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

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• DEPARTMENT OF THE TREASURY

[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 https://www.regulations.gov. Follow the ``Submit a comment'' 
instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-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: https://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. https://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\ https://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\ https://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: https://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/?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 https://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: 
https://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