Patient Protection and Affordable Care Act; Exchange Program Integrity, 71674-71711 [2019-27713]

Download as PDF 71674 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR Parts 155 and 156 [CMS–9922–F] RIN 0938–AT53 Patient Protection and Affordable Care Act; Exchange Program Integrity Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. AGENCY: This final rule revises standards relating to oversight of Exchanges established by states and periodic data matching frequency. This final rule also includes new requirements for certain issuers related to the collection of a separate payment for the portion of a plan’s premium attributable to coverage for certain abortion services. DATES: This final rule is effective on February 25, 2020. FOR FURTHER INFORMATION CONTACT: Emily Ames, (301) 492–4246 or Marisa Beatley, (301) 492–4307. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background jbell on DSKJLSW7X2PROD with RULES3 A. Legislative and Regulatory Overview Sections 1311(b) and 1321(b) of the Patient Protection and Affordable Care Act (PPACA) provide that each state has the opportunity to establish an Exchange. Section 1311(b)(1) of the PPACA gives each state the opportunity to establish an Exchange that facilitates the purchase of qualified health programs (QHPs) by individuals and families, and provides for the establishment of a Small Business Health Options Program (SHOP) that is designed to assist qualified small employers in the state in facilitating the enrollment of their employees in QHPs offered in the small group market in the state. Section 1313 of the PPACA describes the steps the Secretary of Health and Human Services (the Secretary) may take to oversee Exchanges’ compliance with HHS standards related to title I of the PPACA and ensure their financial integrity, including conducting investigations and annual audits. Section 1321(a) of the PPACA provides broad authority for the Secretary to establish standards and regulations to implement the statutory standards related to Exchanges, QHPs, and other identified standards of title I of the PPACA. Section 1321(c)(2) of the PPACA authorizes the Secretary to enforce the VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 Exchange standards using civil money penalties (CMPs) on the same basis as detailed in section 2723(b) of the Public Health Service Act (PHS Act). Section 2723(b) of the PHS Act authorizes the Secretary to impose CMPs as a means of enforcing the individual and group market reforms contained in Part A of title XXVII of the PHS Act when a state fails to substantially enforce these provisions with respect to health insurance issuers. Section 1303 of the PPACA, as implemented in 45 CFR 156.280, specifies standards for issuers of qualified health plans (QHPs) through the Exchanges that cover abortion services for which public funding is prohibited (also referred to as non-Hyde abortion services). The statute and regulation establish that, unless otherwise prohibited by state law, a QHP issuer may elect to cover such nonHyde abortion services. If an issuer elects to cover such services under a QHP sold through an individual market Exchange, the issuer must take certain steps to ensure that no premium tax credit (PTC) or cost-sharing reduction (CSR) funds are used to pay for abortion services for which public funding is prohibited. As specified in section 1303(b)(2), one such step is that individual market Exchange issuers must determine the amount of, and collect, from each enrollee, a separate payment for an amount equal to the actuarial value of the coverage for abortions for which public funding is prohibited, which must be no less than $1 per enrollee, per month. QHP issuers must also segregate funds for non-Hyde abortion services collected through this payment into a separate allocation account used to pay for non-Hyde abortion services. Section 1411(c) of the PPACA requires the Secretary to submit certain information provided by applicants under section 1411(b) of the PPACA to other federal officials for verification, including income and family size information to the Secretary of the Treasury. Section 1411(d) of the PPACA provides that the Secretary must verify the accuracy of information provided by applicants under section 1411(b) of the PPACA for which section 1411(c) does not prescribe a specific verification procedure, in such manner as the Secretary determines appropriate. Section 1411(f)(1)(B) of the PPACA requires the Secretary to establish procedures to redetermine eligibility on a periodic basis, in appropriate circumstances, including for eligibility to purchase a QHP through the Exchange and for advance payments of PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 the premium tax credit (APTC) and CSRs. Section 1411(g) of the PPACA allows the exchange of applicant information only for the limited purposes of, and to the extent necessary to, ensure the efficient operation of the Exchange, including by verifying eligibility to enroll through the Exchange and for APTC and CSRs. On October 30, 2013, we published a final rule entitled, ‘‘Patient Protection and Affordable Care Act; Program Integrity: Exchange, Premium Stabilization Programs, and Market Standards; Amendments to the HHS Notice of Benefit and Payment Parameters for 2014,’’ (78 FR 65046), to implement certain program integrity standards and oversight requirements for State Exchanges. On March 27, 2012, we published a final rule entitled ‘‘Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers,’’ (Exchange Establishment Rule (77 FR 18309), in which we codified the statutory provisions of section 1303 of the PPACA in regulation at 45 CFR 156.280, and established many standards related to Exchanges. On February 27, 2015, we published the Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2016, final rule (80 FR 10750) (hereinafter referred to as the 2016 Payment Notice) providing guidance regarding acceptable billing and premium collection methods for the portion of the policy holder’s total premium attributable to non-Hyde abortion coverage for purposes of satisfying the statutory separate payment requirement. On March 8, 2016, we published the Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017, final rule (81 FR 12204), in which we provided issuers the option to adopt a premium payment threshold policy to avoid situations in which an enrollee who owes only a de minimis amount of premium has his or her enrollment terminated for nonpayment of premiums. On November 9, 2018, we published a proposed rule entitled ‘‘Patient Protection and Affordable Care Act; Exchange Program Integrity’’ (83 FR 56015), which proposed to revise standards relating to oversight of Exchanges established by states and periodic data matching frequency and authority. It also proposed new requirements for certain issuers related to the billing and collection of the separate payment for the premium portion attributable to coverage for certain abortion services. E:\FR\FM\27DER3.SGM 27DER3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations B. Stakeholder Consultation and Input HHS has consulted with stakeholders on policies related to the operation of Exchanges. We have held a number of listening sessions with consumers, providers, employers, health plans, the actuarial community, and state representatives to gather public input, with a particular focus on risks to the individual and small group markets, and how we can alleviate burdens facing patients and issuers. We consulted with stakeholders through regular meetings with the National Association of Insurance Commissioners, regular contact with State Exchanges through the Exchange Blueprint process and ongoing oversight and technical assistance engagements, and meetings with Tribal leaders and representatives, health insurance issuers, trade groups, consumer advocates, employers, and other interested parties. II. Provisions of the Proposed Rule and Analysis of and Responses to Public Comments jbell on DSKJLSW7X2PROD with RULES3 A. Exchange Establishment Standards and Other Related Standards Under the Affordable Care Act 1. Functions of an Exchange (§ 155.200) We proposed to revise § 155.200 to clarify that the Exchanges must perform oversight functions generally, and cooperate with oversight activities, in accordance with section 1313 of the PPACA and as required under 45 CFR part 155. Section 155.200 describes the functions that an Exchange must perform. Section 155.200(c) specifies that the Exchange must perform functions related to oversight and financial integrity in accordance with section 1313 of the PPACA. HHS interprets this requirement broadly to include program integrity functions related to protecting against fraud, waste, and abuse, including functions not explicitly identified in section 1313 of the PPACA. We believe State Exchanges, including State Exchanges on the Federal Platform (SBE–FPs), have also generally interpreted this requirement broadly, as evidenced by their engagement in activities designed to combat fraud and abuse. However, questions about the breadth of this function have arisen when Exchanges have sought to understand what uses and disclosures of personally identifiable information (PII) are permitted under § 155.260.1 1 Section 155.260 limits an Exchange’s use and disclosure of PII when an Exchange creates or collects personally identifiable information for the purposes of determining eligibility for enrollment VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 Specifically, we received questions about whether Exchanges are permitted under § 155.260 to disclose applicant PII to government oversight entities, such as state departments of insurance, when investigating fraudulent behavior related to Exchange enrollments on the part of agents and brokers. As noted in the proposed rule, we believe that use and disclosure of PII related to Exchange program integrity efforts, such as combatting fraud, currently fall under § 155.200(c), but seek to make that position more clear. Therefore, we proposed to revise § 155.200(c) to clarify that the Exchanges must perform oversight functions generally, and cooperate with oversight activities, in accordance with section 1313 of the PPACA and as required under 45 CFR part 155, including overseeing its Exchange programs, Navigators, agents, brokers, and other non-Exchange entities as defined in § 155.260(b). We further explained that because this is a clarification and not a new function, we did not believe it would impose additional burdens on Exchanges, but instead would help resolve questions about the available tools and authority to enable Exchanges to effectively oversee and combat potentially fraudulent behavior. After consideration of comments received, we are finalizing this provision as proposed, with one technical modification to remove a redundant term included in the proposed regulation text. The comments we received on this topic are summarized below, along with our responses. Comment: All commenters on this topic supported the proposed amendment to § 155.200(c) as it clarifies that oversight and transparency for all Exchanges is required with respect to determining eligibility for APTC and combatting fraud. Two commenters encouraged HHS to work closely with states once the proposal is finalized to ensure that individuals who are assisting consumers receive proper notice and training on the applicable compliance requirements and standards in their states. One commenter suggested that HHS solicit stakeholder feedback on the possibility of incorporating an additional level of collaborative issuer-Exchange oversight and verification prior to enrollment in a qualified health plan; determining eligibility for other insurance affordability programs, as defined in § 155.300; or determining eligibility for exemptions from the individual shared responsibility provisions in section 5000A of the Internal Revenue Code. One of the permitted uses and disclosures is for the Exchange to carry out the functions described in § 155.200. PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 71675 when the applicant’s coverage has been previously terminated for fraud. Response: We remain committed to improving Exchange program integrity, including efforts related to combatting fraud, and appreciate commenters’ support for our clarification that Exchanges are permitted to use and disclose applicant PII to certain entities for these efforts. We agree that it is important for agents, brokers, Navigators, and other assisters to understand the applicable standards in their state, and plan to work closely with states to ensure compliance. We continue to explore other pathways for combatting fraud in Exchanges and appreciate commenters’ recommendations. We are finalizing the amendment to § 155.200(c) as proposed, with one modification. We are removing the reference to assisters because it is redundant of the reference to nonExchange entities. Non-Exchange entities are defined in § 155.260(b) and include Navigators, non-Navigator assistance personnel, certified application counselors, agents, brokers, web-brokers and other individuals or entities who gain access to PII submitted to an Exchange or collect, use or disclose PII gathered directly from Exchange applicants or enrollees. 2. Verification Process Related to Eligibility for Insurance Affordability Programs (§ 155.320) We requested comment on our proposed plans to expand the current scope of Medicare periodic data matching (PDM), which only identifies and notifies those dual enrollees receiving financial assistance, to also include the Exchange population not receiving financial assistance. Specifically, we proposed to add a new authorization compliant with Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L. 104–191) standards to the single streamlined application to permit Exchanges using the federal platform to collect PHI in order to determine enrollees’ Medicare enrollment status. We also proposed to leverage the current attestation question on the single, streamlined application, for applicants to provide written consent permitting the Exchange to terminate their coverage if they are found later to be dually enrolled in Medicare and a QHP to expand the scope of Medicare PDM to the population not receiving financial assistance. We will not finalize these proposed actions, but will continue to identify and notify dual enrollees receiving financial assistance E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71676 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations as part of current Medicare PDM operations. Under § 155.330, Exchanges are required to periodically examine available data sources to identify whether enrollees on whose behalf APTC or CSRs are being paid have been found eligible for or are enrolled in Medicare, Medicaid, Children’s Health Insurance Program (CHIP), or the Basic Health Program (BHP), if a BHP is operating in the service area of the Exchange. Individuals identified as enrolled both in Exchange coverage (with or without APTC or CSRs) and one of these other forms of coverage are referred to as dually enrolled consumers. Generally, if an individual is eligible for or enrolled in such other forms of coverage that qualify as minimum essential coverage (MEC) under section 5000A of the Code, the individual is not eligible to receive APTC or CSRs. For instance, if an individual is eligible for premium-free Medicare Part A or enrolled in Medicare Part A or Part C (also known as Medicare Advantage), all of which qualify as MEC, he or she is not eligible to receive APTC or CSRs to help pay for an Exchange plan or covered services. The Secretary has broad authority under section 1321(a) of the PPACA to establish regulations setting standards to implement certain statutory requirements under title I of the PPACA, including with respect to the establishment and operation of Exchanges, the offering of QHPs through the Exchanges, the establishment of the risk adjustment and reinsurance programs, and such other requirements as the Secretary determines appropriate. Additionally, section 1411(g) of the PPACA allows the exchange of certain applicant information as necessary to ensure the efficient operation of the Exchange, including verifying eligibility to enroll in coverage through the Exchange and to receive APTC or CSRs. Furthermore, 45 CFR 155.430(b)(1)(ii) requires an Exchange to provide an opportunity at the time of plan selection for enrollees receiving and not receiving financial assistance to choose to remain enrolled in a QHP if he or she becomes eligible for other MEC, or to terminate QHP coverage if the enrollee does not choose to remain enrolled in the QHP upon completion of the redetermination process. As such, for plan year 2018 and thereafter, we added language to the existing single, streamlined application to support compliance with this requirement by all Exchanges using the federal platform. This new language allows all consumers, regardless of whether they are seeking financial assistance, to authorize the Exchange to VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 obtain eligibility and enrollment data and, if so desired by the consumer, to end their QHP coverage if the Exchange finds during its periodic eligibility checks that the consumer has become eligible for or enrolled in other MEC, such as Medicare, Medicaid/CHIP, or BHP. In addition, for plan years beginning with the 2020 plan year, we stated in the proposed rule our intention to add a new HIPAA authorization to the single, streamlined application used by Exchanges using the federal platform, which would meet HIPAA standards regarding how one’s protected health information (PHI) is collected and used. In the preamble to the proposed rule, we discussed using this proposed new HIPAA authorization to expand the current scope of Medicare PDM to individuals in the Exchange population who are not receiving financial assistance and who authorize the Exchanges using the federal platform to conduct certain PDM by requesting PHI from HHS such as their name, Social Security Number, Medicare eligibility or enrollment status, and other data elements the Exchange may determine necessary, to allow the Exchange to determine whether the consumer is dually enrolled in Medicare and Exchange coverage. This HIPAA authorization would allow HHS to check Medicare enrollment databases for applicants regardless of whether they seek or receive financial assistance. As we discussed in the preamble to the proposed rule, for consumers who request voluntary termination upon a finding of dual enrollment, the Exchange would terminate coverage after following the current PDM process outlined in § 155.330(e)(2)(i), which requires Exchanges to provide notice of the updated information the Exchange found, as well as a 30-day period for the enrollee to respond to the notice. We emphasize again, because the Exchange cannot identify through this process those consumers who are eligible for, but not enrolled in premium-free Part A, we encourage all consumers who are 65 and older to apply with the Social Security Administration (SSA) to receive an eligibility determination with respect to Medicare. We received multiple comments on this discussion regarding expanding the scope of Medicare PDM to the Exchange population not receiving financial assistance. After further consideration of the technical complexity of implementing a HIPAA authorization on the single, streamlined application and the potential burden on consumers to read, decipher, and agree to legal agreements many may find confusing, PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 we will not pursue the addition of a new authorization to the single streamlined application. Instead, we will explore other means through which the Exchanges can expand the scope of Medicare PDM to the Exchange population that is not receiving financial assistance. A summary of these comments and our responses to those comments follow: Comment: Most commenters generally supported HHS’s goal to reduce dual enrollment in Medicare and Exchange coverage, but cautioned HHS about the consequences of terminating QHP coverage for this population. Commenters noted that terminating Exchange coverage could: (1) Interfere with the continuity of care, (2) create gaps in coverage, especially for those dual enrollees who have not yet enrolled in Medicare Part B, (3) cause other family members on the Medicare beneficiary’s policy to lose coverage, and (4) cause increased consumer confusion over their coverage options. Rather than terminating QHP coverage, commenters recommended targeted outreach and education to the Medicare eligible population to ensure this population fully understands the consequences of dual enrollment, the appropriate time to enroll in Medicare Part B to avoid financial penalties for delayed enrollment, and how access to their Medicare eligibility information intersects with QHP termination via Medicare PDM. One commenter recommended that we prevent all individuals with Medicare from enrolling in QHP coverage through screening at initial application. Response: Given the technical complexity of implementing a HIPAA authorization on the single streamlined application and the potential burden it would place on consumers as consumers would be required to read, decipher, and agree to complex legal agreements that may be confusing for consumers, we are reconsidering our approach to expanding Medicare PDM to the Exchange population not receiving financial assistance. We are exploring other options to identify and notify this population of their dual enrollment in Medicare and Exchange coverage to ensure that this population is able to enroll in Medicare Part B at the appropriate time and without financial penalty. For enrollees in Exchanges using the federal platform who are receiving financial assistance, the Exchanges will continue to end subsidies or QHP coverage for those consumers who permit the Exchange to do so in accordance with § 155.330. For the Exchange population receiving financial E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations assistance, terminating QHP coverage as part of Medicare PDM ensures that consumers are not enrolled in unnecessary duplicative coverage, reduces the potential for taxpayer financial liability related to possibly having to repay APTC at the time of federal income tax reconciliation, and also protects the integrity of the Exchange by ensuring enrollees no longer eligible for financial assistance do not receive these subsidies inappropriately. HHS is also aware of concerns from stakeholders that consumers often do not know when they should contact the Exchange to end their QHP coverage after enrolling in Medicare. We believe this voluntary option to provide written consent for the Exchange to end a Medicare dual enrollee’s QHP coverage will alleviate some of the confusion consumers currently face when transitioning from Exchange coverage to Medicare as the Exchange provides information in the intial warning notice on how to end QHP coverage after enrolling in Medicare. Furthermore, in instances where the dual enrollee does not take action, the Exchange will automatically end coverage for the dual enrollee; thus, saving the enrollee time and reducing the risk of the consumer having to pay back some or all of the APTC received when they file their federal income taxes. In addition, in response to commenter concerns about the consequences of termination of dually enrolled consumers’ coverage, we note that enrollees receiving financial assistance have 30 days to respond to their Medicare PDM notice before the Exchange takes action as specified in § 155.330(e)(2)(i)(D). As we noted in the preamble to the proposed rule, upon receiving the required notice, the enrollee could (1) return to the Exchange and terminate his or her QHP coverage, (2) revoke the prior authorization for the Exchange to terminate his or her QHP coverage in the event dual enrollment is found, so that he or she would remain enrolled both in the QHP and in Medicare, or (3) notify the Exchange that he or she is not eligible for, or enrolled in, Medicare. For enrollees who revoke their prior authorization for the Exchange to terminate their QHP enrollment where the Exchange finds the enrollee is eligible for or enrolled in Medicare, or who disagree that they are eligible for or enrolled in Medicare, the Exchange would only proceed to terminate the enrollee’s APTC and CSRs, and not his or her enrollment in QHP coverage through the Exchange, using the process specified in § 155.330(e)(2)(i). Therefore, VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 we believe this operational change mitigates adverse impacts on the continuity of care and the risk of coverage gaps because enrollees can choose to opt out and remain in QHP coverage without APTC, pursuant to the current regulation. We also appreciate the concerns raised that non-Medicare family members could potentially lose coverage. We note that a special enrollment period will be available for family members of dual enrollees when such family members lose their coverage or their financial subsidies as a result of the PDM process described here. Additionally, we continue to prioritize consumer and stakeholder education regarding dual enrollment and transitioning between coverage, and to engage in various outreach activities including distributing webinar, newsletter, and fact sheet content for assisters, agents, brokers, and issuers, as well as direct consumer notification and application help text. We also are working to develop educational materials to ensure that all Medicare beneficiaries understand the consequences of dual enrollment and associated penalties for not enrolling in Medicare Part B when first eligible. We believe this will help reduce consumer confusion over their coverage options and the appropriate time to sign up for Medicare. We appreciate the comments and ideas for future education efforts for this population and will consider these suggestions as part of our Medicare PDM stakeholder outreach moving forward. 3. Eligibility Redetermination During a Benefit Year (§ 155.330) We proposed to add a new paragraph (d)(3) to § 155.330, under which Exchanges would be required to conduct PDM at least twice each calendar year beginning with calendar year 2020. We are finalizing this proposal. However, we have changed the implementation date to the 2021 calendar year, and added clarifying language regarding State Exchanges that have fully integrated eligibility systems with their respective Medicaid agencies. In accordance with § 155.330(d), Exchanges must periodically examine available data sources to determine whether enrollees in a QHP through an Exchange with APTC or CSRs have been determined eligible for or enrolled in other qualifying coverage through Medicare, Medicaid, CHIP, or the BHP, if applicable. HHS has not previously defined ‘‘periodically.’’ Currently, Exchanges using the federal platform conduct Medicare PDM and Medicaid/ CHIP PDM twice a year. To ensure that PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 71677 all Exchanges are taking adequate steps to identify enrollees who have become eligible for or enrolled in these other forms of MEC, and to terminate APTC and CSRs for those identified, we proposed to add paragraph (d)(3) to specify that Exchanges would be required to conduct Medicare, Medicaid/CHIP, and, if applicable, BHP PDM at least twice a calendar year, beginning with the 2020 calendar year. We indicated that this timeframe would likely give Exchanges that are not already performing these PDM checks twice a year sufficient time to implement any business, operational, and information technology changes needed to comply with the proposed new requirement. We explained our belief that this policy would reduce QHP premiums, since Medicare and Medicaid/CHIP beneficiaries tend to have a higher risk profile than a typical Exchange enrollee and, therefore, may have negative impacts on the risk pool. Because this population includes significant numbers of older and disabled beneficiaries, or persons that may have poorer health outcomes generally associated with lower income statuses, we expect that these populations typically will utilize health care services at a greater rate as compared to other populations.2 So that the Exchanges could prioritize the implementation of the proposed requirement to conduct PDM for Medicare, Medicaid, CHIP, and, if applicable, BHP eligibility or enrollment at least twice yearly, we did not also propose requiring Exchanges to perform PDM for death at least twice in a calendar year, and will consider this as part of future rulemaking. Since most State Exchanges that operate their own eligibility and enrollment platform have a single shared, integrated eligibility system with their respective Medicaid programs, the Medicaid/CHIP PDM requirements may be met differently by State Exchanges. State Exchanges that have fully integrated eligibility systems generally have controls in place to prevent concurrent or dual enrollment of an individual in both a QHP through the Exchange with APTC/CSRs, and Modified Adjusted Gross Income (MAGI)-based Medicaid/CHIP coverage, at any given time. We proposed at paragraph (d)(3) that we will deem these State Exchanges to be in compliance with the requirement to perform 2 For example, see Urban Institute and Center on Society and Health, How Are Income and Wealth Linked to Health and Longevity? (April 2015), available at https://www.urban.org/sites/default/ files/publication/49116/2000178-How-are-Incomeand-Wealth-Linked-to-Health-and-Longevity.pdf. E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71678 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations Medicaid/CHIP PDM or, if applicable, BHP PDM. Thus, these State Exchanges would not need to perform additional Medicaid/CHIP PDM outside of the controls that are currently in place to prevent dual enrollment in their integrated eligibility system. State Exchanges that operate their own eligibility and enrollment platform and do not have fully integrated eligibility systems for APTC/CSRs and Medicaid/ CHIP or BHP, if applicable, would be required to perform Medicaid/CHIP PDM at least twice a year. We anticipate many State Exchanges will meet or exceed the proposed requirements for Medicare PDM, Medicaid/CHIP PDM and, if applicable, BHP PDM, based on operations reported to us through the State-based Marketplace Annual Reporting Tool (SMART). This view is also supported by information we have learned through technical assistance engagements. Furthermore, the new Medicaid/CHIP PDM requirement would not result in a significant administrative burden for State Exchanges because we believe most State Exchanges currently operate an integrated eligibility system and could be deemed to be in compliance with the proposed Medicaid/CHIP PDM requirements. We did not propose specific penalties if State Exchanges do not comply with the proposed PDM requirements. However, we noted that, under current authority, HHS requires a State Exchange to take corrective action if it is not complying with applicable federal requirements. We utilize specific oversight tools (SMART, programmatic audits, etc., as described in the preamble to § 155.1200) to identify issues with, and place corrective actions on, the Exchanges, and to provide technical assistance and ongoing monitoring to track those actions until the Exchange comes into compliance. Additionally, under section 1313(a)(4) of the PPACA, if HHS determines that an Exchange has engaged in serious misconduct with respect to compliance with Exchange requirements, it has the option to rescind up to 1 percent of payments due to a state under any program administered by HHS until it is resolved. These existing authorities would apply to the proposed periodic data matching requirements in § 155.330(d). If HHS were to determine that it is necessary to apply this authority due to non-compliance by an Exchange with § 155.330(d), HHS would also determine the HHS-administered program from which it would rescind payments that are due to that state. Lastly, we proposed to make a technical correction in § 155.330(d)(1) VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 by adding an additional reference to the process and authority in § 155.320(b). This reference was omitted previously, but the requirements in § 155.320(b), specifying that Exchanges must verify whether an applicant is eligible for MEC other than through an eligible employersponsored plan using information obtained by transmitting identifying information specified by HHS to HHS for verification purposes, apply to the PDM process in § 155.330. We are finalizing this proposal to add paragraph (d)(3) as proposed, but have changed the implementation date to the 2021 calendar year, and have added some clarifying language with regard to fully integrated eligibility systems, as described below. A summary of comments received and our responses to those comments appear below. Comment: We received multiple comments in support of PDM as an effort to improve Exchange program integrity. These commenters agreed that the process helps inform consumers of their enrollment in potentially duplicative other MEC such as certain Medicare and Medicaid coverage, CHIP, or, if applicable, the BHP, and to help consumers avoid a tax liability for having to repay APTC received during months of overlapping coverage when reconciling at the time of annual federal income tax filing. Many commenters suggested improvements that could be made to current PDM processes. Some commenters suggested that consumers, especially Medicare beneficiaries, could benefit from additional education or outreach from assisters, Navigators, or call center representatives to help these dually enrolled consumers make informed choices about their coverage options. Another commenter recommended that HHS work closely with SSA to identify which Medicare beneficiaries are approaching Medicare eligibility so that notices can be sent during the beneficiary’s initial enrollment period. Another commenter recommended that, in addition to periodic checks for other qualifying coverage, HHS should implement periodic checks for deceased enrollees and that these checks should occur before auto re-enrollment. Response: We agree that the PDM process is an important tool to ensure that Exchange enrollees are enrolled in the appropriate coverage that best meets their needs and budget while reducing the risk for potential tax liabilities for having to repay APTC received during months of overlapping coverage. We also agree that outreach and education is critical for dual enrollees and we continue to work with Exchange stakeholders on education and outreach PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 strategies, especially for the Medicare beneficiary population to ensure that consumers can make well-informed choices and sign up for Medicare coverage during the appropriate timeframes. In 2018, we added additional resources to the Exchange application that provided information on the appropriate timeframes to enroll in Medicare Parts A and B to help consumers avoid incurring any late enrollment penalties. We also believe that periodic checks for deceased enrollees are a critical aspect to ensuring Exchange program integrity. Beginning in late 2019, Exchanges using the federal platform will conduct periodic checks for deceased enrollees in single member applications and subsequently end deceased enrollees’ QHP coverage. As noted previously, to ensure State Exchanges have appropriate time to implement the technical and operational changes necessary to conduct Medicare, Medicaid/CHIP, and, if applicable, BHP, PDM, we are not requiring that State Exchanges perform checks for deceased enrollees twice yearly, and will be considering changes as part of future rulemaking. Comment: We received mixed comments regarding our proposal to require Exchanges to conduct Medicare, Medicaid/CHIP and, if applicable, BHP PDM twice a year. Many commenters stated that increasing the frequency of PDM, particularly Medicare PDM, may be burdensome on both consumers and State Exchanges, and could lead to increased consumer confusion, diversion of resources from customer service and outreach efforts, and potential loss of APTC due to potentially outdated data sources for Medicare enrollment and Medicaid/ CHIP eligibility and enrollment. One commenter recommended that additional verification checks be incorporated into the final rule to ensure consumers are not removed from coverage due to outdated data. Two commenters noted that the twice yearly frequency was too infrequent and would not provide timely notice for those consumers who are dually enrolled in Medicare and Exchange coverage. One commenter recommended requiring that Exchanges only perform PDM checks once yearly, which taken together with the annual renewal process, would allow a check every 6 months. Another commenter expressed concerns that our proposed language would allow State Exchanges to perform PDM more than twice a year, which could cause consumers to lose coverage erroneously. Response: We continue to believe that conducting Medicare, Medicaid/CHIP E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations and, if applicable, BHP PDM serves a critical role in ensuring that consumers are enrolled in the appropriate coverage and ensures that APTC is paid appropriately. We continue to work with our partners throughout HHS to ensure the accuracy of Medicare, Medicaid, and CHIP data, and will continue to provide guidance to State Exchanges on notice language, especially regarding the availability of special enrollment periods for consumers who erroneously lose APTC or QHP coverage, as well as the consumer’s right to appeal an Exchanges’ determination. We disagree that conducting PDM checks twice yearly would cause consumer confusion or divert resources away from customer service and outreach because PDM provides valuable information to consumers regarding their dual enrollment in Medicare and/or Medicaid/CHIP and serves an important program integrity function by ensuring that only consumers eligible for APTC/ CSRs receive them. We continue to prioritize consumer and stakeholder education related to dual enrollment and transitioning between coverage, including webinar, newsletter, and fact sheet content for assisters, agents, brokers, and issuers, as well as direct consumer notification and application help text. We encourage State Exchanges to prioritize these education efforts as well. We appreciate commenters’ suggestions regarding the frequency of PDM checks, but we believe that requiring these checks at least twice a year strikes the appropriate balance between providing timely notice for dually enrolled consumers and not overburdening Exchanges with potentially costly system changes and notice requirements. With respect to the comment regarding Exchanges conducting a Medicaid/CHIP or Medicare PDM check during the annual renewal process, this rule specifies the frequency, and not the precise timing, for when Exchanges must conduct the Medicaid/CHIP and Medicare PDM checks. Exchanges have the flexibility to conduct one of the required PDM checks during the annual renewal process. Finally, we disagree that the changes outlined to PDM would increase burden on all Exchanges. We will deem State Exchanges that have implemented fully integrated eligibility systems with their respective Medicaid programs to be in compliance with the proposed Medicaid/CHIP PDM requirement. Thus, we anticipate the change to the Medicaid/CHIP PDM requirement will not increase burden for those State Exchanges because they will not have to VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 build new functionality to meet this requirement. However, we do agree that any significant burden on State Exchanges would likely be on those that currently do not perform any Medicare PDM, or those that currently do not operate integrated eligibility systems and do not perform any Medicaid/CHIP PDM and, therefore, are not already in compliance with § 155.330(d). Those Exchanges would likely be required to engage in information technology (IT) system development activities in order to communicate with these programs and act on enrollment data in a new way. Comment: We received multiple comments that the proposed date of January 1, 2020 for the implementation of twice yearly Medicare, Medicaid/ CHIP, and, if applicable, BHP PDM provides insufficient time for State Exchanges to implement the required technical changes. Commenters noted that State Exchanges that do not currently conduct Medicare PDM, or do not have integrated eligibility systems with their State Medicaid programs and do not currently conduct Medicaid/ CHIP PDM, would have to make significant changes to their eligibility systems and processes to to confirm enrollment in Medicare or to verify Medicaid or CHIP eligibility, respectively. One commenter suggested 2021 as an appropriate implementation date. Two commenters also requested that HHS finalize a clear and certain definition of a fully integrated eligibility system to mean eligibility systems that have one eligibility rules engine, shared between the State Exchange and its respective Medicaid program, for MAGIbased Medicaid, CHIP, APTC, and if applicable, BHP, eligibility determinations. Response: We agree with commenters that requiring implementation by the 2020 calendar year may not provide State Exchanges with a sufficient timeframe to implement these changes, especially for Exchanges without integrated eligibility systems that do not currently perform Medicaid/CHIP PDM or those that currently do not perform Medicare PDM. These Exchanges would need to implement new interfaces with their respective Medicaid programs and/ or a new connection to federal data to confirm Medicare enrollment. Therefore, we are finalizing the proposal in § 155.330(d)(3) to take effect beginning with the 2021 calendar year. We also agree on the importance of providing a clear and specific definition of ‘‘fully integrated eligibility system.’’ As described in the preamble to the proposed rule, by ‘‘fully integrated eligibility system,’’ we mean one where PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 71679 a State Exchange and its respective Medicaid program shares a single eligibility rules engine for determining eligibility for MAGI-based Medicaid/ CHIP, APTC, and if applicable, BHP. We are finalizing paragraph (d)(3) with some additional language to codify this meaning. Comment: We received three comments that were opposed to the proposed requirement to conduct Medicare, Medicaid/CHIP and, if applicable, BHP PDM, cautioning us that defining the precise frequency and nature of PDM encroaches upon the sovereignty of the State Exchanges. Two commenters noted that HHS has not provided enough evidence that there is a significant problem with duplicative enrollment in other qualifying coverage such as Medicare, Medicaid/CHIP, and BHP. One commenter expressed concern that additional requirements on State Exchanges could discourage consumers from applying for coverage. Response: Ensuring that consumers are enrolled in the appropriate coverage remains a top priority for HHS. Additionally, ensuring that APTC is paid appropriately is a requirement set forth in § 155.330(d)(1)(ii). Several Government Accountability Office (GAO) reviews have underscored the importance of continually re-verifying enrollee eligibility for APTC through PDM with other government entities.3 As such, we believe PDM plays a vital role in ensuring the health and integrity of all Exchanges by ensuring consumers are enrolled in the appropriate coverage, and reduces the risk that consumers will have to pay back all or some of APTC paid on their behalf during months of overlapping coverage when they file their annual federal income taxes. We disagree that the twice yearly requirement to conduct Medicare, Medicaid/CHIP and, if applicable, BHP PDM would discourage consumers from applying for and enrolling in QHP coverage, as the majority of consumers become dually enrolled inadvertently, such as by aging into Medicare or experiencing fluctuations in household income. 4. General Program Integrity and Oversight Requirements (§ 155.1200) As the Exchange Establishment grant program established under section 1311 of the PPACA has come to a conclusion and State Exchanges have become financially self-sustaining, HHS 3 ‘‘Improper Payments: Improvements Needed in CMS and IRS Controls over Health Insurance Premium Tax Credit’’ (GAO 17–467); ‘‘Federal Health-Insurance Marketplace: Analysis of Plan Year 2015 Application, Enrollment, and EligibilityVerification Process’’ (GAO–18–169). E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71680 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations continues to develop and refine its mechanisms and tools for overseeing the ongoing compliance of State Exchanges and SBE–FPs with federal requirements for Exchanges, including eligibility and enrollment requirements under 45 CFR part 155. HHS approves or conditionally approves a state to establish a State Exchange based on an assessment of a state’s attested compliance with applicable statutory and regulatory rules. Once approved or conditionally approved, State Exchanges must meet specific program integrity and oversight requirements identified at section 1313(a) of the PPACA, and the implementing regulations at §§ 155.1200 and 155.1210. These requirements outline HHS’s authority to oversee the Exchanges after their establishment. Currently, annual reporting requirements for State Exchanges at § 155.1200(b) include the annual submission of (1) a financial statement in accordance with generally accepted accounting principles (GAAP); (2) eligibility and enrollment reports; and (3) performance monitoring data. Additionally, under § 155.1200(c), each State Exchange is required to contract with an independent external auditing entity that follows generally accepted government auditing standards (GAGAS) to perform annual independent external financial and programmatic audits. State Exchanges are required to provide HHS with the results of the annual external audits, including corrective action plans to address any material weaknesses or significant deficiencies identified by the auditor.4 All corrective action plans are monitored by HHS until closed. Currently, the audits must address compliance with all Exchange requirements under 45 CFR part 155.5 HHS designed and developed the SMART in 2014 to assist State Exchanges in conducting a defined set of oversight activities. The SMART was designed to facilitate State Exchanges’ reporting to HHS on how they are meeting federal program and operational requirements, including State Exchanges reporting their compliance with federal eligibility and enrollment program requirements under 45 CFR part 155 subparts D and E. The SMART, thus, enables HHS to evaluate and monitor State Exchange progress in coming into compliance with federal requirements where needed. Since then, HHS has come to utilize the SMART, along with the annual programmatic and financial audit reports, as primary 4 45 5 45 CFR 155.1200(c)(1) and (2). CFR 155.1200(d)(2). VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 oversight tools for identifying and addressing State Exchange noncompliance issues. HHS requires State Exchanges to take corrective actions to address issues that are identified through the SMART and annual audits, and HHS monitors the implementation of the corrective actions. In the proposed rule, we proposed to modify § 155.1200(b)(2) to reflect that HHS requires State Exchanges to submit annual compliance reports (such as the SMART), that encompass eligibility and enrollment reporting by State Exchanges, and also include reporting on compliance across other Exchange program requirements under 45 CFR part 155. We also proposed to modify § 155.1200(b)(1) to eliminate the April 1st date by which State Exchanges must provide a financial statement to HHS, to provide HHS the flexibility to align the financial statement deadline with the SMART deadline, which is set annually by HHS. Because we proposed to remove the April 1st date, but intend to maintain the requirement that State Exchanges submit the required reports by a deadline, we also proposed to modify the introductory text to § 155.1200(b) to specify that State Exchanges must provide the required annual reporting by deadlines to be set by HHS. We proposed to retain the requirement at § 155.1200(c) that an annual programmatic audit be conducted by State Exchanges, but proposed a minor change from ‘‘state’’ to ‘‘State Exchanges’’ to be consistent and clear on the entities to which this rule applies. We also proposed to add specificity to the annual programmatic audit requirement by proposing a clarification of § 155.1200(d)(2) to make clear that HHS may specify or target the scope of a programmatic audit to address compliance with particular Exchange program areas or requirements. We explained that this would provide HHS with the ability to specify those Exchange functions that are most pertinent to a particular State Exchange model (either a traditional State Exchange that operates its own eligibility and enrollment system or an SBE–FP) and need to be regularly included in the audit; target those Exchange functions most likely to impact program integrity, such as eligibility verifications; and reduce burden on State Exchanges where possible. In addition, we proposed to modify § 155.1200(d) by replacing existing paragraph (d)(4) with new paragraphs (d)(4) and (5). These proposed new requirements specify that State Exchanges must ensure that the independent audits implement testing PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 procedures or other auditing procedures that assess whether a State Exchange is conducting accurate eligibility determinations and enrollment transactions under 45 CFR part 155 subparts D and E. Such auditing procedures can include the use of statistically valid sampling methods in the testing or auditing procedures. We indicated that we believe these proposed changes would strengthen our programmatic oversight and the program integrity of State Exchanges, while providing flexibility for HHS in the collection of information. We further explained that, through the Paperwork Reduction Act (PRA) process, we are able to make updates and refinements to the SMART reporting tool to align with our program integrity priorities for Exchanges as they evolve. In addition, allowing HHS to specify the scope of the programmatic audit at § 155.1200(d)(2) would provide us the ability to target our oversight to specific Exchange program requirements based on the particular State Exchange model, our program integrity priorities, and the goal of reducing burden on State Exchanges where possible. We explained our belief that this approach would provide HHS and states with greater insight into State Exchange compliance with federal standards in a more cost-effective manner. We also noted our belief that this approach would allow HHS to identify State Exchange non-compliance issues with more precision and efficacy. It would allow HHS to provide more effective, targeted technical assistance to State Exchanges in developing corrective action plans to address issues that are identified. We discussed how this approach could reduce administrative burden on State Exchanges while maintaining the traditional role of State Exchanges in managing and operating their Exchanges, with HHS maintaining its role of overseeing State Exchange compliance with federal requirements through structured reporting processes. We sought comments on these proposals. After consideration of comments received, we are finalizing the amendments to § 155.1200 as proposed. A summary of comments received and our responses to those comments appear below: Comment: Commenters generally expressed support for some of the proposed changes to the annual reporting and programmatic audit requirement. They expressed support for removal of the April 1st financial statement deadline as long as the new deadline accommodates the state budget cycles for all State Exchanges. Some E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations commenters supported the proposal to provide flexibility to specify the scope of the programmatic audit, such as focusing on eligibility and enrollment requirements under 45 CFR part 155 subparts D and E, while two commenters asked HHS to refrain from expanding the scope of the programmatic audit as it can divert funding from other Exchange functions and create administrative burden. Some commenters expressed concern with the timing and potential funding to implement the changes. These commenters urged HHS to provide State Exchanges with over a year of advanced notice to implement the changes, to ensure proper planning and funding. One commenter requested that HHS clarify the proposed requirement for the State Exchange’s independent external auditor to use statistically valid sampling in their review of the State Exchange eligibility and enrollment transactions, noting that statistically significant sampling in the programmatic audit can be larger in scope and more costly in comparison to random sampling which can also identify programmatic issues. Another commenter recommended that HHS consider changing the frequency of the programmatic audit to biennially unless the programmatic audit shows irregularities. Another commenter urged HHS to clarify that the proposed changes to the programmatic audit specific to eligibility and enrollment activities do not pertain to SBE–FPs, since SBE–FPs rely on HHS and the federal platform to perform eligibility and enrollment functions. Response: We believe these proposed changes will strengthen our programmatic oversight and the program integrity of State Exchanges and thus are finalizing these amendments as proposed. As detailed in the proposed rule, these amendments are intended to allow for more targeted audits that focus HHS and State Exchange resources on compliance with particular Exchange program areas that have higher program integrity risks in a more consistent manner, rather than covering all program areas. These amendments are also intended to address requirements that are applicable only to a particular State Exchange model, in a more standardized manner. We are removing the April 1st deadline from § 155.1200(b)(1) to allow HHS to align the deadline for submission of the financial statement to HHS with the deadline for submission of SMART reports, currently June 1. Going forward, we anticipate establishing the deadline for submission of the financial VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 statement and SMART report on an annual basis through guidance and would seek to accommodate state budget cycles to the maximum extent practical when setting these dates. The general scope of these audits remains the same, that is, under the new paragraph (d)(2), HHS may specify that an audit focus on compliance with subparts D and E of 45 CFR part 155, or other requirements under 45 CFR part 155, as specified by HHS.6 However, we appreciate and considered the comments received. We understand that most State Exchanges negotiate their contracts with external auditing entities a year or more in advance and would need sufficient time to update their contracts to reflect any changes in the scope of the external programmatic audits. We also recognize that State Exchanges that operate their own eligibility and enrollment platforms would also need time to work with their contracted auditors to implement new procedures for testing the accuracy of eligibility determinations if their auditors have not previously employed such procedures for this purpose. Thus, subsequent to this rule, we will provide State Exchanges with technical operational guidance that will specify the first plan year for which changes to the scope of the programmatic audit would apply, taking into account the need to allow for a period of time for State Exchanges to implement the changes finalized in this rule. In response to the comments regarding use of a statisticallysignificant sampling methodology versus a random sampling methodology, we clarify that, in this rule, we are not specifying a particular sampling methology that must be used by all State Exchanges for testing the accuracy of eligibility determinations in the annual programmatic audits. In addition to State Exchanges and their contracted auditors using the generally accepted government auditing standards, CMS’s technical operational guidance would also outline procedures the independent external auditor can chose to implement to assess whether a State Exchange is conducting accurate eligibility determinations and enrollment transactions under 45 CFR part 155 subparts D and E. Going forward we intend to provide State Exchanges with this technical operational guidance on an annual basis to outline the deadline for submission of the applicable year’s 6 This is consistent with the scope for audits in the existing regulation at 45 CFR 155.1200(d)(2), which currently requires State Exchanges to ensure these audits address compliance with ‘‘the requirements under this part.’’ PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 71681 reports, the scope of the applicable year’s external programmatic audit, and the requirements under 45 CFR part 155 that are applicable to each State Exchange model. We intend to release this guidance around April each year, to align with our existing timeframe for providing guidance to State Exchanges on the annual SMART process, so that State Exchanges have sufficient time to prepare, and administrative burden is minimized to the extent practical. Lastly, we agree with the overall notion of taking a risk-based approach towards determining the frequency by which State Exchanges are required to conduct the external programmatic audit. Specifically, we considered the recommendation to change the frequency of State Exchange programmatic audits to biennially unless the audit shows irregulatrities. We decline to make this change at this time because some State Exchanges currently are addressing active findings or corrective actions as a result of past programmatic audits, which we believe annual re-evaluations are still appropriate. However, we will consider this recommendation going forward and may propose to decrease the frequency of State Exchange audits in future rulemaking. Comment: Some commenters requested that certain regulatory language remain unchanged or be modified. One commenter urged HHS to retain the language under §§ 155.1200(b)(2) and 155.1200(d)(2) because the proposed language is broader and targeted auditing can create administrative burden. Another commenter requested that HHS limit the scope of the programmatic audit under § 155.1200(d)(2) to solely cover the eligibility and enrollment requirements under 45 CFR part 155 subparts D and E and remove the language that allows HHS to include other Exchange requirements under 45 CFR part 155 in the scope of the programmatic audit. Another commenter requested that § 155.1200(d)(2) remain unchanged because the general reference to compliance with 45 CFR part 155 is consistent with the HHS’s stated intent to specify the scope for programmatic audits, and recommended that HHS make clear that the proposed changes to the review of State Exchange eligibility determinations under § 155.1200(d)(4) applies to eligibility determinations for QHP/APTC only, and not to Medicaid eligibility determinations. Response: We believe the proposed changes under § 155.1200(d) will strengthen our programmatic oversight and the program integrity of State Exchanges and provide appropriate E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71682 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations flexibility to target oversight and enforcement activities, as well as HHS and State Exchange resources, which, in turn, will reduce burden. As State Exchanges continue to evolve and mature, HHS will be able to focus oversight efforts, including making refinements to annual compliance reporting tools (such as the SMART), in response to changes in federal policy, as well as federal program integrity priorities and processes. We further note that, while these amendments provide flexibility for HHS to target these audits, they also retain the authority for HHS to require the audits to address other requirements under 45 CFR part 155, as specified by HHS. As such, HHS can still require audits with a broader scope when deemed appropriate or necessary. While we generally intend to focus programmatic audits on those Exchange functions most likely to impact program integrity, such as eligibility verifications, we do not agree with commenters that these audits should only focus on eligibility and enrollment functions because there may be changes to federal policy, priorities, or processes that result in the need for HHS to focus our oversight on other Exchange functions besides eligibility and enrollment. Also, not all State Exchanges perform their own eligibility and enrollment functions. For instance, SBE–FPs rely on HHS and the federal platform to perform their eligibility and enrollment functions, and thus HHS’s oversight of SBE–FPs would need to focus on other Exchange functions that are more relevant or critical to the SBE– FP model. That is why HHS retains the authority, and the flexibility, under the amended § 155.1200(d)(2) to require the audits to address other requirements under 45 CFR part 155, as specified by HHS. In addition, the amendments to § 155.1200(d)(2) finalized in this rule give HHS flexibility to specify the Exchange functions that are most pertinent to the State Exchange model and most likely to impact program integrity. In response to comments, we clarify that the changes to subparagraph § 155.1200(d)(4) apply to State Exchange eligibility determinations for QHP/ APTC, and not to Medicaid eligibility determinations. We recognize that not all State Exchanges make Medicaid eligibility determinations, but also wish to clarify that in accordance with § 155.302, State Exchanges must conduct a MAGI-based assessment or determination of eligibility for Medicaid as part of determining eligibility for APTC. HHS will provide further guidelines on the auditing of State Exchange eligibility and enrollment VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 transactions, and any other audit requirements applicable in a given year, in the annual technical operational guidance. We further clarify that the amendments to § 155.1200(b)(2) do not reflect an expansion of State Exchange reporting obligations and instead capture the existing annual compliance reports (such as the SMART), that encompass eligibility and enrollment reporting, as well as compliance across other Exchange program requirements under 45 CFR part 155, that State Exchanges currently submit to HHS. Comment: One commenter requested transparency regarding HHS’s oversight of the Federally-facilitated Exchanges’ (FFEs’) compliance with oversight standards. The commenter recommended that HHS publish a comparison of compliance standards and activities to ensure the FFEs and State Exchanges are held to the same oversight requirements. Another commenter generally supported the proposed changes as enhancing the oversight and transparency of the State Exchanges. Response: We appreciate and strive for transparency in the oversight of all Exchanges and will consider these suggestions. However, we note that the oversight standards under § 155.1200, including the proposed amendments, are specific to State Exchanges. Therefore, the comments related to FFE oversight standards are outside the scope of this rulemaking. We also note that the FFEs are overseen through the efforts of other federal entities such as the Government Accountability Office and the HHS Office of the Inspector General. Comment: Several commenters opposed HHS’s proposed changes to the annual reporting and programmatic audit requirements for State Exchanges. They stated that the proposed language expands federal authority and can add administrative burden to State Exchanges. Some commenters disagreed that the Federalism implications are substantially mitigated since the proposed changes only add specificity to existing requirements, stating that the proposed changes are open-ended and remove specificity. Additionally, some of these commenters expressed concern that HHS is eliminating the requirement of eligibility and enrollment reports under § 155.1200(b)(2). These commenters also raised concerns with the disclosure of consumer information, as well as negative consumer impacts, due to the additional oversight on eligibility determinations being proposed. Response: We believe these changes will strengthen our programmatic PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 oversight and the program integrity of State Exchanges. Further, as detailed above, the amendments do not represent an expansion of HHS’s authority to oversee and monitor compliance of State Exchanges. Under the existing language at § 155.1200(d)(2), State Exchanges are currently required to ensure their respective annual programmatic audits address compliance with ‘‘the requirements under this part.’’ The changes to this provision finalized in this rule provide HHS with the flexibility to target the scope of the audits to the requirements applicable to each State Exchange model under 45 CFR part 155 and that most impact program integrity, which should generally reduce the administrative burdens associated with these audits. For example, we anticipate tailoring the requirements regarding audit of eligibility and enrollment activities by State Exchange model. Since SBE–FPs rely on the federal platform for eligibility and enrollment functions, we believe that they should not be subject to the same audit requirements as State Exchanges that perform all eligibility and enrollment activities because they operate their own technology platform for such activities. We also clarify that we are not eliminating eligibility and enrollment reporting under § 155.1200(b)(2). The amendments finalized to that provision reflect that HHS already requires State Exchanges to submit annual reporting (such as the SMART) that encompass eligibility and enrollment reporting, along with other information about compliance with requirements in other subparts under 45 CFR part 155. These changes recognize that HHS has come to utilize the SMART along with the annual programmatic and financial audit reports as the primary oversight tools to oversee State Exchange compliance with the applicable requirements under 45 CFR part 155, which includes compliance with eligibility and enrollment requirements. We further clarify that if we need additional information about a State Exchange’s compliance with applicable requirements beyond what is reported through SMART, we would leverage the new flexibility under the new § 155.1200(d)(2) to conduct a targeted audit. Finally, in response to the comments expressing concern about the increased risk of disclosure of consumer information as a result of the additional oversight and auditor review of individual eligibility determinations made by State Exchanges that is contemplated in this rule, we note that, E:\FR\FM\27DER3.SGM 27DER3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations as part of the responsibilities of State Exchanges and their contracted entities in handling individual consumer data associated with core Exchange functions such as eligibility, enrollment, and consumer assistance, State Exchanges and their contracted non-Exchange entities must always comply with the privacy and security requirements under §§ 155.260 and 155.280 with respect to the protection and disclosure of personally identifiable information. Additionally, under § 155.285, State Exchanges and their contracted entities are subject to civil monetary penalties for improper use or disclosure of personally identifiable information. Finally, HHS has authority under § 155.280 to conduct audits and investigations to ensure compliance with Exchange privacy and security standards, and may pursue civil, criminal or adminstirative proceedings or actions as determined necessary. After considering the comments received in response to the proposed rule and for the reasons discussed above, we are finalizing the modifications to § 155.1200. jbell on DSKJLSW7X2PROD with RULES3 B. Health Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to Exchanges 1. Segregation of Funds for Abortion Services (§ 156.280) We proposed an amendment at § 156.280(e)(2) relating to billing and payment of the policy holder’s portion of the premium attributable to abortion services for which appropriated funds may not be used. Since 1976, Congress has included language, commonly known as the Hyde Amendment, in the Labor, Health and Human Services, Education and Related Agencies appropriations legislation.7 The Hyde Amendment, as currently in effect, permits federal funds subject to its funding limitations to be used for abortion services only in the limited cases of rape, incest, or if a woman suffers from a physical disorder, physical injury, or physical illness, including a life-endangering physical condition caused by or arising from the pregnancy itself, that would, as certified by a physician, place the woman in danger of death unless an abortion is performed (Hyde abortion services). Generally, when appropriated funds are subject to the Hyde Amendment’s funding limitations, an agency is prohibited, among other things, from 7 Accordingly, the Hyde Amendment is not permanent Federal law, but applies only to the extent reenacted by Congress from time to time in appropriations legislation. VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 using those funds to pay for coverage of abortion beyond these specific limited exceptions (non-Hyde abortion services). Section 1303(b)(2) of the PPACA prohibits the issuer of a QHP offering coverage for abortion services that are not exempt from the Hyde Amendment’s ban on the use of federal funds to pay for certain abortions, from using any amount attributable to PTC (including APTC) or CSRs (including advance payments of those funds to an issuer, if any) for abortions for which federal funds are prohibited, ‘‘based on the law as in effect as of the date that is 6 months before the beginning of the plan year involved.’’ 8 Section 1303 of the PPACA outlines specific accounting and notice requirements that QHPs covering nonHyde abortion services must follow to ensure that no federal funding is used to pay for services for which public funds are prohibited. Under sections 1303(b)(2)(B) and (b)(2)(D) of the PPACA, as implemented in § 156.280(e)(2)(i) and (e)(4), QHP issuers must collect a separate payment from each enrollee in such a plan without regard to the enrollee’s age, sex, or family status, for an amount equal to the greater of the actuarial value of coverage of abortion services for which public funding is prohibited, or $1 per enrollee per month. Section 1303(b)(2)(D) of the PPACA establishes certain requirements with respect to a QHP issuer’s estimation of the actuarial value of non-Hyde abortion services. Under section 1303(b)(2)(D) of the PPACA, the QHP issuer ‘‘may take into account the impact on overall costs of the inclusion of such coverage, but may not take into account any cost reduction estimated to result from such services, including prenatal care, delivery, or postnatal care.’’ The QHP issuer is also required to estimate such costs as if such coverage were included for the entire population covered, and may not estimate such a cost at less than $1 per enrollee, per month. If an enrollee’s premium is paid through employee payroll processes, section 1303(b)(2)(B) of the PPACA requires that the separate payments ‘‘shall each be paid by a separate deposit.’’ Accordingly, issuers that offer QHPs that provide coverage of non-Hyde abortion services must collect a separate payment of no less than $1 per enrollee in the plan per month, regardless of the actuarial value of coverage of non-Hyde abortion services and regardless of whether premiums are paid directly by enrollees or through payroll deductions. 8 Section PO 00000 1303(b)(1)(B)(i) of the PPACA. Frm 00011 Fmt 4701 Sfmt 4700 71683 In certain rare scenarios, the FFEs’ system allocated an amount of APTC to a QHP such that the share of the aggregate premium attributable to coverage of non-Hyde abortion services is less than $1, which falls below the minimum requirement under section 1303 of the PPACA. We made system changes for the open enrollment period for plan year 2019 to ensure that the minimum premium amount of $1 per enrollee per month is assigned to all enrollments into plans offering coverage of non-Hyde abortion services, so that issuers can separately collect this amount directly from enrollees for the portion of the total premium attributable to coverage of non-Hyde abortion services. Pursuant to section 1303(b)(2)(C) of the PPACA, as implemented at § 156.280(e)(3), QHP issuers must segregate funds for coverage of nonHyde abortion services collected from enrollees into a separate allocation account that is to be used to pay for non-Hyde abortion services. Thus, if a QHP issuer disburses funds for a nonHyde abortion on behalf of an enrollee, it must draw those funds from the segregated allocation account. The account cannot be used for any other purpose.9 Section 1303 of the PPACA and current implementing regulations at § 156.280 do not specify the method a QHP issuer must use to comply with the separate payment requirement under section 1303(b)(2)(B)(i) of the PPACA and § 156.280(e)(2)(i). In the 2016 Payment Notice, we provided guidance with respect to acceptable methods that a QHP issuer offering coverage of nonHyde abortion services on an individual market Exchange may use to comply with the separate payment requirement. We stated that the QHP issuer could satisfy the separate payment requirement in one of several ways, including by sending the enrollee a single monthly invoice or bill that separately itemizes the premium amount for coverage of non-Hyde abortion services; sending the enrollee a separate monthly bill for these services; or sending the enrollee a notice at or soon after the time of enrollment that 9 This means that funds from the allocation account into which premium amounts attributable to the non-Hyde abortion service benefit must be deposited are the only funds that may be used to pay for non-Hyde abortion services. It should not be read to suggest that the funds in the separate allocation account may not be used to cover administrative costs associated with coverage of non-Hyde abortion services. See 42 U.S.C. 18023(b)(2)(D)(ii)(I) (when estimating per member, per month cost of non-Hyde abortion services, issuers may take into account the impact on overall costs of the inclusion of such coverage). E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71684 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations the monthly invoice or bill will include a separate charge for such services and specify the charge. In the 2016 Payment Notice, we also stated that an enrollee may make the payment for coverage of non-Hyde abortion services and the separate payment for coverage of all other services in a single transaction. On October 6, 2017, we released a bulletin that discussed the statutory requirements for separate payment, as well as this previous guidance with respect to the separate payment requirement.10 As explained in the proposed rule, HHS now believes that some of the methods for billing and collection of the separate payment for coverage of nonHyde abortion services described as permissible in the preamble to the 2016 Payment Notice do not adequately reflect Congress’s intent. We believe Congress intended that QHP issuers collect two distinct (that is, ‘‘separate’’) payments, one for the coverage of nonHyde abortion services, and one for coverage of all other services covered under the policy, rather than simply itemizing these two components in a single bill, or notifying the enrollee that the monthly invoice or bill will include a separate charge for these services. We proposed an amendment at § 156.280(e)(2) relating to billing and payment of the policy holder’s portion of the premium attributable to coverage of non-Hyde abortion services to reflect this interpretation of the statute. Specifically, we proposed that, as of the effective date of this final rule, QHP issuers (1) send an entirely separate monthly bill to the policy holder, the individual who is the party legally responsible for the payment of premiums (which we refer to in this final rule as the ‘‘policy holder’’) for only the portion of premium attributable to coverage of non-Hyde abortion services, and (2) instruct the policy holder to pay the portion of their premium attributable to coverage of non-Hyde abortion services in a separate transaction from any payment the policy holder makes for the portion of their premium not attributable to coverage of non-Hyde abortion services. We also proposed that if a policy holder pays the entire premium in a single transaction (both the portion attributable to coverage of non-Hyde abortion services, as well as the portion attributable to coverage for other services), the QHP issuer would not be permitted to refuse 10 CMS Bulletin Addressing Enforcement of Section 1303 of the Patient Protection and Affordable Care Act (October 6, 2017), available at https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/Section-1303-Bulletin10-6-2017-FINAL-508.pdf. VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 to accept such a combined payment on the basis that the policy holder did not send payment in two separate transactions as requested by the QHP issuer, and to then terminate the policy, subject to any applicable grace period, for non-payment of premiums. We also stated that the QHP issuer would be expected to counsel enrollees to pay in two separate transactions in the future. Finally, we proposed a technical change to § 156.280(e)(2)(iii), as redesignated, to insert an appropriate cross reference to the explanation of the separate payments. We are finalizing these policies at § 156.280(e)(2), but with several changes explained below. We are also finalizing the technical revision to § 156.280(e)(2)(iii) as redesignated, on which we received no comments, and are revising the heading of § 156.280 so that it accurately describes the new requirements we are finalizing in this final rule. Comment: Most commenters objected to the proposed changes to issuer billing for the portion of the premium attributable to coverage of non-Hyde abortion services, asking that we withdraw the proposals altogether. A minority of commenters summarily supported the policy. Nearly all commenters objecting to the proposals stated that separately billing for one specific service would be an unnecessary change that would not enhance program integrity with respect to enrollee transparency or appropriate use of federal funds. These commenters noted that current requirements already adequately comply with the statute and ensure appropriate segregation of funds, without imposing the operational and administrative burdens of the proposed approach. These commenters asserted that the current regulatory structure allows enrollees to make and issuers to accept a single transfer of funds for the full amount of an enrollee’s premium payment including the amount attributable to coverage of non-Hyde abortion services, while still ensuring that the funds are ultimately segregated appropriately. Many commenters noted that requiring a separate bill and instructing enrollees to pay in separate transactions would be against industry practice, which permits one single bill outlining charges and allows for enrollees to make payments using a single transfer of funds which can be administratively separated by the insurer after payment is received. Some commenters who supported the proposed changes stated that section 1303 of the PPACA contains an unambiguous statutory command that issuers separately bill and collect PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 payments for the portion of a policy holder’s premium attributable to coverage of non-Hyde abortion services. These commenters stated that the proposals are necessary to remedy incorrect methods for billing and payment and will help to ensure issuer compliance with the segregation of funds and the requirement to collect separate payments under section 1303 of the PPACA. Nearly all objecting commenters stated that the proposals would cause considerable and unnecessary confusion and frustration for enrollees that may jeopardize their health insurance coverage. Commenters expressed concern that these billing changes would make it more difficult for policy holders to pay their premium bills, and could result in coverage being terminated for unintentional nonpayment. Commenters expressed concerns that, despite issuer notices and communications to explain the second bill and separate payment requirement, enrollees would likely not understand this change in billing. Among the many scenarios that commenters asserted could result in enrollees failing to pay the separate bill, commenters noted that enrollees might not realize or understand that there is a separate bill covering different services under their plan; enrollees may not realize that such payment is mandatory in order to fully satisfy their premium liability each month and avoid termination of coverage; or enrollees may not notice a second bill since it would be delivered in a separate mailing with which they are unfamiliar. Commenters expressed concern that in any of these scenarios, the enrollee would enter a grace period and, in most cases, have 90 days from the date of the missed payment to reconcile their balance, resulting in enrollees who fail to do so losing their health insurance coverage. Commenters expressed concern that such slight enrollee confusion as a result of the proposal could lead to the complete loss of coverage. Commenters also stated that the proposal to allow enrollees to ‘‘not be penalized’’ for sending back a combined payment, would only send conflicting messages to enrollees and add to their confusion. Commenters stated that our proposal that issuers could accept combined payments from enrollees, but would then be expected to counsel enrollees to pay in two separate payments in the future, requiring issuers to repeatedly instruct enrollees to pay in separate transactions for each bill despite not being able to penalize enrollees if they continuously fail to do E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations so, adds additional burden on issuers and will lead to increased calls from confused enrollees. Many commenters stated they appreciated the enrollee protections prohibiting QHP issuers from refusing to accept a combined payment or terminating an enrollee’s coverage on this basis. However, commenters expressed concerns that this protection alone would not be enough for enrollees who fail to pay the second bill entirely and asked that HHS add protections to the policy to avoid termination of coverage for enrollees who inadvertently fail to make the additional payment due to confusion about the separate bill. Response: We continue to believe that the statute contemplates issuers billing separately for coverage of non-Hyde abortion services, consistent with Congress’s intent that issuers collect separate payments for such services. Requiring one bill for the portion of the policy holder’s premium attributable to coverage of non-Hyde abortion services and a separate bill for the portion of the policy holder’s premium attributable to coverage of all other services covered under the QHP will better align with the intent of section 1303 of the PPACA. HHS intentionally sought comment on ways to mitigate possible enrollee confusion from these proposals. After considering these comments, we believe there may be less confusing and less burdensome ways to implement these billing changes while also fulfilling section 1303 of the PPACA’s statutory mandates. Therefore, we are finalizing, as proposed in a new paragraph at § 156.280(e)(2)(ii)(A), the requirement that QHP issuers must send an entirely separate monthly bill to the policy holder for only the portion of the premium attributable to coverage of non-Hyde abortion services. However, in an effort to mitigate issuer burden associated with added postage and mailing costs, we will not require separate mailings with separate postage, as proposed. Rather, we are codifying that the QHP issuer may include the separate bill for coverage of non-Hyde abortion services in the same envelope or mailing as the bill for the portion of the premium attributable to coverage of all other services. As a result of finalizing this proposal, and to more accurately reflect the contents of § 156.280, we are making a technical change to revise the section heading of § 156.280 to now read, ‘‘Separate billing and segregation of funds for abortion services.’’ We note that when issuers send a separate paper bill for the portion of the VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 premim attributable to coverage of nonHyde abortion services in the same mailing as the bill for the other portion of the policy holder’s premium, the bills must remain distinct and separate, on separate pieces of paper with separate explanations of the charges to ensure the policy holder understands the distinction between the two bills and understands that they are expected to pay the separate bills in separate transactions. We are also codifying that issuers transmitting bills through email or other electronic means will still be required to transmit the separate bill for coverage of non-Hyde abortion services in a separate email or electronic communication than for the bill for the portion of the premium attributable to coverage of all other services. We assume that bills sent electronically can be sent at minimal cost such that requiring separate electronic communications will not significantly increase the burden this requirement places on issuers. We also believe policy holders are more likely to make a separate payment for coverage of non-Hyde abortion services when they receive a separate bill for such amount, and that receiving the separate bill in a separate communication further bolsters that likelihood. In deciding to finalize that QHP issuers may send the separate bill in a single mailing when sending paper bills, but must send the separate bill in a separate email or electronic communication when sending bills electronically, we weighed the goal of separate payment with the competing concern of issuer burden resulting from sending separate paper bills, and the comparatively low burden in sending separate electronic bills. We are also finalizing, as proposed in a new paragraph at § 156.280(e)(2)(ii)(B) the requirement that issuers must instruct policy holders to pay the separate bill in a separate transaction. QHP issuers should make reasonable efforts to collect the payment separately. However, we continue to believe that potential loss of coverage would be an unreasonable result of an enrollee paying in full, but failing to adhere to the QHP issuer’s requested payment procedure. Therefore, at § 156.280(e)(2)(ii)(B) we are also codifying, with minor non-substantive revisions, that the QHP issuer would not be permitted to refuse a combined payment on the basis that the policy holder did not send two separate payments as requested by the QHP issuer, and to then terminate the policy for non-payment of premiums. QHP issuers that receive combined enrollee premiums in a single payment must treat the portion of the premium PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 71685 attributable to coverage of non-Hyde abortion services as a separate payment and must disaggregate the amounts into the separate allocation accounts, consistent with § 156.280(e)(2)(iii). To mitigate enrollee confusion and satisfy the requirement to instruct policy holders to pay the separate bill in a separate transaction, QHP issuers should consider including—in the email or electronic communication containing the bill for the portion of the policy holder’s premium not attributable to coverage of non-Hyde abortion services—language notifying policy holders that they will be receiving a second, separate email or electronic communication containing a separate bill for the portion of their premium attributable to coverage of non-Hyde abortion services that they should pay in a separate transaction. Regardless of whether the QHP issuer sends the bills as paper copies in a mailing or sends the bills through electronic communications, the QHP issuer must instruct their enrollees to pay the separate bill in a separate transaction and must still produce an invoice or bill that is distinctly separate from the invoice or bill for the other portion of the policy holder’s premium that is not attributable to coverage of non-Hyde abortion coverage, whether in paper or electronic format. We also suggest that issuers state clearly for policy holders on both bills that the policy holder is receiving two bills to cover the total amount of premium due for the coverage period, that the policy holder’s total premium due is inclusive of the amount attributable to coverage of nonHyde abortion services, and that the policy holder should make separate payments for each bill. We believe including these statements on each bill, will help policy holders to understand that they are receiving two bills for the premiums due for the payment period, the total amount of premium they owe, and the need to make a separate payment for each bill. We believe this will help to ensure that policy holders return the full monthly amount due, thus preventing policy holders from entering grace periods for non-payment of the premium amounts for the nonHyde abortion coverage. We believe these changes will assist in managing enrollee confusion. However, we also acknowledge that additional outreach and education may still be necessary on the part of issuers and states to explain to enrollees why they are receiving a separate bill for a relatively small amount for which they are expected to submit payment in a separate transaction. As indicated above, we believe that QHP issuers E:\FR\FM\27DER3.SGM 27DER3 71686 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES3 should explain to the policy holder in layperson terms on the separate bill for coverage non-Hyde abortion services, or otherwise communicate to enrollees through enrollee outreach and education, that non-payment of any premium due (including non-payment of the portion of the policy holder’s premium attributable to coverage of non-Hyde abortion services) would continue to be subject to state and federal rules regarding grace periods (unless the QHP issuer elects to take advantage of the enforcement discretion we outline later in this section), clarifying for policy holders that failure to pay the portion of the premium attributable to coverage of non-Hyde abortion services could ultimately result in termination of coverage. We believe that including explanatory language on the bills as well as additional outreach and education by QHP issuers will decrease the likelihood that policy holders would inadvertently fail to pay the separate bill for the portion of their premium attributable to coverage of non-Hyde abortion services. However, we acknowledge commenters’ concerns that, even with fulsome outreach and education efforts to explain the billing scheme to the policy holder, consumer confusion could still lead to inadvertent coverage losses. This risk may be especially acute for enrollees whose plan choices likely were not motivated by the plan’s coverage of non-Hyde abortion services, such as men purchasing a QHP solely for themselves, consumers buying coverage for babies or toddlers, and those who otherwise may be unaware that the plan covers non-Hyde abortion services. However, we note that this risk is mitigated by the steps we have taken to improve transparency regarding QHP offerings, to make it easier for consumers to select QHPs that they believe are best suited to their needs and preferences, such as information to more readily identify QHPs that offer coverage of non-Hyde abortion services.11 To address the risk of terminations related to inadvertent failure to pay the separately billed amount for coverage of non-Hyde abortion services, we intend to propose further rulemaking to change our regulations including, for example, our regulations governing termination 11 ‘‘Frequently Asked Questions for Agents, Brokers, and Assisters Providing Consumers with Details on Plan Coverage of Certain Abortion Services’’ (November 21, 2018), available at https:// www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/Downloads/FAQ-on-Providing-Consumerswith-Details-on-Plan-Coverage-of-Certain-AbortionServices.pdf. VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 for non-payment of premiums.12 Although QHP issuers can implement premium payment thresholds under § 155.400(g), those thresholds may not be effective at preventing termination of coverage for policy holders receiving higher APTC amounts who would have greater difficulty meeting the issuer’s premium payment threshold pursuant to § 155.400(g). Until we can finalize regulatory changes through a separate rulemaking, we will exercise enforcement discretion as an interim step. Specifically, HHS will not take enforcement action against a QHP issuer that adopts and implements a policy, applied uniformly to all its QHP enrollees, under which an issuer does not place an enrollee into a grace period and does not terminate QHP coverage based solely on the policy holder’s failure to pay the separate payment for coverage of non-Hyde abortion services. In accordance with non-discrimination rules applicable to QHP issuers, we would expect issuers to apply such a policy uniformly to all of their enrollees for the duration of the applicable plan year. We also note that if a QHP issuer chooses to take this approach, the QHP issuer would still be prohibited from using any federal funds for coverage of non-Hyde abortion services. Moreover, the QHP issuer would still be required to collect the premium for the non-Hyde abortion coverage, which means that the QHP issuer cannot relieve the policy holder of the duty to pay the amount of the premium attributable to coverage for non-Hyde abortion services. This enforcement posture will take effect upon the effective date of the separate billing requirements under 45 CFR 156.280, which is 6 months after publication of this final rule in the Federal Register. We encourage states and State Exchanges to take a similar enforcement approach. We acknowledge that the enforcement posture described above may not mitigate all concerns identified by commenters. Some commenters expressed concern that the lack of transparency under current section 1303 billing requirements has contributed to unknowing purchases of QHPs that include coverage of non-Hyde abortion services by consumers who object to purchasing such coverage. As noted 12 CMS has yet to make determinations regarding specific requirements or rule changes CMS will propose to address the risk of terminations related to inadvertent failures to pay the separately bill amounts for coverage of non-Hyde abortion services. Accordingly, although CMS will undertake the described rulemaking, nothing in this preamble discussion should be construed as a representation or guarantee that CMS will propose changes to any specific rule or requirement. PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 above, this risk is mitigated by the steps the FFEs have taken to improve transparency of the coverage of nonHyde abortion services under FFE QHPs.13 However, even where consumers who hold religious or moral objections to coverage of non-Hyde abortion services may more easily detect whether a QHP offers coverage to which they object, they may still be deciding between purchasing a QHP that covers non-Hyde abortion services, or else going without the coverage they need, because there may not be a QHP available on the Exchange that omits coverage for non-Hyde abortion services. Until we are able to address these concerns through future rulemaking or other appropriate action, we also will not take enforcement action against QHP issuers that modify the benefits of a plan either at the time of enrollment or during a plan year to effectively allow enrollees to opt out of coverage of nonHyde abortion services by not paying the separate bill for such services. This would result in the enrollees having a modified plan that does not cover nonHyde abortion services, meaning that they would no longer have an obligation to pay the required premium for such services. We recognize that a QHP issuer’s ability to make changes to its QHPs to implement a policy holder’s opt out would be subject to applicable state law. We encourage states and State Exchanges to take an enforcement approach that is consistent with the one we intend to take, as described in this section. Where a QHP issuer allows an enrollee to opt out of coverage of nonHyde abortion services by not paying the separate bill for such services, the user fee a QHP issuer in an FFE or SBE– FP would pay would continue to be based on the original premium, which includes the portion of the premium attributable to non-Hyde abortion coverage. This is being done for operational reasons and issuer convenience, as making changes to the user fee system for FFEs and SBE–FPs to reflect a reduction in premium would result in only a minimal reduction in user fees owed. We do not believe the minimal reduction justifies the additional expense to FFEs and SBE– FPs related to the development of systems to receive and process such 13 ‘‘Frequently Asked Questions for Agents, Brokers, and Assisters Providing Consumers with Details on Plan Coverage of Certain Abortion Services’’ (November 21, 2018), available at https:// www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/Downloads/FAQ-on-Providing-Consumerswith-Details-on-Plan-Coverage-of-Certain-AbortionServices.pdf. E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations reports (which could then result in higher user fees in the future) or the additional cost to QHP issuers related to reporting the minimal changes in premiums. We expect QHP issuers taking this approach to take appropriate measures to distinguish between a policy holder’s inadvertent non-payment of the separate bill for coverage of non-Hyde abortion services and a policy holder’s intentional nonpayment of the separate bill. A policy holder who inadvertently fails to pay the separate bill may have failed to pay because of unfamiliarity with receiving a separate bill for this portion of their premium and may still wish to retain coverage for non-Hyde abortion services if provided the opportunity to rectify nonpayment of the separate bill. A policy holder who intentionally does not pay the separate bill is likely to have made the conscious choice to opt-out of such coverage. To help ensure any modifications made by a QHP issuer under this enforcement approach to a policy holder’s plan align with the policy holder’s intent, the QHP issuer could include on the separate bill for coverage of non-Hyde abortion services or separate electronic communication an option (such as a check box or option button) where the policy holder can affirmatively indicate their intent to opt-out of such coverage by not paying the separate bill. We also recommend including an explanation for the policy holder that by affirmatively opting out, the policy holder would no longer have coverage for non-Hyde abortion services and would no longer have an obligation to pay the required premium for such services. To be clear, we intend that a policy holder’s opt-out would have to be applied to all persons in the enrollment group under the policy. For example, if the policy holder does not pay the separate bill for the portion of the premium attributable to non-Hyde abortion coverage and therefore opts out of coverage for non-Hyde abortion, this opt-out would be applicable to all persons in the policy holder’s enrollment group, such as the policy holder’s spouse and/or family if they are also covered under the policy holder’s policy. Further, our exercise of enforcement discretion would only permit issuers to make one-time changes to remove coverage of non-Hyde abortion services from the QHP coverage. Accordingly, once a policy holder opts out of coverage for non-Hyde abortion services, the policy holder would not be allowed to retract their opt-out decision and reinstate coverage VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 of non-Hyde abortion services for that benefit year, by paying premiums that could cover a portion of premium attributable to coverage of non-Hyde abortion services. Thus, an opt-out would be effective for the remainder of the benefit year. Unlike the enforcement discretion policy we announce above to mitigate risk of inadvertent terminations, this enforcement posture will become effective on the effective date of this final rule, which will be 60 days after its publication in the Federal Register. The separate billing requirements we finalize here under 45 CFR 156.280 will address, among other things, stakeholder comments that the lack of transparency under current section 1303 billing requirements has contributed to unknowing purchases of QHPs that include coverage of non-Hyde abortion services by consumers who object to purchasing such coverage. Because the new billing requirements under these final rules will not take effect upon finalization of these rules, we believe it is important to take this enforcement posture as soon as possible to provide relief for the lack of transparency under current QHP billing requirements. We are taking this approach to maintain protections against adverse selection, while mitigating the serious negative risks of coverage loss by enrollees who might experience difficulties adjusting from the manner in which enrollees are accustomed to paying for insurance coverage or services under a single plan or contract. These interim policies will also provide relief to persons who may unknowingly purchase coverage to which they object because of the lack of transparency under current QHP billing requirements that do not require separate bills for non-Hyde abortion coverage. We believe these interim enforcement policies strike an appropriate balance between honoring PPACA section 1303’s requirement for collection of separate payments, protecting enrollees against inadvertent losses of coverage, and ensuring all enrollees have access to coverage that meets their needs and that does not result in their supporting coverage for non-Hyde abortion services to which they object. Comment: Commenters stated that HHS greatly underestimated the burden on issuers caused by these proposals. Commenters stated that the proposed rule’s analysis of the expected costs and benefits was incomplete, such that HHS cannot accurately determine whether the benefits outweigh the quantitative and qualitative costs to justify finalizing the proposals. Many commenters stated that the burden and costs far outweigh PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 71687 any benefit and, as such, the proposals should not be finalized. Commenters also stated that requiring issuers to send the separate bill in a different envelope or separate email communication would cost QHPs significantly more resources than HHS estimated for the multiple mailings, email communications, and personnel hours spent managing enrollee confusion, termination notices, and multiple bills. For example, commenters noted requiring a separate mailing would double the mailing and postage costs associated with current issuer billing. Commenters also explained that the technical build issuers would need to implement to comply with these proposals would be both complex and time consuming, and would alone require substantial new upfront and annual costs for issuers that HHS did not account for. In general, commenters expressed concerns that requiring separate billing and instructing enrollees to make separate payments for a single policy would create substantial new operational administrative costs for health insurance issuers and, subsequently, for the enrollees they serve. Commenters also expressed concerns with the burdens these changes would impose on Exchanges. Commenters noted Exchanges would need to make time consuming and resource intensive changes to their websites, enrollment systems, and customer service and outreach efforts to align with the separate billing and payment requirements, which would be costly and disrupt Exchange efficiency. Commenters also expressed concern that HHS failed to address the adverse impacts on enrollees resulting from how issuers would react to being forced to allocate additional significant operational and administrative resources towards issuing and processing multiple bills and monthly payments from each policy holder. Many commenters stated that issuers would be required to consider these new costs when setting actuarially sound rates, which would lead to higher premiums for enrollees. Many commenters stated that the costs and requirements on QHP issuers that cover non-Hyde abortion services will in many cases be so high that it will result in QHP issuers dropping coverage for non-Hyde abortion services altogether, even if their enrollees desire such coverage. Commenters expressed concern that, in such scenarios, this would transfer the costs and burdens of accessing non-Hyde abortion services to enrollees who must seek coverage for non-Hyde abortion services elsewhere E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71688 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations or pay out-of-pocket. Other commenters noted that issuers are likely to drop coverage of non-Hyde abortion services if the alternative is terminating coverage for a substantial number of its enrollees due to enrollee confusion resulting in non-payment of miniscule amounts. Many commenters stated that the proposals would threaten the mental and physical health, well-being, and economic security of enrollees, especially women, across the country. Commenters stated that health insurance should provide coverage for the full range of reproductive health care, including abortion, and that this rule threatens to take such coverage away by imposing burdensome requirements on issuers. Commenters also expressed concern that, should these proposals result in issuers ceasing to provide coverage of non-Hyde abortion services, it could impede a patient’s ability to make the best medical decision for herself and her family in consultation with her physician given that many women would be unable to pay privately for such services due to high costs without insurance. Commenters noted that barriers to accessing affordable nonHyde abortion services could have longterm, devastating effects on a woman and her family’s economic future. Commenters noted that the proposals would have a greater impact on subsidized enrollees and might have a discriminatory effect on enrollees receiving higher APTC amounts who would have greater difficulty meeting the issuer’s premium payment threshold pursuant to § 155.400(g). Commenters also stated that it would have damaging consequences on enrollees with specific conditions (like patients with cancer or chronic conditions), as any gaps in coverage as a result of confusion over billing may interrupt disease treatment schedules and could jeopardize health outcomes. Commenters also stated that the proposals would threaten the coverage gains made by the PPACA and have a disproportionate impact on enrollees who already face barriers to care, such as low-income individuals and marginalized communities. HHS received many comments expressing concern that when legal abortion becomes inaccessible, women who seek to end their pregnancy turn to unsafe and illegal methods, risking arrest, serious injury, or even death. Commenters also expressed concern that HHS did not propose any requirements or guidelines for how issuers should educate, inform, and conduct outreach to enrollees regarding these changes in billing and payment if the proposed regulation is implemented VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 as proposed. Commenters also expressed concern that the proposals didn’t address how individuals with limited English proficiency (LEP) or individuals with disabilities may experience barriers in complying with the proposed changes which commenters found particularly concerning, since individuals with LEP and individuals with disabilities already experience hardships in navigating and accessing health care. Response: As we acknowledged in the proposed rule, we recognize that QHP issuers that cover non-Hyde abortion services may experience an increase in burden as a result of the proposals. We have carefully considered the comments that shared information about how the proposals would likely impact markets, issuers, and enrollees. We agree with commenters that separately mailing the separate bill with separate postage could cause unintended additional burden and cost for issuers. Therefore, we are not finalizing the requirement that the separate bills be mailed separately with separate postage. However, we also acknowledge that QHP issuers will nevertheless still incur significant burden and costs as a result of implementing this new separate billing policy. We agree with commenters that QHP issuers are likely to consider these new costs when setting actuarially sound rates and that this will likely lead to higher premiums for enrollees. The potential premiums increases are discussed in further detail in section III, ‘‘Collection of Information Requirements,’’ and section IV, ‘‘Regulation Impact Analysis,’’ of this rule. However, in spite of the potential premium increases, we do not agree that requiring issuers to send separate bills, instruct policy holders to pay in two separate transactions, and make reasonable efforts to collect the payments separately would be an inefficient use of resources. Rather, this instruction is important to achieving better alignment of the regulatory requirements for QHP issuer billing of enrollee premiums with the separate payment requirement in section 1303 of the PPACA. We understand commenters’ concerns that the issuer burden associated with this policy may result in issuers withdrawing coverage of non-Hyde abortion services altogether, requiring some enrollees to pay for these services out-of-pocket. Subject to applicable state law, it is ultimately at the issuer’s discretion whether to cover non-Hyde abortion services in their QHPs, and thus to incur any associated burden, and it is ultimately the states’ and HHS’s duty to PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 enforce the statutory provisions of the PPACA as they are written. Although section 1303 permits issuer flexibility in abortion coverage choices, it also requires that QHP issuers electing to cover non-Hyde abortion services take certain steps to ensure that no APTC or CSR funds are used to pay for these services, such as requiring the QHP issuer to collect a separate payment for these services. The finalized changes at § 156.280(e)(2)(ii) may add issuer burden with regard to their payment and billing operations. However, the statute contemplates such burden in section 1303(b)(2)(B)(i) of the PPACA when it requires that issuers collect a separate payment for the portion of the premium attributable to coverage of non-Hyde abortion services and in section 1303(b)(2)(D) of PPACA when it specifies how QHP issuers are to calculate the basic per enrollee, per month cost, determined on an average actuarial basis, for including coverage of non-Hyde abortions in QHPs. We believe that finalizing the rule to allow issuers to send both bills in a single mailing will mitigate the issuer and state burden that would be imposed if we were finalizing the policy as originally proposed, as well as any initial confusion on the part of enrollees. We estimate that these changes would eliminate much of the additional mailing costs for the second bill since issuers would no longer need to pay for additional postage and envelopes. We believe the changes we are finalizing at § 156.280(e)(2)(ii) strike a balance between requiring the separate bill that we believe is required for better alignment with section 1303 of the PPACA, while also avoiding unnecessary enrollee confusion, enrollee harm, and issuer burden. We understand that non-Hyde abortion services are services for which some enrollees may desire coverage, as they may be costly when not covered by insurance. However, we believe that requiring separate billing for the portion of the premium attributable to coverage of non-Hyde abortion services is a necessary change to better align issuer billing with the statutory requirements specified in section 1303 of the PPACA, which requires non-Hyde abortion services be treated differently from other covered services. We believe the changes we are finalizing at § 156.280(e)(2)(ii) will impose less burden on issuers to implement this policy than if we were finalizing as originally proposed, decreasing the likelihood that issuers will drop this coverage or significantly raise their premiums. Although we acknowledge E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations the changes we are finalizing will increase the burden associated with personnel hours spent managing enrollee confusion, termination notices, and multiple bills, we also believe the changes we are finalizing at § 156.280(e)(2)(ii) minimize enrollee confusion surrounding receiving a separate bill, helping to prevent situations where enrollees enter grace periods and subsequently have their coverage terminated for failing to inadvertently pay the second bill. We also believe policy holder confusion regarding the separate bill may decrease in future plan years as policy holders acclimate to this billing structure and as consumer education continues. However, we acknowledge that a policy holder enrolling for the first time after this policy is finalized in a QHP covering non-Hyde abortion services may still experience confusion regarding the separate bill. As finalized, we believe the inclusion of a second separate bill for these services in the same mailing and requiring issuers to instruct enrollees to pay in a separate transaction for the separate bill (whether sent electronically or by mail), but allowing issuers to accept combined payments if the enrollee fails to pay separately, will allow QHP issuers to continue providing coverage for nonHyde abortion services subject to state and federal law and allow policy holders to continue accessing such coverage when available through their QHPs. We understand commenters’ concern about how these proposals will impact individuals with LEP and other policy holders, especially those with disabilities. We note that, under the policy being finalized, issuers must still comply with all applicable enrollee assistance requirements for QHPs on the Exchange, such as those requirements at § 155.205. In particular, we believe that the requirements at § 155.205(c) will help to ensure that issuers are providing information regarding the separate bill and payment options to individuals with LEP and policy holders with disabilities in plain language and in an accessible manner as specified in regulation. We also suggest that issuers consider the needs of these enrollee groups when conducting enrollee education or outreach about the finalized changes. A more detailed summary of comments discussing the potential burden associated with the proposals can be found in the sections III ‘‘Collection of Information Requirements’’ and IV ‘‘Regulation Impact Analysis’’ of this rule. In section III ‘‘Collection of Information VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 Requirements’’ of this final rule, a detailed breakdown of the estimated one-time burden per issuer and the estimated one-time burden for all issuers can be found in tables 2 and 3, and a detailed breakdown of the estimated annual burden per issuer and the estimated annual burden for all issuers can be found in tables 4 and 5. Comment: Many commenters expressed concern that the proposed effective date would be administratively and operationally infeasible. As proposed, issuers would be required to implement these proposals beginning on the effective date of the final rule, which is 60 days after the final rule is published in the Federal Register. Commenters explained that issuer billing and payment requirements are typically included in plan documents that are approved by the state regulator and provided to the enrollee at the time of enrollment. Commenters noted that a change in payment policies would mean that issuers would need to re-file their applications for all affected plans for approval by state regulators and that such a change could not be implemented mid-plan year. Commenters also stated that, given the substantial investment required to operationalize the new proposals and the associated complexities, issuers would need a minimum of 12 to 18 months to implement these changes. Further, because implementation would need to coincide with the beginning of a new plan year, many commenters stated that plan year 2021 would be the earliest at which implementation could occur given the likely publication timeline for this final rule. Commenters also stated that enrollees can more easily adapt to new payment arrangements at the beginning of a plan year, when they expect premiums to be different and other changes to their plan to occur. Commenters also emphasized that the earlier the effective date, the more burdensome these proposals become. One commenter noted that although state regulators are able to accept the responsibility of primary enforcement of this rule given appropriate lead time, they will be ill-equipped to enforce it if it is made effective immediately, since regulators will need time to develop enforcement policies in consultation with state stakeholders. This commenter also noted that, due to the small amounts issuers would separately bill for coverage of non-Hyde abortion services, many issuers may choose to revise their premium payment threshold policies permitted under § 155.400, but would not have time to do so if the rule were made effective immediately. PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 71689 Response: In response to comments that implementation will take longer than the proposed effective date would allow, we are finalizing that QHP issuers must be in compliance with the policies being finalized at § 156.280(e)(2) on or before the day that is 6 months after publication of the final rule. If the date that is 6 months after publication of the final rule falls in the middle of a QHP issuer’s billing cycle (in other words, after the QHP issuer has already sent out bills to policy holders for that month), the QHP issuer would be expected to comply beginning with the next billing cycle immediately following that date. We acknowledge that requiring QHP issuers to begin complying mid-plan year may pose implementation challenges for some states and issuers. For example, as discussed further later in this response, QHP issuers offering coverage of nonHyde abortion services will already have filed rates for the 2020 plan year and would be unable to update those rates until the following plan year to reflect the added administrative costs they may experience as a result of the finalized separate billing policy. We also acknowledge requiring QHP issuer compliance mid-plan year would not provide QHP issuers offering coverage of non-Hyde abortion services an opportunity, in their discretion, to revise their plan and benefit designs, such as to remove coverage of non-Hyde abortion services, in order to avoid requirements under the separate billing policy. We anticipate that State Exchanges that perform premium billing and payment processing that have QHP issuers that offer coverage for non-Hyde abortion services will face similar challenges to comply with the separate billing requirements within 6 months after publication of this final rule as QHP issuers that offer coverage for nonHyde abortion services. However, we believe 6 months is sufficient for State Exchanges performing premium billing and payment processing and QHP issuers to implement the administrative and operational changes to billing processes necessary to comply with this policy. We also believe a 6-month implementation timeline appropriately prioritizes the goals of improved statutory alignment with the additional time State Exchanges and issuers may need to implement this policy. For those State Exchanges and QHP issuers that may face uncommon or unexpected impediments to timely compliance, HHS will consider extending enforcement discretion to an Exchange or QHP issuer that fails to timely E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71690 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations comply with the separate billing policy as required under this final rule, if we find that the Exchange or QHP issuer attempted in good faith to timely meet the requirements. Although we do not believe that it is necessary for state enforcement policies to have been developed prior to the effective and/or compliance date for the separate billing requirements, we believe this will offer state regulators enough time to develop enforcement policies in consultation with state stakeholders. We also believe this implementation timeline will provide sufficient time for enrollee outreach and education to help mitigate any enrollee confusion resulting from the finalized policies, and to explain to enrollees how the QHP issuer’s previous payment policies will be changing to comply with these new billing requirements. We believe it is important that QHP issuers implement these policy changes at the earliest date feasible to improve statutory alignment with section 1303 of the PPACA. Similarly, we do not believe that potential implementation challenges in connection with a midyear implementation date should outweigh numerous commenters’ concerns regarding the lack of transparency as to whether their QHP covers non-Hyde abortion services, transparency that would be delayed by approximately a year if compliance were required by the first day of the 2021 plan year. We believe that further delaying implementation would be imprudent given that we are now aware of these consumer concerns and given that we believe it is operationally and administratively feasible for State Exchanges and QHP issuers to comply with the policy within 6 months after publication of the final rule. We acknowledge that if QHP issuers are not able to take these additional costs into consideration when setting rates for the 2020 plan year, it is possible that some issuers may seek to exit the individual market in a state or incur losses. We believe that any such risk is small. QHP issuers will have the opportunity to adjust their plan and benefits design and rates in response to the separate billing policy for their plan year 2021 plan offerings. Moreover, we are aware that the actuarial value of the non-Hyde abortion coverage under QHPs generally may be less than the minimum $1 per enrollee, per month QHP issuers must charge for such services under section 1303 of the PPACA; and we are not aware of any reason QHP issuers could not use funds from the allocation account into which premium amounts attributable to the non-Hyde abortion service benefit must VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 be deposited to cover administrative costs associated with coverage of nonHyde abortion services.14 This should mitigate the financial consequences to issuers of their not being able to update individual market rates prior to the 2021 plan year to incorporate the costs of implementing the processes required by this rule. We therefore believe that finalizing a longer, 6-month implementation timeline sufficiently mitigates the risk that some issuers would seek to exit the individual market to avoid the separate billing requirements under this final rule. We acknowledge that State Exchanges’ and QHP issuers’ ability to comply within 6 months may depend on the current status of their billing systems and operations, and that State Exchanges and QHP issuers may be confronted with unexpected impediments to timely compliance. For this reason, HHS will consider extending enforcement discretion to an Exchange or QHP issuer that fails to timely comply with the separate billing policy as required under this final rule, if HHS finds that the Exchange or QHP issuer attempted in good faith to timely meet the requirements. Evidence of such good faith efforts might include records showing that planning for compliance with this final rule’s requirements was begun within a reasonable time following the publication of the final rule, but events outside the Exchange’s or QHP issuer’s control caused implementation delays. HHS will consider exercising this enforcement discretion based on the circumstances of the particular Exchange or QHP issuer. We do not anticipate that HHS would exercise such discretion for an Exchange or QHP issuer that fails to meet the separate billing requirements after more than 1 year following publication of this final rule. Comment: Many commenters who supported the proposals stated that these proposals would increase issuer compliance with the segregation of funds and separate payment requirements under section 1303 of the PPACA, and that the proposals would clarify and correct the previous administration’s interpretation of the statute. Many supporting commenters noted their dissatisfaction that abortion coverage of any kind is offered at all in the individual market, but expressed support that the proposals would better protect enrollees who object, based on their religious or moral beliefs 14 See 42 U.S.C. 18023(b)(2)(D)(ii)(I) (when estimating per member, per month cost of non-Hyde abortion services, issuers may take into account the impact on overall costs of the inclusion of such coverage). PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 (collectively, ‘‘conscience’’), to coverage of non-Hyde abortion services. Many commenters stated that it is a direct violation of their conscience rights to have to pay for abortion in any form, including subsidizing it through insurance coverage. Commenters stated that these proposals would increase transparency for enrollees as to what their health insurance covers and would allow enrollees to use this information to seek a plan that does not cover nonHyde abortion services, consistent with their conscience. Although many commenters expressed support for the proposals, many also objected to being required to pay this separate bill at all if they object to coverage of non-Hyde abortion services. Many commenters asked that HHS accommodate individuals who have conscience objections to these services by allowing enrollees in plans covering non-Hyde abortion to ‘‘opt out’’ of this coverage by not paying the separate bill attributable to coverage of non-Hyde abortion services. Many commenters stated they were unconvinced by the stated justification for the proposals (to better align the regulatory requirements for QHP issuer billing of enrollee premiums with the separate payment requirement in section 1303 of the PPACA) and instead stated that the motivation was to appease religious or political special interests. Commenters stated that the proposals would value the needs of enrollees with conscience objections to coverage of non-Hyde abortion services more highly than the needs of enrollees with a health interest in receiving coverage for non-Hyde abortion services. These commenters stated that the proposals address conscience objections of the few at the cost of the many women who need and value coverage of non-Hyde abortion services. Many commenters asked that these proposals be withdrawn because they impose a narrow religious belief opposing a legal medical service on enrollees who do not share this viewpoint and need or value this coverage. Commenters also objected to the proposal because it singles out coverage of non-Hyde abortion services as the only service for which separate billing and payment is required, questioning why other services are not similarly subject to separate payment and billing requirements based on conscience objections. For example, one commenter expressed that they object based on their conscience to supporting coverage of individuals who get sick after refusing vaccinations for that illness. Another commenter noted that they object to having to pay for coverage E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations of services for tobacco-related illnesses as they believe persons who voluntarily choose to use tobacco products should not be subsidized by other enrollees for their unhealthy behaviors. Response: Although we understand objecting commenters’ concerns, the changes are primarily meant to better align the regulatory requirements for QHP issuer billing of enrollee premiums with the statutory separate payment requirement in section 1303 of the PPACA. We acknowledge that the finalized policy regarding separate billing may increase transparency for policy holders who object on the basis of conscience to coverage of non-Hyde abortion services in their QHPs. And while it is true that this final rule treats coverage of non-Hyde abortion services differently from other covered services for purposes of QHP billing and payment, this differential treatment is based on the statutory PPACA requirement that non-Hyde abortion services be treated differently for billing, collection, payment, and federalsubsidy purposes; we are obligated to enforce the statute. Section 1303 of the PPACA has always required QHP issuers to estimate the basic per enrollee per month cost based on the average actuarial basis of the QHP’s coverage of non-Hyde abortion services, and prohibited QHP issuers from estimating that cost to be less than $1 per enrollee per month. Under the statute, QHP issuers must also collect a separate payment for that portion of the enrollee’s QHP premium attributable to coverage of non-Hyde abortion services and must segregate these payments in a separate allocation account that is to be used to pay for non-Hyde abortion services. Furthermore, section 1303 of the PPACA bars the use of PTCs or CSRs for such coverage. The changes we are finalizing at § 156.280(e)(2)(ii) would strengthen regulatory alignment with the existing statutory requirements for QHP issuer billing of enrollee premiums with the separate payment requirement in section 1303 of the PPACA. We further understand that policy holders who object, based on their conscience, to non-Hyde abortion services may prefer to not pay the separate bill attributable to coverage of these services, and thereby opt out of such coverage. We also acknowledge there may be other services covered by a plan that consumers object to or do not intend to use. As previously stated, the primary motivation for this rule is to better align the regulatory requirements for QHP issuer billing of premiums with the statutory separate payment requirement in section 1303 of the PPACA. VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 However, we agree that consumers are best served by the Exchanges when they can enroll in a QHP that meets their needs, from a conscience, as well as a care, perspective. In the Exchanges that use the federal platform, we have taken steps to improve transparency regarding QHP offerings to make it easier for consumers to select plans that they believe are best suited to their needs, preferences, and conscience concerns, such as information to more readily identify QHPs that offer coverage of non-Hyde abortion services.15 State Exchanges that operate their own technology platforms have taken similar steps. For example, State Exchanges display different plan attributes to enrollees to foster the decision-making process, and allow consumers to view plan offerings by selecting filters that show plans with their desired plan characteristics. In addition, Summary of Benefits and Coverage (SBC) requirements help ensure that consumers have access to easy-tounderstand information about coverage. Further, with regard to commenters that stated their dissatisfaction that abortion coverage is offered at all in the individual market, we note that section 1303(a)(1) of the PPACA specifies that states may enact laws prohibiting QHP issuer coverage of abortion services on the Exchange. We also note that section 1303(a)(2) of the PPACA provides that a state may repeal such a law and provide for the offering of abortion coverage through the Exchange, and section 1303(b)(1)(A)(ii) of the PPACA allows QHP issuers to decide whether or not to offer coverage for abortion services, consistent with applicable state law. Comment: Some commenters objected to HHS stating that it would enforce the requirements of section 1303 of the PPACA as codified at § 156.280 directly in the event that State Exchanges do not enforce these requirements, arguing that it would be inconsistent with other HHS efforts to ensure that states can operate their programs with limited federal interference. Commenters also expressed concern that the proposed enforcement structure overrides the authority delegated to states in section 1303 of the PPACA over issuers that operate in their states, and will disrupt the nature of collaboration and partnership that the PPACA meant to create between the states and the federal 15 ‘‘Frequently Asked Questions for Agents, Brokers, and Assisters Providing Consumers with Details on Plan Coverage of Certain Abortion Services’’ (November 21, 2018), available at https:// www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/Downloads/FAQ-on-Providing-Consumerswith-Details-on-Plan-Coverage-of-Certain-AbortionServices.pdf. PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 71691 government. Commenters also stated that the addition of new compliance reviews are unnecessary, as HHS does not articulate any facts or data establishing the current landscape of compliance—or lack of compliance— with existing regulations. Many commenters stated that the 2014 U.S. Government Accountability Office report,16 which the proposed rule cites as evidence of potential remaining issuer compliance concerns, predates the 2016 Payment Notice, which clarified for issuers how to comply with the separate payment requirement. These commenters assert that HHS offers no evidence that any compliance problems remain over 4 years later. Commenters also stated that the research to inform that report was conducted between February 2014 and September 2014, less than 1-full year after the Exchanges began operating and, as such, issuers were less likely to have fully implemented the compliance standards required under the PPACA. Other commenters stated that compliance with section 1303 of the PPACA has been inconsistent and were supportive that the proposals would require greater oversight and transparency from State Exchanges and require them to meet the standards of section 1303 of the PPACA. Some commenters cited to the 2014 U.S. Government Accountability Office report 17 as evidence of this noncompliance, and others cited to a letter sent prior to publication of the proposed rule by 102 members of Congress to HHS Secretary Alex Azar, which requested that new regulations be implemented ‘‘to remedy the severe problems with the ACA in regard to abortion coverage.’’ 18 Response: We agree that oversight of issuer compliance with section 1303 of the PPACA is important to achieving greater transparency for consumers. We acknowledge that section 1303(b)(2)(E)(i) of the PPACA, as implemented at § 156.280(e)(5), designates the state insurance commissioners as responsible for monitoring, overseeing, and enforcing 16 U.S. Government Accountability Office, ‘‘Health Insurance Exchanges: Coverage of Nonexcepted Abortion Services by Qualified Health Plans,’’ (Sept. 15, 2014), available at http:// www.gao.gov/products/GAO-14-742R. 17 U.S. Government Accountability Office, ‘‘Health Insurance Exchanges: Coverage of Nonexcepted Abortion Services by Qualified Health Plans,’’ (Sept. 15, 2014), available at http:// www.gao.gov/products/GAO-14-742R. 18 Letter from Chris Smith, Member of Congress, to Alex Azar, Secretary, U.S. Department of Health and Human Services (Aug. 6, 2018), available at https://chrissmith.house.gov/uploadedfiles/201808-06_-_smith_letter_on_section_1303_-_abortion_ funding_transparency.pdf. E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71692 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations the provisions in section 1303 of the PPACA related to QHP segregation of funds for non-Hyde abortion services. That is different than assigning the exclusive enforcement authority, with respect to all provisions in section 1303, to the states or to State Exchanges. As is the case with many provisions in the PPACA, states are generally the entities primarily responsible for implementing and enforcing the provisions in section 1303 of the PPACA related to individual market QHP coverage of non-Hyde abortion services. However, where we are charged with directly enforcing statutory requirements in the FFE, we intend to do so fully in instances of issuer noncompliance with the separate payment requirement under section 1303 of the PPACA. Moreover, to the extent a state operating its own Exchange fails to substantially enforce these requirements, HHS is authorized to enforce them directly. Pursuant to section 1321(c)(2) of the PPACA, after determining that a state (or State Exchange) has failed to substantially enforce a federal requirement related to Exchanges and the offering of QHPs through Exchanges, including section 1303 of the PPACA’s separate payments requirement (or other requirements), the Secretary may step in to enforce the requirement against the non-compliant issuer. This enforcement structure strikes an appropriate balance between federal oversight and state flexibility with regard to the requirements of section 1303. Accordingly, unless HHS determines a state (or State Exchange) has failed to substantially enforce section 1303 of the PPACA requirements, we intend to continue to defer to states (or State Exchanges) that enforce section 1303 of the PPACA requirements. HHS disagrees that this enforcement structure in a state operating its own Exchange would override the state’s exercise of authority expressly delegated to states in section 1303 of the PPACA. The compliance reviews governing QHP issuers participating in the FFE include reviews of compliance with section 1303 of the PPACA and § 156.280. The compliance reviews for future benefit years will include the new requirements finalized in this rule for separate billing of the portion of the policy holder’s premium attributable to coverage of non-Hyde abortion services, as finalized at § 156.280(e)(2). We continue to believe such compliance reviews will help to address remaining issuer compliance issues, if any, previously identified by the 2014 U.S. VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 GAO report.19 However, commenters also expressed concern that the 2014 U.S. GAO report is outdated and that there is no evidence of ongoing compliance issues to support the changes we are finalizing regarding separate billing. But regardless of whether there are ongoing compliance issues, the changes we are finalize are primarily meant to better align the regulatory requirements for QHP issuer billing of enrollee premiums with the statutory separate payment requirement in section 1303 of the PPACA. This goal is related to overall compliance with section 1303, but has a different compliance focus than the compliance issues cited in the 2014 U.S. GAO report. Additionally, because we are amending the acceptable methods for issuers to comply with the separate payment requirement, we believe additional oversight during this transition time will be necessary to ensure that issuers are modifying their billing procedures appropriately. FFE issuers subject to compliance reviews under § 156.715 must retain all documents and records of compliance with section 1303 of the PPACA and these requirements in accordance with § 156.705, and should anticipate making available to HHS the types of records specified at § 156.715(b) that would be necessary to establish their compliance with these requirements. For example, FFE issuers subject to compliance reviews for § 156.280 should anticipate supplying HHS with documentation of their estimate of the basic per enrollee per month cost, determined on an average actuarial basis, for including coverage of non-Hyde abortion services; detailed invoice and billing records demonstrating they are separately billing for and instructing policy holders to pay for in a separate transaction the portion of the policy holder’s premium attributable to coverage of non-Hyde abortion services as specified in this rule, the actuarial value which must be estimated to be no less than $1 per enrollee, per month; and appropriately segregating the funds collected from enrollees into a separate allocation account that is used to pay for non-Hyde abortion services. We remind issuers that pursuant to § 156.280(e)(5)(ii), any issuer offering coverage of non-Hyde abortion services on the Exchange must submit a plan to the relevant state insurance regulator that details the issuer’s process and methodology for meeting the 19 U.S. Government Accountability Office, ‘‘Health Insurance Exchanges: Coverage of Nonexcepted Abortion Services by Qualified Health Plans,’’ (Sept. 15, 2014), available at http:// www.gao.gov/products/GAO-14-742R. PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 requirements of section 1303(b)(2)(C), (D), and (E) of the PPACA (hereinafter, ‘‘segregation plan’’).20 The segregation plan should describe the QHP issuer’s financial accounting systems, including appropriate accounting documentation and internal controls, that would ensure the segregation of funds required by section 1303(b)(2)(C), (D), and (E) of the PPACA. Issuers should refer to § 156.280(e)(5)(ii) for more information on precisely what issuers should include in their segregation plans to demonstrate compliance with these requirements. We also remind QHP issuers that pursuant to § 156.280(e)(5)(iii) each QHP issuer participating in the Exchange must provide to the state insurance commissioner an annual assurance statement attesting that the plan has complied with section 1303 of the PPACA and applicable regulations. We also remind issuers offering medical QHPs in the FFEs that they already must attest to adhering to all applicable requirements of 45 CFR part 156 as part of the QHP certification application, including those requirements related to the segregation of funds for abortion services implemented in § 156.280.21 As finalized, issuers in the FFE completing this attestation would also attest to adhering to these new separate billing and collection requirements. As part of the QHP certification process, issuers in states with FFEs where the states perform plan management functions must also complete similar program attestations attesting to adherence with § 156.280.22 Issuers in states with State Exchanges that offer QHPs that cover non-Hyde abortion services should contact their state regarding the QHP certification process. Comment: HHS received comments expressing a variety of legal arguments against the proposals. Many commenters stated that the proposals violate the Administrative Procedure Act (APA) because the proposals advance an unreasonable interpretation 20 While we included compliance with section 1303(b)(2)(D) in the segregation plan that QHP issuers are required to submit to state insurance commissioners under our regulations at 45 CFR 156.280(e)(5), we did not mean to suggest by that inclusion that such provision is part of the segregation requirements in the statutory subsection that are subject to the jurisdiction of state health insurance commissioners under section 1303(b)(2)(E). 21 2019 Qualified Health Plan Issuer Application Instructions, available at: https:// www.qhpcertification.cms.gov/s/ 2019QHPInstructionsVersion1.pdf?v=1. 22 State Partnership Exchange Issuer Program Attestation Response Form, available at: https:// www.qhpcertification.cms.gov/s/SuppDoc_SPE_ Attestationsed._revised_508.pdf?v=1. E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations of law, are arbitrary and capricious, fail to provide adequate reasons or satisfactory explanations why HHS seeks to adopt a newly preferred interpretation of the requirement, and fail to adequately assess the costs and harms. Commenters also stated the proposals raise Federalism concerns under the Tenth Amendment because the proposals allegedly are designed to penalize states that have laws requiring QHPs to provide coverage of non-Hyde abortion services by requiring states— through their respective Exchanges and the Department of Insurances (DOIs)—to adopt new oversight responsibilities, and make systemic changes to fit the alterations the proposals require. For these states, commenters stated that this effectively requires states to either divert extensive resources to implement these changes or change their sovereign laws to no longer require coverage of non-Hyde abortion services. Commenters also stated that the proposals exceed the federal government’s spending power by implementing new reporting and oversight obligations in the Exchanges that impose post-acceptance or retroactive conditions on states that were not originally anticipated. Commenters also stated that the proposals serve as a tax penalty on issuers for doing business in states with non-Hyde abortion services coverage requirements. One commenter stated that HHS improperly excluded the proposed changes to § 156.280 among the rule changes with Federalism implications. Commenters also stated that requiring QHP issuers to send a separate bill to enrollees about the plan’s coverage of non-Hyde abortion services constitutes a second separate notice outside of the notice included in the SBC indicating whether the plan covers abortions services and that, as such, these proposals violate section 1303(b)(3)(A) of the PPACA, which specifies that QHP issuers covering these services ‘‘shall provide a notice to enrollees, only as part of the summary of benefits and coverage explanation, at the time of enrollment, of such coverage.’’ Commenters further assert that the proposals violate section 1303(b)(3)(B), which states that all advertising used by issuers, any information provided by the Exchange, and ‘‘any other information specified by the Secretary’’ shall only provide information with respect to the total amount of the combined payments for all services. Commenters also stated that the proposals violate section 1554 of the PPACA because these proposals will limit access to health care services, VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 conflict with section 1557 of the PPACA, violate the Equal Protection Clause because the proposals place a heavy burden on a unique health care service only applicable to women, constitute an undue burden on a woman’s right to procreative choice, violate the unconstitutional conditions doctrine by penalizing those who choose to exercise a constitutionallyprotected right by imposing unreasonable payment protocols to access abortion services, and violate the establishment clause of the First Amendment. HHS also received many comments stating that the proposed interpretation of section 1303 of the PPACA violates congressional intent. Commenters stated that section 1303 of the PPACA makes clear that absent a state law to the contrary, issuers offering Exchange coverage can decide whether to cover non-Hyde abortion services and that these requirements effectively take that decision away from issuers. Commenters also stated that Congress specifically enacted section 1303 of the PPACA’s provisions after rejecting more extreme and restrictive alternatives that would have eliminated abortion coverage in the Exchanges or prohibited enrollees from using federal financial assistance to purchase a plan including abortion coverage, and that HHS is ignoring that legislative history by proposing changes that would have a net effect of reducing abortion coverage where issuers decide to eliminate coverage due to the regulatory burden. Commenters also noted that, although Congress decided to treat abortion differently when passing section 1303 of the PPACA, it did so specifically to ensure that private insurance plans could continue to decide whether or not to cover abortion in states that did not ban such coverage, and that this rule threatens that right. One commenter also stated that HHS violated generally accepted principles of statutory interpretation and should have construed ‘‘separate payment’’ in line with industry practice. Many commenters also stated that these proposals conflict with the Administration’s stated goals of reducing economic and regulatory burden, in conflict with several recently issued Executive Orders. Specifically commenters stated that the proposals would undermine Executive Order 13765 because these proposals would increase the administrative and economic burden of the PPACA, Executive Order 13813 which called for rules and guidelines to improve access to and the quality of information that Americans need to make informed PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 71693 healthcare decisions, Executive Order 13777 which orders federal agencies to alleviate unnecessary regulatory burden placed on the American people, and Executive Order 12866 because HHS did not ‘‘assess both the costs and the benefits of the intended regulation and . . . propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify the costs,’’ as the Executive Order directs. Commenters also stated that the proposals would undermine CMS’s ‘‘Patients Over Paperwork’’ initiative aimed at reducing administrative burden on health plans and providers. HHS also received comments arguing that these changes advance the congressional intent for the separate payment requirement in section 1303 of the PPACA, arguing that both the congressional record and the statutory language clearly demonstrate that Congress intended that billing for coverage of non-Hyde abortion services be separate. Response: HHS disagrees with comments questioning its legal authority to make these policy changes, and disagrees that interpreting section 1303 of the PPACA to require issuers to send a separate bill for the portion of the premium attributable to coverage of non-Hyde abortion services violates the APA. Section 1303 of the PPACA and regulations at § 156.280 do not specify the method a QHP issuer must use to comply with the separate payment requirement under section 1303(b)(2)(B)(i) of the PPACA and § 156.280(e)(2)(i). Although we recognized in the preamble to the proposed rule that the previous methods of itemizing or providing advance notice about the amounts noted as permissible in the preamble of the 2016 Payment Notice arguably identifies two ‘‘separate’’ amounts for two separate purposes, we continue to believe that requiring issuers to bill for two separate ‘‘payments’’ of these two amounts better aligns with, and better enables compliance with, the separate payment requirement in section 1303 of the PPACA. We also believe that consumers are more likely to make a separate payment for the non-Hyde abortion coverage when they receive a separate bill for such amount. In fact, among the previously acceptable methods for QHP issuers to comply with the separate payment requirement outlined in the preamble to the 2016 Payment Notice was sending a separate monthly bill for these E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71694 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations services.23 As such, amending the policy to only permit this method of complying with the separate payment requirement does not wholly depart from the previous interpretation, it merely refines it to better reflect the statute. Additionally, we have carefully considered the comments we received estimating the burden the proposals would impose on issuers, states, enrollees, and other entities, and agree—without accepting the estimates provided by commenters—that, as originally proposed, the actual burden would have exceeded HHS’s estimates. As such, we are finalizing several changes described in responses to comments earlier in this section of the preamble with the specific intent of mitigating the burden that would have been imposed if we were finalizing as originally proposed. HHS disagrees that the policy as originally proposed or as revised in the final rule violates state sovereignty, exceeds the federal government’s spending power, or raises other Federalism concerns. Because states are the entities primarily responsible for implementing and enforcing the provisions in section 1303 of the PPACA related to individual market QHP coverage of non-Hyde abortion services, we acknowledge that requiring issuers to separately bill for the portion of the premium attributable to these services means that states will likely adjust how they ensure issuer compliance with these new requirements. We also remind states concerned about enforcement and oversight of these requirements that, under section 1321(c) of the PPACA, states may elect not to establish and operate an Exchange, thereby deferring those responsibilities to HHS. We are clarifying the existing statutory requirement by adding specificity to the regulatory requirement, for issuers to collect a separate payment for these services. As such, these changes do not directly impose new requirements on states other than to adjust how they check for compliance. We believe that any state oversight responsibility modified through these changes was already contemplated by section 1303 of the PPACA in identifying states as the entities primarily, but not exclusively, responsible for enforcing the provisions in section 1303. Further, as noted above, among the previously acceptable methods for QHP issuers to comply with 23 Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2016 (80 FR 10750, 10840). VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 the separate payment requirement was sending a separate monthly bill for coverage of non-Hyde abortion services. Therefore, states should already have developed mechanisms to confirm compliance with separate monthly billing and payment for these services for any issuers that previously elected this option. Setting aside the question of whether state laws requiring coverage of nonHyde abortion services on the Exchange are consistent with statutory conditions on federal funding from the Department to the States, we acknowledge that some states have such laws. However, the changes we are finalizing do not preempt state law regarding coverage of non-Hyde abortion services or otherwise attempt to coerce states into changing these laws or to deny QHP issuers the ability to offer plans on the Exchanges that provide coverage of non-Hyde abortion services. HHS is simply refining the method by which issuers comply with the separate payment requirement. HHS does not agree with commenters’ concerns that the proposals would inhibit enrollee access to appropriate and timely medical care in violation of section 1554 of the PPACA. We acknowledge that, as originally proposed, the combination of issuer burden and enrollee confusion could have potentially led to a reduction in the availability of coverage of non-Hyde abortion services (either by issuers choosing to drop this coverage to avoid the additional costs or by enrollees having their coverage terminated for failure to pay the second bill), thereby potentially increasing out-of-pocket costs for some women seeking those services. But such an effect of a separate billing requirement would not constitute a violation of section 1554. Moreover, we believe the changes we are finalizing will decrease the likelihood of these outcomes. Importantly, subject to state law, section 1303(b)(1)(A) of the PPACA makes it clear that it is ultimately at the issuer’s discretion whether to cover non-Hyde abortion services in their QHP; requiring a separate bill for these services does not limit that right. HHS also disagrees that the policy in the proposed rule, as revised in this final rule, is inconsistent with sections 1303(b)(3)(A) or 1303(b)(3)(B) of the PPACA. Reading section 1303(b)(3) alongside section 1303(b)(2), which requires collection of separate payments, suggests that section 1303(b)(3) pertaining to notices should be read harmoniously with the separate payment requirement, rather than in conflict with those requirements, as PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 commenters suggest. For example, the separate bill for the portion of the policy holder’s premium attributable to coverage of non-Hyde abortion services is primarily a means of ensuring separate QHP issuer collection of that portion of the policy holder’s premium, as required under section 1303(b)(2). This separate bill does not circumvent or conflict with the independent requirement in section 1303(b)(3) pertaining to notices. Further, any insight the policy holder gains from the separate bill for coverage of non-Hyde abortion services about the QHP’s coverage of non-Hyde abortion services is incidental to the primary purpose of the bill, which is to help ensure separate payment by the policy holder, and separate QHP issuer collection on this portion of the policy holder’s premium. We also note that requiring a separate bill for coverage of non-Hyde abortion services is not a violation of section 1303(b)(3), just as the separate itemization of the premium amount for such coverage on a single bill (as was previously one of the acceptable billing and premium collection methods for this amount) was not a violation of that section. Therefore, we believe it is a more reasonable interpretation of section 1303 of the PPACA that section 1303(b)(2) and 1303(b)(3) of the PPACA need not conflict when read in context with one another. Section 1557 of PPACA prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs or activities. HHS disagrees that the policy in the proposed rule and as revised in this final rule discriminates against women or constitutes gender discrimination in violation of section 1557 of the PPACA or of the Equal Protection Clause. Although only women access non-Hyde abortion services, the separate bill for the portion of the premium attributable to coverage of these services, and any enrollee burden associated with that bill, is broadly applicable to any policy holder in a plan that covers non-Hyde abortion services. In other words, both men and women in plans covering non-Hyde abortion services will receive a separate bill for the portion of the premium attributable to coverage of these services, not just the women who may ultimately access such services. Similarly, HHS disagrees that the proposals violate the unconstitutional conditions doctrine, given that QHP issuers offering these services will be required to send the separate bill to all policy holders in their plan, not just those who choose to access non-Hyde abortion services. As such, although it E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations may be true that enrollees who would be most likely to need access to coverage of non-Hyde abortion services would be most likely to intentially enroll in a QHP with such coverage, any additional burden these enrollees experience related to understanding and paying the second bill is unrelated to whether enrollees actually do access coverage of non-Hyde abortion services. Therefore, the finalized policy does not penalize enrollees for accessing their constitutionally protected right to abortion. All policy holders would receive the separate bill for the portion of their premium attributable to coverage of non-Hyde abortion services, regardless of whether they could, intend to, or do, access the coverage for these services. HHS also disagrees that the policy in the proposed rule, or as revised in this final rule, violates the Establishment Clause or otherwise impedes the free exercise of religion. Although it may be a secondary impact that the billing changes serve the interests of enrollees who object to coverage of non-Hyde abortion services based on their conscience, the objective for this policy change continues to be achieving better alignment with the statutory requirement for issuers to collect a separate payment for coverage of nonHyde abortion services, as specified in section 1303 of the PPACA. As such, we reject commenter’s arguments that these proposals are religiously motivated. We also disagree with commenters that this interpretation of section 1303 of the PPACA violates congressional intent. We acknowledge that, in drafting section 1303 of the PPACA, Congress rejected language that would have imposed more restrictive requirements on QHP issuers offering coveage of nonHyde abortion services.24 However, although the language in section 1303 of the PPACA that Congress ultimately enacted into law permits issuers to offer coverage for non-Hyde abortion services subject to state law, this flexibility is not without limitations. As enacted, section 1303 of the PPACA requires that QHP issuers offering non-Hyde abortion coverage on the Exchanges follow specific actuarial, accounting, and notice requirements to ensure that federal funds are not used to pay for the costs of including coverage of these services under the QHP. We believe that by requiring issuers to collect separate payments, section 1303 of the PPACA contemplates sending to enrollees 24 See Amendment to H.R. 3962, 111th Cong. (2009) (offered by Rep. Stupak and Rep. Pitts), 155 Cong. Rec. H12,921 (Nov. 7, 2009); See 155 Cong. Rec. S12,665 (2009). VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 separate bills for these services to help ensure appropriate segregation of these funds. Furthermore, HHS previously listed ‘‘sending a separate monthly bill for these services’’ as one of the permissible methods for issuers to comply with the separate payment requirement in the 2016 Payment Notice. HHS also disagrees with claims that the proposals impermissibly undermine the Executive Orders mentioned in comments. We interpret the proposals and the policy as finalized in this rule as consistent with Executive Order 13765 because the law is being ‘‘efficiently implemented’’ through better aligning the issuer requirements related to fulfilling section 1303 of the PPACA’s separate payment requirements with the statute. We also believe Executive Order 13813 supports the changes to the policy as finalized in this rule, since providing a separate bill to policy holders for the portion of the premium attributable to coverage of non-Hyde abortion services will ‘‘improve access to and the quality of information that Americans need to make informed healthcare decisions.’’ 25 We note that we also believe Executive Order 13877 supports the policy changes by enhancing the ability of enrollees ‘‘to choose the healthcare that is best for them’’ and to make ‘‘fully informed decisions about their healthcare.’’ Indeed, many commenters highlighted that this would be one of the positive impacts of the proposal— that the separate bill would serve to clarify for enrollees that their plan covers non-Hyde abortion services and at what cost, information which many commenters would use to decide whether to remain enrolled in that QHP or seek a QHP without such coverage. We also believe Executive Order 13777 supports the proposals and changes being finalized in this rule, since requiring a separate bill for coverage of these services helps to ensure that HHS is ‘‘prudent and financially responsible in the expenditure of funds,’’ by better aligning the requirements with the statute in a manner that will help to ensure that QHP issuers that offer coverage for non-Hyde abortion services collect a separate payment from policy holders for the portion of their premium attributable to non-Hyde abortion coverage which also helps to ensure that 25 Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First (issued on June 24, 2019, available at https://www.whitehouse.gov/ presidential-actions/executive-order-improvingprice-quality-transparency-american-healthcareput-patients-first/. PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 71695 APTC or CSR funds are not used pay for such services. Additionally, HHS did ‘‘assess both the costs and the benefits’’ of the proposed rule. However, we note that Executive Order 12866’s directive to only issue net-beneficial regulations applies only ‘‘to the extent permitted by law.’’ Although we have since adjusted the policy as well as the estimated burden to reflect a larger burden estimate, we continue to believe that requiring QHP issuers to separately bill the portion of the policy holder’s premium attributable to coverage of non-Hyde abortion services is a better interpretation of the statutory requirement for QHP issuers to collect a separate payment for coverage of these services, and, thus, justifies the costs.26 Lastly, although CMS’s ‘‘Patients Over Paperwork’’ initiative does include the goal of reducing unnecessary burden, HHS believes these changes and the added burdens associated with the changes are necessary, as the changes will better align issuer billing with the statutory requirements of the PPACA. Moreover, in line with this initiative, we believe enrollees will benefit from the additional clarity that the separate bill provides about their plan’s coverage of non-Hyde abortion services. III. Collection of Information Requirements This final rule contains information collection requirements as defined under the Paperwork Reduction Act of 1995 (PRA). We proposed and solicited comments on these information collection requirements (ICRs) in the notice of proposed rulemaking that published on November 9, 2018 (84 FR 56015). The information collection requirements and the reconciliation of any comment received on the requirements are discussed below. In order to fairly evaluate whether an information collection should be approved by the Office of Management and Budget (OMB), section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the 26 This rule has been subject to interagency (including OMB) review under Executive Order 12866 and cleared by OMB for issuance and publication, indicating that the rule is consistent with Executive Orders. E:\FR\FM\27DER3.SGM 27DER3 71696 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations affected public, including automated collection techniques. In our November 9, 2018 (83 FR 56015) proposed rule, we solicited public comment on each of the required issues under section 3506(c)(2)(A) of the PRA for the following ICRs. A. Wage Estimates To derive average costs, we generally used data from the Bureau of Labor Statistics to determine average labor costs (including a 100 percent increase for fringe benefits and overhead) for estimating the burden associated with the ICRs.27 Table 1 in this final rule presents the mean hourly wage (calculated at 100 percent of salary), the cost of fringe benefits and overhead, and the adjusted hourly wage. As indicated, employee hourly wage estimates have been adjusted by a factor of 100 percent. This is necessarily a rough adjustment, both because fringe benefits and overhead costs vary significantly across employers, and because methods of estimating these costs vary widely across studies. However, we believe that doubling the hourly wage to estimate total cost is a reasonably accurate estimation method. TABLE 1—ADJUSTED HOURLY WAGES USED IN BURDEN ESTIMATES Occupational code Occupation title General and Operations Manager ................................................................... Computer and Information Systems Manager ................................................. Computer Programmer .................................................................................... Computer System Analyst ............................................................................... Business Operations Specialist ....................................................................... Secretaries and Administrative Assistants ...................................................... B. Information Collection Requirements (ICRs) jbell on DSKJLSW7X2PROD with RULES3 1. ICRs Regarding General Program Integrity and Oversight Requirements (§ 155.1200) The burden associated with State Exchanges meeting the program integrity reporting requirements in § 155.1200 have already been assessed and encompassed through SMART currently approved under OMB control number: 0938–1244 (CMS–10507). While we are finalizing proposals in this rule that would provide HHS the ability to focus State Exchange oversight and audit activities towards particular Exchange functions that have higher program integrity risks in a more consistent manner, and require State Exchanges and their auditors to employ auditing techniques or procedures in a more consistent manner, we do not envision these changes to have a material impact on the burden for State Exchanges. As detailed in the proposed rule and in the preamble of this rule, these amendments are intended to allow for more targeted oversight and audits of State Exchanges that focus and direct existing HHS and State Exchange resources towards particular Exchange program areas that have higher program integrity risks, rather than having those Federal and State Exchange resources covering all program areas or covering program areas that have lower program integrity risks. Because existing resources would be directed away from certain program areas and towards 27 See May 2018 Bureau of Labor Statistics, Occupational Employment Statistics, National VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 11–1021 11–3021 15–1131 15–1121 13–1199 43–6014 program areas with higher program integrity impact across all State Exchanges, we believe the overall burden on State Exchanges would not change. Further, we are not specifying a particular sampling methodology that must be used by all State Exchanges for testing the accuracy of eligibility determinations in annual programmatic audits. This final rule therefore does not impose any new burden or revised information collection requirements pertaining to § 155.1200. 2. ICRs Regarding Rules Relating To Segregation of Funds for Abortion Services (§ 156.280) In § 156.280(e)(2), we are finalizing that QHP issuers must send an entirely separate monthly bill to the policy holder covering only the portion of premium attributable to coverage of non-Hyde abortion, and instruct the policy holder to pay the portion of their premium attributable to coverage of non-Hyde abortion services in a separate transaction from any payment the policy holder makes for the portion of their premium not attributable to coverage of non-Hyde abortion services. Based on 2020 QHP certification data in the FFEs and SBE–FPs, we estimate that 23 QHP issuers will offer a total of 338 plans with coverage of non-Hyde abortion services in 9 FFE and SBE–FP states. For the 12 State Exchanges that will operate their own technology platforms in 2020 and have QHPs that offer coverage of non-Hyde abortion services, we have updated our methodology for Mean hourly wage ($/hour) $59.56 73.49 43.07 45.01 37.00 18.28 Frm 00024 Fmt 4701 Sfmt 4700 $59.56 73.49 43.07 45.01 37.00 18.28 Adjusted hourly wage ($/hour) $119.12 146.98 86.14 90.02 74.00 36.56 identifying issuers with QHPs that offer coverage of non-Hyde abortion services, and now estimate that 71 QHP issuers will offer a total of approximately 1,129 plans that include coverage for nonHyde abortions services. Three of those State Exchanges perform premium billing and payment processing, while the other 9 have their issuers perform premium billing and payment processing. In total, we now estimate that will be 94 QHP issuers offering a total of 1,467 plans (representing approximately 32 percent of individual market, on-Exchange plans) covering non-Hyde abortion services across 21 states in plan year 2020. As such, the ICRs associated with these proposals create a new burden on QHP issuers and State Exchanges that perform premium billing and payment processing, and thus will be submitted to OMB for final approval (OMB control number: 0938– 1358 (Billing and Collection of the Separate Payment for Certain Abortion Services (CMS–10681)). Comment: We used the estimated numbers of impacted issuers and plans to estimate the costs associated with the proposals regarding separate billing and payment for coverage of non-Hyde abortion services. We received many comments from issuers, issuer associations, states, State Exchanges, state regulators, and other organizations arguing that we greatly underestimated the burden on issuers to implement the original proposals. For example, commenters stated that actual one-time costs for issuers to implement Occupational Employment and Wage Estimates at https://www.bls.gov/oes/current/oes_stru.htm. PO 00000 Fringe benefits and overhead ($/hour) E:\FR\FM\27DER3.SGM 27DER3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations these proposals would be anywhere from $50,000 to $7,500,000 per issuer. Commenters also stated that annual costs per issuer would be anywhere from $40,000 to $10,800,000 annually. One commenter stated that the operational burden of a mid-size issuer (serving approximately 70,000 Exchange enrollees) would exceed HHS’s estimate by approximately 2,666 times for the first year alone. Commenters explained that the proposals would require changes to nearly every aspect of the enrollment and billing processes to identify impacted enrollees, generate and send multiple accurate invoices, collect multiple payments, and reconcile payment amounts. Some commenters noted that many issuers do not have the ability to generate two separate bills for one policy and that, as such, the proposals would require them to issue two policies per policy holder (and enroll every policy holder into two separate policies to be able to bill them in the required way). Commenters stated that the proposals would consequently require that many issuers create separate member IDs in order to facilitate every enrollee receiving two bills and making two payments. Commenters stated that this would be an extraordinarily costly and difficult change for such issuers to make. Commenters also expressed concern that requiring issuers to send the separate bill in a separate mailing would double an issuer’s postage and associated mailing costs, costing issuers an additional $15.6 to $31.2 million nationally per year, and expressed further concern that this cost was not accounted for in the proposed rule’s impact estimates. Many commenters explained that it is unrealistic to assume that issuers can save costs by enrollees switching to electronic billing, since many enrollees still elect to receive and pay their health coverage bills through the mail. Other commenters explained that many enrollees have no choice but to receive paper bills and send paper checks, as many enrollees in rural areas and many low-income individuals still do not have access to the internet. Response: We appreciate these comments and after consideration, have adjusted the estimated burden below. In response to these comments, we have updated the associated ICRs to reflect an increase in burden and costs for issuers. We believe that the original burden estimate in the proposed rule would not accurately reflect the actual costs issuers would have incurred if we finalized the provisions as proposed. We estimate that allowing issuers to send the separate bill in the same mailing (though not in the same email or electronic communication) as the bill for other services would eliminate much of the commenter estimated $15.6 to $31.2 million that the second bill would have cost annually if we had finalized as proposed. By finalizing this policy to allow for combined mailings when sending paper bills, we ensure that issuers will not be required to incur the costs associated with additional postage and envelopes. Issuers will incur burden to complete the one-time technical build to implement the necessary changes, which will involve activities such as planning, assessment, budgeting, contracting, building and testing their systems; as well as one-time changes such as billing-related outreach and call center training. We assume that this 71697 one-time burden will be incurred primarily in 2020. We estimate that, for each issuer, on average, it will take business operations specialists 2,500 hours (at $74 per hour), computer system analysts 6,500 hours (at $90.02 per hour), computer programmers 22,000 hours (at $86.14 per hour), computer and information systems managers 200 hours (at $146.98 per hour) and operations managers 300 hours (at $119.12 per hour) to complete this task. The total burden for an issuer will be approximately 31,500 hours on average, with an equivalent cost of approximately $2.7 million. We anticipate that implementing these changes within 6 months would result in issuers incurring additional costs such as higher contracting costs and overtime payments, which will increase the total cost for each issuer by 50 percent, to approximately $4.1 million. For all 94 issuers, the total one-time burden will be 2,961,000 hours for a total cost of approximately $385 million. We anticipate that the burden incurred by State Exchanges that perform premium billing and payment processing and have QHP issuers that offer coverage for non-Hyde abortion services will be similar to the burden incurred by QHP issuers offering coverage for non-Hyde abortion services. Therefore the total burden for a State Exchange that performs premium billing and payment processing will be approximately 31,500 hours on average, with a total cost of approximately $4.1 million. For all 3 State Exchanges that perform premium billing and payment processing, the total one-time burden will be 94,500 hours for a total cost of approximately $12.3 million. jbell on DSKJLSW7X2PROD with RULES3 TABLE 2—ESTIMATED ONE-TIME BURDEN PER ISSUER OR STATE EXCHANGE PERFORMING PREMIUM BILLING AND PAYMENT PROCESSING Occupation Burden hours per respondent Labor cost per hour General and Operations Manager ............................................................................................... Computer and Information Systems Manager ............................................................................ Computer Programmer ................................................................................................................ Computer System Analyst ........................................................................................................... Business Operations Specialist ................................................................................................... Total Burden and Labor Cost per respondent ............................................................................ Additional Costs due to Expedited Implementation .................................................................... 300 200 22,000 6,500 2,500 31,500 ........................ $119.12 146.98 86.14 90.02 74.00 ........................ ........................ $35,736 29,396 1,895,080 585,130 185,000 2,730,342 1,365,171 Total per respondent ............................................................................................................ 31,500 ........................ 4,095,513 VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 E:\FR\FM\27DER3.SGM 27DER3 Total cost per respondent 71698 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations TABLE 3—ESTIMATED ONE-TIME BURDEN FOR ALL ISSUERS AND STATE EXCHANGES PERFORMING PREMIUM BILLING AND PAYMENT PROCESSING Burden hours per respondent Number of respondents Number of responses Issuer ................................................................................... State Exchange .................................................................... 94 3 94 3 31,500 31,500 2,961,000 94,500 $384,978,222 12,286,539 Total .............................................................................. 97 97 31,500 3,055,500 397,264,761 Type of respondent In addition to the one-time costs estimated, issuers will incur ongoing annual costs, such as those related to identifying impacted enrollees, ensuring billing accuracy, reconciliation, quality assurance, printing, recordkeeping, and document retention. We estimate that for each issuer, on average, it will take administrative assistants 20,000 hours (at $36.56 per hour), business operations specialists 2,000 hours (at $74 per hour), computer programmers 2,000 hours (at $86.14 per hour), and operations managers 120 hours (at $119.12 per hour) each year to perform these tasks. The total annual burden for each issuer will be 24,120 hours, with an equivalent cost of approximately $1.07 million. Assuming that issuers will start sending separate bills in July, 2020, the total burden for all 94 issuers for the 6 months in 2020 is estimated to be 1,133,640 hours with an equivalent cost of approximately $50.1 million. From 2021 onwards, we estimate the total annual burden for all 94 issuers will be approximately 2,267,280 hours with an associated cost of approximately $100.2 million. We anticipate that State Exchanges performing premium billing and payment processing and which have Total burden hours Total cost QHP issuers that offer coverage for nonHyde abortion services will incur costs similar to QHP issuers offering coverage of non-Hyde abortion services. Therefore, we estimate that for all 3 State Exchanges performing premium billing and payment processing, the total annual burden will be approximately 36,180 hours with an equivalent cost of approximately $1.6 million in 2020 and 72,360 hours with an associated cost of approximately $3.2 million starting in 2021. TABLE 4—ESTIMATED ANNUAL BURDEN PER ISSUER OR STATE EXCHANGE PERFORMING PREMIUM BILLING AND PAYMENT PROCESSING Burden hours per respondent Occupation Labor cost per hour Total cost per respondent Secretaries and Administrative Assistants .................................................................................. General and Operations Manager ............................................................................................... Business Operations Specialist ................................................................................................... Computer Programmer ................................................................................................................ 20,000 120 2,000 2,000 $36.56 119.12 74.00 86.14 $731,200 14,294 148,000 172,280 Total per Respondent ........................................................................................................... 24,120 ........................ 1,065,774 TABLE 5—ESTIMATED ANNUAL BURDEN FOR ALL ISSUERS AND STATE EXCHANGES PERFORMING PREMIUM BILLING AND PAYMENT PROCESSING FOR 2020, 2021 AND 2022 jbell on DSKJLSW7X2PROD with RULES3 Type of respondent Number of respondents Year Number of responses Burden hours per respondent Total burden hours per year Total labor cost per year Issuer ....................................................... State Exchange ........................................ Total ......................................................... Issuer ....................................................... State Exchange ........................................ 2020 2020 2020 2021, 2022 2021, 2022 94 3 97 94 3 94 3 97 94 3 12,060 12,060 12,060 24,120 24,120 1,133,640 36,180 1,169,820 2,267,280 72,360 $50,091,397 1,598,662 51,690,058 100,182,794 3,197,323 Total .................................................. 2021, 2022 97 97 24,120 2,339,640 103,380,117 In response to comments, we reviewed our original enrollee estimates and have updated our estimates for accuracy. Based on 2019 QHP Certification Data in the FFEs and SBE– FPs, we now estimate that there are approximately 442,400 enrollees in QHPs covering non-Hyde abortion services. In the 11 State Exchanges that operated their own technology platform VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 and had issuers that offered coverage of non-Hyde abortion services in 2019, we estimate that there are approximately 2,597,700 enrollees in QHPs covering non-Hyde abortion services. The total number of enrollees in QHPs covering non-Hyde abortion services is approximately 3.04 million in 2019. The number of QHPs covering non-Hyde abortion services will be higher in 2020 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 compared to 2019. Therefore, we are using the number of enrollees in such QHPs in 2019 as a lower bound for the number of enrollees who will experience an increase in burden as a result of the finalized policies. Assuming 1.5 enrollees per policy, issuers and State Exchanges performing premium billing and payment processing will be required to send a separate bill to approximately 2 million E:\FR\FM\27DER3.SGM 27DER3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations policy holders. We understand that, although enrollees can often choose to pay electronically or by phone, choose to utilize automatic payment deductions, and often opt out of receiving paper bills, many enrollees still opt to receive physical mail detailing their coverage. We also understand that many enrollees face barriers to accessing the internet and have little choice but to receive paper bills. Because enrollees typically receive paper bills and because many enrollees already face barriers to accessing the internet, issuers are likely to experience an increased administrative cost in having to print an additional monthly bill for the majority of their policy holders. According to one commenter, issuers send paper bills to 92 percent of Exchange customers. We anticipate that the number of consumers opting for electronic bills will increase over time. Therefore, we assume that approximately 90 percent of policy holders will receive paper bills in 2020 and issuers and State Exchanges performing premium billing and payment processing will need to print and send approximately 1.82 million separate paper bills per month. Assuming materials and printing cost of $0.05 per page, issuers will incur additional monthly costs of approximately $91,200 to print separate bills for impacted policy holders in 2020. Assuming that issuers start sending separate bills in July 2020, for the 6 months in 2020, total cost for all issuers is estimated to be approximately $547,225. Assuming that more consumers will opt to receive electronic bills over time, we estimate that approximately 88 percent of policyholders will receive paper bills in 2021, and the annual cost for all issuers to send separate paper bills will be approximately $1,070,129. We assume that, in 2022, approximately 86 percent of policyholders will receive paper bills, and the annual cost for all issuers to send separate paper bills will be approximately $1,045,808. The average annual materials and printing cost over 3 years (2020 to 2022) will be approximately $887,721. Since issuers and State Exchanges performing premium billing and payment processing will be permitted to send both bills together when sending bills in a physical mailing, they will not incur any additional mailing costs. We assume that bills sent electronically can be sent at minimal cost and note that we have incorporated any associated IT changes to accommodate electronic billing changes based on this rule above, where we discussed premium billing and payment processing costs to issuers and State Exchanges. FFE issuers are subject to future HHS compliance reviews, requiring issuers in the FFE to maintain and submit records to HHS showing compliance with separately billing for the portion of the policy holder’s premium attributable to non-Hyde abortion services as specified in this rule. Commenters stated that HHS excluded an evaluation of the burden and cost for FFE issuers to participate in the additional HHS compliance reviews, ignoring the potential for any new costs associated with this requirement, such as 71699 documenting all efforts for audit purposes. We have revised our burden estimates to account for additional recordkeeping costs not reflected in the proposed rule’s estimates but reiterate that the requirements associated with compliance reviews were already assessed and subsumed within issuer burdens described in previously finalized rules, including the information collection currently approved under OMB control number: 0938–1277 (Program Integrity: Exchange, Premium Stabilization Programs, and Market Standards; Amendments to the HHS Notice of Benefit and Payment Parameters for 2014 (CMS–10516)). To show compliance with FFE standards and program requirements, all issuers seeking QHP certification in FFEs are required to submit responses to program attestations as part of their QHP application. This response already includes an attestation that the issuer agrees to adhere to the requirements related to the segregation of funds for abortion services implemented in § 156.280. We have determined that the requirements associated with QHP certification have already been assessed and encompassed by the information collection currently approved under OMB control number: 0938–1187 (Establishment of Exchanges and Qualified Health Plans; Exchange Standard for Employers (CMS–10433)). C. Summary of Annual Burden Estimates for Proposed Requirements TABLE 6—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS Regulation section(s) OMB control number Number of respondents Burden per response (hours) Total annual burden (hours) Total labor cost of reporting ($) Capital costs (printing and materials) ($) Total cost ($) § 156.280 ........................... 0938–NEW 97 97 30,600 2,968,200 $218,571,684 $887,721 $219,459,405 Total ........................... ........................ 97 97 30,600 2,968,200 218,571,684 887,721 219,459,405 D. Submission of PRA-Related Comments We have submitted a copy of this final rule to OMB for its review of the rule’s information collection and recordkeeping requirements. The requirements are not effective until they have been approved by OMB. jbell on DSKJLSW7X2PROD with RULES3 Number of responses IV. Regulatory Impact Analysis A. Statement of Need This final rule implements standards to ensure enrollees receive the correct amount of APTC and CSRs at the time of enrollment or re-enrollment via VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 periodic data matching requirements. In addition, the provisions in this rule strengthen the mechanisms and tools for overseeing ongoing compliance by State Exchanges with federal program requirements. Finally, the provisions in this rule refine some of the methods for billing of the separate payment for the portion of the policy holder’s premium attributable to non-Hyde abortion services to better align with congressional intent regarding the separate payments provision of section 1303 of the PPACA. The following summary focuses on the benefits and PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 costs of the requirements in this final rule. B. Overall Impact We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96– 354), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on E:\FR\FM\27DER3.SGM 27DER3 71700 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs (January 30, 2017). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity), to the extent permitted by law. Section 3(f) of Executive Order 12866 defines a ‘‘significant regulatory action’’ as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as ‘‘economically significant’’); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order. A regulatory impact analysis (RIA) must be prepared for rules with economically significant effects ($100 million or more in at least 1 year). This final rule is economically significant within the meaning of section 3(f)(1) of the Executive Order. Therefore, OMB has reviewed these regulations and HHS has provided an assessment of the potential costs, benefits, and transfers associated with this rule. Accordingly, we have prepared an RIA that presents the costs and benefits of this final rule. C. Impact Estimates of the Program Integrity Provisions and Accounting Table In accordance with OMB Circular A– 4, Table 7 depicts an accounting statement summarizing HHS’s assessment of the benefits, costs, and transfers associated with this regulatory action. Table 8 includes a summary of annualized values of costs, over a perpetual time horizon at 7 percent discount rate for Executive Order 13771 (E.O. 13771). This final rule implements standards that will have numerous effects, including ensuring that eligible enrollees receive the correct amount of APTC and CSR (as applicable); improving alignment with the separate payment requirement in section 1303 of the PPACA by requiring QHP issuers to send separate bills to policy holders for the portion of their premium attributable to non-Hyde abortion services; conducting effective and efficient monitoring and oversight of State Exchanges to ensure that enrollees are receiving the correct amount of APTC and CSRs in State Exchanges, and that State Exchanges are meeting the standards of federal law in a transparent manner; and protecting the interests of taxpayers, and enrollees, and the financial integrity of Exchanges through oversight of health insurance issuers, including ensuring compliance with the requirements of section 1303 of the PPACA. We are unable to quantify certain benefits and costs of this final rule—such as benefits to enrollees for timely notification of their dual enrollment in other qualifying coverage such as Medicare, Medicaid/CHIP, and, if applicable, the BHP, potential increases in cost to states for increased oversight activities and to establish access to federal data systems to verify eligibility for or enrollment in Medicaid/CHIP or Medicare, and potential costs to enrollees such as increased out-of-pocket costs related to billing changes due to the separate payment requirements for non-Hyde abortion services. The effects in Table 7 reflect qualitatively assessed impacts and estimated direct monetary costs and transfers resulting from the provisions of this final rule for health insurance issuers. States impacted by PDM requirements will incur costs of up to $6.9 million in 2020. In addition, we estimate that issuers, State Exchanges, FFEs, and consumers impacted by the separate billing and payment requirements will incur costs of approximately $546.1 million in 2020, $232.1 million in 2021, $230.7 million in 2022, and $229.3 million 2023 onwards (see Table 10 below). We also expect that transfers from the federal government to consumers in the form of premium tax credits will decrease as a result of Exchanges conducting Medicare, Medicaid/CHIP, and, if applicable, BHP PDM, and increase as a result of separate billing and payment requirements. The net increase in premium tax credits is estimated to be approximately $106 million in 2021 and $96 million in 2022 onwards. TABLE 7—ACCOUNTING TABLE Benefits: jbell on DSKJLSW7X2PROD with RULES3 Qualitative: • Better alignment of the regulatory requirements for QHP issuer billing of premiums with the separate payment requirement in section 1303 of the PPACA. • Clearer regulatory requirements for how frequently Exchanges should be conducting periodic checks for dual enrollment in other qualifying coverage. • Clearer regulatory requirements for State Exchanges around CMS’s oversight and reporting process that allows for more effective oversight of State Exchanges. Costs: Estimate (million). Year Dollar ..... Discount Rate (percent). Period Covered Annualized Monetized ($/year) ....................................................................... $304.09 .......... $298.92 .......... 2019 ............... 2019 ............... 7 ..................... 3 ..................... 2020–2024 2020–2024 Quantitative: • Burden incurred by issuers, states, federal government and enrollees to comply with provisions related to coverage of non-Hyde abortion services and the segregation of premiums for such services. • Costs for State Exchanges not in compliance with regulatory requirements to conduct Medicare, Medicaid/CHIP, and, if applicable, BHP PDM. VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 E:\FR\FM\27DER3.SGM 27DER3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations 71701 TABLE 7—ACCOUNTING TABLE—Continued Qualitative: • Potential increase in costs to states for increased oversight of separate payment requirements. • Potential increased costs incurred by enrollees who choose to make separate payments for coverage of non-Hyde abortion services. • Potential increased burden and costs for State Exchanges to authorize access to federal data sources to verify Medicare and Medicaid/ CHIP eligibility and/or enrollment, notifying enrollees when dual enrollment is detected, and process QHP coverage terminations. • Potential increased burden for assisters, agents and brokers to explain new billing process. • Potential increase in public spending and out-of-pocket costs to enrollees if there is an increase in unplanned pregnancies due to loss of abortion coverage and, with respect to public spending, if those unplanned pregnancies are experienced by individulas who would be eligible for public benefit programs. • Potential decrease in broker and issuer revenue due to decrease in QHP enrollment. Transfers: Estimate (million). Year Dollar percent. Discount Rate Period Covered Federal Annualized Monetized ($/year) ......................................................... .................................................................................................................... $76.2 .............. $77.7 .............. 2019 ............... 2019 ............... 7 ..................... 3 ..................... 2020–2024 2020–2024 Quantitative: • Total transfers from the federal government to enrollees due to an increase in premium tax credit payments. Qualitative: • Increase in premiums beginning in plan year 2021. • Potential increase in out-of-pocket costs for enrollees who experience lapse in coverage for failing to make payments for coverage of non-Hyde abortion services due to confusion with new billing system. • Potential increase in out-of-pocket costs for individuals who lose health insurance coverage due to increase in premiums. • Potential increase in uncompensated care costs for people who lose health insurance coverage. TABLE 8—E.O. 13771 SUMMARY TABLE [In $ millions 2016 dollars, over a perpetual time horizon] Estimate (7% discount rate) Annualized Costs ..................................................................................................................................................................... Annualized Cost Savings ......................................................................................................................................................... Annualized Net Costs .............................................................................................................................................................. 1. Functions of an Exchange (§ 155.200) Our revisions to § 155.200(c) specifying that Exchanges must perform oversight functions or cooperate with activities related to oversight and financial integrity requirements are a clarification and not a new function. Therefore, they will not impose additional burdens on State Exchanges. jbell on DSKJLSW7X2PROD with RULES3 2. Eligibility Redetermination During a Benefit Year (§ 155.330) Our requirement that Exchanges conduct Medicare PDM, Medicaid/CHIP PDM, and, if applicable, BHP PDM at least twice a year beginning with the 2021 calendar year, adds specificity to the existing requirement that Exchanges must periodically examine available data sources to determine whether Exchange enrollees have been determined eligible for or enrolled in other qualifying coverage such as Medicare, Medicaid, CHIP, or, if applicable, the BHP. Therefore, we expect the costs associated with this requirement to be minimal. However, State Exchanges that are not already conducting PDM with the required VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 frequency, or deemed in compliance with the Medicaid, CHIP, and, if applicable, BHP PDM requirements, will be required to engage in IT system development activity in order to communicate with these programs and act on enrollment data either in a new way, or in the same way more frequently. Thus, there may be additional associated administrative cost for these State Exchanges to implement the proposed PDM requirements. We anticipate a majority (up to eight) of the twelve State Exchanges that operate their own technology platforms would be exempt from the requirement to perform Medicaid/CHIP, and, if applicable, BHP PDM because they have shared, integrated eligibility systems with their respective Medicaid programs, as such they would be deemed in compliance with this requirement. However, we are not able to confirm the exact number because we have not yet set specific criteria and process to assess and confirm which State Exchanges would be exempt, and would need additional operational information from State PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 $182.98 0 182.98 Exchanges to confirm our assessment. We will establish and engage in that process after finalization of the rule. For a State Exchange not already conducting Medicare, Medicaid/CHIP, and, if applicable, BHP PDM at least twice a year, and that does not already have a shared, integrated eligibility system with its respective Medicaid/CHIP, and, if applicable, BHP programs, we estimate that it will cost approximately $1,740,000 per State Exchange (a total of $6,960,000 for all 4 nonexempt State Exchanges) to build such capabilities in their system. We assume that this cost will be incurred primarily in 2020. These costs would be incurred by the State Exchange as they are required to be financially self-sustaining and do not receive federal funding for their establishment or operations. We believe these changes will support HHS’s program integrity efforts regarding the Exchanges by helping promote a balanced risk pool for the individual market as Medicare and Medicaid/CHIP beneficiaries tend to be higher utilizers of medical services, ensuring that consumers are accurately E:\FR\FM\27DER3.SGM 27DER3 71702 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations determined eligible for APTC and income-based CSRs, and safeguarding consumers against enrollment in unnecessary or duplicative coverage. Such unnecessary or duplicative coverage, coupled with typically higher utilization, generally results in higher premiums across the individual market, leading to unnecessarily inflated expenditures of federal funds on PTC for taxpayers eligible for PTC in the individual market. We estimate that requiring State Exchanges to perform Medicare PDM twice a year will result in a reduction in PTC payments of approximately $500 million over a 9year period (Table 9). We believe this will not have any discernable impact on premiums. TABLE 9—MEDICARE PDM EFFECT ON PREMIUM TAX CREDIT OUTLAYS Fiscal year 2021 2022 2023 2024 2025 2026 2027 2028 2029 Total PTC ($ millions) ....... ¥40 ¥50 ¥50 ¥50 ¥60 ¥60 ¥60 ¥60 ¥70 ¥500 3. General Program Integrity Oversight Requirements (§ 155.1200) We do not anticipate the changes to § 155.1200(b)(2) will result in any additional cost for State Exchanges because the changes leverage an existing reporting mechanism currently used by all State Exchanges, the annual SMART, for meeting eligibility and enrollment reporting requirements. Additionally, State Exchanges are already required to annually contract with, and budget accordingly for, an external independent audit entity to perform an annual financial and programmatic audit as required under § 155.1200(c). We believe the flexibility under the new § 155.1200(d)(2) to permit HHS to target the scope of annual programmatic audits to focus on the program areas that are most pertinent to a State Exchange model (including SBE–FPs), or have the greatest program integrity implications, would allow State Exchanges to utilize the funds that they already allocate to contracting with an external independent audit entity in the most cost-effective manner. We also believe the flexibility we are providing to State Exchanges in the sampling method employed by their external independent audit entities for testing the accuracy of eligibility determinations in the annual programmatic audits, along with the flexibility for HHS to set the reporting deadlines for State Exchanges under § 155.1200 on an annual basis, will also allow State Exchanges to utilize the funds that they have already allocated to these activities in the most cost-effective manner. jbell on DSKJLSW7X2PROD with RULES3 4. Segregation of Funds for Abortion Services (§ 156.280) In § 156.280, we proposed to amend billing and premium collection requirements related to the separate payment requirement for coverage of abortions for which public funding is prohibited pursuant to section 1303 of the PPACA, as implemented at § 156.280. We originally proposed that QHP issuers send an entirely separate VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 monthly bill in a separate envelope to the policy holder for only the portion of premium attributable to coverage of non-Hyde abortion services, and instruct the policy holder to pay the portion of their premium attributable to coverage of non-Hyde abortion services in a separate transaction from any payment the policy holder makes for the portion of their premium not attributable to coverage of non-Hyde abortion services. We are also finalizing that QHP issuers must begin complying with these billing changes on or before the date that is 6 months after publication of the final rule. If the date that is 6 months after publication of the final rule falls in the middle of the QHP issuer’s billing cycle (in other words, after the QHP issuer has already sent out bills to policy holders for that month), QHP issuers would be expected to begin complying the next billing cycle immediately following that date. We will consider extending enforcement discretion to an Exchange or QHP that fails to timely comply with the separate billing policy as required under this final rule, if we find that the Exchange or QHP issuers attempted in good faith to timely meet the requirements. We believe these changes to the proposed policy will advance HHS’s goal of more closely aligning the regulatory requirements for QHP issuer billing of premiums with the separate payment requirement in section 1303 of the PPACA, while also mitigating the overall burden to affected issuers, states, and enrollees. HHS received many comments stating that we greatly underestimated the burden caused by these proposals. Although we recognized in the proposed rule that QHP issuers that cover non-Hyde abortion services would experience an increase in burden as a result of finalizing these changes, we are committed to mitigating issuer burden where possible and, as such, are finalizing changes to § 156.280(e)(2) that we believe will result in a lower overall regulatory burden than what issuers would have incurred if the provisions PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 were finalized as originally proposed. Specifically, we are amending the proposals at § 156.280(e)(2) to finalize in a new paragraph at § 156.280(e)(2)(ii)(A) that QHP issuers offering coverage of non-Hyde abortion services through an Exchange must send an entirely separate monthly bill to the policy holder for the portion of premium attributable to coverage of non-Hyde abortion services, but they will be permitted to send this separate bill in the same mailing (although not in the same email or electronic communication) as the bill for the portion of the policy holder’s premium not attributable to coverage of non-Hyde abortion services when sending paper copies of bills to policy holders. We are finalizing that, when issuers sending or issuing bills electronically, the issuer must send or issue a separate bill for the portion of the premium attributable to coverage of non-Hyde abortion services in a separate email or electronic communication from the bill for the rest of the policy holder’s premium. We are also finalizing at a new paragraph § 156.280(e)(2)(ii)(B) the requirement that, although the QHP issuer would not be permitted to refuse a combined payment on the basis that the policy holder did not send two separate payments as requested by the QHP issuer, and to then terminate the policy, subject to any applicable grace period, for non-payment of premiums, the QHP issuer must continue to instruct the policy holder to pay the portion of their premium attributable to coverage of non-Hyde abortion services in a separate transaction from any payment the policy holder makes for the portion of their premium not attributable to coverage of non-Hyde abortion services. We are also finalizing that QHP issuers must begin complying with these billing changes on or before the date that is 6 months after publication of the final rule. We believe these changes to the proposed policy will advance HHS’s goal of more closely aligning the regulatory requirements for QHP issuer billing of premiums with the separate payment requirement in E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations section 1303 of the PPACA, while also mitigating the overall burden to affected issuers, states, and enrollees. However, we acknowledge that the changes we are finalizing will still result in additional burden for issuers. HHS received many comments on the original proposals arguing that the burden imposed on issuers would significantly exceed the estimated burden included in the proposed rule. Some commenters from the issuer community conducted internal surveys, providing detailed accounts to HHS of the various ways in which they believe HHS underestimated the burden and detailing the various issuer and Exchange activities that would be necessary for implementation that HHS failed to account for in estimating the burden. The following one-time changes are issuer activities that commenters stated HHS should account for in response to the proposed policy, and that we expect may still be necessary for issuers under the amendments we are finalizing: Planning, assessment, budgeting, funding approval, and allocating funds and resources for the actual technical build (a process of 6 to 9 months); changes to system architecture to allow multiple billing statements per policy holder; changes to enrollment systems to identify enrollees subject to separate billing and payment requirements; automating the processes to send separate invoices (mail or electronic communication); adding electronic communications and payment links (for example, to issuer’s online payment portal) for enrollees to pay separately for the separate bill; changes to call center training/scripting, response processes, billing-related outreach, and interactive voice response (IVR) technology; changes to enrollee notifications related to non-payment and the 3-month grace period; updating Health Insurance Casework System (HICS) and DOI complaint processes, changes to grievance/appeals processes; and testing to ensure accuracy of separate billing processes. Commenters also stated that HHS should have accounted for the development of new training materials. Commenters explained that issuers would need to develop additional materials and training modules for customer service representatives, brokers, and agents, so that they could address member questions and educate them, particularly on the risk of losing coverage should members fail to pay the multiple bills. We expect the following one-time activities to add burden for issuers as issuers must still make system changes to accommodate policy holders paying VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 separately, potential changes to binder payment processing to collect two separate payments to effectuate enrollment; changes to processes to intake payments, including automating ability to match identity and match multiple payments from a policy holder; changes to pay-by-phone and online payment portal to support dual invoices and separate payments, while also supporting combined payments for enrollees who do not make separate payments; changes to processes for enrollment and payment reconciliation, including 834 matching to effectuate enrollments; and adding new processes to address scenarios where an enrollee’s payment is not processed because the bank flags payment as potentially fraudulent (expected to occur for multiple payments in the same day or $1 payments). Commenters also noted several activities issuers would have to complete annually to effectively implement these proposals would also significantly raise the annual burden for issuers. The following annual changes are activities raised by commenters in response to the proposed policy, but that we expect will still be relevant under the amendments we are finalizing: Generating separate billing statements (paper or electronic) and additional member education materials to explain separate billing; administrative expenses in generating twice as many bills; quality assurance to ensure accuracy of separate billing statements; additional customer service resources, including additional staffing and training, to address enrollee questions, confusion, frustration, etc.; increased resources for HICS/DOI case resolution; system testing for billing accuracy; identifying enrollees who did not meet an issuer’s premium payment threshold and enter a grace period for non-payment of premium if they fail to pay the second bill; managing the grace period process for a higher volume of enrollees who enter a non-payment grace period (notices, termination, appeals process, reinstatement), and verification and reconciliation of the two separate bills. Commenters also stated that issuer costs should account for additional staffing since issuers would need to hire additional FTEs for reconciliation and auditing of the enrollment, billing, delinquency and payment processes and to manage the added complexity for the Exchange back-end processes. Because the policy as finalized will require QHP issuers to instruct the policy holder to pay the portion of their premium attributable to coverage of non-Hyde abortion services in a separate PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 71703 transaction from any payment the policy holder makes for the portion of their premium not attributable to coverage of non-Hyde abortion services, we anticipate that the burden associated with the following annual activities raised by commenters will still be relevant: Budgeting for fees for collecting and processing multiple payments, such as bank processing fees; processing and reconciling separate payments (paper and electronic) sent by enrollees; additional resources for manual review where automated processes are not able to reconcile enrollments and payments; and managing the grace period process for a higher volume of enrollees who enter a non-payment grace period (notices, termination, appeals process, reinstatement). Comment: Many commenters expressed concerns that these burdens would fall hardest on those issuers in states that require QHPs to cover nonHyde abortion services, and that if issuers in these states find the requirements overly burdensome they would not have an option to eliminate coverage of non-Hyde abortion services and would thus have to absorb all associated costs or pass those costs onto enrollees. One commenter stated that the proposals are also likely to have an impact off-Exchange, as issuers offering plans on the Exchange are also generally required under guaranteed availability to offer the plans off the Exchange, and that because these administrative processes are fixed investments across all plans, it is likely that many plans would simply change their systems to apply to all plans even though the proposals would only require QHPs to comply. Response: Setting aside the question of whether state laws requiring coverage of non-Hyde abortion services on the Exchange are consistent with statutory conditions on federal funding from the Department to the States, we acknowledge that some states have such laws. The changes we are finalizing do not preempt state law regarding coverage of non-Hyde abortion services or otherwise attempt to coerce states into changing these laws. Although we acknowledge that issuers in these states would incur additional costs if they choose to continue offering individual market plans, HHS is refining the method issuers use to comply with the separate payment requirement, changes that we believe are necessary to align issuer billing with the separate payment requirement in section 1303 of the PPACA. The burden and costs related to the one-time technical changes have been E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71704 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations previously estimated in section III ‘‘Collection of Information Requirements’’ of this final rule. We have also updated HHS’s estimates in the Collection of Information Requirements section to reflect some of the increased annual burden to be incurred by issuers. Additionally, based on comments we received, we estimate that issuers will incur ongoing annual costs associated with activities such as processing and reconciling separate payments, support for enrollees who enter grace period for non-payments, customer service, outreach and compliance. We estimate that each issuer will incur additional annual costs of approximately $1 million for these activities. Assuming that issuers will start sending separate bills in July 2020, the total annual cost of for all 94 issuers will be approximately $47 million for the 6 months in 2020 and $94 million for 2021 onwards. Since issuers will not be able to take the costs incurred in 2020 into consideration when setting rates for the 2020 plan year, it is possible that some issuers will exit the individual market or incur losses. We acknowledge that QHP issuers may choose to make similar billing changes off-Exchange to maximize their investment in making system changes to comply with the separate billing policy required for on-Exchange QHPs. However, we note that the separate billing policy we are finalizing only requires QHP issuers to implement the required changes for their on-Exchange QHPs offering non-Hyde abortion coverage. Comment: Commenters also stated that issuers would be required to consider the added operational and administrative costs when setting actuarially sound rates, which would lead to higher premiums for enrollees. Commenters also expressed concern that the additional administrative costs would be so high that they would place issuers at risk of not meeting the required Medical Loss Ratio (MLR) limits. Response: We believe that the changes we are finalizing to § 156.280(e)(2) will result in a lower burden than the provisions as originally proposed and as such will lessen the degree to which issuers have to raise enrollee premiums. However, we acknowledge that issuers will still incur significant burden and costs as estimated above. Based on the total premiums in the 21 states that have QHP issuers offering non-Hyde abortion coverage, we estimate that there will be no premium impact in 2020 (as plan year 2020 premium rates will already be finalized), and an approximate premium VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 impact of up to 1.0 percent in plan year 2021 and each year thereafter. We also estimate that enrollment will be reduced in the impacted states very slightly as a result of the increase to premiums. In plan year 2021 and each year after, we estimate that APTC amounts will be increased by up to $146 million when premium rates reflect the projected additional administrative and operational expense burdens. We do not anticipate that the policies finalized at § 156.280(e)(2) will measurably increase MLR rebates as we believe that QHP issuers would either cease offering coverage of non-Hyde abortion services (unless state law requires QHP issuers to offer coverage of non-Hyde abortion services) in the plan year following the effective date to avoid issuing additional MLR rebates or would pay for the increased administrative costs from a different revenue source. Further, as noted elsewhere in this rule, among the previously acceptable methods for QHP issuers to comply with the separate payment requirement was sending a separate monthly bill for these services. Therefore, if any issuers already elected this option, there should be no change or impact on MLR rebates as a result of the policies finalized at § 156.280(e)(2). We believe these additional costs are necessary to achieve better alignment of issuer billing with the statute, and strikes a better balance between burden and benefit than if HHS were to require issuers to send the separate bill in a separate mailing. Comment: Commenters also expressed concerns with the burdens these changes would impose on Exchanges, which commenters noted would need to make time consuming and resource intensive changes to their websites, enrollment systems, and customer service and outreach efforts (including the reallocation of marketing funds that currently provide critical enrollee outreach which drives Exchange success) to align with the separate billing and payment requirements, which would be costly and disrupt states’ Exchange efficiency. Commenters noted a variety of changes Exchanges would be required to make, including communicating the new separate billing and payment requirement to enrollees during the enrollment process; updating the online payment portal (the ‘‘Pay Now’’ button on HealthCare.gov) to collect the binder payment through two separate transactions; updating the enrollment materials and notices that reference binder payment requirements to effectuate coverage, updating call center scripting and customer service to address questions related to separate PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 billing and payment (since questions related to payments should be referred to the issuer, but that the call center should be prepared to answer questions about why enrollees are required to make multiple payments); and update complaint processes to address complaints and questions related to separate bills and payments. One commenter estimated that the proposed changes would cost $250,000 annually for its State Exchange customer service center, $152,000 annually for customer outreach, and $19,000 annually to resolve customer complaints and appeals. Another commenter estimated that the proposals would cost its state Exchange an additional $2.9 million annually in customer service costs, $2.25–$2.75 million for IT system changes, and $3.6 million annually for outreach and education, which reflects one-quarter of that state Exchange’s annual advertising and outreach budget. Commenters also stated that, because the proposed changes would lead to decreased QHP enrollment, the proposed rule would cause a corresponding loss of revenue to the Exchange. Commenters also highlighted how any lapse or loss of enrollee coverage due to these proposals would result in more individuals turning to state-funded programs or emergency care for their treatment needs and that any loss of coverage would decrease the size of the risk pool and increase the cost of uncompensated care, driving medical costs and health insurance rates higher generally. For example, one commenter estimated that each one percentage point decline in the uninsured rate is associated with a $167 million drop in uncompensated care. Response: We acknowledge that these provisions will impact Exchange operations. Exchanges perform important enrollee-facing functions that could be integral to issuer and enrollee compliance with the new requirements. Ultimately, we believe the changes we are finalizing will mitigate some of the burden on Exchanges that would have been incurred if we were finalizing as proposed by decreasing potential enrollee confusion and lessening potential issuer burden. We anticipate that State Exchanges will incur additional one-time costs associated with technical changes such as updating online payment portals to accept separate payments and updating enrollment materials and notices that reference binder payments. In addition, State Exchanges will incur ongoing annual costs associated with increased customer service, outreach, and compliance. Based on comments, we estimate that each State Exchange will E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations incur, on average, one-time costs of $750,000 in 2020, and ongoing annual costs of approximately $200,000 for the 6 months in 2020 and $400,000 in 2021. We anticipate that ongoing annual costs will decrease over time as consumers become used to receiving and paying separate bills. We estimate that ongoing annual costs will be approximately $300,000 for each State Exchange in 2022 and $200,00 in 2023 and after. The total one-time cost for all 12 State Exchanges affected by these requirements will be approximately $9 million in 2020. Total ongoing costs for all 12 State Exchanges is estimated to be approximately $2.4 million in 2020, $4.8 million in 2021, $3.6 million in 2022 and $2.4 million 2023 onwards. In addition, we anticipate that the 3 State Exchanges that perform premium billing and payment processing will incur annual ongoing costs similar to QHP issuers that offer coverage of non-Hyde abortion services, as discussed above. We estimate that each State Exchange that performs premium billing and payment processing will incur additional annual costs of approximately $1 million. The total annual cost for all 3 State Exchanges performing premium billing and payment processing will be approximately $1.5 million in 2020 and $3 million for 2021 onwards. Comment: One commenter also stated that the federal government will incur additional expenses due to additional personnel time and other resources needed to ensure that QHPs on the FFEs comply with the proposed rule’s requirements and to ensure compliance if a State Exchange is unable to do so, costs that will be passed on to consumers in the form of taxes. Response: We acknowledge that the FFEs will experience added burden as a result of the final policy. However, because federal government compliance efforts will be covered primarily by FFEs user fees, we disagree that the added costs on the FFEs will be passed on to consumers in the form of taxes (though any increase in user fees may be passed on to enrollees in the form of increased premiums). We do, however, anticipate that the FFEs will incur additional costs due to one-time technical changes and increased call volumes and additional customer services efforts. We do not anticipate that the FFEs will need to make any operational changes to comply with these final policies. We estimate that the FFEs will incur a one-time cost of $750,000 in 2020 and ongoing annual cost of approximately $400,000 in 2020 and $800,000 in 2021 to implement these provisions. As consumers become VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 used to receiving and paying separate bills, the ongoing costs should decrease. We estimate that ongoing costs will be approximately $600,000 in 2022 and $400,000 in 2023 onwards. Comment: Commenters stated that Navigators and in-person assisters will also need to invest time and training resources necessary to ensure that they can provide support to enrollees (especially populations who would be disproportionately impacted by these proposals, including the most financially vulnerable and those with limited English proficiency) as they become acquainted with additional steps needed to maintain coverage as a result of the proposed changes. Commenters also noted that any level of QHP disenrollment resulting from the proposed changes will result in decreased broker revenue and potential loss of broker participation in the market. Response: Although there also may be an impact on Navigators, brokers, and other assisters, we believe these entities receive training and generally keep abreast of policy changes as part of their normal duties. As such, we believe these requirements will not amount to any additional burden above that already experienced by Navigators, brokers, and other assisters as a result of providing support to enrollees who are navigating these new billing requirements. Comment: Many commenters also stated that enrollees would incur ancillary costs that would further drive up administrative costs and burden for enrollees, including postage costs, money order fees, or other banking fees for the second bill and cautioned that these costs will be felt most strongly by low income enrollees. Many commenters stated that these proposals would transfer the costs and burdens of accessing non-Hyde abortion services to enrollees who must seek coverage for abortion elsewhere or pay out-of-pocket. Commenters estimated that non-Hyde abortions can cost between $400 and $1900. Commenters noted that low-income women who lack insurance coverage for abortion often struggle to pay for the procedure out-ofpocket, causing financial hardship that can drive families further into poverty. Commenters also expressed concern that when legal abortion is inaccessible, people who seek to end their pregnancy turn to unsafe and illegal methods, risking arrest, serious injury, or even death. Commenters also suggested that the changes would have a disproportionate effect on enrollee groups who already face barriers to care at higher rates such as low-income PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 71705 individuals, young people, people of color, individuals with LEP, lesbian, gay, bisexual, transgender and queer enrollees, the Latinx community, people with disabilities, rural residents, individuals without access to the internet, and American Indian/Alaskan Native populations. Response: We acknowledge that as originally proposed, the combination of issuer burden and enrollee confusion could have potentially led to a reduction in the availability of coverage of non-Hyde abortion services in insurance (either by issuers choosing to drop this coverage to avoid the additional costs or by enrollees having their coverage terminated for failure to pay the second bill), thereby increasing out-of-pocket costs for those seeking those services. We understand that, even with the changes we are finalizing, the increased burden associated with issuers complying with the separate billing policy, could influence whether a QHP issuer continues offering coverage of non-Hyde abortion services in states that do not require it. However, we believe allowing the separate bill to be included in the same mailing (although not in the same email or other electronic communication), and allowing issuers to accept combined payments when policy holders fail to pay separately for the separate bill will mitigate some of the potential issuer and Exchange burden and consumer confusion associated with the proposed policy, thereby decreasing the likelihood that issuers will drop coverage of non-Hyde abortion services solely to avoid the burden associated with these changes or solely to avoid having to terminate enrollees coverage for non-payment of miniscule amounts. We are also finalizing an enforcement posture that will further mitigate the risk of potential coverage loss. We intend to propose further rulemaking to change our regulations to mitigate this risk. Until we can effectuate such changes, we will exercise enforcement discretion as an interim step. Specifically, HHS will not take an enforcement action against a QHP issuer that adopts and implements a policy, beginning on or after the effective date for the separate billing policies, applied uniformly to all its QHP enrollees, under which an issuer does not place an enrollee into a grace period and does not terminate QHP coverage based solely on the policy holder’s failure to pay the separate payment for coverage of non-Hyde abortion services. We note that the QHP issuer would still be required to collect the premium for the non-Hyde abortion coverage. We also E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71706 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations will not take enforcement action against QHP issuers that, beginning upon the effective date of the final rule, modify the benefits of a plan either at the time of enrollment or during a plan year to effectively allow enrollees to opt out of coverage of non-Hyde abortion services by not paying the separate bill for such services, resulting in the enrollee having a modified plan that does not cover nonHyde abortion services and that no longer obligates the enrollee to pay the required premium for such services. QHP issuers taking this approach should implement appropriate measures to distinguish between a policy holder’s inadvertent non-payment of the separate bill for non-Hyde abortion services and a policy holder’s intentional nonpayment of the separate bill. Although both of these approaches would be entirely optional for a QHP issuer, we believe that offering this enforcement discretion strikes an appropriate balance between honoring section 1303’s requirement for issuers to calculate the actuarial cost of non-Hyde abortion coverage and bill and collect premiums for such coverage in separate transactions, protecting enrollees against inadvertent losses of coverage, and ensuring all enrollees have access to coverage that meets their needs and that does not result in their supporting coverage for non-Hyde abortion services to which they object. We acknowledge that QHP issuers that do not utilize this available enforcement discretion may subsequently experience a higher number of enrollee terminations as a result of delinquent premium payments, which could influence whether a QHP issuer continues offering coverage of non-Hyde abortion services in states that do not require it. Because enrollees will be instructed to make separate payments, those that follow the instructions may need to pay for additional postage, money order fees, credit card fees, or other banking fees for the second bill depending on how the QHP issuer implements this policy. For example, policy holders who have funds automatically withdrawn from their bank accounts may need to arrange for a second withdrawal and may encounter additional fees. Additionally, because QHP issuers often incur fees for credit card transactions and these fees would double when a policy holder is paying in two separate transactions, QHP issuers may decide to transfer the cost of those credit card transaction fees onto policy holders choosing to pay via credit card rather than covering the cost of those transactions themselves. Policy holders that pay their premium bills via money VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 order may need to pay an additional fee for the additional money order they submit for payment of the separate bill. Comment: Many commenters stated that the proposals would cause considerable and unnecessary confusion and frustration for enrollees that may jeopardize their health insurance coverage by making it more difficult for policy holders to pay their premium bills, which could potentially result in their coverage being terminated for unintentional non-payment. Commenters also expressed concerns that despite consumer education and outreach, enrollees would likely not understand this change in billing. Many commenters also stated that we underestimated the number of enrollees who would be impacted by these proposals. One commenter stated that there are 2 million enrollees alone in states where non-Hyde abortion coverage is required in all plans. Another commenter conducted an internal member survey, to which ten issuers responded, indicating that 2.4 million enrollees would be impacted across these ten issuers. This commenter noted that these ten issuers do not represent all health insurance issuers who would be required to comply with the proposals and that, thus, the number of affected enrollees would be greater than 2.4 million. Another commenter stated that the rule would impact 3 million enrollees. As such, commenters stated that we underestimated how much it would cost enrollees annually to comply with the proposals. Commenters also objected that we excluded the cost of enrollees learning in our estimate. Response: We based our initial estimates on 2018 QHP Certification data, and we acknowledge that the estimates may not have captured the exact number of enrollees that may be impacted by this final rule. In response to comments, we have reviewed our methodology and have updated our enrollee estimates accordingly. We also acknowledge that enrollees may initially be confused by receiving a separate bill for the portion of their premium attributable to coverage of non-Hyde abortion services in the same envelope as the bill for the rest of their premium. We believe that the provisions as finalized will minimize enrollee confusion surrounding the second bill for those receiving paper bills and will help to ensure that policy holders pay the entire premium due including the portion attributable to non-Hyde abortion services. There is still potential for confusion and loss of coverage for enrollees who receive electronic bills, due to failure to pay the second bill sent PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 through a separate electronic communication, but the mechanisms by which electronic bills are paid may mitigate or lessen the potential for confusion over separate bills. We believe enrollee outreach and education will assist in further mitigating this risk. Based on 2019 QHP certification data for the FFEs and SBE–FPs, we now estimate that there are approximately 442,400 enrollees in QHPs covering non-Hyde abortion services. In the 11 State Exchanges that operated their own technology platforms and had issuers that offered coverage of non-Hyde abortion services in 2019, we estimate that there are approximately 2,597,700 million enrollees enrolled in QHPs offering coverage for non-Hyde abortion. As noted previously in section III ‘‘Collection of Information Requirements’’ of this final rule, we estimate that there are approximately 3.04 million enrollees impacted by these provisions. Assuming 1.5 enrollees per policy, issuers will be required to send a separate bill to approximately 2 million policy holders. We believe that finalizing the policies to allow for the separate bill to be sent in the same mailing with the bill for the rest of the policy holder’s premium will minimize enrollee confusion and burden. We acknowledge that some policy holders will fail to pay in a separate transaction for both bills, and acknowledge that the burden may be moderately higher for those policy holders who follow instructions to pay in separate transactions. We also acknowledge that enrollees may experience burden in receiving a separate bill to which they are not yet accustomed in the same mailing as for the other portions of their premium or in a separate electronic communication. As such, using the May 2018 National Occupational Employment and Wage Estimates United States, Department of Labor’s Bureau of Labor Statistics (BLS) (https://www.bls.gov/oes/current/oes_ stru.htm), listed national mean hourly wage for the 25th percentile,28 we estimate that for the 2020 plan year each policy holder will incur a burden of approximately 1 hour (at a cost of $12.37 per hour) to read and understand the separate bills received the first time and seek help from customer service if necessary, and approximately 5 minutes for each of the subsequent 5 months, resulting in a total estimated annual burden of 1.42 hours with an associated annual cost of approximately $18. For 28 The 25th percentile mean hourly wage most closely resembles the group of enrollees likely to be affected by this change as most enrollees enrolled in QHPs on the Exchange are between 100 percent and 400 percent of the federal poverty level. E:\FR\FM\27DER3.SGM 27DER3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations all policy holders we estimate that the initial 2020 burden will be approximately 2.9 million hours with and associated annual cost of $35.5 million. For subsequent years we estimate that enrollees will require approximately 5 minutes per month to read and understand their statements, resulting in an estimated annual burden of 1 hour with an associated annual cost of approximately $12. For all policy holders, we estimate that the annual enrollee burden will be approximately 2 million hours with an associated annual cost of approximately $25.1 million. We also note that, although policy holders may experience burden related to reading and understanding the separate bills, there are non-quantifiable benefits to policy holders in QHPs covering non-Hyde abortion who hold conscience objections to such coverage or policy holders who seek a better 71707 understanding of what their health care dollars are purchasing. HHS continues to believe that, although these changes will increase enrollee burden, this burden is reasonable and justified because it will achieve better alignment of the regulatory requirements for QHP issuer billing of premiums with the separate payment collection requirement in section 1303 of the PPACA. TABLE 10—SUMMARY OF COSTS RELATED TO SEPARATE BILLING AND PAYMENT REQUIREMENTS 2020 2022 2023 2024 Issuers .................................................................................. States ................................................................................... State Exchanges with payment portals ............................... Consumers ........................................................................... Federal Government ............................................................ $482,616,844 11,400,000 15,385,201 35,517,268 1,150,000 $195,252,923 4,800,000 6,197,323 25,071,013 800,000 $195,228,601 3,600,000 6,197,323 25,071,013 600,000 $195,216,441 2,400,000 6,197,323 25,071,013 400,000 $195,216,441 2,400,000 6,197,323 25,071,013 400,000 Total .............................................................................. 546,069,313 232,121,259 230,696,938 229,284,777 229,284,777 D. Regulatory Review Costs jbell on DSKJLSW7X2PROD with RULES3 2021 If regulations impose administrative costs on private entities, such as the time needed to read and interpret this final rule, we estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the rule, we assume that the total number of unique reviewers on similar Exchange-related CMS rules will be the number of reviewers of this final rule. We acknowledge this assumption may understate or overstate the costs of reviewing this rule. It is possible that not all reviewers will review the rule in detail. For these reasons, we consider the number of past reviewers on similar CMS rules will be a fair estimate of the number of reviewers of this rule. We recognize that different types of entities may be affected by only certain provisions of this final rule, and therefore, for the purposes of our estimate, we assume that each reviewer reads approximately 50 percent of the rule. Using the wage information from the BLS for medical and health service managers (Code 11–9111), we estimate that the cost of reviewing this rule is $109.36 per hour, including overhead and fringe benefits.29 We estimate that it would take approximately 1 hour for each reviewer to review the relevant portions of this final rule. We received 75,439 comments, including 70,396 comments that were substantially similar to one of 13 different form letters, resulting in 5,043 unique 29 https://www.bls.gov/oes/current/oes_nat.htm. VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 comments on the proposed rule. We further assume that for the form letters received, only the staff at the organization that arranged for those letters will review the final rule. Therefore, we estimate that there will be 5,056 individuals that review the final rule resulting in an estimated total cost of review of approximately $552,924 ($109.36 × 5,056 reviewers). E. Regulatory Alternatives Considered In developing the policies contained in this final rule, we considered numerous alternatives. Below we discuss the key regulatory alternatives that we considered. For the eligibility determination during a benefit year, we considered not defining ‘‘periodically’’ for the frequency of Medicare, Medicaid/CHIP, or BHP, if applicable, PDM as twice a year in lieu of further outreach, education, and coordination with State Exchanges to identify and notice consumers who may also be enrolled in other qualifying coverage with APTC/ CSRs. However, we believe it is critical that consumers receive timely notification of their potential dual enrollment in other qualifying coverage to ensure that consumers are accurately determined eligible for APTC and income-based CSRs, and to ensure that consumers are not enrolling in unnecessary or duplicative coverage. As previously discussed in the preamble of the proposed rule, such unnecessary or duplicative coverage, coupled with typically higher utilization generally results in higher premiums across the individual market leading to unnecessary expenditures of federal PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 funds on PTC for taxpayers eligible for PTC in the individual market. In finalizing the proposed changes to the general program integrity and oversight requirements in § 155.1200, we considered not taking any action. However, because the existing requirements under § 155.1200(b) did not accurately reflect the current structure of CMS’s oversight approach and reporting requirements for State Exchanges, not taking any action could have prevented HHS from being able to accurately describe our reporting requirements and strengthen our oversight processes for State Exchanges. In particular, we needed to clarify that the eligibility and enrollment reports required under § 155.1200(b)(2) were part of the annual compliance reports that State Exchanges were submitting to us, and did not require submission of a separate report. Thus, the amendments to § 155.1200(b) do not reflect an expansion of State Exchange reporting obligations but instead were intended to capture the existing annual compliance reports (such as the SMART) that encompass eligibility and enrollment reporting, as well as compliance across other Exchange program reqirements under 45 CFR part 155, that State Exchanges currently submit to HHS. Also, because the existing external programmatic audit requirements under § 155.1200(d) did not specify how the audits needed to verify the accuracy of eligibility determinations made by State Exchanges, not taking any action would have prevented CMS from strengthening oversight processes by identifying a consistent procedure for these State Exchanges and their auditors to E:\FR\FM\27DER3.SGM 27DER3 jbell on DSKJLSW7X2PROD with RULES3 71708 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations implement in order to ensure accurate eligibility determinations. In finalizing the proposed changes to § 155.1200(c) and (d), we also considered the alternative of narrowing the focus of the external programmatic audits to only 45 CFR part 155 subparts D and E, which cover Exchange eligibility and enrollment requirements. This approach would have focused the State Exchange’s auditing resources to the areas with highest program integrity impact. However, this approach would essentially exclude SBE–FPs from the external programmatic audit requirements altogether because SBE– FPs utilize the federal platform to carry out their eligibility and enrollment functions. Additionally, this approach would have limited our oversight in other program integrity areas that are important for all State Exchanges, such as consumer outreach and assistance. Because the external audit requirements under § 155.1200 is one of the only oversight tools we have for State Exchanges, we did not want to limit the scope of the Exchange functions that the external programmatic audits must cover. Instead, the approach finalized in this rulemaking allows us to specify the Exchange functions that are applicable to each State Exchange model through annual technical operational guidance. As State Exchanges continue to evolve and mature, this approach also provides HHS with the flexibility to focus the audits on emerging issues that raise program integrity concerns, while minimizing burden on State Exchanges to the extent possible. In finalizing the requirement that issuers separately bill for the portion of the policy holder’s premium attributable to the cost of including coverage of nonHyde abortion services in the QHP, and permit policy holders to pay for these amounts in a separate transaction if they so choose, as described at § 156.280(e)(2), we considered maintaining the current methods of billing and collection without modification. We acknowledge that maintaining the current policy would promote stability for issuers and conserve administrative and operational resources by allowing QHP issuers to maintain their current process for billing for and collecting these separate payments. However, by requiring QHP issuers to separately bill for the portion of the policy holder’s premium attributable to coverage of non-Hyde abortion services, we believe we are strengthening alignment of issuer billing with the statutory requirements for collecting a separate payment for these services required under section 1303 of the PPACA. VerDate Sep<11>2014 22:07 Dec 26, 2019 Jkt 250001 We also considered finalizing the changes as originally proposed. However, we believe the changes we are finalizing will help to maximize the net benefit of achieving better statutory alignment while also mitigating burden where possible. For example, we considered finalizing the proposed requirement that issuers would be required to send the separate bill in a separate mailing or electronic communication. This would have resulted in additional mailing costs of approximately $11 million in 2021 for all issuers. However, we believe allowing issuers to send the separate bill in the same mailing (although not in the same electronic communication) and allowing issuers to accept combined payments if a policy holder fails to pay the separate bill in a separate transaction will assist in mitigating the burden associated with this policy change by preventing unnecessary postage and mailing related costs and will mitigate issuer and Exchange burden and enrollee confusion generally associated with the proposed policy. We also believe the separate bill could assist in clarifying for enrollees that their plan covers non-Hyde abortion services and at what cost, increasing overall QHP transparency. Furthermore, we believe these changes will still better align issuer billing with section 1303 of the PPACA. We also considered finalizing the rule without a requirement that issuers instruct policy holders to pay in a separate transaction. We understand that requiring issuers make this instruction and make reasonable efforts to collect the payment separately carries up-front and annual costs for issuers. However, we believe that instructing policy holders to pay the separate bill in a separate transaction is important to achieving better alignment of the regulatory requirements for QHP issuer billing of enrollee premiums with the separate payment requirement in section 1303 of the PPACA. In addition, we considered requiring issuers to comply with the separate billing requirements within 3 months after the publication date of this final rule. We rejected this option because we estimated that one-time costs would have increased by 100 percent due to the shortened implementation period and estimated that total costs for issuers, State Exchanges, FFEs, and consumers would have been approximately $740 million in 2020. We opted to finalize a later effective date to avoid such a burden increase. PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 F. Regulatory Flexibility Act The RFA requires agencies to prepare an initial RFA to describe the impact of the final rule on small entities, unless the head of the agency can certify that the rule will not have a significant economic impact on a substantial number of small entities. The RFA generally defines a ‘‘small entity’’ as (1) a proprietary firm meeting the size standards of the Small Business Administration (SBA), (2) a not-forprofit organization that is not dominant in its field, or (3) a small government jurisdiction with a population of less than 50,000. States and individuals are not included in the definition of ‘‘small entity.’’ HHS uses a change in revenue of more than 3 to 5 percent as its measure of significant economic impact on a substantial number of small entities. In this final rule, we set standards for certain issuers related to the collection of a separate payment for the premium portion attributable to coverage for certain abortion services. Because we believe that insurance firms offering comprehensive health insurance policies generally exceed the size thresholds for ‘‘small entities’’ established by the SBA, we do not believe that an initial regulatory flexibility analysis is required for such firms. For the purposes of the RFA, we expect health insurance issuers to be affected by this final rule. We believe that health insurance issuers would be classified under the North American Industry Classification System code 524114 (Direct Health and Medical Insurance Carriers). According to SBA size standards, entities with average annual receipts of $38.5 million or less would be considered small entities for these North American Industry Classification System codes. Issuers could possibly be classified in 621491 (HMO Medical Centers) and, if this is the case, the SBA size standard would be $32.5 million or less.30 We believe that few, if any, insurance companies underwriting comprehensive health insurance policies (in contrast, for example, to travel insurance policies or dental discount policies) fall below these size thresholds. Therefore, we are not preparing an analysis for the RFA because we have determined, and the Secretary certifies, that this final rule will not have a significant economic impact on a substantial number of small entities. In addition, section 1102(b) of the Social Security Act requires us to 30 https://www.sba.gov/document/support-tablesize-standards. E:\FR\FM\27DER3.SGM 27DER3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. This final rule will not have a significant impact on small rural hospitals. Therefore, the Secretary has determined that this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals. jbell on DSKJLSW7X2PROD with RULES3 G. Unfunded Mandates Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing any rule that includes any federal mandate that may result in expenditures in any 1 year by a state, local, or Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. In 2019, that threshold is approximately $154 million. We anticipate that costs incurred by state, local, or tribal governments and the private sector will cross this threshold. States impacted by the separate billing and payment requirements at § 156.280 may incur costs of approximately $26.8 million in 2020, 11 million in 2021, $9.8 million in 2022 and $8.6 million in 2023 and each year after. In addition, states impacted by PDM requirements will incur costs of up to $6.9 million in 2020. Issuers impacted by the separate billing and payment requirements will incur costs of approximately $482.6 million in 2020 and approximately $195.3 million each year after. H. Federalism Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has Federalism implications. This final rule does not impose substantial direct costs on state and local governments or preempt state law. However, we believe the rule has Federalism implications. In HHS’s view, this regulation has Federalism implications due to our requirements that Exchanges conduct Medicare, Medicaid/CHIP, and, if applicable, BHP PDM at least twice a year, beginning with the 2021 calendar VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 year. As discussed earlier in this final rule, we received three comments that were opposed to the requirement to conduct Medicare, Medicaid/CHIP and, if applicable, BHP PDM at least twice yearly, cautioning us that defining the exact precise frequency and nature of PDM encroached upon the sovereignty of the State Exchanges. However, HHS believes that the Federalism implications are substantially mitigated because the requirement sets only a minimum frequency with which Exchanges must conduct Medicare, Medicaid/CHIP, and, BHP, if applicable, PDM, which is already required to be conducted periodically; State Exchanges continue to have the flexibility to conduct PDM with greater frequency and the best way they see fit to implement the requirements set forth in § 155.330(d). Additionally, as discussed earlier in this final rule, ensuring consumers are enrolled in the appropriate coverage remains a top priority for HHS and ensuring that APTC is paid appropriately is a requirement set forth in § 155.330(d)(1)(ii) to mitigate the risk of federal dollars incorrectly leaving the federal Treasury in the form of APTC during the year. HHS believes that PDM plays a vital role in ensuring the health of all Exchanges, ensuring all consumers are enrolled in the appropriate coverage and in the case of Medicare enrollment, signing up at the appropriate time to avoid late enrollment penalties, and finally reduces the risk that consumers have to pay back all or some of APTC paid on their behalf during months of overlapping coverage when they file their federal income taxes. Additionally, the changes to State Exchange oversight and reporting requirements in § 155.1200 have Federalism implications since those rules require State Exchanges to submit certain reports to HHS and require them to enter into contracts with an external independent audit entity to perform audits, and incur the associated costs. However, HHS believes that the Federalism implications are substantially mitigated because the changes do not impose new requirements on State Exchanges, but rather add specificity and flexibility with respect to the existing requirements. Therefore, HHS believes it has balanced states’ interests in operating State Exchanges with the need to ensure proper federal oversight. By doing so, it is HHS’s view that we have complied with the requirements of Executive Order 13132. As discussed earlier in this final rule, commenters stated that the separate billing and payment proposals at PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 71709 § 156.280 raise Federalism concerns under the Tenth Amendment because the proposals are designed to penalize states that have laws requiring QHPs to provide coverage of non-Hyde abortion services by requiring states—through their respective Exchanges and DOIs—to adopt new oversight responsibilities, and make systemic changes to fit the alterations the proposals require. As explained previously, we disagree that this policy raises Federalism concerns. Setting aside the question of whether state laws requiring coverage of nonHyde abortion services on the Exchange are consistent with statutory conditions on federal funding from the Department to the States, we acknowledge that some states have such laws. However, the changes we are finalizing do not preempt state law regarding coverage of non-Hyde abortion services or otherwise attempt to coerce states into changing these laws. HHS is simply refining the method with which issuers use to comply with the separate payment requirement. We refer readers to section II.B of this final rule regarding the discussion of § 156.280 for further information. I. Reducing Regulation and Controlling Regulatory Costs Executive Order 13771, entitled ‘‘Reducing Regulation and Controlling Regulatory Costs,’’ was issued on January 30, 2017 and requires that the costs associated with significant new regulations ‘‘shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.’’ This final rule is expected to be an Executive Order 13771 regulatory action. We estimate that this rule generates $182.98 million in annualized costs, discounted at 7 percent relative to year 2016, over a perpetual time horizon. Details on the estimated costs of this rule can be found in the preceding analyses.31 J. Congressional Review Act This final rule is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can take effect, the federal agency promulgating the rule shall submit to each House of the Congress and to the Comptroller General a report 31 We estimate costs of approximately $553.6 million in 2020, approximately $232.1 million in 2021, approximately $230.7 million in 2022, and annual costs of approximately $229.3 million thereafter. Thus the annualized value of costs, as of 2016 and calculated over a perpetual time horizon with a 7 percent discount rate, is $182.98 million. E:\FR\FM\27DER3.SGM 27DER3 71710 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations containing a copy of the rule along with other specified information, and has been transmitted to the Congress and the Comptroller General for review. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget. List of Subjects 45 CFR Part 155 Administrative practice and procedure, Advertising, Brokers, Conflict of interests, Consumer protection, Grants administration, Grant programs-health, Health care, Health insurance, Health maintenance organizations (HMO), Health records, Hospitals, Indians, Individuals with disabilities, Intergovernmental relations, Loan programs-health, Medicaid, Organization and functions (Government agencies), Public assistance programs, Reporting and recordkeeping requirements, Technical assistance, Women and youth. 45 CFR Part 156 Administrative practice and procedure, Advertising, Advisory committees, Brokers, Conflict of interests, Consumer protection, Grant programs-health, Grants administration, Health care, Health insurance, Health maintenance organization (HMO), Health records, Hospitals, Indians, Individuals with disabilities, Loan programs-health, Medicaid, Organization and functions (Government agencies), Public assistance programs, Reporting and recordkeeping requirements, State and local governments, Sunshine Act, Technical assistance, Women, Youth. For the reasons set forth in the preamble, the Departement of Health and Human Servcies amends 45 CFR parts 155 and 156 as set forth below: PART 155—EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED STANDARDS UNDER THE AFFORDABLE CARE ACT 1. The authority citation for part 155 continues to read as follows: ■ Authority: 42 U.S.C. 18021–18024, 18031– 18033, 18041–18042, 18051, 18054, 18071, and 18081–18083. 2. Section 155.200 is amended by revising paragraph (c) to read as follows: jbell on DSKJLSW7X2PROD with RULES3 ■ § 155.200 Functions of an Exchange. * * * * * (c) Oversight and financial integrity. The Exchange must perform required functions and cooperate with activities related to oversight and financial integrity requirements in accordance VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 with section 1313 of the Affordable Care Act and as required under this part, including overseeing its Exchange programs and non-Exchange entities as defined in § 155.260(b)(1). * * * * * ■ 3. Section 155.330 is amended by revising paragraph (d)(1) introductory text and adding paragraph (d)(3) to read as follows: § 155.330 Eligibility redetermination during a benefit year. * * * * * (d) * * * (1) General requirement. Subject to paragraph (d)(3) of this section, the Exchange must periodically examine available data sources described in §§ 155.315(b)(1) and 155.320(b) to identify the following changes: * * * * * (3) Definition of periodically. Beginning with the 2021 calendar year, the Exchange must perform the periodic examination of data sources described in paragraph (d)(1)(ii) of this section at least twice in a calendar year. State Exchanges that have implemented a fully integrated eligibility system with their respective State Medicaid programs, that have a single eligibility rules engine that uses MAGI to determine eligibility for advance payments of the premium tax credit, cost-sharing reductions, Medicaid, CHIP, and the BHP, if a BHP is operating in the service area of the Exchange, will be deemed in compliance with the Medicaid/CHIP PDM requirements and, if applicable, BHP PDM requirements, in paragraphs (d)(1)(ii) and (d)(3) of this section. * * * * * ■ 4. Section 155.1200 is amended by— ■ a. Revising paragraphs (b) introductory text, (b)(1) and (2), and (c) introductory text; ■ b. Revising paragraphs (d)(2) and (3); ■ c. Redesignating (d)(4) as paragraph (d)(5); ■ d. Adding a new paragraph (d)(4); and ■ e. Revising newly redesignated paragraph (d)(5). The revisions and addition read as follows: § 155.1200 General program integrity and oversight requirements. * * * * * (b) Reporting. The State Exchange must, at least annually, provide to HHS, in a manner specified by HHS and by applicable deadlines specified by HHS, the following data and information: (1) A financial statement presented in accordance with GAAP, (2) Information showing compliance with Exchange requirements under this PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 part 155 through submission of annual reports, * * * * * (c) External audits. The State Exchange must engage an independent qualified auditing entity which follows generally accepted government auditing standards (GAGAS) to perform an annual independent external financial and programmatic audit and must make such information available to HHS for review. The State Exchange must: * * * * * (d) * * * (2) Compliance with subparts D and E of this part 155, or other requirements under this part 155 as specified by HHS; (3) Processes and procedures designed to prevent improper eligibility determinations and enrollment transactions, as applicable; (4) Compliance with eligibility and enrollment standards through sampling, testing, or other equivalent auditing procedures that demonstrate the accuracy of eligibility determinations and enrollment transactions; and (5) Identification of errors that have resulted in incorrect eligibility determinations, as applicable. PART 156—HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES 5. The authority citation for part 156 is revised to read as follows: ■ Authority: 42 U.S.C. 18021–18024, 18031– 18032, 18041–18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 U.S.C. 36B, and 31 U.S.C. 9701. 6. Section 156.280 is amended by— a. Revising the section heading; b. Redesignating paragraph (e)(2)(ii) as paragraph (e)(2)(iii); ■ c. Adding a new paragraph (e)(2)(ii); and ■ d. Revising newly redesignated paragraph (e)(2)(iii). The addition and revision read as follows: ■ ■ ■ § 156.280 Separate billing and segregation of funds for abortion services. * * * * * (e) * * * (2) * * * (ii) Beginning on or before the first billing cycle following June 27, 2019, to satisfy the obligation in paragraph (e)(2)(i) of this section— (A) Send to each policy holder of a QHP monthly bills for each of the amounts specified in paragraphs (e)(2)(i)(A) and (B) of this section, either by sending separate paper bills which may be in the same envelope or mailing, E:\FR\FM\27DER3.SGM 27DER3 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES3 or by sending separate bills electronically, which must be in separate emails or electronic communications; and (B) Instruct the policy holder to pay each of the amounts specified in paragraphs (e)(2)(i)(A) and (B) of this section through separate transactions. Notwithstanding this instruction, if the policy holder fails to pay each of these amounts in a separate transaction as instructed by the issuer, the issuer may not refuse the payment and initiate a VerDate Sep<11>2014 21:42 Dec 26, 2019 Jkt 250001 grace period or terminate the policy holder’s QHP coverage on this basis. (iii) Deposit all such separate payments into separate allocation accounts as provided in paragraph (e)(3) of this section. In the case of an enrollee whose premium for coverage under the QHP is paid through employee payroll deposit, the separate payments required under paragraph (e)(2)(i) of this section shall each be paid by a separate deposit. * * * * * PO 00000 Frm 00039 Fmt 4701 Sfmt 9990 71711 Dated: December 16, 2019. Seema Verma, Administrator, Centers for Medicare & Medicaid Services. Dated: December 18, 2019. Alex M. Azar II, Secretary, Department of Health and Human Services. [FR Doc. 2019–27713 Filed 12–20–19; 8:45 am] BILLING CODE 4120–01–P E:\FR\FM\27DER3.SGM 27DER3

Agencies

[Federal Register Volume 84, Number 248 (Friday, December 27, 2019)]
[Rules and Regulations]
[Pages 71674-71711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27713]



[[Page 71673]]

Vol. 84

Friday,

No. 248

December 27, 2019

Part V





 Department of Health and Human Services





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45 CFR Parts 155 and 156





 Patient Protection and Affordable Care Act; Exchange Program 
Integrity; Final Rule

Federal Register / Vol. 84 , No. 248 / Friday, December 27, 2019 / 
Rules and Regulations

[[Page 71674]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 155 and 156

[CMS-9922-F]
RIN 0938-AT53


Patient Protection and Affordable Care Act; Exchange Program 
Integrity

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule revises standards relating to oversight of 
Exchanges established by states and periodic data matching frequency. 
This final rule also includes new requirements for certain issuers 
related to the collection of a separate payment for the portion of a 
plan's premium attributable to coverage for certain abortion services.

DATES: This final rule is effective on February 25, 2020.

FOR FURTHER INFORMATION CONTACT: Emily Ames, (301) 492-4246 or Marisa 
Beatley, (301) 492-4307.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Legislative and Regulatory Overview

    Sections 1311(b) and 1321(b) of the Patient Protection and 
Affordable Care Act (PPACA) provide that each state has the opportunity 
to establish an Exchange. Section 1311(b)(1) of the PPACA gives each 
state the opportunity to establish an Exchange that facilitates the 
purchase of qualified health programs (QHPs) by individuals and 
families, and provides for the establishment of a Small Business Health 
Options Program (SHOP) that is designed to assist qualified small 
employers in the state in facilitating the enrollment of their 
employees in QHPs offered in the small group market in the state.
    Section 1313 of the PPACA describes the steps the Secretary of 
Health and Human Services (the Secretary) may take to oversee 
Exchanges' compliance with HHS standards related to title I of the 
PPACA and ensure their financial integrity, including conducting 
investigations and annual audits.
    Section 1321(a) of the PPACA provides broad authority for the 
Secretary to establish standards and regulations to implement the 
statutory standards related to Exchanges, QHPs, and other identified 
standards of title I of the PPACA.
    Section 1321(c)(2) of the PPACA authorizes the Secretary to enforce 
the Exchange standards using civil money penalties (CMPs) on the same 
basis as detailed in section 2723(b) of the Public Health Service Act 
(PHS Act). Section 2723(b) of the PHS Act authorizes the Secretary to 
impose CMPs as a means of enforcing the individual and group market 
reforms contained in Part A of title XXVII of the PHS Act when a state 
fails to substantially enforce these provisions with respect to health 
insurance issuers.
    Section 1303 of the PPACA, as implemented in 45 CFR 156.280, 
specifies standards for issuers of qualified health plans (QHPs) 
through the Exchanges that cover abortion services for which public 
funding is prohibited (also referred to as non-Hyde abortion services). 
The statute and regulation establish that, unless otherwise prohibited 
by state law, a QHP issuer may elect to cover such non-Hyde abortion 
services. If an issuer elects to cover such services under a QHP sold 
through an individual market Exchange, the issuer must take certain 
steps to ensure that no premium tax credit (PTC) or cost-sharing 
reduction (CSR) funds are used to pay for abortion services for which 
public funding is prohibited.
    As specified in section 1303(b)(2), one such step is that 
individual market Exchange issuers must determine the amount of, and 
collect, from each enrollee, a separate payment for an amount equal to 
the actuarial value of the coverage for abortions for which public 
funding is prohibited, which must be no less than $1 per enrollee, per 
month. QHP issuers must also segregate funds for non-Hyde abortion 
services collected through this payment into a separate allocation 
account used to pay for non-Hyde abortion services.
    Section 1411(c) of the PPACA requires the Secretary to submit 
certain information provided by applicants under section 1411(b) of the 
PPACA to other federal officials for verification, including income and 
family size information to the Secretary of the Treasury.
    Section 1411(d) of the PPACA provides that the Secretary must 
verify the accuracy of information provided by applicants under section 
1411(b) of the PPACA for which section 1411(c) does not prescribe a 
specific verification procedure, in such manner as the Secretary 
determines appropriate.
    Section 1411(f)(1)(B) of the PPACA requires the Secretary to 
establish procedures to redetermine eligibility on a periodic basis, in 
appropriate circumstances, including for eligibility to purchase a QHP 
through the Exchange and for advance payments of the premium tax credit 
(APTC) and CSRs.
    Section 1411(g) of the PPACA allows the exchange of applicant 
information only for the limited purposes of, and to the extent 
necessary to, ensure the efficient operation of the Exchange, including 
by verifying eligibility to enroll through the Exchange and for APTC 
and CSRs.
    On October 30, 2013, we published a final rule entitled, ``Patient 
Protection and Affordable Care Act; Program Integrity: Exchange, 
Premium Stabilization Programs, and Market Standards; Amendments to the 
HHS Notice of Benefit and Payment Parameters for 2014,'' (78 FR 65046), 
to implement certain program integrity standards and oversight 
requirements for State Exchanges.
    On March 27, 2012, we published a final rule entitled 
``Establishment of Exchanges and Qualified Health Plans; Exchange 
Standards for Employers,'' (Exchange Establishment Rule (77 FR 18309), 
in which we codified the statutory provisions of section 1303 of the 
PPACA in regulation at 45 CFR 156.280, and established many standards 
related to Exchanges. On February 27, 2015, we published the Patient 
Protection and Affordable Care Act; HHS Notice of Benefit and Payment 
Parameters for 2016, final rule (80 FR 10750) (hereinafter referred to 
as the 2016 Payment Notice) providing guidance regarding acceptable 
billing and premium collection methods for the portion of the policy 
holder's total premium attributable to non-Hyde abortion coverage for 
purposes of satisfying the statutory separate payment requirement.
    On March 8, 2016, we published the Patient Protection and 
Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 
2017, final rule (81 FR 12204), in which we provided issuers the option 
to adopt a premium payment threshold policy to avoid situations in 
which an enrollee who owes only a de minimis amount of premium has his 
or her enrollment terminated for non-payment of premiums.
    On November 9, 2018, we published a proposed rule entitled 
``Patient Protection and Affordable Care Act; Exchange Program 
Integrity'' (83 FR 56015), which proposed to revise standards relating 
to oversight of Exchanges established by states and periodic data 
matching frequency and authority. It also proposed new requirements for 
certain issuers related to the billing and collection of the separate 
payment for the premium portion attributable to coverage for certain 
abortion services.

[[Page 71675]]

B. Stakeholder Consultation and Input

    HHS has consulted with stakeholders on policies related to the 
operation of Exchanges. We have held a number of listening sessions 
with consumers, providers, employers, health plans, the actuarial 
community, and state representatives to gather public input, with a 
particular focus on risks to the individual and small group markets, 
and how we can alleviate burdens facing patients and issuers. We 
consulted with stakeholders through regular meetings with the National 
Association of Insurance Commissioners, regular contact with State 
Exchanges through the Exchange Blueprint process and ongoing oversight 
and technical assistance engagements, and meetings with Tribal leaders 
and representatives, health insurance issuers, trade groups, consumer 
advocates, employers, and other interested parties.

II. Provisions of the Proposed Rule and Analysis of and Responses to 
Public Comments

A. Exchange Establishment Standards and Other Related Standards Under 
the Affordable Care Act

1. Functions of an Exchange (Sec.  155.200)
    We proposed to revise Sec.  155.200 to clarify that the Exchanges 
must perform oversight functions generally, and cooperate with 
oversight activities, in accordance with section 1313 of the PPACA and 
as required under 45 CFR part 155. Section 155.200 describes the 
functions that an Exchange must perform. Section 155.200(c) specifies 
that the Exchange must perform functions related to oversight and 
financial integrity in accordance with section 1313 of the PPACA. HHS 
interprets this requirement broadly to include program integrity 
functions related to protecting against fraud, waste, and abuse, 
including functions not explicitly identified in section 1313 of the 
PPACA. We believe State Exchanges, including State Exchanges on the 
Federal Platform (SBE-FPs), have also generally interpreted this 
requirement broadly, as evidenced by their engagement in activities 
designed to combat fraud and abuse.
    However, questions about the breadth of this function have arisen 
when Exchanges have sought to understand what uses and disclosures of 
personally identifiable information (PII) are permitted under Sec.  
155.260.\1\ Specifically, we received questions about whether Exchanges 
are permitted under Sec.  155.260 to disclose applicant PII to 
government oversight entities, such as state departments of insurance, 
when investigating fraudulent behavior related to Exchange enrollments 
on the part of agents and brokers. As noted in the proposed rule, we 
believe that use and disclosure of PII related to Exchange program 
integrity efforts, such as combatting fraud, currently fall under Sec.  
155.200(c), but seek to make that position more clear. Therefore, we 
proposed to revise Sec.  155.200(c) to clarify that the Exchanges must 
perform oversight functions generally, and cooperate with oversight 
activities, in accordance with section 1313 of the PPACA and as 
required under 45 CFR part 155, including overseeing its Exchange 
programs, Navigators, agents, brokers, and other non-Exchange entities 
as defined in Sec.  155.260(b). We further explained that because this 
is a clarification and not a new function, we did not believe it would 
impose additional burdens on Exchanges, but instead would help resolve 
questions about the available tools and authority to enable Exchanges 
to effectively oversee and combat potentially fraudulent behavior.
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    \1\ Section 155.260 limits an Exchange's use and disclosure of 
PII when an Exchange creates or collects personally identifiable 
information for the purposes of determining eligibility for 
enrollment in a qualified health plan; determining eligibility for 
other insurance affordability programs, as defined in Sec.  155.300; 
or determining eligibility for exemptions from the individual shared 
responsibility provisions in section 5000A of the Internal Revenue 
Code. One of the permitted uses and disclosures is for the Exchange 
to carry out the functions described in Sec.  155.200.
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    After consideration of comments received, we are finalizing this 
provision as proposed, with one technical modification to remove a 
redundant term included in the proposed regulation text. The comments 
we received on this topic are summarized below, along with our 
responses.
    Comment: All commenters on this topic supported the proposed 
amendment to Sec.  155.200(c) as it clarifies that oversight and 
transparency for all Exchanges is required with respect to determining 
eligibility for APTC and combatting fraud. Two commenters encouraged 
HHS to work closely with states once the proposal is finalized to 
ensure that individuals who are assisting consumers receive proper 
notice and training on the applicable compliance requirements and 
standards in their states. One commenter suggested that HHS solicit 
stakeholder feedback on the possibility of incorporating an additional 
level of collaborative issuer-Exchange oversight and verification prior 
to enrollment when the applicant's coverage has been previously 
terminated for fraud.
    Response: We remain committed to improving Exchange program 
integrity, including efforts related to combatting fraud, and 
appreciate commenters' support for our clarification that Exchanges are 
permitted to use and disclose applicant PII to certain entities for 
these efforts. We agree that it is important for agents, brokers, 
Navigators, and other assisters to understand the applicable standards 
in their state, and plan to work closely with states to ensure 
compliance. We continue to explore other pathways for combatting fraud 
in Exchanges and appreciate commenters' recommendations.
    We are finalizing the amendment to Sec.  155.200(c) as proposed, 
with one modification. We are removing the reference to assisters 
because it is redundant of the reference to non-Exchange entities. Non-
Exchange entities are defined in Sec.  155.260(b) and include 
Navigators, non-Navigator assistance personnel, certified application 
counselors, agents, brokers, web-brokers and other individuals or 
entities who gain access to PII submitted to an Exchange or collect, 
use or disclose PII gathered directly from Exchange applicants or 
enrollees.
2. Verification Process Related to Eligibility for Insurance 
Affordability Programs (Sec.  155.320)
    We requested comment on our proposed plans to expand the current 
scope of Medicare periodic data matching (PDM), which only identifies 
and notifies those dual enrollees receiving financial assistance, to 
also include the Exchange population not receiving financial 
assistance. Specifically, we proposed to add a new authorization 
compliant with Health Insurance Portability and Accountability Act of 
1996 (HIPAA) (Pub. L. 104-191) standards to the single streamlined 
application to permit Exchanges using the federal platform to collect 
PHI in order to determine enrollees' Medicare enrollment status. We 
also proposed to leverage the current attestation question on the 
single, streamlined application, for applicants to provide written 
consent permitting the Exchange to terminate their coverage if they are 
found later to be dually enrolled in Medicare and a QHP to expand the 
scope of Medicare PDM to the population not receiving financial 
assistance. We will not finalize these proposed actions, but will 
continue to identify and notify dual enrollees receiving financial 
assistance

[[Page 71676]]

as part of current Medicare PDM operations.
    Under Sec.  155.330, Exchanges are required to periodically examine 
available data sources to identify whether enrollees on whose behalf 
APTC or CSRs are being paid have been found eligible for or are 
enrolled in Medicare, Medicaid, Children's Health Insurance Program 
(CHIP), or the Basic Health Program (BHP), if a BHP is operating in the 
service area of the Exchange. Individuals identified as enrolled both 
in Exchange coverage (with or without APTC or CSRs) and one of these 
other forms of coverage are referred to as dually enrolled consumers. 
Generally, if an individual is eligible for or enrolled in such other 
forms of coverage that qualify as minimum essential coverage (MEC) 
under section 5000A of the Code, the individual is not eligible to 
receive APTC or CSRs. For instance, if an individual is eligible for 
premium-free Medicare Part A or enrolled in Medicare Part A or Part C 
(also known as Medicare Advantage), all of which qualify as MEC, he or 
she is not eligible to receive APTC or CSRs to help pay for an Exchange 
plan or covered services.
    The Secretary has broad authority under section 1321(a) of the 
PPACA to establish regulations setting standards to implement certain 
statutory requirements under title I of the PPACA, including with 
respect to the establishment and operation of Exchanges, the offering 
of QHPs through the Exchanges, the establishment of the risk adjustment 
and reinsurance programs, and such other requirements as the Secretary 
determines appropriate. Additionally, section 1411(g) of the PPACA 
allows the exchange of certain applicant information as necessary to 
ensure the efficient operation of the Exchange, including verifying 
eligibility to enroll in coverage through the Exchange and to receive 
APTC or CSRs.
    Furthermore, 45 CFR 155.430(b)(1)(ii) requires an Exchange to 
provide an opportunity at the time of plan selection for enrollees 
receiving and not receiving financial assistance to choose to remain 
enrolled in a QHP if he or she becomes eligible for other MEC, or to 
terminate QHP coverage if the enrollee does not choose to remain 
enrolled in the QHP upon completion of the redetermination process. As 
such, for plan year 2018 and thereafter, we added language to the 
existing single, streamlined application to support compliance with 
this requirement by all Exchanges using the federal platform. This new 
language allows all consumers, regardless of whether they are seeking 
financial assistance, to authorize the Exchange to obtain eligibility 
and enrollment data and, if so desired by the consumer, to end their 
QHP coverage if the Exchange finds during its periodic eligibility 
checks that the consumer has become eligible for or enrolled in other 
MEC, such as Medicare, Medicaid/CHIP, or BHP.
    In addition, for plan years beginning with the 2020 plan year, we 
stated in the proposed rule our intention to add a new HIPAA 
authorization to the single, streamlined application used by Exchanges 
using the federal platform, which would meet HIPAA standards regarding 
how one's protected health information (PHI) is collected and used. In 
the preamble to the proposed rule, we discussed using this proposed new 
HIPAA authorization to expand the current scope of Medicare PDM to 
individuals in the Exchange population who are not receiving financial 
assistance and who authorize the Exchanges using the federal platform 
to conduct certain PDM by requesting PHI from HHS such as their name, 
Social Security Number, Medicare eligibility or enrollment status, and 
other data elements the Exchange may determine necessary, to allow the 
Exchange to determine whether the consumer is dually enrolled in 
Medicare and Exchange coverage. This HIPAA authorization would allow 
HHS to check Medicare enrollment databases for applicants regardless of 
whether they seek or receive financial assistance.
    As we discussed in the preamble to the proposed rule, for consumers 
who request voluntary termination upon a finding of dual enrollment, 
the Exchange would terminate coverage after following the current PDM 
process outlined in Sec.  155.330(e)(2)(i), which requires Exchanges to 
provide notice of the updated information the Exchange found, as well 
as a 30-day period for the enrollee to respond to the notice. We 
emphasize again, because the Exchange cannot identify through this 
process those consumers who are eligible for, but not enrolled in 
premium-free Part A, we encourage all consumers who are 65 and older to 
apply with the Social Security Administration (SSA) to receive an 
eligibility determination with respect to Medicare.
    We received multiple comments on this discussion regarding 
expanding the scope of Medicare PDM to the Exchange population not 
receiving financial assistance. After further consideration of the 
technical complexity of implementing a HIPAA authorization on the 
single, streamlined application and the potential burden on consumers 
to read, decipher, and agree to legal agreements many may find 
confusing, we will not pursue the addition of a new authorization to 
the single streamlined application. Instead, we will explore other 
means through which the Exchanges can expand the scope of Medicare PDM 
to the Exchange population that is not receiving financial assistance. 
A summary of these comments and our responses to those comments follow:
    Comment: Most commenters generally supported HHS's goal to reduce 
dual enrollment in Medicare and Exchange coverage, but cautioned HHS 
about the consequences of terminating QHP coverage for this population. 
Commenters noted that terminating Exchange coverage could: (1) 
Interfere with the continuity of care, (2) create gaps in coverage, 
especially for those dual enrollees who have not yet enrolled in 
Medicare Part B, (3) cause other family members on the Medicare 
beneficiary's policy to lose coverage, and (4) cause increased consumer 
confusion over their coverage options. Rather than terminating QHP 
coverage, commenters recommended targeted outreach and education to the 
Medicare eligible population to ensure this population fully 
understands the consequences of dual enrollment, the appropriate time 
to enroll in Medicare Part B to avoid financial penalties for delayed 
enrollment, and how access to their Medicare eligibility information 
intersects with QHP termination via Medicare PDM. One commenter 
recommended that we prevent all individuals with Medicare from 
enrolling in QHP coverage through screening at initial application.
    Response: Given the technical complexity of implementing a HIPAA 
authorization on the single streamlined application and the potential 
burden it would place on consumers as consumers would be required to 
read, decipher, and agree to complex legal agreements that may be 
confusing for consumers, we are reconsidering our approach to expanding 
Medicare PDM to the Exchange population not receiving financial 
assistance. We are exploring other options to identify and notify this 
population of their dual enrollment in Medicare and Exchange coverage 
to ensure that this population is able to enroll in Medicare Part B at 
the appropriate time and without financial penalty.
    For enrollees in Exchanges using the federal platform who are 
receiving financial assistance, the Exchanges will continue to end 
subsidies or QHP coverage for those consumers who permit the Exchange 
to do so in accordance with Sec.  155.330. For the Exchange population 
receiving financial

[[Page 71677]]

assistance, terminating QHP coverage as part of Medicare PDM ensures 
that consumers are not enrolled in unnecessary duplicative coverage, 
reduces the potential for taxpayer financial liability related to 
possibly having to repay APTC at the time of federal income tax 
reconciliation, and also protects the integrity of the Exchange by 
ensuring enrollees no longer eligible for financial assistance do not 
receive these subsidies inappropriately.
    HHS is also aware of concerns from stakeholders that consumers 
often do not know when they should contact the Exchange to end their 
QHP coverage after enrolling in Medicare. We believe this voluntary 
option to provide written consent for the Exchange to end a Medicare 
dual enrollee's QHP coverage will alleviate some of the confusion 
consumers currently face when transitioning from Exchange coverage to 
Medicare as the Exchange provides information in the intial warning 
notice on how to end QHP coverage after enrolling in Medicare. 
Furthermore, in instances where the dual enrollee does not take action, 
the Exchange will automatically end coverage for the dual enrollee; 
thus, saving the enrollee time and reducing the risk of the consumer 
having to pay back some or all of the APTC received when they file 
their federal income taxes.
    In addition, in response to commenter concerns about the 
consequences of termination of dually enrolled consumers' coverage, we 
note that enrollees receiving financial assistance have 30 days to 
respond to their Medicare PDM notice before the Exchange takes action 
as specified in Sec.  155.330(e)(2)(i)(D). As we noted in the preamble 
to the proposed rule, upon receiving the required notice, the enrollee 
could (1) return to the Exchange and terminate his or her QHP coverage, 
(2) revoke the prior authorization for the Exchange to terminate his or 
her QHP coverage in the event dual enrollment is found, so that he or 
she would remain enrolled both in the QHP and in Medicare, or (3) 
notify the Exchange that he or she is not eligible for, or enrolled in, 
Medicare. For enrollees who revoke their prior authorization for the 
Exchange to terminate their QHP enrollment where the Exchange finds the 
enrollee is eligible for or enrolled in Medicare, or who disagree that 
they are eligible for or enrolled in Medicare, the Exchange would only 
proceed to terminate the enrollee's APTC and CSRs, and not his or her 
enrollment in QHP coverage through the Exchange, using the process 
specified in Sec.  155.330(e)(2)(i). Therefore, we believe this 
operational change mitigates adverse impacts on the continuity of care 
and the risk of coverage gaps because enrollees can choose to opt out 
and remain in QHP coverage without APTC, pursuant to the current 
regulation.
    We also appreciate the concerns raised that non-Medicare family 
members could potentially lose coverage. We note that a special 
enrollment period will be available for family members of dual 
enrollees when such family members lose their coverage or their 
financial subsidies as a result of the PDM process described here.
    Additionally, we continue to prioritize consumer and stakeholder 
education regarding dual enrollment and transitioning between coverage, 
and to engage in various outreach activities including distributing 
webinar, newsletter, and fact sheet content for assisters, agents, 
brokers, and issuers, as well as direct consumer notification and 
application help text. We also are working to develop educational 
materials to ensure that all Medicare beneficiaries understand the 
consequences of dual enrollment and associated penalties for not 
enrolling in Medicare Part B when first eligible. We believe this will 
help reduce consumer confusion over their coverage options and the 
appropriate time to sign up for Medicare. We appreciate the comments 
and ideas for future education efforts for this population and will 
consider these suggestions as part of our Medicare PDM stakeholder 
outreach moving forward.
3. Eligibility Redetermination During a Benefit Year (Sec.  155.330)
    We proposed to add a new paragraph (d)(3) to Sec.  155.330, under 
which Exchanges would be required to conduct PDM at least twice each 
calendar year beginning with calendar year 2020. We are finalizing this 
proposal. However, we have changed the implementation date to the 2021 
calendar year, and added clarifying language regarding State Exchanges 
that have fully integrated eligibility systems with their respective 
Medicaid agencies.
    In accordance with Sec.  155.330(d), Exchanges must periodically 
examine available data sources to determine whether enrollees in a QHP 
through an Exchange with APTC or CSRs have been determined eligible for 
or enrolled in other qualifying coverage through Medicare, Medicaid, 
CHIP, or the BHP, if applicable. HHS has not previously defined 
``periodically.'' Currently, Exchanges using the federal platform 
conduct Medicare PDM and Medicaid/CHIP PDM twice a year. To ensure that 
all Exchanges are taking adequate steps to identify enrollees who have 
become eligible for or enrolled in these other forms of MEC, and to 
terminate APTC and CSRs for those identified, we proposed to add 
paragraph (d)(3) to specify that Exchanges would be required to conduct 
Medicare, Medicaid/CHIP, and, if applicable, BHP PDM at least twice a 
calendar year, beginning with the 2020 calendar year. We indicated that 
this timeframe would likely give Exchanges that are not already 
performing these PDM checks twice a year sufficient time to implement 
any business, operational, and information technology changes needed to 
comply with the proposed new requirement.
    We explained our belief that this policy would reduce QHP premiums, 
since Medicare and Medicaid/CHIP beneficiaries tend to have a higher 
risk profile than a typical Exchange enrollee and, therefore, may have 
negative impacts on the risk pool. Because this population includes 
significant numbers of older and disabled beneficiaries, or persons 
that may have poorer health outcomes generally associated with lower 
income statuses, we expect that these populations typically will 
utilize health care services at a greater rate as compared to other 
populations.\2\ So that the Exchanges could prioritize the 
implementation of the proposed requirement to conduct PDM for Medicare, 
Medicaid, CHIP, and, if applicable, BHP eligibility or enrollment at 
least twice yearly, we did not also propose requiring Exchanges to 
perform PDM for death at least twice in a calendar year, and will 
consider this as part of future rulemaking.
---------------------------------------------------------------------------

    \2\ For example, see Urban Institute and Center on Society and 
Health, How Are Income and Wealth Linked to Health and Longevity? 
(April 2015), available at https://www.urban.org/sites/default/files/publication/49116/2000178-How-are-Income-and-Wealth-Linked-to-Health-and-Longevity.pdf.
---------------------------------------------------------------------------

    Since most State Exchanges that operate their own eligibility and 
enrollment platform have a single shared, integrated eligibility system 
with their respective Medicaid programs, the Medicaid/CHIP PDM 
requirements may be met differently by State Exchanges. State Exchanges 
that have fully integrated eligibility systems generally have controls 
in place to prevent concurrent or dual enrollment of an individual in 
both a QHP through the Exchange with APTC/CSRs, and Modified Adjusted 
Gross Income (MAGI)-based Medicaid/CHIP coverage, at any given time. We 
proposed at paragraph (d)(3) that we will deem these State Exchanges to 
be in compliance with the requirement to perform

[[Page 71678]]

Medicaid/CHIP PDM or, if applicable, BHP PDM. Thus, these State 
Exchanges would not need to perform additional Medicaid/CHIP PDM 
outside of the controls that are currently in place to prevent dual 
enrollment in their integrated eligibility system. State Exchanges that 
operate their own eligibility and enrollment platform and do not have 
fully integrated eligibility systems for APTC/CSRs and Medicaid/CHIP or 
BHP, if applicable, would be required to perform Medicaid/CHIP PDM at 
least twice a year.
    We anticipate many State Exchanges will meet or exceed the proposed 
requirements for Medicare PDM, Medicaid/CHIP PDM and, if applicable, 
BHP PDM, based on operations reported to us through the State-based 
Marketplace Annual Reporting Tool (SMART). This view is also supported 
by information we have learned through technical assistance 
engagements. Furthermore, the new Medicaid/CHIP PDM requirement would 
not result in a significant administrative burden for State Exchanges 
because we believe most State Exchanges currently operate an integrated 
eligibility system and could be deemed to be in compliance with the 
proposed Medicaid/CHIP PDM requirements.
    We did not propose specific penalties if State Exchanges do not 
comply with the proposed PDM requirements. However, we noted that, 
under current authority, HHS requires a State Exchange to take 
corrective action if it is not complying with applicable federal 
requirements. We utilize specific oversight tools (SMART, programmatic 
audits, etc., as described in the preamble to Sec.  155.1200) to 
identify issues with, and place corrective actions on, the Exchanges, 
and to provide technical assistance and ongoing monitoring to track 
those actions until the Exchange comes into compliance.
    Additionally, under section 1313(a)(4) of the PPACA, if HHS 
determines that an Exchange has engaged in serious misconduct with 
respect to compliance with Exchange requirements, it has the option to 
rescind up to 1 percent of payments due to a state under any program 
administered by HHS until it is resolved. These existing authorities 
would apply to the proposed periodic data matching requirements in 
Sec.  155.330(d). If HHS were to determine that it is necessary to 
apply this authority due to non-compliance by an Exchange with Sec.  
155.330(d), HHS would also determine the HHS-administered program from 
which it would rescind payments that are due to that state.
    Lastly, we proposed to make a technical correction in Sec.  
155.330(d)(1) by adding an additional reference to the process and 
authority in Sec.  155.320(b). This reference was omitted previously, 
but the requirements in Sec.  155.320(b), specifying that Exchanges 
must verify whether an applicant is eligible for MEC other than through 
an eligible employer-sponsored plan using information obtained by 
transmitting identifying information specified by HHS to HHS for 
verification purposes, apply to the PDM process in Sec.  155.330.
    We are finalizing this proposal to add paragraph (d)(3) as 
proposed, but have changed the implementation date to the 2021 calendar 
year, and have added some clarifying language with regard to fully 
integrated eligibility systems, as described below. A summary of 
comments received and our responses to those comments appear below.
    Comment: We received multiple comments in support of PDM as an 
effort to improve Exchange program integrity. These commenters agreed 
that the process helps inform consumers of their enrollment in 
potentially duplicative other MEC such as certain Medicare and Medicaid 
coverage, CHIP, or, if applicable, the BHP, and to help consumers avoid 
a tax liability for having to repay APTC received during months of 
overlapping coverage when reconciling at the time of annual federal 
income tax filing. Many commenters suggested improvements that could be 
made to current PDM processes.
    Some commenters suggested that consumers, especially Medicare 
beneficiaries, could benefit from additional education or outreach from 
assisters, Navigators, or call center representatives to help these 
dually enrolled consumers make informed choices about their coverage 
options. Another commenter recommended that HHS work closely with SSA 
to identify which Medicare beneficiaries are approaching Medicare 
eligibility so that notices can be sent during the beneficiary's 
initial enrollment period. Another commenter recommended that, in 
addition to periodic checks for other qualifying coverage, HHS should 
implement periodic checks for deceased enrollees and that these checks 
should occur before auto re-enrollment.
    Response: We agree that the PDM process is an important tool to 
ensure that Exchange enrollees are enrolled in the appropriate coverage 
that best meets their needs and budget while reducing the risk for 
potential tax liabilities for having to repay APTC received during 
months of overlapping coverage. We also agree that outreach and 
education is critical for dual enrollees and we continue to work with 
Exchange stakeholders on education and outreach strategies, especially 
for the Medicare beneficiary population to ensure that consumers can 
make well-informed choices and sign up for Medicare coverage during the 
appropriate timeframes. In 2018, we added additional resources to the 
Exchange application that provided information on the appropriate 
timeframes to enroll in Medicare Parts A and B to help consumers avoid 
incurring any late enrollment penalties. We also believe that periodic 
checks for deceased enrollees are a critical aspect to ensuring 
Exchange program integrity. Beginning in late 2019, Exchanges using the 
federal platform will conduct periodic checks for deceased enrollees in 
single member applications and subsequently end deceased enrollees' QHP 
coverage. As noted previously, to ensure State Exchanges have 
appropriate time to implement the technical and operational changes 
necessary to conduct Medicare, Medicaid/CHIP, and, if applicable, BHP, 
PDM, we are not requiring that State Exchanges perform checks for 
deceased enrollees twice yearly, and will be considering changes as 
part of future rulemaking.
    Comment: We received mixed comments regarding our proposal to 
require Exchanges to conduct Medicare, Medicaid/CHIP and, if 
applicable, BHP PDM twice a year. Many commenters stated that 
increasing the frequency of PDM, particularly Medicare PDM, may be 
burdensome on both consumers and State Exchanges, and could lead to 
increased consumer confusion, diversion of resources from customer 
service and outreach efforts, and potential loss of APTC due to 
potentially outdated data sources for Medicare enrollment and Medicaid/
CHIP eligibility and enrollment. One commenter recommended that 
additional verification checks be incorporated into the final rule to 
ensure consumers are not removed from coverage due to outdated data. 
Two commenters noted that the twice yearly frequency was too infrequent 
and would not provide timely notice for those consumers who are dually 
enrolled in Medicare and Exchange coverage. One commenter recommended 
requiring that Exchanges only perform PDM checks once yearly, which 
taken together with the annual renewal process, would allow a check 
every 6 months. Another commenter expressed concerns that our proposed 
language would allow State Exchanges to perform PDM more than twice a 
year, which could cause consumers to lose coverage erroneously.
    Response: We continue to believe that conducting Medicare, 
Medicaid/CHIP

[[Page 71679]]

and, if applicable, BHP PDM serves a critical role in ensuring that 
consumers are enrolled in the appropriate coverage and ensures that 
APTC is paid appropriately. We continue to work with our partners 
throughout HHS to ensure the accuracy of Medicare, Medicaid, and CHIP 
data, and will continue to provide guidance to State Exchanges on 
notice language, especially regarding the availability of special 
enrollment periods for consumers who erroneously lose APTC or QHP 
coverage, as well as the consumer's right to appeal an Exchanges' 
determination. We disagree that conducting PDM checks twice yearly 
would cause consumer confusion or divert resources away from customer 
service and outreach because PDM provides valuable information to 
consumers regarding their dual enrollment in Medicare and/or Medicaid/
CHIP and serves an important program integrity function by ensuring 
that only consumers eligible for APTC/CSRs receive them. We continue to 
prioritize consumer and stakeholder education related to dual 
enrollment and transitioning between coverage, including webinar, 
newsletter, and fact sheet content for assisters, agents, brokers, and 
issuers, as well as direct consumer notification and application help 
text. We encourage State Exchanges to prioritize these education 
efforts as well.
    We appreciate commenters' suggestions regarding the frequency of 
PDM checks, but we believe that requiring these checks at least twice a 
year strikes the appropriate balance between providing timely notice 
for dually enrolled consumers and not overburdening Exchanges with 
potentially costly system changes and notice requirements. With respect 
to the comment regarding Exchanges conducting a Medicaid/CHIP or 
Medicare PDM check during the annual renewal process, this rule 
specifies the frequency, and not the precise timing, for when Exchanges 
must conduct the Medicaid/CHIP and Medicare PDM checks. Exchanges have 
the flexibility to conduct one of the required PDM checks during the 
annual renewal process.
    Finally, we disagree that the changes outlined to PDM would 
increase burden on all Exchanges. We will deem State Exchanges that 
have implemented fully integrated eligibility systems with their 
respective Medicaid programs to be in compliance with the proposed 
Medicaid/CHIP PDM requirement. Thus, we anticipate the change to the 
Medicaid/CHIP PDM requirement will not increase burden for those State 
Exchanges because they will not have to build new functionality to meet 
this requirement. However, we do agree that any significant burden on 
State Exchanges would likely be on those that currently do not perform 
any Medicare PDM, or those that currently do not operate integrated 
eligibility systems and do not perform any Medicaid/CHIP PDM and, 
therefore, are not already in compliance with Sec.  155.330(d). Those 
Exchanges would likely be required to engage in information technology 
(IT) system development activities in order to communicate with these 
programs and act on enrollment data in a new way.
    Comment: We received multiple comments that the proposed date of 
January 1, 2020 for the implementation of twice yearly Medicare, 
Medicaid/CHIP, and, if applicable, BHP PDM provides insufficient time 
for State Exchanges to implement the required technical changes. 
Commenters noted that State Exchanges that do not currently conduct 
Medicare PDM, or do not have integrated eligibility systems with their 
State Medicaid programs and do not currently conduct Medicaid/CHIP PDM, 
would have to make significant changes to their eligibility systems and 
processes to to confirm enrollment in Medicare or to verify Medicaid or 
CHIP eligibility, respectively. One commenter suggested 2021 as an 
appropriate implementation date. Two commenters also requested that HHS 
finalize a clear and certain definition of a fully integrated 
eligibility system to mean eligibility systems that have one 
eligibility rules engine, shared between the State Exchange and its 
respective Medicaid program, for MAGI-based Medicaid, CHIP, APTC, and 
if applicable, BHP, eligibility determinations.
    Response: We agree with commenters that requiring implementation by 
the 2020 calendar year may not provide State Exchanges with a 
sufficient timeframe to implement these changes, especially for 
Exchanges without integrated eligibility systems that do not currently 
perform Medicaid/CHIP PDM or those that currently do not perform 
Medicare PDM. These Exchanges would need to implement new interfaces 
with their respective Medicaid programs and/or a new connection to 
federal data to confirm Medicare enrollment. Therefore, we are 
finalizing the proposal in Sec.  155.330(d)(3) to take effect beginning 
with the 2021 calendar year. We also agree on the importance of 
providing a clear and specific definition of ``fully integrated 
eligibility system.'' As described in the preamble to the proposed 
rule, by ``fully integrated eligibility system,'' we mean one where a 
State Exchange and its respective Medicaid program shares a single 
eligibility rules engine for determining eligibility for MAGI-based 
Medicaid/CHIP, APTC, and if applicable, BHP. We are finalizing 
paragraph (d)(3) with some additional language to codify this meaning.
    Comment: We received three comments that were opposed to the 
proposed requirement to conduct Medicare, Medicaid/CHIP and, if 
applicable, BHP PDM, cautioning us that defining the precise frequency 
and nature of PDM encroaches upon the sovereignty of the State 
Exchanges. Two commenters noted that HHS has not provided enough 
evidence that there is a significant problem with duplicative 
enrollment in other qualifying coverage such as Medicare, Medicaid/
CHIP, and BHP. One commenter expressed concern that additional 
requirements on State Exchanges could discourage consumers from 
applying for coverage.
    Response: Ensuring that consumers are enrolled in the appropriate 
coverage remains a top priority for HHS. Additionally, ensuring that 
APTC is paid appropriately is a requirement set forth in Sec.  
155.330(d)(1)(ii). Several Government Accountability Office (GAO) 
reviews have underscored the importance of continually re-verifying 
enrollee eligibility for APTC through PDM with other government 
entities.\3\ As such, we believe PDM plays a vital role in ensuring the 
health and integrity of all Exchanges by ensuring consumers are 
enrolled in the appropriate coverage, and reduces the risk that 
consumers will have to pay back all or some of APTC paid on their 
behalf during months of overlapping coverage when they file their 
annual federal income taxes. We disagree that the twice yearly 
requirement to conduct Medicare, Medicaid/CHIP and, if applicable, BHP 
PDM would discourage consumers from applying for and enrolling in QHP 
coverage, as the majority of consumers become dually enrolled 
inadvertently, such as by aging into Medicare or experiencing 
fluctuations in household income.
---------------------------------------------------------------------------

    \3\ ``Improper Payments: Improvements Needed in CMS and IRS 
Controls over Health Insurance Premium Tax Credit'' (GAO 17-467); 
``Federal Health-Insurance Marketplace: Analysis of Plan Year 2015 
Application, Enrollment, and Eligibility-Verification Process'' 
(GAO-18-169).
---------------------------------------------------------------------------

4. General Program Integrity and Oversight Requirements (Sec.  
155.1200)
    As the Exchange Establishment grant program established under 
section 1311 of the PPACA has come to a conclusion and State Exchanges 
have become financially self-sustaining, HHS

[[Page 71680]]

continues to develop and refine its mechanisms and tools for overseeing 
the ongoing compliance of State Exchanges and SBE-FPs with federal 
requirements for Exchanges, including eligibility and enrollment 
requirements under 45 CFR part 155.
    HHS approves or conditionally approves a state to establish a State 
Exchange based on an assessment of a state's attested compliance with 
applicable statutory and regulatory rules. Once approved or 
conditionally approved, State Exchanges must meet specific program 
integrity and oversight requirements identified at section 1313(a) of 
the PPACA, and the implementing regulations at Sec. Sec.  155.1200 and 
155.1210. These requirements outline HHS's authority to oversee the 
Exchanges after their establishment. Currently, annual reporting 
requirements for State Exchanges at Sec.  155.1200(b) include the 
annual submission of (1) a financial statement in accordance with 
generally accepted accounting principles (GAAP); (2) eligibility and 
enrollment reports; and (3) performance monitoring data.
    Additionally, under Sec.  155.1200(c), each State Exchange is 
required to contract with an independent external auditing entity that 
follows generally accepted government auditing standards (GAGAS) to 
perform annual independent external financial and programmatic audits. 
State Exchanges are required to provide HHS with the results of the 
annual external audits, including corrective action plans to address 
any material weaknesses or significant deficiencies identified by the 
auditor.\4\ All corrective action plans are monitored by HHS until 
closed. Currently, the audits must address compliance with all Exchange 
requirements under 45 CFR part 155.\5\
---------------------------------------------------------------------------

    \4\ 45 CFR 155.1200(c)(1) and (2).
    \5\ 45 CFR 155.1200(d)(2).
---------------------------------------------------------------------------

    HHS designed and developed the SMART in 2014 to assist State 
Exchanges in conducting a defined set of oversight activities. The 
SMART was designed to facilitate State Exchanges' reporting to HHS on 
how they are meeting federal program and operational requirements, 
including State Exchanges reporting their compliance with federal 
eligibility and enrollment program requirements under 45 CFR part 155 
subparts D and E. The SMART, thus, enables HHS to evaluate and monitor 
State Exchange progress in coming into compliance with federal 
requirements where needed. Since then, HHS has come to utilize the 
SMART, along with the annual programmatic and financial audit reports, 
as primary oversight tools for identifying and addressing State 
Exchange non-compliance issues. HHS requires State Exchanges to take 
corrective actions to address issues that are identified through the 
SMART and annual audits, and HHS monitors the implementation of the 
corrective actions.
    In the proposed rule, we proposed to modify Sec.  155.1200(b)(2) to 
reflect that HHS requires State Exchanges to submit annual compliance 
reports (such as the SMART), that encompass eligibility and enrollment 
reporting by State Exchanges, and also include reporting on compliance 
across other Exchange program requirements under 45 CFR part 155. We 
also proposed to modify Sec.  155.1200(b)(1) to eliminate the April 1st 
date by which State Exchanges must provide a financial statement to 
HHS, to provide HHS the flexibility to align the financial statement 
deadline with the SMART deadline, which is set annually by HHS. Because 
we proposed to remove the April 1st date, but intend to maintain the 
requirement that State Exchanges submit the required reports by a 
deadline, we also proposed to modify the introductory text to Sec.  
155.1200(b) to specify that State Exchanges must provide the required 
annual reporting by deadlines to be set by HHS.
    We proposed to retain the requirement at Sec.  155.1200(c) that an 
annual programmatic audit be conducted by State Exchanges, but proposed 
a minor change from ``state'' to ``State Exchanges'' to be consistent 
and clear on the entities to which this rule applies. We also proposed 
to add specificity to the annual programmatic audit requirement by 
proposing a clarification of Sec.  155.1200(d)(2) to make clear that 
HHS may specify or target the scope of a programmatic audit to address 
compliance with particular Exchange program areas or requirements. We 
explained that this would provide HHS with the ability to specify those 
Exchange functions that are most pertinent to a particular State 
Exchange model (either a traditional State Exchange that operates its 
own eligibility and enrollment system or an SBE-FP) and need to be 
regularly included in the audit; target those Exchange functions most 
likely to impact program integrity, such as eligibility verifications; 
and reduce burden on State Exchanges where possible. In addition, we 
proposed to modify Sec.  155.1200(d) by replacing existing paragraph 
(d)(4) with new paragraphs (d)(4) and (5). These proposed new 
requirements specify that State Exchanges must ensure that the 
independent audits implement testing procedures or other auditing 
procedures that assess whether a State Exchange is conducting accurate 
eligibility determinations and enrollment transactions under 45 CFR 
part 155 subparts D and E. Such auditing procedures can include the use 
of statistically valid sampling methods in the testing or auditing 
procedures.
    We indicated that we believe these proposed changes would 
strengthen our programmatic oversight and the program integrity of 
State Exchanges, while providing flexibility for HHS in the collection 
of information. We further explained that, through the Paperwork 
Reduction Act (PRA) process, we are able to make updates and 
refinements to the SMART reporting tool to align with our program 
integrity priorities for Exchanges as they evolve. In addition, 
allowing HHS to specify the scope of the programmatic audit at Sec.  
155.1200(d)(2) would provide us the ability to target our oversight to 
specific Exchange program requirements based on the particular State 
Exchange model, our program integrity priorities, and the goal of 
reducing burden on State Exchanges where possible. We explained our 
belief that this approach would provide HHS and states with greater 
insight into State Exchange compliance with federal standards in a more 
cost-effective manner.
    We also noted our belief that this approach would allow HHS to 
identify State Exchange non-compliance issues with more precision and 
efficacy. It would allow HHS to provide more effective, targeted 
technical assistance to State Exchanges in developing corrective action 
plans to address issues that are identified. We discussed how this 
approach could reduce administrative burden on State Exchanges while 
maintaining the traditional role of State Exchanges in managing and 
operating their Exchanges, with HHS maintaining its role of overseeing 
State Exchange compliance with federal requirements through structured 
reporting processes. We sought comments on these proposals. After 
consideration of comments received, we are finalizing the amendments to 
Sec.  155.1200 as proposed. A summary of comments received and our 
responses to those comments appear below:
    Comment: Commenters generally expressed support for some of the 
proposed changes to the annual reporting and programmatic audit 
requirement. They expressed support for removal of the April 1st 
financial statement deadline as long as the new deadline accommodates 
the state budget cycles for all State Exchanges. Some

[[Page 71681]]

commenters supported the proposal to provide flexibility to specify the 
scope of the programmatic audit, such as focusing on eligibility and 
enrollment requirements under 45 CFR part 155 subparts D and E, while 
two commenters asked HHS to refrain from expanding the scope of the 
programmatic audit as it can divert funding from other Exchange 
functions and create administrative burden. Some commenters expressed 
concern with the timing and potential funding to implement the changes. 
These commenters urged HHS to provide State Exchanges with over a year 
of advanced notice to implement the changes, to ensure proper planning 
and funding.
    One commenter requested that HHS clarify the proposed requirement 
for the State Exchange's independent external auditor to use 
statistically valid sampling in their review of the State Exchange 
eligibility and enrollment transactions, noting that statistically 
significant sampling in the programmatic audit can be larger in scope 
and more costly in comparison to random sampling which can also 
identify programmatic issues. Another commenter recommended that HHS 
consider changing the frequency of the programmatic audit to biennially 
unless the programmatic audit shows irregularities.
    Another commenter urged HHS to clarify that the proposed changes to 
the programmatic audit specific to eligibility and enrollment 
activities do not pertain to SBE-FPs, since SBE-FPs rely on HHS and the 
federal platform to perform eligibility and enrollment functions.
    Response: We believe these proposed changes will strengthen our 
programmatic oversight and the program integrity of State Exchanges and 
thus are finalizing these amendments as proposed. As detailed in the 
proposed rule, these amendments are intended to allow for more targeted 
audits that focus HHS and State Exchange resources on compliance with 
particular Exchange program areas that have higher program integrity 
risks in a more consistent manner, rather than covering all program 
areas. These amendments are also intended to address requirements that 
are applicable only to a particular State Exchange model, in a more 
standardized manner. We are removing the April 1st deadline from Sec.  
155.1200(b)(1) to allow HHS to align the deadline for submission of the 
financial statement to HHS with the deadline for submission of SMART 
reports, currently June 1. Going forward, we anticipate establishing 
the deadline for submission of the financial statement and SMART report 
on an annual basis through guidance and would seek to accommodate state 
budget cycles to the maximum extent practical when setting these dates. 
The general scope of these audits remains the same, that is, under the 
new paragraph (d)(2), HHS may specify that an audit focus on compliance 
with subparts D and E of 45 CFR part 155, or other requirements under 
45 CFR part 155, as specified by HHS.\6\ However, we appreciate and 
considered the comments received. We understand that most State 
Exchanges negotiate their contracts with external auditing entities a 
year or more in advance and would need sufficient time to update their 
contracts to reflect any changes in the scope of the external 
programmatic audits. We also recognize that State Exchanges that 
operate their own eligibility and enrollment platforms would also need 
time to work with their contracted auditors to implement new procedures 
for testing the accuracy of eligibility determinations if their 
auditors have not previously employed such procedures for this purpose. 
Thus, subsequent to this rule, we will provide State Exchanges with 
technical operational guidance that will specify the first plan year 
for which changes to the scope of the programmatic audit would apply, 
taking into account the need to allow for a period of time for State 
Exchanges to implement the changes finalized in this rule.
---------------------------------------------------------------------------

    \6\ This is consistent with the scope for audits in the existing 
regulation at 45 CFR 155.1200(d)(2), which currently requires State 
Exchanges to ensure these audits address compliance with ``the 
requirements under this part.''
---------------------------------------------------------------------------

    In response to the comments regarding use of a statistically-
significant sampling methodology versus a random sampling methodology, 
we clarify that, in this rule, we are not specifying a particular 
sampling methology that must be used by all State Exchanges for testing 
the accuracy of eligibility determinations in the annual programmatic 
audits. In addition to State Exchanges and their contracted auditors 
using the generally accepted government auditing standards, CMS's 
technical operational guidance would also outline procedures the 
independent external auditor can chose to implement to assess whether a 
State Exchange is conducting accurate eligibility determinations and 
enrollment transactions under 45 CFR part 155 subparts D and E. Going 
forward we intend to provide State Exchanges with this technical 
operational guidance on an annual basis to outline the deadline for 
submission of the applicable year's reports, the scope of the 
applicable year's external programmatic audit, and the requirements 
under 45 CFR part 155 that are applicable to each State Exchange model. 
We intend to release this guidance around April each year, to align 
with our existing timeframe for providing guidance to State Exchanges 
on the annual SMART process, so that State Exchanges have sufficient 
time to prepare, and administrative burden is minimized to the extent 
practical. Lastly, we agree with the overall notion of taking a risk-
based approach towards determining the frequency by which State 
Exchanges are required to conduct the external programmatic audit. 
Specifically, we considered the recommendation to change the frequency 
of State Exchange programmatic audits to biennially unless the audit 
shows irregulatrities. We decline to make this change at this time 
because some State Exchanges currently are addressing active findings 
or corrective actions as a result of past programmatic audits, which we 
believe annual re-evaluations are still appropriate. However, we will 
consider this recommendation going forward and may propose to decrease 
the frequency of State Exchange audits in future rule-making.
    Comment: Some commenters requested that certain regulatory language 
remain unchanged or be modified. One commenter urged HHS to retain the 
language under Sec. Sec.  155.1200(b)(2) and 155.1200(d)(2) because the 
proposed language is broader and targeted auditing can create 
administrative burden. Another commenter requested that HHS limit the 
scope of the programmatic audit under Sec.  155.1200(d)(2) to solely 
cover the eligibility and enrollment requirements under 45 CFR part 155 
subparts D and E and remove the language that allows HHS to include 
other Exchange requirements under 45 CFR part 155 in the scope of the 
programmatic audit. Another commenter requested that Sec.  
155.1200(d)(2) remain unchanged because the general reference to 
compliance with 45 CFR part 155 is consistent with the HHS's stated 
intent to specify the scope for programmatic audits, and recommended 
that HHS make clear that the proposed changes to the review of State 
Exchange eligibility determinations under Sec.  155.1200(d)(4) applies 
to eligibility determinations for QHP/APTC only, and not to Medicaid 
eligibility determinations.
    Response: We believe the proposed changes under Sec.  155.1200(d) 
will strengthen our programmatic oversight and the program integrity of 
State Exchanges and provide appropriate

[[Page 71682]]

flexibility to target oversight and enforcement activities, as well as 
HHS and State Exchange resources, which, in turn, will reduce burden. 
As State Exchanges continue to evolve and mature, HHS will be able to 
focus oversight efforts, including making refinements to annual 
compliance reporting tools (such as the SMART), in response to changes 
in federal policy, as well as federal program integrity priorities and 
processes. We further note that, while these amendments provide 
flexibility for HHS to target these audits, they also retain the 
authority for HHS to require the audits to address other requirements 
under 45 CFR part 155, as specified by HHS. As such, HHS can still 
require audits with a broader scope when deemed appropriate or 
necessary. While we generally intend to focus programmatic audits on 
those Exchange functions most likely to impact program integrity, such 
as eligibility verifications, we do not agree with commenters that 
these audits should only focus on eligibility and enrollment functions 
because there may be changes to federal policy, priorities, or 
processes that result in the need for HHS to focus our oversight on 
other Exchange functions besides eligibility and enrollment. Also, not 
all State Exchanges perform their own eligibility and enrollment 
functions. For instance, SBE-FPs rely on HHS and the federal platform 
to perform their eligibility and enrollment functions, and thus HHS's 
oversight of SBE-FPs would need to focus on other Exchange functions 
that are more relevant or critical to the SBE-FP model. That is why HHS 
retains the authority, and the flexibility, under the amended Sec.  
155.1200(d)(2) to require the audits to address other requirements 
under 45 CFR part 155, as specified by HHS. In addition, the amendments 
to Sec.  155.1200(d)(2) finalized in this rule give HHS flexibility to 
specify the Exchange functions that are most pertinent to the State 
Exchange model and most likely to impact program integrity. In response 
to comments, we clarify that the changes to subparagraph Sec.  
155.1200(d)(4) apply to State Exchange eligibility determinations for 
QHP/APTC, and not to Medicaid eligibility determinations. We recognize 
that not all State Exchanges make Medicaid eligibility determinations, 
but also wish to clarify that in accordance with Sec.  155.302, State 
Exchanges must conduct a MAGI-based assessment or determination of 
eligibility for Medicaid as part of determining eligibility for APTC. 
HHS will provide further guidelines on the auditing of State Exchange 
eligibility and enrollment transactions, and any other audit 
requirements applicable in a given year, in the annual technical 
operational guidance. We further clarify that the amendments to Sec.  
155.1200(b)(2) do not reflect an expansion of State Exchange reporting 
obligations and instead capture the existing annual compliance reports 
(such as the SMART), that encompass eligibility and enrollment 
reporting, as well as compliance across other Exchange program 
requirements under 45 CFR part 155, that State Exchanges currently 
submit to HHS.
    Comment: One commenter requested transparency regarding HHS's 
oversight of the Federally-facilitated Exchanges' (FFEs') compliance 
with oversight standards. The commenter recommended that HHS publish a 
comparison of compliance standards and activities to ensure the FFEs 
and State Exchanges are held to the same oversight requirements. 
Another commenter generally supported the proposed changes as enhancing 
the oversight and transparency of the State Exchanges.
    Response: We appreciate and strive for transparency in the 
oversight of all Exchanges and will consider these suggestions. 
However, we note that the oversight standards under Sec.  155.1200, 
including the proposed amendments, are specific to State Exchanges. 
Therefore, the comments related to FFE oversight standards are outside 
the scope of this rulemaking. We also note that the FFEs are overseen 
through the efforts of other federal entities such as the Government 
Accountability Office and the HHS Office of the Inspector General.
    Comment: Several commenters opposed HHS's proposed changes to the 
annual reporting and programmatic audit requirements for State 
Exchanges. They stated that the proposed language expands federal 
authority and can add administrative burden to State Exchanges. Some 
commenters disagreed that the Federalism implications are substantially 
mitigated since the proposed changes only add specificity to existing 
requirements, stating that the proposed changes are open-ended and 
remove specificity. Additionally, some of these commenters expressed 
concern that HHS is eliminating the requirement of eligibility and 
enrollment reports under Sec.  155.1200(b)(2). These commenters also 
raised concerns with the disclosure of consumer information, as well as 
negative consumer impacts, due to the additional oversight on 
eligibility determinations being proposed.
    Response: We believe these changes will strengthen our programmatic 
oversight and the program integrity of State Exchanges. Further, as 
detailed above, the amendments do not represent an expansion of HHS's 
authority to oversee and monitor compliance of State Exchanges. Under 
the existing language at Sec.  155.1200(d)(2), State Exchanges are 
currently required to ensure their respective annual programmatic 
audits address compliance with ``the requirements under this part.'' 
The changes to this provision finalized in this rule provide HHS with 
the flexibility to target the scope of the audits to the requirements 
applicable to each State Exchange model under 45 CFR part 155 and that 
most impact program integrity, which should generally reduce the 
administrative burdens associated with these audits. For example, we 
anticipate tailoring the requirements regarding audit of eligibility 
and enrollment activities by State Exchange model. Since SBE-FPs rely 
on the federal platform for eligibility and enrollment functions, we 
believe that they should not be subject to the same audit requirements 
as State Exchanges that perform all eligibility and enrollment 
activities because they operate their own technology platform for such 
activities.
    We also clarify that we are not eliminating eligibility and 
enrollment reporting under Sec.  155.1200(b)(2). The amendments 
finalized to that provision reflect that HHS already requires State 
Exchanges to submit annual reporting (such as the SMART) that encompass 
eligibility and enrollment reporting, along with other information 
about compliance with requirements in other subparts under 45 CFR part 
155. These changes recognize that HHS has come to utilize the SMART 
along with the annual programmatic and financial audit reports as the 
primary oversight tools to oversee State Exchange compliance with the 
applicable requirements under 45 CFR part 155, which includes 
compliance with eligibility and enrollment requirements. We further 
clarify that if we need additional information about a State Exchange's 
compliance with applicable requirements beyond what is reported through 
SMART, we would leverage the new flexibility under the new Sec.  
155.1200(d)(2) to conduct a targeted audit.
    Finally, in response to the comments expressing concern about the 
increased risk of disclosure of consumer information as a result of the 
additional oversight and auditor review of individual eligibility 
determinations made by State Exchanges that is contemplated in this 
rule, we note that,

[[Page 71683]]

as part of the responsibilities of State Exchanges and their contracted 
entities in handling individual consumer data associated with core 
Exchange functions such as eligibility, enrollment, and consumer 
assistance, State Exchanges and their contracted non-Exchange entities 
must always comply with the privacy and security requirements under 
Sec. Sec.  155.260 and 155.280 with respect to the protection and 
disclosure of personally identifiable information. Additionally, under 
Sec.  155.285, State Exchanges and their contracted entities are 
subject to civil monetary penalties for improper use or disclosure of 
personally identifiable information. Finally, HHS has authority under 
Sec.  155.280 to conduct audits and investigations to ensure compliance 
with Exchange privacy and security standards, and may pursue civil, 
criminal or adminstirative proceedings or actions as determined 
necessary.
    After considering the comments received in response to the proposed 
rule and for the reasons discussed above, we are finalizing the 
modifications to Sec.  155.1200.

B. Health Insurance Issuer Standards Under the Affordable Care Act, 
Including Standards Related to Exchanges

1. Segregation of Funds for Abortion Services (Sec.  156.280)
    We proposed an amendment at Sec.  156.280(e)(2) relating to billing 
and payment of the policy holder's portion of the premium attributable 
to abortion services for which appropriated funds may not be used. 
Since 1976, Congress has included language, commonly known as the Hyde 
Amendment, in the Labor, Health and Human Services, Education and 
Related Agencies appropriations legislation.\7\ The Hyde Amendment, as 
currently in effect, permits federal funds subject to its funding 
limitations to be used for abortion services only in the limited cases 
of rape, incest, or if a woman suffers from a physical disorder, 
physical injury, or physical illness, including a life-endangering 
physical condition caused by or arising from the pregnancy itself, that 
would, as certified by a physician, place the woman in danger of death 
unless an abortion is performed (Hyde abortion services). Generally, 
when appropriated funds are subject to the Hyde Amendment's funding 
limitations, an agency is prohibited, among other things, from using 
those funds to pay for coverage of abortion beyond these specific 
limited exceptions (non-Hyde abortion services). Section 1303(b)(2) of 
the PPACA prohibits the issuer of a QHP offering coverage for abortion 
services that are not exempt from the Hyde Amendment's ban on the use 
of federal funds to pay for certain abortions, from using any amount 
attributable to PTC (including APTC) or CSRs (including advance 
payments of those funds to an issuer, if any) for abortions for which 
federal funds are prohibited, ``based on the law as in effect as of the 
date that is 6 months before the beginning of the plan year involved.'' 
\8\
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    \7\ Accordingly, the Hyde Amendment is not permanent Federal 
law, but applies only to the extent reenacted by Congress from time 
to time in appropriations legislation.
    \8\ Section 1303(b)(1)(B)(i) of the PPACA.
---------------------------------------------------------------------------

    Section 1303 of the PPACA outlines specific accounting and notice 
requirements that QHPs covering non-Hyde abortion services must follow 
to ensure that no federal funding is used to pay for services for which 
public funds are prohibited. Under sections 1303(b)(2)(B) and (b)(2)(D) 
of the PPACA, as implemented in Sec.  156.280(e)(2)(i) and (e)(4), QHP 
issuers must collect a separate payment from each enrollee in such a 
plan without regard to the enrollee's age, sex, or family status, for 
an amount equal to the greater of the actuarial value of coverage of 
abortion services for which public funding is prohibited, or $1 per 
enrollee per month.
    Section 1303(b)(2)(D) of the PPACA establishes certain requirements 
with respect to a QHP issuer's estimation of the actuarial value of 
non-Hyde abortion services. Under section 1303(b)(2)(D) of the PPACA, 
the QHP issuer ``may take into account the impact on overall costs of 
the inclusion of such coverage, but may not take into account any cost 
reduction estimated to result from such services, including prenatal 
care, delivery, or postnatal care.'' The QHP issuer is also required to 
estimate such costs as if such coverage were included for the entire 
population covered, and may not estimate such a cost at less than $1 
per enrollee, per month. If an enrollee's premium is paid through 
employee payroll processes, section 1303(b)(2)(B) of the PPACA requires 
that the separate payments ``shall each be paid by a separate 
deposit.'' Accordingly, issuers that offer QHPs that provide coverage 
of non-Hyde abortion services must collect a separate payment of no 
less than $1 per enrollee in the plan per month, regardless of the 
actuarial value of coverage of non-Hyde abortion services and 
regardless of whether premiums are paid directly by enrollees or 
through payroll deductions.
    In certain rare scenarios, the FFEs' system allocated an amount of 
APTC to a QHP such that the share of the aggregate premium attributable 
to coverage of non-Hyde abortion services is less than $1, which falls 
below the minimum requirement under section 1303 of the PPACA. We made 
system changes for the open enrollment period for plan year 2019 to 
ensure that the minimum premium amount of $1 per enrollee per month is 
assigned to all enrollments into plans offering coverage of non-Hyde 
abortion services, so that issuers can separately collect this amount 
directly from enrollees for the portion of the total premium 
attributable to coverage of non-Hyde abortion services.
    Pursuant to section 1303(b)(2)(C) of the PPACA, as implemented at 
Sec.  156.280(e)(3), QHP issuers must segregate funds for coverage of 
non-Hyde abortion services collected from enrollees into a separate 
allocation account that is to be used to pay for non-Hyde abortion 
services. Thus, if a QHP issuer disburses funds for a non-Hyde abortion 
on behalf of an enrollee, it must draw those funds from the segregated 
allocation account. The account cannot be used for any other 
purpose.\9\
---------------------------------------------------------------------------

    \9\ This means that funds from the allocation account into which 
premium amounts attributable to the non-Hyde abortion service 
benefit must be deposited are the only funds that may be used to pay 
for non-Hyde abortion services. It should not be read to suggest 
that the funds in the separate allocation account may not be used to 
cover administrative costs associated with coverage of non-Hyde 
abortion services. See 42 U.S.C. 18023(b)(2)(D)(ii)(I) (when 
estimating per member, per month cost of non-Hyde abortion services, 
issuers may take into account the impact on overall costs of the 
inclusion of such coverage).
---------------------------------------------------------------------------

    Section 1303 of the PPACA and current implementing regulations at 
Sec.  156.280 do not specify the method a QHP issuer must use to comply 
with the separate payment requirement under section 1303(b)(2)(B)(i) of 
the PPACA and Sec.  156.280(e)(2)(i). In the 2016 Payment Notice, we 
provided guidance with respect to acceptable methods that a QHP issuer 
offering coverage of non-Hyde abortion services on an individual market 
Exchange may use to comply with the separate payment requirement. We 
stated that the QHP issuer could satisfy the separate payment 
requirement in one of several ways, including by sending the enrollee a 
single monthly invoice or bill that separately itemizes the premium 
amount for coverage of non-Hyde abortion services; sending the enrollee 
a separate monthly bill for these services; or sending the enrollee a 
notice at or soon after the time of enrollment that

[[Page 71684]]

the monthly invoice or bill will include a separate charge for such 
services and specify the charge. In the 2016 Payment Notice, we also 
stated that an enrollee may make the payment for coverage of non-Hyde 
abortion services and the separate payment for coverage of all other 
services in a single transaction. On October 6, 2017, we released a 
bulletin that discussed the statutory requirements for separate 
payment, as well as this previous guidance with respect to the separate 
payment requirement.\10\
---------------------------------------------------------------------------

    \10\ CMS Bulletin Addressing Enforcement of Section 1303 of the 
Patient Protection and Affordable Care Act (October 6, 2017), 
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Section-1303-Bulletin-10-6-2017-FINAL-508.pdf.
---------------------------------------------------------------------------

    As explained in the proposed rule, HHS now believes that some of 
the methods for billing and collection of the separate payment for 
coverage of non-Hyde abortion services described as permissible in the 
preamble to the 2016 Payment Notice do not adequately reflect 
Congress's intent. We believe Congress intended that QHP issuers 
collect two distinct (that is, ``separate'') payments, one for the 
coverage of non-Hyde abortion services, and one for coverage of all 
other services covered under the policy, rather than simply itemizing 
these two components in a single bill, or notifying the enrollee that 
the monthly invoice or bill will include a separate charge for these 
services.
    We proposed an amendment at Sec.  156.280(e)(2) relating to billing 
and payment of the policy holder's portion of the premium attributable 
to coverage of non-Hyde abortion services to reflect this 
interpretation of the statute. Specifically, we proposed that, as of 
the effective date of this final rule, QHP issuers (1) send an entirely 
separate monthly bill to the policy holder, the individual who is the 
party legally responsible for the payment of premiums (which we refer 
to in this final rule as the ``policy holder'') for only the portion of 
premium attributable to coverage of non-Hyde abortion services, and (2) 
instruct the policy holder to pay the portion of their premium 
attributable to coverage of non-Hyde abortion services in a separate 
transaction from any payment the policy holder makes for the portion of 
their premium not attributable to coverage of non-Hyde abortion 
services. We also proposed that if a policy holder pays the entire 
premium in a single transaction (both the portion attributable to 
coverage of non-Hyde abortion services, as well as the portion 
attributable to coverage for other services), the QHP issuer would not 
be permitted to refuse to accept such a combined payment on the basis 
that the policy holder did not send payment in two separate 
transactions as requested by the QHP issuer, and to then terminate the 
policy, subject to any applicable grace period, for non-payment of 
premiums. We also stated that the QHP issuer would be expected to 
counsel enrollees to pay in two separate transactions in the future. 
Finally, we proposed a technical change to Sec.  156.280(e)(2)(iii), as 
redesignated, to insert an appropriate cross reference to the 
explanation of the separate payments.
    We are finalizing these policies at Sec.  156.280(e)(2), but with 
several changes explained below. We are also finalizing the technical 
revision to Sec.  156.280(e)(2)(iii) as redesignated, on which we 
received no comments, and are revising the heading of Sec.  156.280 so 
that it accurately describes the new requirements we are finalizing in 
this final rule.
    Comment: Most commenters objected to the proposed changes to issuer 
billing for the portion of the premium attributable to coverage of non-
Hyde abortion services, asking that we withdraw the proposals 
altogether. A minority of commenters summarily supported the policy.
    Nearly all commenters objecting to the proposals stated that 
separately billing for one specific service would be an unnecessary 
change that would not enhance program integrity with respect to 
enrollee transparency or appropriate use of federal funds. These 
commenters noted that current requirements already adequately comply 
with the statute and ensure appropriate segregation of funds, without 
imposing the operational and administrative burdens of the proposed 
approach. These commenters asserted that the current regulatory 
structure allows enrollees to make and issuers to accept a single 
transfer of funds for the full amount of an enrollee's premium payment 
including the amount attributable to coverage of non-Hyde abortion 
services, while still ensuring that the funds are ultimately segregated 
appropriately. Many commenters noted that requiring a separate bill and 
instructing enrollees to pay in separate transactions would be against 
industry practice, which permits one single bill outlining charges and 
allows for enrollees to make payments using a single transfer of funds 
which can be administratively separated by the insurer after payment is 
received.
    Some commenters who supported the proposed changes stated that 
section 1303 of the PPACA contains an unambiguous statutory command 
that issuers separately bill and collect payments for the portion of a 
policy holder's premium attributable to coverage of non-Hyde abortion 
services. These commenters stated that the proposals are necessary to 
remedy incorrect methods for billing and payment and will help to 
ensure issuer compliance with the segregation of funds and the 
requirement to collect separate payments under section 1303 of the 
PPACA.
    Nearly all objecting commenters stated that the proposals would 
cause considerable and unnecessary confusion and frustration for 
enrollees that may jeopardize their health insurance coverage. 
Commenters expressed concern that these billing changes would make it 
more difficult for policy holders to pay their premium bills, and could 
result in coverage being terminated for unintentional non-payment. 
Commenters expressed concerns that, despite issuer notices and 
communications to explain the second bill and separate payment 
requirement, enrollees would likely not understand this change in 
billing.
    Among the many scenarios that commenters asserted could result in 
enrollees failing to pay the separate bill, commenters noted that 
enrollees might not realize or understand that there is a separate bill 
covering different services under their plan; enrollees may not realize 
that such payment is mandatory in order to fully satisfy their premium 
liability each month and avoid termination of coverage; or enrollees 
may not notice a second bill since it would be delivered in a separate 
mailing with which they are unfamiliar. Commenters expressed concern 
that in any of these scenarios, the enrollee would enter a grace period 
and, in most cases, have 90 days from the date of the missed payment to 
reconcile their balance, resulting in enrollees who fail to do so 
losing their health insurance coverage. Commenters expressed concern 
that such slight enrollee confusion as a result of the proposal could 
lead to the complete loss of coverage.
    Commenters also stated that the proposal to allow enrollees to 
``not be penalized'' for sending back a combined payment, would only 
send conflicting messages to enrollees and add to their confusion. 
Commenters stated that our proposal that issuers could accept combined 
payments from enrollees, but would then be expected to counsel 
enrollees to pay in two separate payments in the future, requiring 
issuers to repeatedly instruct enrollees to pay in separate 
transactions for each bill despite not being able to penalize enrollees 
if they continuously fail to do

[[Page 71685]]

so, adds additional burden on issuers and will lead to increased calls 
from confused enrollees.
    Many commenters stated they appreciated the enrollee protections 
prohibiting QHP issuers from refusing to accept a combined payment or 
terminating an enrollee's coverage on this basis. However, commenters 
expressed concerns that this protection alone would not be enough for 
enrollees who fail to pay the second bill entirely and asked that HHS 
add protections to the policy to avoid termination of coverage for 
enrollees who inadvertently fail to make the additional payment due to 
confusion about the separate bill.
    Response: We continue to believe that the statute contemplates 
issuers billing separately for coverage of non-Hyde abortion services, 
consistent with Congress's intent that issuers collect separate 
payments for such services. Requiring one bill for the portion of the 
policy holder's premium attributable to coverage of non-Hyde abortion 
services and a separate bill for the portion of the policy holder's 
premium attributable to coverage of all other services covered under 
the QHP will better align with the intent of section 1303 of the PPACA.
    HHS intentionally sought comment on ways to mitigate possible 
enrollee confusion from these proposals. After considering these 
comments, we believe there may be less confusing and less burdensome 
ways to implement these billing changes while also fulfilling section 
1303 of the PPACA's statutory mandates.
    Therefore, we are finalizing, as proposed in a new paragraph at 
Sec.  156.280(e)(2)(ii)(A), the requirement that QHP issuers must send 
an entirely separate monthly bill to the policy holder for only the 
portion of the premium attributable to coverage of non-Hyde abortion 
services. However, in an effort to mitigate issuer burden associated 
with added postage and mailing costs, we will not require separate 
mailings with separate postage, as proposed. Rather, we are codifying 
that the QHP issuer may include the separate bill for coverage of non-
Hyde abortion services in the same envelope or mailing as the bill for 
the portion of the premium attributable to coverage of all other 
services. As a result of finalizing this proposal, and to more 
accurately reflect the contents of Sec.  156.280, we are making a 
technical change to revise the section heading of Sec.  156.280 to now 
read, ``Separate billing and segregation of funds for abortion 
services.''
    We note that when issuers send a separate paper bill for the 
portion of the premim attributable to coverage of non-Hyde abortion 
services in the same mailing as the bill for the other portion of the 
policy holder's premium, the bills must remain distinct and separate, 
on separate pieces of paper with separate explanations of the charges 
to ensure the policy holder understands the distinction between the two 
bills and understands that they are expected to pay the separate bills 
in separate transactions.
    We are also codifying that issuers transmitting bills through email 
or other electronic means will still be required to transmit the 
separate bill for coverage of non-Hyde abortion services in a separate 
email or electronic communication than for the bill for the portion of 
the premium attributable to coverage of all other services. We assume 
that bills sent electronically can be sent at minimal cost such that 
requiring separate electronic communications will not significantly 
increase the burden this requirement places on issuers. We also believe 
policy holders are more likely to make a separate payment for coverage 
of non-Hyde abortion services when they receive a separate bill for 
such amount, and that receiving the separate bill in a separate 
communication further bolsters that likelihood. In deciding to finalize 
that QHP issuers may send the separate bill in a single mailing when 
sending paper bills, but must send the separate bill in a separate 
email or electronic communication when sending bills electronically, we 
weighed the goal of separate payment with the competing concern of 
issuer burden resulting from sending separate paper bills, and the 
comparatively low burden in sending separate electronic bills.
    We are also finalizing, as proposed in a new paragraph at Sec.  
156.280(e)(2)(ii)(B) the requirement that issuers must instruct policy 
holders to pay the separate bill in a separate transaction. QHP issuers 
should make reasonable efforts to collect the payment separately. 
However, we continue to believe that potential loss of coverage would 
be an unreasonable result of an enrollee paying in full, but failing to 
adhere to the QHP issuer's requested payment procedure. Therefore, at 
Sec.  156.280(e)(2)(ii)(B) we are also codifying, with minor non-
substantive revisions, that the QHP issuer would not be permitted to 
refuse a combined payment on the basis that the policy holder did not 
send two separate payments as requested by the QHP issuer, and to then 
terminate the policy for non-payment of premiums. QHP issuers that 
receive combined enrollee premiums in a single payment must treat the 
portion of the premium attributable to coverage of non-Hyde abortion 
services as a separate payment and must disaggregate the amounts into 
the separate allocation accounts, consistent with Sec.  
156.280(e)(2)(iii).
    To mitigate enrollee confusion and satisfy the requirement to 
instruct policy holders to pay the separate bill in a separate 
transaction, QHP issuers should consider including--in the email or 
electronic communication containing the bill for the portion of the 
policy holder's premium not attributable to coverage of non-Hyde 
abortion services--language notifying policy holders that they will be 
receiving a second, separate email or electronic communication 
containing a separate bill for the portion of their premium 
attributable to coverage of non-Hyde abortion services that they should 
pay in a separate transaction. Regardless of whether the QHP issuer 
sends the bills as paper copies in a mailing or sends the bills through 
electronic communications, the QHP issuer must instruct their enrollees 
to pay the separate bill in a separate transaction and must still 
produce an invoice or bill that is distinctly separate from the invoice 
or bill for the other portion of the policy holder's premium that is 
not attributable to coverage of non-Hyde abortion coverage, whether in 
paper or electronic format. We also suggest that issuers state clearly 
for policy holders on both bills that the policy holder is receiving 
two bills to cover the total amount of premium due for the coverage 
period, that the policy holder's total premium due is inclusive of the 
amount attributable to coverage of non-Hyde abortion services, and that 
the policy holder should make separate payments for each bill. We 
believe including these statements on each bill, will help policy 
holders to understand that they are receiving two bills for the 
premiums due for the payment period, the total amount of premium they 
owe, and the need to make a separate payment for each bill. We believe 
this will help to ensure that policy holders return the full monthly 
amount due, thus preventing policy holders from entering grace periods 
for non-payment of the premium amounts for the non-Hyde abortion 
coverage.
    We believe these changes will assist in managing enrollee 
confusion. However, we also acknowledge that additional outreach and 
education may still be necessary on the part of issuers and states to 
explain to enrollees why they are receiving a separate bill for a 
relatively small amount for which they are expected to submit payment 
in a separate transaction. As indicated above, we believe that QHP 
issuers

[[Page 71686]]

should explain to the policy holder in layperson terms on the separate 
bill for coverage non-Hyde abortion services, or otherwise communicate 
to enrollees through enrollee outreach and education, that non-payment 
of any premium due (including non-payment of the portion of the policy 
holder's premium attributable to coverage of non-Hyde abortion 
services) would continue to be subject to state and federal rules 
regarding grace periods (unless the QHP issuer elects to take advantage 
of the enforcement discretion we outline later in this section), 
clarifying for policy holders that failure to pay the portion of the 
premium attributable to coverage of non-Hyde abortion services could 
ultimately result in termination of coverage.
    We believe that including explanatory language on the bills as well 
as additional outreach and education by QHP issuers will decrease the 
likelihood that policy holders would inadvertently fail to pay the 
separate bill for the portion of their premium attributable to coverage 
of non-Hyde abortion services. However, we acknowledge commenters' 
concerns that, even with fulsome outreach and education efforts to 
explain the billing scheme to the policy holder, consumer confusion 
could still lead to inadvertent coverage losses. This risk may be 
especially acute for enrollees whose plan choices likely were not 
motivated by the plan's coverage of non-Hyde abortion services, such as 
men purchasing a QHP solely for themselves, consumers buying coverage 
for babies or toddlers, and those who otherwise may be unaware that the 
plan covers non-Hyde abortion services. However, we note that this risk 
is mitigated by the steps we have taken to improve transparency 
regarding QHP offerings, to make it easier for consumers to select QHPs 
that they believe are best suited to their needs and preferences, such 
as information to more readily identify QHPs that offer coverage of 
non-Hyde abortion services.\11\
---------------------------------------------------------------------------

    \11\ ``Frequently Asked Questions for Agents, Brokers, and 
Assisters Providing Consumers with Details on Plan Coverage of 
Certain Abortion Services'' (November 21, 2018), available at 
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQ-on-Providing-Consumers-with-Details-on-Plan-Coverage-of-Certain-Abortion-Services.pdf.
---------------------------------------------------------------------------

    To address the risk of terminations related to inadvertent failure 
to pay the separately billed amount for coverage of non-Hyde abortion 
services, we intend to propose further rulemaking to change our 
regulations including, for example, our regulations governing 
termination for non-payment of premiums.\12\ Although QHP issuers can 
implement premium payment thresholds under Sec.  155.400(g), those 
thresholds may not be effective at preventing termination of coverage 
for policy holders receiving higher APTC amounts who would have greater 
difficulty meeting the issuer's premium payment threshold pursuant to 
Sec.  155.400(g). Until we can finalize regulatory changes through a 
separate rulemaking, we will exercise enforcement discretion as an 
interim step. Specifically, HHS will not take enforcement action 
against a QHP issuer that adopts and implements a policy, applied 
uniformly to all its QHP enrollees, under which an issuer does not 
place an enrollee into a grace period and does not terminate QHP 
coverage based solely on the policy holder's failure to pay the 
separate payment for coverage of non-Hyde abortion services. In 
accordance with non-discrimination rules applicable to QHP issuers, we 
would expect issuers to apply such a policy uniformly to all of their 
enrollees for the duration of the applicable plan year. We also note 
that if a QHP issuer chooses to take this approach, the QHP issuer 
would still be prohibited from using any federal funds for coverage of 
non-Hyde abortion services. Moreover, the QHP issuer would still be 
required to collect the premium for the non-Hyde abortion coverage, 
which means that the QHP issuer cannot relieve the policy holder of the 
duty to pay the amount of the premium attributable to coverage for non-
Hyde abortion services. This enforcement posture will take effect upon 
the effective date of the separate billing requirements under 45 CFR 
156.280, which is 6 months after publication of this final rule in the 
Federal Register. We encourage states and State Exchanges to take a 
similar enforcement approach.
---------------------------------------------------------------------------

    \12\ CMS has yet to make determinations regarding specific 
requirements or rule changes CMS will propose to address the risk of 
terminations related to inadvertent failures to pay the separately 
bill amounts for coverage of non-Hyde abortion services. 
Accordingly, although CMS will undertake the described rulemaking, 
nothing in this preamble discussion should be construed as a 
representation or guarantee that CMS will propose changes to any 
specific rule or requirement.
---------------------------------------------------------------------------

    We acknowledge that the enforcement posture described above may not 
mitigate all concerns identified by commenters. Some commenters 
expressed concern that the lack of transparency under current section 
1303 billing requirements has contributed to unknowing purchases of 
QHPs that include coverage of non-Hyde abortion services by consumers 
who object to purchasing such coverage. As noted above, this risk is 
mitigated by the steps the FFEs have taken to improve transparency of 
the coverage of non-Hyde abortion services under FFE QHPs.\13\ However, 
even where consumers who hold religious or moral objections to coverage 
of non-Hyde abortion services may more easily detect whether a QHP 
offers coverage to which they object, they may still be deciding 
between purchasing a QHP that covers non-Hyde abortion services, or 
else going without the coverage they need, because there may not be a 
QHP available on the Exchange that omits coverage for non-Hyde abortion 
services.
---------------------------------------------------------------------------

    \13\ ``Frequently Asked Questions for Agents, Brokers, and 
Assisters Providing Consumers with Details on Plan Coverage of 
Certain Abortion Services'' (November 21, 2018), available at 
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQ-on-Providing-Consumers-with-Details-on-Plan-Coverage-of-Certain-Abortion-Services.pdf.
---------------------------------------------------------------------------

    Until we are able to address these concerns through future 
rulemaking or other appropriate action, we also will not take 
enforcement action against QHP issuers that modify the benefits of a 
plan either at the time of enrollment or during a plan year to 
effectively allow enrollees to opt out of coverage of non-Hyde abortion 
services by not paying the separate bill for such services. This would 
result in the enrollees having a modified plan that does not cover non-
Hyde abortion services, meaning that they would no longer have an 
obligation to pay the required premium for such services. We recognize 
that a QHP issuer's ability to make changes to its QHPs to implement a 
policy holder's opt out would be subject to applicable state law. We 
encourage states and State Exchanges to take an enforcement approach 
that is consistent with the one we intend to take, as described in this 
section.
    Where a QHP issuer allows an enrollee to opt out of coverage of 
non-Hyde abortion services by not paying the separate bill for such 
services, the user fee a QHP issuer in an FFE or SBE-FP would pay would 
continue to be based on the original premium, which includes the 
portion of the premium attributable to non-Hyde abortion coverage. This 
is being done for operational reasons and issuer convenience, as making 
changes to the user fee system for FFEs and SBE-FPs to reflect a 
reduction in premium would result in only a minimal reduction in user 
fees owed. We do not believe the minimal reduction justifies the 
additional expense to FFEs and SBE-FPs related to the development of 
systems to receive and process such

[[Page 71687]]

reports (which could then result in higher user fees in the future) or 
the additional cost to QHP issuers related to reporting the minimal 
changes in premiums.
    We expect QHP issuers taking this approach to take appropriate 
measures to distinguish between a policy holder's inadvertent non-
payment of the separate bill for coverage of non-Hyde abortion services 
and a policy holder's intentional nonpayment of the separate bill. A 
policy holder who inadvertently fails to pay the separate bill may have 
failed to pay because of unfamiliarity with receiving a separate bill 
for this portion of their premium and may still wish to retain coverage 
for non-Hyde abortion services if provided the opportunity to rectify 
nonpayment of the separate bill. A policy holder who intentionally does 
not pay the separate bill is likely to have made the conscious choice 
to opt-out of such coverage. To help ensure any modifications made by a 
QHP issuer under this enforcement approach to a policy holder's plan 
align with the policy holder's intent, the QHP issuer could include on 
the separate bill for coverage of non-Hyde abortion services or 
separate electronic communication an option (such as a check box or 
option button) where the policy holder can affirmatively indicate their 
intent to opt-out of such coverage by not paying the separate bill. We 
also recommend including an explanation for the policy holder that by 
affirmatively opting out, the policy holder would no longer have 
coverage for non-Hyde abortion services and would no longer have an 
obligation to pay the required premium for such services.
    To be clear, we intend that a policy holder's opt-out would have to 
be applied to all persons in the enrollment group under the policy. For 
example, if the policy holder does not pay the separate bill for the 
portion of the premium attributable to non-Hyde abortion coverage and 
therefore opts out of coverage for non-Hyde abortion, this opt-out 
would be applicable to all persons in the policy holder's enrollment 
group, such as the policy holder's spouse and/or family if they are 
also covered under the policy holder's policy. Further, our exercise of 
enforcement discretion would only permit issuers to make one-time 
changes to remove coverage of non-Hyde abortion services from the QHP 
coverage.
    Accordingly, once a policy holder opts out of coverage for non-Hyde 
abortion services, the policy holder would not be allowed to retract 
their opt-out decision and reinstate coverage of non-Hyde abortion 
services for that benefit year, by paying premiums that could cover a 
portion of premium attributable to coverage of non-Hyde abortion 
services. Thus, an opt-out would be effective for the remainder of the 
benefit year.
    Unlike the enforcement discretion policy we announce above to 
mitigate risk of inadvertent terminations, this enforcement posture 
will become effective on the effective date of this final rule, which 
will be 60 days after its publication in the Federal Register. The 
separate billing requirements we finalize here under 45 CFR 156.280 
will address, among other things, stakeholder comments that the lack of 
transparency under current section 1303 billing requirements has 
contributed to unknowing purchases of QHPs that include coverage of 
non-Hyde abortion services by consumers who object to purchasing such 
coverage. Because the new billing requirements under these final rules 
will not take effect upon finalization of these rules, we believe it is 
important to take this enforcement posture as soon as possible to 
provide relief for the lack of transparency under current QHP billing 
requirements.
    We are taking this approach to maintain protections against adverse 
selection, while mitigating the serious negative risks of coverage loss 
by enrollees who might experience difficulties adjusting from the 
manner in which enrollees are accustomed to paying for insurance 
coverage or services under a single plan or contract. These interim 
policies will also provide relief to persons who may unknowingly 
purchase coverage to which they object because of the lack of 
transparency under current QHP billing requirements that do not require 
separate bills for non-Hyde abortion coverage. We believe these interim 
enforcement policies strike an appropriate balance between honoring 
PPACA section 1303's requirement for collection of separate payments, 
protecting enrollees against inadvertent losses of coverage, and 
ensuring all enrollees have access to coverage that meets their needs 
and that does not result in their supporting coverage for non-Hyde 
abortion services to which they object.
    Comment: Commenters stated that HHS greatly underestimated the 
burden on issuers caused by these proposals. Commenters stated that the 
proposed rule's analysis of the expected costs and benefits was 
incomplete, such that HHS cannot accurately determine whether the 
benefits outweigh the quantitative and qualitative costs to justify 
finalizing the proposals. Many commenters stated that the burden and 
costs far outweigh any benefit and, as such, the proposals should not 
be finalized.
    Commenters also stated that requiring issuers to send the separate 
bill in a different envelope or separate email communication would cost 
QHPs significantly more resources than HHS estimated for the multiple 
mailings, email communications, and personnel hours spent managing 
enrollee confusion, termination notices, and multiple bills. For 
example, commenters noted requiring a separate mailing would double the 
mailing and postage costs associated with current issuer billing. 
Commenters also explained that the technical build issuers would need 
to implement to comply with these proposals would be both complex and 
time consuming, and would alone require substantial new upfront and 
annual costs for issuers that HHS did not account for. In general, 
commenters expressed concerns that requiring separate billing and 
instructing enrollees to make separate payments for a single policy 
would create substantial new operational administrative costs for 
health insurance issuers and, subsequently, for the enrollees they 
serve.
    Commenters also expressed concerns with the burdens these changes 
would impose on Exchanges. Commenters noted Exchanges would need to 
make time consuming and resource intensive changes to their websites, 
enrollment systems, and customer service and outreach efforts to align 
with the separate billing and payment requirements, which would be 
costly and disrupt Exchange efficiency.
    Commenters also expressed concern that HHS failed to address the 
adverse impacts on enrollees resulting from how issuers would react to 
being forced to allocate additional significant operational and 
administrative resources towards issuing and processing multiple bills 
and monthly payments from each policy holder. Many commenters stated 
that issuers would be required to consider these new costs when setting 
actuarially sound rates, which would lead to higher premiums for 
enrollees. Many commenters stated that the costs and requirements on 
QHP issuers that cover non-Hyde abortion services will in many cases be 
so high that it will result in QHP issuers dropping coverage for non-
Hyde abortion services altogether, even if their enrollees desire such 
coverage. Commenters expressed concern that, in such scenarios, this 
would transfer the costs and burdens of accessing non-Hyde abortion 
services to enrollees who must seek coverage for non-Hyde abortion 
services elsewhere

[[Page 71688]]

or pay out-of-pocket. Other commenters noted that issuers are likely to 
drop coverage of non-Hyde abortion services if the alternative is 
terminating coverage for a substantial number of its enrollees due to 
enrollee confusion resulting in non-payment of miniscule amounts.
    Many commenters stated that the proposals would threaten the mental 
and physical health, well-being, and economic security of enrollees, 
especially women, across the country. Commenters stated that health 
insurance should provide coverage for the full range of reproductive 
health care, including abortion, and that this rule threatens to take 
such coverage away by imposing burdensome requirements on issuers. 
Commenters also expressed concern that, should these proposals result 
in issuers ceasing to provide coverage of non-Hyde abortion services, 
it could impede a patient's ability to make the best medical decision 
for herself and her family in consultation with her physician given 
that many women would be unable to pay privately for such services due 
to high costs without insurance. Commenters noted that barriers to 
accessing affordable non-Hyde abortion services could have long-term, 
devastating effects on a woman and her family's economic future.
    Commenters noted that the proposals would have a greater impact on 
subsidized enrollees and might have a discriminatory effect on 
enrollees receiving higher APTC amounts who would have greater 
difficulty meeting the issuer's premium payment threshold pursuant to 
Sec.  155.400(g). Commenters also stated that it would have damaging 
consequences on enrollees with specific conditions (like patients with 
cancer or chronic conditions), as any gaps in coverage as a result of 
confusion over billing may interrupt disease treatment schedules and 
could jeopardize health outcomes. Commenters also stated that the 
proposals would threaten the coverage gains made by the PPACA and have 
a disproportionate impact on enrollees who already face barriers to 
care, such as low-income individuals and marginalized communities. HHS 
received many comments expressing concern that when legal abortion 
becomes inaccessible, women who seek to end their pregnancy turn to 
unsafe and illegal methods, risking arrest, serious injury, or even 
death. Commenters also expressed concern that HHS did not propose any 
requirements or guidelines for how issuers should educate, inform, and 
conduct outreach to enrollees regarding these changes in billing and 
payment if the proposed regulation is implemented as proposed. 
Commenters also expressed concern that the proposals didn't address how 
individuals with limited English proficiency (LEP) or individuals with 
disabilities may experience barriers in complying with the proposed 
changes which commenters found particularly concerning, since 
individuals with LEP and individuals with disabilities already 
experience hardships in navigating and accessing health care.
    Response: As we acknowledged in the proposed rule, we recognize 
that QHP issuers that cover non-Hyde abortion services may experience 
an increase in burden as a result of the proposals. We have carefully 
considered the comments that shared information about how the proposals 
would likely impact markets, issuers, and enrollees.
    We agree with commenters that separately mailing the separate bill 
with separate postage could cause unintended additional burden and cost 
for issuers. Therefore, we are not finalizing the requirement that the 
separate bills be mailed separately with separate postage. However, we 
also acknowledge that QHP issuers will nevertheless still incur 
significant burden and costs as a result of implementing this new 
separate billing policy. We agree with commenters that QHP issuers are 
likely to consider these new costs when setting actuarially sound rates 
and that this will likely lead to higher premiums for enrollees. The 
potential premiums increases are discussed in further detail in section 
III, ``Collection of Information Requirements,'' and section IV, 
``Regulation Impact Analysis,'' of this rule. However, in spite of the 
potential premium increases, we do not agree that requiring issuers to 
send separate bills, instruct policy holders to pay in two separate 
transactions, and make reasonable efforts to collect the payments 
separately would be an inefficient use of resources. Rather, this 
instruction is important to achieving better alignment of the 
regulatory requirements for QHP issuer billing of enrollee premiums 
with the separate payment requirement in section 1303 of the PPACA. We 
understand commenters' concerns that the issuer burden associated with 
this policy may result in issuers withdrawing coverage of non-Hyde 
abortion services altogether, requiring some enrollees to pay for these 
services out-of-pocket.
    Subject to applicable state law, it is ultimately at the issuer's 
discretion whether to cover non-Hyde abortion services in their QHPs, 
and thus to incur any associated burden, and it is ultimately the 
states' and HHS's duty to enforce the statutory provisions of the PPACA 
as they are written. Although section 1303 permits issuer flexibility 
in abortion coverage choices, it also requires that QHP issuers 
electing to cover non-Hyde abortion services take certain steps to 
ensure that no APTC or CSR funds are used to pay for these services, 
such as requiring the QHP issuer to collect a separate payment for 
these services. The finalized changes at Sec.  156.280(e)(2)(ii) may 
add issuer burden with regard to their payment and billing operations. 
However, the statute contemplates such burden in section 
1303(b)(2)(B)(i) of the PPACA when it requires that issuers collect a 
separate payment for the portion of the premium attributable to 
coverage of non-Hyde abortion services and in section 1303(b)(2)(D) of 
PPACA when it specifies how QHP issuers are to calculate the basic per 
enrollee, per month cost, determined on an average actuarial basis, for 
including coverage of non-Hyde abortions in QHPs. We believe that 
finalizing the rule to allow issuers to send both bills in a single 
mailing will mitigate the issuer and state burden that would be imposed 
if we were finalizing the policy as originally proposed, as well as any 
initial confusion on the part of enrollees. We estimate that these 
changes would eliminate much of the additional mailing costs for the 
second bill since issuers would no longer need to pay for additional 
postage and envelopes. We believe the changes we are finalizing at 
Sec.  156.280(e)(2)(ii) strike a balance between requiring the separate 
bill that we believe is required for better alignment with section 1303 
of the PPACA, while also avoiding unnecessary enrollee confusion, 
enrollee harm, and issuer burden.
    We understand that non-Hyde abortion services are services for 
which some enrollees may desire coverage, as they may be costly when 
not covered by insurance. However, we believe that requiring separate 
billing for the portion of the premium attributable to coverage of non-
Hyde abortion services is a necessary change to better align issuer 
billing with the statutory requirements specified in section 1303 of 
the PPACA, which requires non-Hyde abortion services be treated 
differently from other covered services. We believe the changes we are 
finalizing at Sec.  156.280(e)(2)(ii) will impose less burden on 
issuers to implement this policy than if we were finalizing as 
originally proposed, decreasing the likelihood that issuers will drop 
this coverage or significantly raise their premiums. Although we 
acknowledge

[[Page 71689]]

the changes we are finalizing will increase the burden associated with 
personnel hours spent managing enrollee confusion, termination notices, 
and multiple bills, we also believe the changes we are finalizing at 
Sec.  156.280(e)(2)(ii) minimize enrollee confusion surrounding 
receiving a separate bill, helping to prevent situations where 
enrollees enter grace periods and subsequently have their coverage 
terminated for failing to inadvertently pay the second bill. We also 
believe policy holder confusion regarding the separate bill may 
decrease in future plan years as policy holders acclimate to this 
billing structure and as consumer education continues. However, we 
acknowledge that a policy holder enrolling for the first time after 
this policy is finalized in a QHP covering non-Hyde abortion services 
may still experience confusion regarding the separate bill. As 
finalized, we believe the inclusion of a second separate bill for these 
services in the same mailing and requiring issuers to instruct 
enrollees to pay in a separate transaction for the separate bill 
(whether sent electronically or by mail), but allowing issuers to 
accept combined payments if the enrollee fails to pay separately, will 
allow QHP issuers to continue providing coverage for non-Hyde abortion 
services subject to state and federal law and allow policy holders to 
continue accessing such coverage when available through their QHPs.
    We understand commenters' concern about how these proposals will 
impact individuals with LEP and other policy holders, especially those 
with disabilities. We note that, under the policy being finalized, 
issuers must still comply with all applicable enrollee assistance 
requirements for QHPs on the Exchange, such as those requirements at 
Sec.  155.205. In particular, we believe that the requirements at Sec.  
155.205(c) will help to ensure that issuers are providing information 
regarding the separate bill and payment options to individuals with LEP 
and policy holders with disabilities in plain language and in an 
accessible manner as specified in regulation. We also suggest that 
issuers consider the needs of these enrollee groups when conducting 
enrollee education or outreach about the finalized changes.
    A more detailed summary of comments discussing the potential burden 
associated with the proposals can be found in the sections III 
``Collection of Information Requirements'' and IV ``Regulation Impact 
Analysis'' of this rule. In section III ``Collection of Information 
Requirements'' of this final rule, a detailed breakdown of the 
estimated one-time burden per issuer and the estimated one-time burden 
for all issuers can be found in tables 2 and 3, and a detailed 
breakdown of the estimated annual burden per issuer and the estimated 
annual burden for all issuers can be found in tables 4 and 5.
    Comment: Many commenters expressed concern that the proposed 
effective date would be administratively and operationally infeasible. 
As proposed, issuers would be required to implement these proposals 
beginning on the effective date of the final rule, which is 60 days 
after the final rule is published in the Federal Register. Commenters 
explained that issuer billing and payment requirements are typically 
included in plan documents that are approved by the state regulator and 
provided to the enrollee at the time of enrollment. Commenters noted 
that a change in payment policies would mean that issuers would need to 
re-file their applications for all affected plans for approval by state 
regulators and that such a change could not be implemented mid-plan 
year. Commenters also stated that, given the substantial investment 
required to operationalize the new proposals and the associated 
complexities, issuers would need a minimum of 12 to 18 months to 
implement these changes. Further, because implementation would need to 
coincide with the beginning of a new plan year, many commenters stated 
that plan year 2021 would be the earliest at which implementation could 
occur given the likely publication timeline for this final rule. 
Commenters also stated that enrollees can more easily adapt to new 
payment arrangements at the beginning of a plan year, when they expect 
premiums to be different and other changes to their plan to occur. 
Commenters also emphasized that the earlier the effective date, the 
more burdensome these proposals become.
    One commenter noted that although state regulators are able to 
accept the responsibility of primary enforcement of this rule given 
appropriate lead time, they will be ill-equipped to enforce it if it is 
made effective immediately, since regulators will need time to develop 
enforcement policies in consultation with state stakeholders. This 
commenter also noted that, due to the small amounts issuers would 
separately bill for coverage of non-Hyde abortion services, many 
issuers may choose to revise their premium payment threshold policies 
permitted under Sec.  155.400, but would not have time to do so if the 
rule were made effective immediately.
    Response: In response to comments that implementation will take 
longer than the proposed effective date would allow, we are finalizing 
that QHP issuers must be in compliance with the policies being 
finalized at Sec.  156.280(e)(2) on or before the day that is 6 months 
after publication of the final rule. If the date that is 6 months after 
publication of the final rule falls in the middle of a QHP issuer's 
billing cycle (in other words, after the QHP issuer has already sent 
out bills to policy holders for that month), the QHP issuer would be 
expected to comply beginning with the next billing cycle immediately 
following that date. We acknowledge that requiring QHP issuers to begin 
complying mid-plan year may pose implementation challenges for some 
states and issuers. For example, as discussed further later in this 
response, QHP issuers offering coverage of non-Hyde abortion services 
will already have filed rates for the 2020 plan year and would be 
unable to update those rates until the following plan year to reflect 
the added administrative costs they may experience as a result of the 
finalized separate billing policy. We also acknowledge requiring QHP 
issuer compliance mid-plan year would not provide QHP issuers offering 
coverage of non-Hyde abortion services an opportunity, in their 
discretion, to revise their plan and benefit designs, such as to remove 
coverage of non-Hyde abortion services, in order to avoid requirements 
under the separate billing policy.
    We anticipate that State Exchanges that perform premium billing and 
payment processing that have QHP issuers that offer coverage for non-
Hyde abortion services will face similar challenges to comply with the 
separate billing requirements within 6 months after publication of this 
final rule as QHP issuers that offer coverage for non-Hyde abortion 
services. However, we believe 6 months is sufficient for State 
Exchanges performing premium billing and payment processing and QHP 
issuers to implement the administrative and operational changes to 
billing processes necessary to comply with this policy. We also believe 
a 6-month implementation timeline appropriately prioritizes the goals 
of improved statutory alignment with the additional time State 
Exchanges and issuers may need to implement this policy. For those 
State Exchanges and QHP issuers that may face uncommon or unexpected 
impediments to timely compliance, HHS will consider extending 
enforcement discretion to an Exchange or QHP issuer that fails to 
timely

[[Page 71690]]

comply with the separate billing policy as required under this final 
rule, if we find that the Exchange or QHP issuer attempted in good 
faith to timely meet the requirements.
    Although we do not believe that it is necessary for state 
enforcement policies to have been developed prior to the effective and/
or compliance date for the separate billing requirements, we believe 
this will offer state regulators enough time to develop enforcement 
policies in consultation with state stakeholders. We also believe this 
implementation timeline will provide sufficient time for enrollee 
outreach and education to help mitigate any enrollee confusion 
resulting from the finalized policies, and to explain to enrollees how 
the QHP issuer's previous payment policies will be changing to comply 
with these new billing requirements.
    We believe it is important that QHP issuers implement these policy 
changes at the earliest date feasible to improve statutory alignment 
with section 1303 of the PPACA. Similarly, we do not believe that 
potential implementation challenges in connection with a mid-year 
implementation date should outweigh numerous commenters' concerns 
regarding the lack of transparency as to whether their QHP covers non-
Hyde abortion services, transparency that would be delayed by 
approximately a year if compliance were required by the first day of 
the 2021 plan year. We believe that further delaying implementation 
would be imprudent given that we are now aware of these consumer 
concerns and given that we believe it is operationally and 
administratively feasible for State Exchanges and QHP issuers to comply 
with the policy within 6 months after publication of the final rule.
    We acknowledge that if QHP issuers are not able to take these 
additional costs into consideration when setting rates for the 2020 
plan year, it is possible that some issuers may seek to exit the 
individual market in a state or incur losses. We believe that any such 
risk is small. QHP issuers will have the opportunity to adjust their 
plan and benefits design and rates in response to the separate billing 
policy for their plan year 2021 plan offerings. Moreover, we are aware 
that the actuarial value of the non-Hyde abortion coverage under QHPs 
generally may be less than the minimum $1 per enrollee, per month QHP 
issuers must charge for such services under section 1303 of the PPACA; 
and we are not aware of any reason QHP issuers could not use funds from 
the allocation account into which premium amounts attributable to the 
non-Hyde abortion service benefit must be deposited to cover 
administrative costs associated with coverage of non-Hyde abortion 
services.\14\ This should mitigate the financial consequences to 
issuers of their not being able to update individual market rates prior 
to the 2021 plan year to incorporate the costs of implementing the 
processes required by this rule. We therefore believe that finalizing a 
longer, 6-month implementation timeline sufficiently mitigates the risk 
that some issuers would seek to exit the individual market to avoid the 
separate billing requirements under this final rule.
---------------------------------------------------------------------------

    \14\ See 42 U.S.C. 18023(b)(2)(D)(ii)(I) (when estimating per 
member, per month cost of non-Hyde abortion services, issuers may 
take into account the impact on overall costs of the inclusion of 
such coverage).
---------------------------------------------------------------------------

    We acknowledge that State Exchanges' and QHP issuers' ability to 
comply within 6 months may depend on the current status of their 
billing systems and operations, and that State Exchanges and QHP 
issuers may be confronted with unexpected impediments to timely 
compliance. For this reason, HHS will consider extending enforcement 
discretion to an Exchange or QHP issuer that fails to timely comply 
with the separate billing policy as required under this final rule, if 
HHS finds that the Exchange or QHP issuer attempted in good faith to 
timely meet the requirements. Evidence of such good faith efforts might 
include records showing that planning for compliance with this final 
rule's requirements was begun within a reasonable time following the 
publication of the final rule, but events outside the Exchange's or QHP 
issuer's control caused implementation delays. HHS will consider 
exercising this enforcement discretion based on the circumstances of 
the particular Exchange or QHP issuer. We do not anticipate that HHS 
would exercise such discretion for an Exchange or QHP issuer that fails 
to meet the separate billing requirements after more than 1 year 
following publication of this final rule.
    Comment: Many commenters who supported the proposals stated that 
these proposals would increase issuer compliance with the segregation 
of funds and separate payment requirements under section 1303 of the 
PPACA, and that the proposals would clarify and correct the previous 
administration's interpretation of the statute. Many supporting 
commenters noted their dissatisfaction that abortion coverage of any 
kind is offered at all in the individual market, but expressed support 
that the proposals would better protect enrollees who object, based on 
their religious or moral beliefs (collectively, ``conscience''), to 
coverage of non-Hyde abortion services.
    Many commenters stated that it is a direct violation of their 
conscience rights to have to pay for abortion in any form, including 
subsidizing it through insurance coverage. Commenters stated that these 
proposals would increase transparency for enrollees as to what their 
health insurance covers and would allow enrollees to use this 
information to seek a plan that does not cover non-Hyde abortion 
services, consistent with their conscience.
    Although many commenters expressed support for the proposals, many 
also objected to being required to pay this separate bill at all if 
they object to coverage of non-Hyde abortion services. Many commenters 
asked that HHS accommodate individuals who have conscience objections 
to these services by allowing enrollees in plans covering non-Hyde 
abortion to ``opt out'' of this coverage by not paying the separate 
bill attributable to coverage of non-Hyde abortion services.
    Many commenters stated they were unconvinced by the stated 
justification for the proposals (to better align the regulatory 
requirements for QHP issuer billing of enrollee premiums with the 
separate payment requirement in section 1303 of the PPACA) and instead 
stated that the motivation was to appease religious or political 
special interests. Commenters stated that the proposals would value the 
needs of enrollees with conscience objections to coverage of non-Hyde 
abortion services more highly than the needs of enrollees with a health 
interest in receiving coverage for non-Hyde abortion services. These 
commenters stated that the proposals address conscience objections of 
the few at the cost of the many women who need and value coverage of 
non-Hyde abortion services.
    Many commenters asked that these proposals be withdrawn because 
they impose a narrow religious belief opposing a legal medical service 
on enrollees who do not share this viewpoint and need or value this 
coverage. Commenters also objected to the proposal because it singles 
out coverage of non-Hyde abortion services as the only service for 
which separate billing and payment is required, questioning why other 
services are not similarly subject to separate payment and billing 
requirements based on conscience objections. For example, one commenter 
expressed that they object based on their conscience to supporting 
coverage of individuals who get sick after refusing vaccinations for 
that illness. Another commenter noted that they object to having to pay 
for coverage

[[Page 71691]]

of services for tobacco-related illnesses as they believe persons who 
voluntarily choose to use tobacco products should not be subsidized by 
other enrollees for their unhealthy behaviors.
    Response: Although we understand objecting commenters' concerns, 
the changes are primarily meant to better align the regulatory 
requirements for QHP issuer billing of enrollee premiums with the 
statutory separate payment requirement in section 1303 of the PPACA. We 
acknowledge that the finalized policy regarding separate billing may 
increase transparency for policy holders who object on the basis of 
conscience to coverage of non-Hyde abortion services in their QHPs. And 
while it is true that this final rule treats coverage of non-Hyde 
abortion services differently from other covered services for purposes 
of QHP billing and payment, this differential treatment is based on the 
statutory PPACA requirement that non-Hyde abortion services be treated 
differently for billing, collection, payment, and federal-subsidy 
purposes; we are obligated to enforce the statute. Section 1303 of the 
PPACA has always required QHP issuers to estimate the basic per 
enrollee per month cost based on the average actuarial basis of the 
QHP's coverage of non-Hyde abortion services, and prohibited QHP 
issuers from estimating that cost to be less than $1 per enrollee per 
month. Under the statute, QHP issuers must also collect a separate 
payment for that portion of the enrollee's QHP premium attributable to 
coverage of non-Hyde abortion services and must segregate these 
payments in a separate allocation account that is to be used to pay for 
non-Hyde abortion services. Furthermore, section 1303 of the PPACA bars 
the use of PTCs or CSRs for such coverage. The changes we are 
finalizing at Sec.  156.280(e)(2)(ii) would strengthen regulatory 
alignment with the existing statutory requirements for QHP issuer 
billing of enrollee premiums with the separate payment requirement in 
section 1303 of the PPACA.
    We further understand that policy holders who object, based on 
their conscience, to non-Hyde abortion services may prefer to not pay 
the separate bill attributable to coverage of these services, and 
thereby opt out of such coverage. We also acknowledge there may be 
other services covered by a plan that consumers object to or do not 
intend to use. As previously stated, the primary motivation for this 
rule is to better align the regulatory requirements for QHP issuer 
billing of premiums with the statutory separate payment requirement in 
section 1303 of the PPACA.
    However, we agree that consumers are best served by the Exchanges 
when they can enroll in a QHP that meets their needs, from a 
conscience, as well as a care, perspective. In the Exchanges that use 
the federal platform, we have taken steps to improve transparency 
regarding QHP offerings to make it easier for consumers to select plans 
that they believe are best suited to their needs, preferences, and 
conscience concerns, such as information to more readily identify QHPs 
that offer coverage of non-Hyde abortion services.\15\ State Exchanges 
that operate their own technology platforms have taken similar steps. 
For example, State Exchanges display different plan attributes to 
enrollees to foster the decision-making process, and allow consumers to 
view plan offerings by selecting filters that show plans with their 
desired plan characteristics. In addition, Summary of Benefits and 
Coverage (SBC) requirements help ensure that consumers have access to 
easy-to-understand information about coverage. Further, with regard to 
commenters that stated their dissatisfaction that abortion coverage is 
offered at all in the individual market, we note that section 
1303(a)(1) of the PPACA specifies that states may enact laws 
prohibiting QHP issuer coverage of abortion services on the Exchange. 
We also note that section 1303(a)(2) of the PPACA provides that a state 
may repeal such a law and provide for the offering of abortion coverage 
through the Exchange, and section 1303(b)(1)(A)(ii) of the PPACA allows 
QHP issuers to decide whether or not to offer coverage for abortion 
services, consistent with applicable state law.
---------------------------------------------------------------------------

    \15\ ``Frequently Asked Questions for Agents, Brokers, and 
Assisters Providing Consumers with Details on Plan Coverage of 
Certain Abortion Services'' (November 21, 2018), available at 
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQ-on-Providing-Consumers-with-Details-on-Plan-Coverage-of-Certain-Abortion-Services.pdf.
---------------------------------------------------------------------------

    Comment: Some commenters objected to HHS stating that it would 
enforce the requirements of section 1303 of the PPACA as codified at 
Sec.  156.280 directly in the event that State Exchanges do not enforce 
these requirements, arguing that it would be inconsistent with other 
HHS efforts to ensure that states can operate their programs with 
limited federal interference. Commenters also expressed concern that 
the proposed enforcement structure overrides the authority delegated to 
states in section 1303 of the PPACA over issuers that operate in their 
states, and will disrupt the nature of collaboration and partnership 
that the PPACA meant to create between the states and the federal 
government. Commenters also stated that the addition of new compliance 
reviews are unnecessary, as HHS does not articulate any facts or data 
establishing the current landscape of compliance--or lack of 
compliance--with existing regulations.
    Many commenters stated that the 2014 U.S. Government Accountability 
Office report,\16\ which the proposed rule cites as evidence of 
potential remaining issuer compliance concerns, predates the 2016 
Payment Notice, which clarified for issuers how to comply with the 
separate payment requirement. These commenters assert that HHS offers 
no evidence that any compliance problems remain over 4 years later. 
Commenters also stated that the research to inform that report was 
conducted between February 2014 and September 2014, less than 1-full 
year after the Exchanges began operating and, as such, issuers were 
less likely to have fully implemented the compliance standards required 
under the PPACA.
---------------------------------------------------------------------------

    \16\ U.S. Government Accountability Office, ``Health Insurance 
Exchanges: Coverage of Non-excepted Abortion Services by Qualified 
Health Plans,'' (Sept. 15, 2014), available at http://www.gao.gov/products/GAO-14-742R.
---------------------------------------------------------------------------

    Other commenters stated that compliance with section 1303 of the 
PPACA has been inconsistent and were supportive that the proposals 
would require greater oversight and transparency from State Exchanges 
and require them to meet the standards of section 1303 of the PPACA. 
Some commenters cited to the 2014 U.S. Government Accountability Office 
report \17\ as evidence of this noncompliance, and others cited to a 
letter sent prior to publication of the proposed rule by 102 members of 
Congress to HHS Secretary Alex Azar, which requested that new 
regulations be implemented ``to remedy the severe problems with the ACA 
in regard to abortion coverage.'' \18\
---------------------------------------------------------------------------

    \17\ U.S. Government Accountability Office, ``Health Insurance 
Exchanges: Coverage of Non-excepted Abortion Services by Qualified 
Health Plans,'' (Sept. 15, 2014), available at http://www.gao.gov/products/GAO-14-742R.
    \18\ Letter from Chris Smith, Member of Congress, to Alex Azar, 
Secretary, U.S. Department of Health and Human Services (Aug. 6, 
2018), available at https://chrissmith.house.gov/uploadedfiles/2018-08-06_-_smith_letter_on_section_1303_-_abortion_funding_transparency.pdf.
---------------------------------------------------------------------------

    Response: We agree that oversight of issuer compliance with section 
1303 of the PPACA is important to achieving greater transparency for 
consumers. We acknowledge that section 1303(b)(2)(E)(i) of the PPACA, 
as implemented at Sec.  156.280(e)(5), designates the state insurance 
commissioners as responsible for monitoring, overseeing, and enforcing

[[Page 71692]]

the provisions in section 1303 of the PPACA related to QHP segregation 
of funds for non-Hyde abortion services. That is different than 
assigning the exclusive enforcement authority, with respect to all 
provisions in section 1303, to the states or to State Exchanges. As is 
the case with many provisions in the PPACA, states are generally the 
entities primarily responsible for implementing and enforcing the 
provisions in section 1303 of the PPACA related to individual market 
QHP coverage of non-Hyde abortion services.
    However, where we are charged with directly enforcing statutory 
requirements in the FFE, we intend to do so fully in instances of 
issuer non-compliance with the separate payment requirement under 
section 1303 of the PPACA. Moreover, to the extent a state operating 
its own Exchange fails to substantially enforce these requirements, HHS 
is authorized to enforce them directly. Pursuant to section 1321(c)(2) 
of the PPACA, after determining that a state (or State Exchange) has 
failed to substantially enforce a federal requirement related to 
Exchanges and the offering of QHPs through Exchanges, including section 
1303 of the PPACA's separate payments requirement (or other 
requirements), the Secretary may step in to enforce the requirement 
against the non-compliant issuer. This enforcement structure strikes an 
appropriate balance between federal oversight and state flexibility 
with regard to the requirements of section 1303. Accordingly, unless 
HHS determines a state (or State Exchange) has failed to substantially 
enforce section 1303 of the PPACA requirements, we intend to continue 
to defer to states (or State Exchanges) that enforce section 1303 of 
the PPACA requirements. HHS disagrees that this enforcement structure 
in a state operating its own Exchange would override the state's 
exercise of authority expressly delegated to states in section 1303 of 
the PPACA.
    The compliance reviews governing QHP issuers participating in the 
FFE include reviews of compliance with section 1303 of the PPACA and 
Sec.  156.280. The compliance reviews for future benefit years will 
include the new requirements finalized in this rule for separate 
billing of the portion of the policy holder's premium attributable to 
coverage of non-Hyde abortion services, as finalized at Sec.  
156.280(e)(2). We continue to believe such compliance reviews will help 
to address remaining issuer compliance issues, if any, previously 
identified by the 2014 U.S. GAO report.\19\ However, commenters also 
expressed concern that the 2014 U.S. GAO report is outdated and that 
there is no evidence of ongoing compliance issues to support the 
changes we are finalizing regarding separate billing. But regardless of 
whether there are ongoing compliance issues, the changes we are 
finalize are primarily meant to better align the regulatory 
requirements for QHP issuer billing of enrollee premiums with the 
statutory separate payment requirement in section 1303 of the PPACA. 
This goal is related to overall compliance with section 1303, but has a 
different compliance focus than the compliance issues cited in the 2014 
U.S. GAO report. Additionally, because we are amending the acceptable 
methods for issuers to comply with the separate payment requirement, we 
believe additional oversight during this transition time will be 
necessary to ensure that issuers are modifying their billing procedures 
appropriately.
---------------------------------------------------------------------------

    \19\ U.S. Government Accountability Office, ``Health Insurance 
Exchanges: Coverage of Non-excepted Abortion Services by Qualified 
Health Plans,'' (Sept. 15, 2014), available at http://www.gao.gov/products/GAO-14-742R.
---------------------------------------------------------------------------

    FFE issuers subject to compliance reviews under Sec.  156.715 must 
retain all documents and records of compliance with section 1303 of the 
PPACA and these requirements in accordance with Sec.  156.705, and 
should anticipate making available to HHS the types of records 
specified at Sec.  156.715(b) that would be necessary to establish 
their compliance with these requirements. For example, FFE issuers 
subject to compliance reviews for Sec.  156.280 should anticipate 
supplying HHS with documentation of their estimate of the basic per 
enrollee per month cost, determined on an average actuarial basis, for 
including coverage of non-Hyde abortion services; detailed invoice and 
billing records demonstrating they are separately billing for and 
instructing policy holders to pay for in a separate transaction the 
portion of the policy holder's premium attributable to coverage of non-
Hyde abortion services as specified in this rule, the actuarial value 
which must be estimated to be no less than $1 per enrollee, per month; 
and appropriately segregating the funds collected from enrollees into a 
separate allocation account that is used to pay for non-Hyde abortion 
services.
    We remind issuers that pursuant to Sec.  156.280(e)(5)(ii), any 
issuer offering coverage of non-Hyde abortion services on the Exchange 
must submit a plan to the relevant state insurance regulator that 
details the issuer's process and methodology for meeting the 
requirements of section 1303(b)(2)(C), (D), and (E) of the PPACA 
(hereinafter, ``segregation plan'').\20\ The segregation plan should 
describe the QHP issuer's financial accounting systems, including 
appropriate accounting documentation and internal controls, that would 
ensure the segregation of funds required by section 1303(b)(2)(C), (D), 
and (E) of the PPACA. Issuers should refer to Sec.  156.280(e)(5)(ii) 
for more information on precisely what issuers should include in their 
segregation plans to demonstrate compliance with these requirements. We 
also remind QHP issuers that pursuant to Sec.  156.280(e)(5)(iii) each 
QHP issuer participating in the Exchange must provide to the state 
insurance commissioner an annual assurance statement attesting that the 
plan has complied with section 1303 of the PPACA and applicable 
regulations.
---------------------------------------------------------------------------

    \20\ While we included compliance with section 1303(b)(2)(D) in 
the segregation plan that QHP issuers are required to submit to 
state insurance commissioners under our regulations at 45 CFR 
156.280(e)(5), we did not mean to suggest by that inclusion that 
such provision is part of the segregation requirements in the 
statutory subsection that are subject to the jurisdiction of state 
health insurance commissioners under section 1303(b)(2)(E).
---------------------------------------------------------------------------

    We also remind issuers offering medical QHPs in the FFEs that they 
already must attest to adhering to all applicable requirements of 45 
CFR part 156 as part of the QHP certification application, including 
those requirements related to the segregation of funds for abortion 
services implemented in Sec.  156.280.\21\ As finalized, issuers in the 
FFE completing this attestation would also attest to adhering to these 
new separate billing and collection requirements. As part of the QHP 
certification process, issuers in states with FFEs where the states 
perform plan management functions must also complete similar program 
attestations attesting to adherence with Sec.  156.280.\22\ Issuers in 
states with State Exchanges that offer QHPs that cover non-Hyde 
abortion services should contact their state regarding the QHP 
certification process.
---------------------------------------------------------------------------

    \21\ 2019 Qualified Health Plan Issuer Application Instructions, 
available at: https://www.qhpcertification.cms.gov/s/2019QHPInstructionsVersion1.pdf?v=1.
    \22\ State Partnership Exchange Issuer Program Attestation 
Response Form, available at: https://www.qhpcertification.cms.gov/s/SuppDoc_SPE_Attestationsed._revised_508.pdf?v=1.
---------------------------------------------------------------------------

    Comment: HHS received comments expressing a variety of legal 
arguments against the proposals. Many commenters stated that the 
proposals violate the Administrative Procedure Act (APA) because the 
proposals advance an unreasonable interpretation

[[Page 71693]]

of law, are arbitrary and capricious, fail to provide adequate reasons 
or satisfactory explanations why HHS seeks to adopt a newly preferred 
interpretation of the requirement, and fail to adequately assess the 
costs and harms. Commenters also stated the proposals raise Federalism 
concerns under the Tenth Amendment because the proposals allegedly are 
designed to penalize states that have laws requiring QHPs to provide 
coverage of non-Hyde abortion services by requiring states--through 
their respective Exchanges and the Department of Insurances (DOIs)--to 
adopt new oversight responsibilities, and make systemic changes to fit 
the alterations the proposals require. For these states, commenters 
stated that this effectively requires states to either divert extensive 
resources to implement these changes or change their sovereign laws to 
no longer require coverage of non-Hyde abortion services. Commenters 
also stated that the proposals exceed the federal government's spending 
power by implementing new reporting and oversight obligations in the 
Exchanges that impose post-acceptance or retroactive conditions on 
states that were not originally anticipated. Commenters also stated 
that the proposals serve as a tax penalty on issuers for doing business 
in states with non-Hyde abortion services coverage requirements. One 
commenter stated that HHS improperly excluded the proposed changes to 
Sec.  156.280 among the rule changes with Federalism implications.
    Commenters also stated that requiring QHP issuers to send a 
separate bill to enrollees about the plan's coverage of non-Hyde 
abortion services constitutes a second separate notice outside of the 
notice included in the SBC indicating whether the plan covers abortions 
services and that, as such, these proposals violate section 
1303(b)(3)(A) of the PPACA, which specifies that QHP issuers covering 
these services ``shall provide a notice to enrollees, only as part of 
the summary of benefits and coverage explanation, at the time of 
enrollment, of such coverage.'' Commenters further assert that the 
proposals violate section 1303(b)(3)(B), which states that all 
advertising used by issuers, any information provided by the Exchange, 
and ``any other information specified by the Secretary'' shall only 
provide information with respect to the total amount of the combined 
payments for all services.
    Commenters also stated that the proposals violate section 1554 of 
the PPACA because these proposals will limit access to health care 
services, conflict with section 1557 of the PPACA, violate the Equal 
Protection Clause because the proposals place a heavy burden on a 
unique health care service only applicable to women, constitute an 
undue burden on a woman's right to procreative choice, violate the 
unconstitutional conditions doctrine by penalizing those who choose to 
exercise a constitutionally-protected right by imposing unreasonable 
payment protocols to access abortion services, and violate the 
establishment clause of the First Amendment.
    HHS also received many comments stating that the proposed 
interpretation of section 1303 of the PPACA violates congressional 
intent. Commenters stated that section 1303 of the PPACA makes clear 
that absent a state law to the contrary, issuers offering Exchange 
coverage can decide whether to cover non-Hyde abortion services and 
that these requirements effectively take that decision away from 
issuers. Commenters also stated that Congress specifically enacted 
section 1303 of the PPACA's provisions after rejecting more extreme and 
restrictive alternatives that would have eliminated abortion coverage 
in the Exchanges or prohibited enrollees from using federal financial 
assistance to purchase a plan including abortion coverage, and that HHS 
is ignoring that legislative history by proposing changes that would 
have a net effect of reducing abortion coverage where issuers decide to 
eliminate coverage due to the regulatory burden. Commenters also noted 
that, although Congress decided to treat abortion differently when 
passing section 1303 of the PPACA, it did so specifically to ensure 
that private insurance plans could continue to decide whether or not to 
cover abortion in states that did not ban such coverage, and that this 
rule threatens that right. One commenter also stated that HHS violated 
generally accepted principles of statutory interpretation and should 
have construed ``separate payment'' in line with industry practice.
    Many commenters also stated that these proposals conflict with the 
Administration's stated goals of reducing economic and regulatory 
burden, in conflict with several recently issued Executive Orders. 
Specifically commenters stated that the proposals would undermine 
Executive Order 13765 because these proposals would increase the 
administrative and economic burden of the PPACA, Executive Order 13813 
which called for rules and guidelines to improve access to and the 
quality of information that Americans need to make informed healthcare 
decisions, Executive Order 13777 which orders federal agencies to 
alleviate unnecessary regulatory burden placed on the American people, 
and Executive Order 12866 because HHS did not ``assess both the costs 
and the benefits of the intended regulation and . . . propose or adopt 
a regulation only upon a reasoned determination that the benefits of 
the intended regulation justify the costs,'' as the Executive Order 
directs. Commenters also stated that the proposals would undermine 
CMS's ``Patients Over Paperwork'' initiative aimed at reducing 
administrative burden on health plans and providers.
    HHS also received comments arguing that these changes advance the 
congressional intent for the separate payment requirement in section 
1303 of the PPACA, arguing that both the congressional record and the 
statutory language clearly demonstrate that Congress intended that 
billing for coverage of non-Hyde abortion services be separate.
    Response: HHS disagrees with comments questioning its legal 
authority to make these policy changes, and disagrees that interpreting 
section 1303 of the PPACA to require issuers to send a separate bill 
for the portion of the premium attributable to coverage of non-Hyde 
abortion services violates the APA. Section 1303 of the PPACA and 
regulations at Sec.  156.280 do not specify the method a QHP issuer 
must use to comply with the separate payment requirement under section 
1303(b)(2)(B)(i) of the PPACA and Sec.  156.280(e)(2)(i). Although we 
recognized in the preamble to the proposed rule that the previous 
methods of itemizing or providing advance notice about the amounts 
noted as permissible in the preamble of the 2016 Payment Notice 
arguably identifies two ``separate'' amounts for two separate purposes, 
we continue to believe that requiring issuers to bill for two separate 
``payments'' of these two amounts better aligns with, and better 
enables compliance with, the separate payment requirement in section 
1303 of the PPACA. We also believe that consumers are more likely to 
make a separate payment for the non-Hyde abortion coverage when they 
receive a separate bill for such amount.
    In fact, among the previously acceptable methods for QHP issuers to 
comply with the separate payment requirement outlined in the preamble 
to the 2016 Payment Notice was sending a separate monthly bill for 
these

[[Page 71694]]

services.\23\ As such, amending the policy to only permit this method 
of complying with the separate payment requirement does not wholly 
depart from the previous interpretation, it merely refines it to better 
reflect the statute.
---------------------------------------------------------------------------

    \23\ Patient Protection and Affordable Care Act; HHS Notice of 
Benefit and Payment Parameters for 2016 (80 FR 10750, 10840).
---------------------------------------------------------------------------

    Additionally, we have carefully considered the comments we received 
estimating the burden the proposals would impose on issuers, states, 
enrollees, and other entities, and agree--without accepting the 
estimates provided by commenters--that, as originally proposed, the 
actual burden would have exceeded HHS's estimates. As such, we are 
finalizing several changes described in responses to comments earlier 
in this section of the preamble with the specific intent of mitigating 
the burden that would have been imposed if we were finalizing as 
originally proposed.
    HHS disagrees that the policy as originally proposed or as revised 
in the final rule violates state sovereignty, exceeds the federal 
government's spending power, or raises other Federalism concerns. 
Because states are the entities primarily responsible for implementing 
and enforcing the provisions in section 1303 of the PPACA related to 
individual market QHP coverage of non-Hyde abortion services, we 
acknowledge that requiring issuers to separately bill for the portion 
of the premium attributable to these services means that states will 
likely adjust how they ensure issuer compliance with these new 
requirements. We also remind states concerned about enforcement and 
oversight of these requirements that, under section 1321(c) of the 
PPACA, states may elect not to establish and operate an Exchange, 
thereby deferring those responsibilities to HHS.
    We are clarifying the existing statutory requirement by adding 
specificity to the regulatory requirement, for issuers to collect a 
separate payment for these services. As such, these changes do not 
directly impose new requirements on states other than to adjust how 
they check for compliance. We believe that any state oversight 
responsibility modified through these changes was already contemplated 
by section 1303 of the PPACA in identifying states as the entities 
primarily, but not exclusively, responsible for enforcing the 
provisions in section 1303. Further, as noted above, among the 
previously acceptable methods for QHP issuers to comply with the 
separate payment requirement was sending a separate monthly bill for 
coverage of non-Hyde abortion services. Therefore, states should 
already have developed mechanisms to confirm compliance with separate 
monthly billing and payment for these services for any issuers that 
previously elected this option.
    Setting aside the question of whether state laws requiring coverage 
of non-Hyde abortion services on the Exchange are consistent with 
statutory conditions on federal funding from the Department to the 
States, we acknowledge that some states have such laws. However, the 
changes we are finalizing do not preempt state law regarding coverage 
of non-Hyde abortion services or otherwise attempt to coerce states 
into changing these laws or to deny QHP issuers the ability to offer 
plans on the Exchanges that provide coverage of non-Hyde abortion 
services. HHS is simply refining the method by which issuers comply 
with the separate payment requirement.
    HHS does not agree with commenters' concerns that the proposals 
would inhibit enrollee access to appropriate and timely medical care in 
violation of section 1554 of the PPACA. We acknowledge that, as 
originally proposed, the combination of issuer burden and enrollee 
confusion could have potentially led to a reduction in the availability 
of coverage of non-Hyde abortion services (either by issuers choosing 
to drop this coverage to avoid the additional costs or by enrollees 
having their coverage terminated for failure to pay the second bill), 
thereby potentially increasing out-of-pocket costs for some women 
seeking those services. But such an effect of a separate billing 
requirement would not constitute a violation of section 1554. Moreover, 
we believe the changes we are finalizing will decrease the likelihood 
of these outcomes. Importantly, subject to state law, section 
1303(b)(1)(A) of the PPACA makes it clear that it is ultimately at the 
issuer's discretion whether to cover non-Hyde abortion services in 
their QHP; requiring a separate bill for these services does not limit 
that right.
    HHS also disagrees that the policy in the proposed rule, as revised 
in this final rule, is inconsistent with sections 1303(b)(3)(A) or 
1303(b)(3)(B) of the PPACA. Reading section 1303(b)(3) alongside 
section 1303(b)(2), which requires collection of separate payments, 
suggests that section 1303(b)(3) pertaining to notices should be read 
harmoniously with the separate payment requirement, rather than in 
conflict with those requirements, as commenters suggest. For example, 
the separate bill for the portion of the policy holder's premium 
attributable to coverage of non-Hyde abortion services is primarily a 
means of ensuring separate QHP issuer collection of that portion of the 
policy holder's premium, as required under section 1303(b)(2). This 
separate bill does not circumvent or conflict with the independent 
requirement in section 1303(b)(3) pertaining to notices. Further, any 
insight the policy holder gains from the separate bill for coverage of 
non-Hyde abortion services about the QHP's coverage of non-Hyde 
abortion services is incidental to the primary purpose of the bill, 
which is to help ensure separate payment by the policy holder, and 
separate QHP issuer collection on this portion of the policy holder's 
premium. We also note that requiring a separate bill for coverage of 
non-Hyde abortion services is not a violation of section 1303(b)(3), 
just as the separate itemization of the premium amount for such 
coverage on a single bill (as was previously one of the acceptable 
billing and premium collection methods for this amount) was not a 
violation of that section. Therefore, we believe it is a more 
reasonable interpretation of section 1303 of the PPACA that section 
1303(b)(2) and 1303(b)(3) of the PPACA need not conflict when read in 
context with one another.
    Section 1557 of PPACA prohibits discrimination on the basis of 
race, color, national origin, sex, age, or disability in certain health 
programs or activities. HHS disagrees that the policy in the proposed 
rule and as revised in this final rule discriminates against women or 
constitutes gender discrimination in violation of section 1557 of the 
PPACA or of the Equal Protection Clause. Although only women access 
non-Hyde abortion services, the separate bill for the portion of the 
premium attributable to coverage of these services, and any enrollee 
burden associated with that bill, is broadly applicable to any policy 
holder in a plan that covers non-Hyde abortion services. In other 
words, both men and women in plans covering non-Hyde abortion services 
will receive a separate bill for the portion of the premium 
attributable to coverage of these services, not just the women who may 
ultimately access such services.
    Similarly, HHS disagrees that the proposals violate the 
unconstitutional conditions doctrine, given that QHP issuers offering 
these services will be required to send the separate bill to all policy 
holders in their plan, not just those who choose to access non-Hyde 
abortion services. As such, although it

[[Page 71695]]

may be true that enrollees who would be most likely to need access to 
coverage of non-Hyde abortion services would be most likely to 
intentially enroll in a QHP with such coverage, any additional burden 
these enrollees experience related to understanding and paying the 
second bill is unrelated to whether enrollees actually do access 
coverage of non-Hyde abortion services. Therefore, the finalized policy 
does not penalize enrollees for accessing their constitutionally 
protected right to abortion. All policy holders would receive the 
separate bill for the portion of their premium attributable to coverage 
of non-Hyde abortion services, regardless of whether they could, intend 
to, or do, access the coverage for these services.
    HHS also disagrees that the policy in the proposed rule, or as 
revised in this final rule, violates the Establishment Clause or 
otherwise impedes the free exercise of religion. Although it may be a 
secondary impact that the billing changes serve the interests of 
enrollees who object to coverage of non-Hyde abortion services based on 
their conscience, the objective for this policy change continues to be 
achieving better alignment with the statutory requirement for issuers 
to collect a separate payment for coverage of non-Hyde abortion 
services, as specified in section 1303 of the PPACA. As such, we reject 
commenter's arguments that these proposals are religiously motivated.
    We also disagree with commenters that this interpretation of 
section 1303 of the PPACA violates congressional intent. We acknowledge 
that, in drafting section 1303 of the PPACA, Congress rejected language 
that would have imposed more restrictive requirements on QHP issuers 
offering coveage of non-Hyde abortion services.\24\ However, although 
the language in section 1303 of the PPACA that Congress ultimately 
enacted into law permits issuers to offer coverage for non-Hyde 
abortion services subject to state law, this flexibility is not without 
limitations. As enacted, section 1303 of the PPACA requires that QHP 
issuers offering non-Hyde abortion coverage on the Exchanges follow 
specific actuarial, accounting, and notice requirements to ensure that 
federal funds are not used to pay for the costs of including coverage 
of these services under the QHP. We believe that by requiring issuers 
to collect separate payments, section 1303 of the PPACA contemplates 
sending to enrollees separate bills for these services to help ensure 
appropriate segregation of these funds. Furthermore, HHS previously 
listed ``sending a separate monthly bill for these services'' as one of 
the permissible methods for issuers to comply with the separate payment 
requirement in the 2016 Payment Notice.
---------------------------------------------------------------------------

    \24\ See Amendment to H.R. 3962, 111th Cong. (2009) (offered by 
Rep. Stupak and Rep. Pitts), 155 Cong. Rec. H12,921 (Nov. 7, 2009); 
See 155 Cong. Rec. S12,665 (2009).
---------------------------------------------------------------------------

    HHS also disagrees with claims that the proposals impermissibly 
undermine the Executive Orders mentioned in comments. We interpret the 
proposals and the policy as finalized in this rule as consistent with 
Executive Order 13765 because the law is being ``efficiently 
implemented'' through better aligning the issuer requirements related 
to fulfilling section 1303 of the PPACA's separate payment requirements 
with the statute. We also believe Executive Order 13813 supports the 
changes to the policy as finalized in this rule, since providing a 
separate bill to policy holders for the portion of the premium 
attributable to coverage of non-Hyde abortion services will ``improve 
access to and the quality of information that Americans need to make 
informed healthcare decisions.'' \25\ We note that we also believe 
Executive Order 13877 supports the policy changes by enhancing the 
ability of enrollees ``to choose the healthcare that is best for them'' 
and to make ``fully informed decisions about their healthcare.'' 
Indeed, many commenters highlighted that this would be one of the 
positive impacts of the proposal--that the separate bill would serve to 
clarify for enrollees that their plan covers non-Hyde abortion services 
and at what cost, information which many commenters would use to decide 
whether to remain enrolled in that QHP or seek a QHP without such 
coverage. We also believe Executive Order 13777 supports the proposals 
and changes being finalized in this rule, since requiring a separate 
bill for coverage of these services helps to ensure that HHS is 
``prudent and financially responsible in the expenditure of funds,'' by 
better aligning the requirements with the statute in a manner that will 
help to ensure that QHP issuers that offer coverage for non-Hyde 
abortion services collect a separate payment from policy holders for 
the portion of their premium attributable to non-Hyde abortion coverage 
which also helps to ensure that APTC or CSR funds are not used pay for 
such services.
---------------------------------------------------------------------------

    \25\ Executive Order on Improving Price and Quality Transparency 
in American Healthcare to Put Patients First (issued on June 24, 
2019, available at https://www.whitehouse.gov/presidential-actions/executive-order-improving-price-quality-transparency-american-healthcare-put-patients-first/.
---------------------------------------------------------------------------

    Additionally, HHS did ``assess both the costs and the benefits'' of 
the proposed rule. However, we note that Executive Order 12866's 
directive to only issue net-beneficial regulations applies only ``to 
the extent permitted by law.'' Although we have since adjusted the 
policy as well as the estimated burden to reflect a larger burden 
estimate, we continue to believe that requiring QHP issuers to 
separately bill the portion of the policy holder's premium attributable 
to coverage of non-Hyde abortion services is a better interpretation of 
the statutory requirement for QHP issuers to collect a separate payment 
for coverage of these services, and, thus, justifies the costs.\26\
---------------------------------------------------------------------------

    \26\ This rule has been subject to interagency (including OMB) 
review under Executive Order 12866 and cleared by OMB for issuance 
and publication, indicating that the rule is consistent with 
Executive Orders.
---------------------------------------------------------------------------

    Lastly, although CMS's ``Patients Over Paperwork'' initiative does 
include the goal of reducing unnecessary burden, HHS believes these 
changes and the added burdens associated with the changes are 
necessary, as the changes will better align issuer billing with the 
statutory requirements of the PPACA. Moreover, in line with this 
initiative, we believe enrollees will benefit from the additional 
clarity that the separate bill provides about their plan's coverage of 
non-Hyde abortion services.

III. Collection of Information Requirements

    This final rule contains information collection requirements as 
defined under the Paperwork Reduction Act of 1995 (PRA). We proposed 
and solicited comments on these information collection requirements 
(ICRs) in the notice of proposed rulemaking that published on November 
9, 2018 (84 FR 56015). The information collection requirements and the 
reconciliation of any comment received on the requirements are 
discussed below.
    In order to fairly evaluate whether an information collection 
should be approved by the Office of Management and Budget (OMB), 
section 3506(c)(2)(A) of the PRA requires that we solicit comment on 
the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the

[[Page 71696]]

affected public, including automated collection techniques.
    In our November 9, 2018 (83 FR 56015) proposed rule, we solicited 
public comment on each of the required issues under section 
3506(c)(2)(A) of the PRA for the following ICRs.

A. Wage Estimates

    To derive average costs, we generally used data from the Bureau of 
Labor Statistics to determine average labor costs (including a 100 
percent increase for fringe benefits and overhead) for estimating the 
burden associated with the ICRs.\27\ Table 1 in this final rule 
presents the mean hourly wage (calculated at 100 percent of salary), 
the cost of fringe benefits and overhead, and the adjusted hourly wage.
---------------------------------------------------------------------------

    \27\ See May 2018 Bureau of Labor Statistics, Occupational 
Employment Statistics, National Occupational Employment and Wage 
Estimates at https://www.bls.gov/oes/current/oes_stru.htm.
---------------------------------------------------------------------------

    As indicated, employee hourly wage estimates have been adjusted by 
a factor of 100 percent. This is necessarily a rough adjustment, both 
because fringe benefits and overhead costs vary significantly across 
employers, and because methods of estimating these costs vary widely 
across studies. However, we believe that doubling the hourly wage to 
estimate total cost is a reasonably accurate estimation method.

                             Table 1--Adjusted Hourly Wages Used in Burden Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                      Fringe
                                                   Occupational     Mean hourly    benefits and      Adjusted
                Occupation title                       code       wage  ($/hour)   overhead  ($/   hourly  wage
                                                                                       hour)         ($/hour)
----------------------------------------------------------------------------------------------------------------
General and Operations Manager..................         11-1021          $59.56          $59.56         $119.12
Computer and Information Systems Manager........         11-3021           73.49           73.49          146.98
Computer Programmer.............................         15-1131           43.07           43.07           86.14
Computer System Analyst.........................         15-1121           45.01           45.01           90.02
Business Operations Specialist..................         13-1199           37.00           37.00           74.00
Secretaries and Administrative Assistants.......         43-6014           18.28           18.28           36.56
----------------------------------------------------------------------------------------------------------------

B. Information Collection Requirements (ICRs)

1. ICRs Regarding General Program Integrity and Oversight Requirements 
(Sec.  155.1200)
    The burden associated with State Exchanges meeting the program 
integrity reporting requirements in Sec.  155.1200 have already been 
assessed and encompassed through SMART currently approved under OMB 
control number: 0938-1244 (CMS-10507). While we are finalizing 
proposals in this rule that would provide HHS the ability to focus 
State Exchange oversight and audit activities towards particular 
Exchange functions that have higher program integrity risks in a more 
consistent manner, and require State Exchanges and their auditors to 
employ auditing techniques or procedures in a more consistent manner, 
we do not envision these changes to have a material impact on the 
burden for State Exchanges. As detailed in the proposed rule and in the 
preamble of this rule, these amendments are intended to allow for more 
targeted oversight and audits of State Exchanges that focus and direct 
existing HHS and State Exchange resources towards particular Exchange 
program areas that have higher program integrity risks, rather than 
having those Federal and State Exchange resources covering all program 
areas or covering program areas that have lower program integrity 
risks. Because existing resources would be directed away from certain 
program areas and towards program areas with higher program integrity 
impact across all State Exchanges, we believe the overall burden on 
State Exchanges would not change. Further, we are not specifying a 
particular sampling methodology that must be used by all State 
Exchanges for testing the accuracy of eligibility determinations in 
annual programmatic audits. This final rule therefore does not impose 
any new burden or revised information collection requirements 
pertaining to Sec.  155.1200.
2. ICRs Regarding Rules Relating To Segregation of Funds for Abortion 
Services (Sec.  156.280)
    In Sec.  156.280(e)(2), we are finalizing that QHP issuers must 
send an entirely separate monthly bill to the policy holder covering 
only the portion of premium attributable to coverage of non-Hyde 
abortion, and instruct the policy holder to pay the portion of their 
premium attributable to coverage of non-Hyde abortion services in a 
separate transaction from any payment the policy holder makes for the 
portion of their premium not attributable to coverage of non-Hyde 
abortion services. Based on 2020 QHP certification data in the FFEs and 
SBE-FPs, we estimate that 23 QHP issuers will offer a total of 338 
plans with coverage of non-Hyde abortion services in 9 FFE and SBE-FP 
states. For the 12 State Exchanges that will operate their own 
technology platforms in 2020 and have QHPs that offer coverage of non-
Hyde abortion services, we have updated our methodology for identifying 
issuers with QHPs that offer coverage of non-Hyde abortion services, 
and now estimate that 71 QHP issuers will offer a total of 
approximately 1,129 plans that include coverage for non-Hyde abortions 
services. Three of those State Exchanges perform premium billing and 
payment processing, while the other 9 have their issuers perform 
premium billing and payment processing. In total, we now estimate that 
will be 94 QHP issuers offering a total of 1,467 plans (representing 
approximately 32 percent of individual market, on-Exchange plans) 
covering non-Hyde abortion services across 21 states in plan year 2020. 
As such, the ICRs associated with these proposals create a new burden 
on QHP issuers and State Exchanges that perform premium billing and 
payment processing, and thus will be submitted to OMB for final 
approval (OMB control number: 0938-1358 (Billing and Collection of the 
Separate Payment for Certain Abortion Services (CMS-10681)).
    Comment: We used the estimated numbers of impacted issuers and 
plans to estimate the costs associated with the proposals regarding 
separate billing and payment for coverage of non-Hyde abortion 
services.
    We received many comments from issuers, issuer associations, 
states, State Exchanges, state regulators, and other organizations 
arguing that we greatly underestimated the burden on issuers to 
implement the original proposals. For example, commenters stated that 
actual one-time costs for issuers to implement

[[Page 71697]]

these proposals would be anywhere from $50,000 to $7,500,000 per 
issuer. Commenters also stated that annual costs per issuer would be 
anywhere from $40,000 to $10,800,000 annually. One commenter stated 
that the operational burden of a mid-size issuer (serving approximately 
70,000 Exchange enrollees) would exceed HHS's estimate by approximately 
2,666 times for the first year alone. Commenters explained that the 
proposals would require changes to nearly every aspect of the 
enrollment and billing processes to identify impacted enrollees, 
generate and send multiple accurate invoices, collect multiple 
payments, and reconcile payment amounts.
    Some commenters noted that many issuers do not have the ability to 
generate two separate bills for one policy and that, as such, the 
proposals would require them to issue two policies per policy holder 
(and enroll every policy holder into two separate policies to be able 
to bill them in the required way). Commenters stated that the proposals 
would consequently require that many issuers create separate member IDs 
in order to facilitate every enrollee receiving two bills and making 
two payments. Commenters stated that this would be an extraordinarily 
costly and difficult change for such issuers to make.
    Commenters also expressed concern that requiring issuers to send 
the separate bill in a separate mailing would double an issuer's 
postage and associated mailing costs, costing issuers an additional 
$15.6 to $31.2 million nationally per year, and expressed further 
concern that this cost was not accounted for in the proposed rule's 
impact estimates. Many commenters explained that it is unrealistic to 
assume that issuers can save costs by enrollees switching to electronic 
billing, since many enrollees still elect to receive and pay their 
health coverage bills through the mail. Other commenters explained that 
many enrollees have no choice but to receive paper bills and send paper 
checks, as many enrollees in rural areas and many low-income 
individuals still do not have access to the internet.
    Response: We appreciate these comments and after consideration, 
have adjusted the estimated burden below. In response to these 
comments, we have updated the associated ICRs to reflect an increase in 
burden and costs for issuers. We believe that the original burden 
estimate in the proposed rule would not accurately reflect the actual 
costs issuers would have incurred if we finalized the provisions as 
proposed.
    We estimate that allowing issuers to send the separate bill in the 
same mailing (though not in the same email or electronic communication) 
as the bill for other services would eliminate much of the commenter 
estimated $15.6 to $31.2 million that the second bill would have cost 
annually if we had finalized as proposed. By finalizing this policy to 
allow for combined mailings when sending paper bills, we ensure that 
issuers will not be required to incur the costs associated with 
additional postage and envelopes.
    Issuers will incur burden to complete the one-time technical build 
to implement the necessary changes, which will involve activities such 
as planning, assessment, budgeting, contracting, building and testing 
their systems; as well as one-time changes such as billing-related 
outreach and call center training. We assume that this one-time burden 
will be incurred primarily in 2020. We estimate that, for each issuer, 
on average, it will take business operations specialists 2,500 hours 
(at $74 per hour), computer system analysts 6,500 hours (at $90.02 per 
hour), computer programmers 22,000 hours (at $86.14 per hour), computer 
and information systems managers 200 hours (at $146.98 per hour) and 
operations managers 300 hours (at $119.12 per hour) to complete this 
task. The total burden for an issuer will be approximately 31,500 hours 
on average, with an equivalent cost of approximately $2.7 million. We 
anticipate that implementing these changes within 6 months would result 
in issuers incurring additional costs such as higher contracting costs 
and overtime payments, which will increase the total cost for each 
issuer by 50 percent, to approximately $4.1 million. For all 94 
issuers, the total one-time burden will be 2,961,000 hours for a total 
cost of approximately $385 million.
    We anticipate that the burden incurred by State Exchanges that 
perform premium billing and payment processing and have QHP issuers 
that offer coverage for non-Hyde abortion services will be similar to 
the burden incurred by QHP issuers offering coverage for non-Hyde 
abortion services. Therefore the total burden for a State Exchange that 
performs premium billing and payment processing will be approximately 
31,500 hours on average, with a total cost of approximately $4.1 
million. For all 3 State Exchanges that perform premium billing and 
payment processing, the total one-time burden will be 94,500 hours for 
a total cost of approximately $12.3 million.

     Table 2--Estimated One-time Burden per Issuer or State Exchange Performing Premium Billing and Payment
                                                   Processing
----------------------------------------------------------------------------------------------------------------
                                                                   Burden  hours                    Total  cost
                           Occupation                                   per         Labor cost          per
                                                                    respondent       per hour       respondent
----------------------------------------------------------------------------------------------------------------
General and Operations Manager..................................             300         $119.12         $35,736
Computer and Information Systems Manager........................             200          146.98          29,396
Computer Programmer.............................................          22,000           86.14       1,895,080
Computer System Analyst.........................................           6,500           90.02         585,130
Business Operations Specialist..................................           2,500           74.00         185,000
Total Burden and Labor Cost per respondent......................          31,500  ..............       2,730,342
Additional Costs due to Expedited Implementation................  ..............  ..............       1,365,171
                                                                 -----------------------------------------------
    Total per respondent........................................          31,500  ..............       4,095,513
----------------------------------------------------------------------------------------------------------------


[[Page 71698]]


  Table 3--Estimated One-Time Burden for All Issuers and State Exchanges Performing Premium Billing and Payment
                                                   Processing
----------------------------------------------------------------------------------------------------------------
                                     Number of       Number of     Burden hours    Total burden
       Type of respondent           respondents      responses    per respondent       hours        Total cost
----------------------------------------------------------------------------------------------------------------
Issuer..........................              94              94          31,500       2,961,000    $384,978,222
State Exchange..................               3               3          31,500          94,500      12,286,539
                                 -------------------------------------------------------------------------------
    Total.......................              97              97          31,500       3,055,500     397,264,761
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time costs estimated, issuers will incur 
ongoing annual costs, such as those related to identifying impacted 
enrollees, ensuring billing accuracy, reconciliation, quality 
assurance, printing, recordkeeping, and document retention. We estimate 
that for each issuer, on average, it will take administrative 
assistants 20,000 hours (at $36.56 per hour), business operations 
specialists 2,000 hours (at $74 per hour), computer programmers 2,000 
hours (at $86.14 per hour), and operations managers 120 hours (at 
$119.12 per hour) each year to perform these tasks. The total annual 
burden for each issuer will be 24,120 hours, with an equivalent cost of 
approximately $1.07 million. Assuming that issuers will start sending 
separate bills in July, 2020, the total burden for all 94 issuers for 
the 6 months in 2020 is estimated to be 1,133,640 hours with an 
equivalent cost of approximately $50.1 million. From 2021 onwards, we 
estimate the total annual burden for all 94 issuers will be 
approximately 2,267,280 hours with an associated cost of approximately 
$100.2 million.
    We anticipate that State Exchanges performing premium billing and 
payment processing and which have QHP issuers that offer coverage for 
non-Hyde abortion services will incur costs similar to QHP issuers 
offering coverage of non-Hyde abortion services. Therefore, we estimate 
that for all 3 State Exchanges performing premium billing and payment 
processing, the total annual burden will be approximately 36,180 hours 
with an equivalent cost of approximately $1.6 million in 2020 and 
72,360 hours with an associated cost of approximately $3.2 million 
starting in 2021.

 Table 4--Estimated Annual Burden per Issuer or State Exchange Performing Premium Billing and Payment Processing
----------------------------------------------------------------------------------------------------------------
                                                                   Burden hours
                           Occupation                                   per       Labor cost per  Total cost per
                                                                    respondent         hour         respondent
----------------------------------------------------------------------------------------------------------------
Secretaries and Administrative Assistants.......................          20,000          $36.56        $731,200
General and Operations Manager..................................             120          119.12          14,294
Business Operations Specialist..................................           2,000           74.00         148,000
Computer Programmer.............................................           2,000           86.14         172,280
                                                                 -----------------------------------------------
    Total per Respondent........................................          24,120  ..............       1,065,774
----------------------------------------------------------------------------------------------------------------


     Table 5--Estimated Annual Burden for All Issuers and State Exchanges Performing Premium Billing and Payment Processing for 2020, 2021 and 2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Burden hours
                   Type of respondent                          Year          Number of       Number of          per        Total burden     Total labor
                                                                            respondents      responses      respondent    hours per year   cost per year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Issuer..................................................            2020              94              94          12,060       1,133,640     $50,091,397
State Exchange..........................................            2020               3               3          12,060          36,180       1,598,662
Total...................................................            2020              97              97          12,060       1,169,820      51,690,058
Issuer..................................................      2021, 2022              94              94          24,120       2,267,280     100,182,794
State Exchange..........................................      2021, 2022               3               3          24,120          72,360       3,197,323
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................      2021, 2022              97              97          24,120       2,339,640     103,380,117
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In response to comments, we reviewed our original enrollee 
estimates and have updated our estimates for accuracy. Based on 2019 
QHP Certification Data in the FFEs and SBE-FPs, we now estimate that 
there are approximately 442,400 enrollees in QHPs covering non-Hyde 
abortion services. In the 11 State Exchanges that operated their own 
technology platform and had issuers that offered coverage of non-Hyde 
abortion services in 2019, we estimate that there are approximately 
2,597,700 enrollees in QHPs covering non-Hyde abortion services. The 
total number of enrollees in QHPs covering non-Hyde abortion services 
is approximately 3.04 million in 2019. The number of QHPs covering non-
Hyde abortion services will be higher in 2020 compared to 2019. 
Therefore, we are using the number of enrollees in such QHPs in 2019 as 
a lower bound for the number of enrollees who will experience an 
increase in burden as a result of the finalized policies.
    Assuming 1.5 enrollees per policy, issuers and State Exchanges 
performing premium billing and payment processing will be required to 
send a separate bill to approximately 2 million

[[Page 71699]]

policy holders. We understand that, although enrollees can often choose 
to pay electronically or by phone, choose to utilize automatic payment 
deductions, and often opt out of receiving paper bills, many enrollees 
still opt to receive physical mail detailing their coverage. We also 
understand that many enrollees face barriers to accessing the internet 
and have little choice but to receive paper bills. Because enrollees 
typically receive paper bills and because many enrollees already face 
barriers to accessing the internet, issuers are likely to experience an 
increased administrative cost in having to print an additional monthly 
bill for the majority of their policy holders. According to one 
commenter, issuers send paper bills to 92 percent of Exchange 
customers. We anticipate that the number of consumers opting for 
electronic bills will increase over time. Therefore, we assume that 
approximately 90 percent of policy holders will receive paper bills in 
2020 and issuers and State Exchanges performing premium billing and 
payment processing will need to print and send approximately 1.82 
million separate paper bills per month. Assuming materials and printing 
cost of $0.05 per page, issuers will incur additional monthly costs of 
approximately $91,200 to print separate bills for impacted policy 
holders in 2020. Assuming that issuers start sending separate bills in 
July 2020, for the 6 months in 2020, total cost for all issuers is 
estimated to be approximately $547,225. Assuming that more consumers 
will opt to receive electronic bills over time, we estimate that 
approximately 88 percent of policyholders will receive paper bills in 
2021, and the annual cost for all issuers to send separate paper bills 
will be approximately $1,070,129. We assume that, in 2022, 
approximately 86 percent of policyholders will receive paper bills, and 
the annual cost for all issuers to send separate paper bills will be 
approximately $1,045,808. The average annual materials and printing 
cost over 3 years (2020 to 2022) will be approximately $887,721. Since 
issuers and State Exchanges performing premium billing and payment 
processing will be permitted to send both bills together when sending 
bills in a physical mailing, they will not incur any additional mailing 
costs. We assume that bills sent electronically can be sent at minimal 
cost and note that we have incorporated any associated IT changes to 
accommodate electronic billing changes based on this rule above, where 
we discussed premium billing and payment processing costs to issuers 
and State Exchanges.
    FFE issuers are subject to future HHS compliance reviews, requiring 
issuers in the FFE to maintain and submit records to HHS showing 
compliance with separately billing for the portion of the policy 
holder's premium attributable to non-Hyde abortion services as 
specified in this rule. Commenters stated that HHS excluded an 
evaluation of the burden and cost for FFE issuers to participate in the 
additional HHS compliance reviews, ignoring the potential for any new 
costs associated with this requirement, such as documenting all efforts 
for audit purposes. We have revised our burden estimates to account for 
additional recordkeeping costs not reflected in the proposed rule's 
estimates but reiterate that the requirements associated with 
compliance reviews were already assessed and subsumed within issuer 
burdens described in previously finalized rules, including the 
information collection currently approved under OMB control number: 
0938-1277 (Program Integrity: Exchange, Premium Stabilization Programs, 
and Market Standards; Amendments to the HHS Notice of Benefit and 
Payment Parameters for 2014 (CMS-10516)).
    To show compliance with FFE standards and program requirements, all 
issuers seeking QHP certification in FFEs are required to submit 
responses to program attestations as part of their QHP application. 
This response already includes an attestation that the issuer agrees to 
adhere to the requirements related to the segregation of funds for 
abortion services implemented in Sec.  156.280. We have determined that 
the requirements associated with QHP certification have already been 
assessed and encompassed by the information collection currently 
approved under OMB control number: 0938-1187 (Establishment of 
Exchanges and Qualified Health Plans; Exchange Standard for Employers 
(CMS-10433)).

C. Summary of Annual Burden Estimates for Proposed Requirements

                                                                    Table 6--Annual Recordkeeping and Reporting Requirements
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                   Capital costs
                                                                    OMB control      Number of       Number of      Burden per     Total annual     Total labor    (printing and
                      Regulation section(s)                           number        respondents      responses       response         burden          cost of       materials)    Total cost ($)
                                                                                                                      (hours)         (hours)      reporting ($)        ($)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.   156.280..................................................        0938-NEW              97              97          30,600       2,968,200    $218,571,684        $887,721    $219,459,405
                                                                 -------------------------------------------------------------------------------------------------------------------------------
    Total.......................................................  ..............              97              97          30,600       2,968,200     218,571,684         887,721     219,459,405
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

D. Submission of PRA-Related Comments

    We have submitted a copy of this final rule to OMB for its review 
of the rule's information collection and recordkeeping requirements. 
The requirements are not effective until they have been approved by 
OMB.

IV. Regulatory Impact Analysis

A. Statement of Need

    This final rule implements standards to ensure enrollees receive 
the correct amount of APTC and CSRs at the time of enrollment or re-
enrollment via periodic data matching requirements. In addition, the 
provisions in this rule strengthen the mechanisms and tools for 
overseeing ongoing compliance by State Exchanges with federal program 
requirements. Finally, the provisions in this rule refine some of the 
methods for billing of the separate payment for the portion of the 
policy holder's premium attributable to non-Hyde abortion services to 
better align with congressional intent regarding the separate payments 
provision of section 1303 of the PPACA. The following summary focuses 
on the benefits and costs of the requirements in this final rule.

B. Overall Impact

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), 
Executive Order 13132 on

[[Page 71700]]

Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 
804(2)), and Executive Order 13771 on Reducing Regulation and 
Controlling Regulatory Costs (January 30, 2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity), to the 
extent permitted by law. Section 3(f) of Executive Order 12866 defines 
a ``significant regulatory action'' as an action that is likely to 
result in a rule: (1) Having an annual effect on the economy of $100 
million or more in any 1 year, or adversely and materially affecting a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or state, local or tribal 
governments or communities (also referred to as ``economically 
significant''); (2) creating a serious inconsistency or otherwise 
interfering with an action taken or planned by another agency; (3) 
materially altering the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raising novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for rules with 
economically significant effects ($100 million or more in at least 1 
year). This final rule is economically significant within the meaning 
of section 3(f)(1) of the Executive Order. Therefore, OMB has reviewed 
these regulations and HHS has provided an assessment of the potential 
costs, benefits, and transfers associated with this rule. Accordingly, 
we have prepared an RIA that presents the costs and benefits of this 
final rule.

C. Impact Estimates of the Program Integrity Provisions and Accounting 
Table

    In accordance with OMB Circular A-4, Table 7 depicts an accounting 
statement summarizing HHS's assessment of the benefits, costs, and 
transfers associated with this regulatory action. Table 8 includes a 
summary of annualized values of costs, over a perpetual time horizon at 
7 percent discount rate for Executive Order 13771 (E.O. 13771). This 
final rule implements standards that will have numerous effects, 
including ensuring that eligible enrollees receive the correct amount 
of APTC and CSR (as applicable); improving alignment with the separate 
payment requirement in section 1303 of the PPACA by requiring QHP 
issuers to send separate bills to policy holders for the portion of 
their premium attributable to non-Hyde abortion services; conducting 
effective and efficient monitoring and oversight of State Exchanges to 
ensure that enrollees are receiving the correct amount of APTC and CSRs 
in State Exchanges, and that State Exchanges are meeting the standards 
of federal law in a transparent manner; and protecting the interests of 
taxpayers, and enrollees, and the financial integrity of Exchanges 
through oversight of health insurance issuers, including ensuring 
compliance with the requirements of section 1303 of the PPACA. We are 
unable to quantify certain benefits and costs of this final rule--such 
as benefits to enrollees for timely notification of their dual 
enrollment in other qualifying coverage such as Medicare, Medicaid/
CHIP, and, if applicable, the BHP, potential increases in cost to 
states for increased oversight activities and to establish access to 
federal data systems to verify eligibility for or enrollment in 
Medicaid/CHIP or Medicare, and potential costs to enrollees such as 
increased out-of-pocket costs related to billing changes due to the 
separate payment requirements for non-Hyde abortion services. The 
effects in Table 7 reflect qualitatively assessed impacts and estimated 
direct monetary costs and transfers resulting from the provisions of 
this final rule for health insurance issuers. States impacted by PDM 
requirements will incur costs of up to $6.9 million in 2020. In 
addition, we estimate that issuers, State Exchanges, FFEs, and 
consumers impacted by the separate billing and payment requirements 
will incur costs of approximately $546.1 million in 2020, $232.1 
million in 2021, $230.7 million in 2022, and $229.3 million 2023 
onwards (see Table 10 below). We also expect that transfers from the 
federal government to consumers in the form of premium tax credits will 
decrease as a result of Exchanges conducting Medicare, Medicaid/CHIP, 
and, if applicable, BHP PDM, and increase as a result of separate 
billing and payment requirements. The net increase in premium tax 
credits is estimated to be approximately $106 million in 2021 and $96 
million in 2022 onwards.

                                            Table 7--Accounting Table
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Benefits:
----------------------------------------------------------------------------------------------------------------
Qualitative:
     Better alignment of the regulatory requirements for QHP issuer billing of premiums with the
     separate payment requirement in section 1303 of the PPACA..
     Clearer regulatory requirements for how frequently Exchanges should be conducting periodic checks
     for dual enrollment in other qualifying coverage..
     Clearer regulatory requirements for State Exchanges around CMS's oversight and reporting process
     that allows for more effective oversight of State Exchanges..
----------------------------------------------------------------------------------------------------------------
Costs:                         Estimate (million).  Year Dollar........  Discount Rate        Period Covered
                                                                          (percent).
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)  $304.09............  2019...............  7..................  2020-2024
                               $298.92............  2019...............  3..................  2020-2024
----------------------------------------------------------------------------------------------------------------
Quantitative:
----------------------------------------------------------------------------------------------------------------
     Burden incurred by issuers, states, federal government and enrollees to comply with provisions
     related to coverage of non-Hyde abortion services and the segregation of premiums for such services..
     Costs for State Exchanges not in compliance with regulatory requirements to conduct Medicare,
     Medicaid/CHIP, and, if applicable, BHP PDM..
----------------------------------------------------------------------------------------------------------------

[[Page 71701]]

 
Qualitative:
----------------------------------------------------------------------------------------------------------------
     Potential increase in costs to states for increased oversight of separate payment requirements.....
     Potential increased costs incurred by enrollees who choose to make separate payments for coverage
     of non-Hyde abortion services..
     Potential increased burden and costs for State Exchanges to authorize access to federal data
     sources to verify Medicare and Medicaid/CHIP eligibility and/or enrollment, notifying enrollees when dual
     enrollment is detected, and process QHP coverage terminations..
     Potential increased burden for assisters, agents and brokers to explain new billing process........
     Potential increase in public spending and out-of-pocket costs to enrollees if there is an increase
     in unplanned pregnancies due to loss of abortion coverage and, with respect to public spending, if those
     unplanned pregnancies are experienced by individulas who would be eligible for public benefit programs..
----------------------------------------------------------------------------------------------------------------
 Potential decrease in broker and issuer revenue due to decrease in QHP enrollment.
----------------------------------------------------------------------------------------------------------------
Transfers:                     Estimate (million).  Year Dollar percent  Discount Rate......  Period Covered
----------------------------------------------------------------------------------------------------------------
Federal Annualized Monetized   $76.2..............  2019...............  7..................  2020-2024
 ($/year).
                               $77.7..............  2019...............  3..................  2020-2024
----------------------------------------------------------------------------------------------------------------
Quantitative:
     Total transfers from the federal government to enrollees due to an increase in premium tax credit
     payments..
----------------------------------------------------------------------------------------------------------------
Qualitative:
     Increase in premiums beginning in plan year 2021...................................................
     Potential increase in out-of-pocket costs for enrollees who experience lapse in coverage for
     failing to make payments for coverage of non-Hyde abortion services due to confusion with new billing
     system..
     Potential increase in out-of-pocket costs for individuals who lose health insurance coverage due to
     increase in premiums..
     Potential increase in uncompensated care costs for people who lose health insurance coverage.......
----------------------------------------------------------------------------------------------------------------


                    Table 8--E.O. 13771 Summary Table
       [In $ millions 2016 dollars, over a perpetual time horizon]
------------------------------------------------------------------------
                                                        Estimate (7%
                                                       discount rate)
------------------------------------------------------------------------
Annualized Costs..................................               $182.98
Annualized Cost Savings...........................                     0
Annualized Net Costs..............................                182.98
------------------------------------------------------------------------

1. Functions of an Exchange (Sec.  155.200)
    Our revisions to Sec.  155.200(c) specifying that Exchanges must 
perform oversight functions or cooperate with activities related to 
oversight and financial integrity requirements are a clarification and 
not a new function. Therefore, they will not impose additional burdens 
on State Exchanges.
2. Eligibility Redetermination During a Benefit Year (Sec.  155.330)
    Our requirement that Exchanges conduct Medicare PDM, Medicaid/CHIP 
PDM, and, if applicable, BHP PDM at least twice a year beginning with 
the 2021 calendar year, adds specificity to the existing requirement 
that Exchanges must periodically examine available data sources to 
determine whether Exchange enrollees have been determined eligible for 
or enrolled in other qualifying coverage such as Medicare, Medicaid, 
CHIP, or, if applicable, the BHP. Therefore, we expect the costs 
associated with this requirement to be minimal. However, State 
Exchanges that are not already conducting PDM with the required 
frequency, or deemed in compliance with the Medicaid, CHIP, and, if 
applicable, BHP PDM requirements, will be required to engage in IT 
system development activity in order to communicate with these programs 
and act on enrollment data either in a new way, or in the same way more 
frequently. Thus, there may be additional associated administrative 
cost for these State Exchanges to implement the proposed PDM 
requirements. We anticipate a majority (up to eight) of the twelve 
State Exchanges that operate their own technology platforms would be 
exempt from the requirement to perform Medicaid/CHIP, and, if 
applicable, BHP PDM because they have shared, integrated eligibility 
systems with their respective Medicaid programs, as such they would be 
deemed in compliance with this requirement. However, we are not able to 
confirm the exact number because we have not yet set specific criteria 
and process to assess and confirm which State Exchanges would be 
exempt, and would need additional operational information from State 
Exchanges to confirm our assessment. We will establish and engage in 
that process after finalization of the rule. For a State Exchange not 
already conducting Medicare, Medicaid/CHIP, and, if applicable, BHP PDM 
at least twice a year, and that does not already have a shared, 
integrated eligibility system with its respective Medicaid/CHIP, and, 
if applicable, BHP programs, we estimate that it will cost 
approximately $1,740,000 per State Exchange (a total of $6,960,000 for 
all 4 nonexempt State Exchanges) to build such capabilities in their 
system. We assume that this cost will be incurred primarily in 2020. 
These costs would be incurred by the State Exchange as they are 
required to be financially self-sustaining and do not receive federal 
funding for their establishment or operations.
    We believe these changes will support HHS's program integrity 
efforts regarding the Exchanges by helping promote a balanced risk pool 
for the individual market as Medicare and Medicaid/CHIP beneficiaries 
tend to be higher utilizers of medical services, ensuring that 
consumers are accurately

[[Page 71702]]

determined eligible for APTC and income-based CSRs, and safeguarding 
consumers against enrollment in unnecessary or duplicative coverage. 
Such unnecessary or duplicative coverage, coupled with typically higher 
utilization, generally results in higher premiums across the individual 
market, leading to unnecessarily inflated expenditures of federal funds 
on PTC for taxpayers eligible for PTC in the individual market. We 
estimate that requiring State Exchanges to perform Medicare PDM twice a 
year will result in a reduction in PTC payments of approximately $500 
million over a 9-year period (Table 9). We believe this will not have 
any discernable impact on premiums.

                                               Table 9--Medicare PDM Effect on Premium Tax Credit Outlays
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Fiscal year               2021        2022        2023        2024        2025        2026        2027        2028        2029        Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
PTC ($ millions)................        -40         -50         -50         -50         -60         -60         -60         -60         -70        -500
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. General Program Integrity Oversight Requirements (Sec.  155.1200)
    We do not anticipate the changes to Sec.  155.1200(b)(2) will 
result in any additional cost for State Exchanges because the changes 
leverage an existing reporting mechanism currently used by all State 
Exchanges, the annual SMART, for meeting eligibility and enrollment 
reporting requirements. Additionally, State Exchanges are already 
required to annually contract with, and budget accordingly for, an 
external independent audit entity to perform an annual financial and 
programmatic audit as required under Sec.  155.1200(c). We believe the 
flexibility under the new Sec.  155.1200(d)(2) to permit HHS to target 
the scope of annual programmatic audits to focus on the program areas 
that are most pertinent to a State Exchange model (including SBE-FPs), 
or have the greatest program integrity implications, would allow State 
Exchanges to utilize the funds that they already allocate to 
contracting with an external independent audit entity in the most cost-
effective manner. We also believe the flexibility we are providing to 
State Exchanges in the sampling method employed by their external 
independent audit entities for testing the accuracy of eligibility 
determinations in the annual programmatic audits, along with the 
flexibility for HHS to set the reporting deadlines for State Exchanges 
under Sec.  155.1200 on an annual basis, will also allow State 
Exchanges to utilize the funds that they have already allocated to 
these activities in the most cost-effective manner.
4. Segregation of Funds for Abortion Services (Sec.  156.280)
    In Sec.  156.280, we proposed to amend billing and premium 
collection requirements related to the separate payment requirement for 
coverage of abortions for which public funding is prohibited pursuant 
to section 1303 of the PPACA, as implemented at Sec.  156.280. We 
originally proposed that QHP issuers send an entirely separate monthly 
bill in a separate envelope to the policy holder for only the portion 
of premium attributable to coverage of non-Hyde abortion services, and 
instruct the policy holder to pay the portion of their premium 
attributable to coverage of non-Hyde abortion services in a separate 
transaction from any payment the policy holder makes for the portion of 
their premium not attributable to coverage of non-Hyde abortion 
services. We are also finalizing that QHP issuers must begin complying 
with these billing changes on or before the date that is 6 months after 
publication of the final rule. If the date that is 6 months after 
publication of the final rule falls in the middle of the QHP issuer's 
billing cycle (in other words, after the QHP issuer has already sent 
out bills to policy holders for that month), QHP issuers would be 
expected to begin complying the next billing cycle immediately 
following that date. We will consider extending enforcement discretion 
to an Exchange or QHP that fails to timely comply with the separate 
billing policy as required under this final rule, if we find that the 
Exchange or QHP issuers attempted in good faith to timely meet the 
requirements. We believe these changes to the proposed policy will 
advance HHS's goal of more closely aligning the regulatory requirements 
for QHP issuer billing of premiums with the separate payment 
requirement in section 1303 of the PPACA, while also mitigating the 
overall burden to affected issuers, states, and enrollees.
    HHS received many comments stating that we greatly underestimated 
the burden caused by these proposals. Although we recognized in the 
proposed rule that QHP issuers that cover non-Hyde abortion services 
would experience an increase in burden as a result of finalizing these 
changes, we are committed to mitigating issuer burden where possible 
and, as such, are finalizing changes to Sec.  156.280(e)(2) that we 
believe will result in a lower overall regulatory burden than what 
issuers would have incurred if the provisions were finalized as 
originally proposed. Specifically, we are amending the proposals at 
Sec.  156.280(e)(2) to finalize in a new paragraph at Sec.  
156.280(e)(2)(ii)(A) that QHP issuers offering coverage of non-Hyde 
abortion services through an Exchange must send an entirely separate 
monthly bill to the policy holder for the portion of premium 
attributable to coverage of non-Hyde abortion services, but they will 
be permitted to send this separate bill in the same mailing (although 
not in the same email or electronic communication) as the bill for the 
portion of the policy holder's premium not attributable to coverage of 
non-Hyde abortion services when sending paper copies of bills to policy 
holders. We are finalizing that, when issuers sending or issuing bills 
electronically, the issuer must send or issue a separate bill for the 
portion of the premium attributable to coverage of non-Hyde abortion 
services in a separate email or electronic communication from the bill 
for the rest of the policy holder's premium. We are also finalizing at 
a new paragraph Sec.  156.280(e)(2)(ii)(B) the requirement that, 
although the QHP issuer would not be permitted to refuse a combined 
payment on the basis that the policy holder did not send two separate 
payments as requested by the QHP issuer, and to then terminate the 
policy, subject to any applicable grace period, for non-payment of 
premiums, the QHP issuer must continue to instruct the policy holder to 
pay the portion of their premium attributable to coverage of non-Hyde 
abortion services in a separate transaction from any payment the policy 
holder makes for the portion of their premium not attributable to 
coverage of non-Hyde abortion services. We are also finalizing that QHP 
issuers must begin complying with these billing changes on or before 
the date that is 6 months after publication of the final rule. We 
believe these changes to the proposed policy will advance HHS's goal of 
more closely aligning the regulatory requirements for QHP issuer 
billing of premiums with the separate payment requirement in

[[Page 71703]]

section 1303 of the PPACA, while also mitigating the overall burden to 
affected issuers, states, and enrollees.
    However, we acknowledge that the changes we are finalizing will 
still result in additional burden for issuers. HHS received many 
comments on the original proposals arguing that the burden imposed on 
issuers would significantly exceed the estimated burden included in the 
proposed rule. Some commenters from the issuer community conducted 
internal surveys, providing detailed accounts to HHS of the various 
ways in which they believe HHS underestimated the burden and detailing 
the various issuer and Exchange activities that would be necessary for 
implementation that HHS failed to account for in estimating the burden.
    The following one-time changes are issuer activities that 
commenters stated HHS should account for in response to the proposed 
policy, and that we expect may still be necessary for issuers under the 
amendments we are finalizing: Planning, assessment, budgeting, funding 
approval, and allocating funds and resources for the actual technical 
build (a process of 6 to 9 months); changes to system architecture to 
allow multiple billing statements per policy holder; changes to 
enrollment systems to identify enrollees subject to separate billing 
and payment requirements; automating the processes to send separate 
invoices (mail or electronic communication); adding electronic 
communications and payment links (for example, to issuer's online 
payment portal) for enrollees to pay separately for the separate bill; 
changes to call center training/scripting, response processes, billing-
related outreach, and interactive voice response (IVR) technology; 
changes to enrollee notifications related to non-payment and the 3-
month grace period; updating Health Insurance Casework System (HICS) 
and DOI complaint processes, changes to grievance/appeals processes; 
and testing to ensure accuracy of separate billing processes. 
Commenters also stated that HHS should have accounted for the 
development of new training materials. Commenters explained that 
issuers would need to develop additional materials and training modules 
for customer service representatives, brokers, and agents, so that they 
could address member questions and educate them, particularly on the 
risk of losing coverage should members fail to pay the multiple bills.
    We expect the following one-time activities to add burden for 
issuers as issuers must still make system changes to accommodate policy 
holders paying separately, potential changes to binder payment 
processing to collect two separate payments to effectuate enrollment; 
changes to processes to intake payments, including automating ability 
to match identity and match multiple payments from a policy holder; 
changes to pay-by-phone and online payment portal to support dual 
invoices and separate payments, while also supporting combined payments 
for enrollees who do not make separate payments; changes to processes 
for enrollment and payment reconciliation, including 834 matching to 
effectuate enrollments; and adding new processes to address scenarios 
where an enrollee's payment is not processed because the bank flags 
payment as potentially fraudulent (expected to occur for multiple 
payments in the same day or $1 payments).
    Commenters also noted several activities issuers would have to 
complete annually to effectively implement these proposals would also 
significantly raise the annual burden for issuers. The following annual 
changes are activities raised by commenters in response to the proposed 
policy, but that we expect will still be relevant under the amendments 
we are finalizing: Generating separate billing statements (paper or 
electronic) and additional member education materials to explain 
separate billing; administrative expenses in generating twice as many 
bills; quality assurance to ensure accuracy of separate billing 
statements; additional customer service resources, including additional 
staffing and training, to address enrollee questions, confusion, 
frustration, etc.; increased resources for HICS/DOI case resolution; 
system testing for billing accuracy; identifying enrollees who did not 
meet an issuer's premium payment threshold and enter a grace period for 
non-payment of premium if they fail to pay the second bill; managing 
the grace period process for a higher volume of enrollees who enter a 
non-payment grace period (notices, termination, appeals process, 
reinstatement), and verification and reconciliation of the two separate 
bills. Commenters also stated that issuer costs should account for 
additional staffing since issuers would need to hire additional FTEs 
for reconciliation and auditing of the enrollment, billing, delinquency 
and payment processes and to manage the added complexity for the 
Exchange back-end processes.
    Because the policy as finalized will require QHP issuers to 
instruct the policy holder to pay the portion of their premium 
attributable to coverage of non-Hyde abortion services in a separate 
transaction from any payment the policy holder makes for the portion of 
their premium not attributable to coverage of non-Hyde abortion 
services, we anticipate that the burden associated with the following 
annual activities raised by commenters will still be relevant: 
Budgeting for fees for collecting and processing multiple payments, 
such as bank processing fees; processing and reconciling separate 
payments (paper and electronic) sent by enrollees; additional resources 
for manual review where automated processes are not able to reconcile 
enrollments and payments; and managing the grace period process for a 
higher volume of enrollees who enter a non-payment grace period 
(notices, termination, appeals process, reinstatement).
    Comment: Many commenters expressed concerns that these burdens 
would fall hardest on those issuers in states that require QHPs to 
cover non-Hyde abortion services, and that if issuers in these states 
find the requirements overly burdensome they would not have an option 
to eliminate coverage of non-Hyde abortion services and would thus have 
to absorb all associated costs or pass those costs onto enrollees. One 
commenter stated that the proposals are also likely to have an impact 
off-Exchange, as issuers offering plans on the Exchange are also 
generally required under guaranteed availability to offer the plans off 
the Exchange, and that because these administrative processes are fixed 
investments across all plans, it is likely that many plans would simply 
change their systems to apply to all plans even though the proposals 
would only require QHPs to comply.
    Response: Setting aside the question of whether state laws 
requiring coverage of non-Hyde abortion services on the Exchange are 
consistent with statutory conditions on federal funding from the 
Department to the States, we acknowledge that some states have such 
laws. The changes we are finalizing do not preempt state law regarding 
coverage of non-Hyde abortion services or otherwise attempt to coerce 
states into changing these laws. Although we acknowledge that issuers 
in these states would incur additional costs if they choose to continue 
offering individual market plans, HHS is refining the method issuers 
use to comply with the separate payment requirement, changes that we 
believe are necessary to align issuer billing with the separate payment 
requirement in section 1303 of the PPACA.
    The burden and costs related to the one-time technical changes have 
been

[[Page 71704]]

previously estimated in section III ``Collection of Information 
Requirements'' of this final rule. We have also updated HHS's estimates 
in the Collection of Information Requirements section to reflect some 
of the increased annual burden to be incurred by issuers. Additionally, 
based on comments we received, we estimate that issuers will incur 
ongoing annual costs associated with activities such as processing and 
reconciling separate payments, support for enrollees who enter grace 
period for non-payments, customer service, outreach and compliance. We 
estimate that each issuer will incur additional annual costs of 
approximately $1 million for these activities. Assuming that issuers 
will start sending separate bills in July 2020, the total annual cost 
of for all 94 issuers will be approximately $47 million for the 6 
months in 2020 and $94 million for 2021 onwards. Since issuers will not 
be able to take the costs incurred in 2020 into consideration when 
setting rates for the 2020 plan year, it is possible that some issuers 
will exit the individual market or incur losses. We acknowledge that 
QHP issuers may choose to make similar billing changes off-Exchange to 
maximize their investment in making system changes to comply with the 
separate billing policy required for on-Exchange QHPs. However, we note 
that the separate billing policy we are finalizing only requires QHP 
issuers to implement the required changes for their on-Exchange QHPs 
offering non-Hyde abortion coverage.
    Comment: Commenters also stated that issuers would be required to 
consider the added operational and administrative costs when setting 
actuarially sound rates, which would lead to higher premiums for 
enrollees. Commenters also expressed concern that the additional 
administrative costs would be so high that they would place issuers at 
risk of not meeting the required Medical Loss Ratio (MLR) limits.
    Response: We believe that the changes we are finalizing to Sec.  
156.280(e)(2) will result in a lower burden than the provisions as 
originally proposed and as such will lessen the degree to which issuers 
have to raise enrollee premiums. However, we acknowledge that issuers 
will still incur significant burden and costs as estimated above. Based 
on the total premiums in the 21 states that have QHP issuers offering 
non-Hyde abortion coverage, we estimate that there will be no premium 
impact in 2020 (as plan year 2020 premium rates will already be 
finalized), and an approximate premium impact of up to 1.0 percent in 
plan year 2021 and each year thereafter.
    We also estimate that enrollment will be reduced in the impacted 
states very slightly as a result of the increase to premiums. In plan 
year 2021 and each year after, we estimate that APTC amounts will be 
increased by up to $146 million when premium rates reflect the 
projected additional administrative and operational expense burdens. We 
do not anticipate that the policies finalized at Sec.  156.280(e)(2) 
will measurably increase MLR rebates as we believe that QHP issuers 
would either cease offering coverage of non-Hyde abortion services 
(unless state law requires QHP issuers to offer coverage of non-Hyde 
abortion services) in the plan year following the effective date to 
avoid issuing additional MLR rebates or would pay for the increased 
administrative costs from a different revenue source. Further, as noted 
elsewhere in this rule, among the previously acceptable methods for QHP 
issuers to comply with the separate payment requirement was sending a 
separate monthly bill for these services. Therefore, if any issuers 
already elected this option, there should be no change or impact on MLR 
rebates as a result of the policies finalized at Sec.  156.280(e)(2). 
We believe these additional costs are necessary to achieve better 
alignment of issuer billing with the statute, and strikes a better 
balance between burden and benefit than if HHS were to require issuers 
to send the separate bill in a separate mailing.
    Comment: Commenters also expressed concerns with the burdens these 
changes would impose on Exchanges, which commenters noted would need to 
make time consuming and resource intensive changes to their websites, 
enrollment systems, and customer service and outreach efforts 
(including the reallocation of marketing funds that currently provide 
critical enrollee outreach which drives Exchange success) to align with 
the separate billing and payment requirements, which would be costly 
and disrupt states' Exchange efficiency. Commenters noted a variety of 
changes Exchanges would be required to make, including communicating 
the new separate billing and payment requirement to enrollees during 
the enrollment process; updating the online payment portal (the ``Pay 
Now'' button on HealthCare.gov) to collect the binder payment through 
two separate transactions; updating the enrollment materials and 
notices that reference binder payment requirements to effectuate 
coverage, updating call center scripting and customer service to 
address questions related to separate billing and payment (since 
questions related to payments should be referred to the issuer, but 
that the call center should be prepared to answer questions about why 
enrollees are required to make multiple payments); and update complaint 
processes to address complaints and questions related to separate bills 
and payments.
    One commenter estimated that the proposed changes would cost 
$250,000 annually for its State Exchange customer service center, 
$152,000 annually for customer outreach, and $19,000 annually to 
resolve customer complaints and appeals. Another commenter estimated 
that the proposals would cost its state Exchange an additional $2.9 
million annually in customer service costs, $2.25-$2.75 million for IT 
system changes, and $3.6 million annually for outreach and education, 
which reflects one-quarter of that state Exchange's annual advertising 
and outreach budget. Commenters also stated that, because the proposed 
changes would lead to decreased QHP enrollment, the proposed rule would 
cause a corresponding loss of revenue to the Exchange. Commenters also 
highlighted how any lapse or loss of enrollee coverage due to these 
proposals would result in more individuals turning to state-funded 
programs or emergency care for their treatment needs and that any loss 
of coverage would decrease the size of the risk pool and increase the 
cost of uncompensated care, driving medical costs and health insurance 
rates higher generally. For example, one commenter estimated that each 
one percentage point decline in the uninsured rate is associated with a 
$167 million drop in uncompensated care.
    Response: We acknowledge that these provisions will impact Exchange 
operations. Exchanges perform important enrollee-facing functions that 
could be integral to issuer and enrollee compliance with the new 
requirements. Ultimately, we believe the changes we are finalizing will 
mitigate some of the burden on Exchanges that would have been incurred 
if we were finalizing as proposed by decreasing potential enrollee 
confusion and lessening potential issuer burden.
    We anticipate that State Exchanges will incur additional one-time 
costs associated with technical changes such as updating online payment 
portals to accept separate payments and updating enrollment materials 
and notices that reference binder payments. In addition, State 
Exchanges will incur ongoing annual costs associated with increased 
customer service, outreach, and compliance. Based on comments, we 
estimate that each State Exchange will

[[Page 71705]]

incur, on average, one-time costs of $750,000 in 2020, and ongoing 
annual costs of approximately $200,000 for the 6 months in 2020 and 
$400,000 in 2021. We anticipate that ongoing annual costs will decrease 
over time as consumers become used to receiving and paying separate 
bills. We estimate that ongoing annual costs will be approximately 
$300,000 for each State Exchange in 2022 and $200,00 in 2023 and after. 
The total one-time cost for all 12 State Exchanges affected by these 
requirements will be approximately $9 million in 2020. Total ongoing 
costs for all 12 State Exchanges is estimated to be approximately $2.4 
million in 2020, $4.8 million in 2021, $3.6 million in 2022 and $2.4 
million 2023 onwards. In addition, we anticipate that the 3 State 
Exchanges that perform premium billing and payment processing will 
incur annual ongoing costs similar to QHP issuers that offer coverage 
of non-Hyde abortion services, as discussed above. We estimate that 
each State Exchange that performs premium billing and payment 
processing will incur additional annual costs of approximately $1 
million. The total annual cost for all 3 State Exchanges performing 
premium billing and payment processing will be approximately $1.5 
million in 2020 and $3 million for 2021 onwards.
    Comment: One commenter also stated that the federal government will 
incur additional expenses due to additional personnel time and other 
resources needed to ensure that QHPs on the FFEs comply with the 
proposed rule's requirements and to ensure compliance if a State 
Exchange is unable to do so, costs that will be passed on to consumers 
in the form of taxes.
    Response: We acknowledge that the FFEs will experience added burden 
as a result of the final policy. However, because federal government 
compliance efforts will be covered primarily by FFEs user fees, we 
disagree that the added costs on the FFEs will be passed on to 
consumers in the form of taxes (though any increase in user fees may be 
passed on to enrollees in the form of increased premiums). We do, 
however, anticipate that the FFEs will incur additional costs due to 
one-time technical changes and increased call volumes and additional 
customer services efforts. We do not anticipate that the FFEs will need 
to make any operational changes to comply with these final policies. We 
estimate that the FFEs will incur a one-time cost of $750,000 in 2020 
and ongoing annual cost of approximately $400,000 in 2020 and $800,000 
in 2021 to implement these provisions. As consumers become used to 
receiving and paying separate bills, the ongoing costs should decrease. 
We estimate that ongoing costs will be approximately $600,000 in 2022 
and $400,000 in 2023 onwards.
    Comment: Commenters stated that Navigators and in-person assisters 
will also need to invest time and training resources necessary to 
ensure that they can provide support to enrollees (especially 
populations who would be disproportionately impacted by these 
proposals, including the most financially vulnerable and those with 
limited English proficiency) as they become acquainted with additional 
steps needed to maintain coverage as a result of the proposed changes. 
Commenters also noted that any level of QHP disenrollment resulting 
from the proposed changes will result in decreased broker revenue and 
potential loss of broker participation in the market.
    Response: Although there also may be an impact on Navigators, 
brokers, and other assisters, we believe these entities receive 
training and generally keep abreast of policy changes as part of their 
normal duties. As such, we believe these requirements will not amount 
to any additional burden above that already experienced by Navigators, 
brokers, and other assisters as a result of providing support to 
enrollees who are navigating these new billing requirements.
    Comment: Many commenters also stated that enrollees would incur 
ancillary costs that would further drive up administrative costs and 
burden for enrollees, including postage costs, money order fees, or 
other banking fees for the second bill and cautioned that these costs 
will be felt most strongly by low income enrollees.
    Many commenters stated that these proposals would transfer the 
costs and burdens of accessing non-Hyde abortion services to enrollees 
who must seek coverage for abortion elsewhere or pay out-of-pocket. 
Commenters estimated that non-Hyde abortions can cost between $400 and 
$1900. Commenters noted that low-income women who lack insurance 
coverage for abortion often struggle to pay for the procedure out-of-
pocket, causing financial hardship that can drive families further into 
poverty. Commenters also expressed concern that when legal abortion is 
inaccessible, people who seek to end their pregnancy turn to unsafe and 
illegal methods, risking arrest, serious injury, or even death. 
Commenters also suggested that the changes would have a 
disproportionate effect on enrollee groups who already face barriers to 
care at higher rates such as low-income individuals, young people, 
people of color, individuals with LEP, lesbian, gay, bisexual, 
transgender and queer enrollees, the Latinx community, people with 
disabilities, rural residents, individuals without access to the 
internet, and American Indian/Alaskan Native populations.
    Response: We acknowledge that as originally proposed, the 
combination of issuer burden and enrollee confusion could have 
potentially led to a reduction in the availability of coverage of non-
Hyde abortion services in insurance (either by issuers choosing to drop 
this coverage to avoid the additional costs or by enrollees having 
their coverage terminated for failure to pay the second bill), thereby 
increasing out-of-pocket costs for those seeking those services.
    We understand that, even with the changes we are finalizing, the 
increased burden associated with issuers complying with the separate 
billing policy, could influence whether a QHP issuer continues offering 
coverage of non-Hyde abortion services in states that do not require 
it. However, we believe allowing the separate bill to be included in 
the same mailing (although not in the same email or other electronic 
communication), and allowing issuers to accept combined payments when 
policy holders fail to pay separately for the separate bill will 
mitigate some of the potential issuer and Exchange burden and consumer 
confusion associated with the proposed policy, thereby decreasing the 
likelihood that issuers will drop coverage of non-Hyde abortion 
services solely to avoid the burden associated with these changes or 
solely to avoid having to terminate enrollees coverage for non-payment 
of miniscule amounts.
    We are also finalizing an enforcement posture that will further 
mitigate the risk of potential coverage loss. We intend to propose 
further rulemaking to change our regulations to mitigate this risk. 
Until we can effectuate such changes, we will exercise enforcement 
discretion as an interim step. Specifically, HHS will not take an 
enforcement action against a QHP issuer that adopts and implements a 
policy, beginning on or after the effective date for the separate 
billing policies, applied uniformly to all its QHP enrollees, under 
which an issuer does not place an enrollee into a grace period and does 
not terminate QHP coverage based solely on the policy holder's failure 
to pay the separate payment for coverage of non-Hyde abortion services. 
We note that the QHP issuer would still be required to collect the 
premium for the non-Hyde abortion coverage. We also

[[Page 71706]]

will not take enforcement action against QHP issuers that, beginning 
upon the effective date of the final rule, modify the benefits of a 
plan either at the time of enrollment or during a plan year to 
effectively allow enrollees to opt out of coverage of non-Hyde abortion 
services by not paying the separate bill for such services, resulting 
in the enrollee having a modified plan that does not cover non-Hyde 
abortion services and that no longer obligates the enrollee to pay the 
required premium for such services. QHP issuers taking this approach 
should implement appropriate measures to distinguish between a policy 
holder's inadvertent non-payment of the separate bill for non-Hyde 
abortion services and a policy holder's intentional nonpayment of the 
separate bill. Although both of these approaches would be entirely 
optional for a QHP issuer, we believe that offering this enforcement 
discretion strikes an appropriate balance between honoring section 
1303's requirement for issuers to calculate the actuarial cost of non-
Hyde abortion coverage and bill and collect premiums for such coverage 
in separate transactions, protecting enrollees against inadvertent 
losses of coverage, and ensuring all enrollees have access to coverage 
that meets their needs and that does not result in their supporting 
coverage for non-Hyde abortion services to which they object. We 
acknowledge that QHP issuers that do not utilize this available 
enforcement discretion may subsequently experience a higher number of 
enrollee terminations as a result of delinquent premium payments, which 
could influence whether a QHP issuer continues offering coverage of 
non-Hyde abortion services in states that do not require it.
    Because enrollees will be instructed to make separate payments, 
those that follow the instructions may need to pay for additional 
postage, money order fees, credit card fees, or other banking fees for 
the second bill depending on how the QHP issuer implements this policy. 
For example, policy holders who have funds automatically withdrawn from 
their bank accounts may need to arrange for a second withdrawal and may 
encounter additional fees. Additionally, because QHP issuers often 
incur fees for credit card transactions and these fees would double 
when a policy holder is paying in two separate transactions, QHP 
issuers may decide to transfer the cost of those credit card 
transaction fees onto policy holders choosing to pay via credit card 
rather than covering the cost of those transactions themselves. Policy 
holders that pay their premium bills via money order may need to pay an 
additional fee for the additional money order they submit for payment 
of the separate bill.
    Comment: Many commenters stated that the proposals would cause 
considerable and unnecessary confusion and frustration for enrollees 
that may jeopardize their health insurance coverage by making it more 
difficult for policy holders to pay their premium bills, which could 
potentially result in their coverage being terminated for unintentional 
non-payment. Commenters also expressed concerns that despite consumer 
education and outreach, enrollees would likely not understand this 
change in billing.
    Many commenters also stated that we underestimated the number of 
enrollees who would be impacted by these proposals. One commenter 
stated that there are 2 million enrollees alone in states where non-
Hyde abortion coverage is required in all plans. Another commenter 
conducted an internal member survey, to which ten issuers responded, 
indicating that 2.4 million enrollees would be impacted across these 
ten issuers. This commenter noted that these ten issuers do not 
represent all health insurance issuers who would be required to comply 
with the proposals and that, thus, the number of affected enrollees 
would be greater than 2.4 million. Another commenter stated that the 
rule would impact 3 million enrollees. As such, commenters stated that 
we underestimated how much it would cost enrollees annually to comply 
with the proposals. Commenters also objected that we excluded the cost 
of enrollees learning in our estimate.
    Response: We based our initial estimates on 2018 QHP Certification 
data, and we acknowledge that the estimates may not have captured the 
exact number of enrollees that may be impacted by this final rule. In 
response to comments, we have reviewed our methodology and have updated 
our enrollee estimates accordingly. We also acknowledge that enrollees 
may initially be confused by receiving a separate bill for the portion 
of their premium attributable to coverage of non-Hyde abortion services 
in the same envelope as the bill for the rest of their premium. We 
believe that the provisions as finalized will minimize enrollee 
confusion surrounding the second bill for those receiving paper bills 
and will help to ensure that policy holders pay the entire premium due 
including the portion attributable to non-Hyde abortion services. There 
is still potential for confusion and loss of coverage for enrollees who 
receive electronic bills, due to failure to pay the second bill sent 
through a separate electronic communication, but the mechanisms by 
which electronic bills are paid may mitigate or lessen the potential 
for confusion over separate bills. We believe enrollee outreach and 
education will assist in further mitigating this risk.
    Based on 2019 QHP certification data for the FFEs and SBE-FPs, we 
now estimate that there are approximately 442,400 enrollees in QHPs 
covering non-Hyde abortion services. In the 11 State Exchanges that 
operated their own technology platforms and had issuers that offered 
coverage of non-Hyde abortion services in 2019, we estimate that there 
are approximately 2,597,700 million enrollees enrolled in QHPs offering 
coverage for non-Hyde abortion. As noted previously in section III 
``Collection of Information Requirements'' of this final rule, we 
estimate that there are approximately 3.04 million enrollees impacted 
by these provisions. Assuming 1.5 enrollees per policy, issuers will be 
required to send a separate bill to approximately 2 million policy 
holders. We believe that finalizing the policies to allow for the 
separate bill to be sent in the same mailing with the bill for the rest 
of the policy holder's premium will minimize enrollee confusion and 
burden.
    We acknowledge that some policy holders will fail to pay in a 
separate transaction for both bills, and acknowledge that the burden 
may be moderately higher for those policy holders who follow 
instructions to pay in separate transactions. We also acknowledge that 
enrollees may experience burden in receiving a separate bill to which 
they are not yet accustomed in the same mailing as for the other 
portions of their premium or in a separate electronic communication. As 
such, using the May 2018 National Occupational Employment and Wage 
Estimates United States, Department of Labor's Bureau of Labor 
Statistics (BLS) (https://www.bls.gov/oes/current/oes_stru.htm), listed 
national mean hourly wage for the 25th percentile,\28\ we estimate that 
for the 2020 plan year each policy holder will incur a burden of 
approximately 1 hour (at a cost of $12.37 per hour) to read and 
understand the separate bills received the first time and seek help 
from customer service if necessary, and approximately 5 minutes for 
each of the subsequent 5 months, resulting in a total estimated annual 
burden of 1.42 hours with an associated annual cost of approximately 
$18. For

[[Page 71707]]

all policy holders we estimate that the initial 2020 burden will be 
approximately 2.9 million hours with and associated annual cost of 
$35.5 million. For subsequent years we estimate that enrollees will 
require approximately 5 minutes per month to read and understand their 
statements, resulting in an estimated annual burden of 1 hour with an 
associated annual cost of approximately $12. For all policy holders, we 
estimate that the annual enrollee burden will be approximately 2 
million hours with an associated annual cost of approximately $25.1 
million.
---------------------------------------------------------------------------

    \28\ The 25th percentile mean hourly wage most closely resembles 
the group of enrollees likely to be affected by this change as most 
enrollees enrolled in QHPs on the Exchange are between 100 percent 
and 400 percent of the federal poverty level.
---------------------------------------------------------------------------

    We also note that, although policy holders may experience burden 
related to reading and understanding the separate bills, there are non-
quantifiable benefits to policy holders in QHPs covering non-Hyde 
abortion who hold conscience objections to such coverage or policy 
holders who seek a better understanding of what their health care 
dollars are purchasing.
    HHS continues to believe that, although these changes will increase 
enrollee burden, this burden is reasonable and justified because it 
will achieve better alignment of the regulatory requirements for QHP 
issuer billing of premiums with the separate payment collection 
requirement in section 1303 of the PPACA.

                 Table 10--Summary of Costs Related to Separate Billing and Payment Requirements
----------------------------------------------------------------------------------------------------------------
                                       2020            2021            2022            2023            2024
----------------------------------------------------------------------------------------------------------------
Issuers.........................    $482,616,844    $195,252,923    $195,228,601    $195,216,441    $195,216,441
States..........................      11,400,000       4,800,000       3,600,000       2,400,000       2,400,000
State Exchanges with payment          15,385,201       6,197,323       6,197,323       6,197,323       6,197,323
 portals........................
Consumers.......................      35,517,268      25,071,013      25,071,013      25,071,013      25,071,013
Federal Government..............       1,150,000         800,000         600,000         400,000         400,000
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
    Total.......................     546,069,313     232,121,259     230,696,938     229,284,777     229,284,777
----------------------------------------------------------------------------------------------------------------

D. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule, we 
estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
reviewers on similar Exchange-related CMS rules will be the number of 
reviewers of this final rule. We acknowledge this assumption may 
understate or overstate the costs of reviewing this rule. It is 
possible that not all reviewers will review the rule in detail. For 
these reasons, we consider the number of past reviewers on similar CMS 
rules will be a fair estimate of the number of reviewers of this rule.
    We recognize that different types of entities may be affected by 
only certain provisions of this final rule, and therefore, for the 
purposes of our estimate, we assume that each reviewer reads 
approximately 50 percent of the rule.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $109.36 per hour, including overhead and fringe 
benefits.\29\ We estimate that it would take approximately 1 hour for 
each reviewer to review the relevant portions of this final rule. We 
received 75,439 comments, including 70,396 comments that were 
substantially similar to one of 13 different form letters, resulting in 
5,043 unique comments on the proposed rule. We further assume that for 
the form letters received, only the staff at the organization that 
arranged for those letters will review the final rule. Therefore, we 
estimate that there will be 5,056 individuals that review the final 
rule resulting in an estimated total cost of review of approximately 
$552,924 ($109.36 x 5,056 reviewers).
---------------------------------------------------------------------------

    \29\ https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------

E. Regulatory Alternatives Considered

    In developing the policies contained in this final rule, we 
considered numerous alternatives. Below we discuss the key regulatory 
alternatives that we considered.
    For the eligibility determination during a benefit year, we 
considered not defining ``periodically'' for the frequency of Medicare, 
Medicaid/CHIP, or BHP, if applicable, PDM as twice a year in lieu of 
further outreach, education, and coordination with State Exchanges to 
identify and notice consumers who may also be enrolled in other 
qualifying coverage with APTC/CSRs. However, we believe it is critical 
that consumers receive timely notification of their potential dual 
enrollment in other qualifying coverage to ensure that consumers are 
accurately determined eligible for APTC and income-based CSRs, and to 
ensure that consumers are not enrolling in unnecessary or duplicative 
coverage. As previously discussed in the preamble of the proposed rule, 
such unnecessary or duplicative coverage, coupled with typically higher 
utilization generally results in higher premiums across the individual 
market leading to unnecessary expenditures of federal funds on PTC for 
taxpayers eligible for PTC in the individual market.
    In finalizing the proposed changes to the general program integrity 
and oversight requirements in Sec.  155.1200, we considered not taking 
any action. However, because the existing requirements under Sec.  
155.1200(b) did not accurately reflect the current structure of CMS's 
oversight approach and reporting requirements for State Exchanges, not 
taking any action could have prevented HHS from being able to 
accurately describe our reporting requirements and strengthen our 
oversight processes for State Exchanges. In particular, we needed to 
clarify that the eligibility and enrollment reports required under 
Sec.  155.1200(b)(2) were part of the annual compliance reports that 
State Exchanges were submitting to us, and did not require submission 
of a separate report. Thus, the amendments to Sec.  155.1200(b) do not 
reflect an expansion of State Exchange reporting obligations but 
instead were intended to capture the existing annual compliance reports 
(such as the SMART) that encompass eligibility and enrollment 
reporting, as well as compliance across other Exchange program 
reqirements under 45 CFR part 155, that State Exchanges currently 
submit to HHS. Also, because the existing external programmatic audit 
requirements under Sec.  155.1200(d) did not specify how the audits 
needed to verify the accuracy of eligibility determinations made by 
State Exchanges, not taking any action would have prevented CMS from 
strengthening oversight processes by identifying a consistent procedure 
for these State Exchanges and their auditors to

[[Page 71708]]

implement in order to ensure accurate eligibility determinations.
    In finalizing the proposed changes to Sec.  155.1200(c) and (d), we 
also considered the alternative of narrowing the focus of the external 
programmatic audits to only 45 CFR part 155 subparts D and E, which 
cover Exchange eligibility and enrollment requirements. This approach 
would have focused the State Exchange's auditing resources to the areas 
with highest program integrity impact. However, this approach would 
essentially exclude SBE-FPs from the external programmatic audit 
requirements altogether because SBE-FPs utilize the federal platform to 
carry out their eligibility and enrollment functions. Additionally, 
this approach would have limited our oversight in other program 
integrity areas that are important for all State Exchanges, such as 
consumer outreach and assistance. Because the external audit 
requirements under Sec.  155.1200 is one of the only oversight tools we 
have for State Exchanges, we did not want to limit the scope of the 
Exchange functions that the external programmatic audits must cover. 
Instead, the approach finalized in this rulemaking allows us to specify 
the Exchange functions that are applicable to each State Exchange model 
through annual technical operational guidance. As State Exchanges 
continue to evolve and mature, this approach also provides HHS with the 
flexibility to focus the audits on emerging issues that raise program 
integrity concerns, while minimizing burden on State Exchanges to the 
extent possible.
    In finalizing the requirement that issuers separately bill for the 
portion of the policy holder's premium attributable to the cost of 
including coverage of non-Hyde abortion services in the QHP, and permit 
policy holders to pay for these amounts in a separate transaction if 
they so choose, as described at Sec.  156.280(e)(2), we considered 
maintaining the current methods of billing and collection without 
modification. We acknowledge that maintaining the current policy would 
promote stability for issuers and conserve administrative and 
operational resources by allowing QHP issuers to maintain their current 
process for billing for and collecting these separate payments. 
However, by requiring QHP issuers to separately bill for the portion of 
the policy holder's premium attributable to coverage of non-Hyde 
abortion services, we believe we are strengthening alignment of issuer 
billing with the statutory requirements for collecting a separate 
payment for these services required under section 1303 of the PPACA.
    We also considered finalizing the changes as originally proposed. 
However, we believe the changes we are finalizing will help to maximize 
the net benefit of achieving better statutory alignment while also 
mitigating burden where possible. For example, we considered finalizing 
the proposed requirement that issuers would be required to send the 
separate bill in a separate mailing or electronic communication. This 
would have resulted in additional mailing costs of approximately $11 
million in 2021 for all issuers. However, we believe allowing issuers 
to send the separate bill in the same mailing (although not in the same 
electronic communication) and allowing issuers to accept combined 
payments if a policy holder fails to pay the separate bill in a 
separate transaction will assist in mitigating the burden associated 
with this policy change by preventing unnecessary postage and mailing 
related costs and will mitigate issuer and Exchange burden and enrollee 
confusion generally associated with the proposed policy. We also 
believe the separate bill could assist in clarifying for enrollees that 
their plan covers non-Hyde abortion services and at what cost, 
increasing overall QHP transparency. Furthermore, we believe these 
changes will still better align issuer billing with section 1303 of the 
PPACA.
    We also considered finalizing the rule without a requirement that 
issuers instruct policy holders to pay in a separate transaction. We 
understand that requiring issuers make this instruction and make 
reasonable efforts to collect the payment separately carries up-front 
and annual costs for issuers. However, we believe that instructing 
policy holders to pay the separate bill in a separate transaction is 
important to achieving better alignment of the regulatory requirements 
for QHP issuer billing of enrollee premiums with the separate payment 
requirement in section 1303 of the PPACA.
    In addition, we considered requiring issuers to comply with the 
separate billing requirements within 3 months after the publication 
date of this final rule. We rejected this option because we estimated 
that one-time costs would have increased by 100 percent due to the 
shortened implementation period and estimated that total costs for 
issuers, State Exchanges, FFEs, and consumers would have been 
approximately $740 million in 2020. We opted to finalize a later 
effective date to avoid such a burden increase.

F. Regulatory Flexibility Act

    The RFA requires agencies to prepare an initial RFA to describe the 
impact of the final rule on small entities, unless the head of the 
agency can certify that the rule will not have a significant economic 
impact on a substantial number of small entities. The RFA generally 
defines a ``small entity'' as (1) a proprietary firm meeting the size 
standards of the Small Business Administration (SBA), (2) a not-for-
profit organization that is not dominant in its field, or (3) a small 
government jurisdiction with a population of less than 50,000. States 
and individuals are not included in the definition of ``small entity.'' 
HHS uses a change in revenue of more than 3 to 5 percent as its measure 
of significant economic impact on a substantial number of small 
entities.
    In this final rule, we set standards for certain issuers related to 
the collection of a separate payment for the premium portion 
attributable to coverage for certain abortion services. Because we 
believe that insurance firms offering comprehensive health insurance 
policies generally exceed the size thresholds for ``small entities'' 
established by the SBA, we do not believe that an initial regulatory 
flexibility analysis is required for such firms.
    For the purposes of the RFA, we expect health insurance issuers to 
be affected by this final rule. We believe that health insurance 
issuers would be classified under the North American Industry 
Classification System code 524114 (Direct Health and Medical Insurance 
Carriers). According to SBA size standards, entities with average 
annual receipts of $38.5 million or less would be considered small 
entities for these North American Industry Classification System codes. 
Issuers could possibly be classified in 621491 (HMO Medical Centers) 
and, if this is the case, the SBA size standard would be $32.5 million 
or less.\30\ We believe that few, if any, insurance companies 
underwriting comprehensive health insurance policies (in contrast, for 
example, to travel insurance policies or dental discount policies) fall 
below these size thresholds.
---------------------------------------------------------------------------

    \30\ https://www.sba.gov/document/support-table-size-standards.
---------------------------------------------------------------------------

    Therefore, we are not preparing an analysis for the RFA because we 
have determined, and the Secretary certifies, that this final rule will 
not have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Social Security Act requires us 
to

[[Page 71709]]

prepare a regulatory impact analysis if a rule may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. This analysis must conform to the provisions of section 604 
of the RFA. For purposes of section 1102(b) of the Act, we define a 
small rural hospital as a hospital that is located outside of a 
metropolitan statistical area and has fewer than 100 beds. This final 
rule will not have a significant impact on small rural hospitals. 
Therefore, the Secretary has determined that this final rule will not 
have a significant impact on the operations of a substantial number of 
small rural hospitals.

G. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing any rule that includes any federal 
mandate that may result in expenditures in any 1 year by a state, 
local, or Tribal government, in the aggregate, or by the private 
sector, of $100 million in 1995 dollars, updated annually for 
inflation. In 2019, that threshold is approximately $154 million. We 
anticipate that costs incurred by state, local, or tribal governments 
and the private sector will cross this threshold. States impacted by 
the separate billing and payment requirements at Sec.  156.280 may 
incur costs of approximately $26.8 million in 2020, 11 million in 2021, 
$9.8 million in 2022 and $8.6 million in 2023 and each year after. In 
addition, states impacted by PDM requirements will incur costs of up to 
$6.9 million in 2020. Issuers impacted by the separate billing and 
payment requirements will incur costs of approximately $482.6 million 
in 2020 and approximately $195.3 million each year after.

H. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. This final rule does not impose substantial direct costs 
on state and local governments or preempt state law. However, we 
believe the rule has Federalism implications.
    In HHS's view, this regulation has Federalism implications due to 
our requirements that Exchanges conduct Medicare, Medicaid/CHIP, and, 
if applicable, BHP PDM at least twice a year, beginning with the 2021 
calendar year. As discussed earlier in this final rule, we received 
three comments that were opposed to the requirement to conduct 
Medicare, Medicaid/CHIP and, if applicable, BHP PDM at least twice 
yearly, cautioning us that defining the exact precise frequency and 
nature of PDM encroached upon the sovereignty of the State Exchanges. 
However, HHS believes that the Federalism implications are 
substantially mitigated because the requirement sets only a minimum 
frequency with which Exchanges must conduct Medicare, Medicaid/CHIP, 
and, BHP, if applicable, PDM, which is already required to be conducted 
periodically; State Exchanges continue to have the flexibility to 
conduct PDM with greater frequency and the best way they see fit to 
implement the requirements set forth in Sec.  155.330(d). Additionally, 
as discussed earlier in this final rule, ensuring consumers are 
enrolled in the appropriate coverage remains a top priority for HHS and 
ensuring that APTC is paid appropriately is a requirement set forth in 
Sec.  155.330(d)(1)(ii) to mitigate the risk of federal dollars 
incorrectly leaving the federal Treasury in the form of APTC during the 
year. HHS believes that PDM plays a vital role in ensuring the health 
of all Exchanges, ensuring all consumers are enrolled in the 
appropriate coverage and in the case of Medicare enrollment, signing up 
at the appropriate time to avoid late enrollment penalties, and finally 
reduces the risk that consumers have to pay back all or some of APTC 
paid on their behalf during months of overlapping coverage when they 
file their federal income taxes.
    Additionally, the changes to State Exchange oversight and reporting 
requirements in Sec.  155.1200 have Federalism implications since those 
rules require State Exchanges to submit certain reports to HHS and 
require them to enter into contracts with an external independent audit 
entity to perform audits, and incur the associated costs. However, HHS 
believes that the Federalism implications are substantially mitigated 
because the changes do not impose new requirements on State Exchanges, 
but rather add specificity and flexibility with respect to the existing 
requirements. Therefore, HHS believes it has balanced states' interests 
in operating State Exchanges with the need to ensure proper federal 
oversight. By doing so, it is HHS's view that we have complied with the 
requirements of Executive Order 13132.
    As discussed earlier in this final rule, commenters stated that the 
separate billing and payment proposals at Sec.  156.280 raise 
Federalism concerns under the Tenth Amendment because the proposals are 
designed to penalize states that have laws requiring QHPs to provide 
coverage of non-Hyde abortion services by requiring states--through 
their respective Exchanges and DOIs--to adopt new oversight 
responsibilities, and make systemic changes to fit the alterations the 
proposals require. As explained previously, we disagree that this 
policy raises Federalism concerns. Setting aside the question of 
whether state laws requiring coverage of non-Hyde abortion services on 
the Exchange are consistent with statutory conditions on federal 
funding from the Department to the States, we acknowledge that some 
states have such laws. However, the changes we are finalizing do not 
preempt state law regarding coverage of non-Hyde abortion services or 
otherwise attempt to coerce states into changing these laws. HHS is 
simply refining the method with which issuers use to comply with the 
separate payment requirement. We refer readers to section II.B of this 
final rule regarding the discussion of Sec.  156.280 for further 
information.

I. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, entitled ``Reducing Regulation and 
Controlling Regulatory Costs,'' was issued on January 30, 2017 and 
requires that the costs associated with significant new regulations 
``shall, to the extent permitted by law, be offset by the elimination 
of existing costs associated with at least two prior regulations.'' 
This final rule is expected to be an Executive Order 13771 regulatory 
action. We estimate that this rule generates $182.98 million in 
annualized costs, discounted at 7 percent relative to year 2016, over a 
perpetual time horizon. Details on the estimated costs of this rule can 
be found in the preceding analyses.\31\
---------------------------------------------------------------------------

    \31\ We estimate costs of approximately $553.6 million in 2020, 
approximately $232.1 million in 2021, approximately $230.7 million 
in 2022, and annual costs of approximately $229.3 million 
thereafter. Thus the annualized value of costs, as of 2016 and 
calculated over a perpetual time horizon with a 7 percent discount 
rate, is $182.98 million.
---------------------------------------------------------------------------

J. Congressional Review Act

    This final rule is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can 
take effect, the federal agency promulgating the rule shall submit to 
each House of the Congress and to the Comptroller General a report

[[Page 71710]]

containing a copy of the rule along with other specified information, 
and has been transmitted to the Congress and the Comptroller General 
for review.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

45 CFR Part 155

    Administrative practice and procedure, Advertising, Brokers, 
Conflict of interests, Consumer protection, Grants administration, 
Grant programs-health, Health care, Health insurance, Health 
maintenance organizations (HMO), Health records, Hospitals, Indians, 
Individuals with disabilities, Intergovernmental relations, Loan 
programs-health, Medicaid, Organization and functions (Government 
agencies), Public assistance programs, Reporting and recordkeeping 
requirements, Technical assistance, Women and youth.

45 CFR Part 156

    Administrative practice and procedure, Advertising, Advisory 
committees, Brokers, Conflict of interests, Consumer protection, Grant 
programs-health, Grants administration, Health care, Health insurance, 
Health maintenance organization (HMO), Health records, Hospitals, 
Indians, Individuals with disabilities, Loan programs-health, Medicaid, 
Organization and functions (Government agencies), Public assistance 
programs, Reporting and recordkeeping requirements, State and local 
governments, Sunshine Act, Technical assistance, Women, Youth.
    For the reasons set forth in the preamble, the Departement of 
Health and Human Servcies amends 45 CFR parts 155 and 156 as set forth 
below:

PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED 
STANDARDS UNDER THE AFFORDABLE CARE ACT

0
1. The authority citation for part 155 continues to read as follows:

    Authority: 42 U.S.C. 18021-18024, 18031-18033, 18041-18042, 
18051, 18054, 18071, and 18081-18083.

0
2. Section 155.200 is amended by revising paragraph (c) to read as 
follows:


Sec.  155.200  Functions of an Exchange.

* * * * *
    (c) Oversight and financial integrity. The Exchange must perform 
required functions and cooperate with activities related to oversight 
and financial integrity requirements in accordance with section 1313 of 
the Affordable Care Act and as required under this part, including 
overseeing its Exchange programs and non-Exchange entities as defined 
in Sec.  155.260(b)(1).
* * * * *

0
3. Section 155.330 is amended by revising paragraph (d)(1) introductory 
text and adding paragraph (d)(3) to read as follows:


Sec.  155.330   Eligibility redetermination during a benefit year.

* * * * *
    (d) * * *
    (1) General requirement. Subject to paragraph (d)(3) of this 
section, the Exchange must periodically examine available data sources 
described in Sec. Sec.  155.315(b)(1) and 155.320(b) to identify the 
following changes:
* * * * *
    (3) Definition of periodically. Beginning with the 2021 calendar 
year, the Exchange must perform the periodic examination of data 
sources described in paragraph (d)(1)(ii) of this section at least 
twice in a calendar year. State Exchanges that have implemented a fully 
integrated eligibility system with their respective State Medicaid 
programs, that have a single eligibility rules engine that uses MAGI to 
determine eligibility for advance payments of the premium tax credit, 
cost-sharing reductions, Medicaid, CHIP, and the BHP, if a BHP is 
operating in the service area of the Exchange, will be deemed in 
compliance with the Medicaid/CHIP PDM requirements and, if applicable, 
BHP PDM requirements, in paragraphs (d)(1)(ii) and (d)(3) of this 
section.
* * * * *


0
4. Section 155.1200 is amended by--
0
a. Revising paragraphs (b) introductory text, (b)(1) and (2), and (c) 
introductory text;
0
b. Revising paragraphs (d)(2) and (3);
0
c. Redesignating (d)(4) as paragraph (d)(5);
0
d. Adding a new paragraph (d)(4); and
0
e. Revising newly redesignated paragraph (d)(5).
    The revisions and addition read as follows:


Sec.  155.1200   General program integrity and oversight requirements.

* * * * *
    (b) Reporting. The State Exchange must, at least annually, provide 
to HHS, in a manner specified by HHS and by applicable deadlines 
specified by HHS, the following data and information:
    (1) A financial statement presented in accordance with GAAP,
    (2) Information showing compliance with Exchange requirements under 
this part 155 through submission of annual reports,
* * * * *
    (c) External audits. The State Exchange must engage an independent 
qualified auditing entity which follows generally accepted government 
auditing standards (GAGAS) to perform an annual independent external 
financial and programmatic audit and must make such information 
available to HHS for review. The State Exchange must:
* * * * *
    (d) * * *
    (2) Compliance with subparts D and E of this part 155, or other 
requirements under this part 155 as specified by HHS;
    (3) Processes and procedures designed to prevent improper 
eligibility determinations and enrollment transactions, as applicable;
    (4) Compliance with eligibility and enrollment standards through 
sampling, testing, or other equivalent auditing procedures that 
demonstrate the accuracy of eligibility determinations and enrollment 
transactions; and
    (5) Identification of errors that have resulted in incorrect 
eligibility determinations, as applicable.

PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE 
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES

0
5. The authority citation for part 156 is revised to read as follows:

    Authority:  42 U.S.C. 18021-18024, 18031-18032, 18041-18042, 
18044, 18054, 18061, 18063, 18071, 18082, 26 U.S.C. 36B, and 31 
U.S.C. 9701.


0
6. Section 156.280 is amended by--
0
a. Revising the section heading;
0
b. Redesignating paragraph (e)(2)(ii) as paragraph (e)(2)(iii);
0
c. Adding a new paragraph (e)(2)(ii); and
0
d. Revising newly redesignated paragraph (e)(2)(iii).
    The addition and revision read as follows:


Sec.  156.280  Separate billing and segregation of funds for abortion 
services.

* * * * *
    (e) * * *
    (2) * * *
    (ii) Beginning on or before the first billing cycle following June 
27, 2019, to satisfy the obligation in paragraph (e)(2)(i) of this 
section--
    (A) Send to each policy holder of a QHP monthly bills for each of 
the amounts specified in paragraphs (e)(2)(i)(A) and (B) of this 
section, either by sending separate paper bills which may be in the 
same envelope or mailing,

[[Page 71711]]

or by sending separate bills electronically, which must be in separate 
emails or electronic communications; and
    (B) Instruct the policy holder to pay each of the amounts specified 
in paragraphs (e)(2)(i)(A) and (B) of this section through separate 
transactions. Notwithstanding this instruction, if the policy holder 
fails to pay each of these amounts in a separate transaction as 
instructed by the issuer, the issuer may not refuse the payment and 
initiate a grace period or terminate the policy holder's QHP coverage 
on this basis.
    (iii) Deposit all such separate payments into separate allocation 
accounts as provided in paragraph (e)(3) of this section. In the case 
of an enrollee whose premium for coverage under the QHP is paid through 
employee payroll deposit, the separate payments required under 
paragraph (e)(2)(i) of this section shall each be paid by a separate 
deposit.
* * * * *

    Dated: December 16, 2019.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: December 18, 2019.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2019-27713 Filed 12-20-19; 8:45 am]
 BILLING CODE 4120-01-P