Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017, 12203-12352 [2016-04439]
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Vol. 81
Tuesday,
No. 45
March 8, 2016
Part II
Department of Health and Human Services
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45 CFR Parts 144, 147, 153, et al.
Patient Protection and Affordable Care Act; HHS Notice of Benefit and
Payment Parameters for 2017; Final Rule
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DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Parts 144, 147, 153, 154, 155,
156, and 158
[CMS–9937–F]
RIN 0938–AS57
Patient Protection and Affordable Care
Act; HHS Notice of Benefit and
Payment Parameters for 2017
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
This final rule sets forth
payment parameters and provisions
related to the risk adjustment,
reinsurance, and risk corridors
programs; cost-sharing parameters and
cost-sharing reductions; and user fees
for Federally-facilitated Exchanges. It
also provides additional amendments
regarding the annual open enrollment
period for the individual market for the
2017 and 2018 benefit years; essential
health benefits; cost sharing; qualified
health plans; Exchange consumer
assistance programs; network adequacy;
patient safety; the Small Business
Health Options Program; stand-alone
dental plans; third-party payments to
qualified health plans; the definitions of
large employer and small employer; fair
health insurance premiums; student
health insurance coverage; the rate
review program; the medical loss ratio
program; eligibility and enrollment;
exemptions and appeals; and other
related topics.
DATES: These regulations are effective
on May 9, 2016.
FOR FURTHER INFORMATION CONTACT: Jeff
Wu, (301) 492–4305, Krutika Amin,
(301) 492–5153, or Lindsey Murtagh
(301) 492–4106, for general information.
David Mlawsky, (410) 786–6851, for
matters related to fair health insurance
premiums, student health insurance
coverage, and the single risk pool.
Kelly Drury, (410) 786–0558, for
matters related to risk adjustment.
Adrianne Glasgow, (410) 786–0686,
for matters related to reinsurance,
distributed data collection, and
administrative appeals of financial
transfers.
Melissa Jaffe, (301) 492–4129, for
matters related to risk corridors.
Lisa Cuozzo, (410) 786–1746, for
matters related to rate review.
Jennifer Stolbach, (301) 492–4350, for
matters related to establishing a State
Exchange, and State-based Exchanges
on the Federal Platform.
Emily Ames, (301) 492–4246, and
Michelle Koltov, (301) 492–4225, for
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SUMMARY:
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matters related to Navigators, nonNavigator assistance personnel, and
certified application counselors under
part 155.
Briana Levine, (301) 492–4247, for
matters related to agents and brokers.
Dana Krohn, (301) 492–4412, for
matters related to employer notification
and verification.
Rachel Arguello, (301) 492–4263, for
matters related to open enrollment
periods and special enrollment periods
under part 155.
Anne Pesto, (410) 786–3492, for
matters related to eligibility
determinations and appeals of eligibility
determinations for Exchange
participation and insurance affordability
programs, and eligibility determinations
for exemptions.
Kate Ficke, (301) 492–4256, for
matters related to exemptions from the
shared responsibility payment.
Ryan Mooney, (301) 492–4405, for
matters related to enrollment.
Terence Kane, (301) 492–4449, for
matters related to the income threshold.
Christelle Jang, (410) 786–8438, for
matters related to the SHOP.
Krutika Amin, (301) 492–5153, for
matters related to the Federallyfacilitated Exchange user fee.
Leigha Basini, (301) 492–4380, for
matters related to essential health
benefits, network adequacy, essential
community providers, and other
standards for QHP issuers.
Ielnaz Kashefipour, (301) 492–4376,
for matters related to standardized
options and third party payment of
premiums and cost sharing.
Rebecca Zimmermann, (301) 492–
4396, for matters related to stand-alone
dental plans.
Cindy Chiou, (301) 492–5142, for
matters related to QHP issuer oversight.
Pat Meisol, (410) 786–1917, for
matters related to cost-sharing
reductions and the premium adjustment
percentage.
Nidhi Singh Shah, (301) 492–5110, for
matters related to patient safety
standards.
Christina Whitefield, (301) 492–4172,
for matters related to the medical loss
ratio program.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Stakeholder Consultation and Input
C. Structure of Final Rule
III. Provisions of the Final Regulations and
Analyses and Responses to Public
Comments
A. Part 144—Requirements Relating to Health
Insurance Coverage
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B. Part 146—Requirements for the Group
Health Insurance Market
C. Part 147—Health Insurance Reform
Requirements for the Group and
Individual Health Insurance Markets
D. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment under the Affordable Care
Act
E. Part 154—Health Insurance Issuer Rate
Increases: Disclosure and Review
Requirements
F. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
G. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
H. Part 158—Issuer Use of Premium Revenue:
Reporting and Rebate Requirements
IV. Collection of Information Requirements
A. ICRs Regarding Student Health Insurance
Coverage
B. ICRs Regarding Submission of Risk
Corridors Data
C. ICRs Regarding Submission of Rate Filing
Justification
D. ICRs Regarding Election to Operate an
Exchange after 2014
E. ICRs Regarding Standards for Certified
Application Counselors
F. ICRs Regarding Network Adequacy
Standards
G. ICR Regarding Monthly SHOP Enrollment
Reconciliation Files Submitted by
Issuers
H. ICR Regarding Patient Safety Standards
I. ICRs Regarding Other Notices
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice
Provisions and Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act
F. Unfunded Mandates
G. Federalism
H. Congressional Review Act
Acronyms and 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), as amended
AHRQ Agency for Healthcare Research and
Quality
APTC Advance payments of the premium
tax credit
AV Actuarial value
BBEDCA Balanced Budget and Emergency
Deficit Control Act of 1985
CCN CMS Certification Number
CFR Code of Federal Regulations
CHIP Children’s Health Insurance Program
CMP Civil money penalty
CMS Centers for Medicare & Medicaid
Services
CSR Cost-sharing reduction
ECN Exemption certificate number
ECP Essential community provider
EHB Essential health benefits
FFE Federally-facilitated Exchange
FF–SHOP Federally-facilitated Small
Business Health Options Program
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FPL Federal poverty level
FR Federal Register
FTE Full-time equivalent
GDP Gross domestic product
HCC Hierarchical condition category
HEN Hospital engagement network
HHS United States Department of Health
and Human Services
HICS Health Insurance Casework System
HIOS Health Insurance Oversight System
HIPAA Health Insurance Portability and
Accountability Act of 1996 (Pub. L. 104–
191)
HRSA Health Resources and Services
Administration
HSA Health Savings Account
IRS Internal Revenue Service
MAGI Modified adjusted gross income
MAT Medication assisted treatment
MLR Medical loss ratio
MV Minimum value
NAIC National Association of Insurance
Commissioners
NHEA National Health Expenditure
Accounts
OMB Office of Management and Budget
OPM United States Office of Personnel
Management
PBM Prescription benefit manager
PHS Act Public Health Service Act
PII Personally identifiable information
PMPM Per member per month
PRA Paperwork Reduction Act of 1995
PSO Patient safety organization
PSQIA Patient Safety and Quality
Improvement Act (Pub. L. 109–41)
QHP Qualified health plan
QIO Quality improvement organizations
RADV Risk adjustment data validation
SADP Stand-alone dental plan
SBC Summary of benefits and coverage
SBE State-based Exchange
SBE–FP State-based Exchange on the
Federal platform
SHOP Small Business Health Options
Program
The Code Internal Revenue Code of 1986
(26 U.S.C. 1, et seq.)
I. Executive Summary
The Patient Protection and Affordable
Care Act (Pub. L. 111–148) and the
Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152), as amended (the Affordable Care
Act) enacted a set of reforms that are
making high-quality health insurance
coverage and care more affordable and
accessible to millions of Americans.
These reforms include the creation of
competitive marketplaces called
Affordable Insurance Exchanges, or
‘‘Exchanges’’ (in this final rule, we also
call an Exchange a Health Insurance
MarketplaceSM,1 or MarketplaceSM)
through which qualified individuals
and qualified employers can purchase
health insurance coverage. In addition,
many individuals who enroll in
qualified health plans (QHPs) through
1 Health Insurance MarketplaceSM and
MarketplaceSM are service marks of the U.S.
Department of Health & Human Services.
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individual market Exchanges are
eligible to receive a premium tax credit
to make health insurance more
affordable, and reductions in costsharing payments to reduce out-ofpocket expenses for health care services.
These Affordable Care Act reforms also
include the premium stabilization
programs (risk adjustment, reinsurance
and risk corridors) and rules that
mitigate the potential impact of adverse
selection and stabilize the price of
health insurance in the individual and
small group markets. In previous
rulemaking, we have outlined the major
provisions and parameters related to
many Affordable Care Act programs.
In this rule, we seek to improve
States’ ability to operate efficient
Exchanges by leveraging the economies
of scale available through the Federal
eligibility and enrollment platform and
information technology infrastructure.
We are finalizing a codification of a new
Exchange model—the State-based
Exchange using the Federal platform
(SBE–FP). This Exchange model will
enable State-based Exchanges (SBEs) to
execute certain processes using the
Federal eligibility enrollment
infrastructure. The SBE–FP will be
required to enter into a Federal platform
agreement with HHS that will define a
set of mutual obligations, including the
set of Federal services upon which the
SBE–FP agrees to rely. Under this
Exchange model, certain requirements
that were previously only applicable to
QHPs offered on a Federally-facilitated
Exchange (FFE) and their downstream
and delegated entities will apply to
QHPs offered on an SBE–FP and their
downstream and delegated entities. For
2017, we are finalizing a mechanism
through which SBE–FPs will offset
some of the Federal costs of providing
this infrastructure. In addition, we are
finalizing rules requiring agents and
brokers facilitating enrollments through
SBE–FPs to comply with the FFE
registration and training requirements.
We are also finalizing a number of
amendments that will improve the
stability of the Exchanges and support
consumers’ ability to make informed
choices when purchasing health
insurance. These include the
introduction of ‘‘standardized options’’
in the individual market FFEs.
Additional amendments will increase
the accessibility of high-quality health
insurance and improve competition,
transparency, and affordability.
Our intent in offering standardized
options is to simplify the consumer
shopping experience and to allow
consumers to more easily compare plans
across issuers in the individual market
FFEs. We are finalizing a standardized
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option with a specified cost-sharing
structure at each of the bronze, silver
(with cost-sharing reduction (CSR) plan
variations), and gold metal levels. This
policy does not restrict issuers’ ability to
offer non-standardized options. We
anticipate differentially displaying these
standardized options to allow
consumers to compare plans based on
differences in price and quality rather
than cost-sharing structures.
We are also finalizing policies relating
to network adequacy for QHPs on the
FFEs. We proposed, but are not
finalizing, a minimum quantitative
network adequacy threshold for each
State. As States continue their work to
implement the National Association of
Insurance Commissioners’ (NAIC’s)
Health Benefit Plan Network Access and
Adequacy Model Act (NAIC Network
Adequacy Model Act), we will continue
to use the same quantitative timedistance standards in our review of
plans for QHP certification on the FFEs,
which we will detail in the annual
Letter to Issuers, which we are issuing
in final form concurrently with this
final rule. We are finalizing our
proposed policy regarding standardized
categorization of network breadth for
QHPs on the FFEs on HealthCare.gov.
We are also finalizing two provisions to
address provider transitions in the FFE
and a standard for all QHPs governing
cost sharing that would apply in certain
circumstances when an enrollee
receives essential health benefit (EHB)
provided by an out-of-network ancillary
provider at an in-network setting.
We discuss the authority for FFEs to
continue to select QHPs based on
meeting the interests of qualified
individuals and qualified employers.
We will use this authority to strengthen
oversight as needed in the short term.
We also seek to improve consumers’
ability to make choices regarding health
insurance coverage by ensuring they
receive high-quality assistance in their
interactions with the Exchange. For
example, this final rule amends program
requirements for Navigators, certain
non-Navigator assistance personnel, and
certified application counselors. These
amendments will require FFE
Navigators to assist consumers with
certain post-enrollment and other issues
beginning in 2018, require all
Navigators to provide targeted
assistance to underserved or vulnerable
populations, and require Navigators and
non-Navigator assistance personnel to
complete training prior to conducting
outreach and education activities. We
are also amending our rules regarding
the giving of gifts by Navigators, certain
non-Navigator assistance personnel, and
certified application counselors. In
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addition, we are finalizing our proposal
that certified application counselor
designated organizations will be
required to submit data and information
related to the organization’s certified
application counselors, upon the
request of the Exchanges in which they
operate.
In addition, this final rule takes
several steps to increase transparency.
This rule finalizes provisions to
enhance the transparency of rates in all
States and the effectiveness of the rate
review program.
This rule also establishes dates for the
individual market annual open
enrollment period for future benefit
years. For 2017 and 2018, we will
maintain the same open enrollment
period we adopted for 2016—that is,
November 1 of the year preceding the
benefit year through January 31 of the
benefit year, and for 2019 and later
benefit years, we are establishing an
open enrollment period of November 1
through December 15 of the year
preceding the benefit year. The rule also
finalizes two narrow changes to the
Exchange re-enrollment hierarchy,
prioritizing re-enrollment into silver
plans, and providing Exchanges with
the flexibility to re-enroll consumers
into plans of other Exchange issuers if
the consumer is enrolled in a plan from
an issuer that does not have another
plan available for re-enrollment through
the Exchange.
We summarize input we have
received on whether special enrollment
periods are being appropriately
provided, and discuss our plans to
conduct an assessment of special
enrollment periods granted to
consumers through the FFEs. We are
also codifying a number of Exchange
policies relating to exemptions in order
to provide certainty and transparency
around these policies for all
stakeholders.
We are finalizing our proposals for the
risk adjustment program—in particular,
we are finalizing our introduction of
preventive services into the
methodology, and our calculation of
model coefficients based on the 2012,
2013, and 2014 MarketScan claims data.
This final rule also amends the risk
corridors provisions related to the
reporting of allowable costs.
In addition to provisions aimed at
stabilizing premiums, we are finalizing
several provisions related to cost
sharing. First, we are finalizing the
premium adjustment percentage for
2017, which is used to set the rate of
increase for several parameters detailed
in the Affordable Care Act, including
the maximum annual limitation on cost
sharing for 2017. We are also finalizing
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the maximum annual limitations on cost
sharing for the 2017 benefit year for
cost-sharing reduction plan variations.
We also finalize standards for standalone dental plans (SADPs) related to
the annual limitation on cost sharing,
and standards related to third party
payments for premiums and cost
sharing made on behalf of enrollees by
Federal, State, and local governments;
Ryan White HIV/AIDS programs; and
Indian tribes, tribal organizations, or
urban Indian organizations.
We finalize several improvements that
seek to ensure consumers have access to
affordable, high-quality health care
coverage. We are amending
requirements for QHPs, including
essential community providers (ECPs)
and meaningful difference
requirements. This rule also contains
technical amendments to QHP issuer
oversight provisions. This rule includes
amendments to further strengthen the
patient safety requirements for QHP
issuers offering coverage through
Exchanges.
For consumers purchasing coverage
through the Small Business Health
Options Program (SHOP), we finalize a
new ‘‘vertical choice’’ model for
Federally-facilitated SHOPs for plan
years beginning on or after January 1,
2017, under which employers would be
able to offer qualified employees a
choice of all plans across all available
actuarial value levels of coverage from
a single issuer. States with a Federallyfacilitated Small Business Health
Options Program (FF–SHOP) will have
the opportunity to recommend that
vertical choice not be implemented in
their State, and SBEs relying on the FF–
SHOP eligibility and enrollment
platform will be able to choose not to
have vertical choice implemented in
their State.
We also finalize adjustments to our
programs and rules, as we do each year,
so that our rules and policies reflect the
latest market developments. We finalize
the following changes and clarifications
to the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) and
Affordable Care Act health insurance
reform requirements. We revise the
definitions of small employer and large
employer to bring them into
conformance with the Protecting
Affordable Coverage for Employees Act
(Pub. L. 114–60). We also finalize
provisions to ensure that a network plan
in the small group market with a limited
service area can be appropriately rated
for sale based on geography. Lastly, we
finalize some of the proposed provisions
regarding the application of the
actuarial value (AV) and single risk pool
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provisions to student health insurance
coverage.
II. Background
A. Legislative and Regulatory Overview
The Patient Protection and Affordable
Care Act (Pub. L. 111–148) was enacted
on March 23, 2010. The Health Care and
Education Reconciliation Act of 2010
(Pub. L. 111–152), which amended and
revised several provisions of the Patient
Protection and Affordable Care Act, was
enacted on March 30, 2010. In this final
rule, we refer to the two statutes
collectively as the Affordable Care Act.
Subtitles A and C of title I of the
Affordable Care Act reorganized,
amended, and added to the provisions
of part A of title XXVII of the Public
Health Service Act (PHS Act) relating to
group health plans and health insurance
issuers in the group and individual
markets.
Section 2701 of the PHS Act, as added
by the Affordable Care Act, restricts the
variation in premium rates charged by a
health insurance issuer for nongrandfathered health insurance coverage
in the individual or small group market
to certain specified factors. The factors
are: Family size, rating area, age, and
tobacco use.
Section 2701 of the PHS Act operates
in coordination with section 1312(c) of
the Affordable Care Act. Section 1312(c)
of the Affordable Care Act generally
requires a health insurance issuer to
consider all enrollees in all health plans
(except for grandfathered health plans)
offered by such issuer to be members of
a single risk pool for each of its
individual and small group markets.
States have the option to merge the
individual market and small group
market risk pools under section
1312(c)(3) of the Affordable Care Act.
Section 2702 of the PHS Act, as added
by the Affordable Care Act, requires
health insurance issuers that offer
health insurance coverage in the group
or individual market in a State to offer
coverage to and accept every employer
and individual in the State that applies
for such coverage unless an exception
applies.2
Section 2703 of the PHS Act, as added
by the Affordable Care Act, and sections
2712 and 2741 of the PHS Act, as added
by HIPAA and codified prior to the
enactment of the Affordable Care Act,
require health insurance issuers that
offer health insurance coverage in the
group or individual market to renew or
2 Before enactment of the Affordable Care Act, the
Health Insurance Portability and Accountability Act
of 1996 amended the PHS Act (formerly section
2711) to generally require guaranteed availability of
coverage for employers in the small group market.
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continue in force such coverage at the
option of the plan sponsor or individual
unless an exception applies.
Section 2718 of the PHS Act, as added
by the Affordable Care Act, generally
requires health insurance issuers to
submit an annual medical loss ratio
(MLR) report to HHS, and provide
rebates to enrollees if the issuers do not
achieve specified MLR thresholds.
Section 2794 of the PHS Act, as added
by the Affordable Care Act, directs the
Secretary of HHS (the Secretary), in
conjunction with the States, to establish
a process for the annual review of
unreasonable increases in premiums for
health insurance coverage.3 The law
also requires health insurance issuers to
submit to the Secretary and the
applicable State justifications for
unreasonable premium increases prior
to the implementation of the increases.
Section 2794(b)(2) of the PHS Act
further directs the Secretary, in
conjunction with the States, to monitor
premium increases of health insurance
coverage offered through an Exchange
and outside of an Exchange beginning
with plan years starting in 2014.
Section 1252 of the Affordable Care
Act provides that any standard or
requirement adopted by a State under
title I of the Affordable Care Act, or any
amendment made by title I of the
Affordable Care Act, is to be applied
uniformly to all health plans in each
insurance market to which the standard
and requirement apply.
Section 1302 of the Affordable Care
Act provides for the establishment of an
EHB package that includes coverage of
EHB (as defined by the Secretary), costsharing limits, and actuarial value
requirements. The law directs that EHBs
be equal in scope to the benefits covered
by a typical employer plan, and that
they cover at least the following 10
general categories: Ambulatory patient
services; emergency services;
hospitalization; maternity and newborn
care; mental health and substance use
disorder services, including behavioral
health treatment; prescription drugs;
rehabilitative and habilitative services
and devices; laboratory services;
preventive and wellness services and
chronic disease management; and
pediatric services, including oral and
vision care.
Section 1301(a)(1)(B) of the
Affordable Care Act directs all issuers of
QHPs to cover the EHB package
3 The implementing regulations in part 154 limit
the scope of the requirements under section 2794
of the PHS Act to health insurance issuers offering
health insurance coverage in the individual market
or small group market. See Rate Increase Disclosure
and Review; Final Rule, 76 FR 29964, 29966 (May
23, 2011).
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described in section 1302(a) of the
Affordable Care Act, including coverage
of the services described in section
1302(b) of the Affordable Care Act, to
adhere to the cost-sharing limits
described in section 1302(c) of the
Affordable Care Act, and to meet the AV
levels established in section 1302(d) of
the Affordable Care Act. Section 2707(a)
of the PHS Act, which is effective for
plan or policy years beginning on or
after January 1, 2014, extends the
coverage of the EHB package to nongrandfathered individual and small
group coverage, irrespective of whether
such coverage is offered through an
Exchange. In addition, section 2707(b)
of the PHS Act directs nongrandfathered group health plans to
ensure that cost sharing under the plan
does not exceed the limitations
described in sections 1302(c)(1) and (2)
of the Affordable Care Act.
Section 1302(d) of the Affordable Care
Act describes the various levels of
coverage based on actuarial value.
Consistent with section 1302(d)(2)(A) of
the Affordable Care Act, actuarial value
is calculated based on the provision of
EHB to a standard population. Section
1302(d)(3) of the Affordable Care Act
directs the Secretary to develop
guidelines that allow for de minimis
variation in AV calculations.
Section 1311(b)(1)(B) of the
Affordable Care Act directs that the
Small Business Health Options Program
assist qualified small employers in
facilitating the enrollment of their
employees in qualified health plans
offered in the small group market.
Sections 1312(f)(1) and (2) of the
Affordable Care Act define qualified
individuals and qualified employers.
Under section 1312(f)(2)(B) of the
Affordable Care Act, beginning in 2017,
States will have the option to allow
issuers to offer QHPs in the large group
market through an Exchange.4
Section 1311(c)(1)(B) of the
Affordable Care Act requires the
Secretary to establish minimum criteria
for provider network adequacy that a
health plan must meet to be certified as
a QHP.
Section 1311(c)(5) of the Affordable
Care Act requires the Secretary to
continue to operate, maintain, and
update the Internet portal developed
under section 1103 of the Affordable
Care Act to provide information to
consumers and small businesses on
4 If a State elects this option, the rating rules in
section 2701 of the PHS Act and its implementing
regulations will apply to all coverage offered in
such State’s large group market (except for selfinsured group health plans) under section
2701(a)(5) of the PHS Act.
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affordable health insurance coverage
options.
Section 1311(c)(6)(B) of the
Affordable Care Act states that the
Secretary is to set annual open
enrollment periods for Exchanges for
calendar years after the initial
enrollment period.
Sections 1311(d)(4)(K) and 1311(i) of
the Affordable Care Act direct all
Exchanges to establish a Navigator
program.
Section 1311(h)(1) of the Affordable
Care Act specifies that a QHP may
contract with health care providers and
hospitals with more than 50 beds only
if they meet certain patient safety
standards, including use of a patient
safety evaluation system, a
comprehensive hospital discharge
program, and implementation of health
care quality improvement activities.
Section 1311(h)(2) of the Affordable
Care Act also provides the Secretary
flexibility to establish reasonable
exceptions to these patient safety
requirements and section 1311(h)(3) of
the Affordable Care Act allows the
Secretary flexibility to issue regulations
to modify the number of beds described
in section 1311(h)(1)(A) of the
Affordable Care Act.
Section 1312(a)(2) of the Affordable
Care Act provides that in a SHOP, a
qualified employer may select any level
of coverage under section 1302(d) of the
Affordable Care Act to be made
available to employees through the
SHOP, and that employees may then, in
turn, choose plans within the level
selected by the qualified employer.
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.
Sections 1313 and 1321 of the
Affordable Care Act provide the
Secretary with the authority to oversee
the financial integrity of State
Exchanges, their compliance with HHS
standards, and the efficient and nondiscriminatory administration of State
Exchange activities. Section 1321 of the
Affordable Care Act provides for State
flexibility in the operation and
enforcement of Exchanges and related
requirements.
When operating an FFE under section
1321(c)(1) of the Affordable Care Act,
HHS has the authority under sections
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1321(c)(1) and 1311(d)(5)(A) of the
Affordable Care Act to collect and spend
user fees. In addition, 31 U.S.C. 9701
permits a Federal agency to establish a
charge for a service provided by the
agency. Office of Management and
Budget (OMB) Circular A–25 Revised
establishes Federal policy regarding
user fees and specifies that a user charge
will be assessed against each
identifiable recipient for special benefits
derived from Federal activities beyond
those received by the general public.
Section 1321(c)(2) of the Affordable
Care Act authorizes the Secretary to
enforce the Exchange standards using
civil money penalties (CMPs) on the
same basis as detailed in section 2723(b)
of the PHS Act. Section 2723(b) of the
PHS Act authorizes the Secretary to
impose CMPs as a means of enforcing
the individual and group market
reforms contained in Part A of title
XXVII of the PHS Act when a State fails
to substantially enforce these
provisions.
Section 1321(d) of the Affordable Care
Act provides that nothing in title I of the
Affordable Care Act should be
construed to preempt any State law that
does not prevent the application of title
I of the Affordable Care Act. Section
1311(k) of the Affordable Care Act
specifies that Exchanges may not
establish rules that conflict with or
prevent the application of regulations
issued by the Secretary.
Section 1341 of the Affordable Care
Act 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 in benefit years 2014 through
2016. Section 1342 of the Affordable
Care Act directs the Secretary to
establish a temporary risk corridors
program that reduces the impact of
inaccurate rate setting from 2014
through 2016. Section 1343 of the
Affordable Care Act establishes a
permanent risk adjustment program to
provide payments to health insurance
issuers that attract higher-risk
populations, such as those with chronic
conditions, funded by payments from
those that attract lower-risk populations,
thereby reducing incentives for issuers
to avoid higher-risk enrollees.
Sections 1402 and 1412 of the
Affordable Care Act provide for, among
other things, reductions in cost sharing
for EHB for qualified low- and
moderate-income enrollees in silver
level health plans offered through the
individual market Exchanges.
Section 5000A of the Internal
Revenue Code of 1986 (the Code), as
added by section 1501(b) of the
Affordable Care Act, requires all non-
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exempt individuals to maintain
minimum essential coverage for each
month or make the individual shared
responsibility payment. Section
5000A(f) of the Code defines minimum
essential coverage as any of the
following: (1) Coverage under a
specified government sponsored
program; (2) coverage under an eligible
employer-sponsored plan; (3) coverage
under a health plan offered in the
individual market within a State; and
(4) coverage under a grandfathered
health plan. Section 5000A(f)(1)(E) of
the Code authorizes the Secretary of
HHS, in coordination with the Secretary
of the Treasury, to designate other
health benefits coverage as minimum
essential coverage.
The Protecting Affordable Coverage
for Employees Act amended section
1304(b) of the Patient Protection and
Affordable Care Act and section 2791(e)
of the PHS Act to amend the definition
of small employer in these statutes to
mean, in connection with a group health
plan with respect to a calendar year and
a plan year, an employer who employed
an average of at least 1 but not more
than 50 employees on business days
during the preceding calendar year and
who employs at least 1 employee on the
first day of the plan year. It also
amended these statutes to make
conforming changes to the definition of
large employer, and to provide that a
State may treat as a small employer,
with respect to a calendar year and a
plan year, an employer who employed
an average of at least 1 but not more
than 100 employees on business days
during the preceding calendar year and
who employs at least 1 employee on the
first day of the plan year.
1. Premium Stabilization Programs
In the July 15, 2011 Federal Register
(76 FR 41929), we published a proposed
rule outlining the framework for the
premium stabilization programs. We
implemented the premium stabilization
programs in a final rule, published in
the March 23, 2012 Federal Register (77
FR 17219) (Premium Stabilization Rule).
In the December 7, 2012 Federal
Register (77 FR 73117), we published a
proposed rule outlining the benefit and
payment parameters for the 2014 benefit
year to expand the provisions related to
the premium stabilization programs and
set forth payment parameters in those
programs (proposed 2014 Payment
Notice). We published the 2014
Payment Notice final rule in the March
11, 2013 Federal Register (78 FR
15409).
In the December 2, 2013 Federal
Register (78 FR 72321), we published a
proposed rule outlining the benefit and
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payment parameters for the 2015 benefit
year to expand the provisions related to
the premium stabilization programs,
setting forth certain oversight provisions
and establishing the payment
parameters in those programs (proposed
2015 Payment Notice). We published
the 2015 Payment Notice final rule in
the March 11, 2014 Federal Register (79
FR 13743).
In the November 26, 2014 Federal
Register (79 FR 70673), we published a
proposed rule outlining the benefit and
payment parameters for the 2016 benefit
year to expand the provisions related to
the premium stabilization programs,
setting forth certain oversight provisions
and establishing the payment
parameters in those programs (proposed
2016 Payment Notice). We published
the 2016 Payment Notice final rule in
the February 27, 2015 Federal Register
(80 FR 10749).
2. Program Integrity
In the June 19, 2013 Federal Register
(78 FR 37031), we published a proposed
rule that proposed certain program
integrity standards related to Exchanges
and the premium stabilization programs
(proposed Program Integrity Rule). The
provisions of that proposed rule were
finalized in two rules, the ‘‘first Program
Integrity Rule’’ published in the August
30, 2013 Federal Register (78 FR 54069)
and the ‘‘second Program Integrity
Rule’’ published in the October 30, 2013
Federal Register (78 FR 65045).
3. Exchanges
We published a request for comment
relating to Exchanges in the August 3,
2010 Federal Register (75 FR 45584).
We issued initial guidance to States on
Exchanges on November 18, 2010. We
proposed a rule in the July 15, 2011
Federal Register (76 FR 41865) to
implement components of the
Exchanges, and a rule in the August 17,
2011 Federal Register (76 FR 51201)
regarding Exchange functions in the
individual market, eligibility
determinations, and Exchange standards
for employers. A final rule
implementing components of the
Exchanges and setting forth standards
for eligibility for Exchanges was
published in the March 27, 2012
Federal Register (77 FR 18309)
(Exchange Establishment Rule).
We established standards for SHOP in
the 2014 Payment Notice. We also set
forth standards related to Exchange user
fees in the 2014 Payment Notice. We
established an adjustment to the FFE
user fee in the Coverage of Certain
Preventive Services Under the
Affordable Care Act final rule,
published in the July 2, 2013 Federal
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Register (78 FR 39869) (Preventive
Services Rule).
In a final rule published in the July
17, 2013 Federal Register (78 FR
42823), we established standards for
Navigators and non-Navigator assistance
personnel in FFEs and for nonNavigator assistance personnel funded
through an Exchange establishment
grant. This final rule also established a
certified application counselor program
for Exchanges and set standards for that
program.
FR 81003). A final rule with comment
period implementing the rate review
program was published in the May 23,
2011 Federal Register (76 FR 29963)
(Rate Review Rule). The provisions of
the Rate Review Rule were amended in
final rules published in the September
6, 2011 Federal Register (76 FR 54969),
the February 27, 2013 Federal Register
(78 FR 13405), the May 27, 2014 Federal
Register (79 FR 30339), and the
February 27, 2015 Federal Register (80
FR 10749).
4. Essential Health Benefits and
Actuarial Value
7. Medical Loss Ratio
We published a request for comment
on section 2718 of the PHS Act in the
April 14, 2010 Federal Register (75 FR
19297), and published an interim final
rule with a 60-day comment period
relating to the MLR program on
December 1, 2010 (75 FR 74863). A final
rule with a 30-day comment period was
published in the December 7, 2011
Federal Register (76 FR 76573). An
interim final rule with a 60-day
comment period was published in the
December 7, 2011 Federal Register (76
FR 76595). A final rule was published
in the Federal Register on May 16, 2012
(77 FR 28790).
On December 16, 2011, HHS released
a bulletin 5 (the EHB Bulletin) that
outlined an intended regulatory
approach for defining EHB, including a
benchmark-based framework. HHS also
published a bulletin that outlined its
intended regulatory approach to
calculations of AV on February 24,
2012.6 A proposed rule relating to EHBs
and AVs was published in the
November 26, 2012 Federal Register (77
FR 70643). We established requirements
relating to EHBs and AVs in the
Standards Related to Essential Health
Benefits, Actuarial Value, and
Accreditation Final Rule, which was
published in the February 25, 2013
Federal Register (78 FR 12833) (EHB
Rule).
5. Market Rules
A proposed rule relating to the 2014
health insurance market rules was
published in the November 26, 2012
Federal Register (77 FR 70584). A final
rule implementing the health insurance
market rules was published in the
February 27, 2013 Federal Register (78
FR 13406) (2014 Market Rules).
A proposed rule relating to Exchanges
and Insurance Market Standards for
2015 and Beyond was published in the
March 21, 2014 Federal Register (79 FR
15808) (2015 Market Standards
Proposed Rule). A final rule
implementing the Exchange and
Insurance Market Standards for 2015
and Beyond was published in the May
27, 2014 Federal Register (79 FR 30239)
(2015 Market Standards Rule).
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6. Rate Review
A proposed rule to establish the rate
review program was published in the
December 23, 2010 Federal Register (75
5 Essential Health Benefits Bulletin. (Dec. 16,
2011), available at https://www.cms.gov/CCIIO/
Resources/Files/Downloads/essential_health_
benefits_bulletin.pdf.
6 Actuarial Value and Cost-Sharing Reductions
Bulletin. (Feb. 24, 2012), available at https://
www.cms.gov/CCIIO/Resources/Files/Downloads/
Av-csr-bulletin.pdf.
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B. Stakeholder Consultation and Input
HHS consulted stakeholders on the
policies related to the operation of
Exchanges, including the SHOP and the
premium stabilization programs. We
have held a number of listening sessions
with consumers, providers, employers,
health plans, the actuarial community,
and State representatives to gather
public input. We consulted with
stakeholders through regular meetings
with the National Association of
Insurance Commissioners, regular
contact with States through the
Exchange Establishment grant and
Exchange Blueprint approval processes,
and meetings with Tribal leaders and
representatives, health insurance
issuers, trade groups, consumer
advocates, employers, and other
interested parties. We considered all
public input we received as we
developed the policies in this final rule.
C. Structure of Final Rule
The regulations outlined in this final
rule will be codified in 45 CFR parts
144, 147, 153, 154, 155, 156 and 158.
The regulations in part 144, consistent
with recent legislation, revise the
definitions of ‘‘large employer’’ and
‘‘small employer.’’
The regulations in part 147 clarify the
definition of principal business address,
and establish the appropriate rating area
under specific circumstances, for
purposes of geographic rating. They also
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12209
address the treatment of student health
insurance coverage with regard to the
AV and single risk pool requirements.
The regulations in part 153 codify
how HHS will evaluate the risk
adjustment and reinsurance data
submitted to an issuer’s dedicated
distributed data environment. This rule
also includes the risk adjustment user
fee for 2017 and outlines certain
modifications to the HHS risk
adjustment methodology. This rule
clarifies reporting requirements for the
risk adjustment, reinsurance, and risk
corridors programs.
The regulations in part 154 outline
certain modifications to enhance the
transparency and effectiveness of the
rate review program. We require the
submission of a Unified Rate Review
Template from all issuers offering single
risk pool coverage in the individual and
small group market, including coverage
with rate decreases or unchanged rates,
as well as rates for new plans. We also
announce our intention to disclose all
proposed rate increases for single risk
pool coverage at a uniform time on the
CMS Web site, including rates with
increases of less than 10 percent.
Finally, we reiterate the process for
establishing the uniform timeline that
proposed rate increases subject to
review and all final rate increases
(including those not subject to review)
for single risk pool coverage must be
posted at a uniform time by States with
Effective Rate Review Programs.
The regulations in part 155 include
clarifications related to the functions of
an Exchange, and establish the
individual market open enrollment
period for the 2017 and 2018 benefit
years. Certain proposals in part 155 are
related to the eligibility and verification
processes related to eligibility for
insurance affordability programs. We
also amend and clarify rules related to
enrollment of qualified individuals into
QHPs. We describe changes to the
process of submitting certain exemption
applications and options for State
Exchanges to handle exemptions. The
finalized regulations also provide for a
Federal platform agreement through
which a State Exchange may agree to
rely on the FFE for certain functions as
an SBE–FP. We also finalize various
proposals related to the SHOPs. We
amend the standards applicable to the
consumer assistance functions
performed by Navigators, non-Navigator
assistance personnel, and certified
application counselors. We also discuss
our approach to QHP certification, and
modify standards for FFE-registered
agents and brokers and requirements for
HHS-approved vendors of FFE training.
Part 155 also includes clarification to
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the policy regarding additional Staterequired benefits.
The regulations in part 156 establish
parameters related to cost sharing,
including the premium adjustment
percentage, the maximum annual
limitation on cost sharing, and the
reductions in the maximum annual
limitation for cost-sharing plan
variations for 2017. We amend the
timeframe to request reconsideration
under the administrative appeals
process applicable to the premium
stabilization programs. Amendments to
part 156 also include provisions related
to EHB prescription drug rules. We
amend network adequacy requirements
(including application of out-of-network
costs to the annual limitation on cost
sharing for EHBs covered under QHPs
in the small group and individual
markets), and essential community
provider requirements. We establish
standardized options for cost-sharing
structures, indexing for the stand-alone
dental plan annual limitation on cost
sharing, changes to our process for
updating the AV Calculator for QHPs,
meaningful difference standards for
QHPs, and minor changes to QHP issuer
oversight standards. We also amend
provisions related to the third-party
premium payments from certain entities
and the next phase of implementation
for patient safety standards for issuers of
QHPs offered on Exchanges.
The amendments to the regulations in
part 158 finalize revisions related to the
definitions of large employer and small
employer consistent with recent
legislation.
III. Provisions of the Final Regulations
and Analyses and Responses to Public
Comments
In the December 2, 2015 Federal
Register (80 FR 75487), we published
the ‘‘Patient Protection and Affordable
Care Act; HHS Notice of Benefit and
Payment Parameters for 2017’’ proposed
rule. We received 524 comments,
including 112 substantially similar
letters regarding our solicitation for
comment on whether the substance use
disorder requirement in essential health
benefits needs additional clarification
regarding medication-assisted treatment
for opioid addiction. Comments were
received from the National Association
of Insurance Commissioners, State
departments of insurance, State
Exchanges, a member of Congress,
health insurance issuers, providers,
consumer groups, labor entities,
industry groups, patient safety groups,
national interest groups, and other
stakeholders. The comments ranged
from general support of or opposition to
the proposed provisions to specific
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questions or comments regarding
proposed changes. We received a
number of comments and suggestions
that were outside the scope of the
proposed rule that will not be addressed
in this final rule.
In this final rule, we provide a
summary of each proposed provision, a
summary of those public comments
received that directly related to
proposals, our responses to them, and a
description of the provisions we are
finalizing.
Comment: We received a number of
comments stating that the comment
period was unreasonably short, making
it difficult for stakeholders to provide
in-depth analysis and input.
Commenters urged HHS to provide a
comment period of 60 days from the
date of publication in the Federal
Register for this and future HHS Notices
of Benefit and Payment Parameters.
Response: The timeline for
publication of this final rule
accommodates issuer filing deadlines
for the 2017 benefit year. A 60-day
comment period would have delayed
the publication of this final rule, and
created significant challenges for States,
Exchanges, issuers, and other entities in
meeting deadlines related to
implementing these rules.
Comment: We received a number of
comments disapproving of the wide
array of topics covered in the rule.
Response: Many of the programs
covered by this final rule are closely
linked. To simplify the regulatory
process, facilitate public comment, and
provide the information needed to meet
statutory deadlines, we have elected to
propose and finalize these regulatory
provisions in one rule, as we have in
years past.
Comment: A number of comments,
many focused primarily on proposals
related to network adequacy, urged HHS
to allow States to continue their
oversight of their insurance markets and
defer to the NAIC for the development
of important industry-wide, State-based
standards.
Response: We aim to establish Federal
oversight standards that complement
State standards while meeting Federal
obligations, including for qualified
health plans on Federally-facilitated
Exchanges. We will continue to
coordinate closely with State authorities
to address compliance issues, eliminate
duplicative requirements or review, and
to reduce the burden on stakeholders.
Comment: Several comments
emphasized the importance of ensuring
coverage is affordable to consumers, or
expressed concern that coverage
purchased through the Exchanges is not
affordable.
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Response: We appreciate the
importance of ensuring coverage
purchased through the Exchanges is
affordable to consumers, and believe
affordability is critical to the success of
the Exchanges.
A. Part 144—Requirements Relating to
Health Insurance Coverage
1. Definitions (§ 144.103)
Section 144.103 sets forth definitions
of terms that are used throughout parts
146 through 150. In the proposed rule,
we discussed the definition of ‘‘plan
year’’ and proposed revisions to the
definitions of small employer and large
employer that would be consistent with
recent legislation. We also proposed a
technical correction in the definition of
excepted benefits to cross reference the
group market provisions in § 146.145(b)
rather than § 146.145(c). We are
finalizing these provisions as proposed.
a. Plan Year
In the preamble to the proposed rule
(80 FR at 79495), we explained that we
interpret the definition of plan year in
§ 144.103 with respect to both
grandfathered and non-grandfathered
group health plans to mean a period that
is no longer than 12 months.
Comment: One commenter requested
clarification that a plan year may be
shorter than 12 months under certain
circumstances.
Response: A plan year may be shorter
than 12 months under certain
circumstances, but a plan year may not
be longer than 12 months.
b. Large Employer and Small Employer
We proposed to revise the regulatory
definitions of large employer and small
employer in §§ 144.103 and 155.20
consistent with section 1304(b) of the
Affordable Care Act and section 2791(e)
of the PHS Act, as amended by the
Protecting Affordable Coverage for
Employees Act. We also proposed to
codify statutory language providing that
in the case of an employer that was not
in existence throughout the preceding
calendar year, the determination of
whether the employer is a large
employer or a small employer is based
on the average number of employees
that it is reasonably expected the
employer will employ on business days
in the current calendar year. We are
finalizing these revisions as proposed.
Comment: Several commenters
supported our proposed definitions of
large employer and small employer,
including the codification related to
employers that were not in existence
throughout the preceding calendar year.
Response: We are finalizing the
revisions to the definitions of large
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employer and small employer in
§§ 144.103 and 155.20 as proposed.7
B. Part 146—Requirements for the
Group Health Insurance Market
1. Guaranteed Availability of Coverage
for Employers in the Small Group
Market (§ 146.150)
For a discussion of the proposed
amendment to § 146.150, please see the
preamble to § 147.104.
C. Part 147—Health Insurance Reform
Requirements for the Group and
Individual Health Insurance Markets
1. Fair Health Insurance Premiums
(§ 147.102)
a. Principal Business Address
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Under section 2701 of the PHS Act
and regulations at § 147.102, the rating
area for a small group plan is based on
the group policyholder’s principal
business address. We proposed to
amend § 147.102(a)(1)(ii) to provide that
if the employer has registered an inState principal business address with
the State, that location is the principal
business address. We noted that an inState address registered solely for
purposes of service of process would
not be considered the employer’s
principal business address, unless it is
a substantial worksite for the employer’s
business. If an in-State principal
business address is not registered with
the State or is only registered for
purposes of service of process and is not
a substantial worksite, we proposed that
the employer would designate as its
principal business address the business
address within the State where the
greatest number of employees work in
the applicable State.
When a network plan offered in a
State has a limited service area, we
noted that this policy could result in an
issuer having to make a plan available
under the guaranteed availability rules
to an employer—because the employer
has an employee who lives, works, or
resides in the service area—but not be
able to apply a geographic rating factor
under the current rule—because the
issuer might not have established rates
applicable to the location of the
employer’s principal business address
outside the plan’s service area.
7 This final rule has no effect on previously
issued guidance by CMS clarifying that offices of
the Members of Congress, as qualified employers,
are eligible to participate in a SHOP regardless of
the size requirements set forth in the definition of
‘‘qualified employer’’ in 45 CFR 155.20. See
Members of Congress and Staff Accessing Coverage
through Health Insurance Exchanges (Marketplaces)
(Sept. 30, 2013), available at: https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/
Downloads/members-of-congress-faq-9-30-2013.pdf.
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We proposed to amend § 147.102 to
provide for an additional principal
business address to be identified within
a plan’s service area in these
circumstances so that the plan can be
appropriately rated for sale to the
employer. In such instances, the
additional principal business address
would be the business address within
the plan’s service area where the
greatest number of employees work as of
the beginning of the plan year, or, if
there is no such business address, an
address within the service area selected
by the employer that reasonably reflects
where the greatest number of employees
live or reside as of the beginning of the
plan year.
As stated in the preamble to the
proposed rule, SHOPs, including the
FF–SHOPs, may use the address that
was used to establish a qualified
employer’s eligibility for participation
in the SHOP to determine the applicable
geographic rating area when calculating
premiums for participating employers.
The intent of these proposals was to
establish a uniform set of rules that can
be applied as simply as possible, while
allowing plans to be properly rated.
We are finalizing the provisions
proposed in § 147.102 of the proposed
rule without substantive modification.
However, we are finalizing the
regulatory text in a way that does not
refer to a location where employees live
or reside as a principal business
address, as we believe doing so in the
proposed regulatory text was confusing,
and we are making additional minor
edits for clarity. These are not
substantive modifications, as the
proposed rule and this final rule apply
the same test to determine the
policyholder’s rating area with respect
to a network plan in such a situation.
Comment: Several commenters
supported our proposed definition of
principal business address, and our
approach for allowing an employer to
identify an additional principal
business address within the service area
of a network plan. Two commenters
suggested HHS should not modify the
standards for geographic rating,
suggesting that the proposed rule
provides opportunities and incentives
for small employers to select an address
based upon factors other than the true
business location of the employer.
These commenters did not provide an
alternative approach to allow plans to
be rated in this circumstance.
Response: We have revised the
proposed rule text such that it no longer
refers to an employer selecting a
location where employees live or reside
as a principal business address. The rule
instead provides that if an employer
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does not have a business location in the
issuer’s service area, but has employees
who live or reside within the service
area, the geographic rating area for
purposes of the network plan is the
rating area where the greatest number of
employees within the plan’s service area
live or reside as of the beginning of the
plan year. We believe these standards
for identifying an applicable rating area
within the issuer’s service area will
ensure that a network plan can be
appropriately rated for sale to the
employer consistent with guaranteed
availability requirements.
Comment: One commenter suggested
we define ‘‘substantial worksite’’ to
determine when a business address
registered solely for purposes of service
of process would be considered the
employer’s principal business address
for rating purposes.
Response: The final rule does not
provide a specific definition of
substantial worksite. We believe the
term is sufficiently clear and will not
cause confusion. Nevertheless, we will
monitor the implementation of this
policy in considering whether it is
appropriate to clarify what constitutes a
substantial worksite in the future.
Comment: One commenter requested
that the FF–SHOP verify that an address
entered by an employer is the official
principal place of business. We also
received a comment requesting that we
modify the FF–SHOP application
process to allow more than one account
per State and thus, allow for more than
one rating area for an employer.
Response: Under § 155.710(b)(3), one
criterion for being a qualified employer
eligible to purchase coverage through a
SHOP is that the employer has its
principal business address in the
Exchange service area and offers
coverage to all its full-time employees
through that SHOP, or offers coverage to
each eligible employee through the
SHOP serving that employee’s primary
worksite. If we receive a report that
incorrect or inaccurate information has
been provided on an FF–SHOP
application, we may investigate and
take corrective action as needed.
Further, as stated in the preamble to the
proposed rule, due to operational
limitations, the SHOPs, including the
FF–SHOPs, may not be able to
accommodate multiple principal
business addresses within a State for
premium calculation purposes. As a
result, due to current operational
limitations, when a single employer
application is completed in a State with
an FF–SHOP, plan availability and
premium calculations will be based on
the principal business address entered
on the FF–SHOP employer application.
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Comment: One commenter asked for
clarification on the interaction between
§ 155.710(b)(3) (governing eligibility
standards for SHOP) and
§ 147.102(a)(1)(ii) (governing geographic
rating).
Response: If SHOPs, including the
FF–SHOPs, have operational limitations
that do not permit them to fully
implement the policy described above,
they may use the address that was used
to establish a qualified employer’s
eligibility for participation in the SHOP
to determine which plans are available
to the employer, as well as the
applicable geographic rating area when
calculating premiums for participating
employers.
b. Other Issues Related to Rating Areas
In the preamble to the proposed rule,
we noted that we have observed wide
variations in the size of rating areas in
the various States. We identified a
concern that this variation could lead to
smaller rating areas with a high
concentration of higher-risk groups,
which potentially compromises the riskspreading objective that the single risk
pool requirement is intended to achieve.
At the same time, States are the primary
regulators of health insurance, and we
believe it is important to recognize the
unique needs of each State. We also
recognize the consumer disruption that
could result from changes to rating
areas. Therefore, we sought comment on
whether we should seek more
uniformity in the size of rating areas or
establish a minimum size for rating
areas, and if so, how that should be
achieved, consistent with the principle
of flexibility for States.
We also recognized the inconsistency
that can occur between an issuer’s rating
area and the service area of some of its
network-based plans. We indicated that
it could be beneficial for the rating area
and the service area to generally be
consistent and sought comment on
whether and how to achieve this
objective.
Comment: One commenter supported
rating areas of a minimum size as a way
to spread risk, and two others suggested
applying a minimum number of
residents per rating area or a minimum
number that is no less than a specified
percentage of residents in the nonmetropolitan statistical areas of a State.
Many commenters, however, stated
their opposition to any further Federal
regulation defining rating areas, stating
that the States are best equipped to
determine how rating areas are
established. One commenter stated that
our example that each rating area be a
contiguous area would adversely affect
service area strategies that identify non-
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contiguous areas with similar pricing
and network dynamics that may warrant
placing them in the same service area.
One commenter stated that limiting the
number of rating areas to the number of
metropolitan statistical areas plus one
would be arbitrary. One commenter
stated that basing rating areas on the
relative population of each area would
require frequent changes in rating areas
due to population shifts.
Many commenters also opposed
aligning rating areas with service areas.
One stated that such an alignment could
cause issuers to leave an entire
geographic area rather than attempt to
establish contracts with providers in
other parts of a rating area, due to
additional costs associated with
establishing a broader network. One
commenter observed that rating areas
are based on geographic differences in
cost of care, while service areas are
constructed to ensure that a network
plan has providers that can serve
enrollees in specific geographic
locations. One commenter observed that
aligning rating areas with service areas
could result in a significant increase in
the number of plans submitted for
approval and rate review and Health
Insurance Oversight System (HIOS) plan
IDs.
Response: We are not making changes
to these regulations in this final rule,
and will consider these comments as we
continue to study these issues.
c. Child Age Rating
Section 147.102(e) provides for a
uniform age curve in each State. When
a State does not specify an age curve, a
Federal default uniform age curve will
apply. We stated in the proposed rule
that we are investigating the child age
rating factor in the Federal uniform age
curve, and seek to determine whether
the default factor is appropriate, or fails
to adequately differentiate the health
risk of children of different ages. We
sought comment and data on the most
appropriate child age curve, and the
policy reasons underlying any
recommendation.
Comment: One commenter did not
support a varying child age curve,
believing that in the individual market,
children may need more care at certain
ages, so a fixed age rating factor that
applies to all children should continue
to apply. With regard to the current
fixed factor, several commenters stated
that the current default factor of 0.635
for children under age 21 may be set too
low.
Several commenters supported a
varying child age curve, and set forth
specific age gradations. Two
commenters stated that the child age
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curve should be increased by a set
amount for plans with embedded
pediatric dental benefits. One
commenter stated that we should
consider using data consistent with data
used to calibrate risk adjustment to
determine child age factors, while one
commenter stated that the age
calibration for children must be
adjusted in the uniform age curve.
Response: We recognize that the child
age band and factor may need to be
updated to better reflect the health risk
of children and intend to address child
age rating in future rulemaking or
guidance.
2. Guaranteed Availability of Coverage
(§ 147.104)
a. Product Discontinuance and Market
Withdrawal Exceptions to Guaranteed
Availability
In the proposed rule, we expressed
concern about whether it would be in
consumers’ or issuers’ interest to require
guaranteed availability of a product
while the issuer is in the process of
winding down operations with respect
to that product or all its products in a
market. Therefore, we proposed to
codify an exception to the guaranteed
availability requirements under
§ 147.104 when the exception to
guaranteed renewability of coverage
related to discontinuing a product or all
coverage in the market applies.
Specifically, we proposed that an issuer
may deny coverage to new individuals
or employers during the applicable 90day or 180-day notice period when the
issuer is discontinuing a product or
exiting the market. We proposed that an
issuer must apply the denial uniformly
to all employers or individuals in the
large group, small group, or individual
market, as applicable, in the State
consistent with applicable State law,
and without regard to the claims
experience or any health-status related
factor relating to those individuals or
employers and their employees (or their
respective dependents). We proposed
that this exception not relieve issuers of
their obligations to existing
policyholders, such as their obligation
to enroll dependents under an
applicable special enrollment period.
We proposed parallel provisions under
§ 146.150 addressing guaranteed
availability of coverage for employers in
the small group market under the
HIPAA rules.
We are not finalizing the provisions
proposed in §§ 147.104 and 146.150 of
the proposed rule. As noted in the
proposed rule, the product
discontinuance exception to the
guaranteed renewability requirement in
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§ 147.106(c) requires an issuer to
provide notice in writing, in the form
and manner specified by the Secretary,
to each plan sponsor or individual, as
applicable, (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. The
market withdrawal exception to the
guaranteed renewability requirement in
§ 147.106(d) requires an issuer to
provide notice in writing to the
applicable State authority and to each
plan sponsor or individual, as
applicable (and to all participants and
beneficiaries covered under the
coverage) of the discontinuation at least
180 calendar days prior to the date the
coverage will be discontinued. We
therefore proposed to interpret the
interaction between the guaranteed
availability and these guaranteed
renewability provisions to permit an
issuer to deny enrollments during the
applicable product discontinuance or
market withdrawal notice period.
However, with regard to situations
where an issuer decides to discontinue
a product, we are concerned that the
proposed policy could have an impact
on the issuer’s risk pool and rating for
its other products. While a market
withdrawal does not have the same
impact since all of the issuer’s products
in a market are being discontinued, we
believe this interpretation of the
interaction between the laws to provide
for an exception to the guaranteed
availability requirements would have to
be applied consistently in both a
product discontinuance and market
withdrawal situation. Therefore, going
forward, we will not interpret these
statutes to recognize an exception to the
guaranteed availability requirement in
either scenario, and the issuer must
continue to offer coverage to and accept
every employer or individual in the
State that applies for coverage under a
product until such time that the product
is discontinued.
Consistent with previous guidance,
with regard to individuals who enroll in
a product after the specified deadline
for providing the applicable product
discontinuance or market withdrawal
notice and before the particular product
or products are discontinued, HHS will
consider an issuer to satisfy the
requirement to provide notice if the
issuer provides prominent and effective
notice at the time of application or
enrollment that the product will be
discontinued, in any form and manner
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permitted by applicable law and
regulations.8
b. Minimum Participation and
Contribution Rules
In the proposed rule, we expressed
concern that the use of minimum group
participation and employer contribution
rules to deny coverage in the small
group market could result in some
applicable large employers, as defined
in section 4980H of the Code, not
reasonably being able to offer coverage
to their full-time employees (and their
dependents) and therefore potentially
being liable for an employer shared
responsibility payment under section
4980H of the Code, particularly in States
that elect to expand the small group
market to include employers with up to
100 employees.
In recognition of this dynamic, we
noted that a State electing to expand its
small group market to include
employers with up to 100 employees
may opt, under its own authority, to
prohibit an issuer from restricting the
availability of small group coverage
based on employer contribution or
group participation rules. Alternatively,
in cases where a State expands the
definition of a small employer to
include employers with up to 100
employees, we could amend the
guaranteed availability regulations, with
respect to small employers with 51–100
employees or with respect to all small
employers altogether, to achieve this
objective. We sought comment on such
an approach.
Comment: Several commenters stated
that we should retain the ability of
issuers to limit, to November 15 to
December 15 of each year, when issuers
must sell a policy to a small employer
that fails to meet the issuer’s group
participation or contribution rules.
Some commenters stated that issuers
should retain this ability even with
respect to groups of 51–100 employees,
as doing otherwise would have an
adverse impact on risk pools. One
commenter stated that if we eliminate
the ability of issuers to apply minimum
contribution and participation rules, we
should at least exempt issuers from
having to offer and renew coverage to
employers that selectively offer insured
and self-funded coverage
simultaneously to separate classes of
employees. Such employers, the
commenter stated, leave issuers with the
8 CMS Insurance Standards Bulletin Series, Form
and Manner of Notices when Discontinuing or
Renewing a Product in the Group or Individual
Market (Sept. 2, 2014), available at https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/Renewal-Notices-9-3-14FINAL.pdf.
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12213
highest-risk individuals. One
commenter stated that we should amend
the guaranteed availability requirements
so that any employer, regardless of size,
that can document that it is subject to
Code section 4980H, must be sold a
policy anytime during the year. The
commenter stated that we should
consider this approach for the entire
small group market as well.
Response: This final rule does not
make any changes to the guaranteed
availability requirements as they apply
in connection with minimum
participation or contribution rules. We
note that States have flexibility to
further restrict the use of minimum
employer contribution or group
participation rules as appropriate.
3. Guaranteed Renewability of Coverage
(§ 147.106)
Title XXVII of the PHS Act includes
several exceptions to its guaranteed
renewability provisions, including
when a group health plan sponsor has
violated a material plan provision
relating to employer contribution or
group participation rules, provided
applicable State law allows an
exception to guaranteed renewability
under such circumstances; and for
coverage made available in the
individual market, or small or large
group market only through one or more
bona fide associations, if the
individual’s or employer’s membership
in the association ceases. Although the
Affordable Care Act removed from Title
XXVII these exceptions as they applied
to guaranteed availability, it did not do
so with respect to guaranteed
renewability. Therefore, as we pointed
out in the preamble to the proposed
rule, a large employer whose coverage is
non-renewed for one of these reasons,
and a small employer whose coverage is
non-renewed due to membership
ceasing in an association, could be seen
to have a right to immediately purchase
that same coverage (if available in the
market) from that same issuer in
accordance with guaranteed availability.
In the preamble to the proposed rule, we
suggested that this renders effectively
meaningless these two exceptions to
guaranteed renewability in these
contexts, and we proposed to amend
§ 147.106 to remove these guaranteed
renewability exceptions.
For the reasons discussed in greater
detail below, the final rule does not
remove the guaranteed renewability
exceptions related to failure to satisfy
minimum employer contribution or
group participation rules, or loss of
association membership, because we
have determined upon further
consideration these exceptions can
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affect the insurance plan choices
available to consumers and employers.
Comment: Two commenters suggested
we should not remove the guaranteed
renewability exceptions when a small
employer’s membership in an
association ceases. The commenters
stated that typically a blanket master
policy is issued to the association and
it would not be appropriate for small
employers who leave the association to
continue to receive coverage through the
same policy.
Response: Based on the comments
received and after further review and
consideration of the statutory
provisions, we have concluded that the
guaranteed availability requirements do
not render effectively meaningless the
guaranteed renewability exceptions for
loss of association membership or
failure to meet group participation or
contribution rules. For example, an
employer with association coverage
leaving the association mid-year and
losing coverage may be subject to a
different premium rate under a new
policy based on a quarterly rate update
in the small group market or a new
experience rate in the large group
market. Further, we recognize that
association members who cease
membership in an association and lose
coverage may have their deductible and
maximum out of pocket limit reset
under a new policy. The same logic
applies with respect to employers
whose coverage is terminated mid-year
for failure to meet an issuer’s
participation or contribution rules. And,
small employers whose coverage is
terminated for failure to meet minimum
participation or contribution rules might
not be able to purchase new coverage
until the next annual enrollment period
from November 15 to December 15. For
these reasons, we believe these
exceptions to guaranteed renewability
continue to have relevance, and we are
not finalizing our proposal to remove
them from the regulations.
4. Student Health Insurance Coverage
(§ 147.145)
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a. Index Rate Setting Methodology for
Student Health Insurance Coverage
Under § 147.145, student health
insurance coverage is a type of
individual health insurance coverage
that, subject to certain limited
exceptions, must comply with the PHS
Act requirements that apply to
individual health insurance coverage.
However, section 1560(c) of the
Affordable Care Act provides that
nothing in title I of the Affordable Care
Act (or an amendment made by title I)
is to be construed to prohibit an
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institution of higher education from
offering a student health insurance plan
to the extent that the requirement is
otherwise permitted under applicable
Federal, State, or local law. HHS has
exercised its authority under section
1560(c) of the Affordable Care Act to
modify some of its rules as applied to
student health insurance coverage,
including those related to the
guaranteed availability, guaranteed
renewability, and single risk pool
requirements.
As we stated in the preamble to the
proposed rules, our intent in exempting
student health insurance coverage from
the single risk pool requirement was to
provide that student health insurance
issuers need not include their student
health insurance coverage in their
overall individual market (or merged
market) risk pool, and also need not
have one single risk pool composed of
their total statewide book of student
health insurance business. Rather, we
intended that issuers could establish
risk pools for students and their
dependents separate from the issuer’s
individual market or merged market risk
pool, including by establishing separate
risk pools for different institutions of
higher education, or multiple risk pools
within a single institution. However, as
explained in the preamble to the
proposed rule, we have learned that
student health insurance issuers may be
using certain rating factors that lead to
rates that might not be actuarially
justified.
As stated in the preamble to the
proposed rule, we do not intend to
disrupt rate setting for student health
insurance, but we do seek to ensure that
rates are based on actuarially justified
factors. To clarify our intent, we
proposed, for policy years beginning on
or after January 1, 2017, that student
health insurance coverage be subject to
the index rate setting methodology of
the single risk pool provision in the
regulation at § 156.80(d). However,
student health insurance issuers still
would be permitted to establish separate
risk pools from their individual market
single risk pool (or merged market risk
pool, where applicable) for student
health insurance coverage, including by
establishing separate risk pools for
different institutions of higher
education, or multiple risk pools within
a single institution, provided they are
based on a bona fide school-related
classification (for example, graduate
students and undergraduate students)
and not a health status-related factor as
described in § 146.121. Consistent with
our single risk pool policy, the index
rates for these risk pools would be based
upon actuarially justified estimates of
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claims. We proposed that permissible
plan-level adjustments to these index
rates would be limited to those
permitted under our rules. This
approach would continue to allow rates
for student health insurance coverage to
reflect the unique characteristics of the
student population at the particular
institution, while more clearly
delineating our intent with regard to the
treatment of student health insurance
coverage. We sought comment on any
potential operational challenges
associated with this proposal, including
potential challenges related to filing
rates for student health insurance
coverage and how this policy might be
adjusted to address those challenges.
We finalize in this rule our proposal
that student health insurance issuers
may establish one or more risk pools per
institution of higher education,
provided that the risk pools are based
on a bona fide school-related
classification and not based on a health
factor as described in § 146.121. In
response to comments, we are not
finalizing our proposal that student
health insurance coverage must comply
with the single risk pool index rate
setting methodology. However, we are
requiring that student health insurance
rates reflect the claims experience of
individuals who comprise the risk pool
and any adjustments to rates within a
risk pool must be based on actuarially
justified factors. We are also removing
outdated provisions in § 147.145(b)(2)
and (d) providing that student health
insurance issuers may impose annual
dollar limits for policy years beginning
before January 1, 2014. Those
provisions, by their own terms, no
longer apply, as student health
insurance issuers are subject to the
provisions in § 147.126 that prohibit
annual dollar limits on EHB for policy
years beginning on or after January 1,
2014. Accordingly, we are finalizing the
AV provision proposed in paragraph
(b)(4) at paragraph (b)(2), and deleting
outdated paragraphs (d) and (e).
Comment: While one commenter
supported the proposal to subject
student health insurance issuers to the
index rate setting methodology, several
commenters were opposed to the
proposal, citing concerns about
additional administrative and regulatory
burdens on both issuers and State
regulators, as well as concerns about
limiting consumer choice and flexibility
and undermining the role of institutions
of higher education in arranging for
coverage that best meets the needs of
their student populations.
Response: After carefully considering
these comments, we have determined
not to apply the single risk pool index
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rate setting methodology to student
health insurance coverage. While we
continue to have concerns that student
health insurance issuers may be setting
rates that are not based upon actuarially
justified estimates of claims, we are also
mindful of the concerns about potential
administrative burden. The single risk
pool rate setting methodology is one
means of ensuring rates are actuarially
justified. Therefore, while student
issuers will not be required to use that
particular methodology to establish
rates, the final rule requires that rates
for student health insurance coverage
reflect the claims experience of
individuals who comprise the risk pool
and any adjustments to rates within a
risk pool must be actuarially justified.
We intend to monitor whether factors
are being used to develop rates for
student health insurance coverage that
are not actuarially justified, such as
adjusting rates based upon the length of
time the coverage has been underwritten
by the issuer.
Comment: Several commenters
supported our proposal to permit
issuers to establish one or more risk
pools per institution of higher
education, provided the risk pools are
based on a bona fide school-related
classification and not a health factor as
described in § 146.121. Two
commenters urged us not to permit
multiple risk pools within a single
institution of higher education,
expressing concern that subgroups
could be discriminatory in nature. One
commenter requested clarification that
issuers may create risk pools comprised
of more than one college or university.
Response: The final rule provides that
student risk pools must be based on a
bona fide school-related classification
and not a health factor as defined in
§ 146.121. The risk pools may include
enrollees at one or multiple institutions
of higher educations in the State or
nationally, or certain subgroups within
a single institution of higher education,
provided that the risk pools are based
on a bona fide classification and not
discriminatory based on health status.
We believe these standards balance
issuer flexibility with appropriate
safeguards against potentially
discriminatory risk pooling practices.
We note that nothing prevents a State
from requiring broader risk pooling with
respect to student health insurance
coverage than provided for in this final
rule (for example, requiring each
student health insurance issuer to
establish one risk pool comprised of its
entire student health insurance book of
business).
Comment: Some commenters
requested clarification that issuers may
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establish separate risk pools for students
and dependents. Other commenters
suggested that issuers should be
permitted to apply actuarially justified
rating factors to distinguish between
students and their dependents who are
on the same plan or cross-subsidize
between students and dependents in
order to keep premiums for dependent
coverage affordable.
Response: Under this final rule, an
issuer may create separate risk pools for
students and dependents. Dependent
rates may vary from those for students
as long as dependents constitute a
separate risk pool and are enrolled in
separate coverage from students.
However, consistent with the rating
rules under section 2701 of the PHS Act,
if students and dependents are enrolled
in the same coverage, then rates may not
vary based on student or dependent
status, but may vary based on age and
family size. Nothing in this final rule
prevents an issuer from including
students and dependents in the same
risk pool.
b. Actuarial Value Requirements for
Student Health Insurance Plans
As stated in the preamble to the
proposed rule, many colleges and
universities have reported to us that
they offer student health insurance
plans that are rich in benefits (for
example, providing an actuarial value of
96 percent) and that they are reluctant
to reduce the level of benefits to meet
an actuarial value metal level. We stated
that because enrollees in student health
insurance plans are not typically
selecting among such plans, there is less
need for standardization of actuarial
levels in this part of the individual
market. Therefore, we proposed to add
an exemption to the requirements for
student health insurance coverage in
§ 147.145, under which, for plan years
beginning on or after January 1, 2017,
student health insurance coverage
would be exempt from the actuarial
value ‘‘metal level’’ requirements under
section 1302(d) of the Affordable Care
Act, as implemented in §§ 156.135 and
156.140, but would be required to
provide an actuarial value of at least 60
percent. To determine a plan’s actuarial
value for purposes of the application of
the 60 percent actuarial value
requirement to student health insurance
coverage, we proposed to require
student health insurance coverage
issuers to obtain certification by an
actuary that the plan provides an
actuarial value of at least 60 percent.
This determination would be required
to be made by a member of the
American Academy of Actuaries, based
on analysis in accordance with
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generally accepted actuarial principles
and methodologies. We sought comment
on this proposal, including whether to
continue to require student health
insurance issuers to determine the
actuarial value of their coverages by
using the actuarial value calculator, as
currently required, instead of through
actuarial certification.
We are finalizing our proposal to
require student health insurance
coverage to meet a minimum 60 percent
actuarial value, as opposed to meeting
any specific metal level. We are not
finalizing our proposal that actuarial
value would be determined by
certification of an actuary but rather
require that it be determined using the
actuarial value calculator, as is the case
for other individual market and small
group market coverage. Requiring the
actuarial value of student health
insurance coverage to be calculated
using the same methodology as those
other types of coverage will allow
students and their dependents to better
compare the generosity of student
health insurance with other available
coverage options, such as coverage
under a parent’s plan or coverage
through the Exchange. We also specify
that this provision will apply for
‘‘policy years’’ beginning on or after July
1, 2016 as opposed to plan years
beginning on or after January 1, 2017.
The reference to ‘‘policy years’’ is the
more appropriate term with regard to
student health insurance coverage, a
type of individual market coverage. We
recognize that student health plans
typically operate on a policy year that
is not the calendar year, and therefore
we have modified the provision to take
effect beginning with coverage for the
upcoming academic year as was our
intent in the proposed rule.
Comment: Several commenters
supported our proposal to require
student health insurance plans to meet
at least 60 percent actuarial value,
instead of meeting any specific metal
level. However, several commenters
stated that student health insurance
plans should be required to meet metal
levels, for purposes of transparency and
comparability with other plans.
Response: Although we are finalizing
the 60 percent actuarial value proposal,
we agree that it is important for
enrollees and potential enrollees in
student health insurance plans to be
able to compare such plans with others
for which they may be eligible, such as
their parents’ plan or an individual
market non-student plan. In the
proposed rule, we had solicited
comments on whether to require student
health insurance issuers to specify, in
their summary of benefits and coverage
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(SBC) documents, enrollment materials,
marketing materials, or other materials,
the actuarial value of the coverage, the
next lowest metal level the coverage
would otherwise satisfy, based on its
actuarial value, or any other data that
would give enrollees and prospective
enrollees information about the
actuarial value of the coverage. Several
commenters supported this general
approach. One opposed it, arguing that
the actuarial value for student health
insurance coverage is an unreliable
indicator of the true value of the plan.
However, we believe that disclosing the
actuarial value of the coverage, and the
next lowest metal level the coverage
would otherwise satisfy, based on its
actuarial value, would be a helpful tool.
Therefore, we are finalizing a
requirement that student health
insurance issuers must disclose, in any
plan materials summarizing the terms of
the coverage, the actuarial value of the
coverage and the metal level (or next
lowest metal level) the coverage would
satisfy. This requirement will not apply
to the SBC, unless and until such
information is incorporated into the
SBC template and instructions.
Comment: One commenter
recommended removing the 92 percent
actuarial value cap on platinum level
student plans instead of eliminating the
metal level requirements altogether.
Response: We believe that the same
reasons to give platinum plans
flexibility with respect to actuarial value
also apply to other metal level plans.
Therefore, we are providing flexibility
in this final rule for student health
insurance plans to provide any AV at or
above 60 percent.
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D. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment Under the Affordable Care
Act
In the proposed rule, we proposed a
number of modifications to the risk
adjustment, reinsurance, and risk
corridors programs.
Comment: One commenter asked that
HHS present all regulatory information
related to the premium stabilization
programs in a clear, transparent, reliable
and timely manner. Another commenter
asked that the risk adjustment and
reinsurance data collection
requirements be limited to data
currently held by plans in order to not
increase the administrative burden on
providers.
Response: HHS is committed to
providing regulations and guidance in a
clear and timely manner, and seeks to
minimize the administrative burden of
our data collection.
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1. Sequestration
In accordance with the OMB Report to
Congress on the Joint Committee
Reductions for Fiscal Year 2016,9 both
the transitional reinsurance program
and permanent risk adjustment program
are subject to the fiscal year 2016
sequestration. The Federal government’s
2016 fiscal year began on October 1,
2015. The reinsurance program will be
sequestered at a rate of 6.8 percent for
payments made from fiscal year 2016
resources (that is, funds collected
during the 2016 fiscal year). To meet the
sequestration requirement for the risk
adjustment program for fiscal year 2016,
HHS will sequester risk adjustment
payments made using fiscal year 2016
resources in all States where HHS
operates risk adjustment at a
sequestration rate of 7.0 percent. HHS
estimates that increasing the
sequestration rate for all risk adjustment
payments made in fiscal year 2016 to all
issuers in the States where HHS
operates risk adjustment by 0.2 percent
will permit HHS to meet the required
national risk adjustment program
sequestration percentage of 6.8 percent
noted in the OMB Report to Congress.
HHS, in coordination with OMB, has
determined that, under section 256(k)(6)
of the Balanced Budget and Emergency
Deficit Control Act of 1985 (the
BBEDCA), as amended, and the
underlying authority for these programs,
the funds that are sequestered in fiscal
year 2016 from the reinsurance and risk
adjustment programs will become
available for payment to issuers in fiscal
year 2017 without further Congressional
action. If the Congress does not enact
deficit reduction provisions that replace
the Joint Committee reductions, these
programs will be sequestered in future
fiscal years, and any sequestered
funding will become available in the
fiscal year following the one in which
it was sequestered.
Comment: One commenter stated that
risk adjustment payments should not be
subject to sequestration because the risk
adjustment program is budget neutral
and the Federal government is simply
transferring funds among issuers.
Response: The BBEDCA requires all
non-exempt budgetary resources be
sequestered in amounts sufficient to
achieve the savings targets established
in the Budget Control Act of 2011. Risk
adjustment payments are subject to
sequestration as they are budgetary
9 Office of Management and Budget, OMB Report
to the Congress on the Joint Committee Reductions
for Fiscal Year 2016 (Feb. 2, 2015), available at
https://www.whitehouse.gov/sites/default/files/
omb/assets/legislative_reports/sequestration/2016_
jc_sequestration_report_speaker.pdf.
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resources provided for by Federal law,
and the risk adjustment program is not
specifically exempted under section 255
of the BBEDCA. Therefore, as clarified
in the OMB Report to Congress on the
Joint Committee Reductions for Fiscal
Year 2016, the risk adjustment program
is subject to sequestration. Under
section 256(k)(6) of the BBEDCA and the
underlying authority for these programs,
funds that are sequestered in fiscal year
2016 from the reinsurance and risk
adjustment programs will become
available for payment to issuers in fiscal
year 2017 without further Congressional
action.
2. Provisions and Parameters for the
Permanent Risk Adjustment Program
In subparts D and G of 45 CFR part
153, we established standards for the
administration of the risk adjustment
program. The risk adjustment program
is a permanent program created by
section 1343 of the Affordable Care Act
that transfers funds from lower risk,
non-grandfathered plans to higher risk,
non-grandfathered plans in the
individual and small group markets,
inside and outside the Exchanges. In
accordance with § 153.310(a), a State
that is approved or conditionally
approved by the Secretary to operate an
Exchange may establish a risk
adjustment program, or have HHS do so
on its behalf.
On January 8, 2016, we announced
that HHS will hold a public conference
to discuss potential improvements to
the HHS risk adjustment methodology
for the 2018 benefit year and beyond.
The conference will take place on
March 31, 2016, in the Grand
Auditorium at the Centers for Medicare
and Medicaid Services in Baltimore,
Maryland.10 Prior to the conference, we
intend to issue a White Paper that will
be open for public comment. The
conference and White Paper will focus
on what we have learned from the 2014
benefit year of the risk adjustment
program, and specific areas of potential
refinements to the methodology,
including prescription drug model
exploration, accounting for partial year
enrollment, future recalibrations using
risk adjustment data, and discussion of
the risk adjustment transfer formula.
Registration for the conference opened
on January 25, 2016, and is available at
https://www.regtap.info/ until March
23, 2016, for onsite attendance
registration, and March 28, 2016, for
remote attendance registration.
Stakeholders who are unable to attend
10 HHS-Operated Risk Adjustment Methodology
Meeting; March 31, 2016, 81 FR 4633 (Jan. 27,
2016).
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the conference in person may live
stream the conference and provide
feedback via the webinar. Additional
information can be found at https://
www.regtap.info/RAonsite.php.
a. Overview of the HHS Risk
Adjustment Model (§ 153.320)
The HHS risk adjustment model
predicts plan liability for an average
enrollee based on that person’s age, sex,
and diagnoses (risk factors), producing a
risk score. The HHS risk adjustment
methodology utilizes separate models
for adults, children, and infants to
account for cost differences in each of
these age groups. In each of the adult
and child models, the relative costs
assigned to an individual’s age, sex, and
diagnoses are added together to produce
a risk score. Infant risk scores are
determined by inclusion in one of 25
mutually exclusive groups, based on the
infant’s maturity and the severity of its
diagnoses. If applicable, the risk score is
multiplied by a cost-sharing reduction
adjustment.
The enrollment-weighted average risk
score of all enrollees in a particular risk
adjustment-covered plan, or the plan
liability risk score, within a geographic
rating area is one of the inputs into the
risk adjustment payment transfer
formula, which determines the payment
or charge that an issuer will receive or
be required to pay for that plan. Thus,
the HHS risk adjustment model predicts
average group costs to account for risk
across plans, which, as we stated in the
2014 Payment Notice, accords with the
Actuarial Standards Board’s Actuarial
Standards of Practice for risk
classification.
We received several general
comments regarding the HHS risk
adjustment methodology.
Comment: Many commenters
reiterated their support for the HHS risk
adjustment methodology. Some
commenters requested a cap on risk
adjustment transfers. Some commenters
also suggested that, under our
methodology, low-cost and low-riskscore issuers subsidize higher cost
issuers, and that the model has adverse
effects on limited network plans and
new, small, and fast-growing plans.
Commenters requested exempting new,
small, and fast-growing plans from risk
adjustment for the first 3 to 5 plan years,
in recognition of the difficulty they are
having in obtaining complete
hierarchical condition categories (HCC)
diagnostic classifications for their
enrollees. Commenters also suggested
gradually phasing in new issuers to risk
adjustment or instituting a credibility
threshold for participation. One
commenter requested that issuers with
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fewer than 5,000 enrollees or less than
5 percent market share be exempt from
risk adjustment. Two commenters
requested that HHS set a cap on risk
adjustment transfers based on MLR
when the amount of the transfer causes
the issuer’s MLR to hit 90 percent.
Specifically, the commenters requested
excluding issuers with an MLR of 90
percent or greater, and capping an
issuer’s risk adjustment payment once it
causes the issuer’s MLR to rise to 90
percent.
Response: We agree that the risk
adjustment program is intended to work
with the fair rating rules under the
Affordable Care Act to reimburse issuers
who take on riskier enrollees, not to
prevent issuers, including small and
fast-growing issuers, from participating
in the individual and small group
markets. In this final rule, we are
finalizing more accurate model
coefficients for 2017 benefit year risk
adjustment. We will discuss in the
upcoming White Paper potential future
improvements to the HHS risk
adjustment methodology that we believe
will continue to improve the accuracy of
the model and benefit all consumers
and issuers in these markets by helping
ensure fair rating practices across those
risk pools because issuers will have the
expectation of accurate risk adjustment
payments. Any changes we make to the
HHS risk adjustment methodology
would be implemented through
rulemaking as necessary.
Comment: One commenter requested
that HHS verify that plans that are
subject to risk adjustment data
validation (RADV) are correctly
implementing the definition of small
group, suggesting that eligibility can be
verified with an employer’s wage and
tax statements.
Response: We will consider ways to
enhance the RADV audits in
operationally feasible ways without
infringing on the States’ primary
regulatory and oversight authority over
health insurance issuers.
Comment: One commenter
recommended that HHS advance its
schedule for publishing the proposed
Notice of Benefit and Payment
Parameters to early fall, and requested
that HHS provide a 60-day comment
period to allow for more detailed and
substantive comments on major
proposed changes to the risk adjustment
model.
Response: We are exploring our
flexibility in moving the Payment
Notice schedule to an earlier timeframe.
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b. Proposed Updates to the Risk
Adjustment Model (§ 153.320)
In the proposed rule, we proposed to
continue to use the same risk
adjustment methodology finalized in the
2014 Payment Notice. We proposed to
make certain updates to the risk
adjustment model to incorporate
preventive services into our simulation
of plan liability, and to reflect more
current data. The proposed data updates
are similar to the ones we effectuated for
2016 risk adjustment in the 2016
Payment Notice. We proposed to
recalculate the weights assigned to the
various hierarchical condition
categories and demographic factors in
our risk adjustment models using the
most recent data available. As we
previously described, in the adult and
child models, enrollee health risks are
estimated using the HHS risk
adjustment model, which assigns a set
of additive factors that reflect the
relative costs attributable to
demographics and diagnoses. Risk
adjustment factors are developed using
claims data and reflect the costs of a
given disease relative to average
spending. The longer the lag in data
used to develop the risk factors, the
greater the potential that the costs of
treating one disease versus another have
changed in a manner not fully reflected
in the risk factors.
To provide risk adjustment factors
that best reflect more recent treatment
patterns and costs, we proposed to
recalibrate the HHS risk adjustment
models for 2017 by using more recent
claims data to develop updated risk
factors. The risk factors published in the
proposed 2017 Payment Notice were
developed using the Truven Health
Analytics 2012 and 2013 MarketScan®
Commercial Claims and Encounters
database (MarketScan); we proposed to
update the risk factors in the HHS risk
adjustment model using 2012, 2013, and
2014 MarketScan data in the final 2017
Payment Notice when 2014 MarketScan
became available. In using 2012, 2013,
and 2014 MarketScan data, we blend, or
average, the resulting coefficients from
the separately solved models from each
dataset. We do not weight one year more
heavily than the others.
We stated that we believe we can
more accurately account for high-cost
conditions with new treatments that are
not reflected in our model due to lags
in the data available to us for
recalibration. We believe that stability
across our models is important, but
sought comment and data that may
inform better methods of accurately
compensating for new treatments for
high cost conditions. For example, we
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sought comment on whether there are
ways to model the severity of these
conditions in a manner that will more
fully capture the highest cost enrollees.
Comment: One commenter requested
that HHS incorporate 2014 and 2015
data for the individual and small group
populations subject to risk adjustment,
giving issuers notice of this
incorporation no later than December
2016, so that they can determine and
file plan year 2018 rates with each State.
Response: Under our current
distributed data collection approach, we
do not have access to enrollee-level
data, which is necessary for risk
adjustment recalibration. However, we
intend to discuss incorporating enrolleelevel data in future recalibrations in the
upcoming White Paper, which will be
published for public comment.
Comment: Commenters stated that
risk adjustment coefficients are too low
for enrollees without HCCs and too high
for those with one or more HCCs. One
commenter recommended that the adult
and child models be calculated
regionally or specifically for each State.
One commenter encouraged HHS to
include socioeconomic status and oral
health services in the model, especially
the child model.
Response: We have attempted to
address the range between enrollees
without HCCs and those with HCCs by
finalizing the incorporation of
preventive services into our simulation
of plan liability. While overall this is
not a very large effect, it does have a
noticeable effect on certain demographic
subgroups, resulting in more accurate
payments for enrollees without HCCs.
As for calculating the adult and child
models regionally or by State, we
believe that the use of the geographic
cost factor (GCF) in the payment transfer
formula should reflect prevailing
utilization and expenditure patterns in
the geographic location of the plan’s
enrollees. We intend to explore whether
accounting for socioeconomic status is
feasible in the risk adjustment model in
the future.
Comment: All commenters on this
section of the proposed rule supported
HHS’s efforts to make the risk
adjustment models more accurate by
addressing the lag in available health
claims data. Many commenters also
supported various approaches in more
accurately addressing high-cost
conditions, which are particularly
susceptible to the lag in health claims
costs because of the rapidly rising costs
of certain specialty drugs. One
commenter opposed the use of 2014
data unless the updated model is
provided in time to be used for 2017
rate filings. Conversely, another
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commenter recommended HHS use
2013, 2014, and 2015 MarketScan data
for 2017 risk adjustment, and 2014,
2015, and 2016 MarketScan data for
2018 risk adjustment, stating that HHS
should finalize the process and
methodology in each year’s Payment
Notice and release the updated factors
later. A commenter acknowledged that
the incorporation of new 2014 data in
the calibration of the risk weights helps
address new high-cost treatments, but
that under the current model, the
benefits of the modification are limited
because the use of 3-year averaging
means it will take 3 years for the risk
weights to fully reflect changes in
treatment patterns. Commenters
recommended that HHS consider
whether individual market data might
show different relative weights for
certain high-cost conditions than the
population currently used for the risk
adjustment calibration. Commenters
also recommended that HHS evaluate
the increase in costs for chronic
conditions (specifically Hepatitis C, for
which expensive prescription drug
therapies have become recently
available) year over year and trend or
adjust the aggregated claims data or
model to reflect the changes—this
would allow HHS to respond to changes
in treatment practices without relying
on additional external data. One
commenter recommended that more
weight and credibility should be given
to the most recent data to best capture
emerging trends in treatments, drug
therapies, and costs.
Response: We agree with commenters
that there may be more precise ways to
trend expenditures to accommodate the
data lag and more accurately reflect the
introduction of new treatments,
including prescription drug therapies,
for high cost conditions. Based on
commenters’ feedback on the need to
better model the risk of high-cost
conditions and rapidly changing health
care costs, we re-examined the
underlying trend factor we used to trend
medical and prescription drug
expenditures in the MarketScan data,
because those expenditures account for
a large portion of the recent changes in
costs to treat high-cost conditions.
Because we were using the same trend
for both sets of expenditures, we looked
at historical MarketScan drug data,
subdivided by traditional (including
branded and generic) drugs, specialty
drugs, and medical and surgical
expenditures, and found varying growth
rates. In order to address commenters’
feedback, we consulted with actuaries
and industry reports to derive a
specialty drug trend rate and traditional
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drug trend rate through 2017. We
believe that using these more granular
trend rates better reflect the growth in
specialty drug expenditures and drugs
generally as compared to medical and
surgical expenditures. Further, we
believe that more accurately trending
drug expenditures through 2017 will
more accurately compensate issuers
providing new treatments associated
with specific HCCs by providing a more
finely tuned estimate of the relative
costs of various conditions under the
HHS risk adjustment methodology. We
have incorporated different trend factors
for (i) traditional drugs, (ii) specialty
drugs, and (iii) medical and surgical
expenditures, and are finalizing this
approach for 2017 risk adjustment. This
approach is reflected in the finalized
coefficients in this final rule.
We proposed to incorporate
preventive services into our simulation
of plan liability in the recalibration of
the risk adjustment models for 2017. We
identified preventive services for the
2012, 2013, and 2014 MarketScan
samples using procedure and diagnosis
codes, prescription drug therapeutic
classes, and enrollee age and sex. We
relied on lists of preventive services
from several major issuers, the
preventive services used for the AV
Calculator, and Medicare’s preventive
services benefit to operationalize
preventive services definitions for
incorporation in the risk adjustment
models. We then adjusted plan liability
by adding 100 percent of preventive
services covered charges to simulate
plan liability for all metal levels. We
also applied standard benefit cost
sharing rules by metal level to covered
charges for non-preventive services.
Total adjusted simulated plan liability is
the sum of preventive services covered
charges, and non-preventive services
simulated plan liability.
We re-estimated the risk adjustment
models by metal level, predicting plan
liability adjusted to account for
preventive services without cost
sharing. We compared the model
coefficients predicting original (that is,
non-adjusted for preventive services)
and adjusted simulated plan liability.
Adjusting for preventive services
increases age-sex coefficients relative to
HCC coefficients, especially in the lower
metal tiers (bronze and silver), and in
age/sex ranges with high preventive
services expenditures (for example,
young adult females). The implication
of the changes to the model coefficients
is that the risk scores of healthy
enrollees (whose risk scores are based
solely on model age-sex coefficients)
will likely rise relative to the risk scores
of the less healthy (whose risk scores
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include one or more HCC coefficients in
addition to an age-sex coefficient),
especially in bronze and silver plans. As
a result of the risk score changes for
individuals, we expect that the
incorporation of preventive services will
increase the risk scores of bronze and
silver plans with healthier enrollees
relative to other plans’ risk scores when
preventive services are taken into
account. This incorporation of
preventive services will more accurately
compensate risk adjustment covered
plans with enrollees who use preventive
services.
Comment: Most commenters
supported the incorporation of
preventive services into our simulation
of plan liability in the risk adjustment
model. Two commenters expressed
concern that this change would
unintentionally create an incentive for
issuers to attract and retain healthier
individuals rather than higher risk
individuals, while another commenter
supported including preventive
services, but suggested that the
approach proposed by HHS appears to
compensate all plans, regardless of
whether their members receive
preventive services, thereby creating a
‘‘free rider’’ problem. One commenter
noted that while the incorporation of
preventive services does increase
demographic factors for catastrophic
plans and for females within bronze
plans, the impact of this change is
relatively small and does not resolve
concerns about unbalanced incentives
to attract enrollees with HCC diagnoses.
Response: Section 2713 of the PHS
Act, as added by the Affordable Care
Act requires that individual and small
group non-grandfathered plans (among
others) provide coverage for a range of
preventive services and may not impose
cost sharing on patients receiving these
services. We believe it is essential that
we are consistent with the goals of the
Affordable Care Act and provide
compensation to issuers who are
required to provide these services
without cost sharing. As such, we also
believe that accurately accounting for
services provided by issuers to healthier
enrollees is a fair adjustment to real,
baseline costs paid by these issuers. As
for concerns about a ‘‘free rider’’
problem, all risk adjustment covered
plans are required to provide zero cost
sharing preventive services. Even if
different enrollees use preventive
services to different extents, by
incorporating zero cost sharing
preventive services in the calculation of
plan liability when calibrating the
models’ coefficients, we will increase
the accuracy of the model overall,
accounting for any differential use of
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preventive services at the plan level. We
believe that this increased accuracy for
demographic factors coupled with our
adjustments to medical and prescription
drug expenditures will promote
increased accuracy for all enrollees,
with and without HCCs. We are
finalizing the incorporation of
preventive services into our simulation
of plan liability as proposed.
Additionally, we are evaluating
whether and how we may incorporate
prescription drug data in the Federally
certified risk adjustment methodology
that HHS uses when it operates risk
adjustment. Prescription drug data
could be used in the risk adjustment
methodology to supplement diagnostic
data by using the prescription drug data
as a severity indicator, or as a proxy for
diagnoses in cases where diagnostic
data are likely to be incomplete. We are
assessing these approaches, with
particular sensitivity to reliability and
the potential for strategic behavior with
respect to prescribing behavior. As we
noted in the 2014 Payment Notice, we
did not use prescription drug utilization
as a predictor of expenditures to avoid
creating adverse incentives to modify
discretionary prescribing. We are
evaluating whether we can improve the
models’ predictive power through the
incorporation of prescription drugs
without unduly incentivizing altered
prescribing behavior. We sought
comment and any data that could
inform effective methods of
incorporating prescription drug data in
future recalibrations.
Comment: Most commenters
supported incorporating prescription
drugs as predictors in the risk
adjustment model either as a proxy for
missing diagnoses or an indicator of
severity. Some commenters shared
HHS’s concerns about creating
incentives to modify discretionary
prescribing to artificially increase the
severity of diagnoses and one
commenter expressed concern about
keeping the model current with
pharmaceutical developments that
could create an additional operational
burden for both health plans and HHS.
Some commenters suggested that
prescription drugs be included for 2017
risk adjustment. One commenter
requested that HHS incorporate
prescription drugs as soon as possible.
Commenters supported 2018
implementation (rather than 2017) and
one commenter suggested that any
changes to include prescription drugs
should include greater detail and go
through the regular notice and comment
process. Commenters suggested that
HHS include prescription drug data in
a limited manner, such as drugs with no
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off label use or drugs approved for
treatment of a single condition. One
commenter recommended that all
prescription drugs used to treat HCC
conditions be included. Commenters
stated that including prescription drugs
could significantly increase payment
accuracy and yield benefits to the
payment system far in excess of any
additional administrative burden.
Commenters further stated that
prescription drug claims data have
certain advantages in that the data are
fairly uniform across plans and do not
have many of the issues associated with
diagnosis data, such as timeliness and
inconsistency of reporting across
providers, in addition to already being
included in EDGE Server data and
readily available to HHS. Commenters
also stated that including prescription
drugs as a proxy for missing diagnoses
could level the playing field for smaller
issuers that are less experienced with
medical coding. Similarly, commenters
supported the inclusion of pharmacy
data to address partial year enrollees
with chronic conditions that have
prescription drug claims, but may not
have a provider encounter with a
documented diagnosis. One commenter
requested that HHS work with
stakeholders to refine the prescription
drug data that would be utilized if this
proposal is finalized and requested that
HHS consider how to gather and
incorporate data on prescription drug
utilization collected by electronic health
records. Commenters cautioned HHS to
be mindful that different characteristics
of prescription drug utilization will be
more or less predictive depending on
the condition. Commenters also warned
that gaming concerns need to be
balanced with the desire to enhance the
risk adjustment methodology’s
predictive power. A commenter also
cautioned that the proposed use of
prescription drug data should have
definitions and guardrails that delineate
its use. Lastly, commenters stated that
using prescription drug data is
important because without an accurate
risk adjustment methodology that
accounts for the extra costs that plans
incur by enrolling high-risk patients,
plans have an incentive to design
benefits in a manner that discourages
enrollment by these patients.
Response: We will explore the
incorporation of prescription drugs in
the risk adjustment model in the White
Paper and at the conference in March
2016. We agree with commenters that
prescription drugs have the potential to
increase the predictive power of the risk
adjustment models. We agree that
different prescription drugs will likely
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be more or less predictive depending on
the condition. We also remain cautious
about creating incentives to modify
discretionary prescribing to artificially
increase the severity of diagnoses.
However, we look forward to continuing
to explore this potential improvement to
the models with stakeholders and to
share our developments in the White
Paper and at the risk adjustment
conference on March 31, 2016.
Lastly, we stated in the proposed rule
that we would like to explore the effect
of partial year enrollment in the HHS
risk adjustment methodology. We have
received input that issuers are
experiencing higher than expected
claims costs for partial year enrollees.
We have also received input that the
methodology does not capture enrollees
with chronic conditions who may not
have accumulated diagnoses in their
partial year enrollment. At the same
time, as compared to full year enrollees
of the same relative risk, partial year
enrollees are less likely to have
spending that exceeds the deductible or
annual limitation on cost sharing. We
sought comment on how the
methodology could be made more
predictive for partial year enrollees.
Comment: Many commenters
supported addressing partial year
enrollees in the model. One commenter
noted that many medical events for
enrollees in the commercial market (for
example, maternity, surgeries) represent
acute rather than chronic events, so the
enrollee can incur most of their annual
medical expenses during a short period
of time. Commenters suggested that the
use of prescription drug claims could
help address enrollees with a chronic
condition but who do not have a
provider encounter with a documented
diagnosis. Commenters also suggested
that the impact of partial year
enrollment could be measured by taking
a population that had multiple years of
enrollment and comparing risk scores
and health care costs when only a
partial year is considered. Commenters
noted Massachusetts’ adjustment for
partial-year enrollment, and suggested
that HHS consider additional analysis to
determine whether that approach is
appropriate for the HHS risk adjustment
methodology. One commenter suggested
a member-level adjustment while
another commenter suggested a
duration-based adjustment. Another
commenter recommended that the
adjustment vary by metal level and
length of time enrolled, with higher
weights for gold and platinum plans and
shorter enrollment periods. One
commenter suggested that HHS should
permit risk scores to travel with an
enrollee across issuers. Two
commenters opposed an explicit
adjustment for partial year enrollees,
because they said such an adjustment
would accommodate liberal
enforcement of special enrollment
periods, incentivizing issuers to employ
loose eligibility standards to gain
members, but ultimately eroding
individual market stability. A few
commenters recommended that to better
address partial year enrollment in risk
adjustment, changes should be made to
special enrollment period processes and
policies to encourage continuous
coverage and prevent fraud and abuse.
Commenters stated that unverified
special enrollment periods have
produced selection issues for health
plans, as enrollees enter through a
special enrollment period, utilize highcost services, and then switch to a lower
metal level plan in the following open
enrollment period or drop coverage
altogether. One commenter cautioned
that any additions to the model to
account for partial year enrollment
should improve reliability and
predictive power, not influence clinical
judgment or plan behavior with respect
to enrollees’ coverage.
Response: We appreciate commenters’
substantive feedback on accounting for
partial year enrollment in future
recalibrations and will continue to
analyze this issue and include our
findings in the White Paper for
discussion at the March 31, 2016 risk
adjustment conference.
c. List of Factors To Be Employed in the
Model (§ 153.320)
The HHS risk adjustment models
predict annualized plan liability
expenditures using age and sex
categories and the HHS HCCs included
in the HHS risk adjustment model.
Dollar coefficients were estimated for
these factors using weighted least
squares regression, where the weight
was the fraction of the year enrolled.
We are including the same HCCs that
were included in the original risk
adjustment calibration in the 2014
Payment Notice. For each model, the
factors are the statistical regression
dollar values for each HCC in the model
divided by a weighted average plan
liability for the full modeling sample.
The factors represent the predicted
relative incremental expenditures for
each HCC. The factors resulting from the
blended factors from the 2012, 2013,
and 2014 separately solved models
(with the incorporation of preventive
services, and with different trend rates
for medical and surgical expenditures,
for traditional prescription drug
expenditures, and for specialty
prescription drug expenditures) are
shown in the tables below. For a given
enrollee, the sums of the factors for the
enrollee’s HCCs are the total relative
predicted expenditures for that enrollee.
Table 1 contains factors for each adult
model, including the interactions. Table
2 contains the HHS HCCs in the severity
illness indicator variable. Table 3
contains the factors for each child
model. Table 4 contains the factors for
each infant model. We are finalizing
these factors, with the adjustment for
the differing medical and traditional
and specialty prescription drug trend
factors incorporated in the 2012, 2013,
and 2014 blended coefficients.
TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS
Factor
Platinum
Gold
Silver
Bronze
Catastrophic
asabaliauskas on DSK3SPTVN1PROD with RULES
Demographic Factors
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
21–24,
25–29,
30–34,
35–39,
40–44,
45–49,
50–54,
55–59,
60–64,
21–24,
25–29,
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Female .............................................................
Female .............................................................
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0.186
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0.119
0.122
0.138
0.172
0.221
0.273
0.372
0.429
0.502
0.200
0.247
08MRR2
0.082
0.083
0.089
0.112
0.151
0.192
0.275
0.320
0.372
0.138
0.173
0.081
0.082
0.088
0.111
0.149
0.191
0.274
0.318
0.369
0.137
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12221
TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued
Factor
Age
Age
Age
Age
Age
Age
Age
30–34,
35–39,
40–44,
45–49,
50–54,
55–59,
60–64,
Female
Female
Female
Female
Female
Female
Female
Platinum
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
Gold
0.582
0.668
0.742
0.750
0.845
0.849
0.909
Silver
Bronze
Catastrophic
0.466
0.542
0.604
0.608
0.691
0.690
0.734
0.337
0.405
0.455
0.450
0.518
0.510
0.537
0.254
0.318
0.357
0.344
0.398
0.380
0.395
0.252
0.316
0.355
0.342
0.395
0.378
0.392
8.942
8.450
8.099
8.142
8.143
10.686
10.511
10.405
10.461
10.462
6.632
4.657
8.503
24.314
6.532
4.422
8.404
23.880
6.468
4.263
8.337
23.578
6.489
4.222
8.319
23.637
6.489
4.222
8.319
23.638
12.630
12.296
12.062
12.066
12.066
5.845
5.152
5.611
4.918
5.435
4.738
5.388
4.690
5.387
4.689
2.957
2.786
2.650
2.597
2.596
1.448
5.455
1.187
1.187
1.187
13.686
2.277
2.277
2.277
1.295
5.233
1.049
1.049
1.049
13.693
2.159
2.159
2.159
1.160
5.091
0.925
0.925
0.925
13.702
2.061
2.061
2.061
1.069
5.112
0.822
0.822
0.822
13.762
2.008
2.008
2.008
1.067
5.114
0.820
0.820
0.820
13.763
2.007
2.007
2.007
2.277
16.042
7.119
3.852
3.852
4.430
32.604
2.159
15.868
6.877
3.690
3.690
4.269
32.555
2.061
15.759
6.718
3.569
3.569
4.158
32.516
2.008
15.771
6.736
3.535
3.535
4.148
32.559
2.007
15.772
6.737
3.535
3.535
4.148
32.559
11.820
6.537
5.455
11.561
6.272
5.233
11.383
6.101
5.091
11.413
6.120
5.112
11.413
6.121
5.114
2.702
3.657
6.576
6.576
4.848
2.515
3.392
6.378
6.378
4.587
2.379
3.190
6.239
6.239
4.394
2.331
3.098
6.254
6.254
4.385
2.331
3.096
6.255
6.255
4.385
1.205
3.115
1.070
2.917
0.952
2.758
0.868
2.699
0.867
2.697
3.115
1.295
46.436
12.671
12.671
2.917
1.137
46.150
12.534
12.534
2.758
1.010
45.931
12.440
12.440
2.699
0.942
45.939
12.448
12.448
2.697
0.941
45.939
12.449
12.449
9.737
9.737
9.737
5.432
5.432
9.576
9.576
9.576
5.284
5.284
9.454
9.454
9.454
5.182
5.182
9.445
9.445
9.445
5.183
5.183
9.445
9.445
9.445
5.183
5.183
2.805
3.830
3.830
2.707
3.574
3.574
2.628
3.380
3.380
2.599
3.286
3.286
2.599
3.284
3.284
asabaliauskas on DSK3SPTVN1PROD with RULES
Diagnosis Factors
HIV/AIDS ..............................................................................
Septicemia, Sepsis, Systemic Inflammatory Response
Syndrome/Shock ..............................................................
Central Nervous System Infections, Except Viral Meningitis ...................................................................................
Viral or Unspecified Meningitis ............................................
Opportunistic Infections .......................................................
Metastatic Cancer ................................................................
Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia .......................................
Non-Hodgkin‘s Lymphomas and Other Cancers and Tumors ..................................................................................
Colorectal, Breast (Age < 50), Kidney, and Other Cancers
Breast (Age 50+) and Prostate Cancer, Benign/Uncertain
Brain Tumors, and Other Cancers and Tumors ..............
Thyroid Cancer, Melanoma, Neurofibromatosis, and Other
Cancers and Tumors ........................................................
Pancreas Transplant Status/Complications .........................
Diabetes with Acute Complications .....................................
Diabetes with Chronic Complications ..................................
Diabetes without Complication ............................................
Protein-Calorie Malnutrition .................................................
Mucopolysaccharidosis ........................................................
Lipidoses and Glycogenosis ................................................
Amyloidosis, Porphyria, and Other Metabolic Disorders .....
Adrenal, Pituitary, and Other Significant Endocrine Disorders ...............................................................................
Liver Transplant Status/Complications ................................
End-Stage Liver Disease .....................................................
Cirrhosis of Liver ..................................................................
Chronic Hepatitis ..................................................................
Acute Liver Failure/Disease, Including Neonatal Hepatitis
Intestine Transplant Status/Complications ..........................
Peritonitis/Gastrointestinal
Perforation/Necrotizing
Enterocolitis ......................................................................
Intestinal Obstruction ...........................................................
Chronic Pancreatitis .............................................................
Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption ...........................................................
Inflammatory Bowel Disease ...............................................
Necrotizing Fasciitis .............................................................
Bone/Joint/Muscle Infections/Necrosis ................................
Rheumatoid Arthritis and Specified Autoimmune Disorders
Systemic Lupus Erythematosus and Other Autoimmune
Disorders ..........................................................................
Osteogenesis Imperfecta and Other Osteodystrophies ......
Congenital/Developmental Skeletal and Connective Tissue
Disorders ..........................................................................
Cleft Lip/Cleft Palate ............................................................
Hemophilia ...........................................................................
Myelodysplastic Syndromes and Myelofibrosis ...................
Aplastic Anemia ...................................................................
Acquired Hemolytic Anemia, Including Hemolytic Disease
of Newborn .......................................................................
Sickle Cell Anemia (Hb-SS) .................................................
Thalassemia Major ...............................................................
Combined and Other Severe Immunodeficiencies ..............
Disorders of the Immune Mechanism ..................................
Coagulation Defects and Other Specified Hematological
Disorders ..........................................................................
Drug Psychosis ....................................................................
Drug Dependence ................................................................
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Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued
asabaliauskas on DSK3SPTVN1PROD with RULES
Factor
Platinum
Schizophrenia ......................................................................
Major Depressive and Bipolar Disorders .............................
Reactive and Unspecified Psychosis, Delusional Disorders
Personality Disorders ...........................................................
Anorexia/Bulimia Nervosa ....................................................
Prader-Willi, Patau, Edwards, and Autosomal Deletion
Syndromes .......................................................................
Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes ................
Autistic Disorder ...................................................................
Pervasive Developmental Disorders, Except Autistic Disorder .................................................................................
Traumatic Complete Lesion Cervical Spinal Cord ..............
Quadriplegia .........................................................................
Traumatic Complete Lesion Dorsal Spinal Cord .................
Paraplegia ............................................................................
Spinal Cord Disorders/Injuries .............................................
Amyotrophic Lateral Sclerosis and Other Anterior Horn
Cell Disease .....................................................................
Quadriplegic Cerebral Palsy ................................................
Cerebral Palsy, Except Quadriplegic ...................................
Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies .............................................................
Myasthenia Gravis/Myoneural Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic Neuropathy ...............
Muscular Dystrophy .............................................................
Multiple Sclerosis .................................................................
Parkinson‘s, Huntington‘s, and Spinocerebellar Disease,
and Other Neurodegenerative Disorders .........................
Seizure Disorders and Convulsions ....................................
Hydrocephalus .....................................................................
Non-Traumatic Coma, and Brain Compression/Anoxic
Damage ............................................................................
Respirator Dependence/Tracheostomy Status ....................
Respiratory Arrest ................................................................
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes ............................................
Heart Assistive Device/Artificial Heart .................................
Heart Transplant ..................................................................
Congestive Heart Failure .....................................................
Acute Myocardial Infarction .................................................
Unstable Angina and Other Acute Ischemic Heart Disease
Heart Infection/Inflammation, Except Rheumatic ................
Specified Heart Arrhythmias ................................................
Intracranial Hemorrhage ......................................................
Ischemic or Unspecified Stroke ...........................................
Cerebral Aneurysm and Arteriovenous Malformation .........
Hemiplegia/Hemiparesis ......................................................
Monoplegia, Other Paralytic Syndromes .............................
Atherosclerosis of the Extremities with Ulceration or Gangrene ................................................................................
Vascular Disease with Complications ..................................
Pulmonary Embolism and Deep Vein Thrombosis ..............
Lung Transplant Status/Complications ................................
Cystic Fibrosis ......................................................................
Chronic Obstructive Pulmonary Disease, Including
Bronchiectasis ..................................................................
Asthma .................................................................................
Fibrosis of Lung and Other Lung Disorders ........................
Aspiration and Specified Bacterial Pneumonias and Other
Severe Lung Infections ....................................................
Kidney Transplant Status .....................................................
End Stage Renal Disease ...................................................
Chronic Kidney Disease, Stage 5 ........................................
Chronic Kidney Disease, Severe (Stage 4) .........................
Ectopic and Molar Pregnancy, Except with Renal Failure,
Shock, or Embolism .........................................................
Miscarriage with Complications ...........................................
Miscarriage with No or Minor Complications .......................
Completed Pregnancy With Major Complications ...............
Completed Pregnancy With Complications .........................
Completed Pregnancy with No or Minor Complications ......
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Gold
Silver
Bronze
Catastrophic
3.189
1.714
1.714
1.176
2.693
2.934
1.547
1.547
1.043
2.527
2.744
1.404
1.404
0.910
2.392
2.680
1.308
1.308
0.814
2.334
2.679
1.307
1.307
0.812
2.333
2.632
2.504
2.403
2.354
2.353
1.056
1.176
0.951
1.043
0.849
0.910
0.778
0.814
0.776
0.812
1.176
12.005
12.005
9.157
9.157
5.635
1.043
11.851
11.851
9.000
9.000
5.424
0.910
11.737
11.737
8.886
8.886
5.275
0.814
11.735
11.735
8.874
8.874
5.246
0.812
11.735
11.735
8.875
8.875
5.246
3.029
1.206
0.124
2.792
0.997
0.068
2.625
0.839
0.034
2.585
0.777
0.011
2.585
0.776
0.011
0.071
0.019
0.000
0.000
0.000
5.247
2.147
13.590
5.099
1.981
13.187
4.994
1.860
12.905
4.971
1.785
12.950
4.971
1.784
12.951
2.147
1.495
6.388
1.981
1.337
6.266
1.860
1.207
6.165
1.785
1.137
6.139
1.784
1.136
6.138
9.207
34.719
10.554
9.070
34.708
10.403
8.964
34.706
10.306
8.958
34.772
10.370
8.957
34.773
10.371
10.554
35.114
35.114
3.280
10.129
5.227
6.297
2.829
9.423
3.167
3.940
5.468
3.452
10.403
34.869
34.869
3.171
9.795
4.952
6.163
2.681
9.144
2.982
3.742
5.374
3.319
10.306
34.711
34.711
3.095
9.580
4.779
6.063
2.565
8.954
2.869
3.600
5.317
3.226
10.370
34.771
34.771
3.089
9.691
4.793
6.042
2.512
8.963
2.875
3.559
5.360
3.207
10.371
34.772
34.772
3.089
9.693
4.794
6.041
2.511
8.964
2.876
3.558
5.361
3.207
10.940
7.727
3.841
36.419
18.011
10.840
7.543
3.675
36.227
17.687
10.784
7.416
3.555
36.103
17.444
10.853
7.417
3.529
36.180
17.467
10.854
7.417
3.529
36.181
17.467
0.942
0.942
1.889
0.825
0.825
1.771
0.717
0.717
1.682
0.641
0.641
1.641
0.640
0.640
1.640
7.594
10.183
38.463
2.088
2.088
7.520
9.919
38.228
1.989
1.989
7.471
9.744
38.078
1.925
1.925
7.485
9.735
38.198
1.920
1.920
7.485
9.735
38.201
1.920
1.920
1.340
1.340
1.340
3.630
3.630
3.630
1.156
1.156
1.156
3.150
3.150
3.150
0.979
0.979
0.979
2.862
2.862
2.862
0.795
0.795
0.795
2.712
2.712
2.712
0.791
0.791
0.791
2.713
2.713
2.713
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12223
TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued
Factor
Platinum
Chronic Ulcer of Skin, Except Pressure ..............................
Hip Fractures and Pathological Vertebral or Humerus
Fractures ..........................................................................
Pathological Fractures, Except of Vertebrae, Hip, or Humerus ................................................................................
Stem Cell, Including Bone Marrow, Transplant Status/
Complications ...................................................................
Artificial Openings for Feeding or Elimination .....................
Amputation Status, Lower Limb/Amputation Complications
Gold
Silver
Bronze
Catastrophic
2.356
2.233
2.150
2.134
2.134
9.460
9.245
9.100
9.136
9.136
2.000
1.871
1.758
1.688
1.687
31.027
10.038
5.263
31.022
9.946
5.112
31.017
9.886
5.015
31.035
9.924
5.044
31.036
9.925
5.045
10.408
10.408
10.632
10.632
10.799
10.799
10.894
10.894
10.895
10.895
10.408
10.632
10.799
10.894
10.895
10.408
10.632
10.799
10.894
10.895
10.408
10.632
10.799
10.894
10.895
10.408
10.408
10.632
10.632
10.799
10.799
10.894
10.894
10.895
10.895
10.408
10.632
10.799
10.894
10.895
10.408
1.906
10.632
2.039
10.799
2.141
10.894
2.225
10.895
2.226
1.906
2.039
2.141
2.225
2.226
1.906
1.906
2.039
2.039
2.141
2.141
2.225
2.225
2.226
2.226
1.906
2.039
2.141
2.225
2.226
1.906
2.039
2.141
2.225
2.226
1.906
2.039
2.141
2.225
2.226
Interaction Factors
Severe illness x Opportunistic Infections .............................
Severe illness x Metastatic Cancer .....................................
Severe illness x Lung, Brain, and Other Severe Cancers,
Including Pediatric Acute Lymphoid Leukemia ................
Severe illness x Non-Hodgkin‘s Lymphomas and Other
Cancers and Tumors ........................................................
Severe illness x Myasthenia Gravis/Myoneural Disorders
and Guillain-Barre Syndrome/Inflammatory and Toxic
Neuropathy .......................................................................
Severe illness x Heart Infection/Inflammation, Except
Rheumatic ........................................................................
Severe illness x Intracranial Hemorrhage ...........................
Severe illness x HCC group G06 (G06 is HCC Group 6
which includes the following HCCs in the blood disease
category: 67, 68) ..............................................................
Severe illness x HCC group G08 (G08 is HCC Group 8
which includes the following HCCs in the blood disease
category: 73, 74) ..............................................................
Severe illness x End-Stage Liver Disease ..........................
Severe illness x Acute Liver Failure/Disease, Including
Neonatal Hepatitis ............................................................
Severe illness x Atherosclerosis of the Extremities with Ulceration or Gangrene .......................................................
Severe illness x Vascular Disease with Complications .......
Severe illness x Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections ......................
Severe illness x Artificial Openings for Feeding or Elimination ................................................................................
Severe illness x HCC group G03 (G03 is HCC Group 3
which includes the following HCCs in the musculoskeletal disease category: 54, 55) ...................................
TABLE 2—HHS HCCS IN THE SEVERITY ILLNESS INDICATOR VARIABLE
Description
Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock.
Peritonitis/Gastrointestinal Perforation/Necrotizing Enter colitis.
Seizure Disorders and Convulsions.
Non-Traumatic Coma, Brain Compression/Anoxic Damage.
Respirator Dependence/Tracheostomy Status.
Respiratory Arrest.
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes.
Pulmonary Embolism and Deep Vein Thrombosis.
TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS
asabaliauskas on DSK3SPTVN1PROD with RULES
Factor
Platinum
Gold
Silver
Bronze
Catastrophic
Demographic Factors
Age
Age
Age
Age
Age
Age
Age
2–4, Male ......................................................................
5–9, Male ......................................................................
10–14, Male ..................................................................
15–20, Male ..................................................................
2–4, Female .................................................................
5–9, Female .................................................................
10–14, Female .............................................................
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0.145
E:\FR\FM\08MRR2.SGM
0.067
0.038
0.089
0.142
0.044
0.027
0.085
08MRR2
0.021
0.004
0.053
0.097
0.011
0.003
0.054
0.020
0.004
0.053
0.096
0.010
0.002
0.054
12224
Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued
Factor
Platinum
Age 15–20, Female .............................................................
Gold
0.330
Silver
Bronze
Catastrophic
0.248
0.157
0.101
0.100
4.875
4.437
4.110
4.033
4.032
17.228
17.069
16.969
16.994
16.995
10.808
3.128
22.943
36.648
10.631
2.925
22.880
36.404
10.506
2.775
22.834
36.207
10.511
2.687
22.825
36.207
10.511
2.686
22.825
36.207
12.117
11.833
11.604
11.547
11.546
9.328
3.508
9.058
3.291
8.836
3.097
8.754
2.989
8.753
2.987
3.016
2.816
2.642
2.538
2.537
1.723
30.468
2.521
2.521
2.521
13.570
8.509
8.509
8.509
8.509
1.553
30.333
2.197
2.197
2.197
13.484
8.238
8.238
8.238
8.238
1.397
30.245
1.946
1.946
1.946
13.421
8.020
8.020
8.020
8.020
1.294
30.256
1.703
1.703
1.703
13.450
7.987
7.987
7.987
7.987
1.292
30.256
1.699
1.699
1.699
13.450
7.986
7.986
7.986
7.986
8.509
30.468
13.077
9.604
2.567
12.729
30.468
8.238
30.333
12.927
9.445
2.418
12.576
30.333
8.020
30.245
12.822
9.326
2.280
12.460
30.245
7.987
30.256
12.821
9.286
2.216
12.447
30.256
7.986
30.256
12.821
9.286
2.215
12.447
30.256
14.795
5.389
9.713
14.463
5.155
9.478
14.217
4.965
9.319
14.238
4.885
9.319
14.238
4.884
9.319
2.561
6.321
4.467
4.467
3.904
2.426
5.943
4.231
4.231
3.662
2.303
5.650
4.041
4.041
3.448
2.217
5.553
3.989
3.989
3.365
2.216
5.551
3.988
3.988
3.364
1.305
1.560
1.154
1.429
1.003
1.303
0.893
1.232
0.891
1.231
1.560
1.563
66.792
15.978
15.978
1.429
1.351
66.309
15.807
15.807
1.303
1.172
65.939
15.672
15.672
1.232
1.061
65.927
15.654
15.654
1.231
1.059
65.927
15.654
15.654
7.706
7.706
7.706
6.686
6.686
7.432
7.432
7.432
6.507
6.507
7.214
7.214
7.214
6.364
6.364
7.145
7.145
7.145
6.310
6.310
7.144
7.144
7.144
6.309
6.309
4.828
5.390
5.390
5.242
1.913
1.913
0.783
2.742
4.689
5.135
5.135
4.853
1.691
1.691
0.653
2.539
4.560
4.948
4.948
4.561
1.485
1.485
0.504
2.370
4.494
4.887
4.887
4.472
1.334
1.334
0.376
2.309
4.493
4.887
4.887
4.471
1.332
1.332
0.374
2.308
asabaliauskas on DSK3SPTVN1PROD with RULES
Diagnosis Factors
HIV/AIDS ..............................................................................
Septicemia, Sepsis, Systemic Inflammatory Response
Syndrome/Shock ..............................................................
Central Nervous System Infections, Except Viral Meningitis ...................................................................................
Viral or Unspecified Meningitis ............................................
Opportunistic Infections .......................................................
Metastatic Cancer ................................................................
Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia .......................................
Non-Hodgkin’s Lymphomas and Other Cancers and Tumors ..................................................................................
Colorectal, Breast (Age <50), Kidney, and Other Cancers
Breast (Age 50+) and Prostate Cancer, Benign/Uncertain
Brain Tumors, and Other Cancers and Tumors ..............
Thyroid Cancer, Melanoma, Neurofibromatosis, and Other
Cancers and Tumors ........................................................
Pancreas Transplant Status/Complications .........................
Diabetes with Acute Complications .....................................
Diabetes with Chronic Complications ..................................
Diabetes without Complication ............................................
Protein-Calorie Malnutrition .................................................
Mucopolysaccharidosis ........................................................
Lipidoses and Glycogenosis ................................................
Congenital Metabolic Disorders, Not Elsewhere Classified
Amyloidosis, Porphyria, and Other Metabolic Disorders .....
Adrenal, Pituitary, and Other Significant Endocrine Disorders ...............................................................................
Liver Transplant Status/Complications ................................
End-Stage Liver Disease .....................................................
Cirrhosis of Liver ..................................................................
Chronic Hepatitis ..................................................................
Acute Liver Failure/Disease, Including Neonatal Hepatitis
Intestine Transplant Status/Complications ..........................
Peritonitis/Gastrointestinal
Perforation/Necrotizing
Enterocolitis ......................................................................
Intestinal Obstruction ...........................................................
Chronic Pancreatitis .............................................................
Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption ...........................................................
Inflammatory Bowel Disease ...............................................
Necrotizing Fasciitis .............................................................
Bone/Joint/Muscle Infections/Necrosis ................................
Rheumatoid Arthritis and Specified Autoimmune Disorders
Systemic Lupus Erythematosus and Other Autoimmune
Disorders ..........................................................................
Osteogenesis Imperfecta and Other Osteodystrophies ......
Congenital/Developmental Skeletal and Connective Tissue
Disorders ..........................................................................
Cleft Lip/Cleft Palate ............................................................
Hemophilia ...........................................................................
Myelodysplastic Syndromes and Myelofibrosis ...................
Aplastic Anemia ...................................................................
Acquired Hemolytic Anemia, Including Hemolytic Disease
of Newborn .......................................................................
Sickle Cell Anemia (Hb-SS) .................................................
Thalassemia Major ...............................................................
Combined and Other Severe Immunodeficiencies ..............
Disorders of the Immune Mechanism ..................................
Coagulation Defects and Other Specified Hematological
Disorders ..........................................................................
Drug Psychosis ....................................................................
Drug Dependence ................................................................
Schizophrenia ......................................................................
Major Depressive and Bipolar Disorders .............................
Reactive and Unspecified Psychosis, Delusional Disorders
Personality Disorders ...........................................................
Anorexia/Bulimia Nervosa ....................................................
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08MRR2
Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
12225
TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued
asabaliauskas on DSK3SPTVN1PROD with RULES
Factor
Platinum
Prader-Willi, Patau, Edwards, and Autosomal Deletion
Syndromes .......................................................................
Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes ................
Autistic Disorder ...................................................................
Pervasive Developmental Disorders, Except Autistic Disorder .................................................................................
Traumatic Complete Lesion Cervical Spinal Cord ..............
Quadriplegia .........................................................................
Traumatic Complete Lesion Dorsal Spinal Cord .................
Paraplegia ............................................................................
Spinal Cord Disorders/Injuries .............................................
Amyotrophic Lateral Sclerosis and Other Anterior Horn
Cell Disease .....................................................................
Quadriplegic Cerebral Palsy ................................................
Cerebral Palsy, Except Quadriplegic ...................................
Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies .............................................................
Myasthenia Gravis/Myoneural Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic Neuropathy ...............
Muscular Dystrophy .............................................................
Multiple Sclerosis .................................................................
Parkinson’s, Huntington’s, and Spinocerebellar Disease,
and Other Neurodegenerative Disorders .........................
Seizure Disorders and Convulsions ....................................
Hydrocephalus .....................................................................
Non-Traumatic Coma, and Brain Compression/Anoxic
Damage ............................................................................
Respirator Dependence/Tracheostomy Status ....................
Respiratory Arrest ................................................................
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes ............................................
Heart Assistive Device/Artificial Heart .................................
Heart Transplant ..................................................................
Congestive Heart Failure .....................................................
Acute Myocardial Infarction .................................................
Unstable Angina and Other Acute Ischemic Heart Disease
Heart Infection/Inflammation, Except Rheumatic ................
Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders ....................................................
Major Congenital Heart/Circulatory Disorders .....................
Atrial and Ventricular Septal Defects, Patent Ductus
Arteriosus, and Other Congenital Heart/Circulatory Disorders ...............................................................................
Specified Heart Arrhythmias ................................................
Intracranial Hemorrhage ......................................................
Ischemic or Unspecified Stroke ...........................................
Cerebral Aneurysm and Arteriovenous Malformation .........
Hemiplegia/Hemiparesis ......................................................
Monoplegia, Other Paralytic Syndromes .............................
Atherosclerosis of the Extremities with Ulceration or Gangrene ................................................................................
Vascular Disease with Complications ..................................
Pulmonary Embolism and Deep Vein Thrombosis ..............
Lung Transplant Status/Complications ................................
Cystic Fibrosis ......................................................................
Chronic Obstructive Pulmonary Disease, Including
Bronchiectasis ..................................................................
Asthma .................................................................................
Fibrosis of Lung and Other Lung Disorders ........................
Aspiration and Specified Bacterial Pneumonias and Other
Severe Lung Infections ....................................................
Kidney Transplant Status .....................................................
End Stage Renal Disease ...................................................
Chronic Kidney Disease, Stage 5 ........................................
Chronic Kidney Disease, Severe (Stage 4) .........................
Ectopic and Molar Pregnancy, Except with Renal Failure,
Shock, or Embolism .........................................................
Miscarriage with Complications ...........................................
Miscarriage with No or Minor Complications .......................
Completed Pregnancy With Major Complications ...............
Completed Pregnancy With Complications .........................
VerDate Sep<11>2014
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Gold
Silver
Bronze
Catastrophic
3.362
3.155
3.013
2.980
2.979
1.787
1.771
1.605
1.577
1.459
1.389
1.378
1.248
1.376
1.246
0.907
13.209
13.209
11.619
11.619
4.847
0.766
13.168
13.168
11.410
11.410
4.614
0.597
13.154
13.154
11.267
11.267
4.433
0.448
13.225
13.225
11.269
11.269
4.359
0.445
13.227
13.227
11.270
11.270
4.358
8.218
3.387
0.861
7.979
3.141
0.675
7.791
2.983
0.530
7.744
2.995
0.451
7.744
2.996
0.450
1.282
1.135
1.010
0.944
0.943
9.635
3.374
8.431
9.457
3.176
8.101
9.315
3.021
7.852
9.279
2.948
7.820
9.279
2.947
7.820
3.374
2.095
5.122
3.176
1.913
5.002
3.021
1.735
4.912
2.948
1.609
4.903
2.947
1.607
4.903
7.539
40.112
12.354
7.391
40.012
12.151
7.276
39.969
12.015
7.236
40.084
12.013
7.235
40.086
12.013
12.354
30.468
30.468
6.999
9.715
6.438
16.113
12.151
30.333
30.333
6.888
9.553
6.331
15.984
12.015
30.245
30.245
6.791
9.443
6.260
15.888
12.013
30.256
30.256
6.751
9.441
6.262
15.866
12.013
30.256
30.256
6.751
9.442
6.262
15.866
6.323
1.778
6.111
1.651
5.905
1.493
5.794
1.391
5.792
1.389
1.202
4.399
15.936
8.574
3.865
4.815
3.627
1.090
4.213
15.685
8.456
3.650
4.703
3.487
0.952
4.049
15.510
8.381
3.490
4.625
3.391
0.872
3.984
15.504
8.396
3.433
4.610
3.361
0.871
3.983
15.504
8.396
3.432
4.610
3.361
15.571
18.826
15.291
30.468
20.415
15.296
18.672
15.130
30.333
19.976
15.096
18.564
15.023
30.245
19.647
15.012
18.569
15.041
30.256
19.686
15.011
18.569
15.042
30.256
19.687
0.435
0.435
4.116
0.348
0.348
3.973
0.231
0.231
3.845
0.149
0.149
3.789
0.147
0.147
3.788
10.256
16.425
39.805
7.087
7.087
10.199
16.083
39.631
6.923
6.923
10.157
15.843
39.521
6.771
6.771
10.177
15.848
39.592
6.675
6.675
10.177
15.848
39.593
6.673
6.673
1.126
1.126
1.126
3.159
3.159
0.939
0.939
0.939
2.712
2.712
0.750
0.750
0.750
2.427
2.427
0.559
0.559
0.559
2.240
2.240
0.555
0.555
0.555
2.240
2.240
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12226
Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued
Factor
Platinum
Completed Pregnancy with No or Minor Complications ......
Chronic Ulcer of Skin, Except Pressure ..............................
Hip Fractures and Pathological Vertebral or Humerus
Fractures ..........................................................................
Pathological Fractures, Except of Vertebrae, Hip, or Humerus ................................................................................
Stem Cell, Including Bone Marrow, Transplant Status/
Complications ...................................................................
Artificial Openings for Feeding or Elimination .....................
Amputation Status, Lower Limb/Amputation Complications
Gold
Silver
Bronze
Catastrophic
3.159
1.941
2.712
1.836
2.427
1.731
2.240
1.675
2.240
1.675
5.725
5.450
5.215
5.124
5.123
1.574
1.428
1.264
1.147
1.145
30.468
14.575
8.195
30.333
14.480
7.923
30.245
14.443
7.727
30.256
14.551
7.631
30.256
14.553
7.630
TABLE 4—INFANT RISK ADJUSTMENT MODELS FACTORS
Group
Platinum
Extremely Immature * Severity Level 5 (Highest) ...............
Extremely Immature * Severity Level 4 ...............................
Extremely Immature * Severity Level 3 ...............................
Extremely Immature * Severity Level 2 ...............................
Extremely Immature * Severity Level 1 (Lowest) ................
Immature *Severity Level 5 (Highest) ..................................
Immature *Severity Level 4 .................................................
Immature *Severity Level 3 .................................................
Immature *Severity Level 2 .................................................
Immature *Severity Level 1 (Lowest) ..................................
Premature/Multiples * Severity Level 5 (Highest) ................
Premature/Multiples * Severity Level 4 ...............................
Premature/Multiples * Severity Level 3 ...............................
Premature/Multiples * Severity Level 2 ...............................
Premature/Multiples * Severity Level 1 (Lowest) ................
Term *Severity Level 5 (Highest) ........................................
Term *Severity Level 4 ........................................................
Term *Severity Level 3 ........................................................
Term *Severity Level 2 ........................................................
Term *Severity Level 1 (Lowest) .........................................
Age1 *Severity Level 5 (Highest) ........................................
Age1 *Severity Level 4 ........................................................
Age1 *Severity Level 3 ........................................................
Age1 *Severity Level 2 ........................................................
Age1 *Severity Level 1 (Lowest) .........................................
Age 0 Male ...........................................................................
Age 1 Male ...........................................................................
Gold
378.927
194.401
46.419
46.419
46.419
190.323
85.852
46.419
28.986
28.986
156.158
32.573
17.215
8.942
6.222
130.728
16.874
6.324
3.857
1.639
54.166
9.298
3.380
2.155
0.572
0.685
0.145
377.561
193.057
45.304
45.304
45.304
189.030
84.500
45.304
27.832
27.832
154.846
31.292
16.169
8.081
5.557
129.499
15.867
5.648
3.319
1.321
53.499
8.787
3.034
1.873
0.441
0.637
0.127
Silver
Bronze
376.491
192.003
44.390
44.390
44.390
188.013
83.442
44.390
26.907
26.907
153.824
30.290
15.315
7.334
4.867
128.518
15.038
4.969
2.700
0.772
52.963
8.351
2.676
1.549
0.274
0.608
0.106
376.507
191.981
44.236
44.236
44.236
188.027
83.437
44.236
26.738
26.738
153.791
30.173
15.020
6.884
4.376
128.414
14.685
4.448
2.139
0.358
52.894
8.169
2.465
1.320
0.199
0.554
0.081
Catastrophic
376.508
191.981
44.234
44.234
44.234
188.028
83.437
44.234
26.736
26.736
153.791
30.173
15.016
6.876
4.367
128.413
14.681
4.438
2.128
0.350
52.892
8.167
2.461
1.316
0.197
0.553
0.081
TABLE 5—HHS HCCS INCLUDED IN INFANT MODEL MATURITY CATEGORIES
Maturity category
HCC/description
Extremely Immature .............................................................
Extremely Immature .............................................................
Extremely Immature .............................................................
Immature ..............................................................................
Immature ..............................................................................
Premature/Multiples .............................................................
Premature/Multiples .............................................................
Term .....................................................................................
Age 1 ....................................................................................
Extremely Immature Newborns, Birthweight < 500 Grams.
Extremely Immature Newborns, Including Birthweight 500–749 Grams.
Extremely Immature Newborns, Including Birthweight 750–999 Grams.
Premature Newborns, Including Birthweight 1000–1499 Grams.
Premature Newborns, Including Birthweight 1500–1999 Grams.
Premature Newborns, Including Birthweight 2000–2499 Grams.
Other Premature, Low Birthweight, Malnourished, or Multiple Birth Newborns.
Term or Post-Term Singleton Newborn, Normal or High Birthweight.
All age 1 infants.
TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES
asabaliauskas on DSK3SPTVN1PROD with RULES
Severity Category
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Level
Level
Level
Level
Level
Level
Level
Level
VerDate Sep<11>2014
5
5
5
5
5
5
5
5
HCC
(Highest) ...................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
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Metastatic Cancer.
Pancreas Transplant Status/Complications.
Liver Transplant Status/Complications.
End-Stage Liver Disease.
Intestine Transplant Status/Complications.
Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis.
Respirator Dependence/Tracheostomy Status.
Heart Assistive Device/Artificial Heart.
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Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
12227
TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES—Continued
Severity Category
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Level
Level
Level
Level
Level
Level
Level
Level
Level
5
5
5
5
5
5
5
4
4
HCC
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
Severity Level 4 ...................................................................
Severity Level 4 ...................................................................
Level
Level
Level
Level
Level
Level
Level
Level
4
4
4
4
4
4
4
4
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
4
4
4
4
4
4
4
4
4
4
4
4
4
4
3
3
3
3
3
3
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
asabaliauskas on DSK3SPTVN1PROD with RULES
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
Severity Level 3 ...................................................................
Severity Level 3 ...................................................................
Severity Level 3 ...................................................................
Severity
Severity
Severity
Severity
Severity
Severity
Level
Level
Level
Level
Level
Level
VerDate Sep<11>2014
3
3
3
3
3
3
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
17:57 Mar 07, 2016
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Heart Transplant.
Congestive Heart Failure.
Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders.
Lung Transplant Status/Complications.
Kidney Transplant Status.
End Stage Renal Disease.
Stem Cell, Including Bone Marrow, Transplant Status/Complications.
Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock.
Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia.
Mucopolysaccharidosis.
Major Congenital Anomalies of Diaphragm, Abdominal Wall, and Esophagus, Age <
2.
Myelodysplastic Syndromes and Myelofibrosis.
Aplastic Anemia.
Combined and Other Severe Immunodeficiencies.
Traumatic Complete Lesion Cervical Spinal Cord.
Quadriplegia.
Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease.
Quadriplegic Cerebral Palsy.
Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory
and Toxic Neuropathy.
Non-Traumatic Coma, Brain Compression/Anoxic Damage.
Respiratory Arrest.
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes.
Acute Myocardial Infarction.
Heart Infection/Inflammation, Except Rheumatic.
Major Congenital Heart/Circulatory Disorders.
Intracranial Hemorrhage.
Ischemic or Unspecified Stroke.
Vascular Disease with Complications.
Pulmonary Embolism and Deep Vein Thrombosis.
Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections.
Chronic Kidney Disease, Stage 5.
Hip Fractures and Pathological Vertebral or Humerus Fractures.
Artificial Openings for Feeding or Elimination.
HIV/AIDS.
Central Nervous System Infections, Except Viral Meningitis.
Opportunistic Infections.
Non-Hodgkin’s Lymphomas and Other Cancers and Tumors.
Colorectal, Breast (Age < 50), Kidney and Other Cancers.
Breast (Age 50+), Prostate Cancer, Benign/Uncertain Brain Tumors, and Other
Cancers and Tumors.
Lipidoses and Glycogenosis.
Adrenal, Pituitary, and Other Significant Endocrine Disorders.
Acute Liver Failure/Disease, Including Neonatal Hepatitis.
Intestinal Obstruction.
Necrotizing Fasciitis.
Bone/Joint/Muscle Infections/Necrosis.
Osteogenesis Imperfecta and Other Osteodystrophies.
Cleft Lip/Cleft Palate.
Hemophilia.
Disorders of the Immune Mechanism.
Coagulation Defects and Other Specified Hematological Disorders.
Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes.
Traumatic Complete Lesion Dorsal Spinal Cord.
Paraplegia.
Spinal Cord Disorders/Injuries.
Cerebral Palsy, Except Quadriplegic.
Muscular Dystrophy.
Parkinson’s,
Huntington’s,
and
Spinocerebellar
Disease,
and
Other
Neurodegenerative Disorders.
Hydrocephalus.
Unstable Angina and Other Acute Ischemic Heart Disease.
Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital Heart/Circulatory Disorders.
Specified Heart Arrhythmias.
Cerebral Aneurysm and Arteriovenous Malformation.
Hemiplegia/Hemiparesis.
Cystic Fibrosis.
Fibrosis of Lung and Other Lung Disorders.
Pathological Fractures, Except of Vertebrae, Hip, or Humerus.
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12228
Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES—Continued
Severity Category
HCC
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
asabaliauskas on DSK3SPTVN1PROD with RULES
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
2
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
(Lowest) ....................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
...................................................................
d. Cost-Sharing Reductions Adjustments
(§ 153.320)
We proposed to continue including an
adjustment for the receipt of costsharing reductions in the model to
account for increased plan liability due
to increased utilization of health care
services by enrollees receiving costsharing reductions. The proposed costsharing reduction adjustment factors for
2017 risk adjustment are unchanged
from those finalized in the 2016
Payment Notice and are set forth in
Table 7. These adjustments are effective
for 2015, 2016, and 2017 risk
adjustment, and are multiplied against
the sum of the demographic, diagnosis,
and interaction factors. We will
continue to evaluate this adjustment in
future years as more data becomes
available.
Comment: One commenter also
recommended that HHS consider
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Viral or Unspecified Meningitis.
Thyroid, Melanoma, Neurofibromatosis, and Other Cancers and Tumors.
Diabetes with Acute Complications.
Diabetes with Chronic Complications.
Diabetes without Complication.
Protein-Calorie Malnutrition.
Congenital Metabolic Disorders, Not Elsewhere Classified.
Amyloidosis, Porphyria, and Other Metabolic Disorders.
Cirrhosis of Liver.
Chronic Pancreatitis.
Inflammatory Bowel Disease.
Rheumatoid Arthritis and Specified Autoimmune Disorders.
Systemic Lupus Erythematosus and Other Autoimmune Disorders.
Congenital/Developmental Skeletal and Connective Tissue Disorders.
Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn.
Sickle Cell Anemia (Hb-SS).
Drug Psychosis.
Drug Dependence.
Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes.
Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies.
Seizure Disorders and Convulsions.
Monoplegia, Other Paralytic Syndromes.
Atherosclerosis of the Extremities with Ulceration or Gangrene.
Chronic Obstructive Pulmonary Disease, Including Bronchiectasis.
Chronic Ulcer of Skin, Except Pressure.
Chronic Hepatitis.
Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption.
Thalassemia Major.
Autistic Disorder.
Pervasive Developmental Disorders, Except Autistic Disorder.
Multiple Sclerosis.
Asthma.
Chronic Kidney Disease, Severe (Stage 4).
Amputation Status, Lower Limb/Amputation Complications.
No Severity HCCs.
looking at other elements of adverse
selection and induced demand within
the individual market that are not
currently captured in the risk
adjustment model. Another commenter
requested that if HHS were to operate
risk adjustment in Massachusetts in
2017, HHS should include a costsharing reduction adjustment table that
will account for the higher AVs of the
‘‘Connector Care’’ plans with wraparound subsidies in Massachusetts.
Response: As we stated in the 2015
Payment Notice, in some States,
expansion of Medicaid benefits under
section 2001(a) of the Affordable Care
Act may take the form of enrolling
newly Medicaid-eligible enrollees into
individual market plans. These
enrollees could be placed into silver
plan variations—either the 94 percent
silver plan variation or the zero cost
sharing plan variation—with a portion
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of the premiums and cost sharing paid
for by Medicaid on their behalf. In
Massachusetts, Connector Care plans
represent these Medicaid alternative
plans in the individual market. To
address this induced utilization in the
context of cost-sharing reduction plan
variations in the HHS risk adjustment
methodology, our methodology
increases the risk score for individuals
in these plan variations by the same
factor that we use to adjust for induced
utilization for individuals enrolled in
cost-sharing plan variations to adjust for
induced utilization for individuals
enrolled in the corresponding Medicaid
alternative plan variations. Here, those
factors are both 1.12. We intend to
evaluate these adjustments in the future
after data from the initial years of risk
adjustment is available. We are
finalizing the cost-sharing reduction
adjustment factors as proposed.
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Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
12229
TABLE 7—COST-SHARING REDUCTION ADJUSTMENT
Household income
Induced
utilization
factor
Plan AV
Silver Plan Variant Recipients
100–150% of FPL .......................................................................
150–200% of FPL .......................................................................
200–250% of FPL .......................................................................
>250% of FPL ............................................................................
Plan Variation 94% .....................................................................
Plan Variation 87% .....................................................................
Plan Variation 73% .....................................................................
Standard Plan 70% ....................................................................
1.12
1.12
1.00
1.00
Zero Cost-Sharing Recipients
<300%
<300%
<300%
<300%
of
of
of
of
FPL
FPL
FPL
FPL
............................................................................
............................................................................
............................................................................
............................................................................
Platinum (90%) ...........................................................................
Gold (80%) .................................................................................
Silver (70%) ................................................................................
Bronze (60%) .............................................................................
1.00
1.07
1.12
1.15
Limited Cost-Sharing Recipients
>300%
>300%
>300%
>300%
of
of
of
of
FPL
FPL
FPL
FPL
............................................................................
............................................................................
............................................................................
............................................................................
e. Model Performance Statistics
(§ 153.320)
To evaluate the model’s performance,
we examined its R-squared and
predictive ratios. The R-squared
statistic, which calculates the
percentage of individual variation
explained by a model, measures the
predictive accuracy of the model
overall. The predictive ratios measure
the predictive accuracy of a model for
different validation groups or
Platinum (90%) ...........................................................................
Gold (80%) .................................................................................
Silver (70%) ................................................................................
Bronze (60%) .............................................................................
subpopulations. The predictive ratio for
each of the HHS risk adjustment models
is the ratio of the weighted mean
predicted plan liability for the model
sample population to the weighted
mean actual plan liability for the model
sample population. The predictive ratio
represents how well the model does on
average at predicting plan liability for
that subpopulation. A subpopulation
that is predicted perfectly would have a
predictive ratio of 1.0. For each of the
HHS risk adjustment models, the R-
1.00
1.07
1.12
1.15
squared statistic and the predictive ratio
are in the range of published estimates
for concurrent risk adjustment
models.11 Because we are blending, that
is to mean, averaging, the coefficients
from separately solved models based on
MarketScan 2012, 2013, and 2014 data,
we are publishing the R-squared statistic
for each model and year separately to
verify their statistical validity. The Rsquared statistic for each model is
shown in Table 8.
TABLE 8—R-SQUARED STATISTIC FOR HHS RISK ADJUSTMENT MODELS
R-Squared statistic
Risk adjustment model
2012
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Platinum Adult ..............................................................................................................................
Platinum Child ..............................................................................................................................
Platinum Infant .............................................................................................................................
Gold Adult ....................................................................................................................................
Gold Child ....................................................................................................................................
Gold Infant ...................................................................................................................................
Silver Adult ...................................................................................................................................
Silver Child ...................................................................................................................................
Silver Infant ..................................................................................................................................
Bronze Adult ................................................................................................................................
Bronze Child ................................................................................................................................
Bronze Infant ...............................................................................................................................
Catastrophic Adult .......................................................................................................................
Catastrophic Child .......................................................................................................................
Catastrophic Infant .......................................................................................................................
f. Overview of the Payment Transfer
Formula (§ 153.320)
We did not propose to alter our
payment transfer methodology. Plan
11 Winkleman, Ross and Syed Mehmud. ‘‘A
Comparative Analysis of Claims-Based Tools for
VerDate Sep<11>2014
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2013
0.3905
0.2669
0.2848
0.3865
0.2621
0.2826
0.3828
0.2576
0.2812
0.3808
0.2554
0.2812
0.3807
0.2554
0.2812
0.3790
0.2518
0.3223
0.3746
0.2467
0.3204
0.3707
0.2422
0.3191
0.3686
0.2400
0.3190
0.3685
0.2400
0.3190
2014
0.3610
0.2341
0.3089
0.3558
0.2288
0.3069
0.3512
0.2241
0.3054
0.3488
0.2218
0.3052
0.3488
0.2218
0.3052
average risk scores will continue to be
calculated as the member monthweighted average of individual enrollee
risk scores. We defined the calculation
of plan average actuarial risk and the
calculation of payments and charges in
the Premium Stabilization Rule. In the
2014 Payment Notice, we combined
those concepts into a risk adjustment
payment transfer formula. Risk
Health Risk Assessment.’’ Society of Actuaries (Apr.
2007), available at https://www.soa.org/research/
research-projects/health/hlth-risk-assement.aspx.
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Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
adjustment expenses, and taxes that are
calculated on premium after risk
adjustment transfers, by using a
specified percentage of State average
premiums. The commenter suggested
the specified percentage could be
determined based on data submitted by
issuers on the Unified Rate Review
Template (URRT) for the portion of
premium needed for claims and on data
from financial reporting statements for
claim adjustment expenses and relevant
taxes as a percent of premium and could
vary by State or market. Some
commenters opposed the use of the
statewide average premium because it
disadvantages issuers with below
average premiums. Commenters
requested that 2014 and later risk
adjustment transfers for all plans with
below average premiums in a State be
calculated using the plans’ own average
premium amount or average claims cost,
so that efficient plans are not penalized
using the Statewide average premium.
Commenters requested use of a ‘‘care
coordination factor’’ in the risk transfer
formula, and stated that risk adjustment
results are distorted by regional biases,
risks, and coding and demographic
differences. One commenter
recommended that risk scores be
compared to other scores in the same
geographic region, not to State averages,
to avoid regional biases and to permit a
fairer and more accurate comparison.
Response: We did not propose
changes to the transfer formula, and
therefore, are not addressing comments
that are outside the scope of this
rulemaking. We may be able to evaluate
geographic differences in the future if
we obtain enrollee-level data for future
recalibrations—a topic that we also
intend to discuss in the White Paper
and at the March 31, 2016 risk
adjustment conference.
Where:
¯
PAs = State average premium;
PLRSi = plan i’s plan liability risk score;
AVi = plan i’s metal level AV;
ARFi = allowable rating factor;
IDFi = plan i’s induced demand factor;
GCFi = plan i’s geographic cost factor;
si = plan i’s share of State enrollment.
level, and catastrophic plans are treated
as a separate risk pool for purposes of
risk adjustment.
meaning of § 153.20 must remit a user
fee to HHS equal to the product of its
monthly enrollment in the plan and the
per enrollee per month risk adjustment
user fee specified in the annual HHS
notice of benefit and payment
parameters for the applicable benefit
year.
OMB Circular No. A–25R establishes
Federal policy regarding user fees, and
specifies that a user charge will be
assessed against each identifiable
recipient for special benefits derived
from Federal activities beyond those
received by the general public. The risk
adjustment program will provide special
benefits as defined in section 6(a)(1)(b)
of Circular No. A–25R to issuers of risk
adjustment covered plans because it
will mitigate the financial instability
associated with potential adverse risk
selection. The risk adjustment program
also will contribute to consumer
confidence in the health insurance
industry by helping to stabilize
premiums across the individual and
small group health insurance markets.
In the 2016 Payment Notice, we
estimated Federal administrative
g. State-Submitted Alternate Risk
Adjustment Methodology
The denominator is summed across all
plans in the risk pool in the market in
the State.
The difference between the two
premium estimates in the payment
transfer formula determines whether a
plan pays a risk transfer charge or
receives a risk transfer payment. Note
that the value of the plan average risk
score by itself does not determine
whether a plan would be assessed a
charge or receive a payment—even if the
risk score is greater than 1.0, it is
possible that the plan would be assessed
a charge if the premium compensation
that the plan may receive through its
rating practices (as measured through
the allowable rating factor) exceeds the
plan’s predicted liability associated
with risk selection. Risk adjustment
transfers are calculated at the risk pool
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We are not recertifying the alternate
State methodology for use in
Massachusetts for 2017 risk adjustment.
Massachusetts and HHS will begin the
transition that will allow HHS to
operate risk adjustment in
Massachusetts in 2017. HHS will
operate risk adjustment in all States for
the 2017 benefit year.
h. Risk Adjustment User Fee
(§ 153.610(f))
As noted above, if a State is not
approved to operate or chooses to forgo
operating its own risk adjustment
program, HHS will operate risk
adjustment on the State’s behalf. As
described in the 2014 Payment Notice,
HHS’s operation of risk adjustment on
behalf of States is funded through a risk
adjustment user fee. Section
153.610(f)(2) provides that an issuer of
a risk adjustment covered plan with the
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(1) Overview of the Payment Transfer
Formula
Although we did not propose to
change the payment transfer formula
from what was finalized in the 2014
Payment Notice (78 FR 15430 through
15434), we believe it is useful to
republish the formula in its entirety,
since, as noted above, we are
recalibrating the HHS risk adjustment
model. Transfers (payments and
charges) will be calculated as the
difference between the plan premium
estimate reflecting risk selection and the
plan premium estimate not reflecting
risk selection. As finalized in the 2014
Payment Notice, the HHS risk
adjustment payment transfer formula is:
E:\FR\FM\08MRR2.SGM
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ER08MR16.000
asabaliauskas on DSK3SPTVN1PROD with RULES
adjustment transfers (payments and
charges) will be calculated after issuers
have completed risk adjustment data
reporting. The payment transfer formula
includes a set of cost adjustment terms
that require transfers to be calculated at
the geographic rating area level for each
plan (that is, HHS will calculate two
separate transfer amounts for a plan that
operates in two rating areas).
The payment transfer formula is
designed to provide a per member per
month (PMPM) transfer amount. The
PMPM transfer amount derived from the
payment transfer formula would be
multiplied by each plan’s total member
months for the benefit year to determine
the total payment due or charge owed
by the issuer for that plan in a rating
area.
Comment: Commenters requested that
administrative expenses be removed
from the calculation of the statewide
average premium. A commenter
suggested that amending the transfer
formula by eliminating administrative
costs from the statewide average
premium would make it ‘‘benefit cost
based.’’ A commenter suggested that
HHS consider basing the payment
transfer on a portion of State average
premium—namely, the portion
representing the sum of claims, claims
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Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
expenses of operating the risk
adjustment program to be $1.75 per
enrollee per year, based on our
estimated contract costs for risk
adjustment operations. For the 2017
benefit year, we proposed to use the
same methodology to estimate our
administrative expenses to operate the
program. These contracts cover
development of the model and
methodology, collections, payments,
account management, data collection,
data validation, program integrity and
audit functions, operational and fraud
analytics, stakeholder training, and
operational support. To calculate the
user fee, we divided HHS’s projected
total costs for administering the risk
adjustment programs on behalf of States
by the expected number of enrollees in
risk adjustment covered plans (other
than plans not subject to market reforms
and student health plans, which are not
subject to payments and charges under
the risk adjustment methodology HHS
uses when it operates risk adjustment
on behalf of a State) in HHS-operated
risk adjustment programs for the benefit
year.
We estimated that the total cost for
HHS to operate the risk adjustment
program on behalf of States for 2017
would be approximately $52 million,
and that the risk adjustment user fee
would be $1.80 per enrollee per year.
We stated that the risk adjustment user
fee contract costs for 2017 include costs
related to 2017 risk adjustment data
validation, and are slightly higher than
the 2016 contract costs because some
contracts were rebid. We do not
anticipate that Massachusetts’ decision
to use the Federal risk adjustment
methodology will substantially affect
the risk adjustment user fee rate for
2017.
Comment: One commenter strongly
supported the assessment of a higher
risk adjustment user fee to support the
RADV program. Another commenter
requested transparency for the user fee
rate and that HHS consider less costly
alternatives. One commenter expressed
concern over the risk adjustment user
fee proposal since HHS collected
increased user fees accounting for 2014
risk adjustment data validation in 2016
but delayed 2014 risk adjustment data
validation. This commenter
recommended that HHS use those
increased fees to pay for risk adjustment
data validation in 2017 and decline to
increase user fees for 2017 risk
adjustment.
Response: In response to the comment
regarding risk adjustment data
validation costs, we re-examined all
assumptions that went into the
calculation of the risk adjustment user
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fee. First, we determined that our
expected contract costs for 2017 risk
adjustment are lower than anticipated,
currently estimated at approximately
$24 million. Then, we looked at the
enrollment assumptions we were using
to calculate the previous benefit year
user fees. Because we now have actual
2014 risk adjustment enrollment, we
were able to base expected 2017
enrollment on projected member month
enrollment rather than total enrollees.
We are revising the risk adjustment user
fee to reflect lower contract costs for the
2017 benefit year and more accurate
enrollment projections. Therefore, we
are finalizing the 2017 risk adjustment
user fee at $1.56 per enrollee per year,
or $0.13 PMPM.
3. Provisions and Parameters for the
Transitional Reinsurance Program
The Affordable Care Act directs that
a transitional reinsurance program be
established in each State to help
stabilize premiums for coverage in the
individual market from 2014 through
2016. In the 2014 Payment Notice, we
expanded on the standards set forth in
subparts C and E of the Premium
Stabilization Rule and established the
reinsurance payment parameters and
uniform reinsurance contribution rate
for the 2014 benefit year. In the 2015
Payment Notice, we established the
reinsurance payment parameters and
uniform reinsurance contribution rate
for the 2015 benefit year and certain
oversight provisions related to the
operation of the reinsurance program. In
the 2016 Payment Notice, we
established the reinsurance payment
parameters and uniform reinsurance
contribution rate for the 2016 benefit
year and certain clarifying provisions
related to the operation of the
reinsurance program.
a. Decreasing the Reinsurance
Attachment Point for the 2016 Benefit
Year
Section 1341(b)(2)(B) of the
Affordable Care Act directs the
Secretary, in establishing standards for
the transitional reinsurance program, to
include a formula for determining the
amount of reinsurance payments to be
made to non-grandfathered, individual
market issuers for high-risk claims that
provides for the equitable allocation of
funds. In the Premium Stabilization
Rule (77 FR 17228), we provided that
reinsurance payments to issuers of
reinsurance-eligible plans will be made
for a portion of an enrollee’s claims
costs paid by the issuer (the coinsurance
rate) that exceeds an attachment point
(when reinsurance would begin), subject
to a reinsurance cap (when the
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12231
reinsurance program stops paying
claims for a high-cost individual). The
coinsurance rate, attachment point, and
reinsurance cap together constitute the
uniform reinsurance payment
parameters.
We provided in the 2015 Payment
Notice (79 FR 13777) that HHS will use
any excess contributions for reinsurance
payments for a benefit year by
increasing the coinsurance rate for that
benefit year up to 100 percent before
rolling over any remaining funds in the
next year. In the proposed rule, we
proposed that if any contribution
amounts remain after calculating
reinsurance payments for the 2016
benefit year (and after HHS increases
the coinsurance rate to 100 percent for
the 2016 benefit year), HHS would
decrease the 2016 attachment point of
$90,000 to pay out any remaining
contribution amounts to issuers of
reinsurance-eligible plans in an
equitable manner for the 2016 benefit
year.
We received numerous comments in
support of this proposal and are
finalizing this provision as proposed.
Comment: One commenter stated that
changing the reinsurance payment
parameters at the end of the program—
instead of identifying and updating the
parameters in earlier benefit years as
current information is available—would
be disruptive. The commenter stated
that this proposal would cause
disruption for States that exercised the
option to create supplemental
reinsurance programs and that need to
set uniform reinsurance payment
parameters.
Response: The final 2016 reinsurance
coinsurance rate and attachment point,
which would reflect a potential increase
in coinsurance rate from 50 to 100
percent and a potential decrease in the
attachment point from $90,000 to an
amount that pays out remaining
contributions in an equitable manner,
will not be set until HHS confirms the
total amount of contributions available
and reinsurance payment requests for
the 2016 benefit year. HHS understands
that no State-operated reinsurance
program established supplemental
reinsurance payment parameters under
§§ 153.220(d) and 153.232 and therefore
no States will be affected by this
provision. We believe that expending all
remaining reinsurance contribution
funds as payments for the 2016 benefit
year will support the reinsurance
program’s goals of promoting
nationwide premium stabilization and
market stability in the early years of
Exchange operations while providing
issuers with incentives to continue to
effectively manage enrollee costs.
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Comment: One commenter asked that
HHS use excess reinsurance
contributions to fund the deficit in the
risk corridors program.
Response: Section 1341 of the
Affordable Care Act establishes the
transitional reinsurance program to
compensate non-grandfathered
individual market plans for high-cost
enrollees in the initial years of the
Exchange. We believe that our policy to
expend any remaining reinsurance
contribution funds as reinsurance
payments for the 2016 benefit best
aligns with that statutory purpose.
b. Audit Authority Extends to Entities
That Assist Contributing Entities
(§ 153.405(i))
In accordance with § 153.405(i), HHS
or its designee has the authority to audit
a contributing entity to assess
compliance with the reinsurance
program requirements. In 2014, HHS
implemented a streamlined approach
through which a contributing entity, or
a third party such as a third party
administrator or an administrative
services-only contractor acting on behalf
of a contributing entity, could register
on Pay.gov, calculate the annual
enrollment count and schedule
reinsurance contribution payments.
During the 2014 and 2015 contribution
submission process, many third party
administrators and administrative
services-only contractors assisted
contributing entities by calculating the
contributing entity’s annual enrollment
count and maintaining the records
necessary to validate that enrollment. In
the proposed rule, we proposed to
amend § 153.405(i) to specify that the
audit authority extends to any third
party administrators, administrative
services-only contractors, or other third
parties that complete any part of the
reinsurance contribution submission
process on behalf of contributing
entities or otherwise assist contributing
entities with compliance with the
requirements for the transitional
reinsurance program. Additionally, we
proposed to amend § 153.405(i) to
specify that a contributing entity that
chooses to use a third party
administrator, administrative servicesonly contractor, or other third party to
assist with its obligations under the
reinsurance program must ensure that
this third party administrator,
administrative services-only contractor,
or other third party cooperate with any
audit under this section.
After reviewing the comments
received on this proposal, we will not
finalize our amendment to § 153.405(i)
that extended the audit authority to
third party administrators,
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administrative services-only contractors
or other third parties that assist a
contributing entity with compliance
with reinsurance program requirements.
However, HHS will finalize as proposed
the amendment to § 153.405(i)
specifying that a contributing entity that
chooses to use a third party
administrator, administrative servicesonly contractor, or other third party to
assist with its obligations under the
reinsurance program must ensure that
this third party administrator,
administrative services-only contractor,
or other third party cooperates with any
audit under that section. We note that
under § 153.405(i) HHS, or its designee,
has the authority to audit contributing
entities’ compliance with their
obligations under the reinsurance
program.
Comment: One commenter disagreed
with HHS’s proposal to extend the audit
authority to third party administrators,
administrative services-only contractors,
or other third parties, arguing that it was
unnecessary and would increase the
costs of compliance.
Response: We recognize the
commenter’s concerns about increasing
compliance costs, and are not finalizing
our proposal to extend the audit
authority. However, a contributing
entity that uses a third party
administrator, administrative servicesonly contractor, or other third party to
assist with its obligations under the
reinsurance program must ensure that
such organization cooperates with any
audit of the contributing entity under
this section.
To ensure the integrity of data used in
risk corridors and MLR calculations, in
prior guidance we indicated that we
would propose in the HHS Notice of
Benefit and Payment Parameters for
2017 an adjustment to correct for any
inaccuracies in risk corridors payment
and charge amounts that could result
from issuers reporting a certified
estimate of cost-sharing reductions on
the 2014 MLR and Risk Corridors
Annual Reporting Form.12 The use of a
certified estimate that is lower than the
actual cost-sharing reductions provided
would affect the MLR calculation and
the risk corridors financial transfers by
increasing incurred claims and
allowable costs, thereby increasing the
MLR and potentially increasing the risk
corridors payment or lowering the risk
corridors charge. We believe that
requiring an update of these reported
amounts through recalculation of the
risk corridors and MLR amounts for the
2014 benefit year will be disruptive to
the market and consumers, as well as
administratively burdensome and
difficult to operationalize for issuers
and HHS. Therefore, consistent with our
earlier guidance, we proposed to add a
new paragraph (g) to the risk corridors
payment methodology set forth in
§ 153.510 stating that if the issuer
reported a certified estimate of 2014
cost-sharing reductions on its 2014 MLR
and Risk Corridors Annual Reporting
Form that is lower than the actual costsharing reductions provided (as
calculated under § 156.430(c) for the
2014 benefit year, which will take place
in the spring of 2016), HHS would make
an adjustment to the amount of the
issuer’s 2015 benefit year risk corridors
payment or charge measured by the full
difference between the certified estimate
reported and the actual cost-sharing
reductions provided as calculated under
§ 156.430(c) in order to address the
impact of the inaccurate reporting on
the risk corridors and MLR calculations
for the 2014 benefit year. We are
finalizing this policy and the
amendment to § 153.510(g) as proposed.
Comment: Several commenters
recommended that, to the extent the
certified estimate of cost-sharing
reductions reported on the 2014 MLR
and Risk Corridors Annual Reporting
Form is lower than the actual costsharing reductions provided, the
difference should be reflected as an
adjustment to the cost-sharing reduction
amount reported for the 2015 benefit
year rather than the risk corridors
payment or charge.
Response: We note that we are also
amending § 153.710(g) (see III.D.5.d of
this preamble) to require that issuers
adjust the cost-sharing reduction
amount reported for the 2015 benefit
year to account for the difference
between cost-sharing reduction amounts
reported for the 2014 benefit year and
actual cost-sharing reduction amounts
as determined under § 156.430(c). The
separate, direct adjustment to the 2015
risk corridors payment or charge set
12 Cost-Sharing Reduction Amounts in Risk
Corridors and Medical Loss Ratio Reporting (Jun.
19, 2015), available at https://www.cms.gov/CCIIO/
Resources/Regulations-and-Guidance/Downloads/
Advance-CSR-Payment-and-RC-MLR-submission_
6192015.pdf.
4. Provisions for the Temporary Risk
Corridors Program
This section contains proposals
related to the temporary risk corridors
program, and therefore applies only to
issuers of QHPs, as defined at § 153.500,
with respect to the benefit years 2014
through 2016.
a. Risk Corridors Payment Methodology
(§ 153.510(g))
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forth in § 153.510(g) was intended as a
program integrity measure, to help
ensure that issuers did not report
certified estimates of cost-sharing
reduction amounts for the 2014 benefit
year that they knew would likely be
lower than their advance payment
amounts.
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b. Risk Corridors Data Requirements
(§ 153.530)
In the proposed rule (80 FR 75488),
we proposed to amend § 153.530 to
require that for the 2015 and later
benefit years, issuers must true up their
claims liabilities and reserve amounts
that were used to determine their
allowable costs reported for the risk
corridors program for the preceding
benefit year to reflect the actual claims
payments made through June 30 of the
year following the benefit year. We also
requested comments on how to handle
the true-up of unpaid claims estimates
for 2016, suggesting four alternatives:
provide for a 2017 payment or charge;
provide for a simplified true-up process;
require that the 2016 estimate be based
on actual 2014 and 2015 amounts; or
provide for no true-up in the final year.
Comment: One commenter supported
our proposal. Several commenters
opposed our proposal, noting that any
improvement in the accuracy of risk
corridor payments to issuers under the
proposal would be outweighed by the
administrative burden on issuers, and
minimized by the operational
mechanics of the risk corridor program
and the potential for continued shortfall
in the program. However, most of these
commenters were primarily concerned
with our proposal to require claims
valuation at June 30 rather than March
31, and not with the proposal to trueup claims estimates. Other commenters
opposed only the true-up of 2016
unpaid claims estimates, and
additionally expressed concern that
2014 and 2015 claims experience may
not accurately reflect 2016 experience.
Response: We acknowledge
commenters’ concern regarding the
potential lack of practical advantages of
requiring claims valuation at June 30
rather than March 31 and requiring a
true-up of 2016 unpaid claims
estimates. However, we continue to
believe that a true-up of 2014 and 2015
unpaid claims estimates is important to
preserve the integrity of the risk
corridors program. Therefore, we are
finalizing the amendment adding
§ 153.530(b)(2)(iv) as proposed with
respect to the true-up of 2014 and 2015
experience in the reporting for the 2015
and 2016 benefit years. We will address
the true-up of 2016 experience after we
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have evaluated the results of the true-up
of 2014 experience.
5. Distributed Data Collection for the
HHS-Operated Programs
a. Interim Dedicated Distributed Data
Environment Reports (§ 153.710(d))
In the proposed rule, we proposed
deleting § 153.710(d), which sets forth
an interim discrepancy reporting
process by which an issuer must notify
HHS of any discrepancy it identifies
between the data to which the issuer has
provided access to HHS through its
dedicated distributed data environment
(that is, an issuer’s EDGE server) and the
interim dedicated distributed data
environment report (that is, an issuer’s
interim EDGE report), or confirm to
HHS that the information in the interim
report accurately reflects the data to
which the issuer has provided access to
HHS through its dedicated distributed
data environment in accordance with
§ 153.700(a) for the timeframe specified
in the report. We proposed that this
change would be effective beginning
with the 2016 benefit year.13
We received numerous comments in
support of this proposal, and are
finalizing this provision as proposed.
We also finalize our proposal to remove
any cross-references in §§ 153.710 and
156.1220 to the interim discrepancy
reporting process currently codified at
§ 153.710(d) and conforming
amendments to redesignate paragraph
(e) as paragraph (d), as well as to revise
and redesignate paragraph (f) as (e).
Comment: Some commenters asked
that HHS confirm that there will
continue to be a robust process to allow
issuers to identify and resolve potential
discrepancies throughout the data
submission process.
Response: HHS is committed to
working with issuers prior to the data
submission deadline to address any data
issues so that reinsurance payment and
risk adjustment transfer calculations can
be made accurately and timely.
Throughout the data collection period,
HHS will continue to maintain a help
desk, host user group calls and
webinars, and make reports available to
issuers on their respective EDGE servers
to assist issuers with the identification
and resolution of data submission errors
and to provide technical assistance.
Comment: One commenter asked that
HHS allow issuers 30 days to respond
13 For the 2015 benefit year, issuers are not
required to confirm that the information in the
interim report accurately reflects the reinsurance
and risk adjustment data to which the issuer has
provided access through its EDGE server; or
describe any discrepancy an issuer identifies in the
interim report. See FAQ 14247 (Dec. 15, 2015),
available at www.regtap.info.
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to the final dedicated distributed data
environment report with any
discrepancies, rather than the 15calendar-day timeframe set forth in
§ 153.710(e) (now finalized as
§ 153.710(d)).
Response: HHS will continue to
require issuers to respond within 15
calendar days to the final dedicated
distributed data environment report. As
we explained in the 2015 Payment
Notice final rule (79 FR 13790), the 15calendar day reporting timeframe for the
final dedicated distributed data
environment report is necessary so that
HHS can notify issuers of their risk
adjustment payment or charge and total
estimated reinsurance payments by June
30 of the year following the applicable
benefit year, as required under
§§ 153.310(e) and 153.240(b)(1)(ii).
Comment: One commenter asked HHS
to release guidance on the 2015
discrepancy reporting process in early
January.
Response: HHS intends to issue future
guidance on the final discrepancy
reporting process set forth in
§ 153.710(e) (now finalized as
§ 153.710(d)) prior to the final
discrepancy reporting window.
b. Risk Adjustment Interim Reports
We did not propose any provisions
related to risk adjustment interim
reports in the Payment Notice. However,
we received a number of comments
related to the schedule of risk
adjustment reports and the availability
of additional information prior to the
final summary report on June 30 of the
year following the applicable benefit
year.
Comment: Several commenters
requested that HHS issue the summary
report earlier than June 30. Commenters
also requested interim or quarterly
reports so that issuers could incorporate
improved estimates into rate setting.
Commenters suggested HHS provide
interim reports with issuers’ calculated
risk scores, market-wide risk scores, and
the other components of the payment
transfer formula, including the
Statewide average premium.
Commenters also recommended that
HHS disclose any issues with the
completeness of data in the report so
that issuers can take this into account
when reviewing results. Commenters
further suggested that HHS may want to
consider publishing additional details
such as the issuer’s market share,
market average distribution by metal
plan, market allowable rating factor, and
market proportion of claims with HCCs.
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Response: We issued an FAQ on
January 8, 2016 14 stating that we will
release an interim public summary
report in March 2016 for those States
and risk pools where the risk
adjustment data that has been submitted
by February 1, 2016 meets HHS’s data
sufficiency thresholds. The interim
summary report will include the
following transfer formula elements by
State and risk pool: (1) Average monthly
premiums; (2) average plan liability risk
score; (3) average allowable rating
factor; (4) average actuarial value; (5)
billable member months; and (6)
geographic cost factors. We will also
provide issuers with an interim report
that contains their own issuer-specific
information and that will not be
released publicly. We are providing this
information because issuers have
indicated that, taken in concert with
other data available to them, it may help
them formulate more accurate estimates
of their risk adjustment transfers.
However, we continue to caution that
data provided in these interim reports
will be preliminary, do not represent
any determination by HHS regarding the
credibility of the data submitted, and
that final risk adjustment results may be
substantially different.
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c. Evaluation of Quality and Quantity of
EDGE Data Submissions (§ 153.710(f))
Under § 153.740(b), if an issuer of a
risk adjustment covered plan fails to
provide HHS with access to the required
data in a dedicated distributed data
environment such that HHS cannot
apply the applicable Federally certified
risk adjustment methodology to
calculate the risk adjustment payment
transfer amount for the risk adjustment
covered plan in a timely fashion, HHS
will assess a default risk adjustment
charge. Similarly, under §§ 153.420 and
153.740(a), an issuer of a reinsuranceeligible plan will forfeit reinsurance
payments it otherwise might have
received if the issuer fails to establish a
dedicated distributed data environment
or fails to meet the data requirements set
forth in §§ 153.420 and 153.700 through
153.730. On April 24, 2015, HHS
released guidance entitled ‘‘Evaluation
of EDGE Data Submissions’’ describing
the approach it would use to evaluate
whether the quality and quantity of the
data that an issuer provided to a
dedicated distributed data environment
was sufficient for HHS to calculate
reinsurance payments and apply the
HHS risk adjustment methodology for
14 See FAQ 14572, (Jan. 8, 2016), available at
https://www.regtap.info/.
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the 2014 benefit year.15 In the proposed
rule, we proposed to codify this practice
for future benefit years to support the
integrity of payments and charges under
the HHS-operated risk adjustment
program and payments under the
reinsurance program, both of which
depend upon the submission of accurate
and complete by issuers.
Consistent with the approach for
review of 2014 benefit year data, to
determine if an issuer meets data
quantity standards, we proposed that
HHS would compare an issuer’s selfreported baseline data of total
enrollment and claims counts by market
to the data submitted to the issuer’s
dedicated distributed data environment.
An issuer whose total enrollment counts
were lower than its baseline data
submission by the deadline for
submitting data to the dedicated
distributed data environment would be
subject to a default risk adjustment
charge under § 153.740(b). An issuer
whose total claims counts were lower
than its baseline data submission by the
deadline for submitting data to the
dedicated distributed data environment
would be subject to a default risk
adjustment charge only if the default
charge was lower than the charge it
would have received through the risk
adjustment transfer calculation.
Additionally, an issuer with either a low
enrollment count or a low claims count
following the final data submission
deadline would forgo reinsurance
payments for any claims that it failed to
submit. In the proposed rule, HHS
stated that it would set forth in
guidance, on an annual basis, the
appropriate threshold by which HHS
will deem data sufficient as to quantity
for a given benefit year.16 We also stated
that HHS would also specify in
guidance the format and timeline for
submission of baseline data to HHS.17
To determine if an issuer meets the
data quality standards required for HHS
to calculate reinsurance payments and
15 EDGE Server Data Bulletin—INFORMATION;
Evaluation of EDGE Data Submissions (Apr. 24,
2015), available at https://www.cms.gov/CCIIO/
Resources/Regulations-and-Guidance/Downloads/
EDGE-guidance-42415-final.pdf.
16 For information on the data quantity thresholds
that will be used to evaluate issuer’s EDGE server
data for the 2015 benefit year related to the release
of interim reinsurance payments and interim risk
adjustment summary reports, see EDGE Server Data
Bulletin—INFORMATION; Evaluation of EDGE
Data Submissions for 2015 Benefit Year for Interim
Reinsurance Payment and Interim Risk Adjustment
Summary Report (Jan. 20, 2016), available at
https://www.regtap.info/uploads/library/
EDGEServer_DataBulletin_5CR_012016.pdf.
Guidance on the on-going and final quantity
evaluation processes will be released in the near
future.
17 Ibid.
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apply the HHS risk adjustment
methodology, HHS proposed to perform
an outlier analysis using select metrics
that target reinsurance data quality and
risk adjustment data quality.18 As with
our data quantity metrics, HHS plans to
describe in guidance, on an annual
basis, the metrics used for a given
benefit year.19 An issuer may be
assessed a risk adjustment default
charge if it does not meet data quality
standards on any of the risk adjustment
metrics, and may forfeit reinsurance
payments it might otherwise have
received if it does not meet data quality
standards for any of the reinsurance
metrics.
HHS would conduct these data
quantity and quality analyses after the
deadline for submission of data
specified in § 153.730 (that is, April 30,
of the year following the applicable
benefit year).20 We proposed to add a
new paragraph (f) to § 153.710 to specify
that HHS will assess default risk
adjustment charges based on these
analyses no later than the date of the
notification provided by HHS under
§ 153.310(e) (that is, June 30 of the year
following the applicable benefit year);
and to describe the responsibilities of
issuers in relation to the quantity and
quality analyses. In § 153.710(f)(1), we
proposed to codify the requirement for
issuers to provide baseline data on their
total enrollment and claims counts by
market, in a format and on a timeline
specified by HHS in guidance. In
§ 153.710(f)(2), we proposed that if HHS
identifies a data outlier that would
cause the data that a risk adjustment
covered plan or a reinsurance-eligible
plan made available through a dedicated
distributed data environment to fail
HHS’s quality thresholds, the issuer
may, within 10 calendar days of
receiving notification of the outlier,
18 For the 2014 benefit year, HHS used the
following five key metrics: Percentage of all
enrollees with at least one HCC; average number of
conditions per enrollee with at least one HCC;
issuer average risk score; percentage of individual
market enrollees with reinsurance payments; and
average reinsurance payment per enrollee for which
the issuer would receive reinsurance payments.
19 For information on the data quality thresholds
that will be used to evaluate issuer’s EDGE server
data for the 2015 benefit year related to the release
of interim reinsurance payments and interim risk
adjustment summary reports, see EDGE Server Data
Bulletin—INFORMATION; Evaluation of EDGE
Data Submissions for 2015 Benefit Year for Interim
Reinsurance Payment and Interim Risk Adjustment
Summary Report (Jan. 20, 2016), available at
https://www.regtap.info/uploads/library/
EDGEServer_DataBulletin_5CR_012016.pdf.
Guidance on the on-going and final quantity
evaluation processes will be released in the near
future.
20 For the 2015 benefit year, the data submission
deadline is Monday, May 2, 2016 because April 30,
2016 is a Sunday. See FAQ 14472, (Dec. 21, 2015),
available at https://www.regtap.info.
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submit a justification of the outlier for
HHS to consider in determining
whether the issuer met the reinsurance
and risk adjustment data requirements.
We indicated that HHS expects to
perform informal data quantity and
quality analyses throughout the data
submission process, providing issuers
with time to address any outlier before
the data submission deadline. Issuers
may provide justifications of data
outliers, updates to their respective
EDGE server data, and corrected
baseline enrollment or claims counts at
any time during the data submission
process, and are encouraged to do so as
early as possible. The timeframe we
proposed in § 153.710(f)(2) would apply
to the final data quantity and quality
analyses only, which are performed
following the deadline for submission of
data specified in § 153.730 (that is, April
30, of the year following the applicable
benefit year).
We are finalizing these provisions as
proposed, with two modifications. In
§ 153.710(f), we are removing the
proposed language that set forth a time
limitation for HHS to assess a default
risk adjustment charge based on the data
quantity and quality analyses because
the administrative appeals process set
forth in § 156.1220 could result in
imposition of a default risk adjustment
charge. For example, if we determine
during the administrative appeals
process that a data submission error was
of such magnitude that the issuer did
not meet the data quantity and quality
thresholds set forth for that benefit year,
then we may assess a default risk
adjustment charge if that charge is lower
than the charge the issuer is being
assessed for that benefit year. We also
changed the heading for § 153.710(f)
from ‘‘Data Sufficiency’’ to ‘‘Evaluation
of Dedicated Distributed Data.’’
Comment: Numerous commenters
asked that HHS extend the 10-day
deadline to submit an explanation of the
outlier to HHS. Several commenters
asked that HHS provide issuers 15 days
or 30 days to respond. One commenter
agreed with the 10-day deadline.
Response: The 10-day deadline only
applies when HHS conducts the final
quality and quantity analyses of the data
submitted to an issuer’s dedicated
distributed data environment, which are
performed following the deadline for
submission of data specified in
§ 153.730 (that is, April 30 of the year
following the applicable benefit year).
As noted above, HHS will continuously
analyze the quantity and quality of an
issuer’s data, providing reports and
notices to issuers and allowing time to
correct any outliers during the data
submission window. The 10-day
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deadline is necessary because HHS must
review an issuer’s outlier justification to
calculate reinsurance payments and
apply the HHS risk adjustment
methodology by the June 30
notification.
Comment: Some commenters asked
that the data quantity and quality
analysis prior to the data submission
deadline for an applicable benefit year
be robust and that HHS quickly respond
to issuers to allow them to identify and
resolve issues during the data
submission process.
Response: HHS will perform informal
data quantity and quality analyses
throughout the data submission process,
providing issuers with reports and
notices to allow time to address any
outliers before the data submission
deadline. HHS encourages issuers to
work with HHS any time an issue or
problem is encountered. Issuers may
provide justifications, update their
EDGE server data, and correct baseline
enrollment or claims counts at any time
during the data submission process, and
are encouraged to do so as early as
possible.
Comment: One commenter
recommended that HHS provide full
transparency into the evaluation
process, including with respect to how
HHS intends to apply its measurements
for baseline data and quality. Another
commenter asked that HHS publish the
timeframes for the data quantity and
quality analysis in the annual Letter to
Issuers.
Response: HHS strives to be
transparent with respect to these
processes, and will issue guidance
regarding the data quantity and quality
process and timeframes. See https://
www.cms.gov/CCIIO/Programs-andInitiatives/Premium-StabilizationPrograms/ or https://
www.regtap.info/.
Comment: One commenter urged HHS
to publish the timeline and format for
submission of baseline data as soon as
possible prior to the applicable benefit
year.
Response: HHS will continue to
publish timeframe and guidance
materials related to the baseline
submission process as soon as
practicable. HHS has already released
guidance regarding the submission of
baseline data for the 2015 benefit year.21
Comment: One commenter requested
that HHS establish an appeals process
for issuers whose data is determined to
fail the data quantity and quality
standards.
21 2015 EDGE Server Status and Baseline
Reporting (Oct, 20, 2015), available at https://
www.regtap.info/reg_library.php?libfilter_topic=3.
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Response: As we stated in the
proposed rule in the preamble section to
§ 156.1220, an issuer may file a request
for reconsideration if it believes that
HHS made a processing error,
incorrectly applied its methodology, or
made a mathematical error related to the
data quantity and quality standards. For
example, an issuer may file a request for
reconsideration to challenge the
assessment of a default risk adjustment
charge if the issuer believes the default
charge was assessed because HHS
incorrectly applied its methodology
regarding data quantity and quality
standards. We note that, under
§ 156.1220(a)(4)(ii), a reconsideration
with respect to a processing error by
HHS, HHS’s incorrect application of the
relevant methodology, or HHS’s
mathematical error may be requested
only if, to the extent the issue could
have been previously identified by the
issuer to HHS under § 153.710(d)(2), it
was identified and remains unresolved.
d. Data Requirements (§ 153.710(g))
We proposed revising
§ 153.710(g)(1)(iii) to require an issuer to
report the amount of cost-sharing
reductions calculated under § 156.430(c)
in its annual MLR and risk corridors
report, regardless of whether the issuer
had any unresolved discrepancy under
§ 156.1210, or whether the issuer had
submitted a request for reconsideration
under § 156.1220(a)(1)(v). Additionally,
consistent with the process outlined in
§ 153.710(g)(2), we proposed to require
an issuer to adjust the cost-sharing
reduction amount it reports on its 2015
risk corridors and MLR forms by the
difference (if any) between the reported
cost-sharing reduction amount used to
adjust allowable costs and incurred
claims on the 2014 MLR Annual
Reporting Form and the amount of costsharing reductions as calculated under
§ 156.430(c) for the 2014 benefit year.
Consistent with the approach
currently outlined in § 153.710(g)(2), we
proposed to amend this paragraph to
require an issuer to report any
adjustment made or approved by HHS
for any risk adjustment payment or
charge, reinsurance payment, costsharing reduction payment to reflect
actual cost-sharing reduction amounts
received, or risk corridors payment or
charge, where the adjustment has not
been accounted for in a prior MLR and
Risk Corridors Annual Reporting Form
in the next following year. For example,
if an issuer’s risk adjustment charges or
payments are adjusted as a result of the
administrative appeals process, the
issuer should adjust these reported
amounts in the next MLR and risk
corridors reporting cycle, after the
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appeal has been resolved. Similarly, if
HHS makes changes to an issuer’s risk
adjustment charges or payments after
the risk corridors and MLR reporting
cycle has closed for the applicable
reporting year, the issuer should adjust
these reported amounts in the next MLR
and risk corridors reporting cycle to
account for the difference between the
reported amounts and the amounts
actually received or paid for the
previous benefit year. However, if an
issuer is notified about the modification
during an open MLR and risk corridors
submission period, it must report the
modified amounts in that open
reporting cycle.
We also proposed to clarify in
§ 153.710(g)(1)(iii) that cost-sharing
reduction amounts to be reported under
this section must exclude amounts
reimbursed to providers of services or
items. This clarifying language is
consistent with how the instructions for
cost-sharing reductions amounts are
reported under §§ 153.530(b)(2)(iii) (risk
corridors data requirements) and
158.140(b)(iii) (MLR data requirements).
We also proposed to revise paragraph
(g)(1)(iv) to require that for medical loss
ratio reporting only, issuers should
report the risk corridors payment to be
made or charge assessed by HHS, as
reflected under § 153.510. Lastly, HHS
learned in the first year of
implementation of the premium
stabilization and Exchange financial
assistance programs that some flexibility
is needed when reporting these program
amounts for purposes of risk corridors
and MLR reporting. As such, we
proposed in § 153.710(g)(3) that HHS
have the ability to modify the reporting
instructions set forth in § 153.710(g)(1)
and (2) through guidance. Our intent in
issuing any such guidance would be to
avoid having the application of the
reporting instructions lead to unfair or
misleading financial reporting in
exceptional circumstances.
Based on comments received, we are
finalizing these provisions as proposed,
with one modification. We are
modifying § 153.710(g)(2) to specify that
an issuer must report any adjustment
made or approved by HHS by August
15, or the next applicable business day,
of the reporting year for any risk
adjustment payment or charge,
including an assessment of risk
adjustment user fees; any reinsurance
payment; any cost-sharing reduction
payment or charge; or any risk corridors
payment or charge, in the current MLR
and risk corridors reporting year, unless
the adjustment meets the criteria for a
‘‘de minimis’’ change outlined in prior
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guidance.22 HHS will also finalize as
proposed the conforming amendments
to the introductory language at
§ 153.710(g)(1) to remove the crossreferences to the interim discrepancy
reporting process currently codified at
§ 153.710(d). See III.D.5.a of this
preamble for a discussion of the
conforming amendments related to the
removal of interim discrepancy
reporting process.
Comment: One commenter agreed
with the proposal to require an issuer to
report any adjustment made or
approved by HHS for any risk
adjustment payment or charge,
reinsurance payment, cost-sharing
reduction payment to reflect actual costsharing reduction amounts received, or
risk corridors payment or charge, where
the adjustment has not been accounted
for in a prior MLR and Risk Corridors
Annual Reporting Form, in the
following year, but further
recommended that we establish a cut-off
date for notifications of adjustments of
June 30, after which adjustments must
be reported in the following year’s MLR
and risk corridors reporting cycle. The
commenter suggested that notifications
by June 30 would give issuers sufficient
time to incorporate data changes into
their MLR and risk corridors
submissions by the July 31 reporting
deadline.
Response: We recognize that, in some
cases, the timing of notifications of
changes to data such as risk adjustment
charges or payments may affect an
issuer’s MLR and risk corridors
submission. Issuers must adhere to the
July 31 regulatory deadline for
submitting MLR and risk corridors data
for the preceding benefit year. In order
to accommodate potential adjustments
to reinsurance payments, risk
adjustment payments or charges, or
payments or charges resulting from the
cost-sharing reduction reconciliation
process, in the period immediately after
the issuance of the June 30 report while
also maintaining the accuracy of issuers’
MLR and risk corridors submissions, we
are modifying § 153.710(g)(2) to specify
that if HHS notifies an issuer about an
adjustment by August 15, the issuer
must report the adjustment in the
current year reporting cycle, unless the
adjustment meets the criteria for a ‘‘de
minimis’’ change outlined in prior
guidance.23 We note that we expect only
a small number of issuers to be required
22 Risk Corridors and Medical Loss Ratio (MLR)
Resubmissions for the 2014 Benefit Year, (Aug. 14,
2015), available at https://www.regtap.info/
uploads/library/RC_MLR_ResubmissionFAQ_5CR_
081415.pdf.
23 https://www.regtap.info/uploads/library/RC_
MLR_ResubmissionFAQ_5CR_081415.pdf.
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to resubmit data due to such an
adjustment, and that all issuers should
prepare to disburse rebates by the
September 30 deadline. For those
issuers who may be notified an
adjustment that does not meet the ‘‘de
minimis’’ criteria by August 15, HHS
will work with the issuer to facilitate
resubmission of its MLR and risk
corridors submissions and to address
the impact on MLR rebates, if necessary,
in a manner that limits additional
operational burden for the issuer.
Comment: One commenter asked that
HHS not finalize § 153.710(g)(1)(iii),
stating this change would limit the
ability of issuers with alternative
payment models to receive cost-sharing
reduction amounts for capitated
payment arrangements.
Response: The language under
§ 153.710(g)(1)(iii) does not limit the
ability of issuers with alternative
payment arrangements to receive costsharing reduction payments, and is
consistent with other cost-sharing
reduction reporting requirements, for
example, allowable costs under
§ 153.530(b)(2)(iii) (risk corridors data
requirements) must be reduced by the
amount of cost-sharing reduction
payments received by the issuer, except
for, or excluding, any part of those
payments used by the issuer to
reimburse providers.
e. Good Faith Safe Harbor
In the second Program Integrity Rule,
we finalized § 153.740(a), which permits
HHS to impose civil money penalties
upon issuers of risk adjustment covered
plans and reinsurance-eligible plans for
failure to adhere to certain standards
relating to their dedicated distributed
data environments. In the proposed
rule, consistent with our previous
statements in the 2016 Payment Notice
(80 FR 10780), we stated that we would
not be extending the good-faith safe
harbor to 2016. Starting in the 2016
calendar year and beyond, civil money
penalties may be imposed if an issuer of
a risk adjustment covered plan or
reinsurance-eligible plan fails to
establish a dedicated distributed data
environment in a manner and timeframe
specified by HHS; fails to provide HHS
with access to the required data in such
environment in accordance with
§ 153.700(a) or otherwise fails to comply
with the requirements of §§ 153.700
through 153.730; fails to adhere to the
reinsurance data submission
requirements set forth in § 153.420; or
fails to adhere to the risk adjustment
data submission and data storage
requirements set forth in §§ 153.610
through 153.630, even if the issuer has
made good faith efforts to comply with
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these requirements. This safe harbor
provision parallels a similar safe harbor
for QHP issuers in FFEs under § 156.800
that also expired at the end of the 2015
calendar year. See III.G.7 of this
preamble for the accompanying
discussion of the safe harbor provision
under § 156.800. However, we are
clarifying that HHS will not impose
civil money penalties under § 153.740(a)
in 2016 or later based on activities that
occurred in the 2014 or 2015 calendar
year if the issuer acted in good faith at
that time.
Comment: Several commenters asked
HHS to extend the good faith safe harbor
to 2016, while others supported our
proposal. Some commenters asked that
HHS allow a good faith safe harbor for
all new processes, such as policy-based
payments and reconciliation of advance
payments of cost-sharing reductions.
Response: HHS will not extend the
good faith safe harbor to cover conduct
in 2016 or later years (including with
respect to activities that occur in the
2016 calendar year or later relating to
data from earlier benefit years). We
believe that the 2 calendar years that we
provided under this policy were
sufficient to permit issuers to transition
into compliance with the applicable risk
adjustment, reinsurance and distributed
data collection requirements. Of course,
in all our enforcement actions, we will
continue to take into account all facts
and circumstances, including the
reasonable good faith action of issuers.
Comment: A few commenters asked
that HHS make clear that the good faith
safe harbor continues to apply to
conduct for benefit years prior to 2016
in perpetuity.
Response: HHS will not impose civil
money penalties in 2016 or later based
on activities that occurred in the 2014
or 2015 calendar year if the issuer acted
in good faith at that time.
f. Default Risk Adjustment Charge
(§ 153.740(b))
In the second Program Integrity Rule
and the 2015 Payment Notice, HHS
indicated that a default risk adjustment
charge will be assessed if an issuer does
not establish a dedicated distributed
data environment or submits inadequate
risk adjustment data. In the 2016
Payment Notice, we established how a
default risk adjustment charge will be
allocated among risk adjustment
covered plans.
As described in the second final
Program Integrity Rule, the total risk
adjustment default charge for a risk
adjustment covered plan equals a
PMPM amount multiplied by the plan’s
enrollment.
Tn = Cn * En
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Where:
Tn = total default risk adjustment charge for
a plan n;
Cn = the PMPM amount for plan n; and
En = the total enrollment (total billable
member months) for plan n.
In the second final Program Integrity
Rule, we provided that En could be
calculated using an enrollment count
provided by the issuer, using enrollment
data from the issuer’s MLR and risk
corridors filings for the applicable
benefit year, or other reliable data
sources.
In the 2015 Payment Notice, we
determined that we would calculate
Cn—the PMPM amount for a plan—
equal to the product of the statewide
average premium (expressed as a PMPM
amount) for a risk pool and the 75th
percentile plan risk transfer amount
expressed as a percentage of the
respective Statewide average PMPM
premiums for the risk pool. The
nationwide percentile would reflect
only plans in States where HHS is
operating the risk adjustment program
and would be calculated based on the
absolute value of plan risk transfer
amounts. The PMPM amount
determined using the method described
here would be multiplied by the noncompliant plan’s enrollment, as
determined using the sources finalized
in the second final Program Integrity
Rule, to establish the plan’s total default
risk adjustment charge.
For the second year of risk
adjustment, the 2015 benefit year, we
proposed to calculate Cn in the same
manner, but increased to the 90th
percentile plan risk transfer amount
expressed as a percentage of the
respective statewide average PMPM
premiums for the risk pool. We believe
that the 75th percentile was reasonable
for the initial year of risk adjustment, as
we did not yet know the distribution of
risk adjustment transfers and issuers
were more likely to experience technical
difficulties in establishing a dedicated
distributed data environment. In the
second year of risk adjustment, now that
issuers have set up EDGE servers and
participated in the calculation of risk
adjustment transfers, we believe that
adjusting the default charge upwards to
the 90th percentile of plan risk transfer
amounts expressed as a percentage of
the respective statewide average PMPM
premiums for the risk pool will
encourage continued compliance with
risk adjustment data submission
requirements. We are concerned that,
absent this change, some issuers may
prefer receiving a default charge at the
75th percentile over participating in the
risk adjustment program; a default
charge at this level might lack sufficient
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12237
deterrent value. We stated that we
believe the proposed 90th percentile
default charge will incentivize issuers to
participate in the risk adjustment
program.
Comment: Commenters generally
supported the increased default risk
adjustment charge for 2015 benefit year
risk adjustment. Two commenters
opposed the increase, stating the
increase is overly punitive.
Response: We believe that the
increased default charge will encourage
participation in the second year of
implementation of the risk adjustment
program. In establishing the amount of
the default charge, we must balance
setting a fair risk allocation and
discouraging strategic behavior from
issuers with low-risk enrollees against
avoiding unduly penalizing issuers who
fail to make proper submissions for
operational, and not strategic, reasons.
In the second year of risk adjustment,
we believe that most issuers will
encounter fewer operational difficulties
in establishing an EDGE server and
meeting data quantity and quality
thresholds, and that the opportunity for
strategic behavior is greater because risk
transfer distributions will be better
understood. We believe that raising the
default risk adjustment charge from the
75th percentile PMPM transfer amount
to the 90th percentile transfer amount is
a fair balancing of these goals. We are
finalizing this policy as proposed
For the 2016 benefit year, we
proposed a separate calculation of Cn for
issuers where En statewide, in the
individual and small group markets
combined, is 500 billable member
months or fewer. For these issuers, we
proposed to calculate Cn, or the PMPM
charge for a plan, as 14 percent of
premium, which we calculated as the
mean charge as a percent of premium of
issuers with 500 billable member
months or fewer in the 2014 benefit year
in the small group market. We based the
charge itself on the experience of small
group issuers in the 2014 benefit year,
as we believe that individual market
issuers are more likely to set up an
EDGE server because of the availability
of reinsurance. Limiting the
applicability in the 2016 benefit year of
this default charge to issuers with 500
billable member months or fewer is
intended to ensure that the only issuers
with this option are issuers that are so
small that their removal from the overall
risk adjustment risk pool would have a
minimal impact on transfers
nationwide. In 2014, approximately 125
issuers would have had fewer than 500
member months in the individual and
small group markets combined. Of those
approximately 125 small issuers, 80
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were assessed risk adjustment charges
greater than the proposed default charge
of 14 percent of premium PMPM. Those
charges amounted to less than 0.09
percent (that is, less than one tenth of
one percent) of total risk adjustment
charges assessed nationally. Assuming
every one of those issuers elect to accept
the proposed 14 percent default risk
charge, and none of the small issuers
that received risk adjustment payments
or with charges below 14 percent of
premium PMPM did so (which we
believe unlikely, due to the
administrative expenses of setting up an
EDGE server), the assessment of the
proposed 14 percent of premium default
charge on those 80 issuers would have
resulted in a 0.05 percent reduction in
risk adjustment charges collected
nationally. Because issuers of this size
have a minimal impact on the overall
risk adjustment risk pools and have a
disproportionately high operational
burden to comply with risk adjustment
data submission requirements, we
believe that a separate default charge for
these issuers would promote efficiency
and data quality in the risk adjustment
program. We proposed to establish this
risk adjustment default charge as the
mean charge in the small group for these
small issuers, or 14 percent of statewide
average premium PMPM, to compensate
on average for the absence of these
immaterial amounts in the affected risk
pools. We intend that this policy would
apply only to the very smallest issuers,
in recognition of the disproportionately
high operational burden on these
issuers.
Comment: Commenters opposed the
separate, lower default charge, stating
that compliance with risk adjustment is
a cost of doing business under the
Affordable Care Act. One commenter
stated that the 500-member-months
threshold is too small. One commenter
recommended a graded approach to the
default risk charge that would adjust the
percentile factor from 50th to 75th for
those issuers with 500 to 2,000 billable
members to allow an issuer more
flexibility as they transition into
participation on the EDGE server. One
commenter recommended that the
threshold should be 720,000 billable
member months.
Response: We agree that, in general,
compliance with risk adjustment is a
cost of doing business under the new
market rules. However, as we explained
in the proposed rule, we believe that an
exception for the very smallest issuers
recognizes that for those issuers the
administrative costs of implementing an
EDGE server will substantially outweigh
the risk adjustment benefits to the risk
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pool. We are finalizing this policy as
proposed.
g. Insolvent Issuers
We are aware that a health insurance
issuer may become insolvent or exit a
market during a benefit year. In some
cases, another entity, such as another
issuer or liquidator may take over the
issuer’s operations, or a State guaranty
fund may become responsible for paying
claims for the insolvent issuer. In some
instances when this occurs, both the
insolvent issuer and the entity seeking
to acquire business from the insolvent
issuer would lack a full year of enrollee
data to submit to the EDGE server for
the risk adjustment or reinsurance
programs.
To address this concern, we proposed
to clarify that an entity acquiring or
entering into another arrangement with
an issuer to serve the current enrollees
under a plan, or a State guaranty fund
that is responsible for paying claims on
behalf of the insolvent issuer, with
substantially the same coverage terms
may accrue the previous months of
claims experience for purposes of risk
adjustment and reinsurance to fully
reflect the enrollees’ risk and claims
costs. We proposed the ‘‘substantially
the same’’ standard because we
understood that in many of these
situations, an acquiring entity’s platform
may require some adjustments to the
plan arrangements and coverage terms.
As part of meeting this standard, an
acquiring entity would be required to
carry over of accumulators for
deductibles and annual limitations on
cost sharing. If the substantially the
same standard is met, and the insolvent
issuer and acquiring entity agree that
the acquiring entity will accrue the
previous months of claims experience,
the acquiring entity must take
responsibility for submitting to HHS
complete and accurate claims and
baseline information for that benefit
year (including data from the insolvent
issuer) in accordance with HHS’s
operational guidance to maintain
eligibility to receive payments under
this program for the given benefit year.
Operationally, the acquiring entity may
elect to have the insolvent issuer submit
the data on behalf of both entities. We
will work with issuers and other
acquiring entities in these situations to
facilitate the submission of the
necessary data to EDGE servers for HHS
to calculate risk adjustment financial
transfers and reinsurance payments.
We also recognized that guaranty
funds may not meet all of the
requirements to be considered a risk
adjustment covered plan or reinsurance
eligible plan (for example, they may not
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meet the definition of ‘‘health insurance
issuer’’), and so we proposed to permit
a guaranty fund to participate in those
programs notwithstanding these
definitions, to the extent it has taken
over liability for a risk adjusted covered
plan or reinsurance eligible plan during
a benefit year.
We sought comment on these policies,
including with respect to permissible
ways in which the acquiring entity’s
arrangements may differ and other ways
of ensuring the submission of the data
necessary for HHS to calculate the risk
adjustment financial transfer amounts
and the reinsurance payment amounts
when another party will take over
operations of the insolvent issuer, or
pay claims on behalf of the insolvent
issuer, during a benefit year. We also
solicited comments on whether
additional flexibility is needed with
respect to the data submission
requirements for the reinsurance and
risk adjustment programs, such as with
respect to the definition of a ‘‘paid
claim’’ to account for situations when
an issuer is unable to pay claims for
covered services, for example, due to
insolvency.
We received a number of comments
on these policies. Most commenters
supported the general intent of the
policies but requested additional
information or clarification of certain
aspects of them. We are finalizing this
policy with certain clarifications, as
detailed below.
Comment: Two commenters requested
that we clarify the term ‘‘substantially
the same’’ in this context, and one of
these commenters questioned whether a
guaranty fund that pays only a portion
of the original covered benefits would
meet this standard.
Response: With respect to the
acquisition of business from an
insolvent issuer, an acquiring entity
must, at a minimum, carry over
accumulators for deductibles and
annual limitations on cost sharing to
meet the substantially the same
standard. We note that this standard is
unrelated to the standards under
§ 153.500 for determining whether a
health plan offered outside of the
Exchange is the same as a QHP for the
purposes of the risk corridors program.
We will continue to monitor situations
involving issuer insolvencies and intend
to issue further guidance as necessary.
Comment: Two commenters
expressed concern about the
opportunity for gaming by acquiring
issuers if they have the option, but are
not required to accrue and submit
claims experience for the insolvent
issuer, because they could select the
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approach that would be most favorable
to their risk adjustment calculation.
Response: We appreciate the concern,
but we believe that a single EDGE server
submission better reflects the true
economic risk of the enrollment in the
plans of the insolvent issuer, and note
that an acquiring entity taking over the
insolvent issuer’s business could
structure the acquisition to provide for
separate submissions. We will work
with issuers and acquiring entities in
these situations to facilitate the
submission of accurate and complete
data to EDGE servers that is necessary
to calculate risk adjustment financial
transfers and reinsurance payments.
Comment: One commenter
encouraged us to address situations
involving a State guaranty fund or
liquidator separately from those
involving an acquiring issuer, given
their differing roles and responsibilities.
This commenter also requested that
liquidators, in addition to guaranty
funds, be given explicit ability to
participate in the reinsurance and risk
adjustment programs as they are often
responsible for providing preliquidation coverage. Another
commenter questioned whether a
guaranty fund would be able to
participate in risk adjustment under
State law or operationally. A separate
commenter proposed that the policies
apply to providers in the same manner
as guaranty associations, because the
majority of issuers in its State are not
subject to the guaranty association to
pay claims; however, providers are
required to hold consumers harmless if
their insurance company becomes
insolvent.
Response: We clarify that this policy
permits participation of a liquidator or
a State guaranty fund in the risk
adjustment and reinsurance programs,
to the extent it has taken over liability
for a risk adjustment covered plan or
reinsurance eligible plan during a
benefit year, unless otherwise
prohibited by State law. We recognize
that restrictions under State law, or
operational limits, may apply. In the
case where a guaranty fund assumes
liability for a risk-adjustment covered
plan or reinsurance eligible plan, the
guaranty fund would submit data acting
on behalf of the insolvent issuer;
however, the insolvent issuer would
retain responsibility for the
coordination of the EDGE data
submission. While we understand that
policyholders in some States are not
covered by guaranty funds, it is not
clear how providers could coordinate
the submission of an EDGE server
because the responsibility to submit
data to the EDGE server applies to the
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issuer and the EDGE server does not
support the submission of individual
claims from providers.
Comment: One commenter
recommended that, in the event that an
issuer in a market in a State is unable
to pay a risk adjustment charge in full,
HHS adjust both risk adjustment
payments and charges in that market
and State, rather than only payments, to
ensure that the shortfall is distributed
proportionally among issuers in the risk
pool.
Response: We appreciate the
recommendation and will consider
proposing this approach in rulemaking
for future benefit years.
E. Part 154—Health Insurance Issuer
Rate Increases: Disclosure and Review
Requirements
1. Disclosure and Review Provisions
a. Rate Increases Subject To Review
(§ 154.200)
In the proposed rule, we proposed
amending paragraph (c)(2) of § 154.200
to re-establish that a rate increase for
single risk pool coverage effective on or
after January 1, 2017, must be calculated
as the premium-weighted average rate
increase for all enrollees. The proposed
change would reverse a previous
amendment 24 that defined a rate
increase for single risk pool coverage
effective on or after January 1, 2017 as
an increase in the plan-adjusted index
rate. We note that the previous
amendment also established a plan level
trigger for a product being subject to
review for coverage effective on or after
January 1, 2017. The proposed
amendment maintained the plan level
trigger for the subject-to-review
threshold.
We proposed the amendment to the
calculation method because an increase
in the plan-adjusted index rate does not
reflect changes to adjustment factors for
rating area, age, or tobacco use. For
example, an issuer could change
geographic rating area factors such that
members in a certain rating area receive
a larger increase, but if the planadjusted index rate did not meet or
exceed the threshold then the rate
increase would not be subject to rate
review.
We are finalizing this section as
proposed, so that a rate increase for
single risk pool coverage effective on or
after January 1, 2017 is subject to review
if the average increase, including
premium rating factors described in
§ 147.102, for all enrollees weighted by
premium volume for any plan within
the product meets or exceeds the
24 80
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12239
applicable threshold. This amendment
strengthens consumer protections
against unreasonable rate increases by
ensuring that coverage with a significant
rate increase due to changes in rating
factors is subject to review.
We maintain that the plan level rate
increase, as opposed to the product
level rate increase, will determine
whether the increase is subject to
review. The plan level trigger was
finalized in the 2016 Payment Notice
(80 FR 10781) effective for coverage
beginning on or after January 1, 2017.
Comment: Some commenters
expressed concern regarding the
inclusion of premium rating factors and
requested HHS clarify how rate changes
should be calculated according to the
proposal.
Response: All rating factors, including
rating area and tobacco use factors,
should be captured in the calculation of
plan rate changes. The intent here, in
the context of the rate review program,
is to measure the premium change based
on an issuer’s current population
compared to that same population if the
new rates were implemented. This is
not intended to capture demographic
changes, such as a member aging up or
moving to a new geographic location.
b. Submission of Rate Filing
Justification (§ 154.215)
In the proposed rule, we proposed to
revise § 154.215(a)(1) to require health
insurance issuers to submit the Unified
Rate Review Template (also known as
Part I of the Rate Filing Justification) for
all single risk pool coverage in the
individual or small group (or merged)
market, regardless of whether any plan
within a product is subject to a rate
increase. This proposal was made to
carry out the Secretary’s responsibility,
in conjunction with the States, under
section 2794(b)(2)(A) of the PHS Act to
monitor premium increases of health
insurance coverage offered through as
well as outside of an Exchange. We also
expressed our intent to disclose
information that is not a trade secret or
confidential commercial or financial
information for all proposed rate
increases for single risk pool coverage,
rather than only proposed rate increases
subject to review, as well as all final rate
increases.
We proposed to revise paragraph (a)
to insert paragraph (a)(1) to establish
that health insurance issuers must
submit the Unified Rate Review
Template (‘‘URRT,’’ also known as Part
I of the Rate Filing Justification) for all
single risk pool products in the
individual or small group (or merged)
market, regardless of whether any plan
within a product is subject to a rate
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increase. We also proposed to insert
paragraph (a)(2) to capture the existing
requirement that issuers must submit a
URRT and an Actuarial Memorandum
(also known as Parts I and III of the Rate
Filing Justification) when a single risk
pool product has a plan that is subject
to a rate increase of any size. Similarly,
we proposed to insert paragraph (a)(3) to
capture the existing requirement that an
issuer must provide that all three parts
of the Rate Filing Justification (that is,
the Part I URRT, the Part II written
description justifying a rate increase,
and the Part III Actuarial Memorandum)
when a single risk pool product has a
plan with a rate increase that is subject
to review. Accordingly, we proposed to
revise paragraph (b) to provide that a
Rate Filing Justification for single risk
pool plans must include one or more of
the three parts, as appropriate, but not
necessarily all three. We also proposed
to remove and reserve paragraph (c), as
it was unnecessary in light of the
proposed amendments to paragraphs (a)
and (b). We are finalizing all of the
amendments to this regulation as
proposed.
Comment: A majority of commenters
supported the proposal and several
recommended that all proposed rate
changes should be made public, rather
than just proposed rate increases. Some
commenters, however, expressed
concern regarding the proposal, citing
the statutory obligation to review only
unreasonable premium increases, rather
than all increases. A few commenters
stated that publicizing rate filings before
they are finalized eliminates
competitive advantages for plans.
Response: We are finalizing the
proposal to collect rate filings for all
single risk pool products in order to
carry out the Secretary’s statutory
responsibility 25 to monitor premium
increases of health insurance coverage.
HHS will post information for all
proposed rate filings for the individual
and small group markets within a state
at a uniform time to promote fair market
competition between issuers through
and outside of the Exchange and further
enhance transparency of the rate-setting
process. We note that States with an
Effective Rate Review Program are
required to post proposed rate increases
subject to review and have a mechanism
for receiving public comments on those
proposed rate increases. CMS’s decision
to post information for all proposed rate
filings for single risk pool coverage does
not affect or change the State’s
25 Section 2794(b)(2)(A) of the Public Health
Service Act.
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obligation to post proposed rate
increases under § 154.301(b).
Comment: Some commenters
requested that HHS should make final
rate information publicly available at
least 15 days before open enrollment.
Response: Final rate increase
information must be posted at a uniform
time for all single risk pool coverage
(regardless of whether the coverage is
sold on the Exchange) by the first day
of open enrollment,26 but States may
establish an earlier uniform posting
timeframe with appropriate notice to
CMS.27 We believe this timeframe
strikes a balance between providing
State and Federal regulators sufficient
time to complete their reviews, while
providing consumers the information
needed to make informed purchasing
decisions.
c. Timing of Providing the Rate Filing
Justification (§ 154.220)
In the proposed rule, we proposed
technical changes to § 154.220 to
remove references to rate increases and
clarify that the timeframes listed pertain
to all single risk pool products with or
without rate changes to conform with
the proposed amendments to § 154.215.
We are finalizing the amendments to
this regulation as proposed.
Comment: Some commenters
requested that HHS change the filing
deadline to a time after the risk
adjustment report is released to issuers.
Other commenters suggested States
establish their own rate filing
submission deadlines rather than
adhering to HHS filing deadlines.
Response: We acknowledge the
comments, and consistent with the
approach outlined in guidance being
released with this rule,28 we are
providing States with an effective rate
review program 29 with additional
flexibility with respect to the
submission deadline for proposed rate
filings for single risk pool products.
Issuers in a State effective rate review
program must submit proposed rate
filings for single risk pool coverage (for
both QHPs and non-QHPs) on a date set
by the State, so long as the date is not
later than July 15, 2016. We encourage
States with effective rate review
programs that are served by the
HealthCare.gov platform to set a date
that aligns with the Federally-facilitated
26 § 154.301(b)(1)(ii).
27 § 154.301(b)(2).
28 CMS Insurance Standards Bulletin: Timing of
Submission and Posting of Rate Filing Justifications
for the 2016 Filing Year for Single Risk Pool
Coverage, (Feb. 29, 2016).
29 See 45 CFR 154.301 for a list of criteria that
CMS considers when evaluating whether a State has
an effective rate review program
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Exchange QHP filing deadlines; 30
however, we understand some States
may face challenges in doing so. Issuers
in States without effective rate review
programs 31 must submit proposed rate
filings for single risk pool coverage (for
both QHPs and non-QHPs) on a date set
by the State, so long as the date is not
later than May 11, 2016. Further, we
note that all States retain flexibility to
establish an earlier submission date
under § 154.220(b).
d. Submission and Posting of Final
Justifications for Unreasonable Rate
Increases (§ 154.230)
We proposed to fix a typographical
error and change the cross reference in
§ 154.230(c)(2)(i) to reference
§ 154.215(h) rather than § 154.215(i).
There were no comments submitted
regarding this section. We are finalizing
the amendment as proposed.
e. CMS’s Determinations of Effective
Rate Review Programs (§ 154.301)
In the proposed rule, we restated that
making rate information available to the
public at a uniform time (rather than a
rolling basis) is one of the criteria for
determining whether a State has an
Effective Rate Review program.32 We
expressed our intent to propose a
uniform timeline for release of proposed
rate increases subject to review and for
all final rate increases for single risk
pool coverage. We are maintaining the
requirement for releasing rate
information at a uniform time rather
than on a rolling basis. We released the
proposed timeline for the 2016 Filing
Year on December 23, 2015.33 Public
comments were accepted until January
22, 2016. We are releasing the final
timeline in guidance 34 with this final
rule, as discussed above.
Comment: Many commenters
expressed support for requiring States to
post all rate increases at the same time.
Some commenters opposed having a
uniform posting timeline, requesting
that States be able to establish the
timeline for SBEs.
30 Final 2017 Letter to Issuers in the Federallyfacilitated Marketplaces (Feb. 29, 2016).
31 For the 2017 plan year, health insurance issuers
in Alabama, Missouri, Oklahoma, Texas, and
Wyoming are required to submit rate filings for
review by CMS to determine reasonableness.
32 § 154.301(b).
33 DRAFT Bulletin: Timing of Submission and
Posting of Rate Filing Justifications for the 2016
Filing Year for Single Risk Pool Coverage1 Effective
on or after January 1, 2017, (Dec. 23, 2015),
available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/TimelineBulletin-12-23-15-FINAL.pdf.
34 CMS Insurance Standards Bulletin: Timing of
Submission and Posting of Rate Filing Justifications
for the 2016 Filing Year for Single Risk Pool
Coverage (Feb. 29, 2016).
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Response: The requirement for a State
with an Effective Rate Review program
to post proposed rate increases that it
reviews, and to have a mechanism for
receiving public comments on those
proposed rate increases, has been in
effect for several years. The uniform
timeline requires States to ensure that
the proposed rate increases subject to
review, as well as all final rate
increases, are released to the public at
the same time. This policy ensures that
rate information is available
simultaneously for coverage offered
through and outside of the Exchange,
which enhances transparency and
promotes fair market competition. We
note that the guidance being released
with this final rule provides States with
an effective rate review program with
flexibility to set a date to post proposed
rate filings for single risk pool products
with rate increases subject to review,
provided the date set by the State is no
later than August 1, 2016. Nothing in
this rule prevents States from making
additional information available to the
public, or prevents States from
establishing earlier uniform timeframes
for public disclosure.
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F. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
1. Definitions (§ 155.20)
In § 155.20, we proposed to amend
the definition of ‘‘applicant’’ for the
small group market so that the term also
includes an employer seeking eligibility
to purchase coverage through a SHOP,
without necessarily enrolling in that
coverage themselves. The current
definition of an applicant contemplates
an employer, employee, or former
employee seeking eligibility for
enrollment in a QHP through the SHOP
for himself or herself. For consistency
with our existing regulations governing
the SHOP application process at
§§ 155.710 and 155.715 and for
consistency with how the small group
market typically works, we proposed
that the term applicant also include an
employer who is seeking eligibility to
purchase coverage through a SHOP, but
who is not seeking to enroll in that
coverage for himself or herself. We
received no comments on this proposal
and are finalizing this amendment as
proposed.
We proposed to modify the
definitions of ‘‘small employer’’ and
‘‘large employer’’ at § 155.20 to align
with the Protecting Affordable Coverage
for Employees Act, which was recently
enacted, as further described in the
preamble to § 144.103. For a discussion
of the provisions of this final rule
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related to the definitions of small
employer and large employer in
§ 155.20, please see the preamble to
§ 144.103. We did not propose to change
the applicability of the counting
methodology under section 4980H(c)(2)
of the Code to these definitions in
§ 155.20, but we proposed amendments
to these definitions that eliminate
language about the timing of the
applicability of the counting
methodology under section 4980H(c)(2)
of the Code under these definitions,
because that language is no longer
relevant. We did not receive any
comments regarding this aspect of the
proposal and are finalizing as proposed
the elimination of the language about
the timing of applicability of the
counting methodology under section
4980H(c)(2) of the Code.
We proposed to amend § 155.20 to
add a definition for ‘‘Federal platform
agreement’’ to apply to this part. We
defined a Federal platform agreement to
mean an agreement entered into by a
State Exchange and HHS, under which
the State Exchange agrees to rely on the
Federal platform to carry out select
Exchange functions. We are finalizing
the definition, with a slight
modification to reflect the fact that the
State election to implement the SBE–FP
would occur through the Blueprint
process in § 155.106(c) rather than the
Federal platform agreement, which will
reflect the agreement between the
parties and will be entered into at the
end of the Blueprint process. The
Federal platform agreement, which we
will publish later this year, will also
contain the parties’ mutual obligations
with respect to those Exchange
functions and related matters.
For a discussion of the provisions of
this final rule regarding standardized
options, please see the preamble to part
156, regarding standardized options.
2. General Standards Related to the
Establishment of an Exchange
a. Election To Operate an Exchange
After 2014 (§ 155.106)
We proposed to modify the
timeframes for submission and approval
of documentation specifying how an
Exchange established by a State or a
regional Exchange meets the Exchange
approval standards (that is, the
Exchange Blueprint). Based on our
experience over the last two open
enrollment periods, we believe the
current Exchange Blueprint application
deadlines for States intending to operate
a State Exchange do not sufficiently
balance the need to provide States with
time to adequately prepare their
Blueprint applications against the need
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12241
to ensure HHS has sufficient time to
accurately assess a State’s progress and
ability to timely build the necessary
Exchange information technology. In
our experience, the process for seeking
approval to operate a State Exchange
involves substantial technical assistance
and collaboration between HHS and the
State in developing plans to transition
from one Exchange operational model
and information technology
infrastructure to another, including key
milestones, deadlines, and contingency
measures. Since the completion of some
of these key milestones and deadlines
would need to occur prior to the
submission of the Blueprint application,
we proposed that we will make that
technical assistance available and
initiate the transition process following
submission of a declaration letter from
the State, as provided for in the
Blueprint approval process. The
declaration letter would serve as formal
notification to HHS of a State’s intent to
operate a State Exchange, including
operating an SBE–FP, and to submit a
Blueprint (or Blueprint update) for HHS
approval. The declaration letter would
initiate coordination between the State
and HHS on a transition plan. The
declaration letter would also serve as a
starting point for HHS to communicate
the operational steps that a State must
complete in order to become an SBE, as
well as a starting point for HHS to assess
a State’s progress by the time of the
State’s Blueprint or Blueprint update
submission. We would require a
declaration letter approximately 21
months prior to the beginning of the
SBE’s first annual enrollment and
approximately 9 months prior to the
beginning of an SBE–FP’s first annual
open enrollment. HHS would assess
later submissions on a case-by-case
basis, recognizing operational realities
and need for adequate notice for
stakeholders, including issuers and
consumers.
In § 155.106(a)(2), we proposed to
require States that are establishing a
State Exchange (not including a State
Exchange using the Federal platform for
certain functions) to submit an
Exchange Blueprint at least 15 months
prior to the date the Exchange proposes
to begin open enrollment as a State
Exchange. We also proposed in
§ 155.106(a)(3) to increase the time that
the State must have in effect an
approved or conditionally approved
Exchange Blueprint from 6.5 months to
14 months prior to the date the
Exchange proposes to begin open
enrollment as a State Exchange. We
recognized that in some situations the
open enrollment period may not have
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been established when Blueprints are
due. Therefore, we proposed in
paragraph (a)(5), if the open enrollment
period for the year the State intends to
begin operating an SBE has not been
established, a State should assume open
enrollment will begin on the same date
as open enrollment is to begin for the
year in which they are submitting the
Blueprint.
We proposed to revise paragraph (b)
to clarify that HHS will operate the
Exchange if a State Exchange ceases
operations.
We proposed to add a paragraph (c) to
establish requirements for a State that
elects to operate an SBE–FP. These
States must submit an Exchange
Blueprint (or submit an update to an
existing approved Exchange Blueprint)
at least 3 months prior to the date open
enrollment is to begin for the State as an
SBE–FP; and must have in effect an
approved, or conditionally approved,
Exchange Blueprint and operational
readiness assessment at least 2 months
prior to the date on which the Exchange
proposes to begin open enrollment as an
SBE–FP. If the State Exchange has a
conditionally approved Exchange
Blueprint application, we proposed that
it would not be required to submit a
new Blueprint application, but instead
must submit any significant changes to
that application for HHS approval at
least 3 months prior to the date on
which the Exchange proposes to begin
open enrollment as an SBE–FP. As part
of HHS’s approval or conditional
approval of the Exchange Blueprint or
amended Blueprint, these States must
execute a Federal platform agreement
and be required to coordinate with HHS
on a transition plan.
Lastly, we want to be clear that we
only proposed changes to the timelines
for submission of the Blueprint
application. We did not otherwise
propose any modifications to the
information and documents that States
must submit as part of the Exchange
Blueprint application.
We are finalizing our proposals as
proposed, except that, in order to
provide additional time for the
transition, we are amending the timing
of the Federal platform agreement, so
that it must be executed prior to
approval or conditional approval of the
Exchange Blueprint.
Comment: Several commenters
expressed concern that the proposed
Blueprint submission and approval
timelines for a State transitioning to an
SBE–FP do not allow sufficient time for
a State and its issuers to make the
necessary operational changes to
prepare for the State’s transition to the
SBE–FP model, and for HHS to make an
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assessment of the State’s progress. A
commenter indicated that they would
also like to see a timeline for when the
Federal platform agreement must be
fully executed. Finally, comments were
received regarding the need for HHS to
publish the operational steps involved
in the transition to an SBE–FP,
including the need for issuer outreach
and flexibility in transition plans for
individual States.
Response: We are finalizing the
regulations as proposed. We believe that
the Blueprint timeline provides
sufficient time for a State to become or
transition to an SBE–FP because that
transition will begin with the
submission of the declaration letter. Part
of the technical assistance provided
upon submission of the declaration
letter will be the communication of the
operational steps that a State must
complete in order to become an SBE–
FP, including the operational steps
States are required to take with their
issuers. We plan to publish guidance on
these operational steps.
b. Additional Required Benefits
(§ 155.170)
Section 1311(d)(3)(B) of the
Affordable Care Act permits a State, at
its option, to require QHPs to cover
benefits in addition to the EHB, but
requires a State to make payments,
either to the individual enrollee or to
the issuer on behalf of the enrollee, to
defray the cost of these additional Staterequired benefits. In the 2016 Payment
Notice, we instructed States to select a
new EHB base-benchmark plan to take
effect beginning for the 2017 plan year.
The final EHB base-benchmark plans
selected as a result of this process have
been made publicly available.35
Section 1311(d)(3)(B) of the
Affordable Care Act refers to situations
in which the State requires QHPs to
cover benefits. That section is not
specific to State statutes, and we have
interpreted that section to apply not
only in cases of legislative action but
also in cases of State regulation,
guidance, or other State action.
Therefore, we proposed to reword
§ 155.170(a)(2) to make clear that a
benefit required by the State through
action taking place on or before
December 31, 2011 is considered an
EHB.
In the EHB Rule (78 FR 12837 through
12838), we discussed § 155.170(a)(2),
which implements section 1311(d)(3)(B)
of the Affordable Care Act. In our
discussion of that provision, we
provided that State-required benefits
35 Available at https://downloads.cms.gov/cciio/
FinalListofBMPs_15_10_21.pdf.
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enacted on or before December 31, 2011
(even if not effective until a later date)
may be considered EHB, which would
obviate the requirement for the State to
defray costs for these State-required
benefits. This policy continues to apply.
Therefore, benefits required by a State
through action taking place after
December 31, 2011 that directly apply to
the QHPs are not considered EHB
(unless enactment is directly
attributable to State compliance with
Federal requirements, as discussed
below).
Although benefits requirements
enacted by States after December 31,
2011 that directly apply to the QHP and
that were not enacted for purposes of
compliance with Federal requirements
are not considered EHB,36 the basebenchmark plan might cover some of
those non-EHB. Nonetheless, issuers
must treat those benefits as they would
other non-EHB, such as those identified
in § 156.115(d),37 and the State must
defray the cost. We proposed to codify
this interpretation in § 155.170(a)(2).
At § 155.170(a)(3), we currently
require the Exchange to identify which
additional State-required benefits, if
any, are in excess of EHB. We proposed
to amend paragraph (a)(3) to designate
the State, rather than the Exchange, as
the entity that identifies which Staterequired benefits are not EHB. We
proposed this change because we
believe insurance regulators are
generally more familiar with Staterequired benefits. We believe each State
should determine the appropriate State
entity best suited to identify newly
required benefits. Additionally, for
consistency of terminology, we
proposed to amend paragraph (a)(3) to
replace the reference to ‘‘in excess of
EHB’’ with ‘‘in addition to EHB.’’
In current § 155.170(c)(2)(iii), we
require QHP issuers to quantify the cost
attributable to each additional Staterequired benefit and report their
calculations to the Exchange. We
proposed to designate the State as the
entity that receives issuer calculations
in paragraph (c)(2)(iii). Since the
Affordable Care Act requires the State to
remit a payment to an enrollee or issuer,
we stated that we believe the calculation
should be sent directly to the State
rather than to the Exchange.
36 The 2016 Payment Notice provides that States
are not expected to defray the cost of State-required
benefits enacted on or after January 1, 2012 that
were required in order to comply with new Federal
requirements. (80 FR 10749, 10813 (Feb. 27, 2015)).
37 An issuer of a plan offering EHB may not
include routine non-pediatric dental services,
routine non-pediatric eye exam services, long-term/
custodial nursing home care benefits, or nonmedically necessary orthodontia as EHB.
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The 2016 Payment Notice specified
that a State may need to supplement
habilitative services if the basebenchmark plan does not cover such
services. We noted that if a State
supplements the base-benchmark plan,
there is no requirement to defray the
cost of the benefits added through
supplementation, as long as the State
must supplement the base-benchmark to
comply with the Affordable Care Act or
another Federal requirement. Examples
of such Federal requirements include:
Requirements to provide benefits and
services in each of the 10 categories of
EHB; requirements to cover preventive
services; requirements to comply with
the Mental Health Parity and Addiction
Equity Act; and the removal of
discriminatory age limits from existing
benefits.
In some States, the base-benchmark
plan may be a large group (nonMedicaid HMO or State employee) plan.
We stated that we have received
questions regarding State-required
benefits that are embedded in those
large group base-benchmark plans. As
stated earlier in this section, if the Staterequired benefit in question was
required by State action after December
31, 2011, applies directly to the QHP,
and was not enacted for purposes of
compliance with Federal requirements,
the benefit is not considered EHB, even
if the benefit is embedded in the basebenchmark plan. However, we stated
that a benefit required only in the large
group market and reflected in a large
group base-benchmark plan is not an
EHB for QHPs offered in the individual
or small group markets because such a
benefit requirement does not apply
directly to those plans, and to the extent
it is included in the base-benchmark
plan, it may be substituted for, in
accordance with § 156.115(b). Therefore,
the State would not have to defray the
cost of individual and small group
market QHPs covering State-required
benefits that are required in the large
group market only. (However, to the
extent the State permits large group
plans to be sold as QHPs through the
State’s Exchange, the State would have
to defray the cost of the large group
QHPs covering the mandated benefit.)
We noted that plans subject to the EHB
requirements offered in the individual
and small group markets in those States
would have to be substantially equal to
the base-benchmark plan, and therefore
may cover the State-required benefit as
EHB since it is embedded in the basebenchmark plan. In such a case, we
proposed to clarify that the benefit is an
EHB because it is covered by the basebenchmark plan, but the cost of
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coverage by individual and small group
QHPs does not have to be defrayed,
because the State-required benefit does
not apply directly to those QHPs.
We noted that some States have
imposed new benefit requirements only
on individual and small group plans
that are not QHPs such that only
individual and small group plans sold
outside the Exchange must cover the
State-required benefit. We noted that a
QHP generally may be sold outside the
Exchanges in which case it would be
subject to these new benefit
requirements. We cautioned States,
however, that imposing different benefit
mandates depending on a plan’s status
as a QHP or because it is sold through
the Exchange may violate section 1252
of the Affordable Care Act. Under this
section, State standards or requirements
implementing, or related to, standards
or requirements in title I of the Act must
be applied uniformly within a given
insurance market. Thus, if a State
requires that non-QHPs in the
individual or small group market
provide any benefits, under section
1252, the State must require QHPs sold
through the Exchange in that same
market to provide those same benefits,
and consistent with our earlier stated
policy at § 155.170(a)(2), States would
generally be required to defray the cost
of QHPs providing the required benefits
if they were required through State
action taking place after December 31,
2011.
We noted that the Protecting
Affordable Coverage for Employees Act,
enacted in October 2015, amended the
definitions of small employer and large
employer in section 1304(b) of the
Affordable Care Act and section 2791(e)
of the PHS Act such that a small
employer is generally 38 an employer
with 1–50 employees, with the option
for States to expand the definition of
small employer to 1–100 employees.39
We noted that several States have
enacted benefit requirements that would
apply to small group insurance plans
offered to employers with 51–100
38 Prior to enactment of the Protecting Affordable
Coverage for Employees Act, small employer was
defined to mean, in connection with a group health
plan with respect to a calendar year and a plan year,
an employer who employed an average of at least
1 but not more than 100 employees on business
days during the preceding calendar year and who
employs at least 1 employee on the first day of the
plan year. In case of plan years beginning before
January 1, 2016, a State was able to elect to define
small employer by substituting ‘‘50 employees’’ for
‘‘100 employees’’. For ease of reference with regard
to this section, we will refer to employers as having
1–50 or 1–100 employees.
39 States that elect to extend the small employer
definition were requested to notify CMS of their
election by October 30, 2015 at marketreform@
cms.hhs.gov.
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employees, but not to employers with
1–50 employees. This may arise because
the State-required benefit was designed
to apply only in the large group market
when the large group market included
employers with more than 50
employees, but the State has since then
availed itself of the option to define a
small employer as an employer with 1–
100 employees.
We noted that section 2702 of the PHS
Act and § 147.104 generally require an
issuer to offer all approved products to
any individual or employer in the
market for which the product was
approved and to accept any individual
or employer that applies for any
approved product in a given market. If
a State elects to expand the definition of
small employer so that it covers
employers with 1–100 employees, all
products approved for sale in the small
group market (defined by the State as 1–
100 employees) generally must be
offered to employers with 1–100
employees. This effectively means that
existing State benefits mandates that
apply to insurance coverage sold to
employers with 51–100 employees
would then effectively also apply to all
products sold to employers with 1–100
employees. As long as the benefit was
required by State action taken on or
before December 31, 2011, the
expansion of coverage would not trigger
the requirement to defray, because the
expansion was required to comply with
Federal guaranteed availability laws. If
a State does not opt to expand the
definition of small employer to 1–100
employees, then any State-required
benefits applicable in the large group
market (including to employers with
51–100 employees) would continue to
not apply in the small group market. If
a State-required benefit was imposed by
State action taking place January 1, 2012
or later, then defrayal generally would
be required. We are finalizing our
proposals and clarifications as
proposed.
Comment: Several commenters agreed
that a benefit required by a State
through action taking place on or before
December 31, 2011 is considered an
EHB. Multiple commenters supported
the proposal that States and not the
Exchange identify what is in addition to
EHB.
Response: We agree that a benefit
required by action taking place on or
before December 31, 2011 is considered
EHB; this has been our policy since
releasing the EHB Rule. We recognize
that States regulators are generally more
familiar with State-required benefits
than an Exchange. We believe each State
should determine the appropriate State
entity best suited to identify newly
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required benefits. Therefore, we are
finalizing the rule as proposed.
Comment: Numerous commenters
questioned how States can supplement
an EHB category without assuming the
financial burden. Multiple commenters
sought guidance on how to determine
that a State requirement, particularly a
habilitative services requirement, goes
beyond EHB, and how to determine the
additional cost attributed to each such
additional required benefit.
Response: The ten categories of EHB,
and the process for supplementing basebenchmark plans to establish EHBbenchmark plans, are outlined in
§ 156.110. In the 2016 Payment Notice
(80 FR 10749, 10813), we stated that
benefit requirements enacted by States
after December 31, 2011 that directly
apply to QHPs, and that were not
enacted for purposes of compliance
with Federal requirements are not
considered EHB. We also stated that if
the base-benchmark plan does not
include coverage for habilitative
services, the State may define that
benefit category. There is no
requirement to defray the cost of the
State-required benefits, as long as the
State requirement is consistent with
section 1302 of the Affordable Care Act
and § 156.110. We also note that
§ 156.110(f) allows States to determine
services included in the habilitative
services and devices category if the
base-benchmark plan does not include
coverage; and that States are not
expected to defray the cost of Staterequired benefits enacted after
December 31, 2011 that were required in
order to comply with new Federal
requirements. We are affirming that the
State has the flexibility to define
habilitative services; however, the State
must use a reasonable interpretation as
to what services are habilitative.
Further, a State may also modify that
definition in future years, as medical
evidence and treatments evolve. We
note that any State definition must
comply with applicable
nondiscrimination rules. This final rule
requires the State to determine, based
on these standards, when State
requirements require issuers to provide
benefits in addition to EHB.
Section 155.170(c)(1) requires issuers
to quantify the cost attributable to each
additional State-required benefit. We are
finalizing our proposal that QHP issuers
must report their calculation to the
State. Since the State is required by
statute to remit a payment to an enrollee
or issuer, we believe the calculation
should be sent directly to the State
rather than to the Exchange. The actual
cost attributed can then be made public
by the State, if it so chooses. Section
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155.170(c)(2)(i) through (iii) states that
QHP issuers’ calculations must (1) be
based on an analysis performed in
accordance with generally accepted
actuarial principles and methodologies;
(2) conducted by a member of the
American Academy of Actuaries; and
(3) reported to the State.
Comment: Some commenters
disagreed with our interpretation that
State-required benefits that apply only
to individual and small group plans that
are not QHPs may violate section 1252
of the Affordable Care Act.
Response: Section 1252 of the
Affordable Care Act provides that State
requirements under Title I of the
Affordable Care Act must be applied
uniformly to all health plans in an
insurance market. We reiterate that a
requirement that depends upon a plan’s
status as a QHP or whether it is sold
through the Exchange may violate
section 1252 of the Affordable Care Act.
Comment: Some commenters
expressed concerns about
discriminatory benefit design, and
sought further guidance regarding what
benefit designs could be deemed
discriminatory.
Response: Under § 156.125(a), an
issuer does not provide EHB if its
benefit design, or the implementation of
its benefit design, discriminates based
on an individual’s age, expected length
of life, present or predicted disability,
degree of medical dependency, quality
of life, or other health conditions.
Furthermore, plans may not establish
annual dollar limits on individual items
or services that are EHB. We will
consider providing further guidance
regarding discriminatory benefit design
in the future.
3. General Functions of an Exchange
a. Functions of an Exchange (§ 155.200)
We proposed a technical correction to
§ 155.200(a) to include a reference to
subpart M, which establishes oversight
and program integrity standards for
State Exchanges, and subpart O, which
establishes quality reporting standards
for Exchanges.
We also proposed to amend § 155.200
by adding a paragraph (f) to address
SBE–FPs. This arrangement is intended
to permit a State Exchange to leverage
existing Federal assets and operations
by relying on HHS services for
performing certain Exchange functions,
particularly eligibility and enrollment
functions. The SBE–FP would also rely
on HHS to perform certain consumer
call center functions and casework
processes, and maintain related
information technology infrastructure.
The SBE–FP would retain responsibility
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for plan management functions,
including QHP certification functions,
subject to certain rules requiring the
SBE–FP to require its QHP issuers to
comply with certain FFE standards
governing QHPs and issuers (as
proposed in § 155.200(f)(2) of this
proposed rule), and consumer support
functions, subject to FFE rules
governing consumer assistance
functions.
Under § 155.200(f)(1), we proposed
that a State may receive approval or
conditional approval to operate an SBE–
FP through the Blueprint process under
proposed § 155.106(c) and meet its
obligations under § 155.200(a) by
entering into a Federal platform
agreement with HHS. Through the
Federal platform agreement, an SBE–FP
would agree to rely on HHS for services
related to the individual market
Exchange, the SHOP Exchange, or both
the individual market and SHOP
Exchanges. The Federal platform
agreement would specify the Federal
services on which the State Exchange
relies, the user fee (as specified at
§ 156.50(c)(2)) that HHS will collect
from issuers in that SBE–FP for the
Federal services, and other mutual
obligations relating to the arrangement,
including obligations for the transfer of
data. The Federal platform agreement
would specify expectations between the
State and HHS across various
operational areas. We indicated our
intent to release the Federal platform
agreement at a later date. We noted that
at this point the Federal services on
which SBE–FPs may rely will come as
an entire package. That is, HHS will not
at this time offer a ‘‘menu’’ of Federal
services from which an SBE–FP may
select some but not other services
available on the Federal platform.
However, we indicated we would
explore the feasibility of doing so in the
future.
Although the SBE–FPs would retain
primary responsibility for certifying
QHPs and overseeing QHPs and issuers,
we proposed under § 155.200(f)(2) to
require an SBE–FP to establish and
oversee certain requirements for its
QHPs and QHP issuers that are no less
strict than the requirements that apply
to QHPs and QHP issuers on an FFE. We
proposed these requirements to include
the existing and proposed standards
under the following sections:
§ 156.122(d)(2) (the requirement for
QHPs to make available published upto-date, accurate, and complete
formulary drug list on its Web site in a
format and at times determined by
HHS); § 156.230 (network adequacy
standards); § 156.235 (essential
community providers standards);
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§ 156.298 (meaningful difference
standards); § 156.330 (changes of
ownership of issuers requirement);
§ 156.340(a)(4) (QHP issuer compliance
and compliance of delegated and
downstream entities requirements);
§ 156.705 (maintenance of records
standard); § 156.715 (compliance
reviews standard); and § 156.1010
(casework standards).
Applying the changes of ownership
issuers’ requirement to SBE–FPs will
help fulfill the Federal platform’s need
for data and technical consistency. It
will ensure that HHS maintains the
most accurate and updated information
to present a consistent experience to
consumers through its branded
platform, HealthCare.gov. HHS must be
able to monitor and provide regulatory
oversight over change in control
situations with regards to the operation
of the Federal platform. Change in
control has a significant operational
impact on the Federal platform and
requires the expenditure of considerable
technical resources to effectuate the
change throughout the multiple systems
that constitute the Federal platform.
Applying the formulary drug list,
network adequacy, meaningful
difference, and essential community
providers standards will ensure that all
QHPs on HealthCare.gov meet a
consistent minimum standard and that
consumers obtaining coverage as a
result of applying through
HealthCare.gov are guaranteed plans
that meet these minimum standards.
HHS has designed and implemented
policy and operations for the FFE such
that shoppers at HealthCare.gov can
experience a consistent standard of
service. We proposed that SBE–FPs that
wish to rely on the HealthCare.gov
platform require their issuers to meet
certain minimum standards as well,
since their consumers are obtaining the
coverage through HealthCare.gov. SBE–
FPs have the flexibility to exceed these
minimum standards to the extent they
do not present display problems on
HealthCare.gov. Although we clearly
recognize that the SBE–FPs are SBEs,
and thus legally distinct from FFEs, this
difference will not always be apparent
to HealthCare.gov consumers. Not
having these standards apply may lead
to consumer confusion and dilution of
consumer goodwill with respect to the
plans available on HealthCare.gov. The
States would still be responsible for
conducting QHP certification reviews
for these standards.
Applying the QHP issuer compliance
and compliance of delegated or
downstream entities requirement at
§ 156.340(a)(4), which involves the
maintenance of records standards of
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§ 156.705 and the compliance reviews
for QHP issuers standards of § 156.715,
will ensure that the SBE–FP has
authority at least as strong as that
possessed by HHS to enforce
compliance with these standards and
will ensure that the SBE–FP and HHS
are able to access all records upon
request from the issuers in the SBE–FPs.
Applying the casework standards at
§ 156.1010 will ensure that the SBE–FP
and HHS can respond to problems about
which they both bear responsibility.
Since SBE–FPs must use the Federally
operated Health Insurance Casework
System (HICS) for handling consumer
casework and meeting casework
resolution timeframes as part of
utilizing the Federal platform for
eligibility and enrollment functions, the
SBE–FP would not be overseeing
casework processes. However, as with
all other Exchange types, State
departments of insurance will still
handle appropriate consumer
complaints related to issuers in their
States. For cases that are Exchangerelated, or those in which the consumer
has chosen to contact the Exchange even
after contacting the appropriate
department of insurance, HHS would
oversee the routing and resolution of
casework. HHS’s intent is to work
collaboratively with the SBE–FP, similar
to how HHS works with SPMs.
Finally, we proposed under
§ 155.200(f)(3) that HHS will work with
SBE–FPs to enforce the FFE standards
listed under § 155.200(f)(2) directly
against SBE–FP issuers or plans who do
not meet these standards. In that
circumstance, we proposed that HHS
would have the authority to suppress a
plan under § 156.815. This will ensure
that consumers shopping for coverage
on HealthCare.gov have access to plans
that are in compliance with the FFE
standards with which SBE–FP issuers
must comply as a condition of offering
QHPs through a State Exchange on the
Federal platform.
We intend to work closely and
collaboratively with SBE–FPs, and
believe that our collaboration with
States that currently use the Federal
platform with respect to enforcement
matters has been close and effective. We
are finalizing our proposals as proposed.
Comment: One commenter indicated
that the inability of the Federal platform
to accommodate State customization for
SBE–FPs is a major disincentive for
SBEs to use the Federal platform. The
commenter also expressed concerns
about the proposed Federal platform
agreement not being able to be
customized by individual State, as State
procurement and contracting officials
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may require State specific language in
contracts.
Response: We are finalizing the
regulations as proposed. We intend to
describe the availability of new
capabilities of the Federal platform that
would allow for SBE–FPs to select
certain Federal services to use or to
customize particular functionality in
future rules, through our annual
rulemaking process, as well as in future
versions of the Federal platform
agreement. At this time we do not
foresee State-specific customization of
the language in the Federal platform
agreement, but will engage with States
as part of the process of finalizing the
agreement.
Comment: We received a comment
that the proposed requirement to use the
Federally operated HICS system creates
procedural burdens on State-based
consumer advocacy staff. The
commenter recommended that
consumer complaints for SBE–FPs
should be referred directly to the
appropriate State authority for
resolution.
Response: We are finalizing the
regulations as proposed. The Federally
operated HICS system is closely tied to
the SBE–FP’s utilization of the Federal
platform for eligibility and enrollment
functions. While SBE–FPs must rely on
the Federally operated HICS system for
processing casework, we are open to
future possibility of HHS coordination
with SBE–FP States on consumer
communications pertaining to casework
and complaints to the extent it is
operationally feasible. Should such
coordination be operationally feasible,
the roles and responsibilities between
HHS and the State would be specified
through the Federal platform agreement.
Comment: Regarding our proposals to
apply certain FFE QHP standards to
SBE–FP issuers, along with our
proposed requirements pertaining to the
enforcement of those standards, we
received some comments that were
supportive and comments that were
opposed. The commenters that opposed
the proposed requirements stated that
SBE–FP States should maintain sole
authority for setting standards for, and
certifying, QHPs. One commenter stated
that using two sets of enforcement
standards would lead to consumer harm
and insurer confusion. Another
commenter expressed concern that the
application of FFE standards could
result in inconsistent treatment of offExchange QHPs and recommended that
SBE–FP QHPs should be governed by
the same State rules as SBEs to ensure
market parity. Another commenter
stated that the proposed requirements
may cause confusion regarding the legal
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status of SBE–FPs and the true extent to
which certain Federal Exchange
requirements and limitations apply. One
commenter recommended that we
explicitly state in the final rule that the
implementing guidance issued through
the annual Letter to Issuers also applies
to issuers on SBE–FPs.
Response: We are finalizing the rules
as proposed. HHS will coordinate with
the SBE–FP on enforcement of FFE
standards listed under § 155.200(f)(2)
through plan suppression. SBE–FP
States are being required to incorporate
certain FFE QHP standards into their
State’s QHP standards and QHP
certification process; thus, there would
be only one set of QHP standards that
apply to all issuers in a particular SBE–
FP State. An SBE–FP would have the
flexibility to exceed those FFE QHP
standards when setting their QHP
standards and QHP certification process
should they elect to. There may be
differences in standards set by an SBE–
FP State for QHPs that participate in the
Exchange versus plans that are offered
outside of the Exchange, which can also
occur in SBE and FFE States. Moving
forward, the annual Letter to Issuers
will include implementing guidance
that is specific to SBE–FPs.
b. Consumer Assistance Tools and
Programs of an Exchange (§ 155.205)
We proposed two amendments to
§ 155.205 to address functions of an
SBE–FP. First, because an SBE–FP relies
on HHS to carry out eligibility and
enrollment functions, which would
include relying on the FFE call center to
carry out these functions, we proposed
to amend § 155.205(a) to exempt an
SBE–FP from the requirement to operate
a toll-free call center, and instead
provide that an SBE–FP must at a
minimum operate a toll-free telephone
hotline to respond to requests for
assistance to consumers in their State,
in accordance with section 1311(d)(4)(B)
of the Affordable Care Act.
Secondly, we proposed to amend
§ 155.205(b) by adding paragraph (b)(7)
to provide that an SBE–FP must, at a
minimum, operate an informational
Internet Web site in accordance with
section 1311(d)(4)(C) of the Affordable
Care Act. The informational Web site
would direct consumers to
HealthCare.gov to apply for, and enroll
in, coverage through the Exchange.
We are also finalizing an amendment
to § 155.205(b)(1), related to
standardized options. For a discussion
of this amendment, please see the
preamble discussion of standardized
options.
Comment: Some comments stated that
having SBE–FPs maintain these
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consumer assistance features is
duplicative and would cause confusion
among consumers. Commenters also
recommended further clarification
between a toll-free call center and a tollfree telephone hotline, and defining
minimum functional requirements of a
toll-free hotline. Commenters also asked
that HHS clarify the minimum
requirements for the SBE–FPs
informational Web site.
Response: We are finalizing the
proposed requirement for the SBE–FP to
operate a toll-free hotline and
informational Web site, as this is based
on statutory minimum functional
requirements that an SBE (including an
SBE–FP) must meet. A toll-free call
center includes capabilities for
processing eligibility and enrollment
actions and accessing consumer
information to process these actions,
whereas a toll-free hotline includes the
capability to provide information to
consumers and appropriately direct
consumers to the Federally operated call
center or HealthCare.gov to apply for,
and enroll in, coverage through the
Exchange. Both the toll-free hotline and
the informational Web site that an SBE–
FP is required to operate must include
the capability to direct consumers to the
Federal platform services, including the
FFE call center and HealthCare.gov Web
site, to apply for, and enroll in,
Exchange coverage. We are finalizing
the requirement for SBE–FPs to operate
a toll-free hotline and informational
Web site.
c. Standards Applicable to Navigators
Under §§ 155.210 and 155.215;
Standards Applicable to Consumer
Assistance Tools and Programs of an
Exchange Under § 155.205(d) and (e);
and Standards Applicable to NonNavigator Assistance Personnel in an
FFE and to Non-Navigator Assistance
Personnel Funded Through an Exchange
Establishment Grant (§§ 155.205,
155.210 and 155.215)
To help consumers apply for and
enroll in QHPs and insurance
affordability programs through the
Exchange, we established consumer
assistance programs, including the
Navigator program described at section
1311(d)(4)(K) and 1311(i) of the
Affordable Care Act and § 155.210.
Among other duties, Navigators are
required to conduct public education
activities to raise awareness of the
availability of QHPs; to distribute fair
and impartial information concerning
enrollment in QHPs and the availability
of Exchange financial assistance; to
facilitate enrollment in QHPs; and to
provide referrals for any enrollee with a
grievance, complaint, or question
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regarding their health plan, coverage, or
a determination under such plan or
coverage. We have also established
under § 155.205(d) and (e) that each
Exchange must provide consumer
assistance, outreach, and education
functions, which must include a
Navigator program and can include a
non-Navigator assistance personnel
program.
We proposed to amend § 155.210(e)
by adding a new paragraph (e)(8) to
require Navigators in all Exchanges to
provide targeted assistance to serve
underserved or vulnerable populations
within the Exchange service area.
Navigators already must have expertise
in the needs of underserved and
vulnerable populations, and we believe
that also requiring Navigators to provide
targeted assistance to these populations
is critical to improving access to health
care for communities that often
experience a disproportionate burden of
disease. We also believe that Navigators
should focus their outreach and
enrollment assistance efforts on harderto-reach populations and the remaining
uninsured.
Because the characteristics of
underserved and vulnerable populations
may vary over time and from region to
region, we proposed to permit each
Exchange to define and identify the
underserved and vulnerable populations
in its service area, and to update these
definitions as appropriate. This could
include an Exchange allowing its
Navigator grantees to propose which
communities to target, for the
Exchange’s approval (for example, in
their grant applications). In FFEs, we
proposed to identify populations as
vulnerable or underserved through our
Navigator funding opportunity
announcements and to give FFE
Navigator grant applicants an
opportunity to propose additional
communities to target during the grant
application process. We proposed that
the primary criteria used to identify
such populations within the FFEs
would be that the population is
disproportionately without access to
coverage or care, or at a greater risk for
poor health outcomes. Members of these
populations could be identified by age
groups, demographics, disease,
geography, or other characteristics as
defined or approved by the Exchange. In
FFEs, our proposal would apply
beginning with the application process
for Navigator grants awarded in 2018.
Although we did not propose to
extend this requirement to certified
application counselors and nonNavigator assistance personnel subject
to § 155.215, we stated in the preamble
to the proposed rule that we would
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encourage certified application
counselors and non-Navigator assistance
personnel subject to § 155.215 to
prioritize assisting the vulnerable and
underserved populations identified by
the Exchange in their communities, and
we recognize that many of these
assisters already focus their efforts on
such populations.
Navigators would not be serving these
target populations exclusively, since all
Navigators are required to assist any
consumer seeking assistance. As we
have explained previously, all
Navigators should have the ability to
help any individual who seeks
assistance, even if that consumer is not
a member of the community or group
the Navigator intends to target (see 78
FR 20589; 78 FR 42830; 79 FR 30270;
79 FR 30278).
We are finalizing this provision as
proposed.
Comment: We received many
comments supporting our proposal to
require Navigators in all Exchanges to
provide targeted assistance to serve
underserved or vulnerable populations
within the Exchange service area.
Commenters agreed that reaching these
populations is important to increasing
awareness among remaining uninsured
consumers regarding coverage options
available through the Exchange, helping
consumers find affordable coverage that
meets their needs, and narrowing health
disparities. In addition, commenters
stated that Navigators are uniquely
positioned to serve these populations
because of established ties and preexisting relationships. Commenters also
agreed that this provision should not be
extended to certified application
counselors and non-Navigator assistance
personnel subject to § 155.215, but said
that it would be helpful for HHS to
educate these assister types about this
kind of targeted assistance and how they
can support Navigators’ efforts.
Response: We agree that requiring
Navigators to target assistance to
underserved and vulnerable populations
is critical to improving access to health
coverage. We are not extending this
requirement to certified application
counselors and non-Navigator assistance
personnel subject to § 155.215 in this
final rule, but continue to encourage
these assister types to prioritize
reaching and assisting the vulnerable
and underserved populations identified
by the Exchange in their communities,
and we recognize that many of these
assister types already focus efforts on
such populations. HHS has previously
and will continue to provide technical
assistance and resources on reaching
and serving a variety of vulnerable and
underserved populations to all
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Navigators, non-Navigator assistance
personnel, and certified application
counselors in the FFEs.
Comment: We received several
comments regarding how Exchanges
should identify vulnerable or
underserved populations. Many
commenters suggested data sources to
consult when identifying these
populations. Several commenters
requested that HHS provide a list of
underserved or vulnerable populations,
made up of populations where there
was either a documented lower rate of
insurance prior to the implementation
of the Affordable Care Act or where
current enrollment rates are lower than
those of other populations. Commenters
recommended specific populations for
identification, including low-income
individuals and families; people of
color; women; people living with HIV/
AIDS; people living with disabilities;
rural communities; lesbian, gay,
bisexual, and transgender people;
people with limited English proficiency;
people with transportation limitations;
people with mental health needs;
children and youth with special health
care needs; cancer survivors; low
income immigrants; patients with rare
diseases; survivors of domestic violence;
abandoned spouses; and pregnant
women enrolled in coverage that is not
minimum essential coverage. In
addition, several commenters requested
that HHS ensure that SBEs consult with
local stakeholders when defining
underserved and vulnerable
populations.
Response: Because the characteristics
of underserved and vulnerable
populations may vary over time and
from region to region, we believe that
SBEs are best positioned to identify the
underserved and vulnerable populations
in their States who most need targeted
assistance and support. Therefore, we
do not intend to provide a list or
otherwise identify these populations in
SBEs, including SBE–FPs. We
encourage SBEs to work with local
stakeholders and Navigators to identify
populations to target, using reliable
sources of data. For FFEs, HHS will
identify vulnerable or underserved
populations through our Navigator
funding opportunity announcements
and will give FFE Navigator grant
applicants an opportunity to propose
additional communities to target during
the grant application process, beginning
with the application process for
Navigator grants awarded in 2018. The
primary criteria the FFEs will use to
identify vulnerable or underserved
populations will be if they are
disproportionately without access to
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coverage or care, or are at a greater risk
for poor health outcomes.
Comment: We received several
comments requesting that HHS further
explain how Navigators are expected to
target or focus their work on these
populations, while still fulfilling the
requirement to assist any consumer
seeking assistance. Commenters
expressed concern that this requirement
might compel Navigator organizations to
limit their services to certain
populations or create such a perception.
Response: This provision does not
require Navigators to limit their services
to the specific populations they are
targeting, and we rely on Navigators’
creativity and local knowledge to
structure their programs so that they
target one or more vulnerable and
underserved populations while
remaining open to all consumers. For
example, a Navigator grantee might
open an application and enrollment
assistance location in an area populated
by a community that has historically
experienced heath care access barriers,
and reach out to community members in
ways that are culturally competent and
linguistically appropriate to that
community, while remaining ready to
serve any consumer seeking assistance.
In the FFEs, we will provide more
information regarding Navigator duties,
scope of activities, and program
requirements in the Navigator funding
opportunity announcement. SBEs,
including SBE–FPs, have flexibility to
provide further guidance in this area as
well. Finally, we continue to remind
Navigators that we interpret Navigators’
duty to provide fair and impartial
information and services under
§ 155.210(e)(2) to require that all
Navigators should have the ability to
help any individual who seeks
assistance from the Navigator, even if
that consumer is not a member of the
community or group the Navigator
intends to target.
Comment: We received several
comments regarding the selection
process for Navigator grantees. Some
commenters requested that HHS
encourage Exchanges to prioritize entity
types (such as safety net providers) or
applicants capable of reaching
underserved or vulnerable populations,
and some recommended specific
populations of Navigator grant
applicants that should be given
preference. In addition, commenters
requested that HHS ensure that
Exchanges adjust their grant-making
criteria to account for the greater time
and resources necessary to reach
underserved and vulnerable
communities. A few commenters
requested that Navigators be required or
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encouraged to collaborate with
providers and other organizations, such
as patient-focused and communitybased organizations that are also
engaged in consumer health and patient
education, in order to ensure that
underserved and vulnerable populations
are receiving assistance. A few
commenters also requested that HHS
develop guidance for FFE Navigators,
FFE non-Navigator assistance personnel,
and FFE certified application counselors
on collaborating and forming
partnerships with groups that are
engaged in reaching populations,
consumer health, and patient education.
Response: For FFEs, we will take
these comments into consideration
when drafting Navigator selection
criteria for the Navigator funding
opportunity announcements for 2018
and future years. We agree that local
collaboration and leveraging community
partnerships might help Navigators
reach marginalized communities, and
we intend to issue guidance for FFE
Navigators with additional information
on collaborating or partnering with
other community organizations. SBEs,
including SBE–FPs, are responsible for
administering their own Navigator
programs, including determining their
own selection process, consistent with
statutory and regulatory authority.
Comment: We received several
comments regarding the timeframes in
which these populations would be
identified. Commenters requested that
Exchanges regularly re-identify these
populations. Some commenters
requested that these populations be
identified at least 3 months prior to the
beginning of open enrollment and that
applicants be allowed to identify new
populations for each grant cycle.
Response: SBEs, including SBE–FPs,
retain flexibility to administer their own
Navigator programs, and we encourage
SBEs to regularly revisit the ways they
define and identify vulnerable and
underserved populations to ensure that
the results remain current and relevant.
In FFEs, we will continue to prioritize
publicizing and awarding Navigator
grants in a transparent and timely
fashion. We intend to identify these
populations when each funding
opportunity announcement is
published, at least 60 days prior to the
date applications are due.
Comment: Several commenters
requested that HHS and States ensure
that Navigators receive adequate
resources, including funding and
training, to work with vulnerable and
underserved populations. Commenters
urged HHS to tailor training
opportunities to population-specific
messages and content. Several
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commenters were concerned about how
these activities would be funded.
Response: Under § 155.210(b)(2)(i),
Navigators in all Exchanges must be
trained in the needs of underserved and
vulnerable populations. Under
§ 155.215(b)(2)(xii), Navigators in FFEs
must additionally receive training on
working effectively with individuals
with limited English proficiency; people
with a full range of disabilities; and
vulnerable, rural, and underserved
populations. SBEs, including SBE–FPs,
are responsible for administering their
own Navigator programs, including
funding and budgets, and may provide
or require additional training and
technical assistance to address the
needs of the populations they have
identified as vulnerable and
underserved. In FFEs, Navigator
applicants will have an opportunity to
propose budgets in their Navigator
applications to cover the costs of these
activities.
In § 155.210, we proposed to add
paragraph (e)(9) to specify that
Navigators in all Exchanges would be
required to help consumers with certain
other types of assistance, including
post-enrollment assistance. We designed
this proposal to ensure that consumers
would have access to skilled assistance
beyond applying for and enrolling in
health coverage, including, for example,
assistance with the process of filing
Exchange eligibility appeals or with
applying through the Exchange for
exemptions from the individual shared
responsibility payment, providing basic
information about reconciliation of
premium tax credits, and understanding
basic concepts related to using health
coverage. We discussed the statutory
authority for these proposals in the
preamble to the proposed rule.
We proposed at § 155.210(e)(9)(i) to
require Navigators in all Exchanges to
help consumers with the process of
filing appeals of Exchange eligibility
determinations. We did not propose to
establish a duty for Navigators to
represent a consumer in an appeal, sign
an appeal request, or file an appeal on
the consumer’s behalf. We explained
that we believe that helping consumers
understand Exchange appeal rights
when they have received an adverse
eligibility determination, and assisting
them with the process of completing
and submitting appeal forms, would
help to facilitate enrollment and would
help consumers obtain fair and
impartial information about enrollment,
including information about available
exemptions from the individual shared
responsibility payment that would help
consumers decide whether or not to
enroll in coverage. We interpreted this
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proposal to include helping consumers
file appeals of eligibility determinations
made by an Exchange (including SHOP
Exchanges) related to enrollment in a
QHP, special enrollment periods,
exemptions from the individual shared
responsibility payment that are granted
by the Exchange, participation as an
employer in a SHOP, and any insurance
affordability program, including
eligibility determinations for Exchange
financial assistance, Medicaid, the
Children’s Health Insurance Program
(CHIP), and Basic Health Programs.
We also proposed at § 155.210(e)(9)(ii)
to require that Navigators in all
Exchanges help consumers understand
and apply for exemptions from the
individual shared responsibility
payment that are granted by the
Exchange. We explained that this
assistance with Exchange-granted
exemptions would include informing
consumers about the requirement to
maintain minimum essential coverage
and the individual shared responsibility
payment; helping consumers fill out and
submit Exchange-granted exemption
applications and obtain any necessary
forms prior to or after applying for the
exemption; explaining what the
exemption certificate number is and
how to use it; and helping consumers
understand and use the Exchange tool to
find bronze plan premiums. We
explained that this duty would also
include explaining the general purpose
of Internal Revenue Service (IRS) Form
8965, Health Coverage Exemptions, to
consumers, consistent with IRS
published guidance on the topic, and
explaining how to access this form and
related tax information on IRS.gov.
Navigators may not provide tax
assistance or interpret tax rules within
their capacity as Exchange Navigators,
and our proposal would not require
Navigators to help consumers apply for
exemptions claimed through the tax
filing process. We noted that we would,
however, interpret the assistance
provided under § 155.210(e)(9)(ii) to
include helping consumers generally
understand the availability of
exemptions claimed through the tax
filing process and how to obtain them.
We noted that this interpretation would
help ensure that Navigators share
information about the full scope of
possible exemptions while not
providing actual tax assistance or tax
advice. We requested comment on
whether we should require that, prior to
providing this assistance and
information, Navigators provide
consumers with a disclaimer stating that
they are not acting as tax advisers and
cannot provide tax advice within their
capacity as Exchange Navigators. We
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also sought comment on whether a
Navigator’s duty to provide assistance
with filing exemption applications
under proposed § 155.210(e)(9)(ii) and
filing appeals of exemption application
denials under proposed
§ 155.210(e)(9)(i) should be limited, in
light of the resource limitations that
Navigators and their funding agencies
may face. We sought comment on
whether this assistance should be
limited, for example, to consumers who
have applied for or have been denied
coverage or financial assistance, as
opposed to those who only seek to avoid
the individual shared responsibility
payment, in order not to reduce the
assistance available to consumers
seeking coverage.
In addition, we proposed at
§ 155.210(e)(9)(iii) to require Navigators
to help consumers with the Exchangerelated components of the premium tax
credit reconciliation process, such as by
ensuring they have access to their Forms
1095–A, Health Insurance Marketplace
Statement, and receive general, highlevel information about the purpose of
this form that is consistent with
published IRS guidance on the topic.
We explained that under the proposal,
Navigators would be required to help
consumers obtain IRS Forms 1095–A
and 8962, Premium Tax Credit (PTC),
and the instructions for Form 8962, and
to provide general information,
consistent with applicable IRS
guidance, about the significance of the
forms. Navigators would also be
required to help consumers understand
(1) how to report errors on the Form
1095–A; (2) how to find silver plan
premiums using the Exchange tool; and
(3) the difference between advance
payments of the premium tax credit and
the premium tax credit and the potential
implications for enrollment and reenrollment of not filing a tax return and
not reconciling any advance payments
of the premium tax credit that were paid
on consumers’ behalf.
As noted above, Navigators may not
provide tax assistance or advice, or
interpret tax rules and forms within
their capacity as Exchange Navigators,
but their expertise related to the
consumer-facing aspects of the
Exchange, including eligibility and
enrollment rules and procedures,
uniquely qualifies them to help
consumers understand and obtain
information from the Exchange that is
necessary to the premium tax credit
reconciliation process. We indicated
that because this proposal would
include a requirement that Navigators
provide consumers with information
and assistance understanding the
availability of IRS resources, Navigators
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would be expected to familiarize
themselves with the availability of
materials on IRS.gov, including the
Form 8962 instructions, IRS Publication
974 Premium Tax Credit, and relevant
FAQs, and to refer consumers with
questions about tax law to those
resources or to other resources, such as
free tax return preparation assistance
from the Volunteer Income Tax
Assistance or Tax Counseling for the
Elderly programs.
To help ensure consumers have
seamless access to Exchange-related tax
information beyond the basic
information that Navigators can provide,
we proposed at § 155.210(e)(9)(v) that
Navigators be required to refer
consumers to licensed tax advisers, tax
preparers, or other resources for
assistance with tax preparation and tax
advice related to consumer questions
about the Exchange application and
enrollment process, exemptions from
the requirement to maintain minimum
essential coverage and the individual
shared responsibility payment, and
premium tax credit reconciliation.
We proposed at § 155.210(e)(9)(iv) to
require Navigators in all Exchanges to
help consumers understand basic
concepts related to health coverage and
how to use it. We explained that these
activities could be supported by existing
resources such as the HHS From
Coverage to Care initiative, which we
encouraged Navigators to review, and
which is now available in multiple
languages at https://
marketplace.cms.gov/c2c. We explained
that this proposal would improve
consumers’ access to health coverage
information both when selecting a plan
and when using their coverage. We
anticipated that this assistance would
vary depending on each consumer’s
needs and goals.
To ensure that all Navigators receive
training in every area for which we
proposed a corresponding Navigator
duty, we proposed at § 155.210(b)(2)(v)
through (viii) to require all Exchanges,
including SBEs, to develop and
disseminate training standards to be met
by all entities and individuals carrying
out Navigator functions to ensure
expertise in: The process of filing
appeals of Exchange eligibility
determinations; general concepts
regarding exemptions from the
requirement to maintain minimum
essential coverage and the individual
shared responsibility payment,
including the application process for
exemptions granted through the
Exchange, and IRS resources on
exemptions; the Exchange-related
components of the premium tax credit
reconciliation process and IRS resources
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on this process; and basic concepts
related to health coverage and how to
use it.
We noted that providing assistance
with certain other post-enrollment
issues already falls within the scope of
existing required Navigator duties. We
explained that we interpret the existing
requirements to facilitate enrollment in
QHPs under section 1311(i)(3)(C) of the
Affordable Care Act and § 155.210(e)(3),
and to provide information that assists
consumers with submitting the
eligibility application under
§ 155.210(e)(2), to include assistance
with updating an application for
coverage through an Exchange,
including reporting changes in
circumstances and assisting with
submitting information for eligibility
redeterminations.
Additionally, we explained in the
proposed rule preamble our
interpretation that Navigators are
already permitted under existing
statutory and regulatory provisions to
help with a variety of other postenrollment issues. For example,
Navigators may educate consumers
about their rights with respect to
coverage available through an Exchange,
such as nondiscrimination protections,
prohibitions on preexisting condition
exclusions, and preventive services
available without cost sharing.
Navigators may also assist consumers
with questions about paying premiums
for coverage enrolled in through an
Exchange and help consumers obtain
assistance with coverage claims denials.
We are finalizing the proposals with
several modifications to paragraphs
(b)(2) and (e)(9). We are revising the
requirement that Navigators must
provide the post-enrollment and other
assistance activities described in
§ 155.210(e)(9) to give SBEs the option
of requiring or authorizing any of these
activities, and to make all of these
activities required in FFEs under
Navigator grants awarded in 2018 or any
later year, and optional (but authorized)
before then.
We are revising the training
requirements under § 155.210(b)(2) to
specify that in any Exchange opting to
require Navigators to perform any of the
assistance topics specified in paragraph
(e)(9), the training topic corresponding
to the required paragraph (e)(9)
assistance topic would also be required.
Because all assistance topics specified
in paragraph (e)(9) will be required in
FFEs under Navigator grants awarded in
2018 or any later year, all training topics
will be required in all FFEs under
Navigator grants awarded in 2018 or any
later year. We are adding a training
provision at § 155.210(b)(2)(ix) to ensure
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that Navigators who are required under
paragraph (e)(9)(v) to provide referrals
to licensed tax advisers, tax preparers,
or other resources are also trained on
this topic.
We are adding language to
§§ 155.210(e)(6)(i), 155.215(g)(1), and
155.225(f)(1) to require that, prior to
providing assistance, Navigators, nonNavigator assistance personnel subject
to § 155.215, and certified application
counselors must provide consumers
with a disclaimer stating that they are
not acting as tax advisers or attorneys
when providing assistance as
Navigators, non-Navigator assistance
personnel, and certified application
counselors (respectively), and cannot
provide tax or legal advice within their
respective capacities as Navigators, nonNavigator assistance personnel, and
certified application counselors.
We are also revising the assistance
provisions at paragraph (e)(9) as follows:
• To make it more clear that
Navigator assistance with Exchange
eligibility appeals under paragraph
(e)(9)(i) does not require Navigators to
help consumers through the entire
Exchange eligibility appeals process, we
have added the word ‘‘understanding’’
to this provision.
• To make minor changes to
paragraphs (e)(9)(ii) and (v) to ensure
consistent usage of the term ‘‘individual
shared responsibility payment,’’ and to
make a minor change to paragraph
(e)(9)(ii) to consistently use the term
‘‘claim’’ to describe how consumers
apply for exemptions through the tax
filing process.
• To remove ‘‘understanding’’ from
the beginning of paragraph (e)(9)(iii)
because we interpret assistance with
Exchange-related components of the
premium tax credit reconciliation
process to also include helping
consumers access and use certain
Exchange tools and resources, and to
add ‘‘understanding’’ before ‘‘the
availability of IRS resources’’ in
paragraph (e)(9)(iii) to more clearly
specify the type of assistance with IRS
resources that is included under this
provision.
• To expand the assistance under
paragraph (e)(9)(iv), with understanding
basic concepts related to health
coverage and how to use it, to also
include helping consumers understand
their rights related to health coverage,
and to make a parallel change to the
corresponding training topic at
paragraph (b)(2)(viii).
Comment: Many commenters
supported our proposed additional
Navigator duties to provide postenrollment and other assistance. A
number of commenters agreed that
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assistance beyond enrollment would
help Navigators maintain relationships
with consumers across coverage years,
which may be vital to successful
enrollment, reenrollment, coverage
utilization, and coverage continuity for
some consumers. Several commenters
stated that SBEs should have the
flexibility to choose whether to require
Navigators in their States to perform
these additional functions. Other
commenters disagreed that postenrollment assistance falls within
Navigators’ statutorily authorized
duties. One commenter recommended
delaying implementation of these
requirements for 2 years to give States
time to establish and implement
training requirements, and to give
Navigators time to become familiar with
these new requirements. Several
commenters recommended making
these activities optional for grantees.
Response: We agree that SBEs should
have the flexibility to determine
effective approaches to post-enrollment
and other Navigator assistance based on
local experience. For example, some
SBEs make the proposed types of
assistance available to consumers
through different types of communitybased consumer advocacy and patient
advocacy organizations, and business
associations and tax clinics, rather than
from Navigators. We do not want to
compel SBEs to disrupt or replace
successful consumer assistance
strategies, and therefore the final rule
gives SBEs, including SBE–FPs, the
flexibility to decide whether or not they
will require or authorize their
Navigators to provide any or all of the
assistance topics listed at
§ 155.210(e)(9). Any SBE opting to
require its Navigators to provide any or
all of the types of assistance listed at
§ 155.210(e)(9) would also be required
to provide training on the corresponding
training topics at § 155.210(b)(2)(v)
through (ix), and we are modifying the
training topic proposals to reflect this
policy.
We also agree that a 2-year delay will
give FFEs more time to expand coverage
of the new assistance topics in the
formal FFE training materials, and give
FFE Navigators more time to familiarize
themselves with the new requirements.
Such a delay also aligns with the timing
of the next FFE Navigator funding
opportunity announcement in 2018 and
thus allows 2018 grant applicants to
structure their proposals to meet these
new requirements while not disrupting
current grantee work plans and budgets.
Therefore, we are specifying that the
new assistance topics and the
corresponding training provisions will
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be required in FFEs beginning with
Navigator grants awarded in 2018.
However, we want to emphasize that
FFE Navigator grantees will be
authorized to provide assistance with
any of the topics listed in § 155.210(e)(9)
before 2018, when providing assistance
in all those topics will be required of
them. If FFE Navigator grantees choose
to provide any of the assistance
specified in § 155.210(e)(9) before 2018,
we would expect them to familiarize
themselves with related needs in their
communities and build competency in
the assistance activities they are
providing. As we noted in the preamble
to the proposed rule, under
§ 155.215(b)(2), Navigators in FFEs must
already be trained on the tax
implications of enrollment decisions,
the individual responsibility to have
health coverage, eligibility appeals, and
rights and processes for QHP appeals
and grievances. FFE Navigators are also
already required under § 155.215(b)(2)
to receive training on applicable
administrative rules, processes, and
systems related to Exchanges and QHPs.
HHS will continue to build and improve
its training materials in these areas, and
in 2018 will expand on the formal FFE
Navigator training that HHS already
provides on the new assistance topics
listed in § 155.210(e)(9). Until then, in
addition to HHS’s existing formal
training, we will continue to provide
FFE Navigators with additional
information related to the new
assistance activities through informal
webinars, newsletters, and technical
assistance tools like fact sheets and slide
presentations. FFE Navigator grantees
that opt to carry out any of the
assistance activities in § 155.210(e)(9)
should draw upon these materials to
ensure their staff and volunteers are
adequately prepared to provide that
assistance.
If SBEs, including SBE–FPs, choose to
authorize (but not require) their
Navigators to provide the assistance
topics listed at § 155.210(e)(9), we
would expect them to ensure that their
Navigators are sufficiently prepared to
provide this assistance, either by
including the corresponding training
topics at § 155.210(b)(2)(v) through (ix)
in their Navigator training standards, or
through informal continuing education
such as webinars, fact sheets,
supplementary trainings and
certifications, and other technical
assistance. However, because we believe
SBEs are in the best position to
determine the extent of training that is
appropriate for duties they are
authorizing (but not requiring) their
Navigators to perform, SBEs (including
SBE–FPs) would not be required to
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provide training on the topics listed in
§ 155.210(b)(2)(v) through (ix) unless
they required the corresponding forms
of assistance under § 155.210(e)(9).
Finally, in the preamble to the
proposed rule we discussed the
statutory authority for the assistance
topics specified in § 155.210(e)(9), and
we refer commenters to those
discussions, at 80 FR 75520–75522.
Comment: Many commenters were
concerned that requiring these new
duties without additional funding
would cause undue burden, discourage
program participation, or detract from
Navigators’ time and resources to help
consumers enroll in coverage. Many
commenters requested that HHS invest
in the Consumer Assistance Programs
established under section 2793 of the
PHS Act instead of, or in addition to,
these requirements.
Response: We expect that providing
for SBE flexibility and phasing in
implementation of § 155.210(e)(9) in
FFEs will mitigate some of commenters’
concerns about funding sources. FFE
Navigators may cover the costs of these
additional activities using Navigator
grant funds and will have the
opportunity to propose budgets during
the grant application process, and
current FFE Navigators may revise their
work plans if they opt to carry out these
activities before they become required.
We agree that Consumer Assistance
Programs established under section
2793 of the PHS Act have served an
important role for consumers with
health insurance concerns. We also
remind commenters that § 155.210(e)(4)
already requires Navigators in all States
to provide referrals to any applicable
office of health insurance consumer
assistance or health insurance
ombudsman established under section
2793 of the PHS Act, or any other
appropriate State agency, for any
enrollee with a grievance, complaint, or
question regarding their health plan,
coverage, or a determination under the
plan or coverage. Many States operate
an office of health insurance consumer
assistance or a health insurance
ombudsman. The critical assistance
provided by these offices will continue
to be an important complement to and
resource for Navigators, and HHS will
continue to explore ways to fund
Consumer Assistance Programs.
However, we note that this existing
referral requirement is not sufficient to
cover the new assistance activities
under § 155.210(e)(9).
Comment: A few commenters said
they believe the proposed Navigator
duties duplicate services provided by
issuers or agents and brokers. Several
commenters requested that Navigators
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providing post-enrollment assistance be
subject to background checks and
required to be licensed, carry errors and
omissions insurance, and be under the
oversight of State regulators.
Response: We believe it is important
for consumers to have access to a variety
of assistance options. Additionally,
Navigators in all States are required
under § 155.210(c)(1)(iii) to meet any
licensing, certification, or other
standards prescribed by the State or
Exchange, so long as the standards do
not prevent the application of the
provisions of title I of the Affordable
Care Act.
Comment: A number of commenters
supported our proposal that all
Exchanges be required to provide
training that would prepare Navigators
for the additional proposed areas of
responsibility. Many commenters urged
us to ensure that this training be robust,
supported by technical assistance, and
carefully monitored and updated. Many
commenters suggested that we specify
additional training topics. One
commenter asked how HHS would
ascertain training competency.
Response: We are finalizing the new
training provisions largely as proposed,
but are adding introductory language so
that their applicability is aligned to
whether the corresponding assistance
activities are required under final
§ 155.210(e)(9). If an Exchange
(including an FFE) opts to require its
Navigators to perform any or all of the
types of assistance specified in
paragraph (e)(9), the Exchange’s training
standards under paragraph (b)(2) must
include corresponding training on any
of the required assistance topics. For
example, an Exchange opting to require
its Navigators to help consumers
understand the process of filing
Exchange eligibility appeals under
§ 155.210(e)(9)(i) must ensure its
Navigators have expertise in this topic
by including the process of filing
Exchange eligibility appeals under
§ 155.210(b)(2)(v) in its training
standards. All of the training topics in
§ 155.210(b)(2)(v) through (ix) must be
included in the training standards for
Navigators in FFEs under Navigator
grants awarded in 2018 or any later
year, because that is when all the
activities specified under paragraph
(e)(9) will be required in FFEs, as
discussed above and as specified in
paragraph (e)(9). We believe this final
policy will ensure that all Navigators
required to perform functions under
paragraph (e)(9) will be adequately
trained in each required topic.
We are also adding a new
§ 155.210(b)(2)(ix) to correspond to the
referral assistance specified in
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§ 155.210(e)(9)(v), and are adding the
words ‘‘and rights’’ to
§ 155.210(b)(2)(viii) to parallel a related
modification to § 155.210(e)(9)(iv) that
is discussed below.
Section 155.215(b)(1)(iii) already
requires FFE Navigators, after
completing required training, to
complete and achieve a passing score on
all approved certification examinations
prior to carrying out any consumer
assistance functions under § 155.205(d)
and (e) or § 155.210. FFE Navigators
must also obtain continuing education
and be certified or recertified on at least
an annual basis under
§ 155.215(b)(1)(iv). Under
§ 155.210(b)(2), all Exchanges, including
SBEs and SBE–FPs, are required to
develop training standards that ensure
expertise in the topics specified at
§ 155.210(b)(2), but SBEs, including
SBE–FPs, have flexibility in creating
examination or certification
requirements for their Navigators.
Comment: Many commenters said
they do not believe the new Navigator
post-enrollment requirements are
appropriate for other assister types, such
as certified application counselors or
non-Navigator assistance personnel
subject to § 155.215, who may have
more limited time and resources. One
commenter thought that these assister
types should be encouraged to help
consumers understand and use their
coverage. Another commenter stated
that certified application counselors are
well positioned to provide postenrollment assistance because many are
in community health centers. A few
commenters recommended that certified
application counselors, non-Navigator
assistance personnel subject to
§ 155.215, and Federally Qualified
Health Center enrollment counselors
should have access to the new Navigator
training and resources related to postenrollment and other assistance.
Response: We agree that nonNavigator assistance personnel subject
to § 155.215 and certified application
counselors may have more limited
resources than Navigators, and that
tailoring duties to each of these three
assister types fosters a robust pool of
different kinds of consumer assistance.
Therefore, we are not finalizing any
assistance or training requirements
parallel to § 155.210(b)(2)(v)–(ix) and
(e)(9) for non-Navigator assistance
personnel subject to § 155.215 or
certified application counselors. As we
noted in the preamble to the proposed
rule, the requirement under
§ 155.210(e)(2) to provide information
that assists consumers with submitting
the eligibility application (which also
applies to certain non-Navigator
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assistance personnel through
§ 155.215(a)(2)(i)), could include
helping consumers report changes in
circumstances and submit information
for eligibility redeterminations. We also
noted in the preamble to the proposed
rule that under § 155.215(b), nonNavigator assistance personnel subject
to § 155.215 and Navigators in FFEs are
subject to the same training
requirements. In addition, all FFE
training modules can be accessed by the
public, including by certified
application counselors and nonNavigator assistance personnel subject
to § 155.215. As noted in the preamble
to the proposed rule, nothing prevents
non-Navigator assistance personnel
subject to § 155.215 or certified
application counselors from helping
with activities that are consistent with
their existing regulatory duties.
Although we are not requiring any
assistance or training requirements
parallel to the new provisions under
§ 155.210(b)(2)(v) through (ix) and (e)(9)
for non-Navigator assistance personnel
subject to § 155.215 or certified
application counselors, we believe that
a disclaimer stating that these assisters
are not acting as tax advisers or
attorneys (as discussed below) is an
important consumer protection that
should apply regardless of whether
these assisters are providing assistance
on the topics specified at
§ 155.210(e)(9). For this reason, and to
align parallel provisions requiring
Navigators, non-Navigator assistance
personnel subject to § 155.215, and
certified application counselors to
provide consumers with information
about their respective functions and
responsibilities, we are revising
§§ 155.215(g)(1) and 155.225(f)(1) to
require that, prior to providing
assistance, non-Navigator assistance
personnel subject to § 155.215 and
certified application counselors provide
consumers with a disclaimer stating that
they are not acting as tax advisers or
attorneys when providing assistance
(respectively) as non-Navigator
assistance personnel and certified
application counselors, and cannot
provide tax or legal advice within their
(respective) capacities as non-Navigator
assistance personnel and certified
application counselors.
Comment: A number of commenters
cautioned that Navigators should not be
expected to become, or be held out as,
experts in the new assistance topics
specified in § 155.210(e)(9). Several
commenters asked that we further
define what we mean by ‘‘assistance
with’’ so that Navigators can be clear
about the full extent of consumer
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support expected from them in these
areas.
Response: Each Navigator grantee and
each individual Navigator should have
the ability to help any individual who
presents themselves for assistance.
Additionally, we expect that all
individuals carrying out Navigator
duties would be trained to perform all
of the duties of a Navigator and would
be equipped to assist consumers with
the activities described in
§ 155.210(e)(9) in Exchanges where the
activities described in § 155.210(e)(9)
are required or authorized. Below, we
discuss examples of the kinds of
assistance we interpret § 155.210(e)(9) to
include.
Comment: Several commenters asked
us to explain whether Navigators are
permitted to collect, disclose, access,
maintain, store or use personally
identifiable information (PII) to carry
out these additional duties. One
commenter asked us to explain how
consumer privacy protections will be
ensured and enforced.
Response: Under their grant terms and
conditions, FFE Navigators are
permitted to create, collect, handle,
disclose, access, maintain, store, or use
consumer PII only to perform functions
that they are authorized to perform
under the terms of their grant, including
functions authorized or required under
§ 155.210, or for other purposes for
which the consumer provides his or her
specific, informed consent. Once this
rule takes effect, the activities under
paragraph (e)(9) will be authorized
Navigator functions in FFEs, both before
and after 2018. Therefore, after this rule
takes effect, FFE Navigators may create,
collect, handle, disclose, access,
maintain, store, and use consumer PII to
perform these functions, and we will
update guidance and model consent
forms to reflect this. HHS has a variety
of enforcement options in the event of
a violation of these standards, including
implementing corrective action plans or
pursuing civil money penalties under
§ 155.206 or § 155.285, or withholding
or terminating grant funds. With respect
to SBEs, § 155.260(b) directs SBEs to
execute a contract or agreement with
Navigators that binds them to privacy
and security standards that, among
other things, take into consideration a
Navigator’s authorized duties and
activities. If an SBE opts to require or
authorize the activities specified in
§ 155.210(e)(9) after that provision takes
effect, we would expect that SBE
privacy and security standards would
reflect SBEs’ decisions to require or
authorize Navigators to carry out these
additional activities, and would give
Navigators the ability to create, collect,
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handle, disclose, access, maintain, store,
and use PII as needed to do so. In any
event, the exact extent to which and the
conditions under which each SBE may
permit or require its Navigators to
create, collect, handle, disclose, access,
maintain, store, and use PII is a matter
within the reasonable discretion of the
SBE, so long as the SBE’s standards
comply with § 155.260 and otherwise do
not act as an impediment to the
performance of required or authorized
Navigator duties under § 155.210.
Comment: We asked for comment on
whether we should make explicit in the
regulation any of our interpretations of
existing statutes and regulations that
would permit (but not require)
Navigators to perform certain kinds of
post-enrollment assistance, such as
assistance with coverage claims denials.
We also asked for comment on whether
there are additional forms of postenrollment assistance that Exchanges
should require Navigators to provide,
commensurate with their general legal
authority. One commenter
recommended that we specify in
regulation any Navigator activities we
interpret to be permitted but not
required. Some commenters
recommended that additional postenrollment activities should be
required, including filing complaints
with regulators, assisting pregnant
women enrolled in QHPs to understand
their coverage options and ensure
continuity of coverage, and helping
enrollees pursue coverage determination
appeals and formulary exceptions.
Response: Because we are sensitive to
the concerns commenters expressed
about Navigators’ limited time and
resources to perform the new activities
described in § 155.210(e)(9), we are not
adding provisions that require or permit
any additional activities commenters
recommended at this time. Instead, we
have tried to limit the modifications to
the proposed activities in this final rule
to changes that provide additional detail
about the scope of the specific postenrollment and other new assistance
activities that we proposed adding to
the rule.
Comment: With respect to our
proposed requirement that Navigators
provide information and assistance with
filing Exchange eligibility appeals,
many commenters were concerned that
consumers’ legal rights may be
compromised without proper legal
representation, and stated that
Navigators should serve primarily as a
bridge to connect consumers with legal
assistance. One commenter stated that
Navigators should have the option of
assisting consumers with appeals only
when they have the expertise to do so.
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Several asked us to clarify that
Navigators may not serve as authorized
representatives for consumers filing
appeals. Commenters urged HHS to
clearly define the types of information
Navigators must provide related to
appeals and create guidelines to help
Navigators and consumers recognize
where legal assistance becomes
appropriate or necessary. Several
commenters recommended that this
duty be limited to making consumers
aware of their right to appeal, providing
basic education on the appeals process,
and making appropriate referrals for
legal assistance when possible. To
facilitate these referrals, commenters
asked HHS to help FFE Navigator
grantees identify methods of
establishing relationships with local
legal services organizations and other
State offices to help with the appeals
process. One commenter suggested that
Navigators should also provide
information and assistance with appeal
denials. One commenter asked how
these proposed requirements might
affect Medicaid appeals in States that
have delegated the authority to make
Medicaid and CHIP eligibility
determinations to the Exchange. A
number of commenters interpreted our
proposal to mean that Navigators would
be required to help consumers appeal
adverse coverage decisions.
Response: We recognize that helping
consumers through the entire Exchange
appeals process may require more
resources and expertise than many
Navigators can offer. To that end, we are
narrowing this provision by adding the
word ‘‘understanding’’ to make clear
that any assistance required under this
provision is limited to activities that
help consumers understand the process
of filing Exchange eligibility appeals,
and does not include a requirement to
help consumers through the entire
Exchange eligibility appeals process. It
does not prevent Navigators who are
authorized or required to provide
assistance under this provision from
providing such longer-term assistance,
as long as they do not provide legal
advice in their capacity as Navigators, as
discussed below. We also appreciate the
critical and established role that legal
services organizations play in helping
consumers understand and access their
Exchange eligibility appeal rights, and
have incorporated providing
information about free and low-cost
legal help into our expectations for
assistance under this provision, as
discussed below.
We interpret assistance under this
provision to include the following
activities, as relevant to consumers’
needs: (1) Helping consumers identify
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and meet the deadline for appealing an
Exchange eligibility determination; (2)
helping consumers understand that they
have a right to appeal eligibility
determinations made by an Exchange
(including SHOP Exchanges) related to
enrollment in a QHP, special enrollment
periods, exemptions from the individual
shared responsibility payment that are
granted by the Exchange, participation
as an employer in a SHOP, and any
insurance affordability program,
including eligibility determinations for
Exchange financial assistance,
Medicaid, the Children’s Health
Insurance Program, and Basic Health
Programs; (3) helping consumers
understand the process of appealing
those eligibility determinations and
what steps to take to complete an
appeal; (4) helping consumers access
relevant Exchange resources, such as
appeal request forms and mailing
addresses for appeals, and Exchange
guidance on appeals; and (5) providing
consumers with information about free
or low-cost legal help in their area,
including local legal aid or legal
services organizations and other State
offices to help with the Exchange
eligibility appeals process. Assistance
under this provision may also include
helping consumers collect supporting
documentation for the appeal (such as
screenshots of relevant information from
the online application).
Although the assistance under
§ 155.210(e)(9)(i) includes helping
consumers understand the general
availability of a right to appeal adverse
Exchange eligibility determinations and
the process for appealing them,
Navigators should not, in their capacity
as Navigators, cross the line into
providing legal advice, such as by
recommending that consumers take
specific action with respect to that right.
For example, Navigators could help
consumers understand the difference
between an appeal and an expedited
appeal, but should not help them decide
which one is best suited to their
circumstances. We suggest that
Navigators familiarize themselves with
any laws defining legal advice in the
States in which they operate, as this
may help them ascertain when they
might be taking an action that could
constitute providing legal advice. We
also note that we did not propose nor
are we establishing a duty for Navigators
to represent a consumer in an appeal,
sign an appeal request, or file an appeal
on the consumer’s behalf, either as a
legally authorized representative or
otherwise. Although HHS regulations do
not prohibit Navigators from serving as
authorized representatives under
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§ 155.227 outside of their capacity as
Navigators, they should keep any
activities as a consumer’s authorized
representative separate from their
Navigator duties and should not use
Navigator grant funds for these
activities, because these activities are
not authorized Navigator functions
under HHS regulations.
Assistance provided under this
provision does not include assistance
with appeals of coverage decisions by
issuers, but only assistance with appeals
of eligibility determinations made by an
Exchange. However, as we said in the
preamble to the proposed rule,
Navigators are already permitted, but
not required, to help consumers obtain
assistance with coverage claims denials
and to educate consumers about their
rights with respect to coverage available
through an Exchange. Additionally,
under the new language about rights
that we are adding to § 155.210(e)(9)(iv),
Navigators providing assistance under
that paragraph should inform
consumers who have questions about
coverage claims denials that they have
the right to appeal adverse benefit
determinations and to have the appeal
reviewed by an independent third party.
Finally, as indicated above, helping
consumers with the process of filing
Exchange eligibility appeals includes,
where applicable, helping consumers
understand the process of filing an
appeal of a modified adjusted gross
income (MAGI)-based Medicaid or CHIP
eligibility determination, where the
State has delegated authority to the
Exchange to adjudicate these appeals.
Comment: Commenters supported our
proposals to require Navigators to
provide consumers with information
and assistance regarding exemptions.
One commenter disagreed with our
proposal, arguing that exemptions
assistance is counter to the goal of the
Affordable Care Act. The majority of
commenters recommended exemptions
assistance not be limited to certain
consumers because helping with
exemptions is minimally burdensome
and because of the importance of skilled
assistance to consumers who cannot
access coverage. Several commenters
suggested that Navigators should have
the flexibility, if they are unable to fully
meet consumer demand, to prioritize
helping consumers apply for and enroll
in coverage over helping consumers
seek exemptions during open
enrollment. Several commenters
recommended that this duty include
assistance with understanding the
requirement to maintain minimum
essential coverage and the individual
shared responsibility payment, the
general purpose of and where to access
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IRS Form 8965, Health Coverage
Exemptions, and how to use applicable
Exchange tools to find bronze plan and
second-lowest cost silver plan
premiums. Several commenters
recommended that Navigators’ duty
with respect to exemptions should be
limited to education about, but not
assistance with, obtaining an
exemption. One commenter asked for
guidance on how this requirement
would apply to SBE Navigators, since
most States’ Exchange-granted
exemptions are processed by an FFE,
rather than an SBE.
Response: We are not limiting
Navigator assistance with exemptions
under paragraph (e)(9)(ii) to a specific
consumer population because we agree
that Navigator services should not be
exclusively available to a predefined set
of consumers and closed to others.
Where resources are limited, Navigators
providing assistance under this
provision may prioritize helping
consumers seeking to apply for and
enroll in coverage. For example, during
a busy enrollment event, Navigators
may choose to limit exemptions
assistance to directing consumers to
exemptions resources on HealthCare.gov
and IRS.gov, and schedule another time
for consumers to return for additional
assistance. But we also continue to
expect that Navigators will serve all
consumers seeking assistance.
We believe that the Affordable Care
Act contemplates that Navigators will
assist consumers with making an
informed decision about whether to
enroll in health coverage, and making
this decision will often require
consumers to have a basic
understanding of available exemptions.
We are finalizing § 155.210(e)(9)(ii)
generally as proposed, except that for
clarity and consistent use of
terminology we are modifying the
reference to the individual shared
responsibility requirement to refer to the
individual shared responsibility
payment, and are changing language
about ‘‘how to apply for’’ exemptions
claimed through the tax filing process to
‘‘how to claim’’ them. Because
exemptions assistance needs will vary
among consumers, and to avoid being
overly prescriptive, we are not
expanding the assistance specifically
required under this provision to include
the activities recommended by
commenters. We interpret assistance
under this provision to include the
following activities, as relevant to
consumers’ needs: (1) Informing
consumers about the requirement to
maintain minimum essential coverage
and the individual shared responsibility
payment; (2) helping consumers fill out
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and submit Exchange-granted
exemption applications and obtain any
necessary forms prior to or after
applying for the exemption; (3)
explaining what the exemption
certificate number is and how to use it;
(4) helping consumers understand the
availability of exemptions from the
requirement to maintain minimum
essential coverage and from the
individual shared responsibility
payment that are claimed through the
tax filing process and how to claim
them; (5) helping consumers use any
applicable Exchange tool to find lowest
cost bronze and second-lowest cost
silver plan premiums (that is, the FFE
tool or any similar tool offered by an
SBE); and (6) helping consumers
understand the availability of IRS
resources on this topic, including
explaining the general purpose of and
how to access IRS Form 8965, Health
Coverage Exemptions, and the
instructions for that form. We
emphasize that explaining the general
purpose of IRS Form 8965 to consumers
must be done consistent with IRS
published guidance on the topic, and
must include providing information on
where to access this form and related
tax information on IRS.gov.
With respect to exemptions granted
through the Exchange, we do not believe
that Navigators’ activities related to
exemptions should be limited to
education only. However, to help ensure
that Navigators do not provide tax
advice in their capacity as Navigators,
we are finalizing the portion of this
proposal that limits Navigators’ required
involvement in exemptions claimed
through the tax filing process to
providing general information and
helping consumers access IRS resources,
rather than assistance with claiming
exemptions on the tax return or filling
out IRS forms. For example, Navigators
acting in their capacity as Navigators
must not help consumers fill out IRS
Form 8965 or help them report having
minimum essential coverage on their tax
return. We believe this limitation is
sufficient to protect both consumers and
Navigators.
In any SBEs that opt to require or
authorize this assistance, Navigators
will be required or authorized
(respectively) to help consumers access
Exchange-granted exemptions, whether
consumers in that State access those
exemptions through the SBE or FFEs,
and, as in any Exchange, they will be
limited to providing only general
information about exemptions claimed
on the tax return in their capacity as
Navigators.
Comment: Many commenters said
that Navigators should provide
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consumers with a disclaimer stating that
they are not acting as tax advisers and
cannot provide tax advice within their
capacity as Navigators. One commenter
stated that requiring a disclaimer was
unnecessary because Navigators do not
provide tax advice and many already
provide a disclaimer to this effect. Some
commenters recommended that we
require a similar disclaimer that
Navigators are not acting as legal
representatives and cannot provide legal
advice or legal representation within
their capacity as Navigators. Some
commenters recommended that the
disclaimer be required to be written,
provided in a linguistically appropriate
manner, or included in our model
authorization form for FFE Navigators.
Response: We agree that prior to
providing assistance, Navigators should
provide consumers with a disclaimer
stating that they are not acting as tax
advisers or attorneys when providing
assistance as Navigators, and cannot
provide tax or legal advice in their
capacity as Navigators. We are therefore
adding language to § 155.210(e)(6)(i) to
specify that such a disclaimer must be
included as part of the information
provided to applicants about the
Navigator’s functions and
responsibilities and that both the
disclaimer and the information
provided about Navigator functions and
responsibilities must be provided prior
to providing assistance. We do not
interpret this requirement to mean that
Navigators must provide such a
disclaimer prior to providing general
outreach and education. Although we
do not specify the method of delivering
the disclaimers, we plan to add these
disclaimers to our model authorization
form for FFE Navigators. The
requirement under § 155.210(e)(5) that
Navigators must provide information in
a manner that is culturally and
linguistically appropriate to the needs of
the population being served by the
Exchange and accessible to people with
disabilities will apply to these
disclaimers. Finally, as discussed above,
we are adding a parallel disclaimer
requirement for non-Navigator
assistance personnel subject to
§ 155.215 and certified application
counselors, under §§ 155.215(g)(1) and
155.225(f)(1) (respectively).
Comment: Many commenters
supported our proposal to require
Navigators to provide consumers with
assistance with understanding the
Exchange-related components of the
premium tax credit reconciliation
process, and the availability of IRS
resources on this process. Commenters
agreed that although Navigators should
not provide tax advice, informing
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consumers of the tax implications of
receiving advance payment of the
premium tax credit is an essential
component of helping consumers enroll.
Several commenters recommended that
we specify that this assistance entails
helping consumers: (1) Access and
understand IRS Forms 1095–A, –B, and
–C, (2) understand how to report Form
1095 errors, (3) understand how to use
applicable Exchange tools to find silver
plan premiums, and (4) understand the
purpose of IRS Form 8962. A few
commenters suggested that Navigators
should also provide information about
reliable resources on this process from
sources other than the IRS. Other
commenters were concerned that our
proposal would stretch Navigators’
capacity and distract from enrollment,
and that tax professionals, not
Navigators, are best suited to assist
consumers with tax-related issues. Some
commenters asked us to clarify the
prohibition on providing tax advice, one
commenter requested that we add this
prohibition to § 155.210(d), and another
asked how it will be enforced.
Response: We are finalizing this
provision largely as proposed. Because
not all consumers will require
information and assistance with each of
the topics commenters recommended
that we include in this provision, we are
not expanding the final rule to include
them. However, we interpret assistance
under this provision to include helping
consumers with the following, as
relevant to their needs: (1) The
Exchange-related components of the
premium tax credit reconciliation
process; (2) accessing and
understanding the general purpose of
IRS Form 1095–A; (3) understanding
how to report Form 1095–A errors; (4)
using any applicable Exchange tool to
find second-lowest cost silver plan
premiums (that is, the FFE tool or any
similar tool offered by an SBE); and (5)
understanding the availability of IRS
resources on this process, including the
general purpose of and how to access
IRS Form 8962, and the instructions for
that form. To avoid confusion about the
scope of this provision, we are removing
the word ‘‘understanding’’ from the
beginning of the provision, because
Navigators’ assistance with the
Exchange-related components of the
premium tax credit reconciliation
process would include not only helping
consumers understand Exchange tools
and resources but also helping
consumers access and use these tools
and resources. We are also adding
‘‘understanding’’ before the provision’s
description of Navigators’ assistance
with respect to the availability of IRS
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resources on this process, to better
capture our interpretation that
Navigators are not authorized to
interpret those resources, and can
instead only direct consumers to them.
This edit also helps align this provision
with the similar requirement in
§ 155.210(e)(9)(ii) that Navigators help
consumers understand the availability
of IRS resources on exemptions.
Where Navigators are also tax
professionals, they might be in a
position to assist clients with both the
Exchange-related and the tax filing
components of the premium tax credit
reconciliation process, but should keep
these duties separate and not perform
any tax assistance within their capacity
as Navigators or using Navigator grant
funds. As part of Navigators’ assistance
with Form 1095–A, they may, for
example, explain to consumers why
they received the form and what the
information on the form means, explain
why they may have received more than
one copy of the form, help them find the
form in their online account or get a
copy of the form, explain what they
should do if they think the form may
have gone to the wrong address, or if
they think the information on their form
is incorrect or does not include a
dependent they added to their coverage.
On the other hand, Navigators who are
acting in their capacity as Navigators
should not, for example, help
consumers fill out IRS Form 8962,
advise consumers about whether to file
an amended tax return, or help them
complete their income tax return. We
believe it is critically important to
ensure that consumers are provided
with the most authoritative, accurate,
and up-to-date resources related to
premium tax credit reconciliation, and
thus IRS-approved resources must be
the primary resource to which
Navigators refer consumers.
We disagree with commenters that
Navigators should be required to help
consumers access and understand IRS
Forms 1095–B and 1095–C. Form 1095–
B, Health Coverage, is an annual form
issued by providers of minimum
essential coverage to report certain
information to the IRS and to taxpayers
about individuals who had coverage
during the year. Form 1095–C,
Employer-Provided Health Insurance
Offer and Coverage, is an annual form
issued by certain large employers to
report to the IRS and to taxpayers
information about offers of employersponsored coverage for the year. Unlike
the Form 1095–A, these forms are not
issued by an Exchange. The IRS has
resources that explain the purpose of
these forms, how they relate to the tax
filing process, how to request copies of
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the forms, and how to request
corrections to the forms. Navigators
should be able to help consumers access
IRS resources relating to these forms.
However, we are not requiring
Navigators providing assistance under
this provision to help consumers access
these forms or report errors.
Comment: We received support from
commenters for our proposal to require
Navigators to help consumers
understand basic concepts related to
health coverage and how to use it.
Several commenters recommended that
this assistance include helping
consumers understand their rights
related to health coverage. Some
recommended that we specify topics in
addition to the examples we included in
the preamble to the proposed rule,
including helping consumers
understand out-of-pocket cost
calculators and provider and formulary
lookup tools, common utilization
management definitions, including step
therapy and prior authorization, and
what an Explanation of Benefits
Statement is and how to read it. Other
commenters stated that because this
assistance will vary depending on each
consumer’s health insurance literacy,
needs, and goals, additional specificity
is unnecessary.
Response: We agree with commenters
that consumers’ rights with respect to
coverage available through an Exchange,
such as nondiscrimination protections
and prohibitions on preexisting
condition exclusions, are critical for
consumers to understand when
accessing or attempting to access
coverage through an Exchange.
Additionally, in the preamble to the
proposed rule, we explained that the
assistance provided under this
provision could include helping
consumers understand the right to
coverage of certain preventive health
services without cost sharing, and that
we interpret existing HHS regulations to
permit Navigators to educate consumers
about their rights with respect to
coverage available through an Exchange.
Therefore, we are adding the phrase
‘‘and rights’’ to § 155.210(e)(9)(iv) to
ensure that Navigators’ activities in this
area include education about these
topics. However, to avoid crossing the
line into providing legal advice,
Navigators should not, in their capacity
as Navigators, recommend that
consumers take specific action with
respect to these rights. We are also
adding the phrase ‘‘and rights’’ to the
corresponding training provision related
to this duty at § 155.210(b)(2)(viii).
Because the health literacy information
consumers need varies depending on
their circumstances, we are not
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requiring Navigators to help consumers
with specific health literacy topics.
Instead, we interpret assistance under
this provision to include, for example,
helping consumers understand: (1) Key
terms used in health coverage materials,
such as ‘‘deductible’’ and
‘‘coinsurance,’’ and how they relate to
the consumer’s health plan; (2) the cost
and care differences between a visit to
the emergency department and a visit to
a primary care provider under the
coverage options available to the
consumer; (3) how to identify innetwork providers and how to make and
prepare for an appointment with a
provider; (4) how the consumer’s
coverage addresses steps that often are
taken after an appointment with a
provider, such as making a follow-up
appointment and filling a prescription;
and (5) the right to coverage of certain
preventive health services without cost
sharing.
Comment: A few commenters asked
for clarification about whether the duty
proposed in § 155.210(e)(9)(iv) pertains
to general education about health
coverage or to assisting individuals with
activities such as making appointments
or filling prescriptions, which they
believed would be overly burdensome.
Several commenters stated that there are
insufficient educational resources
available and asked HHS to create
template materials and identify other
resources on these topics. One
commenter asked HHS to undertake or
support a thorough assessment of
consumer health insurance literacy
needs. Some commenters noted that
issuers often provide additional training
and materials to agents and brokers
about their plans, and recommended
that HHS require issuers to provide
Navigators with this kind of
information.
Response: The assistance provided
under § 155.210(e)(9)(iv) only includes
providing information and assistance
with understanding basic concepts and
rights related to health coverage and
how to use it; it does not include patient
advocacy or case management. With
respect to needs assessments, we
remind Navigators in FFEs of their
obligations under § 155.215(c)(1) to
develop and maintain general
knowledge about the racial, ethnic, and
cultural groups in their service area,
including each group’s health literacy
and other needs, and under
§ 155.215(c)(2) to collect and maintain
updated information to help understand
the composition of the communities in
the service area.
Agents and brokers often receive
information on health plans from the
issuers with whom they have a
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contractual relationship. While we do
not require QHP issuers to provide their
affiliated agents and brokers with plan
information, we continue to leverage
existing practices and encourage agents
and brokers to work directly with QHP
issuers within whom they have a
contractual relationship to obtain the
necessary information on that issuer’s
QHPs. Navigator organizations may
invite issuers in their area to share
information or attend education
sessions regarding plan benefits and
details. As long as all issuers in the
Exchange service area are invited and
all applicable Navigator conflict-ofinterest provisions are followed,
including the rule prohibiting
Navigators from receiving any
consideration directly or indirectly from
any health insurance issuer or stop-loss
insurance issuer in connection with the
enrollment of any individuals or
employees in a QHP or non-QHP, such
an event would not represent a conflict
of interest or violate a Navigator’s duty
under § 155.210(e)(2) to provide
information and services in a fair,
accurate, and impartial manner.
Comment: Most commenters
supported our proposal that Navigators
be required to provide referrals to
licensed tax advisers, tax preparers, or
other resources for assistance with tax
preparation and tax advice related to
consumer questions about the Exchange
application and enrollment process,
exemptions from the requirement to
maintain minimum essential coverage
and from the individual shared
responsibility requirement, and
premium tax credit reconciliations.
Commenters requested detail about how
such a referral mechanism would work;
for example, whether Navigators would
be allowed to refer consumers to a
specific tax professional, as opposed to
a general listing of tax professionals.
Other commenters asked HHS for
guidance on limitations and strategies
for referring and collaborating with tax
preparation services, legal services
organizations, community experts,
patient-focused and community-based
organizations, and other State offices.
One commenter questioned the term
‘‘licensed tax adviser,’’ noting that IRS
does not provide such a license.
Another asked HHS to specify IRS’s
Volunteer Income Tax Assistance
(VITA) and Tax Counseling for the
Elderly (TCE) programs as appropriate
points of referral. And one commenter
asked HHS to partner with the Internal
Revenue Service (IRS) to provide
training and education to tax preparers.
Response: All referrals from a
Navigator to other organizations must be
consistent with applicable statutory and
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regulatory requirements, including the
requirement at § 155.210(e)(2) that
Navigators provide information and
services in a fair, accurate, and impartial
manner, and the conflict of interest
provision at § 155.210(d)(4) prohibiting
Navigators from receiving any
consideration directly or indirectly from
any health insurance issuer or issuer of
stop loss insurance in connection with
the enrollment of any individuals or
employees in a QHP or a non-QHP. We
interpret the requirement under
§ 155.210(e)(2) that Navigators provide
information and services in a fair,
accurate, and impartial manner to mean
that Navigators must not accept
payment in exchange for providing a
referral or recommending the services of
another organization. We intend to issue
guidance for FFE Navigators with
additional information on collaborating
or partnering with other organizations.
The referrals discussed under this
provision include referrals to licensed
tax advisers, tax preparers, or other
resources for assistance with tax
preparation and tax advice. Licensed tax
advisers are one type of tax professional,
but not the only type. ‘‘Licensed’’ can
mean any type of professional license
that qualifies someone to prepare taxes,
and could include certified public
accountants and attorneys. We agree
that VITA and TCE programs may often
be the best resources for referral under
this provision.
To ensure that Navigators who are
required under paragraph (e)(9) to
provide referrals to licensed tax
advisers, tax preparers, or other
resources for assistance with tax
preparation and tax advice are also
trained on this topic, we are adding a
corresponding training provision at
§ 155.210(b)(2)(ix). We are also
replacing a reference in paragraph
(e)(9)(v) to the individual shared
responsibility requirement with a
reference to the individual shared
responsibility payment, to ensure
consistent use of terminology.
We also proposed to amend
§§ 155.205(d) and 155.215(b)(1)(i) to
specify that any individual or entity
carrying out consumer assistance
functions under § 155.205(d) and (e) or
§ 155.210, in both SBEs and FFEs,
would be required to complete training
prior to performing any assister duties,
including before conducting outreach
and education activities, as well as
before providing application and
enrollment assistance. Section
155.215(b) already requires Navigators
and non-Navigator assistance personnel
in FFEs and non-Navigator assistance
personnel funded through Exchange
Establishment grants under section
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1311(a) of the Affordable Care Act to
obtain certification by the Exchange
prior to carrying out any consumer
assistance functions under § 155.205(d)
and (e) or § 155.210. We proposed to
amend § 155.215(b)(1)(i) to specify that
the consumer assistance functions
referenced in that provision would
include outreach and education
activities. In addition, we proposed to
amend § 155.205(d) to require that
training be completed not only before
providing the assistance described in
that paragraph, but also before
conducting the outreach and education
activities specified in paragraph (e).
This proposal sought to ensure that
individuals and organizations subject to
§§ 155.205(d) and (e), 155.210, and
155.215 do not perform any Exchange
outreach and education activities or
application and enrollment assistance
while identifying as or holding
themselves out to the public as
Exchange-approved Navigators or nonNavigator assistance personnel, prior to
completing Exchange requirements,
including training and certification. The
proposed amendments would not apply
to certified application counselors, but
§ 155.225(d)(1) already requires certified
application counselors to complete and
achieve a passing score on all Exchange
approved certification examinations
prior to functioning as certified
application counselors.
We are finalizing these amendments
as proposed.
Comment: The majority of
commenters supported our proposal to
require that Navigators and nonNavigator assistance personnel complete
training prior to performing any assister
duties, including before conducting
outreach and education activities, as
well as before providing application and
enrollment assistance. These
commenters also recommended
exempting Navigators in FFEs and nonNavigator assistance personnel subject
to § 155.215 who are eligible to be
recertified from the requirement in
§ 155.215(b) to complete recertification
training prior to conducting outreach
and education. A few commenters
expressed concern regarding the
availability and content of training.
Commenters also were concerned that
this provision would prevent Navigators
and non-Navigator assistance personnel
subject to § 155.215 from conducting
year-round outreach education, if
training is not available year round, or
recommended that training be available
at least 2 months prior to open
enrollment so that new assisters subject
to this requirement can complete the
training and begin assisting consumers.
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Response: We appreciate the support
for this proposal and agree that it is
essential that consumers trust that
Navigators and non-Navigator assistance
personnel are properly informed and
trained when consumers seek out their
services, whether those services include
assistance with an Exchange application
or education about the Exchange. We
recognize commenters’ concerns that
the timing of the FFE Navigator and
non-Navigator assistance personnel
training may prevent some Navigators
and non-Navigator assistance personnel
in FFEs from conducting outreach and
enrollment work during periods when
training is being updated and
relaunched prior to the start of a new
open enrollment period for the
individual market. We will continue to
strive to complete FFE training updates
prior to FFE Navigator and nonNavigator assistance personnel
certification deadlines. We believe there
is great value in ensuring that
Navigators in FFEs and non-Navigator
assistance personnel subject to
§ 155.215 complete recertification
training prior to providing any outreach
or assistance to consumers because
there are often changes in Exchange
operations and policy from year to year
and we want to ensure that these
assisters are providing the most up to
date and accurate information to
consumers. Therefore, we are not
exempting Navigators in FFEs and nonNavigator assistance personnel subject
to § 155.215 who are eligible to be
recertified from this requirement.
Comment: A few commenters
requested clarification regarding
individuals who are not yet certified or
are not acting as Navigators or nonNavigator assistance personnel at
Navigator and non-Navigator assistance
personnel organizations but who may be
serving as spokespeople and conducting
public education activities about the
Exchange and the Exchange assistance
available from the organization. One
commenter requested that HHS allow
newly hired, but not fully trained or
certified Navigators to conduct
outreach, as long as they disclose they
are not yet certified to conduct
enrollment assistance and immediately
refer consumers to a fully trained and
certified Navigator. A few commenters
opposed our proposal due to concern
that it would prohibit such activities.
Response: As explained in the
proposed rule preamble, nothing in the
Exchange regulations prohibits
individuals who are not trained and
certified as Exchange-approved
Navigators, non-Navigator assistance
personnel, or certified application
counselors from conducting outreach
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about Exchanges and providing
application and enrollment assistance.
These individuals may of course
conduct outreach and education about
Exchanges as long as they do not
represent themselves as Exchangeapproved Navigators, non-Navigator
assistance personnel, or certified
application counselors.
Comment: One commenter expressed
concern about how this provision could
reasonably be enforced.
Response: Exchanges have discretion
to pursue a variety of enforcement
options in the event of Navigator or nonNavigator assistance personnel
noncompliance with any applicable
statutory or regulatory requirements or
prohibitions. These options include
implementing corrective action plans or
pursuing civil money penalties under
§ 155.206 or withholding or terminating
grant or contract funds. FFE Navigators
and FFE non-Navigator assistance
personnel who wish to file a complaint
or grievance against other FFE
Navigators or FFE non-Navigator
assistance personnel can contact their
Project Officer or point of contact at
CMS. FFE certified application
counselors should direct complaints or
grievances to the certified application
counselor inbox at CACQuestions@
cms.hhs.gov. We also rely on
communication with State regulatory
agencies (such as Departments of
Insurance) and CMS Regional Offices
regarding FFE Navigator and FFE nonNavigator assistance personnel conduct.
Section 155.210(d)(6) currently
prohibits Navigators from providing to
an applicant or potential enrollee any
gifts unless they are of nominal value;
or any promotional items that market or
promote the products or services of a
third party, when those promotional
items are being used as an inducement
for enrollment. Through a crossreference to § 155.210(d) in
§ 155.215(a)(2)(i) and a parallel
provision in § 155.225(g)(4), this
prohibition also applies to nonNavigator assistance personnel subject
to § 155.215, and to certified application
counselors.
To reduce confusion about when gifts
and promotional items can be provided
to applicants and potential enrollees, we
proposed to amend §§ 155.210(d)(6) and
155.225(g)(4) to specify that gifts of any
value (including third-party
promotional items of any value) should
never be provided to applicants or
potential enrollees as an inducement for
enrollment. We also proposed to specify
that gifts that are not provided as an
inducement for enrollment may be
provided to applicants and potential
enrollees if they do not exceed nominal
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value.40 We proposed that this nominal
value restriction would apply both to
each individual gift and to the
cumulative value of multiple gifts,
including promotional items. We further
proposed that the nominal value
restriction on the cumulative value of
multiple gifts would only apply to
single encounters between the assister
and an individual, and not to multiple
encounters, so that assisters would not
have to collect PII as a means of tracking
the number and value of gifts provided
to an individual consumer across
multiple encounters, such as all
encounters in a single calendar year or
enrollment season. We noted that we
would consider a single outreach or
educational event to be a ‘‘single
encounter’’; that is, the assisters subject
to the proposed requirement would not
be permitted to provide multiple gifts to
the same consumer at the same outreach
event if the cumulative value of those
gifts exceeded nominal value.
We proposed to define ‘‘gifts,’’ for
purposes of §§ 155.210(d)(6) and
155.225(g)(4), to include gift items, gift
cards, cash cards or cash, as well as
promotional items that market or
promote the products or services of a
third party. Language in
§§ 155.210(d)(6) and 155.225(g)(4)
currently provides that gifts, gift cards,
or cash may exceed nominal value for
the purpose of providing reimbursement
for legitimate expenses incurred by a
consumer in an effort to receive
Exchange application assistance, such
as travel or postage expenses. We
proposed to amend this language to
indicate that the reimbursement of
legitimate expenses, such as travel and
postage expenses, when incurred by a
consumer in an effort to receive
Exchange application assistance, would
not be considered a gift, and therefore,
would not be subject to the proposed
restrictions on providing gifts.
Finally, existing regulations under
§§ 155.210(d)(7) and 155.215(a)(2)(i)
already prohibit the use of Exchange
funds by Navigators and by nonNavigator assistance personnel subject
to § 155.215 to purchase gifts or gift
cards, or promotional items that market
or promote the products or services of
a third party, that would be provided to
any applicant or potential enrollee. We
did not propose to amend this
provision.
40 We have previously defined ‘‘nominal value’’
as a cash value of $15 or less, or an item worth $15
or less, based on the retail purchase price of the
item, regardless of the actual cost. (79 FR 15807,
15831 (Mar. 21, 2014) and 79 FR 30239, 30283 (May
27, 2014).
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We are finalizing the amendments to
§§ 155.210(d)(6) and 155.225(g)(4) as
proposed.
Comment: Many commenters
supported our proposals, agreeing that
the amendments clarify the rule and
strike the right balance between
allowing Navigators, non-Navigator
assistance personnel subject to
§ 155.215, and certified application
counselors to use gifts and promotional
items in outreach while ensuring they
are never used to induce enrollment.
Some commenters asked for examples of
permissible and impermissible gifts,
promotional items, and legitimate
expenses. Several commenters asked for
guidance on the terms ‘‘nominal’’ and
‘‘products or services of a third party.’’
One commenter suggested that our rule
may conflict with the beneficiary
inducement rules that apply to
Medicare and State health care
programs, potentially creating
difficulties for Navigators that are health
care providers.
Response: As we noted in the
preamble to the proposed rule, we have
previously defined ‘‘nominal value’’ as
a cash value of $15 or less, or an item
worth $15 or less, based on the retail
purchase price of the item, regardless of
the actual cost (79 FR 15831 and 79 FR
30283). This nominal value limit
applies to all gifts, including gift items,
gift cards, cash cards, cash, and
promotional items that market or
promote the products or services of a
third party. Some illustrative examples
of permissible gifts and promotional
items include pens, magnets, or key
chains worth $15 or less each, including
if such items bear the name or logo of
a local business, or community or social
service program. Such items may, for
example, be provided to consumers at
outreach and education events or at
other forums attended by members of
the general public, as long as they are
not being provided as an inducement to
enrollment. By ‘‘inducing enrollment,’’
we mean conditioning receipt of the
items on a consumer’s actually enrolling
in coverage, as opposed to encouraging
consumers to seek or receive application
or other authorized assistance. To the
extent that Federal or State health
program beneficiary inducement rules
apply to entities or individuals who also
serve as Navigators, non-Navigator
assistance personnel subject to
§ 155.215, or certified application
counselors, those entities and
individuals must comply with those
rules as well as the applicable program
rules under §§ 155.210(d)(6),
155.215(a)(2)(i), and 155.225(g)(4).
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d. Ability of States To Permit Agents
and Brokers To Assist Qualified
Individuals, Qualified Employers, or
Qualified Employees Enrolling in QHPs
(§ 155.220)
We proposed additional standards
under § 155.220 for oversight and
enforcement of standards applicable to
agents, brokers, and web-brokers who
facilitate enrollment in the FFEs. These
standards were proposed under the
Secretary’s authority to establish
procedures for States to permit agents
and brokers to assist consumers
enrolling in QHPs through the FFEs, as
described in sections 1312(e) of the
Affordable Care Act.
In the proposed rule, we explained
that we were considering an option to
enhance the direct enrollment process,
so that an applicant who initiated
enrollment directly with a web-broker
entity using the web-broker’s nonExchange Web site could remain on the
web-broker’s Web site to complete the
application and enroll in coverage,
instead of being redirected to the
Exchange Web site to complete the
application and receive an eligibility
determination. Under the proposal, the
web-broker’s Web site could obtain
eligibility information from the
Exchange to support the consumer in
selecting and enrolling in a QHP with
Exchange financial assistance.
Accordingly, we proposed to revise
§ 155.220(c)(1) to ensure that the
Exchange maintained its role in
determining eligibility when an
applicant initiates enrollment with a
web-broker on the web-broker’s nonExchange Web site, by requiring the
agent or broker to ensure that the
applicant completed an eligibility
verification and enrollment application
through the Exchange Web site, or an
Exchange-approved web service using
the FFE single streamlined application.
Additionally, we solicited comments on
the proposal to require web-broker
entities to use the FFE single
streamlined application without
deviation from the language of the
application questions and the sequence
of information required for an eligibility
determination or redetermination. We
solicited comments on how much
flexibility web-broker entities should be
afforded relative to the consumer
experience on its non-Exchange Web
site. We also sought comment on
additional matters HHS should consider
to improve the direct enrollment
process, such as requiring HHS approval
of alternative enrollment pathway
processes, additional consumer
safeguard protections, additional webbroker reporting requirements, and
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establishing more robust privacy and
security requirements including
requiring adoption of cyber security best
practices and specificity as to the
collection and use of consumer
information. We also proposed to adopt
parallel standards for the use of QHP
issuer Web sites under
§ 156.265(b)(2)(ii). See III.G.5.c of this
preamble for a discussion of the
amendments to § 156.265(b)(2)(ii).
We proposed to amend paragraph
(g)(2)(ii) to clarify that HHS could
determine an agent or broker to be
noncompliant if HHS finds that the
agent or broker violated any term or
condition of the agreement with the
FFEs required under paragraph (d) of
this section, or any term or condition of
an agreement with the FFEs required
under § 155.260(b). We proposed to add
§ 155.220(g)(5) to address suspension or
termination of an agent’s or broker’s
agreements with the FFEs in cases
involving potential fraud or abusive
conduct. We proposed in
§ 155.220(g)(5)(i)(A) that if HHS
reasonably suspected that an agent or
broker may have engaged in fraud or
abusive conduct using PII of an
Exchange applicant or enrollee, or in
connection with an Exchange
enrollment or application, HHS could
suspend the agent’s or broker’s
agreement and accompanying
registration with the FFEs for up to 90
calendar days, with the suspension
effective as of the date of the notice to
the agent or broker. We further proposed
under § 155.220(g)(5)(i)(B) if the agent or
broker failed to submit information
during this 90-day period, HHS could
terminate the required agreements for
cause effective immediately upon
expiration of the 90-day period, under
§ 155.220(g)(5)(ii). In § 155.220(g)(5)(ii),
we proposed that if HHS reasonably
confirmed the credibility of an
allegation that an agent or broker
engaged in fraud or abusive conduct
using personally identifiable
information of Exchange enrollees or
applicants, or in connection with an
Exchange enrollment or application, or
was notified by a State or law
enforcement authority of the State or
law enforcement authority’s finding or
determination of fraud or behavior that
would constitute abusive conduct in
such a circumstance, HHS would notify
the agent or broker and terminate,
immediately and permanently, the
agent’s or broker’s agreements with the
FFEs. In § 155.220(g)(5)(iii), we
proposed that during the 90-day
suspension period, as well as following
the termination of the FFE agreements,
the agent or broker would not be
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registered with the FFEs, or be
permitted to assist with or facilitate
enrollment through the FFEs, or assist
individuals in applying for Exchange
financial assistance for QHPs. For
consistency with these proposed
termination standards, we proposed
corresponding updates to paragraphs
(g)(3) and (4), and proposed amending
paragraph (f)(4) to remove the
unnecessary reference to paragraph (g).
We proposed adding paragraph
§ 155.220(j) to establish standards of
conduct for agents and brokers that
assist consumers to enroll in coverage
through the FFEs to protect consumers
and ensure the proper administration of
the FFEs. In § 155.220(j)(1)(i) through
(iii), we proposed that an agent or
broker that assisted with or facilitated
enrollment of qualified individuals,
qualified employers, or qualified
employees through an FFE, or assisted
individuals in applying for Exchange
financial assistance for QHPs sold
through the FFEs, would have to: (1)
Execute the required agreement under
§ 155.260(b)(2); (2) register with the
FFEs as described in paragraph (d)(1) of
this section; and (3) comply with the
FFE standards of conduct proposed in
this paragraph. In § 155.220(j)(2), we
proposed that the agents and brokers
described in paragraph (j)(1) would have
to: (1) Provide consumers with correct
information, without omission of
material fact, regarding the FFEs, QHPs
(including SADPs 41) offered through
the FFEs and insurance affordability
programs, and refrain from marketing or
conduct that is misleading or coercive,
or discriminates based on race, color,
national origin, disability, age, sex,
gender identity, or sexual orientation;
(2) provide the FFEs with correct
information under section 1411(b) of the
Affordable Care Act; (3) obtain the
consent of the individual, employer, or
employee prior to assisting with or
facilitating enrollment in coverage
through an FFE, or prior to assisting
with the application for financial
assistance for QHPs sold through the
FFEs; (4) protect consumer PII in
accordance with § 155.260(b)(3) and the
agreement described in § 155.260(b)(2);
and (5) comply with all applicable
Federal and State laws and regulations.
In § 155.220(j)(3), we proposed that an
agent or broker would be considered to
be in compliance with the standard of
41 As detailed in the Exchange Establishment Rule
(77 FR 18309, 18315) (Mar. 27, 2012), with some
limited exceptions, SADPs are considered a type of
QHP. We expect agents, brokers, and web-brokers
registered with the FFEs to comply with applicable
rules and requirements in connection with SADPs,
just as they must comply with those rules in
connection with medical QHPs.
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conduct requirements to provide
consumers and the FFEs with correct
information if HHS determined that the
agent or broker had a reasonable cause
for any failure to provide correct
information and that the agent or broker
acted in good faith. We also proposed
that the violation of these standards
could result in the termination for cause
of the agent’s or broker’s agreements
with the FFEs as described in
§ 155.220(g), or the imposition of other
penalties as authorized by law.
In § 155.220(k), we proposed penalties
for agents and brokers registered with
the FFEs other than termination of the
agreements with the FFEs. In
§ 155.220(k)(1), we proposed that if HHS
determined that an agent or broker
failed to comply with the requirements
of § 155.220 he or she could be denied
the right to enter into an agreement with
the FFEs in future years, and could be
subject to CMPs as described in
§ 155.285 if the violation involved the
provision of false or fraudulent
information to an Exchange or the
improper use or disclosure of
information. In § 155.220(k)(2), we
proposed that the denial of the right to
enter into an agreement with the FFEs
in future years would be subject to 30
calendar days’ advance notice and the
reconsideration process established in
§ 155.220(h). The imposition of CMPs
for the provision of false or fraudulent
information to an Exchange or the
improper use or disclosure of
information would be subject to the
advance notice and appeals process
described in § 155.285.
Finally, in § 155.220(l) we proposed
that an agent or broker who enrolled
qualified individuals, qualified
employers, or qualified employees in
coverage in a manner that constituted
enrollment through an SBE–FP, or
assisted individual market consumers
with submission of applications for
Exchange financial assistance through
an SBE–FP would have to comply with
all applicable FFE standards in
§ 155.220.
Comment: The proposal for the
enhanced direct enrollment process
received broad support by many
commenters, who stated they believe
enabling the applicant to remain on a
web-broker’s or issuer’s non-Exchange
Web site would improve the consumer
experience by supporting more seamless
transitions than the existing direct
enrollment functionality. One
commenter stated the proposal would
increase enrollment, as the current
direct enrollment functionality requires
a consumer to be directed back and
forth between the direct enrollment Web
site and HealthCare.gov, leading some
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consumers to drop out of the process
before completing enrollment out of
frustration over operational
ineffeciencies or duplication.
Commenters also broadly supported our
proposal for the Exchange to continue
being the entity responsible for making
eligibility determinations and to
continue to be the system of record for
enrollment. Other commenters opposed
the proposal, citing the increased risk of
consumers receiving inaccurate or
misleading information that might affect
eligibility determinations and consumer
choice. Some commenters urged HHS to
take several considerations into account
before moving forward with the
proposal, including the potential
negative impact on Medicaid-eligible
populations.
FFE single streamlined application.
We proposed to require web-brokers to
use the single streamlined application
without deviation from the language of
the application questions and the
sequence of information required for an
eligibility determination. In support of
the proposal, a few commenters stated
that HHS should grant entities
flexibility in the application process to
enable integration into existing
processes, and enable more innovation
for a better consumer experience. Some
commenters recommended that HHS
instead use the FFE single streamlined
application as a baseline, and allow
web-brokers the opportunity to tailor
applications for specific target
populations. One commenter stated that
consumers should only be required to
answer questions that are relevant to
their personal circumstances, so as to
reduce consumer burden and
application time. Another commenter
stated that allowing minor changes to
the wording of specific questions could
help enhance the consumer experience,
so long as the overall meaning of the
question is maintained.
Other commenters called HHS’s
proposal to require web-brokers and
issuers to strictly adhere to existing
eligibility Exchange language a
‘‘prudent safeguard,’’ citing concerns
that enhanced direct enrollment would
increase the risk of consumers receiving
inaccurate or misleading information
that might affect eligibility
determinations and consumer choice,
and the potential for consumer
confusion around communication with
Exchanges.
HHS approval of alternative
enrollment pathway processes. HHS
solicited comments on requiring HHS
approval of alternative enrollment
processes in the proposed rule. Some
commenters urged that HHS implement
the approval process in a collaborative
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and flexible manner, with clear and
concise guidelines. Other commenters
strongly recommended that HHS
confirm that all web-brokers adhere to
certain criteria prior to offering
enhanced direct enrollment services,
including ensuring web-broker’s
application questions and flows provide
accurate eligibility assessments and
meet other requirements, such as
providing appropriate consumer
support, displaying all plan information
fully and accurately, and demonstrating
compliance with privacy and security
standards via regular audits. One
commenter asked HHS to adopt a
‘‘check-list and review of required plan
choice elements’’ template that would
enable HHS to validate the entities’ plan
choice displays, tools, and elements of
their application. Another commenter
encouraged HHS to minimally require
web-brokers to submit a Minimum
Acceptable Risk Standards for
Exchanges ‘‘(MARS–E) Compliance
Manual’’ as a pre-condition to offering
the enhanced direct enrollment
eligibility service, which would detail
how they manage and comply with
MARS–E compliance processes. One
commenter stated that HHS should
require web-based entities to seek prior
approval for alternative direct
enrollment processes by presenting their
alternatives to HHS for review, before
using any display features or tools that
vary from those available on the
Exchange Web site.
Timing. We received many comments
on the timing related to implementation
of the enhanced direct enrollment
proposal. Some commenters wanted an
aggressive implementation timeline,
urging HHS to finalize and implement
the FFE single streamline application
process early in 2016 so that testing
could occur well in advance of the 2017
Individual Market Open Enrollment
period. Other commenters
recommended HHS pursue a more
measured approach, noting that
developing, testing, and implementing
the enhanced process will be a
significant undertaking for HHS, webbrokers, and QHP issuers. One
commenter stated that a measured
approach would allow entities to use
the Exchange approved web service for
a transitional period alongside the
traditional direct enrollment pathway.
Another commenter urged that HHS
wait several years before implementing
the proposal, and gather and analyze
data on the consumer experience with
web-based entities during 2016, conduct
an examination of its oversight of webbrokers and QHP issuers in 2017, and
then propose any expansion with
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sufficient detail for implementation no
earlier than 2018.
Response: Based on the comments
received, we are finalizing the proposal
to enhance the direct enrollment
process with some modifications, as
noted below.
We appreciate the many comments
and recommendations on the direct
enrollment proposal we received. While
we believe that an enhanced direct
enrollment process will provide a more
seamless consumer experience, we agree
with commenters that implementing the
proposal will be a significant
undertaking for HHS, web-brokers, and
issuers, and that such an effort will
require sufficient time for operational
planning and preparation, such as
identifying and testing the Exchangeapproved web services under
§ 155.220(c)(1) that can be used to
support the enhanced direct enrollment
process, and ensuring privacy and
security risks are addressed and
mitigated. HHS will not provide such an
option during the individual market
open enrollment period for 2017
coverage, but seeks to make this option
available for the individual market open
enrollment period for 2018 coverage.
We intend to supplement the framework
we are finalizing in this rule with more
specific guidance and requirements in
future rulemaking, such as specific
guidelines for a pre-approval process
under § 155.220(c)(4)(i)(F), and
requirements for privacy and security.
Until then, web-brokers must continue
to comply with the current direct
enrollment process, through which a
consumer is directed to HealthCare.gov
to complete the eligibility application,
and all associated guidance. This means
direct enrollment entities are not
permitted at this time to use nonExchange Web sites to complete the
Exchange eligibility application or
automatically populate data collected
from consumers into HealthCare.gov
through any non-Exchange Web site.
Completion of the Exchange eligibility
application on a non-Exchange Web
site, or collection of data through a nonExchange Web site that is then used to
complete the eligibility application, will
be considered a violation of the direct
enrollment entity’s agreement with the
FFEs.
While enhanced direct enrollment
will not be available in the individual
market open enrollment period for 2017
coverage, we are finalizing our proposal
to revise § 155.220(c)(1) to enable webbroker entities who use HHS-approved
direct enrollment processes to facilitate
enrollment through the FFEs to either
ensure the applicant’s completion of an
eligibility verification and enrollment
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through the Exchange Internet Web site
as described in § 155.405, or ensure that
the eligibility application information is
submitted for an eligibility
determination through an Exchangeapproved web service. This will allow
applicants to complete the entire
Exchange application and enrollment
process on the web-broker’s nonExchange Web site. We believe this
process will grant direct enrollment
entities the operational flexibility to
expand front-end, consumer-facing
channels for enrollment, and provide
consumers with a more seamless
experience.
However, we also share commenters’
concerns that allowing this flexibility
without additional protections in place
may increase the risk of imprecise,
inaccurate, or misleading eligibility
results. In light of those considerations
and the accompanying comments
received, we are adding new
§ 155.220(c)(3)(ii)(A) through (D) to
clearly articulate the requirements
associated with completing an Exchange
eligibility application on a web-broker’s
non-Exchange Web site. These
requirements may be amended over
time as implementation activities begin
and once experience is gained under the
new process (once implemented).
Consistent with the proposal in the
proposed rule, § 155.220(c)(3)(ii)(B)
requires all language related to
application questions, and the sequence
the questions are presented on the direct
enrollment entity’s non-Exchange Web
site to be identical to that of the FFE
Single Streamlined Application. We
acknowledge the comments requesting
deviations from the FFE single
streamlined application to enhance the
consumer experience, and are finalizing
language permitting such deviations
with HHS approval. We will only
approve minor modifications that do not
change the intent or meaning of the
questions, decrease the probability of
accurate answers and eligibility
determinations, or affect the
dependencies and structure of the
dynamic application.
We are also adding new
§ 155.220(c)(3)(ii)(C), which sets out a
more general requirement that any nonExchange Web site facilitating the
completion of an Exchange eligibility
application ensure that all information
necessary for the completion of the
application related to the consumer’s
applicable eligibility circumstance are
submitted through an Exchangeapproved web service. New
§ 155.220(c)(3)(ii)(D) requires that the
process used for consumers to complete
the eligibility application on the nonExchange Web site comply with all
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applicable Exchange standards,
including Exchange notice requirements
under § 155.230 and Exchange privacy
and security standards related to
handling PII under § 155.260(b).
We have also renumbered the current
requirements that apply when an
Internet Web site of an agent or broker
is used to complete the QHP selection
process in new § 155.220(c)(3)(i). No
changes were made to these existing
requirements or the accompanying
regulatory text. We note that, as
outlined in § 155.220(c)(3)(ii)(A), these
requirements would also apply when an
Internet Web site of an agent or broker
is used to complete the Exchange
eligibility application.
We agree with commenters that urged
HHS to adopt an approval process to
ensure that the web-broker nonExchange Web site seeking to offer
stand-alone direct enrollment eligibility
services meets all applicable
requirements in order to protect
consumers. Accordingly, we have added
§ 155.220(c)(4)(i)(F) to outline a process
for HHS to verify that these entities have
met all of the applicable requirements of
this section before the non-Exchange
Web site is used to complete the
Exchange eligibility application.
The primary objective of the new
requirements outlined in
§ 155.220(c)(3)(ii) and (c)(4)(i)(F) is to
ensure that the Exchange is able to
produce an accurate eligibility
determination from an eligibility
application completed by a direct
enrollment entity on a non-Exchange
Web site for enrollment in a QHP
offered through the Exchange, including
eligibility for advance payments of the
premium tax credit and cost-sharing
reductions, as well as enrollments in
Medicaid, CHIP or the Basic Health
Program. Alignment with the FFE Single
Streamlined Application regarding
sequence and language on a nonExchange Web site to the FFE
application is critical to ensuring that
the information provided to the
Exchange through the Exchange
approved web-service represents a
complete understanding of a consumer’s
circumstance, and is directly tied to
ensuring accurate eligibility results. As
noted above, HHS will consider
allowing minor deviations from the
standardized language, in order to
improve readability or the consumer
experience. We will provide guidance
on the process for seeking approval to
deviate from the standardized language.
We clarify that the requirements
related to the direct enrollment process
rules are applicable to FFEs (including
FFEs where States perform plan
management functions) and SBE–FPs
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only, and would not apply to SBEs that
do not use the HealthCare.gov platform,
nor alter any State-specific rules related
to Medicaid eligibility.
Comment: HHS solicited feedback on
experiences with enrollment through
web-brokers, including any concerns
with privacy and security of the
information transmitted through webbrokers by expanding direct enrollment
to incorporate the FFE single
streamlined application and suggestions
for improvements, including requiring
additional information display
requirements (such as the lowest cost
plan at each metal level) beyond those
outlined in § 155.220(c)(3) to ensure that
consumers understand basic
information about cost and availability
of qualified health plans. We received
several comments opposing HHS
implementing additional consumer
protection and privacy and security
standards with respect to the use of the
enhanced direct enrollment process.
Some commenters stated that existing
web-broker requirements are sufficient
to ensure appropriate consumer
protections. One commenter said issuers
and web-brokers should not be required
to display the lowest-cost plan in each
metal level because existing decision
support tools can filter plans based on
customer input. However, one
commenter suggested requiring
conspicuous notice to consumers to
ensure they are aware they are applying
for Exchange coverage. Several
commenters provided specific
recommendations to ensure that
consumers understand that they are
applying for Exchange coverage,
including creating standardized
application ID numbers that enable
consumers to create HealthCare.gov
accounts that would link to their webbroker accounts. Several commenters
did not support requiring branding on
web-brokers’ sites, since many webbrokers build platforms for their
strategic partners with an expectation of
maintaining brand continuity. Others
supported specific branding
requirements, recommending a
consumer-tested ‘‘seal of approval’’ to
demonstrate that the web-broker’s
application was approved by HHS. One
commenter suggested that direct
enrollment non-Exchange Web sites
display a standard disclaimer that
notifies consumers that eligibility
determinations for Exchange coverage
are made by the Exchange and not the
web-broker or issuer, and directing that
any questions, concerns, or appeals
related to an eligibility determination be
submitted to the Exchange.
Commenters generally agreed that
web-brokers should continue to follow
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existing privacy and security standards,
including the Minimum Acceptable
Risk Standards for Exchanges (MARS–
E). Specific suggestions include
requiring approval from CMS’s Chief
Information Security Officer, and the
CMS Chief Technology Officer,
providing CMS with a current MARS–
E Compliance Manual and SSP System
Security Plan (SSP) subject to
verification via a pre-delegation audit by
CMS, and appointing a designated,
dedicated Privacy Officer responsible
for attesting to the organization’s
adherence to privacy standards as
outlined in the web-broker’s agreement
with HHS.
Other comments raised several
concerns about the privacy and security
of consumers’ personally identifiable
information, particularly citizenship
and immigration status, and asked HHS
to clarify how these entities would
collect, store, and use PII. Some
commenters wanted HHS to clarify that
web-based entities will not gather and
store data beyond that necessary for
HealthCare.gov, State-based Exchanges,
and Medicaid eligibility and enrollment
via ‘‘cookies’’ or other tracking tools,
and would not store or use information
gathered from consumers in the
application process for marketing other
products.
Response: We agree that
implementing the proposal will be a
significant undertaking for HHS, and
that privacy and security risks must be
addressed prior to implementation. We
intend for the standards outlined in this
section to provide a framework to
prepare for the implementation to
support use of the enhanced direct
enrollment option in future years. We
will continue to consider commenters’
recommendations on ensuring
consumers are protected, and intend to
propose further protections in future
rulemaking.
Comment: HHS also solicited
comments on about the current agent
and broker provisions in § 155.220 as
applied to web-brokers, including
suggestions for improvements in the
future, such as increased monitoring
and oversight activities. Commenters
supported HHS conducting regular
audits over web-brokers. Additionally,
some commenters supported ongoing
monitoring of plan selection and
enrollment patterns through
comprehensive data analysis. Others
stated that audits need to be conducted
‘‘equitably,’’ and that HHS should assist
web-brokers in coming into compliance
if violations are identified.
Response: We agree with commenters
that supported HHS conducting regular
audits of agents and brokers under this
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section to ensure ongoing compliance
with applicable standards. We are
adding § 155.220(c)(5), which authorizes
HHS to periodically monitor and audit
agents and brokers approved under this
subpart. This audit authority would
extend to agents or brokers who follow
the current direct enrollment pathway
that uses a non-Exchange Web site to
complete QHP selection, as well as
agents or brokers who follow the
enhanced direct enrollment pathway
that uses a non-Exchange Web site to
complete the Exchange eligibility
application.
Comment: One commenter stated that
there was a drafting error in paragraph
(f)(4). That paragraph relates to
termination without cause, but the
language in that paragraph uses the
phrase ‘‘for cause.’’
Response: We confirm the drafting
error—we are correcting the paragraph
to read ‘‘without cause.’’
Comment: While many commenters
supported the proposal for suspension
and termination of an agent’s or broker’s
agreements with the FFEs in cases of
potential fraud or abusive conduct,
several commenters opposed the
proposal as an encroachment on, or
preemption of, State law. These
commenters asked that HHS refer
instances of fraud and abuse to the
State, encouraged the FFE to work
closely with the State regulator to
ensure consumers are protected, and
urged HHS to allow the States to
regulate agents licensed do business in
their State ‘‘without interference.’’
Commenters also requested that HHS
coordinate with issuers on issues of
agent and broker fraud, and inform
issuers when HHS has notified a State’s
department of insurance regarding
specific fraud or misconduct issues.
Response: The proposal we are
finalizing relating to agent or broker
suspension or termination if HHS
reasonably suspects fraud or abusive
conduct pertains only to agents’ and
brokers’ agreements and registration
with the FFEs to assist consumers with
enrollments through the FFEs; it does
not otherwise interfere with any State
authority to regulate agents or brokers
who are licensed to business in their
jurisdiction. While HHS may suspend or
terminate the FFE agreements with an
agent or broker, this suspension or
termination would not impact State
licensure of an agent or broker. As
stated in the preamble to the proposed
rule, the investigations and enforcement
related to the conduct of agents and
brokers with respect to enrollments
through or interactions with the FFEs
will be conducted in coordination with
States. We are finalizing paragraph
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(g)(5)(ii) to clarify that HHS will limit
terminations without 30-days advance
notice to those situations where there is
a finding or determination by a Federal
or State entity that an agent or broker
has engaged in fraud, or abusive
conduct that may result in imminent or
ongoing consumer harm. In response to
comments received from the public on
this matter, we are also adding
paragraph (g)(6) to clarify that the State
department of insurance or equivalent
State producer licensing authority will
be notified by HHS in cases of a
suspension or termination of the agent’s
or broker’s agreements and registration
with an FFE effectuated under
paragraph (g). HHS will also coordinate
with affected QHP issuers if it will not
impede any State or Federal law
enforcement investigation and as
permitted under applicable Federal or
State law.
Comment: Several commenters were
concerned that the proposal did not
afford sufficient due process protections
to agents and brokers, and pointed out
that a 90-day suspension period could
prevent a wrongly accused agent or
broker from participating in most or all
of an individual market open
enrollment period for a given plan year.
These commenters urged HHS to
provide notice and opportunity to
respond before implementing a
suspension, as well as provide further
guidance on what would define ‘fraud’
or ‘abusive conduct.’ Commenters
proposed measures such as suspending
or terminating based on clear,
unequivocal, and convincing evidence,
a threat of immediate consumer harm,
and the opportunity for an appeal
hearing before an administrative law
judge. Some commenters suggested that
a 90-day suspension period may not be
sufficient to conduct a full investigation,
and suggested a longer timeframe for
suspension as well as a reference to
§ 155.1210 to emphasize the record
retention obligation of an agent along
with HHS’s ability to access or audit
agent and broker records.
Response: Section 1313(a)(5) of the
Affordable Care Act provides the
authority to implement any measure or
procedure that the Secretary determines
is appropriate to reduce fraud and abuse
in the administration of the Exchanges.
We believe that a 90-day suspension is
not an unreasonable timeframe where
there is suspected fraud or abuse by an
agent or broker, who may sell plans
through the FFE not only during open
enrollment but throughout the year. We
note that a similar requirement for
Medicare providers, 42 CFR 405.371,
gives HHS the authority to suspend
payments for at least 180 days where
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there is reliable information that an
overpayment exists, or there is a
credible allegation of fraud. HHS
intends to use this suspension and
termination authority to stop further
FFE enrollment activity by the agent or
broker in cases where the misconduct
may cause imminent or ongoing
consumer harm. Further, we are
modifying paragraph (g)(5)(i)(B) to
require HHS to review and make a
determination whether to lift the
suspension within 30 days of receipt of
evidence to rebut the allegation of fraud
or abusive conduct. This provides an
opportunity to limit the length of the
suspension with the timely submission
of rebuttal evidence.
We are finalizing the proposed
paragraphs (g)(5)(i)–(ii) so that
suspension or termination will be
effective starting on the date of the
notice in cases of actions related to
suspected fraud, or abusive conduct that
may cause imminent or ongoing
consumer harm; for other terminations
for cause under paragraph (g)(1), agents
and brokers will receive 30 days’ notice
with opportunity to respond prior to
termination as currently described in
paragraph (g)(3). We are finalizing
proposed paragraph(g)(5)(i)(B) with
modification, so that in cases where the
agent or broker submits evidence during
the suspension period, HHS will review
it and make a determination whether to
lift the suspension within 30 days of
receipt of the evidence; if the rebuttal
evidence fails to convince HHS to lift
the suspension, or if the agent or broker
fails to submit rebuttal evidence during
the 90-day suspension period, HHS may
terminate for cause the agent or broker’s
agreements with the FFEs under
paragraph (g)(5)(ii).
We note that § 155.1210 applies to
Exchanges and agents of Exchanges, but
not agents of QHP issuers. However,
agents and brokers are downstream
entities of QHP issuers, and they should
be bound by their agreement with the
QHP issuer to provide access to records,
under § 156.340(b)(4), and maintain
records in accordance with the standard
at § 156.705, and HHS may request
those records as part of an investigation
or audit.
Comment: Commenters generally
agreed with the standards of conduct
proposed in § 155.220(j) for agents and
brokers as important consumer
protections. One commenter suggested
HHS go further in implementing
standards for protecting PII, protected
health information (PHI), and Federal
tax information. Other commenters
suggested that agents should be able to
maintain flexibility to answer
consumers’ questions in a manner that
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is best understood by the consumers
they serve, which may result in minor
inaccuracies in the information
provided to FFEs, and asked HHS to
adopt a standard of good faith without
the necessity of a finding of reasonable
cause. Two commenters requested
clarification of the requirement for
consumer consent. Commenters also
requested clarification on the
prohibition on the use of the words
‘‘exchange’’ and ‘‘marketplace’’ in
business names and Web sites since the
words ‘‘exchange’’ and ‘‘marketplace’’
are common and have been part of the
names of Web addresses of many longstanding insurance-related businesses
that pre-date the Exchanges and are not
intentionally misleading.
Response: In addition to the standards
of conduct requirements in § 155.220(j),
the FFE privacy and security agreement
contains specific requirements for
protecting PII, PHI, and Federal tax
information. The requirement to provide
accurate information to consumers is
not intended to target generalities or
minor imprecisions, but rather
misrepresentations of material
information that would affect a
consumer’s choice of coverage or
subsidies. As described in preamble to
the proposed rule,42 we would interpret
§ 155.220(j)(2)(i), which requires agents,
brokers and web-brokers to refrain from
marketing or conduct that is misleading,
to require that agents, brokers, and webbrokers avoid the use of the terms
Marketplace or Exchange or other words
in the name of a business or Web site
if doing so could reasonably cause
confusion with a Federal program or
Web site. We intend to provide further
information on the requirements for
consumer consent under
§ 155.220(j)(2)(iii) in future guidance.
Comment: While several commenters
approved of extending the FFE
standards for agents and brokers to
SBE–FP States, others wanted more
flexibility for SBE–FP States to train,
register, and provide oversight of agents
and brokers. Commenters suggested
allowing SBE–FPs to design and
administer their own individual training
and certification program with
treatment of State-specific requirements
and regulations that may not be
adequately addressed by FFE training
and registration. One commenter
suggested that State-specific regulations
and training materials should be made
available for voluntary incorporation by
the individual SBE–FP. Another
commenter requested that all allegations
of agent misconduct in SBE–FP States
be referred to the State so State
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12263
regulators can investigate the
misconduct to see if additional
consumer harm has occurred in offExchange sales.
Response: Because agents and brokers
will be accessing the Federal platform to
enroll consumers in SBE–FP QHPs, we
are finalizing § 155.220(l), to require
that they be registered with HHS (which
includes training through HHS or an
HHS-approved vendor as described in
§ 155.222 for agents and brokers serving
individual market consumers), and that
that they comply with all applicable
FFE standards in § 155.220. As stated
above, HHS will work closely with State
departments of insurance (or equivalent
State regulators of agents and brokers) in
SBE–FP States in oversight of agents
and brokers. The roles and
responsibilities of HHS and the State
will be specified through the Federal
platform agreement. While HHS will
consider future alternatives that would
allow SBE–FPs to provide Exchange
training, we note that States may require
licensed agents and brokers to receive
State-specific SBE–FP training as part of
their continuing education to maintain
a State license.
We are finalizing these provisions as
proposed, with the following
modifications. We are finalizing
§ 155.220(c)(1) to require agents or
brokers to ensure an applicant’s
completion of an eligibility verification
and enrollment application through an
Exchange Internet Web site, or through
an Exchange-approved Web service,
subject to meeting the requirements
under new paragraphs § 155.220(c)(3)(ii)
and (c)(4)(i)(F). To ensure that the
information provided to the Exchange
through non-Exchange Web sites
represents a complete and accurate
determination of a consumer’s eligibility
for enrollment through the FFEs, we are
adding § 155.220(c)(3)(ii)(B) to require
all language related to application
questions, and the sequence of
questions presented on the agent or
broker’s non-Exchange Web site, to use
the same language as the FFE single
streamlined application in § 155.405.
We are also adding § 155.220(c)(3)(ii)(C)
to require all information for the
consumer’s applicable eligibility
circumstances are submitted through an
Exchange-approved Web service; and
§ 155.220(c)(3)(ii)(D) to require the
process used for consumers to complete
the eligibility application to comply
with all applicable Exchange standards,
including §§ 155.230 and 155.260(b). To
ensure maximum consumer protection,
we are also adding new
§ 155.220(c)(4)(i)(F) to outline a process
for HHS to verify entities meet all
requirements of this section prior to
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using a non-Exchange Web site to
complete the Exchange eligibility
application. In addition, we are adding
§ 155.220(c)(5) to enable HHS to
periodically monitor and audit entities
to assess compliance with standards in
this section. We are correcting an error
in paragraph (f)(4) to change ‘‘for cause’’
to ‘‘without cause.’’ We are finalizing
(g)(5)(i)(A) to add ‘‘that may cause
imminent or ongoing consumer harm’’
after ‘‘abusive conduct.’’ To clarify the
process for submitting evidence to rebut
the allegation of fraud or abusive
conduct, we are amending paragraph
(g)(5)(i)(B) to add that if the agent or
broker submits such evidence during
the suspension period, HHS will review
the evidence and make a determination
whether to lift the suspension within 30
days after HHS’s receipt of evidence. If
the rebuttal evidence does not persuade
HHS to lift the suspension, or if the
agent or broker fails to submit rebuttal
evidence during the suspension period,
HHS may terminate the agent’s or
broker’s agreements required under
paragraph (d) of this section and under
§ 155.260(b) for cause under paragraph
(g)(5)(ii) of this section. We are changing
the language in paragraph (g)(5)(ii),
relating to grounds for termination
without notice. The proposed rule
stated that if HHS reasonably confirms
the credibility of an allegation that an
agent or broker engaged in fraud or
abusive conduct (or is notified by a
State or law enforcement authority of
the State or law enforcement authority’s
finding or determination of fraud or
behavior that would constitute abusive
conduct). Based on comments discussed
above, we are revising this provision in
order to clarify the grounds for
termination without advance notice and
the role of the State.
We are also eliminating a redundancy
within the proposed rule. Paragraph
(g)(5)(ii), as originally proposed,
described the termination of the agent’s
or broker’s agreement with the Exchange
under § 155.260(b) as of the date of the
notice. Consequently, to reduce
duplication, we are deleting a similar
sentence from (g)(5)(iii). We are adding
paragraph (g)(6) so that the State
department of insurance or equivalent
State agent or broker licensing authority
will be notified in cases of suspensions
or terminations effectuated under
paragraph (g).
Finally, we have made a small
number of non-substantive changes to
the rule to make language consistent as
well as to clarify the date on which the
30-day window for reconsideration
requests begins.
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e. Standards for HHS-Approved
Vendors of FFE Training for Agents and
Brokers (§ 155.222)
In the proposed rule, we proposed
changes to the standards for HHSapproved vendors of FFE training for
agents and brokers outlined in
§ 155.222. To prevent duplication with
HHS functions, we proposed
eliminating the requirement that
vendors perform information
verification functions, including State
licensure verification and identity
proofing, as well as other changes to
improve the vendor training model.
To reflect that HHS-approved vendors
would no longer be required to perform
information verification functions, we
proposed amending § 155.222(a)(1) to
provide that a vendor must be approved
by HHS, and removing the reference to
information verification. We also
proposed in § 155.222(a)(2) to remove
the requirement that vendors must
require agents and brokers to provide
proof of valid State licensure. Consistent
with these changes, we proposed
amending § 155.222(b)(1) through (5)
and (d) to remove standards for
information verification, identity
proofing, verification of agents’ and
brokers’ valid State licensure, and all
related standards that support these
functions. We proposed to eliminate the
requirements in paragraphs (b)(1)(i)
through (ii) to submit an application
demonstrating prior experience with
verification of State licensure and
identity proofing, and instead combine
into paragraph (b)(1) the existing
requirements to demonstrate prior
experience with online training and
technical support for a large customer
base. In paragraph (b)(2) we proposed to
eliminate the requirement to adhere to
HHS specifications for content, format,
and delivery of information verification.
In paragraph (b)(4) we proposed to
amend the standards for the agreement
that vendors must execute with HHS, to
eliminate the requirement that vendors
implement information verification
processes. We proposed amending
§ 155.222(b)(5) and (d) to remove
references to information verification.
Other proposed changes to this
section incorporated the proposed
standards for SBE–FPs, privacy and
security measures, and technical
support requirements. In paragraph
(b)(2), we proposed to include SBE–FP
States in the requirement to offer
continuing education units (CEUs) in
five FFE States. In paragraph (b)(3) we
proposed to eliminate the requirement
that vendors collect, store, and share
with HHS all data from agent and broker
users of the vendor’s training; instead
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we proposed that vendors would only
be required to collect, store and share
with HHS FFE training completion data.
We also proposed adding a paragraph
(b)(6) to require vendors to provide
technical support to agent and broker
users of the vendor’s FFE training as
specified by HHS. In preamble, we
noted that HHS has the authority to
require approved vendors to provide
technical support, as well as FFE
training, in accordance with HHS
guidelines and in a manner and format
that complies with Section 508 of the
Rehabilitation Act of 1973.43 We also
proposed that, the World Wide Web
Consortium’s Web Content Accessibility
Guidelines (WCAG) 2.0 Level AA
standards 44 could also be considered an
acceptable national standard for Web
site accessibility.
Comment: Commenters supported the
proposed improvements to standards for
vendors that wish to be approved by
HHS to offer agent and broker FFE
training. They supported the proposed
change to § 155.222 that would
eliminate the requirement that vendors
conduct identity-proofing, as the current
years’ experience indicated that it was
not needed and was duplicative of
existing Exchange practices. They also
supported the proposed requirement
that vendors offer tier one help desk
support for agent and broker users. One
commenter requested that vendors be
able to provide an additional level of
help desk support (that is, tier two
support) to brokers who were having
trouble navigating the CMS Enterprise
Portal. The commenter also suggested
that scripted responses, reflecting
vendor input, be provided to vendors at
least two weeks prior to the FFE training
launch. One commenter supported the
provisions at § 155.222(b)(3) that require
vendors to share only training
completion data with HHS, as opposed
to all data about users, and asked that
HHS use that data to provide consumers
with information about the availability
of the assistance that agents and brokers
provide.
Response: HHS will continue to work
with approved vendors to enhance
customer service and technical support
to agents and brokers. Requirements for
vendors’ customer support and help
desks will be included in guidance
provided to conditionally approved
vendors. All agents and brokers who
successfully complete FFE training
through an approved vendor or the CMS
Marketplace Learning Management
System (MLMS), in addition to other
43 80
FR 75487, 75528 (December 2, 2015).
more information see, the WCAG Web site
at https://www.w3.org/TR/WCAG20/.
44 For
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FFE registration steps, will be added to
Find Local Help if they choose to make
their contact information publicly
available.
We are finalizing these provisions as
proposed.
f. Standards Applicable to Certified
Application Counselors (§ 155.225)
We proposed to amend § 155.225(b)(1)
to provide that certified application
counselor designated organizations
must, as a condition of their designation
as certified application counselor
organizations by the Exchange, provide
the Exchange with information and data
related to the number and performance
of the organization’s certified
application counselors, and about the
consumer assistance being provided by
the organization’s certified application
counselors, upon request, in the form
and manner specified by the Exchange.
We explained that § 155.225(b)(1)(ii)
already requires certified application
counselor designated organizations to
maintain a registration process and
method to track the performance of
certified application counselors, but it
does not specify the type of performance
information that must be tracked, nor
does it require that information be
provided to the Exchange. We stated
that our proposed amendment would
give Exchanges valuable information
that will aid in their oversight of
certified application counselor programs
and improve Exchanges’ understanding
of the scope of consumer assistance
being provided in the Exchange service
area. The requirement would also
improve the consumer assistance
functions of the Exchange in other
significant ways, for example, by
providing information that could help
an Exchange focus its outreach and
education efforts, target its recruitment
of certified application counselor
organizations, and identify the need for
increased technical assistance and
support for certified application
counselor organizations.
We explained that under this
proposal, Exchanges could establish
reporting standards tailored to their own
specific needs and objectives. In States
with FFEs, we proposed that HHS
would collect information and data from
certified application counselor
designated organizations on a monthly
basis beginning in January 2017. We
proposed that the FFEs would require
these organizations to report, at a
minimum, data regarding the number of
individuals who have been certified by
the organization; the total number of
consumers who received application
and enrollment assistance from the
organization; and of that number, the
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number of consumers who received
assistance applying for and selecting a
QHP, enrolling in a QHP, or applying
for Medicaid or CHIP. We anticipated
that the monthly reports submitted to
the FFEs would provide information
and data from the preceding month, and
would be submitted electronically,
through HIOS or another electronic
submission vehicle. We also said that
we expected that some of the data that
FFEs would require from certified
application counselor designated
organizations would be similar to what
is collected from Navigator grantees in
the FFEs.45 We explained that we did
not expect this information collection to
include consumers’ PII. We requested
comments on our proposal, on the scope
of information and data that Exchanges
should collect, and on HHS’s specific
proposals for collecting information and
data from certified application
counselor organizations in the FFEs,
including the proposed scope and
timing of reports by these organizations
to the FFEs.
We are finalizing this provision
largely as proposed, with a modification
to the frequency and timing of reporting
required by FFEs, from a monthly basis
beginning in January 2017, to a
quarterly basis beginning with reports
for the third quarter of calendar year
2017.
Comment: We received mixed
comments related to our proposal to
collect data from certified application
counselor organizations. Many
commenters supported the proposal,
noting the value of tracking performance
data. Many commenters also requested
that we coordinate with the Health
Resources and Services Administration
(HRSA), which has reporting
requirements related to their Affordable
Care Act Health Center Outreach and
Enrollment Assistance grants, in order
to reduce duplication and
administrative burden for Federally
Qualified Health Centers that are both
HRSA grantees and serving as FFEdesignated certified application
counselor organizations. We also
received several specific suggestions for
data elements to be collected by
Exchanges, including metrics related to
re-enrollment, assistance to consumers
with limited English proficiency, and
post-enrollment activities. One
45 The data collection requirements for FFE
Navigator grantees in 2015–2016 are specified in
the Information Collection Request (OMB control
number 0938–1215) under the Cooperative
Agreement to Support Navigators in Federallyfacilitated and State Partnership Exchanges (see the
Paperwork Reduction Act package associated with
80 FR 36810). https://www.reginfo.gov/public/do/
PRAViewDocument?ref_nbr=201507-0938-001.
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commenter requested that we develop a
means for certified application
counselor organizations to voluntarily
report additional information that falls
outside of the proposed performance
measures.
Response: We agree that in general,
tracking performance data will enhance
the Exchanges’ ability to oversee and
support certified application counselor
organizations, target outreach and
education efforts, and identify training
needs. In FFEs, we believe the
information and data reporting we
proposed aligns well with HRSA’s
Affordable Care Act Health Center
Outreach and Enrollment Assistance
grant reporting metrics. We also
appreciate commenters’ suggestions for
additional FFE data elements to be
reported. However, to minimize the
burden on certified application
counselor organizations, we are not
adding to or changing the kind of
information and data to be collected in
FFEs.
Comment: A few commenters
opposed this proposal, arguing that the
requirements would be overly
burdensome and could lead some
certified application counselor
organizations to discontinue their
programs. Many commenters urged us
to minimize the burden associated with
certified application counselor
performance data reporting.
Commenters expressed concern that
unfunded reporting burdens would
further reduce the number of
organizations able to provide critical
enrollment assistance. Several
commenters expressed concern
regarding the scope and frequency of the
proposed FFE reporting requirements,
and recommended requiring less
frequent reporting.
Response: We intend that any FFE
information collection be
straightforward, and place little burden
on certified application counselor
organizations, particularly given the
resource constraints faced by many
certified application counselor
organizations. We recognize that
certified application counselor
organizations are not expected or
required to be funded by Exchanges. In
FFEs, to help minimize any burden on
certified application counselors and
certified application counselor
organizations, while still providing
FFEs enough information to
meaningfully improve oversight of
certified application counselor
programs, we are finalizing a quarterly,
rather than monthly, reporting schedule,
beginning with reports for the third
quarter of calendar year 2017, and are
otherwise finalizing the provision as
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proposed. Quarterly reporting submitted
to the FFEs will be aligned with
calendar year quarters (that is, Quarter
1: January 1–March 31; Quarter 2: April
1–June 30; Quarter 3: July 1–September
30; and Quarter 4: October 1–December
31). Quarterly reports submitted to the
FFEs should provide information and
data from the quarter and will be due 30
days after the end of the quarter. For
example, the first report that will be due
under this rule, the third quarter report
for calendar year 2017, will cover the
period from July 1, 2017 through
September 30, 2017, and will be due
October 30, 2017. This quarterly
reporting period and deadline will
generally align with both the FFE
Navigator grant metrics and HRSA’s
Affordable Care Act Health Center
Outreach and Enrollment Assistance
grant reporting metrics. FFE Navigator
quarterly reports are also due 30 days
after the end of the quarter, and the
quarterly reports under HRSA’s grants
are due approximately 10–15 days after
the end of the quarter. We believe that
quarterly reports will provide the FFEs
with sufficient information to
meaningfully improve oversight of
certified application counselor
programs.
We believe our final rule strikes the
right balance between minimized
burden and effective monitoring, and
that it will improve the consumer
assistance functions of the Exchange by
providing Exchanges with information
that could help focus their outreach and
education efforts, target recruitment of
certified application counselor
organizations, and identify the need for
increased technical assistance and
support for certified application
counselor organizations. We also
remind SBEs (including SBE–FPs) that
this provision gives them the option, but
does not require them, to establish
reporting standards and collect data
from certified application counselor
organizations, because the rule only
requires organizations to provide data
and information to the Exchange upon
the Exchange’s request.
Comment: We received many
comments requesting additional
guidance regarding performance metrics
and the submission process for FFE
reporting. Commenters requested clear
guidance and instructions on defining
the specific data elements to ensure that
organizations can easily and
consistently report data. In addition,
commenters requested that the system
for FFE reporting be easy to understand
and access, and that HHS provide
adequate training and support for the
system. We received many comments
suggesting that the FFE leverage existing
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IT and data collection platforms to
avoid duplicative efforts. For example,
commenters noted that certified
application counselors working in FFEs
provide their identification number and
organization number on applications
submitted through HealthCare.gov and
that this number should be used to
quantify the number of clients who
received application assistance.
Commenters also suggested that the
FFEs track the number of certified
application counselors through the FFE
online training system.
Response: In FFEs, additional
guidance on the reporting requirements
will be published through instructions
and trainings. We anticipate that
quarterly reports submitted to FFEs
would provide information and data
from the preceding quarter, and would
be submitted electronically, through
HIOS or another electronic submission
vehicle. We have considered
commenters’ suggestions related to
alternative collection methods, but have
significant concerns with the quality,
completeness, and accuracy of data
collected using these methods. The
certified application counselor
identification number field on
applications submitted through
HealthCare.gov is not a required field,
and therefore is underreported. In
addition, this number would not
account for assistance certified
application counselors provide to
consumers who do not complete an
application through HealthCare.gov.
Tracking the number of certified
application counselors in FFEs through
our online training system only tracks
who has completed the FFE training,
not who has been formally certified. In
FFEs, designated certified application
counselor organizations, not FFEs,
certify individual certified application
counselors, and completion of the FFE
training may be only one of several
criteria prerequisite to certification. For
example, certified application counselor
organizations may require additional
employee training, and some States
have additional requirements that must
be met before an individual can be
certified as a certified application
counselor. By collecting more accurate
information, we believe FFEs will be
better positioned to ensure adequate
assistance is available to consumers.
Comment: A few commenters agreed
that SBEs should have the option to
establish their own reporting
requirements to align with their needs.
A few commenters requested that SBEs
be allowed an exemption from this
proposal if they determine that the
administrative costs are too
burdensome. One commenter requested
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that HHS establish limits on both the
scope and frequency of performance
data reporting requirements in all
Exchanges. Commenters also noted that
certified application counselor
organizations that operate under the
umbrella of national organizations
would benefit from standardized
reporting requirements across all
Exchanges.
Response: In SBEs, including SBE–
FPs, this provision only requires that
organizations submit information and
data to the SBE upon request, in the
form and manner specified by the SBE,
and therefore affords SBEs the flexibility
to establish standards appropriate to
their own specific needs and objectives.
SBEs, including SBE–FPs, may weigh
any increased administrative costs of
requiring regular reports against the
benefits of having additional
information about the consumer
assistance landscape in their State and
decide whether, how, and when to
collect data from certified application
counselor organizations. In addition, we
encourage SBEs to take into
consideration the impact their reporting
requirements will have on organizations
that also serve as certified application
counselor organizations in States with
an FFE. We encourage SBEs to consider
using, at a minimum, the data elements
used by the FFEs, in order to minimize
the burden on organizations that also
serve as certified application counselor
organizations in States with an FFE, but
they are not required to do so if they do
not believe that doing so fits their
State’s circumstances.
As discussed earlier in this preamble,
in the discussion of the amendments to
§ 155.210(d)(6), we proposed to amend
§ 155.225(g)(4), which prohibits
certified application counselors in all
Exchanges from providing certain kinds
of gifts and promotional items to an
applicant or potential enrollee. For the
same reasons discussed above, we
proposed to amend § 155.225(g)(4)
consistent with our proposed
amendments to § 155.210(d)(6). Based
on comments received, discussed above
with the amendments to § 155.210(d)(6),
we are finalizing this provision as
proposed.
g. Privacy and Security of Personally
Identifiable Information (§ 155.260)
Section 155.260(a)(1) refers to
insurance affordability programs, as
defined in § 155.20. We proposed to
make a technical correction to this
paragraph so that § 155.300, which
contains the definition of insurance
affordability programs, is referenced
instead. We are finalizing this provision
as proposed.
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h. Oversight and Monitoring of Privacy
and Security Requirements (§ 155.280)
Section 155.280(a) permits HHS to
oversee and monitor the FFEs and nonExchange entities associated with FFEs
to ensure compliance with the privacy
and security standards established and
implemented by an FFE under
§ 155.260. Section 155.280(a) also
provides authority for HHS to monitor
State Exchanges for compliance with the
privacy and security standards
established and implemented by the
State Exchanges under § 155.260. We
proposed amending paragraph (a) to
permit HHS to also oversee and monitor
SBE–FPs’ compliance with the privacy
and security standards established and
implemented by an FFE under
§ 155.260.
Comment: We received only a few
comments on this proposal. A few
commenters supported extending HHS’s
authority to oversee and monitor
privacy and security standards to SBE–
FPs, but expressed concern that since
SBE–FPs conduct some operations
themselves, HHS should be required to
oversee and monitor SBE–FPs to ensure
protection of consumer PII.
Response: We agree with the
commenter that it is critical to ensure
protection of consumer’s PII, as well as
ensure cybersecurity generally, across
all Exchange models. We are committed
to continue working with States to
ensure compliance with all State and
Federal requirements related to
Exchanges, including Exchange privacy
and security standards. We are
finalizing the rule as proposed.
4. Exchange Functions in the Individual
Market: Eligibility Determinations for
Exchange Participation and Insurance
Affordability Programs
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a. Options for Conducting Eligibility
Determinations (§ 155.302)
We proposed to amend § 155.302(a)
by adding an option for an SBE–FP to
satisfy the requirement of conducting
eligibility determinations by relying on
HHS to carry out eligibility
determination activity and other
requirements within subpart D, through
a Federal platform agreement. We did
not receive any comments on this
proposal, and are finalizing it as
proposed.
b. Eligibility Process (§ 155.310(h))
We proposed to amend § 155.310(h),
which currently directs the Exchange to
notify an employer that an employee
has been determined eligible for
Exchange financial assistance. We
proposed to revise this requirement so
that the Exchange must notify an
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employer that an employee has been
determined eligible for Exchange
financial assistance only if the employee
has also enrolled in a QHP through the
Exchange. We also proposed to revise
paragraph (h)(2) so that a notice sent in
accordance with § 155.310(h) must
indicate that an employee has been
determined eligible for Exchange
financial assistance and has enrolled in
a QHP through the Exchange. We
clarified that for purposes of
§ 155.310(h), an employee is determined
eligible for cost-sharing reductions
when the employee is determined
eligible for cost-sharing reductions
based on income in accordance with
§ 155.305(g) or § 155.350(a).
With regard to the timing of the
employer notification required under
paragraph (h), we proposed that the
Exchange may choose to either (a) notify
employers on an employee-by-employee
basis as eligibility determinations are
made for Exchange financial assistance
and enrollment in a QHP through the
Exchange, or (b) notify employers for
groups of employees who are
determined eligible for Exchange
financial assistance and enroll in a QHP
through the Exchange. Under both
options, the Exchange must notify
employers within a reasonable
timeframe following any month an
employee was determined eligible for
either form of Exchange financial
assistance and enrolled in a QHP, with
the goal to notify employers as soon as
possible to provide the greatest benefit
to enrollees. We sought comment on
these proposals.
Comment: Many commenters
supported the requirement that an
Exchange must notify an employer that
an employee has been determined
eligible for Exchange financial
assistance only if the employee has also
enrolled in a QHP through the
Exchange. A few commenters stated that
the proposed change would reduce
consumer confusion and minimize
administrative burden.
Response: We are finalizing
§ 155.310(h) as proposed.
Comment: Several commenters
expressed concern that employer
notices may contribute to employer
retaliation and requested that HHS
expressly prohibit employer retaliation
and include such language on employer
notices and elsewhere.
Response: Section 1558 of the
Affordable Care Act amended the Fair
Labor Standards Act of 1938 to provide
that no employer may discharge or in
any manner discriminate against any
employee with respect to his or her
compensation, terms, conditions, or
other privileges of employment because
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the employee (or an individual acting at
the request of the employee) has
received financial assistance under the
Affordable Care Act. We intend to
include language referencing section
1558 of the Affordable Care Act in
notices from the FFEs under
§ 155.310(h) for 2016, and we encourage
SBEs to do the same.
Comment: We received comments
supporting both the policy that notices
be sent in groups of employees and that
notices be sent on an employee-byemployee basis. For example, one
commenter expressed concern that
notifying employers in groups of
employees could delay the notification
process. Another commenter supported
the proposal that the Exchange may
choose the manner and timing by which
to send notices.
Response: To allow for operational
flexibility and the varying needs of
different Exchanges, we are finalizing
the proposed language allowing an
Exchange to choose to send notices on
an employee-by-employee basis or in
groups of employees. We note, however,
that for 2016, the FFEs intend to send
notices in groups of employees.
Comment: A few commenters
requested that we further define the
requirement to notify employers within
a reasonable timeframe following any
month an employee was determined
eligible for Exchange financial
assistance and enrolled in a QHP
through the Exchange. They stated that
that failure to send notices within one
month could result in adverse tax
consequences for the employee.
Response: While we understand the
concerns that the commenters
expressed, we are finalizing this
provision as proposed in order to
provide the Exchange with flexibility to
make decisions based on its operational
capabilities. As we stated in the
proposed rule, the Exchange must notify
employers within a reasonable
timeframe following any month an
employee was determined eligible for
either form of Exchange financial
assistance and enrolled in a QHP
through the Exchange, with the goal to
notify employers as soon as possible to
provide the greatest benefit to enrollees
(Emphasis added). The goal of the
Exchange must be to send notices as
soon as possible. We remind
stakeholders that tax liability is
determined by the IRS, and is not
affected by these notices or the
employer appeals process.
Based on the comments received, we
are finalizing paragraph (h) as proposed.
The FFEs intend to publish a sample
notice that complies with § 155.310(h)
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for the benefit of employers, employees,
SBEs, and other stakeholders.
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c. Verification Process Related to
Eligibility for Insurance Affordability
Programs (§ 155.320)
In § 155.320(c), we proposed to allow
an Exchange to establish a reasonable
threshold at which the Exchange must
follow the alternate verification process
where the applicant’s attested projected
annual household income is sufficiently
below the annual income computed in
accordance with § 155.320(c)(3)(ii)(A).
Currently, an applicant enters the
alternate verification process if the
attested annual household income
submitted by the applicant is more than
10 percent less than income data
received from trusted data sources, or if
no data is available from trusted data
sources. Under the proposal, in place of
the 10 percent threshold, the Exchange
would establish a reasonable threshold
in guidance that must be approved by
HHS, must not be less than 10 percent,
and can also include a threshold dollar
amount.
We are finalizing this rule as
proposed.
Comment: Commenters
overwhelmingly supported adjusting the
threshold in § 155.320(c). Commenters
stated that the current 10 percent
threshold is too restrictive and causes
too many applicants to enter the
alternate verification process.
Commenters stated that the alternate
verification process is burdensome to
applicants because providing proof of
projected income can be difficult. Some
commenters suggested that a reasonable
threshold should not be less than 20
percent or 25 percent. Other
commenters recommended that HHS
also do more to assist applicants in the
resolution of annual income data
matching issues.
Response: HHS will continue to study
what threshold may be most
appropriate, taking into account normal
fluctuations in applicants’ annual
household income and experience with
the tax reconciliation process. HHS will
release guidance for Exchanges on what
constitutes a reasonable threshold and
to clarify the process for an Exchange to
receive approval from HHS. HHS
believes that clear outreach and notice
for applicants related to the annual
household income attestation process is
critical. To that end, HHS released a
new guide for applicants with annual
household income data matching issues.
The guide is available at the HHS Web
site: https://marketplace.HHS.gov/
outreach-and-education/householdincome-data-matching-issues.pdf.
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Comment: One commenter
recommended against adjusting the
threshold because it would result in
adverse tax consequences for applicants.
Instead, the commenter suggested that
HHS should broaden the time period it
uses when checking income from
trusted data sources during the
verification process like Equifax
Workforce Solutions from 90 to 360
days.
Response: HHS may examine the
proposal for expanding data used as part
of the electronic data service for upfront
verification of income as part of
consumers’ initial application
submission.
Comment: One commenter suggested
that an Exchange use the same standard
for entering the alternate verification
process as the Exchange uses to resolve
applicants with annual household
income data matching issues.
Response: The two processes are
different since they are comparing
different data elements. The purpose of
the alternate verification process is to
examine the difference in an applicant’s
attested projected annual household
income and information from trusted
data sources, whereas the resolution of
data matching issues depends on an
examination of whether an applicant’s
submitted documentation is satisfactory
evidence to support their attested
projected annual household income.
Comment: One commenter suggested
that applicants be allowed to provide an
explanation for discrepancies in their
income, and that a standardized form
should be provided for applicants to
attest to their income as a means of
verifying their income in the alternate
verification process.
Response: HHS believes the use of
written explanations that include
sufficient information to calculate an
annual income are a valuable tool for
applicants, and has implemented
procedures for handling explanations of
income that accompany documentation
of income.
Comment: The majority of
commenters expressed support for
granting the Exchanges flexibility in
setting a reasonable threshold to meet
varying Exchange needs, including
related to State demographics. One
commenter stated that all Exchanges
should use the same threshold for
applicants entering the alternate
verification process.
Response: HHS supports granting
Exchanges flexibility to establish a
reasonable threshold, but all thresholds
are subject to the same reasonability
standard.
Comment: One commenter suggested
that as a strategy to help applicants
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avoid repayment of advance payments
of the premium tax credit (APTC) at tax
time, Exchanges should set the default
applied APTC amount at 85 percent.
The commenter stated that this would
allow for some flexibility for income
changes during the year, and protect
applicants against repayment during tax
reconciliation.
Response: HHS believes that it is
important to educate applicants about
how changes in their income affect their
eligibility for the premium tax credit.
During plan selection, applicants are
notified that they can accept the full
amount of advance payments of the
premium tax credit for which they have
been determined eligible, accept a
smaller amount, or accept no advance
payments and claim any premium tax
credit they are eligible for on their tax
returns. Applicants are also notified that
they may have to pay money back
through the tax reconciliation process if
the APTC they receive exceeds the PTC
they can claim on their tax return.
Comment: One commenter suggested
allowing for additional flexibility in
verification for annual household
income for certain occupations that
have greater variability in their income
such as self-employed merchants,
artists, and small business owners.
Response: HHS understands that
projecting annual household income
can be difficult, particularly for
applicants who have occupations that
have high variability in income. HHS
has worked to improve the resolution of
annual household income data
matching issues for these applicants by
performing outreach and creating
educational materials with instructions
for verifying variable income.
In § 155.320(d), we made certain
proposals related to alternative
processes relating to verification of
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan. In paragraph
(d)(3), we proposed to redesignate
paragraph (d)(3)(i) as (d)(3)(ii) and
redesignate paragraph (d)(3)(ii) as
(d)(3)(i). To preserve the accuracy of the
redesignated paragraph (d)(3)(ii), we
proposed to update the cross-reference
to paragraph (d)(3)(ii) with (d)(3)(i), and
paragraph (d)(3)(iii) with (d)(4)(i),
discussed below. We also proposed to
modify the requirement that the
Exchange select a statistically
significant random sample of applicants
for whom the Exchange does not have
data as specified in paragraphs (d)(2)(i)
through (iii) and take steps to contact
any employer identified on the
application for the applicant and the
members of his or her household to
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verify whether the applicant is enrolled
in an eligible employer-sponsored plan
or is eligible for qualifying coverage in
an eligible employer-sponsored plan for
the benefit year for which coverage is
requested. This process is referred to as
sampling. We proposed to modify this
requirement as described in our in our
discussion of proposed paragraph (d)(4)
of the proposed rule. These proposed
changes were intended to organize and
simplify the regulatory text.
We proposed to add paragraph (d)(4),
proposing that for any benefit year for
which an Exchange does not reasonably
expect to obtain sufficient verification
data, the Exchange must follow the
procedures described in paragraph
(d)(4)(i) or, in the alternative, for benefit
years 2016 and 2017, the Exchange may
establish an alternative process
approved by HHS. For the purposes of
this section, the Exchange reasonably
expects to obtain sufficient verification
data for any benefit year when, for the
benefit year, the Exchange is able to
obtain data about enrollment in and
eligibility for qualifying coverage in an
eligible employer-sponsored plan from
at least one electronic data source that
is available to the Exchange and has
been approved by HHS, based on
evidence showing that the data source is
sufficiently current, accurate, and
minimizes administrative burden.
In paragraph (d)(4)(i), we proposed
that the Exchange may conduct
sampling. This paragraph is
substantially the same as current
paragraph (d)(3)(iii), with three
differences described in the proposed
rule: we proposed to (1) remove the
absolute requirement to conduct
sampling, and, for benefit years 2016
and 2017, allow the Exchange to
implement an alternative process
approved by HHS; (2) remove the
language that appears in current
paragraph (d)(3)(iv), which discusses
relief that is no longer applicable; and
(3) appropriately update internal crossreferences. We proposed moving the
sampling requirement from paragraph
(d)(3) and adding it to new paragraph
(d)(4) to more accurately reflect the role
of the sampling process. In paragraph
(d)(4)(ii), we proposed to permit an
Exchange the option to implement an
alternate process to sampling approved
by HHS for the benefit years 2016 and
2017.
Comment: Commenters generally
supported the proposal to permit an
Exchange to implement an alternate
process to sampling approved by HHS
for the benefit years 2016 and 2017. A
few SBEs opposed the sunset for the
alternate process to sampling.
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Response: We understand that certain
SBEs may prefer the flexibility to
implement either sampling or an
alternate process indefinitely. However,
the alternate process should be used as
an interim measure to gather
information about the verification
process as Exchanges improve their
long-term verification programs. We
will take these comments under
advisement for future rulemaking.
Comment: We also received several
comments pertaining more broadly to
verification of enrollment in an eligible
employer-sponsored plan and eligibility
for qualifying coverage in an eligible
employer-sponsored plan.
Response: We agree with commenters
on both the benefits of a comprehensive
verification system for employer
sponsored coverage, and on the
considerable operational challenges of
creating one.
We are finalizing the changes to
§ 155.320(d) as proposed.
d. Medicare Notices
We recognize the importance of a
smooth transition to Medicare coverage,
and sought comment on whether and
how to implement a notification that an
enrollee may have become eligible for
Medicare. For example, for enrollees in
an FFE, we considered pop up text on
HealthCare.gov for individuals who are
going to turn 65 during the benefit year.
We sought comment on this and other
ways to promote smooth coverage
transitions.
Comment: All commenters supported
implementation of the pop-up text on
HealthCare.gov for individuals who are
going to turn 65 during the benefit year.
Most commenters also expressed a
desire for more robust notice and
screening requirements. Several
commenters requested that the FFE
implement a screening process to
identify QHP enrollees who are
Medicare-eligible or who will be
reaching Medicare eligibility during the
benefit year. Several commenters
suggested that the FFE provide
additional education to QHP enrollees
nearing Medicare eligibility, including
information related to Medicare
enrollment, penalties for not timely
enrolling in Medicare, the requirement
to return to the FFE in order to
terminate financial assistance for which
Medicare beneficiaries no longer are
eligible or to terminate their QHP
enrollments, and options for those
automatically enrolled into a Medicare
Advantage plan. Most commenters also
requested that the option of a pop-up
screen on HealthCare.gov be augmented
by notices sent to QHP enrollees nearing
eligibility to enroll in Medicare
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12269
(including those QHP enrollees whose
eligibility to enroll in Medicare is due
to disability or end stage renal disease).
Commenters had varied suggestions
related to the form and content of the
notices, but most suggested notices
containing information related to
deadlines for Medicare enrollment and
penalties for late enrollment,
instructions on how to terminate
enrollment in a QHP or to remove a
Medicare beneficiary from an
enrollment group prior to enrolling in
Medicare, and instructions on how to
terminate financial assistance, such as
APTC, for which Medicare beneficiaries
are no longer eligible. Some commenters
had specific suggestions related to
identifying and notifying QHP enrollees
who are eligible for Medicare benefits
due to disability or end stage renal
disease. Finally, some commenters
requested information related to how
State-based Exchanges would be
affected by new Medicare notice
requirements.
Response: We appreciate the
comments related to this issue. We are
working to incorporate additional
online content to help clarify for
consumers who may be close to aging
into Medicare, or who may already be
eligible for Medicare or receiving
Medicare benefits, to provide better
clarity around how Medicare and
Exchange coverage are intended to
work, and options consumers may have
as they transition into Medicare
coverage from Exchange coverage. In
addition, we are working on enhancing
consumer communications on how to
transition from Exchange coverage to
Medicare, and helping consumers
understand where to find helpful
resources for both programs. We
welcome further input and assistance as
we work towards implementing a
framework to ease QHP enrollees’
transition from coverage through the
Exchanges to Medicare enrollment.
5. Exchange Functions in the Individual
Market: Enrollment in Qualified Health
Plans
a. Annual Eligibility Redetermination
(§ 155.335(j))
In the Patient Protection and
Affordable Care Act; Annual Eligibility
Redeterminations for Exchange
Participation and Insurance
Affordability Programs; Health
Insurance Issuer Standards Under the
Affordable Care Act, Including
Standards Related to Exchanges final
rule (79 FR 52994, 53000 (Sept. 5,
2014)), we established a renewal and reenrollment hierarchy at § 155.335(j) to
minimize potential enrollment
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disruptions. To further minimize
potential disruptions of enrollee
eligibility for cost-sharing reductions,
we proposed to amend § 155.335(j)(1) to
create a new re-enrollment hierarchy for
all enrollees in a silver-level QHP that
is no longer available for re-enrollment.
Specifically, if such an enrollee’s
current silver-level QHP is not available
and the enrollee’s current product no
longer includes a silver-level QHP
available through the Exchange, we
proposed that the enrollee’s coverage
would be renewed in a silver-level QHP
in the product offered by the same
issuer that is the most similar to the
enrollee’s current product, rather than
in a plan one metal level higher or lower
than his or her current silver-level QHP,
but within the same product.
Transitioning enrollees in this manner
is an operationally efficient way to
maintain continuity for enrollees
eligible for cost-sharing reductions, and,
because the benchmark plans for
establishing the amount of the premium
tax credit for which an eligible taxpayer
is eligible is a silver-level plan,
continued enrollment in a silver-level
plan, as opposed to enrollment in a plan
at a different metal level but in the same
product is likely to be more consumer
protective.
We also sought comment on whether
the hierarchy, together with rules
related to guaranteed renewability,
should permit a QHP enrollee to be
automatically re-enrolled into a plan not
available through an Exchange, and
under what circumstances such a reenrollment should occur.
As in the 2016 Payment Notice
proposed rule, we also noted that we are
exploring a change to the re-enrollment
hierarchy at § 155.335(j), which
currently prioritizes re-enrollment with
the same issuer in the same or a similar
plan.
In the proposed rule, we stated we
were considering an approach under
which an enrollee in an FFE would be
offered a choice of re-enrollment
hierarchies at the time of initial
enrollment, and could opt into being reenrolled by default for the subsequent
year into a low-cost plan, rather than his
or her current plan or the plan specified
in the current re-enrollment hierarchy.
Comment: Many commenters
supported our proposal with respect to
silver-level QHPs, agreeing that it assists
enrollees in those plans in maintaining
access to cost-sharing reductions. These
commenters stressed that access to that
financial assistance can be of vital
importance to many enrollees. Several
commenters expressed concern that
automatically re-enrolling a silver-level
plan enrollee into a different product
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might affect the enrollee’s provider
network, benefits, and continuity of
care, or stand-alone dental coverage.
Some commenters stated that education
and proper notices could help ensure
that enrollees actively re-enroll in
coverage if they are automatically reenrolled in a plan that does not fit their
needs. Several commenters stressed that
issuers, who have the experience and
information necessary to ensure
enrollees are matched with a product
that most closely fits their needs while
minimizing potential disruptions in
coverage and cost-sharing reductions,
are in the best position to determine
which available plans are the most
similar to plans that are no longer
available.
Response: We are sympathetic to the
comments stating that enrollees should
return to the FFEs to actively re-enroll
in the coverage that best fits their needs.
We recognize, however, that automatic
re-enrollment hierarchies must exist to
help those who do not take advantage of
the opportunity actively to choose
coverage for the benefit year. Therefore,
while we acknowledge that reenrollment between products can result
in disruption to provider networks,
benefits, and continuity of care, we
believe it is important to maintain
enrollees’ access to cost-sharing
reductions in silver plans, which might
be vital to their ability to pay for
coverage or care. We are finalizing this
provision of the rule as proposed,
except that for the purpose of clarity we
are finalizing a slight modified version
of the language in paragraph (j)(1).
Comment: We received many
comments regarding the proposed
alternative re-enrollment hierarchy,
many of them mirroring comments
made to our proposal in the 2016
Payment Notice. Commenters who
opposed permitting an alternative lowcost enrollment hierarchy stated that, in
most cases, the plan a consumer chooses
during open enrollment is one that the
consumer has shopped for and has
determined best meets his or her needs.
Additionally, commenters said that lowcost premiums do not necessarily lead
to lower overall cost of coverage because
deductibles, copayments, coinsurance,
and out-of pocket limits may be higher
in QHPs with low premiums. A
minority of commenters supported the
proposal’s emphasis on low premiums.
Response: We appreciate the many
comments received regarding alternative
re-enrollment hierarchies and are
sensitive to the concerns raised by
commenters. We recognize that
consumers consider many factors in
addition to premium when selecting
health coverage, including the provider
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network, cost-sharing, deductibles, and
other factors that affect overall costs,
continuity of care, and the consumer
experience. We are not finalizing this
proposed additional re-enrollment
hierarchy.
Comment: Many commenters
responded unfavorably to the suggestion
that enrollees in QHPs could be
automatically re-enrolled into offExchange plans because they would lose
any advance payments of the premium
tax credit or cost-sharing reductions
they had been receiving. Several
stressed that such a plan would cause
consumer confusion.
Response: In response to these
comments, and in order in to maintain
coverage with advance payments of the
premium tax credit and cost-sharing
reductions for the majority of Exchange
enrollees who are receiving them, we
are finalizing a rule that would provide
for auto-reenrollment through the
Exchange, as opposed to permitting
auto-reenrollment outside the Exchange.
Under this rule, an enrollee could
automatically be re-enrolled into a QHP
from a different issuer through the
Exchange. Such reenrollments would be
conducted as directed by the applicable
State regulatory authority, or, where the
applicable State’s regulatory authority
declines to act, to the extent permitted
by applicable State law, in a similar
QHP as determined by the Exchange.
With regard to how Exchanges will
determine which plans such enrollees
should be auto-reenrolled into, we note
that this policy provides considerable
flexibility to Exchanges to implement
this rule, in recognition of the
operational realities of implementing a
re-enrollment hierarchy in the often
unique circumstances in which an
issuer is not returning to the Exchange.
However, whenever feasible, the
Exchange should, and the FFE will
attempt to, re-enroll enrollees in silver
metal-level QHPs no longer available
through the Exchange into the silver
metal-level QHP offered by another
issuer through the Exchanges of the
same product network type with the
lowest premium. If the QHPs that have
become unavailable are in metal levels
other than silver, then whenever
feasible, the Exchange should and the
FFE will seek to re-enroll the affected
enrollees in the QHP available on the
Exchange of the same metal level of the
same product network type with the
lowest premium. Exchanges should, and
the FFEs will endeavor to, implement
such a re-enrollment process for
enrollees of QHPs whose issuers are
discontinuing their coverage, for as
many groups as is feasible given the
short timelines and complex operations
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that could be required in these
scenarios. Those groups for which such
reenrollment is not feasible will need to
make an active plan selection to remain
enrolled in a QHP through the
Exchange. We note that such a reenrollment generally would require a
binder payment from a consumer in
order to be effectuated. In future
guidance, we intend to update the
Federal standard notices that address
how issuers that no longer have plans
available through the Exchange should
communicate with consumers. We
anticipate providing that an issuer that
no longer has plans available through
the Exchange may notify its enrollees of
that fact, and may encourage them to
enroll in the issuer’s off-Exchange plans,
but may not automatically enroll them
in those plans, to avoid automatic
enrollment in more than one plan. We
intend to provide additional guidance
on the application of the rules related to
guaranteed renewability to this type of
situation in the future.
Comment: We received a few
comments requesting more information
regarding how the proposed alternative
re-enrollment hierarchy would affect
stand-alone dental plans. Some
commenters stated that the process for
re-enrolling in a SADP should be
independent from re-enrollment in a
QHP.
Response: Because we will not
implement the proposed alternative
reenrollment hierarchy at this time and
the policy for consumers whose issuer
exited the Exchange would not apply to
SADPs, we are not addressing how this
policy would affect SADPs. However,
we appreciate the comments raising this
issue and, if the proposal is revisited in
the future, we will address concerns
regarding SADPs then.
b. Enrollment of Qualified Individuals
Into QHPs (§ 155.400)
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(1) Rules for First Month’s Premium
Payments for Individuals Enrolling With
Regular, Special, and Retroactive
Coverage Effective Dates
We proposed to amend § 155.400(e)
related to the payment of the first
month’s premium (that is, binder
payments), including deadlines, to
codify previously released guidance in
section 8.2 of the updated Federallyfacilitated Marketplace and Federallyfacilitated Small Business Health
Options Program Enrollment Manual,46
46 Federally-facilitated Marketplace and
Federally-facilitated Small Business Health Options
Program Enrollment Manual (eff. Oct. 1, 2015),
available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/Updated_
ENR_Manual.pdf.
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that specified our interpretation of these
requirements. Specifically, we proposed
to amend § 155.400(e)(1)(i) and (ii) to
provide that, for prospective coverage,
the binder payment must consist of the
first month’s premium. To provide
added flexibility for issuers, we also
proposed that the deadline for a binder
payment related to prospective coverage
with a prospective special effective date,
would have to be no earlier than the
coverage effective date and no later than
30 calendar days from the date the
issuer receives the enrollment
transaction or the coverage effective
date, whichever is later. This would
align the requirement for enrollments
with prospective special effective dates
with the requirement for enrollments
with regular effective dates. We
proposed to add § 155.400(e)(1)(iii) to
reflect our interpretation, intended to
limit the risk that issuers would provide
retroactive coverage without receiving
sufficient premium payments from
enrollees, that applicants requesting
coverage being effectuated under
retroactive effective dates, such as
coverage in accordance with a special
enrollment period or a successful
eligibility appeal, must pay a binder
payment that consists of all premium
due (meaning the premium for all
months of retroactive coverage). If the
applicant pays only the premium for
one month of coverage, we proposed
that the issuer would be required to
enroll the applicant in prospective
coverage in accordance with regular
effective dates. We also proposed to
specify that the deadline for payment of
all premium due must be no earlier than
30 calendar days from the date the
issuer receives the enrollment
transaction or notification of the
enrollment. This change to the binder
payment rules was intended to allow
issuers flexibility to set a reasonable
deadline for enrollees to submit
payment of retroactive premium, the
total amount of which may consist of
payment for several months of coverage.
Based on our experience
implementing the grace period
provisions under our previous
rulemaking, particularly in cases
involving advance payments of the
premium tax credit, we identified the
need for additional flexibility for issuers
to establish reasonable policies
regarding premium collection that
would allow issuers to collect a minimal
amount of premium less than that
which is owed without necessarily
triggering the consequences for nonpayment of premiums. For example, in
the Exchange Establishment Rule, we
established that enrollees receiving
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12271
advance payments of the premium tax
credit must make full payment on all
outstanding premiums owed in order to
avoid entering a grace period or having
their coverage terminated. In response
to requests from issuers, we proposed to
add flexibility to this rule to allow
issuers the option to adopt a premium
payment threshold policy to avoid
situations in which an enrollee who
owes only a de minimis amount of
premium has his or her enrollment
terminated for non-payment of
premiums.
Accordingly, at new § 155.400(g), we
proposed to codify a provision related to
premium payment threshold policies
that would allow additional issuer
flexibility regarding when amounts
collected will be considered to satisfy
the obligation to pay amounts due, so
long as issuers implement such a policy
uniformly and without regard to health
status, and the premium payment
threshold adopted is reasonable. This
would allow issuers flexibility to
effectuate an enrollment, not to place an
enrollee in a grace period for failure to
pay 100 percent of the amount due, and
not to terminate enrollments after
exhaustion of the applicable grace
period for enrollees. We are finalizing
these policies as proposed.
Comment: We received several
comments regarding the proposal to set
deadlines for payment of the first
month’s premium (binder payments).
Some commenters appreciated the
flexibility that such a proposal gives to
issuers to set such deadlines while
others commented that the proposal
would resolve ambiguity revolving
around the binder payment deadlines
for special and retroactive effective
dates. Several commented that the
guidelines would provide consumer
protection by not allowing payment due
dates before the effective date of
coverage. One commenter suggested that
the final rule allow issuers flexibility to
offer consumers coverage effective dates
that would be more generous than those
contained in the proposal and another
commenter stated that issuers should be
permitted to set a binder payment
deadline no later than the coverage
effective date.
Response: The final rule allows
issuers flexibility to set binder payment
deadlines within a set of parameters we
believe balances concerns about
consumer protection and issuers’ desire
to have flexibility regarding business
decisions. While we are sympathetic to
the desire to give consumers a generous
amount of time to pay binder payments,
we believe that the final rule allows
issuers to set payment deadlines in such
a way that consumers have ample time
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to effectuate coverage. We also note that
the final rule allows issuers to set the
binder payment deadline on the
coverage effective date, but not on a date
earlier than the coverage effective date.
Comment: Some commenters were
confused about the additional language
to allow first month’s premium
payments after the coverage effective
date, thinking that a person’s coverage
could be effectuated prior to the person
making their payment. These
commenters opposed allowing more
individuals to appear to have effective
coverage and then have the coverage not
be effectuated due to non-payment of
premium by the payment deadline.
Response: As we previously have
stated, payment for first month’s
premium is required prior to coverage
being effectuated. For the FFE, in cases
where an enrollee, consistent with an
issuer’s payment policy, makes his or
her premium payment after the coverage
effective date, but before the premium
payment deadline set by the issuer, the
enrollee would receive a retroactive
effective date. Issuers may pend claims
while waiting for the first month’s
premium payment and either deny or
reverse those claims based on whether
the enrollee makes the first month’s
payment by the premium payment
deadline. We believe that it is
appropriate to allow payments, if the
issuer chooses, after the coverage
effective date.
Comment: One commenter
recommended a modification to
§ 155.400(e)(1)(iii) to give consumers
requesting retroactive coverage effective
dates more flexibility. The commenter
felt that requiring a binder payment
consisting of all premium due would be
a hardship to lower-income enrollees
and, in order to avoid such hardship,
issuers should be required to accept
payment plans when consumers enroll
with a retroactive effective date.
Response: While we understand it
might be difficult for some consumers to
pay all premium due to effectuate with
a retroactive effective date, we believe
that such a policy is necessary to
minimize the risk that providers and
issuers would honor claims during,
potentially, several months of
retroactive coverage without receiving
corresponding premium payments from
consumers. The proposed rule allows
consumers who might have difficulty
paying for retroactive coverage to enroll
with prospective coverage only. It is our
interpretation of § 155.400(e)(1)(iii) that
a binder payment for retroactive
coverage consists of all premium due, or
a payment sufficient to satisfy the
issuer’s premium payment threshold, if
applicable.
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Comment: One commenter expressed
concern about the proposed binder
payment rules for coverage with
retroactive effective dates, noting that if
an issuer receives only the premium for
one month of coverage, the enrollees
would effectuate for prospective
coverage with a regular effective date.
The commenter thought this proposal to
be inconsistent with the FFE’s current
guidance related to altering coverage
effective dates without instruction to do
so from the FFE, which generally, but
not always, requires a transaction from
the FFE in order to set or alter enrollees’
coverage effective dates.
Response: Although issuers generally
should not grant or alter coverage
effective dates without a transaction
from the FFE, there are cases where FFE
guidance is sufficient to give rise to
such an alteration. For example, current
FFE guidance allows issuers to cancel
coverage, without any directive from the
FFE, for enrollees who have not paid
their binder payments by the applicable
due date. We believe that allowing
enrollees who make a binder payment
insufficient to satisfy all premium due
but sufficient to effectuate prospective
coverage to effectuate prospectively
with a regular effective date protects
consumers and promotes the goal of
getting consumers into coverage while
not conflicting with current regulations
or FFE policies.
Comment: Several organizations
commented on the proposal to codify
the provision related to premium
payment threshold policies which
allows additional issuer flexibility
regarding when amounts collected will
be considered to satisfy the obligation to
pay amounts due, so long as issuers
implement such a policy uniformly and
without regard to health status and that
the premium payment threshold
adopted is reasonable. Most commenters
saw the proposal as providing important
consumer protections and allowing
sufficient flexibility for issuers to tailor
the threshold as they wished, within the
parameters set by HHS. A few of the
commenters, however, claimed that the
proposed rule would cause providers to
bear the burden of claims, subsequently
reversed by issuers, incurred during the
second and third months of a grace
period for enrollees receiving APTC.
Response: We do not believe that
codifying the premium payment
threshold will lead to additional
uncompensated claims. The purpose of
the threshold, which issuers may utilize
at their option, is to keep enrollees from
entering a grace period or having their
enrollments terminated for nonpayment of premium when the amount
they owe is within a reasonable
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threshold. Issuers’ adoption of the
premium payment threshold could
serve as a method to avoid terminating
enrollments for non-payment of
premium for enrollees who only owe a
small amount of premium. We do not
believe this policy will have the effect
of increasing the number of consumers
who enter the grace period or who are
terminated from coverage for nonpayment, the predicate for pended
claims that are not eventually paid.
Comment: One commenter sought
clarification that, under the premium
payment threshold policy proposed in
the rule, unpaid premium within a
reasonable threshold tolerance, is still
an amount owed by the enrollee and
cannot be forgiven by the issuer.
Response: Any amount that is unpaid
but within the tolerance of a reasonable
premium payment threshold established
by an issuer remains an amount owed
by the enrollee and cannot be forgiven
by the issuer. This remains true whether
the premium payment threshold is
utilized for any of the following
payments: binder payments, regularlybilled payments, or amounts owed by an
enrollee while in a grace period.
Comment: Two commenters requested
that, due to that the complexity of
creating the necessary operations
framework to institute the premium
payment threshold policy, the
regulation should not be effective until
2017 or 2018. One commenter requested
that the final rule provide for
implementation of a threshold based, at
an issuer’s discretion, on a flat dollar
amount or a percentage of the total
member responsible portion of premium
owed.
Finally, one commenter requested
that we amend the proposed rule to
make the premium payment threshold
mandatory for all issuers. Additionally,
the commenter sought a change to the
proposed rule setting a 90 percent
percentage of member responsible
portion of premium as the mandatory
threshold for all issuers.
Response: The proposed rule
included flexibility for issuers to
implement a premium payment
threshold to suit their specific business,
provided the threshold adopted is
reasonable. We did not consider
utilizing a flat dollar amount threshold
rather than a percentage of premium
owed to be reasonable, because such an
approach would not take into account
the possibility that even a low flat dollar
amount may represent a large portion of
an enrollee’s portion of premium after
application of APTC. We previously
have recommended a premium payment
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threshold of 95 percent,47 which we
consider to be reasonable. Although we
understand the desire to provide
uniformity of consumer protections
across the FFEs, we do not wish to make
the premium payment threshold a
mandatory policy nor to set a mandatory
threshold at a fixed percentage, as
specific facts may justify a higher or
lower one. Finally, because the
premium payment threshold policy is
implemented at the option of each
issuer, we do not believe there is a
reason to delay implementation of the
regulation due to operational
complexity.
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(2) Reliance on HHS to Carry Out
Enrollment and Related Functions
We also proposed to amend § 155.400
by adding a new paragraph (h) to reflect
that SBE–FPs must agree to rely on HHS
to implement the functions related to
eligibility and enrollment within
subpart E, through the Federal platform
agreement. This reflects that eligibility
and enrollment functions must be
performed together in the FFE, and that
neither function can be performed
separately by an SBE–FPs at this time.
We did not receive any comments on
this proposal and are finalizing the
policy as proposed.
c. Annual Open Enrollment Period
(§ 155.410)
We proposed to amend paragraph (e)
of § 155.410, which provides the dates
for the annual open enrollment period
in which qualified individuals may
apply for or change coverage in a QHP.
We proposed to amend paragraph (e)(2)
to define the open enrollment period for
coverage year 2017 to be November 1,
2016, through January 31, 2017. We also
proposed to amend the annual open
enrollment period coverage effective
date provisions in paragraphs (f)(2)(i)
through (iii) to include the coverage
effective dates for 2017.
We proposed this time period and
these coverage effective dates to remain
consistent with the 2016 open
enrollment period. This timeframe will
continue to partially overlap with the
annual open enrollment period for
Medicare and most employer offerings,
which will benefit consumers by
facilitating smooth transitions between
coverage and creating process
efficiencies for issuers handling
enrollments and re-enrollments during
the same period.
47 Federally-facilitated Marketplace and
Federally-facilitated Small Business Health Options
Program Enrollment Manual, updated October 1,
2015, section 6.1, available at https://www.cms.gov/
CCIIO/Resources/Regulations-and-Guidance/
Downloads/Updated_ENR_Manual.pdf.
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We also sought comment on what the
open enrollment period for coverage
year 2018 and subsequent years should
be.
We are finalizing the open enrollment
period for coverage year 2017 as
proposed.
In response to comments received, we
are similarly defining, at § 155.410(e)(2),
the open enrollment period for coverage
year 2018 to be November 1, 2017
through January 31, 2018. These are the
same start and end dates as for the open
enrollment periods for the 2016 and
2017 benefit years. We define the
coverage start dates for all open
enrollment periods beginning with the
open enrollment period for the 2016
benefit year, in three paragraphs at
§ 155.410(f)(2). Accordingly, for
example, for the 2018 coverage year, the
Exchange must ensure that coverage is
effective January 1, 2018, for QHP
selections received by the Exchange on
or before December 15, 2017; February
1, 2018, for QHP selections received by
the Exchange on or before January 15,
2018; and March 1, 2018, for QHP
selections received by the Exchange on
or before January 31, 2018, and similarly
for other coverage years. We believe that
this open enrollment period provides
sufficient time for operational readiness
by the FFE and issuers, and provides
consistency for consumers and
sufficient time for them to enroll in
coverage. However, as further explained
below, we plan to shift to an earlier
open enrollment end date for future
open enrollment periods, starting with
the open enrollment period for the 2019
coverage year, and are therefore
finalizing at § 155.410(e)(3) an open
enrollment period for all future coverage
years to run from November 1 through
December 15 of the year prior to the
coverage year, with coverage effective
the first day of the coverage year.
Comment: We received support from
most commenters for maintaining the
same open enrollment period for
coverage year 2017 as for coverage year
2016, as it provides consistency for
consumers, reduces consumer confusion
about coverage effective dates, and
continues to partially overlap with the
open enrollment period for Medicare
and for most employer offerings. We
received several comments requesting
an earlier open enrollment period that
ends prior to the start of the benefit year
and several comments requesting a later
open enrollment period that continues
through the Federal tax-filing season.
Several commenters requested
shortening the open enrollment period
for the 2017 coverage year by two
weeks, while other commenters
requested lengthening the open
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12273
enrollment period by a month or
through part of the Federal tax filing
season.
Response: After consideration of the
comments, we are finalizing the open
enrollment period for coverage year
2017 as proposed, for consistency with
the 2016 open enrollment period, as
discussed above.
Comment: We received varied
comments regarding the open
enrollment period for coverage year
2018 and for future coverage years.
Many commenters recommended
shifting to an earlier open enrollment
period that starts and ends prior to the
start of the coverage year, so that all
consumers have a full year of coverage.
Among these commenters, some
recommended shortening the open
enrollment period by two weeks for an
open enrollment period that starts on
October 1 and runs through December
15. Some of these commenters
recommended shortening the duration
of the open enrollment period from 3
months to 2 months for an open
enrollment period that starts on October
15 and runs through December 15.
Other commenters recommended
shortening the duration of the open
enrollment period to about six weeks, so
it starts on November 1 and runs
through December 15. Several
commenters recommended an open
enrollment period that starts on October
15 and runs through either December 7
or December 15 in order to align the
Exchange and Medicare open
enrollment periods.
Commenters opposed to an earlier
open enrollment period start date
expressed concerns about providing
sufficient time for plans to be certified
and for plans to be previewed prior to
the start of the open enrollment period.
Those opposed to an earlier open
enrollment period end date expressed
concern about consumer confusion over
the enrollment deadline. And, those
opposed to shortening the duration of
the open enrollment period expressed
concerns about the workforce
constraints of assisters, such as
Navigators and certified application
counselors, agents, and brokers who
provide enrollment assistance
throughout the open enrollment period.
Several commenters recommended a
gradual shift to an earlier open
enrollment period. These commenters
stressed the importance of enabling
consumers to enroll in coverage in
January, since many consumers travel or
are otherwise occupied during the last
few months of the year. Among these
commenters, some recommended
maintaining the same open enrollment
period duration of 3 months for an open
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enrollment period that starts on October
15 and runs through January 15. Other
commenters recommended shortening
the open enrollment period by
approximately two weeks and keeping
the same open enrollment start dates as
for coverage years 2016 and 2017, for an
open enrollment period that starts on
November 1 and runs through January
15. Lastly, some of these commenters
recommended shortening the open
enrollment period to 2 months for one
that starts on November 15 and runs
through January 15.
Several other commenters
recommended maintaining the same
open enrollment period for 2018 and for
future coverage years as for coverage
years 2016 and 2017. Doing so, these
commenters point out, would allow for
better planning and consistency. Many
of these commenters also recommended
that HHS establish an open enrollment
period for all future benefit years, which
would enable issuers to engage in longer
term planning, assist with outreach and
enrollment efforts, and reduce consumer
confusion.
Lastly, many commenters
recommended a later closing of the open
enrollment period to better align with
the Federal tax filing season. These
commenters noted that it is through the
Federal tax filing process that many
consumers have learned about the
individual shared responsibility
coverage requirement. While all of these
commenters agreed that the duration of
the open enrollment period should be
extended, commenters were divided
about whether the start of the open
enrollment period should be the same as
for the 2016 and 2017 coverage years,
November 1, or should start slightly
later on November 15. These
commenters were also divided about
whether the open enrollment period
should continue through most of the tax
filing season by continuing through
March 15 or whether the open
enrollment period should continue past
the April tax-filing deadline to run
through April 30. However, the majority
of these commenters recommended an
open enrollment period that begins on
November 15 and runs through March
15.
Response: After consideration of the
comments received, we are finalizing an
open enrollment period for 2018 that
starts on November 1, 2017 and runs
through January 31, 2018. Maintaining
the same open enrollment period start
and end dates for coverage years 2016
through 2018, will provide consistency
for consumers and will avoid putting
new pressure on the QHP certification
timeline for issuers. An open enrollment
period end date of January 31 ensures
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that consumers are enrolled by March,
which supports coverage for most
consumers for the majority of the 2018
coverage year and does not put any new
burdens on assisters, such as Navigators
and certified application counselors,
agents, brokers, and others providing
enrollment assistance. However, to
support a full year of coverage for most
consumers, we plan to shift to an earlier
open enrollment end date for the 2019
open enrollment period and all future
open enrollment periods. Starting with
the 2019 coverage year and beyond, we
are setting an open enrollment period
that runs through December 15. This
change achieves our goals of shifting to
an earlier open enrollment so that all
consumers who enroll during this time
will receive a full year of coverage and
this will reduce selection risk for
issuers. We believe that shifting the
open enrollment period end date to
December 15 for the 2019 coverage year
provides sufficient time for all entities
involved in the annual open enrollment
period process, including Exchanges
and issuers, to make the necessary
adjustments to meet this earlier
deadline. We also believe that, as the
Exchanges grow and mature, a monthand-a-half open enrollment period
provides sufficient time for consumers
to enroll in or change QHPs for the
upcoming coverage year.
d. Special Enrollment Periods
(§ 155.420)
Special enrollment periods are
available to consumers under a variety
of circumstances as described in
§ 155.420. We stated in the proposed
rule that we had heard concerns
regarding abuse of special enrollment
periods, and we sought comments and
data regarding existing special
enrollment periods.
In order to review the integrity of
special enrollment periods, the FFE will
be conducting an assessment under
which we collect and review documents
from consumers to confirm their
eligibility for the special enrollment
periods under which they enrolled. We
note that where an Exchange undertakes
such a review, the Exchange may either
retroactively or prospectively end
coverage, consistent with Exchange
regulations, if the Exchange determines
that the special enrollment period was
improperly granted under § 155.420.
Comment: We received many
comments related to amending the
number and scope of special enrollment
periods. Several commenters requested
the addition of new special enrollment
periods, including special enrollment
periods for pregnancy and for
individuals facing the individual shared
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responsibility payment at tax time.
Other commenters requested the
expansion of existing special enrollment
periods, including adding provider
network and drug formulary errors to
the special enrollment period for plan or
benefit display errors under paragraph
(d)(4) of this section, allowing
dependents of Indians to enroll in or
change enrollments along with the
Indian through the special enrollment
period in paragraph (d)(8) of this
section, and allowing for a retroactive
coverage start date for consumers who
qualify for the special enrollment period
due to a loss of minimum essential
coverage in paragraph (d)(1) of this
section. Several commenters requested
expansions to the timeframe and
applicability of special enrollment
periods, including extending the length
of time in which a consumer may enroll
after qualifying for a special enrollment
period from 60 to 90 days, and
extending all special enrollment periods
offered through the Exchange to the offExchange market.
Other commenters requested
restrictions in the number and
availability of special enrollment
periods. One commenter requested the
elimination of all special enrollment
periods that do not align with those
special enrollment periods offered by
Medicare or are not required by HIPAA,
while another commenter stated that
special enrollment periods should be
limited to certain life-changing events.
One commenter requested restricting
the eligibility of the special enrollment
period for gaining access to new QHPs
as a result of a permanent move to only
consumers who were previously
enrolled in other minimum essential
coverage, and only allowing the new
dependent to enroll in or change his or
her enrollment into a new QHP under
the special enrollment period described
in paragraph (d)(2). One commenter
requested that States with SBE–FPs
have the flexibility to establish Statespecific special enrollment periods to
address the particular needs of
consumers in their State.
Response: We are not finalizing new
qualifying events, eliminating current
qualifying events, or changing the scope
of current qualifying events for special
enrollment periods at this time, but are
continuing to study this issue. As
explained in guidance released on
January 19, 2016,48 HHS has removed
48 Special Enrollment Periods No Longer Utilized
by the Federally-facilitated Marketplaces and Statebased Marketplaces using the Federal Platform and
Future CMS Actions (Jan. 19, 2016), available at
https://www.regtap.info/uploads/library/ENR_
RetiredSEPs_011916_v1_5CR_011916.pdf; see also
FAQs on the Marketplace Residency Requirement
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certain special enrollment periods that
were available in 2014 and 2015
because the specified time period has
ended, the situation it addressed has
been resolved, or needed system
updates have been made. HHS
continues to review rules and guidance
related to special enrollment periods.
Comment: Commenters expressed
concerns about current misuse or abuse
of special enrollment periods, including
consumers who inappropriately obtain a
special enrollment period on the basis
of a loss of minimum essential coverage
after being terminated from coverage
due to a failure to pay premiums in
violation of § 155.420(e)(1). Some
commenters supported more clearly
defining the eligibility parameters of
existing special enrollment periods, as
well as the consequences for
inappropriately utilizing a special
enrollment period to enroll in coverage.
In response to our request for
comment and data to assess whether
special enrollment periods are being
abused and to minimize potential
misuse and abuse of special enrollment
periods, commenters expressed strong
support for the Exchange to take actions
to verify consumer eligibility for special
enrollment periods moving forward,
including requesting documentation
supporting consumers’ eligibility for
special enrollment periods. Several
commenters requested that the
Exchange require consumers to submit
documentation to either the Exchange or
issuers to verify their eligibility for a
special enrollment period. Some
commenters noted that requesting such
documentation at the time of the
eligibility determination and before
coverage has begun is least burdensome
for consumers and is preferred by
issuers. To aid in verification of special
enrollment period eligibility, one issuer
suggested implementing an online
directory for issuers of consumers who
have been terminated due to
nonpayment of premiums. Some
commenters requested that, until such
verification has taken place, coverage
not be effectuated under the special
enrollment period. Other commenters
suggested that the coverage of
consumers who were ultimately found
to be ineligible for special enrollment
periods which they used to enroll in
coverage or did not submit the
necessary documentation in a timely
manner should be canceled as of the
date the enrollment became effective.
and the Special Enrollment Period due to a
Permanent Move (Jan. 19, 2016), available at
https://www.regtap.info/uploads/library/ENR_
FAQ_ResidencyPermanentMove_SEP_5CR_
011916.pdf.
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Conversely, other commenters
expressed concern about the elimination
or limitation of existing special
enrollment periods without documented
proof of abuse. Commenters stressed the
important role special enrollment
periods play in providing access to
needed coverage for consumers
throughout the year. Commenters
encouraged HHS to analyze how
consumers access special enrollment
periods by using available data sources,
and encouraged HHS to look at the
findings by SBEs that have already
conducted similar analyses. In addition,
commenters cautioned against ending a
consumer’s coverage unless fraud has
been proven.
Response: We appreciate the
important concerns being raised
regarding this issue. We believe it is
important that consumers and others
providing enrollment assistance
understand the eligibility criteria for
special enrollment periods, and so we
will consider providing additional
clarification around existing special
enrollment periods. We continue to be
interested in better understanding how
consumers are accessing special
enrollment periods and whether they
are doing so in an appropriate and
accurate way. In light of the strong
support commenters expressed for
verifying eligibility for special
enrollment periods, we intend to
conduct an assessment of QHP
enrollments that have been made
through special enrollment periods in
the FFE to ensure that consumers
properly accessed coverage and will
require documentation for select SEPs
going forward, as described in recent
guidance posted on February 24, 2016.49
e. Termination of Coverage (§ 155.430)
Under current rules, § 155.430(b)(1)
requires an Exchange to permit an
enrollee to cancel or terminate his or her
coverage in a QHP following
appropriate notice to the Exchange or
the QHP issuer. We proposed to add
paragraph (b)(1)(iv) to allow an enrollee
to retroactively cancel or terminate his
or her enrollment in a QHP through the
Exchange in very limited circumstances.
For enrollees whose enrollment or
continued enrollment in a QHP resulted
from an error, misconduct, or fraud
committed by an entity other than the
enrollee, we aim to increase flexibility
under the regulations to permit such
enrollees to avoid the consequences of
that entity’s actions by canceling the
49 2017 Final HHS Notice of Benefit and Payment
Parameters Fact Sheet. February 24, 2016. Available
at, https://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/#Premium.
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QHP coverage. To this end, we proposed
to redesignate current paragraph
(b)(2)(vi) as (b)(2)(vii) and add a new
paragraph (b)(2)(vi) to permit the
Exchange to cancel an enrollee’s
enrollment in a QHP under certain
circumstances. This rule would permit
cancellations of fraudulent enrollments
that the Exchange discovers, even if the
enrollee is never aware of the
enrollment.
We proposed new paragraph
(b)(1)(iv)(A), which would permit an
enrollee to retroactively terminate his or
her coverage or enrollment if he or she
demonstrates to the Exchange that he or
she attempted to terminate his or her
coverage or enrollment and experienced
a technical error that did not allow the
enrollee to effectuate termination of his
or her coverage or enrollment through
the Exchange. Such an enrollee would
have 60 days after he or she discovered
the technical error to request retroactive
termination.
We proposed a new paragraph (d)(9),
which would provide that the
retroactive termination date under
paragraph (b)(1)(iv)(A) would be no
sooner than 14 days after the earliest
date that the enrollee could demonstrate
that he or she contacted the Exchange to
terminate his or her coverage or
enrollment through the Exchange,
unless the issuer agrees to an earlier
effective date as set forth in
§ 155.430(d)(2)(iii).
We proposed in paragraph
(b)(1)(iv)(B) to provide for cancellation
for an enrollee who demonstrates to the
Exchange that his or her enrollment in
a QHP through the Exchange was
unintentional, inadvertent, or erroneous
and was the result of the error or
misconduct of an officer, employee, or
agent of the Exchange or HHS, its
instrumentalities, or a non-Exchange
entity providing enrollment assistance
or conducting enrollment activities.
Such an enrollee would have 60 days
from the point he or she discovered the
unintentional, inadvertent, or erroneous
enrollment to request cancellation. In
determining whether an enrollee has
demonstrated to the Exchange that his
or her enrollment meets the criteria for
cancellation under this paragraph, the
Exchange would examine the totality of
the circumstances surrounding the
enrollment, such as whether the
enrollee was enrolled in other minimum
essential coverage at the time of his or
her QHP enrollment and whether he or
she submitted claims for services
rendered to the QHP. These factors
would serve to indicate the intentions of
the enrollee and whether the enrollment
really was undesired and unintended
and would be weighed in making a
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determination whether a cancellation is
warranted. We sought comment on what
other factors are indicative of an
enrollee’s bona fide intent and could
limit gaming and should be considered
in this analysis.
In new paragraph (b)(1)(iv)(C), we
proposed to allow cancellations for
enrollees who are enrolled in a QHP
without their knowledge or consent due
to the fraudulent activity of any third
party, including third parties who have
no connection with the Exchange. Such
an enrollee would have 60 days from
the point at which he or she discovered
the fraudulent enrollment to request
cancellation.
We proposed new paragraph (d)(10),
which would provide that for
cancellation or retroactive terminations
granted in accordance with paragraphs
(b)(1)(iv)(B) and (C), the cancellation or
termination date would be the original
coverage effective date or a later date, as
determined appropriate by the
Exchange, based on the circumstances
of the cancellation or termination.
Finally, under our current rules,
§ 155.430(b)(2) allows the Exchange to
initiate termination of an enrollee’s
coverage or enrollment in a QHP
through the Exchange, and permits a
QHP issuer to terminate such coverage
or enrollment in certain circumstances.
We proposed to amend paragraph
(b)(2)(ii)(A) to reflect the change to
§ 156.270(d) and (g) that gives an
enrollee who, upon failing to timely pay
premium, is receiving APTC, a 3-month
grace period.
We also proposed in new paragraph
(b)(2)(vi) that the Exchange could cancel
an enrollee’s enrollment that the
Exchange determines was due to
fraudulent activity, including fraudulent
activity by a third party with no
connection with the Exchange. New
paragraph (d)(11) would provide that for
cancellations granted in accordance
with paragraph (b)(2)(vi), the
cancellation date would be the original
coverage effective date. The Exchange
only would send the cancellation
transaction following reasonable notice
to the enrollee (recognizing that where
no contact information or false contact
information is available that notice may
be impossible or impracticable).
We noted that our current guidance
recognizes that at some point, the
Exchange must discontinue the ability
for enrollees to retroactively adjust
coverage for the preceding coverage
year. We stated that we are considering
codifying a deadline for requesting
cancellations or retroactive
terminations.
We received the following comments
concerning the proposed provisions
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around retroactive terminations and
cancellations.
Comment: Most commenters
supported the proposed ‘‘60-days from
discovery’’ window for requesting the
termination, while a few commenters
suggested shorter windows (30–45
days). A few commenters agreed with
the importance of providing a date after
which retroactive terminations and
cancellations will no longer be granted
for the preceding coverage year.
Response: We chose 60 days to align
with our standard 60-day special
enrollment period window under
§ 155.420. We recognize the need to
discontinue the ability for enrollees to
retroactively adjust coverage for the
preceding coverage year at some point.
To that end, HHS issued a cut-off date
in 2015 after which retroactive
terminations through the FFE for 2014
coverage would no longer be granted,
with the exception of those cases
adjudicated through the appeals
process. In determining the cut-off date
for terminations of enrollments through
FFEs and SBE–FPs for future years, we
want to balance the operational needs of
issuers and potential future
functionality changes to the FFEs’
enrollment system against the need to
provide adequate time to identify and
address erroneous, unknown, or
nonconsensual enrollments through
retroactive terminations and
cancellations. Accordingly, we are
codifying a provision permitting the
Exchange to set a date after which
retroactive terminations and
cancellations will no longer be granted
for the preceding coverage year, with
the exception of those cases adjudicated
through the appeals process, based on
these factors.
Comment: Many commenters
supported our proposal to permit
retroactive terminations for enrollees
who experienced a technical error by
the Exchange that prevented them from
terminating their coverage. Some
supporters noted enrollees sometimes
face challenges in terminating coverage
timely. Two commenters suggested we
make the effective date of termination
the date of the demonstrated attempt,
rather than 14 days following the
attempt. A few commenters expressed
concerns about potential gaming.
Response: This 14-day window
proposed aligns with the regulation on
voluntary, enrollee-initiated prospective
terminations, and we note that issuers
may permit earlier effective dates of
terminations under § 155.430(d)(2)(iii).
To minimize any opportunities for
gaming, the Exchange will make these
determinations based on research
performed by HHS caseworkers.
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Comment: Many commenters
endorsed our proposal to permit
retroactive terminations and
cancellations for enrollees whose
enrollment was unintentional,
inadvertent, or erroneous and was the
result of Exchange error or misconduct,
citing examples of enrollments
occurring under these circumstances
and stressing the importance of this
protection for consumers against undue
financial burden. One commenter felt
the provision did not go far enough to
adequately protect a Medicaid-eligible
enrollee who is unaware of his or her
Medicaid eligibility or unaware of his or
her ineligibility for the premium tax
credit. A few commenters expressed
concern about harm to the risk pool and
the stability of the Exchanges through
gaming. They noted limitations in the
Exchange’s ability to verify eligibility
for special enrollment periods. One
commenter recommended that enrollees
only be permitted to initiate retroactive
terminations or cancellations when
permitted under State law or in the case
of death. A few others recommended no
retroactive terminations or cancellations
be granted if premiums were paid or
claims were incurred.
Response: We understand issuers’
concerns regarding adverse selection if
retroactive terminations or cancellations
are granted without merit. Our aim is to
provide these types of retroactive
terminations or cancellations only for
enrollees who were clearly harmed by
an error or misconduct. It is not
intended for enrollees who either
simply did not understand the rules of
their enrollment when they enrolled
and want to reduce any tax liability they
face due to ineligibility for the premium
tax credit, or who wish to retroactively
drop coverage when they realize they
did not use it. We expect these
terminations and cancellations to be
granted rarely and only following
thorough research of the facts and
circumstances. To that point, the FFE
will make these determinations only
based on research performed by HHS
caseworkers.
Comment: Several commenters
commented on our provisions around
granting enrollee-initiated and
Exchange-initiated retroactive
cancellations in cases involving
fraudulent activity. Supporters cited
examples of enrollee harm due to
fraudulent activity by agents and
brokers. A few commenters noted that
coverage would not be effectuated
without a binder payment and that
member materials would be sent that
would signify enrollment. A few
commenters felt this authority is already
permitted under issuers’ rescission
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authority (§ 147.128(a)(1)). One
recommended we align the language
with the language around agent and
broker fraud in § 155.220. Others
recommended that we clearly define
fraud and ensure verification of
instances of fraud.
Response: These proposed rules
around cancellations for fraudulent
activity are intended, in part, to address
concerns regarding individuals who
may have been enrolled without their
knowledge or consent, potentially
resulting in adverse tax consequences.
In some cases, the enrollee may not
discover the enrollment in time to
request cancellation on his or her own
behalf.
We recognize the legal and
administrative complexities involved in
determining fraud and we understand
the importance of making this rule
narrow enough to prevent abuse, but not
so narrow that it could never be used.
To that end, we are finalizing
paragraphs (b)(1)(iv)(C), (b)(2)(vi), and
(d)(11), except that we are replacing
references to fraud with references to
enrollments performed without enrollee
‘‘knowledge or consent.’’ In addition, in
paragraph (b)(1)(iv)(C), we are adding
that the enrollee must ‘‘demonstrate to
the Exchange’’ that he or she was
enrolled without his or her knowledge
or consent.
Comment: Some commenters
suggested retroactive terminations or
cancellations in circumstances other
than those we proposed. For example, a
few commenters recommended that the
Exchange retroactively terminate or
cancel enrollments granted under
special enrollment periods for which
the enrollee was not truly eligible.
Another commenter recommended we
not permit retroactive cancellation
when a consumer does not pay his or
her premium in the fourth quarter, and
then moves to a different plan during
open enrollment with coverage effective
January 1. Another commenter
recommended we create parameters to
permit retroactive terminations or
cancellations in instances of credit card
theft. Finally, one commenter
recommended we allow termination
without penalty to auto-enrollees in the
first 60 days of the year, or due to
confusion over covered benefits or
providers.
Response: We understand the
commenters’ concerns; however, this
proposed rule was limited to scenarios
involving technical errors, misconduct
or fraudulent activity. We address some
of our future activities around special
enrollment periods elsewhere in this
rule. We are finalizing the provisions
proposed in § 155.430 of the proposed
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rule with a few modifications.
Specifically, as discussed above, we are
eliminating references to fraud in
paragraphs (b)(1)(iv)(C), (b)(2)(vi), and
(d)(11) and referring instead to
enrollments performed without the
enrollee’s knowledge or consent. We
believe that in certain cases a retroactive
termination can be justified where the
enrollment was performed without
knowledge or consent, even if fraud did
not occur. In paragraph (b)(2)(vi), we
also clarify that the enrollment
performed without the enrollee’s
knowledge or consent could be
performed by a third party that has no
connection with the Exchange. In
addition, for consistency with
paragraphs (b)(1)(iv)(A) and (B), in
paragraph (b)(1)(iv)(C), we are requiring
that the enrollee ‘‘demonstrates to the
Exchange’’ that he or she was enrolled
without his or her knowledge or
consent. Finally, as described in
response to comments above, we are
adding a new paragraph (d)(12)
permitting the Exchange to establish a
timeframe during which retroactive
terminations and cancellations for the
preceding coverage year must be
initiated.
6. Appeals of Eligibility Determinations
for Exchange Participation and
Insurance Affordability Programs
a. General Eligibility Appeals
Requirements (§ 155.505)
In § 155.505, we made certain
proposals related to the general
eligibility appeals requirements. We
proposed to add paragraph (b)(1)(iii) to
state more clearly that applicants and
enrollees have the right to appeal a
determination of eligibility for an
enrollment period. We also proposed to
add paragraph (b)(5) to clarify the
existing right under § 155.520(c) that
applicants and enrollees have to appeal
a decision issued by the State Exchange
appeals entity. In paragraph (b)(4), we
proposed to correct a typographical
error by replacing the word ‘‘or’’ with
the word ‘‘of,’’ and to replace ‘‘pursuant
to’’ with ‘‘under.’’
We are finalizing the changes as
proposed.
Comment: Commenters all supported
the proposal to clarify the existing rights
to appeal a determination of eligibility
for an enrollment period and appeal a
decision issued by the State Exchange
appeals entity. One commenter sought
clarification that the change to
§ 155.505(b)(5), related to the right to
appeal a decision issued by a State
Exchange appeals entity, applies only to
Exchange decisions related to eligibility
for enrollment in a qualified health plan
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and financial assistance through the
Exchange, but not Medicaid or CHIP.
Response: In certain circumstances, it
is possible that a State Exchange appeals
entity appeal decision regarding
eligibility for Medicaid, CHIP, or the
BHP could be escalated to and
adjudicated by the HHS appeals entity.
However, as discussed below, at the
time of publication of this final rule, no
State agency administering Medicaid,
CHIP, or the BHP has delegated appeals
to the State Exchange appeals entity in
a manner that would permit the HHS
appeals entity to adjudicate these
appeals. Therefore, we confirm that the
right to appeal a decision issued by a
State Exchange appeals entity under
§ 155.505(b) currently is limited to
decisions related to eligibility for
enrollment in a qualified health plan
through the Exchange (including
enrollment periods), Exchange financial
assistance, exemptions from the
individual shared responsibility
requirement, and denials of requests to
vacate dismissals by the State Exchange
appeals entity.
As we explained in the final rule in
the July 15, 2013 Federal Register (78
FR 42160), States may choose to
delegate authority to conduct Medicaid
fair hearings for MAGI-based eligibility
determinations to the Exchange
operating in the State regardless of
whether the Exchange is an FFE, State
Exchange, or a State Partnership
Exchange, in accordance with the
Medicaid regulations at 42 CFR
431.10(c) and (d). If a State agency
delegates authority to conduct MAGIbased eligibility appeals to an Exchange,
including a State Exchange, in
accordance with 45 CFR 431.10(c) and
(d), such a delegation would extend to
the HHS appeals entity, if the State
Exchange appeals entity’s appeal
decision were escalated under
§ 155.505(c)(2)(i).
However, States with State Exchanges
that are State governmental agencies
may also coordinate appeals, beyond
delegation under our rules, through a
waiver granted under the
Intergovernmental Cooperation Act. If a
State delegates authority to conduct fair
hearings through an Intergovernmental
Cooperation Act waiver to another State
agency, including a State Exchange or
State Exchange appeals entity, Medicaid
appeal decisions made by that entity
could not be escalated to the HHS
appeals entity (78 FR 42,160, 42,165
(July 15, 2013)).
As of this publication, all State
Exchanges have coordinated appeals
through an Intergovernmental
Cooperation Act waiver, and therefore
Medicaid appeal decisions made by a
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State Exchange appeals entity are not
appealable to the HHS appeals entity
under § 155.520(c) or § 155.505(b)(5).
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b. Appeals Coordination (§ 155.510)
We proposed to revise § 155.510(a)(1)
to allow the appeals entity, the
Exchange, or the agency administering
insurance affordability programs to
request information or documentation
from the appellant that the appellant
already has provided if the agency does
not have access to such information or
documentation and cannot reasonably
obtain it. Currently, § 155.510(a)(1)
prohibits the appeals entity or agency
administering insurance affordability
programs from asking an appellant to
provide information or documentation
that the appellant already provided in
order to minimize the burden on the
appellant.
We are finalizing our proposal, with
an addition as described below.
Comment: Commenters all supported
the proposed change to § 155.510(a)(1).
A few commenters cautioned that the
proposed amendment to paragraph
(a)(1) should not overly burden
appellants and recommended that it be
used as a time-limited, interim measure
until system functionality improves.
Response: We agree that proposed
paragraph (a)(1) should not overly
burden appellants. As proposed,
paragraph (a)(1) permits the appeals
entity, Exchange, or agency
administering insurance affordability
programs to request information or
documentation from the appellant if the
agency does not have access to such
information or documentation and
cannot reasonably obtain it. To further
ensure that paragraph (a)(1) does not
overly burden appellants, we are
finalizing paragraph (a)(1) to also
require that the information or
documentation requested is necessary to
properly adjudicate the appellant’s
appeal. We believe that the addition of
this language will minimize any
unnecessary burden on the appellant
while also ensuring that appeals are
adjudicated accurately.
c. Appeal Requests (§ 155.520)
We proposed to add paragraph
(d)(2)(i)(D), concerning appellants
whose appeal request is determined
invalid for failure to request an appeal
by the date determined in paragraph (b)
or (c) of this section. The proposed
addition would require the appeals
entity to notify an appellant that, in the
event the appeal request is invalid
because it was not timely submitted, the
appeal request may be considered valid
if the applicant or enrollee demonstrates
within a reasonable timeframe
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determined by the appeals entity that
failure to timely submit was due to
exceptional circumstances and should
not preclude the appeal.
We proposed that the appeals entity
may determine what constitutes an
exceptional circumstance that should
not preclude an appeal notwithstanding
the appellant’s failure to timely submit
an appeal request. We also proposed
that the appeals entity may determine
what is considered a reasonable
timeframe for an appellant to
demonstrate an exceptional
circumstance.
We are finalizing the provision as
proposed.
Comment: Commenters supported the
proposed change to
§ 155.520(d)(2)(i)(D). A few commenters
requested additional examples or
guidelines as to what constitutes an
‘‘exceptional circumstance’’ such that
failure to timely submit an appeal
request should not preclude an appeal.
Commenters also requested additional
guidance on what constitutes a
‘‘reasonable timeframe’’ to demonstrate
an exceptional circumstance. One SBE
supported the proposed amendment as
long as Exchange appeal entities have
the flexibility to determine what
constitutions an exceptional
circumstance and a reasonable
timeframe.
Response: In the proposed rule, we
provided several examples of situations
that might constitute an exceptional
circumstance under proposed paragraph
(d)(2)(i)(d). We stated that a weather
emergency, such as a blizzard, hurricane
or tornado, may constitute an
exceptional circumstance. We discussed
scenarios in which severe weather
causes a power outage making it
impossible to prepare, mail, or fax
appeal requests to the appeals entity,
and situations when a disaster may
cause consumers to lose access to the
documents they need to complete and
submit appeal requests. We also noted
that if a consumer suffers a catastrophic
medical event and is consequently
unable to submit an appeal request on
time, the appeals entity may determine
that this constitutes an exceptional
circumstance under the proposed
exception.
We also provided guidance in the
proposed rule as to what constitutes a
reasonable timeframe to demonstrate an
exceptional circumstance. We stated
that if an appellant was unable to send
an appeal request on time due to a snow
storm and power outage and sent the
request four months after the snow
storm and power outage had been
resolved, the appeals entity may find
that the appellant experienced an
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exceptional circumstance as
contemplated by the proposed rule, but
that the appellant waited an
unreasonable amount of time to
demonstrate it.
The examples above provide guidance
to appellants and representatives as to
what the appeals entity may consider an
exceptional circumstance such that
failure to timely submit an appeal
request should not preclude an appeal,
and a reasonable timeframe to
demonstrate an exceptional
circumstance. We intend for these
examples to be illustrative and not
exhaustive, and believe that the appeals
entity should decide on a case-by-case
basis whether an appeal request that is
invalid due to untimely submission
nevertheless should be allowed to
proceed under paragraph (d)(2)(i)(d).
d. Dismissals (§ 155.530)
We proposed to revise § 155.530(a)(4)
to allow an appeal to continue when an
appellant dies if the executor,
administrator, or other duly authorized
representative of the estate requests to
continue the appeal.
Comment: Commenters supported the
proposed change to § 155.530(a)(4). A
few commenters also recommended
allowing a spouse, partner, parent, or
guardian of a deceased appellant to
continue an appeal. They believed this
may be necessary when an appellant,
especially a child or incapacitated adult,
has not gone through the legal process
of establishing an executor,
administrator, or other duly authorized
representative. In such cases, the
commenters recommend allowing a
family member to step into the shoes of
the deceased appellant to prevent the
dismissal of an appeal from imposing a
financial hardship on the surviving
members of the family.
Response: We agree with the
commenters. Therefore, we are
clarifying that if a deceased appellant
has not designated an executor,
administrator, or other duly authorized
representative, and one has not been
appointed by the court, the deceased
appellant’s spouse, legal civil or
domestic partner, or for a minor or
unmarried incapacitated appellant,
parent or legal guardian, is considered
a duly authorized representative and
may continue the appeal.
We are finalizing § 155.530(a)(4) as
proposed.
e. Informal Resolution and Hearing
Requirements (§ 155.535)
In § 155.535, we proposed
amendments to the informal resolution
and notice of hearing requirements. In
§ 155.535(a), we proposed a change to
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clarify that the requirements of the
informal resolution process described in
paragraphs (a)(1) through (4) apply to
both the HHS appeals entity and a State
Exchange appeals entity.
In § 155.535(b), we proposed
providing two exceptions to the
requirement that the appeals entity must
send written notice to the appellant of
the date, time, and location or format of
the hearing no later than 15 days prior
to the hearing date. In paragraph (b)(1),
we proposed an exception when an
appellant requests an earlier hearing
date. In paragraph (b)(2), we proposed
an exception to the notice requirement
under paragraph (b) when a hearing date
sooner than 15 days is necessary to
process an expedited appeal, as
described in § 155.540(a), and the
appeals entity and appellant have
mutually agreed to the date, time, and
location or format of the hearing. These
proposals were intended to create a
more agreeable experience for the
appellant overall while also improving
efficiency for the appeals process.
Comment: The comments received on
these proposed changes were largely
supportive. Commenters recommended
that if written notice is not sent to an
appellant under paragraph (b)(2), then
the appeals entity must contact both the
appellant and the appellant’s authorized
representative, if any, to agree upon a
date, time, and location or format of the
hearing.
Response: We agree with the
commenter’s recommendation. The
simple act of contacting the appellant’s
authorized representative could reduce
the likelihood of an unintended failure
to appear that could harm both the
appellant and the overall efficiency of
the appeals process. This may be
especially true for limited-English
proficient appellants who should not
suffer the harsh consequences because
of a language barrier.
We are finalizing § 155.535(a) and
(b)(1) as proposed. We are finalizing
§ 155.535(b)(2) to allow an exception to
the notice requirement under paragraph
(b) when a hearing date sooner than 15
days is necessary to process an
expedited appeal, as described in
§ 155.540(a), and the appeals entity, has
contacted the appellant and appellant’s
authorized representative, if any, to
schedule a hearing on a mutually agreed
to date, time, and location or format.
f. Appeal Decisions (§ 155.545)
In paragraph (b)(1), we proposed to
remove the third appearance of the
word ‘‘of’’ to correct a typographical
error. We proposed to revise paragraph
(c)(1)(i) to include cross references to
§ 155.330(f)(4) and (5), which aligns
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with our proposed change § 155.505(b)
to clarify that applicants and enrollees
have the right to appeal a determination
of eligibility for an enrollment period.
Finally, we proposed to revise
§ 155.545(c)(1)(ii) so that the coverage
effective date for eligible appellants
requesting a retroactive appeal decision
effective date is the coverage effective
date that the appellant did receive or
could have received if the appellant had
enrolled in coverage under the incorrect
eligibility determination that is the
subject of the appeal.
Comment: Commenters all supported
the proposed changes to § 155.545.
Some commenters recommended that,
in the event the appeals entity takes
more than 90 days to process an appeal
through no fault of the appellant, the
appellant may choose a coverage
effective date that falls between the
initial eligibility determination date and
the date of the appeals decision. They
pointed out that while waiting for an
appeal to be adjudicated, an appellant
may have experienced a health issue for
which retroactive coverage would be
helpful, but may not be in the financial
situation to pay back premiums for more
than a limited number of months.
Response: To remain consistent with
other effective date regulations, we
cannot permit an appellant to choose a
coverage effective date that falls
between the initial eligibility
determination date and the date of the
appeal decision, except in the limited
circumstance described below. Existing
effective date regulations including
those at §§ 155.410(f), 155.330(f), and
155.420(b) allow for prospective or
retroactive coverage effective dates, as
appropriate, based on a triggering event
such as an eligibility determination or
the birth of a child. The special coverage
effective dates for certain special
enrollment periods under
§ 155.420(b)(2)(iii), which requires the
Exchange to ensure a coverage effective
date that is appropriate based on the
circumstances of the special enrollment
period, must be tied to a triggering event
and may not be chosen by the qualified
individual or enrollee.
In the event an appeals entity finds
that an eligibility determination, as
described in § 155.505(b)(1), was
incorrect, and the appellant had more
than one coverage effective date
available in the enrollment period that
the eligibility determination was made,
the appellant may be permitted to
choose a coverage effective date
associated with the enrollment period.
For example, if the appeals entity
determines that an eligibility
determination made on November 25,
2015 for the 2016 coverage year was
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incorrect, the appellant may choose a
retroactive coverage effective date of
January 1, 2016, February 1, 2016, or
March 1, 2016 because the appellant
would have had the opportunity to
make a QHP selection between
November 25, 2015 and January 31,
2016 and receive one of those coverage
effective dates (depending on when the
QHP was selected). Even in this
situation, the appellant may choose only
from among those coverage effective
dates that would have been available
under the original enrollment period,
and may not chose any coverage
effective date between the initial
eligibility determination date and the
date of the appeals decision.
Accordingly, we are finalizing
paragraph (c)(1)(ii) as proposed, with
one modification. Under the final
regulation, an appeals entity may only
implement an appeal decision
retroactively to the coverage effective
date the appellant did receive or could
have received if the appellant had
enrolled in coverage under the incorrect
eligibility determination that is the
subject of the appeal. We are changing
the phrase ‘‘would have received’’ to
‘‘could have received’’ to clarify that an
eligible appellant may choose from
among the coverage effective dates that
would have been available under the
original enrollment period.
g. Employer Appeals Process (§ 155.555)
We proposed to make a technical
correction to § 155.555(e)(1) by
removing the cross-reference to
paragraph (d)(3) of this section, which
does not exist, and replacing it with
paragraph (d)(1)(iii).
We also proposed to amend
§ 155.555(l) by revising paragraph (l)
and adding paragraphs (l)(1) and (2) to
give the Exchange more operational
flexibility in implementing an employer
appeal decision. Currently under
§ 155.555(l), when an employer appeal
decision affects an employee’s
eligibility, the Exchange is directed to
redetermine the employee’s eligibility
and the eligibility of the employee’s
household members, if applicable. We
proposed to amend § 155.555(l) so that,
after receipt of the notice from the
appeals entity under paragraph (k)(3) of
this section, the Exchange must follow
the requirements in either paragraph
(l)(1) or (2) if the appeal decision affects
the employee’s eligibility. Under
proposed paragraph (l)(1), the Exchange
must promptly redetermine the
employee’s eligibility and the eligibility
of the employee’s household members,
if applicable, in accordance with the
standards specified in § 155.305, as
currently provided in paragraph (l).
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Under proposed paragraph (l)(2), the
Exchange must promptly notify the
employee of the requirement to report
changes in eligibility as described in
§ 155.330(b)(1). We sought comment on
the addition of the option described in
paragraph (1)(2), and whether it would
help ensure the most accurate
redetermination of eligibility for
insurance affordability programs by
giving employees the opportunity to
report any additional changes in their
eligibility information.
We are finalizing § 155.555(l), and the
technical correction to § 155.555(e)(1),
as proposed.
Comment: Commenters generally
supported the proposed addition of
§ 155.555(l)(2). Several commenters
supported this change because it would
give consumers the opportunity to
update their application with any other
changes that could affect eligibility
which would result in a more accurate
eligibility determination. One
commenter provided an example of an
applicant who had employer-sponsored
coverage through his or her spouse at
the time of applying for coverage
through the Exchange, but later received
a legal separation. One commenter who
disagreed with the proposed addition of
paragraph (l)(2) expressed concern that
an employee who fails to update his or
her eligibility may face a greater tax
liability when filing his or her Federal
tax return.
Response: As described in
§ 155.330(b)(1), an enrollee is required
to report any change with respect to the
eligibility standards specified in
§ 155.305 within 30 days of such
change. Before enrolling in coverage
through the Exchange, applicants for
coverage must confirm their
understanding that they must notify the
entity administering the program they
enroll in if information on their
application changes, and that such
changes may affect the eligibility for
member(s) of their household.
Nevertheless, we agree with
commenters that the proposed change in
§ 155.555(l)(2) would give employees
another opportunity to update their
application with changes that affect
their eligibility or the eligibility of
household members when an appeal
decision under § 155.555 affects the
employee’s eligibility. We are finalizing
§ 155.555(l) as proposed to permit the
Exchange, after receipt of the notice
under paragraph (k)(3) of this section, to
follow either the requirements in either
paragraph (l)(1) or (2) if the appeal
decision affects the employee’s
eligibility. As stated in the proposed
rule, for the 2016 benefit year, the FFE
intends to implement appeal decisions
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that affects the employee’s eligibility by
following the procedure described in
paragraph (1)(2).
Comment: One commenter who
supported the proposed changes to
§ 155.555(l) wrote that, in order for the
option described in paragraph (l)(2) to
be meaningful, employees must have
very clear instructions on how to update
their application.
Response: We agree that a notice
under § 155.555(l)(2) must provide clear
instructions to the employee in order to
be effective. For notices submitted by
the FFE, we intend to provide guidance
on reporting changes in information
with respect to eligibility through the
online application and the Marketplace
Call Center, instructions on updating
the online application questions to
reflect that the employee has an offer of
employer-sponsored coverage that
provides minimum value and is
affordable for the employee, and
instructions on terminating enrollment
in a QHP through the Exchange for
those who want to terminate enrollment
upon being redetermined ineligible for
Exchange financial assistance.
Comment: Commenters suggested that
the Exchange be required to follow the
procedures outlined in both paragraphs
(l)(1) and (2). They recommended that
the Exchange send a notice under
paragraph (l)(2) and, if an employee
does not update his or her application
within a specified period of time, the
Exchange follow the procedure
described paragraph (l)(1) to
redetermine the employee’s eligibility
and the eligibility of the employee’s
household members, if applicable.
Response: We are concerned that such
a policy would cause considerable
operational burden to the Exchange
while providing minimal benefit to the
employee. We believe that the policy as
proposed balances the need for
employees to receive an updated
eligibility determination after an appeal
decision affects the employee’s
eligibility, with the need to provide
operational flexibility to the Exchange.
Accordingly, we are finalizing this
provision as proposed, to give the
Exchange the option to follow either
paragraph (l)(1) or (2) after receipt of the
notice under paragraph (k)(3) of this
section.
Comment: One commenter expressed
concern that an employee who does not
report his or her change in eligibility
could place the employer at greater risk
for an assessable payment under section
4980H of the Code.
Response: We disagree with the
proposition that an employee who does
not report his or her change in eligibility
could place the employer at greater risk
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for being liable for an assessable
payment under section 4980H of the
Code. An employee is subject to the
requirement to report a change in his or
her eligibility under § 155.330(b)(1)
when the appeals entity determines that
his or her employer offered employersponsored coverage that provides
minimum value and is affordable for the
employee. Independently, the Internal
Revenue Service (IRS) will determine
whether an employer is liable for an
employer shared responsibility payment
based on the employer shared
responsibility provisions.50 If the IRS, in
its own review, determines that an
employee of an applicable large
employer is ultimately not eligible for
the premium tax credit under section
36B of the Code, then, in general, the
employer will not owe an employer
shared responsibility payment with
respect to that full-time employee, even
if the employee enrolled in a QHP with
APTC (regardless of whether the
employee reported a change with
respect to eligibility to the Exchange
following the outcome of an employer
appeal).
7. Exchange Functions in the Individual
Market: Eligibility Determinations for
Exemptions
a. Eligibility Standards for Exemptions
(§ 155.605)
In § 155.605, we proposed to clarify
and streamline policies related to
exemptions. Consistent with prior
guidance, we proposed to permit any
applicant whose gross income is below
his or her applicable filing threshold to
qualify for a hardship exemption and
claim the exemption through the tax
filing process. In addition, we proposed
to permit individuals eligible for
services from an Indian health care
50 In general, an applicable large employer (an
employer with at least 50 full-time employees,
including full-time equivalent employees) will owe
an assessable payment to the IRS under section
4980H(a) of the Code if the employer fails to offer
coverage to its full-time employees (and their
dependents) and at least one full-time employee
receives the premium tax credit. An assessable
payment under section 4980H(a) of the Code is
calculated based on the employer’s number of fulltime employees, without regard to how many fulltime employees receive the premium tax credit. An
applicable large employer will owe an assessable
payment under section 4980H(b) of the Code if it
offers coverage to its full-time employees (and their
dependents) but at least one full-time employee
receives the premium tax credit, which could occur
if the coverage offered did not provide minimum
value or was not affordable. (For purposes of
section 4980H, coverage may be considered
affordable under an affordability safe harbor even
if the coverage is not affordable for purposes of
section 36B of the Code. 26 CFR 54.4980H–5(e)(2)).
An assessable payment under section 4980H(b) of
the Code is calculated based on the number of fulltime employees who receive the premium tax
credit.
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provider to claim a hardship exemption
through the tax filing process. We
proposed that for the 2016 tax year and
later that the Exchange no longer issue
exemption certificate numbers (ECNs)
for the following exemption types:
members of a Health Care Sharing
Ministry, individuals who are
incarcerated, members of Federally
recognized tribes, and individuals who
are eligible for services from an Indian
health care provider. We also proposed
to codify a list of other hardship
exemptions previously established in
prior guidance and to clarify operational
standards for timeframes of hardship
events and the duration of certain
hardship exemptions. We are finalizing
the policy of streamlining of exemptions
offered through the tax filing process as
proposed; however, at this time, we will
not codify the list of hardship
exemptions established in prior
guidance and will not finalize the
proposal to permit an individual to
obtain a hardship exemption for a
hardship experienced within 3 years of
the date of application.
Comment: We received comments in
favor of eliminating unnecessary
paperwork for individuals seeking an
exemption due to their State not
expanding Medicaid coverage.
Commenters also supported
streamlining the exemption process for
members of a Health Care Sharing
Ministry, members of Federally
recognized Indian tribes and individuals
eligible for services from an Indian
health care provider, and individuals
who were incarcerated by delegating
these exemption types fully to the IRS.
Response: In this final rule, we are
finalizing the proposal to streamline the
exemption application process for
consumers and to minimize paperwork
requirements for consumers in States
that did not expand Medicaid coverage.
We are finalizing the proposal to no
longer require a denial notice for the
hardship exemption for applicants
ineligible for Medicaid because their
State did not expand Medicaid
coverage. In addition, we are finalizing
the proposal to streamline exemption
processing for members of a Health Care
Sharing Ministry, individuals who are
incarcerated, members of Federally
recognized Indian tribes, and
individuals who are eligible for services
from an Indian health care provider.
Comment: We received comments
supporting and opposing our proposal
to codify hardship criteria established in
regulatory guidance. Commenters stated
that any expansion of the hardship
exemption criteria could weaken the
individual shared responsibility
provision and create instability in
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insurance risk pools. In addition, we
received a request for clarification of
factors that an Exchange would examine
in order to approve a hardship
exemption.
Response: We will continue to
examine these comments and will not
codify the list of hardship exemptions
previously established in public
guidance at this time.
Comment: We received comments
both in support of and against the
proposal to allow individuals to apply
for a hardship that occurred up to 3
calendar years in the past. Commenters
who supported this proposal thought
that it would provide greater flexibility
for Exchanges to approve hardship
exemptions. Commenters who did not
support the proposal stated that 3 years
was overly broad and could lead to a
destabilization of a health insurance risk
pool by providing an additional
incentive for healthy consumers to
claim an exemption in lieu of obtaining
health coverage.
Response: In response to the concerns
raised by commenters, we will not
finalize § 155.605(d)(2) at this time.
Similarly, we will not finalize the last
sentence of the introductory paragraph
of § 155.605(d)(1), which establishes a
maximum length of any hardship
exemption of the month before the
circumstance, the remainder of the
calendar year, and the next calendar
year.
Comment: We received a suggestion
that the Exchange establish an
exemption for people who are
erroneously determined ineligible for
APTC and who do not enroll in a
qualified health plan as a result.
We also received one comment that
our proposal to codify the existing
hardship exemption time period related
to an appeal in § 155.605(d)(2)(xiv)
should be expanded to include the date
of application, rather than a consumer’s
potential coverage effective date. The
commenter stated that the current
timeframe is too narrow for individuals
who were unable to file an appeal of an
eligibility determination within 90 days
due to the fact that a data inconsistency
generated during the application
process must be adjudicated before a
consumer may file an appeal.
Response: We are not codifying
§ 155.605(d)(2)(xiv) at this time, but will
continue to consider these issues and
comments for future rulemaking.
b. Required Contribution Percentage
(§ 155.605(e)(3))
Under section 5000A of the Code, an
individual must have minimum
essential coverage for each month,
qualify for an exemption, or make a
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12281
shared responsibility payment with his
or her Federal income tax return. Under
section 5000A(e)(1) of the Code, an
individual is exempt if the amount that
he or she would be required to pay for
minimum essential coverage (the
required contribution) exceeds a
particular percentage (the required
contribution percentage) of his or her
actual household income for a taxable
year. In addition, under § 155.605(g)(2)
(redesignated as § 155.605(d)(2) in this
final rule), an individual is exempt if his
or her required contribution exceeds the
required contribution percentage of his
or her projected household income for
a year. Finally, under § 155.605(g)(5)
(redesignated as § 155.605(d)(5) in this
final rule), certain employed individuals
are exempt if, on an individual basis,
the cost of self-only coverage is less than
the required contribution percentage,
but the aggregate cost of individual
coverage through employers exceeds the
required contribution percentage, and
no family coverage is available through
an employer at a cost less than the
required contribution percentage.
Section 5000A established the 2014
required contribution percentage at 8
percent. For plan years after 2014,
section 5000A(e)(1)(D) of the Code and
26 CFR 1.5000A–3(e)(2)(ii) provide that
the required contribution percentage is
the percentage determined by the
Secretary of HHS that reflects the excess
of the rate of premium growth between
the preceding calendar year and 2013,
over the rate of income growth for that
period.
We established a methodology for
determining the excess of the rate of
premium growth over the rate of income
growth for plan years after 2014 in the
2015 Market Standards Rule (79 FR
30302), and we said future adjustments
would be published annually in the
HHS notice of benefit and payment
parameters.
Under the HHS methodology, the rate
of premium growth over the rate of
income growth for a particular calendar
year is the quotient of (x) 1 plus the rate
of premium growth between the
preceding calendar year and 2013,
carried out to ten significant digits,
divided by (y) 1 plus the rate of income
growth between the preceding calendar
year and 2013, carried out to ten
significant digits.51
As the measure of premium growth
for a calendar year, we established in
the 2015 Market Standards Rule that we
51 We also defined the required contribution
percentage at § 155.600(a) to mean the product of
8 percent and the rate of premium growth over the
rate of income growth for the calendar year,
rounded to the nearest one-hundredth of one
percent.
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would use the premium adjustment
percentage. The premium adjustment
percentage is based on projections of
average per enrollee employersponsored insurance premiums from the
National Health Expenditure Accounts
(NHEA), which are calculated by the
CMS Office of the Actuary.52 (Below, in
§ 156.130, we finalize the proposed
2017 premium adjustment percentage of
1.1325256291 (or an increase of about
13.3 percent) over the period from 2013
to 2016. This reflects an increase of
about 4.9 percentage points
(1.1325256291–1.0831604752) for 2015–
2016.)
As the measure of income growth for
a calendar year, we established in the
2015 Market Standards Rule that we
would use per capita Gross Domestic
Product (GDP), using the projections of
per capita GDP used for the NHEA,
which is calculated by the Office of the
Actuary. We also stated in the 2015
Market Standards Rule (79 FR 30304),
that we would-consider alternative
measures of income and premium
growth should projections of those
measures become available.
Subsequently, as part of its projections
of National Health Expenditures, the
Office of the Actuary published
projections of personal income (PI) for
the first time in September 2014 and
subsequently in July 2015. As a result,
in the proposed rule we said we were
considering substituting this new
measure of per capita PI for per capita
GDP in the calculation for the required
contribution percentage. We received
one comment in support of our proposal
to substitute per capita PI for per capita
GDP in the calculation to establish the
rate of income growth for the required
contribution percentage, and are
finalizing it here. As stated in the
proposed rule, we believe per capita PI
better aligns with the statutory intent of
measuring the income of an individual
than per capita GDP. The projections of
PI published by the Office of the
Actuary are consistent with the measure
published by the Bureau of Economic
Analysis, which reflects income
received by individuals from all
sources, including income from
participation in production.
Specifically, it includes compensation
of employees (received), supplements to
wages and salaries, proprietors’ income
with adjustments for inventory
valuation and capital consumption,
personal income receipts on assets,
rental income, and personal current
transfer receipts, less contributions for
government social insurance.
The Office of the Actuary’s PI
projection is generated using the
University of Maryland’s Long Term
Inter-industry Forecasting Tool. The
Long Term Inter-industry Forecasting
Tool model is a macro-economic model
that is based on the historical
relationships that exist between PI
growth, GDP growth, and changes in
other macro-economic variables. For
instance, the correlation between PI and
GDP is influenced by fluctuations in
taxes and government transfer
payments, depreciation of capital stock,
and retained earnings and transfer
payments of private business.53
Estimates of GDP in the NHE projections
reflect economic assumptions from the
2015 Medicare Trustees Report and are
updated to incorporate the latest
available consensus data from the
monthly Blue Chip Economic
Indicators. These same economic
assumptions are used for producing
projections of PI and employersponsored insurance premiums, so
using this estimate will generate an
internally consistent estimate of the
growth in premiums relative to growth
in income.
As stated in the proposed rule, we
will continue to consider other changes
to the measures of income per capita
and premium growth as additional
information becomes available and as
we gain experience with the current
measures; we received no comments on
other indices that we should develop or
consider.
Since updating the required
contribution percentage for 2017
requires calculating the cumulative
difference between premium growth
and income growth between the
preceding calendar year and 2013, we
also proposed in the proposed rule to
replace per capita GDP with per capita
PI for all years beginning in 2013 and
then calculate cumulative income
growth through 2016. We received no
comments on this retrospective
approach, and are finalizing it here; as
stated in the proposed rule, a
retrospective approach allows for
consistency across all years with the
most recent data available. We note that
potential future changes based on new
52 For any given year the premium adjustment
percentage is the percentage (if any) by which the
most recent NHEA projection of per enrollee
employer-sponsored insurance premiums for the
current year exceeds the most recent NHEA
projection of per enrollee employer-sponsored
insurance premiums for 2013.
53 For projections of PI and GDP, see Table 1 at
Centers for Medicare & Medicaid Services. National
Health Expenditure Data: Projected, available at
https://www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/
NationalHealthExpendData/
NationalHealthAccountsProjected.html.
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data that are not available for 2013 may
be made on a prospective basis.
Therefore, under the approach
finalized here, and using the NHEA
data, the rate of income growth for 2017
is the percentage (if any) by which the
most recent projection of per capita PI
for the preceding calendar year ($49,875
for 2016) exceeds the per capita PI for
2013, ($44,925), carried out to ten
significant digits. The ratio of per capita
PI for 2016 over the per capita PI for
2013, using the finalized approach for
both years, is estimated to be
1.1101836394 (that is, per capita income
growth of about 11.0 percent). This
reflects an increase of about 3.0
percentage points (1.1101836394–
1.0798864830) for 2015–2016.
Thus, using the 2017 premium
adjustment percentage finalized in this
rule, the excess of the rate of premium
growth over the rate of income growth
for 2013–2016 is 1.1325256291/
1.1101836394, or 1.0201245892. This
results in a required contribution
percentage for 2017 of
8.00*1.0201245892, or 8.16 percent,
when rounded to the nearest onehundredth of one percent, an increase of
0.27 percentage points from 2016
(8.16100–8.13399). The excess of the
rate of premium growth over the rate of
income growth also is used for
determining the applicable percentage
in section 36B(b)(3)(A) and the required
contribution percentage in section
36(c)(2)(C).
c. Eligibility Process for Exemptions
(§ 155.610)
In § 155.610, we proposed adding new
paragraph in § 155.610(k) which
describes how the Exchange will handle
incomplete exemption applications. We
proposed that the Exchange will handle
incomplete exemption applications in a
similar manner to the procedure for
handling incomplete health coverage
applications established under
§ 155.310(k). Specifically, when the
Exchange receives an application that
does not contain sufficient information
to make an eligibility determination, the
Exchange will: (1) Provide notice to the
applicant indicating that information
necessary to complete an eligibility
determination is missing, specify the
missing information, and provide
instructions for submitting the missing
information; (2) provide the applicant
with a period of no less than 10 and no
more than 90 days starting from the date
on which the notice is sent to the
applicant to provide the information
needed to complete the application to
the Exchange; and (3) if the Exchange
does not receive the requested
information, then the Exchange will
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notify the applicant that the Exchange
will not process the application and will
provide appeal rights to the applicant.
We sought comment on this proposal.
Comment: We received comments
which supported this proposal to
handle incomplete exemption
applications, however many
commenters found the 10-day minimum
timeframe to be too short and
recommended a minimum of 30 days to
submit missing information to the
Exchange instead.
Response: We accept this
recommendation, and will amend the
regulation text to establish a minimum
of 30 days from the date on which the
notice is sent to an applicant to provide
required information to the Exchange.
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d. Verification Process Related to
Eligibility for Exemptions (§ 155.615)
In § 155.615, we proposed to delete
§ 155.615(c), (d), (e), and (f)(3) to
conform with a proposal under
§ 155.605 that would remove the ability
for consumers to obtain an ECN from
the Exchange for certain exemptions.
We also proposed conforming
redesignations of the remaining
paragraphs under § 155.615. Elsewhere
in this final rule, we are finalizing the
relevant proposals under § 155.605.
Accordingly, we are finalizing as
proposed the deletions of paragraphs
(c), (d), (e), and (f)(3) from § 155.615 and
the conforming redesignations.
Comment: We received comments
both in support of and against the 3-year
period for exemption criteria under the
proposed rule at § 155.605(d)(3) and the
conforming amendment to
§ 155.615(c)(2).
Response: We will continue to
consider the issues presented by
commenters, and will not finalize
§ 155.615(c)(2) at this time.
e. Options for Conducting Eligibility
Determinations for Exemptions
(§ 155.625)
We proposed to amend § 155.625(a)(2)
and (b) to remove the deadline after
which a State Exchange would be
required to process exemption
applications for residents of the State by
the start of open enrollment for 2016,
and to instead permit an Exchange to
adopt the exemption eligibility
determination service operated by HHS
indefinitely. Based on HHS’s operation
of this service to date, we have
determined that the HHS exemption
option is an efficient process for State
Exchanges that has minimized
confusion for consumers. This proposal
follows an FAQ published on July 28,
2015 in which HHS stated that it will
not take any enforcement action against
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State Exchanges that continue to use the
HHS service for exemptions beyond the
start of open enrollment for 2016.
Comment: We received one comment
about this section that supports the
recommendation to permit States to
elect to use the HHS service for
exemptions. This commenter also
suggested that an SBE should be able to
grant the hardship exemption
established in § 155.605(d)(2) for lack of
affordable coverage even if it does not
process other exemptions, because the
State would have the eligibility
information needed to determine
whether an individual qualifies for this
exemption from an individual’s health
coverage application.
Response: We accept this comment
and have amended the regulation text to
permit a State Exchange to grant a
hardship exemption to consumers the
Exchange determines unable to afford
coverage based on their projected
annual household income under
§ 155.605(d)(2) regardless of whether the
Exchange will grant other exemption
types.
8. Exchange Functions: Small Business
Health Options Program (SHOP)
a. Functions of a SHOP (§ 155.705)
In § 155.705, we proposed to add new
paragraphs (b)(3)(viii) and (ix) to specify
that the FF–SHOPs would provide
additional options for employer choice
for plan years beginning on or after
January 1, 2017, namely a ‘‘vertical
choice’’ option for QHPs and SADPs.
Under this option, employers will be
able to offer qualified employees a
choice of all plans across all available
levels of coverage from a single issuer.
We noted that existing SHOP
regulations at § 155.705(b)(3)(i)(B) and
(b)(3)(ii)(B) provide State-based SHOPs
with the flexibility to provide employers
with vertical choice or other employer
choice options in addition to
‘‘horizontal choice,’’ in which an
employer selects a single actuarial value
coverage level and makes all plans at
that coverage level available to qualified
employees. We did not propose to alter
State-based SHOPs’ flexibility in this
regard, unless the State-based SHOP
was relying on the Federal platform for
SHOP enrollment functions.
We also sought comment on whether
the FF–SHOPs should make other
employer choice options available,
including allowing participating
employers to select an actuarial value
level of coverage, after which employees
could choose from plans available at
that level and at the level above it,
which we refer to below as ‘‘contiguous
choice.’’ We also sought comment on
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whether to give the State in which the
FF–SHOP is operating an opportunity to
recommend whether the FF–SHOP in
that State should implement any
additional model of employer choice.
However, in all States, the FF–SHOPs
would continue to give employers the
option of offering a single QHP (or
single SADP) as well as the option of
offering a choice of all QHPs (or SADPs)
at a single actuarial value level of
coverage, and States would not be given
an opportunity to recommend that these
options not be implemented in their
State.
We also proposed adding new
paragraph § 155.705(b)(3)(x) to provide
that the employer choice models
available through the FF–SHOP
platform would be available for SBE–
FPs utilizing the Federal platform for
SHOP enrollment functions. We
discussed how, if we gave States with
FF–SHOPs an opportunity to
recommend implementation of
additional employer choice models,
States with SBE–FPs would be given the
same opportunity.
Additionally, we proposed to amend
paragraph (b)(4)(ii)(B) to specify the
timeline under which qualified
employers in an FF–SHOP must make
initial premium payments. We proposed
to add paragraph (b)(4)(ii)(B)(1) to
specify that in the FF–SHOPs, payment
for the group’s first month of coverage
must be received by the premium
aggregation services vendor on or before
the 20th day of the month prior to the
month that coverage begins. We
explained that electronic payments
would have to be completed or the
premium aggregation services vendor
must have receipt of any hard copy
check on or before the 20th day of the
month prior to the month that coverage
would begin. We also explained that if
an initial premium payment is not
received by the premium aggregation
services vendor on or before the 20th
day of the month prior to the month that
coverage would begin, coverage would
not be effectuated. We further explained
that grace period and reinstatement
opportunities under § 155.735(c)(2),
which are provided to groups that do
not make timely payments after
coverage has taken effect, are not
relevant in this context, and we
proposed amendments to introductory
language at § 155.735(c)(2) to reflect
this.
In circumstances where an FF–SHOP
would be retroactively effectuating
coverage for qualified employer groups,
the FF–SHOP would need to receive
payment prior to effectuating coverage.
We sought comment on the timing of
when a premium payment should be
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required to be received by an FF–SHOP
when coverage is effectuated
retroactively, and explained that we
were considering a policy under which
payments for the first month’s coverage
and all months of the retroactive
coverage would have to be received and
processed no later than 30 days after the
event that triggers the eligibility for
retroactive coverage.
At paragraph (b)(4)(ii)(C)(2), we
proposed to correct a cross reference to
§ 155.705(b)(4)(ii)(B)(1) that should have
been updated to cross-reference
§ 155.705(b)(4)(ii)(C)(1) when paragraph
(b)(4)(ii)(A) was added in the 2016
Payment Notice.
We also proposed amendments to
§ 155.705(b)(11)(ii) to provide for FF–
SHOPs to use a ‘‘fixed contribution
methodology’’ in addition to the
reference plan methodology set forth in
the current regulation. We proposed to
specify that when an employer decides
to offer a single plan to qualified
employees, the employer would be
required to use the fixed contribution
methodology. We also proposed to
permit employers to choose between the
reference plan contribution
methodology and the proposed fixed
contribution methodology when offering
a choice of plans. Additionally, we
proposed to add language to
§ 155.705(b)(11)(ii) explaining that a
tobacco surcharge, if applicable, would
be added to the monthly premium after
the employer contribution is applied to
the premium. Finally, we proposed to
streamline the discussion of the
reference plan contribution
methodology described in
§ 155.705(b)(11)(ii) and proposed
removing § 155.705(b)(11)(ii)(D) because
the FF–SHOPs are currently not able to
support basing employer contributions
on calculated composite premiums.
We are finalizing the provisions
regarding the FF–SHOP’s authority to
provide vertical choice, but will provide
States with FF–SHOPs an opportunity
to recommend that the FF–SHOP in
their State not offer vertical choice in
their State. States with SBE–FPs
utilizing the Federal platform for SHOP
enrollment functions will have the
authority to opt out of making vertical
choice available in their States.
Information about whether vertical
choice will be available in specific
States with an FF–SHOP or SBE–FP will
be made public prior to the deadline for
QHP certification application
submissions for the applicable year. We
are also making a minor modification to
add ‘‘stand alone dental’’ to the first
sentence of § 155.705(b)(3)(ix)(C).
Comment: We received several
comments concerning the additional
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proposed employer choice options.
Many commenters supported the
additional employer choice options
because they would enhance the appeal
of FF–SHOPs for both employees and
employers. One commenter encouraged
HHS to expand its proposal by allowing
FF–SHOP employees to select from a
wider variety of plans. Some
commenters did not support adding
vertical choice as an additional
employer choice option, expressing
concern about adverse selection because
vertical choice could lead smaller
employer groups with enrollees in need
of more medical services to enroll in
higher metal level QHPs. Additionally,
there is concern that even if vertical
choice is available to employers, an
employer could still select horizontal
choice or a single plan causing adverse
selection. Commenters recommended
that HHS consider the impact on
selection and resulting changes in plan
pricing when considering offering
vertical choice in an FF–SHOP. One
commenter recommended that FF–
SHOP members only be allowed to
enroll in one plan with one carrier to
reduce complexity in the FF–SHOPs.
Some commenters recommended that
HHS promote the existing employer
choice options instead of adding new
employer choice options at this time.
Other commenters believed that
additional changes to employer choice
will create confusion, add complexity,
and create administrative challenges
which would discourage participation
in FF–SHOPs. One commenter also
expressed concern about employer
choice options, stating that if employers
are required to select a specific issuer to
offer coverage to the group, provider
networks for employees could
potentially be disrupted. To address
this, the commenter recommended that
HHS open all QHPs to employees
enrolling in coverage through an FF–
SHOP.
Response: We are finalizing the
proposal to provide for a vertical choice
option in FF–SHOPs, for plan years
beginning on or after January 1, 2017.
We agree with commenters that
additional employer choice options can
enhance the appeal of the FF–SHOPs,
and intend to work with stakeholders to
minimize any confusion stemming from
the introduction of vertical choice. Due
to operational limitations, at this time
we are not offering a wider variety of
employer choice options. We appreciate
the concerns raised about adverse
selection, but believe the fact that our
proposal limits vertical choice to a
single issuer’s plans will help allow the
issuer to manage the risk of adverse
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selection. Offering multiple plans to a
qualified employer group allows an
issuer to enroll a greater share of the
group than if multiple issuers offering
coverage in a single coverage level were
vying for members of the group. Issuers
would thus likely enroll a more diverse
risk pool from the qualified employer’s
group. While qualified employers may
still choose to offer their qualified
employees horizontal choice or a single
plan, the availability of the additional
vertical choice option may help to
mitigate the risk for adverse selection.
To mitigate concerns raised by
commenters and because we believe
States are best positioned to understand
the small group market dynamic in their
State, HHS will provide States with an
FF–SHOP an opportunity to recommend
that the FF–SHOP in their State not
make vertical choice available in their
State. For similar reasons, States with
SBE–FPs utilizing the Federal platform
for SHOP enrollment functions will be
able to opt out of making vertical choice
available in their States. In States where
vertical choice is available, a qualified
employer would have a choice of three
employer choice options for both QHPs
and SADPs: A single plan, all available
plans at a single level of coverage
(horizontal choice, as provided for by
the statute), and a choice of all plans
offered by a single issuer across all
levels of coverage (vertical choice). In
States where vertical choice is not an
available option for qualified employers,
the single plan option and horizontal
choice option would continue to be
available to qualified employers.
Comment: We received several
comments supporting adding
contiguous choice as an additional
employer choice option because
employers would have more QHP
options available to offer to their
employees. One commenter
recommends that HHS consider the
additional administrative costs of
allowing additional choice options.
Response: As stated, we believe
additional employer choice options
could enhance the appeal of the FF–
SHOPs, and we will continue to explore
adding the option of contiguous choice
in the future, but are not adding a
contiguous choice option at this time, so
that we can further consider the
potential for adverse selection that
could result from that option.
Comment: One commenter
recommended that States should not be
permitted to make the decision on
whether to implement new approaches
for employer choice in FF–SHOPs and
that it should be at the issuer’s option
about which QHPs and SADPs to make
available to qualified employees. The
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commenter recommended that HHS
require States to conduct an assessment
on the actuarial impact of various
employer choice approaches, and
determine safeguards that will protect
against adverse selection. Other
commenters also stated they do not
agree with allowing States to opt in and
out of offering vertical choice, and
supported standardizing employer
choice options across all States that
have an FF–SHOP or that rely on the
Federal platform for SHOP enrollment.
Another commenter encouraged HHS to
only allow additional employer choice
options in States where the same option
currently exists in the off-Exchange
market, to prevent possible adverse
selection while promoting a stable small
group market.
Response: In order to provide for
State-specific evaluations of the impact
of vertical choice on adverse selection
and resulting changes in plan pricing,
and to provide for more uniform small
group market coverage options both on
and off-Exchange, States with an FF–
SHOP will be given an opportunity to
recommend that the FF–SHOP in their
State not offer vertical choice. States
with SBE–FPs utilizing the Federal
platform for SHOP enrollment functions
will be able to opt out of making vertical
choice available in their States. We
believe that States are best positioned to
assess the impact of additional
employer choice options based on local
market conditions. A State with an FF–
SHOP that wishes to recommend against
offering vertical choice in that State
must submit a letter to HHS in advance
of the annual QHP certification
application deadline, by a date to be
established by HHS, describing and
justifying the State’s recommendation,
based on the anticipated impact vertical
choice would have on the small group
market and consumers. A State-based
Exchange utilizing the Federal platform
for SHOP enrollment functions may
decide against offering vertical choice
by notifying HHS of that decision.
HHS is requiring that a State with an
FF–SHOP that wishes to recommend
against offering vertical choice in that
State make its recommendation to the
FF–SHOP by submitting a letter to HHS
in advance of the annual QHP
certification application deadline, by a
date to be established by HHS. The
State’s letter must describe and justify
the State’s recommendation, based on
the anticipated impact this additional
option would have on the small group
market and consumers. This deadline
will give issuers sufficient time to make
informed decisions about whether to
participate in the FF–SHOP, and will
give the FF–SHOPs sufficient time to
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implement the State’s recommendation.
States with FF–SHOPs will be able to
make recommendations regarding
vertical choice on an annual basis. For
plan years beginning in 2017 only, we
strongly recommend that States with
FF–SHOPs submit their
recommendations to HHS on or before
March 25, 2016, via email to shop@
cms.hhs.gov. States that meet this
deadline will provide the FF–SHOPs
sufficient time to review and implement
State recommendations. HHS
anticipates that its decisions regarding
State recommendations for plan years
beginning in 2017 would be made by
April 1, 2016, which would provide
issuers with sufficient time to determine
their involvement in the FF–SHOPs for
the following year.
For these same reasons, we are
finalizing our proposal to add a new
paragraph at § 155.705(b)(3)(x) to
provide that the employer choice
models available through the FF–SHOP
platform will be available for SBE–FPs
utilizing the Federal platform for SHOP
enrollment functions, except that SBE–
FPs may decide against offering the
employer choice models specified in
paragraphs (b)(3)(viii)(C) and
(b)(3)(ix)(C). Under the final rule, a State
with an SBE–FP must notify HHS of its
decision against offering vertical choice
in that State in advance of the annual
QHP certification application deadline,
by a date to be established by HHS.
Again, this deadline will give issuers
sufficient time to make informed
decisions about whether to participate
in the SHOP, and will give us sufficient
time to implement the State’s decision.
States with SBE–FPs will be able to
make decisions regarding vertical choice
on an annual basis. For plan years
beginning in 2017 only, we strongly
recommend that States with an SBE–FP
utilizing the Federal platform for SHOP
enrollment functions notify HHS of
their decisions on or before March 25,
2016, via email to shop@cms.hhs.gov.
Again, States that meet this deadline
will provide the FF–SHOPs sufficient
lead time to implement the State’s
decision. HHS anticipates that it will
announce the SBE–FP States that have
decided against offering vertical choice
for plan years beginning in 2017 on or
around April 1, 2016, which would
provide issuers with sufficient time to
decide whether to participate in the
SHOP for the following year.
Additional guidance will be provided
to States regarding the notification or
recommendation time frames for plan
years beginning in 2018 and beyond.
Comment: Some commenters believe
that requiring employer groups to make
initial premium payments by the 20th
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12285
day of the month prior to the month that
coverage begins increases the potential
for issuers not to receive the initial
premium payment until after the first
month of effectuated coverage. These
commenters recommended that issuers
not be required to effectuate coverage
without payment from the FF–SHOP.
Response: We are finalizing the
provision with a modification to specify
that a similar policy also applies under
circumstances of retroactive coverage.
Under § 156.285(c)(8)(iii), FF–SHOP
issuers are required to effectuate
coverage unless the FF–SHOP sends a
cancellation notice prior to the coverage
effective date. Section 156.285(c)(8)(iii)
does not require issuers to effectuate
coverage if the FF–SHOP does not
receive a premium payment by the
deadline established for the FF–SHOP.
If payment is not received by the FF–
SHOP prior to that deadline, the FF–
SHOP will issue a cancellation notice.
We are finalizing the following
premium payment policies for
circumstances where an FF–SHOP
would be retroactively effectuating
coverage. These policies differ
somewhat from the policies we
explained we were considering in the
preamble to the proposed rule, because
for operational reasons, premium
payments must be received by the FF–
SHOP premium aggregation services
vendor by a certain date in order to be
processed in a timely manner. When
coverage is effectuated retroactively, as
discussed in the proposed rule
preamble, payment for the first month’s
coverage and all months of the
retroactive coverage must be received
and processed no later than 30 days
after the event that triggers the
eligibility for retroactive coverage.
Additionally, however, in order for
coverage to be effectuated by the first
day of the following month, the
employer must also make this payment
by the 20th day of the preceding month.
If payment is made after the 20th day of
a month, coverage will take effect as of
the retroactive coverage effective date,
but coverage will not be effectuated
until the first day of the second month
following the payment, and the payment
must include the premium for the
intervening month. Regardless, in order
to effectuate retroactive coverage for a
qualified employer or qualified
employee, such as under an appeal
decision, all premiums owed must be
paid in full, including any prior
premiums owed for coverage back to the
retroactive coverage effective date, as
well as a premium pre-payment for the
next month’s coverage.
These policies also apply to SBE–FPs
that are utilizing the Federal platform
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for SHOP enrollment and premium
aggregation functions, because premium
aggregation is an integral part of the
eligibility and enrollment functions
managed through the FF–SHOP
platform.
Comment: We received a comment
expressing concern that employer
groups will not be able to make the full
premium payment within 30 days after
the event that triggers eligibility for
retroactive coverage, depending on how
many months of retroactivity are
covered. The commenter recommended
that issuers not be required to effectuate
retroactive coverage without full
payment.
Response: We believe that 30 days
after the event that triggers eligibility for
retroactive coverage is sufficient time
for employer groups to make their full
premium payment in order to have
retroactive coverage. This policy also
ensures that issuers receive payments in
a timely manner. Issuers are not
required to effectuate coverage if an
employer’s full payment is not received
by the deadline set by the FF–SHOP.
Issuers should not cancel an enrollment
transaction unless the FF–SHOP sends a
cancellation transaction.
Comment: We received no comments
regarding our proposal to correct the
cross reference from
§ 155.705(b)(4)(ii)(B)(1) to
§ 155.705(b)(4)(ii)(C)(1).
Response: We are finalizing this
provision as proposed.
Comment: With respect to our
proposals to amend § 155.705(b)(11)(ii),
one commenter recommended that HHS
clarify that any tobacco surcharge would
be paid to the FF–SHOP and not to
issuers separately. Another commenter
recommended that the tobacco
surcharges should be spread across the
costs of coverage for an entire group,
rather than for the tobacco users only.
Response: Any applicable tobacco
surcharges will continue to be paid
directly to the FF–SHOP as part of the
group’s total premium payment and will
not be paid to issuers separately. We
disagree that the tobacco surcharge
should be spread across the entire
group. The surcharge is a cost borne by
the tobacco user and other enrollees in
a group should not be responsible for
sharing in its cost. We are finalizing the
proposed amendments to
§ 155.705(b)(11)(ii) with a modification
to the language about tobacco
surcharges for clarity. We are also
modifying the proposed language about
the contribution methodologies
available to employers that offer a
choice of plans to replace a reference to
‘‘the level of coverage offered’’ with a
reference to the ‘‘plans offered,’’ to
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reflect the possibility that employers
might offer vertical choice under the
amendments finalized in this rule.
Comment: With respect to our
proposals to amend § 155.705(b)(11)(ii),
we received one comment stating that if
the FF–SHOP cannot support basing
employer contributions on calculated
composite premiums, employers may
lose interest in participating in FF–
SHOPs. Another commenter stated that
because this feature is widely available
off-Exchange, removing this option
would put FF–SHOPs at a competitive
disadvantage. Several commenters
urged HHS to continue seeking feedback
on this feature.
Response: Because of operational
limitations, FF–SHOPs are not currently
able to support basing employer
contributions on calculated composite
premiums. However, we appreciate the
concerns expressed by commenters and
we are therefore not finalizing the
removal of this provision as proposed.
Instead, we are modifying the provision
at § 155.705(b)(11)(ii)(D) to state that an
FF–SHOP may permit employers to base
contributions on a calculated composite
premium for employees, for adult
dependents, and for dependents below
age 21, which gives the FF–SHOPs the
flexibility to implement this approach
in the future. We are also removing the
reference to ‘‘the reference plan’’ in this
provision to reflect the availability of
the fixed contribution methodology
under the amendments finalized in this
rule. We will continue to examine
supporting employer contributions
based on calculated composite
premiums in the FF–SHOPs.
b. Eligibility Determination Process for
SHOP (§ 155.715)
In order to align with our
interpretation of guaranteed availability
and guaranteed renewability, we
proposed to specify that the termination
described in § 155.715(g)(1) would be a
termination of the employer group’s
enrollment through the SHOP, rather
than a termination of a group’s coverage.
In many circumstances, an employer
may offer to continue the same coverage
outside of the SHOP, in which case the
issuer should not terminate the
coverage. We are finalizing this
provision as proposed.
Comment: Some commenters support
removing automatic terminations of
SHOP coverage in order to be consistent
with guaranteed renewability
requirements. One commenter
recommended that if an employer no
longer has SHOP coverage, the employer
should be able to make no contribution
toward the cost of employee coverage
through the SHOP. Employees would be
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responsible for paying the full premium
amount. Another commenter stated that
making the coverage available outside of
the SHOP and requiring employers to
make payments and send data directly
to issuers will introduce complexity,
undue burden, and unnecessary
confusion due to the differing issuer and
SHOP data and payment methods. We
also received one comment
recommending that HHS wait to
implement terminations of SHOP
enrollment, rather than a termination of
the group’s coverage, until the
infrastructure exists to automate the
process.
Response: In order to align with
regulations around guaranteed
availability and guaranteed
renewability, we are finalizing the
provision as proposed. Employers can
decide whether to contribute toward the
cost of employee coverage regardless of
whether the employee has coverage
through a SHOP. Employer groups
wishing to maintain their small group
coverage outside of a SHOP are
encouraged to work directly with
issuers to do so. If an employer offers
coverage outside of a SHOP, enrollment
and payment functions will be between
the group and the specific issuer, and
not through the SHOP. SHOPs are
encouraged to work directly with
issuers and groups to address any
questions and concerns about the
transfer of responsibility from the SHOP
to the issuer. SHOPs, and not issuers,
initiate all terminations of a group’s
enrollment through the SHOP, and this
is how the FF–SHOP currently
operationalizes terminations of group
enrollments. FF–SHOPs are not able to
automate the process of terminating FF–
SHOP enrollment because it requires
information from issuers and groups to
ensure a transfer of responsibility
should a group’s coverage continue
outside of the FF–SHOP.
c. Enrollment Periods Under SHOP
(§ 155.725)
In § 155.725, we proposed to amend
paragraph (c). Specifically, we proposed
to delete paragraph (c)(1) because it is
outdated, redesignate current paragraph
(c)(2) as introductory text to paragraph
(c), and redesignate the remaining
paragraphs to reflect the new structure
of paragraph (c).
We also proposed to redesignate
§ 155.725(e) as § 155.725(e)(1), and add
paragraph (e)(2) to specify that qualified
employers in the FF–SHOP must
provide qualified employees with an
annual open enrollment period of at
least 1 week. Like all of § 155.725(e),
this amendment would only apply to
renewals of SHOP participation.
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Additionally, we proposed
amendments to § 155.725(h)(2) to
specify that in the case of an initial
group enrollment or renewal, the event
that triggers the group’s coverage
effective date in an FF–SHOP is not the
plan selection of an individual qualified
employee being enrolled as part of the
group enrollment, but the employer’s
submission of all plan selections for the
group, which we refer to in rule text as
the group enrollment. This amendment
would permit qualified employers to set
initial and annual enrollment periods
for their qualified employees that could
include qualified employee plan
selections both before and after the 15th
day of the month. We also proposed to
permit employers to select a coverage
effective date up to 2 months in
advance, provided that small group
market rates are available for the quarter
in which the employer would like
coverage to take effect. Under the
proposal, if an employer submits its
group enrollment by the 15th day of any
month, the FF–SHOP would ensure a
coverage effective date of the first day of
the following month, unless the
employer opts for a later effective date
for which rates are available. If an
employer submits its group enrollment
between the 16th day of the month and
the last day of the month, we proposed
that the FF–SHOP ensure a coverage
effective date of the first day of the
second following month, unless the
employer opts for a later effective date
for which rates are available. We note
that the effective date of coverage
selected by a qualified employer
remains subject to the limit on waiting
periods under § 147.116.
We also proposed to amend
§ 155.725(i)(1) to provide that a SHOP
be permitted to, but not be required to,
provide for auto-renewals of qualified
employees. We also proposed to amend
the language of the provision for
consistency with our interpretation of
guaranteed renewability. Specifically, if
a SHOP does not provide for autorenewals for qualified employees,
qualified employees would have to
review and provide a response to the
employer’s renewal offer of coverage. If
auto-renewal is available in a SHOP,
qualified employees would not be
required to take any action to continue
in the prior year’s coverage through the
SHOP.
Finally, we proposed to amend
§ 155.725(j)(2)(i) to remove a reference
to § 155.420(d)(10), which was deleted
in the 2016 Payment Notice. We also
proposed to specify that there would not
be a SHOP special enrollment period
when a qualified employee or
dependent of a qualified employee
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experiences an event described in
§ 155.420(d)(1)(ii), which provides for a
special enrollment period for
individuals enrolled in a non-calendar
year group health plan or individual
health insurance coverage.
We are finalizing these amendments
as proposed.
Comment: We received several
comments about the length of a
qualified employee’s annual open
enrollment period for renewals. Some
commenters stated they believe the
proposed minimum annual open
enrollment period of one week is
insufficient. One commenter
recommended that employees be
provided with a 30-day annual open
enrollment period, or at a minimum, a
two-week annual open enrollment
period.
Response: The proposed amendment
would not prevent a qualified employer
from offering annual enrollment periods
to qualified employees that are longer
than one week. This regulation specifies
only the minimum length of the annual
open enrollment period for qualified
employees. We are finalizing this
provision as proposed because it would
enable qualified employers and
qualified employees, especially at very
small companies, to finalize their
annual renewal process more quickly.
Comment: We received one comment
supporting our proposal to allow
employers to opt for a coverage effective
date up to 2 months in advance. The
commenter stated that this amendment
increases employer flexibility and may
improve the consumer’s experiences
with SHOP.
Response: We are finalizing the
provision as proposed. We note that the
effective date of coverage selected by a
qualified employer remains subject to
the limit on waiting periods under
§ 147.116.
Comment: One commenter supported
the proposed change to allow SHOPs to
offer auto-renewals of qualified
employees. However, another
commenter did not support this
automated process because of the risk of
error.
Response: Auto-renewals provide a
more streamlined, efficient way to
renew coverage with minimal risk for
error, and our rule will permit SHOPs
to do so. We note that the FF–SHOPs are
not able to support this feature at this
time. Additional guidance will be
provided if auto-renewal becomes
available in the FF–SHOPs.
Comment: We received one comment
supporting the proposal that there not
be a SHOP special enrollment period
when a qualified employee or
dependent of a qualified employee is
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enrolled in a non-calendar year group
health plan or individual health
insurance coverage.
Response: We are finalizing the
provision as proposed.
d. Termination of SHOP Enrollment or
Coverage (§ 155.735)
To align with proposed amendments
to § 155.705(b)(4), we proposed to
modify the introductory language of
§ 155.735(c)(2) to specify that the
provisions related to termination of
employer group health coverage for nonpayment of premiums in FF–SHOPs
under paragraph (c)(2) do not apply to
premium payments for the first month
of coverage. We did not receive any
comments regarding this proposal, and
are finalizing it as proposed.
We also proposed amendments to
§ 155.735(d) to specify that if an
enrollee changes from one QHP to
another during the annual open
enrollment period or during a special
enrollment period, the last day of
coverage would be the day before the
effective date of coverage in the
enrollee’s new QHP.
Additionally, we proposed at
§ 155.735(d)(2)(iii) to require FF–SHOPs
to send advance notices to qualified
employees before their dependents age
off of their plan. The notice would be
sent 90 days in advance of the date
when the child dependent enrollee is no
longer eligible for coverage under the
plan the employer purchased through
the FF–SHOP because he or she has
reached the maximum child dependent
age for the plan. The notice would
include information about the plan in
which the dependent is currently
enrolled, the date the dependent would
age off the plan, and information about
next steps. In the FF–SHOPs, a
dependent aging off of the plan loses
eligibility for dependent coverage at the
end of the month of the dependent’s
26th birthday or at the end of the month
in which the issuer has set the
maximum dependent age limit (but in
some cases might have the option to
keep the coverage for a period of time
after that date under applicable
continuation coverage laws). This notice
is intended to be a courtesy notice as
enrollees would still receive a
termination notice when their coverage
through the SHOP is terminating.
We are finalizing these provisions
generally as proposed, with the
exception of a technical correction to
paragraph (d)(2)(ii) to replace the
citation to § 155.420(b)(2) with a citation
to § 155.725(j)(5), the SHOP rule under
which SHOP enrollments are
effectuated pursuant to special
enrollment periods. Section
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155.725(j)(5) cross-references
§ 155.420(b), and thus also crossreferences the retroactivity possible
under § 155.420(b)(2).
Comment: We received one comment
supporting our proposal to send
qualified employees 90 days advance
notice of when a child dependent is no
longer eligible for coverage under the
plan the employer purchased through
the FF–SHOP because he or she has
reached the maximum child dependent
age for the plan. The commenter notes
that it is important to recognize that the
age-off date may go well beyond a
dependent’s twenty-sixth birthday,
depending on State dependent coverage
laws.
Response: We are finalizing the
provision as proposed. If a State or
issuer sets maximum dependent age
limits greater than 26 years, the FF–
SHOPs will send the notice 90 days in
advance of when the child dependent is
no longer eligible for coverage under the
plan the employer purchased through
an FF–SHOP. The FF–SHOPs will be
able to accommodate issuer-specific and
State-specific maximum dependent age
limits.
e. SHOP Employer and Employee
Eligibility Appeals Requirements
(§ 155.740)
In § 155.740, we proposed
amendments relating to SHOP appeals.
We proposed to provide that employers
and employees may file an appeal not
only if a SHOP fails to provide an
eligibility determination in a timely
manner, but also if a SHOP fails to
provide timely notice of an eligibility
determination. We also proposed to
allow employers and employees who
successfully appeal a denial of SHOP
eligibility to select whether the effective
date of coverage or enrollment through
the SHOP under their appeal decision
will be retroactive to the effective date
of coverage or enrollment through the
SHOP that the employer or employee
would have had if they had correctly
been determined eligible, or prospective
from the first day of the month
following the date of the notice of the
appeal decision. Additionally, we
proposed that if eligibility is denied
under an appeal decision, the appeal
decision would be effective on the first
day of the month following the date of
the notice of the appeal decision.
Comment: Some commenters said
they believe that if an employer only
adds eligible employees to the roster,
then the SHOP will have no knowledge
of ineligible employees. Therefore, the
process of employees appealing to the
SHOP will never be a valid scenario
because no ineligibility notification will
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ever be sent by the SHOP to the
employee. Another commenter
suggested that HHS retain the current
regulatory language about the coverage
effective date after a successful appeal
decision or adopt an effective date that
is the first of the month following the
appeal decision, but not allow each
group to choose. Some commenters
stated that only those who had
retroactive claims would select the
retroactive date. Commenters also
recommended that coverage should
never take effect more than a month
retroactively, or that coverage should
start immediately.
Response: We are finalizing as
proposed our proposal that employers
and employees may file an appeal not
only if a SHOP fails to provide an
eligibility determination in a timely
manner, but also if a SHOP fails to
provide timely notice of an eligibility
determination. SHOPs may send a
notice of ineligibility if the information
provided by an employee does not
match the information provided by the
qualified employer. An FF–SHOP might
send a notice of ineligibility to an
employee, for example, if the employee
inaccurately enters his or her unique
participation code in the FF–SHOP
employee application. We note that
employers do not make SHOP eligibility
determinations for employees. The
SHOPs make all eligibility
determinations for employees.
Employers must offer SHOP coverage to
all full-time employees; other
employees and former employees added
to the employee roster are also eligible
for SHOP coverage.
We are making a minor modification
to our proposal allowing employers and
employees to select either a retroactive
or prospective coverage or enrollment
effective date if the appeal decision
finds the employer or employee eligible,
to specify that individual employees
may select an effective date only when
the appeal is of an individual
employee’s eligibility determination
(rather than an appeal of a
determination of eligibility for an
employer, which affects coverage or
enrollment for the entire group). We
believe that if an employer or employee
applied for coverage or enrollment with
the intention that coverage would be
effective on a specific date, received a
denial of eligibility, and successfully
appealed the decision, the employer or
employee should be provided with the
option to select retroactive or
prospective coverage or enrollment,
because the employer or employee was
found to be eligible for SHOP coverage
and the group or employee could have
had SHOP coverage as early as the
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original desired date had the original
eligibility determination been correct.
Regardless of whether the group or
employee has incurred claims, to
provide maximum flexibility to
consumers, we believe that the decision
about whether to select a retroactive or
prospective coverage or enrollment
effective date should be the employer’s
or employee’s. While we acknowledge
issuers’ concerns about who might
select retroactive coverage, we note that
retroactive coverage would be
effectuated only if the requisite
premium payment is made in
accordance with
§ 155.705(b)(4)(ii)(B)(2), as finalized
here. In the FF–SHOPs, premiums owed
for employees that are found eligible
under an employee appeal decision will
be collected from employers as part of
the next monthly invoice for the group.
We are finalizing § 155.740(l)(3)(iii),
regarding the effective date of a denial
of eligibility under an appeal decision,
with a revision specifying that the
appeal decision would be effective as of
the date of the notice of the appeal
decision. This is the same effective date
that applies under the current version of
§ 155.740(l)(3), so there will not be any
change in policy regarding the effective
date of a denial of eligibility under an
appeal decision under this rule. We
have decided to maintain the current
policy because if an employer or
employee is denied eligibility and their
appeal is also denied, the employer or
employee might never have had
enrollment or coverage through the
SHOP, and even if they did, would not
have been entitled to it. The SHOP
should therefore be able to make the
appeal decision effective as of the date
of the notice of the appeal decision.
9. Exchange Functions: Certification of
Qualified Health Plans
a. Certification Standards for QHPs
(§ 155.1000)
(1) Denial of Certification
Section 1311(e)(1)(B) of the
Affordable Care Act states that
Exchanges may certify a health plan as
a QHP if such health plan meets the
requirements for certification as
promulgated by the Secretary and the
Exchange determines that making
available such health plan through such
Exchange is in the interests of qualified
individuals and qualified employers.
Section 1311(e)(1)(B) thereby affords
Exchanges the discretion to deny
certification of QHPs that meet
minimum QHP certification standards,
but are not ultimately in the interests of
qualified individuals and qualified
employers. In the proposed rule, we
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stated that we interpret the ‘‘interest’’
standard to mean QHPs should provide
quality coverage to consumers to meet
the Affordable Care Act’s goals.
Section 155.1000 provides Exchanges
with broad discretion to certify health
plans that otherwise meet the QHP
certification standards specified in part
156. HHS expects to continue to certify
the vast majority of plans that meet
certification standards. HHS will focus
denials of certification in the FFEs
based on the ‘‘interest of the qualified
individuals and qualified employers’’
standard on cases involving the integrity
of the FFEs and the plans offered
through them. Examples of issues that
could result in non-certification of a
plan include concerns related to an
issuer’s material non-compliance with
applicable requirements, an issuer’s
financial insolvency, or data errors
related to QHP applications and data
submissions. Under this approach, HHS
could consider an assessment of past
performance, including with respect to
oversight concerns raised through
compliance reviews and consumer
complaints received, and the frequency
and extent of any data submission
errors. In exercising this authority, HHS
intends to adopt a measured approach
that would take into consideration
several factors, including available
market competition and the availability
of operational resources.
We noted that the Office of Personnel
Management (OPM) has the sole
discretion for contracting with multiState plans and as such retains the
authority to selectively contract with
multi-State plans.
Comment: Several commenters
opposed HHS’s proposal to deny
certification to plans based on the
interest standard, stating ‘‘additional’’ or
‘‘new’’ HHS certification authority
would reduce competition and
innovation, lead to arbitrary,
inconsistent, and capricious
certification decisions, and interfere
with State reviews. Other commenters
agreed that HHS has existing authority
to deny certification and supported the
proposal. Those commenters believe
that the use of such authority could
promote the availability of high-value
health plans and innovative health care
delivery system reforms, encourage
insurers to minimize annual rate
increases, and enable FFEs to become a
‘‘trusted source of quality coverage for
consumers.’’
Response: The interest standard was
previously codified in § 155.1000 (77 FR
18467); thus, we did not propose new or
additional certification authority.
Comment: Some commenters stated
HHS should work with plans to address
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concerns and meet certification
requirements rather than denying
certification, and denials should only be
used when a health plan is financially
impaired. They also recommended HHS
make specific requirements and
examples available for comment (for
example, clarifying how consumer
complaints would be used to assess past
performance) before finalizing any
criteria. Other commenters agreed that
HHS should use factors outlined in the
proposed rule, such as consumer
complaints and past performance, as
criteria for denying certification. Some
States shared information on their
models. Other commenters wanted HHS
to take additional factors into account,
such as a ‘‘history of repeated or
egregious violations’’ of
nondiscrimination standards and
network adequacy requirements.
Another commenter asked HHS to
consider safe harbors for innovative
plan designs that provide incentives to
reduce the cost of health care to
consumers while providing EHB and
meeting or exceeding minimum value
(MV).
Response: As stated above, while we
have existing authority to deny
certification based on the interest
standard, we are not including any
specific requirements or criteria in this
final rule. HHS will continue to focus
on cases involving the integrity of the
FFEs and the plans offered through
them, and, as discussed in the proposed
rule, will consider factors such as an
issuer’s material non-compliance with
applicable requirements, an issuer’s
financial insolvency, or data errors
related to QHP applications and data
submissions. We expect to continue to
certify the vast majority of plans that
meet certification standards.
G. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
1. Standardized Options
In order to provide a new option that
could further simplify the consumer
plan selection process, we proposed six
standardized options that issuers could
choose to offer in the individual market
FFEs in plan year 2017. At § 156.20, we
proposed to define a standardized
option as a QHP with a cost-sharing
structure specified by HHS. Each
standardized option consists of a fixed
deductible; fixed annual limitation on
cost-sharing; and fixed copayment or
coinsurance for a key set of EHB that
comprise a large percentage of the total
allowable costs for an average enrollee
(these are the EHB in the Actuarial
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12289
Value Calculator with the addition of
urgent care). We proposed one
standardized option at each of the
bronze, silver (and the three associated
silver CSR plan variations), and gold
levels of coverage. We proposed that an
issuer could offer a standardized option
at one or more levels of coverage, with
the exception that if it offers a silver
standardized option, it must also offer
the three associated standardized silver
CSR plan variations. We did not
propose a standardized option at the
platinum level of coverage since only a
small proportion of QHP issuers in the
FFEs offer platinum plans.
We proposed that an issuer could
offer more than one plan for each
standardized option within a service
area, subject to the meaningful
difference requirements defined at
§ 156.298. This could be accomplished,
for example, if the issuer offers an HMO
standardized option at a particular level
of coverage as well as a PPO
standardized option at the same level of
coverage. We also proposed that issuers
would retain the flexibility to offer an
unlimited number of non-standardized
plans and that we would not limit the
total number of QHPs that may be sold
through an FFE in a rating area or
county, outside of any limitations under
the meaningful difference and other
applicable QHP certification
requirements.
We encouraged issuers to offer at least
one standardized option, particularly at
the silver level of coverage (and the
associated silver CSR plan variation
levels). This would simplify the
consumer shopping experience for the
greatest number of FFE QHP enrollees,
since silver plans are the most common
and popular plans in terms of
enrollment in the FFEs.
We designed the standardized options
to be as similar as possible to the most
popular (weighted by enrollment) QHPs
in the 2015 FFEs in order to minimize
market disruption and impact on
premiums.
We proposed that standardized
options have the four drug tiers
currently utilized in our consumerfacing applications—generic, preferred
brand, non-preferred brand, and
specialty drug tiers—with the option for
issuers to offer additional lower-cost
tiers if desired, since slightly more than
half (56 percent) of the proposed 2016
FFE QHPs had more than four drug
tiers.
We proposed that standardized
options have no more than one innetwork provider tier since varying cost
sharing by provider tier affects the
actuarial value of a plan, making it
difficult to standardize a cost-sharing
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structure. Additionally, only 14 percent
of FFE enrollees in 2015 were enrolled
in QHPs with more than one in-network
tier, and only 6 percent of enrollees
were covered by an issuer that did not
offer a single-tier plan in addition to a
multi-tier plan in the same county.
We proposed that the standardized
options would exempt from the
deductible certain routine services, such
as primary care, specialist visits (at the
silver and gold metal levels), and
generic drugs, to ensure that access to
coverage translates into access to care
for routine and chronic conditions and
that enrollees receive some up-front
value for their premium dollars. Among
2015 FFE QHPs, more than 85 percent
of silver plan enrollees and more than
50 percent of bronze plan enrollees
selected plans that cover certain
services prior to application of the
deductible. (The figure for gold plan
enrollees was more than 90 percent.
However, many gold plans have a $0
deductible, in which case, the concept
of deductible-exempt services would
not be meaningful.) Primary care and
generic drugs are the services most
likely to be covered without a
deductible at all metal levels. Other
services that are also likely to be
covered prior to the deductible,
particularly by silver and gold plans,
include specialist visits and mental/
behavioral health and substance use
disorder outpatient services.
We proposed that the standardized
options balance consumer preference for
copayments over coinsurance with the
potential impact on premiums. Research
shows that consumers often prefer
copayments to coinsurance because
copayments are more transparent and
make it easier for consumers to predict
their out-of-pocket costs. On the other
hand, setting fixed copayments on a
national level for high-cost services
could lead to disparate premium effects
due to regional and issuer-specific cost
differences, or it could lead to premium
increases or require corresponding
increases in other forms of cost sharing,
if set too low.
To reduce operational complexity, we
proposed to not vary the standardized
options by State or by region. We
proposed one set of standardized
options for all FFEs, including those in
which States perform plan management
functions, recognizing that some States
regulate the level of cost sharing applied
to certain benefits, such as emergency
room services and specialty drugs.
We noted that we would be
conducting consumer testing to help us
evaluate ways in which standardized
options, when certified by an FFE,
could be displayed on our consumer-
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facing plan comparison features in a
manner that makes it easier for
consumers to find and identify them,
including distinguish them from nonstandardized plans. We noted that we
anticipate differentially displaying the
standardized options to allow
consumers to compare plans based on
differences in price and quality rather
than cost-sharing structure as well as
providing information to explain the
standardized options concept to
consumers. We also noted that we are
considering whether to require QHP
issuers or web-brokers to differentially
display standardized options when a
non-FFE Web site is used to facilitate
enrollment in an FFE.
We noted that multi-State plan issuers
may use the standardized options, but
that OPM, at its discretion, may design
additional standardized options
applicable only to multi-State plan
issuers. We would not display the OPMdesigned standardized options
applicable only to multi-State plan
issuers in a differential manner,
however, in order to preserve
consistency in the standardized options
identified by HHS in the FFEs.
We are finalizing the HHS-specified
standardized options, but as further
described below, we are specifying
some changes to the standardized
options’ cost sharing, including one
technical correction. These changes
remain consistent with the general
features and principles of standardized
options described in the preamble to the
proposed rule. We will make any
additional changes to the standardized
options in future rulemaking. The plans
finalized in this rule apply beginning
with the 2017 plan year and until any
future changes are finalized.
In addition, we are adding to
§ 155.205(b)(1) a new provision
codifying the Exchange’s authority to
differentially display standardized
options on our consumer-facing plan
comparison and shopping tools. (How
standardized options will be displayed
will take into consideration the results
of consumer testing, which is currently
in process.) We do not intend to require
QHP issuers or web-brokers to adhere to
differential display requirements of
standardized options when using a nonExchange Web site to facilitate
enrollment in a QHP through an
Exchange at this time, but will consider
whether we should propose such a
standard in the future. Additionally,
because the provision in § 155.205(b)(1)
refers to standardized options, we will
finalize the definition of standardized
option at § 155.20, which specifies the
definitions for part 155, instead of at
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§ 156.20, which specifies definitions for
part 156.
Overall, commenters were supportive
of the specific standardized plan
designs, but suggested some
modifications. The proposed 2017
bronze standardized option closely
resembled a catastrophic plan, with a
$6,650 deductible, an annual limitation
on cost sharing equal to the maximum
allowable annual limitation on cost
sharing for 2017 (proposed to be
$7,150), and 50 percent coinsurance for
most types of benefits. Primary care
visits (for the first three visits) and
mental health/substance use outpatient
services were exempt from the
deductible with a copayment of $45.
Generic drugs were also exempt from
the deductible with a copayment of $35.
The top three drug tiers each had a 50
percent coinsurance rate. We are making
a change to the cost sharing for each of
the top three drug tiers in the bronze
standardized option. In response to
commenters who noted the relative
paucity of bronze plans on the FFEs
with 50 percent coinsurance rates for
drugs, the preferred brand drug tier now
has a 35 percent coinsurance; the nonpreferred brand drug tier now has a 40
percent coinsurance; and the specialty
drug tier now has a 45 percent
coinsurance. We are also making a
technical correction to the Bronze plan’s
AV calculation to ensure that the
deductible and coinsurance apply
correctly after the first three primary
care visits, to align with the Final 2017
AV Calculator User Guide instructions.
Making this technical correction and the
above changes to drug coinsurance rates
raises the AV for the plan to 61.88.
Thus, the AV for the final bronze
standardized option is 0.06 percent
higher than the AV of the proposed
bronze standardized option, which was
61.82 (rounded to 61.8). The
coinsurance rate for each of the top
three drug tiers more closely reflects the
average coinsurance rate for each of the
top three drug tiers in the most popular
(weighted by enrollment) QHPs in the
2015 FFEs, which were 25 percent, 35
percent, and 45 percent, respectively.
The new bronze standardized option
also addresses commenters’ concerns
that the proposed design was
inconsistent with the principle of
having four different drug tiers. Nongeneric drugs would all have had a 50
percent coinsurance rate with the
proposed version of the bronze
standardized option.
The proposed 2017 silver
standardized option had a $3,500
deductible, an annual limitation on cost
sharing equal to the maximum
allowable annual limitation on sharing
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for 2017, and a 20 percent enrollee
coinsurance rate. Primary care visits,
mental health/substance use outpatient
services, specialist visits, urgent care
visits, and all drug benefits were exempt
from the deductible, and all of the
deductible-exempt benefits had
copayments instead of coinsurance,
except for the specialty drugs tier,
which had a 40 percent coinsurance
rate. Emergency room services were
subject to the deductible, with a $400
copayment applicable after the
deductible.
In the final rule, we are making a
change to the proposed silver
standardized option in response to
comments. The proposed silver
standardized option and gold
standardized option had the same
copayment value for generic drugs. We
are increasing the copayment for generic
drugs to $15 for the silver standardized
option to more closely reflect the
average copayment rate for generic
drugs in the most popular QHPs in the
2015 FFEs (weighted by enrollment).
The actuarial value of the new
standardized silver option is 70.63
percent (0.37 percent lower than the AV
of the proposed version).
The proposed silver cost-sharing
reduction standardized options reduced
all cost sharing parameters successively
to meet the 73 percent, 87 percent, and
94 percent AV requirements. Where
possible, the cost-sharing reduction
standardized options and the non-costsharing reduction standardized silver
option maintain similar differentials
between the cost sharing for certain
benefits like primary care and specialty
visits. We are finalizing the three
standardized options at the silver costsharing reduction variation levels.
The proposed 2017 gold standardized
option, which we are also finalizing as
proposed, has a $1,250 deductible, a
$4,750 annual limitation on cost
sharing, and a 20 percent coinsurance
rate for most types of benefits. Primary
care visits, mental health and substance
use outpatient services, specialist visits,
urgent care visits, and all drug benefits
are not subject to the deductible. All of
the benefits not subject to the deductible
have copayments except for specialty
drugs.
TABLE 9—FINAL 2017 STANDARDIZED OPTIONS
Silver
Silver 73% actuarial value variation
Silver 87% actuarial value variation
Silver 94% actuarial value variation
Actuarial Value (%)
Deductible ..............
Annual Limitation
on Cost Sharing.
Emergency Room
Services.
61.88 ...................
$6,650 .................
$7,150 .................
70.63 ...................
$3,500 .................
$7,150 .................
73.55 ...................
$3,000 .................
$5,700 .................
87.47 ...................
$700 ....................
$2,000 .................
94.30 ...................
$250 ....................
$1,250 .................
79.98.
$1,250.
$4,750.
50% .....................
Urgent Care ...........
Inpatient Hospital
Services.
Primary Care Visit ..
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Bronze
50% .....................
50% .....................
$400 (copay applies only after
deductible).
$75 (*) .................
20% .....................
$300 (copay applies only after
deductible).
$75 (*) .................
20% .....................
$150 (copay applies only after
deductible).
$40 (*) .................
20% .....................
$100 (copay applies only after
deductible).
$25 (*) .................
5% .......................
$250 (copay applies only after
deductible).
$65 (*).
20%.
Specialist Visit ........
Mental Health/Substance Use Disorder Outpatient
Services.
Imaging (CT/PET
Scans, MRIs).
Rehabilitative
Speech Therapy.
Rehabilitative OT/
PT.
Laboratory Services
X-rays .....................
Skilled Nursing Facility.
Outpatient Facility
Fee.
Outpatient Surgery
Physician/Surgical.
Generic Drugs ........
Preferred Brand
Drugs.
Non-Preferred
Brand Drugs.
Specialty Drugs ......
Gold
$45 (* first 3 visits, then subject
to deductible
and 50% coinsurance).
50% .....................
$45 (*) .................
$30 (*) .................
$30 (*) .................
$10 (*) .................
$5 (*) ...................
$20 (*).
$65 (*) .................
$30 (*) .................
$65 (*) .................
$30 (*) .................
$25 (*) .................
$10 (*) .................
$15 (*) .................
$5 (*) ...................
$50 (*).
$20 (*).
50% .....................
20% .....................
20% .....................
20% .....................
5% .......................
20%.
50% .....................
20% .....................
20% .....................
20% .....................
5% .......................
20%.
50% .....................
20% .....................
20% .....................
20% .....................
5% .......................
20%.
50% .....................
50% .....................
50% .....................
20% .....................
20% .....................
20% .....................
20% .....................
20% .....................
20% .....................
20% .....................
20% .....................
20% .....................
5% .......................
5% .......................
5% .......................
20%.
20%.
20%.
50% .....................
20% .....................
20% .....................
20% .....................
5% .......................
20%.
50% .....................
20% .....................
20% .....................
20% .....................
5% .......................
20%.
$35 (*) .................
35% .....................
$15 (*) .................
$50 (*) .................
$10 (*) .................
$50 (*) .................
$5 (*) ...................
$25 (*) .................
$3 (*) ...................
$5 (*) ...................
$10 (*).
$30 (*).
40% .....................
$100 (*) ...............
$100 (*) ...............
$50 (*) .................
$10 (*) .................
$75 (*).
45% .....................
40% (*) ................
40% (*) ................
30% (*) ................
25% (*) ................
30% (*).
(*) = not subject to the deductible.
Comment: Many commenters
supported our proposal to establish
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standardized options in the individual
market FFEs in plan year 2017, as a step
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towards simplifying the consumer
experience, both when shopping for
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health insurance and when making costsharing payments to use covered health
care services. Some commenters
opposed our standardized options
proposal, arguing that it will hamper
innovation and limit competition and
choice, and that differential or
preferential display of standardized
options could inadvertently steer
consumers with specific or special
health care needs towards selecting
standardized options that are designed
for the average QHP enrollee and not for
a specific population. These
commenters expressed their concern
that our proposal represents a first step
toward ultimately limiting or excluding
non-standardized plans. These
commenters stated that making
standardized options mandatory in the
future could stifle innovation in plan
design, including value based insurance
design offerings, as well as competition
in the case that standardized options are
sorted above non-standardized plans on
our consumer-facing plan comparison
and shopping tools. Among those who
supported the standardized options
proposal, many urged that offering them
should be mandatory, even in 2017.
Response: We believe that
standardized options can simplify the
consumer shopping experience and are
therefore finalizing the proposal for
issuers to be able to offer standardized
options if they choose. We recognize
that these cost-sharing structures may
not be appropriate for all issuers or all
markets. We are not requiring issuers to
offer standardized options, nor limiting
their ability to offer other QHPs, and as
a result, we do not believe that
standardized options will hamper
innovation or limit choice.
Additionally, we will seek to mitigate
the risk that consumers with special
health care coverage needs incorrectly
choose a standardized option through
the use of tools that explain to
consumers which cost-sharing features
are standardized, and how they may
differ from one another and from nonstandardized plans, as well as how they
can be used to simplify the shopping
experience. We believe that most
consumers with specialized health care
needs will carefully shop for coverage
that provides the right mix of costsharing protections, benefits, and
networks.
Comment: Several commenters agreed
with the features of our proposed
standardized options, including the
inclusion of certain deductible-exempt
services, a single in-network provider
tier, four drug tiers with the option of
lower-cost tiers, and copayments in
place of coinsurance where possible. We
also received many recommended
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specific changes to the standardized
option designs, particularly with respect
to prescription drugs. Some commenters
opposed the use of coinsurance for the
specialty drug tier across all metal levels
without the inclusion of specific and
reasonable dollar level caps. Some
commenters noted that the proposed
bronze standardized option in effect has
only two tiers, since the generic drug
tier has a proposed copayment of $35
while the top three drug tiers all have
the same coinsurance rate of 50 percent.
Some commenters noted that the
proposed copayments for generic drugs
were set at the same copayment rate
($10) for both the gold standardized
option and the silver standardized
option and recommended that the
generic copayment be lower in the gold
plan than in the silver plan. Some
commenters asked that all four drug
tiers be exempt from the deductible,
while others asked that drugs be subject
to a separate deductible. Some
commenters asked that we clarify that
the copayment amounts for the drug
tiers are for thirty-day retail fills. Some
commenters asked that we clarify that
issuers are permitted to create lower
cost tiers for any of the four drug tiers,
not just for the generic drugs tier. For
example, commenters suggested that
issuers should be permitted to create a
preferred specialty tier with lower cost
sharing than the specialty tier. Some
commenters ask that we clarify that
preferred and non-preferred pharmacies
are permitted with differential cost
sharing and that differential cost sharing
is permitted for mail-service and retail
pharmacies, such that the standardized
cost sharing could represent cost
sharing at non-preferred retail
pharmacies, with lower cost sharing
available at preferred retail or mailservice pharmacies.
Response: We are finalizing the
standardized options as proposed
except for the changes to the bronze and
silver standardized options discussed
above and the following clarifications.
We clarify that that copayment amounts
listed for the drug tiers are for thirty-day
prescription fills at retail pharmacies
and that issuers (or their prescription
benefit managers) may offer a lower
cost-sharing rate for mail order
prescription fills, as is the most
common practice in the current market.
We also clarify that issuers may create
a lower cost tier for the generic drugs
tier for standardized options, but may
not do so for the three higher drug tiers
in the standardized options.
Comment: One commenter
recommended that we create
standardized options for family plans in
addition to individual plans.
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Response: We clarify that issuers may
offer the standardized options as family
plans by doubling the maximum annual
limitation on cost-sharing and setting
the family (other than self-only)
deductible at twice the deductible
provided here.
Comment: Some commenters urged
that we exempt habilitative and
rehabilitative outpatient services from
the deductible in the standardized
options. Some commenters also
encouraged the creation of a
standardized platinum option. Some
commenters opposed designing the
standardized options to be as similar as
possible to the 2015 QHPs, noting that
in their opinion, the 2015 QHPs often
did not meet the needs of people with
chronic conditions.
Response: We designed the plans to
be as similar as possible to the 2015
QHPs (as measured on an enrollmentweighted basis) in order to minimize
disruption to the market and impact on
premiums. Only a minority of these
plans exempted habilitative and
rehabilitative outpatient services from
the deductible. We will consider more
deductible exempt services in future
years depending on changes in the QHP
markets, enrollment patterns, and other
considerations.
Comment: Several commenters
expressed concern with our proposal to
establish a set of standardized options
that would apply in all States in which
an FFE is currently operating, noting
that States may have established or may
wish to establish their own standardized
plans specific to their State-wide
markets.
Response: As we note in the preamble
to § 156.350 in this final rule, it is not
possible at this time for the Federal
platform to accommodate State
customization, such as State-specific
display elements on Plan Compare.
State-defined standardized plans that
are different from HHS’s standardized
options will not be displayed in the
same manner as HHS’s standardized
options on the Federal platform because
of the limitations described above.
Further, in a State that has required
standardization of certain cost-sharing
features of its QHPs or is considering
doing so in 2017 or beyond, issuers
must comply with State law, which may
mean that issuers in those States will be
unable to offer some or all of the
standardized options established
through this rule-making. At this time,
the FFEs will not be able to give
differential display to QHPs that differ
from the standardized options finalized
in this final rule, even if the only
differences are to comply with State
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laws. We will consider whether we may
be able to do so in the future, however.
Comment: HHS solicited comments
on whether it should require QHP
issuers or web-brokers to differentially
display standardized options when
using a non-Exchange Web site to
facilitate enrollment in a QHP through
the Exchange. Commenters voiced
concerns that web-brokers already have
to comply with existing plan display
requirements, such as displaying all
plans sold on the Exchange, and not
displaying plans based on
compensation, and that should HHS
adopt this policy, web brokers would
need clear guidance and sufficient time
to prepare.
Response: We recognize that
currently, web-brokers are expected to
comply with display requirements
under § 155.220(c)(3), which includes
disclosing and displaying all QHP
information provided by the Exchange
or directly by QHP issuers consistent
with the requirements of § 155.205(b)(1)
and (c), providing consumers the ability
to view all QHPs offered through the
Exchange, and displaying all QHP data
provided by the Exchange. We are not
requiring QHP issuers or web-brokers to
adhere to differential display
requirements of standardized options
when using a non-Exchange Web site to
facilitate enrollment in a QHP through
an Exchange at this time. We will
consider whether such a standard
should apply to non-Exchange Web sites
in the future. Web-brokers and issuers
should continue to comply with all
existing plan display requirements.
2. FFE User Fee for the 2017 Benefit
Year (§ 156.50)
Section 1311(d)(5)(A) of the
Affordable Care Act permits an
Exchange to charge assessments or user
fees on participating health insurance
issuers as a means of generating funding
to support its operations. In addition, 31
U.S.C. 9701 permits a Federal agency to
establish a charge for a service provided
by the agency. If a State does not elect
to operate an Exchange or does not have
an approved Exchange, section
1321(c)(1) of the Affordable Care Act
directs HHS to operate an Exchange
within the State. Accordingly, at
§ 156.50(c), we specify that a
participating issuer offering a plan
through an FFE must remit a user fee to
HHS each month that is equal to the
product of the monthly user fee rate
specified in the annual HHS notice of
benefit and payment parameters for
FFEs for the applicable benefit year and
the monthly premium charged by the
issuer for each policy under the plan
where enrollment is through an FFE.
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OMB Circular No. A–25R establishes
Federal policy regarding user fees, and
specifies that a user charge will be
assessed against each identifiable
recipient for special benefits derived
from Federal activities beyond those
received by the general public. As in
benefit years 2014 to 2016, issuers
seeking to participate in an FFE in
benefit year 2017 will receive two
special benefits not available to the
general public: (1) The certification of
their plans as QHPs; and (2) the ability
to sell health insurance coverage
through an FFE to individuals
determined eligible for enrollment in a
QHP. These special benefits are
provided to participating issuers
through the following Federal activities
in connection with the operation of
FFEs:
• Provision of consumer assistance
tools.
• Consumer outreach and education.
• Management of a Navigator
program.
• Regulation of agents and brokers.
• Eligibility determinations.
• Enrollment processes.
• Certification processes for QHPs
(including ongoing compliance
verification, recertification and
decertification).
• Administration of a SHOP
Exchange. Activities performed by the
Federal government that do not provide
issuers participating in an FFE with a
special benefit will not be covered by
this user fee.
OMB Circular No. A–25R further
states that user fee charges should
generally be set at a level so that they
are sufficient to recover the full cost to
the Federal government of providing the
service when the government is acting
in its capacity as sovereign (as is the
case when HHS operates an FFE).
Accordingly, we proposed to set the
2017 user fee rate for all participating
FFE issuers at 3.5 percent. This user fee
rate assessed on FFE issuers is the same
as the 2014 to 2016 user fee rate. We are
finalizing the 2017 user fee rate for all
participating FFE issuers as proposed.
In addition, OMB Circular No. A–25R
requires that the user fee charge be
sufficient to recover the full cost to the
Federal government of providing the
special benefit. An exception was in
place for the 2014 to 2016 user fee rates,
to ensure that FFEs could support the
goals of the Affordable Care Act,
including improving the health of the
population, reducing health care costs,
and providing access to health coverage.
We have sought an exception to this
policy again for 2017.
Comment: Some commenters
requested conversion of the FFE user fee
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assessment from percent of premium to
a per member per month amount to
decouple the user fee from medical
inflation. We received one comment
asking whether the user fees collected in
2017 will exceed the costs of the FFE.
We also received comments stating that
the user fee rate is likely too low to
cover the full costs of the FFE.
Response: We will continue to assess
the FFE user fee as a percent of the
monthly premium charged by issuers
participating in an FFE, in particular as
it relates to the adequacy of funding for
ongoing marketing and outreach. In
accordance with OMB Circular No. A–
25R, issuers are charged the user fee in
exchange for receiving special benefits
beyond those that are offered to the
general public. Setting the user fee as a
percent of premium ensures that the
user fee generally aligns with the
business generated by the issuer as a
result of participation in an FFE.
Additionally, the user fee rate is set to
collect costs incurred for the special
benefits, no more or less, and user fee
collections are used solely to support
FFE user fee eligible functions.
Additionally, we proposed under
§§ 155.106(c) and 155.200(f) to allow
State Exchanges to enter into a Federal
platform agreement with HHS so that
the State Exchange may rely on the
Federal platform for certain Exchange
functions to enhance efficiency and
coordination between State and Federal
programs, and to leverage the systems
established by the FFE to perform
certain Exchange functions. We
proposed in § 156.50(c)(2) to charge
SBE–FP issuers a user fee for the
services and benefits provided to the
issuers by HHS. For 2017, these
functions will include the Federal
Exchange information technology and
call center infrastructure used in
connection with eligibility
determinations for enrollment in QHPs
and other applicable State health
subsidy programs, as defined at section
1413(e) of the Affordable Care Act and
enrollment in QHPs under § 155.400. As
previously discussed, OMB Circular No.
A–25R establishes Federal policy
regarding user fees, and specifies that a
user charge will be assessed against
each identifiable recipient for special
benefits derived from Federal activities
beyond those received by the general
public. We are finalizing our proposals
under § 155.106(c) and § 155.200(f), and
issuers seeking to participate in an SBE–
FP in benefit year 2017 and beyond will
receive special benefits not available to
the general public: The ability to sell
health insurance coverage through a
State Exchange that realizes efficiencies
by using the Federal platform to enroll
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individuals determined eligible for
enrollment in a QHP, including
individuals who may be eligible for
insurance affordability programs that
may support premiums paid to issuers
offering plans through the State
Exchange by way of the Federal
platform (HealthCare.gov), and the
ability to sell health insurance coverage
to small employers eligible to purchase
QHPs for its employees through a SHOP
Exchange. Other services that will be
provided to issuers offering plans
through an SBE–FP include the Federal
Exchange information technology and
call center infrastructure used in
connection with eligibility
determinations for enrollment in QHPs
and other applicable State health
subsidy programs. We proposed to
charge issuers offering QHPs through an
SBE–FP a user fee rate of 3.0 percent of
the monthly premium charged by the
issuer for each policy under a plan
offered through an SBE–FP. This fee
would recover funding to support FFE
operations incurred by the Federal
government associated with providing
the services described above.
The proposed user fee rate was
calculated based on the proportion of
FFE costs that are associated with the
FFE information technology
infrastructure, the consumer call center,
and eligibility and enrollment services,
and allocating a share of those costs to
issuers in the relevant SBE–FPs. A
significant portion of expenditures for
FFE services are associated with the
information technology, call center
infrastructure, and personnel who
conduct eligibility determinations for
enrollment in QHPs and other
applicable State health subsidy
programs as defined at section 1413(e)
of the Affordable Care Act, and who
perform the functions set forth in
§ 155.400 to facilitate enrollment in
QHPs. We intend to review the costs
incurred to provide these special
benefits each year, and revise the user
fee rate for issuers in SBE–FPs
accordingly in the annual HHS notice of
benefit and payment parameters.
Comment: Commenters requested a
one-year delay in assessing the user fee
on issuers operating in an SBE–FP or a
reduction of the user fee for 2017,
particularly noting that SBE–FPs require
additional time to integrate the user fee
into their State’s budget, and also that
the impact of this user fee on premiums
in SBE–FP States will be significant.
Commenters also noted charging SBE–
FP issuers the full user fee rate would
allow the State to make a fully informed
decision on the type of model to use for
2017. We also have received questions
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as to why we have not charged the SBE–
FP user fees until now.
Response: While a user fee rate of 3.0
percent reflects HHS’s actual costs, we
recognize that State Exchanges that are
currently using the Federal platform
may find the abrupt change of the
proposed user fee in 2017 challenging
for their health insurance markets.
Therefore, for the 2017 benefit year, we
have sought a waiver from OMB to the
requirement that the user fee with
respect to SBE–FPs cover the full share
of costs incurred by the FFE for
providing these services, and, if we
receive this waiver, would reduce the
user fee rate by one-half for the issuers
in an SBE–FP, to provide these States
additional transition time to support the
costs incurred by the FFE. That is, for
the 2017 benefit year, issuers operating
in an SBE–FP will be charged an
amount equal to 1.5 percent of
premiums in the SBE–FP.
We expect, in future rulemaking, to
propose that SBE–FP issuers would be
charged the full user fee rate covering
the full share of costs incurred by the
Federal platform for the special benefits
provided to issuers in SBE–FPs. We
note that we did not immediately assess
a user fee on SBE–FP issuers because we
did not establish our authority and
intent to do so through rulemaking in
time for rate-setting. We are drawing on
our experience with SBE–FP operations
in the 2014 and 2015 benefit years to
establish a regulatory structure for SBE–
FPs and to help determine an
appropriate cost estimate for the SBE–
FP user fee. As was the case with the
FFEs, the user fee will not fully capture
our costs, so that we can ease the
transition for States and their issuers to
adapt to these higher fees. We note that
we similarly sought a waiver from OMB
from the requirement that FFE user fees
fully account for costs in the early years
of the FFEs.
Comment: Some commenters
requested that HHS implement the user
fee in SBE–FP States by invoicing the
State directly for the costs incurred or
setting up a different methodology for
recouping the costs incurred. These
commenters indicated that a State that
wishes to fund its Exchange operations
by assessing a fee on all insurance
carriers selling individual market major
medical policies, both on and off
Exchange, the Federal user fee structure
would require the SBE–FP to execute a
complex reconciliation process.
Response: We will assess the user fee
rate as a percent of monthly premiums
charged by issuers operating in an SBE–
FP, as established in prior rulemaking.
Setting the user fee as a percent of
premium charged by issuers ensures
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that the user fee generally aligns with
the business generated by the issuer as
a result of the special benefits provided.
We recognize that SBE–FPs may have
elected to cover Exchange costs
differently. Therefore, at an SBE–FP’s
written request, HHS will collect from
the SBE–FP the total amount that would
result from the user fee collected from
issuers based on the percent of monthly
premiums charged by invoicing the
State for the total user fee charge, and
not by collecting the fee directly from
SBE–FP issuers.
Comment: One commenter requested
unbundling of the costs of the Federal
platform, as States may not utilize all
aspects of the Federal platform bundle.
We also received comments urging HHS
to set a limit on the State’s portion of
the assessment for covering the State’s
costs. Commenters’ suggestions for the
user fee limit ranged from 3.5 percent to
5 percent of premiums for combined
Federal and State user fee charges.
Response: As we discuss in § 155.106,
HHS will not—at this time—offer a
menu of Federal services from which an
SBE–FP may select some but not other
services on the Federal platform. As
such, we are finalizing the SBE–FP user
fee eligible costs as a bundle as
proposed, and do not at this time
anticipate unbundling the costs for each
Federal service. We will also continue
assessing the user fee by market. This
means that, if an SBE–FP is not utilizing
Federal services for the SHOP Exchange,
the user fee would not be charged on
SHOP issuers. Additionally, we do
recognize the benefits of States
operating their own plan management
and customer support functions, and do
not intend to limit the State’s ability to
generate revenue to support these
functions.
Comment: One commenter sought
confirmation that if a State is currently
developing its own SBE platform, but
later decides instead to rely on the
Federal platform under the SBE–FP
model, the SBE–FP model would be
available to the State. Additionally, the
commenter requested that in such a
situation the State be charged the same
user fee as charged to existing SBE–FPs.
Response: The SBE–FP model option
will be available per the timelines and
conditions we describe in § 155.106.
The SBE–FP user fee for a particular
benefit year, established through
rulemaking, will apply to all States that
use the SBE–FP for that benefit year,
including those States that do not
currently use the SBE–FP model. All
issuers on SBE–FPs for the 2017 benefit
year would receive the reduced 1.5
percent transitional rate. Additionally,
we note that nothing restricts a State
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from using its own revenue to support
developing its own SBE platform.
Comment: Other commenters stated
that the FFE and SBE–FP user fee rates
are likely too low to provide all of the
necessary functions for consumers, and
that the assumption that FFE spend only
15 percent of user fee collections on
marketing, outreach, and plan
management is too low.
Response: Our current user fee rates
for issuers in an FFE and an SBE–FP are
based on our current anticipated
contract costs for providing the special
benefits. Our cost distributions are
based on larger estimated enrollment
through FFEs, and are not comparable to
what individual States may spend on
these functions. Further, to ensure FFEs
can support many of the goals of the
Affordable Care Act, we continuously
assess our operational strategy for FFE
functions to maximize access to health
insurance coverage, and could seek,
through notice and comment
rulemaking, to change the user fee rate
in future years to accommodate
increased or decreased spending on
areas such as marketing and consumer
outreach.
Additionally, to ease administrative
burdens on issuers and States, HHS
proposed to offer States the option to
have HHS collect an additional user fee
from issuers at a rate specified by the
State to cover costs incurred by the
State-based Exchange for the functions
the State retains. HHS would undertake
this collection under the
Intergovernmental Cooperation Act of
1968 (IGCA) if a written request is made
by a State. If HHS agrees to provide such
services, States may be required to
reimburse HHS any additional costs that
are associated with HHS’s provision of
such service. This coordination between
the State and Federal programs would
reduce administrative burden on issuers
as well as the SBEs–FP. We did not
receive any comments on this proposal
for HHS to collect an additional user fee
from issuers on behalf of the State. We
will provide additional guidance if we
receive such a request.
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3. Single Risk Pool (§ 156.80)
We proposed to codify that any new
rates set by an issuer in the small group
market as part of a quarterly rate change
would apply for new or renewing
coverage on or after the rate effective
date, and would apply for the entire the
plan year. This policy is consistent with
the preamble to the second Program
Integrity Rule (78 FR 65067). We also
proposed to make non-substantive
changes to the wording of that
paragraph, including to delete an
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outdated reference to when quarterly
rate changes could first be implemented.
We also reiterated that a health
insurance issuer may vary the planadjusted index rate for a particular plan
from its market-wide index rate
adjusting only for the explicitly stated
factors in § 156.80(d)(2). Any plan level
adjustment not specifically stated,
including adjusting for morbidity of
plan enrollees, is not permissible.
We received no comments on these
specific issues and are finalizing the
provisions as proposed.
4. Essential Health Benefits Package
a. Provision of EHB (§ 156.115)
In the 2016 final Payment Notice, we
finalized regulation text at
§ 156.115(a)(5) that discussed
habilitative services and devices. Due to
a technical error in the amendatory
instructions, the current CFR does not
reflect this finalized language, and
instead retains the language that was
finalized prior to being amended by the
2016 Payment Notice; therefore, we are
including regulation text in this
rulemaking to make a technical
correction to update the CFR to
language that was previously finalized.
b. Prescription Drug Benefits (§ 156.122)
In the proposed rule, we discussed
three proposals related to prescription
drug benefits. First, § 156.122(c)
requires plans providing EHB to have
processes in place that allow an
enrollee, an enrollee’s designee, or the
enrollee’s prescribing physician (or
other prescriber) to request and gain
access to clinically appropriate drugs
not covered by the plan. Such
procedures must include a process to
request an expedited review based on
exigent circumstances meeting the
requirements under § 156.122(c)(2). For
plan years beginning in 2016 and
thereafter, these processes must also
include certain processes and
timeframes for the standard review
process, and have an external review
process if the internal review request is
denied. The costs of the non-formulary
drug provided through the exceptions
process must count towards the annual
limitation on cost sharing and AV of the
plan. As discussed in the 2016 Payment
Notice (80 FR 10750), the exceptions
process established in this section is
distinct from the coverage appeals
process established under § 147.136.
Specifically, the drug exceptions
process applies to drugs that are not
included on the plan’s formulary drug
list, while the coverage appeals
regulations apply if an enrollee receives
an adverse benefit determination for a
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drug that is included on the plan’s
formulary drug list. Because these two
processes serve different purposes, we
reaffirmed our belief that they are not
duplicative and we did not propose to
change these definitions. However, we
also clarified in the 2016 Payment
Notice that ‘‘nothing under this policy
(§ 156.122(c)) precludes a State from
requiring stricter standards in this area.’’
We stated in the proposed rule that we
received additional comment regarding
States’ coverage appeals laws and
regulations and non-formulary drugs. In
our discussion, we noted that if a State
is subjecting non-formulary drugs to the
standards under § 147.136 as opposed to
§ 156.122(c), the State’s coverage
appeals laws or regulations would
provide the enrollee with a different
process for review, and as a result a
different process for obtaining coverage
of the non-formulary drug. Specifically,
§ 147.136 has separate requirements for
its external review process and allows
for a secondary level of internal review
before the final internal review
determination for group plans.
As a result, if the State is subjecting
non-formulary drugs to § 147.136 and
the health plans are also required to
comply with § 156.122(c), the health
plan may have to satisfy two standards
for non-formulary drugs. Therefore, we
proposed amending § 156.122(c) to
establish that a plan, in a State that has
coverage appeals laws or regulations
that are more stringent than or are in
conflict with our exceptions process
under § 156.122(c), and that include
reviews for non-formulary drugs, the
health plan’s exception process satisfies
§ 156.122(c) if it complies with the
State’s coverage appeals laws or
regulations. The purpose of § 156.122(c)
is to ensure that an enrollee has the
ability to request and gain access to
clinically appropriate drugs not covered
by the plan. Regardless of whether a
State’s coverage appeals laws or
regulations satisfy § 156.122(c) or if the
health plan meets § 156.122(c) through
its exception process, we would expect
that an enrollee would retain the ability
to request and gain access to clinically
appropriate drugs not covered by the
plan. Therefore, we solicited comments
on the scope of application of State
appeals laws or regulations that include
determinations for non-formulary drugs
for this purpose, especially under
medical necessity provisions. We also
sought comment as to whether these
provisions would allow the enrollee the
ability to request and gain access to
clinically appropriate drugs not covered
by the plan in all cases through a State’s
coverage appeals laws or regulations. As
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the State generally is the primary
enforcer of the EHB requirements, the
State would determine whether its
coverage appeals laws or regulations
would satisfy § 156.122(c) and therefore,
would allow the health plans in the
State to defer to the States’ coverage
laws or regulations. We noted that we
consider multi-State plans that comply
with OPM’s coverage appeals
requirements to satisfy § 156.122(c). We
considered codifying this interpretation.
Second, we proposed amending the
process at § 156.122(c) to allow for a
second level of internal review. For
example, we considered using the same
timelines as the first level of internal
review, 72 hours for the standard review
request and 24 hours for the expedited
review request.
Lastly, we sought comment on
whether the substance use disorder
requirement under EHB needs
additional clarification with regard to
medication assisted treatment (MAT) for
opioid addiction.
We are finalizing one provision under
this final rule to allow a State to
determine that the health plans in the
State satisfy § 156.122(c) when the
health plans are required to adopt an
exceptions process under the State’s
coverage appeals laws and regulations
that include review of non-formulary
drugs, and the exceptions process
contains requirements at least as
stringent as those under § 156.122(c).
Comment: Some commenters
supported allowing the State to
determine that health plans in the State
comply with § 156.122(c) by virtue of
the State’s coverage appeals laws and
regulations applying to non-formulary
drugs, as long as the health plans treat
the denied formulary exception as an
adverse coverage determination under
§ 147.136. These commenters believed
that this proposal is within the State’s
scope and would avoid duplication and
potential operational and financial
burdens of having the two different
external review processes. Other
commenters stated that HHS should
require States to prove that they have a
stronger standard than that required by
the exception process and wanted HHS
to make the determination as to whether
a State has a stronger standard.
Commenters wanted to know what
would make a State law ‘‘in conflict
with’’ the Federal standard and wanted
HHS to study the issue to define the
problem. These commenters were
generally concerned with the timeframe
differences between §§ 156.122(c) and
147.136. Some commenters also wanted
the State to certify that their laws
comply with § 156.122(c), such as with
a tool, and to make the determinations
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publically available. Similarly,
commenters supported or had concerns
with the OPM clarification with regard
to satisfying § 156.122(c). Some
commenters requested additional
clarification as to whether drugs count
towards the annual limitation on cost
sharing, such as cases when a State’s
coverage appeals laws and regulations
are applying to non-formulary drugs.
Some commenters wanted clarification
that this exceptions process is different
from the preventive services’ exceptions
process. Other commenters submitted
comments about other prescription drug
related issues beyond the scope of the
proposed rule.
Response: We are finalizing our
proposal that a State may determine that
health plans in the State satisfy the
requirements of § 156.122(c) if the
health plans have a process through the
State’s coverage appeals laws and
regulations to allow an enrollee to
request and gain access to clinically
appropriate drugs not otherwise covered
by the health plan under standards at
least as stringent as the requirements at
§ 156.122(c). To meet this standard, the
process must include an internal
review, an external review, the ability to
expedite the reviews, and timeframes
that are the same as or shorter than
timeframes established under
paragraphs (c)(1)(ii) and (c)(2)(iii) of this
paragraph. In the event that an
exception request is granted under
§ 156.122(c)(4), the excepted drug(s) are
treated as an EHB including counting
any cost-sharing towards the plan’s
annual limitation on cost-sharing under
§ 156.130.
While we appreciate commenters’
concerns about potential confusion if
two processes apply, we do not believe
that applying timeframes less stringent
than those in the current § 156.122(c)
would benefit enrollees. We understand
that States may not be able to meet these
timeframes under their current coverage
appeals laws and regulations and that
States may have to change their laws
and regulations in order to align the
timeframes under § 156.122(c), if the
State wishes to use its current laws and
regulations to streamline processes and
create efficiencies. The State is not
required to undertake this option. We
also reaffirm that we consider multiState plans that comply with OPM’s
coverage appeals requirements to satisfy
§ 156.122(c). Lastly, we note that the
exceptions process under § 156.122(c) is
separate from other exceptions process
required under applicable Federal or
State law. In particular, compliance
with the exceptions process under
§ 156.122(c) does not constitute
compliance with the exceptions process
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for contraceptive services as clarified in
guidance under section 2713 of the PHS
Act, both of which apply to nongrandfathered individual and small
group market plans that are required to
provide EHB.54
Comment: Some commenters
supported a second level of internal
review and noted that including two
levels of internal review is consistent
with current practices, improves
administrative efficiency, and ensures
enrollees obtain medically necessary
medications as soon as possible. The
commenters noted that having only one
level of internal review means more
enrollees will rely on the external
review process, which is costly. Some
commenters sought additional time for
the second level of review. Other
commenters opposed a second level of
internal review altogether and were
primarily concerned that the second
level of review could delay access and
could burden enrollees. Some
commenters wanted evidence that the
second level of review would help
enrollees, since the health plan
conducts the internal review, as
opposed to a third party. Some
commenters wanted clarification as to
whether this revised rule would be
effective for the 2016 plan year or apply
with enforcement discretion. Other
commenters were concerned that the
rule would apply different standards in
2016 versus 2017 (one level of internal
review versus two).
Response: We are not finalizing new
requirements in this area. A health plan,
at its election, may conduct a
concurrent second internal review in
the standard review process and the
expedited review process within the
timeframes established under
§ 156.122(c)(1) and (2), but the health
plan is not required to do so. As
discussed in the preamble of the 2016
Payment Notice (80 FR 10818), all of the
timeframes begin when the health plan
or its designee receives a request. An
enrollee or the enrollee’s prescribing
physician (or other prescriber) should
strive to submit a completed request;
however, health plans should not fail to
commence review if they have not yet
received information that is not
necessary to begin review. Therefore, we
interpret § 156.122(c)’s reference to
receipt of the request to mean that the
health plan must begin the review
following the receipt of information
54 See the section entitled ‘‘Coverage of Food and
Drug Administration (FDA)-approved
Contraceptives’’ in FAQS about Affordable Care Act
Implementation (PART XXVI), (May 11, 2015),
available at https://www.cms.gov/CCIIO/Resources/
Fact-Sheets-and-FAQs/Downloads/aca_
implementation_faqs26.pdf.
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sufficient to begin the review. We note
that the processes specified in
§ 156.122(c) are only required in
connection with requesting and gaining
access to clinically appropriate nonformulary drugs, and are not required in
connection with utilization management
processes for drugs on the plan’s
formulary drug list. We also note that
§ 156.122(c) only applies to nongrandfathered individual and small
group market plans that are required to
provide EHB under section 2707(a) of
the PHS Act and section 1302 of the
Affordable Care Act, as well as to QHPs
under §§ 156.200(b)(3) and 156.20. We
will continue to monitor the
implementation of the drug exceptions
processes to determine whether further
guidance on these processes is needed.
Comment: We received many
comments supporting requiring
coverage of medication assisted
treatment for opioid addiction as an
EHB. These comments cited cost
effectiveness, clinical evidence, and
inability to interchange MAT options in
support of requiring that all MATs be
covered as an EHB. Commenters noted
a lack of covered providers and related
services limiting access to appropriate
MAT; a lack of and variation in coverage
of specific types of treatments, such as
methadone; utilization management
practices for MAT as areas of concern
and reasons to require coverage of MAT.
Commenters also noted the lack of MAT
coverage by certain new State basebenchmark plans, including explicit
exclusions. Other commenters were not
supportive of additional clarification on
MAT coverage for substance use
disorders or wanted to review a specific
proposal for additional coverage, as
MAT is required to be covered under
certain United States Pharmacopeia
(USP) categories and classes at
§ 156.122(a)(1). Commenters were also
concerned about setting a precedent in
which MAT coverage is treated
differently from other EHB or drugs,
noting that EHBs are required under the
statute to be equal to the scope of
benefits provided under a typical
employer plan. Some commenters
supported the use of Pharmacy &
Therapeutics (P&T) Committees in
making drug coverage determinations
and stated they were concerned that any
coverage requirements could restrict
and impede P&T Committees’ clinical
judgment. Others commented that
requiring MAT coverage could increase
premiums.
Response: In October 2015, the
President issued a Memorandum
directing Federal Departments and
Agencies to identify barriers to
medication-assisted treatment for opioid
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use disorders and develop action plans
to address these barriers. Both the EHB
requirement and Federal mental health
and substance use disorder parity
requirements apply to QHP coverage of
medications to treat opioid dependence.
Because these requirements extend
beyond QHPs, we anticipate issuing
separate guidance with respect to MAT
in the near future.
c. Premium Adjustment Percentage
(§ 156.130)
Section 1302(c)(4) of the Affordable
Care Act directs the Secretary to
determine an annual premium
adjustment percentage, which is used to
set the rate of increase for three
parameters detailed in the Affordable
Care Act: the maximum annual
limitation on cost sharing (defined at
§ 156.130(a)), the required contribution
percentage by individuals for minimum
essential coverage the Secretary may use
to determine eligibility for hardship
exemptions under section 5000A of the
Code, and the assessable payment
amounts under section 4980H(a) and (b)
of the Code. 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.
Under the methodology established in
the 2015 Payment Notice and amended
in the 2015 Market Standards Rule for
estimating average per capita premium
for purposes of calculating the premium
adjustment percentage, the premium
adjustment percentage is calculated
based on the projections of average per
enrollee employer-sponsored insurance
premiums from the NHEA, which is
calculated by the Office of the Actuary.
Accordingly, using the employersponsored insurance data, the premium
adjustment percentage for 2017 is the
percentage (if any) by which the most
recent NHEA projection of per enrollee
employer-sponsored insurance
premiums for 2016 ($6,076) exceeds the
most recent NHEA projection of per
enrollee employer-sponsored insurance
premiums for 2013 ($5,365).55 Using
55 See Projections of National Health
Expenditures: Methodology and Model
Specifications (Jul. 28, 2015), available at https://
www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/
NationalHealthExpendData/Downloads/
ProjectionsMethodology.pdf; Projections of National
Health Expenditures: Methodology and Model
Specification (Sept. 18, 2013), available at https://
www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/
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12297
this formula, we proposed and are
finalizing the premium adjustment
percentage for 2017 at 13.25256291
percent. We note that the 2013 premium
used for this calculation has been
updated to reflect the latest NHEA data.
We are also finalizing the following
cost-sharing parameters for calendar
year 2017 based on our finalized 2017
premium adjustment percentage.
Maximum Annual Limitation on Cost
Sharing for Calendar Year 2017. Under
§ 156.130(a)(2), for the 2017 calendar
year, cost sharing for self-only coverage
may not exceed the dollar limit for
calendar year 2014, increased by an
amount equal to the product of that
amount and the premium adjustment
percentage for 2017, and for other than
self-only coverage, the limit is twice the
dollar limit for self-only coverage.
Under § 156.130(d), these amounts must
be rounded down to the next lowest
multiple of 50. Using the premium
adjustment percentage of 13.25256291
percent for 2017 we established above,
and the 2014 maximum annual
limitation on cost sharing of $6,350 for
self-only coverage, which was published
by the IRS on May 2, 2013,56 we are
finalizing the 2017 maximum annual
limitation on cost sharing as proposed at
$7,150 for self-only coverage and
$14,300 for other than self-only
coverage.
Comment: Two commenters said the
annual rate of increase in the MOOP
($300 for individuals this year after a
$250 increase last year, and $600 for
other than self-only coverage this year
on top of a $500 increase last year) is
unsustainable and negatively affects
enrollees’ willingness to use
prescription drugs, which in turn affects
health outcomes. The commenters asked
HHS to engage with stakeholders to
develop an alternative methodology to
calculate the maximum annual
limitation on cost sharing.
Response: As discussed above, the
maximum annual limitation on cost
sharing is calculated based on the
premium adjustment percentage for the
NationalHealthExpendData/Downloads/
ProjectionsMethodology2012.pdf; and Table 17:
Health Insurance Enrollment and Enrollment
Growth Rates (Jul. 22, 2015), available at https://
www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/
NationalHealthExpendData/
NationalHealthAccountsProjected.html (located in
the NHE Projections 2014–2024—Tables link). For
additional information, see, also, National Health
Expenditure Projections 2012–2022, available at
https://www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/
NationalHealthExpendData/Downloads/
Proj2012.pdf.
56 See: IRS, 26 CFR 601.602: Tax forms and
instructions (May 2, 2013), available at https://
www.irs.gov/pub/irs-drop/rp-13-25.pdf.
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benefit year. The methodology
established in 2015 to calculate the
premium adjustment percentage is
based on a projection of annual
increases in per enrollee employersponsored insurance premiums from the
National Health Expenditure Accounts
(estimated by the CMS Office of the
Actuary). HHS believes it is the best
available source of projected growth for
premium given statutory requirements
and interaction with other
measurements. However, as discussed
in the 2015 Notice of Benefits and
Payment Parameters (79 FR 13802),
HHS intends to review the methodology
for calculating annual premium growth
after the initial years of reform-driven
changes to benefits and plan design,
after the premium trend is more stable,
and as data on premiums become
available.
Comment: One commenter expressed
concern over a growing gap between the
Affordable Care Act’s maximum annual
limitation on cost sharing and the
Internal Revenue Service’s out-of-pocket
limit for high deductible health plans
(HDHPs) used with health savings
accounts. (The 2016 HHS maximum
out-of-pocket limitation for other than
self-only coverage was $600 above the
2016 IRS out-of-pocket limit on high
deductible health plans for other than
self-only coverage.) The commenter also
expressed concern that the IRS limit is
not announced for some months after
the HHS limit is known, leading issuers
to price products conservatively, and
higher than they might otherwise if the
IRS limit had been known.
Response: HHS and IRS are bound by
different statutory parameters when
calculating annual out-of-pocket limits.
HHS uses the premium adjustment
percentage described above to adjust the
maximum out-of-pocket limit, and the
IRS uses the Consumer Price Index, a
measure of inflation, to adjust its out-ofpocket limitation.
d. Reduced Maximum Annual
Limitation on Cost Sharing (§ 156.130)
Sections 1402(a) through (c) of the
Affordable Care Act direct issuers to
reduce cost sharing for EHBs for eligible
individuals enrolled in a silver level
QHP. In the 2014 Payment Notice, we
established standards related to the
provision of these cost-sharing
reductions. Specifically, in 45 CFR part
156, subpart E, we specified that QHP
issuers must provide cost-sharing
reductions by developing plan
variations, which are separate costsharing structures for each eligibility
category that change how the cost
sharing required under the QHP is to be
shared between the enrollee and the
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Federal government. At § 156.420(a), we
detailed the structure of these plan
variations and specified that QHP
issuers must ensure that each silver plan
variation has an annual limitation on
cost sharing no greater than the
applicable reduced maximum annual
limitation on cost sharing specified in
the annual HHS notice of benefit and
payment parameters. Although the
amount of the reduction in the
maximum annual limitation on cost
sharing is specified in section
1402(c)(1)(A) of the Affordable Care Act,
section 1402(c)(1)(B)(ii) of the
Affordable Care Act states that the
Secretary may adjust the cost-sharing
limits to ensure that the resulting limits
do not cause the AVs of the health plans
to exceed the levels specified in section
1402(c)(1)(B)(i) of the Affordable Care
Act (that is, 73 percent, 87 percent, or
94 percent, depending on the income of
the enrollee). Accordingly, we propose
to use a method we established in the
2014 Payment Notice for determining
the appropriate reductions in the
maximum annual limitation on cost
sharing for cost-sharing plan variations.
As we proposed above, the 2017
maximum annual limitation on cost
sharing would be $7,150 for self-only
coverage and $14,300 for other than selfonly group coverage. We analyzed the
effect on AV of the reductions in the
maximum annual limitation on cost
sharing described in the statute to
determine whether to adjust the
reductions so that the AV of a silver
plan variation will not exceed the AV
specified in the statute. Below, we
describe our analysis for the 2017
benefit year and our proposed results.
Consistent with our analysis in the
2014, 2015, and 2016 Payment Notices,
we developed three test silver level
QHPs, and analyzed the impact on AV
of the reductions described in the
Affordable Care Act to the estimated
2017 maximum annual limitation on
cost sharing for self-only coverage
($7,150). The test plan designs are based
on data collected for 2016 plan year
QHP certification to ensure that they
represent a range of plan designs that
we expect issuers to offer at the silver
level of coverage through the Exchanges.
For 2017, the test silver level QHPs
included a PPO with typical costsharing structure ($7,150 annual
limitation on cost sharing, $2,175
deductible, and 20 percent in-network
coinsurance rate), a PPO with a lower
annual limitation on cost sharing
($4,800 annual limitation on cost
sharing, $2,775 deductible, and 20
percent in-network coinsurance rate),
and an HMO ($7,150 annual limitation
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on cost sharing, $3,000 deductible, 20
percent in-network coinsurance rate,
and the following services with
copayments that are not subject to the
deductible or coinsurance: $500
inpatient stay per day, $350 emergency
department visit, $25 primary care
office visit, and $50 specialist office
visit). All three test QHPs meet the AV
requirements for silver level health
plans.
We then entered these test plans into
the proposed 2017 AV Calculator
developed by HHS and observed how
the reductions in the maximum annual
limitation on cost sharing specified in
the Affordable Care Act affected the AVs
of the plans. We found that the
reduction in the maximum annual
limitation on cost sharing specified in
the Affordable Care Act for enrollees
with a household income between 100
and 150 percent of the Federal poverty
line (FPL) (2/3 reduction in the
maximum annual limitation on cost
sharing), and 150 and 200 percent of the
FPL (2/3 reduction), would not cause
the AV of any of the model QHPs to
exceed the statutorily specified AV level
(94 and 87 percent, respectively). In
contrast, the reduction in the maximum
annual limitation on cost sharing
specified in the Affordable Care Act for
enrollees with a household income
between 200 and 250 percent of FPL
(1/2 reduction), would cause the AVs of
two of the test QHPs to exceed the
specified AV level of 73 percent. As a
result, we proposed that the maximum
annual limitation on cost sharing for
enrollees in the 2017 benefit year with
a household income between 200 and
250 percent of FPL be reduced by
approximately 1/5, rather than 1/2. We
further proposed that the maximum
annual limitation on cost sharing for
enrollees with a household income
between 100 and 200 percent of the FPL
be reduced by approximately 2/3, as
specified in the statute, and as shown in
Table 10. These proposed reductions in
the maximum annual limitation on cost
sharing should adequately account for
unique plan designs that may not be
captured by our three model QHPs. We
also noted that selecting a reduction for
the maximum annual limitation on cost
sharing that is less than the reduction
specified in the statute would not
reduce the benefit afforded to enrollees
in aggregate because QHP issuers are
required to further reduce their annual
limitation on cost sharing, or reduce
other types of cost sharing, if the
required reduction does not cause the
AV of the QHP to meet the specified
level. We did not receive comments on
this proposal, and are finalizing the
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reductions in the maximum annual
limitation on cost sharing for 2017 as
proposed.
We note that for 2017, as described in
§ 156.135(d), States are permitted to
submit for approval by HHS Statespecific data sets for use as the standard
12299
population to calculate AV. No State
submitted a data set by the September
1 deadline.
TABLE 10—REDUCTIONS IN MAXIMUM ANNUAL LIMITATION ON COST SHARING FOR 2017
Reduced
maximum annual
limitation on cost
sharing for
self-only coverage
for 2017
Eligibility category
Reduced
maximum annual
limitation on cost
sharing for other
than self-only
coverage for 2017
$2,350
$4,700
2,350
4,700
5,700
11,400
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Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(i) (that is, 100–150 percent of
FPL) ..........................................................................................................................................................
Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(ii) (that is, 150–200 percent of
FPL) ..........................................................................................................................................................
Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(iii) (that is, 200–250 percent of
FPL) ..........................................................................................................................................................
e. AV Calculation for Determining Level
of Coverage (§ 156.135)
Section 2707(a) of the PHS Act and
section 1302 of the Affordable Care Act
direct issuers of non-grandfathered
health insurance in the individual and
small group markets, including QHPs, to
ensure that plans meet a level of
coverage specified in section 1302(d)(1)
of the Affordable Care Act and codified
at § 156.140(b). On February 25, 2013,
HHS published the EHB Rule (78 FR
12833), implementing section 1302(d) of
the Affordable Care Act, which required
that, to determine the level of coverage
for a given metal tier level, the
calculation of AV be based upon the
provision of EHB to a standard
population. Section 156.135(a)
establishes that AV is generally to be
calculated using the AV Calculator
developed and made available by HHS
for a given benefit year. In the 2015
Payment Notice (79 FR 13743), we
established at § 156.135(g) provisions
for updating the AV Calculator in future
plan years and in the proposed rule, we
proposed to amend those provisions to
allow for additional flexibility in our
approach and options for updating of
the AV Calculator in the future.
Specifically, we proposed that HHS
will update the AV Calculator annually
for material changes that may include
costs, plan designs, the standard
population, developments in the
function and operation of the AV
Calculator and other actuarially relevant
factors. Under the amended regulation,
we will continue to make updates to the
AV Calculator, as we have in previous
years, including updates to the trend
factor, algorithms changes, and user
interface changes. We will also update
the claims data and demographic
distribution being used in the AV
Calculator as needed, and continue to
update the AV Calculator’s annual
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limitation on cost sharing based on a
projected estimate to allow for
compliance with § 156.130(a).
Therefore, the major difference that we
proposed under the revised § 156.135(g)
was that the methodology, data sources,
and trigger for making updates in the
AV Calculator would be more flexible
than the previous § 156.135(g). This
amended provision will allow us more
options in considering approaches to
making changes in the AV Calculator,
particularly as the health insurance
market and the AV Calculator evolve,
new methodological approaches are
developed, and new data becomes
available.
We would also not be required to
make each of these changes each year,
although we could include these types
of material changes in our annual
updating of the AV Calculator. We
proposed that in developing the annual
updates to the AV Calculator, we would
continue to take into consideration
stakeholder feedback on needed changes
to the AV Calculator (through
actuarialvalue@cms.hhs.gov) and to
publicly release a draft version of the
AV Calculator and the AV Calculator
Methodology for comment before
releasing the final AV Calculator. We
are finalizing these provisions as
proposed.
Comment: Commenters were
concerned about the timing of the
release of the AV Calculator, and
wanted the AV Calculator to be
available sooner. Certain commenters
did not support the revised language
without a timeframe. Commenters
generally wanted the final AV
Calculator to be available around
January 1 of the preceding benefit year,
in anticipation of State filing deadlines.
Response: We are finalizing the
provision as proposed. One reason for
changing § 156.135(g) is to provide HHS
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with the flexibility to update the AV
Calculator sooner. We understand the
importance for issuers and States to
have time to use the final version of the
AV Calculator to develop and adjust
plan designs in advance of State filing
deadlines. We believe that revised
§ 156.135(g) will give HHS added
flexibility in changing the AV
Calculator, which may result in HHS
releasing the final AV Calculator earlier,
such as by January 1 of the preceding
benefit year. Regardless, we anticipate
releasing the final AV Calculator no
later than the end of the first quarter of
the preceding benefit year.
Comment: Some commenters
supported the flexibility for the trend
factor calculation. Others expressed
wanting predictable and consistent
updates, wanting less frequent updates,
and wanting an increase to the de
minimis range.
Response: We recognize the
importance of ensuring that the AV
Calculator accurately reflects the current
market and that changes to the AV
Calculator minimize disruption to
current plan designs through keeping
AVs stable. We intend to carefully
weigh these factors when making
changes. We do not intend to make
changes to the de minimis range at this
time. The de minimis range is intended
to allow plans to float within a
reasonable range of +/¥ 2 percent.
We will also continue to work with
stakeholders on the development of the
AV Calculator updates. As noted above,
in developing the annual updates to the
AV Calculator, we will continue to take
into consideration stakeholder feedback
on needed changes to the AV Calculator
(through actuarialvalue@cms.hhs.gov)
and to publicly release a draft version of
the AV Calculator and the AV
Calculator Methodology for comment
before releasing the final AV Calculator.
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Additionally, we also intend to consult
as needed with the American Academy
of Actuaries and the NAIC on needed
changes to the AV Calculator.
Comment: One commenter was
concerned that the AV Calculator does
not take into account the scope of
networks and formularies. Other
commenters asked for the Minimum
Value Calculator to be updated
consistently and discussed issues for
large group plans that use the MV
Calculator, such as accounting for the
annual limitation on cost sharing.
Response: AV measures a plan’s cost
sharing generosity on the basis of the
EHB being provided to a standard
population (and without regard to the
population to which that plan may
actually provide benefits) to determine
the level of coverage. AV is not intended
to measure the scope of a network or
formulary. All plans required to comply
with AV must comply with EHB
requirements (which establish the scope
of benefits, including the formulary,
being offered) and State and, in the case
of QHPs, Federal laws and regulations
establish a plan’s network requirements.
We will work with the Department of
Treasury and the Internal Revenue
Service to consider whether further
guidance is needed with regards to the
MV Calculator. Updates to the MV
Calculator are beyond the scope of this
rulemaking.
f. Application to Stand-Alone Dental
Plans Inside the Exchange (§ 156.150)
At § 156.150, we proposed revisions
to increase the annual limitation on cost
sharing for SADPs. To make
adjustments to the annual limitation on
cost sharing in subsequent years to keep
pace with inflation, we proposed in
paragraph (a)(1) that for a plan year
beginning after 2016, the dollar limit
applicable to a SADP for one covered
child be increased by an amount equal
to the product of that amount and the
quotient of consumer price index for
dental services for the year 2 years prior
to the benefit year, divided by the
consumer price index for dental services
for 2016. In paragraph (a)(2), we
proposed that the dollar limit for two or
more covered children be twice the
dollar limit for one child described in
paragraph (a)(1) of this section. We
sought comment on whether the
premium adjustment percentage defined
in § 156.130(e) should be used instead.
In paragraph (c), we proposed to
define the dental CPI, which is a subcomponent of the U.S. Department of
Labor’s Bureau of Labor Statistics
Consumer Price Index specific to dental
services. We would use the annual
dental CPI published by the Department
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of Labor. In paragraph (d), we proposed
that increases in the annual dollar limits
for one child that do not result in a
multiple of $25 will be rounded down,
to the next lowest multiple of $25.
We are finalizing the provision with
modifications to paragraphs (a)(1) and
(2) to apply the indexing formula to
plan years beginning after 2017 and
with a modification of the language of
the formula for increasing the annual
limitation on cost sharing for purposes
of clarity.
Comment: Several commenters
supported our proposed approach to
raise the annual limitation on cost
sharing over time using the CPI for
dental services. Some commenters
asked that the proposal be implemented
sooner than for plan years beginning
after 2016. Others requested using the
2014 CPI for dental services rather than
the 2016 in order to have the annual
limitation on cost sharing increase in
the next few years. Others asked that we
also consider increasing the annual
limitation on cost sharing to a set level
and then applying the indexing formula
via the CPI for dental services in order
to meet HHS’s stated interest in
providing preventive care without cost
sharing. We also received several
comments requesting clarification of the
formula.
Response: When we established
specific values for the annual limitation
on cost sharing for SADPs in previous
rules,57 we intended to eventually index
the limitation to keep pace with
inflation and moderate potential
increases in premiums, similar to the
annual limitation on cost sharing for
medical QHPs. Without such an
increase, over time we could see an
increase in SADP premiums and fewer
affordable dental options for consumers.
We believe that this formula balances
the need to establish a process to
increase the annual limitation on cost
sharing over time against concerns with
increasing the maximum financial
liability to consumers.
In the regulatory impact assessment in
the proposed rule, we noted our desire
for consumers to have access to
preventive services without cost
sharing. We acknowledge that this may
be difficult to achieve at the low AV
level of 70 percent. However, we believe
that to implement a one-time increase to
the annual limitation on cost sharing by
a significant amount would be overly
burdensome for consumers.
Accordingly, we are finalizing the
proposal as proposed, with minor
57 Exchange Establishment Rule, 77 FR 18309
(Mar. 27, 2012); EHB Rule, 78 FR 12833 (Feb. 25,
2013).
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modifications. We are modifying
paragraphs (a)(1) and (2) to apply the
indexing formula to plan years
beginning after 2017 rather than 2016.
We acknowledge that applying the
indexing formula to plan years
beginning after 2017 will ensure that the
first application of the formula, for the
2018 benefit year, will result in neither
an increase nor a decrease in the annual
limitation on cost sharing for that
benefit year. However, we are seeking to
balance stability in plan designs with
the desire to increase the annual
limitation on cost sharing to keep pace
with inflation. We will continue to
monitor the increase over time to ensure
we are working towards our stated
goals. As noted in the proposed rule, we
will propose and finalize the annual
increase to the dental annual limitation
on cost sharing according to the formula
specified here in the annual Payment
Notice.
We did not receive any comments
suggesting that we use the premium
adjustment percentage defined in
§ 156.130(e) instead. We did not receive
any comments opposing our proposal to
increase the annual limitation on cost
sharing in $25 increments and will
finalize this provision as proposed.
We also are making a modification to
the wording of the formula, though not
to its meaning. Under this final rule, as
under the proposal, the annual
limitation on cost sharing will be
increased by the same percentage the
CPI for dental services increased
between 2016 and the year that is 2
years prior to the applicable benefit
year.
Comment: A commenter asked that
we clarify that the annual limitation on
cost sharing would never be reduced.
Another requested clarification whether
the provisions would be applied to offExchange SADPs.
Response: We are clarifying that the
proposed formula will not be used to
reduce the annual limitation on cost
sharing for SADPs. The updated formula
language in paragraph (a)(1) specifically
notes that the annual dollar limit is
increased by the percent increase of the
consumer price index for dental
services. We do not include a provision
that would require a reduction.
We also note that all Exchangecertified SADPs must meet the same
certification standards, including the
annual limitation on cost sharing,
regardless of whether they are offered
on or off Exchanges.
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5. Qualified Health Plan Minimum
Certification Standards
a. Network Adequacy Standards
(§ 156.230)
At § 156.230, we established the
minimum criteria for network adequacy
that health and dental plan issuers must
meet to be certified as QHPs, including
SADPs, in accordance with the
Secretary’s authority in section
1311(c)(1)(B) of the Affordable Care Act.
Section 156.230(a)(2) requires all issuers
to maintain a network that is sufficient
in number and types of providers to
assure that all services will be accessible
without unreasonable delay. Section
156.230(b) sets forth standards for
access to provider directories requiring
issuers to publish an up-to-date,
accurate, and complete provider
directory for plan years beginning on or
after January 1, 2016, and § 156.230(c)
requires QHPs in the FFE to make this
provider directory data available on its
Web site in an HHS-specified format
and also submit this information to HHS
in a format and manner and at times
determined by HHS.
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(1) State Selection of Minimum Network
Adequacy Standards
The NAIC’s Network Adequacy Model
Review Subgroup has completed
significant work in the area of network
adequacy, which includes finalization
of a Network Adequacy Model Act,
which can be found at https://
www.naic.org/store/free/MDL-74.pdf,
that States can adopt in whole or in
part. We will continue to monitor the
work of the NAIC in this area and of
States’ implementation of these
standards, and look forward to
partnering with States and the NAIC in
developing and promulgating network
adequacy protections. In the interest of
furthering this work, we proposed a
number of standards related to network
adequacy.
In recognition of the traditional role
States have in developing and enforcing
network adequacy standards, we
proposed that FFEs would rely on State
reviews for network adequacy in States
in which an FFE is operating, provided
that HHS determined that the State uses
an acceptable quantifiable network
adequacy metric commonly used in the
health insurance industry to measure
network adequacy.
We proposed that HHS would
determine that a State’s network
adequacy assessment methodology
meets the standard above if the State
selects one or more standards from a list
of metrics provided by HHS and applies
them prospectively to the QHP issuers
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in the State. We anticipated including at
least the following metrics in the list:
• Prospective time and distance
standards at least as stringent as the FFE
standard.
• Prospective minimum providercovered person ratios for the specialties
with the highest utilization rate for its
State.
We proposed that after HHS discussed
with States their selection to determine
whether the State’s network adequacy
standard would be acceptable under the
standard above, we would notify issuers
via regulatory guidance about whether
the State standards or Federal default
standard would apply.
We proposed that when HHS
determined that a State’s network
adequacy standard is acceptable under
the standard above, the State would
certify to the FFE which plans meet the
network adequacy standard, and the
FFE in that State would rely on the
State’s review for purposes of
determining whether a QHP meets the
requirements under § 156.230(a)(2),
although those issuers would still be
required to submit to HHS provider
data, attest to the HHS network
adequacy certification requirements,
and meet other applicable HHS
standards, including the other standards
under § 156.230.
In the proposed rule, we stated that
for States that do not review for network
adequacy, or do not select a standard as
described above, the FFE would
conduct an independent review under a
Federal default standard. We proposed
the Federal default standard to be a time
and distance standard. For the
certification cycle for plan years
beginning in 2017, we stated that we
anticipated evaluating the QHP issuer
networks under this standard based on
the numbers and types of providers, in
addition to their general geographic
location. The standard proposed
involved using a time and distance
standard at the county level. We also
stated that we were considering using
standards similar to those used in
Medicare Advantage, utilizing the
National Provider Identifier database,
and focusing on the specialties that
enrollees most generally use. Further,
we explained that HHS was also
carefully considering other network
standards, including those of individual
States, accrediting entities, and Federal
health care programs, as it developed
the time and distance standards for the
FFEs.
We also stated that the proposed
county-specific time and distance
parameters that plans would be required
to meet, including specifications for
specific provider and facility types,
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would be detailed annually in
conjunction with the Letter to Issuers.
We also proposed that issuers that did
not meet the specified standards would
be able to submit a justification to
account for any variances, and that the
FFE would review the justification to
determine whether the variance is
reasonable based on circumstances,
such as the availability of providers and
variables reflected in local patterns of
care.
We explained that we did not intend
in establishing these default standards
to prohibit certification of plans with
narrow networks or otherwise impede
innovation in plan design. Instead, we
stated that we intended to establish a
minimum floor consistent with the
levels generally maintained in the
market today, so that generally a very
small number of plans would be
identified as having networks deemed
inadequate. Our discussion of the
Federal default standard was intended
to provide issuers with more
transparency regarding our certification
processes. In that discussion, we
clarified that the process would be
designed and implemented to achieve
results similar to those yielded by the
reviews conducted by the FFEs in prior
certification cycles. We explained that
we believed this standard would
promote predictability for issuers in the
course of certification. We noted in the
proposed rule that multi-State plan
options will be considered to meet the
network adequacy requirements under
§ 156.230(a)(2) if they meet network
adequacy standards established by
OPM.
For the reasons noted below, we are
not finalizing § 156.230(d) as proposed
at this time and will continue to work
with States to determine how to best
ensure reasonable access while
preventing duplicate review.
Comment: Many commenters raised
concerns about the use of a time and
distance Federal default standard, and
stated the new NAIC Network Adequacy
Model Act does not include time and
distance standards. Commenters also
raised concerns that the proposed
standard could increase health care
costs, would not adequately address
network adequacy issues in all areas,
and would not fit all types of plans, and
numerous commenters asked that HHS
give States time to enact the new NAIC
Network Adequacy Model Act rather
than implementing the standard in the
final rule.
Response: We appreciate the concerns
raised and in response are declining to
finalize § 156.230(d) as proposed for the
2017 plan year. Our intention is to give
States time to adopt the NAIC Network
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Adequacy Model Act provisions. We
note in particular that the NAIC
Network Adequacy Model Act
highlights ‘‘specific quantitative
standards to ensure adequate access that
carriers must, at a minimum, satisfy in
order to be considered to have a
sufficient network,’’ and these include
provisions requiring a minimum
numbers of providers, and setting limits
on travel times and wait times. The Act
explains how these standards can be
incorporated either in statute or in
regulation. Further, we note that the
NAIC Network Adequacy Model Act
was approved unanimously by all States
and Washington, DC, and the NAIC has
stated that it will be a priority of the
organization to have a majority of States
adopt the NAIC Network Adequacy
Model Act within 3 years. We note our
expectation that all States, including
FFE States, will actively implement
these provisions, and we look forward
to monitoring States’ progress this year,
with a particular view to avoiding
duplicative Federal and State review
processes. We will revisit this proposal
in future rulemaking. We will continue
the process used in previous years to
review network adequacy as part of the
annual certification process, and will
review network data for reasonable
access.
For transparency, we are publishing
separately details of the FFEs’ internal
QHP certification process for network
adequacy, including the metric used for
the internal review, to assess plans for
network adequacy.58 These standards
are consistent with those we have used
in the past to assess potential QHPs for
compliance with the network adequacy
requirements; we believe that providing
additional transparency about these
standards will help issuers with their
network planning.
Comment: Many commenters
expressed support for the proposed time
and distance standards, and many
requested specific standards for specific
types of specialty care including
pediatrics, cancer centers, women’s
health, and transplant providers.
Commenters also requested that
additional standards be added to the
quantitative standards, including
requirements regarding wait times,
language services, telehealth, disability
accessibility and reasonable access
being provided at the lowest cost
sharing tier. Some commenters also
expressed concerns about the
applicability of time and distance to
dental issuers and urged that other
standards be used. Some commenters
58 Final 2017 Letter to Issuers in the Federallyfacilitated Marketplaces (Feb. 29, 2016).
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supported the use of time and distance
standards for SADPs. Some commenters
requested that the time and distance
standards be expanded to SBEs and
multi-State plans, and that they be used
as the required standards, not a default.
Response: We appreciate the
comments; however, we are not
finalizing the default time and distance
standard at this time. As discussed
above, our intention is to give States
time to adopt the NAIC Network
Adequacy Model Act provisions and
implement associated standards.
Comment: Many commenters offered
suggestions for changing and expanding
the State metrics listed in the preamble,
including keeping or removing the time
and distance metric and providercovered person ratios, adding the
network sufficiency metrics from the
recently completed NAIC Network
Adequacy Model Act, adding a metric
related to standards for wait times, and
altering the two listed metrics to specify
that they apply to specialties and
subspecialties. Some commenters
suggested we implement an effective
network access review standard
comparable to the effective rate review
standard by State.
Response: We are not finalizing our
proposal establishing a minimum
quantitative State network adequacy
measurement at this time. We wish to
provide States time to adopt the NAIC
Network Adequacy Model Act
provisions and associated standards.
Comment: Some commenters
suggested that HHS provide that only
providers available through the plan’s
lowest tier of cost-sharing be counted
for purposes of determining a network’s
adequacy.
Response: We intend to monitor the
practice of tiering of providers and will
consider implications of the practice for
network adequacy review in the future.
We remind all issuers, including those
that use tiered networks, that they must
continue to meet the current
requirement in § 156.230(a)(2) to
provide reasonable access to all covered
services at all times throughout the plan
year.
As States continue their work to
implement the NAIC Network Adequacy
Model Act, we will continue to use
quantitative time-distance standards in
our review of plans for QHP
certification on the FFEs, and will be
providing details of the criteria for
review in the annual Letter to Issuers.
We are finalizing a number of policies
relating to network adequacy. We are
finalizing two provisions to address
provider transitions in the FFE and a
standard for all QHPs governing cost
sharing that would apply in certain
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circumstances when an enrollee
receives EHB provided by an out-ofnetwork ancillary provider at an innetwork setting. We are also finalizing
our proposed policy regarding
standardized categorization of network
breadth for QHPs on the Federal
platform.
(2) Additional Network Adequacy
Standards
Under proposed § 156.230(e), which
we are finalizing as paragraph (d), we
proposed two new requirements to
address provider transitions. First, we
proposed new § 156.230(e)(1) to require
QHP issuers in all FFEs to notify
enrollees about a discontinuation in
their network coverage of a contracted
provider. We proposed that a QHP in an
FFE be required to make a good faith
effort to provide written notice of a
discontinued provider, 30 days prior to
the effective date of the change or
otherwise as soon as practicable, to all
enrollees who are patients seen on a
regular basis by the provider or receive
primary care from the provider whose
contract is being discontinued,
irrespective of whether the contract is
being discontinued due to a termination
for cause or without cause, or due to a
non-renewal.
We also proposed that a discontinued
provider include both a provider that is
being involuntarily removed from the
network, and a provider that is
voluntarily leaving the network. To
satisfy this requirement, we stated that
we expect the issuer to try to work with
the provider to obtain the list of affected
patients or to use its claims data system
to identify enrollees who see the
affected providers. We said that we
would encourage issuers, as part of the
notice to consumers, to notify the
enrollee of other comparable in-network
providers in the enrollee’s service area,
provide information on how an enrollee
could access the plan’s continuity of
care coverage, and encourage the
enrollee to contact the plan with any
questions.
Second, we proposed a new
§ 156.230(e)(2) to require that QHP
issuers in all FFEs ensure continuity of
care for enrollees in cases where a
provider is terminated without cause.
Specifically, we proposed to require the
issuer, in cases where the provider is
terminated without cause, to allow an
enrollee in active treatment to continue
treatment until the treatment is
complete or for 90 days, whichever is
shorter, at in-network cost-sharing rates.
We proposed the following definition of
active treatment in paragraph (e)(2): (1)
An ongoing course of treatment for a
life-threatening condition; (2) an
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ongoing course of treatment for a serious
acute condition; (3) the second or third
trimester of pregnancy; or (4) an ongoing
course of treatment for a health
condition for which a treating physician
or health care provider attests that
discontinuing care by that physician or
health care provider would worsen the
condition or interfere with anticipated
outcomes. In relation to the proposed
definition of active treatment, we stated
that an ongoing course of treatment
includes treatments for mental health
and substance use disorders that fall
within the proposed definition. For the
purposes of the active treatment
definition, we proposed to interpret a
life-threatening condition as a disease or
condition for which likelihood of death
is probable unless the course of the
disease or condition is interrupted; and
a serious acute condition as a disease or
condition requiring complex on-going
care which the covered person is
currently receiving, such as
chemotherapy, post-operative visits, or
radiation therapy. Finally, we proposed
under paragraph (e)(2)(ii) that any
decisions made for a request for
continuity of care be subject to the
issuer’s internal and external grievance
and appeal processes in accordance
with applicable State or Federal law or
regulations. We solicited comments on
several issues related proposed
§ 156.230(e), such as the definitions of
key terms and timeframes, when these
provisions should apply, whether
exceptions should be allowed for States
that already have requirements, whether
additional provisions should be allowed
for continuity of care in cases of
pregnancy as far as extending beyond 90
days and whether that care should
limited to obstetric care and whether
other provisions are needed to protect
an enrollee when a provider contract is
terminated.
We are finalizing these requirements
as proposed, with certain modifications
to better align with the NAIC Network
Adequacy Model Act, including
extending continuity of care coverage
for the second or third trimester of
pregnancy through the postpartum
period and codifying the definitions of
life-threatening condition and serious
acute condition. Additionally, we note
that these standards are not intended to,
and do not, preempt State provider
transition notices and continuity of care
requirements, and that we intend to
defer to a State’s enforcement of
substantially similar or more stringent
standards.
Comment: Many commenters
supported deferring to State provider
transition policies instead of the
proposals in the proposed rule, with
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some commenters only supporting
deference when the State has stronger
consumer protections. Justifications for
deferring to State provider transition
policies included problems with
conflicting State law and the associated
burden with conflicting requirements.
In the absence of applicable State laws,
some commenters recommended
aligning standards to those in the NAIC
Network Adequacy Model Act that are
administratively feasible or allow
issuers to maintain their current
practices.
Response: We are finalizing these
proposed provider transition policies in
§ 156.230(d), but note that these
standards are not intended to, and do
not, preempt State provider transition
notices and continuity of care rules, and
that we would defer to a State’s
enforcement of substantially similar or
more stringent requirements. This
flexibility would apply to any State that
chooses to enact these parts of the NAIC
Network Adequacy Model Act under
section 6(L).59 We recognize that the
NAIC Network Adequacy Model Act
differs in certain respects from our
requirements under § 156.230(d)(1) and
(2); we intend to monitor States’
implementation of the NAIC Network
Adequacy Model Act and may consider
revisions to this policy in the future if
needed.
Comment: Some commenters wanted
more than 30 days’ notice, or asked that
the timeframes align with the NAIC
Network Adequacy Model Act. Some
commenters supported requiring all
enrollees of a primary care provider to
be required to be notified. Other
commenters stated that the notices
should not be required if providers are
leaving a practice with other in-network
providers from that practice available.
Some commenters advocated for the
development of enrollee registries
through which enrollees can be
informed of changes or receive a list of
providers being discontinued. Some
commenters expressed concern about
the value of notifications, and others
expressed concern about the
confidentiality of provider notices.
Response: We are finalizing the notice
requirements at § 156.230(d)(1) as
proposed. While our notice
requirements are not the same as those
in the NAIC Network Adequacy Model
Act, we did consider these notice
requirements and requirements from
other programs in proposing
§ 156.230(d)(1). We understand that
issuers need timely notification from the
provider leaving the network in order to
meet the 30-day timeframe, but as the
59 See
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issuer has the contracting relationship
with the provider, the issuer is in the
best position to require providers to
provide a termination notice to the
issuer.
We note that paragraph (d)(1) requires
that the issuer make a good faith effort
to provide the required notification. We
understand that there are certain
situations that cannot be anticipated,
and in those cases, we would expect the
issuer to send the notice to the enrollee
as soon as practically possible. Issuers
can send the notification to the enrollee
electronically or by mail. In response to
comments, we clarify that when the
provider is leaving a practice, and as a
result will no longer belong to the
issuer’s network, but other providers
from the practice remain in-network,
paragraph (d)(1) would not require the
issuer to provide notice to the enrollees.
We believe in those cases the provider’s
practice is better positioned to provide
notification to the enrollee.
Comment: Comments on the
appropriate definition of ‘‘regular basis’’
generally either preferred to leave the
definition to the discretion of the issuer
or suggested that we define it to include
an enrollee that has received services
from the provider within one year.
Some commenters specifically wanted
the definitions related to primary care
from the NAIC Network Adequacy
Model Act to be incorporated in the rule
to clarify how the provisions under
paragraph (d)(1) should apply. Some
commenters wanted additional
protections in cases of provider
transitions, such as special enrollment
periods for provider terminations, or
limits on the ability of issuers to
terminate providers mid-year (or
recourse for the providers in the event
of such a termination), while other
comments expressed concern about the
difficulty in coordinating with providers
to identify affected enrollees. Other
commenters wanted issuers to be
required to include information in the
notice about other comparable innetwork providers and to inform the
enrollee of rights to receive continuity
of coverage.
Response: The purpose of
§ 156.230(d)(1) is to ensure that
enrollees are notified of changes to their
provider network on a timely basis. At
this time, we are not extending this
provision to include additional
requirements. However,
notwithstanding a provider termination,
all QHP issuers are required under
§ 156.230(b) to maintain a network that
is sufficient in number and types of
providers, including providers that
specialize in mental health and
substance abuse services, to assure that
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all services will be accessible without
unreasonable delay. For purposes of
paragraph (d)(1), we will not finalize a
uniform definition of regular basis at
this time, and will permit issuers to
implement a reasonable definition of
that term. The NAIC Network Adequacy
Model Act similarly did not include a
definition of regular basis. For purposes
of paragraph (d)(1), we note that, in
alignment with the NAIC Network
Adequacy Model Act, we generally
understand primary care to mean health
care services for a range of common
physical, mental or behavioral health
conditions provided by a physician or
non-physician primary care provider,
and a provider of primary care to mean
a participating health care professional
designated by the issuer to supervise,
coordinate, or provide initial care or
continuing care to an enrollee, and who
may be required by the issuer to initiate
a referral for specialty care and maintain
supervision of health care services
rendered to the covered person, but that
an issuer may implement reasonable
definitions of these terms. To identify
enrollees who see a provider who is
terminating, we expect the issuer to
work with the provider to obtain the list
of affected patients, use its claims data
system to identify enrollees who see the
affected providers, or use another
reasonable method. The issuer does not
need to use more than one method. For
the written notice required under
paragraph (d)(1), we encourage issuers
to notify the enrollee of other
comparable in-network providers in the
enrollee’s service area, provide
information on how an enrollee may
access the plan’s continuity of care
coverage, and encourage the enrollee to
contact the plan with any questions.
Comment: Some commenters stated
that continuity of care should cover
non-renewals and terminations without
cause; other commenters disagreed.
Commenters sought clarifications
regarding the cost sharing during the
continuity of care period, and some
commenters asked us to adopt
provisions from the NAIC Network
Adequacy Model Act, including
providing that the issuer is only
required to provide the continuity of
care if the provider agrees to accept the
previously contracted in-network rate
and to ensure protections against
balance billing. Some stated that failure
to include such a request could increase
premiums.
Response: While we expect issuers to
negotiate with a provider for payment
for services under § 156.230(d)(2),
issuers would only be responsible for
paying to a provider what was
previously being paid under the same
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terms and conditions of the provider
contract, including any protections
against balance billing, if the provider
agrees to provide care under
§ 156.230(d)(2). We cannot require noncontracted providers to accept a
particular payment rate under
§ 156.230(d)(2). Therefore, nothing
under § 156.230(d)(2) would prohibit
balance billing for non-contracted
providers in accordance with section
1302(c)(3)(B) of the Affordable Care Act
and § 155.20. This means that an
enrollee could be balance billed for the
services under § 156.230(d)(2), absent
another prohibition on balance billing
in this situation, and those balance
billing amounts would not be required
to count toward the plan’s annual
limitation on cost sharing established at
§ 156.130.
In response to comments, we are
limiting paragraph (d)(2) to cases where
the provider is terminated without
cause, including non-renewals without
cause, and clarify that § 156.230(d)(2)
does not apply in cases where the
contract is terminated or not renewed
with cause. A termination or nonrenewal without cause could be
initiated by either the issuer or the
provider or could be mutual. In any of
these cases, enrollee continuity of care
should be ensured. Furthermore, we
clarify that if the enrollee remains in the
same plan across plan years,
§ 156.230(d)(2) will apply across plan
years. However, if an enrollee switches
plans, § 156.230(d)(2) would not apply,
since there would not necessarily be an
expectation that the same provider
would be available under the new plan.
Comment: Some commenters sought
clarifications or expansions of the
proposed definition of the course of
active treatment, such as changes that
would require inclusion of certain
conditions or transitional coverage of
drugs. While some commenters sought
clarifications on the definition of active
treatment or wanted the issuer’s medical
director to make the determination of
whether an enrollee was in the course
of active treatment, commenters
generally supported the proposed
definition of ‘‘active treatment’’ and our
proposal that would make the
continuity of coverage rule subject to
internal and external appeal processes.
Commenters supported requiring
continuity of coverage for pregnancy
through the post-partum period. Some
commenters also sought 90 days as the
minimum transitional period, not the
maximum period for continuity of care
coverage, or urged us to adopt a longer
or shorter period.
Response: We are not making changes
to the definition of ‘‘active treatment’’,
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except to amend the definition to
‘‘active course of treatment’’ to align
with the language in the NAIC Network
Adequacy Model Act. This change is not
intended to alter the meaning of the
proposed rule. We are also finalizing, to
align with the NAIC Network Adequacy
Model Act, the definitions of a lifethreatening condition as a disease or
condition for which likelihood of death
is probable unless the course of the
disease or condition is interrupted; and
a serious acute condition as a disease or
condition requiring complex ongoing
care which the covered person is
currently receiving, such as
chemotherapy, radiation therapy, or
post-operative visits. For the purposes
of the active course of treatment
definition, an ongoing course of
treatment includes treatments for
mental health and substance use
disorders that fall within the definition
of active course of treatment.
Additionally, if the enrollee has
successfully transitioned to a
participating provider, if the benefit
limitations of the plan are met or
exceeded, or if care is not medically
necessary, § 156.230(d)(2) would no
longer apply to the enrollee.
In response to comments supporting
the extension of this policy to cases of
pregnancy, we are revising the
definition of active course of treatment
to include the second or third trimester
of pregnancy through the postpartum
period. We are leaving the definition of
what constitutes ‘‘postpartum period’’
and the scope of related services to the
reasonable interpretation of the issuer.
At § 156.230(f), which we are now
finalizing as paragraph (e), we proposed
to require, notwithstanding § 156.130(c)
of the subpart, that for a network to be
deemed adequate, each QHP that uses a
provider network must count cost
sharing paid by an enrollee for an EHB
provided by an out-of-network provider
in an in-network setting under certain
circumstances towards the enrollee’s
annual limitation on cost sharing.
Alternatively, we proposed that the plan
could provide a written notice to the
enrollee at least 10 business days before
the provision of the benefit that
additional costs may be incurred for
EHB provided by an out-of-network
provider in an in-network setting,
including balance billing charges,
unless such costs are prohibited under
State law, and that any additional
charges may not count toward the innetwork annual limitation on cost
sharing.
We solicited comments on whether 10
business days’ advance notice is the
appropriate timeframe. We also sought
comment on whether issuers should be
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required to provide customized
information to the consumer (including
information on potential in-network
providers) or if a form notification
would be sufficient. We proposed that
this policy would apply to all QHP
issuers, in all Exchanges.
We are finalizing our proposed policy,
with four modifications. First, we
provide that this policy would only
apply to cost sharing paid by an enrollee
for an EHB provided by an out-ofnetwork ancillary provider in an innetwork setting. Second, we are
shortening the timeframe from 10
business days to the longer of the
issuer’s prior authorization timeline
(that is, when the issuer would typically
respond to a prior authorization request
submitted timely) or 48 hours prior to
the scheduled service. Third, we are
finalizing this proposal so that it will
take effect beginning for the 2018
benefit year. Fourth, we are making a
minor edit for clarity.
Comment: Many commenters
supported HHS’s efforts to address
surprise out-of-pocket costs for
consumers. Other commenters
supported the proposal, but felt that it
did not go far enough to protect
consumers, and stated that HHS should
consider including a prohibition on
balance billing or otherwise restricting
consumer financial responsibility in
these scenarios. Other commenters
thought that it may be difficult for
consumers to locate an in-network
provider within this timeframe.
Commenters also suggested expanding
the proposal to include situations in
which an in-network provider is not
available, when the provider directory is
not up to date, and emergency care.
Several commenters did not support
our proposal, and asked that States be
given the time and discretion to
implement network adequacy standards.
Others requested that HHS adopt NAIC
Network Adequacy Model Act
provisions instead. Other commenters
were concerned that the proposal may
have unintended consequences, such as
disincentivizing providers from
contracting with issuers in order to be
able to balance bill consumers, or
incentivizing consumers and out-ofnetwork providers to elect to perform
procedures at an in-network facility.
Response: We are finalizing, for the
2018 and later benefit years, a modified
§ 156.230(e) to count services provided
by an out-of-network ancillary provider
in an in-network facility towards the innetwork annual limitation on cost
sharing if the issuer does not provide
timely notice, with the modifications
described above. We did not propose to
prohibit balance billing by out-of-
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network providers or limit the financial
liability associated with out-of-network
services to consumers. Our intent in
establishing this policy beginning for
the 2018 benefit year is to permit us to
monitor ongoing efforts by issuers and
providers to address the complex issue
of surprise out-of-network cost sharing
at in-network facilities across all CMS
programs in a holistic manner, and
amend our policy in the future to
accommodate progress on this issue, if
warranted.
While not a solution to all adverse
financial consequences of receiving
treatment from an out-of-network
provider in this situation, we believe the
policy we are finalizing will help
provide transparency and ensure that
consumers receive notice of the possible
consequences where an out-of-network
ancillary provider may be seen and are
provided some mitigation of these
consequences where proper, timely
notice is not provided by the issuer. We
believe that this policy provides a
measure of financial protection for
consumers against surprise out-ofnetwork cost sharing, while maintaining
the larger part of the QHP’s cost-sharing
structure and avoids significant impacts
on premiums.
We are making a modification to this
policy to limit its application to
ancillary providers (that is, the provider
of a service ancillary to what is being
provided by the primary provider, such
as anesthesiology or radiology) rather
than the services supplied by the
primary provider. In response to
comments, we were concerned that the
proposed policy could have had the
unintended consequence of providing
for reduced cost sharing for a primary
provider, such as a surgeon known to be
out-of-network. We acknowledge
commenters’ concerns that as
previously written, the policy could
allow for a consumer who has selected
an out-of-network provider to
deliberately seek to have the services
rendered in an in-network facility in
order to reduce cost sharing. We believe
that this modification will address this
concern.
We intend to continue to monitor
these situations, including issuers’
timely compliance with this provision
to consider whether further rulemaking
is needed. Lastly, as we stated in the
proposed rule, this proposal is not
intended to, and does not, preempt any
State laws on this topic.
Comment: Some commenters
supported the requirement that issuers
notify consumers of the potential for
additional cost-sharing from out-ofnetwork providers, but did not support
the exception for issuers to not count
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the cost sharing towards the annual
limitation on cost sharing. Others
thought that the notification timeframe
of 10 days was arbitrary, not long
enough for consumers to arrange innetwork care, or too long because prior
authorization frequently happens closer
to service delivery. Some commenters
requested that facilities be required to
notify consumers about whether or not
providers were in-network for a
consumer. Others noted that the 10
days’ notice timeframe prior to the
service may incentivize issuers to delay
approval to utilize the notification
exception.
Commenters also provided feedback
on the type of information that should
be included in a notice—many
suggested that issuers be required to
include information on available
network providers, information on
costs, and how a consumer could appeal
a determination. Other commenters
thought the notification process was
overly burdensome for issuers,
especially if customized information
was required.
Response: In response to comments,
we are modifying the 10-day timeline to
account for issuers’ prior authorization
timelines. We are requiring notice from
issuers by the longer of the issuer’s prior
authorization timeline (that is, when the
issuer would typically provide the prior
authorization) or 48 hours. This new
timeline is more in line with existing
issuer prior authorization timelines and
will be less administratively
burdensome for QHP issuers to
implement, while providing consumers
with the same time period to adjust
their plans that they would have with
respect to notification of prior
authorization.
We are also finalizing our proposal
that a form notice be provided to the
enrollee in these circumstances
indicating that additional costs may be
incurred for an EHB provided by an outof-network ancillary provider in an innetwork setting, including balance
billing charges, unless such costs are
prohibited under State law, and that any
additional charges may not count
toward the in-network annual limitation
on cost sharing. While customized
information for each consumer is
preferable, we understand that creating
such a notice may be burdensome to
QHP issuers and may delay the
notification process. Additionally, the
provider directories that QHP issuers
must provide may ease the burden on
the enrollee to find an appropriate innetwork provider. Therefore, while we
are not requiring that customized
information be provided to the enrollee
in these circumstances, including
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information on available network
providers, costs, and how a consumer
could appeal a determination, we
strongly encourage QHP issuers to
provide that information.
Comment: Commenters asked if
§ 156.230(e), which was proposed
§ 156.230(f), would apply to QHPs with
tiered networks or QHPs that do not
provide out-of-network services.
Another commenter asked for
clarification on whether this provision
would apply to QHPs on and off
Exchanges. Other commenters asked
HHS to clarify that this does not apply
to emergency services which are already
covered by § 147.138(b).
Response: We clarify that § 156.230(e)
applies to QHPs, both on and off
Exchanges, and to QHPs with tiered
networks, but it does not apply to QHPs
that do not cover out-of-network
services. It also does not apply to
emergency services, which are governed
by other Federal regulations.
Comment: Several commenters
requested that § 156.230(d) and (e) not
apply to SADPs as the NAIC determined
that these types of standards were not
necessary for dental plans. The
commenters stated that the structure of
SADPs and the services covered by
SADPs are different from medical plans
as dental services are scheduled well
ahead of time, the course of treatment
does not include more serious
conditions, and services are almost
uniformly provided in the dentist’s
office.
Response: While we agree that these
provisions are more suitable to medical
services, § 155.1065 provides that
SADPs must meet QHP certification
standards, except for any certification
requirement that cannot be met because
the SADP is an excepted benefit that
provides only a limited scope of
coverage. However, we also believe due
to the nature of these policies and the
services provided by SADPs that any
instances in which a SADP would need
to apply these provisions would be rare.
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(3) Other Comments on the Preamble to
§ 156.230
In the proposed rule, we solicited
comments on a number of other network
adequacy standards, including
standards included in the work being
done by the NAIC’s Network Adequacy
Model Review Subgroup. Our
solicitation of comment included:
• Whether a QHP in an FFE should
have a network resilience policy for
disaster preparedness. Network
resilience refers to the provider
network’s capacity to withstand and
recover from natural or man-made
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disasters that may threaten enrollees’
continuous access to quality care.
• Whether measuring network
adequacy based on enrollee wait times
for scheduled appointments, including
the variation in wait times depending
on the type of provider, such as for
primary care or non-primary care
services, and whether we should add a
wait time standard as an option under
the proposed permissible State
standards mentioned in the proposed
rule, or if we should apply a broad wait
time standard across QHPs in the FFEs.
• Whether an issuer should be
required to survey all of its contracted
providers on a regular basis to
determine if a sufficient number of
network providers are accepting new
patients.
• Whether issuers should be required
to make available their selection and
tiering criteria for review and approval
by HHS and the State upon request.
We also stated that we were
considering providing on
HealthCare.gov a rating of each QHP’s
relative network coverage. This rating or
classification would be made available
to a consumer when making a plan
selection. We explained that such a
rating would help an enrollee select the
plan that best meets his or her needs,
and that we anticipated that this
analysis would compare the breadth of
the QHP network at the plan level as
compared to the breadth of the other
plan networks for plans available in the
same geographic area.
We stated that we anticipated
analyzing the QHP network by
calculating the number of specific
providers that are accessible within
specified time and distance standards.
We explained that we would then
classify the QHP networks into three
categories. We stated that we were
considering performing the calculation
based on the provider information
submitted by all QHP issuers in the
existing network adequacy FFE QHP
certification template.
In the proposed rule, we explained
that this network breadth rating would
allow an enrollee to better understand
plans’ designs, and, like other consumer
tools, could help improve plan
satisfaction. We stated that we
anticipated providing additional details
about how we would classify networks
in the Letter to Issuers and in the QHP
certification instructions, and we
solicited comments on what types of
methods should be used to identify each
network’s breadth, what specific
specialties should be included in the
analysis, what sorts of adjustments
should be made to address provider
shortages, and other possible data
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sources to obtain information about
available providers in the area. We also
welcomed comments on the best way to
make this information available to
consumers. We intend to implement
this proposal for open enrollment for
the 2017 benefit year, if following
consumer testing we determine that we
can display this information in a
manner useful to consumers. At this
time, we plan to provide the
classifications of network breadth for
each plan at the county level. These
classifications will be determined by
calculating the percentage of providers
in a plan’s network, compared to the
total number of providers in QHP
networks available in a county. We plan
to provide additional details on this
methodology in the Letter to Issuers.
Comment: Commenters had concerns
about Federal requirements on network
resilience, such as geographic variation
issues. Others generally support
network resilience policies offering
recommendations, such as broad
standards, deferring to States if they
have strong standards, or Medicare
standards.
Response: We intend to work with
stakeholders to consider best practices
for network resilience policies. We want
to ensure that any standards that we
consider in this area are reasonable and
operationally feasible, and take into
account geographical variation.
Comment: Some commenters had
concerns about requiring providers to be
surveyed on whether they are accepting
new patients because of concerns about
accuracy of this reporting, the
associated difficulty and burden on
issuers and providers, the risk of
undermining current efforts by
stakeholders to improve data quality,
and concerns about ‘‘accepting new
patients’’ being a poor standard for
determining network sufficiency. Other
commenters generally supported
requiring issuers to survey providers on
whether they are accepting new
patients, as the information could be
used to update the provider directory.
Response: In the 2016 Payment
Notice, we finalized requirements under
§ 156.230(b) that a QHP issuer must
publish an up-to-date, accurate, and
complete provider directory, including
information on which providers are
accepting new patients, the provider’s
location, contact information, specialty,
medical group, and any institutional
affiliations, in a manner that is easily
accessible to plan enrollees, prospective
enrollees, the State, the Exchange, HHS
and OPM. We also stated that all the
required data, including information on
whether a provider is accepting new
patients, are critical for consumers to
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make educated decisions about their
health coverage. While we believe that
it is important that enrollees have access
to providers who are willing to accept
new patients and issuers should ensure
providers are available within the
network, we intend to continue to
monitor this issue, including industry’s
efforts in this area, to consider whether
further requirements are needed.
Comment: Some commenters had
concerns about issuers being required to
provide selection and tiering criteria,
noting the information is proprietary
and that greater regulatory authority
over network adequacy could have a
chilling effect on network and product
design. Other commenters supported
such a provision. Many noted concerns
that issuers are currently only making
selection and tiering determinations on
costs and not quality, and oversight of
this criteria could prevent
discrimination.
Response: We encourage issuers to be
more transparent about selecting and
tiering criteria. We believe that
transparency of selecting and tiering
criteria would help enrollees and
providers better understand how the
issuer designed its network, which
could help enrollees use the network
more effectively and efficiently.
Comment: Some commenters opposed
a wait time standard, stating it is
difficult to measure and assess
consistently across providers,
operationally and technically
challenging for issuers, does not take
into account quality, and would be
problematic to apply across all FFEs
given State variation. Other commenters
supported requiring issuers to comply
with wait time standards. Many
supported applying such a requirement
to all QHPs or all QHPs in FFEs.
Response: We understand that a
Federal wait time standard would need
to take into consideration market and
geographical variation of States. We
intend to continue to monitor the use of
and development of wait time
standards.
Comment: Some commenters
supported providing network breadth
information to consumers at the time of
plan selection, and supported the
implementation we described. Other
commenters raised concerns about a
rating system, believing it might be
problematic because it does not factor in
quality and could be confusing. Some
commenters requested comprehensive
consumer testing. Some commenters
also requested that the rating
information should include both
physicians and hospitals.
Response: We plan to proceed with
providing information about each QHP’s
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relative network breadth on
HealthCare.gov. We will base the rating
information of the network data for each
QHP that is submitted as part of the
certification process. This rating will be
made available to a consumer when
making a plan selection. We are
conducting consumer testing to help
inform how to display the rating in a
way that will assist the consumer in
selecting the plan that best meets his or
her needs. We anticipate providing
details about what specialties the ratings
will include in the 2017 Final Letter to
Issuers and in the QHP certification
instructions.
Comment: Commenters provided
comments on other network adequacy
issues, such as wanting additional
requirements on provider directories,
provider non-discrimination, access to
specialized care, strong oversight and
enforcement of network adequacy
standards, and standards for material
network changes. Other commenters
wanted the proposed provisions to
apply to all QHPs instead of QHPs in
FFEs only.
Response: We are not implementing
additional network adequacy related
provisions at this time. Our intention is
to give States time to adopt the NAIC
Network Adequacy Model Act
provisions and potentially reconsider
this area in the future. Therefore, we are
finalizing new § 156.230(d) to apply to
all QHPs in an FFE only, and new
§ 156.230(e) to apply to all QHPs.
b. Essential Community Providers
(§ 156.235)
On June 5, 2015, we proposed through
a Paperwork Reduction Act (PRA)
notice a provider petition process to
update the ECP list against which issuer
compliance with the ECP standard is
measured. We completed this data
collection for the 2017 benefit year and
will provide additional opportunities
for ECPs to submit provider data to HHS
for benefit years beyond 2017. The
degree of provider participation in this
data collection effort has allowed HHS
to assemble a more complete listing of
ECPs.
In the proposed rule, we proposed
that, for the 2017 QHP certification
cycle, HHS would continue to credit a
health plan seeking certification to be
offered through an FFE with multiple
providers at a single location counting
as a single ECP toward both the
available ECPs in the plan’s service area
and the issuer’s satisfaction of the ECP
participation standard. For QHP
certification cycles beginning with the
2018 benefit year, we sought comment
on whether we should revise
§ 156.235(a)(2)(i) and (b)(2)(i) to credit
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issuers for multiple contracted full-time
equivalent (FTE) practitioners at a single
location, up to the number of available
FTE practitioners reported to HHS by
the ECP facility through the ECP
petition process. We proposed to apply
this FTE count to the numerator of an
issuer’s percentage satisfaction of the
general ECP standard described in
paragraphs (a)(1) and (2) of § 156.235
and the alternate ECP standard
described in paragraphs (b)(1) and (2) of
that section. We proposed that the
denominator of an issuer’s percentage
satisfaction of the ECP standard would
reflect the number of available FTE
practitioners reported to HHS by each
ECP facility located in the issuer’s plan
service area.
In the proposed rule, we stated that
our analysis of the available ECPs in
each of the additional ECP subcategories
previously considered for disaggregation
(that is, children’s hospitals, rural
health clinics, freestanding cancer
centers, community mental health
centers, and hemophilia treatment
centers) does not support further
disaggregation of these categories at this
time. We explained that there are too
few ECPs within each of these
additional ECP categories appearing on
our ECP list to afford issuers sufficient
flexibility in their contracting. We stated
that we may revisit this consideration in
the future, and encouraged QHP issuers
to include in their networks these
additional providers to best meet the
needs of the populations they serve.
We are finalizing the provisions under
§ 156.235 as proposed.
Comment: We received numerous
comments in support of our proposal for
benefit year 2017 to continue crediting
a health plan seeking certification to be
offered through an FFE with multiple
providers at a single location counting
as a single ECP toward both the
available ECPs in the plan’s service area
and the issuer’s satisfaction of the ECP
participation standard. Other
commenters urged that HHS credit
issuers for multiple contracted FTE
practitioners at a single location.
We received many comments in
support of our proposal for QHP
certification cycles beginning with the
2018 benefit year to credit issuers that
qualify for the general and alternate ECP
standard for multiple contracted FTE
practitioners at a single location, up to
the number of available FTE
practitioners reported to HHS by the
ECP facility. These commenters stated
that the wide variability in the number
of available practitioners at each ECP
facility and broad range of health care
services that ECPs provide favor this
position, and urged that ECP facilities
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should not all be credited equally
toward an issuer’s satisfaction of the 30
percent ECP standard. In addition, they
stated that many issuers contract with
multiple unaffiliated providers that rent
space in the same building and should
be credited for more than one ECP at
that location. Some of these commenters
stated that while they support crediting
issuers for multiple ECPs at a given site,
they urged us to not rely solely on issuer
satisfaction of the 30 percent ECP
threshold to ensure adequate access to
care for low-income medically
underserved individuals.
We also received comments in
opposition to this proposal for benefit
year 2018. Many of the commenters
stated that issuers do not always know
how many FTE practitioners are
available at a specific provider facility,
and it would be burdensome for issuers
to be required to collect such provider
data. Many commenters opposed the
proposal due to concerns that the policy
might not ensure geographic
distribution of ECPs and an adequate
range of health care services provided
by ECPs.
A few commenters stated that FTE
practitioners at a facility often fluctuate,
or they divide their time among several
facilities, and so FTEs might be an
unpredictable measure of an issuer’s
satisfaction of the ECP standard.
Response: On December 9, 2015, HHS
launched its ECP petition initiative to
give providers an opportunity to request
to be added to our ECP list, update their
provider data on our ECP list, and
provide missing provider data,
including FTE practitioner data that
issuers rely upon to identify qualified
ECPs for inclusion in their provider
networks. The web-based ECP petition
link is available at https://
data.healthcare.gov/cciio/ecp_petition.
HHS anticipates that this provider data
collection initiative will require several
months of provider outreach in order to
collect the requisite FTE practitioner
data. For benefit year 2017, we are
finalizing our proposal at
§ 156.235(a)(2)(i) to count multiple
providers at a single location as a single
ECP toward both the available ECPs in
the plan’s service area and the issuer’s
satisfaction of the ECP participation
standard.
For QHP certification cycles
beginning with the 2018 benefit year,
we are finalizing our proposal at
§ 156.235(a)(2)(i) to credit issuers for
multiple contracted FTE practitioners at
a single location, up to the number of
available FTE practitioners reported to
HHS by the ECP facility through the
ECP petition process. As HHS collects
the number of FTE practitioners from
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providers via the ECP petition for
purposes of the benefit year 2018
certification cycle, HHS intends to
clarify to issuers through guidance that
issuers must report on their ECP
template only the number of FTE
practitioners at each ECP facility that
the issuer has included in its provider
networks for its member enrollees. That
number must not exceed the number of
available FTE practitioners reported to
HHS by the ECP facility through the
ECP petition process. Due to the wide
variability in the number of available
practitioners at each ECP facility and
broad range of health care services that
ECPs provide, HHS believes that this
methodology for calculating an issuer’s
satisfaction of the ECP standard will
provide a more accurate representation
of the issuer’s ECP participation in its
provider networks.
For benefit years 2017 and beyond,
HHS will continue to require issuers to
satisfy the separate ECP requirement to
offer a contract in good faith to at least
one ECP per ECP category, where an
ECP in that category is available, within
each county in the plan’s service area.
In addition, issuers must continue to
offer a contract to all available Indian
health care providers in the plan’s
service area. In previous years, HHS
relied in part on crediting a health plan
with multiple providers at a single
location as a single ECP toward the
issuer’s satisfaction of the ECP
participation standard to better ensure
geographic distribution of ECPs. For
benefit year 2018, HHS expects to have
collected the necessary ECP categoryspecific data directly from all qualified
providers on our ECP list via the ECP
petition initiative, so that reliance on
counting multiple providers at a single
location as a single ECP will no longer
be necessary for purposes of ensuring
geographic distribution of ECPs. We
expect that the ECP category per county
contract offering requirement will serve
to better ensure geographic distribution
of ECPs and an adequate range of health
care services.
In order to address fluctuations in
FTE practitioners at a facility, HHS
intends to keep the ECP petition
submission window open throughout
the year, permitting providers to report
the fluctuations and for issuers to view
these updates in preparation for the
following benefit year contract
negotiations. For provider facilities that
employ or contract with practitioners
who divide their time among several
facilities, the ECP should divide their
FTE counts among the facilities when
completing the ECP petition. For
instance, an ECP should report a
practitioner who practices half time at
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two separate facilities as 0.5 FTE at each
facility to ensure a more accurate count
of FTEs at each facility. Lastly, HHS has
instructed providers to submit only one
ECP petition for each facility location
using the facility-level National
Provider Identifier (NPI), rather than
each individual practitioner at the
facility submitting a separate ECP
petition. Therefore, HHS intends to
continue reflecting only facility-level
ECPs on its ECP list, although some
facilities may be composed of a solo
practitioner beginning with the 2017
benefit year ECP list.
For the reasons stated above, we are
finalizing our proposal to revise
§ 156.235(a)(2)(i) and § 156.235(b)(2)(i)
to credit issuers that qualify for the
general or alternate ECP standard
described in § 156.235 that seek
certification to be offered through an
FFE (or SBE–FP) for multiple contracted
FTE practitioners at a single location
toward the issuer’s satisfaction of the
ECP standard, beginning with the 2018
benefit year. In addition, we are
finalizing our proposal that for the 2017
benefit year, HHS will continue to credit
an issuer that qualifies for the general or
alternate ECP standard and is seeking
certification to be offered through an
FFE with multiple providers at a single
location counting as a single ECP
toward both the available ECPs in the
plan’s service area and the issuer’s
satisfaction of the ECP participation
standard.
Comment: Several commenters urged
that HHS disaggregate the providers
listed in the ‘‘Hospitals’’ ECP category
and the ‘‘Other ECP Providers’’ category.
These commenters stated that by
grouping together providers such as
hemophilia treatment centers,
community mental health centers, and
rural health clinics into one ECP
category, HHS runs the risk that lowincome, underserved enrollees will have
inadequate access to key providers that
are uniquely suited to meet their
specialized health needs. These
commenters urged that HHS modify the
ECP categories to separate the distinct
entities and require contracting with
each of them. Several commenters
expressed concern that children’s
hospitals are grouped with hospitals
that do not specialize in children’s
health care services. These commenters
emphasized that children’s hospitals are
uniquely suited to meet the needs of
children with complex medical
conditions, and they urged HHS to
establish a separate ECP category for
children’s hospitals. Some commenters
expressed concern that HHS might be
underestimating the number of
providers in each of these ECP
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subcategories, because the ECP
categories reflected on the benefit year
2016 ECP list combine these providers
with other provider types, rather than
classifying them separately. One
commenter recommended that HHS
require that health plans offer contracts
to all ECPs from each of the categories
in each county that is in a health
professional shortage area (HPSA), with
the Health Resources and Services
Administration serving as a resource for
identifying those areas. In contrast,
several health plans supported not
disaggregating the ECP categories,
expressing concern that issuers would
not have sufficient flexibility in
contracting.
Response: Based on our analysis of
the available ECPs in each of the
additional ECP subcategories previously
considered for disaggregation (that is,
children’s hospitals, rural health clinics,
freestanding cancer centers, community
mental health centers, and hemophilia
treatment centers), we believe that too
few ECPs appear on the ECP list to
afford issuers sufficient flexibility in
their contracting. In order to address
this concern, HHS launched its ECP
Petition initiative on December 9, 2015,
to give providers an opportunity to
request to be added to the ECP list,
update their provider data on the ECP
list, and provide missing provider data.
Provider participation in this ECP
petition initiative is critical to ensure
that issuers are aware of a provider’s
ECP status and that accurate provider
data are reflected on the ECP list,
including ECP category classifications.
We believe that HHS’s network
adequacy standards, coupled with the
ECP standards, including the 30 percent
inclusion standard and the requirement
that issuers offer a contract to at least
one ECP in each ECP category in each
county in the plan’s service area, afford
both providers and issuers sufficient
contracting flexibility as HHS continues
to update the ECP list. In addition, we
continue to partner with HRSA to
identify HPSAs for determining
provider qualification for inclusion on
the ECP list.
Comment: Several commenters urged
that HHS require QHP issuers to
contract with any willing provider,
rather than only 30 percent of the
available ECPs in a plan’s service area.
Some of these commenters suggested
that HHS require that QHP issuers offer
good faith contracts to all willing
providers in specific ECP categories
(that is, FQHCs, Ryan White providers,
hemophilia treatment centers) in the
plan’s service area.
Response: While we appreciate the
commenters’ suggestions, we did not
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propose changes to the 30 percent ECP
standard and consider these comments
to be outside the scope of the proposed
rule.
c. Enrollment Process for Qualified
Individuals (§ 156.265)
Under § 156.265(b)(2), if an applicant
initiates enrollment directly with the
QHP issuer for enrollment through the
Exchange (direct enrollment through an
issuer), the QHP issuer must redirect an
applicant directly to the Exchange Web
site to complete the application and
receive an eligibility determination.
HHS requested comment on an option
to enhance the direct enrollment
process, like that described in this final
rule in the preamble to § 155.220, such
that an applicant could remain on the
QHP issuer’s Web site to complete the
application and enroll in coverage, and
the QHP issuer’s Web site could obtain
eligibility information from the
Exchange in order to support the
consumer in selecting and enrolling in
a QHP. Our intent is to have this
information exchange occur through an
Exchange-approved Web service to
provide Exchanges offering direct
enrollment and QHP issuers more
operational flexibility to expand frontend, consumer-facing channels for
enrollment through a more seamless
consumer experience. Accordingly, as
in § 155.220, we proposed to revise
§ 156.265(b)(2)(ii) to ensure that an
applicant who initiates enrollment
directly with the QHP issuer for
enrollment through the Exchange
receives an eligibility determination for
coverage through the Exchange Web site
or through an Exchange-approved web
service via the FFE single streamlined
application. Comments regarding the
enhanced direct enrollment proposal by
web-brokers are discussed in this final
rule in the preamble to § 155.220. We
sought comment on the same direct
enrollment options for issuers,
including whether to expand oversight,
auditing and monitoring activities, and
how to best maintain privacy and
security standards. We also solicited
comments on whether standards should
differ for a web-broker compared to a
QHP issuer. We did not receive
comments indicating standards should
differ for a web-broker compared to a
QHP issuer in regards to direct
enrollment; thus, we are finalizing the
proposal to require effectively the same
set of standards regarding direct
enrollment.
Comments on the general enhanced
direct enrollment proposal, use of the
FFE single streamlined application,
HHS approval of alternative enrollment
pathway processes, and the timing of
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12309
direct enrollment are discussed in this
final rule at the preamble to
§ 155.220(c)(3).
Comment: Commenters aligned their
comments for web-brokers with
comments for issuers, and a few
commenters generally noted that a level
playing field is essential to Exchange
stability.
Response: Based on the comments
received, as summarized above, we are
finalizing the proposal to enhance the
direct enrollment process with some
modifications, as noted below.
We appreciate the many comments
and recommendations on the direct
enrollment proposal we received. While
we believe that an enhanced direct
enrollment process will provide a more
seamless consumer experience, we agree
with commenters that implementing the
proposal will be a significant
undertaking for HHS, web-brokers, and
issuers, and that such an effort will
require sufficient time for operational
planning and preparations, such as
identifying and testing the Exchangeapproved web services under
§ 156.265(b) that can be used to support
the enhanced direct enrollment process,
and ensuring privacy and security risks
are addressed and mitigated. HHS will
not provide such an option during the
individual market open enrollment
period for 2017 coverage, but intends to
provide the option by the open
enrollment period for 2018 coverage.
We intend to supplement the framework
we are finalizing in this rule with more
specific guidance and requirements in
future rulemaking, such as specific
guidelines for a pre-approval process
under § 156.265(b)(3), and requirements
for privacy and security. Until then,
issuers must continue to comply with
the current direct enrollment process,
through which a consumer is directed to
HealthCare.gov to complete the
eligibility application, and all associated
guidance. This means direct enrollment
entities are not permitted at this time to
use non-Exchange Web sites to complete
the Exchange eligibility application or
automatically populate data collected
from consumers into HealthCare.gov
through any non-Exchange Web site.
Completion of the Exchange eligibility
application on a non-Exchange Web
site, or collection of data through a nonExchange Web site that is then used to
complete the eligibility application will
be considered a violation of the direct
enrollment entity’s agreement with the
FFEs.
See preamble to § 155.220(c)(3),
above, for a discussion of the existing
direct enrollment requirements.
While enhanced direct enrollment
will not be available in the individual
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market open enrollment period for 2017
coverage, we are finalizing our proposal
to revise § 156.265(b)(2)(ii) to enable
issuers who use HHS-approved direct
enrollment processes to facilitate
enrollment through the FFEs to either
ensure the applicant’s completion of an
eligibility verification and enrollment
through the Exchange internet Web site
as required by § 155.405, or ensure that
the eligibility application information is
submitted for an eligibility
determination through an Exchangeapproved web service. This will allow
applicants to complete the entire
Exchange application and enrollment
process on the web-broker’s nonExchange Web site. We believe this
process will grant direct enrollment
entities the operational flexibility to
expand front-end, consumer-facing
channels for enrollment.
However, we also share commenters’
concerns that allowing this flexibility
without additional protections in place
may increase the risk of imprecise,
inaccurate, or misleading eligibility
results. In light of those considerations
and the accompanying comments
received, we are adding new paragraphs
(b)(3)(i) through (iii) to clearly articulate
the requirements associated with
completing an Exchange eligibility
application on a direct enrollment
entity’s non-Exchange Web site. These
requirements may be amended over
time as implementation activities begin
and once experience is gained under the
new process (once implemented).
Consistent with the proposal in the
proposed rule, § 156.265(b)(3)(i)
requires all language related to
application questions, and the sequence
in which the questions are presented on
the direct enrollment entity’s nonExchange Web site to be identical to that
of the FFE Single Streamlined
Application. We acknowledge the
comments requesting deviations from
the FFE single streamlined application
to enhance the consumer experience,
and, as we are for web-brokers, we are
finalizing language permitting such
deviations with HHS approval. We will
only approve minor modifications that
do not change the intent or meaning of
the questions, decrease the probability
of accurate answers and eligibility
determinations, or affect the
dependencies and structure of the
dynamic application.
We are also adding new
§ 156.265(b)(3)(ii), which sets out a
more general requirement that any nonExchange Web site facilitating the
completion of an Exchange eligibility
application ensure that all information
necessary for the completion of the
application related to the consumer’s
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applicable eligibility circumstance are
submitted through the Exchangeapproved web service. New
§ 156.265(b)(3)(iii) requires that the
process used for consumers to complete
the eligibility application on the nonExchange Web site comply with all
applicable Exchange standards,
including Exchange notice requirements
under § 155.230 and Exchange privacy
and security standards related to
handling PII under § 155.260(b).
We also agree with commenters that
urged HHS to adopt an approval process
to ensure that the non-Exchange Web
site seeking to offer stand-alone direct
enrollment eligibility services meets all
applicable requirements in order to
protect consumers. Accordingly, we
have added § 156.265(b)(4) to outline a
process for HHS to verify entities meet
all requirements of this section prior to
using a non-Exchange Web site to
complete the Exchange eligibility
application.
See preamble under § 155.220 for a
discussion on the primary objective of
these changes.
We clarify that the requirements
related to the direct enrollment process
rules are applicable to FFEs (including
FFEs where States perform plan
management functions) and SBE–FPs
only, and would not apply to SBEs that
do not use the Federal platform, nor
alter any State-specific rules related to
Medicaid eligibility.
Comment: Commenters generally
supported HHS conducting regular
audits on issuers and requiring issuers
to adhere regulatory standards for direct
enrollment activities.
Response: We agree with commenters
that supported HHS conducting regular
audits of issuers under this section to
ensure ongoing compliance with
applicable standards and are adding
§ 156.265(b)(5), which enables HHS to
periodically monitor and audit entities
to assess compliance with standards in
this section.
Comment: One commenter stated
HHS should work with issuers as it
develops new direct enrollment
functionality, leverage existing security
standards as much as possible, and
leave sufficient time for testing and
implementation of any requirements.
Other comments raised several concerns
about the privacy and security of
consumers’ personally identifiable
information, particularly citizenship
and immigration status, and asked HHS
to clarify how these entities would
collect, store, and use PII. Some
commenters wanted HHS to clarify that
web-based entities will not gather and
store data beyond that necessary for the
Federal platform, State-based
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Exchanges, and Medicaid eligibility and
enrollment via ‘‘cookies’’ or other
tracking tools, and would not store or
use information gathered from
consumers in the application process for
marketing other products.
Response: We agree that
implementing the proposal will be a
significant undertaking for HHS, and
that privacy and security risks must be
addressed prior to implementation. We
intend for the standards outlined in this
section to provide a framework to
prepare for the implementation to
support use of the enhanced direct
enrollment option in future years. We
will continue to consider commenters’
recommendations on ensuring
consumers are protected, and intend to
propose further protections in future
rulemaking.
d. Termination of Coverage or
Enrollment for Qualified Individuals
(§ 156.270)
We proposed to amend § 156.270(d) to
specify that a QHP issuer must provide
a 3-month grace period to an enrollee
who, upon failing to timely pay his or
her premiums, is receiving advance
payments of the premium tax credit.
Because we believe that changing the
length of an enrollee’s grace period
during the middle of the grace period
would be confusing to enrollees and
could result in otherwise avoidable
terminations for failure to pay
premiums, enrollees receiving APTC
who enter a grace period for failing to
timely pay premiums and who also lose
their eligibility for APTC for any reason
during the grace period would be able
to complete the remaining portion of the
grace period as though the loss of
eligibility for APTC did not occur.
Although the length of the grace period
would continue as though the loss of
eligibility for APTC did not occur,
payment of APTC would terminate
through normal Exchange operations as
a result of the loss of eligibility. The
proposed amendment to § 156.270(d)
also would eliminate language limiting
the 3-month grace period for enrollees
who are receiving APTC to only those
enrollees who made a payment during
the benefit year. This would permit
enrollees renewing coverage that does
not require a binder payment who fail
to pay January premiums in full (or fail
to pay within an issuer’s premium
payment threshold policy, if applicable)
to receive the full grace period of 3
months. This change would align more
closely with our interpretation of the
interaction between grace periods,
guaranteed availability and
renewability, and the binder payment
requirement, that a binder payment is
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not necessary when an enrollee enrolls,
either actively or passively, in a plan
within the same insurance product, and
would prevent enrollees who re-enroll
in the same plan or product from
unfairly losing their right to a grace
period because they do not make a
payment for January coverage. Finally,
we proposed to codify with regard to the
grace period standards our policy
described in the preamble for § 155.400
of this part that if an enrollee receiving
advance payments of the premium tax
credit can satisfy the requirement to pay
all outstanding premiums, or if the
enrollee satisfies an issuer’s premium
payment threshold implemented under
§ 155.400(g), if applicable, the QHP
issuer must not terminate for nonpayment of premium the enrollee’s
enrollment through the Exchange. This
change to the rule would reflect the
extension of the premium threshold
policy to enrollees who are in a grace
period for non-payment of premium.
Comment: Many commenters
supported the proposed rule because it
offers an important consumer protection
and reduces confusion about the length
of an enrollee’s grace period if the
enrollee had his or her APTC adjusted
to $0 during the 3-month grace period
for enrollees receiving APTC. Several
commenters, however, stated that the
proposed rule would cause providers to
bear the burden of claims, subsequently
reversed by issuers, incurred during the
second and third months of a grace
period for enrollees receiving APTC.
Some, opposing the proposed rule,
preferred that enrollees losing their
APTC during a 3-month grace period
revert to State rules to determine the
length of the remainder of the grace
period. Several other commenters
approved of the proposed rule so long
as providers were guaranteed to be
reimbursed for claims incurred during
the second and third months of the 3month grace period. Finally, several
commenters offered suggestions relating
to enhancing the requirement contained
in § 156.270(d)(3) that issuers notify
providers of the possibility for denied
claims when an enrollee is in the
second and third months of the grace
period.
Response: We recognize that the
proposed rule could allow for claims to
be submitted and pended during the
second and third months of a grace
period that, absent this amendment to
the rule, would have been disallowed
for lack of coverage if the length of the
enrollee’s remaining grace period had
been shorter under State rules.
However, the proposed standard is
consistent with our current rules, and
because of the importance we attach to
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the consumer protection inherent in the
proposed rule, we are finalizing the
proposal as proposed.
Comment: One commenter requested
clarification that non-payment of a
binder payment would not give rise to
a grace period under the proposed rule.
Other commenters requested
clarification that, under the proposed
rule, an enrollee is not eligible to
receive a 3-month grace period for nonpayment of premium for a plan which
is not being paid, at least in part, by
APTC. One commenter requested that,
due to the complexity of creating the
systems operations necessary to
implement the rule, the proposed rule
not go into effect, until after the date it
is finalized.
Response: The changes to § 156.270(d)
do not conflict with or change the
binder payment rule at § 155.400(e),
which states that Exchanges may, and
the Federally-facilitated Exchange will,
require payment of the first month’s
premium to effectuate an enrollment.
Likewise, the changes to the binder
payment rule at § 155.400(e) do not
eliminate the need for an enrollee to pay
a binder payment to effectuate coverage.
The rule also does not change the
existing rule that an enrollee is not
eligible to receive a 3-month grace
period for non-payment of premium for
a plan which is not being paid, at least
in part, by APTC. Similarly, the rule
does not make any change to the rules
related to the gain or loss of APTC. As
with the other parts of this rule, the
amendments to § 156.270(d) would be
effective only after the effective date,
identified at the beginning of this rule.
Comment: While some commenters
expressed support for the codification of
our interpretation that our rules do not
require a binder payment when an
enrollee enrolls, either actively or
passively, in a plan within the same
insurance product (but does require a
binder payment when a consumer
enrolls in a new product or with a new
issuer), several commenters raised
objections to the proposed rule’s
amendment of § 156.270(d) to eliminate
language limiting the 3-month grace
period for enrollees who are receiving
APTC to only those enrollees who made
a payment during the benefit year. Some
commenters stated that such a change
would have an adverse actuarial effect
on the risk pool, and encourage
enrollees to neglect their premium
payments in favor of receiving free
coverage during the 3-month grace
period for enrollees receiving APTC.
Response: We do not interpret our
rules to require a binder payment for reenrollment from an enrollee who is
enrolling with the same issuer in the
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same plan or product. We characterize
such a re-enrollment as a renewal of
coverage, which, according to our
interpretation of our rules, is treated the
same as a regularly-billed monthly
premium payment. Because a binder
payment is not required by our rules in
such circumstances, we do not believe
that an enrollee receiving APTC who is
re-enrolling, either actively or passively,
into the same plan or product should be
denied a 3-month grace period if he or
she does not make full payment (or a
payment within the issuer’s premium
payment threshold, if any) for January of
a benefit year. Additionally, we do not
believe that this causes actuarial risk to
the coverage pool or an enticement to
game the system any more than such
dangers would exist during any other
part of the benefit year. Because we
believe that this amendment offers an
important consumer protection, we are
finalizing the proposed rule as written.
At the same time, we will carefully
monitor consumer use of grace periods
and make any necessary changes in
future rules or guidance.
e. Additional Standards Specific to
SHOP (§ 156.285)
In § 156.285(c)(5), we proposed to
specify additional details about how a
QHP issuer offering a QHP through an
FF–SHOP should reconcile enrollment
files with the FF–SHOP. Issuers would
be required to send enrollment
reconciliation files on at least a monthly
basis according to a process and
timeline established by the FF–SHOP,
and in a file format specified by the FF–
SHOP.
We also proposed to delete
§ 156.285(d)(2), to be consistent with
our interpretation of guaranteed
availability and guaranteed
renewability. We specifically proposed
that if a qualified employer withdraws
from a SHOP, the SHOP, not the issuer
should terminate the group’s enrollment
through the SHOP, and coverage might
in many circumstances continue outside
the SHOP.
We received no comments on these
proposals. We are finalizing the
amendment to delete § 156.285(d)(2) as
proposed, and are finalizing the
amendment to § 156.285(c)(5) with
modifications to clarify that a general
requirement under this provision still
appliesin all SHOPs and to delete the
word ‘‘must’’ because it is superfluous
in light of the introductory language in
§ 156.285(c).
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f. Meaningful Difference Standard for
Qualified Health Plans in the FederallyFacilitated Exchanges (§ 156.298)
At § 156.298, we proposed
modifications to the meaningful
difference standard for QHPs in the
FFEs. We proposed to remove the
criterion in paragraph (b)(5) that
otherwise identical plans would be
considered meaningfully different on
the basis of one QHP being health
savings account (HSA) eligible. We also
proposed to delete ‘‘self-only’’ and
‘‘non-self-only’’ from paragraph (b)(6).
We further proposed to redesignate
paragraph (b)(6) as paragraph (b)(5) and
add the word ‘‘or’’ to paragraph (b)(4).
Comment: Commenters generally
supported the removal of HSA
eligibility as a criterion for determining
meaningful difference from otherwise
identical plans, so long as standard key
differences in how the deductible
applies will be accounted for in the
existing cost sharing meaningful
difference standard at § 156.298(b)(1).
One commenter noted that it is
important that HHS permit an issuer to
offer different QHPs that look similar in
terms of deductible and copayments,
where one is HSA-compatible but the
other is not, because certain services
may be covered without a deductible.
Response: We have determined that
HSA eligibility is a cost-sharing status
that may be assessed by examining the
QHP’s cost sharing, which is included at
paragraph (b)(1) and that the ‘‘Health
Savings Account eligibility’’ criterion is
therefore redundant.
Comment: Commenters also generally
supported removing the self-only and
non self-only criteria and questioned
why the ‘‘child-only’’ status was
retained.
Response: We are finalizing the
removal of the self-only and non selfonly criteria. Self-only (that is,
individual) plans do not allow any
dependent relationships, while non-selfonly (that is, enrollee group or family)
plans allow at least one dependent
relationship type. An individual can
enroll in individual and family plans.
The allowance of dependents is the only
difference between two plans if they are
identified as individual only or family.
These statuses alone are not indicative
of meaningful differences among QHPs.
We will maintain the ‘‘child-only’’
versus non-child-only status. It is
permissible for QHP issuers to offer
child-only plans in which the only
enrollees are individuals who have not
attained the age of 21. We believe that
such a child-only plan would be
meaningfully different from a non childonly plan.
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Comment: Several commenters asked
that HHS consider other ways to
strengthen meaningful difference
standards, such as by adding additional
quantitative standards.
Response: We are not proposing any
additional meaningful difference
standards at this time, but will continue
to review the implementation of this
policy over time.
g. Other Considerations
We reminded issuers that certain
other Federal civil rights laws impose
non-discrimination requirements.
Issuers that receive Federal financial
assistance, including in connection with
offering a QHP on an Exchange, are
subject to Title VI of the Civil Rights Act
of 1964, the Age Discrimination Act of
1975, section 504 of the Rehabilitation
Act of 1973, and section 1557 of the
Affordable Care Act. The Office for Civil
Rights (OCR), which enforces these
statutes, published a notice of proposed
rulemaking on September 9, 2015 (80
FR 54172) on the requirements of
section 1557. Issuers that intend to seek
certification of one or more QHPs are
directed to that proposed rule and to
https://www.hhs.gov/ocr/civilrights for
additional information.
We also sought comments on fostering
market-driven programs that can
improve the management of costs and
care. We noted that innovative issuer,
provider, and local programs or
strategies may be successful in
promoting and managing care,
potentially resulting in better health
outcomes and lower rates while creating
important differentiation opportunities
for market participants. We sought
comment on ways in which we can
facilitate such innovation, and in
particular on whether there are
regulations or policies in place that we
should modify in order to foster this
innovation.
Comment: A few commenters stated
that the exclusion of quality
improvement activities in the MLR
definition (for example, drug utilization
review programs, and value-based
oncology management programs) deters
issuers from pursuing such innovative
programs. Commenters recommended
HHS revise the MLR numerator
definition to include the costs of such
programs.
A few commenters also suggested that
HHS revisit last year’s requirements
requiring issuers to cover the greater of
one drug in every USP category and
class, or the same number of
prescription drugs in each category and
class as the EHB-benchmark, and also
establishing P&T committees.
Commenters stated that the
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administrative expense is significant
and unnecessary.
One commenter also asked HHS to
reconsider the mail order and specialty
pharmacy restrictions in the 2016 final
Payment Notice (§ 156.122(e) and (d))
starting for the 2017 benefit year, and
instead establish less restrictive
methods to achieve its policy goals, for
example by requiring issuers and their
prescription benefit managers (PBMs) to
establish protocols that facilitate mail
order delivery to enrollees with
transitional living situations, multiple
addresses, or other living arrangements
requiring non-standard delivery. The
commenter suggested that HHS could
require that any mandatory mail order
programs offered only apply to
maintenance medications and only after
a first fill of a new medication, as is
common in the marketplace.
We received a comment stating that
any willing provider laws can prevent
selective contracting between issuers
and providers as any willing provider
that accepts the issuers’ terms is
considered in-network. The commenter
stated that HHS should take into
account the negative impact of such
restrictions on innovation and avoid
imposing similar regulatory
impediments on issuers participating in
the Exchange. Another commenter
urged HHS to focus on addressing true
drivers of costs, and avoid putting all
financial responsibility on consumers.
The commenter stated that consumerbased programs like reference pricing
and benefit design structures are
difficult for consumers to understand,
particularly for those with low income
literacy. Additionally, the commenter
suggested addressing utilization of more
evidence-based care with incentives for
providers, and the need for broader
efforts on price variation. Another
comment requested HHS develop tools
to allow consumers to pick plans based
on quality and cost-effectiveness, adopt
policies to increase transparency in
costs (public reporting on costs for
episodes), promote technology-enabled
care delivery, and adopt policies to
encourage total community health. We
received one comment requesting that
HHS not require SADPs to offer plans
within its three categories (routine,
basic and major), as it results in
inaccurate plan representation and
consumer confusion.
Another commenter suggested HHS
explore options to waive the Medicaid
rebate program, specifically the best
price restriction, under which the
Exchange QHP drug prices are included.
This sets a pricing floor and prevents
PBMs from negotiating lower drug
prices or manufacturer rebates.
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Response: We appreciate these
comments and will consider them for
future rulemaking.
6. Standards for Qualified Health Plan
Issuers on Federally-Facilitated
Exchanges and State-Based Exchanges
on the Federal Platform (§ 156.350)
To make it operationally feasible for
a State-based Exchange to rely on the
Federal platform for eligibility and
enrollment functions, issuers and plans
offered on the SBE–FP must comply
with rules, as interpreted and
implemented in policy and guidance
related to the Federal eligibility and
enrollment infrastructure. These would
be the same requirements related to
eligibility and enrollment that are
applicable to QHP issuers and plans on
FFEs. For example, SBE–FP special
enrollment periods must be
administered within the guidelines of
the FFE special enrollment periods, as
it is not possible at this time for the
Federal platform to accommodate State
customization in policy or operations,
such as State-specific special enrollment
periods, application questions, display
elements in plan compare, or data
analysis. Additionally, if the Federal
platform is to perform eligibility and
enrollment functions, the Federal
platform would also need to provide for
certain consumer tools (for example,
plan compare, premium estimator,
second-lowest cost silver plan tool) to
support those functions. Thus, the
Federal platform would need SBE–FP
QHP plan data by the dates specified in
the annual Letter to Issuers to provide
for adequate testing and loading of the
data into the various consumer tools the
FFEs offer. Issuers must also comply
with certain FFE enrollment policies
and operations (for example, premium
payment and grace period rules,
effective date logic, acceptable
transaction codes, and reconciliation
rules) for the Federal platform to
successfully process 834 transactions
with issuers and minimize any data
discrepancies for reconciliation.
Therefore, we proposed to add
§ 156.350 to address eligibility and
enrollment standards for QHP issuers
participating on an SBE–FP. In
paragraph (a) of new § 156.350, we
proposed that QHP issuers participating
in an SBE–FP must comply with HHS
regulations, and guidance related to the
eligibility and enrollment functions for
which the State-based Exchange relies
on the Federal platform. For example,
those issuers would be required to
comply with operational standards in
the Federally-facilitated Exchange and
Federally-facilitated Small Business
Health Options Program Enrollment
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Manual. We proposed in paragraph (a)
a list of provisions with which QHP
issuers participating in an SBE–FP
would be required to comply. These
provisions relate to eligibility and
enrollment functions directly, or are
critical to enabling HHS to assess
compliance with eligibility and
enrollment functions. For example, we
would require QHP issuers to comply
with the requirements regarding
compliance reviews of QHP issuers to
the extent relating directly to applicable
eligibility and enrollment functions.
Without this requirement, we would be
severely limited in our ability to
determine whether an issuer is
complying with the requirements
related directly to the Federal platform’s
eligibility and enrollment functions. In
paragraph (b), we proposed to permit
these issuers to directly enroll
applicants in a manner that is
considered to be through the Exchange,
under § 156.1230, just as QHP issuers on
FFEs are permitted.
In paragraph (c), we proposed that if
an SBE–FP does not substantially
enforce the eligibility and enrollment
standards described in paragraph (a),
then HHS may enforce against the issuer
or plan using the enforcement remedies
and processes described in subpart I of
part 156. We also proposed that the
administrative review process in
subpart J of part 156 would apply to
enforcement actions taken against QHP
issuers or plans under proposed
§ 156.350. Because timely compliance
with paragraph (a) is vital to the smooth
functioning of the Federal platform and
because the Federal platform would
apply a uniform compliance and
enforcement regime for reasons of
efficiency and speed, we believe it is
appropriate that HHS have this
authority in this circumstance.
Because this proposal would insert a
section applicable to SBE–FPs in
subpart D, which currently describes
only standards for QHP issuers on the
FFEs, we proposed to amend the title of
subpart D to read Standards for
Qualified Health Plan Issuers on
Federally-Facilitated Exchanges and
State-Based Exchanges on the Federal
Platform.
Comment: We received comments
stating the disadvantages of the Federal
platform not being able to accommodate
State customization. One commenter
requested clarification that if a State
elects to use the Federal platform for
only the individual market or only for
the SHOP market, the State should only
be required to comply with the
operational standards of the FFE for that
market, not both. We also received
comments supporting this proposal,
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noting that for issuers participating in
both FFE and SBE–FP States this policy
enables streamlined policies across
platforms and would decrease
operational burden for issuers,
enrollees, and Exchanges.
Response: As we discuss above, at
this time the Federal platform is not
able to accommodate State
customization in policy or operations.
We are finalizing this policy as
proposed. However, we are confirming
that there is the flexibility for a State to
elect to use the Federal platform for
certain functions for either the
individual market, or the SHOP market,
or both. We are also confirming that
should a State elect to use the Federal
platform for certain functions for only
one market, the requirements in
§ 156.350 would only apply for the
market for which the State elects to rely
on the Federal platform.
7. Enforcement Remedies in FederallyFacilitated Exchanges (§§ 156.800,
156.805, and 156.810)
In the proposed rule, we discussed
four proposed rule changes. First, we
proposed to revise paragraph
§ 156.805(d) to explain fully the effect of
appealing a CMP. In the interest of
aligning our CMP and decertification
regulations, we proposed to rename
paragraph (d) ‘‘Request for hearing.’’ We
proposed to state affirmatively the
issuer’s right to file a request for hearing
on the assessment of a CMP and we
proposed to add language stating that
the request for hearing will suspend the
assessment of CMP until a final
administrative decision on the appeal.
This was similar to language in the
decertification rule.
Second, we proposed to amend
§ 156.810 to present the appeal rights of
QHP issuers and the impact of an appeal
more clearly. Specifically, we added
language to explain how an appeal will
affect the effective date of a
decertification depending on whether
the decertification is standard or
expedited.
Third, we proposed to remove
§ 156.800(c), in which we stated that
sanctions will not be imposed on a QHP
issuer on an FFE if it has made good
faith efforts to comply with applicable
requirements for calendar years 2014
and 2015. Starting in the 2016 calendar
year and beyond, we proposed to
impose sanctions on a QHP issuer in an
FFE if the issuer fails to comply with
applicable standards, even if the QHP
issuer has made good faith efforts to
comply with these requirements. We
intend to use a progressive compliance
model for determining sanctions.
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Fourth, we proposed to add new bases
for decertification of a QHP to § 156.810.
One of the bases for decertification,
§ 156.810(a)(5), authorizes
decertification if a QHP issuer is
hindering the efficient and effective
operation of a Federally-facilitated
Exchange. We explained our intent to
interpret hindering the efficient and
effective operation of the FFEs to
include impeding displaying plans
properly to enrollees who purchase
coverage under that plan. Where an
issuer has informed HHS that it cannot
continue to provide coverage under a
QHP, HHS will interpret this
information to mean that the efficient
and effective operation of the FFE will
be hindered because it will incorrectly
display plans on the FFE platform. In
such a case, we proposed to take all
necessary steps to suppress or decertify
the QHP.
We also proposed to add a basis for
decertification to § 156.810 to address
situations where a QHP issuer is the
subject of a pending or existing State
enforcement action, including a consent
order, or where HHS has reasonably
determined that an issuer lacks the
funds to continue providing coverage to
its consumers for the remainder of the
plan year. Under its obligation to
determine that making a plan available
on the FFEs is in the interest of
qualified individuals and employers, we
proposed to adopt these decertification
bases as a consumer protection measure.
We invited comments from affected
parties on the proposal to end the good
faith compliance policy and on the
proposed bases for decertification.
Comment: We received comments
requesting that we extend the good faith
compliance policy into 2016. Some
commenters only asked for an extension
of the good faith compliance policy for
new 2016 requirements. Commenters
also requested that we clarify that any
conduct occurring in 2014 and 2015
remain subject to the good faith
compliance policy in the future. Others
requested that, if the policy ended, we
use a progressive compliance model for
any compliance enforcement in the
future. One commenter supported
ending the policy.
Response: We are not extending
§ 156.800(c) to cover calendar year 2016.
While there are new requirements for
issuers in 2016, we believe that issuers
have had sufficient time to acquaint
themselves with how to comply with
the fundamental regulations
underpinning participation in the FFEs.
We will be using a progressive
compliance model for compliance
conduct in the future, and may evaluate
how new a particular requirement is
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when determining the appropriate
enforcement remedy. We believe, based
on past and current compliance
monitoring and enforcement efforts, that
issuers have gained enough experience
with the FFEs to comply fully with
participation standards. Of course, in all
our enforcement actions, we will
continue to take into account all facts
and circumstances, including the
reasonable good faith action of issuers.
Comment: We received comments
that the expansion of bases for
decertification, especially a basis for
decertification based on financial
solvency, falls under State, not Federal
authority. One commenter expressed
support for the expanded bases for
decertification.
Response: We are finalizing the
regulation as proposed. We believe that
the added bases are necessary to provide
consumers a consistent and reliable
coverage experience through the FFEs.
We do not believe this constitutes any
infringement on State authority. While
State regulators do have primary
authority over whether issuers may sell
coverage within the State, issuers must
also comply with Federal requirements
for participation in the FFEs and avoid
conduct that violates Federal standards
for decertification if they wish to sell
QHPs on an FFE. When HHS reasonably
determines, in coordination with
information received from State
regulators, that the issuer lacks the
financial ability to provide coverage
until the end of the coverage period,
HHS must be able to take action to
protect FFE consumers. Any action for
consumers not enrolled in a QHP on an
FFE generally remains the primary
authority of the State regulator and
outside the influence of these
regulations.
8. Quality Standards
a. Patient Safety Standards for QHP
Issuers (§ 156.1110)
In the proposed rule, we proposed to
strengthen QHP patient safety standards
at § 156.1110 in accordance with section
1311(h) of the Affordable Care Act for
plan years beginning on or after January
1, 2017. We noted the importance of
alignment of the QHP issuer standards
with effective patient safety
interventions and leveraging the
successful work already being done at
national, regional, and local hospital
systems for health care quality
improvement and harm reduction to
achieve greater impact on reducing
patient harm. We proposed amending
§ 156.1110 to capture the current patient
safety standards that continue to apply
for plan years beginning before January
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1, 2017 in new paragraph (a)(1). We also
proposed to add new paragraph
(a)(2)(i)(A) to specify that for plan years
beginning on or after January 1, 2017, a
QHP issuer that contracts with a
hospital with greater than 50 beds must
verify that the hospital uses a patient
safety evaluation system as defined in
42 CFR 3.20. We proposed to require,
under new paragraph (a)(2)(i)(B), that
for plan years beginning on or after
January 1, 2017 a QHP issuer that
contracts with a hospital with greater
than 50 beds must ensure that the
hospital implements a comprehensive
person-centered discharge program to
improve care coordination and health
care quality for each patient. We noted
that use of a data-driven approach,
analytic feedback, and shared learning
to advance patient safety, such as
working with a Patient Safety
Organization (PSO), are essential to
implementing meaningful interventions
to improve patient health care quality.
We also proposed to exercise the
authority provided to the Secretary
under section 1311(h)(2) of the
Affordable Care Act to establish
reasonable exceptions to the QHP issuer
patient safety requirements.
Specifically, in new paragraph (a)(2)(ii),
for plan years beginning on or after
January 1, 2017, QHP issuers can verify
that a contracted hospital with greater
than 50 beds implements evidencebased initiatives to reduce all cause
preventable harm,60 prevent hospital
readmission, improve care coordination
and improve health care quality through
the collection, management and analysis
of patient safety events by a means other
than reporting of such information to a
PSO. We noted that this would allow
flexibility and promote alignment for
hospitals that already engage in effective
national, State, public and private
patient safety programs.
We proposed to amend the
documentation requirement for plan
years beginning on or after January 1,
2017, from the collection of the
hospital’s CMS Certification Number to
materials which reflect implementation
of PSO activities, such as
documentation of PSOs and hospitals
working together to collect, report and
60 All cause preventable harm or all adverse
events-any event during the care process that
results in harm to a patient, regardless of cause
(Letter from Center for Clinical Standards and
Quality/Survey & Certification Group to State
Survey Agency Directors regarding AHRQ Common
Formats—Information for Hospitals and State
Survey Agencies (SAs)—Comprehensive Patient
Safety Reporting Using AHRQ Common Formats
(Mar. 15, 2013), available at https://www.cms.gov/
Medicare/Provider-Enrollment-and-Certification/
SurveyCertificationGenInfo/Downloads/Surveyand-Cert-Letter-13-19.pdf).
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analyze patient safety events, and
implementation of a comprehensive
person-centered hospital discharge
program to demonstrate compliance
with the proposed requirements in
§ 156.1110(a)(2)(i); or documentation to
reflect implementation of other patient
safety initiatives to reduce all cause
preventable harm, prevent hospital
readmission, improve care coordination
and improve health care quality through
the collection, management and analysis
of patient safety events to demonstrate
compliance with the reasonable
exception provision proposed to be
captured in § 156.1110(a)(2)(ii).
We noted that we were considering
providing that QHP issuers must ensure
that their contracted hospitals as
described in section 1311(h) are
standardizing reporting of patient safety
events with the use of the Agency for
Healthcare Research and Quality
(AHRQ) Common Formats. We also
noted that these proposed standards
would leverage the successful work
already being done at national, regional,
and local hospital systems for health
care quality improvement and harm
reduction, and align with effective
patient safety interventions to achieve
greater impact.
We are finalizing these proposals with
the following modification. We are
modifying the reasonable exceptions
provision in § 156.1110(a)(2)(ii) to state
that QHP issuers must verify that their
applicable contracted hospitals with
greater than 50 beds, if not working with
a PSO, implement an evidence-based
initiative, to improve health care quality
through the collection, management and
analysis of patient safety events, that
reduces all cause preventable harm,
prevents hospital readmission or
improves care coordination. We
acknowledge that some of the patient
safety activities that a hospital performs
with a PSO may be very similar, if not
identical to, some of the activities that
hospitals will perform as part of the
initiatives described in
§ 156.1110(a)(2)(ii). If a provider
undertakes activities to improve patient
safety and health care quality, but does
not do so in conjunction with a PSO,
subject to the requirements of the
Patient Safety and Quality Improvement
Act (PSQIA) and its implementing
regulation, 42 CFR part 3, the patient
safety and quality information involved
in such initiatives would not be subject
to the PSQIA’s privilege and
confidentiality protections.
Comment: Most commenters generally
supported our proposals and agreed
with strengthening QHP issuer patient
safety standards. Commenters agreed
with HHS’s approach of aligning
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existing, effective patient safety
initiatives, including by requiring
applicable hospitals to report to PSOs,
as well as providing flexibility to allow
compliance with § 156.1110 by
implementing evidence-based initiatives
other than working with a PSO. One
commenter stated that the proposal
outlined in § 156.1110(a)(2)(i)—to
require a QHP issuer that contracts with
a hospital with greater than 50 beds to
verify that the hospital uses a patient
safety evaluation system as defined in
42 CFR 3.20—should be the preferred
option versus establishing reasonable
exceptions in the proposed requirement
in § 156.1110(a)(2)(ii). The commenter
strongly supported reporting to a patient
safety evaluation system because most
PSOs collect all types of information
from all types of health care
organizations, unlike Hospital
Engagement Networks (HENs) initiatives
and Quality Improvement Organizations
(QIOs) commissioned work, which are
typically focused on certain conditions
or topics. The commenter also stated
that requiring hospital providers to
contract with a Federally-listed PSO
would decrease QHP operational burden
and expenses versus the QHP burden of
keeping track of multiple organizations
and HEN patient safety initiatives with
tenuous, variable funding.
Response: We agree with the majority
of commenters and are finalizing the
proposed approach of requiring QHP
issuers, for plan years beginning on or
after January 1, 2017 to verify that their
contracted hospitals, with more than 50
beds, have current agreements with
PSOs, while also providing reasonable
exceptions to the PSO requirement. We
believe that these requirements allow
for increased alignment of QHP issuer
standards with effective patient safety
interventions. We agree that PSOs
collect and analyze valuable
information through patient safety
evaluation systems to reduce harm and
we believe that the requirements
finalized in § 156.1110 for plan years
beginning on or after January 1, 2017,
will allow for both flexibility and
innovation for hospitals to choose the
most relevant patient safety initiative for
their populations. We believe hospitals
may choose to work with a PSO as their
preferred option. We acknowledge that
the different initiatives mentioned in
the proposed rule, including HENs,
QIOs and PSOs, may work on focused
topic areas to reduce patient harm.
Therefore, we believe that it is
important for hospitals and their
partners to determine and engage in the
appropriate strategies reflecting the
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needs of their respective patient
populations.
Comment: One commenter requested
that HHS amend the proposed
regulatory language in
§ 156.1110(a)(2)(ii) because it would be
difficult to find any single patient safety
initiative that addresses the reduction of
all cause preventable harm,61
prevention of hospital readmission,
improved care coordination and
improved health care quality through
the collection, management and analysis
of patient safety events, as currently
proposed.
Response: We are finalizing the
proposed requirement at
§ 156.1110(a)(2)(ii), with one
modification. We are modifying the
reasonable exceptions provision to state
that for plan years beginning on or after
January 1, 2017, QHP issuers must
verify that their contracted hospitals
with greater than 50 beds, if not working
with a PSO, implement an evidencebased initiative, to improve health care
quality through the collection,
management and analysis of patient
safety events that reduces all cause
preventable harm, prevents hospital
readmission or improves care
coordination. We clarify that the
evidence-based initiatives described in
this reasonable exception provision are
not intended to address all aspects of
all-cause preventable harm, hospital
readmission, care coordination, and
health care quality in one single
initiative.
Comment: Several commenters
requested that HHS recognize Statelevel patient safety reporting programs,
such as the mandatory Patient Safety
Reporting System required in
Pennsylvania, and Maine’s Sentinel
Event Reporting Program. Commenters
noted that these State-level reporting
programs are robust, evidence-based,
effective patient safety programs that
have delivered high value and improved
patient safety across their regions. They
recommended granting such exceptions
because reporting to a PSO or other
entity would be burdensome,
duplicative, and would not align with
reporting by hospitals in those States.
61 All cause preventable harm or all adverse
events—any event during the care process that
results in harm to a patient, regardless of cause
(Letter from Center for Clinical Standards and
Quality/Survey & Certification Group to State
Survey Agency Directors regarding AHRQ Common
Formats—Information for Hospitals and State
Survey Agencies (SAs)—Comprehensive Patient
Safety Reporting Using AHRQ Common Formats
(Mar. 15, 2013), available at https://www.cms.gov/
Medicare/Provider-Enrollment-and-Certification/
SurveyCertificationGenInfo/Downloads/Surveyand-Cert-Letter-13-19.pdf).
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Response: We acknowledge that there
could be local, State, or national patient
safety reporting programs that meet or
exceed the patient safety standards for
plan years beginning on or after January
1, 2017, as outlined in § 156.1110(a)(2).
Therefore, the QHP issuer patient safety
requirements are intended to be broad
and inclusive of various initiatives, such
as State-level, evidence-based programs
that improve health care quality through
the collection, management and analysis
of patient safety events, and that reduce
all cause preventable harm, prevent
hospital readmission, or improve care
coordination. We describe, in the
reasonable exceptions provision
finalized at § 156.1110(a)(2)(ii), the key
concepts characterizing an evidencebased patient safety initiative that are
consistent with the National Quality
Strategy and existing public and private
patient safety programs. However, we
do not intend to provide an exhaustive
list of initiatives, to allow for flexibility
and innovation for future advances in
patient safety.
Comment: A few commenters
suggested amending the proposed
documentation requirement outlined in
§ 156.1110(b), and recommended
allowing hospitals to attest that they
participate in a patient safety activity to
minimize the documentation
requirement and ensure efficient,
consistent mechanisms for compliance
by hospitals.
Response: We maintain the
documentation requirement as outlined
in § 156.1110(b) and clarify that we
intend the requirement for plan years
beginning on or after January 1, 2017, to
be broad and inclusive of examples such
as hospital attestations or current
agreements to partner with a PSO, HEN,
or QIO. We believe that the patient
safety standards support a common goal
of preventing the risk of patient harm in
an effective, sustainable way. We
believe it is important to allow for
flexibility regarding methods of
complying with the new documentation
requirements at § 156.1110(b)(2) in
order to balance both issuer and
hospital burden and to accommodate a
variety of types of patient safety
initiatives in which hospitals may
engage. We also believe that QHP
issuers and their contracted hospitals
should have flexibility in how they
comply with the documentation
requirement as they develop their
contracts.
Comment: One commenter did not
agree with the proposed documentation
requirement to have hospitals share
their PSO agreements with QHPs
because of concern of violating
confidentiality provisions of sharing
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patient safety work products and
analyses outside of the PSO per the
PSQIA. Another commenter requested
clarification regarding whether HHS
would collect and publish data on the
patient safety evaluation system as
defined in 42 CFR 3.20.
Response: PSO contracts with
hospitals for the purpose of receiving
and reviewing patient safety work
product (referred to as Patient Safety
Act contracts) do not meet the definition
of ‘‘patient safety work product’’, and
thus, are not subject to the protections
and requirements in the PSO statute and
regulations. We do not intend to collect
and publish data on the patient safety
evaluation system nor are we generally
permitted to publish patient safety work
product. We clarify that these QHP
issuer patient safety requirements are
intended to support implementation of
the PSQIA and would not violate the
confidentiality provisions of patient
safety work product, as defined in the
PSQIA. We clarify that the QHP issuer
documentation requirement in
§ 156.1110(b)(2) is intended to direct
issuers to collect basic, administrativetype information from their contracted
hospitals, with greater than 50 beds, to
demonstrate compliance with the
patient safety requirement for plan years
beginning on or after January 1, 2017.
For example, we expect such
information could include current
hospital agreements or attestations to
partner with a PSO, which we note
would not contain patient safety work
product. In addition, we clarify that
such information to demonstrate
compliance would be submitted to an
Exchange, upon request by the
Exchange per the established
requirement in § 156.1110(c).
Comment: Several commenters
requested that HHS consider that the
timeframes of hospital patient safety
initiatives may not coincide with plan
years, and that HHS allow flexibility so
that a hospital may attest to the fact that
it is already or will start to take part in
a patient safety activity during the
relevant plan year or base compliance
on a hospital’s previous year’s activities.
One commenter urged HHS to build a
process for approving new initiatives in
the future.
Response: We acknowledge that
timeframes of hospital patient safety
initiatives may not exactly align with
plan years. We are finalizing the patient
safety requirement in § 156.1110(a)(2) to
state that for plan years beginning on or
after January 1, 2017, issuers must verify
that their applicable contracted
hospitals with greater than 50 beds use
a patient safety evaluation system as
defined in 42 CFR 3.20, as well as
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implement a mechanism for
comprehensive hospital discharge to
improve care coordination and quality
or implement an alternative evidencebased initiative. We clarify that we do
not specify dates of activity regarding
patient safety initiatives because we
believe it is the responsibility of the
issuer and contracted hospital to
maintain current documentation and
ensure compliance with these patient
safety standards.
Comment: Several commenters
supported the proposed discharge
planning requirements outlined in
§ 156.1110(a)(2)(i)(B) that states that a
QHP issuer that contracts with a
hospital with greater than 50 beds must
ensure that the hospital implemented a
comprehensive person-centered
discharge program to improve care
coordination and health care quality for
each patient. Commenters expressed
that it is critical that the discharge
planning process reflect the needs of all
populations and sub-populations. Some
commenters noted that HHS is already
addressing hospital discharge planning
requirements in a separate proposed
rule, CMS 3377–P (80 FR 68125 (Nov.
3, 2015)), which should be used to meet
the discharge requirements in section
1311(h) of the Affordable Care Act and
to minimize unnecessary burden on
QHP issuers and hospitals.
Response: We acknowledge that HHS
has currently proposed implementing
discharge planning requirements
mandated in section 1899B(i) of the
Improving Medicare Post-Acute Care
Transformation Act of 2014 (IMPACT
Act, Pub. L. 113–185) by modifying the
discharge planning or discharge
summary Condition of Participation
requirements for hospitals. We agree
with aligning discharge planning
requirements to minimize burden, and
clarify that continued collection of CMS
Certification Numbers (CCNs) would be
sufficient for issuers to comply with
§ 156.1110(a)(2)(i)(B). We believe there
would be no additional burden because
QHP issuers have already been
collecting this documentation since
January 1, 2015, for the initial phase of
the QHP issuer patient safety standards.
We are finalizing the documentation
requirement in § 156.1110(b)(2) for plan
years beginning on or after January 1,
2017 and clarify that the information to
be collected by a QHP issuer could
include CCNs to demonstrate that their
contracted hospitals implement
mechanisms for comprehensive personcentered hospital discharge to improve
care coordination and health care
quality for each patient. We also believe
it is important to provide flexibility to
hospitals and QHP issuers and note that
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other types of information may be
collected to demonstrate compliance
with comprehensive person-centered
hospital discharge if hospitals choose to
implement this in alternative ways,
other than meeting Condition of
Participation requirements.
Comment: Many commenters did not
support mandating the use of AHRQ
Common Formats for standardizing
reporting of patient safety events. They
stated that requiring use of Common
Formats would stifle private sector
innovation and investment in the
development of PSOs, would add
burden and costs to PSO formation, and
could cause existing PSOs to voluntary
delist. Some commenters noted that
hospitals that already report patient
safety data in a standardized manner
through other reporting systems that
meet or exceed the Patient Safety and
Quality Improvement Act requirements,
would incur undue burden as well.
Commenters urged HHS to allow
flexibility to PSOs and their participants
to choose the reporting format or tool
they use to submit patient safety event
data.
Response: We continue to strongly
support hospital tracking of patient
safety events using the AHRQ Common
Formats,62 which are a useful tool for a
hospital regardless of what patient
safety interventions are implemented for
ongoing, data-driven quality assessment.
We also note that use of Common
Formats, and aligning with existing
HHS recommendations for hospitals,63
is integral, whether a hospital chooses
to work with a PSO to comply with the
proposed requirement in
§ 156.1110(a)(2)(i), or implements an
alternative approach under the
reasonable exception provision in
§ 156.1110(a)(2)(ii). We also remind
PSOs of their requirement to collect
patient safety work product in a
standardized manner, as set forth in 42
CFR 3.102(b)(2)(i)(F) and (b)(2)(iii).
However, we clarify that the QHP issuer
patient safety standards finalized in this
rule do not require the use of the
Common Formats for patient safety
event reporting at this time.
Comment: A few commenters
provided recommendations regarding
the requirement to collect and maintain
62 https://www.pso.ahrq.gov/common.
63 Letter
from Center for Clinical Standards and
Quality/Survey & Certification Group to State
Survey Agency Directors regarding AHRQ Common
Formats—Information for Hospitals and State
Survey Agencies (SAs)—Comprehensive Patient
Safety Reporting Using AHRQ Common Formats
(Mar. 15, 2013), available at https://www.cms.gov/
Medicare/Provider-Enrollment-and-Certification/
SurveyCertificationGenInfo/Downloads/Surveyand-Cert-Letter-13-19.pdf.
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CCNs and to establish quality
improvement strategies.
Response: We clarify that we are
finalizing requirements to transition
from the first phase of patient safety
standards that required, beginning on
January 1, 2015, QHP issuers to verify
that certain contracted hospitals meet
Medicare Hospital Conditions of
Participation requirements regarding a
quality assessment and performance
improvement program and a discharge
planning process. In other words, we are
finalizing the amendments to § 156.1110
to begin the second phase of the patient
safety standards to require for plan years
beginning on January 1, 2017, QHP
issuers to verify that their contracted
hospitals with greater than 50 beds use
a patient safety evaluation system as
defined in 42 CFR 3.20, and implement
a comprehensive person-centered
discharge program to improve care
coordination and health care quality for
each patient; or implement an evidencebased initiative, to improve health care
quality through the collection,
management and analysis of patient
safety events that reduces all cause
preventable harm, prevents hospital
readmission, or improves care
coordination by a means other than
reporting of such information to or by a
PSO. We clarify that the collection of
CCNs would be sufficient under
§ 156.1110(b)(2) for QHP issuers to
document compliance with
§ 156.1110(a)(2)(i)(B).
We also note that QHP issuer
requirements relating to quality
improvement strategies were established
in the 2016 Payment Notice (80 FR
10844); therefore, comments specific to
QHP issuer implementation and
reporting of quality improvement
strategies are out of scope of this rule.
However, we expect QHP issuers would
align and coordinate implementation of
their contracted hospital patient safety
initiatives with their QHP quality
improvement strategies if applicable.
Comment: Several commenters
requested clarifications regarding the
timeframe for the effective date for data
collection to ensure that hospitals have
sufficient time to comply with the
standards. One commenter suggested
one year from the date of the final rule
as the effective date of data collection
since hospitals would need considerable
time to implement activities to comply
with these patient safety standards. One
commenter requested more detail about
how hospitals that meet the standard
can be prospectively identified by plans,
consumers and regulators.
Response: We believe that the
majority of hospitals with greater than
50 beds already partner with a PSO, or
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12317
implement an alternative national,
State, public, or private evidence-based
patient safety initiative that uses the
collection, management and analysis of
patient safety events to reduce all cause
preventable harm, prevent hospital
readmission, or improve care
coordination. We believe that there is an
adequate amount of time from the
publication of this final rule for QHP
issuers and their contracted hospitals to
be able to comply with these patient
safety standards for plan years
beginning on or after January 1, 2017.
We expect that issuers would continue
their efforts to prospectively identify
hospitals to contract with that meet all
applicable Federal and State health care
quality and safety requirements.
Comment: One commenter requested
clarifications regarding the regulatory
reference for ‘‘a comprehensive personcentered discharge program to improve
care coordination and health care
quality for each patient’’ and how this
is tracked or published.
Response: The language being
finalized at § 156.1110(a)(2)(i)(B)
implements the patient safety standard
captured at section 1311(h)(1)(A)(ii) of
the Affordable Care Act, which refers to
a mechanism to ensure that each patient
receives a comprehensive program for
hospital discharge that includes patientcentered education and counseling,
comprehensive discharge planning, and
post discharge reinforcement. We do not
intend to track or publish patient safety
event data regarding hospital discharge
programs at this time. Instead,
§ 156.1110(b)(2) requires QHP issuers,
for plan years beginning on or after
January 1, 2017, to collect and maintain
documentation to demonstrate that its
contracted hospitals with greater than
50 beds meet the required patient safety
standards. We also clarify that
documentation to demonstrate
compliance with the discharge planning
requirement (for example, the hospital’s
CCN) would be submitted to an
Exchange, upon request by the
Exchange per the established
requirement in § 156.1110(c).
9. Qualified Health Plan Issuer
Responsibilities
a. Payment and Collections Processes
(§ 156.1215)
In the 2015 Payment Notice, HHS
established a monthly payment and
collections cycle for insurance
affordability programs, user fees, and
premium stabilization programs. In
2017, as discussed elsewhere in this
document, we are finalizing our
proposal to charge issuers in SBE–FPs
for eligibility and enrollment services a
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user fee for the benefits issuers in SBE–
FPs will receive as a result of the SBE–
FP’s reliance on the Federal platform.
To streamline our payment and
collections process, we proposed that,
for 2017 and later years, for purposes of
the netting process, the reference to FFE
user fees in § 156.1215(b) would be
interpreted to include any fees for
issuers in State-based Exchanges using
the Federal platform.
In the 2015 Payment Notice, we
established in § 156.1215(c) that any
amount owed to the Federal government
by an issuer and its affiliates is the basis
for calculating a debt owed to the
Federal government. In this rulemaking,
we proposed that, for 2017 and later
years, for purposes of calculating the
debt owed to the Federal government,
we would interpret the reference to FFE
user fees to include any fees for issuers
in State-based Exchanges using the
Federal platform. We also sought
comment on whether the regulations
should be amended to reflect these
interpretations.
We are adopting the interpretations of
§ 156.1215 we announced in the
proposed rule by finalizing conforming
amendments to paragraphs (b) and (c) of
§ 156.1215.
Comment: We received one comment
on these proposals requesting that HHS
clarify if it intends to collect user fees
from issuers in State-based Exchanges
using the Federal platform beginning in
2015.
Response: Our intent in this section
was to establish our authority to collect
the user fee from SBE–FP issuers
through netting, but only once such a
fee has been established. As described
elsewhere in this rule, HHS will begin
assessing the user fee on issuers in
State-based Exchanges using the Federal
platform beginning with plan years that
start on or after January 1, 2017, or, at
the State’s request, collecting an
equivalent amount from the State. We
are finalizing our proposal that, for
purposes of the netting process and
calculating the debt owed to the Federal
government, we will interpret the
reference to FFE user fees at
§ 156.1215(b) and (c) to include any fees
for issuers in SBE–FPs, beginning with
plan years that start on or after January
1, 2017.
b. Administrative Appeals (§ 156.1220)
In the 2015 Payment Notice (79 FR
13818), we established an
administrative appeals process for
issuers. We established a three-tiered
appeals process: a request for
reconsideration under § 156.1220(a); a
request for an informal hearing before a
CMS hearing officer under
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§ 156.1220(b); and a request for review
by the Administrator of CMS under
§ 156.1220(c). In light of HHS’s
finalization of the proposal around
SBE–FPs, we interpret this
administrative appeals process to also
apply to user fee payments that we
collect from SBE–FP QHP issuers that
offer plans on an SBE–FP.
Under § 156.1220(a), an issuer may
only file a request for reconsideration
based on the following: A processing
error by HHS, HHS’s incorrect
application of the relevant methodology,
or HHS’s mathematical error. For
example, an issuer may file a request for
reconsideration that challenges the
assessment of a default risk adjustment
charge if the issuer believes the default
charge was assessed because HHS
incorrectly applied its methodology
regarding data quantity and quality
standards set forth in § 153.710(f);
however, the issuer may not file a
request for reconsideration to challenge
the methodology itself. We also clarify
that an issuer may not file a request for
reconsideration regarding issues arising
from the issuer’s failure to load
complete and accurate data to its
dedicated distributed data environment
within the data submission window.
Errors by the issuer are not appealable.
In line with our proposal to delete
§ 153.710(d), we proposed to make
conforming amendments to modify
§ 156.1220 to remove cross-references to
the interim discrepancy reporting
process. Under § 156.1220(a)(4)(ii), a
reconsideration relating to risk
adjustment or reinsurance may only be
requested if, to the extent the issue
could have been previously identified
by the issuer to HHS under the final
discrepancy reporting process proposed
to be redesignated at § 153.710(d)(2), it
was so identified and remains
unresolved. As proposed to be
redesignated, § 153.710(d)(2) states that
an issuer must identify to HHS any
discrepancies it identified in the final
distributed data environment reports.
We clarify that issuers may identify
issues during the discrepancy reporting
process under newly designated
§ 153.710(d)(2) that are not subject to
appeal; that is, issuers may identify
issues that are not processing errors by
HHS, HHS’s incorrect application of the
relevant methodology, or HHS’s
mathematical errors. We clarify that, in
contrast, an issuer may only request a
reconsideration of unresolved issues
that were identified (if they could have
been so identified) under the final
discrepancy reporting process proposed
to be redesignated at § 153.710(d)(2), if
contesting a processing error by HHS,
HHS’s incorrect application of the
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relevant methodology, or HHS’s
mathematical error. We also clarified
that the existence of an unresolved
discrepancy is not alone a sufficient
basis on which to request a
reconsideration.
Additionally, we clarified the grounds
for appeals related to the risk corridors
program. An issuer may not file a
request for reconsideration to challenge
the standards for the risk corridors
program, including those established in
§§ 153.500 through 153.540 and in
guidance issued by HHS. In addition,
appeals related to data for programs
other than risk corridors covered in
§ 156.1220(a) cannot be grounds for risk
corridors appeals. We proposed to
clarify that the last submission of data
to which the issuer has attested serves
as the notification for purposes of
§ 153.510(d).
We also proposed to shorten the
deadline for filing a request for
reconsideration in § 156.1220(a)(3) from
60 to 30 calendar days.
Additionally, we proposed to clarify
that an issuer must pay the full amount
owed to HHS as set forth in the
applicable notification, even if the
issuer files a request for reconsideration
under § 156.1220. Failure to pay an
amount owed will result in interest
accruing after the applicable payment
deadline. Therefore, if an appeal is
unsuccessful, and the issuer has not
already remitted the charge amount
owed, the issuer would owe the debt
plus the interest, and administrative
fees which accrue from delayed
payment. If an appeal is successful,
HHS will refund the amount paid in
accordance with the final appeal
decision. HHS is finalizing this
clarification.
We are finalizing our proposal to
shorten the timeframe for requesting
reconsideration related to the risk
adjustment, reinsurance and risk
corridors programs to 30 calendar days.
This final rule will become effective 60
days after it is published—that is, prior
to the June 30 notification of risk
adjustment and reinsurance amounts.
Therefore, requests for reconsideration
related to the risk adjustment,
reinsurance and risk corridors programs
for the 2015 benefit year must be made
within 30 calendar days of notification
of the payment or charge. However,
HHS will maintain a 60 calendar day
timeframe to request reconsideration for
the APTC, CSR and user fee programs.
Therefore, the request for
reconsideration must be filed in
accordance with the following
timeframes: (1) For the premium tax
credit and cost-sharing reduction
portions of the advance payments, or
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FFE user fee charges, within 60 calendar
days after the date of the final
reconsideration notification specifying
the aggregate amount of such advance
payments or user fees for the applicable
benefit year; (2) for a risk adjustment
payment or charge, including an
assessment of risk adjustment user fees,
within 30 calendar days of the date of
the notification under § 153.310(e); (3)
for a reinsurance payment, within 30
calendar days of the date of the
notification provided under
§ 153.240(b)(1)(ii); (4) for a default risk
adjustment charge, within 30 calendar
days of the date of the notification of
such charge; (5) for reconciliation of the
cost-sharing reduction portion of the
advance payments, within 60 calendar
days of the date of the notification of
such payment or charge; and (6) for a
risk corridors payment or charge, within
30 calendar days of the date of the
notification of such payment or charge
for the purposes of § 153.510(d). In the
proposed rule, we proposed to clarify
that the last submission of data to which
the issuer has attested serves as the
notification for purposes of § 153.510(d).
We have since issued a public FAQ
stating that for the purposes of the 2014
benefit year the public notification of
final estimated risk corridors payments
and charge amounts served as the
notification for purposes of
§ 153.510(d).64
Comment: One commenter agreed
with the shortening the deadline to
request reconsideration related to risk
adjustment to 30 days from 60 days.
Other commenters asked that HHS
maintain the 60-day deadline. One
commenter requested a 90-day timeline
to request reconsideration. Some
commenters asked that HHS maintain
the longer deadline due to new
processes surrounding policy based
payments and cost-sharing reductions
and advance payments of the premium
tax credit reconciliation. Another
commenter requested that HHS extend
the deadline to file a request for
reconsideration to 120 days to allow
cost-sharing reductions and advance
payments of the premium tax credit
adjustments due to the 3-month grace
period.
Response: We are finalizing our
proposal to shorten the timeframe for
requesting reconsideration related to the
risk adjustment, reinsurance and risk
corridors programs to 30 calendar days.
Conversely, HHS will maintain a 60-day
deadline to request reconsideration for
the APTC, CSR and user fee programs.
64 For the 2014 benefit year, we clarified this
deadline in FAQ 14470 (Dec. 21, 2015), available
at https://www.regtap.info.
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Finalizing a shorter timeline for the
premium stabilization programs
requests for reconsideration would
permit HHS to resolve administrative
appeals, calculate final payments and
charges, and make payments in a
manner consistent with the reporting
and payment timelines for those
programs. We agree with commenters
that there are several benefits to
maintaining the longer 60-day
timeframe for the APTC, CSR and user
fee programs.
Comment: One commenter asked that
HHS pay interest to any issuer who pays
and then wins a request for
reconsideration.
Response: If an appeal is successful,
HHS will issue a refund in accordance
with the final appeal decision.
Comment: A few commenters
suggested HHS allow unresolved
discrepancies to be appealed even if the
discrepancy does not fit within one of
the three reconsideration basis,
otherwise discrepancies could be
identified and not resolved within the
timeframe without an opportunity for
resolution.
Response: Issuers cannot appeal data
submission errors that resulted from an
issuer error because it is the
responsibility of the issuer to submit
complete and accurate data (with
corrections to any errors) prior to the
data submission deadline. Throughout
the data collection period, HHS
maintains a help desk, hosts user group
calls and webinars to assist issuers with
the identification and resolution of data
submission errors and to provide
general technical assistance. Issuers are
encouraged to review their data and the
EDGE server generated reports, as well
as to notify HHS of any problems as
soon as possible so that, to the extent
feasible, assistance can be provided to
resolve those problems before the final
data submission deadline. Therefore,
HHS will only consider requests for
reconsideration related to risk
adjustment or reinsurance on the basis
that HHS made a processing error,
incorrectly applied a relevant
methodology, or made a mathematical
error. Additionally, HHS would
continue to require issuers to identify
issues through the final formal
discrepancy reporting process, if the
issue is identifiable at the time, so HHS
can work to address such issues prior to
the final risk adjustment transfers and
reinsurance payment calculations.
Comment: Some commenters asked
that HHS provide a timeline for when
requests for reconsideration and appeals
will be decided.
Response: HHS understands that
receiving a reconsideration decision
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promptly promotes the timely release of
funds, however, due to the varying
nature, complexity and number of
reconsiderations, HHS cannot set forth a
specific deadline. HHS is committed to
providing a decision as quickly and
efficiently as possible.
c. Third Party Payment of Qualified
Health Plan Premiums (§ 156.1250)
We proposed to amend § 156.1250 to
clarify that a Federal or State
government program includes programs
of the political subdivisions of the State,
namely counties and municipalities,
which we referred to as local
governments. Including this
clarification in regulations will ensure
that States have the flexibility to
distribute care and Exchange financial
assistance to their vulnerable
populations through local governments,
consistent with their statutory and
regulatory authority.
In terms of the distinction between
programs sponsored and operated by the
government (such as the Ryan White
HIV/AIDS programs) and programs that
involve Federal grantees that receive
considerable public funding, we
acknowledged that programs such as the
Ryan White HIV/AIDS program operate
by working with cities, States, and local,
community-based organizations to
provide services in line with their
statutory authority. Sections
2604(c)(3)(F), 2612(b)(3)(F), and
2651(c)(3)(F) of the PHS Act authorize
Ryan White HIV/AIDS program grantees
and sub-grantees to use program funds
for premium and cost-sharing
assistance. These grantees and subgrantees must provide the assistance
through third-party payments as they
are prohibited from making payments
directly to patients. Though many Ryan
White HIV/AIDS program grantees are
State and local governments, not all are;
similarly, many of the State and local
government grantees administer funds
through sub-grantees that are not
government entities. We proposed to
distinguish government programs from
government grantees such that the
requirement at § 156.1250 would apply
to government programs, but not
necessarily to entities that are
government grantees, unless specifically
authorized and funded by the Federal,
State, or local government program to
make the payments on behalf of the
program, consistent with the
government programs’ statutory and
regulatory authority to provide premium
and cost-sharing assistance through
grants and grantees. In other words, if
such Federal, State, and local
governments are authorized to
administer their premium and cost-
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sharing assistance through grantees or
sub-grantees, the payments may not be
rejected on the grounds that they did
not come directly from the government
programs. In such cases, the source of
the Exchange financial assistance is the
government program, and
administration or distribution of that
assistance through grants and grantees is
authorized under statute or regulation.
We also proposed to require entities
that make third party payments of
premiums under this section to notify
HHS, in a format and timeline specified
in guidance. We proposed that the
notification must reflect the entity’s
intent to make payments of premiums
under this section and the number of
consumers for whom it intends to make
payments.
We also proposed to clarify that while
issuers offering individual market
QHPs, including SADPs, generally do
not collect cost-sharing payments, they
are required to accept third party costsharing payments on behalf of enrollees
in circumstances where the issuer or the
issuer’s downstream entity accepts costsharing payments from plan enrollees.
We noted that although cost-sharing
payments are generally made to
providers, rather than to issuers, there
are certain contractual circumstances in
which an issuer’s non-provider
downstream entity engages in activities
such as the collection of cost-sharing
payments. For example, an issuer’s
pharmacy benefits manager may collect
cost-sharing payments from the issuer’s
plan enrollees for prescription drugs.
We proposed to clarify that in such
situations, the rules at § 156.1250
regarding the requirement to accept
third-party payments would apply to
cost sharing payments.
We noted that we are considering
whether to expand the list of entities
from whom issuers are required to
accept payment under § 156.1250 to
include not-for-profit charitable
organizations in future years, subject to
certain guardrails intended to minimize
risk pool impacts, such as limiting
assistance to individuals not eligible for
other minimum essential coverage and
requiring assistance until the end of the
calendar year.
Comment: Some commenters
expressed concern that the language
proposed in § 156.1250(a)(3),
‘‘consistent with the program’s statutory
authority,’’ might be read to require
explicit statutory authority to make
premium and cost-sharing payments.
The commenters stated that such a
reading could unduly restrict the ability
of some programs to assist clients and
cause confusion for both programs and
issuers.
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Response: We are amending
§ 156.1250(a) to remove the phrase,
‘‘consistent with the program’s statutory
authority,’’ in order to avoid such
confusion. We believe that the phrase,
‘‘directed by a government program to
make payments on its behalf,’’ is
sufficiently specific and clear.
Comment: Several commenters asked
that we provide a specific list of entities
that qualify as government programs
from which third party payments must
be accepted. Several other commenters
urged that we immediately include notfor-profit, charitable organizations as
entities from which third party
payments for QHP premiums and costsharing must be accepted, with certain
guardrails intended to minimize adverse
selection. Some of these commenters
also urged that HHS provide a list of
acceptable foundation types as
referenced in HHS’s February 7, 2014
FAQ,65 which stated that the concerns
addressed in the November 4, 2013
FAQ 66 do not apply to payments from
private, not-for-profit foundations if
they are made on behalf of QHP
enrollees who satisfy defined criteria
that are based on financial status and do
not consider enrollees’ health status.
These commenters expressed that the
provision of a list of acceptable
foundation types is critical to ensure
that these foundations meet the criteria
noted in the February 7, 2014 FAQ.
Some commenters asked that we collect
the following information under our
proposed information collection:
Number of consumers for whom the
entity will be making payments (by
State or rating area); volume of
payments over a specified time period;
contact information; tax ID and filing
status; governance (for example,
leadership, members of Board of
Directors, principal shareholders, etc.);
funding sources; information on
relationships with provider
organizations (financial or other); and
information on relationships with
pharmaceutical companies (financial or
other).
Response: We are not providing a
specific list of entities that qualify as
government programs at this time, as we
believe that the parameters established
in § 156.1250(a) are sufficiently precise.
65 Third Party Payments of Premiums for
Qualified Health Plans in the Marketplaces (Feb. 7,
2014), available at https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/Downloads/thirdparty-payments-of-premiums-for-qualified-healthplans-in-the-marketplaces-2-7-14.pdf.
66 Third Party Payments of Premiums for
Qualified Health Plans in the Marketplaces (Nov. 4,
2013), available at https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/Downloads/thirdparty-qa-11-04-2013.pdf.
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We are removing § 156.1250(b), the
information collection provision, as we
believe it will unduly burden Indian
tribes, Ryan White HIV/AIDS programs,
and government programs to provide
such notification to HHS. Although
HRSA collects information regarding
premium assistance from its Ryan White
HIV AIDS programs and grantees,
Indian tribes and other Federal, State,
and Local government programs may
not currently collect or maintain this
information. Further, we believe that
payment information from these entities
would be unlikely to inform the impacts
on the risk pool that may result from
expanding the requirement at
§ 156.1250 to third party payments
made by non-profit organizations. The
latter may make payments for a different
population with different health care
needs and conditions. We defer the
question of acceptance of third-party
payments made by non-profit
organizations to future rulemaking. We
refer stakeholders to our February 7,
2014, FAQ, which clarified that the
concerns addressed in our November 4,
2013 FAQ 67 do not apply to payments
from private, not-for-profit foundations
if the payments are made on behalf of
QHP enrollees who satisfy defined
criteria that are based on financial status
and do not consider enrollees’ health
status. In this situation, the FAQ stated
that HHS would expect that the
premium and any cost-sharing
payments cover the entire policy year.
Comment: Some commenters raised
concerns that it would be confusing to
create a requirement for issuers or their
downstream entities such as PBMs to
accept cost sharing from third party
payers because there is currently no
industry infrastructure in place to
facilitate third-party payments,
including the lack of the following:
Secondary payer guidelines; enrollment
file sharing requirements; specific
guidelines for accumulators; a
coordination of benefits entity to collect
and share data with issuers; a
transaction facilitator; data exchange
agreements; the ability of plans to use
common identifiers; and an National
Council for Prescription Drug Programs
transaction process. Other commenters
agreed that when an issuer uses an
entity, such as a PBM, to provide a
benefit such as prescription drugs, that
entity is required to accept third party
payments of cost-sharing by virtue of
being a downstream entity.
67 Third Party Payments of Premiums for
Qualified Health Plans in the Marketplaces (Nov. 4,
2013), available at https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/Downloads/thirdparty-qa-11-04-2013.pdf.
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Response: We are finalizing our
proposal, with an additional
clarification that while issuers offering
individual market QHPs, including
SADPs, generally do not collect costsharing payments, their downstream
entities, or agents of the issuer, are
required to accept third party costsharing payments made by the entities
listed at § 156.1250(a) on behalf of QHP
enrollees if the downstream entities or
agent routinely accept cost-sharing
payments from enrollees. We are also
clarifying in response to comments, that
an agent of the QHP issuer with a mail
order pharmacy, such as a PBM with a
mail order pharmacy, must accept the
third party cost-sharing payments
directly from the entities listed at
§ 156.1250(a).
d. Other Notices (§ 156.1256)
We proposed to add a new § 156.1256,
which would add a requirement for
issuers, in the case of a plan or benefit
display error included in
§ 155.420(d)(4), to notify their enrollees
within 30 calendar days after the error
has been identified, if directed to do so
by the FFE. We believe that enrollees
should be made aware of any error that
may have impacted their QHP selection
and enrollment and any associated
monthly or annual costs. Therefore, we
proposed a requirement that issuers, if
directed to do so by the FFE, must
notify their enrollees of such error, as
well as the availability of a special
enrollment period, under
§ 155.420(d)(4), for the enrollee to select
a different QHP, if desired.
We are finalizing the provisions with
two modifications. In response to
comments received, we are amending
the timeframe within which issuers
must notify their affected enrollees of a
plan or benefit display error and the
availability of a special enrollment
period, from 30 calendar days after the
error is identified to 30 calendar days
after the issuer is notified by the FFE
that the error has been fixed. By waiting
until after the error has been corrected,
issuers will be more likely to have a
complete list of affected enrollees to
notify. In addition, by waiting until the
error has been corrected and the plan
information is properly displayed,
enrollees will be able to compare their
current plan to others in the service area
when deciding whether or not to change
plans under the special enrollment
period. In addition, we are clarifying
that this rule will apply to issuers on
SBE–FPs.
Comment: We received general
support from commenters for finalizing
this proposal, so that consumers are
informed about plan or benefit
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information that was incorrect when
they selected that plan and may have
impacted their plan selection. One
commenter requested that the proposal
be extended to State-based Exchanges.
Other commenters supported this
requirement, but requested that it be
limited to those plan or benefit display
errors for which issuers are responsible
or in cases when issuers fail to comply
with the FFE’s correction procedures.
Response: We agree with commenters
that issuers should notify affected
enrollees of display errors that may have
impacted plan selection and of their
opportunity to select a different plan
through the FFE. While we agree that all
affected enrollees, regardless of location,
should be notified of such errors, we
leave it to States operating SBEs to
determine the method and timeframe for
which enrollees in their Exchanges
should be notified. However, SBE–FPs
will be using the FFE eligibility and
enrollment platform, and, as we note in
the preamble to § 156.350 in this final
rule, it is not possible at this time for the
FFEs to accommodate State
customization in policy or operations,
such as State-specific display elements
in plan compare. Accordingly, we are
modifying the regulation text to specify
that this rule would require issuers
offering QHPs through SBE–FPs to
comply with FFE directions to provide
notice under this section.
The plan and benefit display errors
included in this noticing requirement
includes information submitted by
issuers to the FFE to be displayed for
consumers on Plan Compare. Many
errors falling into this category thus far
have been due to errors in plan
information provided by issuers and all
errors in this category have a specific
impact on the information available to
consumers about one or more plans
provided by a particular issuer.
Comment: Many commenters
requested additional clarification of the
parameters of plan or benefit display
errors under § 155.420(d)(4), including
whether errors in provider directories or
drug formularies, such as those newly
accessible through the premium
estimator tool, are included in this new
notification requirement.
Response: Plan or benefit display
errors under § 155.420(d)(4) refer to
misinformation, including errors related
to service areas, covered services, and
premiums, displayed incorrectly on the
Exchange Web site. For the FFEs, this
only includes the Plan Compare section
of the application where a consumer
may enroll in a plan. If the plan
information incorrectly displayed does
not have a direct bearing on coverage or
benefits, such as plan contact
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information, those errors generally do
not enable an enrollee to qualify for a
special enrollment period under
§ 155.420(d)(4). Only those plan or
benefit display errors that qualify an
enrollee for a special enrollment period
under § 155.420(d)(4) would trigger this
new noticing requirement.
Errors to provider networks or drug
formularies, whether incorrectly
displayed on the issuer’s Web site or
accessible through the premium
estimator tool on HealthCare.gov,
generally do not qualify an enrollee for
a special enrollment period. Therefore,
issuers are not required to notify
affected enrollees in the manner and
timeframe outlined in this provision,
although notifying enrollees of
important changes is encouraged. HHS
notes the importance of issuers
providing accurate and complete plan
information, including provider
network and drug formulary
information, so that consumers may
make informed choices. QHP issuers are
reminded that § 156.225(b) prohibits
them from employing marketing
practices or benefit designs that will
have the effect of discouraging the
enrollment of individuals with
significant health needs. Issuers may
also be subject to Federal civil rights
laws that prohibit discriminatory
marketing practices and benefit designs,
such as section 1557 of the Affordable
Care Act.
Comment: Some commenters
requested that that HHS provide model
notices for issuers to send to enrollees
in the event of a plan or benefit display
error. Other requested that issuers retain
the flexibility to draft notices to
consumers the best way that they see fit.
Response: HHS recognizes that
notifying their enrollees of a plan or
benefit display error is already included
in the business practices of many
issuers offering QHPs through the
Exchanges and, therefore, issuers have
an established method of
communicating such errors to their
enrollees. HHS also recognizes the need
to communicate accurate and standard
information about the availability of a
special enrollment period to consumers.
Therefore, HHS will provide issuers
with suggested special enrollment
period language that they could use in
their existing consumer notices to
satisfy the requirement that they notify
enrollees of their eligibility for a special
enrollment period.
Comment: Several issuers requested
that we amend the amount of time
issuers have to notify affected enrollees,
either by extending it from 30 to 60
calendar days or by starting the 30
calendar days from the date that the
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plan or benefit display error has been
fixed, while other commenters wanted
to ensure that enrollees are notified of
an error in a timely manner.
Response: We believe that 30 calendar
days is sufficient time for issuers to
notify their enrollees affected by a plan
or benefit display error and is soon
enough to minimize sustained harm to
affected enrollees. However, as
discussed above, we agree that the 30
calendar days should begin on the date
that the issuer is notified that the error
has been fixed, and we are amending
this provision accordingly.
Comment: One commenter stated that
State regulators, including SBEs and
departments of insurance, should be
responsible for the identification of plan
and benefit display errors.
Response: We agree that, States
should play a role in identifying plan or
benefit display errors, and we encourage
State regulators to notify the applicable
Exchange of the error. Nothing in this
rule prohibits a State from taking that
role. We also note that issuers offering
QHPs through an FFE must obtain State
authorization to change QHP data after
certification.
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H. Part 158—Issuer Use of Premium
Revenue: Reporting and Rebate
Requirements
1. Definitions (§ 158.103)
In the proposed rule, we proposed to
revise the regulatory definitions of large
employer and small employer in
§ 158.103 to cross-reference the
definitions of those terms in § 144.103,
in order to ensure consistency in those
definitions between the MLR regulation
and the market reform requirements,
and to reflect the recent amendments
made by the Protecting Affordable
Coverage for Employees Act (Pub. L.
114–60).
Comment: We received two comments
supporting this proposal. One
commenter suggested that the
amendment not apply until the 2016
and later MLR reporting years.
Response: We appreciate the
comments regarding the definitions of
large employer and small employer. We
also agree that although the Protecting
Affordable Coverage for Employees Act
was passed in and effective as of
October 2015, policies that were in
effect in 2015 were issued using the
group definitions that existed prior to
this Act. Therefore, we are finalizing the
proposed definitional changes effective
with the 2016 MLR reporting year.
2. Reporting of Incurred Claims
(§§ 158.103 and 158.140(a))
The MLR December 1, 2010 interim
final rule (75 FR 74864) and the May 16,
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2012 technical corrections to that rule
(77 FR 28788) direct issuers to report
incurred claims with a 3-month run-out
period, and define unpaid claim
reserves to mean reserves and liabilities
established to account for claims that
were incurred during the MLR reporting
year but had not been paid within 3
months of the end of the MLR reporting
year. In the proposed rule, we proposed
to amend the definition of unpaid
claims reserves in § 158.103 and the
requirements for reporting incurred
claims in § 158.140(a) to utilize a 6month, rather than a 3-month run-out
period, beginning with the 2015
reporting year. The proposed
amendment was intended to improve
the accuracy of incurred claims amounts
in MLR calculation as well as in the risk
corridors calculation under a related
proposed amendment to § 153.530.
Comment: We received many
comments, split equally between
supporting the change and opposing it.
Some commenters that opposed our
proposal requested that any extension in
the run-out period include an extension
to the filing deadline. Other commenters
were principally concerned that the
MLR rebate deadline would also be
extended, which they believed would
harm consumers. One commenter also
noted that a longer run-out period could
negatively affect States’ timely review of
issuers’ rate filings. Additionally, many
opponents noted that the NAIC had
considered a 6-month run-out period in
2010 and determined that it would not
result in a materially more accurate
MLR. The commenters stated that any
increase in accuracy would therefore be
outweighed by the administrative
burden required to update issuer
processes. Further, some of these
commenters noted that since two of the
three premium stabilization programs
are temporary and will expire in the
near future, HHS could, at that time,
revert back to the June 1 MLR filing
deadline, rather than maintain the
current July 31 deadline that was
adopted to accommodate the premium
stabilization programs. Commenters
point out that this would allow
consumers to receive rebates sooner.
Supporters of the 6-month run-out
period agreed that a longer run-out
period would improve the accuracy of
MLRs and rebate amounts by utilizing
actual rather than estimated claims
amounts.
Response: We appreciate the
comments supporting our proposal, but
also acknowledge the practical
considerations raised by the
commenters that opposed our proposal.
We agree with those commenters that
suggested that it may be more beneficial
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for all stakeholders if we do not modify
the run-out period at this time, but
instead explore ways to restore the
earlier MLR deadlines after two of the
three premium stabilization programs
expire. Consequently, we are not
finalizing the proposed amendments to
§§ 158.103 and 158.140(a) regarding
unpaid claims reserves and incurred
claims, and are retaining the existing 3month run-out period.
3. Reporting of Fraud Prevention
Expenditures
In the proposed rule, we invited
comment on whether we should modify
the treatment of a health insurance
issuer’s investments in fraud prevention
activities for MLR reporting purposes,
noting that we were considering
amending the MLR regulation to permit
the counting of a health insurance
issuer’s investments in fraud prevention
activities among those expenses
attributable to incurred claims. We
asked for comments on this approach,
including whether safeguards against
potential abuse should be included
(such as an upper limit on this
allowance); whether we should collect
fraud prevention activity expense data
as an informational item on the MLR
Annual Reporting Form before
amending the regulation; as well as on
potential alternative treatment of these
expenses for MLR reporting or rebate
calculation purposes. We also asked for
any specific, actual data with respect to
the additional incentives that would
result for health plan investments of this
sort.
Comment: We received numerous
comments, with the majority opposing
any deviation from the current
treatment of fraud prevention in MLR.
Opponents stated that our proposal to
modify treatment of fraud prevention
expenses in MLR directly contradicts
the NAIC’s previous recommendation
that such expenses should not be
allowed. These commenters noted that
the NAIC had conducted extensive
debate and analysis of this issue with
input from all stakeholders, and had
concluded that allowing any additional
fraud-related costs in the MLR
calculation would be inappropriate.
These commenters further stressed that
the current rule is working as intended
and that there is no evidence that a
change is necessary, that fraud
prevention is principally a costcontainment expense that should be
part of the cost of doing business, and
that any benefit to consumers is
indirect, or difficult or impossible to
isolate. Several commenters requested
that we not proceed without additional
data, or that we limit any allowance to
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0.5 percent of earned premium. Many
commenters requested that HHS not
finalize the proposal until the NAIC’s
recently reconvened MLR Quality
Improvement Activities subgroup
determines whether to support a change
in the treatment of fraud prevention
expenses. In contrast, other commenters
fully supported the proposal, expressing
a view that allowing fraud prevention
expenses in the MLR calculation would
provide issuers an incentive to invest in
preventing fraud, waste and abuse.
Some of these commenters did not
believe that we should impose any caps,
while one commenter suggested a cap of
0.3 percent of earned premium. Many of
these commenters additionally did not
believe that data collection prior to
finalizing the proposal would be useful,
arguing that issuers have been
underinvesting in fraud prevention.
Some supporters stated that fraud
prevention has a patient safety
component, while others focused on the
monetary savings for issuers. Some
commenters further suggested that
issuers would use the money saved
through fraud prevention to lower
premiums or cost sharing, or on medical
services.
Response: We note that no
stakeholder has provided specific data
to support the notion that allowing
fraud prevention expenses in the MLR
calculation would have a positive
impact. We agree with the commenters
who stated that fraud prevention is
principally a cost-containment activity,
which generally is not permitted in the
MLR calculation. In addition, we
appreciate the NAIC’s indication in its
comment letter that its views regarding
inclusion of fraud prevention as an
adjustment to incurred claims have not
changed since its 2010
recommendation. We also agree that,
given the possibility that the treatment
of fraud prevention may be addressed
during the NAIC’s review of quality
improvement activities that is currently
under way, it would be premature for
HHS to modify the MLR regulation at
this time. Therefore, we are not
adopting any changes to the treatment of
fraud prevention activities for MLR
purposes.
IV. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, we are required to provide 30day notice in the Federal Register and
solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. This final rule contains
information collection requirements
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(ICRs) that are subject to review by
OMB. A description of these provisions
is given in the following paragraphs
with an estimate of the annual burden,
summarized in Table 11. In the
December 2, 2015 (80 FR 75487)
proposed rule, we requested public
comment on each of the following
collection of information requirements.
The comments and our responses to
them are discussed below.
A. ICRs Regarding Student Health
Insurance Coverage (§ 147.145)
The final rule requires issuers of
student health insurance coverage to
specify the AV of the coverage and the
metal level (or next lowest metal level)
the coverage would otherwise satisfy.
This information must be included in
any plan materials summarizing the
terms of coverage. We estimate that
there are 49 student health insurance
issuers nationwide that will each need
to provide an average of 25,612
notifications annually.68 We estimate
that each student health insurance
issuer will require an average of one
hour for clerical staff (at a labor cost of
$33.18 per hour) to insert the AV and
metal level information into plan
materials for all plans offered by the
issuer, resulting in a total annual burden
of 1 hour and an associated cost of
$33.18 per issuer. There is no additional
burden to determine these values as
student health insurance issuers are
currently required to calculate a plan’s
AV using the AV Calculator. For all 49
issuers currently providing student
health insurance coverage, the total
combined hour burden is estimated to
be 49 hours with a total combined cost
of $1,625.82 annually. This information
will be included in existing plan
materials; therefore, we do not estimate
any additional distribution costs.
The final rule discontinues the
outdated requirement that student
health insurance issuers provide notice
informing students that the coverage
does not meet the annual limits
requirements under section 2711 of the
PHS Act. This regulatory provision, by
its own terms, no longer applies, as
student health insurance coverage is
subject to the prohibition on annual
dollar limits for policy years beginning
or after January 1, 2014. Issuers will
experience a reduction in burden
related to the discontinued notices,
which was previously estimated to be
1,071 hours, with an equivalent labor
and mailing cost of $43,757.14 for all
student health insurance issuer (under
OMB Control No. 0938–1157).
68 Estimate
based on data from Medical Loss Ratio
submissions for 2014 reporting year.
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B. ICRs Regarding Submission of Risk
Corridors Data (§ 153.530)
We finalized our amendment to the
risk corridors program requirements at
§ 153.530 to require issuers to true-up
claims liabilities and reserves used to
determine the allowable costs reported
for the preceding benefit year to reflect
the actual claims payments made
through March 31 of the year following
the benefit year. This policy requires
issuers to submit data indicating the
difference between their incurred
liability estimated as of March 31
following the preceding benefit year and
March 31 following the current benefit
year. While we believe that issuers will
be recording these amounts as part of
their normal business practices, we
estimate that it will take approximately
1 hour for each issuer at $54.44 per hour
(according to the wage estimates
provided in the MLR notice CMS–
10418–OCN 0938–1164) to record these
amounts. Therefore, we estimate the
overall cost burden of implementing
this policy will be $54.44 per issuer, for
approximately 320 applicable risk
corridors program issuers, for a total
cost burden of $17,421.
C. ICRs Regarding Submission of Rate
Filing Justification (§ 154.215)
This final rule amends § 154.215 to
require health insurance issuers to
submit a Unified Rate Review Template
(URRT) for all single risk pool coverage
regardless of whether there is a plan
within a product that experiences a rate
increase. The existing information
collection requirement is approved
under OMB Control Number 0938–1141.
This includes the URRT and
instructions for rate filing
documentation that issuers currently
use to submit rate information to HHS
for rate increases of any size for single
risk pool coverage. We believe most
issuers already report this information.
However, we estimate the number of
URRT submissions may increase by 1
percent due to this requirement. We
released information regarding revisions
to the information collection template
and instructions in accordance with the
Paperwork Reduction Act of 1995, in
CMS–10379, for a 60-day comment
period.69
D. ICRs Regarding Election To Operate
an Exchange After 2014 (§ 155.106)
This final rule amends the dates for
application submission and approval for
States seeking to operate an SBE, and
have an approved or conditionally
69 81 FR 8498 (February 19, 2016). Available at,
https://s3.amazonaws.com/publicinspection.federalregister.gov/2016-03474.pdf.
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approved Exchange Blueprint
application and operational readiness
assessment. We are not modifying the
documents that States already must
submit as part of the required Exchange
Blueprint application. Therefore, we do
not anticipate any additional impact to
the administrative burden associated
with the regulatory changes to
§ 155.106. HHS is utilizing the existing
PRA package approved under OMB
Control Number 0938–1172 for the
Exchange Blueprint application.
E. ICRs Regarding Standards for
Certified Application Counselors
(§ 155.225(b)(1)(iii))
Section 155.225(b)(1)(ii) requires
certified application counselor
designated organizations to maintain a
registration process and method to track
the performance of certified application
counselors. This final rule adds a new
§ 155.225(b)(1)(iii) requiring certified
application counselor designated
organizations to provide the Exchange
with information and data regarding the
number and performance of the
organization’s certified application
counselors, and the consumer assistance
they provide. Although the requirement
at § 155.225(b)(1)(ii) does not specify the
type of performance information that
must be tracked, or require that the
information be provided to the
Exchange, we expect that certified
application counselor designated
organizations already have a tracking
process in place to collect performance
information from individual certified
application counselors, and that
individual certified application
counselors are already recording and
submitting this required information to
their organization. Therefore, we expect
this final rule to have minimal impact
on individual certified application
counselors and on certified application
counselor designated organizations.
Section 155.225(b)(1)(iii) would add a
new burden of compiling the
performance information and
submitting it to the Exchanges. In States
with FFEs, HHS anticipates that,
beginning for the third quarter of
calendar year 2017, it will collect three
performance data points each quarter
from certified application counselor
designated organizations: The number
of individuals who have been certified
by the organization; the total number of
consumers who received application
and enrollment assistance from the
organization; and of that number, the
number of consumers who received
assistance applying for and selecting a
QHP, enrolling in a QHP, or applying
for Medicaid or CHIP. We anticipate
that this data will be reported to FFEs
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electronically, through HIOS or another
electronic submission vehicle. For the
purpose of estimating costs and
burdens, we assume that SBEs will
collect the same information with the
same frequency, although our rule gives
Exchanges the flexibility to determine
which data to collect and the form and
manner of the collection. We estimate
that certified application counselor
designated organizations will have a
mid-level health policy analyst prepare
the reports and a senior manager will
review each quarterly report. HHS
expects that a mid-level health policy
analyst (at an hourly wage rate of
$40.64) will spend 2 hours each quarter
to provide the required quarterly
submissions and a senior manager (at an
hourly wage rate of $91.31) will spend
3⁄8 hour to review the submissions.
Therefore, we estimate each quarterly
report will require 2.375 hours and a
cost burden of $115.52 per quarter per
organization, or 9.50 hours with a cost
(four quarterly reports) of $462.08
annually per certified application
counselor designated organization.
Nationwide, we estimate there are 5,000
certified application counselor
designated organizations, resulting in an
annual cost burden of $2,310,400 and
47,500 hours for certified application
counselor designated organizations.
Under § 155.225(b)(1)(iii), if an
Exchange requests these certified
application counselor reports, the
Exchange would also need to review the
reports. We assume that all Exchanges
will require quarterly reports and will
utilize in-house staff to review them. We
assume that an employee earning a wage
that is equivalent to a mid-level GS–11
employee would review quarterly report
submissions from certified application
counselor designated organizations.70
We estimate that a mid-level employee
(at an hourly wage rate of $43.13) will
spend 10 minutes reviewing each
quarterly report for a cost burden of
approximately $7.19 per quarterly
report per certified application
counselor designated organization. For
all SBEs, we estimate that there are
1,500 certified application counselor
designated organizations resulting in a
cost burden of 1,000 hours and
approximately $43,130 annually. Costs
to the FFEs are estimated separately in
the Regulatory Impact Analysis section
of this final rule.
70 Federal wage rates are available at https://
www.opm.gov/policy-data-oversight/pay-leave/
salaries-wages/salary-tables/pdf/2015/GS_h.pdf.
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F. ICRs Regarding Network Adequacy
Standards (§ 156.230(d) and (e))
Section 156.230(d) requires that QHP
issuers make a good faith effort to
provide written notice of
discontinuation of a provider 30 days
prior to the effective date of the change
or otherwise as soon as practicable, to
enrollees who are patients seen on a
regular basis by the provider or who
receive primary care from the provider
whose contract is being discontinued,
irrespective of whether the contract is
being discontinued due to a termination
for cause or without cause, or due to a
non-renewal. This is a third-party
disclosure requirement. The notification
requirement under § 156.230(d)(1) is a
common practice in the current market
as several States, Medicare Advantage,
Medicaid Managed Care, and the NAIC
Network Adequacy Model Act have
standards regarding enrollee notification
of a provider leaving a network. As
discussed in the preamble, under State
laws, many QHP issuers will already be
under this obligation, and therefore, our
notification requirements will apply in
a more limited fashion. Additionally,
we incorporated SADPs into our
calculations, but we recognize given the
notification requirements that SADPs
may rarely need to send a notification.
We estimate that a total of 475 issuers
participate in the FFE and would be
required to comply with the standard.
We estimated that 5 percent of providers
discontinue contracts per year, and that
an issuer in the FFE covers 7,500
National Provider Identifiers, which
means that we estimate an issuer would
have 375 provider discontinuations in a
year. In response to comment to the
proposed rule, we are clarifying that our
assumption is that the database manager
will receive notification from the
issuer’s contracting team that a provider
contract is being discontinued. From
that notification, the database manager
would aggregate the claims data
associated with the provider to develop
the list of effected enrollees with
associated enrollee information for the
notice. This list of affected enrollees and
associated enrollee information would
be sent to an administrative assistant to
aggregate into a notification template to
be sent to the enrollee. Assuming 375
notifications per year, we believe that
this task would be a routine process for
the administrative assistant to undertake
that would need little to no oversight to
produce. As the issuer has the
discretion to define regular basis and
that the number of notifications are
likely to widely varying between
network and type of provider, we did
not estimate based on the number of
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individual notifications, but rather the
number of provider discontinuations.
For each provider discontinuation, we
estimate that it will take a database
administrator 30 minutes for data
analysis to produce the list of affected
enrollees, at $55.37 an hour, and an
administrative assistant 30 minutes to
develop the notification and send the
notification to the affected enrollees, at
$29.93 an hour. In response to
comment, we are also clarifying these
hourly rates include 35 percent
adjustment for fringe benefits and
overhead costs. The total costs per
issuer would be $15,993.75. The total
annual costs estimate would be
$7,597,031. Because we are already
collecting information regarding
network classifications as part of the
existing QHP certification process, we
do not believe that the network
classifications described in the
preamble will result in additional
information collection requirements for
issuers.
In § 156.230(e), we require QHP
issuers to provide a notice to enrollees
of the possibility of out-of-network
charges from an ancillary out-ofnetwork provider in an in-network
setting prior to the benefit being
provided, to avoid counting the out-ofnetwork costs against the annual
limitation on cost sharing. This
provision applies to all QHPs, which
includes 575 issuers, and would start in
2018. We estimate it would take an
issuer’s mid-level health policy analyst
(at an hourly wage rate of $54.87)
approximately 6 minutes to create a
notification and send the information.
In response comments, we are clarifying
the hourly rates include 35 percent
adjustment for fringe benefits and
overhead costs. We estimate that
approximately two notices would be
sent for every 100 enrollees. Assuming
approximately 24 million enrollees in
QHPs for 2018,71 we estimate QHPs
would send approximately 320,000 total
notices, for a total 21,334.40 hours, at a
total cost of $1,170,619.
would require FF–SHOP issuers to
submit a standard file with specific data
elements and submit their files in a
process set out by the SHOP, at least
monthly. Issuers of QHPs available
through the SHOP are already required
under the current version of
§ 156.285(c)(5) to reconcile enrollment
files with the SHOP at least monthly.
Therefore, we expect this policy to have
minimal impact on SHOP issuers.
G. ICR Regarding Monthly SHOP
Enrollment Reconciliation Files
Submitted by Issuers (156.285(c)(5))
We are finalizing amendments to
§ 156.285(c)(5) to specify that issuers in
a Federally-facilitated SHOP would
send monthly enrollment reconciliation
files to the SHOP according to a process,
timeline and file format established by
the FF–SHOP. We anticipate that this
H. ICR Regarding Patient Safety
Standards (§ 156. 1110)
In § 156.1110(a)(2)(i), for plan years
beginning on or after January 1, 2017, a
QHP issuer that contracts with a
hospital with greater than 50 beds must
verify that the hospital uses a patient
safety evaluation system and
implements a mechanism for
comprehensive person-centered hospital
discharge to improve care coordination
and health care quality for each patient.
In § 156.1100(a)(2)(ii), we also establish
reasonable exceptions to these new QHP
issuer patient safety requirements
(rather than requiring reporting of such
information to a Patient Safety
Organization). The burden estimate
associated with the information
collection, recordkeeping, and
disclosure requirements to demonstrate
compliance with these standards
includes the time and effort required for
QHP issuers to maintain and submit to
the applicable Exchanges
documentation that would include
hospital agreements to partner with, or
other information demonstrating a
partnership with, a Patient Safety
Organization, a Hospital Engagement
Network, or a Quality Improvement
Organization that demonstrate that each
of its contracted hospitals with greater
than 50 beds meets the patient safety
standards required in § 156.1110(a)(2)
for plan years beginning on or after
January 1, 2017. QHP issuers may not
already be collecting such network
provider information; therefore, we
estimate the cost and burden to collect
this administrative information as
follows: For a total of 575 QHP issuers,
offering 15 plans as potential QHPs, we
estimated each issuer would require one
senior manager an average of 3 hours to
collect and maintain the hospital
agreements or other information
necessary to demonstrate compliance as
required in § 156.1110(a)(2) for their
QHPs offered on Exchanges for plan
years beginning on or after January 1,
2017. For a senior manager (at an hourly
71 We used the most recent CBO estimates for
enrollment from March 2015 available at https://
www.cbo.gov/sites/default/files/cbofiles/
attachments/43900-2015-03-ACAtables.pdf.
72 We applied the current FFE to total Exchange
enrollment ratio to the most recent CBO estimates
for total Exchange enrollment from March 2015
available at https://www.cbo.gov/sites/default/files/
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12325
wage rate of $91.31), we estimated the
total annual cost for a QHP issuer to be
$273.93. Therefore, we estimated a total
annual burden of 1,725 hours, resulting
in an annual cost of $157,510.
I. ICRs Regarding Other Notices
(§ 156.1256)
We are adding a new section at
§ 156.1256 to require that, in the event
of a plan or benefit display error, QHP
issuers notify their enrollees within 30
calendar days after the issuer is
informed by the FFE that the error has
been fixed, if directed to do so by the
FFE, both of the plan or benefit display
error and of the opportunity to enroll in
a new QHP under a special enrollment
period at § 155.420(d)(4), if directed to
do so by the FFE. This provision would
apply to all QHPs in the FFEs, as well
as all QHPs in the SBE–FPs, which
includes 475 issuers. We anticipate that
issuers will need to notify multiple
enrollees of the same display error, and
therefore estimate that one form notice
would cover approximately 100 of the
enrollees receiving such a notice. For
each group of 100 form notices, we
estimate that it would take
approximately 30 minutes for an
issuer’s mid-level health policy analyst
(at an hourly wage rate of $54.87) to
amend, add SEP language provided by
the FFE, and send the information. We
estimate that approximately 4 percent of
enrollees would receive such a notice.
Assuming approximately 19 million
FFE and SBE–FP enrollees in 2017,72 we
estimate QHPs in the FFEs and SBE–FPs
would send approximately 760,000 total
notices (4 percent of the estimated 19
million FFE and SBE–FP enrollees), for
a total hours of 3,800, with a total cost
of $208,506.
Although this final rule requires
issuers to send notices for the specified
situation, sending these notices is
already part of normal issuer business
practices and issuers are already
working with the FFE to include
language in their notices about special
enrollment periods, as applicable and
appropriate. Therefore, there will be no
additional information required by
issuers and no new administrative
burden as a result of this final rule. In
accordance with the implementing
regulations of the PRA at 5 CFR
1320.3(b)(2), we believe the burden
associated with this requirement would
be exempt as it associated with a usual
and customary business practice.
cbofiles/attachments/43900-2015-03ACAtables.pdf.
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TABLE 11—ANNUAL REPORTING, RECORDKEEPING AND DISCLOSURE BURDEN
Regulation Section
OMB
Control No.
Number of
respondents
Hourly
labor
cost of
reporting
($)
Total
annual
burden
(hours)
Burden
per response
(hours)
Responses
Total
labor
cost of
reporting
($)
Total cost
($)
§ 147.145—AV ..................
§ 153.530 ...........................
§ 155.225 (b)(1)(iii)—certified application counselor (CAC) organizations ...............................
§ 155.225 (b)(1)(iii)—SBE
§ 156.230(d) ......................
§ 156.230(e) ......................
§ 156.1110 .........................
§ 156.1256 .........................
0938–1157
0938–1164
49
320
25,612
1
1
1
49
320
33.18
54.44
1,625.82
17,421
1,625.82
17,421
0938–1172
0938–1172
0938–NEW
0938–NEW
0938–1249
0938–NEW
5,000
1,500
475
575
575
475
4
4
375
320,000
8,625
760,000
2.375
0.167
1
0.1
0.2
0.5
47,500
1,000
375
32,000
1,725
3,800
48.64
43.13
85.3
54.87
91.31
54.87
2,310,400
43,130
7,597,031
1,170,619
157,510
208,506
2,310,400
43,130
7,597,031
1,170,619
157,510
208,506
Total ...........................
........................
5,575
........................
........................
86,769
........................
11,506,243
11,506,243
Note: There are no capital/maintenance costs associated with the information collection requirements contained in this rule; therefore, we have removed the associated column from Table 11.
We have submitted an information
collection request to OMB for review
and approval of the ICRs contained in
this final rule. The requirements are not
effective until approved by OMB and
assigned a valid OMB control number.
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V. Regulatory Impact Analysis
A. Statement of Need
This rule sets forth standards related
to the premium stabilization programs
(risk adjustment, reinsurance, and risk
corridors) for the 2017 benefit year, as
well as certain modifications to these
programs that will protect issuers from
the potential effects of adverse selection
and protect consumers from increases in
premiums due to issuer uncertainty.
The Premium Stabilization Rule and
previous Payment Notices provided
detail on the implementation of these
programs, including the specific
parameters for the 2014, 2015, and 2016
benefit years applicable to these
programs. This rule provides additional
standards related to essential health
benefits, consumer assistance tools and
programs of an Exchange, Navigators,
non-Navigator assistance personnel,
agents and brokers registered with the
Federally-facilitated Exchange, certified
application counselors, cost-sharing
parameters and cost-sharing reduction
notices, essential community providers,
qualified health plans, network
adequacy, stand-alone dental plans,
acceptance of third-party payments by
QHP issuers, patient safety standards for
issuers of qualified health plans
participating in Exchanges, the rate
review program, the medical loss ratio
program, the Small Business Health
Options Program, and FFE user fees.
B. Overall Impact
We have examined the impacts of this
rule as required by Executive Order
12866 on Regulatory Planning and
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Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 202 of the Unfunded
Mandates Reform Act of 1995 (March
22, 1995, Pub. L. 104–4), Executive
Order 13132 on Federalism (August 4,
1999), and the Congressional Review
Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. A
regulatory impact analysis (RIA) must
be prepared for rules with economically
significant effects ($100 million or more
in any 1 year).
OMB has determined that this final
rule is ‘‘economically significant’’
within the meaning of section 3(f)(1) of
Executive Order 12866, because it is
likely to have an annual effect of $100
million in any 1 year. Accordingly, we
have prepared an RIA that presents the
costs and benefits of this rule.
Although it is difficult to assess the
effects of these provisions in isolation,
the overarching goal of the premium
stabilization, market standards, and
Exchange-related provisions and
policies in the Affordable Care Act is to
make affordable health insurance
available to individuals who do not
have access to affordable employersponsored coverage. The provisions
within this rule are integral to the goal
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of expanding coverage. For example, the
premium stabilization programs help
prevent risk selection and decrease the
risk of financial loss that health
insurance issuers might otherwise
expect in 2017 and Exchange financial
assistance assists low- and moderateincome consumers and American
Indians/Alaska Natives in purchasing
health insurance. The combined
impacts of these provisions affect the
private sector, issuers, and consumers,
through increased access to health care
services including preventive services,
decreased uncompensated care, lower
premiums, establishment of the next
phase of patient safety standards, and
increased plan transparency. Through
the reduction in financial uncertainty
for issuers and increased affordability
for consumers, these provisions are
expected to increase access to affordable
health coverage.
HHS anticipates that the provisions of
this rule will help further the
Department’s goal of ensuring that all
consumers have access to quality and
affordable health care and are able to
make informed choices, that Exchanges
operate smoothly, that premium
stabilization programs work as
intended, that SHOPs are provided
flexibility, and that employers and
consumers are protected from
fraudulent and criminal activities.
Affected entities such as QHP issuers
would incur costs to comply with the
established provisions, including
administrative costs related to notices,
new patient safety requirements, and
training and recertification
requirements. In accordance with
Executive Order 12866, HHS believes
that the benefits of this regulatory action
justify the costs.
Comment: A commenter criticized the
regulatory analysis for lacking an
adequate economic analysis. The
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commenter criticized the credibility of
the sources of the estimates and
assumptions used. Additionally, the
commenter noted that in Table 12 the
magnitude of cost estimates is not
labeled, and the costs associated with
the user fee to be assessed on issuers in
State-based Exchanges using the Federal
platform were not included in the
analysis.
Response: We previously estimated
the annualized impact on issuers,
contributing entities, and States of
transfers and other programs in the
2014, 2015 and 2016 Payment Notice
rules. Therefore, to avoid doublecounting, Table 12 contains only
incremental changes incurred as a result
of provisions in this rule. The results of
HHS’s internal analyses were used to
assess the impact of the policies of this
rule. For this analysis, we continue to
believe that the best available estimates
of the impact of the Affordable Care Act
on the Federal budget, enrollment in
health insurance programs, and revenue
collection are by the Congressional
Budget Office. The CBO’s most recent
updates are available at https://
www.cbo.gov/sites/default/files/
cbofiles/attachments/43900-2015-03ACAtables.pdf. We have clarified the
units for the cost estimates in Table 12.
We also note that the estimate of user
fees to be assessed on issuers in Statebased Exchanges using the Federal
platform has been incorporated in the
annual monetized costs described in
Table 12.
C. Impact Estimates of the Payment
Notice Provisions and Accounting Table
In accordance with OMB Circular A–
4, Table 12 depicts an accounting
statement summarizing HHS’s
assessment of the benefits, costs, and
transfers associated with this regulatory
action.
This final rule implements standards
for programs that will have numerous
effects, including providing consumers
with affordable health insurance
coverage, reducing the impact of
adverse selection, and stabilizing
premiums in the individual and small
group health insurance markets and in
an Exchange. We are unable to quantify
certain benefits of this final rule—such
as improved health outcomes and
longevity due to continuous quality
improvement, improved patient safety
and increased insurance enrollment—
and certain costs—such as the cost of
providing additional medical services to
newly-enrolled individuals. The effects
in Table 12 reflect qualitative impacts
and estimated direct monetary costs and
transfers resulting from the provisions
of this final rule for health insurance
issuers. The annualized monetized costs
described in Table 12 reflect direct
administrative costs to health insurance
issuers as a result of the finalized
provisions, and include administrative
costs related to student health insurance
coverage, rate filing justification,
12327
notices, new patient safety
requirements, and training and
recertification requirements that are
estimated in the Collection of
Information section of this final rule.
The annual monetized transfers
described in Table 12 include costs
associated with FFE user fees and the
risk adjustment user fee paid to HHS by
issuers. We estimate that that the total
cost for HHS to operate the risk
adjustment program on behalf of States
for 2017 will be approximately $24
million and that the risk adjustment
user fee would be $1.56 per enrollee per
year from risk adjustment issuers, which
is less than the anticipated $50 million
in benefit year 2016 for which we
established a $1.75 per-enrollee-per-year
risk adjustment user fee amount. We
reassessed our contract costs for 2017
and were able to base 2017 risk
adjustment eligible plan enrollment
projections on actual 2014 risk
adjustment enrollment. We revised our
user fee rate from the proposed amount
to reflect these considerations. Also, the
increase in FFE user fee collections is
the result of expected growth in
enrollment in the FFEs rather than an
increase in the user fee rate, which at
3.5 percent remains the same from 2016
to 2017. Beginning in 2017, we are also
charging a user fee for State-based
Exchanges using the Federal platform
for eligibility and enrollment services.
This user fee rate would be set at 1.5
percent for benefit year 2017.
TABLE 12—ACCOUNTING TABLE
Benefits:
Qualitative:
• Increased enrollment in the individual market leading to improved access to health care for the previously uninsured, especially individuals with medical conditions, which will result in improved health and protection from the risk of catastrophic medical expenditures.
• Continuous quality improvement among QHP issuers to reduce patient harm and improve health outcomes at lower costs.
• More informed Exchange QHP certification decisions.
• Increased coverage options for small businesses and employees with minimal adverse selection.
Costs
Estimate
Annualized Monetized ($millions/year) ............................................................
Year
dollar
$11.67
$11.67
Discount
rate
percent
2016
2016
Period
covered
7
3
2016–2020
2016–2020
Quantitative:
• Costs reflect administrative costs incurred by issuers and States to comply with provisions in this final rule.
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Transfers
Estimate
Annualized Monetized ($millions/year) ............................................................
Year
dollar
$25.89
$25.86
Discount
rate
percent
2016
2016
Period
covered
7
3
2016–2020
2016–2020
• Transfers reflect a decrease in annual cost of risk adjustment user fees (the total risk adjustment user fee amount for 2016 was $50 million
and $24 million for 2017), which are transfers from health insurance issuers to the Federal government. Transfers also reflect an increase of
$30 million in 2017 and $65million in future years, in the amount of user fees collected from State-based Exchanges that use the Federal
platform for eligibility and enrollment which are transfers from issuers to the Federal government.
• Unquantified: Lower premium rates in the individual market due to the improved risk profile of the insured, competition, and pooling.
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This RIA expands upon the impact
analyses of previous rules and utilizes
the Congressional Budget Office’s (CBO)
analysis of the Affordable Care Act’s
impact on Federal spending, revenue
collection, and insurance enrollment.
The temporary risk corridors program
and the transitional reinsurance
program end after the 2016 benefit year.
Therefore, the costs associated with
those programs are not included in
Tables 12 or 13 for fiscal years 2019–
2020. Table 13 summarizes the effects of
the risk adjustment program on the
Federal budget from fiscal years 2016
through 2020, with the additional,
societal effects of this rule discussed in
this RIA. We do not expect the
provisions of this final rule to
significantly alter CBO’s estimates of the
budget impact of the premium
stabilization programs that are described
in Table 13. We note that transfers
associated with the risk adjustment and
reinsurance programs were previously
estimated in the Premium Stabilization
Rule; therefore, to avoid doublecounting, we do not include them in the
accounting statement for this rule (Table
12).
In addition to utilizing CBO
projections, HHS conducted an internal
analysis of the effects of its regulations
on enrollment and premiums. Based on
these internal analyses, we anticipate
that the quantitative effects of the
provisions in this rule are consistent
with our previous estimates in the 2016
Payment Notice for the impacts
associated with the advance payments
of cost-sharing reductions and premium
tax credits, the premium stabilization
programs, and FFE user fee
requirements.
TABLE 13—ESTIMATED FEDERAL GOVERNMENT OUTLAYS AND RECEIPTS FOR THE RISK ADJUSTMENT, REINSURANCE, AND
RISK CORRIDORS PROGRAMS FROM FISCAL YEAR 2016–2020, IN BILLIONS OF DOLLARS
Year
2016
Risk Adjustment, Reinsurance, and Risk
Corridors Program Payments ...............
Risk Adjustment, Reinsurance, and Risk
Corridors Program Collections * ...........
2017
2018
2019
2020
2016–2020
16.5
19.5
13
15
16
80
15.5
18.5
13
15
16
78
Note 1: Risk adjustment program payments and receipts lag by one quarter. Receipt will fully offset payments over time.
Note 2: The CBO score reflects an additional $2 million in collections in FY 2015 that are outlayed in the FY 2016–FY 2020 timeframe. CBO
does not expect a shortfall in these programs.
Source: Congressional Budget Office. Insurance Coverage Provisions of the Affordable Care Act—CBO’s March 2015 Baseline Table https://
www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2015-03-ACAtables.pdf.
1. Fair Health Insurance Premiums
The final rule permits a rating area to
be identified for a small employer that
is within the service area of an issuer’s
network plan, for purposes of rating
based on geography where the
employer’s principal business address is
not within that service area. This will
ensure that the network plan can be
appropriately rated for sale to the group
policyholder, benefitting both issuers
and employers.
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2. Student Health Insurance Coverage
The final rule eliminates the
requirement that issuers of student
health insurance coverage provide
coverage comprised of the specific metal
levels, and instead requires that student
health insurance coverage provide at
least 60 percent AV. The final rule also
requires issuers of student health
insurance coverage to specify in any
plan materials summarizing the terms of
coverage the AV of the coverage and the
metal level (or next lowest metal level)
the coverage would otherwise satisfy.
This will provide flexibility for
institutions of higher education to offer
student health insurance plans that are
more generous than the standard metal
levels, while providing students with
information that allows them to
compare the generosity of student
health insurance coverage with other
available coverage options. This will
affect an estimated 49 issuers
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nationwide that offer student health
insurance coverage and approximately
1.4 million students and dependents
enrolled in such plans.73
3. Risk Adjustment
The risk adjustment program is a
permanent program created by the
Affordable Care Act that transfers funds
from lower risk, non-grandfathered
plans to higher risk, non-grandfathered
plans in the individual and small group
markets, inside and outside the
Exchanges. We established standards for
the administration of the risk
adjustment program, in subparts D and
G of part 45 of the CFR.
A State approved or conditionally
approved by the Secretary to operate an
Exchange may establish a risk
adjustment program, or have HHS do so
on its behalf. As described in the 2014,
2015, and 2016 Payment Notices, if HHS
operates risk adjustment on behalf of a
State, it will fund its risk adjustment
program operations by assessing a risk
adjustment user fee on issuers of risk
adjustment covered plans. For the 2017
benefit year, we estimate that the total
cost for HHS to operate the risk
adjustment program on behalf of States
for 2017 will be approximately $24
million, and that the risk adjustment
user fee would be $1.56 per enrollee per
year. This user fee reflects our
73 Source: Data from Medical Loss Ratio
submissions for 2014 reporting year.
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reassessment of both contract costs to
support the risk adjustment program in
2017 and the expected member month
enrollment in risk adjustment covered
QHPs.
4. Risk Corridors
The Federally operated temporary risk
corridors program ends in benefit year
2016 as required by statute. Because risk
corridors charges are collected in the
year following the applicable benefit
year, and risk corridors payments lag
receipt of collections by one quarter, we
estimate that risk corridors transfers will
continue through fiscal year 2018. In
this rule, we establish that for the 2015
and 2016 benefit years, the issuer must
true up claims liabilities and reserves
used to determine the allowable costs
reported for the preceding benefit year
to reflect the actual claims payments
made through March 31 of the year
following the benefit year. This
amendment provides for a more
accurate risk corridors calculation by
substituting actual experience in place
of estimates. Some issuers overestimate
their claims and liabilities, while others
underestimate them. Based on the 2014
MLR and risk corridors data, we
estimate that this amendment will result
in a combined total reduction in risk
corridors payments or increase in risk
corridors charges for some issuers; and
a combined total increase in risk
corridors payments or decrease in risk
corridors charges for other issuers. HHS
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continues to implement the risk
corridors program in a budget neutral
manner such that payments are made
from collections that are received. If
collections are insufficient to fund
payment obligations, HHS will apply a
pro rata reduction to risk corridors
payments to issuers for the benefit year.
Because of uncertainty in the amount of
collections that will be received for
payment for the 2015 benefit year, we
are unable to estimate the magnitude of
the net impact of the modification in the
final rule, but believe that it will reduce
the overall amount of risk corridors
transfers for the 2015 benefit year.
5. Rate Review
In § 154.215, we amend the criteria for
submission of the Unified Rate Review
Template for single risk pool coverage to
HHS. We expect URRT submissions
may increase by 1 percent. We have
revised the information collection
currently approved under OMB Control
Number 0938–1141 to clarify
instructions related to completing the
template for single risk pool coverage.
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6. Additional Required Benefits
In § 155.170, we amended the
requirement for coverage of benefits in
addition to the essential health benefits.
Specifically, we are rewording
§ 155.170(a)(2) to make clear that a
benefit required by the State through
action taking place on or before
December 31, 2011 is considered an
EHB and one required by the State
through action taking place after
December 31, 2011 is considered in
addition to EHB. As we see this as a
clarification, we do not anticipate an
additional burden on States or issuers.
At § 155.170(a)(3), we currently require
the Exchange to identify which
additional State-required benefits, if
any, are in excess of EHB. We amended
paragraph (a)(3) to designate the State,
rather than the Exchange, as the entity
that identifies which State-required
benefits are not EHB. Because
Exchanges have been relying upon State
departments of insurance in
determining what constitutes an
essential health benefit, we do not
anticipate any additional burden to
States because of this modification, but
simply a shift in burden from one State
agency to another.
7. Standards for Navigators and certain
Non-Navigator Assistance Personnel
This final rule amends some of the
standards for consumer assistance
functions under § 155.205(d) and (e), as
well as for the activities of Navigators
under § 155.210, and non-Navigator
assistance personnel subject to
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§ 155.215. The changes include ensuring
consumers have access to skilled
assistance with Exchange-related issues
beyond applying for and enrolling in
coverage. Such post enrollment and
other assistance includes assisting
consumers with applying for
exemptions from the individual shared
responsibility payment that are granted
through the Exchange, with
understanding the process of filing
Exchange appeals, and with
understanding basic concepts and rights
related to health coverage and how to
use it. The final rule also requires
Navigators to provide targeted
assistance to serve underserved or
vulnerable populations, as identified by
each Exchange. In addition, the final
rule specifies that any individual or
entity carrying out consumer assistance
functions under § 155.205(d) and (e) or
§ 155.210 must complete training prior
to performing any assister duties,
including conducting outreach and
education activities.
The final rule’s amendments to
§§ 155.205(d) and 155.215(b)(1)(i)
related to completing training for
Navigators and non-Navigator assistance
personnel apply only to the timing of
the training and do not have any impact
on the training itself. Therefore, they do
not affect the burden or cost for entities
already subject to training requirements.
Because under existing § 155.215(b)(2),
Navigators in FFEs must already be
trained on the tax implications of
enrollment decisions, the individual
responsibility to have health coverage,
eligibility appeals, and rights and
processes for QHP appeals and
grievances, we expect our amendments
to § 155.210(b)(2)(v) through (ix) to have
minimal impact on FFE training. If any
SBEs do not already provide training on
these topics, we expect they would
incur minimal costs in developing and
implementing this training. Our final
rule requiring Navigators to provide
targeted assistance to underserved or
vulnerable populations will have an
increased benefit for consumers,
especially hard to reach populations.
All costs associated with reaching these
consumers in FFEs are considered
allowable costs that would be covered
by the Navigator grants for the FFEs and
that may be drawn down as the grantee
incurs such costs. Additionally,
§ 155.210(b)(2)(i) already requires
Navigators in all Exchanges to receive
training on the needs of underserved
and vulnerable populations.
8. Certified Application Counselors
This final rule requires certified
application counselor organizations to
submit data and information to the
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Exchanges regarding the number and
performance of their certified
application counselors and the
consumer assistance they provide, upon
request, in a form and manner specified
by the Exchange. Under
§ 155.225(b)(1)(iii), if an Exchange
requests these certified application
counselor reports, the Exchange would
also need to review them. We assume
that all Exchanges will require quarterly
reports and will utilize in-house staff to
review them. We assume that an
employee earning a wage that is
equivalent to a mid-level GS–11
employee would review quarterly report
submissions from certified application
counselor designated organizations.74
We estimate that a mid-level employee
(at an hourly wage rate of $43.13) will
spend 10 minutes reviewing each
quarterly report for a cost burden of
approximately $7.19 per quarterly
report per certified application
counselor designated organization. We
estimate the costs of this requirement
for State Exchanges in the Collection of
Information Requirements section of
this final rule. For the FFEs, we estimate
there are 3,500 certified application
counselor designated organizations,
resulting in a total annual burden for
FFEs of 2,333 hours, at a cost of
$100,660.
9. SHOP
The SHOP facilitates the enrollment
of eligible employees of eligible small
employers into small group health
insurance plans. A qualitative analysis
of the costs and benefits of establishing
a SHOP was included in the RIA
published in conjunction with the
Exchange Establishment Rule.75 Section
155.735(d)(2)(iii), added in this rule,
requires the FF–SHOPs to send
qualified employees a notice notifying
them in advance of a child dependent’s
loss of eligibility for dependent child
coverage under their plan because of
age. The notice will be sent 90 days in
advance of the date when the dependent
enrollee would lose eligibility for
dependent child coverage. We estimate
the FF–SHOPs will spend roughly 35
hours annually, per State, to prepare the
notice, for a total cost of $1,775, per
State, to design and implement the
notices under § 155.735(d)(2)(iii). We
estimate that there will be
approximately 32 States operating under
the FF–SHOPs and all will be subject to
this requirement. Therefore, we estimate
74 Federal wage rates are available at https://
www.opm.gov/policy-data-oversight/pay-leave/
salaries-wages/salary-tables/pdf/2015/GS_h.pdf.
75 Available at https://cciio.cms.gov/resources/
files/Files2/03162012/hie3r-ria-032012.pdf.
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a total annual cost of $58,575 for the
FF–SHOPs as a result of this
requirement.
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10. Standardized Options
In assessing the burden associated
with implementing standardized
options, as described in § 156.20, we
assessed the potential impact on
premiums established by QHP issuers in
the FFEs. We anticipate that an issuer
will price a standardized option based
on how similar or different the
standardized option is to the issuer’s
current shelf (plan offerings). Because of
the large variation across the country,
we expect that how standardized
options will be priced will vary by
issuer and by State. We do not
anticipate that it will significantly affect
2017 plan premiums. We expect that
issuers will offer standardized options
at a given metal level if the standardized
options are similar to their existing
plans and can be priced competitively.
The premium impact on issuers’ nonstandard plan offerings is difficult to
estimate. Among the six State
Exchanges that standardized plans and
required standardized options to be
offered by QHP issuers in 2014, two
(California and New York) that
attempted to conduct premium impact
analysis found that introduction of the
requirement on issuers to offer
standardized options was associated
with a negligible or downward impact
on premiums. However, these SBEs
found it was difficult to isolate the
effects of plan standardization on
premiums given the many changes that
occurred in the insurance market in
2014 (including the uptake in
individual market enrollment, the
movement to narrow networks, and
active purchasing and rate negotiation
in California).
Again, we note that there is a great
deal of uncertainty in how this policy
will affect Exchanges due to several
considerations:
• While we standardize cost-sharing
on key essential health benefits, there
are a wide range of other benefit design
parameters that we will not standardize.
It is not clear how this differentiation
will manifest among plans or affect
consumer choice.
• There is also wide geographic
variation in health care markets,
including with respect to prices, plan
designs, and provider networks. As
such, we anticipate that the take-up of
standardized options and their impacts
on consumers will vary in different
locations across the country.
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11. User Fees
To support the operation of FFEs, we
require in § 156.50(c) that a
participating issuer offering a plan
through an FFE must remit a user fee to
HHS each month equal to the product
of the monthly user fee rate specified in
the annual HHS notice of benefit and
payment parameters for the applicable
benefit year and the monthly premium
charged by the issuer for each policy
under the plan where enrollment is
through an FFE. In this final rule, for the
2017 benefit year, we finalize a monthly
FFE user fee rate equal to 3.5 percent of
the monthly premium. For a State-based
Exchange using the Federal platform,
we finalize a user fee rate equal to 1.5
percent of the monthly premium. For
the accounting statement of this rule, we
have reduced the incremental increase
in the user fee collected for the first year
by one-half, after which we estimate $30
million in the amount of user fees
collected from State-based Exchanges
that use the Federal platform for 2017
and $65 million for years after 2017. For
the user fee charges assessed on issuers
in the FFE, we have previously received
a waiver to OMB Circular No. A–25R,
which requires that the user fee charge
be sufficient to recover the full cost to
the Federal government of providing the
special benefit. Similarly, for this year,
for the user fee charges assessed on
issuers in the FFE and State-based
Exchanges using the Federal platform,
we have sought an exception to OMB
Circular No. A–25R, which requires that
the user fee charge be sufficient to
recover the full cost to the Federal
government of providing the special
benefit. This exception ensures that the
FFE can support many of the goals of
the Affordable Care Act, including
improving the health of the population,
reducing health care costs, and
providing access to health coverage as
advanced by § 156.50(d).
12. Actuarial Value
In response to comments, we are
clarifying that we take into
consideration stakeholder feedback on
needed changes. One commenter asked
for the basis on which we concluded
that the cost sharing changes that might
be required by a change to the AV
calculator would likely be minor. We
note that because of the de minimis
range established at § 156.140, many
plans do not require significant changes
to cost-sharing structure each year
beyond those permitted by the statute
(such as for changes to the annual
limitation on cost sharing). However,
where significant changes are required,
for example when a plan has reached
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the permissible de minimis limit and
the change in annual limitation on cost
sharing does not fully accommodate
changed calculations established by an
updated AV Calculator, we
acknowledge that plans likely engage in
significant analysis in order to establish
new cost-sharing structures. We do not
anticipate that our policy providing us
with additional flexibility in updating
the AV Calculator will substantially
change the number of plans for which
new cost-sharing structures must be
calculated each year—it is our intent to
continue to provide annual updates to
the AV Calculator.
13. Network Adequacy
In § 156.230(e), we are finalizing our
proposal to require QHPs in the FFEs to
count certain out-of-network cost
sharing towards the in-network annual
limitation on cost sharing for enrollees
who receive EHB from an out-ofnetwork ancillary provider at an innetwork setting, with modifications.
The premium impact will vary based on
existing State laws. We received no
comments on this estimate.
14. Provisions Related to Cost Sharing
The Affordable Care Act provides for
the reduction or elimination of cost
sharing for certain eligible individuals
enrolled in QHPs offered through the
Exchanges. This assistance will help
many low- and moderate-income
individuals and families obtain health
insurance—for many people, cost
sharing is a barrier to obtaining needed
health care.76
We set forth in this rule the
reductions in the maximum annual
limitation on cost sharing for silver plan
variations. Consistent with our analysis
in previous Payment Notices, we
developed three model silver level
QHPs and analyzed the impact on their
AVs of the reductions described in the
Affordable Care Act to the estimated
2017 maximum annual limitation on
cost sharing for self only coverage
($7,150). We do not believe these
changes will result in a significant
economic impact. Therefore, we do not
believe the provisions related to costsharing reductions in this rule will have
an impact on the program established by
and described in the 2015 and 2016
Payment Notices.
76 Brook, Robert H., John E. Ware, William H.
Rogers, Emmett B. Keeler, Allyson Ross Davies,
Cathy D. Sherbourne, George A. Goldberg, Kathleen
N. Lohr, Patricia Camp and Joseph P. Newhouse.
The Effect of Coinsurance on the Health of Adults:
Results from the RAND Health Insurance
Experiment. Santa Monica, CA: RAND Corporation,
1984. Available at https://www.rand.org/pubs/
reports/R3055.
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We also finalize the premium
adjustment percentage for the 2017
benefit year. Section 156.130(e)
provides that the premium adjustment
percentage is the percentage (if any) by
which the average per capita premium
for health insurance coverage for the
preceding calendar year exceeds such
average per capita premium for health
insurance for 2013. The annual
premium adjustment percentage sets the
rate of increase for three parameters
detailed in the Affordable Care Act: the
annual limitation on cost sharing
(defined at § 156.130(a)), the required
contribution percentage by individuals
for minimum essential coverage the
Secretary may use to determine
eligibility for hardship exemptions
under section 5000A of the Code, and
the assessable payments under sections
4980H(a) and 4980H(b). We believe that
the 2017 premium adjustment
percentage of 13.25256291 percent is
well within the parameters used in the
modeling of the Affordable Care Act,
and we do not expect that these
provisions will have a substantial, if
any, effect on CBO’s March 2016
baseline estimates of the budget impact.
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15. Stand-Alone Dental Plans
In § 156.150, we are increasing the
annual limitation on cost sharing for
stand-alone dental plans being certified
by the Exchanges. We believe that the
benefit of increasing the annual limit on
cost sharing is that issuers would be
able to offer consumers SADPs that
provide preventive care without any
cost sharing, similar to what is generally
offered by SADPs in the large group
market. We received several comments
noting that preventive care without any
cost sharing would be easier to achieve
with a high annual limitation on cost
sharing. We have established that
increasing the annual limitation on cost
sharing over time will decrease the
likelihood of premium increases.
16. Meaningful Difference
In § 156.298, we remove the health
savings account eligibility and the
individual coverage or enrollment group
coverage criteria as options for meeting
the meaningful difference standard. As
we believe the health savings account
eligibility criterion to overlap with costsharing criterion (that is, we believe that
a plan that meets the meaningful
difference standard for health savings
account eligibility would also meet the
standard under the cost-sharing
criterion), we do not believe that
removing this criterion will have any
impact on issuers. Additionally, our
records indicate that no other than selfonly coverage plans were reviewed for
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meaningful difference in 2015 and none
are offered for 2016 Open Enrollment,
meaning that there will be limited
impact on removing these criteria. As
such, we estimate that the impact of this
change is negligible.
17. Patient Safety Standards
The next phase of patient safety
standards requires QHP issuers
participating in Exchanges to track
hospital participation with PSOs or
other evidence-based patient safety
initiatives. We believe this new
requirement to verify that hospitals use
a patient safety evaluation tool and
implement a comprehensive personcentered hospital discharge program
would encourage continuous quality
improvement among QHP issuers by
strengthening system-wide efforts to
reduce patient harm in a measurable
way, improve health outcomes at lower
costs, allow for flexibility and
innovation in patient safety
interventions and practices, and
encourage meaningful health care
quality improvements. We discuss the
administrative costs associated with
submitting this information in the
Collection of Information section of this
final rule.
18. Acceptance of Certain Third Party
Payments
On March 19, 2014, we published in
the Federal Register an interim final
rule (IFR) with comment period titled,
Patient Protection and Affordable Care
Act; Third Party Payment of Qualified
Health Plan Premiums (79 FR 15240). In
§ 156.1250, we finalize this rule to
require individual market QHPs and
SADPs to accept premium payments
made by certain third parties. This rule
describes the circumstances in which
individual market QHPs and SADPs
must accept payments made by Ryan
White HIV/AIDS program; Federal and
State government programs that provide
premium and cost sharing support for
specific individuals; and Indian tribes,
tribal organizations, and urban Indian
organizations. We do not believe these
actions would impose any significant
new costs on issuers because we assume
that most issuers already accept such
payments under our interim final rule.
19. Medical Loss Ratio
This final rule amends the risk
corridors program requirements at
§ 153.530 to require issuers to true-up
the claims liabilities and reserves used
to determine the 2014 and 2015
allowable costs to reflect the actual
claims payments made through March
31, 2016 and March 31, 2017,
respectively. We discuss the impact of
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this proposal on the risk corridors
program elsewhere in this RIA. Because
risk corridors payments and charges are
a component of the MLR and rebate
calculation, the impact of this
amendment on risk corridors payments
and charges may in turn affect MLR
rebates to consumers. While, as noted
previously, we are unable to estimate
the magnitude of the net impact of this
modification on risk corridors transfers,
and consequently on MLR rebates, we
believe that this amendment would
increase rebate payments from issuers to
consumers.
D. Regulatory Alternatives Considered
In developing the policies contained
in this final rule, we considered
numerous alternatives to the presented
proposals. Below we discuss the key
regulatory alternatives that we
considered.
Regarding the open enrollment
periods for 2017 and beyond, we
considered gradually shifting the end of
the open enrollment period earlier.
However, we believe keeping the open
enrollment period the same for benefit
years 2017 and 2018 as it was for 2016
and then moving to a December 15 end
date simplifies messaging to consumers,
while achieving our ultimate goal of
shifting the open enrollment period so
that it ends prior to the start of the
benefit year.
Regarding the 2017 required
contribution percentage, which
establishes the threshold for spending
on minimum essential coverage
required for an affordability exemption
from the individual shared
responsibility requirement, we
considered continuing to use the per
capita gross domestic product as the
measure of income growth. However, a
new measure of income growth, per
capita personal income, became
available for the first time last year as
part of the National Health
Expenditure’s projections, and includes
not only participation in production but
also transfer payments. We believe that
this broader measure of personal income
more accurately reflects individual
income than GDP per capita.
For SBE–FP model provisions at
§ 155.200(f), we considered a number of
alternatives. We considered not
codifying the SBE–FP model, and
winding down use of the Federal
platform by SBEs. In this alternative,
SBEs currently utilizing these services
would have had to find a way to
perform all required Exchange eligibility
and enrollment functions themselves,
including the implementation of an
Exchange technology platform, or else
convert to FFEs. We finalized the
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proposal without significant change
because we believe that it is technically
feasible and will permit a number of
SBEs to access the Federal government’s
greater economies of scale. We also
considered a more customized option,
under which an SBE would be
permitted to select from a menu of
Federal services. While we are
considering providing more flexibility
to SBE–FPs in the future, at this point
we do not have the operational ability
to permit that level of customization.
Finally, we considered alternatives
under which issuers and other delegated
and downstream entities in States with
SBE–FPs would not be required to meet
FFE standards, or HHS would not
participate in enforcement against
issuers violating those FFE rules. We
believe that applying Federal standards
to issuers and their downstream entities
for SBE–FPs helps promote consistent
minimum standards associated with
HealthCare.gov.
For employer choice in the FF–
SHOPs, we considered offering an
additional employer choice option that
would permit an employer to select an
actuarial value level of coverage, after
which employees could choose from
plans available at that level and at the
level above it. Recognizing that small
group market dynamics differ by State,
we decided to seek comment on, but not
finalize this option at this time. We also
considered requiring all SHOPs to offer
the additional employer choice options
we proposed, but instead generally
opted to maintain State-based SHOPs’
flexibility under the current regulations,
so that States can decide whether
implementing additional employer
choice options would be in the best
interest of small group market
consumers in their State.
We considered requiring QHP issuers
to offer standardized options as a
condition of participation in the FFEs.
However, we believe that markets and
Exchanges may be at different stages of
readiness for standardized options, and
that the cost-sharing structure that HHS
specifies may not be well tailored for all
States. Similarly, we believe that some
issuers may have difficulty offering
standardized options in the short run
because of operational constraints.
Since releasing the proposed rule, the
NAIC has adopted the NAIC Network
Adequacy Model Act.77 We applaud
NAIC’s work on the Model Act and
appreciate the extensive efforts of the
Network Adequacy Model Review
Subgroup members, as well as the
participating stakeholders. As a result of
the NAIC Network Adequacy Model Act
77 https://www.naic.org/store/free/MDL-74.pdf.
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finalization, we made revisions to this
rule to give States more opportunity to
implement the NAIC Network Adequacy
Model Act. For example, we elected not
to finalize our policy requiring each
State with an FFE to establish a
minimum quantitative network
adequacy threshold this year, and stated
we would closely monitor States’ efforts
to implement the provisions of the
NAIC Network Adequacy Model Act.
In § 156.1110, we considered
maintaining the current approach of
aligning with Medicare hospital
Conditions of Participation standards
and not establishing further regulations
at this time for QHP issuers to collect
information, such as hospital
participation agreements with PSOs, to
comply with new patient safety
standards for plan years beginning on or
after January 1, 2017. However, we
decided to adopt this next phase in this
final rule because we believe that
strengthening patient safety standards
and aligning with current, effective
patient safety interventions will achieve
greater impact for consumers, in terms
of health care quality improvement and
harm reduction, resulting in higher
quality QHPs being offered in the
Exchanges. Additionally, we considered
an approach that did not include
establishing reasonable exceptions to
the requirements for a QHP issuer that
contracts with a hospital with greater
than 50 beds to utilize a patient safety
evaluation system and implement a
mechanism for comprehensive personcentered hospital discharges, as
described in section 1311(h)(1) of the
Affordable Care Act. However, we
determined that it is important to
support national patient safety efforts,
promote evidence-based patient safety
interventions and allow for flexibility,
innovation, and minimal burden for
issuers and hospitals.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5
U.S.C. 601, et seq.), requires agencies to
prepare an initial regulatory flexibility
analysis to describe the impact of the
rule on small entities, unless the head
of the agency can certify that the rule
will not have a significant economic
impact on a substantial number of small
entities. The RFA generally defines a
‘‘small entity’’ as (1) a proprietary firm
meeting the size standards of the Small
Business Administration (SBA), (2) a
not-for-profit organization that is not
dominant in its field, or (3) a small
government jurisdiction with a
population of less than 50,000. States
and individuals are not included in the
definition of small entity. HHS uses a
change in revenues of more than 3 to 5
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percent as its measure of significant
economic impact on a substantial
number of small entities.
In this rule, we set forth standards for
the risk adjustment, reinsurance, and
risk corridors programs, which are
intended to stabilize premiums as
insurance market reforms are
implemented and Exchanges facilitate
increased enrollment. Because we
believe that insurance firms offering
comprehensive health insurance
policies generally exceed the size
thresholds for small entities established
by the SBA, we do not believe that an
initial regulatory flexibility analysis is
required for such firms.
For purposes of the RFA, we expect
the following types of entities to be
affected by this rule:
• Health insurance issuers.
• Group health plans.
We believe that health insurance
issuers and group health plans would be
classified under the North American
Industry Classification System code
524114 (Direct Health and Medical
Insurance Carriers). According to SBA
size standards, entities with average
annual receipts of $38.5 million or less
would be considered small entities for
these North American Industry
Classification System codes. Issuers
could possibly be classified in 621491
(HMO Medical Centers) and, if this is
the case, the SBA size standard would
be $32.5 million or less.
Based on data from MLR annual
report submissions for the 2014 MLR
reporting year, approximately 118 out of
525 issuers of health insurance coverage
nationwide had total premium revenue
of $38.5 million or less. This estimate
may overstate the actual number of
small health insurance companies that
may be affected, since almost 80 percent
of these small companies belong to
larger holding groups, and many if not
all of these small companies are likely
to have non-health lines of business that
would result in their revenues
exceeding $38.5 million. Based on data
from the 2014 MLR and risk corridors
annual report submissions, 20 of these
118 potentially small entities had risk
corridors payments or charges for the
2014 benefit year. Only one of these
entities is estimated to experience a
decrease in its risk corridors payment
under the provisions in
§ 153.530(b)(2)(iv), with no impact on
its rebate liability. Therefore, we do not
expect the provisions of this rule to
affect a substantial number of small
health insurance issuers or group health
plans.
Among the policies established by
this rule are policies that could increase
the choice of QHPs available to small
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groups participating in an FF–SHOP,
and policies imposing requirements,
including information collection
requirements, on Navigators, nonNavigator assistance personnel, and
certified application counselor
organizations. We believe that the
effects on small employers participating
in an FF–SHOP are difficult to quantify,
but will not result in substantial
additional burden, since they will
simply permit certain small employers
greater choice in the QHPs they may
make available. The burden estimates
for Navigators, non-Navigator assistance
personnel, and certified application
counselor organizations are described
elsewhere in the ICR and RIA sections
of this final rule.
asabaliauskas on DSK3SPTVN1PROD with RULES
F. Unfunded Mandates
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
costs and benefits and take certain other
actions before issuing a rule that
includes any Federal mandate that may
result in expenditures in any 1 year by
a State, local, or Tribal governments, in
the aggregate, or by the private sector, of
$100 million in 1995 dollars, updated
annually for inflation. Currently that
threshold is approximately $144
million. Although we have not been
able to quantify all costs, the combined
administrative cost and user fee impact
on State, local, or Tribal governments
and the private sector may be above the
threshold. Earlier portions of this RIA
constitute our UMRA analysis.
G. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a final
rule that imposes substantial direct
costs on State and local governments,
preempts State law, or otherwise has
Federalism implications. Because States
have flexibility in designing their
Exchange and Exchange-related
programs, State decisions will
ultimately influence both administrative
expenses and overall premiums. States
are not required to establish an
Exchange or risk adjustment or
reinsurance program. For States electing
to operate an Exchange, risk adjustment
or reinsurance program, much of the
initial cost of creating these programs
was funded by Exchange Planning and
Establishment Grants. After
establishment, Exchanges will be
financially self-sustaining, with revenue
sources at the discretion of the State.
Current State Exchanges may charge
user fees to issuers.
In HHS’s view, while this rule would
not impose substantial direct
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requirement costs on State and local
governments, this regulation has
Federalism implications due to direct
effects on the distribution of power and
responsibilities among the State and
Federal governments relating to
determining standards relating to health
insurance that is offered in the
individual and small group markets. For
example, in this final rule we have
established a number of policies relating
to network adequacy and continuity of
care for QHPs on FFEs. States have
traditionally played a major role in
regulating these aspects of health
insurance, when offered off the
Exchange.
In compliance with the requirement
of Executive Order 13132 that agencies
examine closely any policies that may
have Federalism implications or limit
the policy making discretion of the
States, HHS has engaged in efforts to
consult with and work cooperatively
with affected States, including
participating in conference calls with
and attending conferences of the
National Association of Insurance
Commissioners, and consulting with
State insurance officials on an
individual basis. Following review of
comments from State insurance officials
and the NAIC, we have made substantial
changes to our network adequacy
policies in this final rule.
Throughout the process of developing
the proposed and final rule, HHS has
attempted to balance the States’
interests in regulating health insurance
issuers, and Congress’ intent to provide
access to Affordable Insurance
Exchanges for consumers in every State.
By doing so, it is HHS’s view that we
have complied with the requirements of
Executive Order 13132.
H. Congressional Review Act
This rule is subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
U.S.C. 801, et seq.), which specifies that
before a rule can take effect, the Federal
agency promulgating the rule shall
submit to each House of the Congress
and to the Comptroller General a report
containing a copy of the rule along with
other specified information, and has
been transmitted to Congress and the
Comptroller General for review.
List of Subjects
45 CFR Parts 144 and 147
Health care, Health insurance,
Reporting and recordkeeping
requirements.
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12333
45 CFR Part 153
Administrative practice and
procedure, Health care, Health
insurance, Health records, Organization
and functions (Government agencies),
Reporting and recordkeeping
requirements.
45 CFR Part 154
Administrative practice and
procedure, Claims, Health care, Health
insurance, Penalties, Reporting and
recordkeeping requirements.
45 CFR Part 155
Administrative practice and
procedure, Health care, Health
insurance, Reporting and recordkeeping
requirements, State and local
governments
45 CFR Part 156
Administrative practice and
procedure, Advertising, American
Indian/Alaska Natives, Conflict of
interest, Consumer protection, Costsharing reductions, Grant programs—
health, Grants administration, Health
care, Health insurance, Health
maintenance organization (HMO),
Health records, Hospitals, Individuals
with disabilities, Loan programs—
health, Medicaid, Organization and
functions (Government agencies), Public
assistance programs, Reporting and
recordkeeping requirements, State and
local governments, Sunshine Act,
Technical assistance, Women, Youth.
45 CFR Part 158
Administrative practice and
procedure, Claims, Health care, Health
insurance, Penalties, Reporting and
recordkeeping requirements.
For the reasons set forth in the
preamble, the Department of Health and
Human Services amends 45 CFR parts
144, 147, 153, 154, 155, 156, and 158 as
set forth below.
PART 144—REQUIREMENTS
RELATING TO HEALTH INSURANCE
COVERAGE
1. The authority citation for part 144
continues to read as follows:
■
Authority: Secs. 2701 through 2763, 2791,
and 2792 of the Public Health Service Act,
42 U.S.C. 300gg through 300gg–63, 300gg–91,
and 300gg–92.
2. Section 144.103 is amended by
revising paragraph (1) of the definition
of ‘‘Excepted benefits’’ and revising the
definitions of ‘‘Large employer’’ and
‘‘Small employer’’ to read as follows:
■
§ 144.103
*
Definitions.
*
*
*
*
Excepted benefits * * *
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(1) Group market provisions in 45
CFR part 146, subpart D, is defined in
45 CFR 146.145(b); and
*
*
*
*
*
Large employer means, in connection
with a group health plan with respect to
a calendar year and a plan year, an
employer who employed an average of
at least 51 employees on business days
during the preceding calendar year and
who employs at least 1 employee on the
first day of the plan year. A State may
elect to define large employer by
substituting ‘‘101 employees’’ for ‘‘51
employees.’’ In the case of an employer
that was not in existence throughout the
preceding calendar year, the
determination of whether the employer
is a large employer is based on the
average number of employees that it is
reasonably expected the employer will
employ on business days in the current
calendar year.
*
*
*
*
*
Small employer means, in connection
with a group health plan with respect to
a calendar year and a plan year, an
employer who employed an average of
at least 1 but not more than 50
employees on business days during the
preceding calendar year and who
employs at least 1 employee on the first
day of the plan year. A State may elect
to define small employer by substituting
‘‘100 employees’’ for ‘‘50 employees.’’ In
the case of an employer that was not in
existence throughout the preceding
calendar year, the determination of
whether the employer is a small
employer is based on the average
number of employees that it is
reasonably expected the employer will
employ on business days in the current
calendar year.
*
*
*
*
*
PART 147—HEALTH INSURANCE
REFORM REQUIREMENTS FOR THE
GROUP AND INDIVIDUAL HEALTH
INSURANCE MARKETS
3. The authority citation for part 147
continues to read as follows:
■
Authority: Secs 2701 through 2763, 2791,
and 2792 of the Public Health Service Act (42
U.S.C. 300gg through 300gg–63, 300gg–91,
and 300gg–92), as amended.
4. Section 147.102 is amended by
revising paragraph (a)(1)(ii) to read as
follows:
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■
§ 147.102
Fair health insurance premiums.
(a) * * *
(1) * * *
(ii) Rating area, as established in
accordance with paragraph (b) of this
section. For purposes of this paragraph
(a), rating area is determined—
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(A) In the individual market, using
the primary policyholder’s address.
(B) In the small group market, using
the group policyholder’s principal
business address. For purposes of this
paragraph (a)(1)(ii)(B), principal
business address means the principal
business address registered with the
State or, if a principal business address
is not registered with the State, or is
registered solely for purposes of service
of process and is not a substantial
worksite for the policyholder’s business,
the business address within the State
where the greatest number of employees
of such policyholder works. If, for a
network plan, the group policyholder’s
principal business address is not within
the service area of such plan, and the
policyholder has employees who live,
reside, or work within the service area,
the principal business address for
purposes of the network plan is the
business address within the plan’s
service area where the greatest number
of employees work as of the beginning
of the plan year. If there is no such
business address, the rating area for
purposes of the network plan is the
rating area that reflects where the
greatest number of employees within
the plan’s service area live or reside as
of the beginning of the plan year.
*
*
*
*
*
■ 5. Section 147.145 is amended by
revising paragraphs (b)(2) and (3) and
removing paragraphs (d) and (e) to read
as follows:
§ 147.145 Student health insurance
coverage.
*
*
*
*
*
(b) * * *
(2) Levels of coverage. The
requirement to provide a specific level
of coverage described in section 1302(d)
of the Affordable Care Act does not
apply to student health insurance
coverage for policy years beginning on
or after July 1, 2016. However, the
benefits provided by such coverage
must provide at least 60 percent
actuarial value, as calculated in
accordance with § 156.135 of this
subchapter. The issuer must specify in
any plan materials summarizing the
terms of the coverage the actuarial value
and level of coverage (or next lowest
level of coverage) the coverage would
otherwise satisfy under § 156.140 of this
subchapter.
(3) Single risk pool. Student health
insurance coverage is not subject to the
requirements of section 1312(c) of the
Affordable Care Act. A health insurance
issuer that offers student health
insurance coverage may establish one or
more separate risk pools for an
institution of higher education, if the
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distinction between or among groups of
students (or dependents of students)
who form the risk pool is based on a
bona fide school-related classification
and not based on a health factor (as
described in § 146.121 of this
subchapter). However, student health
insurance rates must reflect the claims
experience of individuals who comprise
the risk pool, and any adjustments to
rates within a risk pool must be
actuarially justified.
*
*
*
*
*
PART 153—STANDARDS RELATED TO
REINSURANCE, RISK CORRIDORS,
AND RISK ADJUSTMENT UNDER THE
AFFORDABLE CARE ACT
6. The authority citation for part 153
continues to read as follows:
■
Authority: Secs. 1311, 1321, 1341–1343,
Pub. L. 111–148, 24 Stat. 119.
7. Section 153.405 is amended by
revising paragraph (i) to read as follows:
■
§ 153.405 Calculation of reinsurance
contributions.
*
*
*
*
*
(i) Audits. HHS or its designee may
audit a contributing entity to assess its
compliance with the requirements of
this subpart. A contributing entity that
uses a third party administrator,
administrative services-only contractor,
or other third party to assist with its
obligations under this subpart must
ensure that the third party
administrator, administrative servicesonly contractor, or other third party
cooperates with any audit under this
section.
■ 8. Section 153.510 is amended by
adding paragraph (g) to read as follows:
§ 153.510 Risk corridors establishment
and payment methodology.
*
*
*
*
*
(g) Adjustment to risk corridors
payments and charges. If an issuer
reported a certified estimate of 2014
cost-sharing reductions on its 2014 MLR
and Risk Corridors Annual Reporting
Form that is lower than the actual value
of cost-sharing reductions calculated
under § 156.430(c) of this subchapter for
the 2014 benefit year, HHS will make an
adjustment to the amount of the issuer’s
2015 benefit year risk corridors payment
or charge measured by the full
difference between the certified estimate
of 2014 cost-sharing reductions reported
and the actual value of cost-sharing
reductions provided as calculated under
§ 156.430(c) for the 2014 benefit year.
■ 9. Section 153.530 is amended by
revising paragraphs (b)(2)(ii) and (iii)
and adding paragraph (b)(2)(iv) to read
as follows:
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§ 153.530 Risk corridors data
requirements.
*
*
*
*
*
(b) * * *
(2) * * *
(ii) Any reinsurance payments
received by the issuer for the nongrandfathered health plans under the
transitional reinsurance program
established under subpart C of this part;
(iii) A cost-sharing reduction amount
equal to the amount of cost-sharing
reductions for the benefit year as
calculated under § 156.430(c) of this
subchapter, to the extent not reimbursed
to the provider furnishing the item or
service.
(iv) For the 2015 and 2016 benefit
years, any difference between—
(A) The sum of unpaid claims
reserves and claims incurred but not
reported, as set forth in §§ 158.103 and
158.140(a)(2) and (3) of this subchapter,
that were reported on the MLR and Risk
Corridors Annual Reporting Form for
the year preceding the benefit year; and
(B) The actual claims incurred during
the year preceding the benefit year and
paid between March 31 of the benefit
year and March 31 of the year following
the benefit year.
*
*
*
*
*
■ 10. Section 153.710 is amended by—
■ a. Removing paragraph (d).
■ b. Redesignating paragraphs (e) and (f)
as paragraphs (d) and (e), respectively.
■ c. Revising newly redesignated
paragraph (e).
■ d. Adding paragraph (f).
■ e. Adding paragraph (g) introductory
text and revising paragraphs (g)(1)
introductory text, (g)(1)(iii) and (iv), and
(g)(2).
■ f. Adding paragraph (g)(3).
The revisions and additions read as
follows:
§ 153.710
Data requirements.
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*
*
*
*
*
(e) Unresolved discrepancies. If a
discrepancy first identified in a final
dedicated distributed data environment
report in accordance with paragraph
(d)(2) of this section remains unresolved
after the issuance of the notification of
risk adjustment payments and charges
or reinsurance payments under
§ 153.310(e) or § 153.240(b)(1)(ii),
respectively, an issuer of a risk
adjustment covered plan or reinsuranceeligible plan may make a request for
reconsideration regarding such
discrepancy under the process set forth
in § 156.1220(a) of this subchapter.
(f) Evaluation of dedicated distributed
data. If an issuer of a risk adjustment
covered plan fails to provide sufficient
required data, such that HHS cannot
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apply the applicable methodology to
calculate the risk adjustment payment
transfer amount for the risk adjustment
covered plan in a timely or appropriate
fashion, then HHS will assess a default
risk adjustment charge under
§ 153.740(b). If an issuer of a
reinsurance eligible plan fails to provide
data sufficient for HHS to calculate
reinsurance payments, the issuer will
forfeit reinsurance payments for claims
it fails to submit.
(1) Data quantity. An issuer of a risk
adjustment covered plan or a
reinsurance-eligible plan must provide,
in a format and on a timeline specified
by HHS, data on its total enrollment and
claims counts by market, which HHS
may use in evaluating whether the
issuer provided access in the dedicated
distributed data environment to a
sufficient quantity of data to meet
reinsurance and risk adjustment data
requirements.
(2) Data quality. If, following the
deadline for submission of data
specified in § 153.730, HHS identifies
an outlier that would cause the data that
a risk adjustment covered plan or a
reinsurance-eligible plan made available
through a dedicated distributed data
environment to fail HHS’s data quality
thresholds, the issuer may, within 10
calendar days of receiving notification
of the outlier, submit an explanation of
the outlier for HHS to consider in
determining whether the issuer met the
reinsurance and risk adjustment data
requirements.
(g) Risk corridors and MLR reporting.
Except as provided in paragraph (g)(3)
of this section:
(1) Notwithstanding any discrepancy
report made under paragraph (d)(2) of
this section, or any request for
reconsideration under § 156.1220(a) of
this subchapter with respect to any risk
adjustment payment or charge,
including an assessment of risk
adjustment user fees; reinsurance
payment; cost-sharing reduction
payment or charge; or risk corridors
payment or charge, unless the dispute
has been resolved, an issuer must
report, for purposes of the risk corridors
and MLR programs:
*
*
*
*
*
(iii) A cost-sharing reduction amount
equal to the actual amount of costsharing reductions for the benefit year
as calculated under § 156.430(c) of this
subchapter, to the extent not reimbursed
to the provider furnishing the item or
service; and
(iv) For medical loss ratio reporting
only, the risk corridors payment to be
made or charge assessed by HHS under
§ 153.510.
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12335
(2) An issuer must report during the
current MLR and risk corridors
reporting year any adjustment made or
approved by HHS for any risk
adjustment payment or charge,
including an assessment of risk
adjustment user fees; any reinsurance
payment; any cost-sharing reduction
payment or charge; or any risk corridors
payment or charge before August 15, or
the next applicable business day, of the
current MLR and risk corridors
reporting year unless instructed
otherwise by HHS. An issuer must
report any adjustment made or
approved by HHS for any risk
adjustment payment or charge,
including an assessment of risk
adjustment user fees; any reinsurance
payment; any cost-sharing reduction
payment or charge; or any risk corridors
payment or charge where such
adjustment has not been accounted for
in a prior MLR and Risk Corridor
Annual Reporting Form, in the MLR and
Risk Corridors Annual Reporting Form
for the following reporting year.
(3) In cases where HHS reasonably
determines that the reporting
instructions in paragraph (g)(1) or (2) of
this section would lead to unfair or
misleading financial reporting, issuers
must correct their data submissions in a
form and manner to be specified by
HHS.
PART 154—HEALTH INSURANCE
ISSUER RATE INCREASES:
DISCLOSURE AND REVIEW
REQUIREMENTS
11. The authority citation for part 154
continues to read as follows:
■
Authority: Section 2794 of the Public
Health Service Act (42 U.S.C. 300gg–94).
12. Section 154.200 is amended by
revising paragraph (c)(2) to read as
follows:
■
§ 154.200
review.
Rate increases subject to
*
*
*
*
*
(c) * * *
(2) For rates filed for single risk pool
coverage beginning on or after January
1, 2017, the average increase, including
premium rating factors described in
§ 147.102 of this subchapter, for all
enrollees weighted by premium volume
for any plan within the product meets
or exceeds the applicable threshold.
*
*
*
*
*
13. Section 154.215 is amended by
revising paragraphs (a) and (b)
introductory text and removing and
reserving paragraph (c) to read as
follows:
■
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§ 154.215 Submission of rate filing
justification.
(a) A health insurance issuer must
submit to CMS and to the applicable
State (if the State accepts such
submissions) the information specified
below on a form and in a manner
prescribed by the Secretary.
(1) For all single risk pool products,
including new and discontinuing
products, the Unified Rate Review
Template, as described in paragraph (d)
of this section;
(2) For each single risk pool product
that includes a plan that is subject to a
rate increase, regardless of the size of
the increase, the unified rate review
template and actuarial memorandum, as
described in paragraph (f) of this
section;
(3) For each single risk pool product
that includes a plan with a rate increase
that is subject to review under
§ 154.210, all parts of the Rate Filing
Justification, as described in paragraph
(b) of this section
(b) A Rate Filing Justification includes
one or more of the following:
*
*
*
*
*
14. Section 154.220 is amended by
revising the introductory text and
paragraphs (b) introductory text and
(b)(1) to read as follows:
■
§ 154.220 Timing of providing the rate
filing justification.
A health insurance issuer must
submit applicable sections of the Rate
Filing Justification for all single risk
pool coverage in the individual or small
group market, as follows:
*
*
*
*
*
(b) For coverage effective on or after
January 1, 2017, by the earlier of the
following:
(1) The date by which the State
requires submission of a rate filing; or
*
*
*
*
*
15. Section 154.230 is amended by
revising paragraph (c)(2)(i) to read as
follows:
■
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§ 154.230 Submission and posting of Final
Justifications for unreasonable rate
increases.
*
*
*
*
*
(c) * * *
(2) * * *
(i) The information made available to
the public by CMS and described in
§ 154.215(h).
*
*
*
*
*
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PART 155—EXCHANGE
ESTABLISHMENT STANDARDS AND
OTHER RELATED STANDARDS
UNDER THE AFFORDABLE CARE ACT
16. 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).
17. Section 155.20 is amended by—
a. Revising paragraph (2) in the
definition of ‘‘Applicant’’.
■ b. Adding the definitions of ‘‘Federal
platform agreement’’ and ‘‘Standardized
option’’ in alphabetical order.
■ c. Revising the definitions of ‘‘Large
employer’’ and ‘‘Small employer’’.
The addition and revisions read as
follows:
■
■
§ 155.20
Definitions.
*
*
*
*
*
Applicant * * *
(2) For SHOP:
(i) An employer seeking eligibility to
purchase coverage through the SHOP; or
(ii) An employer, employee, or a
former employee seeking eligibility for
enrollment in a QHP through the SHOP
for himself or herself and, if the
qualified employer offers dependent
coverage through the SHOP, seeking
eligibility to enroll his or her
dependents in a QHP through the
SHOP.
*
*
*
*
*
Federal platform agreement means an
agreement between a State Exchange
and HHS under which a State Exchange
agrees to rely on the Federal platform to
carry out select Exchange functions.
*
*
*
*
*
Large employer means, in connection
with a group health plan with respect to
a calendar year and a plan year, an
employer who employed an average of
at least 51 employees on business days
during the preceding calendar year and
who employs at least 1 employee on the
first day of the plan year. In the case of
an employer that was not in existence
throughout the preceding calendar year,
the determination of whether the
employer is a large employer is based on
the average number of employees that it
is reasonably expected the employer
will employ on business days in the
current calendar year. A State may elect
to define large employer by substituting
‘‘101 employees’’ for ‘‘51 employees.’’
The number of employees must be
determined using the method set forth
in section 4980H(c)(2) of the Code.
*
*
*
*
*
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Small employer means, in connection
with a group health plan with respect to
a calendar year and a plan year, an
employer who employed an average of
at least one but not more than 50
employees on business days during the
preceding calendar year and who
employs at least one employee on the
first day of the plan year. In the case of
an employer that was not in existence
throughout the preceding calendar year,
the determination of whether the
employer is a small employer is based
on the average number of employees
that it is reasonably expected the
employer will employ on business days
in the current calendar year. A State
may elect to define small employer by
substituting ‘‘100 employees’’ for ‘‘50
employees.’’ The number of employees
must be determined using the method
set forth in section 4980H(c)(2) of the
Code.
*
*
*
*
*
Standardized option means a QHP
with a standardized cost-sharing
structure specified by HHS in
rulemaking and that is offered for sale
through an individual market Exchange.
*
*
*
*
*
■ 18. Section 155.106 is amended by—
■ a. Revising paragraphs (a)
introductory text, (a)(2) and (3), and (b)
introductory text.
■ b. Adding paragraphs (a)(4) and (5)
and (c).
The revisions and additions read as
follows:
§ 155.106 Election to operate an Exchange
after 2014.
(a) Election to operate an Exchange.
Except as provided in paragraph (c) of
this section, a State electing to seek
approval of its Exchange must:
*
*
*
*
*
(2) Submit an Exchange Blueprint
application for HHS approval at least 15
months prior to the date on which the
Exchange proposes to begin open
enrollment as a State Exchange;
(3) Have in effect an approved, or
conditionally approved, Exchange
Blueprint and operational readiness
assessment at least 14 months prior to
the date on which the Exchange
proposes to begin open enrollment as a
State Exchange;
(4) Develop a plan jointly with HHS
to facilitate the transition to a State
Exchange; and
(5) If the open enrollment period for
the year the State intends to begin
operating an SBE has not been
established, this deadline must be
calculated based on the date open
enrollment began or will begin in the
year in which the State is submitting the
Blueprint application.
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(b) Transition process for State
Exchanges that cease operations. If a
State intends to cease operation of its
Exchange, HHS will operate the
Exchange on behalf of the State.
Therefore, a State that intends to cease
operations of its Exchange must:
*
*
*
*
*
(c) Process for State Exchanges that
seek to utilize the Federal platform for
select functions. A State seeking
approval as a State Exchange utilizing
the Federal platform to support select
functions through a Federal platform
agreement under § 155.200(f) must:
(1) If the State Exchange does not
have a conditionally approved Exchange
Blueprint application, submit one for
HHS approval at least 3 months prior to
the date on which the Exchange
proposes to begin open enrollment as an
SBE–FP;
(2) If the State Exchange has a
conditionally approved Exchange
Blueprint application, submit any
significant changes to that application
for HHS approval, in accordance with
§ 155.105(e), at least 3 months prior to
the date on which the Exchange
proposes to begin open enrollment as an
SBE–FP;
(3) Have in effect an approved, or
conditionally approved, Exchange
Blueprint and operational readiness
assessment at least 2 months prior to the
date on which the Exchange proposes to
begin open enrollment as an SBE–FP, in
accordance with HHS rules, as a State
Exchange utilizing the Federal platform;
(4) Prior to approval, or conditional
approval, of the Exchange Blueprint,
execute a Federal platform agreement
for utilizing the Federal platform for
select functions; and
(5) Coordinate with HHS on a
transition plan to be developed jointly
between HHS and the State.
■ 19. Section 155.170 is amended by
revising paragraphs (a)(2) and (3) and
(c)(2)(iii) to read as follows:
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§ 155.170
Additional required benefits.
(a) * * *
(2) A benefit required by State action
taking place on or before December 31,
2011 is considered an EHB. A benefit
required by State action taking place on
or after January 1, 2012, other than for
purposes of compliance with Federal
requirements, is considered in addition
to the essential health benefits.
(3) The State will identify which
State-required benefits are in addition to
the EHB.
*
*
*
*
*
(c) * * *
(2) * * *
(iii) Reported to the State.
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20. Section 155.200 is amended by
revising paragraph (a) and adding
paragraph (f) to read as follows:
■
§ 155.200
Functions of an Exchange.
(a) General requirements. An
Exchange must perform the functions
described in this subpart and in
subparts D, E, F, G, H, K, M, and O of
this part unless the State is approved to
operate only a SHOP by HHS under
§ 155.100(a)(2), in which case the
Exchange operated by the State must
perform the functions described in
subpart H of this part and all applicable
provisions of other subparts referenced
in that subpart. In a State that is
approved to operate only a SHOP, the
individual market Exchange operated by
HHS in that State will perform the
functions described in this subpart and
in subparts D, E, F, G, K, M, and O of
this part.
*
*
*
*
*
(f) Requirements for State Exchanges
on the Federal platform. (1) A State that
receives approval or conditional
approval to operate a State Exchange on
the Federal platform under § 155.106(c)
may meet its obligations under
paragraph (a) of this section by relying
on Federal services that the Federal
government agrees to provide under a
Federal platform agreement.
(2) A State Exchange on the Federal
platform must establish and oversee
requirements for its issuers that are no
less strict than the following
requirements that are applied to
Federally-facilitated Exchange issuers:
(i) Data submission requirements
under § 156.122(d)(2) of this subchapter;
(ii) Network adequacy standards
under § 156.230 of this subchapter;
(iii) Essential community providers
standards under § 156.235 of this
subchapter;
(iv) Meaningful difference standards
under § 156.298 of this subchapter;
(v) Changes of ownership of issuers
requirements under § 156.330 of this
subchapter;
(vi) QHP issuer compliance and
compliance of delegated or downstream
entities requirements under
§ 156.340(a)(4) of this subchapter; and
(vii) Casework requirements under
§ 156.1010 of this subchapter.
(3) If a State is not substantially
enforcing any requirement listed under
§ 155.200(f)(2) with respect to a QHP
issuer or plan in a State-based Exchange
on the Federal platform, HHS may
enforce that requirement directly against
the issuer or plan by means of plan
suppression under § 156.815 of this
subchapter.
■ 21. Section 155.205 is amended by—
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12337
a. Revising paragraphs (a), (b)(1)
introductory text, and (d)(1).
■ b. Adding paragraph (b)(7).
The addition and revisions read as
follows:
■
§ 155.205 Consumer assistance tools and
programs of an Exchange.
(a) Call center. The Exchange must
provide for operation of a toll-free call
center that addresses the needs of
consumers requesting assistance and
meets the requirements outlined in
paragraphs (c)(1), (c)(2)(i), and (c)(3) of
this section, unless it enters into a
Federal platform agreement through
which it relies on HHS to carry out call
center functions, in which case the
Exchange must provide at a minimum a
toll-free telephone hotline to respond to
requests for assistance and
appropriately directs consumers to
Federal platform services to apply for,
and enroll in, Exchange coverage.
(b) * * *
(1) Provides standardized comparative
information on each available QHP,
which may include differential display
of standardized options on consumerfacing plan comparison and shopping
tools, and at a minimum includes:
*
*
*
*
*
(7) A State-based Exchange on the
Federal platform must at a minimum
maintain an informational Internet Web
site that includes the capability to direct
consumers to Federal platform services
to apply for, and enroll in, Exchange
coverage.
*
*
*
*
*
(d) * * *
(1) The Exchange must have a
consumer assistance function that meets
the standards in paragraph (c) of this
section, including the Navigator
program described in § 155.210. Any
individual providing such consumer
assistance must be trained regarding
QHP options, insurance affordability
programs, eligibility, and benefits rules
and regulations governing all insurance
affordability programs operated in the
State, as implemented in the State, prior
to providing such assistance or the
outreach and education activities
specified in paragraph (e) of this
section.
*
*
*
*
*
■ 22. Section 155.210 is amended by—
■ a. Revising paragraphs (b)(2)(iii) and
(iv).
■ b. Adding paragraphs (b)(2)(v) through
(ix).
■ c. Revising paragraphs (d)(6) and
(e)(6)(i).
■ d. In paragraph (e)(7), removing the
period at the end of the paragraph and
adding a semicolon in its place.
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e. Adding paragraphs (e)(8) and (9).
The revisions and additions read as
follows:
■
§ 155.210
Navigator program standards.
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*
*
*
*
*
(b) * * *
(2) * * *
(iii) The range of QHP options and
insurance affordability programs;
(iv) The privacy and security
standards applicable under § 155.260;
(v) In an Exchange that requires
Navigators to provide the assistance
specified in paragraph (e)(9)(i) of this
section, the process of filing Exchange
eligibility appeals;
(vi) In an Exchange that requires
Navigators to provide the assistance
specified in paragraph (e)(9)(ii) of this
section, general concepts regarding
exemptions from the requirement to
maintain minimum essential coverage
and from the individual shared
responsibility payment, including the
application process for exemptions
granted through the Exchange, and IRS
resources on exemptions;
(vii) In an Exchange that requires
Navigators to provide the assistance
specified in paragraph (e)(9)(iii) of this
section, the Exchange-related
components of the premium tax credit
reconciliation process and IRS resources
on this process;
(viii) In an Exchange that requires
Navigators to provide the assistance
specified in paragraph (e)(9)(iv) of this
section, basic concepts and rights
related to health coverage and how to
use it; and
(ix) In an Exchange that requires
Navigators to provide the assistance
specified in paragraph (e)(9)(v) of this
section, providing referrals to licensed
tax advisers, tax preparers, or other
resources for assistance with tax
preparation and tax advice related to
consumer questions about the Exchange
application and enrollment process,
exemptions from the requirement to
maintain minimum essential coverage
and from the individual shared
responsibility payment, and premium
tax credit reconciliations.
*
*
*
*
*
(d) * * *
(6) Provide to an applicant or
potential enrollee gifts of any value as
an inducement for enrollment. The
value of gifts provided to applicants and
potential enrollees for purposes other
than as an inducement for enrollment
must not exceed nominal value, either
individually or in the aggregate, when
provided to that individual during a
single encounter. For purposes of this
paragraph (d)(6), the term gifts includes
gift items, gift cards, cash cards, cash,
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and promotional items that market or
promote the products or services of a
third party, but does not include the
reimbursement of legitimate expenses
incurred by a consumer in an effort to
receive Exchange application assistance,
such as travel or postage expenses.
*
*
*
*
*
(e) * * *
(6) * * *
(i) Are informed, prior to receiving
assistance, of the functions and
responsibilities of Navigators, including
that Navigators are not acting as tax
advisers or attorneys when providing
assistance as Navigators and cannot
provide tax or legal advice within their
capacity as Navigators;
*
*
*
*
*
(8) Provide targeted assistance to
serve underserved or vulnerable
populations, as identified by the
Exchange, within the Exchange service
area.
(i) In a Federally-facilitated Exchange,
this paragraph (e)(8) will apply
beginning with the Navigator grant
application process for Navigator grants
awarded in 2018. The Federallyfacilitated Exchange will identify
populations as vulnerable or
underserved that are disproportionately
without access to coverage or care, or
that are at a greater risk for poor health
outcomes, in the funding opportunity
announcement for its Navigator grants,
and applicants for those grants will have
an opportunity to propose additional
vulnerable or underserved populations
in their applications for the Federallyfacilitated Exchange’s approval.
(ii) [Reserved]
(9) The Exchange may require or
authorize Navigators to provide
information and assistance with any of
the following topics. In Federallyfacilitated Exchanges, Navigators are
authorized to provide information and
assistance with any of the following
topics and will be required to provide
information and assistance with all of
the following topics under Navigator
grants awarded in 2018 or any later
year.
(i) Understanding the process of filing
Exchange eligibility appeals;
(ii) Understanding and applying for
exemptions from the individual shared
responsibility payment that are granted
through the Exchange, understanding
the availability of exemptions from the
requirement to maintain minimum
essential coverage and from the
individual shared responsibility
payment that are claimed through the
tax filing process and how to claim
them, and understanding the
availability of IRS resources on this
topic;
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(iii) The Exchange-related
components of the premium tax credit
reconciliation process, and
understanding the availability of IRS
resources on this process;
(iv) Understanding basic concepts and
rights related to health coverage and
how to use it; and
(v) Referrals to licensed tax advisers,
tax preparers, or other resources for
assistance with tax preparation and tax
advice related to consumer questions
about the Exchange application and
enrollment process, exemptions from
the requirement to maintain minimum
essential coverage and from the
individual shared responsibility
payment, and premium tax credit
reconciliations.
*
*
*
*
*
■ 23. Section 155.215 is amended by
revising paragraphs (b)(1)(i) and (g)(1) 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.
*
*
*
*
*
(b) * * *
(1) * * *
(i) Obtain certification by the
Exchange prior to carrying out any
consumer assistance functions or
outreach and education activities under
§ 155.205(d) and (e) or § 155.210;
*
*
*
*
*
(g) * * *
(1) Are informed, prior to receiving
assistance, of the functions and
responsibilities of non-Navigator
assistance personnel, including that
non-Navigator assistance personnel are
not acting as tax advisers or attorneys
when providing assistance as nonNavigator assistance personnel and
cannot provide tax or legal advice
within their capacity as non-Navigator
assistance personnel;
*
*
*
*
*
■ 24. Section 155.220 is amended by—
■ a. Revising paragraph (c)(1) and (3),
(f)(4), (g)(2)(ii), and (g)(3) and (4);
■ b. Adding new paragraphs (c)(4)(i)(F),
(c)(5), (g)(5) and (6), (j), (k), and (l).
The revisions and additions read as
follows:
§ 155.220 Ability of States to permit agents
and brokers to assist qualified individuals,
qualified employers, or qualified employees
enrolling in QHPs.
*
*
*
*
*
(c) * * *
(1) The agent or broker ensures the
applicant’s completion of an eligibility
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verification and enrollment application
through the Exchange Internet Web site
as described in § 155.405, or ensures
that the eligibility application
information is submitted for an
eligibility determination through the
Exchange-approved Web service subject
to meeting the requirements in
paragraphs (c)(3)(ii) and (c)(4)(i)(F) of
this section;
*
*
*
*
*
(3)(i) When an Internet Web site of the
agent or broker is used to complete the
QHP selection, at a minimum the
Internet Web site must:
(A) Disclose and display all QHP
information provided by the Exchange
or directly by QHP issuers consistent
with the requirements of § 155.205(b)(1)
and (c), and to the extent that not all
information required under
§ 155.205(b)(1) is displayed on the agent
or broker’s Internet Web site for a QHP,
prominently display a standardized
disclaimer provided by HHS stating that
information required under
§ 155.205(b)(1) for the QHP is available
on the Exchange Web site, and provide
a Web link to the Exchange Web site;
(B) Provide consumers the ability to
view all QHPs offered through the
Exchange;
(C) Not provide financial incentives,
such as rebates or giveaways;
(D) Display all QHP data provided by
the Exchange;
(E) Maintain audit trails and records
in an electronic format for a minimum
of ten years;
(F) Provide consumers with the ability
to withdraw from the process and use
the Exchange Web site described in
§ 155.205(b) instead at any time; and
(G) For the Federally-facilitated
Exchange, prominently display a
standardized disclaimer provided by
HHS, and provide a Web link to the
Exchange Web site.
(ii) When an Internet Web site of an
agent or broker is used to complete the
Exchange eligibility application, at a
minimum, the Internet Web site must:
(A) Comply with the requirements in
paragraph (c)(3)(i) of this section;
(B) Use exactly the same eligibility
application language as appears in the
FFE Single Streamlined Application
required in § 155.405, unless HHS
approves a deviation;
(C) Ensure that all necessary
information for the consumer’s
applicable eligibility circumstances are
submitted through the Exchangeapproved web service; and
(D) Ensure that the process used for
consumers to complete the eligibility
application complies with all applicable
Exchange standards, including
§§ 155.230 and 155.260(b).
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(4) * * *
(i) * * *
(F) When an Internet Web site of an
agent or broker is used to complete the
Exchange eligibility application, obtain
HHS approval verifying that all
requirements in this section are met.
*
*
*
*
*
(5) HHS or its designee may
periodically monitor and audit an agent
or broker under this subpart to assess its
compliance with the applicable
requirements of this section.
*
*
*
*
*
(f) * * *
(4) When the agreement between the
agent or broker and the Exchange under
paragraph (d) of this section is
terminated under paragraph (f) of this
section, the agent or broker will no
longer be registered with the Federallyfacilitated Exchanges, or be permitted to
assist with or facilitate enrollment of
qualified individuals, qualified
employers or qualified employees in
coverage in a manner that constitutes
enrollment through a Federallyfacilitated Exchange, or be permitted to
assist individuals in applying for
advance payments of the premium tax
credit and cost-sharing reductions for
QHPs. The agent’s or broker’s agreement
with the Exchange under § 155.260(b)
will also be terminated through the
termination without cause process set
forth in that agreement. The agent or
broker must continue to protect any
personally identifiable information
accessed during the term of either of
these agreements with the Federallyfacilitated Exchanges.
(g) * * *
(2) * * *
(ii) Any term or condition of the
agreement with the Federally-facilitated
Exchanges required under paragraph (d)
of this section, or any term or condition
of the agreement with the Federallyfacilitated Exchange required under
§ 155.260(b);
*
*
*
*
*
(3) HHS will notify the agent or broker
of the specific finding of noncompliance
or pattern of noncompliance made
under paragraph (g)(1) of this section,
and after 30 days from the date of the
notice, may terminate the agreement for
cause if the matter is not resolved to the
satisfaction of HHS.
(4) After the period in paragraph (g)(3)
of this section has elapsed and the
agreement under paragraph (d) of this
section is terminated, the agent or
broker will no longer be registered with
the Federally-facilitated Exchanges, or
be permitted to assist with or facilitate
enrollment of a qualified individual,
qualified employer, or qualified
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12339
employee in coverage in a manner that
constitutes enrollment through a
Federally-facilitated Exchange, or be
permitted to assist individuals in
applying for advance payments of the
premium tax credit and cost-sharing
reductions for QHPs. The agent’s or
broker’s agreement with the Exchange
under § 155.260(b)(2) will also be
terminated through the process set forth
in that agreement. The agent or broker
must continue to protect any personally
identifiable information accessed during
the term of either of these agreements
with the Federally-facilitated
Exchanges.
(5) Fraud or abusive conduct—
(i)(A) If HHS reasonably suspects that
an agent or broker may have may have
engaged in fraud, or in abusive conduct
that may cause imminent or ongoing
consumer harm using personally
identifiable information of an Exchange
enrollee or applicant or in connection
with an Exchange enrollment or
application, HHS may temporarily
suspend the agent’s or broker’s
agreements required under paragraph
(d) of this section and under
§ 155.260(b) for up to 90 calendar days.
Suspension will be effective on the date
of the notice that HHS sends to the
agent or broker advising of the
suspension of the agreements.
(B) The agent or broker may submit
evidence in a form and manner to be
specified by HHS, to rebut the allegation
during this 90-day period. If the agent
or broker submits such evidence during
the suspension period, HHS will review
the evidence and make a determination
whether to lift the suspension within 30
days of receipt of such evidence. If the
rebuttal evidence does not persuade
HHS to lift the suspension, or if the
agent or broker fails to submit rebuttal
evidence during the suspension period,
HHS may terminate the agent’s or
broker’s agreements required under
paragraph (d) of this section and under
§ 155.260(b) for cause under paragraph
(g)(5)(ii) of this section.
(ii) If there is a finding or
determination by a Federal or State
entity that an agent or broker engaged in
fraud, or abusive conduct that may
result in imminent or ongoing consumer
harm, using personally identifiable
information of Exchange enrollees or
applicants or in connection with an
Exchange enrollment or application,
HHS will terminate the agent’s or
broker’s agreements required under
paragraph (d) of this section and under
§ 155.260(b) for cause. The termination
will be effective starting on the date of
the notice that HHS sends to the agent
or broker advising of the termination of
the agreements.
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(iii) During the suspension period
under paragraph (g)(5)(i) of this section
and following termination of the
agreements under paragraph (g)(5)(i)(B)
or (g)(5)(ii) of this section, the agent or
broker will not be registered with the
Federally-facilitated Exchanges, or be
permitted to assist with or facilitate
enrollment of qualified individuals,
qualified employers, or qualified
employees in coverage in a manner that
constitutes enrollment through a
Federally-facilitated Exchange, or be
permitted to assist individuals in
applying for advance payments of the
premium tax credit and cost-sharing
reductions for QHPs. The agent or
broker must continue to protect any
personally identifiable information
accessed during the term of either of
these agreements with a Federallyfacilitated Exchange.
(6) The State department of insurance
or equivalent State agent or broker
licensing authority will be notified by
HHS in cases of suspensions or
terminations effectuated under this
paragraph (g).
*
*
*
*
*
(j) Federally-facilitated Exchange
standards of conduct. (1) An agent or
broker that assists with or facilitates
enrollment of qualified individuals,
qualified employers, or qualified
employees, in coverage in a manner that
constitutes enrollment through a
Federally-facilitated Exchange, or assists
individuals in applying for advance
payments of the premium tax credit and
cost-sharing reductions for QHPs sold
through a Federally-facilitated
Exchange, must—
(i) Have executed the required
agreement under paragraph
§ 155.260(b);
(ii) Be registered with the Federallyfacilitated Exchanges under paragraph
(d)(1) of this section; and
(iii) Comply with the standards of
conduct in paragraph (j)(2) of this
section.
(2) Standards of conduct. An
individual or entity described in
paragraph (j)(1) of this section must—
(i) Provide consumers with correct
information, without omission of
material fact, regarding the Federallyfacilitated Exchanges, QHPs offered
through the Federally-facilitated
Exchanges, and insurance affordability
programs, and refrain from marketing or
conduct that is misleading or coercive,
or discriminates based on race, color,
national origin, disability, age, sex,
gender identity, or sexual orientation;
(ii) Provide the Federally-facilitated
Exchanges with correct information
under section 1411(b) of the Affordable
Care Act;
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(iii) Obtain the consent of the
individual, employer, or employee prior
to assisting with or facilitating
enrollment through a Federallyfacilitated Exchange, or assisting the
individual in applying for advance
payments of the premium tax credit and
cost-sharing reductions for QHPs;
(iv) Protect consumer personally
identifiable information according to
§ 155.260(b)(3) and the agreement
described in § 155.260(b)(2); and
(v) Comply with all applicable
Federal and State laws and regulations.
(3) If an agent or broker fails to
provide correct information, he or she
will nonetheless be deemed in
compliance with paragraphs (j)(2)(i) and
(ii) of this section if HHS determines
that there was a reasonable cause for the
failure to provide correct information
and that the agent or broker acted in
good faith.
(k) Penalties other than termination of
the agreement with the Federallyfacilitated Exchanges. (1) If HHS
determines that an agent or broker has
failed to comply with the requirements
of this section, in addition to any other
available remedies, that agent or
broker—
(i) May be denied the right to enter
into agreements with the Federallyfacilitated Exchanges in future years;
and
(ii) May be subject to civil money
penalties as described in § 155.285.
(2) HHS will notify the agent or broker
of the proposed imposition of penalties
under paragraph (k)(1)(i) of this section
and, after 30 calendar days from the
date of the notice, may impose the
penalty if the agent or broker has not
requested a reconsideration under
paragraph (h) of this section. The
proposed imposition of penalties under
paragraph (k)(1)(ii) of this section will
follow the process outlined under
§ 155.285.
(l) Application to State-Based
Exchanges using a Federal platform. An
agent or broker who enrolls qualified
individuals, qualified employers, or
qualified employees in coverage in a
manner that constitutes enrollment
through an State-Based Exchange using
a Federal platform, or assists individual
market consumers with submission of
applications for advance payments of
the premium tax credit and cost-sharing
reductions through an State-Based
Exchange using a Federal platform must
comply with all applicable Federallyfacilitated Exchange standards in this
section.
■ 25. Section 155.222 is amended by—
■ a. Revising the section heading.
■ b. Revising paragraphs (a)(1) and (2),
(b)(1) through (5), and (d).
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c. Adding new paragraph (b)(6).
The revisions and addition read as
follows:
■
§ 155.222 Standards for HHS-approved
vendors of Federally-facilitated Exchange
training for agents and brokers.
(a) * * *
(1) A vendor must be approved by
HHS, in a form and manner to be
determined by HHS, to have its training
program recognized for agents and
brokers assisting with or facilitating
enrollment in individual market or
SHOP coverage through the Federallyfacilitated Exchanges consistent with
§ 155.220.
(2) As part of the training program,
the vendor must require agents and
brokers to provide identifying
information and successfully complete
the required curriculum.
*
*
*
*
*
(b) * * *
(1) Submit a complete and accurate
application by the deadline established
by HHS, which includes demonstration
of prior experience with successfully
conducting online training, as well as
providing technical support to a large
customer base.
(2) Adhere to HHS specifications for
content, format, and delivery of training,
which includes offering continuing
education units (CEUs) for at least five
States in which a Federally-facilitated
Exchange or State-Based Exchange using
a Federal platform is operating.
(3) Collect, store, and share with HHS
training completion data from agent and
broker users of the vendor’s training in
a manner, format, and frequency
specified by HHS, and protect all data
from agent and broker users of the
vendor’s training in accordance with
applicable privacy and security
requirements.
(4) Execute an agreement with HHS,
in a form and manner to be determined
by HHS, which requires the vendor to
comply with applicable HHS guidelines
for implementing the training and
interfacing with HHS data systems, and
the use of all data collected.
(5) Permit any individual who holds
a valid State license or equivalent State
authority to sell health insurance
products to access the vendor’s training.
(6) Provide technical support to agent
and broker users of the vendor’s training
as specified by HHS.
*
*
*
*
*
(d) Monitoring. HHS may periodically
monitor and audit vendors approved
under this subpart, and their records
related to the training functions
described in this section, to ensure
ongoing compliance with the standards
in paragraph (b) of this section. If HHS
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determines that an HHS-approved
vendor is not in compliance with the
standards required in paragraph (b) of
this section, the vendor may be removed
from the approved list described in
paragraph (c) of this section and may be
required by HHS to cease performing
the training functions described under
this subpart.
*
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■ 26. Section 155.225 is amended by
adding paragraph (b)(1)(iii) and revising
paragraphs (f)(1) and (g)(4) to read as
follows:
gift items, gift cards, cash cards, cash,
and promotional items that market or
promote the products or services of a
third party, but does not include the
reimbursement of legitimate expenses
incurred by a consumer in an effort to
receive Exchange application assistance,
such as travel or postage expenses;
*
*
*
*
*
■ 27. Section 155.260 is amended by
revising paragraph (a)(1) introductory
text to read as follows:
§ 155.225
(a) * * *
(1) Where the Exchange creates or
collects personally identifiable
information for the purposes of
determining eligibility for enrollment in
a qualified health plan; determining
eligibility for other insurance
affordability programs, as defined in
§ 155.300; or determining eligibility for
exemptions from the individual shared
responsibility provisions in section
5000A of the Code, the Exchange may
only use or disclose such personally
identifiable information to the extent
such information is necessary:
*
*
*
*
*
■ 28. Section 155.280 is amended by
revising paragraph (a) to read as follows:
Certified application counselors.
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(b) * * *
(1) * * *
(iii) Provides data and information to
the Exchange regarding the number and
performance of its certified application
counselors and regarding the consumer
assistance provided by its certified
application counselors, upon request, in
the form and manner specified by the
Exchange. Beginning for the third
quarter of calendar year 2017, in a
Federally-facilitated Exchange,
organizations designated by the
Exchange must submit quarterly reports
that include, at a minimum, data
regarding the number of individuals
who have been certified by the
organization; the total number of
consumers who received application
and enrollment assistance from the
organization; and of that number, the
number of consumers who received
assistance in applying for and selecting
a QHP, enrolling in a QHP, or applying
for Medicaid or CHIP.
*
*
*
*
*
(f) * * *
(1) Are informed, prior to receiving
assistance, of the functions and
responsibilities of certified application
counselors, including that certified
application counselors are not acting as
tax advisers or attorneys when
providing assistance as certified
application counselors and cannot
provide tax or legal advice within their
capacity as certified application
counselors;
*
*
*
*
*
(g) * * *
(4) Provide to an applicant or
potential enrollee gifts of any value as
an inducement for enrollment. The
value of gifts provided to applicants and
potential enrollees for purposes other
than as an inducement for enrollment
must not exceed nominal value, either
individually or in the aggregate, when
provided to that individual during a
single encounter. For purposes of this
paragraph (g)(4), the term gifts includes
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§ 155.260 Privacy and security of
personally identifiable information.
§ 155.280 Oversight and monitoring of
privacy and security requirements.
(a) General. HHS will oversee and
monitor the Federally-facilitated
Exchanges, State-based Exchanges on
the Federal platform, and non-Exchange
entities required to comply with the
privacy and security standards
established and implemented by a
Federally-facilitated Exchange pursuant
to § 155.260 for compliance with those
standards. HHS will oversee and
monitor State Exchanges for compliance
with the standards State Exchanges
establish and implement pursuant to
§ 155.260. State Exchanges will oversee
and monitor non-Exchange entities
required to comply with the privacy and
security standards established and
implemented by a State Exchange in
accordance to § 155.260.
*
*
*
*
*
■ 29. Section 155.302 is amended by
revising paragraph (a)(1) to read as
follows:
§ 155.302 Options for conducting eligibility
determinations.
(a) * * *
(1) Directly, through contracting
arrangements in accordance with
§ 155.110(a), or as a State-based
Exchange on the Federal platform
through a Federal platform agreement
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12341
under which HHS carries out eligibility
determinations and other requirements
contained within this subpart; or
*
*
*
*
*
■ 30. Section 155.310 is amended by
revising paragraphs (h) introductory text
and (h)(2) to read as follows:
§ 155.310
Eligibility process.
*
*
*
*
*
(h) Notice of an employee’s receipt of
advance payments of the premium tax
credit and cost-sharing reductions to an
employer. The Exchange must notify an
employer that an employee has been
determined eligible for advance
payments of the premium tax credit and
cost-sharing reductions and has enrolled
in a qualified health plan through the
Exchange within a reasonable timeframe
following a determination that the
employee is eligible for advance
payments of the premium tax credit and
cost-sharing reductions in accordance
with § 155.305(g) or § 155.350(a) and
enrollment by the employee in a
qualified health plan through the
Exchange. Such notice must:
*
*
*
*
*
(2) Indicate that the employee has
been determined eligible advance
payments of the premium tax credit and
cost-sharing reductions and has enrolled
in a qualified health plan through the
Exchange;
*
*
*
*
*
■ 31. Section 155.320 is amended by
revising paragraphs (c)(3)(vi)
introductory text and (d)(3) and adding
paragraph (d)(4) to read as follows:
§ 155.320 Verification process related to
eligibility for insurance affordability
programs.
*
*
*
*
*
(c) * * *
(3) * * *
(vi) Alternate verification process for
decreases in annual household income
estimates and for situations in which
tax return data is unavailable. If a tax
filer qualifies for an alternate
verification process based on the
requirements specified in paragraph
(c)(3)(iv) of this section and the
applicant’s attestation to projected
annual household income, as described
in paragraph (c)(3)(ii)(B) of this section,
is more than a reasonable threshold
below the annual household income
computed in accordance with paragraph
(c)(3)(ii)(A) of this section, or if data
described in paragraph (c)(1)(i) of this
section is unavailable, the Exchange
must attempt to verify the applicant’s
attestation of the tax filer’s projected
annual household income by following
the procedures specified in paragraph
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(c)(3)(vi)(A) through (G) of this section.
For the purposes of this paragraph
(c)(3)(vi), a reasonable threshold is
established by the Exchange in guidance
and approved by HHS, but must not be
less than 10 percent, and can also
include a threshold dollar amount. The
Exchange’s threshold is subject to
approval by HHS.
*
*
*
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*
(d) * * *
(3) Verification procedures. (i) If an
applicant’s attestation is not reasonably
compatible with the information
obtained by the Exchange as specified in
paragraphs (d)(2)(i) through (iii) of this
section, other information provided by
the application filer, or other
information in the records of the
Exchange, the Exchange must follow the
procedures specified in § 155.315(f).
(ii) Except as specified in paragraph
(d)(3)(i) or (d)(4)(i) of this section, the
Exchange must accept an applicant’s
attestation regarding the verification
specified in paragraph (d) of this section
without further verification.
(4) Alternate procedures. For any
benefit year for which it does not
reasonably expect to obtain sufficient
verification data as described in
paragraphs (d)(2)(i) through (iii) of this
section, the Exchange must follow the
procedures specified in paragraph
(d)(4)(i) of this section or, for benefit
years 2016 and 2017, the Exchange may
follow the procedures specified in
paragraph (d)(4)(ii) of this section. For
purposes of this paragraph (d)(4), the
Exchange reasonably expects to obtain
sufficient verification data for any
benefit year when, for the benefit year,
the Exchange is able to obtain data
about enrollment in and eligibility for
qualifying coverage in an eligible
employer-sponsored plan from at least
one electronic data source that is
available to the Exchange and that has
been approved by HHS, based on
evidence showing that the data source is
sufficiently current, accurate, and
minimizes administrative burden, as
described under paragraph (d)(2)(i) of
this section.
(i) Select a statistically significant
random sample of applicants for whom
the Exchange does not have any of the
information specified in paragraphs
(d)(2)(i) through (iii) of this section
and—
(A) Provide notice to the applicant
indicating that the Exchange will be
contacting any employer identified on
the application for the applicant and the
members of his or her household, as
defined in 26 CFR 1.36B–1(d), to verify
whether the applicant is enrolled in an
eligible employer-sponsored plan or is
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eligible for qualifying coverage in an
eligible employer-sponsored plan for the
benefit year for which coverage is
requested;
(B) Proceed with all other elements of
the eligibility determination using the
applicant’s attestation, and provide
eligibility for enrollment in a QHP to the
extent that an applicant is otherwise
qualified;
(C) Ensure that advance payments of
the premium tax credit and cost-sharing
reductions are provided on behalf of an
applicant who is otherwise qualified for
such payments and reductions, as
described in § 155.305, if the tax filer
attests to the Exchange that he or she
understands that any advance payments
of the premium tax credit paid on his or
her behalf are subject to reconciliation;
(D) Make reasonable attempts to
contact any employer identified on the
application for the applicant and the
members of his or her household, as
defined in 26 CFR 1.36B–1(d), to verify
whether the applicant is enrolled in an
eligible employer-sponsored plan or is
eligible for qualifying coverage in an
eligible employer-sponsored plan for the
benefit year for which coverage is
requested;
(E) If the Exchange receives any
information from an employer relevant
to the applicant’s enrollment in an
eligible employer-sponsored plan or
eligibility for qualifying coverage in an
eligible employer-sponsored plan, the
Exchange must determine the
applicant’s eligibility based on such
information and in accordance with the
effective dates specified in § 155.330(f),
and if such information changes his or
her eligibility determination, notify the
applicant and his or her employer or
employers of such determination in
accordance with the notice
requirements specified in § 155.310(g)
and (h);
(F) If, after a period of 90 days from
the date on which the notice described
in paragraph (d)(4)(i)(A) of this section
is sent to the applicant, the Exchange is
unable to obtain the necessary
information from an employer, the
Exchange must determine the
applicant’s eligibility based on his or
her attestation regarding coverage
provided by that employer.
(G) To carry out the process described
in paragraph (d)(4)(i) of this section, the
Exchange must only disclose an
individual’s information to an employer
to the extent necessary for the employer
to identify the employee.
(ii) Establish an alternative process
approved by HHS.
*
*
*
*
*
■ 32. Section 155.335 is amended by
revising paragraph (j) to read as follows:
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§ 155.335 Annual eligibility
redetermination.
*
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*
(j) Re-enrollment. If an enrollee
remains eligible for enrollment in a QHP
through the Exchange upon annual
redetermination and—
(1) The product under which the QHP
in which he or she is enrolled remains
available through the Exchange for
renewal, consistent with § 147.106 of
this subchapter, such enrollee will have
his or her enrollment through the
Exchange in a QHP under that product
renewed, unless he or she terminates
coverage, including termination of
coverage in connection with voluntarily
selecting a different QHP, in accordance
with § 155.430. The Exchange will
ensure that re-enrollment in coverage
under this paragraph (j)(1) occurs under
the same product (except as provided in
paragraph (j)(1)(iii)(A) of this section) in
which the enrollee was enrolled, as
follows:
(i) The enrollee’s coverage will be
renewed in the same plan as the
enrollee’s current QHP, unless the
current QHP is not available through the
Exchange.
(ii) If the enrollee’s current QHP is not
available through the Exchange, the
enrollee’s coverage will be renewed in
a QHP at the same metal level as the
enrollee’s current QHP within the same
product.
(iii) If the enrollee’s current QHP is
not available through the Exchange and
the enrollee’s product no longer
includes a QHP at the same metal level
as the enrollee’s current QHP and—
(A) The enrollee’s current QHP is a
silver level plan, the enrollee will be reenrolled in a silver level QHP under a
different product offered by the same
QHP issuer that is most similar to the
enrollee’s current product. If no such
silver level QHP is available for
enrollment through the Exchange, the
enrollee’s coverage will be renewed in
a QHP that is one metal level higher or
lower than the enrollee’s current QHP
under the same product;
(B) The enrollee’s current QHP is not
a silver level plan, the enrollee’s
coverage will be renewed in a QHP that
is one metal level higher or lower than
the enrollee’s current QHP under the
same product; or
(iv) If the enrollee’s current QHP is
not available through the Exchange and
the enrollee’s product no longer
includes a QHP that is at the same metal
level as, or one metal level higher or
lower than the enrollee’s current QHP,
the enrollee’s coverage will be renewed
in any other QHP offered under the
product in which the enrollee’s current
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QHP is offered in which the enrollee is
eligible to enroll.
(2) No plans under the product under
which the QHP in which he or she is
enrolled are available through the
Exchange for renewal, consistent with
§ 147.106 of this subchapter, such
enrollee may be enrolled in a QHP
under a different product offered by the
same QHP issuer, to the extent
permitted by applicable State law,
unless he or she terminates coverage,
including termination of coverage in
connection with voluntarily selecting a
different QHP, in accordance with
§ 155.430. The Exchange will ensure
that re-enrollment in coverage under
this paragraph (j)(2) occurs as follows:
(i) The enrollee will be re-enrolled in
a QHP at the same metal level as the
enrollee’s current QHP in the product
offered by the same issuer that is the
most similar to the enrollee’s current
product;
(ii) If the issuer does not offer another
QHP at the same metal level as the
enrollee’s current QHP, the enrollee will
be re-enrolled in a QHP that is one
metal level higher or lower than the
enrollee’s current QHP in the product
offered by the same issuer through the
Exchange that is the most similar to the
enrollee’s current product; or
(iii) If the issuer does not offer another
QHP through the Exchange at the same
metal level as, or one metal level higher
or lower than the enrollee’s current
QHP, the enrollee will be re-enrolled in
any other QHP offered by the same
issuer in which the enrollee is eligible
to enroll.
(3) No QHPs from the same issuer are
available through the Exchange, the
enrollee may be enrolled through the
Exchange in a QHP issued by a different
issuer, to the extent permitted by
applicable State law, unless he or she
terminates coverage, including
termination of coverage in connection
with voluntarily selecting a different
QHP, in accordance with § 155.430. The
Exchange will ensure that re-enrollment
in coverage under this paragraph (j)(3)
occurs as follows:
(i) As directed by the applicable State
regulatory authority; or
(ii) If the applicable State regulatory
authority declines to provide direction,
in a similar QHP from a different issuer,
as determined by the Exchange.
*
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*
■ 33. Section 155.400 is amended by
revising paragraph (e) and adding
paragraphs (g) and (h) to read as follows:
§ 155.400 Enrollment of qualified
individuals into QHPs.
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(e) Premium payment. Exchanges
may, and the Federally-facilitated
Exchange will, require payment of a
binder payment to effectuate an
enrollment or to add coverage
retroactively to an already effectuated
enrollment. Exchanges may, and the
Federally-facilitated Exchange will,
establish a standard policy for setting
premium payment deadlines:
(1) In a Federally-facilitated
Exchange:
(i) For prospective coverage to be
effectuated under regular coverage
effective dates, as provided for in
§§ 155.410(f) and 155.420(b)(1), the
binder payment must consist of the first
month’s premium, and the deadline for
making the binder payment must be no
earlier than the coverage effective date,
and no later than 30 calendar days from
the coverage effective date.
(ii) For prospective coverage to be
effectuated under special effective dates,
as provided for in § 155.420(b)(2), the
binder payment must consist of the first
month’s premium, and the deadline for
making the binder payment must be no
earlier than the coverage effective date
and no later than 30 calendar days from
the date the issuer receives the
enrollment transaction or the coverage
effective date, whichever is later.
(iii) For coverage to be effectuated
under retroactive effective dates, as
provided for in § 155.420(b)(2), the
binder payment must consist of the
premium due for all months of
retroactive coverage through the first
prospective month of coverage, and the
deadline for making the binder payment
must be no earlier than 30 calendar days
from the date the issuer receives the
enrollment transaction. If only the
premium for one month of coverage is
paid, only prospective coverage should
be effectuated, in accordance with
regular effective dates.
(2) [Reserved]
*
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*
*
(g) Premium payment threshold.
Exchanges may, and the Federallyfacilitated Exchange will, allow issuers
to implement, a premium payment
threshold policy under which issuers
can consider enrollees to have paid all
amounts due if the enrollees pay an
amount sufficient to maintain a
percentage of total premium paid out of
the total premium owed equal to or
greater than a level prescribed by the
issuer, provided that the level is
reasonable and that the level and the
policy are applied in a uniform manner
to all enrollees. If an applicant or
enrollee satisfies the premium payment
threshold policy, the issuer may:
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(1) Effectuate an enrollment based on
payment of the binder payment under
paragraph (e) of this section.
(2) Avoid triggering a grace period for
non-payment of premium, as described
by § 156.270(d) of this subchapter or a
grace period governed by State rules.
(3) Avoid terminating the enrollment
for non-payment of premium as,
described by §§ 156.270(g) of this
subchapter and 155.430(b)(2)(ii)(A) and
(B).
(h) Requirements. A State Exchange
may rely on HHS to carry out the
requirements of this section and other
requirements contained within this
subpart through a Federal platform
agreement.
■ 34. Section 155.410 is amended by
revising paragraphs (e)(2) and (f)(2) and
adding paragraphs (e)(3) to read as
follows:
§ 155.410 Initial and annual open
enrollment periods.
*
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*
*
(e) * * *
(2) For the benefit years beginning on
January 1, 2016, on January 1, 2017, and
on January 1, 2018, the annual open
enrollment period begins on November
1 of the calendar year preceding the
benefit year, and extends through
January 31 of the benefit year.
(3) For the benefit years beginning on
January 1, 2019 and beyond, the annual
open enrollment period begins on
November 1 and extends through
December 15 of the calendar year
preceding the benefit year.
(f) * * *
(2) For benefit years beginning on or
after January 1, 2016, the Exchange must
ensure that coverage is effective—
(i) January 1, for QHP selections
received by the Exchange on or before
December 15 of the calendar year
preceding the benefit year.
(ii) February 1, for QHP selections
received by the Exchange from
December 16 of the calendar year
preceding the benefit year through
January 15 of the benefit year.
(iii) March 1, for QHP selections
received by the Exchange from January
16 through January 31 of the benefit
year.
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■ 35. Section 155.430 is amended by—
■ a. Adding paragraph (b)(1)(iv).
■ b. Revising paragraphs (b)(2)(ii)(A).
■ c. Redesignating paragraph (b)(2)(vi)
as paragraph (b)(2)(vii).
■ d. Adding paragraphs (b)(2)(vi) and
(d)(9), (10), (11), and (12).
The additions and revision read as
follows:
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§ 155.430 Termination of Exchange
enrollment or coverage.
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*
*
*
*
(b) * * *
(1) * * *
(iv) The Exchange must permit an
enrollee to retroactively terminate or
cancel his or her coverage or enrollment
in a QHP in the following
circumstances:
(A) The enrollee demonstrates to the
Exchange that he or she attempted to
terminate his or her coverage or
enrollment in a QHP and experienced a
technical error that did not allow the
enrollee to terminate his or her coverage
or enrollment through the Exchange,
and requests retroactive termination
within 60 days after he or she
discovered the technical error.
(B) The enrollee demonstrates to the
Exchange that his or her enrollment in
a QHP through the Exchange was
unintentional, inadvertent, or erroneous
and was the result of the error or
misconduct of an officer, employee, or
agent of the Exchange or HHS, its
instrumentalities, or a non-Exchange
entity providing enrollment assistance
or conducting enrollment activities.
Such enrollee must request cancellation
within 60 days of discovering the
unintentional, inadvertent, or erroneous
enrollment. For purposes of this
paragraph (b)(1)(iv)(B), misconduct
includes the failure to comply with
applicable standards under this part,
part 156 of this subchapter, or other
applicable Federal or State requirements
as determined by the Exchange.
(C) The enrollee demonstrates to the
Exchange that he or she was enrolled in
a QHP without his or her knowledge or
consent by any third party, including
third parties who have no connection
with the Exchange, and requests
cancellation within 60 days of
discovering of the enrollment.
(2) * * *
(ii) * * *
(A) The exhaustion of the 3-month
grace period, as described in
§ 156.270(d) and (g) of this subchapter,
required for enrollees, who when first
failing to timely pay premiums, are
receiving advance payments of the
premium tax credit.
*
*
*
*
*
(vi) The enrollee was enrolled in a
QHP without his or her knowledge or
consent by a third party, including by a
third party with no connection with the
Exchange.
*
*
*
*
*
(d) * * *
(9) In case of a retroactive termination
in accordance with paragraph
(b)(1)(iv)(A) of this section, the
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termination date will be no sooner than
14 days after the date that the enrollee
can demonstrate he or she contacted the
Exchange to terminate his or her
coverage or enrollment through the
Exchange, unless the issuer agrees to an
earlier effective date as set forth in
paragraph (d)(2)(iii) of this section.
(10) In case of a retroactive
cancellation or termination in
accordance with paragraph (b)(1)(iv)(B)
or (C) of this section, the cancellation
date or termination date will be the
original coverage effective date or a later
date, as determined appropriate by the
Exchange, based on the circumstances
of the cancellation or termination.
(11) In the case of cancellation in
accordance with paragraph (b)(2)(vi) of
this section, the Exchange may cancel
the enrollee’s enrollment upon its
determination that the enrollment was
performed without the enrollee’s
knowledge or consent and following
reasonable notice to the enrollee (where
possible). The termination date will be
the original coverage effective date.
(12) In the case of retroactive
cancellations or terminations in
accordance with paragraphs
(b)(1)(iv)(A), (B) and (C) of this section,
such terminations or cancellations for
the preceding coverage year must be
initiated within a timeframe established
by the Exchange based on a balance of
operational needs and consumer
protection. This timeframe will not
apply to cases adjudicated through the
appeals process.
*
*
*
*
*
■ 36. Section 155.505 is amended by
adding paragraphs (b)(1)(iii) and (b)(5)
and revising paragraph (b)(4) to read as
follows:
§ 155.505 General eligibility appeals
requirements.
*
*
*
*
*
(b) * * *
(1) * * *
(iii) A determination of eligibility for
an enrollment period, made in
accordance with § 155.305(b);
*
*
*
*
*
(4) A denial of a request to vacate
dismissal made by a State Exchange
appeals entity in accordance with
§ 155.530(d)(2), made under paragraph
(c)(2)(i) of this section; and
(5) An appeal decision issued by a
State Exchange appeals entity in
accordance with § 155.545(b), consistent
with § 155.520(c).
*
*
*
*
*
■ 37. Section 155.510 is amended by
revising paragraph (a)(1) to read as
follows:
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§ 155.510
Appeals coordination.
(a) * * *
(1) Minimize burden on appellants,
including not asking the appellant to
provide duplicative information or
documentation that he or she already
provided to an agency administering an
insurance affordability program or
eligibility appeals process, unless the
appeals entity, Exchange, or agency
does not have access to the information
or documentation and cannot
reasonably obtain it, and such
information is necessary to properly
adjudicate an appeal;
*
*
*
*
*
■ 38. Section 155.520 is amended by
adding paragraph (d)(2)(i)(D) to read as
follows:
§ 155.520
Appeal requests.
*
*
*
*
*
(d) * * *
(2) * * *
(i) * * *
(D) That, in the event the appeal
request is not valid due to failure to
submit by the date determined under
paragraph (b) or (c) of this section, as
applicable, the appeal request may be
considered valid if the applicant or
enrollee sufficiently demonstrates
within a reasonable timeframe
determined by the appeals entity that
failure to timely submit was due to
exceptional circumstances and should
not preclude the appeal.
*
*
*
*
*
■ 39. Section 155.530 is amended by
revising paragraph (a)(4) to read as
follows:
§ 155.530
Dismissals.
(a) * * *
(4) Dies while the appeal is pending,
except if the executor, administrator, or
other duly authorized representative of
the estate requests to continue the
appeal.
*
*
*
*
*
■ 40. Section 155.535 is amended by
revising paragraphs (a) introductory text
and (b) to read as follows:
§ 155.535 Informal resolution and hearing
requirements.
(a) Informal resolution. The HHS
appeals process will provide an
opportunity for informal resolution and
a hearing in accordance with the
requirements of this section. A State
Exchange appeals entity may also
provide an informal resolution process
prior to a hearing. Any information
resolution process must meet the
following requirements:
*
*
*
*
*
(b) Notice of hearing. When a hearing
is scheduled, the appeals entity must
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send written notice to the appellant and
the appellant’s authorized
representative, if any, of the date, time,
and location or format of the hearing no
later than 15 days prior to the hearing
date unless—
(1) The appellant requests an earlier
hearing date; or
(2) A hearing date sooner than 15 days
is necessary to process an expedited
appeal, as described in § 155.540(a), and
the appeals entity has contacted the
appellant to schedule a hearing on a
mutually agreed upon date, time, and
location or format.
*
*
*
*
*
■ 41. Section 155.545 is amended by
revising paragraphs (b)(1) and (c)(1)(i)
and (ii) to read as follows:
§ 155.545
Appeal decisions.
*
*
*
*
*
(b) * * *
(1) Must issue written notice of the
appeal decision to the appellant within
90 days of the date an appeal request
under § 155.520(b) or (c) is received, as
administratively feasible.
*
*
*
*
*
(c) * * *
(1) * * *
(i) Prospectively, on the first day of
the month following the date of the
notice of appeal decision, or consistent
with § 155.330(f)(2), (3), (4), or (5), if
applicable; or
(ii) Retroactively, to the coverage
effective date the appellant did receive
or would have received if the appellant
had enrolled in coverage under the
incorrect eligibility determination that
is the subject of the appeal, at the option
of the appellant.
*
*
*
*
*
■ 42. Section 155.555 is amended by
revising paragraphs (e)(1) introductory
text and (l) to read as follows:
§ 155.555
Employer appeals process.
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*
*
*
*
*
(e) * * *
(1) Upon receipt of a valid appeal
request under this section, or upon
receipt of the notice under paragraph
(d)(1)(iii) of this section, the Exchange
must promptly transmit via secure
electronic interface to the appeals
entity—
*
*
*
*
*
(l) Implementation of the appeal
decision. After receipt of the notice
under paragraph (k)(3) of this section, if
the appeal decision affects the
employee’s eligibility, the Exchange
must promptly:
(1) Redetermine the employee’s
eligibility and the eligibility of the
employee’s household members, if
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17:57 Mar 07, 2016
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applicable, in accordance with the
standards specified in § 155.305; or
(2) Notify the employee of the
requirement to report changes in
eligibility as described in
§ 155.330(b)(1).
*
*
*
*
*
■ 43. Section 155.605 is amended by—
■ a. In paragraph (b), removing the
reference ‘‘paragraphs (c)(2), (f)(2), and
(g) of this section’’ and adding in its
place the reference ‘‘paragraphs (c)(2)
and (d) of this section’’;
■ b. Removing paragraphs (d), (e), and
(f);
■ c. Redesignating paragraph (g) as
paragraph (d);
■ d. Revising newly redesignated
paragraph (d); and
■ e. Adding paragraph (e).
The revision and addition read as
follows:
§ 155.605 Eligibility standards for
exemptions.
*
*
*
*
*
(d) Hardship—(1) General. The
Exchange must grant a hardship
exemption to an applicant eligible for an
exemption for at least the month before,
the month or months during which, and
the month after a specific event or
circumstance, if the Exchange
determines that:
(i) He or she experienced financial or
domestic circumstances, including an
unexpected natural or human-caused
event, such that he or she had a
significant, unexpected increase in
essential expenses that prevented him
or her from obtaining coverage under a
qualified health plan;
(ii) The expense of purchasing a
qualified health plan would have
caused him or her to experience serious
deprivation of food, shelter, clothing or
other necessities; or
(iii) He or she has experienced other
circumstances that prevented him or her
from obtaining coverage under a
qualified health plan.
(2) Lack of affordable coverage based
on projected income. The Exchange
must determine an applicant eligible for
an exemption for a month or months
during which he or she, or another
individual the applicant attests will be
included in the applicant’s family, as
defined in 26 CFR 1.36B–1(d), is unable
to afford coverage in accordance with
the standards specified in section
5000A(e)(1) of the Code, provided that—
(i) Eligibility for this exemption is
based on projected annual household
income;
(ii) An eligible employer-sponsored
plan is only considered under
paragraphs (d)(4)(iii) and (iv) of this
section if it meets the minimum value
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standard described in § 156.145 of this
subchapter.
(iii) For an individual who is eligible
to purchase coverage under an eligible
employer-sponsored plan, the Exchange
determines the required contribution for
coverage such that—
(A) An individual who uses tobacco is
treated as not earning any premium
incentive related to participation in a
wellness program designed to prevent or
reduce tobacco use that is offered by an
eligible employer-sponsored plan;
(B) Wellness incentives offered by an
eligible employer-sponsored plan that
do not relate to tobacco use are treated
as not earned;
(C) In the case of an employee who is
eligible to purchase coverage under an
eligible employer-sponsored plan
sponsored by the employee’s employer,
the required contribution is the portion
of the annual premium that the
employee would pay (whether through
salary reduction or otherwise) for the
lowest cost self-only coverage.
(D) In the case of an individual who
is eligible to purchase coverage under
an eligible employer-sponsored plan as
a member of the employee’s family, as
defined in 26 CFR 1.36B–1(d), the
required contribution is the portion of
the annual premium that the employee
would pay (whether through salary
reduction or otherwise) for the lowest
cost family coverage that would cover
the employee and all other individuals
who are included in the employee’s
family who have not otherwise been
granted an exemption through the
Exchange.
(iv) For an individual who is
ineligible to purchase coverage under an
eligible employer-sponsored plan, the
Exchange determines the required
contribution for coverage in accordance
with section 5000A(e)(1)(B)(ii) of the
Code, inclusive of all members of the
family, as defined in 26 CFR 1.36B–1(d),
who have not otherwise been granted an
exemption through the Exchange and
who are not treated as eligible to
purchase coverage under an eligible
employer-sponsored plan, in accordance
with paragraph (d)(4)(ii) of this section;
and
(v) The applicant applies for this
exemption prior to the last date on
which he or she could enroll in a QHP
through the Exchange for the month or
months of a calendar year for which the
exemption is requested.
(vi) The Exchange must make an
exemption in this category available
prospectively, and provide it for all
remaining months in a coverage year,
notwithstanding any change in an
individual’s circumstances.
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(3) Ineligible for Medicaid based on a
State’s decision not to expand. The
Exchange must determine an applicant
eligible for an exemption for a calendar
year if he or she would be determined
ineligible for Medicaid for one or more
months during the benefit year solely as
a result of a State not implementing
section 2001(a) of the Affordable Care
Act.
(e) Eligibility for an exemption
through the IRS. Hardship exemptions
in this paragraph (e) can be claimed on
a Federal income tax return without
obtaining an exemption certificate
number. The IRS may allow an
individual to claim the hardship
exemptions described in this paragraph
(e) without requiring an exemption
certificate number from the Exchange.
(1) Filing threshold. The IRS may
allow an applicant to claim an
exemption specified in HHS Guidance
published September 18, 2014, entitled,
‘‘Shared Responsibility Guidance—
Filing Threshold Hardship Exemption,’’
and in IRS Notice 2014–76, section B
(see https://www.cms.gov/cciio/).
(2) Self-only coverage in an eligible
employer-sponsored plan. The IRS may
allow an applicant to claim an
exemption specified in HHS Guidance
published November 21, 2014, entitled,
‘‘Guidance on Hardship Exemptions for
Persons Meeting Certain Criteria,’’ and
in IRS Notice 2014–76, section A (see
https://www.cms.gov/cciio/).
(3) Eligible for services through an
Indian health care provider. The IRS
may allow an applicant to claim the
exemption specified in HHS Guidance
published September 18, 2014, entitled,
‘‘Shared Responsibility Guidance—
Exemption for Individuals Eligible for
Services through an Indian Health Care
Provider,’’ and in IRS Notice 2014–76,
section E (see https://www.cms.gov/
cciio/).
(4) Ineligible for Medicaid based on a
State’s decision not to expand. The IRS
may allow an applicant to claim the
exemption specified in HHS Guidance
published November 21, 2014, entitled,
‘‘Guidance on Hardship Exemptions for
Persons Meeting Certain Criteria,’’ and
in IRS Notice 2014–76, section F (see
https://www.cms.gov/cciio/).
■ 44. Section 155.610 is amended by
revising paragraph (h)(1) and adding
paragraph (k) to read as follows:
§ 155.610 Eligibility process for
exemptions.
*
*
*
*
*
(h) * * *
(1) Except for the exemptions
described in § 155.605(c) and (d), after
December 31 of a given calendar year,
the Exchange may decline to accept an
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application for an exemption that is
available retrospectively for months for
such calendar year, and must provide
information to individuals regarding
how to claim an exemption through the
tax filing process.
*
*
*
*
*
(k) Incomplete application. (1) If an
applicant submits an application that
does not include sufficient information
for the Exchange to conduct a
determination for eligibility of an
exemption the Exchange must—
(i) Provide notice to the applicant
indicating that information necessary to
complete an eligibility determination is
missing, specifying the missing
information, and providing instructions
on how to provide the missing
information; and
(ii) Provide the applicant with a
period of no less than 30 and no more
than 90 days, in the reasonable
discretion of the Exchange, from the
date on which the notice described in
paragraph (k)(1) of this section is sent to
the applicant to provide the information
needed to complete the application to
the Exchange; and
(iii) Not proceed with the applicant’s
eligibility determination during the
period described in paragraph (k)(2) of
this section.
(2) If the Exchange does not receive
the requested information within the
time allotted in paragraph (k)(1)(ii) of
this section, the Exchange must notify
the applicant in writing that the
Exchange cannot process the
application and provide appeal rights to
the applicant.
■ 45. Section 155.615 is amended by—
■ a. Removing paragraphs (c), (d), and
(e).
■ b. Redesignating paragraphs (f), (g),
(h), (i), (j), and (k) as paragraphs (c), (d),
(e), (f), (g), and (h), respectively.
■ c. Revising the paragraph heading for
newly redesignated paragraph (c) and
paragraph (c)(1).
■ d. Removing and reserving newly
redesignated paragraph (c)(3).
The revision and addition read as
follows:
§ 155.615 Verification process related to
eligibility for exemptions.
*
*
*
*
*
(c) Verification related to exemption
for hardship—(1) In general. For any
applicant who requests an exemption
based on hardship, except for the
hardship exemptions described in
§ 155.605(d)(1)(i) and (iv), the Exchange
must verify whether he or she has
experienced the hardship to which he or
she is attesting.
*
*
*
*
*
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46. Section 155.625 is amended by
revising paragraphs (a)(2) and (b) and
adding paragraph (c) to read as follows:
■
§ 155.625 Options for conducting eligibility
determinations for exemptions.
(a) * * *
(2) By use of the HHS service under
paragraph (b) of this section.
(b) Use of HHS service.
Notwithstanding the requirements of
this subpart, the Exchange may adopt an
exemption eligibility determination
made by HHS.
(c) Administration of hardship
exemption based on affordability. States
may choose to administer the hardship
exemption under § 155.605(d)(2) only
and delegate to HHS all other exemption
determinations generally administered
by HHS.
■ 47. Section 155.705 is amended by—
■ a. Adding paragraphs (b)(3)(viii), (ix),
and (x).
■ b. In paragraph (b)(4)(ii)(B), removing
the semicolon and adding a colon in its
place.
■ c. Adding paragraphs (b)(4)(ii)(B)(1)
and (2).
■ d. Revising paragraphs (b)(4)(ii)(C)(2)
and (b)(11)(ii)(A), (B), (C), and (D).
■ e. Removing paragraph (b)(11)(ii)(E).
The revisions and additions read as
follows:
§ 155.705
Functions of a SHOP.
*
*
*
*
*
(b) * * *
(3) * * *
(viii) For plan years beginning on or
after January 1, 2017, a Federallyfacilitated SHOP will provide a
qualified employer a choice of at least
the two methods to make QHPs
available to qualified employees and
their dependents described in
paragraphs (b)(3)(viii)(A) and (B) of this
section, and may also provide a
qualified employer with a choice of a
third method to make QHPs available to
qualified employees and their
dependents as described in paragraph
(b)(3)(viii)(C) of this section.
(A) The employer may choose a level
of coverage as described in paragraph
(b)(2) of this section;
(B) The employer may choose a single
QHP; or
(C) The employer may offer its
qualified employees a choice of all
QHPs offered through a Federallyfacilitated SHOP by a single issuer
across all available levels of coverage, as
described in section 1302(d)(1) of the
Affordable Care Act and implemented
in § 156.140(b) of this subchapter. A
State with a Federally-facilitated SHOP
may recommend that the Federallyfacilitated SHOP not make this
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additional option available in that State,
by submitting a letter to HHS in advance
of the annual QHP certification
application deadline, by a date to be
established by HHS. The State’s letter
must describe and justify the State’s
recommendation, based on the
anticipated impact this additional
option would have on the small group
market and consumers.
(ix) For plan years beginning on or
after January 1, 2017, a Federallyfacilitated SHOP will provide a
qualified employer a choice of at least
the two methods to make stand-alone
dental plans available to qualified
employees and their dependents
described in paragraphs (b)(3)(ix)(A)
and (B) of this section, and may also
provide a qualified employer with a
choice of a third method to make standalone dental plans available to qualified
employees and their dependents as
described in paragraph (b)(3)(ix)(C) of
this section.
(A) The employer may choose to make
available a single stand-alone dental
plan;
(B) The employer may choose to make
available all stand-alone dental plans
offered through a Federally-facilitated
SHOP at a level of coverage as described
in § 156.150(b)(2) of this subchapter; or
(C) The employer may offer its
qualified employees a choice of all
stand-alone dental plans offered through
a Federally-facilitated SHOP by a single
issuer across all available levels of
coverage, as described in § 156.150(b)(2)
of this subchapter. A State with a
Federally-facilitated SHOP may
recommend that the Federallyfacilitated SHOP not make this
additional option available in that State,
by submitting a letter to HHS in advance
of the annual QHP certification
application deadline, by a date to be
established by HHS. The State’s letter
must describe and justify the State’s
recommendation, based on the
anticipated impact this additional
option would have on the small group
market and consumers.
(x) States operating a State-based
Exchange utilizing the Federal platform
for SHOP enrollment functions will
have the same employer choice models
available as States with a Federallyfacilitated SHOP, except that a State
with a State-based Exchange utilizing
the Federal platform for SHOP
enrollment functions may decide
against offering the employer choice
models specified in paragraphs
(b)(3)(viii)(C) and (b)(3)(ix)(C) of this
section in that State, provided that the
State notifies HHS of that decision in
advance of the annual QHP certification
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application deadline, by a date to be
established by HHS.
(4) * * *
(ii) * * *
(B) * * *
(1) In a Federally-facilitated SHOP,
payment for the group’s first month of
coverage must be received by the
premium aggregation services vendor on
or before the 20th day of the month
prior to the month that coverage begins.
(2) In a Federally-facilitated SHOP,
when coverage is effectuated
retroactively, payment for the first
month’s coverage and all months of the
retroactive coverage must be received
and processed no later than 30 days
after the event that triggers the
eligibility for retroactive coverage. If
payment is received on or before the
20th day of a month, coverage will be
effectuated upon the first day of the
following month retroactive to the
effective date of coverage. If payment is
received after the 20th day of a month,
coverage will be effectuated upon the
first day of the second following month
retroactive to the effective date of
coverage, provided that the payment
includes the premium for the
intervening month.
(C) * * *
(2) The number of days for which
coverage is being provided in the month
described in paragraph (b)(4)(ii)(C)(1) of
this section.
*
*
*
*
*
(11) * * *
(ii) * * *
(A) When the employer offers a single
plan to qualified employees, the
employer must use a fixed contribution
methodology under which the employer
contributes a fixed percentage of the
plan’s premium for each qualified
employee and, if applicable, for each
dependent of a qualified employee. The
employer’s contribution is calculated
based on an enrollee’s premium before
any applicable tobacco surcharge, based
on the total premium owed for the
enrollee, is applied.
(B) When the employer offers a choice
of plans to qualified employees, the
employer may use a fixed contribution
methodology or a reference plan
contribution methodology. Under the
fixed contribution methodology, the
employer contributes a fixed percentage
of the premiums for each qualified
employee and, if applicable, for each
dependent of a qualified employee,
across all plans in which any qualified
employee, and, if applicable, any
dependent of a qualified employee, is
enrolled. Under the reference plan
contribution methodology, the employer
will select a plan from among the plans
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12347
offered by the employer as described in
paragraphs (b)(2) and (3) of this section
to serve as a reference plan on which
contributions will be based, and then
will define a percentage contribution
toward premiums under the reference
plan; the resulting contribution amounts
under the reference plan will be applied
toward any plan in which a qualified
employee or, if applicable, any
dependent of a qualified employee, is
enrolled, up to the lesser of the
contribution amount or the total amount
of any premium for the selected plan
before application of a tobacco
surcharge, if applicable. The employer’s
contribution is calculated based on an
enrollee’s premium before any
applicable tobacco surcharge, based on
the total premium owed for the enrollee,
is applied.
(C) The employer will define a
percentage contribution toward
premiums for employee-only coverage
and, if dependent coverage is offered, a
percentage contribution toward
premiums for dependent coverage. To
the extent permitted by other applicable
law, for plan years beginning on or after
January 1, 2015, a Federally-facilitated
SHOP may permit an employer to define
a different percentage contribution for
full-time employees from the percentage
contribution it defines for non-full-time
employees, and it may permit an
employer to define a different
percentage contribution for dependent
coverage for full-time employees from
the percentage contribution it defines
for dependent coverage for non-full-time
employees.
(D) A Federally-facilitated SHOP may
permit employers to base contributions
on a calculated composite premium for
employees, for adult dependents, and
for dependents below age 21.
*
*
*
*
*
■ 48. Section 155.715 is amended by
revising paragraph (g)(1) to read as
follows:
§ 155.715 Eligibility determination process
for SHOP.
*
*
*
*
*
(g) * * *
(1) Each QHP terminates the
enrollment through the SHOP of the
employer’s enrollees enrolled in a QHP
through the SHOP; and
*
*
*
*
*
■ 49. Section 155.725 is amended by
revising paragraphs (c), (e), (h)(2), (i)(1)
introductory text, and (j)(2)(i) to read as
follows:
§ 155.725
Enrollment periods under SHOP.
*
*
*
*
*
(c) Annual employer election period.
The SHOP must provide qualified
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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—
(1) The method by which the
qualified employer makes QHPs
available to qualified employees
pursuant to § 155.705(b)(2) and (3);
(2) The employer contribution
towards the premium cost of coverage;
(3) The level of coverage offered to
qualified employees as described in
§ 155.705(b)(2) and (3); and
(4) The QHP or QHPs offered to
qualified employees in accordance with
§ 155.705.
*
*
*
*
*
(e) Annual employee open enrollment
period. (1) 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.
(2) Qualified employers in a
Federally-facilitated SHOP must
provide qualified employees with an
annual open enrollment period of at
least one week.
*
*
*
*
*
(h) * * *
(2) For a group enrollment received by
the Federally-facilitated SHOP from a
qualified employer at the time of an
initial group enrollment or renewal:
(i) Between the first and fifteenth day
of any month, the Federally-facilitated
SHOP must ensure a coverage effective
date of the first day of the following
month unless the employer opts for a
later effective date within a quarter for
which small group market rates are
available.
(ii) Between the 16th and last day of
any month, the Federally-facilitated
SHOP must ensure a coverage effective
date of the first day of the second
following month unless the employer
opts for a later effective date within a
quarter for which small group market
rates are available.
(i) * * *
(1) If a qualified employee enrolled in
a QHP through the SHOP remains
eligible for enrollment through the
SHOP in coverage offered by the same
qualified employer, the SHOP may
provide for a process under which the
employee will remain in the QHP
selected the previous year, unless—
*
*
*
*
*
(j) * * *
(2) * * *
(i) Experiences an event described in
§ 155.420(d)(1) (other than paragraph
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(d)(1)(ii)), or experiences an event
described in § 155.420(d)(2), (4), (5), (7),
(8), or (9);
*
*
*
*
*
■ 50. Section 155.735 is amended by
revising paragraph (c)(2) introductory
text and paragraph (d)(2) to read as
follows:
§ 155.735 Termination of SHOP enrollment
or coverage.
*
*
*
*
*
(c) * * *
(2) In an FF–SHOP, for premium
payments other than payments for the
first month of coverage—
*
*
*
*
*
(d) * * *
(2) In the FF–SHOP, termination is
effective:
(i) In the case of a termination in
accordance with paragraphs (d)(1)(i),
(ii), (iii), and (v) of this section,
termination is effective on the last day
of the month in which the Federallyfacilitated SHOP receives notice of the
event described in paragraph (d)(1)(i),
(ii), (iii), or (v) of this section.
(ii) In the case of a termination in
accordance with paragraph (d)(1)(iv) 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 for any
retroactive enrollments effectuated
under § 155.725(j)(5).
(iii) The FF–SHOP will send qualified
employees a notice notifying them in
advance of a child dependent’s loss of
eligibility for dependent child coverage
under their plan because of age. The
notice will be sent 90 days in advance
of the date when the dependent enrollee
would lose eligibility for dependent
child coverage. The enrollee will also
receive a separate termination notice
when coverage is terminated, under
§ 155.735(g).
*
*
*
*
*
■ 51. Section 155.740 is amended by
revising paragraphs (c)(2), (d)(2), and
(l)(3) to read as follows:
§ 155.740 SHOP employer and employee
eligibility appeals requirements.
*
*
*
*
*
(c) * * *
(2) A failure by the SHOP to provide
a timely eligibility determination or a
timely notice of an eligibility
determination in accordance with
§ 155.715(e).
(d) * * *
(2) A failure by the SHOP to provide
a timely eligibility determination or a
timely notice of an eligibility
determination in accordance with
§ 155.715(f).
*
*
*
*
*
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(l) * * *
(3) Be effective as follows:
(i) If an employer is found eligible
under the decision, then at the
employer’s option, the effective date of
coverage or enrollment through the
SHOP under the decision can either be
made retroactive to the effective date of
coverage or enrollment through the
SHOP that the employer would have
had if the employer had been correctly
determined eligible, or prospective to
the first day of the month following the
date of the notice of the appeal decision.
(ii) For employee appeal decisions
only, if an employee is found eligible
under the decision, then at the
employee’s option, the effective date of
coverage or enrollment through the
SHOP under the decision can either be
made effective retroactive to the
effective date of coverage or enrollment
through the SHOP that the employee
would have had if the employee had
been correctly determined eligible, or
prospective to the first day of the month
following the date of the notice of the
appeal decision.
(iii) If the employer or employee is
found ineligible under the decision,
then the appeal decision is effective as
of the date of the notice of the appeal
decision.
*
*
*
*
*
PART 156—HEALTH INSURANCE
ISSUER STANDARDS UNDER THE
AFFORDABLE CARE ACT, INCLUDING
STANDARDS RELATED TO
EXCHANGES
52. 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).
53. Section 156.50 amended by
revising paragraph (c) to read as follows:
■
§ 156.50
Financial support.
*
*
*
*
*
(c) Requirement for Federallyfacilitated Exchange user fee. (1) To
support the functions of Federallyfacilitated Exchanges, a participating
issuer offering a plan through a
Federally-facilitated Exchange must
remit a user fee to HHS each month, in
the timeframe and manner established
by HHS, equal to the product of the
monthly user fee rate specified in the
annual HHS notice of benefit and
payment parameters for Federallyfacilitated Exchanges for the applicable
benefit year and the monthly premium
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charged by the issuer for each policy
under the plan where enrollment is
through a Federally-facilitated
Exchange.
(2) To support the functions of Statebased Exchanges on the Federal
platform, unless the State-based
Exchange and HHS agree on an
alternative mechanism to collect the
funds, a participating issuer offering a
plan through a State-based Exchange
that elects to utilize the Federal
Exchange platform for certain Exchange
functions described in § 155.200 of this
subchapter, as specified in a Federal
platform agreement, must remit a user
fee to HHS, in the timeframe and
manner established by HHS, equal to
the product of the sum of the monthly
user fee rate specified in the annual
HHS notice of benefit and payment
parameters for State-based Exchanges
that use the Federal platform for the
applicable benefit year plus, if a written
request is made by a State, any
additional user fee rate that HHS will
collect on behalf of the State-based
Exchange, multiplied by the monthly
premium charged by the issuer for each
policy under the plan where enrollment
is through the State-based Exchange on
the Federal platform.
*
*
*
*
*
■
54. Section 156.80 is amended by
revising paragraph (d)(3)(ii) to read as
follows:
*
■
§ 156.80
Single risk pool.
*
*
*
*
*
(d) * * *
(3) * * *
(ii) A health insurance issuer in the
small group market (not including a
merged market) may establish index
rates and make the marketwide
adjustments under paragraph (d)(1) of
this section, and make the plan-level
adjustments under paragraph (d)(2) of
this section, no more frequently than
quarterly. Any changes to rates must
have effective dates of January 1, April
1, July 1, or October 1. Such rates may
only apply to coverage issued or
renewed on or after the rate effective
date and will apply for the entire plan
year of the group health plan.
*
*
*
*
*
55. Section 156.115 is amended by
revising paragraph (a)(5) introductory
text to read as follows:
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■
§ 156.115
Provision of EHB.
(a) * * *
(5) With respect to habilitative
services and devices—
*
*
*
*
*
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56. Section 156.122 is amended by
adding paragraph (c)(4) to read as
follows:
§ 156.122
Prescription drug benefit.
*
*
*
*
*
(c) * * *
(4) Application of coverage appeals
laws. (i) A State may determine that a
health plan in the State satisfies the
requirements of this paragraph (c) if the
health plan has a process to allow an
enrollee to request and gain access to
clinically appropriate drugs not
otherwise covered by the health plan
that is compliant with the State’s
applicable coverage appeals laws and
regulations that are at least as stringent
as the requirements of this paragraph (c)
and include:
(A) An internal review;
(B) An external review;
(C) The ability to expedite the
reviews; and
(D) Timeframes that are the same or
shorter than the timeframes under
paragraphs (c)(1)(ii) and (c)(2)(iii) of this
section.
*
*
*
*
*
■ 57. Section 156.135 is amended by
revising paragraph (g) to read as follows:
§ 156.135 AV calculation for determining
level of coverage.
*
*
*
*
(g) Updates to the AV Calculator.
HHS will update the AV Calculator
annually for material changes that may
include costs, plan designs, the standard
population, developments in the
function and operation of the AV
Calculator and other actuarially relevant
factors.
■ 58. Section 156.150 is amended by
adding paragraphs (a)(1) and (2), (c), and
(d) to read as follows:
§ 156.150 Application to stand-alone
dental plans inside the Exchange.
(a) * * *
(1) For plan years beginning after
2017, for one covered child—the dollar
limit applicable to a stand-alone dental
plan for one covered child specified in
this paragraph (a) increased by the
percent increase of the consumer price
index for dental services for the year 2
years prior to the applicable plan year
over the consumer price index for
dental services for 2016.
(2) For plan years after 2017, for two
or more covered children—twice the
dollar limit for one child described in
paragraph (a)(1) of this section.
*
*
*
*
*
(c) Consumer price index for dental
services defined. The consumer price
index for dental services is a subcomponent of the U.S. Department of
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12349
Labor’s Bureau of Labor Statistics
Consumer Price Index specific to dental
services.
(d) Increments of cost sharing
increases. Any increase in the annual
dollar limits described in paragraph
(a)(1) of this section that does not result
in a multiple of 25 dollars will be
rounded down, to the next lowest
multiple of 25 dollars.
■ 59. Section 156.230 is amended by
adding paragraphs (d) and (e) to read as
follows:
§ 156.230
Network adequacy standards.
*
*
*
*
*
(d) Provider transitions. A QHP issuer
in a Federally-facilitated Exchange
must—
(1) Make a good faith effort to provide
written notice of discontinuation of a
provider 30 days prior to the effective
date of the change or otherwise as soon
as practicable, to enrollees who are
patients seen on a regular basis by the
provider or who receive primary care
from the provider whose contract is
being discontinued, irrespective of
whether the contract is being
discontinued due to a termination for
cause or without cause, or due to a nonrenewal;
(2) In cases where a provider is
terminated without cause, allow an
enrollee in an active course of treatment
to continue treatment until the
treatment is complete or for 90 days,
whichever is shorter, at in-network costsharing rates.
(i) For the purposes of paragraph
(d)(2) of this section, active course of
treatment means:
(A) An ongoing course of treatment
for a life-threatening condition, defined
as a disease or condition for which
likelihood of death is probable unless
the course of the disease or condition is
interrupted;
(B) An ongoing course of treatment for
a serious acute condition, defined as a
disease or condition requiring complex
ongoing care which the covered person
is currently receiving, such as
chemotherapy, radiation therapy, or
post-operative visits;
(C) The second or third trimester of
pregnancy, through the postpartum
period; or
(D) An ongoing course of treatment for
a health condition for which a treating
physician or health care provider attests
that discontinuing care by that
physician or health care provider would
worsen the condition or interfere with
anticipated outcomes.
(ii) Any QHP issuer decision made for
a request for continuity of care under
paragraph (d)(2) of this section must be
subject to the health benefit plan’s
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internal and external grievance and
appeal processes in accordance with
applicable State or Federal law or
regulations.
(e) Out-of-network cost sharing.
Beginning for the 2018 and later benefit
years, for a network to be deemed
adequate, each QHP that uses a provider
network must:
(1) Notwithstanding § 156.130(c),
count the cost sharing paid by an
enrollee for an essential health benefit
provided by an out-of-network ancillary
provider in an in-network setting
towards the enrollee’s annual limitation
on cost sharing; or
(2) Provide a written notice to the
enrollee by the longer of when the
issuer would typically respond to a
prior authorization request timely
submitted, or 48 hours before the
provision of the benefit, that additional
costs may be incurred for an essential
health benefit provided by an out-ofnetwork ancillary provider in an innetwork setting, including balance
billing charges, unless such costs are
prohibited under State law, and that any
additional charges may not count
toward the in-network annual limitation
on cost sharing.
■ 60. Section 156.235 is amended by
revising paragraphs (a)(2)(i) and (b)(2)(i)
to read as follows:
asabaliauskas on DSK3SPTVN1PROD with RULES
§ 156.235
Essential community providers.
(a) * * *
(2) * * *
(i) The network includes as
participating practitioners at least a
minimum percentage, as specified by
HHS, of available essential community
providers in each plan’s service area.
For plan years beginning prior to
January 1, 2018, multiple providers at a
single location will count as a single
essential community provider toward
both the available essential community
providers in the plan’s service area and
the issuer’s satisfaction of the essential
community provider participation
standard. For plan years beginning on or
after January 1, 2018, multiple
contracted or employed full-time
equivalent practitioners at a single
location will count toward both the
available essential community providers
in the plan’s service area and the
issuer’s satisfaction of the essential
community provider participation
standard; and
*
*
*
*
*
(b) * * *
(2) * * *
(i) The number of its providers that
are located in Health Professional
Shortage Areas or five-digit zip codes in
which 30 percent or more of the
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population falls below 200 percent of
the Federal Poverty Line satisfies a
minimum percentage, specified by HHS,
of available essential community
provider in the plan’s service area. For
plan years beginning prior to January 1,
2018, multiple providers at a single
location will count as a single essential
community provider toward both the
available essential community providers
in the plan’s service area and the
issuer’s satisfaction of the essential
community provider participation
standard. For plan years beginning on or
after January 1, 2018, multiple
contracted or employed full-time
equivalent practitioners at a single
location will count toward both the
available essential community providers
in the plan’s service area and the
satisfaction of the essential community
provider participation standard; and
*
*
*
*
*
■ 61. Section 156.265 is amended by
revising paragraph (b)(2)(ii) and adding
paragraphs (b)(3) through (5) to read as
follows:
§ 156.265 Enrollment process for qualified
individuals.
*
*
*
*
*
(b) * * *
(2) * * *
(ii) Ensure the applicant’s completion
of an eligibility verification and
enrollment application through the
Exchange Internet Web site as described
in § 155.405, or ensure that the
eligibility application information is
submitted for an eligibility
determination through the Exchangeapproved Web service subject to
meeting the requirements in paragraph
(b)(3) through (5) of this section;
(3) When an Internet Web site of an
issuer is used to complete the Exchange
eligibility application outlined in this
section, at a minimum, the Internet Web
site must:
(i) Use exactly the same eligibility
application language as appears in the
FFE Single Streamlined Application
required in § 155.405 of this subchapter,
unless HHS approves a deviation;
(ii) Ensure that all necessary
information for the consumer’s
applicable eligibility circumstances are
submitted through the Exchangeapproved Web service; and
(iii) Ensure that the process used for
consumers to complete the eligibility
application complies with all applicable
Exchange standards, including
§§ 155.230 and 155.260(b) of this
subchapter.
(4) An issuer must obtain HHS
approval that the requirements of this
section have been met prior to
completing an applicant’s eligibility
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application through the issuer’s Internet
Web site.
(5) HHS or its designee may
periodically monitor and audit an agent,
broker, or issuer to assess its compliance
with the applicable requirements of this
section.
*
*
*
*
*
■ 62. Section 156.270 is amended by
revising paragraphs (d) introductory text
and (g) to read as follows:
§ 156.270 Termination of coverage or
enrollment for qualified individuals.
*
*
*
*
*
(d) Grace period for recipients of
advance payments of the premium tax
credit. A QHP issuer must provide a
grace period of 3 months for an enrollee,
who when failing to timely pay
premiums, is receiving advance
payments of the premium tax credit.
During the grace period, the QHP issuer
must:
*
*
*
*
*
(g) Exhaustion of grace period. If an
enrollee receiving advance payments of
the premium tax credit exhausts the 3month grace period in paragraph (d) of
this section without paying all
outstanding premiums, subject to a
premium payment threshold
implemented under § 155.400(g) of this
subchapter, if applicable, the QHP
issuer must terminate the enrollee’s
enrollment through the Exchange on the
effective date described in
§ 155.430(d)(4) of this subchapter,
provided that the QHP issuer meets the
notice requirement specified in
paragraph (b) of this section.
*
*
*
*
*
■ 63. Section 156.285 is amended by
revising paragraph (c)(5) and removing
and reserving paragraph (d)(2) to read as
follows:
§ 156.285
SHOP.
Additional standards specific to
*
*
*
*
*
(c) * * *
(5) Send enrollment reconciliation
files on at least a monthly basis, and, in
a Federally-facilitated SHOP, according
to a process, timeline, and file format
established by the Federally-facilitated
SHOP;
*
*
*
*
*
■ 64. Section 156.298 is amended by—
■ a. Revising paragraph (b)(4).
■ b. Removing paragraph (b)(5).
■ c. Redesignating paragraph (b)(6) as
paragraph (b)(5).
■ d. Revising newly redesignated
paragraph (b)(5).
The revisions read as follows:
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§ 156.298 Meaningful difference standard
for Qualified Health Plans in the Federallyfacilitated Exchanges.
*
*
*
*
*
(b) * * *
(4) Plan type; or
(5) Child-only versus non Child-only
plan offerings.
*
*
*
*
*
■ 65. The heading of subpart D is
revised to read as follows:
Subpart D—Standards for Qualified
Health Plan Issuers on FederallyFacilitated Exchanges and State-Based
Exchanges on the Federal Platform
66. Section 156.350 is added to read
as follows:
■
asabaliauskas on DSK3SPTVN1PROD with RULES
§ 156.350 Eligibility and enrollment
standards for Qualified Health Plan issuers
on State-based Exchanges on the Federal
platform.
(a) In order to participate in a Statebased Exchange on the Federal platform,
a QHP issuer must comply with HHS
regulations, and guidance pertaining to
issuer eligibility and enrollment
functions as if the issuer were an issuer
of a QHP on a Federally-facilitated
Exchange. These requirements
include—
(1) Section 156.285(a)(4)(ii) regarding
the premiums for plans offered on the
SHOP;
(2) Section 156.285(c)(8)(iii) regarding
enrollment process for SHOP; and
(3) Section 156.715 regarding
compliance reviews of QHP issuers, to
the extent relating directly to applicable
eligibility and enrollment functions.
(b) HHS will permit issuers of QHPs
in each State-based Exchange on the
Federal platform to directly enroll
applicants in a manner that is
considered to be through the Exchange,
as if the issuers were issuers of QHPs on
Federally-facilitated Exchanges under
§ 156.1230(a), to the extent permitted by
applicable State law.
(c) If the State-based Exchange on the
Federal platform does not substantially
enforce a requirement in paragraph (a)
of this section against the issuer or plan,
then HHS may do so, in accordance
with the enforcement remedies in
subpart I of this part, subject to the
administrative review process in
subpart J of this part.
■ 67. Section 156.805 is amended by
revising paragraph (d) to read as
follows:
§ 156.805 Bases and process for imposing
civil money penalties in Federally-facilitated
Exchanges.
*
*
*
*
*
(d) Request for hearing. (1) An issuer
may appeal the assessment of a civil
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money penalty under this section by
filing a request for hearing under an
applicable administrative hearing
process.
(2) If an issuer files a request for
hearing under this paragraph (d), the
assessment of a civil money penalty will
not occur prior to the issuance of the
final administrative decision in the
appeal.
*
*
*
*
*
■ 68. Section 156.810 is amended by
revising paragraphs (a)(12) and (13) and
(e) and adding paragraphs (a)(14) and
(15) to read as follows:
§ 156.810 Bases and process for
decertification of a QHP offered by an
issuer through a Federally-facilitated
Exchange.
(a) * * *
(12) The QHP issuer substantially fails
to meet the requirements related to the
cases forwarded to QHP issuers under
subpart K of this part;
(13) The QHP issuer substantially fails
to meet the requirements related to the
offering of a QHP under subpart M of
this part;
(14) The QHP issuer offering the QHP
is the subject of a pending, ongoing, or
final State regulatory or enforcement
action or determination that relates to
the issuer offering QHPs in the
Federally-facilitated Exchanges; or
(15) HHS reasonably believes that the
QHP issuer lacks the financial viability
to provide coverage under its QHPs
until the end of the plan year.
*
*
*
*
*
(e) Request for hearing. An issuer may
appeal the decertification of a QHP
offered by that issuer under paragraph
(c) or (d) of this section by filing a
request for hearing under an applicable
administrative hearing process.
(1) If an issuer files a request for
hearing under this paragraph (e):
(i) If the decertification is under
paragraph (b)(1) of this section, the
decertification will not take effect prior
to the issuance of the final
administrative decision in the appeal,
notwithstanding the effective date
specified in paragraph (b)(1) of this
section.
(ii) If the decertification is under
paragraph (b)(2) of this section, the
decertification will be effective on the
date specified in the notice of
decertification, but the certification of
the QHP may be reinstated immediately
upon issuance of a final administrative
decision that the QHP should not be
decertified.
(2) [Reserved]
■ 69. Section 156.1110 is amended by
revising paragraphs (a) and (b) and
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12351
removing paragraph (d) to read as
follows:
§ 156.1110 Establishment of patient safety
standards for QHP issuers.
(a) Patient safety standards. A QHP
issuer that contracts with a hospital
with greater than 50 beds must verify
that the hospital, as defined in section
1861(e) of the Act:
(1) For plan years beginning before
January 1, 2017, is Medicare-certified or
has been issued a Medicaid-only CMS
Certification Number (CCN) and is
subject to the Medicare Hospital
Conditions of Participation
requirements for—
(i) A quality assessment and
performance improvement program as
specified in 42 CFR 482.21; and
(ii) Discharge planning as specified in
42 CFR 482.43.
(2) For plan years beginning on or
after January 1, 2017—
(i)(A) Utilizes a patient safety
evaluation system as defined in 42 CFR
3.20; and
(B) Implements a mechanism for
comprehensive person-centered hospital
discharge to improve care coordination
and health care quality for each patient;
or
(ii) Implements an evidence-based
initiative, to improve health care quality
through the collection, management and
analysis of patient safety events that
reduces all cause preventable harm,
prevents hospital readmission, or
improves care coordination.
(3) A QHP issuer must ensure that
each of its QHPs meets the patient safety
standards in accordance with this
section.
(b) Documentation. A QHP issuer
must collect:
(1) For plan years beginning before
January 1, 2017, the CCN from each of
its contracted hospitals with greater
than 50 beds, to demonstrate that those
hospitals meet patient safety standards
required in paragraph (a)(1) of this
section; and
(2) For plan years beginning on or
after January 1, 2017, information, from
each of its contracted hospitals with
greater than 50 beds, to demonstrate that
those hospitals meet patient safety
standards required in paragraph (a)(2) of
this section.
*
*
*
*
*
■ 70. Section 156.1215 is amended by
revising paragraphs (b) and (c) to read
as follows:
§ 156.1215 Payment and collections
processes.
*
*
*
*
*
(b) Netting of payments and charges
for later years. As part of its payment
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Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules and Regulations
and collections process, HHS may net
payments owed to issuers and their
affiliates operating under the same tax
identification number against amounts
due to the Federal or State governments
from the issuers and their affiliates
under the same taxpayer identification
number for advance payments of the
premium tax credit, advance payments
of and reconciliation of cost-sharing
reductions, payment of Federallyfacilitated Exchange user fees, payment
of any fees for State-based Exchanges
utilizing the Federal platform, and risk
adjustment, reinsurance, and risk
corridors payments and charges.
(c) Determination of debt. Any
amount owed to the Federal government
by an issuer and its affiliates for
advance payments of the premium tax
credit, advance payments of and
reconciliation of cost-sharing
reductions, Federally-facilitated
Exchange user fees, including any fees
for State-based Exchanges utilizing the
Federal platform, risk adjustment,
reinsurance, and risk corridors, after
HHS nets amounts owed by the Federal
government under these programs, is a
determination of a debt.
■ 71. Section 156.1220 is amended by
revising paragraphs (a)(3) and (a)(4)(ii)
to read as follows:
§ 156.1220
Administrative appeals.
asabaliauskas on DSK3SPTVN1PROD with RULES
(a) * * *
(3) Time for filing a request for
reconsideration. The request for
reconsideration must be filed in
accordance with the following
timeframes:
(i) For advance payments of the
premium tax credit, advance payments
of cost-sharing reductions, Federallyfacilitated Exchange user fee charges, or
State-based Exchanges utilizing the
Federal platform fees, within 60
calendar days after the date of the final
reconsideration notification specifying
the aggregate amount of advance
payments of the premium tax credit,
advance payments of cost-sharing
reductions, Federally-facilitated
Exchange user fees, and State-based
Exchanges utilizing the Federal platform
fees for the applicable benefit year;
VerDate Sep<11>2014
17:57 Mar 07, 2016
Jkt 238001
(ii) For a risk adjustment payment or
charge, including an assessment of risk
adjustment user fees, within 30 calendar
days of the date of the notification
under § 153.310(e) of this subchapter;
(iii) For a reinsurance payment,
within 30 calendar days of the date of
the notification under § 153.240(b)(1)(ii)
of this subchapter;
(iv) For a default risk adjustment
charge, within 30 calendar days of the
date of the notification of the default
risk adjustment charge;
(v) For reconciliation of cost-sharing
reductions, within 60 calendar days of
the date of the notification of the costsharing reduction reconciliation
payment or charge; and
(vi) For a risk corridors payment or
charge, within 30 calendar days of the
date of the notification under
§ 153.510(d) of this subchapter.
(4) * * *
(ii) Notwithstanding paragraph (a)(1)
of this section, a reconsideration with
respect to a processing error by HHS,
HHS’s incorrect application of the
relevant methodology, or HHS’s
mathematical error may be requested
only if, to the extent the issue could
have been previously identified by the
issuer to HHS under § 153.710(d)(2) of
this subchapter, it was so identified and
remains unresolved.
*
*
*
*
*
■ 72. Section 156.1250 is revised to read
as follows:
§ 156.1250 Acceptance of certain third
party payments.
Issuers offering individual market
QHPs, including stand-alone dental
plans, and their downstream entities,
must accept premium and cost-sharing
payments for the QHPs from the
following third-party entities from plan
enrollees (in the case of a downstream
entity, to the extent the entity routinely
collects premiums or cost sharing):
(a) A Ryan White HIV/AIDS Program
under title XXVI of the Public Health
Service Act;
(b) An Indian tribe, tribal
organization, or urban Indian
organization; and
(c) A local, State, or Federal
government program, including a
PO 00000
Frm 00150
Fmt 4701
Sfmt 9990
grantee directed by a government
program to make payments on its behalf.
73. Section 156.1256 is added to read
as follows:
■
§ 156.1256
Other notices.
As directed by the FFE, a health
insurance issuer that is offering QHP
coverage through an FFE or an SBE–FP
must notify its enrollees of material plan
or benefit display errors and the
enrollees’ eligibility for a special
enrollment period, included in
§ 155.420(d)(4) of this subchapter,
within 30 calendar days after being
notified by the FFE that the error has
been fixed, if directed to do so by the
FFE.
PART 158—ISSUER USE OF PREMIUM
REVENUE: REPORTING AND REBATE
REQUIREMENTS
74. 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.
75. Section 158.103 is amended by
revising the definitions of ‘‘Large
Employer’’ and ‘‘Small Employer’’ to
read as follows:
■
§ 158.103
Definitions.
*
*
*
*
*
Large Employer has the meaning
given the term in § 144.103 of this
subchapter.
*
*
*
*
*
Small Employer has the meaning
given the term in § 144.103 of this
subchapter.
*
*
*
*
*
Dated: February 22, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Dated: February 23, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human
Services.
[FR Doc. 2016–04439 Filed 2–29–16; 4:15 pm]
BILLING CODE 4150–01–P
E:\FR\FM\08MRR2.SGM
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Agencies
[Federal Register Volume 81, Number 45 (Tuesday, March 8, 2016)]
[Rules and Regulations]
[Pages 12203-12352]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04439]
[[Page 12203]]
Vol. 81
Tuesday,
No. 45
March 8, 2016
Part II
Department of Health and Human Services
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45 CFR Parts 144, 147, 153, et al.
Patient Protection and Affordable Care Act; HHS Notice of Benefit and
Payment Parameters for 2017; Final Rule
Federal Register / Vol. 81, No. 45 / Tuesday, March 8, 2016 / Rules
and Regulations
[[Page 12204]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 144, 147, 153, 154, 155, 156, and 158
[CMS-9937-F]
RIN 0938-AS57
Patient Protection and Affordable Care Act; HHS Notice of Benefit
and Payment Parameters for 2017
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule sets forth payment parameters and provisions
related to the risk adjustment, reinsurance, and risk corridors
programs; cost-sharing parameters and cost-sharing reductions; and user
fees for Federally-facilitated Exchanges. It also provides additional
amendments regarding the annual open enrollment period for the
individual market for the 2017 and 2018 benefit years; essential health
benefits; cost sharing; qualified health plans; Exchange consumer
assistance programs; network adequacy; patient safety; the Small
Business Health Options Program; stand-alone dental plans; third-party
payments to qualified health plans; the definitions of large employer
and small employer; fair health insurance premiums; student health
insurance coverage; the rate review program; the medical loss ratio
program; eligibility and enrollment; exemptions and appeals; and other
related topics.
DATES: These regulations are effective on May 9, 2016.
FOR FURTHER INFORMATION CONTACT: Jeff Wu, (301) 492-4305, Krutika Amin,
(301) 492-5153, or Lindsey Murtagh (301) 492-4106, for general
information.
David Mlawsky, (410) 786-6851, for matters related to fair health
insurance premiums, student health insurance coverage, and the single
risk pool.
Kelly Drury, (410) 786-0558, for matters related to risk
adjustment.
Adrianne Glasgow, (410) 786-0686, for matters related to
reinsurance, distributed data collection, and administrative appeals of
financial transfers.
Melissa Jaffe, (301) 492-4129, for matters related to risk
corridors.
Lisa Cuozzo, (410) 786-1746, for matters related to rate review.
Jennifer Stolbach, (301) 492-4350, for matters related to
establishing a State Exchange, and State-based Exchanges on the Federal
Platform.
Emily Ames, (301) 492-4246, and Michelle Koltov, (301) 492-4225,
for matters related to Navigators, non-Navigator assistance personnel,
and certified application counselors under part 155.
Briana Levine, (301) 492-4247, for matters related to agents and
brokers.
Dana Krohn, (301) 492-4412, for matters related to employer
notification and verification.
Rachel Arguello, (301) 492-4263, for matters related to open
enrollment periods and special enrollment periods under part 155.
Anne Pesto, (410) 786-3492, for matters related to eligibility
determinations and appeals of eligibility determinations for Exchange
participation and insurance affordability programs, and eligibility
determinations for exemptions.
Kate Ficke, (301) 492-4256, for matters related to exemptions from
the shared responsibility payment.
Ryan Mooney, (301) 492-4405, for matters related to enrollment.
Terence Kane, (301) 492-4449, for matters related to the income
threshold.
Christelle Jang, (410) 786-8438, for matters related to the SHOP.
Krutika Amin, (301) 492-5153, for matters related to the Federally-
facilitated Exchange user fee.
Leigha Basini, (301) 492-4380, for matters related to essential
health benefits, network adequacy, essential community providers, and
other standards for QHP issuers.
Ielnaz Kashefipour, (301) 492-4376, for matters related to
standardized options and third party payment of premiums and cost
sharing.
Rebecca Zimmermann, (301) 492-4396, for matters related to stand-
alone dental plans.
Cindy Chiou, (301) 492-5142, for matters related to QHP issuer
oversight.
Pat Meisol, (410) 786-1917, for matters related to cost-sharing
reductions and the premium adjustment percentage.
Nidhi Singh Shah, (301) 492-5110, for matters related to patient
safety standards.
Christina Whitefield, (301) 492-4172, for matters related to the
medical loss ratio program.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Stakeholder Consultation and Input
C. Structure of Final Rule
III. Provisions of the Final Regulations and Analyses and Responses
to Public Comments
A. Part 144--Requirements Relating to Health Insurance Coverage
B. Part 146--Requirements for the Group Health Insurance Market
C. Part 147--Health Insurance Reform Requirements for the Group and
Individual Health Insurance Markets
D. Part 153--Standards Related to Reinsurance, Risk Corridors, and
Risk Adjustment under the Affordable Care Act
E. Part 154--Health Insurance Issuer Rate Increases: Disclosure and
Review Requirements
F. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
G. Part 156--Health Insurance Issuer Standards Under the Affordable
Care Act, Including Standards Related to Exchanges
H. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
IV. Collection of Information Requirements
A. ICRs Regarding Student Health Insurance Coverage
B. ICRs Regarding Submission of Risk Corridors Data
C. ICRs Regarding Submission of Rate Filing Justification
D. ICRs Regarding Election to Operate an Exchange after 2014
E. ICRs Regarding Standards for Certified Application Counselors
F. ICRs Regarding Network Adequacy Standards
G. ICR Regarding Monthly SHOP Enrollment Reconciliation Files
Submitted by Issuers
H. ICR Regarding Patient Safety Standards
I. ICRs Regarding Other Notices
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice Provisions and Accounting
Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act
F. Unfunded Mandates
G. Federalism
H. Congressional Review Act
Acronyms and 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), as amended
AHRQ Agency for Healthcare Research and Quality
APTC Advance payments of the premium tax credit
AV Actuarial value
BBEDCA Balanced Budget and Emergency Deficit Control Act of 1985
CCN CMS Certification Number
CFR Code of Federal Regulations
CHIP Children's Health Insurance Program
CMP Civil money penalty
CMS Centers for Medicare & Medicaid Services
CSR Cost-sharing reduction
ECN Exemption certificate number
ECP Essential community provider
EHB Essential health benefits
FFE Federally-facilitated Exchange
FF-SHOP Federally-facilitated Small Business Health Options Program
[[Page 12205]]
FPL Federal poverty level
FR Federal Register
FTE Full-time equivalent
GDP Gross domestic product
HCC Hierarchical condition category
HEN Hospital engagement network
HHS United States Department of Health and Human Services
HICS Health Insurance Casework System
HIOS Health Insurance Oversight System
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
HRSA Health Resources and Services Administration
HSA Health Savings Account
IRS Internal Revenue Service
MAGI Modified adjusted gross income
MAT Medication assisted treatment
MLR Medical loss ratio
MV Minimum value
NAIC National Association of Insurance Commissioners
NHEA National Health Expenditure Accounts
OMB Office of Management and Budget
OPM United States Office of Personnel Management
PBM Prescription benefit manager
PHS Act Public Health Service Act
PII Personally identifiable information
PMPM Per member per month
PRA Paperwork Reduction Act of 1995
PSO Patient safety organization
PSQIA Patient Safety and Quality Improvement Act (Pub. L. 109-41)
QHP Qualified health plan
QIO Quality improvement organizations
RADV Risk adjustment data validation
SADP Stand-alone dental plan
SBC Summary of benefits and coverage
SBE State-based Exchange
SBE-FP State-based Exchange on the Federal platform
SHOP Small Business Health Options Program
The Code Internal Revenue Code of 1986 (26 U.S.C. 1, et seq.)
I. Executive Summary
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
and the Health Care and Education Reconciliation Act of 2010 (Pub. L.
111-152), as amended (the Affordable Care Act) enacted a set of reforms
that are making high-quality health insurance coverage and care more
affordable and accessible to millions of Americans. These reforms
include the creation of competitive marketplaces called Affordable
Insurance Exchanges, or ``Exchanges'' (in this final rule, we also call
an Exchange a Health Insurance Marketplace\SM\,\1\ or Marketplace\SM\)
through which qualified individuals and qualified employers can
purchase health insurance coverage. In addition, many individuals who
enroll in qualified health plans (QHPs) through individual market
Exchanges are eligible to receive a premium tax credit to make health
insurance more affordable, and reductions in cost-sharing payments to
reduce out-of-pocket expenses for health care services. These
Affordable Care Act reforms also include the premium stabilization
programs (risk adjustment, reinsurance and risk corridors) and rules
that mitigate the potential impact of adverse selection and stabilize
the price of health insurance in the individual and small group
markets. In previous rulemaking, we have outlined the major provisions
and parameters related to many Affordable Care Act programs.
---------------------------------------------------------------------------
\1\ Health Insurance Marketplace\SM\ and Marketplace\SM\ are
service marks of the U.S. Department of Health & Human Services.
---------------------------------------------------------------------------
In this rule, we seek to improve States' ability to operate
efficient Exchanges by leveraging the economies of scale available
through the Federal eligibility and enrollment platform and information
technology infrastructure. We are finalizing a codification of a new
Exchange model--the State-based Exchange using the Federal platform
(SBE-FP). This Exchange model will enable State-based Exchanges (SBEs)
to execute certain processes using the Federal eligibility enrollment
infrastructure. The SBE-FP will be required to enter into a Federal
platform agreement with HHS that will define a set of mutual
obligations, including the set of Federal services upon which the SBE-
FP agrees to rely. Under this Exchange model, certain requirements that
were previously only applicable to QHPs offered on a Federally-
facilitated Exchange (FFE) and their downstream and delegated entities
will apply to QHPs offered on an SBE-FP and their downstream and
delegated entities. For 2017, we are finalizing a mechanism through
which SBE-FPs will offset some of the Federal costs of providing this
infrastructure. In addition, we are finalizing rules requiring agents
and brokers facilitating enrollments through SBE-FPs to comply with the
FFE registration and training requirements.
We are also finalizing a number of amendments that will improve the
stability of the Exchanges and support consumers' ability to make
informed choices when purchasing health insurance. These include the
introduction of ``standardized options'' in the individual market FFEs.
Additional amendments will increase the accessibility of high-quality
health insurance and improve competition, transparency, and
affordability.
Our intent in offering standardized options is to simplify the
consumer shopping experience and to allow consumers to more easily
compare plans across issuers in the individual market FFEs. We are
finalizing a standardized option with a specified cost-sharing
structure at each of the bronze, silver (with cost-sharing reduction
(CSR) plan variations), and gold metal levels. This policy does not
restrict issuers' ability to offer non-standardized options. We
anticipate differentially displaying these standardized options to
allow consumers to compare plans based on differences in price and
quality rather than cost-sharing structures.
We are also finalizing policies relating to network adequacy for
QHPs on the FFEs. We proposed, but are not finalizing, a minimum
quantitative network adequacy threshold for each State. As States
continue their work to implement the National Association of Insurance
Commissioners' (NAIC's) Health Benefit Plan Network Access and Adequacy
Model Act (NAIC Network Adequacy Model Act), we will continue to use
the same quantitative time-distance standards in our review of plans
for QHP certification on the FFEs, which we will detail in the annual
Letter to Issuers, which we are issuing in final form concurrently with
this final rule. We are finalizing our proposed policy regarding
standardized categorization of network breadth for QHPs on the FFEs on
HealthCare.gov. We are also finalizing two provisions to address
provider transitions in the FFE and a standard for all QHPs governing
cost sharing that would apply in certain circumstances when an enrollee
receives essential health benefit (EHB) provided by an out-of-network
ancillary provider at an in-network setting.
We discuss the authority for FFEs to continue to select QHPs based
on meeting the interests of qualified individuals and qualified
employers. We will use this authority to strengthen oversight as needed
in the short term.
We also seek to improve consumers' ability to make choices
regarding health insurance coverage by ensuring they receive high-
quality assistance in their interactions with the Exchange. For
example, this final rule amends program requirements for Navigators,
certain non-Navigator assistance personnel, and certified application
counselors. These amendments will require FFE Navigators to assist
consumers with certain post-enrollment and other issues beginning in
2018, require all Navigators to provide targeted assistance to
underserved or vulnerable populations, and require Navigators and non-
Navigator assistance personnel to complete training prior to conducting
outreach and education activities. We are also amending our rules
regarding the giving of gifts by Navigators, certain non-Navigator
assistance personnel, and certified application counselors. In
[[Page 12206]]
addition, we are finalizing our proposal that certified application
counselor designated organizations will be required to submit data and
information related to the organization's certified application
counselors, upon the request of the Exchanges in which they operate.
In addition, this final rule takes several steps to increase
transparency. This rule finalizes provisions to enhance the
transparency of rates in all States and the effectiveness of the rate
review program.
This rule also establishes dates for the individual market annual
open enrollment period for future benefit years. For 2017 and 2018, we
will maintain the same open enrollment period we adopted for 2016--that
is, November 1 of the year preceding the benefit year through January
31 of the benefit year, and for 2019 and later benefit years, we are
establishing an open enrollment period of November 1 through December
15 of the year preceding the benefit year. The rule also finalizes two
narrow changes to the Exchange re-enrollment hierarchy, prioritizing
re-enrollment into silver plans, and providing Exchanges with the
flexibility to re-enroll consumers into plans of other Exchange issuers
if the consumer is enrolled in a plan from an issuer that does not have
another plan available for re-enrollment through the Exchange.
We summarize input we have received on whether special enrollment
periods are being appropriately provided, and discuss our plans to
conduct an assessment of special enrollment periods granted to
consumers through the FFEs. We are also codifying a number of Exchange
policies relating to exemptions in order to provide certainty and
transparency around these policies for all stakeholders.
We are finalizing our proposals for the risk adjustment program--in
particular, we are finalizing our introduction of preventive services
into the methodology, and our calculation of model coefficients based
on the 2012, 2013, and 2014 MarketScan claims data. This final rule
also amends the risk corridors provisions related to the reporting of
allowable costs.
In addition to provisions aimed at stabilizing premiums, we are
finalizing several provisions related to cost sharing. First, we are
finalizing the premium adjustment percentage for 2017, which is used to
set the rate of increase for several parameters detailed in the
Affordable Care Act, including the maximum annual limitation on cost
sharing for 2017. We are also finalizing the maximum annual limitations
on cost sharing for the 2017 benefit year for cost-sharing reduction
plan variations. We also finalize standards for stand-alone dental
plans (SADPs) related to the annual limitation on cost sharing, and
standards related to third party payments for premiums and cost sharing
made on behalf of enrollees by Federal, State, and local governments;
Ryan White HIV/AIDS programs; and Indian tribes, tribal organizations,
or urban Indian organizations.
We finalize several improvements that seek to ensure consumers have
access to affordable, high-quality health care coverage. We are
amending requirements for QHPs, including essential community providers
(ECPs) and meaningful difference requirements. This rule also contains
technical amendments to QHP issuer oversight provisions. This rule
includes amendments to further strengthen the patient safety
requirements for QHP issuers offering coverage through Exchanges.
For consumers purchasing coverage through the Small Business Health
Options Program (SHOP), we finalize a new ``vertical choice'' model for
Federally-facilitated SHOPs for plan years beginning on or after
January 1, 2017, under which employers would be able to offer qualified
employees a choice of all plans across all available actuarial value
levels of coverage from a single issuer. States with a Federally-
facilitated Small Business Health Options Program (FF-SHOP) will have
the opportunity to recommend that vertical choice not be implemented in
their State, and SBEs relying on the FF-SHOP eligibility and enrollment
platform will be able to choose not to have vertical choice implemented
in their State.
We also finalize adjustments to our programs and rules, as we do
each year, so that our rules and policies reflect the latest market
developments. We finalize the following changes and clarifications to
the Health Insurance Portability and Accountability Act of 1996 (HIPAA)
and Affordable Care Act health insurance reform requirements. We revise
the definitions of small employer and large employer to bring them into
conformance with the Protecting Affordable Coverage for Employees Act
(Pub. L. 114-60). We also finalize provisions to ensure that a network
plan in the small group market with a limited service area can be
appropriately rated for sale based on geography. Lastly, we finalize
some of the proposed provisions regarding the application of the
actuarial value (AV) and single risk pool provisions to student health
insurance coverage.
II. Background
A. Legislative and Regulatory Overview
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010. The Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised
several provisions of the Patient Protection and Affordable Care Act,
was enacted on March 30, 2010. In this final rule, we refer to the two
statutes collectively as the Affordable Care Act.
Subtitles A and C of title I of the Affordable Care Act
reorganized, amended, and added to the provisions of part A of title
XXVII of the Public Health Service Act (PHS Act) relating to group
health plans and health insurance issuers in the group and individual
markets.
Section 2701 of the PHS Act, as added by the Affordable Care Act,
restricts the variation in premium rates charged by a health insurance
issuer for non-grandfathered health insurance coverage in the
individual or small group market to certain specified factors. The
factors are: Family size, rating area, age, and tobacco use.
Section 2701 of the PHS Act operates in coordination with section
1312(c) of the Affordable Care Act. Section 1312(c) of the Affordable
Care Act generally requires a health insurance issuer to consider all
enrollees in all health plans (except for grandfathered health plans)
offered by such issuer to be members of a single risk pool for each of
its individual and small group markets. States have the option to merge
the individual market and small group market risk pools under section
1312(c)(3) of the Affordable Care Act.
Section 2702 of the PHS Act, as added by the Affordable Care Act,
requires health insurance issuers that offer health insurance coverage
in the group or individual market in a State to offer coverage to and
accept every employer and individual in the State that applies for such
coverage unless an exception applies.\2\
---------------------------------------------------------------------------
\2\ Before enactment of the Affordable Care Act, the Health
Insurance Portability and Accountability Act of 1996 amended the PHS
Act (formerly section 2711) to generally require guaranteed
availability of coverage for employers in the small group market.
---------------------------------------------------------------------------
Section 2703 of the PHS Act, as added by the Affordable Care Act,
and sections 2712 and 2741 of the PHS Act, as added by HIPAA and
codified prior to the enactment of the Affordable Care Act, require
health insurance issuers that offer health insurance coverage in the
group or individual market to renew or
[[Page 12207]]
continue in force such coverage at the option of the plan sponsor or
individual unless an exception applies.
Section 2718 of the PHS Act, as added by the Affordable Care Act,
generally requires health insurance issuers to submit an annual medical
loss ratio (MLR) report to HHS, and provide rebates to enrollees if the
issuers do not achieve specified MLR thresholds.
Section 2794 of the PHS Act, as added by the Affordable Care Act,
directs the Secretary of HHS (the Secretary), in conjunction with the
States, to establish a process for the annual review of unreasonable
increases in premiums for health insurance coverage.\3\ The law also
requires health insurance issuers to submit to the Secretary and the
applicable State justifications for unreasonable premium increases
prior to the implementation of the increases. Section 2794(b)(2) of the
PHS Act further directs the Secretary, in conjunction with the States,
to monitor premium increases of health insurance coverage offered
through an Exchange and outside of an Exchange beginning with plan
years starting in 2014.
---------------------------------------------------------------------------
\3\ The implementing regulations in part 154 limit the scope of
the requirements under section 2794 of the PHS Act to health
insurance issuers offering health insurance coverage in the
individual market or small group market. See Rate Increase
Disclosure and Review; Final Rule, 76 FR 29964, 29966 (May 23,
2011).
---------------------------------------------------------------------------
Section 1252 of the Affordable Care Act provides that any standard
or requirement adopted by a State under title I of the Affordable Care
Act, or any amendment made by title I of the Affordable Care Act, is to
be applied uniformly to all health plans in each insurance market to
which the standard and requirement apply.
Section 1302 of the Affordable Care Act provides for the
establishment of an EHB package that includes coverage of EHB (as
defined by the Secretary), cost-sharing limits, and actuarial value
requirements. The law directs that EHBs be equal in scope to the
benefits covered by a typical employer plan, and that they cover at
least the following 10 general categories: Ambulatory patient services;
emergency services; hospitalization; maternity and newborn care; mental
health and substance use disorder services, including behavioral health
treatment; prescription drugs; rehabilitative and habilitative services
and devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services, including oral and
vision care.
Section 1301(a)(1)(B) of the Affordable Care Act directs all
issuers of QHPs to cover the EHB package described in section 1302(a)
of the Affordable Care Act, including coverage of the services
described in section 1302(b) of the Affordable Care Act, to adhere to
the cost-sharing limits described in section 1302(c) of the Affordable
Care Act, and to meet the AV levels established in section 1302(d) of
the Affordable Care Act. Section 2707(a) of the PHS Act, which is
effective for plan or policy years beginning on or after January 1,
2014, extends the coverage of the EHB package to non-grandfathered
individual and small group coverage, irrespective of whether such
coverage is offered through an Exchange. In addition, section 2707(b)
of the PHS Act directs non-grandfathered group health plans to ensure
that cost sharing under the plan does not exceed the limitations
described in sections 1302(c)(1) and (2) of the Affordable Care Act.
Section 1302(d) of the Affordable Care Act describes the various
levels of coverage based on actuarial value. Consistent with section
1302(d)(2)(A) of the Affordable Care Act, actuarial value is calculated
based on the provision of EHB to a standard population. Section
1302(d)(3) of the Affordable Care Act directs the Secretary to develop
guidelines that allow for de minimis variation in AV calculations.
Section 1311(b)(1)(B) of the Affordable Care Act directs that the
Small Business Health Options Program assist qualified small employers
in facilitating the enrollment of their employees in qualified health
plans offered in the small group market. Sections 1312(f)(1) and (2) of
the Affordable Care Act define qualified individuals and qualified
employers. Under section 1312(f)(2)(B) of the Affordable Care Act,
beginning in 2017, States will have the option to allow issuers to
offer QHPs in the large group market through an Exchange.\4\
---------------------------------------------------------------------------
\4\ If a State elects this option, the rating rules in section
2701 of the PHS Act and its implementing regulations will apply to
all coverage offered in such State's large group market (except for
self-insured group health plans) under section 2701(a)(5) of the PHS
Act.
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Section 1311(c)(1)(B) of the Affordable Care Act requires the
Secretary to establish minimum criteria for provider network adequacy
that a health plan must meet to be certified as a QHP.
Section 1311(c)(5) of the Affordable Care Act requires the
Secretary to continue to operate, maintain, and update the Internet
portal developed under section 1103 of the Affordable Care Act to
provide information to consumers and small businesses on affordable
health insurance coverage options.
Section 1311(c)(6)(B) of the Affordable Care Act states that the
Secretary is to set annual open enrollment periods for Exchanges for
calendar years after the initial enrollment period.
Sections 1311(d)(4)(K) and 1311(i) of the Affordable Care Act
direct all Exchanges to establish a Navigator program.
Section 1311(h)(1) of the Affordable Care Act specifies that a QHP
may contract with health care providers and hospitals with more than 50
beds only if they meet certain patient safety standards, including use
of a patient safety evaluation system, a comprehensive hospital
discharge program, and implementation of health care quality
improvement activities. Section 1311(h)(2) of the Affordable Care Act
also provides the Secretary flexibility to establish reasonable
exceptions to these patient safety requirements and section 1311(h)(3)
of the Affordable Care Act allows the Secretary flexibility to issue
regulations to modify the number of beds described in section
1311(h)(1)(A) of the Affordable Care Act.
Section 1312(a)(2) of the Affordable Care Act provides that in a
SHOP, a qualified employer may select any level of coverage under
section 1302(d) of the Affordable Care Act to be made available to
employees through the SHOP, and that employees may then, in turn,
choose plans within the level selected by the qualified employer.
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.
Sections 1313 and 1321 of the Affordable Care Act provide the
Secretary with the authority to oversee the financial integrity of
State Exchanges, their compliance with HHS standards, and the efficient
and non-discriminatory administration of State Exchange activities.
Section 1321 of the Affordable Care Act provides for State flexibility
in the operation and enforcement of Exchanges and related requirements.
When operating an FFE under section 1321(c)(1) of the Affordable
Care Act, HHS has the authority under sections
[[Page 12208]]
1321(c)(1) and 1311(d)(5)(A) of the Affordable Care Act to collect and
spend user fees. In addition, 31 U.S.C. 9701 permits a Federal agency
to establish a charge for a service provided by the agency. Office of
Management and Budget (OMB) Circular A-25 Revised establishes Federal
policy regarding user fees and specifies that a user charge will be
assessed against each identifiable recipient for special benefits
derived from Federal activities beyond those received by the general
public.
Section 1321(c)(2) of the Affordable Care Act authorizes the
Secretary to enforce the Exchange standards using civil money penalties
(CMPs) on the same basis as detailed in section 2723(b) of the PHS Act.
Section 2723(b) of the PHS Act authorizes the Secretary to impose CMPs
as a means of enforcing the individual and group market reforms
contained in Part A of title XXVII of the PHS Act when a State fails to
substantially enforce these provisions.
Section 1321(d) of the Affordable Care Act provides that nothing in
title I of the Affordable Care Act should be construed to preempt any
State law that does not prevent the application of title I of the
Affordable Care Act. Section 1311(k) of the Affordable Care Act
specifies that Exchanges may not establish rules that conflict with or
prevent the application of regulations issued by the Secretary.
Section 1341 of the Affordable Care Act 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 in
benefit years 2014 through 2016. Section 1342 of the Affordable Care
Act directs the Secretary to establish a temporary risk corridors
program that reduces the impact of inaccurate rate setting from 2014
through 2016. Section 1343 of the Affordable Care Act establishes a
permanent risk adjustment program to provide payments to health
insurance issuers that attract higher-risk populations, such as those
with chronic conditions, funded by payments from those that attract
lower-risk populations, thereby reducing incentives for issuers to
avoid higher-risk enrollees.
Sections 1402 and 1412 of the Affordable Care Act provide for,
among other things, reductions in cost sharing for EHB for qualified
low- and moderate-income enrollees in silver level health plans offered
through the individual market Exchanges.
Section 5000A of the Internal Revenue Code of 1986 (the Code), as
added by section 1501(b) of the Affordable Care Act, requires all non-
exempt individuals to maintain minimum essential coverage for each
month or make the individual shared responsibility payment. Section
5000A(f) of the Code defines minimum essential coverage as any of the
following: (1) Coverage under a specified government sponsored program;
(2) coverage under an eligible employer-sponsored plan; (3) coverage
under a health plan offered in the individual market within a State;
and (4) coverage under a grandfathered health plan. Section
5000A(f)(1)(E) of the Code authorizes the Secretary of HHS, in
coordination with the Secretary of the Treasury, to designate other
health benefits coverage as minimum essential coverage.
The Protecting Affordable Coverage for Employees Act amended
section 1304(b) of the Patient Protection and Affordable Care Act and
section 2791(e) of the PHS Act to amend the definition of small
employer in these statutes to mean, in connection with a group health
plan with respect to a calendar year and a plan year, an employer who
employed an average of at least 1 but not more than 50 employees on
business days during the preceding calendar year and who employs at
least 1 employee on the first day of the plan year. It also amended
these statutes to make conforming changes to the definition of large
employer, and to provide that a State may treat as a small employer,
with respect to a calendar year and a plan year, an employer who
employed an average of at least 1 but not more than 100 employees on
business days during the preceding calendar year and who employs at
least 1 employee on the first day of the plan year.
1. Premium Stabilization Programs
In the July 15, 2011 Federal Register (76 FR 41929), we published a
proposed rule outlining the framework for the premium stabilization
programs. We implemented the premium stabilization programs in a final
rule, published in the March 23, 2012 Federal Register (77 FR 17219)
(Premium Stabilization Rule). In the December 7, 2012 Federal Register
(77 FR 73117), we published a proposed rule outlining the benefit and
payment parameters for the 2014 benefit year to expand the provisions
related to the premium stabilization programs and set forth payment
parameters in those programs (proposed 2014 Payment Notice). We
published the 2014 Payment Notice final rule in the March 11, 2013
Federal Register (78 FR 15409).
In the December 2, 2013 Federal Register (78 FR 72321), we
published a proposed rule outlining the benefit and payment parameters
for the 2015 benefit year to expand the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions and establishing the payment parameters in those programs
(proposed 2015 Payment Notice). We published the 2015 Payment Notice
final rule in the March 11, 2014 Federal Register (79 FR 13743).
In the November 26, 2014 Federal Register (79 FR 70673), we
published a proposed rule outlining the benefit and payment parameters
for the 2016 benefit year to expand the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions and establishing the payment parameters in those programs
(proposed 2016 Payment Notice). We published the 2016 Payment Notice
final rule in the February 27, 2015 Federal Register (80 FR 10749).
2. Program Integrity
In the June 19, 2013 Federal Register (78 FR 37031), we published a
proposed rule that proposed certain program integrity standards related
to Exchanges and the premium stabilization programs (proposed Program
Integrity Rule). The provisions of that proposed rule were finalized in
two rules, the ``first Program Integrity Rule'' published in the August
30, 2013 Federal Register (78 FR 54069) and the ``second Program
Integrity Rule'' published in the October 30, 2013 Federal Register (78
FR 65045).
3. Exchanges
We published a request for comment relating to Exchanges in the
August 3, 2010 Federal Register (75 FR 45584). We issued initial
guidance to States on Exchanges on November 18, 2010. We proposed a
rule in the July 15, 2011 Federal Register (76 FR 41865) to implement
components of the Exchanges, and a rule in the August 17, 2011 Federal
Register (76 FR 51201) regarding Exchange functions in the individual
market, eligibility determinations, and Exchange standards for
employers. A final rule implementing components of the Exchanges and
setting forth standards for eligibility for Exchanges was published in
the March 27, 2012 Federal Register (77 FR 18309) (Exchange
Establishment Rule).
We established standards for SHOP in the 2014 Payment Notice. We
also set forth standards related to Exchange user fees in the 2014
Payment Notice. We established an adjustment to the FFE user fee in the
Coverage of Certain Preventive Services Under the Affordable Care Act
final rule, published in the July 2, 2013 Federal
[[Page 12209]]
Register (78 FR 39869) (Preventive Services Rule).
In a final rule published in the July 17, 2013 Federal Register (78
FR 42823), we established standards for Navigators and non-Navigator
assistance personnel in FFEs and for non-Navigator assistance personnel
funded through an Exchange establishment grant. This final rule also
established a certified application counselor program for Exchanges and
set standards for that program.
4. Essential Health Benefits and Actuarial Value
On December 16, 2011, HHS released a bulletin \5\ (the EHB
Bulletin) that outlined an intended regulatory approach for defining
EHB, including a benchmark-based framework. HHS also published a
bulletin that outlined its intended regulatory approach to calculations
of AV on February 24, 2012.\6\ A proposed rule relating to EHBs and AVs
was published in the November 26, 2012 Federal Register (77 FR 70643).
We established requirements relating to EHBs and AVs in the Standards
Related to Essential Health Benefits, Actuarial Value, and
Accreditation Final Rule, which was published in the February 25, 2013
Federal Register (78 FR 12833) (EHB Rule).
---------------------------------------------------------------------------
\5\ Essential Health Benefits Bulletin. (Dec. 16, 2011),
available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/essential_health_benefits_bulletin.pdf.
\6\ Actuarial Value and Cost-Sharing Reductions Bulletin. (Feb.
24, 2012), available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/Av-csr-bulletin.pdf.
---------------------------------------------------------------------------
5. Market Rules
A proposed rule relating to the 2014 health insurance market rules
was published in the November 26, 2012 Federal Register (77 FR 70584).
A final rule implementing the health insurance market rules was
published in the February 27, 2013 Federal Register (78 FR 13406) (2014
Market Rules).
A proposed rule relating to Exchanges and Insurance Market
Standards for 2015 and Beyond was published in the March 21, 2014
Federal Register (79 FR 15808) (2015 Market Standards Proposed Rule). A
final rule implementing the Exchange and Insurance Market Standards for
2015 and Beyond was published in the May 27, 2014 Federal Register (79
FR 30239) (2015 Market Standards Rule).
6. Rate Review
A proposed rule to establish the rate review program was published
in the December 23, 2010 Federal Register (75 FR 81003). A final rule
with comment period implementing the rate review program was published
in the May 23, 2011 Federal Register (76 FR 29963) (Rate Review Rule).
The provisions of the Rate Review Rule were amended in final rules
published in the September 6, 2011 Federal Register (76 FR 54969), the
February 27, 2013 Federal Register (78 FR 13405), the May 27, 2014
Federal Register (79 FR 30339), and the February 27, 2015 Federal
Register (80 FR 10749).
7. Medical Loss Ratio
We published a request for comment on section 2718 of the PHS Act
in the April 14, 2010 Federal Register (75 FR 19297), and published an
interim final rule with a 60-day comment period relating to the MLR
program on December 1, 2010 (75 FR 74863). A final rule with a 30-day
comment period was published in the December 7, 2011 Federal Register
(76 FR 76573). An interim final rule with a 60-day comment period was
published in the December 7, 2011 Federal Register (76 FR 76595). A
final rule was published in the Federal Register on May 16, 2012 (77 FR
28790).
B. Stakeholder Consultation and Input
HHS consulted stakeholders on the policies related to the operation
of Exchanges, including the SHOP and the premium stabilization
programs. We have held a number of listening sessions with consumers,
providers, employers, health plans, the actuarial community, and State
representatives to gather public input. We consulted with stakeholders
through regular meetings with the National Association of Insurance
Commissioners, regular contact with States through the Exchange
Establishment grant and Exchange Blueprint approval processes, and
meetings with Tribal leaders and representatives, health insurance
issuers, trade groups, consumer advocates, employers, and other
interested parties. We considered all public input we received as we
developed the policies in this final rule.
C. Structure of Final Rule
The regulations outlined in this final rule will be codified in 45
CFR parts 144, 147, 153, 154, 155, 156 and 158.
The regulations in part 144, consistent with recent legislation,
revise the definitions of ``large employer'' and ``small employer.''
The regulations in part 147 clarify the definition of principal
business address, and establish the appropriate rating area under
specific circumstances, for purposes of geographic rating. They also
address the treatment of student health insurance coverage with regard
to the AV and single risk pool requirements.
The regulations in part 153 codify how HHS will evaluate the risk
adjustment and reinsurance data submitted to an issuer's dedicated
distributed data environment. This rule also includes the risk
adjustment user fee for 2017 and outlines certain modifications to the
HHS risk adjustment methodology. This rule clarifies reporting
requirements for the risk adjustment, reinsurance, and risk corridors
programs.
The regulations in part 154 outline certain modifications to
enhance the transparency and effectiveness of the rate review program.
We require the submission of a Unified Rate Review Template from all
issuers offering single risk pool coverage in the individual and small
group market, including coverage with rate decreases or unchanged
rates, as well as rates for new plans. We also announce our intention
to disclose all proposed rate increases for single risk pool coverage
at a uniform time on the CMS Web site, including rates with increases
of less than 10 percent. Finally, we reiterate the process for
establishing the uniform timeline that proposed rate increases subject
to review and all final rate increases (including those not subject to
review) for single risk pool coverage must be posted at a uniform time
by States with Effective Rate Review Programs.
The regulations in part 155 include clarifications related to the
functions of an Exchange, and establish the individual market open
enrollment period for the 2017 and 2018 benefit years. Certain
proposals in part 155 are related to the eligibility and verification
processes related to eligibility for insurance affordability programs.
We also amend and clarify rules related to enrollment of qualified
individuals into QHPs. We describe changes to the process of submitting
certain exemption applications and options for State Exchanges to
handle exemptions. The finalized regulations also provide for a Federal
platform agreement through which a State Exchange may agree to rely on
the FFE for certain functions as an SBE-FP. We also finalize various
proposals related to the SHOPs. We amend the standards applicable to
the consumer assistance functions performed by Navigators, non-
Navigator assistance personnel, and certified application counselors.
We also discuss our approach to QHP certification, and modify standards
for FFE-registered agents and brokers and requirements for HHS-approved
vendors of FFE training. Part 155 also includes clarification to
[[Page 12210]]
the policy regarding additional State-required benefits.
The regulations in part 156 establish parameters related to cost
sharing, including the premium adjustment percentage, the maximum
annual limitation on cost sharing, and the reductions in the maximum
annual limitation for cost-sharing plan variations for 2017. We amend
the timeframe to request reconsideration under the administrative
appeals process applicable to the premium stabilization programs.
Amendments to part 156 also include provisions related to EHB
prescription drug rules. We amend network adequacy requirements
(including application of out-of-network costs to the annual limitation
on cost sharing for EHBs covered under QHPs in the small group and
individual markets), and essential community provider requirements. We
establish standardized options for cost-sharing structures, indexing
for the stand-alone dental plan annual limitation on cost sharing,
changes to our process for updating the AV Calculator for QHPs,
meaningful difference standards for QHPs, and minor changes to QHP
issuer oversight standards. We also amend provisions related to the
third-party premium payments from certain entities and the next phase
of implementation for patient safety standards for issuers of QHPs
offered on Exchanges.
The amendments to the regulations in part 158 finalize revisions
related to the definitions of large employer and small employer
consistent with recent legislation.
III. Provisions of the Final Regulations and Analyses and Responses to
Public Comments
In the December 2, 2015 Federal Register (80 FR 75487), we
published the ``Patient Protection and Affordable Care Act; HHS Notice
of Benefit and Payment Parameters for 2017'' proposed rule. We received
524 comments, including 112 substantially similar letters regarding our
solicitation for comment on whether the substance use disorder
requirement in essential health benefits needs additional clarification
regarding medication-assisted treatment for opioid addiction. Comments
were received from the National Association of Insurance Commissioners,
State departments of insurance, State Exchanges, a member of Congress,
health insurance issuers, providers, consumer groups, labor entities,
industry groups, patient safety groups, national interest groups, and
other stakeholders. The comments ranged from general support of or
opposition to the proposed provisions to specific questions or comments
regarding proposed changes. We received a number of comments and
suggestions that were outside the scope of the proposed rule that will
not be addressed in this final rule.
In this final rule, we provide a summary of each proposed
provision, a summary of those public comments received that directly
related to proposals, our responses to them, and a description of the
provisions we are finalizing.
Comment: We received a number of comments stating that the comment
period was unreasonably short, making it difficult for stakeholders to
provide in-depth analysis and input. Commenters urged HHS to provide a
comment period of 60 days from the date of publication in the Federal
Register for this and future HHS Notices of Benefit and Payment
Parameters.
Response: The timeline for publication of this final rule
accommodates issuer filing deadlines for the 2017 benefit year. A 60-
day comment period would have delayed the publication of this final
rule, and created significant challenges for States, Exchanges,
issuers, and other entities in meeting deadlines related to
implementing these rules.
Comment: We received a number of comments disapproving of the wide
array of topics covered in the rule.
Response: Many of the programs covered by this final rule are
closely linked. To simplify the regulatory process, facilitate public
comment, and provide the information needed to meet statutory
deadlines, we have elected to propose and finalize these regulatory
provisions in one rule, as we have in years past.
Comment: A number of comments, many focused primarily on proposals
related to network adequacy, urged HHS to allow States to continue
their oversight of their insurance markets and defer to the NAIC for
the development of important industry-wide, State-based standards.
Response: We aim to establish Federal oversight standards that
complement State standards while meeting Federal obligations, including
for qualified health plans on Federally-facilitated Exchanges. We will
continue to coordinate closely with State authorities to address
compliance issues, eliminate duplicative requirements or review, and to
reduce the burden on stakeholders.
Comment: Several comments emphasized the importance of ensuring
coverage is affordable to consumers, or expressed concern that coverage
purchased through the Exchanges is not affordable.
Response: We appreciate the importance of ensuring coverage
purchased through the Exchanges is affordable to consumers, and believe
affordability is critical to the success of the Exchanges.
A. Part 144--Requirements Relating to Health Insurance Coverage
1. Definitions (Sec. 144.103)
Section 144.103 sets forth definitions of terms that are used
throughout parts 146 through 150. In the proposed rule, we discussed
the definition of ``plan year'' and proposed revisions to the
definitions of small employer and large employer that would be
consistent with recent legislation. We also proposed a technical
correction in the definition of excepted benefits to cross reference
the group market provisions in Sec. 146.145(b) rather than Sec.
146.145(c). We are finalizing these provisions as proposed.
a. Plan Year
In the preamble to the proposed rule (80 FR at 79495), we explained
that we interpret the definition of plan year in Sec. 144.103 with
respect to both grandfathered and non-grandfathered group health plans
to mean a period that is no longer than 12 months.
Comment: One commenter requested clarification that a plan year may
be shorter than 12 months under certain circumstances.
Response: A plan year may be shorter than 12 months under certain
circumstances, but a plan year may not be longer than 12 months.
b. Large Employer and Small Employer
We proposed to revise the regulatory definitions of large employer
and small employer in Sec. Sec. 144.103 and 155.20 consistent with
section 1304(b) of the Affordable Care Act and section 2791(e) of the
PHS Act, as amended by the Protecting Affordable Coverage for Employees
Act. We also proposed to codify statutory language providing that in
the case of an employer that was not in existence throughout the
preceding calendar year, the determination of whether the employer is a
large employer or a small employer is based on the average number of
employees that it is reasonably expected the employer will employ on
business days in the current calendar year. We are finalizing these
revisions as proposed.
Comment: Several commenters supported our proposed definitions of
large employer and small employer, including the codification related
to employers that were not in existence throughout the preceding
calendar year.
Response: We are finalizing the revisions to the definitions of
large
[[Page 12211]]
employer and small employer in Sec. Sec. 144.103 and 155.20 as
proposed.\7\
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\7\ This final rule has no effect on previously issued guidance
by CMS clarifying that offices of the Members of Congress, as
qualified employers, are eligible to participate in a SHOP
regardless of the size requirements set forth in the definition of
``qualified employer'' in 45 CFR 155.20. See Members of Congress and
Staff Accessing Coverage through Health Insurance Exchanges
(Marketplaces) (Sept. 30, 2013), available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/members-of-congress-faq-9-30-2013.pdf.
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B. Part 146--Requirements for the Group Health Insurance Market
1. Guaranteed Availability of Coverage for Employers in the Small Group
Market (Sec. 146.150)
For a discussion of the proposed amendment to Sec. 146.150, please
see the preamble to Sec. 147.104.
C. Part 147--Health Insurance Reform Requirements for the Group and
Individual Health Insurance Markets
1. Fair Health Insurance Premiums (Sec. 147.102)
a. Principal Business Address
Under section 2701 of the PHS Act and regulations at Sec. 147.102,
the rating area for a small group plan is based on the group
policyholder's principal business address. We proposed to amend Sec.
147.102(a)(1)(ii) to provide that if the employer has registered an in-
State principal business address with the State, that location is the
principal business address. We noted that an in-State address
registered solely for purposes of service of process would not be
considered the employer's principal business address, unless it is a
substantial worksite for the employer's business. If an in-State
principal business address is not registered with the State or is only
registered for purposes of service of process and is not a substantial
worksite, we proposed that the employer would designate as its
principal business address the business address within the State where
the greatest number of employees work in the applicable State.
When a network plan offered in a State has a limited service area,
we noted that this policy could result in an issuer having to make a
plan available under the guaranteed availability rules to an employer--
because the employer has an employee who lives, works, or resides in
the service area--but not be able to apply a geographic rating factor
under the current rule--because the issuer might not have established
rates applicable to the location of the employer's principal business
address outside the plan's service area.
We proposed to amend Sec. 147.102 to provide for an additional
principal business address to be identified within a plan's service
area in these circumstances so that the plan can be appropriately rated
for sale to the employer. In such instances, the additional principal
business address would be the business address within the plan's
service area where the greatest number of employees work as of the
beginning of the plan year, or, if there is no such business address,
an address within the service area selected by the employer that
reasonably reflects where the greatest number of employees live or
reside as of the beginning of the plan year.
As stated in the preamble to the proposed rule, SHOPs, including
the FF-SHOPs, may use the address that was used to establish a
qualified employer's eligibility for participation in the SHOP to
determine the applicable geographic rating area when calculating
premiums for participating employers. The intent of these proposals was
to establish a uniform set of rules that can be applied as simply as
possible, while allowing plans to be properly rated.
We are finalizing the provisions proposed in Sec. 147.102 of the
proposed rule without substantive modification. However, we are
finalizing the regulatory text in a way that does not refer to a
location where employees live or reside as a principal business
address, as we believe doing so in the proposed regulatory text was
confusing, and we are making additional minor edits for clarity. These
are not substantive modifications, as the proposed rule and this final
rule apply the same test to determine the policyholder's rating area
with respect to a network plan in such a situation.
Comment: Several commenters supported our proposed definition of
principal business address, and our approach for allowing an employer
to identify an additional principal business address within the service
area of a network plan. Two commenters suggested HHS should not modify
the standards for geographic rating, suggesting that the proposed rule
provides opportunities and incentives for small employers to select an
address based upon factors other than the true business location of the
employer. These commenters did not provide an alternative approach to
allow plans to be rated in this circumstance.
Response: We have revised the proposed rule text such that it no
longer refers to an employer selecting a location where employees live
or reside as a principal business address. The rule instead provides
that if an employer does not have a business location in the issuer's
service area, but has employees who live or reside within the service
area, the geographic rating area for purposes of the network plan is
the rating area where the greatest number of employees within the
plan's service area live or reside as of the beginning of the plan
year. We believe these standards for identifying an applicable rating
area within the issuer's service area will ensure that a network plan
can be appropriately rated for sale to the employer consistent with
guaranteed availability requirements.
Comment: One commenter suggested we define ``substantial worksite''
to determine when a business address registered solely for purposes of
service of process would be considered the employer's principal
business address for rating purposes.
Response: The final rule does not provide a specific definition of
substantial worksite. We believe the term is sufficiently clear and
will not cause confusion. Nevertheless, we will monitor the
implementation of this policy in considering whether it is appropriate
to clarify what constitutes a substantial worksite in the future.
Comment: One commenter requested that the FF-SHOP verify that an
address entered by an employer is the official principal place of
business. We also received a comment requesting that we modify the FF-
SHOP application process to allow more than one account per State and
thus, allow for more than one rating area for an employer.
Response: Under Sec. 155.710(b)(3), one criterion for being a
qualified employer eligible to purchase coverage through a SHOP is that
the employer has its principal business address in the Exchange service
area and offers coverage to all its full-time employees through that
SHOP, or offers coverage to each eligible employee through the SHOP
serving that employee's primary worksite. If we receive a report that
incorrect or inaccurate information has been provided on an FF-SHOP
application, we may investigate and take corrective action as needed.
Further, as stated in the preamble to the proposed rule, due to
operational limitations, the SHOPs, including the FF-SHOPs, may not be
able to accommodate multiple principal business addresses within a
State for premium calculation purposes. As a result, due to current
operational limitations, when a single employer application is
completed in a State with an FF-SHOP, plan availability and premium
calculations will be based on the principal business address entered on
the FF-SHOP employer application.
[[Page 12212]]
Comment: One commenter asked for clarification on the interaction
between Sec. 155.710(b)(3) (governing eligibility standards for SHOP)
and Sec. 147.102(a)(1)(ii) (governing geographic rating).
Response: If SHOPs, including the FF-SHOPs, have operational
limitations that do not permit them to fully implement the policy
described above, they may use the address that was used to establish a
qualified employer's eligibility for participation in the SHOP to
determine which plans are available to the employer, as well as the
applicable geographic rating area when calculating premiums for
participating employers.
b. Other Issues Related to Rating Areas
In the preamble to the proposed rule, we noted that we have
observed wide variations in the size of rating areas in the various
States. We identified a concern that this variation could lead to
smaller rating areas with a high concentration of higher-risk groups,
which potentially compromises the risk-spreading objective that the
single risk pool requirement is intended to achieve. At the same time,
States are the primary regulators of health insurance, and we believe
it is important to recognize the unique needs of each State. We also
recognize the consumer disruption that could result from changes to
rating areas. Therefore, we sought comment on whether we should seek
more uniformity in the size of rating areas or establish a minimum size
for rating areas, and if so, how that should be achieved, consistent
with the principle of flexibility for States.
We also recognized the inconsistency that can occur between an
issuer's rating area and the service area of some of its network-based
plans. We indicated that it could be beneficial for the rating area and
the service area to generally be consistent and sought comment on
whether and how to achieve this objective.
Comment: One commenter supported rating areas of a minimum size as
a way to spread risk, and two others suggested applying a minimum
number of residents per rating area or a minimum number that is no less
than a specified percentage of residents in the non-metropolitan
statistical areas of a State. Many commenters, however, stated their
opposition to any further Federal regulation defining rating areas,
stating that the States are best equipped to determine how rating areas
are established. One commenter stated that our example that each rating
area be a contiguous area would adversely affect service area
strategies that identify non-contiguous areas with similar pricing and
network dynamics that may warrant placing them in the same service
area. One commenter stated that limiting the number of rating areas to
the number of metropolitan statistical areas plus one would be
arbitrary. One commenter stated that basing rating areas on the
relative population of each area would require frequent changes in
rating areas due to population shifts.
Many commenters also opposed aligning rating areas with service
areas. One stated that such an alignment could cause issuers to leave
an entire geographic area rather than attempt to establish contracts
with providers in other parts of a rating area, due to additional costs
associated with establishing a broader network. One commenter observed
that rating areas are based on geographic differences in cost of care,
while service areas are constructed to ensure that a network plan has
providers that can serve enrollees in specific geographic locations.
One commenter observed that aligning rating areas with service areas
could result in a significant increase in the number of plans submitted
for approval and rate review and Health Insurance Oversight System
(HIOS) plan IDs.
Response: We are not making changes to these regulations in this
final rule, and will consider these comments as we continue to study
these issues.
c. Child Age Rating
Section 147.102(e) provides for a uniform age curve in each State.
When a State does not specify an age curve, a Federal default uniform
age curve will apply. We stated in the proposed rule that we are
investigating the child age rating factor in the Federal uniform age
curve, and seek to determine whether the default factor is appropriate,
or fails to adequately differentiate the health risk of children of
different ages. We sought comment and data on the most appropriate
child age curve, and the policy reasons underlying any recommendation.
Comment: One commenter did not support a varying child age curve,
believing that in the individual market, children may need more care at
certain ages, so a fixed age rating factor that applies to all children
should continue to apply. With regard to the current fixed factor,
several commenters stated that the current default factor of 0.635 for
children under age 21 may be set too low.
Several commenters supported a varying child age curve, and set
forth specific age gradations. Two commenters stated that the child age
curve should be increased by a set amount for plans with embedded
pediatric dental benefits. One commenter stated that we should consider
using data consistent with data used to calibrate risk adjustment to
determine child age factors, while one commenter stated that the age
calibration for children must be adjusted in the uniform age curve.
Response: We recognize that the child age band and factor may need
to be updated to better reflect the health risk of children and intend
to address child age rating in future rulemaking or guidance.
2. Guaranteed Availability of Coverage (Sec. 147.104)
a. Product Discontinuance and Market Withdrawal Exceptions to
Guaranteed Availability
In the proposed rule, we expressed concern about whether it would
be in consumers' or issuers' interest to require guaranteed
availability of a product while the issuer is in the process of winding
down operations with respect to that product or all its products in a
market. Therefore, we proposed to codify an exception to the guaranteed
availability requirements under Sec. 147.104 when the exception to
guaranteed renewability of coverage related to discontinuing a product
or all coverage in the market applies. Specifically, we proposed that
an issuer may deny coverage to new individuals or employers during the
applicable 90-day or 180-day notice period when the issuer is
discontinuing a product or exiting the market. We proposed that an
issuer must apply the denial uniformly to all employers or individuals
in the large group, small group, or individual market, as applicable,
in the State consistent with applicable State law, and without regard
to the claims experience or any health-status related factor relating
to those individuals or employers and their employees (or their
respective dependents). We proposed that this exception not relieve
issuers of their obligations to existing policyholders, such as their
obligation to enroll dependents under an applicable special enrollment
period. We proposed parallel provisions under Sec. 146.150 addressing
guaranteed availability of coverage for employers in the small group
market under the HIPAA rules.
We are not finalizing the provisions proposed in Sec. Sec. 147.104
and 146.150 of the proposed rule. As noted in the proposed rule, the
product discontinuance exception to the guaranteed renewability
requirement in
[[Page 12213]]
Sec. 147.106(c) requires an issuer to provide notice in writing, in
the form and manner specified by the Secretary, to each plan sponsor or
individual, as applicable, (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. The
market withdrawal exception to the guaranteed renewability requirement
in Sec. 147.106(d) requires an issuer to provide notice in writing to
the applicable State authority and to each plan sponsor or individual,
as applicable (and to all participants and beneficiaries covered under
the coverage) of the discontinuation at least 180 calendar days prior
to the date the coverage will be discontinued. We therefore proposed to
interpret the interaction between the guaranteed availability and these
guaranteed renewability provisions to permit an issuer to deny
enrollments during the applicable product discontinuance or market
withdrawal notice period. However, with regard to situations where an
issuer decides to discontinue a product, we are concerned that the
proposed policy could have an impact on the issuer's risk pool and
rating for its other products. While a market withdrawal does not have
the same impact since all of the issuer's products in a market are
being discontinued, we believe this interpretation of the interaction
between the laws to provide for an exception to the guaranteed
availability requirements would have to be applied consistently in both
a product discontinuance and market withdrawal situation. Therefore,
going forward, we will not interpret these statutes to recognize an
exception to the guaranteed availability requirement in either
scenario, and the issuer must continue to offer coverage to and accept
every employer or individual in the State that applies for coverage
under a product until such time that the product is discontinued.
Consistent with previous guidance, with regard to individuals who
enroll in a product after the specified deadline for providing the
applicable product discontinuance or market withdrawal notice and
before the particular product or products are discontinued, HHS will
consider an issuer to satisfy the requirement to provide notice if the
issuer provides prominent and effective notice at the time of
application or enrollment that the product will be discontinued, in any
form and manner permitted by applicable law and regulations.\8\
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\8\ CMS Insurance Standards Bulletin Series, Form and Manner of
Notices when Discontinuing or Renewing a Product in the Group or
Individual Market (Sept. 2, 2014), available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Renewal-Notices-9-3-14-FINAL.pdf.
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b. Minimum Participation and Contribution Rules
In the proposed rule, we expressed concern that the use of minimum
group participation and employer contribution rules to deny coverage in
the small group market could result in some applicable large employers,
as defined in section 4980H of the Code, not reasonably being able to
offer coverage to their full-time employees (and their dependents) and
therefore potentially being liable for an employer shared
responsibility payment under section 4980H of the Code, particularly in
States that elect to expand the small group market to include employers
with up to 100 employees.
In recognition of this dynamic, we noted that a State electing to
expand its small group market to include employers with up to 100
employees may opt, under its own authority, to prohibit an issuer from
restricting the availability of small group coverage based on employer
contribution or group participation rules. Alternatively, in cases
where a State expands the definition of a small employer to include
employers with up to 100 employees, we could amend the guaranteed
availability regulations, with respect to small employers with 51-100
employees or with respect to all small employers altogether, to achieve
this objective. We sought comment on such an approach.
Comment: Several commenters stated that we should retain the
ability of issuers to limit, to November 15 to December 15 of each
year, when issuers must sell a policy to a small employer that fails to
meet the issuer's group participation or contribution rules. Some
commenters stated that issuers should retain this ability even with
respect to groups of 51-100 employees, as doing otherwise would have an
adverse impact on risk pools. One commenter stated that if we eliminate
the ability of issuers to apply minimum contribution and participation
rules, we should at least exempt issuers from having to offer and renew
coverage to employers that selectively offer insured and self-funded
coverage simultaneously to separate classes of employees. Such
employers, the commenter stated, leave issuers with the highest-risk
individuals. One commenter stated that we should amend the guaranteed
availability requirements so that any employer, regardless of size,
that can document that it is subject to Code section 4980H, must be
sold a policy anytime during the year. The commenter stated that we
should consider this approach for the entire small group market as
well.
Response: This final rule does not make any changes to the
guaranteed availability requirements as they apply in connection with
minimum participation or contribution rules. We note that States have
flexibility to further restrict the use of minimum employer
contribution or group participation rules as appropriate.
3. Guaranteed Renewability of Coverage (Sec. 147.106)
Title XXVII of the PHS Act includes several exceptions to its
guaranteed renewability provisions, including when a group health plan
sponsor has violated a material plan provision relating to employer
contribution or group participation rules, provided applicable State
law allows an exception to guaranteed renewability under such
circumstances; and for coverage made available in the individual
market, or small or large group market only through one or more bona
fide associations, if the individual's or employer's membership in the
association ceases. Although the Affordable Care Act removed from Title
XXVII these exceptions as they applied to guaranteed availability, it
did not do so with respect to guaranteed renewability. Therefore, as we
pointed out in the preamble to the proposed rule, a large employer
whose coverage is non-renewed for one of these reasons, and a small
employer whose coverage is non-renewed due to membership ceasing in an
association, could be seen to have a right to immediately purchase that
same coverage (if available in the market) from that same issuer in
accordance with guaranteed availability. In the preamble to the
proposed rule, we suggested that this renders effectively meaningless
these two exceptions to guaranteed renewability in these contexts, and
we proposed to amend Sec. 147.106 to remove these guaranteed
renewability exceptions.
For the reasons discussed in greater detail below, the final rule
does not remove the guaranteed renewability exceptions related to
failure to satisfy minimum employer contribution or group participation
rules, or loss of association membership, because we have determined
upon further consideration these exceptions can
[[Page 12214]]
affect the insurance plan choices available to consumers and employers.
Comment: Two commenters suggested we should not remove the
guaranteed renewability exceptions when a small employer's membership
in an association ceases. The commenters stated that typically a
blanket master policy is issued to the association and it would not be
appropriate for small employers who leave the association to continue
to receive coverage through the same policy.
Response: Based on the comments received and after further review
and consideration of the statutory provisions, we have concluded that
the guaranteed availability requirements do not render effectively
meaningless the guaranteed renewability exceptions for loss of
association membership or failure to meet group participation or
contribution rules. For example, an employer with association coverage
leaving the association mid-year and losing coverage may be subject to
a different premium rate under a new policy based on a quarterly rate
update in the small group market or a new experience rate in the large
group market. Further, we recognize that association members who cease
membership in an association and lose coverage may have their
deductible and maximum out of pocket limit reset under a new policy.
The same logic applies with respect to employers whose coverage is
terminated mid-year for failure to meet an issuer's participation or
contribution rules. And, small employers whose coverage is terminated
for failure to meet minimum participation or contribution rules might
not be able to purchase new coverage until the next annual enrollment
period from November 15 to December 15. For these reasons, we believe
these exceptions to guaranteed renewability continue to have relevance,
and we are not finalizing our proposal to remove them from the
regulations.
4. Student Health Insurance Coverage (Sec. 147.145)
a. Index Rate Setting Methodology for Student Health Insurance Coverage
Under Sec. 147.145, student health insurance coverage is a type of
individual health insurance coverage that, subject to certain limited
exceptions, must comply with the PHS Act requirements that apply to
individual health insurance coverage. However, section 1560(c) of the
Affordable Care Act provides that nothing in title I of the Affordable
Care Act (or an amendment made by title I) is to be construed to
prohibit an institution of higher education from offering a student
health insurance plan to the extent that the requirement is otherwise
permitted under applicable Federal, State, or local law. HHS has
exercised its authority under section 1560(c) of the Affordable Care
Act to modify some of its rules as applied to student health insurance
coverage, including those related to the guaranteed availability,
guaranteed renewability, and single risk pool requirements.
As we stated in the preamble to the proposed rules, our intent in
exempting student health insurance coverage from the single risk pool
requirement was to provide that student health insurance issuers need
not include their student health insurance coverage in their overall
individual market (or merged market) risk pool, and also need not have
one single risk pool composed of their total statewide book of student
health insurance business. Rather, we intended that issuers could
establish risk pools for students and their dependents separate from
the issuer's individual market or merged market risk pool, including by
establishing separate risk pools for different institutions of higher
education, or multiple risk pools within a single institution. However,
as explained in the preamble to the proposed rule, we have learned that
student health insurance issuers may be using certain rating factors
that lead to rates that might not be actuarially justified.
As stated in the preamble to the proposed rule, we do not intend to
disrupt rate setting for student health insurance, but we do seek to
ensure that rates are based on actuarially justified factors. To
clarify our intent, we proposed, for policy years beginning on or after
January 1, 2017, that student health insurance coverage be subject to
the index rate setting methodology of the single risk pool provision in
the regulation at Sec. 156.80(d). However, student health insurance
issuers still would be permitted to establish separate risk pools from
their individual market single risk pool (or merged market risk pool,
where applicable) for student health insurance coverage, including by
establishing separate risk pools for different institutions of higher
education, or multiple risk pools within a single institution, provided
they are based on a bona fide school-related classification (for
example, graduate students and undergraduate students) and not a health
status-related factor as described in Sec. 146.121. Consistent with
our single risk pool policy, the index rates for these risk pools would
be based upon actuarially justified estimates of claims. We proposed
that permissible plan-level adjustments to these index rates would be
limited to those permitted under our rules. This approach would
continue to allow rates for student health insurance coverage to
reflect the unique characteristics of the student population at the
particular institution, while more clearly delineating our intent with
regard to the treatment of student health insurance coverage. We sought
comment on any potential operational challenges associated with this
proposal, including potential challenges related to filing rates for
student health insurance coverage and how this policy might be adjusted
to address those challenges.
We finalize in this rule our proposal that student health insurance
issuers may establish one or more risk pools per institution of higher
education, provided that the risk pools are based on a bona fide
school-related classification and not based on a health factor as
described in Sec. 146.121. In response to comments, we are not
finalizing our proposal that student health insurance coverage must
comply with the single risk pool index rate setting methodology.
However, we are requiring that student health insurance rates reflect
the claims experience of individuals who comprise the risk pool and any
adjustments to rates within a risk pool must be based on actuarially
justified factors. We are also removing outdated provisions in Sec.
147.145(b)(2) and (d) providing that student health insurance issuers
may impose annual dollar limits for policy years beginning before
January 1, 2014. Those provisions, by their own terms, no longer apply,
as student health insurance issuers are subject to the provisions in
Sec. 147.126 that prohibit annual dollar limits on EHB for policy
years beginning on or after January 1, 2014. Accordingly, we are
finalizing the AV provision proposed in paragraph (b)(4) at paragraph
(b)(2), and deleting outdated paragraphs (d) and (e).
Comment: While one commenter supported the proposal to subject
student health insurance issuers to the index rate setting methodology,
several commenters were opposed to the proposal, citing concerns about
additional administrative and regulatory burdens on both issuers and
State regulators, as well as concerns about limiting consumer choice
and flexibility and undermining the role of institutions of higher
education in arranging for coverage that best meets the needs of their
student populations.
Response: After carefully considering these comments, we have
determined not to apply the single risk pool index
[[Page 12215]]
rate setting methodology to student health insurance coverage. While we
continue to have concerns that student health insurance issuers may be
setting rates that are not based upon actuarially justified estimates
of claims, we are also mindful of the concerns about potential
administrative burden. The single risk pool rate setting methodology is
one means of ensuring rates are actuarially justified. Therefore, while
student issuers will not be required to use that particular methodology
to establish rates, the final rule requires that rates for student
health insurance coverage reflect the claims experience of individuals
who comprise the risk pool and any adjustments to rates within a risk
pool must be actuarially justified. We intend to monitor whether
factors are being used to develop rates for student health insurance
coverage that are not actuarially justified, such as adjusting rates
based upon the length of time the coverage has been underwritten by the
issuer.
Comment: Several commenters supported our proposal to permit
issuers to establish one or more risk pools per institution of higher
education, provided the risk pools are based on a bona fide school-
related classification and not a health factor as described in Sec.
146.121. Two commenters urged us not to permit multiple risk pools
within a single institution of higher education, expressing concern
that subgroups could be discriminatory in nature. One commenter
requested clarification that issuers may create risk pools comprised of
more than one college or university.
Response: The final rule provides that student risk pools must be
based on a bona fide school-related classification and not a health
factor as defined in Sec. 146.121. The risk pools may include
enrollees at one or multiple institutions of higher educations in the
State or nationally, or certain subgroups within a single institution
of higher education, provided that the risk pools are based on a bona
fide classification and not discriminatory based on health status. We
believe these standards balance issuer flexibility with appropriate
safeguards against potentially discriminatory risk pooling practices.
We note that nothing prevents a State from requiring broader risk
pooling with respect to student health insurance coverage than provided
for in this final rule (for example, requiring each student health
insurance issuer to establish one risk pool comprised of its entire
student health insurance book of business).
Comment: Some commenters requested clarification that issuers may
establish separate risk pools for students and dependents. Other
commenters suggested that issuers should be permitted to apply
actuarially justified rating factors to distinguish between students
and their dependents who are on the same plan or cross-subsidize
between students and dependents in order to keep premiums for dependent
coverage affordable.
Response: Under this final rule, an issuer may create separate risk
pools for students and dependents. Dependent rates may vary from those
for students as long as dependents constitute a separate risk pool and
are enrolled in separate coverage from students. However, consistent
with the rating rules under section 2701 of the PHS Act, if students
and dependents are enrolled in the same coverage, then rates may not
vary based on student or dependent status, but may vary based on age
and family size. Nothing in this final rule prevents an issuer from
including students and dependents in the same risk pool.
b. Actuarial Value Requirements for Student Health Insurance Plans
As stated in the preamble to the proposed rule, many colleges and
universities have reported to us that they offer student health
insurance plans that are rich in benefits (for example, providing an
actuarial value of 96 percent) and that they are reluctant to reduce
the level of benefits to meet an actuarial value metal level. We stated
that because enrollees in student health insurance plans are not
typically selecting among such plans, there is less need for
standardization of actuarial levels in this part of the individual
market. Therefore, we proposed to add an exemption to the requirements
for student health insurance coverage in Sec. 147.145, under which,
for plan years beginning on or after January 1, 2017, student health
insurance coverage would be exempt from the actuarial value ``metal
level'' requirements under section 1302(d) of the Affordable Care Act,
as implemented in Sec. Sec. 156.135 and 156.140, but would be required
to provide an actuarial value of at least 60 percent. To determine a
plan's actuarial value for purposes of the application of the 60
percent actuarial value requirement to student health insurance
coverage, we proposed to require student health insurance coverage
issuers to obtain certification by an actuary that the plan provides an
actuarial value of at least 60 percent. This determination would be
required to be made by a member of the American Academy of Actuaries,
based on analysis in accordance with generally accepted actuarial
principles and methodologies. We sought comment on this proposal,
including whether to continue to require student health insurance
issuers to determine the actuarial value of their coverages by using
the actuarial value calculator, as currently required, instead of
through actuarial certification.
We are finalizing our proposal to require student health insurance
coverage to meet a minimum 60 percent actuarial value, as opposed to
meeting any specific metal level. We are not finalizing our proposal
that actuarial value would be determined by certification of an actuary
but rather require that it be determined using the actuarial value
calculator, as is the case for other individual market and small group
market coverage. Requiring the actuarial value of student health
insurance coverage to be calculated using the same methodology as those
other types of coverage will allow students and their dependents to
better compare the generosity of student health insurance with other
available coverage options, such as coverage under a parent's plan or
coverage through the Exchange. We also specify that this provision will
apply for ``policy years'' beginning on or after July 1, 2016 as
opposed to plan years beginning on or after January 1, 2017. The
reference to ``policy years'' is the more appropriate term with regard
to student health insurance coverage, a type of individual market
coverage. We recognize that student health plans typically operate on a
policy year that is not the calendar year, and therefore we have
modified the provision to take effect beginning with coverage for the
upcoming academic year as was our intent in the proposed rule.
Comment: Several commenters supported our proposal to require
student health insurance plans to meet at least 60 percent actuarial
value, instead of meeting any specific metal level. However, several
commenters stated that student health insurance plans should be
required to meet metal levels, for purposes of transparency and
comparability with other plans.
Response: Although we are finalizing the 60 percent actuarial value
proposal, we agree that it is important for enrollees and potential
enrollees in student health insurance plans to be able to compare such
plans with others for which they may be eligible, such as their
parents' plan or an individual market non-student plan. In the proposed
rule, we had solicited comments on whether to require student health
insurance issuers to specify, in their summary of benefits and coverage
[[Page 12216]]
(SBC) documents, enrollment materials, marketing materials, or other
materials, the actuarial value of the coverage, the next lowest metal
level the coverage would otherwise satisfy, based on its actuarial
value, or any other data that would give enrollees and prospective
enrollees information about the actuarial value of the coverage.
Several commenters supported this general approach. One opposed it,
arguing that the actuarial value for student health insurance coverage
is an unreliable indicator of the true value of the plan. However, we
believe that disclosing the actuarial value of the coverage, and the
next lowest metal level the coverage would otherwise satisfy, based on
its actuarial value, would be a helpful tool. Therefore, we are
finalizing a requirement that student health insurance issuers must
disclose, in any plan materials summarizing the terms of the coverage,
the actuarial value of the coverage and the metal level (or next lowest
metal level) the coverage would satisfy. This requirement will not
apply to the SBC, unless and until such information is incorporated
into the SBC template and instructions.
Comment: One commenter recommended removing the 92 percent
actuarial value cap on platinum level student plans instead of
eliminating the metal level requirements altogether.
Response: We believe that the same reasons to give platinum plans
flexibility with respect to actuarial value also apply to other metal
level plans. Therefore, we are providing flexibility in this final rule
for student health insurance plans to provide any AV at or above 60
percent.
D. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment Under the Affordable Care Act
In the proposed rule, we proposed a number of modifications to the
risk adjustment, reinsurance, and risk corridors programs.
Comment: One commenter asked that HHS present all regulatory
information related to the premium stabilization programs in a clear,
transparent, reliable and timely manner. Another commenter asked that
the risk adjustment and reinsurance data collection requirements be
limited to data currently held by plans in order to not increase the
administrative burden on providers.
Response: HHS is committed to providing regulations and guidance in
a clear and timely manner, and seeks to minimize the administrative
burden of our data collection.
1. Sequestration
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2016,\9\ both the transitional
reinsurance program and permanent risk adjustment program are subject
to the fiscal year 2016 sequestration. The Federal government's 2016
fiscal year began on October 1, 2015. The reinsurance program will be
sequestered at a rate of 6.8 percent for payments made from fiscal year
2016 resources (that is, funds collected during the 2016 fiscal year).
To meet the sequestration requirement for the risk adjustment program
for fiscal year 2016, HHS will sequester risk adjustment payments made
using fiscal year 2016 resources in all States where HHS operates risk
adjustment at a sequestration rate of 7.0 percent. HHS estimates that
increasing the sequestration rate for all risk adjustment payments made
in fiscal year 2016 to all issuers in the States where HHS operates
risk adjustment by 0.2 percent will permit HHS to meet the required
national risk adjustment program sequestration percentage of 6.8
percent noted in the OMB Report to Congress.
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\9\ Office of Management and Budget, OMB Report to the Congress
on the Joint Committee Reductions for Fiscal Year 2016 (Feb. 2,
2015), available at https://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/2016_jc_sequestration_report_speaker.pdf.
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HHS, in coordination with OMB, has determined that, under section
256(k)(6) of the Balanced Budget and Emergency Deficit Control Act of
1985 (the BBEDCA), as amended, and the underlying authority for these
programs, the funds that are sequestered in fiscal year 2016 from the
reinsurance and risk adjustment programs will become available for
payment to issuers in fiscal year 2017 without further Congressional
action. If the Congress does not enact deficit reduction provisions
that replace the Joint Committee reductions, these programs will be
sequestered in future fiscal years, and any sequestered funding will
become available in the fiscal year following the one in which it was
sequestered.
Comment: One commenter stated that risk adjustment payments should
not be subject to sequestration because the risk adjustment program is
budget neutral and the Federal government is simply transferring funds
among issuers.
Response: The BBEDCA requires all non-exempt budgetary resources be
sequestered in amounts sufficient to achieve the savings targets
established in the Budget Control Act of 2011. Risk adjustment payments
are subject to sequestration as they are budgetary resources provided
for by Federal law, and the risk adjustment program is not specifically
exempted under section 255 of the BBEDCA. Therefore, as clarified in
the OMB Report to Congress on the Joint Committee Reductions for Fiscal
Year 2016, the risk adjustment program is subject to sequestration.
Under section 256(k)(6) of the BBEDCA and the underlying authority for
these programs, funds that are sequestered in fiscal year 2016 from the
reinsurance and risk adjustment programs will become available for
payment to issuers in fiscal year 2017 without further Congressional
action.
2. Provisions and Parameters for the Permanent Risk Adjustment Program
In subparts D and G of 45 CFR part 153, we established standards
for the administration of the risk adjustment program. The risk
adjustment program is a permanent program created by section 1343 of
the Affordable Care Act that transfers funds from lower risk, non-
grandfathered plans to higher risk, non-grandfathered plans in the
individual and small group markets, inside and outside the Exchanges.
In accordance with Sec. 153.310(a), a State that is approved or
conditionally approved by the Secretary to operate an Exchange may
establish a risk adjustment program, or have HHS do so on its behalf.
On January 8, 2016, we announced that HHS will hold a public
conference to discuss potential improvements to the HHS risk adjustment
methodology for the 2018 benefit year and beyond. The conference will
take place on March 31, 2016, in the Grand Auditorium at the Centers
for Medicare and Medicaid Services in Baltimore, Maryland.\10\ Prior to
the conference, we intend to issue a White Paper that will be open for
public comment. The conference and White Paper will focus on what we
have learned from the 2014 benefit year of the risk adjustment program,
and specific areas of potential refinements to the methodology,
including prescription drug model exploration, accounting for partial
year enrollment, future recalibrations using risk adjustment data, and
discussion of the risk adjustment transfer formula. Registration for
the conference opened on January 25, 2016, and is available at https://www.regtap.info/ until March 23, 2016, for onsite attendance
registration, and March 28, 2016, for remote attendance registration.
Stakeholders who are unable to attend
[[Page 12217]]
the conference in person may live stream the conference and provide
feedback via the webinar. Additional information can be found at
https://www.regtap.info/RAonsite.php.
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\10\ HHS-Operated Risk Adjustment Methodology Meeting; March 31,
2016, 81 FR 4633 (Jan. 27, 2016).
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a. Overview of the HHS Risk Adjustment Model (Sec. 153.320)
The HHS risk adjustment model predicts plan liability for an
average enrollee based on that person's age, sex, and diagnoses (risk
factors), producing a risk score. The HHS risk adjustment methodology
utilizes separate models for adults, children, and infants to account
for cost differences in each of these age groups. In each of the adult
and child models, the relative costs assigned to an individual's age,
sex, and diagnoses are added together to produce a risk score. Infant
risk scores are determined by inclusion in one of 25 mutually exclusive
groups, based on the infant's maturity and the severity of its
diagnoses. If applicable, the risk score is multiplied by a cost-
sharing reduction adjustment.
The enrollment-weighted average risk score of all enrollees in a
particular risk adjustment-covered plan, or the plan liability risk
score, within a geographic rating area is one of the inputs into the
risk adjustment payment transfer formula, which determines the payment
or charge that an issuer will receive or be required to pay for that
plan. Thus, the HHS risk adjustment model predicts average group costs
to account for risk across plans, which, as we stated in the 2014
Payment Notice, accords with the Actuarial Standards Board's Actuarial
Standards of Practice for risk classification.
We received several general comments regarding the HHS risk
adjustment methodology.
Comment: Many commenters reiterated their support for the HHS risk
adjustment methodology. Some commenters requested a cap on risk
adjustment transfers. Some commenters also suggested that, under our
methodology, low-cost and low-risk-score issuers subsidize higher cost
issuers, and that the model has adverse effects on limited network
plans and new, small, and fast-growing plans. Commenters requested
exempting new, small, and fast-growing plans from risk adjustment for
the first 3 to 5 plan years, in recognition of the difficulty they are
having in obtaining complete hierarchical condition categories (HCC)
diagnostic classifications for their enrollees. Commenters also
suggested gradually phasing in new issuers to risk adjustment or
instituting a credibility threshold for participation. One commenter
requested that issuers with fewer than 5,000 enrollees or less than 5
percent market share be exempt from risk adjustment. Two commenters
requested that HHS set a cap on risk adjustment transfers based on MLR
when the amount of the transfer causes the issuer's MLR to hit 90
percent. Specifically, the commenters requested excluding issuers with
an MLR of 90 percent or greater, and capping an issuer's risk
adjustment payment once it causes the issuer's MLR to rise to 90
percent.
Response: We agree that the risk adjustment program is intended to
work with the fair rating rules under the Affordable Care Act to
reimburse issuers who take on riskier enrollees, not to prevent
issuers, including small and fast-growing issuers, from participating
in the individual and small group markets. In this final rule, we are
finalizing more accurate model coefficients for 2017 benefit year risk
adjustment. We will discuss in the upcoming White Paper potential
future improvements to the HHS risk adjustment methodology that we
believe will continue to improve the accuracy of the model and benefit
all consumers and issuers in these markets by helping ensure fair
rating practices across those risk pools because issuers will have the
expectation of accurate risk adjustment payments. Any changes we make
to the HHS risk adjustment methodology would be implemented through
rulemaking as necessary.
Comment: One commenter requested that HHS verify that plans that
are subject to risk adjustment data validation (RADV) are correctly
implementing the definition of small group, suggesting that eligibility
can be verified with an employer's wage and tax statements.
Response: We will consider ways to enhance the RADV audits in
operationally feasible ways without infringing on the States' primary
regulatory and oversight authority over health insurance issuers.
Comment: One commenter recommended that HHS advance its schedule
for publishing the proposed Notice of Benefit and Payment Parameters to
early fall, and requested that HHS provide a 60-day comment period to
allow for more detailed and substantive comments on major proposed
changes to the risk adjustment model.
Response: We are exploring our flexibility in moving the Payment
Notice schedule to an earlier timeframe.
b. Proposed Updates to the Risk Adjustment Model (Sec. 153.320)
In the proposed rule, we proposed to continue to use the same risk
adjustment methodology finalized in the 2014 Payment Notice. We
proposed to make certain updates to the risk adjustment model to
incorporate preventive services into our simulation of plan liability,
and to reflect more current data. The proposed data updates are similar
to the ones we effectuated for 2016 risk adjustment in the 2016 Payment
Notice. We proposed to recalculate the weights assigned to the various
hierarchical condition categories and demographic factors in our risk
adjustment models using the most recent data available. As we
previously described, in the adult and child models, enrollee health
risks are estimated using the HHS risk adjustment model, which assigns
a set of additive factors that reflect the relative costs attributable
to demographics and diagnoses. Risk adjustment factors are developed
using claims data and reflect the costs of a given disease relative to
average spending. The longer the lag in data used to develop the risk
factors, the greater the potential that the costs of treating one
disease versus another have changed in a manner not fully reflected in
the risk factors.
To provide risk adjustment factors that best reflect more recent
treatment patterns and costs, we proposed to recalibrate the HHS risk
adjustment models for 2017 by using more recent claims data to develop
updated risk factors. The risk factors published in the proposed 2017
Payment Notice were developed using the Truven Health Analytics 2012
and 2013 MarketScan[supreg] Commercial Claims and Encounters database
(MarketScan); we proposed to update the risk factors in the HHS risk
adjustment model using 2012, 2013, and 2014 MarketScan data in the
final 2017 Payment Notice when 2014 MarketScan became available. In
using 2012, 2013, and 2014 MarketScan data, we blend, or average, the
resulting coefficients from the separately solved models from each
dataset. We do not weight one year more heavily than the others.
We stated that we believe we can more accurately account for high-
cost conditions with new treatments that are not reflected in our model
due to lags in the data available to us for recalibration. We believe
that stability across our models is important, but sought comment and
data that may inform better methods of accurately compensating for new
treatments for high cost conditions. For example, we
[[Page 12218]]
sought comment on whether there are ways to model the severity of these
conditions in a manner that will more fully capture the highest cost
enrollees.
Comment: One commenter requested that HHS incorporate 2014 and 2015
data for the individual and small group populations subject to risk
adjustment, giving issuers notice of this incorporation no later than
December 2016, so that they can determine and file plan year 2018 rates
with each State.
Response: Under our current distributed data collection approach,
we do not have access to enrollee-level data, which is necessary for
risk adjustment recalibration. However, we intend to discuss
incorporating enrollee-level data in future recalibrations in the
upcoming White Paper, which will be published for public comment.
Comment: Commenters stated that risk adjustment coefficients are
too low for enrollees without HCCs and too high for those with one or
more HCCs. One commenter recommended that the adult and child models be
calculated regionally or specifically for each State. One commenter
encouraged HHS to include socioeconomic status and oral health services
in the model, especially the child model.
Response: We have attempted to address the range between enrollees
without HCCs and those with HCCs by finalizing the incorporation of
preventive services into our simulation of plan liability. While
overall this is not a very large effect, it does have a noticeable
effect on certain demographic subgroups, resulting in more accurate
payments for enrollees without HCCs. As for calculating the adult and
child models regionally or by State, we believe that the use of the
geographic cost factor (GCF) in the payment transfer formula should
reflect prevailing utilization and expenditure patterns in the
geographic location of the plan's enrollees. We intend to explore
whether accounting for socioeconomic status is feasible in the risk
adjustment model in the future.
Comment: All commenters on this section of the proposed rule
supported HHS's efforts to make the risk adjustment models more
accurate by addressing the lag in available health claims data. Many
commenters also supported various approaches in more accurately
addressing high-cost conditions, which are particularly susceptible to
the lag in health claims costs because of the rapidly rising costs of
certain specialty drugs. One commenter opposed the use of 2014 data
unless the updated model is provided in time to be used for 2017 rate
filings. Conversely, another commenter recommended HHS use 2013, 2014,
and 2015 MarketScan data for 2017 risk adjustment, and 2014, 2015, and
2016 MarketScan data for 2018 risk adjustment, stating that HHS should
finalize the process and methodology in each year's Payment Notice and
release the updated factors later. A commenter acknowledged that the
incorporation of new 2014 data in the calibration of the risk weights
helps address new high-cost treatments, but that under the current
model, the benefits of the modification are limited because the use of
3-year averaging means it will take 3 years for the risk weights to
fully reflect changes in treatment patterns. Commenters recommended
that HHS consider whether individual market data might show different
relative weights for certain high-cost conditions than the population
currently used for the risk adjustment calibration. Commenters also
recommended that HHS evaluate the increase in costs for chronic
conditions (specifically Hepatitis C, for which expensive prescription
drug therapies have become recently available) year over year and trend
or adjust the aggregated claims data or model to reflect the changes--
this would allow HHS to respond to changes in treatment practices
without relying on additional external data. One commenter recommended
that more weight and credibility should be given to the most recent
data to best capture emerging trends in treatments, drug therapies, and
costs.
Response: We agree with commenters that there may be more precise
ways to trend expenditures to accommodate the data lag and more
accurately reflect the introduction of new treatments, including
prescription drug therapies, for high cost conditions. Based on
commenters' feedback on the need to better model the risk of high-cost
conditions and rapidly changing health care costs, we re-examined the
underlying trend factor we used to trend medical and prescription drug
expenditures in the MarketScan data, because those expenditures account
for a large portion of the recent changes in costs to treat high-cost
conditions. Because we were using the same trend for both sets of
expenditures, we looked at historical MarketScan drug data, subdivided
by traditional (including branded and generic) drugs, specialty drugs,
and medical and surgical expenditures, and found varying growth rates.
In order to address commenters' feedback, we consulted with actuaries
and industry reports to derive a specialty drug trend rate and
traditional drug trend rate through 2017. We believe that using these
more granular trend rates better reflect the growth in specialty drug
expenditures and drugs generally as compared to medical and surgical
expenditures. Further, we believe that more accurately trending drug
expenditures through 2017 will more accurately compensate issuers
providing new treatments associated with specific HCCs by providing a
more finely tuned estimate of the relative costs of various conditions
under the HHS risk adjustment methodology. We have incorporated
different trend factors for (i) traditional drugs, (ii) specialty
drugs, and (iii) medical and surgical expenditures, and are finalizing
this approach for 2017 risk adjustment. This approach is reflected in
the finalized coefficients in this final rule.
We proposed to incorporate preventive services into our simulation
of plan liability in the recalibration of the risk adjustment models
for 2017. We identified preventive services for the 2012, 2013, and
2014 MarketScan samples using procedure and diagnosis codes,
prescription drug therapeutic classes, and enrollee age and sex. We
relied on lists of preventive services from several major issuers, the
preventive services used for the AV Calculator, and Medicare's
preventive services benefit to operationalize preventive services
definitions for incorporation in the risk adjustment models. We then
adjusted plan liability by adding 100 percent of preventive services
covered charges to simulate plan liability for all metal levels. We
also applied standard benefit cost sharing rules by metal level to
covered charges for non-preventive services. Total adjusted simulated
plan liability is the sum of preventive services covered charges, and
non-preventive services simulated plan liability.
We re-estimated the risk adjustment models by metal level,
predicting plan liability adjusted to account for preventive services
without cost sharing. We compared the model coefficients predicting
original (that is, non-adjusted for preventive services) and adjusted
simulated plan liability. Adjusting for preventive services increases
age-sex coefficients relative to HCC coefficients, especially in the
lower metal tiers (bronze and silver), and in age/sex ranges with high
preventive services expenditures (for example, young adult females).
The implication of the changes to the model coefficients is that the
risk scores of healthy enrollees (whose risk scores are based solely on
model age-sex coefficients) will likely rise relative to the risk
scores of the less healthy (whose risk scores
[[Page 12219]]
include one or more HCC coefficients in addition to an age-sex
coefficient), especially in bronze and silver plans. As a result of the
risk score changes for individuals, we expect that the incorporation of
preventive services will increase the risk scores of bronze and silver
plans with healthier enrollees relative to other plans' risk scores
when preventive services are taken into account. This incorporation of
preventive services will more accurately compensate risk adjustment
covered plans with enrollees who use preventive services.
Comment: Most commenters supported the incorporation of preventive
services into our simulation of plan liability in the risk adjustment
model. Two commenters expressed concern that this change would
unintentionally create an incentive for issuers to attract and retain
healthier individuals rather than higher risk individuals, while
another commenter supported including preventive services, but
suggested that the approach proposed by HHS appears to compensate all
plans, regardless of whether their members receive preventive services,
thereby creating a ``free rider'' problem. One commenter noted that
while the incorporation of preventive services does increase
demographic factors for catastrophic plans and for females within
bronze plans, the impact of this change is relatively small and does
not resolve concerns about unbalanced incentives to attract enrollees
with HCC diagnoses.
Response: Section 2713 of the PHS Act, as added by the Affordable
Care Act requires that individual and small group non-grandfathered
plans (among others) provide coverage for a range of preventive
services and may not impose cost sharing on patients receiving these
services. We believe it is essential that we are consistent with the
goals of the Affordable Care Act and provide compensation to issuers
who are required to provide these services without cost sharing. As
such, we also believe that accurately accounting for services provided
by issuers to healthier enrollees is a fair adjustment to real,
baseline costs paid by these issuers. As for concerns about a ``free
rider'' problem, all risk adjustment covered plans are required to
provide zero cost sharing preventive services. Even if different
enrollees use preventive services to different extents, by
incorporating zero cost sharing preventive services in the calculation
of plan liability when calibrating the models' coefficients, we will
increase the accuracy of the model overall, accounting for any
differential use of preventive services at the plan level. We believe
that this increased accuracy for demographic factors coupled with our
adjustments to medical and prescription drug expenditures will promote
increased accuracy for all enrollees, with and without HCCs. We are
finalizing the incorporation of preventive services into our simulation
of plan liability as proposed.
Additionally, we are evaluating whether and how we may incorporate
prescription drug data in the Federally certified risk adjustment
methodology that HHS uses when it operates risk adjustment.
Prescription drug data could be used in the risk adjustment methodology
to supplement diagnostic data by using the prescription drug data as a
severity indicator, or as a proxy for diagnoses in cases where
diagnostic data are likely to be incomplete. We are assessing these
approaches, with particular sensitivity to reliability and the
potential for strategic behavior with respect to prescribing behavior.
As we noted in the 2014 Payment Notice, we did not use prescription
drug utilization as a predictor of expenditures to avoid creating
adverse incentives to modify discretionary prescribing. We are
evaluating whether we can improve the models' predictive power through
the incorporation of prescription drugs without unduly incentivizing
altered prescribing behavior. We sought comment and any data that could
inform effective methods of incorporating prescription drug data in
future recalibrations.
Comment: Most commenters supported incorporating prescription drugs
as predictors in the risk adjustment model either as a proxy for
missing diagnoses or an indicator of severity. Some commenters shared
HHS's concerns about creating incentives to modify discretionary
prescribing to artificially increase the severity of diagnoses and one
commenter expressed concern about keeping the model current with
pharmaceutical developments that could create an additional operational
burden for both health plans and HHS. Some commenters suggested that
prescription drugs be included for 2017 risk adjustment. One commenter
requested that HHS incorporate prescription drugs as soon as possible.
Commenters supported 2018 implementation (rather than 2017) and one
commenter suggested that any changes to include prescription drugs
should include greater detail and go through the regular notice and
comment process. Commenters suggested that HHS include prescription
drug data in a limited manner, such as drugs with no off label use or
drugs approved for treatment of a single condition. One commenter
recommended that all prescription drugs used to treat HCC conditions be
included. Commenters stated that including prescription drugs could
significantly increase payment accuracy and yield benefits to the
payment system far in excess of any additional administrative burden.
Commenters further stated that prescription drug claims data have
certain advantages in that the data are fairly uniform across plans and
do not have many of the issues associated with diagnosis data, such as
timeliness and inconsistency of reporting across providers, in addition
to already being included in EDGE Server data and readily available to
HHS. Commenters also stated that including prescription drugs as a
proxy for missing diagnoses could level the playing field for smaller
issuers that are less experienced with medical coding. Similarly,
commenters supported the inclusion of pharmacy data to address partial
year enrollees with chronic conditions that have prescription drug
claims, but may not have a provider encounter with a documented
diagnosis. One commenter requested that HHS work with stakeholders to
refine the prescription drug data that would be utilized if this
proposal is finalized and requested that HHS consider how to gather and
incorporate data on prescription drug utilization collected by
electronic health records. Commenters cautioned HHS to be mindful that
different characteristics of prescription drug utilization will be more
or less predictive depending on the condition. Commenters also warned
that gaming concerns need to be balanced with the desire to enhance the
risk adjustment methodology's predictive power. A commenter also
cautioned that the proposed use of prescription drug data should have
definitions and guardrails that delineate its use. Lastly, commenters
stated that using prescription drug data is important because without
an accurate risk adjustment methodology that accounts for the extra
costs that plans incur by enrolling high-risk patients, plans have an
incentive to design benefits in a manner that discourages enrollment by
these patients.
Response: We will explore the incorporation of prescription drugs
in the risk adjustment model in the White Paper and at the conference
in March 2016. We agree with commenters that prescription drugs have
the potential to increase the predictive power of the risk adjustment
models. We agree that different prescription drugs will likely
[[Page 12220]]
be more or less predictive depending on the condition. We also remain
cautious about creating incentives to modify discretionary prescribing
to artificially increase the severity of diagnoses. However, we look
forward to continuing to explore this potential improvement to the
models with stakeholders and to share our developments in the White
Paper and at the risk adjustment conference on March 31, 2016.
Lastly, we stated in the proposed rule that we would like to
explore the effect of partial year enrollment in the HHS risk
adjustment methodology. We have received input that issuers are
experiencing higher than expected claims costs for partial year
enrollees. We have also received input that the methodology does not
capture enrollees with chronic conditions who may not have accumulated
diagnoses in their partial year enrollment. At the same time, as
compared to full year enrollees of the same relative risk, partial year
enrollees are less likely to have spending that exceeds the deductible
or annual limitation on cost sharing. We sought comment on how the
methodology could be made more predictive for partial year enrollees.
Comment: Many commenters supported addressing partial year
enrollees in the model. One commenter noted that many medical events
for enrollees in the commercial market (for example, maternity,
surgeries) represent acute rather than chronic events, so the enrollee
can incur most of their annual medical expenses during a short period
of time. Commenters suggested that the use of prescription drug claims
could help address enrollees with a chronic condition but who do not
have a provider encounter with a documented diagnosis. Commenters also
suggested that the impact of partial year enrollment could be measured
by taking a population that had multiple years of enrollment and
comparing risk scores and health care costs when only a partial year is
considered. Commenters noted Massachusetts' adjustment for partial-year
enrollment, and suggested that HHS consider additional analysis to
determine whether that approach is appropriate for the HHS risk
adjustment methodology. One commenter suggested a member-level
adjustment while another commenter suggested a duration-based
adjustment. Another commenter recommended that the adjustment vary by
metal level and length of time enrolled, with higher weights for gold
and platinum plans and shorter enrollment periods. One commenter
suggested that HHS should permit risk scores to travel with an enrollee
across issuers. Two commenters opposed an explicit adjustment for
partial year enrollees, because they said such an adjustment would
accommodate liberal enforcement of special enrollment periods,
incentivizing issuers to employ loose eligibility standards to gain
members, but ultimately eroding individual market stability. A few
commenters recommended that to better address partial year enrollment
in risk adjustment, changes should be made to special enrollment period
processes and policies to encourage continuous coverage and prevent
fraud and abuse. Commenters stated that unverified special enrollment
periods have produced selection issues for health plans, as enrollees
enter through a special enrollment period, utilize high-cost services,
and then switch to a lower metal level plan in the following open
enrollment period or drop coverage altogether. One commenter cautioned
that any additions to the model to account for partial year enrollment
should improve reliability and predictive power, not influence clinical
judgment or plan behavior with respect to enrollees' coverage.
Response: We appreciate commenters' substantive feedback on
accounting for partial year enrollment in future recalibrations and
will continue to analyze this issue and include our findings in the
White Paper for discussion at the March 31, 2016 risk adjustment
conference.
c. List of Factors To Be Employed in the Model (Sec. 153.320)
The HHS risk adjustment models predict annualized plan liability
expenditures using age and sex categories and the HHS HCCs included in
the HHS risk adjustment model. Dollar coefficients were estimated for
these factors using weighted least squares regression, where the weight
was the fraction of the year enrolled.
We are including the same HCCs that were included in the original
risk adjustment calibration in the 2014 Payment Notice. For each model,
the factors are the statistical regression dollar values for each HCC
in the model divided by a weighted average plan liability for the full
modeling sample. The factors represent the predicted relative
incremental expenditures for each HCC. The factors resulting from the
blended factors from the 2012, 2013, and 2014 separately solved models
(with the incorporation of preventive services, and with different
trend rates for medical and surgical expenditures, for traditional
prescription drug expenditures, and for specialty prescription drug
expenditures) are shown in the tables below. For a given enrollee, the
sums of the factors for the enrollee's HCCs are the total relative
predicted expenditures for that enrollee. Table 1 contains factors for
each adult model, including the interactions. Table 2 contains the HHS
HCCs in the severity illness indicator variable. Table 3 contains the
factors for each child model. Table 4 contains the factors for each
infant model. We are finalizing these factors, with the adjustment for
the differing medical and traditional and specialty prescription drug
trend factors incorporated in the 2012, 2013, and 2014 blended
coefficients.
Table 1--Adult Risk Adjustment Model Factors
----------------------------------------------------------------------------------------------------------------
Factor Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Demographic Factors
----------------------------------------------------------------------------------------------------------------
Age 21-24, Male................. 0.236 0.180 0.119 0.082 0.081
Age 25-29, Male................. 0.246 0.186 0.122 0.083 0.082
Age 30-34, Male................. 0.287 0.216 0.138 0.089 0.088
Age 35-39, Male................. 0.346 0.264 0.172 0.112 0.111
Age 40-44, Male................. 0.420 0.326 0.221 0.151 0.149
Age 45-49, Male................. 0.496 0.392 0.273 0.192 0.191
Age 50-54, Male................. 0.633 0.512 0.372 0.275 0.274
Age 55-59, Male................. 0.722 0.585 0.429 0.320 0.318
Age 60-64, Male................. 0.843 0.683 0.502 0.372 0.369
Age 21-24, Female............... 0.379 0.296 0.200 0.138 0.137
Age 25-29, Female............... 0.460 0.359 0.247 0.173 0.172
[[Page 12221]]
Age 30-34, Female............... 0.582 0.466 0.337 0.254 0.252
Age 35-39, Female............... 0.668 0.542 0.405 0.318 0.316
Age 40-44, Female............... 0.742 0.604 0.455 0.357 0.355
Age 45-49, Female............... 0.750 0.608 0.450 0.344 0.342
Age 50-54, Female............... 0.845 0.691 0.518 0.398 0.395
Age 55-59, Female............... 0.849 0.690 0.510 0.380 0.378
Age 60-64, Female............... 0.909 0.734 0.537 0.395 0.392
----------------------------------------------------------------------------------------------------------------
Diagnosis Factors
----------------------------------------------------------------------------------------------------------------
HIV/AIDS........................ 8.942 8.450 8.099 8.142 8.143
Septicemia, Sepsis, Systemic 10.686 10.511 10.405 10.461 10.462
Inflammatory Response Syndrome/
Shock..........................
Central Nervous System 6.632 6.532 6.468 6.489 6.489
Infections, Except Viral
Meningitis.....................
Viral or Unspecified Meningitis. 4.657 4.422 4.263 4.222 4.222
Opportunistic Infections........ 8.503 8.404 8.337 8.319 8.319
Metastatic Cancer............... 24.314 23.880 23.578 23.637 23.638
Lung, Brain, and Other Severe 12.630 12.296 12.062 12.066 12.066
Cancers, Including Pediatric
Acute Lymphoid Leukemia........
Non-Hodgkin`s Lymphomas and 5.845 5.611 5.435 5.388 5.387
Other Cancers and Tumors.......
Colorectal, Breast (Age < 50), 5.152 4.918 4.738 4.690 4.689
Kidney, and Other Cancers......
Breast (Age 50+) and Prostate 2.957 2.786 2.650 2.597 2.596
Cancer, Benign/Uncertain Brain
Tumors, and Other Cancers and
Tumors.........................
Thyroid Cancer, Melanoma, 1.448 1.295 1.160 1.069 1.067
Neurofibromatosis, and Other
Cancers and Tumors.............
Pancreas Transplant Status/ 5.455 5.233 5.091 5.112 5.114
Complications..................
Diabetes with Acute 1.187 1.049 0.925 0.822 0.820
Complications..................
Diabetes with Chronic 1.187 1.049 0.925 0.822 0.820
Complications..................
Diabetes without Complication... 1.187 1.049 0.925 0.822 0.820
Protein-Calorie Malnutrition.... 13.686 13.693 13.702 13.762 13.763
Mucopolysaccharidosis........... 2.277 2.159 2.061 2.008 2.007
Lipidoses and Glycogenosis...... 2.277 2.159 2.061 2.008 2.007
Amyloidosis, Porphyria, and 2.277 2.159 2.061 2.008 2.007
Other Metabolic Disorders......
Adrenal, Pituitary, and Other 2.277 2.159 2.061 2.008 2.007
Significant Endocrine Disorders
Liver Transplant Status/ 16.042 15.868 15.759 15.771 15.772
Complications..................
End-Stage Liver Disease......... 7.119 6.877 6.718 6.736 6.737
Cirrhosis of Liver.............. 3.852 3.690 3.569 3.535 3.535
Chronic Hepatitis............... 3.852 3.690 3.569 3.535 3.535
Acute Liver Failure/Disease, 4.430 4.269 4.158 4.148 4.148
Including Neonatal Hepatitis...
Intestine Transplant Status/ 32.604 32.555 32.516 32.559 32.559
Complications..................
Peritonitis/Gastrointestinal 11.820 11.561 11.383 11.413 11.413
Perforation/Necrotizing
Enterocolitis..................
Intestinal Obstruction.......... 6.537 6.272 6.101 6.120 6.121
Chronic Pancreatitis............ 5.455 5.233 5.091 5.112 5.114
Acute Pancreatitis/Other 2.702 2.515 2.379 2.331 2.331
Pancreatic Disorders and
Intestinal Malabsorption.......
Inflammatory Bowel Disease...... 3.657 3.392 3.190 3.098 3.096
Necrotizing Fasciitis........... 6.576 6.378 6.239 6.254 6.255
Bone/Joint/Muscle Infections/ 6.576 6.378 6.239 6.254 6.255
Necrosis.......................
Rheumatoid Arthritis and 4.848 4.587 4.394 4.385 4.385
Specified Autoimmune Disorders.
Systemic Lupus Erythematosus and 1.205 1.070 0.952 0.868 0.867
Other Autoimmune Disorders.....
Osteogenesis Imperfecta and 3.115 2.917 2.758 2.699 2.697
Other Osteodystrophies.........
Congenital/Developmental 3.115 2.917 2.758 2.699 2.697
Skeletal and Connective Tissue
Disorders......................
Cleft Lip/Cleft Palate.......... 1.295 1.137 1.010 0.942 0.941
Hemophilia...................... 46.436 46.150 45.931 45.939 45.939
Myelodysplastic Syndromes and 12.671 12.534 12.440 12.448 12.449
Myelofibrosis..................
Aplastic Anemia................. 12.671 12.534 12.440 12.448 12.449
Acquired Hemolytic Anemia, 9.737 9.576 9.454 9.445 9.445
Including Hemolytic Disease of
Newborn........................
Sickle Cell Anemia (Hb-SS)...... 9.737 9.576 9.454 9.445 9.445
Thalassemia Major............... 9.737 9.576 9.454 9.445 9.445
Combined and Other Severe 5.432 5.284 5.182 5.183 5.183
Immunodeficiencies.............
Disorders of the Immune 5.432 5.284 5.182 5.183 5.183
Mechanism......................
Coagulation Defects and Other 2.805 2.707 2.628 2.599 2.599
Specified Hematological
Disorders......................
Drug Psychosis.................. 3.830 3.574 3.380 3.286 3.284
Drug Dependence................. 3.830 3.574 3.380 3.286 3.284
[[Page 12222]]
Schizophrenia................... 3.189 2.934 2.744 2.680 2.679
Major Depressive and Bipolar 1.714 1.547 1.404 1.308 1.307
Disorders......................
Reactive and Unspecified 1.714 1.547 1.404 1.308 1.307
Psychosis, Delusional Disorders
Personality Disorders........... 1.176 1.043 0.910 0.814 0.812
Anorexia/Bulimia Nervosa........ 2.693 2.527 2.392 2.334 2.333
Prader-Willi, Patau, Edwards, 2.632 2.504 2.403 2.354 2.353
and Autosomal Deletion
Syndromes......................
Down Syndrome, Fragile X, Other 1.056 0.951 0.849 0.778 0.776
Chromosomal Anomalies, and
Congenital Malformation
Syndromes......................
Autistic Disorder............... 1.176 1.043 0.910 0.814 0.812
Pervasive Developmental 1.176 1.043 0.910 0.814 0.812
Disorders, Except Autistic
Disorder.......................
Traumatic Complete Lesion 12.005 11.851 11.737 11.735 11.735
Cervical Spinal Cord...........
Quadriplegia.................... 12.005 11.851 11.737 11.735 11.735
Traumatic Complete Lesion Dorsal 9.157 9.000 8.886 8.874 8.875
Spinal Cord....................
Paraplegia...................... 9.157 9.000 8.886 8.874 8.875
Spinal Cord Disorders/Injuries.. 5.635 5.424 5.275 5.246 5.246
Amyotrophic Lateral Sclerosis 3.029 2.792 2.625 2.585 2.585
and Other Anterior Horn Cell
Disease........................
Quadriplegic Cerebral Palsy..... 1.206 0.997 0.839 0.777 0.776
Cerebral Palsy, Except 0.124 0.068 0.034 0.011 0.011
Quadriplegic...................
Spina Bifida and Other Brain/ 0.071 0.019 0.000 0.000 0.000
Spinal/Nervous System
Congenital Anomalies...........
Myasthenia Gravis/Myoneural 5.247 5.099 4.994 4.971 4.971
Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic
Neuropathy.....................
Muscular Dystrophy.............. 2.147 1.981 1.860 1.785 1.784
Multiple Sclerosis.............. 13.590 13.187 12.905 12.950 12.951
Parkinson`s, Huntington`s, and 2.147 1.981 1.860 1.785 1.784
Spinocerebellar Disease, and
Other Neurodegenerative
Disorders......................
Seizure Disorders and 1.495 1.337 1.207 1.137 1.136
Convulsions....................
Hydrocephalus................... 6.388 6.266 6.165 6.139 6.138
Non-Traumatic Coma, and Brain 9.207 9.070 8.964 8.958 8.957
Compression/Anoxic Damage......
Respirator Dependence/ 34.719 34.708 34.706 34.772 34.773
Tracheostomy Status............
Respiratory Arrest.............. 10.554 10.403 10.306 10.370 10.371
Cardio-Respiratory Failure and 10.554 10.403 10.306 10.370 10.371
Shock, Including Respiratory
Distress Syndromes.............
Heart Assistive Device/ 35.114 34.869 34.711 34.771 34.772
Artificial Heart...............
Heart Transplant................ 35.114 34.869 34.711 34.771 34.772
Congestive Heart Failure........ 3.280 3.171 3.095 3.089 3.089
Acute Myocardial Infarction..... 10.129 9.795 9.580 9.691 9.693
Unstable Angina and Other Acute 5.227 4.952 4.779 4.793 4.794
Ischemic Heart Disease.........
Heart Infection/Inflammation, 6.297 6.163 6.063 6.042 6.041
Except Rheumatic...............
Specified Heart Arrhythmias..... 2.829 2.681 2.565 2.512 2.511
Intracranial Hemorrhage......... 9.423 9.144 8.954 8.963 8.964
Ischemic or Unspecified Stroke.. 3.167 2.982 2.869 2.875 2.876
Cerebral Aneurysm and 3.940 3.742 3.600 3.559 3.558
Arteriovenous Malformation.....
Hemiplegia/Hemiparesis.......... 5.468 5.374 5.317 5.360 5.361
Monoplegia, Other Paralytic 3.452 3.319 3.226 3.207 3.207
Syndromes......................
Atherosclerosis of the 10.940 10.840 10.784 10.853 10.854
Extremities with Ulceration or
Gangrene.......................
Vascular Disease with 7.727 7.543 7.416 7.417 7.417
Complications..................
Pulmonary Embolism and Deep Vein 3.841 3.675 3.555 3.529 3.529
Thrombosis.....................
Lung Transplant Status/ 36.419 36.227 36.103 36.180 36.181
Complications..................
Cystic Fibrosis................. 18.011 17.687 17.444 17.467 17.467
Chronic Obstructive Pulmonary 0.942 0.825 0.717 0.641 0.640
Disease, Including
Bronchiectasis.................
Asthma.......................... 0.942 0.825 0.717 0.641 0.640
Fibrosis of Lung and Other Lung 1.889 1.771 1.682 1.641 1.640
Disorders......................
Aspiration and Specified 7.594 7.520 7.471 7.485 7.485
Bacterial Pneumonias and Other
Severe Lung Infections.........
Kidney Transplant Status........ 10.183 9.919 9.744 9.735 9.735
End Stage Renal Disease......... 38.463 38.228 38.078 38.198 38.201
Chronic Kidney Disease, Stage 5. 2.088 1.989 1.925 1.920 1.920
Chronic Kidney Disease, Severe 2.088 1.989 1.925 1.920 1.920
(Stage 4)......................
Ectopic and Molar Pregnancy, 1.340 1.156 0.979 0.795 0.791
Except with Renal Failure,
Shock, or Embolism.............
Miscarriage with Complications.. 1.340 1.156 0.979 0.795 0.791
Miscarriage with No or Minor 1.340 1.156 0.979 0.795 0.791
Complications..................
Completed Pregnancy With Major 3.630 3.150 2.862 2.712 2.713
Complications..................
Completed Pregnancy With 3.630 3.150 2.862 2.712 2.713
Complications..................
Completed Pregnancy with No or 3.630 3.150 2.862 2.712 2.713
Minor Complications............
[[Page 12223]]
Chronic Ulcer of Skin, Except 2.356 2.233 2.150 2.134 2.134
Pressure.......................
Hip Fractures and Pathological 9.460 9.245 9.100 9.136 9.136
Vertebral or Humerus Fractures.
Pathological Fractures, Except 2.000 1.871 1.758 1.688 1.687
of Vertebrae, Hip, or Humerus..
Stem Cell, Including Bone 31.027 31.022 31.017 31.035 31.036
Marrow, Transplant Status/
Complications..................
Artificial Openings for Feeding 10.038 9.946 9.886 9.924 9.925
or Elimination.................
Amputation Status, Lower Limb/ 5.263 5.112 5.015 5.044 5.045
Amputation Complications.......
----------------------------------------------------------------------------------------------------------------
Interaction Factors
----------------------------------------------------------------------------------------------------------------
Severe illness x Opportunistic 10.408 10.632 10.799 10.894 10.895
Infections.....................
Severe illness x Metastatic 10.408 10.632 10.799 10.894 10.895
Cancer.........................
Severe illness x Lung, Brain, 10.408 10.632 10.799 10.894 10.895
and Other Severe Cancers,
Including Pediatric Acute
Lymphoid Leukemia..............
Severe illness x Non-Hodgkin`s 10.408 10.632 10.799 10.894 10.895
Lymphomas and Other Cancers and
Tumors.........................
Severe illness x Myasthenia 10.408 10.632 10.799 10.894 10.895
Gravis/Myoneural Disorders and
Guillain-Barre Syndrome/
Inflammatory and Toxic
Neuropathy.....................
Severe illness x Heart Infection/ 10.408 10.632 10.799 10.894 10.895
Inflammation, Except Rheumatic.
Severe illness x Intracranial 10.408 10.632 10.799 10.894 10.895
Hemorrhage.....................
Severe illness x HCC group G06 10.408 10.632 10.799 10.894 10.895
(G06 is HCC Group 6 which
includes the following HCCs in
the blood disease category: 67,
68)............................
Severe illness x HCC group G08 10.408 10.632 10.799 10.894 10.895
(G08 is HCC Group 8 which
includes the following HCCs in
the blood disease category: 73,
74)............................
Severe illness x End-Stage Liver 1.906 2.039 2.141 2.225 2.226
Disease........................
Severe illness x Acute Liver 1.906 2.039 2.141 2.225 2.226
Failure/Disease, Including
Neonatal Hepatitis.............
Severe illness x Atherosclerosis 1.906 2.039 2.141 2.225 2.226
of the Extremities with
Ulceration or Gangrene.........
Severe illness x Vascular 1.906 2.039 2.141 2.225 2.226
Disease with Complications.....
Severe illness x Aspiration and 1.906 2.039 2.141 2.225 2.226
Specified Bacterial Pneumonias
and Other Severe Lung
Infections.....................
Severe illness x Artificial 1.906 2.039 2.141 2.225 2.226
Openings for Feeding or
Elimination....................
Severe illness x HCC group G03 1.906 2.039 2.141 2.225 2.226
(G03 is HCC Group 3 which
includes the following HCCs in
the musculoskeletal disease
category: 54, 55)..............
----------------------------------------------------------------------------------------------------------------
Table 2--HHS HCCs in the Severity Illness Indicator Variable
------------------------------------------------------------------------
Description
-------------------------------------------------------------------------
Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock.
Peritonitis/Gastrointestinal Perforation/Necrotizing Enter colitis.
Seizure Disorders and Convulsions.
Non-Traumatic Coma, Brain Compression/Anoxic Damage.
Respirator Dependence/Tracheostomy Status.
Respiratory Arrest.
Cardio-Respiratory Failure and Shock, Including Respiratory Distress
Syndromes.
Pulmonary Embolism and Deep Vein Thrombosis.
------------------------------------------------------------------------
Table 3--Child Risk Adjustment Model Factors
----------------------------------------------------------------------------------------------------------------
Factor Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Demographic Factors
----------------------------------------------------------------------------------------------------------------
Age 2-4, Male................... 0.224 0.145 0.067 0.021 0.020
Age 5-9, Male................... 0.155 0.098 0.038 0.004 0.004
Age 10-14, Male................. 0.220 0.158 0.089 0.053 0.053
Age 15-20, Male................. 0.290 0.219 0.142 0.097 0.096
Age 2-4, Female................. 0.178 0.109 0.044 0.011 0.010
Age 5-9, Female................. 0.127 0.076 0.027 0.003 0.002
Age 10-14, Female............... 0.204 0.145 0.085 0.054 0.054
[[Page 12224]]
Age 15-20, Female............... 0.330 0.248 0.157 0.101 0.100
----------------------------------------------------------------------------------------------------------------
Diagnosis Factors
----------------------------------------------------------------------------------------------------------------
HIV/AIDS........................ 4.875 4.437 4.110 4.033 4.032
Septicemia, Sepsis, Systemic 17.228 17.069 16.969 16.994 16.995
Inflammatory Response Syndrome/
Shock..........................
Central Nervous System 10.808 10.631 10.506 10.511 10.511
Infections, Except Viral
Meningitis.....................
Viral or Unspecified Meningitis. 3.128 2.925 2.775 2.687 2.686
Opportunistic Infections........ 22.943 22.880 22.834 22.825 22.825
Metastatic Cancer............... 36.648 36.404 36.207 36.207 36.207
Lung, Brain, and Other Severe 12.117 11.833 11.604 11.547 11.546
Cancers, Including Pediatric
Acute Lymphoid Leukemia........
Non-Hodgkin's Lymphomas and 9.328 9.058 8.836 8.754 8.753
Other Cancers and Tumors.......
Colorectal, Breast (Age <50), 3.508 3.291 3.097 2.989 2.987
Kidney, and Other Cancers......
Breast (Age 50+) and Prostate 3.016 2.816 2.642 2.538 2.537
Cancer, Benign/Uncertain Brain
Tumors, and Other Cancers and
Tumors.........................
Thyroid Cancer, Melanoma, 1.723 1.553 1.397 1.294 1.292
Neurofibromatosis, and Other
Cancers and Tumors.............
Pancreas Transplant Status/ 30.468 30.333 30.245 30.256 30.256
Complications..................
Diabetes with Acute 2.521 2.197 1.946 1.703 1.699
Complications..................
Diabetes with Chronic 2.521 2.197 1.946 1.703 1.699
Complications..................
Diabetes without Complication... 2.521 2.197 1.946 1.703 1.699
Protein-Calorie Malnutrition.... 13.570 13.484 13.421 13.450 13.450
Mucopolysaccharidosis........... 8.509 8.238 8.020 7.987 7.986
Lipidoses and Glycogenosis...... 8.509 8.238 8.020 7.987 7.986
Congenital Metabolic Disorders, 8.509 8.238 8.020 7.987 7.986
Not Elsewhere Classified.......
Amyloidosis, Porphyria, and 8.509 8.238 8.020 7.987 7.986
Other Metabolic Disorders......
Adrenal, Pituitary, and Other 8.509 8.238 8.020 7.987 7.986
Significant Endocrine Disorders
Liver Transplant Status/ 30.468 30.333 30.245 30.256 30.256
Complications..................
End-Stage Liver Disease......... 13.077 12.927 12.822 12.821 12.821
Cirrhosis of Liver.............. 9.604 9.445 9.326 9.286 9.286
Chronic Hepatitis............... 2.567 2.418 2.280 2.216 2.215
Acute Liver Failure/Disease, 12.729 12.576 12.460 12.447 12.447
Including Neonatal Hepatitis...
Intestine Transplant Status/ 30.468 30.333 30.245 30.256 30.256
Complications..................
Peritonitis/Gastrointestinal 14.795 14.463 14.217 14.238 14.238
Perforation/Necrotizing
Enterocolitis..................
Intestinal Obstruction.......... 5.389 5.155 4.965 4.885 4.884
Chronic Pancreatitis............ 9.713 9.478 9.319 9.319 9.319
Acute Pancreatitis/Other 2.561 2.426 2.303 2.217 2.216
Pancreatic Disorders and
Intestinal Malabsorption.......
Inflammatory Bowel Disease...... 6.321 5.943 5.650 5.553 5.551
Necrotizing Fasciitis........... 4.467 4.231 4.041 3.989 3.988
Bone/Joint/Muscle Infections/ 4.467 4.231 4.041 3.989 3.988
Necrosis.......................
Rheumatoid Arthritis and 3.904 3.662 3.448 3.365 3.364
Specified Autoimmune Disorders.
Systemic Lupus Erythematosus and 1.305 1.154 1.003 0.893 0.891
Other Autoimmune Disorders.....
Osteogenesis Imperfecta and 1.560 1.429 1.303 1.232 1.231
Other Osteodystrophies.........
Congenital/Developmental 1.560 1.429 1.303 1.232 1.231
Skeletal and Connective Tissue
Disorders......................
Cleft Lip/Cleft Palate.......... 1.563 1.351 1.172 1.061 1.059
Hemophilia...................... 66.792 66.309 65.939 65.927 65.927
Myelodysplastic Syndromes and 15.978 15.807 15.672 15.654 15.654
Myelofibrosis..................
Aplastic Anemia................. 15.978 15.807 15.672 15.654 15.654
Acquired Hemolytic Anemia, 7.706 7.432 7.214 7.145 7.144
Including Hemolytic Disease of
Newborn........................
Sickle Cell Anemia (Hb-SS)...... 7.706 7.432 7.214 7.145 7.144
Thalassemia Major............... 7.706 7.432 7.214 7.145 7.144
Combined and Other Severe 6.686 6.507 6.364 6.310 6.309
Immunodeficiencies.............
Disorders of the Immune 6.686 6.507 6.364 6.310 6.309
Mechanism......................
Coagulation Defects and Other 4.828 4.689 4.560 4.494 4.493
Specified Hematological
Disorders......................
Drug Psychosis.................. 5.390 5.135 4.948 4.887 4.887
Drug Dependence................. 5.390 5.135 4.948 4.887 4.887
Schizophrenia................... 5.242 4.853 4.561 4.472 4.471
Major Depressive and Bipolar 1.913 1.691 1.485 1.334 1.332
Disorders......................
Reactive and Unspecified 1.913 1.691 1.485 1.334 1.332
Psychosis, Delusional Disorders
Personality Disorders........... 0.783 0.653 0.504 0.376 0.374
Anorexia/Bulimia Nervosa........ 2.742 2.539 2.370 2.309 2.308
[[Page 12225]]
Prader-Willi, Patau, Edwards, 3.362 3.155 3.013 2.980 2.979
and Autosomal Deletion
Syndromes......................
Down Syndrome, Fragile X, Other 1.787 1.605 1.459 1.378 1.376
Chromosomal Anomalies, and
Congenital Malformation
Syndromes......................
Autistic Disorder............... 1.771 1.577 1.389 1.248 1.246
Pervasive Developmental 0.907 0.766 0.597 0.448 0.445
Disorders, Except Autistic
Disorder.......................
Traumatic Complete Lesion 13.209 13.168 13.154 13.225 13.227
Cervical Spinal Cord...........
Quadriplegia.................... 13.209 13.168 13.154 13.225 13.227
Traumatic Complete Lesion Dorsal 11.619 11.410 11.267 11.269 11.270
Spinal Cord....................
Paraplegia...................... 11.619 11.410 11.267 11.269 11.270
Spinal Cord Disorders/Injuries.. 4.847 4.614 4.433 4.359 4.358
Amyotrophic Lateral Sclerosis 8.218 7.979 7.791 7.744 7.744
and Other Anterior Horn Cell
Disease........................
Quadriplegic Cerebral Palsy..... 3.387 3.141 2.983 2.995 2.996
Cerebral Palsy, Except 0.861 0.675 0.530 0.451 0.450
Quadriplegic...................
Spina Bifida and Other Brain/ 1.282 1.135 1.010 0.944 0.943
Spinal/Nervous System
Congenital Anomalies...........
Myasthenia Gravis/Myoneural 9.635 9.457 9.315 9.279 9.279
Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic
Neuropathy.....................
Muscular Dystrophy.............. 3.374 3.176 3.021 2.948 2.947
Multiple Sclerosis.............. 8.431 8.101 7.852 7.820 7.820
Parkinson's, Huntington's, and 3.374 3.176 3.021 2.948 2.947
Spinocerebellar Disease, and
Other Neurodegenerative
Disorders......................
Seizure Disorders and 2.095 1.913 1.735 1.609 1.607
Convulsions....................
Hydrocephalus................... 5.122 5.002 4.912 4.903 4.903
Non-Traumatic Coma, and Brain 7.539 7.391 7.276 7.236 7.235
Compression/Anoxic Damage......
Respirator Dependence/ 40.112 40.012 39.969 40.084 40.086
Tracheostomy Status............
Respiratory Arrest.............. 12.354 12.151 12.015 12.013 12.013
Cardio-Respiratory Failure and 12.354 12.151 12.015 12.013 12.013
Shock, Including Respiratory
Distress Syndromes.............
Heart Assistive Device/ 30.468 30.333 30.245 30.256 30.256
Artificial Heart...............
Heart Transplant................ 30.468 30.333 30.245 30.256 30.256
Congestive Heart Failure........ 6.999 6.888 6.791 6.751 6.751
Acute Myocardial Infarction..... 9.715 9.553 9.443 9.441 9.442
Unstable Angina and Other Acute 6.438 6.331 6.260 6.262 6.262
Ischemic Heart Disease.........
Heart Infection/Inflammation, 16.113 15.984 15.888 15.866 15.866
Except Rheumatic...............
Hypoplastic Left Heart Syndrome 6.323 6.111 5.905 5.794 5.792
and Other Severe Congenital
Heart Disorders................
Major Congenital Heart/ 1.778 1.651 1.493 1.391 1.389
Circulatory Disorders..........
Atrial and Ventricular Septal 1.202 1.090 0.952 0.872 0.871
Defects, Patent Ductus
Arteriosus, and Other
Congenital Heart/Circulatory
Disorders......................
Specified Heart Arrhythmias..... 4.399 4.213 4.049 3.984 3.983
Intracranial Hemorrhage......... 15.936 15.685 15.510 15.504 15.504
Ischemic or Unspecified Stroke.. 8.574 8.456 8.381 8.396 8.396
Cerebral Aneurysm and 3.865 3.650 3.490 3.433 3.432
Arteriovenous Malformation.....
Hemiplegia/Hemiparesis.......... 4.815 4.703 4.625 4.610 4.610
Monoplegia, Other Paralytic 3.627 3.487 3.391 3.361 3.361
Syndromes......................
Atherosclerosis of the 15.571 15.296 15.096 15.012 15.011
Extremities with Ulceration or
Gangrene.......................
Vascular Disease with 18.826 18.672 18.564 18.569 18.569
Complications..................
Pulmonary Embolism and Deep Vein 15.291 15.130 15.023 15.041 15.042
Thrombosis.....................
Lung Transplant Status/ 30.468 30.333 30.245 30.256 30.256
Complications..................
Cystic Fibrosis................. 20.415 19.976 19.647 19.686 19.687
Chronic Obstructive Pulmonary 0.435 0.348 0.231 0.149 0.147
Disease, Including
Bronchiectasis.................
Asthma.......................... 0.435 0.348 0.231 0.149 0.147
Fibrosis of Lung and Other Lung 4.116 3.973 3.845 3.789 3.788
Disorders......................
Aspiration and Specified 10.256 10.199 10.157 10.177 10.177
Bacterial Pneumonias and Other
Severe Lung Infections.........
Kidney Transplant Status........ 16.425 16.083 15.843 15.848 15.848
End Stage Renal Disease......... 39.805 39.631 39.521 39.592 39.593
Chronic Kidney Disease, Stage 5. 7.087 6.923 6.771 6.675 6.673
Chronic Kidney Disease, Severe 7.087 6.923 6.771 6.675 6.673
(Stage 4)......................
Ectopic and Molar Pregnancy, 1.126 0.939 0.750 0.559 0.555
Except with Renal Failure,
Shock, or Embolism.............
Miscarriage with Complications.. 1.126 0.939 0.750 0.559 0.555
Miscarriage with No or Minor 1.126 0.939 0.750 0.559 0.555
Complications..................
Completed Pregnancy With Major 3.159 2.712 2.427 2.240 2.240
Complications..................
Completed Pregnancy With 3.159 2.712 2.427 2.240 2.240
Complications..................
[[Page 12226]]
Completed Pregnancy with No or 3.159 2.712 2.427 2.240 2.240
Minor Complications............
Chronic Ulcer of Skin, Except 1.941 1.836 1.731 1.675 1.675
Pressure.......................
Hip Fractures and Pathological 5.725 5.450 5.215 5.124 5.123
Vertebral or Humerus Fractures.
Pathological Fractures, Except 1.574 1.428 1.264 1.147 1.145
of Vertebrae, Hip, or Humerus..
Stem Cell, Including Bone 30.468 30.333 30.245 30.256 30.256
Marrow, Transplant Status/
Complications..................
Artificial Openings for Feeding 14.575 14.480 14.443 14.551 14.553
or Elimination.................
Amputation Status, Lower Limb/ 8.195 7.923 7.727 7.631 7.630
Amputation Complications.......
----------------------------------------------------------------------------------------------------------------
TABLE 4--Infant Risk Adjustment Models Factors
----------------------------------------------------------------------------------------------------------------
Group Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Extremely Immature * Severity 378.927 377.561 376.491 376.507 376.508
Level 5 (Highest)..............
Extremely Immature * Severity 194.401 193.057 192.003 191.981 191.981
Level 4........................
Extremely Immature * Severity 46.419 45.304 44.390 44.236 44.234
Level 3........................
Extremely Immature * Severity 46.419 45.304 44.390 44.236 44.234
Level 2........................
Extremely Immature * Severity 46.419 45.304 44.390 44.236 44.234
Level 1 (Lowest)...............
Immature *Severity Level 5 190.323 189.030 188.013 188.027 188.028
(Highest)......................
Immature *Severity Level 4...... 85.852 84.500 83.442 83.437 83.437
Immature *Severity Level 3...... 46.419 45.304 44.390 44.236 44.234
Immature *Severity Level 2...... 28.986 27.832 26.907 26.738 26.736
Immature *Severity Level 1 28.986 27.832 26.907 26.738 26.736
(Lowest).......................
Premature/Multiples * Severity 156.158 154.846 153.824 153.791 153.791
Level 5 (Highest)..............
Premature/Multiples * Severity 32.573 31.292 30.290 30.173 30.173
Level 4........................
Premature/Multiples * Severity 17.215 16.169 15.315 15.020 15.016
Level 3........................
Premature/Multiples * Severity 8.942 8.081 7.334 6.884 6.876
Level 2........................
Premature/Multiples * Severity 6.222 5.557 4.867 4.376 4.367
Level 1 (Lowest)...............
Term *Severity Level 5 (Highest) 130.728 129.499 128.518 128.414 128.413
Term *Severity Level 4.......... 16.874 15.867 15.038 14.685 14.681
Term *Severity Level 3.......... 6.324 5.648 4.969 4.448 4.438
Term *Severity Level 2.......... 3.857 3.319 2.700 2.139 2.128
Term *Severity Level 1 (Lowest). 1.639 1.321 0.772 0.358 0.350
Age1 *Severity Level 5 (Highest) 54.166 53.499 52.963 52.894 52.892
Age1 *Severity Level 4.......... 9.298 8.787 8.351 8.169 8.167
Age1 *Severity Level 3.......... 3.380 3.034 2.676 2.465 2.461
Age1 *Severity Level 2.......... 2.155 1.873 1.549 1.320 1.316
Age1 *Severity Level 1 (Lowest). 0.572 0.441 0.274 0.199 0.197
Age 0 Male...................... 0.685 0.637 0.608 0.554 0.553
Age 1 Male...................... 0.145 0.127 0.106 0.081 0.081
----------------------------------------------------------------------------------------------------------------
Table 5--HHS HCCs Included in Infant Model Maturity Categories
----------------------------------------------------------------------------------------------------------------
Maturity category HCC/description
----------------------------------------------------------------------------------------------------------------
Extremely Immature.............................................................. Extremely Immature Newborns,
Birthweight < 500 Grams.
Extremely Immature.............................................................. Extremely Immature Newborns,
Including Birthweight 500-749
Grams.
Extremely Immature.............................................................. Extremely Immature Newborns,
Including Birthweight 750-999
Grams.
Immature........................................................................ Premature Newborns, Including
Birthweight 1000-1499 Grams.
Immature........................................................................ Premature Newborns, Including
Birthweight 1500-1999 Grams.
Premature/Multiples............................................................. Premature Newborns, Including
Birthweight 2000-2499 Grams.
Premature/Multiples............................................................. Other Premature, Low
Birthweight, Malnourished, or
Multiple Birth Newborns.
Term............................................................................ Term or Post-Term Singleton
Newborn, Normal or High
Birthweight.
Age 1........................................................................... All age 1 infants.
----------------------------------------------------------------------------------------------------------------
Table 6--HHS HCCs Included in Infant Model Severity Categories
----------------------------------------------------------------------------------------------------------------
Severity Category HCC
----------------------------------------------------------------------------------------------------------------
Severity Level 5 (Highest)...................................................... Metastatic Cancer.
Severity Level 5................................................................ Pancreas Transplant Status/
Complications.
Severity Level 5................................................................ Liver Transplant Status/
Complications.
Severity Level 5................................................................ End-Stage Liver Disease.
Severity Level 5................................................................ Intestine Transplant Status/
Complications.
Severity Level 5................................................................ Peritonitis/Gastrointestinal
Perforation/Necrotizing
Enterocolitis.
Severity Level 5................................................................ Respirator Dependence/
Tracheostomy Status.
Severity Level 5................................................................ Heart Assistive Device/
Artificial Heart.
[[Page 12227]]
Severity Level 5................................................................ Heart Transplant.
Severity Level 5................................................................ Congestive Heart Failure.
Severity Level 5................................................................ Hypoplastic Left Heart
Syndrome and Other Severe
Congenital Heart Disorders.
Severity Level 5................................................................ Lung Transplant Status/
Complications.
Severity Level 5................................................................ Kidney Transplant Status.
Severity Level 5................................................................ End Stage Renal Disease.
Severity Level 5................................................................ Stem Cell, Including Bone
Marrow, Transplant Status/
Complications.
Severity Level 4................................................................ Septicemia, Sepsis, Systemic
Inflammatory Response
Syndrome/Shock.
Severity Level 4................................................................ Lung, Brain, and Other Severe
Cancers, Including Pediatric
Acute Lymphoid Leukemia.
Severity Level 4................................................................ Mucopolysaccharidosis.
Severity Level 4................................................................ Major Congenital Anomalies of
Diaphragm, Abdominal Wall,
and Esophagus, Age < 2.
Severity Level 4................................................................ Myelodysplastic Syndromes and
Myelofibrosis.
Severity Level 4................................................................ Aplastic Anemia.
Severity Level 4................................................................ Combined and Other Severe
Immunodeficiencies.
Severity Level 4................................................................ Traumatic Complete Lesion
Cervical Spinal Cord.
Severity Level 4................................................................ Quadriplegia.
Severity Level 4................................................................ Amyotrophic Lateral Sclerosis
and Other Anterior Horn Cell
Disease.
Severity Level 4................................................................ Quadriplegic Cerebral Palsy.
Severity Level 4................................................................ Myasthenia Gravis/Myoneural
Disorders and Guillain-Barre
Syndrome/Inflammatory and
Toxic Neuropathy.
Severity Level 4................................................................ Non-Traumatic Coma, Brain
Compression/Anoxic Damage.
Severity Level 4................................................................ Respiratory Arrest.
Severity Level 4................................................................ Cardio-Respiratory Failure and
Shock, Including Respiratory
Distress Syndromes.
Severity Level 4................................................................ Acute Myocardial Infarction.
Severity Level 4................................................................ Heart Infection/Inflammation,
Except Rheumatic.
Severity Level 4................................................................ Major Congenital Heart/
Circulatory Disorders.
Severity Level 4................................................................ Intracranial Hemorrhage.
Severity Level 4................................................................ Ischemic or Unspecified
Stroke.
Severity Level 4................................................................ Vascular Disease with
Complications.
Severity Level 4................................................................ Pulmonary Embolism and Deep
Vein Thrombosis.
Severity Level 4................................................................ Aspiration and Specified
Bacterial Pneumonias and
Other Severe Lung Infections.
Severity Level 4................................................................ Chronic Kidney Disease, Stage
5.
Severity Level 4................................................................ Hip Fractures and Pathological
Vertebral or Humerus
Fractures.
Severity Level 4................................................................ Artificial Openings for
Feeding or Elimination.
Severity Level 3................................................................ HIV/AIDS.
Severity Level 3................................................................ Central Nervous System
Infections, Except Viral
Meningitis.
Severity Level 3................................................................ Opportunistic Infections.
Severity Level 3................................................................ Non-Hodgkin's Lymphomas and
Other Cancers and Tumors.
Severity Level 3................................................................ Colorectal, Breast (Age < 50),
Kidney and Other Cancers.
Severity Level 3................................................................ Breast (Age 50+), Prostate
Cancer, Benign/Uncertain
Brain Tumors, and Other
Cancers and Tumors.
Severity Level 3................................................................ Lipidoses and Glycogenosis.
Severity Level 3................................................................ Adrenal, Pituitary, and Other
Significant Endocrine
Disorders.
Severity Level 3................................................................ Acute Liver Failure/Disease,
Including Neonatal Hepatitis.
Severity Level 3................................................................ Intestinal Obstruction.
Severity Level 3................................................................ Necrotizing Fasciitis.
Severity Level 3................................................................ Bone/Joint/Muscle Infections/
Necrosis.
Severity Level 3................................................................ Osteogenesis Imperfecta and
Other Osteodystrophies.
Severity Level 3................................................................ Cleft Lip/Cleft Palate.
Severity Level 3................................................................ Hemophilia.
Severity Level 3................................................................ Disorders of the Immune
Mechanism.
Severity Level 3................................................................ Coagulation Defects and Other
Specified Hematological
Disorders.
Severity Level 3................................................................ Prader-Willi, Patau, Edwards,
and Autosomal Deletion
Syndromes.
Severity Level 3................................................................ Traumatic Complete Lesion
Dorsal Spinal Cord.
Severity Level 3................................................................ Paraplegia.
Severity Level 3................................................................ Spinal Cord Disorders/
Injuries.
Severity Level 3................................................................ Cerebral Palsy, Except
Quadriplegic.
Severity Level 3................................................................ Muscular Dystrophy.
Severity Level 3................................................................ Parkinson's, Huntington's, and
Spinocerebellar Disease, and
Other Neurodegenerative
Disorders.
Severity Level 3................................................................ Hydrocephalus.
Severity Level 3................................................................ Unstable Angina and Other
Acute Ischemic Heart Disease.
Severity Level 3................................................................ Atrial and Ventricular Septal
Defects, Patent Ductus
Arteriosus, and Other
Congenital Heart/Circulatory
Disorders.
Severity Level 3................................................................ Specified Heart Arrhythmias.
Severity Level 3................................................................ Cerebral Aneurysm and
Arteriovenous Malformation.
Severity Level 3................................................................ Hemiplegia/Hemiparesis.
Severity Level 3................................................................ Cystic Fibrosis.
Severity Level 3................................................................ Fibrosis of Lung and Other
Lung Disorders.
Severity Level 3................................................................ Pathological Fractures, Except
of Vertebrae, Hip, or
Humerus.
[[Page 12228]]
Severity Level 2................................................................ Viral or Unspecified
Meningitis.
Severity Level 2................................................................ Thyroid, Melanoma,
Neurofibromatosis, and Other
Cancers and Tumors.
Severity Level 2................................................................ Diabetes with Acute
Complications.
Severity Level 2................................................................ Diabetes with Chronic
Complications.
Severity Level 2................................................................ Diabetes without Complication.
Severity Level 2................................................................ Protein-Calorie Malnutrition.
Severity Level 2................................................................ Congenital Metabolic
Disorders, Not Elsewhere
Classified.
Severity Level 2................................................................ Amyloidosis, Porphyria, and
Other Metabolic Disorders.
Severity Level 2................................................................ Cirrhosis of Liver.
Severity Level 2................................................................ Chronic Pancreatitis.
Severity Level 2................................................................ Inflammatory Bowel Disease.
Severity Level 2................................................................ Rheumatoid Arthritis and
Specified Autoimmune
Disorders.
Severity Level 2................................................................ Systemic Lupus Erythematosus
and Other Autoimmune
Disorders.
Severity Level 2................................................................ Congenital/Developmental
Skeletal and Connective
Tissue Disorders.
Severity Level 2................................................................ Acquired Hemolytic Anemia,
Including Hemolytic Disease
of Newborn.
Severity Level 2................................................................ Sickle Cell Anemia (Hb-SS).
Severity Level 2................................................................ Drug Psychosis.
Severity Level 2................................................................ Drug Dependence.
Severity Level 2................................................................ Down Syndrome, Fragile X,
Other Chromosomal Anomalies,
and Congenital Malformation
Syndromes.
Severity Level 2................................................................ Spina Bifida and Other Brain/
Spinal/Nervous System
Congenital Anomalies.
Severity Level 2................................................................ Seizure Disorders and
Convulsions.
Severity Level 2................................................................ Monoplegia, Other Paralytic
Syndromes.
Severity Level 2................................................................ Atherosclerosis of the
Extremities with Ulceration
or Gangrene.
Severity Level 2................................................................ Chronic Obstructive Pulmonary
Disease, Including
Bronchiectasis.
Severity Level 2................................................................ Chronic Ulcer of Skin, Except
Pressure.
Severity Level 1 (Lowest)....................................................... Chronic Hepatitis.
Severity Level 1................................................................ Acute Pancreatitis/Other
Pancreatic Disorders and
Intestinal Malabsorption.
Severity Level 1................................................................ Thalassemia Major.
Severity Level 1................................................................ Autistic Disorder.
Severity Level 1................................................................ Pervasive Developmental
Disorders, Except Autistic
Disorder.
Severity Level 1................................................................ Multiple Sclerosis.
Severity Level 1................................................................ Asthma.
Severity Level 1................................................................ Chronic Kidney Disease, Severe
(Stage 4).
Severity Level 1................................................................ Amputation Status, Lower Limb/
Amputation Complications.
Severity Level 1................................................................ No Severity HCCs.
----------------------------------------------------------------------------------------------------------------
d. Cost-Sharing Reductions Adjustments (Sec. 153.320)
We proposed to continue including an adjustment for the receipt of
cost-sharing reductions in the model to account for increased plan
liability due to increased utilization of health care services by
enrollees receiving cost-sharing reductions. The proposed cost-sharing
reduction adjustment factors for 2017 risk adjustment are unchanged
from those finalized in the 2016 Payment Notice and are set forth in
Table 7. These adjustments are effective for 2015, 2016, and 2017 risk
adjustment, and are multiplied against the sum of the demographic,
diagnosis, and interaction factors. We will continue to evaluate this
adjustment in future years as more data becomes available.
Comment: One commenter also recommended that HHS consider looking
at other elements of adverse selection and induced demand within the
individual market that are not currently captured in the risk
adjustment model. Another commenter requested that if HHS were to
operate risk adjustment in Massachusetts in 2017, HHS should include a
cost-sharing reduction adjustment table that will account for the
higher AVs of the ``Connector Care'' plans with wrap-around subsidies
in Massachusetts.
Response: As we stated in the 2015 Payment Notice, in some States,
expansion of Medicaid benefits under section 2001(a) of the Affordable
Care Act may take the form of enrolling newly Medicaid-eligible
enrollees into individual market plans. These enrollees could be placed
into silver plan variations--either the 94 percent silver plan
variation or the zero cost sharing plan variation--with a portion of
the premiums and cost sharing paid for by Medicaid on their behalf. In
Massachusetts, Connector Care plans represent these Medicaid
alternative plans in the individual market. To address this induced
utilization in the context of cost-sharing reduction plan variations in
the HHS risk adjustment methodology, our methodology increases the risk
score for individuals in these plan variations by the same factor that
we use to adjust for induced utilization for individuals enrolled in
cost-sharing plan variations to adjust for induced utilization for
individuals enrolled in the corresponding Medicaid alternative plan
variations. Here, those factors are both 1.12. We intend to evaluate
these adjustments in the future after data from the initial years of
risk adjustment is available. We are finalizing the cost-sharing
reduction adjustment factors as proposed.
[[Page 12229]]
Table 7--Cost-Sharing Reduction Adjustment
------------------------------------------------------------------------
Induced
Household income Plan AV utilization
factor
------------------------------------------------------------------------
Silver Plan Variant Recipients
------------------------------------------------------------------------
100-150% of FPL................... Plan Variation 94%.. 1.12
150-200% of FPL................... Plan Variation 87%.. 1.12
200-250% of FPL................... Plan Variation 73%.. 1.00
>250% of FPL...................... Standard Plan 70%... 1.00
------------------------------------------------------------------------
Zero Cost-Sharing Recipients
------------------------------------------------------------------------
<300% of FPL............................................................
<300% of FPL............................................................
<300% of FPL............................................................
<300% of FPL............................................................
------------------------------------------------------------------------
Limited Cost-Sharing Recipients
------------------------------------------------------------------------
>300% of FPL...................... Platinum (90%)...... 1.00
>300% of FPL...................... Gold (80%).......... 1.07
>300% of FPL...................... Silver (70%)........ 1.12
>300% of FPL...................... Bronze (60%)........ 1.15
------------------------------------------------------------------------
e. Model Performance Statistics (Sec. 153.320)
To evaluate the model's performance, we examined its R-squared and
predictive ratios. The R-squared statistic, which calculates the
percentage of individual variation explained by a model, measures the
predictive accuracy of the model overall. The predictive ratios measure
the predictive accuracy of a model for different validation groups or
subpopulations. The predictive ratio for each of the HHS risk
adjustment models is the ratio of the weighted mean predicted plan
liability for the model sample population to the weighted mean actual
plan liability for the model sample population. The predictive ratio
represents how well the model does on average at predicting plan
liability for that subpopulation. A subpopulation that is predicted
perfectly would have a predictive ratio of 1.0. For each of the HHS
risk adjustment models, the R-squared statistic and the predictive
ratio are in the range of published estimates for concurrent risk
adjustment models.\11\ Because we are blending, that is to mean,
averaging, the coefficients from separately solved models based on
MarketScan 2012, 2013, and 2014 data, we are publishing the R-squared
statistic for each model and year separately to verify their
statistical validity. The R-squared statistic for each model is shown
in Table 8.
---------------------------------------------------------------------------
\11\ Winkleman, Ross and Syed Mehmud. ``A Comparative Analysis
of Claims-Based Tools for Health Risk Assessment.'' Society of
Actuaries (Apr. 2007), available at https://www.soa.org/research/research-projects/health/hlth-risk-assement.aspx.
Table 8--R-Squared Statistic for HHS Risk Adjustment Models
----------------------------------------------------------------------------------------------------------------
R-Squared statistic
Risk adjustment model -----------------------------------------------
2012 2013 2014
----------------------------------------------------------------------------------------------------------------
Platinum Adult.................................................. 0.3905 0.3790 0.3610
Platinum Child.................................................. 0.2669 0.2518 0.2341
Platinum Infant................................................. 0.2848 0.3223 0.3089
Gold Adult...................................................... 0.3865 0.3746 0.3558
Gold Child...................................................... 0.2621 0.2467 0.2288
Gold Infant..................................................... 0.2826 0.3204 0.3069
Silver Adult.................................................... 0.3828 0.3707 0.3512
Silver Child.................................................... 0.2576 0.2422 0.2241
Silver Infant................................................... 0.2812 0.3191 0.3054
Bronze Adult.................................................... 0.3808 0.3686 0.3488
Bronze Child.................................................... 0.2554 0.2400 0.2218
Bronze Infant................................................... 0.2812 0.3190 0.3052
Catastrophic Adult.............................................. 0.3807 0.3685 0.3488
Catastrophic Child.............................................. 0.2554 0.2400 0.2218
Catastrophic Infant............................................. 0.2812 0.3190 0.3052
----------------------------------------------------------------------------------------------------------------
f. Overview of the Payment Transfer Formula (Sec. 153.320)
We did not propose to alter our payment transfer methodology. Plan
average risk scores will continue to be calculated as the member month-
weighted average of individual enrollee risk scores. We defined the
calculation of plan average actuarial risk and the calculation of
payments and charges in the Premium Stabilization Rule. In the 2014
Payment Notice, we combined those concepts into a risk adjustment
payment transfer formula. Risk
[[Page 12230]]
adjustment transfers (payments and charges) will be calculated after
issuers have completed risk adjustment data reporting. The payment
transfer formula includes a set of cost adjustment terms that require
transfers to be calculated at the geographic rating area level for each
plan (that is, HHS will calculate two separate transfer amounts for a
plan that operates in two rating areas).
The payment transfer formula is designed to provide a per member
per month (PMPM) transfer amount. The PMPM transfer amount derived from
the payment transfer formula would be multiplied by each plan's total
member months for the benefit year to determine the total payment due
or charge owed by the issuer for that plan in a rating area.
Comment: Commenters requested that administrative expenses be
removed from the calculation of the statewide average premium. A
commenter suggested that amending the transfer formula by eliminating
administrative costs from the statewide average premium would make it
``benefit cost based.'' A commenter suggested that HHS consider basing
the payment transfer on a portion of State average premium--namely, the
portion representing the sum of claims, claims adjustment expenses, and
taxes that are calculated on premium after risk adjustment transfers,
by using a specified percentage of State average premiums. The
commenter suggested the specified percentage could be determined based
on data submitted by issuers on the Unified Rate Review Template (URRT)
for the portion of premium needed for claims and on data from financial
reporting statements for claim adjustment expenses and relevant taxes
as a percent of premium and could vary by State or market. Some
commenters opposed the use of the statewide average premium because it
disadvantages issuers with below average premiums. Commenters requested
that 2014 and later risk adjustment transfers for all plans with below
average premiums in a State be calculated using the plans' own average
premium amount or average claims cost, so that efficient plans are not
penalized using the Statewide average premium. Commenters requested use
of a ``care coordination factor'' in the risk transfer formula, and
stated that risk adjustment results are distorted by regional biases,
risks, and coding and demographic differences. One commenter
recommended that risk scores be compared to other scores in the same
geographic region, not to State averages, to avoid regional biases and
to permit a fairer and more accurate comparison.
Response: We did not propose changes to the transfer formula, and
therefore, are not addressing comments that are outside the scope of
this rulemaking. We may be able to evaluate geographic differences in
the future if we obtain enrollee-level data for future recalibrations--
a topic that we also intend to discuss in the White Paper and at the
March 31, 2016 risk adjustment conference.
(1) Overview of the Payment Transfer Formula
Although we did not propose to change the payment transfer formula
from what was finalized in the 2014 Payment Notice (78 FR 15430 through
15434), we believe it is useful to republish the formula in its
entirety, since, as noted above, we are recalibrating the HHS risk
adjustment model. Transfers (payments and charges) will be calculated
as the difference between the plan premium estimate reflecting risk
selection and the plan premium estimate not reflecting risk selection.
As finalized in the 2014 Payment Notice, the HHS risk adjustment
payment transfer formula is:
[GRAPHIC] [TIFF OMITTED] TR08MR16.000
Where:
P[Amacr]s = State average premium;
PLRSi = plan i's plan liability risk score;
AVi = plan i's metal level AV;
ARFi = allowable rating factor;
IDFi = plan i's induced demand factor;
GCFi = plan i's geographic cost factor;
si = plan i's share of State enrollment.
The denominator is summed across all plans in the risk pool in the
market in the State.
The difference between the two premium estimates in the payment
transfer formula determines whether a plan pays a risk transfer charge
or receives a risk transfer payment. Note that the value of the plan
average risk score by itself does not determine whether a plan would be
assessed a charge or receive a payment--even if the risk score is
greater than 1.0, it is possible that the plan would be assessed a
charge if the premium compensation that the plan may receive through
its rating practices (as measured through the allowable rating factor)
exceeds the plan's predicted liability associated with risk selection.
Risk adjustment transfers are calculated at the risk pool level, and
catastrophic plans are treated as a separate risk pool for purposes of
risk adjustment.
g. State-Submitted Alternate Risk Adjustment Methodology
We are not recertifying the alternate State methodology for use in
Massachusetts for 2017 risk adjustment. Massachusetts and HHS will
begin the transition that will allow HHS to operate risk adjustment in
Massachusetts in 2017. HHS will operate risk adjustment in all States
for the 2017 benefit year.
h. Risk Adjustment User Fee (Sec. 153.610(f))
As noted above, if a State is not approved to operate or chooses to
forgo operating its own risk adjustment program, HHS will operate risk
adjustment on the State's behalf. As described in the 2014 Payment
Notice, HHS's operation of risk adjustment on behalf of States is
funded through a risk adjustment user fee. Section 153.610(f)(2)
provides that an issuer of a risk adjustment covered plan with the
meaning of Sec. 153.20 must remit a user fee to HHS equal to the
product of its monthly enrollment in the plan and the per enrollee per
month risk adjustment user fee specified in the annual HHS notice of
benefit and payment parameters for the applicable benefit year.
OMB Circular No. A-25R establishes Federal policy regarding user
fees, and specifies that a user charge will be assessed against each
identifiable recipient for special benefits derived from Federal
activities beyond those received by the general public. The risk
adjustment program will provide special benefits as defined in section
6(a)(1)(b) of Circular No. A-25R to issuers of risk adjustment covered
plans because it will mitigate the financial instability associated
with potential adverse risk selection. The risk adjustment program also
will contribute to consumer confidence in the health insurance industry
by helping to stabilize premiums across the individual and small group
health insurance markets.
In the 2016 Payment Notice, we estimated Federal administrative
[[Page 12231]]
expenses of operating the risk adjustment program to be $1.75 per
enrollee per year, based on our estimated contract costs for risk
adjustment operations. For the 2017 benefit year, we proposed to use
the same methodology to estimate our administrative expenses to operate
the program. These contracts cover development of the model and
methodology, collections, payments, account management, data
collection, data validation, program integrity and audit functions,
operational and fraud analytics, stakeholder training, and operational
support. To calculate the user fee, we divided HHS's projected total
costs for administering the risk adjustment programs on behalf of
States by the expected number of enrollees in risk adjustment covered
plans (other than plans not subject to market reforms and student
health plans, which are not subject to payments and charges under the
risk adjustment methodology HHS uses when it operates risk adjustment
on behalf of a State) in HHS-operated risk adjustment programs for the
benefit year.
We estimated that the total cost for HHS to operate the risk
adjustment program on behalf of States for 2017 would be approximately
$52 million, and that the risk adjustment user fee would be $1.80 per
enrollee per year. We stated that the risk adjustment user fee contract
costs for 2017 include costs related to 2017 risk adjustment data
validation, and are slightly higher than the 2016 contract costs
because some contracts were rebid. We do not anticipate that
Massachusetts' decision to use the Federal risk adjustment methodology
will substantially affect the risk adjustment user fee rate for 2017.
Comment: One commenter strongly supported the assessment of a
higher risk adjustment user fee to support the RADV program. Another
commenter requested transparency for the user fee rate and that HHS
consider less costly alternatives. One commenter expressed concern over
the risk adjustment user fee proposal since HHS collected increased
user fees accounting for 2014 risk adjustment data validation in 2016
but delayed 2014 risk adjustment data validation. This commenter
recommended that HHS use those increased fees to pay for risk
adjustment data validation in 2017 and decline to increase user fees
for 2017 risk adjustment.
Response: In response to the comment regarding risk adjustment data
validation costs, we re-examined all assumptions that went into the
calculation of the risk adjustment user fee. First, we determined that
our expected contract costs for 2017 risk adjustment are lower than
anticipated, currently estimated at approximately $24 million. Then, we
looked at the enrollment assumptions we were using to calculate the
previous benefit year user fees. Because we now have actual 2014 risk
adjustment enrollment, we were able to base expected 2017 enrollment on
projected member month enrollment rather than total enrollees. We are
revising the risk adjustment user fee to reflect lower contract costs
for the 2017 benefit year and more accurate enrollment projections.
Therefore, we are finalizing the 2017 risk adjustment user fee at $1.56
per enrollee per year, or $0.13 PMPM.
3. Provisions and Parameters for the Transitional Reinsurance Program
The Affordable Care Act directs that a transitional reinsurance
program be established in each State to help stabilize premiums for
coverage in the individual market from 2014 through 2016. In the 2014
Payment Notice, we expanded on the standards set forth in subparts C
and E of the Premium Stabilization Rule and established the reinsurance
payment parameters and uniform reinsurance contribution rate for the
2014 benefit year. In the 2015 Payment Notice, we established the
reinsurance payment parameters and uniform reinsurance contribution
rate for the 2015 benefit year and certain oversight provisions related
to the operation of the reinsurance program. In the 2016 Payment
Notice, we established the reinsurance payment parameters and uniform
reinsurance contribution rate for the 2016 benefit year and certain
clarifying provisions related to the operation of the reinsurance
program.
a. Decreasing the Reinsurance Attachment Point for the 2016 Benefit
Year
Section 1341(b)(2)(B) of the Affordable Care Act directs the
Secretary, in establishing standards for the transitional reinsurance
program, to include a formula for determining the amount of reinsurance
payments to be made to non-grandfathered, individual market issuers for
high-risk claims that provides for the equitable allocation of funds.
In the Premium Stabilization Rule (77 FR 17228), we provided that
reinsurance payments to issuers of reinsurance-eligible plans will be
made for a portion of an enrollee's claims costs paid by the issuer
(the coinsurance rate) that exceeds an attachment point (when
reinsurance would begin), subject to a reinsurance cap (when the
reinsurance program stops paying claims for a high-cost individual).
The coinsurance rate, attachment point, and reinsurance cap together
constitute the uniform reinsurance payment parameters.
We provided in the 2015 Payment Notice (79 FR 13777) that HHS will
use any excess contributions for reinsurance payments for a benefit
year by increasing the coinsurance rate for that benefit year up to 100
percent before rolling over any remaining funds in the next year. In
the proposed rule, we proposed that if any contribution amounts remain
after calculating reinsurance payments for the 2016 benefit year (and
after HHS increases the coinsurance rate to 100 percent for the 2016
benefit year), HHS would decrease the 2016 attachment point of $90,000
to pay out any remaining contribution amounts to issuers of
reinsurance-eligible plans in an equitable manner for the 2016 benefit
year.
We received numerous comments in support of this proposal and are
finalizing this provision as proposed.
Comment: One commenter stated that changing the reinsurance payment
parameters at the end of the program--instead of identifying and
updating the parameters in earlier benefit years as current information
is available--would be disruptive. The commenter stated that this
proposal would cause disruption for States that exercised the option to
create supplemental reinsurance programs and that need to set uniform
reinsurance payment parameters.
Response: The final 2016 reinsurance coinsurance rate and
attachment point, which would reflect a potential increase in
coinsurance rate from 50 to 100 percent and a potential decrease in the
attachment point from $90,000 to an amount that pays out remaining
contributions in an equitable manner, will not be set until HHS
confirms the total amount of contributions available and reinsurance
payment requests for the 2016 benefit year. HHS understands that no
State-operated reinsurance program established supplemental reinsurance
payment parameters under Sec. Sec. 153.220(d) and 153.232 and
therefore no States will be affected by this provision. We believe that
expending all remaining reinsurance contribution funds as payments for
the 2016 benefit year will support the reinsurance program's goals of
promoting nationwide premium stabilization and market stability in the
early years of Exchange operations while providing issuers with
incentives to continue to effectively manage enrollee costs.
[[Page 12232]]
Comment: One commenter asked that HHS use excess reinsurance
contributions to fund the deficit in the risk corridors program.
Response: Section 1341 of the Affordable Care Act establishes the
transitional reinsurance program to compensate non-grandfathered
individual market plans for high-cost enrollees in the initial years of
the Exchange. We believe that our policy to expend any remaining
reinsurance contribution funds as reinsurance payments for the 2016
benefit best aligns with that statutory purpose.
b. Audit Authority Extends to Entities That Assist Contributing
Entities (Sec. 153.405(i))
In accordance with Sec. 153.405(i), HHS or its designee has the
authority to audit a contributing entity to assess compliance with the
reinsurance program requirements. In 2014, HHS implemented a
streamlined approach through which a contributing entity, or a third
party such as a third party administrator or an administrative
services-only contractor acting on behalf of a contributing entity,
could register on Pay.gov, calculate the annual enrollment count and
schedule reinsurance contribution payments. During the 2014 and 2015
contribution submission process, many third party administrators and
administrative services-only contractors assisted contributing entities
by calculating the contributing entity's annual enrollment count and
maintaining the records necessary to validate that enrollment. In the
proposed rule, we proposed to amend Sec. 153.405(i) to specify that
the audit authority extends to any third party administrators,
administrative services-only contractors, or other third parties that
complete any part of the reinsurance contribution submission process on
behalf of contributing entities or otherwise assist contributing
entities with compliance with the requirements for the transitional
reinsurance program. Additionally, we proposed to amend Sec.
153.405(i) to specify that a contributing entity that chooses to use a
third party administrator, administrative services-only contractor, or
other third party to assist with its obligations under the reinsurance
program must ensure that this third party administrator, administrative
services-only contractor, or other third party cooperate with any audit
under this section.
After reviewing the comments received on this proposal, we will not
finalize our amendment to Sec. 153.405(i) that extended the audit
authority to third party administrators, administrative services-only
contractors or other third parties that assist a contributing entity
with compliance with reinsurance program requirements. However, HHS
will finalize as proposed the amendment to Sec. 153.405(i) specifying
that a contributing entity that chooses to use a third party
administrator, administrative services-only contractor, or other third
party to assist with its obligations under the reinsurance program must
ensure that this third party administrator, administrative services-
only contractor, or other third party cooperates with any audit under
that section. We note that under Sec. 153.405(i) HHS, or its designee,
has the authority to audit contributing entities' compliance with their
obligations under the reinsurance program.
Comment: One commenter disagreed with HHS's proposal to extend the
audit authority to third party administrators, administrative services-
only contractors, or other third parties, arguing that it was
unnecessary and would increase the costs of compliance.
Response: We recognize the commenter's concerns about increasing
compliance costs, and are not finalizing our proposal to extend the
audit authority. However, a contributing entity that uses a third party
administrator, administrative services-only contractor, or other third
party to assist with its obligations under the reinsurance program must
ensure that such organization cooperates with any audit of the
contributing entity under this section.
4. Provisions for the Temporary Risk Corridors Program
This section contains proposals related to the temporary risk
corridors program, and therefore applies only to issuers of QHPs, as
defined at Sec. 153.500, with respect to the benefit years 2014
through 2016.
a. Risk Corridors Payment Methodology (Sec. 153.510(g))
To ensure the integrity of data used in risk corridors and MLR
calculations, in prior guidance we indicated that we would propose in
the HHS Notice of Benefit and Payment Parameters for 2017 an adjustment
to correct for any inaccuracies in risk corridors payment and charge
amounts that could result from issuers reporting a certified estimate
of cost-sharing reductions on the 2014 MLR and Risk Corridors Annual
Reporting Form.\12\ The use of a certified estimate that is lower than
the actual cost-sharing reductions provided would affect the MLR
calculation and the risk corridors financial transfers by increasing
incurred claims and allowable costs, thereby increasing the MLR and
potentially increasing the risk corridors payment or lowering the risk
corridors charge. We believe that requiring an update of these reported
amounts through recalculation of the risk corridors and MLR amounts for
the 2014 benefit year will be disruptive to the market and consumers,
as well as administratively burdensome and difficult to operationalize
for issuers and HHS. Therefore, consistent with our earlier guidance,
we proposed to add a new paragraph (g) to the risk corridors payment
methodology set forth in Sec. 153.510 stating that if the issuer
reported a certified estimate of 2014 cost-sharing reductions on its
2014 MLR and Risk Corridors Annual Reporting Form that is lower than
the actual cost-sharing reductions provided (as calculated under Sec.
156.430(c) for the 2014 benefit year, which will take place in the
spring of 2016), HHS would make an adjustment to the amount of the
issuer's 2015 benefit year risk corridors payment or charge measured by
the full difference between the certified estimate reported and the
actual cost-sharing reductions provided as calculated under Sec.
156.430(c) in order to address the impact of the inaccurate reporting
on the risk corridors and MLR calculations for the 2014 benefit year.
We are finalizing this policy and the amendment to Sec. 153.510(g) as
proposed.
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\12\ Cost-Sharing Reduction Amounts in Risk Corridors and
Medical Loss Ratio Reporting (Jun. 19, 2015), available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Advance-CSR-Payment-and-RC-MLR-submission_6192015.pdf.
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Comment: Several commenters recommended that, to the extent the
certified estimate of cost-sharing reductions reported on the 2014 MLR
and Risk Corridors Annual Reporting Form is lower than the actual cost-
sharing reductions provided, the difference should be reflected as an
adjustment to the cost-sharing reduction amount reported for the 2015
benefit year rather than the risk corridors payment or charge.
Response: We note that we are also amending Sec. 153.710(g) (see
III.D.5.d of this preamble) to require that issuers adjust the cost-
sharing reduction amount reported for the 2015 benefit year to account
for the difference between cost-sharing reduction amounts reported for
the 2014 benefit year and actual cost-sharing reduction amounts as
determined under Sec. 156.430(c). The separate, direct adjustment to
the 2015 risk corridors payment or charge set
[[Page 12233]]
forth in Sec. 153.510(g) was intended as a program integrity measure,
to help ensure that issuers did not report certified estimates of cost-
sharing reduction amounts for the 2014 benefit year that they knew
would likely be lower than their advance payment amounts.
b. Risk Corridors Data Requirements (Sec. 153.530)
In the proposed rule (80 FR 75488), we proposed to amend Sec.
153.530 to require that for the 2015 and later benefit years, issuers
must true up their claims liabilities and reserve amounts that were
used to determine their allowable costs reported for the risk corridors
program for the preceding benefit year to reflect the actual claims
payments made through June 30 of the year following the benefit year.
We also requested comments on how to handle the true-up of unpaid
claims estimates for 2016, suggesting four alternatives: provide for a
2017 payment or charge; provide for a simplified true-up process;
require that the 2016 estimate be based on actual 2014 and 2015
amounts; or provide for no true-up in the final year.
Comment: One commenter supported our proposal. Several commenters
opposed our proposal, noting that any improvement in the accuracy of
risk corridor payments to issuers under the proposal would be
outweighed by the administrative burden on issuers, and minimized by
the operational mechanics of the risk corridor program and the
potential for continued shortfall in the program. However, most of
these commenters were primarily concerned with our proposal to require
claims valuation at June 30 rather than March 31, and not with the
proposal to true-up claims estimates. Other commenters opposed only the
true-up of 2016 unpaid claims estimates, and additionally expressed
concern that 2014 and 2015 claims experience may not accurately reflect
2016 experience.
Response: We acknowledge commenters' concern regarding the
potential lack of practical advantages of requiring claims valuation at
June 30 rather than March 31 and requiring a true-up of 2016 unpaid
claims estimates. However, we continue to believe that a true-up of
2014 and 2015 unpaid claims estimates is important to preserve the
integrity of the risk corridors program. Therefore, we are finalizing
the amendment adding Sec. 153.530(b)(2)(iv) as proposed with respect
to the true-up of 2014 and 2015 experience in the reporting for the
2015 and 2016 benefit years. We will address the true-up of 2016
experience after we have evaluated the results of the true-up of 2014
experience.
5. Distributed Data Collection for the HHS-Operated Programs
a. Interim Dedicated Distributed Data Environment Reports (Sec.
153.710(d))
In the proposed rule, we proposed deleting Sec. 153.710(d), which
sets forth an interim discrepancy reporting process by which an issuer
must notify HHS of any discrepancy it identifies between the data to
which the issuer has provided access to HHS through its dedicated
distributed data environment (that is, an issuer's EDGE server) and the
interim dedicated distributed data environment report (that is, an
issuer's interim EDGE report), or confirm to HHS that the information
in the interim report accurately reflects the data to which the issuer
has provided access to HHS through its dedicated distributed data
environment in accordance with Sec. 153.700(a) for the timeframe
specified in the report. We proposed that this change would be
effective beginning with the 2016 benefit year.\13\
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\13\ For the 2015 benefit year, issuers are not required to
confirm that the information in the interim report accurately
reflects the reinsurance and risk adjustment data to which the
issuer has provided access through its EDGE server; or describe any
discrepancy an issuer identifies in the interim report. See FAQ
14247 (Dec. 15, 2015), available at www.regtap.info.
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We received numerous comments in support of this proposal, and are
finalizing this provision as proposed. We also finalize our proposal to
remove any cross-references in Sec. Sec. 153.710 and 156.1220 to the
interim discrepancy reporting process currently codified at Sec.
153.710(d) and conforming amendments to redesignate paragraph (e) as
paragraph (d), as well as to revise and redesignate paragraph (f) as
(e).
Comment: Some commenters asked that HHS confirm that there will
continue to be a robust process to allow issuers to identify and
resolve potential discrepancies throughout the data submission process.
Response: HHS is committed to working with issuers prior to the
data submission deadline to address any data issues so that reinsurance
payment and risk adjustment transfer calculations can be made
accurately and timely. Throughout the data collection period, HHS will
continue to maintain a help desk, host user group calls and webinars,
and make reports available to issuers on their respective EDGE servers
to assist issuers with the identification and resolution of data
submission errors and to provide technical assistance.
Comment: One commenter asked that HHS allow issuers 30 days to
respond to the final dedicated distributed data environment report with
any discrepancies, rather than the 15-calendar-day timeframe set forth
in Sec. 153.710(e) (now finalized as Sec. 153.710(d)).
Response: HHS will continue to require issuers to respond within 15
calendar days to the final dedicated distributed data environment
report. As we explained in the 2015 Payment Notice final rule (79 FR
13790), the 15-calendar day reporting timeframe for the final dedicated
distributed data environment report is necessary so that HHS can notify
issuers of their risk adjustment payment or charge and total estimated
reinsurance payments by June 30 of the year following the applicable
benefit year, as required under Sec. Sec. 153.310(e) and
153.240(b)(1)(ii).
Comment: One commenter asked HHS to release guidance on the 2015
discrepancy reporting process in early January.
Response: HHS intends to issue future guidance on the final
discrepancy reporting process set forth in Sec. 153.710(e) (now
finalized as Sec. 153.710(d)) prior to the final discrepancy reporting
window.
b. Risk Adjustment Interim Reports
We did not propose any provisions related to risk adjustment
interim reports in the Payment Notice. However, we received a number of
comments related to the schedule of risk adjustment reports and the
availability of additional information prior to the final summary
report on June 30 of the year following the applicable benefit year.
Comment: Several commenters requested that HHS issue the summary
report earlier than June 30. Commenters also requested interim or
quarterly reports so that issuers could incorporate improved estimates
into rate setting. Commenters suggested HHS provide interim reports
with issuers' calculated risk scores, market-wide risk scores, and the
other components of the payment transfer formula, including the
Statewide average premium. Commenters also recommended that HHS
disclose any issues with the completeness of data in the report so that
issuers can take this into account when reviewing results. Commenters
further suggested that HHS may want to consider publishing additional
details such as the issuer's market share, market average distribution
by metal plan, market allowable rating factor, and market proportion of
claims with HCCs.
[[Page 12234]]
Response: We issued an FAQ on January 8, 2016 \14\ stating that we
will release an interim public summary report in March 2016 for those
States and risk pools where the risk adjustment data that has been
submitted by February 1, 2016 meets HHS's data sufficiency thresholds.
The interim summary report will include the following transfer formula
elements by State and risk pool: (1) Average monthly premiums; (2)
average plan liability risk score; (3) average allowable rating factor;
(4) average actuarial value; (5) billable member months; and (6)
geographic cost factors. We will also provide issuers with an interim
report that contains their own issuer-specific information and that
will not be released publicly. We are providing this information
because issuers have indicated that, taken in concert with other data
available to them, it may help them formulate more accurate estimates
of their risk adjustment transfers. However, we continue to caution
that data provided in these interim reports will be preliminary, do not
represent any determination by HHS regarding the credibility of the
data submitted, and that final risk adjustment results may be
substantially different.
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\14\ See FAQ 14572, (Jan. 8, 2016), available at https://www.regtap.info/.
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c. Evaluation of Quality and Quantity of EDGE Data Submissions (Sec.
153.710(f))
Under Sec. 153.740(b), if an issuer of a risk adjustment covered
plan fails to provide HHS with access to the required data in a
dedicated distributed data environment such that HHS cannot apply the
applicable Federally certified risk adjustment methodology to calculate
the risk adjustment payment transfer amount for the risk adjustment
covered plan in a timely fashion, HHS will assess a default risk
adjustment charge. Similarly, under Sec. Sec. 153.420 and 153.740(a),
an issuer of a reinsurance-eligible plan will forfeit reinsurance
payments it otherwise might have received if the issuer fails to
establish a dedicated distributed data environment or fails to meet the
data requirements set forth in Sec. Sec. 153.420 and 153.700 through
153.730. On April 24, 2015, HHS released guidance entitled ``Evaluation
of EDGE Data Submissions'' describing the approach it would use to
evaluate whether the quality and quantity of the data that an issuer
provided to a dedicated distributed data environment was sufficient for
HHS to calculate reinsurance payments and apply the HHS risk adjustment
methodology for the 2014 benefit year.\15\ In the proposed rule, we
proposed to codify this practice for future benefit years to support
the integrity of payments and charges under the HHS-operated risk
adjustment program and payments under the reinsurance program, both of
which depend upon the submission of accurate and complete by issuers.
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\15\ EDGE Server Data Bulletin--INFORMATION; Evaluation of EDGE
Data Submissions (Apr. 24, 2015), available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/EDGE-guidance-42415-final.pdf.
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Consistent with the approach for review of 2014 benefit year data,
to determine if an issuer meets data quantity standards, we proposed
that HHS would compare an issuer's self-reported baseline data of total
enrollment and claims counts by market to the data submitted to the
issuer's dedicated distributed data environment. An issuer whose total
enrollment counts were lower than its baseline data submission by the
deadline for submitting data to the dedicated distributed data
environment would be subject to a default risk adjustment charge under
Sec. 153.740(b). An issuer whose total claims counts were lower than
its baseline data submission by the deadline for submitting data to the
dedicated distributed data environment would be subject to a default
risk adjustment charge only if the default charge was lower than the
charge it would have received through the risk adjustment transfer
calculation. Additionally, an issuer with either a low enrollment count
or a low claims count following the final data submission deadline
would forgo reinsurance payments for any claims that it failed to
submit. In the proposed rule, HHS stated that it would set forth in
guidance, on an annual basis, the appropriate threshold by which HHS
will deem data sufficient as to quantity for a given benefit year.\16\
We also stated that HHS would also specify in guidance the format and
timeline for submission of baseline data to HHS.\17\
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\16\ For information on the data quantity thresholds that will
be used to evaluate issuer's EDGE server data for the 2015 benefit
year related to the release of interim reinsurance payments and
interim risk adjustment summary reports, see EDGE Server Data
Bulletin--INFORMATION; Evaluation of EDGE Data Submissions for 2015
Benefit Year for Interim Reinsurance Payment and Interim Risk
Adjustment Summary Report (Jan. 20, 2016), available at https://www.regtap.info/uploads/library/EDGEServer_DataBulletin_5CR_012016.pdf. Guidance on the on-going and
final quantity evaluation processes will be released in the near
future.
\17\ Ibid.
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To determine if an issuer meets the data quality standards required
for HHS to calculate reinsurance payments and apply the HHS risk
adjustment methodology, HHS proposed to perform an outlier analysis
using select metrics that target reinsurance data quality and risk
adjustment data quality.\18\ As with our data quantity metrics, HHS
plans to describe in guidance, on an annual basis, the metrics used for
a given benefit year.\19\ An issuer may be assessed a risk adjustment
default charge if it does not meet data quality standards on any of the
risk adjustment metrics, and may forfeit reinsurance payments it might
otherwise have received if it does not meet data quality standards for
any of the reinsurance metrics.
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\18\ For the 2014 benefit year, HHS used the following five key
metrics: Percentage of all enrollees with at least one HCC; average
number of conditions per enrollee with at least one HCC; issuer
average risk score; percentage of individual market enrollees with
reinsurance payments; and average reinsurance payment per enrollee
for which the issuer would receive reinsurance payments.
\19\ For information on the data quality thresholds that will be
used to evaluate issuer's EDGE server data for the 2015 benefit year
related to the release of interim reinsurance payments and interim
risk adjustment summary reports, see EDGE Server Data Bulletin--
INFORMATION; Evaluation of EDGE Data Submissions for 2015 Benefit
Year for Interim Reinsurance Payment and Interim Risk Adjustment
Summary Report (Jan. 20, 2016), available at https://www.regtap.info/uploads/library/EDGEServer_DataBulletin_5CR_012016.pdf. Guidance on the on-going and
final quantity evaluation processes will be released in the near
future.
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HHS would conduct these data quantity and quality analyses after
the deadline for submission of data specified in Sec. 153.730 (that
is, April 30, of the year following the applicable benefit year).\20\
We proposed to add a new paragraph (f) to Sec. 153.710 to specify that
HHS will assess default risk adjustment charges based on these analyses
no later than the date of the notification provided by HHS under Sec.
153.310(e) (that is, June 30 of the year following the applicable
benefit year); and to describe the responsibilities of issuers in
relation to the quantity and quality analyses. In Sec. 153.710(f)(1),
we proposed to codify the requirement for issuers to provide baseline
data on their total enrollment and claims counts by market, in a format
and on a timeline specified by HHS in guidance. In Sec. 153.710(f)(2),
we proposed that if HHS identifies a data outlier that would cause the
data that a risk adjustment covered plan or a reinsurance-eligible plan
made available through a dedicated distributed data environment to fail
HHS's quality thresholds, the issuer may, within 10 calendar days of
receiving notification of the outlier,
[[Page 12235]]
submit a justification of the outlier for HHS to consider in
determining whether the issuer met the reinsurance and risk adjustment
data requirements.
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\20\ For the 2015 benefit year, the data submission deadline is
Monday, May 2, 2016 because April 30, 2016 is a Sunday. See FAQ
14472, (Dec. 21, 2015), available at https://www.regtap.info.
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We indicated that HHS expects to perform informal data quantity and
quality analyses throughout the data submission process, providing
issuers with time to address any outlier before the data submission
deadline. Issuers may provide justifications of data outliers, updates
to their respective EDGE server data, and corrected baseline enrollment
or claims counts at any time during the data submission process, and
are encouraged to do so as early as possible. The timeframe we proposed
in Sec. 153.710(f)(2) would apply to the final data quantity and
quality analyses only, which are performed following the deadline for
submission of data specified in Sec. 153.730 (that is, April 30, of
the year following the applicable benefit year).
We are finalizing these provisions as proposed, with two
modifications. In Sec. 153.710(f), we are removing the proposed
language that set forth a time limitation for HHS to assess a default
risk adjustment charge based on the data quantity and quality analyses
because the administrative appeals process set forth in Sec. 156.1220
could result in imposition of a default risk adjustment charge. For
example, if we determine during the administrative appeals process that
a data submission error was of such magnitude that the issuer did not
meet the data quantity and quality thresholds set forth for that
benefit year, then we may assess a default risk adjustment charge if
that charge is lower than the charge the issuer is being assessed for
that benefit year. We also changed the heading for Sec. 153.710(f)
from ``Data Sufficiency'' to ``Evaluation of Dedicated Distributed
Data.''
Comment: Numerous commenters asked that HHS extend the 10-day
deadline to submit an explanation of the outlier to HHS. Several
commenters asked that HHS provide issuers 15 days or 30 days to
respond. One commenter agreed with the 10-day deadline.
Response: The 10-day deadline only applies when HHS conducts the
final quality and quantity analyses of the data submitted to an
issuer's dedicated distributed data environment, which are performed
following the deadline for submission of data specified in Sec.
153.730 (that is, April 30 of the year following the applicable benefit
year). As noted above, HHS will continuously analyze the quantity and
quality of an issuer's data, providing reports and notices to issuers
and allowing time to correct any outliers during the data submission
window. The 10-day deadline is necessary because HHS must review an
issuer's outlier justification to calculate reinsurance payments and
apply the HHS risk adjustment methodology by the June 30 notification.
Comment: Some commenters asked that the data quantity and quality
analysis prior to the data submission deadline for an applicable
benefit year be robust and that HHS quickly respond to issuers to allow
them to identify and resolve issues during the data submission process.
Response: HHS will perform informal data quantity and quality
analyses throughout the data submission process, providing issuers with
reports and notices to allow time to address any outliers before the
data submission deadline. HHS encourages issuers to work with HHS any
time an issue or problem is encountered. Issuers may provide
justifications, update their EDGE server data, and correct baseline
enrollment or claims counts at any time during the data submission
process, and are encouraged to do so as early as possible.
Comment: One commenter recommended that HHS provide full
transparency into the evaluation process, including with respect to how
HHS intends to apply its measurements for baseline data and quality.
Another commenter asked that HHS publish the timeframes for the data
quantity and quality analysis in the annual Letter to Issuers.
Response: HHS strives to be transparent with respect to these
processes, and will issue guidance regarding the data quantity and
quality process and timeframes. See https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/ or https://www.regtap.info/.
Comment: One commenter urged HHS to publish the timeline and format
for submission of baseline data as soon as possible prior to the
applicable benefit year.
Response: HHS will continue to publish timeframe and guidance
materials related to the baseline submission process as soon as
practicable. HHS has already released guidance regarding the submission
of baseline data for the 2015 benefit year.\21\
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\21\ 2015 EDGE Server Status and Baseline Reporting (Oct, 20,
2015), available at https://www.regtap.info/reg_library.php?libfilter_topic=3.
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Comment: One commenter requested that HHS establish an appeals
process for issuers whose data is determined to fail the data quantity
and quality standards.
Response: As we stated in the proposed rule in the preamble section
to Sec. 156.1220, an issuer may file a request for reconsideration if
it believes that HHS made a processing error, incorrectly applied its
methodology, or made a mathematical error related to the data quantity
and quality standards. For example, an issuer may file a request for
reconsideration to challenge the assessment of a default risk
adjustment charge if the issuer believes the default charge was
assessed because HHS incorrectly applied its methodology regarding data
quantity and quality standards. We note that, under Sec.
156.1220(a)(4)(ii), a reconsideration with respect to a processing
error by HHS, HHS's incorrect application of the relevant methodology,
or HHS's mathematical error may be requested only if, to the extent the
issue could have been previously identified by the issuer to HHS under
Sec. 153.710(d)(2), it was identified and remains unresolved.
d. Data Requirements (Sec. 153.710(g))
We proposed revising Sec. 153.710(g)(1)(iii) to require an issuer
to report the amount of cost-sharing reductions calculated under Sec.
156.430(c) in its annual MLR and risk corridors report, regardless of
whether the issuer had any unresolved discrepancy under Sec. 156.1210,
or whether the issuer had submitted a request for reconsideration under
Sec. 156.1220(a)(1)(v). Additionally, consistent with the process
outlined in Sec. 153.710(g)(2), we proposed to require an issuer to
adjust the cost-sharing reduction amount it reports on its 2015 risk
corridors and MLR forms by the difference (if any) between the reported
cost-sharing reduction amount used to adjust allowable costs and
incurred claims on the 2014 MLR Annual Reporting Form and the amount of
cost-sharing reductions as calculated under Sec. 156.430(c) for the
2014 benefit year.
Consistent with the approach currently outlined in Sec.
153.710(g)(2), we proposed to amend this paragraph to require an issuer
to report any adjustment made or approved by HHS for any risk
adjustment payment or charge, reinsurance payment, cost-sharing
reduction payment to reflect actual cost-sharing reduction amounts
received, or risk corridors payment or charge, where the adjustment has
not been accounted for in a prior MLR and Risk Corridors Annual
Reporting Form in the next following year. For example, if an issuer's
risk adjustment charges or payments are adjusted as a result of the
administrative appeals process, the issuer should adjust these reported
amounts in the next MLR and risk corridors reporting cycle, after the
[[Page 12236]]
appeal has been resolved. Similarly, if HHS makes changes to an
issuer's risk adjustment charges or payments after the risk corridors
and MLR reporting cycle has closed for the applicable reporting year,
the issuer should adjust these reported amounts in the next MLR and
risk corridors reporting cycle to account for the difference between
the reported amounts and the amounts actually received or paid for the
previous benefit year. However, if an issuer is notified about the
modification during an open MLR and risk corridors submission period,
it must report the modified amounts in that open reporting cycle.
We also proposed to clarify in Sec. 153.710(g)(1)(iii) that cost-
sharing reduction amounts to be reported under this section must
exclude amounts reimbursed to providers of services or items. This
clarifying language is consistent with how the instructions for cost-
sharing reductions amounts are reported under Sec. Sec.
153.530(b)(2)(iii) (risk corridors data requirements) and
158.140(b)(iii) (MLR data requirements).
We also proposed to revise paragraph (g)(1)(iv) to require that for
medical loss ratio reporting only, issuers should report the risk
corridors payment to be made or charge assessed by HHS, as reflected
under Sec. 153.510. Lastly, HHS learned in the first year of
implementation of the premium stabilization and Exchange financial
assistance programs that some flexibility is needed when reporting
these program amounts for purposes of risk corridors and MLR reporting.
As such, we proposed in Sec. 153.710(g)(3) that HHS have the ability
to modify the reporting instructions set forth in Sec. 153.710(g)(1)
and (2) through guidance. Our intent in issuing any such guidance would
be to avoid having the application of the reporting instructions lead
to unfair or misleading financial reporting in exceptional
circumstances.
Based on comments received, we are finalizing these provisions as
proposed, with one modification. We are modifying Sec. 153.710(g)(2)
to specify that an issuer must report any adjustment made or approved
by HHS by August 15, or the next applicable business day, of the
reporting year for any risk adjustment payment or charge, including an
assessment of risk adjustment user fees; any reinsurance payment; any
cost-sharing reduction payment or charge; or any risk corridors payment
or charge, in the current MLR and risk corridors reporting year, unless
the adjustment meets the criteria for a ``de minimis'' change outlined
in prior guidance.\22\ HHS will also finalize as proposed the
conforming amendments to the introductory language at Sec.
153.710(g)(1) to remove the cross-references to the interim discrepancy
reporting process currently codified at Sec. 153.710(d). See III.D.5.a
of this preamble for a discussion of the conforming amendments related
to the removal of interim discrepancy reporting process.
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\22\ Risk Corridors and Medical Loss Ratio (MLR) Resubmissions
for the 2014 Benefit Year, (Aug. 14, 2015), available at https://www.regtap.info/uploads/library/RC_MLR_ResubmissionFAQ_5CR_081415.pdf.
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Comment: One commenter agreed with the proposal to require an
issuer to report any adjustment made or approved by HHS for any risk
adjustment payment or charge, reinsurance payment, cost-sharing
reduction payment to reflect actual cost-sharing reduction amounts
received, or risk corridors payment or charge, where the adjustment has
not been accounted for in a prior MLR and Risk Corridors Annual
Reporting Form, in the following year, but further recommended that we
establish a cut-off date for notifications of adjustments of June 30,
after which adjustments must be reported in the following year's MLR
and risk corridors reporting cycle. The commenter suggested that
notifications by June 30 would give issuers sufficient time to
incorporate data changes into their MLR and risk corridors submissions
by the July 31 reporting deadline.
Response: We recognize that, in some cases, the timing of
notifications of changes to data such as risk adjustment charges or
payments may affect an issuer's MLR and risk corridors submission.
Issuers must adhere to the July 31 regulatory deadline for submitting
MLR and risk corridors data for the preceding benefit year. In order to
accommodate potential adjustments to reinsurance payments, risk
adjustment payments or charges, or payments or charges resulting from
the cost-sharing reduction reconciliation process, in the period
immediately after the issuance of the June 30 report while also
maintaining the accuracy of issuers' MLR and risk corridors
submissions, we are modifying Sec. 153.710(g)(2) to specify that if
HHS notifies an issuer about an adjustment by August 15, the issuer
must report the adjustment in the current year reporting cycle, unless
the adjustment meets the criteria for a ``de minimis'' change outlined
in prior guidance.\23\ We note that we expect only a small number of
issuers to be required to resubmit data due to such an adjustment, and
that all issuers should prepare to disburse rebates by the September 30
deadline. For those issuers who may be notified an adjustment that does
not meet the ``de minimis'' criteria by August 15, HHS will work with
the issuer to facilitate resubmission of its MLR and risk corridors
submissions and to address the impact on MLR rebates, if necessary, in
a manner that limits additional operational burden for the issuer.
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\23\ https://www.regtap.info/uploads/library/RC_MLR_ResubmissionFAQ_5CR_081415.pdf.
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Comment: One commenter asked that HHS not finalize Sec.
153.710(g)(1)(iii), stating this change would limit the ability of
issuers with alternative payment models to receive cost-sharing
reduction amounts for capitated payment arrangements.
Response: The language under Sec. 153.710(g)(1)(iii) does not
limit the ability of issuers with alternative payment arrangements to
receive cost-sharing reduction payments, and is consistent with other
cost-sharing reduction reporting requirements, for example, allowable
costs under Sec. 153.530(b)(2)(iii) (risk corridors data requirements)
must be reduced by the amount of cost-sharing reduction payments
received by the issuer, except for, or excluding, any part of those
payments used by the issuer to reimburse providers.
e. Good Faith Safe Harbor
In the second Program Integrity Rule, we finalized Sec.
153.740(a), which permits HHS to impose civil money penalties upon
issuers of risk adjustment covered plans and reinsurance-eligible plans
for failure to adhere to certain standards relating to their dedicated
distributed data environments. In the proposed rule, consistent with
our previous statements in the 2016 Payment Notice (80 FR 10780), we
stated that we would not be extending the good-faith safe harbor to
2016. Starting in the 2016 calendar year and beyond, civil money
penalties may be imposed if an issuer of a risk adjustment covered plan
or reinsurance-eligible plan fails to establish a dedicated distributed
data environment in a manner and timeframe specified by HHS; fails to
provide HHS with access to the required data in such environment in
accordance with Sec. 153.700(a) or otherwise fails to comply with the
requirements of Sec. Sec. 153.700 through 153.730; fails to adhere to
the reinsurance data submission requirements set forth in Sec.
153.420; or fails to adhere to the risk adjustment data submission and
data storage requirements set forth in Sec. Sec. 153.610 through
153.630, even if the issuer has made good faith efforts to comply with
[[Page 12237]]
these requirements. This safe harbor provision parallels a similar safe
harbor for QHP issuers in FFEs under Sec. 156.800 that also expired at
the end of the 2015 calendar year. See III.G.7 of this preamble for the
accompanying discussion of the safe harbor provision under Sec.
156.800. However, we are clarifying that HHS will not impose civil
money penalties under Sec. 153.740(a) in 2016 or later based on
activities that occurred in the 2014 or 2015 calendar year if the
issuer acted in good faith at that time.
Comment: Several commenters asked HHS to extend the good faith safe
harbor to 2016, while others supported our proposal. Some commenters
asked that HHS allow a good faith safe harbor for all new processes,
such as policy-based payments and reconciliation of advance payments of
cost-sharing reductions.
Response: HHS will not extend the good faith safe harbor to cover
conduct in 2016 or later years (including with respect to activities
that occur in the 2016 calendar year or later relating to data from
earlier benefit years). We believe that the 2 calendar years that we
provided under this policy were sufficient to permit issuers to
transition into compliance with the applicable risk adjustment,
reinsurance and distributed data collection requirements. Of course, in
all our enforcement actions, we will continue to take into account all
facts and circumstances, including the reasonable good faith action of
issuers.
Comment: A few commenters asked that HHS make clear that the good
faith safe harbor continues to apply to conduct for benefit years prior
to 2016 in perpetuity.
Response: HHS will not impose civil money penalties in 2016 or
later based on activities that occurred in the 2014 or 2015 calendar
year if the issuer acted in good faith at that time.
f. Default Risk Adjustment Charge (Sec. 153.740(b))
In the second Program Integrity Rule and the 2015 Payment Notice,
HHS indicated that a default risk adjustment charge will be assessed if
an issuer does not establish a dedicated distributed data environment
or submits inadequate risk adjustment data. In the 2016 Payment Notice,
we established how a default risk adjustment charge will be allocated
among risk adjustment covered plans.
As described in the second final Program Integrity Rule, the total
risk adjustment default charge for a risk adjustment covered plan
equals a PMPM amount multiplied by the plan's enrollment.
Tn = Cn * En
Where:
Tn = total default risk adjustment charge for a plan n;
Cn = the PMPM amount for plan n; and
En = the total enrollment (total billable member months) for plan n.
In the second final Program Integrity Rule, we provided that En
could be calculated using an enrollment count provided by the issuer,
using enrollment data from the issuer's MLR and risk corridors filings
for the applicable benefit year, or other reliable data sources.
In the 2015 Payment Notice, we determined that we would calculate
Cn--the PMPM amount for a plan--equal to the product of the statewide
average premium (expressed as a PMPM amount) for a risk pool and the
75th percentile plan risk transfer amount expressed as a percentage of
the respective Statewide average PMPM premiums for the risk pool. The
nationwide percentile would reflect only plans in States where HHS is
operating the risk adjustment program and would be calculated based on
the absolute value of plan risk transfer amounts. The PMPM amount
determined using the method described here would be multiplied by the
non-compliant plan's enrollment, as determined using the sources
finalized in the second final Program Integrity Rule, to establish the
plan's total default risk adjustment charge.
For the second year of risk adjustment, the 2015 benefit year, we
proposed to calculate Cn in the same manner, but increased to the 90th
percentile plan risk transfer amount expressed as a percentage of the
respective statewide average PMPM premiums for the risk pool. We
believe that the 75th percentile was reasonable for the initial year of
risk adjustment, as we did not yet know the distribution of risk
adjustment transfers and issuers were more likely to experience
technical difficulties in establishing a dedicated distributed data
environment. In the second year of risk adjustment, now that issuers
have set up EDGE servers and participated in the calculation of risk
adjustment transfers, we believe that adjusting the default charge
upwards to the 90th percentile of plan risk transfer amounts expressed
as a percentage of the respective statewide average PMPM premiums for
the risk pool will encourage continued compliance with risk adjustment
data submission requirements. We are concerned that, absent this
change, some issuers may prefer receiving a default charge at the 75th
percentile over participating in the risk adjustment program; a default
charge at this level might lack sufficient deterrent value. We stated
that we believe the proposed 90th percentile default charge will
incentivize issuers to participate in the risk adjustment program.
Comment: Commenters generally supported the increased default risk
adjustment charge for 2015 benefit year risk adjustment. Two commenters
opposed the increase, stating the increase is overly punitive.
Response: We believe that the increased default charge will
encourage participation in the second year of implementation of the
risk adjustment program. In establishing the amount of the default
charge, we must balance setting a fair risk allocation and discouraging
strategic behavior from issuers with low-risk enrollees against
avoiding unduly penalizing issuers who fail to make proper submissions
for operational, and not strategic, reasons. In the second year of risk
adjustment, we believe that most issuers will encounter fewer
operational difficulties in establishing an EDGE server and meeting
data quantity and quality thresholds, and that the opportunity for
strategic behavior is greater because risk transfer distributions will
be better understood. We believe that raising the default risk
adjustment charge from the 75th percentile PMPM transfer amount to the
90th percentile transfer amount is a fair balancing of these goals. We
are finalizing this policy as proposed
For the 2016 benefit year, we proposed a separate calculation of Cn
for issuers where En statewide, in the individual and small
group markets combined, is 500 billable member months or fewer. For
these issuers, we proposed to calculate Cn, or the PMPM charge for a
plan, as 14 percent of premium, which we calculated as the mean charge
as a percent of premium of issuers with 500 billable member months or
fewer in the 2014 benefit year in the small group market. We based the
charge itself on the experience of small group issuers in the 2014
benefit year, as we believe that individual market issuers are more
likely to set up an EDGE server because of the availability of
reinsurance. Limiting the applicability in the 2016 benefit year of
this default charge to issuers with 500 billable member months or fewer
is intended to ensure that the only issuers with this option are
issuers that are so small that their removal from the overall risk
adjustment risk pool would have a minimal impact on transfers
nationwide. In 2014, approximately 125 issuers would have had fewer
than 500 member months in the individual and small group markets
combined. Of those approximately 125 small issuers, 80
[[Page 12238]]
were assessed risk adjustment charges greater than the proposed default
charge of 14 percent of premium PMPM. Those charges amounted to less
than 0.09 percent (that is, less than one tenth of one percent) of
total risk adjustment charges assessed nationally. Assuming every one
of those issuers elect to accept the proposed 14 percent default risk
charge, and none of the small issuers that received risk adjustment
payments or with charges below 14 percent of premium PMPM did so (which
we believe unlikely, due to the administrative expenses of setting up
an EDGE server), the assessment of the proposed 14 percent of premium
default charge on those 80 issuers would have resulted in a 0.05
percent reduction in risk adjustment charges collected nationally.
Because issuers of this size have a minimal impact on the overall risk
adjustment risk pools and have a disproportionately high operational
burden to comply with risk adjustment data submission requirements, we
believe that a separate default charge for these issuers would promote
efficiency and data quality in the risk adjustment program. We proposed
to establish this risk adjustment default charge as the mean charge in
the small group for these small issuers, or 14 percent of statewide
average premium PMPM, to compensate on average for the absence of these
immaterial amounts in the affected risk pools. We intend that this
policy would apply only to the very smallest issuers, in recognition of
the disproportionately high operational burden on these issuers.
Comment: Commenters opposed the separate, lower default charge,
stating that compliance with risk adjustment is a cost of doing
business under the Affordable Care Act. One commenter stated that the
500-member-months threshold is too small. One commenter recommended a
graded approach to the default risk charge that would adjust the
percentile factor from 50th to 75th for those issuers with 500 to 2,000
billable members to allow an issuer more flexibility as they transition
into participation on the EDGE server. One commenter recommended that
the threshold should be 720,000 billable member months.
Response: We agree that, in general, compliance with risk
adjustment is a cost of doing business under the new market rules.
However, as we explained in the proposed rule, we believe that an
exception for the very smallest issuers recognizes that for those
issuers the administrative costs of implementing an EDGE server will
substantially outweigh the risk adjustment benefits to the risk pool.
We are finalizing this policy as proposed.
g. Insolvent Issuers
We are aware that a health insurance issuer may become insolvent or
exit a market during a benefit year. In some cases, another entity,
such as another issuer or liquidator may take over the issuer's
operations, or a State guaranty fund may become responsible for paying
claims for the insolvent issuer. In some instances when this occurs,
both the insolvent issuer and the entity seeking to acquire business
from the insolvent issuer would lack a full year of enrollee data to
submit to the EDGE server for the risk adjustment or reinsurance
programs.
To address this concern, we proposed to clarify that an entity
acquiring or entering into another arrangement with an issuer to serve
the current enrollees under a plan, or a State guaranty fund that is
responsible for paying claims on behalf of the insolvent issuer, with
substantially the same coverage terms may accrue the previous months of
claims experience for purposes of risk adjustment and reinsurance to
fully reflect the enrollees' risk and claims costs. We proposed the
``substantially the same'' standard because we understood that in many
of these situations, an acquiring entity's platform may require some
adjustments to the plan arrangements and coverage terms. As part of
meeting this standard, an acquiring entity would be required to carry
over of accumulators for deductibles and annual limitations on cost
sharing. If the substantially the same standard is met, and the
insolvent issuer and acquiring entity agree that the acquiring entity
will accrue the previous months of claims experience, the acquiring
entity must take responsibility for submitting to HHS complete and
accurate claims and baseline information for that benefit year
(including data from the insolvent issuer) in accordance with HHS's
operational guidance to maintain eligibility to receive payments under
this program for the given benefit year. Operationally, the acquiring
entity may elect to have the insolvent issuer submit the data on behalf
of both entities. We will work with issuers and other acquiring
entities in these situations to facilitate the submission of the
necessary data to EDGE servers for HHS to calculate risk adjustment
financial transfers and reinsurance payments.
We also recognized that guaranty funds may not meet all of the
requirements to be considered a risk adjustment covered plan or
reinsurance eligible plan (for example, they may not meet the
definition of ``health insurance issuer''), and so we proposed to
permit a guaranty fund to participate in those programs notwithstanding
these definitions, to the extent it has taken over liability for a risk
adjusted covered plan or reinsurance eligible plan during a benefit
year.
We sought comment on these policies, including with respect to
permissible ways in which the acquiring entity's arrangements may
differ and other ways of ensuring the submission of the data necessary
for HHS to calculate the risk adjustment financial transfer amounts and
the reinsurance payment amounts when another party will take over
operations of the insolvent issuer, or pay claims on behalf of the
insolvent issuer, during a benefit year. We also solicited comments on
whether additional flexibility is needed with respect to the data
submission requirements for the reinsurance and risk adjustment
programs, such as with respect to the definition of a ``paid claim'' to
account for situations when an issuer is unable to pay claims for
covered services, for example, due to insolvency.
We received a number of comments on these policies. Most commenters
supported the general intent of the policies but requested additional
information or clarification of certain aspects of them. We are
finalizing this policy with certain clarifications, as detailed below.
Comment: Two commenters requested that we clarify the term
``substantially the same'' in this context, and one of these commenters
questioned whether a guaranty fund that pays only a portion of the
original covered benefits would meet this standard.
Response: With respect to the acquisition of business from an
insolvent issuer, an acquiring entity must, at a minimum, carry over
accumulators for deductibles and annual limitations on cost sharing to
meet the substantially the same standard. We note that this standard is
unrelated to the standards under Sec. 153.500 for determining whether
a health plan offered outside of the Exchange is the same as a QHP for
the purposes of the risk corridors program. We will continue to monitor
situations involving issuer insolvencies and intend to issue further
guidance as necessary.
Comment: Two commenters expressed concern about the opportunity for
gaming by acquiring issuers if they have the option, but are not
required to accrue and submit claims experience for the insolvent
issuer, because they could select the
[[Page 12239]]
approach that would be most favorable to their risk adjustment
calculation.
Response: We appreciate the concern, but we believe that a single
EDGE server submission better reflects the true economic risk of the
enrollment in the plans of the insolvent issuer, and note that an
acquiring entity taking over the insolvent issuer's business could
structure the acquisition to provide for separate submissions. We will
work with issuers and acquiring entities in these situations to
facilitate the submission of accurate and complete data to EDGE servers
that is necessary to calculate risk adjustment financial transfers and
reinsurance payments.
Comment: One commenter encouraged us to address situations
involving a State guaranty fund or liquidator separately from those
involving an acquiring issuer, given their differing roles and
responsibilities. This commenter also requested that liquidators, in
addition to guaranty funds, be given explicit ability to participate in
the reinsurance and risk adjustment programs as they are often
responsible for providing pre-liquidation coverage. Another commenter
questioned whether a guaranty fund would be able to participate in risk
adjustment under State law or operationally. A separate commenter
proposed that the policies apply to providers in the same manner as
guaranty associations, because the majority of issuers in its State are
not subject to the guaranty association to pay claims; however,
providers are required to hold consumers harmless if their insurance
company becomes insolvent.
Response: We clarify that this policy permits participation of a
liquidator or a State guaranty fund in the risk adjustment and
reinsurance programs, to the extent it has taken over liability for a
risk adjustment covered plan or reinsurance eligible plan during a
benefit year, unless otherwise prohibited by State law. We recognize
that restrictions under State law, or operational limits, may apply. In
the case where a guaranty fund assumes liability for a risk-adjustment
covered plan or reinsurance eligible plan, the guaranty fund would
submit data acting on behalf of the insolvent issuer; however, the
insolvent issuer would retain responsibility for the coordination of
the EDGE data submission. While we understand that policyholders in
some States are not covered by guaranty funds, it is not clear how
providers could coordinate the submission of an EDGE server because the
responsibility to submit data to the EDGE server applies to the issuer
and the EDGE server does not support the submission of individual
claims from providers.
Comment: One commenter recommended that, in the event that an
issuer in a market in a State is unable to pay a risk adjustment charge
in full, HHS adjust both risk adjustment payments and charges in that
market and State, rather than only payments, to ensure that the
shortfall is distributed proportionally among issuers in the risk pool.
Response: We appreciate the recommendation and will consider
proposing this approach in rulemaking for future benefit years.
E. Part 154--Health Insurance Issuer Rate Increases: Disclosure and
Review Requirements
1. Disclosure and Review Provisions
a. Rate Increases Subject To Review (Sec. 154.200)
In the proposed rule, we proposed amending paragraph (c)(2) of
Sec. 154.200 to re-establish that a rate increase for single risk pool
coverage effective on or after January 1, 2017, must be calculated as
the premium-weighted average rate increase for all enrollees. The
proposed change would reverse a previous amendment \24\ that defined a
rate increase for single risk pool coverage effective on or after
January 1, 2017 as an increase in the plan-adjusted index rate. We note
that the previous amendment also established a plan level trigger for a
product being subject to review for coverage effective on or after
January 1, 2017. The proposed amendment maintained the plan level
trigger for the subject-to-review threshold.
---------------------------------------------------------------------------
\24\ 80 FR 10749, 10863 (Feb. 27, 2015).
---------------------------------------------------------------------------
We proposed the amendment to the calculation method because an
increase in the plan-adjusted index rate does not reflect changes to
adjustment factors for rating area, age, or tobacco use. For example,
an issuer could change geographic rating area factors such that members
in a certain rating area receive a larger increase, but if the plan-
adjusted index rate did not meet or exceed the threshold then the rate
increase would not be subject to rate review.
We are finalizing this section as proposed, so that a rate increase
for single risk pool coverage effective on or after January 1, 2017 is
subject to review if the average increase, including premium rating
factors described in Sec. 147.102, for all enrollees weighted by
premium volume for any plan within the product meets or exceeds the
applicable threshold. This amendment strengthens consumer protections
against unreasonable rate increases by ensuring that coverage with a
significant rate increase due to changes in rating factors is subject
to review.
We maintain that the plan level rate increase, as opposed to the
product level rate increase, will determine whether the increase is
subject to review. The plan level trigger was finalized in the 2016
Payment Notice (80 FR 10781) effective for coverage beginning on or
after January 1, 2017.
Comment: Some commenters expressed concern regarding the inclusion
of premium rating factors and requested HHS clarify how rate changes
should be calculated according to the proposal.
Response: All rating factors, including rating area and tobacco use
factors, should be captured in the calculation of plan rate changes.
The intent here, in the context of the rate review program, is to
measure the premium change based on an issuer's current population
compared to that same population if the new rates were implemented.
This is not intended to capture demographic changes, such as a member
aging up or moving to a new geographic location.
b. Submission of Rate Filing Justification (Sec. 154.215)
In the proposed rule, we proposed to revise Sec. 154.215(a)(1) to
require health insurance issuers to submit the Unified Rate Review
Template (also known as Part I of the Rate Filing Justification) for
all single risk pool coverage in the individual or small group (or
merged) market, regardless of whether any plan within a product is
subject to a rate increase. This proposal was made to carry out the
Secretary's responsibility, in conjunction with the States, under
section 2794(b)(2)(A) of the PHS Act to monitor premium increases of
health insurance coverage offered through as well as outside of an
Exchange. We also expressed our intent to disclose information that is
not a trade secret or confidential commercial or financial information
for all proposed rate increases for single risk pool coverage, rather
than only proposed rate increases subject to review, as well as all
final rate increases.
We proposed to revise paragraph (a) to insert paragraph (a)(1) to
establish that health insurance issuers must submit the Unified Rate
Review Template (``URRT,'' also known as Part I of the Rate Filing
Justification) for all single risk pool products in the individual or
small group (or merged) market, regardless of whether any plan within a
product is subject to a rate
[[Page 12240]]
increase. We also proposed to insert paragraph (a)(2) to capture the
existing requirement that issuers must submit a URRT and an Actuarial
Memorandum (also known as Parts I and III of the Rate Filing
Justification) when a single risk pool product has a plan that is
subject to a rate increase of any size. Similarly, we proposed to
insert paragraph (a)(3) to capture the existing requirement that an
issuer must provide that all three parts of the Rate Filing
Justification (that is, the Part I URRT, the Part II written
description justifying a rate increase, and the Part III Actuarial
Memorandum) when a single risk pool product has a plan with a rate
increase that is subject to review. Accordingly, we proposed to revise
paragraph (b) to provide that a Rate Filing Justification for single
risk pool plans must include one or more of the three parts, as
appropriate, but not necessarily all three. We also proposed to remove
and reserve paragraph (c), as it was unnecessary in light of the
proposed amendments to paragraphs (a) and (b). We are finalizing all of
the amendments to this regulation as proposed.
Comment: A majority of commenters supported the proposal and
several recommended that all proposed rate changes should be made
public, rather than just proposed rate increases. Some commenters,
however, expressed concern regarding the proposal, citing the statutory
obligation to review only unreasonable premium increases, rather than
all increases. A few commenters stated that publicizing rate filings
before they are finalized eliminates competitive advantages for plans.
Response: We are finalizing the proposal to collect rate filings
for all single risk pool products in order to carry out the Secretary's
statutory responsibility \25\ to monitor premium increases of health
insurance coverage. HHS will post information for all proposed rate
filings for the individual and small group markets within a state at a
uniform time to promote fair market competition between issuers through
and outside of the Exchange and further enhance transparency of the
rate-setting process. We note that States with an Effective Rate Review
Program are required to post proposed rate increases subject to review
and have a mechanism for receiving public comments on those proposed
rate increases. CMS's decision to post information for all proposed
rate filings for single risk pool coverage does not affect or change
the State's obligation to post proposed rate increases under Sec.
154.301(b).
---------------------------------------------------------------------------
\25\ Section 2794(b)(2)(A) of the Public Health Service Act.
---------------------------------------------------------------------------
Comment: Some commenters requested that HHS should make final rate
information publicly available at least 15 days before open enrollment.
Response: Final rate increase information must be posted at a
uniform time for all single risk pool coverage (regardless of whether
the coverage is sold on the Exchange) by the first day of open
enrollment,\26\ but States may establish an earlier uniform posting
timeframe with appropriate notice to CMS.\27\ We believe this timeframe
strikes a balance between providing State and Federal regulators
sufficient time to complete their reviews, while providing consumers
the information needed to make informed purchasing decisions.
---------------------------------------------------------------------------
\26\ Sec. 154.301(b)(1)(ii).
\27\ Sec. 154.301(b)(2).
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c. Timing of Providing the Rate Filing Justification (Sec. 154.220)
In the proposed rule, we proposed technical changes to Sec.
154.220 to remove references to rate increases and clarify that the
timeframes listed pertain to all single risk pool products with or
without rate changes to conform with the proposed amendments to Sec.
154.215. We are finalizing the amendments to this regulation as
proposed.
Comment: Some commenters requested that HHS change the filing
deadline to a time after the risk adjustment report is released to
issuers. Other commenters suggested States establish their own rate
filing submission deadlines rather than adhering to HHS filing
deadlines.
Response: We acknowledge the comments, and consistent with the
approach outlined in guidance being released with this rule,\28\ we are
providing States with an effective rate review program \29\ with
additional flexibility with respect to the submission deadline for
proposed rate filings for single risk pool products. Issuers in a State
effective rate review program must submit proposed rate filings for
single risk pool coverage (for both QHPs and non-QHPs) on a date set by
the State, so long as the date is not later than July 15, 2016. We
encourage States with effective rate review programs that are served by
the HealthCare.gov platform to set a date that aligns with the
Federally-facilitated Exchange QHP filing deadlines; \30\ however, we
understand some States may face challenges in doing so. Issuers in
States without effective rate review programs \31\ must submit proposed
rate filings for single risk pool coverage (for both QHPs and non-QHPs)
on a date set by the State, so long as the date is not later than May
11, 2016. Further, we note that all States retain flexibility to
establish an earlier submission date under Sec. 154.220(b).
---------------------------------------------------------------------------
\28\ CMS Insurance Standards Bulletin: Timing of Submission and
Posting of Rate Filing Justifications for the 2016 Filing Year for
Single Risk Pool Coverage, (Feb. 29, 2016).
\29\ See 45 CFR 154.301 for a list of criteria that CMS
considers when evaluating whether a State has an effective rate
review program
\30\ Final 2017 Letter to Issuers in the Federally-facilitated
Marketplaces (Feb. 29, 2016).
\31\ For the 2017 plan year, health insurance issuers in
Alabama, Missouri, Oklahoma, Texas, and Wyoming are required to
submit rate filings for review by CMS to determine reasonableness.
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d. Submission and Posting of Final Justifications for Unreasonable Rate
Increases (Sec. 154.230)
We proposed to fix a typographical error and change the cross
reference in Sec. 154.230(c)(2)(i) to reference Sec. 154.215(h)
rather than Sec. 154.215(i). There were no comments submitted
regarding this section. We are finalizing the amendment as proposed.
e. CMS's Determinations of Effective Rate Review Programs (Sec.
154.301)
In the proposed rule, we restated that making rate information
available to the public at a uniform time (rather than a rolling basis)
is one of the criteria for determining whether a State has an Effective
Rate Review program.\32\ We expressed our intent to propose a uniform
timeline for release of proposed rate increases subject to review and
for all final rate increases for single risk pool coverage. We are
maintaining the requirement for releasing rate information at a uniform
time rather than on a rolling basis. We released the proposed timeline
for the 2016 Filing Year on December 23, 2015.\33\ Public comments were
accepted until January 22, 2016. We are releasing the final timeline in
guidance \34\ with this final rule, as discussed above.
---------------------------------------------------------------------------
\32\ Sec. 154.301(b).
\33\ DRAFT Bulletin: Timing of Submission and Posting of Rate
Filing Justifications for the 2016 Filing Year for Single Risk Pool
Coverage1 Effective on or after January 1, 2017, (Dec. 23, 2015),
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Timeline-Bulletin-12-23-15-FINAL.pdf.
\34\ CMS Insurance Standards Bulletin: Timing of Submission and
Posting of Rate Filing Justifications for the 2016 Filing Year for
Single Risk Pool Coverage (Feb. 29, 2016).
---------------------------------------------------------------------------
Comment: Many commenters expressed support for requiring States to
post all rate increases at the same time. Some commenters opposed
having a uniform posting timeline, requesting that States be able to
establish the timeline for SBEs.
[[Page 12241]]
Response: The requirement for a State with an Effective Rate Review
program to post proposed rate increases that it reviews, and to have a
mechanism for receiving public comments on those proposed rate
increases, has been in effect for several years. The uniform timeline
requires States to ensure that the proposed rate increases subject to
review, as well as all final rate increases, are released to the public
at the same time. This policy ensures that rate information is
available simultaneously for coverage offered through and outside of
the Exchange, which enhances transparency and promotes fair market
competition. We note that the guidance being released with this final
rule provides States with an effective rate review program with
flexibility to set a date to post proposed rate filings for single risk
pool products with rate increases subject to review, provided the date
set by the State is no later than August 1, 2016. Nothing in this rule
prevents States from making additional information available to the
public, or prevents States from establishing earlier uniform timeframes
for public disclosure.
F. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Definitions (Sec. 155.20)
In Sec. 155.20, we proposed to amend the definition of
``applicant'' for the small group market so that the term also includes
an employer seeking eligibility to purchase coverage through a SHOP,
without necessarily enrolling in that coverage themselves. The current
definition of an applicant contemplates an employer, employee, or
former employee seeking eligibility for enrollment in a QHP through the
SHOP for himself or herself. For consistency with our existing
regulations governing the SHOP application process at Sec. Sec.
155.710 and 155.715 and for consistency with how the small group market
typically works, we proposed that the term applicant also include an
employer who is seeking eligibility to purchase coverage through a
SHOP, but who is not seeking to enroll in that coverage for himself or
herself. We received no comments on this proposal and are finalizing
this amendment as proposed.
We proposed to modify the definitions of ``small employer'' and
``large employer'' at Sec. 155.20 to align with the Protecting
Affordable Coverage for Employees Act, which was recently enacted, as
further described in the preamble to Sec. 144.103. For a discussion of
the provisions of this final rule related to the definitions of small
employer and large employer in Sec. 155.20, please see the preamble to
Sec. 144.103. We did not propose to change the applicability of the
counting methodology under section 4980H(c)(2) of the Code to these
definitions in Sec. 155.20, but we proposed amendments to these
definitions that eliminate language about the timing of the
applicability of the counting methodology under section 4980H(c)(2) of
the Code under these definitions, because that language is no longer
relevant. We did not receive any comments regarding this aspect of the
proposal and are finalizing as proposed the elimination of the language
about the timing of applicability of the counting methodology under
section 4980H(c)(2) of the Code.
We proposed to amend Sec. 155.20 to add a definition for ``Federal
platform agreement'' to apply to this part. We defined a Federal
platform agreement to mean an agreement entered into by a State
Exchange and HHS, under which the State Exchange agrees to rely on the
Federal platform to carry out select Exchange functions. We are
finalizing the definition, with a slight modification to reflect the
fact that the State election to implement the SBE-FP would occur
through the Blueprint process in Sec. 155.106(c) rather than the
Federal platform agreement, which will reflect the agreement between
the parties and will be entered into at the end of the Blueprint
process. The Federal platform agreement, which we will publish later
this year, will also contain the parties' mutual obligations with
respect to those Exchange functions and related matters.
For a discussion of the provisions of this final rule regarding
standardized options, please see the preamble to part 156, regarding
standardized options.
2. General Standards Related to the Establishment of an Exchange
a. Election To Operate an Exchange After 2014 (Sec. 155.106)
We proposed to modify the timeframes for submission and approval of
documentation specifying how an Exchange established by a State or a
regional Exchange meets the Exchange approval standards (that is, the
Exchange Blueprint). Based on our experience over the last two open
enrollment periods, we believe the current Exchange Blueprint
application deadlines for States intending to operate a State Exchange
do not sufficiently balance the need to provide States with time to
adequately prepare their Blueprint applications against the need to
ensure HHS has sufficient time to accurately assess a State's progress
and ability to timely build the necessary Exchange information
technology. In our experience, the process for seeking approval to
operate a State Exchange involves substantial technical assistance and
collaboration between HHS and the State in developing plans to
transition from one Exchange operational model and information
technology infrastructure to another, including key milestones,
deadlines, and contingency measures. Since the completion of some of
these key milestones and deadlines would need to occur prior to the
submission of the Blueprint application, we proposed that we will make
that technical assistance available and initiate the transition process
following submission of a declaration letter from the State, as
provided for in the Blueprint approval process. The declaration letter
would serve as formal notification to HHS of a State's intent to
operate a State Exchange, including operating an SBE-FP, and to submit
a Blueprint (or Blueprint update) for HHS approval. The declaration
letter would initiate coordination between the State and HHS on a
transition plan. The declaration letter would also serve as a starting
point for HHS to communicate the operational steps that a State must
complete in order to become an SBE, as well as a starting point for HHS
to assess a State's progress by the time of the State's Blueprint or
Blueprint update submission. We would require a declaration letter
approximately 21 months prior to the beginning of the SBE's first
annual enrollment and approximately 9 months prior to the beginning of
an SBE-FP's first annual open enrollment. HHS would assess later
submissions on a case-by-case basis, recognizing operational realities
and need for adequate notice for stakeholders, including issuers and
consumers.
In Sec. 155.106(a)(2), we proposed to require States that are
establishing a State Exchange (not including a State Exchange using the
Federal platform for certain functions) to submit an Exchange Blueprint
at least 15 months prior to the date the Exchange proposes to begin
open enrollment as a State Exchange. We also proposed in Sec.
155.106(a)(3) to increase the time that the State must have in effect
an approved or conditionally approved Exchange Blueprint from 6.5
months to 14 months prior to the date the Exchange proposes to begin
open enrollment as a State Exchange. We recognized that in some
situations the open enrollment period may not have
[[Page 12242]]
been established when Blueprints are due. Therefore, we proposed in
paragraph (a)(5), if the open enrollment period for the year the State
intends to begin operating an SBE has not been established, a State
should assume open enrollment will begin on the same date as open
enrollment is to begin for the year in which they are submitting the
Blueprint.
We proposed to revise paragraph (b) to clarify that HHS will
operate the Exchange if a State Exchange ceases operations.
We proposed to add a paragraph (c) to establish requirements for a
State that elects to operate an SBE-FP. These States must submit an
Exchange Blueprint (or submit an update to an existing approved
Exchange Blueprint) at least 3 months prior to the date open enrollment
is to begin for the State as an SBE-FP; and must have in effect an
approved, or conditionally approved, Exchange Blueprint and operational
readiness assessment at least 2 months prior to the date on which the
Exchange proposes to begin open enrollment as an SBE-FP. If the State
Exchange has a conditionally approved Exchange Blueprint application,
we proposed that it would not be required to submit a new Blueprint
application, but instead must submit any significant changes to that
application for HHS approval at least 3 months prior to the date on
which the Exchange proposes to begin open enrollment as an SBE-FP. As
part of HHS's approval or conditional approval of the Exchange
Blueprint or amended Blueprint, these States must execute a Federal
platform agreement and be required to coordinate with HHS on a
transition plan.
Lastly, we want to be clear that we only proposed changes to the
timelines for submission of the Blueprint application. We did not
otherwise propose any modifications to the information and documents
that States must submit as part of the Exchange Blueprint application.
We are finalizing our proposals as proposed, except that, in order
to provide additional time for the transition, we are amending the
timing of the Federal platform agreement, so that it must be executed
prior to approval or conditional approval of the Exchange Blueprint.
Comment: Several commenters expressed concern that the proposed
Blueprint submission and approval timelines for a State transitioning
to an SBE-FP do not allow sufficient time for a State and its issuers
to make the necessary operational changes to prepare for the State's
transition to the SBE-FP model, and for HHS to make an assessment of
the State's progress. A commenter indicated that they would also like
to see a timeline for when the Federal platform agreement must be fully
executed. Finally, comments were received regarding the need for HHS to
publish the operational steps involved in the transition to an SBE-FP,
including the need for issuer outreach and flexibility in transition
plans for individual States.
Response: We are finalizing the regulations as proposed. We believe
that the Blueprint timeline provides sufficient time for a State to
become or transition to an SBE-FP because that transition will begin
with the submission of the declaration letter. Part of the technical
assistance provided upon submission of the declaration letter will be
the communication of the operational steps that a State must complete
in order to become an SBE-FP, including the operational steps States
are required to take with their issuers. We plan to publish guidance on
these operational steps.
b. Additional Required Benefits (Sec. 155.170)
Section 1311(d)(3)(B) of the Affordable Care Act permits a State,
at its option, to require QHPs to cover benefits in addition to the
EHB, but requires a State to make payments, either to the individual
enrollee or to the issuer on behalf of the enrollee, to defray the cost
of these additional State-required benefits. In the 2016 Payment
Notice, we instructed States to select a new EHB base-benchmark plan to
take effect beginning for the 2017 plan year. The final EHB base-
benchmark plans selected as a result of this process have been made
publicly available.\35\
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\35\ Available at https://downloads.cms.gov/cciio/FinalListofBMPs_15_10_21.pdf.
---------------------------------------------------------------------------
Section 1311(d)(3)(B) of the Affordable Care Act refers to
situations in which the State requires QHPs to cover benefits. That
section is not specific to State statutes, and we have interpreted that
section to apply not only in cases of legislative action but also in
cases of State regulation, guidance, or other State action. Therefore,
we proposed to reword Sec. 155.170(a)(2) to make clear that a benefit
required by the State through action taking place on or before December
31, 2011 is considered an EHB.
In the EHB Rule (78 FR 12837 through 12838), we discussed Sec.
155.170(a)(2), which implements section 1311(d)(3)(B) of the Affordable
Care Act. In our discussion of that provision, we provided that State-
required benefits enacted on or before December 31, 2011 (even if not
effective until a later date) may be considered EHB, which would
obviate the requirement for the State to defray costs for these State-
required benefits. This policy continues to apply. Therefore, benefits
required by a State through action taking place after December 31, 2011
that directly apply to the QHPs are not considered EHB (unless
enactment is directly attributable to State compliance with Federal
requirements, as discussed below).
Although benefits requirements enacted by States after December 31,
2011 that directly apply to the QHP and that were not enacted for
purposes of compliance with Federal requirements are not considered
EHB,\36\ the base-benchmark plan might cover some of those non-EHB.
Nonetheless, issuers must treat those benefits as they would other non-
EHB, such as those identified in Sec. 156.115(d),\37\ and the State
must defray the cost. We proposed to codify this interpretation in
Sec. 155.170(a)(2).
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\36\ The 2016 Payment Notice provides that States are not
expected to defray the cost of State-required benefits enacted on or
after January 1, 2012 that were required in order to comply with new
Federal requirements. (80 FR 10749, 10813 (Feb. 27, 2015)).
\37\ An issuer of a plan offering EHB may not include routine
non-pediatric dental services, routine non-pediatric eye exam
services, long-term/custodial nursing home care benefits, or non-
medically necessary orthodontia as EHB.
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At Sec. 155.170(a)(3), we currently require the Exchange to
identify which additional State-required benefits, if any, are in
excess of EHB. We proposed to amend paragraph (a)(3) to designate the
State, rather than the Exchange, as the entity that identifies which
State-required benefits are not EHB. We proposed this change because we
believe insurance regulators are generally more familiar with State-
required benefits. We believe each State should determine the
appropriate State entity best suited to identify newly required
benefits. Additionally, for consistency of terminology, we proposed to
amend paragraph (a)(3) to replace the reference to ``in excess of EHB''
with ``in addition to EHB.''
In current Sec. 155.170(c)(2)(iii), we require QHP issuers to
quantify the cost attributable to each additional State-required
benefit and report their calculations to the Exchange. We proposed to
designate the State as the entity that receives issuer calculations in
paragraph (c)(2)(iii). Since the Affordable Care Act requires the State
to remit a payment to an enrollee or issuer, we stated that we believe
the calculation should be sent directly to the State rather than to the
Exchange.
[[Page 12243]]
The 2016 Payment Notice specified that a State may need to
supplement habilitative services if the base-benchmark plan does not
cover such services. We noted that if a State supplements the base-
benchmark plan, there is no requirement to defray the cost of the
benefits added through supplementation, as long as the State must
supplement the base-benchmark to comply with the Affordable Care Act or
another Federal requirement. Examples of such Federal requirements
include: Requirements to provide benefits and services in each of the
10 categories of EHB; requirements to cover preventive services;
requirements to comply with the Mental Health Parity and Addiction
Equity Act; and the removal of discriminatory age limits from existing
benefits.
In some States, the base-benchmark plan may be a large group (non-
Medicaid HMO or State employee) plan. We stated that we have received
questions regarding State-required benefits that are embedded in those
large group base-benchmark plans. As stated earlier in this section, if
the State-required benefit in question was required by State action
after December 31, 2011, applies directly to the QHP, and was not
enacted for purposes of compliance with Federal requirements, the
benefit is not considered EHB, even if the benefit is embedded in the
base-benchmark plan. However, we stated that a benefit required only in
the large group market and reflected in a large group base-benchmark
plan is not an EHB for QHPs offered in the individual or small group
markets because such a benefit requirement does not apply directly to
those plans, and to the extent it is included in the base-benchmark
plan, it may be substituted for, in accordance with Sec. 156.115(b).
Therefore, the State would not have to defray the cost of individual
and small group market QHPs covering State-required benefits that are
required in the large group market only. (However, to the extent the
State permits large group plans to be sold as QHPs through the State's
Exchange, the State would have to defray the cost of the large group
QHPs covering the mandated benefit.) We noted that plans subject to the
EHB requirements offered in the individual and small group markets in
those States would have to be substantially equal to the base-benchmark
plan, and therefore may cover the State-required benefit as EHB since
it is embedded in the base-benchmark plan. In such a case, we proposed
to clarify that the benefit is an EHB because it is covered by the
base-benchmark plan, but the cost of coverage by individual and small
group QHPs does not have to be defrayed, because the State-required
benefit does not apply directly to those QHPs.
We noted that some States have imposed new benefit requirements
only on individual and small group plans that are not QHPs such that
only individual and small group plans sold outside the Exchange must
cover the State-required benefit. We noted that a QHP generally may be
sold outside the Exchanges in which case it would be subject to these
new benefit requirements. We cautioned States, however, that imposing
different benefit mandates depending on a plan's status as a QHP or
because it is sold through the Exchange may violate section 1252 of the
Affordable Care Act. Under this section, State standards or
requirements implementing, or related to, standards or requirements in
title I of the Act must be applied uniformly within a given insurance
market. Thus, if a State requires that non-QHPs in the individual or
small group market provide any benefits, under section 1252, the State
must require QHPs sold through the Exchange in that same market to
provide those same benefits, and consistent with our earlier stated
policy at Sec. 155.170(a)(2), States would generally be required to
defray the cost of QHPs providing the required benefits if they were
required through State action taking place after December 31, 2011.
We noted that the Protecting Affordable Coverage for Employees Act,
enacted in October 2015, amended the definitions of small employer and
large employer in section 1304(b) of the Affordable Care Act and
section 2791(e) of the PHS Act such that a small employer is generally
\38\ an employer with 1-50 employees, with the option for States to
expand the definition of small employer to 1-100 employees.\39\
---------------------------------------------------------------------------
\38\ Prior to enactment of the Protecting Affordable Coverage
for Employees Act, small employer was defined to mean, in connection
with a group health plan with respect to a calendar year and a plan
year, an employer who employed an average of at least 1 but not more
than 100 employees on business days during the preceding calendar
year and who employs at least 1 employee on the first day of the
plan year. In case of plan years beginning before January 1, 2016, a
State was able to elect to define small employer by substituting
``50 employees'' for ``100 employees''. For ease of reference with
regard to this section, we will refer to employers as having 1-50 or
1-100 employees.
\39\ States that elect to extend the small employer definition
were requested to notify CMS of their election by October 30, 2015
at marketreform@cms.hhs.gov.
---------------------------------------------------------------------------
We noted that several States have enacted benefit requirements that
would apply to small group insurance plans offered to employers with
51-100 employees, but not to employers with 1-50 employees. This may
arise because the State-required benefit was designed to apply only in
the large group market when the large group market included employers
with more than 50 employees, but the State has since then availed
itself of the option to define a small employer as an employer with 1-
100 employees.
We noted that section 2702 of the PHS Act and Sec. 147.104
generally require an issuer to offer all approved products to any
individual or employer in the market for which the product was approved
and to accept any individual or employer that applies for any approved
product in a given market. If a State elects to expand the definition
of small employer so that it covers employers with 1-100 employees, all
products approved for sale in the small group market (defined by the
State as 1-100 employees) generally must be offered to employers with
1-100 employees. This effectively means that existing State benefits
mandates that apply to insurance coverage sold to employers with 51-100
employees would then effectively also apply to all products sold to
employers with 1-100 employees. As long as the benefit was required by
State action taken on or before December 31, 2011, the expansion of
coverage would not trigger the requirement to defray, because the
expansion was required to comply with Federal guaranteed availability
laws. If a State does not opt to expand the definition of small
employer to 1-100 employees, then any State-required benefits
applicable in the large group market (including to employers with 51-
100 employees) would continue to not apply in the small group market.
If a State-required benefit was imposed by State action taking place
January 1, 2012 or later, then defrayal generally would be required. We
are finalizing our proposals and clarifications as proposed.
Comment: Several commenters agreed that a benefit required by a
State through action taking place on or before December 31, 2011 is
considered an EHB. Multiple commenters supported the proposal that
States and not the Exchange identify what is in addition to EHB.
Response: We agree that a benefit required by action taking place
on or before December 31, 2011 is considered EHB; this has been our
policy since releasing the EHB Rule. We recognize that States
regulators are generally more familiar with State-required benefits
than an Exchange. We believe each State should determine the
appropriate State entity best suited to identify newly
[[Page 12244]]
required benefits. Therefore, we are finalizing the rule as proposed.
Comment: Numerous commenters questioned how States can supplement
an EHB category without assuming the financial burden. Multiple
commenters sought guidance on how to determine that a State
requirement, particularly a habilitative services requirement, goes
beyond EHB, and how to determine the additional cost attributed to each
such additional required benefit.
Response: The ten categories of EHB, and the process for
supplementing base-benchmark plans to establish EHB-benchmark plans,
are outlined in Sec. 156.110. In the 2016 Payment Notice (80 FR 10749,
10813), we stated that benefit requirements enacted by States after
December 31, 2011 that directly apply to QHPs, and that were not
enacted for purposes of compliance with Federal requirements are not
considered EHB. We also stated that if the base-benchmark plan does not
include coverage for habilitative services, the State may define that
benefit category. There is no requirement to defray the cost of the
State-required benefits, as long as the State requirement is consistent
with section 1302 of the Affordable Care Act and Sec. 156.110. We also
note that Sec. 156.110(f) allows States to determine services included
in the habilitative services and devices category if the base-benchmark
plan does not include coverage; and that States are not expected to
defray the cost of State-required benefits enacted after December 31,
2011 that were required in order to comply with new Federal
requirements. We are affirming that the State has the flexibility to
define habilitative services; however, the State must use a reasonable
interpretation as to what services are habilitative. Further, a State
may also modify that definition in future years, as medical evidence
and treatments evolve. We note that any State definition must comply
with applicable nondiscrimination rules. This final rule requires the
State to determine, based on these standards, when State requirements
require issuers to provide benefits in addition to EHB.
Section 155.170(c)(1) requires issuers to quantify the cost
attributable to each additional State-required benefit. We are
finalizing our proposal that QHP issuers must report their calculation
to the State. Since the State is required by statute to remit a payment
to an enrollee or issuer, we believe the calculation should be sent
directly to the State rather than to the Exchange. The actual cost
attributed can then be made public by the State, if it so chooses.
Section 155.170(c)(2)(i) through (iii) states that QHP issuers'
calculations must (1) be based on an analysis performed in accordance
with generally accepted actuarial principles and methodologies; (2)
conducted by a member of the American Academy of Actuaries; and (3)
reported to the State.
Comment: Some commenters disagreed with our interpretation that
State-required benefits that apply only to individual and small group
plans that are not QHPs may violate section 1252 of the Affordable Care
Act.
Response: Section 1252 of the Affordable Care Act provides that
State requirements under Title I of the Affordable Care Act must be
applied uniformly to all health plans in an insurance market. We
reiterate that a requirement that depends upon a plan's status as a QHP
or whether it is sold through the Exchange may violate section 1252 of
the Affordable Care Act.
Comment: Some commenters expressed concerns about discriminatory
benefit design, and sought further guidance regarding what benefit
designs could be deemed discriminatory.
Response: Under Sec. 156.125(a), an issuer does not provide EHB if
its benefit design, or the implementation of its benefit design,
discriminates based on an individual's age, expected length of life,
present or predicted disability, degree of medical dependency, quality
of life, or other health conditions. Furthermore, plans may not
establish annual dollar limits on individual items or services that are
EHB. We will consider providing further guidance regarding
discriminatory benefit design in the future.
3. General Functions of an Exchange
a. Functions of an Exchange (Sec. 155.200)
We proposed a technical correction to Sec. 155.200(a) to include a
reference to subpart M, which establishes oversight and program
integrity standards for State Exchanges, and subpart O, which
establishes quality reporting standards for Exchanges.
We also proposed to amend Sec. 155.200 by adding a paragraph (f)
to address SBE-FPs. This arrangement is intended to permit a State
Exchange to leverage existing Federal assets and operations by relying
on HHS services for performing certain Exchange functions, particularly
eligibility and enrollment functions. The SBE-FP would also rely on HHS
to perform certain consumer call center functions and casework
processes, and maintain related information technology infrastructure.
The SBE-FP would retain responsibility for plan management functions,
including QHP certification functions, subject to certain rules
requiring the SBE-FP to require its QHP issuers to comply with certain
FFE standards governing QHPs and issuers (as proposed in Sec.
155.200(f)(2) of this proposed rule), and consumer support functions,
subject to FFE rules governing consumer assistance functions.
Under Sec. 155.200(f)(1), we proposed that a State may receive
approval or conditional approval to operate an SBE-FP through the
Blueprint process under proposed Sec. 155.106(c) and meet its
obligations under Sec. 155.200(a) by entering into a Federal platform
agreement with HHS. Through the Federal platform agreement, an SBE-FP
would agree to rely on HHS for services related to the individual
market Exchange, the SHOP Exchange, or both the individual market and
SHOP Exchanges. The Federal platform agreement would specify the
Federal services on which the State Exchange relies, the user fee (as
specified at Sec. 156.50(c)(2)) that HHS will collect from issuers in
that SBE-FP for the Federal services, and other mutual obligations
relating to the arrangement, including obligations for the transfer of
data. The Federal platform agreement would specify expectations between
the State and HHS across various operational areas. We indicated our
intent to release the Federal platform agreement at a later date. We
noted that at this point the Federal services on which SBE-FPs may rely
will come as an entire package. That is, HHS will not at this time
offer a ``menu'' of Federal services from which an SBE-FP may select
some but not other services available on the Federal platform. However,
we indicated we would explore the feasibility of doing so in the
future.
Although the SBE-FPs would retain primary responsibility for
certifying QHPs and overseeing QHPs and issuers, we proposed under
Sec. 155.200(f)(2) to require an SBE-FP to establish and oversee
certain requirements for its QHPs and QHP issuers that are no less
strict than the requirements that apply to QHPs and QHP issuers on an
FFE. We proposed these requirements to include the existing and
proposed standards under the following sections: Sec. 156.122(d)(2)
(the requirement for QHPs to make available published up-to-date,
accurate, and complete formulary drug list on its Web site in a format
and at times determined by HHS); Sec. 156.230 (network adequacy
standards); Sec. 156.235 (essential community providers standards);
[[Page 12245]]
Sec. 156.298 (meaningful difference standards); Sec. 156.330 (changes
of ownership of issuers requirement); Sec. 156.340(a)(4) (QHP issuer
compliance and compliance of delegated and downstream entities
requirements); Sec. 156.705 (maintenance of records standard); Sec.
156.715 (compliance reviews standard); and Sec. 156.1010 (casework
standards).
Applying the changes of ownership issuers' requirement to SBE-FPs
will help fulfill the Federal platform's need for data and technical
consistency. It will ensure that HHS maintains the most accurate and
updated information to present a consistent experience to consumers
through its branded platform, HealthCare.gov. HHS must be able to
monitor and provide regulatory oversight over change in control
situations with regards to the operation of the Federal platform.
Change in control has a significant operational impact on the Federal
platform and requires the expenditure of considerable technical
resources to effectuate the change throughout the multiple systems that
constitute the Federal platform.
Applying the formulary drug list, network adequacy, meaningful
difference, and essential community providers standards will ensure
that all QHPs on HealthCare.gov meet a consistent minimum standard and
that consumers obtaining coverage as a result of applying through
HealthCare.gov are guaranteed plans that meet these minimum standards.
HHS has designed and implemented policy and operations for the FFE such
that shoppers at HealthCare.gov can experience a consistent standard of
service. We proposed that SBE-FPs that wish to rely on the
HealthCare.gov platform require their issuers to meet certain minimum
standards as well, since their consumers are obtaining the coverage
through HealthCare.gov. SBE-FPs have the flexibility to exceed these
minimum standards to the extent they do not present display problems on
HealthCare.gov. Although we clearly recognize that the SBE-FPs are
SBEs, and thus legally distinct from FFEs, this difference will not
always be apparent to HealthCare.gov consumers. Not having these
standards apply may lead to consumer confusion and dilution of consumer
goodwill with respect to the plans available on HealthCare.gov. The
States would still be responsible for conducting QHP certification
reviews for these standards.
Applying the QHP issuer compliance and compliance of delegated or
downstream entities requirement at Sec. 156.340(a)(4), which involves
the maintenance of records standards of Sec. 156.705 and the
compliance reviews for QHP issuers standards of Sec. 156.715, will
ensure that the SBE-FP has authority at least as strong as that
possessed by HHS to enforce compliance with these standards and will
ensure that the SBE-FP and HHS are able to access all records upon
request from the issuers in the SBE-FPs.
Applying the casework standards at Sec. 156.1010 will ensure that
the SBE-FP and HHS can respond to problems about which they both bear
responsibility. Since SBE-FPs must use the Federally operated Health
Insurance Casework System (HICS) for handling consumer casework and
meeting casework resolution timeframes as part of utilizing the Federal
platform for eligibility and enrollment functions, the SBE-FP would not
be overseeing casework processes. However, as with all other Exchange
types, State departments of insurance will still handle appropriate
consumer complaints related to issuers in their States. For cases that
are Exchange-related, or those in which the consumer has chosen to
contact the Exchange even after contacting the appropriate department
of insurance, HHS would oversee the routing and resolution of casework.
HHS's intent is to work collaboratively with the SBE-FP, similar to how
HHS works with SPMs.
Finally, we proposed under Sec. 155.200(f)(3) that HHS will work
with SBE-FPs to enforce the FFE standards listed under Sec.
155.200(f)(2) directly against SBE-FP issuers or plans who do not meet
these standards. In that circumstance, we proposed that HHS would have
the authority to suppress a plan under Sec. 156.815. This will ensure
that consumers shopping for coverage on HealthCare.gov have access to
plans that are in compliance with the FFE standards with which SBE-FP
issuers must comply as a condition of offering QHPs through a State
Exchange on the Federal platform.
We intend to work closely and collaboratively with SBE-FPs, and
believe that our collaboration with States that currently use the
Federal platform with respect to enforcement matters has been close and
effective. We are finalizing our proposals as proposed.
Comment: One commenter indicated that the inability of the Federal
platform to accommodate State customization for SBE-FPs is a major
disincentive for SBEs to use the Federal platform. The commenter also
expressed concerns about the proposed Federal platform agreement not
being able to be customized by individual State, as State procurement
and contracting officials may require State specific language in
contracts.
Response: We are finalizing the regulations as proposed. We intend
to describe the availability of new capabilities of the Federal
platform that would allow for SBE-FPs to select certain Federal
services to use or to customize particular functionality in future
rules, through our annual rulemaking process, as well as in future
versions of the Federal platform agreement. At this time we do not
foresee State-specific customization of the language in the Federal
platform agreement, but will engage with States as part of the process
of finalizing the agreement.
Comment: We received a comment that the proposed requirement to use
the Federally operated HICS system creates procedural burdens on State-
based consumer advocacy staff. The commenter recommended that consumer
complaints for SBE-FPs should be referred directly to the appropriate
State authority for resolution.
Response: We are finalizing the regulations as proposed. The
Federally operated HICS system is closely tied to the SBE-FP's
utilization of the Federal platform for eligibility and enrollment
functions. While SBE-FPs must rely on the Federally operated HICS
system for processing casework, we are open to future possibility of
HHS coordination with SBE-FP States on consumer communications
pertaining to casework and complaints to the extent it is operationally
feasible. Should such coordination be operationally feasible, the roles
and responsibilities between HHS and the State would be specified
through the Federal platform agreement.
Comment: Regarding our proposals to apply certain FFE QHP standards
to SBE-FP issuers, along with our proposed requirements pertaining to
the enforcement of those standards, we received some comments that were
supportive and comments that were opposed. The commenters that opposed
the proposed requirements stated that SBE-FP States should maintain
sole authority for setting standards for, and certifying, QHPs. One
commenter stated that using two sets of enforcement standards would
lead to consumer harm and insurer confusion. Another commenter
expressed concern that the application of FFE standards could result in
inconsistent treatment of off-Exchange QHPs and recommended that SBE-FP
QHPs should be governed by the same State rules as SBEs to ensure
market parity. Another commenter stated that the proposed requirements
may cause confusion regarding the legal
[[Page 12246]]
status of SBE-FPs and the true extent to which certain Federal Exchange
requirements and limitations apply. One commenter recommended that we
explicitly state in the final rule that the implementing guidance
issued through the annual Letter to Issuers also applies to issuers on
SBE-FPs.
Response: We are finalizing the rules as proposed. HHS will
coordinate with the SBE-FP on enforcement of FFE standards listed under
Sec. 155.200(f)(2) through plan suppression. SBE-FP States are being
required to incorporate certain FFE QHP standards into their State's
QHP standards and QHP certification process; thus, there would be only
one set of QHP standards that apply to all issuers in a particular SBE-
FP State. An SBE-FP would have the flexibility to exceed those FFE QHP
standards when setting their QHP standards and QHP certification
process should they elect to. There may be differences in standards set
by an SBE-FP State for QHPs that participate in the Exchange versus
plans that are offered outside of the Exchange, which can also occur in
SBE and FFE States. Moving forward, the annual Letter to Issuers will
include implementing guidance that is specific to SBE-FPs.
b. Consumer Assistance Tools and Programs of an Exchange (Sec.
155.205)
We proposed two amendments to Sec. 155.205 to address functions of
an SBE-FP. First, because an SBE-FP relies on HHS to carry out
eligibility and enrollment functions, which would include relying on
the FFE call center to carry out these functions, we proposed to amend
Sec. 155.205(a) to exempt an SBE-FP from the requirement to operate a
toll-free call center, and instead provide that an SBE-FP must at a
minimum operate a toll-free telephone hotline to respond to requests
for assistance to consumers in their State, in accordance with section
1311(d)(4)(B) of the Affordable Care Act.
Secondly, we proposed to amend Sec. 155.205(b) by adding paragraph
(b)(7) to provide that an SBE-FP must, at a minimum, operate an
informational Internet Web site in accordance with section
1311(d)(4)(C) of the Affordable Care Act. The informational Web site
would direct consumers to HealthCare.gov to apply for, and enroll in,
coverage through the Exchange.
We are also finalizing an amendment to Sec. 155.205(b)(1), related
to standardized options. For a discussion of this amendment, please see
the preamble discussion of standardized options.
Comment: Some comments stated that having SBE-FPs maintain these
consumer assistance features is duplicative and would cause confusion
among consumers. Commenters also recommended further clarification
between a toll-free call center and a toll-free telephone hotline, and
defining minimum functional requirements of a toll-free hotline.
Commenters also asked that HHS clarify the minimum requirements for the
SBE-FPs informational Web site.
Response: We are finalizing the proposed requirement for the SBE-FP
to operate a toll-free hotline and informational Web site, as this is
based on statutory minimum functional requirements that an SBE
(including an SBE-FP) must meet. A toll-free call center includes
capabilities for processing eligibility and enrollment actions and
accessing consumer information to process these actions, whereas a
toll-free hotline includes the capability to provide information to
consumers and appropriately direct consumers to the Federally operated
call center or HealthCare.gov to apply for, and enroll in, coverage
through the Exchange. Both the toll-free hotline and the informational
Web site that an SBE-FP is required to operate must include the
capability to direct consumers to the Federal platform services,
including the FFE call center and HealthCare.gov Web site, to apply
for, and enroll in, Exchange coverage. We are finalizing the
requirement for SBE-FPs to operate a toll-free hotline and
informational Web site.
c. Standards Applicable to Navigators Under Sec. Sec. 155.210 and
155.215; Standards Applicable to Consumer Assistance Tools and Programs
of an Exchange Under Sec. 155.205(d) and (e); and Standards Applicable
to Non-Navigator Assistance Personnel in an FFE and to Non-Navigator
Assistance Personnel Funded Through an Exchange Establishment Grant
(Sec. Sec. 155.205, 155.210 and 155.215)
To help consumers apply for and enroll in QHPs and insurance
affordability programs through the Exchange, we established consumer
assistance programs, including the Navigator program described at
section 1311(d)(4)(K) and 1311(i) of the Affordable Care Act and Sec.
155.210. Among other duties, Navigators are required to conduct public
education activities to raise awareness of the availability of QHPs; to
distribute fair and impartial information concerning enrollment in QHPs
and the availability of Exchange financial assistance; to facilitate
enrollment in QHPs; and to provide referrals for any enrollee with a
grievance, complaint, or question regarding their health plan,
coverage, or a determination under such plan or coverage. We have also
established under Sec. 155.205(d) and (e) that each Exchange must
provide consumer assistance, outreach, and education functions, which
must include a Navigator program and can include a non-Navigator
assistance personnel program.
We proposed to amend Sec. 155.210(e) by adding a new paragraph
(e)(8) to require Navigators in all Exchanges to provide targeted
assistance to serve underserved or vulnerable populations within the
Exchange service area. Navigators already must have expertise in the
needs of underserved and vulnerable populations, and we believe that
also requiring Navigators to provide targeted assistance to these
populations is critical to improving access to health care for
communities that often experience a disproportionate burden of disease.
We also believe that Navigators should focus their outreach and
enrollment assistance efforts on harder-to-reach populations and the
remaining uninsured.
Because the characteristics of underserved and vulnerable
populations may vary over time and from region to region, we proposed
to permit each Exchange to define and identify the underserved and
vulnerable populations in its service area, and to update these
definitions as appropriate. This could include an Exchange allowing its
Navigator grantees to propose which communities to target, for the
Exchange's approval (for example, in their grant applications). In
FFEs, we proposed to identify populations as vulnerable or underserved
through our Navigator funding opportunity announcements and to give FFE
Navigator grant applicants an opportunity to propose additional
communities to target during the grant application process. We proposed
that the primary criteria used to identify such populations within the
FFEs would be that the population is disproportionately without access
to coverage or care, or at a greater risk for poor health outcomes.
Members of these populations could be identified by age groups,
demographics, disease, geography, or other characteristics as defined
or approved by the Exchange. In FFEs, our proposal would apply
beginning with the application process for Navigator grants awarded in
2018.
Although we did not propose to extend this requirement to certified
application counselors and non-Navigator assistance personnel subject
to Sec. 155.215, we stated in the preamble to the proposed rule that
we would
[[Page 12247]]
encourage certified application counselors and non-Navigator assistance
personnel subject to Sec. 155.215 to prioritize assisting the
vulnerable and underserved populations identified by the Exchange in
their communities, and we recognize that many of these assisters
already focus their efforts on such populations.
Navigators would not be serving these target populations
exclusively, since all Navigators are required to assist any consumer
seeking assistance. As we have explained previously, all Navigators
should have the ability to help any individual who seeks assistance,
even if that consumer is not a member of the community or group the
Navigator intends to target (see 78 FR 20589; 78 FR 42830; 79 FR 30270;
79 FR 30278).
We are finalizing this provision as proposed.
Comment: We received many comments supporting our proposal to
require Navigators in all Exchanges to provide targeted assistance to
serve underserved or vulnerable populations within the Exchange service
area. Commenters agreed that reaching these populations is important to
increasing awareness among remaining uninsured consumers regarding
coverage options available through the Exchange, helping consumers find
affordable coverage that meets their needs, and narrowing health
disparities. In addition, commenters stated that Navigators are
uniquely positioned to serve these populations because of established
ties and pre-existing relationships. Commenters also agreed that this
provision should not be extended to certified application counselors
and non-Navigator assistance personnel subject to Sec. 155.215, but
said that it would be helpful for HHS to educate these assister types
about this kind of targeted assistance and how they can support
Navigators' efforts.
Response: We agree that requiring Navigators to target assistance
to underserved and vulnerable populations is critical to improving
access to health coverage. We are not extending this requirement to
certified application counselors and non-Navigator assistance personnel
subject to Sec. 155.215 in this final rule, but continue to encourage
these assister types to prioritize reaching and assisting the
vulnerable and underserved populations identified by the Exchange in
their communities, and we recognize that many of these assister types
already focus efforts on such populations. HHS has previously and will
continue to provide technical assistance and resources on reaching and
serving a variety of vulnerable and underserved populations to all
Navigators, non-Navigator assistance personnel, and certified
application counselors in the FFEs.
Comment: We received several comments regarding how Exchanges
should identify vulnerable or underserved populations. Many commenters
suggested data sources to consult when identifying these populations.
Several commenters requested that HHS provide a list of underserved or
vulnerable populations, made up of populations where there was either a
documented lower rate of insurance prior to the implementation of the
Affordable Care Act or where current enrollment rates are lower than
those of other populations. Commenters recommended specific populations
for identification, including low-income individuals and families;
people of color; women; people living with HIV/AIDS; people living with
disabilities; rural communities; lesbian, gay, bisexual, and
transgender people; people with limited English proficiency; people
with transportation limitations; people with mental health needs;
children and youth with special health care needs; cancer survivors;
low income immigrants; patients with rare diseases; survivors of
domestic violence; abandoned spouses; and pregnant women enrolled in
coverage that is not minimum essential coverage. In addition, several
commenters requested that HHS ensure that SBEs consult with local
stakeholders when defining underserved and vulnerable populations.
Response: Because the characteristics of underserved and vulnerable
populations may vary over time and from region to region, we believe
that SBEs are best positioned to identify the underserved and
vulnerable populations in their States who most need targeted
assistance and support. Therefore, we do not intend to provide a list
or otherwise identify these populations in SBEs, including SBE-FPs. We
encourage SBEs to work with local stakeholders and Navigators to
identify populations to target, using reliable sources of data. For
FFEs, HHS will identify vulnerable or underserved populations through
our Navigator funding opportunity announcements and will give FFE
Navigator grant applicants an opportunity to propose additional
communities to target during the grant application process, beginning
with the application process for Navigator grants awarded in 2018. The
primary criteria the FFEs will use to identify vulnerable or
underserved populations will be if they are disproportionately without
access to coverage or care, or are at a greater risk for poor health
outcomes.
Comment: We received several comments requesting that HHS further
explain how Navigators are expected to target or focus their work on
these populations, while still fulfilling the requirement to assist any
consumer seeking assistance. Commenters expressed concern that this
requirement might compel Navigator organizations to limit their
services to certain populations or create such a perception.
Response: This provision does not require Navigators to limit their
services to the specific populations they are targeting, and we rely on
Navigators' creativity and local knowledge to structure their programs
so that they target one or more vulnerable and underserved populations
while remaining open to all consumers. For example, a Navigator grantee
might open an application and enrollment assistance location in an area
populated by a community that has historically experienced heath care
access barriers, and reach out to community members in ways that are
culturally competent and linguistically appropriate to that community,
while remaining ready to serve any consumer seeking assistance. In the
FFEs, we will provide more information regarding Navigator duties,
scope of activities, and program requirements in the Navigator funding
opportunity announcement. SBEs, including SBE-FPs, have flexibility to
provide further guidance in this area as well. Finally, we continue to
remind Navigators that we interpret Navigators' duty to provide fair
and impartial information and services under Sec. 155.210(e)(2) to
require that all Navigators should have the ability to help any
individual who seeks assistance from the Navigator, even if that
consumer is not a member of the community or group the Navigator
intends to target.
Comment: We received several comments regarding the selection
process for Navigator grantees. Some commenters requested that HHS
encourage Exchanges to prioritize entity types (such as safety net
providers) or applicants capable of reaching underserved or vulnerable
populations, and some recommended specific populations of Navigator
grant applicants that should be given preference. In addition,
commenters requested that HHS ensure that Exchanges adjust their grant-
making criteria to account for the greater time and resources necessary
to reach underserved and vulnerable communities. A few commenters
requested that Navigators be required or
[[Page 12248]]
encouraged to collaborate with providers and other organizations, such
as patient-focused and community-based organizations that are also
engaged in consumer health and patient education, in order to ensure
that underserved and vulnerable populations are receiving assistance. A
few commenters also requested that HHS develop guidance for FFE
Navigators, FFE non-Navigator assistance personnel, and FFE certified
application counselors on collaborating and forming partnerships with
groups that are engaged in reaching populations, consumer health, and
patient education.
Response: For FFEs, we will take these comments into consideration
when drafting Navigator selection criteria for the Navigator funding
opportunity announcements for 2018 and future years. We agree that
local collaboration and leveraging community partnerships might help
Navigators reach marginalized communities, and we intend to issue
guidance for FFE Navigators with additional information on
collaborating or partnering with other community organizations. SBEs,
including SBE-FPs, are responsible for administering their own
Navigator programs, including determining their own selection process,
consistent with statutory and regulatory authority.
Comment: We received several comments regarding the timeframes in
which these populations would be identified. Commenters requested that
Exchanges regularly re-identify these populations. Some commenters
requested that these populations be identified at least 3 months prior
to the beginning of open enrollment and that applicants be allowed to
identify new populations for each grant cycle.
Response: SBEs, including SBE-FPs, retain flexibility to administer
their own Navigator programs, and we encourage SBEs to regularly
revisit the ways they define and identify vulnerable and underserved
populations to ensure that the results remain current and relevant. In
FFEs, we will continue to prioritize publicizing and awarding Navigator
grants in a transparent and timely fashion. We intend to identify these
populations when each funding opportunity announcement is published, at
least 60 days prior to the date applications are due.
Comment: Several commenters requested that HHS and States ensure
that Navigators receive adequate resources, including funding and
training, to work with vulnerable and underserved populations.
Commenters urged HHS to tailor training opportunities to population-
specific messages and content. Several commenters were concerned about
how these activities would be funded.
Response: Under Sec. 155.210(b)(2)(i), Navigators in all Exchanges
must be trained in the needs of underserved and vulnerable populations.
Under Sec. 155.215(b)(2)(xii), Navigators in FFEs must additionally
receive training on working effectively with individuals with limited
English proficiency; people with a full range of disabilities; and
vulnerable, rural, and underserved populations. SBEs, including SBE-
FPs, are responsible for administering their own Navigator programs,
including funding and budgets, and may provide or require additional
training and technical assistance to address the needs of the
populations they have identified as vulnerable and underserved. In
FFEs, Navigator applicants will have an opportunity to propose budgets
in their Navigator applications to cover the costs of these activities.
In Sec. 155.210, we proposed to add paragraph (e)(9) to specify
that Navigators in all Exchanges would be required to help consumers
with certain other types of assistance, including post-enrollment
assistance. We designed this proposal to ensure that consumers would
have access to skilled assistance beyond applying for and enrolling in
health coverage, including, for example, assistance with the process of
filing Exchange eligibility appeals or with applying through the
Exchange for exemptions from the individual shared responsibility
payment, providing basic information about reconciliation of premium
tax credits, and understanding basic concepts related to using health
coverage. We discussed the statutory authority for these proposals in
the preamble to the proposed rule.
We proposed at Sec. 155.210(e)(9)(i) to require Navigators in all
Exchanges to help consumers with the process of filing appeals of
Exchange eligibility determinations. We did not propose to establish a
duty for Navigators to represent a consumer in an appeal, sign an
appeal request, or file an appeal on the consumer's behalf. We
explained that we believe that helping consumers understand Exchange
appeal rights when they have received an adverse eligibility
determination, and assisting them with the process of completing and
submitting appeal forms, would help to facilitate enrollment and would
help consumers obtain fair and impartial information about enrollment,
including information about available exemptions from the individual
shared responsibility payment that would help consumers decide whether
or not to enroll in coverage. We interpreted this proposal to include
helping consumers file appeals of eligibility determinations made by an
Exchange (including SHOP Exchanges) related to enrollment in a QHP,
special enrollment periods, exemptions from the individual shared
responsibility payment that are granted by the Exchange, participation
as an employer in a SHOP, and any insurance affordability program,
including eligibility determinations for Exchange financial assistance,
Medicaid, the Children's Health Insurance Program (CHIP), and Basic
Health Programs.
We also proposed at Sec. 155.210(e)(9)(ii) to require that
Navigators in all Exchanges help consumers understand and apply for
exemptions from the individual shared responsibility payment that are
granted by the Exchange. We explained that this assistance with
Exchange-granted exemptions would include informing consumers about the
requirement to maintain minimum essential coverage and the individual
shared responsibility payment; helping consumers fill out and submit
Exchange-granted exemption applications and obtain any necessary forms
prior to or after applying for the exemption; explaining what the
exemption certificate number is and how to use it; and helping
consumers understand and use the Exchange tool to find bronze plan
premiums. We explained that this duty would also include explaining the
general purpose of Internal Revenue Service (IRS) Form 8965, Health
Coverage Exemptions, to consumers, consistent with IRS published
guidance on the topic, and explaining how to access this form and
related tax information on IRS.gov.
Navigators may not provide tax assistance or interpret tax rules
within their capacity as Exchange Navigators, and our proposal would
not require Navigators to help consumers apply for exemptions claimed
through the tax filing process. We noted that we would, however,
interpret the assistance provided under Sec. 155.210(e)(9)(ii) to
include helping consumers generally understand the availability of
exemptions claimed through the tax filing process and how to obtain
them. We noted that this interpretation would help ensure that
Navigators share information about the full scope of possible
exemptions while not providing actual tax assistance or tax advice. We
requested comment on whether we should require that, prior to providing
this assistance and information, Navigators provide consumers with a
disclaimer stating that they are not acting as tax advisers and cannot
provide tax advice within their capacity as Exchange Navigators. We
[[Page 12249]]
also sought comment on whether a Navigator's duty to provide assistance
with filing exemption applications under proposed Sec.
155.210(e)(9)(ii) and filing appeals of exemption application denials
under proposed Sec. 155.210(e)(9)(i) should be limited, in light of
the resource limitations that Navigators and their funding agencies may
face. We sought comment on whether this assistance should be limited,
for example, to consumers who have applied for or have been denied
coverage or financial assistance, as opposed to those who only seek to
avoid the individual shared responsibility payment, in order not to
reduce the assistance available to consumers seeking coverage.
In addition, we proposed at Sec. 155.210(e)(9)(iii) to require
Navigators to help consumers with the Exchange-related components of
the premium tax credit reconciliation process, such as by ensuring they
have access to their Forms 1095-A, Health Insurance Marketplace
Statement, and receive general, high-level information about the
purpose of this form that is consistent with published IRS guidance on
the topic. We explained that under the proposal, Navigators would be
required to help consumers obtain IRS Forms 1095-A and 8962, Premium
Tax Credit (PTC), and the instructions for Form 8962, and to provide
general information, consistent with applicable IRS guidance, about the
significance of the forms. Navigators would also be required to help
consumers understand (1) how to report errors on the Form 1095-A; (2)
how to find silver plan premiums using the Exchange tool; and (3) the
difference between advance payments of the premium tax credit and the
premium tax credit and the potential implications for enrollment and
re-enrollment of not filing a tax return and not reconciling any
advance payments of the premium tax credit that were paid on consumers'
behalf.
As noted above, Navigators may not provide tax assistance or
advice, or interpret tax rules and forms within their capacity as
Exchange Navigators, but their expertise related to the consumer-facing
aspects of the Exchange, including eligibility and enrollment rules and
procedures, uniquely qualifies them to help consumers understand and
obtain information from the Exchange that is necessary to the premium
tax credit reconciliation process. We indicated that because this
proposal would include a requirement that Navigators provide consumers
with information and assistance understanding the availability of IRS
resources, Navigators would be expected to familiarize themselves with
the availability of materials on IRS.gov, including the Form 8962
instructions, IRS Publication 974 Premium Tax Credit, and relevant
FAQs, and to refer consumers with questions about tax law to those
resources or to other resources, such as free tax return preparation
assistance from the Volunteer Income Tax Assistance or Tax Counseling
for the Elderly programs.
To help ensure consumers have seamless access to Exchange-related
tax information beyond the basic information that Navigators can
provide, we proposed at Sec. 155.210(e)(9)(v) that Navigators be
required to refer consumers to licensed tax advisers, tax preparers, or
other resources for assistance with tax preparation and tax advice
related to consumer questions about the Exchange application and
enrollment process, exemptions from the requirement to maintain minimum
essential coverage and the individual shared responsibility payment,
and premium tax credit reconciliation.
We proposed at Sec. 155.210(e)(9)(iv) to require Navigators in all
Exchanges to help consumers understand basic concepts related to health
coverage and how to use it. We explained that these activities could be
supported by existing resources such as the HHS From Coverage to Care
initiative, which we encouraged Navigators to review, and which is now
available in multiple languages at https://marketplace.cms.gov/c2c. We
explained that this proposal would improve consumers' access to health
coverage information both when selecting a plan and when using their
coverage. We anticipated that this assistance would vary depending on
each consumer's needs and goals.
To ensure that all Navigators receive training in every area for
which we proposed a corresponding Navigator duty, we proposed at Sec.
155.210(b)(2)(v) through (viii) to require all Exchanges, including
SBEs, to develop and disseminate training standards to be met by all
entities and individuals carrying out Navigator functions to ensure
expertise in: The process of filing appeals of Exchange eligibility
determinations; general concepts regarding exemptions from the
requirement to maintain minimum essential coverage and the individual
shared responsibility payment, including the application process for
exemptions granted through the Exchange, and IRS resources on
exemptions; the Exchange-related components of the premium tax credit
reconciliation process and IRS resources on this process; and basic
concepts related to health coverage and how to use it.
We noted that providing assistance with certain other post-
enrollment issues already falls within the scope of existing required
Navigator duties. We explained that we interpret the existing
requirements to facilitate enrollment in QHPs under section
1311(i)(3)(C) of the Affordable Care Act and Sec. 155.210(e)(3), and
to provide information that assists consumers with submitting the
eligibility application under Sec. 155.210(e)(2), to include
assistance with updating an application for coverage through an
Exchange, including reporting changes in circumstances and assisting
with submitting information for eligibility redeterminations.
Additionally, we explained in the proposed rule preamble our
interpretation that Navigators are already permitted under existing
statutory and regulatory provisions to help with a variety of other
post-enrollment issues. For example, Navigators may educate consumers
about their rights with respect to coverage available through an
Exchange, such as nondiscrimination protections, prohibitions on
preexisting condition exclusions, and preventive services available
without cost sharing. Navigators may also assist consumers with
questions about paying premiums for coverage enrolled in through an
Exchange and help consumers obtain assistance with coverage claims
denials.
We are finalizing the proposals with several modifications to
paragraphs (b)(2) and (e)(9). We are revising the requirement that
Navigators must provide the post-enrollment and other assistance
activities described in Sec. 155.210(e)(9) to give SBEs the option of
requiring or authorizing any of these activities, and to make all of
these activities required in FFEs under Navigator grants awarded in
2018 or any later year, and optional (but authorized) before then.
We are revising the training requirements under Sec. 155.210(b)(2)
to specify that in any Exchange opting to require Navigators to perform
any of the assistance topics specified in paragraph (e)(9), the
training topic corresponding to the required paragraph (e)(9)
assistance topic would also be required. Because all assistance topics
specified in paragraph (e)(9) will be required in FFEs under Navigator
grants awarded in 2018 or any later year, all training topics will be
required in all FFEs under Navigator grants awarded in 2018 or any
later year. We are adding a training provision at Sec.
155.210(b)(2)(ix) to ensure
[[Page 12250]]
that Navigators who are required under paragraph (e)(9)(v) to provide
referrals to licensed tax advisers, tax preparers, or other resources
are also trained on this topic.
We are adding language to Sec. Sec. 155.210(e)(6)(i),
155.215(g)(1), and 155.225(f)(1) to require that, prior to providing
assistance, Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors must provide
consumers with a disclaimer stating that they are not acting as tax
advisers or attorneys when providing assistance as Navigators, non-
Navigator assistance personnel, and certified application counselors
(respectively), and cannot provide tax or legal advice within their
respective capacities as Navigators, non-Navigator assistance
personnel, and certified application counselors.
We are also revising the assistance provisions at paragraph (e)(9)
as follows:
To make it more clear that Navigator assistance with
Exchange eligibility appeals under paragraph (e)(9)(i) does not require
Navigators to help consumers through the entire Exchange eligibility
appeals process, we have added the word ``understanding'' to this
provision.
To make minor changes to paragraphs (e)(9)(ii) and (v) to
ensure consistent usage of the term ``individual shared responsibility
payment,'' and to make a minor change to paragraph (e)(9)(ii) to
consistently use the term ``claim'' to describe how consumers apply for
exemptions through the tax filing process.
To remove ``understanding'' from the beginning of
paragraph (e)(9)(iii) because we interpret assistance with Exchange-
related components of the premium tax credit reconciliation process to
also include helping consumers access and use certain Exchange tools
and resources, and to add ``understanding'' before ``the availability
of IRS resources'' in paragraph (e)(9)(iii) to more clearly specify the
type of assistance with IRS resources that is included under this
provision.
To expand the assistance under paragraph (e)(9)(iv), with
understanding basic concepts related to health coverage and how to use
it, to also include helping consumers understand their rights related
to health coverage, and to make a parallel change to the corresponding
training topic at paragraph (b)(2)(viii).
Comment: Many commenters supported our proposed additional
Navigator duties to provide post-enrollment and other assistance. A
number of commenters agreed that assistance beyond enrollment would
help Navigators maintain relationships with consumers across coverage
years, which may be vital to successful enrollment, reenrollment,
coverage utilization, and coverage continuity for some consumers.
Several commenters stated that SBEs should have the flexibility to
choose whether to require Navigators in their States to perform these
additional functions. Other commenters disagreed that post-enrollment
assistance falls within Navigators' statutorily authorized duties. One
commenter recommended delaying implementation of these requirements for
2 years to give States time to establish and implement training
requirements, and to give Navigators time to become familiar with these
new requirements. Several commenters recommended making these
activities optional for grantees.
Response: We agree that SBEs should have the flexibility to
determine effective approaches to post-enrollment and other Navigator
assistance based on local experience. For example, some SBEs make the
proposed types of assistance available to consumers through different
types of community-based consumer advocacy and patient advocacy
organizations, and business associations and tax clinics, rather than
from Navigators. We do not want to compel SBEs to disrupt or replace
successful consumer assistance strategies, and therefore the final rule
gives SBEs, including SBE-FPs, the flexibility to decide whether or not
they will require or authorize their Navigators to provide any or all
of the assistance topics listed at Sec. 155.210(e)(9). Any SBE opting
to require its Navigators to provide any or all of the types of
assistance listed at Sec. 155.210(e)(9) would also be required to
provide training on the corresponding training topics at Sec.
155.210(b)(2)(v) through (ix), and we are modifying the training topic
proposals to reflect this policy.
We also agree that a 2-year delay will give FFEs more time to
expand coverage of the new assistance topics in the formal FFE training
materials, and give FFE Navigators more time to familiarize themselves
with the new requirements. Such a delay also aligns with the timing of
the next FFE Navigator funding opportunity announcement in 2018 and
thus allows 2018 grant applicants to structure their proposals to meet
these new requirements while not disrupting current grantee work plans
and budgets. Therefore, we are specifying that the new assistance
topics and the corresponding training provisions will be required in
FFEs beginning with Navigator grants awarded in 2018.
However, we want to emphasize that FFE Navigator grantees will be
authorized to provide assistance with any of the topics listed in Sec.
155.210(e)(9) before 2018, when providing assistance in all those
topics will be required of them. If FFE Navigator grantees choose to
provide any of the assistance specified in Sec. 155.210(e)(9) before
2018, we would expect them to familiarize themselves with related needs
in their communities and build competency in the assistance activities
they are providing. As we noted in the preamble to the proposed rule,
under Sec. 155.215(b)(2), Navigators in FFEs must already be trained
on the tax implications of enrollment decisions, the individual
responsibility to have health coverage, eligibility appeals, and rights
and processes for QHP appeals and grievances. FFE Navigators are also
already required under Sec. 155.215(b)(2) to receive training on
applicable administrative rules, processes, and systems related to
Exchanges and QHPs. HHS will continue to build and improve its training
materials in these areas, and in 2018 will expand on the formal FFE
Navigator training that HHS already provides on the new assistance
topics listed in Sec. 155.210(e)(9). Until then, in addition to HHS's
existing formal training, we will continue to provide FFE Navigators
with additional information related to the new assistance activities
through informal webinars, newsletters, and technical assistance tools
like fact sheets and slide presentations. FFE Navigator grantees that
opt to carry out any of the assistance activities in Sec.
155.210(e)(9) should draw upon these materials to ensure their staff
and volunteers are adequately prepared to provide that assistance.
If SBEs, including SBE-FPs, choose to authorize (but not require)
their Navigators to provide the assistance topics listed at Sec.
155.210(e)(9), we would expect them to ensure that their Navigators are
sufficiently prepared to provide this assistance, either by including
the corresponding training topics at Sec. 155.210(b)(2)(v) through
(ix) in their Navigator training standards, or through informal
continuing education such as webinars, fact sheets, supplementary
trainings and certifications, and other technical assistance. However,
because we believe SBEs are in the best position to determine the
extent of training that is appropriate for duties they are authorizing
(but not requiring) their Navigators to perform, SBEs (including SBE-
FPs) would not be required to
[[Page 12251]]
provide training on the topics listed in Sec. 155.210(b)(2)(v) through
(ix) unless they required the corresponding forms of assistance under
Sec. 155.210(e)(9).
Finally, in the preamble to the proposed rule we discussed the
statutory authority for the assistance topics specified in Sec.
155.210(e)(9), and we refer commenters to those discussions, at 80 FR
75520-75522.
Comment: Many commenters were concerned that requiring these new
duties without additional funding would cause undue burden, discourage
program participation, or detract from Navigators' time and resources
to help consumers enroll in coverage. Many commenters requested that
HHS invest in the Consumer Assistance Programs established under
section 2793 of the PHS Act instead of, or in addition to, these
requirements.
Response: We expect that providing for SBE flexibility and phasing
in implementation of Sec. 155.210(e)(9) in FFEs will mitigate some of
commenters' concerns about funding sources. FFE Navigators may cover
the costs of these additional activities using Navigator grant funds
and will have the opportunity to propose budgets during the grant
application process, and current FFE Navigators may revise their work
plans if they opt to carry out these activities before they become
required.
We agree that Consumer Assistance Programs established under
section 2793 of the PHS Act have served an important role for consumers
with health insurance concerns. We also remind commenters that Sec.
155.210(e)(4) already requires Navigators in all States to provide
referrals to any applicable office of health insurance consumer
assistance or health insurance ombudsman established under section 2793
of the PHS Act, or any other appropriate State agency, for any enrollee
with a grievance, complaint, or question regarding their health plan,
coverage, or a determination under the plan or coverage. Many States
operate an office of health insurance consumer assistance or a health
insurance ombudsman. The critical assistance provided by these offices
will continue to be an important complement to and resource for
Navigators, and HHS will continue to explore ways to fund Consumer
Assistance Programs. However, we note that this existing referral
requirement is not sufficient to cover the new assistance activities
under Sec. 155.210(e)(9).
Comment: A few commenters said they believe the proposed Navigator
duties duplicate services provided by issuers or agents and brokers.
Several commenters requested that Navigators providing post-enrollment
assistance be subject to background checks and required to be licensed,
carry errors and omissions insurance, and be under the oversight of
State regulators.
Response: We believe it is important for consumers to have access
to a variety of assistance options. Additionally, Navigators in all
States are required under Sec. 155.210(c)(1)(iii) to meet any
licensing, certification, or other standards prescribed by the State or
Exchange, so long as the standards do not prevent the application of
the provisions of title I of the Affordable Care Act.
Comment: A number of commenters supported our proposal that all
Exchanges be required to provide training that would prepare Navigators
for the additional proposed areas of responsibility. Many commenters
urged us to ensure that this training be robust, supported by technical
assistance, and carefully monitored and updated. Many commenters
suggested that we specify additional training topics. One commenter
asked how HHS would ascertain training competency.
Response: We are finalizing the new training provisions largely as
proposed, but are adding introductory language so that their
applicability is aligned to whether the corresponding assistance
activities are required under final Sec. 155.210(e)(9). If an Exchange
(including an FFE) opts to require its Navigators to perform any or all
of the types of assistance specified in paragraph (e)(9), the
Exchange's training standards under paragraph (b)(2) must include
corresponding training on any of the required assistance topics. For
example, an Exchange opting to require its Navigators to help consumers
understand the process of filing Exchange eligibility appeals under
Sec. 155.210(e)(9)(i) must ensure its Navigators have expertise in
this topic by including the process of filing Exchange eligibility
appeals under Sec. 155.210(b)(2)(v) in its training standards. All of
the training topics in Sec. 155.210(b)(2)(v) through (ix) must be
included in the training standards for Navigators in FFEs under
Navigator grants awarded in 2018 or any later year, because that is
when all the activities specified under paragraph (e)(9) will be
required in FFEs, as discussed above and as specified in paragraph
(e)(9). We believe this final policy will ensure that all Navigators
required to perform functions under paragraph (e)(9) will be adequately
trained in each required topic.
We are also adding a new Sec. 155.210(b)(2)(ix) to correspond to
the referral assistance specified in Sec. 155.210(e)(9)(v), and are
adding the words ``and rights'' to Sec. 155.210(b)(2)(viii) to
parallel a related modification to Sec. 155.210(e)(9)(iv) that is
discussed below.
Section 155.215(b)(1)(iii) already requires FFE Navigators, after
completing required training, to complete and achieve a passing score
on all approved certification examinations prior to carrying out any
consumer assistance functions under Sec. 155.205(d) and (e) or Sec.
155.210. FFE Navigators must also obtain continuing education and be
certified or recertified on at least an annual basis under Sec.
155.215(b)(1)(iv). Under Sec. 155.210(b)(2), all Exchanges, including
SBEs and SBE-FPs, are required to develop training standards that
ensure expertise in the topics specified at Sec. 155.210(b)(2), but
SBEs, including SBE-FPs, have flexibility in creating examination or
certification requirements for their Navigators.
Comment: Many commenters said they do not believe the new Navigator
post-enrollment requirements are appropriate for other assister types,
such as certified application counselors or non-Navigator assistance
personnel subject to Sec. 155.215, who may have more limited time and
resources. One commenter thought that these assister types should be
encouraged to help consumers understand and use their coverage. Another
commenter stated that certified application counselors are well
positioned to provide post-enrollment assistance because many are in
community health centers. A few commenters recommended that certified
application counselors, non-Navigator assistance personnel subject to
Sec. 155.215, and Federally Qualified Health Center enrollment
counselors should have access to the new Navigator training and
resources related to post-enrollment and other assistance.
Response: We agree that non-Navigator assistance personnel subject
to Sec. 155.215 and certified application counselors may have more
limited resources than Navigators, and that tailoring duties to each of
these three assister types fosters a robust pool of different kinds of
consumer assistance. Therefore, we are not finalizing any assistance or
training requirements parallel to Sec. 155.210(b)(2)(v)-(ix) and
(e)(9) for non-Navigator assistance personnel subject to Sec. 155.215
or certified application counselors. As we noted in the preamble to the
proposed rule, the requirement under Sec. 155.210(e)(2) to provide
information that assists consumers with submitting the eligibility
application (which also applies to certain non-Navigator
[[Page 12252]]
assistance personnel through Sec. 155.215(a)(2)(i)), could include
helping consumers report changes in circumstances and submit
information for eligibility redeterminations. We also noted in the
preamble to the proposed rule that under Sec. 155.215(b), non-
Navigator assistance personnel subject to Sec. 155.215 and Navigators
in FFEs are subject to the same training requirements. In addition, all
FFE training modules can be accessed by the public, including by
certified application counselors and non-Navigator assistance personnel
subject to Sec. 155.215. As noted in the preamble to the proposed
rule, nothing prevents non-Navigator assistance personnel subject to
Sec. 155.215 or certified application counselors from helping with
activities that are consistent with their existing regulatory duties.
Although we are not requiring any assistance or training
requirements parallel to the new provisions under Sec.
155.210(b)(2)(v) through (ix) and (e)(9) for non-Navigator assistance
personnel subject to Sec. 155.215 or certified application counselors,
we believe that a disclaimer stating that these assisters are not
acting as tax advisers or attorneys (as discussed below) is an
important consumer protection that should apply regardless of whether
these assisters are providing assistance on the topics specified at
Sec. 155.210(e)(9). For this reason, and to align parallel provisions
requiring Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors to provide
consumers with information about their respective functions and
responsibilities, we are revising Sec. Sec. 155.215(g)(1) and
155.225(f)(1) to require that, prior to providing assistance, non-
Navigator assistance personnel subject to Sec. 155.215 and certified
application counselors provide consumers with a disclaimer stating that
they are not acting as tax advisers or attorneys when providing
assistance (respectively) as non-Navigator assistance personnel and
certified application counselors, and cannot provide tax or legal
advice within their (respective) capacities as non-Navigator assistance
personnel and certified application counselors.
Comment: A number of commenters cautioned that Navigators should
not be expected to become, or be held out as, experts in the new
assistance topics specified in Sec. 155.210(e)(9). Several commenters
asked that we further define what we mean by ``assistance with'' so
that Navigators can be clear about the full extent of consumer support
expected from them in these areas.
Response: Each Navigator grantee and each individual Navigator
should have the ability to help any individual who presents themselves
for assistance. Additionally, we expect that all individuals carrying
out Navigator duties would be trained to perform all of the duties of a
Navigator and would be equipped to assist consumers with the activities
described in Sec. 155.210(e)(9) in Exchanges where the activities
described in Sec. 155.210(e)(9) are required or authorized. Below, we
discuss examples of the kinds of assistance we interpret Sec.
155.210(e)(9) to include.
Comment: Several commenters asked us to explain whether Navigators
are permitted to collect, disclose, access, maintain, store or use
personally identifiable information (PII) to carry out these additional
duties. One commenter asked us to explain how consumer privacy
protections will be ensured and enforced.
Response: Under their grant terms and conditions, FFE Navigators
are permitted to create, collect, handle, disclose, access, maintain,
store, or use consumer PII only to perform functions that they are
authorized to perform under the terms of their grant, including
functions authorized or required under Sec. 155.210, or for other
purposes for which the consumer provides his or her specific, informed
consent. Once this rule takes effect, the activities under paragraph
(e)(9) will be authorized Navigator functions in FFEs, both before and
after 2018. Therefore, after this rule takes effect, FFE Navigators may
create, collect, handle, disclose, access, maintain, store, and use
consumer PII to perform these functions, and we will update guidance
and model consent forms to reflect this. HHS has a variety of
enforcement options in the event of a violation of these standards,
including implementing corrective action plans or pursuing civil money
penalties under Sec. 155.206 or Sec. 155.285, or withholding or
terminating grant funds. With respect to SBEs, Sec. 155.260(b) directs
SBEs to execute a contract or agreement with Navigators that binds them
to privacy and security standards that, among other things, take into
consideration a Navigator's authorized duties and activities. If an SBE
opts to require or authorize the activities specified in Sec.
155.210(e)(9) after that provision takes effect, we would expect that
SBE privacy and security standards would reflect SBEs' decisions to
require or authorize Navigators to carry out these additional
activities, and would give Navigators the ability to create, collect,
handle, disclose, access, maintain, store, and use PII as needed to do
so. In any event, the exact extent to which and the conditions under
which each SBE may permit or require its Navigators to create, collect,
handle, disclose, access, maintain, store, and use PII is a matter
within the reasonable discretion of the SBE, so long as the SBE's
standards comply with Sec. 155.260 and otherwise do not act as an
impediment to the performance of required or authorized Navigator
duties under Sec. 155.210.
Comment: We asked for comment on whether we should make explicit in
the regulation any of our interpretations of existing statutes and
regulations that would permit (but not require) Navigators to perform
certain kinds of post-enrollment assistance, such as assistance with
coverage claims denials. We also asked for comment on whether there are
additional forms of post-enrollment assistance that Exchanges should
require Navigators to provide, commensurate with their general legal
authority. One commenter recommended that we specify in regulation any
Navigator activities we interpret to be permitted but not required.
Some commenters recommended that additional post-enrollment activities
should be required, including filing complaints with regulators,
assisting pregnant women enrolled in QHPs to understand their coverage
options and ensure continuity of coverage, and helping enrollees pursue
coverage determination appeals and formulary exceptions.
Response: Because we are sensitive to the concerns commenters
expressed about Navigators' limited time and resources to perform the
new activities described in Sec. 155.210(e)(9), we are not adding
provisions that require or permit any additional activities commenters
recommended at this time. Instead, we have tried to limit the
modifications to the proposed activities in this final rule to changes
that provide additional detail about the scope of the specific post-
enrollment and other new assistance activities that we proposed adding
to the rule.
Comment: With respect to our proposed requirement that Navigators
provide information and assistance with filing Exchange eligibility
appeals, many commenters were concerned that consumers' legal rights
may be compromised without proper legal representation, and stated that
Navigators should serve primarily as a bridge to connect consumers with
legal assistance. One commenter stated that Navigators should have the
option of assisting consumers with appeals only when they have the
expertise to do so.
[[Page 12253]]
Several asked us to clarify that Navigators may not serve as authorized
representatives for consumers filing appeals. Commenters urged HHS to
clearly define the types of information Navigators must provide related
to appeals and create guidelines to help Navigators and consumers
recognize where legal assistance becomes appropriate or necessary.
Several commenters recommended that this duty be limited to making
consumers aware of their right to appeal, providing basic education on
the appeals process, and making appropriate referrals for legal
assistance when possible. To facilitate these referrals, commenters
asked HHS to help FFE Navigator grantees identify methods of
establishing relationships with local legal services organizations and
other State offices to help with the appeals process. One commenter
suggested that Navigators should also provide information and
assistance with appeal denials. One commenter asked how these proposed
requirements might affect Medicaid appeals in States that have
delegated the authority to make Medicaid and CHIP eligibility
determinations to the Exchange. A number of commenters interpreted our
proposal to mean that Navigators would be required to help consumers
appeal adverse coverage decisions.
Response: We recognize that helping consumers through the entire
Exchange appeals process may require more resources and expertise than
many Navigators can offer. To that end, we are narrowing this provision
by adding the word ``understanding'' to make clear that any assistance
required under this provision is limited to activities that help
consumers understand the process of filing Exchange eligibility
appeals, and does not include a requirement to help consumers through
the entire Exchange eligibility appeals process. It does not prevent
Navigators who are authorized or required to provide assistance under
this provision from providing such longer-term assistance, as long as
they do not provide legal advice in their capacity as Navigators, as
discussed below. We also appreciate the critical and established role
that legal services organizations play in helping consumers understand
and access their Exchange eligibility appeal rights, and have
incorporated providing information about free and low-cost legal help
into our expectations for assistance under this provision, as discussed
below.
We interpret assistance under this provision to include the
following activities, as relevant to consumers' needs: (1) Helping
consumers identify and meet the deadline for appealing an Exchange
eligibility determination; (2) helping consumers understand that they
have a right to appeal eligibility determinations made by an Exchange
(including SHOP Exchanges) related to enrollment in a QHP, special
enrollment periods, exemptions from the individual shared
responsibility payment that are granted by the Exchange, participation
as an employer in a SHOP, and any insurance affordability program,
including eligibility determinations for Exchange financial assistance,
Medicaid, the Children's Health Insurance Program, and Basic Health
Programs; (3) helping consumers understand the process of appealing
those eligibility determinations and what steps to take to complete an
appeal; (4) helping consumers access relevant Exchange resources, such
as appeal request forms and mailing addresses for appeals, and Exchange
guidance on appeals; and (5) providing consumers with information about
free or low-cost legal help in their area, including local legal aid or
legal services organizations and other State offices to help with the
Exchange eligibility appeals process. Assistance under this provision
may also include helping consumers collect supporting documentation for
the appeal (such as screenshots of relevant information from the online
application).
Although the assistance under Sec. 155.210(e)(9)(i) includes
helping consumers understand the general availability of a right to
appeal adverse Exchange eligibility determinations and the process for
appealing them, Navigators should not, in their capacity as Navigators,
cross the line into providing legal advice, such as by recommending
that consumers take specific action with respect to that right. For
example, Navigators could help consumers understand the difference
between an appeal and an expedited appeal, but should not help them
decide which one is best suited to their circumstances. We suggest that
Navigators familiarize themselves with any laws defining legal advice
in the States in which they operate, as this may help them ascertain
when they might be taking an action that could constitute providing
legal advice. We also note that we did not propose nor are we
establishing a duty for Navigators to represent a consumer in an
appeal, sign an appeal request, or file an appeal on the consumer's
behalf, either as a legally authorized representative or otherwise.
Although HHS regulations do not prohibit Navigators from serving as
authorized representatives under Sec. 155.227 outside of their
capacity as Navigators, they should keep any activities as a consumer's
authorized representative separate from their Navigator duties and
should not use Navigator grant funds for these activities, because
these activities are not authorized Navigator functions under HHS
regulations.
Assistance provided under this provision does not include
assistance with appeals of coverage decisions by issuers, but only
assistance with appeals of eligibility determinations made by an
Exchange. However, as we said in the preamble to the proposed rule,
Navigators are already permitted, but not required, to help consumers
obtain assistance with coverage claims denials and to educate consumers
about their rights with respect to coverage available through an
Exchange. Additionally, under the new language about rights that we are
adding to Sec. 155.210(e)(9)(iv), Navigators providing assistance
under that paragraph should inform consumers who have questions about
coverage claims denials that they have the right to appeal adverse
benefit determinations and to have the appeal reviewed by an
independent third party. Finally, as indicated above, helping consumers
with the process of filing Exchange eligibility appeals includes, where
applicable, helping consumers understand the process of filing an
appeal of a modified adjusted gross income (MAGI)-based Medicaid or
CHIP eligibility determination, where the State has delegated authority
to the Exchange to adjudicate these appeals.
Comment: Commenters supported our proposals to require Navigators
to provide consumers with information and assistance regarding
exemptions. One commenter disagreed with our proposal, arguing that
exemptions assistance is counter to the goal of the Affordable Care
Act. The majority of commenters recommended exemptions assistance not
be limited to certain consumers because helping with exemptions is
minimally burdensome and because of the importance of skilled
assistance to consumers who cannot access coverage. Several commenters
suggested that Navigators should have the flexibility, if they are
unable to fully meet consumer demand, to prioritize helping consumers
apply for and enroll in coverage over helping consumers seek exemptions
during open enrollment. Several commenters recommended that this duty
include assistance with understanding the requirement to maintain
minimum essential coverage and the individual shared responsibility
payment, the general purpose of and where to access
[[Page 12254]]
IRS Form 8965, Health Coverage Exemptions, and how to use applicable
Exchange tools to find bronze plan and second-lowest cost silver plan
premiums. Several commenters recommended that Navigators' duty with
respect to exemptions should be limited to education about, but not
assistance with, obtaining an exemption. One commenter asked for
guidance on how this requirement would apply to SBE Navigators, since
most States' Exchange-granted exemptions are processed by an FFE,
rather than an SBE.
Response: We are not limiting Navigator assistance with exemptions
under paragraph (e)(9)(ii) to a specific consumer population because we
agree that Navigator services should not be exclusively available to a
predefined set of consumers and closed to others. Where resources are
limited, Navigators providing assistance under this provision may
prioritize helping consumers seeking to apply for and enroll in
coverage. For example, during a busy enrollment event, Navigators may
choose to limit exemptions assistance to directing consumers to
exemptions resources on HealthCare.gov and IRS.gov, and schedule
another time for consumers to return for additional assistance. But we
also continue to expect that Navigators will serve all consumers
seeking assistance.
We believe that the Affordable Care Act contemplates that
Navigators will assist consumers with making an informed decision about
whether to enroll in health coverage, and making this decision will
often require consumers to have a basic understanding of available
exemptions. We are finalizing Sec. 155.210(e)(9)(ii) generally as
proposed, except that for clarity and consistent use of terminology we
are modifying the reference to the individual shared responsibility
requirement to refer to the individual shared responsibility payment,
and are changing language about ``how to apply for'' exemptions claimed
through the tax filing process to ``how to claim'' them. Because
exemptions assistance needs will vary among consumers, and to avoid
being overly prescriptive, we are not expanding the assistance
specifically required under this provision to include the activities
recommended by commenters. We interpret assistance under this provision
to include the following activities, as relevant to consumers' needs:
(1) Informing consumers about the requirement to maintain minimum
essential coverage and the individual shared responsibility payment;
(2) helping consumers fill out and submit Exchange-granted exemption
applications and obtain any necessary forms prior to or after applying
for the exemption; (3) explaining what the exemption certificate number
is and how to use it; (4) helping consumers understand the availability
of exemptions from the requirement to maintain minimum essential
coverage and from the individual shared responsibility payment that are
claimed through the tax filing process and how to claim them; (5)
helping consumers use any applicable Exchange tool to find lowest cost
bronze and second-lowest cost silver plan premiums (that is, the FFE
tool or any similar tool offered by an SBE); and (6) helping consumers
understand the availability of IRS resources on this topic, including
explaining the general purpose of and how to access IRS Form 8965,
Health Coverage Exemptions, and the instructions for that form. We
emphasize that explaining the general purpose of IRS Form 8965 to
consumers must be done consistent with IRS published guidance on the
topic, and must include providing information on where to access this
form and related tax information on IRS.gov.
With respect to exemptions granted through the Exchange, we do not
believe that Navigators' activities related to exemptions should be
limited to education only. However, to help ensure that Navigators do
not provide tax advice in their capacity as Navigators, we are
finalizing the portion of this proposal that limits Navigators'
required involvement in exemptions claimed through the tax filing
process to providing general information and helping consumers access
IRS resources, rather than assistance with claiming exemptions on the
tax return or filling out IRS forms. For example, Navigators acting in
their capacity as Navigators must not help consumers fill out IRS Form
8965 or help them report having minimum essential coverage on their tax
return. We believe this limitation is sufficient to protect both
consumers and Navigators.
In any SBEs that opt to require or authorize this assistance,
Navigators will be required or authorized (respectively) to help
consumers access Exchange-granted exemptions, whether consumers in that
State access those exemptions through the SBE or FFEs, and, as in any
Exchange, they will be limited to providing only general information
about exemptions claimed on the tax return in their capacity as
Navigators.
Comment: Many commenters said that Navigators should provide
consumers with a disclaimer stating that they are not acting as tax
advisers and cannot provide tax advice within their capacity as
Navigators. One commenter stated that requiring a disclaimer was
unnecessary because Navigators do not provide tax advice and many
already provide a disclaimer to this effect. Some commenters
recommended that we require a similar disclaimer that Navigators are
not acting as legal representatives and cannot provide legal advice or
legal representation within their capacity as Navigators. Some
commenters recommended that the disclaimer be required to be written,
provided in a linguistically appropriate manner, or included in our
model authorization form for FFE Navigators.
Response: We agree that prior to providing assistance, Navigators
should provide consumers with a disclaimer stating that they are not
acting as tax advisers or attorneys when providing assistance as
Navigators, and cannot provide tax or legal advice in their capacity as
Navigators. We are therefore adding language to Sec. 155.210(e)(6)(i)
to specify that such a disclaimer must be included as part of the
information provided to applicants about the Navigator's functions and
responsibilities and that both the disclaimer and the information
provided about Navigator functions and responsibilities must be
provided prior to providing assistance. We do not interpret this
requirement to mean that Navigators must provide such a disclaimer
prior to providing general outreach and education. Although we do not
specify the method of delivering the disclaimers, we plan to add these
disclaimers to our model authorization form for FFE Navigators. The
requirement under Sec. 155.210(e)(5) that Navigators must provide
information in a manner that is culturally and linguistically
appropriate to the needs of the population being served by the Exchange
and accessible to people with disabilities will apply to these
disclaimers. Finally, as discussed above, we are adding a parallel
disclaimer requirement for non-Navigator assistance personnel subject
to Sec. 155.215 and certified application counselors, under Sec. Sec.
155.215(g)(1) and 155.225(f)(1) (respectively).
Comment: Many commenters supported our proposal to require
Navigators to provide consumers with assistance with understanding the
Exchange-related components of the premium tax credit reconciliation
process, and the availability of IRS resources on this process.
Commenters agreed that although Navigators should not provide tax
advice, informing
[[Page 12255]]
consumers of the tax implications of receiving advance payment of the
premium tax credit is an essential component of helping consumers
enroll. Several commenters recommended that we specify that this
assistance entails helping consumers: (1) Access and understand IRS
Forms 1095-A, -B, and -C, (2) understand how to report Form 1095
errors, (3) understand how to use applicable Exchange tools to find
silver plan premiums, and (4) understand the purpose of IRS Form 8962.
A few commenters suggested that Navigators should also provide
information about reliable resources on this process from sources other
than the IRS. Other commenters were concerned that our proposal would
stretch Navigators' capacity and distract from enrollment, and that tax
professionals, not Navigators, are best suited to assist consumers with
tax-related issues. Some commenters asked us to clarify the prohibition
on providing tax advice, one commenter requested that we add this
prohibition to Sec. 155.210(d), and another asked how it will be
enforced.
Response: We are finalizing this provision largely as proposed.
Because not all consumers will require information and assistance with
each of the topics commenters recommended that we include in this
provision, we are not expanding the final rule to include them.
However, we interpret assistance under this provision to include
helping consumers with the following, as relevant to their needs: (1)
The Exchange-related components of the premium tax credit
reconciliation process; (2) accessing and understanding the general
purpose of IRS Form 1095-A; (3) understanding how to report Form 1095-A
errors; (4) using any applicable Exchange tool to find second-lowest
cost silver plan premiums (that is, the FFE tool or any similar tool
offered by an SBE); and (5) understanding the availability of IRS
resources on this process, including the general purpose of and how to
access IRS Form 8962, and the instructions for that form. To avoid
confusion about the scope of this provision, we are removing the word
``understanding'' from the beginning of the provision, because
Navigators' assistance with the Exchange-related components of the
premium tax credit reconciliation process would include not only
helping consumers understand Exchange tools and resources but also
helping consumers access and use these tools and resources. We are also
adding ``understanding'' before the provision's description of
Navigators' assistance with respect to the availability of IRS
resources on this process, to better capture our interpretation that
Navigators are not authorized to interpret those resources, and can
instead only direct consumers to them. This edit also helps align this
provision with the similar requirement in Sec. 155.210(e)(9)(ii) that
Navigators help consumers understand the availability of IRS resources
on exemptions.
Where Navigators are also tax professionals, they might be in a
position to assist clients with both the Exchange-related and the tax
filing components of the premium tax credit reconciliation process, but
should keep these duties separate and not perform any tax assistance
within their capacity as Navigators or using Navigator grant funds. As
part of Navigators' assistance with Form 1095-A, they may, for example,
explain to consumers why they received the form and what the
information on the form means, explain why they may have received more
than one copy of the form, help them find the form in their online
account or get a copy of the form, explain what they should do if they
think the form may have gone to the wrong address, or if they think the
information on their form is incorrect or does not include a dependent
they added to their coverage. On the other hand, Navigators who are
acting in their capacity as Navigators should not, for example, help
consumers fill out IRS Form 8962, advise consumers about whether to
file an amended tax return, or help them complete their income tax
return. We believe it is critically important to ensure that consumers
are provided with the most authoritative, accurate, and up-to-date
resources related to premium tax credit reconciliation, and thus IRS-
approved resources must be the primary resource to which Navigators
refer consumers.
We disagree with commenters that Navigators should be required to
help consumers access and understand IRS Forms 1095-B and 1095-C. Form
1095-B, Health Coverage, is an annual form issued by providers of
minimum essential coverage to report certain information to the IRS and
to taxpayers about individuals who had coverage during the year. Form
1095-C, Employer-Provided Health Insurance Offer and Coverage, is an
annual form issued by certain large employers to report to the IRS and
to taxpayers information about offers of employer-sponsored coverage
for the year. Unlike the Form 1095-A, these forms are not issued by an
Exchange. The IRS has resources that explain the purpose of these
forms, how they relate to the tax filing process, how to request copies
of the forms, and how to request corrections to the forms. Navigators
should be able to help consumers access IRS resources relating to these
forms. However, we are not requiring Navigators providing assistance
under this provision to help consumers access these forms or report
errors.
Comment: We received support from commenters for our proposal to
require Navigators to help consumers understand basic concepts related
to health coverage and how to use it. Several commenters recommended
that this assistance include helping consumers understand their rights
related to health coverage. Some recommended that we specify topics in
addition to the examples we included in the preamble to the proposed
rule, including helping consumers understand out-of-pocket cost
calculators and provider and formulary lookup tools, common utilization
management definitions, including step therapy and prior authorization,
and what an Explanation of Benefits Statement is and how to read it.
Other commenters stated that because this assistance will vary
depending on each consumer's health insurance literacy, needs, and
goals, additional specificity is unnecessary.
Response: We agree with commenters that consumers' rights with
respect to coverage available through an Exchange, such as
nondiscrimination protections and prohibitions on preexisting condition
exclusions, are critical for consumers to understand when accessing or
attempting to access coverage through an Exchange. Additionally, in the
preamble to the proposed rule, we explained that the assistance
provided under this provision could include helping consumers
understand the right to coverage of certain preventive health services
without cost sharing, and that we interpret existing HHS regulations to
permit Navigators to educate consumers about their rights with respect
to coverage available through an Exchange. Therefore, we are adding the
phrase ``and rights'' to Sec. 155.210(e)(9)(iv) to ensure that
Navigators' activities in this area include education about these
topics. However, to avoid crossing the line into providing legal
advice, Navigators should not, in their capacity as Navigators,
recommend that consumers take specific action with respect to these
rights. We are also adding the phrase ``and rights'' to the
corresponding training provision related to this duty at Sec.
155.210(b)(2)(viii). Because the health literacy information consumers
need varies depending on their circumstances, we are not
[[Page 12256]]
requiring Navigators to help consumers with specific health literacy
topics. Instead, we interpret assistance under this provision to
include, for example, helping consumers understand: (1) Key terms used
in health coverage materials, such as ``deductible'' and
``coinsurance,'' and how they relate to the consumer's health plan; (2)
the cost and care differences between a visit to the emergency
department and a visit to a primary care provider under the coverage
options available to the consumer; (3) how to identify in-network
providers and how to make and prepare for an appointment with a
provider; (4) how the consumer's coverage addresses steps that often
are taken after an appointment with a provider, such as making a
follow-up appointment and filling a prescription; and (5) the right to
coverage of certain preventive health services without cost sharing.
Comment: A few commenters asked for clarification about whether the
duty proposed in Sec. 155.210(e)(9)(iv) pertains to general education
about health coverage or to assisting individuals with activities such
as making appointments or filling prescriptions, which they believed
would be overly burdensome. Several commenters stated that there are
insufficient educational resources available and asked HHS to create
template materials and identify other resources on these topics. One
commenter asked HHS to undertake or support a thorough assessment of
consumer health insurance literacy needs. Some commenters noted that
issuers often provide additional training and materials to agents and
brokers about their plans, and recommended that HHS require issuers to
provide Navigators with this kind of information.
Response: The assistance provided under Sec. 155.210(e)(9)(iv)
only includes providing information and assistance with understanding
basic concepts and rights related to health coverage and how to use it;
it does not include patient advocacy or case management. With respect
to needs assessments, we remind Navigators in FFEs of their obligations
under Sec. 155.215(c)(1) to develop and maintain general knowledge
about the racial, ethnic, and cultural groups in their service area,
including each group's health literacy and other needs, and under Sec.
155.215(c)(2) to collect and maintain updated information to help
understand the composition of the communities in the service area.
Agents and brokers often receive information on health plans from
the issuers with whom they have a contractual relationship. While we do
not require QHP issuers to provide their affiliated agents and brokers
with plan information, we continue to leverage existing practices and
encourage agents and brokers to work directly with QHP issuers within
whom they have a contractual relationship to obtain the necessary
information on that issuer's QHPs. Navigator organizations may invite
issuers in their area to share information or attend education sessions
regarding plan benefits and details. As long as all issuers in the
Exchange service area are invited and all applicable Navigator
conflict-of-interest provisions are followed, including the rule
prohibiting Navigators from receiving any consideration directly or
indirectly from any health insurance issuer or stop-loss insurance
issuer in connection with the enrollment of any individuals or
employees in a QHP or non-QHP, such an event would not represent a
conflict of interest or violate a Navigator's duty under Sec.
155.210(e)(2) to provide information and services in a fair, accurate,
and impartial manner.
Comment: Most commenters supported our proposal that Navigators be
required to provide referrals to licensed tax advisers, tax preparers,
or other resources for assistance with tax preparation and tax advice
related to consumer questions about the Exchange application and
enrollment process, exemptions from the requirement to maintain minimum
essential coverage and from the individual shared responsibility
requirement, and premium tax credit reconciliations. Commenters
requested detail about how such a referral mechanism would work; for
example, whether Navigators would be allowed to refer consumers to a
specific tax professional, as opposed to a general listing of tax
professionals. Other commenters asked HHS for guidance on limitations
and strategies for referring and collaborating with tax preparation
services, legal services organizations, community experts, patient-
focused and community-based organizations, and other State offices. One
commenter questioned the term ``licensed tax adviser,'' noting that IRS
does not provide such a license. Another asked HHS to specify IRS's
Volunteer Income Tax Assistance (VITA) and Tax Counseling for the
Elderly (TCE) programs as appropriate points of referral. And one
commenter asked HHS to partner with the Internal Revenue Service (IRS)
to provide training and education to tax preparers.
Response: All referrals from a Navigator to other organizations
must be consistent with applicable statutory and regulatory
requirements, including the requirement at Sec. 155.210(e)(2) that
Navigators provide information and services in a fair, accurate, and
impartial manner, and the conflict of interest provision at Sec.
155.210(d)(4) prohibiting Navigators from receiving any consideration
directly or indirectly from any health insurance issuer or issuer of
stop loss insurance in connection with the enrollment of any
individuals or employees in a QHP or a non-QHP. We interpret the
requirement under Sec. 155.210(e)(2) that Navigators provide
information and services in a fair, accurate, and impartial manner to
mean that Navigators must not accept payment in exchange for providing
a referral or recommending the services of another organization. We
intend to issue guidance for FFE Navigators with additional information
on collaborating or partnering with other organizations.
The referrals discussed under this provision include referrals to
licensed tax advisers, tax preparers, or other resources for assistance
with tax preparation and tax advice. Licensed tax advisers are one type
of tax professional, but not the only type. ``Licensed'' can mean any
type of professional license that qualifies someone to prepare taxes,
and could include certified public accountants and attorneys. We agree
that VITA and TCE programs may often be the best resources for referral
under this provision.
To ensure that Navigators who are required under paragraph (e)(9)
to provide referrals to licensed tax advisers, tax preparers, or other
resources for assistance with tax preparation and tax advice are also
trained on this topic, we are adding a corresponding training provision
at Sec. 155.210(b)(2)(ix). We are also replacing a reference in
paragraph (e)(9)(v) to the individual shared responsibility requirement
with a reference to the individual shared responsibility payment, to
ensure consistent use of terminology.
We also proposed to amend Sec. Sec. 155.205(d) and
155.215(b)(1)(i) to specify that any individual or entity carrying out
consumer assistance functions under Sec. 155.205(d) and (e) or Sec.
155.210, in both SBEs and FFEs, would be required to complete training
prior to performing any assister duties, including before conducting
outreach and education activities, as well as before providing
application and enrollment assistance. Section 155.215(b) already
requires Navigators and non-Navigator assistance personnel in FFEs and
non-Navigator assistance personnel funded through Exchange
Establishment grants under section
[[Page 12257]]
1311(a) of the Affordable Care Act to obtain certification by the
Exchange prior to carrying out any consumer assistance functions under
Sec. 155.205(d) and (e) or Sec. 155.210. We proposed to amend Sec.
155.215(b)(1)(i) to specify that the consumer assistance functions
referenced in that provision would include outreach and education
activities. In addition, we proposed to amend Sec. 155.205(d) to
require that training be completed not only before providing the
assistance described in that paragraph, but also before conducting the
outreach and education activities specified in paragraph (e).
This proposal sought to ensure that individuals and organizations
subject to Sec. Sec. 155.205(d) and (e), 155.210, and 155.215 do not
perform any Exchange outreach and education activities or application
and enrollment assistance while identifying as or holding themselves
out to the public as Exchange-approved Navigators or non-Navigator
assistance personnel, prior to completing Exchange requirements,
including training and certification. The proposed amendments would not
apply to certified application counselors, but Sec. 155.225(d)(1)
already requires certified application counselors to complete and
achieve a passing score on all Exchange approved certification
examinations prior to functioning as certified application counselors.
We are finalizing these amendments as proposed.
Comment: The majority of commenters supported our proposal to
require that Navigators and non-Navigator assistance personnel complete
training prior to performing any assister duties, including before
conducting outreach and education activities, as well as before
providing application and enrollment assistance. These commenters also
recommended exempting Navigators in FFEs and non-Navigator assistance
personnel subject to Sec. 155.215 who are eligible to be recertified
from the requirement in Sec. 155.215(b) to complete recertification
training prior to conducting outreach and education. A few commenters
expressed concern regarding the availability and content of training.
Commenters also were concerned that this provision would prevent
Navigators and non-Navigator assistance personnel subject to Sec.
155.215 from conducting year-round outreach education, if training is
not available year round, or recommended that training be available at
least 2 months prior to open enrollment so that new assisters subject
to this requirement can complete the training and begin assisting
consumers.
Response: We appreciate the support for this proposal and agree
that it is essential that consumers trust that Navigators and non-
Navigator assistance personnel are properly informed and trained when
consumers seek out their services, whether those services include
assistance with an Exchange application or education about the
Exchange. We recognize commenters' concerns that the timing of the FFE
Navigator and non-Navigator assistance personnel training may prevent
some Navigators and non-Navigator assistance personnel in FFEs from
conducting outreach and enrollment work during periods when training is
being updated and relaunched prior to the start of a new open
enrollment period for the individual market. We will continue to strive
to complete FFE training updates prior to FFE Navigator and non-
Navigator assistance personnel certification deadlines. We believe
there is great value in ensuring that Navigators in FFEs and non-
Navigator assistance personnel subject to Sec. 155.215 complete
recertification training prior to providing any outreach or assistance
to consumers because there are often changes in Exchange operations and
policy from year to year and we want to ensure that these assisters are
providing the most up to date and accurate information to consumers.
Therefore, we are not exempting Navigators in FFEs and non-Navigator
assistance personnel subject to Sec. 155.215 who are eligible to be
recertified from this requirement.
Comment: A few commenters requested clarification regarding
individuals who are not yet certified or are not acting as Navigators
or non-Navigator assistance personnel at Navigator and non-Navigator
assistance personnel organizations but who may be serving as
spokespeople and conducting public education activities about the
Exchange and the Exchange assistance available from the organization.
One commenter requested that HHS allow newly hired, but not fully
trained or certified Navigators to conduct outreach, as long as they
disclose they are not yet certified to conduct enrollment assistance
and immediately refer consumers to a fully trained and certified
Navigator. A few commenters opposed our proposal due to concern that it
would prohibit such activities.
Response: As explained in the proposed rule preamble, nothing in
the Exchange regulations prohibits individuals who are not trained and
certified as Exchange-approved Navigators, non-Navigator assistance
personnel, or certified application counselors from conducting outreach
about Exchanges and providing application and enrollment assistance.
These individuals may of course conduct outreach and education about
Exchanges as long as they do not represent themselves as Exchange-
approved Navigators, non-Navigator assistance personnel, or certified
application counselors.
Comment: One commenter expressed concern about how this provision
could reasonably be enforced.
Response: Exchanges have discretion to pursue a variety of
enforcement options in the event of Navigator or non-Navigator
assistance personnel noncompliance with any applicable statutory or
regulatory requirements or prohibitions. These options include
implementing corrective action plans or pursuing civil money penalties
under Sec. 155.206 or withholding or terminating grant or contract
funds. FFE Navigators and FFE non-Navigator assistance personnel who
wish to file a complaint or grievance against other FFE Navigators or
FFE non-Navigator assistance personnel can contact their Project
Officer or point of contact at CMS. FFE certified application
counselors should direct complaints or grievances to the certified
application counselor inbox at CACQuestions@cms.hhs.gov. We also rely
on communication with State regulatory agencies (such as Departments of
Insurance) and CMS Regional Offices regarding FFE Navigator and FFE
non-Navigator assistance personnel conduct.
Section 155.210(d)(6) currently prohibits Navigators from providing
to an applicant or potential enrollee any gifts unless they are of
nominal value; or any promotional items that market or promote the
products or services of a third party, when those promotional items are
being used as an inducement for enrollment. Through a cross-reference
to Sec. 155.210(d) in Sec. 155.215(a)(2)(i) and a parallel provision
in Sec. 155.225(g)(4), this prohibition also applies to non-Navigator
assistance personnel subject to Sec. 155.215, and to certified
application counselors.
To reduce confusion about when gifts and promotional items can be
provided to applicants and potential enrollees, we proposed to amend
Sec. Sec. 155.210(d)(6) and 155.225(g)(4) to specify that gifts of any
value (including third-party promotional items of any value) should
never be provided to applicants or potential enrollees as an inducement
for enrollment. We also proposed to specify that gifts that are not
provided as an inducement for enrollment may be provided to applicants
and potential enrollees if they do not exceed nominal
[[Page 12258]]
value.\40\ We proposed that this nominal value restriction would apply
both to each individual gift and to the cumulative value of multiple
gifts, including promotional items. We further proposed that the
nominal value restriction on the cumulative value of multiple gifts
would only apply to single encounters between the assister and an
individual, and not to multiple encounters, so that assisters would not
have to collect PII as a means of tracking the number and value of
gifts provided to an individual consumer across multiple encounters,
such as all encounters in a single calendar year or enrollment season.
We noted that we would consider a single outreach or educational event
to be a ``single encounter''; that is, the assisters subject to the
proposed requirement would not be permitted to provide multiple gifts
to the same consumer at the same outreach event if the cumulative value
of those gifts exceeded nominal value.
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\40\ We have previously defined ``nominal value'' as a cash
value of $15 or less, or an item worth $15 or less, based on the
retail purchase price of the item, regardless of the actual cost.
(79 FR 15807, 15831 (Mar. 21, 2014) and 79 FR 30239, 30283 (May 27,
2014).
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We proposed to define ``gifts,'' for purposes of Sec. Sec.
155.210(d)(6) and 155.225(g)(4), to include gift items, gift cards,
cash cards or cash, as well as promotional items that market or promote
the products or services of a third party. Language in Sec. Sec.
155.210(d)(6) and 155.225(g)(4) currently provides that gifts, gift
cards, or cash may exceed nominal value for the purpose of providing
reimbursement for legitimate expenses incurred by a consumer in an
effort to receive Exchange application assistance, such as travel or
postage expenses. We proposed to amend this language to indicate that
the reimbursement of legitimate expenses, such as travel and postage
expenses, when incurred by a consumer in an effort to receive Exchange
application assistance, would not be considered a gift, and therefore,
would not be subject to the proposed restrictions on providing gifts.
Finally, existing regulations under Sec. Sec. 155.210(d)(7) and
155.215(a)(2)(i) already prohibit the use of Exchange funds by
Navigators and by non-Navigator assistance personnel subject to Sec.
155.215 to purchase gifts or gift cards, or promotional items that
market or promote the products or services of a third party, that would
be provided to any applicant or potential enrollee. We did not propose
to amend this provision.
We are finalizing the amendments to Sec. Sec. 155.210(d)(6) and
155.225(g)(4) as proposed.
Comment: Many commenters supported our proposals, agreeing that the
amendments clarify the rule and strike the right balance between
allowing Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors to use gifts and
promotional items in outreach while ensuring they are never used to
induce enrollment. Some commenters asked for examples of permissible
and impermissible gifts, promotional items, and legitimate expenses.
Several commenters asked for guidance on the terms ``nominal'' and
``products or services of a third party.'' One commenter suggested that
our rule may conflict with the beneficiary inducement rules that apply
to Medicare and State health care programs, potentially creating
difficulties for Navigators that are health care providers.
Response: As we noted in the preamble to the proposed rule, we have
previously defined ``nominal value'' as a cash value of $15 or less, or
an item worth $15 or less, based on the retail purchase price of the
item, regardless of the actual cost (79 FR 15831 and 79 FR 30283). This
nominal value limit applies to all gifts, including gift items, gift
cards, cash cards, cash, and promotional items that market or promote
the products or services of a third party. Some illustrative examples
of permissible gifts and promotional items include pens, magnets, or
key chains worth $15 or less each, including if such items bear the
name or logo of a local business, or community or social service
program. Such items may, for example, be provided to consumers at
outreach and education events or at other forums attended by members of
the general public, as long as they are not being provided as an
inducement to enrollment. By ``inducing enrollment,'' we mean
conditioning receipt of the items on a consumer's actually enrolling in
coverage, as opposed to encouraging consumers to seek or receive
application or other authorized assistance. To the extent that Federal
or State health program beneficiary inducement rules apply to entities
or individuals who also serve as Navigators, non-Navigator assistance
personnel subject to Sec. 155.215, or certified application
counselors, those entities and individuals must comply with those rules
as well as the applicable program rules under Sec. Sec. 155.210(d)(6),
155.215(a)(2)(i), and 155.225(g)(4).
d. Ability of States To Permit Agents and Brokers To Assist Qualified
Individuals, Qualified Employers, or Qualified Employees Enrolling in
QHPs (Sec. 155.220)
We proposed additional standards under Sec. 155.220 for oversight
and enforcement of standards applicable to agents, brokers, and web-
brokers who facilitate enrollment in the FFEs. These standards were
proposed under the Secretary's authority to establish procedures for
States to permit agents and brokers to assist consumers enrolling in
QHPs through the FFEs, as described in sections 1312(e) of the
Affordable Care Act.
In the proposed rule, we explained that we were considering an
option to enhance the direct enrollment process, so that an applicant
who initiated enrollment directly with a web-broker entity using the
web-broker's non-Exchange Web site could remain on the web-broker's Web
site to complete the application and enroll in coverage, instead of
being redirected to the Exchange Web site to complete the application
and receive an eligibility determination. Under the proposal, the web-
broker's Web site could obtain eligibility information from the
Exchange to support the consumer in selecting and enrolling in a QHP
with Exchange financial assistance. Accordingly, we proposed to revise
Sec. 155.220(c)(1) to ensure that the Exchange maintained its role in
determining eligibility when an applicant initiates enrollment with a
web-broker on the web-broker's non-Exchange Web site, by requiring the
agent or broker to ensure that the applicant completed an eligibility
verification and enrollment application through the Exchange Web site,
or an Exchange-approved web service using the FFE single streamlined
application. Additionally, we solicited comments on the proposal to
require web-broker entities to use the FFE single streamlined
application without deviation from the language of the application
questions and the sequence of information required for an eligibility
determination or redetermination. We solicited comments on how much
flexibility web-broker entities should be afforded relative to the
consumer experience on its non-Exchange Web site. We also sought
comment on additional matters HHS should consider to improve the direct
enrollment process, such as requiring HHS approval of alternative
enrollment pathway processes, additional consumer safeguard
protections, additional web-broker reporting requirements, and
[[Page 12259]]
establishing more robust privacy and security requirements including
requiring adoption of cyber security best practices and specificity as
to the collection and use of consumer information. We also proposed to
adopt parallel standards for the use of QHP issuer Web sites under
Sec. 156.265(b)(2)(ii). See III.G.5.c of this preamble for a
discussion of the amendments to Sec. 156.265(b)(2)(ii).
We proposed to amend paragraph (g)(2)(ii) to clarify that HHS could
determine an agent or broker to be noncompliant if HHS finds that the
agent or broker violated any term or condition of the agreement with
the FFEs required under paragraph (d) of this section, or any term or
condition of an agreement with the FFEs required under Sec.
155.260(b). We proposed to add Sec. 155.220(g)(5) to address
suspension or termination of an agent's or broker's agreements with the
FFEs in cases involving potential fraud or abusive conduct. We proposed
in Sec. 155.220(g)(5)(i)(A) that if HHS reasonably suspected that an
agent or broker may have engaged in fraud or abusive conduct using PII
of an Exchange applicant or enrollee, or in connection with an Exchange
enrollment or application, HHS could suspend the agent's or broker's
agreement and accompanying registration with the FFEs for up to 90
calendar days, with the suspension effective as of the date of the
notice to the agent or broker. We further proposed under Sec.
155.220(g)(5)(i)(B) if the agent or broker failed to submit information
during this 90-day period, HHS could terminate the required agreements
for cause effective immediately upon expiration of the 90-day period,
under Sec. 155.220(g)(5)(ii). In Sec. 155.220(g)(5)(ii), we proposed
that if HHS reasonably confirmed the credibility of an allegation that
an agent or broker engaged in fraud or abusive conduct using personally
identifiable information of Exchange enrollees or applicants, or in
connection with an Exchange enrollment or application, or was notified
by a State or law enforcement authority of the State or law enforcement
authority's finding or determination of fraud or behavior that would
constitute abusive conduct in such a circumstance, HHS would notify the
agent or broker and terminate, immediately and permanently, the agent's
or broker's agreements with the FFEs. In Sec. 155.220(g)(5)(iii), we
proposed that during the 90-day suspension period, as well as following
the termination of the FFE agreements, the agent or broker would not be
registered with the FFEs, or be permitted to assist with or facilitate
enrollment through the FFEs, or assist individuals in applying for
Exchange financial assistance for QHPs. For consistency with these
proposed termination standards, we proposed corresponding updates to
paragraphs (g)(3) and (4), and proposed amending paragraph (f)(4) to
remove the unnecessary reference to paragraph (g).
We proposed adding paragraph Sec. 155.220(j) to establish
standards of conduct for agents and brokers that assist consumers to
enroll in coverage through the FFEs to protect consumers and ensure the
proper administration of the FFEs. In Sec. 155.220(j)(1)(i) through
(iii), we proposed that an agent or broker that assisted with or
facilitated enrollment of qualified individuals, qualified employers,
or qualified employees through an FFE, or assisted individuals in
applying for Exchange financial assistance for QHPs sold through the
FFEs, would have to: (1) Execute the required agreement under Sec.
155.260(b)(2); (2) register with the FFEs as described in paragraph
(d)(1) of this section; and (3) comply with the FFE standards of
conduct proposed in this paragraph. In Sec. 155.220(j)(2), we proposed
that the agents and brokers described in paragraph (j)(1) would have
to: (1) Provide consumers with correct information, without omission of
material fact, regarding the FFEs, QHPs (including SADPs \41\) offered
through the FFEs and insurance affordability programs, and refrain from
marketing or conduct that is misleading or coercive, or discriminates
based on race, color, national origin, disability, age, sex, gender
identity, or sexual orientation; (2) provide the FFEs with correct
information under section 1411(b) of the Affordable Care Act; (3)
obtain the consent of the individual, employer, or employee prior to
assisting with or facilitating enrollment in coverage through an FFE,
or prior to assisting with the application for financial assistance for
QHPs sold through the FFEs; (4) protect consumer PII in accordance with
Sec. 155.260(b)(3) and the agreement described in Sec. 155.260(b)(2);
and (5) comply with all applicable Federal and State laws and
regulations. In Sec. 155.220(j)(3), we proposed that an agent or
broker would be considered to be in compliance with the standard of
conduct requirements to provide consumers and the FFEs with correct
information if HHS determined that the agent or broker had a reasonable
cause for any failure to provide correct information and that the agent
or broker acted in good faith. We also proposed that the violation of
these standards could result in the termination for cause of the
agent's or broker's agreements with the FFEs as described in Sec.
155.220(g), or the imposition of other penalties as authorized by law.
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\41\ As detailed in the Exchange Establishment Rule (77 FR
18309, 18315) (Mar. 27, 2012), with some limited exceptions, SADPs
are considered a type of QHP. We expect agents, brokers, and web-
brokers registered with the FFEs to comply with applicable rules and
requirements in connection with SADPs, just as they must comply with
those rules in connection with medical QHPs.
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In Sec. 155.220(k), we proposed penalties for agents and brokers
registered with the FFEs other than termination of the agreements with
the FFEs. In Sec. 155.220(k)(1), we proposed that if HHS determined
that an agent or broker failed to comply with the requirements of Sec.
155.220 he or she could be denied the right to enter into an agreement
with the FFEs in future years, and could be subject to CMPs as
described in Sec. 155.285 if the violation involved the provision of
false or fraudulent information to an Exchange or the improper use or
disclosure of information. In Sec. 155.220(k)(2), we proposed that the
denial of the right to enter into an agreement with the FFEs in future
years would be subject to 30 calendar days' advance notice and the
reconsideration process established in Sec. 155.220(h). The imposition
of CMPs for the provision of false or fraudulent information to an
Exchange or the improper use or disclosure of information would be
subject to the advance notice and appeals process described in Sec.
155.285.
Finally, in Sec. 155.220(l) we proposed that an agent or broker
who enrolled qualified individuals, qualified employers, or qualified
employees in coverage in a manner that constituted enrollment through
an SBE-FP, or assisted individual market consumers with submission of
applications for Exchange financial assistance through an SBE-FP would
have to comply with all applicable FFE standards in Sec. 155.220.
Comment: The proposal for the enhanced direct enrollment process
received broad support by many commenters, who stated they believe
enabling the applicant to remain on a web-broker's or issuer's non-
Exchange Web site would improve the consumer experience by supporting
more seamless transitions than the existing direct enrollment
functionality. One commenter stated the proposal would increase
enrollment, as the current direct enrollment functionality requires a
consumer to be directed back and forth between the direct enrollment
Web site and HealthCare.gov, leading some
[[Page 12260]]
consumers to drop out of the process before completing enrollment out
of frustration over operational ineffeciencies or duplication.
Commenters also broadly supported our proposal for the Exchange to
continue being the entity responsible for making eligibility
determinations and to continue to be the system of record for
enrollment. Other commenters opposed the proposal, citing the increased
risk of consumers receiving inaccurate or misleading information that
might affect eligibility determinations and consumer choice. Some
commenters urged HHS to take several considerations into account before
moving forward with the proposal, including the potential negative
impact on Medicaid-eligible populations.
FFE single streamlined application. We proposed to require web-
brokers to use the single streamlined application without deviation
from the language of the application questions and the sequence of
information required for an eligibility determination. In support of
the proposal, a few commenters stated that HHS should grant entities
flexibility in the application process to enable integration into
existing processes, and enable more innovation for a better consumer
experience. Some commenters recommended that HHS instead use the FFE
single streamlined application as a baseline, and allow web-brokers the
opportunity to tailor applications for specific target populations. One
commenter stated that consumers should only be required to answer
questions that are relevant to their personal circumstances, so as to
reduce consumer burden and application time. Another commenter stated
that allowing minor changes to the wording of specific questions could
help enhance the consumer experience, so long as the overall meaning of
the question is maintained.
Other commenters called HHS's proposal to require web-brokers and
issuers to strictly adhere to existing eligibility Exchange language a
``prudent safeguard,'' citing concerns that enhanced direct enrollment
would increase the risk of consumers receiving inaccurate or misleading
information that might affect eligibility determinations and consumer
choice, and the potential for consumer confusion around communication
with Exchanges.
HHS approval of alternative enrollment pathway processes. HHS
solicited comments on requiring HHS approval of alternative enrollment
processes in the proposed rule. Some commenters urged that HHS
implement the approval process in a collaborative and flexible manner,
with clear and concise guidelines. Other commenters strongly
recommended that HHS confirm that all web-brokers adhere to certain
criteria prior to offering enhanced direct enrollment services,
including ensuring web-broker's application questions and flows provide
accurate eligibility assessments and meet other requirements, such as
providing appropriate consumer support, displaying all plan information
fully and accurately, and demonstrating compliance with privacy and
security standards via regular audits. One commenter asked HHS to adopt
a ``check-list and review of required plan choice elements'' template
that would enable HHS to validate the entities' plan choice displays,
tools, and elements of their application. Another commenter encouraged
HHS to minimally require web-brokers to submit a Minimum Acceptable
Risk Standards for Exchanges ``(MARS-E) Compliance Manual'' as a pre-
condition to offering the enhanced direct enrollment eligibility
service, which would detail how they manage and comply with MARS-E
compliance processes. One commenter stated that HHS should require web-
based entities to seek prior approval for alternative direct enrollment
processes by presenting their alternatives to HHS for review, before
using any display features or tools that vary from those available on
the Exchange Web site.
Timing. We received many comments on the timing related to
implementation of the enhanced direct enrollment proposal. Some
commenters wanted an aggressive implementation timeline, urging HHS to
finalize and implement the FFE single streamline application process
early in 2016 so that testing could occur well in advance of the 2017
Individual Market Open Enrollment period. Other commenters recommended
HHS pursue a more measured approach, noting that developing, testing,
and implementing the enhanced process will be a significant undertaking
for HHS, web-brokers, and QHP issuers. One commenter stated that a
measured approach would allow entities to use the Exchange approved web
service for a transitional period alongside the traditional direct
enrollment pathway. Another commenter urged that HHS wait several years
before implementing the proposal, and gather and analyze data on the
consumer experience with web-based entities during 2016, conduct an
examination of its oversight of web-brokers and QHP issuers in 2017,
and then propose any expansion with sufficient detail for
implementation no earlier than 2018.
Response: Based on the comments received, we are finalizing the
proposal to enhance the direct enrollment process with some
modifications, as noted below.
We appreciate the many comments and recommendations on the direct
enrollment proposal we received. While we believe that an enhanced
direct enrollment process will provide a more seamless consumer
experience, we agree with commenters that implementing the proposal
will be a significant undertaking for HHS, web-brokers, and issuers,
and that such an effort will require sufficient time for operational
planning and preparation, such as identifying and testing the Exchange-
approved web services under Sec. 155.220(c)(1) that can be used to
support the enhanced direct enrollment process, and ensuring privacy
and security risks are addressed and mitigated. HHS will not provide
such an option during the individual market open enrollment period for
2017 coverage, but seeks to make this option available for the
individual market open enrollment period for 2018 coverage. We intend
to supplement the framework we are finalizing in this rule with more
specific guidance and requirements in future rulemaking, such as
specific guidelines for a pre-approval process under Sec.
155.220(c)(4)(i)(F), and requirements for privacy and security. Until
then, web-brokers must continue to comply with the current direct
enrollment process, through which a consumer is directed to
HealthCare.gov to complete the eligibility application, and all
associated guidance. This means direct enrollment entities are not
permitted at this time to use non-Exchange Web sites to complete the
Exchange eligibility application or automatically populate data
collected from consumers into HealthCare.gov through any non-Exchange
Web site. Completion of the Exchange eligibility application on a non-
Exchange Web site, or collection of data through a non-Exchange Web
site that is then used to complete the eligibility application, will be
considered a violation of the direct enrollment entity's agreement with
the FFEs.
While enhanced direct enrollment will not be available in the
individual market open enrollment period for 2017 coverage, we are
finalizing our proposal to revise Sec. 155.220(c)(1) to enable web-
broker entities who use HHS-approved direct enrollment processes to
facilitate enrollment through the FFEs to either ensure the applicant's
completion of an eligibility verification and enrollment
[[Page 12261]]
through the Exchange Internet Web site as described in Sec. 155.405,
or ensure that the eligibility application information is submitted for
an eligibility determination through an Exchange-approved web service.
This will allow applicants to complete the entire Exchange application
and enrollment process on the web-broker's non-Exchange Web site. We
believe this process will grant direct enrollment entities the
operational flexibility to expand front-end, consumer-facing channels
for enrollment, and provide consumers with a more seamless experience.
However, we also share commenters' concerns that allowing this
flexibility without additional protections in place may increase the
risk of imprecise, inaccurate, or misleading eligibility results. In
light of those considerations and the accompanying comments received,
we are adding new Sec. 155.220(c)(3)(ii)(A) through (D) to clearly
articulate the requirements associated with completing an Exchange
eligibility application on a web-broker's non-Exchange Web site. These
requirements may be amended over time as implementation activities
begin and once experience is gained under the new process (once
implemented).
Consistent with the proposal in the proposed rule, Sec.
155.220(c)(3)(ii)(B) requires all language related to application
questions, and the sequence the questions are presented on the direct
enrollment entity's non-Exchange Web site to be identical to that of
the FFE Single Streamlined Application. We acknowledge the comments
requesting deviations from the FFE single streamlined application to
enhance the consumer experience, and are finalizing language permitting
such deviations with HHS approval. We will only approve minor
modifications that do not change the intent or meaning of the
questions, decrease the probability of accurate answers and eligibility
determinations, or affect the dependencies and structure of the dynamic
application.
We are also adding new Sec. 155.220(c)(3)(ii)(C), which sets out a
more general requirement that any non-Exchange Web site facilitating
the completion of an Exchange eligibility application ensure that all
information necessary for the completion of the application related to
the consumer's applicable eligibility circumstance are submitted
through an Exchange-approved web service. New Sec.
155.220(c)(3)(ii)(D) requires that the process used for consumers to
complete the eligibility application on the non-Exchange Web site
comply with all applicable Exchange standards, including Exchange
notice requirements under Sec. 155.230 and Exchange privacy and
security standards related to handling PII under Sec. 155.260(b).
We have also renumbered the current requirements that apply when an
Internet Web site of an agent or broker is used to complete the QHP
selection process in new Sec. 155.220(c)(3)(i). No changes were made
to these existing requirements or the accompanying regulatory text. We
note that, as outlined in Sec. 155.220(c)(3)(ii)(A), these
requirements would also apply when an Internet Web site of an agent or
broker is used to complete the Exchange eligibility application.
We agree with commenters that urged HHS to adopt an approval
process to ensure that the web-broker non-Exchange Web site seeking to
offer stand-alone direct enrollment eligibility services meets all
applicable requirements in order to protect consumers. Accordingly, we
have added Sec. 155.220(c)(4)(i)(F) to outline a process for HHS to
verify that these entities have met all of the applicable requirements
of this section before the non-Exchange Web site is used to complete
the Exchange eligibility application.
The primary objective of the new requirements outlined in Sec.
155.220(c)(3)(ii) and (c)(4)(i)(F) is to ensure that the Exchange is
able to produce an accurate eligibility determination from an
eligibility application completed by a direct enrollment entity on a
non-Exchange Web site for enrollment in a QHP offered through the
Exchange, including eligibility for advance payments of the premium tax
credit and cost-sharing reductions, as well as enrollments in Medicaid,
CHIP or the Basic Health Program. Alignment with the FFE Single
Streamlined Application regarding sequence and language on a non-
Exchange Web site to the FFE application is critical to ensuring that
the information provided to the Exchange through the Exchange approved
web-service represents a complete understanding of a consumer's
circumstance, and is directly tied to ensuring accurate eligibility
results. As noted above, HHS will consider allowing minor deviations
from the standardized language, in order to improve readability or the
consumer experience. We will provide guidance on the process for
seeking approval to deviate from the standardized language.
We clarify that the requirements related to the direct enrollment
process rules are applicable to FFEs (including FFEs where States
perform plan management functions) and SBE-FPs only, and would not
apply to SBEs that do not use the HealthCare.gov platform, nor alter
any State-specific rules related to Medicaid eligibility.
Comment: HHS solicited feedback on experiences with enrollment
through web-brokers, including any concerns with privacy and security
of the information transmitted through web-brokers by expanding direct
enrollment to incorporate the FFE single streamlined application and
suggestions for improvements, including requiring additional
information display requirements (such as the lowest cost plan at each
metal level) beyond those outlined in Sec. 155.220(c)(3) to ensure
that consumers understand basic information about cost and availability
of qualified health plans. We received several comments opposing HHS
implementing additional consumer protection and privacy and security
standards with respect to the use of the enhanced direct enrollment
process. Some commenters stated that existing web-broker requirements
are sufficient to ensure appropriate consumer protections. One
commenter said issuers and web-brokers should not be required to
display the lowest-cost plan in each metal level because existing
decision support tools can filter plans based on customer input.
However, one commenter suggested requiring conspicuous notice to
consumers to ensure they are aware they are applying for Exchange
coverage. Several commenters provided specific recommendations to
ensure that consumers understand that they are applying for Exchange
coverage, including creating standardized application ID numbers that
enable consumers to create HealthCare.gov accounts that would link to
their web-broker accounts. Several commenters did not support requiring
branding on web-brokers' sites, since many web-brokers build platforms
for their strategic partners with an expectation of maintaining brand
continuity. Others supported specific branding requirements,
recommending a consumer-tested ``seal of approval'' to demonstrate that
the web-broker's application was approved by HHS. One commenter
suggested that direct enrollment non-Exchange Web sites display a
standard disclaimer that notifies consumers that eligibility
determinations for Exchange coverage are made by the Exchange and not
the web-broker or issuer, and directing that any questions, concerns,
or appeals related to an eligibility determination be submitted to the
Exchange.
Commenters generally agreed that web-brokers should continue to
follow
[[Page 12262]]
existing privacy and security standards, including the Minimum
Acceptable Risk Standards for Exchanges (MARS-E). Specific suggestions
include requiring approval from CMS's Chief Information Security
Officer, and the CMS Chief Technology Officer, providing CMS with a
current MARS-E Compliance Manual and SSP System Security Plan (SSP)
subject to verification via a pre-delegation audit by CMS, and
appointing a designated, dedicated Privacy Officer responsible for
attesting to the organization's adherence to privacy standards as
outlined in the web-broker's agreement with HHS.
Other comments raised several concerns about the privacy and
security of consumers' personally identifiable information,
particularly citizenship and immigration status, and asked HHS to
clarify how these entities would collect, store, and use PII. Some
commenters wanted HHS to clarify that web-based entities will not
gather and store data beyond that necessary for HealthCare.gov, State-
based Exchanges, and Medicaid eligibility and enrollment via
``cookies'' or other tracking tools, and would not store or use
information gathered from consumers in the application process for
marketing other products.
Response: We agree that implementing the proposal will be a
significant undertaking for HHS, and that privacy and security risks
must be addressed prior to implementation. We intend for the standards
outlined in this section to provide a framework to prepare for the
implementation to support use of the enhanced direct enrollment option
in future years. We will continue to consider commenters'
recommendations on ensuring consumers are protected, and intend to
propose further protections in future rulemaking.
Comment: HHS also solicited comments on about the current agent and
broker provisions in Sec. 155.220 as applied to web-brokers, including
suggestions for improvements in the future, such as increased
monitoring and oversight activities. Commenters supported HHS
conducting regular audits over web-brokers. Additionally, some
commenters supported ongoing monitoring of plan selection and
enrollment patterns through comprehensive data analysis. Others stated
that audits need to be conducted ``equitably,'' and that HHS should
assist web-brokers in coming into compliance if violations are
identified.
Response: We agree with commenters that supported HHS conducting
regular audits of agents and brokers under this section to ensure
ongoing compliance with applicable standards. We are adding Sec.
155.220(c)(5), which authorizes HHS to periodically monitor and audit
agents and brokers approved under this subpart. This audit authority
would extend to agents or brokers who follow the current direct
enrollment pathway that uses a non-Exchange Web site to complete QHP
selection, as well as agents or brokers who follow the enhanced direct
enrollment pathway that uses a non-Exchange Web site to complete the
Exchange eligibility application.
Comment: One commenter stated that there was a drafting error in
paragraph (f)(4). That paragraph relates to termination without cause,
but the language in that paragraph uses the phrase ``for cause.''
Response: We confirm the drafting error--we are correcting the
paragraph to read ``without cause.''
Comment: While many commenters supported the proposal for
suspension and termination of an agent's or broker's agreements with
the FFEs in cases of potential fraud or abusive conduct, several
commenters opposed the proposal as an encroachment on, or preemption
of, State law. These commenters asked that HHS refer instances of fraud
and abuse to the State, encouraged the FFE to work closely with the
State regulator to ensure consumers are protected, and urged HHS to
allow the States to regulate agents licensed do business in their State
``without interference.'' Commenters also requested that HHS coordinate
with issuers on issues of agent and broker fraud, and inform issuers
when HHS has notified a State's department of insurance regarding
specific fraud or misconduct issues.
Response: The proposal we are finalizing relating to agent or
broker suspension or termination if HHS reasonably suspects fraud or
abusive conduct pertains only to agents' and brokers' agreements and
registration with the FFEs to assist consumers with enrollments through
the FFEs; it does not otherwise interfere with any State authority to
regulate agents or brokers who are licensed to business in their
jurisdiction. While HHS may suspend or terminate the FFE agreements
with an agent or broker, this suspension or termination would not
impact State licensure of an agent or broker. As stated in the preamble
to the proposed rule, the investigations and enforcement related to the
conduct of agents and brokers with respect to enrollments through or
interactions with the FFEs will be conducted in coordination with
States. We are finalizing paragraph (g)(5)(ii) to clarify that HHS will
limit terminations without 30-days advance notice to those situations
where there is a finding or determination by a Federal or State entity
that an agent or broker has engaged in fraud, or abusive conduct that
may result in imminent or ongoing consumer harm. In response to
comments received from the public on this matter, we are also adding
paragraph (g)(6) to clarify that the State department of insurance or
equivalent State producer licensing authority will be notified by HHS
in cases of a suspension or termination of the agent's or broker's
agreements and registration with an FFE effectuated under paragraph
(g). HHS will also coordinate with affected QHP issuers if it will not
impede any State or Federal law enforcement investigation and as
permitted under applicable Federal or State law.
Comment: Several commenters were concerned that the proposal did
not afford sufficient due process protections to agents and brokers,
and pointed out that a 90-day suspension period could prevent a wrongly
accused agent or broker from participating in most or all of an
individual market open enrollment period for a given plan year. These
commenters urged HHS to provide notice and opportunity to respond
before implementing a suspension, as well as provide further guidance
on what would define `fraud' or `abusive conduct.' Commenters proposed
measures such as suspending or terminating based on clear, unequivocal,
and convincing evidence, a threat of immediate consumer harm, and the
opportunity for an appeal hearing before an administrative law judge.
Some commenters suggested that a 90-day suspension period may not be
sufficient to conduct a full investigation, and suggested a longer
timeframe for suspension as well as a reference to Sec. 155.1210 to
emphasize the record retention obligation of an agent along with HHS's
ability to access or audit agent and broker records.
Response: Section 1313(a)(5) of the Affordable Care Act provides
the authority to implement any measure or procedure that the Secretary
determines is appropriate to reduce fraud and abuse in the
administration of the Exchanges. We believe that a 90-day suspension is
not an unreasonable timeframe where there is suspected fraud or abuse
by an agent or broker, who may sell plans through the FFE not only
during open enrollment but throughout the year. We note that a similar
requirement for Medicare providers, 42 CFR 405.371, gives HHS the
authority to suspend payments for at least 180 days where
[[Page 12263]]
there is reliable information that an overpayment exists, or there is a
credible allegation of fraud. HHS intends to use this suspension and
termination authority to stop further FFE enrollment activity by the
agent or broker in cases where the misconduct may cause imminent or
ongoing consumer harm. Further, we are modifying paragraph (g)(5)(i)(B)
to require HHS to review and make a determination whether to lift the
suspension within 30 days of receipt of evidence to rebut the
allegation of fraud or abusive conduct. This provides an opportunity to
limit the length of the suspension with the timely submission of
rebuttal evidence.
We are finalizing the proposed paragraphs (g)(5)(i)-(ii) so that
suspension or termination will be effective starting on the date of the
notice in cases of actions related to suspected fraud, or abusive
conduct that may cause imminent or ongoing consumer harm; for other
terminations for cause under paragraph (g)(1), agents and brokers will
receive 30 days' notice with opportunity to respond prior to
termination as currently described in paragraph (g)(3). We are
finalizing proposed paragraph(g)(5)(i)(B) with modification, so that in
cases where the agent or broker submits evidence during the suspension
period, HHS will review it and make a determination whether to lift the
suspension within 30 days of receipt of the evidence; if the rebuttal
evidence fails to convince HHS to lift the suspension, or if the agent
or broker fails to submit rebuttal evidence during the 90-day
suspension period, HHS may terminate for cause the agent or broker's
agreements with the FFEs under paragraph (g)(5)(ii).
We note that Sec. 155.1210 applies to Exchanges and agents of
Exchanges, but not agents of QHP issuers. However, agents and brokers
are downstream entities of QHP issuers, and they should be bound by
their agreement with the QHP issuer to provide access to records, under
Sec. 156.340(b)(4), and maintain records in accordance with the
standard at Sec. 156.705, and HHS may request those records as part of
an investigation or audit.
Comment: Commenters generally agreed with the standards of conduct
proposed in Sec. 155.220(j) for agents and brokers as important
consumer protections. One commenter suggested HHS go further in
implementing standards for protecting PII, protected health information
(PHI), and Federal tax information. Other commenters suggested that
agents should be able to maintain flexibility to answer consumers'
questions in a manner that is best understood by the consumers they
serve, which may result in minor inaccuracies in the information
provided to FFEs, and asked HHS to adopt a standard of good faith
without the necessity of a finding of reasonable cause. Two commenters
requested clarification of the requirement for consumer consent.
Commenters also requested clarification on the prohibition on the use
of the words ``exchange'' and ``marketplace'' in business names and Web
sites since the words ``exchange'' and ``marketplace'' are common and
have been part of the names of Web addresses of many long-standing
insurance-related businesses that pre-date the Exchanges and are not
intentionally misleading.
Response: In addition to the standards of conduct requirements in
Sec. 155.220(j), the FFE privacy and security agreement contains
specific requirements for protecting PII, PHI, and Federal tax
information. The requirement to provide accurate information to
consumers is not intended to target generalities or minor imprecisions,
but rather misrepresentations of material information that would affect
a consumer's choice of coverage or subsidies. As described in preamble
to the proposed rule,\42\ we would interpret Sec. 155.220(j)(2)(i),
which requires agents, brokers and web-brokers to refrain from
marketing or conduct that is misleading, to require that agents,
brokers, and web-brokers avoid the use of the terms Marketplace or
Exchange or other words in the name of a business or Web site if doing
so could reasonably cause confusion with a Federal program or Web site.
We intend to provide further information on the requirements for
consumer consent under Sec. 155.220(j)(2)(iii) in future guidance.
---------------------------------------------------------------------------
\42\ 80 FR 75526 (December 2, 2015).
---------------------------------------------------------------------------
Comment: While several commenters approved of extending the FFE
standards for agents and brokers to SBE-FP States, others wanted more
flexibility for SBE-FP States to train, register, and provide oversight
of agents and brokers. Commenters suggested allowing SBE-FPs to design
and administer their own individual training and certification program
with treatment of State-specific requirements and regulations that may
not be adequately addressed by FFE training and registration. One
commenter suggested that State-specific regulations and training
materials should be made available for voluntary incorporation by the
individual SBE-FP. Another commenter requested that all allegations of
agent misconduct in SBE-FP States be referred to the State so State
regulators can investigate the misconduct to see if additional consumer
harm has occurred in off-Exchange sales.
Response: Because agents and brokers will be accessing the Federal
platform to enroll consumers in SBE-FP QHPs, we are finalizing Sec.
155.220(l), to require that they be registered with HHS (which includes
training through HHS or an HHS-approved vendor as described in Sec.
155.222 for agents and brokers serving individual market consumers),
and that that they comply with all applicable FFE standards in Sec.
155.220. As stated above, HHS will work closely with State departments
of insurance (or equivalent State regulators of agents and brokers) in
SBE-FP States in oversight of agents and brokers. The roles and
responsibilities of HHS and the State will be specified through the
Federal platform agreement. While HHS will consider future alternatives
that would allow SBE-FPs to provide Exchange training, we note that
States may require licensed agents and brokers to receive State-
specific SBE-FP training as part of their continuing education to
maintain a State license.
We are finalizing these provisions as proposed, with the following
modifications. We are finalizing Sec. 155.220(c)(1) to require agents
or brokers to ensure an applicant's completion of an eligibility
verification and enrollment application through an Exchange Internet
Web site, or through an Exchange-approved Web service, subject to
meeting the requirements under new paragraphs Sec. 155.220(c)(3)(ii)
and (c)(4)(i)(F). To ensure that the information provided to the
Exchange through non-Exchange Web sites represents a complete and
accurate determination of a consumer's eligibility for enrollment
through the FFEs, we are adding Sec. 155.220(c)(3)(ii)(B) to require
all language related to application questions, and the sequence of
questions presented on the agent or broker's non-Exchange Web site, to
use the same language as the FFE single streamlined application in
Sec. 155.405. We are also adding Sec. 155.220(c)(3)(ii)(C) to require
all information for the consumer's applicable eligibility circumstances
are submitted through an Exchange-approved Web service; and Sec.
155.220(c)(3)(ii)(D) to require the process used for consumers to
complete the eligibility application to comply with all applicable
Exchange standards, including Sec. Sec. 155.230 and 155.260(b). To
ensure maximum consumer protection, we are also adding new Sec.
155.220(c)(4)(i)(F) to outline a process for HHS to verify entities
meet all requirements of this section prior to
[[Page 12264]]
using a non-Exchange Web site to complete the Exchange eligibility
application. In addition, we are adding Sec. 155.220(c)(5) to enable
HHS to periodically monitor and audit entities to assess compliance
with standards in this section. We are correcting an error in paragraph
(f)(4) to change ``for cause'' to ``without cause.'' We are finalizing
(g)(5)(i)(A) to add ``that may cause imminent or ongoing consumer
harm'' after ``abusive conduct.'' To clarify the process for submitting
evidence to rebut the allegation of fraud or abusive conduct, we are
amending paragraph (g)(5)(i)(B) to add that if the agent or broker
submits such evidence during the suspension period, HHS will review the
evidence and make a determination whether to lift the suspension within
30 days after HHS's receipt of evidence. If the rebuttal evidence does
not persuade HHS to lift the suspension, or if the agent or broker
fails to submit rebuttal evidence during the suspension period, HHS may
terminate the agent's or broker's agreements required under paragraph
(d) of this section and under Sec. 155.260(b) for cause under
paragraph (g)(5)(ii) of this section. We are changing the language in
paragraph (g)(5)(ii), relating to grounds for termination without
notice. The proposed rule stated that if HHS reasonably confirms the
credibility of an allegation that an agent or broker engaged in fraud
or abusive conduct (or is notified by a State or law enforcement
authority of the State or law enforcement authority's finding or
determination of fraud or behavior that would constitute abusive
conduct). Based on comments discussed above, we are revising this
provision in order to clarify the grounds for termination without
advance notice and the role of the State.
We are also eliminating a redundancy within the proposed rule.
Paragraph (g)(5)(ii), as originally proposed, described the termination
of the agent's or broker's agreement with the Exchange under Sec.
155.260(b) as of the date of the notice. Consequently, to reduce
duplication, we are deleting a similar sentence from (g)(5)(iii). We
are adding paragraph (g)(6) so that the State department of insurance
or equivalent State agent or broker licensing authority will be
notified in cases of suspensions or terminations effectuated under
paragraph (g).
Finally, we have made a small number of non-substantive changes to
the rule to make language consistent as well as to clarify the date on
which the 30-day window for reconsideration requests begins.
e. Standards for HHS-Approved Vendors of FFE Training for Agents and
Brokers (Sec. 155.222)
In the proposed rule, we proposed changes to the standards for HHS-
approved vendors of FFE training for agents and brokers outlined in
Sec. 155.222. To prevent duplication with HHS functions, we proposed
eliminating the requirement that vendors perform information
verification functions, including State licensure verification and
identity proofing, as well as other changes to improve the vendor
training model.
To reflect that HHS-approved vendors would no longer be required to
perform information verification functions, we proposed amending Sec.
155.222(a)(1) to provide that a vendor must be approved by HHS, and
removing the reference to information verification. We also proposed in
Sec. 155.222(a)(2) to remove the requirement that vendors must require
agents and brokers to provide proof of valid State licensure.
Consistent with these changes, we proposed amending Sec. 155.222(b)(1)
through (5) and (d) to remove standards for information verification,
identity proofing, verification of agents' and brokers' valid State
licensure, and all related standards that support these functions. We
proposed to eliminate the requirements in paragraphs (b)(1)(i) through
(ii) to submit an application demonstrating prior experience with
verification of State licensure and identity proofing, and instead
combine into paragraph (b)(1) the existing requirements to demonstrate
prior experience with online training and technical support for a large
customer base. In paragraph (b)(2) we proposed to eliminate the
requirement to adhere to HHS specifications for content, format, and
delivery of information verification. In paragraph (b)(4) we proposed
to amend the standards for the agreement that vendors must execute with
HHS, to eliminate the requirement that vendors implement information
verification processes. We proposed amending Sec. 155.222(b)(5) and
(d) to remove references to information verification.
Other proposed changes to this section incorporated the proposed
standards for SBE-FPs, privacy and security measures, and technical
support requirements. In paragraph (b)(2), we proposed to include SBE-
FP States in the requirement to offer continuing education units (CEUs)
in five FFE States. In paragraph (b)(3) we proposed to eliminate the
requirement that vendors collect, store, and share with HHS all data
from agent and broker users of the vendor's training; instead we
proposed that vendors would only be required to collect, store and
share with HHS FFE training completion data. We also proposed adding a
paragraph (b)(6) to require vendors to provide technical support to
agent and broker users of the vendor's FFE training as specified by
HHS. In preamble, we noted that HHS has the authority to require
approved vendors to provide technical support, as well as FFE training,
in accordance with HHS guidelines and in a manner and format that
complies with Section 508 of the Rehabilitation Act of 1973.\43\ We
also proposed that, the World Wide Web Consortium's Web Content
Accessibility Guidelines (WCAG) 2.0 Level AA standards \44\ could also
be considered an acceptable national standard for Web site
accessibility.
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\43\ 80 FR 75487, 75528 (December 2, 2015).
\44\ For more information see, the WCAG Web site at https://www.w3.org/TR/WCAG20/.
---------------------------------------------------------------------------
Comment: Commenters supported the proposed improvements to
standards for vendors that wish to be approved by HHS to offer agent
and broker FFE training. They supported the proposed change to Sec.
155.222 that would eliminate the requirement that vendors conduct
identity-proofing, as the current years' experience indicated that it
was not needed and was duplicative of existing Exchange practices. They
also supported the proposed requirement that vendors offer tier one
help desk support for agent and broker users. One commenter requested
that vendors be able to provide an additional level of help desk
support (that is, tier two support) to brokers who were having trouble
navigating the CMS Enterprise Portal. The commenter also suggested that
scripted responses, reflecting vendor input, be provided to vendors at
least two weeks prior to the FFE training launch. One commenter
supported the provisions at Sec. 155.222(b)(3) that require vendors to
share only training completion data with HHS, as opposed to all data
about users, and asked that HHS use that data to provide consumers with
information about the availability of the assistance that agents and
brokers provide.
Response: HHS will continue to work with approved vendors to
enhance customer service and technical support to agents and brokers.
Requirements for vendors' customer support and help desks will be
included in guidance provided to conditionally approved vendors. All
agents and brokers who successfully complete FFE training through an
approved vendor or the CMS Marketplace Learning Management System
(MLMS), in addition to other
[[Page 12265]]
FFE registration steps, will be added to Find Local Help if they choose
to make their contact information publicly available.
We are finalizing these provisions as proposed.
f. Standards Applicable to Certified Application Counselors (Sec.
155.225)
We proposed to amend Sec. 155.225(b)(1) to provide that certified
application counselor designated organizations must, as a condition of
their designation as certified application counselor organizations by
the Exchange, provide the Exchange with information and data related to
the number and performance of the organization's certified application
counselors, and about the consumer assistance being provided by the
organization's certified application counselors, upon request, in the
form and manner specified by the Exchange.
We explained that Sec. 155.225(b)(1)(ii) already requires
certified application counselor designated organizations to maintain a
registration process and method to track the performance of certified
application counselors, but it does not specify the type of performance
information that must be tracked, nor does it require that information
be provided to the Exchange. We stated that our proposed amendment
would give Exchanges valuable information that will aid in their
oversight of certified application counselor programs and improve
Exchanges' understanding of the scope of consumer assistance being
provided in the Exchange service area. The requirement would also
improve the consumer assistance functions of the Exchange in other
significant ways, for example, by providing information that could help
an Exchange focus its outreach and education efforts, target its
recruitment of certified application counselor organizations, and
identify the need for increased technical assistance and support for
certified application counselor organizations.
We explained that under this proposal, Exchanges could establish
reporting standards tailored to their own specific needs and
objectives. In States with FFEs, we proposed that HHS would collect
information and data from certified application counselor designated
organizations on a monthly basis beginning in January 2017. We proposed
that the FFEs would require these organizations to report, at a
minimum, data regarding the number of individuals who have been
certified by the organization; the total number of consumers who
received application and enrollment assistance from the organization;
and of that number, the number of consumers who received assistance
applying for and selecting a QHP, enrolling in a QHP, or applying for
Medicaid or CHIP. We anticipated that the monthly reports submitted to
the FFEs would provide information and data from the preceding month,
and would be submitted electronically, through HIOS or another
electronic submission vehicle. We also said that we expected that some
of the data that FFEs would require from certified application
counselor designated organizations would be similar to what is
collected from Navigator grantees in the FFEs.\45\ We explained that we
did not expect this information collection to include consumers' PII.
We requested comments on our proposal, on the scope of information and
data that Exchanges should collect, and on HHS's specific proposals for
collecting information and data from certified application counselor
organizations in the FFEs, including the proposed scope and timing of
reports by these organizations to the FFEs.
---------------------------------------------------------------------------
\45\ The data collection requirements for FFE Navigator grantees
in 2015-2016 are specified in the Information Collection Request
(OMB control number 0938-1215) under the Cooperative Agreement to
Support Navigators in Federally-facilitated and State Partnership
Exchanges (see the Paperwork Reduction Act package associated with
80 FR 36810). https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201507-0938-001.
---------------------------------------------------------------------------
We are finalizing this provision largely as proposed, with a
modification to the frequency and timing of reporting required by FFEs,
from a monthly basis beginning in January 2017, to a quarterly basis
beginning with reports for the third quarter of calendar year 2017.
Comment: We received mixed comments related to our proposal to
collect data from certified application counselor organizations. Many
commenters supported the proposal, noting the value of tracking
performance data. Many commenters also requested that we coordinate
with the Health Resources and Services Administration (HRSA), which has
reporting requirements related to their Affordable Care Act Health
Center Outreach and Enrollment Assistance grants, in order to reduce
duplication and administrative burden for Federally Qualified Health
Centers that are both HRSA grantees and serving as FFE-designated
certified application counselor organizations. We also received several
specific suggestions for data elements to be collected by Exchanges,
including metrics related to re-enrollment, assistance to consumers
with limited English proficiency, and post-enrollment activities. One
commenter requested that we develop a means for certified application
counselor organizations to voluntarily report additional information
that falls outside of the proposed performance measures.
Response: We agree that in general, tracking performance data will
enhance the Exchanges' ability to oversee and support certified
application counselor organizations, target outreach and education
efforts, and identify training needs. In FFEs, we believe the
information and data reporting we proposed aligns well with HRSA's
Affordable Care Act Health Center Outreach and Enrollment Assistance
grant reporting metrics. We also appreciate commenters' suggestions for
additional FFE data elements to be reported. However, to minimize the
burden on certified application counselor organizations, we are not
adding to or changing the kind of information and data to be collected
in FFEs.
Comment: A few commenters opposed this proposal, arguing that the
requirements would be overly burdensome and could lead some certified
application counselor organizations to discontinue their programs. Many
commenters urged us to minimize the burden associated with certified
application counselor performance data reporting. Commenters expressed
concern that unfunded reporting burdens would further reduce the number
of organizations able to provide critical enrollment assistance.
Several commenters expressed concern regarding the scope and frequency
of the proposed FFE reporting requirements, and recommended requiring
less frequent reporting.
Response: We intend that any FFE information collection be
straightforward, and place little burden on certified application
counselor organizations, particularly given the resource constraints
faced by many certified application counselor organizations. We
recognize that certified application counselor organizations are not
expected or required to be funded by Exchanges. In FFEs, to help
minimize any burden on certified application counselors and certified
application counselor organizations, while still providing FFEs enough
information to meaningfully improve oversight of certified application
counselor programs, we are finalizing a quarterly, rather than monthly,
reporting schedule, beginning with reports for the third quarter of
calendar year 2017, and are otherwise finalizing the provision as
[[Page 12266]]
proposed. Quarterly reporting submitted to the FFEs will be aligned
with calendar year quarters (that is, Quarter 1: January 1-March 31;
Quarter 2: April 1-June 30; Quarter 3: July 1-September 30; and Quarter
4: October 1-December 31). Quarterly reports submitted to the FFEs
should provide information and data from the quarter and will be due 30
days after the end of the quarter. For example, the first report that
will be due under this rule, the third quarter report for calendar year
2017, will cover the period from July 1, 2017 through September 30,
2017, and will be due October 30, 2017. This quarterly reporting period
and deadline will generally align with both the FFE Navigator grant
metrics and HRSA's Affordable Care Act Health Center Outreach and
Enrollment Assistance grant reporting metrics. FFE Navigator quarterly
reports are also due 30 days after the end of the quarter, and the
quarterly reports under HRSA's grants are due approximately 10-15 days
after the end of the quarter. We believe that quarterly reports will
provide the FFEs with sufficient information to meaningfully improve
oversight of certified application counselor programs.
We believe our final rule strikes the right balance between
minimized burden and effective monitoring, and that it will improve the
consumer assistance functions of the Exchange by providing Exchanges
with information that could help focus their outreach and education
efforts, target recruitment of certified application counselor
organizations, and identify the need for increased technical assistance
and support for certified application counselor organizations. We also
remind SBEs (including SBE-FPs) that this provision gives them the
option, but does not require them, to establish reporting standards and
collect data from certified application counselor organizations,
because the rule only requires organizations to provide data and
information to the Exchange upon the Exchange's request.
Comment: We received many comments requesting additional guidance
regarding performance metrics and the submission process for FFE
reporting. Commenters requested clear guidance and instructions on
defining the specific data elements to ensure that organizations can
easily and consistently report data. In addition, commenters requested
that the system for FFE reporting be easy to understand and access, and
that HHS provide adequate training and support for the system. We
received many comments suggesting that the FFE leverage existing IT and
data collection platforms to avoid duplicative efforts. For example,
commenters noted that certified application counselors working in FFEs
provide their identification number and organization number on
applications submitted through HealthCare.gov and that this number
should be used to quantify the number of clients who received
application assistance. Commenters also suggested that the FFEs track
the number of certified application counselors through the FFE online
training system.
Response: In FFEs, additional guidance on the reporting
requirements will be published through instructions and trainings. We
anticipate that quarterly reports submitted to FFEs would provide
information and data from the preceding quarter, and would be submitted
electronically, through HIOS or another electronic submission vehicle.
We have considered commenters' suggestions related to alternative
collection methods, but have significant concerns with the quality,
completeness, and accuracy of data collected using these methods. The
certified application counselor identification number field on
applications submitted through HealthCare.gov is not a required field,
and therefore is underreported. In addition, this number would not
account for assistance certified application counselors provide to
consumers who do not complete an application through HealthCare.gov.
Tracking the number of certified application counselors in FFEs through
our online training system only tracks who has completed the FFE
training, not who has been formally certified. In FFEs, designated
certified application counselor organizations, not FFEs, certify
individual certified application counselors, and completion of the FFE
training may be only one of several criteria prerequisite to
certification. For example, certified application counselor
organizations may require additional employee training, and some States
have additional requirements that must be met before an individual can
be certified as a certified application counselor. By collecting more
accurate information, we believe FFEs will be better positioned to
ensure adequate assistance is available to consumers.
Comment: A few commenters agreed that SBEs should have the option
to establish their own reporting requirements to align with their
needs. A few commenters requested that SBEs be allowed an exemption
from this proposal if they determine that the administrative costs are
too burdensome. One commenter requested that HHS establish limits on
both the scope and frequency of performance data reporting requirements
in all Exchanges. Commenters also noted that certified application
counselor organizations that operate under the umbrella of national
organizations would benefit from standardized reporting requirements
across all Exchanges.
Response: In SBEs, including SBE-FPs, this provision only requires
that organizations submit information and data to the SBE upon request,
in the form and manner specified by the SBE, and therefore affords SBEs
the flexibility to establish standards appropriate to their own
specific needs and objectives. SBEs, including SBE-FPs, may weigh any
increased administrative costs of requiring regular reports against the
benefits of having additional information about the consumer assistance
landscape in their State and decide whether, how, and when to collect
data from certified application counselor organizations. In addition,
we encourage SBEs to take into consideration the impact their reporting
requirements will have on organizations that also serve as certified
application counselor organizations in States with an FFE. We encourage
SBEs to consider using, at a minimum, the data elements used by the
FFEs, in order to minimize the burden on organizations that also serve
as certified application counselor organizations in States with an FFE,
but they are not required to do so if they do not believe that doing so
fits their State's circumstances.
As discussed earlier in this preamble, in the discussion of the
amendments to Sec. 155.210(d)(6), we proposed to amend Sec.
155.225(g)(4), which prohibits certified application counselors in all
Exchanges from providing certain kinds of gifts and promotional items
to an applicant or potential enrollee. For the same reasons discussed
above, we proposed to amend Sec. 155.225(g)(4) consistent with our
proposed amendments to Sec. 155.210(d)(6). Based on comments received,
discussed above with the amendments to Sec. 155.210(d)(6), we are
finalizing this provision as proposed.
g. Privacy and Security of Personally Identifiable Information (Sec.
155.260)
Section 155.260(a)(1) refers to insurance affordability programs,
as defined in Sec. 155.20. We proposed to make a technical correction
to this paragraph so that Sec. 155.300, which contains the definition
of insurance affordability programs, is referenced instead. We are
finalizing this provision as proposed.
[[Page 12267]]
h. Oversight and Monitoring of Privacy and Security Requirements (Sec.
155.280)
Section 155.280(a) permits HHS to oversee and monitor the FFEs and
non-Exchange entities associated with FFEs to ensure compliance with
the privacy and security standards established and implemented by an
FFE under Sec. 155.260. Section 155.280(a) also provides authority for
HHS to monitor State Exchanges for compliance with the privacy and
security standards established and implemented by the State Exchanges
under Sec. 155.260. We proposed amending paragraph (a) to permit HHS
to also oversee and monitor SBE-FPs' compliance with the privacy and
security standards established and implemented by an FFE under Sec.
155.260.
Comment: We received only a few comments on this proposal. A few
commenters supported extending HHS's authority to oversee and monitor
privacy and security standards to SBE-FPs, but expressed concern that
since SBE-FPs conduct some operations themselves, HHS should be
required to oversee and monitor SBE-FPs to ensure protection of
consumer PII.
Response: We agree with the commenter that it is critical to ensure
protection of consumer's PII, as well as ensure cybersecurity
generally, across all Exchange models. We are committed to continue
working with States to ensure compliance with all State and Federal
requirements related to Exchanges, including Exchange privacy and
security standards. We are finalizing the rule as proposed.
4. Exchange Functions in the Individual Market: Eligibility
Determinations for Exchange Participation and Insurance Affordability
Programs
a. Options for Conducting Eligibility Determinations (Sec. 155.302)
We proposed to amend Sec. 155.302(a) by adding an option for an
SBE-FP to satisfy the requirement of conducting eligibility
determinations by relying on HHS to carry out eligibility determination
activity and other requirements within subpart D, through a Federal
platform agreement. We did not receive any comments on this proposal,
and are finalizing it as proposed.
b. Eligibility Process (Sec. 155.310(h))
We proposed to amend Sec. 155.310(h), which currently directs the
Exchange to notify an employer that an employee has been determined
eligible for Exchange financial assistance. We proposed to revise this
requirement so that the Exchange must notify an employer that an
employee has been determined eligible for Exchange financial assistance
only if the employee has also enrolled in a QHP through the Exchange.
We also proposed to revise paragraph (h)(2) so that a notice sent in
accordance with Sec. 155.310(h) must indicate that an employee has
been determined eligible for Exchange financial assistance and has
enrolled in a QHP through the Exchange. We clarified that for purposes
of Sec. 155.310(h), an employee is determined eligible for cost-
sharing reductions when the employee is determined eligible for cost-
sharing reductions based on income in accordance with Sec. 155.305(g)
or Sec. 155.350(a).
With regard to the timing of the employer notification required
under paragraph (h), we proposed that the Exchange may choose to either
(a) notify employers on an employee-by-employee basis as eligibility
determinations are made for Exchange financial assistance and
enrollment in a QHP through the Exchange, or (b) notify employers for
groups of employees who are determined eligible for Exchange financial
assistance and enroll in a QHP through the Exchange. Under both
options, the Exchange must notify employers within a reasonable
timeframe following any month an employee was determined eligible for
either form of Exchange financial assistance and enrolled in a QHP,
with the goal to notify employers as soon as possible to provide the
greatest benefit to enrollees. We sought comment on these proposals.
Comment: Many commenters supported the requirement that an Exchange
must notify an employer that an employee has been determined eligible
for Exchange financial assistance only if the employee has also
enrolled in a QHP through the Exchange. A few commenters stated that
the proposed change would reduce consumer confusion and minimize
administrative burden.
Response: We are finalizing Sec. 155.310(h) as proposed.
Comment: Several commenters expressed concern that employer notices
may contribute to employer retaliation and requested that HHS expressly
prohibit employer retaliation and include such language on employer
notices and elsewhere.
Response: Section 1558 of the Affordable Care Act amended the Fair
Labor Standards Act of 1938 to provide that no employer may discharge
or in any manner discriminate against any employee with respect to his
or her compensation, terms, conditions, or other privileges of
employment because the employee (or an individual acting at the request
of the employee) has received financial assistance under the Affordable
Care Act. We intend to include language referencing section 1558 of the
Affordable Care Act in notices from the FFEs under Sec. 155.310(h) for
2016, and we encourage SBEs to do the same.
Comment: We received comments supporting both the policy that
notices be sent in groups of employees and that notices be sent on an
employee-by-employee basis. For example, one commenter expressed
concern that notifying employers in groups of employees could delay the
notification process. Another commenter supported the proposal that the
Exchange may choose the manner and timing by which to send notices.
Response: To allow for operational flexibility and the varying
needs of different Exchanges, we are finalizing the proposed language
allowing an Exchange to choose to send notices on an employee-by-
employee basis or in groups of employees. We note, however, that for
2016, the FFEs intend to send notices in groups of employees.
Comment: A few commenters requested that we further define the
requirement to notify employers within a reasonable timeframe following
any month an employee was determined eligible for Exchange financial
assistance and enrolled in a QHP through the Exchange. They stated that
that failure to send notices within one month could result in adverse
tax consequences for the employee.
Response: While we understand the concerns that the commenters
expressed, we are finalizing this provision as proposed in order to
provide the Exchange with flexibility to make decisions based on its
operational capabilities. As we stated in the proposed rule, the
Exchange must notify employers within a reasonable timeframe following
any month an employee was determined eligible for either form of
Exchange financial assistance and enrolled in a QHP through the
Exchange, with the goal to notify employers as soon as possible to
provide the greatest benefit to enrollees (Emphasis added). The goal of
the Exchange must be to send notices as soon as possible. We remind
stakeholders that tax liability is determined by the IRS, and is not
affected by these notices or the employer appeals process.
Based on the comments received, we are finalizing paragraph (h) as
proposed. The FFEs intend to publish a sample notice that complies with
Sec. 155.310(h)
[[Page 12268]]
for the benefit of employers, employees, SBEs, and other stakeholders.
c. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. 155.320)
In Sec. 155.320(c), we proposed to allow an Exchange to establish
a reasonable threshold at which the Exchange must follow the alternate
verification process where the applicant's attested projected annual
household income is sufficiently below the annual income computed in
accordance with Sec. 155.320(c)(3)(ii)(A). Currently, an applicant
enters the alternate verification process if the attested annual
household income submitted by the applicant is more than 10 percent
less than income data received from trusted data sources, or if no data
is available from trusted data sources. Under the proposal, in place of
the 10 percent threshold, the Exchange would establish a reasonable
threshold in guidance that must be approved by HHS, must not be less
than 10 percent, and can also include a threshold dollar amount.
We are finalizing this rule as proposed.
Comment: Commenters overwhelmingly supported adjusting the
threshold in Sec. 155.320(c). Commenters stated that the current 10
percent threshold is too restrictive and causes too many applicants to
enter the alternate verification process. Commenters stated that the
alternate verification process is burdensome to applicants because
providing proof of projected income can be difficult. Some commenters
suggested that a reasonable threshold should not be less than 20
percent or 25 percent. Other commenters recommended that HHS also do
more to assist applicants in the resolution of annual income data
matching issues.
Response: HHS will continue to study what threshold may be most
appropriate, taking into account normal fluctuations in applicants'
annual household income and experience with the tax reconciliation
process. HHS will release guidance for Exchanges on what constitutes a
reasonable threshold and to clarify the process for an Exchange to
receive approval from HHS. HHS believes that clear outreach and notice
for applicants related to the annual household income attestation
process is critical. To that end, HHS released a new guide for
applicants with annual household income data matching issues. The guide
is available at the HHS Web site: https://marketplace.HHS.gov/outreach-and-education/household-income-data-matching-issues.pdf.
Comment: One commenter recommended against adjusting the threshold
because it would result in adverse tax consequences for applicants.
Instead, the commenter suggested that HHS should broaden the time
period it uses when checking income from trusted data sources during
the verification process like Equifax Workforce Solutions from 90 to
360 days.
Response: HHS may examine the proposal for expanding data used as
part of the electronic data service for upfront verification of income
as part of consumers' initial application submission.
Comment: One commenter suggested that an Exchange use the same
standard for entering the alternate verification process as the
Exchange uses to resolve applicants with annual household income data
matching issues.
Response: The two processes are different since they are comparing
different data elements. The purpose of the alternate verification
process is to examine the difference in an applicant's attested
projected annual household income and information from trusted data
sources, whereas the resolution of data matching issues depends on an
examination of whether an applicant's submitted documentation is
satisfactory evidence to support their attested projected annual
household income.
Comment: One commenter suggested that applicants be allowed to
provide an explanation for discrepancies in their income, and that a
standardized form should be provided for applicants to attest to their
income as a means of verifying their income in the alternate
verification process.
Response: HHS believes the use of written explanations that include
sufficient information to calculate an annual income are a valuable
tool for applicants, and has implemented procedures for handling
explanations of income that accompany documentation of income.
Comment: The majority of commenters expressed support for granting
the Exchanges flexibility in setting a reasonable threshold to meet
varying Exchange needs, including related to State demographics. One
commenter stated that all Exchanges should use the same threshold for
applicants entering the alternate verification process.
Response: HHS supports granting Exchanges flexibility to establish
a reasonable threshold, but all thresholds are subject to the same
reasonability standard.
Comment: One commenter suggested that as a strategy to help
applicants avoid repayment of advance payments of the premium tax
credit (APTC) at tax time, Exchanges should set the default applied
APTC amount at 85 percent. The commenter stated that this would allow
for some flexibility for income changes during the year, and protect
applicants against repayment during tax reconciliation.
Response: HHS believes that it is important to educate applicants
about how changes in their income affect their eligibility for the
premium tax credit. During plan selection, applicants are notified that
they can accept the full amount of advance payments of the premium tax
credit for which they have been determined eligible, accept a smaller
amount, or accept no advance payments and claim any premium tax credit
they are eligible for on their tax returns. Applicants are also
notified that they may have to pay money back through the tax
reconciliation process if the APTC they receive exceeds the PTC they
can claim on their tax return.
Comment: One commenter suggested allowing for additional
flexibility in verification for annual household income for certain
occupations that have greater variability in their income such as self-
employed merchants, artists, and small business owners.
Response: HHS understands that projecting annual household income
can be difficult, particularly for applicants who have occupations that
have high variability in income. HHS has worked to improve the
resolution of annual household income data matching issues for these
applicants by performing outreach and creating educational materials
with instructions for verifying variable income.
In Sec. 155.320(d), we made certain proposals related to
alternative processes relating to verification of enrollment in an
eligible employer-sponsored plan and eligibility for qualifying
coverage in an eligible employer-sponsored plan. In paragraph (d)(3),
we proposed to redesignate paragraph (d)(3)(i) as (d)(3)(ii) and
redesignate paragraph (d)(3)(ii) as (d)(3)(i). To preserve the accuracy
of the redesignated paragraph (d)(3)(ii), we proposed to update the
cross-reference to paragraph (d)(3)(ii) with (d)(3)(i), and paragraph
(d)(3)(iii) with (d)(4)(i), discussed below. We also proposed to modify
the requirement that the Exchange select a statistically significant
random sample of applicants for whom the Exchange does not have data as
specified in paragraphs (d)(2)(i) through (iii) and take steps to
contact any employer identified on the application for the applicant
and the members of his or her household to
[[Page 12269]]
verify whether the applicant is enrolled in an eligible employer-
sponsored plan or is eligible for qualifying coverage in an eligible
employer-sponsored plan for the benefit year for which coverage is
requested. This process is referred to as sampling. We proposed to
modify this requirement as described in our in our discussion of
proposed paragraph (d)(4) of the proposed rule. These proposed changes
were intended to organize and simplify the regulatory text.
We proposed to add paragraph (d)(4), proposing that for any benefit
year for which an Exchange does not reasonably expect to obtain
sufficient verification data, the Exchange must follow the procedures
described in paragraph (d)(4)(i) or, in the alternative, for benefit
years 2016 and 2017, the Exchange may establish an alternative process
approved by HHS. For the purposes of this section, the Exchange
reasonably expects to obtain sufficient verification data for any
benefit year when, for the benefit year, the Exchange is able to obtain
data about enrollment in and eligibility for qualifying coverage in an
eligible employer-sponsored plan from at least one electronic data
source that is available to the Exchange and has been approved by HHS,
based on evidence showing that the data source is sufficiently current,
accurate, and minimizes administrative burden.
In paragraph (d)(4)(i), we proposed that the Exchange may conduct
sampling. This paragraph is substantially the same as current paragraph
(d)(3)(iii), with three differences described in the proposed rule: we
proposed to (1) remove the absolute requirement to conduct sampling,
and, for benefit years 2016 and 2017, allow the Exchange to implement
an alternative process approved by HHS; (2) remove the language that
appears in current paragraph (d)(3)(iv), which discusses relief that is
no longer applicable; and (3) appropriately update internal cross-
references. We proposed moving the sampling requirement from paragraph
(d)(3) and adding it to new paragraph (d)(4) to more accurately reflect
the role of the sampling process. In paragraph (d)(4)(ii), we proposed
to permit an Exchange the option to implement an alternate process to
sampling approved by HHS for the benefit years 2016 and 2017.
Comment: Commenters generally supported the proposal to permit an
Exchange to implement an alternate process to sampling approved by HHS
for the benefit years 2016 and 2017. A few SBEs opposed the sunset for
the alternate process to sampling.
Response: We understand that certain SBEs may prefer the
flexibility to implement either sampling or an alternate process
indefinitely. However, the alternate process should be used as an
interim measure to gather information about the verification process as
Exchanges improve their long-term verification programs. We will take
these comments under advisement for future rulemaking.
Comment: We also received several comments pertaining more broadly
to verification of enrollment in an eligible employer-sponsored plan
and eligibility for qualifying coverage in an eligible employer-
sponsored plan.
Response: We agree with commenters on both the benefits of a
comprehensive verification system for employer sponsored coverage, and
on the considerable operational challenges of creating one.
We are finalizing the changes to Sec. 155.320(d) as proposed.
d. Medicare Notices
We recognize the importance of a smooth transition to Medicare
coverage, and sought comment on whether and how to implement a
notification that an enrollee may have become eligible for Medicare.
For example, for enrollees in an FFE, we considered pop up text on
HealthCare.gov for individuals who are going to turn 65 during the
benefit year. We sought comment on this and other ways to promote
smooth coverage transitions.
Comment: All commenters supported implementation of the pop-up text
on HealthCare.gov for individuals who are going to turn 65 during the
benefit year. Most commenters also expressed a desire for more robust
notice and screening requirements. Several commenters requested that
the FFE implement a screening process to identify QHP enrollees who are
Medicare-eligible or who will be reaching Medicare eligibility during
the benefit year. Several commenters suggested that the FFE provide
additional education to QHP enrollees nearing Medicare eligibility,
including information related to Medicare enrollment, penalties for not
timely enrolling in Medicare, the requirement to return to the FFE in
order to terminate financial assistance for which Medicare
beneficiaries no longer are eligible or to terminate their QHP
enrollments, and options for those automatically enrolled into a
Medicare Advantage plan. Most commenters also requested that the option
of a pop-up screen on HealthCare.gov be augmented by notices sent to
QHP enrollees nearing eligibility to enroll in Medicare (including
those QHP enrollees whose eligibility to enroll in Medicare is due to
disability or end stage renal disease). Commenters had varied
suggestions related to the form and content of the notices, but most
suggested notices containing information related to deadlines for
Medicare enrollment and penalties for late enrollment, instructions on
how to terminate enrollment in a QHP or to remove a Medicare
beneficiary from an enrollment group prior to enrolling in Medicare,
and instructions on how to terminate financial assistance, such as
APTC, for which Medicare beneficiaries are no longer eligible. Some
commenters had specific suggestions related to identifying and
notifying QHP enrollees who are eligible for Medicare benefits due to
disability or end stage renal disease. Finally, some commenters
requested information related to how State-based Exchanges would be
affected by new Medicare notice requirements.
Response: We appreciate the comments related to this issue. We are
working to incorporate additional online content to help clarify for
consumers who may be close to aging into Medicare, or who may already
be eligible for Medicare or receiving Medicare benefits, to provide
better clarity around how Medicare and Exchange coverage are intended
to work, and options consumers may have as they transition into
Medicare coverage from Exchange coverage. In addition, we are working
on enhancing consumer communications on how to transition from Exchange
coverage to Medicare, and helping consumers understand where to find
helpful resources for both programs. We welcome further input and
assistance as we work towards implementing a framework to ease QHP
enrollees' transition from coverage through the Exchanges to Medicare
enrollment.
5. Exchange Functions in the Individual Market: Enrollment in Qualified
Health Plans
a. Annual Eligibility Redetermination (Sec. 155.335(j))
In the Patient Protection and Affordable Care Act; Annual
Eligibility Redeterminations for Exchange Participation and Insurance
Affordability Programs; Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges final
rule (79 FR 52994, 53000 (Sept. 5, 2014)), we established a renewal and
re-enrollment hierarchy at Sec. 155.335(j) to minimize potential
enrollment
[[Page 12270]]
disruptions. To further minimize potential disruptions of enrollee
eligibility for cost-sharing reductions, we proposed to amend Sec.
155.335(j)(1) to create a new re-enrollment hierarchy for all enrollees
in a silver-level QHP that is no longer available for re-enrollment.
Specifically, if such an enrollee's current silver-level QHP is not
available and the enrollee's current product no longer includes a
silver-level QHP available through the Exchange, we proposed that the
enrollee's coverage would be renewed in a silver-level QHP in the
product offered by the same issuer that is the most similar to the
enrollee's current product, rather than in a plan one metal level
higher or lower than his or her current silver-level QHP, but within
the same product. Transitioning enrollees in this manner is an
operationally efficient way to maintain continuity for enrollees
eligible for cost-sharing reductions, and, because the benchmark plans
for establishing the amount of the premium tax credit for which an
eligible taxpayer is eligible is a silver-level plan, continued
enrollment in a silver-level plan, as opposed to enrollment in a plan
at a different metal level but in the same product is likely to be more
consumer protective.
We also sought comment on whether the hierarchy, together with
rules related to guaranteed renewability, should permit a QHP enrollee
to be automatically re-enrolled into a plan not available through an
Exchange, and under what circumstances such a re-enrollment should
occur.
As in the 2016 Payment Notice proposed rule, we also noted that we
are exploring a change to the re-enrollment hierarchy at Sec.
155.335(j), which currently prioritizes re-enrollment with the same
issuer in the same or a similar plan.
In the proposed rule, we stated we were considering an approach
under which an enrollee in an FFE would be offered a choice of re-
enrollment hierarchies at the time of initial enrollment, and could opt
into being re-enrolled by default for the subsequent year into a low-
cost plan, rather than his or her current plan or the plan specified in
the current re-enrollment hierarchy.
Comment: Many commenters supported our proposal with respect to
silver-level QHPs, agreeing that it assists enrollees in those plans in
maintaining access to cost-sharing reductions. These commenters
stressed that access to that financial assistance can be of vital
importance to many enrollees. Several commenters expressed concern that
automatically re-enrolling a silver-level plan enrollee into a
different product might affect the enrollee's provider network,
benefits, and continuity of care, or stand-alone dental coverage. Some
commenters stated that education and proper notices could help ensure
that enrollees actively re-enroll in coverage if they are automatically
re-enrolled in a plan that does not fit their needs. Several commenters
stressed that issuers, who have the experience and information
necessary to ensure enrollees are matched with a product that most
closely fits their needs while minimizing potential disruptions in
coverage and cost-sharing reductions, are in the best position to
determine which available plans are the most similar to plans that are
no longer available.
Response: We are sympathetic to the comments stating that enrollees
should return to the FFEs to actively re-enroll in the coverage that
best fits their needs. We recognize, however, that automatic re-
enrollment hierarchies must exist to help those who do not take
advantage of the opportunity actively to choose coverage for the
benefit year. Therefore, while we acknowledge that re-enrollment
between products can result in disruption to provider networks,
benefits, and continuity of care, we believe it is important to
maintain enrollees' access to cost-sharing reductions in silver plans,
which might be vital to their ability to pay for coverage or care. We
are finalizing this provision of the rule as proposed, except that for
the purpose of clarity we are finalizing a slight modified version of
the language in paragraph (j)(1).
Comment: We received many comments regarding the proposed
alternative re-enrollment hierarchy, many of them mirroring comments
made to our proposal in the 2016 Payment Notice. Commenters who opposed
permitting an alternative low-cost enrollment hierarchy stated that, in
most cases, the plan a consumer chooses during open enrollment is one
that the consumer has shopped for and has determined best meets his or
her needs. Additionally, commenters said that low-cost premiums do not
necessarily lead to lower overall cost of coverage because deductibles,
copayments, coinsurance, and out-of pocket limits may be higher in QHPs
with low premiums. A minority of commenters supported the proposal's
emphasis on low premiums.
Response: We appreciate the many comments received regarding
alternative re-enrollment hierarchies and are sensitive to the concerns
raised by commenters. We recognize that consumers consider many factors
in addition to premium when selecting health coverage, including the
provider network, cost-sharing, deductibles, and other factors that
affect overall costs, continuity of care, and the consumer experience.
We are not finalizing this proposed additional re-enrollment hierarchy.
Comment: Many commenters responded unfavorably to the suggestion
that enrollees in QHPs could be automatically re-enrolled into off-
Exchange plans because they would lose any advance payments of the
premium tax credit or cost-sharing reductions they had been receiving.
Several stressed that such a plan would cause consumer confusion.
Response: In response to these comments, and in order in to
maintain coverage with advance payments of the premium tax credit and
cost-sharing reductions for the majority of Exchange enrollees who are
receiving them, we are finalizing a rule that would provide for auto-
reenrollment through the Exchange, as opposed to permitting auto-
reenrollment outside the Exchange. Under this rule, an enrollee could
automatically be re-enrolled into a QHP from a different issuer through
the Exchange. Such reenrollments would be conducted as directed by the
applicable State regulatory authority, or, where the applicable State's
regulatory authority declines to act, to the extent permitted by
applicable State law, in a similar QHP as determined by the Exchange.
With regard to how Exchanges will determine which plans such enrollees
should be auto-reenrolled into, we note that this policy provides
considerable flexibility to Exchanges to implement this rule, in
recognition of the operational realities of implementing a re-
enrollment hierarchy in the often unique circumstances in which an
issuer is not returning to the Exchange. However, whenever feasible,
the Exchange should, and the FFE will attempt to, re-enroll enrollees
in silver metal-level QHPs no longer available through the Exchange
into the silver metal-level QHP offered by another issuer through the
Exchanges of the same product network type with the lowest premium. If
the QHPs that have become unavailable are in metal levels other than
silver, then whenever feasible, the Exchange should and the FFE will
seek to re-enroll the affected enrollees in the QHP available on the
Exchange of the same metal level of the same product network type with
the lowest premium. Exchanges should, and the FFEs will endeavor to,
implement such a re-enrollment process for enrollees of QHPs whose
issuers are discontinuing their coverage, for as many groups as is
feasible given the short timelines and complex operations
[[Page 12271]]
that could be required in these scenarios. Those groups for which such
reenrollment is not feasible will need to make an active plan selection
to remain enrolled in a QHP through the Exchange. We note that such a
re-enrollment generally would require a binder payment from a consumer
in order to be effectuated. In future guidance, we intend to update the
Federal standard notices that address how issuers that no longer have
plans available through the Exchange should communicate with consumers.
We anticipate providing that an issuer that no longer has plans
available through the Exchange may notify its enrollees of that fact,
and may encourage them to enroll in the issuer's off-Exchange plans,
but may not automatically enroll them in those plans, to avoid
automatic enrollment in more than one plan. We intend to provide
additional guidance on the application of the rules related to
guaranteed renewability to this type of situation in the future.
Comment: We received a few comments requesting more information
regarding how the proposed alternative re-enrollment hierarchy would
affect stand-alone dental plans. Some commenters stated that the
process for re-enrolling in a SADP should be independent from re-
enrollment in a QHP.
Response: Because we will not implement the proposed alternative
reenrollment hierarchy at this time and the policy for consumers whose
issuer exited the Exchange would not apply to SADPs, we are not
addressing how this policy would affect SADPs. However, we appreciate
the comments raising this issue and, if the proposal is revisited in
the future, we will address concerns regarding SADPs then.
b. Enrollment of Qualified Individuals Into QHPs (Sec. 155.400)
(1) Rules for First Month's Premium Payments for Individuals Enrolling
With Regular, Special, and Retroactive Coverage Effective Dates
We proposed to amend Sec. 155.400(e) related to the payment of the
first month's premium (that is, binder payments), including deadlines,
to codify previously released guidance in section 8.2 of the updated
Federally-facilitated Marketplace and Federally-facilitated Small
Business Health Options Program Enrollment Manual,\46\ that specified
our interpretation of these requirements. Specifically, we proposed to
amend Sec. 155.400(e)(1)(i) and (ii) to provide that, for prospective
coverage, the binder payment must consist of the first month's premium.
To provide added flexibility for issuers, we also proposed that the
deadline for a binder payment related to prospective coverage with a
prospective special effective date, would have to be no earlier than
the coverage effective date and no later than 30 calendar days from the
date the issuer receives the enrollment transaction or the coverage
effective date, whichever is later. This would align the requirement
for enrollments with prospective special effective dates with the
requirement for enrollments with regular effective dates. We proposed
to add Sec. 155.400(e)(1)(iii) to reflect our interpretation, intended
to limit the risk that issuers would provide retroactive coverage
without receiving sufficient premium payments from enrollees, that
applicants requesting coverage being effectuated under retroactive
effective dates, such as coverage in accordance with a special
enrollment period or a successful eligibility appeal, must pay a binder
payment that consists of all premium due (meaning the premium for all
months of retroactive coverage). If the applicant pays only the premium
for one month of coverage, we proposed that the issuer would be
required to enroll the applicant in prospective coverage in accordance
with regular effective dates. We also proposed to specify that the
deadline for payment of all premium due must be no earlier than 30
calendar days from the date the issuer receives the enrollment
transaction or notification of the enrollment. This change to the
binder payment rules was intended to allow issuers flexibility to set a
reasonable deadline for enrollees to submit payment of retroactive
premium, the total amount of which may consist of payment for several
months of coverage.
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\46\ Federally-facilitated Marketplace and Federally-facilitated
Small Business Health Options Program Enrollment Manual (eff. Oct.
1, 2015), available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Updated_ENR_Manual.pdf.
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Based on our experience implementing the grace period provisions
under our previous rulemaking, particularly in cases involving advance
payments of the premium tax credit, we identified the need for
additional flexibility for issuers to establish reasonable policies
regarding premium collection that would allow issuers to collect a
minimal amount of premium less than that which is owed without
necessarily triggering the consequences for non-payment of premiums.
For example, in the Exchange Establishment Rule, we established that
enrollees receiving advance payments of the premium tax credit must
make full payment on all outstanding premiums owed in order to avoid
entering a grace period or having their coverage terminated. In
response to requests from issuers, we proposed to add flexibility to
this rule to allow issuers the option to adopt a premium payment
threshold policy to avoid situations in which an enrollee who owes only
a de minimis amount of premium has his or her enrollment terminated for
non-payment of premiums.
Accordingly, at new Sec. 155.400(g), we proposed to codify a
provision related to premium payment threshold policies that would
allow additional issuer flexibility regarding when amounts collected
will be considered to satisfy the obligation to pay amounts due, so
long as issuers implement such a policy uniformly and without regard to
health status, and the premium payment threshold adopted is reasonable.
This would allow issuers flexibility to effectuate an enrollment, not
to place an enrollee in a grace period for failure to pay 100 percent
of the amount due, and not to terminate enrollments after exhaustion of
the applicable grace period for enrollees. We are finalizing these
policies as proposed.
Comment: We received several comments regarding the proposal to set
deadlines for payment of the first month's premium (binder payments).
Some commenters appreciated the flexibility that such a proposal gives
to issuers to set such deadlines while others commented that the
proposal would resolve ambiguity revolving around the binder payment
deadlines for special and retroactive effective dates. Several
commented that the guidelines would provide consumer protection by not
allowing payment due dates before the effective date of coverage. One
commenter suggested that the final rule allow issuers flexibility to
offer consumers coverage effective dates that would be more generous
than those contained in the proposal and another commenter stated that
issuers should be permitted to set a binder payment deadline no later
than the coverage effective date.
Response: The final rule allows issuers flexibility to set binder
payment deadlines within a set of parameters we believe balances
concerns about consumer protection and issuers' desire to have
flexibility regarding business decisions. While we are sympathetic to
the desire to give consumers a generous amount of time to pay binder
payments, we believe that the final rule allows issuers to set payment
deadlines in such a way that consumers have ample time
[[Page 12272]]
to effectuate coverage. We also note that the final rule allows issuers
to set the binder payment deadline on the coverage effective date, but
not on a date earlier than the coverage effective date.
Comment: Some commenters were confused about the additional
language to allow first month's premium payments after the coverage
effective date, thinking that a person's coverage could be effectuated
prior to the person making their payment. These commenters opposed
allowing more individuals to appear to have effective coverage and then
have the coverage not be effectuated due to non-payment of premium by
the payment deadline.
Response: As we previously have stated, payment for first month's
premium is required prior to coverage being effectuated. For the FFE,
in cases where an enrollee, consistent with an issuer's payment policy,
makes his or her premium payment after the coverage effective date, but
before the premium payment deadline set by the issuer, the enrollee
would receive a retroactive effective date. Issuers may pend claims
while waiting for the first month's premium payment and either deny or
reverse those claims based on whether the enrollee makes the first
month's payment by the premium payment deadline. We believe that it is
appropriate to allow payments, if the issuer chooses, after the
coverage effective date.
Comment: One commenter recommended a modification to Sec.
155.400(e)(1)(iii) to give consumers requesting retroactive coverage
effective dates more flexibility. The commenter felt that requiring a
binder payment consisting of all premium due would be a hardship to
lower-income enrollees and, in order to avoid such hardship, issuers
should be required to accept payment plans when consumers enroll with a
retroactive effective date.
Response: While we understand it might be difficult for some
consumers to pay all premium due to effectuate with a retroactive
effective date, we believe that such a policy is necessary to minimize
the risk that providers and issuers would honor claims during,
potentially, several months of retroactive coverage without receiving
corresponding premium payments from consumers. The proposed rule allows
consumers who might have difficulty paying for retroactive coverage to
enroll with prospective coverage only. It is our interpretation of
Sec. 155.400(e)(1)(iii) that a binder payment for retroactive coverage
consists of all premium due, or a payment sufficient to satisfy the
issuer's premium payment threshold, if applicable.
Comment: One commenter expressed concern about the proposed binder
payment rules for coverage with retroactive effective dates, noting
that if an issuer receives only the premium for one month of coverage,
the enrollees would effectuate for prospective coverage with a regular
effective date. The commenter thought this proposal to be inconsistent
with the FFE's current guidance related to altering coverage effective
dates without instruction to do so from the FFE, which generally, but
not always, requires a transaction from the FFE in order to set or
alter enrollees' coverage effective dates.
Response: Although issuers generally should not grant or alter
coverage effective dates without a transaction from the FFE, there are
cases where FFE guidance is sufficient to give rise to such an
alteration. For example, current FFE guidance allows issuers to cancel
coverage, without any directive from the FFE, for enrollees who have
not paid their binder payments by the applicable due date. We believe
that allowing enrollees who make a binder payment insufficient to
satisfy all premium due but sufficient to effectuate prospective
coverage to effectuate prospectively with a regular effective date
protects consumers and promotes the goal of getting consumers into
coverage while not conflicting with current regulations or FFE
policies.
Comment: Several organizations commented on the proposal to codify
the provision related to premium payment threshold policies which
allows additional issuer flexibility regarding when amounts collected
will be considered to satisfy the obligation to pay amounts due, so
long as issuers implement such a policy uniformly and without regard to
health status and that the premium payment threshold adopted is
reasonable. Most commenters saw the proposal as providing important
consumer protections and allowing sufficient flexibility for issuers to
tailor the threshold as they wished, within the parameters set by HHS.
A few of the commenters, however, claimed that the proposed rule would
cause providers to bear the burden of claims, subsequently reversed by
issuers, incurred during the second and third months of a grace period
for enrollees receiving APTC.
Response: We do not believe that codifying the premium payment
threshold will lead to additional uncompensated claims. The purpose of
the threshold, which issuers may utilize at their option, is to keep
enrollees from entering a grace period or having their enrollments
terminated for non-payment of premium when the amount they owe is
within a reasonable threshold. Issuers' adoption of the premium payment
threshold could serve as a method to avoid terminating enrollments for
non-payment of premium for enrollees who only owe a small amount of
premium. We do not believe this policy will have the effect of
increasing the number of consumers who enter the grace period or who
are terminated from coverage for non-payment, the predicate for pended
claims that are not eventually paid.
Comment: One commenter sought clarification that, under the premium
payment threshold policy proposed in the rule, unpaid premium within a
reasonable threshold tolerance, is still an amount owed by the enrollee
and cannot be forgiven by the issuer.
Response: Any amount that is unpaid but within the tolerance of a
reasonable premium payment threshold established by an issuer remains
an amount owed by the enrollee and cannot be forgiven by the issuer.
This remains true whether the premium payment threshold is utilized for
any of the following payments: binder payments, regularly-billed
payments, or amounts owed by an enrollee while in a grace period.
Comment: Two commenters requested that, due to that the complexity
of creating the necessary operations framework to institute the premium
payment threshold policy, the regulation should not be effective until
2017 or 2018. One commenter requested that the final rule provide for
implementation of a threshold based, at an issuer's discretion, on a
flat dollar amount or a percentage of the total member responsible
portion of premium owed.
Finally, one commenter requested that we amend the proposed rule to
make the premium payment threshold mandatory for all issuers.
Additionally, the commenter sought a change to the proposed rule
setting a 90 percent percentage of member responsible portion of
premium as the mandatory threshold for all issuers.
Response: The proposed rule included flexibility for issuers to
implement a premium payment threshold to suit their specific business,
provided the threshold adopted is reasonable. We did not consider
utilizing a flat dollar amount threshold rather than a percentage of
premium owed to be reasonable, because such an approach would not take
into account the possibility that even a low flat dollar amount may
represent a large portion of an enrollee's portion of premium after
application of APTC. We previously have recommended a premium payment
[[Page 12273]]
threshold of 95 percent,\47\ which we consider to be reasonable.
Although we understand the desire to provide uniformity of consumer
protections across the FFEs, we do not wish to make the premium payment
threshold a mandatory policy nor to set a mandatory threshold at a
fixed percentage, as specific facts may justify a higher or lower one.
Finally, because the premium payment threshold policy is implemented at
the option of each issuer, we do not believe there is a reason to delay
implementation of the regulation due to operational complexity.
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\47\ Federally-facilitated Marketplace and Federally-facilitated
Small Business Health Options Program Enrollment Manual, updated
October 1, 2015, section 6.1, available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Updated_ENR_Manual.pdf.
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(2) Reliance on HHS to Carry Out Enrollment and Related Functions
We also proposed to amend Sec. 155.400 by adding a new paragraph
(h) to reflect that SBE-FPs must agree to rely on HHS to implement the
functions related to eligibility and enrollment within subpart E,
through the Federal platform agreement. This reflects that eligibility
and enrollment functions must be performed together in the FFE, and
that neither function can be performed separately by an SBE-FPs at this
time. We did not receive any comments on this proposal and are
finalizing the policy as proposed.
c. Annual Open Enrollment Period (Sec. 155.410)
We proposed to amend paragraph (e) of Sec. 155.410, which provides
the dates for the annual open enrollment period in which qualified
individuals may apply for or change coverage in a QHP. We proposed to
amend paragraph (e)(2) to define the open enrollment period for
coverage year 2017 to be November 1, 2016, through January 31, 2017. We
also proposed to amend the annual open enrollment period coverage
effective date provisions in paragraphs (f)(2)(i) through (iii) to
include the coverage effective dates for 2017.
We proposed this time period and these coverage effective dates to
remain consistent with the 2016 open enrollment period. This timeframe
will continue to partially overlap with the annual open enrollment
period for Medicare and most employer offerings, which will benefit
consumers by facilitating smooth transitions between coverage and
creating process efficiencies for issuers handling enrollments and re-
enrollments during the same period.
We also sought comment on what the open enrollment period for
coverage year 2018 and subsequent years should be.
We are finalizing the open enrollment period for coverage year 2017
as proposed.
In response to comments received, we are similarly defining, at
Sec. 155.410(e)(2), the open enrollment period for coverage year 2018
to be November 1, 2017 through January 31, 2018. These are the same
start and end dates as for the open enrollment periods for the 2016 and
2017 benefit years. We define the coverage start dates for all open
enrollment periods beginning with the open enrollment period for the
2016 benefit year, in three paragraphs at Sec. 155.410(f)(2).
Accordingly, for example, for the 2018 coverage year, the Exchange must
ensure that coverage is effective January 1, 2018, for QHP selections
received by the Exchange on or before December 15, 2017; February 1,
2018, for QHP selections received by the Exchange on or before January
15, 2018; and March 1, 2018, for QHP selections received by the
Exchange on or before January 31, 2018, and similarly for other
coverage years. We believe that this open enrollment period provides
sufficient time for operational readiness by the FFE and issuers, and
provides consistency for consumers and sufficient time for them to
enroll in coverage. However, as further explained below, we plan to
shift to an earlier open enrollment end date for future open enrollment
periods, starting with the open enrollment period for the 2019 coverage
year, and are therefore finalizing at Sec. 155.410(e)(3) an open
enrollment period for all future coverage years to run from November 1
through December 15 of the year prior to the coverage year, with
coverage effective the first day of the coverage year.
Comment: We received support from most commenters for maintaining
the same open enrollment period for coverage year 2017 as for coverage
year 2016, as it provides consistency for consumers, reduces consumer
confusion about coverage effective dates, and continues to partially
overlap with the open enrollment period for Medicare and for most
employer offerings. We received several comments requesting an earlier
open enrollment period that ends prior to the start of the benefit year
and several comments requesting a later open enrollment period that
continues through the Federal tax-filing season. Several commenters
requested shortening the open enrollment period for the 2017 coverage
year by two weeks, while other commenters requested lengthening the
open enrollment period by a month or through part of the Federal tax
filing season.
Response: After consideration of the comments, we are finalizing
the open enrollment period for coverage year 2017 as proposed, for
consistency with the 2016 open enrollment period, as discussed above.
Comment: We received varied comments regarding the open enrollment
period for coverage year 2018 and for future coverage years. Many
commenters recommended shifting to an earlier open enrollment period
that starts and ends prior to the start of the coverage year, so that
all consumers have a full year of coverage. Among these commenters,
some recommended shortening the open enrollment period by two weeks for
an open enrollment period that starts on October 1 and runs through
December 15. Some of these commenters recommended shortening the
duration of the open enrollment period from 3 months to 2 months for an
open enrollment period that starts on October 15 and runs through
December 15. Other commenters recommended shortening the duration of
the open enrollment period to about six weeks, so it starts on November
1 and runs through December 15. Several commenters recommended an open
enrollment period that starts on October 15 and runs through either
December 7 or December 15 in order to align the Exchange and Medicare
open enrollment periods.
Commenters opposed to an earlier open enrollment period start date
expressed concerns about providing sufficient time for plans to be
certified and for plans to be previewed prior to the start of the open
enrollment period. Those opposed to an earlier open enrollment period
end date expressed concern about consumer confusion over the enrollment
deadline. And, those opposed to shortening the duration of the open
enrollment period expressed concerns about the workforce constraints of
assisters, such as Navigators and certified application counselors,
agents, and brokers who provide enrollment assistance throughout the
open enrollment period.
Several commenters recommended a gradual shift to an earlier open
enrollment period. These commenters stressed the importance of enabling
consumers to enroll in coverage in January, since many consumers travel
or are otherwise occupied during the last few months of the year. Among
these commenters, some recommended maintaining the same open enrollment
period duration of 3 months for an open
[[Page 12274]]
enrollment period that starts on October 15 and runs through January
15. Other commenters recommended shortening the open enrollment period
by approximately two weeks and keeping the same open enrollment start
dates as for coverage years 2016 and 2017, for an open enrollment
period that starts on November 1 and runs through January 15. Lastly,
some of these commenters recommended shortening the open enrollment
period to 2 months for one that starts on November 15 and runs through
January 15.
Several other commenters recommended maintaining the same open
enrollment period for 2018 and for future coverage years as for
coverage years 2016 and 2017. Doing so, these commenters point out,
would allow for better planning and consistency. Many of these
commenters also recommended that HHS establish an open enrollment
period for all future benefit years, which would enable issuers to
engage in longer term planning, assist with outreach and enrollment
efforts, and reduce consumer confusion.
Lastly, many commenters recommended a later closing of the open
enrollment period to better align with the Federal tax filing season.
These commenters noted that it is through the Federal tax filing
process that many consumers have learned about the individual shared
responsibility coverage requirement. While all of these commenters
agreed that the duration of the open enrollment period should be
extended, commenters were divided about whether the start of the open
enrollment period should be the same as for the 2016 and 2017 coverage
years, November 1, or should start slightly later on November 15. These
commenters were also divided about whether the open enrollment period
should continue through most of the tax filing season by continuing
through March 15 or whether the open enrollment period should continue
past the April tax-filing deadline to run through April 30. However,
the majority of these commenters recommended an open enrollment period
that begins on November 15 and runs through March 15.
Response: After consideration of the comments received, we are
finalizing an open enrollment period for 2018 that starts on November
1, 2017 and runs through January 31, 2018. Maintaining the same open
enrollment period start and end dates for coverage years 2016 through
2018, will provide consistency for consumers and will avoid putting new
pressure on the QHP certification timeline for issuers. An open
enrollment period end date of January 31 ensures that consumers are
enrolled by March, which supports coverage for most consumers for the
majority of the 2018 coverage year and does not put any new burdens on
assisters, such as Navigators and certified application counselors,
agents, brokers, and others providing enrollment assistance. However,
to support a full year of coverage for most consumers, we plan to shift
to an earlier open enrollment end date for the 2019 open enrollment
period and all future open enrollment periods. Starting with the 2019
coverage year and beyond, we are setting an open enrollment period that
runs through December 15. This change achieves our goals of shifting to
an earlier open enrollment so that all consumers who enroll during this
time will receive a full year of coverage and this will reduce
selection risk for issuers. We believe that shifting the open
enrollment period end date to December 15 for the 2019 coverage year
provides sufficient time for all entities involved in the annual open
enrollment period process, including Exchanges and issuers, to make the
necessary adjustments to meet this earlier deadline. We also believe
that, as the Exchanges grow and mature, a month-and-a-half open
enrollment period provides sufficient time for consumers to enroll in
or change QHPs for the upcoming coverage year.
d. Special Enrollment Periods (Sec. 155.420)
Special enrollment periods are available to consumers under a
variety of circumstances as described in Sec. 155.420. We stated in
the proposed rule that we had heard concerns regarding abuse of special
enrollment periods, and we sought comments and data regarding existing
special enrollment periods.
In order to review the integrity of special enrollment periods, the
FFE will be conducting an assessment under which we collect and review
documents from consumers to confirm their eligibility for the special
enrollment periods under which they enrolled. We note that where an
Exchange undertakes such a review, the Exchange may either
retroactively or prospectively end coverage, consistent with Exchange
regulations, if the Exchange determines that the special enrollment
period was improperly granted under Sec. 155.420.
Comment: We received many comments related to amending the number
and scope of special enrollment periods. Several commenters requested
the addition of new special enrollment periods, including special
enrollment periods for pregnancy and for individuals facing the
individual shared responsibility payment at tax time. Other commenters
requested the expansion of existing special enrollment periods,
including adding provider network and drug formulary errors to the
special enrollment period for plan or benefit display errors under
paragraph (d)(4) of this section, allowing dependents of Indians to
enroll in or change enrollments along with the Indian through the
special enrollment period in paragraph (d)(8) of this section, and
allowing for a retroactive coverage start date for consumers who
qualify for the special enrollment period due to a loss of minimum
essential coverage in paragraph (d)(1) of this section. Several
commenters requested expansions to the timeframe and applicability of
special enrollment periods, including extending the length of time in
which a consumer may enroll after qualifying for a special enrollment
period from 60 to 90 days, and extending all special enrollment periods
offered through the Exchange to the off-Exchange market.
Other commenters requested restrictions in the number and
availability of special enrollment periods. One commenter requested the
elimination of all special enrollment periods that do not align with
those special enrollment periods offered by Medicare or are not
required by HIPAA, while another commenter stated that special
enrollment periods should be limited to certain life-changing events.
One commenter requested restricting the eligibility of the special
enrollment period for gaining access to new QHPs as a result of a
permanent move to only consumers who were previously enrolled in other
minimum essential coverage, and only allowing the new dependent to
enroll in or change his or her enrollment into a new QHP under the
special enrollment period described in paragraph (d)(2). One commenter
requested that States with SBE-FPs have the flexibility to establish
State-specific special enrollment periods to address the particular
needs of consumers in their State.
Response: We are not finalizing new qualifying events, eliminating
current qualifying events, or changing the scope of current qualifying
events for special enrollment periods at this time, but are continuing
to study this issue. As explained in guidance released on January 19,
2016,\48\ HHS has removed
[[Page 12275]]
certain special enrollment periods that were available in 2014 and 2015
because the specified time period has ended, the situation it addressed
has been resolved, or needed system updates have been made. HHS
continues to review rules and guidance related to special enrollment
periods.
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\48\ Special Enrollment Periods No Longer Utilized by the
Federally-facilitated Marketplaces and State-based Marketplaces
using the Federal Platform and Future CMS Actions (Jan. 19, 2016),
available at https://www.regtap.info/uploads/library/ENR_RetiredSEPs_011916_v1_5CR_011916.pdf; see also FAQs on the
Marketplace Residency Requirement and the Special Enrollment Period
due to a Permanent Move (Jan. 19, 2016), available at https://www.regtap.info/uploads/library/ENR_FAQ_ResidencyPermanentMove_SEP_5CR_011916.pdf.
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Comment: Commenters expressed concerns about current misuse or
abuse of special enrollment periods, including consumers who
inappropriately obtain a special enrollment period on the basis of a
loss of minimum essential coverage after being terminated from coverage
due to a failure to pay premiums in violation of Sec. 155.420(e)(1).
Some commenters supported more clearly defining the eligibility
parameters of existing special enrollment periods, as well as the
consequences for inappropriately utilizing a special enrollment period
to enroll in coverage.
In response to our request for comment and data to assess whether
special enrollment periods are being abused and to minimize potential
misuse and abuse of special enrollment periods, commenters expressed
strong support for the Exchange to take actions to verify consumer
eligibility for special enrollment periods moving forward, including
requesting documentation supporting consumers' eligibility for special
enrollment periods. Several commenters requested that the Exchange
require consumers to submit documentation to either the Exchange or
issuers to verify their eligibility for a special enrollment period.
Some commenters noted that requesting such documentation at the time of
the eligibility determination and before coverage has begun is least
burdensome for consumers and is preferred by issuers. To aid in
verification of special enrollment period eligibility, one issuer
suggested implementing an online directory for issuers of consumers who
have been terminated due to nonpayment of premiums. Some commenters
requested that, until such verification has taken place, coverage not
be effectuated under the special enrollment period. Other commenters
suggested that the coverage of consumers who were ultimately found to
be ineligible for special enrollment periods which they used to enroll
in coverage or did not submit the necessary documentation in a timely
manner should be canceled as of the date the enrollment became
effective.
Conversely, other commenters expressed concern about the
elimination or limitation of existing special enrollment periods
without documented proof of abuse. Commenters stressed the important
role special enrollment periods play in providing access to needed
coverage for consumers throughout the year. Commenters encouraged HHS
to analyze how consumers access special enrollment periods by using
available data sources, and encouraged HHS to look at the findings by
SBEs that have already conducted similar analyses. In addition,
commenters cautioned against ending a consumer's coverage unless fraud
has been proven.
Response: We appreciate the important concerns being raised
regarding this issue. We believe it is important that consumers and
others providing enrollment assistance understand the eligibility
criteria for special enrollment periods, and so we will consider
providing additional clarification around existing special enrollment
periods. We continue to be interested in better understanding how
consumers are accessing special enrollment periods and whether they are
doing so in an appropriate and accurate way. In light of the strong
support commenters expressed for verifying eligibility for special
enrollment periods, we intend to conduct an assessment of QHP
enrollments that have been made through special enrollment periods in
the FFE to ensure that consumers properly accessed coverage and will
require documentation for select SEPs going forward, as described in
recent guidance posted on February 24, 2016.\49\
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\49\ 2017 Final HHS Notice of Benefit and Payment Parameters
Fact Sheet. February 24, 2016. Available at, https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/#Premium.
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e. Termination of Coverage (Sec. 155.430)
Under current rules, Sec. 155.430(b)(1) requires an Exchange to
permit an enrollee to cancel or terminate his or her coverage in a QHP
following appropriate notice to the Exchange or the QHP issuer. We
proposed to add paragraph (b)(1)(iv) to allow an enrollee to
retroactively cancel or terminate his or her enrollment in a QHP
through the Exchange in very limited circumstances. For enrollees whose
enrollment or continued enrollment in a QHP resulted from an error,
misconduct, or fraud committed by an entity other than the enrollee, we
aim to increase flexibility under the regulations to permit such
enrollees to avoid the consequences of that entity's actions by
canceling the QHP coverage. To this end, we proposed to redesignate
current paragraph (b)(2)(vi) as (b)(2)(vii) and add a new paragraph
(b)(2)(vi) to permit the Exchange to cancel an enrollee's enrollment in
a QHP under certain circumstances. This rule would permit cancellations
of fraudulent enrollments that the Exchange discovers, even if the
enrollee is never aware of the enrollment.
We proposed new paragraph (b)(1)(iv)(A), which would permit an
enrollee to retroactively terminate his or her coverage or enrollment
if he or she demonstrates to the Exchange that he or she attempted to
terminate his or her coverage or enrollment and experienced a technical
error that did not allow the enrollee to effectuate termination of his
or her coverage or enrollment through the Exchange. Such an enrollee
would have 60 days after he or she discovered the technical error to
request retroactive termination.
We proposed a new paragraph (d)(9), which would provide that the
retroactive termination date under paragraph (b)(1)(iv)(A) would be no
sooner than 14 days after the earliest date that the enrollee could
demonstrate that he or she contacted the Exchange to terminate his or
her coverage or enrollment through the Exchange, unless the issuer
agrees to an earlier effective date as set forth in Sec.
155.430(d)(2)(iii).
We proposed in paragraph (b)(1)(iv)(B) to provide for cancellation
for an enrollee who demonstrates to the Exchange that his or her
enrollment in a QHP through the Exchange was unintentional,
inadvertent, or erroneous and was the result of the error or misconduct
of an officer, employee, or agent of the Exchange or HHS, its
instrumentalities, or a non-Exchange entity providing enrollment
assistance or conducting enrollment activities. Such an enrollee would
have 60 days from the point he or she discovered the unintentional,
inadvertent, or erroneous enrollment to request cancellation. In
determining whether an enrollee has demonstrated to the Exchange that
his or her enrollment meets the criteria for cancellation under this
paragraph, the Exchange would examine the totality of the circumstances
surrounding the enrollment, such as whether the enrollee was enrolled
in other minimum essential coverage at the time of his or her QHP
enrollment and whether he or she submitted claims for services rendered
to the QHP. These factors would serve to indicate the intentions of the
enrollee and whether the enrollment really was undesired and unintended
and would be weighed in making a
[[Page 12276]]
determination whether a cancellation is warranted. We sought comment on
what other factors are indicative of an enrollee's bona fide intent and
could limit gaming and should be considered in this analysis.
In new paragraph (b)(1)(iv)(C), we proposed to allow cancellations
for enrollees who are enrolled in a QHP without their knowledge or
consent due to the fraudulent activity of any third party, including
third parties who have no connection with the Exchange. Such an
enrollee would have 60 days from the point at which he or she
discovered the fraudulent enrollment to request cancellation.
We proposed new paragraph (d)(10), which would provide that for
cancellation or retroactive terminations granted in accordance with
paragraphs (b)(1)(iv)(B) and (C), the cancellation or termination date
would be the original coverage effective date or a later date, as
determined appropriate by the Exchange, based on the circumstances of
the cancellation or termination.
Finally, under our current rules, Sec. 155.430(b)(2) allows the
Exchange to initiate termination of an enrollee's coverage or
enrollment in a QHP through the Exchange, and permits a QHP issuer to
terminate such coverage or enrollment in certain circumstances. We
proposed to amend paragraph (b)(2)(ii)(A) to reflect the change to
Sec. 156.270(d) and (g) that gives an enrollee who, upon failing to
timely pay premium, is receiving APTC, a 3-month grace period.
We also proposed in new paragraph (b)(2)(vi) that the Exchange
could cancel an enrollee's enrollment that the Exchange determines was
due to fraudulent activity, including fraudulent activity by a third
party with no connection with the Exchange. New paragraph (d)(11) would
provide that for cancellations granted in accordance with paragraph
(b)(2)(vi), the cancellation date would be the original coverage
effective date. The Exchange only would send the cancellation
transaction following reasonable notice to the enrollee (recognizing
that where no contact information or false contact information is
available that notice may be impossible or impracticable).
We noted that our current guidance recognizes that at some point,
the Exchange must discontinue the ability for enrollees to
retroactively adjust coverage for the preceding coverage year. We
stated that we are considering codifying a deadline for requesting
cancellations or retroactive terminations.
We received the following comments concerning the proposed
provisions around retroactive terminations and cancellations.
Comment: Most commenters supported the proposed ``60-days from
discovery'' window for requesting the termination, while a few
commenters suggested shorter windows (30-45 days). A few commenters
agreed with the importance of providing a date after which retroactive
terminations and cancellations will no longer be granted for the
preceding coverage year.
Response: We chose 60 days to align with our standard 60-day
special enrollment period window under Sec. 155.420. We recognize the
need to discontinue the ability for enrollees to retroactively adjust
coverage for the preceding coverage year at some point. To that end,
HHS issued a cut-off date in 2015 after which retroactive terminations
through the FFE for 2014 coverage would no longer be granted, with the
exception of those cases adjudicated through the appeals process. In
determining the cut-off date for terminations of enrollments through
FFEs and SBE-FPs for future years, we want to balance the operational
needs of issuers and potential future functionality changes to the
FFEs' enrollment system against the need to provide adequate time to
identify and address erroneous, unknown, or nonconsensual enrollments
through retroactive terminations and cancellations. Accordingly, we are
codifying a provision permitting the Exchange to set a date after which
retroactive terminations and cancellations will no longer be granted
for the preceding coverage year, with the exception of those cases
adjudicated through the appeals process, based on these factors.
Comment: Many commenters supported our proposal to permit
retroactive terminations for enrollees who experienced a technical
error by the Exchange that prevented them from terminating their
coverage. Some supporters noted enrollees sometimes face challenges in
terminating coverage timely. Two commenters suggested we make the
effective date of termination the date of the demonstrated attempt,
rather than 14 days following the attempt. A few commenters expressed
concerns about potential gaming.
Response: This 14-day window proposed aligns with the regulation on
voluntary, enrollee-initiated prospective terminations, and we note
that issuers may permit earlier effective dates of terminations under
Sec. 155.430(d)(2)(iii). To minimize any opportunities for gaming, the
Exchange will make these determinations based on research performed by
HHS caseworkers.
Comment: Many commenters endorsed our proposal to permit
retroactive terminations and cancellations for enrollees whose
enrollment was unintentional, inadvertent, or erroneous and was the
result of Exchange error or misconduct, citing examples of enrollments
occurring under these circumstances and stressing the importance of
this protection for consumers against undue financial burden. One
commenter felt the provision did not go far enough to adequately
protect a Medicaid-eligible enrollee who is unaware of his or her
Medicaid eligibility or unaware of his or her ineligibility for the
premium tax credit. A few commenters expressed concern about harm to
the risk pool and the stability of the Exchanges through gaming. They
noted limitations in the Exchange's ability to verify eligibility for
special enrollment periods. One commenter recommended that enrollees
only be permitted to initiate retroactive terminations or cancellations
when permitted under State law or in the case of death. A few others
recommended no retroactive terminations or cancellations be granted if
premiums were paid or claims were incurred.
Response: We understand issuers' concerns regarding adverse
selection if retroactive terminations or cancellations are granted
without merit. Our aim is to provide these types of retroactive
terminations or cancellations only for enrollees who were clearly
harmed by an error or misconduct. It is not intended for enrollees who
either simply did not understand the rules of their enrollment when
they enrolled and want to reduce any tax liability they face due to
ineligibility for the premium tax credit, or who wish to retroactively
drop coverage when they realize they did not use it. We expect these
terminations and cancellations to be granted rarely and only following
thorough research of the facts and circumstances. To that point, the
FFE will make these determinations only based on research performed by
HHS caseworkers.
Comment: Several commenters commented on our provisions around
granting enrollee-initiated and Exchange-initiated retroactive
cancellations in cases involving fraudulent activity. Supporters cited
examples of enrollee harm due to fraudulent activity by agents and
brokers. A few commenters noted that coverage would not be effectuated
without a binder payment and that member materials would be sent that
would signify enrollment. A few commenters felt this authority is
already permitted under issuers' rescission
[[Page 12277]]
authority (Sec. 147.128(a)(1)). One recommended we align the language
with the language around agent and broker fraud in Sec. 155.220.
Others recommended that we clearly define fraud and ensure verification
of instances of fraud.
Response: These proposed rules around cancellations for fraudulent
activity are intended, in part, to address concerns regarding
individuals who may have been enrolled without their knowledge or
consent, potentially resulting in adverse tax consequences. In some
cases, the enrollee may not discover the enrollment in time to request
cancellation on his or her own behalf.
We recognize the legal and administrative complexities involved in
determining fraud and we understand the importance of making this rule
narrow enough to prevent abuse, but not so narrow that it could never
be used. To that end, we are finalizing paragraphs (b)(1)(iv)(C),
(b)(2)(vi), and (d)(11), except that we are replacing references to
fraud with references to enrollments performed without enrollee
``knowledge or consent.'' In addition, in paragraph (b)(1)(iv)(C), we
are adding that the enrollee must ``demonstrate to the Exchange'' that
he or she was enrolled without his or her knowledge or consent.
Comment: Some commenters suggested retroactive terminations or
cancellations in circumstances other than those we proposed. For
example, a few commenters recommended that the Exchange retroactively
terminate or cancel enrollments granted under special enrollment
periods for which the enrollee was not truly eligible. Another
commenter recommended we not permit retroactive cancellation when a
consumer does not pay his or her premium in the fourth quarter, and
then moves to a different plan during open enrollment with coverage
effective January 1. Another commenter recommended we create parameters
to permit retroactive terminations or cancellations in instances of
credit card theft. Finally, one commenter recommended we allow
termination without penalty to auto-enrollees in the first 60 days of
the year, or due to confusion over covered benefits or providers.
Response: We understand the commenters' concerns; however, this
proposed rule was limited to scenarios involving technical errors,
misconduct or fraudulent activity. We address some of our future
activities around special enrollment periods elsewhere in this rule. We
are finalizing the provisions proposed in Sec. 155.430 of the proposed
rule with a few modifications. Specifically, as discussed above, we are
eliminating references to fraud in paragraphs (b)(1)(iv)(C),
(b)(2)(vi), and (d)(11) and referring instead to enrollments performed
without the enrollee's knowledge or consent. We believe that in certain
cases a retroactive termination can be justified where the enrollment
was performed without knowledge or consent, even if fraud did not
occur. In paragraph (b)(2)(vi), we also clarify that the enrollment
performed without the enrollee's knowledge or consent could be
performed by a third party that has no connection with the Exchange. In
addition, for consistency with paragraphs (b)(1)(iv)(A) and (B), in
paragraph (b)(1)(iv)(C), we are requiring that the enrollee
``demonstrates to the Exchange'' that he or she was enrolled without
his or her knowledge or consent. Finally, as described in response to
comments above, we are adding a new paragraph (d)(12) permitting the
Exchange to establish a timeframe during which retroactive terminations
and cancellations for the preceding coverage year must be initiated.
6. Appeals of Eligibility Determinations for Exchange Participation and
Insurance Affordability Programs
a. General Eligibility Appeals Requirements (Sec. 155.505)
In Sec. 155.505, we made certain proposals related to the general
eligibility appeals requirements. We proposed to add paragraph
(b)(1)(iii) to state more clearly that applicants and enrollees have
the right to appeal a determination of eligibility for an enrollment
period. We also proposed to add paragraph (b)(5) to clarify the
existing right under Sec. 155.520(c) that applicants and enrollees
have to appeal a decision issued by the State Exchange appeals entity.
In paragraph (b)(4), we proposed to correct a typographical error by
replacing the word ``or'' with the word ``of,'' and to replace
``pursuant to'' with ``under.''
We are finalizing the changes as proposed.
Comment: Commenters all supported the proposal to clarify the
existing rights to appeal a determination of eligibility for an
enrollment period and appeal a decision issued by the State Exchange
appeals entity. One commenter sought clarification that the change to
Sec. 155.505(b)(5), related to the right to appeal a decision issued
by a State Exchange appeals entity, applies only to Exchange decisions
related to eligibility for enrollment in a qualified health plan and
financial assistance through the Exchange, but not Medicaid or CHIP.
Response: In certain circumstances, it is possible that a State
Exchange appeals entity appeal decision regarding eligibility for
Medicaid, CHIP, or the BHP could be escalated to and adjudicated by the
HHS appeals entity. However, as discussed below, at the time of
publication of this final rule, no State agency administering Medicaid,
CHIP, or the BHP has delegated appeals to the State Exchange appeals
entity in a manner that would permit the HHS appeals entity to
adjudicate these appeals. Therefore, we confirm that the right to
appeal a decision issued by a State Exchange appeals entity under Sec.
155.505(b) currently is limited to decisions related to eligibility for
enrollment in a qualified health plan through the Exchange (including
enrollment periods), Exchange financial assistance, exemptions from the
individual shared responsibility requirement, and denials of requests
to vacate dismissals by the State Exchange appeals entity.
As we explained in the final rule in the July 15, 2013 Federal
Register (78 FR 42160), States may choose to delegate authority to
conduct Medicaid fair hearings for MAGI-based eligibility
determinations to the Exchange operating in the State regardless of
whether the Exchange is an FFE, State Exchange, or a State Partnership
Exchange, in accordance with the Medicaid regulations at 42 CFR
431.10(c) and (d). If a State agency delegates authority to conduct
MAGI-based eligibility appeals to an Exchange, including a State
Exchange, in accordance with 45 CFR 431.10(c) and (d), such a
delegation would extend to the HHS appeals entity, if the State
Exchange appeals entity's appeal decision were escalated under Sec.
155.505(c)(2)(i).
However, States with State Exchanges that are State governmental
agencies may also coordinate appeals, beyond delegation under our
rules, through a waiver granted under the Intergovernmental Cooperation
Act. If a State delegates authority to conduct fair hearings through an
Intergovernmental Cooperation Act waiver to another State agency,
including a State Exchange or State Exchange appeals entity, Medicaid
appeal decisions made by that entity could not be escalated to the HHS
appeals entity (78 FR 42,160, 42,165 (July 15, 2013)).
As of this publication, all State Exchanges have coordinated
appeals through an Intergovernmental Cooperation Act waiver, and
therefore Medicaid appeal decisions made by a
[[Page 12278]]
State Exchange appeals entity are not appealable to the HHS appeals
entity under Sec. 155.520(c) or Sec. 155.505(b)(5).
b. Appeals Coordination (Sec. 155.510)
We proposed to revise Sec. 155.510(a)(1) to allow the appeals
entity, the Exchange, or the agency administering insurance
affordability programs to request information or documentation from the
appellant that the appellant already has provided if the agency does
not have access to such information or documentation and cannot
reasonably obtain it. Currently, Sec. 155.510(a)(1) prohibits the
appeals entity or agency administering insurance affordability programs
from asking an appellant to provide information or documentation that
the appellant already provided in order to minimize the burden on the
appellant.
We are finalizing our proposal, with an addition as described
below.
Comment: Commenters all supported the proposed change to Sec.
155.510(a)(1). A few commenters cautioned that the proposed amendment
to paragraph (a)(1) should not overly burden appellants and recommended
that it be used as a time-limited, interim measure until system
functionality improves.
Response: We agree that proposed paragraph (a)(1) should not overly
burden appellants. As proposed, paragraph (a)(1) permits the appeals
entity, Exchange, or agency administering insurance affordability
programs to request information or documentation from the appellant if
the agency does not have access to such information or documentation
and cannot reasonably obtain it. To further ensure that paragraph
(a)(1) does not overly burden appellants, we are finalizing paragraph
(a)(1) to also require that the information or documentation requested
is necessary to properly adjudicate the appellant's appeal. We believe
that the addition of this language will minimize any unnecessary burden
on the appellant while also ensuring that appeals are adjudicated
accurately.
c. Appeal Requests (Sec. 155.520)
We proposed to add paragraph (d)(2)(i)(D), concerning appellants
whose appeal request is determined invalid for failure to request an
appeal by the date determined in paragraph (b) or (c) of this section.
The proposed addition would require the appeals entity to notify an
appellant that, in the event the appeal request is invalid because it
was not timely submitted, the appeal request may be considered valid if
the applicant or enrollee demonstrates within a reasonable timeframe
determined by the appeals entity that failure to timely submit was due
to exceptional circumstances and should not preclude the appeal.
We proposed that the appeals entity may determine what constitutes
an exceptional circumstance that should not preclude an appeal
notwithstanding the appellant's failure to timely submit an appeal
request. We also proposed that the appeals entity may determine what is
considered a reasonable timeframe for an appellant to demonstrate an
exceptional circumstance.
We are finalizing the provision as proposed.
Comment: Commenters supported the proposed change to Sec.
155.520(d)(2)(i)(D). A few commenters requested additional examples or
guidelines as to what constitutes an ``exceptional circumstance'' such
that failure to timely submit an appeal request should not preclude an
appeal. Commenters also requested additional guidance on what
constitutes a ``reasonable timeframe'' to demonstrate an exceptional
circumstance. One SBE supported the proposed amendment as long as
Exchange appeal entities have the flexibility to determine what
constitutions an exceptional circumstance and a reasonable timeframe.
Response: In the proposed rule, we provided several examples of
situations that might constitute an exceptional circumstance under
proposed paragraph (d)(2)(i)(d). We stated that a weather emergency,
such as a blizzard, hurricane or tornado, may constitute an exceptional
circumstance. We discussed scenarios in which severe weather causes a
power outage making it impossible to prepare, mail, or fax appeal
requests to the appeals entity, and situations when a disaster may
cause consumers to lose access to the documents they need to complete
and submit appeal requests. We also noted that if a consumer suffers a
catastrophic medical event and is consequently unable to submit an
appeal request on time, the appeals entity may determine that this
constitutes an exceptional circumstance under the proposed exception.
We also provided guidance in the proposed rule as to what
constitutes a reasonable timeframe to demonstrate an exceptional
circumstance. We stated that if an appellant was unable to send an
appeal request on time due to a snow storm and power outage and sent
the request four months after the snow storm and power outage had been
resolved, the appeals entity may find that the appellant experienced an
exceptional circumstance as contemplated by the proposed rule, but that
the appellant waited an unreasonable amount of time to demonstrate it.
The examples above provide guidance to appellants and
representatives as to what the appeals entity may consider an
exceptional circumstance such that failure to timely submit an appeal
request should not preclude an appeal, and a reasonable timeframe to
demonstrate an exceptional circumstance. We intend for these examples
to be illustrative and not exhaustive, and believe that the appeals
entity should decide on a case-by-case basis whether an appeal request
that is invalid due to untimely submission nevertheless should be
allowed to proceed under paragraph (d)(2)(i)(d).
d. Dismissals (Sec. 155.530)
We proposed to revise Sec. 155.530(a)(4) to allow an appeal to
continue when an appellant dies if the executor, administrator, or
other duly authorized representative of the estate requests to continue
the appeal.
Comment: Commenters supported the proposed change to Sec.
155.530(a)(4). A few commenters also recommended allowing a spouse,
partner, parent, or guardian of a deceased appellant to continue an
appeal. They believed this may be necessary when an appellant,
especially a child or incapacitated adult, has not gone through the
legal process of establishing an executor, administrator, or other duly
authorized representative. In such cases, the commenters recommend
allowing a family member to step into the shoes of the deceased
appellant to prevent the dismissal of an appeal from imposing a
financial hardship on the surviving members of the family.
Response: We agree with the commenters. Therefore, we are
clarifying that if a deceased appellant has not designated an executor,
administrator, or other duly authorized representative, and one has not
been appointed by the court, the deceased appellant's spouse, legal
civil or domestic partner, or for a minor or unmarried incapacitated
appellant, parent or legal guardian, is considered a duly authorized
representative and may continue the appeal.
We are finalizing Sec. 155.530(a)(4) as proposed.
e. Informal Resolution and Hearing Requirements (Sec. 155.535)
In Sec. 155.535, we proposed amendments to the informal resolution
and notice of hearing requirements. In Sec. 155.535(a), we proposed a
change to
[[Page 12279]]
clarify that the requirements of the informal resolution process
described in paragraphs (a)(1) through (4) apply to both the HHS
appeals entity and a State Exchange appeals entity.
In Sec. 155.535(b), we proposed providing two exceptions to the
requirement that the appeals entity must send written notice to the
appellant of the date, time, and location or format of the hearing no
later than 15 days prior to the hearing date. In paragraph (b)(1), we
proposed an exception when an appellant requests an earlier hearing
date. In paragraph (b)(2), we proposed an exception to the notice
requirement under paragraph (b) when a hearing date sooner than 15 days
is necessary to process an expedited appeal, as described in Sec.
155.540(a), and the appeals entity and appellant have mutually agreed
to the date, time, and location or format of the hearing. These
proposals were intended to create a more agreeable experience for the
appellant overall while also improving efficiency for the appeals
process.
Comment: The comments received on these proposed changes were
largely supportive. Commenters recommended that if written notice is
not sent to an appellant under paragraph (b)(2), then the appeals
entity must contact both the appellant and the appellant's authorized
representative, if any, to agree upon a date, time, and location or
format of the hearing.
Response: We agree with the commenter's recommendation. The simple
act of contacting the appellant's authorized representative could
reduce the likelihood of an unintended failure to appear that could
harm both the appellant and the overall efficiency of the appeals
process. This may be especially true for limited-English proficient
appellants who should not suffer the harsh consequences because of a
language barrier.
We are finalizing Sec. 155.535(a) and (b)(1) as proposed. We are
finalizing Sec. 155.535(b)(2) to allow an exception to the notice
requirement under paragraph (b) when a hearing date sooner than 15 days
is necessary to process an expedited appeal, as described in Sec.
155.540(a), and the appeals entity, has contacted the appellant and
appellant's authorized representative, if any, to schedule a hearing on
a mutually agreed to date, time, and location or format.
f. Appeal Decisions (Sec. 155.545)
In paragraph (b)(1), we proposed to remove the third appearance of
the word ``of'' to correct a typographical error. We proposed to revise
paragraph (c)(1)(i) to include cross references to Sec. 155.330(f)(4)
and (5), which aligns with our proposed change Sec. 155.505(b) to
clarify that applicants and enrollees have the right to appeal a
determination of eligibility for an enrollment period. Finally, we
proposed to revise Sec. 155.545(c)(1)(ii) so that the coverage
effective date for eligible appellants requesting a retroactive appeal
decision effective date is the coverage effective date that the
appellant did receive or could have received if the appellant had
enrolled in coverage under the incorrect eligibility determination that
is the subject of the appeal.
Comment: Commenters all supported the proposed changes to Sec.
155.545. Some commenters recommended that, in the event the appeals
entity takes more than 90 days to process an appeal through no fault of
the appellant, the appellant may choose a coverage effective date that
falls between the initial eligibility determination date and the date
of the appeals decision. They pointed out that while waiting for an
appeal to be adjudicated, an appellant may have experienced a health
issue for which retroactive coverage would be helpful, but may not be
in the financial situation to pay back premiums for more than a limited
number of months.
Response: To remain consistent with other effective date
regulations, we cannot permit an appellant to choose a coverage
effective date that falls between the initial eligibility determination
date and the date of the appeal decision, except in the limited
circumstance described below. Existing effective date regulations
including those at Sec. Sec. 155.410(f), 155.330(f), and 155.420(b)
allow for prospective or retroactive coverage effective dates, as
appropriate, based on a triggering event such as an eligibility
determination or the birth of a child. The special coverage effective
dates for certain special enrollment periods under Sec.
155.420(b)(2)(iii), which requires the Exchange to ensure a coverage
effective date that is appropriate based on the circumstances of the
special enrollment period, must be tied to a triggering event and may
not be chosen by the qualified individual or enrollee.
In the event an appeals entity finds that an eligibility
determination, as described in Sec. 155.505(b)(1), was incorrect, and
the appellant had more than one coverage effective date available in
the enrollment period that the eligibility determination was made, the
appellant may be permitted to choose a coverage effective date
associated with the enrollment period. For example, if the appeals
entity determines that an eligibility determination made on November
25, 2015 for the 2016 coverage year was incorrect, the appellant may
choose a retroactive coverage effective date of January 1, 2016,
February 1, 2016, or March 1, 2016 because the appellant would have had
the opportunity to make a QHP selection between November 25, 2015 and
January 31, 2016 and receive one of those coverage effective dates
(depending on when the QHP was selected). Even in this situation, the
appellant may choose only from among those coverage effective dates
that would have been available under the original enrollment period,
and may not chose any coverage effective date between the initial
eligibility determination date and the date of the appeals decision.
Accordingly, we are finalizing paragraph (c)(1)(ii) as proposed,
with one modification. Under the final regulation, an appeals entity
may only implement an appeal decision retroactively to the coverage
effective date the appellant did receive or could have received if the
appellant had enrolled in coverage under the incorrect eligibility
determination that is the subject of the appeal. We are changing the
phrase ``would have received'' to ``could have received'' to clarify
that an eligible appellant may choose from among the coverage effective
dates that would have been available under the original enrollment
period.
g. Employer Appeals Process (Sec. 155.555)
We proposed to make a technical correction to Sec. 155.555(e)(1)
by removing the cross-reference to paragraph (d)(3) of this section,
which does not exist, and replacing it with paragraph (d)(1)(iii).
We also proposed to amend Sec. 155.555(l) by revising paragraph
(l) and adding paragraphs (l)(1) and (2) to give the Exchange more
operational flexibility in implementing an employer appeal decision.
Currently under Sec. 155.555(l), when an employer appeal decision
affects an employee's eligibility, the Exchange is directed to
redetermine the employee's eligibility and the eligibility of the
employee's household members, if applicable. We proposed to amend Sec.
155.555(l) so that, after receipt of the notice from the appeals entity
under paragraph (k)(3) of this section, the Exchange must follow the
requirements in either paragraph (l)(1) or (2) if the appeal decision
affects the employee's eligibility. Under proposed paragraph (l)(1),
the Exchange must promptly redetermine the employee's eligibility and
the eligibility of the employee's household members, if applicable, in
accordance with the standards specified in Sec. 155.305, as currently
provided in paragraph (l).
[[Page 12280]]
Under proposed paragraph (l)(2), the Exchange must promptly notify the
employee of the requirement to report changes in eligibility as
described in Sec. 155.330(b)(1). We sought comment on the addition of
the option described in paragraph (1)(2), and whether it would help
ensure the most accurate redetermination of eligibility for insurance
affordability programs by giving employees the opportunity to report
any additional changes in their eligibility information.
We are finalizing Sec. 155.555(l), and the technical correction to
Sec. 155.555(e)(1), as proposed.
Comment: Commenters generally supported the proposed addition of
Sec. 155.555(l)(2). Several commenters supported this change because
it would give consumers the opportunity to update their application
with any other changes that could affect eligibility which would result
in a more accurate eligibility determination. One commenter provided an
example of an applicant who had employer-sponsored coverage through his
or her spouse at the time of applying for coverage through the
Exchange, but later received a legal separation. One commenter who
disagreed with the proposed addition of paragraph (l)(2) expressed
concern that an employee who fails to update his or her eligibility may
face a greater tax liability when filing his or her Federal tax return.
Response: As described in Sec. 155.330(b)(1), an enrollee is
required to report any change with respect to the eligibility standards
specified in Sec. 155.305 within 30 days of such change. Before
enrolling in coverage through the Exchange, applicants for coverage
must confirm their understanding that they must notify the entity
administering the program they enroll in if information on their
application changes, and that such changes may affect the eligibility
for member(s) of their household. Nevertheless, we agree with
commenters that the proposed change in Sec. 155.555(l)(2) would give
employees another opportunity to update their application with changes
that affect their eligibility or the eligibility of household members
when an appeal decision under Sec. 155.555 affects the employee's
eligibility. We are finalizing Sec. 155.555(l) as proposed to permit
the Exchange, after receipt of the notice under paragraph (k)(3) of
this section, to follow either the requirements in either paragraph
(l)(1) or (2) if the appeal decision affects the employee's
eligibility. As stated in the proposed rule, for the 2016 benefit year,
the FFE intends to implement appeal decisions that affects the
employee's eligibility by following the procedure described in
paragraph (1)(2).
Comment: One commenter who supported the proposed changes to Sec.
155.555(l) wrote that, in order for the option described in paragraph
(l)(2) to be meaningful, employees must have very clear instructions on
how to update their application.
Response: We agree that a notice under Sec. 155.555(l)(2) must
provide clear instructions to the employee in order to be effective.
For notices submitted by the FFE, we intend to provide guidance on
reporting changes in information with respect to eligibility through
the online application and the Marketplace Call Center, instructions on
updating the online application questions to reflect that the employee
has an offer of employer-sponsored coverage that provides minimum value
and is affordable for the employee, and instructions on terminating
enrollment in a QHP through the Exchange for those who want to
terminate enrollment upon being redetermined ineligible for Exchange
financial assistance.
Comment: Commenters suggested that the Exchange be required to
follow the procedures outlined in both paragraphs (l)(1) and (2). They
recommended that the Exchange send a notice under paragraph (l)(2) and,
if an employee does not update his or her application within a
specified period of time, the Exchange follow the procedure described
paragraph (l)(1) to redetermine the employee's eligibility and the
eligibility of the employee's household members, if applicable.
Response: We are concerned that such a policy would cause
considerable operational burden to the Exchange while providing minimal
benefit to the employee. We believe that the policy as proposed
balances the need for employees to receive an updated eligibility
determination after an appeal decision affects the employee's
eligibility, with the need to provide operational flexibility to the
Exchange. Accordingly, we are finalizing this provision as proposed, to
give the Exchange the option to follow either paragraph (l)(1) or (2)
after receipt of the notice under paragraph (k)(3) of this section.
Comment: One commenter expressed concern that an employee who does
not report his or her change in eligibility could place the employer at
greater risk for an assessable payment under section 4980H of the Code.
Response: We disagree with the proposition that an employee who
does not report his or her change in eligibility could place the
employer at greater risk for being liable for an assessable payment
under section 4980H of the Code. An employee is subject to the
requirement to report a change in his or her eligibility under Sec.
155.330(b)(1) when the appeals entity determines that his or her
employer offered employer-sponsored coverage that provides minimum
value and is affordable for the employee. Independently, the Internal
Revenue Service (IRS) will determine whether an employer is liable for
an employer shared responsibility payment based on the employer shared
responsibility provisions.\50\ If the IRS, in its own review,
determines that an employee of an applicable large employer is
ultimately not eligible for the premium tax credit under section 36B of
the Code, then, in general, the employer will not owe an employer
shared responsibility payment with respect to that full-time employee,
even if the employee enrolled in a QHP with APTC (regardless of whether
the employee reported a change with respect to eligibility to the
Exchange following the outcome of an employer appeal).
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\50\ In general, an applicable large employer (an employer with
at least 50 full-time employees, including full-time equivalent
employees) will owe an assessable payment to the IRS under section
4980H(a) of the Code if the employer fails to offer coverage to its
full-time employees (and their dependents) and at least one full-
time employee receives the premium tax credit. An assessable payment
under section 4980H(a) of the Code is calculated based on the
employer's number of full-time employees, without regard to how many
full-time employees receive the premium tax credit. An applicable
large employer will owe an assessable payment under section 4980H(b)
of the Code if it offers coverage to its full-time employees (and
their dependents) but at least one full-time employee receives the
premium tax credit, which could occur if the coverage offered did
not provide minimum value or was not affordable. (For purposes of
section 4980H, coverage may be considered affordable under an
affordability safe harbor even if the coverage is not affordable for
purposes of section 36B of the Code. 26 CFR 54.4980H-5(e)(2)). An
assessable payment under section 4980H(b) of the Code is calculated
based on the number of full-time employees who receive the premium
tax credit.
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7. Exchange Functions in the Individual Market: Eligibility
Determinations for Exemptions
a. Eligibility Standards for Exemptions (Sec. 155.605)
In Sec. 155.605, we proposed to clarify and streamline policies
related to exemptions. Consistent with prior guidance, we proposed to
permit any applicant whose gross income is below his or her applicable
filing threshold to qualify for a hardship exemption and claim the
exemption through the tax filing process. In addition, we proposed to
permit individuals eligible for services from an Indian health care
[[Page 12281]]
provider to claim a hardship exemption through the tax filing process.
We proposed that for the 2016 tax year and later that the Exchange no
longer issue exemption certificate numbers (ECNs) for the following
exemption types: members of a Health Care Sharing Ministry, individuals
who are incarcerated, members of Federally recognized tribes, and
individuals who are eligible for services from an Indian health care
provider. We also proposed to codify a list of other hardship
exemptions previously established in prior guidance and to clarify
operational standards for timeframes of hardship events and the
duration of certain hardship exemptions. We are finalizing the policy
of streamlining of exemptions offered through the tax filing process as
proposed; however, at this time, we will not codify the list of
hardship exemptions established in prior guidance and will not finalize
the proposal to permit an individual to obtain a hardship exemption for
a hardship experienced within 3 years of the date of application.
Comment: We received comments in favor of eliminating unnecessary
paperwork for individuals seeking an exemption due to their State not
expanding Medicaid coverage. Commenters also supported streamlining the
exemption process for members of a Health Care Sharing Ministry,
members of Federally recognized Indian tribes and individuals eligible
for services from an Indian health care provider, and individuals who
were incarcerated by delegating these exemption types fully to the IRS.
Response: In this final rule, we are finalizing the proposal to
streamline the exemption application process for consumers and to
minimize paperwork requirements for consumers in States that did not
expand Medicaid coverage. We are finalizing the proposal to no longer
require a denial notice for the hardship exemption for applicants
ineligible for Medicaid because their State did not expand Medicaid
coverage. In addition, we are finalizing the proposal to streamline
exemption processing for members of a Health Care Sharing Ministry,
individuals who are incarcerated, members of Federally recognized
Indian tribes, and individuals who are eligible for services from an
Indian health care provider.
Comment: We received comments supporting and opposing our proposal
to codify hardship criteria established in regulatory guidance.
Commenters stated that any expansion of the hardship exemption criteria
could weaken the individual shared responsibility provision and create
instability in insurance risk pools. In addition, we received a request
for clarification of factors that an Exchange would examine in order to
approve a hardship exemption.
Response: We will continue to examine these comments and will not
codify the list of hardship exemptions previously established in public
guidance at this time.
Comment: We received comments both in support of and against the
proposal to allow individuals to apply for a hardship that occurred up
to 3 calendar years in the past. Commenters who supported this proposal
thought that it would provide greater flexibility for Exchanges to
approve hardship exemptions. Commenters who did not support the
proposal stated that 3 years was overly broad and could lead to a
destabilization of a health insurance risk pool by providing an
additional incentive for healthy consumers to claim an exemption in
lieu of obtaining health coverage.
Response: In response to the concerns raised by commenters, we will
not finalize Sec. 155.605(d)(2) at this time. Similarly, we will not
finalize the last sentence of the introductory paragraph of Sec.
155.605(d)(1), which establishes a maximum length of any hardship
exemption of the month before the circumstance, the remainder of the
calendar year, and the next calendar year.
Comment: We received a suggestion that the Exchange establish an
exemption for people who are erroneously determined ineligible for APTC
and who do not enroll in a qualified health plan as a result.
We also received one comment that our proposal to codify the
existing hardship exemption time period related to an appeal in Sec.
155.605(d)(2)(xiv) should be expanded to include the date of
application, rather than a consumer's potential coverage effective
date. The commenter stated that the current timeframe is too narrow for
individuals who were unable to file an appeal of an eligibility
determination within 90 days due to the fact that a data inconsistency
generated during the application process must be adjudicated before a
consumer may file an appeal.
Response: We are not codifying Sec. 155.605(d)(2)(xiv) at this
time, but will continue to consider these issues and comments for
future rulemaking.
b. Required Contribution Percentage (Sec. 155.605(e)(3))
Under section 5000A of the Code, an individual must have minimum
essential coverage for each month, qualify for an exemption, or make a
shared responsibility payment with his or her Federal income tax
return. Under section 5000A(e)(1) of the Code, an individual is exempt
if the amount that he or she would be required to pay for minimum
essential coverage (the required contribution) exceeds a particular
percentage (the required contribution percentage) of his or her actual
household income for a taxable year. In addition, under Sec.
155.605(g)(2) (redesignated as Sec. 155.605(d)(2) in this final rule),
an individual is exempt if his or her required contribution exceeds the
required contribution percentage of his or her projected household
income for a year. Finally, under Sec. 155.605(g)(5) (redesignated as
Sec. 155.605(d)(5) in this final rule), certain employed individuals
are exempt if, on an individual basis, the cost of self-only coverage
is less than the required contribution percentage, but the aggregate
cost of individual coverage through employers exceeds the required
contribution percentage, and no family coverage is available through an
employer at a cost less than the required contribution percentage.
Section 5000A established the 2014 required contribution percentage
at 8 percent. For plan years after 2014, section 5000A(e)(1)(D) of the
Code and 26 CFR 1.5000A-3(e)(2)(ii) provide that the required
contribution percentage is the percentage determined by the Secretary
of HHS that reflects the excess of the rate of premium growth between
the preceding calendar year and 2013, over the rate of income growth
for that period.
We established a methodology for determining the excess of the rate
of premium growth over the rate of income growth for plan years after
2014 in the 2015 Market Standards Rule (79 FR 30302), and we said
future adjustments would be published annually in the HHS notice of
benefit and payment parameters.
Under the HHS methodology, the rate of premium growth over the rate
of income growth for a particular calendar year is the quotient of (x)
1 plus the rate of premium growth between the preceding calendar year
and 2013, carried out to ten significant digits, divided by (y) 1 plus
the rate of income growth between the preceding calendar year and 2013,
carried out to ten significant digits.\51\
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\51\ We also defined the required contribution percentage at
Sec. 155.600(a) to mean the product of 8 percent and the rate of
premium growth over the rate of income growth for the calendar year,
rounded to the nearest one-hundredth of one percent.
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As the measure of premium growth for a calendar year, we
established in the 2015 Market Standards Rule that we
[[Page 12282]]
would use the premium adjustment percentage. The premium adjustment
percentage is 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.\52\ (Below, in Sec. 156.130, we finalize the proposed 2017
premium adjustment percentage of 1.1325256291 (or an increase of about
13.3 percent) over the period from 2013 to 2016. This reflects an
increase of about 4.9 percentage points (1.1325256291-1.0831604752) for
2015-2016.)
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\52\ For any given year the premium adjustment percentage is the
percentage (if any) by which the most recent NHEA projection of per
enrollee employer-sponsored insurance premiums for the current year
exceeds the most recent NHEA projection of per enrollee employer-
sponsored insurance premiums for 2013.
---------------------------------------------------------------------------
As the measure of income growth for a calendar year, we established
in the 2015 Market Standards Rule that we would use per capita Gross
Domestic Product (GDP), using the projections of per capita GDP used
for the NHEA, which is calculated by the Office of the Actuary. We also
stated in the 2015 Market Standards Rule (79 FR 30304), that we would-
consider alternative measures of income and premium growth should
projections of those measures become available. Subsequently, as part
of its projections of National Health Expenditures, the Office of the
Actuary published projections of personal income (PI) for the first
time in September 2014 and subsequently in July 2015. As a result, in
the proposed rule we said we were considering substituting this new
measure of per capita PI for per capita GDP in the calculation for the
required contribution percentage. We received one comment in support of
our proposal to substitute per capita PI for per capita GDP in the
calculation to establish the rate of income growth for the required
contribution percentage, and are finalizing it here. As stated in the
proposed rule, we believe per capita PI better aligns with the
statutory intent of measuring the income of an individual than per
capita GDP. The projections of PI published by the Office of the
Actuary are consistent with the measure published by the Bureau of
Economic Analysis, which reflects income received by individuals from
all sources, including income from participation in production.
Specifically, it includes compensation of employees (received),
supplements to wages and salaries, proprietors' income with adjustments
for inventory valuation and capital consumption, personal income
receipts on assets, rental income, and personal current transfer
receipts, less contributions for government social insurance.
The Office of the Actuary's PI projection is generated using the
University of Maryland's Long Term Inter-industry Forecasting Tool. The
Long Term Inter-industry Forecasting Tool model is a macro-economic
model that is based on the historical relationships that exist between
PI growth, GDP growth, and changes in other macro-economic variables.
For instance, the correlation between PI and GDP is influenced by
fluctuations in taxes and government transfer payments, depreciation of
capital stock, and retained earnings and transfer payments of private
business.\53\ Estimates of GDP in the NHE projections reflect economic
assumptions from the 2015 Medicare Trustees Report and are updated to
incorporate the latest available consensus data from the monthly Blue
Chip Economic Indicators. These same economic assumptions are used for
producing projections of PI and employer-sponsored insurance premiums,
so using this estimate will generate an internally consistent estimate
of the growth in premiums relative to growth in income.
---------------------------------------------------------------------------
\53\ For projections of PI and GDP, see Table 1 at Centers for
Medicare & Medicaid Services. National Health Expenditure Data:
Projected, available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html.
---------------------------------------------------------------------------
As stated in the proposed rule, we will continue to consider other
changes to the measures of income per capita and premium growth as
additional information becomes available and as we gain experience with
the current measures; we received no comments on other indices that we
should develop or consider.
Since updating the required contribution percentage for 2017
requires calculating the cumulative difference between premium growth
and income growth between the preceding calendar year and 2013, we also
proposed in the proposed rule to replace per capita GDP with per capita
PI for all years beginning in 2013 and then calculate cumulative income
growth through 2016. We received no comments on this retrospective
approach, and are finalizing it here; as stated in the proposed rule, a
retrospective approach allows for consistency across all years with the
most recent data available. We note that potential future changes based
on new data that are not available for 2013 may be made on a
prospective basis.
Therefore, under the approach finalized here, and using the NHEA
data, the rate of income growth for 2017 is the percentage (if any) by
which the most recent projection of per capita PI for the preceding
calendar year ($49,875 for 2016) exceeds the per capita PI for 2013,
($44,925), carried out to ten significant digits. The ratio of per
capita PI for 2016 over the per capita PI for 2013, using the finalized
approach for both years, is estimated to be 1.1101836394 (that is, per
capita income growth of about 11.0 percent). This reflects an increase
of about 3.0 percentage points (1.1101836394-1.0798864830) for 2015-
2016.
Thus, using the 2017 premium adjustment percentage finalized in
this rule, the excess of the rate of premium growth over the rate of
income growth for 2013-2016 is 1.1325256291/1.1101836394, or
1.0201245892. This results in a required contribution percentage for
2017 of 8.00*1.0201245892, or 8.16 percent, when rounded to the nearest
one-hundredth of one percent, an increase of 0.27 percentage points
from 2016 (8.16100-8.13399). The excess of the rate of premium growth
over the rate of income growth also is used for determining the
applicable percentage in section 36B(b)(3)(A) and the required
contribution percentage in section 36(c)(2)(C).
c. Eligibility Process for Exemptions (Sec. 155.610)
In Sec. 155.610, we proposed adding new paragraph in Sec.
155.610(k) which describes how the Exchange will handle incomplete
exemption applications. We proposed that the Exchange will handle
incomplete exemption applications in a similar manner to the procedure
for handling incomplete health coverage applications established under
Sec. 155.310(k). Specifically, when the Exchange receives an
application that does not contain sufficient information to make an
eligibility determination, the Exchange will: (1) Provide notice to the
applicant indicating that information necessary to complete an
eligibility determination is missing, specify the missing information,
and provide instructions for submitting the missing information; (2)
provide the applicant with a period of no less than 10 and no more than
90 days starting from the date on which the notice is sent to the
applicant to provide the information needed to complete the application
to the Exchange; and (3) if the Exchange does not receive the requested
information, then the Exchange will
[[Page 12283]]
notify the applicant that the Exchange will not process the application
and will provide appeal rights to the applicant. We sought comment on
this proposal.
Comment: We received comments which supported this proposal to
handle incomplete exemption applications, however many commenters found
the 10-day minimum timeframe to be too short and recommended a minimum
of 30 days to submit missing information to the Exchange instead.
Response: We accept this recommendation, and will amend the
regulation text to establish a minimum of 30 days from the date on
which the notice is sent to an applicant to provide required
information to the Exchange.
d. Verification Process Related to Eligibility for Exemptions (Sec.
155.615)
In Sec. 155.615, we proposed to delete Sec. 155.615(c), (d), (e),
and (f)(3) to conform with a proposal under Sec. 155.605 that would
remove the ability for consumers to obtain an ECN from the Exchange for
certain exemptions. We also proposed conforming redesignations of the
remaining paragraphs under Sec. 155.615. Elsewhere in this final rule,
we are finalizing the relevant proposals under Sec. 155.605.
Accordingly, we are finalizing as proposed the deletions of paragraphs
(c), (d), (e), and (f)(3) from Sec. 155.615 and the conforming
redesignations.
Comment: We received comments both in support of and against the 3-
year period for exemption criteria under the proposed rule at Sec.
155.605(d)(3) and the conforming amendment to Sec. 155.615(c)(2).
Response: We will continue to consider the issues presented by
commenters, and will not finalize Sec. 155.615(c)(2) at this time.
e. Options for Conducting Eligibility Determinations for Exemptions
(Sec. 155.625)
We proposed to amend Sec. 155.625(a)(2) and (b) to remove the
deadline after which a State Exchange would be required to process
exemption applications for residents of the State by the start of open
enrollment for 2016, and to instead permit an Exchange to adopt the
exemption eligibility determination service operated by HHS
indefinitely. Based on HHS's operation of this service to date, we have
determined that the HHS exemption option is an efficient process for
State Exchanges that has minimized confusion for consumers. This
proposal follows an FAQ published on July 28, 2015 in which HHS stated
that it will not take any enforcement action against State Exchanges
that continue to use the HHS service for exemptions beyond the start of
open enrollment for 2016.
Comment: We received one comment about this section that supports
the recommendation to permit States to elect to use the HHS service for
exemptions. This commenter also suggested that an SBE should be able to
grant the hardship exemption established in Sec. 155.605(d)(2) for
lack of affordable coverage even if it does not process other
exemptions, because the State would have the eligibility information
needed to determine whether an individual qualifies for this exemption
from an individual's health coverage application.
Response: We accept this comment and have amended the regulation
text to permit a State Exchange to grant a hardship exemption to
consumers the Exchange determines unable to afford coverage based on
their projected annual household income under Sec. 155.605(d)(2)
regardless of whether the Exchange will grant other exemption types.
8. Exchange Functions: Small Business Health Options Program (SHOP)
a. Functions of a SHOP (Sec. 155.705)
In Sec. 155.705, we proposed to add new paragraphs (b)(3)(viii)
and (ix) to specify that the FF-SHOPs would provide additional options
for employer choice for plan years beginning on or after January 1,
2017, namely a ``vertical choice'' option for QHPs and SADPs. Under
this option, employers will be able to offer qualified employees a
choice of all plans across all available levels of coverage from a
single issuer. We noted that existing SHOP regulations at Sec.
155.705(b)(3)(i)(B) and (b)(3)(ii)(B) provide State-based SHOPs with
the flexibility to provide employers with vertical choice or other
employer choice options in addition to ``horizontal choice,'' in which
an employer selects a single actuarial value coverage level and makes
all plans at that coverage level available to qualified employees. We
did not propose to alter State-based SHOPs' flexibility in this regard,
unless the State-based SHOP was relying on the Federal platform for
SHOP enrollment functions.
We also sought comment on whether the FF-SHOPs should make other
employer choice options available, including allowing participating
employers to select an actuarial value level of coverage, after which
employees could choose from plans available at that level and at the
level above it, which we refer to below as ``contiguous choice.'' We
also sought comment on whether to give the State in which the FF-SHOP
is operating an opportunity to recommend whether the FF-SHOP in that
State should implement any additional model of employer choice.
However, in all States, the FF-SHOPs would continue to give employers
the option of offering a single QHP (or single SADP) as well as the
option of offering a choice of all QHPs (or SADPs) at a single
actuarial value level of coverage, and States would not be given an
opportunity to recommend that these options not be implemented in their
State.
We also proposed adding new paragraph Sec. 155.705(b)(3)(x) to
provide that the employer choice models available through the FF-SHOP
platform would be available for SBE-FPs utilizing the Federal platform
for SHOP enrollment functions. We discussed how, if we gave States with
FF-SHOPs an opportunity to recommend implementation of additional
employer choice models, States with SBE-FPs would be given the same
opportunity.
Additionally, we proposed to amend paragraph (b)(4)(ii)(B) to
specify the timeline under which qualified employers in an FF-SHOP must
make initial premium payments. We proposed to add paragraph
(b)(4)(ii)(B)(1) to specify that in the FF-SHOPs, payment for the
group's first month of coverage must be received by the premium
aggregation services vendor on or before the 20th day of the month
prior to the month that coverage begins. We explained that electronic
payments would have to be completed or the premium aggregation services
vendor must have receipt of any hard copy check on or before the 20th
day of the month prior to the month that coverage would begin. We also
explained that if an initial premium payment is not received by the
premium aggregation services vendor on or before the 20th day of the
month prior to the month that coverage would begin, coverage would not
be effectuated. We further explained that grace period and
reinstatement opportunities under Sec. 155.735(c)(2), which are
provided to groups that do not make timely payments after coverage has
taken effect, are not relevant in this context, and we proposed
amendments to introductory language at Sec. 155.735(c)(2) to reflect
this.
In circumstances where an FF-SHOP would be retroactively
effectuating coverage for qualified employer groups, the FF-SHOP would
need to receive payment prior to effectuating coverage. We sought
comment on the timing of when a premium payment should be
[[Page 12284]]
required to be received by an FF-SHOP when coverage is effectuated
retroactively, and explained that we were considering a policy under
which payments for the first month's coverage and all months of the
retroactive coverage would have to be received and processed no later
than 30 days after the event that triggers the eligibility for
retroactive coverage.
At paragraph (b)(4)(ii)(C)(2), we proposed to correct a cross
reference to Sec. 155.705(b)(4)(ii)(B)(1) that should have been
updated to cross-reference Sec. 155.705(b)(4)(ii)(C)(1) when paragraph
(b)(4)(ii)(A) was added in the 2016 Payment Notice.
We also proposed amendments to Sec. 155.705(b)(11)(ii) to provide
for FF-SHOPs to use a ``fixed contribution methodology'' in addition to
the reference plan methodology set forth in the current regulation. We
proposed to specify that when an employer decides to offer a single
plan to qualified employees, the employer would be required to use the
fixed contribution methodology. We also proposed to permit employers to
choose between the reference plan contribution methodology and the
proposed fixed contribution methodology when offering a choice of
plans. Additionally, we proposed to add language to Sec.
155.705(b)(11)(ii) explaining that a tobacco surcharge, if applicable,
would be added to the monthly premium after the employer contribution
is applied to the premium. Finally, we proposed to streamline the
discussion of the reference plan contribution methodology described in
Sec. 155.705(b)(11)(ii) and proposed removing Sec.
155.705(b)(11)(ii)(D) because the FF-SHOPs are currently not able to
support basing employer contributions on calculated composite premiums.
We are finalizing the provisions regarding the FF-SHOP's authority
to provide vertical choice, but will provide States with FF-SHOPs an
opportunity to recommend that the FF-SHOP in their State not offer
vertical choice in their State. States with SBE-FPs utilizing the
Federal platform for SHOP enrollment functions will have the authority
to opt out of making vertical choice available in their States.
Information about whether vertical choice will be available in specific
States with an FF-SHOP or SBE-FP will be made public prior to the
deadline for QHP certification application submissions for the
applicable year. We are also making a minor modification to add ``stand
alone dental'' to the first sentence of Sec. 155.705(b)(3)(ix)(C).
Comment: We received several comments concerning the additional
proposed employer choice options. Many commenters supported the
additional employer choice options because they would enhance the
appeal of FF-SHOPs for both employees and employers. One commenter
encouraged HHS to expand its proposal by allowing FF-SHOP employees to
select from a wider variety of plans. Some commenters did not support
adding vertical choice as an additional employer choice option,
expressing concern about adverse selection because vertical choice
could lead smaller employer groups with enrollees in need of more
medical services to enroll in higher metal level QHPs. Additionally,
there is concern that even if vertical choice is available to
employers, an employer could still select horizontal choice or a single
plan causing adverse selection. Commenters recommended that HHS
consider the impact on selection and resulting changes in plan pricing
when considering offering vertical choice in an FF-SHOP. One commenter
recommended that FF-SHOP members only be allowed to enroll in one plan
with one carrier to reduce complexity in the FF-SHOPs. Some commenters
recommended that HHS promote the existing employer choice options
instead of adding new employer choice options at this time. Other
commenters believed that additional changes to employer choice will
create confusion, add complexity, and create administrative challenges
which would discourage participation in FF-SHOPs. One commenter also
expressed concern about employer choice options, stating that if
employers are required to select a specific issuer to offer coverage to
the group, provider networks for employees could potentially be
disrupted. To address this, the commenter recommended that HHS open all
QHPs to employees enrolling in coverage through an FF-SHOP.
Response: We are finalizing the proposal to provide for a vertical
choice option in FF-SHOPs, for plan years beginning on or after January
1, 2017. We agree with commenters that additional employer choice
options can enhance the appeal of the FF-SHOPs, and intend to work with
stakeholders to minimize any confusion stemming from the introduction
of vertical choice. Due to operational limitations, at this time we are
not offering a wider variety of employer choice options. We appreciate
the concerns raised about adverse selection, but believe the fact that
our proposal limits vertical choice to a single issuer's plans will
help allow the issuer to manage the risk of adverse selection. Offering
multiple plans to a qualified employer group allows an issuer to enroll
a greater share of the group than if multiple issuers offering coverage
in a single coverage level were vying for members of the group. Issuers
would thus likely enroll a more diverse risk pool from the qualified
employer's group. While qualified employers may still choose to offer
their qualified employees horizontal choice or a single plan, the
availability of the additional vertical choice option may help to
mitigate the risk for adverse selection. To mitigate concerns raised by
commenters and because we believe States are best positioned to
understand the small group market dynamic in their State, HHS will
provide States with an FF-SHOP an opportunity to recommend that the FF-
SHOP in their State not make vertical choice available in their State.
For similar reasons, States with SBE-FPs utilizing the Federal platform
for SHOP enrollment functions will be able to opt out of making
vertical choice available in their States. In States where vertical
choice is available, a qualified employer would have a choice of three
employer choice options for both QHPs and SADPs: A single plan, all
available plans at a single level of coverage (horizontal choice, as
provided for by the statute), and a choice of all plans offered by a
single issuer across all levels of coverage (vertical choice). In
States where vertical choice is not an available option for qualified
employers, the single plan option and horizontal choice option would
continue to be available to qualified employers.
Comment: We received several comments supporting adding contiguous
choice as an additional employer choice option because employers would
have more QHP options available to offer to their employees. One
commenter recommends that HHS consider the additional administrative
costs of allowing additional choice options.
Response: As stated, we believe additional employer choice options
could enhance the appeal of the FF-SHOPs, and we will continue to
explore adding the option of contiguous choice in the future, but are
not adding a contiguous choice option at this time, so that we can
further consider the potential for adverse selection that could result
from that option.
Comment: One commenter recommended that States should not be
permitted to make the decision on whether to implement new approaches
for employer choice in FF-SHOPs and that it should be at the issuer's
option about which QHPs and SADPs to make available to qualified
employees. The
[[Page 12285]]
commenter recommended that HHS require States to conduct an assessment
on the actuarial impact of various employer choice approaches, and
determine safeguards that will protect against adverse selection. Other
commenters also stated they do not agree with allowing States to opt in
and out of offering vertical choice, and supported standardizing
employer choice options across all States that have an FF-SHOP or that
rely on the Federal platform for SHOP enrollment. Another commenter
encouraged HHS to only allow additional employer choice options in
States where the same option currently exists in the off-Exchange
market, to prevent possible adverse selection while promoting a stable
small group market.
Response: In order to provide for State-specific evaluations of the
impact of vertical choice on adverse selection and resulting changes in
plan pricing, and to provide for more uniform small group market
coverage options both on and off-Exchange, States with an FF-SHOP will
be given an opportunity to recommend that the FF-SHOP in their State
not offer vertical choice. States with SBE-FPs utilizing the Federal
platform for SHOP enrollment functions will be able to opt out of
making vertical choice available in their States. We believe that
States are best positioned to assess the impact of additional employer
choice options based on local market conditions. A State with an FF-
SHOP that wishes to recommend against offering vertical choice in that
State must submit a letter to HHS in advance of the annual QHP
certification application deadline, by a date to be established by HHS,
describing and justifying the State's recommendation, based on the
anticipated impact vertical choice would have on the small group market
and consumers. A State-based Exchange utilizing the Federal platform
for SHOP enrollment functions may decide against offering vertical
choice by notifying HHS of that decision.
HHS is requiring that a State with an FF-SHOP that wishes to
recommend against offering vertical choice in that State make its
recommendation to the FF-SHOP by submitting a letter to HHS in advance
of the annual QHP certification application deadline, by a date to be
established by HHS. The State's letter must describe and justify the
State's recommendation, based on the anticipated impact this additional
option would have on the small group market and consumers. This
deadline will give issuers sufficient time to make informed decisions
about whether to participate in the FF-SHOP, and will give the FF-SHOPs
sufficient time to implement the State's recommendation. States with
FF-SHOPs will be able to make recommendations regarding vertical choice
on an annual basis. For plan years beginning in 2017 only, we strongly
recommend that States with FF-SHOPs submit their recommendations to HHS
on or before March 25, 2016, via email to shop@cms.hhs.gov. States that
meet this deadline will provide the FF-SHOPs sufficient time to review
and implement State recommendations. HHS anticipates that its decisions
regarding State recommendations for plan years beginning in 2017 would
be made by April 1, 2016, which would provide issuers with sufficient
time to determine their involvement in the FF-SHOPs for the following
year.
For these same reasons, we are finalizing our proposal to add a new
paragraph at Sec. 155.705(b)(3)(x) to provide that the employer choice
models available through the FF-SHOP platform will be available for
SBE-FPs utilizing the Federal platform for SHOP enrollment functions,
except that SBE-FPs may decide against offering the employer choice
models specified in paragraphs (b)(3)(viii)(C) and (b)(3)(ix)(C). Under
the final rule, a State with an SBE-FP must notify HHS of its decision
against offering vertical choice in that State in advance of the annual
QHP certification application deadline, by a date to be established by
HHS. Again, this deadline will give issuers sufficient time to make
informed decisions about whether to participate in the SHOP, and will
give us sufficient time to implement the State's decision. States with
SBE-FPs will be able to make decisions regarding vertical choice on an
annual basis. For plan years beginning in 2017 only, we strongly
recommend that States with an SBE-FP utilizing the Federal platform for
SHOP enrollment functions notify HHS of their decisions on or before
March 25, 2016, via email to shop@cms.hhs.gov. Again, States that meet
this deadline will provide the FF-SHOPs sufficient lead time to
implement the State's decision. HHS anticipates that it will announce
the SBE-FP States that have decided against offering vertical choice
for plan years beginning in 2017 on or around April 1, 2016, which
would provide issuers with sufficient time to decide whether to
participate in the SHOP for the following year.
Additional guidance will be provided to States regarding the
notification or recommendation time frames for plan years beginning in
2018 and beyond.
Comment: Some commenters believe that requiring employer groups to
make initial premium payments by the 20th day of the month prior to the
month that coverage begins increases the potential for issuers not to
receive the initial premium payment until after the first month of
effectuated coverage. These commenters recommended that issuers not be
required to effectuate coverage without payment from the FF-SHOP.
Response: We are finalizing the provision with a modification to
specify that a similar policy also applies under circumstances of
retroactive coverage. Under Sec. 156.285(c)(8)(iii), FF-SHOP issuers
are required to effectuate coverage unless the FF-SHOP sends a
cancellation notice prior to the coverage effective date. Section
156.285(c)(8)(iii) does not require issuers to effectuate coverage if
the FF-SHOP does not receive a premium payment by the deadline
established for the FF-SHOP. If payment is not received by the FF-SHOP
prior to that deadline, the FF-SHOP will issue a cancellation notice.
We are finalizing the following premium payment policies for
circumstances where an FF-SHOP would be retroactively effectuating
coverage. These policies differ somewhat from the policies we explained
we were considering in the preamble to the proposed rule, because for
operational reasons, premium payments must be received by the FF-SHOP
premium aggregation services vendor by a certain date in order to be
processed in a timely manner. When coverage is effectuated
retroactively, as discussed in the proposed rule preamble, payment for
the first month's coverage and all months of the retroactive coverage
must be received and processed no later than 30 days after the event
that triggers the eligibility for retroactive coverage. Additionally,
however, in order for coverage to be effectuated by the first day of
the following month, the employer must also make this payment by the
20th day of the preceding month. If payment is made after the 20th day
of a month, coverage will take effect as of the retroactive coverage
effective date, but coverage will not be effectuated until the first
day of the second month following the payment, and the payment must
include the premium for the intervening month. Regardless, in order to
effectuate retroactive coverage for a qualified employer or qualified
employee, such as under an appeal decision, all premiums owed must be
paid in full, including any prior premiums owed for coverage back to
the retroactive coverage effective date, as well as a premium pre-
payment for the next month's coverage.
These policies also apply to SBE-FPs that are utilizing the Federal
platform
[[Page 12286]]
for SHOP enrollment and premium aggregation functions, because premium
aggregation is an integral part of the eligibility and enrollment
functions managed through the FF-SHOP platform.
Comment: We received a comment expressing concern that employer
groups will not be able to make the full premium payment within 30 days
after the event that triggers eligibility for retroactive coverage,
depending on how many months of retroactivity are covered. The
commenter recommended that issuers not be required to effectuate
retroactive coverage without full payment.
Response: We believe that 30 days after the event that triggers
eligibility for retroactive coverage is sufficient time for employer
groups to make their full premium payment in order to have retroactive
coverage. This policy also ensures that issuers receive payments in a
timely manner. Issuers are not required to effectuate coverage if an
employer's full payment is not received by the deadline set by the FF-
SHOP. Issuers should not cancel an enrollment transaction unless the
FF-SHOP sends a cancellation transaction.
Comment: We received no comments regarding our proposal to correct
the cross reference from Sec. 155.705(b)(4)(ii)(B)(1) to Sec.
155.705(b)(4)(ii)(C)(1).
Response: We are finalizing this provision as proposed.
Comment: With respect to our proposals to amend Sec.
155.705(b)(11)(ii), one commenter recommended that HHS clarify that any
tobacco surcharge would be paid to the FF-SHOP and not to issuers
separately. Another commenter recommended that the tobacco surcharges
should be spread across the costs of coverage for an entire group,
rather than for the tobacco users only.
Response: Any applicable tobacco surcharges will continue to be
paid directly to the FF-SHOP as part of the group's total premium
payment and will not be paid to issuers separately. We disagree that
the tobacco surcharge should be spread across the entire group. The
surcharge is a cost borne by the tobacco user and other enrollees in a
group should not be responsible for sharing in its cost. We are
finalizing the proposed amendments to Sec. 155.705(b)(11)(ii) with a
modification to the language about tobacco surcharges for clarity. We
are also modifying the proposed language about the contribution
methodologies available to employers that offer a choice of plans to
replace a reference to ``the level of coverage offered'' with a
reference to the ``plans offered,'' to reflect the possibility that
employers might offer vertical choice under the amendments finalized in
this rule.
Comment: With respect to our proposals to amend Sec.
155.705(b)(11)(ii), we received one comment stating that if the FF-SHOP
cannot support basing employer contributions on calculated composite
premiums, employers may lose interest in participating in FF-SHOPs.
Another commenter stated that because this feature is widely available
off-Exchange, removing this option would put FF-SHOPs at a competitive
disadvantage. Several commenters urged HHS to continue seeking feedback
on this feature.
Response: Because of operational limitations, FF-SHOPs are not
currently able to support basing employer contributions on calculated
composite premiums. However, we appreciate the concerns expressed by
commenters and we are therefore not finalizing the removal of this
provision as proposed. Instead, we are modifying the provision at Sec.
155.705(b)(11)(ii)(D) to state that an FF-SHOP may permit employers to
base contributions on a calculated composite premium for employees, for
adult dependents, and for dependents below age 21, which gives the FF-
SHOPs the flexibility to implement this approach in the future. We are
also removing the reference to ``the reference plan'' in this provision
to reflect the availability of the fixed contribution methodology under
the amendments finalized in this rule. We will continue to examine
supporting employer contributions based on calculated composite
premiums in the FF-SHOPs.
b. Eligibility Determination Process for SHOP (Sec. 155.715)
In order to align with our interpretation of guaranteed
availability and guaranteed renewability, we proposed to specify that
the termination described in Sec. 155.715(g)(1) would be a termination
of the employer group's enrollment through the SHOP, rather than a
termination of a group's coverage. In many circumstances, an employer
may offer to continue the same coverage outside of the SHOP, in which
case the issuer should not terminate the coverage. We are finalizing
this provision as proposed.
Comment: Some commenters support removing automatic terminations of
SHOP coverage in order to be consistent with guaranteed renewability
requirements. One commenter recommended that if an employer no longer
has SHOP coverage, the employer should be able to make no contribution
toward the cost of employee coverage through the SHOP. Employees would
be responsible for paying the full premium amount. Another commenter
stated that making the coverage available outside of the SHOP and
requiring employers to make payments and send data directly to issuers
will introduce complexity, undue burden, and unnecessary confusion due
to the differing issuer and SHOP data and payment methods. We also
received one comment recommending that HHS wait to implement
terminations of SHOP enrollment, rather than a termination of the
group's coverage, until the infrastructure exists to automate the
process.
Response: In order to align with regulations around guaranteed
availability and guaranteed renewability, we are finalizing the
provision as proposed. Employers can decide whether to contribute
toward the cost of employee coverage regardless of whether the employee
has coverage through a SHOP. Employer groups wishing to maintain their
small group coverage outside of a SHOP are encouraged to work directly
with issuers to do so. If an employer offers coverage outside of a
SHOP, enrollment and payment functions will be between the group and
the specific issuer, and not through the SHOP. SHOPs are encouraged to
work directly with issuers and groups to address any questions and
concerns about the transfer of responsibility from the SHOP to the
issuer. SHOPs, and not issuers, initiate all terminations of a group's
enrollment through the SHOP, and this is how the FF-SHOP currently
operationalizes terminations of group enrollments. FF-SHOPs are not
able to automate the process of terminating FF-SHOP enrollment because
it requires information from issuers and groups to ensure a transfer of
responsibility should a group's coverage continue outside of the FF-
SHOP.
c. Enrollment Periods Under SHOP (Sec. 155.725)
In Sec. 155.725, we proposed to amend paragraph (c). Specifically,
we proposed to delete paragraph (c)(1) because it is outdated,
redesignate current paragraph (c)(2) as introductory text to paragraph
(c), and redesignate the remaining paragraphs to reflect the new
structure of paragraph (c).
We also proposed to redesignate Sec. 155.725(e) as Sec.
155.725(e)(1), and add paragraph (e)(2) to specify that qualified
employers in the FF-SHOP must provide qualified employees with an
annual open enrollment period of at least 1 week. Like all of Sec.
155.725(e), this amendment would only apply to renewals of SHOP
participation.
[[Page 12287]]
Additionally, we proposed amendments to Sec. 155.725(h)(2) to
specify that in the case of an initial group enrollment or renewal, the
event that triggers the group's coverage effective date in an FF-SHOP
is not the plan selection of an individual qualified employee being
enrolled as part of the group enrollment, but the employer's submission
of all plan selections for the group, which we refer to in rule text as
the group enrollment. This amendment would permit qualified employers
to set initial and annual enrollment periods for their qualified
employees that could include qualified employee plan selections both
before and after the 15th day of the month. We also proposed to permit
employers to select a coverage effective date up to 2 months in
advance, provided that small group market rates are available for the
quarter in which the employer would like coverage to take effect. Under
the proposal, if an employer submits its group enrollment by the 15th
day of any month, the FF-SHOP would ensure a coverage effective date of
the first day of the following month, unless the employer opts for a
later effective date for which rates are available. If an employer
submits its group enrollment between the 16th day of the month and the
last day of the month, we proposed that the FF-SHOP ensure a coverage
effective date of the first day of the second following month, unless
the employer opts for a later effective date for which rates are
available. We note that the effective date of coverage selected by a
qualified employer remains subject to the limit on waiting periods
under Sec. 147.116.
We also proposed to amend Sec. 155.725(i)(1) to provide that a
SHOP be permitted to, but not be required to, provide for auto-renewals
of qualified employees. We also proposed to amend the language of the
provision for consistency with our interpretation of guaranteed
renewability. Specifically, if a SHOP does not provide for auto-
renewals for qualified employees, qualified employees would have to
review and provide a response to the employer's renewal offer of
coverage. If auto-renewal is available in a SHOP, qualified employees
would not be required to take any action to continue in the prior
year's coverage through the SHOP.
Finally, we proposed to amend Sec. 155.725(j)(2)(i) to remove a
reference to Sec. 155.420(d)(10), which was deleted in the 2016
Payment Notice. We also proposed to specify that there would not be a
SHOP special enrollment period when a qualified employee or dependent
of a qualified employee experiences an event described in Sec.
155.420(d)(1)(ii), which provides for a special enrollment period for
individuals enrolled in a non-calendar year group health plan or
individual health insurance coverage.
We are finalizing these amendments as proposed.
Comment: We received several comments about the length of a
qualified employee's annual open enrollment period for renewals. Some
commenters stated they believe the proposed minimum annual open
enrollment period of one week is insufficient. One commenter
recommended that employees be provided with a 30-day annual open
enrollment period, or at a minimum, a two-week annual open enrollment
period.
Response: The proposed amendment would not prevent a qualified
employer from offering annual enrollment periods to qualified employees
that are longer than one week. This regulation specifies only the
minimum length of the annual open enrollment period for qualified
employees. We are finalizing this provision as proposed because it
would enable qualified employers and qualified employees, especially at
very small companies, to finalize their annual renewal process more
quickly.
Comment: We received one comment supporting our proposal to allow
employers to opt for a coverage effective date up to 2 months in
advance. The commenter stated that this amendment increases employer
flexibility and may improve the consumer's experiences with SHOP.
Response: We are finalizing the provision as proposed. We note that
the effective date of coverage selected by a qualified employer remains
subject to the limit on waiting periods under Sec. 147.116.
Comment: One commenter supported the proposed change to allow SHOPs
to offer auto-renewals of qualified employees. However, another
commenter did not support this automated process because of the risk of
error.
Response: Auto-renewals provide a more streamlined, efficient way
to renew coverage with minimal risk for error, and our rule will permit
SHOPs to do so. We note that the FF-SHOPs are not able to support this
feature at this time. Additional guidance will be provided if auto-
renewal becomes available in the FF-SHOPs.
Comment: We received one comment supporting the proposal that there
not be a SHOP special enrollment period when a qualified employee or
dependent of a qualified employee is enrolled in a non-calendar year
group health plan or individual health insurance coverage.
Response: We are finalizing the provision as proposed.
d. Termination of SHOP Enrollment or Coverage (Sec. 155.735)
To align with proposed amendments to Sec. 155.705(b)(4), we
proposed to modify the introductory language of Sec. 155.735(c)(2) to
specify that the provisions related to termination of employer group
health coverage for non-payment of premiums in FF-SHOPs under paragraph
(c)(2) do not apply to premium payments for the first month of
coverage. We did not receive any comments regarding this proposal, and
are finalizing it as proposed.
We also proposed amendments to Sec. 155.735(d) to specify that if
an enrollee changes from one QHP to another during the annual open
enrollment period or during a special enrollment period, the last day
of coverage would be the day before the effective date of coverage in
the enrollee's new QHP.
Additionally, we proposed at Sec. 155.735(d)(2)(iii) to require
FF-SHOPs to send advance notices to qualified employees before their
dependents age off of their plan. The notice would be sent 90 days in
advance of the date when the child dependent enrollee is no longer
eligible for coverage under the plan the employer purchased through the
FF-SHOP because he or she has reached the maximum child dependent age
for the plan. The notice would include information about the plan in
which the dependent is currently enrolled, the date the dependent would
age off the plan, and information about next steps. In the FF-SHOPs, a
dependent aging off of the plan loses eligibility for dependent
coverage at the end of the month of the dependent's 26th birthday or at
the end of the month in which the issuer has set the maximum dependent
age limit (but in some cases might have the option to keep the coverage
for a period of time after that date under applicable continuation
coverage laws). This notice is intended to be a courtesy notice as
enrollees would still receive a termination notice when their coverage
through the SHOP is terminating.
We are finalizing these provisions generally as proposed, with the
exception of a technical correction to paragraph (d)(2)(ii) to replace
the citation to Sec. 155.420(b)(2) with a citation to Sec.
155.725(j)(5), the SHOP rule under which SHOP enrollments are
effectuated pursuant to special enrollment periods. Section
[[Page 12288]]
155.725(j)(5) cross-references Sec. 155.420(b), and thus also cross-
references the retroactivity possible under Sec. 155.420(b)(2).
Comment: We received one comment supporting our proposal to send
qualified employees 90 days advance notice of when a child dependent is
no longer eligible for coverage under the plan the employer purchased
through the FF-SHOP because he or she has reached the maximum child
dependent age for the plan. The commenter notes that it is important to
recognize that the age-off date may go well beyond a dependent's
twenty-sixth birthday, depending on State dependent coverage laws.
Response: We are finalizing the provision as proposed. If a State
or issuer sets maximum dependent age limits greater than 26 years, the
FF-SHOPs will send the notice 90 days in advance of when the child
dependent is no longer eligible for coverage under the plan the
employer purchased through an FF-SHOP. The FF-SHOPs will be able to
accommodate issuer-specific and State-specific maximum dependent age
limits.
e. SHOP Employer and Employee Eligibility Appeals Requirements (Sec.
155.740)
In Sec. 155.740, we proposed amendments relating to SHOP appeals.
We proposed to provide that employers and employees may file an appeal
not only if a SHOP fails to provide an eligibility determination in a
timely manner, but also if a SHOP fails to provide timely notice of an
eligibility determination. We also proposed to allow employers and
employees who successfully appeal a denial of SHOP eligibility to
select whether the effective date of coverage or enrollment through the
SHOP under their appeal decision will be retroactive to the effective
date of coverage or enrollment through the SHOP that the employer or
employee would have had if they had correctly been determined eligible,
or prospective from the first day of the month following the date of
the notice of the appeal decision. Additionally, we proposed that if
eligibility is denied under an appeal decision, the appeal decision
would be effective on the first day of the month following the date of
the notice of the appeal decision.
Comment: Some commenters said they believe that if an employer only
adds eligible employees to the roster, then the SHOP will have no
knowledge of ineligible employees. Therefore, the process of employees
appealing to the SHOP will never be a valid scenario because no
ineligibility notification will ever be sent by the SHOP to the
employee. Another commenter suggested that HHS retain the current
regulatory language about the coverage effective date after a
successful appeal decision or adopt an effective date that is the first
of the month following the appeal decision, but not allow each group to
choose. Some commenters stated that only those who had retroactive
claims would select the retroactive date. Commenters also recommended
that coverage should never take effect more than a month retroactively,
or that coverage should start immediately.
Response: We are finalizing as proposed our proposal that employers
and employees may file an appeal not only if a SHOP fails to provide an
eligibility determination in a timely manner, but also if a SHOP fails
to provide timely notice of an eligibility determination. SHOPs may
send a notice of ineligibility if the information provided by an
employee does not match the information provided by the qualified
employer. An FF-SHOP might send a notice of ineligibility to an
employee, for example, if the employee inaccurately enters his or her
unique participation code in the FF-SHOP employee application. We note
that employers do not make SHOP eligibility determinations for
employees. The SHOPs make all eligibility determinations for employees.
Employers must offer SHOP coverage to all full-time employees; other
employees and former employees added to the employee roster are also
eligible for SHOP coverage.
We are making a minor modification to our proposal allowing
employers and employees to select either a retroactive or prospective
coverage or enrollment effective date if the appeal decision finds the
employer or employee eligible, to specify that individual employees may
select an effective date only when the appeal is of an individual
employee's eligibility determination (rather than an appeal of a
determination of eligibility for an employer, which affects coverage or
enrollment for the entire group). We believe that if an employer or
employee applied for coverage or enrollment with the intention that
coverage would be effective on a specific date, received a denial of
eligibility, and successfully appealed the decision, the employer or
employee should be provided with the option to select retroactive or
prospective coverage or enrollment, because the employer or employee
was found to be eligible for SHOP coverage and the group or employee
could have had SHOP coverage as early as the original desired date had
the original eligibility determination been correct. Regardless of
whether the group or employee has incurred claims, to provide maximum
flexibility to consumers, we believe that the decision about whether to
select a retroactive or prospective coverage or enrollment effective
date should be the employer's or employee's. While we acknowledge
issuers' concerns about who might select retroactive coverage, we note
that retroactive coverage would be effectuated only if the requisite
premium payment is made in accordance with Sec.
155.705(b)(4)(ii)(B)(2), as finalized here. In the FF-SHOPs, premiums
owed for employees that are found eligible under an employee appeal
decision will be collected from employers as part of the next monthly
invoice for the group.
We are finalizing Sec. 155.740(l)(3)(iii), regarding the effective
date of a denial of eligibility under an appeal decision, with a
revision specifying that the appeal decision would be effective as of
the date of the notice of the appeal decision. This is the same
effective date that applies under the current version of Sec.
155.740(l)(3), so there will not be any change in policy regarding the
effective date of a denial of eligibility under an appeal decision
under this rule. We have decided to maintain the current policy because
if an employer or employee is denied eligibility and their appeal is
also denied, the employer or employee might never have had enrollment
or coverage through the SHOP, and even if they did, would not have been
entitled to it. The SHOP should therefore be able to make the appeal
decision effective as of the date of the notice of the appeal decision.
9. Exchange Functions: Certification of Qualified Health Plans
a. Certification Standards for QHPs (Sec. 155.1000)
(1) Denial of Certification
Section 1311(e)(1)(B) of the Affordable Care Act states that
Exchanges may certify a health plan as a QHP if such health plan meets
the requirements for certification as promulgated by the Secretary and
the Exchange determines that making available such health plan through
such Exchange is in the interests of qualified individuals and
qualified employers. Section 1311(e)(1)(B) thereby affords Exchanges
the discretion to deny certification of QHPs that meet minimum QHP
certification standards, but are not ultimately in the interests of
qualified individuals and qualified employers. In the proposed rule, we
[[Page 12289]]
stated that we interpret the ``interest'' standard to mean QHPs should
provide quality coverage to consumers to meet the Affordable Care Act's
goals.
Section 155.1000 provides Exchanges with broad discretion to
certify health plans that otherwise meet the QHP certification
standards specified in part 156. HHS expects to continue to certify the
vast majority of plans that meet certification standards. HHS will
focus denials of certification in the FFEs based on the ``interest of
the qualified individuals and qualified employers'' standard on cases
involving the integrity of the FFEs and the plans offered through them.
Examples of issues that could result in non-certification of a plan
include concerns related to an issuer's material non-compliance with
applicable requirements, an issuer's financial insolvency, or data
errors related to QHP applications and data submissions. Under this
approach, HHS could consider an assessment of past performance,
including with respect to oversight concerns raised through compliance
reviews and consumer complaints received, and the frequency and extent
of any data submission errors. In exercising this authority, HHS
intends to adopt a measured approach that would take into consideration
several factors, including available market competition and the
availability of operational resources.
We noted that the Office of Personnel Management (OPM) has the sole
discretion for contracting with multi-State plans and as such retains
the authority to selectively contract with multi-State plans.
Comment: Several commenters opposed HHS's proposal to deny
certification to plans based on the interest standard, stating
``additional'' or ``new'' HHS certification authority would reduce
competition and innovation, lead to arbitrary, inconsistent, and
capricious certification decisions, and interfere with State reviews.
Other commenters agreed that HHS has existing authority to deny
certification and supported the proposal. Those commenters believe that
the use of such authority could promote the availability of high-value
health plans and innovative health care delivery system reforms,
encourage insurers to minimize annual rate increases, and enable FFEs
to become a ``trusted source of quality coverage for consumers.''
Response: The interest standard was previously codified in Sec.
155.1000 (77 FR 18467); thus, we did not propose new or additional
certification authority.
Comment: Some commenters stated HHS should work with plans to
address concerns and meet certification requirements rather than
denying certification, and denials should only be used when a health
plan is financially impaired. They also recommended HHS make specific
requirements and examples available for comment (for example,
clarifying how consumer complaints would be used to assess past
performance) before finalizing any criteria. Other commenters agreed
that HHS should use factors outlined in the proposed rule, such as
consumer complaints and past performance, as criteria for denying
certification. Some States shared information on their models. Other
commenters wanted HHS to take additional factors into account, such as
a ``history of repeated or egregious violations'' of nondiscrimination
standards and network adequacy requirements. Another commenter asked
HHS to consider safe harbors for innovative plan designs that provide
incentives to reduce the cost of health care to consumers while
providing EHB and meeting or exceeding minimum value (MV).
Response: As stated above, while we have existing authority to deny
certification based on the interest standard, we are not including any
specific requirements or criteria in this final rule. HHS will continue
to focus on cases involving the integrity of the FFEs and the plans
offered through them, and, as discussed in the proposed rule, will
consider factors such as an issuer's material non-compliance with
applicable requirements, an issuer's financial insolvency, or data
errors related to QHP applications and data submissions. We expect to
continue to certify the vast majority of plans that meet certification
standards.
G. Part 156--Health Insurance Issuer Standards Under the Affordable
Care Act, Including Standards Related to Exchanges
1. Standardized Options
In order to provide a new option that could further simplify the
consumer plan selection process, we proposed six standardized options
that issuers could choose to offer in the individual market FFEs in
plan year 2017. At Sec. 156.20, we proposed to define a standardized
option as a QHP with a cost-sharing structure specified by HHS. Each
standardized option consists of a fixed deductible; fixed annual
limitation on cost-sharing; and fixed copayment or coinsurance for a
key set of EHB that comprise a large percentage of the total allowable
costs for an average enrollee (these are the EHB in the Actuarial Value
Calculator with the addition of urgent care). We proposed one
standardized option at each of the bronze, silver (and the three
associated silver CSR plan variations), and gold levels of coverage. We
proposed that an issuer could offer a standardized option at one or
more levels of coverage, with the exception that if it offers a silver
standardized option, it must also offer the three associated
standardized silver CSR plan variations. We did not propose a
standardized option at the platinum level of coverage since only a
small proportion of QHP issuers in the FFEs offer platinum plans.
We proposed that an issuer could offer more than one plan for each
standardized option within a service area, subject to the meaningful
difference requirements defined at Sec. 156.298. This could be
accomplished, for example, if the issuer offers an HMO standardized
option at a particular level of coverage as well as a PPO standardized
option at the same level of coverage. We also proposed that issuers
would retain the flexibility to offer an unlimited number of non-
standardized plans and that we would not limit the total number of QHPs
that may be sold through an FFE in a rating area or county, outside of
any limitations under the meaningful difference and other applicable
QHP certification requirements.
We encouraged issuers to offer at least one standardized option,
particularly at the silver level of coverage (and the associated silver
CSR plan variation levels). This would simplify the consumer shopping
experience for the greatest number of FFE QHP enrollees, since silver
plans are the most common and popular plans in terms of enrollment in
the FFEs.
We designed the standardized options to be as similar as possible
to the most popular (weighted by enrollment) QHPs in the 2015 FFEs in
order to minimize market disruption and impact on premiums.
We proposed that standardized options have the four drug tiers
currently utilized in our consumer-facing applications--generic,
preferred brand, non-preferred brand, and specialty drug tiers--with
the option for issuers to offer additional lower-cost tiers if desired,
since slightly more than half (56 percent) of the proposed 2016 FFE
QHPs had more than four drug tiers.
We proposed that standardized options have no more than one in-
network provider tier since varying cost sharing by provider tier
affects the actuarial value of a plan, making it difficult to
standardize a cost-sharing
[[Page 12290]]
structure. Additionally, only 14 percent of FFE enrollees in 2015 were
enrolled in QHPs with more than one in-network tier, and only 6 percent
of enrollees were covered by an issuer that did not offer a single-tier
plan in addition to a multi-tier plan in the same county.
We proposed that the standardized options would exempt from the
deductible certain routine services, such as primary care, specialist
visits (at the silver and gold metal levels), and generic drugs, to
ensure that access to coverage translates into access to care for
routine and chronic conditions and that enrollees receive some up-front
value for their premium dollars. Among 2015 FFE QHPs, more than 85
percent of silver plan enrollees and more than 50 percent of bronze
plan enrollees selected plans that cover certain services prior to
application of the deductible. (The figure for gold plan enrollees was
more than 90 percent. However, many gold plans have a $0 deductible, in
which case, the concept of deductible-exempt services would not be
meaningful.) Primary care and generic drugs are the services most
likely to be covered without a deductible at all metal levels. Other
services that are also likely to be covered prior to the deductible,
particularly by silver and gold plans, include specialist visits and
mental/behavioral health and substance use disorder outpatient
services.
We proposed that the standardized options balance consumer
preference for copayments over coinsurance with the potential impact on
premiums. Research shows that consumers often prefer copayments to
coinsurance because copayments are more transparent and make it easier
for consumers to predict their out-of-pocket costs. On the other hand,
setting fixed copayments on a national level for high-cost services
could lead to disparate premium effects due to regional and issuer-
specific cost differences, or it could lead to premium increases or
require corresponding increases in other forms of cost sharing, if set
too low.
To reduce operational complexity, we proposed to not vary the
standardized options by State or by region. We proposed one set of
standardized options for all FFEs, including those in which States
perform plan management functions, recognizing that some States
regulate the level of cost sharing applied to certain benefits, such as
emergency room services and specialty drugs.
We noted that we would be conducting consumer testing to help us
evaluate ways in which standardized options, when certified by an FFE,
could be displayed on our consumer-facing plan comparison features in a
manner that makes it easier for consumers to find and identify them,
including distinguish them from non-standardized plans. We noted that
we anticipate differentially displaying the standardized options to
allow consumers to compare plans based on differences in price and
quality rather than cost-sharing structure as well as providing
information to explain the standardized options concept to consumers.
We also noted that we are considering whether to require QHP issuers or
web-brokers to differentially display standardized options when a non-
FFE Web site is used to facilitate enrollment in an FFE.
We noted that multi-State plan issuers may use the standardized
options, but that OPM, at its discretion, may design additional
standardized options applicable only to multi-State plan issuers. We
would not display the OPM-designed standardized options applicable only
to multi-State plan issuers in a differential manner, however, in order
to preserve consistency in the standardized options identified by HHS
in the FFEs.
We are finalizing the HHS-specified standardized options, but as
further described below, we are specifying some changes to the
standardized options' cost sharing, including one technical correction.
These changes remain consistent with the general features and
principles of standardized options described in the preamble to the
proposed rule. We will make any additional changes to the standardized
options in future rulemaking. The plans finalized in this rule apply
beginning with the 2017 plan year and until any future changes are
finalized.
In addition, we are adding to Sec. 155.205(b)(1) a new provision
codifying the Exchange's authority to differentially display
standardized options on our consumer-facing plan comparison and
shopping tools. (How standardized options will be displayed will take
into consideration the results of consumer testing, which is currently
in process.) We do not intend to require QHP issuers or web-brokers to
adhere to differential display requirements of standardized options
when using a non-Exchange Web site to facilitate enrollment in a QHP
through an Exchange at this time, but will consider whether we should
propose such a standard in the future. Additionally, because the
provision in Sec. 155.205(b)(1) refers to standardized options, we
will finalize the definition of standardized option at Sec. 155.20,
which specifies the definitions for part 155, instead of at Sec.
156.20, which specifies definitions for part 156.
Overall, commenters were supportive of the specific standardized
plan designs, but suggested some modifications. The proposed 2017
bronze standardized option closely resembled a catastrophic plan, with
a $6,650 deductible, an annual limitation on cost sharing equal to the
maximum allowable annual limitation on cost sharing for 2017 (proposed
to be $7,150), and 50 percent coinsurance for most types of benefits.
Primary care visits (for the first three visits) and mental health/
substance use outpatient services were exempt from the deductible with
a copayment of $45. Generic drugs were also exempt from the deductible
with a copayment of $35. The top three drug tiers each had a 50 percent
coinsurance rate. We are making a change to the cost sharing for each
of the top three drug tiers in the bronze standardized option. In
response to commenters who noted the relative paucity of bronze plans
on the FFEs with 50 percent coinsurance rates for drugs, the preferred
brand drug tier now has a 35 percent coinsurance; the non-preferred
brand drug tier now has a 40 percent coinsurance; and the specialty
drug tier now has a 45 percent coinsurance. We are also making a
technical correction to the Bronze plan's AV calculation to ensure that
the deductible and coinsurance apply correctly after the first three
primary care visits, to align with the Final 2017 AV Calculator User
Guide instructions. Making this technical correction and the above
changes to drug coinsurance rates raises the AV for the plan to 61.88.
Thus, the AV for the final bronze standardized option is 0.06 percent
higher than the AV of the proposed bronze standardized option, which
was 61.82 (rounded to 61.8). The coinsurance rate for each of the top
three drug tiers more closely reflects the average coinsurance rate for
each of the top three drug tiers in the most popular (weighted by
enrollment) QHPs in the 2015 FFEs, which were 25 percent, 35 percent,
and 45 percent, respectively. The new bronze standardized option also
addresses commenters' concerns that the proposed design was
inconsistent with the principle of having four different drug tiers.
Non-generic drugs would all have had a 50 percent coinsurance rate with
the proposed version of the bronze standardized option.
The proposed 2017 silver standardized option had a $3,500
deductible, an annual limitation on cost sharing equal to the maximum
allowable annual limitation on sharing
[[Page 12291]]
for 2017, and a 20 percent enrollee coinsurance rate. Primary care
visits, mental health/substance use outpatient services, specialist
visits, urgent care visits, and all drug benefits were exempt from the
deductible, and all of the deductible-exempt benefits had copayments
instead of coinsurance, except for the specialty drugs tier, which had
a 40 percent coinsurance rate. Emergency room services were subject to
the deductible, with a $400 copayment applicable after the deductible.
In the final rule, we are making a change to the proposed silver
standardized option in response to comments. The proposed silver
standardized option and gold standardized option had the same copayment
value for generic drugs. We are increasing the copayment for generic
drugs to $15 for the silver standardized option to more closely reflect
the average copayment rate for generic drugs in the most popular QHPs
in the 2015 FFEs (weighted by enrollment). The actuarial value of the
new standardized silver option is 70.63 percent (0.37 percent lower
than the AV of the proposed version).
The proposed silver cost-sharing reduction standardized options
reduced all cost sharing parameters successively to meet the 73
percent, 87 percent, and 94 percent AV requirements. Where possible,
the cost-sharing reduction standardized options and the non-cost-
sharing reduction standardized silver option maintain similar
differentials between the cost sharing for certain benefits like
primary care and specialty visits. We are finalizing the three
standardized options at the silver cost-sharing reduction variation
levels.
The proposed 2017 gold standardized option, which we are also
finalizing as proposed, has a $1,250 deductible, a $4,750 annual
limitation on cost sharing, and a 20 percent coinsurance rate for most
types of benefits. Primary care visits, mental health and substance use
outpatient services, specialist visits, urgent care visits, and all
drug benefits are not subject to the deductible. All of the benefits
not subject to the deductible have copayments except for specialty
drugs.
Table 9--Final 2017 Standardized Options
--------------------------------------------------------------------------------------------------------------------------------------------------------
Silver 73% Silver 87% Silver 94%
Bronze Silver actuarial value actuarial value actuarial value Gold
variation variation variation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actuarial Value (%)............. 61.88............. 70.63............. 73.55............. 87.47............. 94.30............. 79.98.
Deductible...................... $6,650............ $3,500............ $3,000............ $700.............. $250.............. $1,250.
Annual Limitation on Cost $7,150............ $7,150............ $5,700............ $2,000............ $1,250............ $4,750.
Sharing.
Emergency Room Services......... 50%............... $400 (copay $300 (copay $150 (copay $100 (copay $250 (copay
applies only applies only applies only applies only applies only
after deductible). after deductible). after deductible). after deductible). after
deductible).
Urgent Care..................... 50%............... $75 (*)........... $75 (*)........... $40 (*)........... $25 (*)........... $65 (*).
Inpatient Hospital Services..... 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
Primary Care Visit.............. $45 (* first 3 $30 (*)........... $30 (*)........... $10 (*)........... $5 (*)............ $20 (*).
visits, then
subject to
deductible and
50% coinsurance).
Specialist Visit................ 50%............... $65 (*)........... $65 (*)........... $25 (*)........... $15 (*)........... $50 (*).
Mental Health/Substance Use $45 (*)........... $30 (*)........... $30 (*)........... $10 (*)........... $5 (*)............ $20 (*).
Disorder Outpatient Services.
Imaging (CT/PET Scans, MRIs).... 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
Rehabilitative Speech Therapy... 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
Rehabilitative OT/PT............ 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
Laboratory Services............. 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
X-rays.......................... 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
Skilled Nursing Facility........ 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
Outpatient Facility Fee......... 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
Outpatient Surgery Physician/ 50%............... 20%............... 20%............... 20%............... 5%................ 20%.
Surgical.
Generic Drugs................... $35 (*)........... $15 (*)........... $10 (*)........... $5 (*)............ $3 (*)............ $10 (*).
Preferred Brand Drugs........... 35%............... $50 (*)........... $50 (*)........... $25 (*)........... $5 (*)............ $30 (*).
Non-Preferred Brand Drugs....... 40%............... $100 (*).......... $100 (*).......... $50 (*)........... $10 (*)........... $75 (*).
Specialty Drugs................. 45%............... 40% (*)........... 40% (*)........... 30% (*)........... 25% (*)........... 30% (*).
--------------------------------------------------------------------------------------------------------------------------------------------------------
(*) = not subject to the deductible.
Comment: Many commenters supported our proposal to establish
standardized options in the individual market FFEs in plan year 2017,
as a step towards simplifying the consumer experience, both when
shopping for
[[Page 12292]]
health insurance and when making cost-sharing payments to use covered
health care services. Some commenters opposed our standardized options
proposal, arguing that it will hamper innovation and limit competition
and choice, and that differential or preferential display of
standardized options could inadvertently steer consumers with specific
or special health care needs towards selecting standardized options
that are designed for the average QHP enrollee and not for a specific
population. These commenters expressed their concern that our proposal
represents a first step toward ultimately limiting or excluding non-
standardized plans. These commenters stated that making standardized
options mandatory in the future could stifle innovation in plan design,
including value based insurance design offerings, as well as
competition in the case that standardized options are sorted above non-
standardized plans on our consumer-facing plan comparison and shopping
tools. Among those who supported the standardized options proposal,
many urged that offering them should be mandatory, even in 2017.
Response: We believe that standardized options can simplify the
consumer shopping experience and are therefore finalizing the proposal
for issuers to be able to offer standardized options if they choose. We
recognize that these cost-sharing structures may not be appropriate for
all issuers or all markets. We are not requiring issuers to offer
standardized options, nor limiting their ability to offer other QHPs,
and as a result, we do not believe that standardized options will
hamper innovation or limit choice. Additionally, we will seek to
mitigate the risk that consumers with special health care coverage
needs incorrectly choose a standardized option through the use of tools
that explain to consumers which cost-sharing features are standardized,
and how they may differ from one another and from non-standardized
plans, as well as how they can be used to simplify the shopping
experience. We believe that most consumers with specialized health care
needs will carefully shop for coverage that provides the right mix of
cost-sharing protections, benefits, and networks.
Comment: Several commenters agreed with the features of our
proposed standardized options, including the inclusion of certain
deductible-exempt services, a single in-network provider tier, four
drug tiers with the option of lower-cost tiers, and copayments in place
of coinsurance where possible. We also received many recommended
specific changes to the standardized option designs, particularly with
respect to prescription drugs. Some commenters opposed the use of
coinsurance for the specialty drug tier across all metal levels without
the inclusion of specific and reasonable dollar level caps. Some
commenters noted that the proposed bronze standardized option in effect
has only two tiers, since the generic drug tier has a proposed
copayment of $35 while the top three drug tiers all have the same
coinsurance rate of 50 percent. Some commenters noted that the proposed
copayments for generic drugs were set at the same copayment rate ($10)
for both the gold standardized option and the silver standardized
option and recommended that the generic copayment be lower in the gold
plan than in the silver plan. Some commenters asked that all four drug
tiers be exempt from the deductible, while others asked that drugs be
subject to a separate deductible. Some commenters asked that we clarify
that the copayment amounts for the drug tiers are for thirty-day retail
fills. Some commenters asked that we clarify that issuers are permitted
to create lower cost tiers for any of the four drug tiers, not just for
the generic drugs tier. For example, commenters suggested that issuers
should be permitted to create a preferred specialty tier with lower
cost sharing than the specialty tier. Some commenters ask that we
clarify that preferred and non-preferred pharmacies are permitted with
differential cost sharing and that differential cost sharing is
permitted for mail-service and retail pharmacies, such that the
standardized cost sharing could represent cost sharing at non-preferred
retail pharmacies, with lower cost sharing available at preferred
retail or mail-service pharmacies.
Response: We are finalizing the standardized options as proposed
except for the changes to the bronze and silver standardized options
discussed above and the following clarifications. We clarify that that
copayment amounts listed for the drug tiers are for thirty-day
prescription fills at retail pharmacies and that issuers (or their
prescription benefit managers) may offer a lower cost-sharing rate for
mail order prescription fills, as is the most common practice in the
current market. We also clarify that issuers may create a lower cost
tier for the generic drugs tier for standardized options, but may not
do so for the three higher drug tiers in the standardized options.
Comment: One commenter recommended that we create standardized
options for family plans in addition to individual plans.
Response: We clarify that issuers may offer the standardized
options as family plans by doubling the maximum annual limitation on
cost-sharing and setting the family (other than self-only) deductible
at twice the deductible provided here.
Comment: Some commenters urged that we exempt habilitative and
rehabilitative outpatient services from the deductible in the
standardized options. Some commenters also encouraged the creation of a
standardized platinum option. Some commenters opposed designing the
standardized options to be as similar as possible to the 2015 QHPs,
noting that in their opinion, the 2015 QHPs often did not meet the
needs of people with chronic conditions.
Response: We designed the plans to be as similar as possible to the
2015 QHPs (as measured on an enrollment-weighted basis) in order to
minimize disruption to the market and impact on premiums. Only a
minority of these plans exempted habilitative and rehabilitative
outpatient services from the deductible. We will consider more
deductible exempt services in future years depending on changes in the
QHP markets, enrollment patterns, and other considerations.
Comment: Several commenters expressed concern with our proposal to
establish a set of standardized options that would apply in all States
in which an FFE is currently operating, noting that States may have
established or may wish to establish their own standardized plans
specific to their State-wide markets.
Response: As we note in the preamble to Sec. 156.350 in this final
rule, it is not possible at this time for the Federal platform to
accommodate State customization, such as State-specific display
elements on Plan Compare. State-defined standardized plans that are
different from HHS's standardized options will not be displayed in the
same manner as HHS's standardized options on the Federal platform
because of the limitations described above.
Further, in a State that has required standardization of certain
cost-sharing features of its QHPs or is considering doing so in 2017 or
beyond, issuers must comply with State law, which may mean that issuers
in those States will be unable to offer some or all of the standardized
options established through this rule-making. At this time, the FFEs
will not be able to give differential display to QHPs that differ from
the standardized options finalized in this final rule, even if the only
differences are to comply with State
[[Page 12293]]
laws. We will consider whether we may be able to do so in the future,
however.
Comment: HHS solicited comments on whether it should require QHP
issuers or web-brokers to differentially display standardized options
when using a non-Exchange Web site to facilitate enrollment in a QHP
through the Exchange. Commenters voiced concerns that web-brokers
already have to comply with existing plan display requirements, such as
displaying all plans sold on the Exchange, and not displaying plans
based on compensation, and that should HHS adopt this policy, web
brokers would need clear guidance and sufficient time to prepare.
Response: We recognize that currently, web-brokers are expected to
comply with display requirements under Sec. 155.220(c)(3), which
includes disclosing and displaying all QHP information provided by the
Exchange or directly by QHP issuers consistent with the requirements of
Sec. 155.205(b)(1) and (c), providing consumers the ability to view
all QHPs offered through the Exchange, and displaying all QHP data
provided by the Exchange. We are not requiring QHP issuers or web-
brokers to adhere to differential display requirements of standardized
options when using a non-Exchange Web site to facilitate enrollment in
a QHP through an Exchange at this time. We will consider whether such a
standard should apply to non-Exchange Web sites in the future. Web-
brokers and issuers should continue to comply with all existing plan
display requirements.
2. FFE User Fee for the 2017 Benefit Year (Sec. 156.50)
Section 1311(d)(5)(A) of the Affordable Care Act permits an
Exchange to charge assessments or user fees on participating health
insurance issuers as a means of generating funding to support its
operations. In addition, 31 U.S.C. 9701 permits a Federal agency to
establish a charge for a service provided by the agency. If a State
does not elect to operate an Exchange or does not have an approved
Exchange, section 1321(c)(1) of the Affordable Care Act directs HHS to
operate an Exchange within the State. Accordingly, at Sec. 156.50(c),
we specify that a participating issuer offering a plan through an FFE
must remit a user fee to HHS each month that is equal to the product of
the monthly user fee rate specified in the annual HHS notice of benefit
and payment parameters for FFEs for the applicable benefit year and the
monthly premium charged by the issuer for each policy under the plan
where enrollment is through an FFE.
OMB Circular No. A-25R establishes Federal policy regarding user
fees, and specifies that a user charge will be assessed against each
identifiable recipient for special benefits derived from Federal
activities beyond those received by the general public. As in benefit
years 2014 to 2016, issuers seeking to participate in an FFE in benefit
year 2017 will receive two special benefits not available to the
general public: (1) The certification of their plans as QHPs; and (2)
the ability to sell health insurance coverage through an FFE to
individuals determined eligible for enrollment in a QHP. These special
benefits are provided to participating issuers through the following
Federal activities in connection with the operation of FFEs:
Provision of consumer assistance tools.
Consumer outreach and education.
Management of a Navigator program.
Regulation of agents and brokers.
Eligibility determinations.
Enrollment processes.
Certification processes for QHPs (including ongoing
compliance verification, recertification and decertification).
Administration of a SHOP Exchange. Activities performed by
the Federal government that do not provide issuers participating in an
FFE with a special benefit will not be covered by this user fee.
OMB Circular No. A-25R further states that user fee charges should
generally be set at a level so that they are sufficient to recover the
full cost to the Federal government of providing the service when the
government is acting in its capacity as sovereign (as is the case when
HHS operates an FFE). Accordingly, we proposed to set the 2017 user fee
rate for all participating FFE issuers at 3.5 percent. This user fee
rate assessed on FFE issuers is the same as the 2014 to 2016 user fee
rate. We are finalizing the 2017 user fee rate for all participating
FFE issuers as proposed. In addition, OMB Circular No. A-25R requires
that the user fee charge be sufficient to recover the full cost to the
Federal government of providing the special benefit. An exception was
in place for the 2014 to 2016 user fee rates, to ensure that FFEs could
support the goals of the Affordable Care Act, including improving the
health of the population, reducing health care costs, and providing
access to health coverage. We have sought an exception to this policy
again for 2017.
Comment: Some commenters requested conversion of the FFE user fee
assessment from percent of premium to a per member per month amount to
decouple the user fee from medical inflation. We received one comment
asking whether the user fees collected in 2017 will exceed the costs of
the FFE. We also received comments stating that the user fee rate is
likely too low to cover the full costs of the FFE.
Response: We will continue to assess the FFE user fee as a percent
of the monthly premium charged by issuers participating in an FFE, in
particular as it relates to the adequacy of funding for ongoing
marketing and outreach. In accordance with OMB Circular No. A-25R,
issuers are charged the user fee in exchange for receiving special
benefits beyond those that are offered to the general public. Setting
the user fee as a percent of premium ensures that the user fee
generally aligns with the business generated by the issuer as a result
of participation in an FFE. Additionally, the user fee rate is set to
collect costs incurred for the special benefits, no more or less, and
user fee collections are used solely to support FFE user fee eligible
functions.
Additionally, we proposed under Sec. Sec. 155.106(c) and
155.200(f) to allow State Exchanges to enter into a Federal platform
agreement with HHS so that the State Exchange may rely on the Federal
platform for certain Exchange functions to enhance efficiency and
coordination between State and Federal programs, and to leverage the
systems established by the FFE to perform certain Exchange functions.
We proposed in Sec. 156.50(c)(2) to charge SBE-FP issuers a user fee
for the services and benefits provided to the issuers by HHS. For 2017,
these functions will include the Federal Exchange information
technology and call center infrastructure used in connection with
eligibility determinations for enrollment in QHPs and other applicable
State health subsidy programs, as defined at section 1413(e) of the
Affordable Care Act and enrollment in QHPs under Sec. 155.400. As
previously discussed, OMB Circular No. A-25R establishes Federal policy
regarding user fees, and specifies that a user charge will be assessed
against each identifiable recipient for special benefits derived from
Federal activities beyond those received by the general public. We are
finalizing our proposals under Sec. 155.106(c) and Sec. 155.200(f),
and issuers seeking to participate in an SBE-FP in benefit year 2017
and beyond will receive special benefits not available to the general
public: The ability to sell health insurance coverage through a State
Exchange that realizes efficiencies by using the Federal platform to
enroll
[[Page 12294]]
individuals determined eligible for enrollment in a QHP, including
individuals who may be eligible for insurance affordability programs
that may support premiums paid to issuers offering plans through the
State Exchange by way of the Federal platform (HealthCare.gov), and the
ability to sell health insurance coverage to small employers eligible
to purchase QHPs for its employees through a SHOP Exchange. Other
services that will be provided to issuers offering plans through an
SBE-FP include the Federal Exchange information technology and call
center infrastructure used in connection with eligibility
determinations for enrollment in QHPs and other applicable State health
subsidy programs. We proposed to charge issuers offering QHPs through
an SBE-FP a user fee rate of 3.0 percent of the monthly premium charged
by the issuer for each policy under a plan offered through an SBE-FP.
This fee would recover funding to support FFE operations incurred by
the Federal government associated with providing the services described
above.
The proposed user fee rate was calculated based on the proportion
of FFE costs that are associated with the FFE information technology
infrastructure, the consumer call center, and eligibility and
enrollment services, and allocating a share of those costs to issuers
in the relevant SBE-FPs. A significant portion of expenditures for FFE
services are associated with the information technology, call center
infrastructure, and personnel who conduct eligibility determinations
for enrollment in QHPs and other applicable State health subsidy
programs as defined at section 1413(e) of the Affordable Care Act, and
who perform the functions set forth in Sec. 155.400 to facilitate
enrollment in QHPs. We intend to review the costs incurred to provide
these special benefits each year, and revise the user fee rate for
issuers in SBE-FPs accordingly in the annual HHS notice of benefit and
payment parameters.
Comment: Commenters requested a one-year delay in assessing the
user fee on issuers operating in an SBE-FP or a reduction of the user
fee for 2017, particularly noting that SBE-FPs require additional time
to integrate the user fee into their State's budget, and also that the
impact of this user fee on premiums in SBE-FP States will be
significant. Commenters also noted charging SBE-FP issuers the full
user fee rate would allow the State to make a fully informed decision
on the type of model to use for 2017. We also have received questions
as to why we have not charged the SBE-FP user fees until now.
Response: While a user fee rate of 3.0 percent reflects HHS's
actual costs, we recognize that State Exchanges that are currently
using the Federal platform may find the abrupt change of the proposed
user fee in 2017 challenging for their health insurance markets.
Therefore, for the 2017 benefit year, we have sought a waiver from OMB
to the requirement that the user fee with respect to SBE-FPs cover the
full share of costs incurred by the FFE for providing these services,
and, if we receive this waiver, would reduce the user fee rate by one-
half for the issuers in an SBE-FP, to provide these States additional
transition time to support the costs incurred by the FFE. That is, for
the 2017 benefit year, issuers operating in an SBE-FP will be charged
an amount equal to 1.5 percent of premiums in the SBE-FP.
We expect, in future rulemaking, to propose that SBE-FP issuers
would be charged the full user fee rate covering the full share of
costs incurred by the Federal platform for the special benefits
provided to issuers in SBE-FPs. We note that we did not immediately
assess a user fee on SBE-FP issuers because we did not establish our
authority and intent to do so through rulemaking in time for rate-
setting. We are drawing on our experience with SBE-FP operations in the
2014 and 2015 benefit years to establish a regulatory structure for
SBE-FPs and to help determine an appropriate cost estimate for the SBE-
FP user fee. As was the case with the FFEs, the user fee will not fully
capture our costs, so that we can ease the transition for States and
their issuers to adapt to these higher fees. We note that we similarly
sought a waiver from OMB from the requirement that FFE user fees fully
account for costs in the early years of the FFEs.
Comment: Some commenters requested that HHS implement the user fee
in SBE-FP States by invoicing the State directly for the costs incurred
or setting up a different methodology for recouping the costs incurred.
These commenters indicated that a State that wishes to fund its
Exchange operations by assessing a fee on all insurance carriers
selling individual market major medical policies, both on and off
Exchange, the Federal user fee structure would require the SBE-FP to
execute a complex reconciliation process.
Response: We will assess the user fee rate as a percent of monthly
premiums charged by issuers operating in an SBE-FP, as established in
prior rulemaking. Setting the user fee as a percent of premium charged
by issuers ensures that the user fee generally aligns with the business
generated by the issuer as a result of the special benefits provided.
We recognize that SBE-FPs may have elected to cover Exchange costs
differently. Therefore, at an SBE-FP's written request, HHS will
collect from the SBE-FP the total amount that would result from the
user fee collected from issuers based on the percent of monthly
premiums charged by invoicing the State for the total user fee charge,
and not by collecting the fee directly from SBE-FP issuers.
Comment: One commenter requested unbundling of the costs of the
Federal platform, as States may not utilize all aspects of the Federal
platform bundle. We also received comments urging HHS to set a limit on
the State's portion of the assessment for covering the State's costs.
Commenters' suggestions for the user fee limit ranged from 3.5 percent
to 5 percent of premiums for combined Federal and State user fee
charges.
Response: As we discuss in Sec. 155.106, HHS will not--at this
time--offer a menu of Federal services from which an SBE-FP may select
some but not other services on the Federal platform. As such, we are
finalizing the SBE-FP user fee eligible costs as a bundle as proposed,
and do not at this time anticipate unbundling the costs for each
Federal service. We will also continue assessing the user fee by
market. This means that, if an SBE-FP is not utilizing Federal services
for the SHOP Exchange, the user fee would not be charged on SHOP
issuers. Additionally, we do recognize the benefits of States operating
their own plan management and customer support functions, and do not
intend to limit the State's ability to generate revenue to support
these functions.
Comment: One commenter sought confirmation that if a State is
currently developing its own SBE platform, but later decides instead to
rely on the Federal platform under the SBE-FP model, the SBE-FP model
would be available to the State. Additionally, the commenter requested
that in such a situation the State be charged the same user fee as
charged to existing SBE-FPs.
Response: The SBE-FP model option will be available per the
timelines and conditions we describe in Sec. 155.106. The SBE-FP user
fee for a particular benefit year, established through rulemaking, will
apply to all States that use the SBE-FP for that benefit year,
including those States that do not currently use the SBE-FP model. All
issuers on SBE-FPs for the 2017 benefit year would receive the reduced
1.5 percent transitional rate. Additionally, we note that nothing
restricts a State
[[Page 12295]]
from using its own revenue to support developing its own SBE platform.
Comment: Other commenters stated that the FFE and SBE-FP user fee
rates are likely too low to provide all of the necessary functions for
consumers, and that the assumption that FFE spend only 15 percent of
user fee collections on marketing, outreach, and plan management is too
low.
Response: Our current user fee rates for issuers in an FFE and an
SBE-FP are based on our current anticipated contract costs for
providing the special benefits. Our cost distributions are based on
larger estimated enrollment through FFEs, and are not comparable to
what individual States may spend on these functions. Further, to ensure
FFEs can support many of the goals of the Affordable Care Act, we
continuously assess our operational strategy for FFE functions to
maximize access to health insurance coverage, and could seek, through
notice and comment rulemaking, to change the user fee rate in future
years to accommodate increased or decreased spending on areas such as
marketing and consumer outreach.
Additionally, to ease administrative burdens on issuers and States,
HHS proposed to offer States the option to have HHS collect an
additional user fee from issuers at a rate specified by the State to
cover costs incurred by the State-based Exchange for the functions the
State retains. HHS would undertake this collection under the
Intergovernmental Cooperation Act of 1968 (IGCA) if a written request
is made by a State. If HHS agrees to provide such services, States may
be required to reimburse HHS any additional costs that are associated
with HHS's provision of such service. This coordination between the
State and Federal programs would reduce administrative burden on
issuers as well as the SBEs-FP. We did not receive any comments on this
proposal for HHS to collect an additional user fee from issuers on
behalf of the State. We will provide additional guidance if we receive
such a request.
3. Single Risk Pool (Sec. 156.80)
We proposed to codify that any new rates set by an issuer in the
small group market as part of a quarterly rate change would apply for
new or renewing coverage on or after the rate effective date, and would
apply for the entire the plan year. This policy is consistent with the
preamble to the second Program Integrity Rule (78 FR 65067). We also
proposed to make non-substantive changes to the wording of that
paragraph, including to delete an outdated reference to when quarterly
rate changes could first be implemented.
We also reiterated that a health insurance issuer may vary the
plan-adjusted index rate for a particular plan from its market-wide
index rate adjusting only for the explicitly stated factors in Sec.
156.80(d)(2). Any plan level adjustment not specifically stated,
including adjusting for morbidity of plan enrollees, is not
permissible.
We received no comments on these specific issues and are finalizing
the provisions as proposed.
4. Essential Health Benefits Package
a. Provision of EHB (Sec. 156.115)
In the 2016 final Payment Notice, we finalized regulation text at
Sec. 156.115(a)(5) that discussed habilitative services and devices.
Due to a technical error in the amendatory instructions, the current
CFR does not reflect this finalized language, and instead retains the
language that was finalized prior to being amended by the 2016 Payment
Notice; therefore, we are including regulation text in this rulemaking
to make a technical correction to update the CFR to language that was
previously finalized.
b. Prescription Drug Benefits (Sec. 156.122)
In the proposed rule, we discussed three proposals related to
prescription drug benefits. First, Sec. 156.122(c) requires plans
providing EHB to have processes in place that allow an enrollee, an
enrollee's designee, or the enrollee's prescribing physician (or other
prescriber) to request and gain access to clinically appropriate drugs
not covered by the plan. Such procedures must include a process to
request an expedited review based on exigent circumstances meeting the
requirements under Sec. 156.122(c)(2). For plan years beginning in
2016 and thereafter, these processes must also include certain
processes and timeframes for the standard review process, and have an
external review process if the internal review request is denied. The
costs of the non-formulary drug provided through the exceptions process
must count towards the annual limitation on cost sharing and AV of the
plan. As discussed in the 2016 Payment Notice (80 FR 10750), the
exceptions process established in this section is distinct from the
coverage appeals process established under Sec. 147.136. Specifically,
the drug exceptions process applies to drugs that are not included on
the plan's formulary drug list, while the coverage appeals regulations
apply if an enrollee receives an adverse benefit determination for a
drug that is included on the plan's formulary drug list. Because these
two processes serve different purposes, we reaffirmed our belief that
they are not duplicative and we did not propose to change these
definitions. However, we also clarified in the 2016 Payment Notice that
``nothing under this policy (Sec. 156.122(c)) precludes a State from
requiring stricter standards in this area.'' We stated in the proposed
rule that we received additional comment regarding States' coverage
appeals laws and regulations and non-formulary drugs. In our
discussion, we noted that if a State is subjecting non-formulary drugs
to the standards under Sec. 147.136 as opposed to Sec. 156.122(c),
the State's coverage appeals laws or regulations would provide the
enrollee with a different process for review, and as a result a
different process for obtaining coverage of the non-formulary drug.
Specifically, Sec. 147.136 has separate requirements for its external
review process and allows for a secondary level of internal review
before the final internal review determination for group plans.
As a result, if the State is subjecting non-formulary drugs to
Sec. 147.136 and the health plans are also required to comply with
Sec. 156.122(c), the health plan may have to satisfy two standards for
non-formulary drugs. Therefore, we proposed amending Sec. 156.122(c)
to establish that a plan, in a State that has coverage appeals laws or
regulations that are more stringent than or are in conflict with our
exceptions process under Sec. 156.122(c), and that include reviews for
non-formulary drugs, the health plan's exception process satisfies
Sec. 156.122(c) if it complies with the State's coverage appeals laws
or regulations. The purpose of Sec. 156.122(c) is to ensure that an
enrollee has the ability to request and gain access to clinically
appropriate drugs not covered by the plan. Regardless of whether a
State's coverage appeals laws or regulations satisfy Sec. 156.122(c)
or if the health plan meets Sec. 156.122(c) through its exception
process, we would expect that an enrollee would retain the ability to
request and gain access to clinically appropriate drugs not covered by
the plan. Therefore, we solicited comments on the scope of application
of State appeals laws or regulations that include determinations for
non-formulary drugs for this purpose, especially under medical
necessity provisions. We also sought comment as to whether these
provisions would allow the enrollee the ability to request and gain
access to clinically appropriate drugs not covered by the plan in all
cases through a State's coverage appeals laws or regulations. As
[[Page 12296]]
the State generally is the primary enforcer of the EHB requirements,
the State would determine whether its coverage appeals laws or
regulations would satisfy Sec. 156.122(c) and therefore, would allow
the health plans in the State to defer to the States' coverage laws or
regulations. We noted that we consider multi-State plans that comply
with OPM's coverage appeals requirements to satisfy Sec. 156.122(c).
We considered codifying this interpretation.
Second, we proposed amending the process at Sec. 156.122(c) to
allow for a second level of internal review. For example, we considered
using the same timelines as the first level of internal review, 72
hours for the standard review request and 24 hours for the expedited
review request.
Lastly, we sought comment on whether the substance use disorder
requirement under EHB needs additional clarification with regard to
medication assisted treatment (MAT) for opioid addiction.
We are finalizing one provision under this final rule to allow a
State to determine that the health plans in the State satisfy Sec.
156.122(c) when the health plans are required to adopt an exceptions
process under the State's coverage appeals laws and regulations that
include review of non-formulary drugs, and the exceptions process
contains requirements at least as stringent as those under Sec.
156.122(c).
Comment: Some commenters supported allowing the State to determine
that health plans in the State comply with Sec. 156.122(c) by virtue
of the State's coverage appeals laws and regulations applying to non-
formulary drugs, as long as the health plans treat the denied formulary
exception as an adverse coverage determination under Sec. 147.136.
These commenters believed that this proposal is within the State's
scope and would avoid duplication and potential operational and
financial burdens of having the two different external review
processes. Other commenters stated that HHS should require States to
prove that they have a stronger standard than that required by the
exception process and wanted HHS to make the determination as to
whether a State has a stronger standard. Commenters wanted to know what
would make a State law ``in conflict with'' the Federal standard and
wanted HHS to study the issue to define the problem. These commenters
were generally concerned with the timeframe differences between
Sec. Sec. 156.122(c) and 147.136. Some commenters also wanted the
State to certify that their laws comply with Sec. 156.122(c), such as
with a tool, and to make the determinations publically available.
Similarly, commenters supported or had concerns with the OPM
clarification with regard to satisfying Sec. 156.122(c). Some
commenters requested additional clarification as to whether drugs count
towards the annual limitation on cost sharing, such as cases when a
State's coverage appeals laws and regulations are applying to non-
formulary drugs. Some commenters wanted clarification that this
exceptions process is different from the preventive services'
exceptions process. Other commenters submitted comments about other
prescription drug related issues beyond the scope of the proposed rule.
Response: We are finalizing our proposal that a State may determine
that health plans in the State satisfy the requirements of Sec.
156.122(c) if the health plans have a process through the State's
coverage appeals laws and regulations to allow an enrollee to request
and gain access to clinically appropriate drugs not otherwise covered
by the health plan under standards at least as stringent as the
requirements at Sec. 156.122(c). To meet this standard, the process
must include an internal review, an external review, the ability to
expedite the reviews, and timeframes that are the same as or shorter
than timeframes established under paragraphs (c)(1)(ii) and (c)(2)(iii)
of this paragraph. In the event that an exception request is granted
under Sec. 156.122(c)(4), the excepted drug(s) are treated as an EHB
including counting any cost-sharing towards the plan's annual
limitation on cost-sharing under Sec. 156.130.
While we appreciate commenters' concerns about potential confusion
if two processes apply, we do not believe that applying timeframes less
stringent than those in the current Sec. 156.122(c) would benefit
enrollees. We understand that States may not be able to meet these
timeframes under their current coverage appeals laws and regulations
and that States may have to change their laws and regulations in order
to align the timeframes under Sec. 156.122(c), if the State wishes to
use its current laws and regulations to streamline processes and create
efficiencies. The State is not required to undertake this option. We
also reaffirm that we consider multi-State plans that comply with OPM's
coverage appeals requirements to satisfy Sec. 156.122(c). Lastly, we
note that the exceptions process under Sec. 156.122(c) is separate
from other exceptions process required under applicable Federal or
State law. In particular, compliance with the exceptions process under
Sec. 156.122(c) does not constitute compliance with the exceptions
process for contraceptive services as clarified in guidance under
section 2713 of the PHS Act, both of which apply to non-grandfathered
individual and small group market plans that are required to provide
EHB.\54\
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\54\ See the section entitled ``Coverage of Food and Drug
Administration (FDA)-approved Contraceptives'' in FAQS about
Affordable Care Act Implementation (PART XXVI), (May 11, 2015),
available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/aca_implementation_faqs26.pdf.
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Comment: Some commenters supported a second level of internal
review and noted that including two levels of internal review is
consistent with current practices, improves administrative efficiency,
and ensures enrollees obtain medically necessary medications as soon as
possible. The commenters noted that having only one level of internal
review means more enrollees will rely on the external review process,
which is costly. Some commenters sought additional time for the second
level of review. Other commenters opposed a second level of internal
review altogether and were primarily concerned that the second level of
review could delay access and could burden enrollees. Some commenters
wanted evidence that the second level of review would help enrollees,
since the health plan conducts the internal review, as opposed to a
third party. Some commenters wanted clarification as to whether this
revised rule would be effective for the 2016 plan year or apply with
enforcement discretion. Other commenters were concerned that the rule
would apply different standards in 2016 versus 2017 (one level of
internal review versus two).
Response: We are not finalizing new requirements in this area. A
health plan, at its election, may conduct a concurrent second internal
review in the standard review process and the expedited review process
within the timeframes established under Sec. 156.122(c)(1) and (2),
but the health plan is not required to do so. As discussed in the
preamble of the 2016 Payment Notice (80 FR 10818), all of the
timeframes begin when the health plan or its designee receives a
request. An enrollee or the enrollee's prescribing physician (or other
prescriber) should strive to submit a completed request; however,
health plans should not fail to commence review if they have not yet
received information that is not necessary to begin review. Therefore,
we interpret Sec. 156.122(c)'s reference to receipt of the request to
mean that the health plan must begin the review following the receipt
of information
[[Page 12297]]
sufficient to begin the review. We note that the processes specified in
Sec. 156.122(c) are only required in connection with requesting and
gaining access to clinically appropriate non-formulary drugs, and are
not required in connection with utilization management processes for
drugs on the plan's formulary drug list. We also note that Sec.
156.122(c) only applies to non-grandfathered individual and small group
market plans that are required to provide EHB under section 2707(a) of
the PHS Act and section 1302 of the Affordable Care Act, as well as to
QHPs under Sec. Sec. 156.200(b)(3) and 156.20. We will continue to
monitor the implementation of the drug exceptions processes to
determine whether further guidance on these processes is needed.
Comment: We received many comments supporting requiring coverage of
medication assisted treatment for opioid addiction as an EHB. These
comments cited cost effectiveness, clinical evidence, and inability to
interchange MAT options in support of requiring that all MATs be
covered as an EHB. Commenters noted a lack of covered providers and
related services limiting access to appropriate MAT; a lack of and
variation in coverage of specific types of treatments, such as
methadone; utilization management practices for MAT as areas of concern
and reasons to require coverage of MAT. Commenters also noted the lack
of MAT coverage by certain new State base-benchmark plans, including
explicit exclusions. Other commenters were not supportive of additional
clarification on MAT coverage for substance use disorders or wanted to
review a specific proposal for additional coverage, as MAT is required
to be covered under certain United States Pharmacopeia (USP) categories
and classes at Sec. 156.122(a)(1). Commenters were also concerned
about setting a precedent in which MAT coverage is treated differently
from other EHB or drugs, noting that EHBs are required under the
statute to be equal to the scope of benefits provided under a typical
employer plan. Some commenters supported the use of Pharmacy &
Therapeutics (P&T) Committees in making drug coverage determinations
and stated they were concerned that any coverage requirements could
restrict and impede P&T Committees' clinical judgment. Others commented
that requiring MAT coverage could increase premiums.
Response: In October 2015, the President issued a Memorandum
directing Federal Departments and Agencies to identify barriers to
medication-assisted treatment for opioid use disorders and develop
action plans to address these barriers. Both the EHB requirement and
Federal mental health and substance use disorder parity requirements
apply to QHP coverage of medications to treat opioid dependence.
Because these requirements extend beyond QHPs, we anticipate issuing
separate guidance with respect to MAT in the near future.
c. Premium Adjustment Percentage (Sec. 156.130)
Section 1302(c)(4) of the Affordable Care Act directs the Secretary
to determine an annual premium adjustment percentage, which is used to
set the rate of increase for three parameters detailed in the
Affordable Care Act: the maximum annual limitation on cost sharing
(defined at Sec. 156.130(a)), the required contribution percentage by
individuals for minimum essential coverage the Secretary may use to
determine eligibility for hardship exemptions under section 5000A of
the Code, and the assessable payment amounts under section 4980H(a) and
(b) of the Code. 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.
Under the methodology established in the 2015 Payment Notice and
amended in the 2015 Market Standards Rule for estimating average per
capita premium for purposes of calculating the premium adjustment
percentage, the premium adjustment percentage is calculated based on
the projections of average per enrollee employer-sponsored insurance
premiums from the NHEA, which is calculated by the Office of the
Actuary. Accordingly, using the employer-sponsored insurance data, the
premium adjustment percentage for 2017 is the percentage (if any) by
which the most recent NHEA projection of per enrollee employer-
sponsored insurance premiums for 2016 ($6,076) exceeds the most recent
NHEA projection of per enrollee employer-sponsored insurance premiums
for 2013 ($5,365).\55\ Using this formula, we proposed and are
finalizing the premium adjustment percentage for 2017 at 13.25256291
percent. We note that the 2013 premium used for this calculation has
been updated to reflect the latest NHEA data. We are also finalizing
the following cost-sharing parameters for calendar year 2017 based on
our finalized 2017 premium adjustment percentage.
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\55\ See Projections of National Health Expenditures:
Methodology and Model Specifications (Jul. 28, 2015), available at
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.pdf; Projections of National Health
Expenditures: Methodology and Model Specification (Sept. 18, 2013),
available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology2012.pdf; and Table 17: Health
Insurance Enrollment and Enrollment Growth Rates (Jul. 22, 2015),
available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html (located in the NHE Projections
2014-2024--Tables link). For additional information, see, also,
National Health Expenditure Projections 2012-2022, available at
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2012.pdf.
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Maximum Annual Limitation on Cost Sharing for Calendar Year 2017.
Under Sec. 156.130(a)(2), for the 2017 calendar year, cost sharing for
self-only coverage may not exceed the dollar limit for calendar year
2014, increased by an amount equal to the product of that amount and
the premium adjustment percentage for 2017, and for other than self-
only coverage, the limit is twice the dollar limit for self-only
coverage. Under Sec. 156.130(d), these amounts must be rounded down to
the next lowest multiple of 50. Using the premium adjustment percentage
of 13.25256291 percent for 2017 we established above, and the 2014
maximum annual limitation on cost sharing of $6,350 for self-only
coverage, which was published by the IRS on May 2, 2013,\56\ we are
finalizing the 2017 maximum annual limitation on cost sharing as
proposed at $7,150 for self-only coverage and $14,300 for other than
self-only coverage.
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\56\ See: IRS, 26 CFR 601.602: Tax forms and instructions (May
2, 2013), available at https://www.irs.gov/pub/irs-drop/rp-13-25.pdf.
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Comment: Two commenters said the annual rate of increase in the
MOOP ($300 for individuals this year after a $250 increase last year,
and $600 for other than self-only coverage this year on top of a $500
increase last year) is unsustainable and negatively affects enrollees'
willingness to use prescription drugs, which in turn affects health
outcomes. The commenters asked HHS to engage with stakeholders to
develop an alternative methodology to calculate the maximum annual
limitation on cost sharing.
Response: As discussed above, the maximum annual limitation on cost
sharing is calculated based on the premium adjustment percentage for
the
[[Page 12298]]
benefit year. The methodology established in 2015 to calculate the
premium adjustment percentage is based on a projection of annual
increases in per enrollee employer-sponsored insurance premiums from
the National Health Expenditure Accounts (estimated by the CMS Office
of the Actuary). HHS believes it is the best available source of
projected growth for premium given statutory requirements and
interaction with other measurements. However, as discussed in the 2015
Notice of Benefits and Payment Parameters (79 FR 13802), HHS intends to
review the methodology for calculating annual premium growth after the
initial years of reform-driven changes to benefits and plan design,
after the premium trend is more stable, and as data on premiums become
available.
Comment: One commenter expressed concern over a growing gap between
the Affordable Care Act's maximum annual limitation on cost sharing and
the Internal Revenue Service's out-of-pocket limit for high deductible
health plans (HDHPs) used with health savings accounts. (The 2016 HHS
maximum out-of-pocket limitation for other than self-only coverage was
$600 above the 2016 IRS out-of-pocket limit on high deductible health
plans for other than self-only coverage.) The commenter also expressed
concern that the IRS limit is not announced for some months after the
HHS limit is known, leading issuers to price products conservatively,
and higher than they might otherwise if the IRS limit had been known.
Response: HHS and IRS are bound by different statutory parameters
when calculating annual out-of-pocket limits. HHS uses the premium
adjustment percentage described above to adjust the maximum out-of-
pocket limit, and the IRS uses the Consumer Price Index, a measure of
inflation, to adjust its out-of-pocket limitation.
d. Reduced Maximum Annual Limitation on Cost Sharing (Sec. 156.130)
Sections 1402(a) through (c) of the Affordable Care Act direct
issuers to reduce cost sharing for EHBs for eligible individuals
enrolled in a silver level QHP. In the 2014 Payment Notice, we
established standards related to the provision of these cost-sharing
reductions. Specifically, in 45 CFR part 156, subpart E, we specified
that QHP issuers must provide cost-sharing reductions by developing
plan variations, which are separate cost-sharing structures for each
eligibility category that change how the cost sharing required under
the QHP is to be shared between the enrollee and the Federal
government. At Sec. 156.420(a), we detailed the structure of these
plan variations and specified that QHP issuers must ensure that each
silver plan variation has an annual limitation on cost sharing no
greater than the applicable reduced maximum annual limitation on cost
sharing specified in the annual HHS notice of benefit and payment
parameters. Although the amount of the reduction in the maximum annual
limitation on cost sharing is specified in section 1402(c)(1)(A) of the
Affordable Care Act, section 1402(c)(1)(B)(ii) of the Affordable Care
Act states that the Secretary may adjust the cost-sharing limits to
ensure that the resulting limits do not cause the AVs of the health
plans to exceed the levels specified in section 1402(c)(1)(B)(i) of the
Affordable Care Act (that is, 73 percent, 87 percent, or 94 percent,
depending on the income of the enrollee). Accordingly, we propose to
use a method we established in the 2014 Payment Notice for determining
the appropriate reductions in the maximum annual limitation on cost
sharing for cost-sharing plan variations. As we proposed above, the
2017 maximum annual limitation on cost sharing would be $7,150 for
self-only coverage and $14,300 for other than self-only group coverage.
We analyzed the effect on AV of the reductions in the maximum annual
limitation on cost sharing described in the statute to determine
whether to adjust the reductions so that the AV of a silver plan
variation will not exceed the AV specified in the statute. Below, we
describe our analysis for the 2017 benefit year and our proposed
results.
Consistent with our analysis in the 2014, 2015, and 2016 Payment
Notices, we developed three test silver level QHPs, and analyzed the
impact on AV of the reductions described in the Affordable Care Act to
the estimated 2017 maximum annual limitation on cost sharing for self-
only coverage ($7,150). The test plan designs are based on data
collected for 2016 plan year QHP certification to ensure that they
represent a range of plan designs that we expect issuers to offer at
the silver level of coverage through the Exchanges. For 2017, the test
silver level QHPs included a PPO with typical cost-sharing structure
($7,150 annual limitation on cost sharing, $2,175 deductible, and 20
percent in-network coinsurance rate), a PPO with a lower annual
limitation on cost sharing ($4,800 annual limitation on cost sharing,
$2,775 deductible, and 20 percent in-network coinsurance rate), and an
HMO ($7,150 annual limitation on cost sharing, $3,000 deductible, 20
percent in-network coinsurance rate, and the following services with
copayments that are not subject to the deductible or coinsurance: $500
inpatient stay per day, $350 emergency department visit, $25 primary
care office visit, and $50 specialist office visit). All three test
QHPs meet the AV requirements for silver level health plans.
We then entered these test plans into the proposed 2017 AV
Calculator developed by HHS and observed how the reductions in the
maximum annual limitation on cost sharing specified in the Affordable
Care Act affected the AVs of the plans. We found that the reduction in
the maximum annual limitation on cost sharing specified in the
Affordable Care Act for enrollees with a household income between 100
and 150 percent of the Federal poverty line (FPL) (2/3 reduction in the
maximum annual limitation on cost sharing), and 150 and 200 percent of
the FPL (2/3 reduction), would not cause the AV of any of the model
QHPs to exceed the statutorily specified AV level (94 and 87 percent,
respectively). In contrast, the reduction in the maximum annual
limitation on cost sharing specified in the Affordable Care Act for
enrollees with a household income between 200 and 250 percent of FPL
(1/2 reduction), would cause the AVs of two of the test QHPs to exceed
the specified AV level of 73 percent. As a result, we proposed that the
maximum annual limitation on cost sharing for enrollees in the 2017
benefit year with a household income between 200 and 250 percent of FPL
be reduced by approximately 1/5, rather than 1/2. We further proposed
that the maximum annual limitation on cost sharing for enrollees with a
household income between 100 and 200 percent of the FPL be reduced by
approximately 2/3, as specified in the statute, and as shown in Table
10. These proposed reductions in the maximum annual limitation on cost
sharing should adequately account for unique plan designs that may not
be captured by our three model QHPs. We also noted that selecting a
reduction for the maximum annual limitation on cost sharing that is
less than the reduction specified in the statute would not reduce the
benefit afforded to enrollees in aggregate because QHP issuers are
required to further reduce their annual limitation on cost sharing, or
reduce other types of cost sharing, if the required reduction does not
cause the AV of the QHP to meet the specified level. We did not receive
comments on this proposal, and are finalizing the
[[Page 12299]]
reductions in the maximum annual limitation on cost sharing for 2017 as
proposed.
We note that for 2017, as described in Sec. 156.135(d), States are
permitted to submit for approval by HHS State-specific data sets for
use as the standard population to calculate AV. No State submitted a
data set by the September 1 deadline.
Table 10--Reductions in Maximum Annual Limitation on Cost Sharing for
2017
------------------------------------------------------------------------
Reduced maximum
Reduced maximum annual
annual limitation on
Eligibility category limitation on cost sharing for
cost sharing for other than self-
self-only only coverage
coverage for 2017 for 2017
------------------------------------------------------------------------
Individuals eligible for cost- $2,350 $4,700
sharing reductions under Sec.
155.305(g)(2)(i) (that is, 100-
150 percent of FPL)..............
Individuals eligible for cost- 2,350 4,700
sharing reductions under Sec.
155.305(g)(2)(ii) (that is, 150-
200 percent of FPL)..............
Individuals eligible for cost- 5,700 11,400
sharing reductions under Sec.
155.305(g)(2)(iii) (that is, 200-
250 percent of FPL)..............
------------------------------------------------------------------------
e. AV Calculation for Determining Level of Coverage (Sec. 156.135)
Section 2707(a) of the PHS Act and section 1302 of the Affordable
Care Act direct issuers of non-grandfathered health insurance in the
individual and small group markets, including QHPs, to ensure that
plans meet a level of coverage specified in section 1302(d)(1) of the
Affordable Care Act and codified at Sec. 156.140(b). On February 25,
2013, HHS published the EHB Rule (78 FR 12833), implementing section
1302(d) of the Affordable Care Act, which required that, to determine
the level of coverage for a given metal tier level, the calculation of
AV be based upon the provision of EHB to a standard population. Section
156.135(a) establishes that AV is generally to be calculated using the
AV Calculator developed and made available by HHS for a given benefit
year. In the 2015 Payment Notice (79 FR 13743), we established at Sec.
156.135(g) provisions for updating the AV Calculator in future plan
years and in the proposed rule, we proposed to amend those provisions
to allow for additional flexibility in our approach and options for
updating of the AV Calculator in the future.
Specifically, we proposed that HHS will update the AV Calculator
annually for material changes that may include costs, plan designs, the
standard population, developments in the function and operation of the
AV Calculator and other actuarially relevant factors. Under the amended
regulation, we will continue to make updates to the AV Calculator, as
we have in previous years, including updates to the trend factor,
algorithms changes, and user interface changes. We will also update the
claims data and demographic distribution being used in the AV
Calculator as needed, and continue to update the AV Calculator's annual
limitation on cost sharing based on a projected estimate to allow for
compliance with Sec. 156.130(a). Therefore, the major difference that
we proposed under the revised Sec. 156.135(g) was that the
methodology, data sources, and trigger for making updates in the AV
Calculator would be more flexible than the previous Sec. 156.135(g).
This amended provision will allow us more options in considering
approaches to making changes in the AV Calculator, particularly as the
health insurance market and the AV Calculator evolve, new
methodological approaches are developed, and new data becomes
available.
We would also not be required to make each of these changes each
year, although we could include these types of material changes in our
annual updating of the AV Calculator. We proposed that in developing
the annual updates to the AV Calculator, we would continue to take into
consideration stakeholder feedback on needed changes to the AV
Calculator (through actuarialvalue@cms.hhs.gov) and to publicly release
a draft version of the AV Calculator and the AV Calculator Methodology
for comment before releasing the final AV Calculator. We are finalizing
these provisions as proposed.
Comment: Commenters were concerned about the timing of the release
of the AV Calculator, and wanted the AV Calculator to be available
sooner. Certain commenters did not support the revised language without
a timeframe. Commenters generally wanted the final AV Calculator to be
available around January 1 of the preceding benefit year, in
anticipation of State filing deadlines.
Response: We are finalizing the provision as proposed. One reason
for changing Sec. 156.135(g) is to provide HHS with the flexibility to
update the AV Calculator sooner. We understand the importance for
issuers and States to have time to use the final version of the AV
Calculator to develop and adjust plan designs in advance of State
filing deadlines. We believe that revised Sec. 156.135(g) will give
HHS added flexibility in changing the AV Calculator, which may result
in HHS releasing the final AV Calculator earlier, such as by January 1
of the preceding benefit year. Regardless, we anticipate releasing the
final AV Calculator no later than the end of the first quarter of the
preceding benefit year.
Comment: Some commenters supported the flexibility for the trend
factor calculation. Others expressed wanting predictable and consistent
updates, wanting less frequent updates, and wanting an increase to the
de minimis range.
Response: We recognize the importance of ensuring that the AV
Calculator accurately reflects the current market and that changes to
the AV Calculator minimize disruption to current plan designs through
keeping AVs stable. We intend to carefully weigh these factors when
making changes. We do not intend to make changes to the de minimis
range at this time. The de minimis range is intended to allow plans to
float within a reasonable range of +/- 2 percent.
We will also continue to work with stakeholders on the development
of the AV Calculator updates. As noted above, in developing the annual
updates to the AV Calculator, we will continue to take into
consideration stakeholder feedback on needed changes to the AV
Calculator (through actuarialvalue@cms.hhs.gov) and to publicly release
a draft version of the AV Calculator and the AV Calculator Methodology
for comment before releasing the final AV Calculator.
[[Page 12300]]
Additionally, we also intend to consult as needed with the American
Academy of Actuaries and the NAIC on needed changes to the AV
Calculator.
Comment: One commenter was concerned that the AV Calculator does
not take into account the scope of networks and formularies. Other
commenters asked for the Minimum Value Calculator to be updated
consistently and discussed issues for large group plans that use the MV
Calculator, such as accounting for the annual limitation on cost
sharing.
Response: AV measures a plan's cost sharing generosity on the basis
of the EHB being provided to a standard population (and without regard
to the population to which that plan may actually provide benefits) to
determine the level of coverage. AV is not intended to measure the
scope of a network or formulary. All plans required to comply with AV
must comply with EHB requirements (which establish the scope of
benefits, including the formulary, being offered) and State and, in the
case of QHPs, Federal laws and regulations establish a plan's network
requirements.
We will work with the Department of Treasury and the Internal
Revenue Service to consider whether further guidance is needed with
regards to the MV Calculator. Updates to the MV Calculator are beyond
the scope of this rulemaking.
f. Application to Stand-Alone Dental Plans Inside the Exchange (Sec.
156.150)
At Sec. 156.150, we proposed revisions to increase the annual
limitation on cost sharing for SADPs. To make adjustments to the annual
limitation on cost sharing in subsequent years to keep pace with
inflation, we proposed in paragraph (a)(1) that for a plan year
beginning after 2016, the dollar limit applicable to a SADP for one
covered child be increased by an amount equal to the product of that
amount and the quotient of consumer price index for dental services for
the year 2 years prior to the benefit year, divided by the consumer
price index for dental services for 2016. In paragraph (a)(2), we
proposed that the dollar limit for two or more covered children be
twice the dollar limit for one child described in paragraph (a)(1) of
this section. We sought comment on whether the premium adjustment
percentage defined in Sec. 156.130(e) should be used instead.
In paragraph (c), we proposed to define the dental CPI, which is a
sub-component of the U.S. Department of Labor's Bureau of Labor
Statistics Consumer Price Index specific to dental services. We would
use the annual dental CPI published by the Department of Labor. In
paragraph (d), we proposed that increases in the annual dollar limits
for one child that do not result in a multiple of $25 will be rounded
down, to the next lowest multiple of $25.
We are finalizing the provision with modifications to paragraphs
(a)(1) and (2) to apply the indexing formula to plan years beginning
after 2017 and with a modification of the language of the formula for
increasing the annual limitation on cost sharing for purposes of
clarity.
Comment: Several commenters supported our proposed approach to
raise the annual limitation on cost sharing over time using the CPI for
dental services. Some commenters asked that the proposal be implemented
sooner than for plan years beginning after 2016. Others requested using
the 2014 CPI for dental services rather than the 2016 in order to have
the annual limitation on cost sharing increase in the next few years.
Others asked that we also consider increasing the annual limitation on
cost sharing to a set level and then applying the indexing formula via
the CPI for dental services in order to meet HHS's stated interest in
providing preventive care without cost sharing. We also received
several comments requesting clarification of the formula.
Response: When we established specific values for the annual
limitation on cost sharing for SADPs in previous rules,\57\ we intended
to eventually index the limitation to keep pace with inflation and
moderate potential increases in premiums, similar to the annual
limitation on cost sharing for medical QHPs. Without such an increase,
over time we could see an increase in SADP premiums and fewer
affordable dental options for consumers. We believe that this formula
balances the need to establish a process to increase the annual
limitation on cost sharing over time against concerns with increasing
the maximum financial liability to consumers.
---------------------------------------------------------------------------
\57\ Exchange Establishment Rule, 77 FR 18309 (Mar. 27, 2012);
EHB Rule, 78 FR 12833 (Feb. 25, 2013).
---------------------------------------------------------------------------
In the regulatory impact assessment in the proposed rule, we noted
our desire for consumers to have access to preventive services without
cost sharing. We acknowledge that this may be difficult to achieve at
the low AV level of 70 percent. However, we believe that to implement a
one-time increase to the annual limitation on cost sharing by a
significant amount would be overly burdensome for consumers.
Accordingly, we are finalizing the proposal as proposed, with minor
modifications. We are modifying paragraphs (a)(1) and (2) to apply the
indexing formula to plan years beginning after 2017 rather than 2016.
We acknowledge that applying the indexing formula to plan years
beginning after 2017 will ensure that the first application of the
formula, for the 2018 benefit year, will result in neither an increase
nor a decrease in the annual limitation on cost sharing for that
benefit year. However, we are seeking to balance stability in plan
designs with the desire to increase the annual limitation on cost
sharing to keep pace with inflation. We will continue to monitor the
increase over time to ensure we are working towards our stated goals.
As noted in the proposed rule, we will propose and finalize the annual
increase to the dental annual limitation on cost sharing according to
the formula specified here in the annual Payment Notice.
We did not receive any comments suggesting that we use the premium
adjustment percentage defined in Sec. 156.130(e) instead. We did not
receive any comments opposing our proposal to increase the annual
limitation on cost sharing in $25 increments and will finalize this
provision as proposed.
We also are making a modification to the wording of the formula,
though not to its meaning. Under this final rule, as under the
proposal, the annual limitation on cost sharing will be increased by
the same percentage the CPI for dental services increased between 2016
and the year that is 2 years prior to the applicable benefit year.
Comment: A commenter asked that we clarify that the annual
limitation on cost sharing would never be reduced. Another requested
clarification whether the provisions would be applied to off-Exchange
SADPs.
Response: We are clarifying that the proposed formula will not be
used to reduce the annual limitation on cost sharing for SADPs. The
updated formula language in paragraph (a)(1) specifically notes that
the annual dollar limit is increased by the percent increase of the
consumer price index for dental services. We do not include a provision
that would require a reduction.
We also note that all Exchange-certified SADPs must meet the same
certification standards, including the annual limitation on cost
sharing, regardless of whether they are offered on or off Exchanges.
[[Page 12301]]
5. Qualified Health Plan Minimum Certification Standards
a. Network Adequacy Standards (Sec. 156.230)
At Sec. 156.230, we established the minimum criteria for network
adequacy that health and dental plan issuers must meet to be certified
as QHPs, including SADPs, in accordance with the Secretary's authority
in section 1311(c)(1)(B) of the Affordable Care Act. Section
156.230(a)(2) requires all issuers to maintain a network that is
sufficient in number and types of providers to assure that all services
will be accessible without unreasonable delay. Section 156.230(b) sets
forth standards for access to provider directories requiring issuers to
publish an up-to-date, accurate, and complete provider directory for
plan years beginning on or after January 1, 2016, and Sec. 156.230(c)
requires QHPs in the FFE to make this provider directory data available
on its Web site in an HHS-specified format and also submit this
information to HHS in a format and manner and at times determined by
HHS.
(1) State Selection of Minimum Network Adequacy Standards
The NAIC's Network Adequacy Model Review Subgroup has completed
significant work in the area of network adequacy, which includes
finalization of a Network Adequacy Model Act, which can be found at
https://www.naic.org/store/free/MDL-74.pdf, that States can adopt in
whole or in part. We will continue to monitor the work of the NAIC in
this area and of States' implementation of these standards, and look
forward to partnering with States and the NAIC in developing and
promulgating network adequacy protections. In the interest of
furthering this work, we proposed a number of standards related to
network adequacy.
In recognition of the traditional role States have in developing
and enforcing network adequacy standards, we proposed that FFEs would
rely on State reviews for network adequacy in States in which an FFE is
operating, provided that HHS determined that the State uses an
acceptable quantifiable network adequacy metric commonly used in the
health insurance industry to measure network adequacy.
We proposed that HHS would determine that a State's network
adequacy assessment methodology meets the standard above if the State
selects one or more standards from a list of metrics provided by HHS
and applies them prospectively to the QHP issuers in the State. We
anticipated including at least the following metrics in the list:
Prospective time and distance standards at least as
stringent as the FFE standard.
Prospective minimum provider-covered person ratios for the
specialties with the highest utilization rate for its State.
We proposed that after HHS discussed with States their selection to
determine whether the State's network adequacy standard would be
acceptable under the standard above, we would notify issuers via
regulatory guidance about whether the State standards or Federal
default standard would apply.
We proposed that when HHS determined that a State's network
adequacy standard is acceptable under the standard above, the State
would certify to the FFE which plans meet the network adequacy
standard, and the FFE in that State would rely on the State's review
for purposes of determining whether a QHP meets the requirements under
Sec. 156.230(a)(2), although those issuers would still be required to
submit to HHS provider data, attest to the HHS network adequacy
certification requirements, and meet other applicable HHS standards,
including the other standards under Sec. 156.230.
In the proposed rule, we stated that for States that do not review
for network adequacy, or do not select a standard as described above,
the FFE would conduct an independent review under a Federal default
standard. We proposed the Federal default standard to be a time and
distance standard. For the certification cycle for plan years beginning
in 2017, we stated that we anticipated evaluating the QHP issuer
networks under this standard based on the numbers and types of
providers, in addition to their general geographic location. The
standard proposed involved using a time and distance standard at the
county level. We also stated that we were considering using standards
similar to those used in Medicare Advantage, utilizing the National
Provider Identifier database, and focusing on the specialties that
enrollees most generally use. Further, we explained that HHS was also
carefully considering other network standards, including those of
individual States, accrediting entities, and Federal health care
programs, as it developed the time and distance standards for the FFEs.
We also stated that the proposed county-specific time and distance
parameters that plans would be required to meet, including
specifications for specific provider and facility types, would be
detailed annually in conjunction with the Letter to Issuers.
We also proposed that issuers that did not meet the specified
standards would be able to submit a justification to account for any
variances, and that the FFE would review the justification to determine
whether the variance is reasonable based on circumstances, such as the
availability of providers and variables reflected in local patterns of
care.
We explained that we did not intend in establishing these default
standards to prohibit certification of plans with narrow networks or
otherwise impede innovation in plan design. Instead, we stated that we
intended to establish a minimum floor consistent with the levels
generally maintained in the market today, so that generally a very
small number of plans would be identified as having networks deemed
inadequate. Our discussion of the Federal default standard was intended
to provide issuers with more transparency regarding our certification
processes. In that discussion, we clarified that the process would be
designed and implemented to achieve results similar to those yielded by
the reviews conducted by the FFEs in prior certification cycles. We
explained that we believed this standard would promote predictability
for issuers in the course of certification. We noted in the proposed
rule that multi-State plan options will be considered to meet the
network adequacy requirements under Sec. 156.230(a)(2) if they meet
network adequacy standards established by OPM.
For the reasons noted below, we are not finalizing Sec. 156.230(d)
as proposed at this time and will continue to work with States to
determine how to best ensure reasonable access while preventing
duplicate review.
Comment: Many commenters raised concerns about the use of a time
and distance Federal default standard, and stated the new NAIC Network
Adequacy Model Act does not include time and distance standards.
Commenters also raised concerns that the proposed standard could
increase health care costs, would not adequately address network
adequacy issues in all areas, and would not fit all types of plans, and
numerous commenters asked that HHS give States time to enact the new
NAIC Network Adequacy Model Act rather than implementing the standard
in the final rule.
Response: We appreciate the concerns raised and in response are
declining to finalize Sec. 156.230(d) as proposed for the 2017 plan
year. Our intention is to give States time to adopt the NAIC Network
[[Page 12302]]
Adequacy Model Act provisions. We note in particular that the NAIC
Network Adequacy Model Act highlights ``specific quantitative standards
to ensure adequate access that carriers must, at a minimum, satisfy in
order to be considered to have a sufficient network,'' and these
include provisions requiring a minimum numbers of providers, and
setting limits on travel times and wait times. The Act explains how
these standards can be incorporated either in statute or in regulation.
Further, we note that the NAIC Network Adequacy Model Act was approved
unanimously by all States and Washington, DC, and the NAIC has stated
that it will be a priority of the organization to have a majority of
States adopt the NAIC Network Adequacy Model Act within 3 years. We
note our expectation that all States, including FFE States, will
actively implement these provisions, and we look forward to monitoring
States' progress this year, with a particular view to avoiding
duplicative Federal and State review processes. We will revisit this
proposal in future rulemaking. We will continue the process used in
previous years to review network adequacy as part of the annual
certification process, and will review network data for reasonable
access.
For transparency, we are publishing separately details of the FFEs'
internal QHP certification process for network adequacy, including the
metric used for the internal review, to assess plans for network
adequacy.\58\ These standards are consistent with those we have used in
the past to assess potential QHPs for compliance with the network
adequacy requirements; we believe that providing additional
transparency about these standards will help issuers with their network
planning.
---------------------------------------------------------------------------
\58\ Final 2017 Letter to Issuers in the Federally-facilitated
Marketplaces (Feb. 29, 2016).
---------------------------------------------------------------------------
Comment: Many commenters expressed support for the proposed time
and distance standards, and many requested specific standards for
specific types of specialty care including pediatrics, cancer centers,
women's health, and transplant providers. Commenters also requested
that additional standards be added to the quantitative standards,
including requirements regarding wait times, language services,
telehealth, disability accessibility and reasonable access being
provided at the lowest cost sharing tier. Some commenters also
expressed concerns about the applicability of time and distance to
dental issuers and urged that other standards be used. Some commenters
supported the use of time and distance standards for SADPs. Some
commenters requested that the time and distance standards be expanded
to SBEs and multi-State plans, and that they be used as the required
standards, not a default.
Response: We appreciate the comments; however, we are not
finalizing the default time and distance standard at this time. As
discussed above, our intention is to give States time to adopt the NAIC
Network Adequacy Model Act provisions and implement associated
standards.
Comment: Many commenters offered suggestions for changing and
expanding the State metrics listed in the preamble, including keeping
or removing the time and distance metric and provider-covered person
ratios, adding the network sufficiency metrics from the recently
completed NAIC Network Adequacy Model Act, adding a metric related to
standards for wait times, and altering the two listed metrics to
specify that they apply to specialties and subspecialties. Some
commenters suggested we implement an effective network access review
standard comparable to the effective rate review standard by State.
Response: We are not finalizing our proposal establishing a minimum
quantitative State network adequacy measurement at this time. We wish
to provide States time to adopt the NAIC Network Adequacy Model Act
provisions and associated standards.
Comment: Some commenters suggested that HHS provide that only
providers available through the plan's lowest tier of cost-sharing be
counted for purposes of determining a network's adequacy.
Response: We intend to monitor the practice of tiering of providers
and will consider implications of the practice for network adequacy
review in the future. We remind all issuers, including those that use
tiered networks, that they must continue to meet the current
requirement in Sec. 156.230(a)(2) to provide reasonable access to all
covered services at all times throughout the plan year.
As States continue their work to implement the NAIC Network
Adequacy Model Act, we will continue to use quantitative time-distance
standards in our review of plans for QHP certification on the FFEs, and
will be providing details of the criteria for review in the annual
Letter to Issuers.
We are finalizing a number of policies relating to network
adequacy. We are finalizing two provisions to address provider
transitions in the FFE and a standard for all QHPs governing cost
sharing that would apply in certain circumstances when an enrollee
receives EHB provided by an out-of-network ancillary provider at an in-
network setting. We are also finalizing our proposed policy regarding
standardized categorization of network breadth for QHPs on the Federal
platform.
(2) Additional Network Adequacy Standards
Under proposed Sec. 156.230(e), which we are finalizing as
paragraph (d), we proposed two new requirements to address provider
transitions. First, we proposed new Sec. 156.230(e)(1) to require QHP
issuers in all FFEs to notify enrollees about a discontinuation in
their network coverage of a contracted provider. We proposed that a QHP
in an FFE be required to make a good faith effort to provide written
notice of a discontinued provider, 30 days prior to the effective date
of the change or otherwise as soon as practicable, to all enrollees who
are patients seen on a regular basis by the provider or receive primary
care from the provider whose contract is being discontinued,
irrespective of whether the contract is being discontinued due to a
termination for cause or without cause, or due to a non-renewal.
We also proposed that a discontinued provider include both a
provider that is being involuntarily removed from the network, and a
provider that is voluntarily leaving the network. To satisfy this
requirement, we stated that we expect the issuer to try to work with
the provider to obtain the list of affected patients or to use its
claims data system to identify enrollees who see the affected
providers. We said that we would encourage issuers, as part of the
notice to consumers, to notify the enrollee of other comparable in-
network providers in the enrollee's service area, provide information
on how an enrollee could access the plan's continuity of care coverage,
and encourage the enrollee to contact the plan with any questions.
Second, we proposed a new Sec. 156.230(e)(2) to require that QHP
issuers in all FFEs ensure continuity of care for enrollees in cases
where a provider is terminated without cause. Specifically, we proposed
to require the issuer, in cases where the provider is terminated
without cause, to allow an enrollee in active treatment to continue
treatment until the treatment is complete or for 90 days, whichever is
shorter, at in-network cost-sharing rates. We proposed the following
definition of active treatment in paragraph (e)(2): (1) An ongoing
course of treatment for a life-threatening condition; (2) an
[[Page 12303]]
ongoing course of treatment for a serious acute condition; (3) the
second or third trimester of pregnancy; or (4) an ongoing course of
treatment for a health condition for which a treating physician or
health care provider attests that discontinuing care by that physician
or health care provider would worsen the condition or interfere with
anticipated outcomes. In relation to the proposed definition of active
treatment, we stated that an ongoing course of treatment includes
treatments for mental health and substance use disorders that fall
within the proposed definition. For the purposes of the active
treatment definition, we proposed to interpret a life-threatening
condition as a disease or condition for which likelihood of death is
probable unless the course of the disease or condition is interrupted;
and a serious acute condition as a disease or condition requiring
complex on-going care which the covered person is currently receiving,
such as chemotherapy, post-operative visits, or radiation therapy.
Finally, we proposed under paragraph (e)(2)(ii) that any decisions made
for a request for continuity of care be subject to the issuer's
internal and external grievance and appeal processes in accordance with
applicable State or Federal law or regulations. We solicited comments
on several issues related proposed Sec. 156.230(e), such as the
definitions of key terms and timeframes, when these provisions should
apply, whether exceptions should be allowed for States that already
have requirements, whether additional provisions should be allowed for
continuity of care in cases of pregnancy as far as extending beyond 90
days and whether that care should limited to obstetric care and whether
other provisions are needed to protect an enrollee when a provider
contract is terminated.
We are finalizing these requirements as proposed, with certain
modifications to better align with the NAIC Network Adequacy Model Act,
including extending continuity of care coverage for the second or third
trimester of pregnancy through the postpartum period and codifying the
definitions of life-threatening condition and serious acute condition.
Additionally, we note that these standards are not intended to, and do
not, preempt State provider transition notices and continuity of care
requirements, and that we intend to defer to a State's enforcement of
substantially similar or more stringent standards.
Comment: Many commenters supported deferring to State provider
transition policies instead of the proposals in the proposed rule, with
some commenters only supporting deference when the State has stronger
consumer protections. Justifications for deferring to State provider
transition policies included problems with conflicting State law and
the associated burden with conflicting requirements. In the absence of
applicable State laws, some commenters recommended aligning standards
to those in the NAIC Network Adequacy Model Act that are
administratively feasible or allow issuers to maintain their current
practices.
Response: We are finalizing these proposed provider transition
policies in Sec. 156.230(d), but note that these standards are not
intended to, and do not, preempt State provider transition notices and
continuity of care rules, and that we would defer to a State's
enforcement of substantially similar or more stringent requirements.
This flexibility would apply to any State that chooses to enact these
parts of the NAIC Network Adequacy Model Act under section 6(L).\59\ We
recognize that the NAIC Network Adequacy Model Act differs in certain
respects from our requirements under Sec. 156.230(d)(1) and (2); we
intend to monitor States' implementation of the NAIC Network Adequacy
Model Act and may consider revisions to this policy in the future if
needed.
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\59\ See https://www.naic.org/store/free/MDL-74.pdf.
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Comment: Some commenters wanted more than 30 days' notice, or asked
that the timeframes align with the NAIC Network Adequacy Model Act.
Some commenters supported requiring all enrollees of a primary care
provider to be required to be notified. Other commenters stated that
the notices should not be required if providers are leaving a practice
with other in-network providers from that practice available. Some
commenters advocated for the development of enrollee registries through
which enrollees can be informed of changes or receive a list of
providers being discontinued. Some commenters expressed concern about
the value of notifications, and others expressed concern about the
confidentiality of provider notices.
Response: We are finalizing the notice requirements at Sec.
156.230(d)(1) as proposed. While our notice requirements are not the
same as those in the NAIC Network Adequacy Model Act, we did consider
these notice requirements and requirements from other programs in
proposing Sec. 156.230(d)(1). We understand that issuers need timely
notification from the provider leaving the network in order to meet the
30-day timeframe, but as the issuer has the contracting relationship
with the provider, the issuer is in the best position to require
providers to provide a termination notice to the issuer.
We note that paragraph (d)(1) requires that the issuer make a good
faith effort to provide the required notification. We understand that
there are certain situations that cannot be anticipated, and in those
cases, we would expect the issuer to send the notice to the enrollee as
soon as practically possible. Issuers can send the notification to the
enrollee electronically or by mail. In response to comments, we clarify
that when the provider is leaving a practice, and as a result will no
longer belong to the issuer's network, but other providers from the
practice remain in-network, paragraph (d)(1) would not require the
issuer to provide notice to the enrollees. We believe in those cases
the provider's practice is better positioned to provide notification to
the enrollee.
Comment: Comments on the appropriate definition of ``regular
basis'' generally either preferred to leave the definition to the
discretion of the issuer or suggested that we define it to include an
enrollee that has received services from the provider within one year.
Some commenters specifically wanted the definitions related to primary
care from the NAIC Network Adequacy Model Act to be incorporated in the
rule to clarify how the provisions under paragraph (d)(1) should apply.
Some commenters wanted additional protections in cases of provider
transitions, such as special enrollment periods for provider
terminations, or limits on the ability of issuers to terminate
providers mid-year (or recourse for the providers in the event of such
a termination), while other comments expressed concern about the
difficulty in coordinating with providers to identify affected
enrollees. Other commenters wanted issuers to be required to include
information in the notice about other comparable in-network providers
and to inform the enrollee of rights to receive continuity of coverage.
Response: The purpose of Sec. 156.230(d)(1) is to ensure that
enrollees are notified of changes to their provider network on a timely
basis. At this time, we are not extending this provision to include
additional requirements. However, notwithstanding a provider
termination, all QHP issuers are required under Sec. 156.230(b) to
maintain a network that is sufficient in number and types of providers,
including providers that specialize in mental health and substance
abuse services, to assure that
[[Page 12304]]
all services will be accessible without unreasonable delay. For
purposes of paragraph (d)(1), we will not finalize a uniform definition
of regular basis at this time, and will permit issuers to implement a
reasonable definition of that term. The NAIC Network Adequacy Model Act
similarly did not include a definition of regular basis. For purposes
of paragraph (d)(1), we note that, in alignment with the NAIC Network
Adequacy Model Act, we generally understand primary care to mean health
care services for a range of common physical, mental or behavioral
health conditions provided by a physician or non-physician primary care
provider, and a provider of primary care to mean a participating health
care professional designated by the issuer to supervise, coordinate, or
provide initial care or continuing care to an enrollee, and who may be
required by the issuer to initiate a referral for specialty care and
maintain supervision of health care services rendered to the covered
person, but that an issuer may implement reasonable definitions of
these terms. To identify enrollees who see a provider who is
terminating, we expect the issuer to work with the provider to obtain
the list of affected patients, use its claims data system to identify
enrollees who see the affected providers, or use another reasonable
method. The issuer does not need to use more than one method. For the
written notice required under paragraph (d)(1), we encourage issuers to
notify the enrollee of other comparable in-network providers in the
enrollee's service area, provide information on how an enrollee may
access the plan's continuity of care coverage, and encourage the
enrollee to contact the plan with any questions.
Comment: Some commenters stated that continuity of care should
cover non-renewals and terminations without cause; other commenters
disagreed. Commenters sought clarifications regarding the cost sharing
during the continuity of care period, and some commenters asked us to
adopt provisions from the NAIC Network Adequacy Model Act, including
providing that the issuer is only required to provide the continuity of
care if the provider agrees to accept the previously contracted in-
network rate and to ensure protections against balance billing. Some
stated that failure to include such a request could increase premiums.
Response: While we expect issuers to negotiate with a provider for
payment for services under Sec. 156.230(d)(2), issuers would only be
responsible for paying to a provider what was previously being paid
under the same terms and conditions of the provider contract, including
any protections against balance billing, if the provider agrees to
provide care under Sec. 156.230(d)(2). We cannot require non-
contracted providers to accept a particular payment rate under Sec.
156.230(d)(2). Therefore, nothing under Sec. 156.230(d)(2) would
prohibit balance billing for non-contracted providers in accordance
with section 1302(c)(3)(B) of the Affordable Care Act and Sec. 155.20.
This means that an enrollee could be balance billed for the services
under Sec. 156.230(d)(2), absent another prohibition on balance
billing in this situation, and those balance billing amounts would not
be required to count toward the plan's annual limitation on cost
sharing established at Sec. 156.130.
In response to comments, we are limiting paragraph (d)(2) to cases
where the provider is terminated without cause, including non-renewals
without cause, and clarify that Sec. 156.230(d)(2) does not apply in
cases where the contract is terminated or not renewed with cause. A
termination or non-renewal without cause could be initiated by either
the issuer or the provider or could be mutual. In any of these cases,
enrollee continuity of care should be ensured. Furthermore, we clarify
that if the enrollee remains in the same plan across plan years, Sec.
156.230(d)(2) will apply across plan years. However, if an enrollee
switches plans, Sec. 156.230(d)(2) would not apply, since there would
not necessarily be an expectation that the same provider would be
available under the new plan.
Comment: Some commenters sought clarifications or expansions of the
proposed definition of the course of active treatment, such as changes
that would require inclusion of certain conditions or transitional
coverage of drugs. While some commenters sought clarifications on the
definition of active treatment or wanted the issuer's medical director
to make the determination of whether an enrollee was in the course of
active treatment, commenters generally supported the proposed
definition of ``active treatment'' and our proposal that would make the
continuity of coverage rule subject to internal and external appeal
processes. Commenters supported requiring continuity of coverage for
pregnancy through the post-partum period. Some commenters also sought
90 days as the minimum transitional period, not the maximum period for
continuity of care coverage, or urged us to adopt a longer or shorter
period.
Response: We are not making changes to the definition of ``active
treatment'', except to amend the definition to ``active course of
treatment'' to align with the language in the NAIC Network Adequacy
Model Act. This change is not intended to alter the meaning of the
proposed rule. We are also finalizing, to align with the NAIC Network
Adequacy Model Act, the definitions of a life-threatening condition as
a disease or condition for which likelihood of death is probable unless
the course of the disease or condition is interrupted; and a serious
acute condition as a disease or condition requiring complex ongoing
care which the covered person is currently receiving, such as
chemotherapy, radiation therapy, or post-operative visits. For the
purposes of the active course of treatment definition, an ongoing
course of treatment includes treatments for mental health and substance
use disorders that fall within the definition of active course of
treatment. Additionally, if the enrollee has successfully transitioned
to a participating provider, if the benefit limitations of the plan are
met or exceeded, or if care is not medically necessary, Sec.
156.230(d)(2) would no longer apply to the enrollee.
In response to comments supporting the extension of this policy to
cases of pregnancy, we are revising the definition of active course of
treatment to include the second or third trimester of pregnancy through
the postpartum period. We are leaving the definition of what
constitutes ``postpartum period'' and the scope of related services to
the reasonable interpretation of the issuer.
At Sec. 156.230(f), which we are now finalizing as paragraph (e),
we proposed to require, notwithstanding Sec. 156.130(c) of the
subpart, that for a network to be deemed adequate, each QHP that uses a
provider network must count cost sharing paid by an enrollee for an EHB
provided by an out-of-network provider in an in-network setting under
certain circumstances towards the enrollee's annual limitation on cost
sharing. Alternatively, we proposed that the plan could provide a
written notice to the enrollee at least 10 business days before the
provision of the benefit that additional costs may be incurred for EHB
provided by an out-of-network provider in an in-network setting,
including balance billing charges, unless such costs are prohibited
under State law, and that any additional charges may not count toward
the in-network annual limitation on cost sharing.
We solicited comments on whether 10 business days' advance notice
is the appropriate timeframe. We also sought comment on whether issuers
should be
[[Page 12305]]
required to provide customized information to the consumer (including
information on potential in-network providers) or if a form
notification would be sufficient. We proposed that this policy would
apply to all QHP issuers, in all Exchanges.
We are finalizing our proposed policy, with four modifications.
First, we provide that this policy would only apply to cost sharing
paid by an enrollee for an EHB provided by an out-of-network ancillary
provider in an in-network setting. Second, we are shortening the
timeframe from 10 business days to the longer of the issuer's prior
authorization timeline (that is, when the issuer would typically
respond to a prior authorization request submitted timely) or 48 hours
prior to the scheduled service. Third, we are finalizing this proposal
so that it will take effect beginning for the 2018 benefit year.
Fourth, we are making a minor edit for clarity.
Comment: Many commenters supported HHS's efforts to address
surprise out-of-pocket costs for consumers. Other commenters supported
the proposal, but felt that it did not go far enough to protect
consumers, and stated that HHS should consider including a prohibition
on balance billing or otherwise restricting consumer financial
responsibility in these scenarios. Other commenters thought that it may
be difficult for consumers to locate an in-network provider within this
timeframe. Commenters also suggested expanding the proposal to include
situations in which an in-network provider is not available, when the
provider directory is not up to date, and emergency care.
Several commenters did not support our proposal, and asked that
States be given the time and discretion to implement network adequacy
standards. Others requested that HHS adopt NAIC Network Adequacy Model
Act provisions instead. Other commenters were concerned that the
proposal may have unintended consequences, such as disincentivizing
providers from contracting with issuers in order to be able to balance
bill consumers, or incentivizing consumers and out-of-network providers
to elect to perform procedures at an in-network facility.
Response: We are finalizing, for the 2018 and later benefit years,
a modified Sec. 156.230(e) to count services provided by an out-of-
network ancillary provider in an in-network facility towards the in-
network annual limitation on cost sharing if the issuer does not
provide timely notice, with the modifications described above. We did
not propose to prohibit balance billing by out-of-network providers or
limit the financial liability associated with out-of-network services
to consumers. Our intent in establishing this policy beginning for the
2018 benefit year is to permit us to monitor ongoing efforts by issuers
and providers to address the complex issue of surprise out-of-network
cost sharing at in-network facilities across all CMS programs in a
holistic manner, and amend our policy in the future to accommodate
progress on this issue, if warranted.
While not a solution to all adverse financial consequences of
receiving treatment from an out-of-network provider in this situation,
we believe the policy we are finalizing will help provide transparency
and ensure that consumers receive notice of the possible consequences
where an out-of-network ancillary provider may be seen and are provided
some mitigation of these consequences where proper, timely notice is
not provided by the issuer. We believe that this policy provides a
measure of financial protection for consumers against surprise out-of-
network cost sharing, while maintaining the larger part of the QHP's
cost-sharing structure and avoids significant impacts on premiums.
We are making a modification to this policy to limit its
application to ancillary providers (that is, the provider of a service
ancillary to what is being provided by the primary provider, such as
anesthesiology or radiology) rather than the services supplied by the
primary provider. In response to comments, we were concerned that the
proposed policy could have had the unintended consequence of providing
for reduced cost sharing for a primary provider, such as a surgeon
known to be out-of-network. We acknowledge commenters' concerns that as
previously written, the policy could allow for a consumer who has
selected an out-of-network provider to deliberately seek to have the
services rendered in an in-network facility in order to reduce cost
sharing. We believe that this modification will address this concern.
We intend to continue to monitor these situations, including
issuers' timely compliance with this provision to consider whether
further rulemaking is needed. Lastly, as we stated in the proposed
rule, this proposal is not intended to, and does not, preempt any State
laws on this topic.
Comment: Some commenters supported the requirement that issuers
notify consumers of the potential for additional cost-sharing from out-
of-network providers, but did not support the exception for issuers to
not count the cost sharing towards the annual limitation on cost
sharing. Others thought that the notification timeframe of 10 days was
arbitrary, not long enough for consumers to arrange in-network care, or
too long because prior authorization frequently happens closer to
service delivery. Some commenters requested that facilities be required
to notify consumers about whether or not providers were in-network for
a consumer. Others noted that the 10 days' notice timeframe prior to
the service may incentivize issuers to delay approval to utilize the
notification exception.
Commenters also provided feedback on the type of information that
should be included in a notice--many suggested that issuers be required
to include information on available network providers, information on
costs, and how a consumer could appeal a determination. Other
commenters thought the notification process was overly burdensome for
issuers, especially if customized information was required.
Response: In response to comments, we are modifying the 10-day
timeline to account for issuers' prior authorization timelines. We are
requiring notice from issuers by the longer of the issuer's prior
authorization timeline (that is, when the issuer would typically
provide the prior authorization) or 48 hours. This new timeline is more
in line with existing issuer prior authorization timelines and will be
less administratively burdensome for QHP issuers to implement, while
providing consumers with the same time period to adjust their plans
that they would have with respect to notification of prior
authorization.
We are also finalizing our proposal that a form notice be provided
to the enrollee in these circumstances indicating that additional costs
may be incurred for an EHB provided by an out-of-network ancillary
provider in an in-network setting, including balance billing charges,
unless such costs are prohibited under State law, and that any
additional charges may not count toward the in-network annual
limitation on cost sharing. While customized information for each
consumer is preferable, we understand that creating such a notice may
be burdensome to QHP issuers and may delay the notification process.
Additionally, the provider directories that QHP issuers must provide
may ease the burden on the enrollee to find an appropriate in-network
provider. Therefore, while we are not requiring that customized
information be provided to the enrollee in these circumstances,
including
[[Page 12306]]
information on available network providers, costs, and how a consumer
could appeal a determination, we strongly encourage QHP issuers to
provide that information.
Comment: Commenters asked if Sec. 156.230(e), which was proposed
Sec. 156.230(f), would apply to QHPs with tiered networks or QHPs that
do not provide out-of-network services. Another commenter asked for
clarification on whether this provision would apply to QHPs on and off
Exchanges. Other commenters asked HHS to clarify that this does not
apply to emergency services which are already covered by Sec.
147.138(b).
Response: We clarify that Sec. 156.230(e) applies to QHPs, both on
and off Exchanges, and to QHPs with tiered networks, but it does not
apply to QHPs that do not cover out-of-network services. It also does
not apply to emergency services, which are governed by other Federal
regulations.
Comment: Several commenters requested that Sec. 156.230(d) and (e)
not apply to SADPs as the NAIC determined that these types of standards
were not necessary for dental plans. The commenters stated that the
structure of SADPs and the services covered by SADPs are different from
medical plans as dental services are scheduled well ahead of time, the
course of treatment does not include more serious conditions, and
services are almost uniformly provided in the dentist's office.
Response: While we agree that these provisions are more suitable to
medical services, Sec. 155.1065 provides that SADPs must meet QHP
certification standards, except for any certification requirement that
cannot be met because the SADP is an excepted benefit that provides
only a limited scope of coverage. However, we also believe due to the
nature of these policies and the services provided by SADPs that any
instances in which a SADP would need to apply these provisions would be
rare.
(3) Other Comments on the Preamble to Sec. 156.230
In the proposed rule, we solicited comments on a number of other
network adequacy standards, including standards included in the work
being done by the NAIC's Network Adequacy Model Review Subgroup. Our
solicitation of comment included:
Whether a QHP in an FFE should have a network resilience
policy for disaster preparedness. Network resilience refers to the
provider network's capacity to withstand and recover from natural or
man-made disasters that may threaten enrollees' continuous access to
quality care.
Whether measuring network adequacy based on enrollee wait
times for scheduled appointments, including the variation in wait times
depending on the type of provider, such as for primary care or non-
primary care services, and whether we should add a wait time standard
as an option under the proposed permissible State standards mentioned
in the proposed rule, or if we should apply a broad wait time standard
across QHPs in the FFEs.
Whether an issuer should be required to survey all of its
contracted providers on a regular basis to determine if a sufficient
number of network providers are accepting new patients.
Whether issuers should be required to make available their
selection and tiering criteria for review and approval by HHS and the
State upon request.
We also stated that we were considering providing on HealthCare.gov
a rating of each QHP's relative network coverage. This rating or
classification would be made available to a consumer when making a plan
selection. We explained that such a rating would help an enrollee
select the plan that best meets his or her needs, and that we
anticipated that this analysis would compare the breadth of the QHP
network at the plan level as compared to the breadth of the other plan
networks for plans available in the same geographic area.
We stated that we anticipated analyzing the QHP network by
calculating the number of specific providers that are accessible within
specified time and distance standards. We explained that we would then
classify the QHP networks into three categories. We stated that we were
considering performing the calculation based on the provider
information submitted by all QHP issuers in the existing network
adequacy FFE QHP certification template.
In the proposed rule, we explained that this network breadth rating
would allow an enrollee to better understand plans' designs, and, like
other consumer tools, could help improve plan satisfaction. We stated
that we anticipated providing additional details about how we would
classify networks in the Letter to Issuers and in the QHP certification
instructions, and we solicited comments on what types of methods should
be used to identify each network's breadth, what specific specialties
should be included in the analysis, what sorts of adjustments should be
made to address provider shortages, and other possible data sources to
obtain information about available providers in the area. We also
welcomed comments on the best way to make this information available to
consumers. We intend to implement this proposal for open enrollment for
the 2017 benefit year, if following consumer testing we determine that
we can display this information in a manner useful to consumers. At
this time, we plan to provide the classifications of network breadth
for each plan at the county level. These classifications will be
determined by calculating the percentage of providers in a plan's
network, compared to the total number of providers in QHP networks
available in a county. We plan to provide additional details on this
methodology in the Letter to Issuers.
Comment: Commenters had concerns about Federal requirements on
network resilience, such as geographic variation issues. Others
generally support network resilience policies offering recommendations,
such as broad standards, deferring to States if they have strong
standards, or Medicare standards.
Response: We intend to work with stakeholders to consider best
practices for network resilience policies. We want to ensure that any
standards that we consider in this area are reasonable and
operationally feasible, and take into account geographical variation.
Comment: Some commenters had concerns about requiring providers to
be surveyed on whether they are accepting new patients because of
concerns about accuracy of this reporting, the associated difficulty
and burden on issuers and providers, the risk of undermining current
efforts by stakeholders to improve data quality, and concerns about
``accepting new patients'' being a poor standard for determining
network sufficiency. Other commenters generally supported requiring
issuers to survey providers on whether they are accepting new patients,
as the information could be used to update the provider directory.
Response: In the 2016 Payment Notice, we finalized requirements
under Sec. 156.230(b) that a QHP issuer must publish an up-to-date,
accurate, and complete provider directory, including information on
which providers are accepting new patients, the provider's location,
contact information, specialty, medical group, and any institutional
affiliations, in a manner that is easily accessible to plan enrollees,
prospective enrollees, the State, the Exchange, HHS and OPM. We also
stated that all the required data, including information on whether a
provider is accepting new patients, are critical for consumers to
[[Page 12307]]
make educated decisions about their health coverage. While we believe
that it is important that enrollees have access to providers who are
willing to accept new patients and issuers should ensure providers are
available within the network, we intend to continue to monitor this
issue, including industry's efforts in this area, to consider whether
further requirements are needed.
Comment: Some commenters had concerns about issuers being required
to provide selection and tiering criteria, noting the information is
proprietary and that greater regulatory authority over network adequacy
could have a chilling effect on network and product design. Other
commenters supported such a provision. Many noted concerns that issuers
are currently only making selection and tiering determinations on costs
and not quality, and oversight of this criteria could prevent
discrimination.
Response: We encourage issuers to be more transparent about
selecting and tiering criteria. We believe that transparency of
selecting and tiering criteria would help enrollees and providers
better understand how the issuer designed its network, which could help
enrollees use the network more effectively and efficiently.
Comment: Some commenters opposed a wait time standard, stating it
is difficult to measure and assess consistently across providers,
operationally and technically challenging for issuers, does not take
into account quality, and would be problematic to apply across all FFEs
given State variation. Other commenters supported requiring issuers to
comply with wait time standards. Many supported applying such a
requirement to all QHPs or all QHPs in FFEs.
Response: We understand that a Federal wait time standard would
need to take into consideration market and geographical variation of
States. We intend to continue to monitor the use of and development of
wait time standards.
Comment: Some commenters supported providing network breadth
information to consumers at the time of plan selection, and supported
the implementation we described. Other commenters raised concerns about
a rating system, believing it might be problematic because it does not
factor in quality and could be confusing. Some commenters requested
comprehensive consumer testing. Some commenters also requested that the
rating information should include both physicians and hospitals.
Response: We plan to proceed with providing information about each
QHP's relative network breadth on HealthCare.gov. We will base the
rating information of the network data for each QHP that is submitted
as part of the certification process. This rating will be made
available to a consumer when making a plan selection. We are conducting
consumer testing to help inform how to display the rating in a way that
will assist the consumer in selecting the plan that best meets his or
her needs. We anticipate providing details about what specialties the
ratings will include in the 2017 Final Letter to Issuers and in the QHP
certification instructions.
Comment: Commenters provided comments on other network adequacy
issues, such as wanting additional requirements on provider
directories, provider non-discrimination, access to specialized care,
strong oversight and enforcement of network adequacy standards, and
standards for material network changes. Other commenters wanted the
proposed provisions to apply to all QHPs instead of QHPs in FFEs only.
Response: We are not implementing additional network adequacy
related provisions at this time. Our intention is to give States time
to adopt the NAIC Network Adequacy Model Act provisions and potentially
reconsider this area in the future. Therefore, we are finalizing new
Sec. 156.230(d) to apply to all QHPs in an FFE only, and new Sec.
156.230(e) to apply to all QHPs.
b. Essential Community Providers (Sec. 156.235)
On June 5, 2015, we proposed through a Paperwork Reduction Act
(PRA) notice a provider petition process to update the ECP list against
which issuer compliance with the ECP standard is measured. We completed
this data collection for the 2017 benefit year and will provide
additional opportunities for ECPs to submit provider data to HHS for
benefit years beyond 2017. The degree of provider participation in this
data collection effort has allowed HHS to assemble a more complete
listing of ECPs.
In the proposed rule, we proposed that, for the 2017 QHP
certification cycle, HHS would continue to credit a health plan seeking
certification to be offered through an FFE with multiple providers at a
single location counting as a single ECP toward both the available ECPs
in the plan's service area and the issuer's satisfaction of the ECP
participation standard. For QHP certification cycles beginning with the
2018 benefit year, we sought comment on whether we should revise Sec.
156.235(a)(2)(i) and (b)(2)(i) to credit issuers for multiple
contracted full-time equivalent (FTE) practitioners at a single
location, up to the number of available FTE practitioners reported to
HHS by the ECP facility through the ECP petition process. We proposed
to apply this FTE count to the numerator of an issuer's percentage
satisfaction of the general ECP standard described in paragraphs (a)(1)
and (2) of Sec. 156.235 and the alternate ECP standard described in
paragraphs (b)(1) and (2) of that section. We proposed that the
denominator of an issuer's percentage satisfaction of the ECP standard
would reflect the number of available FTE practitioners reported to HHS
by each ECP facility located in the issuer's plan service area.
In the proposed rule, we stated that our analysis of the available
ECPs in each of the additional ECP subcategories previously considered
for disaggregation (that is, children's hospitals, rural health
clinics, freestanding cancer centers, community mental health centers,
and hemophilia treatment centers) does not support further
disaggregation of these categories at this time. We explained that
there are too few ECPs within each of these additional ECP categories
appearing on our ECP list to afford issuers sufficient flexibility in
their contracting. We stated that we may revisit this consideration in
the future, and encouraged QHP issuers to include in their networks
these additional providers to best meet the needs of the populations
they serve.
We are finalizing the provisions under Sec. 156.235 as proposed.
Comment: We received numerous comments in support of our proposal
for benefit year 2017 to continue crediting a health plan seeking
certification to be offered through an FFE with multiple providers at a
single location counting as a single ECP toward both the available ECPs
in the plan's service area and the issuer's satisfaction of the ECP
participation standard. Other commenters urged that HHS credit issuers
for multiple contracted FTE practitioners at a single location.
We received many comments in support of our proposal for QHP
certification cycles beginning with the 2018 benefit year to credit
issuers that qualify for the general and alternate ECP standard for
multiple contracted FTE practitioners at a single location, up to the
number of available FTE practitioners reported to HHS by the ECP
facility. These commenters stated that the wide variability in the
number of available practitioners at each ECP facility and broad range
of health care services that ECPs provide favor this position, and
urged that ECP facilities
[[Page 12308]]
should not all be credited equally toward an issuer's satisfaction of
the 30 percent ECP standard. In addition, they stated that many issuers
contract with multiple unaffiliated providers that rent space in the
same building and should be credited for more than one ECP at that
location. Some of these commenters stated that while they support
crediting issuers for multiple ECPs at a given site, they urged us to
not rely solely on issuer satisfaction of the 30 percent ECP threshold
to ensure adequate access to care for low-income medically underserved
individuals.
We also received comments in opposition to this proposal for
benefit year 2018. Many of the commenters stated that issuers do not
always know how many FTE practitioners are available at a specific
provider facility, and it would be burdensome for issuers to be
required to collect such provider data. Many commenters opposed the
proposal due to concerns that the policy might not ensure geographic
distribution of ECPs and an adequate range of health care services
provided by ECPs.
A few commenters stated that FTE practitioners at a facility often
fluctuate, or they divide their time among several facilities, and so
FTEs might be an unpredictable measure of an issuer's satisfaction of
the ECP standard.
Response: On December 9, 2015, HHS launched its ECP petition
initiative to give providers an opportunity to request to be added to
our ECP list, update their provider data on our ECP list, and provide
missing provider data, including FTE practitioner data that issuers
rely upon to identify qualified ECPs for inclusion in their provider
networks. The web-based ECP petition link is available at https://data.healthcare.gov/cciio/ecp_petition. HHS anticipates that this
provider data collection initiative will require several months of
provider outreach in order to collect the requisite FTE practitioner
data. For benefit year 2017, we are finalizing our proposal at Sec.
156.235(a)(2)(i) to count multiple providers at a single location as a
single ECP toward both the available ECPs in the plan's service area
and the issuer's satisfaction of the ECP participation standard.
For QHP certification cycles beginning with the 2018 benefit year,
we are finalizing our proposal at Sec. 156.235(a)(2)(i) to credit
issuers for multiple contracted FTE practitioners at a single location,
up to the number of available FTE practitioners reported to HHS by the
ECP facility through the ECP petition process. As HHS collects the
number of FTE practitioners from providers via the ECP petition for
purposes of the benefit year 2018 certification cycle, HHS intends to
clarify to issuers through guidance that issuers must report on their
ECP template only the number of FTE practitioners at each ECP facility
that the issuer has included in its provider networks for its member
enrollees. That number must not exceed the number of available FTE
practitioners reported to HHS by the ECP facility through the ECP
petition process. Due to the wide variability in the number of
available practitioners at each ECP facility and broad range of health
care services that ECPs provide, HHS believes that this methodology for
calculating an issuer's satisfaction of the ECP standard will provide a
more accurate representation of the issuer's ECP participation in its
provider networks.
For benefit years 2017 and beyond, HHS will continue to require
issuers to satisfy the separate ECP requirement to offer a contract in
good faith to at least one ECP per ECP category, where an ECP in that
category is available, within each county in the plan's service area.
In addition, issuers must continue to offer a contract to all available
Indian health care providers in the plan's service area. In previous
years, HHS relied in part on crediting a health plan with multiple
providers at a single location as a single ECP toward the issuer's
satisfaction of the ECP participation standard to better ensure
geographic distribution of ECPs. For benefit year 2018, HHS expects to
have collected the necessary ECP category-specific data directly from
all qualified providers on our ECP list via the ECP petition
initiative, so that reliance on counting multiple providers at a single
location as a single ECP will no longer be necessary for purposes of
ensuring geographic distribution of ECPs. We expect that the ECP
category per county contract offering requirement will serve to better
ensure geographic distribution of ECPs and an adequate range of health
care services.
In order to address fluctuations in FTE practitioners at a
facility, HHS intends to keep the ECP petition submission window open
throughout the year, permitting providers to report the fluctuations
and for issuers to view these updates in preparation for the following
benefit year contract negotiations. For provider facilities that employ
or contract with practitioners who divide their time among several
facilities, the ECP should divide their FTE counts among the facilities
when completing the ECP petition. For instance, an ECP should report a
practitioner who practices half time at two separate facilities as 0.5
FTE at each facility to ensure a more accurate count of FTEs at each
facility. Lastly, HHS has instructed providers to submit only one ECP
petition for each facility location using the facility-level National
Provider Identifier (NPI), rather than each individual practitioner at
the facility submitting a separate ECP petition. Therefore, HHS intends
to continue reflecting only facility-level ECPs on its ECP list,
although some facilities may be composed of a solo practitioner
beginning with the 2017 benefit year ECP list.
For the reasons stated above, we are finalizing our proposal to
revise Sec. 156.235(a)(2)(i) and Sec. 156.235(b)(2)(i) to credit
issuers that qualify for the general or alternate ECP standard
described in Sec. 156.235 that seek certification to be offered
through an FFE (or SBE-FP) for multiple contracted FTE practitioners at
a single location toward the issuer's satisfaction of the ECP standard,
beginning with the 2018 benefit year. In addition, we are finalizing
our proposal that for the 2017 benefit year, HHS will continue to
credit an issuer that qualifies for the general or alternate ECP
standard and is seeking certification to be offered through an FFE with
multiple providers at a single location counting as a single ECP toward
both the available ECPs in the plan's service area and the issuer's
satisfaction of the ECP participation standard.
Comment: Several commenters urged that HHS disaggregate the
providers listed in the ``Hospitals'' ECP category and the ``Other ECP
Providers'' category. These commenters stated that by grouping together
providers such as hemophilia treatment centers, community mental health
centers, and rural health clinics into one ECP category, HHS runs the
risk that low-income, underserved enrollees will have inadequate access
to key providers that are uniquely suited to meet their specialized
health needs. These commenters urged that HHS modify the ECP categories
to separate the distinct entities and require contracting with each of
them. Several commenters expressed concern that children's hospitals
are grouped with hospitals that do not specialize in children's health
care services. These commenters emphasized that children's hospitals
are uniquely suited to meet the needs of children with complex medical
conditions, and they urged HHS to establish a separate ECP category for
children's hospitals. Some commenters expressed concern that HHS might
be underestimating the number of providers in each of these ECP
[[Page 12309]]
subcategories, because the ECP categories reflected on the benefit year
2016 ECP list combine these providers with other provider types, rather
than classifying them separately. One commenter recommended that HHS
require that health plans offer contracts to all ECPs from each of the
categories in each county that is in a health professional shortage
area (HPSA), with the Health Resources and Services Administration
serving as a resource for identifying those areas. In contrast, several
health plans supported not disaggregating the ECP categories,
expressing concern that issuers would not have sufficient flexibility
in contracting.
Response: Based on our analysis of the available ECPs in each of
the additional ECP subcategories previously considered for
disaggregation (that is, children's hospitals, rural health clinics,
freestanding cancer centers, community mental health centers, and
hemophilia treatment centers), we believe that too few ECPs appear on
the ECP list to afford issuers sufficient flexibility in their
contracting. In order to address this concern, HHS launched its ECP
Petition initiative on December 9, 2015, to give providers an
opportunity to request to be added to the ECP list, update their
provider data on the ECP list, and provide missing provider data.
Provider participation in this ECP petition initiative is critical to
ensure that issuers are aware of a provider's ECP status and that
accurate provider data are reflected on the ECP list, including ECP
category classifications. We believe that HHS's network adequacy
standards, coupled with the ECP standards, including the 30 percent
inclusion standard and the requirement that issuers offer a contract to
at least one ECP in each ECP category in each county in the plan's
service area, afford both providers and issuers sufficient contracting
flexibility as HHS continues to update the ECP list. In addition, we
continue to partner with HRSA to identify HPSAs for determining
provider qualification for inclusion on the ECP list.
Comment: Several commenters urged that HHS require QHP issuers to
contract with any willing provider, rather than only 30 percent of the
available ECPs in a plan's service area. Some of these commenters
suggested that HHS require that QHP issuers offer good faith contracts
to all willing providers in specific ECP categories (that is, FQHCs,
Ryan White providers, hemophilia treatment centers) in the plan's
service area.
Response: While we appreciate the commenters' suggestions, we did
not propose changes to the 30 percent ECP standard and consider these
comments to be outside the scope of the proposed rule.
c. Enrollment Process for Qualified Individuals (Sec. 156.265)
Under Sec. 156.265(b)(2), if an applicant initiates enrollment
directly with the QHP issuer for enrollment through the Exchange
(direct enrollment through an issuer), the QHP issuer must redirect an
applicant directly to the Exchange Web site to complete the application
and receive an eligibility determination. HHS requested comment on an
option to enhance the direct enrollment process, like that described in
this final rule in the preamble to Sec. 155.220, such that an
applicant could remain on the QHP issuer's Web site to complete the
application and enroll in coverage, and the QHP issuer's Web site could
obtain eligibility information from the Exchange in order to support
the consumer in selecting and enrolling in a QHP. Our intent is to have
this information exchange occur through an Exchange-approved Web
service to provide Exchanges offering direct enrollment and QHP issuers
more operational flexibility to expand front-end, consumer-facing
channels for enrollment through a more seamless consumer experience.
Accordingly, as in Sec. 155.220, we proposed to revise Sec.
156.265(b)(2)(ii) to ensure that an applicant who initiates enrollment
directly with the QHP issuer for enrollment through the Exchange
receives an eligibility determination for coverage through the Exchange
Web site or through an Exchange-approved web service via the FFE single
streamlined application. Comments regarding the enhanced direct
enrollment proposal by web-brokers are discussed in this final rule in
the preamble to Sec. 155.220. We sought comment on the same direct
enrollment options for issuers, including whether to expand oversight,
auditing and monitoring activities, and how to best maintain privacy
and security standards. We also solicited comments on whether standards
should differ for a web-broker compared to a QHP issuer. We did not
receive comments indicating standards should differ for a web-broker
compared to a QHP issuer in regards to direct enrollment; thus, we are
finalizing the proposal to require effectively the same set of
standards regarding direct enrollment.
Comments on the general enhanced direct enrollment proposal, use of
the FFE single streamlined application, HHS approval of alternative
enrollment pathway processes, and the timing of direct enrollment are
discussed in this final rule at the preamble to Sec. 155.220(c)(3).
Comment: Commenters aligned their comments for web-brokers with
comments for issuers, and a few commenters generally noted that a level
playing field is essential to Exchange stability.
Response: Based on the comments received, as summarized above, we
are finalizing the proposal to enhance the direct enrollment process
with some modifications, as noted below.
We appreciate the many comments and recommendations on the direct
enrollment proposal we received. While we believe that an enhanced
direct enrollment process will provide a more seamless consumer
experience, we agree with commenters that implementing the proposal
will be a significant undertaking for HHS, web-brokers, and issuers,
and that such an effort will require sufficient time for operational
planning and preparations, such as identifying and testing the
Exchange-approved web services under Sec. 156.265(b) that can be used
to support the enhanced direct enrollment process, and ensuring privacy
and security risks are addressed and mitigated. HHS will not provide
such an option during the individual market open enrollment period for
2017 coverage, but intends to provide the option by the open enrollment
period for 2018 coverage. We intend to supplement the framework we are
finalizing in this rule with more specific guidance and requirements in
future rulemaking, such as specific guidelines for a pre-approval
process under Sec. 156.265(b)(3), and requirements for privacy and
security. Until then, issuers must continue to comply with the current
direct enrollment process, through which a consumer is directed to
HealthCare.gov to complete the eligibility application, and all
associated guidance. This means direct enrollment entities are not
permitted at this time to use non-Exchange Web sites to complete the
Exchange eligibility application or automatically populate data
collected from consumers into HealthCare.gov through any non-Exchange
Web site. Completion of the Exchange eligibility application on a non-
Exchange Web site, or collection of data through a non-Exchange Web
site that is then used to complete the eligibility application will be
considered a violation of the direct enrollment entity's agreement with
the FFEs.
See preamble to Sec. 155.220(c)(3), above, for a discussion of the
existing direct enrollment requirements.
While enhanced direct enrollment will not be available in the
individual
[[Page 12310]]
market open enrollment period for 2017 coverage, we are finalizing our
proposal to revise Sec. 156.265(b)(2)(ii) to enable issuers who use
HHS-approved direct enrollment processes to facilitate enrollment
through the FFEs to either ensure the applicant's completion of an
eligibility verification and enrollment through the Exchange internet
Web site as required by Sec. 155.405, or ensure that the eligibility
application information is submitted for an eligibility determination
through an Exchange-approved web service. This will allow applicants to
complete the entire Exchange application and enrollment process on the
web-broker's non-Exchange Web site. We believe this process will grant
direct enrollment entities the operational flexibility to expand front-
end, consumer-facing channels for enrollment.
However, we also share commenters' concerns that allowing this
flexibility without additional protections in place may increase the
risk of imprecise, inaccurate, or misleading eligibility results. In
light of those considerations and the accompanying comments received,
we are adding new paragraphs (b)(3)(i) through (iii) to clearly
articulate the requirements associated with completing an Exchange
eligibility application on a direct enrollment entity's non-Exchange
Web site. These requirements may be amended over time as implementation
activities begin and once experience is gained under the new process
(once implemented).
Consistent with the proposal in the proposed rule, Sec.
156.265(b)(3)(i) requires all language related to application
questions, and the sequence in which the questions are presented on the
direct enrollment entity's non-Exchange Web site to be identical to
that of the FFE Single Streamlined Application. We acknowledge the
comments requesting deviations from the FFE single streamlined
application to enhance the consumer experience, and, as we are for web-
brokers, we are finalizing language permitting such deviations with HHS
approval. We will only approve minor modifications that do not change
the intent or meaning of the questions, decrease the probability of
accurate answers and eligibility determinations, or affect the
dependencies and structure of the dynamic application.
We are also adding new Sec. 156.265(b)(3)(ii), which sets out a
more general requirement that any non-Exchange Web site facilitating
the completion of an Exchange eligibility application ensure that all
information necessary for the completion of the application related to
the consumer's applicable eligibility circumstance are submitted
through the Exchange-approved web service. New Sec. 156.265(b)(3)(iii)
requires that the process used for consumers to complete the
eligibility application on the non-Exchange Web site comply with all
applicable Exchange standards, including Exchange notice requirements
under Sec. 155.230 and Exchange privacy and security standards related
to handling PII under Sec. 155.260(b).
We also agree with commenters that urged HHS to adopt an approval
process to ensure that the non-Exchange Web site seeking to offer
stand-alone direct enrollment eligibility services meets all applicable
requirements in order to protect consumers. Accordingly, we have added
Sec. 156.265(b)(4) to outline a process for HHS to verify entities
meet all requirements of this section prior to using a non-Exchange Web
site to complete the Exchange eligibility application.
See preamble under Sec. 155.220 for a discussion on the primary
objective of these changes.
We clarify that the requirements related to the direct enrollment
process rules are applicable to FFEs (including FFEs where States
perform plan management functions) and SBE-FPs only, and would not
apply to SBEs that do not use the Federal platform, nor alter any
State-specific rules related to Medicaid eligibility.
Comment: Commenters generally supported HHS conducting regular
audits on issuers and requiring issuers to adhere regulatory standards
for direct enrollment activities.
Response: We agree with commenters that supported HHS conducting
regular audits of issuers under this section to ensure ongoing
compliance with applicable standards and are adding Sec.
156.265(b)(5), which enables HHS to periodically monitor and audit
entities to assess compliance with standards in this section.
Comment: One commenter stated HHS should work with issuers as it
develops new direct enrollment functionality, leverage existing
security standards as much as possible, and leave sufficient time for
testing and implementation of any requirements. Other comments raised
several concerns about the privacy and security of consumers'
personally identifiable information, particularly citizenship and
immigration status, and asked HHS to clarify how these entities would
collect, store, and use PII. Some commenters wanted HHS to clarify that
web-based entities will not gather and store data beyond that necessary
for the Federal platform, State-based Exchanges, and Medicaid
eligibility and enrollment via ``cookies'' or other tracking tools, and
would not store or use information gathered from consumers in the
application process for marketing other products.
Response: We agree that implementing the proposal will be a
significant undertaking for HHS, and that privacy and security risks
must be addressed prior to implementation. We intend for the standards
outlined in this section to provide a framework to prepare for the
implementation to support use of the enhanced direct enrollment option
in future years. We will continue to consider commenters'
recommendations on ensuring consumers are protected, and intend to
propose further protections in future rulemaking.
d. Termination of Coverage or Enrollment for Qualified Individuals
(Sec. 156.270)
We proposed to amend Sec. 156.270(d) to specify that a QHP issuer
must provide a 3-month grace period to an enrollee who, upon failing to
timely pay his or her premiums, is receiving advance payments of the
premium tax credit. Because we believe that changing the length of an
enrollee's grace period during the middle of the grace period would be
confusing to enrollees and could result in otherwise avoidable
terminations for failure to pay premiums, enrollees receiving APTC who
enter a grace period for failing to timely pay premiums and who also
lose their eligibility for APTC for any reason during the grace period
would be able to complete the remaining portion of the grace period as
though the loss of eligibility for APTC did not occur. Although the
length of the grace period would continue as though the loss of
eligibility for APTC did not occur, payment of APTC would terminate
through normal Exchange operations as a result of the loss of
eligibility. The proposed amendment to Sec. 156.270(d) also would
eliminate language limiting the 3-month grace period for enrollees who
are receiving APTC to only those enrollees who made a payment during
the benefit year. This would permit enrollees renewing coverage that
does not require a binder payment who fail to pay January premiums in
full (or fail to pay within an issuer's premium payment threshold
policy, if applicable) to receive the full grace period of 3 months.
This change would align more closely with our interpretation of the
interaction between grace periods, guaranteed availability and
renewability, and the binder payment requirement, that a binder payment
is
[[Page 12311]]
not necessary when an enrollee enrolls, either actively or passively,
in a plan within the same insurance product, and would prevent
enrollees who re-enroll in the same plan or product from unfairly
losing their right to a grace period because they do not make a payment
for January coverage. Finally, we proposed to codify with regard to the
grace period standards our policy described in the preamble for Sec.
155.400 of this part that if an enrollee receiving advance payments of
the premium tax credit can satisfy the requirement to pay all
outstanding premiums, or if the enrollee satisfies an issuer's premium
payment threshold implemented under Sec. 155.400(g), if applicable,
the QHP issuer must not terminate for non-payment of premium the
enrollee's enrollment through the Exchange. This change to the rule
would reflect the extension of the premium threshold policy to
enrollees who are in a grace period for non-payment of premium.
Comment: Many commenters supported the proposed rule because it
offers an important consumer protection and reduces confusion about the
length of an enrollee's grace period if the enrollee had his or her
APTC adjusted to $0 during the 3-month grace period for enrollees
receiving APTC. Several commenters, however, stated that the proposed
rule would cause providers to bear the burden of claims, subsequently
reversed by issuers, incurred during the second and third months of a
grace period for enrollees receiving APTC. Some, opposing the proposed
rule, preferred that enrollees losing their APTC during a 3-month grace
period revert to State rules to determine the length of the remainder
of the grace period. Several other commenters approved of the proposed
rule so long as providers were guaranteed to be reimbursed for claims
incurred during the second and third months of the 3-month grace
period. Finally, several commenters offered suggestions relating to
enhancing the requirement contained in Sec. 156.270(d)(3) that issuers
notify providers of the possibility for denied claims when an enrollee
is in the second and third months of the grace period.
Response: We recognize that the proposed rule could allow for
claims to be submitted and pended during the second and third months of
a grace period that, absent this amendment to the rule, would have been
disallowed for lack of coverage if the length of the enrollee's
remaining grace period had been shorter under State rules. However, the
proposed standard is consistent with our current rules, and because of
the importance we attach to the consumer protection inherent in the
proposed rule, we are finalizing the proposal as proposed.
Comment: One commenter requested clarification that non-payment of
a binder payment would not give rise to a grace period under the
proposed rule. Other commenters requested clarification that, under the
proposed rule, an enrollee is not eligible to receive a 3-month grace
period for non-payment of premium for a plan which is not being paid,
at least in part, by APTC. One commenter requested that, due to the
complexity of creating the systems operations necessary to implement
the rule, the proposed rule not go into effect, until after the date it
is finalized.
Response: The changes to Sec. 156.270(d) do not conflict with or
change the binder payment rule at Sec. 155.400(e), which states that
Exchanges may, and the Federally-facilitated Exchange will, require
payment of the first month's premium to effectuate an enrollment.
Likewise, the changes to the binder payment rule at Sec. 155.400(e) do
not eliminate the need for an enrollee to pay a binder payment to
effectuate coverage. The rule also does not change the existing rule
that an enrollee is not eligible to receive a 3-month grace period for
non-payment of premium for a plan which is not being paid, at least in
part, by APTC. Similarly, the rule does not make any change to the
rules related to the gain or loss of APTC. As with the other parts of
this rule, the amendments to Sec. 156.270(d) would be effective only
after the effective date, identified at the beginning of this rule.
Comment: While some commenters expressed support for the
codification of our interpretation that our rules do not require a
binder payment when an enrollee enrolls, either actively or passively,
in a plan within the same insurance product (but does require a binder
payment when a consumer enrolls in a new product or with a new issuer),
several commenters raised objections to the proposed rule's amendment
of Sec. 156.270(d) to eliminate language limiting the 3-month grace
period for enrollees who are receiving APTC to only those enrollees who
made a payment during the benefit year. Some commenters stated that
such a change would have an adverse actuarial effect on the risk pool,
and encourage enrollees to neglect their premium payments in favor of
receiving free coverage during the 3-month grace period for enrollees
receiving APTC.
Response: We do not interpret our rules to require a binder payment
for re-enrollment from an enrollee who is enrolling with the same
issuer in the same plan or product. We characterize such a re-
enrollment as a renewal of coverage, which, according to our
interpretation of our rules, is treated the same as a regularly-billed
monthly premium payment. Because a binder payment is not required by
our rules in such circumstances, we do not believe that an enrollee
receiving APTC who is re-enrolling, either actively or passively, into
the same plan or product should be denied a 3-month grace period if he
or she does not make full payment (or a payment within the issuer's
premium payment threshold, if any) for January of a benefit year.
Additionally, we do not believe that this causes actuarial risk to the
coverage pool or an enticement to game the system any more than such
dangers would exist during any other part of the benefit year. Because
we believe that this amendment offers an important consumer protection,
we are finalizing the proposed rule as written. At the same time, we
will carefully monitor consumer use of grace periods and make any
necessary changes in future rules or guidance.
e. Additional Standards Specific to SHOP (Sec. 156.285)
In Sec. 156.285(c)(5), we proposed to specify additional details
about how a QHP issuer offering a QHP through an FF-SHOP should
reconcile enrollment files with the FF-SHOP. Issuers would be required
to send enrollment reconciliation files on at least a monthly basis
according to a process and timeline established by the FF-SHOP, and in
a file format specified by the FF-SHOP.
We also proposed to delete Sec. 156.285(d)(2), to be consistent
with our interpretation of guaranteed availability and guaranteed
renewability. We specifically proposed that if a qualified employer
withdraws from a SHOP, the SHOP, not the issuer should terminate the
group's enrollment through the SHOP, and coverage might in many
circumstances continue outside the SHOP.
We received no comments on these proposals. We are finalizing the
amendment to delete Sec. 156.285(d)(2) as proposed, and are finalizing
the amendment to Sec. 156.285(c)(5) with modifications to clarify that
a general requirement under this provision still appliesin all SHOPs
and to delete the word ``must'' because it is superfluous in light of
the introductory language in Sec. 156.285(c).
[[Page 12312]]
f. Meaningful Difference Standard for Qualified Health Plans in the
Federally-Facilitated Exchanges (Sec. 156.298)
At Sec. 156.298, we proposed modifications to the meaningful
difference standard for QHPs in the FFEs. We proposed to remove the
criterion in paragraph (b)(5) that otherwise identical plans would be
considered meaningfully different on the basis of one QHP being health
savings account (HSA) eligible. We also proposed to delete ``self-
only'' and ``non-self-only'' from paragraph (b)(6). We further proposed
to redesignate paragraph (b)(6) as paragraph (b)(5) and add the word
``or'' to paragraph (b)(4).
Comment: Commenters generally supported the removal of HSA
eligibility as a criterion for determining meaningful difference from
otherwise identical plans, so long as standard key differences in how
the deductible applies will be accounted for in the existing cost
sharing meaningful difference standard at Sec. 156.298(b)(1). One
commenter noted that it is important that HHS permit an issuer to offer
different QHPs that look similar in terms of deductible and copayments,
where one is HSA-compatible but the other is not, because certain
services may be covered without a deductible.
Response: We have determined that HSA eligibility is a cost-sharing
status that may be assessed by examining the QHP's cost sharing, which
is included at paragraph (b)(1) and that the ``Health Savings Account
eligibility'' criterion is therefore redundant.
Comment: Commenters also generally supported removing the self-only
and non self-only criteria and questioned why the ``child-only'' status
was retained.
Response: We are finalizing the removal of the self-only and non
self-only criteria. Self-only (that is, individual) plans do not allow
any dependent relationships, while non-self-only (that is, enrollee
group or family) plans allow at least one dependent relationship type.
An individual can enroll in individual and family plans. The allowance
of dependents is the only difference between two plans if they are
identified as individual only or family. These statuses alone are not
indicative of meaningful differences among QHPs.
We will maintain the ``child-only'' versus non-child-only status.
It is permissible for QHP issuers to offer child-only plans in which
the only enrollees are individuals who have not attained the age of 21.
We believe that such a child-only plan would be meaningfully different
from a non child-only plan.
Comment: Several commenters asked that HHS consider other ways to
strengthen meaningful difference standards, such as by adding
additional quantitative standards.
Response: We are not proposing any additional meaningful difference
standards at this time, but will continue to review the implementation
of this policy over time.
g. Other Considerations
We reminded issuers that certain other Federal civil rights laws
impose non-discrimination requirements. Issuers that receive Federal
financial assistance, including in connection with offering a QHP on an
Exchange, are subject to Title VI of the Civil Rights Act of 1964, the
Age Discrimination Act of 1975, section 504 of the Rehabilitation Act
of 1973, and section 1557 of the Affordable Care Act. The Office for
Civil Rights (OCR), which enforces these statutes, published a notice
of proposed rulemaking on September 9, 2015 (80 FR 54172) on the
requirements of section 1557. Issuers that intend to seek certification
of one or more QHPs are directed to that proposed rule and to https://www.hhs.gov/ocr/civilrights for additional information.
We also sought comments on fostering market-driven programs that
can improve the management of costs and care. We noted that innovative
issuer, provider, and local programs or strategies may be successful in
promoting and managing care, potentially resulting in better health
outcomes and lower rates while creating important differentiation
opportunities for market participants. We sought comment on ways in
which we can facilitate such innovation, and in particular on whether
there are regulations or policies in place that we should modify in
order to foster this innovation.
Comment: A few commenters stated that the exclusion of quality
improvement activities in the MLR definition (for example, drug
utilization review programs, and value-based oncology management
programs) deters issuers from pursuing such innovative programs.
Commenters recommended HHS revise the MLR numerator definition to
include the costs of such programs.
A few commenters also suggested that HHS revisit last year's
requirements requiring issuers to cover the greater of one drug in
every USP category and class, or the same number of prescription drugs
in each category and class as the EHB-benchmark, and also establishing
P&T committees. Commenters stated that the administrative expense is
significant and unnecessary.
One commenter also asked HHS to reconsider the mail order and
specialty pharmacy restrictions in the 2016 final Payment Notice (Sec.
156.122(e) and (d)) starting for the 2017 benefit year, and instead
establish less restrictive methods to achieve its policy goals, for
example by requiring issuers and their prescription benefit managers
(PBMs) to establish protocols that facilitate mail order delivery to
enrollees with transitional living situations, multiple addresses, or
other living arrangements requiring non-standard delivery. The
commenter suggested that HHS could require that any mandatory mail
order programs offered only apply to maintenance medications and only
after a first fill of a new medication, as is common in the
marketplace.
We received a comment stating that any willing provider laws can
prevent selective contracting between issuers and providers as any
willing provider that accepts the issuers' terms is considered in-
network. The commenter stated that HHS should take into account the
negative impact of such restrictions on innovation and avoid imposing
similar regulatory impediments on issuers participating in the
Exchange. Another commenter urged HHS to focus on addressing true
drivers of costs, and avoid putting all financial responsibility on
consumers. The commenter stated that consumer-based programs like
reference pricing and benefit design structures are difficult for
consumers to understand, particularly for those with low income
literacy. Additionally, the commenter suggested addressing utilization
of more evidence-based care with incentives for providers, and the need
for broader efforts on price variation. Another comment requested HHS
develop tools to allow consumers to pick plans based on quality and
cost-effectiveness, adopt policies to increase transparency in costs
(public reporting on costs for episodes), promote technology-enabled
care delivery, and adopt policies to encourage total community health.
We received one comment requesting that HHS not require SADPs to offer
plans within its three categories (routine, basic and major), as it
results in inaccurate plan representation and consumer confusion.
Another commenter suggested HHS explore options to waive the
Medicaid rebate program, specifically the best price restriction, under
which the Exchange QHP drug prices are included. This sets a pricing
floor and prevents PBMs from negotiating lower drug prices or
manufacturer rebates.
[[Page 12313]]
Response: We appreciate these comments and will consider them for
future rulemaking.
6. Standards for Qualified Health Plan Issuers on Federally-Facilitated
Exchanges and State-Based Exchanges on the Federal Platform (Sec.
156.350)
To make it operationally feasible for a State-based Exchange to
rely on the Federal platform for eligibility and enrollment functions,
issuers and plans offered on the SBE-FP must comply with rules, as
interpreted and implemented in policy and guidance related to the
Federal eligibility and enrollment infrastructure. These would be the
same requirements related to eligibility and enrollment that are
applicable to QHP issuers and plans on FFEs. For example, SBE-FP
special enrollment periods must be administered within the guidelines
of the FFE special enrollment periods, as it is not possible at this
time for the Federal platform to accommodate State customization in
policy or operations, such as State-specific special enrollment
periods, application questions, display elements in plan compare, or
data analysis. Additionally, if the Federal platform is to perform
eligibility and enrollment functions, the Federal platform would also
need to provide for certain consumer tools (for example, plan compare,
premium estimator, second-lowest cost silver plan tool) to support
those functions. Thus, the Federal platform would need SBE-FP QHP plan
data by the dates specified in the annual Letter to Issuers to provide
for adequate testing and loading of the data into the various consumer
tools the FFEs offer. Issuers must also comply with certain FFE
enrollment policies and operations (for example, premium payment and
grace period rules, effective date logic, acceptable transaction codes,
and reconciliation rules) for the Federal platform to successfully
process 834 transactions with issuers and minimize any data
discrepancies for reconciliation.
Therefore, we proposed to add Sec. 156.350 to address eligibility
and enrollment standards for QHP issuers participating on an SBE-FP. In
paragraph (a) of new Sec. 156.350, we proposed that QHP issuers
participating in an SBE-FP must comply with HHS regulations, and
guidance related to the eligibility and enrollment functions for which
the State-based Exchange relies on the Federal platform. For example,
those issuers would be required to comply with operational standards in
the Federally-facilitated Exchange and Federally-facilitated Small
Business Health Options Program Enrollment Manual. We proposed in
paragraph (a) a list of provisions with which QHP issuers participating
in an SBE-FP would be required to comply. These provisions relate to
eligibility and enrollment functions directly, or are critical to
enabling HHS to assess compliance with eligibility and enrollment
functions. For example, we would require QHP issuers to comply with the
requirements regarding compliance reviews of QHP issuers to the extent
relating directly to applicable eligibility and enrollment functions.
Without this requirement, we would be severely limited in our ability
to determine whether an issuer is complying with the requirements
related directly to the Federal platform's eligibility and enrollment
functions. In paragraph (b), we proposed to permit these issuers to
directly enroll applicants in a manner that is considered to be through
the Exchange, under Sec. 156.1230, just as QHP issuers on FFEs are
permitted.
In paragraph (c), we proposed that if an SBE-FP does not
substantially enforce the eligibility and enrollment standards
described in paragraph (a), then HHS may enforce against the issuer or
plan using the enforcement remedies and processes described in subpart
I of part 156. We also proposed that the administrative review process
in subpart J of part 156 would apply to enforcement actions taken
against QHP issuers or plans under proposed Sec. 156.350. Because
timely compliance with paragraph (a) is vital to the smooth functioning
of the Federal platform and because the Federal platform would apply a
uniform compliance and enforcement regime for reasons of efficiency and
speed, we believe it is appropriate that HHS have this authority in
this circumstance.
Because this proposal would insert a section applicable to SBE-FPs
in subpart D, which currently describes only standards for QHP issuers
on the FFEs, we proposed to amend the title of subpart D to read
Standards for Qualified Health Plan Issuers on Federally-Facilitated
Exchanges and State-Based Exchanges on the Federal Platform.
Comment: We received comments stating the disadvantages of the
Federal platform not being able to accommodate State customization. One
commenter requested clarification that if a State elects to use the
Federal platform for only the individual market or only for the SHOP
market, the State should only be required to comply with the
operational standards of the FFE for that market, not both. We also
received comments supporting this proposal, noting that for issuers
participating in both FFE and SBE-FP States this policy enables
streamlined policies across platforms and would decrease operational
burden for issuers, enrollees, and Exchanges.
Response: As we discuss above, at this time the Federal platform is
not able to accommodate State customization in policy or operations. We
are finalizing this policy as proposed. However, we are confirming that
there is the flexibility for a State to elect to use the Federal
platform for certain functions for either the individual market, or the
SHOP market, or both. We are also confirming that should a State elect
to use the Federal platform for certain functions for only one market,
the requirements in Sec. 156.350 would only apply for the market for
which the State elects to rely on the Federal platform.
7. Enforcement Remedies in Federally-Facilitated Exchanges (Sec. Sec.
156.800, 156.805, and 156.810)
In the proposed rule, we discussed four proposed rule changes.
First, we proposed to revise paragraph Sec. 156.805(d) to explain
fully the effect of appealing a CMP. In the interest of aligning our
CMP and decertification regulations, we proposed to rename paragraph
(d) ``Request for hearing.'' We proposed to state affirmatively the
issuer's right to file a request for hearing on the assessment of a CMP
and we proposed to add language stating that the request for hearing
will suspend the assessment of CMP until a final administrative
decision on the appeal. This was similar to language in the
decertification rule.
Second, we proposed to amend Sec. 156.810 to present the appeal
rights of QHP issuers and the impact of an appeal more clearly.
Specifically, we added language to explain how an appeal will affect
the effective date of a decertification depending on whether the
decertification is standard or expedited.
Third, we proposed to remove Sec. 156.800(c), in which we stated
that sanctions will not be imposed on a QHP issuer on an FFE if it has
made good faith efforts to comply with applicable requirements for
calendar years 2014 and 2015. Starting in the 2016 calendar year and
beyond, we proposed to impose sanctions on a QHP issuer in an FFE if
the issuer fails to comply with applicable standards, even if the QHP
issuer has made good faith efforts to comply with these requirements.
We intend to use a progressive compliance model for determining
sanctions.
[[Page 12314]]
Fourth, we proposed to add new bases for decertification of a QHP
to Sec. 156.810. One of the bases for decertification, Sec.
156.810(a)(5), authorizes decertification if a QHP issuer is hindering
the efficient and effective operation of a Federally-facilitated
Exchange. We explained our intent to interpret hindering the efficient
and effective operation of the FFEs to include impeding displaying
plans properly to enrollees who purchase coverage under that plan.
Where an issuer has informed HHS that it cannot continue to provide
coverage under a QHP, HHS will interpret this information to mean that
the efficient and effective operation of the FFE will be hindered
because it will incorrectly display plans on the FFE platform. In such
a case, we proposed to take all necessary steps to suppress or
decertify the QHP.
We also proposed to add a basis for decertification to Sec.
156.810 to address situations where a QHP issuer is the subject of a
pending or existing State enforcement action, including a consent
order, or where HHS has reasonably determined that an issuer lacks the
funds to continue providing coverage to its consumers for the remainder
of the plan year. Under its obligation to determine that making a plan
available on the FFEs is in the interest of qualified individuals and
employers, we proposed to adopt these decertification bases as a
consumer protection measure.
We invited comments from affected parties on the proposal to end
the good faith compliance policy and on the proposed bases for
decertification.
Comment: We received comments requesting that we extend the good
faith compliance policy into 2016. Some commenters only asked for an
extension of the good faith compliance policy for new 2016
requirements. Commenters also requested that we clarify that any
conduct occurring in 2014 and 2015 remain subject to the good faith
compliance policy in the future. Others requested that, if the policy
ended, we use a progressive compliance model for any compliance
enforcement in the future. One commenter supported ending the policy.
Response: We are not extending Sec. 156.800(c) to cover calendar
year 2016. While there are new requirements for issuers in 2016, we
believe that issuers have had sufficient time to acquaint themselves
with how to comply with the fundamental regulations underpinning
participation in the FFEs. We will be using a progressive compliance
model for compliance conduct in the future, and may evaluate how new a
particular requirement is when determining the appropriate enforcement
remedy. We believe, based on past and current compliance monitoring and
enforcement efforts, that issuers have gained enough experience with
the FFEs to comply fully with participation standards. Of course, in
all our enforcement actions, we will continue to take into account all
facts and circumstances, including the reasonable good faith action of
issuers.
Comment: We received comments that the expansion of bases for
decertification, especially a basis for decertification based on
financial solvency, falls under State, not Federal authority. One
commenter expressed support for the expanded bases for decertification.
Response: We are finalizing the regulation as proposed. We believe
that the added bases are necessary to provide consumers a consistent
and reliable coverage experience through the FFEs. We do not believe
this constitutes any infringement on State authority. While State
regulators do have primary authority over whether issuers may sell
coverage within the State, issuers must also comply with Federal
requirements for participation in the FFEs and avoid conduct that
violates Federal standards for decertification if they wish to sell
QHPs on an FFE. When HHS reasonably determines, in coordination with
information received from State regulators, that the issuer lacks the
financial ability to provide coverage until the end of the coverage
period, HHS must be able to take action to protect FFE consumers. Any
action for consumers not enrolled in a QHP on an FFE generally remains
the primary authority of the State regulator and outside the influence
of these regulations.
8. Quality Standards
a. Patient Safety Standards for QHP Issuers (Sec. 156.1110)
In the proposed rule, we proposed to strengthen QHP patient safety
standards at Sec. 156.1110 in accordance with section 1311(h) of the
Affordable Care Act for plan years beginning on or after January 1,
2017. We noted the importance of alignment of the QHP issuer standards
with effective patient safety interventions and leveraging the
successful work already being done at national, regional, and local
hospital systems for health care quality improvement and harm reduction
to achieve greater impact on reducing patient harm. We proposed
amending Sec. 156.1110 to capture the current patient safety standards
that continue to apply for plan years beginning before January 1, 2017
in new paragraph (a)(1). We also proposed to add new paragraph
(a)(2)(i)(A) to specify that for plan years beginning on or after
January 1, 2017, a QHP issuer that contracts with a hospital with
greater than 50 beds must verify that the hospital uses a patient
safety evaluation system as defined in 42 CFR 3.20. We proposed to
require, under new paragraph (a)(2)(i)(B), that for plan years
beginning on or after January 1, 2017 a QHP issuer that contracts with
a hospital with greater than 50 beds must ensure that the hospital
implements a comprehensive person-centered discharge program to improve
care coordination and health care quality for each patient. We noted
that use of a data-driven approach, analytic feedback, and shared
learning to advance patient safety, such as working with a Patient
Safety Organization (PSO), are essential to implementing meaningful
interventions to improve patient health care quality.
We also proposed to exercise the authority provided to the
Secretary under section 1311(h)(2) of the Affordable Care Act to
establish reasonable exceptions to the QHP issuer patient safety
requirements. Specifically, in new paragraph (a)(2)(ii), for plan years
beginning on or after January 1, 2017, QHP issuers can verify that a
contracted hospital with greater than 50 beds implements evidence-based
initiatives to reduce all cause preventable harm,\60\ prevent hospital
readmission, improve care coordination and improve health care quality
through the collection, management and analysis of patient safety
events by a means other than reporting of such information to a PSO. We
noted that this would allow flexibility and promote alignment for
hospitals that already engage in effective national, State, public and
private patient safety programs.
---------------------------------------------------------------------------
\60\ All cause preventable harm or all adverse events-any event
during the care process that results in harm to a patient,
regardless of cause (Letter from Center for Clinical Standards and
Quality/Survey & Certification Group to State Survey Agency
Directors regarding AHRQ Common Formats--Information for Hospitals
and State Survey Agencies (SAs)--Comprehensive Patient Safety
Reporting Using AHRQ Common Formats (Mar. 15, 2013), available at
https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-13-19.pdf).
---------------------------------------------------------------------------
We proposed to amend the documentation requirement for plan years
beginning on or after January 1, 2017, from the collection of the
hospital's CMS Certification Number to materials which reflect
implementation of PSO activities, such as documentation of PSOs and
hospitals working together to collect, report and
[[Page 12315]]
analyze patient safety events, and implementation of a comprehensive
person-centered hospital discharge program to demonstrate compliance
with the proposed requirements in Sec. 156.1110(a)(2)(i); or
documentation to reflect implementation of other patient safety
initiatives to reduce all cause preventable harm, prevent hospital
readmission, improve care coordination and improve health care quality
through the collection, management and analysis of patient safety
events to demonstrate compliance with the reasonable exception
provision proposed to be captured in Sec. 156.1110(a)(2)(ii).
We noted that we were considering providing that QHP issuers must
ensure that their contracted hospitals as described in section 1311(h)
are standardizing reporting of patient safety events with the use of
the Agency for Healthcare Research and Quality (AHRQ) Common Formats.
We also noted that these proposed standards would leverage the
successful work already being done at national, regional, and local
hospital systems for health care quality improvement and harm
reduction, and align with effective patient safety interventions to
achieve greater impact.
We are finalizing these proposals with the following modification.
We are modifying the reasonable exceptions provision in Sec.
156.1110(a)(2)(ii) to state that QHP issuers must verify that their
applicable contracted hospitals with greater than 50 beds, if not
working with a PSO, implement an evidence-based initiative, to improve
health care quality through the collection, management and analysis of
patient safety events, that reduces all cause preventable harm,
prevents hospital readmission or improves care coordination. We
acknowledge that some of the patient safety activities that a hospital
performs with a PSO may be very similar, if not identical to, some of
the activities that hospitals will perform as part of the initiatives
described in Sec. 156.1110(a)(2)(ii). If a provider undertakes
activities to improve patient safety and health care quality, but does
not do so in conjunction with a PSO, subject to the requirements of the
Patient Safety and Quality Improvement Act (PSQIA) and its implementing
regulation, 42 CFR part 3, the patient safety and quality information
involved in such initiatives would not be subject to the PSQIA's
privilege and confidentiality protections.
Comment: Most commenters generally supported our proposals and
agreed with strengthening QHP issuer patient safety standards.
Commenters agreed with HHS's approach of aligning existing, effective
patient safety initiatives, including by requiring applicable hospitals
to report to PSOs, as well as providing flexibility to allow compliance
with Sec. 156.1110 by implementing evidence-based initiatives other
than working with a PSO. One commenter stated that the proposal
outlined in Sec. 156.1110(a)(2)(i)--to require a QHP issuer that
contracts with a hospital with greater than 50 beds to verify that the
hospital uses a patient safety evaluation system as defined in 42 CFR
3.20--should be the preferred option versus establishing reasonable
exceptions in the proposed requirement in Sec. 156.1110(a)(2)(ii). The
commenter strongly supported reporting to a patient safety evaluation
system because most PSOs collect all types of information from all
types of health care organizations, unlike Hospital Engagement Networks
(HENs) initiatives and Quality Improvement Organizations (QIOs)
commissioned work, which are typically focused on certain conditions or
topics. The commenter also stated that requiring hospital providers to
contract with a Federally-listed PSO would decrease QHP operational
burden and expenses versus the QHP burden of keeping track of multiple
organizations and HEN patient safety initiatives with tenuous, variable
funding.
Response: We agree with the majority of commenters and are
finalizing the proposed approach of requiring QHP issuers, for plan
years beginning on or after January 1, 2017 to verify that their
contracted hospitals, with more than 50 beds, have current agreements
with PSOs, while also providing reasonable exceptions to the PSO
requirement. We believe that these requirements allow for increased
alignment of QHP issuer standards with effective patient safety
interventions. We agree that PSOs collect and analyze valuable
information through patient safety evaluation systems to reduce harm
and we believe that the requirements finalized in Sec. 156.1110 for
plan years beginning on or after January 1, 2017, will allow for both
flexibility and innovation for hospitals to choose the most relevant
patient safety initiative for their populations. We believe hospitals
may choose to work with a PSO as their preferred option. We acknowledge
that the different initiatives mentioned in the proposed rule,
including HENs, QIOs and PSOs, may work on focused topic areas to
reduce patient harm. Therefore, we believe that it is important for
hospitals and their partners to determine and engage in the appropriate
strategies reflecting the needs of their respective patient
populations.
Comment: One commenter requested that HHS amend the proposed
regulatory language in Sec. 156.1110(a)(2)(ii) because it would be
difficult to find any single patient safety initiative that addresses
the reduction of all cause preventable harm,\61\ prevention of hospital
readmission, improved care coordination and improved health care
quality through the collection, management and analysis of patient
safety events, as currently proposed.
---------------------------------------------------------------------------
\61\ All cause preventable harm or all adverse events--any event
during the care process that results in harm to a patient,
regardless of cause (Letter from Center for Clinical Standards and
Quality/Survey & Certification Group to State Survey Agency
Directors regarding AHRQ Common Formats--Information for Hospitals
and State Survey Agencies (SAs)--Comprehensive Patient Safety
Reporting Using AHRQ Common Formats (Mar. 15, 2013), available at
https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-13-19.pdf).
---------------------------------------------------------------------------
Response: We are finalizing the proposed requirement at Sec.
156.1110(a)(2)(ii), with one modification. We are modifying the
reasonable exceptions provision to state that for plan years beginning
on or after January 1, 2017, QHP issuers must verify that their
contracted hospitals with greater than 50 beds, if not working with a
PSO, implement an evidence-based initiative, to improve health care
quality through the collection, management and analysis of patient
safety events that reduces all cause preventable harm, prevents
hospital readmission or improves care coordination. We clarify that the
evidence-based initiatives described in this reasonable exception
provision are not intended to address all aspects of all-cause
preventable harm, hospital readmission, care coordination, and health
care quality in one single initiative.
Comment: Several commenters requested that HHS recognize State-
level patient safety reporting programs, such as the mandatory Patient
Safety Reporting System required in Pennsylvania, and Maine's Sentinel
Event Reporting Program. Commenters noted that these State-level
reporting programs are robust, evidence-based, effective patient safety
programs that have delivered high value and improved patient safety
across their regions. They recommended granting such exceptions because
reporting to a PSO or other entity would be burdensome, duplicative,
and would not align with reporting by hospitals in those States.
[[Page 12316]]
Response: We acknowledge that there could be local, State, or
national patient safety reporting programs that meet or exceed the
patient safety standards for plan years beginning on or after January
1, 2017, as outlined in Sec. 156.1110(a)(2). Therefore, the QHP issuer
patient safety requirements are intended to be broad and inclusive of
various initiatives, such as State-level, evidence-based programs that
improve health care quality through the collection, management and
analysis of patient safety events, and that reduce all cause
preventable harm, prevent hospital readmission, or improve care
coordination. We describe, in the reasonable exceptions provision
finalized at Sec. 156.1110(a)(2)(ii), the key concepts characterizing
an evidence-based patient safety initiative that are consistent with
the National Quality Strategy and existing public and private patient
safety programs. However, we do not intend to provide an exhaustive
list of initiatives, to allow for flexibility and innovation for future
advances in patient safety.
Comment: A few commenters suggested amending the proposed
documentation requirement outlined in Sec. 156.1110(b), and
recommended allowing hospitals to attest that they participate in a
patient safety activity to minimize the documentation requirement and
ensure efficient, consistent mechanisms for compliance by hospitals.
Response: We maintain the documentation requirement as outlined in
Sec. 156.1110(b) and clarify that we intend the requirement for plan
years beginning on or after January 1, 2017, to be broad and inclusive
of examples such as hospital attestations or current agreements to
partner with a PSO, HEN, or QIO. We believe that the patient safety
standards support a common goal of preventing the risk of patient harm
in an effective, sustainable way. We believe it is important to allow
for flexibility regarding methods of complying with the new
documentation requirements at Sec. 156.1110(b)(2) in order to balance
both issuer and hospital burden and to accommodate a variety of types
of patient safety initiatives in which hospitals may engage. We also
believe that QHP issuers and their contracted hospitals should have
flexibility in how they comply with the documentation requirement as
they develop their contracts.
Comment: One commenter did not agree with the proposed
documentation requirement to have hospitals share their PSO agreements
with QHPs because of concern of violating confidentiality provisions of
sharing patient safety work products and analyses outside of the PSO
per the PSQIA. Another commenter requested clarification regarding
whether HHS would collect and publish data on the patient safety
evaluation system as defined in 42 CFR 3.20.
Response: PSO contracts with hospitals for the purpose of receiving
and reviewing patient safety work product (referred to as Patient
Safety Act contracts) do not meet the definition of ``patient safety
work product'', and thus, are not subject to the protections and
requirements in the PSO statute and regulations. We do not intend to
collect and publish data on the patient safety evaluation system nor
are we generally permitted to publish patient safety work product. We
clarify that these QHP issuer patient safety requirements are intended
to support implementation of the PSQIA and would not violate the
confidentiality provisions of patient safety work product, as defined
in the PSQIA. We clarify that the QHP issuer documentation requirement
in Sec. 156.1110(b)(2) is intended to direct issuers to collect basic,
administrative-type information from their contracted hospitals, with
greater than 50 beds, to demonstrate compliance with the patient safety
requirement for plan years beginning on or after January 1, 2017. For
example, we expect such information could include current hospital
agreements or attestations to partner with a PSO, which we note would
not contain patient safety work product. In addition, we clarify that
such information to demonstrate compliance would be submitted to an
Exchange, upon request by the Exchange per the established requirement
in Sec. 156.1110(c).
Comment: Several commenters requested that HHS consider that the
timeframes of hospital patient safety initiatives may not coincide with
plan years, and that HHS allow flexibility so that a hospital may
attest to the fact that it is already or will start to take part in a
patient safety activity during the relevant plan year or base
compliance on a hospital's previous year's activities. One commenter
urged HHS to build a process for approving new initiatives in the
future.
Response: We acknowledge that timeframes of hospital patient safety
initiatives may not exactly align with plan years. We are finalizing
the patient safety requirement in Sec. 156.1110(a)(2) to state that
for plan years beginning on or after January 1, 2017, issuers must
verify that their applicable contracted hospitals with greater than 50
beds use a patient safety evaluation system as defined in 42 CFR 3.20,
as well as implement a mechanism for comprehensive hospital discharge
to improve care coordination and quality or implement an alternative
evidence-based initiative. We clarify that we do not specify dates of
activity regarding patient safety initiatives because we believe it is
the responsibility of the issuer and contracted hospital to maintain
current documentation and ensure compliance with these patient safety
standards.
Comment: Several commenters supported the proposed discharge
planning requirements outlined in Sec. 156.1110(a)(2)(i)(B) that
states that a QHP issuer that contracts with a hospital with greater
than 50 beds must ensure that the hospital implemented a comprehensive
person-centered discharge program to improve care coordination and
health care quality for each patient. Commenters expressed that it is
critical that the discharge planning process reflect the needs of all
populations and sub-populations. Some commenters noted that HHS is
already addressing hospital discharge planning requirements in a
separate proposed rule, CMS 3377-P (80 FR 68125 (Nov. 3, 2015)), which
should be used to meet the discharge requirements in section 1311(h) of
the Affordable Care Act and to minimize unnecessary burden on QHP
issuers and hospitals.
Response: We acknowledge that HHS has currently proposed
implementing discharge planning requirements mandated in section
1899B(i) of the Improving Medicare Post-Acute Care Transformation Act
of 2014 (IMPACT Act, Pub. L. 113-185) by modifying the discharge
planning or discharge summary Condition of Participation requirements
for hospitals. We agree with aligning discharge planning requirements
to minimize burden, and clarify that continued collection of CMS
Certification Numbers (CCNs) would be sufficient for issuers to comply
with Sec. 156.1110(a)(2)(i)(B). We believe there would be no
additional burden because QHP issuers have already been collecting this
documentation since January 1, 2015, for the initial phase of the QHP
issuer patient safety standards. We are finalizing the documentation
requirement in Sec. 156.1110(b)(2) for plan years beginning on or
after January 1, 2017 and clarify that the information to be collected
by a QHP issuer could include CCNs to demonstrate that their contracted
hospitals implement mechanisms for comprehensive person-centered
hospital discharge to improve care coordination and health care quality
for each patient. We also believe it is important to provide
flexibility to hospitals and QHP issuers and note that
[[Page 12317]]
other types of information may be collected to demonstrate compliance
with comprehensive person-centered hospital discharge if hospitals
choose to implement this in alternative ways, other than meeting
Condition of Participation requirements.
Comment: Many commenters did not support mandating the use of AHRQ
Common Formats for standardizing reporting of patient safety events.
They stated that requiring use of Common Formats would stifle private
sector innovation and investment in the development of PSOs, would add
burden and costs to PSO formation, and could cause existing PSOs to
voluntary delist. Some commenters noted that hospitals that already
report patient safety data in a standardized manner through other
reporting systems that meet or exceed the Patient Safety and Quality
Improvement Act requirements, would incur undue burden as well.
Commenters urged HHS to allow flexibility to PSOs and their
participants to choose the reporting format or tool they use to submit
patient safety event data.
Response: We continue to strongly support hospital tracking of
patient safety events using the AHRQ Common Formats,\62\ which are a
useful tool for a hospital regardless of what patient safety
interventions are implemented for ongoing, data-driven quality
assessment. We also note that use of Common Formats, and aligning with
existing HHS recommendations for hospitals,\63\ is integral, whether a
hospital chooses to work with a PSO to comply with the proposed
requirement in Sec. 156.1110(a)(2)(i), or implements an alternative
approach under the reasonable exception provision in Sec.
156.1110(a)(2)(ii). We also remind PSOs of their requirement to collect
patient safety work product in a standardized manner, as set forth in
42 CFR 3.102(b)(2)(i)(F) and (b)(2)(iii). However, we clarify that the
QHP issuer patient safety standards finalized in this rule do not
require the use of the Common Formats for patient safety event
reporting at this time.
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\62\ https://www.pso.ahrq.gov/common.
\63\ Letter from Center for Clinical Standards and Quality/
Survey & Certification Group to State Survey Agency Directors
regarding AHRQ Common Formats--Information for Hospitals and State
Survey Agencies (SAs)--Comprehensive Patient Safety Reporting Using
AHRQ Common Formats (Mar. 15, 2013), available at https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-13-19.pdf.
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Comment: A few commenters provided recommendations regarding the
requirement to collect and maintain CCNs and to establish quality
improvement strategies.
Response: We clarify that we are finalizing requirements to
transition from the first phase of patient safety standards that
required, beginning on January 1, 2015, QHP issuers to verify that
certain contracted hospitals meet Medicare Hospital Conditions of
Participation requirements regarding a quality assessment and
performance improvement program and a discharge planning process. In
other words, we are finalizing the amendments to Sec. 156.1110 to
begin the second phase of the patient safety standards to require for
plan years beginning on January 1, 2017, QHP issuers to verify that
their contracted hospitals with greater than 50 beds use a patient
safety evaluation system as defined in 42 CFR 3.20, and implement a
comprehensive person-centered discharge program to improve care
coordination and health care quality for each patient; or implement an
evidence-based initiative, to improve health care quality through the
collection, management and analysis of patient safety events that
reduces all cause preventable harm, prevents hospital readmission, or
improves care coordination by a means other than reporting of such
information to or by a PSO. We clarify that the collection of CCNs
would be sufficient under Sec. 156.1110(b)(2) for QHP issuers to
document compliance with Sec. 156.1110(a)(2)(i)(B).
We also note that QHP issuer requirements relating to quality
improvement strategies were established in the 2016 Payment Notice (80
FR 10844); therefore, comments specific to QHP issuer implementation
and reporting of quality improvement strategies are out of scope of
this rule. However, we expect QHP issuers would align and coordinate
implementation of their contracted hospital patient safety initiatives
with their QHP quality improvement strategies if applicable.
Comment: Several commenters requested clarifications regarding the
timeframe for the effective date for data collection to ensure that
hospitals have sufficient time to comply with the standards. One
commenter suggested one year from the date of the final rule as the
effective date of data collection since hospitals would need
considerable time to implement activities to comply with these patient
safety standards. One commenter requested more detail about how
hospitals that meet the standard can be prospectively identified by
plans, consumers and regulators.
Response: We believe that the majority of hospitals with greater
than 50 beds already partner with a PSO, or implement an alternative
national, State, public, or private evidence-based patient safety
initiative that uses the collection, management and analysis of patient
safety events to reduce all cause preventable harm, prevent hospital
readmission, or improve care coordination. We believe that there is an
adequate amount of time from the publication of this final rule for QHP
issuers and their contracted hospitals to be able to comply with these
patient safety standards for plan years beginning on or after January
1, 2017. We expect that issuers would continue their efforts to
prospectively identify hospitals to contract with that meet all
applicable Federal and State health care quality and safety
requirements.
Comment: One commenter requested clarifications regarding the
regulatory reference for ``a comprehensive person-centered discharge
program to improve care coordination and health care quality for each
patient'' and how this is tracked or published.
Response: The language being finalized at Sec.
156.1110(a)(2)(i)(B) implements the patient safety standard captured at
section 1311(h)(1)(A)(ii) of the Affordable Care Act, which refers to a
mechanism to ensure that each patient receives a comprehensive program
for hospital discharge that includes patient-centered education and
counseling, comprehensive discharge planning, and post discharge
reinforcement. We do not intend to track or publish patient safety
event data regarding hospital discharge programs at this time. Instead,
Sec. 156.1110(b)(2) requires QHP issuers, for plan years beginning on
or after January 1, 2017, to collect and maintain documentation to
demonstrate that its contracted hospitals with greater than 50 beds
meet the required patient safety standards. We also clarify that
documentation to demonstrate compliance with the discharge planning
requirement (for example, the hospital's CCN) would be submitted to an
Exchange, upon request by the Exchange per the established requirement
in Sec. 156.1110(c).
9. Qualified Health Plan Issuer Responsibilities
a. Payment and Collections Processes (Sec. 156.1215)
In the 2015 Payment Notice, HHS established a monthly payment and
collections cycle for insurance affordability programs, user fees, and
premium stabilization programs. In 2017, as discussed elsewhere in this
document, we are finalizing our proposal to charge issuers in SBE-FPs
for eligibility and enrollment services a
[[Page 12318]]
user fee for the benefits issuers in SBE-FPs will receive as a result
of the SBE-FP's reliance on the Federal platform. To streamline our
payment and collections process, we proposed that, for 2017 and later
years, for purposes of the netting process, the reference to FFE user
fees in Sec. 156.1215(b) would be interpreted to include any fees for
issuers in State-based Exchanges using the Federal platform.
In the 2015 Payment Notice, we established in Sec. 156.1215(c)
that any amount owed to the Federal government by an issuer and its
affiliates is the basis for calculating a debt owed to the Federal
government. In this rulemaking, we proposed that, for 2017 and later
years, for purposes of calculating the debt owed to the Federal
government, we would interpret the reference to FFE user fees to
include any fees for issuers in State-based Exchanges using the Federal
platform. We also sought comment on whether the regulations should be
amended to reflect these interpretations.
We are adopting the interpretations of Sec. 156.1215 we announced
in the proposed rule by finalizing conforming amendments to paragraphs
(b) and (c) of Sec. 156.1215.
Comment: We received one comment on these proposals requesting that
HHS clarify if it intends to collect user fees from issuers in State-
based Exchanges using the Federal platform beginning in 2015.
Response: Our intent in this section was to establish our authority
to collect the user fee from SBE-FP issuers through netting, but only
once such a fee has been established. As described elsewhere in this
rule, HHS will begin assessing the user fee on issuers in State-based
Exchanges using the Federal platform beginning with plan years that
start on or after January 1, 2017, or, at the State's request,
collecting an equivalent amount from the State. We are finalizing our
proposal that, for purposes of the netting process and calculating the
debt owed to the Federal government, we will interpret the reference to
FFE user fees at Sec. 156.1215(b) and (c) to include any fees for
issuers in SBE-FPs, beginning with plan years that start on or after
January 1, 2017.
b. Administrative Appeals (Sec. 156.1220)
In the 2015 Payment Notice (79 FR 13818), we established an
administrative appeals process for issuers. We established a three-
tiered appeals process: a request for reconsideration under Sec.
156.1220(a); a request for an informal hearing before a CMS hearing
officer under Sec. 156.1220(b); and a request for review by the
Administrator of CMS under Sec. 156.1220(c). In light of HHS's
finalization of the proposal around SBE-FPs, we interpret this
administrative appeals process to also apply to user fee payments that
we collect from SBE-FP QHP issuers that offer plans on an SBE-FP.
Under Sec. 156.1220(a), an issuer may only file a request for
reconsideration based on the following: A processing error by HHS,
HHS's incorrect application of the relevant methodology, or HHS's
mathematical error. For example, an issuer may file a request for
reconsideration that challenges the assessment of a default risk
adjustment charge if the issuer believes the default charge was
assessed because HHS incorrectly applied its methodology regarding data
quantity and quality standards set forth in Sec. 153.710(f); however,
the issuer may not file a request for reconsideration to challenge the
methodology itself. We also clarify that an issuer may not file a
request for reconsideration regarding issues arising from the issuer's
failure to load complete and accurate data to its dedicated distributed
data environment within the data submission window. Errors by the
issuer are not appealable.
In line with our proposal to delete Sec. 153.710(d), we proposed
to make conforming amendments to modify Sec. 156.1220 to remove cross-
references to the interim discrepancy reporting process. Under Sec.
156.1220(a)(4)(ii), a reconsideration relating to risk adjustment or
reinsurance may only be requested if, to the extent the issue could
have been previously identified by the issuer to HHS under the final
discrepancy reporting process proposed to be redesignated at Sec.
153.710(d)(2), it was so identified and remains unresolved. As proposed
to be redesignated, Sec. 153.710(d)(2) states that an issuer must
identify to HHS any discrepancies it identified in the final
distributed data environment reports. We clarify that issuers may
identify issues during the discrepancy reporting process under newly
designated Sec. 153.710(d)(2) that are not subject to appeal; that is,
issuers may identify issues that are not processing errors by HHS,
HHS's incorrect application of the relevant methodology, or HHS's
mathematical errors. We clarify that, in contrast, an issuer may only
request a reconsideration of unresolved issues that were identified (if
they could have been so identified) under the final discrepancy
reporting process proposed to be redesignated at Sec. 153.710(d)(2),
if contesting a processing error by HHS, HHS's incorrect application of
the relevant methodology, or HHS's mathematical error. We also
clarified that the existence of an unresolved discrepancy is not alone
a sufficient basis on which to request a reconsideration.
Additionally, we clarified the grounds for appeals related to the
risk corridors program. An issuer may not file a request for
reconsideration to challenge the standards for the risk corridors
program, including those established in Sec. Sec. 153.500 through
153.540 and in guidance issued by HHS. In addition, appeals related to
data for programs other than risk corridors covered in Sec.
156.1220(a) cannot be grounds for risk corridors appeals. We proposed
to clarify that the last submission of data to which the issuer has
attested serves as the notification for purposes of Sec. 153.510(d).
We also proposed to shorten the deadline for filing a request for
reconsideration in Sec. 156.1220(a)(3) from 60 to 30 calendar days.
Additionally, we proposed to clarify that an issuer must pay the
full amount owed to HHS as set forth in the applicable notification,
even if the issuer files a request for reconsideration under Sec.
156.1220. Failure to pay an amount owed will result in interest
accruing after the applicable payment deadline. Therefore, if an appeal
is unsuccessful, and the issuer has not already remitted the charge
amount owed, the issuer would owe the debt plus the interest, and
administrative fees which accrue from delayed payment. If an appeal is
successful, HHS will refund the amount paid in accordance with the
final appeal decision. HHS is finalizing this clarification.
We are finalizing our proposal to shorten the timeframe for
requesting reconsideration related to the risk adjustment, reinsurance
and risk corridors programs to 30 calendar days. This final rule will
become effective 60 days after it is published--that is, prior to the
June 30 notification of risk adjustment and reinsurance amounts.
Therefore, requests for reconsideration related to the risk adjustment,
reinsurance and risk corridors programs for the 2015 benefit year must
be made within 30 calendar days of notification of the payment or
charge. However, HHS will maintain a 60 calendar day timeframe to
request reconsideration for the APTC, CSR and user fee programs.
Therefore, the request for reconsideration must be filed in accordance
with the following timeframes: (1) For the premium tax credit and cost-
sharing reduction portions of the advance payments, or
[[Page 12319]]
FFE user fee charges, within 60 calendar days after the date of the
final reconsideration notification specifying the aggregate amount of
such advance payments or user fees for the applicable benefit year; (2)
for a risk adjustment payment or charge, including an assessment of
risk adjustment user fees, within 30 calendar days of the date of the
notification under Sec. 153.310(e); (3) for a reinsurance payment,
within 30 calendar days of the date of the notification provided under
Sec. 153.240(b)(1)(ii); (4) for a default risk adjustment charge,
within 30 calendar days of the date of the notification of such charge;
(5) for reconciliation of the cost-sharing reduction portion of the
advance payments, within 60 calendar days of the date of the
notification of such payment or charge; and (6) for a risk corridors
payment or charge, within 30 calendar days of the date of the
notification of such payment or charge for the purposes of Sec.
153.510(d). In the proposed rule, we proposed to clarify that the last
submission of data to which the issuer has attested serves as the
notification for purposes of Sec. 153.510(d). We have since issued a
public FAQ stating that for the purposes of the 2014 benefit year the
public notification of final estimated risk corridors payments and
charge amounts served as the notification for purposes of Sec.
153.510(d).\64\
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\64\ For the 2014 benefit year, we clarified this deadline in
FAQ 14470 (Dec. 21, 2015), available at https://www.regtap.info.
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Comment: One commenter agreed with the shortening the deadline to
request reconsideration related to risk adjustment to 30 days from 60
days. Other commenters asked that HHS maintain the 60-day deadline. One
commenter requested a 90-day timeline to request reconsideration. Some
commenters asked that HHS maintain the longer deadline due to new
processes surrounding policy based payments and cost-sharing reductions
and advance payments of the premium tax credit reconciliation. Another
commenter requested that HHS extend the deadline to file a request for
reconsideration to 120 days to allow cost-sharing reductions and
advance payments of the premium tax credit adjustments due to the 3-
month grace period.
Response: We are finalizing our proposal to shorten the timeframe
for requesting reconsideration related to the risk adjustment,
reinsurance and risk corridors programs to 30 calendar days.
Conversely, HHS will maintain a 60-day deadline to request
reconsideration for the APTC, CSR and user fee programs. Finalizing a
shorter timeline for the premium stabilization programs requests for
reconsideration would permit HHS to resolve administrative appeals,
calculate final payments and charges, and make payments in a manner
consistent with the reporting and payment timelines for those programs.
We agree with commenters that there are several benefits to maintaining
the longer 60-day timeframe for the APTC, CSR and user fee programs.
Comment: One commenter asked that HHS pay interest to any issuer
who pays and then wins a request for reconsideration.
Response: If an appeal is successful, HHS will issue a refund in
accordance with the final appeal decision.
Comment: A few commenters suggested HHS allow unresolved
discrepancies to be appealed even if the discrepancy does not fit
within one of the three reconsideration basis, otherwise discrepancies
could be identified and not resolved within the timeframe without an
opportunity for resolution.
Response: Issuers cannot appeal data submission errors that
resulted from an issuer error because it is the responsibility of the
issuer to submit complete and accurate data (with corrections to any
errors) prior to the data submission deadline. Throughout the data
collection period, HHS maintains a help desk, hosts user group calls
and webinars to assist issuers with the identification and resolution
of data submission errors and to provide general technical assistance.
Issuers are encouraged to review their data and the EDGE server
generated reports, as well as to notify HHS of any problems as soon as
possible so that, to the extent feasible, assistance can be provided to
resolve those problems before the final data submission deadline.
Therefore, HHS will only consider requests for reconsideration related
to risk adjustment or reinsurance on the basis that HHS made a
processing error, incorrectly applied a relevant methodology, or made a
mathematical error. Additionally, HHS would continue to require issuers
to identify issues through the final formal discrepancy reporting
process, if the issue is identifiable at the time, so HHS can work to
address such issues prior to the final risk adjustment transfers and
reinsurance payment calculations.
Comment: Some commenters asked that HHS provide a timeline for when
requests for reconsideration and appeals will be decided.
Response: HHS understands that receiving a reconsideration decision
promptly promotes the timely release of funds, however, due to the
varying nature, complexity and number of reconsiderations, HHS cannot
set forth a specific deadline. HHS is committed to providing a decision
as quickly and efficiently as possible.
c. Third Party Payment of Qualified Health Plan Premiums (Sec.
156.1250)
We proposed to amend Sec. 156.1250 to clarify that a Federal or
State government program includes programs of the political
subdivisions of the State, namely counties and municipalities, which we
referred to as local governments. Including this clarification in
regulations will ensure that States have the flexibility to distribute
care and Exchange financial assistance to their vulnerable populations
through local governments, consistent with their statutory and
regulatory authority.
In terms of the distinction between programs sponsored and operated
by the government (such as the Ryan White HIV/AIDS programs) and
programs that involve Federal grantees that receive considerable public
funding, we acknowledged that programs such as the Ryan White HIV/AIDS
program operate by working with cities, States, and local, community-
based organizations to provide services in line with their statutory
authority. Sections 2604(c)(3)(F), 2612(b)(3)(F), and 2651(c)(3)(F) of
the PHS Act authorize Ryan White HIV/AIDS program grantees and sub-
grantees to use program funds for premium and cost-sharing assistance.
These grantees and sub-grantees must provide the assistance through
third-party payments as they are prohibited from making payments
directly to patients. Though many Ryan White HIV/AIDS program grantees
are State and local governments, not all are; similarly, many of the
State and local government grantees administer funds through sub-
grantees that are not government entities. We proposed to distinguish
government programs from government grantees such that the requirement
at Sec. 156.1250 would apply to government programs, but not
necessarily to entities that are government grantees, unless
specifically authorized and funded by the Federal, State, or local
government program to make the payments on behalf of the program,
consistent with the government programs' statutory and regulatory
authority to provide premium and cost-sharing assistance through grants
and grantees. In other words, if such Federal, State, and local
governments are authorized to administer their premium and cost-
[[Page 12320]]
sharing assistance through grantees or sub-grantees, the payments may
not be rejected on the grounds that they did not come directly from the
government programs. In such cases, the source of the Exchange
financial assistance is the government program, and administration or
distribution of that assistance through grants and grantees is
authorized under statute or regulation.
We also proposed to require entities that make third party payments
of premiums under this section to notify HHS, in a format and timeline
specified in guidance. We proposed that the notification must reflect
the entity's intent to make payments of premiums under this section and
the number of consumers for whom it intends to make payments.
We also proposed to clarify that while issuers offering individual
market QHPs, including SADPs, generally do not collect cost-sharing
payments, they are required to accept third party cost-sharing payments
on behalf of enrollees in circumstances where the issuer or the
issuer's downstream entity accepts cost-sharing payments from plan
enrollees. We noted that although cost-sharing payments are generally
made to providers, rather than to issuers, there are certain
contractual circumstances in which an issuer's non-provider downstream
entity engages in activities such as the collection of cost-sharing
payments. For example, an issuer's pharmacy benefits manager may
collect cost-sharing payments from the issuer's plan enrollees for
prescription drugs. We proposed to clarify that in such situations, the
rules at Sec. 156.1250 regarding the requirement to accept third-party
payments would apply to cost sharing payments.
We noted that we are considering whether to expand the list of
entities from whom issuers are required to accept payment under Sec.
156.1250 to include not-for-profit charitable organizations in future
years, subject to certain guardrails intended to minimize risk pool
impacts, such as limiting assistance to individuals not eligible for
other minimum essential coverage and requiring assistance until the end
of the calendar year.
Comment: Some commenters expressed concern that the language
proposed in Sec. 156.1250(a)(3), ``consistent with the program's
statutory authority,'' might be read to require explicit statutory
authority to make premium and cost-sharing payments. The commenters
stated that such a reading could unduly restrict the ability of some
programs to assist clients and cause confusion for both programs and
issuers.
Response: We are amending Sec. 156.1250(a) to remove the phrase,
``consistent with the program's statutory authority,'' in order to
avoid such confusion. We believe that the phrase, ``directed by a
government program to make payments on its behalf,'' is sufficiently
specific and clear.
Comment: Several commenters asked that we provide a specific list
of entities that qualify as government programs from which third party
payments must be accepted. Several other commenters urged that we
immediately include not-for-profit, charitable organizations as
entities from which third party payments for QHP premiums and cost-
sharing must be accepted, with certain guardrails intended to minimize
adverse selection. Some of these commenters also urged that HHS provide
a list of acceptable foundation types as referenced in HHS's February
7, 2014 FAQ,\65\ which stated that the concerns addressed in the
November 4, 2013 FAQ \66\ do not apply to payments from private, not-
for-profit foundations if they are made on behalf of QHP enrollees who
satisfy defined criteria that are based on financial status and do not
consider enrollees' health status. These commenters expressed that the
provision of a list of acceptable foundation types is critical to
ensure that these foundations meet the criteria noted in the February
7, 2014 FAQ. Some commenters asked that we collect the following
information under our proposed information collection: Number of
consumers for whom the entity will be making payments (by State or
rating area); volume of payments over a specified time period; contact
information; tax ID and filing status; governance (for example,
leadership, members of Board of Directors, principal shareholders,
etc.); funding sources; information on relationships with provider
organizations (financial or other); and information on relationships
with pharmaceutical companies (financial or other).
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\65\ Third Party Payments of Premiums for Qualified Health Plans
in the Marketplaces (Feb. 7, 2014), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/third-party-payments-of-premiums-for-qualified-health-plans-in-the-marketplaces-2-7-14.pdf.
\66\ Third Party Payments of Premiums for Qualified Health Plans
in the Marketplaces (Nov. 4, 2013), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/third-party-qa-11-04-2013.pdf.
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Response: We are not providing a specific list of entities that
qualify as government programs at this time, as we believe that the
parameters established in Sec. 156.1250(a) are sufficiently precise.
We are removing Sec. 156.1250(b), the information collection
provision, as we believe it will unduly burden Indian tribes, Ryan
White HIV/AIDS programs, and government programs to provide such
notification to HHS. Although HRSA collects information regarding
premium assistance from its Ryan White HIV AIDS programs and grantees,
Indian tribes and other Federal, State, and Local government programs
may not currently collect or maintain this information. Further, we
believe that payment information from these entities would be unlikely
to inform the impacts on the risk pool that may result from expanding
the requirement at Sec. 156.1250 to third party payments made by non-
profit organizations. The latter may make payments for a different
population with different health care needs and conditions. We defer
the question of acceptance of third-party payments made by non-profit
organizations to future rulemaking. We refer stakeholders to our
February 7, 2014, FAQ, which clarified that the concerns addressed in
our November 4, 2013 FAQ \67\ do not apply to payments from private,
not-for-profit foundations if the payments are made on behalf of QHP
enrollees who satisfy defined criteria that are based on financial
status and do not consider enrollees' health status. In this situation,
the FAQ stated that HHS would expect that the premium and any cost-
sharing payments cover the entire policy year.
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\67\ Third Party Payments of Premiums for Qualified Health Plans
in the Marketplaces (Nov. 4, 2013), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/third-party-qa-11-04-2013.pdf.
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Comment: Some commenters raised concerns that it would be confusing
to create a requirement for issuers or their downstream entities such
as PBMs to accept cost sharing from third party payers because there is
currently no industry infrastructure in place to facilitate third-party
payments, including the lack of the following: Secondary payer
guidelines; enrollment file sharing requirements; specific guidelines
for accumulators; a coordination of benefits entity to collect and
share data with issuers; a transaction facilitator; data exchange
agreements; the ability of plans to use common identifiers; and an
National Council for Prescription Drug Programs transaction process.
Other commenters agreed that when an issuer uses an entity, such as a
PBM, to provide a benefit such as prescription drugs, that entity is
required to accept third party payments of cost-sharing by virtue of
being a downstream entity.
[[Page 12321]]
Response: We are finalizing our proposal, with an additional
clarification that while issuers offering individual market QHPs,
including SADPs, generally do not collect cost-sharing payments, their
downstream entities, or agents of the issuer, are required to accept
third party cost-sharing payments made by the entities listed at Sec.
156.1250(a) on behalf of QHP enrollees if the downstream entities or
agent routinely accept cost-sharing payments from enrollees. We are
also clarifying in response to comments, that an agent of the QHP
issuer with a mail order pharmacy, such as a PBM with a mail order
pharmacy, must accept the third party cost-sharing payments directly
from the entities listed at Sec. 156.1250(a).
d. Other Notices (Sec. 156.1256)
We proposed to add a new Sec. 156.1256, which would add a
requirement for issuers, in the case of a plan or benefit display error
included in Sec. 155.420(d)(4), to notify their enrollees within 30
calendar days after the error has been identified, if directed to do so
by the FFE. We believe that enrollees should be made aware of any error
that may have impacted their QHP selection and enrollment and any
associated monthly or annual costs. Therefore, we proposed a
requirement that issuers, if directed to do so by the FFE, must notify
their enrollees of such error, as well as the availability of a special
enrollment period, under Sec. 155.420(d)(4), for the enrollee to
select a different QHP, if desired.
We are finalizing the provisions with two modifications. In
response to comments received, we are amending the timeframe within
which issuers must notify their affected enrollees of a plan or benefit
display error and the availability of a special enrollment period, from
30 calendar days after the error is identified to 30 calendar days
after the issuer is notified by the FFE that the error has been fixed.
By waiting until after the error has been corrected, issuers will be
more likely to have a complete list of affected enrollees to notify. In
addition, by waiting until the error has been corrected and the plan
information is properly displayed, enrollees will be able to compare
their current plan to others in the service area when deciding whether
or not to change plans under the special enrollment period. In
addition, we are clarifying that this rule will apply to issuers on
SBE-FPs.
Comment: We received general support from commenters for finalizing
this proposal, so that consumers are informed about plan or benefit
information that was incorrect when they selected that plan and may
have impacted their plan selection. One commenter requested that the
proposal be extended to State-based Exchanges. Other commenters
supported this requirement, but requested that it be limited to those
plan or benefit display errors for which issuers are responsible or in
cases when issuers fail to comply with the FFE's correction procedures.
Response: We agree with commenters that issuers should notify
affected enrollees of display errors that may have impacted plan
selection and of their opportunity to select a different plan through
the FFE. While we agree that all affected enrollees, regardless of
location, should be notified of such errors, we leave it to States
operating SBEs to determine the method and timeframe for which
enrollees in their Exchanges should be notified. However, SBE-FPs will
be using the FFE eligibility and enrollment platform, and, as we note
in the preamble to Sec. 156.350 in this final rule, it is not possible
at this time for the FFEs to accommodate State customization in policy
or operations, such as State-specific display elements in plan compare.
Accordingly, we are modifying the regulation text to specify that this
rule would require issuers offering QHPs through SBE-FPs to comply with
FFE directions to provide notice under this section.
The plan and benefit display errors included in this noticing
requirement includes information submitted by issuers to the FFE to be
displayed for consumers on Plan Compare. Many errors falling into this
category thus far have been due to errors in plan information provided
by issuers and all errors in this category have a specific impact on
the information available to consumers about one or more plans provided
by a particular issuer.
Comment: Many commenters requested additional clarification of the
parameters of plan or benefit display errors under Sec. 155.420(d)(4),
including whether errors in provider directories or drug formularies,
such as those newly accessible through the premium estimator tool, are
included in this new notification requirement.
Response: Plan or benefit display errors under Sec. 155.420(d)(4)
refer to misinformation, including errors related to service areas,
covered services, and premiums, displayed incorrectly on the Exchange
Web site. For the FFEs, this only includes the Plan Compare section of
the application where a consumer may enroll in a plan. If the plan
information incorrectly displayed does not have a direct bearing on
coverage or benefits, such as plan contact information, those errors
generally do not enable an enrollee to qualify for a special enrollment
period under Sec. 155.420(d)(4). Only those plan or benefit display
errors that qualify an enrollee for a special enrollment period under
Sec. 155.420(d)(4) would trigger this new noticing requirement.
Errors to provider networks or drug formularies, whether
incorrectly displayed on the issuer's Web site or accessible through
the premium estimator tool on HealthCare.gov, generally do not qualify
an enrollee for a special enrollment period. Therefore, issuers are not
required to notify affected enrollees in the manner and timeframe
outlined in this provision, although notifying enrollees of important
changes is encouraged. HHS notes the importance of issuers providing
accurate and complete plan information, including provider network and
drug formulary information, so that consumers may make informed
choices. QHP issuers are reminded that Sec. 156.225(b) prohibits them
from employing marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs. Issuers may also be subject to Federal civil
rights laws that prohibit discriminatory marketing practices and
benefit designs, such as section 1557 of the Affordable Care Act.
Comment: Some commenters requested that that HHS provide model
notices for issuers to send to enrollees in the event of a plan or
benefit display error. Other requested that issuers retain the
flexibility to draft notices to consumers the best way that they see
fit.
Response: HHS recognizes that notifying their enrollees of a plan
or benefit display error is already included in the business practices
of many issuers offering QHPs through the Exchanges and, therefore,
issuers have an established method of communicating such errors to
their enrollees. HHS also recognizes the need to communicate accurate
and standard information about the availability of a special enrollment
period to consumers. Therefore, HHS will provide issuers with suggested
special enrollment period language that they could use in their
existing consumer notices to satisfy the requirement that they notify
enrollees of their eligibility for a special enrollment period.
Comment: Several issuers requested that we amend the amount of time
issuers have to notify affected enrollees, either by extending it from
30 to 60 calendar days or by starting the 30 calendar days from the
date that the
[[Page 12322]]
plan or benefit display error has been fixed, while other commenters
wanted to ensure that enrollees are notified of an error in a timely
manner.
Response: We believe that 30 calendar days is sufficient time for
issuers to notify their enrollees affected by a plan or benefit display
error and is soon enough to minimize sustained harm to affected
enrollees. However, as discussed above, we agree that the 30 calendar
days should begin on the date that the issuer is notified that the
error has been fixed, and we are amending this provision accordingly.
Comment: One commenter stated that State regulators, including SBEs
and departments of insurance, should be responsible for the
identification of plan and benefit display errors.
Response: We agree that, States should play a role in identifying
plan or benefit display errors, and we encourage State regulators to
notify the applicable Exchange of the error. Nothing in this rule
prohibits a State from taking that role. We also note that issuers
offering QHPs through an FFE must obtain State authorization to change
QHP data after certification.
H. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Definitions (Sec. 158.103)
In the proposed rule, we proposed to revise the regulatory
definitions of large employer and small employer in Sec. 158.103 to
cross-reference the definitions of those terms in Sec. 144.103, in
order to ensure consistency in those definitions between the MLR
regulation and the market reform requirements, and to reflect the
recent amendments made by the Protecting Affordable Coverage for
Employees Act (Pub. L. 114-60).
Comment: We received two comments supporting this proposal. One
commenter suggested that the amendment not apply until the 2016 and
later MLR reporting years.
Response: We appreciate the comments regarding the definitions of
large employer and small employer. We also agree that although the
Protecting Affordable Coverage for Employees Act was passed in and
effective as of October 2015, policies that were in effect in 2015 were
issued using the group definitions that existed prior to this Act.
Therefore, we are finalizing the proposed definitional changes
effective with the 2016 MLR reporting year.
2. Reporting of Incurred Claims (Sec. Sec. 158.103 and 158.140(a))
The MLR December 1, 2010 interim final rule (75 FR 74864) and the
May 16, 2012 technical corrections to that rule (77 FR 28788) direct
issuers to report incurred claims with a 3-month run-out period, and
define unpaid claim reserves to mean reserves and liabilities
established to account for claims that were incurred during the MLR
reporting year but had not been paid within 3 months of the end of the
MLR reporting year. In the proposed rule, we proposed to amend the
definition of unpaid claims reserves in Sec. 158.103 and the
requirements for reporting incurred claims in Sec. 158.140(a) to
utilize a 6-month, rather than a 3-month run-out period, beginning with
the 2015 reporting year. The proposed amendment was intended to improve
the accuracy of incurred claims amounts in MLR calculation as well as
in the risk corridors calculation under a related proposed amendment to
Sec. 153.530.
Comment: We received many comments, split equally between
supporting the change and opposing it. Some commenters that opposed our
proposal requested that any extension in the run-out period include an
extension to the filing deadline. Other commenters were principally
concerned that the MLR rebate deadline would also be extended, which
they believed would harm consumers. One commenter also noted that a
longer run-out period could negatively affect States' timely review of
issuers' rate filings. Additionally, many opponents noted that the NAIC
had considered a 6-month run-out period in 2010 and determined that it
would not result in a materially more accurate MLR. The commenters
stated that any increase in accuracy would therefore be outweighed by
the administrative burden required to update issuer processes. Further,
some of these commenters noted that since two of the three premium
stabilization programs are temporary and will expire in the near
future, HHS could, at that time, revert back to the June 1 MLR filing
deadline, rather than maintain the current July 31 deadline that was
adopted to accommodate the premium stabilization programs. Commenters
point out that this would allow consumers to receive rebates sooner.
Supporters of the 6-month run-out period agreed that a longer run-out
period would improve the accuracy of MLRs and rebate amounts by
utilizing actual rather than estimated claims amounts.
Response: We appreciate the comments supporting our proposal, but
also acknowledge the practical considerations raised by the commenters
that opposed our proposal. We agree with those commenters that
suggested that it may be more beneficial for all stakeholders if we do
not modify the run-out period at this time, but instead explore ways to
restore the earlier MLR deadlines after two of the three premium
stabilization programs expire. Consequently, we are not finalizing the
proposed amendments to Sec. Sec. 158.103 and 158.140(a) regarding
unpaid claims reserves and incurred claims, and are retaining the
existing 3-month run-out period.
3. Reporting of Fraud Prevention Expenditures
In the proposed rule, we invited comment on whether we should
modify the treatment of a health insurance issuer's investments in
fraud prevention activities for MLR reporting purposes, noting that we
were considering amending the MLR regulation to permit the counting of
a health insurance issuer's investments in fraud prevention activities
among those expenses attributable to incurred claims. We asked for
comments on this approach, including whether safeguards against
potential abuse should be included (such as an upper limit on this
allowance); whether we should collect fraud prevention activity expense
data as an informational item on the MLR Annual Reporting Form before
amending the regulation; as well as on potential alternative treatment
of these expenses for MLR reporting or rebate calculation purposes. We
also asked for any specific, actual data with respect to the additional
incentives that would result for health plan investments of this sort.
Comment: We received numerous comments, with the majority opposing
any deviation from the current treatment of fraud prevention in MLR.
Opponents stated that our proposal to modify treatment of fraud
prevention expenses in MLR directly contradicts the NAIC's previous
recommendation that such expenses should not be allowed. These
commenters noted that the NAIC had conducted extensive debate and
analysis of this issue with input from all stakeholders, and had
concluded that allowing any additional fraud-related costs in the MLR
calculation would be inappropriate. These commenters further stressed
that the current rule is working as intended and that there is no
evidence that a change is necessary, that fraud prevention is
principally a cost-containment expense that should be part of the cost
of doing business, and that any benefit to consumers is indirect, or
difficult or impossible to isolate. Several commenters requested that
we not proceed without additional data, or that we limit any allowance
to
[[Page 12323]]
0.5 percent of earned premium. Many commenters requested that HHS not
finalize the proposal until the NAIC's recently reconvened MLR Quality
Improvement Activities subgroup determines whether to support a change
in the treatment of fraud prevention expenses. In contrast, other
commenters fully supported the proposal, expressing a view that
allowing fraud prevention expenses in the MLR calculation would provide
issuers an incentive to invest in preventing fraud, waste and abuse.
Some of these commenters did not believe that we should impose any
caps, while one commenter suggested a cap of 0.3 percent of earned
premium. Many of these commenters additionally did not believe that
data collection prior to finalizing the proposal would be useful,
arguing that issuers have been underinvesting in fraud prevention. Some
supporters stated that fraud prevention has a patient safety component,
while others focused on the monetary savings for issuers. Some
commenters further suggested that issuers would use the money saved
through fraud prevention to lower premiums or cost sharing, or on
medical services.
Response: We note that no stakeholder has provided specific data to
support the notion that allowing fraud prevention expenses in the MLR
calculation would have a positive impact. We agree with the commenters
who stated that fraud prevention is principally a cost-containment
activity, which generally is not permitted in the MLR calculation. In
addition, we appreciate the NAIC's indication in its comment letter
that its views regarding inclusion of fraud prevention as an adjustment
to incurred claims have not changed since its 2010 recommendation. We
also agree that, given the possibility that the treatment of fraud
prevention may be addressed during the NAIC's review of quality
improvement activities that is currently under way, it would be
premature for HHS to modify the MLR regulation at this time. Therefore,
we are not adopting any changes to the treatment of fraud prevention
activities for MLR purposes.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. This
final rule contains information collection requirements (ICRs) that are
subject to review by OMB. A description of these provisions is given in
the following paragraphs with an estimate of the annual burden,
summarized in Table 11. In the December 2, 2015 (80 FR 75487) proposed
rule, we requested public comment on each of the following collection
of information requirements. The comments and our responses to them are
discussed below.
A. ICRs Regarding Student Health Insurance Coverage (Sec. 147.145)
The final rule requires issuers of student health insurance
coverage to specify the AV of the coverage and the metal level (or next
lowest metal level) the coverage would otherwise satisfy. This
information must be included in any plan materials summarizing the
terms of coverage. We estimate that there are 49 student health
insurance issuers nationwide that will each need to provide an average
of 25,612 notifications annually.\68\ We estimate that each student
health insurance issuer will require an average of one hour for
clerical staff (at a labor cost of $33.18 per hour) to insert the AV
and metal level information into plan materials for all plans offered
by the issuer, resulting in a total annual burden of 1 hour and an
associated cost of $33.18 per issuer. There is no additional burden to
determine these values as student health insurance issuers are
currently required to calculate a plan's AV using the AV Calculator.
For all 49 issuers currently providing student health insurance
coverage, the total combined hour burden is estimated to be 49 hours
with a total combined cost of $1,625.82 annually. This information will
be included in existing plan materials; therefore, we do not estimate
any additional distribution costs.
---------------------------------------------------------------------------
\68\ Estimate based on data from Medical Loss Ratio submissions
for 2014 reporting year.
---------------------------------------------------------------------------
The final rule discontinues the outdated requirement that student
health insurance issuers provide notice informing students that the
coverage does not meet the annual limits requirements under section
2711 of the PHS Act. This regulatory provision, by its own terms, no
longer applies, as student health insurance coverage is subject to the
prohibition on annual dollar limits for policy years beginning or after
January 1, 2014. Issuers will experience a reduction in burden related
to the discontinued notices, which was previously estimated to be 1,071
hours, with an equivalent labor and mailing cost of $43,757.14 for all
student health insurance issuer (under OMB Control No. 0938-1157).
B. ICRs Regarding Submission of Risk Corridors Data (Sec. 153.530)
We finalized our amendment to the risk corridors program
requirements at Sec. 153.530 to require issuers to true-up claims
liabilities and reserves used to determine the allowable costs reported
for the preceding benefit year to reflect the actual claims payments
made through March 31 of the year following the benefit year. This
policy requires issuers to submit data indicating the difference
between their incurred liability estimated as of March 31 following the
preceding benefit year and March 31 following the current benefit year.
While we believe that issuers will be recording these amounts as part
of their normal business practices, we estimate that it will take
approximately 1 hour for each issuer at $54.44 per hour (according to
the wage estimates provided in the MLR notice CMS-10418-OCN 0938-1164)
to record these amounts. Therefore, we estimate the overall cost burden
of implementing this policy will be $54.44 per issuer, for
approximately 320 applicable risk corridors program issuers, for a
total cost burden of $17,421.
C. ICRs Regarding Submission of Rate Filing Justification (Sec.
154.215)
This final rule amends Sec. 154.215 to require health insurance
issuers to submit a Unified Rate Review Template (URRT) for all single
risk pool coverage regardless of whether there is a plan within a
product that experiences a rate increase. The existing information
collection requirement is approved under OMB Control Number 0938-1141.
This includes the URRT and instructions for rate filing documentation
that issuers currently use to submit rate information to HHS for rate
increases of any size for single risk pool coverage. We believe most
issuers already report this information. However, we estimate the
number of URRT submissions may increase by 1 percent due to this
requirement. We released information regarding revisions to the
information collection template and instructions in accordance with the
Paperwork Reduction Act of 1995, in CMS-10379, for a 60-day comment
period.\69\
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\69\ 81 FR 8498 (February 19, 2016). Available at, https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-03474.pdf.
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D. ICRs Regarding Election To Operate an Exchange After 2014 (Sec.
155.106)
This final rule amends the dates for application submission and
approval for States seeking to operate an SBE, and have an approved or
conditionally
[[Page 12324]]
approved Exchange Blueprint application and operational readiness
assessment. We are not modifying the documents that States already must
submit as part of the required Exchange Blueprint application.
Therefore, we do not anticipate any additional impact to the
administrative burden associated with the regulatory changes to Sec.
155.106. HHS is utilizing the existing PRA package approved under OMB
Control Number 0938-1172 for the Exchange Blueprint application.
E. ICRs Regarding Standards for Certified Application Counselors (Sec.
155.225(b)(1)(iii))
Section 155.225(b)(1)(ii) requires certified application counselor
designated organizations to maintain a registration process and method
to track the performance of certified application counselors. This
final rule adds a new Sec. 155.225(b)(1)(iii) requiring certified
application counselor designated organizations to provide the Exchange
with information and data regarding the number and performance of the
organization's certified application counselors, and the consumer
assistance they provide. Although the requirement at Sec.
155.225(b)(1)(ii) does not specify the type of performance information
that must be tracked, or require that the information be provided to
the Exchange, we expect that certified application counselor designated
organizations already have a tracking process in place to collect
performance information from individual certified application
counselors, and that individual certified application counselors are
already recording and submitting this required information to their
organization. Therefore, we expect this final rule to have minimal
impact on individual certified application counselors and on certified
application counselor designated organizations.
Section 155.225(b)(1)(iii) would add a new burden of compiling the
performance information and submitting it to the Exchanges. In States
with FFEs, HHS anticipates that, beginning for the third quarter of
calendar year 2017, it will collect three performance data points each
quarter from certified application counselor designated organizations:
The number of individuals who have been certified by the organization;
the total number of consumers who received application and enrollment
assistance from the organization; and of that number, the number of
consumers who received assistance applying for and selecting a QHP,
enrolling in a QHP, or applying for Medicaid or CHIP. We anticipate
that this data will be reported to FFEs electronically, through HIOS or
another electronic submission vehicle. For the purpose of estimating
costs and burdens, we assume that SBEs will collect the same
information with the same frequency, although our rule gives Exchanges
the flexibility to determine which data to collect and the form and
manner of the collection. We estimate that certified application
counselor designated organizations will have a mid-level health policy
analyst prepare the reports and a senior manager will review each
quarterly report. HHS expects that a mid-level health policy analyst
(at an hourly wage rate of $40.64) will spend 2 hours each quarter to
provide the required quarterly submissions and a senior manager (at an
hourly wage rate of $91.31) will spend \3/8\ hour to review the
submissions. Therefore, we estimate each quarterly report will require
2.375 hours and a cost burden of $115.52 per quarter per organization,
or 9.50 hours with a cost (four quarterly reports) of $462.08 annually
per certified application counselor designated organization.
Nationwide, we estimate there are 5,000 certified application counselor
designated organizations, resulting in an annual cost burden of
$2,310,400 and 47,500 hours for certified application counselor
designated organizations.
Under Sec. 155.225(b)(1)(iii), if an Exchange requests these
certified application counselor reports, the Exchange would also need
to review the reports. We assume that all Exchanges will require
quarterly reports and will utilize in-house staff to review them. We
assume that an employee earning a wage that is equivalent to a mid-
level GS-11 employee would review quarterly report submissions from
certified application counselor designated organizations.\70\ We
estimate that a mid-level employee (at an hourly wage rate of $43.13)
will spend 10 minutes reviewing each quarterly report for a cost burden
of approximately $7.19 per quarterly report per certified application
counselor designated organization. For all SBEs, we estimate that there
are 1,500 certified application counselor designated organizations
resulting in a cost burden of 1,000 hours and approximately $43,130
annually. Costs to the FFEs are estimated separately in the Regulatory
Impact Analysis section of this final rule.
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\70\ Federal wage rates are available at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2015/GS_h.pdf.
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F. ICRs Regarding Network Adequacy Standards (Sec. 156.230(d) and (e))
Section 156.230(d) requires that QHP issuers make a good faith
effort to provide written notice of discontinuation of a provider 30
days prior to the effective date of the change or otherwise as soon as
practicable, to enrollees who are patients seen on a regular basis by
the provider or who receive primary care from the provider whose
contract is being discontinued, irrespective of whether the contract is
being discontinued due to a termination for cause or without cause, or
due to a non-renewal. This is a third-party disclosure requirement. The
notification requirement under Sec. 156.230(d)(1) is a common practice
in the current market as several States, Medicare Advantage, Medicaid
Managed Care, and the NAIC Network Adequacy Model Act have standards
regarding enrollee notification of a provider leaving a network. As
discussed in the preamble, under State laws, many QHP issuers will
already be under this obligation, and therefore, our notification
requirements will apply in a more limited fashion. Additionally, we
incorporated SADPs into our calculations, but we recognize given the
notification requirements that SADPs may rarely need to send a
notification.
We estimate that a total of 475 issuers participate in the FFE and
would be required to comply with the standard. We estimated that 5
percent of providers discontinue contracts per year, and that an issuer
in the FFE covers 7,500 National Provider Identifiers, which means that
we estimate an issuer would have 375 provider discontinuations in a
year. In response to comment to the proposed rule, we are clarifying
that our assumption is that the database manager will receive
notification from the issuer's contracting team that a provider
contract is being discontinued. From that notification, the database
manager would aggregate the claims data associated with the provider to
develop the list of effected enrollees with associated enrollee
information for the notice. This list of affected enrollees and
associated enrollee information would be sent to an administrative
assistant to aggregate into a notification template to be sent to the
enrollee. Assuming 375 notifications per year, we believe that this
task would be a routine process for the administrative assistant to
undertake that would need little to no oversight to produce. As the
issuer has the discretion to define regular basis and that the number
of notifications are likely to widely varying between network and type
of provider, we did not estimate based on the number of
[[Page 12325]]
individual notifications, but rather the number of provider
discontinuations. For each provider discontinuation, we estimate that
it will take a database administrator 30 minutes for data analysis to
produce the list of affected enrollees, at $55.37 an hour, and an
administrative assistant 30 minutes to develop the notification and
send the notification to the affected enrollees, at $29.93 an hour. In
response to comment, we are also clarifying these hourly rates include
35 percent adjustment for fringe benefits and overhead costs. The total
costs per issuer would be $15,993.75. The total annual costs estimate
would be $7,597,031. Because we are already collecting information
regarding network classifications as part of the existing QHP
certification process, we do not believe that the network
classifications described in the preamble will result in additional
information collection requirements for issuers.
In Sec. 156.230(e), we require QHP issuers to provide a notice to
enrollees of the possibility of out-of-network charges from an
ancillary out-of-network provider in an in-network setting prior to the
benefit being provided, to avoid counting the out-of-network costs
against the annual limitation on cost sharing. This provision applies
to all QHPs, which includes 575 issuers, and would start in 2018. We
estimate it would take an issuer's mid-level health policy analyst (at
an hourly wage rate of $54.87) approximately 6 minutes to create a
notification and send the information. In response comments, we are
clarifying the hourly rates include 35 percent adjustment for fringe
benefits and overhead costs. We estimate that approximately two notices
would be sent for every 100 enrollees. Assuming approximately 24
million enrollees in QHPs for 2018,\71\ we estimate QHPs would send
approximately 320,000 total notices, for a total 21,334.40 hours, at a
total cost of $1,170,619.
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\71\ We used the most recent CBO estimates for enrollment from
March 2015 available at https://www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2015-03-ACAtables.pdf.
---------------------------------------------------------------------------
G. ICR Regarding Monthly SHOP Enrollment Reconciliation Files Submitted
by Issuers (156.285(c)(5))
We are finalizing amendments to Sec. 156.285(c)(5) to specify that
issuers in a Federally-facilitated SHOP would send monthly enrollment
reconciliation files to the SHOP according to a process, timeline and
file format established by the FF-SHOP. We anticipate that this would
require FF-SHOP issuers to submit a standard file with specific data
elements and submit their files in a process set out by the SHOP, at
least monthly. Issuers of QHPs available through the SHOP are already
required under the current version of Sec. 156.285(c)(5) to reconcile
enrollment files with the SHOP at least monthly. Therefore, we expect
this policy to have minimal impact on SHOP issuers.
H. ICR Regarding Patient Safety Standards (Sec. 156. 1110)
In Sec. 156.1110(a)(2)(i), for plan years beginning on or after
January 1, 2017, a QHP issuer that contracts with a hospital with
greater than 50 beds must verify that the hospital uses a patient
safety evaluation system and implements a mechanism for comprehensive
person-centered hospital discharge to improve care coordination and
health care quality for each patient. In Sec. 156.1100(a)(2)(ii), we
also establish reasonable exceptions to these new QHP issuer patient
safety requirements (rather than requiring reporting of such
information to a Patient Safety Organization). The burden estimate
associated with the information collection, recordkeeping, and
disclosure requirements to demonstrate compliance with these standards
includes the time and effort required for QHP issuers to maintain and
submit to the applicable Exchanges documentation that would include
hospital agreements to partner with, or other information demonstrating
a partnership with, a Patient Safety Organization, a Hospital
Engagement Network, or a Quality Improvement Organization that
demonstrate that each of its contracted hospitals with greater than 50
beds meets the patient safety standards required in Sec.
156.1110(a)(2) for plan years beginning on or after January 1, 2017.
QHP issuers may not already be collecting such network provider
information; therefore, we estimate the cost and burden to collect this
administrative information as follows: For a total of 575 QHP issuers,
offering 15 plans as potential QHPs, we estimated each issuer would
require one senior manager an average of 3 hours to collect and
maintain the hospital agreements or other information necessary to
demonstrate compliance as required in Sec. 156.1110(a)(2) for their
QHPs offered on Exchanges for plan years beginning on or after January
1, 2017. For a senior manager (at an hourly wage rate of $91.31), we
estimated the total annual cost for a QHP issuer to be $273.93.
Therefore, we estimated a total annual burden of 1,725 hours, resulting
in an annual cost of $157,510.
I. ICRs Regarding Other Notices (Sec. 156.1256)
We are adding a new section at Sec. 156.1256 to require that, in
the event of a plan or benefit display error, QHP issuers notify their
enrollees within 30 calendar days after the issuer is informed by the
FFE that the error has been fixed, if directed to do so by the FFE,
both of the plan or benefit display error and of the opportunity to
enroll in a new QHP under a special enrollment period at Sec.
155.420(d)(4), if directed to do so by the FFE. This provision would
apply to all QHPs in the FFEs, as well as all QHPs in the SBE-FPs,
which includes 475 issuers. We anticipate that issuers will need to
notify multiple enrollees of the same display error, and therefore
estimate that one form notice would cover approximately 100 of the
enrollees receiving such a notice. For each group of 100 form notices,
we estimate that it would take approximately 30 minutes for an issuer's
mid-level health policy analyst (at an hourly wage rate of $54.87) to
amend, add SEP language provided by the FFE, and send the information.
We estimate that approximately 4 percent of enrollees would receive
such a notice. Assuming approximately 19 million FFE and SBE-FP
enrollees in 2017,\72\ we estimate QHPs in the FFEs and SBE-FPs would
send approximately 760,000 total notices (4 percent of the estimated 19
million FFE and SBE-FP enrollees), for a total hours of 3,800, with a
total cost of $208,506.
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\72\ We applied the current FFE to total Exchange enrollment
ratio to the most recent CBO estimates for total Exchange enrollment
from March 2015 available at https://www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2015-03-ACAtables.pdf.
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Although this final rule requires issuers to send notices for the
specified situation, sending these notices is already part of normal
issuer business practices and issuers are already working with the FFE
to include language in their notices about special enrollment periods,
as applicable and appropriate. Therefore, there will be no additional
information required by issuers and no new administrative burden as a
result of this final rule. In accordance with the implementing
regulations of the PRA at 5 CFR 1320.3(b)(2), we believe the burden
associated with this requirement would be exempt as it associated with
a usual and customary business practice.
[[Page 12326]]
TABLE 11--Annual Reporting, Recordkeeping and Disclosure Burden
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Burden per Total annual Hourly labor Total labor
Regulation Section OMB Control Number of Responses response burden cost of cost of Total cost
No. respondents (hours) (hours) reporting ($) reporting ($) ($)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 147.145--AV.............................................. 0938-1157 49 25,612 1 49 33.18 1,625.82 1,625.82
Sec. 153.530.................................................. 0938-1164 320 1 1 320 54.44 17,421 17,421
Sec. 155.225 (b)(1)(iii)--certified application counselor 0938-1172 5,000 4 2.375 47,500 48.64 2,310,400 2,310,400
(CAC) organizations............................................
Sec. 155.225 (b)(1)(iii)--SBE................................. 0938-1172 1,500 4 0.167 1,000 43.13 43,130 43,130
Sec. 156.230(d)............................................... 0938-NEW 475 375 1 375 85.3 7,597,031 7,597,031
Sec. 156.230(e)............................................... 0938-NEW 575 320,000 0.1 32,000 54.87 1,170,619 1,170,619
Sec. 156.1110................................................. 0938-1249 575 8,625 0.2 1,725 91.31 157,510 157,510
Sec. 156.1256................................................. 0938-NEW 475 760,000 0.5 3,800 54.87 208,506 208,506
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Total....................................................... .............. 5,575 .............. .............. 86,769 .............. 11,506,243 11,506,243
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: There are no capital/maintenance costs associated with the information collection requirements contained in this rule; therefore, we have removed the associated column from Table 11.
We have submitted an information collection request to OMB for
review and approval of the ICRs contained in this final rule. The
requirements are not effective until approved by OMB and assigned a
valid OMB control number.
V. Regulatory Impact Analysis
A. Statement of Need
This rule sets forth standards related to the premium stabilization
programs (risk adjustment, reinsurance, and risk corridors) for the
2017 benefit year, as well as certain modifications to these programs
that will protect issuers from the potential effects of adverse
selection and protect consumers from increases in premiums due to
issuer uncertainty. The Premium Stabilization Rule and previous Payment
Notices provided detail on the implementation of these programs,
including the specific parameters for the 2014, 2015, and 2016 benefit
years applicable to these programs. This rule provides additional
standards related to essential health benefits, consumer assistance
tools and programs of an Exchange, Navigators, non-Navigator assistance
personnel, agents and brokers registered with the Federally-facilitated
Exchange, certified application counselors, cost-sharing parameters and
cost-sharing reduction notices, essential community providers,
qualified health plans, network adequacy, stand-alone dental plans,
acceptance of third-party payments by QHP issuers, patient safety
standards for issuers of qualified health plans participating in
Exchanges, the rate review program, the medical loss ratio program, the
Small Business Health Options Program, and FFE user fees.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 202 of the Unfunded Mandates Reform Act
of 1995 (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulatory impact analysis (RIA) must be prepared for
rules with economically significant effects ($100 million or more in
any 1 year).
OMB has determined that this final rule is ``economically
significant'' within the meaning of section 3(f)(1) of Executive Order
12866, because it is likely to have an annual effect of $100 million in
any 1 year. Accordingly, we have prepared an RIA that presents the
costs and benefits of this rule.
Although it is difficult to assess the effects of these provisions
in isolation, the overarching goal of the premium stabilization, market
standards, and Exchange-related provisions and policies in the
Affordable Care Act is to make affordable health insurance available to
individuals who do not have access to affordable employer-sponsored
coverage. The provisions within this rule are integral to the goal of
expanding coverage. For example, the premium stabilization programs
help prevent risk selection and decrease the risk of financial loss
that health insurance issuers might otherwise expect in 2017 and
Exchange financial assistance assists low- and moderate-income
consumers and American Indians/Alaska Natives in purchasing health
insurance. The combined impacts of these provisions affect the private
sector, issuers, and consumers, through increased access to health care
services including preventive services, decreased uncompensated care,
lower premiums, establishment of the next phase of patient safety
standards, and increased plan transparency. Through the reduction in
financial uncertainty for issuers and increased affordability for
consumers, these provisions are expected to increase access to
affordable health coverage.
HHS anticipates that the provisions of this rule will help further
the Department's goal of ensuring that all consumers have access to
quality and affordable health care and are able to make informed
choices, that Exchanges operate smoothly, that premium stabilization
programs work as intended, that SHOPs are provided flexibility, and
that employers and consumers are protected from fraudulent and criminal
activities. Affected entities such as QHP issuers would incur costs to
comply with the established provisions, including administrative costs
related to notices, new patient safety requirements, and training and
recertification requirements. In accordance with Executive Order 12866,
HHS believes that the benefits of this regulatory action justify the
costs.
Comment: A commenter criticized the regulatory analysis for lacking
an adequate economic analysis. The
[[Page 12327]]
commenter criticized the credibility of the sources of the estimates
and assumptions used. Additionally, the commenter noted that in Table
12 the magnitude of cost estimates is not labeled, and the costs
associated with the user fee to be assessed on issuers in State-based
Exchanges using the Federal platform were not included in the analysis.
Response: We previously estimated the annualized impact on issuers,
contributing entities, and States of transfers and other programs in
the 2014, 2015 and 2016 Payment Notice rules. Therefore, to avoid
double-counting, Table 12 contains only incremental changes incurred as
a result of provisions in this rule. The results of HHS's internal
analyses were used to assess the impact of the policies of this rule.
For this analysis, we continue to believe that the best available
estimates of the impact of the Affordable Care Act on the Federal
budget, enrollment in health insurance programs, and revenue collection
are by the Congressional Budget Office. The CBO's most recent updates
are available at https://www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2015-03-ACAtables.pdf. We have clarified the units
for the cost estimates in Table 12. We also note that the estimate of
user fees to be assessed on issuers in State-based Exchanges using the
Federal platform has been incorporated in the annual monetized costs
described in Table 12.
C. Impact Estimates of the Payment Notice Provisions and Accounting
Table
In accordance with OMB Circular A-4, Table 12 depicts an accounting
statement summarizing HHS's assessment of the benefits, costs, and
transfers associated with this regulatory action.
This final rule implements standards for programs that will have
numerous effects, including providing consumers with affordable health
insurance coverage, reducing the impact of adverse selection, and
stabilizing premiums in the individual and small group health insurance
markets and in an Exchange. We are unable to quantify certain benefits
of this final rule--such as improved health outcomes and longevity due
to continuous quality improvement, improved patient safety and
increased insurance enrollment--and certain costs--such as the cost of
providing additional medical services to newly-enrolled individuals.
The effects in Table 12 reflect qualitative impacts and estimated
direct monetary costs and transfers resulting from the provisions of
this final rule for health insurance issuers. The annualized monetized
costs described in Table 12 reflect direct administrative costs to
health insurance issuers as a result of the finalized provisions, and
include administrative costs related to student health insurance
coverage, rate filing justification, notices, new patient safety
requirements, and training and recertification requirements that are
estimated in the Collection of Information section of this final rule.
The annual monetized transfers described in Table 12 include costs
associated with FFE user fees and the risk adjustment user fee paid to
HHS by issuers. We estimate that that the total cost for HHS to operate
the risk adjustment program on behalf of States for 2017 will be
approximately $24 million and that the risk adjustment user fee would
be $1.56 per enrollee per year from risk adjustment issuers, which is
less than the anticipated $50 million in benefit year 2016 for which we
established a $1.75 per-enrollee-per-year risk adjustment user fee
amount. We reassessed our contract costs for 2017 and were able to base
2017 risk adjustment eligible plan enrollment projections on actual
2014 risk adjustment enrollment. We revised our user fee rate from the
proposed amount to reflect these considerations. Also, the increase in
FFE user fee collections is the result of expected growth in enrollment
in the FFEs rather than an increase in the user fee rate, which at 3.5
percent remains the same from 2016 to 2017. Beginning in 2017, we are
also charging a user fee for State-based Exchanges using the Federal
platform for eligibility and enrollment services. This user fee rate
would be set at 1.5 percent for benefit year 2017.
TABLE 12--Accounting Table
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Benefits:
Qualitative:
Increased enrollment in the individual market leading to improved access to health care for the
previously uninsured, especially individuals with medical conditions, which will result in improved health
and protection from the risk of catastrophic medical expenditures..........................................
Continuous quality improvement among QHP issuers to reduce patient harm and improve health outcomes
at lower costs.............................................................................................
More informed Exchange QHP certification decisions.................................................
Increased coverage options for small businesses and employees with minimal adverse selection.......
----------------------------------------------------------------------------------------------------------------
Costs Estimate Year Discount Period
dollar rate covered
percent
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/year)........... $11.67 2016 7 2016-2020
$11.67 2016 3 2016-2020
----------------------------------------------------------------------------------------------------------------
Quantitative:
Costs reflect administrative costs incurred by issuers and States to comply with provisions in this
final rule.................................................................................................
----------------------------------------------------------------------------------------------------------------
Transfers Estimate Year Discount Period
dollar rate covered
percent
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/year)........... $25.89 2016 7 2016-2020
$25.86 2016 3 2016-2020
----------------------------------------------------------------------------------------------------------------
Transfers reflect a decrease in annual cost of risk adjustment user fees (the total risk adjustment
user fee amount for 2016 was $50 million and $24 million for 2017), which are transfers from health insurance
issuers to the Federal government. Transfers also reflect an increase of $30 million in 2017 and $65million in
future years, in the amount of user fees collected from State-based Exchanges that use the Federal platform for
eligibility and enrollment which are transfers from issuers to the Federal government..........................
Unquantified: Lower premium rates in the individual market due to the improved risk profile of the
insured, competition, and pooling..............................................................................
----------------------------------------------------------------------------------------------------------------
[[Page 12328]]
This RIA expands upon the impact analyses of previous rules and
utilizes the Congressional Budget Office's (CBO) analysis of the
Affordable Care Act's impact on Federal spending, revenue collection,
and insurance enrollment. The temporary risk corridors program and the
transitional reinsurance program end after the 2016 benefit year.
Therefore, the costs associated with those programs are not included in
Tables 12 or 13 for fiscal years 2019-2020. Table 13 summarizes the
effects of the risk adjustment program on the Federal budget from
fiscal years 2016 through 2020, with the additional, societal effects
of this rule discussed in this RIA. We do not expect the provisions of
this final rule to significantly alter CBO's estimates of the budget
impact of the premium stabilization programs that are described in
Table 13. We note that transfers associated with the risk adjustment
and reinsurance programs were previously estimated in the Premium
Stabilization Rule; therefore, to avoid double-counting, we do not
include them in the accounting statement for this rule (Table 12).
In addition to utilizing CBO projections, HHS conducted an internal
analysis of the effects of its regulations on enrollment and premiums.
Based on these internal analyses, we anticipate that the quantitative
effects of the provisions in this rule are consistent with our previous
estimates in the 2016 Payment Notice for the impacts associated with
the advance payments of cost-sharing reductions and premium tax
credits, the premium stabilization programs, and FFE user fee
requirements.
Table 13--Estimated Federal Government Outlays and Receipts for the Risk Adjustment, Reinsurance, and Risk Corridors Programs From Fiscal Year 2016-
2020, in Billions of Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2016 2017 2018 2019 2020 2016-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Risk Adjustment, Reinsurance, and Risk Corridors Program 16.5 19.5 13 15 16 80
Payments...............................................
Risk Adjustment, Reinsurance, and Risk Corridors Program 15.5 18.5 13 15 16 78
Collections *..........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note 1: Risk adjustment program payments and receipts lag by one quarter. Receipt will fully offset payments over time.
Note 2: The CBO score reflects an additional $2 million in collections in FY 2015 that are outlayed in the FY 2016-FY 2020 timeframe. CBO does not
expect a shortfall in these programs.
Source: Congressional Budget Office. Insurance Coverage Provisions of the Affordable Care Act--CBO's March 2015 Baseline Table https://www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2015-03-ACAtables.pdf.
1. Fair Health Insurance Premiums
The final rule permits a rating area to be identified for a small
employer that is within the service area of an issuer's network plan,
for purposes of rating based on geography where the employer's
principal business address is not within that service area. This will
ensure that the network plan can be appropriately rated for sale to the
group policyholder, benefitting both issuers and employers.
2. Student Health Insurance Coverage
The final rule eliminates the requirement that issuers of student
health insurance coverage provide coverage comprised of the specific
metal levels, and instead requires that student health insurance
coverage provide at least 60 percent AV. The final rule also requires
issuers of student health insurance coverage to specify in any plan
materials summarizing the terms of coverage the AV of the coverage and
the metal level (or next lowest metal level) the coverage would
otherwise satisfy. This will provide flexibility for institutions of
higher education to offer student health insurance plans that are more
generous than the standard metal levels, while providing students with
information that allows them to compare the generosity of student
health insurance coverage with other available coverage options. This
will affect an estimated 49 issuers nationwide that offer student
health insurance coverage and approximately 1.4 million students and
dependents enrolled in such plans.\73\
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\73\ Source: Data from Medical Loss Ratio submissions for 2014
reporting year.
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3. Risk Adjustment
The risk adjustment program is a permanent program created by the
Affordable Care Act that transfers funds from lower risk, non-
grandfathered plans to higher risk, non-grandfathered plans in the
individual and small group markets, inside and outside the Exchanges.
We established standards for the administration of the risk adjustment
program, in subparts D and G of part 45 of the CFR.
A State approved or conditionally approved by the Secretary to
operate an Exchange may establish a risk adjustment program, or have
HHS do so on its behalf. As described in the 2014, 2015, and 2016
Payment Notices, if HHS operates risk adjustment on behalf of a State,
it will fund its risk adjustment program operations by assessing a risk
adjustment user fee on issuers of risk adjustment covered plans. For
the 2017 benefit year, we estimate that the total cost for HHS to
operate the risk adjustment program on behalf of States for 2017 will
be approximately $24 million, and that the risk adjustment user fee
would be $1.56 per enrollee per year. This user fee reflects our
reassessment of both contract costs to support the risk adjustment
program in 2017 and the expected member month enrollment in risk
adjustment covered QHPs.
4. Risk Corridors
The Federally operated temporary risk corridors program ends in
benefit year 2016 as required by statute. Because risk corridors
charges are collected in the year following the applicable benefit
year, and risk corridors payments lag receipt of collections by one
quarter, we estimate that risk corridors transfers will continue
through fiscal year 2018. In this rule, we establish that for the 2015
and 2016 benefit years, the issuer must true up claims liabilities and
reserves used to determine the allowable costs reported for the
preceding benefit year to reflect the actual claims payments made
through March 31 of the year following the benefit year. This amendment
provides for a more accurate risk corridors calculation by substituting
actual experience in place of estimates. Some issuers overestimate
their claims and liabilities, while others underestimate them. Based on
the 2014 MLR and risk corridors data, we estimate that this amendment
will result in a combined total reduction in risk corridors payments or
increase in risk corridors charges for some issuers; and a combined
total increase in risk corridors payments or decrease in risk corridors
charges for other issuers. HHS
[[Page 12329]]
continues to implement the risk corridors program in a budget neutral
manner such that payments are made from collections that are received.
If collections are insufficient to fund payment obligations, HHS will
apply a pro rata reduction to risk corridors payments to issuers for
the benefit year. Because of uncertainty in the amount of collections
that will be received for payment for the 2015 benefit year, we are
unable to estimate the magnitude of the net impact of the modification
in the final rule, but believe that it will reduce the overall amount
of risk corridors transfers for the 2015 benefit year.
5. Rate Review
In Sec. 154.215, we amend the criteria for submission of the
Unified Rate Review Template for single risk pool coverage to HHS. We
expect URRT submissions may increase by 1 percent. We have revised the
information collection currently approved under OMB Control Number
0938-1141 to clarify instructions related to completing the template
for single risk pool coverage.
6. Additional Required Benefits
In Sec. 155.170, we amended the requirement for coverage of
benefits in addition to the essential health benefits. Specifically, we
are rewording Sec. 155.170(a)(2) to make clear that a benefit required
by the State through action taking place on or before December 31, 2011
is considered an EHB and one required by the State through action
taking place after December 31, 2011 is considered in addition to EHB.
As we see this as a clarification, we do not anticipate an additional
burden on States or issuers. At Sec. 155.170(a)(3), we currently
require the Exchange to identify which additional State-required
benefits, if any, are in excess of EHB. We amended paragraph (a)(3) to
designate the State, rather than the Exchange, as the entity that
identifies which State-required benefits are not EHB. Because Exchanges
have been relying upon State departments of insurance in determining
what constitutes an essential health benefit, we do not anticipate any
additional burden to States because of this modification, but simply a
shift in burden from one State agency to another.
7. Standards for Navigators and certain Non-Navigator Assistance
Personnel
This final rule amends some of the standards for consumer
assistance functions under Sec. 155.205(d) and (e), as well as for the
activities of Navigators under Sec. 155.210, and non-Navigator
assistance personnel subject to Sec. 155.215. The changes include
ensuring consumers have access to skilled assistance with Exchange-
related issues beyond applying for and enrolling in coverage. Such post
enrollment and other assistance includes assisting consumers with
applying for exemptions from the individual shared responsibility
payment that are granted through the Exchange, with understanding the
process of filing Exchange appeals, and with understanding basic
concepts and rights related to health coverage and how to use it. The
final rule also requires Navigators to provide targeted assistance to
serve underserved or vulnerable populations, as identified by each
Exchange. In addition, the final rule specifies that any individual or
entity carrying out consumer assistance functions under Sec.
155.205(d) and (e) or Sec. 155.210 must complete training prior to
performing any assister duties, including conducting outreach and
education activities.
The final rule's amendments to Sec. Sec. 155.205(d) and
155.215(b)(1)(i) related to completing training for Navigators and non-
Navigator assistance personnel apply only to the timing of the training
and do not have any impact on the training itself. Therefore, they do
not affect the burden or cost for entities already subject to training
requirements. Because under existing Sec. 155.215(b)(2), Navigators in
FFEs must already be trained on the tax implications of enrollment
decisions, the individual responsibility to have health coverage,
eligibility appeals, and rights and processes for QHP appeals and
grievances, we expect our amendments to Sec. 155.210(b)(2)(v) through
(ix) to have minimal impact on FFE training. If any SBEs do not already
provide training on these topics, we expect they would incur minimal
costs in developing and implementing this training. Our final rule
requiring Navigators to provide targeted assistance to underserved or
vulnerable populations will have an increased benefit for consumers,
especially hard to reach populations. All costs associated with
reaching these consumers in FFEs are considered allowable costs that
would be covered by the Navigator grants for the FFEs and that may be
drawn down as the grantee incurs such costs. Additionally, Sec.
155.210(b)(2)(i) already requires Navigators in all Exchanges to
receive training on the needs of underserved and vulnerable
populations.
8. Certified Application Counselors
This final rule requires certified application counselor
organizations to submit data and information to the Exchanges regarding
the number and performance of their certified application counselors
and the consumer assistance they provide, upon request, in a form and
manner specified by the Exchange. Under Sec. 155.225(b)(1)(iii), if an
Exchange requests these certified application counselor reports, the
Exchange would also need to review them. We assume that all Exchanges
will require quarterly reports and will utilize in-house staff to
review them. We assume that an employee earning a wage that is
equivalent to a mid-level GS-11 employee would review quarterly report
submissions from certified application counselor designated
organizations.\74\ We estimate that a mid-level employee (at an hourly
wage rate of $43.13) will spend 10 minutes reviewing each quarterly
report for a cost burden of approximately $7.19 per quarterly report
per certified application counselor designated organization. We
estimate the costs of this requirement for State Exchanges in the
Collection of Information Requirements section of this final rule. For
the FFEs, we estimate there are 3,500 certified application counselor
designated organizations, resulting in a total annual burden for FFEs
of 2,333 hours, at a cost of $100,660.
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\74\ Federal wage rates are available at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2015/GS_h.pdf.
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9. SHOP
The SHOP facilitates the enrollment of eligible employees of
eligible small employers into small group health insurance plans. A
qualitative analysis of the costs and benefits of establishing a SHOP
was included in the RIA published in conjunction with the Exchange
Establishment Rule.\75\ Section 155.735(d)(2)(iii), added in this rule,
requires the FF-SHOPs to send qualified employees a notice notifying
them in advance of a child dependent's loss of eligibility for
dependent child coverage under their plan because of age. The notice
will be sent 90 days in advance of the date when the dependent enrollee
would lose eligibility for dependent child coverage. We estimate the
FF-SHOPs will spend roughly 35 hours annually, per State, to prepare
the notice, for a total cost of $1,775, per State, to design and
implement the notices under Sec. 155.735(d)(2)(iii). We estimate that
there will be approximately 32 States operating under the FF-SHOPs and
all will be subject to this requirement. Therefore, we estimate
[[Page 12330]]
a total annual cost of $58,575 for the FF-SHOPs as a result of this
requirement.
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\75\ Available at https://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
---------------------------------------------------------------------------
10. Standardized Options
In assessing the burden associated with implementing standardized
options, as described in Sec. 156.20, we assessed the potential impact
on premiums established by QHP issuers in the FFEs. We anticipate that
an issuer will price a standardized option based on how similar or
different the standardized option is to the issuer's current shelf
(plan offerings). Because of the large variation across the country, we
expect that how standardized options will be priced will vary by issuer
and by State. We do not anticipate that it will significantly affect
2017 plan premiums. We expect that issuers will offer standardized
options at a given metal level if the standardized options are similar
to their existing plans and can be priced competitively.
The premium impact on issuers' non-standard plan offerings is
difficult to estimate. Among the six State Exchanges that standardized
plans and required standardized options to be offered by QHP issuers in
2014, two (California and New York) that attempted to conduct premium
impact analysis found that introduction of the requirement on issuers
to offer standardized options was associated with a negligible or
downward impact on premiums. However, these SBEs found it was difficult
to isolate the effects of plan standardization on premiums given the
many changes that occurred in the insurance market in 2014 (including
the uptake in individual market enrollment, the movement to narrow
networks, and active purchasing and rate negotiation in California).
Again, we note that there is a great deal of uncertainty in how
this policy will affect Exchanges due to several considerations:
While we standardize cost-sharing on key essential health
benefits, there are a wide range of other benefit design parameters
that we will not standardize. It is not clear how this differentiation
will manifest among plans or affect consumer choice.
There is also wide geographic variation in health care
markets, including with respect to prices, plan designs, and provider
networks. As such, we anticipate that the take-up of standardized
options and their impacts on consumers will vary in different locations
across the country.
11. User Fees
To support the operation of FFEs, we require in Sec. 156.50(c)
that a participating issuer offering a plan through an FFE must remit a
user fee to HHS each month equal to the product of the monthly user fee
rate specified in the annual HHS notice of benefit and payment
parameters for the applicable benefit year and the monthly premium
charged by the issuer for each policy under the plan where enrollment
is through an FFE. In this final rule, for the 2017 benefit year, we
finalize a monthly FFE user fee rate equal to 3.5 percent of the
monthly premium. For a State-based Exchange using the Federal platform,
we finalize a user fee rate equal to 1.5 percent of the monthly
premium. For the accounting statement of this rule, we have reduced the
incremental increase in the user fee collected for the first year by
one-half, after which we estimate $30 million in the amount of user
fees collected from State-based Exchanges that use the Federal platform
for 2017 and $65 million for years after 2017. For the user fee charges
assessed on issuers in the FFE, we have previously received a waiver to
OMB Circular No. A-25R, which requires that the user fee charge be
sufficient to recover the full cost to the Federal government of
providing the special benefit. Similarly, for this year, for the user
fee charges assessed on issuers in the FFE and State-based Exchanges
using the Federal platform, we have sought an exception to OMB Circular
No. A-25R, which requires that the user fee charge be sufficient to
recover the full cost to the Federal government of providing the
special benefit. This exception ensures that the FFE can support many
of the goals of the Affordable Care Act, including improving the health
of the population, reducing health care costs, and providing access to
health coverage as advanced by Sec. 156.50(d).
12. Actuarial Value
In response to comments, we are clarifying that we take into
consideration stakeholder feedback on needed changes. One commenter
asked for the basis on which we concluded that the cost sharing changes
that might be required by a change to the AV calculator would likely be
minor. We note that because of the de minimis range established at
Sec. 156.140, many plans do not require significant changes to cost-
sharing structure each year beyond those permitted by the statute (such
as for changes to the annual limitation on cost sharing). However,
where significant changes are required, for example when a plan has
reached the permissible de minimis limit and the change in annual
limitation on cost sharing does not fully accommodate changed
calculations established by an updated AV Calculator, we acknowledge
that plans likely engage in significant analysis in order to establish
new cost-sharing structures. We do not anticipate that our policy
providing us with additional flexibility in updating the AV Calculator
will substantially change the number of plans for which new cost-
sharing structures must be calculated each year--it is our intent to
continue to provide annual updates to the AV Calculator.
13. Network Adequacy
In Sec. 156.230(e), we are finalizing our proposal to require QHPs
in the FFEs to count certain out-of-network cost sharing towards the
in-network annual limitation on cost sharing for enrollees who receive
EHB from an out-of-network ancillary provider at an in-network setting,
with modifications. The premium impact will vary based on existing
State laws. We received no comments on this estimate.
14. Provisions Related to Cost Sharing
The Affordable Care Act provides for the reduction or elimination
of cost sharing for certain eligible individuals enrolled in QHPs
offered through the Exchanges. This assistance will help many low- and
moderate-income individuals and families obtain health insurance--for
many people, cost sharing is a barrier to obtaining needed health
care.\76\
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\76\ Brook, Robert H., John E. Ware, William H. Rogers, Emmett
B. Keeler, Allyson Ross Davies, Cathy D. Sherbourne, George A.
Goldberg, Kathleen N. Lohr, Patricia Camp and Joseph P. Newhouse.
The Effect of Coinsurance on the Health of Adults: Results from the
RAND Health Insurance Experiment. Santa Monica, CA: RAND
Corporation, 1984. Available at https://www.rand.org/pubs/reports/R3055.
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We set forth in this rule the reductions in the maximum annual
limitation on cost sharing for silver plan variations. Consistent with
our analysis in previous Payment Notices, we developed three model
silver level QHPs and analyzed the impact on their AVs of the
reductions described in the Affordable Care Act to the estimated 2017
maximum annual limitation on cost sharing for self only coverage
($7,150). We do not believe these changes will result in a significant
economic impact. Therefore, we do not believe the provisions related to
cost-sharing reductions in this rule will have an impact on the program
established by and described in the 2015 and 2016 Payment Notices.
[[Page 12331]]
We also finalize the premium adjustment percentage for the 2017
benefit year. Section 156.130(e) provides that the premium adjustment
percentage is the percentage (if any) by which the average per capita
premium for health insurance coverage for the preceding calendar year
exceeds such average per capita premium for health insurance for 2013.
The annual premium adjustment percentage sets the rate of increase for
three parameters detailed in the Affordable Care Act: the annual
limitation on cost sharing (defined at Sec. 156.130(a)), the required
contribution percentage by individuals for minimum essential coverage
the Secretary may use to determine eligibility for hardship exemptions
under section 5000A of the Code, and the assessable payments under
sections 4980H(a) and 4980H(b). We believe that the 2017 premium
adjustment percentage of 13.25256291 percent is well within the
parameters used in the modeling of the Affordable Care Act, and we do
not expect that these provisions will have a substantial, if any,
effect on CBO's March 2016 baseline estimates of the budget impact.
15. Stand-Alone Dental Plans
In Sec. 156.150, we are increasing the annual limitation on cost
sharing for stand-alone dental plans being certified by the Exchanges.
We believe that the benefit of increasing the annual limit on cost
sharing is that issuers would be able to offer consumers SADPs that
provide preventive care without any cost sharing, similar to what is
generally offered by SADPs in the large group market. We received
several comments noting that preventive care without any cost sharing
would be easier to achieve with a high annual limitation on cost
sharing. We have established that increasing the annual limitation on
cost sharing over time will decrease the likelihood of premium
increases.
16. Meaningful Difference
In Sec. 156.298, we remove the health savings account eligibility
and the individual coverage or enrollment group coverage criteria as
options for meeting the meaningful difference standard. As we believe
the health savings account eligibility criterion to overlap with cost-
sharing criterion (that is, we believe that a plan that meets the
meaningful difference standard for health savings account eligibility
would also meet the standard under the cost-sharing criterion), we do
not believe that removing this criterion will have any impact on
issuers. Additionally, our records indicate that no other than self-
only coverage plans were reviewed for meaningful difference in 2015 and
none are offered for 2016 Open Enrollment, meaning that there will be
limited impact on removing these criteria. As such, we estimate that
the impact of this change is negligible.
17. Patient Safety Standards
The next phase of patient safety standards requires QHP issuers
participating in Exchanges to track hospital participation with PSOs or
other evidence-based patient safety initiatives. We believe this new
requirement to verify that hospitals use a patient safety evaluation
tool and implement a comprehensive person-centered hospital discharge
program would encourage continuous quality improvement among QHP
issuers by strengthening system-wide efforts to reduce patient harm in
a measurable way, improve health outcomes at lower costs, allow for
flexibility and innovation in patient safety interventions and
practices, and encourage meaningful health care quality improvements.
We discuss the administrative costs associated with submitting this
information in the Collection of Information section of this final
rule.
18. Acceptance of Certain Third Party Payments
On March 19, 2014, we published in the Federal Register an interim
final rule (IFR) with comment period titled, Patient Protection and
Affordable Care Act; Third Party Payment of Qualified Health Plan
Premiums (79 FR 15240). In Sec. 156.1250, we finalize this rule to
require individual market QHPs and SADPs to accept premium payments
made by certain third parties. This rule describes the circumstances in
which individual market QHPs and SADPs must accept payments made by
Ryan White HIV/AIDS program; Federal and State government programs that
provide premium and cost sharing support for specific individuals; and
Indian tribes, tribal organizations, and urban Indian organizations. We
do not believe these actions would impose any significant new costs on
issuers because we assume that most issuers already accept such
payments under our interim final rule.
19. Medical Loss Ratio
This final rule amends the risk corridors program requirements at
Sec. 153.530 to require issuers to true-up the claims liabilities and
reserves used to determine the 2014 and 2015 allowable costs to reflect
the actual claims payments made through March 31, 2016 and March 31,
2017, respectively. We discuss the impact of this proposal on the risk
corridors program elsewhere in this RIA. Because risk corridors
payments and charges are a component of the MLR and rebate calculation,
the impact of this amendment on risk corridors payments and charges may
in turn affect MLR rebates to consumers. While, as noted previously, we
are unable to estimate the magnitude of the net impact of this
modification on risk corridors transfers, and consequently on MLR
rebates, we believe that this amendment would increase rebate payments
from issuers to consumers.
D. Regulatory Alternatives Considered
In developing the policies contained in this final rule, we
considered numerous alternatives to the presented proposals. Below we
discuss the key regulatory alternatives that we considered.
Regarding the open enrollment periods for 2017 and beyond, we
considered gradually shifting the end of the open enrollment period
earlier. However, we believe keeping the open enrollment period the
same for benefit years 2017 and 2018 as it was for 2016 and then moving
to a December 15 end date simplifies messaging to consumers, while
achieving our ultimate goal of shifting the open enrollment period so
that it ends prior to the start of the benefit year.
Regarding the 2017 required contribution percentage, which
establishes the threshold for spending on minimum essential coverage
required for an affordability exemption from the individual shared
responsibility requirement, we considered continuing to use the per
capita gross domestic product as the measure of income growth. However,
a new measure of income growth, per capita personal income, became
available for the first time last year as part of the National Health
Expenditure's projections, and includes not only participation in
production but also transfer payments. We believe that this broader
measure of personal income more accurately reflects individual income
than GDP per capita.
For SBE-FP model provisions at Sec. 155.200(f), we considered a
number of alternatives. We considered not codifying the SBE-FP model,
and winding down use of the Federal platform by SBEs. In this
alternative, SBEs currently utilizing these services would have had to
find a way to perform all required Exchange eligibility and enrollment
functions themselves, including the implementation of an Exchange
technology platform, or else convert to FFEs. We finalized the
[[Page 12332]]
proposal without significant change because we believe that it is
technically feasible and will permit a number of SBEs to access the
Federal government's greater economies of scale. We also considered a
more customized option, under which an SBE would be permitted to select
from a menu of Federal services. While we are considering providing
more flexibility to SBE-FPs in the future, at this point we do not have
the operational ability to permit that level of customization. Finally,
we considered alternatives under which issuers and other delegated and
downstream entities in States with SBE-FPs would not be required to
meet FFE standards, or HHS would not participate in enforcement against
issuers violating those FFE rules. We believe that applying Federal
standards to issuers and their downstream entities for SBE-FPs helps
promote consistent minimum standards associated with HealthCare.gov.
For employer choice in the FF-SHOPs, we considered offering an
additional employer choice option that would permit an employer to
select an actuarial value level of coverage, after which employees
could choose from plans available at that level and at the level above
it. Recognizing that small group market dynamics differ by State, we
decided to seek comment on, but not finalize this option at this time.
We also considered requiring all SHOPs to offer the additional employer
choice options we proposed, but instead generally opted to maintain
State-based SHOPs' flexibility under the current regulations, so that
States can decide whether implementing additional employer choice
options would be in the best interest of small group market consumers
in their State.
We considered requiring QHP issuers to offer standardized options
as a condition of participation in the FFEs. However, we believe that
markets and Exchanges may be at different stages of readiness for
standardized options, and that the cost-sharing structure that HHS
specifies may not be well tailored for all States. Similarly, we
believe that some issuers may have difficulty offering standardized
options in the short run because of operational constraints.
Since releasing the proposed rule, the NAIC has adopted the NAIC
Network Adequacy Model Act.\77\ We applaud NAIC's work on the Model Act
and appreciate the extensive efforts of the Network Adequacy Model
Review Subgroup members, as well as the participating stakeholders. As
a result of the NAIC Network Adequacy Model Act finalization, we made
revisions to this rule to give States more opportunity to implement the
NAIC Network Adequacy Model Act. For example, we elected not to
finalize our policy requiring each State with an FFE to establish a
minimum quantitative network adequacy threshold this year, and stated
we would closely monitor States' efforts to implement the provisions of
the NAIC Network Adequacy Model Act.
---------------------------------------------------------------------------
\77\ https://www.naic.org/store/free/MDL-74.pdf.
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In Sec. 156.1110, we considered maintaining the current approach
of aligning with Medicare hospital Conditions of Participation
standards and not establishing further regulations at this time for QHP
issuers to collect information, such as hospital participation
agreements with PSOs, to comply with new patient safety standards for
plan years beginning on or after January 1, 2017. However, we decided
to adopt this next phase in this final rule because we believe that
strengthening patient safety standards and aligning with current,
effective patient safety interventions will achieve greater impact for
consumers, in terms of health care quality improvement and harm
reduction, resulting in higher quality QHPs being offered in the
Exchanges. Additionally, we considered an approach that did not include
establishing reasonable exceptions to the requirements for a QHP issuer
that contracts with a hospital with greater than 50 beds to utilize a
patient safety evaluation system and implement a mechanism for
comprehensive person-centered hospital discharges, as described in
section 1311(h)(1) of the Affordable Care Act. However, we determined
that it is important to support national patient safety efforts,
promote evidence-based patient safety interventions and allow for
flexibility, innovation, and minimal burden for issuers and hospitals.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires
agencies to prepare an initial regulatory flexibility analysis to
describe the impact of the rule on small entities, unless the head of
the agency can certify that the rule will not have a significant
economic impact on a substantial number of small entities. The RFA
generally defines a ``small entity'' as (1) a proprietary firm meeting
the size standards of the Small Business Administration (SBA), (2) a
not-for-profit organization that is not dominant in its field, or (3) a
small government jurisdiction with a population of less than 50,000.
States and individuals are not included in the definition of small
entity. HHS uses a change in revenues of more than 3 to 5 percent as
its measure of significant economic impact on a substantial number of
small entities.
In this rule, we set forth standards for the risk adjustment,
reinsurance, and risk corridors programs, which are intended to
stabilize premiums as insurance market reforms are implemented and
Exchanges facilitate increased enrollment. Because we believe that
insurance firms offering comprehensive health insurance policies
generally exceed the size thresholds for small entities established by
the SBA, we do not believe that an initial regulatory flexibility
analysis is required for such firms.
For purposes of the RFA, we expect the following types of entities
to be affected by this rule:
Health insurance issuers.
Group health plans.
We believe that health insurance issuers and group health plans
would be classified under the North American Industry Classification
System code 524114 (Direct Health and Medical Insurance Carriers).
According to SBA size standards, entities with average annual receipts
of $38.5 million or less would be considered small entities for these
North American Industry Classification System codes. Issuers could
possibly be classified in 621491 (HMO Medical Centers) and, if this is
the case, the SBA size standard would be $32.5 million or less.
Based on data from MLR annual report submissions for the 2014 MLR
reporting year, approximately 118 out of 525 issuers of health
insurance coverage nationwide had total premium revenue of $38.5
million or less. This estimate may overstate the actual number of small
health insurance companies that may be affected, since almost 80
percent of these small companies belong to larger holding groups, and
many if not all of these small companies are likely to have non-health
lines of business that would result in their revenues exceeding $38.5
million. Based on data from the 2014 MLR and risk corridors annual
report submissions, 20 of these 118 potentially small entities had risk
corridors payments or charges for the 2014 benefit year. Only one of
these entities is estimated to experience a decrease in its risk
corridors payment under the provisions in Sec. 153.530(b)(2)(iv), with
no impact on its rebate liability. Therefore, we do not expect the
provisions of this rule to affect a substantial number of small health
insurance issuers or group health plans.
Among the policies established by this rule are policies that could
increase the choice of QHPs available to small
[[Page 12333]]
groups participating in an FF-SHOP, and policies imposing requirements,
including information collection requirements, on Navigators, non-
Navigator assistance personnel, and certified application counselor
organizations. We believe that the effects on small employers
participating in an FF-SHOP are difficult to quantify, but will not
result in substantial additional burden, since they will simply permit
certain small employers greater choice in the QHPs they may make
available. The burden estimates for Navigators, non-Navigator
assistance personnel, and certified application counselor organizations
are described elsewhere in the ICR and RIA sections of this final rule.
F. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a rule that includes any Federal
mandate that may result in expenditures in any 1 year by a State,
local, or Tribal governments, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for
inflation. Currently that threshold is approximately $144 million.
Although we have not been able to quantify all costs, the combined
administrative cost and user fee impact on State, local, or Tribal
governments and the private sector may be above the threshold. Earlier
portions of this RIA constitute our UMRA analysis.
G. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct costs on State and local governments, preempts State
law, or otherwise has Federalism implications. Because States have
flexibility in designing their Exchange and Exchange-related programs,
State decisions will ultimately influence both administrative expenses
and overall premiums. States are not required to establish an Exchange
or risk adjustment or reinsurance program. For States electing to
operate an Exchange, risk adjustment or reinsurance program, much of
the initial cost of creating these programs was funded by Exchange
Planning and Establishment Grants. After establishment, Exchanges will
be financially self-sustaining, with revenue sources at the discretion
of the State. Current State Exchanges may charge user fees to issuers.
In HHS's view, while this rule would not impose substantial direct
requirement costs on State and local governments, this regulation has
Federalism implications due to direct effects on the distribution of
power and responsibilities among the State and Federal governments
relating to determining standards relating to health insurance that is
offered in the individual and small group markets. For example, in this
final rule we have established a number of policies relating to network
adequacy and continuity of care for QHPs on FFEs. States have
traditionally played a major role in regulating these aspects of health
insurance, when offered off the Exchange.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have Federalism
implications or limit the policy making discretion of the States, HHS
has engaged in efforts to consult with and work cooperatively with
affected States, including participating in conference calls with and
attending conferences of the National Association of Insurance
Commissioners, and consulting with State insurance officials on an
individual basis. Following review of comments from State insurance
officials and the NAIC, we have made substantial changes to our network
adequacy policies in this final rule.
Throughout the process of developing the proposed and final rule,
HHS has attempted to balance the States' interests in regulating health
insurance issuers, and Congress' intent to provide access to Affordable
Insurance Exchanges for consumers in every State. By doing so, it is
HHS's view that we have complied with the requirements of Executive
Order 13132.
H. Congressional Review Act
This rule is subject to the Congressional Review Act provisions of
the Small Business Regulatory Enforcement Fairness Act of 1996 (5
U.S.C. 801, et seq.), which specifies that before a rule can take
effect, the Federal agency promulgating the rule shall submit to each
House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information,
and has been transmitted to Congress and the Comptroller General for
review.
List of Subjects
45 CFR Parts 144 and 147
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 153
Administrative practice and procedure, Health care, Health
insurance, Health records, Organization and functions (Government
agencies), Reporting and recordkeeping requirements.
45 CFR Part 154
Administrative practice and procedure, Claims, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
45 CFR Part 155
Administrative practice and procedure, Health care, Health
insurance, Reporting and recordkeeping requirements, State and local
governments
45 CFR Part 156
Administrative practice and procedure, Advertising, American
Indian/Alaska Natives, Conflict of interest, Consumer protection, Cost-
sharing reductions, Grant programs--health, Grants administration,
Health care, Health insurance, Health maintenance organization (HMO),
Health records, Hospitals, Individuals with disabilities, Loan
programs--health, Medicaid, Organization and functions (Government
agencies), Public assistance programs, Reporting and recordkeeping
requirements, State and local governments, Sunshine Act, Technical
assistance, Women, Youth.
45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Department of Health
and Human Services amends 45 CFR parts 144, 147, 153, 154, 155, 156,
and 158 as set forth below.
PART 144--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
0
1. The authority citation for part 144 continues to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the Public
Health Service Act, 42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92.
0
2. Section 144.103 is amended by revising paragraph (1) of the
definition of ``Excepted benefits'' and revising the definitions of
``Large employer'' and ``Small employer'' to read as follows:
Sec. 144.103 Definitions.
* * * * *
Excepted benefits * * *
[[Page 12334]]
(1) Group market provisions in 45 CFR part 146, subpart D, is
defined in 45 CFR 146.145(b); and
* * * * *
Large employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least 51 employees on business days during the preceding
calendar year and who employs at least 1 employee on the first day of
the plan year. A State may elect to define large employer by
substituting ``101 employees'' for ``51 employees.'' In the case of an
employer that was not in existence throughout the preceding calendar
year, the determination of whether the employer is a large employer is
based on the average number of employees that it is reasonably expected
the employer will employ on business days in the current calendar year.
* * * * *
Small employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least 1 but not more than 50 employees on business days
during the preceding calendar year and who employs at least 1 employee
on the first day of the plan year. A State may elect to define small
employer by substituting ``100 employees'' for ``50 employees.'' In the
case of an employer that was not in existence throughout the preceding
calendar year, the determination of whether the employer is a small
employer is based on the average number of employees that it is
reasonably expected the employer will employ on business days in the
current calendar year.
* * * * *
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
3. The authority citation for part 147 continues to read as follows:
Authority: Secs 2701 through 2763, 2791, and 2792 of the Public
Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92), as amended.
0
4. Section 147.102 is amended by revising paragraph (a)(1)(ii) to read
as follows:
Sec. 147.102 Fair health insurance premiums.
(a) * * *
(1) * * *
(ii) Rating area, as established in accordance with paragraph (b)
of this section. For purposes of this paragraph (a), rating area is
determined--
(A) In the individual market, using the primary policyholder's
address.
(B) In the small group market, using the group policyholder's
principal business address. For purposes of this paragraph
(a)(1)(ii)(B), principal business address means the principal business
address registered with the State or, if a principal business address
is not registered with the State, or is registered solely for purposes
of service of process and is not a substantial worksite for the
policyholder's business, the business address within the State where
the greatest number of employees of such policyholder works. If, for a
network plan, the group policyholder's principal business address is
not within the service area of such plan, and the policyholder has
employees who live, reside, or work within the service area, the
principal business address for purposes of the network plan is the
business address within the plan's service area where the greatest
number of employees work as of the beginning of the plan year. If there
is no such business address, the rating area for purposes of the
network plan is the rating area that reflects where the greatest number
of employees within the plan's service area live or reside as of the
beginning of the plan year.
* * * * *
0
5. Section 147.145 is amended by revising paragraphs (b)(2) and (3) and
removing paragraphs (d) and (e) to read as follows:
Sec. 147.145 Student health insurance coverage.
* * * * *
(b) * * *
(2) Levels of coverage. The requirement to provide a specific level
of coverage described in section 1302(d) of the Affordable Care Act
does not apply to student health insurance coverage for policy years
beginning on or after July 1, 2016. However, the benefits provided by
such coverage must provide at least 60 percent actuarial value, as
calculated in accordance with Sec. 156.135 of this subchapter. The
issuer must specify in any plan materials summarizing the terms of the
coverage the actuarial value and level of coverage (or next lowest
level of coverage) the coverage would otherwise satisfy under Sec.
156.140 of this subchapter.
(3) Single risk pool. Student health insurance coverage is not
subject to the requirements of section 1312(c) of the Affordable Care
Act. A health insurance issuer that offers student health insurance
coverage may establish one or more separate risk pools for an
institution of higher education, if the distinction between or among
groups of students (or dependents of students) who form the risk pool
is based on a bona fide school-related classification and not based on
a health factor (as described in Sec. 146.121 of this subchapter).
However, student health insurance rates must reflect the claims
experience of individuals who comprise the risk pool, and any
adjustments to rates within a risk pool must be actuarially justified.
* * * * *
PART 153--STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS, AND
RISK ADJUSTMENT UNDER THE AFFORDABLE CARE ACT
0
6. The authority citation for part 153 continues to read as follows:
Authority: Secs. 1311, 1321, 1341-1343, Pub. L. 111-148, 24
Stat. 119.
0
7. Section 153.405 is amended by revising paragraph (i) to read as
follows:
Sec. 153.405 Calculation of reinsurance contributions.
* * * * *
(i) Audits. HHS or its designee may audit a contributing entity to
assess its compliance with the requirements of this subpart. A
contributing entity that uses a third party administrator,
administrative services-only contractor, or other third party to assist
with its obligations under this subpart must ensure that the third
party administrator, administrative services-only contractor, or other
third party cooperates with any audit under this section.
0
8. Section 153.510 is amended by adding paragraph (g) to read as
follows:
Sec. 153.510 Risk corridors establishment and payment methodology.
* * * * *
(g) Adjustment to risk corridors payments and charges. If an issuer
reported a certified estimate of 2014 cost-sharing reductions on its
2014 MLR and Risk Corridors Annual Reporting Form that is lower than
the actual value of cost-sharing reductions calculated under Sec.
156.430(c) of this subchapter for the 2014 benefit year, HHS will make
an adjustment to the amount of the issuer's 2015 benefit year risk
corridors payment or charge measured by the full difference between the
certified estimate of 2014 cost-sharing reductions reported and the
actual value of cost-sharing reductions provided as calculated under
Sec. 156.430(c) for the 2014 benefit year.
0
9. Section 153.530 is amended by revising paragraphs (b)(2)(ii) and
(iii) and adding paragraph (b)(2)(iv) to read as follows:
[[Page 12335]]
Sec. 153.530 Risk corridors data requirements.
* * * * *
(b) * * *
(2) * * *
(ii) Any reinsurance payments received by the issuer for the non-
grandfathered health plans under the transitional reinsurance program
established under subpart C of this part;
(iii) A cost-sharing reduction amount equal to the amount of cost-
sharing reductions for the benefit year as calculated under Sec.
156.430(c) of this subchapter, to the extent not reimbursed to the
provider furnishing the item or service.
(iv) For the 2015 and 2016 benefit years, any difference between--
(A) The sum of unpaid claims reserves and claims incurred but not
reported, as set forth in Sec. Sec. 158.103 and 158.140(a)(2) and (3)
of this subchapter, that were reported on the MLR and Risk Corridors
Annual Reporting Form for the year preceding the benefit year; and
(B) The actual claims incurred during the year preceding the
benefit year and paid between March 31 of the benefit year and March 31
of the year following the benefit year.
* * * * *
0
10. Section 153.710 is amended by--
0
a. Removing paragraph (d).
0
b. Redesignating paragraphs (e) and (f) as paragraphs (d) and (e),
respectively.
0
c. Revising newly redesignated paragraph (e).
0
d. Adding paragraph (f).
0
e. Adding paragraph (g) introductory text and revising paragraphs
(g)(1) introductory text, (g)(1)(iii) and (iv), and (g)(2).
0
f. Adding paragraph (g)(3).
The revisions and additions read as follows:
Sec. 153.710 Data requirements.
* * * * *
(e) Unresolved discrepancies. If a discrepancy first identified in
a final dedicated distributed data environment report in accordance
with paragraph (d)(2) of this section remains unresolved after the
issuance of the notification of risk adjustment payments and charges or
reinsurance payments under Sec. 153.310(e) or Sec. 153.240(b)(1)(ii),
respectively, an issuer of a risk adjustment covered plan or
reinsurance-eligible plan may make a request for reconsideration
regarding such discrepancy under the process set forth in Sec.
156.1220(a) of this subchapter.
(f) Evaluation of dedicated distributed data. If an issuer of a
risk adjustment covered plan fails to provide sufficient required data,
such that HHS cannot apply the applicable methodology to calculate the
risk adjustment payment transfer amount for the risk adjustment covered
plan in a timely or appropriate fashion, then HHS will assess a default
risk adjustment charge under Sec. 153.740(b). If an issuer of a
reinsurance eligible plan fails to provide data sufficient for HHS to
calculate reinsurance payments, the issuer will forfeit reinsurance
payments for claims it fails to submit.
(1) Data quantity. An issuer of a risk adjustment covered plan or a
reinsurance-eligible plan must provide, in a format and on a timeline
specified by HHS, data on its total enrollment and claims counts by
market, which HHS may use in evaluating whether the issuer provided
access in the dedicated distributed data environment to a sufficient
quantity of data to meet reinsurance and risk adjustment data
requirements.
(2) Data quality. If, following the deadline for submission of data
specified in Sec. 153.730, HHS identifies an outlier that would cause
the data that a risk adjustment covered plan or a reinsurance-eligible
plan made available through a dedicated distributed data environment to
fail HHS's data quality thresholds, the issuer may, within 10 calendar
days of receiving notification of the outlier, submit an explanation of
the outlier for HHS to consider in determining whether the issuer met
the reinsurance and risk adjustment data requirements.
(g) Risk corridors and MLR reporting. Except as provided in
paragraph (g)(3) of this section:
(1) Notwithstanding any discrepancy report made under paragraph
(d)(2) of this section, or any request for reconsideration under Sec.
156.1220(a) of this subchapter with respect to any risk adjustment
payment or charge, including an assessment of risk adjustment user
fees; reinsurance payment; cost-sharing reduction payment or charge; or
risk corridors payment or charge, unless the dispute has been resolved,
an issuer must report, for purposes of the risk corridors and MLR
programs:
* * * * *
(iii) A cost-sharing reduction amount equal to the actual amount of
cost-sharing reductions for the benefit year as calculated under Sec.
156.430(c) of this subchapter, to the extent not reimbursed to the
provider furnishing the item or service; and
(iv) For medical loss ratio reporting only, the risk corridors
payment to be made or charge assessed by HHS under Sec. 153.510.
(2) An issuer must report during the current MLR and risk corridors
reporting year any adjustment made or approved by HHS for any risk
adjustment payment or charge, including an assessment of risk
adjustment user fees; any reinsurance payment; any cost-sharing
reduction payment or charge; or any risk corridors payment or charge
before August 15, or the next applicable business day, of the current
MLR and risk corridors reporting year unless instructed otherwise by
HHS. An issuer must report any adjustment made or approved by HHS for
any risk adjustment payment or charge, including an assessment of risk
adjustment user fees; any reinsurance payment; any cost-sharing
reduction payment or charge; or any risk corridors payment or charge
where such adjustment has not been accounted for in a prior MLR and
Risk Corridor Annual Reporting Form, in the MLR and Risk Corridors
Annual Reporting Form for the following reporting year.
(3) In cases where HHS reasonably determines that the reporting
instructions in paragraph (g)(1) or (2) of this section would lead to
unfair or misleading financial reporting, issuers must correct their
data submissions in a form and manner to be specified by HHS.
PART 154--HEALTH INSURANCE ISSUER RATE INCREASES: DISCLOSURE AND
REVIEW REQUIREMENTS
0
11. The authority citation for part 154 continues to read as follows:
Authority: Section 2794 of the Public Health Service Act (42
U.S.C. 300gg-94).
0
12. Section 154.200 is amended by revising paragraph (c)(2) to read as
follows:
Sec. 154.200 Rate increases subject to review.
* * * * *
(c) * * *
(2) For rates filed for single risk pool coverage beginning on or
after January 1, 2017, the average increase, including premium rating
factors described in Sec. 147.102 of this subchapter, for all
enrollees weighted by premium volume for any plan within the product
meets or exceeds the applicable threshold.
* * * * *
0
13. Section 154.215 is amended by revising paragraphs (a) and (b)
introductory text and removing and reserving paragraph (c) to read as
follows:
[[Page 12336]]
Sec. 154.215 Submission of rate filing justification.
(a) A health insurance issuer must submit to CMS and to the
applicable State (if the State accepts such submissions) the
information specified below on a form and in a manner prescribed by the
Secretary.
(1) For all single risk pool products, including new and
discontinuing products, the Unified Rate Review Template, as described
in paragraph (d) of this section;
(2) For each single risk pool product that includes a plan that is
subject to a rate increase, regardless of the size of the increase, the
unified rate review template and actuarial memorandum, as described in
paragraph (f) of this section;
(3) For each single risk pool product that includes a plan with a
rate increase that is subject to review under Sec. 154.210, all parts
of the Rate Filing Justification, as described in paragraph (b) of this
section
(b) A Rate Filing Justification includes one or more of the
following:
* * * * *
0
14. Section 154.220 is amended by revising the introductory text and
paragraphs (b) introductory text and (b)(1) to read as follows:
Sec. 154.220 Timing of providing the rate filing justification.
A health insurance issuer must submit applicable sections of the
Rate Filing Justification for all single risk pool coverage in the
individual or small group market, as follows:
* * * * *
(b) For coverage effective on or after January 1, 2017, by the
earlier of the following:
(1) The date by which the State requires submission of a rate
filing; or
* * * * *
0
15. Section 154.230 is amended by revising paragraph (c)(2)(i) to read
as follows:
Sec. 154.230 Submission and posting of Final Justifications for
unreasonable rate increases.
* * * * *
(c) * * *
(2) * * *
(i) The information made available to the public by CMS and
described in Sec. 154.215(h).
* * * * *
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
16. 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
17. Section 155.20 is amended by--
0
a. Revising paragraph (2) in the definition of ``Applicant''.
0
b. Adding the definitions of ``Federal platform agreement'' and
``Standardized option'' in alphabetical order.
0
c. Revising the definitions of ``Large employer'' and ``Small
employer''.
The addition and revisions read as follows:
Sec. 155.20 Definitions.
* * * * *
Applicant * * *
(2) For SHOP:
(i) An employer seeking eligibility to purchase coverage through
the SHOP; or
(ii) An employer, employee, or a former employee seeking
eligibility for enrollment in a QHP through the SHOP for himself or
herself and, if the qualified employer offers dependent coverage
through the SHOP, seeking eligibility to enroll his or her dependents
in a QHP through the SHOP.
* * * * *
Federal platform agreement means an agreement between a State
Exchange and HHS under which a State Exchange agrees to rely on the
Federal platform to carry out select Exchange functions.
* * * * *
Large employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least 51 employees on business days during the preceding
calendar year and who employs at least 1 employee on the first day of
the plan year. In the case of an employer that was not in existence
throughout the preceding calendar year, the determination of whether
the employer is a large employer is based on the average number of
employees that it is reasonably expected the employer will employ on
business days in the current calendar year. A State may elect to define
large employer by substituting ``101 employees'' for ``51 employees.''
The number of employees must be determined using the method set forth
in section 4980H(c)(2) of the Code.
* * * * *
Small employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least one but not more than 50 employees on business days
during the preceding calendar year and who employs at least one
employee on the first day of the plan year. In the case of an employer
that was not in existence throughout the preceding calendar year, the
determination of whether the employer is a small employer is based on
the average number of employees that it is reasonably expected the
employer will employ on business days in the current calendar year. A
State may elect to define small employer by substituting ``100
employees'' for ``50 employees.'' The number of employees must be
determined using the method set forth in section 4980H(c)(2) of the
Code.
* * * * *
Standardized option means a QHP with a standardized cost-sharing
structure specified by HHS in rulemaking and that is offered for sale
through an individual market Exchange.
* * * * *
0
18. Section 155.106 is amended by--
0
a. Revising paragraphs (a) introductory text, (a)(2) and (3), and (b)
introductory text.
0
b. Adding paragraphs (a)(4) and (5) and (c).
The revisions and additions read as follows:
Sec. 155.106 Election to operate an Exchange after 2014.
(a) Election to operate an Exchange. Except as provided in
paragraph (c) of this section, a State electing to seek approval of its
Exchange must:
* * * * *
(2) Submit an Exchange Blueprint application for HHS approval at
least 15 months prior to the date on which the Exchange proposes to
begin open enrollment as a State Exchange;
(3) Have in effect an approved, or conditionally approved, Exchange
Blueprint and operational readiness assessment at least 14 months prior
to the date on which the Exchange proposes to begin open enrollment as
a State Exchange;
(4) Develop a plan jointly with HHS to facilitate the transition to
a State Exchange; and
(5) If the open enrollment period for the year the State intends to
begin operating an SBE has not been established, this deadline must be
calculated based on the date open enrollment began or will begin in the
year in which the State is submitting the Blueprint application.
[[Page 12337]]
(b) Transition process for State Exchanges that cease operations.
If a State intends to cease operation of its Exchange, HHS will operate
the Exchange on behalf of the State. Therefore, a State that intends to
cease operations of its Exchange must:
* * * * *
(c) Process for State Exchanges that seek to utilize the Federal
platform for select functions. A State seeking approval as a State
Exchange utilizing the Federal platform to support select functions
through a Federal platform agreement under Sec. 155.200(f) must:
(1) If the State Exchange does not have a conditionally approved
Exchange Blueprint application, submit one for HHS approval at least 3
months prior to the date on which the Exchange proposes to begin open
enrollment as an SBE-FP;
(2) If the State Exchange has a conditionally approved Exchange
Blueprint application, submit any significant changes to that
application for HHS approval, in accordance with Sec. 155.105(e), at
least 3 months prior to the date on which the Exchange proposes to
begin open enrollment as an SBE-FP;
(3) Have in effect an approved, or conditionally approved, Exchange
Blueprint and operational readiness assessment at least 2 months prior
to the date on which the Exchange proposes to begin open enrollment as
an SBE-FP, in accordance with HHS rules, as a State Exchange utilizing
the Federal platform;
(4) Prior to approval, or conditional approval, of the Exchange
Blueprint, execute a Federal platform agreement for utilizing the
Federal platform for select functions; and
(5) Coordinate with HHS on a transition plan to be developed
jointly between HHS and the State.
0
19. Section 155.170 is amended by revising paragraphs (a)(2) and (3)
and (c)(2)(iii) to read as follows:
Sec. 155.170 Additional required benefits.
(a) * * *
(2) A benefit required by State action taking place on or before
December 31, 2011 is considered an EHB. A benefit required by State
action taking place on or after January 1, 2012, other than for
purposes of compliance with Federal requirements, is considered in
addition to the essential health benefits.
(3) The State will identify which State-required benefits are in
addition to the EHB.
* * * * *
(c) * * *
(2) * * *
(iii) Reported to the State.
0
20. Section 155.200 is amended by revising paragraph (a) and adding
paragraph (f) to read as follows:
Sec. 155.200 Functions of an Exchange.
(a) General requirements. An Exchange must perform the functions
described in this subpart and in subparts D, E, F, G, H, K, M, and O of
this part unless the State is approved to operate only a SHOP by HHS
under Sec. 155.100(a)(2), in which case the Exchange operated by the
State must perform the functions described in subpart H of this part
and all applicable provisions of other subparts referenced in that
subpart. In a State that is approved to operate only a SHOP, the
individual market Exchange operated by HHS in that State will perform
the functions described in this subpart and in subparts D, E, F, G, K,
M, and O of this part.
* * * * *
(f) Requirements for State Exchanges on the Federal platform. (1) A
State that receives approval or conditional approval to operate a State
Exchange on the Federal platform under Sec. 155.106(c) may meet its
obligations under paragraph (a) of this section by relying on Federal
services that the Federal government agrees to provide under a Federal
platform agreement.
(2) A State Exchange on the Federal platform must establish and
oversee requirements for its issuers that are no less strict than the
following requirements that are applied to Federally-facilitated
Exchange issuers:
(i) Data submission requirements under Sec. 156.122(d)(2) of this
subchapter;
(ii) Network adequacy standards under Sec. 156.230 of this
subchapter;
(iii) Essential community providers standards under Sec. 156.235
of this subchapter;
(iv) Meaningful difference standards under Sec. 156.298 of this
subchapter;
(v) Changes of ownership of issuers requirements under Sec.
156.330 of this subchapter;
(vi) QHP issuer compliance and compliance of delegated or
downstream entities requirements under Sec. 156.340(a)(4) of this
subchapter; and
(vii) Casework requirements under Sec. 156.1010 of this
subchapter.
(3) If a State is not substantially enforcing any requirement
listed under Sec. 155.200(f)(2) with respect to a QHP issuer or plan
in a State-based Exchange on the Federal platform, HHS may enforce that
requirement directly against the issuer or plan by means of plan
suppression under Sec. 156.815 of this subchapter.
0
21. Section 155.205 is amended by--
0
a. Revising paragraphs (a), (b)(1) introductory text, and (d)(1).
0
b. Adding paragraph (b)(7).
The addition and revisions read as follows:
Sec. 155.205 Consumer assistance tools and programs of an Exchange.
(a) Call center. The Exchange must provide for operation of a toll-
free call center that addresses the needs of consumers requesting
assistance and meets the requirements outlined in paragraphs (c)(1),
(c)(2)(i), and (c)(3) of this section, unless it enters into a Federal
platform agreement through which it relies on HHS to carry out call
center functions, in which case the Exchange must provide at a minimum
a toll-free telephone hotline to respond to requests for assistance and
appropriately directs consumers to Federal platform services to apply
for, and enroll in, Exchange coverage.
(b) * * *
(1) Provides standardized comparative information on each available
QHP, which may include differential display of standardized options on
consumer-facing plan comparison and shopping tools, and at a minimum
includes:
* * * * *
(7) A State-based Exchange on the Federal platform must at a
minimum maintain an informational Internet Web site that includes the
capability to direct consumers to Federal platform services to apply
for, and enroll in, Exchange coverage.
* * * * *
(d) * * *
(1) The Exchange must have a consumer assistance function that
meets the standards in paragraph (c) of this section, including the
Navigator program described in Sec. 155.210. Any individual providing
such consumer assistance must be trained regarding QHP options,
insurance affordability programs, eligibility, and benefits rules and
regulations governing all insurance affordability programs operated in
the State, as implemented in the State, prior to providing such
assistance or the outreach and education activities specified in
paragraph (e) of this section.
* * * * *
0
22. Section 155.210 is amended by--
0
a. Revising paragraphs (b)(2)(iii) and (iv).
0
b. Adding paragraphs (b)(2)(v) through (ix).
0
c. Revising paragraphs (d)(6) and (e)(6)(i).
0
d. In paragraph (e)(7), removing the period at the end of the paragraph
and adding a semicolon in its place.
[[Page 12338]]
0
e. Adding paragraphs (e)(8) and (9).
The revisions and additions read as follows:
Sec. 155.210 Navigator program standards.
* * * * *
(b) * * *
(2) * * *
(iii) The range of QHP options and insurance affordability
programs;
(iv) The privacy and security standards applicable under Sec.
155.260;
(v) In an Exchange that requires Navigators to provide the
assistance specified in paragraph (e)(9)(i) of this section, the
process of filing Exchange eligibility appeals;
(vi) In an Exchange that requires Navigators to provide the
assistance specified in paragraph (e)(9)(ii) of this section, general
concepts regarding exemptions from the requirement to maintain minimum
essential coverage and from the individual shared responsibility
payment, including the application process for exemptions granted
through the Exchange, and IRS resources on exemptions;
(vii) In an Exchange that requires Navigators to provide the
assistance specified in paragraph (e)(9)(iii) of this section, the
Exchange-related components of the premium tax credit reconciliation
process and IRS resources on this process;
(viii) In an Exchange that requires Navigators to provide the
assistance specified in paragraph (e)(9)(iv) of this section, basic
concepts and rights related to health coverage and how to use it; and
(ix) In an Exchange that requires Navigators to provide the
assistance specified in paragraph (e)(9)(v) of this section, providing
referrals to licensed tax advisers, tax preparers, or other resources
for assistance with tax preparation and tax advice related to consumer
questions about the Exchange application and enrollment process,
exemptions from the requirement to maintain minimum essential coverage
and from the individual shared responsibility payment, and premium tax
credit reconciliations.
* * * * *
(d) * * *
(6) Provide to an applicant or potential enrollee gifts of any
value as an inducement for enrollment. The value of gifts provided to
applicants and potential enrollees for purposes other than as an
inducement for enrollment must not exceed nominal value, either
individually or in the aggregate, when provided to that individual
during a single encounter. For purposes of this paragraph (d)(6), the
term gifts includes gift items, gift cards, cash cards, cash, and
promotional items that market or promote the products or services of a
third party, but does not include the reimbursement of legitimate
expenses incurred by a consumer in an effort to receive Exchange
application assistance, such as travel or postage expenses.
* * * * *
(e) * * *
(6) * * *
(i) Are informed, prior to receiving assistance, of the functions
and responsibilities of Navigators, including that Navigators are not
acting as tax advisers or attorneys when providing assistance as
Navigators and cannot provide tax or legal advice within their capacity
as Navigators;
* * * * *
(8) Provide targeted assistance to serve underserved or vulnerable
populations, as identified by the Exchange, within the Exchange service
area.
(i) In a Federally-facilitated Exchange, this paragraph (e)(8) will
apply beginning with the Navigator grant application process for
Navigator grants awarded in 2018. The Federally-facilitated Exchange
will identify populations as vulnerable or underserved that are
disproportionately without access to coverage or care, or that are at a
greater risk for poor health outcomes, in the funding opportunity
announcement for its Navigator grants, and applicants for those grants
will have an opportunity to propose additional vulnerable or
underserved populations in their applications for the Federally-
facilitated Exchange's approval.
(ii) [Reserved]
(9) The Exchange may require or authorize Navigators to provide
information and assistance with any of the following topics. In
Federally-facilitated Exchanges, Navigators are authorized to provide
information and assistance with any of the following topics and will be
required to provide information and assistance with all of the
following topics under Navigator grants awarded in 2018 or any later
year.
(i) Understanding the process of filing Exchange eligibility
appeals;
(ii) Understanding and applying for exemptions from the individual
shared responsibility payment that are granted through the Exchange,
understanding the availability of exemptions from the requirement to
maintain minimum essential coverage and from the individual shared
responsibility payment that are claimed through the tax filing process
and how to claim them, and understanding the availability of IRS
resources on this topic;
(iii) The Exchange-related components of the premium tax credit
reconciliation process, and understanding the availability of IRS
resources on this process;
(iv) Understanding basic concepts and rights related to health
coverage and how to use it; and
(v) Referrals to licensed tax advisers, tax preparers, or other
resources for assistance with tax preparation and tax advice related to
consumer questions about the Exchange application and enrollment
process, exemptions from the requirement to maintain minimum essential
coverage and from the individual shared responsibility payment, and
premium tax credit reconciliations.
* * * * *
0
23. Section 155.215 is amended by revising paragraphs (b)(1)(i) and
(g)(1) 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.
* * * * *
(b) * * *
(1) * * *
(i) Obtain certification by the Exchange prior to carrying out any
consumer assistance functions or outreach and education activities
under Sec. 155.205(d) and (e) or Sec. 155.210;
* * * * *
(g) * * *
(1) Are informed, prior to receiving assistance, of the functions
and responsibilities of non-Navigator assistance personnel, including
that non-Navigator assistance personnel are not acting as tax advisers
or attorneys when providing assistance as non-Navigator assistance
personnel and cannot provide tax or legal advice within their capacity
as non-Navigator assistance personnel;
* * * * *
0
24. Section 155.220 is amended by--
0
a. Revising paragraph (c)(1) and (3), (f)(4), (g)(2)(ii), and (g)(3)
and (4);
0
b. Adding new paragraphs (c)(4)(i)(F), (c)(5), (g)(5) and (6), (j),
(k), and (l).
The revisions and additions read as follows:
Sec. 155.220 Ability of States to permit agents and brokers to assist
qualified individuals, qualified employers, or qualified employees
enrolling in QHPs.
* * * * *
(c) * * *
(1) The agent or broker ensures the applicant's completion of an
eligibility
[[Page 12339]]
verification and enrollment application through the Exchange Internet
Web site as described in Sec. 155.405, or ensures that the eligibility
application information is submitted for an eligibility determination
through the Exchange-approved web service subject to meeting the
requirements in paragraphs (c)(3)(ii) and (c)(4)(i)(F) of this section;
* * * * *
(3)(i) When an Internet Web site of the agent or broker is used to
complete the QHP selection, at a minimum the Internet Web site must:
(A) Disclose and display all QHP information provided by the
Exchange or directly by QHP issuers consistent with the requirements of
Sec. 155.205(b)(1) and (c), and to the extent that not all information
required under Sec. 155.205(b)(1) is displayed on the agent or
broker's Internet Web site for a QHP, prominently display a
standardized disclaimer provided by HHS stating that information
required under Sec. 155.205(b)(1) for the QHP is available on the
Exchange Web site, and provide a Web link to the Exchange Web site;
(B) Provide consumers the ability to view all QHPs offered through
the Exchange;
(C) Not provide financial incentives, such as rebates or giveaways;
(D) Display all QHP data provided by the Exchange;
(E) Maintain audit trails and records in an electronic format for a
minimum of ten years;
(F) Provide consumers with the ability to withdraw from the process
and use the Exchange Web site described in Sec. 155.205(b) instead at
any time; and
(G) For the Federally-facilitated Exchange, prominently display a
standardized disclaimer provided by HHS, and provide a Web link to the
Exchange Web site.
(ii) When an Internet Web site of an agent or broker is used to
complete the Exchange eligibility application, at a minimum, the
Internet Web site must:
(A) Comply with the requirements in paragraph (c)(3)(i) of this
section;
(B) Use exactly the same eligibility application language as
appears in the FFE Single Streamlined Application required in Sec.
155.405, unless HHS approves a deviation;
(C) Ensure that all necessary information for the consumer's
applicable eligibility circumstances are submitted through the
Exchange-approved web service; and
(D) Ensure that the process used for consumers to complete the
eligibility application complies with all applicable Exchange
standards, including Sec. Sec. 155.230 and 155.260(b).
(4) * * *
(i) * * *
(F) When an Internet Web site of an agent or broker is used to
complete the Exchange eligibility application, obtain HHS approval
verifying that all requirements in this section are met.
* * * * *
(5) HHS or its designee may periodically monitor and audit an agent
or broker under this subpart to assess its compliance with the
applicable requirements of this section.
* * * * *
(f) * * *
(4) When the agreement between the agent or broker and the Exchange
under paragraph (d) of this section is terminated under paragraph (f)
of this section, the agent or broker will no longer be registered with
the Federally-facilitated Exchanges, or be permitted to assist with or
facilitate enrollment of qualified individuals, qualified employers or
qualified employees in coverage in a manner that constitutes enrollment
through a Federally-facilitated Exchange, or be permitted to assist
individuals in applying for advance payments of the premium tax credit
and cost-sharing reductions for QHPs. The agent's or broker's agreement
with the Exchange under Sec. 155.260(b) will also be terminated
through the termination without cause process set forth in that
agreement. The agent or broker must continue to protect any personally
identifiable information accessed during the term of either of these
agreements with the Federally-facilitated Exchanges.
(g) * * *
(2) * * *
(ii) Any term or condition of the agreement with the Federally-
facilitated Exchanges required under paragraph (d) of this section, or
any term or condition of the agreement with the Federally-facilitated
Exchange required under Sec. 155.260(b);
* * * * *
(3) HHS will notify the agent or broker of the specific finding of
noncompliance or pattern of noncompliance made under paragraph (g)(1)
of this section, and after 30 days from the date of the notice, may
terminate the agreement for cause if the matter is not resolved to the
satisfaction of HHS.
(4) After the period in paragraph (g)(3) of this section has
elapsed and the agreement under paragraph (d) of this section is
terminated, the agent or broker will no longer be registered with the
Federally-facilitated Exchanges, or be permitted to assist with or
facilitate enrollment of a qualified individual, qualified employer, or
qualified employee in coverage in a manner that constitutes enrollment
through a Federally-facilitated Exchange, or be permitted to assist
individuals in applying for advance payments of the premium tax credit
and cost-sharing reductions for QHPs. The agent's or broker's agreement
with the Exchange under Sec. 155.260(b)(2) will also be terminated
through the process set forth in that agreement. The agent or broker
must continue to protect any personally identifiable information
accessed during the term of either of these agreements with the
Federally-facilitated Exchanges.
(5) Fraud or abusive conduct--
(i)(A) If HHS reasonably suspects that an agent or broker may have
may have engaged in fraud, or in abusive conduct that may cause
imminent or ongoing consumer harm using personally identifiable
information of an Exchange enrollee or applicant or in connection with
an Exchange enrollment or application, HHS may temporarily suspend the
agent's or broker's agreements required under paragraph (d) of this
section and under Sec. 155.260(b) for up to 90 calendar days.
Suspension will be effective on the date of the notice that HHS sends
to the agent or broker advising of the suspension of the agreements.
(B) The agent or broker may submit evidence in a form and manner to
be specified by HHS, to rebut the allegation during this 90-day period.
If the agent or broker submits such evidence during the suspension
period, HHS will review the evidence and make a determination whether
to lift the suspension within 30 days of receipt of such evidence. If
the rebuttal evidence does not persuade HHS to lift the suspension, or
if the agent or broker fails to submit rebuttal evidence during the
suspension period, HHS may terminate the agent's or broker's agreements
required under paragraph (d) of this section and under Sec. 155.260(b)
for cause under paragraph (g)(5)(ii) of this section.
(ii) If there is a finding or determination by a Federal or State
entity that an agent or broker engaged in fraud, or abusive conduct
that may result in imminent or ongoing consumer harm, using personally
identifiable information of Exchange enrollees or applicants or in
connection with an Exchange enrollment or application, HHS will
terminate the agent's or broker's agreements required under paragraph
(d) of this section and under Sec. 155.260(b) for cause. The
termination will be effective starting on the date of the notice that
HHS sends to the agent or broker advising of the termination of the
agreements.
[[Page 12340]]
(iii) During the suspension period under paragraph (g)(5)(i) of
this section and following termination of the agreements under
paragraph (g)(5)(i)(B) or (g)(5)(ii) of this section, the agent or
broker will not be registered with the Federally-facilitated Exchanges,
or be permitted to assist with or facilitate enrollment of qualified
individuals, qualified employers, or qualified employees in coverage in
a manner that constitutes enrollment through a Federally-facilitated
Exchange, or be permitted to assist individuals in applying for advance
payments of the premium tax credit and cost-sharing reductions for
QHPs. The agent or broker must continue to protect any personally
identifiable information accessed during the term of either of these
agreements with a Federally-facilitated Exchange.
(6) The State department of insurance or equivalent State agent or
broker licensing authority will be notified by HHS in cases of
suspensions or terminations effectuated under this paragraph (g).
* * * * *
(j) Federally-facilitated Exchange standards of conduct. (1) An
agent or broker that assists with or facilitates enrollment of
qualified individuals, qualified employers, or qualified employees, in
coverage in a manner that constitutes enrollment through a Federally-
facilitated Exchange, or assists individuals in applying for advance
payments of the premium tax credit and cost-sharing reductions for QHPs
sold through a Federally-facilitated Exchange, must--
(i) Have executed the required agreement under paragraph Sec.
155.260(b);
(ii) Be registered with the Federally-facilitated Exchanges under
paragraph (d)(1) of this section; and
(iii) Comply with the standards of conduct in paragraph (j)(2) of
this section.
(2) Standards of conduct. An individual or entity described in
paragraph (j)(1) of this section must--
(i) Provide consumers with correct information, without omission of
material fact, regarding the Federally-facilitated Exchanges, QHPs
offered through the Federally-facilitated Exchanges, and insurance
affordability programs, and refrain from marketing or conduct that is
misleading or coercive, or discriminates based on race, color, national
origin, disability, age, sex, gender identity, or sexual orientation;
(ii) Provide the Federally-facilitated Exchanges with correct
information under section 1411(b) of the Affordable Care Act;
(iii) Obtain the consent of the individual, employer, or employee
prior to assisting with or facilitating enrollment through a Federally-
facilitated Exchange, or assisting the individual in applying for
advance payments of the premium tax credit and cost-sharing reductions
for QHPs;
(iv) Protect consumer personally identifiable information according
to Sec. 155.260(b)(3) and the agreement described in Sec.
155.260(b)(2); and
(v) Comply with all applicable Federal and State laws and
regulations.
(3) If an agent or broker fails to provide correct information, he
or she will nonetheless be deemed in compliance with paragraphs
(j)(2)(i) and (ii) of this section if HHS determines that there was a
reasonable cause for the failure to provide correct information and
that the agent or broker acted in good faith.
(k) Penalties other than termination of the agreement with the
Federally-facilitated Exchanges. (1) If HHS determines that an agent or
broker has failed to comply with the requirements of this section, in
addition to any other available remedies, that agent or broker--
(i) May be denied the right to enter into agreements with the
Federally-facilitated Exchanges in future years; and
(ii) May be subject to civil money penalties as described in Sec.
155.285.
(2) HHS will notify the agent or broker of the proposed imposition
of penalties under paragraph (k)(1)(i) of this section and, after 30
calendar days from the date of the notice, may impose the penalty if
the agent or broker has not requested a reconsideration under paragraph
(h) of this section. The proposed imposition of penalties under
paragraph (k)(1)(ii) of this section will follow the process outlined
under Sec. 155.285.
(l) Application to State-Based Exchanges using a Federal platform.
An agent or broker who enrolls qualified individuals, qualified
employers, or qualified employees in coverage in a manner that
constitutes enrollment through an State-Based Exchange using a Federal
platform, or assists individual market consumers with submission of
applications for advance payments of the premium tax credit and cost-
sharing reductions through an State-Based Exchange using a Federal
platform must comply with all applicable Federally-facilitated Exchange
standards in this section.
0
25. Section 155.222 is amended by--
0
a. Revising the section heading.
0
b. Revising paragraphs (a)(1) and (2), (b)(1) through (5), and (d).
0
c. Adding new paragraph (b)(6).
The revisions and addition read as follows:
Sec. 155.222 Standards for HHS-approved vendors of Federally-
facilitated Exchange training for agents and brokers.
(a) * * *
(1) A vendor must be approved by HHS, in a form and manner to be
determined by HHS, to have its training program recognized for agents
and brokers assisting with or facilitating enrollment in individual
market or SHOP coverage through the Federally-facilitated Exchanges
consistent with Sec. 155.220.
(2) As part of the training program, the vendor must require agents
and brokers to provide identifying information and successfully
complete the required curriculum.
* * * * *
(b) * * *
(1) Submit a complete and accurate application by the deadline
established by HHS, which includes demonstration of prior experience
with successfully conducting online training, as well as providing
technical support to a large customer base.
(2) Adhere to HHS specifications for content, format, and delivery
of training, which includes offering continuing education units (CEUs)
for at least five States in which a Federally-facilitated Exchange or
State-Based Exchange using a Federal platform is operating.
(3) Collect, store, and share with HHS training completion data
from agent and broker users of the vendor's training in a manner,
format, and frequency specified by HHS, and protect all data from agent
and broker users of the vendor's training in accordance with applicable
privacy and security requirements.
(4) Execute an agreement with HHS, in a form and manner to be
determined by HHS, which requires the vendor to comply with applicable
HHS guidelines for implementing the training and interfacing with HHS
data systems, and the use of all data collected.
(5) Permit any individual who holds a valid State license or
equivalent State authority to sell health insurance products to access
the vendor's training.
(6) Provide technical support to agent and broker users of the
vendor's training as specified by HHS.
* * * * *
(d) Monitoring. HHS may periodically monitor and audit vendors
approved under this subpart, and their records related to the training
functions described in this section, to ensure ongoing compliance with
the standards in paragraph (b) of this section. If HHS
[[Page 12341]]
determines that an HHS-approved vendor is not in compliance with the
standards required in paragraph (b) of this section, the vendor may be
removed from the approved list described in paragraph (c) of this
section and may be required by HHS to cease performing the training
functions described under this subpart.
* * * * *
0
26. Section 155.225 is amended by adding paragraph (b)(1)(iii) and
revising paragraphs (f)(1) and (g)(4) to read as follows:
Sec. 155.225 Certified application counselors.
* * * * *
(b) * * *
(1) * * *
(iii) Provides data and information to the Exchange regarding the
number and performance of its certified application counselors and
regarding the consumer assistance provided by its certified application
counselors, upon request, in the form and manner specified by the
Exchange. Beginning for the third quarter of calendar year 2017, in a
Federally-facilitated Exchange, organizations designated by the
Exchange must submit quarterly reports that include, at a minimum, data
regarding the number of individuals who have been certified by the
organization; the total number of consumers who received application
and enrollment assistance from the organization; and of that number,
the number of consumers who received assistance in applying for and
selecting a QHP, enrolling in a QHP, or applying for Medicaid or CHIP.
* * * * *
(f) * * *
(1) Are informed, prior to receiving assistance, of the functions
and responsibilities of certified application counselors, including
that certified application counselors are not acting as tax advisers or
attorneys when providing assistance as certified application counselors
and cannot provide tax or legal advice within their capacity as
certified application counselors;
* * * * *
(g) * * *
(4) Provide to an applicant or potential enrollee gifts of any
value as an inducement for enrollment. The value of gifts provided to
applicants and potential enrollees for purposes other than as an
inducement for enrollment must not exceed nominal value, either
individually or in the aggregate, when provided to that individual
during a single encounter. For purposes of this paragraph (g)(4), the
term gifts includes gift items, gift cards, cash cards, cash, and
promotional items that market or promote the products or services of a
third party, but does not include the reimbursement of legitimate
expenses incurred by a consumer in an effort to receive Exchange
application assistance, such as travel or postage expenses;
* * * * *
0
27. Section 155.260 is amended by revising paragraph (a)(1)
introductory text to read as follows:
Sec. 155.260 Privacy and security of personally identifiable
information.
(a) * * *
(1) Where the Exchange creates or collects personally identifiable
information for the purposes of determining eligibility for enrollment
in a qualified health plan; determining eligibility for other insurance
affordability programs, as defined in Sec. 155.300; or determining
eligibility for exemptions from the individual shared responsibility
provisions in section 5000A of the Code, the Exchange may only use or
disclose such personally identifiable information to the extent such
information is necessary:
* * * * *
0
28. Section 155.280 is amended by revising paragraph (a) to read as
follows:
Sec. 155.280 Oversight and monitoring of privacy and security
requirements.
(a) General. HHS will oversee and monitor the Federally-facilitated
Exchanges, State-based Exchanges on the Federal platform, and non-
Exchange entities required to comply with the privacy and security
standards established and implemented by a Federally-facilitated
Exchange pursuant to Sec. 155.260 for compliance with those standards.
HHS will oversee and monitor State Exchanges for compliance with the
standards State Exchanges establish and implement pursuant to Sec.
155.260. State Exchanges will oversee and monitor non-Exchange entities
required to comply with the privacy and security standards established
and implemented by a State Exchange in accordance to Sec. 155.260.
* * * * *
0
29. Section 155.302 is amended by revising paragraph (a)(1) to read as
follows:
Sec. 155.302 Options for conducting eligibility determinations.
(a) * * *
(1) Directly, through contracting arrangements in accordance with
Sec. 155.110(a), or as a State-based Exchange on the Federal platform
through a Federal platform agreement under which HHS carries out
eligibility determinations and other requirements contained within this
subpart; or
* * * * *
0
30. Section 155.310 is amended by revising paragraphs (h) introductory
text and (h)(2) to read as follows:
Sec. 155.310 Eligibility process.
* * * * *
(h) Notice of an employee's receipt of advance payments of the
premium tax credit and cost-sharing reductions to an employer. The
Exchange must notify an employer that an employee has been determined
eligible for advance payments of the premium tax credit and cost-
sharing reductions and has enrolled in a qualified health plan through
the Exchange within a reasonable timeframe following a determination
that the employee is eligible for advance payments of the premium tax
credit and cost-sharing reductions in accordance with Sec. 155.305(g)
or Sec. 155.350(a) and enrollment by the employee in a qualified
health plan through the Exchange. Such notice must:
* * * * *
(2) Indicate that the employee has been determined eligible advance
payments of the premium tax credit and cost-sharing reductions and has
enrolled in a qualified health plan through the Exchange;
* * * * *
0
31. Section 155.320 is amended by revising paragraphs (c)(3)(vi)
introductory text and (d)(3) and adding paragraph (d)(4) to read as
follows:
Sec. 155.320 Verification process related to eligibility for
insurance affordability programs.
* * * * *
(c) * * *
(3) * * *
(vi) Alternate verification process for decreases in annual
household income estimates and for situations in which tax return data
is unavailable. If a tax filer qualifies for an alternate verification
process based on the requirements specified in paragraph (c)(3)(iv) of
this section and the applicant's attestation to projected annual
household income, as described in paragraph (c)(3)(ii)(B) of this
section, is more than a reasonable threshold below the annual household
income computed in accordance with paragraph (c)(3)(ii)(A) of this
section, or if data described in paragraph (c)(1)(i) of this section is
unavailable, the Exchange must attempt to verify the applicant's
attestation of the tax filer's projected annual household income by
following the procedures specified in paragraph
[[Page 12342]]
(c)(3)(vi)(A) through (G) of this section. For the purposes of this
paragraph (c)(3)(vi), a reasonable threshold is established by the
Exchange in guidance and approved by HHS, but must not be less than 10
percent, and can also include a threshold dollar amount. The Exchange's
threshold is subject to approval by HHS.
* * * * *
(d) * * *
(3) Verification procedures. (i) If an applicant's attestation is
not reasonably compatible with the information obtained by the Exchange
as specified in paragraphs (d)(2)(i) through (iii) of this section,
other information provided by the application filer, or other
information in the records of the Exchange, the Exchange must follow
the procedures specified in Sec. 155.315(f).
(ii) Except as specified in paragraph (d)(3)(i) or (d)(4)(i) of
this section, the Exchange must accept an applicant's attestation
regarding the verification specified in paragraph (d) of this section
without further verification.
(4) Alternate procedures. For any benefit year for which it does
not reasonably expect to obtain sufficient verification data as
described in paragraphs (d)(2)(i) through (iii) of this section, the
Exchange must follow the procedures specified in paragraph (d)(4)(i) of
this section or, for benefit years 2016 and 2017, the Exchange may
follow the procedures specified in paragraph (d)(4)(ii) of this
section. For purposes of this paragraph (d)(4), the Exchange reasonably
expects to obtain sufficient verification data for any benefit year
when, for the benefit year, the Exchange is able to obtain data about
enrollment in and eligibility for qualifying coverage in an eligible
employer-sponsored plan from at least one electronic data source that
is available to the Exchange and that has been approved by HHS, based
on evidence showing that the data source is sufficiently current,
accurate, and minimizes administrative burden, as described under
paragraph (d)(2)(i) of this section.
(i) Select a statistically significant random sample of applicants
for whom the Exchange does not have any of the information specified in
paragraphs (d)(2)(i) through (iii) of this section and--
(A) Provide notice to the applicant indicating that the Exchange
will be contacting any employer identified on the application for the
applicant and the members of his or her household, as defined in 26 CFR
1.36B-1(d), to verify whether the applicant is enrolled in an eligible
employer-sponsored plan or is eligible for qualifying coverage in an
eligible employer-sponsored plan for the benefit year for which
coverage is requested;
(B) Proceed with all other elements of the eligibility
determination using the applicant's attestation, and provide
eligibility for enrollment in a QHP to the extent that an applicant is
otherwise qualified;
(C) Ensure that advance payments of the premium tax credit and
cost-sharing reductions are provided on behalf of an applicant who is
otherwise qualified for such payments and reductions, as described in
Sec. 155.305, if the tax filer attests to the Exchange that he or she
understands that any advance payments of the premium tax credit paid on
his or her behalf are subject to reconciliation;
(D) Make reasonable attempts to contact any employer identified on
the application for the applicant and the members of his or her
household, as defined in 26 CFR 1.36B-1(d), to verify whether the
applicant is enrolled in an eligible employer-sponsored plan or is
eligible for qualifying coverage in an eligible employer-sponsored plan
for the benefit year for which coverage is requested;
(E) If the Exchange receives any information from an employer
relevant to the applicant's enrollment in an eligible employer-
sponsored plan or eligibility for qualifying coverage in an eligible
employer-sponsored plan, the Exchange must determine the applicant's
eligibility based on such information and in accordance with the
effective dates specified in Sec. 155.330(f), and if such information
changes his or her eligibility determination, notify the applicant and
his or her employer or employers of such determination in accordance
with the notice requirements specified in Sec. 155.310(g) and (h);
(F) If, after a period of 90 days from the date on which the notice
described in paragraph (d)(4)(i)(A) of this section is sent to the
applicant, the Exchange is unable to obtain the necessary information
from an employer, the Exchange must determine the applicant's
eligibility based on his or her attestation regarding coverage provided
by that employer.
(G) To carry out the process described in paragraph (d)(4)(i) of
this section, the Exchange must only disclose an individual's
information to an employer to the extent necessary for the employer to
identify the employee.
(ii) Establish an alternative process approved by HHS.
* * * * *
0
32. Section 155.335 is amended by revising paragraph (j) to read as
follows:
Sec. 155.335 Annual eligibility redetermination.
* * * * *
(j) Re-enrollment. If an enrollee remains eligible for enrollment
in a QHP through the Exchange upon annual redetermination and--
(1) The product under which the QHP in which he or she is enrolled
remains available through the Exchange for renewal, consistent with
Sec. 147.106 of this subchapter, such enrollee will have his or her
enrollment through the Exchange in a QHP under that product renewed,
unless he or she terminates coverage, including termination of coverage
in connection with voluntarily selecting a different QHP, in accordance
with Sec. 155.430. The Exchange will ensure that re-enrollment in
coverage under this paragraph (j)(1) occurs under the same product
(except as provided in paragraph (j)(1)(iii)(A) of this section) in
which the enrollee was enrolled, as follows:
(i) The enrollee's coverage will be renewed in the same plan as the
enrollee's current QHP, unless the current QHP is not available through
the Exchange.
(ii) If the enrollee's current QHP is not available through the
Exchange, the enrollee's coverage will be renewed in a QHP at the same
metal level as the enrollee's current QHP within the same product.
(iii) If the enrollee's current QHP is not available through the
Exchange and the enrollee's product no longer includes a QHP at the
same metal level as the enrollee's current QHP and--
(A) The enrollee's current QHP is a silver level plan, the enrollee
will be re-enrolled in a silver level QHP under a different product
offered by the same QHP issuer that is most similar to the enrollee's
current product. If no such silver level QHP is available for
enrollment through the Exchange, the enrollee's coverage will be
renewed in a QHP that is one metal level higher or lower than the
enrollee's current QHP under the same product;
(B) The enrollee's current QHP is not a silver level plan, the
enrollee's coverage will be renewed in a QHP that is one metal level
higher or lower than the enrollee's current QHP under the same product;
or
(iv) If the enrollee's current QHP is not available through the
Exchange and the enrollee's product no longer includes a QHP that is at
the same metal level as, or one metal level higher or lower than the
enrollee's current QHP, the enrollee's coverage will be renewed in any
other QHP offered under the product in which the enrollee's current
[[Page 12343]]
QHP is offered in which the enrollee is eligible to enroll.
(2) No plans under the product under which the QHP in which he or
she is enrolled are available through the Exchange for renewal,
consistent with Sec. 147.106 of this subchapter, such enrollee may be
enrolled in a QHP under a different product offered by the same QHP
issuer, to the extent permitted by applicable State law, unless he or
she terminates coverage, including termination of coverage in
connection with voluntarily selecting a different QHP, in accordance
with Sec. 155.430. The Exchange will ensure that re-enrollment in
coverage under this paragraph (j)(2) occurs as follows:
(i) The enrollee will be re-enrolled in a QHP at the same metal
level as the enrollee's current QHP in the product offered by the same
issuer that is the most similar to the enrollee's current product;
(ii) If the issuer does not offer another QHP at the same metal
level as the enrollee's current QHP, the enrollee will be re-enrolled
in a QHP that is one metal level higher or lower than the enrollee's
current QHP in the product offered by the same issuer through the
Exchange that is the most similar to the enrollee's current product; or
(iii) If the issuer does not offer another QHP through the Exchange
at the same metal level as, or one metal level higher or lower than the
enrollee's current QHP, the enrollee will be re-enrolled in any other
QHP offered by the same issuer in which the enrollee is eligible to
enroll.
(3) No QHPs from the same issuer are available through the
Exchange, the enrollee may be enrolled through the Exchange in a QHP
issued by a different issuer, to the extent permitted by applicable
State law, unless he or she terminates coverage, including termination
of coverage in connection with voluntarily selecting a different QHP,
in accordance with Sec. 155.430. The Exchange will ensure that re-
enrollment in coverage under this paragraph (j)(3) occurs as follows:
(i) As directed by the applicable State regulatory authority; or
(ii) If the applicable State regulatory authority declines to
provide direction, in a similar QHP from a different issuer, as
determined by the Exchange.
* * * * *
0
33. Section 155.400 is amended by revising paragraph (e) and adding
paragraphs (g) and (h) 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 a binder payment to effectuate an
enrollment or to add coverage retroactively to an already effectuated
enrollment. Exchanges may, and the Federally-facilitated Exchange will,
establish a standard policy for setting premium payment deadlines:
(1) In a Federally-facilitated Exchange:
(i) For prospective coverage to be effectuated under regular
coverage effective dates, as provided for in Sec. Sec. 155.410(f) and
155.420(b)(1), the binder payment must consist of the first month's
premium, and the deadline for making the binder payment must be no
earlier than the coverage effective date, and no later than 30 calendar
days from the coverage effective date.
(ii) For prospective coverage to be effectuated under special
effective dates, as provided for in Sec. 155.420(b)(2), the binder
payment must consist of the first month's premium, and the deadline for
making the binder payment must be no earlier than the coverage
effective date and no later than 30 calendar days from the date the
issuer receives the enrollment transaction or the coverage effective
date, whichever is later.
(iii) For coverage to be effectuated under retroactive effective
dates, as provided for in Sec. 155.420(b)(2), the binder payment must
consist of the premium due for all months of retroactive coverage
through the first prospective month of coverage, and the deadline for
making the binder payment must be no earlier than 30 calendar days from
the date the issuer receives the enrollment transaction. If only the
premium for one month of coverage is paid, only prospective coverage
should be effectuated, in accordance with regular effective dates.
(2) [Reserved]
* * * * *
(g) Premium payment threshold. Exchanges may, and the Federally-
facilitated Exchange will, allow issuers to implement, a premium
payment threshold policy under which issuers can consider enrollees to
have paid all amounts due if the enrollees pay an amount sufficient to
maintain a percentage of total premium paid out of the total premium
owed equal to or greater than a level prescribed by the issuer,
provided that the level is reasonable and that the level and the policy
are applied in a uniform manner to all enrollees. If an applicant or
enrollee satisfies the premium payment threshold policy, the issuer
may:
(1) Effectuate an enrollment based on payment of the binder payment
under paragraph (e) of this section.
(2) Avoid triggering a grace period for non-payment of premium, as
described by Sec. 156.270(d) of this subchapter or a grace period
governed by State rules.
(3) Avoid terminating the enrollment for non-payment of premium as,
described by Sec. Sec. 156.270(g) of this subchapter and
155.430(b)(2)(ii)(A) and (B).
(h) Requirements. A State Exchange may rely on HHS to carry out the
requirements of this section and other requirements contained within
this subpart through a Federal platform agreement.
0
34. Section 155.410 is amended by revising paragraphs (e)(2) and (f)(2)
and adding paragraphs (e)(3) to read as follows:
Sec. 155.410 Initial and annual open enrollment periods.
* * * * *
(e) * * *
(2) For the benefit years beginning on January 1, 2016, on January
1, 2017, and on January 1, 2018, the annual open enrollment period
begins on November 1 of the calendar year preceding the benefit year,
and extends through January 31 of the benefit year.
(3) For the benefit years beginning on January 1, 2019 and beyond,
the annual open enrollment period begins on November 1 and extends
through December 15 of the calendar year preceding the benefit year.
(f) * * *
(2) For benefit years beginning on or after January 1, 2016, the
Exchange must ensure that coverage is effective--
(i) January 1, for QHP selections received by the Exchange on or
before December 15 of the calendar year preceding the benefit year.
(ii) February 1, for QHP selections received by the Exchange from
December 16 of the calendar year preceding the benefit year through
January 15 of the benefit year.
(iii) March 1, for QHP selections received by the Exchange from
January 16 through January 31 of the benefit year.
* * * * *
0
35. Section 155.430 is amended by--
0
a. Adding paragraph (b)(1)(iv).
0
b. Revising paragraphs (b)(2)(ii)(A).
0
c. Redesignating paragraph (b)(2)(vi) as paragraph (b)(2)(vii).
0
d. Adding paragraphs (b)(2)(vi) and (d)(9), (10), (11), and (12).
The additions and revision read as follows:
[[Page 12344]]
Sec. 155.430 Termination of Exchange enrollment or coverage.
* * * * *
(b) * * *
(1) * * *
(iv) The Exchange must permit an enrollee to retroactively
terminate or cancel his or her coverage or enrollment in a QHP in the
following circumstances:
(A) The enrollee demonstrates to the Exchange that he or she
attempted to terminate his or her coverage or enrollment in a QHP and
experienced a technical error that did not allow the enrollee to
terminate his or her coverage or enrollment through the Exchange, and
requests retroactive termination within 60 days after he or she
discovered the technical error.
(B) The enrollee demonstrates to the Exchange that his or her
enrollment in a QHP through the Exchange was unintentional,
inadvertent, or erroneous and was the result of the error or misconduct
of an officer, employee, or agent of the Exchange or HHS, its
instrumentalities, or a non-Exchange entity providing enrollment
assistance or conducting enrollment activities. Such enrollee must
request cancellation within 60 days of discovering the unintentional,
inadvertent, or erroneous enrollment. For purposes of this paragraph
(b)(1)(iv)(B), misconduct includes the failure to comply with
applicable standards under this part, part 156 of this subchapter, or
other applicable Federal or State requirements as determined by the
Exchange.
(C) The enrollee demonstrates to the Exchange that he or she was
enrolled in a QHP without his or her knowledge or consent by any third
party, including third parties who have no connection with the
Exchange, and requests cancellation within 60 days of discovering of
the enrollment.
(2) * * *
(ii) * * *
(A) The exhaustion of the 3-month grace period, as described in
Sec. 156.270(d) and (g) of this subchapter, required for enrollees,
who when first failing to timely pay premiums, are receiving advance
payments of the premium tax credit.
* * * * *
(vi) The enrollee was enrolled in a QHP without his or her
knowledge or consent by a third party, including by a third party with
no connection with the Exchange.
* * * * *
(d) * * *
(9) In case of a retroactive termination in accordance with
paragraph (b)(1)(iv)(A) of this section, the termination date will be
no sooner than 14 days after the date that the enrollee can demonstrate
he or she contacted the Exchange to terminate his or her coverage or
enrollment through the Exchange, unless the issuer agrees to an earlier
effective date as set forth in paragraph (d)(2)(iii) of this section.
(10) In case of a retroactive cancellation or termination in
accordance with paragraph (b)(1)(iv)(B) or (C) of this section, the
cancellation date or termination date will be the original coverage
effective date or a later date, as determined appropriate by the
Exchange, based on the circumstances of the cancellation or
termination.
(11) In the case of cancellation in accordance with paragraph
(b)(2)(vi) of this section, the Exchange may cancel the enrollee's
enrollment upon its determination that the enrollment was performed
without the enrollee's knowledge or consent and following reasonable
notice to the enrollee (where possible). The termination date will be
the original coverage effective date.
(12) In the case of retroactive cancellations or terminations in
accordance with paragraphs (b)(1)(iv)(A), (B) and (C) of this section,
such terminations or cancellations for the preceding coverage year must
be initiated within a timeframe established by the Exchange based on a
balance of operational needs and consumer protection. This timeframe
will not apply to cases adjudicated through the appeals process.
* * * * *
0
36. Section 155.505 is amended by adding paragraphs (b)(1)(iii) and
(b)(5) and revising paragraph (b)(4) to read as follows:
Sec. 155.505 General eligibility appeals requirements.
* * * * *
(b) * * *
(1) * * *
(iii) A determination of eligibility for an enrollment period, made
in accordance with Sec. 155.305(b);
* * * * *
(4) A denial of a request to vacate dismissal made by a State
Exchange appeals entity in accordance with Sec. 155.530(d)(2), made
under paragraph (c)(2)(i) of this section; and
(5) An appeal decision issued by a State Exchange appeals entity in
accordance with Sec. 155.545(b), consistent with Sec. 155.520(c).
* * * * *
0
37. Section 155.510 is amended by revising paragraph (a)(1) to read as
follows:
Sec. 155.510 Appeals coordination.
(a) * * *
(1) Minimize burden on appellants, including not asking the
appellant to provide duplicative information or documentation that he
or she already provided to an agency administering an insurance
affordability program or eligibility appeals process, unless the
appeals entity, Exchange, or agency does not have access to the
information or documentation and cannot reasonably obtain it, and such
information is necessary to properly adjudicate an appeal;
* * * * *
0
38. Section 155.520 is amended by adding paragraph (d)(2)(i)(D) to read
as follows:
Sec. 155.520 Appeal requests.
* * * * *
(d) * * *
(2) * * *
(i) * * *
(D) That, in the event the appeal request is not valid due to
failure to submit by the date determined under paragraph (b) or (c) of
this section, as applicable, the appeal request may be considered valid
if the applicant or enrollee sufficiently demonstrates within a
reasonable timeframe determined by the appeals entity that failure to
timely submit was due to exceptional circumstances and should not
preclude the appeal.
* * * * *
0
39. Section 155.530 is amended by revising paragraph (a)(4) to read as
follows:
Sec. 155.530 Dismissals.
(a) * * *
(4) Dies while the appeal is pending, except if the executor,
administrator, or other duly authorized representative of the estate
requests to continue the appeal.
* * * * *
0
40. Section 155.535 is amended by revising paragraphs (a) introductory
text and (b) to read as follows:
Sec. 155.535 Informal resolution and hearing requirements.
(a) Informal resolution. The HHS appeals process will provide an
opportunity for informal resolution and a hearing in accordance with
the requirements of this section. A State Exchange appeals entity may
also provide an informal resolution process prior to a hearing. Any
information resolution process must meet the following requirements:
* * * * *
(b) Notice of hearing. When a hearing is scheduled, the appeals
entity must
[[Page 12345]]
send written notice to the appellant and the appellant's authorized
representative, if any, of the date, time, and location or format of
the hearing no later than 15 days prior to the hearing date unless--
(1) The appellant requests an earlier hearing date; or
(2) A hearing date sooner than 15 days is necessary to process an
expedited appeal, as described in Sec. 155.540(a), and the appeals
entity has contacted the appellant to schedule a hearing on a mutually
agreed upon date, time, and location or format.
* * * * *
0
41. Section 155.545 is amended by revising paragraphs (b)(1) and
(c)(1)(i) and (ii) to read as follows:
Sec. 155.545 Appeal decisions.
* * * * *
(b) * * *
(1) Must issue written notice of the appeal decision to the
appellant within 90 days of the date an appeal request under Sec.
155.520(b) or (c) is received, as administratively feasible.
* * * * *
(c) * * *
(1) * * *
(i) Prospectively, on the first day of the month following the date
of the notice of appeal decision, or consistent with Sec.
155.330(f)(2), (3), (4), or (5), if applicable; or
(ii) Retroactively, to the coverage effective date the appellant
did receive or would have received if the appellant had enrolled in
coverage under the incorrect eligibility determination that is the
subject of the appeal, at the option of the appellant.
* * * * *
0
42. Section 155.555 is amended by revising paragraphs (e)(1)
introductory text and (l) to read as follows:
Sec. 155.555 Employer appeals process.
* * * * *
(e) * * *
(1) Upon receipt of a valid appeal request under this section, or
upon receipt of the notice under paragraph (d)(1)(iii) of this section,
the Exchange must promptly transmit via secure electronic interface to
the appeals entity--
* * * * *
(l) Implementation of the appeal decision. After receipt of the
notice under paragraph (k)(3) of this section, if the appeal decision
affects the employee's eligibility, the Exchange must promptly:
(1) Redetermine the employee's eligibility and the eligibility of
the employee's household members, if applicable, in accordance with the
standards specified in Sec. 155.305; or
(2) Notify the employee of the requirement to report changes in
eligibility as described in Sec. 155.330(b)(1).
* * * * *
0
43. Section 155.605 is amended by--
0
a. In paragraph (b), removing the reference ``paragraphs (c)(2),
(f)(2), and (g) of this section'' and adding in its place the reference
``paragraphs (c)(2) and (d) of this section'';
0
b. Removing paragraphs (d), (e), and (f);
0
c. Redesignating paragraph (g) as paragraph (d);
0
d. Revising newly redesignated paragraph (d); and
0
e. Adding paragraph (e).
The revision and addition read as follows:
Sec. 155.605 Eligibility standards for exemptions.
* * * * *
(d) Hardship--(1) General. The Exchange must grant a hardship
exemption to an applicant eligible for an exemption for at least the
month before, the month or months during which, and the month after a
specific event or circumstance, if the Exchange determines that:
(i) He or she experienced financial or domestic circumstances,
including an unexpected natural or human-caused event, such that he or
she had a significant, unexpected increase in essential expenses that
prevented him or her from obtaining coverage under a qualified health
plan;
(ii) The expense of purchasing a qualified health plan would have
caused him or her to experience serious deprivation of food, shelter,
clothing or other necessities; or
(iii) He or she has experienced other circumstances that prevented
him or her from obtaining coverage under a qualified health plan.
(2) Lack of affordable coverage based on projected income. The
Exchange must determine an applicant eligible for an exemption for a
month or months during which he or she, or another individual the
applicant attests will be included in the applicant's family, as
defined in 26 CFR 1.36B-1(d), is unable to afford coverage in
accordance with the standards specified in section 5000A(e)(1) of the
Code, provided that--
(i) Eligibility for this exemption is based on projected annual
household income;
(ii) An eligible employer-sponsored plan is only considered under
paragraphs (d)(4)(iii) and (iv) of this section if it meets the minimum
value standard described in Sec. 156.145 of this subchapter.
(iii) For an individual who is eligible to purchase coverage under
an eligible employer-sponsored plan, the Exchange determines the
required contribution for coverage such that--
(A) An individual who uses tobacco is treated as not earning any
premium incentive related to participation in a wellness program
designed to prevent or reduce tobacco use that is offered by an
eligible employer-sponsored plan;
(B) Wellness incentives offered by an eligible employer-sponsored
plan that do not relate to tobacco use are treated as not earned;
(C) In the case of an employee who is eligible to purchase coverage
under an eligible employer-sponsored plan sponsored by the employee's
employer, the required contribution is the portion of the annual
premium that the employee would pay (whether through salary reduction
or otherwise) for the lowest cost self-only coverage.
(D) In the case of an individual who is eligible to purchase
coverage under an eligible employer-sponsored plan as a member of the
employee's family, as defined in 26 CFR 1.36B-1(d), the required
contribution is the portion of the annual premium that the employee
would pay (whether through salary reduction or otherwise) for the
lowest cost family coverage that would cover the employee and all other
individuals who are included in the employee's family who have not
otherwise been granted an exemption through the Exchange.
(iv) For an individual who is ineligible to purchase coverage under
an eligible employer-sponsored plan, the Exchange determines the
required contribution for coverage in accordance with section
5000A(e)(1)(B)(ii) of the Code, inclusive of all members of the family,
as defined in 26 CFR 1.36B-1(d), who have not otherwise been granted an
exemption through the Exchange and who are not treated as eligible to
purchase coverage under an eligible employer-sponsored plan, in
accordance with paragraph (d)(4)(ii) of this section; and
(v) The applicant applies for this exemption prior to the last date
on which he or she could enroll in a QHP through the Exchange for the
month or months of a calendar year for which the exemption is
requested.
(vi) The Exchange must make an exemption in this category available
prospectively, and provide it for all remaining months in a coverage
year, notwithstanding any change in an individual's circumstances.
[[Page 12346]]
(3) Ineligible for Medicaid based on a State's decision not to
expand. The Exchange must determine an applicant eligible for an
exemption for a calendar year if he or she would be determined
ineligible for Medicaid for one or more months during the benefit year
solely as a result of a State not implementing section 2001(a) of the
Affordable Care Act.
(e) Eligibility for an exemption through the IRS. Hardship
exemptions in this paragraph (e) can be claimed on a Federal income tax
return without obtaining an exemption certificate number. The IRS may
allow an individual to claim the hardship exemptions described in this
paragraph (e) without requiring an exemption certificate number from
the Exchange.
(1) Filing threshold. The IRS may allow an applicant to claim an
exemption specified in HHS Guidance published September 18, 2014,
entitled, ``Shared Responsibility Guidance--Filing Threshold Hardship
Exemption,'' and in IRS Notice 2014-76, section B (see https://www.cms.gov/cciio/).
(2) Self-only coverage in an eligible employer-sponsored plan. The
IRS may allow an applicant to claim an exemption specified in HHS
Guidance published November 21, 2014, entitled, ``Guidance on Hardship
Exemptions for Persons Meeting Certain Criteria,'' and in IRS Notice
2014-76, section A (see https://www.cms.gov/cciio/).
(3) Eligible for services through an Indian health care provider.
The IRS may allow an applicant to claim the exemption specified in HHS
Guidance published September 18, 2014, entitled, ``Shared
Responsibility Guidance--Exemption for Individuals Eligible for
Services through an Indian Health Care Provider,'' and in IRS Notice
2014-76, section E (see https://www.cms.gov/cciio/).
(4) Ineligible for Medicaid based on a State's decision not to
expand. The IRS may allow an applicant to claim the exemption specified
in HHS Guidance published November 21, 2014, entitled, ``Guidance on
Hardship Exemptions for Persons Meeting Certain Criteria,'' and in IRS
Notice 2014-76, section F (see https://www.cms.gov/cciio/).
0
44. Section 155.610 is amended by revising paragraph (h)(1) and adding
paragraph (k) to read as follows:
Sec. 155.610 Eligibility process for exemptions.
* * * * *
(h) * * *
(1) Except for the exemptions described in Sec. 155.605(c) and
(d), after December 31 of a given calendar year, the Exchange may
decline to accept an application for an exemption that is available
retrospectively for months for such calendar year, and must provide
information to individuals regarding how to claim an exemption through
the tax filing process.
* * * * *
(k) Incomplete application. (1) If an applicant submits an
application that does not include sufficient information for the
Exchange to conduct a determination for eligibility of an exemption the
Exchange must--
(i) Provide notice to the applicant indicating that information
necessary to complete an eligibility determination is missing,
specifying the missing information, and providing instructions on how
to provide the missing information; and
(ii) Provide the applicant with a period of no less than 30 and no
more than 90 days, in the reasonable discretion of the Exchange, from
the date on which the notice described in paragraph (k)(1) of this
section is sent to the applicant to provide the information needed to
complete the application to the Exchange; and
(iii) Not proceed with the applicant's eligibility determination
during the period described in paragraph (k)(2) of this section.
(2) If the Exchange does not receive the requested information
within the time allotted in paragraph (k)(1)(ii) of this section, the
Exchange must notify the applicant in writing that the Exchange cannot
process the application and provide appeal rights to the applicant.
0
45. Section 155.615 is amended by--
0
a. Removing paragraphs (c), (d), and (e).
0
b. Redesignating paragraphs (f), (g), (h), (i), (j), and (k) as
paragraphs (c), (d), (e), (f), (g), and (h), respectively.
0
c. Revising the paragraph heading for newly redesignated paragraph (c)
and paragraph (c)(1).
0
d. Removing and reserving newly redesignated paragraph (c)(3).
The revision and addition read as follows:
Sec. 155.615 Verification process related to eligibility for
exemptions.
* * * * *
(c) Verification related to exemption for hardship--(1) In general.
For any applicant who requests an exemption based on hardship, except
for the hardship exemptions described in Sec. 155.605(d)(1)(i) and
(iv), the Exchange must verify whether he or she has experienced the
hardship to which he or she is attesting.
* * * * *
0
46. Section 155.625 is amended by revising paragraphs (a)(2) and (b)
and adding paragraph (c) to read as follows:
Sec. 155.625 Options for conducting eligibility determinations for
exemptions.
(a) * * *
(2) By use of the HHS service under paragraph (b) of this section.
(b) Use of HHS service. Notwithstanding the requirements of this
subpart, the Exchange may adopt an exemption eligibility determination
made by HHS.
(c) Administration of hardship exemption based on affordability.
States may choose to administer the hardship exemption under Sec.
155.605(d)(2) only and delegate to HHS all other exemption
determinations generally administered by HHS.
0
47. Section 155.705 is amended by--
0
a. Adding paragraphs (b)(3)(viii), (ix), and (x).
0
b. In paragraph (b)(4)(ii)(B), removing the semicolon and adding a
colon in its place.
0
c. Adding paragraphs (b)(4)(ii)(B)(1) and (2).
0
d. Revising paragraphs (b)(4)(ii)(C)(2) and (b)(11)(ii)(A), (B), (C),
and (D).
0
e. Removing paragraph (b)(11)(ii)(E).
The revisions and additions read as follows:
Sec. 155.705 Functions of a SHOP.
* * * * *
(b) * * *
(3) * * *
(viii) For plan years beginning on or after January 1, 2017, a
Federally-facilitated SHOP will provide a qualified employer a choice
of at least the two methods to make QHPs available to qualified
employees and their dependents described in paragraphs (b)(3)(viii)(A)
and (B) of this section, and may also provide a qualified employer with
a choice of a third method to make QHPs available to qualified
employees and their dependents as described in paragraph
(b)(3)(viii)(C) of this section.
(A) The employer may choose a level of coverage as described in
paragraph (b)(2) of this section;
(B) The employer may choose a single QHP; or
(C) The employer may offer its qualified employees a choice of all
QHPs offered through a Federally-facilitated SHOP by a single issuer
across all available levels of coverage, as described in section
1302(d)(1) of the Affordable Care Act and implemented in Sec.
156.140(b) of this subchapter. A State with a Federally-facilitated
SHOP may recommend that the Federally-facilitated SHOP not make this
[[Page 12347]]
additional option available in that State, by submitting a letter to
HHS in advance of the annual QHP certification application deadline, by
a date to be established by HHS. The State's letter must describe and
justify the State's recommendation, based on the anticipated impact
this additional option would have on the small group market and
consumers.
(ix) For plan years beginning on or after January 1, 2017, a
Federally-facilitated SHOP will provide a qualified employer a choice
of at least the two methods to make stand-alone dental plans available
to qualified employees and their dependents described in paragraphs
(b)(3)(ix)(A) and (B) of this section, and may also provide a qualified
employer with a choice of a third method to make stand-alone dental
plans available to qualified employees and their dependents as
described in paragraph (b)(3)(ix)(C) of this section.
(A) The employer may choose to make available a single stand-alone
dental plan;
(B) The employer may choose to make available all stand-alone
dental plans offered through a Federally-facilitated SHOP at a level of
coverage as described in Sec. 156.150(b)(2) of this subchapter; or
(C) The employer may offer its qualified employees a choice of all
stand-alone dental plans offered through a Federally-facilitated SHOP
by a single issuer across all available levels of coverage, as
described in Sec. 156.150(b)(2) of this subchapter. A State with a
Federally-facilitated SHOP may recommend that the Federally-facilitated
SHOP not make this additional option available in that State, by
submitting a letter to HHS in advance of the annual QHP certification
application deadline, by a date to be established by HHS. The State's
letter must describe and justify the State's recommendation, based on
the anticipated impact this additional option would have on the small
group market and consumers.
(x) States operating a State-based Exchange utilizing the Federal
platform for SHOP enrollment functions will have the same employer
choice models available as States with a Federally-facilitated SHOP,
except that a State with a State-based Exchange utilizing the Federal
platform for SHOP enrollment functions may decide against offering the
employer choice models specified in paragraphs (b)(3)(viii)(C) and
(b)(3)(ix)(C) of this section in that State, provided that the State
notifies HHS of that decision in advance of the annual QHP
certification application deadline, by a date to be established by HHS.
(4) * * *
(ii) * * *
(B) * * *
(1) In a Federally-facilitated SHOP, payment for the group's first
month of coverage must be received by the premium aggregation services
vendor on or before the 20th day of the month prior to the month that
coverage begins.
(2) In a Federally-facilitated SHOP, when coverage is effectuated
retroactively, payment for the first month's coverage and all months of
the retroactive coverage must be received and processed no later than
30 days after the event that triggers the eligibility for retroactive
coverage. If payment is received on or before the 20th day of a month,
coverage will be effectuated upon the first day of the following month
retroactive to the effective date of coverage. If payment is received
after the 20th day of a month, coverage will be effectuated upon the
first day of the second following month retroactive to the effective
date of coverage, provided that the payment includes the premium for
the intervening month.
(C) * * *
(2) The number of days for which coverage is being provided in the
month described in paragraph (b)(4)(ii)(C)(1) of this section.
* * * * *
(11) * * *
(ii) * * *
(A) When the employer offers a single plan to qualified employees,
the employer must use a fixed contribution methodology under which the
employer contributes a fixed percentage of the plan's premium for each
qualified employee and, if applicable, for each dependent of a
qualified employee. The employer's contribution is calculated based on
an enrollee's premium before any applicable tobacco surcharge, based on
the total premium owed for the enrollee, is applied.
(B) When the employer offers a choice of plans to qualified
employees, the employer may use a fixed contribution methodology or a
reference plan contribution methodology. Under the fixed contribution
methodology, the employer contributes a fixed percentage of the
premiums for each qualified employee and, if applicable, for each
dependent of a qualified employee, across all plans in which any
qualified employee, and, if applicable, any dependent of a qualified
employee, is enrolled. Under the reference plan contribution
methodology, the employer will select a plan from among the plans
offered by the employer as described in paragraphs (b)(2) and (3) of
this section to serve as a reference plan on which contributions will
be based, and then will define a percentage contribution toward
premiums under the reference plan; the resulting contribution amounts
under the reference plan will be applied toward any plan in which a
qualified employee or, if applicable, any dependent of a qualified
employee, is enrolled, up to the lesser of the contribution amount or
the total amount of any premium for the selected plan before
application of a tobacco surcharge, if applicable. The employer's
contribution is calculated based on an enrollee's premium before any
applicable tobacco surcharge, based on the total premium owed for the
enrollee, is applied.
(C) The employer will define a percentage contribution toward
premiums for employee-only coverage and, if dependent coverage is
offered, a percentage contribution toward premiums for dependent
coverage. To the extent permitted by other applicable law, for plan
years beginning on or after January 1, 2015, a Federally-facilitated
SHOP may permit an employer to define a different percentage
contribution for full-time employees from the percentage contribution
it defines for non-full-time employees, and it may permit an employer
to define a different percentage contribution for dependent coverage
for full-time employees from the percentage contribution it defines for
dependent coverage for non-full-time employees.
(D) A Federally-facilitated SHOP may permit employers to base
contributions on a calculated composite premium for employees, for
adult dependents, and for dependents below age 21.
* * * * *
0
48. Section 155.715 is amended by revising paragraph (g)(1) to read as
follows:
Sec. 155.715 Eligibility determination process for SHOP.
* * * * *
(g) * * *
(1) Each QHP terminates the enrollment through the SHOP of the
employer's enrollees enrolled in a QHP through the SHOP; and
* * * * *
0
49. Section 155.725 is amended by revising paragraphs (c), (e), (h)(2),
(i)(1) introductory text, and (j)(2)(i) to read as follows:
Sec. 155.725 Enrollment periods under SHOP.
* * * * *
(c) Annual employer election period. The SHOP must provide
qualified
[[Page 12348]]
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--
(1) The method by which the qualified employer makes QHPs available
to qualified employees pursuant to Sec. 155.705(b)(2) and (3);
(2) The employer contribution towards the premium cost of coverage;
(3) The level of coverage offered to qualified employees as
described in Sec. 155.705(b)(2) and (3); and
(4) The QHP or QHPs offered to qualified employees in accordance
with Sec. 155.705.
* * * * *
(e) Annual employee open enrollment period. (1) 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.
(2) Qualified employers in a Federally-facilitated SHOP must
provide qualified employees with an annual open enrollment period of at
least one week.
* * * * *
(h) * * *
(2) For a group enrollment received by the Federally-facilitated
SHOP from a qualified employer at the time of an initial group
enrollment or renewal:
(i) Between the first and fifteenth day of any month, the
Federally-facilitated SHOP must ensure a coverage effective date of the
first day of the following month unless the employer opts for a later
effective date within a quarter for which small group market rates are
available.
(ii) Between the 16th and last day of any month, the Federally-
facilitated SHOP must ensure a coverage effective date of the first day
of the second following month unless the employer opts for a later
effective date within a quarter for which small group market rates are
available.
(i) * * *
(1) If a qualified employee enrolled in a QHP through the SHOP
remains eligible for enrollment through the SHOP in coverage offered by
the same qualified employer, the SHOP may provide for a process under
which the employee will remain in the QHP selected the previous year,
unless--
* * * * *
(j) * * *
(2) * * *
(i) Experiences an event described in Sec. 155.420(d)(1) (other
than paragraph (d)(1)(ii)), or experiences an event described in Sec.
155.420(d)(2), (4), (5), (7), (8), or (9);
* * * * *
0
50. Section 155.735 is amended by revising paragraph (c)(2)
introductory text and paragraph (d)(2) to read as follows:
Sec. 155.735 Termination of SHOP enrollment or coverage.
* * * * *
(c) * * *
(2) In an FF-SHOP, for premium payments other than payments for the
first month of coverage--
* * * * *
(d) * * *
(2) In the FF-SHOP, termination is effective:
(i) In the case of a termination in accordance with paragraphs
(d)(1)(i), (ii), (iii), and (v) of this section, termination is
effective on the last day of the month in which the Federally-
facilitated SHOP receives notice of the event described in paragraph
(d)(1)(i), (ii), (iii), or (v) of this section.
(ii) In the case of a termination in accordance with paragraph
(d)(1)(iv) 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 for any retroactive enrollments effectuated
under Sec. 155.725(j)(5).
(iii) The FF-SHOP will send qualified employees a notice notifying
them in advance of a child dependent's loss of eligibility for
dependent child coverage under their plan because of age. The notice
will be sent 90 days in advance of the date when the dependent enrollee
would lose eligibility for dependent child coverage. The enrollee will
also receive a separate termination notice when coverage is terminated,
under Sec. 155.735(g).
* * * * *
0
51. Section 155.740 is amended by revising paragraphs (c)(2), (d)(2),
and (l)(3) to read as follows:
Sec. 155.740 SHOP employer and employee eligibility appeals
requirements.
* * * * *
(c) * * *
(2) A failure by the SHOP to provide a timely eligibility
determination or a timely notice of an eligibility determination in
accordance with Sec. 155.715(e).
(d) * * *
(2) A failure by the SHOP to provide a timely eligibility
determination or a timely notice of an eligibility determination in
accordance with Sec. 155.715(f).
* * * * *
(l) * * *
(3) Be effective as follows:
(i) If an employer is found eligible under the decision, then at
the employer's option, the effective date of coverage or enrollment
through the SHOP under the decision can either be made retroactive to
the effective date of coverage or enrollment through the SHOP that the
employer would have had if the employer had been correctly determined
eligible, or prospective to the first day of the month following the
date of the notice of the appeal decision.
(ii) For employee appeal decisions only, if an employee is found
eligible under the decision, then at the employee's option, the
effective date of coverage or enrollment through the SHOP under the
decision can either be made effective retroactive to the effective date
of coverage or enrollment through the SHOP that the employee would have
had if the employee had been correctly determined eligible, or
prospective to the first day of the month following the date of the
notice of the appeal decision.
(iii) If the employer or employee is found ineligible under the
decision, then the appeal decision is effective as of the date of the
notice of the appeal decision.
* * * * *
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
52. 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
53. Section 156.50 amended by revising paragraph (c) to read as
follows:
Sec. 156.50 Financial support.
* * * * *
(c) Requirement for Federally-facilitated Exchange user fee. (1) To
support the functions of Federally-facilitated Exchanges, a
participating issuer offering a plan through a Federally-facilitated
Exchange must remit a user fee to HHS each month, in the timeframe and
manner established by HHS, equal to the product of the monthly user fee
rate specified in the annual HHS notice of benefit and payment
parameters for Federally-facilitated Exchanges for the applicable
benefit year and the monthly premium
[[Page 12349]]
charged by the issuer for each policy under the plan where enrollment
is through a Federally-facilitated Exchange.
(2) To support the functions of State-based Exchanges on the
Federal platform, unless the State-based Exchange and HHS agree on an
alternative mechanism to collect the funds, a participating issuer
offering a plan through a State-based Exchange that elects to utilize
the Federal Exchange platform for certain Exchange functions described
in Sec. 155.200 of this subchapter, as specified in a Federal platform
agreement, must remit a user fee to HHS, in the timeframe and manner
established by HHS, equal to the product of the sum of the monthly user
fee rate specified in the annual HHS notice of benefit and payment
parameters for State-based Exchanges that use the Federal platform for
the applicable benefit year plus, if a written request is made by a
State, any additional user fee rate that HHS will collect on behalf of
the State-based Exchange, multiplied by the monthly premium charged by
the issuer for each policy under the plan where enrollment is through
the State-based Exchange on the Federal platform.
* * * * *
0
54. Section 156.80 is amended by revising paragraph (d)(3)(ii) to read
as follows:
Sec. 156.80 Single risk pool.
* * * * *
(d) * * *
(3) * * *
(ii) A health insurance issuer in the small group market (not
including a merged market) may establish index rates and make the
marketwide adjustments under paragraph (d)(1) of this section, and make
the plan-level adjustments under paragraph (d)(2) of this section, no
more frequently than quarterly. Any changes to rates must have
effective dates of January 1, April 1, July 1, or October 1. Such rates
may only apply to coverage issued or renewed on or after the rate
effective date and will apply for the entire plan year of the group
health plan.
* * * * *
0
55. Section 156.115 is amended by revising paragraph (a)(5)
introductory text to read as follows:
Sec. 156.115 Provision of EHB.
(a) * * *
(5) With respect to habilitative services and devices--
* * * * *
0
56. Section 156.122 is amended by adding paragraph (c)(4) to read as
follows:
Sec. 156.122 Prescription drug benefit.
* * * * *
(c) * * *
(4) Application of coverage appeals laws. (i) A State may determine
that a health plan in the State satisfies the requirements of this
paragraph (c) if the health plan has a process to allow an enrollee to
request and gain access to clinically appropriate drugs not otherwise
covered by the health plan that is compliant with the State's
applicable coverage appeals laws and regulations that are at least as
stringent as the requirements of this paragraph (c) and include:
(A) An internal review;
(B) An external review;
(C) The ability to expedite the reviews; and
(D) Timeframes that are the same or shorter than the timeframes
under paragraphs (c)(1)(ii) and (c)(2)(iii) of this section.
* * * * *
0
57. Section 156.135 is amended by revising paragraph (g) to read as
follows:
Sec. 156.135 AV calculation for determining level of coverage.
* * * * *
(g) Updates to the AV Calculator. HHS will update the AV Calculator
annually for material changes that may include costs, plan designs, the
standard population, developments in the function and operation of the
AV Calculator and other actuarially relevant factors.
0
58. Section 156.150 is amended by adding paragraphs (a)(1) and (2),
(c), and (d) to read as follows:
Sec. 156.150 Application to stand-alone dental plans inside the
Exchange.
(a) * * *
(1) For plan years beginning after 2017, for one covered child--the
dollar limit applicable to a stand-alone dental plan for one covered
child specified in this paragraph (a) increased by the percent increase
of the consumer price index for dental services for the year 2 years
prior to the applicable plan year over the consumer price index for
dental services for 2016.
(2) For plan years after 2017, for two or more covered children--
twice the dollar limit for one child described in paragraph (a)(1) of
this section.
* * * * *
(c) Consumer price index for dental services defined. The consumer
price index for dental services is a sub-component of the U.S.
Department of Labor's Bureau of Labor Statistics Consumer Price Index
specific to dental services.
(d) Increments of cost sharing increases. Any increase in the
annual dollar limits described in paragraph (a)(1) of this section that
does not result in a multiple of 25 dollars will be rounded down, to
the next lowest multiple of 25 dollars.
0
59. Section 156.230 is amended by adding paragraphs (d) and (e) to read
as follows:
Sec. 156.230 Network adequacy standards.
* * * * *
(d) Provider transitions. A QHP issuer in a Federally-facilitated
Exchange must--
(1) Make a good faith effort to provide written notice of
discontinuation of a provider 30 days prior to the effective date of
the change or otherwise as soon as practicable, to enrollees who are
patients seen on a regular basis by the provider or who receive primary
care from the provider whose contract is being discontinued,
irrespective of whether the contract is being discontinued due to a
termination for cause or without cause, or due to a non-renewal;
(2) In cases where a provider is terminated without cause, allow an
enrollee in an active course of treatment to continue treatment until
the treatment is complete or for 90 days, whichever is shorter, at in-
network cost-sharing rates.
(i) For the purposes of paragraph (d)(2) of this section, active
course of treatment means:
(A) An ongoing course of treatment for a life-threatening
condition, defined as a disease or condition for which likelihood of
death is probable unless the course of the disease or condition is
interrupted;
(B) An ongoing course of treatment for a serious acute condition,
defined as a disease or condition requiring complex ongoing care which
the covered person is currently receiving, such as chemotherapy,
radiation therapy, or post-operative visits;
(C) The second or third trimester of pregnancy, through the
postpartum period; or
(D) An ongoing course of treatment for a health condition for which
a treating physician or health care provider attests that discontinuing
care by that physician or health care provider would worsen the
condition or interfere with anticipated outcomes.
(ii) Any QHP issuer decision made for a request for continuity of
care under paragraph (d)(2) of this section must be subject to the
health benefit plan's
[[Page 12350]]
internal and external grievance and appeal processes in accordance with
applicable State or Federal law or regulations.
(e) Out-of-network cost sharing. Beginning for the 2018 and later
benefit years, for a network to be deemed adequate, each QHP that uses
a provider network must:
(1) Notwithstanding Sec. 156.130(c), count the cost sharing paid
by an enrollee for an essential health benefit provided by an out-of-
network ancillary provider in an in-network setting towards the
enrollee's annual limitation on cost sharing; or
(2) Provide a written notice to the enrollee by the longer of when
the issuer would typically respond to a prior authorization request
timely submitted, or 48 hours before the provision of the benefit, that
additional costs may be incurred for an essential health benefit
provided by an out-of- network ancillary provider in an in-network
setting, including balance billing charges, unless such costs are
prohibited under State law, and that any additional charges may not
count toward the in-network annual limitation on cost sharing.
0
60. Section 156.235 is amended by revising paragraphs (a)(2)(i) and
(b)(2)(i) to read as follows:
Sec. 156.235 Essential community providers.
(a) * * *
(2) * * *
(i) The network includes as participating practitioners at least a
minimum percentage, as specified by HHS, of available essential
community providers in each plan's service area. For plan years
beginning prior to January 1, 2018, multiple providers at a single
location will count as a single essential community provider toward
both the available essential community providers in the plan's service
area and the issuer's satisfaction of the essential community provider
participation standard. For plan years beginning on or after January 1,
2018, multiple contracted or employed full-time equivalent
practitioners at a single location will count toward both the available
essential community providers in the plan's service area and the
issuer's satisfaction of the essential community provider participation
standard; and
* * * * *
(b) * * *
(2) * * *
(i) The number of its providers that are located in Health
Professional Shortage Areas or five-digit zip codes in which 30 percent
or more of the population falls below 200 percent of the Federal
Poverty Line satisfies a minimum percentage, specified by HHS, of
available essential community provider in the plan's service area. For
plan years beginning prior to January 1, 2018, multiple providers at a
single location will count as a single essential community provider
toward both the available essential community providers in the plan's
service area and the issuer's satisfaction of the essential community
provider participation standard. For plan years beginning on or after
January 1, 2018, multiple contracted or employed full-time equivalent
practitioners at a single location will count toward both the available
essential community providers in the plan's service area and the
satisfaction of the essential community provider participation
standard; and
* * * * *
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61. Section 156.265 is amended by revising paragraph (b)(2)(ii) and
adding paragraphs (b)(3) through (5) to read as follows:
Sec. 156.265 Enrollment process for qualified individuals.
* * * * *
(b) * * *
(2) * * *
(ii) Ensure the applicant's completion of an eligibility
verification and enrollment application through the Exchange Internet
Web site as described in Sec. 155.405, or ensure that the eligibility
application information is submitted for an eligibility determination
through the Exchange-approved Web service subject to meeting the
requirements in paragraph (b)(3) through (5) of this section;
(3) When an Internet Web site of an issuer is used to complete the
Exchange eligibility application outlined in this section, at a
minimum, the Internet Web site must:
(i) Use exactly the same eligibility application language as
appears in the FFE Single Streamlined Application required in Sec.
155.405 of this subchapter, unless HHS approves a deviation;
(ii) Ensure that all necessary information for the consumer's
applicable eligibility circumstances are submitted through the
Exchange-approved Web service; and
(iii) Ensure that the process used for consumers to complete the
eligibility application complies with all applicable Exchange
standards, including Sec. Sec. 155.230 and 155.260(b) of this
subchapter.
(4) An issuer must obtain HHS approval that the requirements of
this section have been met prior to completing an applicant's
eligibility application through the issuer's Internet Web site.
(5) HHS or its designee may periodically monitor and audit an
agent, broker, or issuer to assess its compliance with the applicable
requirements of this section.
* * * * *
0
62. Section 156.270 is amended by revising paragraphs (d) introductory
text and (g) to read as follows:
Sec. 156.270 Termination of coverage or enrollment for qualified
individuals.
* * * * *
(d) Grace period for recipients of advance payments of the premium
tax credit. A QHP issuer must provide a grace period of 3 months for an
enrollee, who when failing to timely pay premiums, is receiving advance
payments of the premium tax credit. During the grace period, the QHP
issuer must:
* * * * *
(g) Exhaustion of grace period. If an enrollee receiving advance
payments of the premium tax credit exhausts the 3-month grace period in
paragraph (d) of this section without paying all outstanding premiums,
subject to a premium payment threshold implemented under Sec.
155.400(g) of this subchapter, if applicable, the QHP issuer must
terminate the enrollee's enrollment through the Exchange on the
effective date described in Sec. 155.430(d)(4) of this subchapter,
provided that the QHP issuer meets the notice requirement specified in
paragraph (b) of this section.
* * * * *
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63. Section 156.285 is amended by revising paragraph (c)(5) and
removing and reserving paragraph (d)(2) to read as follows:
Sec. 156.285 Additional standards specific to SHOP.
* * * * *
(c) * * *
(5) Send enrollment reconciliation files on at least a monthly
basis, and, in a Federally-facilitated SHOP, according to a process,
timeline, and file format established by the Federally-facilitated
SHOP;
* * * * *
0
64. Section 156.298 is amended by--
0
a. Revising paragraph (b)(4).
0
b. Removing paragraph (b)(5).
0
c. Redesignating paragraph (b)(6) as paragraph (b)(5).
0
d. Revising newly redesignated paragraph (b)(5).
The revisions read as follows:
[[Page 12351]]
Sec. 156.298 Meaningful difference standard for Qualified Health
Plans in the Federally-facilitated Exchanges.
* * * * *
(b) * * *
(4) Plan type; or
(5) Child-only versus non Child-only plan offerings.
* * * * *
0
65. The heading of subpart D is revised to read as follows:
Subpart D--Standards for Qualified Health Plan Issuers on
Federally-Facilitated Exchanges and State-Based Exchanges on the
Federal Platform
0
66. Section 156.350 is added to read as follows:
Sec. 156.350 Eligibility and enrollment standards for Qualified
Health Plan issuers on State-based Exchanges on the Federal platform.
(a) In order to participate in a State-based Exchange on the
Federal platform, a QHP issuer must comply with HHS regulations, and
guidance pertaining to issuer eligibility and enrollment functions as
if the issuer were an issuer of a QHP on a Federally-facilitated
Exchange. These requirements include--
(1) Section 156.285(a)(4)(ii) regarding the premiums for plans
offered on the SHOP;
(2) Section 156.285(c)(8)(iii) regarding enrollment process for
SHOP; and
(3) Section 156.715 regarding compliance reviews of QHP issuers, to
the extent relating directly to applicable eligibility and enrollment
functions.
(b) HHS will permit issuers of QHPs in each State-based Exchange on
the Federal platform to directly enroll applicants in a manner that is
considered to be through the Exchange, as if the issuers were issuers
of QHPs on Federally-facilitated Exchanges under Sec. 156.1230(a), to
the extent permitted by applicable State law.
(c) If the State-based Exchange on the Federal platform does not
substantially enforce a requirement in paragraph (a) of this section
against the issuer or plan, then HHS may do so, in accordance with the
enforcement remedies in subpart I of this part, subject to the
administrative review process in subpart J of this part.
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67. Section 156.805 is amended by revising paragraph (d) to read as
follows:
Sec. 156.805 Bases and process for imposing civil money penalties in
Federally-facilitated Exchanges.
* * * * *
(d) Request for hearing. (1) An issuer may appeal the assessment of
a civil money penalty under this section by filing a request for
hearing under an applicable administrative hearing process.
(2) If an issuer files a request for hearing under this paragraph
(d), the assessment of a civil money penalty will not occur prior to
the issuance of the final administrative decision in the appeal.
* * * * *
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68. Section 156.810 is amended by revising paragraphs (a)(12) and (13)
and (e) and adding paragraphs (a)(14) and (15) to read as follows:
Sec. 156.810 Bases and process for decertification of a QHP offered
by an issuer through a Federally-facilitated Exchange.
(a) * * *
(12) The QHP issuer substantially fails to meet the requirements
related to the cases forwarded to QHP issuers under subpart K of this
part;
(13) The QHP issuer substantially fails to meet the requirements
related to the offering of a QHP under subpart M of this part;
(14) The QHP issuer offering the QHP is the subject of a pending,
ongoing, or final State regulatory or enforcement action or
determination that relates to the issuer offering QHPs in the
Federally-facilitated Exchanges; or
(15) HHS reasonably believes that the QHP issuer lacks the
financial viability to provide coverage under its QHPs until the end of
the plan year.
* * * * *
(e) Request for hearing. An issuer may appeal the decertification
of a QHP offered by that issuer under paragraph (c) or (d) of this
section by filing a request for hearing under an applicable
administrative hearing process.
(1) If an issuer files a request for hearing under this paragraph
(e):
(i) If the decertification is under paragraph (b)(1) of this
section, the decertification will not take effect prior to the issuance
of the final administrative decision in the appeal, notwithstanding the
effective date specified in paragraph (b)(1) of this section.
(ii) If the decertification is under paragraph (b)(2) of this
section, the decertification will be effective on the date specified in
the notice of decertification, but the certification of the QHP may be
reinstated immediately upon issuance of a final administrative decision
that the QHP should not be decertified.
(2) [Reserved]
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69. Section 156.1110 is amended by revising paragraphs (a) and (b) and
removing paragraph (d) to read as follows:
Sec. 156.1110 Establishment of patient safety standards for QHP
issuers.
(a) Patient safety standards. A QHP issuer that contracts with a
hospital with greater than 50 beds must verify that the hospital, as
defined in section 1861(e) of the Act:
(1) For plan years beginning before January 1, 2017, is Medicare-
certified or has been issued a Medicaid-only CMS Certification Number
(CCN) and is subject to the Medicare Hospital Conditions of
Participation requirements for--
(i) A quality assessment and performance improvement program as
specified in 42 CFR 482.21; and
(ii) Discharge planning as specified in 42 CFR 482.43.
(2) For plan years beginning on or after January 1, 2017--
(i)(A) Utilizes a patient safety evaluation system as defined in 42
CFR 3.20; and
(B) Implements a mechanism for comprehensive person-centered
hospital discharge to improve care coordination and health care quality
for each patient; or
(ii) Implements an evidence-based initiative, to improve health
care quality through the collection, management and analysis of patient
safety events that reduces all cause preventable harm, prevents
hospital readmission, or improves care coordination.
(3) A QHP issuer must ensure that each of its QHPs meets the
patient safety standards in accordance with this section.
(b) Documentation. A QHP issuer must collect:
(1) For plan years beginning before January 1, 2017, the CCN from
each of its contracted hospitals with greater than 50 beds, to
demonstrate that those hospitals meet patient safety standards required
in paragraph (a)(1) of this section; and
(2) For plan years beginning on or after January 1, 2017,
information, from each of its contracted hospitals with greater than 50
beds, to demonstrate that those hospitals meet patient safety standards
required in paragraph (a)(2) of this section.
* * * * *
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70. Section 156.1215 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 156.1215 Payment and collections processes.
* * * * *
(b) Netting of payments and charges for later years. As part of its
payment
[[Page 12352]]
and collections process, HHS may net payments owed to issuers and their
affiliates operating under the same tax identification number against
amounts due to the Federal or State governments from the issuers and
their affiliates under the same taxpayer identification number for
advance payments of the premium tax credit, advance payments of and
reconciliation of cost-sharing reductions, payment of Federally-
facilitated Exchange user fees, payment of any fees for State-based
Exchanges utilizing the Federal platform, and risk adjustment,
reinsurance, and risk corridors payments and charges.
(c) Determination of debt. Any amount owed to the Federal
government by an issuer and its affiliates for advance payments of the
premium tax credit, advance payments of and reconciliation of cost-
sharing reductions, Federally-facilitated Exchange user fees, including
any fees for State-based Exchanges utilizing the Federal platform, risk
adjustment, reinsurance, and risk corridors, after HHS nets amounts
owed by the Federal government under these programs, is a determination
of a debt.
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71. Section 156.1220 is amended by revising paragraphs (a)(3) and
(a)(4)(ii) to read as follows:
Sec. 156.1220 Administrative appeals.
(a) * * *
(3) Time for filing a request for reconsideration. The request for
reconsideration must be filed in accordance with the following
timeframes:
(i) For advance payments of the premium tax credit, advance
payments of cost-sharing reductions, Federally-facilitated Exchange
user fee charges, or State-based Exchanges utilizing the Federal
platform fees, within 60 calendar days after the date of the final
reconsideration notification specifying the aggregate amount of advance
payments of the premium tax credit, advance payments of cost-sharing
reductions, Federally-facilitated Exchange user fees, and State-based
Exchanges utilizing the Federal platform fees for the applicable
benefit year;
(ii) For a risk adjustment payment or charge, including an
assessment of risk adjustment user fees, within 30 calendar days of the
date of the notification under Sec. 153.310(e) of this subchapter;
(iii) For a reinsurance payment, within 30 calendar days of the
date of the notification under Sec. 153.240(b)(1)(ii) of this
subchapter;
(iv) For a default risk adjustment charge, within 30 calendar days
of the date of the notification of the default risk adjustment charge;
(v) For reconciliation of cost-sharing reductions, within 60
calendar days of the date of the notification of the cost-sharing
reduction reconciliation payment or charge; and
(vi) For a risk corridors payment or charge, within 30 calendar
days of the date of the notification under Sec. 153.510(d) of this
subchapter.
(4) * * *
(ii) Notwithstanding paragraph (a)(1) of this section, a
reconsideration with respect to a processing error by HHS, HHS's
incorrect application of the relevant methodology, or HHS's
mathematical error may be requested only if, to the extent the issue
could have been previously identified by the issuer to HHS under Sec.
153.710(d)(2) of this subchapter, it was so identified and remains
unresolved.
* * * * *
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72. Section 156.1250 is revised to read as follows:
Sec. 156.1250 Acceptance of certain third party payments.
Issuers offering individual market QHPs, including stand-alone
dental plans, and their downstream entities, must accept premium and
cost-sharing payments for the QHPs from the following third-party
entities from plan enrollees (in the case of a downstream entity, to
the extent the entity routinely collects premiums or cost sharing):
(a) A Ryan White HIV/AIDS Program under title XXVI of the Public
Health Service Act;
(b) An Indian tribe, tribal organization, or urban Indian
organization; and
(c) A local, State, or Federal government program, including a
grantee directed by a government program to make payments on its
behalf.
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73. Section 156.1256 is added to read as follows:
Sec. 156.1256 Other notices.
As directed by the FFE, a health insurance issuer that is offering
QHP coverage through an FFE or an SBE-FP must notify its enrollees of
material plan or benefit display errors and the enrollees' eligibility
for a special enrollment period, included in Sec. 155.420(d)(4) of
this subchapter, within 30 calendar days after being notified by the
FFE that the error has been fixed, if directed to do so by the FFE.
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
74. 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
75. Section 158.103 is amended by revising the definitions of ``Large
Employer'' and ``Small Employer'' to read as follows:
Sec. 158.103 Definitions.
* * * * *
Large Employer has the meaning given the term in Sec. 144.103 of
this subchapter.
* * * * *
Small Employer has the meaning given the term in Sec. 144.103 of
this subchapter.
* * * * *
Dated: February 22, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: February 23, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-04439 Filed 2-29-16; 4:15 pm]
BILLING CODE 4150-01-P