State Relief and Empowerment Waivers, 53575-53584 [2018-23182]

Download as PDF Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations (3) Before the next winch launch after November 13, 2018 (the effective date of this AD), revise the flying operations section of the sailplane flight manual by inserting the text in paragraph (f)(3)(i) of this AD into the winch tow section. (i) Winch launching is permissible only with a connecting ring pair that conforms to aeronautical standard LN 65091. (ii) This action may be done by the owner/ operator (pilot) holding at least a private pilot certificate and must be entered into the aircraft records showing compliance with this AD by following 14 CFR 43.9 (a)(1) through (4) and 14 CFR 91.417(a)(2)(v). The record must be maintained as required by 14 CFR 91.417, 121.380, or 135.439. (g) Other FAA AD Provisions The following provisions also apply to this AD: (1) Alternative Methods of Compliance (AMOCs): The Manager, Small Airplane Standards Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Jim Rutherford, Aerospace Engineer, FAA, Policy and Innovation Division, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329–4165; fax: (816) 329–4090; email: jim.rutherford@faa.gov. Before using any approved AMOC on any glider to which the AMOC applies, notify your appropriate principal inspector (PI) in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO. (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must instead be accomplished using a method approved by the Manager, Small Airplane Standards Branch, FAA; or the European Aviation Safety Agency (EASA). amozie on DSK3GDR082PROD with RULES (h) Related Information Refer to MCAI EASA AD No. 2018–0143– E, dated July 6, 2018, for related information. You may examine the MCAI on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA–2018–0891. (i) Material Incorporated by Reference (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51. (2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise. (i) Glasfaser-Flugzeug-Service GmbH Technical Note No. 5–2018, dated June 25, 2018. (ii) [Reserved] (3) For service information identified in this AD, contact Glasfaser Flugzeug-Service GmbH, Hansjorg Streifeneder, Hofener Weg 61, 72582 Grabenstetten, Germany; phone: +49 (0)7382/1032; fax: +49 (0)7382/1629; email: info@streifly.de; internet: http:// www.streifly.de/kontakt-e.htm. (4) You may view this service information at the FAA, Policy and Innovation, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329–4148. It VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 is also available on the internet at http:// www.regulations.gov by searching for locating Docket No. FAA–2018–0891. (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to: http:// www.archives.gov/federal-register/cfr/ibrlocations.html. Issued in Kansas City, Missouri, on October 12, 2018. Melvin J. Johnson, Aircraft Certification Service, Deputy Director, Policy and Innovation Division, AIR–601. 53575 DEPARTMENT OF THE TREASURY 31 CFR Part 33 DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR Part 155 [CMS–9936–NC] State Relief and Empowerment Waivers Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services; Department of the Treasury. ACTION: Guidance. AGENCY: [FR Doc. 2018–23107 Filed 10–23–18; 8:45 am] DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 4 Licenses, Permits, Exemptions, and Determination of Project Costs CFR Correction In Title 18 of the Code of Federal Regulations, Parts 1 to 399, revised as of April 1, 2018, on page 102, in § 4.39, the first sentence of paragraph (a) is removed. [FR Doc. 2018–23332 Filed 10–23–18; 8:45 am] BILLING CODE 1301–00–D DEPARTMENT OF THE INTERIOR Office of Surface Mining and Reclamation 30 CFR Part 779 Surface Mining Permit Applications CFR Correction In Title 30 of the Code of Federal Regulations, Part 700 to End, revised as of July 1, 2018, on page 229, the designation ‘‘§ 779.25 [Reserved]’’ is removed. [FR Doc. 2018–23315 Filed 10–23–18; 8:45 am] BILLING CODE 1301–00–D PO 00000 Frm 00013 Fmt 4700 This guidance relates to section 1332 of the Patient Protection and Affordable Care Act (PPACA) and its implementing regulations. Section 1332 provides the Secretary of Health and Human Services and the Secretary of the Treasury (collectively, the Secretaries) with the discretion to approve a state’s proposal to waive specific provisions of the PPACA (a State Innovation Waiver, now also referred to as a State Relief and Empowerment Waiver), provided the section 1332 state plan meets certain requirements. The Department of Health and Human Services and the Department of the Treasury (collectively, the Departments) finalized implementing regulations on February 27, 2012. This updated guidance provides supplementary information about the requirements that must be met for the approval of a State Innovation Waiver, the Secretaries’ application review procedures, the calculation of pass-through funding, certain analytical requirements, and operational considerations. This guidance supersedes the guidance related to section 1332 of the PPACA that was previously published on December 16, 2015. Changes include increasing flexibility with respect to the manner in which a section 1332 state plan may meet section 1332 standards in order to be eligible to be approved by the Secretaries, clarifying the adjustments the Secretaries may make to maintain federal deficit neutrality, and allowing for states to use existing legislative authority to authorize section 1332 waivers in certain scenarios. The Departments are committed to empowering states to innovate in ways that will strengthen their health insurance markets, expand choices of coverage, target public resources to those most in need, and meet the unique circumstances of each state. This guidance aims to lower barriers to SUMMARY: BILLING CODE 4910–13–P Sfmt 4700 E:\FR\FM\24OCR1.SGM 24OCR1 53576 Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations innovation for states seeking to reform their health insurance markets. DATES: Applicability date: This guidance is applicable beginning October 22, 2018. Comment date: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on December 24, 2018. ADDRESSES: In commenting, refer to file code CMS–9936–NC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this document to http://www.regulations.gov. Follow the ‘‘Submit a comment’’ instructions. 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–9936–NC, P.O. Box 8010, Baltimore, MD 21244–1810. Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–9936–NC, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Lina Rashid, (202) 260–6098. Michele Koltov, (301) 492–4225. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments. amozie on DSK3GDR082PROD with RULES I. Overview One of the Administration’s priorities is to empower states by providing tools to address the serious problems that have surfaced in state individual health insurance markets with the implementation of the Patient Protection and Affordable Care Act (PPACA). After the Exchanges took full VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 effect in 2014, individual market insurance companies began experiencing substantial losses. Industry analysts estimate aggregate losses reached $7.2 billion (10.1 percent of premiums) in 2015.1 In response to these losses, many issuers (some of whom entered the market as a result of the PPACA) left the market, including issuers participating on the Exchanges. The percentage of counties with one Exchange issuer grew from 7 percent in 2016 to 33 percent in 2017 and to 52 percent in 2018, representing 2 percent, 21 percent, and 26 percent of enrollees respectively.2 The issuers remaining in the individual market increased premiums substantially between 2013 and 2017; average premiums for individual market health plans sold through Healthcare.gov rose by 105 percent.3 While subsidized enrollment in Exchanges remains stable, overall enrollment on and off the Exchanges dropped between 2016 and 2017 by over 10 percent, reflecting a sizable drop in unsubsidized enrollment.4 Kaiser Family Foundation further found that individual market enrollment dropped 12 percent between the first quarter of 2017 and the first quarter of 2018.5 This drop represents deterioration in the individual market for people who pay the full premium. These national average premium and enrollment trends mask deeper, more serious problems occurring in certain state markets. Some states experienced premium increases in excess of 200 percent between 2013 and 2017.6 States with larger premium 1 Losses in 2016 appear to be between 7% and 9% of premiums. https://healthcare.mckinsey.com/ 2016-individual-market-losses-are-high-singledigits%E2%80%94-slight-improvement-2015. The insurance market is showing signs of stabilizing. http://files.kff.org/attachment/Issue-BriefIndividual-Insurance-Market-Performance-in-Early2018. 2 https://www.kff.org/health-reform/issue-brief/ insurer-participation-on-aca-marketplaces/ and Kaiser Family Foundation analysis as of August 26, 2016. 3 The data is for states using the federallyfacilitated exchange. Pg 2. https://aspe.hhs.gov/ system/files/pdf/256751/IndividualMarketPremium Changes.pdf. The premium increases since 2013 are partly attributable to changes in the types of policies that may be offered. For example, the Congressional Budget Office estimates that PPACA market reforms including requiring a minimum actuarial value of 60 percent, coverage of preexisting conditions and covering more benefits likely resulted in about a 27 to 30 percent increase in premiums. See Congressional Budget Office, Private Health Insurance Premiums and Federal Policy, February 2016, p.21. 4 Pg 1. https://www.cms.gov/CCIIO/Programsand-Initiatives/Health-Insurance-Marketplaces/ Downloads/2018-07-02-Trends-Report-2.pdf. 5 http://files.kff.org/attachment/Data-NoteChanges-in-Enrollment-in-the-Individual-HealthInsurance-Market. 6 Alabama, Alaska, and Oklahoma experienced premium increases in excess of 200 percent PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 increases also tended to experience larger enrollment declines, with a few states losing more than a third of the individual market in 2017.7 According to Kaiser, there were 14.4 million people enrolled in the individual market as of the first quarter of 2018, compared to 10.6 million people in 2013.8 This gain in enrollment has come at a significant cost to the federal government as CBO estimates the premium tax credits will total about $50 billion in 2018.9 This guidance intends to expand state flexibility, empowering states to address problems with their individual insurance markets and increase coverage options for their residents, while at the same time encouraging states to adopt innovative strategies to reduce future overall health care spending. Section 1332 of the PPACA permits a state to apply for a State Innovation Waiver (referred to as a section 1332 waiver or a State Relief and Empowerment Waiver) to pursue innovative strategies for providing their residents with access to higher value, more affordable health coverage. The overarching goal of section 1332 waivers is to give all Americans the opportunity to gain high value and affordable health coverage regardless of income, geography, age, gender, or health status while empowering states to develop health coverage strategies that best meet the needs of their residents. Section 1332 waivers provide states an opportunity to promote a stable health insurance market that offers more choice and affordability to state residents, in part through expanded competition. These waivers could potentially be used to allow states to build on additional opportunities for more flexible and affordable coverage that the Administration opened through expanded options for Association Health Plans (AHP) 10 and short-term, limited-duration insurance (STLDI).11 The Departments are seeking to reduce burdens that may impede a state’s efforts to implement innovative changes and improvements to its health between 2013 and 2017. https://aspe.hhs.gov/ system/files/pdf/256751/IndividualMarketPremium Changes.pdf. 7 Figure 4 https://downloads.cms.gov/cciio/ Summary-Report-Risk-Adjustment-2017.pdf. 8 http://files.kff.org/attachment/Data-NoteChanges-in-Enrollment-in-the-Individual-HealthInsurance-Market. 9 https://www.cbo.gov/system/files?file=2018-06/ 53826-healthinsurancecoverage.pdf. 10 https://www.federalregister.gov/documents/ 2018/06/21/2018-12992/definition-of-employerunder-section-35-of-erisa-association-health-plans. 11 https://www.federalregister.gov/documents/ 2018/08/03/2018-16568/short-term-limitedduration-insurance. E:\FR\FM\24OCR1.SGM 24OCR1 Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations amozie on DSK3GDR082PROD with RULES insurance market while remaining consistent with the statute. We believe that the reduction in these burdens will lead to more affordable health coverage for individuals and families. Under section 1332 of the PPACA, the Secretaries may exercise their discretion to approve a request for a section 1332 waiver 12 only if the Secretaries determine that the proposal for the section 1332 waiver meets the following four requirements (referred to as the statutory guardrails): (1) The proposal will provide coverage that is at least as comprehensive as coverage defined in PPACA’s section 1302(b) and offered through Exchanges established by title I of PPACA, as certified by the Office of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient data from the State and from comparable States about their experience with programs created by the PPACA and the provisions of the PPACA that would be waived; (2) the proposal will provide coverage and costsharing protections against excessive out-of-pocket spending that are at least as affordable for the state’s residents as would be provided under title I of PPACA; (3) the proposal will provide coverage to at least a comparable number of the state’s residents as would be provided under title I of PPACA; and (4) the proposal will not increase the federal deficit. The Secretaries retain their discretionary authority under section 1332 to deny waivers when appropriate given consideration of the application as a whole, even if an application meets the four statutory guardrail requirements. The Secretaries will consider favorably section 1332 waiver applications that advance some or all of these five principles as elements of a section 1332 waiver application. The principles are: • Provide increased access to affordable private market coverage. Making private health insurance coverage more accessible and affordable should be a priority for a section 1332 waiver. A section 1332 state plan should foster health coverage through competitive private coverage, including AHPs and STLDI plans, over public programs. Additionally, the Departments will look favorably upon section 1332 applications under which 12 The Departments’ State Innovation Waiver authority is limited to requirements described in section 1332(a)(2) of the PPACA. Further, section 1332(c) of the PPACA states that while the Secretaries have broad discretion to determine the scope of a waiver, no federal laws or requirements may be waived that are not within the Secretaries’ authority. See 77 FR 11700, 11711 (February 27, 2012). Therefore, for example, section 1332 does not grant the Departments the authority to waive any provision of ERISA. VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 states increase issuer participation in state insurance markets and promote competition. • Encourage sustainable spending growth. Section 1332 waivers should promote more cost-effective health coverage and be fair to the federal taxpayer by restraining growth in federal spending commitments. For example, states should consider eliminating or reducing state-level regulation that limits market choice and competition in order to reduce prices for consumers and reduce costs to the federal government, as part of their section 1332 waiver applications. • Foster state innovation. States are better positioned than the federal government to assess and respond to the needs of their citizens with innovative solutions. We encourage states to craft solutions that meet the needs of their consumers and markets and innovate to the maximum extent possible under the law. • Support and empower those in need. Americans should have access to affordable, high value health insurance. Some Americans, particularly those with low incomes or high expected health care costs, may require financial assistance. Policies in section 1332 waiver applications should support state residents in need in the purchase of private coverage with financial assistance that meets their specific health care situations. • Promote consumer-driven healthcare. Section 1332 waivers should empower Americans to make informed choices about their health coverage and health care with incentives that encourage consumers to seek value. Instead of only offering a one-size-fitsall plan proposal, a section 1332 state plan should focus on providing people with the resources and information they need to afford and purchase the private insurance coverage that best meets their needs. States should explain in their waiver applications how their proposals would advance some or all of these principles. Consistent with the principles laid out above, the Secretaries intend to provide states with maximum flexibility within the law to innovate, empower consumers, and expand higher value and more affordable coverage options. As under similar waiver authorities, the Secretaries reserve the right to suspend or terminate a waiver, in whole or in part, any time before the date of expiration, if the Secretaries determine that the state materially failed to comply with the terms and conditions of the waiver. Additionally, states with approved section 1332 waivers must comply with all applicable federal laws PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 53577 and regulations (unless specifically waived) and must come into compliance with any changes in federal law or regulations affecting section 1332 waivers. Final regulations at 31 CFR part 33 and 45 CFR part 155, subpart N, require a state to provide actuarial analyses and actuarial certifications, economic analyses, data and assumptions, targets, an implementation timeline, and other necessary information to support the state’s estimates that the proposed waiver will comply with section 1332 requirements.13 II. Changes to 2015 Guidance In 2015, the Departments published guidance explaining how they would consider applications for waivers under section 1332 (2015 guidance).14 In light of the Departments’ experience since 2015 in considering State waiver applications and communicating with states considering such applications, the Departments have reviewed the statutory guardrails to determine whether the interpretations set forth in the previous guidance could be revised to provide more flexibility to the states. As a result of this review, the Departments have determined that the analysis of comprehensiveness and affordability of coverage under a waiver should focus on the nature of coverage that is made available to state residents (access to coverage), rather than on the coverage that residents actually purchase. Adopting this more flexible interpretation of the section 1332 guardrails that focuses on coverage made available under the waiver will lower barriers to innovation and allow states to implement waiver plans that will strengthen their health insurance markets by providing a variety of coverage options. Section 1332(b)(1)(C) requires that a state’s plan under a waiver will provide coverage ‘‘to at least a comparable number of its residents’’ as would occur without the waiver. By contrast, section 1332(b)(1)(A) and (B) merely state that the state’s plan will provide coverage that is as comprehensive and affordable as would occur without a waiver, but do not specify to whom such coverage must be provided. The 2015 guidance focused on the number of individuals actually estimated to receive comprehensive and affordable coverage, in effect reading the ‘‘to at least a comparable number of its residents’’ language from the coverage 13 Application, Review, and Reporting Process for Waivers for State Innovation Final Rule, February 27, 2012. Available at: http://www.gpo.gov/fdsys/ pkg/FR-2012-02-27/pdf/2012-4395.pdf. 14 https://www.gpo.gov/fdsys/pkg/FR-2015-12-16/ pdf/2015-31563.pdf. E:\FR\FM\24OCR1.SGM 24OCR1 amozie on DSK3GDR082PROD with RULES 53578 Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations guardrail into the comprehensiveness and affordability guardrails as well. However, the Departments do not believe that the language or structure of the statute compels that reading. Further, a major disadvantage of the 2015 interpretation was that it deterred states from providing innovative coverage that, while potentially less comprehensive than coverage established under the PPACA, could have been better suited to consumer needs and potentially more affordable and attractive to a broad range of its residents. For example, even if coverage similar to that made available under the PPACA remained available in a state, an offer of more attractive, but less comprehensive plans would have reduced the number of residents who elected PPACA-like coverage, and would likely have caused the state waiver plan to fail the comprehensiveness guardrail. To avoid this effect of the 2015 guidance, this guidance focuses on the availability of comprehensive and affordable coverage. This shift in focus ensures that state residents who wish to retain coverage similar to that provided under the PPACA can continue to do so, while permitting a state plan to also provide access to other options that may be better suited to consumer needs and more attractive to many individuals. In order to ensure that the Departments’ revised interpretation of the comprehensiveness and affordability guardrails provides full meaning to the statute and aligns with the Administration’s principles, it is important that the two guardrails be evaluated in conjunction. In other words, it is not enough to make available some coverage that is comprehensive but not affordable, while making available other coverage that is affordable but not comprehensive. Thus, the guidance, as described in detail below, provides that a state plan will comply with the comprehensiveness and affordability guardrails, consistent with the statute, if it makes coverage that is both comprehensive and affordable available to a comparable number of otherwise qualified residents as would have had such coverage available absent the waiver. The 2015 guidance concerning the comprehensiveness and affordability guardrails has also been revised to focus on the aggregate effects of a waiver. The 2015 guidance largely prohibited approval of a state plan that made coverage less comprehensive or affordable for any particular group of residents. While analysis will continue to consider effects on all categories of residents, the revised guardrails will VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 give states more flexibility to decide that improvements in comprehensiveness and affordability for state residents as a whole offset any small detrimental effects for particular residents. As discussed in this guidance and principles above, the state should also address in the application for the section 1332 waiver how the section 1332 state plan addresses the Administration’s priority to support and empower those with low incomes as well at those with high expected health care costs. The coverage guardrail requires that coverage be provided to at least a comparable number of residents as would occur absent the waiver. However, the text of the coverage guardrail provision of the statute is silent as to the type of coverage that is required. Accordingly, to enable state flexibility and to promote choice of a wide range of coverage to ensure that consumers can enroll in coverage that is right for them, this guidance permits states to provide access to less comprehensive or less affordable coverage as an additional option for their residents to choose. This guidance on the coverage guardrail continues to consider the number of state residents who are actually receiving coverage. As long as a comparable number of residents are projected to be covered as would have been covered absent the waiver, the coverage guardrail will be met. In addition, in another effort to provide flexibility for states and provide full meaning to the statute in this guidance, the Departments clarify that in certain circumstances, existing state legislation that provides statutory authority to enforce PPACA provisions and the state plan, combined with a duly-enacted state regulation or executive order, may satisfy the requirement that the state enact a law under section 1332(b)(2). Finally, our analysis of the deficit neutrality guardrail has been revised to provide more specific guidance in light of the Departments’ experience in evaluating waiver applications. III. Statutory Guardrail Requirements The following guidance explains in more detail how the Departments will evaluate each of the statutory guardrails. A. Comprehensiveness and Affordability The Departments may consider these guardrails met if access to coverage that is as affordable and comprehensive as coverage forecasted to have been available in the absence of the waiver is projected to be available to a comparable number of people under the PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 waiver. The Departments will not require projections demonstrating that this coverage will actually be purchased by a comparable number of state residents; in other words, these guardrails will be met if the state plan has made other coverage options available that state residents may prefer, so long as access to affordable, comprehensive coverage is also available. Thus, the Departments will consider the affordability requirement to be met in a state plan that will provide consumers access to coverage options that are at least as affordable and comprehensive as the coverage options provided without the waiver, to at least a comparable number of people as would have had access to such coverage absent the waiver. In evaluating whether the state plan meets the comprehensiveness and affordability guardrails, the Departments will take into account access to affordable, comprehensive coverage to all state residents, regardless of the type of coverage they would have had access to in absence of the waiver. Comprehensiveness Comprehensiveness refers to the scope of benefits provided by the coverage as measured by the extent to which coverage meets essential health benefits (EHB) requirements as defined in section 1302(b) of the PPACA and offered through Exchanges established by title I of PPACA, as certified by the Office of the Actuary of the Centers for Medicare & Medicaid Services. The impact on all state residents eligible for coverage under title I of PPACA is considered, regardless of the type of coverage that they would have had access to absent the waiver. In April 2018, CMS provided states with substantially more options in the selection of an EHB-benchmark plan.15 The Departments will evaluate comprehensiveness by comparing access to coverage under the waiver to the state’s EHB benchmark (for the applicable plan year) selected by the state (or if the state does not select a benchmark, the default base-benchmark 15 As finalized in the HHS Notice of Benefit and Payment Parameters for 2019, starting in plan year 2020 CMS is providing states with additional flexibility in how they select their EHB-benchmark plan. The final rule provides states with substantially more options in what they can select as an EHB-benchmark plan. Instead of being limited to 10 options, states will now be able to choose from the 50 EHB-benchmark plans used for the 2017 plan year in other states or select specific EHB categories, such as drug coverage or hospitalization, from among the categories used for the 2017 plan year in other states. States will also now be able to build their own set of benefits that could potentially become their EHB-benchmark plan, subject to certain scope of benefits requirements. E:\FR\FM\24OCR1.SGM 24OCR1 Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations amozie on DSK3GDR082PROD with RULES plan), any other state’s benchmark plan chosen by the state for purposes of the waiver application, or any benchmark plan chosen by the state that the state could otherwise build that could potentially become their EHBbenchmark plan. Affordability Affordability refers to state residents’ ability to pay for health care expenses relative to their incomes and may generally be measured by comparing each individual’s expected out-ofpocket spending for health coverage and services to their income. Out-of-pocket spending for health care includes premiums (or equivalent costs for enrolling in coverage) and spending such as deductibles, co-pays, and coinsurance associated with the coverage, or direct payments for healthcare. In evaluating affordability, the Departments will take into account access to affordable, comprehensive coverage available to all state residents, regardless of the type of coverage they would have had access to in the absence of the waiver. In addition to considering the number of state residents for whom comprehensive coverage has become more or less affordable, the Departments will take into account the magnitude of such changes. For example, a waiver that makes coverage slightly more affordable for some people but much less affordable for a comparable number of people would be less likely to be granted than a waiver that makes coverage substantially more affordable for some people without making others substantially worse off. In addition, a waiver that makes coverage much more affordable for some people and only slightly more costly for a larger number of people would likely meet this guardrail. The Departments will consider the changes in affordability for all groups, including low-income residents and those with high expected health care costs. As provided in 31 CFR part 33 and 45 CFR part 155, subpart N, the waiver application must include analysis and supporting data that establishes that the waiver satisfies the comprehensiveness and affordability guardrails. This includes an explanation of how the coverage available under the waiver differ from the coverage chosen absent the waiver (if the coverage differs at all) and how the state determined the coverage to be as comprehensive. It also includes information on estimated individual out-of-pocket costs (premium and out-of-pocket expenses for deductibles, co-payments, co-insurance, co-payments and plan differences) by income, health expenses, health VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 insurance status, and age groups, absent the waiver and for available coverage under the waiver. The application should identify any types of individuals (including, but not limited to, those individuals who are low income or have high expected health care costs) for whom affordability of coverage would be reduced by the waiver and also identify any types of individuals for whom affordability of coverage would be improved by the waiver. The state should also address in its section 1332 waiver application how it would address the Administration’s priority to support and empower consumers, including those with high expected health care costs and those with low incomes. B. Number of State Residents Covered (Coverage) To meet the coverage requirement, the section 1332 state plan must provide meaningful health care coverage to a comparable number of its residents as title I of PPACA would provide. The Departments will assess the coverage guardrail by requiring the state to forecast, for each year the section 1332 state plan will be in effect, the number of individuals that will have health care coverage under the section 1332 state plan, and compare that to the number of individuals that would have had health care coverage absent the waiver. A section 1332 state plan will be considered to comply with this coverage guardrail if, for each year the waiver is in effect, the state can demonstrate that a comparable number of state residents eligible for coverage under title I of PPACA will have health care coverage under the section 1332 state plan as would have had coverage absent the waiver. For purposes of meeting this guardrail, in line with the Administration’s priority favoring private coverage, including AHPs and STLDI plans, the Departments will consider all forms of private coverage in addition to public coverage, including employer-based coverage, individual market coverage, and other forms of private health coverage. Coverage refers to minimum essential coverage as defined in 26 U.S.C. 5000A(f) and 26 CFR 1.5000A–2, and health insurance coverage as defined in 45 CFR 144.103.16 16 Health insurance coverage means benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or HMO contract offered by a health insurance issuer. Health insurance coverage includes group health insurance coverage, individual health insurance coverage, and shortterm, limited-duration insurance. PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 53579 Under this guardrail, the impact on all state residents eligible for coverage under title I of PPACA will be considered, regardless of the type of coverage they would have had absent the waiver. For example, while a section 1332 waiver alone may not change the terms of a state’s Medicaid coverage or change existing Medicaid demonstration authority, changes in Medicaid enrollment—whether increases or decreases—that result from a section 1332 waiver, holding the state’s Medicaid policies constant, will be considered in evaluating the number of residents with coverage under a waiver. The Departments will consider the effects the section 1332 state plan will have on coverage in the aggregate across all state residents. However, as noted in this guidance, an application for a section 1332 waiver should address the Administration’s priority to support and empower consumers, including those with high expected health care costs and those with low incomes. The assessment under the coverage requirement will take into account whether the section 1332 state plan sufficiently prevents gaps in or discontinuations of coverage. The section 1332 guardrails generally should be forecast to be met in each year that a waiver would be in effect. However, the Departments will consider the longer-term impacts of a state’s proposal, and may approve a waiver even where a state expects a temporary reduction in coverage but can demonstrate that the reduction is reasonable under the circumstances, and that the innovations will produce longer-term increases in the number of state residents who have coverage such that, in the aggregate, the coverage guardrail will be met or exceeded over the course of the waiver term. For example, the Departments may approve a 1332 waiver plan that is not forecast to meet the coverage guardrail on Day 1 of the waiver, if the state’s plan is forecast to meet or exceed pre-waiver coverage levels within a reasonable amount of time, and any coverage reductions are offset by coverage gains. The reasonableness of a proposed transition period will be considered, taking into account the following: The reasons it is infeasible under the state’s plan to fully maintain pre-waiver coverage levels at the outset; the degree of the departure from the pre-waiver levels during the transition period; the state’s ability to demonstrate the longterm gains in coverage as compared to pre-waiver levels; other features of the plan that mitigate the impact of the E:\FR\FM\24OCR1.SGM 24OCR1 amozie on DSK3GDR082PROD with RULES 53580 Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations departure, if any; and any other relevant factors. As provided in 31 CFR part 33 and 45 CFR part 155, subpart N, the waiver application must include analysis and supporting data that establishes that the waiver satisfies the scope of coverage requirement, including information on the number of individuals covered by income, health expenses, health insurance status, and age group, under title I of PPACA and under the waiver, including year-by-year estimates. The application should identify any types of individuals who are more or less likely to be covered under the waiver than under current law. attributed to the waiver for each of the ten years. The 10-year budget plan should assume the waiver would continue permanently, unless such an assumption would be inconsistent with the nature and intent of the state plan. However, the budget plan should not include federal spending or savings attributable to any period outside of the 10-year budget window. A variety of factors, including the likelihood and accuracy of projected spending and revenue effects and the timing of those effects, will be considered when evaluating the effect of the waiver on the federal deficit. C. Deficit Neutrality IV. Federal Pass-Through Funding Section 1332 directs the Secretaries to pay pass-through funding for the purpose of implementing the state plan under the waiver. The amount of federal pass-through funding equals the Secretaries’ annual estimate of the federal financial assistance, including PTC, small business tax credits, or costsharing reductions, provided pursuant to the PPACA that would have been paid on behalf of participants in the Exchange in the state in the calendar year in the absence of the waiver, but will not be paid as a result of the waiver. This includes any amount of federal financial assistance pursuant to the PPACA not paid due to an individual not qualifying for financial assistance or qualifying for a reduced level of financial assistance resulting from a waived provision as a direct result of the waiver plan. The passthrough amount does not include any savings other than the reduction in PPACA financial assistance. The passthrough amount will be reduced by any other increase in spending or decrease in revenue if necessary to ensure deficit neutrality. The estimates take into account experience in the relevant state and similar states. This amount is calculated annually by the Departments. The annual amount may be updated at any time to reflect changes in state or federal law (including regulation and sub-regulatory guidance). The waiver application, consistent with the Departments’ regulations, must provide analysis and supporting data to inform the estimate of the pass-through funding amount. For states that do not utilize a Federally-facilitated Exchange, this includes information about enrollment, premiums, and Exchange financial assistance in the state’s Exchange by age, income, and type of policy, and other information as may be required by the Secretaries. For further information on the demographic and economic assumptions to be used in Under the deficit neutrality requirement, the projected federal spending net of federal revenues under the section 1332 waiver must be equal to or lower than projected federal spending net of federal revenues in the absence of the section 1332 waiver. The estimated effect on federal revenue includes all changes in income, payroll, or excise tax revenue, as well as any other forms of revenue (including but not limited to user fees), that would result from the proposed waiver. Estimated effects would include, for example, changes in amounts the federal government pays in premium tax credits (PTC) and small business tax credits; changes in the amount of employer shared responsibility payments and excise taxes on high-cost employer-sponsored plans collected by the federal government; and changes in income and payroll taxes resulting from changes in tax exclusions for employersponsored insurance and in deductions for medical expenses. The effect on federal spending includes all changes in Exchange financial assistance and any other spending that result from the section 1332 waiver. Projected federal spending under the waiver proposal also includes all administrative costs of the federal government, including any changes in Internal Revenue Service administrative costs, federal Exchange administrative costs, or other administrative costs associated with the waiver or alleviated by the waiver. Waivers must not increase the federal deficit over the period of the waiver (which may not exceed 5 years unless renewed) or in total over the 10-year budget plan submitted by the state as part of the application. We have revised the 2015 guidance to clarify that the tenyear budget plan should describe the changes in projected federal spending and changes in federal revenues VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 determining the pass-through amount, see Section V of this guidance. As part of the state’s waiver application, the state should include a description of the provisions for which the state seeks a waiver and how the waiver is necessary to facilitate the state’s waiver plan. Further, as part of the state’s waiver plan if the state is seeking pass-through funding, the state waiver application should include an explanation of how, due to the structure of the section 1332 state plan and the statutory provisions waived, the state anticipates that individuals would no longer qualify for financial assistance (PTC, small business tax credits, or costsharing reductions) or would qualify for reduced financial assistance for which they would not be eligible absent the section 1332 waiver. The state should also explain how the state intends to use that funding for the purposes of implementing its section 1332 state plan. Pass-through funding may only be used to implement the approved section 1332 state plan. States have a wide range of flexibility in designing their section 1332 waiver application and section 1332 state plan. V. Economic Assumptions and Methodological Guidelines The determination of whether a waiver meets the requirements under section 1332 and the calculation of the pass-through funding amount are made using generally accepted actuarial and economic analytic methods, such as micro-simulation. The analysis relies on assumptions and methodologies that are similar to those used to produce the baseline and policy projections included in the most recent President’s Budget (or Mid-Session Review),17 but adapted as appropriate to reflect statespecific conditions. As provided in 31 CFR 33.108(f)(4)(i) and 45 CFR 155.1308(f)(4)(i), the state must include actuarial analyses and actuarial certifications to support the state’s estimates that the proposed waiver will comply with the comprehensive coverage requirement, the affordability requirement, and the scope of coverage requirement. In this guidance, we clarify that this actuarial analysis and certification should be conducted by a member of the American Academy of Actuaries. The Departments’ analysis is based on state-specific estimates of the current level and distribution of population by the relevant economic and demographic characteristics, including income and source of health coverage. It generally uses federal estimates of population 17 https://www.whitehouse.gov/omb/budget/. E:\FR\FM\24OCR1.SGM 24OCR1 amozie on DSK3GDR082PROD with RULES Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations growth, economic growth as published in the Analytical Perspectives volume released as part of the President’s Budget (https://www.whitehouse.gov/ omb/budget/Analytical_Perspectives) and health care cost growth (https:// www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/NationalHealthExpendData/ index.html?redirect=/NationalHealth ExpendData/) to project the initial state variables through the 10-year Budget plan window. However, in limited circumstances where it is expected that a state will experience substantially different trends than the nation as a whole in the absence of a waiver, the Secretaries may determine that statespecific assumptions will be used. Estimates of the effect of the waiver assume, in accordance with standard estimating conventions, that macroeconomic variables like population, output, and labor supply are not affected by the waiver. However, estimates take into account, as appropriate, other changes in the behavior of individuals, employers, and other relevant entities induced by the waiver where applicable, including employer decisions regarding what coverage (and other compensation) they offer and individual decisions regarding whether to take up coverage. The same state-specific and federal data, assumptions, and model are used to calculate comprehensiveness, affordability, and coverage, and relevant state components of federal taxes and spending under the waiver and under current law. The analysis and information submitted by the state as part of the application should conform to these standards as outlined in this guidance. The application should describe all modeling assumptions used, sources of state-specific data, and the rationale for any deviation from federal forecasts. A state may be required under 31 CFR 33.108(f)(4)(vii) and 45 CFR 155.1308(f)(4)(vii) to provide to the Secretaries copies of any data used for their waiver analyses that are not publicly available so that the Secretaries can independently verify the analysis produced by the state. For each of the guardrails, the state should clearly explain its estimates with and without the waiver. The actuarial and economic analyses must compare comprehensiveness, affordability, coverage, and net federal spending and revenues under the waiver to those measures absent the waiver (the baseline) for each year of the waiver. If the state is submitting a waiver application for less than a 5-year period, the actuarial analysis can be submitted VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 for the period of the waiver. The Departments, in accordance with their regulations, may request additional information or data in order to conduct their assessments. The state should also provide a description of the models used to produce these estimates, including data sources and quality of the data, key assumptions, and parameters for the section 1332 state plan. The Departments are not prescribing any particular method of actuarial analysis to estimate the potential impact of a section 1332 waiver. However, the state should explain its modeling in sufficient detail to allow the Secretaries to evaluate the accuracy of the state’s modeling and the comprehensiveness and affordability of the coverage available under the state’s waiver proposal. As permitted under 45 CFR 155.1308(g) and 31 CFR 33.108(g), the state may be required to provide data or other information that it used to make its estimates to inform the Secretaries’ assessment, including an explanation of the assumptions used in the actuarial analysis. VI. Operational Considerations A. Federally-Facilitated Exchanges CMS operates the Exchange information technology platform (the federal platform) utilized by the Federally-facilitated Exchanges (FFEs) and some state Exchanges. Previously, CMS stated that the federal platform could not accommodate different eligibility and enrollment rules for different states. Since then, the federal platform has undergone technical enhancements necessary for the FFE’s operations that will enable it to support increased variation and flexibility for states that may want to leverage components of the federal platform to implement new models through section 1332 waivers. These improvements will include functionality that will enable states to work with private industry partners to create their own websites that could replace the consumer-facing aspects of HealthCare.gov for their state, while allowing the state to utilize aspects of the back-end technology that supports the FFE. Using this enhanced direct enrollment functionality 18 as well as other CMS technology, states and private partners could customize the display of plan data and the information provided to consumers, or 18 Enhanced direct enrollment is a program in which CMS will provide direct enrollment entities with the ability to provide an account creation, application, enrollment and coverage maintenance experience for consumers and agents/brokers working with consumers. PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 53581 access specific eligibility verifications for use in state-specific eligibility determinations. Further, for states that opt to waive the requirement to establish an Exchange under section 1311(b)(1) of the PPACA and transition their Exchange-eligible populations to a state-based 1332 program, in compliance with applicable privacy law and standards and with the consent of the relevant enrollees, the new FFE data-sharing functionality could make information on current enrollees accessible to states outside of the Exchange context. The new FFE datasharing functionality potentially could provide data on the status of data matching issues and special enrollment period verification issues, account creation, and document uploading which would ease transition periods to a potential new non-Exchange program and mitigate risk pool deterioration. HHS is continuing to evaluate what types of flexibilities related to plan management, financial assistance, and consumer assistance are feasible, and seeks to engage with states to determine interest in potential models. States should engage with HHS early in the section 1332 waiver application process to determine whether the federal platform could accommodate state needs. During this time, HHS will work to estimate potential funding costs to implement the requested flexibilities. States will be responsible for funding all customized technical builds, in addition to funding of year-round customized operational support. CMS may provide services in support of the state’s section 1332 waiver plan including but not limited to eligibility determinations or data verification services to support eligibility determinations for participation in State waiver programs under the Intergovernmental Cooperation Act (ICA). Under the ICA, a federal agency generally may provide certain technical and specialized services to state governments, so long as the state covers the full costs of those services. Accordingly, where a state intends to rely on CMS for services, the state must cover CMS’s costs. For this reason, the Departments will not consider costs for CMS services covered under the ICA as an increase in federal spending resulting from the state’s waiver plan for purposes of the deficit neutrality analysis. As noted in Section III.C of this guidance, costs associated with changes to federal administrative processes are taken into account in determining whether a waiver application satisfies the deficit neutrality requirement. Regulations at 31 CFR part 33 and 45 E:\FR\FM\24OCR1.SGM 24OCR1 53582 Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations amozie on DSK3GDR082PROD with RULES CFR part 155, subpart N, require that such costs be included in the 10-year budget plan submitted by the state. B. Internal Revenue Service Certain changes that affect Internal Revenue Service (IRS) administrative processes may make a section 1332 waiver proposal infeasible for the Departments to accommodate. At this time, the IRS generally is not able to administer different sets of tax rules for different states. As a result, while a state may propose to entirely waive the application of one or more of the tax provisions listed in section 1332 to taxpayers in the state, it is generally not feasible to design a waiver that would require the IRS to administer an alteration to these provisions for taxpayers in the state. In some cases, the IRS may be able to accommodate small adjustments to the existing system for administering federal tax provisions. For example, a state that has not expanded its Medicaid program may wish to expand eligibility for APTC and PTC to individuals under 100 percent of the Federal Poverty Level (FPL). It may be feasible for IRS to implement this change because it currently administers a special rule that allows certain individuals to claim PTC if they are under 100 percent FPL and get APTC. However, it is generally not feasible to have the IRS administer a different set of PTC eligibility rules for individuals over 100 percent FPL in a particular state. Thus, states contemplating a waiver proposal that includes a modified version of a federal tax provision might consider waiving the provision entirely and creating a subsidy program administered by the state as part of its section 1332 waiver plan. In addition, a waiver proposal that partly or completely waives one or more tax provisions in a state may create administrative costs for the IRS. As noted in Section III.C of this guidance, costs associated with changes to federal administrative processes are taken into account in determining whether a waiver application satisfies the deficit neutrality requirement. Regulations at 31 CFR part 33 and 45 CFR part 155, subpart N, require that such costs be included in the 10-year budget plan submitted by the state. States contemplating to waive any part of a federal tax provision should engage with the Departments early in the section 1332 application process to assess whether the waiver proposal is feasible for the IRS to implement, and to assess the administrative costs to the IRS of implementing the waiver proposal. VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 VII. Application Timing Consistent with the regulations at 31 CFR 33.108(b) and 45 CFR 155.1308(b), states are required to submit initial section 1332 waiver applications sufficiently in advance of the requested waiver effective date to allow for an appropriate implementation timeline. We strongly encourage states interested in applying for any section 1332 waivers, including coordinated section 1115 and section 1332 waivers, to engage with the Departments promptly for assistance in formulating an approach that meets the requirements of section 1332. In order to help ensure timely approval, states should plan to submit their initial waiver applications with enough time to allow for public comment, review by the Departments, and implementation of the section 1332 state plan as outlined in the waiver application. In general, submission during the first quarter of the year prior to the year health plans affected by the waiver would take effect would permit sufficient time for review and implementation of both the waiver application and affected plans. It is important to note that the Departments cannot guarantee a state’s request for expedited review or approval under a regular waiver submission and will continue to review applications consistent with the timeline requirements outlined in the regulations and statute.19 We encourage states to work with the Departments on timeframes that take into account the state’s legislative sessions and timing of rate filings if the section 1332 waiver is projected to have any impact on premiums. If a state’s waiver application includes potential operational changes or accommodations to the federal information technology platform or its operations, additional time may be needed. States should engage with the Departments early in the process to determine whether federal infrastructure can accommodate technical changes that support their requested flexibilities. VIII. Enacted State Legislation States are required under the statute to enact or amend state laws to apply for and implement state actions under a section 1332 waiver. Under 31 CFR 33.108(f)(3)(i) and 45 CFR 155.1308(f)(3)(i), as part of the state’s waiver application, the state must include a comprehensive description of the state legislation and program to implement a plan meeting the 19 45 CFR 155.1308(c)(1), Sections 1332(d), 1332(e) of Public Law 111–148. PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 requirements for a waiver under section 1332. In addition, under 31 CFR 33.108(f)(3)(ii) and 45 CFR 155.1308(f)(3)(ii), the state must include a copy of the enacted state legislation that provides the state with authority to implement the proposed waiver, as required under section 1332(a)(1)(C) of the PPACA. Generally, a state must enact legislation establishing authority to pursue a section 1332 waiver and for the program to implement a section 1332 state plan, but the Departments also recognize that administrative regulations and executive orders generally carry the force of the law. In implementing this guidance, the Departments clarify that in certain circumstances, states may use existing legislation if it provides statutory authority to enforce PPACA provisions and/or the state plan, combined with a duly-enacted state regulation or executive order, may satisfy the requirement that the state enact a law under section 1332(b)(2). As one example, a state might have a statute that grants to a state official or agency authority to implement and enforce PPACA and to promulgate regulations to implement PPACA programs in the state. The state also has in place an executive order directing the appropriate state official or agency to pursue a State Innovation Waiver, as well as regulations that further authorize specific actions to be taken under a waiver. The Departments may consider these legislative, administrative, and executive actions together and determine that section 1332(b)(2) is satisfied. It is not possible to describe every combination of legislative, administrative and/or executive action that may satisfy the section 1332(b)(2) requirement. But so long as the state has enacted through its legislative branch a statute that authorizes the pursuit of a State Innovation Waiver, even broadly, the Departments will consider additional state administrative and executive branch actions in determining whether the section 1332(b)(2) requirement is satisfied. If a state is using an Executive Order or regulation to meet the requirement to enact a law for purposes of a 1332 waiver the state must include a letter from the state executive or Governor outlining that the state authority is sufficient to implement the state plan. The Departments generally will look favorably upon a state’s interpretation of its own state law. As a result, the Departments may determine that section 1332(b)(2) is satisfied, to enact a law where existing E:\FR\FM\24OCR1.SGM 24OCR1 Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations amozie on DSK3GDR082PROD with RULES legislation, coupled with an administrative regulation or executive order provides the authority to pursue a section 1332 waiver. This reflects the Departments’ intention to allow states increased flexibility to pursue a section 1332 waiver despite timing or other constraints, such as state legislative calendars that result in short or infrequent legislative sessions, provided that the state law at issue provides a sufficient foundation for an administrative regulation or executive order. IX. Public Input on Waiver Proposals Section 1332, and regulations at 31 CFR 33.112 and 45 CFR 155.1312 require states to provide a public notice and comment period for a waiver application sufficient to ensure a meaningful level of public input prior to submitting an application. As part of the public notice and comment period, a state with one or more Federallyrecognized tribes must conduct a separate process for meaningful consultation with such tribes. Because State Innovation Waiver applications may vary significantly in their complexity and breadth, the regulations provide states with flexibility in determining the length of the comment period required to allow for meaningful and robust public engagement. The comment period should in no case be less than 30 days. Consistent with HHS regulations, waiver applications must be posted online in a manner that meets national standards to assure access to individuals with disabilities. Such standards are issued by the Architectural and Transportation Barriers Compliance Board, and are referred to as ‘‘section 508’’ standards. Alternatively, the World Wide Web Consortium’s Web Content Accessibility Guidelines (WCAG) 2.0 Level AA standards would also be considered as acceptable national standard for website accessibility. For more information, see the WCAG website at http://www.w3. org/TR/WCAG20/. Section 1332 and its implementing regulations also require the Federal Government to provide a public notice and comment period, once the Secretaries receive an application. A submitted application will not be deemed received until the Secretaries have made the preliminary determination that the application is complete. The period must be sufficient to ensure a meaningful level of public input and must not impose requirements that are in addition to, or duplicative of, requirements imposed under the Administrative Procedure VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 Act, or requirements that are unreasonable or unnecessarily burdensome with respect to state compliance. As with the comment period described above, the length of the comment period should reflect the complexity of the proposal and in no case can be less than 30 days. X. Impact of Other Program Changes on Assessment of a Waiver Proposal The assessment of whether a State Innovation Waiver proposal satisfies the statutory criteria set forth in Section 1332 takes into consideration the impact of changes to PPACA provisions made pursuant to the State Innovation Waiver. The assessment also considers related changes to the state’s health care system that, under state law, are contingent only on the approval of the State Innovation Waiver. For example, the assessment would take into account the impact of a new state-run health benefits program that, under legislation enacted by the state, would be implemented only if the State Innovation Waiver were approved. The assessment does not consider the impact of policy changes that are contingent on further state action, such as state legislation that is proposed but not yet enacted. It also does not include the impact of changes contingent on other Federal determinations, including approval of Federal waivers pursuant to statutory provisions other than Section 1332. Therefore, the assessment would not take into account changes to Medicaid or CHIP that require separate Federal approval, such as changes in coverage or Federal Medicaid or CHIP spending that would result from a proposed Section 1115 demonstration, regardless of whether the Section 1115 demonstration proposal is submitted as part of a coordinated waiver application with a State Innovation Waiver. Savings accrued under either proposed or current Section 1115 Medicaid or CHIP demonstrations are not factored into the assessment of whether a proposed State Innovation Waiver meets the deficit neutrality requirement. The assessment also does not take into account any changes to the Medicaid or CHIP state plan that are subject to Federal approval. The assessment does take into account changes in Medicaid and/or CHIP coverage or in Federal spending on Medicaid and/or CHIP that would result directly from the proposed waiver of provisions pursuant to Section 1332, holding state Medicaid and CHIP policies constant. As the Departments receive and review waiver proposals, we will continue to examine the types of PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 53583 changes that will be considered in assessing State Innovation Waivers. Nothing in this guidance alters a state’s authority to make changes to its Medicaid and CHIP policies consistent with applicable law. This guidance does not alter the Secretary of Health and Human Services’ authority or CMS’ policy regarding review and approval of Section 1115 demonstrations, and states should continue to work with CMS’ Center for Medicaid and CHIP Services on issues relating to Section 1115 demonstrations. A state may submit a coordinated waiver application as provided in 31 CFR 33.102 and 45 CFR 155.1302; in such a case, each waiver will be evaluated independently according to applicable Federal laws. XI. Applicability This guidance supersedes the 2015 guidance, published on December 16, 2015 (80 FR 78131), which provided additional information about the requirements that must be met, the Secretaries’ application review procedures, the amount of pass-through funding, certain analytical requirements, operational considerations and public comment. This guidance will be in effect on the date of publication and will be applicable for section 1332 waivers submitted after the publication date of this guidance (including section 1332 waivers submitted, but not yet approved). Applications for waivers approved under section 1332 before the publication date of this guidance will not require reconsideration of whether such applications meet these updated requirements of section 1332. On January 20, 2017, the President issued an Executive Order (E.O.),20 which stated that ‘‘to the maximum extent permitted by law, the Secretary of HHS and heads of all other executive departments and agencies with authorities and responsibilities under the PPACA (Pub. L. 111–148) shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the PPACA that would impose a fiscal burden on any state or a cost, fee, tax, penalty, or regulatory burden on individuals, families, health care providers, health issuers, patients, recipients of health care services, purchasers of health insurance, or makers of medical devices, products, or medications.’’ Furthermore, the E.O. 20 https://www.federalregister.gov/documents/ 2017/01/24/2017-01799/minimizing-the-economicburden-of-the-patient-protection-and-affordablecare-act-pending-repeal. E:\FR\FM\24OCR1.SGM 24OCR1 53584 Federal Register / Vol. 83, No. 206 / Wednesday, October 24, 2018 / Rules and Regulations stated that ‘‘To the maximum extent permitted by law, the Secretary and the heads of all other executive departments and agencies with authorities and responsibilities under the Act, shall exercise all authority and discretion available to them to provide greater flexibility to states and cooperate with them in implementing healthcare programs.’’ In the spirit of this E.O., the Departments are seeking to reduce burdens that may impede a state’s efforts to implement innovative changes and improvements to their health care market while remaining consistent with the statute. We believe that the reduction in these burdens will lead to more affordable health coverage for individuals and families. Final regulations at 31 CFR part 33 and 45 CFR part 155 Subpart N remain in effect and require a state to provide actuarial analyses and actuarial certifications, economic analyses, data and assumptions, targets, an implementation timeline, and other necessary information to support the state’s estimates that the proposed waiver will comply with these requirements.21 The May 11, 2017, Checklist for Section 1332 State Innovation Waiver Applications, including specific items applicable to High-Risk Pool/State-Operated Reinsurance Program Applications, remains available to assist states in assembling an application for a section 1332 waiver. The Departments will apply the regulations and statutory requirements when reviewing state applications for section 1332 waivers and will work to provide states with the flexibility they need to be innovative and respond to the needs in their state. XII. Collection of Information Requirements amozie on DSK3GDR082PROD with RULES This document does not impose new information collection requirements, that is, reporting, recordkeeping or third-party disclosure requirements. Consequently, there is no need for review by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). 21 ‘‘Application, Review, and Reporting Process for Waivers for State Innovation Final Rule.’’ February 27, 2012. Available at: http://www.gpo. gov/fdsys/pkg/FR-2012-02-27/pdf/2012-4395.pdf. VerDate Sep<11>2014 16:10 Oct 23, 2018 Jkt 247001 Dated: October 9, 2018. Seema Verma, Administrator, Centers for Medicare & Medicaid Services. Dated: October 12, 2018. Alex M. Azar II, Secretary, Department of Health and Human Services. Dated: October 10, 2018. David J. Kautter, Assistant Secretary for Tax Policy, Department of Treasury. [FR Doc. 2018–23182 Filed 10–22–18; 11:15 am] BILLING CODE P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [Docket No. USCG–2018–0965] Drawbridge Operation Regulation; Sacramento River, Sacramento, CA Coast Guard, DHS. Notice of deviation from drawbridge regulation. AGENCY: ACTION: The Coast Guard has issued a temporary deviation from the operating schedule that governs the I Street Drawbridge across the Sacramento River, mile 59.4, at Sacramento, CA. The deviation is necessary to allow the bridge owner to conduct preventative maintenance. This deviation allows the bridge to remain in the closed-tonavigation position. DATES: This deviation is effective from 6 a.m. to 3 p.m. on November 6, 2018. ADDRESSES: The docket for this deviation, USCG–2018–0965, is available at http://www.regulations.gov. Type the docket number in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on Open Docket Folder on the line associated with this deviation. FOR FURTHER INFORMATION CONTACT: If you have questions on this temporary deviation, call or email Carl T. Hausner, Chief, Bridge Section, Eleventh Coast Guard District; telephone 510–437– 3516, email Carl.T.Hausner@uscg.mil. SUPPLEMENTARY INFORMATION: The Union Pacific Railroad Company has requested a temporary change to the operation of the I Street Drawbridge, mile 59.4, over the Sacramento River, at Sacramento, CA. The drawbridge navigation span provides a vertical clearance of 30 feet above Mean High Water in the closedto-navigation position. The draw operates as required by 33 CFR 117.189(a). Navigation on the waterway is commercial and recreational. SUMMARY: PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 The drawspan will be secured in the closed-to-navigation position from 6 a.m. to 3 p.m. on November 6, 2018, to allow the bridge owner to perform necessary preventative maintenance on the center lens of the drawspan. This temporary deviation has been coordinated with the waterway users. No objections to the proposed temporary deviation were raised. Vessels able to pass through the bridge in the closed position may do so at anytime. The bridge will not be able to open for emergencies and there is no immediate alternate route for vessels to pass. The Coast Guard will also inform the users of the waterway through our Local and Broadcast Notices to Mariners of the change in the operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation. In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35. Dated: October 18, 2018. Carl T. Hausner, District Bridge Chief, Eleventh Coast Guard District. [FR Doc. 2018–23136 Filed 10–23–18; 8:45 am] BILLING CODE 9110–04–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 80 [EPA–HQ–OAR–2018–0172; FRL 9985–76– OAR] RIN 2060–AT91 Approval of Louisiana’s Request To Relax the Federal Reid Vapor Pressure (RVP) Gasoline Standard for the Baton Rouge Area Environmental Protection Agency (EPA). ACTION: Final rule. AGENCY: The Environmental Protection Agency (EPA) is taking final action to approve a request from Louisiana for EPA to relax the federal Reid Vapor Pressure (RVP) standard applicable to gasoline introduced into commerce from June 1 to September 15 of each year for the Louisiana parishes of East Baton Rouge, West Baton Rouge, Livingston, Ascension, and Iberville (the Baton Rouge Area). Specifically, EPA is approving amendments to the regulations to allow the gasoline RVP SUMMARY: E:\FR\FM\24OCR1.SGM 24OCR1

Agencies

[Federal Register Volume 83, Number 206 (Wednesday, October 24, 2018)]
[Rules and Regulations]
[Pages 53575-53584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-23182]


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DEPARTMENT OF THE TREASURY

31 CFR Part 33

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 155

[CMS-9936-NC]


State Relief and Empowerment Waivers

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services; Department of the Treasury.

ACTION: Guidance.

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SUMMARY: This guidance relates to section 1332 of the Patient 
Protection and Affordable Care Act (PPACA) and its implementing 
regulations. Section 1332 provides the Secretary of Health and Human 
Services and the Secretary of the Treasury (collectively, the 
Secretaries) with the discretion to approve a state's proposal to waive 
specific provisions of the PPACA (a State Innovation Waiver, now also 
referred to as a State Relief and Empowerment Waiver), provided the 
section 1332 state plan meets certain requirements. The Department of 
Health and Human Services and the Department of the Treasury 
(collectively, the Departments) finalized implementing regulations on 
February 27, 2012. This updated guidance provides supplementary 
information about the requirements that must be met for the approval of 
a State Innovation Waiver, the Secretaries' application review 
procedures, the calculation of pass-through funding, certain analytical 
requirements, and operational considerations. This guidance supersedes 
the guidance related to section 1332 of the PPACA that was previously 
published on December 16, 2015. Changes include increasing flexibility 
with respect to the manner in which a section 1332 state plan may meet 
section 1332 standards in order to be eligible to be approved by the 
Secretaries, clarifying the adjustments the Secretaries may make to 
maintain federal deficit neutrality, and allowing for states to use 
existing legislative authority to authorize section 1332 waivers in 
certain scenarios. The Departments are committed to empowering states 
to innovate in ways that will strengthen their health insurance 
markets, expand choices of coverage, target public resources to those 
most in need, and meet the unique circumstances of each state. This 
guidance aims to lower barriers to

[[Page 53576]]

innovation for states seeking to reform their health insurance markets.

DATES: Applicability date: This guidance is applicable beginning 
October 22, 2018. Comment date: To be assured consideration, comments 
must be received at one of the addresses provided below, no later than 
5 p.m. on December 24, 2018.

ADDRESSES: In commenting, refer to file code CMS-9936-NC. Because of 
staff and resource limitations, we cannot accept comments by facsimile 
(FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
document to http://www.regulations.gov. Follow the ``Submit a comment'' 
instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9936-NC, P.O. Box 8010, 
Baltimore, MD 21244-1810.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9936-NC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Lina Rashid, (202) 260-6098.
    Michele Koltov, (301) 492-4225.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments 
received are available for viewing by the public, including any 
personally identifiable or confidential business information that is 
included in a comment. We post all comments received on the following 
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to 
view public comments.

I. Overview

    One of the Administration's priorities is to empower states by 
providing tools to address the serious problems that have surfaced in 
state individual health insurance markets with the implementation of 
the Patient Protection and Affordable Care Act (PPACA). After the 
Exchanges took full effect in 2014, individual market insurance 
companies began experiencing substantial losses. Industry analysts 
estimate aggregate losses reached $7.2 billion (10.1 percent of 
premiums) in 2015.\1\ In response to these losses, many issuers (some 
of whom entered the market as a result of the PPACA) left the market, 
including issuers participating on the Exchanges. The percentage of 
counties with one Exchange issuer grew from 7 percent in 2016 to 33 
percent in 2017 and to 52 percent in 2018, representing 2 percent, 21 
percent, and 26 percent of enrollees respectively.\2\ The issuers 
remaining in the individual market increased premiums substantially 
between 2013 and 2017; average premiums for individual market health 
plans sold through Healthcare.gov rose by 105 percent.\3\ While 
subsidized enrollment in Exchanges remains stable, overall enrollment 
on and off the Exchanges dropped between 2016 and 2017 by over 10 
percent, reflecting a sizable drop in unsubsidized enrollment.\4\ 
Kaiser Family Foundation further found that individual market 
enrollment dropped 12 percent between the first quarter of 2017 and the 
first quarter of 2018.\5\ This drop represents deterioration in the 
individual market for people who pay the full premium. These national 
average premium and enrollment trends mask deeper, more serious 
problems occurring in certain state markets. Some states experienced 
premium increases in excess of 200 percent between 2013 and 2017.\6\ 
States with larger premium increases also tended to experience larger 
enrollment declines, with a few states losing more than a third of the 
individual market in 2017.\7\ According to Kaiser, there were 14.4 
million people enrolled in the individual market as of the first 
quarter of 2018, compared to 10.6 million people in 2013.\8\ This gain 
in enrollment has come at a significant cost to the federal government 
as CBO estimates the premium tax credits will total about $50 billion 
in 2018.\9\
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    \1\ Losses in 2016 appear to be between 7% and 9% of premiums. 
https://healthcare.mckinsey.com/2016-individual-market-losses-are-high-single-digits%E2%80%94-slight-improvement-2015. The insurance 
market is showing signs of stabilizing. http://files.kff.org/attachment/Issue-Brief-Individual-Insurance-Market-Performance-in-Early-2018.
    \2\ https://www.kff.org/health-reform/issue-brief/insurer-participation-on-aca-marketplaces/ and Kaiser Family Foundation 
analysis as of August 26, 2016.
    \3\ The data is for states using the federally-facilitated 
exchange. Pg 2. https://aspe.hhs.gov/system/files/pdf/256751/IndividualMarketPremiumChanges.pdf. The premium increases since 2013 
are partly attributable to changes in the types of policies that may 
be offered. For example, the Congressional Budget Office estimates 
that PPACA market reforms including requiring a minimum actuarial 
value of 60 percent, coverage of pre-existing conditions and 
covering more benefits likely resulted in about a 27 to 30 percent 
increase in premiums. See Congressional Budget Office, Private 
Health Insurance Premiums and Federal Policy, February 2016, p.21.
    \4\ Pg 1. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/2018-07-02-Trends-Report-2.pdf.
    \5\ http://files.kff.org/attachment/Data-Note-Changes-in-Enrollment-in-the-Individual-Health-Insurance-Market.
    \6\ Alabama, Alaska, and Oklahoma experienced premium increases 
in excess of 200 percent between 2013 and 2017. https://aspe.hhs.gov/system/files/pdf/256751/IndividualMarketPremiumChanges.pdf.
    \7\ Figure 4 https://downloads.cms.gov/cciio/Summary-Report-Risk-Adjustment-2017.pdf.
    \8\ http://files.kff.org/attachment/Data-Note-Changes-in-Enrollment-in-the-Individual-Health-Insurance-Market.
    \9\ https://www.cbo.gov/system/files?file=2018-06/53826-healthinsurancecoverage.pdf.
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    This guidance intends to expand state flexibility, empowering 
states to address problems with their individual insurance markets and 
increase coverage options for their residents, while at the same time 
encouraging states to adopt innovative strategies to reduce future 
overall health care spending. Section 1332 of the PPACA permits a state 
to apply for a State Innovation Waiver (referred to as a section 1332 
waiver or a State Relief and Empowerment Waiver) to pursue innovative 
strategies for providing their residents with access to higher value, 
more affordable health coverage. The overarching goal of section 1332 
waivers is to give all Americans the opportunity to gain high value and 
affordable health coverage regardless of income, geography, age, 
gender, or health status while empowering states to develop health 
coverage strategies that best meet the needs of their residents. 
Section 1332 waivers provide states an opportunity to promote a stable 
health insurance market that offers more choice and affordability to 
state residents, in part through expanded competition. These waivers 
could potentially be used to allow states to build on additional 
opportunities for more flexible and affordable coverage that the 
Administration opened through expanded options for Association Health 
Plans (AHP) \10\ and short-term, limited-duration insurance 
(STLDI).\11\
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    \10\ https://www.federalregister.gov/documents/2018/06/21/2018-12992/definition-of-employer-under-section-35-of-erisa-association-health-plans.
    \11\ https://www.federalregister.gov/documents/2018/08/03/2018-16568/short-term-limited-duration-insurance.
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    The Departments are seeking to reduce burdens that may impede a 
state's efforts to implement innovative changes and improvements to its 
health

[[Page 53577]]

insurance market while remaining consistent with the statute. We 
believe that the reduction in these burdens will lead to more 
affordable health coverage for individuals and families. Under section 
1332 of the PPACA, the Secretaries may exercise their discretion to 
approve a request for a section 1332 waiver \12\ only if the 
Secretaries determine that the proposal for the section 1332 waiver 
meets the following four requirements (referred to as the statutory 
guardrails): (1) The proposal will provide coverage that is at least as 
comprehensive as coverage defined in PPACA's section 1302(b) and 
offered through Exchanges established by title I of PPACA, as certified 
by the Office of the Actuary of the Centers for Medicare & Medicaid 
Services based on sufficient data from the State and from comparable 
States about their experience with programs created by the PPACA and 
the provisions of the PPACA that would be waived; (2) the proposal will 
provide coverage and cost-sharing protections against excessive out-of-
pocket spending that are at least as affordable for the state's 
residents as would be provided under title I of PPACA; (3) the proposal 
will provide coverage to at least a comparable number of the state's 
residents as would be provided under title I of PPACA; and (4) the 
proposal will not increase the federal deficit. The Secretaries retain 
their discretionary authority under section 1332 to deny waivers when 
appropriate given consideration of the application as a whole, even if 
an application meets the four statutory guardrail requirements. The 
Secretaries will consider favorably section 1332 waiver applications 
that advance some or all of these five principles as elements of a 
section 1332 waiver application. The principles are:
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    \12\ The Departments' State Innovation Waiver authority is 
limited to requirements described in section 1332(a)(2) of the 
PPACA. Further, section 1332(c) of the PPACA states that while the 
Secretaries have broad discretion to determine the scope of a 
waiver, no federal laws or requirements may be waived that are not 
within the Secretaries' authority. See 77 FR 11700, 11711 (February 
27, 2012). Therefore, for example, section 1332 does not grant the 
Departments the authority to waive any provision of ERISA.
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     Provide increased access to affordable private market 
coverage. Making private health insurance coverage more accessible and 
affordable should be a priority for a section 1332 waiver. A section 
1332 state plan should foster health coverage through competitive 
private coverage, including AHPs and STLDI plans, over public programs. 
Additionally, the Departments will look favorably upon section 1332 
applications under which states increase issuer participation in state 
insurance markets and promote competition.
     Encourage sustainable spending growth. Section 1332 
waivers should promote more cost-effective health coverage and be fair 
to the federal taxpayer by restraining growth in federal spending 
commitments. For example, states should consider eliminating or 
reducing state-level regulation that limits market choice and 
competition in order to reduce prices for consumers and reduce costs to 
the federal government, as part of their section 1332 waiver 
applications.
     Foster state innovation. States are better positioned than 
the federal government to assess and respond to the needs of their 
citizens with innovative solutions. We encourage states to craft 
solutions that meet the needs of their consumers and markets and 
innovate to the maximum extent possible under the law.
     Support and empower those in need. Americans should have 
access to affordable, high value health insurance. Some Americans, 
particularly those with low incomes or high expected health care costs, 
may require financial assistance. Policies in section 1332 waiver 
applications should support state residents in need in the purchase of 
private coverage with financial assistance that meets their specific 
health care situations.
     Promote consumer-driven healthcare. Section 1332 waivers 
should empower Americans to make informed choices about their health 
coverage and health care with incentives that encourage consumers to 
seek value. Instead of only offering a one-size-fits-all plan proposal, 
a section 1332 state plan should focus on providing people with the 
resources and information they need to afford and purchase the private 
insurance coverage that best meets their needs.
    States should explain in their waiver applications how their 
proposals would advance some or all of these principles. Consistent 
with the principles laid out above, the Secretaries intend to provide 
states with maximum flexibility within the law to innovate, empower 
consumers, and expand higher value and more affordable coverage 
options.
    As under similar waiver authorities, the Secretaries reserve the 
right to suspend or terminate a waiver, in whole or in part, any time 
before the date of expiration, if the Secretaries determine that the 
state materially failed to comply with the terms and conditions of the 
waiver. Additionally, states with approved section 1332 waivers must 
comply with all applicable federal laws and regulations (unless 
specifically waived) and must come into compliance with any changes in 
federal law or regulations affecting section 1332 waivers.
    Final regulations at 31 CFR part 33 and 45 CFR part 155, subpart N, 
require a state to provide actuarial analyses and actuarial 
certifications, economic analyses, data and assumptions, targets, an 
implementation timeline, and other necessary information to support the 
state's estimates that the proposed waiver will comply with section 
1332 requirements.\13\
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    \13\ Application, Review, and Reporting Process for Waivers for 
State Innovation Final Rule, February 27, 2012. Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-02-27/pdf/2012-4395.pdf.
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II. Changes to 2015 Guidance

    In 2015, the Departments published guidance explaining how they 
would consider applications for waivers under section 1332 (2015 
guidance).\14\ In light of the Departments' experience since 2015 in 
considering State waiver applications and communicating with states 
considering such applications, the Departments have reviewed the 
statutory guardrails to determine whether the interpretations set forth 
in the previous guidance could be revised to provide more flexibility 
to the states. As a result of this review, the Departments have 
determined that the analysis of comprehensiveness and affordability of 
coverage under a waiver should focus on the nature of coverage that is 
made available to state residents (access to coverage), rather than on 
the coverage that residents actually purchase. Adopting this more 
flexible interpretation of the section 1332 guardrails that focuses on 
coverage made available under the waiver will lower barriers to 
innovation and allow states to implement waiver plans that will 
strengthen their health insurance markets by providing a variety of 
coverage options.
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    \14\ https://www.gpo.gov/fdsys/pkg/FR-2015-12-16/pdf/2015-31563.pdf.
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    Section 1332(b)(1)(C) requires that a state's plan under a waiver 
will provide coverage ``to at least a comparable number of its 
residents'' as would occur without the waiver. By contrast, section 
1332(b)(1)(A) and (B) merely state that the state's plan will provide 
coverage that is as comprehensive and affordable as would occur without 
a waiver, but do not specify to whom such coverage must be provided. 
The 2015 guidance focused on the number of individuals actually 
estimated to receive comprehensive and affordable coverage, in effect 
reading the ``to at least a comparable number of its residents'' 
language from the coverage

[[Page 53578]]

guardrail into the comprehensiveness and affordability guardrails as 
well. However, the Departments do not believe that the language or 
structure of the statute compels that reading.
    Further, a major disadvantage of the 2015 interpretation was that 
it deterred states from providing innovative coverage that, while 
potentially less comprehensive than coverage established under the 
PPACA, could have been better suited to consumer needs and potentially 
more affordable and attractive to a broad range of its residents. For 
example, even if coverage similar to that made available under the 
PPACA remained available in a state, an offer of more attractive, but 
less comprehensive plans would have reduced the number of residents who 
elected PPACA-like coverage, and would likely have caused the state 
waiver plan to fail the comprehensiveness guardrail. To avoid this 
effect of the 2015 guidance, this guidance focuses on the availability 
of comprehensive and affordable coverage. This shift in focus ensures 
that state residents who wish to retain coverage similar to that 
provided under the PPACA can continue to do so, while permitting a 
state plan to also provide access to other options that may be better 
suited to consumer needs and more attractive to many individuals.
    In order to ensure that the Departments' revised interpretation of 
the comprehensiveness and affordability guardrails provides full 
meaning to the statute and aligns with the Administration's principles, 
it is important that the two guardrails be evaluated in conjunction. In 
other words, it is not enough to make available some coverage that is 
comprehensive but not affordable, while making available other coverage 
that is affordable but not comprehensive. Thus, the guidance, as 
described in detail below, provides that a state plan will comply with 
the comprehensiveness and affordability guardrails, consistent with the 
statute, if it makes coverage that is both comprehensive and affordable 
available to a comparable number of otherwise qualified residents as 
would have had such coverage available absent the waiver.
    The 2015 guidance concerning the comprehensiveness and 
affordability guardrails has also been revised to focus on the 
aggregate effects of a waiver. The 2015 guidance largely prohibited 
approval of a state plan that made coverage less comprehensive or 
affordable for any particular group of residents. While analysis will 
continue to consider effects on all categories of residents, the 
revised guardrails will give states more flexibility to decide that 
improvements in comprehensiveness and affordability for state residents 
as a whole offset any small detrimental effects for particular 
residents. As discussed in this guidance and principles above, the 
state should also address in the application for the section 1332 
waiver how the section 1332 state plan addresses the Administration's 
priority to support and empower those with low incomes as well at those 
with high expected health care costs.
    The coverage guardrail requires that coverage be provided to at 
least a comparable number of residents as would occur absent the 
waiver. However, the text of the coverage guardrail provision of the 
statute is silent as to the type of coverage that is required. 
Accordingly, to enable state flexibility and to promote choice of a 
wide range of coverage to ensure that consumers can enroll in coverage 
that is right for them, this guidance permits states to provide access 
to less comprehensive or less affordable coverage as an additional 
option for their residents to choose. This guidance on the coverage 
guardrail continues to consider the number of state residents who are 
actually receiving coverage. As long as a comparable number of 
residents are projected to be covered as would have been covered absent 
the waiver, the coverage guardrail will be met.
    In addition, in another effort to provide flexibility for states 
and provide full meaning to the statute in this guidance, the 
Departments clarify that in certain circumstances, existing state 
legislation that provides statutory authority to enforce PPACA 
provisions and the state plan, combined with a duly-enacted state 
regulation or executive order, may satisfy the requirement that the 
state enact a law under section 1332(b)(2).
    Finally, our analysis of the deficit neutrality guardrail has been 
revised to provide more specific guidance in light of the Departments' 
experience in evaluating waiver applications.

III. Statutory Guardrail Requirements

    The following guidance explains in more detail how the Departments 
will evaluate each of the statutory guardrails.

A. Comprehensiveness and Affordability

    The Departments may consider these guardrails met if access to 
coverage that is as affordable and comprehensive as coverage forecasted 
to have been available in the absence of the waiver is projected to be 
available to a comparable number of people under the waiver. The 
Departments will not require projections demonstrating that this 
coverage will actually be purchased by a comparable number of state 
residents; in other words, these guardrails will be met if the state 
plan has made other coverage options available that state residents may 
prefer, so long as access to affordable, comprehensive coverage is also 
available. Thus, the Departments will consider the affordability 
requirement to be met in a state plan that will provide consumers 
access to coverage options that are at least as affordable and 
comprehensive as the coverage options provided without the waiver, to 
at least a comparable number of people as would have had access to such 
coverage absent the waiver. In evaluating whether the state plan meets 
the comprehensiveness and affordability guardrails, the Departments 
will take into account access to affordable, comprehensive coverage to 
all state residents, regardless of the type of coverage they would have 
had access to in absence of the waiver.
Comprehensiveness
    Comprehensiveness refers to the scope of benefits provided by the 
coverage as measured by the extent to which coverage meets essential 
health benefits (EHB) requirements as defined in section 1302(b) of the 
PPACA and offered through Exchanges established by title I of PPACA, as 
certified by the Office of the Actuary of the Centers for Medicare & 
Medicaid Services. The impact on all state residents eligible for 
coverage under title I of PPACA is considered, regardless of the type 
of coverage that they would have had access to absent the waiver.
    In April 2018, CMS provided states with substantially more options 
in the selection of an EHB-benchmark plan.\15\ The Departments will 
evaluate comprehensiveness by comparing access to coverage under the 
waiver to the state's EHB benchmark (for the applicable plan year) 
selected by the state (or if the state does not select a benchmark, the 
default base-benchmark

[[Page 53579]]

plan), any other state's benchmark plan chosen by the state for 
purposes of the waiver application, or any benchmark plan chosen by the 
state that the state could otherwise build that could potentially 
become their EHB-benchmark plan.
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    \15\ As finalized in the HHS Notice of Benefit and Payment 
Parameters for 2019, starting in plan year 2020 CMS is providing 
states with additional flexibility in how they select their EHB-
benchmark plan. The final rule provides states with substantially 
more options in what they can select as an EHB-benchmark plan. 
Instead of being limited to 10 options, states will now be able to 
choose from the 50 EHB-benchmark plans used for the 2017 plan year 
in other states or select specific EHB categories, such as drug 
coverage or hospitalization, from among the categories used for the 
2017 plan year in other states. States will also now be able to 
build their own set of benefits that could potentially become their 
EHB-benchmark plan, subject to certain scope of benefits 
requirements.
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Affordability
    Affordability refers to state residents' ability to pay for health 
care expenses relative to their incomes and may generally be measured 
by comparing each individual's expected out-of-pocket spending for 
health coverage and services to their income. Out-of-pocket spending 
for health care includes premiums (or equivalent costs for enrolling in 
coverage) and spending such as deductibles, co-pays, and co-insurance 
associated with the coverage, or direct payments for healthcare. In 
evaluating affordability, the Departments will take into account access 
to affordable, comprehensive coverage available to all state residents, 
regardless of the type of coverage they would have had access to in the 
absence of the waiver. In addition to considering the number of state 
residents for whom comprehensive coverage has become more or less 
affordable, the Departments will take into account the magnitude of 
such changes. For example, a waiver that makes coverage slightly more 
affordable for some people but much less affordable for a comparable 
number of people would be less likely to be granted than a waiver that 
makes coverage substantially more affordable for some people without 
making others substantially worse off. In addition, a waiver that makes 
coverage much more affordable for some people and only slightly more 
costly for a larger number of people would likely meet this guardrail. 
The Departments will consider the changes in affordability for all 
groups, including low-income residents and those with high expected 
health care costs.
    As provided in 31 CFR part 33 and 45 CFR part 155, subpart N, the 
waiver application must include analysis and supporting data that 
establishes that the waiver satisfies the comprehensiveness and 
affordability guardrails. This includes an explanation of how the 
coverage available under the waiver differ from the coverage chosen 
absent the waiver (if the coverage differs at all) and how the state 
determined the coverage to be as comprehensive. It also includes 
information on estimated individual out-of-pocket costs (premium and 
out-of-pocket expenses for deductibles, co-payments, co-insurance, co-
payments and plan differences) by income, health expenses, health 
insurance status, and age groups, absent the waiver and for available 
coverage under the waiver. The application should identify any types of 
individuals (including, but not limited to, those individuals who are 
low income or have high expected health care costs) for whom 
affordability of coverage would be reduced by the waiver and also 
identify any types of individuals for whom affordability of coverage 
would be improved by the waiver. The state should also address in its 
section 1332 waiver application how it would address the 
Administration's priority to support and empower consumers, including 
those with high expected health care costs and those with low incomes.

B. Number of State Residents Covered (Coverage)

    To meet the coverage requirement, the section 1332 state plan must 
provide meaningful health care coverage to a comparable number of its 
residents as title I of PPACA would provide. The Departments will 
assess the coverage guardrail by requiring the state to forecast, for 
each year the section 1332 state plan will be in effect, the number of 
individuals that will have health care coverage under the section 1332 
state plan, and compare that to the number of individuals that would 
have had health care coverage absent the waiver. A section 1332 state 
plan will be considered to comply with this coverage guardrail if, for 
each year the waiver is in effect, the state can demonstrate that a 
comparable number of state residents eligible for coverage under title 
I of PPACA will have health care coverage under the section 1332 state 
plan as would have had coverage absent the waiver. For purposes of 
meeting this guardrail, in line with the Administration's priority 
favoring private coverage, including AHPs and STLDI plans, the 
Departments will consider all forms of private coverage in addition to 
public coverage, including employer-based coverage, individual market 
coverage, and other forms of private health coverage. Coverage refers 
to minimum essential coverage as defined in 26 U.S.C. 5000A(f) and 26 
CFR 1.5000A-2, and health insurance coverage as defined in 45 CFR 
144.103.\16\
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    \16\ Health insurance coverage means benefits consisting of 
medical care (provided directly, through insurance or reimbursement, 
or otherwise) under any hospital or medical service policy or 
certificate, hospital or medical service plan contract, or HMO 
contract offered by a health insurance issuer. Health insurance 
coverage includes group health insurance coverage, individual health 
insurance coverage, and short-term, limited-duration insurance.
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    Under this guardrail, the impact on all state residents eligible 
for coverage under title I of PPACA will be considered, regardless of 
the type of coverage they would have had absent the waiver. For 
example, while a section 1332 waiver alone may not change the terms of 
a state's Medicaid coverage or change existing Medicaid demonstration 
authority, changes in Medicaid enrollment--whether increases or 
decreases--that result from a section 1332 waiver, holding the state's 
Medicaid policies constant, will be considered in evaluating the number 
of residents with coverage under a waiver. The Departments will 
consider the effects the section 1332 state plan will have on coverage 
in the aggregate across all state residents. However, as noted in this 
guidance, an application for a section 1332 waiver should address the 
Administration's priority to support and empower consumers, including 
those with high expected health care costs and those with low incomes. 
The assessment under the coverage requirement will take into account 
whether the section 1332 state plan sufficiently prevents gaps in or 
discontinuations of coverage. The section 1332 guardrails generally 
should be forecast to be met in each year that a waiver would be in 
effect. However, the Departments will consider the longer-term impacts 
of a state's proposal, and may approve a waiver even where a state 
expects a temporary reduction in coverage but can demonstrate that the 
reduction is reasonable under the circumstances, and that the 
innovations will produce longer-term increases in the number of state 
residents who have coverage such that, in the aggregate, the coverage 
guardrail will be met or exceeded over the course of the waiver term. 
For example, the Departments may approve a 1332 waiver plan that is not 
forecast to meet the coverage guardrail on Day 1 of the waiver, if the 
state's plan is forecast to meet or exceed pre-waiver coverage levels 
within a reasonable amount of time, and any coverage reductions are 
offset by coverage gains. The reasonableness of a proposed transition 
period will be considered, taking into account the following: The 
reasons it is infeasible under the state's plan to fully maintain pre-
waiver coverage levels at the outset; the degree of the departure from 
the pre-waiver levels during the transition period; the state's ability 
to demonstrate the long-term gains in coverage as compared to pre-
waiver levels; other features of the plan that mitigate the impact of 
the

[[Page 53580]]

departure, if any; and any other relevant factors.
    As provided in 31 CFR part 33 and 45 CFR part 155, subpart N, the 
waiver application must include analysis and supporting data that 
establishes that the waiver satisfies the scope of coverage 
requirement, including information on the number of individuals covered 
by income, health expenses, health insurance status, and age group, 
under title I of PPACA and under the waiver, including year-by-year 
estimates. The application should identify any types of individuals who 
are more or less likely to be covered under the waiver than under 
current law.

C. Deficit Neutrality

    Under the deficit neutrality requirement, the projected federal 
spending net of federal revenues under the section 1332 waiver must be 
equal to or lower than projected federal spending net of federal 
revenues in the absence of the section 1332 waiver.
    The estimated effect on federal revenue includes all changes in 
income, payroll, or excise tax revenue, as well as any other forms of 
revenue (including but not limited to user fees), that would result 
from the proposed waiver. Estimated effects would include, for example, 
changes in amounts the federal government pays in premium tax credits 
(PTC) and small business tax credits; changes in the amount of employer 
shared responsibility payments and excise taxes on high-cost employer-
sponsored plans collected by the federal government; and changes in 
income and payroll taxes resulting from changes in tax exclusions for 
employer-sponsored insurance and in deductions for medical expenses.
    The effect on federal spending includes all changes in Exchange 
financial assistance and any other spending that result from the 
section 1332 waiver. Projected federal spending under the waiver 
proposal also includes all administrative costs of the federal 
government, including any changes in Internal Revenue Service 
administrative costs, federal Exchange administrative costs, or other 
administrative costs associated with the waiver or alleviated by the 
waiver.
    Waivers must not increase the federal deficit over the period of 
the waiver (which may not exceed 5 years unless renewed) or in total 
over the 10-year budget plan submitted by the state as part of the 
application. We have revised the 2015 guidance to clarify that the ten-
year budget plan should describe the changes in projected federal 
spending and changes in federal revenues attributed to the waiver for 
each of the ten years.
    The 10-year budget plan should assume the waiver would continue 
permanently, unless such an assumption would be inconsistent with the 
nature and intent of the state plan. However, the budget plan should 
not include federal spending or savings attributable to any period 
outside of the 10-year budget window. A variety of factors, including 
the likelihood and accuracy of projected spending and revenue effects 
and the timing of those effects, will be considered when evaluating the 
effect of the waiver on the federal deficit.

IV. Federal Pass-Through Funding

    Section 1332 directs the Secretaries to pay pass-through funding 
for the purpose of implementing the state plan under the waiver. The 
amount of federal pass-through funding equals the Secretaries' annual 
estimate of the federal financial assistance, including PTC, small 
business tax credits, or cost-sharing reductions, provided pursuant to 
the PPACA that would have been paid on behalf of participants in the 
Exchange in the state in the calendar year in the absence of the 
waiver, but will not be paid as a result of the waiver. This includes 
any amount of federal financial assistance pursuant to the PPACA not 
paid due to an individual not qualifying for financial assistance or 
qualifying for a reduced level of financial assistance resulting from a 
waived provision as a direct result of the waiver plan. The pass-
through amount does not include any savings other than the reduction in 
PPACA financial assistance. The pass-through amount will be reduced by 
any other increase in spending or decrease in revenue if necessary to 
ensure deficit neutrality. The estimates take into account experience 
in the relevant state and similar states. This amount is calculated 
annually by the Departments. The annual amount may be updated at any 
time to reflect changes in state or federal law (including regulation 
and sub-regulatory guidance).
    The waiver application, consistent with the Departments' 
regulations, must provide analysis and supporting data to inform the 
estimate of the pass-through funding amount. For states that do not 
utilize a Federally-facilitated Exchange, this includes information 
about enrollment, premiums, and Exchange financial assistance in the 
state's Exchange by age, income, and type of policy, and other 
information as may be required by the Secretaries. For further 
information on the demographic and economic assumptions to be used in 
determining the pass-through amount, see Section V of this guidance.
    As part of the state's waiver application, the state should include 
a description of the provisions for which the state seeks a waiver and 
how the waiver is necessary to facilitate the state's waiver plan. 
Further, as part of the state's waiver plan if the state is seeking 
pass-through funding, the state waiver application should include an 
explanation of how, due to the structure of the section 1332 state plan 
and the statutory provisions waived, the state anticipates that 
individuals would no longer qualify for financial assistance (PTC, 
small business tax credits, or cost-sharing reductions) or would 
qualify for reduced financial assistance for which they would not be 
eligible absent the section 1332 waiver. The state should also explain 
how the state intends to use that funding for the purposes of 
implementing its section 1332 state plan. Pass-through funding may only 
be used to implement the approved section 1332 state plan. States have 
a wide range of flexibility in designing their section 1332 waiver 
application and section 1332 state plan.

V. Economic Assumptions and Methodological Guidelines

    The determination of whether a waiver meets the requirements under 
section 1332 and the calculation of the pass-through funding amount are 
made using generally accepted actuarial and economic analytic methods, 
such as micro-simulation. The analysis relies on assumptions and 
methodologies that are similar to those used to produce the baseline 
and policy projections included in the most recent President's Budget 
(or Mid-Session Review),\17\ but adapted as appropriate to reflect 
state-specific conditions. As provided in 31 CFR 33.108(f)(4)(i) and 45 
CFR 155.1308(f)(4)(i), the state must include actuarial analyses and 
actuarial certifications to support the state's estimates that the 
proposed waiver will comply with the comprehensive coverage 
requirement, the affordability requirement, and the scope of coverage 
requirement. In this guidance, we clarify that this actuarial analysis 
and certification should be conducted by a member of the American 
Academy of Actuaries.
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    \17\ https://www.whitehouse.gov/omb/budget/.
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    The Departments' analysis is based on state-specific estimates of 
the current level and distribution of population by the relevant 
economic and demographic characteristics, including income and source 
of health coverage. It generally uses federal estimates of population

[[Page 53581]]

growth, economic growth as published in the Analytical Perspectives 
volume released as part of the President's Budget (https://www.whitehouse.gov/omb/budget/Analytical_Perspectives) and health care 
cost growth (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html?redirect=/NationalHealthExpendData/) to project the initial 
state variables through the 10-year Budget plan window. However, in 
limited circumstances where it is expected that a state will experience 
substantially different trends than the nation as a whole in the 
absence of a waiver, the Secretaries may determine that state-specific 
assumptions will be used.
    Estimates of the effect of the waiver assume, in accordance with 
standard estimating conventions, that macroeconomic variables like 
population, output, and labor supply are not affected by the waiver. 
However, estimates take into account, as appropriate, other changes in 
the behavior of individuals, employers, and other relevant entities 
induced by the waiver where applicable, including employer decisions 
regarding what coverage (and other compensation) they offer and 
individual decisions regarding whether to take up coverage. The same 
state-specific and federal data, assumptions, and model are used to 
calculate comprehensiveness, affordability, and coverage, and relevant 
state components of federal taxes and spending under the waiver and 
under current law.
    The analysis and information submitted by the state as part of the 
application should conform to these standards as outlined in this 
guidance. The application should describe all modeling assumptions 
used, sources of state-specific data, and the rationale for any 
deviation from federal forecasts. A state may be required under 31 CFR 
33.108(f)(4)(vii) and 45 CFR 155.1308(f)(4)(vii) to provide to the 
Secretaries copies of any data used for their waiver analyses that are 
not publicly available so that the Secretaries can independently verify 
the analysis produced by the state.
    For each of the guardrails, the state should clearly explain its 
estimates with and without the waiver. The actuarial and economic 
analyses must compare comprehensiveness, affordability, coverage, and 
net federal spending and revenues under the waiver to those measures 
absent the waiver (the baseline) for each year of the waiver. If the 
state is submitting a waiver application for less than a 5-year period, 
the actuarial analysis can be submitted for the period of the waiver. 
The Departments, in accordance with their regulations, may request 
additional information or data in order to conduct their assessments.
    The state should also provide a description of the models used to 
produce these estimates, including data sources and quality of the 
data, key assumptions, and parameters for the section 1332 state plan. 
The Departments are not prescribing any particular method of actuarial 
analysis to estimate the potential impact of a section 1332 waiver. 
However, the state should explain its modeling in sufficient detail to 
allow the Secretaries to evaluate the accuracy of the state's modeling 
and the comprehensiveness and affordability of the coverage available 
under the state's waiver proposal. As permitted under 45 CFR 
155.1308(g) and 31 CFR 33.108(g), the state may be required to provide 
data or other information that it used to make its estimates to inform 
the Secretaries' assessment, including an explanation of the 
assumptions used in the actuarial analysis.

VI. Operational Considerations

A. Federally-Facilitated Exchanges

    CMS operates the Exchange information technology platform (the 
federal platform) utilized by the Federally-facilitated Exchanges 
(FFEs) and some state Exchanges. Previously, CMS stated that the 
federal platform could not accommodate different eligibility and 
enrollment rules for different states. Since then, the federal platform 
has undergone technical enhancements necessary for the FFE's operations 
that will enable it to support increased variation and flexibility for 
states that may want to leverage components of the federal platform to 
implement new models through section 1332 waivers. These improvements 
will include functionality that will enable states to work with private 
industry partners to create their own websites that could replace the 
consumer-facing aspects of HealthCare.gov for their state, while 
allowing the state to utilize aspects of the back-end technology that 
supports the FFE. Using this enhanced direct enrollment functionality 
\18\ as well as other CMS technology, states and private partners could 
customize the display of plan data and the information provided to 
consumers, or access specific eligibility verifications for use in 
state-specific eligibility determinations. Further, for states that opt 
to waive the requirement to establish an Exchange under section 
1311(b)(1) of the PPACA and transition their Exchange-eligible 
populations to a state-based 1332 program, in compliance with 
applicable privacy law and standards and with the consent of the 
relevant enrollees, the new FFE data-sharing functionality could make 
information on current enrollees accessible to states outside of the 
Exchange context. The new FFE data-sharing functionality potentially 
could provide data on the status of data matching issues and special 
enrollment period verification issues, account creation, and document 
uploading which would ease transition periods to a potential new non-
Exchange program and mitigate risk pool deterioration. HHS is 
continuing to evaluate what types of flexibilities related to plan 
management, financial assistance, and consumer assistance are feasible, 
and seeks to engage with states to determine interest in potential 
models. States should engage with HHS early in the section 1332 waiver 
application process to determine whether the federal platform could 
accommodate state needs. During this time, HHS will work to estimate 
potential funding costs to implement the requested flexibilities. 
States will be responsible for funding all customized technical builds, 
in addition to funding of year-round customized operational support.
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    \18\ Enhanced direct enrollment is a program in which CMS will 
provide direct enrollment entities with the ability to provide an 
account creation, application, enrollment and coverage maintenance 
experience for consumers and agents/brokers working with consumers.
---------------------------------------------------------------------------

    CMS may provide services in support of the state's section 1332 
waiver plan including but not limited to eligibility determinations or 
data verification services to support eligibility determinations for 
participation in State waiver programs under the Intergovernmental 
Cooperation Act (ICA). Under the ICA, a federal agency generally may 
provide certain technical and specialized services to state 
governments, so long as the state covers the full costs of those 
services. Accordingly, where a state intends to rely on CMS for 
services, the state must cover CMS's costs. For this reason, the 
Departments will not consider costs for CMS services covered under the 
ICA as an increase in federal spending resulting from the state's 
waiver plan for purposes of the deficit neutrality analysis.
    As noted in Section III.C of this guidance, costs associated with 
changes to federal administrative processes are taken into account in 
determining whether a waiver application satisfies the deficit 
neutrality requirement. Regulations at 31 CFR part 33 and 45

[[Page 53582]]

CFR part 155, subpart N, require that such costs be included in the 10-
year budget plan submitted by the state.

B. Internal Revenue Service

    Certain changes that affect Internal Revenue Service (IRS) 
administrative processes may make a section 1332 waiver proposal 
infeasible for the Departments to accommodate. At this time, the IRS 
generally is not able to administer different sets of tax rules for 
different states. As a result, while a state may propose to entirely 
waive the application of one or more of the tax provisions listed in 
section 1332 to taxpayers in the state, it is generally not feasible to 
design a waiver that would require the IRS to administer an alteration 
to these provisions for taxpayers in the state.
    In some cases, the IRS may be able to accommodate small adjustments 
to the existing system for administering federal tax provisions. For 
example, a state that has not expanded its Medicaid program may wish to 
expand eligibility for APTC and PTC to individuals under 100 percent of 
the Federal Poverty Level (FPL). It may be feasible for IRS to 
implement this change because it currently administers a special rule 
that allows certain individuals to claim PTC if they are under 100 
percent FPL and get APTC. However, it is generally not feasible to have 
the IRS administer a different set of PTC eligibility rules for 
individuals over 100 percent FPL in a particular state. Thus, states 
contemplating a waiver proposal that includes a modified version of a 
federal tax provision might consider waiving the provision entirely and 
creating a subsidy program administered by the state as part of its 
section 1332 waiver plan.
    In addition, a waiver proposal that partly or completely waives one 
or more tax provisions in a state may create administrative costs for 
the IRS. As noted in Section III.C of this guidance, costs associated 
with changes to federal administrative processes are taken into account 
in determining whether a waiver application satisfies the deficit 
neutrality requirement. Regulations at 31 CFR part 33 and 45 CFR part 
155, subpart N, require that such costs be included in the 10-year 
budget plan submitted by the state. States contemplating to waive any 
part of a federal tax provision should engage with the Departments 
early in the section 1332 application process to assess whether the 
waiver proposal is feasible for the IRS to implement, and to assess the 
administrative costs to the IRS of implementing the waiver proposal.

VII. Application Timing

    Consistent with the regulations at 31 CFR 33.108(b) and 45 CFR 
155.1308(b), states are required to submit initial section 1332 waiver 
applications sufficiently in advance of the requested waiver effective 
date to allow for an appropriate implementation timeline. We strongly 
encourage states interested in applying for any section 1332 waivers, 
including coordinated section 1115 and section 1332 waivers, to engage 
with the Departments promptly for assistance in formulating an approach 
that meets the requirements of section 1332.
    In order to help ensure timely approval, states should plan to 
submit their initial waiver applications with enough time to allow for 
public comment, review by the Departments, and implementation of the 
section 1332 state plan as outlined in the waiver application. In 
general, submission during the first quarter of the year prior to the 
year health plans affected by the waiver would take effect would permit 
sufficient time for review and implementation of both the waiver 
application and affected plans. It is important to note that the 
Departments cannot guarantee a state's request for expedited review or 
approval under a regular waiver submission and will continue to review 
applications consistent with the timeline requirements outlined in the 
regulations and statute.\19\ We encourage states to work with the 
Departments on timeframes that take into account the state's 
legislative sessions and timing of rate filings if the section 1332 
waiver is projected to have any impact on premiums. If a state's waiver 
application includes potential operational changes or accommodations to 
the federal information technology platform or its operations, 
additional time may be needed. States should engage with the 
Departments early in the process to determine whether federal 
infrastructure can accommodate technical changes that support their 
requested flexibilities.
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    \19\ 45 CFR 155.1308(c)(1), Sections 1332(d), 1332(e) of Public 
Law 111-148.
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VIII. Enacted State Legislation

    States are required under the statute to enact or amend state laws 
to apply for and implement state actions under a section 1332 waiver. 
Under 31 CFR 33.108(f)(3)(i) and 45 CFR 155.1308(f)(3)(i), as part of 
the state's waiver application, the state must include a comprehensive 
description of the state legislation and program to implement a plan 
meeting the requirements for a waiver under section 1332. In addition, 
under 31 CFR 33.108(f)(3)(ii) and 45 CFR 155.1308(f)(3)(ii), the state 
must include a copy of the enacted state legislation that provides the 
state with authority to implement the proposed waiver, as required 
under section 1332(a)(1)(C) of the PPACA.
    Generally, a state must enact legislation establishing authority to 
pursue a section 1332 waiver and for the program to implement a section 
1332 state plan, but the Departments also recognize that administrative 
regulations and executive orders generally carry the force of the law. 
In implementing this guidance, the Departments clarify that in certain 
circumstances, states may use existing legislation if it provides 
statutory authority to enforce PPACA provisions and/or the state plan, 
combined with a duly-enacted state regulation or executive order, may 
satisfy the requirement that the state enact a law under section 
1332(b)(2).
    As one example, a state might have a statute that grants to a state 
official or agency authority to implement and enforce PPACA and to 
promulgate regulations to implement PPACA programs in the state. The 
state also has in place an executive order directing the appropriate 
state official or agency to pursue a State Innovation Waiver, as well 
as regulations that further authorize specific actions to be taken 
under a waiver. The Departments may consider these legislative, 
administrative, and executive actions together and determine that 
section 1332(b)(2) is satisfied.
    It is not possible to describe every combination of legislative, 
administrative and/or executive action that may satisfy the section 
1332(b)(2) requirement. But so long as the state has enacted through 
its legislative branch a statute that authorizes the pursuit of a State 
Innovation Waiver, even broadly, the Departments will consider 
additional state administrative and executive branch actions in 
determining whether the section 1332(b)(2) requirement is satisfied. If 
a state is using an Executive Order or regulation to meet the 
requirement to enact a law for purposes of a 1332 waiver the state must 
include a letter from the state executive or Governor outlining that 
the state authority is sufficient to implement the state plan. The 
Departments generally will look favorably upon a state's interpretation 
of its own state law.
    As a result, the Departments may determine that section 1332(b)(2) 
is satisfied, to enact a law where existing

[[Page 53583]]

legislation, coupled with an administrative regulation or executive 
order provides the authority to pursue a section 1332 waiver. This 
reflects the Departments' intention to allow states increased 
flexibility to pursue a section 1332 waiver despite timing or other 
constraints, such as state legislative calendars that result in short 
or infrequent legislative sessions, provided that the state law at 
issue provides a sufficient foundation for an administrative regulation 
or executive order.

IX. Public Input on Waiver Proposals

    Section 1332, and regulations at 31 CFR 33.112 and 45 CFR 155.1312 
require states to provide a public notice and comment period for a 
waiver application sufficient to ensure a meaningful level of public 
input prior to submitting an application. As part of the public notice 
and comment period, a state with one or more Federally-recognized 
tribes must conduct a separate process for meaningful consultation with 
such tribes. Because State Innovation Waiver applications may vary 
significantly in their complexity and breadth, the regulations provide 
states with flexibility in determining the length of the comment period 
required to allow for meaningful and robust public engagement. The 
comment period should in no case be less than 30 days.
    Consistent with HHS regulations, waiver applications must be posted 
online in a manner that meets national standards to assure access to 
individuals with disabilities. Such standards are issued by the 
Architectural and Transportation Barriers Compliance Board, and are 
referred to as ``section 508'' standards. Alternatively, the World Wide 
Web Consortium's Web Content Accessibility Guidelines (WCAG) 2.0 Level 
AA standards would also be considered as acceptable national standard 
for website accessibility. For more information, see the WCAG website 
at http://www.w3.org/TR/WCAG20/.
    Section 1332 and its implementing regulations also require the 
Federal Government to provide a public notice and comment period, once 
the Secretaries receive an application. A submitted application will 
not be deemed received until the Secretaries have made the preliminary 
determination that the application is complete. The period must be 
sufficient to ensure a meaningful level of public input and must not 
impose requirements that are in addition to, or duplicative of, 
requirements imposed under the Administrative Procedure Act, or 
requirements that are unreasonable or unnecessarily burdensome with 
respect to state compliance. As with the comment period described 
above, the length of the comment period should reflect the complexity 
of the proposal and in no case can be less than 30 days.

X. Impact of Other Program Changes on Assessment of a Waiver Proposal

    The assessment of whether a State Innovation Waiver proposal 
satisfies the statutory criteria set forth in Section 1332 takes into 
consideration the impact of changes to PPACA provisions made pursuant 
to the State Innovation Waiver. The assessment also considers related 
changes to the state's health care system that, under state law, are 
contingent only on the approval of the State Innovation Waiver. For 
example, the assessment would take into account the impact of a new 
state-run health benefits program that, under legislation enacted by 
the state, would be implemented only if the State Innovation Waiver 
were approved.
    The assessment does not consider the impact of policy changes that 
are contingent on further state action, such as state legislation that 
is proposed but not yet enacted. It also does not include the impact of 
changes contingent on other Federal determinations, including approval 
of Federal waivers pursuant to statutory provisions other than Section 
1332. Therefore, the assessment would not take into account changes to 
Medicaid or CHIP that require separate Federal approval, such as 
changes in coverage or Federal Medicaid or CHIP spending that would 
result from a proposed Section 1115 demonstration, regardless of 
whether the Section 1115 demonstration proposal is submitted as part of 
a coordinated waiver application with a State Innovation Waiver. 
Savings accrued under either proposed or current Section 1115 Medicaid 
or CHIP demonstrations are not factored into the assessment of whether 
a proposed State Innovation Waiver meets the deficit neutrality 
requirement. The assessment also does not take into account any changes 
to the Medicaid or CHIP state plan that are subject to Federal 
approval.
    The assessment does take into account changes in Medicaid and/or 
CHIP coverage or in Federal spending on Medicaid and/or CHIP that would 
result directly from the proposed waiver of provisions pursuant to 
Section 1332, holding state Medicaid and CHIP policies constant.
    As the Departments receive and review waiver proposals, we will 
continue to examine the types of changes that will be considered in 
assessing State Innovation Waivers. Nothing in this guidance alters a 
state's authority to make changes to its Medicaid and CHIP policies 
consistent with applicable law. This guidance does not alter the 
Secretary of Health and Human Services' authority or CMS' policy 
regarding review and approval of Section 1115 demonstrations, and 
states should continue to work with CMS' Center for Medicaid and CHIP 
Services on issues relating to Section 1115 demonstrations. A state may 
submit a coordinated waiver application as provided in 31 CFR 33.102 
and 45 CFR 155.1302; in such a case, each waiver will be evaluated 
independently according to applicable Federal laws.

XI. Applicability

    This guidance supersedes the 2015 guidance, published on December 
16, 2015 (80 FR 78131), which provided additional information about the 
requirements that must be met, the Secretaries' application review 
procedures, the amount of pass-through funding, certain analytical 
requirements, operational considerations and public comment. This 
guidance will be in effect on the date of publication and will be 
applicable for section 1332 waivers submitted after the publication 
date of this guidance (including section 1332 waivers submitted, but 
not yet approved). Applications for waivers approved under section 1332 
before the publication date of this guidance will not require 
reconsideration of whether such applications meet these updated 
requirements of section 1332.
    On January 20, 2017, the President issued an Executive Order 
(E.O.),\20\ which stated that ``to the maximum extent permitted by law, 
the Secretary of HHS and heads of all other executive departments and 
agencies with authorities and responsibilities under the PPACA (Pub. L. 
111-148) shall exercise all authority and discretion available to them 
to waive, defer, grant exemptions from, or delay the implementation of 
any provision or requirement of the PPACA that would impose a fiscal 
burden on any state or a cost, fee, tax, penalty, or regulatory burden 
on individuals, families, health care providers, health issuers, 
patients, recipients of health care services, purchasers of health 
insurance, or makers of medical devices, products, or medications.'' 
Furthermore, the E.O.

[[Page 53584]]

stated that ``To the maximum extent permitted by law, the Secretary and 
the heads of all other executive departments and agencies with 
authorities and responsibilities under the Act, shall exercise all 
authority and discretion available to them to provide greater 
flexibility to states and cooperate with them in implementing 
healthcare programs.'' In the spirit of this E.O., the Departments are 
seeking to reduce burdens that may impede a state's efforts to 
implement innovative changes and improvements to their health care 
market while remaining consistent with the statute. We believe that the 
reduction in these burdens will lead to more affordable health coverage 
for individuals and families.
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    \20\ https://www.federalregister.gov/documents/2017/01/24/2017-01799/minimizing-the-economic-burden-of-the-patient-protection-and-affordable-care-act-pending-repeal.
---------------------------------------------------------------------------

    Final regulations at 31 CFR part 33 and 45 CFR part 155 Subpart N 
remain in effect and require a state to provide actuarial analyses and 
actuarial certifications, economic analyses, data and assumptions, 
targets, an implementation timeline, and other necessary information to 
support the state's estimates that the proposed waiver will comply with 
these requirements.\21\ The May 11, 2017, Checklist for Section 1332 
State Innovation Waiver Applications, including specific items 
applicable to High-Risk Pool/State-Operated Reinsurance Program 
Applications, remains available to assist states in assembling an 
application for a section 1332 waiver. The Departments will apply the 
regulations and statutory requirements when reviewing state 
applications for section 1332 waivers and will work to provide states 
with the flexibility they need to be innovative and respond to the 
needs in their state.
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    \21\ ``Application, Review, and Reporting Process for Waivers 
for State Innovation Final Rule.'' February 27, 2012. Available at: 
http://www.gpo.gov/fdsys/pkg/FR-2012-02-27/pdf/2012-4395.pdf.
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XII. Collection of Information Requirements

    This document does not impose new information collection 
requirements, that is, reporting, recordkeeping or third-party 
disclosure requirements. Consequently, there is no need for review by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

    Dated: October 9, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 12, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
    Dated: October 10, 2018.
David J. Kautter,
Assistant Secretary for Tax Policy, Department of Treasury.
[FR Doc. 2018-23182 Filed 10-22-18; 11:15 am]
 BILLING CODE P