Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2024, 25740-25923 [2023-08368]
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Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 / Rules and Regulations
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Parts 153, 155, and 156
[CMS–9899–F]
RIN 0938–AU97
Patient Protection and Affordable Care
Act, HHS Notice of Benefit and
Payment Parameters for 2024
Centers for Medicare &
Medicaid Services (CMS), Department
of Health and Human Services (HHS).
ACTION: Final rule.
AGENCY:
This final rule includes
payment parameters and provisions
related to the HHS-operated risk
adjustment and risk adjustment data
validation programs, as well as 2024
user fee rates for issuers offering
qualified health plans (QHPs) through
Federally-facilitated Exchanges (FFEs)
and State-based Exchanges on the
Federal platform (SBE–FPs). This final
rule also has requirements related to
updating standardized plan options and
reducing plan choice overload; the
automatic re-enrollment hierarchy; plan
and plan variation marketing name
requirements for QHPs; essential
community providers (ECPs) and
network adequacy; failure to file and
reconcile; special enrollment periods
(SEPs); the annual household income
verification; the deadline for QHP
issuers to report enrollment and
payment inaccuracies; requirements
related to the State Exchange improper
payment measurement program; and
requirements for agents, brokers, and
web-brokers assisting FFE and SBE–FP
consumers.
DATES: These regulations are effective
on June 18, 2023.
FOR FURTHER INFORMATION CONTACT: Jeff
Wu, (301) 492–4305, Rogelyn McLean,
(301) 492–4229, Grace Bristol, (410)
786–8437, for general information.
Joshua Paul, (301) 492–4347,
Jacquelyn Rudich, (301) 492–5211, John
Barfield, (301) 492–4433, or Bryan Kirk,
(443) 745–8999, for matters related to
HHS-operated risk adjustment.
Leanne Klock, (410) 786–1045, or
Joshua Paul, (301) 492–4347, for matters
related to risk adjustment data
validation (HHS–RADV).
John Barfield, (301) 492–4433, or
Leanne Klock, (410) 786–1045, for
matters related to FFE and SBE–FP user
fees.
Jacob LaGrand, (301) 492–4400, for
matters related to actuarial value (AV).
Brian Gubin, (410) 786–1659, for
matters related to agent, broker, and
web-broker guidelines.
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SUMMARY:
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Claire Curtin, (301) 492–4400 or
Marisa Beatley, (301) 492–4307, for
matters related to failure to file and
reconcile.
Grace Bridges, (301) 492–5228, or
Natalie Myren, (667) 290–8511, for
matters related to the verification
process related to eligibility for
insurance affordability programs.
Carolyn Kraemer, (301) 492–4197, for
matters related to auto re-enrollment in
the Exchanges.
Nicholas Eckart, (301) 492–4452, for
matters related to termination of
Exchange enrollment or coverage for
qualified individuals.
Marisa Beatley, (301) 492–4307, or
Dena Nelson, (240) 401–3535, for
matters related to qualified individuals
losing minimum essential coverage
(MEC) and qualifying for SEPs.
Samantha Nguyen Kella, (816) 426–
6339, for matters related to plan display
error SEPs.
Eva LaManna, (301) 492–5565, or
Ellen Kuhn, (410) 786–1695, for matters
related to the eligibility appeals
requirements.
Linus Bicker, (803) 931–6185, for
matters related to State Exchange
improper payment measurement.
Alexandra Gribbin, (667) 290–9977,
for matters related to stand-alone dental
plans.
Nikolas Berkobien, (667) 290–9903,
for matters related to standardized plan
options.
Carolyn Kraemer, (301) 492–4197, for
matters related to plan and plan
variation marketing name requirements
for QHPs.
Emily Martin, (301) 492–4423, or
Deborah Hunter, (443) 386–3651, for
matters related to network adequacy and
ECPs.
Rebecca Braun-Harrison, (667) 290–
8846 for matters related to reporting
enrollment and payment inaccuracies
and administrative appeals.
Jenny Chen, (301) 492–5156, or Shilpa
Gogna, (301) 492–4257, for matters
related to State Exchange Blueprint
approval timelines.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Summary of Major Provisions
III. Provisions of the Proposed Regulations
A. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment
B. Part 155—Exchange Establishment
Standards and Other Related Standards
under the Affordable Care Act
C. Part 156—Health Insurance Issuer
Standards under the Affordable Care Act,
Including Standards Related to
Exchanges
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IV. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding Repeal of Risk
Adjustment State Flexibility to Request a
Reduction in Risk Adjustment State
Transfers (§ 153.320(d))
C. ICRs Regarding Risk Adjustment Issuer
Data Submission Requirements
(§§ 153.610, 153.700, and 153.710)
D. ICRs Regarding Risk Adjustment Data
Validation Requirements When HHS
Operates Risk Adjustment (HHS–RADV)
(§ 153.630)
E. ICRs Regarding Navigator, NonNavigator Assistance Personnel, and
Certified Application Counselor Program
Standards (§§ 155.210 and 155.225)
F. ICRs Regarding Providing Correct
Information to the FFEs (§ 155.220(j))
G. ICRs Regarding Documenting Receipt of
Consumer Consent (§ 155.220(j))
H. ICRs Regarding Failure to File and
Reconcile Process (§ 155.305(f))
I. ICRs Regarding Income Inconsistencies
(§§ 155.315 and 155.320)
J. ICRs Regarding the Improper Payment
Pre-Testing and Assessment (IPPTA) for
State-based Exchanges (§§ 155.1500
through 155.1515)
K. ICRs Regarding QHP Rate and Benefit
Information (§ 156.210)
L. ICRs Regarding Establishing a
Timeliness Standard for Notices of
Payment Delinquency (§ 156.270)
M. Summary of Annual Burden Estimates
for Proposed Requirements
N. Submission of PRA-Related Comments
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice
Provisions and Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act (RFA)
F. Unfunded Mandates Reform Act
(UMRA)
G. Federalism
I. Executive Summary
We are finalizing changes to the
provisions and parameters implemented
through prior rulemaking to implement
the Patient Protection and Affordable
Care Act (ACA).1 These requirements
are published under the authority
granted to the Secretary by the ACA and
the Public Health Service (PHS) Act.2 In
this final rule, we are finalizing changes
related to some of the ACA provisions
and parameters we previously
implemented and are implementing
new provisions. Our goal with these
requirements is providing quality,
1 The Patient Protection and Affordable Care Act
(Pub. L. 111–148) was enacted on March 23, 2010.
The Healthcare and Education Reconciliation Act of
2010 (Pub. L. 111–152), which amended and
revised several provisions of the Patient Protection
and Affordable Care Act, was enacted on March 30,
2010. In this rulemaking, the two statutes are
referred to collectively as the ‘‘Patient Protection
and Affordable Care Act,’’ ‘‘Affordable Care Act,’’
or ‘‘ACA.’’
2 See sections 1311, 1312, 1313, 1321, and 1343
of the ACA and section 2792 of the PHS Act.
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affordable coverage to consumers while
minimizing administrative burden and
ensuring program integrity. The changes
finalized in this rule are also intended
to help advance health equity and
mitigate health disparities.
II. Background
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A. Legislative and Regulatory Overview
Title I of the Health Insurance
Portability and Accountability Act of
1996 (HIPAA) added a new title XXVII
to the PHS Act to establish various
reforms to the group and individual
health insurance markets.
These provisions of the PHS Act were
later augmented by other laws,
including the ACA.
Subtitles A and C of title I of the ACA
reorganized, amended, and added to the
provisions of part A of title XXVII of the
PHS Act relating to group health plans
and health insurance issuers in the
group and individual markets. The term
‘‘group health plan’’ includes both
insured and self-insured group health
plans.
Section 2702 of the PHS Act, as added
by the ACA, establishes requirements
for guaranteed availability of coverage
in the group and individual markets.
Section 1301(a)(1)(B) of the ACA
directs all issuers of QHPs to cover the
essential health benefit (EHB) package
described in section 1302(a) of the ACA,
including coverage of the services
described in section 1302(b) of the ACA,
adherence to the cost-sharing limits
described in section 1302(c) of the ACA,
and meeting the AV levels established
in section 1302(d) of the ACA. Section
2707(a) of the PHS Act, which is
effective for plan or policy years
beginning on or after January 1, 2014,
extends the requirement to cover the
EHB package to non-grandfathered
individual and small group health
insurance coverage, irrespective of
whether such coverage is offered
through an Exchange. In addition,
section 2707(b) of the PHS Act directs
non-grandfathered group health plans to
ensure that cost-sharing under the plan
does not exceed the limitations
described in section 1302(c)(1) of the
ACA.
Section 1302 of the ACA provides for
the establishment of an EHB package
that includes coverage of EHBs (as
defined by the Secretary of HHS), costsharing limits, and AV requirements.
The law directs that EHBs be equal in
scope to the benefits provided under a
typical employer plan, and that they
cover at least the following 10 general
categories: ambulatory patient services;
emergency services; hospitalization;
maternity and newborn care; mental
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health and substance use disorder
services, including behavioral health
treatment; prescription drugs;
rehabilitative and habilitative services
and devices; laboratory services;
preventive and wellness services and
chronic disease management; and
pediatric services, including oral and
vision care. Section 1302(d) of the ACA
describes the various levels of coverage
based on their AV. Consistent with
section 1302(d)(2)(A) of the ACA, AV is
calculated based on the provision of
EHB to a standard population. Section
1302(d)(3) of the ACA directs the
Secretary of HHS to develop guidelines
that allow for de minimis variation in
AV calculations. Sections 1302(b)(4)(A)
through (D) of the ACA establish that
the Secretary must define EHB in a
manner that: (1) Reflects appropriate
balance among the 10 categories; (2) is
not designed in such a way as to
discriminate based on age, disability, or
expected length of life; (3) takes into
account the health care needs of diverse
segments of the population; and (4) does
not allow denials of EHBs based on age,
life expectancy, disability, degree of
medical dependency, or quality of life.
Section 1311(c) of the ACA provides
the Secretary the authority to issue
regulations to establish criteria for the
certification of QHPs. Section
1311(c)(1)(B) of the ACA requires,
among the criteria for certification that
the Secretary must establish by
regulation that QHPs ensure a sufficient
choice of providers. Section 1311(e)(1)
of the ACA grants the Exchange the
authority to certify a health plan as a
QHP if the health plan meets the
Secretary’s requirements for
certification issued under section
1311(c) of the ACA, and the Exchange
determines that making the plan
available through the Exchange is in the
interests of qualified individuals and
qualified employers in the State. Section
1311(c)(6)(C) of the ACA directs the
Secretary of HHS to require an Exchange
to provide for special enrollment
periods and section 1311(c)(6)(D) of the
ACA directs the Secretary of HHS to
require an Exchange to provide for a
monthly enrollment period for Indians,
as defined by section 4 of the Indian
Health Care Improvement Act.
Section 1311(d)(3)(B) of the ACA
permits a State, at its option, to require
QHPs to cover benefits in addition to
EHB. This section also requires a State
to make payments, either to the
individual enrollee or to the issuer on
behalf of the enrollee, to defray the cost
of these additional State-required
benefits.
Section 1312(c) of the ACA generally
requires a health insurance issuer to
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consider all enrollees in all health plans
(except grandfathered health plans)
offered by such issuer to be members of
a single risk pool for each of its
individual and small group markets.
States have the option to merge the
individual and small group market risk
pools under section 1312(c)(3) of the
ACA.
Section 1312(e) of the ACA provides
the Secretary with the authority to
establish procedures under which a
State may allow agents or brokers to (1)
enroll qualified individuals and
qualified employers in QHPs offered
through Exchanges and (2) assist
individuals in applying for advance
payments of the premium tax credit
(APTC) and cost-sharing reductions
(CSRs) for QHPs sold through an
Exchange.
Sections 1313 and 1321 of the ACA
provide the Secretary with the authority
to oversee the financial integrity of State
Exchanges, their compliance with HHS
standards, and the efficient and nondiscriminatory administration of State
Exchange activities. Section
1313(a)(5)(A) of the ACA provides the
Secretary with the authority to
implement any measure or procedure
that the Secretary determines is
appropriate to reduce fraud and abuse
in the administration of the Exchanges.
Section 1321 of the ACA provides for
State flexibility in the operation and
enforcement of Exchanges and related
requirements.
Section 1321(a) of the ACA provides
broad authority for the Secretary to
establish standards and regulations to
implement the statutory requirements
related to Exchanges, QHPs and other
components of title I of the ACA,
including such other requirements as
the Secretary determines appropriate.
When operating an FFE under section
1321(c)(1) of the ACA, HHS has the
authority under sections 1321(c)(1) and
1311(d)(5)(A) of the ACA to collect and
spend user fees. Office of Management
and Budget (OMB) Circular A–25
Revised establishes Federal policy
regarding user fees and specifies that a
user charge will be assessed against
each identifiable recipient for special
benefits derived from Federal activities
beyond those received by the general
public.
Section 1321(d) of the ACA provides
that nothing in title I of the ACA must
be construed to preempt any State law
that does not prevent the application of
title I of the ACA. Section 1311(k) of the
ACA specifies that Exchanges may not
establish rules that conflict with or
prevent the application of regulations
issued by the Secretary.
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Section 1343 of the ACA establishes
a permanent risk adjustment program to
provide payments to health insurance
issuers that attract higher-than-average
risk populations, such as those with
chronic conditions, funded by payments
from those that attract lower-thanaverage risk populations, thereby
reducing incentives for issuers to avoid
higher-risk enrollees. Section 1343(b) of
the ACA provides that the Secretary, in
consultation with States, shall establish
criteria and methods to be used in
carrying out the risk adjustment
activities under this section. Consistent
with section 1321(c) of the ACA, the
Secretary is responsible for operating
the risk adjustment program in any State
that fails to do so.3
Section 1401(a) of the ACA added
section 36B to the Internal Revenue
Code (the Code), which, among other
things, requires that a taxpayer reconcile
APTC for a year of coverage with the
amount of the premium tax credit (PTC)
the taxpayer is allowed for the year.
Section 1402 of the ACA provides for,
among other things, reductions in costsharing for EHB for qualified low- and
moderate-income enrollees in silver
level QHPs offered through the
individual market Exchanges. This
section also provides for reductions in
cost-sharing for Indians enrolled in
QHPs at any metal level.
Section 1411(c) of the ACA requires
the Secretary to submit certain
information provided by applicants
under section 1411(b) of the ACA to
other Federal officials for verification,
including income and family size
information to the Secretary of the
Treasury. Section 1411(d) of the ACA
provides that the Secretary must verify
the accuracy of information provided by
applicants under section 1411(b) of the
ACA, for which section 1411(c) of the
ACA does not prescribe a specific
verification procedure, in such manner
as the Secretary determines appropriate.
Section 1411(f) of the ACA requires
the Secretary, in consultation with the
Treasury and Homeland Security
Department Secretaries and the
Commissioner of Social Security, to
establish procedures for hearing and
making decisions governing appeals of
Exchange eligibility determinations.
Section 1411(f)(1)(B) of the ACA
requires the Secretary to establish
procedures to redetermine eligibility on
a periodic basis, in appropriate
circumstances, including eligibility to
3 In the 2014 through 2016 benefit years, HHS
operated the risk adjustment program in every State
and the District of Columbia, except Massachusetts.
Beginning with the 2017 benefit year, HHS has
operated the risk adjustment program in all 50
States and the District of Columbia.
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purchase a QHP through the Exchange
and for APTC and CSRs.
Section 1411(g) of the ACA allows the
use 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, and
limits the disclosure of such
information.
Section 5000A of the Code, as added
by section 1501(b) of the ACA, requires
individuals to have minimum essential
coverage (MEC) for each month, qualify
for an exemption, or make an individual
shared responsibility payment. Under
the Tax Cuts and Jobs Act, which was
enacted on December 22, 2017, the
individual shared responsibility
payment is reduced to $0, effective for
months beginning after December 31,
2018. Notwithstanding that reduction,
certain exemptions are still relevant to
determine whether individuals age 30
and above qualify to enroll in
catastrophic coverage under
§§ 155.305(h) and 156.155(a)(5).
1. Premium Stabilization Programs
The premium stabilization programs
refer to the risk adjustment, risk
corridors, and reinsurance programs
established by the ACA.4 For past
rulemaking, we refer readers to the
following rules:
• In the March 23, 2012 Federal
Register (77 FR 17219) (Premium
Stabilization Rule), we implemented the
premium stabilization programs.
• In the March 11, 2013 Federal
Register (78 FR 15409) (2014 Payment
Notice), we finalized the benefit and
payment parameters for the 2014 benefit
year to expand the provisions related to
the premium stabilization programs and
set forth payment parameters in those
programs.
• In the October 30, 2013 Federal
Register (78 FR 65046), we finalized the
modification to the HHS-operated
methodology related to community
rating States.
• In the November 6, 2013 Federal
Register (78 FR 66653), we published a
correcting amendment to the 2014
Payment Notice final rule to address
how an enrollee’s age for the risk score
calculation would be determined under
the HHS-operated risk adjustment
methodology.
• In the March 11, 2014 Federal
Register (79 FR 13743) (2015 Payment
Notice), we finalized the benefit and
4 See
ACA section 1341 (transitional reinsurance
program), ACA section 1342 (risk corridors
program), and ACA section 1343 (risk adjustment
program).
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payment parameters for the 2015 benefit
year to expand the provisions related to
the premium stabilization programs, set
forth certain oversight provisions, and
established payment parameters in
those programs.
• In the May 27, 2014 Federal
Register (79 FR 30240), we announced
the 2015 fiscal year sequestration rate
for the risk adjustment program.
• In the February 27, 2015 Federal
Register (80 FR 10749) (2016 Payment
Notice), we finalized the benefit and
payment parameters for the 2016 benefit
year to expand the provisions related to
the premium stabilization programs, set
forth certain oversight provisions, and
established the payment parameters in
those programs.
• In the March 8, 2016 Federal
Register (81 FR 12203) (2017 Payment
Notice), we finalized the benefit and
payment parameters for the 2017 benefit
year to expand the provisions related to
the premium stabilization programs, set
forth certain oversight provisions, and
established the payment parameters in
those programs.
• In the December 22, 2016 Federal
Register (81 FR 94058) (2018 Payment
Notice), we finalized the benefit and
payment parameters for the 2018 benefit
year, added the high-cost risk pool
parameters to the HHS risk adjustment
methodology, incorporated prescription
drug factors in the adult models,
established enrollment duration factors
for the adult models, and finalized
policies related to the collection and use
of enrollee-level External Data Gathering
Environment (EDGE) data.
• In the April 17, 2018 Federal
Register (83 FR 16930) (2019 Payment
Notice), we finalized the benefit and
payment parameters for 2019 benefit
year, created the State flexibility
framework permitting States to request
a reduction in risk adjustment State
transfers calculated by HHS, and
adopted a new methodology for HHS–
RADV adjustments to transfers.
• In the May 11, 2018 Federal
Register (83 FR 21925), we published a
correction to the 2019 risk adjustment
coefficients in the 2019 Payment Notice
final rule.
• On July 27, 2018, consistent with 45
CFR 153.320(b)(1)(i), we updated the
2019 benefit year final risk adjustment
model coefficients to reflect an
additional recalibration related to an
update to the 2016 enrollee-level EDGE
data set.5
5 CMS. (2018, July 27). Updated 2019 Benefit
Year Final HHS Risk Adjustment Model
Coefficients. https://www.cms.gov/CCIIO/
Resources/Regulations-and-Guidance/Downloads/
2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf.
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• In the July 30, 2018 Federal
Register (83 FR 36456), we adopted the
2017 benefit year risk adjustment
methodology as established in the final
rules published in the March 23, 2012
(77 FR 17220 through 17252) and March
8, 2016 editions of the Federal Register
(81 FR 12204 through 12352). The final
rule set forth an additional explanation
of the rationale supporting the use of
Statewide average premium in the HHSoperated risk adjustment State payment
transfer formula for the 2017 benefit
year, including the reasons why the
program is operated in a budget-neutral
manner. The final rule also permitted
HHS to resume 2017 benefit year risk
adjustment payments and charges. HHS
also provided guidance as to the
operation of the HHS-operated risk
adjustment program for the 2017 benefit
year in light of the publication of the
final rule.
• In the December 10, 2018 Federal
Register (83 FR 63419), we adopted the
2018 benefit year HHS-operated risk
adjustment methodology as established
in the final rules published in the March
23, 2012 (77 FR 17219) and the
December 22, 2016 (81 FR 94058)
editions of the Federal Register. In the
rule, we set forth an additional
explanation of the rationale supporting
the use of Statewide average premium
in the HHS-operated risk adjustment
State payment transfer formula for the
2018 benefit year, including the reasons
why the program is operated in a
budget-neutral manner.
• In the April 25, 2019 Federal
Register (84 FR 17454) (2020 Payment
Notice), we finalized the benefit and
payment parameters for 2020 benefit
year, as well as the policies related to
making the enrollee-level EDGE data
available as a limited data set for
research purposes and expanding the
HHS uses of the enrollee-level EDGE
data, approval of the request from
Alabama to reduce risk adjustment
transfers by 50 percent in the small
group market for the 2020 benefit year,
and updates to HHS–RADV program
requirements.
• On May 12, 2020, consistent with
§ 153.320(b)(1)(i), we published the
2021 Benefit Year Final HHS Risk
Adjustment Model Coefficients on the
Center for Consumer Information and
Insurance Oversight (CCIIO) website.6
• In the May 14, 2020 Federal
Register (85 FR 29164) (2021 Payment
Notice), we finalized the benefit and
payment parameters for 2021 benefit
6 CMS. (2020, May 12). Final 2021 Benefit Year
Final HHS Risk Adjustment Model Coefficients.
https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/Final-2021-Benefit-YearFinal-HHS-Risk-Adjustment-Model-Coefficients.pdf.
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year, as well as adopted updates to the
risk adjustment models’ hierarchical
condition categories (HCCs) to transition
to International Classification of
Diseases, Tenth Revision (ICD–10)
codes, approved the request from
Alabama to reduce risk adjustment
transfers by 50 percent in small group
market for the 2021 benefit year, and
modified the outlier identification
process under the HHS–RADV program.
• In the December 1, 2020 Federal
Register (85 FR 76979) (Amendments to
the HHS-Operated Risk Adjustment
Data Validation Under the Patient
Protection and Affordable Care Act’s
HHS-Operated Risk Adjustment
Program (2020 HHS–RADV
Amendments Rule)), we adopted the
creation and application of Super HCCs
in the sorting step that assigns HCCs to
failure rate groups, finalized a sliding
scale adjustment in HHS–RADV error
rate calculation, and added a constraint
for negative error rate outliers with a
negative error rate. We also established
a transition from the prospective
application of HHS–RADV adjustments
to apply HHS–RADV results to risk
scores from the same benefit year as that
being audited.
• In the September 2, 2020 Federal
Register (85 FR 54820), we issued an
interim final rule containing certain
policy and regulatory revisions in
response to the COVID–19 public health
emergency (PHE), wherein we set forth
risk adjustment reporting requirements
for issuers offering temporary premium
credits in the 2020 benefit year.
• In the May 5, 2021 Federal Register
(86 FR 24140), we issued part 2 of the
2022 Payment Notice final rule (2022
Payment Notice) finalizing a subset of
proposals from the 2022 Payment Notice
proposed rule, including policy and
regulatory revisions related to the risk
adjustment program, finalization of the
benefit and payment parameters for the
2022 benefit year, and approval of the
request from Alabama to reduce risk
adjustment transfers by 50 percent in
the individual and small group markets
for the 2022 benefit year. In addition,
this final rule established a revised
schedule of collections for HHS–RADV
and updated the provisions regulating
second validation audit (SVA) and
initial validation audit (IVA) entities.
• On July 19, 2021, consistent with
§ 153.320(b)(1)(i), we released Updated
2022 Benefit Year Final HHS Risk
Adjustment Model Coefficients on the
CCIIO website, announcing some minor
revisions to the 2022 benefit year final
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risk adjustment adult model
coefficients.7
• In the May 6, 2022 Federal Register
(87 FR 27208) (2023 Payment Notice),
we finalized revisions related to the risk
adjustment program, including the
benefit and payment parameters for the
2023 benefit year, risk adjustment
model recalibration, and collection and
extraction of enrollee-level EDGE data.
We also finalized the adoption of the
interacted HCC count specification for
the adult and child models, along with
modified enrollment duration factors for
the adult model models, beginning with
the 2023 benefit year.8 We also repealed
the ability for States, other than prior
participants, to request a reduction in
risk adjustment State transfers starting
with the 2024 benefit year. In addition,
we approved a 25 percent reduction to
2023 benefit year transfers in Alabama’s
individual market and a 10 percent
reduction to 2023 benefit year transfers
in Alabama’s small group market. We
also finalized further refinements to the
HHS–RADV error rate calculation
methodology beginning with the 2021
benefit year and beyond.
2. Program Integrity
We have finalized program integrity
standards related to the Exchanges and
premium stabilization programs in two
rules: the ‘‘first Program Integrity Rule’’
published in the August 30, 2013
Federal Register (78 FR 54069), and the
‘‘second Program Integrity Rule’’
published in the October 30, 2013
Federal Register (78 FR 65045). We also
refer readers to the 2019 Patient
Protection and Affordable Care Act;
Exchange Program Integrity rule
published in the December 27, 2019
Federal Register (84 FR 71674).
3. Market Rules
For past rulemaking related to the
market rules, we refer readers to the
following rules:
• In the April 8, 1997 Federal
Register (62 FR 16894), HHS, with the
Department of Labor and Department of
the Treasury, published an interim final
rule relating to the HIPAA health
insurance reforms. In the February 27,
2013 Federal Register (78 FR 13406)
(2014 Market Rules), we published the
health insurance market rules.
7 See CMS. (2021, July 19). 2022 Benefit Year
Final HHS Risk Adjustment Model Coefficients.
https://www.cms.gov/files/document/updated2022-benefit-year-final-hhs-risk-adjustment-modelcoefficients-clean-version-508.pdf.
8 On May 6, 2022, we also published the 2023
Benefit Year Final HHS Risk Adjustment Model
Coefficients at https://www.cms.gov/files/
document/2023-benefit-year-final-hhs-riskadjustment-model-coefficients.pdf.
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• In the May 27, 2014 Federal
Register (79 FR 30240) (2015 Market
Standards Rule), we published the
Exchange and Insurance Market
Standards for 2015 and Beyond.
• In the December 22, 2016 Federal
Register (81 FR 94058), we provided
additional guidance on guaranteed
availability and guaranteed
renewability.
• In the April 18, 2017 Federal
Register (82 FR 18346) (Market
Stabilization final rule), we further
interpreted the guaranteed availability
provision.
• In the April 17, 2018 Federal
Register (83 FR 17058) (2019 Payment
Notice final rule), we clarified that
certain exceptions to the special
enrollment periods only apply to
coverage offered outside of the
Exchange in the individual market.
• In the June 19, 2020 Federal
Register (85 FR 37160) (2020 section
1557 final rule), in which HHS
discussed section 1557 of the ACA, HHS
removed nondiscrimination protections
based on gender identity and sexual
orientation from the guaranteed
availability regulation.
• In part 2 of the 2022 Payment
Notice final rule in the May 5, 2021
Federal Register (86 FR 24140), we
made additional amendments to the
guaranteed availability regulation
regarding special enrollment periods
and finalized new special enrollment
periods related to untimely notice of
triggering events, cessation of employer
contributions or government subsidies
to COBRA continuation coverage, and
loss of APTC eligibility.
• In the September 27, 2021 Federal
Register (86 FR 53412) (part 3 of the
2022 Payment Notice final rule), which
was published by HHS and the
Department of the Treasury, we
finalized additional amendments to the
guaranteed availability regulations
regarding special enrollment periods.
• In the May 6, 2022 Federal Register
(87 FR 27208), we finalized a revision
to our interpretation of the guaranteed
availability requirement to prohibit
issuers from applying a premium
payment to an individual’s or
employer’s past debt owed for coverage
and refusing to effectuate enrollment in
new coverage.
4. Exchanges
We published a request for comment
relating to Exchanges in the August 3,
2010 Federal Register (75 FR 45584).
We issued initial guidance to States on
Exchanges on November 18, 2010. In the
March 27, 2012 Federal Register (77 FR
18309) (Exchange Establishment Rule),
we implemented the Affordable
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Insurance Exchanges (‘‘Exchanges’’),
consistent with title I of the ACA, to
provide competitive marketplaces for
individuals and small employers to
directly compare available private
health insurance options on the basis of
price, quality, and other factors. This
included implementation of
components of the Exchanges and
standards for eligibility for Exchanges,
as well as network adequacy and ECP
certification standards.
In the 2014 Payment Notice and the
Amendments to the HHS Notice of
Benefit and Payment Parameters for
2014 interim final rule, published in the
March 11, 2013 Federal Register (78 FR
15541), we set forth standards related to
Exchange user fees. We established an
adjustment to the FFE user fee in the
Coverage of Certain Preventive Services
under the Affordable Care Act final rule,
published in the July 2, 2013 Federal
Register (78 FR 39869) (Preventive
Services Rule).
In the 2016 Payment Notice, we also
set forth the ECP certification standard
at § 156.235, with revisions in the 2017
Payment Notice in the March 8, 2016
Federal Register (81 FR 12203) and the
2018 Payment Notice in the December
22, 2016 Federal Register (81 FR
94058).
In an interim final rule, published in
the May 11, 2016 Federal Register (81
FR 29146), we made amendments to the
parameters of certain special enrollment
periods (2016 Interim Final Rule). We
finalized these in the 2018 Payment
Notice final rule, published in the
December 22, 2016 Federal Register (81
FR 94058).
In the April 18, 2017 Market
Stabilization final rule Federal Register
(82 FR 18346), we amended standards
relating to special enrollment periods
and QHP certification. In the 2019
Payment Notice final rule, published in
the April 17, 2018 Federal Register (83
FR 16930), we modified parameters
around certain special enrollment
periods. In the April 25, 2019 Federal
Register (84 FR 17454), the final 2020
Payment Notice established a new
special enrollment period.
We published the final rule in the
May 14, 2020 Federal Register (85 FR
29164) (2021 Payment Notice).
In the January 19, 2021 Federal
Register (86 FR 6138), we finalized part
1 of the 2022 Payment Notice final rule
that finalized only a subset of the
proposals in the 2022 Payment Notice
proposed rule. In the May 5, 2021
Federal Register (86 FR 24140), we
published part 2 of the 2022 Payment
Notice final rule. In the September 27,
2021 Federal Register (86 FR 53412)
part 3 of the 2022 Payment Notice final
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rule, in conjunction with the
Department of the Treasury, we
finalized amendments to certain
policies in part 1 of the 2022 Payment
Notice final rule.
In the May 6, 2022 Federal Register
(87 FR 27208), we finalized changes to
maintain the user fee rate for issuers
offering plans through the FFEs and
maintain the user fee rate for issuers
offering plans through the SBE–FPs for
the 2023 benefit year. We also finalized
various policies to address certain agent,
broker, and web-broker practices and
conduct. We also finalized updates to
the requirement that all Exchanges
conduct special enrollment period
verifications.
5. Essential Health Benefits
On December 16, 2011, HHS released
a bulletin that outlined an intended
regulatory approach for defining EHB,
including a benchmark-based
framework. We established
requirements relating to EHBs in the
Standards Related to Essential Health
Benefits, Actuarial Value, and
Accreditation final rule, which was
published in the February 25, 2013
Federal Register (78 FR 12833) (EHB
Rule). In the 2019 Payment Notice,
published in the April 17, 2018 Federal
Register (83 FR 16930), we added
§ 156.111 to provide States with
additional options from which to select
an EHB-benchmark plan for plan years
(PYs) 2020 and beyond.
B. Summary of Major Provisions
The regulations outlined in this final
rule will be codified in 45 CFR parts
153, 155, and 156.
1. 45 CFR part 153
In accordance with the OMB Report to
Congress on the Joint Committee
Reductions for Fiscal Year 2023, the
permanent risk adjustment program is
subject to the fiscal year 2023
sequestration.9 Therefore, the risk
adjustment program will be sequestered
at a rate of 5.7 percent for payments
made from fiscal year 2023 resources
(that is, funds collected during the 2023
fiscal year). The funds that are
sequestered in fiscal year 2023 from the
risk adjustment program will become
available for payment to issuers in fiscal
year 2024 without further congressional
action. We did not receive any requests
from States to operate risk adjustment
for the 2024 benefit year; therefore, HHS
will operate risk adjustment in every
9 OMB. (2022, March 28). OMB Report to the
Congress on the BBEDCA 251A Sequestration for
Fiscal Year 2023. https://www.whitehouse.gov/
wpcontent/uploads/2022/03/BBEDCA_251A_
Sequestration_Report_FY2023.pdf.
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State and the District of Columbia for
the 2024 benefit year.
We will recalibrate the 2024 benefit
year risk adjustment models using the
2018, 2019, and 2020 benefit year
enrollee-level EDGE data, with no
exceptions. For the 2024 benefit year,
we will continue to apply a market
pricing adjustment to the plan liability
associated with Hepatitis C drugs in the
risk adjustment models (see, for
example, 84 FR 17463 through 17466).
We will also continue to maintain the
CSR adjustment factors finalized in the
2019, 2020, 2021, 2022, and 2023
Payment Notices.10
We are finalizing the repeal of the
ability under § 153.320(d) for prior
participant States to request reductions
of State risk adjustment transfers
calculated by HHS under the State
payment transfer formula in all State
market risk pools for the 2025 benefit
year and beyond. We are approving
Alabama’s requests to reduce risk
adjustment State transfers in its
individual and small group markets by
50 percent for the 2024 benefit year.
Additionally, we are finalizing,
beginning with the 2023 benefit year,
the proposal to collect and extract from
issuers’ EDGE servers through issuers’
EDGE Server Enrollment Submission
(ESES) files and risk adjustment
recalibration enrollment files a new data
element, a Qualified Small Employer
Health Reimbursement Arrangement
(QSEHRA) indicator. In addition, we are
finalizing our proposal to extract the
plan identifier and rating area data
elements from issuers’ EDGE servers for
certain benefit years prior to the 2021
benefit year. We are finalizing the
proposed risk adjustment user fee for
the 2024 benefit year of $0.21 per
member per month (PMPM).
Beginning with the 2022 benefit year
HHS–RADV, we are changing the
materiality threshold established under
§ 153.630(g)(2) for random and targeted
sampling from $15 million in total
annual premiums Statewide to 30,000
total billable member months (BMM)
Statewide, calculated by combining an
issuer’s enrollment in a State’s
individual non-catastrophic,
catastrophic, small group, and merged
markets, as applicable, in the benefit
year being audited.
Beginning with the 2021 benefit year
of HHS–RADV, we are no longer
exempting exiting issuers from
adjustments to risk scores and risk
adjustment transfers when they are
negative error rate outliers in the
applicable benefit year’s HHS–RADV.
Thus, we are applying HHS–RADV
results to adjust the plan liability risk
scores of all exiting and non-exiting
issuers identified as outliers in the
benefit year being audited.
Beginning with the 2022 benefit year
of HHS–RADV, we announce that we
are discontinuing the use of the lifelong
permanent condition list and the use of
non-EDGE claims in HHS–RADV.
Additionally, beginning with the 2022
benefit year of HHS–RADV, we are
finalizing the shortening of the window
to confirm the findings of the second
validation audit (SVA) (if applicable),11
or file a discrepancy report to dispute
the SVA findings, to within 15 calendar
days of the notification by HHS.
We are amending the EDGE
discrepancy materiality threshold set
forth at § 153.710(e) to align with and
mirror the policy finalized in preamble
in part 2 of the 2022 Payment Notice (86
FR 24194 through 24195). That is, the
materiality threshold at § 153.710(e) will
be revised to provide that the amount in
dispute must equal or exceed $100,000
or one percent of the total estimated
transfer amount in the applicable State
market risk pool, whichever is less.
10 See 83 FR 16930 at 16953; 84 FR 17454 at
17478 through 17479; 85 FR 29164 at 29190; 86 FR
24140 at 24181; and 87 FR 27208 at 27235 through
27235.
11 Only those issuers who have insufficient
pairwise agreement between the Initial Validation
Audit (IVA) and SVA receive SVA findings. See 84
FR 17495; 86 FR 24201.
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2. 45 CFR part 155
In part 155, we are finalizing the
revision of the Exchange Blueprint
approval timelines for States
transitioning from either a FFE to a
SBE–FP or to a State-based Exchange
(SBE), or from a SBE–FP to a SBE. We
are finalizing the removal of the existing
deadlines for when we provide
approval, or conditional approval, on an
Exchange Blueprint, and instead will
require that such approval be provided
at some point prior to the date on which
the Exchange proposes to begin open
enrollment either as a SBE or SBE–FP.
We are finalizing the proposal to
address the standards applicable to
Navigators and other assisters and their
consumer service functions. At
§ 155.210(d)(8), we are finalizing the
removal of the prohibition on
Navigators from going door-to-door or
using other unsolicited means of direct
contact to provide application or
enrollment assistance. This will also
apply to non-Navigator assistance
personnel in FFEs and in State
Exchanges if funded with section
1311(a) Exchange Establishment grants,
through the reference to § 155.210(d) in
§ 155.215(a)(2)(i). In § 155.225(g)(5), we
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25745
are finalizing the removal of the
prohibition on certified application
counselors from going door-to-door or
using unsolicited means of direct
contact to provide application or
enrollment assistance. We believe
policies as finalized will allow
Navigators and other assisters in the
FFEs to help more consumers.
In part 155, we are finalizing changes
to address certain agent, broker, and
web-broker practices. We are finalizing
the proposal to allow HHS up to an
additional 15 calendar days to review
evidence submitted by agents, brokers,
or web-brokers to rebut allegations that
led to the suspension of their Exchange
agreement(s). We also are finalizing the
proposal to allow HHS up to an
additional 30 calendar days to review
evidence submitted by agents, brokers,
or web-brokers that led to the
termination of their Exchange
agreement(s). The amendments adopted
in this final rule will provide HHS with
up to 45 or 60 calendar days to review
and respond to such evidence or
requests for reconsideration submitted
by agents, brokers, or web-brokers
stemming from the suspension or
termination of their Exchange
agreement(s), respectively.
Further, we are finalizing the proposal
to require agents, brokers, or webbrokers assisting consumers with
completing eligibility applications
through the FFEs and SBE–FPs or
assisting an individual with applying
for APTC and CSRs for QHPs to
document that eligibility application
information has been reviewed by and
confirmed to be accurate by the
consumer or their authorized
representative prior to application
submission. We are finalizing the
proposal that the documentation will be
required to include: the date the
information was reviewed; the name of
the consumer or their authorized
representative; an explanation of the
attestations at the end of the eligibility
application; and the name of the
assisting agent, broker, or web-broker.
Furthermore, the agent, broker, or webbroker will be required to maintain the
documentation for a minimum of 10
years and produce it upon request in
response to monitoring, audit, and
enforcement activities.
We also are finalizing the proposal to
require agents, brokers, or web-brokers
assisting consumers with applying and
enrolling through FFEs and SBE–FPs,
making updates to an existing
application, or assisting an individual
with applying for APTC and CSRs for
QHPs to document the receipt of
consent from the consumer seeking
assistance or their authorized
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representative prior to providing
assistance. We are finalizing the
proposal that the documentation will be
required to include: a description of the
scope, purpose, and duration of the
consent provided by the consumer or
their authorized representative; the date
consent was given; name of the
consumer or their authorized
representative; the name of the agent,
broker, web-broker, or agency being
granted consent; and the process by
which the consumer or their authorized
representative may rescind consent.
Further, we are finalizing the
requirement that agents, brokers, or
web-brokers will be required to
maintain the consent documentation for
a minimum of 10 years and produce it
upon request in response to monitoring,
audit, and enforcement activities.
We are finalizing the revisions to the
failure to file and reconcile (FTR)
process at § 155.305(f)(4). First, we are
finalizing the proposal to amend the
FTR process described in § 155.305(f)(4)
so that an Exchange may only determine
enrollees ineligible for APTC after a
taxpayer (or a taxpayer’s spouse, if
married) has failed to file a Federal
income tax return and reconcile their
past APTC for two consecutive years
(specifically, years for which tax data
will be utilized for verification of
household income and family size). In
the proposed rule (87 FR 78256), we
proposed that this policy would be
effective January 1, 2024, with the intent
that the proposed rule would apply to
eligibility determinations made in 2024
for PY 2025 (and beyond). We are
clarifying in the final rule that this will
become effective on the general effective
date of the final rule. Second, we are
finalizing the proposal to continue to
pause FTR operations until HHS and the
Internal Revenue Service (IRS) will be
able to implement the new FTR policy.
We are finalizing revisions to
§ 155.320, which will require Exchanges
to accept an applicant’s attestation of
projected annual household income
when the Exchanges request tax return
data from the IRS to verify attested
projected annual household income, but
the IRS confirms there is no such tax
return data available. Further, we are
finalizing revisions to § 155.315, which
will require that an enrollee with a
household income inconsistency receive
a 60-day extension to present
satisfactory documentary evidence to
resolve a data matching issue (DMI) in
addition to the 90 days currently
provided in § 155.315(f)(2)(ii). These
changes will ensure consumers are
treated equitably, ensure continuous
coverage, and strengthen the risk pool.
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We are finalizing amendments and
additions to § 155.335(j), including the
clarification that when an enrollee is
determined upon annual
redetermination eligible for incomebased CSRs, is currently enrolled in a
bronze level QHP, and would be reenrolled in a bronze level QHP, then to
the extent permitted by applicable State
law, unless the enrollee terminates
coverage, including termination of
coverage in connection with voluntarily
selecting a different QHP, in accordance
with § 155.430, at the option of the
Exchange, the Exchange may re-enroll
such enrollee in a silver level QHP
within the same product, with the same
provider network, and with a lower or
equivalent premium after the
application of APTC as the bronze level
QHP into which the Exchange would
otherwise re-enroll the enrollee. We are
also finalizing modifications to the
proposed policy to specify that
Exchanges implementing this policy
may auto re-enroll enrollees from a
bronze QHP to a silver QHP provided
that the net monthly silver plan
premium for the future year is not more
than the net monthly bronze plan
premiums for the future year, as
opposed to comparing net monthly
bronze plan premiums for the current
year with future year silver plan
premiums. Lastly, for enrollees whose
current QHP or product will no longer
be available in the coming year, we are
finalizing the policy to require
Exchanges to incorporate network
similarity into auto re-enrollment
criteria.
We are finalizing the proposed
changes related to SEPs at § 155.420.
First, we are finalizing two technical
corrections to § 155.420(a)(4)(ii)(A) and
(B) to align the text with
§ 155.420(a)(d)(6)(i) and (ii). The
revisions will clarify that only one
person in a household applying for
coverage or financial assistance through
the Exchange must qualify for a SEP in
order for the entire household to qualify
for the SEP. Second, we are finalizing
the change to the current coverage
effective date requirements at
§ 155.420(b)(2)(iv) to permit Exchanges
to offer earlier coverage effective dates
for consumers attesting to a future loss
of MEC. This change will ensure
qualifying individuals are able to
seamlessly transition from other forms
of coverage to Exchange coverage as
quickly as possible with minimal
coverage gaps.
Third, to mitigate coverage gaps, we
are finalizing the proposed new rule at
§ 155.420(c)(6) with a modification that
will give Exchanges the option to allow
consumers who are eligible for a SEP
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under § 155.420(d)(1)(i) due to loss of
Medicaid or Children’s Health
Insurance Program (CHIP) coverage up
to 90 days after their loss of Medicaid
or CHIP coverage to select a plan and
enroll in coverage through the
Exchange. The modification will grant
an Exchange the option to provide more
than 90 days to select a plan and enroll
in coverage through the Exchange up to
the length of the applicable Medicaid or
CHIP redetermination period if the State
Medicaid Agency allows or provides for
a Medicaid or CHIP reconsideration
period greater than 90 days. Fourth, we
are finalizing § 155.420(d)(12) to align
the policy of the Exchanges on the
Federal platform for granting SEPs to
consumers who enrolled in a plan
influenced by a material plan display
error with current plan display error
SEP operations. The proposal will
remove the burden from the consumer
to solely demonstrate to the Exchange
that a material plan display error has
influenced the consumer’s decision to
purchase a QHP through the Exchange.
We are finalizing § 155.430(b)(3) to
explicitly prohibit issuers participating
in Exchanges on the Federal platform
from terminating coverage for a
dependent child prior to the end of the
plan year because the dependent child
has reached the applicable maximum
age. This change will clarify to issuers
participating in Exchanges on the
Federal platform their obligation to
maintain coverage for dependent
children, as well as to enrollees
regarding their ability to maintain
coverage for dependent children. This
change is optional for State Exchanges.
We are finalizing § 155.505(g), which
acknowledges the ability of the CMS
Administrator to review Exchange
eligibility appeals decisions prior to
judicial review. This change will
provide appellants and other parties
with accurate information about the
availability of administrative review by
the CMS Administrator if they are
dissatisfied with their eligibility appeal
decision.
We are finalizing the Improper
Payment Pre-Testing and Assessment
(IPPTA) program under which SBEs will
be required to participate in pre-audit
activities that will prepare SBEs for
complying with audits required under
the Payment Integrity Information Act of
2019 (PIIA). Activities under the
proposed IPPTA program will provide
SBEs experience helpful to preparing for
future PIIA audits and will help HHS
design and refine appropriate
requirements for future PIIA audits of
SBEs.
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3. 45 CFR part 156
In part 156, after revising our
projections based on newly available
data that impacted enrollment
projections, we are finalizing for the
2024 benefit year a user fee rate for all
issuers offering QHPs through an FFE of
2.2 percent of the monthly premium
charged by issuers for each policy under
plans where enrollment is through an
FFE, and a user fee rate for all issuers
offering QHPs through an SBE–FP of 1.8
percent of the monthly premium
charged by issuers for each policy under
plans offered through an SBE–FP.
We are also finalizing the proposal to
maintain a large degree of continuity
with our approach to standardized plan
options finalized in the 2023 Payment
Notice, making only minor updates to
each set of plan designs. In particular,
for PY 2024 and subsequent PYs, we are
finalizing two sets of plan designs that,
in contrast to the policy finalized in the
2023 Payment Notice (87 FR 28278
through 28279), no longer include a
standardized plan option for the nonexpanded bronze metal level, mainly
due to AV constraints.
Thus, for PY 2024 and subsequent
PYs, we are finalizing revisions to
§ 156.201 to require issuers to offer
standardized plan options for the
following metal levels throughout every
service area that they also offer nonstandardized plan options: one bronze
plan that meets the requirement to have
an AV up to five percentage points
above the 60 percent standard, as
specified in § 156.140(c) (known as an
expanded bronze plan); one standard
silver plan; one version of each of the
three income-based silver CSR plan
variations; one gold plan; and one
platinum plan.
We also will continue to differentially
display standardized plan options,
including those standardized plan
options required under State action that
took place on or before January 1, 2020,
on HealthCare.gov, and continue
enforcement of the standardized plan
options display requirements for
approved web-brokers and QHP issuers
using a direct enrollment pathway to
facilitate enrollment through an FFE or
SBE–FP—including both the Classic
Direct Enrollment (Classic DE) and
Enhanced Direct Enrollment (EDE)
Pathways.
To mitigate the risk of plan choice
overload, we are finalizing § 156.202,
which limits the number of nonstandardized plan options that QHP
issuers may offer through the Exchanges
using the Federal platform to four nonstandardized plan options per product
network type, metal level (excluding
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catastrophic plans), and inclusion of
dental and/or vision benefit coverage, in
any service area for PY 2024, and to two
non-standardized plan options per
product network type, metal level
(excluding catastrophic plans), and
inclusion of dental and/or vision benefit
coverage, in any service area for PY
2025 and subsequent PYs.
We are finalizing new § 156.210(d)(1)
to require stand-alone dental plan
(SADP) issuers to use an enrollee’s age
at the time of policy issuance or renewal
(referred to as age on effective date) as
the sole method to calculate an
enrollee’s age for rating and eligibility
purposes, as a condition of QHP
certification, beginning with Exchange
certification for PY 2024. We believe
requiring SADPs to use the age on
effective date methodology to calculate
an enrollee’s age as a condition of QHP
certification, and consequently
removing the less commonly used and
more complex age calculation methods,
will reduce consumer confusion and
promote operational efficiency. This
policy will apply to Exchange-certified
SADPs, whether they are sold on- or offExchange.
In addition, we are finalizing new
§ 156.210(d)(2) to require SADP issuers
to submit guaranteed rates as a
condition of QHP certification,
beginning with Exchange certification
for PY 2024. We believe this change will
help reduce the risk of incorrect APTC
calculation for the pediatric dental EHB
portion of premiums, thereby reducing
the risk of consumer harm. This policy
will apply to Exchange-certified SADPs,
whether they are sold on- or offExchange.
We are finalizing a new rule at
§ 156.225(c) to require that plan and
plan variation marketing names for
QHPs include correct information,
without omission of material fact, and
not include content that is misleading.
We will review plan and plan variation
marketing names during the annual
QHP certification process in close
collaboration with State regulators in
States with Exchanges on the Federal
platform.
We are finalizing revisions to the
network adequacy and ECP standards at
§§ 156.230 and 156.235 to provide that
all individual market QHPs, including
individual market SADPs, and all Small
Business Health Options Program
(SHOP) QHPs, including SHOP SADPs,
across all Exchanges must use a network
of providers that complies with the
network adequacy and ECP standards in
those sections, and to remove the
exception that these sections do not
apply to plans that do not use a provider
network. However, we are finalizing a
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limited exception at § 156.230(a)(4) for
certain SADP issuers that sell plans in
areas where it is prohibitively difficult
for the issuer to establish a network of
dental providers. Specifically, under
this exception, an area is considered
‘‘prohibitively difficult’’ for the SADP
issuer to establish a network of dental
providers based on attestations from
State departments of insurance in States
with at least 80 percent of their counties
classified as Counties with Extreme
Access Considerations (CEAC) that at
least one of the following factors exists
in the area of concern: a significant
shortage of dental providers, a
significant number of dental providers
unwilling to contract with Exchange
issuers, or significant geographic
limitations impacting consumer access
to dental providers.
To expand access to care for lowincome and medically underserved
consumers, we are finalizing our
proposal to establish two additional
stand-alone ECP categories at
§ 156.235(a)(2)(ii)(B) for PY 2024 and
subsequent PYs, Mental Health
Facilities and Substance Use Disorder
Treatment Centers, and adding rural
emergency hospitals (REHs) as a
provider type in the Other ECP
Providers category. In addition, we are
finalizing our proposed revisions to
§ 156.235(a)(2)(i) to require QHPs to
contract with at least a minimum
percentage of available ECPs in each
plan’s service area within certain ECP
categories, as specified by HHS.
Specifically, we will require that QHPs
contract with at least 35 percent of
available Federally Qualified Health
Centers (FQHCs) that qualify as ECPs in
the plan’s service area and at least 35
percent of available Family Planning
Providers that qualify as ECPs in the
plan’s service area for PY 2024 and
subsequent PYs. Furthermore, we are
finalizing revisions to § 156.235(a)(2)(i)
to clarify that these threshold
requirements will be in addition to the
existing provision that QHPs must
satisfy the overall 35 percent ECP
threshold requirement in the plan’s
service area. In addition, we revised
§ 156.235(b)(2)(i) to reflect that these
policies would also affect issuers subject
to the Alternate ECP Standard under
§ 156.235(b).
We are finalizing revisions to
§ 156.270(f) to require QHP issuers in
Exchanges operating on the Federal
platform to send enrollees a notice of
payment delinquency promptly and
without undue delay. Specifically, we
will require QHP issuers in Exchanges
operating on the Federal platform to
send such notices within 10 business
days of the date the issuer should have
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discovered the delinquency. This
requirement will help ensure that
enrollees are aware they are at risk of
losing coverage and can avoid losing
coverage by paying any outstanding
premium amounts promptly.
We are finalizing the proposal to
revise the final deadline in § 156.1210(c)
for issuers to report data inaccuracies
identified in payment and collections
reports for discovered underpayments of
APTC to the issuer and user fee
overpayments to HHS. Specifically, we
will retain only the deadline at
§ 156.1210(c)(1), which requires that
issuers describe all inaccuracies
identified in a payment and collections
report within 3 years of the end of the
applicable plan year to which the
inaccuracy relates to be eligible to
receive an adjustment to correct an
underpayment of APTC to the issuer
and user fee overpayments to HHS.
Under this policy, beginning with the
2015 PY coverage, we will not pay
additional APTC payments or reimburse
user fee payments for FFE, SBE–FP, and
SBE issuers for data inaccuracies
reported after the 3-year deadline.
Further, for PYs 2015 through 2019, to
be eligible for resolution, an issuer must
describe before January 1, 2024, all
inaccuracies identified in a payment
and collections report for these PYs that
relate to discovered underpayments to
the issuer of APTC or user fee
overpayments to HHS, thus allowing
issuers additional time to submit and
seek resolution of such inaccuracies for
the 2015 through 2019 PY coverage.
These policies will better align with the
existing limitation under the Code on
amending a Federal income tax return
and reduce administrative and
operational burden on issuers, State
Exchanges, and HHS when handling
payment and enrollment disputes.
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III. Provisions of the Proposed
Regulations
A. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment
In subparts A, D, G, and H of part 153,
we established standards for the
administration of the risk adjustment
program. The risk adjustment program
is a permanent program created by
section 1343 of the ACA that transfers
funds from lower-than-average risk, risk
adjustment covered plans to higherthan-average risk, risk adjustment
covered plans in the individual, small
group markets, or merged markets,
inside and outside the Exchanges. In
accordance with § 153.310(a), a State
that is approved or conditionally
approved by the Secretary to operate an
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Exchange may establish a risk
adjustment program, or have HHS do so
on its behalf.12 We did not receive any
requests from States to operate a risk
adjustment program for the 2024 benefit
year. Therefore, we will operate risk
adjustment in every State and the
District of Columbia for the 2024 benefit
year.
1. Sequestration
In accordance with the OMB Report to
Congress on the Joint Committee
Reductions for Fiscal Year 2023, the
permanent risk adjustment program is
subject to the fiscal year 2023
sequestration.13 The Federal
Government’s 2023 fiscal year began on
October 1, 2022. Therefore, the risk
adjustment program will be sequestered
at a rate of 5.7 percent for payments
made from fiscal year 2023 resources
(that is, funds collected during the 2023
fiscal year).
HHS, in coordination with OMB, has
determined that, under section 256(k)(6)
of the Balanced Budget and Emergency
Deficit Control Act of 1985,14 as
amended, and the underlying authority
for the risk adjustment program, the
funds that are sequestered in fiscal year
2023 from the risk adjustment program
will become available for payment to
issuers in fiscal year 2024 without
further Congressional action. If Congress
does not enact deficit reduction
provisions that replace the Joint
Committee reductions, the program will
be sequestered in future fiscal years, and
any sequestered funding will become
available in the fiscal year following
that in which it was sequestered.
Additionally, we note that the
Infrastructure Investment and Jobs
Act 15 amended section 251A(6) of the
Balanced Budget and Emergency Deficit
Control Act of 1985 and extended
sequestration for the risk adjustment
program through fiscal year 2031 at a
rate of 5.7 percent per fiscal year.16 17
We received no comments on the
fiscal year 2023 sequestration rate for
risk adjustment.
12 See
also 42 U.S.C. 18041(c)(1).
(2022, March 28). OMB Report to the
Congress on the BBEDCA 251A Sequestration for
Fiscal Year 2023. https://www.whitehouse.gov/wpcontent/uploads/2022/03/BBEDCA_251A_
Sequestration_Report_FY2023.pdf.
14 Public Law 99–177 (1985).
15 Public Law 117–58, 135 Stat. 429 (2021).
16 2 U.S.C. 901a.
17 The Coronavirus Aid, Relief, and Economic
Security (CARES) Act previously amended section
251A(6) of the Balanced Budget and Emergency
Deficit Control Act of 1985 and extended
sequestration for the risk adjustment program
through fiscal year 2023 at a rate of 5.7 percent per
fiscal year. Section 4408 of the CARES Act, Public
Law 116–136, 134 Stat. 281 (2020).
13 OMB.
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2. HHS Risk Adjustment (§ 153.320)
The HHS risk adjustment models
predict plan liability for an average
enrollee based on that person’s age, sex,
and diagnoses (also referred to as
hierarchical condition categories
(HCCs)), producing a risk score. The
HHS risk adjustment methodology
utilizes separate models for adults,
children, and infants to account for
clinical and cost differences in each age
group. In the adult and child models,
the relative risk assigned to an
individual’s age, sex, and diagnoses are
added together to produce an individual
risk score. Additionally, to calculate
enrollee risk scores in the adult models,
we added enrollment duration factors
beginning with the 2017 benefit year,18
and prescription drug categories (RXCs)
beginning with the 2018 benefit year.19
Starting with the 2023 benefit year, we
added interacted HCC count factors to
the adult and child models applicable to
certain severity and transplant HCCs.
Infant risk scores are determined by
inclusion in one of 25 mutually
exclusive groups, based on the infant’s
maturity and the severity of diagnoses.
If applicable, the risk score for adults,
children, or infants is multiplied by a
cost-sharing reduction (CSR) factor. The
enrollment-weighted average risk score
of all enrollees in a particular risk
adjustment covered plan (also referred
to as the plan liability risk score (PLRS))
within a geographic rating area is one of
the inputs into the risk adjustment State
payment transfer formula,20 which
determines the State transfer payment or
charge that an issuer will receive or be
required to pay for that plan for the
applicable State market risk pool. Thus,
the HHS risk adjustment models predict
average group costs to account for risk
across plans, in keeping with the
Actuarial Standards Board’s Actuarial
18 For the 2017 through 2022 benefit years, there
is a set of 11 binary enrollment duration factors in
the adult models that decrease monotonically from
one to 11 months, reflecting the increased
annualized costs associated with fewer months of
enrollments. See, for example, 81 FR 94071 through
94074. These enrollment duration factors were
replaced beginning with the 2023 benefit year with
HCC-contingent enrollment duration factors for up
to 6 months in the adult models. See, for example,
87 FR 27228 through 27230.
19 For the 2018 benefit year, there were 12 RXCs,
but starting with the 2019 benefit year, the two
severity-only RXCs were removed from the adult
risk adjustment models. See, for example, 83 FR
16941.
20 The State payment transfer formula refers to the
part of the HHS risk adjustment methodology that
calculates payments and charges at the State market
risk pool level prior to the calculation of the highcost risk pool payment and charge terms that apply
beginning with the 2018 benefit year (BY). See, for
example, 81 FR 94080.
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Standards of Practice for risk
classification.
a. Data for Risk Adjustment Model
Recalibration for 2024 Benefit Year
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78214), we proposed
to use 2018, 2019, and 2020 benefit year
enrollee-level EDGE data to recalibrate
the 2024 benefit year risk adjustment
models with an exception to exclude the
2020 benefit year data from the blending
of the age-sex coefficients for the adult
models. However, after consideration of
comments, we are not finalizing the
2024 benefit year model recalibration
approach as proposed. Instead, based on
our analysis and in response to
comments, we are finalizing the use of
2018, 2019 and 2020 benefit year
enrollee-level EDGE data for
recalibration of the 2024 benefit year
risk adjustment models for all model
coefficients, including the adult age-sex
coefficients, with no exceptions.
In accordance with § 153.320, HHS
develops and publishes the risk
adjustment methodology applicable in
States where HHS operates the program,
including the draft factors to be
employed in the models for the benefit
year. This includes information related
to the annual recalibration of the risk
adjustment models using data from the
most recent available prior benefit years
trended forwarded to reflect the
applicable benefit year of risk
adjustment.
Our proposed approach for 2024
recalibration aligns with the approach
finalized in the 2022 Payment Notice
(86 FR 24151 through 24155) and
reiterated in the 2023 Payment Notice
(87 FR 27220 through 27221), that
involves use of the 3 most recent
consecutive years of enrollee-level
EDGE data that are available at the time
we incorporate the data in the draft
recalibrated coefficients published in
the proposed rule for the applicable
benefit year, and not updating the
coefficients between the proposed and
final rules if an additional year of
enrollee-level EDGE data becomes
available for incorporation.
We proposed to determine
coefficients for the 2024 benefit year
based on a blend of separately solved
coefficients from the 2018, 2019, and
2020 benefit years of enrollee-level
EDGE data, with an exception to
exclude the 2020 benefit year data from
the blending of the age-sex coefficients
for the adult models. For all adult model
age-sex coefficients, we proposed to use
only 2018 and 2019 benefit year
enrollee-level EDGE data in
recalibration to account for the observed
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anomalous decreases in the
unconstrained coefficients 21 for the
2020 benefit year enrollee-level EDGE
data for older adult enrollees, especially
older adult female enrollees.
To further explain, due to the
potential impact of the COVID–19 PHE
on costs and utilization of services in
2020, we considered whether the 2020
enrollee-level EDGE data was
appropriate for use in the annual model
recalibration for the HHS-operated risk
adjustment program applicable to the
individual and small group (including
merged) markets. As part of this
analysis, we considered: (1) comments
received in response to the 2023
Payment Notice proposed rule (87 FR
598); (2) the current policy that involves
using the 3 most recent years of EDGE
data available as of the proposed rule for
the annual risk adjustment model
recalibration which promotes stability
and ensures the models reflect the yearover-year changes to the markets’
patterns of utilization and spending
without over-relying on any factors
unique to one particular year; and (3)
our experience that every year of data
can be unique and therefore some level
of deviation from year to year is
expected.22 All of these general
considerations weigh in favor of
including the 2020 benefit year data in
the recalibration of the risk adjustment
models.
However, we recognized that if a
benefit year has significant changes that
differentially impact certain conditions
or populations relative to others, or is
sufficiently anomalous relative to
expected future patterns of care, we
should carefully consider what impact
that benefit year of data could have if it
21 HHS constrains the risk adjustment models in
multiple distinct ways during model recalibration.
These include (1) coefficient estimation groups, also
referred to as G-Groups in the Risk Adjustment Do
It Yourself (DIY) Software, (2) a priori stability
constraints, and (3) hierarchy violation constraints.
Of these, coefficient estimation groups and a priori
stability constraints are applied prior to model
fitting. The hierarchy violation constraints are
applied after the initial estimates of coefficients are
produced. We refer to the models and coefficients
prior to the application of hierarchy violation
constraints as the ‘‘unconstrained models’’ and
‘‘unconstrained coefficients,’’ respectively. For a
description of the various constraints we apply to
the risk adjustment models, see, CMS’ ‘‘Potential
Updates to HHS–HCCs for the HHS-operated Risk
Adjustment Program’’ (the ‘‘2019 White Paper’’)
(June 17, 2019). https://www.cms.gov/CCIIO/
Resources/Regulations-and-Guidance/Downloads/
Potential-Updates-to-HHS-HCCs-HHS-operatedRisk-Adjustment-Program.pdf.
22 Every year we expect some shifting in
treatment and cost patterns, for example as new
drugs come to market. Our goal in using multiple
years of data for model calibration is to capture
some degree of year-to-year cost shifting without
over-relying on any factors unique to one particular
year.
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is used in the annual model
recalibration for the HHS-operated risk
adjustment program. This includes
consideration of whether to exclude or
adjust that benefit year of data to
increase the models’ predictive validity
or otherwise limit the impact of
anomalous trends. The situation
presented by the COVID–19 PHE and its
potential impact on utilization and costs
in the 2020 benefit year is an example 23
of a situation that requires this
additional consideration. Thus, to help
further inform our decision on whether
it is appropriate to use 2020 enrolleelevel EDGE data to calibrate the risk
adjustment coefficients, we analyzed the
2020 benefit year enrollee-level EDGE
recalibration data to assess how it
compares to 2019 benefit year enrolleelevel EDGE recalibration data. For more
information on our analysis of the 2020
benefit year enrollee-level EDGE
recalibration data see the proposed rule
(87 FR 78215 through 78218). Based on
this analysis, we determined that on
many key dimensions, the 2019 benefit
year and 2020 benefit year enrollee-level
EDGE data recalibration were largely
comparable. However, there were some
observed anomalous decreases in the
unconstrained age-sex coefficients in
the 2020 benefit year data for older
adult enrollees, especially older female
enrollees.
With this analysis in mind, and based
on the comments received in response
to the 2023 Payment Notice proposed
rule,24 we outlined six different options
the Department considered for handling
the 2020 benefit year enrollee-level
EDGE recalibration data for purposes of
the annual recalibration of the HHS risk
adjustment models for the 2024 benefit
year.25 Four options involved the use of
2020 benefit year enrollee-level EDGE
recalibration data in the risk adjustment
23 In the 10 years since the start of model
calibration for the HHS-operated risk adjustment
program, which began with benefit year 2014, the
COVID–19 PHE has been the only such situation to
date. Other events and policy changes have not
risen to the same level of uniqueness or potential
impact.
24 These comments offered a variety of
perspectives with some commenters stating that
2020 enrollee-level EDGE data should be used for
model recalibration as normal, a few commenters
suggesting that 2020 enrollee-level EDGE data
should be excluded entirely, one commenter
recommending that 2020 enrollee-level EDGE data
should be used with a different weight assigned,
and several commenters suggesting HHS release a
technical paper on the use of 2020 enrollee-level
EDGE data, with several suggesting HHS do a
comparison of coefficients with and without the
2020 enrollee-level EDGE data to review relative
changes in coefficients, and evaluate changes for
clinical reasonability and consistency with 2018
and 2019 enrollee-level EDGE data. See 87 FR
27220 through 27221.
25 See 87 FR 78214 through 78218.
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model recalibration, and two involved
the exclusion of the 2020 benefit year
data. These six options were as follows:
• Option 1: Maintain the current
policy, recalibrating the 2024 benefit
year risk adjustment models using 2018,
2019, and 2020 enrollee-level EDGE
data with no exceptions or
modifications.
• Option 2: Maintain the current
policy, recalibrating the 2024 benefit
year risk adjustment models using 2018,
2019, and 2020 benefit year enrolleelevel EDGE recalibration data, but assign
a lower weight to 2020 data.
• Option 3: Utilize 4 years of
enrollee-level EDGE data, instead of
three, to recalibrate the 2024 benefit
year risk adjustment models using 2017,
2018, 2019, and 2020 benefit year data.
• Option 4: Maintain the current
policy, recalibrating the 2024 benefit
year risk adjustment models using 2018,
2019, and 2020 enrollee-level EDGE
recalibration data with an exception to
exclude the 2020 benefit year data from
the blending of the age-sex coefficients
for the adult models. Under this option,
we would have determined coefficients
for the 2024 benefit year based on a
blend of separately solved coefficients
from the 2018, 2019, and 2020 benefit
years of enrollee-level EDGE
recalibration data and would exclude
the 2020 benefit year from the blending
of the adult models’ age-sex coefficients.
Instead, only 2018 and 2019 benefit year
enrollee-level EDGE recalibration data
would be used in blending the adult risk
adjustment models age-sex coefficients.
• Option 5: Exclude the 2020 benefit
year enrollee-level EDGE recalibration
data and instead use the 2017, 2018, and
2019 benefit year enrollee-level EDGE
recalibration data, trended forward to
the 2024 benefit year, in recalibration of
the risk adjustment models for the 2024
benefit year, or use the final 2023 risk
adjustment model coefficients for the
2024 benefit year without trending the
data to account for inflation and
changes in costs and utilization between
the 2023 and 2024 benefit years.
• Option 6: Exclude the 2020 benefit
year enrollee-level EDGE recalibration
data and instead use only 2 years of
enrollee-level EDGE data for
recalibration—that is, use only 2018 and
2019 benefit year data to recalibrate the
2024 risk adjustment models.
As noted above, we proposed to use
the 3 most recent available consecutive
benefit year data sets (the 2018, 2019,
and 2020 benefit year enrollee-level
EDGE recalibration data), with a
narrowly tailored exception to exclude
the 2020 benefit year data from the
blending of the age-sex coefficients for
the adult models (Option 4).
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After reviewing the public comments,
we are finalizing the use of 2018, 2019,
and 2020 enrollee-level EDGE data with
no exceptions or modifications for
recalibration of the risk adjustment
models for the 2024 benefit year (Option
1). Consistent with prior benefit model
recalibrations and the proposed
adoption of Option 4 to recalibrate the
HHS risk adjustment models for the
2024 benefit year, this will involve the
use of the 3 most recent consecutive
years of enrollee-level EDGE data that
were available for the applicable benefit
year and not updating the coefficients
between the proposed and final rules if
an additional year of enrollee-level
EDGE data becomes available for
incorporation. The coefficients listed in
Tables 1 through 6 of this final rule
reflect the use of 2018, 2019, and 2020
benefit year enrollee-level EDGE
recalibration data for all coefficients,
including adult age-sex coefficients, as
well as the pricing adjustment for
Hepatitis C drugs finalized in this final
rule.26 27 We summarize and respond to
public comments received on the
proposed approach to recalibration of
the HHS risk adjustment models for the
2024 benefit year below.
Comment: Several commenters
supported our proposal to recalibrate
the 2024 risk adjustment models with
2018, 2019, and 2020 enrollee-level
EDGE data, except for the age-sex
coefficients, which would be calculated
by blending the age-sex coefficients
from the 2018 and 2019 enrollee-level
EDGE data only. One of these
commenters stated that, of the options
presented by HHS, Option 4 struck the
best balance between maintaining
HHS’s established practice of
26 Similar to recalibration of the 2023 risk
adjustment adult models and consistent with the
policies adopted in the 2023 Payment Notice, the
2024 benefit year factors in this rule also reflect the
removal of the mapping of hydroxychloroquine
sulfate to RXC 09 (Immune Suppressants and
Immunomodulators) and the related RXC 09
interactions (RXC 09 x HCC056 or 057 and 048 or
041; RXC 09 x HCC056; RXC 09 x HCC 057; RXC
09 x HCC048, 041) from the 2018 and 2019 benefit
year enrollee-level EDGE data sets for purposes of
recalibrating the 2024 benefit year adult models.
See 87 FR 27232 through 27235. Additionally, the
factors for the adult models reflect the use of the
final, fourth quarter (Q4) RXC mapping document
that was applicable for each benefit year of data
included in the current year’s model recalibration
(except under extenuating circumstances that can
result in targeted changes to RXC mappings). See
87 FR 27231 through 27232.
27 The adult, child and infant models have been
truncated to account for the high-cost risk pool
payment parameters by removing 60 percent of
costs above the $1 million threshold. We did not
propose changes to the high-cost risk pool
parameters for the 2024 benefit year. See 87 FR
78237. Therefore, as detailed below, we are
maintaining the $1 million threshold and 60
percent coinsurance rate.
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recalibrating the models based on the 3
most recent years of available EDGE
data while also accounting for the
anomalous decreases in the age-sex
coefficients observed in the 2020 benefit
year enrollee-level EDGE recalibration
data. Another commenter stated that
using 2017, 2018, and 2019 enrolleelevel EDGE data for recalibration
(Option 5), or using only 2018 and 2019
enrollee-level EDGE data (Option 6)
would also be reasonable approaches.
One commenter supported the proposal
to adopt Option 4, but generally
objected to the use of age-sex factors in
the HHS-operated risk adjustment
program due to concerns about
discrimination.
However, several commenters
opposed the finalization of Option 4,
objecting to the use of different data
years to recalibrate different coefficients
for the same benefit year of the HHSoperated risk adjustment program (that
is, blending benefit year 2024 adult agesex coefficients using 2018 and 2019
enrollee-level EDGE data, and blending
all other benefit year 2024 coefficients
using 2018, 2019, and 2020 enrolleelevel EDGE data) on the grounds that
model coefficients are interrelated, so
the 2020 enrollee-level EDGE data adult
age-sex coefficients that were excluded
from blending had an influence during
initial model fitting on 2020 enrolleelevel EDGE data adult model
coefficients that were used in blending.
One commenter urged HHS to include
2020 enrollee-level EDGE data, but to
weight that data year less than other
data years (Option 2).
Several other commenters supported
using the 2017, 2018, and 2019 enrolleelevel EDGE data for the 2024 benefit
year model recalibration (Option 5). One
commenter suggested that HHS might
identify fixable anomalies in the 2020
enrollee-level EDGE recalibration data
prior to model fitting and then refit the
models as an alternative option to use
2018, 2019 and 2020 data for all
coefficients across all models.
Response: In light of our analysis and
further consideration of the previously
identified model recalibration options
along with the benefit of interested
party comments on the six options, we
are finalizing the use of 2018, 2019, and
2020 enrollee-level EDGE data to
recalibrate the 2024 risk adjustment
models for all model coefficients, with
no exceptions (Option 1). As stated in
the proposed rule, although our
analyses found that the 2019 and 2020
benefit year enrollee-level EDGE data
were largely comparable, there were
observed anomalous decreases in the
unconstrained age-sex coefficients for
the 2020 benefit year enrollee-level
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EDGE data for older adult enrollees,
especially older female enrollees.
Therefore, our proposed adoption of
Option 4 included an exception
narrowly tailored to account for the
observed anomalous decreases in the
unconstrained coefficients for the 2020
benefit year enrollee-level EDGE data.
At the same time, as explained in the
proposed rule (87 FR 78215 through
78216), our analysis generally found
that the 2020 enrollee-level EDGE data
were anomalous primarily in the
volume and frequencies of certain types
of claims, but that the relative costs of
specific services, at least those
associated with payment HCCs in the
HHS risk adjustment models, were
largely unaffected. Because the risk
adjustment models predict relative costs
of care for specific conditions on an
enrollee-level basis and tend not to rely
on overall patterns of utilization, the
minimal impacts to relative costs of care
for payment HCCs likewise resulted in
minimal impacts on the coefficients
fitted by the 2020 enrollee-level EDGE
recalibration data.
Although we found anomalous trends
in the adult age-sex factors, they were
limited to the direction of coefficient
changes. Specifically, age and sex in the
adult models seemed to be predictive of
whether an age-sex coefficient would go
up or down with older female enrollees
more likely to see a decrease in their
age-sex coefficient fit to 2020 enrolleelevel EDGE data relative to their age-sex
coefficient fit to 2019 enrollee-level
EDGE data, and younger male enrollees
more likely to see an increase in the
coefficient fit to 2020 data relative to the
coefficient fit with 2019 data. To put
these directional changes into
perspective, the magnitudes of these
changes were small and did not appear
as anomalous when further compared to
previous benefit years. Specifically, as
part of our consideration of comments
we further investigated these anomalies
and found that:
• For the risk adjustment model
coefficients from the 2016 through the
2023 benefit years, the adult age-sex
factors varied in magnitude from their
prior benefit year by a historic median
value of 16.1 percent.
• Using only 2018 and 2019 data to
blend the adult age-sex factors (as in our
proposed approach, Option 4,28) across
metal levels, the median change in
magnitude between the 2023 final adult
age-sex coefficients 29 and the 2024
28 See the 2024 Payment Notice proposed rule,
Table 2 at 87 FR 78220.
29 See the 2023 Benefit Year Final HHS Risk
Adjustment Model Coefficients, Table 1, available
at https://www.cms.gov/files/document/2023-
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proposed adult age-sex coefficients was
2.0 percent and the maximum change in
magnitude was 12.0 percent.
• Using all 3 years of enrollee-level
EDGE data (2018, 2019, and 2020), the
median change in magnitude between
the 2023 final adult age-sex coefficients
and the 2024 adult age-sex coefficients
was 3.6 percent and the maximum
change in magnitude was 13.2 percent.
• The median magnitude of the
differences between the proposed agesex coefficients, and blended age-sex
coefficients using 2018, 2019, and 2020
enrollee-level EDGE data 30 was 2.7
percent.
These values show that although the
pattern of the direction of the changes
in adult age-sex coefficients might
appear to be anomalous, with older
female enrollees showing more
decreases than expected, the coefficients
were actually more consistent between
the 2023 final risk adjustment models
and those proposed or explored as
alternatives for the 2024 benefit year
than we have seen in previous benefit
years. As noted in the proposed rule (78
FR 78217), we know from our
experience that every year of data can be
unique and therefore some level of
deviation from year to year is expected.
Although the adult age-sex trends may
have displayed a systematic effect such
that older female enrollees were more
likely to see lower coefficients, the
magnitude of this effect appears very
small and does not rise above what we
have seen in prior year-to-year variation.
Moreover, the intent of the
established policy to use the 3 most
recent consecutive years of enrolleelevel EDGE data for recalibration of the
risk adjustment models is to provide
stability within the HHS-operated risk
adjustment program and minimize
volatility in changes to risk scores
between benefit years due to differences
in the data set’s underlying populations,
while reflecting the most recent years’
claims experience available.31 Given
that the magnitude of differences in the
coefficients between separately solved
models from the 2019 and 2020
enrollee-level EDGE data sets are similar
in magnitude to the normal variation we
see between data years, despite the
initially observed anomalous trends,
after review of comments and further
consideration and analysis of the
options presented, we now believe that
benefit-year-final-hhs-risk-adjustment-modelcoefficients.pdf.
30 See the 2024 Payment Notice proposed rule,
Table 1 at 87 FR 78218.
31 For a discussion of the established policy
governing the data used for the annual risk
adjustment model recalibration, see 86 FR 24151
through 24155.
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the blending of 3 years of data for all
coefficients, including the adult model
age-sex coefficients, is the better
approach for recalibration of the 2024
benefit year risk adjustment models,
because we continued to find that there
may not be a sufficient justification to
exclude 2020 benefit year enrollee-level
EDGE data in the recalibration of the
risk adjustment models. Additionally,
this approach will continue to serve the
purpose of providing stability in risk
scores by maintaining the policy to use
the 3 most recent consecutive years of
enrollee-level data available at the time
we incorporated the data in the draft
recalibrated coefficients published in
the proposed rule and will update the
models to reflect the most recent year’s
claims experience available.
Additionally, we agree with
commenters and recognize there are
disadvantages with Option 4 and the
use of different benefit years to
recalibrate the adult model age-sex
coefficients because model coefficients
are interdependent. For example, if the
2020 data differed from the 2019 data in
that some risk had shifted from an HCC
to an age-sex category for which that
HCC was common, the removal of the
age-sex category from blending would
result in that HCC being slightly
underpredicted relative to its predicted
value if all three benefit years of data
were used because the shifted risk
would not be captured in the blended
age-sex coefficient with that benefit year
of data being included. Another
example may include vaccinations.
Costs associated with vaccinations have
an impact on age-sex coefficients
because they are not associated with a
diagnosis that would be captured by an
HCC. As such, if there were changes in
the relative costs of common
vaccinations between the 2019 and 2020
years of enrollee-level EDGE data,
removing the 2020 enrollee-level EDGE
data age-sex coefficients from blending
would prevent the models from
capturing these changes.
We also continue to believe that the
COVID–19 PHE is an example of the
type of situation that requires a close
examination of the potential impact on
utilization and costs to identify whether
there are sufficiently anomalous trends
relative to expected future patterns of
care or significant changes that
differentially impact certain conditions
or populations relative to others that
could impact the use of that benefit year
in the annual recalibration of the HHS
risk adjustment models. HHS intends to
similarly examine 2021 enrollee-level
EDGE data, which will be available for
use in recalibration of the 2025 benefit
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year HHS risk adjustment models,32 and
would propose any changes to current
policies for recalibration of the models
in future benefit years through noticeand-comment rulemaking.
We recognize that some commenters
preferred alternative options that would
use 2017, 2018, and 2019 enrollee-level
EDGE data (Option 5) or only 2018 and
2019 enrollee-level EDGE data (Option
6). We remain concerned about these
options, which would completely
exclude 2020 enrollee-level EDGE data,
because these options would result in
the HHS risk adjustment models
reflecting older costs and utilization
trends than would be desirable. As
previously stated, our analyses of the
2020 benefit year enrollee-level EDGE
recalibration data found that it was
largely comparable to the 2019 benefit
year data set and we did not identify
other major anomalous trends in our
comparison of the unconstrained HCC
coefficients in the 2019 and 2020
enrollee-level EDGE recalibration data
sets. This raises the question about
whether there is a sufficient justification
to completely exclude 2020 benefit year
enrollee-level EDGE data in the
recalibration of the HHS risk adjustment
models. Beyond the concern about using
older data and the question about the
justification to completely exclude 2020
benefit year data, Option 6 has the
additional drawback of decreasing the
stabilizing effect of using multiple years
of data. As our goal in using the 3 most
recent consecutive years of data that are
available at the time we incorporate data
to recalibrate the models and determine
draft coefficients based on a blend of
equally-weighted, separately solved
coefficients from each year is to capture
some degree of year-to-year cost shifting
without over-relying on any factors
unique to one particular year. When
using 2 years of data under this
approach, each year is weighted at 50
percent, but with 3 years of data, each
year is weighted at 33.3 percent. As
such, a change in a coefficient occurring
in 1 year of the data that is actually
included in recalibration would have a
greater impact on the HHS risk
adjustment model coefficients if only
using 2 years of data rather than 3 years,
due to the increase in the reliance of the
32 Consistent with the policies finalized in the
2022 Payment Notice, use of the 3 most recent
consecutive years of enrollee-level EDGE data
would result in the use of 2019, 2020, and 2021
enrollee-level EDGE data for recalibration of the
2024 benefit year models; the use of 2020, 2021,
and 2022 enrollee-level EDGE data for recalibration
of the 2025 benefit year models; and the use of
2021, 2022, and 2023 enrollee-level EDGE data for
recalibration of the 2026 benefit year models. See
86 FR 24151 through 24155.
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blended coefficients on the remaining 2
years of data.
Option 2, which was supported by
one commenter and would have
weighted 2020 enrollee-level EDGE data
less than the other two benefit years
(2018 and 2019 enrollee-level EDGE
data) used in recalibration while
continuing to include it in the blended
coefficients, would represent a middle
ground between Option 1 and Option 6.
However, we continue to be concerned
that this approach would require
identifying an appropriate weighting
methodology other than the equal
weighting that we generally use to blend
coefficients from the 3 data years, and
we do not believe there is a self-evident
method of weighting 2020 data
differently for this purpose.
Furthermore, although Option 2 would
not completely eliminate the effect of
the 2020 benefit year data in all of the
models for all factors (as opposed to just
the age-sex factors in the adult models),
this option would dampen the effect of
2020 benefit year data, raising similar
concerns as Options 5 and 6 in that
Option 2 would also, to some extent,
prevent the models from reflecting
changes in utilization and cost of care
that are unrelated to the impact of the
COVID–19 PHE.
Regarding the recommendation to
identify and address fixable anomalies
in the underlying data and then refit the
models using the modified data, we do
not believe this recommendation is
feasible or prudent. Although it may be
possible to identify an increase or a
decrease in the frequency of particular
diagnosis or service codes, these checks
and procedures do not presently allow
HHS to identify whether a diagnosis or
service code on a given enrollee’s record
was directly attributable to the COVID–
19 PHE. We are also presently unable to
determine whether an enrollee had care
deferred due to office closures or other
logistical issues or what care would
have been provided in the absence of
the PHE. We generally consider this sort
of enrollee-level adjustment to be out of
scope for model calibration unless there
is a clear data error. As such, we
generally 33 use the data as is, with only
some basic trending assumptions 34 to
33 As previously stated in the March 2016 Risk
Adjustment Methodology White Paper (March 24,
2016; available at https://www.cms.gov/CCIIO/
Resources/Forms-Reports-and-Other-Resources/
Downloads/RA-March-31-White-Paper-032416.pdf),
we exclude enrollees with capitated claims from the
recalibration sample due to concerns that methods
for computing and reporting derived amounts from
capitated claims would not result in reliable data
for recalibration or analysis. See also 87 FR 27227.
34 These trending assumptions include the pricing
adjustment for Hepatitis C drugs. See 84 FR 17463
through 17466. See also 87 FR 78218.
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ensure the costs are measured for the
year in which the coefficients will be
used. Furthermore, as previously stated,
the HHS risk adjustment models rely
more on relative cost of care for a given
diagnosis than they do on how many
such diagnoses are present in the
underlying data.
Regarding the general concerns about
use of age-sex factors in the HHS risk
adjustment models, HHS takes very
seriously our obligation to protect
individuals from discrimination and
generally disagrees that the use of these
factors in risk adjustment is
inappropriate. Consistent with section
1343 of the ACA, the HHS-operated risk
adjustment program reduces the
incentives for issuers to avoid higherthan-average risk enrollees, such as
those with chronic conditions, by using
charges collected from issuers that
attract lower-than-average risk enrollees
to provide payments to health insurance
issuers that attract higher-than-average
risk enrollees. The ACA also prohibits
issuers from establishing or charging
premiums on the basis of sex,35 and
limits issuers ability to do so on the
basis of age.36 However, the cost of care
for and actuarial risk of enrollees is, in
part, predicted by their age and sex. As
such, without the inclusion of age-sex
factors in the HHS risk adjustment
models, some issuers would be
incentivized to design plans that are less
attractive to potential enrollees whose
age-sex category is predicted to create a
higher liability for the issuer. The agesex factors in the HHS risk adjustment
models help alleviate this incentive by
ensuring issuers whose enrollees’
actuarial risk is greater than the average
actuarial risk of all enrollees in the State
market risk pool, such as issuers that
enroll a higher-than-average proportion
of enrollees who fall into a high-cost
age-sex category, are appropriately
compensated. The use of age and sex
factors in the HHS risk adjustment
models is therefore necessary,
appropriate, and helps reduce the
likelihood that discrimination based on
age or sex will occur with respect to
health insurance coverage issued or
renewed in the individual and small
group (including merged) markets.
After review of comments and further
consideration of the options presented,
for the reasons outlined above, we are
finalizing adoption of Option 1 for
recalibrating the HHS risk adjustment
models for the 2024 benefit year. The
35 See section 2701 of the Public Health Service
Act (42 U.S.C. 300gg) as amended by section 1201
of the ACA.
36 Ibid. See also the Market Rules and Rate
Review final rule (78 FR 13411 through 13413).
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model coefficients for the 2024 benefit
year listed in Tables 1 through 6 of this
final rule are based on a blend of
equally-weighted, separately solved
coefficients from the 2018, 2019, and
2020 benefit years of enrollee-level
EDGE data for all coefficients.37 38 39
Comment: Several commenters were
concerned about some of the proposed
RXC adult model coefficients, in
particular RXCs 1 (Anti-HIV Agents), 8
(Multiple Sclerosis Agents), and 9
(immune suppressants and
immunomodulators), for which the
majority of filled prescriptions fall into
the category of specialty drugs. As a
result, many of these commenters
supported Option 5, described above,
for addressing 2020 enrollee-level EDGE
data in model recalibration and
recommended that the 2017, 2018 and
2019 enrollee-level EDGE data not be
trended forward to the 2024 benefit year
(that is, that HHS should use the 2023
final model coefficients for the 2024
benefit year). These commenters also
requested that HHS publish additional
information on these coefficients,
including the separately solved model
coefficients from each data year, the
trending methodology, and how these
trend factors were applied as part of the
2024 benefit year risk adjustment model
recalibration. Some of these commenters
questioned whether the changes for
these coefficients were due to anomalies
in the 2020 enrollee-level EDGE data or,
as others suggested, if the changes may
be due to the trending methodology
applied. One of these commenters
suggested different trend factors may
37 The coefficients listed in Tables 1 through 6 of
this final rule also reflect the pricing adjustment for
Hepatitis C drugs finalized in this rule. In addition,
the factors in this rule also reflect the removal of
the mapping of hydroxychloroquine sulfate to RXC
09 (Immune Suppressants and Immunomodulators)
and the related RXC 09 interactions (RXC 09 x
HCC056 or 057 and 048 or 041; RXC 09 x HCC056;
RXC 09 x HCC 057; RXC 09 x HCC048, 041) from
the 2018 and 2019 benefit year enrollee-level EDGE
data sets for purposes of recalibrating the 2024
benefit year adult models. See 87 FR 27232 through
27235. Additionally, the factors for the adult
models reflect the use of the final, fourth quarter
(Q4) RXC mapping document that was applicable
for each benefit year of data included in the current
year’s model recalibration (except under
extenuating circumstances that can result in
targeted changes to RXC mappings). See 87 FR
27231 through 27232.
38 The adult, child and infant models have also
been truncated to account for the high-cost risk pool
payment parameters by removing 60 percent of
costs above the $1 million threshold.
39 Starting with the 2024 risk adjustment adult
models, HHS will group HCC 18 Pancreas
Transplant Status and CC 83 Kidney Transplant
Status/Complications to reflect that these
transplants frequently co-occur for clinical reasons
and to reduce volatility of coefficients across benefit
years due to the small sample size of HCC 18. This
change will also be reflected in the DIY Software
for the 2024 benefit year.
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need to be applied differently for
different RXCs, noting that market
patterns for non-RXC specialty drugs
may not align with market patterns for
specialty drugs included in the affected
RXCs.
Response: We are finalizing the RXC
coefficients as proposed because we
believe the 2024 risk adjustment
models’ RXCs are accurately predicting
the costs of RXCs in the market for the
applicable benefit year. Although there
are RXC coefficients changes between
the 2023 and 2024 benefit year models,
these changes are not due to anomalies
in the 2020 enrollee-level EDGE data
and are of a similar magnitude to RXC
changes found in previous benefit years.
The change in these RXC coefficients
relative to the previous benefit year are
due to decisions HHS made in trending
costs for traditional and specialty drugs,
as suggested by some commenters.
To explain, we analyzed separately
solved model coefficients from each
data year used in the proposed 2024 risk
adjustment model recalibration and
found that all 3 data years used for 2024
model recalibration exhibited similar
changes in these RXC coefficients. This
indicates that the 2020 enrollee-level
EDGE data (or any potential anomalies
related to that data year) were not
driving the decrease. Although we
understand the importance of
transparency, we do not believe it is
necessary to release the separately
solved model coefficients from each
data year.
However, we appreciate it is
important to share more information
about the RXC coefficients identified by
commenters and generally note that,
between benefit years, the RXC
coefficients are typically less stable than
HCC coefficients in the HHS risk
adjustment models due to smaller
sample sizes than their corresponding
HCC coefficients, and multicollinearity
with HCC coefficients and HCC–RXC
interaction factors. In addition, as part
of our consideration of these comments
and to investigate whether the 2020
enrollee-level EDGE data coefficients for
these three RXCs were substantially
different from the 2018 and 2019 years
of enrollee-level EDGE data coefficients,
we engaged in a further analysis of the
differences between coefficients solved
from each year of enrollee-level EDGE
data (2018, 2019, and 2020 enrolleelevel EDGE data) for these three RXCs
and found:
• In the HHS risk adjustment adult
model coefficients from the 2018
through the 2023 benefit years, across
the five metal levels, the distance
between RXC coefficient values from the
2 most dissimilar data years used in the
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annual model recalibration for RXC 1
have ranged between 9.2 percent and
40.7 percent. Across the five metal
levels, the median distance between
RXC 1 coefficients from the 2 most
dissimilar data years for the 2024
benefit year risk adjustment adult
models is 30.9 percent.
• For RXC 8, the distance between
values from the 2 most dissimilar data
years used in the annual model
recalibration for this adult model
coefficient across the 2018 through 2023
benefit years ranged from between 5.1
percent and 28.4 percent, with the
median value for the 2024 benefit year
risk adjustment adult models at 7.0
percent across metal levels.
• For RXC 9, the range of distance
between values from the 2 most
dissimilar data years used in the annual
model recalibration for this adult model
coefficient across the 2018 through 2023
benefit years has fallen between 1.6
percent and 60.1 percent, with the
median value for the proposed and final
2024 risk adjustment adult models at 4.7
percent across the five metal levels.
Although coefficients for these three
RXCs decreased between the 2023 and
2024 benefit year risk adjustment adult
models, the similarity of the coefficients
among the 3 data years used to fit the
2024 benefit year risk adjustment
models and the consistency of the
dispersion between data years with the
range of dispersion observed for
previous benefit years’ HHS risk
adjustment models demonstrates that
these decreases are not due to any
anomalous patterns in the 2020
enrollee-level EDGE data. As noted
above, in past benefit years, we have
attributed the lower level of stability
among RXC and RXC–HCC interaction
factors to the high level of collinearity
between these variables. Due to their
close association with one another, the
models may fit coefficients that divide
risk between an interaction factor and
its related RXC and HCC(s) differently
for different years of enrollee-level
EDGE data.
However, the change in these RXC
coefficients relative to the previous
benefit year are due to decisions we
made in trending costs for traditional
and specialty drugs, as suggested by
some commenters, which have been
trended separately from medical
expenditures since the 2017 benefit
year.40 More specifically, in our annual
assessment of the trending factors for
the 2024 HHS risk adjustment models,
we determined that the trend factors
used for specialty drugs was higher than
the market data supported. Therefore,
40 See
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for the 2024 benefit year, we used trend
factors for specialty drugs that aligned
with the market data rather than
continuing the historical, higher trend
factors. In determining these trend
factors, we consulted our actuarial
experts, reviewed relevant Unified Rate
Review Template (URRT) submission
data, analyzed multiple years of
enrollee-level EDGE data, and consulted
National Health Expenditure Accounts
(NHEA) data as well as external reports
and documents 41 published by third
parties. In this process, we also ensured
that the trends we use reflect changes in
cost of care rather than gross growth in
expenditures. As such, we believe the
trend factors we used for specialty drugs
are appropriate for the most recent
trends we have seen in the market and
the proposed RXC coefficient values
that we finalize in this rule reflect the
appropriate amount of growth between
the data years used to fit the model and
the 2024 benefit year. As part of our
annual model recalibration activities,
we intend to continue to reassess the
trend factors used to update the HHS
risk adjustment models in future benefit
years. Consistent with § 153.320(b)(1),
we will also continue to include and
solicit comments on the draft model
factors to be employed in the HHS risk
adjustment models for a given benefit
year, including but not limited to the
proposed coefficients, as part of the
applicable benefit year’s Payment
Notice proposed rule.
b. Pricing Adjustment for the Hepatitis
C Drugs
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In the HHS Notice of Benefits and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78218), for the 2024
benefit year, we proposed to continue
applying a market pricing adjustment to
the plan liability associated with
Hepatitis C drugs in the risk adjustment
models.42
Since the 2020 benefit year risk
adjustment models, we have been
making a market pricing adjustment to
the plan liability associated with
Hepatitis C drugs to reflect future
market pricing prior to solving for
41 See for example, ‘‘How much is health
spending expected to grow?’’ by the Peterson-Kaiser
Family Foundation, available at https://
www.healthsystemtracker.org/chart-collection/howmuch-is-health-spending-expected-to-grow/. See
also ‘‘Medical cost trend: Behind the numbers
2022’’ by PwC Health Research Institute, available
at https://www.pwc.com/us/en/industries/healthindustries/library/assets/pwc-hri-behind-thenumbers-2022.pdf. See also, ‘‘MBB health trends’’
by MercerMarsh Benefits, available at https://
www.mercer.com/content/dam/mercer/
attachments/private/gl-2022-mmb-health-trendsreport.pdf.
42 See for example, 84 FR 17463 through 17466.
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coefficients for the models.43 The
purpose of this market pricing
adjustment is to account for significant
pricing changes associated with the
introduction of new and generic
Hepatitis C drugs between the data years
used for recalibrating the models and
the applicable recalibration benefit
year.44
We have committed to reassessing
this pricing adjustment with additional
years of enrollee-level EDGE data, as
data become available. As part of the
2024 benefit year model recalibration,
we reassessed the cost trend for
Hepatitis C drugs using available
enrollee-level EDGE data (including
2020 benefit year data) to consider
whether the adjustment was still needed
and if it is still needed, whether it
should be modified. We found that the
data for the Hepatitis C RXC that will be
used for the 2024 benefit year
recalibration 45 still do not account for
the significant pricing changes due to
the introduction of new Hepatitis C
drugs, and therefore, do not precisely
reflect the average cost of Hepatitis C
treatments applicable to the benefit year
in question.
Specifically, generic Hepatitis C drugs
did not become available on the market
until 2019, and we proposed to use 2018
benefit year EDGE data in the 2024
benefit year model recalibration.46 Due
to the lag between the data years used
to recalibrate the risk adjustment
models and the applicable benefit year
of risk adjustment, as well as the
expectation that the costs for Hepatitis
C drugs will not increase at the same
rate as other drug costs between the data
43 The Hepatitis C drugs market pricing
adjustment to plan liability is applied for all
enrollees taking Hepatitis C drugs in the data used
for recalibration.
44 Silseth, S., & Shaw, H. (2021). Analysis of
prescription drugs for the treatment of hepatitis C
in the United States. Milliman White Paper. https://
www.milliman.com/-/media/milliman/pdfs/2021articles/6-11-21-analysis-prescription-drugstreatment-hepatitis-c-us.ashx.
45 As detailed above, we are finalizing that we
will use 2018, 2019 and 2020 enrollee-level EDGE
data for recalibration of the 2024 benefit year HHS
risk adjustment models, with no exceptions.
However, for the proposed rule, we also assessed
2017 enrollee-level EDGE data in the event one of
the alternative proposals regarding use of 2020
enrollee-level EDGE data were to be adopted.
46 See Miligan, J, (2018). A perspective from our
CEO: Gilead Subsidiary to Launch Authorized
Generics to Treat HCV. Gilead. https://
www.gilead.com/news-and-press/companystatements/authorized-generics-for-hcv. See also
AbbVie. (2017). AbbVie Receives U.S. FDA
Approval of MAVYRETTM (glecaprevir/
pibrentasvir) for the Treatment of Chronic Hepatitis
C in All Major Genotypes (GT 1–6) in as Short as
8 Weeks. Abbvie. https://news.abbvie.com/news/
abbvie-receives-us-fda-approval-mavyretglecaprevirpibrentasvir-for-treatment-chronichepatitis-c-in-all-major-genotypes-gt-1-6-in-asshort-as-8-weeks.htm.
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year and the applicable benefit year of
risk adjustment, we do not believe that
the trends used to reflect growth in the
cost of prescription drugs due to
inflation and related factors for
recalibrating the models will
appropriately reflect the average cost of
Hepatitis C treatments expected in the
2024 benefit year. Therefore, we
continue to believe a market pricing
adjustment specific to Hepatitis C drugs
in our models for the 2024 benefit year
is necessary to account for the
significant pricing changes associated
with the introduction of new and
generic Hepatitis C drugs between the
data years used for recalibrating the
models and the applicable recalibration
benefit year. As noted in the proposed
rule, we intend to continue to assess
this pricing adjustment in future benefit
year recalibrations using additional
years of enrollee-level EDGE data.
We sought comment on this proposal.
After reviewing the public comments,
we are finalizing this proposal to
continue applying a market pricing
adjustment to the plan liability
associated with Hepatitis C drugs in the
2024 benefit year HHS risk adjustment
models as proposed. We summarize and
respond to public comments received
on the proposed pricing adjustment for
Hepatitis C drugs below.
Comment: Most commenters
supported the continued use of the
pricing adjustment for Hepatitis C drugs
with one commenter stating that the
proposed Hepatitis C pricing adjustment
seems reasonably well calibrated to
reduce the incentives for issuers to
create discriminatory plans that would
drive away enrollees with Hepatitis C.
Some commenters expressed concern
about the Hepatitis C pricing
adjustment. These commenters
cautioned against reducing the Hepatitis
C RXC coefficient more than the
expected decrease in cost as that may
incentivize issuers to reduce the
availability of treatment. These
commenters were also concerned about
undercompensating issuers for enrollees
with serious chronic conditions, which
they stated would incentivize issuers to
avoid these enrollees. One commenter
asserted that the professional
independence and ethical standards of
providers would prevent providers from
prescribing drugs that they did not
believe were medically necessary and
appropriate, reducing the potential for
issuers to game the program.
Response: We believe that continuing
to apply the Hepatitis C pricing
adjustment in the 2024 benefit year HHS
risk adjustment models is appropriate at
this time. This pricing adjustment will
help avoid perverse incentives and will
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lead to Hepatitis C RXC coefficients that
better reflect anticipated actual 2024
benefit year plan liability associated
with Hepatitis C drugs. Specifically, the
purpose of the Hepatitis C pricing
adjustment is to address the significant
pricing changes associated with the
introduction of new and generic
Hepatitis C drugs between the data years
used for recalibrating the models and
the applicable recalibration benefit year
that present a risk of creating perverse
incentives by overcompensating issuers.
We reassessed the pricing adjustment
for the Hepatitis C RXC for the 2024
benefit year model recalibration and
found that the data used for the 2024
benefit year risk adjustment model
recalibration (that is, 2018, 2019, and
2020 enrollee-level EDGE data) still do
not account for the significant pricing
changes that we have observed for the
Hepatitis C drugs due to the
introduction of newer and cheaper
Hepatitis C drugs. Therefore, the data
that will be used to recalibrate the
models needs to be adjusted because it
does not precisely reflect the average
cost of Hepatitis C treatments expected
in the 2024 benefit year.
In making this determination, we
consulted our clinical and actuarial
experts, and analyzed the most recent
enrollee-level EDGE data available to
further assess the changing costs
associated with Hepatitis C enrollees.
Due to the high cost of these drugs
reflected in the 2018, 2019, and 2020
enrollee-level EDGE data, without a
pricing adjustment to plan liability,
issuers would be overcompensated for
the Hepatitis C RXC in the 2024 benefit
year, and issuers could be incentivized
to encourage overprescribing practices
and game risk adjustment such that
their risk adjustment payment is
increased or risk adjustment charge is
decreased. We also recognize concerns
that applying a pricing adjustment that
would reduce the coefficient for the
Hepatitis C RXC by more than the
expected decrease in costs could
incentivize issuers to reduce the
availability of the treatment. However,
we believe that the Hepatitis C pricing
adjustment we are finalizing accurately
captures the costs of Hepatitis C drugs
for the 2024 benefit year using the most
recently available data, balances the
need to deter gaming practices with the
need to ensure that issuers are
adequately compensated, and does not
undermine recent progress in the
treatment of Hepatitis C. Nevertheless,
we intend to continue to reassess this
pricing adjustment as part of future
benefit years’ model recalibrations using
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additional years of available enrolleelevel EDGE data.
We appreciate commenters’ concerns
about undercompensating issuers for
enrollees with serious chronic
conditions. We note that HHS, in the
2023 Payment Notice (87 FR 27221
through 27230), finalized several risk
adjustment model changes to address
the adult and child models’
underprediction for enrollees with
many HCCs. Specifically, we finalized
the interacted HCC counts and HCCcontingent enrollment duration factor
model specifications to improve model
prediction for the higher risk enrollees
and ensure that issuers are being
accurately compensated for these
enrollees. As such, the potential for
underprediction or overprediction in
the HHS risk adjustment models is an
area that we are consistently monitoring
and addressing as needed and will
continue to monitor and address in the
future as part of our ongoing efforts to
continually improve the HHS risk
adjustment models.
Additionally, we recognize the
important role that the ethical standards
of providers play in preventing
overprescribing of drugs that they do
not believe are medically necessary and
appropriate, but we believe that the
Hepatitis C pricing adjustment is the
most effective way to protect against
perverse incentives that could affect
prescribing patterns.
Comment: One commenter urged HHS
to expand the pricing adjustment to
other drugs, noting that biosimilar
versions of adalimumab (Humira®), a
drug that is currently classified in RXC
9 Immune suppressants and
Immunomodulators in the adult risk
adjustment models, will soon enter the
market and the logic for applying a
market pricing adjustment to the plan
liability associated with Hepatitis C
drugs may be extended to these
biosimilar drugs.
Response: We did not propose or
solicit comments on extending a pricing
adjustment to drugs treating conditions
other than Hepatitis C. As such, at this
time, we will not be finalizing any
pricing adjustments for the RXC 9 drug
adalimumab or other specialty drugs
with alternatives (whether generic or
biosimilar) entering the market in the
coming year. In the 2023 Payment
Notice (87 FR 27231 through 27235), we
explained our criteria for inclusion and
exclusion of drugs in RXC mapping and
recalibration. We stated that in
extenuating circumstances where HHS
believes there will be a significant
impact from a change in an RxNorm
Concept Unique Identifiers (RXCUI) to
RXC mapping, such as: (1) evidence of
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significant off-label prescribing (as was
the case with hydroxychloroquine
sulfate); 47 (2) abnormally large changes
in clinical indications or practice
patterns associated with drug usage; or
(3) certain situations in which the cost
of a drug (or biosimilars) become much
higher or lower than the typical cost of
drugs in the same prescription drug
category, HHS will consider whether
changes to the RXCUI to RXC mapping
from the applicable data year crosswalk
(or, in this case, pricing adjustments) are
needed for future benefit year
recalibrations.
Although making a pricing
adjustment due to the introduction of
new drugs in a market is not the same
as adjusting the RXC mappings, we take
a similar approach in considering
whether a pricing adjustment for new
drugs in a market is needed. We do not
believe there is evidence at this time
that the introduction of biosimilar
alternatives to adalimumab will create
market patterns that meet any of these
three criteria. Our current
understanding is that the biosimilar
alternatives to adalimumab entering the
market are not analogous to the generic
versions of drugs used to treat Hepatitis
C. Biosimilars, in general, differ from
common generic drugs and their market
behaviors are expected to be distinct.
Because biosimilars are made from
living material (which is not the case
with common generic drugs), they differ
in their interchangeability and
manufacturing cost savings from
common generics.48 Furthermore,
although costs are expected to be lower
for adalimumab biosimilars due to
lower costs of development, the nature
of the different production process for
biologic drugs means that the price
reductions are expected to be much
smaller with biosimilars than we see
with the introduction of generic
medications.49 As such, we also do not
believe that the costs and prescribing
patterns of adalimumab (and its
biosimilars) will be much higher or
lower than the typical cost of drugs in
the same prescription drug category in
the near future. Nevertheless, we will
continue to monitor the prescription
drug market as part of our ongoing
efforts to continually improve the HHS
risk adjustment models.
47 See,
for example, 86 FR 24180.
https://www.uspharmacist.com/article/
biosimilars-not-simply-generics. See also https://
www.goodrx.com/humira/biosimilars.
49 See https://www.reuters.com/business/
healthcare-pharmaceuticals/abbvies-humira-getsus-rival-costs-could-stay-high-2023-01-31/. See also
https://info.goodrootinc.com/download-ourbiosimilars-white-paper.
48 See
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c. Request for Information: Payment
HCC for Gender Dysphoria
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78219), HHS requested
information on adding a payment HCC
for gender dysphoria to the HHS risk
adjustment models for future benefit
years. We thank commenters for their
feedback and will take these comments
into consideration if we pursue this
potential risk adjustment model update
for future benefit years through noticeand-comment rulemaking.
d. List of Factors To Be Employed in the
Risk Adjustment Models (§ 153.320)
We are finalizing the 2024 benefit
year risk adjustment model factors
resulting from the equally weighted
(averaged) blended factors from
separately solved models using the
2018, 2019, and 2020 enrollee-level
EDGE data in Tables 1 through 6. The
adult, child, and infant models have
been truncated to account for the highcost risk pool payment parameters by
removing 60 percent of costs above the
$1 million threshold.50 Table 1 contains
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50 We did not propose changes to the high-cost
risk pool parameters for the 2024 benefit year.
Therefore, we will maintain the $1 million
threshold and 60 percent coinsurance rate.
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factors for each adult model, including
the age-sex, HCCs, RXCs, RXC–HCC
interactions, interacted HCC counts, and
enrollment duration coefficients. Table
2 contains the factors for each child
model, including the age-sex, HCCs, and
interacted HCC counts coefficients.
Table 3 lists the HHS–HCCs selected for
the interacted HCC counts factors that
apply to the adult and child models.
Table 4 contains the factors for each
infant model. Tables 5 and 6 contain the
HCCs included in the infant models’
maturity and severity categories,
respectively.
BILLING CODE 4120–01–P
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BILLING CODE 4120–01–C
After reviewing public comments, we
are finalizing the list of factors to be
employed in the HHS risk adjustment
models with the following
modifications. In the proposed rule (87
FR 78219 through 78226), the adult risk
adjustment model factor coefficients
reflected a blend of separately solved
coefficients from the 2018, 2019, and
2020 benefit years of enrollee-level
EDGE data, with an exception to
exclude the 2020 benefit year data from
the blending of the age-sex coefficients
for the adult models. In this final rule,
the adult risk adjustment model factor
coefficients for the 2024 benefit year
have been updated to reflect the
finalization of the use of the 2018, 2019
and 2020 benefit year enrollee-level
EDGE data for recalibration of the 2024
benefit year risk adjustment models for
all model coefficients, including the
adult age-sex coefficients, as detailed in
an earlier section of this rule.
We summarize and respond to public
comments received on the list of factors
to be employed in the HHS risk
adjustment models below.
Comment: One commenter stated that
the enrollment duration factors do not
fully capture the financial impact of
enrollment duration for consumers who
enroll during SEPs, and requested HHS
further investigate how the HHS risk
adjustment models can be updated and
improved to reflect more recent changes
to SEPs.
Response: In the 2023 Payment Notice
(87 FR 27228 through 27230), we
changed the enrollment duration factors
in the adult risk adjustment models to
improve prediction for partial-year adult
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enrollees with and without HCCs. As
described in the 2021 Risk Adjustment
(RA) Technical Paper,51 we found that
the previous adult model enrollment
duration factors underpredicted plan
liability for partial-year adult enrollees
with HCCs and overpredicted plan
liability for partial-year adult enrollees
without HCCs. Therefore, beginning
with the 2023 benefit year, we
eliminated the enrollment duration
factors of up to 11 months for all
enrollees in the adult models, and
replaced them with new monthly
enrollment duration factors of up to 6
months that would apply only to adult
enrollees with HCCs. HHS did not
propose and is not finalizing any
changes to the enrollment duration
factors as part of this rulemaking.
However, as more data years become
available, we will continue to
investigate the performance of the
enrollment duration factors.
Specifically, as the SEP landscape
changes and we have new data to reflect
those changes,52 we will assess the
extent to which the enrollment duration
factors fully capture the financial
51 HHS published analysis of CSR population
utilization in the HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes. (2021,
October 26). CMS. https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
52 See, for example, CMS. (2022, October 28).
Marketplace Stakeholder Technical Assistance Tip
Sheet on the Monthly Special Enrollment Period for
Advance Payments of the Premium Tax credit—
Eligible Consumers with Household Income at or
below 150% of the Federal Poverty Level. https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance/150FPLSEPTATIPSHEET.
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impact of enrollment duration for
enrollees who enroll during an SEP.
e. CSR Adjustments
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78235), we proposed
to continue including an adjustment for
the receipt of CSRs in the risk
adjustment models in all 50 States and
the District of Columbia. We explained
that while we continue to study and
explore a range of options to update the
CSR adjustments to improve prediction
for CSR enrollees and whether changes
are needed to the risk adjustment
transfer formula to account for CSR
plans,53 to maintain stability and
certainty for issuers for the 2024 benefit
year, we proposed to maintain the CSR
adjustment factors finalized in the 2019,
2020, 2021, 2022, and 2023 Payment
Notices.54 See Table 7. We also
proposed to continue to use a CSR
adjustment factor of 1.12 for all
Massachusetts wrap-around plans in the
risk adjustment PLRS calculation, as all
53 See CMS. (2021, October 26). HHS-Operated
Risk Adjustment Technical Paper on Possible
Model Changes. Appendix A. https://www.cms.gov/
files/document/2021-ra-technical-paper.pdf. We are
also considering a letter recently published by the
American Academy of Actuaries regarding
accounting for the receipt of CSRs in risk
adjustment and plan rating and are continuing to
monitor changes related to these issues. Bohl, J.,
Novak, D., & Karcher, J. (2022, September 8).
Comment Letter on Cost-Sharing Reduction
Premium Load Factors. American Academy of
Actuaries. https://www.actuary.org/sites/default/
files/2022-09/Academy_CSR_Load_Letter_
09.08.22.pdf.
54 See 83 FR 16930 at 16953; 84 FR 17478 through
17479; 85 FR 29190; 86 FR 24181; and 87 FR 27235
through 27236.
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of Massachusetts’ cost-sharing plan
variations have AVs above 94 percent
(81 FR 12228).
We sought comment on these
proposals. After reviewing the public
comments, we are finalizing the CSR
adjustment factors as proposed.
We summarize and respond to public
comments received on the proposed
CSR adjustment factors below.
Comment: One commenter supported
using the proposed CSR adjustment
factors in the HHS-operated risk
adjustment program. Another
commenter supported continuing to
apply an adjustment for Massachusetts
wrap-around plans to account for its
unique market dynamics. A few
commenters supported further
evaluation of the CSR adjustment
factors. One commenter requested
evaluation of the current CSR
adjustment factors in light of an absence
of funding of CSR subsidies and due to
the potential socioeconomic health
equity issues associated with lowerthan-anticipated induced utilization
levels in the CSR population.55 Another
commenter requested a technical paper
before future proposed rulemaking with
further CSR induced demand analysis.
One commenter stated that current
CSR adjustment factors, specifically
when applied to CSR 87 percent and 94
percent variants, do not accurately
reflect population risk and another
commenter requested the risk
adjustment formula reflect actual costs
incurred by 87 percent and 94 percent
AV enrollees.
Response: We appreciate the
comments in support of these proposals
and are finalizing the 2024 benefit year
CSR adjustment factors as proposed.
While we have studied the CSR
adjustment factors, we agree continued
study of the CSR adjustment factors is
warranted to further assess the different
options outlined in the 2021 RA
Technical Paper and other potential
approaches before pursuing any
changes.56 However, at this time, we are
not planning to publish another
technical paper with additional CSR
induced demand analysis prior to
pursing changes to these factors in any
future proposed rulemaking. We
anticipate that between the 2021 RA
Technical Paper and any future noticeand-comment rulemaking, sufficient
analysis and justification for any
proposed changes would be provided.
Additionally, we reiterate the findings
from the 2021 RA Technical Paper that
the current CSR adjustment factors are
predicting actual plan liability relatively
accurately on average, with the
nationally-approximated risk term
predictive ratios for CSR 87 percent and
94 percent variants both within +/-5
percent. We also believe that the
collection and extraction of additional
data elements from issuers’ EDGE
servers, including plan ID and rating
area, will help further inform our study
of the CSR adjustment factors and may
allow us to further consider potential
socioeconomic issues in the CSR
populations. Therefore, HHS intends to
review the enrollee-level EDGE data
with the plan ID and rating area before
proposing any changes to the CSR
adjustment factors in future notice-andcomment rulemaking.
Comment: A few commenters were
concerned about the underprediction of
zero and limited sharing CSR plan
variants for American Indian/Alaska
Natives (AI/AN) in the risk term of the
State payment transfer formula, as
outlined in the 2021 RA Technical
Paper,57 particularly in States that have
a high percentage of AI/AN enrollment,
because competition for these enrollees
may be discouraged by this
underprediction.58 These commenters
were concerned that this market
dynamic would result in issuers with
fewer AI/AN enrollees having the ability
to more aggressively price silver plan
premiums, gaining competitive
advantage and depressing premium tax
credits for enrollees in that State’s
market. One commenter recommended
that HHS reframe and recalibrate the
CSR adjustment factors to fully
eliminate the underprediction of
liability for AI/AN enrollees to best
capture actual CSR experience and
mitigate any existing imbalances in risk
adjustment State transfers across metal
and CSR plan variants.
Response: As part of our overall
analysis of the CSR adjustment factors,
55 HHS
published analysis of CSR population
utilization in the HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes. (2021,
October 26). CMS. https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
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56 Ibid.
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57 Ibid.
58 The CSR adjustment factors for zero cost
sharing recipients (less than 300 percent of FPL)
and limited cost sharing recipients (greater than 300
percent of FPL) for each metal level are included
in Table 7 of this rule.
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we will also continue to consider
options for how to recalibrate and adjust
the CSR adjustment factors for the zero
and limited sharing CSR plan variants
for future benefit years. In the 2021 RA
Technical Paper, we provided an
analysis that showed the
underprediction of zero and limited
sharing CSR plan variants for AI/AN in
HHS risk adjustment and considered a
variety of different options to adjust the
CSR adjustment factors.59 Because this
analysis was conducted at the national
level, we did not observe any trends of
particular issuers, States or rating areas
having a higher percentage of AI/AN
enrollment as noted by the commenter.
Specifically, we were extracting and
using national enrollee-level EDGE data
without issuer or geographic markers.
Therefore, in the past and when we
developed the proposed rule, we did not
have the ability to analyze the
distribution of the CSR populations at a
more granular level (for example, at the
issuer, State or rating area level) to see,
for example, which issuers, States or
rating areas have a high percentage of
AI/AN enrollment. However, with
policies finalized in the 2023 Payment
Notice (87 FR 27241 through 27243) and
this final rule, we will have the ability
to extract and use multiple years of
enrollee-level EDGE data with plan ID
and rating area markers and will be able
to further analyze the CSR populations
at a more granular level, including
analyzing whether incentives may exist
in certain States with high proportions
of AI/AN populations for issuers with
fewer AI/AN enrollees to more
aggressively price silver plan premiums
in those States, to further consider
potential changes to these factors for
future benefit years. In the meantime,
we are finalizing the CSR adjustment
factors as proposed for the 2024 benefit
year to maintain stability and certainty
for issuers.
Comment: We also received several
comments in response to a reference to
the American Academy of Actuaries’
letter on CSR loading in a footnote in
the proposed rule.60 These commenters
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59 HHS published analysis of CSR population
utilization in the HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes. (2021,
October 26). CMS. https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
60 Bohl, J., Novak, D., & Karcher, J. (2022,
September 8). Comment Letter on Cost-Sharing
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objected to HHS considering any
method of estimating CSR premium
load factors that involves issuers using
experience data or issuer pricing models
to estimate the CSR load for silver plan
variants. These commenters stated that
they believed such a methodology is a
violation of the ACA’s single risk pool
requirement, which requires issuers to
treat all individual market enrollees as
part of a single risk pool so that pricing
reflects utilization of essential benefits
by a standard population. These
commenters shared their experience
from Texas and New Mexico, where
they claim aligning plan prices by AV
when regulating the variation in metal
level premiums resulted in large
enrollment increases and enhanced
affordability following premium
realignment. One commenter expressed
concern about using a nationally
weighted CSR silver load in the rating
term of the transfer formula due to
variations in State CSR enrollment
mixes or CSR loading requirement
recommending the use of State-specific
AV factors, as discussed in the 2021 RA
Technical Paper. Another of these
commenters suggested that anticipated
premiums should instead reflect the
average AV of all CSR variants.
Response: We appreciate the
comments on potential approaches to
change the current CSR adjustment
factors and, as previously noted, are
continuing to study these issues for
potential updates to these factors in
future benefit years. We did not propose
and are not adopting any changes to the
CSR adjustment factors. With policies
finalized in the 2023 Payment Notice
(87 FR 27241 through 27243), we have
the ability to extract and use enrolleelevel EDGE data with plan ID and rating
area markers to further analyze the CSR
populations at a more granular level to
further consider potential changes to
these factors for future benefit years, as
well as other potential approaches. This
includes consideration of the American
Academy of Actuaries letter regarding
accounting for the receipt of CSRs in the
HHS-operated risk adjustment program
and plan rating.61 As part of this effort,
we will also consider interested parties’
analysis and comments on potential
approaches under consideration,
including the feedback provided by
these commenters. We are aware of the
interaction that potential future changes
to the CSR adjustment factors may have
with regard to the ACA’s single risk
pool requirement, and confirm that any
changes to the CSR adjustment factors
would be designed to align with other
applicable Federal market reforms. We
also affirm that interested parties will
have an opportunity to comment on any
potential changes to the CSR adjustment
factors for future benefit years, as those
updates would be pursued through
notice-and-comment rulemaking.
Reduction Premium Load Factors. American
Academy of Actuaries. https://www.actuary.org/
sites/default/files/2022-09/Academy_CSR_Load_
Letter_09.08.22.pdf.
61 Ibid.
62 Hileman, G., & Steele, S. (2016). Accuracy of
Claims-Based Risk Scoring Models. Society of
Actuaries. https://www.soa.org/4937b5/
globalassets/assets/files/research/research-2016accuracy-claims-based-risk-scoring-models.pdf.
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f. Model Performance Statistics
Each benefit year, to evaluate risk
adjustment model performance, we
examine each model’s R-squared
statistic and predictive ratios (PRs). The
R-squared statistic, which calculates the
percentage of individual variation
explained by a model, measures the
predictive accuracy of the model
overall. The PR for each of the HHS risk
adjustment model is the ratio of the
weighted mean predicted plan liability
for the model sample population to the
weighted mean actual plan liability for
the model sample population. The PR
represents how well the model does on
average at predicting plan liability for
that subpopulation.
A subpopulation that is predicted
perfectly will have a PR of 1.0. For each
of the current and proposed HHS risk
adjustment models, the R-squared
statistic and the PRs are in the range of
published estimates for concurrent risk
adjustment models.62 Because we are
finalizing a blend of coefficients from
separately solved models based on the
2018, 2019, and 2020 benefit years’
enrollee-level EDGE data, we are
publishing the R-squared statistic for
each model separately to verify their
statistical validity. The R-squared
statistics for the 2024 benefit models are
shown in Table 8.
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3. Overview of the HHS Risk
Adjustment Methodology (§ 153.320)
In part 2 of the 2022 Payment Notice
(86 FR 24183 through 24186), we
finalized the proposal to continue to use
the State payment transfer formula
finalized in the 2021 Payment Notice for
the 2022 benefit year and beyond,
unless changed through notice-andcomment rulemaking. We explained
that under this approach, we will no
longer republish these formulas in
future annual HHS notice of benefit and
payment parameter rules unless changes
are being proposed. We did not propose
any changes to the formula in the
proposed rule, and therefore, are not
republishing the formulas in this rule.
We will continue to apply the formula
as finalized in the 2021 Payment Notice
(86 FR 24183 through 24186) 63 in the
States where HHS operates the risk
adjustment program in the 2024 benefit
year. Additionally, as finalized in the
2020 Payment Notice (84 FR 17466
through 17468), we will maintain the
high-cost risk pool parameters for the
2020 benefit year and beyond, unless
amended through notice-and-comment
rulemaking. We did not propose any
changes to the high-cost risk pool
parameters for the 2024 benefit year;
therefore, we will maintain the $1
million threshold and 60 percent
coinsurance rate.
We summarize and respond to public
comments received on the HHS risk
adjustment methodology below.
Comment: A few commenters asserted
that using a population’s history of
health care utilization, as the HHSoperated risk adjustment program
63 Discussion provided an illustration and further
details on the State payment transfer formula.
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currently does, entrenches resource
disparities and barriers to health care
access, and shifts resources from issuers
serving lower-income communities to
issuers serving higher-income
communities in the State of
Massachusetts. These commenters also
stated that they believe HHS should
include social determinants of health
(SDOH) as factors in the HHS risk
adjustment models. The commenters
stated that using the Statewide average
premium as a scaling factor in the State
payment transfer formula amplifies the
transfer of funds away from issuers with
low-priced provider networks, who
disproportionately serve lower-income
communities.
Response: We appreciate these
comments, which were based on
findings in a report released by the
Massachusetts Attorney General’s Office
titled Examination of Health Care Cost
Trends and Cost Drivers 2022,64 but do
not believe that changes to the HHSoperated risk adjustment program are
warranted at this time based on this
report, as the findings do not appear to
be applicable to other States. Following
the release of the report, we analyzed
available enrollee-level EDGE data to
investigate whether the findings of the
report were applicable in other State
markets. We found that the
Massachusetts merged market exhibits a
unique combination of characteristics,
including a highly segmented market
where some issuers serve primarily CSR
enrollees while other issuers primarily
serve off-Exchange enrollees, and a
64 See Examination of Health Care Cost Trends
and Cost Drivers 2022. Available at https://
www.mass.gov/files/documents/2022/11/02/202211-2%20COST-TRENDS-REPORT_PUB_DRAFT4_
HQ.pdf.
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uniquely healthy CSR population, that
create an environment in which issuers
that serve low-income communities can
be assessed charges in that State’s
market risk pools. In particular, because
the HHS-operated risk adjustment
program is intended to transfer funds
from lower-than-average risk plans to
higher-than-average risk plans, a plan
with a uniquely healthy population,
whether because it has a uniquely
healthy CSR population or a healthy
general population, can be assessed a
risk adjustment charge.
No other State exhibits the same
combination of unique characteristics
discussed in this section as the State of
Massachusetts. Therefore, we have
concerns about proposing changes to the
HHS-operated risk adjustment program,
including changes with regard to the use
of the Statewide average premium as a
scaling factor in the State payment
transfer formula, based on a report that
is Massachusetts specific and reflects
the unique market conditions of a single
State. Furthermore, in light of the
unique combination of characteristics of
Massachusetts’s CSR population
discussed elsewhere in this section, we
believe that under the existing HHS risk
adjustment methodology, the transfer
charges and payments assessed in the
Massachusetts merged market risk pool
reflect a reasonably accurate estimate for
the relative risk incurred by issuers in
that State. We also reiterate that HHS
chose to use Statewide average premium
and normalize the risk adjustment State
payment transfer formula to reflect State
average factors so that each plan’s
enrollment characteristics are compared
to the State average and the calculated
payment amounts equal calculated
charges in each State market risk pool.
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Thus, each plan in the risk pool receives
a risk adjustment payment or charge
designed to compensate for risk for a
plan with average risk in a budgetneutral manner. This approach supports
the overall goals of the HHS-operated
risk adjustment program, which are to
encourage issuers to rate for the average
risk in the applicable State market risk
pool, to stabilize premiums, and to
avoid the creation of incentives for
issuers to operate less efficiently, set
higher prices, or develop benefit designs
or marketing strategies to avoid highrisk enrollees.65
We also appreciate the comments on
including SDOH as factors in the HHS
risk adjustment models. In the 2023
Payment Notice, HHS solicited
comments on ways to incentivize
issuers to design plans that improve
health equity and health conditions in
enrollees’ environments, as well as
sought comments on the potential future
collection and extraction of z codes
(particularly Z55–Z65), a subset of ICD–
10–CM encounter reason codes used to
identify, analyze, and document SDOH,
as part of the required EDGE data
submissions. We continue to review and
consider the public comments related to
the collection and extraction of z codes
to inform analysis and policy
development for the HHS-operated risk
adjustment program. In the interim, we
note that including SDOH in the HHSoperated risk adjustment models would
require careful consideration because
doing so could actually increase health
disparities rather than reduce them. For
example, if individuals who have a
particular SDOH factor in risk
adjustment tended to underutilize
health care services relative to their
health status, including that factor in
the HHS-operated risk adjustment
models could perpetuate, and possibly
exacerbate, the under compensation of
issuers for enrollees that receive that
factor in risk adjustment. Such a
dynamic may incentivize risk selecting
behavior among issuers. Furthermore,
we have concerns about the reliability of
existing data for determining if an
enrollee has SDOH and what
documentation would be needed from
the issuer to verify them.66 We continue
to analyze data in this area, especially
as new enrollee-level EDGE data
elements become available, and would
propose any changes to the HHS risk
adjustment models or HHS-operated
risk adjustment program through noticeand-comment rulemaking.
65 84
FR 17480 through 17484.
66 See, for example, the analysis of z codes at 87
FR 632.
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4. Repeal of Risk Adjustment State
Flexibility To Request a Reduction in
Risk Adjustment State Transfers
(§ 153.320(d))
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78237), we proposed
to repeal the flexibility under
§ 153.320(d) for prior participant
States 67 to request reductions of risk
adjustment State transfers under the
State payment transfer formula in all
State market risk pools for the 2025
benefit year and beyond. We also
solicited comment on Alabama’s
requests to reduce risk adjustment State
transfers in the individual (including
the catastrophic and non-catastrophic
risk pools) and small group markets for
the 2024 benefit year. After reviewing
public comments, we are approving
Alabama’s requests for the 2024 benefit
year and finalizing the proposal to
repeal the flexibility for prior
participant States to request transfer
reductions for the 2025 benefit year and
beyond.
a. Repeal of State Flexibility To Request
Transfer Reductions
In the proposed rule (87 FR 78237
through 78238), we proposed to amend
§ 153.320(d) to repeal the ability for
prior participant States to request a
reduction in risk adjustment State
transfers beginning with the 2025
benefit year. As part of this repeal, we
proposed conforming amendments to
the introductory text of § 153.320(d),
which currently provides that prior
participant States may request to reduce
risk adjustment transfers in all State
market risk pools by up to 50 percent
beginning with the 2024 benefit year, to
remove this flexibility for the 2025
benefit year and beyond and limit the
timeframe available for prior
participants to request reductions to the
2024 benefit year only. Similarly, we
proposed conforming amendments to
paragraphs (d)(1)(iv) and (d)(4)(i)(B),
which describe the conditions for a
prior participant State to request a
reduction beginning with the 2024
benefit year, to also limit these requests
to the 2024 benefit year only and to
eliminate the ability for prior
participant States to request a reduction
for the 2025 benefit year and beyond.
After reviewing public comments, we
are finalizing these proposals as
proposed.
In the 2019 Payment Notice (83 FR
16955 through 16960), we amended
67 Alabama is the only State that has previously
requested a reduction in risk adjustment transfers
through this flexibility, and therefore, is the only
State considered a ‘‘prior participant State’’.
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§ 153.320 to add paragraph (d) to
provide States the flexibility to request
a reduction to the applicable risk
adjustment State transfers calculated by
HHS using the State payment transfer
formula for the State’s individual
(catastrophic or non-catastrophic risk
pools), small group, or merged market
risk pool by up to 50 percent in States
where HHS operates the risk adjustment
program to more precisely account for
differences in actuarial risk in the
applicable State’s markets beginning
with the 2020 benefit year. We finalized
that any requests we received would be
published in the applicable benefit
year’s proposed HHS notice of benefit
and payment parameters, and the
supporting evidence provided by the
State in support of its request would be
made available for public comment.68
In the 2023 Payment Notice (87 FR
27236), we limited this flexibility by
finalizing amendments to § 153.320(d)
that repealed the State flexibility
framework for States to request
reductions in risk adjustment State
transfer payments for the 2024 benefit
year and beyond, with an exception for
prior participants.69 We also limited the
options for prior participants to request
reductions by finalizing that beginning
with the 2024 benefit year, States
submitting reduction requests must
demonstrate that the requested
reduction satisfies the de minimis
standard—that is, the premium increase
necessary to cover the affected issuer’s
or issuers’ reduced risk adjustment
payments does not exceed 1 percent in
the relevant State market risk pool.70 In
the 2023 Payment Notice (87 FR 27239
through 27241), we also finalized
conforming amendments to the HHS
approval framework in § 153.320(d)(4)
to reflect the changes to the applicable
criteria (that is, only retaining the de
minimis criterion) beginning with the
2024 benefit year, and we finalized the
proposed definition of ‘‘prior
participant’’ in § 153.320(d)(5). In
68 If the State requests that HHS not make
publicly available certain supporting evidence and
analysis because it contains trade secrets or
confidential commercial or financial information
within the meaning of HHS’ Freedom of
Information Act regulations at 45 CFR 5.31(d), HHS
will only make available on the CMS website the
supporting evidence submitted by the State that is
not a trade secret or confidential commercial or
financial information by posting a redacted version
of the State’s supporting evidence. See
§ 153.320(d)(3).
69 Section 153.320(d)(5) defines prior participants
as States that submitted a State reduction request
in the State’s individual catastrophic, individual
non-catastrophic, small group, or merged market
risk pool in the 2020, 2021, 2022, or 2023 benefit
year.
70 87 FR 27239 through 27241. See also 83 FR
16957.
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addition, we indicated our intention to
propose in future rulemaking to repeal
the exception for prior participants
beginning with the 2025 benefit year.71
Since finalizing the ability for States
to request a reduction of risk adjustment
transfers in the 2019 Payment Notice (83
FR 16955 through 16960), we received
public comments on subsequent
proposed rulemakings requesting that
HHS repeal this policy, with several
commenters noting that reducing risk
adjustment transfers to plans with
higher-risk enrollees could create
incentives for issuers to avoid enrolling
high-risk enrollees in the future by
distorting plan offerings and designs,
including by avoiding broad network
plans, not offering platinum plans at all,
and only offering limited gold plans.
Commenters further stated that issuers
could also distort plan designs by
excluding coverage or imposing high
cost-sharing for certain drugs or
services. For example, one commenter
stated that the risk adjustment State
payment transfer formula already
adjusts for differences in types of
individuals enrolled in different States
and aggregate differences in prices and
utilization by using the Statewide
average premium as a scaling factor, so
State flexibility to account for Statespecific factors is unnecessary.72 In
addition, we noted that since
establishing this framework, we have
observed a lack of interest from States
in using this policy. Only one State
(Alabama) has exercised this flexibility
and requested reductions to transfers in
its individual and/or small group
markets.73
As discussed in the proposed rule,
HHS believes the complete repeal of the
option for States to request reductions
in risk adjustment State transfers will
align HHS policy with section 1 of E.O.
14009 (86 FR 7793), which prioritizes
protecting and strengthening the ACA
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71 Ibid.
72 See Fielder, M, & Layton, T. (2020, December
30). Comment Letter on 2022 Payment Notice
Proposed Rule. Brookings. https://
www.brookings.edu/wp-content/uploads/2020/12/
FiedlerLaytonCommentLetterNBPP2022.pdf.
73 For the 2020 and 2021 benefit years, Alabama
submitted a 50 percent risk adjustment transfer
reduction request for its small group market, which
HHS approved in the 2020 Payment Notice (84 FR
17454) and in the 2021 Payment Notice (85 FR
29164). For the 2022 and 2023 benefit years,
Alabama submitted 50 percent risk adjustment
transfer reduction requests for its individual and
small group markets. HHS approved the State’s
requests for the 2022 benefit year in part 2 of the
2022 Payment Notice final rule (86 FR 24140) and
approved a 25 percent reduction for Alabama’s
individual market State transfers (including the
catastrophic and non-catastrophic risk pools) and a
10 percent reduction for the State’s small group
market transfers for the 2023 benefit year in the
2023 Payment Notice (87 FR 27208).
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and making high-quality health care
accessible and affordable for all
individuals. Section 3 of E.O. 14009
directs HHS, and the heads of all other
executive departments and agencies
with authorities and responsibilities
related to Medicaid and the ACA, to
review all existing regulations, orders,
guidance documents, policies, and any
other similar agency actions to
determine whether they are inconsistent
with policy priorities described in
section 1 of E.O. 14009. Consistent with
this directive, we reviewed the risk
adjustment State flexibility under
§ 153.320(d) and determined it is
inconsistent with policies described in
sections 1 and 3 of E.O. 14009. We
noted that we believe a complete repeal
of § 153.320(d) will prevent the
potential negative outcomes of risk
adjustment State flexibility identified
through public comment, including the
possibility of risk selection, market
destabilization, increased premiums,
smaller networks, and lesscomprehensive plan options, the
prevention of which will protect and
strengthen the ACA and make health
care more accessible and affordable. For
all of these reasons, we proposed to
amend § 153.320(d) to repeal the
flexibility for prior participant States to
request reductions of risk adjustment
State transfers calculated by HHS under
the State payment transfer formula in all
State market risk pools beginning with
the 2025 benefit year. We noted in the
proposed rule that if these amendments
are finalized, no State will be able to
request a reduction in risk adjustment
transfers calculated by HHS under the
State payment transfer formula starting
with the 2025 benefit year.
We summarize and respond to public
comments received on the proposal to
repeal the flexibility for prior
participant States to request reductions
of risk adjustment State transfers
calculated by HHS under the State
payment transfer formula in all State
market risk pools beginning with the
2025 benefit year below.
Comment: Several commenters
supported the proposal to repeal the
ability for States to request a reduction
in risk adjustment State transfers due to
concerns that the reduction in transfers
would contribute to adverse selection,
increase premiums, and reduce plan
options. Commenters stated that
reducing risk adjustment State transfers
incentivizes issuers to ‘‘cherry-pick’’
lower-risk enrollees as they would not
have to contribute the full difference in
risk to support the cost of higher-risk
individuals enrolled by other issuers.
Commenters also noted that the HHS
risk adjustment methodology already
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25777
accounts for differences in State market
conditions and that States can run their
own risk adjustment programs if they do
not think the HHS-operated risk
adjustment program works for their
State. Some commenters expressed
concerns about the potential negative
impacts, such as reduced plan quality
and increased risk selection, of allowing
transfer reductions in the prior
participant State’s markets. One
commenter stated that repealing this
flexibility would provide stability and
certainty for the markets.
Conversely, several commenters
opposed the proposal, stating that they
support the ability for States to make
their own decisions about how best to
address the unique circumstances of
their insurance markets. Some
commenters also noted that HHS has the
ability to review and reject these
requests, indicating that there are
appropriate guardrails in place such that
States should continue to be offered this
flexibility. Additionally, some
commenters asserted that other States
may develop the same market dynamics
as the one prior participating State and
should have the same ability to request
reductions. One commenter noted
concerns with the ability for States to
run their own risk adjustment programs,
due to the costs to implement such a
program within a State. Finally, one
commenter stated that the prior
participant State had not observed any
of the concerns regarding market
destabilization or reduced plan offerings
as a result of the requests, so the prior
participant State should continue to be
permitted to request transfer reductions.
Response: We agree with the
comments submitted in support of this
proposal and are finalizing as proposed
the repeal of the exception for prior
participant States to request a reduction
in risk adjustment State transfers of up
to 50 percent in any State market risk
pool beginning with the 2025 benefit
year. We reiterate that a strong risk
adjustment program is necessary to
support stability and address adverse
selection in the individual and small
group markets. We are concerned that
retaining the State flexibility framework
could undermine these goals in the
long-term. As explained in 2023
Payment Notice and the proposed rule,
our further consideration of prior
feedback from interested parties, along
with consideration of the State
flexibility framework under E.O. 14009
and the very low level of interest from
States since the policy was adopted,
resulted in an evaluation of whether this
flexibility should continue and in what
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manner.74 In the 2023 Payment Notice,
we finalized the proposed amendments
to § 153.320(d) to repeal the State
flexibility framework beginning with the
2024 benefit year, with an exception for
prior participant States.75 We also
announced our intention to propose in
future rulemaking to repeal the
exception for prior participants
beginning with the 2025 benefit year to
provide impacted parties additional
time to prepare for the potential
elimination of this flexibility.76 After
reviewing public comments on the
proposed repeal of the exception for
prior participant States, we are
finalizing the repeal of the prior
participant exception, as proposed.
As noted above and in the proposed
rule, we believe that a complete repeal
of the State flexibility framework in
§ 153.320(d) by removing the prior
participant exception beginning with
the 2025 benefit year will prevent the
potential negative outcomes of States’
risk adjustment transfer reduction
requests identified by several
commenters, including the possibility of
risk selection or ‘‘cherry-picking’’ lowerrisk enrollees, market destabilization,
increased premiums, smaller networks,
and less-comprehensive plan options.
The prevention of these potential
negative outcomes would serve to
further protect and strengthen the ACA,
protect enrollees from potential ‘‘cherrypicking’’ practices, and make health
care coverage more accessible and
affordable. As such, despite our ability
to review and reject risk adjustment
transfer reduction requests, we are still
of the view that the State flexibility
framework is inconsistent with policies
described in sections 1 and 3 of E.O.
14009 and a complete repeal would
better support the goals of the HHSoperated risk adjustment program and
ultimately the ACA.
With respect to the prior participant
State, the State experienced new
entrants to the individual market for the
2022 benefit year, but it has seen issuers
both entering and exiting its markets for
the 2023 benefit year, so it is not clear
that the State has seen market
stabilization or improved plan quality
since its reduction requests have been
approved. A more detailed discussion of
the prior participant State’s market
dynamics appears in the section below
regarding Alabama’s 2024 risk
adjustment transfer reduction requests.
We agree with commenters who noted
that States are best able to make their
74 See 87 FR 27239 through 27241. Also see 87
FR 78237 through 78238.
75 87 FR 27239 through 27241.
76 Ibid.
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own decisions about how to address the
unique circumstances of their insurance
markets and remain the primary
regulators of their insurance markets.
We also understand that it is possible
that other States may develop the same
market dynamics as the one prior
participating State. At the same time,
however, States have shown a low level
of interest in submitting requests to
reduce transfers calculated by HHS
under the State payment transfer
formula. Between the 2020 benefit year
and 2023 benefit year, all States had the
opportunity to submit reduction
requests under § 153.320(d), and yet
only one State did so.77 As discussed in
the 2023 Payment Notice (87 FR 27240),
we believed it was appropriate to
provide a transition for the prior
participant State, starting with the
policies and amendments finalized in
the 2023 Payment Notice that apply
beginning with the 2024 benefit year.
However, we continue to be concerned
about the potential long-term impact of
allowing reductions to risk adjustment
State transfers in any State market risk
pool, including the potential negative
impacts on the program’s ability to
mitigate adverse selection and support
stability in the individual and small
group (including merged) markets. We
are therefore finalizing a full repeal of
the State flexibility framework (for all
States) beginning in the 2025 benefit
year in this final rule.
Furthermore, since the 2014 benefit
year, all States have had the opportunity
to operate their own risk adjustment
program and, to date, only one State has
done so.78 Despite a broad range of
market conditions across the 50 States
and the District of Columbia, only two
States have expressed interest in
tailoring risk adjustment to address the
unique circumstances of their insurance
markets, which suggests States generally
do not want to operate their own risk
adjustment program. It also offers
evidence that the HHS-operated risk
adjustment program works across a
broad range of market conditions to
mitigate adverse selection in the
individual and small group (including
merged) markets. We also agree with
commenters that the HHS risk
adjustment methodology already
accounts for differences in State market
conditions. For example, the use of the
Statewide average premium in the risk
adjustment State payment transfer
77 Alabama is the only State that has requested a
reduction in risk adjustment transfers through this
flexibility and therefore is the only State considered
a ‘‘prior participant State’’.
78 Massachusetts operated a State-based risk
adjustment program for the 2014 through 2016
benefit years.
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formula accounts for differences in State
market conditions by scaling a plan’s
transfer amount based on the
determination of plan average risk
within a State market risk pool. The
State payment transfer formula also
includes a geographic cost factor (GCF),
which adjusts at the rating area level for
the many costs, such as input prices and
medical care utilization, that vary
geographically and are likely to affect
premiums.79
Commenters are also correct that
States continue to have the option to
operate their own risk adjustment
program if the State believes the risk
adjustment program for the individual
and small group (including merged)
markets should be tailored to capture its
State-specific dynamics. At the same
time, we appreciate there are a number
of different factors States consider when
weighing whether to operate a Statebased risk adjustment program,
including but not limited to the costs
associated with establishing and
maintaining such a program. We stand
ready to work with any State that is
interested in operating its own risk
adjustment program for the individual
and small group (including merged)
markets. Furthermore, now that we are
collecting and extracting additional data
elements—like plan ID, Zip Code, and
rating area—from issuers’ EDGE servers,
as finalized in the 2023 Payment Notice
(87 FR 27244 through 27252), we are
better equipped to further evaluate State
market conditions at various levels as
we consider future changes to the HHSoperated risk adjustment program, as
applicable. We also remain committed
to working with States and other
interested parties to encourage new
market participants, mitigate adverse
selection, and promote stable insurance
markets through strong risk adjustment
programs.
b. Requests To Reduce Risk Adjustment
Transfers for the 2024 Benefit Year
For the 2024 benefit year, HHS
received requests from Alabama to
reduce risk adjustment State transfers
for its individual 80 and small group
markets by 50 percent. As in previous
years, Alabama asserted that the HHSoperated risk adjustment program does
not work precisely in the Alabama
market, clarifying that they do not assert
79 See ‘‘March 31, 2016 HHS-Operated Risk
Adjustment Methodology Meeting Discussion
Paper,’’ CMS (2016, March 24), available at https://
www.cms.gov/cciio/resources/forms-reports-andother-resources/downloads/ra-march-31-whitepaper-032416.pdf for more information on the GCF.
80 Alabama’s individual market request is for a 50
percent reduction to risk adjustment transfers for its
individual market non-catastrophic and
catastrophic risk pools.
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that the risk adjustment formula is
flawed, only that it produces imprecise
results in Alabama, which has an
‘‘extremely unbalanced market share.’’
The State reported that its review of
issuers’ 2021 financial data suggested
that any premium increase resulting
from a reduction of 50 percent to the
2024 benefit year risk adjustment
payments for the individual market
would not exceed one percent, the de
minimis premium increase threshold set
forth in § 153.320(d)(1)(iv) and
(d)(4)(i)(B). Additionally, the State
reported that its review of issuers’ 2021
financial data also suggested that any
premium increase resulting from a 50
percent reduction to risk adjustment
payments in the small group market for
the 2024 benefit year would not exceed
the de minimis threshold of one percent.
In the proposed rule (87 FR 782378),
we sought comment on Alabama’s
requests to reduce risk adjustment State
transfers in its individual and small
group markets by 50 percent for the
2024 benefit year. The request and
additional documentation submitted by
Alabama were posted under the ‘‘State
Flexibility Requests’’ heading at https://
www.cms.gov/cciio/programs-andinitiatives/premium-stabilizationprograms and under the ‘‘Risk
Adjustment State Flexibility Requests’’
heading at https://www.cms.gov/CCIIO/
Resources/Regulations-andGuidance#Premium-StabilizationPrograms.
After reviewing the public comments,
we are approving Alabama’s requests to
reduce risk adjustment State transfers in
its individual and small group markets
by 50 percent for the 2024 benefit year.
We summarize and respond to public
comments received on Alabama’s
reduction requests below.
Comment: A few commenters
supported Alabama’s requests to reduce
risk adjustment State transfers in its
individual and small group markets by
50 percent for the 2024 benefit year.
These commenters stated that the HHSoperated risk adjustment program is not
effective in Alabama due to its extreme
market dynamics and that the State has
not seen a loss of broad network,
platinum, or gold plans as some
interested parties had feared would
result from the reductions in prior years.
However, other commenters opposed
Alabama’s 2024 benefit year reduction
requests, stating that the requested
reductions would diminish the
effectiveness of the HHS-operated risk
adjustment program. One commenter
stated that there was no mathematical
reason why the presence of one large
issuer would preclude the HHS-
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operated risk adjustment program from
functioning appropriately in Alabama.
Some commenters also asserted that
the State did not meet its burden to
substantiate the requests under the
criteria established in § 153.320(d).
These commenters argued that the State
did not consider in its analysis changes
to the risk adjustment models, issuer
participation, market conditions, benefit
design offerings, network breadth,
premium changes, or consumer
behavior. A few of these commenters
suggested that the State be required to
provide more detailed analysis with its
requests about the impact of transfer
reductions on premiums and issuer
participation. One of these commenters
provided detailed data it previously
submitted in comments in response to
Alabama’s reduction requests for the
2023 benefit year, asserting the
requested individual market transfer
reduction would again increase
premiums for one impacted Alabama
issuer by an amount greater than the de
minimis threshold (that is, more than 1
percent increase in its premiums) for the
2024 benefit year. This commenter
noted that, based on their experience
from the 2022 benefit year (the first year
for which the State requested and HHS
approved a 50 percent reduction in risk
adjustment State transfers calculated by
HHS for the individual market), the 50
percent reduction in Alabama
individual market transfers for 2022 led
to an approximately 2 percent increase
in their premiums for that year, which
exceeds the de minimis threshold and
was approved by the State in the
issuer’s rate filings.81 This commenter
stated that they anticipated the impact
for the 2024 benefit year, were HHS to
approve Alabama’s requests, would be
similar.
Finally, a few commenters stated that
if HHS were to approve Alabama’s
requests, it should approve percentage
reductions no higher than what it
approved for the 2023 benefit year; that
is, 25 percent in the individual market
and 10 percent in the small group
market.82
Response: We appreciate the
comments in support of HHS’s approval
of Alabama’s 2024 benefit year
reduction requests and are approving
Alabama’s requests to reduce risk
adjustment transfers for the 2024 benefit
year in the individual and small group
markets by 50 percent, as Alabama met
81 Blue Cross and Blue Shield of Alabama
Comment Letter. (2023, January 27). CMS. https://
www.regulations.gov/comment/CMS-2022-01920100.
82 See 87 FR 27208 at 27236 through 27239.
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the criteria set forth in
§ 153.320(d)(4)(i)(B).
We continue to believe and recognize
that risk adjustment is critical to the
proper functioning of the individual and
small group (including merged) markets,
and we acknowledge commenters’
concerns that approving requested
reductions in risk adjustment transfers
could impact the effectiveness of the
HHS-operated risk adjustment program,
which is why we are repealing the
exception for prior participant States to
request risk adjustment transfer
reductions beginning with the 2025
benefit year, as discussed in detail in
the preamble section above. However,
under existing HHS regulations,
Alabama was permitted to submit a
reduction request for the 2024 benefit
year,83 and they did so in the manner
set forth in § 153.320(d)(1).84 As such,
we are obligated to consider Alabama’s
request consistent with the regulatory
framework applicable for the 2024
benefit year.
Our review and approval of the risk
adjustment State transfer reduction
requests submitted by Alabama for the
2024 benefit year are guided by the
framework and criteria established in
regulation under § 153.320(d) applicable
to prior participants. Consistent with
§ 153.320(d)(1)(iv), prior participants are
required to demonstrate their requests
satisfy the de minimis impact standard.
Under this standard, the requesting
State is required to show that the
requested transfer reduction would not
cause premiums in the relevant market
risk pool to increase by more than 1
percent. For the 2024 benefit year,
§ 153.320(d)(4) provides that we will
approve State reduction requests if we
determine, based on a review of the
State’s submission, along with other
relevant factors, including the premium
impact of the reduction, and relevant
83 As explained in the 2023 Payment Notice, we
finalized amendments to § 153.320(d), including the
creation of the prior participant exception following
our further consideration of the State flexibility
framework under E.O, 14009. See 87 FR 27240. We
also announced our intention to repeal the prior
participant exception in future rulemaking
beginning with the 2025 benefit year to provide
impacted parties additional time to prepare for this
change and potential elimination of this flexibility.
Ibid.
84 The State’s request must also include
supporting evidence and analysis demonstrating the
State-specific factors that warrant any adjustment to
more precisely account for the differences in
actuarial risk in the applicable market risk pool, as
well as identify the requested adjustment
percentage of up to 50 percent for the applicable
market risk pools. See 45 CFR 153.320(d)(1)(i) and
(ii). In addition, the State must submit the request
by August 1 of the benefit year that is 2 calendar
years prior to the applicable benefit year, in the
form and manner specified by HHS. See 45 CFR
153.320(d)(2).
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public comments, that the requested
reduction would have a de minimis
impact on the necessary premium
increase to cover the transfers for issuers
that would receive reduced transfer
payments.85
The evidence provided by Alabama in
support of its requests to reduce risk
adjustment State transfers by 50 percent
in its individual and small group
markets was sufficient to justify its
request under the de minimis
requirement for HHS approval under
§ 153.320(d)(4)(i)(B). We further note
that Alabama requested that, consistent
with § 153.320(d)(3), HHS not publish
certain information in support of its
request because it contained trade
secrets or confidential commercial or
financial information. If the State
requests that HHS not make publicly
available certain supporting evidence
and analysis because it contains trade
secrets or confidential commercial or
financial information within the
meaning of the HHS Freedom of
Information Act (FOIA) regulations at 45
CFR 5.31(d), HHS will only make
available on the CMS website the
supporting evidence submitted by the
State that is not a trade secret or
confidential commercial or financial
information by posting a redacted
version of the State’s supporting
evidence.86 Consistent with the State’s
request, we posted a redacted version of
the supporting evidence for Alabama’s
request. However, when evaluating the
State’s reduction requests, we reviewed
the State’s un-redacted supporting
analysis, along with other data available
to HHS and the relevant public
comments submitted within the
applicable comment period for the
proposed rule. We conducted a
comprehensive analysis of the available
information and found the supporting
evidence submitted by Alabama to be
sufficient to support its 2024 benefit
year requests.
We recognize there is some level of
uncertainty regarding future market
dynamics, including their potential
impact on future benefit year transfers.
However, to align with the annual
pricing cycle for health insurance
coverage, the applicable risk adjustment
parameters (including approval or
denial of State flexibility reduction
requests for the 2024 benefit year from
prior participants) must generally be
finalized sufficiently in advance of the
85 HHS is also required to publish State reduction
requests and to make the State’s supporting
evidence available to the public for the comment,
with certain exceptions. See 45 CFR 153.320(d)(3).
HHS must also publish any approved or denied
State reduction requests. Ibid.
86 See § 153.320(d)(3).
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applicable benefit year to allow issuers
to consider such information when
setting rates.87 As such, there will
always be an opportunity for some
uncertainty regarding the precise impact
of future methodological changes (such
as the risk adjustment model changes
applicable beginning with the 2023
benefit year) or unforeseen events (such
as unwinding and its impact on
enrollment and utilization).
With respect to Alabama’s 2024
benefit year requests, our review of the
evidence submitted by Alabama in
support of its transfer reduction requests
was sufficient, along with other
information available to HHS and timely
submitted comments, to confirm the
requests meet the criteria for approval
set forth in § 153.320(d)(4)(i)(B).
For the individual market, the State
provided information in support of its
50 percent reduction request, including
its analysis that the reduction requested
would have a de minimis impact on
necessary premium increases. In
alignment with our approach in
previous years’ consideration of the
reduction requests, we analyzed the
information provided by the State in
support of its request, along with
additional data and information
available to HHS, separately by market
and found that the request meets the de
minimis regulatory standard in the
individual market.
More specifically, we began our
review of the State’s individual market
request with consideration of available
2021 EDGE data 88 and the State’s
submitted analysis. Using the most
recent 2021 plan-level data available to
us,89 we estimated transfer calculations
as a percent of premiums, which
indicated that the risk adjustment
payment recipient would not have to
increase premiums by 1 percent or more
87 See 45 CFR 153.320(d)(2) and (3). Also see the
2019 Payment Notice (83 FR 16955 through 16960),
which explained the timing for this process was
intended to permit plans to incorporate approved
adjustments in their rates for the applicable benefit
year.
88 Similar to our approach in considering
Alabama’s reduction requests in previous years, we
considered the most recent EDGE data available (for
example, for the 2023 benefit year, we considered
2020 EDGE data as part of the analysis). This
included consideration of available EDGE premium
and risk adjustment transfer data.
89 Issuer specific BY 2021 risk adjustment
transfers can be found in Summary Report on
Permanent Risk Adjustment Transfers for the 2021
Benefit Year. (2022, July 19). CMS. https://
www.cms.gov/CCIIO/Programs-and-Initiatives/
Premium-Stabilization-Programs/Downloads/RAReport-BY2021.pdf. For BY 2021, the issuer specific
EDGE premium and enrollment data used for this
analysis have not been made public. However, planlevel QHP rates are available in the Health
Insurance Public Use Files. (2021). CMS. https://
www.cms.gov/CCIIO/Resources/Data-Resources/
marketplace-puf.
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to cover a 50 percent reduction in
individual market transfers. Therefore,
our analysis of the 2021 EDGE data
supports the State’s submitted analysis
that the 50 percent reduction in
individual market transfers for the 2024
benefit year would meet the de minimis
regulatory standard.
We also considered detailed
comments that provided evidence of
changing price and market share
positions, using 2021 and 2022 data,
that raised questions about the impact a
50 percent reduction in individual
market transfers would have on
premiums. One commenter (an issuer in
Alabama’s individual market) stated
that the 50 percent reduction in
individual market transfers approved by
HHS for the 2022 benefit year caused
them to increase premiums by more
than 2 percent.90 The commenter
believed the 25 percent reduction in
individual market transfers for the 2023
benefit year would also violate the de
minimis standard but did not provide
data to this effect. However, as
discussed in the prior paragraph, our
analysis of the 2021 EDGE data did not
provide any evidence to support these
commenters’ claims.
Therefore, to further consider these
comments, including the prior year
premium analysis from an issuer in
Alabama, we analyzed open enrollment
plan selection and premium data for the
individual market in Alabama for the
2023 benefit year. However, due to
issuers entering and exiting the
Alabama individual market between the
2022 and 2023 benefit years, we found
the open enrollment data were not
comparable between benefit years, and
we were unable to reasonably determine
the effects of the transfer reductions for
the 2022 benefit year on the 2023
benefit year individual market
dynamics. Therefore, similar to our
analysis of the 2021 EDGE data, our
analysis of the 2023 benefit year open
enrollment data did not align with the
commenter’s analysis or otherwise
confirm premiums would increase by
more than one (1) percent and led us to
have some concerns about the
commenters’ estimates using a previous
year’s analysis that did not take into
consideration new data or recent
90 Commenter’s analysis available at BCBSAL
Comment Letter on 2024 NBPP AL RA Transfer
Flexibility Request. (2023, January 27). CMS.
https://www.regulations.gov/comment/CMS-20220192-0100. Issuer specific BY 2021 EDGE data and
BY 2023 open enrollment data are not publicly
available. However, plan-level QHP rates are
available in the Health Insurance Exchange Public
Use Files (2021, 2022, 2023). CMS. https://
www.cms.gov/CCIIO/Resources/Data-Resources/
marketplace-puf.
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changes in market participation in
Alabama’s individual market.
For the small group market, the State
provided information in support of its
50 percent reduction request, including
its analysis that the reduction requested
would have a de minimis impact on
necessary premium increases. HHS also
analyzed enrollment and plan-level data
for Alabama’s small group market for
2023 in reviewing Alabama’s transfer
reduction request for its small group
market. Due to a lack of robust
enrollment data for the small group
market,91 we considered the most recent
available EDGE premium and
enrollment plan-level data available for
the small group market to further
analyze the request, as in past years.
Similar to the individual market
analysis, our analysis of the 2021 EDGE
data supports the State’s submitted
analysis that the 50 percent reduction in
small group market transfers for the
2024 benefit year would meet the de
minimis regulatory standard. Using the
most recent 2021 plan-level data
available to us,92 we estimated transfer
calculations as a percent of premiums,
which indicated that the risk adjustment
payment recipient would not have to
increase premiums by 1 percent or more
to cover a 50 percent reduction in small
group market transfers.
Therefore, as the review of
information has determined that
Alabama’s 2024 benefit year reduction
requests for its individual and small
group markets would not exceed the de
minimis threshold, we will approve the
amount of the reductions requested
pursuant to § 153.320(d)(4)(i)(B). The
data and analysis available to us do not
support a reduction smaller than what
was requested by the State.
In addition, the suggestion that the
presence of one large issuer would not
preclude the HHS-operated risk
adjustment program from functioning as
intended in the State’s markets is not
pertinent to HHS’s determination on the
reduction requests, as the sole criteria
91 HHS does not have the same open enrollment
plan selection and premium data on the small
group market in Alabama as it does for the
individual market in Alabama; therefore, EDGE
premium and enrollment plan-level data were used
for the small group market assessment.
92 Issuer specific BY 2021 risk adjustment
transfers can be found in Summary Report on
Permanent Risk Adjustment Transfers for the 2021
Benefit Year. (2022, July 19). CMS. https://
www.cms.gov/CCIIO/Programs-and-Initiatives/
Premium-Stabilization-Programs/Downloads/RAReport-BY2021.pdf. For BY 2021, the issuer specific
EDGE premium and enrollment data used for this
analysis have not been made public. However, planlevel QHP rates are available in the Health
Insurance Public Use Files. (2021). CMS. https://
www.cms.gov/CCIIO/Resources/Data-Resources/
marketplace-puf.
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we have to evaluate the 2024 benefit
year requests is the de minimis standard
in § 153.320(d)(4)(i)(B).
Following our consideration of the
State’s submission and public
comments, we are approving Alabama’s
requests to reduce risk adjustment State
transfers by 50 percent in its individual
and small group markets for the 2024
benefit year. With the repeal of the prior
participant exception in § 153.320(d),
the 2024 benefit year is the last year
Alabama will be able to request
reductions to HHS calculated transfers
under the State payment transfer
formula.
5. Risk Adjustment Issuer Data
Requirements (§§ 153.610, 153.700, and
153.710)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78238), we proposed,
beginning with the 2023 benefit year, to
collect and extract from issuers’ EDGE
servers through EDGE Server
Enrollment Submission (ESES) files and
risk adjustment recalibration enrollment
files a new data element, a Qualified
Small Employer Health Reimbursement
Arrangement (QSEHRA) indicator, and
to include this indicator in the enrolleelevel EDGE Limited Data Set (LDS)
made available to qualified researchers
upon request once available. We also
proposed to extract plan ID and rating
area data elements issuers have
submitted to their EDGE servers from
certain benefit years prior to 2021. We
sought comment on these proposals.
After reviewing public comments, we
are finalizing both proposals as
proposed.
Section 153.610(a) requires that
health insurance issuers of risk
adjustment covered plans submit or
make accessible all required risk
adjustment data in accordance with the
data collection approach established by
HHS 93 in States where HHS operates
the program on behalf of a State.94 In the
2014 Payment Notice (78 FR 15497
through 15500; § 153.720), HHS
established an approach for obtaining
the necessary data for risk adjustment
calculations in States where HHS
operates the program through a
distributed data collection model that
prevented the transfer of individuals’
personally identifiable information (PII).
93 Also
see §§ 153.700 through 153.740.
full list of required data elements can be
found in Appendix A of OMB Control Number
0938–1155/CMS–10401. (2022, May 26). Standards
Related to Reinsurance, Risk Corridors, and Risk
Adjustment. https://www.cms.gov/Regulations-andGuidance/Legislation/Paperwork
ReductionActof1995/PRA-Listing-Items/CMS10401.
94 The
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25781
Then, in several subsequent
rulemakings,95 we finalized policies for
the extraction and use of enrollee-level
EDGE data. The purpose of collecting
and extracting enrollee-level data is to
provide HHS with more granular data to
use for recalibrating the HHS risk
adjustment models, informing updates
to the AV Calculator, conducting policy
analysis, and calibrating HHS programs
in the individual and small group
(including merged) markets and the PHS
Act requirements enforced by HHS that
are applicable market-wide,96 as well as
informing policy and improving the
integrity of other HHS Federal healthrelated programs.97 The use of enrolleelevel data extracted from issuers’ EDGE
servers and summary level reports
produced from remote command and ad
hoc queries enhances HHS’ ability to
develop and set policy and limits the
need to pursue alternative burdensome
data collections from issuers. We also
previously finalized policies related to
creating on an annual basis an enrolleelevel EDGE LDS using masked enrolleelevel data submitted to EDGE servers by
issuers of risk adjustment covered plans
in the individual and small group
(including merged) markets and making
this LDS available to requestors who
seek the data for research purposes.98 99
a. Collection and Extraction of the
QSEHRA Indicator
We are finalizing, as proposed, that
beginning with the 2023 benefit year,
issuers will be required to collect and
submit a QSEHRA indicator as part of
the required risk adjustment data that
issuers make accessible to HHS from
95 See the 2018 Payment Notice, 81 FR 94101; the
2020 Payment Notice, 84 FR 17488; and the 2023
Payment Notice, 87 FR 27241.
96 See, for example, 42 U.S.C. 300gg–300gg–28.
97 As detailed in the 2023 Payment Notice, the
finalized policies related to the permitted uses of
EDGE data and reports make clear that HHS can use
this information to inform policy analyses and
improve the integrity of other HHS Federal healthrelated programs outside the commercial individual
and small group (including merged) markets to the
extent such use of the data is otherwise authorized
by, required under, or not inconsistent with
applicable Federal law. See 87 FR 27243; 87 FR 630
through 631. Examples of other HHS Federal
health-related programs include the programs in
certain States to provide wrap-around QHP
coverage through Exchanges to Medicaid expansion
populations and coverage offered by non-Federal
Governmental plans. Ibid.
98 See the 2020 Payment Notice, 84 FR 17486
through 17490 and the 2023 Payment Notice, 87 FR
27243. Also see CMS. (2022, August 15). EnrolleeLevel External Data Gathering Environment (EDGE)
Limited Data Set (LDS). https://www.cms.gov/
research-statistics-data-systems/limited-data-setlds-files/enrollee-level-external-data-gatheringenvironment-edge-limited-data-set-lds.
99 As explained in the 2020 Payment Notice, we
do not currently make the EDGE LDS available to
requestors for public health or health care operation
activities. See 84 FR 17488.
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their respective EDGE servers in States
where HHS operates the risk adjustment
program. This new data element will be
included as part of the enrollee-level
EDGE data extracted from issuers’ EDGE
servers and summary level reports
produced from remote command and ad
hoc queries beginning with the 2023
benefit year.100 We are also finalizing, as
proposed, to include this indicator in
the enrollee-level EDGE LDS made
available to qualified researchers upon
request once available (that is,
beginning with 2023 benefit year data).
Beginning with the 2023 benefit year,
we will provide additional operational
and technical guidance on how issuers
should submit this new data element to
HHS through issuer EDGE servers via
the applicable benefit year’s EDGE
Server Business Rules and the EDGE
Server Interface Control Document, as
may be necessary. HHS will also
provide additional details on what
constitutes a good faith effort to ensure
collection and submission of the
QSEHRA indicator in the future. HHS
will seek input from issuers and other
interested parties to inform
development of the good faith standard
and determine the most feasible
methods for issuers to collect the
information used to populate this data
field.101
In the 2023 Payment Notice (87 FR
27241 through 27252), we finalized that
we will collect and extract an individual
coverage Health Reimbursement
Arrangement (ICHRA) indicator and that
we will make this indicator available in
the enrollee-level EDGE LDS beginning
with the 2023 benefit year. Since
finalizing the collection of the ICHRA
indicator as part of the enrollee-level
EDGE data extracted from issuers’ EDGE
servers, we determined that also
collecting and extracting a QSEHRA
indicator would provide a more
thorough picture of the actuarial
characteristics of the Health
Reimbursement Arrangement (HRA)
population and how or whether HRA
enrollment is impacting State individual
and small group (including merged)
market risk pools.
In the 2023 Payment Notice (87 FR
27248), we acknowledged that ICHRA
information is collected by HHS from
FFE or SBE–FP enrollees through the
100 The deadline for submission of 2023 benefit
year risk adjustment data is April 30, 2024. See
§ 153.730.
101 If the burden estimate for collection of
QSEHRA indicator changes beginning with the
2025 benefit year (after the transitional approach
ends), the information collection under OMB
control number 0938–1155 would be revised
accordingly and interested parties would be
provided the opportunity to comment through that
process.
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eligibility application process and from
SBE enrollees through the State
Exchange enrollment and payment files,
as well as collected directly by issuers
and their affiliated agents and brokers.
We also noted the ICHRA indicator was
intended to capture whether a particular
enrollee’s health care coverage involves
(or does not involve) an ICHRA and that
we will structure this data element for
EDGE data submissions similar to
current collections, where possible.
Additionally, we explained that the
collection and extraction of an ICHRA
indicator as part of the required risk
adjustment data submissions issuers
make accessible to HHS through their
respective EDGE servers provides more
uniform and comprehensive
information than what is submitted by
FFE and SBE–FP enrollees on a QHP
application and by SBE enrollees
through enrollment and payment files,
as it will capture both on and off
Exchange enrollees.
The same is also true for QSEHRA
information and we therefore proposed
to apply the same approach for the
QSEHRA indicator. Currently, the FFEs
and SBE–FPs collect information about
QSEHRAs from all applicants to
determine whether they are eligible for
an SEP, as individuals and their
dependents who become newly eligible
for a QSEHRA may be eligible for an
SEP. SBEs also collect similar
information from their applicants to
determine SEP eligibility. This data may
also be provided directly to issuers by
consumers who seek to enroll in
coverage directly with the issuer.
In addition, an issuer may currently
have or collect information that could
be used to populate the QSEHRA
indicator in situations where the issuer
is being paid directly by the employer
through the QSEHRA for the individual
market coverage. We therefore proposed
to generally permit issuers to populate
the required QSEHRA indicator with
information from the FFE or SBE–FP
enrollees or enrollees through SBEs, or
from other sources for collecting this
information. The QSEHRA indicator
will be used to capture whether a
particular enrollee’s health care
coverage involves (or does not involve)
a QSEHRA, and we proposed to
structure this data element for EDGE
data submissions similar to current
collections, where possible.
We also proposed, similar to the
transitional approach for the ICHRA
indicator finalized in the 2023 Payment
Notice (87 FR 27241 through 27252), a
transitional approach for the collection
and extraction of the QSEHRA
indicator. For the 2023 and 2024 benefit
years, issuers would be required to
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populate the QSEHRA indicator using
only data they already collect or have
accessible regarding their enrollees. For
example, when an FFE enrollee is using
an SEP, information about QSEHRA
provision is collected by the FFE, and
the FFE may make these data available
to issuers. In addition, as noted above,
there may be situations where an issuer
has or collects information that could be
used to populate the QSEHRA indicator.
Then, beginning with the 2025 benefit
year, we proposed that the transitional
approach would end, and issuers would
be required to populate the QSEHRA
field using available sources (for
example, information from Exchanges,
and requesting information directly
from enrollees) and, in the absence of an
existing source for particular enrollees,
to make a good faith effort to ensure
collection and submission of the
QSEHRA indictor for these enrollees.
In conjunction with the proposal to
collect and extract this new data
element, we also proposed to include
the QSEHRA indicator in the LDS
containing enrollee-level EDGE data that
HHS makes available to qualified
researchers upon request once the
QSEHRA indicator is available,
beginning with the 2023 benefit year.
We further noted that similar to the
ICHRA indicator, the proposed
QSEHRA indicator would not be a
direct identifier that must be excluded
from an LDS under the HIPAA Privacy
Rule and thus would not add to the risk
of enrollees being identified. As noted
in the 2023 Payment Notice (87 FR
27245), only an LDS of certain masked
enrollee-level EDGE data elements is
made available and this LDS is available
only to qualified researchers if they
meet the requirements for access to such
file(s), including entering into a data use
agreement that establishes the permitted
uses or disclosures of the information
and prohibits the recipient from
identifying the information.102 103 In
addition, consistent with how we
created the LDS in prior years, we
would continue to exclude data from
the LDS that could lead to identification
of certain enrollees.104
102 See CMS. (2020, June). Data Use Agreement.
(Form CMS–R–0235L). https://www.cms.gov/
Medicare/CMS-Forms/CMS-Forms/Downloads/
CMS-R-0235L.pdf. See also 84 FR 17486 through
17490.
103 CMS. (2020, June). Data Use Agreement. (Form
CMS–R–0235L). https://www.cms.gov/Medicare/
CMS-Forms/CMS-Forms/Downloads/CMS-R0235L.pdf.
104 See, for example, CMS. (2021, August 25).
Creation of the 2019 Benefit Year Enrollee-Level
EDGE Limited Data Sets: Methods, Decisions and
Notes on Data Use. https://www.cms.gov/files/
document/2019-data-use-guide.pdf.
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We summarize and respond to public
comments received on the proposals
related to the collection and extraction
of a QSEHRA indicator below.
Comment: Several commenters
supported the collection and extraction
of a QSEHRA indicator, including the
proposed transition for implementation.
One commenter, while supporting the
proposal, did not believe a QSEHRA
indicator should factor into risk
adjustment analyses or calculations,
stating that issuers currently have
limited information about HRA
enrollment, and therefore should not be
penalized for not submitting HRA data.
Many commenters opposed the
proposal to collect and extract a
QSEHRA indicator, citing significant
operational concerns with collecting
and reporting a QSEHRA indicator,
including that the data are not currently
or routinely collected, are difficult to
obtain, are inconsistent, unreliable, and
complex, and therefore, would provide
little insight in policy analysis using
these data, and would impose a
significant burden on issuers to
determine how to collect and report this
data and then implement the required
changes.
Response: We are finalizing, as
proposed, the collection and extraction
of a QSEHRA indicator, including the
proposed transition for implementation.
While we understand the concerns
raised over the use of QSEHRA in risk
adjustment, particularly that there is
currently limited information about the
population enrolled in QSEHRA and
their associated risk, we continue to
believe that it is important to collect this
information to allow us to understand
the associated risk profile of this
population and inform our analysis
about whether any refinements to the
HHS risk adjustment methodology
should be examined or proposed
through notice- and- comment
rulemaking. Consistent with the
established policies governing the
permitted uses of the enrollee-level
EDGE data, the additional information
collected through the QSEHRA
indicator will also be used to inform
policy analysis and potential updates to
the AV Calculator, other HHS
individual or small group (including
merged) market programs, the PHS Act
requirements enforced by HHS that are
applicable market-wide, or other HHS
Federal health-related programs.
To further explain, similar to the
collection and reporting of an ICHRA
indicator finalized in the 2023 Payment
Notice, collection of a QSEHRA
indicator will allow HHS to examine
whether there are any unique actuarial
characteristics of the QSEHRA
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population (such as the health status of
participants), and provide a more
thorough picture of the actuarial
characteristics of the HRA population
and how or whether HRA participation
is impacting individual and small group
(including merged) market risk pools. A
QSEHRA indicator will also allow HHS
to analyze whether the risk profile of
participants in QSEHRAs differs from
participants in ICHRAs as ICHRAs differ
with respect to standards related to
employer eligibility, employee
eligibility, restrictions on allowance
amounts, and eligibility for PTCs
(among others). While data that may be
used to populate a QSEHRA indicator
may be limited or incomplete at this
time, we continue to believe that
collecting this information is valuable,
will better inform potential refinements
to the HHS-operated risk adjustment
program in future years, and will
improve our understanding of these
markets. As occurs with any new data
collection requirement, HHS expects
that over time, collection and
submission of a QSEHRA indicator will
improve as issuers gain experience with
and develop processes for collecting and
reporting the indicator. In addition, we
will not use the QSEHRA indicator or
any analysis that relied upon the
indicator to pursue changes to our
policies until we conduct data quality
checks and ensure the response rate is
adequate to support any analytical
conclusions. Therefore, we continue to
believe that the benefits of finalizing the
proposal related to the collection and
extraction of a QSEHRA indicator
outweigh potential concerns about
reliability and consistency of data
reporting.
Further, we proposed and are
finalizing the adoption of a transitional
approach for collecting the QSEHRA
indicator under which issuers will be
required to populate this new QSEHRA
indicator using data they already have
or collect for the 2023 and 2024 benefit
years. This approach recognizes issuers
may need time to develop processes for
collection and validation of this new
data element. Then, beginning with the
2025 benefit year, issuers will be
required to populate the field using
available sources and, in the absence of
an existing source to populate the
QSEHRA indicator for particular
enrollees, issuers will be required to
make a good faith effort to ensure
collection of this data element. HHS
will provide additional details on what
constitutes a good faith effort to ensure
collection and submission of the
QSEHRA indicator in the future. Any
issuers meeting this standard and
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25783
making a good faith effort to ensure
collection and submission of the
QSEHRA indicator beginning with the
2025 benefit year data will not be
penalized for being unable to submit
this information for a particular
individual. Similarly, HHS does not
intend to penalize issuers who are
unable to populate the QSEHRA
indicator with existing data sources
during the transitional approach for
2023 and 2024 benefit year data
submissions.
We acknowledge concerns that the
new data collection could impose
additional administrative burden and
may require operational changes to
develop, test, and validate submission
of these data elements. As further
detailed in the section IV.C of this rule,
we have estimated the burden and costs
associated with this new data collection.
Currently, all issuers that submit data to
their EDGE servers have automated the
creation of data files that are submitted
to their EDGE servers for the existing
required data elements, and each issuer
will need to update their file creation
process to include the new data
element, which will require a one-time
administrative cost. In addition to
adding this one-time cost, we also
estimate that collection and submission
of the new data element will require an
additional one hour of work by a
management analyst on an annual basis.
This estimate recognizes that
information to populate the QSEHRA
indicator data field is not routinely
collected by all issuers at this time.
Because we are adopting a transitional
approach, under which issuers will be
required to populate the QSEHRA
indicator data fields using data they
already have or collect for the 2023 and
2024 benefit years, issuers are not
required to make any changes to the
manner in which they currently collect
the QSEHRA data element for the 2023
and 2024 benefit year submissions. This
transition period allows additional time
for issuers to develop processes for
collection and validation of the data
required for the new data fields. We are
further mitigating the burdens
associated with the collection and
submission of this new data element by
structuring it similar to current
collections, where possible. Similar to
the ICHRA indicator, the QSEHRA
indicator will capture whether a
particular enrollee’s health care
coverage involves (or does not involve)
a QSEHRA. HHS will provide additional
operational and technical guidance on
how issuers should submit this new
data element to their respective EDGE
servers via the applicable benefit year’s
EDGE Server Business Rules and the
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EDGE Server Interface Control
Document, as may be necessary. After
consideration of comments, we continue
to believe that the benefits of collecting
and extracting this data element
outweigh the burdens and costs
associated with the new requirement.
Comment: Many commenters
requested that HHS obtain QSEHRA
information from other sources, such as
plan administrators and/or employers.
Response: While we understand
commenters’ requests that we obtain
QSEHRA information from other
sources, such as plan administrators or
employers, we decline to adopt this
recommendation. We are finalizing the
proposal to collect this new data
element through issuers’ EDGE server
data to ensure that the QSEHRA data
can be extracted and aggregated with
other claims and enrollment
information data made accessible to
HHS by issuers of risk adjustment
covered plans through their respective
EDGE servers. This collection and
extraction with claim data would not be
possible if the QSEHRA data were
collected from other sources, such as
from plan administrators or
employers.105 As outlined in the
proposed rule, similar to the ICHRA
indicator, we considered that the FFEs
and SBE–FPs collect information about
QSEHRA from all applicants to
determine whether they are eligible for
an SEP, as individuals and their
dependents who become newly eligible
for a QSEHRA may be eligible for an
SEP. We further recognize that SBEs
also collect similar information from
their applicants to determine SEP
eligibility. However, because the
enrollee-level EDGE data uses a masked
enrollee ID, HHS similarly would not be
able to match the QSEHRA data
collected by Exchanges for SEP
purposes and the enrollee-level EDGE
data set. Relying on QSEHRA
information provided by Exchanges also
would not provide a complete picture of
this HRA population as it would not
include QSHERA enrollment associated
with health insurance coverage
purchased outside of Exchanges.
In addition, we understand an issuer
may currently have or collect
information that could be used to
populate the QSEHRA indicator in
situations where the issuer is being paid
directly by the employer, through the
QSEHRA, for the individual health
insurance coverage. We proposed and
are finalizing the policy to generally
permit issuers to populate the required
105 For information on the challenges associated
with linking the extracted enrollee-level EDGE data
to other sources, see 87 FR 631 through 632.
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QSEHRA indicator with information
from the FFE or SBE–FP enrollees or
enrollees through SBEs, or from other
sources for collecting this information.
Some other sources that an issuer could
use include information provided
directly to issuers by consumers who
seek to enroll in coverage directly with
the issuer, as well as information
provided to the issuer by employers or
plan administrators. To limit the burden
associated with populating this
indicator, we will structure this data
element for EDGE data submissions
similar to current collections, where
possible, and generally intend to use the
same structure for the ICHRA and
QSEHRA indicators. That is, similar to
the ICHRA indicator, the QSEHRA
indicator will capture whether a
particular enrollee’s health insurance
coverage involves (or does not involve)
a QSEHRA. HHS will provide additional
operational and technical guidance on
how issuers should submit this new
data element to their respective EDGE
servers, as may be necessary.
Comment: Many commenters
indicated that low uptake of QSEHRAs
make the data unnecessary to collect
due to the limited impact these HRAs
could have on risk adjustment, and that
collecting and reporting of a QSEHRA
indicator was generally inappropriate or
unnecessary for risk adjustment
purposes. Many commenters requested
additional information on HHS’
rationale for collecting QSEHRA data,
and additional guidance on the
collection and extraction of a QSEHRA
indicator.
Response: We disagree with the
comments that suggested it is
inappropriate to consider the impact of
the HRA population on the HHSoperated risk adjustment program, and
those that similarly suggested low
enrollment in QSEHRAs makes this
proposal unnecessary. The purpose of
collecting and extracting the QSEHRA
indicator is to allow HHS to conduct
analyses to examine whether there are
any unique actuarial characteristics of
this enrollee population and to
investigate what impact (if any)
QSEHRA participation is having on
State individual and small group
(including merged) market risk pools to
inform risk adjustment policy
development. As discussed above, the
QSEHRA indicator will be used to
capture whether a particular enrollee’s
health care coverage involves (or does
not involve) a QSEHRA and will
provide a more thorough picture of the
actuarial characteristics of the HRA
population and how or whether HRA
participation is impacting individual
and small group (including merged)
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market risk pools; and allow HHS to
investigate whether the risk profile of
enrollees with QSEHRAs differ from
enrollees with ICHRAs. Currently, we
do not have data on enrollment by
individuals with QSEHRAs to analyze
the risk associated with these enrollees
and the impact this population may
have on the individual and small group
(including merged) market or the HHSoperated risk adjustment program. The
rules regarding ICHRAs and QSEHRAs
both became effective in 2020; thus,
there is limited amount of data
regarding the ICHRA and QSEHRA
populations in general. Further, a recent
report by HRA Council 2022 106
highlighted that the number of both
ICHRAs and QSEHRAs has increased
substantially from 2020 to 2022.
Therefore, including this data as part of
the required EDGE data submissions
will provide HHS with a more accurate
and complete view and distribution of
risk in the individual and small group
(including merged) markets. The
additional information collected
through the QSEHRA indicator will be
used to further analyze if any
refinements to the HHS risk adjustment
methodology should be examined or
proposed through notice- and- comment
rulemaking, such as examination of the
risk profile of partial year enrollees with
ICHRAs or QSEHRA given the potential
for those populations to enroll through
an SEP. Similarly, this information will
also help inform policy analysis and
potential updates to the AV Calculator,
other HHS individual or small group
(including merged) market programs,
the PHS Act requirements enforced by
HHS that are applicable market-wide or
other HHS Federal health-related
programs.
We also acknowledge commenters’
request for additional information on
submission of the QSEHRA indicator,
and similar to the ICHRA indicator, we
will provide additional operational and
technical guidance on how issuers
should submit this new data element to
HHS through issuer EDGE servers via
the applicable benefit year’s EDGE
Server Business Rules and the EDGE
Server Interface Control Document, as
may be necessary.
b. Extracting Plan ID and Rating Area
In addition to collecting and
extracting a QSEHRA indicator, we
proposed to extract the plan ID 107 and
106 For details of this report, see https://
hracouncil.wildapricot.org/resources/Documents/
2022_HRAC_Data_FullReport_Final.pdf.
107 For details on the plan ID and its components,
see p. 42 of the following: CMS. (2013, March 22).
CMS Standard Companion Guide Transaction
Information: Instructions related to the ASC X12
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rating area data elements from the 2017,
2018, 2019, and 2020 benefit year data
submissions that issuers already made
accessible to HHS. In the 2023 Payment
Notice (87 FR 27249), we finalized the
proposal to extract these data elements
beginning with the 2021 benefit year.
However, we determined that to aid in
annual model recalibration, as well as in
our analyses of risk adjustment data, it
would be beneficial to also include
these two data elements as part of the
enrollee-level EDGE data and reports
extracted from issuers’ EDGE servers for
the 2017, 2018, 2019, and 2020 benefit
years. Inclusion of plan ID and rating
area in extractions of these additional
benefit year data sets would also
support analysis of other HHS
individual and small group (including
merged) market programs, the PHS Act
requirements enforced by HHS that are
applicable market-wide, as well as other
HHS Federal health-related programs.
Moreover, since finalizing the 2023
Payment Notice, we have found that the
analysis of risk adjustment data would
be more valuable if we could compare
historical trends, and access to these
data elements for past years would
further our ability to analyze and
improve the risk adjustment program.
For example, in assessing the 2020
enrollee-level EDGE data set for
inclusion in the 2024 benefit year model
recalibration, having access to plan ID
and rating area would have allowed us
to consider the different patterns of
utilization and costs at a more granular
level (for example, the State market risk
pool level). Since issuers already
collected and made available these data
elements to HHS for the 2017, 2018,
2019 and 2020 benefit years,108 we did
not believe that this proposal would
increase burden on issuers. We also did
not propose any changes to the
accompanying policies finalized in the
2023 Payment Notice with respect to
these data elements and the enrolleelevel EDGE Limited Data set (LDS).
Although we recognized that including
plan ID and rating area would enhance
the usefulness of the LDS, we continue
to believe it is appropriate to exclude
these data elements from the LDS to
Benefit Enrollment and Maintenance (834)
transaction, based on the 005010X220
Implementation Guide and its associated
005010X220A1 addenda for the FFE. https://
www.cms.gov/cciio/resources/regulations-andguidance/downloads/companion-guide-for-ffeenrollment-transaction-v15.pdf.
108 As detailed in the 2023 Payment Notice,
issuers have been required to submit these two data
elements as part of the required risk adjustment
data submissions to their respective EDGE servers
to support HHS’ calculation of risk adjustment
transfers since the 2014 benefit year. See 87 FR
27243.
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mitigate the risk that entities that
receive the LDS file could identify
issuers based on these identifiers,
particularly in areas with a small
number of issuers. As such, HHS would
not include these data elements (plan ID
and rating area) in the LDS files made
available to qualified researchers upon
request.
We summarize and respond to public
comments received on the proposed
extraction of plan ID and rating area
data elements for certain benefit years
prior to 2021 below.
Comment: Many commenters
supported the extraction of plan ID and
rating area data elements for earlier
benefit years of EDGE data and their use
in risk adjustment. However, many
commenters opposed the proposal to
extract the plan ID and rating area data
elements from issuers’ EDGE servers for
certain benefit years prior to 2021, citing
concerns regarding privacy and security
of patients’ personally identifiable
information (PII) and protected health
information (PHI). One commenter
requested that CMS reconsider their
extraction altogether, as well as the
extraction of zip code and subscriber ID
data as finalized in the 2023 Payment
Notice.
Response: We are finalizing, as
proposed, the extraction of plan ID and
rating area data elements for certain
benefit years of EDGE data prior to 2021
as we believe that the collection of these
additional data will allow HHS to better
assess actuarial risk in the individual
and small group (including merged)
market risk pools, examine historical
trends, and consider changes to improve
the HHS-operated risk adjustment
program. Consistent with previously
finalized policies regarding the
permitted uses of the enrollee-level
EDGE data, HHS may also use these
additional data to inform analysis and
policy development for the AV
Calculator and other HHS individual
and small group (including merged)
market programs, the PHS Act
requirements enforced by HHS that are
applicable market-wide, as well as other
HHS Federal health-related programs.109
We acknowledge the concerns raised
regarding the need to protect the privacy
and security of patients’ PII and PHI,
however, we generally disagree that the
extraction of plan ID and rating area
data elements for these additional
benefit years would increase risk of
disclosure of enrollee PII, nor do they
fall under the category of PHI according
109 See, for example, the 2018 Payment Notice, 81
FR 94101; the 2020 Payment Notice, 84 FR 17488;
and the 2023 Payment Notice, 87 FR 27241–27252.
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25785
to the HIPAA Privacy Rule.110 As noted
in the 2023 Payment Notice (87 FR
27245), while we do not believe this
data collection causes risk to the privacy
or security of patients’ PII, to mitigate
the risk that entities that receive the
LDS file could identify issuers based on
these identifiers, particularly in areas
with a small number of issuers, we
continue to believe it is appropriate to
exclude these data elements (plan ID
and rating area) from the LDSs. As such,
HHS will not include these data
elements in the LDS files made available
to qualified researchers upon request.
HHS remains committed to protecting
the privacy and security of enrollees’
sensitive data as initially outlined in the
2014 Payment Notice (77 FR 15434,
15471, 15498, 15500; § 153.720)
regarding the risk adjustment data
collection approach, which
encompasses PII. As noted above, in the
2014 Payment Notice (78 FR 15497
through 15500; § 153.720), we
established an approach for obtaining
the necessary data for risk adjustment
calculations in States where HHS
operates the program through a
distributed data collection model that
prevented the transfer of individuals’
sensitive data. We did not propose and
are not finalizing any changes to the
distributed data collection approach
applicable to the HHS-operated risk
adjustment program. As explained in
the proposed 2014 Payment Notice (77
FR 73118), using a distributed data
collection model 111 means HHS does
not directly receive data from issuers,112
which limits transmission of sensitive
data.113 This general framework remains
unchanged. Issuers of risk adjustment
covered plans will continue to provide
HHS access to the applicable required
risk adjustment data elements through
the distributed data environment (that
is, the issuer’s secure EDGE server) in
the HHS-specified electronic formats by
the applicable deadline.114 Issuers will
continue to retain control over their data
assets subject to the requirements of the
HHS-operated risk adjustment program.
HHS will also continue to require
issuers to use a unique masked enrollee
110 45
CFR 164.512(a).
this model, each issuer submits to its
EDGE server the required data in HHS-specified
formats and must make these data accessible to
HHS for use in the HHS-operated risk adjustment
program. See 78 FR 15497.
112 77 FR 73162, 73182 through 73183. This
policy was finalized in the 2014 Payment Notice
final rule. See 78 FR 15497 through 15500.
113 See 78 FR 15500. We explained that data are
particularly vulnerable during transmission, and
that the distributed data collection model
eliminates this risk.
114 See 45 CFR 153.610(a). See also 45 CFR
153.700 through 153.740.
111 Under
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identification number for each enrollee
that cannot include PII and PHI,115
along with maintaining the other
existing data safeguards to protect
enrollee PII and PHI.116 117 118 119 The
policies finalized in this rule regarding
the extraction of plan ID and rating area
for certain benefit years prior to 2021 do
not alter the distributed data collection
approach or otherwise change any of the
existing protections for enrollee PII and
PHI under the HHS-operated risk
adjustment program.
We also did not propose and are not
finalizing any changes to the final
policies adopted in the 2023 Payment
Notice related to the collection and
extraction of zip code and subscriber
indicator.120 The collection and
extraction of these two data elements
will begin with the 2023 benefit year. In
addition, in the 2023 Payment Notice
(87 FR 27249), we finalized the proposal
to extract the plan ID and rating area
data elements beginning with the 2021
benefit year. Since finalizing that
proposal, we determined that to aid in
annual model recalibration, as well as
HHS’ analyses of risk adjustment data,
it would be beneficial to also include
these two data elements as part of the
enrollee-level EDGE data and reports
extracted from issuers’ EDGE servers for
the 2017, 2018, 2019, and 2020 benefit
years. For example, we found HHS
collection and extraction of plan ID
allows HHS to conduct deeper analyses
115 See 45 CFR 153.720. See also 78 FR 15509 and
81 FR 94101.
116 As we explained in the 2018 Payment Notice,
use of masked enrollee-level data safeguards
enrollee privacy and security because masked
enrollee-level data does not include PII. See 78 FR
15500.
117 In addition to use of masked enrollee IDs and
masked claims IDs, another protection for enrollee
PII is the exclusion of enrollee date of birth from
the data issuers must make accessible to HHS on
their EDGE servers.
118 The LDS policies are additional examples of
protections for enrollee PII. Under these policies,
HHS makes available only an LDS of certain
masked enrollee-level EDGE data elements and only
to qualified researchers if they meet the
requirements for access to such file(s), including
entering into a data use agreement that establishes
the permitted uses or disclosure of the information
and prohibits the recipient from identifying the
information. See, for example, 84 FR 17486 through
17490 and 87 FR 27243 through 27252. Also see
Data Use Agreement. CMS. https://www.cms.gov/
research-statistics-data-and-systems/files-for-order/
data-disclosures-data-agreements/overview. Further
details on limited data set files available at Limited
Data Set (LDS) Files. CMS. https://www.cms.gov/
research-statistics-data-and-systems/files-for-order/
data-disclosures-data-agreements/dua_-_newlds.
119 The final policies to exclude plan ID, rating
area and ZIP code from the LDS is also part of our
commitment to protect enrollee PII to mitigate the
risk that entities that receive the LDS could identify
individual members, particularly in areas with a
small number of issuers. See, for example, 87 FR
27243 through 27252.
120 See 87 FR 27241 through 27252.
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when confronted with minor data
anomalies to see if these trends are in
fact reflective of the market or if targeted
outreach to specific issuers is necessary
to address data errors or potential
misinterpretation of the EDGE server
business rules and other applicable data
requirements to improve the EDGE data
quality for future benefit years. After
considering comments, we are finalizing
the proposals related to the collection
and extraction of plan ID and rating area
for the additional prior benefit years
beginning with the 2017 benefit year
enrollee-level EDGE data.
As previously explained, the
collection and extraction of these data
elements for the additional prior benefit
years will help HHS further assess risk
patterns and the impact of risk
adjustment policies by providing
valuable insight into historical trends.
For example, rating area data for these
additional benefit years will provide
HHS with more granular data to
examine and assess risk patterns and
impacts based on geographic differences
over time. These data will therefore be
useful to examine whether changes
should be proposed to the HHS risk
adjustment methodology through
notice-and-comment rulemaking, as
well as to assist with analysis and
policy development for the AV
Calculator and other HHS individual
and small group (including merged
market) programs, the PHS Act
requirements enforced by HHS that are
applicable market-wide, and other HHS
Federal health-related programs.
Comment: Some commenters opposed
to the extraction of plan ID and rating
area data elements questioned the
appropriateness of using these data
elements for purposes beyond the HHSoperated risk adjustment program and
the AV Calculator.
Response: We acknowledge
commenters concerns regarding use of
the plan ID and rating area data
elements use for purposes beyond the
HHS-operated risk adjustment program
and the AV Calculator. However, we
disagree that the use of these data
elements should be limited to only the
HHS-operated risk adjustment program
and the AV Calculator.
In several prior rulemakings,121 we
finalized policies for the extraction and
use of enrollee-level EDGE data
beginning with the 2016 benefit year.
HHS began the collection and extraction
of enrollee-level EDGE data to provide
HHS with more granular data to use for
recalibrating the HHS risk adjustment
121 See the 2018 Payment Notice, 81 FR 94101;
the 2020 Payment Notice, 84 FR 17488; and the
2023 Payment Notice, 87 FR 27241.
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models and to use actual data from
issuers’ individual and small group (and
merged) market populations, as opposed
to the MarketScan® commercial
database that approximates these
populations, for model recalibration
purposes.122 We also previously
finalized the use of the extracted
masked enrollee-level EDGE data to
inform updates to the AV Calculator and
methodology,123 conduct policy
analysis and calibrate HHS programs in
the individual and small group
(including merged) markets and the PHS
Act requirements enforced by HHS that
are applicable market-wide,124 125 as
well as informing policy and improving
the integrity of other HHS Federal
health-related programs.126 The
finalized policies related to the use of
enrollee-level data extracted from
issuers’ EDGE servers and summary
level reports produced from remote
command and ad hoc queries enhance
our ability to develop and set policy and
limit the need to pursue alternative
burdensome data collections from
issuers. The use of plan ID and rating
area from the 2017, 2018, 2019, and
2020 benefit year data sets beyond the
risk adjustment program and AV
Calculator is consistent with these
previously finalized policies, including
the use of these two data elements
beginning with the 2021 benefit year
data set for other HHS individual and
small group (including merged) market
programs, the PHS Act requirements
enforced by HHS that are applicable
market-wide, as well as other HHS
Federal health-related programs.
Consistent with the use of these data
elements to help further assess risk
patterns for use in analysis and
development of risk adjustment and AV
Calculator policies, plan ID and rating
area will also support HHS analysis and
policy development for other HHS
individual and small group (including
merged) market programs, the PHS Act
requirements enforced by HHS that are
applicable market-wide, as well as other
122 81
FR 94101.
123 Ibid.
124 See,
for example, 42 U.S.C. 300gg–300gg–28.
81 FR 94101 and 84 FR 17488.
126 As detailed in the 2023 Payment Notice, HHS
can use the extracted EDGE data and reports to
inform policy analyses and improve the integrity of
other HHS Federal health-related programs outside
the commercial individual and small group
(including merged) markets to the extent such use
of the data is otherwise authorized by, required
under, or not inconsistent with applicable Federal
law. See 87 FR 27243; 87 FR 630 through 631.
Examples of other HHS Federal health-related
programs include the programs in certain States to
provide wrap-around QHP coverage through
Exchanges to Medicaid expansion populations and
coverage offered by non-Federal Governmental
plans. Ibid.
125 See
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HHS Federal health-related programs. In
particular, extra benefit years of these
data will be beneficial for testing policy
options over multiple years of data. For
example, we want to assess whether the
scope of EHBs are equal to benefits
provided under a typical employer plan
under section 1302(b)(2)(A) of the ACA
at the State level, and that analysis
would benefit greatly from being tested
on additional benefit years of data. As
such, while we acknowledge the
comments expressing concern over the
use of this data for purposes beyond
HHS risk adjustment and the AV
Calculator, we decline to limit the use
of these data to only those two areas.
The utility of the plan ID and rating area
data elements, along with zip code and
subscriber indicator, in annual model
recalibration and policy analysis to
support HHS individual and small
group (including merged) market
programs, the PHS Act requirements
enforced by HHS that are applicable
market-wide, and other Federal-health
related programs outweighs any gains
from not finalizing the extraction of
plan ID and rating area from certain
prior benefit years as proposed or
repealing the EDGE data extraction and
permitted use policies finalized in the
2023 Payment Notice.
Comment: One commenter
specifically requested that HHS
consider releasing the plan ID and rating
area data elements as part of the EDGE
LDS by aggregating the information at
the county level to assuage privacy and
security concerns.
Response: While we recognize
including the plan ID and rating area
data elements may enhance the
usefulness of the LDS for researchers,
we continue to believe it is appropriate
to exclude these data elements from the
LDS to mitigate the risk that entities that
receive the LDS file could identify
issuers based on these identifiers,
particularly in areas with a small
number of issuers. While aggregating
data at the county level, as suggested,
could mitigate this concern in many
cases, it would not completely eliminate
the possibility that counties with small
numbers of issuers could be identified
by these data elements. We also did not
propose to release these data as part of
the LDS at the county level and decline
to adopt the suggestion as part of this
final rule.
6. Risk Adjustment User Fee for 2024
Benefit Year (§ 153.610(f))
HHS proposed a risk adjustment user
fee for the 2024 benefit year of $0.21
PMPM. We sought comment on this
proposal. After review of the comments
received, we are finalizing the proposed
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risk adjustment user fee for the 2024
benefit year as proposed.
Under § 153.310, if a State is not
approved to operate, or chooses to forgo
operating, its own risk adjustment
program, HHS will operate risk
adjustment on its behalf. As noted
previously in this final rule, for the 2024
benefit year, HHS will operate the risk
adjustment program in every State and
the District of Columbia. As described
in the 2014 Payment Notice (78 FR
15416 through 15417), HHS’ operation
of risk adjustment on behalf of States is
funded through a risk adjustment user
fee. Section 153.610(f)(2) provides that,
where HHS operates a risk adjustment
program on behalf of a State, an issuer
of a risk adjustment covered plan must
remit a user fee to HHS equal to the
product of its monthly billable member
enrollment in the plan and the PMPM
risk adjustment user fee specified in the
annual HHS notice of benefit and
payment parameters for the applicable
benefit year.
OMB Circular No. A–25 established
Federal policy regarding user fees, and
specifies that a user charge will be
assessed against each identifiable
recipient for special benefits derived
from Federal activities beyond those
received by the general public.127 The
HHS-operated risk adjustment program
provides special benefits as defined in
section 6(a)(1)(B) of OMB Circular No.
A–25 to issuers of risk adjustment
covered plans because it mitigates the
financial instability associated with
potential adverse risk selection.128 The
risk adjustment program also
contributes to consumer confidence in
the health insurance industry by
helping to stabilize premiums across the
individual, merged, and small group
markets.
In the 2023 Payment Notice (87 FR
27252), we calculated the Federal
administrative expenses of operating the
risk adjustment program for the 2023
benefit year to result in a risk
adjustment user fee rate of $0.22 PMPM
based on our estimated costs for risk
adjustment operations and estimated
BMM for individuals enrolled in risk
adjustment covered plans. For the 2024
benefit year, HHS proposed to use the
same methodology to estimate our
administrative expenses to operate the
risk adjustment program. These costs
cover development of the models and
methodology, collections, payments,
account management, data collection,
127 OMB. (1993). OMB Circular No. A–25 Revised,
Transmittal Memorandum No. https://
www.whitehouse.gov/wp-content/uploads/2017/11/
Circular-025.pdf.
128 Ibid.
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25787
data validation, program integrity and
audit functions, operational and fraud
analytics, interested parties training,
operational support, and administrative
and personnel costs dedicated to risk
adjustment program activities. To
calculate the risk adjustment user fee,
we divided HHS’ projected total costs
for administering the risk adjustment
program on behalf of States by the
expected number of BMM in risk
adjustment covered plans in States
where the HHS-operated risk
adjustment program will apply in the
2024 benefit year.
We estimated that the total cost for
HHS to operate the risk adjustment
program on behalf of States for the 2024
benefit year will be approximately $60
million, which remains stable with the
approximately $60 million estimated for
the 2023 benefit year. We also projected
higher enrollment than our prior
estimates in the individual and small
group (including merged) markets in the
2023 and 2024 benefit years based on
the increased enrollment between the
2020 and 2021 benefit years, due to the
increased PTC subsidies provided for in
the American Rescue Plan Act of 2021
(ARP).129 130 In light of the passage of the
Inflation Reduction Act of 2022 (IRA),
in which section 12001 extended the
enhanced PTC subsidies in section 9661
of the ARP through the 2025 benefit
year, we projected increased 2021
enrollment levels to remain steady
through the 2025 benefit year.131
Because this provision of the IRA is
expected to promote continued higher
enrollment, we proposed a slightly
lower risk adjustment user fee of $0.21
PMPM.
We summarize and respond to public
comments received on the proposed
2024 benefit year risk adjustment user
fee rate below.
Comment: We received a few
comments in support of the 2024 benefit
year risk adjustment user fee rate.
Response: We appreciate the support
and are finalizing, as proposed, a risk
adjustment user fee rate for the 2024
benefit year of $0.21 PMPM.
7. Risk Adjustment Data Validation
Requirements When HHS Operates Risk
Adjustment (HHS–RADV) (§§ 153.350
and 153.630)
HHS will conduct HHS–RADV under
§§ 153.350 and 153.630 in any State
129 ARP.
Public Law 117–2 (2021).
(2022, July 19). Summary Report on
Permanent Risk Adjustment Transfers for the 2021
Benefit Year. (p. 9). https://www.cms.gov/CCIIO/
Programs-and-Initiatives/Premium-StabilizationPrograms/Downloads/RA-Report-BY2021.pdf.
131 Inflation Reduction Act. Public Law 117–169
(2022).
130 CMS.
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where HHS is operating risk adjustment
on a State’s behalf.132 The purpose of
HHS–RADV is to ensure issuers are
providing accurate high-quality
information to HHS, which is crucial for
the proper functioning of the HHSoperated risk adjustment program.
HHS–RADV also ensures that risk
adjustment transfers reflect verifiable
actuarial risk differences among issuers,
rather than risk score calculations that
are based on poor quality data, thereby
helping to ensure that the HHS-operated
risk adjustment program assesses
charges to issuers with plans with
lower-than-average actuarial risk while
making payments to issuers with plans
with higher-than-average actuarial risk.
HHS–RADV consists of an initial
validation audit (IVA) and a second
validation audit (SVA). Under
§ 153.630, each issuer of a risk
adjustment covered plan must engage an
independent initial validation audit
(IVA) entity. The issuer provides
demographic, enrollment, and medical
record documentation for a sample of
enrollees selected by HHS to its IVA
entity for data validation. Each issuer’s
IVA is followed by an SVA, which is
conducted by an entity HHS retains to
verify the accuracy of the findings of the
IVA. Based on the findings from the
IVA, or SVA (as applicable), HHS
conducts error estimation to calculate
an HHS–RADV error rate. The HHS–
RADV error rate is then applied to
adjust the plan liability risk scores of
outlier issuers, as well as the risk
adjustment transfers calculated under
the State payment transfer formula for
the applicable State market risk pools,
for the benefit year being audited.133
a. Materiality Threshold for Risk
Adjustment Data Validation
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Beginning with 2022 benefit year
HHS–RADV, we proposed to change the
HHS–RADV materiality threshold
definition, first implemented in the
2018 Payment Notice (81 FR 94104
through 94105), from $15 million in
total annual premiums Statewide to
30,000 total BMM Statewide, calculated
by combining an issuer’s enrollment in
a State’s individual non-catastrophic,
catastrophic, small group, and merged
markets, as applicable, in the benefit
132 HHS has operated the risk adjustment program
in all 50 States the District of Columbia since the
2017 benefit year.
133 HHS transitioned from a prospective
application of HHS–RADV error rates for nonexiting issuers to apply HHS–RADV error rates to
the risk scores and risk adjustment State transfers
of the benefit year being audited for all issuers
beginning with the 2020 benefit year of HHS–
RADV. See 85 FR 77002–77005.
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year being audited.134 We are finalizing
the change to the HHS–RADV
materiality threshold definition as
proposed.
Consistent with the application of the
current materiality threshold definition
and accompanying exemption under
§ 153.630(g)(2), we proposed that issuers
that fall below the new proposed
materiality threshold would not be
subject to the annual IVA (and SVA)
audit requirements, but may be selected
to participate in a given benefit year of
HHS–RADV based on random sampling
or targeted sampling due to the
identification of any risk-based triggers
that warrant more frequent audits. We
did not propose any changes to the
regulatory text at § 153.630(g)(2) or to
the other accompanying policies. We
solicited comments on this proposal as
well as sought comments on whether we
should increase the materiality
threshold to $17 million in total annual
premiums Statewide instead of
switching to 30,000 BMM Statewide and
on the applicability date for when a new
HHS–RADV materiality threshold
definition should begin to apply.
In the 2020 Payment Notice (84 FR
17508 through 17511), HHS established
§ 153.630(g) to codify exemptions to
HHS–RADV requirements, including an
exemption for issuers that fell below a
materiality threshold, as defined by
HHS, to ease the burden of annual audit
requirements for smaller issuers of risk
adjustment covered plans that do not
materially impact risk adjustment
transfers.135 This materiality threshold
was first implemented and defined in
the 2018 Payment Notice (81 FR 94104
through 94105), where HHS finalized a
policy that issuers with total annual
premiums at or below $15 million
(calculated based on the Statewide
premiums of the benefit year being
validated) would not be subject to
annual IVA requirements, but would
still be subject to random and targeted
sampling.136 Issuers below the
134 Activities related to the 2022 benefit year of
HHS–RADV generally began in March 2023, when
issuers could start selecting their IVA entity, and
IVA entities could start electing to participate in
HHS–RADV for the 2022 benefit year. See, for
example, the 2021 Benefit Year HHS–RADV
Activities Timeline (May 3, 2022), available at
https://regtap.cms.gov/uploads/library/HRADV_
2021Timeline_5CR_050322.pdf and the 2022
Benefit Year HHS–RADV Timeline (March 1, 2023),
available at https://regtap.cms.gov/uploads/library/
HRADV_2022_timeline_5CR_022323.pdf.
135 Additionally, in the 2019 Payment Notice (83
FR 16966), we finalized an exemption from HHS–
RADV for issuers with 500 or fewer BMM Statewide
in the benefit year being audited. This very small
issuer exemption is codified at § 153.630(g)(1).
Issuers with 500 or fewer BMM Statewide are not
subject to random or targeted sampling.
136 While the 2018 Payment Notice (81 FR 94104
through 94105) provided an applicability date for
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materiality threshold are subject to an
IVA approximately every 3 years,
barring any risk-based triggers that
warrant more frequent audits.
Under the new materiality threshold
definition, beginning with the 2022
benefit year of HHS–RADV, issuers that
fall below 30,000 BMM Statewide will
be exempt from participating in the
annual HHS–RADV IVA and SVA audit
requirements if not otherwise selected
by HHS to participate under random
and targeted sampling conducted
approximately every 3 years (barring
any risk-based triggers based on
experience that will warrant more
frequent audits). To determine whether
an issuer falls under the materiality
threshold, its BMM will be calculated
Statewide, that is, by combining an
issuer’s enrollment in a State’s
individual non-catastrophic,
catastrophic, small group, and merged
markets, as applicable, in the benefit
year being audited. Issuers that qualify
for the exemption under § 153.630(g)(2)
from HHS–RADV requirements for a
particular benefit year must continue to
maintain their risk adjustment
documents and records consistent with
§ 153.620(b) and may be required to
make those documents and records
available for review or to comply with
an audit by the Federal Government.137
If an issuer of a risk adjustment covered
plan that falls within the materiality
threshold is not exempt from HHS–
RADV for a given benefit year (for
example, if the issuer is selected as part
of random or targeted sampling), and
fails to engage an IVA or submit IVA
results to HHS, the issuer will be subject
to the default data validation charge in
accordance with § 153.630(b)(10) and
may be subject to other enforcement
action. Lastly, an issuer that qualifies for
an exemption under § 153.630(g)(2)
from HHS–RADV requirements for a
particular benefit year will not have its
risk scores and State transfers adjusted
due to its own risk score error rate(s),
but its risk scores and State transfers
could be adjusted if other issuers in the
applicable State market risk pools were
identified as outliers in that benefit year
of HHS–RADV.
We summarize and respond to public
comments received on the proposed
change to the HHS–RADV materiality
threshold definition from $15 million in
total annual premiums Statewide to
30,000 total BMM Statewide beginning
the materiality threshold that began with the 2017
benefit year of HHS–RADV, we postponed the
application of the materiality threshold to the 2018
benefit year in the 2019 Payment Notice (83 FR
16966 through 16967).
137 See § 153.620(b) and (c).
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with the 2022 benefit year of HHS–
RADV below.
Comment: Most commenters
supported the proposal to change the
HHS–RADV materiality threshold
definition from $15 million in total
annual premiums Statewide to 30,000
total BMM, calculated by combining an
issuer’s enrollment in a State’s
individual non-catastrophic,
catastrophic, small group, and merged
markets, as applicable, in the benefit
year being audited. One commenter
agreed that the proposed change to the
materiality threshold definition will
continue to ease the administrative
burden associated with HHS–RADV
audits.
Many of these commenters asserted
that a BMM-based threshold would be
more consistent over time and across
geographies as the threshold would not
be impacted by premium increases or
variation in health care costs. Another
commenter stated that the proposed
BMM-based threshold would eliminate
the need for the materiality threshold to
be updated over time. One commenter
agreed that shifting the materiality
threshold to a BMM basis would align
with the 500 BMM threshold used to
exempt very small issuers from HHS–
RADV. This commenter also noted that
the alternative proposal to increase the
threshold from $15 million in total
annual premiums Statewide to $17
million in total annual premiums
indicates that a non-indexed dollar
threshold could increase the number of
issuers subject to annual HHS–RADV
audits over time.
However, one commenter opposed
changing the materiality threshold to
30,000 BMM and stated that allowing
some issuers to be exempt for annual
HHS–RADV audit requirements reduces
accountability and transparency. One
commenter encouraged HHS to consider
changing the materiality threshold for
HHS–RADV to a percentage of
Statewide member months to reduce the
burden of HHS–RADV on issuers that
do not materially impact a State’s risk
adjustment transfers. Another
commenter asked that HHS investigate
how to balance the frequency of issuers
randomly sampled each year within a
parent company and stated that
historical random samples have not
produced a balanced volume of issuers
year to year.
Response: After considering
comments, we are finalizing this policy
as proposed to change the HHS–RADV
materiality threshold definition from
$15 million in total annual premiums
Statewide to 30,000 total BMM
Statewide beginning with the 2022
benefit year of HHS–RADV. Consistent
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with the original adoption of the
materiality threshold for HHS–RADV,
we believe that this policy and updated
definition will continue to ease the
administrative burden of annual HHS–
RADV requirements for smaller issuers
of risk adjustment covered plans that do
not materially impact risk adjustment
transfers. We also continue to believe
that this exemption will have a minimal
impact on HHS–RADV as issuers of risk
adjustment covered plans below the
30,000 BMM threshold are estimated to
represent less than 1.5 percent of
enrollment in risk adjustment covered
plans nationally. We believe that
continuing to use a threshold
representing risk adjustment covered
plans that cover less than 1.5 percent of
membership nationally promotes the
goals of HHS–RADV while also
considering the burden of such a
process on smaller issuers.
As explained in the proposed rule (87
FR 78242 through 78243), since we
established the materiality threshold
definition of $15 million in total
premiums, the estimated costs to
complete the IVA have increased,
especially with the addition of
prescription drug categories to the adult
models starting with the 2018 benefit
year. Therefore, we believe that it is
necessary and appropriate to update the
materiality threshold definition to better
align with current costs to complete an
IVA. We estimated the current cost of
the IVA to be approximately $170,000
per an issuer. To continue the overall
design of the materiality threshold
policy and effectively limit the
proportion of an issuer’s premiums that
will be used to cover IVA costs to one
(1) percent, we would need to increase
the materiality threshold to $17 million
in total annual premiums Statewide.
While we considered using another
dollar value to update the materiality
threshold definition, we believe that
using BMMs instead of a dollar
threshold ensures that the materiality
threshold definition under
§ 153.630(g)(2) will continue to exempt
small issuers that face a
disproportionally higher burden for
conducting HHS–RADV audit, even in
situations where PMPM premiums grow
overtime. We therefore proposed and
are finalizing a materiality threshold of
30,000 BMM Statewide, which
translates to approximately $17 million
in total annual premiums Statewide on
average across markets.
Shifting the materiality threshold
under § 153.630(g)(2) to a BMM basis
will also align with the threshold
established in § 153.630(g)(1), which
exempts issuers with 500 or fewer BMM
Statewide in the benefit year being
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25789
audited from HHS–RADV requirements,
including random and targeted
sampling. As part of this change, we
considered whether the new BMMbased threshold would significantly
impact other issuers of risk adjustment
covered plans. We analyzed historical
data on issuers of risk adjustment
covered plans and found that the pool
of issuers falling below a 30,000 BMM
Statewide threshold does not
significantly differ from the current pool
of issuers falling below a $15 million
total annual premiums Statewide
threshold.138 Therefore, we do not
anticipate that the new materiality
threshold definition will change the
current estimated burdens of the annual
HHS–RADV requirements or
significantly impact other issuers of risk
adjustment covered plans. While we
would expect the number of issuers
falling under a premium-dollar-based
materiality threshold to decrease
overtime as PMPM premiums grow, we
expect the BMM-based threshold to
produce a consistent pool of issuers
subject to random and targeted sampling
over time and across State market risk
pools.
We did not consider using a
percentage of Statewide member months
as the metric for the materiality
threshold as that metric does not have
a relationship with the costs to conduct
HHS–RADV. As such, after considering
comments, we are finalizing the new
materiality threshold definition of
30,000 BMM as proposed, beginning
with the 2022 benefit year of HHS–
RADV. As noted above, the materiality
threshold was initially set after
considering the fixed costs associated
with hiring an IVA entity and
submitting results to HHS, which may
represent a large portion of some
issuers’ administrative costs. We
estimated that 30,000 BMM Statewide
translates to approximately $17 million
in total annual premiums Statewide on
average across markets, and therefore
anticipate that issuers above this
threshold will not spend more than one
(1) percent of their premiums on
covering the estimated $170,000 cost of
the initial validation audit.
Finally, we do not believe that it is
necessary to investigate the balance of
the frequency of issuers randomly
sampled each year within a parent
company. The purpose of conducting
random audits is for these audits to be
random and not controlled to limit the
frequency that specific issuers,
including issuers within a particular
parent company, are selected. We also
note that in addition to conducting
138 See
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87 FR 78242 through 78243.
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random audits of issuers of risk
adjustment covered plans that fall below
the materiality threshold definition,
issuers that fall below the materiality
threshold definition can be selected to
participate in HHS–RADV due to the
targeted sampling based on the
identification of risk-based triggers that
warrant more frequent audits.139
b. HHS–RADV Adjustments for Issuers
That Have Exited the Market
Beginning with 2021 benefit year
HHS–RADV, we proposed to remove the
policy to only apply an exiting issuer’s
HHS–RADV results if that issuer is a
positive error rate outlier.140 We
proposed to change this policy because
it is no longer necessary to treat exiting
issuers differently from non-exiting
issuers when they are negative error rate
outliers in the applicable benefit year’s
HHS–RADV given the transition to the
concurrent application of HHS–RADV
results for all issuers. We solicited
comments on this proposal. After
reviewing the public comments, we are
finalizing the removal of this policy as
proposed.
We did not propose any other changes
to the policies regarding HHS–RADV
adjustments for issuers that exit the
market, and therefore, will otherwise
maintain the existing framework for
determining whether an issuer is an
exiting issuer. As such, the issuer will
have to exit all of the market risk pools
in the State (that is, not selling or
offering any new plan in the State) to be
considered an exiting issuer. If an issuer
only exits some of the markets or risk
pools in the State, but continues to sell
or offer new plans in others, it will not
be considered an exiting issuer. Small
group market issuers with off-calendar
year coverage who exit the market and
only have carry-over coverage that ends
in the next benefit year (that is, carryover of run out claims for individuals
enrolled in the previous benefit year,
with no new coverage being offered or
sold) will be considered an exiting
issuer and will be exempt from HHS–
RADV under § 153.630(g)(4). Individual
market issuers offering or selling any
new individual market coverage in the
139 See
§ 153.630(g)(2).
qualify as an exiting issuer, an issuer must
exit all of the market risk pools in the State (that
is, not selling or offering any new plans in the
State). If an issuer only exits some markets or risk
pools in the State, but continues to sell or offer new
plans in others, it is not considered an exiting
issuer. A small group market issuer with offcalendar year coverage who exits the market but has
only carry-over coverage that ends in the next
benefit year (that is, carry-over of run out claims for
individuals or groups enrolled in the previous
benefit year, with no new coverage being offered or
sold) is considered an exiting issuer. See the 2020
Payment Notice, 84 FR 17503 through 17504.
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140 To
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State in the subsequent benefit year will
be required to participate in HHS–
RADV, unless another exemption
applies.
We summarize and respond to public
comments received on the proposal to
remove the policy to only apply an
exiting issuer’s HHS–RADV results if
that issuer is a positive error rate outlier
beginning with the 2021 benefit year
below.
Comment: All commenters who
commented on this policy change
supported the proposal to remove the
policy that prevented the application of
an exiting issuer’s HHS–RADV results
when the issuer is a negative error rate
outlier. A few commenters agreed that it
is no longer necessary to treat exiting
issuers differently from non-exiting
issuers when an issuer is a negative
error rate outlier given the transition to
the concurrent application of HHS–
RADV results to the risk scores and risk
adjustment transfers of the benefit year
being audited for all issuers.
Response: We agree with commenters
that the policy that limited the
application of exiting issuers’ HHS–
RADV results to situations where the
issuer was identified as a positive error
rate outlier in the applicable benefit
year of HHS–RADV is no longer needed.
We are finalizing the removal of this
policy and will begin adjusting the plan
liability risk scores for all positive and
negative error rate outlier issuers
(inclusive of exiting and non-exiting
issuers) beginning with the 2021 benefit
year of HHS–RADV.
c. Discontinue Lifelong Permanent
Conditions List and Use of Non-EDGE
Claims in HHS–RADV
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78224), we sought
comment on discontinuing the use of
the Lifelong Permanent Conditions
(LLPC) list 141 and the use of non-EDGE
claims starting with the 2022 benefit
year of HHS–RADV. We solicited
comment on all aspects of these
potential changes, including the
applicability date. We also requested
comment on the extent that issuers and
their IVA entities have relied on these
policies and on how these potential
141 See, for example, Appendix C: Lifelong
Permanent Conditions in the 2021 Benefit Year
PPACA HHS Risk Adjustment Data Validation
(HHS–RADV) Protocols (November 9, 2022)
available at https://regtap.cms.gov/uploads/library/
HRADV_2021_Benefit_Year_Protocols_5CR_
110922.pdf. Also see, for example, Appendix E:
Lifelong Permanent Conditions in the 2018 Benefit
Year PPACA HHS Risk Adjustment Data Validation
(HHS–RADV) Protocols (June 24, 2019) available at
https://regtap.cms.gov/uploads/library/HRADV_
2018Protocols_070319_RETIRED_5CR_070519.pdf.
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Fmt 4701
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changes may impact issuers. After
reviewing the public comments, we will
discontinue the use of the LLPC list and
the policy that permitted the use of nonEDGE claims beginning with the 2022
benefit year of HHS–RADV. We will
update the HHS–RADV Protocols to
capture these changes for the 2022
benefit year and beyond.
The LLPC list was developed for
HHS–RADV medical record abstraction
purposes beginning with the 2016
benefit year, when issuers were first
learning the HHS–RADV Protocols and
still gaining experience with EDGE data
submissions.142 While the LLPC list was
developed for HHS–RADV medical
record abstraction purposes, the EDGE
Server Business Rules for risk
adjustment EDGE data submissions
direct that EDGE server data
submissions are claim-based and follow
standard coding principles and
guidelines. EDGE Server Business Rules
require that diagnosis codes submitted
to the EDGE server be related to medical
services performed during the patient’s
visit, be performed by a State licensed
medical provider, be associated with a
paid claim submitted to the issuer’s
EDGE server, and be associated with an
active enrollment period with the issuer
for the applicable risk adjustment
benefit year.143 Some issuers have
raised concerns that the LLPC list may
incentivize issuers to submit EDGE
supplemental diagnosis files containing
LLPC diagnoses even though those
diagnoses may not have been addressed
in a claim submitted to the EDGE server
for that encounter. While we allowed
the use of the LLPC list for the last
several years of HHS–RADV, we
continued to consider these issues and
solicited comments on the
discontinuance of the use of the LLPC
list beginning with the 2022 benefit year
of HHS–RADV.
Similarly, we sought comments on
discontinuing the current policy that
permits the use of non-EDGE claims in
HHS–RADV beginning with the 2022
HHS–RADV benefit year. Under
§ 153.630(b)(6), issuers are required to
142 CMS first published the ‘‘Chronic Condition
HCCs’’ list in the 2016 Benefit Year PPACA HHS
Risk Adjustment Data Validation (HHS–RADV)
Protocols (October 20, 2017) available at https://
regtap.cms.gov/uploads/library/HRADV_
2016Protocols_v1_5CR_052218.pdf. Beginning with
2018 benefit year, CMS has provided the ‘‘Lifelong
Permanent Conditions’’ list, a simplified list of
health conditions which share similar
characteristics as those on the ‘‘Chronic Condition
HCCs’’ list. See supra note 117.
143 See, for example, Section 8.1 Guidance on
Diagnosis Code(s) Derived from Health Assessments
of the EDGE Server Business Rules (ESBR)
(November 1, 2022) available at https://
regtap.cms.gov/uploads/library/DDC-ESBR-1101225CR-110122.pdf.
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provide their IVA entity with all
relevant claims data and medical record
documentation for the enrollees selected
for audit. HHS currently allows issuers
to submit medical records to their IVA
entity for which no claim was accepted
into the EDGE server in certain
situations.144 Under the non-EDGE
claims policy, if issuers identify medical
records with no associated EDGE server
claim in HHS–RADV, they must
demonstrate that a non-EDGE claim
meets risk adjustment eligibility criteria.
Issuers must also allow the IVA entity
to view the associated non-EDGE claim,
and IVA entities must record their
validation results in their IVA Entity
Audit Results Submission.145 As part of
our ongoing effort to examine ways to
better align HHS–RADV guidance and
the EDGE Server Business Rules, and in
recognition of the experience issuers
have gained with HHS–RADV and
EDGE data submissions, we solicited
comments on discontinuing the use of
non-EDGE claims in HHS–RADV
beginning with the 2022 benefit year.
We summarize and respond to public
comments received on discontinuing
the use of the LLPC list and the use of
non-EDGE claims in HHS–RADV below.
Comment: Several commenters
supported discontinuing the use of the
LLPC list and a few commenters
supported discontinuing the use of nonEDGE claims. Many of these
commenters raised data integrity
concerns created by the allowance of the
use of the LLPC and non-EDGE claims
in HHS–RADV. Some commenters
asserted there is a current misalignment
between EDGE Server Business Rules
and HHS–RADV that creates
opportunities for issuers to submit data
to the EDGE server without following
the EDGE Server Business Rules and
then receive credit for this data in HHS–
RADV. Several commenters supported
consistency between the EDGE Server
Business Rules and what is allowable in
HHS–RADV by discontinuing the use of
144 See, for example, Section 9.2.6.5:
Documentation of Claims Not Accepted in EDGE of
the 2021 Benefit Year PPACA HHS Risk Adjustment
Data Validation (HHS–RADV) Protocols (August 17,
2022) available at https://regtap.cms.gov/uploads/
library/HRADV_2021_Benefit_Year_Protocols_v1_
5CR_081722.pdf.
145 Under the current policy, the non-EDGE claim
must be risk adjustment eligible paid/positively
adjudicated within the benefit year for the specified
sampled enrollee. Although the non-EDGE claim
would have been accepted to EDGE had it met the
EDGE submission deadline, diagnoses associated
with non-EDGE claims are not included in the risk
adjustment risk score calculations in the June 30th
Summary Report on Permanent Risk Adjustment
Transfers. Diagnoses associated with non-EDGE
claims are only used as an option for HCC
validation purposes in HHS–RADV when the
applicable criteria are met.
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the LLPC list and non-EDGE claims in
HHS–RADV. One of these commenters
asserted that the LLPC list creates an
asymmetry between the rules auditors
use for HCC validation and the rules
issuers use for submitting HCCs to
EDGE by granting auditors a more
permissive set of rules for HCC
validation, which thereby allows an
issuer’s risk score to reflect the strength
of their compliance department.
Another of these commenters asserted
that ending the policy that permitted the
use of non-EDGE claims in HHS–RADV
will provide consistency between the
data submission and its validation.
One commenter stated that
discontinuing the LLPC list will level
the playing field for all issuers. Two
commenters expressed concerns about
the use of dated information to justify
diagnoses and upcoding in the current
benefit year. One of these commenters
expressed concern that the LLPC list
was created as an administrative
convenience despite there being a wide
range of treatments and outcomes
within the same diagnosis on the LLPC
list. Another commenter raised concerns
about individuals with diagnoses on the
LLPC list enrolling in a new plan during
periods when these diagnoses do not
require treatment and the issuers of the
new plans covering these individuals
receiving credit for those LLPC HCCs in
HHS–RADV. This commenter also
suggested that, under a concurrent risk
adjustment model, issuers should get
credit for diagnoses that are treated
during the benefit year being risk
adjusted and should not be allowed to
rely on historic data or documentation
from before the applicable coverage
period.
Response: HHS agrees with
commenters that supported the
discontinuation of the LLPC list and
non-EDGE claims in HHS–RADV as we
seek to better align HHS–RADV policies
with the EDGE Server Business Rules.
We also believe that issuers have gained
years of experience with EDGE data
submissions and HHS–RADV activities,
such that it is now appropriate to
discontinue use of the LLPC list and
non-EDGE claims in HHS–RADV. The
LLPC list was not created to supplement
or replace the EDGE Server Business
Rules that issuers must follow to submit
diagnoses conditions to EDGE with the
necessary medical record
documentation. Instead, HHS created
the LLPC list in the early years of HHS–
RADV to ease the burden of medical
record retrieval for lifelong conditions
in HHS–RADV by simplifying and
standardizing coding abstraction for IVA
and SVA entities. The conditions
included in the LLPC list are those that
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25791
require ongoing medical attention and
are typically unresolved once
diagnosed. While a range of treatments
and outcomes may exist within the
same diagnosis on the LLPC list, the
HHS–HCC diagnostic classification is a
key component of the HHS risk
adjustment models. The basis of the
HHS risk adjustment model uses health
plan enrollee diagnoses to predict
medical expenditure risk. To do this,
tens of thousands of diagnostic codes
are grouped into a smaller number of
organized condition categories that
aggregate into HCCs to produce a
diagnostic profile of each enrollee.146
The HCCs in the HHS risk adjustment
models were selected to reflect salient
medical conditions and cost patterns for
adult, child, and infant subpopulations.
The models produce coefficients for
each HCC that incorporate the range of
treatments and outcomes for those
diagnoses as they represent the marginal
predicted plan liability expenditures of
an enrollee with that HCC given that
enrollee’s other risk markers. The HHS
risk adjustment models also include
interacted HCC counts factors beginning
with the 2023 benefit year that will
further capture the range of plan
liability that may exist within the same
diagnoses. For these reasons, we believe
that continuing the policy to permit use
of the LLPC list is no longer necessary
and its removal will better align HHS–
RADV guidance with the EDGE Server
Business Rules, as well as ensure that
audit entities follow the same standard
coding principles and guidelines for
HHS–RADV that issuers must follow
when submitting data to EDGE. As
detailed in the HHS–RADV Protocols,
issuers and entities should refer to the
conventions in the ICD–10–CM and
ICD10–PCS classification, ICD–10–CM
Official Coding Guidelines for Coding
and Reporting, and the American
Hospital Association (AHA) Coding
Clinic Standard for coding guidance,
including the coding of chronic
conditions.147
146 See The HHS–HCC Risk Adjustment Model for
Individual and Small Group Markets under the
Affordable Care Act, Medicare & Medicaid Research
Review, Volume 4, Number 3 (2014) available at
https://www.cms.gov/mmrr/Downloads/
MMRR2014_004_03_a03.pdf. Also see, for example,
Chapter 2: HHS–HCC Diagnostic Classification of
the March 31, 2016, HHS-Operated Risk
Adjustment Methodology Meeting Discussion Paper
(March 24, 2016) available at https://www.cms.gov/
cciio/resources/forms-reports-and-other-resources/
downloads/ra-march-31-white-paper-032416.pdf.
147 See, for example, Section 9.2.6 Phase 5—
Health Status Validation of the 2021 Benefit Year
PPACA HHS Risk Adjustment Data Validation
(HHS–RADV) Protocols (November 9, 2022)
available at https://regtap.cms.gov/uploads/library/
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Although we have no evidence that
enrollees with HCCs on the LLPC list
are switching plans when their
conditions are inactive, HHS agrees that
the LLPC list may create the
opportunity, in certain circumstances,
for issuers to receive credit for HCCs
when the enrollee did not receive care
or require active treatment during the
applicable enrollment-period. Thus, as
outlined above and in the proposed
rule, we believe that the LLPC list is no
longer necessary to balance the burdens
and costs of HHS–RADV with the
program integrity goals of validating the
actuarial risk of enrollees in risk
adjustment covered plans.148 Now that
issuers have gained sufficient
experience with the HHS–RADV
Protocols and have consistently met
data integrity criteria for their EDGE
data submissions,149 HHS will
discontinue use of the LLPC list and the
use of non-EDGE claims beginning with
the 2022 benefit year of HHS–RADV.
We will update the HHS–RADV
Protocols applicable to the 2022 benefit
year and beyond to capture these
changes.
We also generally disagree with
concerns of upcoding in the HHSoperated risk adjustment program. First,
the vast majority of enrollees in risk
HRADV_2021_Benefit_Year_Protocols_5CR_
110922.pdf.
148 See § 153.20. Risk adjustment covered plan
means, for the purpose of the risk adjustment
program, any health insurance coverage offered in
the individual or small group market with the
exception of grandfathered health plans, group
health insurance coverage described in § 146.145(b)
of this subchapter, individual health insurance
coverage described in § 148.220 of this subchapter,
and any plan determined not to be a risk adjustment
covered plan in the applicable federally certified
risk adjustment methodology.
149 As noted in the proposed rule (87 FR 78245),
all States received an interim risk adjustment
summary report from the 2017 benefit year through
2021 benefit year of the HHS-operated risk
adjustment program. Since issuance of the proposed
rule, we released the 2022 benefit year interim risk
adjustment results. As noted in the 2022 benefit
year interim risk adjustment report, five States were
ineligible for inclusion on the basis of one or more
credible issuers in those markets failing to meet the
applicable thresholds for data quantity and/or
quality evaluations by the applicable deadline. See
the Interim Summary Report on Permanent Risk
Adjustment for the 2022 Benefit Year (March 17,
2023), available at https://www.cms.gov/cciio/
programs-and-initiatives/premium-stabilizationprograms/downloads/interim-ra-report-by2022.pdf.
However, across eligible States, we calculated a
data completion rate of 91.7 percent in the 2022
benefit year interim risk adjustment report, which
is an increase from the data completion rate of 90.8
percent in the 2021 benefit year interim risk
adjustment report. Ibid. We therefore continue to
believe issuers have had sufficient time to gain
experience with EDGE data submissions, and HHS–
RADV activities, such that it is appropriate to
reconsider and move forward with discontinuing
the LLPC list and non-EDGE claims policies
beginning with the 2022 benefit year of HHS–
RADV, as proposed.
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adjustment covered plans do not have
HCCs, and therefore, there are limited
opportunities for upcoding to exist in
the HHS-operated risk adjustment
program. As of the 2021 benefit year,
over 75 percent of enrollees of risk
adjustment covered plans in the
individual non-catastrophic risk pool
did not have a single HCC.150 In
addition, over time, we have
implemented risk adjustment model
specifications to mitigate the potential
for upcoding, such as the HCC
coefficient estimation groups, which
reduce risk score additivity within
disease groups and limit the sensitivity
of the risk adjustment models to
upcoding, and the interacted HCC
counts model specification, which is
restricted to enrollees with at least one
severe illness or transplant HCC, and
thus, reduces concerns of issuers
inflating overall HCC counts.151 152
Moreover, the HHS–RADV program
serves as an additional safeguard for
upcoding by auditing the issuer
submitted data, and we have not seen
conclusive evidence of upcoding on
EDGE. Regardless, we will continue to
monitor trends in the HHS-operated risk
adjustment program and utilize HHS–
RADV to validate the accuracy of data
submitted by issuers for use in
calculations under the State payment
transfer formula in the HHS risk
adjustment methodology.
Comment: A few commenters
supported discontinuing the use of the
LLPC list and the use of non-EDGE
claims due to concerns related to the
use of the supplemental file. One of
these commenters asserted that a small
150 See Table 4: Percent of Enrollees with HCCs,
2017–21 of the Summary Report on Permanent Risk
Adjustment Transfers for the 2021 Benefit Year
(July 19, 2022) available at https://www.cms.gov/
CCIIO/Programs-and-Initiatives/PremiumStabilization-Programs/Downloads/RA-ReportBY2021.pdf.
151 For example, diabetes diagnosis codes are
organized in a Diabetes hierarchy, consisting of
three CCs arranged in descending order of clinical
severity and cost, from CC 19 Diabetes with Acute
Complications to CC 20 Diabetes with Chronic
Complications to CC 21 Diabetes without
Complication. A person may have diagnosis codes
in multiple CCs within the Diabetes hierarchy, but
once hierarchies are imposed, that enrollee would
only be assigned the single highest HCC in the
hierarchy. To limit diagnostic upcoding by severity
in the Diabetes hierarchy, we have constrained the
three HCCs to have the same coefficient in risk
adjustment. As such, issuers cannot get more credit
towards their risk score by upcoding within the
Diabetes hierarchy.
152 As discussed in the 2021 RA White Paper, one
of our considerations for proposing the interacted
HCC count model specifications was our belief that
by limiting the interacted HCC counts factors to
certain severe illness and transplant HCCs, we
would restrict the scope for coding proliferation
and effectively mitigate the potential for gaming.
Page 59–60 https://www.cms.gov/files/document/
2021-ra-technical-paper.pdf.
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number of issuers use the supplemental
file for a disproportionate share of their
plan liability risk scores and
recommended prohibiting use of the
LLPC list and non-EDGE claim
documentation to validate supplemental
diagnoses. This commenter urged HHS
to limit the use of the supplemental file
to a percent of plan liability risk score
and asked HHS to reevaluate HCCs that
are more prevalent in the supplemental
file or are associated with lower-cost
individuals when added through the
supplemental file. This commenter also
asked HHS to clarify that discontinuing
the use of the LLPC list and non-EDGE
claims would end the use of
documentation for prior-year or nonEDGE encounters to support
supplemental HCCs on EDGE. Another
commenter supported the use of the
supplemental file and asserted that the
purpose of the supplemental diagnosis
files is to facilitate accurate and
complete coding.
Response: We agree with comments
that support the use of supplemental file
and generally clarify that issuers have
never been allowed to use the LLPC list
to support supplemental diagnosis
codes in supplemental file submissions.
The supplemental file allows issuers to
submit supplemental diagnosis codes
for the limited circumstances in which
relevant diagnoses may be missed or
omitted on a claim or during an
encounter submission, or in which
diagnoses requires deletion for a claim
accepted to the issuer’s EDGE server.
Issuers are required to follow the EDGE
Server Business Rules when submitting
diagnoses through the supplemental
file. Supplemental diagnosis codes must
be supported by medical record
documentation and comply with
standard coding principles and
guidelines, be linked to a previously
submitted and accepted EDGE server
medical claim, and be the result of
medical service(s) that occurred during
the data collection period for a given
benefit year.153 154
With these limitations in place, we do
not believe that it is necessary or
appropriate to limit supplemental file
submissions to a percentage of plan
liability risk score. Moreover, in
153 To see the complete list of processing rules for
the supplemental file, see Section 8.4 General
Supplemental Diagnosis Code File Processing Rules
of the EDGE Server Business Rules (ESBR) Version
22.0 (November 2022) available at https://
regtap.cms.gov/reg_librarye.php?i=3765.
154 While supplemental file diagnosis codes may
be linked to accepted EDGE server medical claims
that are not risk adjustment eligible, only
supplemental file diagnosis codes that are linked to
risk adjustment-eligible claims accepted by the
EDGE server will be used in risk adjustment and
HHS–RADV.
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response to comments, we analyzed
enrollee condition categories by
diagnosis source in the 2018, 2019 and
2020 HHS–RADV data, and we do not
have concerns of HCCs that are more
prevalent in the supplemental file or are
associated with lower-cost individuals
when added through the supplemental
file. Our analysis found that issuers
mostly use the supplemental file as a
way to provide more evidence of a
condition. We also did not propose and
are not finalizing any changes to the
framework applicable to the use or
submission of supplemental files to
issuers’ EDGE servers.
Furthermore, supplemental file
diagnoses cannot be linked to non-EDGE
claims as these claims are not on EDGE.
The discontinuation of the non-EDGE
claims policy means issuers will no
longer be able to submit claims that are
not accepted onto EDGE to validate
diagnoses for their IVA (or SVA, as
applicable), and the discontinuation of
the LLPC list means issuers will no
longer be able to submit prior-year
documentation for their IVA (or SVA, as
applicable). Both of these changes will
apply beginning with the 2022 benefit
year of HHS–RADV. In addition,
consistent with existing requirements,
the medical record documentation
submitted by the issuer for their IVA (or
SVA, as applicable) must meet standard
coding principles and guidelines for
abstraction of the diagnosis, to support
EDGE claims or supplemental diagnosis
codes.155
Comment: Several commenters
opposed discontinuing the use of the
LLPC list and non-EDGE claims due to
concerns that this would hinder issuers’
ability to accurately capture health care
costs and be appropriately compensated
for enrollee risk. One commenter stated
that the discontinuance of the LLPC list
and non-EDGE claims will limit their
ability to identify and coordinate the
most appropriate care for enrollees with
LLPC diagnoses. This commenter also
noted that the use of non-EDGE claims
improves the capture of diagnoses on
the LLPC list and suggested that the
removal of these policies contradicts the
purpose of the ACA to ensure coverage
of pre-exiting conditions. A few
commenters stated that the LLPC list
helps capture diagnoses that might
otherwise only be reflected in pharmacy
costs. One commenter stated that plans
are already losing out on capturing
155 45 CFR 153.630(b)(7). See, for example,
Section 9.2.6 Phase 5—Health Status Validation of
the 2021 Benefit Year PPACA HHS Risk Adjustment
Data Validation (HHS–RADV) Protocols (November
9, 2022) available at https://regtap.cms.gov/
uploads/library/HRADV_2021_Benefit_Year_
Protocols_5CR_110922.pdf.
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many chronic conditions because the
HHS-operated risk adjustment program
does not allow a plan to code conditions
based on medication. Another
commenter suggested that conditions
with high pharmacy costs that are not
recognized by the RXC model, such as
hemophilia, will only be captured by
the specialist responsible for the
condition and not by other provider
types like primary care physicians. This
commenter recommended studying
which high-cost conditions on the LLPC
list are not represented by the RXC
model, but have high costs associated
with them regardless of whether a
diagnosis is billed directly during the
course of a benefit year.
Response: We agree there are some
benefits associated with the LLPC list
and non-EDGE claims policy, that were
developed in the early years of HHS–
RADV. The list was designed to ease the
burden of medical record retrieval for
lifelong conditions by simplifying and
standardizing coding abstraction for IVA
and SVA entities as issuers were gaining
experience with the HHS–RADV
Protocols and addressing any lingering
challenges submitting claims to their
EDGE servers. It did not, however,
supersede or replace the rules for
submitting the diagnosis codes to EDGE
servers that are used to determine
enrollee risk. To capture enrollee risk,
issuers must submit enrollee claims data
and diagnosis codes to EDGE servers
following the EDGE Server Business
Rules and standard coding principles
and guidelines.156
Similarly, the use of non-EDGE claims
in HHS–RADV allowed issuers to
submit medical records associated with
non-EDGE claims to their IVA entity for
HCC validation purposes in certain
situations. This protocol was also
designed to ease the burden as issuers
were gaining experience with the HHS–
RADV Protocols and addressing any
lingering challenges submitting claims
to their EDGE servers. As noted in the
proposed rule, issuers consistently meet
data integrity criteria for their EDGE
data submissions.157 Therefore, HHS
does not believe that the discontinuance
of the use of the LLPC list or non-EDGE
claims in HHS–RADV will impact
issuers’ ability to accurately capture
health care costs and enrollee risk.
Further, HHS believes issuers have now
gained sufficient experience with the
HHS–RADV Protocols such that it is
also no longer necessary to continue
these policies beginning with the 2022
benefit year of HHS–RADV.
Discontinuing the use of the LLPC list
and non-EDGE claims should also not
impact providers’ or issuers’ ability to
coordinate the most appropriate care for
enrollees with LLPC diagnoses. If
anything, enrollees with bettercoordinated care should be more likely
to have their diagnoses documented on
a risk adjustment-eligible claim during
the benefit year, which should then be
captured in the issuer’s EDGE data
submission. Further, HHS does not
believe the removal of the LLPC list will
contradict the purpose of the ACA to
ensure coverage of pre-existing
conditions. Issuers should continue to
follow standard coding principles and
guidelines, which include guidelines
regarding the treatment of chronic
conditions, to capture diagnoses among
enrollees with pre-existing conditions.
We believe that updating the HHS–
RADV Protocols to discontinue the use
of the LLPC list and non-EDGE claims
beginning with the 2022 benefit year of
HHS–RADV aligns with the goals of the
HHS-operated risk adjustment program
and HHS–RADV, as issuers will have a
stronger incentive to encourage
enrollees to access care within the
benefit year so the risk can be captured
on a risk adjustment-eligible claim.
These updates to the HHS–RADV
Protocols will also address concerns
raised by some interested parties that
issuers could passively receive credit for
an HCC when the enrollee did not
receive care or require active treatment
during the applicable benefit year.
We also do not agree that
discontinuing the use of the LLPC list
will prevent the capture of diagnoses
that are being actively managed and are
associated with pharmacy costs. If a
patient with hemophilia or other
chronic conditions is receiving care or
active treatment, whether from a
specialist or primary care provider, the
diagnosis should be documented on a
claim submitted to the issuer’s EDGE
server. Additionally, we anticipate the
issuer would also be encouraging the
patient with such chronic conditions to
access care during the benefit year as
part of its general wellness, prevention,
or other health promotion activities.
We further note that our purpose for
adding RXCs to the risk adjustment
models was to impute missing
diagnoses and to indicate severity of
illness.158 These prescription drugbased classes for the HHS risk
adjustment adult models were
developed using empirical evidence on
frequencies and predictive power;
clinical judgment on relatedness,
specificity, and severity of RXCs; and
156 Ibid.
157 87
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professional judgment on incentives and
likely provider responses to the
classification system.159 We carefully
considered the selection of high-cost
drugs for inclusion to avoid overly
reducing the incentives for issuers to
strive for efficiency in prescription drug
utilization and the selection of drugs in
areas exhibiting a rapid rate of
technological change, as a drug class
that is associated with a specific, costly
diagnosis in one year may no longer be
commonly used for that condition the
next. As a result, there is a limited
number of prescription drug classes
included in the HHS risk adjustment
adult models, and the RXCs included
are select drug classes (and in some
cases, specific drugs) that are closely
associated with particular diagnoses.
The same medication may be prescribed
for multiple conditions, and therefore, a
condition cannot be substantiated based
solely on medication. To receive credit
for an HCC in HHS–RADV, the
condition needs to be linked to a risk
adjustment eligible claim that has been
accepted by the EDGE server with
appropriate medical record
documentation supporting diagnosis or
treatment regardless of whether that
HCC is also represented by an RXC in
the HHS risk adjustment adult models.
We continuously monitor, assess and
update the drugs for mapping to RXCs
in the adult risk adjustment models, and
we may further investigate drugs
associated with high-cost chronic
conditions that are not currently
represented by the RXC model in the
future.
Comment: Several commenters
opposed discontinuing the use of the
LLPC list and non-EDGE claims policy
due to concerns of provider coding
practices. Some of these commenters
stated that LLPC diagnoses are taken
into consideration by providers during
medical decision making, and are
sometimes treated, regardless of
whether they separately appear on a
claim. One commenter shared they have
observed an ongoing issue where
providers are not consistently capturing
the care provided for conditions
diagnosed in prior-year claims.
Other commenters noted that many
LLPCs are captured in medical history
or surgical history notes and may not be
included in any notes on current
treatment. One commenter asserted that
issuers with narrow networks or limited
out-of-network benefits have a great
ability to influence provider coding
practices and ensure all diagnoses are
recorded on claims. One commenter
urged HHS to consider regulatory
159 See,
for example, 81 FR 94075 through 94076.
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differences across States, and noted that
issuers in their State are required by
State law to cover behavioral treatment
for autism from some providers without
a referral from a diagnosing provider.
Response: The LLPC list and the nonEDGE claims policies are part of the
HHS–RADV Protocols and, as noted
above, were adopted in the early years
of HHS–RADV to streamline and
simplify the process while issuers
gained experience with HHS–RADV
activities and EDGE data submissions.
They do not, however, supplement or
replace the data submission
requirements or EDGE Server Business
Rules that issuers must follow to submit
claims to their EDGE servers, including
the rules governing the necessary
medical record documentation to
support each condition, diagnosis or
treatment on each claim. Consistent
with § 153.710(a) through (c), EDGE
Server Business Rules for the HHSoperated risk adjustment program that
govern EDGE data submissions direct
that EDGE server data submissions are
claim-based and follow standard coding
principles and guidelines.160 EDGE
Server Business Rules also require that
diagnosis codes submitted on risk
adjustment-eligible claims to the EDGE
server be related to medical services
performed during the patient’s visit.161
It is the issuer’s responsibility to
submit complete and accurate data for
each benefit year to their respective
EDGE server by the applicable
deadline.162 Issuers are also responsible
for helping their respective IVA entities
retrieve provider medical records and
documentation sufficient to support the
conditions, diagnosis and treatment
information submitted to the issuer’s
EDGE server for the applicable benefit
year.163 Issuers should work with their
providers to ensure they are following
correct coding guidelines to support
acceptance of medical claims and
diagnoses submitted to the issuer’s
EDGE server.164 We have not seen
160 See, for example, Table 49: ‘Standard Code
Sets and Sources’ of the EDGE Server Business
Rules (ESBR) Version 22.0 (November 2022)
available at https://regtap.cms.gov/uploads/library/
DDC-ESBR-110122-5CR-110122.pdf, which lists the
standard code sets and sources the EDGE server
uses to verify submitted codes during data
submission.
161 See, for example, Section 8.1 Guidance on
Diagnosis Code(s) Derived from Health Assessments
of the EDGE Server Business Rules (ESBR)
(November 1, 2022) available at https://
regtap.cms.gov/uploads/library/DDC-ESBR-1101225CR-110122.pdf.
162 See 45 CFR 153.610, 153.700, and 153.730.
163 See 45 CFR 153.630(b)(6). Also see 45 CFR
153.620(a) and (b).
164 See, for example, Table 49: ‘Standard Code
Sets and Sources’ of the EDGE Server Business
Rules (ESBR) Version 22.0 (November 2022)
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evidence that issuers with narrow
networks or limited out-of-network
benefits have a greater ability to
influence provider coding practices.
Issuers in the individual and small
group (including merged) markets are
allowed to develop provider networks
and out of network benefit designs in
accordance with applicable State and
Federal requirements. These types of
plans and benefit designs are subject to
the same rules and requirements of the
HHS-operated risk adjustment program
as all issuers, including but not limited
to the processes to conduct the HHS–
RADV audits. We also note that HCCs
associated with behavioral diagnoses
such as autism are not included on the
LLPC list. Additionally, we clarify that
HHS–RADV does consider and
accommodate differences across States,
such as with respect to provider
credentialing requirements. For
example, medical records submitted for
HHS–RADV must be from an acceptable
physician/practitioner specialty type
licensed to diagnose in that State and
must be authenticated by the provider.
We continue to consider ways to
improve the HHS–RADV audit process
to address State regulatory differences.
In the past, we recognized concerns
regarding limitations imposed under
certain States’ medical privacy laws that
could limit providers’ ability to furnish
mental and behavioral health records for
HHS–RADV purposes, and in response,
we updated § 153.630(b)(6) to permit
use of abbreviated mental or behavioral
health assessments for HHS–RADV in
situations where a provider is subject to
State (or Federal) privacy laws that
prohibit the provider from providing a
complete mental or behavioral health
record to HHS.165 HHS appreciates
regulatory differences across States
being brought to our attention and will
continue to consider these differences,
such as those associated with behavioral
diagnoses, when developing policies.
Issuers should also develop and
communicate with providers the
applicable policies and procedures that
providers will need to follow to support
the issuer’s business needs, including
the issuer’s submission of data to their
EDGE server and subsequent validation
available at https://regtap.cms.gov/uploads/library/
DDC-ESBR-110122-5CR-110122.pdf, which lists the
standard code sets and sources the EDGE server
uses to verify submitted codes during data
submission.
165 See the 2019 Payment Notice, 83 FR 16967
through 16969. Also see Section 9.2.6.7—
Acceptable Medical Record Source of the 2021
Benefit Year PPACA HHS Risk Adjustment Data
Validation (HHS–RADV) Protocols (November 9,
2022) available at https://regtap.cms.gov/uploads/
library/HRADV_2021_Benefit_Year_Protocols_5CR_
110922.pdf.
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of such data in HHS–RADV. If an issuer
is aware of incorrect or incomplete
coding practices by a provider, the
issuer should work to resolve the
incorrect or incomplete coding practices
with the provider and should not rely
on the use of the LLPC list or non-EDGE
claims to address provider coding
concerns.
We are discontinuing the use of the
LLPC list and the non-EDGE claims
beginning with the 2022 benefit year. As
such, beginning with the 2022 benefit
year of HHS–RADV, issuers will no
longer be able to submit non-EDGE
claims to their IVA entities to
supplement EDGE claims reviewed
during HHS–RADV and the LLPC list
will also no longer be available for use
by the IVA (and SVA) entities in HHS–
RADV. We will update the HHS–RADV
Protocols applicable to the 2022 benefit
year and beyond to capture these
changes. In addition, we continue to
encourage issuers to examine ways to
encourage providers to follow coding
guidelines and capture all relevant
diagnoses on claims and notes related to
current treatments.
Comment: Several commenters
expressed concern that discontinuing
the LLPC list and non-EDGE claims
policy in HHS–RADV would increase
issuer dependence on provider’s
medical document retrieval. Some of
these commenters disagreed with HHS
that issuers’ ability to capture
conditions is based on experience with
HHS–RADV or EDGE data submissions,
and instead asserted that accurately
capturing conditions depends on
documentation received from providers.
One of these commenters shared that
they request thousands of records every
year that they never receive. A few
commenters raised concerns of claims
processing time impacting issuers’
ability to submit diagnoses and claims
information to their EDGE servers, as
well as validate the data in HHS–RADV.
One of these commenters stated that the
inconsistent nature of chart retrieval
necessitates the continuation of the nonEDGE claims policy to allow issuers to
submit medical records associated with
a risk adjustment-eligible claim that
missed the deadline for EDGE
submission. Another one of these
commenters stated that a significant
number of HCCs are contained on
facility claims for services that are often
furnished late in the year, which leaves
issuers without enough time to include
them in EDGE data submissions.
Another one of these commenters noted
that claims data on EDGE is often
incomplete due to the nature of claims
adjudication processes and the use of
non-EDGE claims in HHS–RADV
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remedies this by allowing issuers to
capture conditions in HHS–RADV that
may have been missed in EDGE data
submissions.
Response: After consideration of
comments, HHS is discontinuing of the
use of the LLPC list and non-EDGE
claims in HHS–RADV beginning with
2022 benefit year HHS–RADV and
generally encourages issuers to work
with providers to improve processes for
medical record retrieval. Once the LLPC
list and non-EDGE claim policy are
discontinued, to receive credit for an
HCC in HHS–RADV, the condition will
need to be linked to a risk adjustment
eligible claim that is accepted by the
EDGE server with the appropriate
medical record documentation
supporting the diagnosis or treatment on
the claim. Issuers should develop and
communicate with providers the
policies and procedures they need to
comply with to support the issuer’s
complete submission of data to their
EDGE server and validation of that data
in HHS–RADV. If issuers are aware of
providers that are unresponsive to
documentation requests, the issuer
should work with those providers to
resolve the concerns. To assist issuers in
medical record retrieval, we created an
HHS–RADV Provider Medical Record
Request Memo on CMS letterhead,
available via the HHS–RADV Audit
Tool, that issuers can use when
engaging with providers to obtain
medical record documentation to
support HHS–RADV.166
Additionally, HHS allows issuers
until April 30th of the following
applicable benefit year, or until the next
applicable business day if April 30th
does not fall on a business day, to
submit all final claims, supplemental
diagnosis codes, and enrollment data for
the applicable benefit year of risk
adjustment to their respective EDGE
servers.167 The purpose of establishing
the EDGE data submission deadline
several months after the close of the
benefit year is to give issuers time to
collect all necessary claims information,
including facility claims, as we
recognize there are often hospital stays
that begin at the end of the year and
cross into the next.168
166 See Section 9.2.6.2—Medical Record and
Chart Retrieval of the 2021 Benefit Year PPACA
HHS Risk Adjustment Data Validation (HHS–
RADV) Protocols (November 9, 2022) available at
https://regtap.cms.gov/uploads/library/HRADV_
2021_Benefit_Year_Protocols_5CR_110922.pdf.
167 See § 153.730.
168 See, for example, the 2014 Payment Notice, 78
FR 15434 (explaining the EDGE data submission
deadline ‘‘ . . . provides for ample claims runout
to ensure that diagnoses for the benefit year are
captured, while providing HHS sufficient time to
run enrollee risk score, plan average risk, and
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25795
In addition, we recognize that issuers
may sometimes experience delays in the
submission of claims by providers and
facilities, as well as reprocess claims
submitted to their EDGE servers after
the applicable benefit year’s data
submission deadline. However, issuers
are not permitted to submit additional
data or correct data already submitted to
their EDGE servers after the applicable
benefit year’s deadline and remain
responsible for ensuring the
completeness and accuracy of the data
submitted to their EDGE servers by the
applicable data submission deadline.169
This deadline is applicable to all issuers
of risk adjustment covered plans to
create a level playing field and to create
a clear deadline for when the previous
benefit year needs to be closed out so
transfers can be calculated. Given that
HHS–RADV is an audit of data issuers
submit to EDGE, claims that miss the
deadline for EDGE submission should
generally not be used to support HCC
validation in HHS–RADV. As
previously explained, the LLPC list and
use of non-EDGE claims policies were
adopted in the early years of HHS–
RADV to help simplify and streamline
the process as issuers gained experience
with the HHS–RADV Protocols and
addressed any lingering challenges with
the EDGE data submission process. HHS
believes it is now appropriate to end
these policies as there is clear evidence
that issuers are now sufficiently familiar
with these operations. In fact, HHS
rarely observes claims processing times
preventing issuers from meeting
applicable EDGE data submission
deadlines, as all States were included in
interim risk adjustment summary
reports for the 2017 through 2021
benefit years.170 This means that, from
the 2017 through 2021 benefit years, all
issuers of risk adjustment covered plans
with 0.5 percent or more of market share
submitted at least 90 percent of a full
year of medical claims to their EDGE
servers by the applicable deadline, as
well as met data quality evaluation
checks. HHS recognizes there can be
challenges in the document retrieval
process and continues to welcome
feedback from stakeholders on ways
HHS can further support issuers with
document retrieval for HHS–RADV.
payments and charges calculations and meet the
June 30 deadline described at the redesignated
§ 153.310(e) . . .’’)
169 See, for example, the Evaluation of EDGE Data
Submissions for 2022 Benefit Year EDGE Server
Data Bulletin (October 25, 2022), available at
https://www.cms.gov/cciio/resources/regulationsand-guidance/downloads/edge_2022_qq_
guidance.pdf.
170 See supra note 14947.
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Comment: Several commenters
recommended maintaining the LLPC list
in HHS–RADV and extending it to also
apply to EDGE data submissions. A few
commenters raised concerns about
conflicting rules between HHS–RADV
Protocols and the standard coding
principles and guidelines that issuers
must follow to submit data to their
EDGE servers. One of these commenters
noted AHA Coding Clinic guidance
disallowing abstraction of chronic
conditions from past medical history
and supported HHS alignment of the
EDGE Server Business Rules and the
HHS–RADV Protocols, including with
respect to the treatment of chronic
conditions found in the past medical
history section of the medical record.
Another commenter stated the need for
greater clarity to ensure consistent
coding guidelines across providers,
issuers and IVA entities, and asserted
that discontinuing the use of LLPC list
would exacerbate inconsistent
interpretations of standard coding
guidelines across issuers and IVA
entities. This commenter stated that
Coding Clinic Guidance has increased
confusion of the standard coding
guidelines and urged HHS to intervene
with the Coding Clinic process and to
not relinquish authority to the Coding
Clinic.171 This commenter also noted
that the LLPC list is widely appreciated
by IVA entities that lack coding
experience and knowledge.
Response: HHS is discontinuing the
use of the LLPC list and non-EDGE
claims in HHS–RADV beginning with
the 2022 benefit year HHS–RADV. This
change does not change coding
guidance for the HHS-operated risk
adjustment program or the EDGE Server
Business Rules.172 Issuers are still
required to follow standard coding
principles and guidelines when
submitting data to EDGE.
As previously explained, HHS created
the LLPC list in the early years of HHS–
RADV to assist with coding abstraction
for IVA and SVA entities as issuers
gained experience with HHS–RADV and
addressed any lingering EDGE data
submission challenges, but the LLPC list
171 See, for example, ICD–10–CM/PCS Coding
Clinic, Second Quarter 2022, Page 30 to 31,
Reporting Additional Diagnoses in Outpatient
Setting.
172 When abstracting a diagnosis, HHS–RADV
interested parties should reference, in sequential
order, the conventions in the ICD–10–CM and
ICD10–PCS classification, ICD–10–CM Official
Coding Guidelines for Coding and Reporting, the
AHA Coding Clinic. See, for example, Section
9.2.6.3—Medical Record Review and Diagnosis
Abstraction of the 2021 Benefit Year PPACA HHS
Risk Adjustment Data Validation (HHS–RADV)
Protocols (November 9, 2022) available at https://
regtap.cms.gov/uploads/library/HRADV_2021_
Benefit_Year_Protocols_5CR_110922.pdf.
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was never a supplement to or
replacement for the EDGE Server
Business Rules. As such, we do not
believe it is appropriate to extend the
use of the LLPC list to EDGE data
submissions. The HHS-operated risk
adjustment program relies on EDGE
server data to identify risk incurred by
the issuer, measured using the issuer’s
claims from only the current benefit
year. Extending the use of the LLPC list
to EDGE data submissions could result
in an issuer receiving credit for risk that
they did not incur in the benefit year,
and thereby create an EDGE server data
integrity issue. Rather, we believe that
issuers have now gained sufficient
experience with HHS–RADV and EDGE
data submission processes such that it is
appropriate at this time, to promote
consistency between the EDGE Server
Business Rules and the HHS–RADV
Protocols, to discontinue the use of the
LLPC list beginning in the 2022 benefit
year of HHS–RADV. The EDGE Server
Business Rules require issuers to
comply with standard coding principles
and guidelines, which include any
guidelines regarding the treatment of
chronic conditions found in the past
medical history section of the medical
record.173
We affirm that, with the removal of
the LLPC list, IVA entities will no
longer be permitted to rely on the
treatment of chronic conditions found
in the past medical history section of
the medical record to validate enrollee
health status. This policy change, along
with the discontinuation of the nonEDGE claims policy, will apply
beginning with the 2022 benefit year of
HHS–RADV. Consistent with the IVA
requirements in § 153.630(b) and the
applicable standards established by
HHS, IVA entities will continue to be
required to follow the ICD–10–CM and
ICD–10 PCS classifications, Official
Guidelines for Coding and Reporting
and the American Hospital Association
(AHA) Coding Clinic, along with
professional judgment, to abstract
diagnoses during health status
validation.174 Advice published in
Coding Clinic does not replace the
instruction in the ICD–10–CM and ICD–
173 See, for example, Table 49: ‘Standard Code
Sets and Sources’ of the EDGE Server Business
Rules (ESBR) Version 22.0 (November 2022)
available at https://regtap.cms.gov/reg_
librarye.php?i=3765, which lists the standard code
sets and sources the EDGE server uses to verify
submitted codes during data submission.
174 See § 153.630(b)(2). Also see, for example,
section 9.2.6 Phase 5—Health Status Validation of
the HHS of the 2021 Benefit Year PPACA HHS Risk
Adjustment Data Validation (HHS–RADV) Protocols
(November 9, 2022) available at https://
regtap.cms.gov/uploads/library/HRADV_2021_
Benefit_Year_Protocols_5CR_110922.pdf.
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10–PCS classification or the Official
Guidelines for Coding and Reporting.
HHS cannot provide specific coding
guidance for the purposes of HHS–
RADV, and it is not our role to resolve
disputes between coding clinic
guidance.175 176 We believe that it is
important for coding clinics to remain
independent of HHS’ influence to
promote consistency and ensure
diagnosis validation in accordance with
industry standards. Although the SVA
entity performs a second validation
audit on a subsample of IVA Entity
submission data to verify the IVA
findings, issuers must ensure that their
IVA Entities are reasonably capable of
performing an IVA according to the
requirements and standards established
by HHS, which includes validating the
risk score of each enrollee in the sample
by validating medical records according
to industry standards for coding and
reporting.177
d. HHS–RADV Discrepancy and
Administrative Appeals Process
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78245), we proposed
to shorten the window under
§ 153.630(d)(2) for issuers to confirm the
findings of the SVA (if applicable),178 or
file a discrepancy report, to within 15
calendar days of the notification by
HHS, beginning with the 2022 benefit
year of HHS–RADV. To effectuate this
proposed amendment, we proposed the
following four revisions to § 153.630(d):
(1) remove the reference to the
calculation of the risk score error rate as
a result of HHS–RADV; (2) revise
§ 153.630(d)(2) to establish that the
attestation and discrepancy reporting
window for the SVA findings (if
applicable) will be within 15 calendar
days of the notification by HHS of the
SVA findings (if applicable), rather than
the current 30-calendar-day reporting
window; (3) redesignate current
paragraph (d)(3) as paragraph (d)(4); and
(4) add a new § 153.630(d)(3) to
175 On behalf of HHS, the Center for Consumer
Information and Insurance Oversight (CCIIO), a
component within CMS, performs functions related
to the operation of the HHS–RADV program and
promulgates standards governing the establishment
by issuers of the EDGE server that is used for the
HHS risk adjustment data collection process.
176 See Section 9.2.6.11—Medical Record
Abstraction of the HHS of the 2021 Benefit Year
PPACA HHS Risk Adjustment Data Validation
(HHS–RADV) Protocols (November 9, 2022)
available at https://regtap.cms.gov/uploads/library/
HRADV_2021_Benefit_Year_Protocols_5CR_
110922.pdf.
177 See § 153.630(b)(2) and (b)(7)(iv).
178 Only those issuers who have insufficient
pairwise agreement between the IVA and SVA
receive SVA findings. See 84 FR 17495. Also see 86
FR 24201.
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maintain the current attestation and
discrepancy reporting window for the
calculation of the risk score error rate,
which provides that within 30 calendar
days of the notification by HHS of the
calculation of the risk score error rate,
in the manner set forth by HHS, an
issuer must either confirm or file a
discrepancy report to dispute the
calculation of the risk score error rate as
a result of HHS–RADV. In addition, we
proposed to make corresponding
amendments to the cross-references to
§ 153.630(d)(2) that appear in
§§ 153.710(h)(1) and 156.1220(a)(4)(ii),
to add a reference to paragraph (d)(3).
We sought comment on this proposal
and the accompanying conforming
amendments.
After reviewing the public comments,
we are finalizing this provision as
proposed. We summarize and respond
to public comments received on the
proposal and accompanying proposed
amendments to shorten the window to
15 calendar days to confirm the SVA
findings or file a discrepancy report,
under § 153.630(d)(2), beginning with
the 2022 benefit year HHS–RADV
below.
Comment: Some commenters
generally supported shortening the
window to confirm the SVA findings or
file a discrepancy report to dispute the
SVA findings to within 15 calendar days
of the notification by HHS beginning
with the 2022 benefit year HHS–RADV.
Other commenters stated that
shortening the window would have a
positive impact on reporting HHS–
RADV adjustments for medical loss ratio
(MLR) by supporting more timely
reporting of these amounts. One
commenter stated that, based on their
experience, 15-calendar days provides
sufficient time to respond to the SVA
findings notification from HHS.
However, some commenters were
opposed to the proposal to shorten the
SVA attestation and discrepancy
reporting timeframe from 30 to 15 days
and instead recommended maintaining
the existing 30-calendar day window.
These commenters stated that they
believed that the proposed 15-day
timeline would not provide adequate
time for issuers to complete a thorough
review of the SVA findings. Another
commenter suggested that the
timeframes could be shortened
elsewhere in the HHS–RADV process to
keep the 30-day timeframe for the SVA
attestation and discrepancy reporting
process. This commenter also noted it
would be helpful for issuers to receive
their HHS–RADV error rates sooner for
use in pricing.
A few commenters asserted that a 15calendar day window would create
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internal challenges and operational
burden in cases that require data
extraction or information from clinical
staff. One of these commenters noted
that diverting the attention of Medical
Directors to reviewing SVA findings
would strain care and utilization
management services, and thus,
negatively impact members.
One commenter stated that shortening
the window may cause issuers to appeal
matters preemptively that would not
have otherwise been appealed. This
commenter also disagreed with HHS’
rationale that the shortened window is
appropriate because the SVA finding
attestation and discrepancy reporting
process is limited to the small number
of issuers that have insufficient pairwise
agreement between the IVA and SVA.
The commenter indicated when an
issuer receives SVA findings, an issuer’s
IVA results may raise material concerns
that could impact other issuers in HHS–
RADV, including the reporting of
discrepancies due to insufficient
pairwise agreement that have the
potential of having substantial financial
impacts and the issuer’s risk score error
rate calculation.
Response: After consideration of
comments received, we are finalizing
the proposal to shorten the SVA
attestation and discrepancy reporting
window from 30 to 15 calendar days as
proposed. We are also finalizing the
conforming amendments to
§§ 153.630(d), 153.710(h)(1) and
156.1220(a)(4)(ii) to implement this
change to the SVA attestation and
discrepancy reporting window as
proposed. We agree with commenters
that this change will help to support
timely reporting of the HHS–RADV
adjustments to risk adjustment State
payment transfers in issuers’ MLR
reports.
We also believe that shortening the
attestation and discrepancy reporting
window related to SVA results will
improve HHS’ ability to finalize SVA
findings results prior to release of the
applicable benefit year HHS–RADV
Results Memo and the Summary Report
of Risk Adjustment Data Validation
Adjustments to Risk Adjustment
Transfers for the applicable benefit year
and prior to the MLR Reporting
deadline. These reports are timesensitive publications that cannot be
developed until all SVA discrepancies
are resolved and SVA findings are
finalized. Our experience is also similar
to the commenter who shared their
perspective that a 15-day window is
sufficient time to respond to the SVA
findings notification from HHS. We
further note that a 15-calendar-day SVA
attestation and discrepancy reporting
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window is consistent with the IVA
sample and EDGE attestation and
discrepancy reporting windows at
§§ 153.630(d)(1) and 153.710(d),
respectively.
Although we appreciate the concerns
expressed by some commenters,
especially the potential internal
challenges, operational burden, and
potential downstream impacts on
members, we believe the positive effects
to reporting, combined with experience
suggesting the 15-day window is
feasible, provide sufficient
countervailing support to shortening the
window. HHS continues to believe that
shortening the SVA window will benefit
issuers by facilitating the issuance of
more timely reports that can be used in
pricing, including improving HHS’
ability to finalize SVA findings results
prior to release of the applicable benefit
year HHS–RADV Results Memo and the
Summary Report of Risk Adjustment
Data Validation Adjustments to Risk
Adjustment Transfers for the applicable
benefit year.
We appreciate the request to shorten
other timeframes in the HHS–RADV
process to maintain the 30-day window
for the SVA attestation and discrepancy
reporting window, and while HHS
continually considers process
improvements to find more efficient
ways to conduct HHS–RADV, we do not
believe there are other areas we could
shorten timelines for the processes at
this time. These comments are also
outside the scope of this rulemaking as
we did not propose shortening any other
HHS–RADV timelines in the proposed
rule.
Additionally, as previously explained,
the shortened window for the SVA
attestation and discrepancy reporting
window generally impacts a limited
number of issuers. That is, our
experience indicates that few issuers
have insufficient pairwise agreement
between the IVA and SVA such that
they receive SVA findings; therefore,
only few issuers would even have the
option to file an SVA discrepancy. Of
the issuers that receive SVA findings,
our experience is that only a subset will
actually file a discrepancy, and
therefore, based on this experience,
HHS believes only a very small number
of issuers will be impacted by this
change in future benefit years of HHS–
RADV. Because a very small number of
issuers will be impacted and the SVA
discrepancy window will still be
available for those issuers to raise
material concerns, including those that
could impact other issuers in HHS–
RADV, the shortened SVA attestation
and discrepancy reporting window
mitigates concerns regarding financial
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impacts and the issuer’s risk score error
rate calculation.
We also do not believe that shortening
the SVA attestation and discrepancy
reporting window may cause issuers to
appeal matters preemptively. Issuers are
bound by the requirements of
§ 156.1220, specifically paragraph
(a)(4)(ii) which provides that
notwithstanding § 156.1220(a)(1), a
reconsideration with respect to a
processing error by HHS, HHS’s
incorrect application of the relevant
methodology, or HHS’s mathematical
error may be requested only if, to the
extent the issue could have been
previously identified, the issuer notified
HHS of the dispute through the
applicable process for reporting a
discrepancy set forth in §§ 153.630(d)(2)
and (3), 153.710(d)(2), and
156.430(h)(1), it was so identified and
remains unresolved.
Finally, the shortened window also
does not change the underlying burden
for an issuer to attest or file a
discrepancy of its SVA results as those
tasks generally remain the same.
Instead, this change only relates to the
timeframe to complete these activities,
but the existing overall burden hours to
complete these tasks remains
unchanged.179 We recognize this change
may have a short-term impact, such as
diverting the attention of Medical
Directors to reviewing SVA findings on
a shorter timeline, but we expect the
same staff and resources would
generally be involved. Therefore, we do
not expect this change will result in
significant long-term downstream
impacts to members. For all of the
reasons outlined above, we believe the
benefits of the shortened attestation and
discrepancy reporting window for an
issuer to attest to or file a discrepancy
for its SVA findings under new
§ 153.630(d)(2) from 30 to 15 calendar
days outweigh the reasons to maintain
the 30-day window.
8. EDGE Discrepancy Materiality
Threshold (§ 153.710)
We are finalizing, as proposed, the
regulatory amendment from the HHS
Notice of Benefit and Payment
Parameters for 2024 proposed rule (87
FR 78206, 78247) to the EDGE
discrepancy materiality threshold set
forth at § 153.710(e) to align it with the
final policy adopted in preamble in part
2 of the 2022 Payment Notice.180 We are
also finalizing, as proposed, the
conforming amendment to
179 For information on the associated burdens, see
OMB Control Number 0938–1155 (CMS–10401—
‘‘Standards Related to Reinsurance, Risk Corridors,
and Risk Adjustment).
180 See 86 FR 24194 through 24195.
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§ 153.710(h)(1) to add a reference to new
§ 153.630(d)(3).
As we explained in the proposed rule,
the EDGE discrepancy materiality
threshold final policy was intended to
reflect that the amount in dispute must
equal or exceed $100,000 or one percent
of the total estimated transfer amount in
the applicable State market risk pool,
whichever is less. HHS generally only
takes action on reported material EDGE
discrepancies that harm other issuers in
the same State market risk pool and,
based on HHS’ experience with prior
benefit years, EDGE discrepancies that
are less than a fraction of total State
market risk pool transfers are unlikely to
materially impact other issuers. We
therefore proposed to amend
§ 153.710(e) to align with this final
policy. We also proposed to amend
§ 153.710(h)(1) to add a reference to new
proposed § 153.630(d)(3) to align with
the changes discussed in section
III.A.7.d. of this preamble (HHS–RADV
Discrepancy and Administrative
Appeals Process), to shorten the SVA
attestation and discrepancy reporting
period. We sought comment on the
proposed amendments to § 153.710.
After reviewing the public comments,
we are finalizing these amendments as
proposed. The following is a summary
of the comment we received and our
response.
Comment: One commenter supported
the proposal to update the EDGE
discrepancy materiality threshold
captured in § 153.710(e) to reflect that
the amount in dispute must equal or
exceed $100,000 or one percent of the
total estimated transfer amount in the
applicable State market risk pool,
whichever is less. This commenter also
asked that HHS consider applying the
same threshold to reporting
discrepancies because it would allow
issuers to discontinue reporting minor
discrepancies, which requires
significant time and resources.
Response: We are finalizing the
amendment to the EDGE discrepancy
materiality threshold such that the
amount in dispute must equal or exceed
$100,000 or one percent of the total
estimated transfer amount in the
applicable State market risk pool,
whichever is less, as proposed. We did
not propose and are not finalizing a
threshold for reporting EDGE
discrepancies. Issuers must continue to
report all discrepancies to HHS for HHS
to determine whether they are material
and actionable.181
181 See § 153.710(d)(2). Also see 83 FR 16970
through 16971. See also, for example, CMS. (2022,
October 25). Evaluation of EDGE Data Submissions
for the 2022 Benefit Year. https://www.cms.gov/
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We are also finalizing the conforming
amendment to add a reference to the
new § 153.630(d)(3) to the introductory
text in § 153.710(h)(1). For a discussion
of the comments related to the
shortening of the SVA window to
confirm, or file a discrepancy for SVA
findings to 15 days, see the preamble
discussion in section III.A.7.d. of this
rule (HHS–RADV Discrepancy and
Administrative Appeals Process).
B. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
1. Exchange Blueprint Approval
Timelines (§ 155.106)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78247), we proposed
a change to address the Exchange
Blueprint approval timelines for States
transitioning from either a Federallyfacilitated Exchange (FFE) to a Statebased Exchange on the Federal Platform
(SBE–FP) or to a State Exchange, or from
an SBE–FP to a State Exchange. At
§ 155.106(a)(3) (for FFE or SBE–FP to
State Exchange transitions) and (c)(3)
(for FFE to SBE–FP transitions), we
proposed to revise the current timelines
by which a State must have an approved
or conditionally approved Exchange
Blueprint to require that States gain
approval prior to the date on which the
Exchange proposes to begin open
enrollment either as an State Exchange
or SBE–FP. The current regulatory
timeline by which a State must have an
approved or conditionally approved
Exchange Blueprint was finalized in the
2017 Payment Notice (81 FR 12203,
12241 through 12242). Based on our
experience with Exchange transitions
since then, we stated in the proposed
rule (87 FR 78206, 78247) that we
believed the current timeline by which
a State must gain Exchange Blueprint
approval did not sufficiently support
States’ need to work with HHS to
finalize and submit an approvable
Exchange Blueprint.
Section 155.106 currently requires
States to have an approved or
conditionally approved Exchange
Blueprint 14 months prior to an SBE–FP
to State Exchange transition in
accordance with paragraph (a)(3) and
three months prior to a FFE to SBE–FP
transition in accordance with paragraph
(c)(3). The submission and approval of
Exchange Blueprints is an iterative
process that generally takes place over
the course of 15 months prior to a
State’s first open enrollment with a
cciio/resources/regulations-and-guidance/
downloads/edge_2022_qq_guidance.pdf.
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State Exchange, or 3 to 6 months prior
to a State’s first open enrollment with
an SBE–FP. The Exchange Blueprint
serves as a vehicle for a State to
document its progress toward
implementing its intended Exchange
operational model. HHS’ review and
approval of the Exchange Blueprint
involves providing substantial technical
assistance to States as they design,
finalize, and implement their Exchange
operations. The transition from a FFE to
a SBE–FP or State Exchange, or SBE–FP
to State Exchange, involves significant
collaboration between HHS and States
to develop plans and document
readiness for the State to transition from
one Exchange operational model and
information technology infrastructure to
another. These activities include the
State completing key milestones,
meeting established deadlines, and
implementing contingency measures.
Finalizing our proposal to require
Exchange Blueprint approval or
conditional approval prior to an
Exchange’s first open enrollment period
will allow States the additional time
and flexibility if needed, that, in our
experience, is necessary to support the
development and finalization of an
approvable Exchange Blueprint, as well
as for completion of the myriad of
activities necessary to transition QHP
enrollees in the State to a new Exchange
model and operator. We are of the view
that the more generous proposed
timeline is appropriate and necessary to
support a State’s submission of an
approvable Exchange Blueprint. The
proposed timeline is more protective of
the significant investments of personnel
time and State tax dollars a State must
make to stand up a new Exchange, by
providing the State a timeline that
reflects the realities of the time
necessary to develop an approvable
Exchange Blueprint that shows the
Exchange will be ready to support the
State’s current and future QHP enrollees
and applicants for QHP enrollment.
We sought comment on this proposal,
including comments related to how
transitioning State Exchanges could
provide greater transparency to
consumers regarding the Exchange
Blueprint approval process.
After reviewing the public comments,
we are finalizing this provision as
proposed. We summarize and respond
to public comments received on the
proposed Exchange Blueprint approval
timelines at § 155.106 below.
Comment: Multiple commenters
supported the proposal that States
receive approval on their Blueprint
applications to operate a State Exchange
or SBE–FP prior to their first open
enrollment (rather than 14 months or 3
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months before, as previously
applicable), noting that the additional
time for States to obtain approval of its
Blueprint application will help States
better implement State Exchange or
SBE–FP requirements and prepare for
State Exchange or SBE–FP operations.
Response: We agree that revising the
current timelines by which a State must
have an approved or conditionally
approved Exchange Blueprint as
proposed will permit States additional
time to implement State Exchange or
SBE–FP requirements.
Comment: One commenter suggested
that States transitioning to State
Exchanges could aim to provide greater
transparency to consumers regarding the
Blueprint approval process by adding
information to their board meetings and
making consumers aware of those
meetings.
Response: We acknowledge this
suggestion that States transitioning to
State Exchanges should aim to provide
greater transparency to consumers,
however, this is outside the scope of
this proposal.
Comment: A few commenters
opposed the proposal, stating that
without assurance of HHS’ approval of
the transition per current timelines,
impacted interested parties in States
transitioning to State Exchanges or SBE–
FPs could face associated
implementation risks. These
commenters noted that issuers, as an
example, require adequate time to
implement operational changes
necessary to accommodate a State
transitioning to a State Exchange, such
as changes to information technology
systems, member communications, and
marketing materials, with the goal of
minimizing consumer confusion.
Response: We recognize the
importance of interested parties, such as
issuers and agents and brokers, in a
State’s transition to either a State
Exchange or SBE–FP. The revision to
the current timelines in § 155.106(a)(3)
and (c)(3) does not circumvent the
substantial technical assistance we
provide to States as they design,
finalize, and implement their Exchange
operations. This involves significant
collaboration between HHS and States
to develop plans and document
readiness for the State to transition from
one Exchange operational model and
information technology infrastructure to
another. Moreover, as part of a State’s
transition, States are required to consult
on an ongoing basis with interested
parties, under § 155.130, to make them
aware of transitioning activities and
progress, with the goal of maximizing a
seamless consumer experience. As such,
we expect a State transitioning to a State
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Exchange or SBE–FP to coordinate well
in advance with interested parties
around its progress and the likelihood of
implementing the applicable Exchange
model operations for its intended first
year of open enrollment.
2. Navigator, Non-Navigator Assistance
Personnel, and Certified Application
Counselor Program Standards
(§§ 155.210, 155.215, and 155.225)
a. Repeal of Prohibitions on Door-toDoor and Other Direct Contacts
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78248), we proposed
to repeal the provisions that currently
prohibit Navigators, certified
application counselors, non-Navigator
assistance personnel in FFEs, and nonNavigator assistance personnel in
certain State Exchanges funded with
section 1311(a) Exchange Establishment
grants (collectively, Assisters) from
going door-to-door or using other
unsolicited means of direct contact to
provide enrollment assistance to
consumers. This proposal will eliminate
barriers to coverage access by
maximizing pathways to enrollment.
Section 1311(d)(4)(K) and 1311(i) of
the ACA direct all Exchanges to
establish a Navigator program. Navigator
duties and requirements for all
Exchanges are set forth in section
1311(i) of the ACA and § 155.210.
Section 1321(a)(1) of the ACA directs
the Secretary to issue regulations that
set standards for meeting the
requirements of title I of the ACA, for,
among other things, the establishment
and operation of Exchanges. Under
section 1321(a)(1) of the ACA, the
Secretary issued § 155.205(d) and (e),
which authorizes Exchanges to perform
certain consumer service functions in
addition to the Navigator program, such
as the establishment of a non-Navigator
assistance personnel program. Section
155.215 establishes standards for nonNavigator assistance personnel in FFEs
and in State Exchanges if they are
funded with section 1311(a) Exchange
Establishment grant funds.182 Section
155.225 establishes the certified
application counselor program as a
consumer assistance function of the
Exchange, separate from and in addition
to the functions described in
§§ 155.205(d) and (e), 155.210, and
155.215.
Assisters are certified and trusted
community partners who provide free
and impartial enrollment assistance to
consumers. They conduct outreach and
182 At this time, no State Exchanges are funded
with section 1311(a) Exchange Establishment grant
funds.
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education to raise awareness about the
Exchanges and other coverage options.
Their mission focuses on assisting the
uninsured and other underserved
communities to prepare applications,
establish eligibility and enroll in
coverage through the Exchanges, among
many other things. The regulations
governing these Assisters prohibit them
from soliciting any consumer for
application or enrollment assistance by
going door-to-door or through other
unsolicited means of direct contact,
including calling a consumer to provide
application or enrollment assistance
without the consumer initiating the
contact, unless the individual has a preexisting relationship with the individual
Assister or designated organization and
other applicable State and Federal laws
are otherwise complied with. We have
interpreted this prohibition in the 2015
Market Standards final rule (79 FR
30240, 30284 through 30285) as still
permitting door-to-door and other
unsolicited contacts to conduct general
consumer education or outreach,
including to let the community know
that the Assister’s organization is
available to provide application and
enrollment assistance services to the
public.
The existing regulations prohibiting
Navigators (at § 155.210(d)(8)), nonNavigator assistance personnel (through
the cross-reference to § 155.210(d) in
§ 155.215(a)(2)(i)), and certified
application counselors (at
§ 155.225(g)(5)) were initially finalized
in the 2015 Market Standards final rule
(79 FR 30240). At the time that HHS
proposed and finalized the 2015 Market
Standards rule in 2014, the Exchanges
were just beginning to establish
operations. At the time, we believed that
prohibiting door-to-door solicitation and
other unsolicited means of direct
consumer contact by an Assister for
application or enrollment assistance
would ensure that Assisters’ practices
were sufficiently protective of the
privacy and security interests of the
consumers they served. We also
believed that prohibiting unsolicited
means of direct contacts initiated by
Assisters was necessary to provide
important guidance and peace of mind
to consumers, especially when they
were faced with questions or concerns
about what to expect in their
interactions with individuals offering
Exchange assistance.183
However, under existing regulations,
Navigators and other non-Navigator
assistance personnel in FFE States are
permitted to conduct outreach to
consumers using consumer information
183 79
FR 30240.
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provided to them by an FFE. The Health
Insurance Exchanges (HIX) System of
Records Notice,184 Routine Use No. 1
provides that the FFEs may share
consumer information with HHS
grantees, including Navigators and other
non-Navigator assistance personnel in
FFE States, who have been engaged by
HHS to assist in an FFE authorized
function, which includes conducting
outreach to persons who have been
redetermined ineligible for Medicaid/
CHIP. In this limited circumstance, an
FFE may share with Navigators and
other non-Navigator assistance
personnel in FFE States consumer
information that the FFE receives from
Medicaid/CHIP agencies once a
consumer has been redetermined
ineligible for Medicaid/CHIP for the
Navigators and other non-Navigator
assistance personnel to conduct
outreach to such consumers regarding
opportunities for coverage through the
FFEs.
Since finalizing the 2015 Market
Standards final rule, we have enacted a
number of measures designed to ensure
that Assisters are properly safeguarding
the personally identifiable information
of all consumers they assist. As part of
their annual certification training, we
require Assisters to complete a course
on privacy, security, and fraud
prevention standards. Further, we
require Assisters to obtain a consumer’s
consent before discussing or accessing
their personal information (except in the
limited circumstance described above)
and to only create, collect, disclose,
access, maintain, store and/or use
consumer personally identifiable
information to perform the functions
that they are authorized to perform as
Assisters in accordance with
§§ 155.210(b)(2)(iv) and (c)(1)(v),
155.225(d)(3), and 155.215(b)(2), as
applicable. In addition, now that the
Exchanges and their Assister programs
have been in operation for almost 10
years, Assisters have more name
recognition and consumer trust within
the communities the Assisters serve.
Accordingly, we believe that our
previous concerns related to consumers’
privacy and security interests and
consumers not knowing what to expect
when interacting with Assisters have
been sufficiently mitigated with the
measures we have enacted such that a
blanket prohibition on unsolicited
direct contact of consumers by Assisters
for application or enrollment assistance
is no longer necessary.
The prohibition on door-to-door
enrollment assistance places additional
burden on consumers and Assisters to
184 78
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make subsequent appointments to
facilitate enrollment, which creates
access barriers for consumers to receive
timely and relevant enrollment
assistance. Additionally, this
prohibition could impede the
Exchanges’ potential to reach a broader
consumer base in a timely manner,
reduce uninsured rates, and increase
access to health care. We believe it is
important to be able to increase access
to coverage for those whose ability to
travel is impeded due to mobility,
sensory or other disabilities, who are
immunocompromised, and who are
limited by a lack of transportation.
Consistent with the proposal to
remove the general prohibition on doorto-door and other direct outreach by
Navigators, we proposed to delete
§ 155.210(d)(8). The repeal of
§ 155.210(d)(8) will remove the general
prohibition on door-to-door and other
direct outreach by non-Navigator
assistance personnel in FFEs and in
State Exchanges if funded with section
1311(a) Exchange Establishment grants,
as § 155.215(a)(2)(i) requires such
entities to comply with the prohibitions
on Navigator conduct set forth at
§ 155.210(d). Likewise, we proposed to
repeal § 155.225(g)(5), which currently
imposes the general prohibition against
door-to-door and other direct contacts
on certified application counselors.
As we explained in the proposed rule
(87 FR 78249), we are now of the view
that repealing restrictions on an
Exchange’s ability to allow Navigators,
non-Navigator assistance personnel, and
certified application counselors to offer
application or enrollment assistance by
going door-to-door or through other
unsolicited means of direct contact is a
positive step that will enable Assisters
to reach a broader consumer base in a
timely manner—helping to reduce
uninsured rates and health disparities
by removing underlying barriers to
accessing health coverage.
We sought comment on this proposal.
After reviewing the public comments,
we are finalizing this provision as
proposed. We summarize and respond
to public comments received on the
proposed repeal of the provisions that
prevent Assisters from going on door-todoor or using other unsolicited means of
direct contact to provide enrollment
assistance to consumers below.
Comment: The vast majority
commenters supported this proposal,
stating that it will help reduce
uninsured rates and health disparities;
improve health literacy in rural and
underserved communities; and reduce
burden on consumers, especially those
experiencing social determinants of
health that negatively affect health care
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access and quality (for example, lack of
transportation) or have inflexible job
schedules; and immunocompromised
individuals. Commenters also
frequently noted that Navigators provide
a key role in Medicaid and CHIP
enrollments and have trusted
relationships in the community. Health
Centers commented that they
appreciated the increased flexibility to
go out into the community and reach
patients who need the most support.
Lastly, commenters stated that the
proposal was particularly important to
maintaining health insurance
enrollments in light of Medicaid
unwinding.
Response: We agree that that door-todoor consumer education, outreach, and
enrollment can be a useful and effective
method for addressing the concerns
raised by commenters. We appreciate
the overwhelming support for this
proposal and agree that it will help
Assisters continue to build trusted
relationships in the community, which
may result in an overall reduction in
uninsured rates and reduce health
disparities.
Comment: Several commenters
recommended reinstating previous
requirements to have two Navigator
organizations in each State, with one
being a local trusted non-profit that
maintains a principal place of business
within their Exchange service area.
Response: We agree that having two
Navigator organizations in each State to
provide face-to-face assistance could
further help consumer assistance
personnel understand and meet the
specific needs of the communities they
serve, foster trust between consumer
assistance personnel and community
members, and encourage participation
in the Assister programs by individuals
whose backgrounds and experiences
reflect those of the communities they
serve. However, we maintain that the
two per State requirement may be too
restrictive for Assister organizations
already successfully providing remote
assistance. In many circumstances,
remote assistance may be more effective
or practical than face-to-face assistance,
particularly when an Assister is
providing services to difficult-to-reach
individuals or populations.
Additionally, during the COVID PHE,
usage of alternate methods of
interactions with consumers, such as
through telecommunication and digital
health care tools, became more
widespread. We believe that reaching as
many consumers as possible is
important as we approach Medicaid
unwinding and strive to continually
increase health insurance program
enrollments. We train and entrust
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Assisters to help in the manner
requested by the consumer, when
possible.
Comment: Some commenters had
mixed reactions to the proposal,
supporting the intent but expressing
concerns about protecting consumers
against fraud. Some commenters
specifically recommended that we
withdraw or rewrite this section to
protect consumers more adequately
from fraud, by requiring Assisters going
door-to-door to provide identification,
records of enrollment transactions, and
clear instructions on how to cancel any
completed enrollments, as well as
additional training to ensure Assisters
obtain the consent of the household
member in charge of financial matters.
Response: We appreciate the
commenters’ concerns and agree with
them about protecting consumers
against fraud. We have taken various
measures to protect consumers against
fraud. For example, we have recently
updated the privacy and security
requirements included in all Assister
organizations agreements in
consultation with the CMS security and
privacy subject matter experts. We will
continue to work on improving these
requirements to ensure we are in
alignment with current best practices to
safeguard consumer privacy and
security information.
We believe that current requirements
adequately require Assisters to obtain
informed consent from consumers.
Assisters who complete an enrollment
transaction must obtain a consent form
from the consumer before collecting PII
to carry out authorized Assister
functions. In the Standard Operating
Procedures Manual for Assisters in the
Individual Federally-facilitated
Marketplaces Consumer Protections:
Privacy and Security Guidelines 185 we
also encourage Assisters to ensure
consumers take possession of their
enrollment documents during in-person
appointments (though Assisters can
provide postage materials and/or mail a
paper application on a consumer’s
behalf as long as the consumer consents
to the Assister’s retaining the
application for this purpose). Assisters
can add a specific consent to the
Navigator’s or certified application
counselor’s model authorization form so
that consumers can consent to having
their application mailed on their behalf.
We also have ways for a consumer to
verify the legitimacy of Assisters such as
requesting Assisters furnish a certificate
of training completion from HHS that
185 https://marketplace.cms.gov/technicalassistance-resources/sop-privacy-securityguidelines.pdf.
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contains their name and unique Assister
ID number, or simply requesting their
name and Assister ID number, which
consumers can verify by calling the
Marketplace Call Center.
Lastly, we appreciate the constructive
feedback on additional measures we
may take to protect consumers from
fraud and will take these into
consideration in future rulemaking,
training, and policy guidance.
Comment: Some commenters
opposing the proposal expressed
concerns about privacy and unwanted
solicitations, and suggested that
allowing door-to-door enrollments
would compromise Assister impartiality
and create confusion and
misunderstanding among consumers.
Commenters also opined that Assisters
do not have the ability to project income
for consumers with multiple sources of
income. Commenters also suggested we
have argued in the past that educating
the public in conjunction with
marketing creates confusion. Lastly,
commenters stated that there is a
prohibition against door-to-door
enrollment by FFE agents and brokers
which should be applied equally to
Assisters.
Response: We appreciate the
commenters’ feedback but we have
taken great strides to ensure the privacy
and security of consumers’ information
through a variety of mechanisms. This
includes requiring Assisters to obtain
consumer consent to access their PII to
carry out authorized Assister functions
via an authorization form which must
be maintained by the Assister
organization for six years. Assisters also
provide the FFE Privacy Policy to
consumers they are assisting with
enrollment, which explains how their
PII will be used and safeguarded. This
is also publicly available at
HealthCare.gov/privacy/. Additionally,
Assisters undergo certification training
that includes modules on Privacy,
Security, and Fraud Prevention
Strategies, and Assister organizations
must have policies and procedures for
the collection, use, protection, and
securing of PII. We also note that
certification training includes modules
that help to build trust from consumers
by providing best practices for serving
vulnerable and underserved
populations, working with consumers
with disabilities, providing language
access, and doing all these things in a
culturally sensitive manner.
We consider Assisters to be able to
assist consumers with multiple streams
of income. Assisters are required to
know and understand the Exchangerelated components of the PTC
reconciliation process and understand
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the availability of IRS resources on this
process. They also are required to
provide referrals to licensed tax
advisers, tax preparers, or other
resources for assistance with tax
preparation and tax advice related to the
Exchange application and enrollment
process and PTC reconciliations.
Lastly, there is no current Federal
prohibition on door-to-door enrollments
by agents and brokers in the FFEs and
this comment is inaccurate based on
current regulations for agents and
brokers.
3. Ability of States To Permit Agents
and Brokers and Web-Brokers To Assist
Qualified Individuals, Qualified
Employers, or Qualified Employees
Enrolling in QHPs (§ 155.220)
Section 1312(e) of the ACA directs the
Secretary to establish procedures under
which a State may permit agents and
brokers to enroll individuals and
employers in QHPs through an
Exchange and to assist individuals in
applying for financial assistance for
QHPs sold through an Exchange. In
addition, section 1313(a)(5)(A) of the
ACA directs the Secretary to provide for
the efficient and non-discriminatory
administration of Exchange activities
and to implement any measure or
procedure the Secretary determines is
appropriate to reduce fraud and abuse.
Under § 155.220, we established
procedures to support the State’s ability
to permit agents, brokers, and webbrokers to assist individuals, employers,
or employees with enrollment in QHPs
offered through an Exchange, subject to
applicable Federal and State
requirements. This includes processes
under § 155.220(g) and (h) for HHS to
suspend or terminate an agent’s,
broker’s, or web-broker’s Exchange
agreement(s) in circumstances that
involve fraud or abusive conduct or
where there are sufficiently severe
findings of non-compliance. We also
established FFE standards of conduct
under § 155.220(j) for agents and brokers
that assist consumers in enrolling in
coverage through the FFEs to protect
consumers and ensure the proper
administration of the FFEs. Consistent
with § 155.220(l), agents, brokers and
web-brokers that assist with or facilitate
enrollment in States with SBE–FPs must
comply with all applicable FFE
standards, including the requirements
in § 155.220. In the HHS Notice of
Benefit and Payment Parameters for
2024 proposed rule (87 FR 78206,
78249), we proposed to build on this
foundation with new proposed
procedures and additional consumer
protection standards for agents, brokers,
and web-brokers that assist consumers
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with enrollments through FFEs and
SBE–FPs.
a. Extension of Time To Review
Suspension Rebuttal Evidence and
Termination Reconsideration Requests
(§ 155.220(g) and (h))
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78249), we proposed
to allow HHS up to an additional 15 or
30 calendar days to review evidence
submitted by agents, brokers, or webbrokers to rebut allegations that led to
the suspension of their Exchange
agreement(s) or to request
reconsideration of termination of their
Exchange agreement(s), respectively. We
are finalizing this proposal as proposed,
which will provide HHS a total of up to
45 or 60 calendar days to review such
rebuttal evidence or reconsideration
request and notify the submitting
agents, brokers, or web-brokers of HHS’
determination regarding the suspension
of their Exchange agreement(s) or
reconsideration decision related to the
termination of their Exchange
agreement(s), respectively.
In the 2017 Payment Notice, we
added paragraph (g)(5) to § 155.220 to
address the temporary suspension or
immediate termination of an agent’s or
broker’s agreements with the FFEs in
cases involving fraud or abusive
conduct.186 Consistent with section
1313(a)(5)(A) of the ACA, we added
these procedures to give HHS authority
to act quickly in these situations to
prevent further harm to consumers and
to support the efficient and effective
administration of Exchanges on the
Federal platform. Under
§ 155.220(g)(5)(i)(A), if HHS reasonably
suspects that an agent, broker, or webbroker may have engaged in fraud or
abusive conduct using personally
identifiable information of Exchange
applicants or enrollees or in connection
with an Exchange enrollment or
application, HHS may temporarily
suspend the agent’s, broker’s or webbroker’s Exchange agreement(s) for up to
90 calendar days, with the suspension
effective as of the date of the notice to
the agent, broker, or web-broker. This
temporary suspension is effective
immediately and prohibits the agent,
broker, or web-broker from assisting
with or facilitating enrollment in
coverage in a manner that constitutes
enrollment through the Exchanges on
the Federal platform, including utilizing
the Classic Direct Enrollment (Classic
DE) and Enhanced Direct Enrollment
(EDE) Pathways, during this 90-day
186 See 81 FR 12258 through 12264. Also see 80
FR 75525 through 75526.
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period.187 188 As previously explained,
immediate suspension is critical in
these circumstances to stop additional
potentially fraudulent enrollments
through the FFEs and SBE–FPs.189
Consistent with § 155.220(g)(5)(i)(B), the
agent, broker, or web-broker can submit
evidence to HHS to rebut the allegations
that they have engaged in fraud or
abusive conduct that led to a temporary
suspension by HHS of their Exchange
agreement(s) at any time during 90-day
period. If such rebuttal evidence is
submitted, HHS will review it and make
a determination as to whether a
suspension should be lifted within 30
days of receipt of such evidence.190 If
HHS determines that the agent, broker,
or web-broker satisfactorily addresses
the concerns at issue, HHS will lift the
temporary suspension and notify the
agent, broker, or web-broker. If the
rebuttal evidence does not persuade
HHS to lift the suspension, HHS may
terminate the agent’s, broker’s, or webbroker’s Exchange agreement(s) for
cause.191 192
We also previously established a
framework for termination of an agent’s,
broker’s, or web-broker’s Exchange
agreement(s) for cause in situations
where, in HHS’ determination, a
specific finding of noncompliance or
pattern of noncompliance is sufficiently
severe.193 This framework provides
HHS the ability to terminate an agent’s,
broker’s, or web-broker’s Exchange
agreement(s) for cause to protect
consumers and the efficient and
effective operation of Exchanges on the
Federal platform in cases of sufficiently
severe violations or patterns of
violations. In these situations, HHS
provides the agent, broker, or webbroker, an advance 30-day notice and an
opportunity to cure and address the
noncompliance finding(s).194 195 More
187 45
CFR 155.220(g)(5)(iii).
agent, broker, or web-broker must
continue to protect any personally identifiable
information accessed during the term of their
Exchange agreement(s). See, for example, 45 CFR
155.220(g)(5)(iii) and 155.260.
189 See, for example, 81 FR 12258 through 12264.
190 See 45 CFR 155.220(g)(5)(i)(B).
191 See 45 CFR 155.220(g)(5)(i)(B).
192 If the agent, broker, or web-broker fails to
submit rebuttal information during this 90-day
period, HHS may terminate their Exchange
agreement(s) for cause. 45 CFR 155.220(g)(5)(i)(B).
193 See 45 CFR 155.220(g)(1) through (4). Also see,
for example, 78 FR 37047 through 37048 and 78 FR
54076 through 54081.
194 See 45 CFR 155.220(g)(3)(i).
195 The one exception is for situations where the
agent, broker, or web-broker fails to maintain the
appropriate license under applicable State law(s).
See 45 CFR 155.220(g)(3)(ii). In these limited
situations, HHS may immediately terminate the
agent, broker, or web-broker’s Exchange
agreement(s) for cause without any further
188 The
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specifically, upon identification of a
sufficiently severe violation, HHS
notifies the agent, broker, or web-broker
of the specific finding(s) of
noncompliance or pattern of
noncompliance. The agent, broker, or
web-broker then has a period of 30 days
from the date of the notice to correct the
noncompliance to HHS’ satisfaction. If
after 30 days the noncompliance is not
addressed to HHS’ satisfaction, HHS
may terminate the Exchange
agreement(s) for cause. Once their
Exchange agreement(s) are terminated
for cause under § 155.220(g)(3), the
agent, broker, or web-broker is no longer
registered with the FFE, is not permitted
to assist with or facilitate enrollment of
a qualified individual, qualified
employer, or qualified employee in
coverage in a manner that constitutes
enrollment through the Exchanges on
the Federal platform, and is not
permitted to assist individuals in
applying for APTC and CSRs for
QHPs.196 197 Consistent with
§ 155.220(h)(1), an agent, broker, or
web-broker whose Exchange
agreement(s) are terminated can request
reconsideration of such action. Section
155.220(h)(2) provides the agent, broker,
or web-broker with 30 calendar days to
submit their request (including any
rebuttal evidence or information) and
§ 155.220(h)(3) requires HHS to provide
agents, brokers, or web-brokers with
written notice of HHS’ reconsideration
decision within 30 calendar days of
receipt of the request for
reconsideration.
Our experience reviewing evidence
and other information submitted by
agents, brokers, or web-brokers to rebut
allegations that led to the suspension of
their Exchange agreement(s) or to
request reconsideration of the
termination of their Exchange
agreement(s), found that the process,
especially in more complex situations,
often requires significant resources and
time. The review process can involve
parsing complex technical information
and data, as well as revisiting consumer
complaints or conducting outreach to
consumers. The amount of time it takes
for the review process is largely
dependent on the particular situation at
hand (for example, the number of
alleged violations and impacted
consumers, how much and what type of
information an agent, broker, or webbroker submits, the amount of time it
opportunity to resolve the matter upon providing
notice to the agent, broker, or web-broker. Ibid.
196 45 CFR 155.220(g)(4).
197 The agent, broker, or web-broker must
continue to protect any PII accessed during the term
of their Exchange agreements. See, for example, 45
CFR 155.220(g)(4) and 155.260.
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takes for consumers to locate and
provide documentation related to their
complaints, and the number of
concurrent submissions in need of
review). Given the large number of
factors involved, we noted in the
proposed rule (87 FR 78250) that we
believe allowing HHS additional time to
complete the review would be
beneficial.
We noted in the proposed rule (87 FR
78250) that we were cognizant this
additional time could delay the ability
of agents, brokers, and web-brokers to
conduct business, which may be
particularly burdensome to those who
have compelling evidence to rebut
allegations of noncompliance. Given the
critical role that agents, brokers, and
web-brokers serve in enrolling
consumers in plans on the Exchanges on
the Federal platform, we noted that it is
our intention to minimize the burden
imposed on agents, brokers, and webbrokers to the greatest extent possible
while also ensuring that HHS has
additional time (if necessary) to review
any submitted rebuttal evidence. As
stated previously, this additional time is
warranted to accommodate particularly
complex situations that require
significant resources and time. We
noted that we expect not all reviews are
so complex that they will require the
use of this additional time; in cases
where agents, brokers, and web-brokers
present compelling evidence to rebut
allegations of noncompliance, we expect
to be able to resolve the vast majority of
those reviews without the use of this
additional time.
We also noted that we believe the
proposal to allow HHS a total of up to
45 calendar days to review rebuttal
evidence is warranted given that agents,
brokers, and web-brokers have up to 90
days to submit rebuttal evidence to HHS
during their suspension period, while
HHS currently only has 30 days to
review, consider, and make
determinations based on that evidence.
It does not seem unreasonable to
increase this combined maximum 120day time period 198 to 135 days.199
198 As noted above, an agent, broker, or webbroker whose Exchange agreement(s) are
temporarily suspended can submit rebuttal
evidence at any time during the 90-day suspension
period, thus triggering the start of the HHS review
period and limiting the length of the suspension
period. For example, if an agent were to submit
rebuttal evidence within seven days of receiving the
suspension notice and HHS were to respond on the
last day of the new review period (day 45), as
finalized in this rule, and lift the suspension, that
would mean the agent’s Exchange agreement(s)
would have been suspended for only 52 days.
199 For example, if an agent whose Exchange
agreement(s) were temporarily suspended were to
submit rebuttal evidence to rebut allegations that
led to the suspension of their Exchange
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25803
We noted that we believe this is not
an unreasonable maximum timeframe,
particularly where HHS has a
reasonable suspicion the agent, broker,
or web-broker engaged in fraud or
abusive conduct that may cause
imminent or ongoing consumer harm
using personally identifiable
information of an Exchange enrollee or
applicant or in connection with an
Exchange enrollment or application. As
noted in the 2017 Payment Notice, there
is a similar requirement for Medicare
providers, as 42 CFR 405.371 provides
HHS with the authority to suspend
payment for at least 180 days if there is
reliable information that an
overpayment exists, or there is a
credible allegation of fraud (81 FR
12262 through 12263). Under
§ 155.220(g)(5)(i)(A), HHS temporarily
suspends an agent, broker or webbroker’s Exchange agreement(s) only in
situations in which there is sufficient
evidence or other information such that
HHS reasonably suspects the agent,
broker or web-broker engaged in fraud
or in abusive conduct that may cause
imminent or ongoing consumer harm
using personally identifiable
information of an Exchange enrollee or
applicant or in connection with an
Exchange enrollment or application on
the Federal platform. As such, HHS
exercises this authority and sends
suspension notices only in the limited
situations where there may have been
fraud or abusive conduct to stop further
Exchange enrollment activity on the
Federal platform when the misconduct
may cause imminent or ongoing harm to
consumers or the effective and efficient
administration of Exchanges. We also
further emphasized that the proposed
extension to allow for up to 45 days for
HHS to review rebuttal evidence in
these situations represents the
maximum timeframe.200 To the extent
the situation at hand does not, for
example, involve a large number of
alleged violations or impacted
consumers, HHS may not need the
maximum timeframe to complete the
review and notify the agent, broker, or
web-broker whether the suspension is
lifted.
Terminations of Exchange
agreement(s) by HHS are also limited,
agreement(s) on the final day of the suspension
period (day 90), pursuant to § 155.220(g)(5)(i)(B),
and HHS were to respond on the final day of the
new review period (day 45), as finalized in this
rule, and lift the suspension, that agent’s Exchange
agreement(s) would be suspended for a maximum
of 135 days.
200 Further, as detailed above, the agent, broker,
or web-broker whose Exchange agreement(s) are
suspended has an opportunity to limit the overall
length of the suspension period with the timely
submission of rebuttal evidence.
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but in a different way. As outlined
above, § 155.220(g)(1) allows HHS to
terminate an agent, broker, or webbrokers Exchange agreement for cause
only when, in HHS’ determination, a
specific finding of noncompliance or
pattern of noncompliance is sufficiently
severe. Examples of specific findings of
noncompliance that HHS might
determine to be sufficiently severe to
warrant termination of an agent’s,
broker’s, or web-broker’s Exchange
agreement for cause under
§ 155.220(g)(1) include, but are not
limited to, violations of the Exchange
privacy and security standards.201
Patterns of noncompliance that HHS
might determine to be sufficiently
severe to warrant termination for cause
include, for example, repeated
violations of any of the applicable
standards in § 155.220 or § 155.260(b)
for which the agent or broker was
previously found to be noncompliant.202
As noted in the proposed rule (87 FR
78206, 78251), if HHS takes the total up
to 60 calendar days to review rebuttal
evidence submitted by the agent, broker,
or web-broker whose Exchange
agreement was terminated for cause, the
maximum timeframe for the
reconsideration process under
§ 155.220(h) would be 90 days. We
noted that we believe this approach
strikes the appropriate balance with
respect to reviewing information
submitted with a request to reconsider
termination of their Exchange
agreement(s) because it provides the
agent, broker, or web-broker due process
while also protecting consumers from
potential harm. We proposed a longer
time period of 60 days for HHS review
of information and evidence submitted
by an agent, broker, or web-broker as
part of their reconsideration request
(versus 45 days for HHS review of
rebuttal evidence and information
submitted in response to a suspension
determination) because the HHS
reviews under § 155.220(h)(2) are part of
the appeal process. As such, the agent,
broker, or web-broker had an
opportunity at an earlier stage of the
suspension or termination process to
rebut the allegations and/or findings, or
otherwise take remedial steps to address
the concerns identified by HHS, that led
201 As outlined in § 155.220(g)(2), an agent,
broker, or web-broker may be determined
noncompliant if HHS finds that the agent, broker,
or web-broker violated any standard specified in
§ 155.220; any term or condition of their Exchange
agreement(s); any State law applicable to agents,
brokers, or web-brokers; or any Federal law
applicable to agents, brokers, or web-brokers.
202 Ibid.
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to suspension or termination of their
Exchange agreement(s).203 204
For these reasons, we proposed to
amend § 155.220(g)(5)(i)(B) to provide
HHS with up to 45 calendar days to
review evidence and other information
submitted by agents, brokers, or webbrokers to rebut allegations that led to
suspension of their Exchange
agreement(s) and make a determination
of whether to lift the suspension. We
also proposed to amend § 155.220(h)(3)
to provide HHS with up to 60 days to
review evidence and other information
submitted by agents, brokers, or webbrokers to rebut allegations that led to
termination of their Exchange
agreement(s) and provide written notice
of HHS’ reconsideration decision.
We sought comment on this proposal.
After reviewing the public comments,
we are finalizing this proposal to allow
HHS up to an additional 15 or 30
calendar days to review evidence
submitted by agents, brokers, or webbrokers to rebut allegations that led to
suspension of their Exchange
agreement(s) or to request
reconsideration of termination of their
Exchange agreement(s), respectively, as
proposed. We summarize and respond
to public comments received on the
proposed extension of time to review
suspension rebuttal evidence and
termination reconsideration requests
(‘‘extended review windows’’) below.
Comment: Multiple commenters
expressed their support of these
extended review windows. These
commenters noted they believe the
extended review windows are necessary
to allow for proper review of complex
cases. However, some of these
commenters encouraged HHS to attempt
to resolve suspension and termination
reviews as quickly as possible and to
not use the extra review time if it is not
needed.
Response: We appreciate these
comments and are finalizing the
amendments to § 155.220(g)(5)(i)(B) and
(h)(3) as proposed. As previously noted,
we expect that not all reviews are so
complex that they will require the use
of this additional time, and that in cases
where agents, brokers, and web-brokers
present compelling evidence to rebut
203 See 45 CFR 155.220(g)(5)(i)(B) (providing an
opportunity to rebut allegations of fraud or abusive
conduct) and 45 CFR 155.220(g)(3)(i) (providing
advance notice and an opportunity to correct the
noncompliance).
204 The one exception is for immediate
terminations for cause due to the lack of
appropriate State licensure under 45 CFR
155.220(g)(3)(ii). In these situations, however, the
maximum timeframe between the agent, broker, or
web-broker receiving the termination notice and the
issuance of the HHS reconsideration decision
would be 90 days.
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allegations of noncompliance, we
believe that we will be able to resolve
the vast majority of those reviews
without the use of this additional time.
We will continue to strive to resolve all
suspension and termination reviews
expeditiously and will not utilize the
maximum review windows allowed
unless necessary.
Comment: One commenter expressed
concern that the extended review
windows are too lengthy, especially
during Open Enrollment.
Response: We disagree that these
extended review windows are too
lengthy, even during Open Enrollment.
While we have acknowledged that this
additional time could delay the ability
of agents, brokers, and web-brokers to
conduct business, particularly during
Open Enrollment, we believe extending
the review windows will be beneficial
when dealing with complex cases that
involve review of extensive evidence
submitted by the agent or broker,
revisiting multiple consumer
complaints, and conducting additional
outreach. Additionally, as previously
stated, we believe that these extended
review windows will only impact a very
small percentage of agents, brokers, and
web-brokers. This is because prior to
suspending or terminating an agent or
broker’s Exchange agreement(s), HHS
has already conducted a thorough
investigation and concluded that the
agent, broker, or web-broker in question
is likely involved in fraudulent or
noncompliant behavior. Furthermore,
these extended review windows
represent the maximum suspension or
termination period possible. Therefore,
we believe this approach strikes the
appropriate balance because it
maintains the agent’s, broker’s, or webbroker’s ability to submit additional
information for reconsideration after a
suspension or termination while also
protecting consumers from potential
harm, including during Open
Enrollment, and supporting the efficient
and effective administration of the
Exchanges on the Federal platform.
b. Providing Correct Information to the
FFEs (§ 155.220(j))
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78251), we proposed
amendments to § 155.220(j)(2)(ii) to
require agents, brokers, or web-brokers
assisting with and facilitating
enrollment in coverage through FFEs
and SBE–FPs or assisting an individual
with applying for APTC and CSRs for
QHPs to document that eligibility
application information has been
reviewed by and confirmed to be
accurate by the consumer or their
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authorized representative designated in
compliance with § 155.227, prior to
application submission. We proposed
that such documentation would be
created by the assisting agent, broker, or
web-broker and would require the
consumer or their authorized
representative to take an action, such as
providing a signature or a recorded
verbal confirmation, that produces a
record that can be maintained by the
agent, broker, or web-broker and
produced to confirm the submitted
eligibility application information was
reviewed and confirmed to be accurate
by the consumer or their authorized
representative. In addition, we proposed
that the documentation would be
required to include the date the
information was reviewed, the name of
the consumer or their authorized
representative, an explanation of the
attestations at the end of the eligibility
application, and the name of the agent,
broker, or web-broker providing
assistance. Lastly, we proposed that the
documentation would be required to be
maintained by the agent, broker, or webbroker for a minimum of 10 years and
produced upon request in response to
monitoring, audit, and enforcement
activities conducted consistent with
§ 155.220(c)(5), (g), (h) and (k). As noted
in the proposed rule, these proposed
changes would require amending
§ 155.220(j)(2)(ii), creating new
§ 155.220(j)(2)(ii)(A), and redesignating
current § 155.220(j)(2)(ii)(A) through (D)
without change as § 155.220(j)(2)(ii)(B)
through (E), respectively.
Agents, brokers, and web-brokers are
among those who play a critical role in
educating consumers about Exchanges
and insurance affordability programs,
and in helping consumers complete and
submit applications for eligibility
determinations, compare plans, and
enroll in coverage. Consistent with
section 1312(e) of the ACA, § 155.220
establishes the minimum standards for
the process by which an agent, broker,
or web-broker may help enroll an
individual in a QHP in a manner that
constitutes enrollment through the
Exchanges on the Federal platform and
to assist individuals in applying for
APTC and CSRs. This process and
minimum standards require the
applicant’s completion of an eligibility
verification and enrollment application
and the agent’s, broker’s, or webbroker’s submission of the eligibility
application information through the
Exchange website or an Exchangeapproved web service.205 While agents,
brokers, and web-brokers can assist a
205 45 CFR 155.220(c)(1). Also see, for example,
77 FR 18334 through 18336.
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consumer with completing the
Exchange application, the consumer is
the individual with the knowledge to
confirm the accuracy of the information
provided on the application.206
Section 155.220(j)(2) sets forth the
standards of conduct for agents, brokers,
or web-brokers that assist with or
facilitate enrollment of qualified
individuals, qualified employers, or
qualified employees in coverage in a
manner that constitutes enrollment
through an FFE or SBE–FP or that assist
individuals in applying for APTC and
CSRs for QHPs sold through an FFE or
SBE–FP. As explained in the 2017
Payment Notice proposed rule (81 FR
12258 through 12264), these standards
are designed to protect against agent,
broker, and web-broker conduct that is
harmful towards consumers or prevents
the efficient operation of the FFEs and
SBE–FPs. Under § 155.220(j)(2)(ii),
agents, brokers, or web-brokers must
provide the FFEs and SBE–FPs with
‘‘correct information under section
1411(b) of the Affordable Care Act.’’
Section 1411(h) of the ACA provides
for the imposition of civil penalties if
any person fails to provide correct
information under section 1411(b) to the
Exchange. Consistent with § 155.220(l),
agents, brokers and web-brokers that
assist with or facilitate enrollment of
qualified individuals, qualified
employers, or qualified employees in
States with SBE–FPs must comply with
all applicable FFE standards. This
includes, but is not limited to,
compliance with the FFE standards of
conduct in § 155.220(j).
Currently, § 155.220(j)(2)(ii) requires
that agents, brokers, and web-brokers
provide the FFEs and SBE–FPs with
correct information under section
1411(b) of the ACA, but it does not
explicitly require agents, brokers, or
web-brokers assisting consumers with
completing eligibility applications
through the FFEs and SBE–FPs to
confirm with those consumers the
accuracy of the information entered on
their applications prior to application
submission or document the consumer
has reviewed and confirmed the
information to be accurate. We noted in
the proposed rule (87 FR 78252) that
HHS has continued to observe
applications submitted to the FFEs and
SBE–FPs that contain incorrect
consumer information. We have also
received consumer complaints stating
the information provided on their
eligibility applications submitted by
206 This is evidenced by the language in
§ 155.220(j)(1) that refers to agents, brokers, or webbrokers that assist or facilitate enrollment
(emphasis added).
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25805
agents, brokers, or web-brokers on their
behalf was incorrect. These complaints
can be difficult to investigate and
adjudicate, because the only evidence
available is often the word of one person
against another and the FFEs and SBE–
FPs generally do not have access to
other contextual information to help
resolve the matter. By requiring the
creation and maintenance of
documentation that the assisting agent,
broker, or web-broker confirmed with
the consumer or their authorized
representative that the entered
information was reviewed and accurate,
the adjudication of such complaints
could be expedited and more easily
resolved. In addition, the inclusion of
incorrect consumer information on
eligibility applications may result in
consumers receiving inaccurate
eligibility determinations, and may
affect consumers’ tax liability, or
produce other potentially negative
results. If a consumer receives an
incorrect APTC determination or is
unaware they are enrolled in a QHP,
that consumer may owe money to the
IRS when they file their Federal income
tax return. Ensuring a consumer’s
income determination has been
reviewed and is accurate will help avoid
these situations. Incorrect consumer
information on eligibility applications
may also affect Exchange operations or
HHS’s analysis of Exchange trends. For
example, a high volume of applications
all containing erroneous information,
such as U.S. citizens attesting to not
having a Social Security number (SSN),
could hinder the efficient and effective
operation of the Exchanges on the
Federal platform by requiring HHS to
focus its time and efforts on addressing
these erroneous applications. We noted
that this proposal is consistent with the
fact that the consumer or their
authorized representative is the
individual with the knowledge to
confirm the accuracy of the information
provided on the application and will
serve as an additional safeguard and
procedural step to ensure the accuracy
of the application information
submitted to Exchanges on the Federal
platform. Thus, we proposed to revise
§ 155.220(j)(2)(ii) to require agents,
brokers, and web-brokers to document
that the eligibility application
information was reviewed and
confirmed to be accurate by the
consumer or their authorized
representative before application
submission.
We also proposed to establish in new
proposed § 155.220(j)(2)(ii)(A) standards
for what constitutes adequate
documentation that eligibility
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application information has been
reviewed and confirmed to be accurate
by the consumer or their authorized
representative. First, we proposed to
revise § 155.220(j)(2)(ii)(A) to establish
that documenting that eligibility
application information has been
reviewed and confirmed to be accurate
by the consumer or their authorized
representative would require the
consumer or their authorized
representative to take an action that
produces a record that can be
maintained and produced by the agent,
broker, or web-broker and produced to
confirm the consumer or their
authorized representative has reviewed
and confirmed the accuracy of the
eligibility application information.
We did not propose any specific
method for documenting that eligibility
application information has been
reviewed and confirmed to be accurate
by the consumer or their authorized
representative. To provide guidance to
agents, brokers, and web-brokers, we
proposed to include in
§ 155.220(j)(2)(ii)(A) a non-exhaustive
list of acceptable methods to document
that eligibility application information
has been reviewed and confirmed to be
accurate, including obtaining the
signature of the consumer or their
authorized representative (electronically
or otherwise), verbal confirmation by
the consumer or their authorized
representative that is captured in an
audio recording, or a written response
(electronic or otherwise) from the
consumer or their authorized
representative to a communication sent
by the agent, broker, or web-broker, or
other similar means or methods that we
specify in guidance. We also invited
comment on whether there may be other
acceptable methods of documentation
that we should consider specifying to be
permissible for purposes of
documenting that eligibility application
information has been reviewed and
confirmed to be accurate by the
consumer or their authorized
representative. For example, we noted
that we were specifically interested in
any current best practices or approaches
that agents, brokers or web-brokers may
use to create records or otherwise
document that eligibility application
information was reviewed by the
consumer or their authorized
representative prior to submission to the
Exchanges on the Federal platform.
We also proposed that the consumer
would be able to review and confirm the
accuracy of application information on
behalf of other applicants (for example,
dependents or other household
members), and authorized
representatives would be able to provide
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review and confirm the accuracy of
application information on behalf of the
people they are designated to represent,
as it may be difficult or impossible to
obtain confirmation from each
consumer whose information is
included on an application. This would
allow agents, brokers, and web-brokers
to continue assisting consumers as they
currently do (for example, often by
working with an individual representing
a household when submitting an
application for a family).
Next, we proposed to require at new
proposed § 155.220(j)(2)(ii)(A)(1) that
the eligibility application information
documentation, which would be created
by the assisting agent, broker, or webbroker, would be required to include an
explanation of the attestations at the end
of the eligibility application that the
eligibility application information has
been reviewed by and confirmed to be
accurate by the consumer or their
authorized representative. At the end of
the Exchange eligibility application, one
of the attestations the consumer must
currently agree to before submitting the
application is as follows: ‘‘I’m signing
this application under penalty of
perjury, which means I’ve provided true
answers to all of the questions to the
best of my knowledge. I know I may be
subject to penalties under Federal law if
I intentionally provide false
information.’’ The documentation the
agent, broker, or web-broker creates to
satisfy this proposed requirement would
be required to include this language for
awareness and to remind the consumer
that they are responsible for the
accuracy of the application information,
even if the information was entered into
the application on their behalf by an
agent, broker, or web-broker assisting
them. We noted that we believe this
proposal would help ensure that the
consumer or their authorized
representative understands the
importance of confirming the accuracy
of the information contained in the
eligibility application and further
safeguard against the provision and
submission of incorrect eligibility
application information. We also noted
that we believe the proposal would help
safeguard consumers from the negative
consequences of failing to understand
the attestations and potentially attesting
to conflicting information. For example,
one common error we see on
applications completed by agents,
brokers, or web-brokers is an attestation
that a consumer does not have an SSN
while also including an attestation that
the consumer is a U.S. citizen. These
conflicting attestations can generate
DMIs, which, if not resolved during the
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allotted resolution window, could result
in the consumer’s coverage being
terminated. For these reasons, we
proposed to add a requirement at new
§ 155.220(j)(2)(ii)(A)(1) that the
documentation include the date the
information was reviewed, the name of
the consumer or their authorized
representative, an explanation of the
attestations at the end of the eligibility
application, and the name of the
assisting agent, broker, or web-broker.
Lastly, at new proposed
§ 155.220(j)(2)(ii)(A)(2), we proposed to
require agents, brokers, and web-brokers
to maintain the documentation
demonstrating that the eligibility
application information was reviewed
and confirmed as accurate by the
consumer or their authorized
representative for a minimum of 10
years. Section 155.220(c)(5) states HHS
or our designee may periodically
monitor and audit an agent, broker, or
web-broker to assess their compliance
with applicable requirements. However,
there is not currently a maintenance of
records requirement directly applicable
to all agents, brokers, and web-brokers
assisting consumers through the FFEs
and SBE–FPs.207 Capturing a broadbased requirement mandating that all
agents, brokers, and web-brokers
assisting consumers in the FFEs and
SBE–FPs maintain the records and
documentation demonstrating that
information captured in their
application has been reviewed and
confirmed to be accurate by the
consumer or their authorized
representative they are assisting would
provide a clear, uniform standard. It
also would ensure this documentation is
maintained for sufficient time to allow
for monitoring, audit, and enforcement
activities to take place.208 Therefore,
207 Section 155.220(c)(3)(i)(E) requires webbrokers to maintain audit trails and records in an
electronic format for a minimum of 10 years and
cooperate with any audit under this section. Section
156.340(a)(2) places responsibility on QHP issuers
participating in Exchanges using the Federal
platform to ensure their downstream and delegated
entities (including agents and brokers) are
complying with certain requirements, including the
maintenance of records requirements in § 156.705.
In addition, under § 156.340(b), agents and brokers
that are downstream entities of QHP issuers in the
FFEs must be bound by their agreements with the
QHP issuer to comply with certain requirements,
including the records maintenance standards in
§ 156.705. Section 156.705(c) and (d) requires QHP
issuers in the FFEs to maintain certain records for
10 years and to make all such records available to
HHS, the OIG, the Comptroller General, or their
designees, upon request.
208 While investigations consumer complaints are
an example of a more immediate, real-time
monitoring and oversight activity, market conduct
examinations, audits, and other types of
investigations (for example, compliance reviews)
may occur several years after the applicable
coverage year.
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consistent with other Exchange
maintenance of records requirements,209
we proposed to capture in new
proposed § 155.220(j)(2)(iii)(A)(2) that
agents, brokers, and web-brokers would
be required to maintain the
documentation described in proposed
§ 155.220(j)(2)(ii)(A) for a minimum of
10 years, and produce the
documentation upon request in
response to monitoring, audit, and
enforcement activities conducted
consistent with § 155.220(c)(5), (g), (h),
and (k).
We sought comment on these
proposals.
After reviewing the public comments,
we are finalizing these proposals as
proposed. We are making an edit to new
§ 155.220(j)(2)(ii) to add a missing
comma before the reference to section
1411(b) of the ACA. This is a
nonsubstantive edit that does not
impact or otherwise change the new
requirements or policies related to the
obligation for agents, brokers and webbrokers to provide the FFEs and SBE–
FPs with correct information under
§ 155.220(j)(2)(ii) that are being finalized
in this rule, as proposed.
We summarize and respond to public
comments received on the proposals to
require agents, brokers, and web-brokers
to document that eligibility application
information has been reviewed by and
confirmed to be accurate by the
consumer or their authorized
representative prior to application
submission and the associated
document retention policy below.
Comment: Many commenters
supported these proposals, stating they
would protect consumers by helping
prevent incorrect APTC determinations,
and as a result, consumers potentially
owing additional money to the IRS
when they file their Federal income tax
returns. Other commenters stated that
these proposals would help encourage
compliance and aid investigations of
misconduct by agents, brokers, and webbrokers.
Response: We agree with these
commenters and appreciate their
support of these proposals. We are
finalizing these proposals as proposed.
Comment: Numerous commenters
expressed concerns the proposals would
impose heavy burdens on agents,
brokers, and web-brokers due to the
additional time that would be required
for agents, brokers, and web-brokers to
implement and come into compliance
with these new requirements. Some of
these commenters stated the additional
time required to meet these new
209 See, for example, 45 CFR 155.220(c)(3)(i)(E)
and 156.705(c).
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requirements would be more
burdensome during the Open
Enrollment Period. Other commenters
stated that they believed the additional
time associated with implementing and
complying with these new requirements
would discourage consumers from
enrolling in coverage through the FFEs
and SBE–FPs, as well as agents, brokers,
and web-brokers from assisting
consumers in the FFEs and SBE–FPs.
Response: We recognize these new
requirements will likely require agents,
brokers, and web-brokers to spend more
time with each consumer to ensure and
document that eligibility application
information has been reviewed by and
confirmed to be accurate by the
consumer or their authorized
representative prior to application
submission and that this may affect
agents, brokers, and web-brokers more
so during the Open Enrollment Period.
However, we believe the benefits of the
new requirements outweigh any
potential negative impact on agents,
brokers, web-brokers, or consumers. It is
imperative that consumers’ Exchange
applications contain accurate
information when determining
eligibility. As discussed in the proposed
rule (87 FR 78252), if consumers’
income determinations are not accurate,
they could face serious financial harm
when reconciling their taxes. In
addition, submission of incorrect
information on an application may lead
to a DMI. Some DMIs, if left unresolved,
can lead to a termination of a
consumer’s Exchange coverage.
Ensuring consumers, or their authorized
representatives, have reviewed their
application information and attested to
its accuracy will help mitigate these
issues. Further, these new requirements
will support the efficient operation of
the FFEs and SBE–FPs by helping
reduce the number of applications with
incorrect information, limiting the
number of DMIs that need to be
investigated, and expediting our ability
to investigate and resolve disputes
related to inaccurate consumer
information being entered on an
eligibility application, which will also
benefit agents, brokers, web-brokers and
consumers.
In addition, as discussed in the
proposed rule (87 FR 78252 through
78253), we did not propose to specify a
method for documenting that eligibility
application information has been
reviewed and confirmed to be accurate
by the consumer or their authorized
representative to provide agents,
brokers, or web-brokers the flexibility to
establish protocols and methods that
will meet their needs in the most
efficient manner.
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25807
Given this flexibility, and that the fact
that these new requirements are simply
building on existing requirements,210
we do not believe that they will
discourage many agents, brokers, or
web-brokers from assisting consumers
in the FFEs and SBE–FPs or that
Exchange enrollment will drop by a
significant percentage, if at all. In fact,
we believe that these new requirements,
which are intended to protect
consumers, prevent fraud and abusive
conduct, and ensure the efficient and
effective operation of the Exchanges on
the Federal platform, will encourage
more consumers to purchase health
insurance through the Exchanges. We
will, however, monitor Exchange
enrollment data and agent, broker, and
web-broker participation in future years
to analyze if these new requirements
have a noticeable negative impact.
Comment: Some commenters
suggested these new requirements
would add a disproportionate burden on
smaller agencies and independent
agents, brokers, and web-brokers,
particularly with regard to the initial
costs of implementing these new
requirements. These commenters stated
larger agencies are better equipped to
implement these new requirements and
absorb the costs associated with them.
Response: We acknowledge that larger
agencies may be better equipped to
implement these new requirements.
There will be upfront costs associated
with implementing these new
requirements, including potentially
purchasing recording software,
upgrading storage capacity, or hiring
new personnel. Larger agencies
typically have more resources to
allocate towards meeting new industry
standards, as is the case in other
business fields as well. However, we do
not believe these new requirements will
be cost prohibitive to smaller agencies
or independent agents, brokers, and
web-brokers. As discussed above, we are
not mandating the method by which
agents, brokers, and web-brokers must
meet these new requirements.
Therefore, smaller agencies and
independent agents, brokers, and webbrokers have the flexibility to meet these
requirements utilizing the most efficient
and cost-effective method that meets
their business needs. Additionally, as
mentioned previously, these new
requirements are simply building on
existing requirements,211 which we
believe will alleviate the burdens and
costs associated with these new
210 See
211 See
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requirements for agents, brokers, and
web-brokers of all sizes.
Comment: Multiple commenters
stated they believed these new
requirements would be more difficult to
implement over the phone, which
would negatively impact consumers
without internet access (that is, lower
income) or those who are less proficient
with technology.
Response: We disagree that these
requirements will be more difficult to
implement over the phone than with
respect to other enrollment methods. As
is the case today, consumers will be able
to enroll in QHPs and apply for APTC
and CSRs for such coverage over the
phone, in-person, and via the internet.
The flexibility to choose what method is
utilized to document that eligibility
application information has been
reviewed and confirmed to be accurate
by the consumer or their authorized
representative will allow agents,
brokers, and web-brokers to implement
these new requirements in a manner
that is least burdensome to them.
Agents, brokers, and web-brokers may
also use this flexibility to implement
different methods to comply with these
requirements depending on the
circumstances of each consumer they
are assisting. Different implementation
methods include, but are not limited to,
obtaining the signature of the consumer
or their authorized representative
(electronic or otherwise), verbal
confirmation by the consumer or their
authorized representative that is
captured in an audio recording, where
legally permissible, or a written
response (electronic or otherwise) from
the consumer or their authorized
representative to a communication sent
by the agent, broker, or web-broker.
As such, to implement these new
requirements for over-the-phone
enrollments, where legally permissible
and in accordance with applicable
requirements,212 agents, brokers, and
web-brokers can record phone
conversations with consumers or their
authorized representatives to comply
with § 155.220(j)(2)(ii)(A). For example,
during these conversations, an agent,
broker, or web-broker may ask the
consumer if they have reviewed their
application information, the information
is accurate, and they understand the
attestations involved. A recording of the
consumer’s response to these questions,
212 We recognize that there are Federal and State
laws that govern the legality of recording phone
calls and conversations that may impact an agent,
broker, or web-broker’s ability to record phone or
oral communications with consumers or that may
require an agent, broker, or web-broker to obtain the
consumer’s consent prior to recording such
communications (see, for example, 18 U.S.C. 2511).
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if it meets the requirements in
§ 155.220(j)(2)(ii)(A), would be
sufficient to meet these new
requirements. We understand that
saving recorded conversations may be
more difficult than other mediums due
to the digital space requirements and
recording software needed, but is not an
excessive burden as there are numerous
recording software options to choose
from and external hard drives are
widely available for purchase. Where
legally permissible, it will be the choice
of the agent, broker, or web-broker if
recording phone conversations is the
best method for them to implement
these requirements for over-the-phone
enrollments. At the same time, we
recognize there may be reasons agents,
brokers and web-brokers would also
want to have other methods available
for over-the-phone enrollments. For
example, in situations where a phone
recording is not possible, agents, brokers
and web-brokers may send the
consumer or their authorized
representative an email or text message
after talking with them over the phone.
The consumer or their authorized
representative may respond to this
email or text message, acknowledging
they have reviewed the eligibility
application information and confirmed
its accuracy prior to application
submission. When in-person assistance
is provided, the agent, broker or webbroker may want to offer the recording
methods and other options that it uses
for over-the-phone enrollments. The
agent, broker, or web-broker may also
want to implement a method for inperson assistance that involves
obtaining the signature of the consumer
or authorized representative (electronic
or otherwise) given the face-to-face
nature of the interaction. Similarly,
agents, brokers and web-brokers should
consider what methods meets their
business needs, and those of their
consumers, for enrollments over the
internet. While we are not mandating
that agents, brokers, and web-brokers
adopt all of these different
implementation methods, we encourage
agents, brokers and web-brokers to
exercise this flexibility in a manner that
accommodates the various enrollment
methods they use with their respective
consumers. Additionally, if an agent,
broker, or web-broker is not able to
accommodate a consumer (for example,
the consumer does not have access to
the internet or is less proficient with
technology but the specific agent,
broker, or web-broker only engages in
enrollments via the internet), the
consumer may find another agent,
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broker, or web-broker that can meet
their needs.
We believe these new requirements
will help protect consumers, including
those who may be in underserved
groups, rather than inhibit their
enrollment in Exchange coverage, as
well as ensure the efficient and effective
operation of the Exchanges on the
Federal platform. Further, we frequently
see unauthorized enrollments impact
underserved groups of consumers in
greater numbers than other groups.
Often, agents, brokers, and web-brokers
who engage in noncompliant or
fraudulent behavior target low-income
consumers or consumers with limited
English proficiency. By requiring that
agents, brokers, and web-brokers
document that consumers or their
authorized representatives have
reviewed and verified their application
information prior to submission, we
believe that these consumer harms and
the impact on underserved groups can
be mitigated.
Comment: Multiple commenters
expressed concerns regarding the
disclosure of consumers’ personally
identifiable information (PII). These
commenters stated that they believe
these new requirements would lead to
more improper disclosures of consumer
PII as agents, brokers, and web-brokers
would be storing more consumer PII
than in the past.
Response: We do not believe these
new requirements will lead to more
improper disclosures of consumer PII.
These new requirements do not require
agents, brokers, and web-brokers to
record or maintain any consumer PII in
addition to the consumer PII an agent,
broker, or web-broker currently records
and maintains. The new requirements
include ensuring a consumer or their
authorized representative has reviewed
and attested that their application
information is correct prior to
submission and that this is documented
and maintained by the agent, broker, or
web-broker for a minimum of 10 years.
This documentation must include the
date the information was reviewed, the
name of the consumer or their
authorized representative, an
explanation of the attestations at the end
of the eligibility application, and the
name of the assisting agent, broker, or
web-broker. The only piece of PII
required for this documentation is the
consumer’s name, which an agent,
broker, or web-broker would already be
recording and maintaining in their files.
A recorded conversation, during an
over-the-phone enrollment or otherwise,
could potentially contain more
consumer PII than what the regulations
require, as additional consumer
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information may be revealed during the
conversation and the enrollment
process. However, we do not believe
this will lead to more improper
disclosures of consumer PII. Agents,
brokers, and web-brokers are already
required to adhere to applicable State or
Federal laws concerning the
safeguarding of consumer PII, including
§ 155.220(g)(4) and (j)(2)(iv), and
HIPAA.213 These same requirements
and protections continue to apply.
Additionally, an agent, broker, or webbroker that elects to implement the
phone recording method to meet these
new requirements would only be
required to record the portion of the
conversation in which the consumer or
consumer’s representative confirms that
they have reviewed and attested that
their application information is correct
prior to submission to demonstrate
compliance, which would reduce the
amount of consumer PII in the recorded
conversation. This would further reduce
or eliminate the potential of improper
disclosures of consumer PII.
Comment: One commenter suggested
the IRS provide the consumer income
information that is to be entered on each
Exchange application.
Response: We appreciate the
commenter’s suggestion, but generally
note the consumer is in the best position
to project their future income and is the
individual generally responsible for
providing application information,
including information regarding
income.214 To determine if a consumer
is eligible for financial assistance, such
as APTC, prior to enrollment, an
estimate for income must be entered
prior to the eligibility determination
process. As many consumers enroll in
health coverage prior to a new calendar
year, the income amount they enter is
an estimate based on available data,
including income in prior years, as well
as what consumers believe their income
will be in the upcoming plan year. The
IRS will not have income data for the
consumer for the year of coverage until
the consumer files a tax return for the
year of coverage. This typically does not
occur until the next calendar year. By
that time, the year of coverage will have
ended so this income data from the IRS
will not provide a timely income
projection for the upcoming year of
coverage. Recognizing income amounts
provided by consumers on eligibility
applications are projections, the statute
generally requires HHS to verify income
213 See, for example, § 155.260, 45 CFR part 164,
subparts A and E, and the Health Insurance
Portability and Accountability Act of 1996, Pub. L.
104–191, H.R. 3103, 104th Cong.
214 See sections 1411(b)(3) and 1412(b)(2) of the
ACA and redesignated § 155.220(j)(2)(ii)(E).
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information on Exchange applications
with the Department of Treasury.215 As
such, the ACA established an approach
that collects information about
estimated income for the upcoming plan
year from the consumer, the person in
the best position to make such
projections, with a verification of that
information from a trusted source, the
Department of Treasury and IRS.
Comment: Several commenters stated
that we should allow agents, brokers,
and web-brokers to meet these new
requirements under § 155.220(j)(2)(ii)
and the new requirements related to
documenting consumer consent under
§ 155.220(j)(2)(iii) during the same
consumer interaction and/or within the
same document.
Response: Agents, brokers, and webbrokers are not prohibited from
documenting that eligibility application
information has been reviewed by and
confirmed to be accurate by the
consumer or the consumer’s authorized
representative and documenting the
receipt of consent from the consumer or
the consumer’s authorized
representative pursuant to
§ 155.220(j)(2)(ii) and (iii), respectively,
during the same conversation with the
consumer, or within the same
document, as long as the documentation
complies with the requirements set forth
in § 155.220(j)(2)(ii)(A) and (B) and
(j)(2)(iii)(A) through (C).
Comment: Some commenters stated
that we should not take enforcement
action against agents, brokers, or webbrokers who act in good faith to comply
with these new requirements and who
enter information on a consumer’s
Exchange application that the consumer
has attested to be true, but that turns out
to be inaccurate. Specifically, these
commenters indicated accurate income
projections for consumers who are selfemployed or work flexible hours are
difficult, and thus, can often end up
being inaccurate. Some commenters also
suggested that we should only enforce
these requirements against agents,
brokers, and web-brokers, and not
against issuers, as issuers are not
directly involved in enrolling
consumers in Exchange coverage.
Response: We do not initiate
enforcement actions against agents,
brokers, and web-brokers who act in
good faith to provide the FFEs and SBE–
FPs with correct information and where
there is a reasonable cause for the
failure to provide correct
information.216 We understand that
215 See sections 1411(c)(3) and 1412(b)(2) of the
ACA and redesignated § 155.220(j)(2)(ii)(E).
216 See § 155.220(j)(3), which states ‘‘If an agent,
broker, or web-broker fails to provide correct
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income projections are purely estimates
and a consumer’s yearly income may be
different than projected, especially for
those who are self-employed or work
flexible hours. As such, assuming the
agent, broker or web-broker meets the
applicable requirements and maintains
the necessary documentation, we
believe the situation described by these
commenters is an example in which an
agent, broker, or web-broker has acted in
good faith and there is a reasonable
cause for the failure to provide correct
information such that no enforcement
action would be taken and no penalties
would be imposed. In addition, we note
that the requirements contained in
§ 155.220(j)(2)(ii)(A) apply specifically
to agents, brokers, and web-brokers, and
not to issuers.
Comment: A few commenters
suggested the proposed record retention
period of 10 years is too long for agents,
brokers, and web-brokers to maintain
the documentation required by
§ 155.220(j)(2)(ii)(A). Another
commenter stated we should have the
record retention period match align
with the required record retention
period of the State where the consumer
is enrolled.
Response: Please see the
accompanying information collection
section IV.F (ICRs Regarding Providing
Correct Information to the FFEs
(§ 155.220(j)) of this final rule for the
response to these comments.
Comment: We also received several
comments related to agents, brokers,
and web-brokers switching their
National Producer Numbers on
consumers’ applications, a lack of
respect towards agents, brokers, and
web-brokers, and agent, broker, and
web-broker commissions, which were
outside the scope of these proposals.
Response: Although we appreciate
these commenters’ interest in the
policies governing consumer review and
attestation of their application
information prior to submission, given
that these comments are out-of-scope
with regard to these specific proposals,
we decline to comment on them at this
time.
c. Documenting Receipt of Consumer
Consent (§ 155.220(j))
We proposed to amend
§ 155.220(j)(2)(iii) to require agents,
brokers, or web-brokers assisting with
and facilitating enrollment in coverage
through FFEs and SBE–FPs or assisting
information, he, she, or it will nonetheless be
deemed in compliance with paragraphs (j)(2)(i) and
(ii) of this section if HHS determines that there was
a reasonable cause for the failure to provide correct
information and that the agent, broker, or webbroker acted in good faith.’’
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an individual with applying for APTC
and CSRs for QHPs to document the
receipt of consent from the consumer, or
the consumer’s authorized
representative designated in compliance
with § 155.227, qualified employers, or
qualified employees they are assisting.
We proposed that documentation of
receipt of consent would be created by
the assisting agent, broker, or webbroker and would require the consumer
seeking to receive assistance, or the
consumer’s authorized representative, to
take an action that produces a record
that can be maintained by the agent,
broker, or web-broker and produced to
confirm the consumer’s or their
authorized representative’s consent was
provided. With regard to the content of
the documentation of consent, in
addition to the date consent was given,
name of the consumer or their
authorized representative, and the name
of the agent, broker, web-broker, or
agency being granted consent, we
proposed the documentation would be
required to include a description of the
scope, purpose, and duration of the
consent provided by the consumer, or
their authorized representative, as well
as the process by which the consumer
or their authorized representative may
rescind such consent. Lastly, we
proposed that documentation of the
consumer’s or their authorized
representative’s, consent be maintained
by the agent, broker, or web-broker for
a minimum of 10 years and produced
upon request in response to monitoring,
audit, and enforcement activities
conducted consistent with
§ 155.220(c)(5), (g), (h) and (k).
Currently, § 155.220(j)(2)(iii) requires
agents, brokers, or web-brokers assisting
with or facilitating enrollment in
coverage through the FFEs or SBE–FPs
or assisting an individual in applying
for APTC and CSRs for QHPs to obtain
the consent of the individual, employer,
or employee prior to providing such
assistance. However, § 155.220(j)(2)(iii)
does not currently require agents,
brokers, or web-brokers to document the
receipt of consent. As provided in the
proposed rule (87 FR 78254), we have
observed several cases in which there
have been disputes between agents,
brokers, or web-brokers and the
individuals they are assisting, or
between two or more agents, brokers, or
web-brokers, about who has been
authorized to act on behalf of a
consumer or whether anyone has been
authorized to do so. We have also
received complaints alleging
enrollments by agents, brokers, and
web-brokers that occurred without the
consumer’s consent, and have
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encountered agents, brokers, and webbrokers who attest they have obtained
consent and have acted in good faith,
but who do not have reliable records of
such consent to defend themselves from
allegations of misconduct. Thus, we
proposed this standard because, as
noted in the proposed rule (87 FR
78254), we believe that it will be
beneficial to have reliable records of
consent to help with the resolution of
such disputes or complaints and to
minimize the risk of fraudulent
activities such as unauthorized
enrollments. For these reasons, we
proposed to revise § 155.220(j)(2)(iii) to
require agents, brokers, and web-brokers
to document the receipt of consent from
the consumer seeking to receive
assistance or the consumer’s authorized
representative, employer, or employee
prior to assisting with or facilitating
enrollment through the FFEs and SBE–
FPs, making updates to an existing
application or enrollment, or assisting
the consumer in applying for APTC and
CSRs for QHPs.
We also proposed to establish in
proposed new § 155.220(j)(2)(iii)(A)
through (C) standards for what
constitutes obtaining and documenting
consent to provide agents, brokers, and
web-brokers with further clarity
regarding this proposed requirement.
First, we proposed to add new proposed
§ 155.220(j)(2)(iii)(A) to establish that
obtaining and documenting the receipt
of consent would require the consumer
seeking to receive assistance, or the
consumer’s authorized representative
designated in compliance with
§ 155.227, to take an action that
produces a record that can be
maintained by the agent, broker, or webbroker and produced to confirm the
consumer’s or their authorized
representative’s consent has been
provided.
We noted that we did not intend to
prescribe the method to document
receipt of individual consent, so long as
whatever method is chosen requires the
consumer or their authorized
representative to take an action and
results in a record that can be
maintained and produced by the agent,
broker, or web-broker. Therefore, we
proposed to include in new proposed
§ 155.220(j)(2)(iii)(A) a non-exhaustive
list of acceptable means to document
receipt of consent, including obtaining
the signature of the consumer or their
authorized representative (electronically
or otherwise), verbal confirmation by
the consumer or their authorized
representative that is captured in an
audio recording, a response from the
consumer or their authorized
representative to an electronic or other
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communication sent by the agent,
broker, or web-broker, or other similar
means or methods that HHS specifies in
guidance. Other methods of
documenting individual consent may be
acceptable, such as requiring
individuals to create user accounts on
an agent’s or agency’s website where
they designate or indicate the agents,
brokers, or web-brokers to whom they
have provided consent. We proposed
that agents, brokers, and web-brokers
would also be permitted to continue to
utilize State Department of Insurance
forms, such as agent or broker of record
forms, provided these forms cover the
minimum requirements that the
documentation include the date consent
was given, the name of the consumer or
their authorized representative, the
name of the agent, broker, web-broker,
or agency being granted consent, a
description of the scope, purpose, and
duration of the consent obtained by the
individual, as well as a process through
which the consumer or their authorized
representative may rescind consent. We
noted that if agents, brokers, and webbrokers have already adopted consent
documentation processes consistent
with this proposed framework, no
changes would be required. We noted in
the proposed rule (87 FR 78206, 78254)
that we intend to allow for
documentation methods well-suited to
the full range of ways agents, brokers,
and web-brokers interact with
consumers they are assisting (for
example: in-person, via phone,
electronic communications, use of an
agent’s or agency’s website, etc.). We
also noted that we intend for the
primary applicant to be able to provide
consent on behalf of other applicants
(for example, dependents or other
household members), and authorized
representatives to be able to provide
consent on behalf of the people they are
designated to represent (for example,
incapacitated persons), as it may be
difficult or impossible to obtain consent
from each individual whose information
is included on an application. This
would allow agents, brokers, and webbrokers to continue assisting individuals
as they currently do (for example, often
by working with an individual
representing a household when
submitting an application for a family).
Second, we proposed to require at
new proposed § 155.220(j)(2)(iii)(B) that
the consent documentation must
include the date consent was given,
name of the consumer or their
authorized representative, name of the
agent, broker, web-broker, or agency
being granted consent, a description of
the scope, purpose, and duration of the
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consent obtained by the individual, as
well as a process through which the
consumer or their authorized
representative may rescind consent.
Agents, brokers, and web-brokers may
work with individuals in numerous
capacities. For example, they may assist
individuals with applying for financial
assistance and enrolling in QHPs
through the FFEs and SBE–FPs, as well
as shopping for other non-Exchange
products. Similarly, agents, brokers, and
web-brokers may have different
business models such that individuals
may interact with specific individuals
consistently or numerous individuals
representing a business entity that may
vary upon each contact (for example,
call center representatives), and the
methods of interaction may vary as well
(for example: in-person, phone calls, use
of an agent’s or agency’s website etc.).
In addition, individuals may wish to
change the agents, brokers, or webbrokers they work with and provide
consent to over time. For these reasons,
the scope, purpose, and duration of the
consent agents, brokers, and webbrokers seek to obtain from individuals
can vary widely. Therefore, as noted in
the proposed rule (87 FR 78254 through
78255), this proposal is intended to
ensure individuals are making an
informed decision when providing their
consent to the agents, brokers, or webbrokers assisting them, that individuals
can make changes to their provision of
consent over time, and that the
documentation of consent at a minimum
captures who is providing and receiving
consent, for what purpose(s) the consent
is being provided, when consent was
provided, the intended duration of the
consent, and how specifically consent
may be rescinded. We noted that we
expect the information in the consent
documentation will align with the
information in the corresponding
individuals’ applications (for example:
names, phone numbers, or email
addresses should align as applicable
depending on whether the consent is
obtained via email, text message, call
recording, or otherwise), except for in
instances in which consent is being
provided by an authorized
representative.
Lastly, at new proposed
§ 155.220(j)(2)(iii)(C), we proposed to
require agents, brokers, and web-brokers
to maintain the documentation
described in proposed
§ 155.220(j)(2)(iii)(A) for a minimum of
10 years. Section 155.220(c)(5) states
HHS or its designee may periodically
monitor and audit an agent, broker, or
web-broker to assess their compliance
with applicable requirements. However,
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there is not currently a maintenance of
records requirement directly applicable
to all agents, brokers, and web-brokers
assisting consumers through the FFEs
and SBE–FPs.217 Capturing a broadbased requirement mandating that all
agents, brokers, and web-brokers
assisting consumers in the FFEs and
SBE–FPs to maintain the records and
documentation demonstrating receipt of
consent from consumers or their
authorized representative would
provide a clear, uniform standard. It
would also ensure these records and
documentation are maintained for
sufficient time to allow for monitoring,
audit, and enforcement activities to take
place.218 Therefore, consistent with
other Exchange maintenance of records
requirements,219 we proposed to capture
in new proposed § 155.220(j)(2)(iii)(C)
that agents, brokers, and web-brokers
would be required to maintain the
documentation described in proposed
§ 155.220(j)(2)(iii)(A) for a minimum of
10 years, and produce the
documentation upon request in
response to monitoring, audit and
enforcement activities conducted
consistent with § 155.220(c)(5), (g), (h)
and (k).
We sought comment on these
proposals, including whether there are
other means or methods of
documentation that we should consider
specifying are permissible for purposes
of documenting the receipt of consent
from consumer or their, qualified
employers, or qualified employees.
After reviewing the public comments,
we are finalizing these proposals as
proposed. We are making a technical
update to § 155.220(j)(2)(iii)(A) to add in
the phrase ‘‘or other similar means or
methods that HHS specifies in
guidance’’ to align with and capture the
proposed policy, as reflected in the
preamble of the proposed rule, and
which is being finalized in this final
rule, as proposed.
217 Section 155.220(c)(3)(i)(E) requires webbrokers to maintain audit trails and records in an
electronic format for a minimum of 10 years and
cooperate with any audit under this section. Section
156.340(a)(2) places responsibility on QHP issuers
participating in Exchanges using the Federal
platform to ensure their downstream and delegated
entities (including agents and brokers) are
complying with certain requirements, including the
maintenance of records requirements in § 156.705.
Section 156.705(c) requires QHP issuers in the FFEs
to maintain certain records for 10 years.
218 While investigations consumer complaints are
an example of a more immediate, real-time
monitoring and oversight activity, market conduct
examinations, audits, and other types of
investigations (for example, compliance reviews)
may occur several years after the applicable
coverage year.
219 See, for example, 45 CFR 155.220(c)(3)(i)(E)
and 156.705(c).
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25811
We summarize and respond to public
comments received on the proposals
related to the documentation of
consumer consent and the associated
document retention policy below.
Comment: Multiple commenters
expressed their support of these
proposals. These commenters stated
they believed these new requirements
would help eliminate unauthorized
enrollments and protect consumers.
Many of these commenters
recommended that we allow agents,
brokers, and web-brokers to maintain
the flexibility to determine the method
by which they will meet these
requirements.
Response: We agree with these
commenters and are finalizing these
proposals as proposed. As discussed in
the proposed rule, to ensure continued
flexibility for agents, brokers, and webbrokers, we have not mandated a
specific method by which agents,
brokers, and web- brokers must meet
these requirements. The technical
update we are making to
§ 155.220(j)(2)(iii)(A) to add in the
phrase ‘‘or other similar means or
methods that HHS specifies in
guidance’’ aligns the regulatory text
with the preamble and further
emphasizes this flexibility, as the means
or methods by which acceptable
documentation may be obtained by
agents, brokers, and web-brokers are not
being mandated and may be updated by
HHS in guidance.
Comment: Some commenters
expressed concern these new
requirements would impose heavy
burdens on agents, brokers, and webbrokers due to the additional time that
would be required for agents, brokers,
and web-brokers to implement and
come into compliance with these new
requirements. Some of these
commenters stated the additional time
required to meet these new
requirements would be more
burdensome during the Open
Enrollment Period. Other commenters
stated the additional time associated
with implementing and complying with
these new requirements would
discourage consumers from enrolling in
coverage through the FFEs and SBE–
FPs, as well as agents, brokers, and webbrokers from assisting consumers in the
FFEs and SBE–FPs.
Response: We recognize these new
requirements will likely require agents,
brokers, and web-brokers to spend more
time with each consumer to ensure that
consumer consent is documented and
that this may affect agents, brokers, and
web-brokers more so during the Open
Enrollment Period. However, we believe
the benefits of these new requirements
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outweigh any potential negative impact
on agents, brokers, web-brokers, or
consumers. Existing rules require
agents, brokers, and web-brokers to
obtain consumer consent prior to
assisting them with Exchange
enrollment or applying for APTC and
CSRs for QHPs.220 Therefore, we believe
that requiring a record of that consent be
documented and maintained will not
add significant burdens on agents,
brokers, and web-brokers.
Additionally, as discussed in the
proposed rule (87 FR 78254), we believe
having a reliable record of consent will
help with the resolution of disputes
between agents, brokers, or web-brokers
and the individuals they are assisting, or
between two or more agents, brokers, or
web-brokers, about who has been
authorized to act on behalf of a
consumer or whether anyone has been
authorized to do so; the resolution of
consumer complaints; and minimize the
risk of fraudulent activities such as
unauthorized enrollments. Finally, as
discussed in the proposed rule (87 FR
78254), we did not propose to specify a
method for documenting that consumer
consent was provided. This flexibility
will allow each individual agent, broker,
or web-broker to establish protocols and
methods that will meet their needs in
the most efficient manner. We believe
this flexibility, and that the fact that
these new requirements are simply
building on existing requirements,221
will minimize the burdens associated
with implementing these new
requirements. In fact, we believe that
these new requirements, which are
intended to protect consumers, prevent
fraud and abusive conduct, and ensure
the efficient and effective operation of
the Exchanges on the Federal platform,
will encourage more consumers to
purchase health insurance through the
Exchanges. We will, however, monitor
Exchange enrollment data and agent,
broker, web-broker participation in
future years to analyze if these new
requirements have a noticeable negative
impact.
Comment: Multiple commenters
expressed concerns regarding the
disclosure of consumers’ PII. These
commenters stated that they believe
these new requirements would lead to
more improper disclosures of consumer
PII as agents, brokers, and web-brokers
would be storing more consumer PII
than in the past.
Response: We do not believe these
new requirements will lead to more
improper disclosures of consumer PII.
These new requirements do not require
220 See
221 See
45 CFR 155.220(j)(2)(iii).
45 CFR 155.220(j)(2)(iii).
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agents, brokers, and web-brokers to
record or keep consumer PII beyond
what an agent, broker, or web-broker
currently records and maintains.
Section 155.220(j)(2)(iii)(A) requires that
agents, brokers, and web-brokers
document the receipt of consent from a
consumer or the consumer’s authorized
representative. Under
§ 155.220(j)(2)(iii)(B), such
documentation is required to include a
description of the scope, purpose, and
duration of the consent provided, the
date consent was given, the name of the
consumer or their authorized
representative, the name of the agent,
broker, web-broker, or agency being
granted consent, and a process through
which the consumer or their authorized
representative may rescind the consent.
The only piece of PII required for this
documentation is the consumer’s name,
which an agent, broker, or web-broker
would already be recording and
maintaining in their files.
A recorded conversation, during an
over-the-phone enrollment or otherwise,
could potentially contain more
consumer PII than what the regulations
require, as additional consumer
information may be revealed during the
conversation and the enrollment
process. However, we do not believe
this will lead to more improper
disclosures of consumer PII. Agents,
brokers, and web-brokers are already
required to adhere to applicable State or
Federal laws concerning the
safeguarding of consumer PII, including
§ 155.220(g)(4) and (j)(2)(iv), and
HIPAA.222 These same requirements
and protections continue to apply.
Additionally, an agent, broker, or webbroker that elects to implement the
phone recording method to meet these
new requirements would only be
required to record the portion of the
conversation in which the consumer or
consumer’s representative provides
consent to demonstrate compliance,
which would reduce the amount of
consumer PII in the recorded
conversation. This would further reduce
or eliminate the potential of improper
disclosures of consumer PII.
Comment: Some commenters
suggested these new requirements
would add a disproportionate burden on
smaller agencies and independent
agents, brokers, and web-brokers,
particularly with regard to the initial
costs of implementing these new
requirements. These commenters stated
larger agencies are better equipped to
222 See, for example, 45 CFR 155.260, 45 CFR part
164, subparts A and E, and the Health Insurance
Portability and Accountability Act of 1996, Public
Law 104–191, H.R. 3103, 104th Cong (42 U.S.C.
1320d–2).
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implement these new requirements and
absorb the costs associated with them.
Response: We acknowledge that larger
agencies may be better equipped to
implement these new requirements.
There will be upfront costs associated
with these new requirements,
potentially including purchasing
recording software, upgrading storage
capacity, or hiring new personnel.
Larger agencies typically have more
resources to allocate towards meeting
new industry standards, as is the case in
other business fields as well. However,
we do not believe these new
requirements will be cost prohibitive to
smaller agencies or independent agents,
brokers, and web-brokers. As discussed
above, we are not mandating the method
by which agents, brokers, and webbrokers must meet these new
requirements. Therefore, smaller
agencies and independent agents,
brokers, and web-brokers have the
flexibility to meet these requirements
utilizing the most efficient and costeffective method that meets their
business needs. Additionally, as
mentioned previously, these new
requirements are simply building on
existing requirements to obtain
consumer consent prior to assisting with
or facilitating enrollment through an
FFE or assisting the individual in
applying for APTC and CSRs for
QHPs,223 which we believe will
alleviate the burdens and costs
associated with these new requirements
for agents, brokers, and web-brokers of
all sizes.
Comment: Multiple commenters
stated they believed these new
requirements would be more difficult to
implement over the phone, which
would negatively impact consumers
without internet access (that is, lower
income) or those who are less proficient
with technology.
Response: We disagree that these
requirements will be more difficult to
implement over the phone than with
respect to other enrollment methods. As
is the case today, consumers will be able
to enroll in QHPs and apply for APTC
and CSRs for such coverage over the
phone, in-person, and via the internet.
The flexibility to choose what method is
utilized to document that consumer
consent has been obtained will allow
agents, brokers, and web-brokers to
implement these new requirements in a
manner that is least burdensome to
them. Agents, brokers, and web-brokers
may also use this flexibility to
implement different methods to comply
with these requirements depending on
the circumstances of each consumer
223 See
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they are assisting. Different
implementation methods include, but
are not limited to, obtaining the
signature of the consumer or their
authorized representative (electronic or
otherwise), verbal confirmation by the
consumer or their authorized
representative that is captured in an
audio recording, where legally
permissible, or a written response
(electronic or otherwise) from the
consumer or their authorized
representative to a communication sent
by the agent, broker, or web-broker.
As such, to implement these new
requirements for over-the-phone
enrollments, where legally permissible
and in accordance with applicable
requirements,224 agents, brokers, and
web-brokers can record phone
conversations with consumers or their
authorized representatives to comply
with § 155.220(j)(2)(iii)(A) and (B). For
example, during these conversations, an
agent, broker, or web-broker may ask the
consumer or the consumer’s authorized
representative if they have provided
consent. A recording of the consumer’s
or their authorized representative’s
response to this question, if it meets the
requirements in § 155.220(j)(iii)(A) and
(B), would be sufficient to meet these
new requirements. We understand that
saving recorded conversations may be
more difficult than other mediums due
to the digital space requirements and
recording software needed, but is not an
excessive burden as there are numerous
recording software options to choose
from and external hard drives are
widely available for purchase. Where
legally permissible, it will be the choice
of the agent, broker, or web-broker if
recording phone conversations is the
best method for them to implement
these requirements for over-the-phone
enrollments. At the same time, we
recognize there may be reasons agents,
brokers and web-brokers would also
want to have other methods available
for over-the-phone enrollments. For
example, in situations where a phone
recording is not possible, agents, brokers
and web-brokers may send the
consumer or their authorized
representative an email or text message
after talking with them over the phone.
The consumer or their authorized
representative may respond to this
email or text message, acknowledging
they have provided consent. When in224 We recognize that there are Federal and State
laws that govern the legality of recording phone
calls and conversations that may impact an agent,
broker, or web-broker’s ability to record phone or
oral communications with consumers or that may
require an agent, broker, or web-broker to obtain the
consumer’s consent prior to recording such
communications (see, for example, 18 U.S.C. 2511).
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person assistance is provided, the agent,
broker or web-broker may want to offer
the recording methods and other
options that it uses for over-the-phone
enrollments. The agent, broker, or webbroker may also want to implement a
method for in-person assistance that
involves obtaining the signature of the
consumer or authorized representative
(electronic or otherwise) given the faceto-face nature of the interaction.
Similarly, agents, brokers and webbrokers should consider what methods
meets their business needs, and those of
their consumers, for enrollments over
the internet. While we are not
mandating that agents, brokers, and
web-brokers adopt all of these different
implementation methods, we encourage
agents, brokers and web-brokers to
exercise this flexibility in a manner that
accommodates the various enrollment
methods they use with their respective
consumers. Additionally, if an agent,
broker, or web-broker is not able to
accommodate a consumer (for example,
the consumer does not have access to
the internet or is not proficient with
technology but the specific agent,
broker, or web-broker only engages in
enrollments via the internet), the
consumer may find another agent,
broker, or web-broker that can meet
their needs.
We believe these new requirements
will help protect consumers, including
those who may be in underserved
groups, rather than inhibit their
enrollment in Exchange coverage.
Further, we frequently see unauthorized
enrollments impact underserved groups
of consumers in greater numbers than
other groups. Often, agents, brokers, and
web-brokers who engage in
noncompliant or fraudulent behavior
target low-income consumers or
consumers with limited English
proficiency. By requiring that agents,
brokers, and web-brokers document that
consumers or their authorized
representatives have provided their
consent, we believe that these consumer
harms and the impact on underserved
groups can be mitigated. In addition,
requiring agents, brokers, and webbrokers to document that consumer
consent was received and to maintain
the record for 10 years will provide us
with more conclusive evidence when
pursuing enforcement actions against
agents, brokers, or web-brokers for
potentially fraudulent activities.
Comment: Multiple commenters
suggested these new requirements
related to the documentation of
consumer consent are unnecessary as
the requirement to obtain consumer
consent already exists, either under
Federal or State law or in the agent,
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25813
broker, or web-broker’s Exchange
agreement(s).
Response: We disagree that these new
requirements related to the
documentation of consumer consent are
unnecessary or duplicative of existing
requirements. While agents, brokers,
and web-brokers are currently required
to obtain consumer consent prior to
providing the consumer with assistance
pursuant to § 155.220(j)(2)(iii), this
section does not currently require
agents, brokers, or web-brokers to
document the receipt of consent and
maintain such documentation for a
specified period of time. As discussed
in the proposed rule (87 FR 78254), we
believe requiring such documentation of
consent is crucial for two reasons. First,
we believe this requirement will help
minimize the risk of fraudulent
activities, such as unauthorized
enrollments. Second, it will help us
resolve disputes and adjudicate claims
related to the provision of consumer
consent.
Comment: One commenter suggested
that the documentation of consumer
consent requirement is unnecessary as
unauthorized enrollments in Exchange
coverage do not occur for consumers
under the age of 65.
Response: We have observed
numerous unauthorized Exchange
enrollments that have occurred for
consumers under the age of 65. This is
especially true with regard to consumers
with limited English proficiency or
underserved populations, including
unhoused individuals. We believe these
new requirements will help mitigate the
risk of unauthorized enrollments for
consumers of all ages.
Comment: Several commenters stated
that we should allow agents, brokers,
and web-brokers to meet these new
requirements under § 155.220(j)(2)(iii)
and the new requirements related to
documenting that eligibility application
information has been reviewed by and
confirmed to be accurate by the
consumer or the consumer’s authorized
representative under § 155.220(j)(2)(ii)
during the same consumer interaction
and/or within the same document.
Response: Agents, brokers, or webbrokers are not prohibited from
documenting that eligibility application
information has been reviewed by and
confirmed to be accurate by the
consumer or the consumer’s authorized
representative and documenting the
receipt of consent from the consumer or
the consumer’s authorized
representative pursuant to
§ 155.220(j)(2)(ii) and (iii), respectively,
during the same conversation with the
consumer, or within the same
document, as long as the documentation
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complies with the requirements set forth
in § 155.220(j)(2)(ii)(A) and (B) and
(j)(2)(iii)(A) through (C).
Comment: Some commenters
recommended that we allow consumers
to grant consent to multiple agents,
brokers, or web-brokers simultaneously.
Response: As noted in the proposed
rule (87 FR 78254), we are not directing
agents, brokers, or web-brokers on how
to comply with these new
documentation requirements. In the
Model Consent Form 225 that
accompanied the proposed rule, we
included an option for a consumer to
provide consent to an agency rather
than an individual agent, broker, or
web-broker. At this time, providing
consent to an agency or multiple agents,
brokers, or web-brokers simultaneously
is permitted, provided the consent
documentation complies with the
requirements contained in
§ 155.220(j)(2)(iii).
Comment: A few commenters
suggested the proposed record retention
period of 10 years is too long for agents,
brokers, and web-brokers to maintain
the documentation required by
§ 155.220(j)(2)(iii)(C). Another
commenter stated we should have
record retention period align with the
record retention period of the State
where the consumer is enrolled.
Response: Please see the
accompanying information collection
section IV.F. (ICRs Regarding Providing
Correct Information to the FFEs
(§ 155.220(j)) of this final rule for the
response to these comments.
Comment: One commenter suggested
we define what consent is so that it may
be standardized. This commenter also
suggested we delay implementation of
these documentation requirements until
PY 2025, or exercise enforcement
discretion with regard to those agents,
brokers, and web-brokers making goodfaith efforts to meet these requirements
during PY 2024.
Response: After considering these
comments, we decline to define
consent. We believe the term consent is
unambiguous and the new requirements
in § 155.220(j)(2)(iii)(A) through (C) will
provide agents, brokers, and webbrokers with a clear picture of what
obtaining and documenting the receipt
of consent requires under
§ 155.220(j)(2)(iii). In addition, we
decline to delay implementation of
these requirements until PY 2025. As
noted in the proposed rule (87 FR
225 CMS. (Dec. 14, 2022). CMS Model Consent
Form for Marketplace Agents and Brokers. PRA
package (CMS–10840, OMB 0938–XXXX). https://
www.cms.gov/regulations-and-guidance/legislation/
paperworkreductionactof1995/pra-listing/cms10840.
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78254) and above, the goal of these
requirements is to prevent fraudulent
activities such as unauthorized
enrollments, to help resolve disputes
between agents, brokers, and webbrokers and consumers related to
consumer consent, reduce consumer
harm, and support the efficient
operation of the Exchanges. If we delay
implementation of these documentation
requirements, consumers may be
negatively impacted when that impact
could have been avoided. Additionally,
we do not plan on targeting agents,
brokers, or web-brokers who are acting
in good faith to meet these new
requirements. Our primary goal is to
address situations involving
noncompliance by actors who are not
acting in good faith, with a particular
focus on fraudulent activities in the
FFEs and SBE–FPs. Our experience
shows long-standing patterns of this
activity with the potential to impact a
large number of consumers with
potentially severe consequences (for
example, termination of coverage,
unanticipated tax liability).
Comment: We also received several
comments that were outside the scope
of these proposals related to the
documentation of consumer consent,
including the need to have the
Exchange(s) obtain and maintain
consent documentation instead of the
agent, broker, or web-broker, as well as
having the Exchange(s) email consumers
when changes on an application are
made.
Response: Although we appreciate the
commenters’ interest in policies
governing the documentation of
consumer consent, given that these
comments are out-of-scope with regard
to these specific proposals, we decline
to comment on them at this time.
4. Eligibility Standards (§ 155.305)
a. Failure To File and Reconcile Process
(§ 155.305(f)(4))
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78255), we proposed
to amend § 155.305(f)(4) which
currently prohibits an Exchange from
determining a taxpayer eligible for
APTC if HHS notifies the Exchange that
a taxpayer (or a taxpayer’s spouse, if
married) has failed to file a Federal
income tax return and reconcile their
past APTC for a year for which tax data
from the IRS will be utilized for
verification of household income and
family size in accordance with
§ 155.320(c)(1)(i).
As background, Exchange enrollees
whose taxpayer fails to comply with
current § 155.305(f)(4) are referred to as
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having failed to ‘‘file and reconcile.’’
Since 2015, HHS has taken regulatory
and operational steps to help increase
taxpayer compliance with filing and
reconciliation requirements under
section 36B(f) of the Code and its
implementing regulations at 26 CFR
1.36B–4(a)(1)(i) and (a)(1)(ii)(A) by tying
eligibility for future APTC to the
taxpayer’s reconciliation of past APTC
paid. However, since the finalization of
the requirement at § 155.305(f)(4), HHS
has determined that the operational
costs of the current policy are
significant and can be improved to
provide a better consumer experience,
while also preserving an Exchange’s
duty to protect program integrity.
Exchanges have faced a longstanding
operational challenge, specifically that
Exchanges sometimes have to determine
an enrollee ineligible for APTC without
having up-to-date information on the tax
filing status of households while
Federal income tax returns are still
being processed by the IRS. Currently,
Exchanges determine an enrollee
ineligible for APTC if the IRS, through
data passed from the IRS to HHS, via the
Federal Data Services Hub (the Hub),
notifies an Exchange that the taxpayer
did not comply with the requirement to
file a Federal income tax return and
reconcile APTC for one specific tax
year. To address the challenge of
receiving up-to-date information, and to
promote continuity of coverage in an
Exchange QHP, we proposed a new
process for Exchanges to conduct FTR
while also ensuring that Exchanges
preserve program integrity by paying
APTC only to consumers who are
eligible to receive it. HHS believes that
any FTR process should encourage
compliance with the filing and
reconciling requirement under the Code
and its implementing regulations,
minimize the potential for APTC
recipients to incur large tax liabilities
over time, and support eligible
enrollees’ continuous enrollment in
Exchange coverage with APTC by
avoiding situations where enrollees
become uninsured when their APTC is
terminated.
For Exchanges using the Federal
eligibility and enrollment platform,
which includes the FFEs and SBE–FPs,
taxpayers who have not met the
requirement of § 155.305(f)(4) are put
into the FTR process with the Exchange.
As part of the normal process used by
Exchanges using the Federal eligibility
and enrollment platform during Open
Enrollment, enrollees for whom IRS
data indicates an FTR status for their
taxpayer receive notices from the
Exchange alerting them that IRS data
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shows that their taxpayer has not filed
a Federal income tax return for the
applicable tax year and reconciled
APTC for that year using IRS Form
8962, Premium Tax Credit (PTC). FTR
Open Enrollment notices sent directly to
the taxpayer clearly state that IRS data
indicates the taxpayer failed to file and
reconcile, whereas FTR Open
Enrollment notices sent to the
applicant’s household contact, who may
or may not be the taxpayer, list a few
different reasons consumers may be at
risk of losing APTC, including the
possibility that IRS data indicates the
taxpayer failed to file and reconcile
(because the Exchange is prohibited
from sending protected tax information
to an individual who may not be the tax
filer). Notices to the applicant’s
household contact can be confusing
because of the multiple reasons listed.
Both Open Enrollment notices
encourage taxpayers identified as
having an FTR status to file their
Federal income tax return and reconcile
their APTC for that year using IRS Form
8962, or risk losing APTC eligibility for
the next coverage year.
In late 2015, to allow consumers with
an FTR status to be determined eligible
for APTC temporarily (if otherwise
eligible), HHS added a question to the
single, streamlined application used by
the Exchanges using the Federal
eligibility and enrollment platform that
allows enrollees to attest on their
application, under the penalty of
perjury, that they have filed and
reconciled their APTC by checking a
box that says, ‘‘Yes, I reconciled
premium tax credits for past years.’’ 226
Enrollees who make this attestation and
enroll in coverage during Open
Enrollment retain their APTC, even if
IRS data has not been updated to reflect
their most current Federal income tax
filing status or if the individual has not
actually reconciled their APTC.
Allowing enrollees to attest to filing and
reconciling, even though IRS data
indicates that they did not, is a critical
step to safeguard enrollees from losing
APTC erroneously as the IRS typically
takes several weeks to process Federal
income tax returns, with additional time
required for returns or amendments that
are filed using a paper process.
After Open Enrollment, Exchanges
using the Federal platform then conduct
a second look at FTR data to follow up
and verify an enrollee’s reconciliation
attestation by conducting a verification
of their taxpayer’s FTR status early in
the next coverage year, which includes
226 We note that this question was removed from
the single streamlined application once the FTR
process was paused in 2020 for the 2021 PY.
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additional notices to enrollees and
taxpayers. This verification process
early in the next coverage year is
referred to as FTR Recheck. State
Exchanges that operate their own
eligibility and enrollment platform have
each implemented similar processes to
check the FTR status of their enrollees
annually based on data provided by the
IRS to identify and notify enrollees who
are at risk of losing APTC eligibility,
and to allow enrollees to attest under
the penalty of perjury that they have
filed and reconciled their APTC.
There are many reasons we proposed
the changes to § 155.305(f)(4) described
in the proposed rule (87 FR 78255
through 78257). HHS’ and the State
Exchanges’ experiences with running
FTR operations have shown that
Exchange enrollees often do not
understand the requirement that their
taxpayer must file a Federal income tax
return and reconcile their APTC or that
they must also submit IRS Form 8962 to
properly reconcile their APTC, even
though the single, streamlined
application used by Exchanges on the
Federal platform and QHP enrollment
process require a consumer to attest to
understanding the requirement to file
and reconcile in two places. For
example, we are aware anecdotally that
many third-party tax preparers, such as
accountants, are not aware of the
requirement to file and reconcile, nor
prompt consumers to also include IRS
Form 8962 along with their Federal
income tax return. Although enrollees
who rely on third party tax preparers
such as accountants or third-party tax
preparation software to prepare their
Federal income tax returns are still
required to file and reconcile even if
their tax preparer was unaware of the
requirement, consumers should have
the opportunity to receive additional
guidance from Exchanges on the
requirement to file and reconcile to
promote compliance and prevent
termination of APTC.
While annual FTR notices help with
this issue as the notices alert consumers
that they did not provide adequate
documentation to fulfill the requirement
to file and reconcile, the current process
that requires Exchanges to determine an
enrollee ineligible for APTC after one
year of having an FTR status is overly
punitive. Some consumers may have
their APTC ended due to delayed data,
in which case their only remedy is to
appeal to get their APTC reinstated.
Consumers also may be confused or may
have received inadequate education on
the requirement to file and reconcile, in
which case they must actually file,
reconcile, and appeal to get their APTC
reinstated. By requiring Exchanges to
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25815
determine an enrollee ineligible for
APTC only after having an FTR status
for 2 consecutive tax years (specifically,
years for which tax data will be utilized
for verification of household income
and family size), Exchanges will have
more opportunity to conduct outreach
to consumers whom data indicate have
failed to file and reconcile to prevent
erroneous terminations of APTC and to
provide access to APTC for an
additional year even when APTC would
have been correctly terminated under
the original FTR process. Under the
proposed change, Exchanges on the
Federal platform will continue to send
notices to consumers for the year in
which they have failed to reconcile
APTC as an initial warning to inform
and educate consumers that they need
to file and reconcile or risk being
determined ineligible for APTC if they
fail to file and reconcile for a second
consecutive tax year. This change will
also alleviate burden on HHS hearing
officers by reducing the number of
appeals related to denial of APTC due
to FTR, and prevent consumers who did
reconcile, but for whom IRS data was
not updated quickly enough, from
having to go through an appeal process
to have their APTC rightfully reinstated.
We believe in ensuring consumers
have access to affordable coverage and
place high value on consumers
maintaining continuity of coverage in
the Exchange, as we have found that
FFE and SBE–FP enrollees who lose
APTC tend to end their Exchange
coverage and will experience coverage
gaps, as they cannot afford unsubsidized
coverage. In light of this, we believe it
is imperative that any change to the
current FTR operations be done
carefully and that we thoughtfully
balance how it enforces the requirement
to file and reconcile, since a
consequence of losing APTC effectively
means many consumers may lose access
to health insurance coverage for needed
medical care.
Therefore, given these challenges that
both Exchanges and consumers have
faced with the requirement to file and
reconcile, we proposed to revise
§ 155.305(f)(4) under which Exchanges
will not be required, or permitted, to
determine consumers ineligible for
APTC due to having an FTR status for
only one year. Given that our experience
running FTR shows continued issues
with compliance with the requirement
to file and reconcile, we proposed that
beginning on January 1, 2024, an
applicant’s FTR status will trigger an
Exchange determination that the
applicant is ineligible for APTC only if
the applicant has an FTR status for 2
consecutive years (specifically, 2
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consecutive years for which tax data
will be utilized for verification of
household income and family size).
Due to the COVID–19 PHE starting in
2020, for PYs 2021 and 2022, we
temporarily paused ending APTC for
enrollees with an FTR status due to IRS
processing delays of 2019 Federal
income tax returns.227 We then
extended this pause for the PY 2023 in
July 2022 and included flexibility for
State Exchanges that operate their own
eligibility and enrollment platforms to
take similar action.228 As a result of
these changes, 55 percent of enrollees
who were automatically re-enrolled
during 2021 open enrollment with an
FTR status remained enrolled in
Exchange coverage as of March 2021. In
contrast, only 12 percent of enrollees
with an FTR status who were
automatically re-enrolled without APTC
during the 2020 open enrollment were
still enrolled in coverage as of March
2020. These results show the significant
impact that loss of APTC due to FTR
status has on whether enrollees
continue to remain in coverage offered
through the Exchange, as these
impacted enrollees must pay the full
cost of their Exchange plan, which is
often unaffordable without APTC.
We proposed to continue to pause
APTC denials based on a failure to
reconcile until HHS and the IRS are able
to implement the new FTR policy. Until
the IRS can update its systems to
implement the new FTR policy, and we
can notify the Exchange of an enrollee’s
consecutive two-year FTR status, the
Exchange would not determine
enrollee’s ineligible for APTC based on
either the one-year or two-year FTR
status. We believe that removing APTC
after 2 consecutive years of an FTR
status instead of one would help
consumers avoid gaps in coverage by
increasing retention in the Exchange
even if they have failed to reconcile for
one year, and would reduce the punitive
nature of the current process which may
erroneously terminate APTC for
consumers who have filed and
reconciled. We also believe that these
proposed changes would help protect
consumers from accruing large tax
liabilities over multiple years by
notifying and ending APTC for
consumers with an FTR status for 2
227 See CMS. (2021, July 23) Failure to File and
Reconcile (FTR) Operations Flexibilities for Plan
Years 2021 and 2022—Frequently Asked Questions
(FAQ). https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/FTR-flexibilities-2021and-2022.pdf.
228 See CMS. (2022, July 18). Failure to File and
Reconcile (FTR) Operations Flexibilities for Plan
Year 2023. https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/FTR-flexibilities2023.pdf.
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consecutive years. Finally, we believe
these proposed changes would allow
Exchanges to maintain program integrity
by denying APTC to consumers who
have, over the course of 2 years, been
given ample notification of their
obligation to file and reconcile and have
nevertheless failed to do so.
We sought comment on these
proposals, especially from States and
other interested parties regarding tax
burdens on consumers which would
inform our decision on this proposal.
After reviewing the public comments,
we are finalizing this provision as
proposed, except that the final rule will
become effective on the general effective
date of the final rule, instead of January
1, 2024. As detailed in the responses to
comments on these policies, some
commenters sought clarity on when the
policy would become effective, and
others were concerned that changing the
FTR policy would threaten the integrity
of APTC available to eligible consumers.
By allowing the policy to become
generally effective prior to January 1,
2024, we are solidifying flexibility for
HHS and IRS to resume FTR operations
as soon as HHS and IRS are ready to
begin. HHS will provide at least three
months’ notice to consumers and other
interested parties prior to resuming FTR
operations. We originally proposed a
technical correction to clarify that HHS
receives data from the IRS for
consumers who have failed to file tax
returns and reconcile a previous year’s
APTC. However, upon further review,
this technical correction is not
necessary because we believe that the
original wording of the rule more
accurately reflected how information is
passed through the Federal Data
Services Hub, and therefore, we are not
finalizing this technical correction.
Finally, we clarify that Exchanges must
continue to pause APTC denials based
on a failure to reconcile for one year
under the currently effective regulation,
or 2 years under the regulation we
finalize here, until HHS and the IRS are
able to implement the FTR policy.
We summarize and respond to public
comments received on the proposed
rule that an applicant’s FTR status will
result in an Exchange finding that the
applicant is ineligible for APTC only if
the applicant has an FTR status for 2
consecutive tax years.
Comment: Many commenters agreed
with the proposal that an applicant’s
FTR status will result in an Exchange
determination that the applicant is
ineligible for APTC only if the applicant
has an FTR status for 2 consecutive tax
years. Commenters agreed that the twoyear FTR proposal better protects
financially vulnerable enrollees
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compared to the current one-year FTR
process. Several commenters added that
Exchanges still face operational
challenges, and enrollees should not be
financially penalized in the case of an
unintentional technical issue within the
Exchange. A commenter also stated the
proposed change will positively
promote continuity of coverage for
consumers enrolled in Exchange
coverage. Additionally, many
commenters stated that the proposal
would allow for more consumer
education on the requirement to file and
reconcile past APTC received and the
process for doing so, while protecting
consumers from accruing large tax
liabilities over multiple years.
Response: We agree that the proposed
FTR policy will improve continuity of
coverage for consumers by ensuring that
consumers do not become uninsured
because their Exchange coverage
becomes unaffordable after losing
APTC. Continuity of coverage is
especially important for consumers with
chronic health conditions such as
cancer. Additionally, the proposed
policy would protect consumers from
incurring large tax liabilities over
multiple years, which may especially
benefit consumers with household
incomes over 400 percent of the Federal
poverty level (FPL), who are not subject
to APTC repayment caps, and whose
potential tax liability from failing to
reconcile APTC may be larger.
Nonetheless, it is still a statutory
requirement 229 that consumers file their
Federal income taxes and reconcile past
APTC received, regardless of their FPL
level or risk for tax liability, and we will
continue to implement policies that
work towards ensuring that only those
consumers who are eligible to receive
APTC continue to do so. We believe that
the proposed policy strikes a balance
between protecting consumers from
large tax liabilities, such as those with
household incomes above 400 percent
of the FPL, while also ensuring program
integrity for all Exchanges.
Comment: A few comments from
State Exchanges supported the proposal
but asked that we provide clear and
early information about the technical
specifications and processes that will be
required to implement the FTR rule as
proposed within State Exchange’s
systems.
Response: We agree that clear
communication about technical
specifications and the processes that
will be required to implement the FTR
229 Internal Revenue Code section 36B; 26 CFR
1.36B 4(a)(1)(i); see also https://www.irs.gov/
affordable-care-act/individuals-and-families/
premium-tax-credit-claiming-the-credit-andreconciling-advance-credit-payments#Advance.
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rule would be beneficial. As such, we
will work with all parties involved to
make sure the FTR process is explained
clearly prior to and during
implementation.
Comment: A few commenters,
including several State Exchanges,
supported the policy, but requested
clarification on the intended
implementation timeline of the new
FTR proposal. Commenters requested
adequate time to implement necessary
technical changes, allow Medicaid
unwinding efforts to be completed, and
ensure alignment with IRS provisions
and systems.
Response: In the proposed rule (87 FR
78256), we stated that policy would
become effective on January 1, 2024.
The proposed FTR regulation provided
that ineligibility based on FTR status
would apply when IRS notifies HHS
and HHS then notifies the Exchanges
that a tax filer or their spouse did not
comply with the requirement to file an
income tax return and reconcile APTC
for a year for which tax data would be
utilized for verification of household
income and family size. Based on
information on the availability of data
from IRS, we intend to continue pausing
implementation of the FTR requirement
on Exchanges on the Federal platform
until data from IRS about APTC
reconciliation is available to HHS,
which we expect to be available for
eligibility determinations for PY 2025,
and we expect that State Exchanges are
doing likewise. Exchanges on the
Federal platform expect such
information to be available, and to first
take action to apply the new FTR rule,
in September 2024, when batch auto reenrollment (BAR) activities begin for PY
2025 eligibility determinations. During
BAR, the Exchanges on the Federal
platform will communicate with IRS to
check whether enrollees have filed and
reconciled for tax years 2022 and 2023
and set the appropriate FTR status code
for enrollees who have not filed and
reconciled APTC for tax years 2022 and
2023. Exchanges on the Federal
platform will then send notices to
enrollees who have either a one-year or
two-year FTR status according to their
2022 and 2023 Federal income tax
filings. Under the proposed change,
Exchanges on the Federal platform will
not deny APTC eligibility, but will
continue to send notices to consumers
for the first year in which they have
failed to reconcile APTC to inform and
educate them that they need to file and
reconcile or risk being determined
ineligible for APTC if they fail to file
and reconcile for a second consecutive
tax year.
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Enrollees in Exchanges on the Federal
platform who have been notified and
have been determined to have a current
two-year FTR status will no longer be
eligible for APTC, consistent with the
Exchanges’ on the Federal platform FTR
process, while those enrollees who have
received the first-year notice will be
encouraged to file and reconcile to
avoid losing APTC eligibility the
following year. Given the expected
timing to resume accurately and timely
notifying Exchanges of FTR status by
September 2024, we believe there is
enough time for Medicaid unwinding to
take place and to ensure alignment with
IRS systems. In response to commenter
concerns regarding adequate notice of
when the new FTR policy may be
applied to deny APTC eligibility, and to
provide HHS and IRS flexibility to
resume FTR operations as soon as they
are able to implement the policy, HHS
will provide at least 3 months’ notice
before Exchanges are required to deny
APTC to consumers who the IRS reports
to have failed to reconcile APTC for 2
consecutive years.
Comment: Two commenters
expressed concern for consumers who
might experience a greater tax burden or
tax liability if they are unable to
reconcile their APTC after two years
rather than one year and suggested we
find a solution to alleviate this burden.
We also received a few comments that
neither supported nor opposed the
proposal but raised concerns about
consumer protections for enrollees
facing high repayment effects, especially
those with household incomes above
400 percent of FPL.
Response: We agree with the
commenters that this proposal could
place consumers at a risk for increased
tax liability. In particular, taxpayers
who underestimated their annual
income when they enrolled in an
Exchange QHP and are ultimately
determined ineligible for APTC because
of their FTR status, may be required to
repay large amounts of APTC when they
file their Federal income taxes and
reconcile past APTC received. We agree
that taxpayers with incomes above 400
percent of the FPL may face the highest
repayment burdens if they fail to file
and reconcile for 2 consecutive tax years
as APTC repayments are not capped for
this group. To mitigate this concern, we
intend to continue issuing FTR warning
notices for enrollees in Exchanges on
the Federal platform who have not filed
and reconciled for one tax year. We
believe that annual FTR warning notices
will remind this population of the
potential for a large tax liability and
prompt them to comply with the
requirement to file and reconcile if they
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25817
have not already. We encourage State
Exchanges to take similar action.
Despite the potential for a large tax
liability, we believe that this proposal
will have a positive impact on
consumers while still ensuring program
integrity as it will provide better
continuity of coverage for consumers
who may not be aware of the
requirement to file and reconcile. We
are aware that some third-party tax
preparers do not properly educate
consumers on the importance of filing
and reconciling and, in some instances,
these third-party tax preparers are
unaware that consumers have to file IRS
Form 8962 along with their tax return to
reconcile past APTC received. In
implementing the new FTR
requirement, Exchanges on the Federal
platform will provide additional
education, outreach, and initial warning
notices for those consumers who are out
of compliance with the filing and
reconciling requirement after one year
to avoid those high tax penalties. We
will continue to monitor the
implementation of this new policy
including whether certain populations
continue to experience large tax
liabilities and will consider whether
additional guidance, or any additional
policy changes in future rulemaking, are
necessary.
Comment: Two commenters
supported the proposal and suggested
that more outreach is needed to both
consumers and tax preparers about the
FTR process, the risk of noncompliance,
and the process for determining
eligibility.
Response: We agree with the
commenter regarding the need for
education and outreach for consumers,
States, tax preparers, and interested
parties that assist consumers with
enrollment decisions, such as Assisters,
agents, and brokers. As we monitor the
implementation of this provision, we
will consider providing additional
guidance, education, and other
technical assistance to Exchanges to
adequately prepare consumers, States,
tax preparers, and interested parties
before the implementation is completed
and FTR operations are resumed.
Comment: We received various
comments regarding potential program
integrity implications. One commenter
fully opposed the proposal of removing
APTC after an enrollee has been in an
FTR status for 2 consecutive years,
citing the risks of increased fraud and
abuse by consumers who know they can
ignore an FTR status for an additional
year. Similarly, a few commenters
neither supported nor opposed the
proposal but cautioned HHS about
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potential fraud and abuse by enrollees
receiving excess premium tax credits.
Response: We understand and
appreciate the commenters’ concern
regarding the risk for fraud and abuse
with respect to this proposal. We
acknowledge that there is some risk that
enrollees may choose to ignore the
requirement to file and reconcile, but
we anticipate these instances will be
limited as the majority of enrollees
comply with the requirement to file and
reconcile. Additionally, taxpayers who
choose to ignore the requirement to file
and reconcile may be subject to IRS
enforcement action, additional tax
liability, and possibly interest and
penalties. We also note that nothing in
this regulation changes the requirement
for enrollees to file their Federal income
tax return and reconcile the previous
year’s APTC with the IRS. We will
continue to monitor the implementation
of this policy by reviewing and
monitoring yearly FTR consumer data
and referring any instances of suspected
fraud or abuse to the appropriate
Federal agencies. We will also
determine whether additional guidance,
or any additional policy changes in
future rulemaking to combat fraud and
abuse, are necessary.
Comment: A few commenters urged
HHS to fully repeal the FTR process,
citing the threat it presents to continuity
of coverage for consumers who are
facing periods of intense care, the
punitive nature of the FTR process
towards consumers who cannot afford
coverage, and the risk that a two-year
FTR process does not sufficiently
mitigate the unwarranted loss of APTC.
Response: We considered many
factors in our decision to shift from a
one-year FTR process to a two-year FTR
process. We believe that the change
properly balances consumer protections
and program integrity concerns, and
therefore, we believe we should
continue to improve the FTR process
rather than repeal it entirely.
5. Verification Process Related to
Eligibility for Insurance Affordability
Programs (§§ 155.315 and 155.320)
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a. Income Inconsistencies
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78257), we proposed
to amend § 155.320 to require
Exchanges to accept an applicant’s or
enrollee’s attestation of projected annual
household income when the Exchange
requests tax return data from the IRS to
verify attested projected annual
household income, but the IRS confirms
there is no such tax return data
available. We further proposed to
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amend § 155.315(f) to add that income
inconsistencies must receive an
automatic 60-day extension in addition
to the 90 days provided by
§ 155.315(f)(2)(ii).
Section 155.320 sets forth the
verification process for household
income. The Exchange requires that an
applicant or enrollee applying for
financial assistance must attest to their
projected annual household income. See
§ 155.320(a)(1) and (c)(3)(ii)(b). The
regulation also requires that for any
individual in the applicant’s or
enrollee’s tax household (and for whom
the Exchange has a SSN), the Exchange
must request tax return data regarding
income and family size from the IRS.230
See § 155.320(c)(1)(i)(A). When the
Exchange requests tax return data from
the IRS and the data indicates that
attested projected annual household
income represents an accurate
projection of the tax filer’s household
income for the benefit year for which
coverage is requested, the Exchange
must determine eligibility for APTC and
CSR based on the IRS tax data. See
§ 155.320(c)(3)(ii)(C).
When the Exchange requests tax
return data from the IRS and the IRS
returns data that reflects that the
attested projected annual household
income is not an accurate projection of
the tax filer’s household income for the
benefit year for which coverage is
requested, the applicant or enrollee is
considered to have experienced a
change in circumstances, which allows
HHS to establish procedures for
determining eligibility for APTC on
information other than IRS tax return
data, as described in § 155.320(c)(3)(iii)
through (vi). See section 1412(b)(2) of
the ACA.
The Exchange also considers an
applicant or enrollee to have
experienced a change in circumstances
when the Exchange requests tax return
data from the IRS to verify attested
projected household income, but the
IRS confirms such data is unavailable.
This is because tax data is usually
unavailable when an applicant or
enrollee has experienced a change in
family size, other household
circumstances (such as a birth or death),
filing status changes (such as a marriage
or divorce), or the applicant or enrollee
was not required to file a tax return for
the year involved. See section 1412(b)(2)
of the ACA. When an applicant or
enrollee has experienced a change in
circumstances as described in section
1412(b)(2) of the ACA, the Exchange
230 The Exchange must also request data regarding
Social Security Benefits from the Social Security
Administration.
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determines eligibility for APTC and CSR
using alternate procedures designed to
minimize burden and protect program
integrity, described in
§ 155.320(c)(3)(iii) through (vi).
If an applicant or enrollee qualifies for
an alternate verification process as
described above, and the attested
projected annual household income is
greater than the income amount
returned by the IRS, the Exchange
accepts the applicant’s attestation
without further verification under
§ 155.320(c)(3)(iii)(A). If an applicant
qualifies for an alternate verification
process, and the attested projected
annual household income is more than
a reasonable threshold less than the
income amount returned by the IRS, or
there is no IRS data available, the
Exchange generates an income
inconsistency (also referred to as a data
matching issue or DMI) and proceeds
with the process described in
§ 155.315(f)(1) through (4), unless a
different electronic data source returns
an amount within a reasonable
threshold of the projected annual
household income. See
§ 155.320(c)(3)(iv) and (c)(3)(vi)(D). This
process usually requires the applicant or
enrollee to present satisfactory
documentary evidence of projected
annual household income. If the
applicant fails to provide
documentation verifying their projected
annual household income attestation,
the Exchange determines the
consumer’s eligibility for APTC and
CSRs based on available IRS data, as
required in § 155.320(c)(3)(vi)(F).
However, if there is no IRS data
available, the Exchange must determine
the applicant ineligible for APTC and
CSRs as required in
§ 155.320(c)(3)(vi)(G). We proposed to
make clarifying revisions to the current
regulations to ensure consistency
between the regulations and the current
operations of the Exchanges on the
Federal platform, as described here.
We proposed to add § 155.320(c)(5)
which would require Exchanges to
accept an applicant’s or enrollee’s
attestation of projected annual
household income when the Exchange
requests IRS tax return data but IRS
confirms such data is not available
because the current process is overly
punitive to consumers and burdensome
to Exchanges. There are many reasons
for IRS not returning consumer data,
aside from the consumer’s failure to file
tax returns, including tax household
composition changes (such as birth,
marriage, and divorce), name changes,
or other demographic updates or
mismatches—all of which are legitimate
changes that currently cause a consumer
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to receive an income DMI. Additionally,
the consequence of receiving an income
DMI and being unable to provide
sufficient documentation to verify
projected household income outweighs
program integrity risks as, under
§ 155.320(c)(3)(vi)(G), consumers are
determined completely ineligible for
APTC and CSRs. For burden on
Exchanges, DMI verification by the
Exchange requires an outlay of
administrative hours to monitor and
facilitate the resolution of income
inconsistencies. Within the Federal
Platform, this administrative task
accounts for approximately 300,000
hours of labor annually, which we
believe is proportionally mirrored by
State Exchanges.
Accordingly, we proposed to accept
an applicant’s or enrollee’s attestation of
projected annual household income
when IRS tax return data is requested
but is not available, and to determine
the applicant or enrollee eligible for
APTC or CSRs in accordance with the
applicant’s or enrollee’s attested
projected household income, to more
fairly determine eligibility for
consumers and to reduce unnecessary
burden on Exchanges. This proposal is
consistent with section 1412(b)(2) of the
ACA, which allows the Exchange to
utilize alternate verification procedures
when a consumer has experienced
substantial changes in income, family
size or other household circumstances,
or filing status, or when an applicant or
enrollee was not required to file a tax
return for the applicable year.231 It is
also consistent with the flexibility under
section 1411(c)(4)(B) of the ACA to
modify methods for verification of the
information where we determine such
modifications will reduce the
administrative costs and burdens on the
applicant.
The Exchange would continue to
generate income DMIs when IRS tax
data is available and the attested
projected household income amount is
more than a reasonable threshold below
the income amount returned by the IRS,
and other sources cannot provide
income data within the reasonable
threshold. Additionally, the Exchange
would continue to generate income
DMIs when IRS tax data cannot be
requested because an applicant or
enrollee did not provide sufficient
information (namely, a social security
number), and other sources cannot
provide income data within the
reasonable threshold of the attested
projected household income.
Under section 1411(c)(3) of the ACA,
data from the IRS is required to be used
231 42
U.S.C. 18081.
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to determine if income is inconsistent.
Exchanges on the Federal Platform do
not use any other data sources for the
purpose of generating income DMIs
because there are currently no reliable
and accurate income data sources
legally available to such Exchanges that
would provide quality data for this
purpose. For Exchanges using the
Federal platform, income data from
other electronic data sources will
continue to be used to verify income to
avoid setting an income DMI when the
attested projected household income
amount is more than a reasonable
threshold below the income amount
returned by the IRS or IRS data cannot
be requested.
However, we clarify that under
§ 155.315(h), State Exchanges are
granted flexibility to modify the
methods used for income collection and
verification, subject to HHS’ approval,
which can include the use of alternative
data sources. And, per
§ 155.320(c)(3)(vi), these HHS approved
electronic data sources must be used,
where available, in instances where IRS
income data is unavailable or
inconsistent. Accordingly, upon
approval from HHS, State Exchanges
may use alternative electronic data
sources to generate income DMIs when
IRS is unable to return data or if the
projected household annual income is
more than a reasonable threshold less
than the income amount returned for
the household by the alternative
electronic data source. In order for the
alternative electronic data to be used to
generate an income DMI, the alternative
electronic data source must maintain
the same accuracy of the IRS data in
providing an income data for
verification by returning income data for
all members of the household who have
attested to earning income. If IRS is
successfully contacted for a household
but does not return data, and the
alternative electronic data source does
not provide full income data for the
household, then the State Exchange
must accept the applicant’s or enrollee’s
attestation of projected annual
household income.
Lastly, we proposed to revise
§ 155.315 to add new paragraph (f)(7) to
require that applicants must receive an
automatic 60-day extension in addition
to the 90 days currently provided by
§ 155.315(f)(2)(ii) to allow applicants
sufficient time to provide
documentation to verify household
income. The extension would be
automatically granted when consumers
exceed the allotted 90 days without
resolving their household income DMI.
This proposal aligns with current
§ 155.315(f)(3), which provides
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25819
extensions to applicants beyond the
existing 90 days if the applicant
demonstrates that a good faith effort has
been made to obtain the required
documentation during the period. It is
also consistent with the flexibility under
section 1411(c)(4)(B) of the ACA to
modify methods for verification of the
information where we determine such
modifications will reduce the
administrative costs and burdens on the
applicant.
We have found that 90 days is often
an insufficient amount of time for many
applicants to provide income
documentation, since it can require
multiple documents from various
household members along with an
explanation of seasonal employment or
self-employment, including multiple
jobs. As applicants are asked to provide
a projection for their next year’s income,
they often submit documents that do not
fully explain their attestation due to the
complexities noted previously, which
requires contact from the Exchange and
additional document submission, often
pushing the verification timeline past 90
days. An additional 60 days would
allow consumers more time to gather
multiple documents from multiple
sources, and would allow time for back
and forth review with the Exchange.
The majority of households with income
DMIs are comprised of consumers who
are low income and often have multiple
sources of employment that can change
frequently. Therefore, collecting and
submitting documentation to verify
projected household income is
extremely complicated and difficult.
While we recognize that it raises
program integrity concerns to provide
APTC for an additional 60 days to
consumers who may ultimately be
ineligible, we believe that these
concerns are outweighed by the benefits
of improved health care access and
health equity, a stronger risk pool, and
operational efficiency. The proposed
extension would provide many
consumers who are eligible for APTC
with the necessary time to gather and
submit sufficient documentation to
verify their eligibility. The current
authority allowing for the granting of
extensions is applied on a case-by-case
basis and requires the consumers to
demonstrate difficulty before the 90-day
deadline, which does not address the
need for additional time more broadly
for households with income DMIs.
A review of income DMI data
indicates that when consumers receive
additional time, they are more likely to
successfully provide documentation to
verify their projected household
income. Between 2018 and 2021, over
one third of consumers who resolved
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their income DMIs on the Exchange did
so in more than 90 days. These
consumers were provided additional
time under § 155.315(f)(3), but the
extension under this existing provision
places the burden on the consumer to
obtain more time to submit
documentation. The proposed extension
would treat consumers more equitably,
take into consideration the complicated
process of obtaining and submitting
income documents for these
households, and provide more
opportunity for Exchanges to work with
consumers to submit the correct
documentation to verify their projected
annual household income. We believe
that this extension would provide
consumers with these benefits because
previous extensions enabled us to
determine eligibility for more
consumers who, after verifying their
eligibility through the DMI process,
were determined eligible for financial
assistance. We continue to study
consumer behavior in resolving
inconsistencies to continue to support
accurate eligibility determination.
We have found that income DMIs
have a negative impact on access and
health equity. Upon a review of PY 2022
data, income DMIs disproportionately
impacted households with lower
attested household income. Among
households with an income DMI in PY
2022, approximately 60 percent attested
to a household income of less than
$25,000. In households without an
income DMI, only about 40 percent
attested to household income less than
$25,000. Additionally, households with
an attested household income below
$25,000 successfully submitted
documentation to verify their income 25
percent less often than households with
higher household incomes. Income
DMIs also may pose a strain on
populations of color. A review of
available data indicates that income
DMI expirations are higher than
expected among Black or African
American consumers. The proposed
changes would promote access to more
affordable coverage by continuing APTC
for many eligible consumers.
Consumers’ challenges in submitting
documentation to resolve income DMIs
also negatively impact the risk pool.
When households are unable to submit
documentation to verify their household
income and lose eligibility for APTC,
they are much more likely to drop
coverage since they must pay the entire
monthly premium, which in many cases
may be significantly more than the
premium minus the APTC. We have
found that consumers who were unable
to submit sufficient documentation to
verify their income and lost their
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eligibility for APTC were half as likely
as other consumers to remain covered
through the end of the plan year.
Consumers aged 25–35 were the age
group most likely to lose their APTC
eligibility due to an income DMI,
resulting in a loss of a population that,
on average, has a lower health risk,
thereby negatively impacting the risk
pool.
Given the information we have on the
negative and disproportionate impacts
of income DMIs, we proposed to adjust
the household income verification
requirements to treat consumers more
equitably, help ensure continuous
coverage, and strengthen the risk pool.
Exchanges would utilize only data from
the IRS for the purpose of generating an
income DMI, except for State Exchanges
that are approved to utilize additional
data sources as outlined earlier in this
proposal, and Exchanges would accept
attestation when tax return data is
requested from IRS but not returned. In
cases where the IRS returns tax data that
reflects that the attested projected
annual household income is not an
accurate projection of the tax filer’s
household income, Exchanges would
continue existing DMI generation and
adjudication operations. Additionally,
Exchanges would utilize the additional
time provided to work with consumers
to submit documentation to verify their
projected annual household income.
While the increased protection for
consumers from loss of eligibility for
APTC could present a program integrity
risk, households are required to provide
accurate answers to application
questions under penalty of perjury. We
note that the program integrity risk
applies to a limited group of consumers,
namely those who misreport income
and for whom IRS indicates that they
have no income data after being
contacted by HHS. Also, we do not
believe that individuals for whom IRS
cannot return income data due to
situations such as family size change
have a greater incentive to misreport
income than their counterparts, given
that changes in family size and other
changes in circumstances are unlikely to
be correlated with income misreporting
incentives. We will continue to engage
with partners to evaluate the impact of
this proposal on the amount of APTC a
household receives compared to the
amount of PTC the household is eligible
for when filing taxes.
After reviewing the public comments,
we are finalizing these provisions as
proposed. We summarize and respond
below to public comments received on
the proposed policies to accept
household income attestation when the
Exchange requests tax return data from
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the IRS to verify attested projected
annual household income but the IRS
confirms there is no such tax return data
available and to provide an automatic
60-day extension for income DMIs.
Comment: Multiple commenters
requested clarification on the usage of
State data sources to resolve income
inconsistencies, noting a desire to
continue using those sources for that
purpose.
Response: We agree that State
Exchanges can continue to use the data
sources that they currently use to verify
income, and we have provided
additional information in the preamble
to explain when and how State
Exchanges may use alternative data
sources. Exchanges may only continue
to use income data from other electronic
data sources to verify income if income
is not already verified by the IRS, or if
IRS data is inconsistent with the
projected annual household income,
unless flexibility is granted and
approved by HHS under § 155.315(h).
This includes income sources that are
available to State Exchanges that may
not be available to other Exchanges,
such as information maintained by State
tax franchise boards or public benefit
records.
Comment: Multiple commenters
expressed program integrity concerns,
as well as tax liability concerns for
consumers, particularly for consumers
who miscalculate their income.
Response: While data suggests that
consumers have a high degree of ability
to project their income and
HealthCare.gov has made recent
changes to further assist individuals in
determining their projected income, we
will continue to engage with State
Exchanges, consumer advocates, and
other external interested parties on how
to increase the accuracy of consumer
income attestation and subsequent
APTC determination. Anticipated
updates to promote program integrity
include strengthening accurate income
attestation and tax reconciliation
language in existing consumer-facing
materials. Although the program
integrity risk applies to a limited group
of consumers, namely those who
misreport income and for whom IRS
indicates that they have no income data
after being contacted by HHS, we
acknowledge the commenter’s concerns
on program integrity. It is our belief that
the health care accessibility, health
equity, risk pool, and operational
efficiency benefits outlined in the
preamble outweigh these concerns.
Additionally, households are required
to provide true answers to application
questions under penalty of perjury.
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Comment: Some commenters
suggested asking the applicant for
additional information on why an
applicant projects their income a certain
way, including why it has changed over
time.
Response: We currently ask
consumers for additional information in
the application, such as the specific
reason why their income may have
changed with the opportunity to
provide responses from a pull-down
menu, including an option for
additional information, and we use that
information as part of our verification of
a household’s projected income. We
have found that while sometimes the
information provided is sufficient to
verify household projected income, it
often does not help thoroughly explain
consumers’ complicated income streams
and household changes. Additionally,
an applicant or enrollee may not know,
and therefore may not be able to explain
why a DMI is caused by a tax household
composition change (such as birth,
marriage, and divorce), name change, or
other demographic updates or
mismatch.
Comment: Multiple commenters
stated that the 60-day extension was not
necessary for all consumers and would
slow down and burden the
administrative process, and that the
existing 90 days is sufficient. Some
commenters proposed that we instead
offer the 60-day extension on a case-bycase basis.
Response: We do not believe that 90
days is sufficient for many applicants.
Applicants and enrollees often need to
submit multiple documents to verify
their projected household income,
which is often difficult to do within 90
days, particularly for those in seasonal
work or who are self-employed. When
given extra time (as currently may be
provided on a case-by-case basis under
§ 155.315(f)(3)), over one third of
consumers resolve their income DMIs
after 90 days, demonstrating that many
consumers are able to provide the
required information when they are
given sufficient time to do so. Finally,
the 90-day extension adjustment would
likely not burden the administrative
process as the additional time could
facilitate more DMI resolutions,
potentially leading to fewer appeals
related to the adjustment or removal of
financial assistance.
Comment: One commenter mentioned
concerns about implementing the 60day extension and requested flexibility
on the implementation timeline for
State Exchanges.
Response: While we acknowledge that
this change will require implementation
effort from the State Exchanges, we have
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decided not to provide flexibility on the
implementation timeline for State
Exchanges. As stated in the preamble,
90 days is often an insufficient amount
of time for households to collect and
submit documents to successfully verify
their projected household income, and
consumers who lose eligibility for
financial assistance as a result of a failed
income verification often drop coverage.
We believe that this provision must be
implemented in all Exchanges to
account for the complicated process of
submitting documentation. However,
we will be available to conduct
technical assistance to State Exchanges
experiencing difficulty in implementing
the extension.
Comment: One commenter noted that
the existing income verification process
is sufficient and that the existing
document submission process is a small
burden on consumers.
Response: We do not believe that the
current income verification process is
sufficient due to the negative impacts on
health care access, health equity, the
risk pool, and operational efficiency.
Additionally, the existing document
submission process is burdensome on
consumers and time consuming, as they
often have to obtain and submit
multiple documents before their income
inconsistency is resolved, particularly if
they are self-employed or work seasonal
jobs.
6. Annual Eligibility Redetermination
(§ 155.335)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78259), we proposed
revising § 155.335(j) to allow the
Exchange, beginning in PY 2024, to
direct re-enrollment for enrollees who
are eligible for CSRs in accordance with
§ 155.305(g) from a bronze QHP to a
silver QHP with a lower or equivalent
premium after APTC within the same
product and QHP issuer, regardless of
whether their current plan is available
or not, if certain conditions are met
(referred to here as the ‘‘bronze to silver
crosswalk policy’’). We also proposed to
amend the Exchange re-enrollment
hierarchy to require all Exchanges
(Exchanges on the Federal platform and
State Exchanges) to ensure enrollees
whose QHPs are no longer available to
them and enrollees who would be reenrolled into a silver-level QHP in order
to receive income-based CSRs are reenrolled into plans with the most
similar network to the plan they had in
the previous year, provided that certain
conditions are met.
After reviewing public comments, we
are finalizing these proposals with
modifications. Specifically, we are
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25821
amending the proposed regulations to
clarify that Exchanges implementing the
bronze to silver crosswalk policy will
compare net monthly silver plan
premiums for the future year with net
monthly bronze plan premiums for the
future year, as opposed to net monthly
bronze plan premiums for the current
year (where net monthly premium is the
enrollee’s responsible amount after
applying APTC). For example, when
determining whether to automatically
re-enroll a 2023 bronze plan enrollee
who is CSR-eligible into a silver plan for
2024, an Exchange will compare the net
premium the enrollee would pay for the
silver plan in 2024 with the net
premium that they would pay for the
bronze plan into which they would
otherwise be auto re-enrolled in 2024, as
opposed to the net premium the
enrollee paid for their bronze plan in
2023. This clarification ensures that
Exchanges will make auto re-enrollment
determinations based on comparable
premium information.
Additionally, we changed the
structure and some content of the
regulation to simplify the regulatory text
and to more clearly explain that
enrollees whose QHP is no longer
available as described in paragraphs
(j)(1) and (2) must be enrolled in a plan
that has the most similar network
compared to their current plan, whereas
enrollees subject to the bronze to silver
crosswalk policy under paragraph (j)(4)
must be enrolled in a plan with the
same network as the bronze plan they
would have been auto re-enrolled in per
requirements in paragraph (j)(1) or (2).
We made these changes in part based on
public comments indicating confusion
about when an enrollee’s issuer,
provider network, and covered benefits
will change as a result of the bronze to
silver crosswalk policy, compared to the
policy regarding network continuity for
enrollees whose QHP is no longer
available.
The restructured regulation language
shifts the provisions related to the
bronze to silver crosswalk policy into a
new paragraph (j)(4) to distinguish this
policy from other crosswalk scenarios.
We also amended this language to
clarify that, under the bronze to silver
crosswalk policy, an Exchange may only
auto re-enroll a bronze plan enrollee
into a silver plan if there is a silver plan
within the same product and with the
same provider network as the bronze
plan into which the enrollee would
otherwise have been auto re-enrolled,
with a net premium that does not
exceed that of the bronze plan. In other
words, the bronze to silver crosswalk
policy will not result in enrollment into
a plan for any enrollee that is in a
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different product or that has a different
provider network from the one the
enrollee would have had absent this
bronze to silver crosswalk policy. The
restructured language deviates from the
proposed rule as follows. Under the
proposed rule (87 FR 78260), we
proposed to require, with respect to all
auto re-enrollments, including those
under the bronze to silver crosswalk
policy now described in paragraph
(j)(4), that the future year silver plan’s
provider network be ‘‘the most similar
network compared to’’ an enrollee’s
current bronze plan network because
provider networks can change year-toyear within the same plan and product.
We are finalizing this proposal only
with respect to auto re-enrollments
under paragraphs (j)(1) and (2).
Specifically, we are finalizing that
where an enrollee’s plan is no longer
available through the Exchange under
§ 155.335(j)(1)(ii) through (iv) and (j)(2),
the Exchange will be required to
compare the future year plan’s provider
network to the current year plan’s
network and take network similarity
into account when auto re-enrolling
enrollees whose current plan will no
longer be available. However, we are
also finalizing under § 155.335(j)(4), that
the Exchange is permitted to compare
the future year silver plan’s provider
network against the future year bronze
plan’s provider network (as opposed to
the current year bronze plan’s network
as proposed), which is the plan and
network that the enrollee would have
been auto re-enrolled into absent the
bronze to silver crosswalk policy, and
the Exchange can select the silver plan
only if the networks are identical. For
example, a bronze plan enrollee who is
auto re-enrolled into the same plan as
their current plan will have a similar,
but not necessarily identical, network to
their current plan because provider
networks may change from year-to-year.
If crosswalked into a silver plan under
the bronze to silver crosswalk policy at
§ 155.335(j)(4), the enrollee’s future year
silver plan network would be compared
to the network of the future year bronze
plan into which they would have been
auto re-enrolled absent the policy at
paragraph (j)(4), making for a same year
comparison.
Accordingly, we are finalizing the
policy to require Exchanges to take into
account network similarity to current
year plan when re-enrolling enrollees
whose current year plans are no longer
available, and to permit Exchanges to reenroll enrollees under the bronze to
silver crosswalk policy only if the future
year silver plan has the same network
that the future year bronze plan would
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have absent the bronze to silver
crosswalk policy.
For PY 2024, we will implement both
policies in Exchanges on the Federal
platform by incorporating plan network
ID into the auto re-enrollment process,
while continuing to take into account
enrollees’ current year product.232 We
believe that plan network ID will be an
effective method of network comparison
for Exchanges on the Federal platform
because if specific providers are innetwork for some of an issuer’s products
but not others, the issuer must establish
separate network IDs to enable mapping
the plans to the applicable network IDs.
We will also work closely with issuers
and State regulators to ensure a mutual
understanding of the information we
will collect to facilitate smooth network
data submission and review processes
during the QHP Certification process.
As further discussed in our responses to
comments, we will also work with
issuers and State regulators to learn how
we may improve methods to analyze
and ensure network continuity in future
years. For example, Exchanges on the
Federal platform will rely on issuer
submissions through the existing
crosswalk process, which, per
§ 155.335(j)(2), already requires that the
issuer propose a plan for the future year
that is in the product most similar to the
current year product if no plans under
the same product as an enrollee’s
current year QHP are available for
renewal.233 Based on internal analysis,
in many cases we already re-enroll
consumers in plans for the future year
with the same network ID as their
current year plan through this approach.
However, for plan years starting in 2024,
we will incorporate plan network ID
into our analysis of crosswalk plan
information that we receive from
issuers, and permit them to submit
justifications to HHS for review if they
believe a different network ID in the
following plan year has the most similar
network to the enrollee’s current
QHP.234
We believe that these changes in the
final rule will help distinguish between
the enrollment procedures under the
bronze to silver crosswalk policy and
232 As discussed in the proposed rule (87 FR
78262), in situations where a non-CSR eligible
enrollee would not be auto re-enrolled into their
current QHP because it is no longer available, the
existing auto re-enrollment process places them
into a plan with the same product ID as their
current QHP, if possible.
233 See § 155.335(j)(2), and see ‘‘Plan Crosswalk’’
on the QHP Certification Information and Guidance
website: https://www.qhpcertification.cms.gov/s/
Plan%20Crosswalk for more information on the
Crosswalk Template.
234 See 87 FR 78261 through 78263.
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the procedures for when an enrollee’s
current QHP is no longer available.
Finally, we also made additional
revisions for clarity and readability that
do not substantively change the policy.
For example, in certain instances we
amended passive language to active
language to specify that ‘‘the Exchange
will’’ auto re-enroll current enrollees as
opposed to stating that a consumer ‘‘will
be auto re-enrolled.’’ We also updated
rule language to include gender-neutral
terms: specifically, changing instances
of ‘‘he or she’’ to ‘‘the enrollee.’’
We summarize and respond below to
public comments received on the
automatic re-enrollment proposals in
§ 155.335(j).
Comment: Many commenters
supported the bronze to silver crosswalk
policy proposal, agreeing that it would
help limit CSR forfeiture and increase
the likelihood that more consumers
would be enrolled in more generous
coverage without additional cost. A
number of commenters added that lowincome consumers would be able to use
the money that they saved for other
crucial household expenses such as
food and housing, and would have
improved access to care at the same
monthly premium. Commenters added
that automatically re-enrolling lowincome consumers into more generous
plans for the same or lower monthly
premium could be especially helpful for
individuals and families who do not
understand the need to actively reenroll in coverage for a new plan year,
those who find the plan compare and
selection process especially
burdensome, and those who originally
enrolled in coverage prior to availability
of more generous subsidies provided for
in the American Rescue Plan Act of
2021 (ARP) and extended by the
Inflation Reduction Act of 2022
(IRA).235
Commenters cited examples of similar
auto re-enrollment practices that State
Exchanges have implemented
successfully, including the
Massachusetts Health Connector’s auto
re-enrollment of about 2,000 enrollees
into a silver plan for the 2023 plan year,
and Covered California’s auto reenrollment of bronze enrollees with a
household income no greater than 150
percent of the FPL into silver QHPs for
PY 2022 and PY 2023. One commenter
expressed support but suggested that the
policy could be limited in its impact for
individuals and families with
household incomes above 150 percent
FPL because of the difference in bronze
and silver plans’ monthly premiums.
235 ARP, Public Law 117–2 (2021); IRA, Public
Law 117–169 (2022).
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Commenters generally agreed with the
policy’s prioritization of network and
benefit continuity for consumers who
are auto re-enrolled in a QHP that is
different from their current QHP. One
commenter appreciated that the
proposal incorporated network into the
bronze to silver crosswalk policy
specifically because in their experience,
enrollees who forgo a $0 net monthly
premium silver plan with CSRs in favor
of a $0 net monthly premium bronze
plan (without the ability to use CSRs) do
so in order to access a specific provider
when they cannot afford the premiums
for the silver plan(s) with networks that
include the provider. One commenter
asked that we clarify the re-enrollment
hierarchy for consumers who are auto
re-enrolled in a silver plan with CSRs
but become ineligible for CSRs the
following year.
Response: We agree that finalizing
this proposal will help to ensure that
additional enrollees are able to benefit
from more generous coverage at a lower
cost that provides the same benefits and
provider network. We also agree that
this may be especially beneficial for
those who find the re-enrollment
process confusing or who are unaware
of the benefits of actively re-enrolling in
coverage, though we will continue to
help such consumers understand the
plan comparison and selection
processes. We appreciate evidence from
State Exchanges of the success of similar
practices, and will work with States to
understand the impact of the policy
moving forward. Because bronze plan
premiums are generally lower than
silver plan premiums, we agree with the
comment that many enrollees who can
benefit from the bronze to silver
crosswalk policy under paragraph (j)(4)
will be eligible for a silver plan with a
$0 net monthly premium because their
household income does not exceed 150
percent of FPL.236 However, some
enrollees with a household income
greater than 150 percent of FPL may
also qualify for a silver plan with a $0
net monthly premium, depending on
the premiums of bronze and silver plans
available to them, and so we will not
limit this policy based on household
236 Section 9661 of the ARP amended section
36B(b)(3)(A) of the Internal Revenue Code for tax
years 2021 and 2022 to decrease the applicable
percentages used to calculate the amount of
household income a taxpayer is required to
contribute to their second lowest cost silver plan,
which generally result in increased PTC for PTCeligible taxpayers. For those with household
incomes no greater than 150 percent of the FPL, the
new applicable percentage is zero, resulting in
availability of one or more available silver-level
plans with a net premium of $0, if the lowest or
second-lowest cost silver plan covers only EHBs.
The Inflation Reduction Act of 2022 extended these
changes through tax year 2025.
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income. We strongly agree with the
importance of ensuring network
continuity for re-enrollees as much as
possible. The policy at § 155.335(j)(4)
clarifies that those who are auto reenrolled from a bronze to a silver plan
will not experience network changes
that they would not have experienced
had they been auto re-enrolled into a
bronze plan.
Finally, in response to the comment
requesting clarity on the auto reenrollment hierarchy for consumers
who are auto re-enrolled in a silver plan
with CSRs but become ineligible for
CSRs the following year, we clarify that
Exchanges will not be required to take
into consideration when applying auto
re-enrollment rules under § 155.335(j)
whether an enrollee had previously
been re-enrolled under the new rule at
§ 155.335(j)(4). That is, a CSR-eligible
individual who is auto re-enrolled from
a bronze to a silver plan for PY 2024 in
accordance with paragraph (j)(4) and
who does not return to select a plan for
PY 2025, will be auto re-enrolled as
otherwise provided for under
§ 155.335(j). However, we also note that
we encourage all enrollees to return to
the Exchange to update their application
if they experience changes during the
plan year, and an enrollee in a silver
plan with CSRs who updates their
application such that they are no longer
CSR-eligible may qualify for a SEP to
change to a plan that is one metal higher
or lower.237
Comment: Some opposing
commenters voiced concerns that the
bronze to silver crosswalk proposal
would cause consumer confusion, and
they cautioned against interpreting
consumer inaction as indifference. In
particular, these commenters noted that
consumers sometimes research their
options and make a decision to allow
themselves to be auto re-enrolled,
without taking action on
HealthCare.gov. These commenters also
advocated for HHS to improve decisionmaking tools on HealthCare.gov instead
of changing consumers’ default plan
selections. Opposing commenters also
noted that consumers select plans for
many reasons other than monthly
premium amount, including provider
network, benefit structure, and health
savings account (HSA) eligibility, and
raised the concern that auto re-enrolling
some consumers from a bronze plan to
a silver plan would disregard these
consumer priorities.
Some commenters expressed concern
that consumers who are auto re-enrolled
into a silver plan could incur
unexpected tax liability, including
237 See
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25823
consumers aware of their auto reenrollment, if their APTC amount was
determined based on inaccurate
household income for the future year,
which is a particular risk for hourly
workers. One commenter noted that
bronze enrollees not using the entire
amount of the APTC for which they
qualify towards their premiums during
the year have some protection against
tax liability in the event of an
unexpected increase in household
income, and that they could lose this
protection if an Exchange auto reenrolls
them into a silver plan because the
consumer would be likely to use more
APTC to cover the higher monthly
premium.238 That is, an enrollee who
experiences a household increase midyear that they do not report to the
Exchange, which results in eligibility for
less PTC, may have a larger tax liability
upon tax filing if they apply more APTC
to a monthly silver plan premium than
to a monthly bronze plan premium to
off-set the higher premium.
Some opposing commenters asked
that we delay this policy, if
implemented, to conduct further
research to ensure it honors consumer
preferences and to provide interested
parties with additional time to develop
appropriate consumer messaging. A few
commenters raised the concern that auto
re-enrolling consumers into an alternate
plan when their current plan remains
available violates the guaranteed
renewability requirements with which
issuers must comply, and that the
limited exceptions to these
requirements do not include availability
of a different plan with lower premiums
or cost-sharing.
Response: We acknowledge that some
consumers may choose not to take
action during an open enrollment
period with the expectation that they
will be auto re-enrolled in their current
238 For example, assume an individual enrolls in
a bronze plan and the enrollee’s APTC covers the
entire monthly premium for the plan based on
projected household income at 150 percent of the
FPL. Also assume, based on the enrollee’s projected
income, that APTC would have covered the entire
amount of the enrollee’s premium for a silver plan
in the same product. If the enrollee’s income as a
percent of FPL ends up higher than projected, it is
possible that the enrollee’s benchmark plan
premium minus the enrollee’s contribution amount
(that is, the maximum available premium
assistance) would still be more than the bronze
premium but less than the relevant silver plan
premium. This would result in a tax liability with
the silver plan, but not the bronze plan selection,
in this case. (Note: ‘‘contribution amount’’ means
the amount of a taxpayer’s household income that
the taxpayer would be responsible for paying as
their share of premiums each month if they enrolled
in the applicable second lowest-cost silver plan. See
‘‘Terms You May Need To Know’’ in Instructions
for Form 8962: https://www.irs.gov/pub/irs-pdf/
i8962.pdf.)
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plan, and we anticipate updating
current outreach on HealthCare.gov and
elsewhere and providing technical
assistance to promote understanding of
these changes, and encourage State
Exchanges to similarly educate their
enrollees. Also, as discussed in the
proposed rule,239 income-based CSReligible enrollees in Exchanges on the
Federal platform who may be auto reenrolled under the bronze to silver
crosswalk policy described in paragraph
(j)(4) will receive a notice from the
Exchange advising them that they will
be re-enrolled into a silver plan if they
do not make an active selection on or
before December 15th. These enrollees
would also see the silver plan
highlighted in the online shopping
experience if they return on or before
December 15th to review their
options.240 Also, we agree that we
should continue to work to improve
decision-making tools on
HealthCare.gov; however, we do not
believe that that work is a substitute for
auto re-enrolling certain consumers in a
plan that will provide them with more
generous coverage for a lower or equal
premium.
In response to concerns that enrollees
subject to the bronze to silver plan
crosswalk policy will be auto reenrolled into a plan with a different
benefit structure and provider network,
we note that the policy only applies for
consumers who have access to a silver
plan in their same product with a
Network ID that matches that of their
future year bronze plan, and therefore
consumers will not experience network
changes or benefit changes that they
would not otherwise experience had
they been auto re-enrolled into their
bronze plan.
Also, we will perform additional
research to ensure that we are able to
provide appropriate support and
technical assistance to enrollees who
may have chosen a plan for its HSA
eligibility. We also encourage State
Exchanges, agents and brokers, and
Assisters to work with these enrollees to
ensure they can make informed
decisions on this matter.
In terms of potential tax liability for
repayment of APTC, we agree that it is
important for Exchanges to take steps to
ensure enrollees understand this
possibility when applying APTC to
premium payments in advance. We
believe that consumer notices can help
to ensure they do, and we already
239 See
87 FR 78262.
who return to their HealthCare.gov
account after December 15 will see the plan as their
enrolled plan, and could choose a different plan
until January 15 for coverage starting February 1.
240 Enrollees
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convey this information, because the
existing auto re-enrollment process can
re-enroll enrollees in a plan with a
higher monthly premium than their
current year plan due to annual
increases in the cost of coverage, which
can increase tax liability. For example,
the current HealthCare.gov notice for
consumers who were auto re-enrolled in
coverage with financial assistance
instructs enrollees to ‘‘Keep your
Marketplace application up to date,’’
and explains that consumers must
report changes in circumstance,
including changes in household income,
within 30 days to ‘‘help make sure you
get the right amount of financial help
and don’t owe money on your tax return
because you got the wrong amount.’’
This notice also explains that ‘‘The full
amount of tax credit that you qualify for
is now being applied to your monthly
premium,’’ and provides instructions for
enrollees who do not want to apply the
full amount of APTC for which they
qualify to their monthly premium
payments.241 State Exchanges should
ensure their notices are similarly
educational. These State Exchange
notices will be reviewed and approved
as part of HHS’ annual review of State
Exchanges alternative eligibility
redetermination plans, as specified in
§ 155.335(a)(2)(iii).
Additionally, when calculating the
difference in net premium between
enrollees’ bronze and silver plan
options for the future year, for the auto
re-enrollment process for Exchanges on
the Federal platform, we will generally
take into account the full amount of
APTC for which enrollees may qualify.
However, in cases where a consumer
opted not to use any of their PTC in
advance during the current plan year, in
keeping with our existing auto reenrollment practice for Exchanges on
the Federal platform, we will maintain
the enrollee’s preference not to apply
any APTC towards monthly premiums
by not taking APTC into account when
determining the difference between
their monthly bronze and monthly
silver premiums for the future year, and
not automatically applying APTC to
their future year monthly premiums.242
241 See Marketplace Automatic Enrollment
Confirmation Messages (December 2022);
automatic-enrollment-with-financial-help.pdf, at
https://marketplace.cms.gov/applications-andforms/notices.
242 This operational practice is not an Exchange
requirement. We share this information here as an
example of how we plan to implement this policy
to reflect enrollees’ likely intentions. We also note
that in cases where an enrollee who is auto reenrolled opted to apply some, but not all, of their
APTC toward monthly premiums during the current
year, our current practice is to apply any additional
APTC for which the enrollee qualifies to cover as
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We also note that enrollees whose
expected household income changes
mid-year such that they no longer
qualify for APTC or CSRs may be
eligible for a SEP that allows them to
change to a plan of a different metal
level. For example, an enrollee whose
household income increases such that
they no longer qualify for CSRs can
change from a silver plan to a bronze or
gold plan, per § 155.420(d)(6)(i) or (ii).
We believe that this SEP will help
protect enrollees who experience
changes in household income during
the year from applying APTC in an
amount that exceeds the PTC they are
ultimately eligible to receive.
Nevertheless, we will work closely with
interested parties to promote
understanding of potential tax liability
for enrollees who are auto re-enrolled
from a bronze to a silver plan under
paragraph (j)(4). We will also work
closely with State Exchanges that
implement this policy to share best
practices for doing so.
Given the benefits that this policy will
provide to consumers who are enrolled
in more generous coverage for no greater
cost, we will not delay its effectuation.
We will work closely with all interested
parties to promote smooth
implementation and mitigate consumer
confusion.
Finally, as discussed in the proposed
rule (87 FR 78262 through 78263), this
proposal is consistent with the
explanation of the guaranteed
renewability provisions at § 147.106
provided in the 2014 Patient Protection
and Affordable Care Act; Annual
Eligibility Redeterminations for
Exchange Participation and Insurance
Affordability Programs; Health
Insurance Issuer Standards Under the
Affordable Care Act, Including
Standards Related to Exchanges.243 If a
product remains available for renewal,
including outside the Exchange, the
issuer must renew the coverage within
the product in which the enrollee is
currently enrolled at the option of the
enrollee, unless an exception to the
guaranteed renewability requirements
applies. However, to the extent the
issuer is subject to § 155.335(j) with
regard to an enrollee’s coverage through
the Exchange, the issuer must, subject to
applicable State law regarding
automatic re-enrollments, automatically
enroll the enrollee in accordance with
the re-enrollment hierarchy, even where
that results in re-enrollment in a plan
much of the future year monthly premium as
possible. We will continue this practice, including
for enrollees who qualify for the bronze to silver
crosswalk.
243 See 87 FR 78262–78263 for this discussion.
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under a product offered by the same
QHP issuer through the Exchange that is
different than the enrollee’s current
plan. Auto re-enrolling consumers
under § 155.335(j)(4) will not result in
the issuer violating the guaranteed
renewability provisions at § 147.106 as
long as the issuer gives the enrollee the
option to renew coverage within their
current product, including permitting
the enrollee to actively re-enroll in their
current year plan for the coming year if
it remains available for renewal.
Comment: Some commenters
supported the proposal to give States
that operate their own Exchange
platforms flexibility with whether to
implement the policy described in final
paragraph (j)(4), and requested
confirmation that the final policy would
provide such flexibility.
Response: We confirm that, as
proposed, Exchanges have the option to
implement the policy at § 155.335(j)(4).
For example, an Exchange might choose
not to implement this policy, or might
choose to implement it for PY 2025 or
a future plan year, instead of PY 2024.
However, the rule requires all
Exchanges to implement changes to the
requirements under paragraphs (j)(1)
and (2) for PY 2024.244 We will work
closely with Exchanges that request any
related technical assistance regarding
implementation of the auto reenrollment hierarchy.
Additionally, we clarify that State
regulatory authorities and Exchanges
have the option to apply the bronze to
silver crosswalk policy per
§ 155.335(j)(4) to the approach that they
use for cross-issuer enrollments per
§ 155.335(j)(3)(i) and (ii). As noted in
‘‘Section 5. Plan ID Crosswalk’’ of
Chapter 1 of the PY 2024 Draft Letter to
Issuers, if this policy was finalized, we
would modify the 2024 cross-issuer auto
re-enrollment policy to take into
account the other changes at
§ 155.335(j).245 Specifically, in
Exchanges on the Federal platform,
when § 155.335(j)(3)(ii) is applicable, we
will crosswalk enrollees in a bronze
plan who are eligible for CSR in
accordance with § 155.305(g), and who
would otherwise be auto re-enrolled in
a bronze plan, to a silver level QHP
within the same product, with the same
provider network, and with a net
premium lower than or equivalent to
that of the bronze level QHP into which
the Exchange would otherwise re-enroll
the enrollee under paragraph (j)(3).
When § 155.335(j)(3)(i) is applicable, we
will defer to the applicable State
244 See
§ 155.335(j)(1)(ii) through (iv) and (j)(2).
https://www.cms.gov/files/document/
2024-draft-letter-issuers-508.pdf.
245 See
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regulatory authority with regard to
whether to incorporate the bronze to
silver crosswalk policy into cross-issuer
auto re-enrollment.
Comment: Some commenters
supported using network ID to
determine the most similar network for
purposes of auto re-enrolling
consumers, and one commenter noted
that the Washington State Exchange
already uses the network ID as a
consideration when cross-walking
enrollees from one plan to another.
Several commenters urged that we work
closely with States to better understand
how networks differ based on ID,
because States may use different
practices for the assignment of network
IDs. These commenters expressed
concerns that overriding an enrollee’s
prior choice of plan level may create
disruptions when networks are similar
but not identical, and they asked that
we be transparent in the reasons behind
auto re-enrolling a consumer into a
particular plan.
One commenter had concerns with
using network ID as part of the plan
crosswalk process because issuers are
not required to use a distinct ID for each
health maintenance organization
(HMO), preferred provider organization
(PPO), and exclusive provider
organization (EPO) network type, which
would make such comparisons
incomplete, and added that network IDs
would not fully explain potential
differences in delivery systems or
providers offered within the same
issuer’s products. Several commenters
shared the concerns about preserving
plan benefit structure for consumers
who are not auto re-enrolled into their
current plan. One commenter stated
they supported the proposed policy
only if enrollees were not moved to a
different product.
Response: We appreciate the
additional insight that commenters
provided about how States and issuers
currently use network IDs. Also, we
note that, all changes to § 155.335(j)
require Exchanges to continue to
account for characteristics of enrollees’
current product. As noted earlier,
Exchanges on the Federal platform will
implement the similar network policy
and the bronze to silver crosswalk
policy by incorporating network ID into
existing requirements for issuer
submissions through the crosswalk
process, which, per existing rules at
§ 155.335(j)(2), already requires that if
no plans under the same product as an
enrollee’s current QHP are available for
renewal, the Exchange will auto reenroll the enrollee in the product most
similar to their current product with the
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25825
same issuer.246 As noted earlier in
preamble for this section, we believe
that plan network ID will be an effective
method of network comparison for
Exchanges on the Federal platform
because QHP Certification Instructions
specify that if specific providers are
available for some of an issuer’s
products but not others, the issuer must
establish separate Network IDs to enable
mapping the plans to the applicable
Network IDs. However, reiterating what
we stated in the proposed rule, we will
permit issuers to submit justifications
for our review if they believe a different
network ID in the following plan year is
better suited as a crosswalk option for
enrollees in a particular plan.247
Further, we will collaborate with State
regulators in States with FFEs and with
SBE–FPs through regularly scheduled
meetings and other methods to ensure
clear and appropriate incorporation of
network ID into the auto re-enrollment
process. We will also work closely with
State Exchanges to share best practices
for implementing this policy. Finally,
based on experience from past years, a
majority of enrollees who were
crosswalked into a different product
with the same issuer had the same
network ID and product type (for
example, HMO, PPO), and so we
anticipate that this policy will reinforce
and not disrupt current auto reenrollment processes.248
Comment: Some commenters raised
concerns about how consumers who are
auto re-enrolled from a bronze to a
silver plan under paragraph (j)(4) would
be notified by the Exchange and issuers.
Commenters urged that we ensure that,
if finalized, the new auto re-enrollment
rule would require Exchanges and
issuers to send notification of the plan
change in time for consumers to make
a plan selection if they choose, and that
the notification include information
about key characteristics of their new
plan and the reasons they were auto reenrolled into it. Some commenters
raised concerns that consumers would
be confused by content in the Federal
Standard Renewal and Product
Discontinuation Notices, which are
required to include information about
availability of the product in which a
consumer is currently enrolled and
could not include targeted information
246 See § 155.335(j)(2), and see ‘‘Plan Crosswalk’’
on the QHP Certification Information and Guidance
website: https://www.qhpcertification.cms.gov/s/
Plan%20Crosswalk for more information on the
Crosswalk Template.
247 See 87 FR 78261 through 78263.
248 Based on internal CMS analysis, for PY2023
86 percent of crosswalks to a different product with
the same issuer had the same network ID and the
same network type (that is, HMO, PPO, EPO).
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about potential auto re-enrollment from
bronze into a silver plan because issuers
do not have access to enrollees’ CSR
eligibility.249 One commenter asked
whether issuers would be allowed more
flexibility in terms of the content or the
timing for mailing the Federal Standard
Renewal and Product Discontinuation
Notices to account for proposed reenrollment changes. Multiple
commenters asked that we provide
consumers who are auto re-enrolled
from a bronze to a silver plan under
paragraph (j)(4) with a SEP to allow
them time after their coverage takes
effect to change plans if they find that
the plan’s network does not include a
provider that they need or the coverage
does not work well for them in some
other way.
Response: As discussed in this rule
and in the proposed rule,250 incomebased CSR-eligible enrollees in
Exchanges on the Federal platform who
may be auto re-enrolled from a bronze
to a silver plan under paragraph (j)(4)
will receive messaging from the
Exchange advising them that they will
be re-enrolled into a silver plan if they
do not make an active selection on or
before December 15th, and that they can
see the silver plan highlighted in the
online shopping experience on
HealthCare.gov until December 15th.
Further, enrollees in Exchanges on the
Federal platform who do not make an
active selection on or before December
15th will receive an additional
communication from the Exchange after
December 15th reminding them of their
new plan enrollment for January 1st,
and that they can select a different plan
by January 15th that would be effective
starting February 1st. We believe that
State Exchanges also have practices in
place to notify consumers of important
changes to their enrollment, and that
State Exchanges’ flexibility in terms of
whether or not to implement the bronze
to silver crosswalk policy, or to
implement it in a future plan year,
allows State Exchanges additional time
to further develop consumer noticing
timing and content in advance of
implementation.
In response to comments on the
Federal Standard Renewal and Product
Discontinuation Notices, we note that
issuers are required to use the Federal
249 See Updated Federal Standard Renewal and
Product Discontinuation Notices in the Individual
Market (Required For Notices Provided In
Connection With Coverage Beginning In The 2021
Plan Year) OMB Control No.: 0938–1254, https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/Updated-Federal-StandardNotices-for-coverage-beginning-in-the-2021-planyear.pdf.
250 See 87 FR 78262.
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standard notices developed by HHS,
unless a State develops and requires the
use of a different form consistent with
HHS guidance, in which case issuers in
that State are required to use notices in
the form and manner specified by the
State. Because issuers are not permitted
to make modifications to the Federal
standard notices, we do not believe it is
necessary to provide additional
flexibility regarding timing of the
notices.251 We are updating the Federal
standard notices currently approved
under OMB control number 0938–1254
(Annual Eligibility Redetermination,
Product Discontinuation and Renewal
Notices) and we intend to include
language related to the re-enrollment
hierarchy finalized in this rule in the
Federal standard notices as part of that
process.
In addition, nothing under Federal
law prevents an issuer from providing
additional information, outside of the
standard notices, to an enrollee about
their re-enrollment options. Also, we
will work closely with issuers in
Exchanges on the Federal platform to
coordinate and develop strategies to
mitigate potential consumer confusion.
We will also work with State Exchanges
that choose to implement the bronze to
silver crosswalk policy in plan year
2024 or in future years to share
information on best practices to help
ensure smooth transitions for impacted
consumers.
Finally, as discussed in the proposed
rule,252 we did not propose, and
therefore are not finalizing, any changes
to SEP eligibility or duration in
connection with the proposed changes
at § 155.335(j). As the proposed rule 253
also explained, enrollees qualify for a
loss of MEC SEP under § 155.420(d)(1)(i)
when their current product is no longer
available for renewal, but not when
their current product is still available,
even if they are auto re-enrolled from a
bronze QHP to a silver QHP within the
same product. Therefore, enrollees who
are auto re-enrolled under
§ 155.335(j)(2), which applies when an
enrollee’s product is no longer available,
may qualify for a loss of MEC SEP, but
enrollees auto re-enrolled under
251 Non-grandfathered, non-transitional plans
must provide renewal notices before the first day
of the next annual open enrollment period. In prior
years, HHS has provided an enforcement safe
harbor under which the agency will not take
enforcement action against an issuer for failing to
provide a product discontinuation notice with
respect to individual market coverage at least 90
days prior to the discontinuation, as long as the
issuer provides such notice consistent with the
timeframes applicable to renewal notices. We
anticipate providing similar relief for PY 2024.
252 See 87 FR 78263.
253 87 FR 78263.
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§ 155.335(j)(1) or (4) will not. Finally,
while we agree that a SEP plays an
important role in ensuring that
consumers with a change in
circumstance can update their coverage
accordingly, we do not believe that a
SEP is necessary in this case because
consumers who are auto re-enrolled into
a silver plan will have the same network
as if they had instead been auto reenrolled into a bronze plan absent the
bronze to silver crosswalk policy.
Further, notifications before and after
auto re-enrollment provide them with
the information that they need to choose
a different plan during open enrollment
if desired.
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78263–78264), HHS
requested information on potential
future changes to the auto re-enrollment
hierarchy. We thank commenters for
their feedback and will take comments
into consideration in future rulemaking.
7. Special Enrollment Periods
(§ 155.420)
a. Use of Special Enrollment Periods by
Enrollees
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78264), we proposed
two technical corrections to
§ 155.420(a)(4)(ii)(A) and (B) to align the
text with § 155.420(d)(6)(i) and (ii). The
proposed revisions clarified that only
one person in a tax household applying
for coverage or financial assistance
through the Exchange must qualify for
a SEP under paragraphs (d)(6)(i) and (ii)
for the entire household to qualify for
the SEP.
After reviewing the public comments,
we are finalizing this provision as
proposed, with a modification to use
gender neutral language. We also note a
correction, that any member of a
household, rather than any member of a
tax household as previously stated in
preamble, can trigger this SEP for the
household. We summarize and respond
to public comments received on the
proposed technical corrections below.
Comment: All commenters strongly
supported the proposed technical
corrections. Commenters noted that this
change supports the inclusion of
households with different family
structures and/or access to affordable
insurance options, which is especially
important for consumers moving from
Medicaid or CHIP to Exchange coverage.
Commenters also stated that the
proposal will reduce administrative
burden and potential confusion for
households applying for coverage or
financial assistance with a SEP. One
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commenter also asked that we clarify
that any member of a household, rather
than any member of a tax household as
stated in preamble to the proposed rule
(87 FR 78264 through 78265), must
qualify for a SEP under paragraphs
(d)(6)(i) and (ii) for the entire household
to qualify for the SEP.
Response: We agree that the proposed
technical corrections support different
types of household compositions and
that it will reduce both administrative
burden and confusion for consumers,
which is especially important during
Medicaid unwinding. We also wish to
clarify that any member of a household
(as opposed to a tax household) must
qualify for a SEP under paragraphs
(d)(6)(i) and (ii) for the entire household
to qualify for the SEP.
b. Effective Dates for Qualified
Individuals Losing Other Minimum
Essential Coverage (§ 155.420(b))
We proposed amendments to the
coverage effective date rules at
§ 155.420(b)(2)(iv) to permit Exchanges
the option to offer earlier coverage
effective start dates for consumers
attesting to a future loss of MEC under
paragraph (d)(1), and also the SEPs at
paragraphs (d)(6)(iii) and (d)(15), as the
eligibility for these SEPs also require
that the loss of coverage be considered
MEC. Doing so could mitigate coverage
gaps when consumers lose forms of
MEC (other than Exchange coverage)
mid-month and allow for more seamless
transitions from other coverage to
Exchange coverage. We were aware that
consumers may face gaps in coverage
because current coverage effective date
rules do not allow for retroactive or
mid-month coverage effective dates for
consumers whose other coverage ends
mid-month. Under current rules, the
earliest start date for Exchange coverage
under the loss of MEC SEP is the first
day of the month following the date of
loss of MEC. We were aware in the
proposed rule (87 FR 78265) that in
some States, Medicaid or CHIP is
regularly terminated mid-month, so we
solicited input on whether the proposed
change would help consumers,
especially those impacted by Medicaid
unwinding, to seamlessly transition
from another form of MEC to Exchange
coverage.
Consumers losing MEC, such as
coverage through an employer,
Medicaid, or CHIP, already qualify for a
SEP under § 155.420(d)(1), (d)(6)(iii),
and (d)(15) and may report a loss of
MEC to Exchanges and select a QHP up
to 60 days before or 60 days after their
loss of MEC. Exchanges must generally
provide a regular coverage effective date
as described in § 155.420(b)(1): for a
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QHP selection received by the Exchange
between the 1st and the 15th day of any
month, the Exchange must ensure a
coverage effective date of the 1st day of
the following month; and for a QHP
selection received by the Exchange
between the 16th and the last day of any
month, the Exchange must ensure a
coverage effective date of the 1st day of
the second following month. However,
Exchanges must provide special
coverage effective dates for certain SEP
types including loss of MEC, as
described in § 155.420(b)(2), and may
elect to provide coverage effective dates
earlier than those specified in
§ 155.420(b)(1) and (2), as described in
§ 155.420(b)(3). The loss of MEC
coverage effective dates are generally
governed by § 155.420(b)(2)(iv).
Currently, for all Exchanges, consumers
who report a future loss of MEC and
select a plan on or before the loss of
MEC are provided an Exchange coverage
effective date of the 1st of the month
after the date of loss of MEC, under
§ 155.420(b)(2)(iv). For example, if a
consumer reports on June 1st that they
will lose MEC on July 15th and they
make a plan selection on or before July
15th, Exchange coverage will be
effective August 1st. The consumer in
this case cannot avoid a gap in coverage
of more than 2 weeks.
For consumers reporting a loss of
MEC that occurred up to 60 days in the
past, Exchanges must ensure that
coverage is effective in accordance with
§ 155.420(b)(1) (the regular coverage
effective dates described above) 254
through a cross reference from
§ 155.420(b)(2)(iv). Alternatively,
Exchanges can offer prospective
coverage effective dates so that coverage
is effective the first of the month
following plan selection, at the option of
the Exchange. See § 155.420(b)(2)(iv).
For example, if a consumer reports on
July 1st a past loss of MEC that occurred
on June 30th and selects a plan on July
15th, Exchange coverage is effective
August 1st. This option has been
selected for Exchanges on the Federal
platform. See § 155.420(b)(3)(i).
Because current regulation at
§ 155.420(b)(2)(iv) does not allow for
retroactive or mid-month coverage
effective dates, consumers who lose
MEC mid-month, including consumers
who live in States that allow mid-month
terminations of Medicaid or CHIP
coverage, may experience a gap in
coverage when transitioning to coverage
through the Exchange. During Medicaid
254 For example, if a consumer selects a plan on
May 2nd, coverage will be effective June 1st, if a
consumer selects a plan on May 16th, coverage will
be effective July 1st.
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unwinding, we expect to see a higher
than usual volume of individuals
transitioning from Medicaid and CHIP
coverage to the Exchange from April 1,
2023, through May 31, 2024, as States
resume Medicaid and CHIP
terminations that have been paused due
to the Medicaid continuous enrollment
condition. Consumers who become
ineligible for Medicaid or CHIP are at
risk of being uninsured for a period of
time and postponing use of health care
services, which can lead to poorer
health outcomes, if they are not able to
successfully transition between
coverage programs without coverage
gaps.
Therefore, to ensure that qualifying
individuals whose prior MEC ends midmonth are able to seamlessly transition
from their prior coverage to Exchange
coverage as quickly as possible with no
coverage gaps, we proposed revisions to
paragraph (b)(2)(iv). Specifically, we
proposed to add additional language to
paragraph (b)(2)(iv) stating that if a
qualified individual, enrollee, or
dependent, as applicable, loses coverage
as described in paragraph (d)(1),
experiences a change in eligibility for
APTC per paragraph (d)(6)(iii), or
experiences a loss of government
contribution or subsidy per paragraph
(d)(15), and if the plan selection is made
on or before the day of the triggering
event, the Exchange must ensure that
the coverage effective date is the first
day of the month following the date of
the triggering event (as currently
required under paragraph (b)(2)(iv)) and,
at the option of the Exchange, if the plan
selection is made on or before the last
day of the month preceding the
triggering event, the Exchange must
ensure that coverage is effective on the
first day of the month in which the
triggering event occurs. For example, if
a consumer attests between May 16th
and June 30th that they will lose MEC
on July 15th and selects a plan on or
before June 30th, coverage would be
effective on August 1st (first of the
month after the loss of MEC), or at the
option of the Exchange, on July 1st (the
first day of the month in which the
triggering event occurs).
We acknowledged in the proposed
rule (87 FR 78265 through 78266) that
this proposed change may have a
limited impact because many types of
coverage typically do not have end dates
in the middle of the month. However,
for those that it does impact, the
proposed change would provide earlier
access to coverage and APTC and CSR.
Under the current rule at paragraph
(b)(2)(iv), consumers reporting a future
loss of MEC may have to wait weeks for
their coverage to start, even if they were
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proactive and attested to a coverage loss
as soon as they became aware. We noted
in the proposed rule (87 FR 78265
through 78266) that we did not believe
that this proposed change introduces
program integrity concerns because
these concerns would apply to only a
very narrow group of consumers,
specifically: those who report a future
loss of MEC within their 60-day
reporting window, have been
determined eligible for a SEP and found
eligible for an Exchange QHP, and select
a plan on or before the last day of the
month preceding the loss of MEC.
We stated in the proposed rule (87 FR
78266) that we believed this proposal
would provide additional flexibilities
for Exchanges, as Exchanges would have
the option to use the current coverage
effective dates available under current
paragraph (b)(2)(iv) and provide earlier
coverage effective dates for consumers
who attest to a future mid-month loss of
MEC. We also acknowledged that if
Exchanges do elect an earlier coverage
effective date as we proposed, this
would result in some consumers paying
for both an Exchange QHP and their
other MEC for a short period of dual
enrollment.
We also stated in the proposed rule
that the partial-month period of dual
enrollment would not bar an enrollee
from eligibility for APTC or CSRs, if
otherwise eligible, because PTC would
be allowed for such month under 26
CFR 1.36B–3(a).255 Under this
provision, PTC is the sum of the
premium assistance amounts for each
coverage month, and a month in which
an individual is eligible for MEC for
only a portion of the month may be a
coverage month for the individual. We
sought comment on whether Exchange
regulations at § 155.305(f) should be
revised to reference the IRS’s definition
of a coverage month to clarify that a
consumer who is eligible and enrolled
in non-Exchange MEC for only a portion
of the month is not prohibited from
receiving APTC.
We also stated in the proposed rule
(87 FR 78266) that we believed
consumers in States that permit midmonth terminations of Medicaid or
CHIP coverage would be most impacted
by the proposed change. We sought
comment from interested parties on the
frequency of mid-month coverage end
dates, potential program integrity issues
associated with earlier effective dates,
and instances when the expedited
effective date would or would not
255 Under section 1412(c)(2) of the ACA, APTC
cannot be paid for a month if PTC is not allowed
for such month under the Code section 36B.
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mitigate coverage gaps or introduce
coordination of benefits issues.
Under § 147.104(b)(5), applicable to
health insurance issuers that offer
health insurance coverage in the
individual, small group, or large group
market in a State, coverage elected
during limited open enrollment periods
and SEPs described in § 147.104(b)(2)
and (3) must become effective consistent
with the dates described in
§ 155.420(b).256 Therefore, with the
exception of the triggering event in
§ 155.420(d)(6), which is limited to
coverage purchased through an
Exchange, the proposed changes to the
effective date for future loss of MEC
would be effective for individual market
coverage purchased off an Exchange, as
well as for coverage purchased through
an Exchange. For individual market
coverage offered outside of an Exchange,
the proposed option of the Exchange to
specify the effective date would refer to
an option of the applicable State
authority.
While we also considered proposing
retroactive coverage effective dates for
consumers reporting past loss of MEC,
we decided in the proposed rule (87 FR
78266) to limit these proposed changes
to future loss of MEC to avoid adverse
selection and reduce burden on
Exchanges, States, and issuers, as
allowing for retroactive coverage start
dates can be operationally complex for
Exchanges to implement and for issuers
to process. Also, we noted that we
believed the proposed changes would
limit the financial burden on
consumers, as consumers who report a
loss of MEC in the past 60 days may not
want or be able to afford to pay past
premiums to effectuate coverage
retroactively. While we also considered
providing mid-month coverage effective
dates for consumers who lose MEC midmonth, this would have limited the
affordability of coverage given that IRS
regulations at 26 CFR 1.36B–3 generally
provide that PTC is only allowed for a
month when, as of the first day of the
month, the individual is enrolled in a
QHP. We sought comment on additional
regulatory changes that would improve
transitions to Exchange coverage and
minimize periods of uninsurance for
consumers who report a loss of MEC to
the Exchange.
We sought comment on these
proposals.
After reviewing the public comments,
we are finalizing this provision as
proposed, with a modification to section
256 With the exception that, under § 147.104(b)(2),
a health insurance issuer in the individual market
is not required to allow enrollment for certain SEPs,
including § 155.420(d)(6), with respect to coverage
offered outside of an Exchange.
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§ 155.305(f)(1)(ii)(B) to state that a tax
filer must be determined eligible for
APTC if the tax filer (or a member of
their tax household) is not eligible for a
full calendar month of MEC (and other
criteria are met). We summarize and
respond to public comments received
on the proposed policy to permit
Exchanges the option to provide earlier
coverage effective dates for consumers
attesting to a future loss of coverage
below.
Comment: The majority of
commenters expressed their support for
the proposal, explaining that the
proposal would help ensure consumers,
especially those with HIV or cancer,
continue to have access to medical care
without interruption. Commenters
stated that the proposal would help
consumers maintain adherence to
treatment, including access to certain
prescription drugs, which are a critical
component of most cancer treatment
plans. Several commenters also
explained that it is important to align
Exchange QHP coverage effective dates
with Medicaid or CHIP termination
dates, and that the immediate enactment
of the proposal is especially important
as it will help with coverage transitions
from Medicaid or CHIP into other forms
of coverage, such as Exchange coverage,
during the Medicaid unwinding period.
Other commenters said that they
supported the flexibility provided to the
State Exchanges to implement this
proposal and urged HHS to keep this
proposal at the option of Exchanges.
Response: We agree that this proposal
will have a positive impact by
preventing some consumers losing MEC
from experiencing gaps in coverage or
an inability to access treatment or
prescription drugs. We agree with the
commenter of the importance of
aligning Medicaid or CHIP coverage
mid-month terminations with Exchange
QHP effective dates; however, we wish
to clarify that the intent of this policy
is not to align Exchange coverage
effective dates with Medicaid of CHIP
mid-month terminations, but rather to
provide consumers reporting a future
loss of MEC with earlier coverage
effective dates to ensure continuity of
coverage. We also agree that the
proposal will help further ensure during
Medicaid unwinding that consumers
transitioning from Medicaid or CHIP
into individual coverage on or off the
Exchange are able to maintain
continuity of coverage. Finally, we agree
that State Exchanges should have
flexibility to implement the proposed
changes or not, based on their specific
enrolled populations.
Comment: Some commenters
supported the proposal, but had various
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concerns and recommendations for HHS
regarding coverage effective dates and
adverse selection. One commenter urged
HHS to make this proposal mandatory
for all Exchanges, while another
commenter recommended that HHS
modify the proposal so that Exchanges
give the consumer the option to choose
an earlier or later Exchange coverage
effective date to mitigate any
complexities related to overlapping
coverage. Also due to adverse selection
risk, some commenters recommended
that HHS should finalize this policy
only in States that allow mid-month
terminations of Medicaid or CHIP
coverage or put into place guardrails for
when consumers can select these
coverage effective dates in cases of
retroactive enrollments. One commenter
supported the policy but shared a
concern that the proposal may still
result in continuity of care issues and
that HHS should allow coverage
effective dates to be closer to the loss of
MEC date, such as through mid-month
coverage effective dates. A few
commenters also said that HHS should
not make any changes to allow midmonth or retroactive coverage effective
dates due to adverse selection risks.
Response: We appreciate the concerns
raised by commenters regarding the
proposed changes. We considered
making this proposal required for all
Exchanges, however, we believe that
Exchanges should continue to have
flexibility and authority to determine if
allowing earlier coverage effective dates
would benefit their enrolled
populations. If an Exchange operates in
a State that allows mid-month
terminations of Medicaid or CHIP
coverage, that Exchange may want to
allow earlier coverage effective dates for
consumers attesting to a future loss of
MEC, whereas this change may not be
necessary for an Exchange that operates
in a State that does not allow midmonth terminations of Medicaid or
CHIP. We rejected the idea to
implement this policy only in States
that allow mid-month terminations of
Medicaid or CHIP because, due to the
demands that both Exchanges and States
will face during Medicaid unwinding,
we believe that States should have the
option whether or not to devote
resources to implement earlier coverage
effective dates for consumers attesting to
a future loss of coverage in PY 2023 or
2024. Additionally, we wish to note that
there is still the possibility that
consumers lose non-Medicaid or CHIP
coverage mid-month, such as COBRA
coverage. Therefore, limiting this policy
only to States that have mid-month
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Medicaid or CHIP termination dates
would be too restrictive.
We also considered whether
consumers should be able to select their
own coverage effective dates when
selecting a plan but determined this
would be operationally complex for
Exchanges and issuers to implement.
Exchanges would have to implement
application and logic changes to permit
consumers to select their own coverage
effective date through new application
questions, as well as a way for
consumers to reverse their decision in
cases of error. Nonetheless, we are
preserving in the final rule some
element of consumer choice, as a
consumer who knows they will be
losing MEC in the future still has the
option to select a plan after the last day
of the month preceding the triggering
event to be subject to the existing
coverage effective date rules.
We also took into consideration
operational complexities for both
Exchanges and issuers of allowing
coverage to start retroactively.
Retroactive coverage would also require
application and logic changes, and
could impact QHP pricing across all
Exchanges. Given these considerations
and the complexities around offering
retroactivity, we are not finalizing any
changes to allow retroactivity for the
loss of MEC SEP.
Regarding the comment that we allow
QHP coverage to start as close as
possible to the last day of coverage, we
currently lack the authority to permit
APTC and CSRs to start mid-month and
elected not to allow consumers to enroll
in a QHP mid-month if they could not
be eligible for APTC or CSRs. IRS
regulation at 26 CFR 1.36B–3(c)
provides that a consumer may only
qualify for PTC during a given month if
they are enrolled in QHP ‘‘as of the first
day of the month’’ (providing an
exception only for births and adoptions,
and certain other circumstances at 26
CFR 1.36B 3(c)(2)). If we were to begin
QHP coverage mid-month without
APTC and CSR, enrolling in Exchange
coverage might be cost prohibitive for
some consumers which may dissuade
them from enrolling in Exchange
coverage at all. Additionally, in the
Exchanges on the Federal platform, a
consumer who did enroll in a QHP
(without APTC or CSRs) mid-month
would need to update their Exchange
application after the beginning of the
month following their loss of MEC to be
determined eligible for APTC and CSRs
going forward (if otherwise eligible).
This process would be difficult to
message and burdensome for
consumers.
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25829
Finally, we acknowledge the concerns
raised by commenters regarding the
potential risk for adverse selection,
however, we believe the risk to be low
because we are not proposing that
coverage may start retroactively or that
consumers have the option to select
their preferred coverage start date.
Given these concerns and our belief that
Exchanges should retain flexibility in
whether to offer the option for earlier
coverage effective dates for consumers
attesting to a future coverage loss, we
are finalizing as proposed.
Comment: A commenter supported
the proposal but stated that the
proposed policy only provides seamless
coverage transitions for consumers who
proactively come to an Exchange to
report their future loss of Medicaid or
CHIP the month before their
termination. The commenter requested
that we consider additional
improvements to notices to ensure that
Medicaid and CHIP beneficiaries receive
clear instructions about coverage
transitions.
Response: We agree with the need for
clear and effective communications
with Medicaid and CHIP beneficiaries
and wish to share some of the work we
have done. In partnership with States
and other interested parties, we have
developed toolkits and strategies that
States can implement to support
Medicaid unwinding activities to inform
consumers about renewing their
coverage and exploring other available
health insurance options if they no
longer qualify for Medicaid or CHIP.
The resources emphasize the need for
consumers to act quickly to enroll in
Exchange coverage so they are able to
minimize gaps in coverage, where
possible.257
Comment: One commenter supported
the proposal, but also requested that
HHS maintain the existing special
enrollment flexibilities that were
introduced after COVID–19 was
declared a PHE by the President on
March 13, 2020, including the
Exceptional Circumstances SEP for
consumers who lost qualifying health
coverage on or after January 1, 2020, but
missed their 60-day window after their
loss of coverage to enroll in an Exchange
plan due to the COVID–19 PHE. Other
commenters supported the proposal and
HHS’ recent announcement of the
Unwinding SEP,258 which temporarily
257 More information about these efforts is
available at https://www.medicaid.gov/stateresource-center/downloads/mac-learningcollaboratives/ffm-transfer-message-lc-presentationdeck.pdf.
258 See CMS. (2023, January 27). Temporary
Special Enrollment Period (SEP) for Consumers
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provides more time for consumers to
report losing Medicaid or CHIP coverage
during Medicaid unwinding, but
recommended HHS also require this
Unwinding SEP for issuers offering
plans in the individual and group health
insurance markets off-Exchange.
Response: In 2018, we clarified
through guidance that an Exceptional
Circumstances SEP pursuant to 45 CFR
155.420(d)(9) is available for individuals
seeking coverage on Exchanges on the
Federal platform and who were
prevented from enrolling in Exchange
coverage during another SEP or during
an Open Enrollment period (OEP) by an
event that Federal Emergency
Management Agency (FEMA) declared a
national emergency or major disaster
(FEMA SEP).259 This guidance also
clarified that we would make a FEMA
SEP available for only 60 days after the
date in which a national emergency or
major disaster officially ends.260 Given
the recent end of the COVID national
emergency on April 10, 2023, the
current SEP flexibilities due to the
COVID–19 FEMA national emergency
will only be in place until June 9, 2023.
We appreciate the recommendation
that the Unwinding SEP be available offExchange. However, as specified in 45
CFR 147.104(b)(2)(i)(D), issuers in the
individual market off-Exchange are not
required to provide Exceptional
Circumstances SEPs under
§ 155.420(d)(9).261 In addition, the
Exceptional Circumstances SEP does
not extend to issuers offering group
health insurance coverage outside of the
Exchange.262 As such, issuers in the
individual and group market offExchange are not required to offer an
Exceptional Circumstances SEP to help
Losing Medicaid or the Children’s Health Insurance
Program (CHIP) Coverage Due to Unwinding of the
Medicaid Continuous Enrollment Condition—
Frequently Asked Questions (FAQ). https://
www.cms.gov/technical-assistance-resources/tempsep-unwinding-faq.pdf.
259 See Pate, R. (2018, August 9). Emergency and
Major Disaster Declarations by the Federal
Emergency Management Agency (FEMA)—Special
Enrollment Periods (SEPs), Termination of
Coverage, and Payment Deadline Flexibilities,
Effective August 9, 2018. https://www.cms.gov/
CCIIO/Resources/Regulations-and-Guidance/
Downloads/8-9-natural-disaster-SEP.pdf.
260 https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/8-9-naturaldisaster-SEP.pdf.
261 See CMS. (2023, January 27). Temporary
Special Enrollment Period (SEP) for Consumers
Losing Medicaid or the Children’s Health Insurance
Program (CHIP) Coverage Due to Unwinding of the
Medicaid Continuous Enrollment Condition—
Frequently Asked Questions (FAQ). https://
www.cms.gov/technical-assistance-resources/tempsep-unwinding-faq.pdf.
262 QHP issuers offering a QHP through a Small
Business Health Options Program (SHOP) are
required to provide the exceptional circumstances
special enrollment period. 45 CFR 156.286.
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with coverage transitions due to
Medicaid unwinding. Finally, while the
Unwinding SEP does not apply to
issuers in the individual and group
health markets off-Exchange, employers
may still work with their plan or issuer
to extend the SEP available to
consumers losing Medicaid or CHIP for
those who need to enroll in employer
sponsored coverage after the end of the
60-day loss of MEC SEP available under
applicable law.
Comment: A few commenters neither
fully supported or opposed the
proposed policy but provided some
considerations for HHS, specifically that
the proposal could result in consumers
enrolling in a new plan earlier than they
intended to or were aware of.
Commenters also recommended that
HHS consider whether it could result in
confusion or misunderstandings among
consumers as to when coverage would
begin, which could have financial
implications or lead to issues with
billing and premium payments. Another
commenter noted that the proposed
change could result in short periods of
dual enrollment for consumers, which
may introduce coordination of benefits
issues for consumers.
Response: We agree that both
consumers and issuers will require
additional guidance to ensure that the
policy is implemented as intended and
that all interested parties assisting
consumers with enrollment decisions
receive education and guidance,
especially regarding coordination of
benefits and potential periods of
overlapping coverage. Because the
earlier coverage effective date will only
be available when consumers select a
QHP in advance of the month in which
they are losing MEC, consumers who do
not want any overlap in coverage could
choose to wait until the month they lose
MEC (and up to 60 days after the loss
of MEC) before selecting a plan. We
encourage any Exchanges choosing to
implement earlier effective dates to
provide clear explanations to consumers
regarding this option. We will continue
to monitor the implementation of this
policy, including whether additional
guidance, or any additional policy
changes in future rulemaking, are
necessary.
Comment: One commenter fully
opposed the proposed policy, stating
that it could further complicate the
Medicaid unwinding process, especially
in light of recent guidance published by
HHS on January 27, 2023, announcing
flexibilities for consumers losing
Medicaid or CHIP due to Medicaid
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unwinding.263 The commenter stated
that a more narrowly tailored approach,
such as allowing mid-month
enrollments in Exchange QHPs and
proration of APTC and premium
amounts, similar to the SEPs for
adoption or birth of a child, is the better
solution.
Response: We appreciate and
understand the concern that this policy
could further complicate the Medicaid
unwinding process given that there is
variability amongst States’ unwinding
plans and activities. However, we do
believe that the policy still has value
given that it would facilitate timely
coverage transitions, which will be
critical throughout the entire Medicaid
unwinding period. For example,
consumers who reside in States that
allow mid-month terminations of
Medicaid or CHIP risk gaps in coverage
during Medicaid unwinding. A rule that
allows for earlier QHP effective dates
could mitigate these gaps in coverage,
even more so if consumers do not have
access to the flexibilities we announced
on January 27, 2023, because their State
Exchange opted to not provide the
Unwinding SEP or something similar.
Regarding the suggestion to allow
Exchange QHP coverage to start midmonth, we also considered and rejected
this option for the reasons described
earlier in this final rule.
Comment: A commenter supported a
review of the regulations to ensure that
consumers with MEC ending midmonth can be found eligible for an
earlier coverage effective date not just
for QHP, but also for APTC and CSR to
help pay for their coverage.
Response: We reiterate that a
consumer who is not eligible for or
enrolled in non-Exchange MEC for a full
month, and who is enrolled in a QHP
on the first day of such month, may be
allowed PTC under 26 CFR 1.36B–
3(c)(1). To clarify that such a consumer
may be eligible for APTC and CSRs, we
are adding language to the APTC
eligibility regulation at
§ 155.305(f)(1)(ii)(B) to state that a tax
filer must be determined eligible for
APTC if the tax filer (or a member of
their tax household) is not eligible for a
full calendar month of minimum
essential coverage (and other criteria are
met).
263 See CMS. (2023, January 27). Temporary
Special Enrollment Period (SEP) for Consumers
Losing Medicaid or the Children’s Health Insurance
Program (CHIP) Coverage Due to Unwinding of the
Medicaid Continuous Enrollment Condition—
Frequently Asked Questions (FAQ). https://
www.cms.gov/technical-assistance-resources/tempsep-unwinding-faq.pdf.
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c. Special Rule for Loss of Medicaid or
CHIP Coverage (§ 155.420(c))
To mitigate coverage gaps when
consumers lose Medicaid or CHIP
coverage and to allow for a more
seamless transition into Exchange
coverage, we are finalizing the proposed
new special rule under § 155.420(c)(6)
to provide more time for consumers
who lose Medicaid or CHIP coverage
that is considered MEC as described in
§ 155.420(d)(1)(i) to report their loss of
coverage and enroll in Exchange
coverage. The proposed regulation
would align the SEP window following
loss of Medicaid or CHIP with the
reconsideration period available under
42 CFR 435.916(a).
Currently, qualified individuals or
their dependents who lose MEC, such as
coverage through an employer or most
kinds of Medicaid or CHIP, qualify for
a SEP under § 155.420(d)(1)(i) and may
report a loss of MEC to Exchanges up to
60 days before and up to 60 days after
their loss of MEC. See 45 CFR
155.420(c)(2). When these qualified
individuals or their dependents are not
renewed into Medicaid or CHIP based
on modified adjusted gross income
following an eligibility redetermination,
42 CFR 435.916 requires that the State
Medicaid agency provide a 90-day
reconsideration window, or a longer
period elected by the State, which
allows former beneficiaries to provide
the necessary information to their State
Medicaid agency to re-establish their
eligibility for Medicaid or CHIP without
having to complete a new application.
During the 90 days (or longer period
elected by the State) following a
Medicaid or CHIP non-renewal, it
would be reasonable for a consumer
who becomes uninsured to proceed first
by attempting to regain coverage
through Medicaid or CHIP. However,
because the SEP for loss of MEC at
§ 155.420(d)(1)(i) currently lasts only 60
days after the loss of Medicaid or CHIP
coverage, by the time that a consumer
exhausts their attempt to renew
coverage through Medicaid or CHIP
(which they must do within 90 days or
the longer period elected by a State of
the consumer’s loss of Medicaid or
CHIP), they may have missed their
window to enroll in Exchange coverage
through a SEP based on loss of MEC (60
days after loss of Medicaid or CHIP).
In further support of this proposal, we
explained in the proposed rule (87 FR
78266 through 78267) that we are aware
that most consumers losing Medicaid or
CHIP and who are also eligible for
Exchange coverage may not transition to
Exchange coverage in a timely manner.
A recent report published by the
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Medicaid and CHIP Payment and
Access Commission (MACPAC) 264
found that only about three percent of
beneficiaries who were disenrolled from
Medicaid or CHIP in 2018 enrolled in
Exchange coverage within 12 months.
The 2018 data also showed that more
than 70 percent of adults and children
moving from Medicaid to Exchange
coverage had gaps in coverage for an
average of about three months.265 While
there are likely several reasons that
consumers did not transition directly
from Medicaid or CHIP coverage to
Exchange coverage in 2018, the
proposed special rule at § 155.420(c)(6)
has the potential to mitigate an
administrative hurdle that may pose a
barrier to enrolling in Exchange
coverage in a timely manner while
minimizing coverage gaps.
Therefore, to ensure that qualifying
individuals are able to seamlessly
transition from Medicaid or CHIP
coverage to Exchange coverage as
quickly as possible and to mitigate the
risk of coverage gaps, we proposed to
create new paragraph (c)(6) stating that,
effective January 1, 2024, at the option
of the Exchange, consumers eligible for
a SEP under § 155.420(d)(1)(i) due to
loss of Medicaid or CHIP coverage that
is considered MEC would have up to 90
days (or the longer period elected by a
State) after their loss of Medicaid or
CHIP coverage to enroll in an Exchange
QHP. This proposal would align the SEP
window following loss of Medicaid or
CHIP with the reconsideration period
available under 42 CFR 435.916(a). We
also proposed adding language to
paragraph (c)(2) to clarify that a
qualified individual or their
dependent(s) who is described in
paragraph (d)(1)(i) continues to have 60
days after the triggering event to select
a QHP unless an Exchange exercises the
option proposed in new paragraph
(c)(6). We believed in the proposed rule
(87 FR 78267) that these proposed
changes would have a positive impact
on consumers while providing
flexibility for Exchanges with different
enrollment trends.
We sought comment on this proposal.
After reviewing the public comments,
we are finalizing this provision as
proposed, with two modifications to
permit State Exchanges some additional
flexibilities. As finalized, State
Exchanges are permitted to provide a
qualified individual or their
dependent(s) who are losing Medicaid
264 Medicaid and CHIP Payment Access
Commission. (2022, July). Transitions Between
Medicaid, CHIP, and Exchange Coverage. https://
www.macpac.gov/wp-content/uploads/2022/07/
Coverage-transitions-issue-brief.pdf.
265 Ibid.
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25831
or CHIP coverage with more time to
select a QHP, up to the number of days
provided for the applicable Medicaid or
CHIP reconsideration period if the State
Medicaid Agency allows or provides a
longer Medicaid or CHIP
reconsideration period. State Exchanges
will also have the option to implement
this special rule as soon as this final
rule takes effect, instead of on January
1, 2024, as proposed. We summarize
and respond to public comments
received on the proposed special rule
for consumers losing Medicaid or CHIP
coverage below.
Comment: Multiple commenters
supported the proposal stating that,
even before the COVID–19 PHE, many
Medicaid beneficiaries experienced
churn due to administrative errors, lost
paperwork, and address changes.
Commenters noted that despite States’
best efforts during Medicaid unwinding,
notices may still not reach consumers in
time. Commenters also supported the
proposal because it would promote
continuity of care, which helps
consumers achieve healthier outcomes,
helps support the emergency care safety
net, and minimizes care disruptions,
especially for those with serious,
chronic medical conditions.
Commenters also were supportive of the
flexibility for State Exchanges to
determine whether they will adopt the
special rule or not.
Response: We agree that the new
special rule will have a significant
impact and will be beneficial for
consumers losing Medicaid or CHIP
coverage, especially those with chronic
health conditions, and will help ease
transitions into Exchange coverage. We
also agree that State Exchanges should
have flexibility to decide whether to
offer this special rule or not.
Comment: A few commenters
supported the proposal but made
recommendations for HHS to consider.
A few commenters requested that HHS
make this special rule mandatory
instead of at the option of Exchanges. A
few commenters requested that HHS not
delay implementation to January 1,
2024, and requested that this special
rule go into effect immediately or that
Exchanges be given explicit authority to
offer this special rule before January 1,
2024, if desired. Other commenters
asked that HHS consider extending the
window to 120 days or to permit
Exchanges to extend the attestation
window in States where the Medicaid or
CHIP reconsideration period is longer
than 90 days. Finally, a few commenters
said that HHS should clarify that, under
45 CFR 155.420(d)(9), Exchanges
already have flexibility to offer
Exceptional Circumstance SEPs, can
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establish Exceptional Circumstance
SEPs at any time and/or length, and that
these lengths can be greater than the 60
or 90-day timeframes as discussed in
preamble.
Response: We continue to believe that
all Exchanges should have flexibility to
adopt this special rule or not, based on
their experiences with their eligible and
enrolled populations. Therefore, we are
not requiring that all Exchanges offer
this special rule but we may consider
this in future rulemaking. We believe
that delaying implementation until
January 1, 2024, will give Exchanges
time to prepare any system changes for
implementation, and update guidance
and educational materials, which may
not be feasible when States are also
engaged in Medicaid unwinding
activities. However, we understand that
some Exchanges may be ready to
implement this special rule earlier than
January 1, 2024, and therefore, we are
modifying our proposal to provide State
Exchanges the flexibility to implement
this policy as soon as this rule is
finalized. Finally, we understand and
appreciate States’ concerns that the
proposed 90-day window for consumers
to report a past loss of Medicaid or CHIP
is not enough time in States whose State
Medicaid agency allow or provide for a
Medicaid or CHIP reconsideration
window that is 90 days or greater. Given
these concerns, we are modifying our
proposal to permit Exchanges to offer an
attestation window (for consumers
eligible for a SEP under
§ 155.420(d)(1)(i) due to loss of
Medicaid or CHIP coverage that is
considered MEC) up to the number of
days provided for the applicable
Medicaid or CHIP reconsideration
period, if the State Medicaid agency
allows or provides for a Medicaid or
CHIP reconsideration period greater
than 90 days.
Regarding the comment that
Exchanges already have flexibility and
authority under paragraph (d)(9) to set
the length of a SEP, we remind
Exchanges that the exceptional
circumstances authority is subject to
each Exchange’s reasonable
interpretation of what is ‘‘exceptional.’’
A misalignment between the Exchange
attestation window for consumers losing
Medicaid or CHIP coverage with the
Medicaid or CHIP reconsideration
period alone does not alone constitute
an exceptional circumstance. If an
Exchange chooses not to adopt this
special rule for consumers losing
Medicaid or CHIP coverage, or if an
Exchange receives a request from an
applicant to enroll in Exchange coverage
more than 90 days after losing Medicaid
or CHIP coverage, an Exchange could
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consider that applicant’s claim that they
experienced an exceptional
circumstance that prevented them from
enrolling in Exchange coverage in a
timely manner on a case-by-case basis
only. We also remind commenters that
while Exchanges have broad authority
to establish a SEP due to an exceptional
circumstance, the Exceptional
Circumstance SEP may not last more
than 60 days, consistent with 45 CFR
155.420(c)(1). Therefore, we are
finalizing as proposed.
Comment: One commenter supported
the proposed special rule but also
recommended that HHS continue to
implement other changes to enrollment
rules to reduce burden on consumers
looking to enroll in Exchanges to make
it more likely that they enroll. For
example, the commenter suggested
offering a SEP to consumers who owe a
monthly premium after application of
APTC, so that they can enroll in
Exchange coverage throughout the year,
similar to the SEP at § 155.420(d)(16) for
consumers with attested household
incomes at or below 150 percent of the
FPL. The commenter also recommended
that HHS consider other SEPs once the
150 percent FPL SEP expires at the end
of coverage year 2025. Finally, one
commenter supported automatic
coverage transitions for consumers
needing to transition from Medicaid or
CHIP into Exchange coverage.
Response: We appreciate the
commenters’ concerns regarding
consumers who have low incomes but
are ineligible for the SEP at paragraph
(d)(16). While any changes to the
existing SEP at paragraph (d)(16) are
out-of-scope for this rule, we will
continue to explore potential ways to
help lower income consumers access
and enroll in Exchange coverage. We
also appreciate the concerns regarding
the need for automatic coverage
transitions and will continue work with
internal and external interested parties
to find ways to improve transitions for
consumers.
Comment: Some commenters also
expressed concern about the recently
announced Unwinding SEP available for
consumers who submit a new
application or update an existing
application between March 31, 2023,
and July 31, 2024, and attest to a last
date of Medicaid or CHIP coverage
within the same time period.266
266 See
CMS. (2023, January 27). Temporary
Special Enrollment Period (SEP) for Consumers
Losing Medicaid or the Children’s Health Insurance
Program (CHIP) Coverage Due to Unwinding of the
Medicaid Continuous Enrollment Condition—
Frequently Asked Questions (FAQ). https://
www.cms.gov/technical-assistance-resources/tempsep-unwinding-faq.pdf.
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Commenters were concerned that the
Unwinding SEP could invite adverse
selection, as impacted consumers may
delay enrolling into Exchange coverage
until they have a medical need for
health insurance, and because the
Unwinding SEP is not subject to SEP
verification. Commenters also said that
they did not anticipate the
announcement of the Unwinding SEP so
that they could determine how the
Unwinding SEP will impact their 2024
pricing.
Response: The recently announced
Unwinding SEP 267 is out of scope for
this rulemaking, but we acknowledge
and appreciate the concerns raised by
commenters related to potential adverse
selection and impact on pricing of
premiums.
Comment: A few commenters
opposed the proposed special rule. One
commenter contended that it was
unnecessary given that the Consolidated
Appropriations Act, 2023 268 delinked
the Medicaid unwinding from the end
of the COVID–19 PHE. Specifically, the
commenter said that ‘‘beginning April 1,
2023, States can begin Medicaid
redeterminations’’ and because of this,
the commenter expects that ‘‘many
individuals impacted by this will have
been redirected to coverage on the
Exchange by the end of 2023.’’ Another
commenter stated that the existing SEP
at § 155.420(d)(1) adequately addresses
the situation, and expressed concern
that HHS is introducing too many new
SEPs, which can cause too much
variation amongst Exchanges and may
create more confusion within and across
markets. The commenter also stated that
enrollment data shows that consumers
submit their applications early during
their 60-day SEP window, and that
lengthy, overlapping SEPs create more
administrative burden for Exchanges
and may cause delays or prevent
consumers from enrolling into coverage.
Response: While there may not be a
need for this special rule during
Medicaid unwinding due to our recent
announcement of the Unwinding SEP,
the Unwinding SEP is only temporary
and will not address the misalignment
of the loss of MEC SEP eligibility period
and Medicaid and CHIP reconsideration
periods outside of the exceptional
circumstances of Medicaid unwinding.
We proposed this change due to
267 See CMS. (2023, January 27). Temporary
Special Enrollment Period (SEP) for Consumers
Losing Medicaid or the Children’s Health Insurance
Program (CHIP) Coverage Due to Unwinding of the
Medicaid Continuous Enrollment Condition—
Frequently Asked Questions (FAQ). https://
www.cms.gov/technical-assistance-resources/tempsep-unwinding-faq.pdf.
268 Public Law 117–328.
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continued concerns from interested
parties that consumers transitioning
from Medicaid or CHIP coverage and
into other coverage, like Exchange
coverage, continue to experience gaps in
coverage, which can be detrimental to
health outcomes. We also appreciate the
concern that different rules for SEPs
may be confusing, and therefore,
Exchanges have the option of whether
or not to offer this special rule.
d. Plan Display Error Special
Enrollment Periods (§ 155.420(d))
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We are finalizing our proposal to
amend § 155.420(d)(12) to align the
policy of the Exchanges for granting
SEPs to persons who are adversely
affected by a plan display error with
current plan display error SEP
operations. We proposed amending
paragraph (d)(12) by changing the
subject of the regulation to focus on the
affected enrollment, not the affected
qualified individual, enrollee, or their
dependents.269
In accordance with § 155.420, SEPs
allow a qualified individual, enrollee,
and/or their dependents who
experiences certain qualifying events to
enroll in, or change enrollment in, a
QHP through the Exchange outside of
the annual OEP. In 2016, we added
warnings on HealthCare.gov about
inappropriate use of SEPs, and
tightened certain eligibility rules.270 We
sought comment on these issues in the
Patient Protection and Affordable Care
Act; HHS Notice of Benefit and Payment
Parameters for 2018 proposed rule (81
FR 61456), especially on data that could
help distinguish misuse of SEPs from
low take-up of SEPs among healthier
eligible individuals; evidence on the
impact of eligibility verification
approaches, including pre-enrollment
verification, on health insurance
enrollment, continuity of coverage, and
risk pools (whether in the Exchange or
other contexts); and input on what SEPrelated policy or outreach changes could
help strengthen risk pools. We
examined attrition rates in our
enrollment data and have found that the
attrition rate for any particular cohort is
no different at the end of the year than
at points earlier in the year, suggesting
that any such gaming, if it is occurring,
does not appear to be occurring at
sufficient scale to produce statistically
measurable effects.
269 In this section, ‘‘consumer’’ may be used as
shorthand for ‘‘qualified individual, enrollee, or
their dependents.’’
270 February 25, 2016. Fact Sheet: Special
Enrollment Confirmation Process. Available online
at https://www.cms.gov/newsroom/fact-sheets/factsheet-special-enrollment-confirmation-process.
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In the Patient Protection and
Affordable Care Act; HHS Notice of
Benefit and Payment Parameters for
2018; Amendments to Special
Enrollment Periods and the Consumer
Operated and Oriented Plan Program
(81 FR 94058, 94127 through 94129), we
codified the plan display error SEP at
§ 155.420(d)(12) to reflect that plan
display error SEP may be triggered
when a qualified individual or enrollee,
or their dependent, adequately
demonstrates to the Exchange that a
material error related to plan benefits,
service area, or premium (hereinafter
‘‘plan display error’’) influenced the
qualified individual’s, enrollee’s, or
their dependents’ decision to purchase
a QHP through the Exchange. This
generally allowed consumers who
enrolled in a plan for which
HealthCare.gov displayed incorrect plan
benefits, service area, cost-sharing, or
premium, and who could demonstrate
that such incorrect information
influenced their decision to purchase a
QHP through the Exchange, to select a
new plan that better suited their needs.
In the same final rule, we also
finalized the policies at § 147.104(b)(2)
to make clear that the plan display error
SEP only creates an opportunity to
enroll in coverage through the
Exchange, and clarified that the SEP is
limited to plan display errors presented
to the consumer by the Exchange at the
point at which the consumer enrolls in
a QHP (81 FR 94128 through 94129). By
this we meant that the consumer must
have already completed their Exchange
application, the Exchange must have
determined that the consumer is eligible
for QHP coverage and any applicable
APTC or CSRs, and the consumer must
have viewed the material error while
making a final selection to enroll in the
QHP.
Currently, § 155.420(d)(12) requires
the qualified individual, enrollee, or
their dependent, to adequately
demonstrate to the Exchange that a
material error related to plan benefits,
service area, or premium influenced the
qualified individual’s or enrollee’s, or
their dependent’s, decision to purchase
a QHP through the Exchange. However,
we have found that consumers may
benefit when other interested parties
can demonstrate to the Exchange that a
material plan error influenced the
qualified individual’s, enrollee’s, or
their dependents’ enrollment decision
to purchase a QHP through the
Exchange. In our experience, plan
display errors may not be obvious or
detectable to the consumer and the
Exchange until after the enrollment has
been impacted by the error, at which
point the issuer or State regulator is in
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25833
the best position first to identify the
display error. For example, a plan
display error that influenced a
consumer’s enrollment can be
discovered when a consumer enrolls in
a QHP, pays the premium amount that
was submitted by the issuer to be
displayed on HealthCare.gov, and the
enrollment is cancelled by the issuer for
non-payment of premiums because the
premium was incorrectly displayed on
HealthCare.gov. In this case, the plan
display error would not be discovered
until the issuer investigates the reason
for cancellation. The issuer is the only
party that can identify and notify the
Exchange that the error was caused by
incorrect premium amounts between the
issuer’s records and data submitted to
HealthCare.gov. We can then work with
the issuer to implement the data
correction processes to make the
necessary corrections to the
HealthCare.gov and investigate the error
to determine if the error was material
because it was likely to have influenced
the consumer’s enrollment. In this
example, we would likely determine
that the error impacted the consumer’s
enrollment if the difference between the
displayed premium and the actual
premium was material. Issuers that
submit a data change request that
adversely impacts the consumers’
enrollment on HealthCare.gov are
required to notify consumers of the plan
display error and the remediation.
Since qualified individuals, enrollees,
and their dependents are not always the
parties best suited to demonstrate to the
Exchange that a material plan display
has influenced their enrollment, we
proposed revising paragraph (d)(12) to
remove the burden solely from the
qualified individual, enrollee, and their
dependents. We also proposed adding
cost-sharing to the list of plan display
errors, alongside plan benefits, service
area, and premiums, as a plan display
error with respect to cost-sharing could
equally influence a consumer’s
enrollment decision. Specifically, we
proposed revising § 155.420(d)(12) to
reflect that a SEP is available when the
enrollment in a QHP through the
Exchange was influenced by a material
error related to plan benefits, costsharing, service area, or premium. We
proposed to consider a material error to
be an error that is likely to have
influenced a qualified individual’s,
enrollee’s, or their dependent’s
enrollment in a QHP.
We note that an error related to plan
benefits, service area, cost-sharing or
premium does not trigger a SEP when
the error is not material, which may
occur if an error is honored as
displayed. Errors related to plan
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benefits, service area, cost-sharing or
premium include situations where
coding on HealthCare.gov causes
benefits to display incorrectly, or where
we identified incorrect QHP data
submission or discrepancy between an
issuer’s QHP data and its Stateapproved form filings.271 If the error
involves information that displays on
HealthCare.gov, we work with the issuer
and applicable State’s regulatory
authority to arrive at a solution that has
minimal impact on consumers and
affirms, to the extent possible, that they
are not negatively affected by the error.
Generally, the most straightforward and
consumer-friendly resolution is for
issuers to honor the benefit as it was
displayed incorrectly for affected
enrollees, if permitted by the applicable
State regulatory authority. If the issuer
chooses to honor the error and
administers the plan as it was
incorrectly displayed for the affected
consumers, we will not typically
provide the consumers with a SEP. The
proposed revision to the regulation will
be consistent with this approach.
Our proposal would have minimal
operational impact, as interested parties
currently have the infrastructure to
demonstrate to the Exchange that a plan
display error influenced a qualified
individual’s, enrollee’s, or their
dependents’ decision to purchase a QHP
through the Exchange. We currently
engage with partners and interested
parties throughout the plan display
error SEP process to ensure that issuers
and States are notified of our decisions
as appropriate. States have access to the
status of all applicable plan display
error SEPs and can track the progress of
the plan display error SEPs until
remediation. In addition, under
§ 156.1256, issuers ‘‘must notify their
enrollees of material plan or benefit
display errors and the enrollees’
eligibility for an [SEP]. . . within 30
calendar days after being notified by the
[FFE] that the error has been fixed, if
directed to do so by the [FFE].’’ Thus,
impacted consumers are also currently
being notified and made aware of plan
display error SEP if their plan data had
a significant, material error. We
expected that this experience is similar
on all Exchanges, and therefore are
proposing that this amendment to the
description of the SEP will apply for all
Exchanges.
We requested comment on this
proposal.
271 See the following: CMS. (2022, July 28). 2022
Federally-facilitated Exchange (FFE) and Federallyfacilitated Small Business Health Options Program
(FF–SHOP) Enrollment Manual. (Section 6.8.1, p.
82). https://www.cms.gov/files/document/ffeffshopenrollment-manual-2022.pdf.
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After reviewing the public comments,
we are finalizing this provision as
proposed. All comments supported the
proposed policy. We summarize and
respond to public comments received
on the proposed plan display error SEP
below.
Comment: Multiple commenters
supported a SEP for consumers affected
by a material plan display error related
to plan benefits, service area, or
premium. Specifically, commenters
mentioned their support for the SEP for
consumers whose enrollment in a plan
was adversely affected by the material
plan display error. Additionally,
multiple commenters supported the
proposal to add ‘‘cost-sharing’’ to the
list of plan display error that includes
material error related to plan benefits,
service area, and premiums.
Response: We agree that this revised
plan display error SEP will support
consumers whose enrollment in a plan
was influenced by a material plan
display error related to plan benefits,
service area, or premium. We also agree
with adding cost-sharing to the list of
errors that may constitute a plan
display, and we are finalizing this as
proposed.
Comment: Several commenters
supported our proposal to lift the
burden of proof to additionally allow
regulators and other interested third
parties to demonstrate that a plan
display error affected a consumer’s plan
selection. One comment supported
expanding the ways in which people
can prove they have been affected by
plan display errors. Commenters stated
this proposed change encourages the
efficient operations of the Exchanges
while reducing the burden on
consumers to prove an error occurred.
Another commenter supported the
proposal as it allows consumers to
benefit from other interested parties
recognizing a plan display error
including issuers, State regulators, and
others.
Response: We agree that the proposal
will remove the burden from consumers
to solely demonstrate to the Exchange
that their enrollment was influenced by
a material error. We agree that this
change will lift the burden of proof to
allow regulators and other interested
parties to demonstrate plan display
errors. As such, we will finalize this
proposal to allow plan display errors to
be efficiently identified and resolved.
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78268), HHS requested
information on whether consumers
affected by a significant change in their
plan’s provider network should be
eligible for a SEP, and whether we
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should consider an enrollee who is
impacted by a provider contract
termination to be someone who is
experiencing an exceptional
circumstance, as specified in
§ 155.420(d)(9), or should be eligible for
a new SEP for provider contract
terminations. We thank commenters for
their feedback and will take this into
consideration in future rulemaking.
Comment: One commenter
recommended that the plan display
error SEP should also include provider
directory inaccuracies.
Response: In the Federally-facilitated
Exchange (FFE) and Federallyfacilitated Small Business Health
Options Program (FF–SHOP) Enrollment
Manual, we state that plan display
errors or changes that are made to
external websites will not be considered
triggering events for plan display error
SEPs.272 Since provider directories are
displayed and maintained outside the
Exchange, we did not propose in this
rulemaking to include provider network
inaccuracies as potential plan display
error triggers under § 155.420(d)(12).
Nonetheless, we will consider provider
directory inaccuracies for future
rulemaking.
8. Termination of Exchange Enrollment
or Coverage (§ 155.430)
a. Prohibition of Mid-Plan Year
Coverage Termination for Dependent
Children Who Reach the Maximum Age
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78268), we proposed
to add § 155.430(b)(3) to explicitly
prohibit QHP issuers participating in
Exchanges on the Federal platform from
terminating coverage of dependent
children before the end of the coverage
year because the child has reached the
maximum age at which issuers are
required to make coverage available
under Federal or State law. The ACA
added PHS Act section 2714
(implemented at § 147.120) to require
that group health plans and health
insurance issuers offering group or
individual health insurance coverage
that offer dependent child coverage
make such coverage available for an
adult child until age 26. The ACA also
added section 9815(a)(1) to the Code
and section 715(a)(1) to the Employee
Retirement Income Security Act (ERISA)
to incorporate the provisions of part A
of title XXVII of the PHS Act (including
272 CMS. (2022, July 28). 2022 Federallyfacilitated Exchange (FFE) and Federally-facilitated
Small Business Health Options Program (FF–SHOP)
Enrollment Manual. (Exhibit 12, pp. 33–37, and p.
87). https://www.hhs.gov/guidance/document/2022enrollment-manual.
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section 2714) and make them applicable
under ERISA and the Code to group
health plans and health insurance
issuers providing health insurance
coverage in connection with group
health plans. This proposed amendment
to § 155.430 would not change the
requirements under § 147.120 nor
would it affect parallel provisions in 26
CFR 54.9815–2714 and 2590.715–2714.
Some States have established
requirements under which issuers must
maintain coverage for dependent
children beyond age 26, and some
issuers adopt higher than legally
required age limits as a business
decision.
In operationalizing § 155.430 on the
Federal eligibility and enrollment
platform, HHS has required QHP issuers
that cover dependent children to
provide coverage to dependent children
until the end of the plan year in which
they turn 26 (or, if higher, the maximum
age under State law or the plan’s
business rules), although this is not
required under § 147.120. Nevertheless,
interested parties requested that HHS’
policy be codified in regulation for
clarity. Doing so by amending § 155.430
would reduce uncertainty for issuers on
the Exchanges on the Federal platform
regarding their obligation under
§ 155.430 to maintain coverage for a
dependent child who has turned 26 (or,
if higher, the maximum age under State
law or the plan’s business rules) until
the end of the plan year (unless
coverage is otherwise permitted to be
terminated). Likewise, it would provide
clarity for enrollees themselves who
may be uncertain about the rules
governing their ability to remain
enrolled as a dependent child until the
end of the plan year in which they reach
the maximum age (that is, age 26 or, if
higher, the maximum age under State
law or the plan’s business rules). This
policy would codify the current policy
on the Federal platform.
Payment of APTC on the Exchange, in
addition to the way the Federal
eligibility and enrollment platform has
operationalized Exchange eligibility
determinations, warrants a different
policy for issuers of individual market
QHPs on the Exchanges with regard to
child dependents turning age 26 (or, if
higher, the maximum age under State
law or the plan’s business rules). This
is especially true when comparing
individual market Exchange coverage to
the employer market. In the employer
market, the employer typically
contributes toward the cost of child
dependent coverage, but only until the
child dependent attains the maximum
dependent age under the group health
plan (at which point the child
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dependent’s coverage would typically
be terminated). Whereas in the
Exchange, APTC is allowed for the
coverage of a 26-year-old child who is
a tax dependent for the entire plan year
because attaining age 26 may not, by
itself, change tax dependent status.
Exchange eligibility determinations for
enrollment through the Exchange and
for APTC are based on the tax
household, and the determination is
made for the entire plan year unless it
is replaced by a new determination of
eligibility, such as when a change is
reported by the enrollee or identified by
the Exchange in accordance with
§ 155.330. The annual basis of Exchange
eligibility determinations, absent a new
determination, is made clear by the
annual eligibility redetermination
requirements in § 155.335. Eligibility
standards for enrollment through the
Exchange and for APTC make no
mention of an issuer’s business rules
regarding dependent relationships, or
otherwise regarding the specific non-tax
relationships between applicants.
Additionally, Exchange eligibility
criteria do not prohibit allocation of
APTC to dependent children enrollees
based on age. Every family member who
is part of the tax household must be
listed on the Exchange application for
coverage, and there is no maximum age
cap for tax dependents. Because
eligibility determinations are made for
the entire plan year, the Exchange will
generally continue to pay the issuer
APTC, including the portion attributable
to the dependent child, through the end
of the plan year in which the dependent
child turns 26, or, if higher, through the
end of the plan year in which the
dependent reaches the maximum age
required under State law or the plan’s
business rules.
In developing the Federal eligibility
and enrollment platform, we directed
QHP issuers on Exchanges that use the
Federal platform to honor the eligibility
determination made by the Exchange.
This requirement applies whether or not
the enrollees are determined eligible for
APTC. The situation for issuers on these
Exchanges thus differs from those in the
off-Exchange insurance market, where
enrollees do not receive APTC, and in
the group insurance market, where
contributions by employers may end on
the day in which the dependent child
turns 26 (or, if higher, the maximum age
under State law or the plan’s business
rules).
To clarify, in Exchanges on the
Federal platform, during the annual reenrollment process, enrollees who,
during the plan year, have reached age
26 (or, if higher, the maximum age
under State law or the plan’s business
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25835
rules) are, if otherwise eligible, reenrolled into a separate policy
(following the re-enrollment hierarchy
at § 155.335(j)) beginning January 1st of
the following plan year, with APTC, if
applicable. We proposed to add new
paragraph (b)(3) to § 155.430 to
expressly prohibit QHP issuers
participating in Exchanges on the
Federal platform from terminating
coverage until the end of the plan year
for dependent children because the
dependent child has reached age 26 (or
the maximum age under State law). This
change would provide clarity to issuers
participating in Exchanges on the
Federal platform regarding their
obligation to maintain coverage for
dependent children, as well as to
enrollees themselves regarding their
ability to maintain coverage. In
addition, we proposed to make
implementation optional for State
Exchanges.
We requested comments on this
proposal.
After reviewing the public comments,
we are finalizing this provision as
proposed, with the additional
clarification that issuers who have
adopted a higher maximum age than
required by State or Federal law, as
described in their business rules, also
must maintain coverage for dependent
children until the end of the plan year
in which they reach the maximum age.
We summarize and respond to public
comments received on the proposal
below.
Comment: Multiple commenters
supported the proposal, and none
opposed it. Several commenters stated
that this proposal would support
continuity of coverage and avoid
interruptions in coverage for dependent
children who turn 26 during the plan
year (or the maximum age under State
law). A few commenters noted that this
proposal was particularly important
given health concerns faced by young
people, such as reproductive health, and
given the tendency of young adults to
have lower rates of health insurance
coverage. A few commenters agreed that
the proposal would help provide clarity
to issuers regarding their obligation to
maintain coverage for dependent
children until the end of the plan year
in which the child turns 26 (or the
maximum age under State law), and
would clarify for dependent child
enrollees their ability to remain enrolled
until the end of the plan year in which
they turn 26 (or the maximum age under
State law). Three commenters, two of
whom represented State Exchanges,
indicated that their State has a similar
requirement in place. One commenter
noted that this proposal would align
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with the insurance industry standard of
enrollments taking place during the
annual Open Enrollment Period. Lastly,
two commenters stated that the proposal
would ensure accumulators were not
reset mid-plan year for enrollees who
turn 26.
Response: We agree that these
changes will help provide clarity to
consumers and issuers regarding the
obligation of issuers on Exchanges on
the Federal platform to maintain
coverage for dependent children until
the end of the plan year in which they
turn 26 (or, if higher, reach the
maximum allowable age under State law
or the plan’s business rules). Although
this policy has already been in place on
these Exchanges, we agree that this
requirement promotes continuity of
coverage, ensures consumers maintain
access to needed health services, and
avoids the reset of accumulators that
may occur if their coverage was
terminated in the middle of the plan
year.
Comment: One commenter supporting
the proposal noted that implementation
would be optional for State Exchanges
and requested that we encourage States
to adopt a policy of prohibiting midyear plan terminations for dependent
children who reach the applicable
maximum age.
Response: This proposal provides
State Exchanges with the option to
adopt a similar policy, but we do not
believe it is appropriate to explicitly
encourage State Exchanges to do so. We
note that this requirement applies to all
issuers on Exchanges on the Federal
platform, and as noted in a previous
comment, some State Exchanges have
also indicated they currently have a
similar requirement. However, as noted
in the preamble of this proposal, this
policy for the Exchanges on the Federal
platform is based on Exchange
operations and the fact that APTC
eligibility determinations are made for
the entire plan year based on tax
household, unless replaced by a new
determination of eligibility. Because
State Exchanges may establish their own
operational practices regarding the
maximum age for dependent enrollees,
including ones that differ from those on
the Exchanges on the Federal platform,
we believe it is appropriate to allow
State Exchanges to determine whether
or not to adopt this proposal.
Comment: One commenter expressing
support for the proposal stated that
consumers should be informed that
some States have higher maximum ages
for dependent child enrollees, and that
Federal law requires that individuals
with developmental disabilities must be
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covered as insurance dependents
regardless of age.
Response: We agree that it is
important for consumers to be aware of
the maximum age for dependent
children required under State law and
therefore will explore ways in which we
can convey this information. With
respect to plans with business rules that
provide a maximum age higher than
what is required under State or Federal
law, we note that HHS publishes Public
Use Files for the Federally-facilitated
Exchange which contain information on
issuers’ business rules, including the
maximum dependent age.273 States,
including State Departments of
Insurance and State Exchanges, may
also have resources available to inform
consumers of the applicable laws
regarding maximum age. Finally, we
note that Federal law requires coverage
of dependent children until age 26,
though States may have higher
maximum dependent ages based on
disability status. The application for
Exchanges on the Federal platform
allows consumers to designate an
enrollee with a disability, which allows
that enrollee to remain enrolled as a
dependent past age 26 if required by
applicable State law.
Comment: Two commenters
expressing support for the proposal
noted that it was important for enrollees
to retain APTC for the full plan year.
One commenter stated that dependents
may be eligible for more generous APTC
while on their family’s coverage than in
coverage alone.
Response: We agree that it is
important for Exchange enrollees to
retain the APTC to which they are
entitled for the full plan year. However,
we note that even if a dependent
enrollee enrolls in a separate plan prior
to the end of the year in which the
dependent turns 26, they are still
entitled to the portion of APTC paid on
their behalf for the tax household in
which they are a tax dependent.
Enrolling in a separate plan does not, in
and of itself, reduce the amount of
APTC to which an enrollee is entitled.
Comment: One commenter expressed
neither support for nor opposition to the
proposal and stated that enrollees who
turn 26 during the plan year should not
be automatically re-enrolled into their
own plan at the end of the plan year.
Response: Although this comment is
not within the scope of our proposal, we
believe it is appropriate for such
enrollees to be re-enrolled into their
273 CMS. (n.d.). Health Insurance Exchange
Public Use Files (Exchange PUFs). https://
www.cms.gov/cciio/resources/data-resources/
marketplace-puf.
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own plan at the end of the year in which
they turn 26 (or, if higher, reach the
maximum age under State law or the
plan’s business rules). This practice
avoids disruptions of coverage for
enrollees transitioning off their parents’
plans, and is in line with the general
Exchange practice of automatically reenrolling enrollees at the end of each
plan year.
9. General Eligibility Appeals
Requirements (§ 155.505)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78269), we proposed
revising § 155.505(g) to acknowledge the
ability of the CMS Administrator to
review Exchange eligibility appeals
decisions prior to judicial review.
Section 155.505 describes the general
Exchange eligibility appeals process,
including applicants’ and enrollees’
right to appeal certain Exchange
eligibility determinations specified in
§ 155.505(b), and the obligation of the
HHS appeals entity and State Exchange
appeals entities to conduct certain
Exchange eligibility appeals as
described in § 155.505(c). In accordance
with § 155.505(g), appellants may seek
judicial review of an Exchange
eligibility appeal decision made by the
HHS appeals entity and State Exchange
appeals entities to the extent it is
available by law. Currently, the
regulation specifies no other
administrative opportunities for
appellants to appeal Exchange eligibility
appeal decisions made by the HHS
appeals entity. We proposed revising
this regulation to acknowledge the
ability of the CMS Administrator to
review Exchange eligibility appeals
decisions prior to judicial review.
This change would ensure that
accountability for the decisions of the
HHS appeals entity is vested in a
principal officer, as well as bring
§ 155.505(g) of the appeals process to a
more similar posture as other CMS
appeals entities that provide
Administrator review.274 Revising the
regulation would also provide
appellants and other parties with
accurate information about the
availability of administrative review by
274 Examples include: 42 CFR part 405, subpart R
(Provider Reimbursement Review Board); 42 CFR
part 412, subpart L (Medicare Geographic
Classification Review Board); 42 CFR 430.60
through 430.104 (Medicaid State Plan Materials/
Compliance Determinations); 42 CFR 423.890
(Retiree Drug Subsidy (RDS) Appeals); 42 CFR
411.120 through 411.124 (Group Health Plan Nonconformance Appeals); 42 CFR 417.640, 417.492.
417.500, 417.494 (Health Maintenance Organization
Competitive Medical Plan (HMO/CMP) Contract
Related Appeals); 42 CFR 423.2345 (Termination of
Discount Program Agreement Appeals).
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the CMS Administrator if they are
dissatisfied with their Exchange
eligibility appeal decision.
We sought comment on this proposal.
After reviewing the public comments,
we are finalizing this provision as
proposed, with the following technical
corrections to improve understanding of
the review process, and with a modified
effective date. The first technical
correction is to the proposed language at
§ 155.505(g). We are modifying the
sentence at § 155.505(g) including its
citation to paragraph (b) to clarify that
review is available for Exchange
eligibility appeals decisions issued by
an impartial official under
§ 155.535(c)(4). The second technical
correction is to change the reference
found in § 155.505(g)(1)(i)(A) from
paragraph (g)(1)(ii)(B) to paragraph
(g)(1)(ii)(B)(1) to add specificity
regarding voiding the Administrator’s
declination. The third technical
correction is to § 155.505(g)(1)(i)(C),
which should cross reference the 30-day
period described in paragraphs
(g)(1)(i)(B)(1) and (3). The fourth is to
§ 155.505(g)(1)(ii)(C), which should
cross reference the 30-day period
described in paragraphs (g)(1)(ii)(B)(1)
and (3). The fifth technical correction is
to § 155.505(g)(1)(iii)(A), which should
cross-reference Exchange eligibility
appeal decisions final pursuant to
paragraphs (g)(1)(i)(C) and (g)(1)(ii)(C) in
this section.
With respect to the effective date,
under the proposed rule, any finalized
changes to § 155.505 would be effective
60 days after the date of display of the
final rule in the Federal Register. While
this rule acknowledges the ability of the
CMS Administrator to review Exchange
eligibility appeals decisions prior to
judicial review, we anticipate
implementation of the proposed process
to apply this authority will take some
time. Therefore, we are finalizing this
rule with the new process becoming
available for eligibility appeal decisions
issued on or after January 1, 2024.
We summarize and respond to public
comments received on the proposed
changes acknowledging the ability of
the CMS Administrator to review
Exchange appeals decisions below.
Comment: Some commenters
expressed support for the proposed
changes, acknowledging the ability of
the CMS Administrator to review
Exchange eligibility appeals decisions
prior to judicial review. One commenter
cautioned that we should work to make
sure that the correct decision is made at
the lowest level of review.
Response: We will continue to make
every effort to ensure the correctness of
the initial decision.
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Comment: Two commenters sought
clarity around how the proposed
administrative review process would
interact with the State Exchange secondtier eligibility appeal process, with one
commenter expressing concern that the
additional level of review may be
duplicative and burdensome, adding
further time before a decision can be
implemented.
Response: We acknowledge the
concerns around an additional level of
review, but reiterate the existing ability
of the CMS Administrator to review
Exchange eligibility appeals decisions
prior to judicial review. The proposed
regulation also describes timeframes for
the CMS Administrator to review, and
for parties to the appeal to request the
CMS Administrator review, an
Exchange eligibility appeal decision,
which is intended to balance the right
of CMS Administrator to review a
decision with the appellant’s desire for
finality of an Exchange eligibility
appeal. We recognize that the Exchange
should implement the correct decision
as expeditiously as feasible and set the
timeframes in the regulation to achieve
that goal. We also clarify that the CMS
Administrator may review the HHS
appeals entity’s decision with respect to
a second-tier appeal of a State Exchange
appeals entity’s decision, but cannot
review a decision of a State Exchange
appeals entity.
Comment: A commenter sought
clarity around the interaction between
the administrative review process and
the timeliness standards prescribed
under § 155.545(b).
Response: The administrative review
process will not affect the requirement
under § 155.545(b) that the HHS appeals
entity must issue written notice of the
appeal decision to the appellant within
90 days of the date an appeal request is
received, as administratively feasible.
Parties have 14 days to request, and the
CMS Administrator has 14 days to
determine whether to conduct, an
administrative review. Once either of
these actions occurs, the CMS
Administrator’s review will occur
within 30 days of the date a party
requests review or the CMS
Administrator determines to review a
case. The total additional time for
administrative review may add up to 44
days before the eligibility appeal
decision becomes final.
10. Improper Payment Pre-Testing and
Assessment (IPPTA) for State-Based
Exchanges (§§ 155.1500 Through
155.1515)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78270–72), we
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25837
proposed to establish the IPPTA, an
improper payment measurement
program of APTC, that would include
State Exchanges. As proposed, the
IPPTA would prepare State Exchanges
for the planned measurement of
improper payments of APTC, test
processes and procedures that support
our review of determinations of APTC
made by State Exchanges, and provide
a mechanism for us and State Exchanges
to share information that will aid in
developing an efficient measurement
process. We proposed to codify the
IPPTA requirements in a new subpart P
under 45 CFR part 155.
The Payment Integrity Information
Act of 2019 (PIIA) 275 requires Federal
agencies to annually identify, review,
measure, and report on the programs
they administer that are considered
susceptible to significant improper
payments. We determined that APTC
are susceptible to significant improper
payments and are subject to additional
oversight. In accordance with 45 CFR
part 155, FFEs, SBE–FPs, and State
Exchanges that operate their own
eligibility and enrollment systems
determine the amount of APTC to be
paid to qualified applicants. Only
improper payments of APTC made by
FFE and SBE–FPs were measured and
reported in the FY22 Annual Financial
Report (AFR) as part of the Exchange
Improper Payment Measurement (EIPM)
program. We stated in the 2023 Payment
Notice proposed rule (87 FR 654, 654–
655) that we were in the planning phase
of establishing a State-based Exchange
Improper Payment Measurement
(SEIPM) program. We also stated in the
2023 Payment Notice proposed rule that
we had intended to implement the
proposed SEIPM program beginning
with the 2023 benefit year. In response
to that proposed rule, we received
several comments that indicated
concerns with the proposed
requirements, particularly with respect
to the SEIPM program’s implementation
timeline and proposed data collection
processes. For example, some State
Exchanges commented that they needed
more time and information from us to
prepare for the implementation of the
SEIPM program. We decided not to
finalize the proposed rule due to
commenters’ concerns surrounding the
proposed implementation timeline and
other burdens that would be imposed by
the proposed SEIPM program (87 FR
27281). In the 2024 Payment Notice
proposed rule (87 FR 78206, 78270), we
proposed IPPTA to provide State
Exchanges with more time to prepare for
the planned measurement of improper
275 PIIA,
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payments of APTC, to test processes and
procedures that support our review of
determinations of APTC made by State
Exchanges, and to provide a mechanism
for HHS and State Exchanges to share
information that will aid in developing
an efficient measurement process (87 FR
28270).
In 2019, we developed an initiative to
provide the State Exchanges with an
opportunity to voluntarily engage with
us to prepare for future measurement of
improper payments of APTC. We
provided three options to State
Exchanges—program analysis, program
design, and piloting—designed to
accommodate the State Exchanges’
schedules and availability to participate
in the initiative. Currently, of the 18
State Exchanges, 10 have participated in
various levels of voluntary State
engagement, and of those, 2 have
participated in the piloting option.
We stated in the proposed rule that
IPPTA would replace the voluntary
State engagement. We explained that, if
finalized, activities already completed
by State Exchanges as part of the
voluntary State engagement may be
used to satisfy elements of IPPTA. We
have determined that participation from
all State Exchanges is required to test
processes and procedures to prepare the
State Exchanges for the planned
measurement of improper payments of
APTC.
We proposed to establish a new
subpart P under 45 CFR part 155
(containing §§ 155.1500 through
155.1515) to codify the proposed IPPTA
requirements. We explained that the
proposed regulations at subpart P would
be applicable beginning in 2024 with
each State Exchange being selected to
participate for a period of one calendar
year which would occur either in 2024
or 2025.
After reviewing public comments, we
are finalizing our proposals relating to
the establishment of the IPPTA with the
following modifications: (1) the final
regulations at subpart P will be
applicable beginning in 2024 with a
modification to the definition in
§ 155.1505 that extends the pre-testing
and assessment period from one
calendar year to 2 calendar years; and
(2) with a modification to
§ 155.1515(a)(1) that reflects the
extension of the pre-testing and
assessment period such that each State
Exchange will be selected to participate
in the IPPTA for a pre-testing and
assessment period of 2 calendar years,
which will begin in either 2024 or 2025.
We note that, in response to comments
regarding burden and resources, we are
extending the pre-testing and
assessment period from one calendar
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year to 2 calendar years without
increasing or changing any of the IPPTA
requirements in order to provide State
Exchanges with more time to perform
and complete all of the IPPTA
requirements. The extended pre-testing
and assessment period will also reduce
burden to the State Exchanges by
allowing more time to focus on other
Exchange priorities instead of meeting
the IPPTA requirements in one year.
Additionally, the burden per State
Exchange in estimated hours per year
was reduced from 530 to 265, and the
burden in estimated costs per year was
reduced from $56,986 to $28,493 by
allowing State Exchanges to spread their
costs over a two-year period. The
estimated annualized cost across all
State Exchanges by extending the pretesting and assessment period by one
calendar year to 2 calendar years
without changing any of the IPPTA
requirements was reduced from
$1,025,756 to $512,878, saving State
Exchanges half of their estimated
outlays on an annualized basis. We will
also work with each State Exchange
during the IPPTA orientation and
planning process to address a State
Exchange’s time and resource
constraints to allow completion of all
review processes and procedures. We
summarize and respond to public
comments received on the proposed
IPPTA below.
Comment: Some commenters
recommended that prior to the
implementation of IPPTA or an
improper payment measurement
program, HHS complete the SEIPM
voluntary State engagement piloting to
incorporate lessons learned and best
practices into the design of IPPTA and/
or a future improper payment
measurement program. One commenter
supported IPPTA but was opposed to
the mandatory nature of the initiative.
Response: Throughout the course of
the voluntary State engagement, we
sought State Exchange feedback to
improve the structure of the planned
program and to improve the tools that
will be used in IPPTA in support of
reviewing payments of APTC. We
applied the feedback and lessons
learned to gain a better understanding of
State Exchange operations, policies, and
procedures. Additionally, we were able
to define necessary data specifications
for conducting improper payment
measurement and to determine data
transfer and access mechanisms
between HHS and State Exchanges.
We appreciate the voluntary
participation of the 10 State Exchanges
and acknowledge the benefits such
participation has provided in our
development of the planned
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measurement program. We have
determined that participation in IPPTA
by all the State Exchanges is necessary
to help State Exchanges prepare for the
planned measurement of improper
payments. In addition, requiring
participation in IPPTA will provide us
with feedback from all 18 State
Exchanges on the processes and
procedures that support our review of
APTC determinations made by State
Exchanges, and therefore will help us
maximize the efficiency of the
measurement process. To achieve that,
we have determined that all State
Exchanges will need to complete the
processes described for IPPTA with the
goal of testing our IPPTA review
methodology for each State Exchange. In
this way, all State Exchanges will have
the opportunity to collaborate with us
and receive feedback on their current
processes without our IPPTA review
contributing to an estimated improper
payment rate.
Comment: One commenter said they
supported allowing State Exchanges to
satisfy IPPTA requirements through
activities undertaken during voluntary
State engagements.
Response: Our general position is that
activities that were performed by the 10
State Exchanges that participated in
voluntary State engagement will not be
duplicated as part of IPPTA. To achieve
that, we will evaluate the activities
performed by State Exchanges during
the voluntary State engagements and
determine which of those satisfy IPPTA
requirements. We will also utilize
voluntary State engagement information
as a substitute, thereby, saving time and
resources needed for the completion of
IPPTA. We will accomplish this by
using the pre-testing and assessment
checklist, which will identify the IPPTA
requirements that have already been
fulfilled. The pretesting and assessment
plan will include the pre-testing and
assessment checklist that will identify
which State Exchange’s activities
satisfied the requirements. We will work
with State Exchanges during the
orientation and planning process to
review the checklist and to confirm the
State Exchange’s completed activities.
Additional information about the
process for satisfying certain IPPTA
requirements as a result of participation
in the voluntary State engagements will
be provided in guidance issued after
this rule is finalized. State Exchanges
that did not participate in voluntary
State engagement will not have
performed activities that satisfy IPPTA
requirements and therefore must
complete all IPPTA processes and
procedures.
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Comment: Some commenters stated
that IPPTA would duplicate
requirements embodied in existing
Federal reporting requirements. For
example, these commenters cited the
State-based Marketplace Annual
Reporting Tool (SMART), annual
independent external programmatic
audits, State Based Marketplace
Inbound (SBMI) reporting, performance
monitoring data reporting, and
reconciliation processes including the
annual IRS PTC reconciliation as
Federal requirements that may duplicate
IPPTA. A few commenters
recommended HHS build on existing
audit requirements (for example, the
independent, external programmatic
audit) rather than create a new IPPTA
requirement. One commenter
recommended State Exchanges make a
testing environment for HHS to run
standard tests rather than create a new
data collection process. Another
commenter stated that both the
independent external auditors and the
IRS PTC reconciliation process already
collect data that could be used to
determine an improper payment rate.
Response: We appreciate the
commenters’ concerns that IPPTA
would be duplicative of existing audits;
however, IPPTA is not an audit program
but instead is designed to test processes
and procedures that support our review
of determinations of APTC made by
State Exchanges for the planned
measurement of improper payments.
Additionally, the independent external
programmatic audits ensure oversight of
a host of exchange activities beyond the
scope of improper APTC payments.
Moreover, the data collected as part of
the Federal reporting requirements
identified by the commenters do not
provide us with information required by
§ 155.1510 such as information that
verifies citizenship, social security
number, residency, and other data
specified below. This information is
needed to review determinations of
APTC, which is a necessary step to
prepare for identifying and measuring
improper payments of APTC, as
required by PIIA.276 For example, the
IRS reconciliation process uses annual
enrollment data and monthly
reconciliation data provided by HHS to
calculate the PTC and to verify
reconciliation of APTC made to the QHP
issuers on enrollees’ individual tax
returns. However, these annual
276 In 2016, we conducted a risk assessment of the
APTC program and determined that the program
was susceptible to significant improper payments.
PIIA requires that Federal agencies produce a
statistically valid estimate of improper payments for
any programs deemed susceptible to significant
improper payments.
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enrollment data and monthly
reconciliation data do not contain data
to the level of required specificity (such
as dates that electronic eligibility
verifications were made) to address
issues related to APTC and its
calculation, particularly verification of
citizenship, social security number,
residency, MEC, SEP circumstance,
income, family size, and DMIs related to
document authenticity. Moreover, the
annual enrollment data and the monthly
reconciliation data are collected after an
applicant has been determined eligible
for APTC. We need pre-enrollment data
that were used to verify an applicant’s
eligibility before the application is
approved. Examining these areas in
detail is necessary to identify
underlying issues that may lead to
improper payments. In contrast, the
SMART allows State Exchanges to selfattest to their verification procedures for
eligibility and enrollment transactions
without submitting supporting data.
Similarly, the annual independent
external programmatic audits require
State Exchanges to hire independent,
external auditors to review eligibility
and enrollment information collected by
State Exchanges to identify deficiencies
or errors in processes to make eligibility
determinations for QHPs and APTC
without submitting supporting data to
HHS. Neither the SMART nor the
independent, external programmatic
audits measure, estimate, or report the
amounts or rates of improper payments,
or the systematic errors that may
contribute to improper payments and do
not provide the underlying data that
would allow HHS to do so. Finally,
these current oversight procedures do
not allow for standardized comparison
or analysis of improper payments across
all State Exchanges, which will be
necessary functions of the planned
improper payment measurement
program. For these reasons, we will
require State Exchanges to submit the
data and data documentation specified
in the final rule to comply with PIIA
requirements. We believe that IPPTA
will assist State Exchanges to prepare
for the planned measurement of
improper payments, an activity with
requirements that are distinct from
existing Federal requirements. IPPTA
will provide the data needed to conduct
the pre-testing and assessment review
processes in preparation for the planned
measurement of improper payments. We
note that in designing IPPTA, we have
carefully reviewed the commenters’
concerns regarding potential
duplication of existing audit processes
and analyzed the data fields used to
accomplish existing Federal
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25839
requirements. We have made every
effort to minimize the burden on the
State Exchanges by limiting the amount
of data required (that is, application
data associated with no fewer than 10
tax households).
Comment: Some commenters stated
that IPPTA would create financial,
administrative, and staffing burdens for
the State Exchanges. A few commenters
stated that they would incur technology
upgrade costs to provide information in
the format requested by IPPTA and one
said HHS should wait until after the
voluntary State engagement piloting is
completed to enable State Exchanges to
make an accurate assessment of
technology costs. One commenter was
opposed to the overall burden of IPPTA
but was supportive of our desire to
coordinate and consult with State
Exchanges.
Response: We received several
comments regarding the burden and
resources (that is, budget, staff, time,
technology upgrades) needed to prepare
for and fulfill IPPTA’s requirements. We
understand these concerns and,
therefore, are finalizing the
establishment of the IPPTA with a
modification to extend the pre-testing
and assessment period from one
calendar year to two calendar years
without increasing or changing any of
the IPPTA requirements in order to
allow State Exchanges more time to
perform and complete all IPPTA
requirements. By doing so, we are
extending the timeframes allotted for
State Exchanges to execute the pretesting and assessment procedures
including the timeframes for the
submission and review of data and data
documentation. By extending the pretesting and assessment period to two
calendar years and not otherwise
expanding the IPPTA requirements, we
are providing the State Exchanges with
the ability to spread their staffing,
administrative, and other budgetary
costs across 24 months of activity
instead of 12 months as well as
providing State Exchanges additional
time to identify and address staffing
capacity and technology capabilities.
The planning and orientation phase
will involve collaboration between HHS
and the State Exchanges to create the
IPPTA plan, which will include a
timeline for completing the required
pre-testing and assessment processes.
There is sufficient flexibility in this
process that conceivably, the State
Exchange could plan to complete, and
achieve completion of all of the required
processes within the span of one year if
the State Exchange was able to dedicate
the time and resources that would be so
required.
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We are committed to working with
State Exchanges to address burden and
resources during the orientation and
planning processes, which would allow
State Exchanges to complete the IPPTA.
Finally, we acknowledge that State
Exchanges may incur additional costs
depending on their technology
capabilities. We provided the public
with our estimate of the burden and
costs to State Exchanges in section IV.,
Information Collection Requirements.
We are willing to continue to work with
State Exchanges to help to resolve
technology issues during the orientation
and planning processes.
Comment: One commenter stated that
the review methodology and associated
data structure used by HHS for the FFE
does not uniformly align with State
Exchange practices. The commenter
added that HHS is applying a
standardized approach despite the
flexibility provided to State Exchanges
under the ACA.
Response: We note that IPPTA is
intended to test processes and
procedures that support our review of
determinations of APTC made by State
Exchanges. We acknowledge the
complexities associated with the
development of a planned measurement
program tailored for each State
Exchange and that the methodology
used for the improper payment
measurement program for the FFE does
not directly translate to
operationalization for State Exchange
measurement. Those complexities,
which include the State Exchange’s
mapping their source data to the Data
Request Form (DRF) and validation and
verification of the data by HHS, require
close collaboration between HHS and
each of the State Exchanges as described
in § 155.1515(e)(2), and in part, form the
basis for the necessity of the IPPTA
program in preparing the State
Exchanges for an improper payment
measurement program. Through
collaboration with the State Exchanges
during IPPTA, we will make every
attempt to resolve data structure issues
that differ between the FFE data model
and the State Exchanges.
Comment: A few commenters
suggested that HHS provide State
Exchanges with an exemption from the
annual independent, external
programmatic audit requirement under
45 CFR 155.1200(c) if HHS finalized
IPPTA, and they suggested that
continuing to require the audit would be
duplicative of activities under IPPTA.
Response: The annual independent,
external programmatic audits are one of
the primary oversight tools for
identifying and addressing State
Exchange regulatory compliance issues,
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and the audit reports ensure oversight of
a variety of exchange-related activities
beyond the scope of potential improper
payments of APTC. As part of the
auditing process, we require State
Exchanges to take corrective actions to
address non-compliance issues that are
identified through the annual audits and
monitor the implementation of the
corrective actions. We designed IPPTA
to minimize the burden on the State
Exchanges by limiting the amount of
data required to only what is necessary
to conduct the pre-testing and
assessment review processes that will
prepare State Exchanges for the planned
measurement of improper payments.
Modifying the annual independent,
external programmatic audit
requirement would eliminate a key
oversight mechanism over activities
beyond the scope of the SEIPM program
and potentially impact our ability to
adequately oversee program integrity in
the State Exchanges.
Comment: One commenter requested
more information regarding the
sunsetting of the SEIPM piloting option.
Response: We appreciate the
comment regarding the sunsetting of the
voluntary State engagement. As stated
in the preamble, IPPTA will replace the
voluntary State engagement. Voluntary
State engagement activities will cease by
the end of 2023. We will provide further
guidance after the publication of this
final rule.
Comment: Some commenters
expressed their position as neutral or
did not express a position in support or
opposition of IPPTA. These commenters
expressed concerns regarding burden
and duplication of existing Federal
requirements. These commenters also
suggested that HHS complete the
voluntary piloting prior to establishing
IPPTA.
Response: We appreciate those
commenters who expressed various
concerns but remained neutral overall to
IPPTA, either expressly indicating their
neutrality or choosing not to take a
position in support or opposition of
IPPTA. We have addressed the burden,
duplication of existing Federal
requirements, and voluntary State
engagement in the preamble to this final
rule.
a. Purpose and Scope (§ 155.1500)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78270), we proposed
to add a new subpart P to part 155,
which addressed State Exchange and
HHS responsibilities. We explained that
we may use Federal contractors as
needed to support the performance of
IPPTA.
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We proposed to add new § 155.1500
to convey the purpose and scope of
IPPTA. In the proposed rule, at
paragraph (a), we stated the purpose and
scope of subpart P as setting forth the
requirements of the IPPTA for State
Exchanges. We explained that the
proposed IPPTA is an initiative between
HHS and State Exchanges. We stated in
the proposed rule that the IPPTA
requirements were intended to prepare
State Exchanges for the planned
measurement of improper payments,
test processes and procedures that
support our review of determinations of
APTC made by State Exchanges, and
provide a mechanism for HHS and State
Exchanges to share information that will
aid in developing an efficient
measurement process.
We summarize and respond to public
comments received on the purpose and
scope of IPPTA below. After reviewing
the public comments, we are finalizing
this provision as proposed.
Comment: One commenter stated that
consultation with State Exchanges is
crucial to collecting accurate
information and recommended HHS
retain the proposed regulatory language
requiring strong coordination and
consultation with State Exchanges.
Response: We appreciate the
recommendation to retain the language
of the proposed rule that we work with
State Exchanges including coordinating
and consulting during the IPPTA
period. We are retaining the language in
the rule pertaining to coordinating with
the State Exchanges during the IPPTA
period. As stated in the preamble to the
proposed rule (87 FR 78270), IPPTA is
intended to be a collaborative effort
between us and the State Exchanges.
b. Definitions (§ 155.1505)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78270–71) we
proposed to add new § 155.1505, which
would codify the definitions of several
terms that are specific to IPPTA and are
key to understanding the processes and
procedures of IPPTA. Specifically, we
proposed to define the following terms
as set forth below.
• We proposed to define ‘‘Business
rules’’ to mean the State Exchange’s
internal directives defining, guiding, or
constraining the State Exchange’s
actions when making eligibility
determinations and related APTC
calculations. In the proposed rule we
explained that, for example, the internal
directives, methodologies, algorithms,
or policies that a State Exchange applies
or executes on its own data to determine
whether an applicant meets the
eligibility requirements for a QHP and
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any associated APTC would be
considered a business rule.
• We proposed to define ‘‘Entity
relationship diagram’’ to mean a
graphical representation illustrating the
organization and relationship of the data
elements that are pertinent to
applications for QHP and associated
APTC payments.
• We proposed to define ‘‘Pre-testing
and assessment’’ to mean the process
that uses the procedures specified in
§ 155.1515 to prepare State Exchanges
for the planned measurement of
improper payments of APTC.
• We proposed to define ‘‘Pre-testing
and assessment checklist’’ to mean the
document that contains criteria that
HHS will use to review a State
Exchange’s completion of the
requirements of the IPPTA.
• We proposed to define ‘‘Pre-testing
and assessment data request form’’ to
mean the document that specifies the
structure for the data elements that HHS
will require each State Exchange to
submit.
• We proposed to define ‘‘Pre-testing
and assessment period’’ to mean the
timespan during which HHS will engage
in the pre-testing and assessment
procedures with a State Exchange. In
the proposed rule, we proposed that the
pre-testing and assessment period
would cover one calendar year.
• We proposed to define ‘‘Pre-testing
and assessment plan’’ to mean the
template developed by HHS in
collaboration with each State Exchange
enumerating the procedures, sequence,
and schedule to accomplish the pretesting and assessment.
• We proposed to define ‘‘Pre-testing
and assessment report’’ to mean the
summary report provided by HHS to
each State Exchange at the end of the
State Exchange’s pre-testing and
assessment period that will include, but
not be limited to, the State Exchanges’
status regarding completion of each of
the pre-testing and assessment
procedures specified in proposed
§ 155.1515, as well as observations and
recommendations that result from
processing and testing the data
submitted by the State Exchanges to
HHS. In the proposed rule, we
explained, at § 155.1515(g), that we
were proposing that the pre-testing and
assessment report is intended to be used
internally by HHS and each State
Exchange as a reference document for
performance improvement. We
explained that the pre-testing and
assessment report will not be released to
the public by HHS unless otherwise
required by law.
We summarize and respond to public
comments received on the proposed
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definitions below. We are finalizing the
definitions as proposed, with the
following modification: we are changing
the proposed definition of ‘‘Pre-testing
and assessment period’’ to extend the
pre-testing and assessment period from
a one calendar year timespan to a 2calendar year timespan, during which
we will engage in pre-testing and
assessment procedures with a State
Exchange. As discussed earlier in this
preamble, we are making this
modification in response to comments
received regarding burden and resources
(that is, budget, staff, time, technology
upgrades, etc.). By extending the pretesting and assessment period from one
calendar year to two calendar years
without increasing or changing any of
the IPPTA requirements, we are
providing State Exchanges with more
time to perform and complete all IPPTA
requirements.
Comment: One commenter requested
that HHS clarify the definition of ‘‘entity
relationship diagram.’’ The commenter
stated they did not understand how the
diagram would be used to describe data
elements, and the commenter also
requested more information on how
sample data would be collected.
Response: An entity relationship
diagram is used to document the data
structure of a database and the
relationships of the various data
elements that are used to align many
pieces of data to the individual records
within a data set. For the purposes of
IPPTA, the entity relationship diagram
would be used to aid in understanding
the mapping of data from the data
structures being used by the State
Exchange to the structure of data being
used for the review, which is collected
in the data request form (DRF). In
addition, an entity relationship diagram
will provide an understanding of the
relationships among State Exchangeprovided data and can explain the data
values provided by the State Exchange
in the DRF. The properties associated
with each entity need to be understood
by the reviewers to ensure that the
mapping of data and the population of
the DRF have been performed correctly.
During IPPTA planning, we will work
with the State Exchanges to determine
whether available documentation can
satisfy the information needs for the
entity relationship diagram.
c. Data Submission (§ 155.1510)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206 at 78271), we
proposed to add a new § 155.1510
which would address the data
submission requirements to support the
IPPTA. Consistent with this, we
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proposed to establish a pre-testing and
assessment DRF to collect and compile
information from each State Exchange.
As explained below in section IV.,
Collection of Information Requirements,
the pre-testing and assessment DRF was
submitted to OMB for review and
approval. We proposed that each State
Exchange must submit to us a sample of
no fewer than 10 tax household
identification numbers (that is, the
record of a tax household that applied
for and was determined eligible to
enroll in a QHP and was determined
eligible to receive APTC in an amount
greater than $0).
We summarize and respond to public
comments received on the proposed
pre-testing and assessment DRF below.
After reviewing the public comments,
we are finalizing this provision as
proposed.
Comment: Several commenters stated
that they are willing to share more data
and information with HHS and other
Federal partners to ensure the effective
and efficient operation of State
Exchanges.
Response: We appreciate the
willingness of these commenters to
share more data and information with
us and other Federal partners to ensure
that the State Exchanges operate in an
efficient and effective manner.
Comment: A few commenters
suggested that HHS not require State
Exchanges to produce information about
their systems, business rules, or
software. Two commenters
recommended that HHS not require new
data documentation but rather accept a
State Exchange’s existing data
documentation. One commenter
objected to the comprehensive
submission of business rules and
proposed using identified errors as the
basis for root cause analysis. One
commenter objected generally to the
provision of system documentation
including concerns that some
documentation may be proprietary. One
commenter objected to the detailed
review of eligibility criteria and
examination of associated data. Another
commenter recommended that HHS
allow State Exchanges to submit data
documentation such as the data
dictionary and entity relationship
diagram in any format.
Response: We are not requiring State
Exchanges to create new data
documentation, but rather we are
requiring State Exchanges provide us
with existing or available data
documentation as described in
§ 155.1510, such as business rules and
policies used to determine an
applicant’s eligibility for APTC. This
data documentation is necessary to test
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our processes and procedures that
support our review of determinations of
APTC made by State Exchanges. We are
seeking to test all the processes
associated with IPPTA. Therefore, the
information provided by State
Exchanges regarding their systems and
business rules will allow us to tailor
review procedures to each State
Exchange. A detailed review of
eligibility criteria is necessary to create
a measurement program that complies
with the statutory requirements set forth
in PIIA. Regarding the submission of the
data dictionary and entity relationship
diagram in any format, we agree with
the commenter. We will allow State
Exchanges to submit their data
documentation as defined in this final
rule in the format currently used by the
State Exchange.
We will coordinate with State
Exchanges to resolve any issues that
may arise related to the potential
proprietary nature of this data
documentation and ensure that any
such data documentation provided is
not made publicly available, unless
required by law.
• At paragraph (a)(1) in the proposal,
we proposed that a State Exchange
would be required to submit to HHS by
the deadline in the pre-testing and
assessment plan the following
documentation for their data: (i) the
State Exchange’s data dictionary
including attribute name, data type,
allowable values, and description; (ii)
an entity relationship diagram, which
shall include the structure of the data
tables and the residing data elements
that identify the relationships between
the data tables; and (iii) business rules
and related calculations.
• At paragraph (a)(2) in the proposal,
we proposed that the State Exchange
must use the pre-testing and assessment
DRF, or other method as specified by
HHS, to submit to HHS the application
data associated with no fewer than 10
tax household identification numbers
and the associated policy identification
numbers that address scenarios
specified by HHS to allow HHS to test
all of the pre-testing and assessment
processes and procedures. We explained
that the proposed scenarios would
include various application
characteristics such as household
composition, data matching
inconsistencies (for example, SSN,
citizenship, lawful presence, annual
income) identified for the applications,
SEP application types (for example,
relocation, marriage), periodic data
matching (for example, Medicaid/CHIP,
Medicare, death), application status (for
example, policy terminated, policy
canceled), and application types (for
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example, initial application). We
explained that we understand that it is
unlikely that the application data
associated with a singular tax household
could address all of the characteristics
contained in all of the scenarios
specified. Therefore, we proposed that
while the application data for each tax
household does not need to address all
the scenarios specified, the application
data submitted for no fewer than 10 tax
households should, when taken together
as a whole, address all the
characteristics in all the scenarios
specified. We explained that, for
example, the application data for one
tax household may address lawful
presence inconsistency adjudication but
not special enrollment eligibility
verification. Accordingly, we noted that
the application data for another tax
household should address special
enrollment eligibility verification. In the
proposal we stated that after receiving
the application data associated with no
fewer than 10 tax households from the
State Exchange, we would test the data
from each of the tax households against
its review procedures to determine if the
respective policy applications fulfill the
scenarios. If the submitted application
data did not collectively fulfill the
scenarios, we proposed that we would
coordinate with the State Exchange to
select additional tax households. For the
data submitted, we also would require
the State Exchange to provide digital
copies such as PDFs of supporting
consumer-submitted documentation (for
example, proof of residency, proof of
citizenship).
• We also proposed that for each of
the tax households, the State Exchange
would align and populate the data in
the pre-testing and assessment DRF with
the assistance of HHS. We explained
that we would require that the State
Exchange electronically transmit the
completed pre-testing and assessment
DRF to HHS within the deadline
specified in the pre-testing and
assessment plan. We proposed that once
we receive the transmission from the
State Exchange, we then would execute
the pre-testing and assessment processes
and procedures on the application data.
We summarize and respond to public
comments received on submission of
application data for no fewer than 10 tax
households using the pre-testing and
assessment DRF that will be provided to
State Exchanges by HHS and on the
proposed scenarios specified by HHS to
allow HHS to test all of the pre-testing
and assessment processes and
procedures below. After reviewing the
public comments, we are finalizing
§ 155.1510(a) as proposed.
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Comment: A few commenters support
the sample size of no fewer than 10 tax
households.
Response: We appreciate support of
the no fewer than 10 tax household
sample size.
Comment: One commenter agreed
with the use of the pre-testing and
assessment DRF to collect and compile
information from each State Exchange.
Response: We appreciate support for
collecting information from the State
Exchanges using the pre-testing and
assessment DRF.
• At paragraph (b) in the proposal, we
proposed that a State Exchange must
submit the data documentation as
specified in § 155.1510(a)(1) and the
application data associated with no
fewer than 10 tax households as
specified in § 155.1510(a)(2) within the
timelines in the pre-testing and
assessment plan specified in § 155.1515.
We did not receive any comments in
response to the proposed pretesting and
assessment data submission timeline.
We are finalizing § 155.1510(b) as
proposed.
d. Pre-Testing and Assessment
Procedures (§ 155.1515)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78271 through 72),
we proposed to add a new § 155.1515
which would address the requirements
associated with the pre-testing and
assessment procedures that underlie
and support the IPPTA. The pre-testing
and assessment procedures are the
activities of IPPTA that are, in part,
designed to test our review processes
and procedures that support our review
of determinations of the APTC made by
State Exchanges, to improve the State
Exchange’s understanding of IPPTA, to
prepare State Exchanges for the planned
measurement of improper payments,
and to provide us and the State
Exchanges with a mechanism to share
information that will aid in developing
an efficient measurement process.
Comment: One commenter supported
the need to prepare State Exchanges for
the planned measurement of improper
payments.
Response: We appreciate recognition
of the need to prepare State Exchanges
for the planned measurement of
improper payments.
• At paragraph (a), we proposed the
general requirement that the State
Exchange must participate in IPPTA for
a period of one calendar year that will
occur in either 2024 or 2025, and that
the State Exchange and HHS would
work together to execute IPPTA
procedures in accordance with
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timelines in the pre-testing and
assessment plan.
We did not receive any comments in
response to the proposed requirement
for State Exchanges to participate in
IPPTA for one calendar year in either
2024 or 2025. In response to comments
regarding burden and resources (that is,
budget, staff, time, technology
upgrades), and as previously discussed
in the preamble of the rule, we are
finalizing this provision with the
following modification: we are
extending the pre-testing and
assessment period from one calendar
year to 2 calendar years without
increasing or changing any of the IPPTA
requirements in order to provide State
Exchanges with more time to perform
and complete all IPPTA requirements.
We are requiring State Exchanges to
participate in IPPTA for a pre-testing
and assessment period of 2 calendar
years, which would begin in either 2024
or 2025.
• At paragraph (b), we proposed the
requirements for the orientation and
planning processes.
• At paragraph (b)(1), we proposed
that we would provide State Exchanges
with an overview of the pre-testing and
assessment procedures as part of the
orientation process. We also proposed
that, during the orientation process, we
would identify the documentation that
a State Exchange must provide to HHS
for pre-testing and assessment. We
explained that, for example, if data use
agreements or information exchange
agreements need to be executed, we
would inform State Exchanges about
that documentation requirement.
We did not receive any comments in
response to the proposed State
Exchange IPPTA orientation process.
We are finalizing these provisions as
proposed.
• At paragraph (b)(2), we proposed
that HHS, in collaboration with each
State Exchange, would develop a pretesting and assessment plan as part of
the orientation process. We explained
that the pre-testing and assessment plan
would be based on a template that
enumerates the procedures, sequence,
and schedule to accomplish pre-testing
and assessment. In the proposal, we
noted that while we would need to meet
milestones specified in the schedule
and applicable deadlines due to the
time span allotted for this proposed
program, we would take into account
feedback from the State Exchanges in an
effort to minimize burden. We stated
that the pre-testing and assessment plan
would take into consideration relevant
activities, if any, that were completed
during voluntary State engagement. We
explained that the pre-testing and
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assessment plan would include the pretesting and assessment checklist.
We summarize and respond to public
comments received on the proposed
pre-testing and assessment plan below.
After reviewing the public comments,
we are finalizing this provision as
proposed.
Comment: One commenter said that
more information was needed to inform
State Exchanges of how their activities
would satisfy IPPTA requirements.
Response: We appreciate the
cooperation and collaboration of State
Exchanges that have participated in
voluntary State engagement. We will
work with State Exchanges during the
IPPTA orientation and planning process
to review the pre-testing and assessment
checklist and confirm the State
Exchange’s completed activities that
satisfy certain IPPTA requirements. One
of the major activities in the voluntary
State engagements has been the
submission of data by the State
Exchange, which includes the mapping
of a State Exchange’s source data to the
data elements in our DRF. The DRF has
been used by State Exchanges
participating in the pilot option of the
voluntary State engagement to collect
and transmit application data for
testing. In the scenario that a State
Exchange submitted data on the DRF
during the piloting option of voluntary
State engagement, and where review
processes were not able to be completed
due to the sunsetting of voluntary State
engagement activities, we will
incorporate the previously submitted
data to satisfy IPPTA data submission
requirements. Similarly, in the scenario
where data was submitted by a State
Exchange, but the data was not
sufficient to execute the review
methodology, we will incorporate the
previously submitted data into IPPTA
and continue working with the State
Exchange for the purpose of satisfying
IPPTA data submission requirements.
Our general position is that a State
Exchange that submitted data while
participating in the piloting option of
voluntary State engagement will not be
required as part of IPPTA to submit new
data for a more recent benefit year. State
Exchanges that did not submit data as
part of the voluntary State engagement
are required to submit data for the
benefit year most recent to their
designated IPPTA period agreed upon as
part of the orientation and planning
process.
• At paragraph (b)(3), we proposed
that we would issue a pre-testing and
assessment plan specific to a State
Exchange at the conclusion of the pretesting and assessment planning
process. We explained that the pre-
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testing and assessment plan would be
for HHS and State Exchange internal use
only and would not be made available
to the public by HHS unless otherwise
required by law.
We did not receive any comments in
response to the proposal that we would
issue a pre-testing and assessment plan
specific to a State Exchange at the
conclusion of the pre-testing and
assessment planning process. We also
did not receive any comments in
response to the proposal that the pretesting and assessment plan would be
used for internal use only and would
not be made publicly available by HHS
unless required by law. We are
finalizing this provision as proposed.
• At paragraph (c), we proposed the
requirements associated with
notifications and updates.
• At paragraph (c)(1), we proposed
the requirements associated with our
responsibility to notify State Exchanges,
as needed throughout the pre-testing
and assessment period, concerning
information related to the pre-testing
and assessment processes and
procedures.
We did not receive any comments in
response to the proposed requirement
for HHS to notify State Exchanges of the
pre-testing and assessment data request
period. We are finalizing these
provisions as proposed.
• At paragraph (c)(2), we proposed
the requirements associated with
information State Exchanges must
provide to HHS throughout the pretesting and assessment period regarding
any operational, policy, business rules
(for example, data elements and table
relationships), information technology,
or other changes that may impact the
ability of the State Exchange to satisfy
the requirements of IPPTA during the
pre-testing and assessment period. We
explained, for example, that we would
need to be made aware of changes to the
State Exchange’s technical platform or
modifications to its policies or
procedures as these changes may impact
specific pre-testing and assessment
processes or procedures, the data to be
reviewed, and ultimately a State
Exchange’s determinations of an
applicant’s eligibility for APTC. We
proposed that other decisions or
changes made by a State Exchange,
which could affect the pre-testing and
assessment including any changes
regarding items such as naming
conventions or definitions of specific
data elements used in the pre-testing
and assessment, must be submitted to
HHS. We proposed this requirement
because any lack of clarity in how State
Exchanges make eligibility
determinations and payment
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calculations could impact our ability to
assist the State Exchange in
understanding the pre-testing and
assessment processes and procedures
and could affect our recommendations
in the pre-testing and assessment report.
We did not receive any comments in
response to the proposed requirements
associated with information that State
Exchanges must provide to HHS
throughout the pre-testing and
assessment period regarding any
operational, policy, business rules,
information technology, or other
changes that may impact the ability of
the State Exchange to satisfy the
requirements of IPPTA during the pretesting and assessment period. We are
finalizing this provision as proposed.
• At paragraph (d), we proposed the
requirements regarding the submission
of required data and data
documentation by State Exchanges, and
we stated that, as specified in
§ 155.1510(a), we will inform State
Exchanges about the form and manner
for State Exchanges to submit required
data and data documentation to HHS in
accordance with the pre-testing and
assessment plan.
We did not receive any comments to
the specific proposed requirement for
HHS to coordinate data documentation
tracking and management with each
State Exchange. We responded to
related comments regarding the
underlying data submission
requirements that appear in
§ 155.1510(a)(2). We are finalizing this
provision as proposed.
• At paragraph (e), we proposed the
general requirements regarding
coordination between HHS and the
State Exchanges to facilitate our
processing of data and data
documentation submitted by State
Exchanges.
• At paragraph (e)(1), we proposed
the requirements associated with our
responsibility to coordinate with each
State Exchange to track and manage the
data and data documentation submitted
by a State Exchange as specified in
§ 155.1510(a)(1) and (2).
We did not receive any comments in
response to the proposed requirement
for HHS to coordinate data
documentation tracking and
management with each State Exchange.
We are finalizing these provisions as
proposed.
• At paragraph (e)(2), we proposed
the requirements associated with our
responsibility to coordinate with each
State Exchange to provide assistance in
aligning the data specified in
§ 155.1510(a)(2) from the State
Exchange’s existing data structure to our
standardized set of data elements.
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We summarize and respond to public
comments received on the proposed
requirement for HHS to assist each State
Exchange with data alignment to a
standardized set of data elements below.
After reviewing the public comments,
we are finalizing this provision as
proposed.
Comment: One commenter stated that
HHS should use its own resources to
map the State Exchange data elements
to the pre-testing and assessment DRF.
Response: We considered an
alternative to requiring each State
Exchange to submit their source data
using the pre-testing and assessment
DRF. That alternative would have
allowed a State Exchange to provide to
us the required source data in an
unstructured format. We would have
been required to map the source data to
the required data elements. The
mapping process would have required
consultative sessions with each State
Exchange and a validation process to
ensure accurate mapping. Some State
Exchanges stated during voluntary State
engagement that they preferred mapping
their data to the data elements in the
DRF in order to ensure accuracy of
mapping. We believe that the
consultative process suggested by the
commenter would require more frequent
and resource-intensive meetings, costing
each party more than use of standard
data fields in the pre-testing and
assessment DRF. The regulatory
alternative was documented in the
proposed rule (87 FR 78206, 78313) and
no additional comments were received
in favor of that option. For these
reasons, we are finalizing this provision
as proposed. We are requiring that HHS
coordinate with each State Exchange to
aid in aligning the data specified in
§ 155.1510(a)(2) from the State
Exchange’s existing structure to the
standardized set of data elements
required for IPPTA.
• At paragraph (e)(3), we proposed
the requirement that we will coordinate
with each State Exchange to interpret
and validate the data specified in
§ 155.1510(a)(2).
We did not receive any comments in
response to the proposed requirement
for HHS to coordinate with each State
Exchange to interpret and validate the
data specified. We are finalizing this
provision as proposed.
• At paragraph (e)(4), we proposed
the requirement that we would use the
data and data documentation submitted
by the State Exchange to execute the
pre-testing and assessment procedures.
We did not receive any comments in
response to the proposed requirement
for HHS to use the data and data
documentation submitted by the State
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Exchange to execute the pre-testing and
assessment procedures. We are
finalizing this provision as proposed.
• At paragraph (f), we proposed the
requirements that we would issue the
pre-testing and assessment checklist in
conjunction with and as part of the pretesting and assessment plan. We
explained that the pre-testing and
assessment checklist criteria we
proposed would include but would not
be limited to:
++ At paragraph (f)(1), the State
Exchange’s submission of the data
documentation as specified in
§ 155.1510(a)(1);
We did not receive any comments in
response to the proposed requirement
for the pre-testing and assessment
checklist criteria to include the State
Exchange’s submission of the data
documentation as specified. We are
finalizing this provision as proposed.
++ At paragraph (f)(2), the State
Exchange’s submission of the data for
processing and testing as specified in
§ 155.1510(a)(2); and
We did not receive any comments in
response to the proposed requirement
for the pre-testing and assessment
criteria to include the State Exchange’s
submission of the data for processing
and testing. We are finalizing this
provision as proposed.
++ At paragraph (f)(3), the State
Exchange’s completion of the pre-testing
and assessment processes and
procedures related to the IPPTA
program.
We did not receive any comments in
response to the proposed requirement
for the pre-testing and assessment
criteria to include the State Exchange’s
completion of the pre-testing and
assessment processes and procedures
related to the IPPTA program. We are
finalizing this provision as proposed.
• At paragraph (g), we proposed that,
subsequent to the completion of a State
Exchange’s pre-testing and assessment
period, we will prepare and issue a pretesting and assessment report specific to
that State Exchange. We proposed that
the pre-testing and assessment report
would be for HHS and State Exchange
internal use only and would not be
made available to the public by HHS
unless otherwise required by law.
We did not receive any comments in
response to the proposal that,
subsequent to the completion of a State
Exchange’s pre-testing and assessment
period, we will prepare and issue a pretesting and assessment report specific to
that State Exchange. We also did not
receive any comments in response to the
proposal that the report would be for
HHS and State Exchange internal use
only and would not be made available
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to the public by HHS unless otherwise
required by law. We are finalizing this
provision as proposed.
C. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
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1. FFE and SBE–FP User Fee Rates for
the 2024 Benefit Year (§ 156.50)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78272 through
78273), for the 2024 benefit year, we
proposed an FFE user fee rate of 2.5
percent of total monthly premiums and
an SBE–FP user fee rate of 2.0 percent
of the total monthly premiums.
Section 1311(d)(5)(A) of the ACA
permits an Exchange to charge
assessments or user fees on participating
health insurance issuers as a means of
generating funding to support its
operations. If a State does not elect to
operate an Exchange or does not have an
approved Exchange, section 1321(c)(1)
of the ACA directs HHS to operate an
Exchange within the State. Accordingly,
in § 156.50(c), we stated that a
participating issuer offering a plan
through an FFE or SBE–FP must remit
a user fee to HHS each month that is
equal to the product of the annual user
fee rate specified in the annual HHS
notice of benefit and payment
parameters for FFEs and SBE–FPs for
the applicable benefit year and the
monthly premium charged by the issuer
for each policy where enrollment is
through an FFE or SBE–FP. OMB
Circular A–25 established Federal
policy regarding user fees and what the
fees can be used for.277 In particular, it
specifies that a user fee charge will be
assessed against each identifiable
recipient of special benefits derived
from Federal activities beyond those
received by the general public.
a. FFE User Fee Rates for the 2024
Benefit Year
In § 156.50(c)(1), to support the
functions of FFEs, an issuer offering a
plan through an FFE must remit a user
fee to HHS, in the timeframe and
manner established by HHS, equal to
the product of the monthly user fee rate
specified in the annual HHS notice of
benefit and payment parameters for the
applicable benefit year and the monthly
premium charged by the issuer for each
policy where enrollment is through an
FFE. As we stated in the proposed rule,
as in benefit years 2014 through 2023,
issuers seeking to participate in an FFE
277 See Circular No. A–25 Revised, available at
https://obamawhitehouse.archives.gov/omb/
circulars_a025/.
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in the 2024 benefit year will receive two
special benefits not available to the
general public: (1) the certification of
their plans as QHPs; and (2) the ability
to sell health insurance coverage
through an FFE to individuals
determined eligible for enrollment in a
QHP. For the 2024 benefit year, issuers
participating in an FFE will receive
special benefits from the following
Federal activities:
• Provision of consumer assistance
tools;
• Consumer outreach and education;
• Management of a Navigator
program;
• Regulation of agents and brokers;
• Eligibility determinations;
• Enrollment processes; and
• Certification processes for QHPs
(including ongoing compliance
verification, recertification, and
decertification).
As we explained in the proposed rule
(87 FR 78273), activities performed by
the Federal Government that do not
provide issuers participating in an FFE
with a special benefit are not covered by
the FFE user fee.
We stated in the proposed rule (87 FR
78273) that the proposed user fee rate
for all participating FFE issuers of 2.5
percent of total monthly premiums was
based on estimated costs, enrollment
(including anticipated establishment of
SBEs in certain States in which FFEs
currently are operating), and premiums
for the 2023 PY. We refer readers to the
proposed rule (87 FR 78273) for a full
description of how the proposed 2024
benefit year FFE user fee rate was
developed.
b. SBE–FP User Fee Rates for the 2024
Benefit Year
In § 156.50(c)(2), we specify that an
issuer offering a plan through an SBE–
FP must remit a user fee to HHS, in the
timeframe and manner established by
HHS, equal to the monthly user fee rate
specified in the annual HHS notice of
benefit and payment parameters for the
applicable benefit year and the monthly
premium charged by the issuer for each
policy where enrollment is through an
SBE–FP, unless the SBE–FP and HHS
agree on an alternative mechanism to
collect the funds from the SBE–FP or
State instead of direct collection from
SBE–FP issuers. SBE–FPs enter into a
Federal platform agreement with HHS to
leverage the systems established for the
FFEs to perform certain Exchange
functions, and to enhance efficiency and
coordination between State and Federal
programs. We explained in the proposed
rule that the benefits provided to issuers
in SBE–FPs by the Federal Government
include use of the Federal Exchange
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25845
information technology and call center
infrastructure used in connection with
eligibility determinations for enrollment
in QHPs and other applicable State
health subsidy programs, as defined at
section 1413(e) of the ACA, and QHP
enrollment functions under 45 CFR part
155, subpart E. We stated that the user
fee rate for SBE–FPs is calculated based
on the proportion of user fee eligible
FFE costs that are associated with the
FFE information technology
infrastructure, the consumer call center
infrastructure, and eligibility and
enrollment services, and allocating a
share of those costs to issuers in the
relevant SBE–FPs. We refer readers to
the proposed rule (87 FR 78273 through
78274) for a full description of how the
proposed 2024 benefit year SBE–FP user
fee rate of 2.0 percent of total monthly
premiums was developed.
We sought comment on the proposed
2024 user fee rates.
After reviewing the public comments
and revising our projections based on
newly available data that impacted our
enrollment projections, we are finalizing
for the 2024 benefit year a user fee rate
for all issuers offering QHPs through an
FFE of 2.2 percent of the monthly
premium charged by the issuer for each
policy under plans where enrollment is
through an FFE, and a user fee rate for
all issuers offering QHPs through an
SBE–FP of 1.8 percent of the monthly
premium charged by the issuer for each
policy under plans offered through an
SBE–FP. We summarize and respond to
public comments received on the
proposed 2024 benefit year FFE and
SBE–FP user fee rates below.
Comment: Some commenters
supported the proposed 2024 user fee
rates by agreeing that a lower user fee
rate would exert downward pressure on
premiums. A few commenters
supported user fee rate reduction in
future years too. One commenter stated
that lower user fee rates could
incentivize additional issuers to
participate in the Exchanges, providing
consumers with additional choice. One
supporting commenter wanted HHS to
monitor whether a reduced user fee rate
continued to fully serve consumers’
needs moving forward. Many
commenters appreciated the increased
funding for consumer outreach.
Response: We proposed lowering the
2024 user fee rates in the proposed rule
to 2.5 percent of monthly premiums
charged by issuers for each policy under
plans offered through an FFE and 2.0
percent of monthly premiums charged
by issuers for each policy under plans
offered through an SBE–FP based on our
enrollment projections at the time. After
publishing the proposed rule, two major
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events have changed our estimated
enrollment for benefit year 2024. The
first event was the record 2023
Exchange Open Enrollment, with the
number of plan selections exceeding our
enrollment estimates.278 The second
event was the Consolidated
Appropriations Act, 2023, signed into
law of December 29, 2022, which
included provisions that provided
certainty that Medicaid
redeterminations would take place
beginning in 2023. These two changes,
both of which took place between the
publication of the proposed rule and the
final rule, prompted us to reassess the
2024 projected enrollment estimates
used in our user fee calculations. After
additional analysis of increased future
expected enrollment, we have
determined that further reduction to the
2024 user fee rates is warranted.
FFE and SBE–FP user fees are
collected from participating issuers as a
percentage of total monthly premiums,
which is calculated as the product of
monthly enrollment and premiums. The
increased future expected enrollment
resulting from the record 2023 Open
Enrollment and the Consolidated
Appropriations Act, 2023, increased
overall expected user fee collections
under the proposed user fee rates of 2.5
percent of monthly premiums for FFE
issuers and 2.0 percent of monthly
premiums for SBE–FP issuers above
levels determined to be necessary to
fully fund Exchange operation. This
increased collection estimate allowed
for additional reductions of the user fee
rates to 2.2 percent of monthly
premiums for FFE issuers and 1.8
percent of monthly premiums for SBE–
FP issuers without decreasing total
estimated collections below levels
necessary to fully fund Exchange
operations.
Accordingly, we are finalizing user
fee rates of 2.2 percent of monthly
premiums charged by issuers for each
policy under plans offered through an
FFE and 1.8 percent of monthly
premiums charged by issuers for each
policy under plans offered through an
SBE–FP. As discussed in the proposed
rule (87 FR 78273), we believe that the
lower 2024 user fee rates will exert
downward pressure on premiums when
compared to the user fee rates from
prior years, and ensure adequate
funding for Federal Exchange
278 Biden-Harris Administration Announces
Record-Breaking 16.3 Million People Signed Up for
Health Care Coverage in ACA Marketplaces During
2022–2023 Open Enrollment Season, available at
https://www.cms.gov/newsroom/press-releases/
biden-harris-administration-announces-recordbreaking-163-million-people-signed-health-carecoverage.
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operations. We also agree that lower
user fee rates may incentivize additional
issuers to participate in the Exchanges,
thereby promoting competition and
improving consumer choice. HHS will
continue to calculate the FFE and SBE–
FP user fee rate annually in a manner
that ensures sufficient funding for
operations, ensuring that consumers’
needs are met and consumer outreach is
appropriately funded.
Comment: Many commenters
expressed concern about the timing of
decreased user fee rates considering the
high anticipated volume of Medicaid
redeterminations. These commenters
suggested additional investment in
outreach and enrollment and requested
that the user fee rates be kept at their
current levels. Several commenters
stated that lower user fee rates could
reduce funding for community health
workers and encourage private
navigators that are incentivized to direct
consumers to certain private products.
A few commenters supported using the
higher pre-2022 user fee rates to
improve HealthCare.gov. One
commenter suggested retaining or
increasing user fee rates to devote
additional resources to hard to reach
populations. One commenter suggested
that reducing user fee rates may
undermine the historic enrollment gains
for 2023. One commenter disagreed that
reducing user fee rates will result in
downward pressure on premiums, citing
other factors as more impactful drivers
of premium increases.
Response: Although we are reducing
the user fee rates, we are not reducing
our user-fee budget and are considering
the additional cost for Medicaid
redeterminations, including providing
consumer outreach and education
related to unwinding, in our estimated
budget. With these estimated costs, we
are still able to reduce the user fees and
retain this budget because we anticipate
higher Exchange enrollment levels due
to Medicaid redeterminations, and we
expect the projected total premiums
where the user fee applies to increase,
thereby increasing the amount of user
fee that will be collected. Thus, we are
able to reduce the user fee rate without
reducing the budget. We believe that
any additional costs associated with
Medicaid redeterminations will be offset
by the higher expected enrollment and,
even after accounting for the impact of
the lower user fee rates, we estimate that
we will have sufficient funding
available to fully fund user-fee eligible
Exchange activities in 2024, even with
increased budget needs.
To further explain, due to high levels
of anticipated enrollment through the
end of 2025, and the increased total
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amount of user fees that will be
collected as a result, we believe that a
reduced user fee rate will not result in
reduced funding to Exchange functions
that address consumers’ needs,
including improvements to the
HealthCare.gov website, outreach and
enrollment campaigns, and the
Navigator program. We understand that
this funding is particularly impactful in
improving coverage for hard to reach
and underserved populations, which is
why our estimated budget continues to
estimate fully covering the costs of these
programs, even with increased
budgetary spending on these essential
activities.
We also disagree that reducing user
fees may undermine the historic
enrollment gains for 2023, as we do not
believe that the user fee rates have
direct impact on major enrollment
trends. Instead, we believe that the
historic enrollment gains can be
attributed to a number of factors that are
non-user fee rate related, such as the
enhanced PTC subsidies in section 9661
of the ARP being extended through the
2025 benefit year in section 12001 of the
IRA.
Finally, while we acknowledge that
there are many factors that drive
premiums increases, we maintain that
reduced user fee rates will tend to exert
downward pressure on premiums, with
issuers passing the additional savings
from reduced user fees on to Exchange
enrollees through lower premiums.
For these reasons, we are finalizing
the reduced user fee rates for the 2024
benefit year of 2.2 percent of monthly
premiums charged by issuers for each
policy under plans offered through an
FFE and 1.8 percent of monthly
premiums charged by issuers for each
policy under plans offered through an
SBE–FP. As always, we will reassess the
FFE and SBE–FP user fee rates for the
2025 benefit year and propose those
rates in the proposed 2025 Payment
Notice. We also note that we will
continue to look for opportunities to
reduce these user fee rates in the future,
while ensuring that we will be able to
fully fund all Exchange activities.
Comment: A few commenters stated
that HHS should adopt a PMPM user fee
structure, stating that administrative
costs do not track with premium
changes and a PMPM user fee would
avoid higher fee amounts based solely
on premium increases.
Response: We did not propose any
changes to the user fee structure, as
such the user fee rates will continue to
be set as a percent of the premium.
However, we will continue to engage
with interested parties regarding how
the FFE and SBE–FP user fee policies
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can best support consumer access to
affordable, quality health insurance
coverage through the Exchanges that use
the Federal platform. We also note that,
even if administrative costs do not trend
with premium changes, we propose and
finalize user fee rates each benefit year
and would have the opportunity to
adjust the user fee rates to avoid higher
fee amounts based solely on premium
increases. Therefore, even if
administrative costs do not trend with
premium changes, we do not believe
that would necessarily justify a PMPM
user fee cost structure.
Comment: One commenter
appreciated the increased transparency
around user fees, and encouraged
additional transparency in the
methodology used to set the user fee
rates, as well as how user fees support
HHS’ policy goals for the Exchanges. A
few other commenters recommended
greater transparency in how the user fee
rates are determined and requested
enumerated costs of providing Federal
eligibility and enrollment platform
service and infrastructure to each State.
Response: We provided additional
information in the proposed rule (87 FR
78272 through 78274), explaining the
impact of stable contract cost estimates,
the enhanced PTC subsidies in section
9661 of the ARP being extended in
section 12001 of the IRA through the
2025 benefit year, anticipated effects of
the IRA on enrollment, and States
transitioning from FFEs or SBE–FPs to
SBEs, as well as the enrollment impacts
of section 1332 State innovation
waivers. Additionally, we note that FFE
and SBE–FP user fee costs are not
allocated to or provided to each State.
User fees cover activities performed by
the Federal government that provide
issuers offering a plan in an FFE or
SBE–FP with a special benefit. As
stated, these services are generally IT,
eligibility, enrollment, and QHP
certification services that are more
efficiently conducted in a consolidated
manner across the Federal platform,
rather than by States, so that the
services, service delivery, and
infrastructure can be the same for all
issuers in the FFEs and SBE–FPs. For
example, all FFE and SBE–FP issuers
send their 834 enrollment transactions
to the Federal platform database, which
are processed consistently regardless of
State. Contracts are acquired to provide
services for the Federal platform. The
services do not differ by State, and
therefore, we do not calculate costs on
a State-by-State basis. Additionally,
because HHS is not permitted to
publicly provide information that is
confidential due to trade secrets
associated with contracting, there are
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limits in our ability to provide detailed
information about our budget.
2. Publication of the 2024 Premium
Adjustment Percentage, Maximum
Annual Limitation on Cost Sharing,
Reduced Maximum Annual Limitation
on Cost Sharing, and Required
Contribution Percentage in Guidance
(§ 156.130)
As established in part 2 of the 2022
Payment Notice, we will publish the
premium adjustment percentage, the
required contribution percentage,
maximum annual limitations on costsharing, and reduced maximum annual
limitation on cost-sharing, in guidance
annually starting with the 2023 benefit
year. We did not propose to change the
methodology for these parameters for
the 2024 benefit year, and therefore, we
published these parameters in guidance
on December 12, 2022.279
3. Standardized Plan Options
(§ 156.201)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78274 through
78279), we proposed to exercise our
authority under sections 1311(c)(1) and
1321(a)(1)(B) of the ACA to make
several minor updates to our approach
for standardized plan options for PY
2024 and subsequent PYs. Section
1311(c)(1) of the ACA directs the
Secretary to establish criteria for the
certification of health plans as QHPs.
Section 1321(a)(1)(B) of the ACA directs
the Secretary to issue regulations that
set standards for meeting the
requirements of title I of the ACA with
respect to, among other things, the
offering of QHPs through such
Exchanges. We refer readers to the
proposed rule (87 FR 78274 through
78275) for discussion of our prior and
current standardized plan option
policies.
First, in contrast to the policy
finalized in the 2023 Payment Notice,
we proposed, for PY 2024 and
subsequent PYs, to no longer include a
standardized plan option for the nonexpanded bronze metal level.
Accordingly, we proposed at new
§ 156.201(b) that for PY 2024 and
subsequent PYs, FFE and SBE–FP
issuers offering QHPs through the
Exchanges must offer standardized QHP
options designed by HHS at every
product network type (as described in
the definition of ‘‘product’’ at
§ 144.103), at every metal level except
the non-expanded bronze level, and
throughout every service area that they
279 https://www.cms.gov/files/document/2024papi-parameters-guidance-2022-12-12.pdf.
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25847
offer non-standardized QHP options. We
proposed to re-designate the current
regulation text at § 156.201 as paragraph
(a) and revise it to apply only to PY
2023. Thus, for PY 2024 and subsequent
PYs, we proposed standardized plan
options for the following metal levels:
one bronze plan that meets the
requirement to have an AV up to 5
points above the 60 percent standard, as
specified in § 156.140(c) (known as an
expanded bronze plan), one standard
silver plan, one version of each of the
three income-based silver CSR plan
variations, one gold plan, and one
platinum plan.
As we explained in the proposed rule
(87 FR 78276), we proposed to
discontinue standardized plan options
for the non-expanded bronze metal level
mainly due to AV constraints.
Specifically, we explained that it is not
feasible to design a non-expanded
bronze plan that includes any predeductible coverage while maintaining
an AV within the permissible AV de
minimis range for the non-expanded
bronze metal level. Furthermore, we
explained that few issuers chose to offer
non-expanded bronze standardized plan
options in PY 2023, with the majority of
issuers offering bronze plans instead
choosing to offer only expanded bronze
standardized plan options. Thus, we
explained that we believe that
discontinuing non-expanded bronze
standardized plan options would
minimize burden without causing
deleterious consequences. We also
clarified that issuers would still be
permitted to offer non-standardized
plan options at the non-expanded
bronze metal level, meaning consumers
would still have the ability to choose
these plan options, if they so choose.
We further clarified that if an issuer
offers a non-standardized plan option at
the bronze metal level, whether
expanded or non-expanded, it would
need to also offer an expanded bronze
standardized plan option.
Consistent with our approach in the
2023 Payment Notice, we did not
propose standardized plan options for
the Indian CSR plan variations as
provided for at § 156.420(b), given that
the cost-sharing parameters for these
plan variations are already largely
specified. We also explained that we
would continue to require issuers to
offer these plan variations for all
standardized plan options offered, and
we proposed to remove the regulation
text language stating that standardized
plan options for these plan variations
are not required to clarify that while
issuers must, under § 156.420(b),
continue to offer such plan variations
based on standardized plan options,
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those plan variations will themselves
not be standardized plan options based
on designs specified in this
rulemaking.280
Similar to the approach taken in the
2023 Payment Notice, we proposed to
create standardized plan options that
resemble the most popular QHP
offerings that millions are already
enrolled in by selecting the most
popular cost-sharing type for each
benefit category; selecting enrolleeweighted median values for each of
these benefit categories based on
refreshed PY 2022 cost-sharing and
enrollment data; modifying these plans
to be able to accommodate State costsharing laws; and decreasing the AVs
for these plan designs to be at the floor
of each AV de minimis range primarily
by increasing deductibles.
Furthermore, consistent with the
approach taken in the 2023 Payment
Notice, we proposed to create two sets
of standardized plan options at the
aforementioned metal levels, with the
same sets of designs applying to the
same sets of States as in the 2023
Payment Notice. Specifically, we
proposed that the first set of
standardized plan options would
continue to apply to FFE and SBE–FP
issuers in all FFE and SBE–FP States,
excluding those in Delaware, Louisiana,
and Oregon, and the second set of
standardized plan options would
continue to apply to Exchange issuers
specifically in Delaware and Louisiana.
See Table 9 and Table 10 for the two
sets of standardized plan options we are
finalizing for PY 2024.
In addition, since SBE–FPs use the
same platform as the FFEs, we
explained that we would continue to
apply these standardized plan option
requirements equally on FFEs and SBE–
FPs. We explained that we continue to
believe that differentiating between
FFEs and SBE–FPs for the purposes of
these requirements would create a
substantial financial and operational
burden that outweighs the benefit of
permitting such a distinction.
Also, consistent with our policy in PY
2023, we stated that we would continue
to apply these requirements to
applicable issuers in the individual
market but not in the small group
market. We also explained that we
would continue to exempt issuers
offering QHPs through FFEs and SBE–
FPs that are already required to offer
standardized plan options under State
action taking place on or before January
280 See QHP Certification Standardized Plan
Options FAQs, https://
www.qhpcertification.cms.gov/s/Standardized
%20Plan%20Options%20FAQs.
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1, 2020, such as issuers in the State of
Oregon,281 from the requirement to offer
the standardized plan options included
in this rule.
In addition, we stated that we would
continue to exempt issuers in SBEs from
these requirements for several reasons.
First, we explained that we did not wish
to impose duplicative standardized plan
option requirements on issuers in the
eight SBEs that already have
standardized plan option requirements.
Additionally, we explained that we
continue to believe that SBEs are best
positioned to understand both the
nuances of their respective markets and
consumer needs within those markets.
Finally, we explained that we continue
to believe that States that have invested
the necessary time and resources to
become SBEs have done so to
implement innovative policies that
differ from those on the FFEs, and we
do not wish to impede these innovative
policies so long as they comply with
existing legal requirements.
Furthermore, consistent with the
policy finalized in the 2023 Payment
Notice, we explained that we would
continue to differentially display
standardized plan options, including
those standardized plan options
required under State action taking place
on or before January 1, 2020, on
HealthCare.gov under the authority at
§ 155.205(b)(1). We further explained
that we would also continue
enforcement of the standardized plan
options display requirements for
approved web-brokers and QHP issuers
using a direct enrollment pathway to
facilitate enrollment through an FFE or
SBE–FP—including both the Classic DE
and EDE Pathways—at
§§ 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv), respectively. This
means that these entities would
continue to be required to differentially
display the 2024 benefit year
standardized plan options in accordance
with the requirements under
§ 155.205(b)(1) in a manner consistent
with how standardized plan options are
displayed on HealthCare.gov, unless
HHS approves a deviation. Consistent
with our PY 2023 policy, we stated that
any requests from web-brokers and QHP
issuers seeking approval for an alternate
differentiation format would continue to
be reviewed based on whether the same
or similar level of differentiation and
clarity is being provided under the
requested deviation as is provided on
HealthCare.gov.
Consistent with the approach to plan
designs in the 2023 Payment Notice, we
explained that we would continue to
281 See
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use the following four tiers of
prescription drug cost sharing in the
proposed standardized plan options:
generic drugs, preferred brand drugs,
non-preferred brand drugs, and
specialty drugs. We stated that we
believe the use of four tiers of
prescription drug cost-sharing in the
standardized plan options would
continue to allow for predictable and
understandable drug coverage. We
further explained that we believe the
use of four tiers of prescription drug
cost-sharing would play an important
role in facilitating the consumer
decision-making process by allowing
consumers to more easily compare
formularies between plans, and allow
for easier year-to-year comparisons with
their current plan.
We also explained that the continued
use of four tiers would minimize issuer
burden since, for PY 2023, issuers have
already created standardized plan
options with formularies that include
only four tiers of prescription drug costsharing. We noted that we would
consider including additional drug tiers
for future years, and invited comment
on the appropriate number of drug tiers
to use in standardized plan options in
the future. However, we explained that
we would continue to use four tiers of
prescription drug cost-sharing in
standardized plan options for PY 2024
and subsequent PYs to maintain
continuity with our approach to
standardized plan options in PY 2023.
In addition, we noted concerns that
issuers may not be including specific
drugs at appropriate cost-sharing tiers
for the standardized plan options; for
example, that some issuers may be
including brand name drugs in the
generic drug cost-sharing tier, while
others include generic drugs in the
preferred or non-preferred brand drug
cost-sharing tiers. We explained that we
believe that consumers understand the
difference between generic and brand
name drugs, and that it is reasonable to
assume that consumers expect that only
generic drugs are covered at the costsharing amount in the generic drug costsharing tier, and that only brand name
drugs are covered at the cost-sharing
amount in the preferred or nonpreferred brand drug cost-sharing tiers.
Accordingly, we proposed to revise
§ 156.201 to add a new paragraph (c)
specifying that issuers of standardized
plan options must (1) place all covered
generic drugs in the standardized plan
options’ generic drug cost-sharing tier,
or the specialty drug tier if there is an
appropriate and non-discriminatory
basis in accordance with § 156.125 for
doing so, and (2) place all covered brand
name drugs in either the standardized
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plan options’ preferred brand or nonpreferred brand drug cost-sharing tiers,
or the specialty drug tier if there is an
appropriate and non-discriminatory
basis in accordance with § 156.125 for
doing so. For purposes of this proposal,
‘‘non-discriminatory basis’’ means there
must be a clinical basis for placing a
particular prescription drug in the
specialty drug tier in accordance with
§ 156.125.
We also specified that within the
Prescription Drug Template, for
standardized plan options, issuers
should enter zero cost preventive drugs
for tier one, generic drugs for tier two,
preferred brand drugs for tier three, nonpreferred drugs for tier four, specialty
drugs for tier five, and medical services
drugs for tier six, if applicable.
We proposed the approach described
in this section for PY 2024 and
subsequent PYs for several reasons. To
begin, we explained that we were
continuing to require FFE and SBE–FP
issuers to offer standardized plan
options in large part due to continued
plan proliferation, which has only
increased since the standardized plan
option requirements were finalized in
the 2023 Payment Notice. We explained
that with this continued plan
proliferation, it is increasingly
important to continue to attempt to
streamline and simplify the plan
selection process for consumers on the
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Exchanges. We stated that we believe
these standardized plan options can
continue to play a meaningful role in
that simplification by reducing the
number of variables that consumers
have to consider when selecting a plan
option, thus allowing consumers to
more easily compare available plan
options. More specifically, we explained
that with these standardized plan
options, consumers would continue to
be able to take other meaningful factors
into account, such as networks,
formularies, and premiums, when
selecting a plan option. We stated that
we further believe these standardized
plan options include several distinctive
features, such as enhanced predeductible coverage for several benefit
categories, that would continue to play
an important role in reducing barriers to
access, combatting discriminatory
benefit designs, and advancing health
equity. We explained that including
enhanced pre-deductible coverage for
these benefit categories would ensure
consumers are more easily able to access
these services without first meeting
their deductibles. Furthermore, we
explained that including copayments
instead of coinsurance rates for a greater
number of benefit categories would
enhance consumer certainty and reduce
the risk of unexpected financial harm
sometimes associated with high
coinsurance rates.
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Additionally, given that insufficient
time has passed to assess all the impacts
of the standardized plan option
requirements finalized in the 2023
Payment Notice, we proposed to
maintain a high degree of continuity for
many of the standardized plan option
policies previously finalized to reduce
the risk of disruption for all involved
interested parties, including issuers,
agents, brokers, States, and enrollees.
We explained that we believe that
making major departures from the
methodology used to create the
standardized plan options as finalized
in the 2023 Payment Notice could result
in drastic changes in these plan designs
that could potentially create undue
burden for these interested parties.
Furthermore, we explained that if these
standardized plan options vary
significantly from year to year, those
enrolled in these plans could experience
unexpected financial harm if the costsharing for services they rely upon
differs substantially from the previous
year. We stated that, ultimately, we
believe that consistency in standardized
plan options is important to allow both
issuers and enrollees to become
accustomed to these plan designs.
We sought comment on our proposed
approach to standardized plan options
for PY 2024 and subsequent PYs.
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After reviewing public comments, we
are finalizing our proposed policies
with respect to standardized plan
options for PY 2024 and subsequent
PYs, as proposed, except as follows.
First, we are not finalizing the proposed
requirement that issuers of standardized
plan options must (1) place all covered
generic drugs in the standardized plan
options’ generic drug cost-sharing tier,
or the specialty drug tier if there is an
appropriate and non-discriminatory
basis in accordance with § 156.125 for
doing so, and (2) place all covered brand
name drugs in either the standardized
plan options’ preferred brand or nonpreferred brand drug cost-sharing tiers,
or the specialty drug tier if there is an
appropriate and non-discriminatory
basis in accordance with § 156.125 for
doing so.
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Additionally, we note that both of the
standard silver plan designs finalized in
this rule, as set forth in Tables 9 and 10
above, differ slightly from the
corresponding plan designs in the
proposed rule (87 FR 78278 through
78279). Specifically, in this final rule,
for both of these standard silver plans,
we are reducing the deductible by $100
from $6,000 to $5,900, which increases
the AV for these plans from 70.00
percent to 70.01 percent. We are making
this change to rectify an error in our use
of the proposed AV Calculator and
Plans and Benefits Template.
Specifically, the proposed AV
Calculator produced an AV output of
69.998 percent for both of these
standard silver plans.
However, the proposed AV Calculator
rounds to only two decimal places,
which resulted in the AV output for
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25851
both of these plans being rounded up to
70.00 percent. With a permissible AV de
minimis range for the standard silver
metal level of 70.00 percent to 72.00
percent, these standard silver plans
(with an unrounded AV of 69.998
percent) would have failed the AV de
minimis range validation within the
Plans and Benefits Template, meaning
issuers would not have been able to
successfully submit these plans during
QHP certification. We designed these
plans to have AVs near the floor of each
de minimis range to ensure competitive
premiums for these plans. Slightly
modifying the deductibles for these
plans ensures that they will continue to
have competitive premiums and AVs
within the permissible AV de minimis
range. All other aspects of these plan
designs remain unchanged from the
corresponding plan designs in the
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proposed rule. Given that the same
rounding logic is present in the final AV
Calculator and the final Plans and
Benefits Template, we note that this
change must also be made in the final
versions of each of these tools.
We summarize and respond to public
comments received on the proposed
policies with respect to standardized
plan options below.
Comment: Many commenters
expressed support for continuing to
require FFE and SBE–FP issuers to offer
standardized plan options. These
commenters explained that
standardized plan options serve an
important role in simplifying the plan
selection process for consumers
purchasing health insurance through the
Exchanges. These commenters also
explained that the plan selection
process could be further simplified if
the requirement for issuers to offer
standardized plan options were paired
with the proposed requirements in
§ 156.202 in the proposed rule to reduce
the risk of plan choice overload by
either directly limiting the number of
non-standardized plan options that
issuers can offer through the Exchanges
or by implementing a meaningful
difference standard.
These commenters explained that the
continued emphasis on efforts to further
simplify the plan selection process is
especially important given the
continued proliferation of available plan
choices offered through the Exchanges,
as was described in greater detail in
§ 156.202 of the preamble of the
proposed rule (87 FR 78279 through
78283). Commenters further explained
that having an overwhelming number of
plan choices to consider during the plan
selection process significantly
exacerbates the risk of plan choice
overload, which also increases the risk
of suboptimal plan selection and
unexpected financial harm. Commenters
thus explained that continuing to
require issuers to offer these
standardized plan options would act as
one prong in a multi-pronged strategy to
meaningfully simplify the plan selection
process, thereby reducing the risk of
suboptimal plan selection and
unexpected financial harm to
consumers.
Commenters who supported
continuing to require issuers to offer
standardized plan options also
explained that the standardized plan
options included in the proposed rule
also contain several distinctive features,
such as enhanced pre-deductible
coverage for a wide range of benefit
categories, including primary care visits,
urgent care visits, specialist visits,
mental health and substance use
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disorder outpatient office visits, speech
therapy, occupational therapy, physical
therapy, and generic drugs. Commenters
explained that the enhanced predeductible coverage for these benefit
categories would continue to serve an
important role in reducing barriers to
access for services critical to health.
Commenters supportive of these
standardized plan options also
explained that including copayments
instead of coinsurance rates as the form
of cost sharing for as many benefit
categories as possible would continue to
enhance the predictability of costs for
consumers enrolled in these plans, thus
further reducing the risk of unexpected
financial harm.
Conversely, several commenters
opposed continuing to require issuers to
offer these standardized plan options.
These commenters explained that QHPs
are sufficiently standardized due to
requirements pertaining to EHB, annual
limitations on cost sharing, metal tiers,
and the recently narrowed AV de
minimis ranges for each metal tier.
These commenters also explained that
continuing to require issuers to offer
these standardized plan options would
inhibit issuer innovation in plan design,
reducing the degree of consumer choice.
Several commenters also noted that
requiring issuers to offer standardized
plan options in PY 2023 contributed to
the sharp increase in plans offered
during this past Open Enrollment,
which further increased the risk of plan
choice overload.
Response: We agree that continuing to
require issuers to offer these
standardized plan options will serve an
important role in simplifying the plan
selection process, especially when done
in conjunction with reducing the risk of
plan choice overload by directly
limiting the number of nonstandardized plan options that issuers
can offer as well as with further
enhancing and optimizing choice
architecture and the consumer
experience on HealthCare.gov. We agree
with commenters that simplifying the
plan selection process will reduce the
risk of suboptimal plan selection and
unexpected financial harm to
consumers. We also agree that the
enhanced pre-deductible coverage and
the inclusion of copayments instead of
coinsurance rates for a broad range of
benefit categories in these standardized
plan options will continue to serve as
important forms of consumer protection.
We further believe that this additional
degree of standardization—beyond the
existing requirements pertaining to
EHB, annual limitations on cost sharing,
metal tiers, and the recently narrowed
AV de minimis ranges for each metal
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tier—for plans offered through the
Exchanges is warranted given the
continued proliferation of available plan
choices offered through the Exchanges,
a stable trend that has continued
unabated for several years. We believe
the overwhelming number of plan
choices necessitates taking measures to
further simplify the consumer
experience in order to reduce the risk of
suboptimal plan selection.
We acknowledge that requiring
issuers to offer these standardized plan
options contributed to the increase in
the total number of plans offered
through the Exchanges. However, we
note that in the 2023 Payment Notice
(87 FR 27318), we encouraged issuers to
modify their existing non-standardized
plan offerings—in accordance with
uniform modification requirements at
§ 147.106(e)—to conform with the costsharing parameters of the standardized
plan options finalized in the 2023
Payment Notice in order to significantly
reduce the number of total new plan
offerings on the Exchanges. We reiterate
this encouragement.
Additionally, since these
standardized plan options contain
several distinctive benefits, such as
enhanced pre-deductible coverage and a
preference for copayments instead of
coinsurance rates, and since we believe
these standardized plan options play an
important role in simplifying the plan
selection process, we believe limiting
the number of non-standardized plan
options that issuers can offer will offset
this increase in the number of total plan
offerings.
Finally, we disagree that continuing
to require issuers to offer these
standardized plan options will inhibit
issuer innovation in plan design and
reduce consumer choice. First, given
that issuers will still be permitted to
offer two non-standardized plan options
per product network type, metal level,
inclusion of dental or vision benefit
coverage, and service area, we believe
that issuers will continue to have
sufficient flexibility to innovate and that
consumers will continue to retain a
satisfactory degree of choice.
Additionally, as is explained in
greater detail in the section of the
preamble to this rule addressing
§ 156.202, a 2016 report by the RAND
Corporation reviewing over 100 studies
concluded that having too many health
plan choices can lead to poor
enrollment decisions due to the
difficulty consumers face in processing
complex health insurance
information.282 We also referred to a
282 Taylor EA, Carman KG, Lopez A, Muchow
AN, Roshan P, and Eibner C. Consumer
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study of consumer behavior in Medicare
Part D, Medicare Advantage, and
Medigap that demonstrated that a
choice of 15 or fewer plans was
associated with higher enrollment rates,
while a choice of 30 or more plans led
to a decline in enrollment rates.283 As
we note in the section of the preamble
to this rule addressing § 156.202, with
the limit we are finalizing on the
number of non-standardized plans that
may be offered, we estimate (based on
Plan Year 2023 data) that the weighted
average number of non-standardized
plan options (which does not take into
consideration standardized plan
options) available to each consumer will
be reduced from approximately 89.5 in
PY 2023 to 66.3 in PY 2024, while the
weighted average total number of plans
(which includes both standardized and
non-standardized plan options)
available to each consumer will be
reduced from approximately 113.7 in
PY 2023 to 90.5 in PY 2024, which we
believe will still provide consumers a
satisfactory degree of choice and will
continue to allow them to select a plan
that meets their unique health needs.
Altogether, we believe the
standardized plan option requirements
at § 156.201 in conjunction with the
non-standardized plan option limits at
§ 156.202 will meaningfully enhance
consumer choice by allowing consumers
to more easily and meaningfully
compare available plan choices by
reducing the risk of plan choice
overload.
Comment: Many commenters
supported maintaining a high degree of
continuity in both the broader policy
approach as well as in specific plan
designs from the previous plan year.
These commenters explained that
maintaining a consistent approach
between plan years would maintain
predictability for consumers currently
enrolled in these plans. These
commenters further explained that
introducing drastic changes in the plan
designs would unnecessarily risk
disruption for issuers, states, and
enrollees.
Response: We agree that maintaining
the highest degree of continuity possible
in both the broader approach, as well as
in the specific plan designs from the
previous plan year is highly desirable,
mainly in order to maintain
predictability, to minimize the risk of
disruption for issuers, States and
Decisionmaking in the Health Care Marketplace.
RAND Corporation. 2016.
283 Chao Zhou and Yuting Zhang, ‘‘The Vast
Majority of Medicare Part D Beneficiaries Still Don’t
Choose the Cheapest Plans That Meet Their
Medication Needs.’’ Health Affairs, 31, no.10
(2012): 2259–2265.
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enrollees, and to minimize issuer
burden.
Comment: Many commenters
expressed concerns about several
aspects of these plan designs.
Specifically, several commenters
expressed concern about the high
deductibles for these plans. These
commenters explained that having high
deductibles acts as a significant barrier
that makes it more difficult for
consumers to obtain the care they need.
Thus, many commenters recommended
lowering the deductibles for these plans
in order to decrease barriers to access.
Commenters also emphasized the need
to expand pre-deductible coverage to a
broader range of benefit categories,
including laboratory services, x-rays and
diagnostic imaging, outpatient facility
fees, outpatient surgery physician fees,
and more tiers of prescription drug
coverage.
Response: We agree that high
deductibles can act as a barrier to
obtaining health care services, and that
expanding pre-deductible coverage to a
broader range of benefit categories
would help to expand access to health
care services. However, to ensure these
plans have design attributes that reflect
the most popular plan offerings, to
maintain reasonable cost sharing
amounts, to continue exempting benefit
categories that contain some of the most
frequently utilized health care services
from the deductible, and to ensure these
plans have competitive premiums, all
the while maintaining an AV within the
permissible AV de minimis range, we
are unable to materially lower the
deductibles or exempt additional benefit
categories from the deductibles in these
plan designs. We note that we will
consider these modifications in future
PYs.
Comment: Several commenters
supported excluding plan designs for
standardized plan options at the nonexpanded bronze metal level. These
commenters explained that excluding
non-expanded bronze plan designs
would reduce issuer and State burden,
as there would be fewer plans for
issuers to offer and for States to certify.
These commenters also explained that
the non-expanded bronze plan
standardized plan options finalized in
the 2023 Payment Notice did not
include pre-deductible coverage for any
services, which places consumers at risk
of unexpected financial harm.
Additionally, commenters explained
that issuers generally chose to offer
standardized plan options at the
expanded bronze metal level instead of
the non-expanded bronze metal level in
PY 2023 since these plans included pre-
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deductible coverage for a range of
benefit categories.
Conversely, several commenters
opposed excluding plan designs for
standardized plan options at the nonexpanded bronze metal level, explaining
that consumers currently enrolled in
these low-cost plans would lose access
to their current plan offerings.
Response: We agree that excluding
plan designs for standardized plan
options at the non-expanded bronze
metal level will reduce issuer and State
burden with minimal consumer harm
since these plan designs contain no predeductible coverage. In addition, as
noted in the proposed rule, few issuers
chose to offer non-expanded bronze
standardized plan options in PY 2023.
We also note that although consumers
currently enrolled in standardized plan
options at the non-expanded bronze
metal level would lose access to their
current plan offering, these consumers
could continue to have access to nonstandardized plan options at the nonexpanded bronze metal level, if the
issuer continues to offer such a plan. We
believe non-standardized plan options
at the non-expanded bronze metal level
would be appropriate replacements for
consumers’ current standardized plan
offerings at that level since there is little
material difference between a
standardized plan option at the nonexpanded bronze metal level and a nonstandardized plan option at the nonexpanded bronze metal level—primarily
due to severe AV constraints.
Comment: Several commenters
supported continuing to include only
four tiers of prescription drug cost
sharing in the formularies of the
standardized plan options. These
commenters generally explained that
doing so would allow consumers to
better understand their drug coverage,
thereby reducing the risk of unexpected
financial harm. These commenters also
noted that the continuity in this aspect
of the plan designs is highly desirable
for consumers, and that this would
further minimize the risk of disruption
for these consumers.
Conversely, several commenters
supported including more than four
tiers of prescription drug cost sharing in
the formularies of the standardized plan
options. These commenters instead
recommended permitting the inclusion
of five or six tiers, explaining that this
formulary structure is common practice
in the commercial market. These
commenters explained that including
additional tiers of cost sharing in these
formularies would promote competition
among manufacturers for favorable
formulary placement, thus reducing
costs for consumers.
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Response: While we acknowledge that
the inclusion of five or six tiers in
formularies is common practice in the
commercial market, we believe the
advantages of maintaining four tiers in
these standardized plan option
formularies outweigh the advantages of
permitting additional tiers at this time.
Specifically, we agree that continuing to
include only four tiers of prescription
drug cost sharing in the formularies of
these standardized plan options will
continue to allow for more predictable
and understandable drug coverage,
thereby reducing the risk of unexpected
financial harm for consumers enrolled
in these plans.
Additionally, we believe that not
finalizing the proposed formulary
tiering placement regulations that
would have required issuers to place all
covered generic drugs in the generic
cost-sharing tier and all brand drugs in
either the preferred or non-preferred
brand cost-sharing tier (or the specialty
cost-sharing tier, with an appropriate
and non-discriminatory basis) (as
discussed later in this section) for PY
2024 will continue to facilitate
competition among manufacturers for
favorable formulary placement,
reducing costs for consumers, which we
believe is especially important given the
other significant policies finalized in
this rule.
We also note that the four-tier design
feature is consistent with the plan
designs for PY 2023. As noted in the
proposed rule (87 FR 78277), we believe
that the use of four tiers plays an
important role in facilitating the
consumer decision making process by
allowing consumers to more easily
compare formularies between plans, and
allows for easier year-to-year
comparison with their current plan.
Thus, in order to minimize the degree
of disruption for enrollees, we will
continue to include only four tiers of
prescription drug cost-sharing
(excluding the zero-cost share
preventive drugs and the medical
services drugs cost-sharing tiers) in
these standardized plan options for PY
2024.
Comment: Several commenters
supported requiring issuers to place all
covered generic drugs in the generic
drug cost sharing tier and all covered
brand drugs in either the preferred
brand or non-preferred brand drug cost
sharing tiers—or the specialty tier, with
an appropriate and non-discriminatory
basis—in the standardized plan options.
These commenters explained that
introducing such a requirement would
enhance predictability for consumers
and allow them to anticipate the
expected costs for prescription drugs,
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which would further decrease the risk of
unexpected financial harm. Commenters
further explained that this requirement
would act as an important step in
ensuring that patients are not forced to
overpay for low-cost generic
prescription drugs.
Several commenters further explained
that generic drugs are a major source of
cost savings for patients and systems.
These commenters cited recent analyses
that demonstrated that generics
comprise roughly 91 percent of
prescriptions yet only account for 18.2
percent of prescription drug spending.
These commenters also cited analyses
that demonstrated that generics save
hundreds of billions of dollars in
prescription drug spending overall, with
demonstrated patient savings of $373
billion in 2021. These commenters also
explained how the number of generic
drugs covered on generic cost sharing
tiers has been steadily decreasing over
the years. These commenters explained
that as recently as 2016, 65 percent of
generic drugs were covered on generic
tiers, but in 2022, only 43 percent of
generic drugs were covered on generic
tiers—a decrease of 22 percent in just
six years.
Conversely, several commenters
opposed requiring issuers to place all
covered generic drugs in the generic
drug cost sharing tier and all covered
brand drugs in either the preferred
brand or non-preferred brand drug cost
sharing tiers—or the specialty tier, with
an appropriate and non-discriminatory
basis—in these standardized plan
options.
Specifically, commenters explained
that there are numerous examples of
high-cost generic prescription drugs that
have lower-cost, clinically similar
brand-name prescription alternatives.
Similarly, commenters explained that
there are brand-name prescription drugs
that may offer clinical and financial
value that supports tiering lower than
the preferred brand tier. Thus,
commenters explained that the
traditional viewpoint that generic drugs
are the lowest-cost or highest value
option is not always necessarily the
case. Commenters further stated that it
is commonplace in all market segments
to shift generics to lower tiers only at
the point where they become the most
cost-effective option. Commenters also
explained that the purpose of tiered
formularies is to encourage the use of
high value drugs—not to encourage the
use of generic drugs, per se, especially
since generic prescription drugs are no
longer consistently inexpensive or highvalue.
In addition, several commenters
expressed concern that requiring brand
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prescription drugs to be placed on a
higher cost sharing tier could result in
decreased medication adherence, which
would be especially detrimental for
consumers with chronic conditions that
require treatment with brand-name
prescription drugs (such as asthma
medications and insulin). Moreover,
several commenters noted that this
policy would force the placement of
clinically inappropriate and high-priced
prescription drugs on lower tiers, thus
undermining the work of Pharmacy &
Therapeutics Committees that considers
multiple factors when deciding the tier
on which to place each prescription
drug.
Several commenters also expressed
concern that this requirement would
incentivize manufacturers to take
advantage of mandatory tier placement
by raising the cost of certain drugs.
Similarly, several commenters
expressed concern that this requirement
would limit PBM flexibility to
effectively manage formularies and
enrollee drug spending, as well as PBM
and issuer position in negotiations with
manufacturers.
Moreover, these commenters were
concerned that this policy could lead to
more administrative costs and may
require issuers to maintain two sets of
formularies for standardized and nonstandardized plan options, and that this
may lead to more confusion for
consumers. Ultimately, several
commenters noted that this policy may
have the unintended effect of increasing
costs for consumers through the cost of
each tier with higher out-of-pocket
costs, cost-sharing, and the price of
premiums.
Response: We agree that requiring
generic prescription drugs to be placed
in the generic drug cost sharing tier and
brand drugs in the preferred or nonpreferred brand drug cost sharing tiers
(or the specialty tier, with an
appropriate and non-discriminatory
basis) would enhance predictability for
consumers and could potentially result
in patient cost savings. However,
comments regarding the changing
nature of the costs of brand name drugs
and generics, flexibility in designing
formularies, and decreased medication
adherence have led us to determine that
we should further investigate the
potential impact of this proposed
requirement. For example, we believe
that there may be merit in examining
drug tiering more broadly, and not just
as related to standardized plan options.
Furthermore, as noted earlier in this
section, we value maintaining the
highest degree of continuity possible in
both the broader approach, as well as in
the specific plan designs from the
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previous plan year and we intend to
minimize disruption while still
improving on our policies. As such, we
are not finalizing this requirement for
PY 2024, but we intend to conduct
further investigation for future PYs.
Comment: Several commenters had
specific recommendations regarding the
manner in which these standardized
plan options are displayed as well as
broader aspects of choice architecture
and the user experience on
HealthCare.gov.
Specifically, several commenters
recommended including a more
granular level of detail to highlight
important differences between plans,
such as by displaying both the product
ID and network ID of plans.
Additionally, several commenters
underscored the need to streamline the
plan selection process by adding more
filters and sort orders to highlight
innovative plan designs and plans with
supplemental benefits, to prioritize
lower deductible plans, or to prioritize
plans with particular cost sharing types
and amounts. Several commenters
recommended including additional
screener questions to assess consumer
preferences for cost, providers,
prescription drugs, utilization, and costsharing assistance. Several commenters
recommended including display
features that would further facilitate
consumer education and understanding,
such as through pop-ups on screen and
accompanying explanatory messages
clarifying what distinguishes ‘‘Easy
Pricing’’ plans from non-standardized
plan options.
Finally, several commenters
explained that enhancing choice
architecture and the user experience on
HealthCare.gov would be a more
effective and less disruptive method to
simplify the plan selection process and
facilitate consumer decision-making
than limiting the number of nonstandardized plan options that issuers
can offer through the Exchanges.
Response: We appreciate the
commenters’ recommendations and will
take them into consideration. We agree
that enhancing choice architecture and
the user experience on HealthCare.gov
can serve an important role in
simplifying the plan selection process,
but we also believe that these
enhancements must be made in
conjunction with other steps—such as
enhancing comparability by requiring
issuers to offer standardized plan
options, and by reducing the risk of plan
choice overload by limiting the number
of non-standardized plan options that
issuers can offer. Ultimately, we believe
that multifaceted problems such as plan
choice overload, suboptimal plan
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selection, and unexpected financial
harm are best mitigated through
multifaceted approaches.
4. Non-Standardized Plan Option Limits
(§ 156.202)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78279), we proposed
to exercise the authority under sections
1311(c)(1) and 1321(a)(1)(B) of the ACA
to add § 156.202 to limit the number of
non-standardized plan options that
issuers of QHPs can offer through
Exchanges on the Federal platform
(including State-based Exchanges on the
Federal Platform) to two nonstandardized plan options per product
network type (as described in the
definition of ‘‘product’’ at § 144.103)
and metal level (excluding catastrophic
plans), in any service area, for PY 2024
and beyond, as a condition of QHP
certification. Section 1311(c)(1) of the
ACA directs the Secretary to establish
criteria for the certification of health
plans as QHPs. Section 1321(a)(1)(B) of
the ACA directs the Secretary to issue
regulations that set standards for
meeting the requirements of title I of the
ACA for, among other things, the
offering of QHPs through such
Exchanges.
In the proposed rule (87 FR 78279),
we explained that under this proposed
limit, an issuer would, for example, be
limited to offering through an Exchange
two gold HMO and two gold PPO nonstandardized plan options in any service
area in PY 2024 or any subsequent PY.
As an additional clarifying example, we
explained that if an issuer wanted to
offer two Statewide bronze HMO nonstandardized plan options, as well as
two additional bronze HMO nonstandardized plan options in one
particular service area that covers less
than the entire State, in the service areas
that all four plans would cover, the
issuer could choose to offer through the
Exchange either the two bronze HMO
non-standardized plan options offered
Statewide or the two bronze HMO nonstandardized plan options offered in
that particular service area (or any
combination thereof, so long as the total
number of non-standardized plan
options does not exceed the limit of two
per issuer, product network type, and
metal level in the service area).
Similar to the approach taken with
respect to standardized plan options in
the 2023 Payment Notice and in this
final rule, we proposed to not apply this
requirement to issuers in SBEs for
several reasons. First, we explained that
we did not wish to impose duplicative
requirements on issuers in the SBEs that
already limit the number of non-
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standardized plan options.
Additionally, we stated that we believe
that SBEs are best positioned to
understand both the nuances of their
respective markets and consumer needs
within those markets. Finally, we
explained that we believe that States
that have invested the necessary time
and resources to become SBEs have
done so to implement innovative
policies that differ from those on the
FFEs, and that we did not wish to
impede these innovative policies, so
long as they comply with existing legal
requirements.
Also, consistent with the approach
taken for standardized plan options in
the 2023 Payment Notice and in this
this final rule, since SBE–FPs use the
same platform as the FFEs, we proposed
to apply this requirement equally on
FFEs and SBE–FPs. We explained that
we believe that proposing a distinction
between FFEs and SBE–FPs for
purposes of this requirement would
create a substantial financial and
operational burden that we believe
outweighs the benefit of permitting such
a distinction.
Finally, also in alignment with the
approach taken with respect to
standardized plan options in the 2023
Payment Notice and this final rule, we
proposed that this requirement would
not apply to plans offered through the
SHOPs or to SADPs, given that the
nature of these markets differ
substantially from the individual
medical QHP market, in terms of issuer
participation, plan offerings, plan
enrollment, and services covered. For
example, we explained that the degree
of plan proliferation observed in
individual market medical QHPs over
the last several plan years is not evident
to the same degree for QHPs offered
through the SHOPs or for SADPs offered
in the individual market. For these
reasons, we stated that we do not
believe the same requirements should
be applied to these other markets.
We also explained that we believe
that given the large number of plan
offerings that would continue to exist on
the Exchanges, a sufficiently diverse
range of plan offerings would still exist
for consumers to continue to select
innovative plans that meet their unique
health needs, even if we did ultimately
choose to limit the number of nonstandardized plan options that issuers
can offer. Thus, we stated that even if
consumers believe that their health
needs may not be best met with the
standardized plan options included in
this current rulemaking, they would still
have the option to select from a
sufficient number of other nonstandardized plan options.
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We stated in the proposed rule (87 FR
78280) that, under this proposed limit,
we estimated that the weighted average
number of non-standardized plan
options (which does not take into
consideration standardized plan
options) available to each consumer
would be reduced from approximately
107.8 in PY 2022 to 37.2 in PY 2024,
which we stated we believe would still
provide consumers with a sufficient
number of plan offerings.284
Furthermore, we estimated that
approximately 60,949 of a total 106,037
non-standardized plan option plancounty combinations offered in PY 2022
(amounting to 57.5 percent of nonstandardized plan option plan-county
combinations) would be discontinued as
a result of this limit, a number we stated
would still provide consumers with a
sufficient degree of choice during the
plan selection process.285
Finally, we stated that if this limit
were adopted, we estimated that of the
approximately 10.21 million enrollees
in the FFEs and SBE–FPs in PY 2022,
approximately 2.72 million (26.6
percent) of these enrollees would have
their current plan offerings affected, and
issuers would therefore be required to
select another QHP to crosswalk these
enrollees into for PY 2024.286 We also
explained that we would utilize the
existing discontinuation notices and
process as well as the current reenrollment hierarchy at § 155.335(j) to
ensure a seamless transition and
continuity of coverage for affected
enrollees. In addition, we explained that
we would ensure that the necessary
consumer assistance would be made
available to affected enrollees as part of
284 Utilizing weighted as opposed to unweighted
averages takes into consideration the number of
enrollees in a particular service area when
calculating the average number of plans available to
enrollees. As a result of weighting by enrollment,
service areas with a higher number of enrollees
have a greater impact on the overall average than
service areas with a lower number of enrollees.
Weighting averages allows a more representative
metric to be calculated that more closely resembles
the actual experience of enrollees.
285 Plan-county combinations are the count of
unique plan ID and Federal Information Processing
Series (FIPS) code combinations. This measure is
used because a single plan may be available in
multiple counties, and specific limits on nonstandardized plan options may have different
impacts on one county where there are four plans
of the same product network type and metal level
versus another county where there are only two
plans of the same product network type and service
area, for example.
286 These calculations assumed that the nonstandardized plan options removed due to the
proposed limit would be those with the fewest
enrollees based on PY 2022 data, which includes
individual market medical QHPs for Exchanges
using the HealthCare.gov eligibility and enrollment
platform, including SBE–FPs.
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the expanded funding for Navigator
programs.
In the 2023 Payment Notice, we also
solicited comment on enhancing choice
architecture and on preventing plan
choice overload for consumers on
HealthCare.gov (87 FR 689 through 691
and 87 FR 27345 through 27347). In this
comment solicitation, we noted that
although we continue to prioritize
competition and choice on the
Exchanges, we were concerned about
plan choice overload, which can result
when consumers have too many choices
in plan options on an Exchange. We
referred to a 2016 report by the RAND
Corporation reviewing over 100 studies
which concluded that having too many
health plan choices can lead to poor
enrollment decisions due to the
difficulty consumers face in processing
complex health insurance
information.287 We also referred to a
study of consumer behavior in Medicare
Part D, Medicare Advantage, and
Medigap that demonstrated that a
choice of 15 or fewer plans was
associated with higher enrollment rates,
while a choice of 30 or more plans led
to a decline in enrollment rates.288
With this concern in mind, we
explained in the 2023 Payment Notice
that we were interested in exploring
possible methods of improving choice
architecture and preventing plan choice
overload. We expressed interest in
exploring the feasibility and utility of
limiting the number of nonstandardized plan options that FFE and
SBE–FP issuers can offer through the
Exchanges in future plan years as one
option to reduce the risk of plan choice
overload and to further streamline and
optimize the plan selection process for
consumers on the Exchanges.
Accordingly, we sought comment on the
impact of limiting the number of nonstandardized plan options that issuers
can offer through the Exchanges, on
effective methods to achieve this goal,
the advantages and disadvantages of
these methods, and if there were
alternative methods not considered.
In response to this comment
solicitation, many commenters agreed
that the number of plan options that
consumers can choose from on the
Exchanges has increased beyond a point
that is productive for consumers. Many
of these commenters further explained
287 Taylor EA, Carman KG, Lopez A, Muchow
AN, Roshan P, and Eibner C. Consumer
Decisionmaking in the Health Care Marketplace.
RAND Corporation. 2016.
288 Chao Zhou and Yuting Zhang, ‘‘The Vast
Majority of Medicare Part D Beneficiaries Still Don’t
Choose the Cheapest Plans That Meet Their
Medication Needs.’’ Health Affairs, 31, no.10
(2012): 2259–2265.
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that consumers do not have the time,
resources, or health literacy to be able
to meaningfully compare all available
plan options. These commenters also
agreed that when consumers are faced
with an overwhelming number of plan
options, many of which are similar with
only minor differences between them,
the risk of plan choice overload is
significantly exacerbated.
Similarly, in the proposed rule (87 FR
78280 through 78281), we noted that
during the standardized plan option
interested party engagement sessions we
conducted after publishing the 2023
Payment Notice, many participants
agreed that the number of plan options
was far too high and supported taking
additional action to prevent plan choice
overload. In short, many 2023 Payment
Notice commenters and interested party
engagement participants supported
limiting the number of nonstandardized plan options that issuers
can offer to streamline the plan
selection process for consumers on the
Exchanges.
In addition, we explained in the
proposed rule (87 FR 78281) that QHP
submission data supports the argument
that enacting such a limit would be
beneficial for consumers, noting that
there has been a sizeable increase in the
weighted average number of plans
available per enrollee and plans offered
per issuer in recent years. We refer
readers to the proposed rule further
discussion. With this continued plan
proliferation for both enrollees and
issuers, we explained that we believe
that limiting the number of nonstandardized plan options that FFE and
SBE–FP issuers of QHPs can offer
through the Exchanges beginning in PY
2024 could greatly enhance the
consumer experience on
HealthCare.gov.
We also stated in the proposed rule
(87 FR 78281) that to reduce the risk of
plan choice overload, we also
considered solely focusing on
enhancing choice architecture on
HealthCare.gov, instead of enhancing
choice architecture in conjunction with
limiting the number of nonstandardized plan options that issuers
can offer, an approach recommended by
several commenters in the 2023
Payment Notice. We explained that we
agree that enhancements to the
consumer experience on HealthCare.gov
are critical in ensuring that consumers
are able to more meaningfully compare
plan choices and more easily select a
health plan that meets their unique
health needs. As such, we stated that we
made several enhancements to
HealthCare.gov for the open enrollment
period for PY 2023. We also explained
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that we intend to continue conducting
research to inform further
enhancements to the consumer
experience on HealthCare.gov for PY
2024 and subsequent PYs.
That said, we explained that we
believe that enhancing choice
architecture on HealthCare.gov is
necessary but, alone, insufficient to
reduce the risk of plan choice overload
for several reasons. First, we stated that
HealthCare.gov is not the only pathway
for consumers to search for, compare,
select, and enroll in a QHP, and it is not
the only information resource
consumers seek when considering
Exchange coverage. Instead, we noted
that consumers shop through a
multitude of channels, sometimes
utilizing a mix of customer service
channels including the Marketplace Call
Center; online on HealthCare.gov;
through assisters, agents, and brokers;
and through certified enrollment
partners (such as Classic DE and EDE
web brokers and issuers). Thus, we
explained that we believe consumers
enrolling in QHPs through these
alternative pathways would not benefit
to the same degree as those enrolling
through HealthCare.gov if we focused
on reducing plan choice overload solely
by making enhancements to
HealthCare.gov. Moreover, considering
that an increasingly greater portion of
QHP enrollment is occurring through
these alternative enrollment pathways,
we explained that we believe a more
comprehensive approach to reducing
plan choice overload that would also
benefit those utilizing these alternative
enrollment pathways was required.
Furthermore, we explained that while
making enhancements to choice
architecture and the plan comparison
experience can play a critical role in
streamlining the plan selection process
and reducing the risk of plan choice
overload, the number of plans available
per enrollee has increased beyond a
number that is beneficial for consumers,
and this high number of plan choices
makes it increasingly difficult to
meaningfully manage choice
architecture on HealthCare.gov and
through other Exchange customer
service channels.
Relatedly, we explained that we
believe low-income consumers would
particularly benefit from a policy that
limits the number of plans. This is
because silver plans deliver the most
value to low-income consumers, but it
is exactly these consumers—who often
have the lowest health insurance
literacy—who now face choosing among
the highest number of near-duplicate
silver plans, which would continue
unless limits on the number of these
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plans are set. We also explained that
near-duplicate plans are the most
difficult to filter and sort out by
interface improvements, and would
therefore be most effectively addressed
by limiting the number of nonstandardized plan options.
As such, we explained that we believe
having an excessive number of plans
(particularly those at the silver metal
level) places an inequitable burden on
those who need insurance the most,
those who face the greatest challenges in
selecting the most suitable health plan,
and those who can least withstand the
consequences of choosing a plan that
costs too much and delivers too little.
For this reason, we explained that we
believe reducing the number of
available plans (particularly silver
plans) by limiting the number of nonstandardized plan options that issuers
can offer, can play an important role in
advancing the agency’s commitments to
health equity.
In short, we explained that we believe
limiting the number of nonstandardized plan options that issuers
can offer in conjunction with enhancing
the plan comparison experience on
HealthCare.gov would be the most
effective method to streamline the plan
selection process and to reduce the risk
of plan choice overload for consumers
on the HealthCare.gov Exchanges.
In addition, we proposed, as an
alternative to the proposal to limit the
number of non-standardized plan
options that an FFE or SBE–FP issuer
may offer on the Exchange, to impose a
new meaningful difference standard for
PY 2024 and subsequent PYs, which
would be more stringent than the
previous standard finalized in the 2015
and 2017 Payment Notices. Specifically,
instead of including all of the criteria
from the original standard from the 2015
Payment Notice (that is, cost sharing,
provider networks, covered benefits,
plan type, Health Savings Account
eligibility, or self-only, non-self-only, or
child only plan offerings), we proposed
grouping plans by issuer ID, county,
metal level, product network type, and
deductible integration type, and then
evaluating whether plans within each
group are ‘‘meaningfully different’’
based on differences in deductible
amounts.
We explained that with this proposed
approach, two plans would need to have
deductibles that differ by more than
$1,000 to satisfy the new proposed
meaningful difference standard. We
further explained that we believe
adopting this approach for a new
meaningful difference standard would
more effectively reduce the risk of plan
choice overload and streamline the plan
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selection process for consumers on the
Exchanges.
With a dollar deductible difference
threshold of $1,000, we estimated that
the weighted average number of nonstandardized plan options (which does
not take into consideration standardized
plan options) available to each
consumer would be reduced from
approximately 107.8 in PY 2022 to 53.2
in PY 2024, which we explained we
believe would still provide consumers
with a sufficient number of plan
offerings. In addition, we estimated that
of a total of 106,037 non-standardized
plan option plan-county combinations
offered in PY 2022, approximately
49,629 (46.8 percent) of these plancounty combinations would no longer
be permitted to be offered, which we
stated we believe would still provide
consumers with a sufficient degree of
choice during the plan selection
process.289 We estimated that if this
dollar deductible difference threshold
were adopted, of the approximately
10.21 million enrollees in the FFEs and
SBE–FPs in PY 2022, approximately
2.64 million (25.9 percent) of these
enrollees would have their current plan
offerings affected.290
We sought comment on the feasibility
and utility of limiting the number of
non-standardized plan options that FFE
and SBE–FP issuers can offer through
the Exchanges beginning in PY 2024.
We also sought comment on whether
the limit of two non-standardized plan
options per issuer, product network
type, and metal level in any service area
is the most appropriate approach, or if
a stricter or more relaxed limit should
be adopted instead. In addition, we
sought comment on the advantages and
disadvantages of utilizing a phased
approach of limiting the number of nonstandardized plan options (for example,
if there were a limit of three nonstandardized plan options per issuer,
product network type, metal level, and
service area for PY 2024, two for PY
2025, and one for PY 2026). We also
sought comment on the effect that
289 Plan-county combinations are the count of
unique plan ID and FIPS code combinations. This
measure was used because a single plan may be
available in multiple counties, and specific limits
on non-standardized plan options or specific dollar
deductible difference thresholds may have different
impacts on one county where there are four plans
of the same product network type and metal level
versus another county where there are only two
plans of the same product network type and metal
level, for example.
290 These calculations assumed that the nonstandardized plan options removed due to the
proposed limit would be those with the fewest
enrollees based on PY 2022 data, which includes
individual market medical QHPs for Exchanges
using the HealthCare.gov eligibility and enrollment
platform, including SBE–FPs.
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adopting such a limit would have on
particular product network types, and
whether this limit would cause a
proliferation of product network types
that are not actually differentiated for
consumers.
Furthermore, we sought comment on
whether we should consider additional
factors, such as variations of products or
networks, when limiting the number of
non-standardized plan options—which
would mean that issuers would be
limited to offering two non-standardized
plan options per product network type,
metal level, product, and network
variation (for example, by network ID)
in any service area (or some
combination thereof). We also sought
comment on whether permitting
additional variation only for specific
benefits, such as adult dental and adult
vision benefits, instead of permitting
any variation in a product (for example,
by product ID) would be more
appropriate.
In addition, we sought comment on
imposing a new meaningful difference
standard in place of limiting the number
of non-standardized plan options that
issuers can offer. We also sought
comment on additional or alternative
specific criteria that would be
appropriate to include in the
meaningful difference standard to
determine whether plans are
‘‘meaningfully different’’ from one
another, including whether the same
criteria and difference thresholds from
the original standard from the 2015
Payment Notice or the updated
difference thresholds from the 2017
Payment Notice should be instituted, or
some combination thereof. Finally, we
sought comment on the specific
deductible dollar difference thresholds
that would be appropriate to determine
whether plans are considered to be
‘‘meaningfully different’’ from other
plans in the same grouping, and
whether a deductible threshold of
$1,000 would be most appropriate and
effective, or if a stricter or more relaxed
threshold should be adopted instead.
After reviewing the public comments,
we are finalizing § 156.202 with
modification. Specifically, for PY 2024,
we are limiting the number of nonstandardized plan options that issuers of
QHPs can offer through Exchanges on
the Federal platform (including the
SBE–FPs) to four non-standardized plan
options per product network type, metal
level (excluding catastrophic plans), and
inclusion of dental and/or vision benefit
coverage, in any service area. For PY
2025 and subsequent plan years, we are
limiting the number of nonstandardized plan options that issuers of
QHPs can offer through Exchanges on
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the Federal platform (including the
SBE–FPs) to two non-standardized plan
options per product network type, metal
level (excluding catastrophic plans), and
inclusion of dental and/or vision benefit
coverage, in any service area.
We note that for PY 2024 and
subsequent PYs, we are permitting
additional flexibility specifically for
plans with additional dental and/or
vision benefit coverage. Under this
modified requirement for PY 2024, For
example, an issuer will be permitted to
offer four non-standardized gold HMOs
with no additional dental or vision
benefit coverage, four non-standardized
gold HMOs with additional dental
benefit coverage, four non-standardized
gold HMOs with additional vision
benefit coverage, and four nonstandardized gold HMOs with
additional dental and vision benefit
coverage, as well as four nonstandardized gold PPOs with no
additional dental or vision benefit
coverage, four non-standardized gold
PPOs with additional dental benefit
coverage, four non-standardized gold
PPOs with additional vision benefit
coverage, and four non-standardized
gold PPOs with additional dental and
vision benefit coverage, in the same
service area.
Under this modified requirement, for
PY 2025, for example, an issuer will be
permitted to offer two non-standardized
gold HMOs with no additional dental or
vision benefit coverage, two nonstandardized gold HMOs with
additional dental benefit coverage, two
non-standardized gold HMOs with
additional vision benefit coverage, and
two non-standardized gold HMOs with
additional dental and vision benefit
coverage, as well as two nonstandardized gold PPOs with no
additional dental or vision benefit
coverage, two non-standardized gold
PPOs with additional dental benefit
coverage, two non-standardized gold
PPOs with additional vision benefit
coverage, and two non-standardized
gold PPOs with additional dental and
vision benefit coverage, in the same
service area.
By finalizing the proposed policy
with modifications to increase the limit
on the number of non-standardized plan
options that issuers can offer to four
instead of two for PY 2024, and to factor
the inclusion of dental and/or vision
benefit coverage into this limit, we
estimate (based on PY 2023 enrollment
and plan offering data) that the
weighted average number of nonstandardized plan options available to
each consumer will be reduced from
approximately 89.5 in PY 2023 to 66.3
in PY 2024, while the weighted average
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total number of plans (which includes
both standardized and non-standardized
plan options) available to each
consumer will be reduced from
approximately 113.7 in PY 2023 to 90.5
in PY 2024.
Furthermore, we estimate that
approximately 17,532 of the total
101,453 non-standardized plan option
plan-county combinations (17.3 percent)
will be discontinued as a result of this
limit in PY 2024. Relatedly, we estimate
that approximately 0.81 million of the
12.2 million enrollees on the FFEs and
SBE–FPs (6.6 percent) will be affected
by these discontinuations in PY 2024.
Finally, in terms of the impact on
network availability, for PY 2024, we
estimate an average reduction of only
0.03 network IDs per issuer, product
network type, metal level, and service
area, meaning we anticipate network IDs
to remain largely unaffected by this
limit for PY 2024.
We note that, for PY 2025, we are
unable to provide meaningful estimates
at this time for the weighted average
number of non-standardized plan
options available to each consumer; the
weighted average number of total plans
available to each consumer; the number
of plan-county discontinuations; the
number of affected enrollees; and the
average reduction of network IDs per
issuer, product network type, metal
level, and service area under the limit
of two non-standardized plan options
per issuer, product network type, metal
level, inclusion of dental and/or vision
benefit, and service area.
For these estimates to be meaningful,
they will need to be based on plan
offering and enrollment data for PY
2024, which will not be available until
the end of the current QHP certification
cycle for PY 2024 and the end of the
2024 OEP, respectively. We anticipate
that the broader landscape of plan
offerings as well as the composition of
individual issuers’ portfolios of plan
offerings will undergo significant
changes as a result of the limit of four
non-standardized plan options in PY
2024, and that any estimates based on
data sourced from a plan year before
this limit is enacted would not be
meaningfully predictive of the
landscape of plan offerings or
individual issuers’ portfolios of plan
offerings for a plan year after this limit
is enacted.
Furthermore, these estimates would
not be able to take into account the
exceptions process we intend to propose
that would allow issuers to offer nonstandardized plan options in excess of
the limit of two for PY 2025 and
subsequent plan years, because we
intend to propose the exceptions
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process, as well as the specific criteria
and thresholds to be included in this
exceptions process, in the 2025 Payment
Notice proposed rule, and we do not yet
know whether or how such a proposal
would be finalized.
We also offer further clarification
regarding the specific dental and/or
vision benefit coverage a nonstandardized plan option would need to
include in order to qualify for this
additional flexibility, which is also
reflected in the finalized regulation text
at § 156.202(c). Specifically, we clarify
that a non-standardized plan option
must include any or all of the following
adult dental benefit coverage in the
‘‘Benefits’’ column in the Plans and
Benefits Template: (1) Routine Dental
Services (Adult), (2) Basic Dental Care—
Adult, or (3) Major Dental Care—Adult.
We also clarify that a non-standardized
plan option must include any or all of
the following pediatric dental benefit
coverage in the ‘‘Benefits’’ column in
the Plans and Benefits Template: (1)
Dental Check-Up for Children, (2) Basic
Dental Care—Child, or (3) Major Dental
Care—Child. Finally, we clarify that a
non-standardized plan option must
include the following adult vision
benefit coverage in the ‘‘Benefits’’
column in the Plans and Benefits
Template: Routine Eye Exam (Adult).
We are making these modifications
primarily to decrease the risk of
disruption for both issuers and
enrollees, and to provide increased
flexibility to issuers. Specifically, many
commenters supported adopting a more
gradual approach in which the number
of non-standardized plan options that
issuers can offer is gradually decreased
over a span of several plan years,
instead of directly adopting a limit of
two for PY 2024. Additionally,
regarding the modification to factor the
inclusion of dental and/or vision
benefits into this limit, Issuers have
frequently offered these specific benefit
categories as additional benefits in
otherwise identical plan options,
accounting for the vast majority of
product ID-based variation
(approximately 84 percent of such
variation) offered by issuers within a
given metal level, network type, and
service area in PY 2022.
We are not finalizing a new
meaningful difference standard. We
summarize and respond to public
comments received on the proposed
non-standardized plan option limits and
the alternative meaningful difference
standard below.
Comment: Many commenters agreed
that the number of plan choices
available through the Exchanges has
increased to a point that is beyond
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productive for consumers, and many
commenters agreed that additional
action should be taken to reduce the risk
of plan choice overload. As such, many
of these commenters supported directly
limiting the number of nonstandardized plan options that issuers
can offer. These commenters explained
that adopting this specific approach to
reduce the risk of plan choice overload
would be most effective in further
simplifying and streamlining the
Exchange experience, aligning with
some of the primary goals of the
Exchanges—fostering competition
among issuers and facilitating a
consumer-friendly experience for
individuals looking to purchase health
insurance.
As commenters further explained,
limiting the number of nonstandardized plan options is especially
important at this time because many
consumers currently face an
overwhelming number of health plans
to choose from on the Exchanges, and
these consumers must navigate the
complexity of each of these options to
be able to select a health plan that meets
their unique health care needs and
budgetary realities.
Commenters explained that having an
overwhelming number of options makes
it difficult to easily and meaningfully
compare all available options, which
increases the risk of plan choice
overload and suboptimal plan selection
as well as the risk of unexpected
financial harm, especially for consumers
with a lower degree of health care
literacy. Commenters thus explained
that limiting the number of nonstandardized plan options would allow
consumers to more easily and
meaningfully compare available plan
options and select a plan that best meets
their unique health care needs, which
would particularly benefit those with
lower degrees of health care literacy and
those most at risk of unexpected
financial harm.
Several commenters also pointed to
the fact that several SBEs have
successfully limited the number of nonstandardized plan options that issuers
can offer as evidence that adopting such
a policy would benefit consumers in
States with an FFE or SBE–FP. Several
commenters also explained that
codifying this requirement would serve
as a helpful template for consideration
by SBEs that do not currently limit the
number of non-standardized plan
options but may be interested in doing
so in the future.
Response: We agree that the risk of
plan choice overload has continued to
increase over the last several years and
that additional action should be taken to
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reduce this risk. We also agree that
limiting the number of nonstandardized plan options that issuers
can offer is the most effective strategy to
mitigate this risk, especially when done
in conjunction with requiring issuers to
offer standardized plan options and
enhancing choice architecture on
HealthCare.gov.
Specifically, we agree that these limits
will allow consumers to more
meaningfully compare available plan
options and select a health plan that
best meets their unique health needs.
These limits will also allow consumers
to take more factors into consideration
when comparing and selecting a health
plan—such as providers, networks,
formularies, and quality ratings. We also
agree that these changes would reduce
the risk of suboptimal plan selection,
which would greatly benefit
disadvantaged populations who can
least afford experiencing unexpected
financial harm.
Comment: Several commenters
opposed limiting the number of nonstandardized plan options that issuers
can offer. Several of these commenters
explained that limiting the number of
these plans would impose a significant
burden on issuers as they develop
product portfolios for PY 2024. These
commenters explained that issuers have
already made strategic decisions about
plan offerings and participation, and
that finalizing these changes for PY
2024 would result in significant
operational challenges. These
commenters also expressed concern that
we are proposing the concurrent
implementation of multiple substantive
provisions—such as changes to the reenrollment hierarchy and changes to
standardized plan option formulary
tiering—that would be extremely
disruptive if finalized simultaneously.
Many commenters also explained that
a significant number of Exchange
enrollees would lose access to the plans
they are currently enrolled in and
would consequently be relegated to
enrollment in plans they did not choose.
Many of these commenters pointed to
the estimate that this provision would
force 2.72 million enrollees on the FFE
and SBE–FPs (26.6 percent of total
enrollees) to change plans due to plan
discontinuations in PY 2024. Many of
these commenters explained that these
plan discontinuations would put
consumers at risk of unexpected
financial harm, such as from changing
the cost-sharing structure, formularies,
or networks from the plans they are
currently enrolled in.
Many commenters also explained that
these plan discontinuations would come
at a time when issuers will be preparing
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for and processing a deluge of Medicaid
redeterminations with the unwinding of
the Public Health Emergency.
Commenters explained that
approximately 10 million current
Medicaid enrollees will be eligible for
other forms of coverage, including
approximately one million of these
enrollees who are expected to be eligible
for Exchange coverage. Commenters
explained that for this reason, the
Exchanges need to be prepared for a
massive influx of enrollees over the
coming months, and that major policy
changes could cause severe disruption
for both consumers and issuers at a
critical time.
Commenters also explained that
limiting the number of nonstandardized plan options that issuers
can offer would inhibit issuer
innovation and force issuers to
drastically reduce the unique plan
designs they have thoughtfully
developed to best serve their members’
health care needs, which would in turn
force consumers into a ‘‘one-size fits
all’’ benefit offering.
Many commenters also explained
how limiting the number of nonstandardized plan options that issuers
can offer would have unintended
impacts on provider networks. These
commenters explained that many
issuers would likely drop plans with
broader networks to maintain
competitive plan premiums, which
would ultimately move the market in
the direction of plans with restricted
provider networks. Commenters further
explained that this change could result
in further disruption and the loss of
providers consumers are accustomed to.
Commenters also explained that there
are consumers who are well-served by
smaller, less expensive networks, and
there are consumers who are willing to
pay more for a larger of pool of
providers and facilities—and that both
groups deserve the same access to plan
choice.
Several commenters also explained
that the proposed limit would
negatively impact HSA-eligible highdeductible health plan (HDHP) offerings
since issuers would likely discontinue
these plan offerings due to low
enrollment if non-standardized plan
options were limited. Thus, several
commenters recommended that HSAeligible HDHPs be exempt from these
limits.
Several commenters pointed to other
health coverage options, such as
Medicare Advantage, which do not limit
the number of plans an issuer can offer.
These commenters explained that, in
2022, Medicare beneficiaries had a
choice of 23 stand-alone Medicare Part
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D plans and 31 Medicare Advantage
plans offering Part D, on average.
Similarly, these commenters explained
that in 2023, Medicare beneficiaries had
a choice of 43 Medicare Advantage
plans, on average.
Several commenters also explained
that although the proposed limits may
be appropriate for geographic areas with
high rates of both issuer participation
and plan choice proliferation, these
limits would not be appropriate for
geographic areas with lower rates of
issuers participation and a more
restricted range of plan offerings. These
commenters explained that several
States have service areas with only one
issuer and a limited number of plan
offerings, and that these limits would
severely restrict consumer choice in
these counties.
Several commenters also explained
that limiting the number of nonstandardized plan options that issuers
can offer could discourage new market
entrants and disadvantage smaller
issuers since larger holding companies
operating multiple issuers would still be
able to have each issuer offer its own
non-standardized plan options.
Response: We disagree that issuers
will have insufficient time to
operationalize these changes, as we
have regularly issued new requirements
for the following plan year in that plan
year’s Payment Notice, as we are doing
here. Additionally, although we
acknowledge that the termination of
numerous non-standardized plan
options would entail burden for issuers
(such as by affecting issuers’ balance of
enrollment across plans, by affecting the
premium rating for each of those plans,
and by requiring issuers to send
discontinuation notices for enrollees
whose plans are being discontinued),
we believe that the advantages of
enacting these changes outweigh the
disadvantages of doing so.
Specifically, with plan proliferation
continuing unabated for several years,
consumers have had to select from
among record numbers of available plan
options. Having such high numbers of
plan choices to select from makes it
increasingly difficult for consumers,
especially those with lower rates of
health care literacy, to easily and
meaningfully compare all available plan
options. This subsequently increases the
risk of suboptimal plan selection and
unexpected financial harm for those
who can least afford it. Thus, although
we acknowledge the burden imposed on
issuers subsequent to the imposition of
these limits in PY 2024, we believe
these changes align with the original
intent of the Exchanges—to facilitate a
consumer-friendly experience for
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individuals looking to purchase health
insurance. We believe this change will
continue to benefit consumers on the
Exchanges over numerous years. We
further note that we intend to offer the
necessary guidance and technical
assistance to facilitate this transition,
such as through the 2024 Letter to
Issuers and QHP certification webinars.
Furthermore, based on PY 2022 QHP
submission and enrollment data, we
have determined that each issuer’s
enrollment is predominately
concentrated among its top several plan
offerings per product network type and
metal level, with the smaller remaining
portion of enrollment distributed more
evenly among several plans.
Specifically, we determined that, on
average, 71 percent of each issuer’s
enrollment is concentrated among its
top two plan offerings per product
network type and metal level, and 83
percent of each issuer’s enrollment is
concentrated among its top three plan
offerings per product network type and
metal level—meaning that the
remaining portion of each issuer’s
enrollment is more evenly distributed
among issuer’s less popular offerings.
As such, we believe making these
changes will simply concentrate
enrollment among each issuer’s top
current plan offerings.
We also acknowledge that, as a result
of limiting the number of nonstandardized plan options, a significant
number of consumers will have the
plans they are currently enrolled in
discontinued and will as a result be
auto-reenrolled into another nonstandardized plan option or
standardized plan option offered by the
issuer—similar to how this scenario
would be handled prior to the
imposition of these new requirements
under the existing reenrollment
hierarchy. We believe affected enrollees
auto-reenrolled into standardized plan
options would benefit from the several
important distinctive features, such as
enhanced pre-deductible coverage and
copayments instead of coinsurance rates
for a broad range of benefit categories,
that serve as important forms of
consumer protection. Furthermore,
these standardized plan options were
designed to incorporate design features
that reflect the most popular current
QHP offerings that millions of enrollees
are already accustomed to. As such, we
believe affected enrollees autoreenrolled into standardized plan
options will not experience disruption
since these standardized plan options
will not differ substantially from the
discontinued plans that the majority of
consumers are currently enrolled in.
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Additionally, many commenters
explained that a large number of current
non-standardized plan option offerings
differ in only minor ways from one
another, and that consumers are often
unaware of these minor differences.
Thus, in the scenario that affected
enrollees are auto-reenrolled into a nonstandardized plan option (instead of a
standardized plan option), we believe
that the new plans these affected
enrollees will be auto-reenrolled into
will not differ significantly from the
plan they are currently enrolled in.
Thus, in short, we believe that the
majority of affected enrollees would not
experience significant disruption if they
were crosswalked into either equivalent
standardized plan option offerings or
other non-standardized plan offerings.
We also note that enrollees dissatisfied
with the plan they are re-enrolled in
will have the option to actively select a
different plan offering for PY 2024, if
desired.
We also note that phasing in the
reduction in the number of nonstandardized plan options that issuers
can offer, beginning with four for PY
2024, will also significantly reduce the
number of plan discontinuations and
affected enrollees for PY 2024.
Specifically, based on PY 2022 data, we
originally estimated that a limit of two
non-standardized plan options would
result in approximately 60,949 of a total
106,037 non-standardized plan option
plan-county combinations (57.5 percent)
being discontinued, and approximately
2.72 million of the 10.21 million
enrollees in the FFEs and SBE–FPs (26.6
percent) being affected. That said, under
the limit of four non-standardized plan
options that we are finalizing in this
rule for PY 2024, based on PY 2023
data, we estimate that approximately
17,532 of the total 101,453 nonstandardized plan option plan-county
combinations (17.3 percent) will be
discontinued as a result of this limit,
and approximately 0.81 million of the
12.2 million enrollees on the FFEs and
SBE–FPs (6.6 percent) will be affected
by these discontinuations in PY 2024.
We anticipate that reducing the limit
on non-standardized plan options from
four in PY 2024 to two in PY 2025 and
subsequent plan years will result in
additional plan-county discontinuations
and affected enrollees in PY 2025. That
said, as described previously, we are
unable to provide meaningful estimates
for these plan-county discontinuations
and affected enrollees for PY 2025 at
this time due to PY 2024 plan offering
and enrollment data limitations. In
addition, as discussed previously, these
estimates would not be able to take into
account the exceptions process we
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intend to propose that would allow
issuers to offer non-standardized plan
options in excess of the limit of two for
PY 2025 and subsequent plan years,
because we intend to propose the
exceptions process, as well as the
specific criteria and thresholds to be
included in this exceptions process, in
the 2025 Payment Notice proposed rule,
and we do not yet know whether or how
such a proposal would be finalized.
We also clarify that the same rules
and processes regarding binder
payments for scenarios unrelated to
non-standardized plan option limits (for
example, scenarios from previous years
where a particular plan offering is
discontinued, and affected enrollees are
auto-reenrolled from the discontinued
plan into a different plan offered by the
same issuer) apply to non-standardized
plan option limit scenarios. Specifically,
we clarify that for such renewals of
effectuated coverage, a binder payment
is not required, as the renewal is a
continuation of effectuated coverage,
and no new effectuation is required. The
Exchanges on the Federal platform also
do not require a binder payment for
passive re-enrollments that continue
effectuated coverage in another plan
within the same product (or to a
different plan in a different product
offered by the same issuer, if the current
product will no longer be available to
the enrollee, consistent with the
hierarchy for reenrollment specified at
§ 155.335(j)(2)) for the same subscriber.
This means, when consumers are
auto-reenrolled into another nonstandardized plan option or
standardized plan option as a result of
limiting the number of nonstandardized plan options, no binder
payment is required when subscribers
in already effectuated policies are autoreenrolled into coverage offered by the
same issuer. If, however, the enrollee
were to be moved into a plan from a
different issuer, a binder payment
would be required. Alternate
enrollments, for QHP enrollees whose
current year coverage is no longer
available through the Exchange and for
whom a plan offered by a different
issuer is selected, are new enrollments,
not renewals, and thus require a binder
payment to effectuate.
We also acknowledge that a
significant number of consumers will be
affected by Medicaid eligibility
redeterminations and will likely seek
Exchange coverage as a result in PY
2024. We believe this timing offers a
unique opportunity to help ensure that
these consumers are able to
meaningfully compare available plan
options, select a health plan that best
meets their health needs, and weigh
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standardized plan design features such
as enhanced pre-deductible coverage for
a greater number of benefits, enhanced
price predictability in the form of
copayments over coinsurance for a
range of benefit categories, and
copayments for all tiers of prescription
drug coverage—including the nonpreferred brand and specialty tiers,
which are several relatively uncommon
plan design features.
We disagree that these limits will
inhibit issuer innovation and
unnecessarily constrain consumer
choice. In PY 2024, issuers will still
retain the ability to offer at least five
plans per product network type, metal
level, and service area—four nonstandardized plan options and at least
one standardized plan option—such
that issuers will continue to retain the
ability to innovate in plan designs. This
figure does not include the additional
flexibility permitted for plans that
include dental and/or vision benefit
coverage, nor does it include
catastrophic plans, which will allow
issuers to offer additional plans beyond
the five per product network type, metal
level, and service area.
Under our incremental approach to
phasing in limits to non-standardized
plan options, in PY 2025 and
subsequent plan years, issuers will
retain the ability to offer at least three
plans per product network type, metal
level, and service area—two nonstandardized plan options and at least
one standardized plan option—such
that issuers will continue to retain the
ability to innovate in plan designs.
Similar to PY 2024, this figure does not
include the additional flexibility
permitted for plans that include dental
and/or vision benefit coverage, nor does
it include catastrophic plans, which
would allow issuers to offer additional
plans beyond the three per product
network type, metal level, and service
area. As noted, we also intend to
propose an exceptions process in the
2025 Payment Notice proposed rule that
could, if finalized, further expand this
range of possible plan offerings in PY
2025 and subsequent plan years.
Moreover, we reiterate that issuers are
not limited in the number of
standardized plan options that they can
offer and thus retain the ability to
innovate in their standardized plan
options, so long as this innovation
conforms with the required cost-sharing
specifications. As previously discussed,
we also believe that limiting the number
of non-standardized plan options
reduces the risk of plan choice overload,
which actually enhances the plan
selection process by making it easier to
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more meaningfully compare available
options.
Furthermore, we believe that, even
with the limit on the number of nonstandardized plan options an issuer may
offer, the expected weighted average
number of plan offerings available to
each enrollee will remain sufficiently
high to permit a satisfactory degree of
choice. The limit being finalized in this
rule is estimated to reduce the weighted
average number of total plan offerings
(which includes both standardized and
non-standardized plan options
offerings) from approximately 113.7 in
PY 2023 to 90.5 in PY 2024, meaning
consumers will continue to have more
than enough plan choices to select from
among. Even under the originally
proposed limit of two non-standardized
plan options per issuer, product
network, type, metal level, inclusion of
dental and/or vision benefits, and
service area (which will be the limit for
PY 2025 and subsequent plan years), we
estimate that the weighted average
number of total plan offerings available
to each consumer will be 65.3—which
will still permit a sufficient degree of
consumer choice.
Similarly, we believe this flexibility
will ensure that enrollees continue to
have access to a sufficiently wide range
of networks, ranging from broader and
more encompassing networks with
larger pools of providers and facilities to
narrower and less expansive networks
with smaller pools of providers and
facilities. Additionally, as previously
described, for PY 2024, we estimate an
average reduction of only 0.03 network
IDs per issuer, product network type,
metal level, and service area
combination, meaning we anticipate
network IDs to remain largely
unaffected by this limit for PY 2024.
Furthermore, we once more reiterate
that issuers are not limited in the
number of standardized plan options
that they can offer and thus retain the
ability to continue to offer these
network variations in their standardized
plan options, if so desired.
While we acknowledge that this limit
may affect HSA-eligible HDHP offerings,
we do not believe that an exception to
the limit is warranted for these plan
offerings as there has been a steady
decrease in both the proportion of HSAeligible HDHP offerings and enrollment
in these plan offerings (especially at the
silver, gold, and platinum metal levels)
over the past several years. The
proportion of total plan offerings that
are HSA-eligible HDHPs has decreased
from 7 percent in PY 2019 to 3 percent
in PY 2023. Most of these remaining
plans are offered at the bronze metal
level, with HSA-eligible HDHP offerings
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constituting 14 percent of plan offerings
at the bronze metal level in PY 2023
(and 2 percent, 1 percent, and 0 percent
at the non-CSR silver, gold, and
platinum metal levels in the same year,
respectively).
Total enrollment in these plans has
decreased from 8 percent in PY 2019 to
5 percent in PY 2022. Similar to the PY
2023 plan offering data, most of this
enrollment is concentrated at the bronze
metal level, with HSA-eligible HDHPs
constituting 14% of enrollment at the
bronze metal level in PY 2022 (and 2
percent, 2 percent, and 0 percent at the
non-CSR silver, gold, and platinum
metal levels in the same year,
respectively). We believe the fact that
there is a steadily decreasing number of
issuers choosing to offer these plans, as
well as a steadily decreasing number of
consumers choosing to enroll in these
plans, reflects both issuer and consumer
preference evolving away from these
types of plan offerings.
Furthermore, due to severe AV
constraints at the bronze metal level,
issuers are significantly constrained in
how they are able to design their plan
offerings at this metal level. This is
especially true for the non-expanded
bronze metal level, in which it is not
possible to include any pre-deductible
coverage while maintaining an AV
inside the permissible AV de minimis
range—which is also the main reason
we excluded a standardized plan design
for the non-expanded bronze metal level
in each set of the plan designs for PY
2024 finalized in this rule. This means
that issuers of plans at the bronze metal
level do not have as much leeway to
vary their plan offerings compared to
offering plans at other metal levels that
do not have as severe AV constraints—
such as the silver, gold, and platinum
metal levels.
With issuers subject to these severe
AV constraints at the bronze metal level
in particular, and with the ability of
issuers to vary plan designs at the
bronze metal level significantly limited,
we believe the four-plan limit in PY
2024 and the two-plan limit in PY 2025
and subsequent plan years (per product
network type, metal level, inclusion of
dental and/or vision benefit, and service
area) will satisfactorily accommodate
the full scope of plans that issuers wish
to offer, including HSA-eligible HDHPs
(at the bronze metal level, where the
majority of these plans are offered). We
encourage issuers to offer an HSAeligible HDHP at the bronze metal level
as one of their plan designs, if so
desired.
We also acknowledge that issuers that
offer Medicare Advantage plans are not
limited in the number of plans they can
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offer. That said, the average number of
plans that Medicare beneficiaries had
access to in PY 2023 is still lower than
the estimated weighted average number
of total plan offerings that Exchange
consumers would have to choose from
with the limit we are finalizing on nonstandardized plan options for both PY
2024 and PY 2025 and subsequent plan
years.
In addition, we acknowledge that
different States and counties have
differing rates of issuer participation,
and thus, differing rates of plan choice
proliferation. Thus, we acknowledge
that the risk of plan choice overload is
more pronounced in certain counties
than others. That said, we believe the
limit of four non-standardized plan
options for PY 2024 and the limit of two
non-standardized plan options for PY
2025 and subsequent years (with
additional flexibility permitted for plans
with additional dental and vision
benefits, and subject to a potential
exceptions process for the limit of two
non-standardized plan options
beginning in PY 2025—which we intend
to propose in the 2025 Payment Notice
proposed rule) strikes an appropriate
balance in reducing the risk of plan
choice overload and preserving a
sufficient degree of consumer choice,
even for consumers in counties with
lower rates of issuer participation.
For example, even in counties that
have only two issuers, with each issuer
seeking to offer the maximum number of
plans possible under the limit we are
finalizing, consumers in PY 2024 would
still theoretically have the ability to
select from at least five plans per issuer,
product network type, and metal level—
four of which would be nonstandardized, and at least one of which
would be standardized. In this scenario,
if both of these issuers offered both PPO
and HMO versions of these plans, they
could each theoretically offer at a
minimum, ten expanded bronze plans,
ten silver plans (not including CSR
silver plans), ten gold plans, and ten
platinum plans, if desired, meaning the
total number of plan offerings available
to consumers in that county will be 20
per metal level, and 80 altogether. In
this scenario, the number of plans could
conceivably be higher if both issuers
offered more than one standardized plan
option per product network type and
metal level, higher yet if issuers offer
additional plan variations of nonstandardized plan options with dental
and/or vision benefit coverage, and
higher yet if issuers choose to also offer
catastrophic plans.
Similarly, under a non-standardized
plan option limit of two, consumers in
PY 2025 will still theoretically have the
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ability to select from at least three plans
per issuer, product network type, and
metal level—two of which will be nonstandardized, and at least one of which
will be standardized. In this scenario, if
both of these issuers offered both PPO
and HMO versions of these plans, they
could each theoretically offer at a
minimum, six expanded bronze plans,
six silver plans (not including CSR
silver plans), six gold plans, and six
platinum plans, if desired, meaning the
total number of plan offerings available
to consumers in that county would be
12 per metal level, and 48 altogether.
Similar to PY 2024, In this scenario, the
number of plans could conceivably be
higher if both issuers offered more than
one standardized plan option per
product network type and metal level,
higher yet if issuers offer additional
plan variations of non-standardized
plan options with dental or vision
benefit coverage, and higher yet if
issuers choose to also offer catastrophic
plans.
We also acknowledge that there could
potentially be scenarios in which
counties have a single issuer not seeking
to offer the maximum number of plans
possible under this limit and instead
chooses to offer no non-standardized
plan options (since these plans are not
required to be offered). In this scenario,
an issuer could theoretically choose to
only offer plans of one product network
type at only the required metal levels
(silver and gold), which would mean
that there would only be two plan
offerings in that particular county (for
example, standardized silver HMO and
standardized gold HMO). This will be
true for both PY 2024 (when the limit
is four non-standardized plan options)
and for PY 2025 (when the limit is two
non-standardized plan options), since
the issuer in this scenario would be
offering the bare minimum number of
plans, and will therefore not be affected
by the maximum limit on the number of
non-standardized plan options, whether
four or two.
Though we discourage such an
approach, we believe this scenario
would not differ substantially from the
scenario before standardized plan
option requirements were introduced.
For example, if that same issuer, prior
to the imposition of the standardized
plan option requirements, chose to offer
the minimum number of plans in a
particular service area (specifically, one
non-standardized silver HMO and one
non-standardized gold HMO), then in
PY 2023 also began to offer one
standardized silver HMO and one
standardized gold HMO, then in PY
2024 discontinued the non-standardized
silver and gold HMOs, then consumers
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would have access to the same number
of plans they did in PY 2022, before
either standardized plan option
requirements and non-standardized
plan option limits were enacted. Similar
to the previous discussion, this would
also be true whether the limit on the
number of non-standardized plan
options is four in PY 2024 or two in PY
2025.
Furthermore, we disagree that
limiting the number of nonstandardized plan options that issuers
can offer will discourage new market
entrants and disadvantage smaller
issuers since larger holding companies
operating multiple issuers would still be
able to have each issuer offer its own
non-standardized plan options. To the
contrary, we believe that limiting nonstandardized plan options—in
conjunction with requiring issuers to
offer standardized plan options—can
serve to even the playing field between
larger and more well-established issuers
and smaller issuers newer to the market,
because all issuers will be required to
offer plans with standardized cost
sharing for a key set of EHB, and issuers
will no longer be permitted to flood the
market with plans with only minor
differences between them.
Comment: Several commenters
supported a limit of either two or four
non-standardized plan options per
product network type, metal level, and
service area, while others recommended
adopting a slightly looser or stricter
limit, including for only particular
metal levels. Several commenters
recommended not permitting additional
variation only for specific benefits such
as adult dental and adult vision benefits
because doing so would likely cause
confusion for consumers as to their
options to obtain such benefits through
medical QHPs or stand-alone dental or
vision plans. Several other commenters
recommended taking additional factors
into account for any limit, such as
particular networks (instead of product
network types) and particular benefit
packages (in the form of product IDs)—
such that issuers would be permitted to
offer two non-standardized plan options
per product ID, network ID, metal level,
and service area, for example.
Response: We believe that finalizing a
limit for PY 2024 of four nonstandardized plan options and a limit
for PY 2025 and subsequent plan years
of two non-standardized plan options
per product network type, metal level,
inclusion of dental and/or vision benefit
coverage, and service area strikes an
appropriate balance between
simplifying the plan selection process
and maintaining a sufficient degree of
consumer choice. We believe that
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25863
adopting this more gradual approach, as
opposed to directly limiting the number
of non-standardized plan options to two
in PY 2024, also facilitates this
transition and reduces the risk of
disruption for both issuers and
enrollees.
We also believe that providing
advance notice of the eventual
transition to the limit of two nonstandardized plan options in PY 2025
and subsequent plan years will allow
issuers additional time to prepare for
the two-plan limit. We further believe
that permitting additional variations
specifically for non-standardized plan
options with the inclusion of dental
and/or vision benefit coverage—instead
of, for example, permitting additional
variation for any single change in the
product package, however small—
decreases the likelihood that these
limits will be circumvented. Permitting
additional flexibility for any single
change in the product package (such as
only including one additional
infrequently utilized benefit) would
allow issuers to continue to offer as
many non-standardized plan options as
desired simply by adding a single
benefit to these additional plans, which
would run counter to the goal of
reducing the risk of plan choice
overload.
We also believe that permitting
issuers to offer a total of at least five
plans in PY 2024—four nonstandardized and at least one
standardized—per product network
type, metal level, and inclusion of
dental and/or vision benefit coverage, in
any service area will allow issuers to
offer at least five different networks per
product network type, metal level, and
inclusion of dental and/or vision benefit
coverage, in any service area, a number
we believe provides a sufficient degree
of flexibility for issuers and choice for
consumers.
Similarly, we believe that permitting
issuers to offer a total of at least three
plans in PY 2025 and subsequent plan
years—two non-standardized and at
least one standardized—per product
network type, metal level, and inclusion
of dental and/or vision benefit coverage,
in any service area will allow issuers to
offer at least three different networks
per product network type, metal level,
and inclusion of dental and/or vision
benefit coverage, in any service area, a
number we believe provides a sufficient
degree of flexibility for issuers and
choice for consumers.
Comment: Several commenters
recommended either applying limits to
non-standardized plan options or
imposing a meaningful difference
standard to issuers in SBEs in addition
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to issuers in the FFEs and SBE–FPs.
However, one commenter opposed
applying limits to the number of nonstandardized plan options and imposing
a meaningful difference standard to
issuers in SBE–FPs, explaining that
SBE–FPs are similarly positioned to
SBEs and should thus also be exempt
from these requirements.
Response: Similar to our approach
with respect to standardized plan
options in the 2023 Payment Notice, we
did not propose to limit the number of
non-standardized plan options that
issuers can offer through SBEs for
several reasons, including that several
SBEs already impose such limits. As
such, we believe imposing duplicative
requirements on issuers in SBEs that are
already limited in the number of nonstandardized plan options they can offer
could create contradictory requirements
that misalign with existing State
requirements.
We also believe that SBEs are
uniquely positioned to best understand
the nature of their respective markets as
well as the consumers in these markets.
Furthermore, as we explained in the
proposed rule, as well as in the 2023
Payment Notice, we believe States that
have invested the necessary time and
resources to become SBEs have done so
in order to implement innovative
policies that differ from those on the
FFEs. We explained that we do not wish
to impede these innovative policies so
long as they comply with existing legal
requirements.
However, as we explained in the
proposed rule, as well as in the 2023
Payment Notice, because we impose this
requirement in the FFEs, and because
the SBE–FPs use the same platform as
the FFEs, we believe it is appropriate to
apply these requirements equally on
FFEs and SBE–FPs. We believe that
changing the platform to permit
distinction on this policy between FFEs
and SBE–FPs would require a very
substantial financial and operational
burden to HHS that we believe
outweighs the benefit of permitting such
a distinction. Finally, States with SBE–
FPs that do not wish to be subject to
these requirements may investigate the
feasibility of transitioning to an SBE.
Comment: Many commenters who
were concerned with the proliferation of
seemingly similar plans and the
consequent increased risk of plan choice
overload but were opposed to limits on
non-standardized plan options
recommended implementing a
meaningful difference standard. These
commenters explained that
implementing a meaningful difference
standard would strike a more
appropriate balance in reducing the risk
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of plan choice overload while
simultaneously preserving a sufficient
degree of consumer choice. These
commenters also explained that
adopting this approach would be a more
effective mechanism in ensuring that
plans are not duplicative and are
instead meaningfully different from one
another without inhibiting issuer
innovation in plan design.
Commenters also had a range of
recommendations for a meaningful
difference standard. Several
commenters suggested decreasing the
deductible dollar difference threshold
from the proposed $1,000 to $500,
explaining that requiring a deductible
difference of $1,000 would be too high
to account for consumer preference.
Several commenters recommended
adopting a version of the meaningful
difference standard more closely aligned
with the previous iteration of the
meaningful difference standard. Several
commenters recommended taking more
factors into account when determining
whether plans are meaningfully
different from one another, such as
differences in covered specific benefits
(such as dental or vision benefits),
differences in product packages,
differences in cost-sharing (such as the
percentage of pre-deductible services),
differences in provider network (such as
if there is a reasonable difference in the
size of the network or a reasonable
percentage of providers who are
different between networks), differences
in network ID, differences in product
network type, and HSA-compatibility.
Response: We believe that directly
limiting the number of nonstandardized plan options to four for PY
2024 and two for PY 2025 and
subsequent years per issuer, product
network type, metal level, and inclusion
of dental and/or vision benefit coverage,
in any service area, is a more effective
mechanism at this particular time to
reduce plan choice proliferation and to
reduce the risk of plan choice overload
for several reasons.
First, we believe the increased
complexity associated with a
meaningful difference standard that
effectively reduces duplicative plan
offerings as well as the risk of plan
choice overload would be more difficult
for issuers to understand and
operationalize. We believe that direct
limits on the number of nonstandardized plan options that issuers
can offer is a more straightforward
approach. We also believe that the
increased complexity associated with
creating and operationalizing a
meaningful difference standard (that
takes multiple factors into account
when determining whether plans are
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meaningfully different from one
another) creates the risk of
unintentionally allowing
circumvention, which would decrease
the efficacy of this mechanism.
Furthermore, we do not wish to cause
unintended consequences to plan
designs by requiring plans to have
deductible differences of $1,000 or
more—which would influence issuers to
systematically increase cost-sharing for
particular benefits to meet such
meaningful difference standards or to
systematically subject particular
benefits to the deductible, which could
potentially increase the risk of
discriminatory benefit designs. That
said, we note that we intend to further
investigate the feasibility and
appropriateness of employing this
mechanism in a future year.
Comment: Several commenters
requested clarification that any product
or plan mapping necessary due to nonstandardized plan option
discontinuations would satisfy the
exception to guaranteed renewability for
uniform modifications of coverage at
renewal due to modification in Federal
requirements under §§ 147.106(e)(2) and
148.122(g)(2).
Response: The guaranteed
renewability requirements at section
2703 of the PHS Act and § 147.106 (as
well as parallel provisions at §§ 146.152
and 148.122) generally require an issuer
that offers health insurance coverage in
the individual or group market to renew
or continue in force such coverage at the
option of the plan sponsor or
individual, as applicable. These
provisions also establish requirements
for issuers that decide to discontinue
offering a particular product in the
individual or group market and for
issuers that modify coverage at the time
of coverage renewal. These
requirements apply at the ‘‘product’’
level, and the terms ‘‘product’’ and
‘‘plan’’ are defined in § 144.103.
Removing a plan(s) from a product
will not result in a product
discontinuation, unless by removing the
plan(s), the issuer exceeds the scope of
a uniform modification of coverage at
§ 147.106(e).291 If an individual’s
product remains available for renewal,
including a product with uniform
modifications, the issuer generally must
provide the individual the option to
renew coverage under that product
(including any plan within the product)
to satisfy the guaranteed renewability
291 Center for Consumer Information and
Insurance Oversight, Uniform Modification and
Plan/Product Withdrawal FAQ (June 15, 2015),
available at https://www.cms.gov/CCIIO/Resources/
Fact-Sheets-and-FAQs/Downloads/uniform-modand-plan-wd-FAQ-06-15-2015.pdf.
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requirements. Further, issuers on the
Exchange must adhere to the reenrollment hierarchy at § 155.335(j)
when auto re-enrolling enrollees in
coverage through the Exchange.
The guaranteed renewability
regulations provide that, in the
individual and small group markets,
modifications made pursuant to Federal
or State requirements are a uniform
modification of coverage. However, as
nothing in this final rule requires an
issuer to cease generally offering nonstandardized plans (that is, outside the
Exchange), a non-standardized plan
discontinuation is not a change made
pursuant to a Federal requirement.
Comment: Several commenters
requested clarification that Statemandated plan designs would be
excluded from the proposed limit on the
number of non-standardized plan
options.
Response: State-mandated plan
designs will not be excluded from the
limit of four non-standardized plan
options in PY 2024 or two nonstandardized plan options in PY 2025
and subsequent years per issuer,
product network type, metal level, and
inclusion of dental and/or vision benefit
coverage, in any service area. We do not
believe that State-mandated plan
designs differ sufficiently from other
non-standardized plan options and did
not receive comments with substantive
examples of such plan designs.
Furthermore, we believe that if all
issuers in a particular State are required
to offer State-mandated plan designs
through the Exchanges in that State,
these limits will apply to these issuers
equally. Finally, we believe that the
flexibility permitted in this framework
(in which issuers will have the ability
to offer four non-standardized plan
options per product network type, metal
level, and inclusion of dental and/or
vision benefit coverage, in any service
area for PY 2024, and two for PY 2025)
will allow issuers to comply with both
these State-mandated plan designs and
the limits finalized in this rule.
Comment: Several commenters
requested that HHS clarify its definition
of ‘‘service area’’ in the limit on the
number of non-standardized plan
options.
Response: We clarify that the ‘‘service
area’’ component of the limit on nonstandardized plan options refers to
Federal Information Processing Series
(FIPS) code.292 A FIPS code is a fivedigit code that is unique to every county
in the country. The first two digits are
the State code (for example, Georgia’s
292 https://www.census.gov/library/reference/
code-lists/ansi.html#county.
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State code is 13), and the remaining
three digits identify the county. We are
defining ‘‘service area’’ with FIPS codes
in order to provide a standardized,
widely utilized, comprehensive, and
mutually exclusive geographic unit for
assessing consumer choice overload and
adherence to non-standardized plan
option limits.
5. QHP Rate and Benefit Information
(§ 156.210)
a. Age on Effective Date for SADPs
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78283), we proposed
at new § 156.210(d)(1) to require issuers
of stand-alone dental plans (SADPs), as
a condition of Exchange certification, to
use an enrollee’s age at the time of
policy issuance or renewal (referred to
as age on effective date) as the sole
method to calculate an enrollee’s age for
rating and eligibility purposes,
beginning with Exchange certification
for PY 2024. We proposed that this
requirement apply to Exchange-certified
SADPs, whether sold on- or offExchange. We clarify that an SADP, as
noted at section 1302(d)(2)(B)(ii) of the
ACA, is a type of QHP, which is
Exchange-certified, and offers the
pediatric dental EHB as specified at
section 1302(b)(1)(J) of the ACA.
We explained in the proposed rule (87
FR 78283) that since PY 2014, the
process the FFEs use in QHP
certification allows SADP issuers
seeking certification to enter multiple
options to explain how age is
determined for rating and eligibility
purposes. We explained that because
the Federal eligibility and enrollment
platform operationalizes the rating and
eligibility standards when an applicant
seeks SADP coverage through an SBE–
FP, issuers in SBE–FPs have also been
required to comply with this part of the
process. While market rules at
§ 147.102(a)(1)(iii) require medical QHP
issuers to use the age as of the date of
policy issuance or renewal for purposes
of identifying the appropriate age rating
adjustment, SADP issuers have been
able to enter any of the following four
options in the Business Rules Template:
(1) Age on effective date; (2) Age on
January 1st of the effective date year; (3)
Age on insurance date (age on birthday
nearest the effective date); or (4) Age on
January 1st or July 1st.293
We stated in the proposed rule that
despite the availability of these other
293 See, for example, Qualified Health Plan Issuer
Application Instructions, Plan Year 2023, Extracted
section: Section 3B: Business Rules. https://
www.qhpcertification.cms.gov/s/Business
%20Rules.
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options for SADPs, age on effective date
is the most commonly used age rating
methodology; the vast majority of
individual market SADP issuers have
used the age on effective date method
since PY 2014. We added that not only
is it the most commonly used method,
but it is also the most straightforward
methodology for consumers to
understand. For example, under the age
on effective date method, if an enrollee
is age 30 at the time of a plan’s effective
date, the enrollee is rated at age 30 for
the rest of the plan year, and the rate
will not change on the basis of age until
the next plan year, even if the enrollee’s
age changes mid-plan year.
As further explained in the proposed
rule (87 FR 78283), allowing SADPs to
rate by other methods imposes
unnecessary complexity, not only to us
as operator of the FFEs and the Federal
eligibility and enrollment platform, but
also to enrollment partners and
consumers in the Exchanges on the
Federal platform. Thus, we stated that
we believe requiring SADP issuers to
use the age on effective date
methodology, and consequently
removing the less commonly used and
more complex age calculation methods,
would reduce consumer confusion and
promote operational efficiency.
We stated that, by helping to reduce
consumer confusion and promote
operational efficiency during the QHP
certification process, this proposed
policy would help facilitate more
informed enrollment decisions and
enrollment satisfaction. Accordingly, we
stated that we believe it is appropriate
to extend this proposed certification
requirement to SADPs seeking
certification on the FFEs as well as the
SBE–FPs and SBEs. We sought comment
on any anticipated challenges that this
proposal could present for SBEs using
their own platform, and whether and to
what extent we should, if this proposal
is finalized, limit or delay this proposed
certification requirement for those SBEs.
We received one comment on the
anticipated challenges this proposal
could present for SBEs, which we
address later in this section.
We sought comment on the proposal
to require SADP issuers, as a condition
of Exchange certification, to use age on
effective date as the sole method to
calculate an enrollee’s age for rating and
eligibility purposes, beginning with
Exchange certification for PY 2024. We
refer readers to the proposed rule (87 FR
78283) for further discussion of our
proposal. After reviewing the public
comments, we are finalizing this
provision at new § 156.210(d)(1) as
proposed. We summarize and respond
to public comments received on the
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proposed age on effective date policy
below.
Comment: All commenters who
commented on this provision supported
the proposal. A few commenters
expressed their general support of
CMS’s efforts to standardize the age
calculation method and to select age on
effective date as the only method for
calculating the enrollee’s age for rating
and eligibility purposes. A majority of
commenters supported the proposal
because it would reduce or eliminate
confusion among consumers and
improve consumer understanding of
SADPs. One commenter agreed this
policy would eliminate unnecessary
complexity for both consumers and the
Navigators and assisters who help them.
Response: We agree with commenters
that requiring SADP issuers to use age
on effective date as the sole method to
calculate an enrollee’s age for rating and
eligibility purposes will help reduce or
eliminate confusion among consumers,
improve consumer understanding of
SADPs, and eliminate unnecessary
complexity for consumers and those
who assist them. As we mentioned in
the proposed rule (87 FR 78283), not
only is age on effective date the most
commonly used age rating method, but
it is also the most straightforward
methodology for consumers to
understand. Since consumers can more
easily understand the premium rate they
are charged when the age on effective
date method is used, it reduces
consumer confusion. As we also
mentioned, allowing SADPs to rate by
other methods imposes unnecessary
complexity, not only to HHS as operator
of the FFEs and the Federal eligibility
and enrollment platform, but also to
enrollment partners and consumers in
the Exchanges on the Federal platform.
From the consumer standpoint, the
more complicated alternative age
calculation methods currently in use
make it more difficult to understand the
premium rate they are charged.
Therefore, we believe requiring SADP
issuers to use age on effective date as
the sole age rating method, and
removing the less commonly used and
more complex age calculation methods,
will reduce consumer confusion and
promote operational efficiency.
Comment: Several commenters
supported this proposal because it
promotes consistency between issuers,
as well as between medical QHPs and
QHPs that are SADPs. One commenter
agreed with CMS that standards for
medical QHPs and QHPs that are SADPs
should be aligned wherever possible,
including rating methodologies.
Similarly, one commenter supported the
proposal because it aligns with
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consumer expectations and current
industry practices. Another commenter
noted that the other age reporting
options are not widely used, and
therefore, they agreed it is appropriate
for CMS to no longer offer issuers the
ability to choose the less common age
reporting methods. Lastly, one
commenter noted that SBEs that do not
currently use the age on effective date
method may need more time for
implementation.
Response: We agree with commenters
that requiring SADP issuers to use age
on effective date as the sole age
calculation method promotes
consistency between issuers and
between medical QHPs and QHPs that
are SADPs as well. We also agree that
this policy aligns with consumer
expectations and industry practices. As
we mentioned in the proposed rule (87
FR 78283), the vast majority of
individual market SADP issuers have
used the age on effective date method
since PY 2014. Given that most SADP
issuers are already using this method,
and based on the current availability of
such plans in all service areas, we
anticipate that most consumers or other
Exchange-certified plans will not
experience notable changes. As we also
mentioned, market rules at
§ 147.102(a)(1)(iii) require medical QHP
issuers to use the age as of the date of
policy issuance or renewal for purposes
of identifying the appropriate age rating
adjustment, however, SADP issuers
were not subject to the same
requirement. Implementing this policy
change will help align the requirements
for SADPs with the requirements
applicable to other QHPs. We also
acknowledge that the SADP issuers that
do need to implement this change will
need time for implementation, but we
do not anticipate this will be a
significant operational burden and
believe this is feasible to implement for
QHP certification in PY 2024.
b. Guaranteed Rates for SADPs
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78284), we proposed
at new § 156.210(d)(2) to require issuers
of SADPs, as a condition of Exchange
certification, to submit guaranteed rates
beginning with Exchange certification
for PY 2024. We proposed that this
requirement apply to Exchange-certified
SADPs, whether they are sold on- or offExchange.
In the proposed rule (87 FR 78284),
we explained that SADPs are excepted
benefits, as defined by section
2791(c)(2)(A) of the PHS Act and HHS
implementing regulations at
§§ 146.145(b)(3)(iii)(A) and
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148.220(b)(1), and are not subject to the
PHS Act insurance market reform
provisions that generally apply to nongrandfathered health plans in the
individual and group markets inside
and outside the Exchange.294 In
particular, because issuers of Exchangecertified SADPs are not required to
comply with the premium rating
requirements under section 2701 of the
PHS Act applicable to nongrandfathered individual and small
group health insurance coverage, we
have permitted issuers of Exchangecertified SADPs in the FFEs and SBE–
FPs to comply with the rate information
submission requirements at § 156.210
under a modified standard.295
Specifically, we have historically
granted issuers of SADPs the flexibility
to offer guaranteed or estimated rates.
By indicating the rate is a guaranteed
rate, the SADP issuer commits to
charging the consumer the approved
premium rate, which has been
calculated using consumers’ geographic
location, age, and other permissible
rating factors. Estimated rates require
enrollees to contact the issuer to
determine a final rate.
This flexibility for SADPs to offer
estimated rates was effective for SADP
issuers beginning with PY 2014. We
explained in the proposed rule that it
was necessary because the relevant
certification template was originally
designed to support medical QHPs,
which forced operational limits that
prevented the accurate collection of
rating rules for SADPs. We noted that
since PY 2014, we have improved the
certification templates to allow SADPs
to set the maximum age for dependents
to 18, and to rate all such dependents.
Thus, the FFEs and SBE–FPs can now
accommodate the accurate collection of
dental rating rules without forced
operational limits in most reasonable
circumstances.
In the proposed rule (87 FR 78284),
we stated that we believe this proposal
would significantly benefit enrollees.
Consistent with §§ 156.440(b) and
156.470, APTC may be applied to the
pediatric dental EHB portion of SADP
premiums. We explained that if SADP
issuers submit estimated rates and
294 See PHS Act sections 2722(b) and (c) and
2763(b). Examples of PHS Act insurance market
reforms added by the ACA that do not apply to
stand-alone dental plans include but are not limited
to section 2702 guaranteed availability standards,
section 2703 guaranteed renewability standards,
and section 2718 medical loss ratio standards.
295 See, for example, the 2014 Final Letter to
Issuers on Federally-facilitated and State
Partnership Exchanges for more information on
how SADPs in the FFEs and SBE–FPs have
flexibility to comply with the rate information
submission requirements at § 156.210.
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subsequently modify their actual rates,
the Exchanges, including State
Exchanges (including State Exchanges
on the Federal platform) and FFEs,
could incorrectly calculate APTC for the
pediatric dental EHB portion of a
consumer’s premium, which could
potentially cause consumer harm. We
also noted that since low-income
individuals may qualify for APTC, we
believe this proposed policy change
would help advance health equity by
helping ensure that low-income
individuals who qualify for APTC are
charged the correct premium amount
when enrolling in SADPs on the
Exchange.
We acknowledged in the proposed
rule that requiring guaranteed rates
presents a small risk that SADP issuers
that offer estimated rates could cease
offering SADPs on the Exchanges. While
we recognized this risk, we stated that
we believe the benefits of this proposal
far exceed the disadvantages.
Specifically, as discussed previously,
we stated that we believe this proposed
policy change would significantly
reduce the risk of consumer harm by
reducing the risk of incorrect APTC
calculation for the pediatric dental EHB
portion of premiums.
As we explained in the proposed rule,
because we believe this proposed policy
would significantly benefit enrollees by
ensuring that enrollees in SADPs
receive the correct APTC calculation for
the pediatric dental EHB portion of
premiums, and therefore, are charged
the correct premium rate, we believe it
is appropriate to apply this proposed
certification requirement to SADPs
seeking certification on the FFEs, as
well as the SBE–FPs and SBEs. We
sought comment on any anticipated
challenges that this proposal could
present for SBEs using their own
platform, and whether and to what
extent we should, if this proposal is
finalized, limit or delay this proposed
certification requirement for those SBEs.
We did not receive any comments on
the anticipated challenges this proposal
could present for SBEs, or whether or to
what extent we should limit or delay
this proposed certification requirement.
We sought comment on the proposal
to require issuers of Exchange-certified
SADPs, whether they are sold on- or offExchange, to submit guaranteed rates as
a condition of Exchange certification,
beginning with Exchange certification
for PY 2024. We refer readers to the
proposed rule (87 FR 78284) for further
discussion of our proposal. After
reviewing the public comments, we are
finalizing this provision at new
§ 156.210(d)(2) as proposed. We
summarize and respond to public
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comments received on the proposed
policy to require guaranteed rates
below.
Comment: All commenters addressing
this provision supported the policy
proposal. A few commenters expressed
their general support of CMS’s efforts to
require the submission of guaranteed
rates for SADPs. More specifically, a few
commenters supported this proposal
because it promotes consumer
understanding and helps reduce or
eliminate consumer confusion. One
commenter stated that requiring SADPs
to submit guaranteed rates promotes
consumer understanding by ensuring
that consumers and those who assist
them will better understand their
coverage and the actual premium costs
they will incur. Another commenter
noted that this proposal will help
people make informed decisions when
shopping for their health coverage.
Another commenter explained that
guaranteed rates add transparency and
clarity for consumers.
Response: We agree with the
commenters that requiring SADP issuers
to submit guaranteed rates will benefit
consumers by promoting consumer
understanding and helping to reduce or
eliminate consumer confusion. We
prioritize the development and
implementation of consumer-centric
policies, and will continue to direct our
efforts towards promoting consumer
understanding and improving consumer
transparency.
Comment: A few commenters
supported this proposal because it
results in a better consumer experience
and helps eliminate complexity. One
commenter noted requiring SADP
issuers to submit guaranteed rates will
eliminate the practice of providing
estimated rates to consumers, which
typically requires the enrollee to contact
the insurance issuer directly to
determine a final rate.
Response: We agree with the
commenters that requiring guaranteed
rates will result in an improved
consumer experience. We also agree that
eliminating the practice of providing
estimated rates, which requires the
enrollee to contact the insurance issuer
directly to determine a final rate, is
beneficial because it helps eliminate
complexity and reduces the burden on
the consumer. As we noted in the
proposed rule (87 FR 78284), by
indicating a guaranteed rate, the SADP
issuer commits to charging the
consumer the approved premium rate,
which has been calculated using the
consumers’ geographic location, age,
and other permissible rating factors.
Therefore, a guaranteed rate provides
consumers with more certainty,
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25867
resulting in a more positive consumer
experience.
Comment: A few commenters
supported the guaranteed rates proposal
because it is consistent with current
industry practices. In particular, one
commenter stated that since the
estimated rate option is not widely used
by SADP issuers, it is appropriate for
CMS to no longer offer this option.
Response: We agree with the
commenters that the guaranteed rates
proposal aligns with current industry
practices. As we mentioned in the
proposed rule (87 FR 78284), the vast
majority of issuers offering on-Exchange
and off-Exchange Exchange-certified
SADPs already elect to submit
guaranteed rates. Therefore, the majority
of SADP issuers are unlikely to be
impacted by this policy.
Comment: A few commenters
supported the guaranteed rates proposal
because it allows for accurate APTC
calculation of the pediatric dental EHB
portion of premiums, and protects
consumers from both unexpected costs
and unnecessary financial burden. One
commenter explained that because the
portion of APTC attributable to pediatric
dental coverage can be applied to
SADPs, after-purchase rate information
changes could affect APTC calculation,
resulting in unnecessary financial
burden and uncertainty for enrollees
selecting SADPs. Another commenter
also emphasized that guaranteed rates
protect consumers from unnecessary tax
reconciliation.
Response: We agree with the
commenters that requiring guaranteed
rates will promote accurate APTC
calculation of the pediatric dental EHB
portion of premiums, and protect
consumers from unnecessary financial
burden and uncertainty. As we
explained in the proposed rule (87 FR
78284), if an SADP issuer submits an
estimated rate and subsequently
modifies their actual rate, the
Exchanges, including SBEs, SBE–FPs,
and FFEs, could incorrectly calculate
APTC for the pediatric dental EHB
portion of a consumer’s premium,296
which could result in consumer harm.
This may also disproportionately impact
low-income individuals who may
qualify for APTC, who are already
disproportionately impacted by limited
access to affordable health care.
Therefore, we believe this policy will
also help advance health equity by
ensuring that low-income individuals
who qualify for APTC are charged the
296 Consistent with §§ 156.440(b) and 156.470,
APTC may be applied to the pediatric dental EHB
portion of SADP premiums.
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correct premium amount when
enrolling in SADPs on the Exchange.
Comment: One commenter requested
clarity on whether the proposed policy
also applies to small group SADPs. This
commenter explained that as a State, it
does not have the authority to review
dental rates for small group issuers onor off-Exchange, and thus it cannot
enforce this proposed certification
requirement for such issuers. The
commenter further explained that if
plans cannot be certified without
meeting this requirement, that CMS
should certify the off-Exchange-only
SADPs.
Response: We clarify that the
guaranteed rates policy does not apply
to SADPs that are not Exchangecertified. SADPs that are not seeking
Exchange certification, in either an
individual market Exchange or SHOP,
will not need to use guaranteed rates
under this policy. States will therefore
not need to enforce this requirement,
but State Exchanges will be required to
only certify SADPs that comply with the
requirement.
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6. Plan and Plan Variation Marketing
Name Requirements for QHPs
(§ 156.225)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78284 through
78285), we proposed to add a new
paragraph (c) to § 156.225 to require that
QHP plan and plan variation 297
marketing names include correct
information, without omission of
material fact, and do not include
content that is misleading. We stated
that, if this policy is finalized, we would
review plan and plan variation
marketing names during the annual
QHP certification process in close
collaboration with State regulators in
States with Exchanges on the Federal
platform.
Section 1311(c)(1)(A) of the ACA
states that the Secretary shall establish
QHP certification criteria, which must
include, at a minimum, that a QHP meet
marketing requirements and not employ
marketing practices or benefit designs
that have the effect of discouraging
enrollment by individuals with
significant health needs. As we stated in
297 In practice, CMS and interested parties often
use the term ‘‘plan variants’’ to refer to ‘‘plan
variations.’’ Per § 156.400, plan variation means a
zero-cost sharing plan variation, a limited cost
sharing plan variation, or a silver plan variation.
Issuers may choose to vary plan marketing name by
the plan variant—for example, use one plan
marketing name for a silver plan that meets the
actuarial value (AV) requirements at § 156.140(b)(2),
and a different name for that plan’s equivalent that
meets the AV requirements at § 156.420(a)(1), (2), or
(3).
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the proposed rule (87 FR 78285), CMS,
States, and QHP issuers work together to
ensure that consumers can make
informed decisions when selecting a
health insurance plan based on factors
such as QHP benefit design, cost-sharing
requirements, and available financial
assistance. We also stated that in PY
2022, we received complaints from
consumers in multiple States who
misunderstood cost-sharing information
in their QHP’s marketing name. We also
stated that upon further investigation,
CMS and State regulators determined
that language in a number of plan and
plan variation marketing names was
incorrect or could be reasonably
interpreted by consumers as misleading
based on information in corresponding
plan benefit documentation submitted
as part of the QHP certification
process.298
As we explained in the proposed rule
(87 FR 78285), CMS’ review of QHP data
for PY 2023 indicates continued use of
cost-sharing information in plan and
plan variation marketing names. We
explained in the proposed rule that this
proposed policy would address the
issues we observed during PY 2022 and
again in PY 2023 by requiring all
information in plan and plan variation
marketing names that relates to plan
attributes to align with information that
issuers submit for the plan in the Plans
& Benefits Template, and in other
materials submitted as part of the QHP
certification process, such as any
content that is part of the Summary of
Benefits and Coverage. Also, we stated
that plan benefit or cost sharing
information in a plan or plan variation
marketing name should not conflict
with plan or plan variation information
displayed on HealthCare.gov during the
plan selection process in terms of dollar
amount and, where applicable,
terminology. We refer readers to the
proposed rule (87 FR 78284 through
78285) for further discussion of this
proposed requirement, including
examples illustrating the kinds of
information in plan and plan variation
marketing names that could mislead
consumers through inaccurate
information or omission of material
facts.
We sought comment on this proposal
and whether there are additional
methods of preventing consumer
confusion and market disruption related
to this issue. In particular, we sought
298 For example, in some cases a plan marketing
name described a limited benefit in a way that
could be understood as being unlimited, such as a
‘‘$5 co-pay’’ when the $5 co-pay was only available
for an initial visit. Consumers were concerned upon
learning the full extent of the cost-sharing for which
they would be responsible during the plan year.
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comment on the potential to identify
components of plan and plan variation
marketing names that could be
uniformly structured and defined across
QHPs for consistency and to ensure that
plan and plan variation marketing
names complement and do not
contradict other sources of plan detail,
such as cost-sharing and benefit
information, displayed during the plan
selection process on HealthCare.gov and
other enrollment platforms. For
example, we sought comment on
whether, to address this, we should
establish a required format for plan and
plan variation marketing names that
specifies elements such as name of
issuer, metal level, and limited costsharing information.
After reviewing the public comments,
we are finalizing, as proposed,
§ 156.225(c) to require that QHP plan
and plan variation marketing names
include correct information, without
omission of material fact, and not
include content that is misleading. We
will review plan and plan variation
marketing names during the annual
QHP certification process in close
collaboration with State regulators in
States with Exchanges on the Federal
platform. We summarize and respond to
public comments received on the
proposed policy below.
Comment: Almost all commenters
supported the proposal. A number of
commenters agreed that requiring
marketing names to be accurate and not
misleading would help consumers make
more informed plan selections, and
choose a QHP that they are ultimately
satisfied with. Some commenters added
that, like HHS and States, they also
heard concerns and complaints from
consumers applying for Exchange
coverage about inaccurate or misleading
marketing names, or marketing names
that included extensive detail that they
found confusing. One commenter noted
that while confusion about marketing
names has not been an issue in all
States, it would be helpful to have clear
Federal policy should the issue arise.
Many commenters expressed strong
support for continued collaboration
between HHS and States in plan and
plan variation marketing name
oversight. Some commenters requested
that HHS not impose any requirements
on marketing names in excess of what
States already require, or that HHS not
make requirements that contradict
requirements already in place within a
State.
Response: We agree with commenters
that requiring plan and plan variation
marketing names to be accurate and not
misleading will help applicants for
Exchange coverage make more informed
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decisions, and have greater confidence
that they are choosing the plan that is
best for themselves and their families.
Moving forward, we will continue
working closely with States to review
plan and plan variation marketing
names by providing information and
technical assistance and regularly
scheduled calls and coordinating shared
review of marketing names during the
annual QHP certification process. We
will also take existing State
requirements into account when
overseeing marketing names to prevent
contradictory requirements and ensure
an efficient plan and plan variation
marketing name review process.
Comment: A few commenters
opposed the proposal, stating that they
generally supported its intent, but
disagreed that additional regulation was
necessary to achieve its purpose. One
commenter stated that States are in a
better position than HHS to regulate
marketing names, and voiced concern
that there could be conflicting
recommendations between State and
Federal regulators. Another commenter
stated that issuers should continue to
have the ability to uniquely position
their plans in a market through plan
marketing names, noting that this
practice is often descriptive in nature,
and therefore, is not possible to do
through other methods of data
submission. As examples, the
commenter cited terms like ‘‘Freedom
plans,’’ implying broad access or
‘‘Virtual plans,’’ implying enhanced
telehealth benefits. This commenter
added that they offered Exchange plans
with the same marketing convention for
the past ten years, and expressed
concern about any requirements to
change it. Other commenters supportive
of the proposal made similar points. For
example, other commenters cited terms
like ‘‘elite’’ or ‘‘premium’’ as being
important marketing tools to convey
advantages of a particular plan. Another
recommended exempting marketing
names that have been used for three or
more years from required correction,
with the exception of changes to costsharing amounts. The commenter noted
that many plans have been offered for
five or more years under the same name,
and it would be confusing for enrollees
to see a new marketing name for the
same plan.
Response: We agree with commenters
that States are well-positioned to
oversee plan and plan variation
marketing names. However, based on
other public comments and our
experiences over the last several years,
we believe that Federal partnership is
helpful and necessary to ensure that
marketing names include only
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information that is accurate and not
misleading. As noted earlier, we will
continue to work closely with States to
prevent contradictory requirements and
ensure State input. We note that certain
Federal requirements may exceed those
that States currently have in place, such
as prohibiting a plan from including in
its marketing name ‘‘$0 cost-sharing’’
without specifying that it only applies
to a limited number of visits, or listing
‘‘$0 deductible’’ for a plan that offers a
$0 medical deductible but a greater than
$0 drug deductible. However, we
believe such requirements are important
to address the more recent marketing
name practices causing problems and
we do not anticipate that any such
requirements will contradict existing
State rules.
We also acknowledge that some
issuers have consistently offered plans
and plan variations with marketing
names that are clear and include correct
information. This policy applies to all
plan and plan variation marketing
names. We will not exempt any
marketing names that include errors,
such as contradictions with plan benefit
information, from required corrections.
However, our goal is not to prevent
issuers from using marketing names that
have not proven problematic in the past.
Because inclusion of detailed and
sometimes incorrect or misleading plan
benefit information in marketing names
is a relatively recent practice, we do not
anticipate issuers needing to make
extensive changes to marketing names
already in use for a number of years.
Finally, this policy does not prohibit
the use of descriptive language
including the terms the commenter
cited, such as ‘‘Freedom Plans’’ and
‘‘Virtual Plans’’; because these terms do
not directly correlate with or intend to
describe a specific service or benefit, it
is unlikely that they would be
considered incorrect. However, we
encourage issuers to consider this
language carefully to ensure it is not
misleading. In particular, we encourage
issuers to ensure that a plan or plan
variation marketing name does not
mislead consumers regarding the nature
and cost-sharing for telehealth services
and in person services, when there are
differences between the two.
Comment: Multiple commenters
shared concerns about the specific types
of inaccurate or confusing marketing
name information, some of which we
identified in the proposed rule (87 FR
78285). One commenter recommended
that issuers not be required to include
the term ‘‘deductible’’ in marketing
names that included a deductible dollar
amount, because issuers had long
included these dollar amounts in
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25869
marketing names, and adding an
additional term could cause confusion.
Some commenters expressed general
concerns about lengthy, detailed
marketing names, stating that they cause
confusion because they are difficult for
consumers to understand. One of these
commenters made several
recommendations to decrease the length
of marketing names, such as prohibiting
issuers from including the company
name in the marketing name because it
is already displayed in the
HealthCare.gov plan compare section,
and imposing a character limit to
prevent issuers from creating long and
complicated plan names. Another
commenter recommended limiting
marketing names to including only one
cost-sharing feature to avoid
overwhelming consumers with too
much information. One commenter
raised the concern that some marketing
names advertise features available under
all QHPs, such as no restrictions for
consumers with pre-existing conditions
or full coverage of preventive care free
of charge, which increases the length of
the marketing name without providing
valuable information.
Some commenters also expressed
concern about using terms like ‘‘choice’’
or ‘‘star’’ network to refer to a narrow
network, based on the belief that these
terms implied an enhanced benefit
when the reality was that the plan might
provide access to fewer providers than
a plan with a broader network that it did
not advertise. Commenters also
expressed concern about including
information in a marketing name that
leads consumers to believe that one of
more benefits will be covered free of
charge, when in fact certain conditions
and limitations apply and enrollees
cannot access such benefits without
incurring significant cost sharing.
Commenters also observed that
marketing names for CSR variants of
silver plans often retain the dollar
amount of the deductible or copay of the
non-CSR variant plan. In addition,
commenters noted that some consumers
find it difficult to confirm benefit
information with a Summary of Benefits
and Coverage (SBC); they cannot
determine which SBC corresponds to a
plan they have or are considering,
because plan and plan variation
marketing names do not match the plan
name used in the SBC. This commenter
recommended that HHS require plan
and plan variation marketing names to
match the plan name in the
corresponding SBC at the level of
individual CSR variations.
Response: We appreciate the
comments regarding the concerns we
cited in the proposed rule about specific
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types of incorrect or misleading
marketing name information, and
appreciate additional issues that
commenters raised. We confirm that
under this policy, at minimum, we will
generally flag for revision plan and plan
variation marketing names that include
the issues listed in the proposed rule (87
FR 78285) to help ensure consumers are
not misled about plans’ cost-sharing and
coverage implications. However, while
we suggested in the proposed rule that
dollar amounts that do not specify what
they refer to (for example, deductible,
maximum out-of-pocket, or something
else) could be misleading, based on
comments that cited the importance of
allowing issuers to continue using
longstanding plan and plan variation
marketing names, and that encouraged
us not to require issuers to include the
term ‘‘deductible’’ in marketing names
that include a deductible dollar amount,
we will not require issuers to include
cost-sharing terms such as deductible in
marketing names that list numbers or
dollar amounts. Specifically, while we
believe that some consumers might
benefit from additional detail about
what numbers in a marketing name
reference, we are aware that requiring
issuers to label all numbers in a
marketing name could be
counterproductive by lengthening an
otherwise concise plan marketing name
and requiring that some issuers change
marketing names that have long been in
use and that comply with existing State
rules. Nevertheless, we strongly
encourage issuers to carefully consider
the information that numbers and dollar
amounts are meant to convey. Further,
in cases where marketing names specify
the type of cost sharing that a number
or dollar amount refers to, our review
will confirm that this information is
accurate. For example, plan and plan
variation marketing names that list a
deductible amount must be clear
whether that amount refers only to
medical, drug, or another type of
benefit, or simply lists a deductible
amount that is inclusive of all these
categories to ensure that potential
enrollees understand the full costsharing requirement.
Additionally, we share concerns that
consumers are not always able to fully
understand a plan’s benefits because of
inconsistencies between a plan name
used in an SBC and the corresponding
plan or plan variation marketing name
displayed on HealthCare.gov. Moving
forward, we will require that these
names be consistent and clearly
resemble each other, even if a plan or
plan variation marketing name includes
cost-sharing or other benefit detail that
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the plan name listed in the SBC does
not. This requirement exemplifies the
intent of the final policy that we
discussed in the proposed rule: by
requiring marketing names to be correct,
not omit material fact, and not include
content that is misleading, we expect
that consumers will be able to refer to
marketing names as a source of
information that supports them in their
plan selection process by facilitating
their ability to learn more about a
potential plan, which includes being
able to look up information in other
plan materials, instead of exacerbating
confusion or making it more difficult to
understand plan benefit details. We will
also prohibit marketing names from
advertising benefits that the ACA
requires all Exchange plans to cover as
though they were unique to that plan to
prevent this information from
unnecessarily extending marketing
names’ length and from implying that
certain plans are uniquely advantageous
because they provide benefits that in
fact all QHPs are required to cover. This
requirement mirrors requirements in
widely adopted North American
Industry Classification (NAIC) model
regulations, and therefore, reflects
longstanding rules and practice.299
Additionally, we have also observed
cases of incorrect information in plan
variation marketing names for CSR
variations that occur because the
marketing name retains cost-sharing
information from the non-CSR variation
plan. Our goals moving forward as part
of our review of plan and plan variation
marketing names will include making
sure that this does not happen. We
strongly encourage issuers to
proactively update cost sharing
information in marketing names to
accurately reflect information for CSR
plan variations to ensure that their
initial QHP application includes
accurate information.
We share concerns about the use of
potentially misleading terms to refer to
narrow networks; while we do not
currently plan to prohibit use of general
descriptive terms in marketing names,
we encourage issuers to carefully
consider whether in certain instances,
use of these terms could cause or
exacerbate existing consumer confusion
or mislead consumers regarding a
particular plan benefit. We also do not
currently plan to prohibit inclusion of
issuer names because this could prevent
299 See ADVERTISEMENTS OF ACCIDENT AND
SICKNESS INSURANCE MODEL REGULATION,
Section 6.A(14), which prohibits ‘‘An advertisement
that exaggerates the effects of statutorily mandated
benefits or required policy provisions or that
implies that the provisions are unique to the
advertised policy.’’
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continuity in some marketing names
that are not otherwise problematic. We
note that current QHP certification
instructions already impose a character
limit on plan and plan variation
marketing names of 255 characters.300
Moving forward, we will consider
whether decreasing this character limit
starting in PY 2024 would help to
reduce consumer confusion and
improve plan data accuracy and the
efficiency of the QHP certification
process. For example, a character limit
of 150 would have permitted more than
90 percent of plan and plan variation
marketing names in plan year 2022,
while providing a cap to shorten some
of the lengthiest marketing names and
reduce the risk of unnecessary and
confusing information. Finally, we will
consider for future PYs the additional
recommendations to limit confusion
related to plan and plan variation
marketing names.
Comment: Some commenters
supported the proposal but expressed
concern or confusion about the extent
and nature of its requirements. Multiple
commenters expressed concern about
language in the proposed rule noting
that information in plan and plan
variation marketing names should
correspond to benefit information in
other plan documents, including the
Plans & Benefits Template,
HealthCare.gov plan selection
information, and other applicable QHP
certification materials. Some
commenters, including several that
supported the proposal and one that did
not, noted that not all plan information
that issuers include in plan marketing
names is included in the Plans &
Benefits Template. Multiple
commenters cited examples of
information on benefits that they noted
may help to mitigate negative impacts of
certain Social Determinants of Health,
such as medical transportation and
telehealth coverage. One commenter
requested that the Plans & Benefits
Template not be used as a marketing
name generator. Several commenters
requested that HHS release guidance on
specific requirements for plan and plan
variation marketing names under this
policy, to mitigate issuer confusion and
ensure efficient submission of plan
information during the QHP
certification process for the coming PY.
Response: We clarify that this policy
does not restrict plan and plan variation
marketing name content to information
only from the Plans & Benefits
300 See PY2023 QHP Issuer Application
Instructions: Plans & Benefits, Section 4.10: page
2D–17: https://www.qhpcertification.cms.gov/s/
Plans%20and%20Benefits.
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Template, or any other template that
issuers submit as part of the QHP
certification process. However,
information about benefits or any other
plan attribute included in a marketing
name should not be the sole source of
information about that benefit, and it
must not conflict with information that
appears in other plan documents. In
other words, issuers must only include
benefit or other plan attribute
information in a marketing name that is
from other plan documents, such as the
Plans & Benefits Template, the SBC, or
the plan policy document. For example,
references to telehealth coverage, a
medical transportation benefit, or to any
other plan information in a plan
marketing name should be based on,
correspond to, and not imply that they
are more generous than, information
about that benefit from plan policy
documents. Further, as previously
discussed, information in the plan
marketing name should not imply more
generous coverage or lower cost sharing
than what is true in practice for that
plan, including by omitting key benefit
details or related restrictions. For
example, we have received complaints
about plan and plan variation marketing
names advertising ‘‘free’’ or ‘‘$0’’
primary care provider visits, when in
fact only virtual or telehealth visits are
free of charge. Omission of that
limitation on the type of visits that are
free can mislead consumers and make it
less likely that they will choose a plan
based on an accurate understanding of
its benefits. Finally, we understand the
need for guidance on permitted plan
and plan variation marketing name
characteristics, and strongly support
issuer efforts to ensure that marketing
name content is accurate prior to
submitting an application for QHP
certification.
Comment: One commenter suggested
that because applicants for Exchange
coverage can view plan and benefit
information in a standardized format on
the HealthCare.gov website, there is no
need for standardizing plan and plan
variation marketing names. Other
commenters stated that because plan
and benefit information is available on
HealthCare.gov, there is no need for
plan or plan variation marketing names
to include benefit information at all, and
CMS should prohibit doing so. Other
commenters recommended that rather
than impose overly restrictive standards
on plan and plan variation marketing
names, CMS should work to improve
the consumer shopping experience on
HealthCare.gov to maximize consumer
understanding of benefits available
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through and cost sharing required by
different QHP options.
Response: We agree that
characteristics of the consumer
shopping experience in
HealthCare.gov’s Plan Compare section
play an important role in helping
consumers to choose a plan that is best
for themselves and their family. We also
agree that consumers are generally
better served by comparing plan benefit
information on HealthCare.gov Plan
Compare, because Plan Compare
displays corresponding information for
different plans in a comparable way (for
example, plan deductibles and other
cost sharing information is listed in the
same format for each available plan). We
disagree that the consistency that Plan
Compare offers makes it unnecessary to
require that plan and plan variation
marketing names be correct and not
misleading, because incorrect or
misleading information has the
potential to harm consumers regardless
of whether accurate information is also
available. In fact, information from a
marketing name that conflicts with or
does not match corresponding
information on HealthCare.gov or
another Exchange enrollment platform
could create consumer confusion that an
Exchange could mitigate with a
standard marketing name format
designed to complement information
from HealthCare.gov Plan Compare or
another Exchange’s enrollment
platform. With regard to the suggestion
that availability of plan and benefit
information on HealthCare.gov means
there is no need for issuers to include
this information in marketing names, we
will not prohibit that practice at this
time, because our goal for PY 2024 is to
ensure that marketing names are
accurate and not misleading while
permitting issuers, to the extent
possible, to continue using marketing
names that they have in prior years in
order to mitigate issuer burden and
avoid consumer confusion. Further, we
know that some State rules related to
plan and plan variation marketing
names include some cost sharing
information, and we want to establish
rules that complement and do not
contradict State policy. Relatedly, as
further discussed below, we do not plan
to require a specific plan marketing
name format for PY 2024, but do view
it as a useful potential tool to improve
the consumer shopping experience
wherever possible, which we will
continue to work to do.
Comment: Many commenters
supported developing specific standards
for plan and plan variation marketing
names either for PY 2024 or in future
plan years. Some offered suggestions for
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25871
information that issuers should be
permitted or required to include.
Commenters also supported establishing
a defined format that all marketing
names would be required to follow,
several citing examples of issuers and
States that had already adopted specific
formats with success. For example, one
commenter noted that Washington’s
Exchange requires issuers to follow a
naming format for standard plans,
known as ‘‘Cascade Care’’ plans.
Specifically, Washington adopted the
standard plan naming format of ‘‘[Issuer
Name] + Cascade + [Metal Level]’’ when
implementing standard plans for PY
2021, and found it simplified
comparisons for consumers by making it
easier for them to use standard plans’
comparable plan designs to evaluate the
distinctions. Commenters that
recommended standardizing plan and
plan variation marketing names and that
recommended specific types of
information generally recommended all
or some combination of issuer name,
plan metal level, limited cost-sharing
information, network type, and HSA
eligibility if applicable. Some
commenters offered specific suggestions
about network information in marketing
names with several recommending
requiring issuers to include network
information in marketing names for
similar plans with different networks.
Others emphasized that network
information in marketing names should
not be misleading, and one stated that
availability and relative cost of out-ofnetwork benefits is important to some
consumers and an indication in the plan
name would be a prominent way to
signal plan differences in this area.
However, other commenters opposed
the development of specific standards,
based on concerns that this would limit
issuers’ ability to convey important plan
information about plan characteristics
through a marketing name and uniquely
position products in the market based
on this information. Some commenters
raised further concerns that a standard
format for plan marketing names that
specified permitted types of information
could result in the same marketing
name for multiple plans, which would
cause consumer confusion. Other
commenters added that requirements for
issuers to offer standardized plan
options made it especially important for
issuers to be able to use marketing
names to illustrate what makes a
particular QHP unique in a context of
many available options, and that many
issuers offer more than one network
within a single product network type
and use marketing names to make this
distinction clear to consumers.
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Response: We agree that clear and
comparable information is most helpful
for consumers during the plan selection
process, and we appreciate
recommendations on how to design
plan marketing names to support
consumer decision-making. However,
we will not apply a required format for
plan and plan variation marketing
names for PY 2024, because we want to
achieve a balance between overseeing
plan marketing names to ensure that
they are accurate and not misleading
and providing issuers with flexibility to
create plan marketing names with
information they believe will be useful
to consumers. Further, we want to
continue to work with interested parties
to understand the best methods for
ensuring that a marketing name is
accurate and clear, but also accounts as
needed for distinctions between
different plans. For example, we
appreciate comments related to helping
to ensure that consumers understand
plans’ provider network information,
and will continue to investigate how to
improve consumers’ experiences in this
area. Additionally, we agree with
comments that it is important to prevent
different plans from having the same
plan variation marketing name, and will
take this concern into account if we
develop standardized requirements for
plan and plan variation marketing
names.
7. Plans That Do Not Use a Provider
Network: Network Adequacy (§ 156.230)
and Essential Community Providers
(§ 156.235)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78285), we proposed
to revise the network adequacy and ECP
standards at §§ 156.230 and 156.235 to
state that all individual market QHPs
and SADPs and all SHOP QHPs across
all Exchanges must use a network of
providers that complies with the
standards described in those sections,
and to remove the exception that these
sections do not apply to plans that do
not use a provider network.
In the Exchange Establishment Rule,
we established the minimum network
adequacy criteria that health and dental
plans must meet to be certified as QHPs
at § 156.230. In the 2016 Payment
Notice, we modified § 156.230(a), in
part, to specify that network adequacy
requirements apply only to QHPs that
use a provider network to deliver
services to enrollees and that a provider
network includes only providers that
are contracted as in-network. We also
revised § 156.235(a) to state that the ECP
criteria apply only to QHPs that use a
provider network. In Part 1 of the 2022
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Payment Notice (86 FR 6138), we added
paragraph (f) to § 156.230 to state that a
plan for which an issuer seeks QHP
certification or any certified QHP that
does not use a provider network
(meaning that the plan or QHP does not
condition or differentiate benefits based
on whether the issuer has a network
participation agreement with a provider
that furnishes covered services) is not
required to comply with the network
adequacy standards at paragraphs (a)
through (e) of § 156.230 to qualify for
certification as a QHP. In that rule, we
also stated that plans that do not utilize
a provider network must still comply
with all applicable QHP certification
requirements to obtain QHP
certification, which ensures that any
plan that does not comply with
applicable QHP certification
requirements will be denied QHP
certification (86 FR 6138).
We stated in the proposed rule (87 FR
78286) that since 2016, only a single
issuer has sought certification on an FFE
for a plan that does not use a network.
As we explained in the proposed rule,
despite lengthy negotiations with this
issuer, our experience with this plan
convinced us that commenters to Part 1
of the 2022 Payment Notice who raised
concerns about the burden plans
without networks place on enrollees
appear to have been correct, and so, for
that reason and the other reasons
explained below, we proposed to revisit
this policy.
Section 1311(c)(1) of the ACA directs
HHS to establish by regulation
certification criteria for QHPs, including
criteria that require QHPs to ensure a
sufficient choice of providers (in a
manner consistent with applicable
provisions under section 2702(c) of the
PHS Act, which governs insured health
plans that include a provider network),
provide information to enrollees and
prospective enrollees on the availability
of in-network and out-of-network
providers, and include within health
insurance plan provider networks those
ECPs that serve predominantly low
income, medically underserved
individuals. We explained in the
proposed rule (87 FR 78286) that HHS
carries out this directive in part through
establishing network adequacy and ECP
requirements.
We stated in the proposed rule (87 FR
78286) that when we added paragraph
(f) to § 156.230 in Part 1 of the 2022
Payment Notice to except plans that do
not use a provider network from
meeting the network adequacy
standards described at § 156.230(a)
through (e), we did not intend to allow
a plan to ignore the minimum statutory
criteria for QHP certification. We
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explained that plans without provider
networks still are required by section
1311(c)(1)(B) of the ACA to ensure
sufficient choice of providers and
provide information to enrollees and
prospective enrollees on the availability
of providers to obtain certification, even
though they are not currently subject to
§§ 156.230 and 156.235. We also noted
that whether a plan that does not use a
network provides a sufficient choice of
providers is a more nuanced inquiry
than a simple assertion that an enrollee
can receive benefits for any provider.
We explained that for a prospective
enrollee, a ‘‘sufficient choice of
providers’’ likely involves factors like
the burden of accessing those providers,
including whether there are providers
nearby that they can see without
unreasonable delay that would accept
such a plan’s benefit amount as
payment in full, or whether they are
able to receive all the care for a specific
health condition from a single provider
without incurring additional out-ofpocket costs. We stated that these are
among the factors involved in
determining whether a network plan is
in compliance with the network
adequacy and ECP standards at
§§ 156.230 and 156.235 and noted that
a plan’s compliance with these
regulatory standards is one way that
HHS can verify that plans meet the
statutory criteria that QHPs ensure a
sufficient choice of providers, including
ECPs.
We stated in the proposed rule (87 FR
78286) that to ensure more effectively
that all plans provide sufficient choice
of providers and to provide for
consistent standards across all QHPs,
we believe it would be appropriate to
revise the network adequacy and ECP
standards at §§ 156.230 and 156.235 to
state that all QHPs, including SADPs,
must use a network of providers that
complies with the standards described
in those sections and to remove the
exception at § 156.230(f). We explained
that consistent standards also would
allow for easier comparison across all
QHPs in a more comprehensible manner
for prospective enrollees. The benefits
of easier comparison among plans and
other challenges posed by plan choice
overload are discussed in more detail in
the preamble sections about
standardized plan options and nonstandardized plan option limits.
We have previously stated that
‘‘nothing in [the ACA] requires a QHP
issuer to use a provider network’’ (84 FR
6154), and it is true that the ACA
includes no standalone network
requirement. However, we explained in
the proposed rule (87 FR 78286) that,
after revisiting the statute, we now
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25873
doubt that a plan without a network can
comply with the statutory requirement
at section 1311(c)(1)(C) of the ACA that
‘‘a plan shall, at a minimum . . .
include within health insurance plan
networks those essential community
providers, where available, that serve
predominately low-income, medicallyunderserved individuals.’’ We
explained that we have always
understood section 1311(c)(1)(C) of the
ACA to require all plans to provide
sufficient access to ECPs, where
available, whether or not the plan
included a provider network. But we
noted that we have not previously
considered whether this specific
statutory text is consistent with a policy
exempting plans without a network
from network adequacy regulations. We
stated that we now understand the
statute’s text to best support a reading
that access to ECPs will be provided
‘‘within health insurance networks.’’
Additionally, we noted in the
proposed rule (87 FR 78286) that under
section 1311(e)(1)(B) of the ACA and
§ 155.1000(c)(2), an Exchange may
certify plans only if it determines that
making the plans available through the
Exchange is in the interests of qualified
individuals. We further noted that
§ 155.1000 provides Exchanges with
broad discretion to certify health plans
that may otherwise meet the QHP
certification standards specified in 45
CFR part 156. We explained that when
we implemented section 1311(e)(1)(B) of
the ACA at § 155.1000(c)(2) in the
Exchange Establishment Rule, we noted
that ‘‘an Exchange could adopt an ‘any
qualified plan’ certification, engage in
selective certification, or negotiate with
plans on a case-by-case basis’’ (77 FR
18405). We also explained in the
proposed rule (87 FR 78286), that we
believe requiring QHPs to use a provider
network would be in the interests of
qualified individuals and would better
protect consumers from potential harms
that could arise in cases where QHPs do
not use provider networks.301 For
example, we stated that the
implementation of a provider network
can help mitigate against risks of
substantial out-of-pocket costs, ensure
access without out-of-pocket costs to
preventive services that must be covered
without cost sharing, and, in the
individual market, facilitate comparison
of standardized plan options.
Furthermore, we noted that studies have
found that provider networks allow for
insurer-negotiated prices and controlled
(that is, reduced) costs in the form of
reduced patient cost sharing, premiums,
and service price, as compared with
such services obtained out of
network.302 303
We stated in the proposed rule (87 FR
78286 through 78287) that the proposed
revision would assure HHS that all
plans certified as QHPs offer sufficient
choice of providers in compliance with
a consistent set of criteria for easier
comparison across all QHPs and better
ensure substantive consumer
protections afforded by the ACA
without undue barriers to access those
protections. We explained that this
consistency would be valuable to
consumers as it ensures all consumers
will have access to a set of providers
with whom their plan has contracted in
accordance with our established
network adequacy and ECP
requirements and allows for easier
comparison between plans for
prospective enrollees. We stated that
this would also allow consumers to seek
care from providers with whom their
plan has negotiated a rate, limiting their
potential exposure to out-of-pocket costs
under the plan.
Accordingly, under the authority
delegated to HHS to establish criteria for
the certification of health plans as
QHPs, we proposed to remove the
exception at § 156.230(f) and to revise
§§ 156.230 and 156.235 to state that all
individual market QHPs and SADPs and
all SHOP plan QHPs across all
Exchanges-types must use a network of
providers that complies with the
standards described in those sections,
beginning with PY 2024. We explained
in the proposed rule (87 FR 78287) that
under this proposal, an Exchange could
not certify as a QHP a health plan that
does not use a network of providers.
However, we solicited comment on
whether it is possible to design a plan
that does not use a network in a way
that would address our concerns about
the plan’s ability to offer a sufficient
choice of providers without excessive
burden on consumers, or what
regulatory standards such a plan could
meet to ensure a sufficient choice of
providers without excessive burden on
consumers.
We explained in the proposed rule (87
FR 78287) that this proposed
requirement would also generally apply
to SADPs. We stated that since 2014, the
FFEs have received, and approved, QHP
certification applications for SADPs that
do not use a provider network in every
PY. However, we explained that the
number of SADPs that do not use a
provider network has never accounted
for a significant number of Exchangecertified SADPs on the FFEs. We noted
that at their most prevalent in PY 2014,
only 50 of the 1,521 Exchange-certified
SADPs on the FFEs were plans that do
not use a provider network. We also
noted that in PY 2022, only 8 of the 672
Exchange-certified SADPs on the FFEs
were plans that do not use a provider
network.
We further explained in the proposed
rule (87 FR 78287) that the number of
SADPs on the FFEs that did not use a
provider network appears to be limited
since 2017 to fewer and fewer States;
while 9 FFE States had Exchangecertified SADPs that do not use a
provider network in PY 2014, only 2
FFE States still had Exchange-certified
SADPs that do not use a provider
network in PY 2022. We noted that
since PY 2021, only 85 counties in
Alaska and Montana still have
Exchange-certified SADPs that do not
use a provider network. We stated that
we assumed that the few SADP issuers
that still offer SADPs that do not use a
provider network on the FFEs in Alaska
and Montana only do so because of
difficulty in maintaining a sufficient
provider network in those States. We
further explained that we believe it is
reasonable to assume that consumers
increasingly gravitate towards SADPs
that use a network, given this overall
decrease in the availability of SADPs
that do not use a provider network. We
invited comment to confirm these
understandings, as well as comment on
the prevalence of SADPs that do not use
a provider network offered outside of
the FFEs in the non-grandfathered
individual and small group markets.
301 As discussed below, some commenters
asserted that the requirement to use a network of
providers to obtain certification contravenes section
1311(e)(1)(B)(i) of the ACA, which states that an
‘‘Exchange may not exclude a health plan . . . on
the basis that such plan is a fee-for-service plan,’’
and that ‘‘fee-for-service plans’’ are understood to
be ‘‘a type of non-network plan.’’ While we respond
to this comment in more detail below, we clarify
that our reference here to section 1311(e)(1)(B)(i) of
the ACA specifically pertains to our finding that—
at least in an FFE that the agency operates—using
a network of providers is generally in the interests
of qualified individuals. It does not address
whether fee-for-service plans are in the interests of
qualified individuals.
302 Benson NM, Song Z. Prices And Cost Sharing
For Psychotherapy In Network Versus Out Of
Network In The United States. Health Aff
(Millwood). 2020 Jul;39(7):1210–1218. https://
www.healthaffairs.org/doi/10.1377/
hlthaff.2019.01468.
303 Song, Z., Johnson, W., Kennedy, K., Biniek, J.
F., & Wallace, J. Out-of-network spending mostly
declined in privately insured populations with a
few notable exceptions from 2008 to 2016. Health
Aff. 2020;39(6), 1032–1041.
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We explained in the proposed rule (87
FR 78288) that, given the overall lack of
popularity of SADPs that do not use a
provider network, we believe that
consumers find that such plans do not
offer the same levels of protections
against out-of-pocket costs as network
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plans. Thus, we stated that we believe
it would be appropriate to revise
§§ 156.230 and 156.235 so that all
SADPs must use a network of providers
that complies with the standards
described in those sections as a
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condition of QHP certification,
beginning with PY 2024.
However, we explained in the
proposed rule (87 FR 78288 through
78289) that we were cognizant that it
can be more challenging for SADPs to
establish a network of dental providers
based on the availability of nearby
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dental providers, and we were aware
this proposal could result in no SADPs
offered through Exchanges in States like
Alaska and Montana, which have
historically offered SADPs without
provider networks (see Table 11). We
also expressed our awareness that
having no Exchange-certified SADPs
offered through an Exchange in an area
would impact all non-grandfathered
individual and small group health plans
in such areas. We noted that without an
SADP available on the respective
Exchange, all non-grandfathered
individual and small group health plans
in impacted areas would be required to
cover the pediatric dental EHB. We
noted that section 1302(b)(4)(F) of the
ACA states that if such an SADP is
offered through an Exchange, another
health plan offered through such
Exchange shall not fail to be treated as
a QHP solely because the plan does not
offer coverage of pediatric dental
benefits offered through the SADP.
As we explained that in the EHB Rule
(78 FR 12853), we operationalized this
provision at section 1302(b)(4)(F) of the
ACA to permit QHP issuers to omit
coverage of the pediatric dental EHB if
an Exchange-certified SADP exists in
the same service area in which they
intend to offer coverage. We further
explained in the proposed rule (87 FR
78289) that as a corollary, if no such
SADP is offered through an Exchange in
that service area, then all health plans
offered through the Exchange in that
service area would be required to
provide coverage of the pediatric dental
EHB, as section 2707(a) of the ACA
requires all non-grandfathered plans in
the individual and small group markets
to provide coverage of the EHB package
described at section 1302(a) of the ACA.
However, we stated in the proposed rule
that to our knowledge, at least one
Exchange-certified SADP has been
offered in all service areas nationwide
since implementation of this
requirement in 2014, and no Exchange
has required a medical QHP to provide
coverage of the pediatric dental EHB in
this manner. We solicited comment to
confirm this understanding.
As we stated in the proposed rule (87
FR 78289), to prevent a situation where
this proposal would require health
plans in those areas to cover the
pediatric dental EHB, we solicited
comment on the extent to which we
should finalize a limited exception to
this proposal only for SADPs that sell
plans in areas where it is prohibitively
difficult for the issuer to establish a
network of dental providers; we also
clarified that this exception would not
be applicable to health plans. We
explained that under such an exception,
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we could consider an area to be
‘‘prohibitively difficult’’ for the SADP
issuer to establish a network of dental
providers on a case-by-case basis, taking
into account a number of nonexhaustive factors, such as the
availability of other SADPs that use a
provider network in the service area,
and prior years’ network adequacy data
to identify counties in which SADP
issuers have struggled to meet standards
due to a shortage of dental providers.
We stated that other factors could
include an attestation from the issuer
about extreme difficulties in developing
a dental provider network, or data
provided in the ECP/network adequacy
(NA) template or justification forms
during the QHP application submission
process that reflect such extreme
difficulties. We sought comment on
whether it would be appropriate to
finalize such an exception in this rule,
other factors that we might consider in
evaluating whether an exception is
appropriate, as well as alternative
approaches to such an exception.
We sought comment on this proposal,
as well as on other topics included in
this section.
After reviewing the public comments,
for the reasons set forth in this final rule
and those we explained in the proposed
rule, subject to the exception discussed
below, we are finalizing the proposal to
revise the network adequacy and ECP
standards at §§ 156.230 and 156.235 to
require all individual market QHPs,
including individual market SADPs,
and all SHOP QHPs, including SHOP
SADPs, across all Exchanges to use a
network of providers that complies with
the standards described in those
sections. In addition, as proposed, we
are also removing from the regulation
text the exception at § 156.230(f) that
these sections do not apply to plans that
do not use a provider network. Finally,
we are finalizing a limited exception at
§ 156.230(a)(4) for certain SADP issuers
that sell plans in areas where it is
prohibitively difficult for the issuer to
establish a network of dental providers.
Specifically, under this exception, an
area is considered ‘‘prohibitively
difficult’’ for the SADP issuer to
establish a network of dental providers
based on attestations from State
departments of insurance in States with
at least 80 percent of their counties
classified as Counties with Extreme
Access Considerations (CEAC) that at
least one of the following factors exists
in the area of concern: a significant
shortage of dental providers, a
significant number of dental providers
unwilling to contract with Exchange
issuers, or significant geographic
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25875
limitations impacting consumer access
to dental providers.
We summarize and respond to public
comments received on this proposal
below.
Comment: A majority of commenters
supported the proposal to require plans
to use a network of providers that
complies with the standards in
§§ 156.230 and 156.235. Commenters
agreed that such a requirement is
consistent with statutory requirements
at section 1311(c)(1)(B) and (C) of the
ACA. Some commenters indicated that
the proposal would allow easier
comparison across all QHPs in a more
comprehensible manner for prospective
enrollees. Commenters agreed that the
proposal would ensure consumer choice
and access to care, as it would ensure
that QHPs do not impose excessive
burden on enrollees to understand
whether they would incur additional
out-of-pocket costs by their plan or to
identify which providers within a
reasonable distance from their residence
accept the plan’s benefit amount as
payment in full. Other commenters
agreed with the proposal, asserting that
health plans that do not use a network
of providers are not in consumers’
interests, as they are more likely to
subject consumers to increased medical
costs. Other commenters agreed that this
requirement should apply to SADPs.
Some commenters supported the
proposal, stating that plans that do not
use a provider network have historically
presented a barrier to consumers’ ability
to access care and control their health
care costs, unnecessarily expose people
to potential medical debt, and are not in
the interests of consumers shopping for
QHPs.
Response: Subject to a limited
exception described below applicable to
SADPs, we are revising the network
adequacy and ECP standards at
§§ 156.230 and 156.235 to state that all
individual market QHPs, including
individual market SADPs, and all SHOP
QHPs, including SHOP SADPs, across
all Exchanges must use a network of
providers that complies with the
standards described in those sections,
and to remove the exception at
§ 156.235(f) that these sections do not
apply to plans that do not use a provider
network. We are finalizing this
requirement, agreeing with commenters
that subjecting all plans that apply for
certification to the network adequacy
and ECP standards at §§ 156.230 and
156.235 allows for proper oversight of
the statutory requirements at section
1311(c)(1)(B) and (C) of the ACA. As
discussed below, while plans that use a
network of providers may present
certain access issues for consumers,
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their compliance with §§ 156.230 and
156.235 ensures that consumers have
reasonable access to a set of providers
that accept the plan’s payment as
payment in full, which limits
consumers’ out-of-pocket costs. In
addition, we are not aware of any
administrable regulatory standard that
would ensure that plans that do not use
a network comply with those sections of
the ACA. Commenters responding to
this proposal also did not identify a
regulatory standard that we believe that
we could administer to ensure
compliance with the ACA, as further
discussed below.
Comment: A minority of commenters,
including one health insurance issuer,
opposed the proposal and asserted that
the exception at § 156.230(f) should be
retained. These commenters asserted
that the proposal to require QHPs to
utilize a provider network contravenes
section 1311(e)(1)(B)(i) of the ACA,
which states that an ‘‘Exchange may not
exclude a health plan . . . on the basis
that such plan is a fee-for-service plan,’’
and they state that ‘‘fee-for-service
plans’’ are understood to be ‘‘a type of
non-network plan.’’ Commenters also
asserted that HHS impermissibly
justifies the requirement that QHPs
must use a network of providers because
only plans with networks can satisfy
section 1311(c)(1)(C) of the ACA
regarding the ECP requirement for
certification. One commenter stated that
HHS should develop alternative
regulatory standards for plans that do
not use a network to demonstrate
compliance with section 1311(c)(1)(B)
and (C) of the ACA, recommending that
HHS should look to Medicare
Advantage program standards as an
example.
Response: We do not agree that the
requirement for QHPs to utilize a
provider network conflicts with section
1311(e)(1)(B)(i) of the ACA. Section
1311(e)(1) and (e)(1)(B)(i) of the ACA
states that an Exchange may certify a
health plan as a QHP if such plan meets
the requirements for certification as
promulgated by the Secretary under
section 1311(c)(1) of the ACA and the
Exchange determines that making
available such health plan through such
Exchange is in the interests of qualified
individuals and qualified employers in
the State in which such Exchange
operates, except that the Exchange may
not exclude a health plan, among other
reasons, on the basis that such plan is
a fee-for-service (FFS) plan. In requiring
all plans to use a network, we are
exercising the authority granted to the
Secretary at section 1311(c)(1)(A) of
ACA to establish requirements for the
certification of health plans as QHPs,
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though we are also informed by the
requirement for certification at section
1311(e) of the ACA, which states that an
Exchange must determine that making
available such health plan through such
Exchange is in the interests of qualified
individuals and qualified employers in
the State or States in which such
Exchange operates, and which we
determine when evaluating plans for
QHP certification on an FFE.
In so doing, we are not excluding FFS
plans from obtaining certification on the
basis that such plans are FFS plans and
categorically not in the interests of
qualified individuals and qualified
employers. We are establishing that
plans that do not use a network of
providers are inherently unable to
comply with the statutory requirement
at section 1311(c)(1)(C) of the ACA
because that section requires health
plans certified as QHPs to ‘‘include
[ECPs] within health insurance plan
networks.’’ That health plans must
include ECPs within health insurance
plan networks as one of the criteria for
certification is a straightforward reading
of the language at section 1311(c)(1)(C)
of ACA. This statutory language does
not provide an exception for plans that
do not use a network of providers or
FFS plans; it simply states, ‘‘. . . to be
certified, a plan shall, at a minimum—
(C) include [ECPs] within health
insurance plan networks . . .’’ Our
interpretation that this language
requires health plans to use a network
of providers to obtain certification is
supported by statute. We believe that
section 1311(c)(1)(B)’s requirement that
plans must provide a ‘‘sufficient choice
of providers’’ on which the commenter
relies in fact provides additional legal
support for our regulation. As discussed
below, section 1311(c)(1)(B) of the ACA
encompasses the burden of accessing
providers, and our experience with
health plans that do not use a network
of providers seeking QHP certification
suggests that such plans impose
significant burdens on enrollees seeking
access to providers.
Commenters’ suggestion is based on
equating FFS plans to plans that do not
use a network of providers. We disagree
that FFS plans never use a network of
providers. For example, while
commenters rely on the Office of
Personnel Management’s subregulatory
definition of ‘‘non-PPO’’ FFS plans—
which are indeed FFS plans that do not
involve a network—they overlook the
definition of ‘‘Fee-for-Service (FFS) with
a Preferred Provider Organization
(PPO)’’ plan that follows, which
acknowledges that there are FFS plans
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that use a network.304 Similarly, the
commenters’ citation to our 1997
statement in the Federal Register
suggesting that Medicare private FFS
plans often lacked networks overlooks
that even then, section 1852(d) of the
Social Security Act (the Act) allowed
private FFS plans to include a
network 305—and that provision has
since been amended to encourage and
sometimes require that Medicare private
FFS plans use a network.306 Because
FFS plans include plans with and
without networks of providers, we
disagree that a statutory prohibition on
not certifying plans based on the fact
that they are FFS plans impliedly
prohibits not certifying plans on the
basis that they lack a provider network.
Thus, we find that commenters are
incorrect that FFS plans never use a
network of providers. However, even if
the commenters’ assertions were
accurate, section 1311(e)(1)(B)(i) of the
ACA would not prevent finalization of
this requirement. First, we principally
proposed this rule under our authority
to set requirements under section
1311(c) of the Act, and we do not
believe section 1311(e)(1)(B)(i) of the
ACA—directed at the authority of
Exchanges—necessarily limits our
general rulemaking authority under
section 1311(c) of the ACA. Nor does
section 1311(e)(1)(B)(i) of the ACA
override our interpretation of the
requirement at section 1311(c)(1)(C) of
the ACA that all plans must use a
network as a requirement for
certification. In addition, even if section
1311(e)(1)(B)(i) of the ACA also limited
section 1311(c) of the ACA, the
prohibition at section 1311(e)(1)(B)(i) of
the ACA is based on how the plan pays
providers for services rendered, and not
on the absence or presence of a network
of providers.
In addition, even if we did not
interpret the ACA to require the use of
a network of providers for certification,
we are not aware of any administrable
regulatory standard to assess whether a
plan that does not use a network of
providers ensures a sufficient choice of
providers, including ECPs, as required
by sections 1311(c)(1)(B) and (C) of the
ACA. While it may be true that enrollees
in plans that do not use a network may
visit any provider (and thus all ECPs)
304 https://www.opm.gov/healthcare-insurance/
healthcare/plan-information/plan-types/
#:∼:text=Fee%2Dfor%2DService%20(FFS)%20Plans
%20with%20a%20Preferred,to%20file%20claims
%20or%20paperwork.
305 See Public Law 105–33, section 4001, 111 Stat.
290–91 (1997).
306 See Public Law108–173, section 211, 117 Stat.
2180 (2003); Pub. L. 110–275, section 162, 122 Stat.
2569–70 (2008).
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and receive some reimbursement from
the plan, the possibility of the enrollee
receiving some reimbursement for any
benefit from any provider is not the
same as the plan providing enough
reimbursement for those benefits, such
that the enrollee has reasonable access
to sufficient providers that would accept
the plan’s payment amount as payment
in full. As discussed in the proposed
rule (87 FR 78286), for a prospective
enrollee, the analysis of whether a plan
ensures a sufficient choice of providers,
and thus provides sufficient protection
against additional out-of-pocket costs,
involves factors like the burden of
accessing those providers, including
whether there are providers nearby that
they can see without unreasonable delay
that will accept such a plan’s benefit
amount as payment in full. Thus, we
cannot conclude that such a plan de
facto complies with these statutory
requirements simply because it provides
some reimbursement to its enrollees for
any benefit.
Further, we are unaware of an
administrable regulatory standard that
would allow us to determine whether
such a plan’s benefit amount would be
accepted as payment in full by any
provider, such that an enrollee’s out-ofpocket costs may be limited by receiving
services from that provider. Such a plan
cannot impose on providers any
obligation to set a certain price for a
specific service, and there is no
requirement imposed by the plan on
providers to accept the plan’s payment
as payment in full. The plan cannot
prevent a provider from changing the
price for a specific service, nor can it
require that a provider communicate the
price change to the enrollee or their
plan. Likewise, no Federal requirements
prohibit such individual market plans
from changing the amount the plan pays
for a given service or require the plan
to communicate the change to the
enrollee or their provider, even midplan year. As a result, the enrollee is
subject to a plan that can change its
benefit amount, and there is no
assurance that any provider will
actually accept the payment amount as
payment in full; these changes could
occur frequently and without any notice
to the enrollee. To attempt to ascertain
whether there are sufficient providers
(including ECPs) who will accept the
plan’s benefit amount as payment in
full, one would need to accurately
understand what services are medically
necessary, continuously contact every
provider in the State to determine what
services they perform and what amount
they charge for every specific service,
and continuously contact the plan to
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determine the amount they pay for
every specific service. Such an exercise
is prohibitively difficult for a consumer
to perform, and we have been unable to
devise an administrable regulatory
standard to ensure compliance with the
ACA’s network adequacy and ECP
requirements.
Further, even if it were theoretically
possible to devise such a requirement,
we are not aware of any statutory
authority to require providers
continuously to report what amount
they would accept as payment in full,
either to an Exchange, a plan, or
individuals—significantly inhibiting an
Exchange’s ability to enforce such a
standard. And, even if we had such
statutory authority, there is insufficient
demand that HHS dedicate the
significant resources necessary to devise
a regulatory standard for plans that do
not use a network to demonstrate
compliance with section 1311(c)(1)(C) of
the ACA. We are aware of a single
health plan that does not use a network
of providers in one State that seeks to
obtain certification for the State’s
Exchange. No other issuer has expressed
interest to us in obtaining certification
for such a plan, and the majority of
comments on this rule supported the
proposal to require health plans to use
a network to obtain certification.
One commenter suggested that we
consider implementing a regulatory
standard that considers Medicare
Advantage private FFS plan
requirements. We do not find Medicare
Advantage private FFS plans to be
comparable to plans without networks
seeking QHP certification under the
ACA. Section 1852(d) of the Act
requires Medicare Advantage private
FFS plans to demonstrate to the
Secretary that the organization has
sufficient number and range of health
care professionals and providers willing
to provide services under the terms of
the plan. Further, Medicare Advantage
private FFS plans are defined in section
1859(b)(2) of the Act as a plan that,
among other things, ‘‘does not restrict
the selection of providers among those
who are lawfully authorized to provide
the covered services and agree to accept
the terms and conditions of payment
established by the plan.’’ As a result, in
the Medicare Advantage context, private
FFS enrollees are more protected from
unexpected out-of-pocket costs.307 This
307 Because sections 1852(k)(1) and 1866(a)(1)(O)
of the Act require health care providers and
hospitals to accept Medicare-established amounts
as payment in full, Medicare Advantage private FFS
plans can rely on the availability of providers that
accept Medicare as one way to demonstrate access
to services for their enrollees. In addition, since
2011, Medicare Advantage (MA) private FFS plans
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may not hold true in the Exchange
context. The one issuer that has
previously sought QHP certification for
a plan that did not use a network of
providers would not have required any
provider to agree to any particular terms
or conditions of payment. Unlike
Medicare Advantage private FFS plans,
then, we are concerned that Exchange
plans without networks leave
uncertainty as to whether any provider
accepts a plan’s benefit amount as
payment in full and potentially opens
up the enrollee to additional out-ofpocket costs.
Comment: Some commenters asserted
that the proposed rule fails to provide
a balanced discussion of the data on
provider network strengths and
weaknesses or acknowledge the merits
of plans that do not use a provider
network.
Response: In requiring plans to use a
network of providers to obtain QHP
certification, we are not representing
that plans that use a network of
providers do not present certain access
issues. For example, we recognize that
such plans place the burden on
enrollees to ensure that specific
providers are in-network, while a plan
that does not use a network of providers
does not place a such a burden on its
enrollees to receive some benefit under
the plan. We also recognize that some
networks are narrower than some
enrollees may prefer, which can result
in enrollees needing to travel further or
wait longer to receive care from an innetwork provider, while enrollees in a
plan that does not use a network of
providers may not need to travel as far
or wait as long to receive some benefit
under their plan. However, unlike plans
that do not use a network of providers,
there is an administrable regulatory
standard to ensure that plans that use a
network of providers comply with
sections 1311(c)(1)(B) and (C) of the
ACA; to that end, since 2014, we have
required that plans that use a network
of providers comply with the network
adequacy and ECP standards at
§§ 156.230 and 156.235. Plans that
comply with these standards ensure that
their enrollees have access to sufficient
providers who are contractually
obligated to accept the plan’s payment
amount as payment in full. This is a
consumer protection that plans that do
not use a network cannot provide to its
enrollees, and one that we believe is
consistent with core tenets of the ACA—
that are offered in areas where there are at least two
other MA plans that are network-based plans, must
use contracts or agreements with providers as the
only way to demonstrate that the private FFS plan
provides adequate access to services. See 42 CFR
422.114.
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that consumers have access to a plan
that provides a reasonable method to
limit their out-of-pocket costs for health
care to the annual limitation on cost
sharing.
Comment: One commenter requested
that HHS clarify whether the definition
of ‘‘provider’’ includes pharmacies in
the context of network adequacy and
ECP standards.
Response: While we have not defined
the term ‘‘provider’’ in the context of the
network adequacy standards, we
provide a list of the individual provider
and facility specialty types that are
included in the network adequacy
reviews within the ‘Specialty Types’ tab
of the respective plan year ECP/NA
template. If an issuer does not see a
specific specialty type listed in the
‘Specialty Types’ tab, it should refer to
the ‘Taxonomy Codes’ tab of the ECP/
NA template to select the correct
specialty type to which the taxonomy
code crosswalks. If a specific taxonomy
code is not listed in the ‘Taxonomy
Codes’ tab, such as in the case of
pharmacies, the provider type has not
been included in the FFE network
adequacy reviews. In the context of the
ECP standards, although we have not
defined the term ‘‘provider,’’ we list the
provider types that are included in the
ECP categories at § 156.235(a)(2)(ii)(B),
which does not include pharmacies.
Comment: Some commenters,
including two State departments of
insurance (Alaska and Montana), were
in favor of a limited exception to this
requirement for SADPs that sell plans in
areas where it is prohibitively difficult
for the issuer to establish a network of
dental providers. These commenters
confirmed our analysis that it may be
currently prohibitively difficult for
SADP issuers to establish a network of
dental providers in Alaska and
Montana, and that without an exception
to the proposed requirement, consumer
access to any SADP would be in
jeopardy. Commenters supported the
use of the list of non-exhaustive factors
that we would consider in determining
whether it is prohibitively difficult for
SADP issuers to establish a network of
dental providers, such as the availability
of other SADPs that use a provider
network in the service area, and prior
years’ network adequacy data to identify
counties in which SADP issuers have
struggled to meet standards due to a
shortage of dental providers. In
addition, commenters specifically
mentioned as barriers geographic
barriers and providers’ unwillingness to
enter into provider contracts. A handful
of commenters suggested that State
regulators should decide whether to
allow non-network plans to be certified
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as QHPs on an Exchange. One
commenter recommended that we
implement this ‘‘prohibitively difficult’’
approach for allowing certain SADPs to
not use a provider network with a preapproved form for SADPs to request the
exception and permit an abbreviated
filing for subsequent years if a SADP
filed the full request in a prior year.
This commenter also requested
clarification that the ‘‘prohibitively
difficult’’ exception does not require an
attestation, as well as clarification as to
the meaning of ‘‘extreme difficulties’’ in
developing a dental provider network.
Response: We are finalizing this
proposal with a limited exception for
SADPs that sell plans in areas where it
is prohibitively difficult for the issuer to
establish a network of dental providers.
This limited exception follows logically
from how the requirements in sections
1311(c)(1)(B) and (C) of the ACA that
plans ensure a sufficient choice of
providers, including ECPs, apply in the
unique SADP context. As commenters
point out, if creating a network of dental
providers is prohibitively difficult for
SADPs in certain areas, it is foreseeable
that there may be some areas where
SADPs could not be Exchange-certified
(in Alaska and Montana, for example).
That risks there being no SADPs in that
area and thus no choice of dental
providers through SADPs at all. Thus, in
this limited context, requiring a network
would defeat the purpose of sections
1311(c)(1)(B) and (C) the ACA to ensure
that enrollees have a sufficient choice of
providers.
We find additional support for this
exception in section 1302(b)(4)(F) of the
ACA, which states that if an SADP is
offered through an Exchange, another
health plan offered through such
Exchange shall not fail to be treated as
a QHP solely because the plan does not
offer coverage for pediatric services,
including pediatric dental benefits.
Without an Exchange-certified SADP
available on the Exchange in those
areas, all non-grandfathered individual
and small group health insurance plans
in impacted areas would be required to
cover the pediatric dental EHB, and
would be required to develop a network
of pediatric dental providers in
accordance with the policy finalized in
this rule. Imposing this certification
requirement on these health plans
would likely cause health plans in the
area to fail this certification
requirement, as SADPs would have
already established the difficulty in
creating pediatric dental networks in
this area. The ultimate result would be
that QHPs may not be available on the
respective Exchange in those areas, as
all non-grandfathered individual and
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small group health insurance plans in
the State would not be permitted to omit
coverage of the pediatric dental EHB.
This limited exception will be
codified at § 156.230(a)(4). Under this
exception, we will consider an area to
be one where it is ‘‘prohibitively
difficult’’ for the SADP issuer to
establish a network of dental providers
based on attestations from State
departments of insurance in States with
at least 80 percent of their counties
classified as CEAC that at least one of
the following factors exists in the area
of concern: a significant shortage of
dental providers, a significant number
of dental providers unwilling to contract
with Exchange issuers, or significant
geographic limitations impacting
consumer access to dental providers.
For purposes of its network adequacy
standards, CMS uses a county type
designation method that is based on the
population size and density parameters
of individual counties. These
parameters are foundationally based on
approaches used by the U.S. Census
Bureau in its classification of
‘‘urbanized areas’’ and ‘‘urban clusters,’’
and by the Office of Management and
Budget (OMB) in its classifications of
‘‘metropolitan’’ and ‘‘micropolitan.’’
The CEAC county type designation is
based on a U.S. Census Bureau
population density estimate of fewer
than 10 people per square mile.
This approach was informed by
comments submitted in response to our
solicitation for comments regarding if
and/or how we should design a limited
exception for SADP issuers. The States
of Alaska and Montana were the only
two States that expressed a need for this
limited exception in their public
comments, and are the only two States
with FFEs that have had SADPs without
a provider network for the past two
years. The State of Alaska noted that out
of the 2,200 people in the country
enrolled in SADPs without provider
networks in 2021, approximately 1,000
of those individuals resided in Alaska.
The State of Alaska requested in its
public comment that if HHS proceeds
with requiring SADPs to use a provider
network that we include a limited
exception for SADPs in areas where it
is prohibitively difficult to establish a
network, noting that 90 percent of
counties in Alaska with Exchangecertified SADPs without provider
networks have no Exchange-certified
SADPs with provider networks.
Furthermore, the State of Montana
stated in its public comment that they
have unique challenges as it pertains to
health care delivery and access,
including geographic barriers to care
and a limited number of dentists
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practicing in Montana who are willing
to contract with issuers. The State of
Montana strongly supported HHS
establishing an exception to the
provider network requirement for
SADPs in areas where it is difficult for
issuers to establish SADPs with
provider networks based on information
supporting such an exception, including
data provided in an issuer’s ECP/NA
template.
These comments submitted by the
States of Alaska and Montana,
combined with data provided in issuers’
ECP/NA templates or justification
forms, demonstrate that in States with
80 percent or more of their counties
classified as CEAC (that is, Alaska,
Montana, North Dakota, and Wyoming),
it is prohibitively more difficult for
issuers to establishing a network of
dental providers compared with issuers
in States with fewer than 80 percent of
their counties classified as CEAC, as
evidenced by the limited availability of
SADPs that use a provider network in
these States and/or the limited number
of contracted dentists. Given that our
network adequacy time and distance
standards allow for an issuer to receive
credit for a provider across county/State
lines so long as the provider is within
the requisite time and distance of
consumers in the respective county,
issuers operating in States with fewer
than 80 percent of their counties
classified as CEAC have performed
better overall with respect to meeting
network adequacy standards than
issuers in Alaska, Montana, North
Dakota, and Wyoming, demonstrating
that States with fewer than 80 percent
of their counties classified as CEAC are
not in need of this exception. Therefore,
limiting this SADP exception to States
with 80 percent or more of their
counties classified as CEAC aligns with
our solicitation for comments regarding
whether we should consider the
availability of other SADPs that use a
provider network in the service area and
prior years’ network adequacy data
submitted in issuers’ ECP/NA templates
or justification forms to identify
counties in which SADP issuers have
struggled to meet standards due to a
shortage of dental providers.
We expect that States, in determining
whether an area has been impacted by
at least one of the above factors to the
degree of being considered
‘‘prohibitively difficult’’ for SADP
issuers to establish a network of dental
providers, will take into account a
number of non-exhaustive factors, such
as the availability of other SADPs that
use a provider network in the service
area and prior years’ network adequacy
data to identify counties in which SADP
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issuers have struggled to meet standards
due to a shortage of dental providers.
Other factors could include extreme
difficulties in developing a dental
provider network, or data provided in
the ECP/NA template or justification
forms during the QHP application
submission process that reflect such
extreme difficulties, and geographic
barriers. Where we have determined
that an area is one where it is
‘‘prohibitively difficult’’ for the SADP
issuer to establish a network of dental
providers based on attestations from
State departments of insurance, all
SADPs that are seeking Exchange
certification and that are offering
coverage in that area will be exempt
from the requirement to use a provider
network. In areas for which we have not
made such a determination, SADP
issuers may still avail themselves of the
written justification process at
§ 156.230(a)(2)(ii).
We also believe that this limited
exception is justified for SADPs in part
because, unlike health plans, dentalonly coverage constitutes an excepted
benefit under section 2791(c)(2)(A) of
the PHS Act. In addition, there is
limited exposure to unanticipated outof-pocket costs for pediatric dental EHB
in SADPs that do not use a network of
providers, and there are a relatively
small number of pediatric dental EHBs
that are covered by such a plan.
Collectively, these factors significantly
limit the potential that those receiving
pediatric dental EHB will experience
excessive out-of-pocket costs. Thus, we
are not extending this limited exception
to health plans. No commenters
indicated that it is prohibitively difficult
for health plans to establish a network
of providers that complies with
§§ 156.230 and 156.235 (or sections
1311(c)(1)(B) or (C) of the ACA) or that
such a requirement may result in the
inability for health plans to be certified
as QHPs in specific areas. As a result,
we are codifying the limited exception
for SADPs only at this time.
We will operationalize this limited
exception beginning with certification
for PY 2024 and anticipate that States
will apply for this exception and
include a justification for requiring an
exception. We envision providing SADP
issuers and States ample guidance in
advance of PY 2024, and in any event,
envision working closely with State
regulators in these areas. We considered
allowing issuers to apply for an
exception, but we believe that State
regulators are better positioned to make
recommendations to HHS, as they know
the challenges of their markets. We also
believe that the conditions for granting
or not granting an exception would not
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exist at an issuer level, but instead at a
county or service area level, such that
issuer-specific applications would be
inappropriate.
Compliance With Appointment Wait
Time Standards
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78289), we noted that
in the 2023 Payment Notice, we
finalized the requirement that issuers
demonstrate compliance with
appointment wait time standards via
attestation, beginning in PY 2024.
We received numerous comments in
response to the finalized policy from the
2023 Payment Notice raising concerns
regarding the implementation of
appointment wait time standards for
QHP issuers beginning in PY 2024. In
response to the public comments, we
are amending § 156.230(a)(2)(i)(B) to
delay applicability of this standard until
PY 2025. We summarize and respond to
public comments received below.
Comment: Most commenters opposed
applying appointment wait time
standards beginning in PY 2024 and
requested delayed implementation to
PY 2025. Several commenters
highlighted the need for HHS to issue
additional guidance necessary for
issuers to comply with appointment
wait time standards, and to allow the
industry time to comment on that
guidance. Many commenters noted the
lack of specificity around how
appointment wait times would be
assessed and how issuers could attest
without a standard metric. Other
commenters were concerned that States
do not have the tools to assess
compliance or additional resources to
conduct compliance activities. A few
commenters were concerned with the
following barriers to implementation:
the burden on providers to report data
to issuers; the operational challenges in
monitoring contracted providers; the
difficulty in receiving accurate wait
time data from providers; and
fluctuations in appointment wait times
during the PY. Other commenters noted
workforce staffing, recruiting, and
retention challenges as additional
barriers. By contrast, a few commenters
supported implementing the
appointment wait time policy on the
finalized schedule so that consumers
have access to timely necessary care.
Others supported the standard but
requested that the methodology for
assessing compliance include additional
methodologies other than issuer
attestation.
Response: As noted above, we agree
with the many commenters that
implementation of the appointment wait
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time standards should be delayed by
one PY. We are amending the regulation
to delay the applicability of the
appointment wait time standards until
PY 2025. We are also aware of other
HHS initiatives to define and implement
appointment wait times standards for
other program areas. The additional PY
delay will allow HHS to ensure that
these wait time standards are
implemented in a holistic, logical way
across programs. Accordingly, QHP
issuers in FFEs will have one additional
PY before being required to attest to
meeting appointment wait time
standards.
As we noted in the 2023 Payment
Notice, specific guidelines for
complying with appointment wait time
standards will be released in later
guidance. This will allow us additional
time to develop specific guidelines for
how issuers should collect the requisite
data from providers, how the metrics
should be interpreted, and for public
comment on the proposed guidance.
Issuers that do not yet meet the
appointment wait time standards once
implemented in PY 2025, will be able to
use the justification process to update
HHS on the progress of their contracting
efforts for the respective plan year.
We encourage issuers that have
implemented monitoring and data
collection of provider appointment wait
times to continue to do so. However,
under this new timeline, we will not be
actively collecting or requiring
submission of any data or attestations
for compliance with the standards for
purposes of QHP certification for PY
2024.
Comment: Some commenters noted
the proposed rule would require QHPs
on all Exchanges to comply with
network adequacy standards but that
appointment wait time criteria would
only apply to issuers in FFEs. Others
requested that HHS establish Federal
appointment wait time standards that
would be applicable to issuers in all
Exchanges, including State Exchanges.
Response: As we noted in the 2023
Payment Notice (87 FR 27334), we
appreciate these comments and
understand that there are diverse
opinions regarding the appropriate
regulator for network adequacy
standards in State Exchanges. We will
monitor existing network adequacy
standards in State Exchanges relative to
the Federal standards and will consider
whether applying Federal standards to
issuers in State Exchanges in future PYs
is warranted.
Comment: One commenter requested
revisions to the wait time standards for
dental issuers and to reduce the
required wait time standard compliance
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percentage from 90 percent to 80
percent during the first 3 years. A few
commenters requested that the
appointment wait time standards be
applicable to pediatric providers
separately.
Response: We appreciate the detailed
recommendations around appointment
wait times and we will take these
comments under advisement as we
continue to specify the Federal
appointment wait time standards.
8. Essential Community Providers
(§ 156.235)
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78289), we proposed
to expand access to care for low-income
and medically underserved consumers
by strengthening ECP standards for QHP
certification, as discussed in this
section. First, HHS proposed to
establish two additional stand-alone
ECP categories at § 156.235(a)(2)(ii)(B)
for PY 2024 and beyond: Mental Health
Facilities and Substance Use Disorder
(SUD) Treatment Centers. In doing so,
two provider types currently categorized
as ‘‘Other ECP Providers’’ (Community
Mental Health Centers and SUD
Treatment Centers) would be
recategorized within these new
proposed stand-alone ECP categories.
We proposed to crosswalk the
Community Mental Health Centers
provider type into the newly created
stand-alone Mental Health Facilities
category and the SUD Treatment Centers
provider type into the newly created
stand-alone SUD Treatment Centers
category. Additionally, we proposed to
add Rural Emergency Hospitals (REHs)
as a provider type in the Other ECP
Providers ECP category (87 FR 78289).
We stated in the proposed rule that this
addition would reflect the fact that on
or after January 1, 2023, REHs may
begin participating in the Medicare
program. As we noted in July 2022,
‘‘[t]he REH designation provides an
opportunity for Critical Access
Hospitals (CAHs) and certain rural
hospitals to avert potential closure and
continue to provide essential services
for the communities they serve.’’ 308 We
stated in the proposed rule that we
believe the inclusion of REHs on the
ECP List may increase access to needed
care for low-income and medically
underserved consumers in rural
communities.
ECPs include providers that serve
predominantly low-income and
medically underserved individuals, and
specifically include providers described
308 https://www.cms.gov/newsroom/fact-sheets/
rural-emergency-hospitals-proposed-rulemaking.
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in section 340B(a)(4) of the PHS Act and
section 1927(c)(1)(D)(i)(IV) of the Act.
Section 156.235 establishes the
requirements for the inclusion of ECPs
in QHP provider networks. Section
156.235(a) requires QHP issuers to
include a sufficient number and
geographic distribution of ECPs in their
networks, where available. We
explained in the proposed rule (87 FR
78289) that each plan year, we release
a final list of ECPs to assist issuers with
identifying providers that qualify for
inclusion in a QHP issuer’s plan
network toward satisfaction of the ECP
standard under § 156.235. We noted that
the list is not exhaustive and does not
include every provider that participates
or is eligible to participate in the 340B
Drug Pricing Program, every provider
that is described under section
1927(c)(1)(D)(i)(IV) of the Act, or every
provider that may otherwise qualify
under § 156.235. We explained that we
endeavor to continue improving the ECP
list for future years and that these efforts
include direct provider outreach to
ECPs themselves, as well as reviewing
the provider data with Federal partners.
Section 156.235(b) establishes an
Alternate ECP Standard for QHP issuers
that provide a majority of their covered
professional services through physicians
employed directly by the issuer or a
single contracted medical group. We
noted in the proposed rule (87 FR
78289) that the above proposal
establishing two additional ECP
categories and the proposed threshold
requirements discussed later in this
section would affect all QHP issuers,
regardless of whether they are subject to
the General ECP Standard under
§ 156.235(a) or Alternate ECP Standard
under § 156.235(b). However, we stated
that SADP issuers would only be subject
to such requirements as applied to
provider types that offer dental services,
as reflected in § 156.235(a)(2)(ii)(B).
Currently, QHPs that utilize provider
networks are required to contract with
at least 35 percent of available ECPs in
each plan’s service area to participate in
the plan’s provider network. In
addition, under § 156.235(a)(2)(ii)(B),
medical QHPs must offer a contract in
good faith to at least one ECP in each
of the available ECP categories in each
county in the plan’s service area and
offer a contract in good faith to all
available Indian health care providers in
the plan’s service area. Under
§ 156.235(a)(2)(ii)(B), the six ECP
categories currently include Federally
Qualified Health Centers, Ryan White
Program Providers, Family Planning
Providers, Indian Health Care Providers,
Inpatient Hospitals, and Other ECP
Providers (currently defined to include
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Substance Use Disorder Treatment
Centers, Community Mental Health
Centers, Rural Health Clinics, Black
Lung Clinics, Hemophilia Treatment
Centers, Sexually Transmitted Disease
Clinics, and Tuberculosis Clinics).
We stated in the proposed rule (87 FR
78290) that the establishment of two
new stand-alone ECP categories (Mental
Health Facilities and SUD Treatment
Centers) would strengthen the ECP
standard in two ways: (1) by requiring
that medical QHP issuers offer a
contract in good faith to at least one
SUD Treatment Center and at least one
Mental Health Facility that qualify as
ECPs in each county in the plan’s
service area, as opposed to being
blended with other provider types in the
existing ‘‘Other ECP Provider’’ category;
and (2) by decreasing the number of
provider types remaining in the ‘‘Other
ECP Provider’’ category, thereby
increasing the likelihood that remaining
provider types included in the ‘‘Other
ECP Provider’’ category will receive a
contract offer from a medical QHP
issuer to satisfy the requirement that
they must offer a contract in good faith
to at least one provider in each ECP
category in each county in the plan’s
service area.
As we explained in the proposed rule
(87 FR 78290), given that the ECP
standard is facility-based, the inclusion
of SUD Treatment Centers and Mental
Health Facilities on the HHS ECP list
would be limited to those facilities
identified by the Substance Abuse and
Mental Health Services Administration
(SAMHSA) or CMS as providing such
services, in addition to fulfilling other
ECP qualification requirements as
specified at § 156.235(c).
We stated in the proposed rule (87 FR
78290), that if this proposal is finalized
as proposed, the eight available standalone ECP categories would consist of
the following: (1) Federally Qualified
Health Centers; (2) Ryan White Program
Providers; (3) Family Planning
Providers; (4) Indian Health Care
Providers; (5) Inpatient Hospitals, (6)
Mental Health Facilities; (7) SUD
Treatment Centers, and (8) Other ECP
Providers, to include Rural Health
Clinics, Black Lung Clinics, Hemophilia
Treatment Centers, Sexually
Transmitted Disease Clinics, and
Tuberculosis Clinics. The proposed ECP
categories and ECP provider types
within those categories in the FFEs for
PY 2024 and beyond are set forth in
Table 12 (as discussed below, we are
finalizing these as proposed).
In addition, we proposed to revise
§ 156.235(a)(2)(i) to require QHPs to
contract with at least a minimum
percentage of available ECPs in each
plan’s service area within certain ECP
categories, as specified by HHS.
Specifically, we proposed to require
QHPs to contract with at least 35
percent of available FQHCs that qualify
as ECPs in the plan’s service area and
at least 35 percent of available Family
Planning Providers that qualify as ECPs
in the plan’s service area. Furthermore,
we proposed to revise § 156.235(a)(2)(i)
to clarify that these proposed
requirements would be in addition to
the existing provision that QHPs must
satisfy the overall 35 percent ECP
threshold requirement in the plan’s
service area. We noted that we would
retain the current overall ECP provider
participation standard of 35 percent of
available ECPs based on the applicable
PY HHS ECP list, including approved
ECP write-ins that would also count
toward a QHP issuer’s satisfaction of the
35 percent threshold.
We proposed that only two ECP
categories, FQHCs and Family Planning
Providers, be subject to the additional
35 percent threshold in PY 2024 and
beyond. We stated in the proposed rule
(87 FR 78291) that these two categories
were selected, in part, because they
represent the two largest ECP categories;
together, these two categories comprise
a significant majority of all facilities on
the ECP List. As we explained in the
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proposed rule, applying an additional
35 percent threshold to these two
categories could increase consumer
access in low-income areas that could
benefit from the additional access to the
broad range of health care services that
these particular providers offer. We
stated that we may consider applying a
specified threshold to other ECP
categories in future rulemaking, if we
find that additional ECP categories
contain a sufficient number and
geographic distribution of providers to
allow for application of the threshold
without inflicting undue burden on
issuers by effectively forcing them to
contract with a few specific providers.
We explained that, based on data from
PY 2023, it is likely that a majority of
issuers would be able to meet or exceed
the threshold requirements for FQHCs
and Family Planning Providers without
needing to contract with additional
providers in these categories. To
illustrate, we stated that if these
requirements had been in place for PY
2023, out of 137 QHP issuers on the
FFEs, 76 percent would have been able
to meet or exceed the 35 percent FQHC
threshold, while 61 percent would have
been able to meet or exceed the 35
percent Family Planning Provider
threshold without contracting with
additional providers. For SADP issuers,
84 percent would have been able to
meet the 35 percent threshold
requirement for FQHCs offering dental
services without contracting with
additional providers. We further stated
that in PY 2023, for medical QHPs, the
mean and median percentages of
contracted ECPs for the FQHC category
were 74 and 83 percent, respectively.
For the Family Planning Providers
category, the mean and median
percentages of contracted ECPs were 66
and 71 percent, respectively. For
SADPs, the mean and median
percentages of contracted ECPs for the
FQHC category were 61 and 64 percent,
respectively.
In the proposed rule (87 FR 78291),
we acknowledged challenges associated
with a general shortage and uneven
distribution of SUD Treatment Centers
and Mental Health Facilities. However,
we noted that the ACA requires that a
QHP’s network include ECPs where
available. As such, we explained that
the proposal to require QHPs to offer a
contract to at least one available SUD
Treatment Center and one available
Mental Health Facility in every county
in the plan’s service area does not
unduly penalize issuers facing a lack of
certain types of ECPs within a service
area, meaning that if there are no
provider types that map to a specified
ECP category available within the
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respective county, the issuer is not
penalized. Further, we explained that,
as outlined in prior Letters to Issuers,
HHS prepares the applicable PY HHS
ECP list that potential QHPs use to
identify eligible ECP facilities. The HHS
ECP list reflects eligible providers (that
is, the denominator) from which an
issuer may select for contracting to
count toward satisfying the ECP
standard. We noted that, as a result,
issuers are not disadvantaged if their
service areas contain fewer ECPs. We
explained that we anticipate that any
QHP issuers falling short of the 35
percent threshold for PY 2024 and
beyond could satisfy the standard by
using ECP write-ins and justifications.
We stated that as in previous years, if an
issuer’s application does not satisfy the
ECP standard, the issuer would be
required to include as part of its
application for QHP certification a
satisfactory justification.
We sought comment on these
proposals.
After reviewing the public comments,
we are finalizing, as proposed, for PY
2024 and subsequent PYs, the
establishment of two additional standalone ECP categories at
§ 156.235(a)(2)(ii)(B), Mental Health
Facilities and SUD Treatment Centers,
and the addition of REHs as a provider
type in the Other ECP Providers
category. In addition, we are finalizing,
as proposed, revisions to
§ 156.235(a)(2)(i) to require QHPs to
contract with at least a minimum
percentage of available ECPs in each
plan’s service area within certain ECP
categories, as specified by HHS.
Specifically, we are finalizing that QHPs
must contract with at least 35 percent of
available FQHCs that qualify as ECPs in
the plan’s service area and at least 35
percent of available Family Planning
Providers that qualify as ECPs in the
plan’s service area for PY 2024 and
subsequent PYs. Furthermore, we are
finalizing, as proposed, revisions to
§ 156.235(a)(2)(i) to clarify that these
threshold requirements will be in
addition to the existing provision that
QHPs must satisfy the overall 35 percent
ECP threshold requirement in the plan’s
service area. As stated earlier, we noted
in the proposed rule (87 FR 78289) that
the proposal establishing two additional
ECP categories and the proposed
threshold requirements would affect all
QHP issuers, regardless of whether they
are subject to the General ECP Standard
under § 156.235(a) or Alternate ECP
Standard under § 156.235(b), but we
stated that SADP issuers would only be
subject to such requirements as applied
to provider types that offer dental
services, as reflected in
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§ 156.235(a)(2)(ii)(B). However, we
omitted corresponding regulation text
amendments in the proposed rule. We
are including regulation text
amendments at § 156.235(b)(2)(i) to
codify this policy as proposed.
We summarize and respond to public
comments received on the proposed
policies, below.
Comment: The majority of
commenters supported the proposal to
create the standalone ECP categories for
SUD Treatment Centers and Mental
Health Facilities, noting that the new
categories will expand access to mental
health services and SUD treatment. One
commenter urged HHS to further define
what types of facilities are included in
the SUD Treatment Centers and Mental
Health Facilities categories. One
commenter recommended that HHS use
the language ‘‘mental health
organizations’’ because ‘‘mental health
organizations’’ is a broader term and can
include peer-run organizations and
other community-based mental health
centers. They indicated that these
organizations receive funding and
technical assistance from SAMHSA and
that they would be able to service more
individuals if they were ECPs. Two
commenters requested that HHS
establish an additional ECP category for
‘‘pediatric mental health facility.’’
Response: We are finalizing the
creation of standalone ECP categories
for SUD Treatment Centers and Mental
Health Facilities as proposed. As noted
by commenters and explained in the
proposed rule (87 FR 78290), we believe
that establishing these new standalone
categories will expand access to mental
health services and SUD treatment.
Regarding the suggestion to use the
broader term ‘‘mental health
organizations,’’ the commenter noted
that this term can include the use of
peer-run organizations. CMS partners
with SAMHSA to ensure that a range of
providers providing mental health and
SUD care appear on the HHS ECP list
in order to increase access for all
consumers who need these types of
care. HHS may consider additional ECP
categories or provider types, including
pediatric mental health providers and
other types of mental health
organizations, in future rulemaking, if
analysis suggests that there is a
sufficient number and distribution of
such providers.
Comment: Two commenters opposed
HHS’ proposal to establish these ECP
categories. One of these comments
urged HHS to delay implementation of
the standalone categories until PY 2025
to allow issuers more time to prepare
and to evaluate the impact of the
proposal. One commenter did not
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specifically state whether they
supported or opposed the proposal but
stated that regulation should be left to
the States. Two commenters recognized
that issuers may have difficulty meeting
the requirements due to inadequate
provider supply. One of these two
commenters recommended delaying the
implementation of the two categories
until further analysis can be conducted
to determine the best way to contract
with quality SUD treatment and mental
health providers.
Response: In response to concerns
raised about potential difficulties
meeting the increased standard because
of a provider supply shortage, we note
that the standard does not penalize
issuers that lack certain types of ECPs
within a service area. First, section
1311(c)(1)(C) of the ACA requires that a
QHP’s network include those ECPs,
where available, that serve
predominantly low income and
medically-underserved populations. As
such, as we explained in the proposed
rule (87 FR 78291), the proposal to
require QHPs to offer a contract to at
least one available SUD Treatment
Center and one available Mental Health
Facility in every county in the plan’s
service area does not unduly penalize
issuers facing a lack of certain types of
ECPs within a service area. In addition,
as outlined in prior Letters to Issuers,
HHS prepares the applicable PY HHS
ECP list that potential QHPs use to
identify eligible ECP facilities. The HHS
ECP list reflects eligible providers (that
is, the denominator) from which an
issuer may select for contracting to
count toward satisfying the ECP
standard.309 As a result, issuers are not
disadvantaged if their service areas
contain fewer ECPs. Further, as in prior
years, there will be mechanisms in place
to assist issuers who encounter
difficulty meeting any element of the
ECP standard during certification,
including the ECP Justification Form
and the ECP Write-in Worksheet.310 We
reflect this in our regulations
(§ 156.235(a)(3) and (b)(3)) by permitting
issuers that cannot meet the contracting
standards to satisfy the QHP
certification standard by submitting a
justification. Therefore, the standard
does not penalize issuers that cannot
meet the ECP standard because of a lack
309 HHS also endeavors to continue improving the
ECP list for future plan years, and invites issuers
to encourage any mental health or SUD provider in
that issuer’s service area to submit an ECP petition
for potential inclusion on the list.
310 See https://www.qhpcertification.cms.gov/s/
ECP%20and%20Network%20Adequacy and
https://www.qhpcertification.cms.gov/s/Essential
%20Community%20Providers%20and%20Network
%20Adequacy%20FAQs for more information.
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of certain types of ECPs within a service
area. Moreover, we anticipate
implementing these categories for PY
2024 will increase consumer access to
vitally important mental health and
SUD care, enhancing health equity for
low-income and medically underserved
consumers. Thus, we are not delaying
implementation until PY 2025.
Comment: One commenter supported
the proposal but expressed patient
access concerns, as many mental health
and SUD facilities are religious in
nature, and LGBTQIA+ and racial and
ethnic minority groups have frequently
expressed discomfort with religiously
affiliated programs. The commenter
urged HHS to ensure that the ECP list
also includes secular mental health and
SUD facilities.
Response: We acknowledge the
commenter’s concern and remain
committed to continuously improving
the ECP list such that it includes a wide
range of providers that can provide care
for all consumers, recognizing that
diverse patient populations may have
varying needs and preferences for their
care, including mental health and SUD
care.
Comment: Several commenters
supported the proposal to add REHs to
the Other ECP Providers category, citing
expanded access to care in rural areas.
Response: We agree that including
REHs in the Other ECP Providers
category may increase access to needed
care for low-income and medically
underserved consumers in rural
communities, and are finalizing the
addition of REHs to the Other ECP
Providers category as proposed. As we
noted in the proposed rule (87 FR
78289), REHs are a new provider type
established to address the growing
concern over closures of rural hospitals,
and as such, there may initially be few
REHs on the ECP list. We anticipate that
the number of REHs on the ECP list will
grow in future years as some current
ECPs, such as critical access hospitals,
may potentially convert to REHs to
avoid closure.
Comment: Two commenters opposed
the addition of REHs to the Other ECP
Providers category. They recommended
that HHS delay the proposal until PY
2025 to allow more time for issuers to
prepare and because States, hospitals,
providers, and other interested parties
are in the process of implementing new
REH standards.
Response: We are finalizing our
proposal to add REHs to the ‘‘Other ECP
Providers’’ category. This will increase
the likelihood that issuers will include
REHs in their networks, thereby
increasing access to needed care for
low-income and medically underserved
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consumers in rural communities.
However, we note that issuers will often
have the option to satisfy the ECP
requirement by contracting with another
provider type. If no REHs are available
in a service area, the issuer will not be
penalized.
Comment: Many commenters
supported the proposal to apply the 35
percent threshold to FQHCs and Family
Planning Providers, citing enhanced
access to care for low-income, medically
underserved consumers. One
commenter stated that its support for
the extension of the 35 percent
requirement threshold to FQHCs was
contingent on HHS’ ECP justification
process remaining the same.
Response: We agree that the
application of the 35 percent threshold
to FQHCs and Family Planning
Providers will enhance access to care for
low-income, medically underserved
consumers, and are finalizing the 35
percent thresholds for FQHCs and
Family Planning Providers as proposed.
As we stated in the proposed rule, these
thresholds will apply to all issuers
regardless of whether they are subject to
the General ECP standards under
§ 156.235(a) or the Alternate ECP
Standards under § 156.235(b). We note
that SADP issuers will only be subject
to such requirements as applied to
provider types that offer dental services,
as reflected in § 156.235(a)(2)(ii)(B).
Apart from some enhancements to the
ECP Justification Form to facilitate
issuers’ reporting to CMS when provider
facilities have closed or are no longer
interested in contracting, or when
issuers have encountered other
contracting barriers beyond their
control, the justification process
remains broadly the same as in PY 2023.
Comment: Some commenters opposed
the proposed categorical threshold
requirements (that is, the proposed
threshold requirements that would
apply to specific categories of ECPs),
stating that they do not account for
regional variations in provider
availability, enrollee needs, and
geographic features. Commenters also
stated that categorical thresholds may
lead to inflexibility in contracting with
high-quality providers and increased
administrative costs. Two of the
opposing commenters expressed
concerns about not being given enough
time to negotiate new contracts with
providers. However, one commenter
acknowledged that issuers that fall short
of the requirement could submit ECP
write-ins and justification forms.
Response: We recognize commenters’
concerns given that issuer network
participation negotiations are a tool that
issuers use to manage costs, which are
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generally reflected in lower premium
rates. Reducing issuers’ ability to limit
the scope of their networks could
reduce the utility of that cost
management tool and potentially cause
premiums to increase. In considering
these factors, we elected not to propose
to extend the 35 percent threshold to
each of the major ECP categories.
Rather, we proposed that only two
major ECP categories, FQHCs and
Family Planning Providers, be subject to
the additional 35 percent threshold in
PY 2024 and beyond. These two
categories were selected, in part,
because they represent the two largest
ECP categories; together, these two
categories comprise a significant
majority of all facilities on the ECP list.
Applying an additional 35 percent
threshold to these two categories could
increase consumer access in low-income
areas that could benefit from the
additional access to the broad range of
health care services that these particular
providers offer. As we explained in the
proposed rule (87 FR 78291), because
there is already a robust number of these
two types of facilities on the ECP list,
we do not anticipate that it will be
unduly burdensome for issuers to
contract with 35 percent of available
providers of these types in the plan’s
service area. We acknowledge that
extending the 35 percent threshold to
those ECP categories that contain fewer
total providers, on the other hand, could
potentially lead to decreased contracting
flexibility for issuers.
If issuers encounter difficulty meeting
the 35 percent thresholds for FQHCs
and/or Family Planning Providers due
to insufficient time, provider
availability, or flexibility to carry out
contracting activities, we remind issuers
that the ECP Justification Form, the ECP
Write-in Worksheet, and the ECP/NA
Post-certification Compliance
Monitoring (PCM) program are available
as tools to assist issuers with their good
faith efforts toward compliance with the
applicable ECP standard.
Comment: Several commenters noted
support for HHS’ proposal to increase
the contracting threshold for FQHCs
from 30 to 35 percent.
Response: We did not make such a
proposal in the proposed rule. We
proposed, and are finalizing, the
application of a 35 percent ECP
threshold to both FQHCs and Family
Planning Providers (in addition to the
existing overall 35 percent ECP
threshold requirement in the plan’s
service area). In prior years, the
threshold percentage applied overall
across categories and did not apply
specifically to any individual ECP
category.
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9. Termination of Coverage or
Enrollment for Qualified Individuals
(§ 156.270)
a. Establishing a Timeliness Standard
for Notices of Payment Delinquency
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78291), we proposed
to amend § 156.270(f) by adding a
timeliness standard to the requirement
for QHP issuers in Exchanges to send
enrollees notice of payment
delinquency. Specifically, we proposed
to revise § 156.270(f) to require issuers
to send notice of payment delinquency
promptly and without undue delay.
We stated in the proposed rule that
HHS has long required issuers to send
notices of non-payment of premium (77
FR 18469), so that enrollees who
become delinquent on premium
payments are aware and have a chance
to avoid termination of coverage. In
accordance with § 156.270(a), issuers
may terminate coverage for the reasons
specified in § 155.430(b), which under
paragraph (2)(ii) includes termination of
coverage due to non-payment of
premiums. Enrollees who are receiving
APTC and who fail to timely pay their
premiums are entitled to a 3-month
grace period, described at § 156.270(d),
during which they may return to good
standing by paying all outstanding
premium before the end of the 3
months. We noted in the proposed rule
(87 FR 78291) that enrollees who are not
receiving APTC may also be entitled to
a grace period under State law, if
applicable.
As we explained in the proposed rule
(87 FR 78291), we have an interest in
helping enrollees maintain coverage by
establishing basic standards of
communication between the QHP issuer
and enrollees regarding premium
payment status, especially at the start of
an enrollment and when an enrollment
has entered delinquency for failure to
timely pay premium and is at risk for
termination. For example, we stated that
before Exchange coverage is effectuated,
the Exchanges on the Federal platform
generally require that the enrollee make
a binder payment (first month’s
premium) by prescribed due dates.311 At
§ 156.270(f), we have also regulated on
communicating to an enrollee when
they have become delinquent on
premium payment and when their
coverage has been terminated. But we
noted that while the regulation at
§ 156.270(f) requires that issuers notify
enrollees when they become delinquent
on premium payments, we currently set
no timeliness requirements for issuers.
311 See
PO 00000
§ 155.400(e).
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We stated that, in conducting oversight
of issuers, we are aware that in some
instances, issuers have delayed
notifying enrollees of delinquency, and
are concerned that there may be
situations in which enrollees are not
timely informed that they have become
delinquent on premium payments, thus
limiting the amount of time they have
available to rectify the delinquency and
avoid termination of coverage. We noted
that in extreme cases, an enrollee may
not become aware that they have
become delinquent until termination of
coverage has already occurred. For
example, we noted that if an enrollee
(who was not receiving APTC) failed to
pay August’s premium but was not
informed by the issuer they had become
delinquent until September, they would
have already lost coverage and will not
have an opportunity to restore it. We
acknowledged that there may also be
uncertainty among issuers regarding
their requirement to send notices of
delinquency, since we have not
provided guidance on when this notice
must be sent.
As we explained in the proposed rule
(87 FR 78292), modifying § 156.270(f) to
require issuers operating in Exchanges
to send notices of payment delinquency
promptly and without undue delay
would ensure that issuers are promptly
sending these notices when enrollees
fail to make premium payments, so that
enrollees are aware they are at risk of
losing coverage, including when they
are entering a grace period (either the 3month grace period for enrollees who
are receiving APTC, or a State grace
period if applicable). We noted that it
would also provide clarity to issuers
regarding their obligation to send a
notice when an enrollee becomes
delinquent on premium payment.
Finally, we stated that updating this
regulation would serve HHS’ goal of
promoting continuity of coverage by
ensuring enrollees are aware they have
become delinquent on premium
payment and have a chance to pay their
outstanding premium to avoid losing
coverage. We sought comments on this
proposal.
In addition, to further help ensure
that notices are sent in a timely and
uniform manner, we stated that we
believe it would be important to specify
the number of days within which the
issuer must send notice from the time
an enrollee becomes delinquent on
payment. Thus, we also solicited
comment on what a reasonable
timeframe would be for sending notices
of delinquency to enrollees.
After reviewing the public comments,
we are finalizing our proposal to revise
§ 156.270(f) to require QHP issuers in
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Exchanges on the Federal platform to
send notices of payment delinquency
promptly and without undue delay. We
are also finalizing that such notices
must be sent within 10 business days of
the date the issuer should have
discovered the delinquency. In addition,
we clarify that this timeliness
requirement only applies to QHP issuers
operating in Exchanges on the Federal
platform. We summarize and respond
below to public comments received on
the proposal to require issuers to send
notice of payment delinquency
promptly and without undue delay, and
on the comment solicitation regarding a
reasonable timeframe for sending
notices of delinquency to enrollees.
Comment: Most commenters who
addressed the proposal to add a
timeliness standard for sending notices
supported it, stating that the proposal
would help better ensure continuity of
coverage and access to health care
services for enrollees. One commenter
stated that the proposal would help
ensure issuers do not arbitrarily
terminate coverage without providing
the enrollee a chance to make a payment
that may be needed to maintain their
coverage.
Response: We agree with commenters
that adding the timeliness standard will
help ensure continuity of coverage and
access to health care services, as well as
help ensure issuers do not arbitrarily
terminate coverage without providing
the enrollee a chance to make a payment
that may be needed to maintain their
coverage. As discussed further below,
we are finalizing the timeliness standard
with modification.
Comment: One commenter opposed
the proposal, stating that such rules are
already included and enforced at the
State level. In addition, one commenter
who supported the proposal suggested
that HHS could deem issuers compliant
with the policy in States that have
existing time frames for sending notices
to enrollees with premiums in arrears.
Response: While we acknowledge
some States have their own rules, as we
noted in the proposed rule (87 FR
78291), HHS has observed instances in
which issuers significantly delayed
sending delinquency notices, limiting
enrollees’ ability to pay past due
premium prior to termination of
coverage. It is thus important to
establish a minimum standard for when
issuers must send notices of payment
delinquency so that enrollees
consistently receive such notices in a
timely manner. Under this approach, in
States that do not have requirements or
that have less stringent requirements,
issuers of QHPs in Exchanges on the
Federal platform would at least be
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required to meet this new Federal
standard, though States may establish a
timeliness standard that is more
protective. However, we clarify that this
timeliness requirement does not apply
to SBEs. Unlike the Exchanges on the
Federal platform, some SBEs collect and
aggregate premium on behalf of issuers,
or send delinquency notices to
consumers, and thus it is appropriate to
avoid extending this requirement to
issuers in SBEs.
Comment: Two commenters
supported adding a timeliness standard
to the requirement for QHP issuers to
send enrollees notice of payment
delinquency but did not recommend
including a specific timeframe for this
requirement. These commenters
encouraged CMS to allow issuers to
maintain their best practices for sending
delinquency payment notices, and
cautioned that issuers need sufficient
time to process enrollee payments
received in the few days before and after
a payment due date to ensure
consumers do not unnecessarily receive
a notice of payment delinquency.
Response: We acknowledge that
issuers have historically had a variety of
practices for sending delinquency
notices, and that they need sufficient
time to process enrollee payments to
ensure consumers do not unnecessarily
receive a notice of payment
delinquency. However, we also believe
it is important that enrollees are given
adequate time to make payments before
any applicable grace period expires. To
balance providing issuers sufficient time
to process payments around the
payment due date and ensuring that
enrollees timely receive notice of
payment delinquency, we are finalizing
a standard that requires issuers to send
delinquency notices within 10 business
days of the date the issuer should have
discovered the delinquency.
Comment: One commenter
recommended that taglines (including
large print taglines) be added to
delinquency notices to address the
needs of consumers with LEP and/or
sight issues.
Response: Although this comment is
not within the scope of our proposals on
the timeliness standard presented in the
proposed rule, we appreciate that
consumers with disabilities may have a
need for reasonable accommodations
with regard to the notices they receive.
Issuers are required to provide such
accommodations under State and
Federal law. Regulation on meaningful
access to qualified health plan
information can be found at § 156.250,
and on accessibility requirements at
§ 155.205(c). Enrollees who need a
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particular accommodation should reach
out to their issuer to make the request.
Comment: Twenty commenters
suggested time frames for sending
notices of delinquency to enrollees. One
commenter recommended the earliest
timeframe that is reasonably possible
and most protective of enrollees. Nine
commenters recommended insurers
send notice of payment immediately
after the deadline. Two commenters
recommended that issuers send
delinquency notices to enrollees within
5 business days following the due date
of the unpaid premium. One commenter
recommended one week, and another
commenter recommended 7 calendar
days, both following the due date of the
premium. Two commenters
recommended 10 business days after the
discovery of the delinquency, with one
commenter adding that this would
provide flexibility for situations in
which an issuer is not initially aware
that an enrollee has become delinquent
on premium payments. This commenter
also noted that there were cases in
which issuers did not receive notice of
insufficient funds until 20 days after
payment was due.
One commenter recommended 12
days, with no specification of when that
time period would begin, or whether
they meant business or calendar days.
One commenter recommended a
minimum of 12 business days or 15
calendar days, with no specification of
when that time period would begin. One
commenter recommended that an issuer
send an initial delinquency notice
within two calendar weeks of the initial
delinquency. One recommended that 30
days from the original payment due date
would be a sufficient timeline for
sending such notices, but did not
specify whether they meant business or
calendar days.
Response: We agree with the two
commenters who suggested that 10
business days would be a reasonable
timeframe for sending notices of
payment delinquency. However, in
order to ensure that issuers are promptly
sending notices, we are finalizing a time
frame of 10 business days from when
the issuer ‘‘should have’’ discovered the
delinquency. This means that there is an
expectation that issuers will promptly
send notices of delinquency once they
discover the delinquency. We believe
that requiring notice to be sent within
10 business days of the date an issuer
should have discovered the enrollee’s
delinquency appropriately balances the
need to ensure enrollees receive timely
notice of delinquency, while providing
issuers with adequate time to send the
notices. Adopting a standard of 10
business days also allows time for
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issuers to ensure information regarding
enrollee delinquency is accurate and to
communicate with enrollees. In
addition, as some commenters noted,
there are situations in which an issuer
is not initially aware that an enrollee
has entered delinquency. For example,
one commenter noted that there were
cases in which issuers did not receive
notice of insufficient funds until 20
days after payment was due. Thus, the
standard we are finalizing in this rule
requires issuers to send notice to
enrollees within 10 business days of the
date the issuer should have discovered
the delinquency so that issuers are not
required to send the notices until they
should have become aware that an
enrollee is delinquent on payment.
Other timeframes suggested by
commenters, such as 30 days after the
payment due date or immediately after
the deadline for payment, are either too
long to ensure that enrollees are timely
notified of delinquency and have an
opportunity to rectify it, or too short to
give issuers time to process an enrollee’s
delinquency and send a notice. We
believe that defining ‘‘promptly without
undue delay,’’ as 10 business days of the
date the issuer should have discovered
the delinquency provides issuers with
the flexibility to process premium
payments that arrive late, and enough
time for enrollees to make late payments
before the expiration of a grace period.
Comment: One commenter
recommended that HHS institute a
minimum requirement that issuers
include notice of delinquency on their
monthly invoices as soon as the first
missed payment and allow issuers to
continue to send additional notices
using additional methods.
Response: Issuers have flexibility to
implement additional notices, and
nothing prevents issuers from sending
additional notices if they would like to
do so.
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10. Final Deadline for Reporting
Enrollment and Payment Inaccuracies
Discovered After the Initial 90-Day
Reporting Window (§ 156.1210(c))
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78292), we proposed
to amend § 156.1210(c) to remove,
beginning with adjustments to APTC
and user fee payments and collections
for 2015 PY coverage, the alternate
deadline at § 156.1210(c)(2) that allows
an issuer to describe all data
inaccuracies identified in a payment
and collection report by the date HHS
notifies issuers that the HHS audit
process for the PY to which such
inaccuracy relates has been completed,
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for these data inaccuracies to be eligible
for resolution.
In the proposed rule (87 FR 78292),
we proposed to revise § 156.1210(c) to
provide that to be eligible for resolution
under § 156.1210(b), an issuer must
describe all inaccuracies identified in a
payment and collections report before
the end of the 3-year period beginning
at the end of the PY to which the
inaccuracy relates. As we stated in the
proposed rule, under this proposal,
beginning with the 2020 PY coverage,
HHS would not pay additional APTC
payments or reimburse user fee
payments for FFE, SBE–FP, and SBE
issuers for data inaccuracies reported
after the 3-year deadline. Additionally,
we proposed that HHS would not accept
or take action that results in an outgoing
payment on data inaccuracies or
payment errors for the 2015 through
2019 PY coverage that are reported after
December 31, 2023, which means an
issuer must describe all inaccuracies
identified in a payment and collections
report for PYs 2015 through 2019 before
January 1, 2024. We stated that this
proposal would allow issuers some
additional time after this rule is
finalized to submit any inaccuracies for
the 2015 through 2019 PY coverage, for
which submissions would no longer be
permitted upon the effective date of this
rule if this proposal were effective upon
finalization.
We did not propose any changes to
the general framework outlined in
§ 156.1210(c)(3), which currently states
that if a payment error is discovered
after the final deadline set forth in
§ 156.1210(c)(1) and (2), the issuer must
notify HHS, the State Exchange, or SBE–
FP (as applicable) and repay any
overpayments to HHS. We proposed to
retain this language as the last sentence
of new proposed § 156.1210(c), except
for the reference to the alternative
deadline at § 156.1210(c)(2).
For issuers in State Exchanges, we
further affirmed that this proposal
would not change the requirement that
issuers promptly identify and report
data inaccuracies to the State
Exchange.312 We stated that under the
proposed revisions, issuers in State
Exchanges would be subject to the same
final 3-year deadline to work with the
State Exchange to resolve any
enrollment or payment inaccuracies
identified after the initial 90-day
reporting window for discovered
underpayments. Similarly, we also
proposed that HHS would not make any
312 As previously noted, the requirements
captured in § 156.1210 apply to all issuers who
receive APTC, including issuers in State Exchanges.
Also see part 2 of the 2022 Payment Notice, 86 FR
24258.
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payments to issuers in State Exchanges
on data inaccuracies or payment errors
for 2015 through 2019 PY coverage that
are reported after December 31, 2023. In
addition, we explained that issuers in
State Exchanges would also remain
subject to the existing requirement to
report data inaccuracies identified at
any time when related to overpayments.
We refer readers to the proposed rule
for further discussion of these proposals
(87 FR 78292 through 78293). We
sought comment on these proposals.
After reviewing the public comments,
we are finalizing our proposals without
modification. Specifically, we are
finalizing as proposed, removing the
alternate deadline at § 156.1210(c)(2)
beginning with the 2015 PY coverage,313
so that issuers are required to describe
all inaccuracies identified in a payment
and collections report within 3 years of
the end of the applicable PY to which
the inaccuracy relates to be eligible to
receive an adjustment to correct an
underpayment.314 Additionally, as
proposed, we are finalizing at
§ 156.1210(c) that, for PYs 2015 through
2019, to be eligible for resolution under
paragraph (b) of this section, an issuer
must describe all inaccuracies identified
in a payment and collections report
before January 1, 2024, thus allowing
issuers additional time to submit any
inaccuracies for the 2015 through 2019
PY coverage. We summarize and
respond below to public comments
received on the proposed provisions.
Comment: A few commenters
supported the proposal to remove the
alternate deadline at § 156.1210(c)(2) to
resolve data inaccuracies and report
payment adjustments to HHS. Removal
of the alternate deadline requires issuers
to describe all inaccuracies in a
payment and collections report within
three years of the end of the applicable
PY to which the inaccuracy relates. One
of these commenters was concerned
about permitting waiver of any user fees
owed to an SBE–FP if inaccuracies are
discovered after the deadline and
indicated that some State-imposed user
fees are determined by State law and
HHS does not have the authority to
waive them.
Response: We are finalizing these
changes as proposed and clarify that
313 The 2014 PY is excluded because the alternate
deadline for reporting inaccuracies closed upon
completion of the 2014 audits. See CMS. (2019,
April 1). CMS Issuer Audits of Advanced Payments
of the Premium Tax Credit. https://www.cms.gov/
CCIIO/Resources/Forms-Reports-and-OtherResources/Downloads/2014-CMS-APTCAudits.PDF.
314 Underpayment in this section refers to both
APTC underpayments to the issuer and user fee
overpayments to HHS, for which an issuer would
be entitled to additional payment from HHS.
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this policy is not intended to waive the
collection of user fees owed to SBE–FPs.
Only payments to issuers to address
underpayments that are identified
several years after the applicable plan
year are constrained under these
changes—not incoming user fee or
APTC overpayments owed by the issuer
to either HHS or a State. As explained
in the proposed rule and in part 2 of the
2022 Payment Notice (86 FR 24257),
under section 1313(a)(6) of the ACA,
‘‘payments made by, through, or in
connection with an Exchange are
subject to the False Claims Act (31
U.S.C. 3729, et seq.) if those payments
include any Federal funds.’’ As such, if
any issuer has an obligation to pay back
APTC or pay additional user fees, the
issuer could be liable under the False
Claims Act for knowingly and
improperly avoiding the obligation to
pay. Section 156.1210(c) states that if a
payment error is discovered after the
reporting deadline, the issuer is
obligated to notify HHS and the State
Exchange (as applicable) and repay any
overpayment.
Comment: One commenter stated that
removing the alternate deadline at
§ 156.1210(c)(2) puts issuers in a
position in which they will be expected
to return overpayment of APTCs but
will not be reimbursed for
underpayments when identified through
an audit process, asserting that this is
unnecessarily punitive to issuers. That
commenter stated that audits are timeconsuming, resource-heavy obligations
to ensure accurate payments are made
and paying issuers what they owed is a
reasonable expectation.
Response: We believe the benefits of
requiring inaccuracies identified in a
payment and collections report to be
described within 3 years of the end of
the applicable plan year to which the
inaccuracy relates outweigh any
perceived inequities associated with
establishing a deadline for receiving an
adjustment to correct discovered
underpayments but not for payment of
amounts owed to the Federal
government. First, prompt identification
and correction of payment and
enrollment errors protects enrollees
from unanticipated tax liability that
could result if the APTC is greater than
the amount authorized by the Exchange.
In addition, finalizing these changes
ensures that HHS and Exchange
processes for handling payment and
enrollment disputes for discovered
underpayments are completed before
the existing IRS limitation on amending
a Federal income tax return. Second,
prompt reporting supports the efficient
operation of Exchanges by aligning the
Exchange’s enrollment and eligibility
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data, payments provided by and
collected by HHS for Exchange
coverage, and the issuer’s own records
of payments due. The 3-year window is
intended to result in accurate reporting
and timely resolution of data
inaccuracies, and will establish a more
consistent, predictable, and less
operationally burdensome process for
the identification and resolution of such
inaccuracies for enrollees, issuers, HHS,
and State Exchanges. Further, we
believe that requiring issuers to adhere
to the 3-year deadline to submit all
disputes and address all errors will
incentivize proactive reporting of
inaccuracies that will increase data
integrity, and will discourage a reactive
approach of utilizing the audit process
to identify inaccuracies and utilizing the
end of the audit process as an
alternative timeframe to receive
additional APTC or reimbursement of
user fee payments. For all of these
reasons, we therefore generally disagree
that this approach is unnecessarily
punitive.
This policy requires that issuers
describe all inaccuracies identified in a
payment and collections report within
three years of the end of the applicable
PY to which the inaccuracy relates to be
eligible to receive an adjustment to
correct an underpayment. We will
continue to take action that results in an
outgoing payment on data inaccuracies
or payment errors identified through an
audit process when those errors are
identified within the 3 years of the end
of the applicable PY to which the
inaccuracy relates. However, under this
new framework, we will not accept or
take action that results in an outgoing
payment on data inaccuracies or
payment errors for the 2015 through
2019 PY coverage that are not reported
before January 1, 2024.
To assist in the transitioning to this
new framework, we are affording issuers
additional time to report data
inaccuracies or payment errors for the
2015 through 2019 PY coverage for
discovered underpayments, providing at
§ 156.1210(c) that all such inaccuracies
must be reported before January 1, 2024.
This one-time window is intended to
afford issuers time to address concerns
with their submissions and any
discovered underpayments for these
PYs before full implementation of this
policy change. We will make outgoing
payments for additional APTC or
reimbursement of user fee overpayments
associated with reported errors during
this one-time window, which we
believe affords ample opportunity for
issuers to report any data inaccuracies
or payment errors related to discovered
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underpayments for 2015 through 2019
PY coverage.
Finally, we note that it is the False
Claims Act (31 U.S.C. 3729, et seq.) 315
that obligates issuers to notify HHS and
repay improper ‘‘payments made by,
through, or in connection with an
Exchange . . . if those payments
include any Federal funds,’’ and
prohibits an issuer from knowingly and
improperly avoiding the obligation to
pay. If any issuer has an obligation to
pay back APTC or pay additional user
fees, the issuer could be liable under the
False Claims Act for knowingly and
improperly avoiding the obligation to
pay. The requirement at § 156.1210(c)
that the issuer notify HHS and the State
Exchange (as applicable) and repay any
overpayment (regardless of when the
payment error is discovered), aligns
with obligations under the False Claims
Act. Further, we reiterate that
safeguarding Federal funds is a primary
reason for APTC and user fee audits (78
FR 65087 through 65088),316 even if a
historic, ancillary benefit under the
prior framework had been providing
issuers a mechanism to receive
additional outgoing payments after the
3-year reporting deadline in situations
involving late discovery and
identification of underpayments. After
consideration of comments, we are
finalizing the amendments to
§ 156.1210(c) as proposed.
11. Administrative Appeals (§ 156.1220)
As discussed in section III.A.7.d. of
this preamble, (HHS–RADV
Discrepancy and Administrative
Appeals Process), we are finalizing the
amendments to § 156.1220(a)(4)(ii) to
add a reference to new proposed
§ 153.630(d)(3) to align with the changes
to shorten the SVA attestation and
discrepancy reporting period. As
discussed in section III.A.7.d of this
preamble, under new § 153.630(d)(3),
we are retaining the 30-calendar-day
window to confirm, or file a
discrepancy, regarding the calculation
of the risk score error rate as a result of
HHS–RADV. The cross-reference to
§ 153.630(d)(2) in § 156.1220(a)(4)(ii)
315 ACA section 1313(a)(6) explicitly subjects
payments made by, through, or in connection with
an Exchange to the False Claims Act, if the
payments include any Federal funds.
316 The 2014 Payment Notice that included
financial oversight, maintenance of records and
reporting requirements, ‘‘safeguard[s] the use of
Federal funds provided as cost-sharing reductions
and advance payments of the premium tax credit
and provide[s] value for taxpayers’ dollars.’’ See 78
FR 65088; see also CMS. The Center for Consumer
Information & Insurance Oversight: Audit Reports.
https://www.cms.gov/CCIIO/Programs-andInitiatives/Health-Insurance-Market-Reforms/
AuditReports (‘‘The goals of [APTC] audits are to:
Safeguard Federal Funds’’).
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• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
We solicited public comment on each
of these issues for the following sections
of this document that contain
information collection requirements
(ICRs). The public comments and our
responses appear in the applicable ICR
sections that follow.
will be maintained and will capture the
new proposed 15-calendar-day window
to confirm, or file a discrepancy, for
SVA findings (if applicable).
In addition, in the HHS Notice of
Benefit and Payment Parameters for
2024 proposed rule (87 FR 78206,
78293), we proposed to amend
§ 156.1220(b)(1) to address situations
when the last day of the period to
request an informal hearing does not fall
on a business day by extending the
deadline to request an informal hearing
to the next applicable business day. We
solicited comment on this proposed
amendment.
After reviewing the public comments,
we are finalizing the amendment to
§ 156.1220(b)(1), as proposed, to extend
the deadline to request an informal
hearing to the next applicable business
day in situations when the last day of
the period to request an informal
hearing does not fall on a business day.
We summarize and respond below to
the public comment received on the
proposed amendment to
§ 156.1220(b)(1).
Comment: One commenter supported
the proposal to clarify that when the last
day to request an informal hearing does
not fall on a business day, the deadline
is the next business day.
Response: We are finalizing the
amendment to § 156.1220(b)(1), as
proposed, extending the deadline to
request an informal hearing to the next
applicable business day when the last
day to request an informal hearing does
not fall on a business day. As we noted
in the proposed rule (87 FR 78293), this
provision is consistent with our policy
for other risk adjustment deadlines that
do not fall on a business day.317
For a discussion of the comments
related to the shortening of the SVA
window to confirm, or file a
discrepancy for SVA findings to 15
days, see the preamble discussion in
section III.A.7.d. of this rule (HHS–
RADV Discrepancy and Administrative
Appeals Process).
IV. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, we are required to provide
notice in the Federal Register and
solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. In order to fairly evaluate
whether an information collection
should be approved by OMB, section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we
solicit comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of the agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
To derive wage estimates, we
generally use data from the Bureau of
Labor Statistics to derive average labor
costs (including a 100 percent increase
for the cost of fringe benefits and
overhead) for estimating the burden
associated with the ICRs.318 Table 13 in
this final rule presents the mean hourly
wage, 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.
Nonetheless, there is no practical
alternative, and we believe that
doubling the hourly wage to estimate
total cost is a reasonably accurate
estimation method.
B. ICRs Regarding Repeal of Risk
Adjustment State Flexibility To Request
a Reduction in Risk Adjustment State
Transfers (§ 153.320(d))
pools beginning with the 2025 benefit
year. As such, we are finalizing several
amendments to § 153.320(d).
The burden currently associated with
this option is the time and effort for the
State regulator to submit its request(s),
supporting evidence, and analysis to
HHS. Burden for this option is currently
approved under OMB control number:
0938–1155. In that Paperwork
Reduction Act (PRA) package, we
estimate that it will take a business
operations specialist 40 hours (at a rate
of $76.20 per hour) to prepare the
request, supporting evidence, and
analysis, and 20 hours for a senior
318 See May 2021 Bureau of Labor Statistics,
Occupational Employment Statistics, National
Occupational Employment and Wage Estimates.
Available at https://www.bls.gov/oes/current/oes_
stru.htm.
We are finalizing the repeal of the
ability for prior participant States to
request a reduction in risk adjustment
State transfers in all State market risk
317 See,
for example, § 153.730.
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A. Wage Estimates
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operations manager (at a rate of $110.82
per hour) to review the request,
supporting evidence, and analysis and
transmit it electronically to HHS. In that
PRA package, we further estimate that
each State seeking a reduction will
incur a total burden of 60 hours at a cost
of approximately $5,264.40 per State to
comply with this reporting.
Since this policy will eliminate the
ability of the one prior participating
State (Alabama) to request a reduction
in risk adjustment transfers beginning
with benefit year 2025, we proposed to
rescind this information collection and
the associated burden beginning with
the 2025 benefit year in the proposed
rule. Therefore, there will be a reduction
in burden on States seeking reductions
of 60 hours at a cost of approximately
$5,264.40 per State due to the repeal of
this policy.
We sought comment on the
information collection requirements
related to this policy and the proposed
rescission of this information collection
beginning with the 2025 benefit year.
We did not receive any comments.
Therefore, we are finalizing this
information collection as proposed, and
HHS will rescind the associated
information collection once the policy is
no longer in effect.
C. ICRs Regarding Risk Adjustment
Issuer Data Submission Requirements
(§§ 153.610, 153.700, and 153.710)
We are finalizing a requirement for
issuers to collect and make available for
HHS’ extraction from issuers’ EDGE
servers a new data element, a QSEHRA
indicator. To implement this policy, we
are adopting the same transitional
approach and schedule for the QSEHRA
indicator as was finalized for the ICHRA
indicator in the 2023 Payment Notice.
Under this approach, for the 2023 and
2024 benefit years, issuers will be
required to populate the QSEHRA
indicator using data they already collect
or have accessible regarding their
enrollees. Then, beginning with the
2025 benefit year, issuers that do not
have an existing source to populate this
field for particular enrollees will be
required to make a good faith effort to
collect and submit the QSEHRA
indicator for these enrollees. We are also
finalizing the proposed extraction of
this data element beginning with the
2023 benefit year and are also finalizing
the inclusion of the QSEHRA indicator
in the enrollee-level EDGE limited data
sets available to qualified researchers
upon request, once available.
We will begin collection of the
QSEHRA indicator with the 2023
benefit year, and we estimate that
approximately 650 issuers of risk
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adjustment covered plans will be
subject to this data collection. We will
collect a QSEHRA indicator from
issuers’ ESES files and risk adjustment
recalibration enrollment files. We
believe the burden associated with the
collection of this data will be similar to
that of the collection of ICHRA indicator
finalized in the 2023 Payment Notice.
Much like the ICHRA indicator data, we
believe that some issuers already collect
or have access to the relevant
information to populate the QSEHRA
indicator. However, we do not believe
the information to populate the
QSEHRA indicator is routinely collected
by all issuers at this time; therefore, we
anticipate that there may be
administrative burden for some issuers
in developing processes for collection,
validation, and submission of this new
data element.
In recognition of the burden
associated with collecting this new data
element for issuers, we are adopting a
transitional approach for the QSEHRA
indicator that mirrors the approach
finalized for the ICHRA indicator in the
2023 Payment Notice and is similar to
how we have handled other new data
collection requirements.319 For
successful EDGE server data
submission, each issuer will need to
update their file creation process to
include the new data element, which
will require a one-time administrative
cost. After incorporating the most
recently updated wage estimate data, we
estimate this one-time administrative
cost at $579.96 per issuer (reflecting 6
hours of work by a management analyst
at an average hourly rate of $96.66 per
hour). Based on this, we estimate the
cumulative one-time cost to update
issuers’ file creation process to be
$376,974 for 650 issuers (3,900 total
hours for all issuers). We also estimate
a cost of $96.66 in total annual labor
costs for each issuer, which reflects 1
hour of work by a management analyst
per issuer at an average hourly rate of
$96.66 per hour.
Based on these estimates, we estimate
$62,829 in total annual labor costs for
650 issuers (650 total hours per year for
all issuers). We believe that this data
collection should not pose significant
additional operational burden to issuers
given that the operational burden
associated with populating the QSEHRA
319 For example, HHS did not penalize issuers for
temporarily submitting a default value for the in/
out-of-network indictor for the 2018 benefit year to
give issuers time to make the necessary changes to
their operations and systems to comply with the
new data collection requirement, but required
issuers to provide full and accurate information for
the in/out-of-network indicator beginning with the
2019 benefit year.
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indicator should be aided by the
requirement finalized in the 2023
Payment Notice mandating the
collection of the ICHRA indicator in the
same fashion. The extraction of the new
QSEHRA indicator should also not pose
additional burden to issuers since the
creation and storage of the extract—
which issuers do not receive—are
mainly handled by HHS. As this policy
is being finalized in this rule, we will
revise the information collection request
to account for the burden associated
with this policy, and will provide the
applicable comment periods.320
We are also finalizing the amendment
to the applicability date for the
extraction of the plan ID and rating area
data elements to extend the extraction of
these two data elements to the 2017,
2018, 2019 and 2020 benefit year data
sets. As detailed earlier and in prior
rulemakings, issuers have been required
to collect and submit these two data
elements as part of the required risk
adjustment data since the 2014 benefit
year. Therefore, we estimate that the
extraction of these data elements will
not pose additional operational burden
to the majority of issuers, since the
creation and storage of the extract—
which issuers do not receive—is mainly
handled by HHS. However, some issuers
may not have benefit year 2017, 2018,
2019, or 2020 data readily available for
extraction from their EDGE servers, and
therefore, there may be some burden
associated with restoring past years’
data to their respective EDGE servers
should this be the case. Our intention
with this policy is to limit the burden
on issuers for us to collect and extract
the plan ID and rating area data
elements from these additional prior
benefit year data. Therefore, while we
broadly solicited comment on these data
collections, we specifically solicited
comments on this burden estimate and
ways that we can further limit the
burden on extracting these two data
elements from the 2017, 2018, 2019 and
2020 benefit year data sets.
We did not receive any comments in
response to the information collection
requirements related to these policies.
We are finalizing these requirements as
proposed.
D. ICRs Regarding Risk Adjustment Data
Validation Requirements When HHS
Operates Risk Adjustment (HHS–RADV)
(§ 153.630)
Under § 153.630(g)(2), issuers below a
materiality threshold, as defined by
HHS, are exempt from the annual HHS–
320 Standards Related to Reinsurance, Risk
Corridors, and Risk Adjustment (OMB control
number 0938–1155).
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RADV audit requirements in
§ 153.630(b). While these issuers are
exempt from the annual HHS–RADV
audit process, they are subject to
random and targeted sampling such that
they undergo HHS–RADV
approximately every 3 years (barring
any risk-based triggers based on
experience that would warrant more
frequent audits). We are finalizing,
beginning with 2022 benefit year HHS–
RADV, a change to the materiality
threshold from $15 million in total
annual premiums Statewide in the
benefit year being audited to 30,000
BMM Statewide in the benefit year
being audited.
We estimate that this policy will not
significantly impact issuer burden
relative to previous estimates for HHS–
RADV and the current materiality
threshold. In particular, the new
threshold will not significantly alter the
anticipated number of issuers that will
fall under the materiality threshold and
be subject to random and targeted
sampling rather than the annual audit
requirements. We estimate that each
year, on average, there are 197 issuers of
risk adjustment covered plans with total
annual Statewide premiums below $15
million and 201 issuers of risk
adjustment covered plans below 30,000
BMM Statewide. Assuming one-third of
issuers below the materiality threshold
will be subject to HHS–RADV each year,
we estimate that the total number of
issuers selected for HHS–RADV that fall
under the materiality threshold will
remain fairly constant. We believe that
the number of issuers participating in
HHS–RADV for any given benefit year
under the finalized 30,000 BMM
Statewide threshold will not be
significantly different than the number
of issuers participating under the
current $15 million total annual
premium Statewide threshold and
reflected in our current HHS–RADV
burden estimates, and therefore, we
believe that there will not be an overall
increase or decrease in burden. We will
revise the information collection
currently approved under OMB control
number: 0938–1155 to account for the
changes to the HHS definition for the
materiality threshold in § 153.630(g)(2).
We did not receive any comments in
response to the information collection
requirements related to this policy. We
are finalizing these requirements as
proposed.
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E. ICRs Regarding Navigator, NonNavigator Assistance Personnel, and
Certified Application Counselor
Program Standards (§§ 155.210 and
155.225)
We are finalizing amendments to
§§ 155.210 and 155.225 to permit
enrollment assistance on initial door-todoor outreach by Navigators, nonNavigator assistance personnel, or
certified application counselors. This
policy will not impose any new
information collection requirements,
that is, reporting, recordkeeping or
third-party disclosure requirements.
Though we require Navigator grantees to
track enrollment numbers on weekly,
monthly, and quarterly progress reports,
burden is already accounted for under
OMB control number: 0938–1205, and
grantees are not required to specifically
track enrollments completed for door-todoor enrollments.
We did not receive any comments in
response to the information collection
requirements related to this policy. We
are finalizing these requirements as
proposed.
F. ICRs Regarding Providing Correct
Information to the FFEs (§ 155.220(j))
We are finalizing amendments to
§ 155.220(j)(2)(ii) to require agents,
brokers, and web-brokers to document
that eligibility application information
has been reviewed by and confirmed to
be accurate by the consumer or their
authorized representative prior to
application submission. This policy will
require the consumer or their authorized
representative to take an action that
produces a record that they reviewed
and confirmed the information on the
eligibility application to be accurate
prior to application submission. This
documentation will be required to be
maintained by agents, brokers, and webbrokers for a minimum of 10 years and
produced upon request in response to
monitoring, audit, and enforcement
activities.
We estimate costs will be associated
with this policy, including those related
to documenting, maintaining, and
producing the documentation. This
policy will not mandate any method or
prescribe a template for documenting
that a consumer or their authorized
representative reviewed and confirmed
the accuracy of their eligibility
application information. It will be up to
the agents, brokers, and web-brokers to
determine the best way to meet these
regulatory requirements.
Costs related to requiring the agent,
broker, or web-broker to document that
eligibility application information has
been reviewed by and confirmed to be
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accurate by the consumer or their
authorized representative prior to
application submission and to maintain
that documentation for a period of 10
years are as follows. We estimate it will
take an additional 5 minutes for an
enrolling agent, broker, or web-broker to
obtain documentation from a consumer
or their authorized representative that
they have reviewed and confirmed the
accuracy of their application
information. Billing at $66.68 per hour
using the Insurance Sales Agent
occupation code, each enrollment will
have approximately $5.56 additional
cost associated with it based on extra
time commitment. In PY 2022, agents
submitted 4,947,909 policies. This
makes the yearly total cost associated
with the extra 412,326 hours of burden
approximately $27,493,898 (412,326
total hours × $66.68 per hour).
Costs associated with maintaining
consumer’s or their authorized
representative’s documentation will
depend on the method selected by the
agent, broker, or web-broker to meet the
regulatory requirements. For those
agents, brokers, or web-brokers
currently meeting the requirements, no
additional costs will be incurred. If an
agent, broker, or web-broker opts to use
paper for documentation, they will bear
the costs of paper, ink and filing
cabinets to store the paperwork.
HHS will only require an agent,
broker, or web-broker to produce
retained records in limited
circumstances related to monitoring,
audit, and enforcement activities. In
instances of fraud investigation, we
typically request documentation
associated with approximately 10
different applications, generally from
the past 2 to 3 years. We estimate it will
take an agent approximately 2 hours to
gather consumer documentation for 10
applications. Each year, we generally
investigate approximately 120 agents,
brokers, or web-brokers. Therefore, we
estimate the yearly cost of producing
documentation for HHS to be
approximately $16,002 (($66.68 hourly
rate × 2 hours) × 120). The
documentation will be able to be mailed
electronically, so there will be no cost
associated with printing or mailing the
documentation. Agency-wide audits are
not completed often by HHS but may
become more widespread. In those
instances, we will request that the
agency produce a certain number of
records from the past 10 years. As this
policy is being finalized in this rule, we
will request to account for the
associated information collection
burden under OMB control number:
0938–NEW—(CMS–10840—Agent/
Broker Consent Information Collection).
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After a review of the comments
received, we are finalizing this
information collection requirement as
proposed. We summarize and respond
to public comments received on the
burden estimates associated with the
proposal to require agents, brokers, and
web-brokers to document that eligibility
application information has been
reviewed by and confirmed to be
accurate by the consumer or their
authorized representative prior to
application submission and to maintain
that documentation for a period of 10
years.
Comment: One commenter suggested
we did not estimate these costs
properly. This commenter believed we
underestimated these burden estimates
by as much as six times. Specifically,
the commenter asserted the time to
produce client specific documentation
for each client and unique factors such
as individuals with limited English
proficiency or without means to sign
electronically and the estimated 30
minutes the process takes for Medicare
applications is indicative the burden
may be underestimated.
Response: After reviewing the
regulatory changes and potential costs
associated, we disagree with this
commenter’s suggestion that we
underestimated these costs. We believe
5 minutes per enrollment interaction is
a reasonable timeframe to meet these
requirements. Under current
§ 155.220(j)(2)(ii), agents, brokers, and
web-brokers must ‘‘Provide the
Federally-facilitated Exchanges with
correct information . . .’’ As such, these
new requirements are simply building
on the existing requirement to provide
the FFEs with correct information,
which we believe will alleviate the
burdens and costs associated with these
new requirements for agents, brokers,
and web-brokers.321 Requesting that a
consumer respond to a text message,
email, verbal question posed by the
assisting agent, broker, or web-broker,
etc., stating they have reviewed their
application information and it is
accurate should not add a significant
amount of time to the enrollment
process. As discussed in the proposed
rule (87 FR 78252), we did not propose
to specify a method for documenting
that eligibility application information
has been reviewed and confirmed to be
accurate by the consumer or their
authorized representative. This
flexibility will allow each individual
agent, broker, or web-broker to establish
protocols and methods that will meet
their needs in the most efficient manner.
We believe this flexibility will allow
321 See
§ 155.220(j)(2)(ii).
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agents, brokers, and web-brokers to meet
the requirements of § 155.220(j)(2)(ii)
within the estimated 5 minutes per
enrollment interaction instead of the 30
minutes associated with Medicare
applications.
Additionally, we only plan on
requesting this documentation when
investigating potentially fraudulent or
noncompliant behavior. As agents,
brokers, and web-brokers establish
storage methods that best suit their
needs, the costs associated with
obtaining and submitting such
documentation to HHS should be
minimal. We believe that a 2-hour time
window for submitting requested
documentation is a reasonable
assumption.
Comment: A few commenters
suggested the proposed record retention
period of 10 years is too long for agents,
brokers, and web-brokers to maintain
the documentation required by
§ 155.220(j)(2)(ii)(A). Another
commenter stated HHS should have the
record retention period align with the
required record retention period of the
State where the consumer is enrolled.
Response: We have considered these
comments but continue to believe 10
years is an appropriate length of time to
maintain the documentation required by
§ 155.220(j)(2)(ii)(A). As discussed in
the proposed rule (87 FR 78253), this
aligns with other Exchange maintenance
of records requirements, including
§ 155.220(c)(3)(i)(E), which states
internet websites of web-brokers used to
complete QHP selections must
‘‘[m]aintain audit trails and records in
an electronic format for a minimum of
ten years and cooperate with any audit
under this section.’’ We believe being
consistent within the regulation and
with other Exchange maintenance of
records requirements is important.
Enforcement actions may encompass
non-compliance with different parts of
the regulations making standardized
timeframes for retention important for
relevant document collection and
review during investigations.
Additionally, we do not agree that
aligning with State record retention
requirements is beneficial in this
instance given the variability in
retention periods that this approach
would introduce. Many agents, brokers,
and web-brokers assist consumers in
multiple States and as a result, we often
speak with consumers from multiple
States during the course of a single
investigation into potential
noncompliance by an agent, broker,
web-broker. If these agents, brokers, and
web-brokers were retaining documents
based on State laws, investigations may
be hindered by one State’s record
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retention law being shorter than
another’s due to records being legally
discarded by the agent, broker, or webbroker under investigation. Mandating a
standard 10-year retention period for all
agents, brokers, and web-brokers
assisting consumers in the FFEs and
SBE–FPs will help mitigate these
concerns when reviewing agent, broker,
or web-broker responses to monitoring,
audit, and enforcement activities
conducted consistent with
§ 155.220(c)(5), (g), (h), and (k).
Comment: Some commenters stated
this documentation should be part of
the application process and maintained
by the Federal government, making the
documentation readily accessible and
minimizing burden on agents, brokers,
and web-brokers.
Response: We appreciate commenter’s
suggestions and agree there is merit to
these ideas. However, it is not currently
feasible to implement systematic
changes of this nature. There are no
plans to create a system that would
allow the Federal government to store
documentation for all enrollees. This
type of systematic change would likely
take years to implement, which would
mean the protections we hope to
implement with these new requirements
would be severely delayed. Delaying
these requirements means a longer time
period during which consumers may be
vulnerable to potentially fraudulent
behavior by agents, brokers, and webbrokers. If a consumer receives an
incorrect APTC determination or is
unaware they are enrolled in a QHP,
that consumer may owe money to the
IRS when they file their Federal income
tax return. Ensuring a consumer’s
income determination has been
reviewed and is attested to be accurate
will help avoid these situations, which
is why we are requiring the consumer or
their authorized representative to take
an action to produce a record that is
retained by the assisting agent, broker,
or web-broker. We believe the consumer
is in the best position to project their
future income. To determine if a
consumer is eligible for financial
assistance, such as APTC, prior to
enrollment, an estimate for income must
be entered prior to the eligibility
determination process. As many
consumers enroll in health coverage
prior to a new calendar year, the income
amount they enter is an estimate based
on available data, including income in
prior years, as well as what consumers
believe their income will be in the
upcoming plan year. If we remove the
consumer action from this process,
which may happen if the system is
changed in ways these commenters are
suggesting, it may circumvent the
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purpose of these new requirements (that
is, consumers reviewing their
information to ensure accuracy).
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G. ICRs Regarding Documenting Receipt
of Consumer Consent (§ 155.220(j))
We are finalizing amendments to
§ 155.220(j)(2)(iii) to require agents,
brokers, and web-brokers to document
the receipt of consumer consent prior to
facilitating enrollment in coverage
through the FFEs or SBE–FPs or
assisting an individual in applying for
APTC and CSRs for QHPs. This policy
will require the consumer or their
authorized representative to take an
action that produces a record that they
provided consent. Agents, brokers, and
web-brokers will be required to
maintain the documentation for a
minimum of 10 years and produce it
upon request in response to monitoring,
audit, and enforcement activities.
We estimate costs will be associated
with this policy, including those related
to documenting, maintaining, and
producing the records of consumer
consent. This policy does not mandate
any method or prescribe a template for
documenting receipt of consumer
consent. It will be up to the agents,
brokers, and web-brokers to determine
the best way to meet these regulatory
requirements.
Costs related to requiring that agents,
brokers, and web-brokers document the
receipt of consumer consent and
maintain such documentation for a
period of 10 years are as follows. We
estimate it will take about 5 minutes for
an enrolling agent, broker or web-broker
to obtain a consumer’s, or their
authorized representative’s, record of
their consent. Using the adjusted hourly
wage rate of $66.68 for an Insurance
Sales Agent, each enrollment will have
approximately $5.56 in additional cost
associated with it based on the extra
time commitment from these proposed
policy changes. In PY 2022, agents
submitted 4,947,909 policies. Based on
this number of enrollments, the total
annual burden is approximately 412,326
hours with a total annual cost of
approximately $27,493,898.
We will only require an agent, broker,
or web-broker to produce retained
records in limited circumstances related
to fraud investigation or agency audits.
In instances of fraud investigation, we
typically request consent records of
approximately 10 different applications,
generally from the past 2 to 3 years. We
estimate it will take an agent, broker, or
web-broker approximately 2 hours to
gather consent documentation for 10
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applications.322 Each year, we generally
investigate approximately 120 agents,
brokers, or web-brokers. Therefore, we
estimate the yearly cost of producing
consumer consent documentation to
HHS to be approximately $16,002
(($66.68 hourly rate × 2 hours) × 120).
These records are able to be mailed
electronically, so there will be no cost
associated with printing or mailing the
records. Agency-wide audits are not
completed often by HHS but may
become more widespread. In those
instances, we will request that the
agency produce a certain number of
records from the past 10 years.
The estimated total annual cost of
documenting of consumer consent is
$27,493,898 and the estimated total cost
of producing the retained consent
records is $16,002. This cost is captured
in the new information request related
to requiring agents, brokers, and webbrokers to document that eligibility
application information has been
reviewed by and confirmed to be
accurate by the consumer or their
authorized representative prior to
application submission. Therefore, the
total annual cost of the information
collection requirements associated with
this policy is $27,493,898. As this
policy is being finalized in this rule, we
will request to account for the
associated information collection
burden under OMB control number:
0938–NEW (CMS–10840—Agent/Broker
Consent Information Collection).
After a review of the comments
received, we are finalizing the
information collection requirements as
proposed. We received similar
comments on this proposal as we did on
the policy to require agents, brokers,
and web-brokers to document that
eligibility application information has
been reviewed by and confirmed to be
accurate by the consumer or their
authorized representative prior to
application submission and to maintain
that documentation for a period of 10
years. There were no comments that
were unique to the documentation of
consumer consent. Therefore, we
request that you please see the prior
information collection section for our
responses to these comments.
322 We note that we generally expect that
producing retained documentation of consumer
consent and documentation that a consumer has
reviewed and confirmed the accuracy of their
application information will occur as part of a
single audit in most cases, so the estimate for this
activity in section IV.F is inclusive of the costs for
this activity in this ICR.
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H. ICRs Regarding Failure To File and
Reconcile Process (§ 155.305(f))
We are finalizing amendments to
§ 155.305(f)(4) to provide that an
Exchange must determine an enrollee
ineligible for APTC if the enrollee has
FTR status is for two consecutive tax
years as opposed to one tax year
(specifically, years for which tax data
will be utilized for verification of
household income and family size).
This change will ensure that consumers
are complying with the requirement to
file their Federal income tax returns and
reconcile past years’ APTC, while also
ensuring continuity of coverage in
Exchange QHPs. The finalized FTR rule
will impact APTC eligibility
determinations for PY 2025 and beyond.
On Exchanges on the Federal
platform, FTR will be conducted in the
same as manner it had previously been
conducted with respect to collection of
information, with minimal changes to
the language of the Exchange
application questions necessary to
obtain relevant information; as such, we
anticipate that the finalized amendment
will not impact the information
collection OMB control number: 0938–
1191 burden for consumers.
We did not receive any comments in
response to the information collection
requirements related to this policy. We
are finalizing these information
collection requirements as proposed,
with a correction that there is not an
option for Exchanges to remove APTC
after a consumer has been in an FTR
status for 1 year.
I. ICRs Regarding Income
Inconsistencies (§§ 155.315 and
155.320)
We are finalizing amendments to
§ 155.320 to require Exchanges to accept
attestations, and not set an Income DMI,
when the Exchange requests tax return
data from the IRS to verify attested
projected annual household income, but
the IRS confirms there is no such tax
return data available.
Based on historical DMI data, we
estimate that HHS will conduct
document verification for 1.2 million
fewer households per year. Once
households have submitted the required
verification documents, we estimate that
it takes approximately 12 minutes for an
eligibility support staff person
(occupation No. 43–4061), at an hourly
cost of $46.70, to review and verify
submitted verification documents. The
revisions to § 155.320 will result in a
decrease in annual burden for the
Federal government of 240,000 hours at
a cost of $11,208,000.
In addition to the reduced
administrative burden for HHS
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eligibility support staff, the change will
reduce the time consumers spend
submitting documentation to verify
their income. We estimate that
consumers each spend 1 hour to submit
documentation and that the proposed
change will decrease burden on
consumers by 1.2 million hours per
year.
We will revise the information
collection currently approved under
OMB control number: 0938–1207 to
account for this decreased burden.
We did not receive any comments in
response to the information collection
requirements related to this policy. We
are finalizing these information
collection requirements as proposed.
J. ICRs Regarding the Improper Payment
Pre-Testing and Assessment (IPPTA) for
State-Based Exchanges (§§ 155.1500
through 155.1515)
As described in the preamble to
§ 155.1510, IPPTA will replace the
previous voluntary State engagement
initiative with mandatory participation
and related requirements. IPPTA is
designed to test processes and
procedures that support HHS’s review
of determinations of APTC made by
State Exchanges and to prepare State
Exchanges for the planned measurement
of improper payments.
In the preamble to § 155.1510(a)(1),
we state that State Exchanges will
provide to HHS: (1) the State Exchange’s
data dictionary including attribute
name, data type, allowable values, and
description; (2) an entity relationship
diagram; and (3) business rules and
related calculations. This data
documentation is currently retained by
State Exchanges in a digital format and
can be electronically transmitted to
HHS. We estimate that the burden
associated with this data transfer will be
no more than 22 hours.
In the preamble to § 155.1510(a)(2),
we state that HHS will provide State
Exchanges with the pre-testing and
assessment data request form. We will
review the form and its instructions
with each State Exchange prior to the
State Exchange completing and
returning the form and required data to
HHS. Both the pre-testing and
assessment data request form and the
requested source data are in an
electronic format. The burden
associated with completion and return
of the pre-testing and assessment data
request form and required data will be
the time it will take each State Exchange
to meet with HHS to review the form
and its requirements, analyze and
design the database queries based on the
data elements identified in the form,
electronically transmit the data to HHS,
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and meet with HHS to verify and
validate the data.
We expect respondent costs will not
substantially vary since the data being
collected is largely in a digitized format
and that each State Exchange will be
providing the application data and
consumer submitted documents for
approximately 10 tax households. We
sought comment on these assumptions.
We estimate that gathering and
transmitting the data documentation as
specified in § 155.1510(a)(1) and
completion of the pre-testing and
assessment data request form as
specified in § 155.1510(a)(2) will take
265 hours per respondent at an
estimated cost of $28,493.24 per
respondent on an annualized basis. To
compile our estimates, we referenced
our experience collecting data in our
FFE pilot initiative and in working with
State Exchanges in the previous
voluntary State engagement initiative.
We identified specific personnel and the
number of hours that will be involved
in collecting the data broken down by
specific area (for example, eligibility
verification, auto-re-enrollment,
periodic data matching, enrollment
reconciliation, plan management, and
manual reviews including document
retrieval).
Hourly wage rates vary from $92.92
for a Computer Programmer to $156.66
for a Computer and Information Systems
Manager depending on occupation code
and function. With a mean hourly rate
of $111.07 for the respective occupation
codes, the burden across the 18 State
Exchanges equals 4,770 hours for a total
cost of up to $512,878 on an annualized
basis. As this policy is being finalized
in this rule, we will request to account
for the associated information collection
burden under OMB control number:
0938–1439 (CMS–10829—Improper
Payment Pre-Testing and Assessment
(IPPTA)).
We did not receive any comments
specific to the collection of information
and are finalizing these requirements as
proposed. We did receive and respond
to related general comments of financial
burdens in the earlier preamble section
associated with this policy.
K. ICRs Regarding QHP Rate and Benefit
Information (§ 156.210)
a. Age on Effective Date for SADPs
We are finalizing requiring issuers of
Exchange-certified stand-alone dental
plans (SADPs), whether they are sold
on- or off-Exchange, to use the age on
effective date methodology as the sole
method to calculate an enrollee’s age for
rating and eligibility purposes, as a
condition of QHP certification,
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beginning with Exchange certification
for PY 2024. This rule does not alter any
of the information collection
requirements related to age
determination for rating and eligibility
purposes during the QHP certification
process in a way that will create any
additional costs or burdens for issuers
seeking QHP certification. This
information collection is currently
approved under OMB control number:
0938–1187.
We did not receive any comments in
response to the information collection
requirements related to this policy. We
are finalizing these requirements as
proposed.
b. Guaranteed Rates for SADPs
The policy to require issuers of
Exchange-certified SADPs, whether they
are sold on- or off-Exchange, to submit
guaranteed rates, as a condition of
Exchange certification beginning with
Exchange certification for PY 2024, will
not impose an additional burden on
issuers. Exchange-certified SADP
issuers already submit either guaranteed
or estimated rates during QHP
certification, and are therefore familiar
with the QHP certification rate
submission process. This information
collection is currently approved under
OMB control number: 0938–1187.
We did not receive any comments in
response to the information collection
requirements related to this policy. We
are finalizing these requirements as
proposed.
L. ICRs Regarding Establishing a
Timeliness Standard for Notices of
Payment Delinquency (§ 156.270)
The policy to add a timeliness
standard to the requirement for QHP
issuers to send enrollees notice of
payment delinquency will not impose
an additional information burden on
issuers. Per § 156.270(f), issuers are
already required to send notices to
enrollees when they become delinquent
on premium payments, and this policy
will not require any additional
information collection. We are merely
finalizing the addition of a requirement
that issuers in the Exchanges on the
Federal platform send these notices
promptly and without undue delay,
within 10 business days of the date the
issuer should have discovered the
delinquency. This information
collection is currently approved under
OMB control number: 0938–1341.
After a review of the comments
received, we are finalizing the
information collection requirements as
proposed. We summarize and respond
below to public comments received on
the information collection requirements
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related to the proposed addition of the
timeliness standard to the requirement
for QHP issuers to send enrollees notice
of payment delinquency.
Comment: One commenter was
neutral on the proposal as long as it did
not require another letter to be sent to
consumers.
Response: To clarify, this policy adds
a timeliness requirement to the existing
required notice of payment
delinquency, so issuers will not be
required to send another letter to
consumers.
This final rule includes one policy—
repealing the ability of States to request
a reduction in risk adjustment transfers
(§ 153.320(d))—with information
collection requests being rescinded.
HHS will rescind the associated
information collection once the policy is
no longer in effect.
The following information collection
requests will be submitted for OMB
approval outside of this rulemaking,
through separate Federal Register
notices: risk adjustment issuer data
submission requirements (§§ 153.610,
153,700, and 153.710); and income
inconsistencies (§ 155.320).
The HHS–RADV, Navigator, FTR,
application to SADPs, and QHP rate and
benefit information policies do not
impact any of the information
collections under the following OMB
control numbers: Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment, OMB control number:
0938–1155; Cooperative Agreement to
Support Navigators in Federallyfacilitated and State Partnership
Exchanges, OMB control number: 0938–
1215; Data Collection to Support
Eligibility Determinations for Insurance
Affordability Programs and Enrollment
through Health Benefits Exchanges,
Medicaid and CHIP Agencies, OMB
control number: 0938–1191; Initial Plan
Data Collection to Support QHP
Certification and other Financial
Management and Exchange Operations,
OMB control number: 0938–1187; and
Establishment of Qualified Health Plans
and American Health Benefit
Exchanges, OMB control number: 0938–
1156. After a review of the comments
received, we are finalizing the
information collection requirements as
proposed. We summarize and respond
to public comments received on
information collection requirements for
the proposals related to agent/broker
standards in the ICR sections earlier in
this rule (sections IV.F and IV.G).
available and determining the applicant
or enrollee eligible for APTC or CSRs in
accordance with the applicant’s or
enrollee’s attested projected household
income. In addition, the rule finalizes
the implementation of the IPPTA,
reduced 2024 user fee rates of 2.2
percent of premiums for FFE issuers and
1.8 percent of premiums for SBE–FP
issuers, and minor updates to
standardized plan options and limiting
the number of non-standardized plan
options issuers can offer. Finally, the
rule finalizes requirements for QHP plan
marketing names to include correct
information, without omission of
material fact, and to not include content
that is misleading; revisions to the
network adequacy and ECP standards at
§§ 156.230 and 156.235 to state that all
QHP issuers, including SADPs, subject
to limited exceptions, must use a
network of providers that complies with
the standards described in those
sections; expanded access to care for
low-income and medically underserved
consumers by strengthening ECP
standards for QHP certification;
revisions to the Exchange re-enrollment
hierarchy; the addition of a timeliness
standard to the requirement for QHP
issuers to send enrollees notice of
payment delinquency; and revisions to
the final deadline for issuers to report
data inaccuracies identified in payment
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V. Regulatory Impact Analysis
A. Statement of Need
This rule finalizes improvements to
risk adjustment and HHS–RADV
policies to use more recent data to
recalibrate the risk adjustment models
and to refine operational HHS–RADV
processes, and to update Navigator
standards to permit door-to-door and
other unsolicited means of direct
contact. The rule also finalizes
requirements that agents, brokers, and
web-brokers provide correct consumer
information and document consumer
consent; and requirements that
Exchanges on the Federal platform
accept an applicant’s or enrollee’s
attestation of projected annual
household income when IRS data is not
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M. Summary of Annual Burden
Estimates for Finalized Requirements
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and collections reports for discovered
underpayments of APTC to the issuer
and user fee overpayments to HHS,
requiring that issuers describe all such
inaccuracies within three years of the
end of the applicable plan year to which
the inaccuracy relates to be eligible to
receive an adjustment.
B. Overall Impact
We have examined the impacts of this
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 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
Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). The April 6, 2023 Executive
order on Modernizing Regulatory
Review 323 amends section 3(f) of
Executive Order 12866 to define a
‘‘significant regulatory action’’ as an
action that is likely to result in a rule
that may: (1) have an annual effect on
the economy of $200 million or more
(adjusted every 3 years by the
Administrator of the Office of
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pkg/FR-2023-04-11/pdf/2023-07760.pdf.
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Information and Regulatory Affairs
(OIRA) for changes in gross domestic
product), or adversely affect in a
material way the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, territorial, or tribal
governments or communities; (2) create
a serious inconsistency or otherwise
interfere with an action taken or
planned by another agency; (3)
materially alter the budgetary impacts of
entitlements, grants, user fees, or loan
programs or the rights and obligations of
recipients thereof; or (4) raise legal or
policy issues for which centralized
review would meaningfully further the
President’s priorities or the principles
set forth in the Executive order, as
specifically authorized in a timely
manner by the Administrator of OIRA in
each case.
A regulatory impact analysis (RIA)
must be prepared for rules that are
significant under section 3(f)(1) of the
Executive order. Based on our estimates,
OMB’s Office of Information and
Regulatory Affairs has determined this
rulemaking is ‘‘significant’’ as measured
by the $200 million threshold under
section 3(f)(1). Accordingly, we have
prepared an RIA that to the best of our
ability presents the costs and benefits of
the rulemaking. Therefore, OMB has
reviewed these final regulations, and the
Departments have provided the
following assessment of their impact.
C. Impact Estimates of the Payment
Notice Provisions and Accounting Table
As required by OMB Circular A–4
(available at https://
www.whitehouse.gov/wp-content/
uploads/legacy_drupal_files/omb/
circulars/A4/a-4.pdf), we have prepared
an accounting statement in Table 15
showing the classification of the impact
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associated with the provisions of this
final rule.
This final rule finalizes standards for
programs that will have numerous
effects, including providing consumers
with access to affordable health
insurance coverage, reducing the impact
of adverse selection, and stabilizing
premiums in the individual and small
group health insurance markets and in
an Exchange. We are unable to quantify
all benefits and costs of this final rule.
The effects in Table 15 reflect
qualitative assessment of impacts and
estimated direct monetary costs and
transfers resulting from the provisions
of this final rule for health insurance
issuers and consumers.
We are finalizing the risk adjustment
user fee of $0.21 PMPM for the 2024
benefit year to operate the risk
adjustment program on behalf of
States,324 which we estimate will cost
approximately $60 million in benefit
year 2024. This estimated total cost
remains stable with the approximately
$60 million estimated for the 2023
benefit year.
Additionally, for 2024, we are
finalizing FFE and SBE–FP user fee
rates of 2.2 and 1.8 percent of
premiums, respectively. These user fee
rates are lower than the 2023 FFE and
SBE–FP user fee rates of 2.75 and 2.25
percent of premiums, respectively.
For the implementation of the IPPTA
program, we estimate recordkeeping
costs for data submission to be
approximately $1,025,756 beginning in
PY 2024.
BILLING CODE 4120–01–P
324 As noted previously in this final rule, no State
has elected to operate the risk adjustment program
for the 2024 benefit year; therefore, HHS will
operate the risk adjustment program for all 50 States
and the District of Columbia.
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This RIA expands upon the impact
analyses of previous rules and utilizes
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the Congressional Budget Office’s (CBO)
analysis of the ACA’s impact on Federal
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spending, revenue collections, and
insurance enrollment. Table 16
summarizes the effects of the risk
adjustment program on the Federal
budget from fiscal years 2024 through
2028, with the additional, societal
effects of this final rule discussed in this
RIA. We do not expect the provisions of
this final rule to significantly alter
CBO’s estimates of the budget impact of
the premium stabilization programs that
are described in Table 16.
1. Data for Risk Adjustment Model
Recalibration for 2024 Benefit Year
recalibration of the HHS risk adjustment
models using 2018, 2019, and 2020
EDGE data for the blending of all HHS
risk adjustment model coefficients will
have a minimal impact on risk scores
and transfers for issuers in the
individual and small group (including
merged) markets because our analysis
found that the 2020 enrollee-level EDGE
data is largely comparable to previous
years’ data sets.
We did not receive any comments in
response to the burden estimates
associated with the proposed policy or
any of the alternatives presented in the
proposed rule. We are finalizing these
estimates with the modification
discussed in the above paragraph. We
note that although the age-sex
coefficients for the adult risk adjustment
models differ slightly from their
proposed values, we anticipate that
these changes will have a minimal
impact on risk scores and transfers for
issuers in the individual and small
group (including merged) markets.
policy. We are finalizing these estimates
as proposed.
We proposed to use the 2018, 2019,
and 2020 benefit year enrollee-level
EDGE data to recalibrate the 2024
benefit year risk adjustment models
with an exception for the use of the
2020 benefit year to recalibrate the agesex coefficients for the adult models.
Specifically, we proposed to use only
2018 and 2019 benefit year enrolleelevel EDGE data to recalibrate the agesex coefficients in the adult models to
account for the observed anomalous
decreases in the unconstrained
coefficients for the 2020 benefit year
enrollee-level EDGE data for older adult
enrollees, especially older female adult
enrollees. However, we are finalizing
that we will use the 2018, 2019, and
2020 benefit year enrollee-level EDGE
data to recalibrate the 2024 benefit year
risk adjustment models, for all
coefficients without exception,
including the adult age-sex coefficients.
Consistent with the approach outlined
in the 2020 Payment Notice to no longer
rely upon MarketScan® data for
recalibrating the risk adjustment
models, as finalized in this rule, we will
continue to recalibrate the risk
adjustment models for the 2024 benefit
year using only enrollee-level EDGE
data, and will continue to use blended,
or averaged, coefficients from the 3
years of separately solved models for the
2024 benefit year model recalibration.
This approach seeks to maintain
stability in the markets by capturing
some degree of year-to-year cost shifting
without over-relying on any factors
unique to one particular year.
Additionally, we anticipate that the
325 Reinsurance collections ended in FY 2018 and
outlays in subsequent years reflect remaining
payments, refunds, and allowable activities.
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2. Repeal of Risk Adjustment State
Flexibility To Request a Reduction in
Risk Adjustment State Transfers
(§ 153.320(d))
We are finalizing the elimination of
the ability for prior participant States to
request reductions of risk adjustment
State transfers calculated by HHS under
the State payment transfer formula
beginning with the 2025 benefit year.
We anticipate that this change will have
a minimal impact as only one State,
Alabama, is considered a prior
participant State and will no longer be
able to request reductions in risk
adjustment transfers beginning with the
2025 benefit year.
We did not receive any comments in
response to the burden estimates for this
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3. Risk Adjustment Issuer Data
Requirements (§§ 153.610, 153.700, and
153.710)
We are finalizing the collection and
extraction of a new data element, the
QSEHRA indicator, as part of the
required risk adjustment data
submissions issuers make accessible to
HHS through their respective EDGE
servers. For the 2023 and 2024 benefit
years, similar to the transitional
approach finalized for the ICHRA
indicator, issuers will be required to
populate the field for the QSEHRA
indicator using only data they already
collect or have accessible regarding their
enrollees. Then, beginning with the
2025 benefit year, the transitional
approach will end, and issuers will be
required to populate the field using
available sources (for example,
information from Exchanges, and
requesting information directly from
enrollees) and, in the absence of an
existing source for particular enrollees,
to make a good faith effort to ensure
collection and submission of the
QSEHRA indicator for these enrollees.
HHS will provide additional guidance
on what constitutes a good faith effort
to ensure collection and submission of
the QSEHRA indicator beginning with
2025 benefit year data submissions in
the future. An updated burden estimate
associated with this policy may be
found in section IV.C of this final rule,
in the ICRs Regarding Risk Adjustment
Issuer Data Submission Requirements
(§§ 153.610, 153.700, and 153.710)
section earlier in this rule.
In addition, we are finalizing the
extraction of the plan ID and rating area
data elements from issuers’ EDGE
servers that issuers already make
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accessible to HHS as part of the required
risk adjustment data for additional prior
benefit years of data. Specifically, we
are finalizing an amendment to the
applicability date for the extraction of
these two data elements from issuers’
enrollee-level EDGE data as finalized in
the 2023 Payment Notice to also allow
extraction of these data elements from
the 2017, 2018, 2019 and 2020 benefit
year data.
We did not receive any comments in
response to the burden estimates for
these policies. We are finalizing these
estimates as proposed.
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4. Risk Adjustment User Fee for 2024
Benefit Year (§ 153.610(f))
For the 2024 benefit year, HHS will
operate risk adjustment in every State
and the District of Columbia. As
described in the 2014 Payment Notice
(78 FR 15416 through 15417), HHS’
operation of risk adjustment on behalf of
States is funded through a risk
adjustment user fee. For the 2024
benefit year, we are using the same
methodology to estimate our
administrative expenses to operate the
risk adjustment program as was used in
the 2023 Payment Notice. Risk
adjustment user fee costs for the 2024
benefit year are expected to remain
stable from the prior 2023 benefit year
estimates. However, we project higher
enrollment than our prior estimates in
the individual and small group
(including merged) markets in the 2023
and 2024 benefit years due to the
enactment of the ARP 326 and section
12001 of the IRA,327 which extended the
enhanced PTC subsidies in section 9661
of the ARP through the 2025 benefit
year. We estimate that the total cost for
HHS to operate the risk adjustment
program on behalf of all 50 States and
the District of Columbia for the 2024
benefit year will be approximately $60
million, and therefore, the proposed risk
adjustment user fee will be $0.21
PMPM. Because enrollment projections
have increased for the 2023 and 2024
benefit year due to the IRA and the
proposed 2024 risk adjustment user fee
is $0.01 PMPM lower than the 2023 user
fee, we expect the risk adjustment user
fee for the 2024 benefit year to reduce
the transfer amounts collected or paid
by issuers of risk adjustment covered
plans.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
326 Public
327 Public
Law 117–2.
Law 117–169.
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5. Risk Adjustment Data Validation
Requirements When HHS Operates Risk
Adjustment (HHS–RADV) (§ 153.630)
We are finalizing, beginning with
2022 benefit year HHS–RADV, changes
to the HHS definition for the materiality
threshold for the HHS–RADV
exemption under § 153.630(g)(2) from
$15 million total annual premiums
Statewide to 30,000 BMM Statewide in
the benefit year being audited. The
purpose of this policy is to address the
estimated increase in costs to complete
the initial validation audit (IVA) over
the years and to ensure the materiality
threshold is not eroded as costs
increase. We quantified this increase in
IVA cost in the Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment PRA package (OMB Control
Number 0938–1155), which we updated
in 2022.328 We believe the number of
issuers exempt from HHS–RADV for any
given benefit year under the new 30,000
BMM materiality threshold will not be
significantly different than the number
of issuers exempt under the current $15
million total annual premium Statewide
threshold, and therefore, we believe
there will not be an overall reduction in
burden. However, those issuers that are
exempted from HHS–RADV will have
less burden and administrative costs
than an issuer subject to these
requirements.
We are finalizing, beginning with
2021 benefit year HHS–RADV, the
removal of the policy to only make
adjustments to reflect exiting outlier
issuers HHS–RADV results when the
issuer is a positive error rate outlier in
the applicable benefit year’s HHS–
RADV. With this policy, exiting and
non-exiting outlier issuers are treated
the same, and HHS is applying HHS–
RADV adjustments to risk scores and
risk adjustment State transfers for both
positive and negative error rate outlier
exiting and non-exiting issuers. Based
on our experience, we estimate the
number of negative error rate outlier
exiting issuers in any given benefit year
will be very small, and therefore, we
believe changing this policy will not
significantly increase burden.
We are also finalizing a change to the
attestation and discrepancy reporting
window to file a discrepancy report or
confirm second validation audit (SVA)
findings from 30 calendar days to
within 15 calendar days of the
notification by HHS, beginning with the
2022 benefit year HHS–RADV.
Shortening this attestation and
discrepancy reporting window will
improve our ability to finalize SVA
328 Available at https://www.reginfo.gov/public/
do/PRAViewICR?ref_nbr=202207-0938-001.
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findings results prior to release of the
HHS Risk Adjustment Data Validation
(HHS–RADV) Results Memo and the
Summary Report of Risk Adjustment
Data Validation Adjustments to Risk
Adjustment Transfers for the applicable
benefit year in a timely fashion. This
change will support timely reporting of
information on HHS–RADV adjustments
to risk adjustment State transfers in
issuers’ MLR reports.
Based on our experience operating
HHS–RADV, few issuers have
insufficient pairwise agreement and
receive SVA findings, and the 15calendar-day attestation and
discrepancy reporting window is
consistent with the IVA sample and
EDGE discrepancy reporting windows
under §§ 153.630(d)(1) and
153.710(d)(1). The shortened window
also does not change the underlying
burden for an issuer to attest or file a
discrepancy of its SVA results as those
tasks generally remain the same.
Instead, this change only relates to the
timeframe to complete these activities.
Although there may be a potential
increase in administrative burden to
issuers resulting from the need to
reallocate staffing or resources to attest
or file a discrepancy of its SVA within
the compressed 15-day window, the
existing overall burden hours and
associated resource expenditures to
complete this task remains unchanged.
Further, we believe that this shortened
reporting window will not be overly
burdensome to the few impacted
issuers, and that any disadvantages of
this shortened reporting window will be
outweighed by the benefits of timely
resolution of any discrepancies before
the release of the applicable benefit year
HHS RADV Results Memo and the
Summary Report of Risk Adjustment
Data Validation Adjustments to Risk
Adjustment Transfers for the applicable
benefit year.
After reviewing the public comments,
we are finalizing the burden estimates
as proposed. We summarize and
respond to public comments received
regarding the impact of the change to
the HHS–RADV materiality threshold
definition below.
Comment: One commenter agreed that
the proposed materiality threshold of
30,000 BMM will continue to ease the
administrative burden associated with
HHS–RADV audits. Another commenter
encouraged HHS to consider changing
the materiality threshold for HHS–
RADV participation to a percentage of
Statewide member months to reduce the
burden of HHS–RADV on issuers that
do not materially impact risk
adjustment transfers.
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Response: As explained in section
III.A.7 of this final rule, we believe that
a materiality threshold of 30,000 BMM
appropriately balances the goals of the
HHS–RADV process and the burden of
the process on smaller issuers. As stated
above, we do not anticipate that a
materiality threshold of 30,000 BMM
will change the current estimated
burden of the annual HHS–RADV
requirements on issuers. The burden of
annual HHS–RADV requirements may
decrease over time as a materiality
threshold of 30,000 BMM will result in
a more consistent pool of issuers subject
to random and targeted sampling than a
threshold of $15 million in total annual
premiums, which could increase the
number of issuers subject to annual
HHS–RADV audits over time as
premiums grow. We did not consider or
propose using a percentage of Statewide
member months as the metric for the
materiality threshold as that metric does
not have a relationship with the costs to
conduct the audit. We therefore decline
to adopt use of such a metric as part of
this final rule.
6. EDGE Discrepancy Materiality
Threshold (§ 153.710)
We are finalizing an amendment to
the materiality threshold for EDGE
discrepancies at § 153.710(e) to align
with the materiality threshold as
described in the preamble of part 2 of
the 2022 Payment Notice final rule (86
FR 24194 through 24195) to reflect that
the amount in dispute must equal or
exceed $100,000 or 1 percent of the total
estimated transfer amount in the
applicable State market risk pool,
whichever is less. HHS generally only
takes action on reported material EDGE
discrepancies when an issuer’s
submission of incorrect EDGE server
premium data has the effect of
increasing or decreasing the magnitude
of the risk adjustment transfers to other
issuers in the market (83 FR 16970
through 16971). We do not believe that
the updated materiality threshold
definition for EDGE discrepancies will
impose additional administrative
burden on issuers beyond the effort
already required to submit data to HHS
for the purposes of operating State
market risk pool transfers, as previously
estimated in part 2 of the 2022 Payment
Notice (86 FR 24273 through 24274).
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
7. Exchange Blueprint Approval
Timelines (§ 155.106)
As discussed in section III.B.1 of this
final rule, the proposed regulatory
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amendments will not eliminate the
requirement for States seeking to
transition to a different Exchange
operational model (FFE to SBE–FP or
State Exchange, or SBE–FP to State
Exchange) to submit an Exchange
Blueprint or for HHS to approve, or
conditionally approve, a State’s
Exchange Blueprint. It will only impact
the timeline, by providing additional
time for HHS to provide approval, or
conditional approval.
We do not anticipate any additional
burden associated with this policy as
States are currently required to submit
an Exchange Blueprint to HHS for
approval, or conditional approval, and
HHS is currently required to approve, or
conditionally approve, a State’s
Exchange Blueprint.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
8. Navigator, Non-Navigator Assistance
Personnel, and Certified Application
Counselor Program Standards
(§§ 155.210 and 155.225)
As discussed in section III.B.2, new
rules will permit enrollment assistance
on initial door-to-door outreach.
Currently, Assisters are permitted to go
door-to-door to engage in outreach and
education activities, just not enrollment
assistance. Therefore, this change will
not impose any new or additional
opportunity costs on Assisters, and we
do not anticipate any estimated burden
associated with this proposal. The
benefits of this proposal will be
eliminating barriers to coverage access
by maximizing pathways to enrollment.
We believe it is important to be able to
increase access to coverage for those
whose ability to travel is impeded due
to mobility, sensory or other disabilities,
who are immunocompromised, and who
are limited by a lack of transportation.
We anticipate that this proposal will be
a positive step toward enabling
Assisters to reach a broader consumer
base in a timely manner—helping to
reduce uninsured rates and health
disparities by removing underlying
barriers to accessing health coverage.
We sought comment on these
assumptions, specifically about any
reduction in costs, benefits, or burdens
on Assisters and consumers as related to
this policy.
After reviewing the public comments,
we are finalizing the burden estimates
as proposed. We summarize and
respond to public comments received
regarding the impact of the proposed
change to repeal the provisions that
currently prohibit Assisters from going
door-to-door or using other unsolicited
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means of direct contact to provide
enrollment assistance to consumers
below.
Comment: We received many
comments expressing appreciation that
we are striving to build-in more
flexibility for Assisters to go into the
community and reach the patients who
need the most support. These
commenters stated that Assisters being
able to travel to an enrollee’s residence
enhances the opportunity to get more
people enrolled in health insurance
coverage and that this provision will
allow Navigators and other types of
Assisters to better meet patients where
they are, hopefully allowing more
people to receive health coverage.
Response: We agree that additional
flexibility will help reduce burden not
only for Assisters but for consumers
experiencing chronic illness, inflexible
schedules, lack of child care, lack of
transportation, and other adverse social
determinants of health.
9. Extension of Time To Review
Suspension Rebuttal Evidence and
Termination Reconsideration Requests
(§§ 155.220(g) and 155.220(h))
As discussed in section III.B.3 of this
final rule, the regulatory amendments
we are finalizing will provide HHS with
up to an additional 15 calendar days to
review evidence submitted by agents,
brokers, or web-brokers to rebut
allegations that led to the suspension of
their Exchange agreement(s) and up to
an additional 30 calendar days to review
evidence submitted by agents, brokers,
or web-brokers to request
reconsideration of termination of their
Exchange agreement(s).
We do not estimate much burden
associated with these amendments, as
there is no requirement for HHS to
utilize the additional 15 or 30 calendar
days and this will only impact a very
small percentage of enrolling agents,
brokers, or web-brokers. Only those
agents, brokers, or web-brokers that are
reasonably suspected to have engaged in
fraud or abusive conduct, or those with
a specific finding of noncompliance
against them or who have exhibited a
pattern of noncompliance or abuse that
may pose imminent consumer harm will
be impacted.
As discussed in the preamble, this
policy will not impose any new
requirements on agents, brokers, or webbrokers. At present, agents, brokers, or
web-brokers whose Exchange
agreement(s) are suspended or
terminated may submit rebuttal
evidence or reconsideration requests for
HHS to consider. During this review, the
submitting agent, broker, or web-broker
remains unable to enroll consumers on
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the FFEs. This process will not change.
While we will be increasing the amount
of potential time the review process will
take, which could lead to slightly longer
periods during which agents, brokers, or
web-brokers cannot enroll consumers
through the FFEs and SBE–FPs, we will
not be mandating HHS utilize the
additional 15 or 30 calendars days for
its reviews. For this reason, we do not
expect any impact on agents, brokers, or
web-brokers based on this policy.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
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10. Providing Correct Information to the
FFEs and Documenting Receipt of
Consumer Consent (§ 155.220(j))
As discussed in section III.B.3 of this
final rule, the regulatory amendments
we are finalizing will require agents,
brokers, and web-brokers assisting with
and facilitating enrollment in coverage
through FFEs and SBE–FPs or assisting
an individual with applying for APTC
and CSRs for QHPs to document that
eligibility application information has
been reviewed by and confirmed to be
accurate by the consumer or their
authorized representative, designated in
compliance with § 155.227, prior to
application submission. The policy will
require the consumer or their authorized
representative to take an action that
produces a record showing the
consumer or their authorized
representative reviewed and confirmed
the accuracy of their application
information that must be maintained by
the assisting agent, broker, or webbroker and produced upon request in
response to monitoring, audit, and
enforcement activities.
In addition, we are finalizing
regulatory amendments that will require
agents, brokers, and web-brokers
assisting with and facilitating
enrollment through FFEs and SBE–FPs
or assisting an individual with applying
for APTC and CSRs for QHPs to
document the receipt of consent from
the consumer or their authorized
representative, designated in
compliance with § 155.227, qualified
employers, or qualified employees they
are assisting. The policy will require the
consumer or their authorized
representative to take an action that
produces a record of consent that must
be maintained by the assisting agent,
broker, or web-broker and produced
upon request in response to monitoring,
audit, and enforcement activities. As we
anticipate these two documentation
processes will likely be occurring as
part of the same consumer
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interaction,329 the two policies are
discussed together below.
A potential cost to consider is the
additional time it will take to process
and submit each consumer’s eligibility
application. It currently takes
approximately 30 minutes for an
assisting agent, broker, or web-broker to
submit a consumer’s eligibility
application. These finalized
requirements may add approximately
five minutes additional time, per the
new requirement, to each application,
making each application submission
take 40 minutes under the new finalized
policies. This means that for every six
policies submitted under the new
finalized regulatory requirements, there
would have been two additional
applications that could have been
submitted under the former regulatory
requirements (10 extra minutes per
application × 3 applications = 30
minutes, which is the estimated
completion time for applications at
present). If we assume agents, brokers,
and web-brokers work traditional 8-hour
days, they would have been able to
enroll approximately 4 more consumers
per day (1 application per 30 minutes =
16 per day; 1 application per 40 minutes
= 12 per day). An approximation of
commission for each submitted policy is
$16.67.330 Therefore, the finalized
regulatory text may result in $66.68 lost
per day per agent, broker, or web-broker
($16.67 × 4 fewer applications
submitted).
However, there will only be a
potential loss of income if an agent,
broker, or web-broker were constantly
enrolling consumers and running out of
time during the workday. It is unlikely
agents, brokers, and web-brokers are
constantly enrolling consumers nonstop throughout an 8-hour workday.
During PY 2021, agents submitted
3,630,849 policies. The top 1 percent of
agents 331 submitted 1,159,608 policies
during PY 2021, which equals
approximately 7 submitted policies per
day.332 As it was determined under the
329 We note that obtaining documentation of
consumer consent must occur before an application
is completed. In contrast, obtaining documentation
that a consumer has reviewed and confirmed the
accuracy of their application information must
necessarily take place during or after the
application is completed and prior to application
submission. However, we generally expect that the
documentation that will be required before and
after the completion of the application, will occur
as part of a single interaction in most cases.
330 This was derived using the Insurance Sales
Agent mean hourly wage from the above wage
estimate table of $33.34 and dividing in half.
331 The current number of agents registered with
the Exchange is 66,893. We looked at data from the
668 top-selling agents.
332 This assumed an agent worked 250 days per
year (50 weeks at 5 days per week).
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new policies that an agent could submit
approximately 12 applications per day,
there is no clear impact associated with
these policies as far as the number of
applications being submitted. However,
this could be different during the Open
Enrollment Period (OEP) as there is
generally more enrollment activity
during OEP than regular business days.
During PY 2022 Open Enrollment,
agents submitted 2,572,341
applications, which translates to 38
applications per agent. The top selling
1 percent of agents submitted 689,146
applications during Open Enrollment,
which is approximately 18 applications
per day.333 Under the finalized
regulatory amendments, a top-selling
agent could lose approximately 6
applications per day due to time
constraints. OEP runs from November 1
through January 15, which is 76 days.
Under the assumption an agent is
working 5 days per week for 8 hours per
day, an agent may submit 330 fewer
applications during OEP (55 days
working × 6 fewer applications per day).
Using the above reference of $16.67
commission gained per submitted
policy, a top-selling agent may lose
$5,501.10 in commissions during OEP
(330 applications × $16.67). For the 668
agents in the top selling 1 percent, the
total potential commission loss may be
approximately $3,674,735 (668 agents ×
$5,501.10). It is likely these agents are
working more hours than we accounted
for, meaning the 330 fewer applications
and $3,674,735 in lost commissions is
an estimate such that the actual loss of
commission will be less than we
estimated.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
11. Failure To File and Reconcile
Process (§ 155.305)
We are finalizing a requirement that
Exchanges determine an enrollee as
ineligible for APTC if their taxpayer did
not file a Federal income tax return and
reconcile their APTC for two
consecutive tax years, rather than one
tax year as currently outlined at
§ 155.305(f)(4). We believe this policy
will benefit both Exchanges and
consumers by ensuring that consumers
are complying with the requirement to
file their Federal income tax returns and
reconcile past years’ APTC, while also
providing continuity of coverage for
consumers who might otherwise go
uninsured after losing ATPC.
333 This assumed an agent worked 5 days per
week at 8 hours per day, which is likely a low
estimate.
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We anticipate that this policy will
increase APTC expenditures by
promoting continuous enrollment of
consumers with APTC, who, absent this
policy, would likely choose to terminate
their coverage altogether after losing
their APTC eligibility due to having an
FTR status. Based on our own analysis,
for Open Enrollment 2020, about
116,000 enrollees with an FTR status
were automatically re-enrolled into an
Exchange QHP without APTC; by March
2020, approximately 14,000 (12 percent)
of those enrollees were still enrolled in
an Exchange QHP without APTC.
Assuming the same enrollment numbers
for Open Enrollment 2025 with the new
2-year FTR policy, if the 102,000
enrollees who ended their QHP
coverage after losing APTC were given
another year of APTC eligibility to
confirm compliance or come into
compliance with the requirement to file
and reconcile, we estimate that all
102,000 likely enrollees would have
retained coverage for another coverage
year. However, based on our experience
running FTR since 2015, we anticipate
that about 20,400 (20 percent) of these
enrollees would have likely received a
second, consecutive FTR flag and would
be re-enrolled into coverage without
APTC due to their failure to file and
reconcile for two consecutive tax years.
Therefore, we estimate that this 2-year
FTR policy is likely to increase APTC
expenditures by approximately $373
million per year beginning in plan year
2025 for those consumers who have not
filed and reconciled for only one tax
year (approximately 81,600) and retain
their APTC eligibility (using average
APTC amount of approximately $508
per month multiplied by the average
retention rate in an Exchange QHP of 9
months).
We are also aware of five States that
have only recently transitioned to
operating their own State Exchange and
have not yet fully implemented the
infrastructure to run FTR operations for
plan years through 2023 due to the
flexibility the Exchanges were given to
temporarily pause FTR operations
between 2021 and 2023 due to the
COVID–19 PHE. We estimate the onetime costs for these five States to fully
implement the functionality and
infrastructure to conduct FTR
operations to be approximately $6.6
million and estimate the annual costs to
maintain FTR operations to be
approximately $10 million.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
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12. Income Inconsistencies (§§ 155.315
and 155.320)
We anticipate that the finalized
revision to § 155.315 will impose a
minimal regulatory and cost burden on
Exchanges using the Federal platform
and State Exchanges in order to grant
the 60-day extension for income DMIs.
We estimate that the change to grant a
60-day extension to applicants with
income DMIs will result in a $500,000
one-time cost to Exchanges on the
Federal platform and to each of the State
Exchanges using their own platform.
Therefore, we estimate that the total cost
for State Exchanges will be $9 million
to comply with the requirement to grant
the 60-day extension, and the total cost
to the Federal Government will be
$500,000.
We anticipate that the revisions to
§ 155.320 will impose a minimal
regulatory burden and a one-time cost
burden on the Exchanges using the
Federal platform and State Exchanges
using their own platform. We estimate
that the change to accept the income
attestation for households for which the
Exchange requests tax return data from
the IRS to verify attested projected
annual household income but for whom
the IRS confirms there is no such tax
return data available will result in a
$500,000 one-time cost to the Federal
Government and a one-time cost of
$500,000 to each of the State Exchanges
using their own platform. We also
anticipate $175 million in increased
APTC costs annually as a result of this
policy, due to applicants remaining
enrolled through the end of the plan
year instead of losing eligibility for
APTC for failing to provide sufficient
documentation to verify their projected
household income.
However, we do anticipate that the
revisions to § 155.320 will also result in
some decreases in ongoing
administrative costs for the Exchanges
using the Federal platform and State
Exchanges. The change will eliminate
the requirement to generate income
DMIs when the Exchange requests tax
return data from the IRS for an applicant
or enrollee and the IRS confirms no
such data is available. For Exchanges on
the Federal platform, based on historical
DMI data, we anticipate that this will
result in 1.2 million fewer households
receiving an income DMI, which will
result in $66 million in annual cost
savings to the Federal Government.
Additionally, State Exchanges using
their own platform will also experience
annual cost savings of $37 million due
to this change.
We do not anticipate that these
changes will impose a cost or regulatory
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burden on issuers. However, the
changes will have a financial impact on
issuers via the continued enrollment of
consumers who otherwise would have
experienced APTC adjustment and thus
would have been likely to disenroll.
After reviewing the public comments,
we are finalizing the burden estimates
as proposed. We summarize and
respond to public comments received
regarding the impact of the change to
accept household income attestation
when IRS is contacted but does not
return data and to provide an automatic
60-day extension for Income DMIs
below.
Comment: One commenter noted
concerns that these calculations would
result in increased spending for the
Federal Government.
Response: We agree that Federal
Government spending will increase, but
this will be primarily due to more
consumers appropriately maintaining
eligibility for financial assistance that
they need to stay enrolled in coverage,
which positively impacts health equity,
continuous coverage, and the risk pool.
We note that these consumers are still
subject to the reconciliation process
when filing their taxes, which may
result in repayment of APTC and help
account for any potential excess
financial assistance beyond what they
were eligible for. Additionally,
households are required to provide true
answers to application questions under
penalty of perjury.
13. Annual Eligibility Redetermination
(§ 155.335(j))
In the HHS Notice of Benefit and
Payment Parameters for 2024 proposed
rule (87 FR 78206, 78259), we proposed
changes to allow Exchanges, beginning
in PY 2024, to direct re-enrollment for
enrollees who are eligible for CSRs in
accordance with § 155.305(g) from a
bronze QHP to a silver QHP, if certain
conditions are met (‘‘bronze to silver
crosswalk policy’’), and to require all
Exchanges (Exchanges on the Federal
platform and State Exchanges) to
incorporate provider network
considerations into the re-enrollment
hierarchy. After reviewing public
comments, we are finalizing proposed
changes to the re-enrollment hierarchy
with modifications. Specifically, we are
amending the proposed regulations to
clarify that Exchanges implementing the
bronze to silver crosswalk policy will
compare net monthly silver plan
premiums for the future year with net
monthly bronze plan premiums for the
future year, as opposed to net monthly
bronze plan premiums for the current
year (where net monthly premium is the
enrollee’s responsible amount after
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applying APTC). Additionally, we
changed the structure and some content
of the regulation to simplify the
regulatory text and to clearly
characterize the rule’s provider network
continuity protections for enrollees
whose QHP is no longer available,
compared to enrollees eligible for the
bronze to silver crosswalk policy under
paragraph (j)(4).334
As discussed in the proposed rule, we
anticipate that the inclusion of
additional criteria in the auto reenrollment process will increase costs
and burden for issuers and Exchanges,
although we are unable to quantify this
increase. However, we believe initially
limiting the scope of the bronze to silver
crosswalk policy to only CSR-eligible
enrollees who are currently in a bronze
QHP and have a lower or equivalent
after APTC cost silver QHP available
will allow issuers and Exchanges to
incrementally update their processes, as
opposed to including both premium
(after APTC) and out-of-pocket cost
(OOPC) throughout the hierarchy in PY
2024. Additionally, we believe that
allowing the Exchange to direct reenrollment for CSR-eligible enrollees
from bronze plans to silver plans with
lower or equivalent premium after
APTC will facilitate enrollment into
silver CSR plans and help reduce CSR
forfeiture. Notwithstanding these
burdens, we believe changes to the reenrollment process finalized in this
rule, in combination with improved
consumer notification, will further
streamline the consumer shopping
experience, enhance consumer
understanding of plan options, and help
move enrollment into more affordable,
higher generosity plans, especially in
cases where market conditions have
substantially increased the cost of an
enrollee’s current plan. By amending
the current Federal hierarchy for reenrollment to incorporate provider
networks and facilitate enrollment into
lower cost, higher generosity plans, we
believe we will be promoting consumer
access to affordable, quality coverage.
We sought comment on the estimated
costs and benefits described in this
section, as well as any additional
impacts on consumers, issuers, and
Exchanges as a result of this policy. We
summarize and respond in preamble
and below to public comments received
regarding the impact of the changes to
the auto re-enrollment policy.
Comment: Some commenters raised
concerns that implementing this policy
for the 2024 plan year would be difficult
334 Please see the preamble for § 155.335(j) at
section III.B.6. for a full description of and
explanation for these modifications.
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for issuers and cause confusion for
consumers. Some commenters with this
concern requested that HHS delay the
policy if it were finalized, and that HHS
not change the auto re-enrollment
system until after the implementation of
other proposed policies including the
proposals to require plan and plan
variation marketing accuracy and to
limit the number of non-standardized
plan options that issuers may offer
through the Exchanges. These
commenters expressed concerns that
auto re-enrolling consumers into a
different plan than their current QHP
would exacerbate potential confusion
related to these other policies. They
requested that HHS wait to implement
any changes related to auto reenrollment until issuers have finalized
their product decisions in accordance
with new plan variation marketing
requirements so that plan and plan
variation marketing names are accurate,
consistent, and understood by
consumers before consumers are
mapped into new plans they are
unfamiliar with.
Response: As noted in section III.B.6.
of the preamble, Exchanges on the
Federal platform will implement the
new policy at § 155.335(j)(4) by
incorporating network ID into existing
requirements for issuer submissions
through the crosswalk process, which,
per existing rules at § 155.335(j)(2),
already requires that if no plans under
the same product as an enrollee’s
current QHP are available for renewal,
the Exchange will auto re-enroll the
enrollee in the product most similar to
their current product with the same
issuer.335 We believe that plan network
ID will be an effective method of
network comparison for Exchanges on
the Federal platform because QHP
Certification Instructions specify that if
specific providers are in-network for
some of an issuer’s products but not
others, the issuer must establish
separate network IDs to enable mapping
the plans to the applicable network IDs.
We will also work closely with State
Exchanges to share best practices for
implementing this policy. Further,
based on experience from past years, a
majority of enrollees who were
crosswalked into a different product
with the same issuer had the same
network ID and product type (for
example, HMO, PPO), and so we
anticipate that this policy will reinforce
and not disrupt current auto re335 See
§ 155.335(j)(2), and see ‘‘Plan Crosswalk’’
on the QHP Certification Information and Guidance
website at https://www.qhpcertification.cms.gov/s/
Plan%20Crosswalk for more information on the
Crosswalk Template.
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25903
enrollment processes.336 Finally, we
believe that issuer implementation
burden will be mitigated because, as
discussed in the proposed rule,
Exchanges, not issuers, will be
responsible for identifying enrollees
eligible for the bronze to silver
crosswalk policy under paragraph
(j)(4).337 Given the benefits that this
policy will provide to consumers who
will be enrolled in more generous
coverage for no greater cost, we will not
delay its effectuation. We will work
closely with all interested parties to
ensure smooth implementation and
mitigate any adverse effects such as
consumer confusion.
Comment: As also discussed in the
preamble, many commenters supported
this proposal, agreeing that it would
help limit CSR forfeiture and increase
the likelihood that more consumers
would be enrolled in more generous
coverage without additional cost. One
commenter expressed support but
suggested that the policy could be
limited in its impact for individuals and
families with household incomes above
150 percent FPL because of the
difference in bronze and silver plans’
monthly premiums. Commenters also
raised concerns that auto re-enrolling
consumers into a different plan for the
coming year could disrupt consumers’
provider network, prescription drug
availability, and HSA eligibility that had
informed their original choice of plan
selection.
Response: We agree that this policy
will help to prevent CSR forfeiture.
Also, we agree with the comment that
most enrollees who Exchanges can
crosswalk from a bronze to a silver plan
under paragraph (j)(4) will be those who
have access to a silver plan with a $0
monthly net premium because their
household income does not exceed 150
percent of the FPL. Nevertheless, we
believe that the importance of auto reenrolling enrollees in a plan within the
same product and with the same
provider network that they would have
if they were auto re-enrolled under
§ 155.335(j)(1) or (2) outweighs concerns
that this will result in fewer bronze
enrollees being crosswalked to a silver
plan. In response to concerns that
Exchanges will be shifting CSR eligible
consumers auto re-enrolled from a
bronze to a silver plan under paragraph
(j)(4) into different benefits and provider
networks, we note that by making this
change only for consumers who have a
336 Based on internal CMS analysis, for the 2023
plan year, 86 percent of crosswalks to a different
product with the same issuer had the same network
ID and the same network type (that is, HMO, PPO,
EPO).
337 See 87 FR 78263.
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plan in their same product with a
network ID that matches that of their
future year bronze plan, the policy
ensures that consumers will not
experience network changes that they
would not otherwise experience had
they been auto re-enrolled into their
bronze plan. Also, we will perform
additional research to ensure that we are
able to provide appropriate support and
technical assistance to enrollees who
may have chosen a bronze plan HSA,
and we encourage State Exchanges,
agents and brokers, and enrollment
assisters to do the same.
14. Coverage Effective Dates for
Qualified Individuals Losing Other
Minimum Essential Coverage
(§ 155.420(b))
We are finalizing the amendment to
paragraph (b)(2)(iv) to § 155.420 to
provide earlier SEP coverage effective
dates for qualifying individuals who
attest to a future loss of MEC, such as
coverage offered through an employer,
Medicaid, CHIP, or Medicare, and select
a plan between 60 days before such loss
of MEC and the last day of the month
preceding the month in which the loss
of MEC occurs. Currently, the earliest
start date for Exchange coverage when a
qualifying individual attests to a future
loss of MEC is the first day of the month
following the date of loss of MEC, which
may result in coverage gaps when
consumers lose forms of MEC (other
than Exchange coverage) mid-month.
We believe that this change is necessary
to ensure that qualifying individuals are
able to seamlessly transition from other
non-Exchange MEC to Exchange
coverage as quickly as possible with
minimal coverage gaps. As discussed
earlier in preamble at section III.B.7.a.,
ensuring smooth and quick transitions
into Exchange coverage will be
especially critical during Medicaid
unwinding when a large number of
consumers are expected to lose their
Medicaid or CHIP coverage and
transition to Exchange coverage.
Based on our own analysis, for plan
years 2019 through 2021, approximately
214,000 households seeking coverage on
Exchanges using the Federal platform
reported a future mid-month loss of
MEC date and ultimately did not enroll
in a QHP. In PY 2021, about 45,000
households attested to a future midmonth loss of coverage MEC date and
did not enroll in QHP coverage. If these
consumers had been given the
opportunity for Exchange coverage to
begin on the first of the month in which
their prior mid-month loss of MEC
coverage end date occurred, rather than
having to wait weeks for their coverage
to start, these consumers could have
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avoided a gap in coverage and could
have received an additional month of
APTC. Therefore, for consumers who
report a future loss of MEC, especially
those who reside in States that allow
mid-month terminations for Medicaid or
CHIP, we estimate that this change
could increase APTC expenditures by
approximately $161 million dollars per
coverage year by allowing Exchange
coverage to start the first of the month
in which the mid-month loss of MEC
occurs assuming a similar volume of
consumers will choose to enroll in an
Exchange QHP based on PY 2021 data.
We estimated this amount by
multiplying the number of consumers in
PY 2021 who attested to a future loss of
MEC and chose not to enroll
(approximately 45,000) and multiplied
this by average APTC (about $508 per
month for PY 2021 and assuming an
average enrollment of 7 months).
However, the actual number could be
lower, given that we are unable to
estimate what proportion of consumers
will still elect to not enroll in an
Exchange QHP. We also anticipate
additional costs for consumers whose
monthly premium after APTC (if
applicable) is greater than $0, as they
would likely have to pay premiums for
both MEC and Exchange coverage in the
month over overlapping coverage,
depending on the type of prior MEC
involved. Conversely, our estimate may
also be low because it does not account
for the one additional month of coverage
and APTC that consumers may receive
if they would have already chosen to
enroll in Exchange coverage under the
existing policy, but may do so earlier
under the new rule. We note that, to
mitigate adverse selection and the
related burden on issuers, we did not
propose that Exchanges permit
consumers to select a coverage date
such as the first of the month following
plan selection. We sought comment on
this policy, specifically about any
additional costs, benefits, or burdens on
State Exchanges, issuers, and consumers
as related to this policy. We also sought
comment from issuers regarding any
additional or remaining risk regarding
mid-month coverage effective dates.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
15. Special Rule for Loss of Medicaid or
CHIP Coverage (§ 155.420(c))
We are finalizing the addition of
paragraph (c)(6) to § 155.420 to provide
qualifying individuals losing Medicaid
or CHIP that is considered MEC in
accordance with § 155.420(d)(1)(i), and
who qualify for a special enrollment
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period, with up to 60 days before and
up to 90 days after their loss of coverage
to enroll in QHP coverage. In addition,
if a State Medicaid Agency allows or
provides for a Medicaid or CHIP
reconsideration period greater than 90
days, then the Exchange in that State
may elect to provide a qualified
individual or their dependent(s) who is
described in paragraph (d)(1)(i) of this
section and whose loss of coverage is a
loss of Medicaid or CHIP coverage
additional time to select a QHP, up to
the number of days provided for the
applicable Medicaid or CHIP
reconsideration period. We believe that
this change is necessary to ensure that
qualifying individuals are able to
seamlessly transition from Medicaid or
CHIP into Exchange coverage as quickly
as possible with minimal coverage gaps.
Based on our own analysis, in plan
year 2019, about 60,000 consumers
seeking coverage on Exchanges using
the Federal platform attested to a
Medicaid or CHIP loss or denial
between 60 to 90 days prior to
submitting or updating a HealthCare.gov
application. We estimate that this
change to permit Exchanges to use a
special rule to provide consumers losing
Medicaid or CHIP with 90 days after
their loss of Medicaid or CHIP to enroll
in QHP coverage will increase APTC
expenditures by approximately $98
million per year. This number may be
slightly higher given the additional
flexibilities for State Exchanges, but we
are unable to estimate that because we
do not know which State Exchanges
may choose to implement this special
rule earlier than January 1, 2024, or
which State Exchanges operate in States
whose State Medicaid Agency allows or
provides for a Medicaid or CHIP
reconsideration period greater than 90
days whereby the Exchange in that State
may elect to provide more than 90 days
to select a QHP under § 155.420(c)(6).
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
16. Plan Display Error Special
Enrollment Periods (§ 155.420(d))
We anticipate that revisions to
§ 155.420(d)(12) will maintain current
regulatory burden and cost on issuers.
As discussed earlier in preamble at
section III.B.7.d., these revisions will
make necessary changes to the text of
§ 155.420(d)(12) to align the policy for
granting SEPs to persons who are
adversely affected by a plan display
error with current plan display error
SEP operations. This policy will have
minimal operational impact, as
interested parties such as issuers, States,
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and the Exchanges on the Federal
platform currently have the
infrastructure to demonstrate that a
material plan display error influenced a
qualified individual’s, enrollee’s, or
their dependents’ enrollment in a QHP
through the Exchange. This does not
impose additional regulatory burden or
costs because the revisions do not
require the consumers, HHS, or issuers
to conduct new or additional processes.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
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17. Termination of Exchange Enrollment
or Coverage (§ 155.430)
We do not anticipate any burden
related to the policy to expressly
prohibit QHP issuers participating in
Exchanges on the Federal platform from
terminating coverage of dependent
children before the end of the coverage
year because the child has reached the
maximum age at which issuers are
required to make coverage available
under Federal or State law, or the
issuer’s business rules. Because this
prohibition has already been
operationalized on the Exchanges on the
Federal platform, we do not anticipate
a financial impact to issuers or HHS.
There may be some minor costs for State
Exchanges that choose to implement
this policy and have not previously
done so, but we do not have adequate
data to estimate these costs.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
18. Improper Payment Pre-Testing and
Assessment for State-Based Exchanges
(§ 155.1500)
This policy will prepare HHS to
implement the Payment Integrity
Information Act of 2019 (PIIA)
requirements for State Exchanges. As
described in the preamble in this final
rule, the PIIA requires that agencies
measure the improper payments rate for
programs susceptible to significant
improper payments. We already
undertake annual measurements for
Medicare, Medicaid, FFEs, and SBE–
FPs. This final rule will lay the
groundwork to complete the Exchanges’
measurement program by including
State Exchanges and to enable HHS to
estimate improper payment rates as
mandated by statute.
This policy will test State Exchanges’
readiness to provide the information
necessary to measure the rate of
improper payments. Even slight
decreases in this rate will accrue large
taxpayer savings. As discussed in
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section IV.J, the IPPTA incurs
approximately $28,500 in annual costs
per State Exchange for a total annual
cost of $512,878 for all 18 State
Exchanges. Nevertheless, we believe
that the potential benefits of this
regulatory action justify the present
costs.
This policy will prepare HHS to
implement the statutory requirement for
measurement of improper payments for
programs susceptible to significant
improper payments. We have quantified
the costs for this policy. Neither this
IPPTA nor any follow-on program
should affect transfers between parties.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
19. FFE and SBE–FP User Fee Rates for
the 2024 Benefit Year (§ 156.50)
We are finalizing an FFE user fee rate
of 2.2 percent of monthly premiums for
the 2024 benefit year, which is a
decrease from the 2.75 percent FFE user
fee rate finalized in the 2023 Payment
Notice (87 FR 27289). We are also
finalizing an SBE–FP user fee rate of 1.8
percent of monthly premium for the
2024 benefit year, which is a decrease
from the 2.25 percent SBE–FP user fee
rate finalized in the 2023 Payment
Notice. Based on our estimated costs,
enrollment (including anticipated
transitions of States from the FFE and
SBE–FP models to either the SBE–FP or
State Exchange model, increased Open
Enrollment numbers and anticipated
Medicaid redeterminations), premiums
for the 2024 benefit year, and user fee
rates, we are estimating that FFE and
SBE–FP user fee transfers from issuers
to the Federal Government will be $404
million lower compared to those
estimated for the prior benefit year. We
also anticipate that the lower user fee
rates may exert downward pressure on
premiums.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
20. Standardized Plans
a. Standardized Plan Options
(§ 156.201)
At § 156.201, for PY 2024 and
subsequent PYs, we are finalizing minor
updates to our approach to standardized
plan options. Specifically, in contrast to
the policy finalized in the 2023 Payment
Notice, we are finalizing, for PY 2024
and subsequent PYs, to no longer
include a standardized plan option for
the non-expanded bronze metal level.
Accordingly, we are finalizing at new
§ 156.201(b) that for PY 2024 and
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subsequent PYs, FFE and SBE–FP
issuers offering QHPs through the
Exchanges must offer standardized QHP
options designed by HHS at every
product network type (as described in
the definition of ‘‘product’’ at
§ 144.103), at every metal level except
the non-expanded bronze level, and
throughout every service area that they
offer non-standardized QHP options.
As we explained in the proposed rule,
we believe that maintaining the highest
degree of continuity possible in the
approach to standardized plan options
minimizes the risk of disruption for a
range of interested parties, including
issuers, agents, brokers, States, and
enrollees. We also explained that we
believe that making major departures
from the approach to standardized plan
options in the 2023 Payment Notice
could result in drastic changes in these
plan designs that could potentially
cause undue burden for these interested
parties. Furthermore, we explained that
if these standardized plan options vary
significantly from year to year, those
enrolled in these plans could experience
unexpected financial harm if the costsharing for services they rely upon
differs substantially from the previous
year. Ultimately, we believe that
consistency in standardized plan
options is important to allow both
issuers and enrollees to become
accustomed to these plan designs.
Thus, similar to the approach taken in
the 2023 Payment Notice, we are
finalizing standardized plan options
that continue to resemble the most
popular QHP offerings that millions of
consumers are already enrolled in.
Accordingly, these standardized plan
options are based on refreshed PY 2022
cost-sharing and enrollment data to
ensure that these plans continue to
reflect the most popular offerings in the
Exchanges.
We are maintaining an approach to
standardized plan options that is similar
to that taken in the 2023 Payment
Notice, such that issuers will continue
to be able to utilize many existing
benefit packages, networks, and
formularies, including those paired with
standardized plan options for PY 2023.
Furthermore, since we are finalizing
requirements that QHP issuers offer
standardized plan options at every
product network type, at every metal
level except the non-expanded bronze
metal level, and throughout every
service area for which they also offer
non-standardized plan options (but not
for different product network types,
metal levels, and service areas where
they do not also offer non-standardized
plan options), issuers will not be
required to extend plan offerings
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beyond service areas and metal levels in
which they currently offer plans.
Furthermore, as discussed earlier in
the preamble, we will continue to
differentially display standardized plan
options on HealthCare.gov per the
existing authority at § 155.205(b)(1).
Since we will continue to assume the
burden for differentially displaying
standardized plan options on
HealthCare.gov, FFE and SBE–FP
issuers will not be subject to this
burden.
In addition, as noted in the preamble,
we will continue enforcement of the
standardized plan option display
requirements for approved web-brokers
and QHP issuers using a direct
enrollment pathway to facilitate
enrollment through an FFE or SBE–FP—
including both the Classic DE and EDE
Pathways—at §§ 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv), respectively. We
believe that continuing the enforcement
of these differential display
requirements will not require significant
modification of these entities’ platforms
and non-Exchange websites, especially
since the majority of this burden already
occurred when the standardized plan
option differential display requirements
were first finalized in the 2018 Payment
Notice 338 or when enforcement of these
requirements resumed beginning with
the PY 2023 open enrollment period.
Furthermore, since we will continue
to allow these entities to submit
requests to deviate from the manner in
which standardized plan options are
differentially displayed on
HealthCare.gov, the burden for these
entities will continue to be minimized.
We intend to continue providing access
to information on standardized plan
options to web-brokers through the
Health Insurance Marketplace Public
Use Files (PUFs) and QHP Landscape
file to further minimize burden. Specific
burden estimates for these requirements
can be found in the corresponding ICR
sections for §§ 155.220 and 156.265 of
the 2023 Payment Notice (87 FR 698
and 699 and 87 FR 27360 and 27361).
Finally, since we are not finalizing the
proposed requirement for issuers to
place all covered generic prescription
drugs in the generic prescription drug
cost-sharing tier and all covered brand
drugs in the preferred or non-preferred
brand prescription drug cost sharing
tiers (or the specialty prescription drug
tier, with an appropriate and nondiscriminatory basis) in these
standardized plan options, issuers of
338 These differential display requirements were
first effective and enforced beginning with PY 2018.
See 81 FR 94117 through 94118, 94148.
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these plans will not be subject to this
additional burden.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
b. Non-Standardized Plan Option Limits
(§ 156.202)
At § 156.202, we are finalizing
limiting the number of nonstandardized plan options that issuers of
individual market medical QHPs can
offer through the FFEs and SBE–FPs to
four in PY 2024 and two in PY 2025 and
subsequent plan years per product
network type, metal level, and inclusion
of dental and/or vision benefit coverage,
in any service area.
By finalizing the proposed policy
with modifications to increase the limit
on the number of non-standardized plan
options that issuers can offer to four
instead of two for PY 2024, and to also
factor the inclusion of dental and/or
vision benefit coverage into this limit,
we estimate (based on PY 2023
enrollment and plan offering data) that
the weighted average number of nonstandardized plan options available to
each consumer will be reduced from
approximately 89.5 in PY 2023 to 66.3
in PY 2024, while the weighted average
total number of plans (which includes
both standardized and non-standardized
plan options) available to each
consumer will be reduced from
approximately 113.7 in PY 2023 to 90.5
in PY 2024.
We also note that phasing in the
reduction in the number of nonstandardized plan options that issuers
can offer, beginning with four for PY
2024, will also significantly reduce the
number of plan discontinuations and
affected enrollees for PY 2024.
Specifically, based on PY 2022 data, we
originally estimated that a limit of two
non-standardized plan options would
result in the discontinuation of
approximately 60,949 of a total 106,037
non-standardized plan option plancounty combinations (57.5 percent), and
would affect approximately 2.72 million
of the 10.21 million enrollees in the
FFEs and SBE–FPs (26.6 percent). That
said, under the limit of four nonstandardized plan options we are
finalizing for PY 2024, based on PY
2023 data, we estimate that
approximately 17,532 of the total
101,453 non-standardized plan option
plan-county combinations (17.3 percent)
will be discontinued as a result of this
limit, and approximately 0.81 million of
the 12.2 million enrollees on the FFEs
and SBE–FPs (6.6 percent) will be
affected by these discontinuations in PY
2024. Finally, in terms of the impact on
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network availability, we estimate an
average reduction of only 0.03 network
IDs per issuer, product network type,
metal level, and service area, meaning
we anticipate network IDs will remain
largely unaffected by this limit for PY
2024.
As discussed in the preamble to this
rule, we note that we are unable to
provide meaningful estimates at this
time for the weighted average number of
non-standardized plan options available
to each consumer; the weighted average
number of total plans available to each
consumer; the number of plan-county
discontinuations; the number of affected
enrollees; and the average reduction of
network IDs per issuer, product network
type, metal level, and service area under
the limit of two non-standardized plan
options per issuer, product network
type, metal level, inclusion of dental
and/or vision benefit, and service area
for PY 2025 and subsequent plan years.
This is because for these estimates to
be meaningful, they would need to be
based on plan offering and enrollment
data for PY 2024, which will not be
available until the end of the current
QHP certification cycle for PY 2024 and
the end of the 2024 OEP, respectively.
We anticipate that the broader
landscape of plan offerings as well as
the composition of individual issuers’
portfolios of plan offerings will undergo
significant changes as a result of the
limit of four non-standardized plan
options in PY 2024, and that any
estimates based on data sourced from a
plan year before this limit is enacted
would not be meaningfully predictive of
the landscape of plan offerings or
individual issuers’ portfolios of plan
offerings for a plan year after this limit
is enacted.
Furthermore, as we discussed in the
preamble to this rule, we note that in
the 2025 Payment Notice proposed rule,
we intend to propose an exceptions
process, as well as the specific criteria
and thresholds that would be included
in this exceptions process, that would,
if finalized, allow issuers to offer nonstandardized plan options in excess of
the limit of two for PY 2025 and
subsequent plan years.
Regardless, we acknowledge that the
termination of these non-standardized
plan options would entail burden in
several forms, such as by affecting
issuers’ balance of enrollment across
plans, by affecting the premium rating
for each of those plans, and by requiring
issuers to send discontinuation notices
for enrollees whose plans are being
discontinued. We are unable to quantify
this burden, as the costs of
discontinuing plans, reallocating
enrollment among existing plans, and
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recalculating the premium rating for
each of these plans after these
discontinuations and enrollee
reallocations vary considerably due to a
range of factors, including the current
number of plan offerings per issuer, the
number of plans that would be
discontinued per issuer, the number of
enrollees in those discontinued plans
that would have to be re-enrolled in a
different plan, and the composition of
these remaining plan offerings.
That said, we believe that the
advantages of enacting these changes
outweigh the disadvantages of doing so.
Specifically, with plan proliferation
continuing unabated for several years,
consumers have had to select from
among record numbers of available plan
options. Having such high numbers of
plan choices to select from makes it
increasingly difficult for consumers,
especially those with lower rates of
health care literacy, to easily and
meaningfully compare all available plan
options.
This subsequently increases the risk
of suboptimal plan selection and
unexpected financial harm for those
who can least afford it. Thus, although
we acknowledge the burden imposed on
issuers subsequent to the imposition of
a limit of four non-standardized plan
options in PY 2024 and two nonstandardized plan options in PY 2025
and subsequent plan years, we believe
these changes align with the original
intent of the Exchanges—to facilitate a
consumer-friendly experience for
individuals looking to purchase health
insurance. We believe this change will
continue to benefit consumers on the
Exchanges over numerous years. We
further note that we intend to offer the
necessary guidance and technical
assistance to facilitate this transition,
such as through the 2024 Letter to
Issuers and QHP certification webinars.
Relatedly, although issuers will be
required to select another QHP to which
to crosswalk affected enrollees from
discontinued non-standardized plan
options, we note that the existing
discontinuation notices and process as
well as the current re-enrollment
hierarchy and corresponding crosswalk
process outlined at § 155.335(j) will
accommodate crosswalking these
affected enrollees, and that no
additional modification to these
processes or to this re-enrollment
hierarchy will be required. Finally, we
note that no additional action will be
required on behalf of consumers to
complete this crosswalking process.
Finally, we believe burden is further
meaningfully reduced given that we are
phasing in the reduction in the number
of non-standardized plan options that
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issuers can offer, beginning with four in
PY 2024, which significantly reduces
the number of necessary
discontinuations in PY 2024 and
subsequently reduces the number of
affected enrollees that will need to be
crosswalked.
We explained in the proposed rule
that we did not have sufficient data to
estimate the costs associated with these
changes. As such, we sought comment
from interested parties regarding cost
estimates and data sources.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
21. QHP Rate and Benefit Information
(§ 156.210)
a. Age on Effective Date for SADPs
We are finalizing standards related to
the rate submission process for
Exchange-certified SADPs during QHP
certification. Specifically, we are
finalizing modifications to the rate
submission process to require issuers of
Exchange-certified SADPs, whether they
are sold on- or off-Exchange, to use age
on effective date as the sole method to
calculate an enrollee’s age for rating and
eligibility purposes beginning with
Exchange certification in PY 2024.
Requiring these issuers to use the age on
effective date methodology for
calculating an enrollee’s age, and
consequently removing the less
common and more complex age
calculation methods, will reduce
potential consumer confusion and the
burden placed on Exchange interested
parties (including issuers, as well as
Classic DE and EDE partners) by
promoting operational efficiency.
This policy change reduces the risk of
consumer harm and confusion since the
age on effective date method allows
consumers to more easily understand
the rate they are charged. This policy
also helps reduce enrollment blockers,
which will improve the efficiency of the
enrollment process and reduce the
burden placed on Exchange interested
parties (including issuers, as well as
Classic DE and EDE partners).
Therefore, this policy helps facilitate
more informed enrollment decisions
and enrollment satisfaction.
We also do not anticipate any
negative financial impact as a result of
this policy, given that it will be a small
operational change. If anything, this
policy has the potential to reduce
financial burden on issuers and HHS, as
removing the other age rating methods
will reduce the added expense and
slower development times that must
account for test cases in the rating
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25907
engine for the less commonly used and
more complex methods.
Additionally, this policy change will
not create any additional information
submission burden, as it will apply to
information that Exchange issuers
already submit as part of the QHP
certification process.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
b. Guaranteed Rates for SADPs
We are finalizing standards related to
the rate submission process for
Exchange-certified SADPs during QHP
certification. Specifically, we are
finalizing modifications to the rate
submission process to require issuers of
Exchange-certified SADPs, whether they
are sold on- or off-Exchange, to submit
guaranteed rates beginning with
Exchange certification in PY 2024.
Requiring guaranteed rates will
reduce the risk of consumer harm by
reducing the risk of incorrect APTC
calculation for the pediatric dental EHB
portion of premiums. Therefore, we
believe that this policy change will
support health equity by helping to
ensure that low-income enrollees who
qualify for APTC are charged the correct
premium amount. Beyond reducing the
potential for consumer financial harm,
this policy will also reduce the burden
placed on consumers because it will
allow them to rely on the information
they see on the issuer’s website and not
have to contact issuers for final rates
after the QHP certification process.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
22. Plan and Plan Variation Marketing
Name Requirements for QHPs
(§ 156.225)
We are finalizing the addition of a
new paragraph (c) to § 156.225 as
proposed, to require that QHP plan and
plan variation 339 marketing names
include correct information, without
omission of material fact, and do not
include content that is misleading. We
will review plan and plan variation
marketing names during the annual
339 In practice, CMS and interested parties often
use the term ‘‘plan variants’’ to refer to ‘‘plan
variations.’’ Per § 156.400, plan variation means a
zero-cost sharing plan variation, a limited cost
sharing plan variation, or a silver plan variation.
Issuers may choose to vary plan marketing name by
the plan variant—for example, use one plan
marketing name for a silver plan that meets the
actuarial value (AV) requirements at § 156.140(b)(2),
and a different name for that plan’s equivalent that
meets the AV requirements at § 156.420(a)(1), (2), or
(3).
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QHP certification process in close
collaboration with State regulators in
States with Exchanges on the Federal
platform.
By providing standards that help
ensure plan and plan variation
marketing names are clear and accurate,
we anticipate this policy will reduce
burden on consumers and on those who
help consumers to enroll in Exchange
coverage because it will allow them to
rely on information they see during the
plan selection process. In addition, we
believe that the policy will have an
overall positive impact on other
Exchange interested parties as well, by
ensuring that the consumer education
that plans use to compete in the
individual health insurance market is
clear and accurate. We acknowledge
that the policy might require additional
effort during the QHP certification
process on the part of Exchange issuers
to comply with new plan marketing
name standards, but believe it will
ultimately decrease issuer and State
effort following QHP certification, and
during and after the annual Open
Enrollment Period, by reducing the
number of plan and plan variation
marketing name-related consumer
complaints to triage and, in some cases,
special enrollment periods to be
provided.
Finally, we also believe that the
policy will promote health equity by
reducing the likelihood of QHP benefit
misunderstanding and confusion that
leads to less informed enrollment
decisions, especially for consumers with
low health literacy, which is
disproportionately experienced among
underserved communities and other
vulnerable populations.
We sought comment on the burden
that this policy would impose, and on
the burden reduction it could provide.
We also sought comment on how HHS
can further alleviate any burden
associated with this policy, such as
through technical assistance to
Exchange interested parties, including
issuers and enrollment assisters.
We summarize and respond to public
comments received regarding the impact
of the policy below.
Comment: Many commenters
supported the proposal and agreed that
ensuring plan and plan variation
marketing name accuracy would reduce
burden on consumers, assisters, agents
and brokers, and other stakeholders.
Some commenters supported the policy
but cautioned against imposing name
requirements that were too detailed or
restrictive, or that contradicted existing
State requirements. A few commenters
opposed the policy based on concerns
that it would restrict issuers’ ability to
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market unique characteristics of their
plans.
Response: We respond to these public
comments in the final rule preamble.
Comment: Several commenters
recommended steps for CMS to take to
reduce burden on issuers if this policy
were finalized. One commenter
requested that CMS delay the policy to
2025 because issuers would have
already begun plan filings when the
final rule is expected to be issued, and
because marketing names are used in
multiple materials, issuers would
benefit from additional implementation
time and more specific guidance
regarding permitted naming practices to
prevent having to revise consumerfacing materials. This commenter also
suggested that this proposal be
implemented prior to the proposed
changes to the auto re-enrollment
hierarchy to ensure that marketing
names are first accurate, consistent, and
understood by consumers, before some
consumers are auto re-enrolled into a
different plan than their current plan.
Another commenter raised concerns
about including additional requirements
during the QHP certification process,
stating that new requirements would
add significant administrative burden
during a time when issuers are working
to implement several new standards and
requirements.
Response: Given that the primary
intent of this policy is to ensure that
information in plan and plan variation
marketing names is accurate and does
not conflict with information included
in other plan documents, we disagree
that it is necessary or appropriate to
delay it. In response to concerns about
issuer burden, we expect that this rule,
and the related requirements discussed
in preamble, will permit the continued
use of most plan and plan variation
marketing names and that this will help
mitigate burden on issuers. Further, the
rule and related review process will
likely result in improved stability in this
area because it will allow us to work
with issuers and States during the QHP
Certification process to address
marketing name errors prior to Open
Enrollment, as opposed to addressing
problems with and requiring changes to
plan and plan variation marketing
names based on consumer complaints
during and after Open Enrollment. Over
the past several years, the need to make
changes to plan and plan variation
marketing names after Open Enrollment
to address incorrect or misleading
information in marketing names has
resulted in significant time and effort on
the part of HHS and issuers. We expect
that the requirement to make these
corrections prior to Open Enrollment
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will result in a net reduction in burden,
especially in cases where a marketing
name error would otherwise have
resulted in offering an SEP to enrollees
whose plan selection may have been
impacted by the incorrect or misleading
marketing name information. The
availability of accurate and clear
marketing names during Open
Enrollment will also reduce burden for
consumers who would otherwise have
to reassess their decisions based on
information that was not clear when
they enrolled.
For a discussion of why we do not
plan to delay implementation of
changes to the re-enrollment hierarchy,
see the RIA section for annual eligibility
redeterminations (§ 155.335(j)). We also
note that as discussed in the preamble
for this section, we will work with
States to review plan and plan variation
marketing names in advance of Open
Enrollment, which will result in
improved accuracy of marketing names
prior to the auto re-enrollment process
for PY 2024. Additionally, as we
discussed in the proposed rule (87 FR
78309), we will proactively address
issuer and State questions through
existing outreach and education
vehicles, including webinars, email
blasts, and regularly scheduled meetings
on individual health insurance market
policy and operations.
Comment: Multiple commenters
agreed that this policy would promote
health equity by reducing the likelihood
that consumers might misunderstand or
be confused about QHP benefits based
on information in marketing names.
These commenters agreed that these
challenges were especially burdensome
for consumers with low health literacy,
which is disproportionately experienced
among low-income, underserved, and
vulnerable populations.
Response: We agree with commenters
and look forward to continuing to work
with interested parties to advance
health equity in the individual and
small group health insurance markets.
23. Network Adequacy (§ 156.230)
HHS is finalizing the proposal to
revise §§ 156.230 and 156.235 to require
all QHP issuers, including SADP
issuers, to utilize a contracted network
of providers and comply with network
adequacy standards at § 156.230 and
ECP standards at § 156.235, subject to a
limited exception for certain SADPs as
discussed previously in this final rule.
We acknowledge that SADP issuers that
only offer plans that do not use a
provider network and that want to be
certified may initially face increased
costs associated with developing
contractual relationships with providers
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or leveraging pre-existing networks
associated with their other plans.
However, studies have found that
provider networks allow for insurernegotiated prices and controlled (that is,
reduced) costs in the form of reduced
patient cost-sharing, premiums, and
service price, as compared with such
services obtained out of network.340 341
We expect any initial increased issuer
costs to differ from the costs
experienced once such provider
contractual relationships have been
established or pre-existing networks
associated with their other plans have
been leveraged. We requested comment
on whether and how to extrapolate from
literature on voluntary network
formation for purposes of assessing
impacts of this regulatory provision.
For SADPs that do not use a provider
network, this policy will require these
issuers to contract with providers in
accordance with our existing network
adequacy requirements or withdraw
from the Exchange. The latter may
create a burden for enrollees and QHP
plans in the service area if no SADPs
remain. However, we expect this burden
to only affect a small number of
consumers, given the overall small
number of Exchange-certified SADPs
that do not use a provider network on
the FFEs, and we expect that a similarly
small number of Exchange-certified
SADPs that do not use a provider
network would be affected on State
Exchanges and SBE–FPs. As discussed
further in Table 11 in the preamble for
part 156, over the last few years, fewer
than 100 counties on the FFEs have had
SADPs without provider networks, and
most of these counties had SADPs with
provider network options available. For
PY 2022, there were only 8 Exchangecertified SADPs without provider
networks in the FFEs. Similarly, the
number of States with these types of
plans has decreased over time. At its
highest, in 2014, 9 FFE States had
Exchange-certified SADPs without
provider networks. Since PY 2020, this
number has dropped to 4 or fewer FFE
States, with only 2 FFE States having
this plan type in PYs 2022 and 2023.
Additionally, Exchange-certified SADPs
with provider networks are becoming
340 Benson NM, Song Z. Prices And Cost Sharing
For Psychotherapy In Network Versus Out Of
Network In The United States. Health Aff
(Millwood). 2020 Jul;39(7):1210–1218. https://
www.healthaffairs.org/doi/10.1377/
hlthaff.2019.01468.
341 Song, Z., Johnson, W., Kennedy, K., Biniek, J.
F., & Wallace, J. Out-of-network spending mostly
declined in privately insured populations with a
few notable exceptions from 2008 to 2016. Health
Aff. 2020;39(6), 1032–1041. https://
www.healthaffairs.org/doi/full/10.1377/
hlthaff.2019.01776.
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more available in counties that
previously only had no-network SADP
options: for PYs 2022 and 2023, only 2
FFE States (Alaska and Montana) offer
Exchange-certified SADPs without
provider networks. For Montana, all
counties offering this plan type also
offer Exchange-certified SADPs with
provider networks. For Alaska in PYs
2022 and 2023, 90 percent of counties
with Exchange-certified SADPs without
provider networks have no Exchangecertified SADPs with provider networks.
We anticipate approximately 2,200
enrollees will be affected by this
proposal. Enrollees in SADPs that
choose not to comply with this
requirement will need to select a
different plan for coverage, which may
cause hardship if the enrollee cannot
access assistance, requires culturally
and linguistically appropriate support,
and/or does not have an understanding
of health insurance design and benefits.
In the event service areas are left
without SADPs due to the provider
network requirement, health plans will
have to amend their benefits to include
the pediatric dental benefit EHB. This
change may require costs for issuers to
build the benefit and contract with
providers.
As discussed previously in this final
rule, these impacts will be mitigated, as
we are finalizing a limited exception to
allow SADPs to not use a provider
network in areas where it is
prohibitively difficult for the SADP
issuer to establish a network of dental
providers that complies with §§ 156.230
and 156.235 (we refer readers to section
III.C.7 of the preamble of this final rule
for further discussion of this exception).
Finally, we do not anticipate any
impact as a result of this policy on
health plans that do not use a network,
given our understanding that no such
plan is currently certified as a QHP by
an Exchange, but we solicited comment
to inform that understanding.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
24. Essential Community Providers
(§ 156.235)
We are finalizing the proposal to
strengthen the ECP standards under
§ 156.235(a)(2)(i) and (b)(2)(i) by
requiring QHPs to contract with at least
a minimum percentage of available
ECPs in each plan’s service area within
certain ECP categories, as specified by
HHS. Specifically, we are requiring
QHPs to contract with at least 35
percent of available FQHCs that qualify
as ECPs in the plan’s service area and
at least 35 percent of available Family
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25909
Planning Providers that qualify as ECPs
in the plan’s service area as proposed.
We acknowledge that issuers whose
provider networks do not currently
include such a percentage of these
provider types that qualify as ECPs may
face increased costs associated with
complying with the proposed policies.
However, we do not expect this increase
to be prohibitive. Based on data from PY
2023, it is likely that a majority of
issuers will be able to meet or exceed
the threshold requirements for FQHCs
and Family Planning Providers without
needing to contract with additional
providers in these categories.
To illustrate, if these requirements
had been in place for PY 2023, out of
137 QHP issuers on the FFEs, 76 percent
would have been able to meet or exceed
the 35 percent FQHC threshold, while
61 percent would have been able to
meet or exceed the 35 percent Family
Planning Provider threshold without
contracting with additional providers.
For SADP issuers, 84 percent would
have been able to meet the 35 percent
threshold requirement for FQHCs
offering dental services without
contracting with additional providers.
In PY 2023, for medical QHPs, the mean
and median ECP percentages for the
FQHC category were 74 and 83 percent,
respectively. For the Family Planning
Providers category, the mean and
median ECP percentages were 66 and 71
percent, respectively. For SADPs, the
mean and median ECP percentages for
the FQHC category were 61 and 64
percent, respectively.
We are also finalizing the proposal to
strengthen the ECP standards under
§ 156.235(a)(2)(ii)(B) by establishing two
additional stand-alone ECP categories—
SUD Treatment Centers and Mental
Health Facilities. We acknowledge
challenges associated with a general
shortage and uneven distribution of
SUD Treatment Centers and mental
health providers. However, the ACA
requires that a QHP’s network include
ECPs where available. As such, the
policy to require QHPs to offer a
contract to at least one available SUD
Treatment Center and one available
Mental Health Facility in every county
in the plan’s service area does not
unduly penalize issuers facing a lack of
certain types of ECPs within a service
area; meaning that if there are no
provider types that map to a specified
ECP category available within the
respective county, the issuer is not
penalized. Further, as outlined in prior
Letters to Issuers, HHS prepares the
applicable PY HHS ECP list that
potential QHPs use to identify eligible
ECP facilities. The HHS ECP list reflects
the total supply of eligible providers
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(that is, the denominator) from which an
issuer may select for contracting to
count toward satisfying the ECP
standard. As a result, issuers are not
disadvantaged if their service areas
contain fewer ECPs. HHS anticipates
that any QHP issuers falling short of the
35 percent threshold for PY 2024 could
satisfy the standard by using ECP writeins and justifications. As in previous
years, if an issuer’s application does not
satisfy the ECP standard, the issuer will
be required to include as part of its
application for QHP certification a
satisfactory justification.
We did not receive any comments in
response to the burden estimates for
these policies. We are finalizing these
estimates as proposed.
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25. Termination of Coverage or
Enrollment for Qualified Individuals
(§ 156.270)
We are finalizing an amendment to
§ 156.270(f) to add a timeliness standard
to the requirement for QHP issuers
operating in Exchanges on the Federal
platform to send enrollees notice of
payment delinquency. Specifically, we
are revising § 156.270(f) to require such
issuers to send notice of payment
delinquency promptly and without
undue delay, within 10 business days of
the date the issuer should have
discovered the delinquency. We
anticipate that this policy will be
beneficial to enrollees who become
delinquent on premium payments by
ensuring they are properly informed of
their delinquency in time to avoid
losing coverage. It may be especially
beneficial to enrollees who are low
income, who will be especially
negatively impacted by disruptions in
coverage. We expect some minimal
costs to issuers associated with updating
their internal processes to ensure
compliance with the finalized
timeliness standard, but do not have
adequate data to estimate these costs.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
26. Final Deadline for Reporting
Enrollment and Payment Inaccuracies
Discovered After the Initial 90-Day
Reporting Window (§ 156.1210(c))
We are finalizing an amendment to
§ 156.1210(c) to remove the alternate
deadline at § 156.1210(c)(2), which
requires an issuer to describe all data
inaccuracies identified in a payment
and collection report by the date HHS
notifies issuers that the HHS audit
process with respect to the PY to which
such inaccuracy relates has been
completed, in order for these data
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inaccuracies to be eligible for resolution.
We are retaining only the deadline at
§ 156.1210(c)(1), which requires that
issuers describe all inaccuracies
identified in a payment and collections
report within 3 years of the end of the
applicable PY to which the inaccuracy
relates to be eligible to receive an
adjustment to correct an underpayment
of APTC or overpayment of user fees to
HHS. Beginning with the 2020 plan year
coverage, HHS will not pay additional
APTC payments or reimburse user fee
payments for FFE, SBE–FP, and State
Exchange issuers for data inaccuracies
reported after the 3-year deadline. For
PYs 2015 through 2019, to be eligible for
resolution under § 156.1210(b), an
issuer must describe all inaccuracies
identified in a payment and collections
report before January 1, 2024. We
anticipate that this change will result in
a less operationally burdensome process
for the identification and resolution of
these data inaccuracies for issuers, State
Exchanges, and HHS, and a slight
reduction in associated burdens, such as
resolution of data inaccuracies for
discovered underpayments. However,
we anticipate the impact will be
minimal, if any, as issuers have several
opportunities to submit data
inaccuracies prior to this 3- year
deadline. Therefore, we anticipate no
significant financial impact for this
policy.
We did not receive any comments in
response to the burden estimates for this
policy. We are finalizing these estimates
as proposed.
27. Regulatory Review Cost Estimation
If regulations impose administrative
costs on private entities, such as the
time needed to read and interpret this
final rule, we should 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
assumed that the total number of unique
commenters on last year’s final rule
(465) will be the number of reviewers of
this final rule. We acknowledge that this
assumption may understate or overstate
the costs of reviewing this rule. It is
possible that not all commenters
reviewed last year’s rule in detail, and
it is also possible that some reviewers
chose not to comment on the proposed
rule. For these reasons, we thought that
the number of past commenters will be
a fair estimate of the number of
reviewers of this rule. We welcome any
comments on the approach in
estimating the number of entities which
will review this proposed rule.
We also recognized that different
types of entities are in many cases
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affected by mutually exclusive sections
of this final rule, and therefore, for the
purposes of our estimate we assume that
each reviewer reads approximately 50
percent of the rule. We sought
comments on this assumption.
Using the wage information ($57.61
per hour) from the Bureau of Labor
Statistics (BLS) for medical and health
service managers (Code 11–9111), we
estimate that the cost of reviewing this
rule is $115.22 per hour, including a
100 percent increase for other indirect
costs.342 Assuming an average reading
speed of 250 words per minute, we
estimate that it will take approximately
6.67 hours for the staff to review half of
this final rule (no more than 100,000
words). For each entity that reviews the
rule, the estimated cost is $768.13 (6.67
hours × $115.22). Therefore, we estimate
that the total cost of reviewing this
regulation is approximately $357,180
($768.13 × 465).
D. Regulatory Alternatives Considered
For the inclusion or exclusion of the
2020 benefit year enrollee-level EDGE
data in the recalibration of 2024 benefit
year risk adjustment models, we
considered a variety of alternative
options that were detailed in the
proposed rule (87 FR 78216 through
78218). The first option considered was
to maintain current policy, recalibrating
the risk adjustment models using 2018,
2019, and 2020 enrollee-level EDGE
data (without any adjustment). The
second option involved using 2018,
2019, and 2020 enrollee-level EDGE
data, but assigning a lower weight to the
2020 data. The third option we
considered would utilize 4 years of
enrollee-level EDGE data, instead of
three, to recalibrate the risk adjustment
models using 2017, 2018, 2019, and
2020 data. The fourth option, which was
the proposed option, would determine
coefficients for the 2024 benefit year
based on a blend of separately solved
coefficients from the 2018, 2019, and
2020 benefit years of enrollee-level
EDGE recalibration data except for the
coefficients for the adult age-sex factors,
which would instead be based on a
blend of separately solved coefficients
from only the 2018 and 2019 benefit
year enrollee-level EDGE recalibration.
The fifth option would exclude the 2020
enrollee-level EDGE data and use the
2017, 2018, and 2019 enrollee-level
EDGE data in recalibration for the 2024
benefit year or to use the final 2023
models as the 2024 risk adjustment
models. The sixth and final option we
considered would use 2 years of
enrollee-level EDGE data for 2024
342 https://www.bls.gov/oes/current/oes_nat.htm.
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benefit year recalibration—only 2018
and 2019 data.
Our analyses found that the 2019 and
2020 enrollee-level EDGE recalibration
data were largely comparable, however,
there were observed anomalous
decreases in the unconstrained age-sex
coefficients for the 2020 enrollee-level
EDGE. Specifically, whether a
coefficient increased or decreased
between the 2019 and 2020 enrolleelevel EDGE data seemed to be related to
the age and sex values for the age-sex
factor, with older female enrollees being
observed to have a greater likelihood of
a decrease in their age-sex factor
coefficient than other age and sex
groups. However, we have noted that
the magnitude of these coefficient
changes is within the range of year-toyear changes that we have previously
observed. Additionally, we agree with
commenters to the proposed rule that
removing only the 2020 enrollee-level
EDGE data set age-sex factors from the
blending of the coefficients may have
disadvantages in that all coefficients in
the model are interrelated and the
removal of a subset of coefficients from
blending as described in the proposed
option 4 would not address any related
coefficients that remained in the
blending step. Therefore, although
option 1 will not address the identified
anomalous trend in the direction of
changes to the age-sex factors, the small
magnitude of the changes and the
disadvantages of the proposed option
have resulted in our decision to finalize
option 1 in lieu of the proposed option.
As such, we will maintain current
policy, recalibrating the risk adjustment
models using 2018, 2019, and 2020
enrollee-level EDGE data (without any
adjustment).
We continue to believe the other
options we considered are less
appropriate than either the proposed
option or the option finalized in this
rule. For example, the second option we
considered in the proposed rule
represented a compromise between
those who wish to include 2020
enrollee-level EDGE data in model
recalibration and those who wish to
exclude 2020 data, by capturing the
utilization and spending patterns
underlying the 2020 data while
dampening its effects in the model.
However, we are concerned this
approach will require finding an
appropriate weighting methodology,
and we are further concerned that
broadly dampening the effect of the
2020 enrollee-level EDGE data in the
models defeats the purpose of adding
the next available benefit year of data as
part of model recalibration, because
doing so will prevent the models from
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reflecting changes in utilization and cost
of care that are unrelated to the impact
of the COVID–19 PHE. We have similar
concerns with option 3 and the
inclusion of an additional prior benefit
year (that is, 2017) to recalibrate the
2024 benefit year models to dampen the
impact of the 2020 enrollee-level EDGE
data. We do not believe that such a
broad dampening is necessary because
the anomalous coefficient changes
identified from the 2020 enrollee-level
EDGE data were largely limited to
which adult model age-sex coefficients
increased or decreased, and including
an additional prior benefit year of data
will dampen the impact of the 2020 data
on other factors, preventing the models
from reflecting changes in utilization
and cost of care that are unrelated to the
impact of the COVID–19 PHE.
We are similarly concerned about
options 5 and 6, which involve the
complete exclusion of 2020 enrolleelevel EDGE data, because both of these
options will result in reliance on data
that may not be the most reflective data
set of current utilization and spending
trends. Furthermore, there are questions
about whether there is a sufficient
justification to completely exclude 2020
benefit year enrollee-level EDGE
recalibration data in the recalibration of
the risk adjustment models as our
analysis showed 2020 enrollee-level
EDGE data to be largely comparable to
2019 benefit year enrollee-level EDGE
data. The sixth option has the same
limitations and would also have the
additional drawback of decreasing the
stabilizing effect of using multiple years
of data in model recalibration. More
specifically, because this option would
reduce the number of years of data used,
a change in a coefficient occurring in
just 1 year of the data that is actually
included in recalibration (that is, the
2018 or 2019 benefit years of enrolleelevel EDGE recalibration data) will have
a greater impact on the risk adjustment
model coefficients due to the increase in
the reliance of the blended coefficients
on the remaining 2 years of data.
We solicited comment on all of these
alternatives for the use of the 2020
enrollee-level EDGE data in the 2024
benefit year risk adjustment model
recalibration and responded to
comments in the above preamble
section entitled ‘‘Data for Risk
Adjustment Model Recalibration for
2024 Benefit Year’’.
In developing the updated materiality
threshold for HHS–RADV finalized in
this rule, we sought to ensure the
materiality threshold will ease the
burden of annual audit requirements for
smaller issuers of risk adjustment
covered plans that do not materially
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25911
impact risk. To do this, we considered
the costs associated with hiring an
initial validation auditor and submitting
IVA results and the relative growth of
issuers’ total annual premiums
Statewide and total BMM. We also
evaluated the benefits of shifting to a
threshold based on BMM rather than
annual premiums, and we proposed
changing the materiality threshold from
$15 million in total annual premiums
Statewide to 30,000 BMM Statewide. As
an alternative option, we considered
increasing the threshold to $17 million
in total annual premiums Statewide and
maintaining a cutoff based on premium
dollars (instead of BMMs). However, we
were concerned that a premium
threshold will fail to capture small
issuers overtime as PMPM premiums
grow and will require more regular
updates to the materiality threshold to
maintain the current balance. The use of
a BMM threshold avoids this issue. We
invited comment on our proposed
materiality threshold and on the
potential alternative option to update
the threshold to $17 million annual
premiums Statewide for the benefit year
being audited, and we also invited
comment on the applicability date for
when the new materiality threshold
should begin to apply. Based on
comments received and discussed in the
preamble section titled ‘‘Materiality
Threshold for Risk Adjustment Data
Validation,’’ we are finalizing this
provision as proposed and are using the
new materiality threshold beginning
with the 2022 benefit year HHS–RADV.
Regarding our proposal to require
Exchanges to determine an enrollee as
ineligible for APTC after having failed to
file and reconcile for two consecutive
tax years rather than after one tax year,
we considered multiple alternatives.
One alternative we considered was
extending the current pause on FTR
operations through plan year 2024,
while HHS continued to examine the
current FTR process, and explore ways
in which the FTR process could
promote continuity of coverage, while
maintaining its critical program
integrity function to ensure that only
enrollees eligible for APTC continue to
do so. Another alternative we
considered was repealing the
requirement under 45 CFR 155.305(f)(4)
that a taxpayer(s) must file a Federal
income tax return and reconcile their
APTC for any tax year in which they or
their tax household received APTC in
order to continue their eligibility for
APTC. However, we wanted to maintain
the program integrity benefits of the
FTR process, and believe there is still
value in ensuring that only people who
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are filing and reconciling remain
eligible to receive APTC. Because of
this, we amended our proposal and are
finalizing as proposed a requirement
that Exchanges end APTC only after two
consecutive years of FTR status rather
than ending APTC after a single year.
We considered two alternatives to
accepting attestation to determine
household income for households for
which IRS does not return any data and
expanding the amount of time to resolve
income DMIs to meet the goal of
increased consumer service and
advancing health equity. We considered
establishing a threshold when adjusting
APTC following an income
inconsistency period. Under this
alternative, HHS would continue
current operations but would not
eliminate APTC eligibility completely if
consumers are unable to provide
sufficient documentation. While this
alternative would require fewer changes
to implement, the policy we are
finalizing will create better outcomes for
more consumers and decrease
administrative burden. Additionally, we
considered eliminating income DMIs for
all consumers, including those for
whom the Exchanges have IRS data, due
to the large burden the income
verification process places on
consumers, but we found that the
verification process was required for
consumers with IRS data, and that
consumers with IRS data would have
their household income adjusted based
on that data as opposed to those without
IRS data who would lose eligibility for
financial assistance.
In developing the proposal for reenrollment hierarchy, we considered a
variety of alternatives, including making
no modifications. We also considered
revising the policy, beginning in PY
2024, such that the Exchange could
direct re-enrollment for income-based
CSR-eligible enrollees from a bronze
QHP to a silver QHP with a $0 net
premium within the same product and
QHP issuer, regardless if the enrollee’s
current plan is available. Under this
alternative we considered revising the
policy to allow the Exchange to ensure
the enrollee’s coverage retained a
similar provider network throughout the
Federal hierarchy for re-enrollment.
While we believed this may slightly
reduce operational complexity, we
believed income-based CSR-eligible
enrollees who have a de minimis or
non-zero-dollar premium will still
greatly benefit from having their
coverage renewed into a silver CSR QHP
with a lower or equivalent net premium
and OOPC, by saving thousands in care
costs.
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We also considered revising the
policy, beginning in PY 2024, such that
the Exchange could: (1) direct reenrollment, for income-based CSReligible enrollees, from a bronze QHP to
a silver QHP with a lower or equivalent
net premium and total OOPC within the
same product and QHP issuer regardless
if their current plan is available; (2) if
their current plan is available and the
enrollee is not income-based CSR
eligible, re-enroll the enrollee’s coverage
in the enrollee’s same plan; (3) if their
current plan is not available and the
enrollee is not income-based CSR
eligible, direct re-enrollment to a plan at
the same metal level that has a lower or
equivalent net premium and total outof-pocket cost compared to the
enrollee’s current QHP within the same
product and QHP issuer; and (4) if a
plan at the same metal level as their
current QHP is not available and the
enrollee is not income-based CSR
eligible, direct re-enrollment to a QHP
that is one metal level higher or lower
than the enrollee’s current QHP and has
a lower or equivalent net premium and
total OOPC compared to the enrollee’s
current QHP within the same product
and issuer. Under this alternative, we
considered revising the policy to allow
the Exchange to ensure the enrollee’s
coverage retained a similar provider
network throughout the Federal
hierarchy for re-enrollment. While we
believed this alternative would be
beneficial for all enrollees, we
understand this would pose a
substantial operational burden and
complexities for issuers and Exchanges
to shift from the current policy to this
revised alternative. We believe an
incremental change will help issuers
and Exchanges diligently and
appropriately adjust their re-enrollment
operations. We solicited comment on all
aspects of the re-enrollment proposal at
§ 155.335(j) and responded to comments
received in the associated preamble
section. As discussed in that preamble
section, we are finalizing this policy
with minor modifications.
We considered taking no action
related to the two technical corrections
to the regulatory text at
§ 155.420(a)(4)(ii)(A) and (B). However,
we believed these changes were
necessary to make it explicitly clear that
when a qualified individual or enrollee,
or his or her dependent, experiences the
special enrollment period triggering
event, all members of a household may
enroll in or change plans together in
response to the event experienced by
one member of the household. These
finalized technical corrections should
eliminate any confusion surrounding
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special enrollment period triggering
events and may help Exchanges and
other interested parties more effectively
communicate and message rules that
determine eligibility for special
enrollment periods and how plan
category limitations may apply for
certain special enrollment periods as
outlined under § 155.420(a).
We considered taking no action
related to the revisions to
§ 155.420(b)(2)(iv), to provide
Exchanges with more flexibility by
allowing Exchanges the option to
provide consumers with earlier coverage
effective dates so that consumers are
able to seamlessly transition from one
form of coverage to Exchange coverage
as quickly as possible with no coverage
gaps. However, we believe that many
consumers will benefit from this
finalized change, especially those
consumers whose States allow for midmonth terminations for Medicaid/CHIP
or those consumers whose COBRA
coverage ends mid-month and who
report their coverage loss to the
Exchange before it happens. We also
considered allowing consumers the
option to request a prospective coverage
start date rather than the day following
loss of MEC or COBRA coverage but we
determined that this could introduce
adverse selection as consumers could
choose to delay enrolling in Exchange
coverage and paying premiums until
coverage was necessary. Finally, we also
considered for consumers attesting to a
past loss of MEC and who also report a
mid-month coverage loss that Exchange
coverage will be effective retroactively
back to the first day after the prior
coverage loss date. For example, if a
consumer lost coverage on July 15,
coverage will be effective retroactively
back to July 16. We decided against this
option as it would require a statutory
change to allow for mid-month PTC for
consumers losing MEC mid-month, in
addition to being too operationally
complex for both Exchanges and issuers
to implement.
We considered taking no action
related to the addition of new
§ 155.420(c)(6), to ensure that qualifying
individuals losing Medicaid or CHIP
coverage are able to seamlessly
transition to Exchange coverage as
quickly as possible with little to no
coverage gaps. However, we believe that
many consumers will benefit from this
finalized change, especially during the
period of unwinding the Medicaid
continuous enrollment condition, where
many consumers will need to
seamlessly transition off Medicaid or
CHIP and into Exchange coverage. We
also considered whether this proposed
change should be broadened to include
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consumers in other disadvantaged
groups such as those impacted by
natural disasters or other exceptional
circumstances, consumers losing
Medicaid or CHIP that is not considered
MEC, and consumers who are denied
Medicaid or CHIP coverage. We decided
not to include other groups, such as
those residing in a Federal Emergency
Management Agency (FEMA) declared
disaster area, as current CMS guidance
requires that an SEP be made available
for an additional 60 days after the end
of a FEMA declaration.343 Additionally,
for other exceptional circumstances,
there is flexibility under § 155.420(d)(9)
that we may offer impacted consumers
more time to enroll under an SEP
depending on the type of exceptional
circumstance, like a national PHE such
as COVID–19. Finally, regarding the
population that is denied Medicaid or
CHIP coverage in a new application for
enrollment (instead of losing eligibility
for existing Medicaid or CHIP coverage),
we also considered whether to extend
the SEP window length from 60 days to
90 days for the population that is denied
Medicaid or CHIP; however, we chose
not to extend the SEP window length for
this population as there is no 90 day
reconsideration period that needs
alignment for consumers denied
Medicaid or CHIP as there is for
consumers who have lost eligibility for
Medicaid or CHIP as described earlier in
the preamble.
We considered taking no action
regarding the modifications to
§ 155.430(b) to expressly prohibit
issuers from terminating coverage for
policy dependent enrollees because they
reached the maximum allowable age
mid-plan year. However, we believe it is
important to provide clarity to issuers
and consumers regarding this policy so
that coverage is not prematurely
disrupted, and we are therefore
finalizing this policy as proposed.
In developing the IPPTA policies
contained in this final rule (§ 155.1500),
we requested to meet individually with
each State Exchange that participated in
the voluntary State engagement
initiative in order to gather Statespecific information regarding options
for data collection that will impose the
least burden on State Exchanges. Based
on information provided by those State
Exchanges that were able to participate
in the meetings, we considered several
data collection options but chose the
option that provides State Exchanges
with the greatest amount of control in
aligning their source data to the
343 https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/8-9-naturaldisaster-SEP.pdf.
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requested data elements. In addition,
the data collection option requests that
the State Exchange provide no fewer
than 10 sampled tax households that we
proposed the State Exchange will
identify based upon fulfilling the
scenarios described in the preamble. An
alternative option consisted of allowing
the State Exchange to provide to HHS
all of the source data in an unstructured
format for the respective, sampled tax
households. HHS, using its own
resources, would then map the State
Exchange source data to the required
data elements that are necessary for
performing the pre-testing and
assessment. The mapping process
would require consultative sessions
with each State Exchange and a
validation process to ensure the
accurate mapping of the data. While the
pre-testing and assessment data request
form also entails a process to validate
the data with the State Exchanges, the
consultative process associated with
this alternative data collection
mechanism would entail more
frequency and a higher level of
intensity.
We invited comment on this data
collection option and potential
alternative data collection options. We
did not receive any comments on the
data collection alternative option. We
are finalizing the data collection option
as proposed.
For standardized plan options, we
considered a range of options for the
policy approach at § 156.201, such as
modifying the methodology used to
create the standardized plan options for
PY 2024 and subsequent PYs.
Specifically, we considered including
more than four tiers of prescription drug
cost-sharing in the standardized plan
option formularies. We also considered
lowering the deductibles in these plan
designs and offsetting this increase in
plan generosity by increasing costsharing amounts for several benefit
categories. We also considered
simultaneously maintaining the current
cost-sharing structures and decreasing
the deductibles for these plan designs,
which would have increased the AVs of
these plans to be at the ceiling of each
AV de minimis range. Ultimately, we
decided to maintain the AVs of these
plans near the floor of each de minimis
range by largely maintaining the costsharing structures and deductible values
of the standardized plan options from
PY 2023, as well as by increasing the
maximum out-of-pocket (MOOP) values
for these plan designs. We explained in
the proposed rule that we believe this
approach will strike the greatest balance
in providing enhanced pre-deductible
coverage while ensuring competitive
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25913
premiums for these standardized plan
options.
We invited comment on this proposed
approach. As further discussed in the
associated preamble section, we are
finalizing the proposed standardized
plan options policy, but with one
modification. Specifically, we are not
finalizing the proposed requirement for
issuers to include all covered generic
drugs in the generic prescription drug
cost-sharing tier and all covered brand
drugs in either the preferred brand or
non-preferred brand prescription drug
cost-sharing tiers (or the specialty tier,
with an appropriate and nondiscriminatory basis) in these
standardized plan options, as is further
discussed in the associated preamble
section.
For non-standardized plan option
limits, we considered a range of options
for the policy approach at § 156.202.
Specifically, we considered limiting the
number of non-standardized plan
options to three, two, or one per issuer,
product network type, metal level, and
service area combination. We also
considered no longer permitting nonstandardized plan options to be offered
through the Exchanges.
We also considered redeploying the
meaningful difference standard, which
was previously codified at § 156.298,
either in place of or in conjunction with
imposing limits on the number of nonstandardized plan options that issuers
can offer through the Exchanges. In this
scenario, we considered selecting from
among several combinations of the
criteria in the original version of the
meaningful difference standard to
determine whether plans are
‘‘meaningfully different’’ from one
another.344 Specifically, we considered
using only a difference in deductible
type (that is, integrated or separate
medical and drug deductible), as well as
a $1,000 difference in deductible to
determine whether plans are
‘‘meaningfully different’’ from one
another.
In the proposed rule, we proposed to
add § 156.202 to limit the number of
non-standardized plan options that
issuers of QHPs can offer through
Exchanges on the Federal platform
(including SBE–FPs) to two non344 Under the original meaningful difference
standard, a plan was considered to be
‘‘meaningfully different’’ from other plans in the
same product network type, metal level, and service
area combination if the plan had at least one of the
following characteristics: difference in network ID,
difference in formulary ID, difference in MOOP
type, difference in deductible, multiple in-network
provider tiers rather than only one, a difference of
$500 or more in MOOP, a difference of $250 or
more in deductible, or any difference in covered
benefits.
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standardized plan options per product
network type (as described in the
definition of ‘‘product’’ at § 144.103)
and metal level (excluding catastrophic
plans), in any service area, for PY 2024
and beyond, as a condition of QHP
certification. We explained that we
believed this would be the most
effective mechanism to reduce the risk
of plan choice overload, streamline the
plan selection process, and enhance
choice architecture for consumers on
the Exchanges.
We invited comment on this proposed
approach. As discussed further in the
associated preamble section of this final
rule, we are finalizing this policy with
a modification. Specifically, we are
finalizing a phased in approach to
limiting the number of nonstandardized plan options such that a
QHP issuer in an FFE or SBE–FP in PY
2024 is limited to offering four nonstandardized plan options per product
network type, as the term is described
in the definition of ‘‘product’’ at
§ 144.103, metal level (excluding
catastrophic plans), and inclusion of
dental and/or vision benefit coverage, in
any service area. For PY 2025 and
subsequent plan years, a QHP issuer in
an FFE or SBE–FP is limited to offering
two non-standardized plan options per
product network type, as the term is
described in the definition of ‘‘product’’
at § 144.103, metal level (excluding
catastrophic plans), and inclusion of
dental and/or vision benefit coverage, in
any service area.
We believe this policy strikes an
appropriate balance in reducing the risk
of plan choice overload and preserving
a sufficient degree of consumer choice.
As we explain in the corresponding
section of the preamble to this final rule,
we believe that permitting additional
variations specifically for nonstandardized plan options with the
inclusion of dental or vision benefit
coverage—instead of, for example,
permitting additional variation for any
single change in the product package,
however small—decreases the
likelihood that these limits will be
circumvented.
For plan and plan variation marketing
names, we considered issuing subregulatory guidance in lieu of
rulemaking to require that marketing
names include correct information,
without omission of material fact, and
not include content that is misleading.
However, as explained in the proposed
rule, given the important role that plan
and plan variation marketing names
play in facilitating plan competition
through consumer education on
Exchanges, we proposed this
requirement in regulation to allow
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interested parties the opportunity to
comment. As discussed in that preamble
section, we are finalizing this policy as
proposed.
We considered leaving the ECP
provider participation threshold and
major ECP categories unchanged from
PY 2023, but elected to propose these
changes to ECP policy in an effort to
increase access to care, particularly
mental health care and SUD treatment,
for low-income and medically
underserved consumers. In the
proposed rule, we invited comment on
these proposed changes and respond to
those comments in the associated
preamble section of this final rule. As
discussed in that preamble section, we
are finalizing these changes as
proposed.
We considered not proposing to
require all QHP issuers, including
SADPs, to utilize a contracted network
of providers, but elected to propose this
change to network adequacy policy in
an effort to ensure that consumers have
access to insurer-negotiated prices and
reduced costs in the form of reduced
cost-sharing, premiums, and service
price, as compared with cost-sharing,
premiums, and service prices obtained
from plans with no network of
contracted providers. In the proposed
rule, we invited comment on this
proposal and respond to those
comments in the associated preamble
section of this final rule. As discussed
in that preamble section, we are
finalizing this policy but providing a
limited exception to allow SADPs to not
use a provider network in areas where
it is prohibitively difficult for the SADP
issuer to establish a network of dental
providers that complies with §§ 156.230
and 156.235 (we refer readers to section
III.C.7 of the preamble of this final rule
for further discussion of this exception).
We considered not proposing an
amendment to § 156.270(f) to add a
timeliness standard to the requirement
for QHP issuers to send enrollees
notices of payment delinquency.
However, as we stated in the proposed
rule, because there is currently no
timeliness standard for delinquency
notices, we are concerned that there is
a risk that enrollees may not receive
sufficient notice of their delinquency to
avoid termination of coverage. We also
considered proposing requirements on
how much advance notice issuers must
provide on premium bills after coverage
is effectuated, but declined to propose
such a regulation, determining that our
focus on delinquency notice timeliness
will have the desired impact without
creating potential conflicts with the
existing pattern of State rules and issuer
practices that have long applied in the
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individual market. As discussed in the
associated preamble section of this final
rule, we are finalizing this timeliness
standard with modifications, such that
beginning in PY 2024, QHP issuers in
Exchanges operating on the Federal
platform will be required to send
notices of payment delinquency
promptly and without undue delay,
within 10 business days of the date the
issuer should have discovered the
delinquency.
E. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze
options for regulatory relief of small
entities, if a rule has a significant impact
on a substantial number of small
entities. For purposes of the RFA, we
estimate that small businesses,
nonprofit organizations, and small
governmental jurisdictions are small
entities as that term is used in the RFA.
The great majority of hospitals and most
other health care providers and
suppliers are small entities, either by
being nonprofit organizations or by
meeting the SBA definition of a small
business (having revenues of less than
$8.0 million to $41.5 million in any 1
year). Individuals and States are not
included in the definition of a small
entity.
For purposes of the RFA, we believe
that health insurance issuers and group
health plans will be classified under the
North American Industry Classification
System (NAICS) code 524114 (Direct
Health and Medical Insurance Carriers).
According to SBA size standards,
entities with average annual receipts of
$41.5 million or less will be considered
small entities for these NAICS codes.
Issuers could possibly be classified in
621491 (HMO Medical Centers) and, if
this is the case, the SBA size standard
will be $35 million or less.345 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. Based on data
from MLR annual report submissions for
the 2021 MLR reporting year,
approximately 78 out of 480 issuers of
health insurance coverage nationwide
had total premium revenue of $41.5
million or less.346 This estimate may
overstate the actual number of small
health insurance issuers that may be
affected, since over 76 percent of these
small issuers belong to larger holding
groups, and many, if not all, of these
345 https://www.sba.gov/document/support-table-size-standards.
346 Available at https://www.cms.gov/CCIIO/
Resources/Data-Resources/mlr.html.
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small companies are likely to have nonhealth lines of business that will result
in their revenues exceeding $41.5
million.
In this final rule, we are finalizing
standards for the risk adjustment and
HHS–RADV programs, which are
intended to stabilize premiums and
reduce incentives for issuers to avoid
higher-risk enrollees. Because we
believe that insurance firms offering
comprehensive health insurance
policies generally exceed the size
thresholds for ‘‘small entities’’
established by the SBA, we did not
believe that an initial regulatory
flexibility analysis is required for such
firms and therefore do not believe a
final regulatory flexibility analysis is
required. Furthermore, the proposals
related to IPPTA at §§ 155.1500–
155.1515 will affect only State
Exchanges. As State governments do not
constitute small entities under the
statutory definition, and as all State
Exchanges have revenues exceeding $5
million, an impact analysis for these
provisions is not required under the
RFA.
As its measure of significant
economic impact on a substantial
number of small entities, HHS uses a
change in revenue of more than 3 to 5
percent. We do not believe that this
threshold will be reached by the
requirements in this final rule.
Therefore, the Secretary has certified
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 Act
requires us to 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 603 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. While this rule is
not subject to section 1102 of the Act,
we have determined that this rule will
not affect small rural hospitals.
Therefore, the Secretary has certified
that this final rule will not have a
significant impact on the operations of
a substantial number of small rural
hospitals.
F. Unfunded Mandates Reform Act
(UMRA)
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
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18:55 Apr 26, 2023
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million in 1995 dollars, updated
annually for inflation. In 2023, that
threshold is approximately $177
million. Although we have not been
able to quantify all costs, we expect that
the combined impact on State, local, or
Tribal governments and the private
sector does not meet the UMRA
definition of unfunded mandate.
G. 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.
In compliance with the requirement
of E.O. 13132 that agencies examine
closely any policies that may have
federalism implications or limit the
policy making discretion of the States,
we have engaged in efforts to consult
with and work cooperatively with
affected States, including participating
in conference calls with and attending
conferences of the NAIC, and consulting
with State insurance officials on an
individual basis.
While developing this rule, we
attempted to balance the States’
interests in regulating health insurance
issuers with the need to ensure market
stability. By doing so, we complied with
the requirements of E.O. 13132.
Because States have flexibility in
designing their Exchange and Exchangerelated programs, State decisions will
ultimately influence both administrative
expenses and overall premiums. States
are not required to establish an
Exchange or risk adjustment program.
For States that elected previously to
operate an Exchange, those States had
the opportunity to use funds under
Exchange Planning and Establishment
Grants to fund the development of data.
Accordingly, some of the initial cost of
creating programs was funded by
Exchange Planning and Establishment
Grants. After establishment, Exchanges
must be financially self-sustaining, with
revenue sources at the discretion of the
State. Current State Exchanges charge
user fees to issuers.
In our view, while this final rule will
not impose substantial direct
requirement costs on State and local
governments, this regulation has
federalism implications due to potential
direct effects on the distribution of
power and responsibilities among the
State and Federal Governments relating
to determining standards relating to
health insurance that is offered in the
individual and small group markets. For
example, the repeal of the ability for
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25915
States to request a reduction in risk
adjustment State transfers may have
federalism implications, but they are
mitigated because States have the option
to operate their own Exchange and risk
adjustment program if they believe the
HHS risk adjustment methodology does
not account for State-specific factors
unique to the State’s markets.
As previously noted, the policies in
this rule related to IPPTA will impose
a minimal unfunded mandate on State
Exchanges to supply data for the
improper payment calculation.
Accordingly, E.O. 13132 does not apply
to this section of the final rule. In
addition, statute requires HHS to
determine the amount and rate of
improper payments. Finally, States have
the option to choose an FFE or SBE–FP,
each of which place different Federal
burdens on the State. As the IPPTA
section of this final rule should not
conflict with State law, HHS does not
anticipate any preemption of State law.
We invited State Exchanges to submit
comments on this section of the
proposed rule if they believe it will
conflict with State law and did not
receive any such comments.
In addition, we believe this final rule
does have federalism implications due
to the finalized policy that Exchanges
offer earlier effective dates for
consumers attesting to future midmonth coverage losses. However, the
federalism implications are mitigated as
Exchanges will have the flexibility to
continue offering the current coverage
effective dates as described at
§ 155.420(b)(2)(iv) or the new finalized
earlier effective dates for consumers
attesting to a future loss of MEC as
described earlier in preamble. In
addition, through the cross-references in
§ 147.104(b)(5), the new earlier coverage
effective dates for consumers attesting to
a future loss of MEC will be applicable
market-wide at the option of the
applicable State authority.
Additionally, we believe this final
rule does have federalism implications
due to the finalized policy that
Exchanges provide consumers losing
Medicaid or CHIP with a 90-day special
enrollment period window to enroll in
an Exchange QHP rather than the
current 60-day window. However, the
federalism implications are mitigated as
Exchanges will have the flexibility to
decide whether to continue providing
60 days before or 60 days after for
consumers losing Medicaid or CHIP to
enroll in a QHP plan as described at
§ 155.420(c)(1) or to implement the new
special rule providing consumers with
60 days before or 90 days after their loss
of Medicaid or CHIP to enroll in QHP
coverage. State Exchanges will also have
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additional flexibility to implement this
special rule earlier than January 1, 2024,
if they so choose, and are permitted to
offer a longer attestation window up to
the number of days provided for the
applicable Medicaid or CHIP
reconsideration period, if the State
Medicaid agency allows or provides for
a Medicaid or CHIP reconsideration
period greater than 90 days.
H. 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
containing a copy of the rule along with
other specified information. The Office
of Information and Regulatory Affairs in
OMB has determined that this final rule
is a ‘‘major rule’’ as that term is defined
in 5 U.S.C. 804(2), because it is likely to
result in an annual effect on the
economy of $100 million or more.
Chiquita Brooks-LaSure,
Administrator of the Centers for
Medicare & Medicaid Services,
approved this document on April 12,
2023.
List of Subjects
45 CFR Part 153
Administrative practice and
procedure, Health care, Health
insurance, Health records,
Intergovernmental relations,
Organization and functions
(Government agencies), Reporting and
recordkeeping requirements.
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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, 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
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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, under the authority at 5
U.S.C. 301, the Department of Health
and Human Services amends 45 CFR
subtitle A, subchapter B, as set forth
below.
PART 153—STANDARDS RELATED TO
REINSURANCE, RISK CORRIDORS,
AND RISK ADJUSTMENT UNDER THE
AFFORDABLE CARE ACT
1. The authority citation for part 153
continues to read as follows:
■
Authority: 42 U.S.C. 18031, 18041, and
18061 through 18063.
2. Section 153.320 is amended by
revising paragraphs (d) introductory
text, (d)(1)(iv), and (d)(4)(i)(B) to read as
follows:
■
§ 153.320 Federally certified risk
adjustment methodology.
*
*
*
*
*
(d) State flexibility to request
reductions to transfers. For the 2020
through 2023 benefit years, States can
request to reduce risk adjustment
transfers in the State’s individual
catastrophic, individual noncatastrophic, small group, or merged
market risk pool by up to 50 percent in
States where HHS operates the risk
adjustment program. For the 2024
benefit year only, only prior
participants, as defined in paragraph
(d)(5) of this section, may request to
reduce risk adjustment transfers in the
State’s individual catastrophic,
individual non-catastrophic, small
group, or merged market risk pool by up
to 50 percent in States where HHS
operates the risk adjustment program.
(1) * * *
(i) * * *
(iv) For the 2024 benefit year only, a
justification for the requested reduction
demonstrating the requested reduction
would have de minimis impact on the
necessary premium increase to cover the
transfers for issuers that would receive
reduced transfer payments.
*
*
*
*
*
(4) * * *
(i) * * *
(B) For the 2024 benefit year only,
that the requested reduction would have
de minimis impact on the necessary
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premium increase to cover the transfers
for issuers that would receive reduced
transfer payments.
*
*
*
*
*
■ 3. Section 153.630 is amended by—
■ a. Revising paragraph (d)(2);
■ b. Redesignating paragraph (d)(3) as
paragraph (d)(4); and
■ c. Adding new paragraph (d)(3).
The revision and addition read as
follows:
§ 153.630 Data validation requirements
when HHS operates risk adjustment.
*
*
*
*
*
(d) * * *
(2) Within 15 calendar days of the
notification of the findings of a second
validation audit (if applicable) by HHS,
in the manner set forth by HHS, an
issuer must confirm the findings of the
second validation audit (if applicable),
or file a discrepancy report to dispute
the findings of a second validation audit
(if applicable).
(3) Within 30 calendar days of the
notification by HHS of the calculation of
a risk score error rate, in the manner set
forth by HHS, an issuer must confirm
the calculation of the risk score error
rate as a result of risk adjustment data
validation, or file a discrepancy report
to dispute the calculation of a risk score
error rate as a result of risk adjustment
data validation.
*
*
*
*
*
■ 4. Section 153.710 is amended by
revising paragraphs (e) and (h)(1)
introductory text to read as follows:
§ 153.710
Data requirements.
*
*
*
*
*
(e) Materiality threshold. HHS will
consider a discrepancy reported under
paragraph (d)(2) of this section to be
material if the amount in dispute is
equal to or exceeds $100,000 or 1
percent of the total estimated transfer
amount in the applicable State market
risk pool, whichever is less.
*
*
*
*
*
(h) * * *
(1) Notwithstanding any discrepancy
report made under paragraph (d)(2) of
this section, any discrepancy filed
under § 153.630(d)(2) or (3), or any
request for reconsideration under
§ 156.1220(a) of this subchapter with
respect to any risk adjustment payment
or charge, including an assessment of
risk adjustment user fees and risk
adjustment data validation adjustments;
reinsurance payment; cost-sharing
reduction payment or charge; or risk
corridors payment or charge, unless the
dispute has been resolved, an issuer
must report, for purposes of the risk
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corridors and medical loss ratio (MLR)
programs:
*
*
*
*
*
PART 155—EXCHANGE
ESTABLISHMENT STANDARDS AND
OTHER RELATED STANDARDS
UNDER THE AFFORDABLE CARE ACT
5. 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.
6. Section 155.106 is amended by
revising paragraphs (a)(3) and (c)(3) to
read as follows:
■
§ 155.106 Election to operate an Exchange
after 2014.
(a) * * *
(3) Have in effect an approved, or
conditionally approved, Exchange
Blueprint and operational readiness
assessment prior to the date on which
the Exchange would begin open
enrollment as a State Exchange;
*
*
*
*
*
(c) * * *
(3) Have in effect an approved, or
conditionally approved, Exchange
Blueprint and operational readiness
assessment prior to the date on which
the Exchange proposes to begin open
enrollment as a State-based Exchanges
on the Federal platform (SBE–FP), in
accordance with HHS rules in this
chapter, as a State Exchange utilizing
the Federal platform;
*
*
*
*
*
§ 155.210
[Amended]
7. Section 155.210 is amended by:
a. Removing the period at the end of
paragraph (c)(6) and adding a semicolon
in its place;
■ b. Adding the word ‘‘or’’ following the
semicolon at the end of paragraph (d)(7);
and
■ c. Removing and reserving paragraph
(d)(8).
■ 8. Section 155.220 is amended by—
■ a. Revising paragraphs (g)(5)(i)(B),
(h)(3), and (j)(2)(ii) introductory text;
■ b. Redesignating paragraphs
(j)(2)(ii)(A) through (D) as paragraphs
(j)(2)(ii)(B) through (E), respectively;
■ c. Adding new paragraph (j)(2)(ii)(A);
and
■ d. Revising paragraph (j)(2)(iii).
The revisions and additions read as
follows:
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■
■
§ 155.220 Ability of States to permit agents
and brokers and web-brokers to assist
qualified individuals, qualified employers,
or qualified employees enrolling QHPs.
*
*
*
(g) * * *
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*
*
18:55 Apr 26, 2023
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(5) * * *
(i) * * *
(B) The agent, broker, or web-broker
may submit evidence in a form and
manner to be specified by HHS, to rebut
the allegation during this 90-day period.
If the agent, broker, or web-broker
submits such evidence during the
suspension period, HHS will review the
evidence and make a determination
whether to lift the suspension within 45
calendar days of receipt of such
evidence. If the rebuttal evidence does
not persuade HHS to lift the suspension,
or if the agent, broker, or web-broker
fails to submit rebuttal evidence during
the suspension period, HHS may
terminate the agent’s, broker’s, or webbroker’s agreements required under
paragraph (d) of this section and under
§ 155.260(b) for cause under paragraph
(g)(5)(ii) of this section.
*
*
*
*
*
(h) * * *
(3) Notice of reconsideration decision.
The HHS reconsideration entity will
provide the agent, broker, or web-broker
with a written notice of the
reconsideration decision within 60
calendar days of the date it receives the
request for reconsideration. This
decision will constitute HHS’ final
determination.
*
*
*
*
*
(j) * * *
(2) * * *
(ii) Provide the Federally-facilitated
Exchanges with correct information, and
document that eligibility application
information has been reviewed by and
confirmed to be accurate by the
consumer, or the consumer’s authorized
representative designated in compliance
with § 155.227, prior to the submission
of information, under section 1411(b) of
the Affordable Care Act, including but
not limited to:
(A) Documenting that eligibility
application information has been
reviewed by and confirmed to be
accurate by the consumer or the
consumer’s authorized representative
must require the consumer or their
authorized representative to take an
action that produces a record that can be
maintained by the individual or entity
described in paragraph (j)(1) of this
section and produced to confirm the
consumer or their authorized
representative has reviewed and
confirmed the accuracy of the eligibility
application information. Nonexhaustive examples of acceptable
documentation include obtaining the
signature of the consumer or their
authorized representative (electronically
or otherwise), verbal confirmation by
the consumer or their authorized
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25917
representative that is captured in an
audio recording, a written response
(electronic or otherwise) from the
consumer or their authorized
representative to a communication sent
by the agent, broker, or web-broker, or
other similar means or methods
specified by HHS in guidance.
(1) The documentation required under
paragraph (j)(2)(ii)(A) of this section
must include the date the information
was reviewed, the name of the
consumer or their authorized
representative, an explanation of the
attestations at the end of the eligibility
application, and the name of the
assisting agent, broker, or web-broker.
(2) An individual or entity described
in paragraph (j)(1) of this section must
maintain the documentation described
in paragraph (j)(2)(ii)(A) of this section
for a minimum of ten years, and
produce the documentation upon
request in response to monitoring, audit,
and enforcement activities conducted
consistent with paragraphs (c)(5), (g),
(h), and (k) of this section.
*
*
*
*
*
(iii) Obtain and document the receipt
of consent of the consumer or their
authorized representative designated in
compliance with § 155.227, employer,
or employee prior to assisting with or
facilitating enrollment through a
Federally-facilitated Exchange or
assisting the individual in applying for
advance payments of the premium tax
credit and cost-sharing reductions for
QHPs;
(A) Obtaining and documenting the
receipt of consent must require the
consumer, or the consumer’s authorized
representative designated in compliance
with § 155.227, to take an action that
produces a record that can be
maintained and produced by an
individual or entity described in
paragraph (j)(1) of this section to
confirm the consumer’s or their
authorized representative’s consent has
been provided. Non-exhaustive
examples of acceptable documentation
of consent include obtaining the
signature of the consumer or their
authorized representative (electronically
or otherwise), verbal confirmation by
the consumer or their authorized
representative that is captured in an
audio recording, a response from the
consumer or their authorized
representative to an electronic or other
communication sent by the agent,
broker, or web-broker, or other similar
means or methods specified by HHS in
guidance.
(B) The documentation required
under paragraph (j)(2)(iii)(A) of this
section must include a description of
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the scope, purpose, and duration of the
consent provided by the consumer or
their authorized representative
designated in compliance with
§ 155.227, the date consent was given,
name of the consumer or their
authorized representative, and the name
of the agent, broker, web-broker, or
agency being granted consent, as well as
a process through which the consumer
or their authorized representative may
rescind the consent.
(C) An individual or entity described
in paragraph (j)(1) of this section must
maintain the documentation described
in paragraph (j)(2)(iii)(A) of this section
for a minimum of 10 years, and produce
the documentation upon request in
response to monitoring, audit, and
enforcement activities conducted
consistent with paragraphs (c)(5), (g),
(h), and (k) of this section.
*
*
*
*
*
§ 155.225
[Amended]
9. Section 155.225 is amended by:
a. Adding the word ‘‘or’’ following the
semicolon in paragraph (g)(4); and
■ b. Removing and reserving paragraph
(g)(5).
■ 10. Section 155.305 is amended by
revising paragraphs (f)(1)(ii)(B) and (f)(4)
to read as follows.
■
■
§ 155.305
Eligibility standards.
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*
*
*
*
*
(f) * * *
(1) * * *
(ii) * * *
(B) Is not eligible for minimum
essential coverage for the full calendar
month for which advance payments of
the premium tax credit would be paid,
with the exception of coverage in the
individual market, in accordance with
26 CFR 1.36B–2(a)(2) and (c).
*
*
*
*
*
(4) Compliance with filing
requirement. The Exchange may not
determine a tax filer eligible for advance
payments of the premium tax credit
(APTC) if HHS notifies the Exchange as
part of the process described in
§ 155.320(c)(3) that APTC payments
were made on behalf of either the tax
filer or spouse, if the tax filer is a
married couple, for two consecutive
years for which tax data would be
utilized for verification of household
income and family size in accordance
with § 155.320(c)(1)(i), and the tax filer
or the tax filer’s spouse did not comply
with the requirement to file an income
tax return for that year and for the
previous year as required by 26 U.S.C.
6011, 6012, and in 26 CFR chapter I,
and reconcile APTC for that period.
*
*
*
*
*
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11. Section 155.315 is amended by
adding paragraph (f)(7) to read as
follows:
■
§ 155.315 Verification process related to
eligibility for enrollment in a QHP through
the Exchange.
*
*
*
*
*
(f) * * *
(7) Must extend the period described
in paragraph (f)(2)(ii) of this section by
a period of 60 days for an applicant if
the applicant is required to present
satisfactory documentary evidence to
verify household income.
*
*
*
*
*
■ 12. Section 155.320 is amended by
adding paragraph (c)(5) to read as
follows:
§ 155.320 Verification process related to
eligibility for insurance affordability
programs.
*
*
*
*
*
(c) * * *
(5) Acceptance of attestation.
Notwithstanding any other requirement
described in this paragraph (c) to the
contrary, when the Exchange requests
tax return data and family size from the
Secretary of Treasury as described in
paragraph (c)(1)(i)(A) of this section but
no such data is returned for an
applicant, the Exchange will accept that
applicant’s attestation of income and
family size without further verification.
*
*
*
*
*
■ 13. Section 155.335 is amended by—
■ a. Revising paragraphs (j)(1)
introductory text, (j)(1)(i) and (ii),
(j)(1)(iii)(A) and (B), (j)(1)(iv), (j)(2), and
(j)(3) introductory text; and
■ b. Adding paragraph (j)(4).
The revisions and addition read as
follows:
§ 155.335 Annual eligibility
redetermination.
*
*
*
*
*
(j) * * *
(1) The product under which the QHP
in which the enrollee is enrolled
remains available through the Exchange
for renewal, consistent with § 147.106 of
this subchapter, the Exchange will
renew the enrollee in a QHP under that
product, unless the enrollee terminates
coverage, including termination of
coverage in connection with voluntarily
selecting a different QHP, in accordance
with § 155.430, or unless otherwise
provided in paragraph (j)(1)(iii)(A) or
(j)(4) of this section, as follows:
(i) The Exchange will re-enroll the
enrollee in the same plan as the
enrollee’s current QHP, unless the
current QHP is not available through the
Exchange;
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(ii) If the enrollee’s current QHP is not
available through the Exchange, the
Exchange will re-enroll the enrollee in
a QHP within the same product at the
same metal level as the enrollee’s
current QHP that has the most similar
network compared to the enrollee’s
current QHP;
(iii) * * *
(A) The enrollee’s current QHP is a
silver level plan, the Exchange will reenroll the enrollee in a silver level QHP
under a different product offered by the
same QHP issuer that is most similar to
the enrollee’s current product and that
has the most similar network compared
to the enrollee’s current QHP. If no such
silver level QHP is available for
enrollment through the Exchange, the
Exchange will re-enroll the enrollee in
a QHP under the same product that is
one metal level higher or lower than the
enrollee’s current QHP and that has the
most similar network compared to the
enrollee’s current QHP; or
(B) The enrollee’s current QHP is not
a silver level plan, the Exchange will reenroll the enrollee in a QHP under the
same product that is one metal level
higher or lower than the enrollee’s
current QHP and that has the most
similar network compared to the
enrollee’s current QHP; or
(iv) If the enrollee’s current QHP is
not available through the Exchange and
the enrollee’s product no longer
includes a QHP that is at the same metal
level as, or one metal level higher or
lower than, the enrollee’s current QHP,
the Exchange will re-enroll the enrollee
in any other QHP offered under the
product in which the enrollee’s current
QHP is offered in which the enrollee is
eligible to enroll and that has the most
similar network compared to the
enrollee’s current QHP.
(2) No plans under the product under
which the QHP in which the enrollee is
enrolled are available through the
Exchange for renewal, consistent with
§ 147.106 of this subchapter, the
Exchange will enroll the enrollee in a
QHP under a different product offered
by the same QHP issuer, to the extent
permitted by applicable State law,
unless the enrollee terminates coverage,
including termination of coverage in
connection with voluntarily selecting a
different QHP, in accordance with
§ 155.430, as follows, except as
provided in paragraph (j)(4) of this
section.
(i) The Exchange will re-enroll the
enrollee in a QHP at the same metal
level as the enrollee’s current QHP in
the product offered by the same issuer
that is the most similar to the enrollee’s
current product and that has the most
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similar network compared to the
enrollee’s current QHP;
(ii) If the issuer does not offer another
QHP at the same metal level as the
enrollee’s current QHP, the Exchange
will re-enroll the enrollee in a QHP that
is one metal level higher or lower than
the enrollee’s current QHP and that has
the most similar network compared to
the enrollee’s current QHP in the
product offered by the same issuer
through the Exchange that is the most
similar to the enrollee’s current product;
or
(iii) If the issuer does not offer another
QHP through the Exchange at the same
metal level as, or one metal level higher
or lower than the enrollee’s current
QHP, the Exchange will re-enroll the
enrollee in any other QHP offered by the
same issuer in which the enrollee is
eligible to enroll and that has the most
similar network compared to the
enrollee’s current QHP in the product
that is most similar to the enrollee’s
current product.
(3) No QHPs from the same issuer are
available through the Exchange, the
Exchange may enroll the enrollee in a
QHP issued by a different issuer, to the
extent permitted by applicable State
law, unless the enrollee terminates
coverage, including termination of
coverage in connection with voluntarily
selecting a different QHP, in accordance
with § 155.430, as follows:
*
*
*
*
*
(4) The enrollee is determined upon
annual redetermination eligible for costsharing reductions, in accordance with
§ 155.305(g), is currently enrolled in a
bronze level QHP, and would be reenrolled in a bronze level QHP under
paragraph (j)(1) or (2) of this section,
then to the extent permitted by
applicable State law, unless the enrollee
terminates coverage, including
termination of coverage in connection
with voluntarily selecting a different
QHP, in accordance with § 155.430, at
the option of the Exchange, the
Exchange may re-enroll such enrollee in
a silver level QHP within the same
product, with the same provider
network, and with a lower or equivalent
premium after the application of
advance payments of the premium tax
credit as the bronze level QHP into
which the Exchange would otherwise
re-enroll the enrollee under paragraph
(j)(1) or (2) of this section.
*
*
*
*
*
■ 14. Section 155.420 is amended by–
■ a. Revising paragraphs (a)(4)(ii)(A)
and (B), (b)(2)(iv), and (c)(2);
■ b. Adding paragraph (c)(6);
■ c. Removing the heading from
paragraph (d)(6); and
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d. Revising paragraph (d)(12).
The revisions and addition read as
follows:
■
§ 155.420
Special enrollment periods.
(a) * * *
(4) * * *
(ii) * * *
(A) If an enrollee or their dependents
become newly eligible for cost-sharing
reductions in accordance with
paragraph (d)(6)(i) or (ii) of this section
and the enrollee or their dependents are
not enrolled in a silver-level QHP, the
Exchange must allow the enrollee and
their dependents to change to a silverlevel QHP if they elect to change their
QHP enrollment; or
(B) Beginning January 2022, if an
enrollee or their dependents become
newly ineligible for cost-sharing
reductions in accordance with
paragraph (d)(6)(i) or (ii) of this section
and the enrollee or his or her
dependents are enrolled in a silver-level
QHP, the Exchange must allow the
enrollee and their dependents to change
to a QHP one metal level higher or
lower if they elect to change their QHP
enrollment;
*
*
*
*
*
(b) * * *
(2) * * *
(iv) If a qualified individual, enrollee,
or dependent, as applicable, loses
coverage as described in paragraph
(d)(1) or (d)(6)(iii) of this section, or is
enrolled in COBRA continuation
coverage for which an employer is
paying all or part of the premiums, or
for which a government entity is
providing subsidies, and the employer
contributions or government subsidies
completely cease as described in
paragraph (d)(15) of this section, gains
access to a new QHP as described in
paragraph (d)(7) of this section, becomes
newly eligible for enrollment in a QHP
through the Exchange in accordance
with § 155.305(a)(2) as described in
paragraph (d)(3) of this section, becomes
newly eligible for advance payments of
the premium tax credit in conjunction
with a permanent move as described in
paragraph (d)(6)(iv) of this section, and
if the plan selection is made on or
before the day of the triggering event,
the Exchange must ensure that the
coverage effective date is the first day of
the month following the date of the
triggering event. If the plan selection is
made after the date of the triggering
event, the Exchange must ensure that
coverage is effective in accordance with
paragraph (b)(1) of this section or on the
first day of the following month, at the
option of the Exchange.
Notwithstanding the requirements of
this paragraph (b)(2)(iv) with respect to
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25919
losses of coverage as described at
paragraphs (d)(1), (d)(6)(iii), and (d)(15)
of this section, at the option of the
Exchange, if the plan selection is made
on or before the last day of the month
preceding the triggering event, the
Exchange must ensure that the coverage
effective date is the first day of the
month in which the triggering event
occurs.
*
*
*
*
*
(c) * * *
(2) Advanced availability. A qualified
individual or their dependent who is
described in paragraph (d)(1), (d)(6)(iii),
or (d)(15) of this section has 60 days
before and, unless the Exchange
exercises the option in paragraph (c)(6)
of this section, 60 days after the
triggering event to select a QHP. At the
option of the Exchange, a qualified
individual or their dependent who is
described in paragraph (d)(7) of this
section; who is described in paragraph
(d)(6)(iv) of this section becomes newly
eligible for advance payments of the
premium tax credit as a result of a
permanent move to a new State; or who
is described in paragraph (d)(3) of this
section and becomes newly eligible for
enrollment in a QHP through the
Exchange because they newly satisfy the
requirements under § 155.305(a)(2), has
60 days before or after the triggering
event to select a QHP.
*
*
*
*
*
(6) Special rule for individuals losing
Medicaid or CHIP. Beginning January 1,
2024, or earlier, at the option of the
Exchange, a qualified individual or their
dependent(s) who is described in
paragraph (d)(1)(i) of this section and
whose loss of coverage is a loss of
Medicaid or CHIP coverage shall have
90 days after the triggering event to
select a QHP. If a State Medicaid or
CHIP Agency allows or provides for a
Medicaid or CHIP reconsideration
period greater than 90 days, the
Exchange in that State may elect to
provide a qualified individual or their
dependent(s) who is described in
paragraph (d)(1)(i) of this section and
whose loss of coverage is a loss of
Medicaid or CHIP coverage additional
time to select a QHP, up to the number
of days provided for the applicable
Medicaid or CHIP reconsideration
period.
*
*
*
*
*
(d) * * *
(12) The enrollment in a QHP through
the Exchange was influenced by a
material error related to plan benefits,
service area, cost-sharing, or premium.
A material error is one that is likely to
have influenced a qualified individual’s,
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enrollee’s, or their dependent’s
enrollment in a QHP.
*
*
*
*
*
■ 15. Section 155.430 is amended by
adding paragraph (b)(3) to read as
follows:
§ 155.430 Termination of Exchange
enrollment or coverage.
*
*
*
*
*
(b) * * *
(3) Prohibition of issuer-initiated
terminations due to aging-off.
Exchanges on the Federal platform
must, and State Exchanges using their
own platform may, prohibit QHP issuers
from terminating dependent coverage of
a child before the end of the plan year
in which the child attains age 26 (or, if
higher, the maximum age a QHP issuer
is required to make available dependent
coverage of children under applicable
State law or the issuer’s business rules),
on the basis of the child’s age, unless
otherwise permitted.
*
*
*
*
*
■ 16. Section 155.505 is amended by
revising paragraph (g) to read as follows:
§ 155.505 General eligibility appeals
requirements.
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*
*
*
*
*
(g) Review of Exchange eligibility
appeal decisions. Review of appeal
decisions issued by an impartial official
as described in § 155.535(c)(4) is
available as follows:
(1) Administrative review. The
Administrator may review an Exchange
eligibility appeal decision as follows:
(i) Request by a party to the appeal.
(A) Within 14 calendar days of the date
of the Exchange eligibility appeal
decision issued by an impartial official
as described in § 155.535(c)(4), a party
to the appeal may request review of the
Exchange eligibility appeal decision by
the CMS Administrator. Such a request
may be made even if the CMS
Administrator has already at their
initiative declined review as described
in paragraph (g)(1)(ii)(B)(1) of this
section. If the CMS Administrator
accepts that party’s request for a review
after having declined review, then the
CMS Administrator’s initial declination
to review the eligibility appeal decision
is void.
(B) Within 30 days of the date of the
party’s request for administrative
review, the CMS Administrator must:
(1) Decline to review the Exchange
eligibility appeal decision;
(2) Render a final decision as
described in § 155.545(a)(1) based on
their review of the eligibility appeal
decision; or
(3) Choose to take no action on the
request for review.
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(C) The Exchange eligibility appeal
decision of the impartial official as
described in § 155.535(c)(4) is final as of
the date of the impartial official’s
decision if the CMS Administrator
declines the party’s request for review
or if the CMS Administrator does not
take any action on the party’s request for
review by the end of the 30-day period
described in paragraphs (g)(1)(i)(B)(1)
and (3) of this section.
(ii) Review at the discretion of the
CMS Administrator. (A) Within 14
calendar days of the date of the
Exchange eligibility appeal decision
issued by an impartial official as
described in § 155.535(c)(4), the CMS
Administrator may initiate a review of
an eligibility appeal decision at their
discretion.
(B) Within 30 days of the date the
CMS Administrator initiates a review,
the CMS Administrator may:
(1) Decline to review the Exchange
eligibility appeal decision;
(2) Render a final decision as
described in § 155.545(a)(1) based on
their review of the eligibility appeal
decision; or
(3) Choose to take no action on the
Exchange eligibility appeal decision.
(C) The eligibility Exchange appeal
decision of the impartial official as
described in § 155.535(c)(4) is final as of
the date of the Exchange eligibility
appeal decision if the CMS
Administrator declines to review the
eligibility appeal decision or chooses to
take no action by the end of the 30-day
period described in paragraphs
(g)(1)(i)(B)(1) and (3) of this section.
(iii) Effective dates. If a party requests
a review of an Exchange eligibility
appeal decision by the CMS
Administrator or the CMS
Administrator initiates a review of an
Exchange eligibility appeal decision at
their own discretion, the eligibility
appeal decision is effective as follows:
(A) If an Exchange eligibility appeal
decision is final pursuant to paragraphs
(g)(1)(i)(C) and (g)(1)(ii)(C) in this
section, the Exchange eligibility appeal
decision of the impartial official as
described in § 155.535(c)(4) is effective
as of the date of the impartial official’s
decision.
(B) If the CMS Administrator renders
a final decision after reviewing an
Exchange eligibility appeal decision as
described in paragraphs (g)(1)(i)(B)(2)
and (g)(1)(ii)(B)(2) of this section, the
CMS Administrator may choose to
change the effective date of the
Exchange eligibility appeal decision as
described in § 155.545(a)(5).
(iv) Informal resolution decision.
Informal resolution decisions as
described in § 155.535(a)(4) are not
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subject to administrative review by the
CMS Administrator.
(2) Judicial review. To the extent it is
available by law, an appellant may seek
judicial review of a final Exchange
eligibility appeal decision.
(3) Implementation date. The
administrative review process is
available for eligibility appeal decisions
issued on or after January 1, 2024.
*
*
*
*
*
■ 17. Add subpart P, consisting of
§§ 155.1500 through 155.1515, to read
as follows:
Subpart P—Improper Payment Pre-Testing
and Assessment (IPPTA) for State-based
Exchanges
Sec.
155.1500 Purpose and scope.
155.1505 Definitions.
155.1510 Data submission.
155.1515 Pre-testing and assessment
procedures.
Subpart P—Improper Payment PreTesting and Assessment (IPPTA) for
State-based Exchanges
§ 155.1500
Purpose and scope.
(a) This subpart sets forth the
requirements of the IPPTA. The IPPTA
is an initiative between HHS and the
State-based Exchanges. These
requirements are intended to:
(1) Prepare State-based Exchanges for
the planned measurement of improper
payments.
(2) Test processes and procedures that
support HHS’s review of determinations
of advance payments of the premium
tax credit (APTC) made by State-based
Exchanges.
(3) Provide a mechanism for HHS and
State-based Exchanges to share
information that will aid in developing
an efficient measurement process.
(b) [Reserved]
§ 155.1505
Definitions.
As used in this subpart–
Business rules means the State-based
Exchange’s internal directives defining,
guiding, or constraining the State-based
Exchange’s actions when making
eligibility determinations and related
APTC calculations.
Entity relationship diagram means a
graphical representation illustrating the
organization and relationship of the data
elements that are pertinent to
applications for QHP and associated
APTC payments.
Pre-testing and assessment means the
process that uses the procedures
specified in § 155.1515 to prepare Statebased Exchanges for the planned
measurement of improper payments of
APTC.
Pre-testing and assessment checklist
means the document that contains
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criteria that HHS will use to review a
State-based Exchange’s ability to
accomplish the requirements of the
IPPTA.
Pre-testing and assessment data
request form means the document that
specifies the structure for the data
elements that HHS will require each
State-based Exchange to submit.
Pre-testing and assessment period
means the two calendar year timespan
during which HHS will engage in pretesting and assessment procedures with
a State-based Exchange.
Pre-testing and assessment plan
means the template developed by HHS
in collaboration with each State-based
Exchange enumerating the procedures,
sequence, and schedule to accomplish
pre-testing and assessment.
Pre-testing and assessment report
means the summary report provided by
HHS to each State-based Exchange at
the end of the State-based Exchange’s
pre-testing and assessment period that
will include, but not be limited to, the
State-based Exchange’s status regarding
completion of each of the pre-testing
and assessment procedures specified in
§ 155.1515, as well as observations and
recommendations that result from
processing and reviewing the data
submitted by the State-based Exchange
to HHS.
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§ 155.1510
Data submission.
(a) Requirements. For purposes of the
IPPTA, a State-based Exchange must
submit the following information in a
form and manner specified by HHS:
(1) Data documentation. The Statebased Exchange must provide to HHS
the following data documentation:
(i) The State-based Exchange’s data
dictionary including attribute name,
data type, allowable values, and
description;
(ii) An entity relationship diagram,
which shall include the structure of the
data tables and the residing data
elements that identify the relationships
between the data tables; and
(iii) Business rules and related
calculations.
(2) Data for processing and testing.
The State-based Exchange must use the
pre-testing and assessment data request
form, or other method as specified by
HHS, to submit to HHS the application
data associated with no fewer than 10
tax household identification numbers
and the associated policy identification
numbers that address scenarios
specified by HHS to allow HHS to test
all of the pre-testing and assessment
processes and procedures.
(b) Timing. The State-based Exchange
must submit the information specified
in paragraph (a) of this section within
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the timelines in the pre-testing and
assessment plan specified in § 155.1515.
§ 155.1515 Pre-testing and assessment
procedures.
(a) General requirement. The Statebased Exchanges are required to
participate in the IPPTA for a period of
two calendar years. The State-based
Exchange and HHS will execute the pretesting and assessment procedures in
this section within the timelines in the
pre-testing and assessment plan.
(b) Orientation and planning
processes. (1) As a part of the
orientation process, HHS will provide
State-based Exchanges with an overview
of the pre-testing and assessment
procedures and identify documentation
that a State-based Exchange must
provide to HHS for pre-testing and
assessment.
(2) As a part of the planning process,
HHS, in collaboration with each Statebased Exchange, will develop a pretesting and assessment plan that takes
into consideration relevant activities, if
any, that were completed during a prior,
voluntary State engagement. The pretesting and assessment plan will include
the pre-testing and assessment checklist.
(3) At the conclusion of the pretesting and assessment planning
process, HHS will issue the pre-testing
and assessment plan specific to that
State-based Exchange. The pre-testing
and assessment plan will be for HHS
and State-based Exchange internal use
only and will not be made available to
the public by HHS unless otherwise
required by law.
(c) Notifications and updates—(1)
Notifications. As needed throughout the
pre-testing and assessment period, HHS
will issue notifications to State-based
Exchanges concerning information
related to the pre-testing and assessment
processes and procedures.
(2) Updates regarding changes.
Throughout the pre-testing and
assessment period, the State-based
Exchange must provide HHS with
information regarding any operational,
policy, business rules, information
technology, or other changes that may
impact the ability of the State-based
Exchange to satisfy the requirements of
the pre-testing and assessment.
(d) Submission of required data and
data documentation. As specified in
§ 155.1510, HHS will inform State-based
Exchanges about the form and manner
for State-based Exchanges to submit
required data and data documentation
to HHS in accordance with the pretesting and assessment plan.
(e) Data processing. (1) HHS will
coordinate with each State-based
Exchange to track and manage the data
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25921
and data documentation submitted by a
State-based Exchange as specified in
§ 155.1510(a)(1) and (2).
(2) HHS will coordinate with each
State-based Exchange to provide
assistance in aligning the data specified
in § 155.1510(a)(2) from the State-based
Exchange’s existing data structure to the
standardized set of data elements.
(3) HHS will coordinate with each
State-based Exchange to interpret and
validate the data specified in
§ 155.1510(a)(2).
(4) HHS will use the data and data
documentation submitted by the Statebased Exchange to execute the pretesting and assessment procedures.
(f) Pre-testing and assessment
checklist. HHS will issue the pre-testing
and assessment checklist as part of the
pre-testing and assessment plan. The
pre-testing and assessment checklist
criteria will include but are not limited
to:
(1) A State-based Exchange’s
submission of the data documentation
as specified in § 155.1510(a)(1).
(2) A State-based Exchange’s
submission of the data for processing
and testing as specified in
§ 155.1510(a)(2); and
(3) A State-based Exchange’s
completion of the pre-testing and
assessment processes and procedures
related to the IPPTA program.
(g) Pre-testing and assessment report.
Subsequent to the completion of a Statebased Exchange’s pre-testing and
assessment period, HHS will issue a
pre-testing and assessment report
specific to that State-based Exchange.
The pre-testing and assessment report
will be for HHS and State-based
Exchange internal use only and will not
be made available to the public by HHS
unless otherwise required by law.
PART 156—HEALTH INSURANCE
ISSUER STANDARDS UNDER THE
AFFORDABLE CARE ACT, INCLUDING
STANDARDS RELATED TO
EXCHANGES
18. The authority citation for part 156
continues to read as follows:
■
Authority: 42 U.S.C. 18021–18024, 18031–
18032, 18041–18042, 18044, 18054, 18061,
18063, 18071, 18082, and 26 U.S.C. 36B.
19. Section 156.201 is revised to read
as follows:
■
§ 156.201
Standardized plan options.
A qualified health plan (QHP) issuer
in a Federally-facilitated Exchange or a
State-based Exchange on the Federal
platform, other than an issuer that is
already required to offer standardized
plan options under State action taking
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place on or before January 1, 2020,
must:
(a) For the plan year 2023, offer in the
individual market at least one
standardized QHP option, defined at
§ 155.20 of this subchapter, at every
product network type, as the term is
described in the definition of ‘‘product’’
at § 144.103 of this subchapter, at every
metal level, and throughout every
service area that it also offers nonstandardized QHP options, including,
for silver plans, for the income-based
cost-sharing reduction plan variations,
as provided for at § 156.420(a); and
(b) For plan year 2024 and subsequent
plan years, offer in the individual
market at least one standardized QHP
option, defined at § 155.20 of this
subchapter, at every product network
type, as the term is described in the
definition of ‘‘product’’ at § 144.103 of
this subchapter, at every metal level
except the non-expanded bronze metal
level, and throughout every service area
that it also offers non-standardized QHP
options, including, for silver plans, for
the income-based cost-sharing reduction
plan variations, as provided for at
§ 156.420(a).
■ 20. Section 156.202 is added to read
as follows:
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§ 156.202
limits.
Non-standardized plan option
A QHP issuer in a Federallyfacilitated Exchange or a State-based
Exchange on the Federal platform:
(a) For plan year 2024, is limited to
offering four non-standardized plan
options per product network type, as the
term is described in the definition of
‘‘product’’ at § 144.103 of this
subchapter, metal level (excluding
catastrophic plans), and inclusion of
dental and/or vision benefit coverage (as
defined in paragraph (c) of this section),
in any service area.
(b) For plan year 2025 and subsequent
plan years, is limited to offering two
non-standardized plan options per
product network type, as the term is
described in the definition of ‘‘product’’
at § 144.103 of this subchapter, metal
level (excluding catastrophic plans), and
inclusion of dental and/or vision benefit
coverage (as defined in paragraph (c) of
this section), in any service area.
(c) For purposes of paragraphs (a) and
(b) of this section, the inclusion of
dental and/or vision benefit coverage is
defined as coverage of any or all of the
following:
(1) Adult dental benefit coverage as
defined by the following in the
‘‘Benefits’’ column in the Plans and
Benefits Template:
(i) Routine Dental Services (Adult);
(ii) Basic Dental Care—Adult; or
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(iii) Major Dental Care—Adult.
(2) Pediatric dental benefit coverage
as defined by the following in the
‘‘Benefits’’ column in the Plans and
Benefits Template:
(i) Dental Check-Up for Children;
(ii) Basic Dental Care—Child; or
(iii) Major Dental Care—Child.
(3) Adult vision benefit coverage as
defined by the following in the
‘‘Benefits’’ column in the Plans and
Benefits Template: Routine Eye Exam
(Adult).
■ 21. Section 156.210 is amended by
adding paragraph (d) to read as follows:
§ 156.210 QHP rate and benefit
information.
*
*
*
*
*
(d) Rate requirements for stand-alone
dental plans. For benefit and plan years
beginning on or after January 1, 2024:
(1) Age on effective date. The
premium rate charged by an issuer of
stand-alone dental plans may vary with
respect to the particular plan or
coverage involved by determining the
enrollee’s age. Any age calculation for
rating and eligibility purposes must be
based on the age as of the time of policy
issuance or renewal.
(2) Guaranteed rates. An issuer of
stand-alone dental plans must set
guaranteed rates.
■ 22. Section 156.225 is amended by—
■ a. Revising the section heading;
■ b. In paragraph (a), removing ‘‘and’’
from the end of the paragraph;
■ c. In paragraph (b), removing the
period and adding in its place ‘‘; and’’;
and
■ d. Adding paragraph (c).
The revision and addition read as
follows:
§ 156.225
QHPs.
Marketing and benefit design of
*
*
*
*
*
(c) Plan marketing names. Offer plans
and plan variations with marketing
names that include correct information,
without omission of material fact, and
do not include content that is
misleading.
■ 23. Section 156.230 is amended by—
■ a. Revising paragraphs (a)(1)
introductory text and (a)(2)(i)(B);
■ b. Adding paragraph (a)(4);
■ c. Revising paragraph (e) introductory
text; and
■ d. Removing and reserving paragraph
(f).
The revisions and addition read as
follows:
§ 156.230
Network adequacy standards.
(a) * * *
(1) Each QHP issuer must use a
provider network and ensure that the
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provider network consisting of innetwork providers, as available to all
enrollees, meets the following
standards:
*
*
*
*
*
(2) * * *
(i) * * *
(B) For plan years beginning on or
after January 1, 2025, meeting
appointment wait time standards
established by the Federally-facilitated
Exchange. Such appointment wait time
standards will be developed for
consistency with industry standards and
published in guidance.
*
*
*
*
*
(4) A limited exception to the
requirement described under paragraph
(a)(1) of this section that each QHP
issuer use a provider network is
available to stand-alone dental plans
issuers that sell plans in areas where it
is prohibitively difficult for the issuer to
establish a network of dental providers;
this exception is not available to
medical QHP issuers. Under this
exception, an area is considered
‘‘prohibitively difficult’’ for the standalone dental plan issuer to establish a
network of dental providers based on
attestations from State departments of
insurance in States with at least 80
percent of counties classified as
Counties with Extreme Access
Considerations (CEAC) that at least one
of the following factors exists in the area
of concern: a significant shortage of
dental providers, a significant number
of dental providers unwilling to contract
with Exchange issuers, or significant
geographic limitations impacting
consumer access to dental providers.
*
*
*
*
*
(e) Out-of-network cost-sharing.
Beginning for the 2018 and later benefit
years, for a network to be deemed
adequate, each QHP must:
*
*
*
*
*
■ 24. Section 156.235 is amended by
revising paragraphs (a)(1), (a)(2)(i),
(a)(2)(ii)(B), and (b)(2)(i) to read as
follows:
§ 156.235
Essential community providers.
(a) * * *
(1) A QHP issuer must include in its
provider network a sufficient number
and geographic distribution of essential
community providers (ECPs), where
available, to ensure reasonable and
timely access to a broad range of such
providers for low-income individuals or
individuals residing in Health
Professional Shortage Areas within the
QHP’s service area, in accordance with
the Exchange’s network adequacy
standards.
(2) * * *
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(i) The QHP issuer’s provider network
includes as participating providers at
least a minimum percentage, as
specified by HHS, of available ECPs in
each plan’s service area collectively
across all ECP categories defined under
paragraph (a)(2)(ii)(B) of this section,
and at least a minimum percentage of
available ECPs in each plan’s service
area within certain individual ECP
categories, as specified by HHS.
Multiple providers at a single location
will count as a single ECP toward both
the available ECPs in the plan’s service
area and the issuer’s satisfaction of the
ECP participation standard. For plans
that use tiered networks, to count
toward the issuer’s satisfaction of the
ECP standards, providers must be
contracted within the network tier that
results in the lowest cost-sharing
obligation. For plans with two network
tiers (for example, participating
providers and preferred providers), such
as many preferred provider
organizations (PPOs), where costsharing is lower for preferred providers,
only preferred providers will be counted
towards ECP standards; and
(ii) * * *
(B) At least one ECP in each of the
eight (8) ECP categories in each county
in the service area, where an ECP in that
category is available and provides
medical or dental services that are
covered by the issuer plan type. The
ECP categories are: Federally Qualified
Health Centers, Ryan White Program
Providers, Family Planning Providers,
Indian Health Care Providers, Inpatient
Hospitals, Mental Health Facilities,
Substance Use Disorder Treatment
Centers, and Other ECP Providers. The
Other ECP Providers category includes
the following types of providers: Rural
Health Clinics, Black Lung Clinics,
Hemophilia Treatment Centers,
Sexually Transmitted Disease Clinics,
Tuberculosis Clinics, and Rural
Emergency Hospitals.
*
*
*
*
*
(b) * * *
(2) * * *
(i) The number of its providers that
are located in Health Professional
Shortage Areas or five-digit zip codes in
which 30 percent or more of the
population falls below 200 percent of
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the Federal poverty level satisfies a
minimum percentage, specified by HHS,
of available ECPs in each plan’s service
area collectively across all ECP
categories defined under paragraph
(a)(2)(ii)(B) of this section, and at least
a minimum percentage of available
ECPs in each plan’s service area within
certain individual ECP categories, as
specified by HHS. Multiple providers at
a single location will count as a single
ECP toward both the available ECPs in
the plan’s service area and the issuer’s
satisfaction of the ECP participation
standard. For plans that use tiered
networks, to count toward the issuer’s
satisfaction of the ECP standards,
providers must be contracted within the
network tier that results in the lowest
cost-sharing obligation. For plans with
two network tiers (for example,
participating providers and preferred
providers), such as many PPOs, where
cost sharing is lower for preferred
providers, only preferred providers
would be counted towards ECP
standards; and
*
*
*
*
*
■ 25. Section 156.270 is amended by
revising paragraph (f) to read as follows:
§ 156.270 Termination of coverage or
enrollment for qualified individuals.
*
*
*
*
*
(f) Notice of non-payment of
premiums. If an enrollee is delinquent
on premium payment, the QHP issuer
must provide the enrollee with notice of
such payment delinquency. Issuers
offering QHPs in Exchanges on the
Federal platform must provide such
notices promptly and without undue
delay, within 10 business days of the
date the issuer should have discovered
the delinquency.
*
*
*
*
*
■ 26. Section 156.1210 is amended by
revising paragraph (c) to read as follows:
§ 156.1210
Dispute submission.
*
*
*
*
*
(c) Deadline for describing
inaccuracies. To be eligible for
resolution under paragraph (b) of this
section, an issuer must describe all
inaccuracies identified in a payment
and collections report before the end of
the 3-year period beginning at the end
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Fmt 4701
Sfmt 9990
25923
of the plan year to which the inaccuracy
relates. For plan years 2015 through
2019, to be eligible for resolution under
paragraph (b) of this section, an issuer
must describe all inaccuracies identified
in a payment and collections report
before January 1, 2024. If a payment
error is discovered after the timeframe
set forth in this paragraph (c), the issuer
must notify HHS, the State Exchange, or
State-based Exchanges on the Federal
platform (SBE–FP) (as applicable) and
repay any overpayments to HHS.
*
*
*
*
*
27. Section 156.1220 is amended by
revising paragraphs (a)(4)(ii) and (b)(1)
to read as follows:
■
§ 156.1220
Administrative appeals.
(a) * * *
(4) * * *
(ii) Notwithstanding paragraph (a)(1)
of this section, a reconsideration with
respect to a processing error by HHS,
HHS’s incorrect application of the
relevant methodology, or HHS’s
mathematical error may be requested
only if, to the extent the issue could
have been previously identified, the
issuer notified HHS of the dispute
through the applicable process for
reporting a discrepancy set forth in
§§ 153.630(d)(2) and (3) and
153.710(d)(2) of this subchapter and
§ 156.430(h)(1), it was so identified and
remains unresolved.
*
*
*
*
*
(b) * * *
(1) Manner and timing for request. A
request for an informal hearing must be
made in writing and filed with HHS
within 30 calendar days of the date of
the reconsideration decision under
paragraph (a)(5) of this section. If the
last day of this period is not a business
day, the request for an informal hearing
must be made in writing and filed by
the next applicable business day.
*
*
*
*
*
Dated: April 17, 2023.
Xavier Becerra,
Secretary, Department of Health and Human
Services.
[FR Doc. 2023–08368 Filed 4–19–23; 4:15 pm]
BILLING CODE 4120–01–P
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]]>Agencies
[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Rules and Regulations]
[Pages 25740-25923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08368]
[[Page 25739]]
Vol. 88
Thursday,
No. 81
April 27, 2023
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
45 CFR Parts 153, 155, and 156
Patient Protection and Affordable Care Act, HHS Notice of Benefit and
Payment Parameters for 2024; Final Rule
Federal Register / Vol. 88 , No. 81 / Thursday, April 27, 2023 /
Rules and Regulations
[[Page 25740]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 153, 155, and 156
[CMS-9899-F]
RIN 0938-AU97
Patient Protection and Affordable Care Act, HHS Notice of Benefit
and Payment Parameters for 2024
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule includes payment parameters and provisions
related to the HHS-operated risk adjustment and risk adjustment data
validation programs, as well as 2024 user fee rates for issuers
offering qualified health plans (QHPs) through Federally-facilitated
Exchanges (FFEs) and State-based Exchanges on the Federal platform
(SBE-FPs). This final rule also has requirements related to updating
standardized plan options and reducing plan choice overload; the
automatic re-enrollment hierarchy; plan and plan variation marketing
name requirements for QHPs; essential community providers (ECPs) and
network adequacy; failure to file and reconcile; special enrollment
periods (SEPs); the annual household income verification; the deadline
for QHP issuers to report enrollment and payment inaccuracies;
requirements related to the State Exchange improper payment measurement
program; and requirements for agents, brokers, and web-brokers
assisting FFE and SBE-FP consumers.
DATES: These regulations are effective on June 18, 2023.
FOR FURTHER INFORMATION CONTACT: Jeff Wu, (301) 492-4305, Rogelyn
McLean, (301) 492-4229, Grace Bristol, (410) 786-8437, for general
information.
Joshua Paul, (301) 492-4347, Jacquelyn Rudich, (301) 492-5211, John
Barfield, (301) 492-4433, or Bryan Kirk, (443) 745-8999, for matters
related to HHS-operated risk adjustment.
Leanne Klock, (410) 786-1045, or Joshua Paul, (301) 492-4347, for
matters related to risk adjustment data validation (HHS-RADV).
John Barfield, (301) 492-4433, or Leanne Klock, (410) 786-1045, for
matters related to FFE and SBE-FP user fees.
Jacob LaGrand, (301) 492-4400, for matters related to actuarial
value (AV).
Brian Gubin, (410) 786-1659, for matters related to agent, broker,
and web-broker guidelines.
Claire Curtin, (301) 492-4400 or Marisa Beatley, (301) 492-4307,
for matters related to failure to file and reconcile.
Grace Bridges, (301) 492-5228, or Natalie Myren, (667) 290-8511,
for matters related to the verification process related to eligibility
for insurance affordability programs.
Carolyn Kraemer, (301) 492-4197, for matters related to auto re-
enrollment in the Exchanges.
Nicholas Eckart, (301) 492-4452, for matters related to termination
of Exchange enrollment or coverage for qualified individuals.
Marisa Beatley, (301) 492-4307, or Dena Nelson, (240) 401-3535, for
matters related to qualified individuals losing minimum essential
coverage (MEC) and qualifying for SEPs.
Samantha Nguyen Kella, (816) 426-6339, for matters related to plan
display error SEPs.
Eva LaManna, (301) 492-5565, or Ellen Kuhn, (410) 786-1695, for
matters related to the eligibility appeals requirements.
Linus Bicker, (803) 931-6185, for matters related to State Exchange
improper payment measurement.
Alexandra Gribbin, (667) 290-9977, for matters related to stand-
alone dental plans.
Nikolas Berkobien, (667) 290-9903, for matters related to
standardized plan options.
Carolyn Kraemer, (301) 492-4197, for matters related to plan and
plan variation marketing name requirements for QHPs.
Emily Martin, (301) 492-4423, or Deborah Hunter, (443) 386-3651,
for matters related to network adequacy and ECPs.
Rebecca Braun-Harrison, (667) 290-8846 for matters related to
reporting enrollment and payment inaccuracies and administrative
appeals.
Jenny Chen, (301) 492-5156, or Shilpa Gogna, (301) 492-4257, for
matters related to State Exchange Blueprint approval timelines.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Summary of Major Provisions
III. Provisions of the Proposed Regulations
A. Part 153--Standards Related to Reinsurance, Risk Corridors,
and Risk Adjustment
B. Part 155--Exchange Establishment Standards and Other Related
Standards under the Affordable Care Act
C. Part 156--Health Insurance Issuer Standards under the
Affordable Care Act, Including Standards Related to Exchanges
IV. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding Repeal of Risk Adjustment State Flexibility to
Request a Reduction in Risk Adjustment State Transfers (Sec.
153.320(d))
C. ICRs Regarding Risk Adjustment Issuer Data Submission
Requirements (Sec. Sec. 153.610, 153.700, and 153.710)
D. ICRs Regarding Risk Adjustment Data Validation Requirements
When HHS Operates Risk Adjustment (HHS-RADV) (Sec. 153.630)
E. ICRs Regarding Navigator, Non-Navigator Assistance Personnel,
and Certified Application Counselor Program Standards (Sec. Sec.
155.210 and 155.225)
F. ICRs Regarding Providing Correct Information to the FFEs
(Sec. 155.220(j))
G. ICRs Regarding Documenting Receipt of Consumer Consent (Sec.
155.220(j))
H. ICRs Regarding Failure to File and Reconcile Process (Sec.
155.305(f))
I. ICRs Regarding Income Inconsistencies (Sec. Sec. 155.315 and
155.320)
J. ICRs Regarding the Improper Payment Pre-Testing and
Assessment (IPPTA) for State-based Exchanges (Sec. Sec. 155.1500
through 155.1515)
K. ICRs Regarding QHP Rate and Benefit Information (Sec.
156.210)
L. ICRs Regarding Establishing a Timeliness Standard for Notices
of Payment Delinquency (Sec. 156.270)
M. Summary of Annual Burden Estimates for Proposed Requirements
N. Submission of PRA-Related Comments
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice Provisions and
Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act (RFA)
F. Unfunded Mandates Reform Act (UMRA)
G. Federalism
I. Executive Summary
We are finalizing changes to the provisions and parameters
implemented through prior rulemaking to implement the Patient
Protection and Affordable Care Act (ACA).\1\ These requirements are
published under the authority granted to the Secretary by the ACA and
the Public Health Service (PHS) Act.\2\ In this final rule, we are
finalizing changes related to some of the ACA provisions and parameters
we previously implemented and are implementing new provisions. Our goal
with these requirements is providing quality,
[[Page 25741]]
affordable coverage to consumers while minimizing administrative burden
and ensuring program integrity. The changes finalized in this rule are
also intended to help advance health equity and mitigate health
disparities.
---------------------------------------------------------------------------
\1\ The Patient Protection and Affordable Care Act (Pub. L. 111-
148) was enacted on March 23, 2010. The Healthcare and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and
revised several provisions of the Patient Protection and Affordable
Care Act, was enacted on March 30, 2010. In this rulemaking, the two
statutes are referred to collectively as the ``Patient Protection
and Affordable Care Act,'' ``Affordable Care Act,'' or ``ACA.''
\2\ See sections 1311, 1312, 1313, 1321, and 1343 of the ACA and
section 2792 of the PHS Act.
---------------------------------------------------------------------------
II. Background
A. Legislative and Regulatory Overview
Title I of the Health Insurance Portability and Accountability Act
of 1996 (HIPAA) added a new title XXVII to the PHS Act to establish
various reforms to the group and individual health insurance markets.
These provisions of the PHS Act were later augmented by other laws,
including the ACA.
Subtitles A and C of title I of the ACA reorganized, amended, and
added to the provisions of part A of title XXVII of the PHS Act
relating to group health plans and health insurance issuers in the
group and individual markets. The term ``group health plan'' includes
both insured and self-insured group health plans.
Section 2702 of the PHS Act, as added by the ACA, establishes
requirements for guaranteed availability of coverage in the group and
individual markets.
Section 1301(a)(1)(B) of the ACA directs all issuers of QHPs to
cover the essential health benefit (EHB) package described in section
1302(a) of the ACA, including coverage of the services described in
section 1302(b) of the ACA, adherence to the cost-sharing limits
described in section 1302(c) of the ACA, and meeting the AV levels
established in section 1302(d) of the ACA. Section 2707(a) of the PHS
Act, which is effective for plan or policy years beginning on or after
January 1, 2014, extends the requirement to cover the EHB package to
non-grandfathered individual and small group health insurance coverage,
irrespective of whether such coverage is offered through an Exchange.
In addition, section 2707(b) of the PHS Act directs non-grandfathered
group health plans to ensure that cost-sharing under the plan does not
exceed the limitations described in section 1302(c)(1) of the ACA.
Section 1302 of the ACA provides for the establishment of an EHB
package that includes coverage of EHBs (as defined by the Secretary of
HHS), cost-sharing limits, and AV requirements. The law directs that
EHBs be equal in scope to the benefits provided under a typical
employer plan, and that they cover at least the following 10 general
categories: ambulatory patient services; emergency services;
hospitalization; maternity and newborn care; mental health and
substance use disorder services, including behavioral health treatment;
prescription drugs; rehabilitative and habilitative services and
devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services, including oral and
vision care. Section 1302(d) of the ACA describes the various levels of
coverage based on their AV. Consistent with section 1302(d)(2)(A) of
the ACA, AV is calculated based on the provision of EHB to a standard
population. Section 1302(d)(3) of the ACA directs the Secretary of HHS
to develop guidelines that allow for de minimis variation in AV
calculations. Sections 1302(b)(4)(A) through (D) of the ACA establish
that the Secretary must define EHB in a manner that: (1) Reflects
appropriate balance among the 10 categories; (2) is not designed in
such a way as to discriminate based on age, disability, or expected
length of life; (3) takes into account the health care needs of diverse
segments of the population; and (4) does not allow denials of EHBs
based on age, life expectancy, disability, degree of medical
dependency, or quality of life.
Section 1311(c) of the ACA provides the Secretary the authority to
issue regulations to establish criteria for the certification of QHPs.
Section 1311(c)(1)(B) of the ACA requires, among the criteria for
certification that the Secretary must establish by regulation that QHPs
ensure a sufficient choice of providers. Section 1311(e)(1) of the ACA
grants the Exchange the authority to certify a health plan as a QHP if
the health plan meets the Secretary's requirements for certification
issued under section 1311(c) of the ACA, and the Exchange determines
that making the plan available through the Exchange is in the interests
of qualified individuals and qualified employers in the State. Section
1311(c)(6)(C) of the ACA directs the Secretary of HHS to require an
Exchange to provide for special enrollment periods and section
1311(c)(6)(D) of the ACA directs the Secretary of HHS to require an
Exchange to provide for a monthly enrollment period for Indians, as
defined by section 4 of the Indian Health Care Improvement Act.
Section 1311(d)(3)(B) of the ACA permits a State, at its option, to
require QHPs to cover benefits in addition to EHB. This section also
requires a State to make payments, either to the individual enrollee or
to the issuer on behalf of the enrollee, to defray the cost of these
additional State-required benefits.
Section 1312(c) of the ACA generally requires a health insurance
issuer to consider all enrollees in all health plans (except
grandfathered health plans) offered by such issuer to be members of a
single risk pool for each of its individual and small group markets.
States have the option to merge the individual and small group market
risk pools under section 1312(c)(3) of the ACA.
Section 1312(e) of the ACA provides the Secretary with the
authority to establish procedures under which a State may allow agents
or brokers to (1) enroll qualified individuals and qualified employers
in QHPs offered through Exchanges and (2) assist individuals in
applying for advance payments of the premium tax credit (APTC) and
cost-sharing reductions (CSRs) for QHPs sold through an Exchange.
Sections 1313 and 1321 of the ACA provide the Secretary with the
authority to oversee the financial integrity of State Exchanges, their
compliance with HHS standards, and the efficient and non-discriminatory
administration of State Exchange activities. Section 1313(a)(5)(A) of
the ACA provides the Secretary with the authority to implement any
measure or procedure that the Secretary determines is appropriate to
reduce fraud and abuse in the administration of the Exchanges. Section
1321 of the ACA provides for State flexibility in the operation and
enforcement of Exchanges and related requirements.
Section 1321(a) of the ACA provides broad authority for the
Secretary to establish standards and regulations to implement the
statutory requirements related to Exchanges, QHPs and other components
of title I of the ACA, including such other requirements as the
Secretary determines appropriate. When operating an FFE under section
1321(c)(1) of the ACA, HHS has the authority under sections 1321(c)(1)
and 1311(d)(5)(A) of the ACA to collect and spend user fees. Office of
Management and Budget (OMB) Circular A-25 Revised establishes Federal
policy regarding user fees and specifies that a user charge will be
assessed against each identifiable recipient for special benefits
derived from Federal activities beyond those received by the general
public.
Section 1321(d) of the ACA provides that nothing in title I of the
ACA must be construed to preempt any State law that does not prevent
the application of title I of the ACA. Section 1311(k) of the ACA
specifies that Exchanges may not establish rules that conflict with or
prevent the application of regulations issued by the Secretary.
[[Page 25742]]
Section 1343 of the ACA establishes a permanent risk adjustment
program to provide payments to health insurance issuers that attract
higher-than-average risk populations, such as those with chronic
conditions, funded by payments from those that attract lower-than-
average risk populations, thereby reducing incentives for issuers to
avoid higher-risk enrollees. Section 1343(b) of the ACA provides that
the Secretary, in consultation with States, shall establish criteria
and methods to be used in carrying out the risk adjustment activities
under this section. Consistent with section 1321(c) of the ACA, the
Secretary is responsible for operating the risk adjustment program in
any State that fails to do so.\3\
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\3\ In the 2014 through 2016 benefit years, HHS operated the
risk adjustment program in every State and the District of Columbia,
except Massachusetts. Beginning with the 2017 benefit year, HHS has
operated the risk adjustment program in all 50 States and the
District of Columbia.
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Section 1401(a) of the ACA added section 36B to the Internal
Revenue Code (the Code), which, among other things, requires that a
taxpayer reconcile APTC for a year of coverage with the amount of the
premium tax credit (PTC) the taxpayer is allowed for the year.
Section 1402 of the ACA provides for, among other things,
reductions in cost-sharing for EHB for qualified low- and moderate-
income enrollees in silver level QHPs offered through the individual
market Exchanges. This section also provides for reductions in cost-
sharing for Indians enrolled in QHPs at any metal level.
Section 1411(c) of the ACA requires the Secretary to submit certain
information provided by applicants under section 1411(b) of the ACA to
other Federal officials for verification, including income and family
size information to the Secretary of the Treasury. Section 1411(d) of
the ACA provides that the Secretary must verify the accuracy of
information provided by applicants under section 1411(b) of the ACA,
for which section 1411(c) of the ACA does not prescribe a specific
verification procedure, in such manner as the Secretary determines
appropriate.
Section 1411(f) of the ACA requires the Secretary, in consultation
with the Treasury and Homeland Security Department Secretaries and the
Commissioner of Social Security, to establish procedures for hearing
and making decisions governing appeals of Exchange eligibility
determinations. Section 1411(f)(1)(B) of the ACA requires the Secretary
to establish procedures to redetermine eligibility on a periodic basis,
in appropriate circumstances, including eligibility to purchase a QHP
through the Exchange and for APTC and CSRs.
Section 1411(g) of the ACA allows the use 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, and
limits the disclosure of such information.
Section 5000A of the Code, as added by section 1501(b) of the ACA,
requires individuals to have minimum essential coverage (MEC) for each
month, qualify for an exemption, or make an individual shared
responsibility payment. Under the Tax Cuts and Jobs Act, which was
enacted on December 22, 2017, the individual shared responsibility
payment is reduced to $0, effective for months beginning after December
31, 2018. Notwithstanding that reduction, certain exemptions are still
relevant to determine whether individuals age 30 and above qualify to
enroll in catastrophic coverage under Sec. Sec. 155.305(h) and
156.155(a)(5).
1. Premium Stabilization Programs
The premium stabilization programs refer to the risk adjustment,
risk corridors, and reinsurance programs established by the ACA.\4\ For
past rulemaking, we refer readers to the following rules:
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\4\ See ACA section 1341 (transitional reinsurance program), ACA
section 1342 (risk corridors program), and ACA section 1343 (risk
adjustment program).
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In the March 23, 2012 Federal Register (77 FR 17219)
(Premium Stabilization Rule), we implemented the premium stabilization
programs.
In the March 11, 2013 Federal Register (78 FR 15409) (2014
Payment Notice), we finalized the benefit and payment parameters for
the 2014 benefit year to expand the provisions related to the premium
stabilization programs and set forth payment parameters in those
programs.
In the October 30, 2013 Federal Register (78 FR 65046), we
finalized the modification to the HHS-operated methodology related to
community rating States.
In the November 6, 2013 Federal Register (78 FR 66653), we
published a correcting amendment to the 2014 Payment Notice final rule
to address how an enrollee's age for the risk score calculation would
be determined under the HHS-operated risk adjustment methodology.
In the March 11, 2014 Federal Register (79 FR 13743) (2015
Payment Notice), we finalized the benefit and payment parameters for
the 2015 benefit year to expand the provisions related to the premium
stabilization programs, set forth certain oversight provisions, and
established payment parameters in those programs.
In the May 27, 2014 Federal Register (79 FR 30240), we
announced the 2015 fiscal year sequestration rate for the risk
adjustment program.
In the February 27, 2015 Federal Register (80 FR 10749)
(2016 Payment Notice), we finalized the benefit and payment parameters
for the 2016 benefit year to expand the provisions related to the
premium stabilization programs, set forth certain oversight provisions,
and established the payment parameters in those programs.
In the March 8, 2016 Federal Register (81 FR 12203) (2017
Payment Notice), we finalized the benefit and payment parameters for
the 2017 benefit year to expand the provisions related to the premium
stabilization programs, set forth certain oversight provisions, and
established the payment parameters in those programs.
In the December 22, 2016 Federal Register (81 FR 94058)
(2018 Payment Notice), we finalized the benefit and payment parameters
for the 2018 benefit year, added the high-cost risk pool parameters to
the HHS risk adjustment methodology, incorporated prescription drug
factors in the adult models, established enrollment duration factors
for the adult models, and finalized policies related to the collection
and use of enrollee-level External Data Gathering Environment (EDGE)
data.
In the April 17, 2018 Federal Register (83 FR 16930) (2019
Payment Notice), we finalized the benefit and payment parameters for
2019 benefit year, created the State flexibility framework permitting
States to request a reduction in risk adjustment State transfers
calculated by HHS, and adopted a new methodology for HHS-RADV
adjustments to transfers.
In the May 11, 2018 Federal Register (83 FR 21925), we
published a correction to the 2019 risk adjustment coefficients in the
2019 Payment Notice final rule.
On July 27, 2018, consistent with 45 CFR 153.320(b)(1)(i),
we updated the 2019 benefit year final risk adjustment model
coefficients to reflect an additional recalibration related to an
update to the 2016 enrollee-level EDGE data set.\5\
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\5\ CMS. (2018, July 27). Updated 2019 Benefit Year Final HHS
Risk Adjustment Model Coefficients. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf.
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[[Page 25743]]
In the July 30, 2018 Federal Register (83 FR 36456), we
adopted the 2017 benefit year risk adjustment methodology as
established in the final rules published in the March 23, 2012 (77 FR
17220 through 17252) and March 8, 2016 editions of the Federal Register
(81 FR 12204 through 12352). The final rule set forth an additional
explanation of the rationale supporting the use of Statewide average
premium in the HHS-operated risk adjustment State payment transfer
formula for the 2017 benefit year, including the reasons why the
program is operated in a budget-neutral manner. The final rule also
permitted HHS to resume 2017 benefit year risk adjustment payments and
charges. HHS also provided guidance as to the operation of the HHS-
operated risk adjustment program for the 2017 benefit year in light of
the publication of the final rule.
In the December 10, 2018 Federal Register (83 FR 63419),
we adopted the 2018 benefit year HHS-operated risk adjustment
methodology as established in the final rules published in the March
23, 2012 (77 FR 17219) and the December 22, 2016 (81 FR 94058) editions
of the Federal Register. In the rule, we set forth an additional
explanation of the rationale supporting the use of Statewide average
premium in the HHS-operated risk adjustment State payment transfer
formula for the 2018 benefit year, including the reasons why the
program is operated in a budget-neutral manner.
In the April 25, 2019 Federal Register (84 FR 17454) (2020
Payment Notice), we finalized the benefit and payment parameters for
2020 benefit year, as well as the policies related to making the
enrollee-level EDGE data available as a limited data set for research
purposes and expanding the HHS uses of the enrollee-level EDGE data,
approval of the request from Alabama to reduce risk adjustment
transfers by 50 percent in the small group market for the 2020 benefit
year, and updates to HHS-RADV program requirements.
On May 12, 2020, consistent with Sec. 153.320(b)(1)(i),
we published the 2021 Benefit Year Final HHS Risk Adjustment Model
Coefficients on the Center for Consumer Information and Insurance
Oversight (CCIIO) website.\6\
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\6\ CMS. (2020, May 12). Final 2021 Benefit Year Final HHS Risk
Adjustment Model Coefficients. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf.
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In the May 14, 2020 Federal Register (85 FR 29164) (2021
Payment Notice), we finalized the benefit and payment parameters for
2021 benefit year, as well as adopted updates to the risk adjustment
models' hierarchical condition categories (HCCs) to transition to
International Classification of Diseases, Tenth Revision (ICD-10)
codes, approved the request from Alabama to reduce risk adjustment
transfers by 50 percent in small group market for the 2021 benefit
year, and modified the outlier identification process under the HHS-
RADV program.
In the December 1, 2020 Federal Register (85 FR 76979)
(Amendments to the HHS-Operated Risk Adjustment Data Validation Under
the Patient Protection and Affordable Care Act's HHS-Operated Risk
Adjustment Program (2020 HHS-RADV Amendments Rule)), we adopted the
creation and application of Super HCCs in the sorting step that assigns
HCCs to failure rate groups, finalized a sliding scale adjustment in
HHS-RADV error rate calculation, and added a constraint for negative
error rate outliers with a negative error rate. We also established a
transition from the prospective application of HHS-RADV adjustments to
apply HHS-RADV results to risk scores from the same benefit year as
that being audited.
In the September 2, 2020 Federal Register (85 FR 54820),
we issued an interim final rule containing certain policy and
regulatory revisions in response to the COVID-19 public health
emergency (PHE), wherein we set forth risk adjustment reporting
requirements for issuers offering temporary premium credits in the 2020
benefit year.
In the May 5, 2021 Federal Register (86 FR 24140), we
issued part 2 of the 2022 Payment Notice final rule (2022 Payment
Notice) finalizing a subset of proposals from the 2022 Payment Notice
proposed rule, including policy and regulatory revisions related to the
risk adjustment program, finalization of the benefit and payment
parameters for the 2022 benefit year, and approval of the request from
Alabama to reduce risk adjustment transfers by 50 percent in the
individual and small group markets for the 2022 benefit year. In
addition, this final rule established a revised schedule of collections
for HHS-RADV and updated the provisions regulating second validation
audit (SVA) and initial validation audit (IVA) entities.
On July 19, 2021, consistent with Sec. 153.320(b)(1)(i),
we released Updated 2022 Benefit Year Final HHS Risk Adjustment Model
Coefficients on the CCIIO website, announcing some minor revisions to
the 2022 benefit year final risk adjustment adult model
coefficients.\7\
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\7\ See CMS. (2021, July 19). 2022 Benefit Year Final HHS Risk
Adjustment Model Coefficients. https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf.
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In the May 6, 2022 Federal Register (87 FR 27208) (2023
Payment Notice), we finalized revisions related to the risk adjustment
program, including the benefit and payment parameters for the 2023
benefit year, risk adjustment model recalibration, and collection and
extraction of enrollee-level EDGE data. We also finalized the adoption
of the interacted HCC count specification for the adult and child
models, along with modified enrollment duration factors for the adult
model models, beginning with the 2023 benefit year.\8\ We also repealed
the ability for States, other than prior participants, to request a
reduction in risk adjustment State transfers starting with the 2024
benefit year. In addition, we approved a 25 percent reduction to 2023
benefit year transfers in Alabama's individual market and a 10 percent
reduction to 2023 benefit year transfers in Alabama's small group
market. We also finalized further refinements to the HHS-RADV error
rate calculation methodology beginning with the 2021 benefit year and
beyond.
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\8\ On May 6, 2022, we also published the 2023 Benefit Year
Final HHS Risk Adjustment Model Coefficients at https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.pdf.
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2. Program Integrity
We have finalized program integrity standards related to the
Exchanges and premium stabilization programs in two rules: the ``first
Program Integrity Rule'' published in the August 30, 2013 Federal
Register (78 FR 54069), and the ``second Program Integrity Rule''
published in the October 30, 2013 Federal Register (78 FR 65045). We
also refer readers to the 2019 Patient Protection and Affordable Care
Act; Exchange Program Integrity rule published in the December 27, 2019
Federal Register (84 FR 71674).
3. Market Rules
For past rulemaking related to the market rules, we refer readers
to the following rules:
In the April 8, 1997 Federal Register (62 FR 16894), HHS,
with the Department of Labor and Department of the Treasury, published
an interim final rule relating to the HIPAA health insurance reforms.
In the February 27, 2013 Federal Register (78 FR 13406) (2014 Market
Rules), we published the health insurance market rules.
[[Page 25744]]
In the May 27, 2014 Federal Register (79 FR 30240) (2015
Market Standards Rule), we published the Exchange and Insurance Market
Standards for 2015 and Beyond.
In the December 22, 2016 Federal Register (81 FR 94058),
we provided additional guidance on guaranteed availability and
guaranteed renewability.
In the April 18, 2017 Federal Register (82 FR 18346)
(Market Stabilization final rule), we further interpreted the
guaranteed availability provision.
In the April 17, 2018 Federal Register (83 FR 17058) (2019
Payment Notice final rule), we clarified that certain exceptions to the
special enrollment periods only apply to coverage offered outside of
the Exchange in the individual market.
In the June 19, 2020 Federal Register (85 FR 37160) (2020
section 1557 final rule), in which HHS discussed section 1557 of the
ACA, HHS removed nondiscrimination protections based on gender identity
and sexual orientation from the guaranteed availability regulation.
In part 2 of the 2022 Payment Notice final rule in the May
5, 2021 Federal Register (86 FR 24140), we made additional amendments
to the guaranteed availability regulation regarding special enrollment
periods and finalized new special enrollment periods related to
untimely notice of triggering events, cessation of employer
contributions or government subsidies to COBRA continuation coverage,
and loss of APTC eligibility.
In the September 27, 2021 Federal Register (86 FR 53412)
(part 3 of the 2022 Payment Notice final rule), which was published by
HHS and the Department of the Treasury, we finalized additional
amendments to the guaranteed availability regulations regarding special
enrollment periods.
In the May 6, 2022 Federal Register (87 FR 27208), we
finalized a revision to our interpretation of the guaranteed
availability requirement to prohibit issuers from applying a premium
payment to an individual's or employer's past debt owed for coverage
and refusing to effectuate enrollment in new coverage.
4. Exchanges
We published a request for comment relating to Exchanges in the
August 3, 2010 Federal Register (75 FR 45584). We issued initial
guidance to States on Exchanges on November 18, 2010. In the March 27,
2012 Federal Register (77 FR 18309) (Exchange Establishment Rule), we
implemented the Affordable Insurance Exchanges (``Exchanges''),
consistent with title I of the ACA, to provide competitive marketplaces
for individuals and small employers to directly compare available
private health insurance options on the basis of price, quality, and
other factors. This included implementation of components of the
Exchanges and standards for eligibility for Exchanges, as well as
network adequacy and ECP certification standards.
In the 2014 Payment Notice and the Amendments to the HHS Notice of
Benefit and Payment Parameters for 2014 interim final rule, published
in the March 11, 2013 Federal Register (78 FR 15541), we set forth
standards related to Exchange user fees. We established an adjustment
to the FFE user fee in the Coverage of Certain Preventive Services
under the Affordable Care Act final rule, published in the July 2, 2013
Federal Register (78 FR 39869) (Preventive Services Rule).
In the 2016 Payment Notice, we also set forth the ECP certification
standard at Sec. 156.235, with revisions in the 2017 Payment Notice in
the March 8, 2016 Federal Register (81 FR 12203) and the 2018 Payment
Notice in the December 22, 2016 Federal Register (81 FR 94058).
In an interim final rule, published in the May 11, 2016 Federal
Register (81 FR 29146), we made amendments to the parameters of certain
special enrollment periods (2016 Interim Final Rule). We finalized
these in the 2018 Payment Notice final rule, published in the December
22, 2016 Federal Register (81 FR 94058).
In the April 18, 2017 Market Stabilization final rule Federal
Register (82 FR 18346), we amended standards relating to special
enrollment periods and QHP certification. In the 2019 Payment Notice
final rule, published in the April 17, 2018 Federal Register (83 FR
16930), we modified parameters around certain special enrollment
periods. In the April 25, 2019 Federal Register (84 FR 17454), the
final 2020 Payment Notice established a new special enrollment period.
We published the final rule in the May 14, 2020 Federal Register
(85 FR 29164) (2021 Payment Notice).
In the January 19, 2021 Federal Register (86 FR 6138), we finalized
part 1 of the 2022 Payment Notice final rule that finalized only a
subset of the proposals in the 2022 Payment Notice proposed rule. In
the May 5, 2021 Federal Register (86 FR 24140), we published part 2 of
the 2022 Payment Notice final rule. In the September 27, 2021 Federal
Register (86 FR 53412) part 3 of the 2022 Payment Notice final rule, in
conjunction with the Department of the Treasury, we finalized
amendments to certain policies in part 1 of the 2022 Payment Notice
final rule.
In the May 6, 2022 Federal Register (87 FR 27208), we finalized
changes to maintain the user fee rate for issuers offering plans
through the FFEs and maintain the user fee rate for issuers offering
plans through the SBE-FPs for the 2023 benefit year. We also finalized
various policies to address certain agent, broker, and web-broker
practices and conduct. We also finalized updates to the requirement
that all Exchanges conduct special enrollment period verifications.
5. Essential Health Benefits
On December 16, 2011, HHS released a bulletin that outlined an
intended regulatory approach for defining EHB, including a benchmark-
based framework. We established requirements relating to EHBs in the
Standards Related to Essential Health Benefits, Actuarial Value, and
Accreditation final rule, which was published in the February 25, 2013
Federal Register (78 FR 12833) (EHB Rule). In the 2019 Payment Notice,
published in the April 17, 2018 Federal Register (83 FR 16930), we
added Sec. 156.111 to provide States with additional options from
which to select an EHB-benchmark plan for plan years (PYs) 2020 and
beyond.
B. Summary of Major Provisions
The regulations outlined in this final rule will be codified in 45
CFR parts 153, 155, and 156.
1. 45 CFR part 153
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2023, the permanent risk
adjustment program is subject to the fiscal year 2023 sequestration.\9\
Therefore, the risk adjustment program will be sequestered at a rate of
5.7 percent for payments made from fiscal year 2023 resources (that is,
funds collected during the 2023 fiscal year). The funds that are
sequestered in fiscal year 2023 from the risk adjustment program will
become available for payment to issuers in fiscal year 2024 without
further congressional action. We did not receive any requests from
States to operate risk adjustment for the 2024 benefit year; therefore,
HHS will operate risk adjustment in every
[[Page 25745]]
State and the District of Columbia for the 2024 benefit year.
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\9\ OMB. (2022, March 28). OMB Report to the Congress on the
BBEDCA 251A Sequestration for Fiscal Year 2023. https://www.whitehouse.gov/wpcontent/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.pdf.
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We will recalibrate the 2024 benefit year risk adjustment models
using the 2018, 2019, and 2020 benefit year enrollee-level EDGE data,
with no exceptions. For the 2024 benefit year, we will continue to
apply a market pricing adjustment to the plan liability associated with
Hepatitis C drugs in the risk adjustment models (see, for example, 84
FR 17463 through 17466). We will also continue to maintain the CSR
adjustment factors finalized in the 2019, 2020, 2021, 2022, and 2023
Payment Notices.\10\
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\10\ See 83 FR 16930 at 16953; 84 FR 17454 at 17478 through
17479; 85 FR 29164 at 29190; 86 FR 24140 at 24181; and 87 FR 27208
at 27235 through 27235.
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We are finalizing the repeal of the ability under Sec. 153.320(d)
for prior participant States to request reductions of State risk
adjustment transfers calculated by HHS under the State payment transfer
formula in all State market risk pools for the 2025 benefit year and
beyond. We are approving Alabama's requests to reduce risk adjustment
State transfers in its individual and small group markets by 50 percent
for the 2024 benefit year.
Additionally, we are finalizing, beginning with the 2023 benefit
year, the proposal to collect and extract from issuers' EDGE servers
through issuers' EDGE Server Enrollment Submission (ESES) files and
risk adjustment recalibration enrollment files a new data element, a
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
indicator. In addition, we are finalizing our proposal to extract the
plan identifier and rating area data elements from issuers' EDGE
servers for certain benefit years prior to the 2021 benefit year. We
are finalizing the proposed risk adjustment user fee for the 2024
benefit year of $0.21 per member per month (PMPM).
Beginning with the 2022 benefit year HHS-RADV, we are changing the
materiality threshold established under Sec. 153.630(g)(2) for random
and targeted sampling from $15 million in total annual premiums
Statewide to 30,000 total billable member months (BMM) Statewide,
calculated by combining an issuer's enrollment in a State's individual
non-catastrophic, catastrophic, small group, and merged markets, as
applicable, in the benefit year being audited.
Beginning with the 2021 benefit year of HHS-RADV, we are no longer
exempting exiting issuers from adjustments to risk scores and risk
adjustment transfers when they are negative error rate outliers in the
applicable benefit year's HHS-RADV. Thus, we are applying HHS-RADV
results to adjust the plan liability risk scores of all exiting and
non-exiting issuers identified as outliers in the benefit year being
audited.
Beginning with the 2022 benefit year of HHS-RADV, we announce that
we are discontinuing the use of the lifelong permanent condition list
and the use of non-EDGE claims in HHS-RADV. Additionally, beginning
with the 2022 benefit year of HHS-RADV, we are finalizing the
shortening of the window to confirm the findings of the second
validation audit (SVA) (if applicable),\11\ or file a discrepancy
report to dispute the SVA findings, to within 15 calendar days of the
notification by HHS.
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\11\ Only those issuers who have insufficient pairwise agreement
between the Initial Validation Audit (IVA) and SVA receive SVA
findings. See 84 FR 17495; 86 FR 24201.
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We are amending the EDGE discrepancy materiality threshold set
forth at Sec. 153.710(e) to align with and mirror the policy finalized
in preamble in part 2 of the 2022 Payment Notice (86 FR 24194 through
24195). That is, the materiality threshold at Sec. 153.710(e) will be
revised to provide that the amount in dispute must equal or exceed
$100,000 or one percent of the total estimated transfer amount in the
applicable State market risk pool, whichever is less.
2. 45 CFR part 155
In part 155, we are finalizing the revision of the Exchange
Blueprint approval timelines for States transitioning from either a FFE
to a SBE-FP or to a State-based Exchange (SBE), or from a SBE-FP to a
SBE. We are finalizing the removal of the existing deadlines for when
we provide approval, or conditional approval, on an Exchange Blueprint,
and instead will require that such approval be provided at some point
prior to the date on which the Exchange proposes to begin open
enrollment either as a SBE or SBE-FP.
We are finalizing the proposal to address the standards applicable
to Navigators and other assisters and their consumer service functions.
At Sec. 155.210(d)(8), we are finalizing the removal of the
prohibition on Navigators from going door-to-door or using other
unsolicited means of direct contact to provide application or
enrollment assistance. This will also apply to non-Navigator assistance
personnel in FFEs and in State Exchanges if funded with section 1311(a)
Exchange Establishment grants, through the reference to Sec.
155.210(d) in Sec. 155.215(a)(2)(i). In Sec. 155.225(g)(5), we are
finalizing the removal of the prohibition on certified application
counselors from going door-to-door or using unsolicited means of direct
contact to provide application or enrollment assistance. We believe
policies as finalized will allow Navigators and other assisters in the
FFEs to help more consumers.
In part 155, we are finalizing changes to address certain agent,
broker, and web-broker practices. We are finalizing the proposal to
allow HHS up to an additional 15 calendar days to review evidence
submitted by agents, brokers, or web-brokers to rebut allegations that
led to the suspension of their Exchange agreement(s). We also are
finalizing the proposal to allow HHS up to an additional 30 calendar
days to review evidence submitted by agents, brokers, or web-brokers
that led to the termination of their Exchange agreement(s). The
amendments adopted in this final rule will provide HHS with up to 45 or
60 calendar days to review and respond to such evidence or requests for
reconsideration submitted by agents, brokers, or web-brokers stemming
from the suspension or termination of their Exchange agreement(s),
respectively.
Further, we are finalizing the proposal to require agents, brokers,
or web-brokers assisting consumers with completing eligibility
applications through the FFEs and SBE-FPs or assisting an individual
with applying for APTC and CSRs for QHPs to document that eligibility
application information has been reviewed by and confirmed to be
accurate by the consumer or their authorized representative prior to
application submission. We are finalizing the proposal that the
documentation will be required to include: the date the information was
reviewed; the name of the consumer or their authorized representative;
an explanation of the attestations at the end of the eligibility
application; and the name of the assisting agent, broker, or web-
broker. Furthermore, the agent, broker, or web-broker will be required
to maintain the documentation for a minimum of 10 years and produce it
upon request in response to monitoring, audit, and enforcement
activities.
We also are finalizing the proposal to require agents, brokers, or
web-brokers assisting consumers with applying and enrolling through
FFEs and SBE-FPs, making updates to an existing application, or
assisting an individual with applying for APTC and CSRs for QHPs to
document the receipt of consent from the consumer seeking assistance or
their authorized
[[Page 25746]]
representative prior to providing assistance. We are finalizing the
proposal that the documentation will be required to include: a
description of the scope, purpose, and duration of the consent provided
by the consumer or their authorized representative; the date consent
was given; name of the consumer or their authorized representative; the
name of the agent, broker, web-broker, or agency being granted consent;
and the process by which the consumer or their authorized
representative may rescind consent. Further, we are finalizing the
requirement that agents, brokers, or web-brokers will be required to
maintain the consent documentation for a minimum of 10 years and
produce it upon request in response to monitoring, audit, and
enforcement activities.
We are finalizing the revisions to the failure to file and
reconcile (FTR) process at Sec. 155.305(f)(4). First, we are
finalizing the proposal to amend the FTR process described in Sec.
155.305(f)(4) so that an Exchange may only determine enrollees
ineligible for APTC after a taxpayer (or a taxpayer's spouse, if
married) has failed to file a Federal income tax return and reconcile
their past APTC for two consecutive years (specifically, years for
which tax data will be utilized for verification of household income
and family size). In the proposed rule (87 FR 78256), we proposed that
this policy would be effective January 1, 2024, with the intent that
the proposed rule would apply to eligibility determinations made in
2024 for PY 2025 (and beyond). We are clarifying in the final rule that
this will become effective on the general effective date of the final
rule. Second, we are finalizing the proposal to continue to pause FTR
operations until HHS and the Internal Revenue Service (IRS) will be
able to implement the new FTR policy.
We are finalizing revisions to Sec. 155.320, which will require
Exchanges to accept an applicant's attestation of projected annual
household income when the Exchanges request tax return data from the
IRS to verify attested projected annual household income, but the IRS
confirms there is no such tax return data available. Further, we are
finalizing revisions to Sec. 155.315, which will require that an
enrollee with a household income inconsistency receive a 60-day
extension to present satisfactory documentary evidence to resolve a
data matching issue (DMI) in addition to the 90 days currently provided
in Sec. 155.315(f)(2)(ii). These changes will ensure consumers are
treated equitably, ensure continuous coverage, and strengthen the risk
pool.
We are finalizing amendments and additions to Sec. 155.335(j),
including the clarification that when an enrollee is determined upon
annual redetermination eligible for income-based CSRs, is currently
enrolled in a bronze level QHP, and would be re-enrolled in a bronze
level QHP, then to the extent permitted by applicable State law, unless
the enrollee terminates coverage, including termination of coverage in
connection with voluntarily selecting a different QHP, in accordance
with Sec. 155.430, at the option of the Exchange, the Exchange may re-
enroll such enrollee in a silver level QHP within the same product,
with the same provider network, and with a lower or equivalent premium
after the application of APTC as the bronze level QHP into which the
Exchange would otherwise re-enroll the enrollee. We are also finalizing
modifications to the proposed policy to specify that Exchanges
implementing this policy may auto re-enroll enrollees from a bronze QHP
to a silver QHP provided that the net monthly silver plan premium for
the future year is not more than the net monthly bronze plan premiums
for the future year, as opposed to comparing net monthly bronze plan
premiums for the current year with future year silver plan premiums.
Lastly, for enrollees whose current QHP or product will no longer be
available in the coming year, we are finalizing the policy to require
Exchanges to incorporate network similarity into auto re-enrollment
criteria.
We are finalizing the proposed changes related to SEPs at Sec.
155.420. First, we are finalizing two technical corrections to Sec.
155.420(a)(4)(ii)(A) and (B) to align the text with Sec.
155.420(a)(d)(6)(i) and (ii). The revisions will clarify that only one
person in a household applying for coverage or financial assistance
through the Exchange must qualify for a SEP in order for the entire
household to qualify for the SEP. Second, we are finalizing the change
to the current coverage effective date requirements at Sec.
155.420(b)(2)(iv) to permit Exchanges to offer earlier coverage
effective dates for consumers attesting to a future loss of MEC. This
change will ensure qualifying individuals are able to seamlessly
transition from other forms of coverage to Exchange coverage as quickly
as possible with minimal coverage gaps.
Third, to mitigate coverage gaps, we are finalizing the proposed
new rule at Sec. 155.420(c)(6) with a modification that will give
Exchanges the option to allow consumers who are eligible for a SEP
under Sec. 155.420(d)(1)(i) due to loss of Medicaid or Children's
Health Insurance Program (CHIP) coverage up to 90 days after their loss
of Medicaid or CHIP coverage to select a plan and enroll in coverage
through the Exchange. The modification will grant an Exchange the
option to provide more than 90 days to select a plan and enroll in
coverage through the Exchange up to the length of the applicable
Medicaid or CHIP redetermination period if the State Medicaid Agency
allows or provides for a Medicaid or CHIP reconsideration period
greater than 90 days. Fourth, we are finalizing Sec. 155.420(d)(12) to
align the policy of the Exchanges on the Federal platform for granting
SEPs to consumers who enrolled in a plan influenced by a material plan
display error with current plan display error SEP operations. The
proposal will remove the burden from the consumer to solely demonstrate
to the Exchange that a material plan display error has influenced the
consumer's decision to purchase a QHP through the Exchange.
We are finalizing Sec. 155.430(b)(3) to explicitly prohibit
issuers participating in Exchanges on the Federal platform from
terminating coverage for a dependent child prior to the end of the plan
year because the dependent child has reached the applicable maximum
age. This change will clarify to issuers participating in Exchanges on
the Federal platform their obligation to maintain coverage for
dependent children, as well as to enrollees regarding their ability to
maintain coverage for dependent children. This change is optional for
State Exchanges.
We are finalizing Sec. 155.505(g), which acknowledges the ability
of the CMS Administrator to review Exchange eligibility appeals
decisions prior to judicial review. This change will provide appellants
and other parties with accurate information about the availability of
administrative review by the CMS Administrator if they are dissatisfied
with their eligibility appeal decision.
We are finalizing the Improper Payment Pre-Testing and Assessment
(IPPTA) program under which SBEs will be required to participate in
pre-audit activities that will prepare SBEs for complying with audits
required under the Payment Integrity Information Act of 2019 (PIIA).
Activities under the proposed IPPTA program will provide SBEs
experience helpful to preparing for future PIIA audits and will help
HHS design and refine appropriate requirements for future PIIA audits
of SBEs.
[[Page 25747]]
3. 45 CFR part 156
In part 156, after revising our projections based on newly
available data that impacted enrollment projections, we are finalizing
for the 2024 benefit year a user fee rate for all issuers offering QHPs
through an FFE of 2.2 percent of the monthly premium charged by issuers
for each policy under plans where enrollment is through an FFE, and a
user fee rate for all issuers offering QHPs through an SBE-FP of 1.8
percent of the monthly premium charged by issuers for each policy under
plans offered through an SBE-FP.
We are also finalizing the proposal to maintain a large degree of
continuity with our approach to standardized plan options finalized in
the 2023 Payment Notice, making only minor updates to each set of plan
designs. In particular, for PY 2024 and subsequent PYs, we are
finalizing two sets of plan designs that, in contrast to the policy
finalized in the 2023 Payment Notice (87 FR 28278 through 28279), no
longer include a standardized plan option for the non-expanded bronze
metal level, mainly due to AV constraints.
Thus, for PY 2024 and subsequent PYs, we are finalizing revisions
to Sec. 156.201 to require issuers to offer standardized plan options
for the following metal levels throughout every service area that they
also offer non-standardized plan options: one bronze plan that meets
the requirement to have an AV up to five percentage points above the 60
percent standard, as specified in Sec. 156.140(c) (known as an
expanded bronze plan); one standard silver plan; one version of each of
the three income-based silver CSR plan variations; one gold plan; and
one platinum plan.
We also will continue to differentially display standardized plan
options, including those standardized plan options required under State
action that took place on or before January 1, 2020, on HealthCare.gov,
and continue enforcement of the standardized plan options display
requirements for approved web-brokers and QHP issuers using a direct
enrollment pathway to facilitate enrollment through an FFE or SBE-FP--
including both the Classic Direct Enrollment (Classic DE) and Enhanced
Direct Enrollment (EDE) Pathways.
To mitigate the risk of plan choice overload, we are finalizing
Sec. 156.202, which limits the number of non-standardized plan options
that QHP issuers may offer through the Exchanges using the Federal
platform to four non-standardized plan options per product network
type, metal level (excluding catastrophic plans), and inclusion of
dental and/or vision benefit coverage, in any service area for PY 2024,
and to two non-standardized plan options per product network type,
metal level (excluding catastrophic plans), and inclusion of dental
and/or vision benefit coverage, in any service area for PY 2025 and
subsequent PYs.
We are finalizing new Sec. 156.210(d)(1) to require stand-alone
dental plan (SADP) issuers to use an enrollee's age at the time of
policy issuance or renewal (referred to as age on effective date) as
the sole method to calculate an enrollee's age for rating and
eligibility purposes, as a condition of QHP certification, beginning
with Exchange certification for PY 2024. We believe requiring SADPs to
use the age on effective date methodology to calculate an enrollee's
age as a condition of QHP certification, and consequently removing the
less commonly used and more complex age calculation methods, will
reduce consumer confusion and promote operational efficiency. This
policy will apply to Exchange-certified SADPs, whether they are sold
on- or off-Exchange.
In addition, we are finalizing new Sec. 156.210(d)(2) to require
SADP issuers to submit guaranteed rates as a condition of QHP
certification, beginning with Exchange certification for PY 2024. We
believe this change will help reduce the risk of incorrect APTC
calculation for the pediatric dental EHB portion of premiums, thereby
reducing the risk of consumer harm. This policy will apply to Exchange-
certified SADPs, whether they are sold on- or off-Exchange.
We are finalizing a new rule at Sec. 156.225(c) to require that
plan and plan variation marketing names for QHPs include correct
information, without omission of material fact, and not include content
that is misleading. We will review plan and plan variation marketing
names during the annual QHP certification process in close
collaboration with State regulators in States with Exchanges on the
Federal platform.
We are finalizing revisions to the network adequacy and ECP
standards at Sec. Sec. 156.230 and 156.235 to provide that all
individual market QHPs, including individual market SADPs, and all
Small Business Health Options Program (SHOP) QHPs, including SHOP
SADPs, across all Exchanges must use a network of providers that
complies with the network adequacy and ECP standards in those sections,
and to remove the exception that these sections do not apply to plans
that do not use a provider network. However, we are finalizing a
limited exception at Sec. 156.230(a)(4) for certain SADP issuers that
sell plans in areas where it is prohibitively difficult for the issuer
to establish a network of dental providers. Specifically, under this
exception, an area is considered ``prohibitively difficult'' for the
SADP issuer to establish a network of dental providers based on
attestations from State departments of insurance in States with at
least 80 percent of their counties classified as Counties with Extreme
Access Considerations (CEAC) that at least one of the following factors
exists in the area of concern: a significant shortage of dental
providers, a significant number of dental providers unwilling to
contract with Exchange issuers, or significant geographic limitations
impacting consumer access to dental providers.
To expand access to care for low-income and medically underserved
consumers, we are finalizing our proposal to establish two additional
stand-alone ECP categories at Sec. 156.235(a)(2)(ii)(B) for PY 2024
and subsequent PYs, Mental Health Facilities and Substance Use Disorder
Treatment Centers, and adding rural emergency hospitals (REHs) as a
provider type in the Other ECP Providers category. In addition, we are
finalizing our proposed revisions to Sec. 156.235(a)(2)(i) to require
QHPs to contract with at least a minimum percentage of available ECPs
in each plan's service area within certain ECP categories, as specified
by HHS. Specifically, we will require that QHPs contract with at least
35 percent of available Federally Qualified Health Centers (FQHCs) that
qualify as ECPs in the plan's service area and at least 35 percent of
available Family Planning Providers that qualify as ECPs in the plan's
service area for PY 2024 and subsequent PYs. Furthermore, we are
finalizing revisions to Sec. 156.235(a)(2)(i) to clarify that these
threshold requirements will be in addition to the existing provision
that QHPs must satisfy the overall 35 percent ECP threshold requirement
in the plan's service area. In addition, we revised Sec.
156.235(b)(2)(i) to reflect that these policies would also affect
issuers subject to the Alternate ECP Standard under Sec. 156.235(b).
We are finalizing revisions to Sec. 156.270(f) to require QHP
issuers in Exchanges operating on the Federal platform to send
enrollees a notice of payment delinquency promptly and without undue
delay. Specifically, we will require QHP issuers in Exchanges operating
on the Federal platform to send such notices within 10 business days of
the date the issuer should have
[[Page 25748]]
discovered the delinquency. This requirement will help ensure that
enrollees are aware they are at risk of losing coverage and can avoid
losing coverage by paying any outstanding premium amounts promptly.
We are finalizing the proposal to revise the final deadline in
Sec. 156.1210(c) for issuers to report data inaccuracies identified in
payment and collections reports for discovered underpayments of APTC to
the issuer and user fee overpayments to HHS. Specifically, we will
retain only the deadline at Sec. 156.1210(c)(1), which requires that
issuers describe all inaccuracies identified in a payment and
collections report within 3 years of the end of the applicable plan
year to which the inaccuracy relates to be eligible to receive an
adjustment to correct an underpayment of APTC to the issuer and user
fee overpayments to HHS. Under this policy, beginning with the 2015 PY
coverage, we will not pay additional APTC payments or reimburse user
fee payments for FFE, SBE-FP, and SBE issuers for data inaccuracies
reported after the 3-year deadline. Further, for PYs 2015 through 2019,
to be eligible for resolution, an issuer must describe before January
1, 2024, all inaccuracies identified in a payment and collections
report for these PYs that relate to discovered underpayments to the
issuer of APTC or user fee overpayments to HHS, thus allowing issuers
additional time to submit and seek resolution of such inaccuracies for
the 2015 through 2019 PY coverage. These policies will better align
with the existing limitation under the Code on amending a Federal
income tax return and reduce administrative and operational burden on
issuers, State Exchanges, and HHS when handling payment and enrollment
disputes.
III. Provisions of the Proposed Regulations
A. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment
In subparts A, D, G, and H of part 153, we established standards
for the administration of the risk adjustment program. The risk
adjustment program is a permanent program created by section 1343 of
the ACA that transfers funds from lower-than-average risk, risk
adjustment covered plans to higher-than-average risk, risk adjustment
covered plans in the individual, small group markets, or merged
markets, inside and outside the Exchanges. In accordance with Sec.
153.310(a), a State that is approved or conditionally approved by the
Secretary to operate an Exchange may establish a risk adjustment
program, or have HHS do so on its behalf.\12\ We did not receive any
requests from States to operate a risk adjustment program for the 2024
benefit year. Therefore, we will operate risk adjustment in every State
and the District of Columbia for the 2024 benefit year.
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\12\ See also 42 U.S.C. 18041(c)(1).
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1. Sequestration
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2023, the permanent risk
adjustment program is subject to the fiscal year 2023
sequestration.\13\ The Federal Government's 2023 fiscal year began on
October 1, 2022. Therefore, the risk adjustment program will be
sequestered at a rate of 5.7 percent for payments made from fiscal year
2023 resources (that is, funds collected during the 2023 fiscal year).
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\13\ OMB. (2022, March 28). OMB Report to the Congress on the
BBEDCA 251A Sequestration for Fiscal Year 2023. https://www.whitehouse.gov/wp-content/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.pdf.
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HHS, in coordination with OMB, has determined that, under section
256(k)(6) of the Balanced Budget and Emergency Deficit Control Act of
1985,\14\ as amended, and the underlying authority for the risk
adjustment program, the funds that are sequestered in fiscal year 2023
from the risk adjustment program will become available for payment to
issuers in fiscal year 2024 without further Congressional action. If
Congress does not enact deficit reduction provisions that replace the
Joint Committee reductions, the program will be sequestered in future
fiscal years, and any sequestered funding will become available in the
fiscal year following that in which it was sequestered.
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\14\ Public Law 99-177 (1985).
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Additionally, we note that the Infrastructure Investment and Jobs
Act \15\ amended section 251A(6) of the Balanced Budget and Emergency
Deficit Control Act of 1985 and extended sequestration for the risk
adjustment program through fiscal year 2031 at a rate of 5.7 percent
per fiscal year.16 17
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\15\ Public Law 117-58, 135 Stat. 429 (2021).
\16\ 2 U.S.C. 901a.
\17\ The Coronavirus Aid, Relief, and Economic Security (CARES)
Act previously amended section 251A(6) of the Balanced Budget and
Emergency Deficit Control Act of 1985 and extended sequestration for
the risk adjustment program through fiscal year 2023 at a rate of
5.7 percent per fiscal year. Section 4408 of the CARES Act, Public
Law 116-136, 134 Stat. 281 (2020).
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We received no comments on the fiscal year 2023 sequestration rate
for risk adjustment.
2. HHS Risk Adjustment (Sec. 153.320)
The HHS risk adjustment models predict plan liability for an
average enrollee based on that person's age, sex, and diagnoses (also
referred to as hierarchical condition categories (HCCs)), producing a
risk score. The HHS risk adjustment methodology utilizes separate
models for adults, children, and infants to account for clinical and
cost differences in each age group. In the adult and child models, the
relative risk assigned to an individual's age, sex, and diagnoses are
added together to produce an individual risk score. Additionally, to
calculate enrollee risk scores in the adult models, we added enrollment
duration factors beginning with the 2017 benefit year,\18\ and
prescription drug categories (RXCs) beginning with the 2018 benefit
year.\19\ Starting with the 2023 benefit year, we added interacted HCC
count factors to the adult and child models applicable to certain
severity and transplant HCCs.
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\18\ For the 2017 through 2022 benefit years, there is a set of
11 binary enrollment duration factors in the adult models that
decrease monotonically from one to 11 months, reflecting the
increased annualized costs associated with fewer months of
enrollments. See, for example, 81 FR 94071 through 94074. These
enrollment duration factors were replaced beginning with the 2023
benefit year with HCC-contingent enrollment duration factors for up
to 6 months in the adult models. See, for example, 87 FR 27228
through 27230.
\19\ For the 2018 benefit year, there were 12 RXCs, but starting
with the 2019 benefit year, the two severity-only RXCs were removed
from the adult risk adjustment models. See, for example, 83 FR
16941.
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Infant risk scores are determined by inclusion in one of 25
mutually exclusive groups, based on the infant's maturity and the
severity of diagnoses. If applicable, the risk score for adults,
children, or infants is multiplied by a cost-sharing reduction (CSR)
factor. The enrollment-weighted average risk score of all enrollees in
a particular risk adjustment covered plan (also referred to as the plan
liability risk score (PLRS)) within a geographic rating area is one of
the inputs into the risk adjustment State payment transfer formula,\20\
which determines the State transfer payment or charge that an issuer
will receive or be required to pay for that plan for the applicable
State market risk pool. Thus, the HHS risk adjustment models predict
average group costs to account for risk across plans, in keeping with
the Actuarial Standards Board's Actuarial
[[Page 25749]]
Standards of Practice for risk classification.
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\20\ The State payment transfer formula refers to the part of
the HHS risk adjustment methodology that calculates payments and
charges at the State market risk pool level prior to the calculation
of the high-cost risk pool payment and charge terms that apply
beginning with the 2018 benefit year (BY). See, for example, 81 FR
94080.
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a. Data for Risk Adjustment Model Recalibration for 2024 Benefit Year
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78214), we proposed to use 2018, 2019, and
2020 benefit year enrollee-level EDGE data to recalibrate the 2024
benefit year risk adjustment models with an exception to exclude the
2020 benefit year data from the blending of the age-sex coefficients
for the adult models. However, after consideration of comments, we are
not finalizing the 2024 benefit year model recalibration approach as
proposed. Instead, based on our analysis and in response to comments,
we are finalizing the use of 2018, 2019 and 2020 benefit year enrollee-
level EDGE data for recalibration of the 2024 benefit year risk
adjustment models for all model coefficients, including the adult age-
sex coefficients, with no exceptions.
In accordance with Sec. 153.320, HHS develops and publishes the
risk adjustment methodology applicable in States where HHS operates the
program, including the draft factors to be employed in the models for
the benefit year. This includes information related to the annual
recalibration of the risk adjustment models using data from the most
recent available prior benefit years trended forwarded to reflect the
applicable benefit year of risk adjustment.
Our proposed approach for 2024 recalibration aligns with the
approach finalized in the 2022 Payment Notice (86 FR 24151 through
24155) and reiterated in the 2023 Payment Notice (87 FR 27220 through
27221), that involves use of the 3 most recent consecutive years of
enrollee-level EDGE data that are available at the time we incorporate
the data in the draft recalibrated coefficients published in the
proposed rule for the applicable benefit year, and not updating the
coefficients between the proposed and final rules if an additional year
of enrollee-level EDGE data becomes available for incorporation.
We proposed to determine coefficients for the 2024 benefit year
based on a blend of separately solved coefficients from the 2018, 2019,
and 2020 benefit years of enrollee-level EDGE data, with an exception
to exclude the 2020 benefit year data from the blending of the age-sex
coefficients for the adult models. For all adult model age-sex
coefficients, we proposed to use only 2018 and 2019 benefit year
enrollee-level EDGE data in recalibration to account for the observed
anomalous decreases in the unconstrained coefficients \21\ for the 2020
benefit year enrollee-level EDGE data for older adult enrollees,
especially older adult female enrollees.
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\21\ HHS constrains the risk adjustment models in multiple
distinct ways during model recalibration. These include (1)
coefficient estimation groups, also referred to as G-Groups in the
Risk Adjustment Do It Yourself (DIY) Software, (2) a priori
stability constraints, and (3) hierarchy violation constraints. Of
these, coefficient estimation groups and a priori stability
constraints are applied prior to model fitting. The hierarchy
violation constraints are applied after the initial estimates of
coefficients are produced. We refer to the models and coefficients
prior to the application of hierarchy violation constraints as the
``unconstrained models'' and ``unconstrained coefficients,''
respectively. For a description of the various constraints we apply
to the risk adjustment models, see, CMS' ``Potential Updates to HHS-
HCCs for the HHS-operated Risk Adjustment Program'' (the ``2019
White Paper'') (June 17, 2019). https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf.
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To further explain, due to the potential impact of the COVID-19 PHE
on costs and utilization of services in 2020, we considered whether the
2020 enrollee-level EDGE data was appropriate for use in the annual
model recalibration for the HHS-operated risk adjustment program
applicable to the individual and small group (including merged)
markets. As part of this analysis, we considered: (1) comments received
in response to the 2023 Payment Notice proposed rule (87 FR 598); (2)
the current policy that involves using the 3 most recent years of EDGE
data available as of the proposed rule for the annual risk adjustment
model recalibration which promotes stability and ensures the models
reflect the year-over-year changes to the markets' patterns of
utilization and spending without over-relying on any factors unique to
one particular year; and (3) our experience that every year of data can
be unique and therefore some level of deviation from year to year is
expected.\22\ All of these general considerations weigh in favor of
including the 2020 benefit year data in the recalibration of the risk
adjustment models.
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\22\ Every year we expect some shifting in treatment and cost
patterns, for example as new drugs come to market. Our goal in using
multiple years of data for model calibration is to capture some
degree of year-to-year cost shifting without over-relying on any
factors unique to one particular year.
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However, we recognized that if a benefit year has significant
changes that differentially impact certain conditions or populations
relative to others, or is sufficiently anomalous relative to expected
future patterns of care, we should carefully consider what impact that
benefit year of data could have if it is used in the annual model
recalibration for the HHS-operated risk adjustment program. This
includes consideration of whether to exclude or adjust that benefit
year of data to increase the models' predictive validity or otherwise
limit the impact of anomalous trends. The situation presented by the
COVID-19 PHE and its potential impact on utilization and costs in the
2020 benefit year is an example \23\ of a situation that requires this
additional consideration. Thus, to help further inform our decision on
whether it is appropriate to use 2020 enrollee-level EDGE data to
calibrate the risk adjustment coefficients, we analyzed the 2020
benefit year enrollee-level EDGE recalibration data to assess how it
compares to 2019 benefit year enrollee-level EDGE recalibration data.
For more information on our analysis of the 2020 benefit year enrollee-
level EDGE recalibration data see the proposed rule (87 FR 78215
through 78218). Based on this analysis, we determined that on many key
dimensions, the 2019 benefit year and 2020 benefit year enrollee-level
EDGE data recalibration were largely comparable. However, there were
some observed anomalous decreases in the unconstrained age-sex
coefficients in the 2020 benefit year data for older adult enrollees,
especially older female enrollees.
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\23\ In the 10 years since the start of model calibration for
the HHS-operated risk adjustment program, which began with benefit
year 2014, the COVID-19 PHE has been the only such situation to
date. Other events and policy changes have not risen to the same
level of uniqueness or potential impact.
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With this analysis in mind, and based on the comments received in
response to the 2023 Payment Notice proposed rule,\24\ we outlined six
different options the Department considered for handling the 2020
benefit year enrollee-level EDGE recalibration data for purposes of the
annual recalibration of the HHS risk adjustment models for the 2024
benefit year.\25\ Four options involved the use of 2020 benefit year
enrollee-level EDGE recalibration data in the risk adjustment
[[Page 25750]]
model recalibration, and two involved the exclusion of the 2020 benefit
year data. These six options were as follows:
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\24\ These comments offered a variety of perspectives with some
commenters stating that 2020 enrollee-level EDGE data should be used
for model recalibration as normal, a few commenters suggesting that
2020 enrollee-level EDGE data should be excluded entirely, one
commenter recommending that 2020 enrollee-level EDGE data should be
used with a different weight assigned, and several commenters
suggesting HHS release a technical paper on the use of 2020
enrollee-level EDGE data, with several suggesting HHS do a
comparison of coefficients with and without the 2020 enrollee-level
EDGE data to review relative changes in coefficients, and evaluate
changes for clinical reasonability and consistency with 2018 and
2019 enrollee-level EDGE data. See 87 FR 27220 through 27221.
\25\ See 87 FR 78214 through 78218.
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Option 1: Maintain the current policy, recalibrating the
2024 benefit year risk adjustment models using 2018, 2019, and 2020
enrollee-level EDGE data with no exceptions or modifications.
Option 2: Maintain the current policy, recalibrating the
2024 benefit year risk adjustment models using 2018, 2019, and 2020
benefit year enrollee-level EDGE recalibration data, but assign a lower
weight to 2020 data.
Option 3: Utilize 4 years of enrollee-level EDGE data,
instead of three, to recalibrate the 2024 benefit year risk adjustment
models using 2017, 2018, 2019, and 2020 benefit year data.
Option 4: Maintain the current policy, recalibrating the
2024 benefit year risk adjustment models using 2018, 2019, and 2020
enrollee-level EDGE recalibration data with an exception to exclude the
2020 benefit year data from the blending of the age-sex coefficients
for the adult models. Under this option, we would have determined
coefficients for the 2024 benefit year based on a blend of separately
solved coefficients from the 2018, 2019, and 2020 benefit years of
enrollee-level EDGE recalibration data and would exclude the 2020
benefit year from the blending of the adult models' age-sex
coefficients. Instead, only 2018 and 2019 benefit year enrollee-level
EDGE recalibration data would be used in blending the adult risk
adjustment models age-sex coefficients.
Option 5: Exclude the 2020 benefit year enrollee-level
EDGE recalibration data and instead use the 2017, 2018, and 2019
benefit year enrollee-level EDGE recalibration data, trended forward to
the 2024 benefit year, in recalibration of the risk adjustment models
for the 2024 benefit year, or use the final 2023 risk adjustment model
coefficients for the 2024 benefit year without trending the data to
account for inflation and changes in costs and utilization between the
2023 and 2024 benefit years.
Option 6: Exclude the 2020 benefit year enrollee-level
EDGE recalibration data and instead use only 2 years of enrollee-level
EDGE data for recalibration--that is, use only 2018 and 2019 benefit
year data to recalibrate the 2024 risk adjustment models.
As noted above, we proposed to use the 3 most recent available
consecutive benefit year data sets (the 2018, 2019, and 2020 benefit
year enrollee-level EDGE recalibration data), with a narrowly tailored
exception to exclude the 2020 benefit year data from the blending of
the age-sex coefficients for the adult models (Option 4).
After reviewing the public comments, we are finalizing the use of
2018, 2019, and 2020 enrollee-level EDGE data with no exceptions or
modifications for recalibration of the risk adjustment models for the
2024 benefit year (Option 1). Consistent with prior benefit model
recalibrations and the proposed adoption of Option 4 to recalibrate the
HHS risk adjustment models for the 2024 benefit year, this will involve
the use of the 3 most recent consecutive years of enrollee-level EDGE
data that were available for the applicable benefit year and not
updating the coefficients between the proposed and final rules if an
additional year of enrollee-level EDGE data becomes available for
incorporation. The coefficients listed in Tables 1 through 6 of this
final rule reflect the use of 2018, 2019, and 2020 benefit year
enrollee-level EDGE recalibration data for all coefficients, including
adult age-sex coefficients, as well as the pricing adjustment for
Hepatitis C drugs finalized in this final rule.26 27 We
summarize and respond to public comments received on the proposed
approach to recalibration of the HHS risk adjustment models for the
2024 benefit year below.
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\26\ Similar to recalibration of the 2023 risk adjustment adult
models and consistent with the policies adopted in the 2023 Payment
Notice, the 2024 benefit year factors in this rule also reflect the
removal of the mapping of hydroxychloroquine sulfate to RXC 09
(Immune Suppressants and Immunomodulators) and the related RXC 09
interactions (RXC 09 x HCC056 or 057 and 048 or 041; RXC 09 x
HCC056; RXC 09 x HCC 057; RXC 09 x HCC048, 041) from the 2018 and
2019 benefit year enrollee-level EDGE data sets for purposes of
recalibrating the 2024 benefit year adult models. See 87 FR 27232
through 27235. Additionally, the factors for the adult models
reflect the use of the final, fourth quarter (Q4) RXC mapping
document that was applicable for each benefit year of data included
in the current year's model recalibration (except under extenuating
circumstances that can result in targeted changes to RXC mappings).
See 87 FR 27231 through 27232.
\27\ The adult, child and infant models have been truncated to
account for the high-cost risk pool payment parameters by removing
60 percent of costs above the $1 million threshold. We did not
propose changes to the high-cost risk pool parameters for the 2024
benefit year. See 87 FR 78237. Therefore, as detailed below, we are
maintaining the $1 million threshold and 60 percent coinsurance
rate.
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Comment: Several commenters supported our proposal to recalibrate
the 2024 risk adjustment models with 2018, 2019, and 2020 enrollee-
level EDGE data, except for the age-sex coefficients, which would be
calculated by blending the age-sex coefficients from the 2018 and 2019
enrollee-level EDGE data only. One of these commenters stated that, of
the options presented by HHS, Option 4 struck the best balance between
maintaining HHS's established practice of recalibrating the models
based on the 3 most recent years of available EDGE data while also
accounting for the anomalous decreases in the age-sex coefficients
observed in the 2020 benefit year enrollee-level EDGE recalibration
data. Another commenter stated that using 2017, 2018, and 2019
enrollee-level EDGE data for recalibration (Option 5), or using only
2018 and 2019 enrollee-level EDGE data (Option 6) would also be
reasonable approaches. One commenter supported the proposal to adopt
Option 4, but generally objected to the use of age-sex factors in the
HHS-operated risk adjustment program due to concerns about
discrimination.
However, several commenters opposed the finalization of Option 4,
objecting to the use of different data years to recalibrate different
coefficients for the same benefit year of the HHS-operated risk
adjustment program (that is, blending benefit year 2024 adult age-sex
coefficients using 2018 and 2019 enrollee-level EDGE data, and blending
all other benefit year 2024 coefficients using 2018, 2019, and 2020
enrollee-level EDGE data) on the grounds that model coefficients are
interrelated, so the 2020 enrollee-level EDGE data adult age-sex
coefficients that were excluded from blending had an influence during
initial model fitting on 2020 enrollee-level EDGE data adult model
coefficients that were used in blending. One commenter urged HHS to
include 2020 enrollee-level EDGE data, but to weight that data year
less than other data years (Option 2).
Several other commenters supported using the 2017, 2018, and 2019
enrollee-level EDGE data for the 2024 benefit year model recalibration
(Option 5). One commenter suggested that HHS might identify fixable
anomalies in the 2020 enrollee-level EDGE recalibration data prior to
model fitting and then refit the models as an alternative option to use
2018, 2019 and 2020 data for all coefficients across all models.
Response: In light of our analysis and further consideration of the
previously identified model recalibration options along with the
benefit of interested party comments on the six options, we are
finalizing the use of 2018, 2019, and 2020 enrollee-level EDGE data to
recalibrate the 2024 risk adjustment models for all model coefficients,
with no exceptions (Option 1). As stated in the proposed rule, although
our analyses found that the 2019 and 2020 benefit year enrollee-level
EDGE data were largely comparable, there were observed anomalous
decreases in the unconstrained age-sex coefficients for the 2020
benefit year enrollee-level
[[Page 25751]]
EDGE data for older adult enrollees, especially older female enrollees.
Therefore, our proposed adoption of Option 4 included an exception
narrowly tailored to account for the observed anomalous decreases in
the unconstrained coefficients for the 2020 benefit year enrollee-level
EDGE data. At the same time, as explained in the proposed rule (87 FR
78215 through 78216), our analysis generally found that the 2020
enrollee-level EDGE data were anomalous primarily in the volume and
frequencies of certain types of claims, but that the relative costs of
specific services, at least those associated with payment HCCs in the
HHS risk adjustment models, were largely unaffected. Because the risk
adjustment models predict relative costs of care for specific
conditions on an enrollee-level basis and tend not to rely on overall
patterns of utilization, the minimal impacts to relative costs of care
for payment HCCs likewise resulted in minimal impacts on the
coefficients fitted by the 2020 enrollee-level EDGE recalibration data.
Although we found anomalous trends in the adult age-sex factors,
they were limited to the direction of coefficient changes.
Specifically, age and sex in the adult models seemed to be predictive
of whether an age-sex coefficient would go up or down with older female
enrollees more likely to see a decrease in their age-sex coefficient
fit to 2020 enrollee-level EDGE data relative to their age-sex
coefficient fit to 2019 enrollee-level EDGE data, and younger male
enrollees more likely to see an increase in the coefficient fit to 2020
data relative to the coefficient fit with 2019 data. To put these
directional changes into perspective, the magnitudes of these changes
were small and did not appear as anomalous when further compared to
previous benefit years. Specifically, as part of our consideration of
comments we further investigated these anomalies and found that:
For the risk adjustment model coefficients from the 2016
through the 2023 benefit years, the adult age-sex factors varied in
magnitude from their prior benefit year by a historic median value of
16.1 percent.
Using only 2018 and 2019 data to blend the adult age-sex
factors (as in our proposed approach, Option 4,\28\) across metal
levels, the median change in magnitude between the 2023 final adult
age-sex coefficients \29\ and the 2024 proposed adult age-sex
coefficients was 2.0 percent and the maximum change in magnitude was
12.0 percent.
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\28\ See the 2024 Payment Notice proposed rule, Table 2 at 87 FR
78220.
\29\ See the 2023 Benefit Year Final HHS Risk Adjustment Model
Coefficients, Table 1, available at https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.pdf.
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Using all 3 years of enrollee-level EDGE data (2018, 2019,
and 2020), the median change in magnitude between the 2023 final adult
age-sex coefficients and the 2024 adult age-sex coefficients was 3.6
percent and the maximum change in magnitude was 13.2 percent.
The median magnitude of the differences between the
proposed age-sex coefficients, and blended age-sex coefficients using
2018, 2019, and 2020 enrollee-level EDGE data \30\ was 2.7 percent.
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\30\ See the 2024 Payment Notice proposed rule, Table 1 at 87 FR
78218.
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These values show that although the pattern of the direction of the
changes in adult age-sex coefficients might appear to be anomalous,
with older female enrollees showing more decreases than expected, the
coefficients were actually more consistent between the 2023 final risk
adjustment models and those proposed or explored as alternatives for
the 2024 benefit year than we have seen in previous benefit years. As
noted in the proposed rule (78 FR 78217), we know from our experience
that every year of data can be unique and therefore some level of
deviation from year to year is expected. Although the adult age-sex
trends may have displayed a systematic effect such that older female
enrollees were more likely to see lower coefficients, the magnitude of
this effect appears very small and does not rise above what we have
seen in prior year-to-year variation.
Moreover, the intent of the established policy to use the 3 most
recent consecutive years of enrollee-level EDGE data for recalibration
of the risk adjustment models is to provide stability within the HHS-
operated risk adjustment program and minimize volatility in changes to
risk scores between benefit years due to differences in the data set's
underlying populations, while reflecting the most recent years' claims
experience available.\31\ Given that the magnitude of differences in
the coefficients between separately solved models from the 2019 and
2020 enrollee-level EDGE data sets are similar in magnitude to the
normal variation we see between data years, despite the initially
observed anomalous trends, after review of comments and further
consideration and analysis of the options presented, we now believe
that the blending of 3 years of data for all coefficients, including
the adult model age-sex coefficients, is the better approach for
recalibration of the 2024 benefit year risk adjustment models, because
we continued to find that there may not be a sufficient justification
to exclude 2020 benefit year enrollee-level EDGE data in the
recalibration of the risk adjustment models. Additionally, this
approach will continue to serve the purpose of providing stability in
risk scores by maintaining the policy to use the 3 most recent
consecutive years of enrollee-level data available at the time we
incorporated the data in the draft recalibrated coefficients published
in the proposed rule and will update the models to reflect the most
recent year's claims experience available.
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\31\ For a discussion of the established policy governing the
data used for the annual risk adjustment model recalibration, see 86
FR 24151 through 24155.
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Additionally, we agree with commenters and recognize there are
disadvantages with Option 4 and the use of different benefit years to
recalibrate the adult model age-sex coefficients because model
coefficients are interdependent. For example, if the 2020 data differed
from the 2019 data in that some risk had shifted from an HCC to an age-
sex category for which that HCC was common, the removal of the age-sex
category from blending would result in that HCC being slightly
underpredicted relative to its predicted value if all three benefit
years of data were used because the shifted risk would not be captured
in the blended age-sex coefficient with that benefit year of data being
included. Another example may include vaccinations. Costs associated
with vaccinations have an impact on age-sex coefficients because they
are not associated with a diagnosis that would be captured by an HCC.
As such, if there were changes in the relative costs of common
vaccinations between the 2019 and 2020 years of enrollee-level EDGE
data, removing the 2020 enrollee-level EDGE data age-sex coefficients
from blending would prevent the models from capturing these changes.
We also continue to believe that the COVID-19 PHE is an example of
the type of situation that requires a close examination of the
potential impact on utilization and costs to identify whether there are
sufficiently anomalous trends relative to expected future patterns of
care or significant changes that differentially impact certain
conditions or populations relative to others that could impact the use
of that benefit year in the annual recalibration of the HHS risk
adjustment models. HHS intends to similarly examine 2021 enrollee-level
EDGE data, which will be available for use in recalibration of the 2025
benefit
[[Page 25752]]
year HHS risk adjustment models,\32\ and would propose any changes to
current policies for recalibration of the models in future benefit
years through notice-and-comment rulemaking.
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\32\ Consistent with the policies finalized in the 2022 Payment
Notice, use of the 3 most recent consecutive years of enrollee-level
EDGE data would result in the use of 2019, 2020, and 2021 enrollee-
level EDGE data for recalibration of the 2024 benefit year models;
the use of 2020, 2021, and 2022 enrollee-level EDGE data for
recalibration of the 2025 benefit year models; and the use of 2021,
2022, and 2023 enrollee-level EDGE data for recalibration of the
2026 benefit year models. See 86 FR 24151 through 24155.
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We recognize that some commenters preferred alternative options
that would use 2017, 2018, and 2019 enrollee-level EDGE data (Option 5)
or only 2018 and 2019 enrollee-level EDGE data (Option 6). We remain
concerned about these options, which would completely exclude 2020
enrollee-level EDGE data, because these options would result in the HHS
risk adjustment models reflecting older costs and utilization trends
than would be desirable. As previously stated, our analyses of the 2020
benefit year enrollee-level EDGE recalibration data found that it was
largely comparable to the 2019 benefit year data set and we did not
identify other major anomalous trends in our comparison of the
unconstrained HCC coefficients in the 2019 and 2020 enrollee-level EDGE
recalibration data sets. This raises the question about whether there
is a sufficient justification to completely exclude 2020 benefit year
enrollee-level EDGE data in the recalibration of the HHS risk
adjustment models. Beyond the concern about using older data and the
question about the justification to completely exclude 2020 benefit
year data, Option 6 has the additional drawback of decreasing the
stabilizing effect of using multiple years of data. As our goal in
using the 3 most recent consecutive years of data that are available at
the time we incorporate data to recalibrate the models and determine
draft coefficients based on a blend of equally-weighted, separately
solved coefficients from each year is to capture some degree of year-
to-year cost shifting without over-relying on any factors unique to one
particular year. When using 2 years of data under this approach, each
year is weighted at 50 percent, but with 3 years of data, each year is
weighted at 33.3 percent. As such, a change in a coefficient occurring
in 1 year of the data that is actually included in recalibration would
have a greater impact on the HHS risk adjustment model coefficients if
only using 2 years of data rather than 3 years, due to the increase in
the reliance of the blended coefficients on the remaining 2 years of
data.
Option 2, which was supported by one commenter and would have
weighted 2020 enrollee-level EDGE data less than the other two benefit
years (2018 and 2019 enrollee-level EDGE data) used in recalibration
while continuing to include it in the blended coefficients, would
represent a middle ground between Option 1 and Option 6. However, we
continue to be concerned that this approach would require identifying
an appropriate weighting methodology other than the equal weighting
that we generally use to blend coefficients from the 3 data years, and
we do not believe there is a self-evident method of weighting 2020 data
differently for this purpose. Furthermore, although Option 2 would not
completely eliminate the effect of the 2020 benefit year data in all of
the models for all factors (as opposed to just the age-sex factors in
the adult models), this option would dampen the effect of 2020 benefit
year data, raising similar concerns as Options 5 and 6 in that Option 2
would also, to some extent, prevent the models from reflecting changes
in utilization and cost of care that are unrelated to the impact of the
COVID-19 PHE.
Regarding the recommendation to identify and address fixable
anomalies in the underlying data and then refit the models using the
modified data, we do not believe this recommendation is feasible or
prudent. Although it may be possible to identify an increase or a
decrease in the frequency of particular diagnosis or service codes,
these checks and procedures do not presently allow HHS to identify
whether a diagnosis or service code on a given enrollee's record was
directly attributable to the COVID-19 PHE. We are also presently unable
to determine whether an enrollee had care deferred due to office
closures or other logistical issues or what care would have been
provided in the absence of the PHE. We generally consider this sort of
enrollee-level adjustment to be out of scope for model calibration
unless there is a clear data error. As such, we generally \33\ use the
data as is, with only some basic trending assumptions \34\ to ensure
the costs are measured for the year in which the coefficients will be
used. Furthermore, as previously stated, the HHS risk adjustment models
rely more on relative cost of care for a given diagnosis than they do
on how many such diagnoses are present in the underlying data.
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\33\ As previously stated in the March 2016 Risk Adjustment
Methodology White Paper (March 24, 2016; available at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf), we exclude enrollees
with capitated claims from the recalibration sample due to concerns
that methods for computing and reporting derived amounts from
capitated claims would not result in reliable data for recalibration
or analysis. See also 87 FR 27227.
\34\ These trending assumptions include the pricing adjustment
for Hepatitis C drugs. See 84 FR 17463 through 17466. See also 87 FR
78218.
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Regarding the general concerns about use of age-sex factors in the
HHS risk adjustment models, HHS takes very seriously our obligation to
protect individuals from discrimination and generally disagrees that
the use of these factors in risk adjustment is inappropriate.
Consistent with section 1343 of the ACA, the HHS-operated risk
adjustment program reduces the incentives for issuers to avoid higher-
than-average risk enrollees, such as those with chronic conditions, by
using charges collected from issuers that attract lower-than-average
risk enrollees to provide payments to health insurance issuers that
attract higher-than-average risk enrollees. The ACA also prohibits
issuers from establishing or charging premiums on the basis of sex,\35\
and limits issuers ability to do so on the basis of age.\36\ However,
the cost of care for and actuarial risk of enrollees is, in part,
predicted by their age and sex. As such, without the inclusion of age-
sex factors in the HHS risk adjustment models, some issuers would be
incentivized to design plans that are less attractive to potential
enrollees whose age-sex category is predicted to create a higher
liability for the issuer. The age-sex factors in the HHS risk
adjustment models help alleviate this incentive by ensuring issuers
whose enrollees' actuarial risk is greater than the average actuarial
risk of all enrollees in the State market risk pool, such as issuers
that enroll a higher-than-average proportion of enrollees who fall into
a high-cost age-sex category, are appropriately compensated. The use of
age and sex factors in the HHS risk adjustment models is therefore
necessary, appropriate, and helps reduce the likelihood that
discrimination based on age or sex will occur with respect to health
insurance coverage issued or renewed in the individual and small group
(including merged) markets.
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\35\ See section 2701 of the Public Health Service Act (42
U.S.C. 300gg) as amended by section 1201 of the ACA.
\36\ Ibid. See also the Market Rules and Rate Review final rule
(78 FR 13411 through 13413).
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After review of comments and further consideration of the options
presented, for the reasons outlined above, we are finalizing adoption
of Option 1 for recalibrating the HHS risk adjustment models for the
2024 benefit year. The
[[Page 25753]]
model coefficients for the 2024 benefit year listed in Tables 1 through
6 of this final rule are based on a blend of equally-weighted,
separately solved coefficients from the 2018, 2019, and 2020 benefit
years of enrollee-level EDGE data for all
coefficients.37 38 39
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\37\ The coefficients listed in Tables 1 through 6 of this final
rule also reflect the pricing adjustment for Hepatitis C drugs
finalized in this rule. In addition, the factors in this rule also
reflect the removal of the mapping of hydroxychloroquine sulfate to
RXC 09 (Immune Suppressants and Immunomodulators) and the related
RXC 09 interactions (RXC 09 x HCC056 or 057 and 048 or 041; RXC 09 x
HCC056; RXC 09 x HCC 057; RXC 09 x HCC048, 041) from the 2018 and
2019 benefit year enrollee-level EDGE data sets for purposes of
recalibrating the 2024 benefit year adult models. See 87 FR 27232
through 27235. Additionally, the factors for the adult models
reflect the use of the final, fourth quarter (Q4) RXC mapping
document that was applicable for each benefit year of data included
in the current year's model recalibration (except under extenuating
circumstances that can result in targeted changes to RXC mappings).
See 87 FR 27231 through 27232.
\38\ The adult, child and infant models have also been truncated
to account for the high-cost risk pool payment parameters by
removing 60 percent of costs above the $1 million threshold.
\39\ Starting with the 2024 risk adjustment adult models, HHS
will group HCC 18 Pancreas Transplant Status and CC 83 Kidney
Transplant Status/Complications to reflect that these transplants
frequently co-occur for clinical reasons and to reduce volatility of
coefficients across benefit years due to the small sample size of
HCC 18. This change will also be reflected in the DIY Software for
the 2024 benefit year.
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Comment: Several commenters were concerned about some of the
proposed RXC adult model coefficients, in particular RXCs 1 (Anti-HIV
Agents), 8 (Multiple Sclerosis Agents), and 9 (immune suppressants and
immunomodulators), for which the majority of filled prescriptions fall
into the category of specialty drugs. As a result, many of these
commenters supported Option 5, described above, for addressing 2020
enrollee-level EDGE data in model recalibration and recommended that
the 2017, 2018 and 2019 enrollee-level EDGE data not be trended forward
to the 2024 benefit year (that is, that HHS should use the 2023 final
model coefficients for the 2024 benefit year). These commenters also
requested that HHS publish additional information on these
coefficients, including the separately solved model coefficients from
each data year, the trending methodology, and how these trend factors
were applied as part of the 2024 benefit year risk adjustment model
recalibration. Some of these commenters questioned whether the changes
for these coefficients were due to anomalies in the 2020 enrollee-level
EDGE data or, as others suggested, if the changes may be due to the
trending methodology applied. One of these commenters suggested
different trend factors may need to be applied differently for
different RXCs, noting that market patterns for non-RXC specialty drugs
may not align with market patterns for specialty drugs included in the
affected RXCs.
Response: We are finalizing the RXC coefficients as proposed
because we believe the 2024 risk adjustment models' RXCs are accurately
predicting the costs of RXCs in the market for the applicable benefit
year. Although there are RXC coefficients changes between the 2023 and
2024 benefit year models, these changes are not due to anomalies in the
2020 enrollee-level EDGE data and are of a similar magnitude to RXC
changes found in previous benefit years. The change in these RXC
coefficients relative to the previous benefit year are due to decisions
HHS made in trending costs for traditional and specialty drugs, as
suggested by some commenters.
To explain, we analyzed separately solved model coefficients from
each data year used in the proposed 2024 risk adjustment model
recalibration and found that all 3 data years used for 2024 model
recalibration exhibited similar changes in these RXC coefficients. This
indicates that the 2020 enrollee-level EDGE data (or any potential
anomalies related to that data year) were not driving the decrease.
Although we understand the importance of transparency, we do not
believe it is necessary to release the separately solved model
coefficients from each data year.
However, we appreciate it is important to share more information
about the RXC coefficients identified by commenters and generally note
that, between benefit years, the RXC coefficients are typically less
stable than HCC coefficients in the HHS risk adjustment models due to
smaller sample sizes than their corresponding HCC coefficients, and
multicollinearity with HCC coefficients and HCC-RXC interaction
factors. In addition, as part of our consideration of these comments
and to investigate whether the 2020 enrollee-level EDGE data
coefficients for these three RXCs were substantially different from the
2018 and 2019 years of enrollee-level EDGE data coefficients, we
engaged in a further analysis of the differences between coefficients
solved from each year of enrollee-level EDGE data (2018, 2019, and 2020
enrollee-level EDGE data) for these three RXCs and found:
In the HHS risk adjustment adult model coefficients from
the 2018 through the 2023 benefit years, across the five metal levels,
the distance between RXC coefficient values from the 2 most dissimilar
data years used in the annual model recalibration for RXC 1 have ranged
between 9.2 percent and 40.7 percent. Across the five metal levels, the
median distance between RXC 1 coefficients from the 2 most dissimilar
data years for the 2024 benefit year risk adjustment adult models is
30.9 percent.
For RXC 8, the distance between values from the 2 most
dissimilar data years used in the annual model recalibration for this
adult model coefficient across the 2018 through 2023 benefit years
ranged from between 5.1 percent and 28.4 percent, with the median value
for the 2024 benefit year risk adjustment adult models at 7.0 percent
across metal levels.
For RXC 9, the range of distance between values from the 2
most dissimilar data years used in the annual model recalibration for
this adult model coefficient across the 2018 through 2023 benefit years
has fallen between 1.6 percent and 60.1 percent, with the median value
for the proposed and final 2024 risk adjustment adult models at 4.7
percent across the five metal levels.
Although coefficients for these three RXCs decreased between the
2023 and 2024 benefit year risk adjustment adult models, the similarity
of the coefficients among the 3 data years used to fit the 2024 benefit
year risk adjustment models and the consistency of the dispersion
between data years with the range of dispersion observed for previous
benefit years' HHS risk adjustment models demonstrates that these
decreases are not due to any anomalous patterns in the 2020 enrollee-
level EDGE data. As noted above, in past benefit years, we have
attributed the lower level of stability among RXC and RXC-HCC
interaction factors to the high level of collinearity between these
variables. Due to their close association with one another, the models
may fit coefficients that divide risk between an interaction factor and
its related RXC and HCC(s) differently for different years of enrollee-
level EDGE data.
However, the change in these RXC coefficients relative to the
previous benefit year are due to decisions we made in trending costs
for traditional and specialty drugs, as suggested by some commenters,
which have been trended separately from medical expenditures since the
2017 benefit year.\40\ More specifically, in our annual assessment of
the trending factors for the 2024 HHS risk adjustment models, we
determined that the trend factors used for specialty drugs was higher
than the market data supported. Therefore,
[[Page 25754]]
for the 2024 benefit year, we used trend factors for specialty drugs
that aligned with the market data rather than continuing the
historical, higher trend factors. In determining these trend factors,
we consulted our actuarial experts, reviewed relevant Unified Rate
Review Template (URRT) submission data, analyzed multiple years of
enrollee-level EDGE data, and consulted National Health Expenditure
Accounts (NHEA) data as well as external reports and documents \41\
published by third parties. In this process, we also ensured that the
trends we use reflect changes in cost of care rather than gross growth
in expenditures. As such, we believe the trend factors we used for
specialty drugs are appropriate for the most recent trends we have seen
in the market and the proposed RXC coefficient values that we finalize
in this rule reflect the appropriate amount of growth between the data
years used to fit the model and the 2024 benefit year. As part of our
annual model recalibration activities, we intend to continue to
reassess the trend factors used to update the HHS risk adjustment
models in future benefit years. Consistent with Sec. 153.320(b)(1), we
will also continue to include and solicit comments on the draft model
factors to be employed in the HHS risk adjustment models for a given
benefit year, including but not limited to the proposed coefficients,
as part of the applicable benefit year's Payment Notice proposed rule.
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\40\ See 81 FR 12218.
\41\ See for example, ``How much is health spending expected to
grow?'' by the Peterson-Kaiser Family Foundation, available at
https://www.healthsystemtracker.org/chart-collection/how-much-is-health-spending-expected-to-grow/. See also ``Medical cost trend:
Behind the numbers 2022'' by PwC Health Research Institute,
available at https://www.pwc.com/us/en/industries/health-industries/library/assets/pwc-hri-behind-the-numbers-2022.pdf. See also, ``MBB
health trends'' by MercerMarsh Benefits, available at https://www.mercer.com/content/dam/mercer/attachments/private/gl-2022-mmb-health-trends-report.pdf.
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b. Pricing Adjustment for the Hepatitis C Drugs
In the HHS Notice of Benefits and Payment Parameters for 2024
proposed rule (87 FR 78206, 78218), for the 2024 benefit year, we
proposed to continue applying a market pricing adjustment to the plan
liability associated with Hepatitis C drugs in the risk adjustment
models.\42\
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\42\ See for example, 84 FR 17463 through 17466.
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Since the 2020 benefit year risk adjustment models, we have been
making a market pricing adjustment to the plan liability associated
with Hepatitis C drugs to reflect future market pricing prior to
solving for coefficients for the models.\43\ The purpose of this market
pricing adjustment is to account for significant pricing changes
associated with the introduction of new and generic Hepatitis C drugs
between the data years used for recalibrating the models and the
applicable recalibration benefit year.\44\
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\43\ The Hepatitis C drugs market pricing adjustment to plan
liability is applied for all enrollees taking Hepatitis C drugs in
the data used for recalibration.
\44\ Silseth, S., & Shaw, H. (2021). Analysis of prescription
drugs for the treatment of hepatitis C in the United States.
Milliman White Paper. https://www.milliman.com/-/media/milliman/pdfs/2021-articles/6-11-21-analysis-prescription-drugs-treatment-hepatitis-c-us.ashx.
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We have committed to reassessing this pricing adjustment with
additional years of enrollee-level EDGE data, as data become available.
As part of the 2024 benefit year model recalibration, we reassessed the
cost trend for Hepatitis C drugs using available enrollee-level EDGE
data (including 2020 benefit year data) to consider whether the
adjustment was still needed and if it is still needed, whether it
should be modified. We found that the data for the Hepatitis C RXC that
will be used for the 2024 benefit year recalibration \45\ still do not
account for the significant pricing changes due to the introduction of
new Hepatitis C drugs, and therefore, do not precisely reflect the
average cost of Hepatitis C treatments applicable to the benefit year
in question.
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\45\ As detailed above, we are finalizing that we will use 2018,
2019 and 2020 enrollee-level EDGE data for recalibration of the 2024
benefit year HHS risk adjustment models, with no exceptions.
However, for the proposed rule, we also assessed 2017 enrollee-level
EDGE data in the event one of the alternative proposals regarding
use of 2020 enrollee-level EDGE data were to be adopted.
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Specifically, generic Hepatitis C drugs did not become available on
the market until 2019, and we proposed to use 2018 benefit year EDGE
data in the 2024 benefit year model recalibration.\46\ Due to the lag
between the data years used to recalibrate the risk adjustment models
and the applicable benefit year of risk adjustment, as well as the
expectation that the costs for Hepatitis C drugs will not increase at
the same rate as other drug costs between the data year and the
applicable benefit year of risk adjustment, we do not believe that the
trends used to reflect growth in the cost of prescription drugs due to
inflation and related factors for recalibrating the models will
appropriately reflect the average cost of Hepatitis C treatments
expected in the 2024 benefit year. Therefore, we continue to believe a
market pricing adjustment specific to Hepatitis C drugs in our models
for the 2024 benefit year is necessary to account for the significant
pricing changes associated with the introduction of new and generic
Hepatitis C drugs between the data years used for recalibrating the
models and the applicable recalibration benefit year. As noted in the
proposed rule, we intend to continue to assess this pricing adjustment
in future benefit year recalibrations using additional years of
enrollee-level EDGE data.
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\46\ See Miligan, J, (2018). A perspective from our CEO: Gilead
Subsidiary to Launch Authorized Generics to Treat HCV. Gilead.
https://www.gilead.com/news-and-press/company-statements/authorized-generics-for-hcv. See also AbbVie. (2017). AbbVie Receives U.S. FDA
Approval of MAVYRETTM (glecaprevir/pibrentasvir) for the
Treatment of Chronic Hepatitis C in All Major Genotypes (GT 1-6) in
as Short as 8 Weeks. Abbvie. https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm.
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We sought comment on this proposal. After reviewing the public
comments, we are finalizing this proposal to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs in the 2024 benefit year HHS risk adjustment models as proposed.
We summarize and respond to public comments received on the proposed
pricing adjustment for Hepatitis C drugs below.
Comment: Most commenters supported the continued use of the pricing
adjustment for Hepatitis C drugs with one commenter stating that the
proposed Hepatitis C pricing adjustment seems reasonably well
calibrated to reduce the incentives for issuers to create
discriminatory plans that would drive away enrollees with Hepatitis C.
Some commenters expressed concern about the Hepatitis C pricing
adjustment. These commenters cautioned against reducing the Hepatitis C
RXC coefficient more than the expected decrease in cost as that may
incentivize issuers to reduce the availability of treatment. These
commenters were also concerned about undercompensating issuers for
enrollees with serious chronic conditions, which they stated would
incentivize issuers to avoid these enrollees. One commenter asserted
that the professional independence and ethical standards of providers
would prevent providers from prescribing drugs that they did not
believe were medically necessary and appropriate, reducing the
potential for issuers to game the program.
Response: We believe that continuing to apply the Hepatitis C
pricing adjustment in the 2024 benefit year HHS risk adjustment models
is appropriate at this time. This pricing adjustment will help avoid
perverse incentives and will
[[Page 25755]]
lead to Hepatitis C RXC coefficients that better reflect anticipated
actual 2024 benefit year plan liability associated with Hepatitis C
drugs. Specifically, the purpose of the Hepatitis C pricing adjustment
is to address the significant pricing changes associated with the
introduction of new and generic Hepatitis C drugs between the data
years used for recalibrating the models and the applicable
recalibration benefit year that present a risk of creating perverse
incentives by overcompensating issuers. We reassessed the pricing
adjustment for the Hepatitis C RXC for the 2024 benefit year model
recalibration and found that the data used for the 2024 benefit year
risk adjustment model recalibration (that is, 2018, 2019, and 2020
enrollee-level EDGE data) still do not account for the significant
pricing changes that we have observed for the Hepatitis C drugs due to
the introduction of newer and cheaper Hepatitis C drugs. Therefore, the
data that will be used to recalibrate the models needs to be adjusted
because it does not precisely reflect the average cost of Hepatitis C
treatments expected in the 2024 benefit year.
In making this determination, we consulted our clinical and
actuarial experts, and analyzed the most recent enrollee-level EDGE
data available to further assess the changing costs associated with
Hepatitis C enrollees. Due to the high cost of these drugs reflected in
the 2018, 2019, and 2020 enrollee-level EDGE data, without a pricing
adjustment to plan liability, issuers would be overcompensated for the
Hepatitis C RXC in the 2024 benefit year, and issuers could be
incentivized to encourage overprescribing practices and game risk
adjustment such that their risk adjustment payment is increased or risk
adjustment charge is decreased. We also recognize concerns that
applying a pricing adjustment that would reduce the coefficient for the
Hepatitis C RXC by more than the expected decrease in costs could
incentivize issuers to reduce the availability of the treatment.
However, we believe that the Hepatitis C pricing adjustment we are
finalizing accurately captures the costs of Hepatitis C drugs for the
2024 benefit year using the most recently available data, balances the
need to deter gaming practices with the need to ensure that issuers are
adequately compensated, and does not undermine recent progress in the
treatment of Hepatitis C. Nevertheless, we intend to continue to
reassess this pricing adjustment as part of future benefit years' model
recalibrations using additional years of available enrollee-level EDGE
data.
We appreciate commenters' concerns about undercompensating issuers
for enrollees with serious chronic conditions. We note that HHS, in the
2023 Payment Notice (87 FR 27221 through 27230), finalized several risk
adjustment model changes to address the adult and child models'
underprediction for enrollees with many HCCs. Specifically, we
finalized the interacted HCC counts and HCC-contingent enrollment
duration factor model specifications to improve model prediction for
the higher risk enrollees and ensure that issuers are being accurately
compensated for these enrollees. As such, the potential for
underprediction or overprediction in the HHS risk adjustment models is
an area that we are consistently monitoring and addressing as needed
and will continue to monitor and address in the future as part of our
ongoing efforts to continually improve the HHS risk adjustment models.
Additionally, we recognize the important role that the ethical
standards of providers play in preventing overprescribing of drugs that
they do not believe are medically necessary and appropriate, but we
believe that the Hepatitis C pricing adjustment is the most effective
way to protect against perverse incentives that could affect
prescribing patterns.
Comment: One commenter urged HHS to expand the pricing adjustment
to other drugs, noting that biosimilar versions of adalimumab
(Humira[supreg]), a drug that is currently classified in RXC 9 Immune
suppressants and Immunomodulators in the adult risk adjustment models,
will soon enter the market and the logic for applying a market pricing
adjustment to the plan liability associated with Hepatitis C drugs may
be extended to these biosimilar drugs.
Response: We did not propose or solicit comments on extending a
pricing adjustment to drugs treating conditions other than Hepatitis C.
As such, at this time, we will not be finalizing any pricing
adjustments for the RXC 9 drug adalimumab or other specialty drugs with
alternatives (whether generic or biosimilar) entering the market in the
coming year. In the 2023 Payment Notice (87 FR 27231 through 27235), we
explained our criteria for inclusion and exclusion of drugs in RXC
mapping and recalibration. We stated that in extenuating circumstances
where HHS believes there will be a significant impact from a change in
an RxNorm Concept Unique Identifiers (RXCUI) to RXC mapping, such as:
(1) evidence of significant off-label prescribing (as was the case with
hydroxychloroquine sulfate); \47\ (2) abnormally large changes in
clinical indications or practice patterns associated with drug usage;
or (3) certain situations in which the cost of a drug (or biosimilars)
become much higher or lower than the typical cost of drugs in the same
prescription drug category, HHS will consider whether changes to the
RXCUI to RXC mapping from the applicable data year crosswalk (or, in
this case, pricing adjustments) are needed for future benefit year
recalibrations.
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\47\ See, for example, 86 FR 24180.
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Although making a pricing adjustment due to the introduction of new
drugs in a market is not the same as adjusting the RXC mappings, we
take a similar approach in considering whether a pricing adjustment for
new drugs in a market is needed. We do not believe there is evidence at
this time that the introduction of biosimilar alternatives to
adalimumab will create market patterns that meet any of these three
criteria. Our current understanding is that the biosimilar alternatives
to adalimumab entering the market are not analogous to the generic
versions of drugs used to treat Hepatitis C. Biosimilars, in general,
differ from common generic drugs and their market behaviors are
expected to be distinct. Because biosimilars are made from living
material (which is not the case with common generic drugs), they differ
in their interchangeability and manufacturing cost savings from common
generics.\48\ Furthermore, although costs are expected to be lower for
adalimumab biosimilars due to lower costs of development, the nature of
the different production process for biologic drugs means that the
price reductions are expected to be much smaller with biosimilars than
we see with the introduction of generic medications.\49\ As such, we
also do not believe that the costs and prescribing patterns of
adalimumab (and its biosimilars) will be much higher or lower than the
typical cost of drugs in the same prescription drug category in the
near future. Nevertheless, we will continue to monitor the prescription
drug market as part of our ongoing efforts to continually improve the
HHS risk adjustment models.
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\48\ See https://www.uspharmacist.com/article/biosimilars-not-simply-generics. See also https://www.goodrx.com/humira/biosimilars.
\49\ See https://www.reuters.com/business/healthcare-pharmaceuticals/abbvies-humira-gets-us-rival-costs-could-stay-high-2023-01-31/. See also https://info.goodrootinc.com/download-our-biosimilars-white-paper.
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[[Page 25756]]
c. Request for Information: Payment HCC for Gender Dysphoria
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78219), HHS requested information on adding a
payment HCC for gender dysphoria to the HHS risk adjustment models for
future benefit years. We thank commenters for their feedback and will
take these comments into consideration if we pursue this potential risk
adjustment model update for future benefit years through notice-and-
comment rulemaking.
d. List of Factors To Be Employed in the Risk Adjustment Models (Sec.
153.320)
We are finalizing the 2024 benefit year risk adjustment model
factors resulting from the equally weighted (averaged) blended factors
from separately solved models using the 2018, 2019, and 2020 enrollee-
level EDGE data in Tables 1 through 6. The adult, child, and infant
models have been truncated to account for the high-cost risk pool
payment parameters by removing 60 percent of costs above the $1 million
threshold.\50\ Table 1 contains factors for each adult model, including
the age-sex, HCCs, RXCs, RXC-HCC interactions, interacted HCC counts,
and enrollment duration coefficients. Table 2 contains the factors for
each child model, including the age-sex, HCCs, and interacted HCC
counts coefficients. Table 3 lists the HHS-HCCs selected for the
interacted HCC counts factors that apply to the adult and child models.
Table 4 contains the factors for each infant model. Tables 5 and 6
contain the HCCs included in the infant models' maturity and severity
categories, respectively.
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\50\ We did not propose changes to the high-cost risk pool
parameters for the 2024 benefit year. Therefore, we will maintain
the $1 million threshold and 60 percent coinsurance rate.
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After reviewing public comments, we are finalizing the list of
factors to be employed in the HHS risk adjustment models with the
following modifications. In the proposed rule (87 FR 78219 through
78226), the adult risk adjustment model factor coefficients reflected a
blend of separately solved coefficients from the 2018, 2019, and 2020
benefit years of enrollee-level EDGE data, with an exception to exclude
the 2020 benefit year data from the blending of the age-sex
coefficients for the adult models. In this final rule, the adult risk
adjustment model factor coefficients for the 2024 benefit year have
been updated to reflect the finalization of the use of the 2018, 2019
and 2020 benefit year enrollee-level EDGE data for recalibration of the
2024 benefit year risk adjustment models for all model coefficients,
including the adult age-sex coefficients, as detailed in an earlier
section of this rule.
We summarize and respond to public comments received on the list of
factors to be employed in the HHS risk adjustment models below.
Comment: One commenter stated that the enrollment duration factors
do not fully capture the financial impact of enrollment duration for
consumers who enroll during SEPs, and requested HHS further investigate
how the HHS risk adjustment models can be updated and improved to
reflect more recent changes to SEPs.
Response: In the 2023 Payment Notice (87 FR 27228 through 27230),
we changed the enrollment duration factors in the adult risk adjustment
models to improve prediction for partial-year adult enrollees with and
without HCCs. As described in the 2021 Risk Adjustment (RA) Technical
Paper,\51\ we found that the previous adult model enrollment duration
factors underpredicted plan liability for partial-year adult enrollees
with HCCs and overpredicted plan liability for partial-year adult
enrollees without HCCs. Therefore, beginning with the 2023 benefit
year, we eliminated the enrollment duration factors of up to 11 months
for all enrollees in the adult models, and replaced them with new
monthly enrollment duration factors of up to 6 months that would apply
only to adult enrollees with HCCs. HHS did not propose and is not
finalizing any changes to the enrollment duration factors as part of
this rulemaking. However, as more data years become available, we will
continue to investigate the performance of the enrollment duration
factors. Specifically, as the SEP landscape changes and we have new
data to reflect those changes,\52\ we will assess the extent to which
the enrollment duration factors fully capture the financial impact of
enrollment duration for enrollees who enroll during an SEP.
---------------------------------------------------------------------------
\51\ HHS published analysis of CSR population utilization in the
HHS-Operated Risk Adjustment Technical Paper on Possible Model
Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\52\ See, for example, CMS. (2022, October 28). Marketplace
Stakeholder Technical Assistance Tip Sheet on the Monthly Special
Enrollment Period for Advance Payments of the Premium Tax credit--
Eligible Consumers with Household Income at or below 150% of the
Federal Poverty Level. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/150FPLSEPTATIPSHEET.
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e. CSR Adjustments
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78235), we proposed to continue including
an adjustment for the receipt of CSRs in the risk adjustment models in
all 50 States and the District of Columbia. We explained that while we
continue to study and explore a range of options to update the CSR
adjustments to improve prediction for CSR enrollees and whether changes
are needed to the risk adjustment transfer formula to account for CSR
plans,\53\ to maintain stability and certainty for issuers for the 2024
benefit year, we proposed to maintain the CSR adjustment factors
finalized in the 2019, 2020, 2021, 2022, and 2023 Payment Notices.\54\
See Table 7. We also proposed to continue to use a CSR adjustment
factor of 1.12 for all Massachusetts wrap-around plans in the risk
adjustment PLRS calculation, as all
[[Page 25773]]
of Massachusetts' cost-sharing plan variations have AVs above 94
percent (81 FR 12228).
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\53\ See CMS. (2021, October 26). HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes. Appendix A. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. We are also
considering a letter recently published by the American Academy of
Actuaries regarding accounting for the receipt of CSRs in risk
adjustment and plan rating and are continuing to monitor changes
related to these issues. Bohl, J., Novak, D., & Karcher, J. (2022,
September 8). Comment Letter on Cost-Sharing Reduction Premium Load
Factors. American Academy of Actuaries. https://www.actuary.org/sites/default/files/2022-09/Academy_CSR_Load_Letter_09.08.22.pdf.
\54\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR
29190; 86 FR 24181; and 87 FR 27235 through 27236.
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We sought comment on these proposals. After reviewing the public
comments, we are finalizing the CSR adjustment factors as proposed.
[GRAPHIC] [TIFF OMITTED] TR27AP23.017
We summarize and respond to public comments received on the
proposed CSR adjustment factors below.
Comment: One commenter supported using the proposed CSR adjustment
factors in the HHS-operated risk adjustment program. Another commenter
supported continuing to apply an adjustment for Massachusetts wrap-
around plans to account for its unique market dynamics. A few
commenters supported further evaluation of the CSR adjustment factors.
One commenter requested evaluation of the current CSR adjustment
factors in light of an absence of funding of CSR subsidies and due to
the potential socioeconomic health equity issues associated with lower-
than-anticipated induced utilization levels in the CSR population.\55\
Another commenter requested a technical paper before future proposed
rulemaking with further CSR induced demand analysis.
---------------------------------------------------------------------------
\55\ HHS published analysis of CSR population utilization in the
HHS-Operated Risk Adjustment Technical Paper on Possible Model
Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
One commenter stated that current CSR adjustment factors,
specifically when applied to CSR 87 percent and 94 percent variants, do
not accurately reflect population risk and another commenter requested
the risk adjustment formula reflect actual costs incurred by 87 percent
and 94 percent AV enrollees.
Response: We appreciate the comments in support of these proposals
and are finalizing the 2024 benefit year CSR adjustment factors as
proposed. While we have studied the CSR adjustment factors, we agree
continued study of the CSR adjustment factors is warranted to further
assess the different options outlined in the 2021 RA Technical Paper
and other potential approaches before pursuing any changes.\56\
However, at this time, we are not planning to publish another technical
paper with additional CSR induced demand analysis prior to pursing
changes to these factors in any future proposed rulemaking. We
anticipate that between the 2021 RA Technical Paper and any future
notice-and-comment rulemaking, sufficient analysis and justification
for any proposed changes would be provided.
---------------------------------------------------------------------------
\56\ Ibid.
---------------------------------------------------------------------------
Additionally, we reiterate the findings from the 2021 RA Technical
Paper that the current CSR adjustment factors are predicting actual
plan liability relatively accurately on average, with the nationally-
approximated risk term predictive ratios for CSR 87 percent and 94
percent variants both within +/-5 percent. We also believe that the
collection and extraction of additional data elements from issuers'
EDGE servers, including plan ID and rating area, will help further
inform our study of the CSR adjustment factors and may allow us to
further consider potential socioeconomic issues in the CSR populations.
Therefore, HHS intends to review the enrollee-level EDGE data with the
plan ID and rating area before proposing any changes to the CSR
adjustment factors in future notice-and-comment rulemaking.
Comment: A few commenters were concerned about the underprediction
of zero and limited sharing CSR plan variants for American Indian/
Alaska Natives (AI/AN) in the risk term of the State payment transfer
formula, as outlined in the 2021 RA Technical Paper,\57\ particularly
in States that have a high percentage of AI/AN enrollment, because
competition for these enrollees may be discouraged by this
underprediction.\58\ These commenters were concerned that this market
dynamic would result in issuers with fewer AI/AN enrollees having the
ability to more aggressively price silver plan premiums, gaining
competitive advantage and depressing premium tax credits for enrollees
in that State's market. One commenter recommended that HHS reframe and
recalibrate the CSR adjustment factors to fully eliminate the
underprediction of liability for AI/AN enrollees to best capture actual
CSR experience and mitigate any existing imbalances in risk adjustment
State transfers across metal and CSR plan variants.
---------------------------------------------------------------------------
\57\ Ibid.
\58\ The CSR adjustment factors for zero cost sharing recipients
(less than 300 percent of FPL) and limited cost sharing recipients
(greater than 300 percent of FPL) for each metal level are included
in Table 7 of this rule.
---------------------------------------------------------------------------
Response: As part of our overall analysis of the CSR adjustment
factors,
[[Page 25774]]
we will also continue to consider options for how to recalibrate and
adjust the CSR adjustment factors for the zero and limited sharing CSR
plan variants for future benefit years. In the 2021 RA Technical Paper,
we provided an analysis that showed the underprediction of zero and
limited sharing CSR plan variants for AI/AN in HHS risk adjustment and
considered a variety of different options to adjust the CSR adjustment
factors.\59\ Because this analysis was conducted at the national level,
we did not observe any trends of particular issuers, States or rating
areas having a higher percentage of AI/AN enrollment as noted by the
commenter. Specifically, we were extracting and using national
enrollee-level EDGE data without issuer or geographic markers.
Therefore, in the past and when we developed the proposed rule, we did
not have the ability to analyze the distribution of the CSR populations
at a more granular level (for example, at the issuer, State or rating
area level) to see, for example, which issuers, States or rating areas
have a high percentage of AI/AN enrollment. However, with policies
finalized in the 2023 Payment Notice (87 FR 27241 through 27243) and
this final rule, we will have the ability to extract and use multiple
years of enrollee-level EDGE data with plan ID and rating area markers
and will be able to further analyze the CSR populations at a more
granular level, including analyzing whether incentives may exist in
certain States with high proportions of AI/AN populations for issuers
with fewer AI/AN enrollees to more aggressively price silver plan
premiums in those States, to further consider potential changes to
these factors for future benefit years. In the meantime, we are
finalizing the CSR adjustment factors as proposed for the 2024 benefit
year to maintain stability and certainty for issuers.
---------------------------------------------------------------------------
\59\ HHS published analysis of CSR population utilization in the
HHS-Operated Risk Adjustment Technical Paper on Possible Model
Changes. (2021, October 26). CMS. https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
---------------------------------------------------------------------------
Comment: We also received several comments in response to a
reference to the American Academy of Actuaries' letter on CSR loading
in a footnote in the proposed rule.\60\ These commenters objected to
HHS considering any method of estimating CSR premium load factors that
involves issuers using experience data or issuer pricing models to
estimate the CSR load for silver plan variants. These commenters stated
that they believed such a methodology is a violation of the ACA's
single risk pool requirement, which requires issuers to treat all
individual market enrollees as part of a single risk pool so that
pricing reflects utilization of essential benefits by a standard
population. These commenters shared their experience from Texas and New
Mexico, where they claim aligning plan prices by AV when regulating the
variation in metal level premiums resulted in large enrollment
increases and enhanced affordability following premium realignment. One
commenter expressed concern about using a nationally weighted CSR
silver load in the rating term of the transfer formula due to
variations in State CSR enrollment mixes or CSR loading requirement
recommending the use of State-specific AV factors, as discussed in the
2021 RA Technical Paper. Another of these commenters suggested that
anticipated premiums should instead reflect the average AV of all CSR
variants.
---------------------------------------------------------------------------
\60\ Bohl, J., Novak, D., & Karcher, J. (2022, September 8).
Comment Letter on Cost-Sharing Reduction Premium Load Factors.
American Academy of Actuaries. https://www.actuary.org/sites/default/files/2022-09/Academy_CSR_Load_Letter_09.08.22.pdf.
---------------------------------------------------------------------------
Response: We appreciate the comments on potential approaches to
change the current CSR adjustment factors and, as previously noted, are
continuing to study these issues for potential updates to these factors
in future benefit years. We did not propose and are not adopting any
changes to the CSR adjustment factors. With policies finalized in the
2023 Payment Notice (87 FR 27241 through 27243), we have the ability to
extract and use enrollee-level EDGE data with plan ID and rating area
markers to further analyze the CSR populations at a more granular level
to further consider potential changes to these factors for future
benefit years, as well as other potential approaches. This includes
consideration of the American Academy of Actuaries letter regarding
accounting for the receipt of CSRs in the HHS-operated risk adjustment
program and plan rating.\61\ As part of this effort, we will also
consider interested parties' analysis and comments on potential
approaches under consideration, including the feedback provided by
these commenters. We are aware of the interaction that potential future
changes to the CSR adjustment factors may have with regard to the ACA's
single risk pool requirement, and confirm that any changes to the CSR
adjustment factors would be designed to align with other applicable
Federal market reforms. We also affirm that interested parties will
have an opportunity to comment on any potential changes to the CSR
adjustment factors for future benefit years, as those updates would be
pursued through notice-and-comment rulemaking.
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\61\ Ibid.
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f. Model Performance Statistics
Each benefit year, to evaluate risk adjustment model performance,
we examine each model's R-squared statistic and predictive ratios
(PRs). The R-squared statistic, which calculates the percentage of
individual variation explained by a model, measures the predictive
accuracy of the model overall. The PR for each of the HHS risk
adjustment model is the ratio of the weighted mean predicted plan
liability for the model sample population to the weighted mean actual
plan liability for the model sample population. The PR represents how
well the model does on average at predicting plan liability for that
subpopulation.
A subpopulation that is predicted perfectly will have a PR of 1.0.
For each of the current and proposed HHS risk adjustment models, the R-
squared statistic and the PRs are in the range of published estimates
for concurrent risk adjustment models.\62\ Because we are finalizing a
blend of coefficients from separately solved models based on the 2018,
2019, and 2020 benefit years' enrollee-level EDGE data, we are
publishing the R-squared statistic for each model separately to verify
their statistical validity. The R-squared statistics for the 2024
benefit models are shown in Table 8.
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\62\ Hileman, G., & Steele, S. (2016). Accuracy of Claims-Based
Risk Scoring Models. Society of Actuaries. https://www.soa.org/4937b5/globalassets/assets/files/research/research-2016-accuracy-claims-based-risk-scoring-models.pdf.
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[[Page 25775]]
[GRAPHIC] [TIFF OMITTED] TR27AP23.018
3. Overview of the HHS Risk Adjustment Methodology (Sec. 153.320)
In part 2 of the 2022 Payment Notice (86 FR 24183 through 24186),
we finalized the proposal to continue to use the State payment transfer
formula finalized in the 2021 Payment Notice for the 2022 benefit year
and beyond, unless changed through notice-and-comment rulemaking. We
explained that under this approach, we will no longer republish these
formulas in future annual HHS notice of benefit and payment parameter
rules unless changes are being proposed. We did not propose any changes
to the formula in the proposed rule, and therefore, are not
republishing the formulas in this rule. We will continue to apply the
formula as finalized in the 2021 Payment Notice (86 FR 24183 through
24186) \63\ in the States where HHS operates the risk adjustment
program in the 2024 benefit year. Additionally, as finalized in the
2020 Payment Notice (84 FR 17466 through 17468), we will maintain the
high-cost risk pool parameters for the 2020 benefit year and beyond,
unless amended through notice-and-comment rulemaking. We did not
propose any changes to the high-cost risk pool parameters for the 2024
benefit year; therefore, we will maintain the $1 million threshold and
60 percent coinsurance rate.
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\63\ Discussion provided an illustration and further details on
the State payment transfer formula.
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We summarize and respond to public comments received on the HHS
risk adjustment methodology below.
Comment: A few commenters asserted that using a population's
history of health care utilization, as the HHS-operated risk adjustment
program currently does, entrenches resource disparities and barriers to
health care access, and shifts resources from issuers serving lower-
income communities to issuers serving higher-income communities in the
State of Massachusetts. These commenters also stated that they believe
HHS should include social determinants of health (SDOH) as factors in
the HHS risk adjustment models. The commenters stated that using the
Statewide average premium as a scaling factor in the State payment
transfer formula amplifies the transfer of funds away from issuers with
low-priced provider networks, who disproportionately serve lower-income
communities.
Response: We appreciate these comments, which were based on
findings in a report released by the Massachusetts Attorney General's
Office titled Examination of Health Care Cost Trends and Cost Drivers
2022,\64\ but do not believe that changes to the HHS-operated risk
adjustment program are warranted at this time based on this report, as
the findings do not appear to be applicable to other States. Following
the release of the report, we analyzed available enrollee-level EDGE
data to investigate whether the findings of the report were applicable
in other State markets. We found that the Massachusetts merged market
exhibits a unique combination of characteristics, including a highly
segmented market where some issuers serve primarily CSR enrollees while
other issuers primarily serve off-Exchange enrollees, and a uniquely
healthy CSR population, that create an environment in which issuers
that serve low-income communities can be assessed charges in that
State's market risk pools. In particular, because the HHS-operated risk
adjustment program is intended to transfer funds from lower-than-
average risk plans to higher-than-average risk plans, a plan with a
uniquely healthy population, whether because it has a uniquely healthy
CSR population or a healthy general population, can be assessed a risk
adjustment charge.
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\64\ See Examination of Health Care Cost Trends and Cost Drivers
2022. Available at https://www.mass.gov/files/documents/2022/11/02/2022-11-2%20COST-TRENDS-REPORT_PUB_DRAFT4_HQ.pdf.
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No other State exhibits the same combination of unique
characteristics discussed in this section as the State of
Massachusetts. Therefore, we have concerns about proposing changes to
the HHS-operated risk adjustment program, including changes with regard
to the use of the Statewide average premium as a scaling factor in the
State payment transfer formula, based on a report that is Massachusetts
specific and reflects the unique market conditions of a single State.
Furthermore, in light of the unique combination of characteristics of
Massachusetts's CSR population discussed elsewhere in this section, we
believe that under the existing HHS risk adjustment methodology, the
transfer charges and payments assessed in the Massachusetts merged
market risk pool reflect a reasonably accurate estimate for the
relative risk incurred by issuers in that State. We also reiterate that
HHS chose to use Statewide average premium and normalize the risk
adjustment State payment transfer formula to reflect State average
factors so that each plan's enrollment characteristics are compared to
the State average and the calculated payment amounts equal calculated
charges in each State market risk pool.
[[Page 25776]]
Thus, each plan in the risk pool receives a risk adjustment payment or
charge designed to compensate for risk for a plan with average risk in
a budget-neutral manner. This approach supports the overall goals of
the HHS-operated risk adjustment program, which are to encourage
issuers to rate for the average risk in the applicable State market
risk pool, to stabilize premiums, and to avoid the creation of
incentives for issuers to operate less efficiently, set higher prices,
or develop benefit designs or marketing strategies to avoid high-risk
enrollees.\65\
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\65\ 84 FR 17480 through 17484.
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We also appreciate the comments on including SDOH as factors in the
HHS risk adjustment models. In the 2023 Payment Notice, HHS solicited
comments on ways to incentivize issuers to design plans that improve
health equity and health conditions in enrollees' environments, as well
as sought comments on the potential future collection and extraction of
z codes (particularly Z55-Z65), a subset of ICD-10-CM encounter reason
codes used to identify, analyze, and document SDOH, as part of the
required EDGE data submissions. We continue to review and consider the
public comments related to the collection and extraction of z codes to
inform analysis and policy development for the HHS-operated risk
adjustment program. In the interim, we note that including SDOH in the
HHS-operated risk adjustment models would require careful consideration
because doing so could actually increase health disparities rather than
reduce them. For example, if individuals who have a particular SDOH
factor in risk adjustment tended to underutilize health care services
relative to their health status, including that factor in the HHS-
operated risk adjustment models could perpetuate, and possibly
exacerbate, the under compensation of issuers for enrollees that
receive that factor in risk adjustment. Such a dynamic may incentivize
risk selecting behavior among issuers. Furthermore, we have concerns
about the reliability of existing data for determining if an enrollee
has SDOH and what documentation would be needed from the issuer to
verify them.\66\ We continue to analyze data in this area, especially
as new enrollee-level EDGE data elements become available, and would
propose any changes to the HHS risk adjustment models or HHS-operated
risk adjustment program through notice-and-comment rulemaking.
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\66\ See, for example, the analysis of z codes at 87 FR 632.
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4. Repeal of Risk Adjustment State Flexibility To Request a Reduction
in Risk Adjustment State Transfers (Sec. 153.320(d))
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78237), we proposed to repeal the
flexibility under Sec. 153.320(d) for prior participant States \67\ to
request reductions of risk adjustment State transfers under the State
payment transfer formula in all State market risk pools for the 2025
benefit year and beyond. We also solicited comment on Alabama's
requests to reduce risk adjustment State transfers in the individual
(including the catastrophic and non-catastrophic risk pools) and small
group markets for the 2024 benefit year. After reviewing public
comments, we are approving Alabama's requests for the 2024 benefit year
and finalizing the proposal to repeal the flexibility for prior
participant States to request transfer reductions for the 2025 benefit
year and beyond.
---------------------------------------------------------------------------
\67\ Alabama is the only State that has previously requested a
reduction in risk adjustment transfers through this flexibility, and
therefore, is the only State considered a ``prior participant
State''.
---------------------------------------------------------------------------
a. Repeal of State Flexibility To Request Transfer Reductions
In the proposed rule (87 FR 78237 through 78238), we proposed to
amend Sec. 153.320(d) to repeal the ability for prior participant
States to request a reduction in risk adjustment State transfers
beginning with the 2025 benefit year. As part of this repeal, we
proposed conforming amendments to the introductory text of Sec.
153.320(d), which currently provides that prior participant States may
request to reduce risk adjustment transfers in all State market risk
pools by up to 50 percent beginning with the 2024 benefit year, to
remove this flexibility for the 2025 benefit year and beyond and limit
the timeframe available for prior participants to request reductions to
the 2024 benefit year only. Similarly, we proposed conforming
amendments to paragraphs (d)(1)(iv) and (d)(4)(i)(B), which describe
the conditions for a prior participant State to request a reduction
beginning with the 2024 benefit year, to also limit these requests to
the 2024 benefit year only and to eliminate the ability for prior
participant States to request a reduction for the 2025 benefit year and
beyond. After reviewing public comments, we are finalizing these
proposals as proposed.
In the 2019 Payment Notice (83 FR 16955 through 16960), we amended
Sec. 153.320 to add paragraph (d) to provide States the flexibility to
request a reduction to the applicable risk adjustment State transfers
calculated by HHS using the State payment transfer formula for the
State's individual (catastrophic or non-catastrophic risk pools), small
group, or merged market risk pool by up to 50 percent in States where
HHS operates the risk adjustment program to more precisely account for
differences in actuarial risk in the applicable State's markets
beginning with the 2020 benefit year. We finalized that any requests we
received would be published in the applicable benefit year's proposed
HHS notice of benefit and payment parameters, and the supporting
evidence provided by the State in support of its request would be made
available for public comment.\68\
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\68\ If the State requests that HHS not make publicly available
certain supporting evidence and analysis because it contains trade
secrets or confidential commercial or financial information within
the meaning of HHS' Freedom of Information Act regulations at 45 CFR
5.31(d), HHS will only make available on the CMS website the
supporting evidence submitted by the State that is not a trade
secret or confidential commercial or financial information by
posting a redacted version of the State's supporting evidence. See
Sec. 153.320(d)(3).
---------------------------------------------------------------------------
In the 2023 Payment Notice (87 FR 27236), we limited this
flexibility by finalizing amendments to Sec. 153.320(d) that repealed
the State flexibility framework for States to request reductions in
risk adjustment State transfer payments for the 2024 benefit year and
beyond, with an exception for prior participants.\69\ We also limited
the options for prior participants to request reductions by finalizing
that beginning with the 2024 benefit year, States submitting reduction
requests must demonstrate that the requested reduction satisfies the de
minimis standard--that is, the premium increase necessary to cover the
affected issuer's or issuers' reduced risk adjustment payments does not
exceed 1 percent in the relevant State market risk pool.\70\ In the
2023 Payment Notice (87 FR 27239 through 27241), we also finalized
conforming amendments to the HHS approval framework in Sec.
153.320(d)(4) to reflect the changes to the applicable criteria (that
is, only retaining the de minimis criterion) beginning with the 2024
benefit year, and we finalized the proposed definition of ``prior
participant'' in Sec. 153.320(d)(5). In
[[Page 25777]]
addition, we indicated our intention to propose in future rulemaking to
repeal the exception for prior participants beginning with the 2025
benefit year.\71\
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\69\ Section 153.320(d)(5) defines prior participants as States
that submitted a State reduction request in the State's individual
catastrophic, individual non-catastrophic, small group, or merged
market risk pool in the 2020, 2021, 2022, or 2023 benefit year.
\70\ 87 FR 27239 through 27241. See also 83 FR 16957.
\71\ Ibid.
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Since finalizing the ability for States to request a reduction of
risk adjustment transfers in the 2019 Payment Notice (83 FR 16955
through 16960), we received public comments on subsequent proposed
rulemakings requesting that HHS repeal this policy, with several
commenters noting that reducing risk adjustment transfers to plans with
higher-risk enrollees could create incentives for issuers to avoid
enrolling high-risk enrollees in the future by distorting plan
offerings and designs, including by avoiding broad network plans, not
offering platinum plans at all, and only offering limited gold plans.
Commenters further stated that issuers could also distort plan designs
by excluding coverage or imposing high cost-sharing for certain drugs
or services. For example, one commenter stated that the risk adjustment
State payment transfer formula already adjusts for differences in types
of individuals enrolled in different States and aggregate differences
in prices and utilization by using the Statewide average premium as a
scaling factor, so State flexibility to account for State-specific
factors is unnecessary.\72\ In addition, we noted that since
establishing this framework, we have observed a lack of interest from
States in using this policy. Only one State (Alabama) has exercised
this flexibility and requested reductions to transfers in its
individual and/or small group markets.\73\
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\72\ See Fielder, M, & Layton, T. (2020, December 30). Comment
Letter on 2022 Payment Notice Proposed Rule. Brookings. https://www.brookings.edu/wp-content/uploads/2020/12/FiedlerLaytonCommentLetterNBPP2022.pdf.
\73\ For the 2020 and 2021 benefit years, Alabama submitted a 50
percent risk adjustment transfer reduction request for its small
group market, which HHS approved in the 2020 Payment Notice (84 FR
17454) and in the 2021 Payment Notice (85 FR 29164). For the 2022
and 2023 benefit years, Alabama submitted 50 percent risk adjustment
transfer reduction requests for its individual and small group
markets. HHS approved the State's requests for the 2022 benefit year
in part 2 of the 2022 Payment Notice final rule (86 FR 24140) and
approved a 25 percent reduction for Alabama's individual market
State transfers (including the catastrophic and non-catastrophic
risk pools) and a 10 percent reduction for the State's small group
market transfers for the 2023 benefit year in the 2023 Payment
Notice (87 FR 27208).
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As discussed in the proposed rule, HHS believes the complete repeal
of the option for States to request reductions in risk adjustment State
transfers will align HHS policy with section 1 of E.O. 14009 (86 FR
7793), which prioritizes protecting and strengthening the ACA and
making high-quality health care accessible and affordable for all
individuals. Section 3 of E.O. 14009 directs HHS, and the heads of all
other executive departments and agencies with authorities and
responsibilities related to Medicaid and the ACA, to review all
existing regulations, orders, guidance documents, policies, and any
other similar agency actions to determine whether they are inconsistent
with policy priorities described in section 1 of E.O. 14009. Consistent
with this directive, we reviewed the risk adjustment State flexibility
under Sec. 153.320(d) and determined it is inconsistent with policies
described in sections 1 and 3 of E.O. 14009. We noted that we believe a
complete repeal of Sec. 153.320(d) will prevent the potential negative
outcomes of risk adjustment State flexibility identified through public
comment, including the possibility of risk selection, market
destabilization, increased premiums, smaller networks, and less-
comprehensive plan options, the prevention of which will protect and
strengthen the ACA and make health care more accessible and affordable.
For all of these reasons, we proposed to amend Sec. 153.320(d) to
repeal the flexibility for prior participant States to request
reductions of risk adjustment State transfers calculated by HHS under
the State payment transfer formula in all State market risk pools
beginning with the 2025 benefit year. We noted in the proposed rule
that if these amendments are finalized, no State will be able to
request a reduction in risk adjustment transfers calculated by HHS
under the State payment transfer formula starting with the 2025 benefit
year.
We summarize and respond to public comments received on the
proposal to repeal the flexibility for prior participant States to
request reductions of risk adjustment State transfers calculated by HHS
under the State payment transfer formula in all State market risk pools
beginning with the 2025 benefit year below.
Comment: Several commenters supported the proposal to repeal the
ability for States to request a reduction in risk adjustment State
transfers due to concerns that the reduction in transfers would
contribute to adverse selection, increase premiums, and reduce plan
options. Commenters stated that reducing risk adjustment State
transfers incentivizes issuers to ``cherry-pick'' lower-risk enrollees
as they would not have to contribute the full difference in risk to
support the cost of higher-risk individuals enrolled by other issuers.
Commenters also noted that the HHS risk adjustment methodology already
accounts for differences in State market conditions and that States can
run their own risk adjustment programs if they do not think the HHS-
operated risk adjustment program works for their State. Some commenters
expressed concerns about the potential negative impacts, such as
reduced plan quality and increased risk selection, of allowing transfer
reductions in the prior participant State's markets. One commenter
stated that repealing this flexibility would provide stability and
certainty for the markets.
Conversely, several commenters opposed the proposal, stating that
they support the ability for States to make their own decisions about
how best to address the unique circumstances of their insurance
markets. Some commenters also noted that HHS has the ability to review
and reject these requests, indicating that there are appropriate
guardrails in place such that States should continue to be offered this
flexibility. Additionally, some commenters asserted that other States
may develop the same market dynamics as the one prior participating
State and should have the same ability to request reductions. One
commenter noted concerns with the ability for States to run their own
risk adjustment programs, due to the costs to implement such a program
within a State. Finally, one commenter stated that the prior
participant State had not observed any of the concerns regarding market
destabilization or reduced plan offerings as a result of the requests,
so the prior participant State should continue to be permitted to
request transfer reductions.
Response: We agree with the comments submitted in support of this
proposal and are finalizing as proposed the repeal of the exception for
prior participant States to request a reduction in risk adjustment
State transfers of up to 50 percent in any State market risk pool
beginning with the 2025 benefit year. We reiterate that a strong risk
adjustment program is necessary to support stability and address
adverse selection in the individual and small group markets. We are
concerned that retaining the State flexibility framework could
undermine these goals in the long-term. As explained in 2023 Payment
Notice and the proposed rule, our further consideration of prior
feedback from interested parties, along with consideration of the State
flexibility framework under E.O. 14009 and the very low level of
interest from States since the policy was adopted, resulted in an
evaluation of whether this flexibility should continue and in what
[[Page 25778]]
manner.\74\ In the 2023 Payment Notice, we finalized the proposed
amendments to Sec. 153.320(d) to repeal the State flexibility
framework beginning with the 2024 benefit year, with an exception for
prior participant States.\75\ We also announced our intention to
propose in future rulemaking to repeal the exception for prior
participants beginning with the 2025 benefit year to provide impacted
parties additional time to prepare for the potential elimination of
this flexibility.\76\ After reviewing public comments on the proposed
repeal of the exception for prior participant States, we are finalizing
the repeal of the prior participant exception, as proposed.
---------------------------------------------------------------------------
\74\ See 87 FR 27239 through 27241. Also see 87 FR 78237 through
78238.
\75\ 87 FR 27239 through 27241.
\76\ Ibid.
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As noted above and in the proposed rule, we believe that a complete
repeal of the State flexibility framework in Sec. 153.320(d) by
removing the prior participant exception beginning with the 2025
benefit year will prevent the potential negative outcomes of States'
risk adjustment transfer reduction requests identified by several
commenters, including the possibility of risk selection or ``cherry-
picking'' lower-risk enrollees, market destabilization, increased
premiums, smaller networks, and less-comprehensive plan options. The
prevention of these potential negative outcomes would serve to further
protect and strengthen the ACA, protect enrollees from potential
``cherry-picking'' practices, and make health care coverage more
accessible and affordable. As such, despite our ability to review and
reject risk adjustment transfer reduction requests, we are still of the
view that the State flexibility framework is inconsistent with policies
described in sections 1 and 3 of E.O. 14009 and a complete repeal would
better support the goals of the HHS-operated risk adjustment program
and ultimately the ACA.
With respect to the prior participant State, the State experienced
new entrants to the individual market for the 2022 benefit year, but it
has seen issuers both entering and exiting its markets for the 2023
benefit year, so it is not clear that the State has seen market
stabilization or improved plan quality since its reduction requests
have been approved. A more detailed discussion of the prior participant
State's market dynamics appears in the section below regarding
Alabama's 2024 risk adjustment transfer reduction requests.
We agree with commenters who noted that States are best able to
make their own decisions about how to address the unique circumstances
of their insurance markets and remain the primary regulators of their
insurance markets. We also understand that it is possible that other
States may develop the same market dynamics as the one prior
participating State. At the same time, however, States have shown a low
level of interest in submitting requests to reduce transfers calculated
by HHS under the State payment transfer formula. Between the 2020
benefit year and 2023 benefit year, all States had the opportunity to
submit reduction requests under Sec. 153.320(d), and yet only one
State did so.\77\ As discussed in the 2023 Payment Notice (87 FR
27240), we believed it was appropriate to provide a transition for the
prior participant State, starting with the policies and amendments
finalized in the 2023 Payment Notice that apply beginning with the 2024
benefit year. However, we continue to be concerned about the potential
long-term impact of allowing reductions to risk adjustment State
transfers in any State market risk pool, including the potential
negative impacts on the program's ability to mitigate adverse selection
and support stability in the individual and small group (including
merged) markets. We are therefore finalizing a full repeal of the State
flexibility framework (for all States) beginning in the 2025 benefit
year in this final rule.
---------------------------------------------------------------------------
\77\ Alabama is the only State that has requested a reduction in
risk adjustment transfers through this flexibility and therefore is
the only State considered a ``prior participant State''.
---------------------------------------------------------------------------
Furthermore, since the 2014 benefit year, all States have had the
opportunity to operate their own risk adjustment program and, to date,
only one State has done so.\78\ Despite a broad range of market
conditions across the 50 States and the District of Columbia, only two
States have expressed interest in tailoring risk adjustment to address
the unique circumstances of their insurance markets, which suggests
States generally do not want to operate their own risk adjustment
program. It also offers evidence that the HHS-operated risk adjustment
program works across a broad range of market conditions to mitigate
adverse selection in the individual and small group (including merged)
markets. We also agree with commenters that the HHS risk adjustment
methodology already accounts for differences in State market
conditions. For example, the use of the Statewide average premium in
the risk adjustment State payment transfer formula accounts for
differences in State market conditions by scaling a plan's transfer
amount based on the determination of plan average risk within a State
market risk pool. The State payment transfer formula also includes a
geographic cost factor (GCF), which adjusts at the rating area level
for the many costs, such as input prices and medical care utilization,
that vary geographically and are likely to affect premiums.\79\
---------------------------------------------------------------------------
\78\ Massachusetts operated a State-based risk adjustment
program for the 2014 through 2016 benefit years.
\79\ See ``March 31, 2016 HHS-Operated Risk Adjustment
Methodology Meeting Discussion Paper,'' CMS (2016, March 24),
available at https://www.cms.gov/cciio/resources/forms-reports-and-
other-resources/downloads/ra-march-31-white-paper-032416.pdf for
more information on the GCF.
---------------------------------------------------------------------------
Commenters are also correct that States continue to have the option
to operate their own risk adjustment program if the State believes the
risk adjustment program for the individual and small group (including
merged) markets should be tailored to capture its State-specific
dynamics. At the same time, we appreciate there are a number of
different factors States consider when weighing whether to operate a
State-based risk adjustment program, including but not limited to the
costs associated with establishing and maintaining such a program. We
stand ready to work with any State that is interested in operating its
own risk adjustment program for the individual and small group
(including merged) markets. Furthermore, now that we are collecting and
extracting additional data elements--like plan ID, Zip Code, and rating
area--from issuers' EDGE servers, as finalized in the 2023 Payment
Notice (87 FR 27244 through 27252), we are better equipped to further
evaluate State market conditions at various levels as we consider
future changes to the HHS-operated risk adjustment program, as
applicable. We also remain committed to working with States and other
interested parties to encourage new market participants, mitigate
adverse selection, and promote stable insurance markets through strong
risk adjustment programs.
b. Requests To Reduce Risk Adjustment Transfers for the 2024 Benefit
Year
For the 2024 benefit year, HHS received requests from Alabama to
reduce risk adjustment State transfers for its individual \80\ and
small group markets by 50 percent. As in previous years, Alabama
asserted that the HHS-operated risk adjustment program does not work
precisely in the Alabama market, clarifying that they do not assert
[[Page 25779]]
that the risk adjustment formula is flawed, only that it produces
imprecise results in Alabama, which has an ``extremely unbalanced
market share.'' The State reported that its review of issuers' 2021
financial data suggested that any premium increase resulting from a
reduction of 50 percent to the 2024 benefit year risk adjustment
payments for the individual market would not exceed one percent, the de
minimis premium increase threshold set forth in Sec. 153.320(d)(1)(iv)
and (d)(4)(i)(B). Additionally, the State reported that its review of
issuers' 2021 financial data also suggested that any premium increase
resulting from a 50 percent reduction to risk adjustment payments in
the small group market for the 2024 benefit year would not exceed the
de minimis threshold of one percent.
---------------------------------------------------------------------------
\80\ Alabama's individual market request is for a 50 percent
reduction to risk adjustment transfers for its individual market
non-catastrophic and catastrophic risk pools.
---------------------------------------------------------------------------
In the proposed rule (87 FR 782378), we sought comment on Alabama's
requests to reduce risk adjustment State transfers in its individual
and small group markets by 50 percent for the 2024 benefit year. The
request and additional documentation submitted by Alabama were posted
under the ``State Flexibility Requests'' heading at https://www.cms.gov/cciio/programs-and-initiatives/premium-stabilization-programs and under the ``Risk Adjustment State Flexibility Requests''
heading at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance#Premium-Stabilization-Programs.
After reviewing the public comments, we are approving Alabama's
requests to reduce risk adjustment State transfers in its individual
and small group markets by 50 percent for the 2024 benefit year. We
summarize and respond to public comments received on Alabama's
reduction requests below.
Comment: A few commenters supported Alabama's requests to reduce
risk adjustment State transfers in its individual and small group
markets by 50 percent for the 2024 benefit year. These commenters
stated that the HHS-operated risk adjustment program is not effective
in Alabama due to its extreme market dynamics and that the State has
not seen a loss of broad network, platinum, or gold plans as some
interested parties had feared would result from the reductions in prior
years.
However, other commenters opposed Alabama's 2024 benefit year
reduction requests, stating that the requested reductions would
diminish the effectiveness of the HHS-operated risk adjustment program.
One commenter stated that there was no mathematical reason why the
presence of one large issuer would preclude the HHS-operated risk
adjustment program from functioning appropriately in Alabama.
Some commenters also asserted that the State did not meet its
burden to substantiate the requests under the criteria established in
Sec. 153.320(d). These commenters argued that the State did not
consider in its analysis changes to the risk adjustment models, issuer
participation, market conditions, benefit design offerings, network
breadth, premium changes, or consumer behavior. A few of these
commenters suggested that the State be required to provide more
detailed analysis with its requests about the impact of transfer
reductions on premiums and issuer participation. One of these
commenters provided detailed data it previously submitted in comments
in response to Alabama's reduction requests for the 2023 benefit year,
asserting the requested individual market transfer reduction would
again increase premiums for one impacted Alabama issuer by an amount
greater than the de minimis threshold (that is, more than 1 percent
increase in its premiums) for the 2024 benefit year. This commenter
noted that, based on their experience from the 2022 benefit year (the
first year for which the State requested and HHS approved a 50 percent
reduction in risk adjustment State transfers calculated by HHS for the
individual market), the 50 percent reduction in Alabama individual
market transfers for 2022 led to an approximately 2 percent increase in
their premiums for that year, which exceeds the de minimis threshold
and was approved by the State in the issuer's rate filings.\81\ This
commenter stated that they anticipated the impact for the 2024 benefit
year, were HHS to approve Alabama's requests, would be similar.
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\81\ Blue Cross and Blue Shield of Alabama Comment Letter.
(2023, January 27). CMS. https://www.regulations.gov/comment/CMS-2022-0192-0100.
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Finally, a few commenters stated that if HHS were to approve
Alabama's requests, it should approve percentage reductions no higher
than what it approved for the 2023 benefit year; that is, 25 percent in
the individual market and 10 percent in the small group market.\82\
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\82\ See 87 FR 27208 at 27236 through 27239.
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Response: We appreciate the comments in support of HHS's approval
of Alabama's 2024 benefit year reduction requests and are approving
Alabama's requests to reduce risk adjustment transfers for the 2024
benefit year in the individual and small group markets by 50 percent,
as Alabama met the criteria set forth in Sec. 153.320(d)(4)(i)(B).
We continue to believe and recognize that risk adjustment is
critical to the proper functioning of the individual and small group
(including merged) markets, and we acknowledge commenters' concerns
that approving requested reductions in risk adjustment transfers could
impact the effectiveness of the HHS-operated risk adjustment program,
which is why we are repealing the exception for prior participant
States to request risk adjustment transfer reductions beginning with
the 2025 benefit year, as discussed in detail in the preamble section
above. However, under existing HHS regulations, Alabama was permitted
to submit a reduction request for the 2024 benefit year,\83\ and they
did so in the manner set forth in Sec. 153.320(d)(1).\84\ As such, we
are obligated to consider Alabama's request consistent with the
regulatory framework applicable for the 2024 benefit year.
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\83\ As explained in the 2023 Payment Notice, we finalized
amendments to Sec. 153.320(d), including the creation of the prior
participant exception following our further consideration of the
State flexibility framework under E.O, 14009. See 87 FR 27240. We
also announced our intention to repeal the prior participant
exception in future rulemaking beginning with the 2025 benefit year
to provide impacted parties additional time to prepare for this
change and potential elimination of this flexibility. Ibid.
\84\ The State's request must also include supporting evidence
and analysis demonstrating the State-specific factors that warrant
any adjustment to more precisely account for the differences in
actuarial risk in the applicable market risk pool, as well as
identify the requested adjustment percentage of up to 50 percent for
the applicable market risk pools. See 45 CFR 153.320(d)(1)(i) and
(ii). In addition, the State must submit the request by August 1 of
the benefit year that is 2 calendar years prior to the applicable
benefit year, in the form and manner specified by HHS. See 45 CFR
153.320(d)(2).
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Our review and approval of the risk adjustment State transfer
reduction requests submitted by Alabama for the 2024 benefit year are
guided by the framework and criteria established in regulation under
Sec. 153.320(d) applicable to prior participants. Consistent with
Sec. 153.320(d)(1)(iv), prior participants are required to demonstrate
their requests satisfy the de minimis impact standard. Under this
standard, the requesting State is required to show that the requested
transfer reduction would not cause premiums in the relevant market risk
pool to increase by more than 1 percent. For the 2024 benefit year,
Sec. 153.320(d)(4) provides that we will approve State reduction
requests if we determine, based on a review of the State's submission,
along with other relevant factors, including the premium impact of the
reduction, and relevant
[[Page 25780]]
public comments, that the requested reduction would have a de minimis
impact on the necessary premium increase to cover the transfers for
issuers that would receive reduced transfer payments.\85\
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\85\ HHS is also required to publish State reduction requests
and to make the State's supporting evidence available to the public
for the comment, with certain exceptions. See 45 CFR 153.320(d)(3).
HHS must also publish any approved or denied State reduction
requests. Ibid.
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The evidence provided by Alabama in support of its requests to
reduce risk adjustment State transfers by 50 percent in its individual
and small group markets was sufficient to justify its request under the
de minimis requirement for HHS approval under Sec.
153.320(d)(4)(i)(B). We further note that Alabama requested that,
consistent with Sec. 153.320(d)(3), HHS not publish certain
information in support of its request because it contained trade
secrets or confidential commercial or financial information. If the
State requests that HHS not make publicly available certain supporting
evidence and analysis because it contains trade secrets or confidential
commercial or financial information within the meaning of the HHS
Freedom of Information Act (FOIA) regulations at 45 CFR 5.31(d), HHS
will only make available on the CMS website the supporting evidence
submitted by the State that is not a trade secret or confidential
commercial or financial information by posting a redacted version of
the State's supporting evidence.\86\ Consistent with the State's
request, we posted a redacted version of the supporting evidence for
Alabama's request. However, when evaluating the State's reduction
requests, we reviewed the State's un-redacted supporting analysis,
along with other data available to HHS and the relevant public comments
submitted within the applicable comment period for the proposed rule.
We conducted a comprehensive analysis of the available information and
found the supporting evidence submitted by Alabama to be sufficient to
support its 2024 benefit year requests.
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\86\ See Sec. 153.320(d)(3).
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We recognize there is some level of uncertainty regarding future
market dynamics, including their potential impact on future benefit
year transfers. However, to align with the annual pricing cycle for
health insurance coverage, the applicable risk adjustment parameters
(including approval or denial of State flexibility reduction requests
for the 2024 benefit year from prior participants) must generally be
finalized sufficiently in advance of the applicable benefit year to
allow issuers to consider such information when setting rates.\87\ As
such, there will always be an opportunity for some uncertainty
regarding the precise impact of future methodological changes (such as
the risk adjustment model changes applicable beginning with the 2023
benefit year) or unforeseen events (such as unwinding and its impact on
enrollment and utilization).
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\87\ See 45 CFR 153.320(d)(2) and (3). Also see the 2019 Payment
Notice (83 FR 16955 through 16960), which explained the timing for
this process was intended to permit plans to incorporate approved
adjustments in their rates for the applicable benefit year.
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With respect to Alabama's 2024 benefit year requests, our review of
the evidence submitted by Alabama in support of its transfer reduction
requests was sufficient, along with other information available to HHS
and timely submitted comments, to confirm the requests meet the
criteria for approval set forth in Sec. 153.320(d)(4)(i)(B).
For the individual market, the State provided information in
support of its 50 percent reduction request, including its analysis
that the reduction requested would have a de minimis impact on
necessary premium increases. In alignment with our approach in previous
years' consideration of the reduction requests, we analyzed the
information provided by the State in support of its request, along with
additional data and information available to HHS, separately by market
and found that the request meets the de minimis regulatory standard in
the individual market.
More specifically, we began our review of the State's individual
market request with consideration of available 2021 EDGE data \88\ and
the State's submitted analysis. Using the most recent 2021 plan-level
data available to us,\89\ we estimated transfer calculations as a
percent of premiums, which indicated that the risk adjustment payment
recipient would not have to increase premiums by 1 percent or more to
cover a 50 percent reduction in individual market transfers. Therefore,
our analysis of the 2021 EDGE data supports the State's submitted
analysis that the 50 percent reduction in individual market transfers
for the 2024 benefit year would meet the de minimis regulatory
standard.
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\88\ Similar to our approach in considering Alabama's reduction
requests in previous years, we considered the most recent EDGE data
available (for example, for the 2023 benefit year, we considered
2020 EDGE data as part of the analysis). This included consideration
of available EDGE premium and risk adjustment transfer data.
\89\ Issuer specific BY 2021 risk adjustment transfers can be
found in Summary Report on Permanent Risk Adjustment Transfers for
the 2021 Benefit Year. (2022, July 19). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf. For BY 2021, the issuer specific
EDGE premium and enrollment data used for this analysis have not
been made public. However, plan-level QHP rates are available in the
Health Insurance Public Use Files. (2021). CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/marketplace-puf.
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We also considered detailed comments that provided evidence of
changing price and market share positions, using 2021 and 2022 data,
that raised questions about the impact a 50 percent reduction in
individual market transfers would have on premiums. One commenter (an
issuer in Alabama's individual market) stated that the 50 percent
reduction in individual market transfers approved by HHS for the 2022
benefit year caused them to increase premiums by more than 2
percent.\90\ The commenter believed the 25 percent reduction in
individual market transfers for the 2023 benefit year would also
violate the de minimis standard but did not provide data to this
effect. However, as discussed in the prior paragraph, our analysis of
the 2021 EDGE data did not provide any evidence to support these
commenters' claims.
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\90\ Commenter's analysis available at BCBSAL Comment Letter on
2024 NBPP AL RA Transfer Flexibility Request. (2023, January 27).
CMS. https://www.regulations.gov/comment/CMS-2022-0192-0100. Issuer
specific BY 2021 EDGE data and BY 2023 open enrollment data are not
publicly available. However, plan-level QHP rates are available in
the Health Insurance Exchange Public Use Files (2021, 2022, 2023).
CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/marketplace-puf.
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Therefore, to further consider these comments, including the prior
year premium analysis from an issuer in Alabama, we analyzed open
enrollment plan selection and premium data for the individual market in
Alabama for the 2023 benefit year. However, due to issuers entering and
exiting the Alabama individual market between the 2022 and 2023 benefit
years, we found the open enrollment data were not comparable between
benefit years, and we were unable to reasonably determine the effects
of the transfer reductions for the 2022 benefit year on the 2023
benefit year individual market dynamics. Therefore, similar to our
analysis of the 2021 EDGE data, our analysis of the 2023 benefit year
open enrollment data did not align with the commenter's analysis or
otherwise confirm premiums would increase by more than one (1) percent
and led us to have some concerns about the commenters' estimates using
a previous year's analysis that did not take into consideration new
data or recent
[[Page 25781]]
changes in market participation in Alabama's individual market.
For the small group market, the State provided information in
support of its 50 percent reduction request, including its analysis
that the reduction requested would have a de minimis impact on
necessary premium increases. HHS also analyzed enrollment and plan-
level data for Alabama's small group market for 2023 in reviewing
Alabama's transfer reduction request for its small group market. Due to
a lack of robust enrollment data for the small group market,\91\ we
considered the most recent available EDGE premium and enrollment plan-
level data available for the small group market to further analyze the
request, as in past years. Similar to the individual market analysis,
our analysis of the 2021 EDGE data supports the State's submitted
analysis that the 50 percent reduction in small group market transfers
for the 2024 benefit year would meet the de minimis regulatory
standard. Using the most recent 2021 plan-level data available to
us,\92\ we estimated transfer calculations as a percent of premiums,
which indicated that the risk adjustment payment recipient would not
have to increase premiums by 1 percent or more to cover a 50 percent
reduction in small group market transfers.
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\91\ HHS does not have the same open enrollment plan selection
and premium data on the small group market in Alabama as it does for
the individual market in Alabama; therefore, EDGE premium and
enrollment plan-level data were used for the small group market
assessment.
\92\ Issuer specific BY 2021 risk adjustment transfers can be
found in Summary Report on Permanent Risk Adjustment Transfers for
the 2021 Benefit Year. (2022, July 19). CMS. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf. For BY 2021, the issuer specific
EDGE premium and enrollment data used for this analysis have not
been made public. However, plan-level QHP rates are available in the
Health Insurance Public Use Files. (2021). CMS. https://www.cms.gov/CCIIO/Resources/Data-Resources/marketplace-puf.
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Therefore, as the review of information has determined that
Alabama's 2024 benefit year reduction requests for its individual and
small group markets would not exceed the de minimis threshold, we will
approve the amount of the reductions requested pursuant to Sec.
153.320(d)(4)(i)(B). The data and analysis available to us do not
support a reduction smaller than what was requested by the State.
In addition, the suggestion that the presence of one large issuer
would not preclude the HHS-operated risk adjustment program from
functioning as intended in the State's markets is not pertinent to
HHS's determination on the reduction requests, as the sole criteria we
have to evaluate the 2024 benefit year requests is the de minimis
standard in Sec. 153.320(d)(4)(i)(B).
Following our consideration of the State's submission and public
comments, we are approving Alabama's requests to reduce risk adjustment
State transfers by 50 percent in its individual and small group markets
for the 2024 benefit year. With the repeal of the prior participant
exception in Sec. 153.320(d), the 2024 benefit year is the last year
Alabama will be able to request reductions to HHS calculated transfers
under the State payment transfer formula.
5. Risk Adjustment Issuer Data Requirements (Sec. Sec. 153.610,
153.700, and 153.710)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78238), we proposed, beginning with the
2023 benefit year, to collect and extract from issuers' EDGE servers
through EDGE Server Enrollment Submission (ESES) files and risk
adjustment recalibration enrollment files a new data element, a
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
indicator, and to include this indicator in the enrollee-level EDGE
Limited Data Set (LDS) made available to qualified researchers upon
request once available. We also proposed to extract plan ID and rating
area data elements issuers have submitted to their EDGE servers from
certain benefit years prior to 2021. We sought comment on these
proposals. After reviewing public comments, we are finalizing both
proposals as proposed.
Section 153.610(a) requires that health insurance issuers of risk
adjustment covered plans submit or make accessible all required risk
adjustment data in accordance with the data collection approach
established by HHS \93\ in States where HHS operates the program on
behalf of a State.\94\ In the 2014 Payment Notice (78 FR 15497 through
15500; Sec. 153.720), HHS established an approach for obtaining the
necessary data for risk adjustment calculations in States where HHS
operates the program through a distributed data collection model that
prevented the transfer of individuals' personally identifiable
information (PII). Then, in several subsequent rulemakings,\95\ we
finalized policies for the extraction and use of enrollee-level EDGE
data. The purpose of collecting and extracting enrollee-level data is
to provide HHS with more granular data to use for recalibrating the HHS
risk adjustment models, informing updates to the AV Calculator,
conducting policy analysis, and calibrating HHS programs in the
individual and small group (including merged) markets and the PHS Act
requirements enforced by HHS that are applicable market-wide,\96\ as
well as informing policy and improving the integrity of other HHS
Federal health-related programs.\97\ The use of enrollee-level data
extracted from issuers' EDGE servers and summary level reports produced
from remote command and ad hoc queries enhances HHS' ability to develop
and set policy and limits the need to pursue alternative burdensome
data collections from issuers. We also previously finalized policies
related to creating on an annual basis an enrollee-level EDGE LDS using
masked enrollee-level data submitted to EDGE servers by issuers of risk
adjustment covered plans in the individual and small group (including
merged) markets and making this LDS available to requestors who seek
the data for research purposes.98 99
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\93\ Also see Sec. Sec. 153.700 through 153.740.
\94\ The full list of required data elements can be found in
Appendix A of OMB Control Number 0938-1155/CMS-10401. (2022, May
26). Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment. https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10401.
\95\ See the 2018 Payment Notice, 81 FR 94101; the 2020 Payment
Notice, 84 FR 17488; and the 2023 Payment Notice, 87 FR 27241.
\96\ See, for example, 42 U.S.C. 300gg-300gg-28.
\97\ As detailed in the 2023 Payment Notice, the finalized
policies related to the permitted uses of EDGE data and reports make
clear that HHS can use this information to inform policy analyses
and improve the integrity of other HHS Federal health-related
programs outside the commercial individual and small group
(including merged) markets to the extent such use of the data is
otherwise authorized by, required under, or not inconsistent with
applicable Federal law. See 87 FR 27243; 87 FR 630 through 631.
Examples of other HHS Federal health-related programs include the
programs in certain States to provide wrap-around QHP coverage
through Exchanges to Medicaid expansion populations and coverage
offered by non-Federal Governmental plans. Ibid.
\98\ See the 2020 Payment Notice, 84 FR 17486 through 17490 and
the 2023 Payment Notice, 87 FR 27243. Also see CMS. (2022, August
15). Enrollee-Level External Data Gathering Environment (EDGE)
Limited Data Set (LDS). https://www.cms.gov/research-statistics-data-systems/limited-data-set-lds-files/enrollee-level-external-data-gathering-environment-edge-limited-data-set-lds.
\99\ As explained in the 2020 Payment Notice, we do not
currently make the EDGE LDS available to requestors for public
health or health care operation activities. See 84 FR 17488.
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a. Collection and Extraction of the QSEHRA Indicator
We are finalizing, as proposed, that beginning with the 2023
benefit year, issuers will be required to collect and submit a QSEHRA
indicator as part of the required risk adjustment data that issuers
make accessible to HHS from
[[Page 25782]]
their respective EDGE servers in States where HHS operates the risk
adjustment program. This new data element will be included as part of
the enrollee-level EDGE data extracted from issuers' EDGE servers and
summary level reports produced from remote command and ad hoc queries
beginning with the 2023 benefit year.\100\ We are also finalizing, as
proposed, to include this indicator in the enrollee-level EDGE LDS made
available to qualified researchers upon request once available (that
is, beginning with 2023 benefit year data).
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\100\ The deadline for submission of 2023 benefit year risk
adjustment data is April 30, 2024. See Sec. 153.730.
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Beginning with the 2023 benefit year, we will provide additional
operational and technical guidance on how issuers should submit this
new data element to HHS through issuer EDGE servers via the applicable
benefit year's EDGE Server Business Rules and the EDGE Server Interface
Control Document, as may be necessary. HHS will also provide additional
details on what constitutes a good faith effort to ensure collection
and submission of the QSEHRA indicator in the future. HHS will seek
input from issuers and other interested parties to inform development
of the good faith standard and determine the most feasible methods for
issuers to collect the information used to populate this data
field.\101\
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\101\ If the burden estimate for collection of QSEHRA indicator
changes beginning with the 2025 benefit year (after the transitional
approach ends), the information collection under OMB control number
0938-1155 would be revised accordingly and interested parties would
be provided the opportunity to comment through that process.
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In the 2023 Payment Notice (87 FR 27241 through 27252), we
finalized that we will collect and extract an individual coverage
Health Reimbursement Arrangement (ICHRA) indicator and that we will
make this indicator available in the enrollee-level EDGE LDS beginning
with the 2023 benefit year. Since finalizing the collection of the
ICHRA indicator as part of the enrollee-level EDGE data extracted from
issuers' EDGE servers, we determined that also collecting and
extracting a QSEHRA indicator would provide a more thorough picture of
the actuarial characteristics of the Health Reimbursement Arrangement
(HRA) population and how or whether HRA enrollment is impacting State
individual and small group (including merged) market risk pools.
In the 2023 Payment Notice (87 FR 27248), we acknowledged that
ICHRA information is collected by HHS from FFE or SBE-FP enrollees
through the eligibility application process and from SBE enrollees
through the State Exchange enrollment and payment files, as well as
collected directly by issuers and their affiliated agents and brokers.
We also noted the ICHRA indicator was intended to capture whether a
particular enrollee's health care coverage involves (or does not
involve) an ICHRA and that we will structure this data element for EDGE
data submissions similar to current collections, where possible.
Additionally, we explained that the collection and extraction of an
ICHRA indicator as part of the required risk adjustment data
submissions issuers make accessible to HHS through their respective
EDGE servers provides more uniform and comprehensive information than
what is submitted by FFE and SBE-FP enrollees on a QHP application and
by SBE enrollees through enrollment and payment files, as it will
capture both on and off Exchange enrollees.
The same is also true for QSEHRA information and we therefore
proposed to apply the same approach for the QSEHRA indicator.
Currently, the FFEs and SBE-FPs collect information about QSEHRAs from
all applicants to determine whether they are eligible for an SEP, as
individuals and their dependents who become newly eligible for a QSEHRA
may be eligible for an SEP. SBEs also collect similar information from
their applicants to determine SEP eligibility. This data may also be
provided directly to issuers by consumers who seek to enroll in
coverage directly with the issuer.
In addition, an issuer may currently have or collect information
that could be used to populate the QSEHRA indicator in situations where
the issuer is being paid directly by the employer through the QSEHRA
for the individual market coverage. We therefore proposed to generally
permit issuers to populate the required QSEHRA indicator with
information from the FFE or SBE-FP enrollees or enrollees through SBEs,
or from other sources for collecting this information. The QSEHRA
indicator will be used to capture whether a particular enrollee's
health care coverage involves (or does not involve) a QSEHRA, and we
proposed to structure this data element for EDGE data submissions
similar to current collections, where possible.
We also proposed, similar to the transitional approach for the
ICHRA indicator finalized in the 2023 Payment Notice (87 FR 27241
through 27252), a transitional approach for the collection and
extraction of the QSEHRA indicator. For the 2023 and 2024 benefit
years, issuers would be required to populate the QSEHRA indicator using
only data they already collect or have accessible regarding their
enrollees. For example, when an FFE enrollee is using an SEP,
information about QSEHRA provision is collected by the FFE, and the FFE
may make these data available to issuers. In addition, as noted above,
there may be situations where an issuer has or collects information
that could be used to populate the QSEHRA indicator. Then, beginning
with the 2025 benefit year, we proposed that the transitional approach
would end, and issuers would be required to populate the QSEHRA field
using available sources (for example, information from Exchanges, and
requesting information directly from enrollees) and, in the absence of
an existing source for particular enrollees, to make a good faith
effort to ensure collection and submission of the QSEHRA indictor for
these enrollees.
In conjunction with the proposal to collect and extract this new
data element, we also proposed to include the QSEHRA indicator in the
LDS containing enrollee-level EDGE data that HHS makes available to
qualified researchers upon request once the QSEHRA indicator is
available, beginning with the 2023 benefit year. We further noted that
similar to the ICHRA indicator, the proposed QSEHRA indicator would not
be a direct identifier that must be excluded from an LDS under the
HIPAA Privacy Rule and thus would not add to the risk of enrollees
being identified. As noted in the 2023 Payment Notice (87 FR 27245),
only an LDS of certain masked enrollee-level EDGE data elements is made
available and this LDS is available only to qualified researchers if
they meet the requirements for access to such file(s), including
entering into a data use agreement that establishes the permitted uses
or disclosures of the information and prohibits the recipient from
identifying the information.\102\ \103\ In addition, consistent with
how we created the LDS in prior years, we would continue to exclude
data from the LDS that could lead to identification of certain
enrollees.\104\
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\102\ See CMS. (2020, June). Data Use Agreement. (Form CMS-R-
0235L). https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf. See also 84 FR 17486 through 17490.
\103\ CMS. (2020, June). Data Use Agreement. (Form CMS-R-0235L).
https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf.
\104\ See, for example, CMS. (2021, August 25). Creation of the
2019 Benefit Year Enrollee-Level EDGE Limited Data Sets: Methods,
Decisions and Notes on Data Use. https://www.cms.gov/files/document/2019-data-use-guide.pdf.
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[[Page 25783]]
We summarize and respond to public comments received on the
proposals related to the collection and extraction of a QSEHRA
indicator below.
Comment: Several commenters supported the collection and extraction
of a QSEHRA indicator, including the proposed transition for
implementation. One commenter, while supporting the proposal, did not
believe a QSEHRA indicator should factor into risk adjustment analyses
or calculations, stating that issuers currently have limited
information about HRA enrollment, and therefore should not be penalized
for not submitting HRA data.
Many commenters opposed the proposal to collect and extract a
QSEHRA indicator, citing significant operational concerns with
collecting and reporting a QSEHRA indicator, including that the data
are not currently or routinely collected, are difficult to obtain, are
inconsistent, unreliable, and complex, and therefore, would provide
little insight in policy analysis using these data, and would impose a
significant burden on issuers to determine how to collect and report
this data and then implement the required changes.
Response: We are finalizing, as proposed, the collection and
extraction of a QSEHRA indicator, including the proposed transition for
implementation. While we understand the concerns raised over the use of
QSEHRA in risk adjustment, particularly that there is currently limited
information about the population enrolled in QSEHRA and their
associated risk, we continue to believe that it is important to collect
this information to allow us to understand the associated risk profile
of this population and inform our analysis about whether any
refinements to the HHS risk adjustment methodology should be examined
or proposed through notice- and- comment rulemaking. Consistent with
the established policies governing the permitted uses of the enrollee-
level EDGE data, the additional information collected through the
QSEHRA indicator will also be used to inform policy analysis and
potential updates to the AV Calculator, other HHS individual or small
group (including merged) market programs, the PHS Act requirements
enforced by HHS that are applicable market-wide, or other HHS Federal
health-related programs.
To further explain, similar to the collection and reporting of an
ICHRA indicator finalized in the 2023 Payment Notice, collection of a
QSEHRA indicator will allow HHS to examine whether there are any unique
actuarial characteristics of the QSEHRA population (such as the health
status of participants), and provide a more thorough picture of the
actuarial characteristics of the HRA population and how or whether HRA
participation is impacting individual and small group (including
merged) market risk pools. A QSEHRA indicator will also allow HHS to
analyze whether the risk profile of participants in QSEHRAs differs
from participants in ICHRAs as ICHRAs differ with respect to standards
related to employer eligibility, employee eligibility, restrictions on
allowance amounts, and eligibility for PTCs (among others). While data
that may be used to populate a QSEHRA indicator may be limited or
incomplete at this time, we continue to believe that collecting this
information is valuable, will better inform potential refinements to
the HHS-operated risk adjustment program in future years, and will
improve our understanding of these markets. As occurs with any new data
collection requirement, HHS expects that over time, collection and
submission of a QSEHRA indicator will improve as issuers gain
experience with and develop processes for collecting and reporting the
indicator. In addition, we will not use the QSEHRA indicator or any
analysis that relied upon the indicator to pursue changes to our
policies until we conduct data quality checks and ensure the response
rate is adequate to support any analytical conclusions. Therefore, we
continue to believe that the benefits of finalizing the proposal
related to the collection and extraction of a QSEHRA indicator outweigh
potential concerns about reliability and consistency of data reporting.
Further, we proposed and are finalizing the adoption of a
transitional approach for collecting the QSEHRA indicator under which
issuers will be required to populate this new QSEHRA indicator using
data they already have or collect for the 2023 and 2024 benefit years.
This approach recognizes issuers may need time to develop processes for
collection and validation of this new data element. Then, beginning
with the 2025 benefit year, issuers will be required to populate the
field using available sources and, in the absence of an existing source
to populate the QSEHRA indicator for particular enrollees, issuers will
be required to make a good faith effort to ensure collection of this
data element. HHS will provide additional details on what constitutes a
good faith effort to ensure collection and submission of the QSEHRA
indicator in the future. Any issuers meeting this standard and making a
good faith effort to ensure collection and submission of the QSEHRA
indicator beginning with the 2025 benefit year data will not be
penalized for being unable to submit this information for a particular
individual. Similarly, HHS does not intend to penalize issuers who are
unable to populate the QSEHRA indicator with existing data sources
during the transitional approach for 2023 and 2024 benefit year data
submissions.
We acknowledge concerns that the new data collection could impose
additional administrative burden and may require operational changes to
develop, test, and validate submission of these data elements. As
further detailed in the section IV.C of this rule, we have estimated
the burden and costs associated with this new data collection.
Currently, all issuers that submit data to their EDGE servers have
automated the creation of data files that are submitted to their EDGE
servers for the existing required data elements, and each issuer will
need to update their file creation process to include the new data
element, which will require a one-time administrative cost. In addition
to adding this one-time cost, we also estimate that collection and
submission of the new data element will require an additional one hour
of work by a management analyst on an annual basis. This estimate
recognizes that information to populate the QSEHRA indicator data field
is not routinely collected by all issuers at this time.
Because we are adopting a transitional approach, under which
issuers will be required to populate the QSEHRA indicator data fields
using data they already have or collect for the 2023 and 2024 benefit
years, issuers are not required to make any changes to the manner in
which they currently collect the QSEHRA data element for the 2023 and
2024 benefit year submissions. This transition period allows additional
time for issuers to develop processes for collection and validation of
the data required for the new data fields. We are further mitigating
the burdens associated with the collection and submission of this new
data element by structuring it similar to current collections, where
possible. Similar to the ICHRA indicator, the QSEHRA indicator will
capture whether a particular enrollee's health care coverage involves
(or does not involve) a QSEHRA. HHS will provide additional operational
and technical guidance on how issuers should submit this new data
element to their respective EDGE servers via the applicable benefit
year's EDGE Server Business Rules and the
[[Page 25784]]
EDGE Server Interface Control Document, as may be necessary. After
consideration of comments, we continue to believe that the benefits of
collecting and extracting this data element outweigh the burdens and
costs associated with the new requirement.
Comment: Many commenters requested that HHS obtain QSEHRA
information from other sources, such as plan administrators and/or
employers.
Response: While we understand commenters' requests that we obtain
QSEHRA information from other sources, such as plan administrators or
employers, we decline to adopt this recommendation. We are finalizing
the proposal to collect this new data element through issuers' EDGE
server data to ensure that the QSEHRA data can be extracted and
aggregated with other claims and enrollment information data made
accessible to HHS by issuers of risk adjustment covered plans through
their respective EDGE servers. This collection and extraction with
claim data would not be possible if the QSEHRA data were collected from
other sources, such as from plan administrators or employers.\105\ As
outlined in the proposed rule, similar to the ICHRA indicator, we
considered that the FFEs and SBE-FPs collect information about QSEHRA
from all applicants to determine whether they are eligible for an SEP,
as individuals and their dependents who become newly eligible for a
QSEHRA may be eligible for an SEP. We further recognize that SBEs also
collect similar information from their applicants to determine SEP
eligibility. However, because the enrollee-level EDGE data uses a
masked enrollee ID, HHS similarly would not be able to match the QSEHRA
data collected by Exchanges for SEP purposes and the enrollee-level
EDGE data set. Relying on QSEHRA information provided by Exchanges also
would not provide a complete picture of this HRA population as it would
not include QSHERA enrollment associated with health insurance coverage
purchased outside of Exchanges.
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\105\ For information on the challenges associated with linking
the extracted enrollee-level EDGE data to other sources, see 87 FR
631 through 632.
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In addition, we understand an issuer may currently have or collect
information that could be used to populate the QSEHRA indicator in
situations where the issuer is being paid directly by the employer,
through the QSEHRA, for the individual health insurance coverage. We
proposed and are finalizing the policy to generally permit issuers to
populate the required QSEHRA indicator with information from the FFE or
SBE-FP enrollees or enrollees through SBEs, or from other sources for
collecting this information. Some other sources that an issuer could
use include information provided directly to issuers by consumers who
seek to enroll in coverage directly with the issuer, as well as
information provided to the issuer by employers or plan administrators.
To limit the burden associated with populating this indicator, we will
structure this data element for EDGE data submissions similar to
current collections, where possible, and generally intend to use the
same structure for the ICHRA and QSEHRA indicators. That is, similar to
the ICHRA indicator, the QSEHRA indicator will capture whether a
particular enrollee's health insurance coverage involves (or does not
involve) a QSEHRA. HHS will provide additional operational and
technical guidance on how issuers should submit this new data element
to their respective EDGE servers, as may be necessary.
Comment: Many commenters indicated that low uptake of QSEHRAs make
the data unnecessary to collect due to the limited impact these HRAs
could have on risk adjustment, and that collecting and reporting of a
QSEHRA indicator was generally inappropriate or unnecessary for risk
adjustment purposes. Many commenters requested additional information
on HHS' rationale for collecting QSEHRA data, and additional guidance
on the collection and extraction of a QSEHRA indicator.
Response: We disagree with the comments that suggested it is
inappropriate to consider the impact of the HRA population on the HHS-
operated risk adjustment program, and those that similarly suggested
low enrollment in QSEHRAs makes this proposal unnecessary. The purpose
of collecting and extracting the QSEHRA indicator is to allow HHS to
conduct analyses to examine whether there are any unique actuarial
characteristics of this enrollee population and to investigate what
impact (if any) QSEHRA participation is having on State individual and
small group (including merged) market risk pools to inform risk
adjustment policy development. As discussed above, the QSEHRA indicator
will be used to capture whether a particular enrollee's health care
coverage involves (or does not involve) a QSEHRA and will provide a
more thorough picture of the actuarial characteristics of the HRA
population and how or whether HRA participation is impacting individual
and small group (including merged) market risk pools; and allow HHS to
investigate whether the risk profile of enrollees with QSEHRAs differ
from enrollees with ICHRAs. Currently, we do not have data on
enrollment by individuals with QSEHRAs to analyze the risk associated
with these enrollees and the impact this population may have on the
individual and small group (including merged) market or the HHS-
operated risk adjustment program. The rules regarding ICHRAs and
QSEHRAs both became effective in 2020; thus, there is limited amount of
data regarding the ICHRA and QSEHRA populations in general. Further, a
recent report by HRA Council 2022 \106\ highlighted that the number of
both ICHRAs and QSEHRAs has increased substantially from 2020 to 2022.
Therefore, including this data as part of the required EDGE data
submissions will provide HHS with a more accurate and complete view and
distribution of risk in the individual and small group (including
merged) markets. The additional information collected through the
QSEHRA indicator will be used to further analyze if any refinements to
the HHS risk adjustment methodology should be examined or proposed
through notice- and- comment rulemaking, such as examination of the
risk profile of partial year enrollees with ICHRAs or QSEHRA given the
potential for those populations to enroll through an SEP. Similarly,
this information will also help inform policy analysis and potential
updates to the AV Calculator, other HHS individual or small group
(including merged) market programs, the PHS Act requirements enforced
by HHS that are applicable market-wide or other HHS Federal health-
related programs.
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\106\ For details of this report, see https://hracouncil.wildapricot.org/resources/Documents/2022_HRAC_Data_FullReport_Final.pdf.
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We also acknowledge commenters' request for additional information
on submission of the QSEHRA indicator, and similar to the ICHRA
indicator, we will provide additional operational and technical
guidance on how issuers should submit this new data element to HHS
through issuer EDGE servers via the applicable benefit year's EDGE
Server Business Rules and the EDGE Server Interface Control Document,
as may be necessary.
b. Extracting Plan ID and Rating Area
In addition to collecting and extracting a QSEHRA indicator, we
proposed to extract the plan ID \107\ and
[[Page 25785]]
rating area data elements from the 2017, 2018, 2019, and 2020 benefit
year data submissions that issuers already made accessible to HHS. In
the 2023 Payment Notice (87 FR 27249), we finalized the proposal to
extract these data elements beginning with the 2021 benefit year.
However, we determined that to aid in annual model recalibration, as
well as in our analyses of risk adjustment data, it would be beneficial
to also include these two data elements as part of the enrollee-level
EDGE data and reports extracted from issuers' EDGE servers for the
2017, 2018, 2019, and 2020 benefit years. Inclusion of plan ID and
rating area in extractions of these additional benefit year data sets
would also support analysis of other HHS individual and small group
(including merged) market programs, the PHS Act requirements enforced
by HHS that are applicable market-wide, as well as other HHS Federal
health-related programs.
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\107\ For details on the plan ID and its components, see p. 42
of the following: CMS. (2013, March 22). CMS Standard Companion
Guide Transaction Information: Instructions related to the ASC X12
Benefit Enrollment and Maintenance (834) transaction, based on the
005010X220 Implementation Guide and its associated 005010X220A1
addenda for the FFE. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/companion-guide-for-ffe-enrollment-transaction-v15.pdf.
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Moreover, since finalizing the 2023 Payment Notice, we have found
that the analysis of risk adjustment data would be more valuable if we
could compare historical trends, and access to these data elements for
past years would further our ability to analyze and improve the risk
adjustment program. For example, in assessing the 2020 enrollee-level
EDGE data set for inclusion in the 2024 benefit year model
recalibration, having access to plan ID and rating area would have
allowed us to consider the different patterns of utilization and costs
at a more granular level (for example, the State market risk pool
level). Since issuers already collected and made available these data
elements to HHS for the 2017, 2018, 2019 and 2020 benefit years,\108\
we did not believe that this proposal would increase burden on issuers.
We also did not propose any changes to the accompanying policies
finalized in the 2023 Payment Notice with respect to these data
elements and the enrollee-level EDGE Limited Data set (LDS). Although
we recognized that including plan ID and rating area would enhance the
usefulness of the LDS, we continue to believe it is appropriate to
exclude these data elements from the LDS to mitigate the risk that
entities that receive the LDS file could identify issuers based on
these identifiers, particularly in areas with a small number of
issuers. As such, HHS would not include these data elements (plan ID
and rating area) in the LDS files made available to qualified
researchers upon request.
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\108\ As detailed in the 2023 Payment Notice, issuers have been
required to submit these two data elements as part of the required
risk adjustment data submissions to their respective EDGE servers to
support HHS' calculation of risk adjustment transfers since the 2014
benefit year. See 87 FR 27243.
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We summarize and respond to public comments received on the
proposed extraction of plan ID and rating area data elements for
certain benefit years prior to 2021 below.
Comment: Many commenters supported the extraction of plan ID and
rating area data elements for earlier benefit years of EDGE data and
their use in risk adjustment. However, many commenters opposed the
proposal to extract the plan ID and rating area data elements from
issuers' EDGE servers for certain benefit years prior to 2021, citing
concerns regarding privacy and security of patients' personally
identifiable information (PII) and protected health information (PHI).
One commenter requested that CMS reconsider their extraction
altogether, as well as the extraction of zip code and subscriber ID
data as finalized in the 2023 Payment Notice.
Response: We are finalizing, as proposed, the extraction of plan ID
and rating area data elements for certain benefit years of EDGE data
prior to 2021 as we believe that the collection of these additional
data will allow HHS to better assess actuarial risk in the individual
and small group (including merged) market risk pools, examine
historical trends, and consider changes to improve the HHS-operated
risk adjustment program. Consistent with previously finalized policies
regarding the permitted uses of the enrollee-level EDGE data, HHS may
also use these additional data to inform analysis and policy
development for the AV Calculator and other HHS individual and small
group (including merged) market programs, the PHS Act requirements
enforced by HHS that are applicable market-wide, as well as other HHS
Federal health-related programs.\109\
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\109\ See, for example, the 2018 Payment Notice, 81 FR 94101;
the 2020 Payment Notice, 84 FR 17488; and the 2023 Payment Notice,
87 FR 27241-27252.
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We acknowledge the concerns raised regarding the need to protect
the privacy and security of patients' PII and PHI, however, we
generally disagree that the extraction of plan ID and rating area data
elements for these additional benefit years would increase risk of
disclosure of enrollee PII, nor do they fall under the category of PHI
according to the HIPAA Privacy Rule.\110\ As noted in the 2023 Payment
Notice (87 FR 27245), while we do not believe this data collection
causes risk to the privacy or security of patients' PII, to mitigate
the risk that entities that receive the LDS file could identify issuers
based on these identifiers, particularly in areas with a small number
of issuers, we continue to believe it is appropriate to exclude these
data elements (plan ID and rating area) from the LDSs. As such, HHS
will not include these data elements in the LDS files made available to
qualified researchers upon request.
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\110\ 45 CFR 164.512(a).
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HHS remains committed to protecting the privacy and security of
enrollees' sensitive data as initially outlined in the 2014 Payment
Notice (77 FR 15434, 15471, 15498, 15500; Sec. 153.720) regarding the
risk adjustment data collection approach, which encompasses PII. As
noted above, in the 2014 Payment Notice (78 FR 15497 through 15500;
Sec. 153.720), we established an approach for obtaining the necessary
data for risk adjustment calculations in States where HHS operates the
program through a distributed data collection model that prevented the
transfer of individuals' sensitive data. We did not propose and are not
finalizing any changes to the distributed data collection approach
applicable to the HHS-operated risk adjustment program. As explained in
the proposed 2014 Payment Notice (77 FR 73118), using a distributed
data collection model \111\ means HHS does not directly receive data
from issuers,\112\ which limits transmission of sensitive data.\113\
This general framework remains unchanged. Issuers of risk adjustment
covered plans will continue to provide HHS access to the applicable
required risk adjustment data elements through the distributed data
environment (that is, the issuer's secure EDGE server) in the HHS-
specified electronic formats by the applicable deadline.\114\ Issuers
will continue to retain control over their data assets subject to the
requirements of the HHS-operated risk adjustment program. HHS will also
continue to require issuers to use a unique masked enrollee
[[Page 25786]]
identification number for each enrollee that cannot include PII and
PHI,\115\ along with maintaining the other existing data safeguards to
protect enrollee PII and PHI.116 117 118 119 The policies
finalized in this rule regarding the extraction of plan ID and rating
area for certain benefit years prior to 2021 do not alter the
distributed data collection approach or otherwise change any of the
existing protections for enrollee PII and PHI under the HHS-operated
risk adjustment program.
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\111\ Under this model, each issuer submits to its EDGE server
the required data in HHS-specified formats and must make these data
accessible to HHS for use in the HHS-operated risk adjustment
program. See 78 FR 15497.
\112\ 77 FR 73162, 73182 through 73183. This policy was
finalized in the 2014 Payment Notice final rule. See 78 FR 15497
through 15500.
\113\ See 78 FR 15500. We explained that data are particularly
vulnerable during transmission, and that the distributed data
collection model eliminates this risk.
\114\ See 45 CFR 153.610(a). See also 45 CFR 153.700 through
153.740.
\115\ See 45 CFR 153.720. See also 78 FR 15509 and 81 FR 94101.
\116\ As we explained in the 2018 Payment Notice, use of masked
enrollee-level data safeguards enrollee privacy and security because
masked enrollee-level data does not include PII. See 78 FR 15500.
\117\ In addition to use of masked enrollee IDs and masked
claims IDs, another protection for enrollee PII is the exclusion of
enrollee date of birth from the data issuers must make accessible to
HHS on their EDGE servers.
\118\ The LDS policies are additional examples of protections
for enrollee PII. Under these policies, HHS makes available only an
LDS of certain masked enrollee-level EDGE data elements and only to
qualified researchers if they meet the requirements for access to
such file(s), including entering into a data use agreement that
establishes the permitted uses or disclosure of the information and
prohibits the recipient from identifying the information. See, for
example, 84 FR 17486 through 17490 and 87 FR 27243 through 27252.
Also see Data Use Agreement. CMS. https://www.cms.gov/research-statistics-data-and-systems/files-for-order/data-disclosures-data-agreements/overview. Further details on limited data set files
available at Limited Data Set (LDS) Files. CMS. https://www.cms.gov/research-statistics-data-and-systems/files-for-order/data-disclosures-data-agreements/dua_-_newlds.
\119\ The final policies to exclude plan ID, rating area and ZIP
code from the LDS is also part of our commitment to protect enrollee
PII to mitigate the risk that entities that receive the LDS could
identify individual members, particularly in areas with a small
number of issuers. See, for example, 87 FR 27243 through 27252.
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We also did not propose and are not finalizing any changes to the
final policies adopted in the 2023 Payment Notice related to the
collection and extraction of zip code and subscriber indicator.\120\
The collection and extraction of these two data elements will begin
with the 2023 benefit year. In addition, in the 2023 Payment Notice (87
FR 27249), we finalized the proposal to extract the plan ID and rating
area data elements beginning with the 2021 benefit year. Since
finalizing that proposal, we determined that to aid in annual model
recalibration, as well as HHS' analyses of risk adjustment data, it
would be beneficial to also include these two data elements as part of
the enrollee-level EDGE data and reports extracted from issuers' EDGE
servers for the 2017, 2018, 2019, and 2020 benefit years. For example,
we found HHS collection and extraction of plan ID allows HHS to conduct
deeper analyses when confronted with minor data anomalies to see if
these trends are in fact reflective of the market or if targeted
outreach to specific issuers is necessary to address data errors or
potential misinterpretation of the EDGE server business rules and other
applicable data requirements to improve the EDGE data quality for
future benefit years. After considering comments, we are finalizing the
proposals related to the collection and extraction of plan ID and
rating area for the additional prior benefit years beginning with the
2017 benefit year enrollee-level EDGE data.
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\120\ See 87 FR 27241 through 27252.
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As previously explained, the collection and extraction of these
data elements for the additional prior benefit years will help HHS
further assess risk patterns and the impact of risk adjustment policies
by providing valuable insight into historical trends. For example,
rating area data for these additional benefit years will provide HHS
with more granular data to examine and assess risk patterns and impacts
based on geographic differences over time. These data will therefore be
useful to examine whether changes should be proposed to the HHS risk
adjustment methodology through notice-and-comment rulemaking, as well
as to assist with analysis and policy development for the AV Calculator
and other HHS individual and small group (including merged market)
programs, the PHS Act requirements enforced by HHS that are applicable
market-wide, and other HHS Federal health-related programs.
Comment: Some commenters opposed to the extraction of plan ID and
rating area data elements questioned the appropriateness of using these
data elements for purposes beyond the HHS-operated risk adjustment
program and the AV Calculator.
Response: We acknowledge commenters concerns regarding use of the
plan ID and rating area data elements use for purposes beyond the HHS-
operated risk adjustment program and the AV Calculator. However, we
disagree that the use of these data elements should be limited to only
the HHS-operated risk adjustment program and the AV Calculator.
In several prior rulemakings,\121\ we finalized policies for the
extraction and use of enrollee-level EDGE data beginning with the 2016
benefit year. HHS began the collection and extraction of enrollee-level
EDGE data to provide HHS with more granular data to use for
recalibrating the HHS risk adjustment models and to use actual data
from issuers' individual and small group (and merged) market
populations, as opposed to the MarketScan[supreg] commercial database
that approximates these populations, for model recalibration
purposes.\122\ We also previously finalized the use of the extracted
masked enrollee-level EDGE data to inform updates to the AV Calculator
and methodology,\123\ conduct policy analysis and calibrate HHS
programs in the individual and small group (including merged) markets
and the PHS Act requirements enforced by HHS that are applicable
market-wide,124 125 as well as informing policy and
improving the integrity of other HHS Federal health-related
programs.\126\ The finalized policies related to the use of enrollee-
level data extracted from issuers' EDGE servers and summary level
reports produced from remote command and ad hoc queries enhance our
ability to develop and set policy and limit the need to pursue
alternative burdensome data collections from issuers. The use of plan
ID and rating area from the 2017, 2018, 2019, and 2020 benefit year
data sets beyond the risk adjustment program and AV Calculator is
consistent with these previously finalized policies, including the use
of these two data elements beginning with the 2021 benefit year data
set for other HHS individual and small group (including merged) market
programs, the PHS Act requirements enforced by HHS that are applicable
market-wide, as well as other HHS Federal health-related programs.
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\121\ See the 2018 Payment Notice, 81 FR 94101; the 2020 Payment
Notice, 84 FR 17488; and the 2023 Payment Notice, 87 FR 27241.
\122\ 81 FR 94101.
\123\ Ibid.
\124\ See, for example, 42 U.S.C. 300gg-300gg-28.
\125\ See 81 FR 94101 and 84 FR 17488.
\126\ As detailed in the 2023 Payment Notice, HHS can use the
extracted EDGE data and reports to inform policy analyses and
improve the integrity of other HHS Federal health-related programs
outside the commercial individual and small group (including merged)
markets to the extent such use of the data is otherwise authorized
by, required under, or not inconsistent with applicable Federal law.
See 87 FR 27243; 87 FR 630 through 631. Examples of other HHS
Federal health-related programs include the programs in certain
States to provide wrap-around QHP coverage through Exchanges to
Medicaid expansion populations and coverage offered by non-Federal
Governmental plans. Ibid.
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Consistent with the use of these data elements to help further
assess risk patterns for use in analysis and development of risk
adjustment and AV Calculator policies, plan ID and rating area will
also support HHS analysis and policy development for other HHS
individual and small group (including merged) market programs, the PHS
Act requirements enforced by HHS that are applicable market-wide, as
well as other
[[Page 25787]]
HHS Federal health-related programs. In particular, extra benefit years
of these data will be beneficial for testing policy options over
multiple years of data. For example, we want to assess whether the
scope of EHBs are equal to benefits provided under a typical employer
plan under section 1302(b)(2)(A) of the ACA at the State level, and
that analysis would benefit greatly from being tested on additional
benefit years of data. As such, while we acknowledge the comments
expressing concern over the use of this data for purposes beyond HHS
risk adjustment and the AV Calculator, we decline to limit the use of
these data to only those two areas. The utility of the plan ID and
rating area data elements, along with zip code and subscriber
indicator, in annual model recalibration and policy analysis to support
HHS individual and small group (including merged) market programs, the
PHS Act requirements enforced by HHS that are applicable market-wide,
and other Federal-health related programs outweighs any gains from not
finalizing the extraction of plan ID and rating area from certain prior
benefit years as proposed or repealing the EDGE data extraction and
permitted use policies finalized in the 2023 Payment Notice.
Comment: One commenter specifically requested that HHS consider
releasing the plan ID and rating area data elements as part of the EDGE
LDS by aggregating the information at the county level to assuage
privacy and security concerns.
Response: While we recognize including the plan ID and rating area
data elements may enhance the usefulness of the LDS for researchers, we
continue to believe it is appropriate to exclude these data elements
from the LDS to mitigate the risk that entities that receive the LDS
file could identify issuers based on these identifiers, particularly in
areas with a small number of issuers. While aggregating data at the
county level, as suggested, could mitigate this concern in many cases,
it would not completely eliminate the possibility that counties with
small numbers of issuers could be identified by these data elements. We
also did not propose to release these data as part of the LDS at the
county level and decline to adopt the suggestion as part of this final
rule.
6. Risk Adjustment User Fee for 2024 Benefit Year (Sec. 153.610(f))
HHS proposed a risk adjustment user fee for the 2024 benefit year
of $0.21 PMPM. We sought comment on this proposal. After review of the
comments received, we are finalizing the proposed risk adjustment user
fee for the 2024 benefit year as proposed.
Under Sec. 153.310, if a State is not approved to operate, or
chooses to forgo operating, its own risk adjustment program, HHS will
operate risk adjustment on its behalf. As noted previously in this
final rule, for the 2024 benefit year, HHS will operate the risk
adjustment program in every State and the District of Columbia. As
described in the 2014 Payment Notice (78 FR 15416 through 15417), HHS'
operation of risk adjustment on behalf of States is funded through a
risk adjustment user fee. Section 153.610(f)(2) provides that, where
HHS operates a risk adjustment program on behalf of a State, an issuer
of a risk adjustment covered plan must remit a user fee to HHS equal to
the product of its monthly billable member enrollment in the plan and
the PMPM risk adjustment user fee specified in the annual HHS notice of
benefit and payment parameters for the applicable benefit year.
OMB Circular No. A-25 established Federal policy regarding user
fees, and specifies that a user charge will be assessed against each
identifiable recipient for special benefits derived from Federal
activities beyond those received by the general public.\127\ The HHS-
operated risk adjustment program provides special benefits as defined
in section 6(a)(1)(B) of OMB Circular No. A-25 to issuers of risk
adjustment covered plans because it mitigates the financial instability
associated with potential adverse risk selection.\128\ The risk
adjustment program also contributes to consumer confidence in the
health insurance industry by helping to stabilize premiums across the
individual, merged, and small group markets.
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\127\ OMB. (1993). OMB Circular No. A-25 Revised, Transmittal
Memorandum No. https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf.
\128\ Ibid.
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In the 2023 Payment Notice (87 FR 27252), we calculated the Federal
administrative expenses of operating the risk adjustment program for
the 2023 benefit year to result in a risk adjustment user fee rate of
$0.22 PMPM based on our estimated costs for risk adjustment operations
and estimated BMM for individuals enrolled in risk adjustment covered
plans. For the 2024 benefit year, HHS proposed to use the same
methodology to estimate our administrative expenses to operate the risk
adjustment program. These costs cover development of the models and
methodology, collections, payments, account management, data
collection, data validation, program integrity and audit functions,
operational and fraud analytics, interested parties training,
operational support, and administrative and personnel costs dedicated
to risk adjustment program activities. To calculate the risk adjustment
user fee, we divided HHS' projected total costs for administering the
risk adjustment program on behalf of States by the expected number of
BMM in risk adjustment covered plans in States where the HHS-operated
risk adjustment program will apply in the 2024 benefit year.
We estimated that the total cost for HHS to operate the risk
adjustment program on behalf of States for the 2024 benefit year will
be approximately $60 million, which remains stable with the
approximately $60 million estimated for the 2023 benefit year. We also
projected higher enrollment than our prior estimates in the individual
and small group (including merged) markets in the 2023 and 2024 benefit
years based on the increased enrollment between the 2020 and 2021
benefit years, due to the increased PTC subsidies provided for in the
American Rescue Plan Act of 2021 (ARP).129 130 In light of
the passage of the Inflation Reduction Act of 2022 (IRA), in which
section 12001 extended the enhanced PTC subsidies in section 9661 of
the ARP through the 2025 benefit year, we projected increased 2021
enrollment levels to remain steady through the 2025 benefit year.\131\
Because this provision of the IRA is expected to promote continued
higher enrollment, we proposed a slightly lower risk adjustment user
fee of $0.21 PMPM.
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\129\ ARP. Public Law 117-2 (2021).
\130\ CMS. (2022, July 19). Summary Report on Permanent Risk
Adjustment Transfers for the 2021 Benefit Year. (p. 9). https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf.
\131\ Inflation Reduction Act. Public Law 117-169 (2022).
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We summarize and respond to public comments received on the
proposed 2024 benefit year risk adjustment user fee rate below.
Comment: We received a few comments in support of the 2024 benefit
year risk adjustment user fee rate.
Response: We appreciate the support and are finalizing, as
proposed, a risk adjustment user fee rate for the 2024 benefit year of
$0.21 PMPM.
7. Risk Adjustment Data Validation Requirements When HHS Operates Risk
Adjustment (HHS-RADV) (Sec. Sec. 153.350 and 153.630)
HHS will conduct HHS-RADV under Sec. Sec. 153.350 and 153.630 in
any State
[[Page 25788]]
where HHS is operating risk adjustment on a State's behalf.\132\ The
purpose of HHS-RADV is to ensure issuers are providing accurate high-
quality information to HHS, which is crucial for the proper functioning
of the HHS-operated risk adjustment program. HHS-RADV also ensures that
risk adjustment transfers reflect verifiable actuarial risk differences
among issuers, rather than risk score calculations that are based on
poor quality data, thereby helping to ensure that the HHS-operated risk
adjustment program assesses charges to issuers with plans with lower-
than-average actuarial risk while making payments to issuers with plans
with higher-than-average actuarial risk. HHS-RADV consists of an
initial validation audit (IVA) and a second validation audit (SVA).
Under Sec. 153.630, each issuer of a risk adjustment covered plan must
engage an independent initial validation audit (IVA) entity. The issuer
provides demographic, enrollment, and medical record documentation for
a sample of enrollees selected by HHS to its IVA entity for data
validation. Each issuer's IVA is followed by an SVA, which is conducted
by an entity HHS retains to verify the accuracy of the findings of the
IVA. Based on the findings from the IVA, or SVA (as applicable), HHS
conducts error estimation to calculate an HHS-RADV error rate. The HHS-
RADV error rate is then applied to adjust the plan liability risk
scores of outlier issuers, as well as the risk adjustment transfers
calculated under the State payment transfer formula for the applicable
State market risk pools, for the benefit year being audited.\133\
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\132\ HHS has operated the risk adjustment program in all 50
States the District of Columbia since the 2017 benefit year.
\133\ HHS transitioned from a prospective application of HHS-
RADV error rates for non-exiting issuers to apply HHS-RADV error
rates to the risk scores and risk adjustment State transfers of the
benefit year being audited for all issuers beginning with the 2020
benefit year of HHS-RADV. See 85 FR 77002-77005.
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a. Materiality Threshold for Risk Adjustment Data Validation
Beginning with 2022 benefit year HHS-RADV, we proposed to change
the HHS-RADV materiality threshold definition, first implemented in the
2018 Payment Notice (81 FR 94104 through 94105), from $15 million in
total annual premiums Statewide to 30,000 total BMM Statewide,
calculated by combining an issuer's enrollment in a State's individual
non-catastrophic, catastrophic, small group, and merged markets, as
applicable, in the benefit year being audited.\134\ We are finalizing
the change to the HHS-RADV materiality threshold definition as
proposed.
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\134\ Activities related to the 2022 benefit year of HHS-RADV
generally began in March 2023, when issuers could start selecting
their IVA entity, and IVA entities could start electing to
participate in HHS-RADV for the 2022 benefit year. See, for example,
the 2021 Benefit Year HHS-RADV Activities Timeline (May 3, 2022),
available at https://regtap.cms.gov/uploads/library/HRADV_2021Timeline_5CR_050322.pdf and the 2022 Benefit Year HHS-RADV
Timeline (March 1, 2023), available at https://regtap.cms.gov/uploads/library/HRADV_2022_timeline_5CR_022323.pdf.
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Consistent with the application of the current materiality
threshold definition and accompanying exemption under Sec.
153.630(g)(2), we proposed that issuers that fall below the new
proposed materiality threshold would not be subject to the annual IVA
(and SVA) audit requirements, but may be selected to participate in a
given benefit year of HHS-RADV based on random sampling or targeted
sampling due to the identification of any risk-based triggers that
warrant more frequent audits. We did not propose any changes to the
regulatory text at Sec. 153.630(g)(2) or to the other accompanying
policies. We solicited comments on this proposal as well as sought
comments on whether we should increase the materiality threshold to $17
million in total annual premiums Statewide instead of switching to
30,000 BMM Statewide and on the applicability date for when a new HHS-
RADV materiality threshold definition should begin to apply.
In the 2020 Payment Notice (84 FR 17508 through 17511), HHS
established Sec. 153.630(g) to codify exemptions to HHS-RADV
requirements, including an exemption for issuers that fell below a
materiality threshold, as defined by HHS, to ease the burden of annual
audit requirements for smaller issuers of risk adjustment covered plans
that do not materially impact risk adjustment transfers.\135\ This
materiality threshold was first implemented and defined in the 2018
Payment Notice (81 FR 94104 through 94105), where HHS finalized a
policy that issuers with total annual premiums at or below $15 million
(calculated based on the Statewide premiums of the benefit year being
validated) would not be subject to annual IVA requirements, but would
still be subject to random and targeted sampling.\136\ Issuers below
the materiality threshold are subject to an IVA approximately every 3
years, barring any risk-based triggers that warrant more frequent
audits.
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\135\ Additionally, in the 2019 Payment Notice (83 FR 16966), we
finalized an exemption from HHS-RADV for issuers with 500 or fewer
BMM Statewide in the benefit year being audited. This very small
issuer exemption is codified at Sec. 153.630(g)(1). Issuers with
500 or fewer BMM Statewide are not subject to random or targeted
sampling.
\136\ While the 2018 Payment Notice (81 FR 94104 through 94105)
provided an applicability date for the materiality threshold that
began with the 2017 benefit year of HHS-RADV, we postponed the
application of the materiality threshold to the 2018 benefit year in
the 2019 Payment Notice (83 FR 16966 through 16967).
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Under the new materiality threshold definition, beginning with the
2022 benefit year of HHS-RADV, issuers that fall below 30,000 BMM
Statewide will be exempt from participating in the annual HHS-RADV IVA
and SVA audit requirements if not otherwise selected by HHS to
participate under random and targeted sampling conducted approximately
every 3 years (barring any risk-based triggers based on experience that
will warrant more frequent audits). To determine whether an issuer
falls under the materiality threshold, its BMM will be calculated
Statewide, that is, by combining an issuer's enrollment in a State's
individual non-catastrophic, catastrophic, small group, and merged
markets, as applicable, in the benefit year being audited. Issuers that
qualify for the exemption under Sec. 153.630(g)(2) from HHS-RADV
requirements for a particular benefit year must continue to maintain
their risk adjustment documents and records consistent with Sec.
153.620(b) and may be required to make those documents and records
available for review or to comply with an audit by the Federal
Government.\137\ If an issuer of a risk adjustment covered plan that
falls within the materiality threshold is not exempt from HHS-RADV for
a given benefit year (for example, if the issuer is selected as part of
random or targeted sampling), and fails to engage an IVA or submit IVA
results to HHS, the issuer will be subject to the default data
validation charge in accordance with Sec. 153.630(b)(10) and may be
subject to other enforcement action. Lastly, an issuer that qualifies
for an exemption under Sec. 153.630(g)(2) from HHS-RADV requirements
for a particular benefit year will not have its risk scores and State
transfers adjusted due to its own risk score error rate(s), but its
risk scores and State transfers could be adjusted if other issuers in
the applicable State market risk pools were identified as outliers in
that benefit year of HHS-RADV.
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\137\ See Sec. 153.620(b) and (c).
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We summarize and respond to public comments received on the
proposed change to the HHS-RADV materiality threshold definition from
$15 million in total annual premiums Statewide to 30,000 total BMM
Statewide beginning
[[Page 25789]]
with the 2022 benefit year of HHS-RADV below.
Comment: Most commenters supported the proposal to change the HHS-
RADV materiality threshold definition from $15 million in total annual
premiums Statewide to 30,000 total BMM, calculated by combining an
issuer's enrollment in a State's individual non-catastrophic,
catastrophic, small group, and merged markets, as applicable, in the
benefit year being audited. One commenter agreed that the proposed
change to the materiality threshold definition will continue to ease
the administrative burden associated with HHS-RADV audits.
Many of these commenters asserted that a BMM-based threshold would
be more consistent over time and across geographies as the threshold
would not be impacted by premium increases or variation in health care
costs. Another commenter stated that the proposed BMM-based threshold
would eliminate the need for the materiality threshold to be updated
over time. One commenter agreed that shifting the materiality threshold
to a BMM basis would align with the 500 BMM threshold used to exempt
very small issuers from HHS-RADV. This commenter also noted that the
alternative proposal to increase the threshold from $15 million in
total annual premiums Statewide to $17 million in total annual premiums
indicates that a non-indexed dollar threshold could increase the number
of issuers subject to annual HHS-RADV audits over time.
However, one commenter opposed changing the materiality threshold
to 30,000 BMM and stated that allowing some issuers to be exempt for
annual HHS-RADV audit requirements reduces accountability and
transparency. One commenter encouraged HHS to consider changing the
materiality threshold for HHS-RADV to a percentage of Statewide member
months to reduce the burden of HHS-RADV on issuers that do not
materially impact a State's risk adjustment transfers. Another
commenter asked that HHS investigate how to balance the frequency of
issuers randomly sampled each year within a parent company and stated
that historical random samples have not produced a balanced volume of
issuers year to year.
Response: After considering comments, we are finalizing this policy
as proposed to change the HHS-RADV materiality threshold definition
from $15 million in total annual premiums Statewide to 30,000 total BMM
Statewide beginning with the 2022 benefit year of HHS-RADV. Consistent
with the original adoption of the materiality threshold for HHS-RADV,
we believe that this policy and updated definition will continue to
ease the administrative burden of annual HHS-RADV requirements for
smaller issuers of risk adjustment covered plans that do not materially
impact risk adjustment transfers. We also continue to believe that this
exemption will have a minimal impact on HHS-RADV as issuers of risk
adjustment covered plans below the 30,000 BMM threshold are estimated
to represent less than 1.5 percent of enrollment in risk adjustment
covered plans nationally. We believe that continuing to use a threshold
representing risk adjustment covered plans that cover less than 1.5
percent of membership nationally promotes the goals of HHS-RADV while
also considering the burden of such a process on smaller issuers.
As explained in the proposed rule (87 FR 78242 through 78243),
since we established the materiality threshold definition of $15
million in total premiums, the estimated costs to complete the IVA have
increased, especially with the addition of prescription drug categories
to the adult models starting with the 2018 benefit year. Therefore, we
believe that it is necessary and appropriate to update the materiality
threshold definition to better align with current costs to complete an
IVA. We estimated the current cost of the IVA to be approximately
$170,000 per an issuer. To continue the overall design of the
materiality threshold policy and effectively limit the proportion of an
issuer's premiums that will be used to cover IVA costs to one (1)
percent, we would need to increase the materiality threshold to $17
million in total annual premiums Statewide. While we considered using
another dollar value to update the materiality threshold definition, we
believe that using BMMs instead of a dollar threshold ensures that the
materiality threshold definition under Sec. 153.630(g)(2) will
continue to exempt small issuers that face a disproportionally higher
burden for conducting HHS-RADV audit, even in situations where PMPM
premiums grow overtime. We therefore proposed and are finalizing a
materiality threshold of 30,000 BMM Statewide, which translates to
approximately $17 million in total annual premiums Statewide on average
across markets.
Shifting the materiality threshold under Sec. 153.630(g)(2) to a
BMM basis will also align with the threshold established in Sec.
153.630(g)(1), which exempts issuers with 500 or fewer BMM Statewide in
the benefit year being audited from HHS-RADV requirements, including
random and targeted sampling. As part of this change, we considered
whether the new BMM-based threshold would significantly impact other
issuers of risk adjustment covered plans. We analyzed historical data
on issuers of risk adjustment covered plans and found that the pool of
issuers falling below a 30,000 BMM Statewide threshold does not
significantly differ from the current pool of issuers falling below a
$15 million total annual premiums Statewide threshold.\138\ Therefore,
we do not anticipate that the new materiality threshold definition will
change the current estimated burdens of the annual HHS-RADV
requirements or significantly impact other issuers of risk adjustment
covered plans. While we would expect the number of issuers falling
under a premium-dollar-based materiality threshold to decrease overtime
as PMPM premiums grow, we expect the BMM-based threshold to produce a
consistent pool of issuers subject to random and targeted sampling over
time and across State market risk pools.
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\138\ See 87 FR 78242 through 78243.
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We did not consider using a percentage of Statewide member months
as the metric for the materiality threshold as that metric does not
have a relationship with the costs to conduct HHS-RADV. As such, after
considering comments, we are finalizing the new materiality threshold
definition of 30,000 BMM as proposed, beginning with the 2022 benefit
year of HHS-RADV. As noted above, the materiality threshold was
initially set after considering the fixed costs associated with hiring
an IVA entity and submitting results to HHS, which may represent a
large portion of some issuers' administrative costs. We estimated that
30,000 BMM Statewide translates to approximately $17 million in total
annual premiums Statewide on average across markets, and therefore
anticipate that issuers above this threshold will not spend more than
one (1) percent of their premiums on covering the estimated $170,000
cost of the initial validation audit.
Finally, we do not believe that it is necessary to investigate the
balance of the frequency of issuers randomly sampled each year within a
parent company. The purpose of conducting random audits is for these
audits to be random and not controlled to limit the frequency that
specific issuers, including issuers within a particular parent company,
are selected. We also note that in addition to conducting
[[Page 25790]]
random audits of issuers of risk adjustment covered plans that fall
below the materiality threshold definition, issuers that fall below the
materiality threshold definition can be selected to participate in HHS-
RADV due to the targeted sampling based on the identification of risk-
based triggers that warrant more frequent audits.\139\
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\139\ See Sec. 153.630(g)(2).
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b. HHS-RADV Adjustments for Issuers That Have Exited the Market
Beginning with 2021 benefit year HHS-RADV, we proposed to remove
the policy to only apply an exiting issuer's HHS-RADV results if that
issuer is a positive error rate outlier.\140\ We proposed to change
this policy because it is no longer necessary to treat exiting issuers
differently from non-exiting issuers when they are negative error rate
outliers in the applicable benefit year's HHS-RADV given the transition
to the concurrent application of HHS-RADV results for all issuers. We
solicited comments on this proposal. After reviewing the public
comments, we are finalizing the removal of this policy as proposed.
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\140\ To qualify as an exiting issuer, an issuer must exit all
of the market risk pools in the State (that is, not selling or
offering any new plans in the State). If an issuer only exits some
markets or risk pools in the State, but continues to sell or offer
new plans in others, it is not considered an exiting issuer. A small
group market issuer with off-calendar year coverage who exits the
market but has only carry-over coverage that ends in the next
benefit year (that is, carry-over of run out claims for individuals
or groups enrolled in the previous benefit year, with no new
coverage being offered or sold) is considered an exiting issuer. See
the 2020 Payment Notice, 84 FR 17503 through 17504.
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We did not propose any other changes to the policies regarding HHS-
RADV adjustments for issuers that exit the market, and therefore, will
otherwise maintain the existing framework for determining whether an
issuer is an exiting issuer. As such, the issuer will have to exit all
of the market risk pools in the State (that is, not selling or offering
any new plan in the State) to be considered an exiting issuer. If an
issuer only exits some of the markets or risk pools in the State, but
continues to sell or offer new plans in others, it will not be
considered an exiting issuer. Small group market issuers with off-
calendar year coverage who exit the market and only have carry-over
coverage that ends in the next benefit year (that is, carry-over of run
out claims for individuals enrolled in the previous benefit year, with
no new coverage being offered or sold) will be considered an exiting
issuer and will be exempt from HHS-RADV under Sec. 153.630(g)(4).
Individual market issuers offering or selling any new individual market
coverage in the State in the subsequent benefit year will be required
to participate in HHS-RADV, unless another exemption applies.
We summarize and respond to public comments received on the
proposal to remove the policy to only apply an exiting issuer's HHS-
RADV results if that issuer is a positive error rate outlier beginning
with the 2021 benefit year below.
Comment: All commenters who commented on this policy change
supported the proposal to remove the policy that prevented the
application of an exiting issuer's HHS-RADV results when the issuer is
a negative error rate outlier. A few commenters agreed that it is no
longer necessary to treat exiting issuers differently from non-exiting
issuers when an issuer is a negative error rate outlier given the
transition to the concurrent application of HHS-RADV results to the
risk scores and risk adjustment transfers of the benefit year being
audited for all issuers.
Response: We agree with commenters that the policy that limited the
application of exiting issuers' HHS-RADV results to situations where
the issuer was identified as a positive error rate outlier in the
applicable benefit year of HHS-RADV is no longer needed. We are
finalizing the removal of this policy and will begin adjusting the plan
liability risk scores for all positive and negative error rate outlier
issuers (inclusive of exiting and non-exiting issuers) beginning with
the 2021 benefit year of HHS-RADV.
c. Discontinue Lifelong Permanent Conditions List and Use of Non-EDGE
Claims in HHS-RADV
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78224), we sought comment on discontinuing
the use of the Lifelong Permanent Conditions (LLPC) list \141\ and the
use of non-EDGE claims starting with the 2022 benefit year of HHS-RADV.
We solicited comment on all aspects of these potential changes,
including the applicability date. We also requested comment on the
extent that issuers and their IVA entities have relied on these
policies and on how these potential changes may impact issuers. After
reviewing the public comments, we will discontinue the use of the LLPC
list and the policy that permitted the use of non-EDGE claims beginning
with the 2022 benefit year of HHS-RADV. We will update the HHS-RADV
Protocols to capture these changes for the 2022 benefit year and
beyond.
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\141\ See, for example, Appendix C: Lifelong Permanent
Conditions in the 2021 Benefit Year PPACA HHS Risk Adjustment Data
Validation (HHS-RADV) Protocols (November 9, 2022) available at
https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf. Also see, for
example, Appendix E: Lifelong Permanent Conditions in the 2018
Benefit Year PPACA HHS Risk Adjustment Data Validation (HHS-RADV)
Protocols (June 24, 2019) available at https://regtap.cms.gov/uploads/library/HRADV_2018Protocols_070319_RETIRED_5CR_070519.pdf.
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The LLPC list was developed for HHS-RADV medical record abstraction
purposes beginning with the 2016 benefit year, when issuers were first
learning the HHS-RADV Protocols and still gaining experience with EDGE
data submissions.\142\ While the LLPC list was developed for HHS-RADV
medical record abstraction purposes, the EDGE Server Business Rules for
risk adjustment EDGE data submissions direct that EDGE server data
submissions are claim-based and follow standard coding principles and
guidelines. EDGE Server Business Rules require that diagnosis codes
submitted to the EDGE server be related to medical services performed
during the patient's visit, be performed by a State licensed medical
provider, be associated with a paid claim submitted to the issuer's
EDGE server, and be associated with an active enrollment period with
the issuer for the applicable risk adjustment benefit year.\143\ Some
issuers have raised concerns that the LLPC list may incentivize issuers
to submit EDGE supplemental diagnosis files containing LLPC diagnoses
even though those diagnoses may not have been addressed in a claim
submitted to the EDGE server for that encounter. While we allowed the
use of the LLPC list for the last several years of HHS-RADV, we
continued to consider these issues and solicited comments on the
discontinuance of the use of the LLPC list beginning with the 2022
benefit year of HHS-RADV.
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\142\ CMS first published the ``Chronic Condition HCCs'' list in
the 2016 Benefit Year PPACA HHS Risk Adjustment Data Validation
(HHS-RADV) Protocols (October 20, 2017) available at https://regtap.cms.gov/uploads/library/HRADV_2016Protocols_v1_5CR_052218.pdf. Beginning with 2018 benefit
year, CMS has provided the ``Lifelong Permanent Conditions'' list, a
simplified list of health conditions which share similar
characteristics as those on the ``Chronic Condition HCCs'' list. See
supra note 117.
\143\ See, for example, Section 8.1 Guidance on Diagnosis
Code(s) Derived from Health Assessments of the EDGE Server Business
Rules (ESBR) (November 1, 2022) available at https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf.
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Similarly, we sought comments on discontinuing the current policy
that permits the use of non-EDGE claims in HHS-RADV beginning with the
2022 HHS-RADV benefit year. Under Sec. 153.630(b)(6), issuers are
required to
[[Page 25791]]
provide their IVA entity with all relevant claims data and medical
record documentation for the enrollees selected for audit. HHS
currently allows issuers to submit medical records to their IVA entity
for which no claim was accepted into the EDGE server in certain
situations.\144\ Under the non-EDGE claims policy, if issuers identify
medical records with no associated EDGE server claim in HHS-RADV, they
must demonstrate that a non-EDGE claim meets risk adjustment
eligibility criteria. Issuers must also allow the IVA entity to view
the associated non-EDGE claim, and IVA entities must record their
validation results in their IVA Entity Audit Results Submission.\145\
As part of our ongoing effort to examine ways to better align HHS-RADV
guidance and the EDGE Server Business Rules, and in recognition of the
experience issuers have gained with HHS-RADV and EDGE data submissions,
we solicited comments on discontinuing the use of non-EDGE claims in
HHS-RADV beginning with the 2022 benefit year.
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\144\ See, for example, Section 9.2.6.5: Documentation of Claims
Not Accepted in EDGE of the 2021 Benefit Year PPACA HHS Risk
Adjustment Data Validation (HHS-RADV) Protocols (August 17, 2022)
available at https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_v1_5CR_081722.pdf.
\145\ Under the current policy, the non-EDGE claim must be risk
adjustment eligible paid/positively adjudicated within the benefit
year for the specified sampled enrollee. Although the non-EDGE claim
would have been accepted to EDGE had it met the EDGE submission
deadline, diagnoses associated with non-EDGE claims are not included
in the risk adjustment risk score calculations in the June 30th
Summary Report on Permanent Risk Adjustment Transfers. Diagnoses
associated with non-EDGE claims are only used as an option for HCC
validation purposes in HHS-RADV when the applicable criteria are
met.
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We summarize and respond to public comments received on
discontinuing the use of the LLPC list and the use of non-EDGE claims
in HHS-RADV below.
Comment: Several commenters supported discontinuing the use of the
LLPC list and a few commenters supported discontinuing the use of non-
EDGE claims. Many of these commenters raised data integrity concerns
created by the allowance of the use of the LLPC and non-EDGE claims in
HHS-RADV. Some commenters asserted there is a current misalignment
between EDGE Server Business Rules and HHS-RADV that creates
opportunities for issuers to submit data to the EDGE server without
following the EDGE Server Business Rules and then receive credit for
this data in HHS-RADV. Several commenters supported consistency between
the EDGE Server Business Rules and what is allowable in HHS-RADV by
discontinuing the use of the LLPC list and non-EDGE claims in HHS-RADV.
One of these commenters asserted that the LLPC list creates an
asymmetry between the rules auditors use for HCC validation and the
rules issuers use for submitting HCCs to EDGE by granting auditors a
more permissive set of rules for HCC validation, which thereby allows
an issuer's risk score to reflect the strength of their compliance
department. Another of these commenters asserted that ending the policy
that permitted the use of non-EDGE claims in HHS-RADV will provide
consistency between the data submission and its validation.
One commenter stated that discontinuing the LLPC list will level
the playing field for all issuers. Two commenters expressed concerns
about the use of dated information to justify diagnoses and upcoding in
the current benefit year. One of these commenters expressed concern
that the LLPC list was created as an administrative convenience despite
there being a wide range of treatments and outcomes within the same
diagnosis on the LLPC list. Another commenter raised concerns about
individuals with diagnoses on the LLPC list enrolling in a new plan
during periods when these diagnoses do not require treatment and the
issuers of the new plans covering these individuals receiving credit
for those LLPC HCCs in HHS-RADV. This commenter also suggested that,
under a concurrent risk adjustment model, issuers should get credit for
diagnoses that are treated during the benefit year being risk adjusted
and should not be allowed to rely on historic data or documentation
from before the applicable coverage period.
Response: HHS agrees with commenters that supported the
discontinuation of the LLPC list and non-EDGE claims in HHS-RADV as we
seek to better align HHS-RADV policies with the EDGE Server Business
Rules. We also believe that issuers have gained years of experience
with EDGE data submissions and HHS-RADV activities, such that it is now
appropriate to discontinue use of the LLPC list and non-EDGE claims in
HHS-RADV. The LLPC list was not created to supplement or replace the
EDGE Server Business Rules that issuers must follow to submit diagnoses
conditions to EDGE with the necessary medical record documentation.
Instead, HHS created the LLPC list in the early years of HHS-RADV to
ease the burden of medical record retrieval for lifelong conditions in
HHS-RADV by simplifying and standardizing coding abstraction for IVA
and SVA entities. The conditions included in the LLPC list are those
that require ongoing medical attention and are typically unresolved
once diagnosed. While a range of treatments and outcomes may exist
within the same diagnosis on the LLPC list, the HHS-HCC diagnostic
classification is a key component of the HHS risk adjustment models.
The basis of the HHS risk adjustment model uses health plan enrollee
diagnoses to predict medical expenditure risk. To do this, tens of
thousands of diagnostic codes are grouped into a smaller number of
organized condition categories that aggregate into HCCs to produce a
diagnostic profile of each enrollee.\146\ The HCCs in the HHS risk
adjustment models were selected to reflect salient medical conditions
and cost patterns for adult, child, and infant subpopulations. The
models produce coefficients for each HCC that incorporate the range of
treatments and outcomes for those diagnoses as they represent the
marginal predicted plan liability expenditures of an enrollee with that
HCC given that enrollee's other risk markers. The HHS risk adjustment
models also include interacted HCC counts factors beginning with the
2023 benefit year that will further capture the range of plan liability
that may exist within the same diagnoses. For these reasons, we believe
that continuing the policy to permit use of the LLPC list is no longer
necessary and its removal will better align HHS-RADV guidance with the
EDGE Server Business Rules, as well as ensure that audit entities
follow the same standard coding principles and guidelines for HHS-RADV
that issuers must follow when submitting data to EDGE. As detailed in
the HHS-RADV Protocols, issuers and entities should refer to the
conventions in the ICD-10-CM and ICD10-PCS classification, ICD-10-CM
Official Coding Guidelines for Coding and Reporting, and the American
Hospital Association (AHA) Coding Clinic Standard for coding guidance,
including the coding of chronic conditions.\147\
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\146\ See The HHS-HCC Risk Adjustment Model for Individual and
Small Group Markets under the Affordable Care Act, Medicare &
Medicaid Research Review, Volume 4, Number 3 (2014) available at
https://www.cms.gov/mmrr/Downloads/MMRR2014_004_03_a03.pdf. Also
see, for example, Chapter 2: HHS-HCC Diagnostic Classification of
the March 31, 2016, HHS-Operated Risk Adjustment Methodology Meeting
Discussion Paper (March 24, 2016) available at https://www.cms.gov/
cciio/resources/forms-reports-and-other-resources/downloads/ra-
march-31-white-paper-032416.pdf.
\147\ See, for example, Section 9.2.6 Phase 5--Health Status
Validation of the 2021 Benefit Year PPACA HHS Risk Adjustment Data
Validation (HHS-RADV) Protocols (November 9, 2022) available at
https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf.
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[[Page 25792]]
Although we have no evidence that enrollees with HCCs on the LLPC
list are switching plans when their conditions are inactive, HHS agrees
that the LLPC list may create the opportunity, in certain
circumstances, for issuers to receive credit for HCCs when the enrollee
did not receive care or require active treatment during the applicable
enrollment-period. Thus, as outlined above and in the proposed rule, we
believe that the LLPC list is no longer necessary to balance the
burdens and costs of HHS-RADV with the program integrity goals of
validating the actuarial risk of enrollees in risk adjustment covered
plans.\148\ Now that issuers have gained sufficient experience with the
HHS-RADV Protocols and have consistently met data integrity criteria
for their EDGE data submissions,\149\ HHS will discontinue use of the
LLPC list and the use of non-EDGE claims beginning with the 2022
benefit year of HHS-RADV. We will update the HHS-RADV Protocols
applicable to the 2022 benefit year and beyond to capture these
changes.
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\148\ See Sec. 153.20. Risk adjustment covered plan means, for
the purpose of the risk adjustment program, any health insurance
coverage offered in the individual or small group market with the
exception of grandfathered health plans, group health insurance
coverage described in Sec. 146.145(b) of this subchapter,
individual health insurance coverage described in Sec. 148.220 of
this subchapter, and any plan determined not to be a risk adjustment
covered plan in the applicable federally certified risk adjustment
methodology.
\149\ As noted in the proposed rule (87 FR 78245), all States
received an interim risk adjustment summary report from the 2017
benefit year through 2021 benefit year of the HHS-operated risk
adjustment program. Since issuance of the proposed rule, we released
the 2022 benefit year interim risk adjustment results. As noted in
the 2022 benefit year interim risk adjustment report, five States
were ineligible for inclusion on the basis of one or more credible
issuers in those markets failing to meet the applicable thresholds
for data quantity and/or quality evaluations by the applicable
deadline. See the Interim Summary Report on Permanent Risk
Adjustment for the 2022 Benefit Year (March 17, 2023), available at
https://www.cms.gov/cciio/programs-and-initiatives/premium-stabilization-programs/downloads/interim-ra-report-by2022.pdf.
However, across eligible States, we calculated a data completion
rate of 91.7 percent in the 2022 benefit year interim risk
adjustment report, which is an increase from the data completion
rate of 90.8 percent in the 2021 benefit year interim risk
adjustment report. Ibid. We therefore continue to believe issuers
have had sufficient time to gain experience with EDGE data
submissions, and HHS-RADV activities, such that it is appropriate to
reconsider and move forward with discontinuing the LLPC list and
non-EDGE claims policies beginning with the 2022 benefit year of
HHS-RADV, as proposed.
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We also generally disagree with concerns of upcoding in the HHS-
operated risk adjustment program. First, the vast majority of enrollees
in risk adjustment covered plans do not have HCCs, and therefore, there
are limited opportunities for upcoding to exist in the HHS-operated
risk adjustment program. As of the 2021 benefit year, over 75 percent
of enrollees of risk adjustment covered plans in the individual non-
catastrophic risk pool did not have a single HCC.\150\ In addition,
over time, we have implemented risk adjustment model specifications to
mitigate the potential for upcoding, such as the HCC coefficient
estimation groups, which reduce risk score additivity within disease
groups and limit the sensitivity of the risk adjustment models to
upcoding, and the interacted HCC counts model specification, which is
restricted to enrollees with at least one severe illness or transplant
HCC, and thus, reduces concerns of issuers inflating overall HCC
counts.151 152 Moreover, the HHS-RADV program serves as an
additional safeguard for upcoding by auditing the issuer submitted
data, and we have not seen conclusive evidence of upcoding on EDGE.
Regardless, we will continue to monitor trends in the HHS-operated risk
adjustment program and utilize HHS-RADV to validate the accuracy of
data submitted by issuers for use in calculations under the State
payment transfer formula in the HHS risk adjustment methodology.
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\150\ See Table 4: Percent of Enrollees with HCCs, 2017-21 of
the Summary Report on Permanent Risk Adjustment Transfers for the
2021 Benefit Year (July 19, 2022) available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf.
\151\ For example, diabetes diagnosis codes are organized in a
Diabetes hierarchy, consisting of three CCs arranged in descending
order of clinical severity and cost, from CC 19 Diabetes with Acute
Complications to CC 20 Diabetes with Chronic Complications to CC 21
Diabetes without Complication. A person may have diagnosis codes in
multiple CCs within the Diabetes hierarchy, but once hierarchies are
imposed, that enrollee would only be assigned the single highest HCC
in the hierarchy. To limit diagnostic upcoding by severity in the
Diabetes hierarchy, we have constrained the three HCCs to have the
same coefficient in risk adjustment. As such, issuers cannot get
more credit towards their risk score by upcoding within the Diabetes
hierarchy.
\152\ As discussed in the 2021 RA White Paper, one of our
considerations for proposing the interacted HCC count model
specifications was our belief that by limiting the interacted HCC
counts factors to certain severe illness and transplant HCCs, we
would restrict the scope for coding proliferation and effectively
mitigate the potential for gaming. Page 59-60 https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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Comment: A few commenters supported discontinuing the use of the
LLPC list and the use of non-EDGE claims due to concerns related to the
use of the supplemental file. One of these commenters asserted that a
small number of issuers use the supplemental file for a
disproportionate share of their plan liability risk scores and
recommended prohibiting use of the LLPC list and non-EDGE claim
documentation to validate supplemental diagnoses. This commenter urged
HHS to limit the use of the supplemental file to a percent of plan
liability risk score and asked HHS to reevaluate HCCs that are more
prevalent in the supplemental file or are associated with lower-cost
individuals when added through the supplemental file. This commenter
also asked HHS to clarify that discontinuing the use of the LLPC list
and non-EDGE claims would end the use of documentation for prior-year
or non-EDGE encounters to support supplemental HCCs on EDGE. Another
commenter supported the use of the supplemental file and asserted that
the purpose of the supplemental diagnosis files is to facilitate
accurate and complete coding.
Response: We agree with comments that support the use of
supplemental file and generally clarify that issuers have never been
allowed to use the LLPC list to support supplemental diagnosis codes in
supplemental file submissions. The supplemental file allows issuers to
submit supplemental diagnosis codes for the limited circumstances in
which relevant diagnoses may be missed or omitted on a claim or during
an encounter submission, or in which diagnoses requires deletion for a
claim accepted to the issuer's EDGE server. Issuers are required to
follow the EDGE Server Business Rules when submitting diagnoses through
the supplemental file. Supplemental diagnosis codes must be supported
by medical record documentation and comply with standard coding
principles and guidelines, be linked to a previously submitted and
accepted EDGE server medical claim, and be the result of medical
service(s) that occurred during the data collection period for a given
benefit year.153 154
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\153\ To see the complete list of processing rules for the
supplemental file, see Section 8.4 General Supplemental Diagnosis
Code File Processing Rules of the EDGE Server Business Rules (ESBR)
Version 22.0 (November 2022) available at https://regtap.cms.gov/reg_librarye.php?i=3765.
\154\ While supplemental file diagnosis codes may be linked to
accepted EDGE server medical claims that are not risk adjustment
eligible, only supplemental file diagnosis codes that are linked to
risk adjustment-eligible claims accepted by the EDGE server will be
used in risk adjustment and HHS-RADV.
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With these limitations in place, we do not believe that it is
necessary or appropriate to limit supplemental file submissions to a
percentage of plan liability risk score. Moreover, in
[[Page 25793]]
response to comments, we analyzed enrollee condition categories by
diagnosis source in the 2018, 2019 and 2020 HHS-RADV data, and we do
not have concerns of HCCs that are more prevalent in the supplemental
file or are associated with lower-cost individuals when added through
the supplemental file. Our analysis found that issuers mostly use the
supplemental file as a way to provide more evidence of a condition. We
also did not propose and are not finalizing any changes to the
framework applicable to the use or submission of supplemental files to
issuers' EDGE servers.
Furthermore, supplemental file diagnoses cannot be linked to non-
EDGE claims as these claims are not on EDGE. The discontinuation of the
non-EDGE claims policy means issuers will no longer be able to submit
claims that are not accepted onto EDGE to validate diagnoses for their
IVA (or SVA, as applicable), and the discontinuation of the LLPC list
means issuers will no longer be able to submit prior-year documentation
for their IVA (or SVA, as applicable). Both of these changes will apply
beginning with the 2022 benefit year of HHS-RADV. In addition,
consistent with existing requirements, the medical record documentation
submitted by the issuer for their IVA (or SVA, as applicable) must meet
standard coding principles and guidelines for abstraction of the
diagnosis, to support EDGE claims or supplemental diagnosis codes.\155\
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\155\ 45 CFR 153.630(b)(7). See, for example, Section 9.2.6
Phase 5--Health Status Validation of the 2021 Benefit Year PPACA HHS
Risk Adjustment Data Validation (HHS-RADV) Protocols (November 9,
2022) available at https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf.
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Comment: Several commenters opposed discontinuing the use of the
LLPC list and non-EDGE claims due to concerns that this would hinder
issuers' ability to accurately capture health care costs and be
appropriately compensated for enrollee risk. One commenter stated that
the discontinuance of the LLPC list and non-EDGE claims will limit
their ability to identify and coordinate the most appropriate care for
enrollees with LLPC diagnoses. This commenter also noted that the use
of non-EDGE claims improves the capture of diagnoses on the LLPC list
and suggested that the removal of these policies contradicts the
purpose of the ACA to ensure coverage of pre-exiting conditions. A few
commenters stated that the LLPC list helps capture diagnoses that might
otherwise only be reflected in pharmacy costs. One commenter stated
that plans are already losing out on capturing many chronic conditions
because the HHS-operated risk adjustment program does not allow a plan
to code conditions based on medication. Another commenter suggested
that conditions with high pharmacy costs that are not recognized by the
RXC model, such as hemophilia, will only be captured by the specialist
responsible for the condition and not by other provider types like
primary care physicians. This commenter recommended studying which
high-cost conditions on the LLPC list are not represented by the RXC
model, but have high costs associated with them regardless of whether a
diagnosis is billed directly during the course of a benefit year.
Response: We agree there are some benefits associated with the LLPC
list and non-EDGE claims policy, that were developed in the early years
of HHS-RADV. The list was designed to ease the burden of medical record
retrieval for lifelong conditions by simplifying and standardizing
coding abstraction for IVA and SVA entities as issuers were gaining
experience with the HHS-RADV Protocols and addressing any lingering
challenges submitting claims to their EDGE servers. It did not,
however, supersede or replace the rules for submitting the diagnosis
codes to EDGE servers that are used to determine enrollee risk. To
capture enrollee risk, issuers must submit enrollee claims data and
diagnosis codes to EDGE servers following the EDGE Server Business
Rules and standard coding principles and guidelines.\156\
---------------------------------------------------------------------------
\156\ Ibid.
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Similarly, the use of non-EDGE claims in HHS-RADV allowed issuers
to submit medical records associated with non-EDGE claims to their IVA
entity for HCC validation purposes in certain situations. This protocol
was also designed to ease the burden as issuers were gaining experience
with the HHS-RADV Protocols and addressing any lingering challenges
submitting claims to their EDGE servers. As noted in the proposed rule,
issuers consistently meet data integrity criteria for their EDGE data
submissions.\157\ Therefore, HHS does not believe that the
discontinuance of the use of the LLPC list or non-EDGE claims in HHS-
RADV will impact issuers' ability to accurately capture health care
costs and enrollee risk. Further, HHS believes issuers have now gained
sufficient experience with the HHS-RADV Protocols such that it is also
no longer necessary to continue these policies beginning with the 2022
benefit year of HHS-RADV.
---------------------------------------------------------------------------
\157\ 87 FR 78245. Also see supra note 14947.
---------------------------------------------------------------------------
Discontinuing the use of the LLPC list and non-EDGE claims should
also not impact providers' or issuers' ability to coordinate the most
appropriate care for enrollees with LLPC diagnoses. If anything,
enrollees with better-coordinated care should be more likely to have
their diagnoses documented on a risk adjustment-eligible claim during
the benefit year, which should then be captured in the issuer's EDGE
data submission. Further, HHS does not believe the removal of the LLPC
list will contradict the purpose of the ACA to ensure coverage of pre-
existing conditions. Issuers should continue to follow standard coding
principles and guidelines, which include guidelines regarding the
treatment of chronic conditions, to capture diagnoses among enrollees
with pre-existing conditions. We believe that updating the HHS-RADV
Protocols to discontinue the use of the LLPC list and non-EDGE claims
beginning with the 2022 benefit year of HHS-RADV aligns with the goals
of the HHS-operated risk adjustment program and HHS-RADV, as issuers
will have a stronger incentive to encourage enrollees to access care
within the benefit year so the risk can be captured on a risk
adjustment-eligible claim. These updates to the HHS-RADV Protocols will
also address concerns raised by some interested parties that issuers
could passively receive credit for an HCC when the enrollee did not
receive care or require active treatment during the applicable benefit
year.
We also do not agree that discontinuing the use of the LLPC list
will prevent the capture of diagnoses that are being actively managed
and are associated with pharmacy costs. If a patient with hemophilia or
other chronic conditions is receiving care or active treatment, whether
from a specialist or primary care provider, the diagnosis should be
documented on a claim submitted to the issuer's EDGE server.
Additionally, we anticipate the issuer would also be encouraging the
patient with such chronic conditions to access care during the benefit
year as part of its general wellness, prevention, or other health
promotion activities.
We further note that our purpose for adding RXCs to the risk
adjustment models was to impute missing diagnoses and to indicate
severity of illness.\158\ These prescription drug-based classes for the
HHS risk adjustment adult models were developed using empirical
evidence on frequencies and predictive power; clinical judgment on
relatedness, specificity, and severity of RXCs; and
[[Page 25794]]
professional judgment on incentives and likely provider responses to
the classification system.\159\ We carefully considered the selection
of high-cost drugs for inclusion to avoid overly reducing the
incentives for issuers to strive for efficiency in prescription drug
utilization and the selection of drugs in areas exhibiting a rapid rate
of technological change, as a drug class that is associated with a
specific, costly diagnosis in one year may no longer be commonly used
for that condition the next. As a result, there is a limited number of
prescription drug classes included in the HHS risk adjustment adult
models, and the RXCs included are select drug classes (and in some
cases, specific drugs) that are closely associated with particular
diagnoses. The same medication may be prescribed for multiple
conditions, and therefore, a condition cannot be substantiated based
solely on medication. To receive credit for an HCC in HHS-RADV, the
condition needs to be linked to a risk adjustment eligible claim that
has been accepted by the EDGE server with appropriate medical record
documentation supporting diagnosis or treatment regardless of whether
that HCC is also represented by an RXC in the HHS risk adjustment adult
models. We continuously monitor, assess and update the drugs for
mapping to RXCs in the adult risk adjustment models, and we may further
investigate drugs associated with high-cost chronic conditions that are
not currently represented by the RXC model in the future.
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\158\ 81 FR 94074 through 94084
\159\ See, for example, 81 FR 94075 through 94076.
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Comment: Several commenters opposed discontinuing the use of the
LLPC list and non-EDGE claims policy due to concerns of provider coding
practices. Some of these commenters stated that LLPC diagnoses are
taken into consideration by providers during medical decision making,
and are sometimes treated, regardless of whether they separately appear
on a claim. One commenter shared they have observed an ongoing issue
where providers are not consistently capturing the care provided for
conditions diagnosed in prior-year claims.
Other commenters noted that many LLPCs are captured in medical
history or surgical history notes and may not be included in any notes
on current treatment. One commenter asserted that issuers with narrow
networks or limited out-of-network benefits have a great ability to
influence provider coding practices and ensure all diagnoses are
recorded on claims. One commenter urged HHS to consider regulatory
differences across States, and noted that issuers in their State are
required by State law to cover behavioral treatment for autism from
some providers without a referral from a diagnosing provider.
Response: The LLPC list and the non-EDGE claims policies are part
of the HHS-RADV Protocols and, as noted above, were adopted in the
early years of HHS-RADV to streamline and simplify the process while
issuers gained experience with HHS-RADV activities and EDGE data
submissions. They do not, however, supplement or replace the data
submission requirements or EDGE Server Business Rules that issuers must
follow to submit claims to their EDGE servers, including the rules
governing the necessary medical record documentation to support each
condition, diagnosis or treatment on each claim. Consistent with Sec.
153.710(a) through (c), EDGE Server Business Rules for the HHS-operated
risk adjustment program that govern EDGE data submissions direct that
EDGE server data submissions are claim-based and follow standard coding
principles and guidelines.\160\ EDGE Server Business Rules also require
that diagnosis codes submitted on risk adjustment-eligible claims to
the EDGE server be related to medical services performed during the
patient's visit.\161\
---------------------------------------------------------------------------
\160\ See, for example, Table 49: `Standard Code Sets and
Sources' of the EDGE Server Business Rules (ESBR) Version 22.0
(November 2022) available at https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf, which lists the standard code sets
and sources the EDGE server uses to verify submitted codes during
data submission.
\161\ See, for example, Section 8.1 Guidance on Diagnosis
Code(s) Derived from Health Assessments of the EDGE Server Business
Rules (ESBR) (November 1, 2022) available at https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf.
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It is the issuer's responsibility to submit complete and accurate
data for each benefit year to their respective EDGE server by the
applicable deadline.\162\ Issuers are also responsible for helping
their respective IVA entities retrieve provider medical records and
documentation sufficient to support the conditions, diagnosis and
treatment information submitted to the issuer's EDGE server for the
applicable benefit year.\163\ Issuers should work with their providers
to ensure they are following correct coding guidelines to support
acceptance of medical claims and diagnoses submitted to the issuer's
EDGE server.\164\ We have not seen evidence that issuers with narrow
networks or limited out-of-network benefits have a greater ability to
influence provider coding practices. Issuers in the individual and
small group (including merged) markets are allowed to develop provider
networks and out of network benefit designs in accordance with
applicable State and Federal requirements. These types of plans and
benefit designs are subject to the same rules and requirements of the
HHS-operated risk adjustment program as all issuers, including but not
limited to the processes to conduct the HHS-RADV audits. We also note
that HCCs associated with behavioral diagnoses such as autism are not
included on the LLPC list. Additionally, we clarify that HHS-RADV does
consider and accommodate differences across States, such as with
respect to provider credentialing requirements. For example, medical
records submitted for HHS-RADV must be from an acceptable physician/
practitioner specialty type licensed to diagnose in that State and must
be authenticated by the provider.
---------------------------------------------------------------------------
\162\ See 45 CFR 153.610, 153.700, and 153.730.
\163\ See 45 CFR 153.630(b)(6). Also see 45 CFR 153.620(a) and
(b).
\164\ See, for example, Table 49: `Standard Code Sets and
Sources' of the EDGE Server Business Rules (ESBR) Version 22.0
(November 2022) available at https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf, which lists the standard code sets
and sources the EDGE server uses to verify submitted codes during
data submission.
---------------------------------------------------------------------------
We continue to consider ways to improve the HHS-RADV audit process
to address State regulatory differences. In the past, we recognized
concerns regarding limitations imposed under certain States' medical
privacy laws that could limit providers' ability to furnish mental and
behavioral health records for HHS-RADV purposes, and in response, we
updated Sec. 153.630(b)(6) to permit use of abbreviated mental or
behavioral health assessments for HHS-RADV in situations where a
provider is subject to State (or Federal) privacy laws that prohibit
the provider from providing a complete mental or behavioral health
record to HHS.\165\ HHS appreciates regulatory differences across
States being brought to our attention and will continue to consider
these differences, such as those associated with behavioral diagnoses,
when developing policies.
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\165\ See the 2019 Payment Notice, 83 FR 16967 through 16969.
Also see Section 9.2.6.7--Acceptable Medical Record Source of the
2021 Benefit Year PPACA HHS Risk Adjustment Data Validation (HHS-
RADV) Protocols (November 9, 2022) available at https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf.
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Issuers should also develop and communicate with providers the
applicable policies and procedures that providers will need to follow
to support the issuer's business needs, including the issuer's
submission of data to their EDGE server and subsequent validation
[[Page 25795]]
of such data in HHS-RADV. If an issuer is aware of incorrect or
incomplete coding practices by a provider, the issuer should work to
resolve the incorrect or incomplete coding practices with the provider
and should not rely on the use of the LLPC list or non-EDGE claims to
address provider coding concerns.
We are discontinuing the use of the LLPC list and the non-EDGE
claims beginning with the 2022 benefit year. As such, beginning with
the 2022 benefit year of HHS-RADV, issuers will no longer be able to
submit non-EDGE claims to their IVA entities to supplement EDGE claims
reviewed during HHS-RADV and the LLPC list will also no longer be
available for use by the IVA (and SVA) entities in HHS-RADV. We will
update the HHS-RADV Protocols applicable to the 2022 benefit year and
beyond to capture these changes. In addition, we continue to encourage
issuers to examine ways to encourage providers to follow coding
guidelines and capture all relevant diagnoses on claims and notes
related to current treatments.
Comment: Several commenters expressed concern that discontinuing
the LLPC list and non-EDGE claims policy in HHS-RADV would increase
issuer dependence on provider's medical document retrieval. Some of
these commenters disagreed with HHS that issuers' ability to capture
conditions is based on experience with HHS-RADV or EDGE data
submissions, and instead asserted that accurately capturing conditions
depends on documentation received from providers. One of these
commenters shared that they request thousands of records every year
that they never receive. A few commenters raised concerns of claims
processing time impacting issuers' ability to submit diagnoses and
claims information to their EDGE servers, as well as validate the data
in HHS-RADV. One of these commenters stated that the inconsistent
nature of chart retrieval necessitates the continuation of the non-EDGE
claims policy to allow issuers to submit medical records associated
with a risk adjustment-eligible claim that missed the deadline for EDGE
submission. Another one of these commenters stated that a significant
number of HCCs are contained on facility claims for services that are
often furnished late in the year, which leaves issuers without enough
time to include them in EDGE data submissions. Another one of these
commenters noted that claims data on EDGE is often incomplete due to
the nature of claims adjudication processes and the use of non-EDGE
claims in HHS-RADV remedies this by allowing issuers to capture
conditions in HHS-RADV that may have been missed in EDGE data
submissions.
Response: After consideration of comments, HHS is discontinuing of
the use of the LLPC list and non-EDGE claims in HHS-RADV beginning with
2022 benefit year HHS-RADV and generally encourages issuers to work
with providers to improve processes for medical record retrieval. Once
the LLPC list and non-EDGE claim policy are discontinued, to receive
credit for an HCC in HHS-RADV, the condition will need to be linked to
a risk adjustment eligible claim that is accepted by the EDGE server
with the appropriate medical record documentation supporting the
diagnosis or treatment on the claim. Issuers should develop and
communicate with providers the policies and procedures they need to
comply with to support the issuer's complete submission of data to
their EDGE server and validation of that data in HHS-RADV. If issuers
are aware of providers that are unresponsive to documentation requests,
the issuer should work with those providers to resolve the concerns. To
assist issuers in medical record retrieval, we created an HHS-RADV
Provider Medical Record Request Memo on CMS letterhead, available via
the HHS-RADV Audit Tool, that issuers can use when engaging with
providers to obtain medical record documentation to support HHS-
RADV.\166\
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\166\ See Section 9.2.6.2--Medical Record and Chart Retrieval of
the 2021 Benefit Year PPACA HHS Risk Adjustment Data Validation
(HHS-RADV) Protocols (November 9, 2022) available at https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf.
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Additionally, HHS allows issuers until April 30th of the following
applicable benefit year, or until the next applicable business day if
April 30th does not fall on a business day, to submit all final claims,
supplemental diagnosis codes, and enrollment data for the applicable
benefit year of risk adjustment to their respective EDGE servers.\167\
The purpose of establishing the EDGE data submission deadline several
months after the close of the benefit year is to give issuers time to
collect all necessary claims information, including facility claims, as
we recognize there are often hospital stays that begin at the end of
the year and cross into the next.\168\
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\167\ See Sec. 153.730.
\168\ See, for example, the 2014 Payment Notice, 78 FR 15434
(explaining the EDGE data submission deadline `` . . . provides for
ample claims runout to ensure that diagnoses for the benefit year
are captured, while providing HHS sufficient time to run enrollee
risk score, plan average risk, and payments and charges calculations
and meet the June 30 deadline described at the redesignated Sec.
153.310(e) . . .'')
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In addition, we recognize that issuers may sometimes experience
delays in the submission of claims by providers and facilities, as well
as reprocess claims submitted to their EDGE servers after the
applicable benefit year's data submission deadline. However, issuers
are not permitted to submit additional data or correct data already
submitted to their EDGE servers after the applicable benefit year's
deadline and remain responsible for ensuring the completeness and
accuracy of the data submitted to their EDGE servers by the applicable
data submission deadline.\169\ This deadline is applicable to all
issuers of risk adjustment covered plans to create a level playing
field and to create a clear deadline for when the previous benefit year
needs to be closed out so transfers can be calculated. Given that HHS-
RADV is an audit of data issuers submit to EDGE, claims that miss the
deadline for EDGE submission should generally not be used to support
HCC validation in HHS-RADV. As previously explained, the LLPC list and
use of non-EDGE claims policies were adopted in the early years of HHS-
RADV to help simplify and streamline the process as issuers gained
experience with the HHS-RADV Protocols and addressed any lingering
challenges with the EDGE data submission process. HHS believes it is
now appropriate to end these policies as there is clear evidence that
issuers are now sufficiently familiar with these operations. In fact,
HHS rarely observes claims processing times preventing issuers from
meeting applicable EDGE data submission deadlines, as all States were
included in interim risk adjustment summary reports for the 2017
through 2021 benefit years.\170\ This means that, from the 2017 through
2021 benefit years, all issuers of risk adjustment covered plans with
0.5 percent or more of market share submitted at least 90 percent of a
full year of medical claims to their EDGE servers by the applicable
deadline, as well as met data quality evaluation checks. HHS recognizes
there can be challenges in the document retrieval process and continues
to welcome feedback from stakeholders on ways HHS can further support
issuers with document retrieval for HHS-RADV.
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\169\ See, for example, the Evaluation of EDGE Data Submissions
for 2022 Benefit Year EDGE Server Data Bulletin (October 25, 2022),
available at https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/edge_2022_qq_guidance.pdf.
\170\ See supra note 14947.
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[[Page 25796]]
Comment: Several commenters recommended maintaining the LLPC list
in HHS-RADV and extending it to also apply to EDGE data submissions. A
few commenters raised concerns about conflicting rules between HHS-RADV
Protocols and the standard coding principles and guidelines that
issuers must follow to submit data to their EDGE servers. One of these
commenters noted AHA Coding Clinic guidance disallowing abstraction of
chronic conditions from past medical history and supported HHS
alignment of the EDGE Server Business Rules and the HHS-RADV Protocols,
including with respect to the treatment of chronic conditions found in
the past medical history section of the medical record. Another
commenter stated the need for greater clarity to ensure consistent
coding guidelines across providers, issuers and IVA entities, and
asserted that discontinuing the use of LLPC list would exacerbate
inconsistent interpretations of standard coding guidelines across
issuers and IVA entities. This commenter stated that Coding Clinic
Guidance has increased confusion of the standard coding guidelines and
urged HHS to intervene with the Coding Clinic process and to not
relinquish authority to the Coding Clinic.\171\ This commenter also
noted that the LLPC list is widely appreciated by IVA entities that
lack coding experience and knowledge.
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\171\ See, for example, ICD-10-CM/PCS Coding Clinic, Second
Quarter 2022, Page 30 to 31, Reporting Additional Diagnoses in
Outpatient Setting.
---------------------------------------------------------------------------
Response: HHS is discontinuing the use of the LLPC list and non-
EDGE claims in HHS-RADV beginning with the 2022 benefit year HHS-RADV.
This change does not change coding guidance for the HHS-operated risk
adjustment program or the EDGE Server Business Rules.\172\ Issuers are
still required to follow standard coding principles and guidelines when
submitting data to EDGE.
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\172\ When abstracting a diagnosis, HHS-RADV interested parties
should reference, in sequential order, the conventions in the ICD-
10-CM and ICD10-PCS classification, ICD-10-CM Official Coding
Guidelines for Coding and Reporting, the AHA Coding Clinic. See, for
example, Section 9.2.6.3--Medical Record Review and Diagnosis
Abstraction of the 2021 Benefit Year PPACA HHS Risk Adjustment Data
Validation (HHS-RADV) Protocols (November 9, 2022) available at
https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf.
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As previously explained, HHS created the LLPC list in the early
years of HHS-RADV to assist with coding abstraction for IVA and SVA
entities as issuers gained experience with HHS-RADV and addressed any
lingering EDGE data submission challenges, but the LLPC list was never
a supplement to or replacement for the EDGE Server Business Rules. As
such, we do not believe it is appropriate to extend the use of the LLPC
list to EDGE data submissions. The HHS-operated risk adjustment program
relies on EDGE server data to identify risk incurred by the issuer,
measured using the issuer's claims from only the current benefit year.
Extending the use of the LLPC list to EDGE data submissions could
result in an issuer receiving credit for risk that they did not incur
in the benefit year, and thereby create an EDGE server data integrity
issue. Rather, we believe that issuers have now gained sufficient
experience with HHS-RADV and EDGE data submission processes such that
it is appropriate at this time, to promote consistency between the EDGE
Server Business Rules and the HHS-RADV Protocols, to discontinue the
use of the LLPC list beginning in the 2022 benefit year of HHS-RADV.
The EDGE Server Business Rules require issuers to comply with standard
coding principles and guidelines, which include any guidelines
regarding the treatment of chronic conditions found in the past medical
history section of the medical record.\173\
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\173\ See, for example, Table 49: `Standard Code Sets and
Sources' of the EDGE Server Business Rules (ESBR) Version 22.0
(November 2022) available at https://regtap.cms.gov/reg_librarye.php?i=3765, which lists the standard code sets and
sources the EDGE server uses to verify submitted codes during data
submission.
---------------------------------------------------------------------------
We affirm that, with the removal of the LLPC list, IVA entities
will no longer be permitted to rely on the treatment of chronic
conditions found in the past medical history section of the medical
record to validate enrollee health status. This policy change, along
with the discontinuation of the non-EDGE claims policy, will apply
beginning with the 2022 benefit year of HHS-RADV. Consistent with the
IVA requirements in Sec. 153.630(b) and the applicable standards
established by HHS, IVA entities will continue to be required to follow
the ICD-10-CM and ICD-10 PCS classifications, Official Guidelines for
Coding and Reporting and the American Hospital Association (AHA) Coding
Clinic, along with professional judgment, to abstract diagnoses during
health status validation.\174\ Advice published in Coding Clinic does
not replace the instruction in the ICD-10-CM and ICD-10-PCS
classification or the Official Guidelines for Coding and Reporting. HHS
cannot provide specific coding guidance for the purposes of HHS-RADV,
and it is not our role to resolve disputes between coding clinic
guidance.175 176 We believe that it is important for coding
clinics to remain independent of HHS' influence to promote consistency
and ensure diagnosis validation in accordance with industry standards.
Although the SVA entity performs a second validation audit on a
subsample of IVA Entity submission data to verify the IVA findings,
issuers must ensure that their IVA Entities are reasonably capable of
performing an IVA according to the requirements and standards
established by HHS, which includes validating the risk score of each
enrollee in the sample by validating medical records according to
industry standards for coding and reporting.\177\
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\174\ See Sec. 153.630(b)(2). Also see, for example, section
9.2.6 Phase 5--Health Status Validation of the HHS of the 2021
Benefit Year PPACA HHS Risk Adjustment Data Validation (HHS-RADV)
Protocols (November 9, 2022) available at https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf.
\175\ On behalf of HHS, the Center for Consumer Information and
Insurance Oversight (CCIIO), a component within CMS, performs
functions related to the operation of the HHS-RADV program and
promulgates standards governing the establishment by issuers of the
EDGE server that is used for the HHS risk adjustment data collection
process.
\176\ See Section 9.2.6.11--Medical Record Abstraction of the
HHS of the 2021 Benefit Year PPACA HHS Risk Adjustment Data
Validation (HHS-RADV) Protocols (November 9, 2022) available at
https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf.
\177\ See Sec. 153.630(b)(2) and (b)(7)(iv).
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d. HHS-RADV Discrepancy and Administrative Appeals Process
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78245), we proposed to shorten the window
under Sec. 153.630(d)(2) for issuers to confirm the findings of the
SVA (if applicable),\178\ or file a discrepancy report, to within 15
calendar days of the notification by HHS, beginning with the 2022
benefit year of HHS-RADV. To effectuate this proposed amendment, we
proposed the following four revisions to Sec. 153.630(d): (1) remove
the reference to the calculation of the risk score error rate as a
result of HHS-RADV; (2) revise Sec. 153.630(d)(2) to establish that
the attestation and discrepancy reporting window for the SVA findings
(if applicable) will be within 15 calendar days of the notification by
HHS of the SVA findings (if applicable), rather than the current 30-
calendar-day reporting window; (3) redesignate current paragraph (d)(3)
as paragraph (d)(4); and (4) add a new Sec. 153.630(d)(3) to
[[Page 25797]]
maintain the current attestation and discrepancy reporting window for
the calculation of the risk score error rate, which provides that
within 30 calendar days of the notification by HHS of the calculation
of the risk score error rate, in the manner set forth by HHS, an issuer
must either confirm or file a discrepancy report to dispute the
calculation of the risk score error rate as a result of HHS-RADV. In
addition, we proposed to make corresponding amendments to the cross-
references to Sec. 153.630(d)(2) that appear in Sec. Sec.
153.710(h)(1) and 156.1220(a)(4)(ii), to add a reference to paragraph
(d)(3). We sought comment on this proposal and the accompanying
conforming amendments.
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\178\ Only those issuers who have insufficient pairwise
agreement between the IVA and SVA receive SVA findings. See 84 FR
17495. Also see 86 FR 24201.
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After reviewing the public comments, we are finalizing this
provision as proposed. We summarize and respond to public comments
received on the proposal and accompanying proposed amendments to
shorten the window to 15 calendar days to confirm the SVA findings or
file a discrepancy report, under Sec. 153.630(d)(2), beginning with
the 2022 benefit year HHS-RADV below.
Comment: Some commenters generally supported shortening the window
to confirm the SVA findings or file a discrepancy report to dispute the
SVA findings to within 15 calendar days of the notification by HHS
beginning with the 2022 benefit year HHS-RADV. Other commenters stated
that shortening the window would have a positive impact on reporting
HHS-RADV adjustments for medical loss ratio (MLR) by supporting more
timely reporting of these amounts. One commenter stated that, based on
their experience, 15-calendar days provides sufficient time to respond
to the SVA findings notification from HHS.
However, some commenters were opposed to the proposal to shorten
the SVA attestation and discrepancy reporting timeframe from 30 to 15
days and instead recommended maintaining the existing 30-calendar day
window. These commenters stated that they believed that the proposed
15-day timeline would not provide adequate time for issuers to complete
a thorough review of the SVA findings. Another commenter suggested that
the timeframes could be shortened elsewhere in the HHS-RADV process to
keep the 30-day timeframe for the SVA attestation and discrepancy
reporting process. This commenter also noted it would be helpful for
issuers to receive their HHS-RADV error rates sooner for use in
pricing.
A few commenters asserted that a 15-calendar day window would
create internal challenges and operational burden in cases that require
data extraction or information from clinical staff. One of these
commenters noted that diverting the attention of Medical Directors to
reviewing SVA findings would strain care and utilization management
services, and thus, negatively impact members.
One commenter stated that shortening the window may cause issuers
to appeal matters preemptively that would not have otherwise been
appealed. This commenter also disagreed with HHS' rationale that the
shortened window is appropriate because the SVA finding attestation and
discrepancy reporting process is limited to the small number of issuers
that have insufficient pairwise agreement between the IVA and SVA. The
commenter indicated when an issuer receives SVA findings, an issuer's
IVA results may raise material concerns that could impact other issuers
in HHS-RADV, including the reporting of discrepancies due to
insufficient pairwise agreement that have the potential of having
substantial financial impacts and the issuer's risk score error rate
calculation.
Response: After consideration of comments received, we are
finalizing the proposal to shorten the SVA attestation and discrepancy
reporting window from 30 to 15 calendar days as proposed. We are also
finalizing the conforming amendments to Sec. Sec. 153.630(d),
153.710(h)(1) and 156.1220(a)(4)(ii) to implement this change to the
SVA attestation and discrepancy reporting window as proposed. We agree
with commenters that this change will help to support timely reporting
of the HHS-RADV adjustments to risk adjustment State payment transfers
in issuers' MLR reports.
We also believe that shortening the attestation and discrepancy
reporting window related to SVA results will improve HHS' ability to
finalize SVA findings results prior to release of the applicable
benefit year HHS-RADV Results Memo and the Summary Report of Risk
Adjustment Data Validation Adjustments to Risk Adjustment Transfers for
the applicable benefit year and prior to the MLR Reporting deadline.
These reports are time-sensitive publications that cannot be developed
until all SVA discrepancies are resolved and SVA findings are
finalized. Our experience is also similar to the commenter who shared
their perspective that a 15-day window is sufficient time to respond to
the SVA findings notification from HHS. We further note that a 15-
calendar-day SVA attestation and discrepancy reporting window is
consistent with the IVA sample and EDGE attestation and discrepancy
reporting windows at Sec. Sec. 153.630(d)(1) and 153.710(d),
respectively.
Although we appreciate the concerns expressed by some commenters,
especially the potential internal challenges, operational burden, and
potential downstream impacts on members, we believe the positive
effects to reporting, combined with experience suggesting the 15-day
window is feasible, provide sufficient countervailing support to
shortening the window. HHS continues to believe that shortening the SVA
window will benefit issuers by facilitating the issuance of more timely
reports that can be used in pricing, including improving HHS' ability
to finalize SVA findings results prior to release of the applicable
benefit year HHS-RADV Results Memo and the Summary Report of Risk
Adjustment Data Validation Adjustments to Risk Adjustment Transfers for
the applicable benefit year.
We appreciate the request to shorten other timeframes in the HHS-
RADV process to maintain the 30-day window for the SVA attestation and
discrepancy reporting window, and while HHS continually considers
process improvements to find more efficient ways to conduct HHS-RADV,
we do not believe there are other areas we could shorten timelines for
the processes at this time. These comments are also outside the scope
of this rulemaking as we did not propose shortening any other HHS-RADV
timelines in the proposed rule.
Additionally, as previously explained, the shortened window for the
SVA attestation and discrepancy reporting window generally impacts a
limited number of issuers. That is, our experience indicates that few
issuers have insufficient pairwise agreement between the IVA and SVA
such that they receive SVA findings; therefore, only few issuers would
even have the option to file an SVA discrepancy. Of the issuers that
receive SVA findings, our experience is that only a subset will
actually file a discrepancy, and therefore, based on this experience,
HHS believes only a very small number of issuers will be impacted by
this change in future benefit years of HHS-RADV. Because a very small
number of issuers will be impacted and the SVA discrepancy window will
still be available for those issuers to raise material concerns,
including those that could impact other issuers in HHS-RADV, the
shortened SVA attestation and discrepancy reporting window mitigates
concerns regarding financial
[[Page 25798]]
impacts and the issuer's risk score error rate calculation.
We also do not believe that shortening the SVA attestation and
discrepancy reporting window may cause issuers to appeal matters
preemptively. Issuers are bound by the requirements of Sec. 156.1220,
specifically paragraph (a)(4)(ii) which provides that notwithstanding
Sec. 156.1220(a)(1), a reconsideration with respect to a processing
error by HHS, HHS's incorrect application of the relevant methodology,
or HHS's mathematical error may be requested only if, to the extent the
issue could have been previously identified, the issuer notified HHS of
the dispute through the applicable process for reporting a discrepancy
set forth in Sec. Sec. 153.630(d)(2) and (3), 153.710(d)(2), and
156.430(h)(1), it was so identified and remains unresolved.
Finally, the shortened window also does not change the underlying
burden for an issuer to attest or file a discrepancy of its SVA results
as those tasks generally remain the same. Instead, this change only
relates to the timeframe to complete these activities, but the existing
overall burden hours to complete these tasks remains unchanged.\179\ We
recognize this change may have a short-term impact, such as diverting
the attention of Medical Directors to reviewing SVA findings on a
shorter timeline, but we expect the same staff and resources would
generally be involved. Therefore, we do not expect this change will
result in significant long-term downstream impacts to members. For all
of the reasons outlined above, we believe the benefits of the shortened
attestation and discrepancy reporting window for an issuer to attest to
or file a discrepancy for its SVA findings under new Sec.
153.630(d)(2) from 30 to 15 calendar days outweigh the reasons to
maintain the 30-day window.
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\179\ For information on the associated burdens, see OMB Control
Number 0938-1155 (CMS-10401--``Standards Related to Reinsurance,
Risk Corridors, and Risk Adjustment).
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8. EDGE Discrepancy Materiality Threshold (Sec. 153.710)
We are finalizing, as proposed, the regulatory amendment from the
HHS Notice of Benefit and Payment Parameters for 2024 proposed rule (87
FR 78206, 78247) to the EDGE discrepancy materiality threshold set
forth at Sec. 153.710(e) to align it with the final policy adopted in
preamble in part 2 of the 2022 Payment Notice.\180\ We are also
finalizing, as proposed, the conforming amendment to Sec.
153.710(h)(1) to add a reference to new Sec. 153.630(d)(3).
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\180\ See 86 FR 24194 through 24195.
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As we explained in the proposed rule, the EDGE discrepancy
materiality threshold final policy was intended to reflect that the
amount in dispute must equal or exceed $100,000 or one percent of the
total estimated transfer amount in the applicable State market risk
pool, whichever is less. HHS generally only takes action on reported
material EDGE discrepancies that harm other issuers in the same State
market risk pool and, based on HHS' experience with prior benefit
years, EDGE discrepancies that are less than a fraction of total State
market risk pool transfers are unlikely to materially impact other
issuers. We therefore proposed to amend Sec. 153.710(e) to align with
this final policy. We also proposed to amend Sec. 153.710(h)(1) to add
a reference to new proposed Sec. 153.630(d)(3) to align with the
changes discussed in section III.A.7.d. of this preamble (HHS-RADV
Discrepancy and Administrative Appeals Process), to shorten the SVA
attestation and discrepancy reporting period. We sought comment on the
proposed amendments to Sec. 153.710.
After reviewing the public comments, we are finalizing these
amendments as proposed. The following is a summary of the comment we
received and our response.
Comment: One commenter supported the proposal to update the EDGE
discrepancy materiality threshold captured in Sec. 153.710(e) to
reflect that the amount in dispute must equal or exceed $100,000 or one
percent of the total estimated transfer amount in the applicable State
market risk pool, whichever is less. This commenter also asked that HHS
consider applying the same threshold to reporting discrepancies because
it would allow issuers to discontinue reporting minor discrepancies,
which requires significant time and resources.
Response: We are finalizing the amendment to the EDGE discrepancy
materiality threshold such that the amount in dispute must equal or
exceed $100,000 or one percent of the total estimated transfer amount
in the applicable State market risk pool, whichever is less, as
proposed. We did not propose and are not finalizing a threshold for
reporting EDGE discrepancies. Issuers must continue to report all
discrepancies to HHS for HHS to determine whether they are material and
actionable.\181\
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\181\ See Sec. 153.710(d)(2). Also see 83 FR 16970 through
16971. See also, for example, CMS. (2022, October 25). Evaluation of
EDGE Data Submissions for the 2022 Benefit Year. https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/edge_2022_qq_guidance.pdf.
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We are also finalizing the conforming amendment to add a reference
to the new Sec. 153.630(d)(3) to the introductory text in Sec.
153.710(h)(1). For a discussion of the comments related to the
shortening of the SVA window to confirm, or file a discrepancy for SVA
findings to 15 days, see the preamble discussion in section III.A.7.d.
of this rule (HHS-RADV Discrepancy and Administrative Appeals Process).
B. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Exchange Blueprint Approval Timelines (Sec. 155.106)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78247), we proposed a change to address the
Exchange Blueprint approval timelines for States transitioning from
either a Federally-facilitated Exchange (FFE) to a State-based Exchange
on the Federal Platform (SBE-FP) or to a State Exchange, or from an
SBE-FP to a State Exchange. At Sec. 155.106(a)(3) (for FFE or SBE-FP
to State Exchange transitions) and (c)(3) (for FFE to SBE-FP
transitions), we proposed to revise the current timelines by which a
State must have an approved or conditionally approved Exchange
Blueprint to require that States gain approval prior to the date on
which the Exchange proposes to begin open enrollment either as an State
Exchange or SBE-FP. The current regulatory timeline by which a State
must have an approved or conditionally approved Exchange Blueprint was
finalized in the 2017 Payment Notice (81 FR 12203, 12241 through
12242). Based on our experience with Exchange transitions since then,
we stated in the proposed rule (87 FR 78206, 78247) that we believed
the current timeline by which a State must gain Exchange Blueprint
approval did not sufficiently support States' need to work with HHS to
finalize and submit an approvable Exchange Blueprint.
Section 155.106 currently requires States to have an approved or
conditionally approved Exchange Blueprint 14 months prior to an SBE-FP
to State Exchange transition in accordance with paragraph (a)(3) and
three months prior to a FFE to SBE-FP transition in accordance with
paragraph (c)(3). The submission and approval of Exchange Blueprints is
an iterative process that generally takes place over the course of 15
months prior to a State's first open enrollment with a
[[Page 25799]]
State Exchange, or 3 to 6 months prior to a State's first open
enrollment with an SBE-FP. The Exchange Blueprint serves as a vehicle
for a State to document its progress toward implementing its intended
Exchange operational model. HHS' review and approval of the Exchange
Blueprint involves providing substantial technical assistance to States
as they design, finalize, and implement their Exchange operations. The
transition from a FFE to a SBE-FP or State Exchange, or SBE-FP to State
Exchange, involves significant collaboration between HHS and States to
develop plans and document readiness for the State to transition from
one Exchange operational model and information technology
infrastructure to another. These activities include the State
completing key milestones, meeting established deadlines, and
implementing contingency measures.
Finalizing our proposal to require Exchange Blueprint approval or
conditional approval prior to an Exchange's first open enrollment
period will allow States the additional time and flexibility if needed,
that, in our experience, is necessary to support the development and
finalization of an approvable Exchange Blueprint, as well as for
completion of the myriad of activities necessary to transition QHP
enrollees in the State to a new Exchange model and operator. We are of
the view that the more generous proposed timeline is appropriate and
necessary to support a State's submission of an approvable Exchange
Blueprint. The proposed timeline is more protective of the significant
investments of personnel time and State tax dollars a State must make
to stand up a new Exchange, by providing the State a timeline that
reflects the realities of the time necessary to develop an approvable
Exchange Blueprint that shows the Exchange will be ready to support the
State's current and future QHP enrollees and applicants for QHP
enrollment.
We sought comment on this proposal, including comments related to
how transitioning State Exchanges could provide greater transparency to
consumers regarding the Exchange Blueprint approval process.
After reviewing the public comments, we are finalizing this
provision as proposed. We summarize and respond to public comments
received on the proposed Exchange Blueprint approval timelines at Sec.
155.106 below.
Comment: Multiple commenters supported the proposal that States
receive approval on their Blueprint applications to operate a State
Exchange or SBE-FP prior to their first open enrollment (rather than 14
months or 3 months before, as previously applicable), noting that the
additional time for States to obtain approval of its Blueprint
application will help States better implement State Exchange or SBE-FP
requirements and prepare for State Exchange or SBE-FP operations.
Response: We agree that revising the current timelines by which a
State must have an approved or conditionally approved Exchange
Blueprint as proposed will permit States additional time to implement
State Exchange or SBE-FP requirements.
Comment: One commenter suggested that States transitioning to State
Exchanges could aim to provide greater transparency to consumers
regarding the Blueprint approval process by adding information to their
board meetings and making consumers aware of those meetings.
Response: We acknowledge this suggestion that States transitioning
to State Exchanges should aim to provide greater transparency to
consumers, however, this is outside the scope of this proposal.
Comment: A few commenters opposed the proposal, stating that
without assurance of HHS' approval of the transition per current
timelines, impacted interested parties in States transitioning to State
Exchanges or SBE-FPs could face associated implementation risks. These
commenters noted that issuers, as an example, require adequate time to
implement operational changes necessary to accommodate a State
transitioning to a State Exchange, such as changes to information
technology systems, member communications, and marketing materials,
with the goal of minimizing consumer confusion.
Response: We recognize the importance of interested parties, such
as issuers and agents and brokers, in a State's transition to either a
State Exchange or SBE-FP. The revision to the current timelines in
Sec. 155.106(a)(3) and (c)(3) does not circumvent the substantial
technical assistance we provide to States as they design, finalize, and
implement their Exchange operations. This involves significant
collaboration between HHS and States to develop plans and document
readiness for the State to transition from one Exchange operational
model and information technology infrastructure to another. Moreover,
as part of a State's transition, States are required to consult on an
ongoing basis with interested parties, under Sec. 155.130, to make
them aware of transitioning activities and progress, with the goal of
maximizing a seamless consumer experience. As such, we expect a State
transitioning to a State Exchange or SBE-FP to coordinate well in
advance with interested parties around its progress and the likelihood
of implementing the applicable Exchange model operations for its
intended first year of open enrollment.
2. Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards (Sec. Sec. 155.210, 155.215,
and 155.225)
a. Repeal of Prohibitions on Door-to-Door and Other Direct Contacts
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78248), we proposed to repeal the
provisions that currently prohibit Navigators, certified application
counselors, non-Navigator assistance personnel in FFEs, and non-
Navigator assistance personnel in certain State Exchanges funded with
section 1311(a) Exchange Establishment grants (collectively, Assisters)
from going door-to-door or using other unsolicited means of direct
contact to provide enrollment assistance to consumers. This proposal
will eliminate barriers to coverage access by maximizing pathways to
enrollment.
Section 1311(d)(4)(K) and 1311(i) of the ACA direct all Exchanges
to establish a Navigator program. Navigator duties and requirements for
all Exchanges are set forth in section 1311(i) of the ACA and Sec.
155.210. Section 1321(a)(1) of the ACA directs the Secretary to issue
regulations that set standards for meeting the requirements of title I
of the ACA, for, among other things, the establishment and operation of
Exchanges. Under section 1321(a)(1) of the ACA, the Secretary issued
Sec. 155.205(d) and (e), which authorizes Exchanges to perform certain
consumer service functions in addition to the Navigator program, such
as the establishment of a non-Navigator assistance personnel program.
Section 155.215 establishes standards for non-Navigator assistance
personnel in FFEs and in State Exchanges if they are funded with
section 1311(a) Exchange Establishment grant funds.\182\ Section
155.225 establishes the certified application counselor program as a
consumer assistance function of the Exchange, separate from and in
addition to the functions described in Sec. Sec. 155.205(d) and (e),
155.210, and 155.215.
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\182\ At this time, no State Exchanges are funded with section
1311(a) Exchange Establishment grant funds.
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Assisters are certified and trusted community partners who provide
free and impartial enrollment assistance to consumers. They conduct
outreach and
[[Page 25800]]
education to raise awareness about the Exchanges and other coverage
options. Their mission focuses on assisting the uninsured and other
underserved communities to prepare applications, establish eligibility
and enroll in coverage through the Exchanges, among many other things.
The regulations governing these Assisters prohibit them from soliciting
any consumer for application or enrollment assistance by going door-to-
door or through other unsolicited means of direct contact, including
calling a consumer to provide application or enrollment assistance
without the consumer initiating the contact, unless the individual has
a pre-existing relationship with the individual Assister or designated
organization and other applicable State and Federal laws are otherwise
complied with. We have interpreted this prohibition in the 2015 Market
Standards final rule (79 FR 30240, 30284 through 30285) as still
permitting door-to-door and other unsolicited contacts to conduct
general consumer education or outreach, including to let the community
know that the Assister's organization is available to provide
application and enrollment assistance services to the public.
The existing regulations prohibiting Navigators (at Sec.
155.210(d)(8)), non-Navigator assistance personnel (through the cross-
reference to Sec. 155.210(d) in Sec. 155.215(a)(2)(i)), and certified
application counselors (at Sec. 155.225(g)(5)) were initially
finalized in the 2015 Market Standards final rule (79 FR 30240). At the
time that HHS proposed and finalized the 2015 Market Standards rule in
2014, the Exchanges were just beginning to establish operations. At the
time, we believed that prohibiting door-to-door solicitation and other
unsolicited means of direct consumer contact by an Assister for
application or enrollment assistance would ensure that Assisters'
practices were sufficiently protective of the privacy and security
interests of the consumers they served. We also believed that
prohibiting unsolicited means of direct contacts initiated by Assisters
was necessary to provide important guidance and peace of mind to
consumers, especially when they were faced with questions or concerns
about what to expect in their interactions with individuals offering
Exchange assistance.\183\
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\183\ 79 FR 30240.
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However, under existing regulations, Navigators and other non-
Navigator assistance personnel in FFE States are permitted to conduct
outreach to consumers using consumer information provided to them by an
FFE. The Health Insurance Exchanges (HIX) System of Records
Notice,\184\ Routine Use No. 1 provides that the FFEs may share
consumer information with HHS grantees, including Navigators and other
non-Navigator assistance personnel in FFE States, who have been engaged
by HHS to assist in an FFE authorized function, which includes
conducting outreach to persons who have been redetermined ineligible
for Medicaid/CHIP. In this limited circumstance, an FFE may share with
Navigators and other non-Navigator assistance personnel in FFE States
consumer information that the FFE receives from Medicaid/CHIP agencies
once a consumer has been redetermined ineligible for Medicaid/CHIP for
the Navigators and other non-Navigator assistance personnel to conduct
outreach to such consumers regarding opportunities for coverage through
the FFEs.
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\184\ 78 FR 63211, 63215.
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Since finalizing the 2015 Market Standards final rule, we have
enacted a number of measures designed to ensure that Assisters are
properly safeguarding the personally identifiable information of all
consumers they assist. As part of their annual certification training,
we require Assisters to complete a course on privacy, security, and
fraud prevention standards. Further, we require Assisters to obtain a
consumer's consent before discussing or accessing their personal
information (except in the limited circumstance described above) and to
only create, collect, disclose, access, maintain, store and/or use
consumer personally identifiable information to perform the functions
that they are authorized to perform as Assisters in accordance with
Sec. Sec. 155.210(b)(2)(iv) and (c)(1)(v), 155.225(d)(3), and
155.215(b)(2), as applicable. In addition, now that the Exchanges and
their Assister programs have been in operation for almost 10 years,
Assisters have more name recognition and consumer trust within the
communities the Assisters serve. Accordingly, we believe that our
previous concerns related to consumers' privacy and security interests
and consumers not knowing what to expect when interacting with
Assisters have been sufficiently mitigated with the measures we have
enacted such that a blanket prohibition on unsolicited direct contact
of consumers by Assisters for application or enrollment assistance is
no longer necessary.
The prohibition on door-to-door enrollment assistance places
additional burden on consumers and Assisters to make subsequent
appointments to facilitate enrollment, which creates access barriers
for consumers to receive timely and relevant enrollment assistance.
Additionally, this prohibition could impede the Exchanges' potential to
reach a broader consumer base in a timely manner, reduce uninsured
rates, and increase access to health care. We believe it is important
to be able to increase access to coverage for those whose ability to
travel is impeded due to mobility, sensory or other disabilities, who
are immunocompromised, and who are limited by a lack of transportation.
Consistent with the proposal to remove the general prohibition on
door-to-door and other direct outreach by Navigators, we proposed to
delete Sec. 155.210(d)(8). The repeal of Sec. 155.210(d)(8) will
remove the general prohibition on door-to-door and other direct
outreach by non-Navigator assistance personnel in FFEs and in State
Exchanges if funded with section 1311(a) Exchange Establishment grants,
as Sec. 155.215(a)(2)(i) requires such entities to comply with the
prohibitions on Navigator conduct set forth at Sec. 155.210(d).
Likewise, we proposed to repeal Sec. 155.225(g)(5), which currently
imposes the general prohibition against door-to-door and other direct
contacts on certified application counselors.
As we explained in the proposed rule (87 FR 78249), we are now of
the view that repealing restrictions on an Exchange's ability to allow
Navigators, non-Navigator assistance personnel, and certified
application counselors to offer application or enrollment assistance by
going door-to-door or through other unsolicited means of direct contact
is a positive step that will enable Assisters to reach a broader
consumer base in a timely manner--helping to reduce uninsured rates and
health disparities by removing underlying barriers to accessing health
coverage.
We sought comment on this proposal.
After reviewing the public comments, we are finalizing this
provision as proposed. We summarize and respond to public comments
received on the proposed repeal of the provisions that prevent
Assisters from going on door-to-door or using other unsolicited means
of direct contact to provide enrollment assistance to consumers below.
Comment: The vast majority commenters supported this proposal,
stating that it will help reduce uninsured rates and health
disparities; improve health literacy in rural and underserved
communities; and reduce burden on consumers, especially those
experiencing social determinants of health that negatively affect
health care
[[Page 25801]]
access and quality (for example, lack of transportation) or have
inflexible job schedules; and immunocompromised individuals. Commenters
also frequently noted that Navigators provide a key role in Medicaid
and CHIP enrollments and have trusted relationships in the community.
Health Centers commented that they appreciated the increased
flexibility to go out into the community and reach patients who need
the most support. Lastly, commenters stated that the proposal was
particularly important to maintaining health insurance enrollments in
light of Medicaid unwinding.
Response: We agree that that door-to-door consumer education,
outreach, and enrollment can be a useful and effective method for
addressing the concerns raised by commenters. We appreciate the
overwhelming support for this proposal and agree that it will help
Assisters continue to build trusted relationships in the community,
which may result in an overall reduction in uninsured rates and reduce
health disparities.
Comment: Several commenters recommended reinstating previous
requirements to have two Navigator organizations in each State, with
one being a local trusted non-profit that maintains a principal place
of business within their Exchange service area.
Response: We agree that having two Navigator organizations in each
State to provide face-to-face assistance could further help consumer
assistance personnel understand and meet the specific needs of the
communities they serve, foster trust between consumer assistance
personnel and community members, and encourage participation in the
Assister programs by individuals whose backgrounds and experiences
reflect those of the communities they serve. However, we maintain that
the two per State requirement may be too restrictive for Assister
organizations already successfully providing remote assistance. In many
circumstances, remote assistance may be more effective or practical
than face-to-face assistance, particularly when an Assister is
providing services to difficult-to-reach individuals or populations.
Additionally, during the COVID PHE, usage of alternate methods of
interactions with consumers, such as through telecommunication and
digital health care tools, became more widespread. We believe that
reaching as many consumers as possible is important as we approach
Medicaid unwinding and strive to continually increase health insurance
program enrollments. We train and entrust Assisters to help in the
manner requested by the consumer, when possible.
Comment: Some commenters had mixed reactions to the proposal,
supporting the intent but expressing concerns about protecting
consumers against fraud. Some commenters specifically recommended that
we withdraw or rewrite this section to protect consumers more
adequately from fraud, by requiring Assisters going door-to-door to
provide identification, records of enrollment transactions, and clear
instructions on how to cancel any completed enrollments, as well as
additional training to ensure Assisters obtain the consent of the
household member in charge of financial matters.
Response: We appreciate the commenters' concerns and agree with
them about protecting consumers against fraud. We have taken various
measures to protect consumers against fraud. For example, we have
recently updated the privacy and security requirements included in all
Assister organizations agreements in consultation with the CMS security
and privacy subject matter experts. We will continue to work on
improving these requirements to ensure we are in alignment with current
best practices to safeguard consumer privacy and security information.
We believe that current requirements adequately require Assisters
to obtain informed consent from consumers. Assisters who complete an
enrollment transaction must obtain a consent form from the consumer
before collecting PII to carry out authorized Assister functions. In
the Standard Operating Procedures Manual for Assisters in the
Individual Federally-facilitated Marketplaces Consumer Protections:
Privacy and Security Guidelines \185\ we also encourage Assisters to
ensure consumers take possession of their enrollment documents during
in-person appointments (though Assisters can provide postage materials
and/or mail a paper application on a consumer's behalf as long as the
consumer consents to the Assister's retaining the application for this
purpose). Assisters can add a specific consent to the Navigator's or
certified application counselor's model authorization form so that
consumers can consent to having their application mailed on their
behalf.
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\185\ https://marketplace.cms.gov/technical-assistance-resources/sop-privacy-security-guidelines.pdf.
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We also have ways for a consumer to verify the legitimacy of
Assisters such as requesting Assisters furnish a certificate of
training completion from HHS that contains their name and unique
Assister ID number, or simply requesting their name and Assister ID
number, which consumers can verify by calling the Marketplace Call
Center.
Lastly, we appreciate the constructive feedback on additional
measures we may take to protect consumers from fraud and will take
these into consideration in future rulemaking, training, and policy
guidance.
Comment: Some commenters opposing the proposal expressed concerns
about privacy and unwanted solicitations, and suggested that allowing
door-to-door enrollments would compromise Assister impartiality and
create confusion and misunderstanding among consumers. Commenters also
opined that Assisters do not have the ability to project income for
consumers with multiple sources of income. Commenters also suggested we
have argued in the past that educating the public in conjunction with
marketing creates confusion. Lastly, commenters stated that there is a
prohibition against door-to-door enrollment by FFE agents and brokers
which should be applied equally to Assisters.
Response: We appreciate the commenters' feedback but we have taken
great strides to ensure the privacy and security of consumers'
information through a variety of mechanisms. This includes requiring
Assisters to obtain consumer consent to access their PII to carry out
authorized Assister functions via an authorization form which must be
maintained by the Assister organization for six years. Assisters also
provide the FFE Privacy Policy to consumers they are assisting with
enrollment, which explains how their PII will be used and safeguarded.
This is also publicly available at HealthCare.gov/privacy/.
Additionally, Assisters undergo certification training that includes
modules on Privacy, Security, and Fraud Prevention Strategies, and
Assister organizations must have policies and procedures for the
collection, use, protection, and securing of PII. We also note that
certification training includes modules that help to build trust from
consumers by providing best practices for serving vulnerable and
underserved populations, working with consumers with disabilities,
providing language access, and doing all these things in a culturally
sensitive manner.
We consider Assisters to be able to assist consumers with multiple
streams of income. Assisters are required to know and understand the
Exchange-related components of the PTC reconciliation process and
understand
[[Page 25802]]
the availability of IRS resources on this process. They also are
required to provide referrals to licensed tax advisers, tax preparers,
or other resources for assistance with tax preparation and tax advice
related to the Exchange application and enrollment process and PTC
reconciliations.
Lastly, there is no current Federal prohibition on door-to-door
enrollments by agents and brokers in the FFEs and this comment is
inaccurate based on current regulations for agents and brokers.
3. Ability of States To Permit Agents and Brokers and Web-Brokers To
Assist Qualified Individuals, Qualified Employers, or Qualified
Employees Enrolling in QHPs (Sec. 155.220)
Section 1312(e) of the ACA directs the Secretary to establish
procedures under which a State may permit agents and brokers to enroll
individuals and employers in QHPs through an Exchange and to assist
individuals in applying for financial assistance for QHPs sold through
an Exchange. In addition, section 1313(a)(5)(A) of the ACA directs the
Secretary to provide for the efficient and non-discriminatory
administration of Exchange activities and to implement any measure or
procedure the Secretary determines is appropriate to reduce fraud and
abuse. Under Sec. 155.220, we established procedures to support the
State's ability to permit agents, brokers, and web-brokers to assist
individuals, employers, or employees with enrollment in QHPs offered
through an Exchange, subject to applicable Federal and State
requirements. This includes processes under Sec. 155.220(g) and (h)
for HHS to suspend or terminate an agent's, broker's, or web-broker's
Exchange agreement(s) in circumstances that involve fraud or abusive
conduct or where there are sufficiently severe findings of non-
compliance. We also established FFE standards of conduct under Sec.
155.220(j) for agents and brokers that assist consumers in enrolling in
coverage through the FFEs to protect consumers and ensure the proper
administration of the FFEs. Consistent with Sec. 155.220(l), agents,
brokers and web-brokers that assist with or facilitate enrollment in
States with SBE-FPs must comply with all applicable FFE standards,
including the requirements in Sec. 155.220. In the HHS Notice of
Benefit and Payment Parameters for 2024 proposed rule (87 FR 78206,
78249), we proposed to build on this foundation with new proposed
procedures and additional consumer protection standards for agents,
brokers, and web-brokers that assist consumers with enrollments through
FFEs and SBE-FPs.
a. Extension of Time To Review Suspension Rebuttal Evidence and
Termination Reconsideration Requests (Sec. 155.220(g) and (h))
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78249), we proposed to allow HHS up to an
additional 15 or 30 calendar days to review evidence submitted by
agents, brokers, or web-brokers to rebut allegations that led to the
suspension of their Exchange agreement(s) or to request reconsideration
of termination of their Exchange agreement(s), respectively. We are
finalizing this proposal as proposed, which will provide HHS a total of
up to 45 or 60 calendar days to review such rebuttal evidence or
reconsideration request and notify the submitting agents, brokers, or
web-brokers of HHS' determination regarding the suspension of their
Exchange agreement(s) or reconsideration decision related to the
termination of their Exchange agreement(s), respectively.
In the 2017 Payment Notice, we added paragraph (g)(5) to Sec.
155.220 to address the temporary suspension or immediate termination of
an agent's or broker's agreements with the FFEs in cases involving
fraud or abusive conduct.\186\ Consistent with section 1313(a)(5)(A) of
the ACA, we added these procedures to give HHS authority to act quickly
in these situations to prevent further harm to consumers and to support
the efficient and effective administration of Exchanges on the Federal
platform. Under Sec. 155.220(g)(5)(i)(A), if HHS reasonably suspects
that an agent, broker, or web-broker may have engaged in fraud or
abusive conduct using personally identifiable information of Exchange
applicants or enrollees or in connection with an Exchange enrollment or
application, HHS may temporarily suspend the agent's, broker's or web-
broker's Exchange agreement(s) for up to 90 calendar days, with the
suspension effective as of the date of the notice to the agent, broker,
or web-broker. This temporary suspension is effective immediately and
prohibits the agent, broker, or web-broker from assisting with or
facilitating enrollment in coverage in a manner that constitutes
enrollment through the Exchanges on the Federal platform, including
utilizing the Classic Direct Enrollment (Classic DE) and Enhanced
Direct Enrollment (EDE) Pathways, during this 90-day
period.187 188 As previously explained, immediate
suspension is critical in these circumstances to stop additional
potentially fraudulent enrollments through the FFEs and SBE-FPs.\189\
Consistent with Sec. 155.220(g)(5)(i)(B), the agent, broker, or web-
broker can submit evidence to HHS to rebut the allegations that they
have engaged in fraud or abusive conduct that led to a temporary
suspension by HHS of their Exchange agreement(s) at any time during 90-
day period. If such rebuttal evidence is submitted, HHS will review it
and make a determination as to whether a suspension should be lifted
within 30 days of receipt of such evidence.\190\ If HHS determines that
the agent, broker, or web-broker satisfactorily addresses the concerns
at issue, HHS will lift the temporary suspension and notify the agent,
broker, or web-broker. If the rebuttal evidence does not persuade HHS
to lift the suspension, HHS may terminate the agent's, broker's, or
web-broker's Exchange agreement(s) for cause.191 192
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\186\ See 81 FR 12258 through 12264. Also see 80 FR 75525
through 75526.
\187\ 45 CFR 155.220(g)(5)(iii).
\188\ The agent, broker, or web-broker must continue to protect
any personally identifiable information accessed during the term of
their Exchange agreement(s). See, for example, 45 CFR
155.220(g)(5)(iii) and 155.260.
\189\ See, for example, 81 FR 12258 through 12264.
\190\ See 45 CFR 155.220(g)(5)(i)(B).
\191\ See 45 CFR 155.220(g)(5)(i)(B).
\192\ If the agent, broker, or web-broker fails to submit
rebuttal information during this 90-day period, HHS may terminate
their Exchange agreement(s) for cause. 45 CFR 155.220(g)(5)(i)(B).
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We also previously established a framework for termination of an
agent's, broker's, or web-broker's Exchange agreement(s) for cause in
situations where, in HHS' determination, a specific finding of
noncompliance or pattern of noncompliance is sufficiently severe.\193\
This framework provides HHS the ability to terminate an agent's,
broker's, or web-broker's Exchange agreement(s) for cause to protect
consumers and the efficient and effective operation of Exchanges on the
Federal platform in cases of sufficiently severe violations or patterns
of violations. In these situations, HHS provides the agent, broker, or
web-broker, an advance 30-day notice and an opportunity to cure and
address the noncompliance finding(s).194 195 More
[[Page 25803]]
specifically, upon identification of a sufficiently severe violation,
HHS notifies the agent, broker, or web-broker of the specific
finding(s) of noncompliance or pattern of noncompliance. The agent,
broker, or web-broker then has a period of 30 days from the date of the
notice to correct the noncompliance to HHS' satisfaction. If after 30
days the noncompliance is not addressed to HHS' satisfaction, HHS may
terminate the Exchange agreement(s) for cause. Once their Exchange
agreement(s) are terminated for cause under Sec. 155.220(g)(3), the
agent, broker, or web-broker is no longer registered with the FFE, is
not permitted to assist with or facilitate enrollment of a qualified
individual, qualified employer, or qualified employee in coverage in a
manner that constitutes enrollment through the Exchanges on the Federal
platform, and is not permitted to assist individuals in applying for
APTC and CSRs for QHPs.196 197 Consistent with Sec.
155.220(h)(1), an agent, broker, or web-broker whose Exchange
agreement(s) are terminated can request reconsideration of such action.
Section 155.220(h)(2) provides the agent, broker, or web-broker with 30
calendar days to submit their request (including any rebuttal evidence
or information) and Sec. 155.220(h)(3) requires HHS to provide agents,
brokers, or web-brokers with written notice of HHS' reconsideration
decision within 30 calendar days of receipt of the request for
reconsideration.
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\193\ See 45 CFR 155.220(g)(1) through (4). Also see, for
example, 78 FR 37047 through 37048 and 78 FR 54076 through 54081.
\194\ See 45 CFR 155.220(g)(3)(i).
\195\ The one exception is for situations where the agent,
broker, or web-broker fails to maintain the appropriate license
under applicable State law(s). See 45 CFR 155.220(g)(3)(ii). In
these limited situations, HHS may immediately terminate the agent,
broker, or web-broker's Exchange agreement(s) for cause without any
further opportunity to resolve the matter upon providing notice to
the agent, broker, or web-broker. Ibid.
\196\ 45 CFR 155.220(g)(4).
\197\ The agent, broker, or web-broker must continue to protect
any PII accessed during the term of their Exchange agreements. See,
for example, 45 CFR 155.220(g)(4) and 155.260.
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Our experience reviewing evidence and other information submitted
by agents, brokers, or web-brokers to rebut allegations that led to the
suspension of their Exchange agreement(s) or to request reconsideration
of the termination of their Exchange agreement(s), found that the
process, especially in more complex situations, often requires
significant resources and time. The review process can involve parsing
complex technical information and data, as well as revisiting consumer
complaints or conducting outreach to consumers. The amount of time it
takes for the review process is largely dependent on the particular
situation at hand (for example, the number of alleged violations and
impacted consumers, how much and what type of information an agent,
broker, or web-broker submits, the amount of time it takes for
consumers to locate and provide documentation related to their
complaints, and the number of concurrent submissions in need of
review). Given the large number of factors involved, we noted in the
proposed rule (87 FR 78250) that we believe allowing HHS additional
time to complete the review would be beneficial.
We noted in the proposed rule (87 FR 78250) that we were cognizant
this additional time could delay the ability of agents, brokers, and
web-brokers to conduct business, which may be particularly burdensome
to those who have compelling evidence to rebut allegations of
noncompliance. Given the critical role that agents, brokers, and web-
brokers serve in enrolling consumers in plans on the Exchanges on the
Federal platform, we noted that it is our intention to minimize the
burden imposed on agents, brokers, and web-brokers to the greatest
extent possible while also ensuring that HHS has additional time (if
necessary) to review any submitted rebuttal evidence. As stated
previously, this additional time is warranted to accommodate
particularly complex situations that require significant resources and
time. We noted that we expect not all reviews are so complex that they
will require the use of this additional time; in cases where agents,
brokers, and web-brokers present compelling evidence to rebut
allegations of noncompliance, we expect to be able to resolve the vast
majority of those reviews without the use of this additional time.
We also noted that we believe the proposal to allow HHS a total of
up to 45 calendar days to review rebuttal evidence is warranted given
that agents, brokers, and web-brokers have up to 90 days to submit
rebuttal evidence to HHS during their suspension period, while HHS
currently only has 30 days to review, consider, and make determinations
based on that evidence. It does not seem unreasonable to increase this
combined maximum 120-day time period \198\ to 135 days.\199\
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\198\ As noted above, an agent, broker, or web-broker whose
Exchange agreement(s) are temporarily suspended can submit rebuttal
evidence at any time during the 90-day suspension period, thus
triggering the start of the HHS review period and limiting the
length of the suspension period. For example, if an agent were to
submit rebuttal evidence within seven days of receiving the
suspension notice and HHS were to respond on the last day of the new
review period (day 45), as finalized in this rule, and lift the
suspension, that would mean the agent's Exchange agreement(s) would
have been suspended for only 52 days.
\199\ For example, if an agent whose Exchange agreement(s) were
temporarily suspended were to submit rebuttal evidence to rebut
allegations that led to the suspension of their Exchange
agreement(s) on the final day of the suspension period (day 90),
pursuant to Sec. 155.220(g)(5)(i)(B), and HHS were to respond on
the final day of the new review period (day 45), as finalized in
this rule, and lift the suspension, that agent's Exchange
agreement(s) would be suspended for a maximum of 135 days.
---------------------------------------------------------------------------
We noted that we believe this is not an unreasonable maximum
timeframe, particularly where HHS has a reasonable suspicion the agent,
broker, or web-broker engaged in fraud or abusive conduct that may
cause imminent or ongoing consumer harm using personally identifiable
information of an Exchange enrollee or applicant or in connection with
an Exchange enrollment or application. As noted in the 2017 Payment
Notice, there is a similar requirement for Medicare providers, as 42
CFR 405.371 provides HHS with the authority to suspend payment for at
least 180 days if there is reliable information that an overpayment
exists, or there is a credible allegation of fraud (81 FR 12262 through
12263). Under Sec. 155.220(g)(5)(i)(A), HHS temporarily suspends an
agent, broker or web-broker's Exchange agreement(s) only in situations
in which there is sufficient evidence or other information such that
HHS reasonably suspects the agent, broker or web-broker engaged in
fraud or in abusive conduct that may cause imminent or ongoing consumer
harm using personally identifiable information of an Exchange enrollee
or applicant or in connection with an Exchange enrollment or
application on the Federal platform. As such, HHS exercises this
authority and sends suspension notices only in the limited situations
where there may have been fraud or abusive conduct to stop further
Exchange enrollment activity on the Federal platform when the
misconduct may cause imminent or ongoing harm to consumers or the
effective and efficient administration of Exchanges. We also further
emphasized that the proposed extension to allow for up to 45 days for
HHS to review rebuttal evidence in these situations represents the
maximum timeframe.\200\ To the extent the situation at hand does not,
for example, involve a large number of alleged violations or impacted
consumers, HHS may not need the maximum timeframe to complete the
review and notify the agent, broker, or web-broker whether the
suspension is lifted.
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\200\ Further, as detailed above, the agent, broker, or web-
broker whose Exchange agreement(s) are suspended has an opportunity
to limit the overall length of the suspension period with the timely
submission of rebuttal evidence.
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Terminations of Exchange agreement(s) by HHS are also limited,
[[Page 25804]]
but in a different way. As outlined above, Sec. 155.220(g)(1) allows
HHS to terminate an agent, broker, or web-brokers Exchange agreement
for cause only when, in HHS' determination, a specific finding of
noncompliance or pattern of noncompliance is sufficiently severe.
Examples of specific findings of noncompliance that HHS might determine
to be sufficiently severe to warrant termination of an agent's,
broker's, or web-broker's Exchange agreement for cause under Sec.
155.220(g)(1) include, but are not limited to, violations of the
Exchange privacy and security standards.\201\ Patterns of noncompliance
that HHS might determine to be sufficiently severe to warrant
termination for cause include, for example, repeated violations of any
of the applicable standards in Sec. 155.220 or Sec. 155.260(b) for
which the agent or broker was previously found to be noncompliant.\202\
As noted in the proposed rule (87 FR 78206, 78251), if HHS takes the
total up to 60 calendar days to review rebuttal evidence submitted by
the agent, broker, or web-broker whose Exchange agreement was
terminated for cause, the maximum timeframe for the reconsideration
process under Sec. 155.220(h) would be 90 days. We noted that we
believe this approach strikes the appropriate balance with respect to
reviewing information submitted with a request to reconsider
termination of their Exchange agreement(s) because it provides the
agent, broker, or web-broker due process while also protecting
consumers from potential harm. We proposed a longer time period of 60
days for HHS review of information and evidence submitted by an agent,
broker, or web-broker as part of their reconsideration request (versus
45 days for HHS review of rebuttal evidence and information submitted
in response to a suspension determination) because the HHS reviews
under Sec. 155.220(h)(2) are part of the appeal process. As such, the
agent, broker, or web-broker had an opportunity at an earlier stage of
the suspension or termination process to rebut the allegations and/or
findings, or otherwise take remedial steps to address the concerns
identified by HHS, that led to suspension or termination of their
Exchange agreement(s).203 204
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\201\ As outlined in Sec. 155.220(g)(2), an agent, broker, or
web-broker may be determined noncompliant if HHS finds that the
agent, broker, or web-broker violated any standard specified in
Sec. 155.220; any term or condition of their Exchange agreement(s);
any State law applicable to agents, brokers, or web-brokers; or any
Federal law applicable to agents, brokers, or web-brokers.
\202\ Ibid.
\203\ See 45 CFR 155.220(g)(5)(i)(B) (providing an opportunity
to rebut allegations of fraud or abusive conduct) and 45 CFR
155.220(g)(3)(i) (providing advance notice and an opportunity to
correct the noncompliance).
\204\ The one exception is for immediate terminations for cause
due to the lack of appropriate State licensure under 45 CFR
155.220(g)(3)(ii). In these situations, however, the maximum
timeframe between the agent, broker, or web-broker receiving the
termination notice and the issuance of the HHS reconsideration
decision would be 90 days.
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For these reasons, we proposed to amend Sec. 155.220(g)(5)(i)(B)
to provide HHS with up to 45 calendar days to review evidence and other
information submitted by agents, brokers, or web-brokers to rebut
allegations that led to suspension of their Exchange agreement(s) and
make a determination of whether to lift the suspension. We also
proposed to amend Sec. 155.220(h)(3) to provide HHS with up to 60 days
to review evidence and other information submitted by agents, brokers,
or web-brokers to rebut allegations that led to termination of their
Exchange agreement(s) and provide written notice of HHS'
reconsideration decision.
We sought comment on this proposal.
After reviewing the public comments, we are finalizing this
proposal to allow HHS up to an additional 15 or 30 calendar days to
review evidence submitted by agents, brokers, or web-brokers to rebut
allegations that led to suspension of their Exchange agreement(s) or to
request reconsideration of termination of their Exchange agreement(s),
respectively, as proposed. We summarize and respond to public comments
received on the proposed extension of time to review suspension
rebuttal evidence and termination reconsideration requests (``extended
review windows'') below.
Comment: Multiple commenters expressed their support of these
extended review windows. These commenters noted they believe the
extended review windows are necessary to allow for proper review of
complex cases. However, some of these commenters encouraged HHS to
attempt to resolve suspension and termination reviews as quickly as
possible and to not use the extra review time if it is not needed.
Response: We appreciate these comments and are finalizing the
amendments to Sec. 155.220(g)(5)(i)(B) and (h)(3) as proposed. As
previously noted, we expect that not all reviews are so complex that
they will require the use of this additional time, and that in cases
where agents, brokers, and web-brokers present compelling evidence to
rebut allegations of noncompliance, we believe that we will be able to
resolve the vast majority of those reviews without the use of this
additional time. We will continue to strive to resolve all suspension
and termination reviews expeditiously and will not utilize the maximum
review windows allowed unless necessary.
Comment: One commenter expressed concern that the extended review
windows are too lengthy, especially during Open Enrollment.
Response: We disagree that these extended review windows are too
lengthy, even during Open Enrollment. While we have acknowledged that
this additional time could delay the ability of agents, brokers, and
web-brokers to conduct business, particularly during Open Enrollment,
we believe extending the review windows will be beneficial when dealing
with complex cases that involve review of extensive evidence submitted
by the agent or broker, revisiting multiple consumer complaints, and
conducting additional outreach. Additionally, as previously stated, we
believe that these extended review windows will only impact a very
small percentage of agents, brokers, and web-brokers. This is because
prior to suspending or terminating an agent or broker's Exchange
agreement(s), HHS has already conducted a thorough investigation and
concluded that the agent, broker, or web-broker in question is likely
involved in fraudulent or noncompliant behavior. Furthermore, these
extended review windows represent the maximum suspension or termination
period possible. Therefore, we believe this approach strikes the
appropriate balance because it maintains the agent's, broker's, or web-
broker's ability to submit additional information for reconsideration
after a suspension or termination while also protecting consumers from
potential harm, including during Open Enrollment, and supporting the
efficient and effective administration of the Exchanges on the Federal
platform.
b. Providing Correct Information to the FFEs (Sec. 155.220(j))
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78251), we proposed amendments to Sec.
155.220(j)(2)(ii) to require agents, brokers, or web-brokers assisting
with and facilitating enrollment in coverage through FFEs and SBE-FPs
or assisting an individual with applying for APTC and CSRs for QHPs to
document that eligibility application information has been reviewed by
and confirmed to be accurate by the consumer or their
[[Page 25805]]
authorized representative designated in compliance with Sec. 155.227,
prior to application submission. We proposed that such documentation
would be created by the assisting agent, broker, or web-broker and
would require the consumer or their authorized representative to take
an action, such as providing a signature or a recorded verbal
confirmation, that produces a record that can be maintained by the
agent, broker, or web-broker and produced to confirm the submitted
eligibility application information was reviewed and confirmed to be
accurate by the consumer or their authorized representative. In
addition, we proposed that the documentation would be required to
include the date the information was reviewed, the name of the consumer
or their authorized representative, an explanation of the attestations
at the end of the eligibility application, and the name of the agent,
broker, or web-broker providing assistance. Lastly, we proposed that
the documentation would be required to be maintained by the agent,
broker, or web-broker for a minimum of 10 years and produced upon
request in response to monitoring, audit, and enforcement activities
conducted consistent with Sec. 155.220(c)(5), (g), (h) and (k). As
noted in the proposed rule, these proposed changes would require
amending Sec. 155.220(j)(2)(ii), creating new Sec.
155.220(j)(2)(ii)(A), and redesignating current Sec.
155.220(j)(2)(ii)(A) through (D) without change as Sec.
155.220(j)(2)(ii)(B) through (E), respectively.
Agents, brokers, and web-brokers are among those who play a
critical role in educating consumers about Exchanges and insurance
affordability programs, and in helping consumers complete and submit
applications for eligibility determinations, compare plans, and enroll
in coverage. Consistent with section 1312(e) of the ACA, Sec. 155.220
establishes the minimum standards for the process by which an agent,
broker, or web-broker may help enroll an individual in a QHP in a
manner that constitutes enrollment through the Exchanges on the Federal
platform and to assist individuals in applying for APTC and CSRs. This
process and minimum standards require the applicant's completion of an
eligibility verification and enrollment application and the agent's,
broker's, or web-broker's submission of the eligibility application
information through the Exchange website or an Exchange-approved web
service.\205\ While agents, brokers, and web-brokers can assist a
consumer with completing the Exchange application, the consumer is the
individual with the knowledge to confirm the accuracy of the
information provided on the application.\206\
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\205\ 45 CFR 155.220(c)(1). Also see, for example, 77 FR 18334
through 18336.
\206\ This is evidenced by the language in Sec. 155.220(j)(1)
that refers to agents, brokers, or web-brokers that assist or
facilitate enrollment (emphasis added).
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Section 155.220(j)(2) sets forth the standards of conduct for
agents, brokers, or web-brokers that assist with or facilitate
enrollment of qualified individuals, qualified employers, or qualified
employees in coverage in a manner that constitutes enrollment through
an FFE or SBE-FP or that assist individuals in applying for APTC and
CSRs for QHPs sold through an FFE or SBE-FP. As explained in the 2017
Payment Notice proposed rule (81 FR 12258 through 12264), these
standards are designed to protect against agent, broker, and web-broker
conduct that is harmful towards consumers or prevents the efficient
operation of the FFEs and SBE-FPs. Under Sec. 155.220(j)(2)(ii),
agents, brokers, or web-brokers must provide the FFEs and SBE-FPs with
``correct information under section 1411(b) of the Affordable Care
Act.''
Section 1411(h) of the ACA provides for the imposition of civil
penalties if any person fails to provide correct information under
section 1411(b) to the Exchange. Consistent with Sec. 155.220(l),
agents, brokers and web-brokers that assist with or facilitate
enrollment of qualified individuals, qualified employers, or qualified
employees in States with SBE-FPs must comply with all applicable FFE
standards. This includes, but is not limited to, compliance with the
FFE standards of conduct in Sec. 155.220(j).
Currently, Sec. 155.220(j)(2)(ii) requires that agents, brokers,
and web-brokers provide the FFEs and SBE-FPs with correct information
under section 1411(b) of the ACA, but it does not explicitly require
agents, brokers, or web-brokers assisting consumers with completing
eligibility applications through the FFEs and SBE-FPs to confirm with
those consumers the accuracy of the information entered on their
applications prior to application submission or document the consumer
has reviewed and confirmed the information to be accurate. We noted in
the proposed rule (87 FR 78252) that HHS has continued to observe
applications submitted to the FFEs and SBE-FPs that contain incorrect
consumer information. We have also received consumer complaints stating
the information provided on their eligibility applications submitted by
agents, brokers, or web-brokers on their behalf was incorrect. These
complaints can be difficult to investigate and adjudicate, because the
only evidence available is often the word of one person against another
and the FFEs and SBE-FPs generally do not have access to other
contextual information to help resolve the matter. By requiring the
creation and maintenance of documentation that the assisting agent,
broker, or web-broker confirmed with the consumer or their authorized
representative that the entered information was reviewed and accurate,
the adjudication of such complaints could be expedited and more easily
resolved. In addition, the inclusion of incorrect consumer information
on eligibility applications may result in consumers receiving
inaccurate eligibility determinations, and may affect consumers' tax
liability, or produce other potentially negative results. If a consumer
receives an incorrect APTC determination or is unaware they are
enrolled in a QHP, that consumer may owe money to the IRS when they
file their Federal income tax return. Ensuring a consumer's income
determination has been reviewed and is accurate will help avoid these
situations. Incorrect consumer information on eligibility applications
may also affect Exchange operations or HHS's analysis of Exchange
trends. For example, a high volume of applications all containing
erroneous information, such as U.S. citizens attesting to not having a
Social Security number (SSN), could hinder the efficient and effective
operation of the Exchanges on the Federal platform by requiring HHS to
focus its time and efforts on addressing these erroneous applications.
We noted that this proposal is consistent with the fact that the
consumer or their authorized representative is the individual with the
knowledge to confirm the accuracy of the information provided on the
application and will serve as an additional safeguard and procedural
step to ensure the accuracy of the application information submitted to
Exchanges on the Federal platform. Thus, we proposed to revise Sec.
155.220(j)(2)(ii) to require agents, brokers, and web-brokers to
document that the eligibility application information was reviewed and
confirmed to be accurate by the consumer or their authorized
representative before application submission.
We also proposed to establish in new proposed Sec.
155.220(j)(2)(ii)(A) standards for what constitutes adequate
documentation that eligibility
[[Page 25806]]
application information has been reviewed and confirmed to be accurate
by the consumer or their authorized representative. First, we proposed
to revise Sec. 155.220(j)(2)(ii)(A) to establish that documenting that
eligibility application information has been reviewed and confirmed to
be accurate by the consumer or their authorized representative would
require the consumer or their authorized representative to take an
action that produces a record that can be maintained and produced by
the agent, broker, or web-broker and produced to confirm the consumer
or their authorized representative has reviewed and confirmed the
accuracy of the eligibility application information.
We did not propose any specific method for documenting that
eligibility application information has been reviewed and confirmed to
be accurate by the consumer or their authorized representative. To
provide guidance to agents, brokers, and web-brokers, we proposed to
include in Sec. 155.220(j)(2)(ii)(A) a non-exhaustive list of
acceptable methods to document that eligibility application information
has been reviewed and confirmed to be accurate, including obtaining the
signature of the consumer or their authorized representative
(electronically or otherwise), verbal confirmation by the consumer or
their authorized representative that is captured in an audio recording,
or a written response (electronic or otherwise) from the consumer or
their authorized representative to a communication sent by the agent,
broker, or web-broker, or other similar means or methods that we
specify in guidance. We also invited comment on whether there may be
other acceptable methods of documentation that we should consider
specifying to be permissible for purposes of documenting that
eligibility application information has been reviewed and confirmed to
be accurate by the consumer or their authorized representative. For
example, we noted that we were specifically interested in any current
best practices or approaches that agents, brokers or web-brokers may
use to create records or otherwise document that eligibility
application information was reviewed by the consumer or their
authorized representative prior to submission to the Exchanges on the
Federal platform.
We also proposed that the consumer would be able to review and
confirm the accuracy of application information on behalf of other
applicants (for example, dependents or other household members), and
authorized representatives would be able to provide review and confirm
the accuracy of application information on behalf of the people they
are designated to represent, as it may be difficult or impossible to
obtain confirmation from each consumer whose information is included on
an application. This would allow agents, brokers, and web-brokers to
continue assisting consumers as they currently do (for example, often
by working with an individual representing a household when submitting
an application for a family).
Next, we proposed to require at new proposed Sec.
155.220(j)(2)(ii)(A)(1) that the eligibility application information
documentation, which would be created by the assisting agent, broker,
or web-broker, would be required to include an explanation of the
attestations at the end of the eligibility application that the
eligibility application information has been reviewed by and confirmed
to be accurate by the consumer or their authorized representative. At
the end of the Exchange eligibility application, one of the
attestations the consumer must currently agree to before submitting the
application is as follows: ``I'm signing this application under penalty
of perjury, which means I've provided true answers to all of the
questions to the best of my knowledge. I know I may be subject to
penalties under Federal law if I intentionally provide false
information.'' The documentation the agent, broker, or web-broker
creates to satisfy this proposed requirement would be required to
include this language for awareness and to remind the consumer that
they are responsible for the accuracy of the application information,
even if the information was entered into the application on their
behalf by an agent, broker, or web-broker assisting them. We noted that
we believe this proposal would help ensure that the consumer or their
authorized representative understands the importance of confirming the
accuracy of the information contained in the eligibility application
and further safeguard against the provision and submission of incorrect
eligibility application information. We also noted that we believe the
proposal would help safeguard consumers from the negative consequences
of failing to understand the attestations and potentially attesting to
conflicting information. For example, one common error we see on
applications completed by agents, brokers, or web-brokers is an
attestation that a consumer does not have an SSN while also including
an attestation that the consumer is a U.S. citizen. These conflicting
attestations can generate DMIs, which, if not resolved during the
allotted resolution window, could result in the consumer's coverage
being terminated. For these reasons, we proposed to add a requirement
at new Sec. 155.220(j)(2)(ii)(A)(1) that the documentation include the
date the information was reviewed, the name of the consumer or their
authorized representative, an explanation of the attestations at the
end of the eligibility application, and the name of the assisting
agent, broker, or web-broker.
Lastly, at new proposed Sec. 155.220(j)(2)(ii)(A)(2), we proposed
to require agents, brokers, and web-brokers to maintain the
documentation demonstrating that the eligibility application
information was reviewed and confirmed as accurate by the consumer or
their authorized representative for a minimum of 10 years. Section
155.220(c)(5) states HHS or our designee may periodically monitor and
audit an agent, broker, or web-broker to assess their compliance with
applicable requirements. However, there is not currently a maintenance
of records requirement directly applicable to all agents, brokers, and
web-brokers assisting consumers through the FFEs and SBE-FPs.\207\
Capturing a broad-based requirement mandating that all agents, brokers,
and web-brokers assisting consumers in the FFEs and SBE-FPs maintain
the records and documentation demonstrating that information captured
in their application has been reviewed and confirmed to be accurate by
the consumer or their authorized representative they are assisting
would provide a clear, uniform standard. It also would ensure this
documentation is maintained for sufficient time to allow for
monitoring, audit, and enforcement activities to take place.\208\
Therefore,
[[Page 25807]]
consistent with other Exchange maintenance of records
requirements,\209\ we proposed to capture in new proposed Sec.
155.220(j)(2)(iii)(A)(2) that agents, brokers, and web-brokers would be
required to maintain the documentation described in proposed Sec.
155.220(j)(2)(ii)(A) for a minimum of 10 years, and produce the
documentation upon request in response to monitoring, audit, and
enforcement activities conducted consistent with Sec. 155.220(c)(5),
(g), (h), and (k).
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\207\ Section 155.220(c)(3)(i)(E) requires web-brokers to
maintain audit trails and records in an electronic format for a
minimum of 10 years and cooperate with any audit under this section.
Section 156.340(a)(2) places responsibility on QHP issuers
participating in Exchanges using the Federal platform to ensure
their downstream and delegated entities (including agents and
brokers) are complying with certain requirements, including the
maintenance of records requirements in Sec. 156.705. In addition,
under Sec. 156.340(b), agents and brokers that are downstream
entities of QHP issuers in the FFEs must be bound by their
agreements with the QHP issuer to comply with certain requirements,
including the records maintenance standards in Sec. 156.705.
Section 156.705(c) and (d) requires QHP issuers in the FFEs to
maintain certain records for 10 years and to make all such records
available to HHS, the OIG, the Comptroller General, or their
designees, upon request.
\208\ While investigations consumer complaints are an example of
a more immediate, real-time monitoring and oversight activity,
market conduct examinations, audits, and other types of
investigations (for example, compliance reviews) may occur several
years after the applicable coverage year.
\209\ See, for example, 45 CFR 155.220(c)(3)(i)(E) and
156.705(c).
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We sought comment on these proposals.
After reviewing the public comments, we are finalizing these
proposals as proposed. We are making an edit to new Sec.
155.220(j)(2)(ii) to add a missing comma before the reference to
section 1411(b) of the ACA. This is a nonsubstantive edit that does not
impact or otherwise change the new requirements or policies related to
the obligation for agents, brokers and web-brokers to provide the FFEs
and SBE-FPs with correct information under Sec. 155.220(j)(2)(ii) that
are being finalized in this rule, as proposed.
We summarize and respond to public comments received on the
proposals to require agents, brokers, and web-brokers to document that
eligibility application information has been reviewed by and confirmed
to be accurate by the consumer or their authorized representative prior
to application submission and the associated document retention policy
below.
Comment: Many commenters supported these proposals, stating they
would protect consumers by helping prevent incorrect APTC
determinations, and as a result, consumers potentially owing additional
money to the IRS when they file their Federal income tax returns. Other
commenters stated that these proposals would help encourage compliance
and aid investigations of misconduct by agents, brokers, and web-
brokers.
Response: We agree with these commenters and appreciate their
support of these proposals. We are finalizing these proposals as
proposed.
Comment: Numerous commenters expressed concerns the proposals would
impose heavy burdens on agents, brokers, and web-brokers due to the
additional time that would be required for agents, brokers, and web-
brokers to implement and come into compliance with these new
requirements. Some of these commenters stated the additional time
required to meet these new requirements would be more burdensome during
the Open Enrollment Period. Other commenters stated that they believed
the additional time associated with implementing and complying with
these new requirements would discourage consumers from enrolling in
coverage through the FFEs and SBE-FPs, as well as agents, brokers, and
web-brokers from assisting consumers in the FFEs and SBE-FPs.
Response: We recognize these new requirements will likely require
agents, brokers, and web-brokers to spend more time with each consumer
to ensure and document that eligibility application information has
been reviewed by and confirmed to be accurate by the consumer or their
authorized representative prior to application submission and that this
may affect agents, brokers, and web-brokers more so during the Open
Enrollment Period. However, we believe the benefits of the new
requirements outweigh any potential negative impact on agents, brokers,
web-brokers, or consumers. It is imperative that consumers' Exchange
applications contain accurate information when determining eligibility.
As discussed in the proposed rule (87 FR 78252), if consumers' income
determinations are not accurate, they could face serious financial harm
when reconciling their taxes. In addition, submission of incorrect
information on an application may lead to a DMI. Some DMIs, if left
unresolved, can lead to a termination of a consumer's Exchange
coverage. Ensuring consumers, or their authorized representatives, have
reviewed their application information and attested to its accuracy
will help mitigate these issues. Further, these new requirements will
support the efficient operation of the FFEs and SBE-FPs by helping
reduce the number of applications with incorrect information, limiting
the number of DMIs that need to be investigated, and expediting our
ability to investigate and resolve disputes related to inaccurate
consumer information being entered on an eligibility application, which
will also benefit agents, brokers, web-brokers and consumers.
In addition, as discussed in the proposed rule (87 FR 78252 through
78253), we did not propose to specify a method for documenting that
eligibility application information has been reviewed and confirmed to
be accurate by the consumer or their authorized representative to
provide agents, brokers, or web-brokers the flexibility to establish
protocols and methods that will meet their needs in the most efficient
manner.
Given this flexibility, and that the fact that these new
requirements are simply building on existing requirements,\210\ we do
not believe that they will discourage many agents, brokers, or web-
brokers from assisting consumers in the FFEs and SBE-FPs or that
Exchange enrollment will drop by a significant percentage, if at all.
In fact, we believe that these new requirements, which are intended to
protect consumers, prevent fraud and abusive conduct, and ensure the
efficient and effective operation of the Exchanges on the Federal
platform, will encourage more consumers to purchase health insurance
through the Exchanges. We will, however, monitor Exchange enrollment
data and agent, broker, and web-broker participation in future years to
analyze if these new requirements have a noticeable negative impact.
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\210\ See Sec. 155.220(j)(2)(ii).
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Comment: Some commenters suggested these new requirements would add
a disproportionate burden on smaller agencies and independent agents,
brokers, and web-brokers, particularly with regard to the initial costs
of implementing these new requirements. These commenters stated larger
agencies are better equipped to implement these new requirements and
absorb the costs associated with them.
Response: We acknowledge that larger agencies may be better
equipped to implement these new requirements. There will be upfront
costs associated with implementing these new requirements, including
potentially purchasing recording software, upgrading storage capacity,
or hiring new personnel. Larger agencies typically have more resources
to allocate towards meeting new industry standards, as is the case in
other business fields as well. However, we do not believe these new
requirements will be cost prohibitive to smaller agencies or
independent agents, brokers, and web-brokers. As discussed above, we
are not mandating the method by which agents, brokers, and web-brokers
must meet these new requirements. Therefore, smaller agencies and
independent agents, brokers, and web-brokers have the flexibility to
meet these requirements utilizing the most efficient and cost-effective
method that meets their business needs. Additionally, as mentioned
previously, these new requirements are simply building on existing
requirements,\211\ which we believe will alleviate the burdens and
costs associated with these new
[[Page 25808]]
requirements for agents, brokers, and web-brokers of all sizes.
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\211\ See Sec. 155.220(j)(2)(ii).
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Comment: Multiple commenters stated they believed these new
requirements would be more difficult to implement over the phone, which
would negatively impact consumers without internet access (that is,
lower income) or those who are less proficient with technology.
Response: We disagree that these requirements will be more
difficult to implement over the phone than with respect to other
enrollment methods. As is the case today, consumers will be able to
enroll in QHPs and apply for APTC and CSRs for such coverage over the
phone, in-person, and via the internet. The flexibility to choose what
method is utilized to document that eligibility application information
has been reviewed and confirmed to be accurate by the consumer or their
authorized representative will allow agents, brokers, and web-brokers
to implement these new requirements in a manner that is least
burdensome to them. Agents, brokers, and web-brokers may also use this
flexibility to implement different methods to comply with these
requirements depending on the circumstances of each consumer they are
assisting. Different implementation methods include, but are not
limited to, obtaining the signature of the consumer or their authorized
representative (electronic or otherwise), verbal confirmation by the
consumer or their authorized representative that is captured in an
audio recording, where legally permissible, or a written response
(electronic or otherwise) from the consumer or their authorized
representative to a communication sent by the agent, broker, or web-
broker.
As such, to implement these new requirements for over-the-phone
enrollments, where legally permissible and in accordance with
applicable requirements,\212\ agents, brokers, and web-brokers can
record phone conversations with consumers or their authorized
representatives to comply with Sec. 155.220(j)(2)(ii)(A). For example,
during these conversations, an agent, broker, or web-broker may ask the
consumer if they have reviewed their application information, the
information is accurate, and they understand the attestations involved.
A recording of the consumer's response to these questions, if it meets
the requirements in Sec. 155.220(j)(2)(ii)(A), would be sufficient to
meet these new requirements. We understand that saving recorded
conversations may be more difficult than other mediums due to the
digital space requirements and recording software needed, but is not an
excessive burden as there are numerous recording software options to
choose from and external hard drives are widely available for purchase.
Where legally permissible, it will be the choice of the agent, broker,
or web-broker if recording phone conversations is the best method for
them to implement these requirements for over-the-phone enrollments. At
the same time, we recognize there may be reasons agents, brokers and
web-brokers would also want to have other methods available for over-
the-phone enrollments. For example, in situations where a phone
recording is not possible, agents, brokers and web-brokers may send the
consumer or their authorized representative an email or text message
after talking with them over the phone. The consumer or their
authorized representative may respond to this email or text message,
acknowledging they have reviewed the eligibility application
information and confirmed its accuracy prior to application submission.
When in-person assistance is provided, the agent, broker or web-broker
may want to offer the recording methods and other options that it uses
for over-the-phone enrollments. The agent, broker, or web-broker may
also want to implement a method for in-person assistance that involves
obtaining the signature of the consumer or authorized representative
(electronic or otherwise) given the face-to-face nature of the
interaction. Similarly, agents, brokers and web-brokers should consider
what methods meets their business needs, and those of their consumers,
for enrollments over the internet. While we are not mandating that
agents, brokers, and web-brokers adopt all of these different
implementation methods, we encourage agents, brokers and web-brokers to
exercise this flexibility in a manner that accommodates the various
enrollment methods they use with their respective consumers.
Additionally, if an agent, broker, or web-broker is not able to
accommodate a consumer (for example, the consumer does not have access
to the internet or is less proficient with technology but the specific
agent, broker, or web-broker only engages in enrollments via the
internet), the consumer may find another agent, broker, or web-broker
that can meet their needs.
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\212\ We recognize that there are Federal and State laws that
govern the legality of recording phone calls and conversations that
may impact an agent, broker, or web-broker's ability to record phone
or oral communications with consumers or that may require an agent,
broker, or web-broker to obtain the consumer's consent prior to
recording such communications (see, for example, 18 U.S.C. 2511).
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We believe these new requirements will help protect consumers,
including those who may be in underserved groups, rather than inhibit
their enrollment in Exchange coverage, as well as ensure the efficient
and effective operation of the Exchanges on the Federal platform.
Further, we frequently see unauthorized enrollments impact underserved
groups of consumers in greater numbers than other groups. Often,
agents, brokers, and web-brokers who engage in noncompliant or
fraudulent behavior target low-income consumers or consumers with
limited English proficiency. By requiring that agents, brokers, and
web-brokers document that consumers or their authorized representatives
have reviewed and verified their application information prior to
submission, we believe that these consumer harms and the impact on
underserved groups can be mitigated.
Comment: Multiple commenters expressed concerns regarding the
disclosure of consumers' personally identifiable information (PII).
These commenters stated that they believe these new requirements would
lead to more improper disclosures of consumer PII as agents, brokers,
and web-brokers would be storing more consumer PII than in the past.
Response: We do not believe these new requirements will lead to
more improper disclosures of consumer PII. These new requirements do
not require agents, brokers, and web-brokers to record or maintain any
consumer PII in addition to the consumer PII an agent, broker, or web-
broker currently records and maintains. The new requirements include
ensuring a consumer or their authorized representative has reviewed and
attested that their application information is correct prior to
submission and that this is documented and maintained by the agent,
broker, or web-broker for a minimum of 10 years. This documentation
must include the date the information was reviewed, the name of the
consumer or their authorized representative, an explanation of the
attestations at the end of the eligibility application, and the name of
the assisting agent, broker, or web-broker. The only piece of PII
required for this documentation is the consumer's name, which an agent,
broker, or web-broker would already be recording and maintaining in
their files.
A recorded conversation, during an over-the-phone enrollment or
otherwise, could potentially contain more consumer PII than what the
regulations require, as additional consumer
[[Page 25809]]
information may be revealed during the conversation and the enrollment
process. However, we do not believe this will lead to more improper
disclosures of consumer PII. Agents, brokers, and web-brokers are
already required to adhere to applicable State or Federal laws
concerning the safeguarding of consumer PII, including Sec.
155.220(g)(4) and (j)(2)(iv), and HIPAA.\213\ These same requirements
and protections continue to apply. Additionally, an agent, broker, or
web-broker that elects to implement the phone recording method to meet
these new requirements would only be required to record the portion of
the conversation in which the consumer or consumer's representative
confirms that they have reviewed and attested that their application
information is correct prior to submission to demonstrate compliance,
which would reduce the amount of consumer PII in the recorded
conversation. This would further reduce or eliminate the potential of
improper disclosures of consumer PII.
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\213\ See, for example, Sec. 155.260, 45 CFR part 164, subparts
A and E, and the Health Insurance Portability and Accountability Act
of 1996, Pub. L. 104-191, H.R. 3103, 104th Cong.
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Comment: One commenter suggested the IRS provide the consumer
income information that is to be entered on each Exchange application.
Response: We appreciate the commenter's suggestion, but generally
note the consumer is in the best position to project their future
income and is the individual generally responsible for providing
application information, including information regarding income.\214\
To determine if a consumer is eligible for financial assistance, such
as APTC, prior to enrollment, an estimate for income must be entered
prior to the eligibility determination process. As many consumers
enroll in health coverage prior to a new calendar year, the income
amount they enter is an estimate based on available data, including
income in prior years, as well as what consumers believe their income
will be in the upcoming plan year. The IRS will not have income data
for the consumer for the year of coverage until the consumer files a
tax return for the year of coverage. This typically does not occur
until the next calendar year. By that time, the year of coverage will
have ended so this income data from the IRS will not provide a timely
income projection for the upcoming year of coverage. Recognizing income
amounts provided by consumers on eligibility applications are
projections, the statute generally requires HHS to verify income
information on Exchange applications with the Department of
Treasury.\215\ As such, the ACA established an approach that collects
information about estimated income for the upcoming plan year from the
consumer, the person in the best position to make such projections,
with a verification of that information from a trusted source, the
Department of Treasury and IRS.
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\214\ See sections 1411(b)(3) and 1412(b)(2) of the ACA and
redesignated Sec. 155.220(j)(2)(ii)(E).
\215\ See sections 1411(c)(3) and 1412(b)(2) of the ACA and
redesignated Sec. 155.220(j)(2)(ii)(E).
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Comment: Several commenters stated that we should allow agents,
brokers, and web-brokers to meet these new requirements under Sec.
155.220(j)(2)(ii) and the new requirements related to documenting
consumer consent under Sec. 155.220(j)(2)(iii) during the same
consumer interaction and/or within the same document.
Response: Agents, brokers, and web-brokers are not prohibited from
documenting that eligibility application information has been reviewed
by and confirmed to be accurate by the consumer or the consumer's
authorized representative and documenting the receipt of consent from
the consumer or the consumer's authorized representative pursuant to
Sec. 155.220(j)(2)(ii) and (iii), respectively, during the same
conversation with the consumer, or within the same document, as long as
the documentation complies with the requirements set forth in Sec.
155.220(j)(2)(ii)(A) and (B) and (j)(2)(iii)(A) through (C).
Comment: Some commenters stated that we should not take enforcement
action against agents, brokers, or web-brokers who act in good faith to
comply with these new requirements and who enter information on a
consumer's Exchange application that the consumer has attested to be
true, but that turns out to be inaccurate. Specifically, these
commenters indicated accurate income projections for consumers who are
self-employed or work flexible hours are difficult, and thus, can often
end up being inaccurate. Some commenters also suggested that we should
only enforce these requirements against agents, brokers, and web-
brokers, and not against issuers, as issuers are not directly involved
in enrolling consumers in Exchange coverage.
Response: We do not initiate enforcement actions against agents,
brokers, and web-brokers who act in good faith to provide the FFEs and
SBE-FPs with correct information and where there is a reasonable cause
for the failure to provide correct information.\216\ We understand that
income projections are purely estimates and a consumer's yearly income
may be different than projected, especially for those who are self-
employed or work flexible hours. As such, assuming the agent, broker or
web-broker meets the applicable requirements and maintains the
necessary documentation, we believe the situation described by these
commenters is an example in which an agent, broker, or web-broker has
acted in good faith and there is a reasonable cause for the failure to
provide correct information such that no enforcement action would be
taken and no penalties would be imposed. In addition, we note that the
requirements contained in Sec. 155.220(j)(2)(ii)(A) apply specifically
to agents, brokers, and web-brokers, and not to issuers.
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\216\ See Sec. 155.220(j)(3), which states ``If an agent,
broker, or web-broker fails to provide correct information, he, she,
or it will nonetheless be deemed in compliance with paragraphs
(j)(2)(i) and (ii) of this section if HHS determines that there was
a reasonable cause for the failure to provide correct information
and that the agent, broker, or web-broker acted in good faith.''
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Comment: A few commenters suggested the proposed record retention
period of 10 years is too long for agents, brokers, and web-brokers to
maintain the documentation required by Sec. 155.220(j)(2)(ii)(A).
Another commenter stated we should have the record retention period
match align with the required record retention period of the State
where the consumer is enrolled.
Response: Please see the accompanying information collection
section IV.F (ICRs Regarding Providing Correct Information to the FFEs
(Sec. 155.220(j)) of this final rule for the response to these
comments.
Comment: We also received several comments related to agents,
brokers, and web-brokers switching their National Producer Numbers on
consumers' applications, a lack of respect towards agents, brokers, and
web-brokers, and agent, broker, and web-broker commissions, which were
outside the scope of these proposals.
Response: Although we appreciate these commenters' interest in the
policies governing consumer review and attestation of their application
information prior to submission, given that these comments are out-of-
scope with regard to these specific proposals, we decline to comment on
them at this time.
c. Documenting Receipt of Consumer Consent (Sec. 155.220(j))
We proposed to amend Sec. 155.220(j)(2)(iii) to require agents,
brokers, or web-brokers assisting with and facilitating enrollment in
coverage through FFEs and SBE-FPs or assisting
[[Page 25810]]
an individual with applying for APTC and CSRs for QHPs to document the
receipt of consent from the consumer, or the consumer's authorized
representative designated in compliance with Sec. 155.227, qualified
employers, or qualified employees they are assisting. We proposed that
documentation of receipt of consent would be created by the assisting
agent, broker, or web-broker and would require the consumer seeking to
receive assistance, or the consumer's authorized representative, to
take an action that produces a record that can be maintained by the
agent, broker, or web-broker and produced to confirm the consumer's or
their authorized representative's consent was provided. With regard to
the content of the documentation of consent, in addition to the date
consent was given, name of the consumer or their authorized
representative, and the name of the agent, broker, web-broker, or
agency being granted consent, we proposed the documentation would be
required to include a description of the scope, purpose, and duration
of the consent provided by the consumer, or their authorized
representative, as well as the process by which the consumer or their
authorized representative may rescind such consent. Lastly, we proposed
that documentation of the consumer's or their authorized
representative's, consent be maintained by the agent, broker, or web-
broker for a minimum of 10 years and produced upon request in response
to monitoring, audit, and enforcement activities conducted consistent
with Sec. 155.220(c)(5), (g), (h) and (k).
Currently, Sec. 155.220(j)(2)(iii) requires agents, brokers, or
web-brokers assisting with or facilitating enrollment in coverage
through the FFEs or SBE-FPs or assisting an individual in applying for
APTC and CSRs for QHPs to obtain the consent of the individual,
employer, or employee prior to providing such assistance. However,
Sec. 155.220(j)(2)(iii) does not currently require agents, brokers, or
web-brokers to document the receipt of consent. As provided in the
proposed rule (87 FR 78254), we have observed several cases in which
there have been disputes between agents, brokers, or web-brokers and
the individuals they are assisting, or between two or more agents,
brokers, or web-brokers, about who has been authorized to act on behalf
of a consumer or whether anyone has been authorized to do so. We have
also received complaints alleging enrollments by agents, brokers, and
web-brokers that occurred without the consumer's consent, and have
encountered agents, brokers, and web-brokers who attest they have
obtained consent and have acted in good faith, but who do not have
reliable records of such consent to defend themselves from allegations
of misconduct. Thus, we proposed this standard because, as noted in the
proposed rule (87 FR 78254), we believe that it will be beneficial to
have reliable records of consent to help with the resolution of such
disputes or complaints and to minimize the risk of fraudulent
activities such as unauthorized enrollments. For these reasons, we
proposed to revise Sec. 155.220(j)(2)(iii) to require agents, brokers,
and web-brokers to document the receipt of consent from the consumer
seeking to receive assistance or the consumer's authorized
representative, employer, or employee prior to assisting with or
facilitating enrollment through the FFEs and SBE-FPs, making updates to
an existing application or enrollment, or assisting the consumer in
applying for APTC and CSRs for QHPs.
We also proposed to establish in proposed new Sec.
155.220(j)(2)(iii)(A) through (C) standards for what constitutes
obtaining and documenting consent to provide agents, brokers, and web-
brokers with further clarity regarding this proposed requirement.
First, we proposed to add new proposed Sec. 155.220(j)(2)(iii)(A) to
establish that obtaining and documenting the receipt of consent would
require the consumer seeking to receive assistance, or the consumer's
authorized representative designated in compliance with Sec. 155.227,
to take an action that produces a record that can be maintained by the
agent, broker, or web-broker and produced to confirm the consumer's or
their authorized representative's consent has been provided.
We noted that we did not intend to prescribe the method to document
receipt of individual consent, so long as whatever method is chosen
requires the consumer or their authorized representative to take an
action and results in a record that can be maintained and produced by
the agent, broker, or web-broker. Therefore, we proposed to include in
new proposed Sec. 155.220(j)(2)(iii)(A) a non-exhaustive list of
acceptable means to document receipt of consent, including obtaining
the signature of the consumer or their authorized representative
(electronically or otherwise), verbal confirmation by the consumer or
their authorized representative that is captured in an audio recording,
a response from the consumer or their authorized representative to an
electronic or other communication sent by the agent, broker, or web-
broker, or other similar means or methods that HHS specifies in
guidance. Other methods of documenting individual consent may be
acceptable, such as requiring individuals to create user accounts on an
agent's or agency's website where they designate or indicate the
agents, brokers, or web-brokers to whom they have provided consent. We
proposed that agents, brokers, and web-brokers would also be permitted
to continue to utilize State Department of Insurance forms, such as
agent or broker of record forms, provided these forms cover the minimum
requirements that the documentation include the date consent was given,
the name of the consumer or their authorized representative, the name
of the agent, broker, web-broker, or agency being granted consent, a
description of the scope, purpose, and duration of the consent obtained
by the individual, as well as a process through which the consumer or
their authorized representative may rescind consent. We noted that if
agents, brokers, and web-brokers have already adopted consent
documentation processes consistent with this proposed framework, no
changes would be required. We noted in the proposed rule (87 FR 78206,
78254) that we intend to allow for documentation methods well-suited to
the full range of ways agents, brokers, and web-brokers interact with
consumers they are assisting (for example: in-person, via phone,
electronic communications, use of an agent's or agency's website,
etc.). We also noted that we intend for the primary applicant to be
able to provide consent on behalf of other applicants (for example,
dependents or other household members), and authorized representatives
to be able to provide consent on behalf of the people they are
designated to represent (for example, incapacitated persons), as it may
be difficult or impossible to obtain consent from each individual whose
information is included on an application. This would allow agents,
brokers, and web-brokers to continue assisting individuals as they
currently do (for example, often by working with an individual
representing a household when submitting an application for a family).
Second, we proposed to require at new proposed Sec.
155.220(j)(2)(iii)(B) that the consent documentation must include the
date consent was given, name of the consumer or their authorized
representative, name of the agent, broker, web-broker, or agency being
granted consent, a description of the scope, purpose, and duration of
the
[[Page 25811]]
consent obtained by the individual, as well as a process through which
the consumer or their authorized representative may rescind consent.
Agents, brokers, and web-brokers may work with individuals in numerous
capacities. For example, they may assist individuals with applying for
financial assistance and enrolling in QHPs through the FFEs and SBE-
FPs, as well as shopping for other non-Exchange products. Similarly,
agents, brokers, and web-brokers may have different business models
such that individuals may interact with specific individuals
consistently or numerous individuals representing a business entity
that may vary upon each contact (for example, call center
representatives), and the methods of interaction may vary as well (for
example: in-person, phone calls, use of an agent's or agency's website
etc.). In addition, individuals may wish to change the agents, brokers,
or web-brokers they work with and provide consent to over time. For
these reasons, the scope, purpose, and duration of the consent agents,
brokers, and web-brokers seek to obtain from individuals can vary
widely. Therefore, as noted in the proposed rule (87 FR 78254 through
78255), this proposal is intended to ensure individuals are making an
informed decision when providing their consent to the agents, brokers,
or web-brokers assisting them, that individuals can make changes to
their provision of consent over time, and that the documentation of
consent at a minimum captures who is providing and receiving consent,
for what purpose(s) the consent is being provided, when consent was
provided, the intended duration of the consent, and how specifically
consent may be rescinded. We noted that we expect the information in
the consent documentation will align with the information in the
corresponding individuals' applications (for example: names, phone
numbers, or email addresses should align as applicable depending on
whether the consent is obtained via email, text message, call
recording, or otherwise), except for in instances in which consent is
being provided by an authorized representative.
Lastly, at new proposed Sec. 155.220(j)(2)(iii)(C), we proposed to
require agents, brokers, and web-brokers to maintain the documentation
described in proposed Sec. 155.220(j)(2)(iii)(A) for a minimum of 10
years. Section 155.220(c)(5) states HHS or its designee may
periodically monitor and audit an agent, broker, or web-broker to
assess their compliance with applicable requirements. However, there is
not currently a maintenance of records requirement directly applicable
to all agents, brokers, and web-brokers assisting consumers through the
FFEs and SBE-FPs.\217\ Capturing a broad-based requirement mandating
that all agents, brokers, and web-brokers assisting consumers in the
FFEs and SBE-FPs to maintain the records and documentation
demonstrating receipt of consent from consumers or their authorized
representative would provide a clear, uniform standard. It would also
ensure these records and documentation are maintained for sufficient
time to allow for monitoring, audit, and enforcement activities to take
place.\218\ Therefore, consistent with other Exchange maintenance of
records requirements,\219\ we proposed to capture in new proposed Sec.
155.220(j)(2)(iii)(C) that agents, brokers, and web-brokers would be
required to maintain the documentation described in proposed Sec.
155.220(j)(2)(iii)(A) for a minimum of 10 years, and produce the
documentation upon request in response to monitoring, audit and
enforcement activities conducted consistent with Sec. 155.220(c)(5),
(g), (h) and (k).
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\217\ Section 155.220(c)(3)(i)(E) requires web-brokers to
maintain audit trails and records in an electronic format for a
minimum of 10 years and cooperate with any audit under this section.
Section 156.340(a)(2) places responsibility on QHP issuers
participating in Exchanges using the Federal platform to ensure
their downstream and delegated entities (including agents and
brokers) are complying with certain requirements, including the
maintenance of records requirements in Sec. 156.705. Section
156.705(c) requires QHP issuers in the FFEs to maintain certain
records for 10 years.
\218\ While investigations consumer complaints are an example of
a more immediate, real-time monitoring and oversight activity,
market conduct examinations, audits, and other types of
investigations (for example, compliance reviews) may occur several
years after the applicable coverage year.
\219\ See, for example, 45 CFR 155.220(c)(3)(i)(E) and
156.705(c).
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We sought comment on these proposals, including whether there are
other means or methods of documentation that we should consider
specifying are permissible for purposes of documenting the receipt of
consent from consumer or their, qualified employers, or qualified
employees.
After reviewing the public comments, we are finalizing these
proposals as proposed. We are making a technical update to Sec.
155.220(j)(2)(iii)(A) to add in the phrase ``or other similar means or
methods that HHS specifies in guidance'' to align with and capture the
proposed policy, as reflected in the preamble of the proposed rule, and
which is being finalized in this final rule, as proposed.
We summarize and respond to public comments received on the
proposals related to the documentation of consumer consent and the
associated document retention policy below.
Comment: Multiple commenters expressed their support of these
proposals. These commenters stated they believed these new requirements
would help eliminate unauthorized enrollments and protect consumers.
Many of these commenters recommended that we allow agents, brokers, and
web-brokers to maintain the flexibility to determine the method by
which they will meet these requirements.
Response: We agree with these commenters and are finalizing these
proposals as proposed. As discussed in the proposed rule, to ensure
continued flexibility for agents, brokers, and web-brokers, we have not
mandated a specific method by which agents, brokers, and web- brokers
must meet these requirements. The technical update we are making to
Sec. 155.220(j)(2)(iii)(A) to add in the phrase ``or other similar
means or methods that HHS specifies in guidance'' aligns the regulatory
text with the preamble and further emphasizes this flexibility, as the
means or methods by which acceptable documentation may be obtained by
agents, brokers, and web-brokers are not being mandated and may be
updated by HHS in guidance.
Comment: Some commenters expressed concern these new requirements
would impose heavy burdens on agents, brokers, and web-brokers due to
the additional time that would be required for agents, brokers, and
web-brokers to implement and come into compliance with these new
requirements. Some of these commenters stated the additional time
required to meet these new requirements would be more burdensome during
the Open Enrollment Period. Other commenters stated the additional time
associated with implementing and complying with these new requirements
would discourage consumers from enrolling in coverage through the FFEs
and SBE-FPs, as well as agents, brokers, and web-brokers from assisting
consumers in the FFEs and SBE-FPs.
Response: We recognize these new requirements will likely require
agents, brokers, and web-brokers to spend more time with each consumer
to ensure that consumer consent is documented and that this may affect
agents, brokers, and web-brokers more so during the Open Enrollment
Period. However, we believe the benefits of these new requirements
[[Page 25812]]
outweigh any potential negative impact on agents, brokers, web-brokers,
or consumers. Existing rules require agents, brokers, and web-brokers
to obtain consumer consent prior to assisting them with Exchange
enrollment or applying for APTC and CSRs for QHPs.\220\ Therefore, we
believe that requiring a record of that consent be documented and
maintained will not add significant burdens on agents, brokers, and
web-brokers.
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\220\ See 45 CFR 155.220(j)(2)(iii).
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Additionally, as discussed in the proposed rule (87 FR 78254), we
believe having a reliable record of consent will help with the
resolution of disputes between agents, brokers, or web-brokers and the
individuals they are assisting, or between two or more agents, brokers,
or web-brokers, about who has been authorized to act on behalf of a
consumer or whether anyone has been authorized to do so; the resolution
of consumer complaints; and minimize the risk of fraudulent activities
such as unauthorized enrollments. Finally, as discussed in the proposed
rule (87 FR 78254), we did not propose to specify a method for
documenting that consumer consent was provided. This flexibility will
allow each individual agent, broker, or web-broker to establish
protocols and methods that will meet their needs in the most efficient
manner. We believe this flexibility, and that the fact that these new
requirements are simply building on existing requirements,\221\ will
minimize the burdens associated with implementing these new
requirements. In fact, we believe that these new requirements, which
are intended to protect consumers, prevent fraud and abusive conduct,
and ensure the efficient and effective operation of the Exchanges on
the Federal platform, will encourage more consumers to purchase health
insurance through the Exchanges. We will, however, monitor Exchange
enrollment data and agent, broker, web-broker participation in future
years to analyze if these new requirements have a noticeable negative
impact.
---------------------------------------------------------------------------
\221\ See 45 CFR 155.220(j)(2)(iii).
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Comment: Multiple commenters expressed concerns regarding the
disclosure of consumers' PII. These commenters stated that they believe
these new requirements would lead to more improper disclosures of
consumer PII as agents, brokers, and web-brokers would be storing more
consumer PII than in the past.
Response: We do not believe these new requirements will lead to
more improper disclosures of consumer PII. These new requirements do
not require agents, brokers, and web-brokers to record or keep consumer
PII beyond what an agent, broker, or web-broker currently records and
maintains. Section 155.220(j)(2)(iii)(A) requires that agents, brokers,
and web-brokers document the receipt of consent from a consumer or the
consumer's authorized representative. Under Sec.
155.220(j)(2)(iii)(B), such documentation is required to include a
description of the scope, purpose, and duration of the consent
provided, the date consent was given, the name of the consumer or their
authorized representative, the name of the agent, broker, web-broker,
or agency being granted consent, and a process through which the
consumer or their authorized representative may rescind the consent.
The only piece of PII required for this documentation is the consumer's
name, which an agent, broker, or web-broker would already be recording
and maintaining in their files.
A recorded conversation, during an over-the-phone enrollment or
otherwise, could potentially contain more consumer PII than what the
regulations require, as additional consumer information may be revealed
during the conversation and the enrollment process. However, we do not
believe this will lead to more improper disclosures of consumer PII.
Agents, brokers, and web-brokers are already required to adhere to
applicable State or Federal laws concerning the safeguarding of
consumer PII, including Sec. 155.220(g)(4) and (j)(2)(iv), and
HIPAA.\222\ These same requirements and protections continue to apply.
Additionally, an agent, broker, or web-broker that elects to implement
the phone recording method to meet these new requirements would only be
required to record the portion of the conversation in which the
consumer or consumer's representative provides consent to demonstrate
compliance, which would reduce the amount of consumer PII in the
recorded conversation. This would further reduce or eliminate the
potential of improper disclosures of consumer PII.
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\222\ See, for example, 45 CFR 155.260, 45 CFR part 164,
subparts A and E, and the Health Insurance Portability and
Accountability Act of 1996, Public Law 104-191, H.R. 3103, 104th
Cong (42 U.S.C. 1320d-2).
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Comment: Some commenters suggested these new requirements would add
a disproportionate burden on smaller agencies and independent agents,
brokers, and web-brokers, particularly with regard to the initial costs
of implementing these new requirements. These commenters stated larger
agencies are better equipped to implement these new requirements and
absorb the costs associated with them.
Response: We acknowledge that larger agencies may be better
equipped to implement these new requirements. There will be upfront
costs associated with these new requirements, potentially including
purchasing recording software, upgrading storage capacity, or hiring
new personnel. Larger agencies typically have more resources to
allocate towards meeting new industry standards, as is the case in
other business fields as well. However, we do not believe these new
requirements will be cost prohibitive to smaller agencies or
independent agents, brokers, and web-brokers. As discussed above, we
are not mandating the method by which agents, brokers, and web-brokers
must meet these new requirements. Therefore, smaller agencies and
independent agents, brokers, and web-brokers have the flexibility to
meet these requirements utilizing the most efficient and cost-effective
method that meets their business needs. Additionally, as mentioned
previously, these new requirements are simply building on existing
requirements to obtain consumer consent prior to assisting with or
facilitating enrollment through an FFE or assisting the individual in
applying for APTC and CSRs for QHPs,\223\ which we believe will
alleviate the burdens and costs associated with these new requirements
for agents, brokers, and web-brokers of all sizes.
---------------------------------------------------------------------------
\223\ See Sec. 155.220(j)(2)(iii).
---------------------------------------------------------------------------
Comment: Multiple commenters stated they believed these new
requirements would be more difficult to implement over the phone, which
would negatively impact consumers without internet access (that is,
lower income) or those who are less proficient with technology.
Response: We disagree that these requirements will be more
difficult to implement over the phone than with respect to other
enrollment methods. As is the case today, consumers will be able to
enroll in QHPs and apply for APTC and CSRs for such coverage over the
phone, in-person, and via the internet. The flexibility to choose what
method is utilized to document that consumer consent has been obtained
will allow agents, brokers, and web-brokers to implement these new
requirements in a manner that is least burdensome to them. Agents,
brokers, and web-brokers may also use this flexibility to implement
different methods to comply with these requirements depending on the
circumstances of each consumer
[[Page 25813]]
they are assisting. Different implementation methods include, but are
not limited to, obtaining the signature of the consumer or their
authorized representative (electronic or otherwise), verbal
confirmation by the consumer or their authorized representative that is
captured in an audio recording, where legally permissible, or a written
response (electronic or otherwise) from the consumer or their
authorized representative to a communication sent by the agent, broker,
or web-broker.
As such, to implement these new requirements for over-the-phone
enrollments, where legally permissible and in accordance with
applicable requirements,\224\ agents, brokers, and web-brokers can
record phone conversations with consumers or their authorized
representatives to comply with Sec. 155.220(j)(2)(iii)(A) and (B). For
example, during these conversations, an agent, broker, or web-broker
may ask the consumer or the consumer's authorized representative if
they have provided consent. A recording of the consumer's or their
authorized representative's response to this question, if it meets the
requirements in Sec. 155.220(j)(iii)(A) and (B), would be sufficient
to meet these new requirements. We understand that saving recorded
conversations may be more difficult than other mediums due to the
digital space requirements and recording software needed, but is not an
excessive burden as there are numerous recording software options to
choose from and external hard drives are widely available for purchase.
Where legally permissible, it will be the choice of the agent, broker,
or web-broker if recording phone conversations is the best method for
them to implement these requirements for over-the-phone enrollments. At
the same time, we recognize there may be reasons agents, brokers and
web-brokers would also want to have other methods available for over-
the-phone enrollments. For example, in situations where a phone
recording is not possible, agents, brokers and web-brokers may send the
consumer or their authorized representative an email or text message
after talking with them over the phone. The consumer or their
authorized representative may respond to this email or text message,
acknowledging they have provided consent. When in-person assistance is
provided, the agent, broker or web-broker may want to offer the
recording methods and other options that it uses for over-the-phone
enrollments. The agent, broker, or web-broker may also want to
implement a method for in-person assistance that involves obtaining the
signature of the consumer or authorized representative (electronic or
otherwise) given the face-to-face nature of the interaction. Similarly,
agents, brokers and web-brokers should consider what methods meets
their business needs, and those of their consumers, for enrollments
over the internet. While we are not mandating that agents, brokers, and
web-brokers adopt all of these different implementation methods, we
encourage agents, brokers and web-brokers to exercise this flexibility
in a manner that accommodates the various enrollment methods they use
with their respective consumers. Additionally, if an agent, broker, or
web-broker is not able to accommodate a consumer (for example, the
consumer does not have access to the internet or is not proficient with
technology but the specific agent, broker, or web-broker only engages
in enrollments via the internet), the consumer may find another agent,
broker, or web-broker that can meet their needs.
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\224\ We recognize that there are Federal and State laws that
govern the legality of recording phone calls and conversations that
may impact an agent, broker, or web-broker's ability to record phone
or oral communications with consumers or that may require an agent,
broker, or web-broker to obtain the consumer's consent prior to
recording such communications (see, for example, 18 U.S.C. 2511).
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We believe these new requirements will help protect consumers,
including those who may be in underserved groups, rather than inhibit
their enrollment in Exchange coverage. Further, we frequently see
unauthorized enrollments impact underserved groups of consumers in
greater numbers than other groups. Often, agents, brokers, and web-
brokers who engage in noncompliant or fraudulent behavior target low-
income consumers or consumers with limited English proficiency. By
requiring that agents, brokers, and web-brokers document that consumers
or their authorized representatives have provided their consent, we
believe that these consumer harms and the impact on underserved groups
can be mitigated. In addition, requiring agents, brokers, and web-
brokers to document that consumer consent was received and to maintain
the record for 10 years will provide us with more conclusive evidence
when pursuing enforcement actions against agents, brokers, or web-
brokers for potentially fraudulent activities.
Comment: Multiple commenters suggested these new requirements
related to the documentation of consumer consent are unnecessary as the
requirement to obtain consumer consent already exists, either under
Federal or State law or in the agent, broker, or web-broker's Exchange
agreement(s).
Response: We disagree that these new requirements related to the
documentation of consumer consent are unnecessary or duplicative of
existing requirements. While agents, brokers, and web-brokers are
currently required to obtain consumer consent prior to providing the
consumer with assistance pursuant to Sec. 155.220(j)(2)(iii), this
section does not currently require agents, brokers, or web-brokers to
document the receipt of consent and maintain such documentation for a
specified period of time. As discussed in the proposed rule (87 FR
78254), we believe requiring such documentation of consent is crucial
for two reasons. First, we believe this requirement will help minimize
the risk of fraudulent activities, such as unauthorized enrollments.
Second, it will help us resolve disputes and adjudicate claims related
to the provision of consumer consent.
Comment: One commenter suggested that the documentation of consumer
consent requirement is unnecessary as unauthorized enrollments in
Exchange coverage do not occur for consumers under the age of 65.
Response: We have observed numerous unauthorized Exchange
enrollments that have occurred for consumers under the age of 65. This
is especially true with regard to consumers with limited English
proficiency or underserved populations, including unhoused individuals.
We believe these new requirements will help mitigate the risk of
unauthorized enrollments for consumers of all ages.
Comment: Several commenters stated that we should allow agents,
brokers, and web-brokers to meet these new requirements under Sec.
155.220(j)(2)(iii) and the new requirements related to documenting that
eligibility application information has been reviewed by and confirmed
to be accurate by the consumer or the consumer's authorized
representative under Sec. 155.220(j)(2)(ii) during the same consumer
interaction and/or within the same document.
Response: Agents, brokers, or web-brokers are not prohibited from
documenting that eligibility application information has been reviewed
by and confirmed to be accurate by the consumer or the consumer's
authorized representative and documenting the receipt of consent from
the consumer or the consumer's authorized representative pursuant to
Sec. 155.220(j)(2)(ii) and (iii), respectively, during the same
conversation with the consumer, or within the same document, as long as
the documentation
[[Page 25814]]
complies with the requirements set forth in Sec. 155.220(j)(2)(ii)(A)
and (B) and (j)(2)(iii)(A) through (C).
Comment: Some commenters recommended that we allow consumers to
grant consent to multiple agents, brokers, or web-brokers
simultaneously.
Response: As noted in the proposed rule (87 FR 78254), we are not
directing agents, brokers, or web-brokers on how to comply with these
new documentation requirements. In the Model Consent Form \225\ that
accompanied the proposed rule, we included an option for a consumer to
provide consent to an agency rather than an individual agent, broker,
or web-broker. At this time, providing consent to an agency or multiple
agents, brokers, or web-brokers simultaneously is permitted, provided
the consent documentation complies with the requirements contained in
Sec. 155.220(j)(2)(iii).
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\225\ CMS. (Dec. 14, 2022). CMS Model Consent Form for
Marketplace Agents and Brokers. PRA package (CMS-10840, OMB 0938-
XXXX). https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing/cms-10840.
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Comment: A few commenters suggested the proposed record retention
period of 10 years is too long for agents, brokers, and web-brokers to
maintain the documentation required by Sec. 155.220(j)(2)(iii)(C).
Another commenter stated we should have record retention period align
with the record retention period of the State where the consumer is
enrolled.
Response: Please see the accompanying information collection
section IV.F. (ICRs Regarding Providing Correct Information to the FFEs
(Sec. 155.220(j)) of this final rule for the response to these
comments.
Comment: One commenter suggested we define what consent is so that
it may be standardized. This commenter also suggested we delay
implementation of these documentation requirements until PY 2025, or
exercise enforcement discretion with regard to those agents, brokers,
and web-brokers making good-faith efforts to meet these requirements
during PY 2024.
Response: After considering these comments, we decline to define
consent. We believe the term consent is unambiguous and the new
requirements in Sec. 155.220(j)(2)(iii)(A) through (C) will provide
agents, brokers, and web-brokers with a clear picture of what obtaining
and documenting the receipt of consent requires under Sec.
155.220(j)(2)(iii). In addition, we decline to delay implementation of
these requirements until PY 2025. As noted in the proposed rule (87 FR
78254) and above, the goal of these requirements is to prevent
fraudulent activities such as unauthorized enrollments, to help resolve
disputes between agents, brokers, and web-brokers and consumers related
to consumer consent, reduce consumer harm, and support the efficient
operation of the Exchanges. If we delay implementation of these
documentation requirements, consumers may be negatively impacted when
that impact could have been avoided. Additionally, we do not plan on
targeting agents, brokers, or web-brokers who are acting in good faith
to meet these new requirements. Our primary goal is to address
situations involving noncompliance by actors who are not acting in good
faith, with a particular focus on fraudulent activities in the FFEs and
SBE-FPs. Our experience shows long-standing patterns of this activity
with the potential to impact a large number of consumers with
potentially severe consequences (for example, termination of coverage,
unanticipated tax liability).
Comment: We also received several comments that were outside the
scope of these proposals related to the documentation of consumer
consent, including the need to have the Exchange(s) obtain and maintain
consent documentation instead of the agent, broker, or web-broker, as
well as having the Exchange(s) email consumers when changes on an
application are made.
Response: Although we appreciate the commenters' interest in
policies governing the documentation of consumer consent, given that
these comments are out-of-scope with regard to these specific
proposals, we decline to comment on them at this time.
4. Eligibility Standards (Sec. 155.305)
a. Failure To File and Reconcile Process (Sec. 155.305(f)(4))
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78255), we proposed to amend Sec.
155.305(f)(4) which currently prohibits an Exchange from determining a
taxpayer eligible for APTC if HHS notifies the Exchange that a taxpayer
(or a taxpayer's spouse, if married) has failed to file a Federal
income tax return and reconcile their past APTC for a year for which
tax data from the IRS will be utilized for verification of household
income and family size in accordance with Sec. 155.320(c)(1)(i).
As background, Exchange enrollees whose taxpayer fails to comply
with current Sec. 155.305(f)(4) are referred to as having failed to
``file and reconcile.'' Since 2015, HHS has taken regulatory and
operational steps to help increase taxpayer compliance with filing and
reconciliation requirements under section 36B(f) of the Code and its
implementing regulations at 26 CFR 1.36B-4(a)(1)(i) and (a)(1)(ii)(A)
by tying eligibility for future APTC to the taxpayer's reconciliation
of past APTC paid. However, since the finalization of the requirement
at Sec. 155.305(f)(4), HHS has determined that the operational costs
of the current policy are significant and can be improved to provide a
better consumer experience, while also preserving an Exchange's duty to
protect program integrity. Exchanges have faced a longstanding
operational challenge, specifically that Exchanges sometimes have to
determine an enrollee ineligible for APTC without having up-to-date
information on the tax filing status of households while Federal income
tax returns are still being processed by the IRS. Currently, Exchanges
determine an enrollee ineligible for APTC if the IRS, through data
passed from the IRS to HHS, via the Federal Data Services Hub (the
Hub), notifies an Exchange that the taxpayer did not comply with the
requirement to file a Federal income tax return and reconcile APTC for
one specific tax year. To address the challenge of receiving up-to-date
information, and to promote continuity of coverage in an Exchange QHP,
we proposed a new process for Exchanges to conduct FTR while also
ensuring that Exchanges preserve program integrity by paying APTC only
to consumers who are eligible to receive it. HHS believes that any FTR
process should encourage compliance with the filing and reconciling
requirement under the Code and its implementing regulations, minimize
the potential for APTC recipients to incur large tax liabilities over
time, and support eligible enrollees' continuous enrollment in Exchange
coverage with APTC by avoiding situations where enrollees become
uninsured when their APTC is terminated.
For Exchanges using the Federal eligibility and enrollment
platform, which includes the FFEs and SBE-FPs, taxpayers who have not
met the requirement of Sec. 155.305(f)(4) are put into the FTR process
with the Exchange. As part of the normal process used by Exchanges
using the Federal eligibility and enrollment platform during Open
Enrollment, enrollees for whom IRS data indicates an FTR status for
their taxpayer receive notices from the Exchange alerting them that IRS
data
[[Page 25815]]
shows that their taxpayer has not filed a Federal income tax return for
the applicable tax year and reconciled APTC for that year using IRS
Form 8962, Premium Tax Credit (PTC). FTR Open Enrollment notices sent
directly to the taxpayer clearly state that IRS data indicates the
taxpayer failed to file and reconcile, whereas FTR Open Enrollment
notices sent to the applicant's household contact, who may or may not
be the taxpayer, list a few different reasons consumers may be at risk
of losing APTC, including the possibility that IRS data indicates the
taxpayer failed to file and reconcile (because the Exchange is
prohibited from sending protected tax information to an individual who
may not be the tax filer). Notices to the applicant's household contact
can be confusing because of the multiple reasons listed. Both Open
Enrollment notices encourage taxpayers identified as having an FTR
status to file their Federal income tax return and reconcile their APTC
for that year using IRS Form 8962, or risk losing APTC eligibility for
the next coverage year.
In late 2015, to allow consumers with an FTR status to be
determined eligible for APTC temporarily (if otherwise eligible), HHS
added a question to the single, streamlined application used by the
Exchanges using the Federal eligibility and enrollment platform that
allows enrollees to attest on their application, under the penalty of
perjury, that they have filed and reconciled their APTC by checking a
box that says, ``Yes, I reconciled premium tax credits for past
years.'' \226\ Enrollees who make this attestation and enroll in
coverage during Open Enrollment retain their APTC, even if IRS data has
not been updated to reflect their most current Federal income tax
filing status or if the individual has not actually reconciled their
APTC. Allowing enrollees to attest to filing and reconciling, even
though IRS data indicates that they did not, is a critical step to
safeguard enrollees from losing APTC erroneously as the IRS typically
takes several weeks to process Federal income tax returns, with
additional time required for returns or amendments that are filed using
a paper process.
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\226\ We note that this question was removed from the single
streamlined application once the FTR process was paused in 2020 for
the 2021 PY.
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After Open Enrollment, Exchanges using the Federal platform then
conduct a second look at FTR data to follow up and verify an enrollee's
reconciliation attestation by conducting a verification of their
taxpayer's FTR status early in the next coverage year, which includes
additional notices to enrollees and taxpayers. This verification
process early in the next coverage year is referred to as FTR Recheck.
State Exchanges that operate their own eligibility and enrollment
platform have each implemented similar processes to check the FTR
status of their enrollees annually based on data provided by the IRS to
identify and notify enrollees who are at risk of losing APTC
eligibility, and to allow enrollees to attest under the penalty of
perjury that they have filed and reconciled their APTC.
There are many reasons we proposed the changes to Sec.
155.305(f)(4) described in the proposed rule (87 FR 78255 through
78257). HHS' and the State Exchanges' experiences with running FTR
operations have shown that Exchange enrollees often do not understand
the requirement that their taxpayer must file a Federal income tax
return and reconcile their APTC or that they must also submit IRS Form
8962 to properly reconcile their APTC, even though the single,
streamlined application used by Exchanges on the Federal platform and
QHP enrollment process require a consumer to attest to understanding
the requirement to file and reconcile in two places. For example, we
are aware anecdotally that many third-party tax preparers, such as
accountants, are not aware of the requirement to file and reconcile,
nor prompt consumers to also include IRS Form 8962 along with their
Federal income tax return. Although enrollees who rely on third party
tax preparers such as accountants or third-party tax preparation
software to prepare their Federal income tax returns are still required
to file and reconcile even if their tax preparer was unaware of the
requirement, consumers should have the opportunity to receive
additional guidance from Exchanges on the requirement to file and
reconcile to promote compliance and prevent termination of APTC.
While annual FTR notices help with this issue as the notices alert
consumers that they did not provide adequate documentation to fulfill
the requirement to file and reconcile, the current process that
requires Exchanges to determine an enrollee ineligible for APTC after
one year of having an FTR status is overly punitive. Some consumers may
have their APTC ended due to delayed data, in which case their only
remedy is to appeal to get their APTC reinstated. Consumers also may be
confused or may have received inadequate education on the requirement
to file and reconcile, in which case they must actually file,
reconcile, and appeal to get their APTC reinstated. By requiring
Exchanges to determine an enrollee ineligible for APTC only after
having an FTR status for 2 consecutive tax years (specifically, years
for which tax data will be utilized for verification of household
income and family size), Exchanges will have more opportunity to
conduct outreach to consumers whom data indicate have failed to file
and reconcile to prevent erroneous terminations of APTC and to provide
access to APTC for an additional year even when APTC would have been
correctly terminated under the original FTR process. Under the proposed
change, Exchanges on the Federal platform will continue to send notices
to consumers for the year in which they have failed to reconcile APTC
as an initial warning to inform and educate consumers that they need to
file and reconcile or risk being determined ineligible for APTC if they
fail to file and reconcile for a second consecutive tax year. This
change will also alleviate burden on HHS hearing officers by reducing
the number of appeals related to denial of APTC due to FTR, and prevent
consumers who did reconcile, but for whom IRS data was not updated
quickly enough, from having to go through an appeal process to have
their APTC rightfully reinstated.
We believe in ensuring consumers have access to affordable coverage
and place high value on consumers maintaining continuity of coverage in
the Exchange, as we have found that FFE and SBE-FP enrollees who lose
APTC tend to end their Exchange coverage and will experience coverage
gaps, as they cannot afford unsubsidized coverage. In light of this, we
believe it is imperative that any change to the current FTR operations
be done carefully and that we thoughtfully balance how it enforces the
requirement to file and reconcile, since a consequence of losing APTC
effectively means many consumers may lose access to health insurance
coverage for needed medical care.
Therefore, given these challenges that both Exchanges and consumers
have faced with the requirement to file and reconcile, we proposed to
revise Sec. 155.305(f)(4) under which Exchanges will not be required,
or permitted, to determine consumers ineligible for APTC due to having
an FTR status for only one year. Given that our experience running FTR
shows continued issues with compliance with the requirement to file and
reconcile, we proposed that beginning on January 1, 2024, an
applicant's FTR status will trigger an Exchange determination that the
applicant is ineligible for APTC only if the applicant has an FTR
status for 2 consecutive years (specifically, 2
[[Page 25816]]
consecutive years for which tax data will be utilized for verification
of household income and family size).
Due to the COVID-19 PHE starting in 2020, for PYs 2021 and 2022, we
temporarily paused ending APTC for enrollees with an FTR status due to
IRS processing delays of 2019 Federal income tax returns.\227\ We then
extended this pause for the PY 2023 in July 2022 and included
flexibility for State Exchanges that operate their own eligibility and
enrollment platforms to take similar action.\228\ As a result of these
changes, 55 percent of enrollees who were automatically re-enrolled
during 2021 open enrollment with an FTR status remained enrolled in
Exchange coverage as of March 2021. In contrast, only 12 percent of
enrollees with an FTR status who were automatically re-enrolled without
APTC during the 2020 open enrollment were still enrolled in coverage as
of March 2020. These results show the significant impact that loss of
APTC due to FTR status has on whether enrollees continue to remain in
coverage offered through the Exchange, as these impacted enrollees must
pay the full cost of their Exchange plan, which is often unaffordable
without APTC.
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\227\ See CMS. (2021, July 23) Failure to File and Reconcile
(FTR) Operations Flexibilities for Plan Years 2021 and 2022--
Frequently Asked Questions (FAQ). https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/FTR-flexibilities-2021-and-2022.pdf.
\228\ See CMS. (2022, July 18). Failure to File and Reconcile
(FTR) Operations Flexibilities for Plan Year 2023. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/FTR-flexibilities-2023.pdf.
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We proposed to continue to pause APTC denials based on a failure to
reconcile until HHS and the IRS are able to implement the new FTR
policy. Until the IRS can update its systems to implement the new FTR
policy, and we can notify the Exchange of an enrollee's consecutive
two-year FTR status, the Exchange would not determine enrollee's
ineligible for APTC based on either the one-year or two-year FTR
status. We believe that removing APTC after 2 consecutive years of an
FTR status instead of one would help consumers avoid gaps in coverage
by increasing retention in the Exchange even if they have failed to
reconcile for one year, and would reduce the punitive nature of the
current process which may erroneously terminate APTC for consumers who
have filed and reconciled. We also believe that these proposed changes
would help protect consumers from accruing large tax liabilities over
multiple years by notifying and ending APTC for consumers with an FTR
status for 2 consecutive years. Finally, we believe these proposed
changes would allow Exchanges to maintain program integrity by denying
APTC to consumers who have, over the course of 2 years, been given
ample notification of their obligation to file and reconcile and have
nevertheless failed to do so.
We sought comment on these proposals, especially from States and
other interested parties regarding tax burdens on consumers which would
inform our decision on this proposal.
After reviewing the public comments, we are finalizing this
provision as proposed, except that the final rule will become effective
on the general effective date of the final rule, instead of January 1,
2024. As detailed in the responses to comments on these policies, some
commenters sought clarity on when the policy would become effective,
and others were concerned that changing the FTR policy would threaten
the integrity of APTC available to eligible consumers. By allowing the
policy to become generally effective prior to January 1, 2024, we are
solidifying flexibility for HHS and IRS to resume FTR operations as
soon as HHS and IRS are ready to begin. HHS will provide at least three
months' notice to consumers and other interested parties prior to
resuming FTR operations. We originally proposed a technical correction
to clarify that HHS receives data from the IRS for consumers who have
failed to file tax returns and reconcile a previous year's APTC.
However, upon further review, this technical correction is not
necessary because we believe that the original wording of the rule more
accurately reflected how information is passed through the Federal Data
Services Hub, and therefore, we are not finalizing this technical
correction. Finally, we clarify that Exchanges must continue to pause
APTC denials based on a failure to reconcile for one year under the
currently effective regulation, or 2 years under the regulation we
finalize here, until HHS and the IRS are able to implement the FTR
policy.
We summarize and respond to public comments received on the
proposed rule that an applicant's FTR status will result in an Exchange
finding that the applicant is ineligible for APTC only if the applicant
has an FTR status for 2 consecutive tax years.
Comment: Many commenters agreed with the proposal that an
applicant's FTR status will result in an Exchange determination that
the applicant is ineligible for APTC only if the applicant has an FTR
status for 2 consecutive tax years. Commenters agreed that the two-year
FTR proposal better protects financially vulnerable enrollees compared
to the current one-year FTR process. Several commenters added that
Exchanges still face operational challenges, and enrollees should not
be financially penalized in the case of an unintentional technical
issue within the Exchange. A commenter also stated the proposed change
will positively promote continuity of coverage for consumers enrolled
in Exchange coverage. Additionally, many commenters stated that the
proposal would allow for more consumer education on the requirement to
file and reconcile past APTC received and the process for doing so,
while protecting consumers from accruing large tax liabilities over
multiple years.
Response: We agree that the proposed FTR policy will improve
continuity of coverage for consumers by ensuring that consumers do not
become uninsured because their Exchange coverage becomes unaffordable
after losing APTC. Continuity of coverage is especially important for
consumers with chronic health conditions such as cancer. Additionally,
the proposed policy would protect consumers from incurring large tax
liabilities over multiple years, which may especially benefit consumers
with household incomes over 400 percent of the Federal poverty level
(FPL), who are not subject to APTC repayment caps, and whose potential
tax liability from failing to reconcile APTC may be larger.
Nonetheless, it is still a statutory requirement \229\ that consumers
file their Federal income taxes and reconcile past APTC received,
regardless of their FPL level or risk for tax liability, and we will
continue to implement policies that work towards ensuring that only
those consumers who are eligible to receive APTC continue to do so. We
believe that the proposed policy strikes a balance between protecting
consumers from large tax liabilities, such as those with household
incomes above 400 percent of the FPL, while also ensuring program
integrity for all Exchanges.
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\229\ Internal Revenue Code section 36B; 26 CFR 1.36B
4(a)(1)(i); see also https://www.irs.gov/affordable-care-act/individuals-and-families/premium-tax-credit-claiming-the-credit-and-reconciling-advance-credit-payments#Advance.
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Comment: A few comments from State Exchanges supported the proposal
but asked that we provide clear and early information about the
technical specifications and processes that will be required to
implement the FTR rule as proposed within State Exchange's systems.
Response: We agree that clear communication about technical
specifications and the processes that will be required to implement the
FTR
[[Page 25817]]
rule would be beneficial. As such, we will work with all parties
involved to make sure the FTR process is explained clearly prior to and
during implementation.
Comment: A few commenters, including several State Exchanges,
supported the policy, but requested clarification on the intended
implementation timeline of the new FTR proposal. Commenters requested
adequate time to implement necessary technical changes, allow Medicaid
unwinding efforts to be completed, and ensure alignment with IRS
provisions and systems.
Response: In the proposed rule (87 FR 78256), we stated that policy
would become effective on January 1, 2024. The proposed FTR regulation
provided that ineligibility based on FTR status would apply when IRS
notifies HHS and HHS then notifies the Exchanges that a tax filer or
their spouse did not comply with the requirement to file an income tax
return and reconcile APTC for a year for which tax data would be
utilized for verification of household income and family size. Based on
information on the availability of data from IRS, we intend to continue
pausing implementation of the FTR requirement on Exchanges on the
Federal platform until data from IRS about APTC reconciliation is
available to HHS, which we expect to be available for eligibility
determinations for PY 2025, and we expect that State Exchanges are
doing likewise. Exchanges on the Federal platform expect such
information to be available, and to first take action to apply the new
FTR rule, in September 2024, when batch auto re-enrollment (BAR)
activities begin for PY 2025 eligibility determinations. During BAR,
the Exchanges on the Federal platform will communicate with IRS to
check whether enrollees have filed and reconciled for tax years 2022
and 2023 and set the appropriate FTR status code for enrollees who have
not filed and reconciled APTC for tax years 2022 and 2023. Exchanges on
the Federal platform will then send notices to enrollees who have
either a one-year or two-year FTR status according to their 2022 and
2023 Federal income tax filings. Under the proposed change, Exchanges
on the Federal platform will not deny APTC eligibility, but will
continue to send notices to consumers for the first year in which they
have failed to reconcile APTC to inform and educate them that they need
to file and reconcile or risk being determined ineligible for APTC if
they fail to file and reconcile for a second consecutive tax year.
Enrollees in Exchanges on the Federal platform who have been
notified and have been determined to have a current two-year FTR status
will no longer be eligible for APTC, consistent with the Exchanges' on
the Federal platform FTR process, while those enrollees who have
received the first-year notice will be encouraged to file and reconcile
to avoid losing APTC eligibility the following year. Given the expected
timing to resume accurately and timely notifying Exchanges of FTR
status by September 2024, we believe there is enough time for Medicaid
unwinding to take place and to ensure alignment with IRS systems. In
response to commenter concerns regarding adequate notice of when the
new FTR policy may be applied to deny APTC eligibility, and to provide
HHS and IRS flexibility to resume FTR operations as soon as they are
able to implement the policy, HHS will provide at least 3 months'
notice before Exchanges are required to deny APTC to consumers who the
IRS reports to have failed to reconcile APTC for 2 consecutive years.
Comment: Two commenters expressed concern for consumers who might
experience a greater tax burden or tax liability if they are unable to
reconcile their APTC after two years rather than one year and suggested
we find a solution to alleviate this burden. We also received a few
comments that neither supported nor opposed the proposal but raised
concerns about consumer protections for enrollees facing high repayment
effects, especially those with household incomes above 400 percent of
FPL.
Response: We agree with the commenters that this proposal could
place consumers at a risk for increased tax liability. In particular,
taxpayers who underestimated their annual income when they enrolled in
an Exchange QHP and are ultimately determined ineligible for APTC
because of their FTR status, may be required to repay large amounts of
APTC when they file their Federal income taxes and reconcile past APTC
received. We agree that taxpayers with incomes above 400 percent of the
FPL may face the highest repayment burdens if they fail to file and
reconcile for 2 consecutive tax years as APTC repayments are not capped
for this group. To mitigate this concern, we intend to continue issuing
FTR warning notices for enrollees in Exchanges on the Federal platform
who have not filed and reconciled for one tax year. We believe that
annual FTR warning notices will remind this population of the potential
for a large tax liability and prompt them to comply with the
requirement to file and reconcile if they have not already. We
encourage State Exchanges to take similar action.
Despite the potential for a large tax liability, we believe that
this proposal will have a positive impact on consumers while still
ensuring program integrity as it will provide better continuity of
coverage for consumers who may not be aware of the requirement to file
and reconcile. We are aware that some third-party tax preparers do not
properly educate consumers on the importance of filing and reconciling
and, in some instances, these third-party tax preparers are unaware
that consumers have to file IRS Form 8962 along with their tax return
to reconcile past APTC received. In implementing the new FTR
requirement, Exchanges on the Federal platform will provide additional
education, outreach, and initial warning notices for those consumers
who are out of compliance with the filing and reconciling requirement
after one year to avoid those high tax penalties. We will continue to
monitor the implementation of this new policy including whether certain
populations continue to experience large tax liabilities and will
consider whether additional guidance, or any additional policy changes
in future rulemaking, are necessary.
Comment: Two commenters supported the proposal and suggested that
more outreach is needed to both consumers and tax preparers about the
FTR process, the risk of noncompliance, and the process for determining
eligibility.
Response: We agree with the commenter regarding the need for
education and outreach for consumers, States, tax preparers, and
interested parties that assist consumers with enrollment decisions,
such as Assisters, agents, and brokers. As we monitor the
implementation of this provision, we will consider providing additional
guidance, education, and other technical assistance to Exchanges to
adequately prepare consumers, States, tax preparers, and interested
parties before the implementation is completed and FTR operations are
resumed.
Comment: We received various comments regarding potential program
integrity implications. One commenter fully opposed the proposal of
removing APTC after an enrollee has been in an FTR status for 2
consecutive years, citing the risks of increased fraud and abuse by
consumers who know they can ignore an FTR status for an additional
year. Similarly, a few commenters neither supported nor opposed the
proposal but cautioned HHS about
[[Page 25818]]
potential fraud and abuse by enrollees receiving excess premium tax
credits.
Response: We understand and appreciate the commenters' concern
regarding the risk for fraud and abuse with respect to this proposal.
We acknowledge that there is some risk that enrollees may choose to
ignore the requirement to file and reconcile, but we anticipate these
instances will be limited as the majority of enrollees comply with the
requirement to file and reconcile. Additionally, taxpayers who choose
to ignore the requirement to file and reconcile may be subject to IRS
enforcement action, additional tax liability, and possibly interest and
penalties. We also note that nothing in this regulation changes the
requirement for enrollees to file their Federal income tax return and
reconcile the previous year's APTC with the IRS. We will continue to
monitor the implementation of this policy by reviewing and monitoring
yearly FTR consumer data and referring any instances of suspected fraud
or abuse to the appropriate Federal agencies. We will also determine
whether additional guidance, or any additional policy changes in future
rulemaking to combat fraud and abuse, are necessary.
Comment: A few commenters urged HHS to fully repeal the FTR
process, citing the threat it presents to continuity of coverage for
consumers who are facing periods of intense care, the punitive nature
of the FTR process towards consumers who cannot afford coverage, and
the risk that a two-year FTR process does not sufficiently mitigate the
unwarranted loss of APTC.
Response: We considered many factors in our decision to shift from
a one-year FTR process to a two-year FTR process. We believe that the
change properly balances consumer protections and program integrity
concerns, and therefore, we believe we should continue to improve the
FTR process rather than repeal it entirely.
5. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. Sec. 155.315 and 155.320)
a. Income Inconsistencies
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78257), we proposed to amend Sec. 155.320
to require Exchanges to accept an applicant's or enrollee's attestation
of projected annual household income when the Exchange requests tax
return data from the IRS to verify attested projected annual household
income, but the IRS confirms there is no such tax return data
available. We further proposed to amend Sec. 155.315(f) to add that
income inconsistencies must receive an automatic 60-day extension in
addition to the 90 days provided by Sec. 155.315(f)(2)(ii).
Section 155.320 sets forth the verification process for household
income. The Exchange requires that an applicant or enrollee applying
for financial assistance must attest to their projected annual
household income. See Sec. 155.320(a)(1) and (c)(3)(ii)(b). The
regulation also requires that for any individual in the applicant's or
enrollee's tax household (and for whom the Exchange has a SSN), the
Exchange must request tax return data regarding income and family size
from the IRS.\230\ See Sec. 155.320(c)(1)(i)(A). When the Exchange
requests tax return data from the IRS and the data indicates that
attested projected annual household income represents an accurate
projection of the tax filer's household income for the benefit year for
which coverage is requested, the Exchange must determine eligibility
for APTC and CSR based on the IRS tax data. See Sec.
155.320(c)(3)(ii)(C).
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\230\ The Exchange must also request data regarding Social
Security Benefits from the Social Security Administration.
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When the Exchange requests tax return data from the IRS and the IRS
returns data that reflects that the attested projected annual household
income is not an accurate projection of the tax filer's household
income for the benefit year for which coverage is requested, the
applicant or enrollee is considered to have experienced a change in
circumstances, which allows HHS to establish procedures for determining
eligibility for APTC on information other than IRS tax return data, as
described in Sec. 155.320(c)(3)(iii) through (vi). See section
1412(b)(2) of the ACA.
The Exchange also considers an applicant or enrollee to have
experienced a change in circumstances when the Exchange requests tax
return data from the IRS to verify attested projected household income,
but the IRS confirms such data is unavailable. This is because tax data
is usually unavailable when an applicant or enrollee has experienced a
change in family size, other household circumstances (such as a birth
or death), filing status changes (such as a marriage or divorce), or
the applicant or enrollee was not required to file a tax return for the
year involved. See section 1412(b)(2) of the ACA. When an applicant or
enrollee has experienced a change in circumstances as described in
section 1412(b)(2) of the ACA, the Exchange determines eligibility for
APTC and CSR using alternate procedures designed to minimize burden and
protect program integrity, described in Sec. 155.320(c)(3)(iii)
through (vi).
If an applicant or enrollee qualifies for an alternate verification
process as described above, and the attested projected annual household
income is greater than the income amount returned by the IRS, the
Exchange accepts the applicant's attestation without further
verification under Sec. 155.320(c)(3)(iii)(A). If an applicant
qualifies for an alternate verification process, and the attested
projected annual household income is more than a reasonable threshold
less than the income amount returned by the IRS, or there is no IRS
data available, the Exchange generates an income inconsistency (also
referred to as a data matching issue or DMI) and proceeds with the
process described in Sec. 155.315(f)(1) through (4), unless a
different electronic data source returns an amount within a reasonable
threshold of the projected annual household income. See Sec.
155.320(c)(3)(iv) and (c)(3)(vi)(D). This process usually requires the
applicant or enrollee to present satisfactory documentary evidence of
projected annual household income. If the applicant fails to provide
documentation verifying their projected annual household income
attestation, the Exchange determines the consumer's eligibility for
APTC and CSRs based on available IRS data, as required in Sec.
155.320(c)(3)(vi)(F). However, if there is no IRS data available, the
Exchange must determine the applicant ineligible for APTC and CSRs as
required in Sec. 155.320(c)(3)(vi)(G). We proposed to make clarifying
revisions to the current regulations to ensure consistency between the
regulations and the current operations of the Exchanges on the Federal
platform, as described here.
We proposed to add Sec. 155.320(c)(5) which would require
Exchanges to accept an applicant's or enrollee's attestation of
projected annual household income when the Exchange requests IRS tax
return data but IRS confirms such data is not available because the
current process is overly punitive to consumers and burdensome to
Exchanges. There are many reasons for IRS not returning consumer data,
aside from the consumer's failure to file tax returns, including tax
household composition changes (such as birth, marriage, and divorce),
name changes, or other demographic updates or mismatches--all of which
are legitimate changes that currently cause a consumer
[[Page 25819]]
to receive an income DMI. Additionally, the consequence of receiving an
income DMI and being unable to provide sufficient documentation to
verify projected household income outweighs program integrity risks as,
under Sec. 155.320(c)(3)(vi)(G), consumers are determined completely
ineligible for APTC and CSRs. For burden on Exchanges, DMI verification
by the Exchange requires an outlay of administrative hours to monitor
and facilitate the resolution of income inconsistencies. Within the
Federal Platform, this administrative task accounts for approximately
300,000 hours of labor annually, which we believe is proportionally
mirrored by State Exchanges.
Accordingly, we proposed to accept an applicant's or enrollee's
attestation of projected annual household income when IRS tax return
data is requested but is not available, and to determine the applicant
or enrollee eligible for APTC or CSRs in accordance with the
applicant's or enrollee's attested projected household income, to more
fairly determine eligibility for consumers and to reduce unnecessary
burden on Exchanges. This proposal is consistent with section
1412(b)(2) of the ACA, which allows the Exchange to utilize alternate
verification procedures when a consumer has experienced substantial
changes in income, family size or other household circumstances, or
filing status, or when an applicant or enrollee was not required to
file a tax return for the applicable year.\231\ It is also consistent
with the flexibility under section 1411(c)(4)(B) of the ACA to modify
methods for verification of the information where we determine such
modifications will reduce the administrative costs and burdens on the
applicant.
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\231\ 42 U.S.C. 18081.
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The Exchange would continue to generate income DMIs when IRS tax
data is available and the attested projected household income amount is
more than a reasonable threshold below the income amount returned by
the IRS, and other sources cannot provide income data within the
reasonable threshold. Additionally, the Exchange would continue to
generate income DMIs when IRS tax data cannot be requested because an
applicant or enrollee did not provide sufficient information (namely, a
social security number), and other sources cannot provide income data
within the reasonable threshold of the attested projected household
income.
Under section 1411(c)(3) of the ACA, data from the IRS is required
to be used to determine if income is inconsistent. Exchanges on the
Federal Platform do not use any other data sources for the purpose of
generating income DMIs because there are currently no reliable and
accurate income data sources legally available to such Exchanges that
would provide quality data for this purpose. For Exchanges using the
Federal platform, income data from other electronic data sources will
continue to be used to verify income to avoid setting an income DMI
when the attested projected household income amount is more than a
reasonable threshold below the income amount returned by the IRS or IRS
data cannot be requested.
However, we clarify that under Sec. 155.315(h), State Exchanges
are granted flexibility to modify the methods used for income
collection and verification, subject to HHS' approval, which can
include the use of alternative data sources. And, per Sec.
155.320(c)(3)(vi), these HHS approved electronic data sources must be
used, where available, in instances where IRS income data is
unavailable or inconsistent. Accordingly, upon approval from HHS, State
Exchanges may use alternative electronic data sources to generate
income DMIs when IRS is unable to return data or if the projected
household annual income is more than a reasonable threshold less than
the income amount returned for the household by the alternative
electronic data source. In order for the alternative electronic data to
be used to generate an income DMI, the alternative electronic data
source must maintain the same accuracy of the IRS data in providing an
income data for verification by returning income data for all members
of the household who have attested to earning income. If IRS is
successfully contacted for a household but does not return data, and
the alternative electronic data source does not provide full income
data for the household, then the State Exchange must accept the
applicant's or enrollee's attestation of projected annual household
income.
Lastly, we proposed to revise Sec. 155.315 to add new paragraph
(f)(7) to require that applicants must receive an automatic 60-day
extension in addition to the 90 days currently provided by Sec.
155.315(f)(2)(ii) to allow applicants sufficient time to provide
documentation to verify household income. The extension would be
automatically granted when consumers exceed the allotted 90 days
without resolving their household income DMI. This proposal aligns with
current Sec. 155.315(f)(3), which provides extensions to applicants
beyond the existing 90 days if the applicant demonstrates that a good
faith effort has been made to obtain the required documentation during
the period. It is also consistent with the flexibility under section
1411(c)(4)(B) of the ACA to modify methods for verification of the
information where we determine such modifications will reduce the
administrative costs and burdens on the applicant.
We have found that 90 days is often an insufficient amount of time
for many applicants to provide income documentation, since it can
require multiple documents from various household members along with an
explanation of seasonal employment or self-employment, including
multiple jobs. As applicants are asked to provide a projection for
their next year's income, they often submit documents that do not fully
explain their attestation due to the complexities noted previously,
which requires contact from the Exchange and additional document
submission, often pushing the verification timeline past 90 days. An
additional 60 days would allow consumers more time to gather multiple
documents from multiple sources, and would allow time for back and
forth review with the Exchange. The majority of households with income
DMIs are comprised of consumers who are low income and often have
multiple sources of employment that can change frequently. Therefore,
collecting and submitting documentation to verify projected household
income is extremely complicated and difficult.
While we recognize that it raises program integrity concerns to
provide APTC for an additional 60 days to consumers who may ultimately
be ineligible, we believe that these concerns are outweighed by the
benefits of improved health care access and health equity, a stronger
risk pool, and operational efficiency. The proposed extension would
provide many consumers who are eligible for APTC with the necessary
time to gather and submit sufficient documentation to verify their
eligibility. The current authority allowing for the granting of
extensions is applied on a case-by-case basis and requires the
consumers to demonstrate difficulty before the 90-day deadline, which
does not address the need for additional time more broadly for
households with income DMIs.
A review of income DMI data indicates that when consumers receive
additional time, they are more likely to successfully provide
documentation to verify their projected household income. Between 2018
and 2021, over one third of consumers who resolved
[[Page 25820]]
their income DMIs on the Exchange did so in more than 90 days. These
consumers were provided additional time under Sec. 155.315(f)(3), but
the extension under this existing provision places the burden on the
consumer to obtain more time to submit documentation. The proposed
extension would treat consumers more equitably, take into consideration
the complicated process of obtaining and submitting income documents
for these households, and provide more opportunity for Exchanges to
work with consumers to submit the correct documentation to verify their
projected annual household income. We believe that this extension would
provide consumers with these benefits because previous extensions
enabled us to determine eligibility for more consumers who, after
verifying their eligibility through the DMI process, were determined
eligible for financial assistance. We continue to study consumer
behavior in resolving inconsistencies to continue to support accurate
eligibility determination.
We have found that income DMIs have a negative impact on access and
health equity. Upon a review of PY 2022 data, income DMIs
disproportionately impacted households with lower attested household
income. Among households with an income DMI in PY 2022, approximately
60 percent attested to a household income of less than $25,000. In
households without an income DMI, only about 40 percent attested to
household income less than $25,000. Additionally, households with an
attested household income below $25,000 successfully submitted
documentation to verify their income 25 percent less often than
households with higher household incomes. Income DMIs also may pose a
strain on populations of color. A review of available data indicates
that income DMI expirations are higher than expected among Black or
African American consumers. The proposed changes would promote access
to more affordable coverage by continuing APTC for many eligible
consumers.
Consumers' challenges in submitting documentation to resolve income
DMIs also negatively impact the risk pool. When households are unable
to submit documentation to verify their household income and lose
eligibility for APTC, they are much more likely to drop coverage since
they must pay the entire monthly premium, which in many cases may be
significantly more than the premium minus the APTC. We have found that
consumers who were unable to submit sufficient documentation to verify
their income and lost their eligibility for APTC were half as likely as
other consumers to remain covered through the end of the plan year.
Consumers aged 25-35 were the age group most likely to lose their APTC
eligibility due to an income DMI, resulting in a loss of a population
that, on average, has a lower health risk, thereby negatively impacting
the risk pool.
Given the information we have on the negative and disproportionate
impacts of income DMIs, we proposed to adjust the household income
verification requirements to treat consumers more equitably, help
ensure continuous coverage, and strengthen the risk pool. Exchanges
would utilize only data from the IRS for the purpose of generating an
income DMI, except for State Exchanges that are approved to utilize
additional data sources as outlined earlier in this proposal, and
Exchanges would accept attestation when tax return data is requested
from IRS but not returned. In cases where the IRS returns tax data that
reflects that the attested projected annual household income is not an
accurate projection of the tax filer's household income, Exchanges
would continue existing DMI generation and adjudication operations.
Additionally, Exchanges would utilize the additional time provided to
work with consumers to submit documentation to verify their projected
annual household income.
While the increased protection for consumers from loss of
eligibility for APTC could present a program integrity risk, households
are required to provide accurate answers to application questions under
penalty of perjury. We note that the program integrity risk applies to
a limited group of consumers, namely those who misreport income and for
whom IRS indicates that they have no income data after being contacted
by HHS. Also, we do not believe that individuals for whom IRS cannot
return income data due to situations such as family size change have a
greater incentive to misreport income than their counterparts, given
that changes in family size and other changes in circumstances are
unlikely to be correlated with income misreporting incentives. We will
continue to engage with partners to evaluate the impact of this
proposal on the amount of APTC a household receives compared to the
amount of PTC the household is eligible for when filing taxes.
After reviewing the public comments, we are finalizing these
provisions as proposed. We summarize and respond below to public
comments received on the proposed policies to accept household income
attestation when the Exchange requests tax return data from the IRS to
verify attested projected annual household income but the IRS confirms
there is no such tax return data available and to provide an automatic
60-day extension for income DMIs.
Comment: Multiple commenters requested clarification on the usage
of State data sources to resolve income inconsistencies, noting a
desire to continue using those sources for that purpose.
Response: We agree that State Exchanges can continue to use the
data sources that they currently use to verify income, and we have
provided additional information in the preamble to explain when and how
State Exchanges may use alternative data sources. Exchanges may only
continue to use income data from other electronic data sources to
verify income if income is not already verified by the IRS, or if IRS
data is inconsistent with the projected annual household income, unless
flexibility is granted and approved by HHS under Sec. 155.315(h). This
includes income sources that are available to State Exchanges that may
not be available to other Exchanges, such as information maintained by
State tax franchise boards or public benefit records.
Comment: Multiple commenters expressed program integrity concerns,
as well as tax liability concerns for consumers, particularly for
consumers who miscalculate their income.
Response: While data suggests that consumers have a high degree of
ability to project their income and HealthCare.gov has made recent
changes to further assist individuals in determining their projected
income, we will continue to engage with State Exchanges, consumer
advocates, and other external interested parties on how to increase the
accuracy of consumer income attestation and subsequent APTC
determination. Anticipated updates to promote program integrity include
strengthening accurate income attestation and tax reconciliation
language in existing consumer-facing materials. Although the program
integrity risk applies to a limited group of consumers, namely those
who misreport income and for whom IRS indicates that they have no
income data after being contacted by HHS, we acknowledge the
commenter's concerns on program integrity. It is our belief that the
health care accessibility, health equity, risk pool, and operational
efficiency benefits outlined in the preamble outweigh these concerns.
Additionally, households are required to provide true answers to
application questions under penalty of perjury.
[[Page 25821]]
Comment: Some commenters suggested asking the applicant for
additional information on why an applicant projects their income a
certain way, including why it has changed over time.
Response: We currently ask consumers for additional information in
the application, such as the specific reason why their income may have
changed with the opportunity to provide responses from a pull-down
menu, including an option for additional information, and we use that
information as part of our verification of a household's projected
income. We have found that while sometimes the information provided is
sufficient to verify household projected income, it often does not help
thoroughly explain consumers' complicated income streams and household
changes. Additionally, an applicant or enrollee may not know, and
therefore may not be able to explain why a DMI is caused by a tax
household composition change (such as birth, marriage, and divorce),
name change, or other demographic updates or mismatch.
Comment: Multiple commenters stated that the 60-day extension was
not necessary for all consumers and would slow down and burden the
administrative process, and that the existing 90 days is sufficient.
Some commenters proposed that we instead offer the 60-day extension on
a case-by-case basis.
Response: We do not believe that 90 days is sufficient for many
applicants. Applicants and enrollees often need to submit multiple
documents to verify their projected household income, which is often
difficult to do within 90 days, particularly for those in seasonal work
or who are self-employed. When given extra time (as currently may be
provided on a case-by-case basis under Sec. 155.315(f)(3)), over one
third of consumers resolve their income DMIs after 90 days,
demonstrating that many consumers are able to provide the required
information when they are given sufficient time to do so. Finally, the
90-day extension adjustment would likely not burden the administrative
process as the additional time could facilitate more DMI resolutions,
potentially leading to fewer appeals related to the adjustment or
removal of financial assistance.
Comment: One commenter mentioned concerns about implementing the
60-day extension and requested flexibility on the implementation
timeline for State Exchanges.
Response: While we acknowledge that this change will require
implementation effort from the State Exchanges, we have decided not to
provide flexibility on the implementation timeline for State Exchanges.
As stated in the preamble, 90 days is often an insufficient amount of
time for households to collect and submit documents to successfully
verify their projected household income, and consumers who lose
eligibility for financial assistance as a result of a failed income
verification often drop coverage. We believe that this provision must
be implemented in all Exchanges to account for the complicated process
of submitting documentation. However, we will be available to conduct
technical assistance to State Exchanges experiencing difficulty in
implementing the extension.
Comment: One commenter noted that the existing income verification
process is sufficient and that the existing document submission process
is a small burden on consumers.
Response: We do not believe that the current income verification
process is sufficient due to the negative impacts on health care
access, health equity, the risk pool, and operational efficiency.
Additionally, the existing document submission process is burdensome on
consumers and time consuming, as they often have to obtain and submit
multiple documents before their income inconsistency is resolved,
particularly if they are self-employed or work seasonal jobs.
6. Annual Eligibility Redetermination (Sec. 155.335)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78259), we proposed revising Sec.
155.335(j) to allow the Exchange, beginning in PY 2024, to direct re-
enrollment for enrollees who are eligible for CSRs in accordance with
Sec. 155.305(g) from a bronze QHP to a silver QHP with a lower or
equivalent premium after APTC within the same product and QHP issuer,
regardless of whether their current plan is available or not, if
certain conditions are met (referred to here as the ``bronze to silver
crosswalk policy''). We also proposed to amend the Exchange re-
enrollment hierarchy to require all Exchanges (Exchanges on the Federal
platform and State Exchanges) to ensure enrollees whose QHPs are no
longer available to them and enrollees who would be re-enrolled into a
silver-level QHP in order to receive income-based CSRs are re-enrolled
into plans with the most similar network to the plan they had in the
previous year, provided that certain conditions are met.
After reviewing public comments, we are finalizing these proposals
with modifications. Specifically, we are amending the proposed
regulations to clarify that Exchanges implementing the bronze to silver
crosswalk policy will compare net monthly silver plan premiums for the
future year with net monthly bronze plan premiums for the future year,
as opposed to net monthly bronze plan premiums for the current year
(where net monthly premium is the enrollee's responsible amount after
applying APTC). For example, when determining whether to automatically
re-enroll a 2023 bronze plan enrollee who is CSR-eligible into a silver
plan for 2024, an Exchange will compare the net premium the enrollee
would pay for the silver plan in 2024 with the net premium that they
would pay for the bronze plan into which they would otherwise be auto
re-enrolled in 2024, as opposed to the net premium the enrollee paid
for their bronze plan in 2023. This clarification ensures that
Exchanges will make auto re-enrollment determinations based on
comparable premium information.
Additionally, we changed the structure and some content of the
regulation to simplify the regulatory text and to more clearly explain
that enrollees whose QHP is no longer available as described in
paragraphs (j)(1) and (2) must be enrolled in a plan that has the most
similar network compared to their current plan, whereas enrollees
subject to the bronze to silver crosswalk policy under paragraph (j)(4)
must be enrolled in a plan with the same network as the bronze plan
they would have been auto re-enrolled in per requirements in paragraph
(j)(1) or (2). We made these changes in part based on public comments
indicating confusion about when an enrollee's issuer, provider network,
and covered benefits will change as a result of the bronze to silver
crosswalk policy, compared to the policy regarding network continuity
for enrollees whose QHP is no longer available.
The restructured regulation language shifts the provisions related
to the bronze to silver crosswalk policy into a new paragraph (j)(4) to
distinguish this policy from other crosswalk scenarios. We also amended
this language to clarify that, under the bronze to silver crosswalk
policy, an Exchange may only auto re-enroll a bronze plan enrollee into
a silver plan if there is a silver plan within the same product and
with the same provider network as the bronze plan into which the
enrollee would otherwise have been auto re-enrolled, with a net premium
that does not exceed that of the bronze plan. In other words, the
bronze to silver crosswalk policy will not result in enrollment into a
plan for any enrollee that is in a
[[Page 25822]]
different product or that has a different provider network from the one
the enrollee would have had absent this bronze to silver crosswalk
policy. The restructured language deviates from the proposed rule as
follows. Under the proposed rule (87 FR 78260), we proposed to require,
with respect to all auto re-enrollments, including those under the
bronze to silver crosswalk policy now described in paragraph (j)(4),
that the future year silver plan's provider network be ``the most
similar network compared to'' an enrollee's current bronze plan network
because provider networks can change year-to-year within the same plan
and product. We are finalizing this proposal only with respect to auto
re-enrollments under paragraphs (j)(1) and (2). Specifically, we are
finalizing that where an enrollee's plan is no longer available through
the Exchange under Sec. 155.335(j)(1)(ii) through (iv) and (j)(2), the
Exchange will be required to compare the future year plan's provider
network to the current year plan's network and take network similarity
into account when auto re-enrolling enrollees whose current plan will
no longer be available. However, we are also finalizing under Sec.
155.335(j)(4), that the Exchange is permitted to compare the future
year silver plan's provider network against the future year bronze
plan's provider network (as opposed to the current year bronze plan's
network as proposed), which is the plan and network that the enrollee
would have been auto re-enrolled into absent the bronze to silver
crosswalk policy, and the Exchange can select the silver plan only if
the networks are identical. For example, a bronze plan enrollee who is
auto re-enrolled into the same plan as their current plan will have a
similar, but not necessarily identical, network to their current plan
because provider networks may change from year-to-year. If crosswalked
into a silver plan under the bronze to silver crosswalk policy at Sec.
155.335(j)(4), the enrollee's future year silver plan network would be
compared to the network of the future year bronze plan into which they
would have been auto re-enrolled absent the policy at paragraph (j)(4),
making for a same year comparison.
Accordingly, we are finalizing the policy to require Exchanges to
take into account network similarity to current year plan when re-
enrolling enrollees whose current year plans are no longer available,
and to permit Exchanges to re-enroll enrollees under the bronze to
silver crosswalk policy only if the future year silver plan has the
same network that the future year bronze plan would have absent the
bronze to silver crosswalk policy.
For PY 2024, we will implement both policies in Exchanges on the
Federal platform by incorporating plan network ID into the auto re-
enrollment process, while continuing to take into account enrollees'
current year product.\232\ We believe that plan network ID will be an
effective method of network comparison for Exchanges on the Federal
platform because if specific providers are in-network for some of an
issuer's products but not others, the issuer must establish separate
network IDs to enable mapping the plans to the applicable network IDs.
We will also work closely with issuers and State regulators to ensure a
mutual understanding of the information we will collect to facilitate
smooth network data submission and review processes during the QHP
Certification process. As further discussed in our responses to
comments, we will also work with issuers and State regulators to learn
how we may improve methods to analyze and ensure network continuity in
future years. For example, Exchanges on the Federal platform will rely
on issuer submissions through the existing crosswalk process, which,
per Sec. 155.335(j)(2), already requires that the issuer propose a
plan for the future year that is in the product most similar to the
current year product if no plans under the same product as an
enrollee's current year QHP are available for renewal.\233\ Based on
internal analysis, in many cases we already re-enroll consumers in
plans for the future year with the same network ID as their current
year plan through this approach. However, for plan years starting in
2024, we will incorporate plan network ID into our analysis of
crosswalk plan information that we receive from issuers, and permit
them to submit justifications to HHS for review if they believe a
different network ID in the following plan year has the most similar
network to the enrollee's current QHP.\234\
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\232\ As discussed in the proposed rule (87 FR 78262), in
situations where a non-CSR eligible enrollee would not be auto re-
enrolled into their current QHP because it is no longer available,
the existing auto re-enrollment process places them into a plan with
the same product ID as their current QHP, if possible.
\233\ See Sec. 155.335(j)(2), and see ``Plan Crosswalk'' on the
QHP Certification Information and Guidance website: https://www.qhpcertification.cms.gov/s/Plan%20Crosswalk for more information
on the Crosswalk Template.
\234\ See 87 FR 78261 through 78263.
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We believe that these changes in the final rule will help
distinguish between the enrollment procedures under the bronze to
silver crosswalk policy and the procedures for when an enrollee's
current QHP is no longer available.
Finally, we also made additional revisions for clarity and
readability that do not substantively change the policy. For example,
in certain instances we amended passive language to active language to
specify that ``the Exchange will'' auto re-enroll current enrollees as
opposed to stating that a consumer ``will be auto re-enrolled.'' We
also updated rule language to include gender-neutral terms:
specifically, changing instances of ``he or she'' to ``the enrollee.''
We summarize and respond below to public comments received on the
automatic re-enrollment proposals in Sec. 155.335(j).
Comment: Many commenters supported the bronze to silver crosswalk
policy proposal, agreeing that it would help limit CSR forfeiture and
increase the likelihood that more consumers would be enrolled in more
generous coverage without additional cost. A number of commenters added
that low-income consumers would be able to use the money that they
saved for other crucial household expenses such as food and housing,
and would have improved access to care at the same monthly premium.
Commenters added that automatically re-enrolling low-income consumers
into more generous plans for the same or lower monthly premium could be
especially helpful for individuals and families who do not understand
the need to actively re-enroll in coverage for a new plan year, those
who find the plan compare and selection process especially burdensome,
and those who originally enrolled in coverage prior to availability of
more generous subsidies provided for in the American Rescue Plan Act of
2021 (ARP) and extended by the Inflation Reduction Act of 2022
(IRA).\235\
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\235\ ARP, Public Law 117-2 (2021); IRA, Public Law 117-169
(2022).
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Commenters cited examples of similar auto re-enrollment practices
that State Exchanges have implemented successfully, including the
Massachusetts Health Connector's auto re-enrollment of about 2,000
enrollees into a silver plan for the 2023 plan year, and Covered
California's auto re-enrollment of bronze enrollees with a household
income no greater than 150 percent of the FPL into silver QHPs for PY
2022 and PY 2023. One commenter expressed support but suggested that
the policy could be limited in its impact for individuals and families
with household incomes above 150 percent FPL because of the difference
in bronze and silver plans' monthly premiums.
[[Page 25823]]
Commenters generally agreed with the policy's prioritization of
network and benefit continuity for consumers who are auto re-enrolled
in a QHP that is different from their current QHP. One commenter
appreciated that the proposal incorporated network into the bronze to
silver crosswalk policy specifically because in their experience,
enrollees who forgo a $0 net monthly premium silver plan with CSRs in
favor of a $0 net monthly premium bronze plan (without the ability to
use CSRs) do so in order to access a specific provider when they cannot
afford the premiums for the silver plan(s) with networks that include
the provider. One commenter asked that we clarify the re-enrollment
hierarchy for consumers who are auto re-enrolled in a silver plan with
CSRs but become ineligible for CSRs the following year.
Response: We agree that finalizing this proposal will help to
ensure that additional enrollees are able to benefit from more generous
coverage at a lower cost that provides the same benefits and provider
network. We also agree that this may be especially beneficial for those
who find the re-enrollment process confusing or who are unaware of the
benefits of actively re-enrolling in coverage, though we will continue
to help such consumers understand the plan comparison and selection
processes. We appreciate evidence from State Exchanges of the success
of similar practices, and will work with States to understand the
impact of the policy moving forward. Because bronze plan premiums are
generally lower than silver plan premiums, we agree with the comment
that many enrollees who can benefit from the bronze to silver crosswalk
policy under paragraph (j)(4) will be eligible for a silver plan with a
$0 net monthly premium because their household income does not exceed
150 percent of FPL.\236\ However, some enrollees with a household
income greater than 150 percent of FPL may also qualify for a silver
plan with a $0 net monthly premium, depending on the premiums of bronze
and silver plans available to them, and so we will not limit this
policy based on household income. We strongly agree with the importance
of ensuring network continuity for re-enrollees as much as possible.
The policy at Sec. 155.335(j)(4) clarifies that those who are auto re-
enrolled from a bronze to a silver plan will not experience network
changes that they would not have experienced had they been auto re-
enrolled into a bronze plan.
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\236\ Section 9661 of the ARP amended section 36B(b)(3)(A) of
the Internal Revenue Code for tax years 2021 and 2022 to decrease
the applicable percentages used to calculate the amount of household
income a taxpayer is required to contribute to their second lowest
cost silver plan, which generally result in increased PTC for PTC-
eligible taxpayers. For those with household incomes no greater than
150 percent of the FPL, the new applicable percentage is zero,
resulting in availability of one or more available silver-level
plans with a net premium of $0, if the lowest or second-lowest cost
silver plan covers only EHBs. The Inflation Reduction Act of 2022
extended these changes through tax year 2025.
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Finally, in response to the comment requesting clarity on the auto
re-enrollment hierarchy for consumers who are auto re-enrolled in a
silver plan with CSRs but become ineligible for CSRs the following
year, we clarify that Exchanges will not be required to take into
consideration when applying auto re-enrollment rules under Sec.
155.335(j) whether an enrollee had previously been re-enrolled under
the new rule at Sec. 155.335(j)(4). That is, a CSR-eligible individual
who is auto re-enrolled from a bronze to a silver plan for PY 2024 in
accordance with paragraph (j)(4) and who does not return to select a
plan for PY 2025, will be auto re-enrolled as otherwise provided for
under Sec. 155.335(j). However, we also note that we encourage all
enrollees to return to the Exchange to update their application if they
experience changes during the plan year, and an enrollee in a silver
plan with CSRs who updates their application such that they are no
longer CSR-eligible may qualify for a SEP to change to a plan that is
one metal higher or lower.\237\
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\237\ See Sec. 155.420(a)(4)(ii)(B) and (d)(6)(i) and (ii)
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Comment: Some opposing commenters voiced concerns that the bronze
to silver crosswalk proposal would cause consumer confusion, and they
cautioned against interpreting consumer inaction as indifference. In
particular, these commenters noted that consumers sometimes research
their options and make a decision to allow themselves to be auto re-
enrolled, without taking action on HealthCare.gov. These commenters
also advocated for HHS to improve decision-making tools on
HealthCare.gov instead of changing consumers' default plan selections.
Opposing commenters also noted that consumers select plans for many
reasons other than monthly premium amount, including provider network,
benefit structure, and health savings account (HSA) eligibility, and
raised the concern that auto re-enrolling some consumers from a bronze
plan to a silver plan would disregard these consumer priorities.
Some commenters expressed concern that consumers who are auto re-
enrolled into a silver plan could incur unexpected tax liability,
including consumers aware of their auto re-enrollment, if their APTC
amount was determined based on inaccurate household income for the
future year, which is a particular risk for hourly workers. One
commenter noted that bronze enrollees not using the entire amount of
the APTC for which they qualify towards their premiums during the year
have some protection against tax liability in the event of an
unexpected increase in household income, and that they could lose this
protection if an Exchange auto reenrolls them into a silver plan
because the consumer would be likely to use more APTC to cover the
higher monthly premium.\238\ That is, an enrollee who experiences a
household increase mid-year that they do not report to the Exchange,
which results in eligibility for less PTC, may have a larger tax
liability upon tax filing if they apply more APTC to a monthly silver
plan premium than to a monthly bronze plan premium to off-set the
higher premium.
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\238\ For example, assume an individual enrolls in a bronze plan
and the enrollee's APTC covers the entire monthly premium for the
plan based on projected household income at 150 percent of the FPL.
Also assume, based on the enrollee's projected income, that APTC
would have covered the entire amount of the enrollee's premium for a
silver plan in the same product. If the enrollee's income as a
percent of FPL ends up higher than projected, it is possible that
the enrollee's benchmark plan premium minus the enrollee's
contribution amount (that is, the maximum available premium
assistance) would still be more than the bronze premium but less
than the relevant silver plan premium. This would result in a tax
liability with the silver plan, but not the bronze plan selection,
in this case. (Note: ``contribution amount'' means the amount of a
taxpayer's household income that the taxpayer would be responsible
for paying as their share of premiums each month if they enrolled in
the applicable second lowest-cost silver plan. See ``Terms You May
Need To Know'' in Instructions for Form 8962: https://www.irs.gov/pub/irs-pdf/i8962.pdf.)
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Some opposing commenters asked that we delay this policy, if
implemented, to conduct further research to ensure it honors consumer
preferences and to provide interested parties with additional time to
develop appropriate consumer messaging. A few commenters raised the
concern that auto re-enrolling consumers into an alternate plan when
their current plan remains available violates the guaranteed
renewability requirements with which issuers must comply, and that the
limited exceptions to these requirements do not include availability of
a different plan with lower premiums or cost-sharing.
Response: We acknowledge that some consumers may choose not to take
action during an open enrollment period with the expectation that they
will be auto re-enrolled in their current
[[Page 25824]]
plan, and we anticipate updating current outreach on HealthCare.gov and
elsewhere and providing technical assistance to promote understanding
of these changes, and encourage State Exchanges to similarly educate
their enrollees. Also, as discussed in the proposed rule,\239\ income-
based CSR-eligible enrollees in Exchanges on the Federal platform who
may be auto re-enrolled under the bronze to silver crosswalk policy
described in paragraph (j)(4) will receive a notice from the Exchange
advising them that they will be re-enrolled into a silver plan if they
do not make an active selection on or before December 15th. These
enrollees would also see the silver plan highlighted in the online
shopping experience if they return on or before December 15th to review
their options.\240\ Also, we agree that we should continue to work to
improve decision-making tools on HealthCare.gov; however, we do not
believe that that work is a substitute for auto re-enrolling certain
consumers in a plan that will provide them with more generous coverage
for a lower or equal premium.
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\239\ See 87 FR 78262.
\240\ Enrollees who return to their HealthCare.gov account after
December 15 will see the plan as their enrolled plan, and could
choose a different plan until January 15 for coverage starting
February 1.
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In response to concerns that enrollees subject to the bronze to
silver plan crosswalk policy will be auto re-enrolled into a plan with
a different benefit structure and provider network, we note that the
policy only applies for consumers who have access to a silver plan in
their same product with a Network ID that matches that of their future
year bronze plan, and therefore consumers will not experience network
changes or benefit changes that they would not otherwise experience had
they been auto re-enrolled into their bronze plan.
Also, we will perform additional research to ensure that we are
able to provide appropriate support and technical assistance to
enrollees who may have chosen a plan for its HSA eligibility. We also
encourage State Exchanges, agents and brokers, and Assisters to work
with these enrollees to ensure they can make informed decisions on this
matter.
In terms of potential tax liability for repayment of APTC, we agree
that it is important for Exchanges to take steps to ensure enrollees
understand this possibility when applying APTC to premium payments in
advance. We believe that consumer notices can help to ensure they do,
and we already convey this information, because the existing auto re-
enrollment process can re-enroll enrollees in a plan with a higher
monthly premium than their current year plan due to annual increases in
the cost of coverage, which can increase tax liability. For example,
the current HealthCare.gov notice for consumers who were auto re-
enrolled in coverage with financial assistance instructs enrollees to
``Keep your Marketplace application up to date,'' and explains that
consumers must report changes in circumstance, including changes in
household income, within 30 days to ``help make sure you get the right
amount of financial help and don't owe money on your tax return because
you got the wrong amount.'' This notice also explains that ``The full
amount of tax credit that you qualify for is now being applied to your
monthly premium,'' and provides instructions for enrollees who do not
want to apply the full amount of APTC for which they qualify to their
monthly premium payments.\241\ State Exchanges should ensure their
notices are similarly educational. These State Exchange notices will be
reviewed and approved as part of HHS' annual review of State Exchanges
alternative eligibility redetermination plans, as specified in Sec.
155.335(a)(2)(iii).
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\241\ See Marketplace Automatic Enrollment Confirmation Messages
(December 2022); automatic-enrollment-with-financial-help.pdf, at
https://marketplace.cms.gov/applications-and-forms/notices.
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Additionally, when calculating the difference in net premium
between enrollees' bronze and silver plan options for the future year,
for the auto re-enrollment process for Exchanges on the Federal
platform, we will generally take into account the full amount of APTC
for which enrollees may qualify. However, in cases where a consumer
opted not to use any of their PTC in advance during the current plan
year, in keeping with our existing auto re-enrollment practice for
Exchanges on the Federal platform, we will maintain the enrollee's
preference not to apply any APTC towards monthly premiums by not taking
APTC into account when determining the difference between their monthly
bronze and monthly silver premiums for the future year, and not
automatically applying APTC to their future year monthly premiums.\242\
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\242\ This operational practice is not an Exchange requirement.
We share this information here as an example of how we plan to
implement this policy to reflect enrollees' likely intentions. We
also note that in cases where an enrollee who is auto re-enrolled
opted to apply some, but not all, of their APTC toward monthly
premiums during the current year, our current practice is to apply
any additional APTC for which the enrollee qualifies to cover as
much of the future year monthly premium as possible. We will
continue this practice, including for enrollees who qualify for the
bronze to silver crosswalk.
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We also note that enrollees whose expected household income changes
mid-year such that they no longer qualify for APTC or CSRs may be
eligible for a SEP that allows them to change to a plan of a different
metal level. For example, an enrollee whose household income increases
such that they no longer qualify for CSRs can change from a silver plan
to a bronze or gold plan, per Sec. 155.420(d)(6)(i) or (ii). We
believe that this SEP will help protect enrollees who experience
changes in household income during the year from applying APTC in an
amount that exceeds the PTC they are ultimately eligible to receive.
Nevertheless, we will work closely with interested parties to promote
understanding of potential tax liability for enrollees who are auto re-
enrolled from a bronze to a silver plan under paragraph (j)(4). We will
also work closely with State Exchanges that implement this policy to
share best practices for doing so.
Given the benefits that this policy will provide to consumers who
are enrolled in more generous coverage for no greater cost, we will not
delay its effectuation. We will work closely with all interested
parties to promote smooth implementation and mitigate consumer
confusion.
Finally, as discussed in the proposed rule (87 FR 78262 through
78263), this proposal is consistent with the explanation of the
guaranteed renewability provisions at Sec. 147.106 provided in the
2014 Patient Protection and Affordable Care Act; Annual Eligibility
Redeterminations for Exchange Participation and Insurance Affordability
Programs; Health Insurance Issuer Standards Under the Affordable Care
Act, Including Standards Related to Exchanges.\243\ If a product
remains available for renewal, including outside the Exchange, the
issuer must renew the coverage within the product in which the enrollee
is currently enrolled at the option of the enrollee, unless an
exception to the guaranteed renewability requirements applies. However,
to the extent the issuer is subject to Sec. 155.335(j) with regard to
an enrollee's coverage through the Exchange, the issuer must, subject
to applicable State law regarding automatic re-enrollments,
automatically enroll the enrollee in accordance with the re-enrollment
hierarchy, even where that results in re-enrollment in a plan
[[Page 25825]]
under a product offered by the same QHP issuer through the Exchange
that is different than the enrollee's current plan. Auto re-enrolling
consumers under Sec. 155.335(j)(4) will not result in the issuer
violating the guaranteed renewability provisions at Sec. 147.106 as
long as the issuer gives the enrollee the option to renew coverage
within their current product, including permitting the enrollee to
actively re-enroll in their current year plan for the coming year if it
remains available for renewal.
---------------------------------------------------------------------------
\243\ See 87 FR 78262-78263 for this discussion.
---------------------------------------------------------------------------
Comment: Some commenters supported the proposal to give States that
operate their own Exchange platforms flexibility with whether to
implement the policy described in final paragraph (j)(4), and requested
confirmation that the final policy would provide such flexibility.
Response: We confirm that, as proposed, Exchanges have the option
to implement the policy at Sec. 155.335(j)(4). For example, an
Exchange might choose not to implement this policy, or might choose to
implement it for PY 2025 or a future plan year, instead of PY 2024.
However, the rule requires all Exchanges to implement changes to the
requirements under paragraphs (j)(1) and (2) for PY 2024.\244\ We will
work closely with Exchanges that request any related technical
assistance regarding implementation of the auto re-enrollment
hierarchy.
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\244\ See Sec. 155.335(j)(1)(ii) through (iv) and (j)(2).
---------------------------------------------------------------------------
Additionally, we clarify that State regulatory authorities and
Exchanges have the option to apply the bronze to silver crosswalk
policy per Sec. 155.335(j)(4) to the approach that they use for cross-
issuer enrollments per Sec. 155.335(j)(3)(i) and (ii). As noted in
``Section 5. Plan ID Crosswalk'' of Chapter 1 of the PY 2024 Draft
Letter to Issuers, if this policy was finalized, we would modify the
2024 cross-issuer auto re-enrollment policy to take into account the
other changes at Sec. 155.335(j).\245\ Specifically, in Exchanges on
the Federal platform, when Sec. 155.335(j)(3)(ii) is applicable, we
will crosswalk enrollees in a bronze plan who are eligible for CSR in
accordance with Sec. 155.305(g), and who would otherwise be auto re-
enrolled in a bronze plan, to a silver level QHP within the same
product, with the same provider network, and with a net premium lower
than or equivalent to that of the bronze level QHP into which the
Exchange would otherwise re-enroll the enrollee under paragraph (j)(3).
When Sec. 155.335(j)(3)(i) is applicable, we will defer to the
applicable State regulatory authority with regard to whether to
incorporate the bronze to silver crosswalk policy into cross-issuer
auto re-enrollment.
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\245\ See https://www.cms.gov/files/document/2024-draft-letter-issuers-508.pdf.
---------------------------------------------------------------------------
Comment: Some commenters supported using network ID to determine
the most similar network for purposes of auto re-enrolling consumers,
and one commenter noted that the Washington State Exchange already uses
the network ID as a consideration when cross-walking enrollees from one
plan to another. Several commenters urged that we work closely with
States to better understand how networks differ based on ID, because
States may use different practices for the assignment of network IDs.
These commenters expressed concerns that overriding an enrollee's prior
choice of plan level may create disruptions when networks are similar
but not identical, and they asked that we be transparent in the reasons
behind auto re-enrolling a consumer into a particular plan.
One commenter had concerns with using network ID as part of the
plan crosswalk process because issuers are not required to use a
distinct ID for each health maintenance organization (HMO), preferred
provider organization (PPO), and exclusive provider organization (EPO)
network type, which would make such comparisons incomplete, and added
that network IDs would not fully explain potential differences in
delivery systems or providers offered within the same issuer's
products. Several commenters shared the concerns about preserving plan
benefit structure for consumers who are not auto re-enrolled into their
current plan. One commenter stated they supported the proposed policy
only if enrollees were not moved to a different product.
Response: We appreciate the additional insight that commenters
provided about how States and issuers currently use network IDs. Also,
we note that, all changes to Sec. 155.335(j) require Exchanges to
continue to account for characteristics of enrollees' current product.
As noted earlier, Exchanges on the Federal platform will implement the
similar network policy and the bronze to silver crosswalk policy by
incorporating network ID into existing requirements for issuer
submissions through the crosswalk process, which, per existing rules at
Sec. 155.335(j)(2), already requires that if no plans under the same
product as an enrollee's current QHP are available for renewal, the
Exchange will auto re-enroll the enrollee in the product most similar
to their current product with the same issuer.\246\ As noted earlier in
preamble for this section, we believe that plan network ID will be an
effective method of network comparison for Exchanges on the Federal
platform because QHP Certification Instructions specify that if
specific providers are available for some of an issuer's products but
not others, the issuer must establish separate Network IDs to enable
mapping the plans to the applicable Network IDs. However, reiterating
what we stated in the proposed rule, we will permit issuers to submit
justifications for our review if they believe a different network ID in
the following plan year is better suited as a crosswalk option for
enrollees in a particular plan.\247\ Further, we will collaborate with
State regulators in States with FFEs and with SBE-FPs through regularly
scheduled meetings and other methods to ensure clear and appropriate
incorporation of network ID into the auto re-enrollment process. We
will also work closely with State Exchanges to share best practices for
implementing this policy. Finally, based on experience from past years,
a majority of enrollees who were crosswalked into a different product
with the same issuer had the same network ID and product type (for
example, HMO, PPO), and so we anticipate that this policy will
reinforce and not disrupt current auto re-enrollment processes.\248\
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\246\ See Sec. 155.335(j)(2), and see ``Plan Crosswalk'' on the
QHP Certification Information and Guidance website: https://www.qhpcertification.cms.gov/s/Plan%20Crosswalk for more information
on the Crosswalk Template.
\247\ See 87 FR 78261 through 78263.
\248\ Based on internal CMS analysis, for PY2023 86 percent of
crosswalks to a different product with the same issuer had the same
network ID and the same network type (that is, HMO, PPO, EPO).
---------------------------------------------------------------------------
Comment: Some commenters raised concerns about how consumers who
are auto re-enrolled from a bronze to a silver plan under paragraph
(j)(4) would be notified by the Exchange and issuers. Commenters urged
that we ensure that, if finalized, the new auto re-enrollment rule
would require Exchanges and issuers to send notification of the plan
change in time for consumers to make a plan selection if they choose,
and that the notification include information about key characteristics
of their new plan and the reasons they were auto re-enrolled into it.
Some commenters raised concerns that consumers would be confused by
content in the Federal Standard Renewal and Product Discontinuation
Notices, which are required to include information about availability
of the product in which a consumer is currently enrolled and could not
include targeted information
[[Page 25826]]
about potential auto re-enrollment from bronze into a silver plan
because issuers do not have access to enrollees' CSR eligibility.\249\
One commenter asked whether issuers would be allowed more flexibility
in terms of the content or the timing for mailing the Federal Standard
Renewal and Product Discontinuation Notices to account for proposed re-
enrollment changes. Multiple commenters asked that we provide consumers
who are auto re-enrolled from a bronze to a silver plan under paragraph
(j)(4) with a SEP to allow them time after their coverage takes effect
to change plans if they find that the plan's network does not include a
provider that they need or the coverage does not work well for them in
some other way.
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\249\ See Updated Federal Standard Renewal and Product
Discontinuation Notices in the Individual Market (Required For
Notices Provided In Connection With Coverage Beginning In The 2021
Plan Year) OMB Control No.: 0938-1254, https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Updated-Federal-Standard-Notices-for-coverage-beginning-in-the-2021-plan-year.pdf.
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Response: As discussed in this rule and in the proposed rule,\250\
income-based CSR-eligible enrollees in Exchanges on the Federal
platform who may be auto re-enrolled from a bronze to a silver plan
under paragraph (j)(4) will receive messaging from the Exchange
advising them that they will be re-enrolled into a silver plan if they
do not make an active selection on or before December 15th, and that
they can see the silver plan highlighted in the online shopping
experience on HealthCare.gov until December 15th. Further, enrollees in
Exchanges on the Federal platform who do not make an active selection
on or before December 15th will receive an additional communication
from the Exchange after December 15th reminding them of their new plan
enrollment for January 1st, and that they can select a different plan
by January 15th that would be effective starting February 1st. We
believe that State Exchanges also have practices in place to notify
consumers of important changes to their enrollment, and that State
Exchanges' flexibility in terms of whether or not to implement the
bronze to silver crosswalk policy, or to implement it in a future plan
year, allows State Exchanges additional time to further develop
consumer noticing timing and content in advance of implementation.
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\250\ See 87 FR 78262.
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In response to comments on the Federal Standard Renewal and Product
Discontinuation Notices, we note that issuers are required to use the
Federal standard notices developed by HHS, unless a State develops and
requires the use of a different form consistent with HHS guidance, in
which case issuers in that State are required to use notices in the
form and manner specified by the State. Because issuers are not
permitted to make modifications to the Federal standard notices, we do
not believe it is necessary to provide additional flexibility regarding
timing of the notices.\251\ We are updating the Federal standard
notices currently approved under OMB control number 0938-1254 (Annual
Eligibility Redetermination, Product Discontinuation and Renewal
Notices) and we intend to include language related to the re-enrollment
hierarchy finalized in this rule in the Federal standard notices as
part of that process.
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\251\ Non-grandfathered, non-transitional plans must provide
renewal notices before the first day of the next annual open
enrollment period. In prior years, HHS has provided an enforcement
safe harbor under which the agency will not take enforcement action
against an issuer for failing to provide a product discontinuation
notice with respect to individual market coverage at least 90 days
prior to the discontinuation, as long as the issuer provides such
notice consistent with the timeframes applicable to renewal notices.
We anticipate providing similar relief for PY 2024.
---------------------------------------------------------------------------
In addition, nothing under Federal law prevents an issuer from
providing additional information, outside of the standard notices, to
an enrollee about their re-enrollment options. Also, we will work
closely with issuers in Exchanges on the Federal platform to coordinate
and develop strategies to mitigate potential consumer confusion. We
will also work with State Exchanges that choose to implement the bronze
to silver crosswalk policy in plan year 2024 or in future years to
share information on best practices to help ensure smooth transitions
for impacted consumers.
Finally, as discussed in the proposed rule,\252\ we did not
propose, and therefore are not finalizing, any changes to SEP
eligibility or duration in connection with the proposed changes at
Sec. 155.335(j). As the proposed rule \253\ also explained, enrollees
qualify for a loss of MEC SEP under Sec. 155.420(d)(1)(i) when their
current product is no longer available for renewal, but not when their
current product is still available, even if they are auto re-enrolled
from a bronze QHP to a silver QHP within the same product. Therefore,
enrollees who are auto re-enrolled under Sec. 155.335(j)(2), which
applies when an enrollee's product is no longer available, may qualify
for a loss of MEC SEP, but enrollees auto re-enrolled under Sec.
155.335(j)(1) or (4) will not. Finally, while we agree that a SEP plays
an important role in ensuring that consumers with a change in
circumstance can update their coverage accordingly, we do not believe
that a SEP is necessary in this case because consumers who are auto re-
enrolled into a silver plan will have the same network as if they had
instead been auto re-enrolled into a bronze plan absent the bronze to
silver crosswalk policy. Further, notifications before and after auto
re-enrollment provide them with the information that they need to
choose a different plan during open enrollment if desired.
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\252\ See 87 FR 78263.
\253\ 87 FR 78263.
---------------------------------------------------------------------------
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78263-78264), HHS requested information on
potential future changes to the auto re-enrollment hierarchy. We thank
commenters for their feedback and will take comments into consideration
in future rulemaking.
7. Special Enrollment Periods (Sec. 155.420)
a. Use of Special Enrollment Periods by Enrollees
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78264), we proposed two technical
corrections to Sec. 155.420(a)(4)(ii)(A) and (B) to align the text
with Sec. 155.420(d)(6)(i) and (ii). The proposed revisions clarified
that only one person in a tax household applying for coverage or
financial assistance through the Exchange must qualify for a SEP under
paragraphs (d)(6)(i) and (ii) for the entire household to qualify for
the SEP.
After reviewing the public comments, we are finalizing this
provision as proposed, with a modification to use gender neutral
language. We also note a correction, that any member of a household,
rather than any member of a tax household as previously stated in
preamble, can trigger this SEP for the household. We summarize and
respond to public comments received on the proposed technical
corrections below.
Comment: All commenters strongly supported the proposed technical
corrections. Commenters noted that this change supports the inclusion
of households with different family structures and/or access to
affordable insurance options, which is especially important for
consumers moving from Medicaid or CHIP to Exchange coverage. Commenters
also stated that the proposal will reduce administrative burden and
potential confusion for households applying for coverage or financial
assistance with a SEP. One
[[Page 25827]]
commenter also asked that we clarify that any member of a household,
rather than any member of a tax household as stated in preamble to the
proposed rule (87 FR 78264 through 78265), must qualify for a SEP under
paragraphs (d)(6)(i) and (ii) for the entire household to qualify for
the SEP.
Response: We agree that the proposed technical corrections support
different types of household compositions and that it will reduce both
administrative burden and confusion for consumers, which is especially
important during Medicaid unwinding. We also wish to clarify that any
member of a household (as opposed to a tax household) must qualify for
a SEP under paragraphs (d)(6)(i) and (ii) for the entire household to
qualify for the SEP.
b. Effective Dates for Qualified Individuals Losing Other Minimum
Essential Coverage (Sec. 155.420(b))
We proposed amendments to the coverage effective date rules at
Sec. 155.420(b)(2)(iv) to permit Exchanges the option to offer earlier
coverage effective start dates for consumers attesting to a future loss
of MEC under paragraph (d)(1), and also the SEPs at paragraphs
(d)(6)(iii) and (d)(15), as the eligibility for these SEPs also require
that the loss of coverage be considered MEC. Doing so could mitigate
coverage gaps when consumers lose forms of MEC (other than Exchange
coverage) mid-month and allow for more seamless transitions from other
coverage to Exchange coverage. We were aware that consumers may face
gaps in coverage because current coverage effective date rules do not
allow for retroactive or mid-month coverage effective dates for
consumers whose other coverage ends mid-month. Under current rules, the
earliest start date for Exchange coverage under the loss of MEC SEP is
the first day of the month following the date of loss of MEC. We were
aware in the proposed rule (87 FR 78265) that in some States, Medicaid
or CHIP is regularly terminated mid-month, so we solicited input on
whether the proposed change would help consumers, especially those
impacted by Medicaid unwinding, to seamlessly transition from another
form of MEC to Exchange coverage.
Consumers losing MEC, such as coverage through an employer,
Medicaid, or CHIP, already qualify for a SEP under Sec. 155.420(d)(1),
(d)(6)(iii), and (d)(15) and may report a loss of MEC to Exchanges and
select a QHP up to 60 days before or 60 days after their loss of MEC.
Exchanges must generally provide a regular coverage effective date as
described in Sec. 155.420(b)(1): for a QHP selection received by the
Exchange between the 1st and the 15th day of any month, the Exchange
must ensure a coverage effective date of the 1st day of the following
month; and for a QHP selection received by the Exchange between the
16th and the last day of any month, the Exchange must ensure a coverage
effective date of the 1st day of the second following month. However,
Exchanges must provide special coverage effective dates for certain SEP
types including loss of MEC, as described in Sec. 155.420(b)(2), and
may elect to provide coverage effective dates earlier than those
specified in Sec. 155.420(b)(1) and (2), as described in Sec.
155.420(b)(3). The loss of MEC coverage effective dates are generally
governed by Sec. 155.420(b)(2)(iv). Currently, for all Exchanges,
consumers who report a future loss of MEC and select a plan on or
before the loss of MEC are provided an Exchange coverage effective date
of the 1st of the month after the date of loss of MEC, under Sec.
155.420(b)(2)(iv). For example, if a consumer reports on June 1st that
they will lose MEC on July 15th and they make a plan selection on or
before July 15th, Exchange coverage will be effective August 1st. The
consumer in this case cannot avoid a gap in coverage of more than 2
weeks.
For consumers reporting a loss of MEC that occurred up to 60 days
in the past, Exchanges must ensure that coverage is effective in
accordance with Sec. 155.420(b)(1) (the regular coverage effective
dates described above) \254\ through a cross reference from Sec.
155.420(b)(2)(iv). Alternatively, Exchanges can offer prospective
coverage effective dates so that coverage is effective the first of the
month following plan selection, at the option of the Exchange. See
Sec. 155.420(b)(2)(iv). For example, if a consumer reports on July 1st
a past loss of MEC that occurred on June 30th and selects a plan on
July 15th, Exchange coverage is effective August 1st. This option has
been selected for Exchanges on the Federal platform. See Sec.
155.420(b)(3)(i).
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\254\ For example, if a consumer selects a plan on May 2nd,
coverage will be effective June 1st, if a consumer selects a plan on
May 16th, coverage will be effective July 1st.
---------------------------------------------------------------------------
Because current regulation at Sec. 155.420(b)(2)(iv) does not
allow for retroactive or mid-month coverage effective dates, consumers
who lose MEC mid-month, including consumers who live in States that
allow mid-month terminations of Medicaid or CHIP coverage, may
experience a gap in coverage when transitioning to coverage through the
Exchange. During Medicaid unwinding, we expect to see a higher than
usual volume of individuals transitioning from Medicaid and CHIP
coverage to the Exchange from April 1, 2023, through May 31, 2024, as
States resume Medicaid and CHIP terminations that have been paused due
to the Medicaid continuous enrollment condition. Consumers who become
ineligible for Medicaid or CHIP are at risk of being uninsured for a
period of time and postponing use of health care services, which can
lead to poorer health outcomes, if they are not able to successfully
transition between coverage programs without coverage gaps.
Therefore, to ensure that qualifying individuals whose prior MEC
ends mid-month are able to seamlessly transition from their prior
coverage to Exchange coverage as quickly as possible with no coverage
gaps, we proposed revisions to paragraph (b)(2)(iv). Specifically, we
proposed to add additional language to paragraph (b)(2)(iv) stating
that if a qualified individual, enrollee, or dependent, as applicable,
loses coverage as described in paragraph (d)(1), experiences a change
in eligibility for APTC per paragraph (d)(6)(iii), or experiences a
loss of government contribution or subsidy per paragraph (d)(15), and
if the plan selection is made on or before the day of the triggering
event, the Exchange must ensure that the coverage effective date is the
first day of the month following the date of the triggering event (as
currently required under paragraph (b)(2)(iv)) and, at the option of
the Exchange, if the plan selection is made on or before the last day
of the month preceding the triggering event, the Exchange must ensure
that coverage is effective on the first day of the month in which the
triggering event occurs. For example, if a consumer attests between May
16th and June 30th that they will lose MEC on July 15th and selects a
plan on or before June 30th, coverage would be effective on August 1st
(first of the month after the loss of MEC), or at the option of the
Exchange, on July 1st (the first day of the month in which the
triggering event occurs).
We acknowledged in the proposed rule (87 FR 78265 through 78266)
that this proposed change may have a limited impact because many types
of coverage typically do not have end dates in the middle of the month.
However, for those that it does impact, the proposed change would
provide earlier access to coverage and APTC and CSR. Under the current
rule at paragraph (b)(2)(iv), consumers reporting a future loss of MEC
may have to wait weeks for their coverage to start, even if they were
[[Page 25828]]
proactive and attested to a coverage loss as soon as they became aware.
We noted in the proposed rule (87 FR 78265 through 78266) that we did
not believe that this proposed change introduces program integrity
concerns because these concerns would apply to only a very narrow group
of consumers, specifically: those who report a future loss of MEC
within their 60-day reporting window, have been determined eligible for
a SEP and found eligible for an Exchange QHP, and select a plan on or
before the last day of the month preceding the loss of MEC.
We stated in the proposed rule (87 FR 78266) that we believed this
proposal would provide additional flexibilities for Exchanges, as
Exchanges would have the option to use the current coverage effective
dates available under current paragraph (b)(2)(iv) and provide earlier
coverage effective dates for consumers who attest to a future mid-month
loss of MEC. We also acknowledged that if Exchanges do elect an earlier
coverage effective date as we proposed, this would result in some
consumers paying for both an Exchange QHP and their other MEC for a
short period of dual enrollment.
We also stated in the proposed rule that the partial-month period
of dual enrollment would not bar an enrollee from eligibility for APTC
or CSRs, if otherwise eligible, because PTC would be allowed for such
month under 26 CFR 1.36B-3(a).\255\ Under this provision, PTC is the
sum of the premium assistance amounts for each coverage month, and a
month in which an individual is eligible for MEC for only a portion of
the month may be a coverage month for the individual. We sought comment
on whether Exchange regulations at Sec. 155.305(f) should be revised
to reference the IRS's definition of a coverage month to clarify that a
consumer who is eligible and enrolled in non-Exchange MEC for only a
portion of the month is not prohibited from receiving APTC.
---------------------------------------------------------------------------
\255\ Under section 1412(c)(2) of the ACA, APTC cannot be paid
for a month if PTC is not allowed for such month under the Code
section 36B.
---------------------------------------------------------------------------
We also stated in the proposed rule (87 FR 78266) that we believed
consumers in States that permit mid-month terminations of Medicaid or
CHIP coverage would be most impacted by the proposed change. We sought
comment from interested parties on the frequency of mid-month coverage
end dates, potential program integrity issues associated with earlier
effective dates, and instances when the expedited effective date would
or would not mitigate coverage gaps or introduce coordination of
benefits issues.
Under Sec. 147.104(b)(5), applicable to health insurance issuers
that offer health insurance coverage in the individual, small group, or
large group market in a State, coverage elected during limited open
enrollment periods and SEPs described in Sec. 147.104(b)(2) and (3)
must become effective consistent with the dates described in Sec.
155.420(b).\256\ Therefore, with the exception of the triggering event
in Sec. 155.420(d)(6), which is limited to coverage purchased through
an Exchange, the proposed changes to the effective date for future loss
of MEC would be effective for individual market coverage purchased off
an Exchange, as well as for coverage purchased through an Exchange. For
individual market coverage offered outside of an Exchange, the proposed
option of the Exchange to specify the effective date would refer to an
option of the applicable State authority.
---------------------------------------------------------------------------
\256\ With the exception that, under Sec. 147.104(b)(2), a
health insurance issuer in the individual market is not required to
allow enrollment for certain SEPs, including Sec. 155.420(d)(6),
with respect to coverage offered outside of an Exchange.
---------------------------------------------------------------------------
While we also considered proposing retroactive coverage effective
dates for consumers reporting past loss of MEC, we decided in the
proposed rule (87 FR 78266) to limit these proposed changes to future
loss of MEC to avoid adverse selection and reduce burden on Exchanges,
States, and issuers, as allowing for retroactive coverage start dates
can be operationally complex for Exchanges to implement and for issuers
to process. Also, we noted that we believed the proposed changes would
limit the financial burden on consumers, as consumers who report a loss
of MEC in the past 60 days may not want or be able to afford to pay
past premiums to effectuate coverage retroactively. While we also
considered providing mid-month coverage effective dates for consumers
who lose MEC mid-month, this would have limited the affordability of
coverage given that IRS regulations at 26 CFR 1.36B-3 generally provide
that PTC is only allowed for a month when, as of the first day of the
month, the individual is enrolled in a QHP. We sought comment on
additional regulatory changes that would improve transitions to
Exchange coverage and minimize periods of uninsurance for consumers who
report a loss of MEC to the Exchange.
We sought comment on these proposals.
After reviewing the public comments, we are finalizing this
provision as proposed, with a modification to section Sec.
155.305(f)(1)(ii)(B) to state that a tax filer must be determined
eligible for APTC if the tax filer (or a member of their tax household)
is not eligible for a full calendar month of MEC (and other criteria
are met). We summarize and respond to public comments received on the
proposed policy to permit Exchanges the option to provide earlier
coverage effective dates for consumers attesting to a future loss of
coverage below.
Comment: The majority of commenters expressed their support for the
proposal, explaining that the proposal would help ensure consumers,
especially those with HIV or cancer, continue to have access to medical
care without interruption. Commenters stated that the proposal would
help consumers maintain adherence to treatment, including access to
certain prescription drugs, which are a critical component of most
cancer treatment plans. Several commenters also explained that it is
important to align Exchange QHP coverage effective dates with Medicaid
or CHIP termination dates, and that the immediate enactment of the
proposal is especially important as it will help with coverage
transitions from Medicaid or CHIP into other forms of coverage, such as
Exchange coverage, during the Medicaid unwinding period. Other
commenters said that they supported the flexibility provided to the
State Exchanges to implement this proposal and urged HHS to keep this
proposal at the option of Exchanges.
Response: We agree that this proposal will have a positive impact
by preventing some consumers losing MEC from experiencing gaps in
coverage or an inability to access treatment or prescription drugs. We
agree with the commenter of the importance of aligning Medicaid or CHIP
coverage mid-month terminations with Exchange QHP effective dates;
however, we wish to clarify that the intent of this policy is not to
align Exchange coverage effective dates with Medicaid of CHIP mid-month
terminations, but rather to provide consumers reporting a future loss
of MEC with earlier coverage effective dates to ensure continuity of
coverage. We also agree that the proposal will help further ensure
during Medicaid unwinding that consumers transitioning from Medicaid or
CHIP into individual coverage on or off the Exchange are able to
maintain continuity of coverage. Finally, we agree that State Exchanges
should have flexibility to implement the proposed changes or not, based
on their specific enrolled populations.
Comment: Some commenters supported the proposal, but had various
[[Page 25829]]
concerns and recommendations for HHS regarding coverage effective dates
and adverse selection. One commenter urged HHS to make this proposal
mandatory for all Exchanges, while another commenter recommended that
HHS modify the proposal so that Exchanges give the consumer the option
to choose an earlier or later Exchange coverage effective date to
mitigate any complexities related to overlapping coverage. Also due to
adverse selection risk, some commenters recommended that HHS should
finalize this policy only in States that allow mid-month terminations
of Medicaid or CHIP coverage or put into place guardrails for when
consumers can select these coverage effective dates in cases of
retroactive enrollments. One commenter supported the policy but shared
a concern that the proposal may still result in continuity of care
issues and that HHS should allow coverage effective dates to be closer
to the loss of MEC date, such as through mid-month coverage effective
dates. A few commenters also said that HHS should not make any changes
to allow mid-month or retroactive coverage effective dates due to
adverse selection risks.
Response: We appreciate the concerns raised by commenters regarding
the proposed changes. We considered making this proposal required for
all Exchanges, however, we believe that Exchanges should continue to
have flexibility and authority to determine if allowing earlier
coverage effective dates would benefit their enrolled populations. If
an Exchange operates in a State that allows mid-month terminations of
Medicaid or CHIP coverage, that Exchange may want to allow earlier
coverage effective dates for consumers attesting to a future loss of
MEC, whereas this change may not be necessary for an Exchange that
operates in a State that does not allow mid-month terminations of
Medicaid or CHIP. We rejected the idea to implement this policy only in
States that allow mid-month terminations of Medicaid or CHIP because,
due to the demands that both Exchanges and States will face during
Medicaid unwinding, we believe that States should have the option
whether or not to devote resources to implement earlier coverage
effective dates for consumers attesting to a future loss of coverage in
PY 2023 or 2024. Additionally, we wish to note that there is still the
possibility that consumers lose non-Medicaid or CHIP coverage mid-
month, such as COBRA coverage. Therefore, limiting this policy only to
States that have mid-month Medicaid or CHIP termination dates would be
too restrictive.
We also considered whether consumers should be able to select their
own coverage effective dates when selecting a plan but determined this
would be operationally complex for Exchanges and issuers to implement.
Exchanges would have to implement application and logic changes to
permit consumers to select their own coverage effective date through
new application questions, as well as a way for consumers to reverse
their decision in cases of error. Nonetheless, we are preserving in the
final rule some element of consumer choice, as a consumer who knows
they will be losing MEC in the future still has the option to select a
plan after the last day of the month preceding the triggering event to
be subject to the existing coverage effective date rules.
We also took into consideration operational complexities for both
Exchanges and issuers of allowing coverage to start retroactively.
Retroactive coverage would also require application and logic changes,
and could impact QHP pricing across all Exchanges. Given these
considerations and the complexities around offering retroactivity, we
are not finalizing any changes to allow retroactivity for the loss of
MEC SEP.
Regarding the comment that we allow QHP coverage to start as close
as possible to the last day of coverage, we currently lack the
authority to permit APTC and CSRs to start mid-month and elected not to
allow consumers to enroll in a QHP mid-month if they could not be
eligible for APTC or CSRs. IRS regulation at 26 CFR 1.36B-3(c) provides
that a consumer may only qualify for PTC during a given month if they
are enrolled in QHP ``as of the first day of the month'' (providing an
exception only for births and adoptions, and certain other
circumstances at 26 CFR 1.36B 3(c)(2)). If we were to begin QHP
coverage mid-month without APTC and CSR, enrolling in Exchange coverage
might be cost prohibitive for some consumers which may dissuade them
from enrolling in Exchange coverage at all. Additionally, in the
Exchanges on the Federal platform, a consumer who did enroll in a QHP
(without APTC or CSRs) mid-month would need to update their Exchange
application after the beginning of the month following their loss of
MEC to be determined eligible for APTC and CSRs going forward (if
otherwise eligible). This process would be difficult to message and
burdensome for consumers.
Finally, we acknowledge the concerns raised by commenters regarding
the potential risk for adverse selection, however, we believe the risk
to be low because we are not proposing that coverage may start
retroactively or that consumers have the option to select their
preferred coverage start date. Given these concerns and our belief that
Exchanges should retain flexibility in whether to offer the option for
earlier coverage effective dates for consumers attesting to a future
coverage loss, we are finalizing as proposed.
Comment: A commenter supported the proposal but stated that the
proposed policy only provides seamless coverage transitions for
consumers who proactively come to an Exchange to report their future
loss of Medicaid or CHIP the month before their termination. The
commenter requested that we consider additional improvements to notices
to ensure that Medicaid and CHIP beneficiaries receive clear
instructions about coverage transitions.
Response: We agree with the need for clear and effective
communications with Medicaid and CHIP beneficiaries and wish to share
some of the work we have done. In partnership with States and other
interested parties, we have developed toolkits and strategies that
States can implement to support Medicaid unwinding activities to inform
consumers about renewing their coverage and exploring other available
health insurance options if they no longer qualify for Medicaid or
CHIP. The resources emphasize the need for consumers to act quickly to
enroll in Exchange coverage so they are able to minimize gaps in
coverage, where possible.\257\
---------------------------------------------------------------------------
\257\ More information about these efforts is available at
https://www.medicaid.gov/state-resource-center/downloads/mac-learning-collaboratives/ffm-transfer-message-lc-presentation-deck.pdf.
---------------------------------------------------------------------------
Comment: One commenter supported the proposal, but also requested
that HHS maintain the existing special enrollment flexibilities that
were introduced after COVID-19 was declared a PHE by the President on
March 13, 2020, including the Exceptional Circumstances SEP for
consumers who lost qualifying health coverage on or after January 1,
2020, but missed their 60-day window after their loss of coverage to
enroll in an Exchange plan due to the COVID-19 PHE. Other commenters
supported the proposal and HHS' recent announcement of the Unwinding
SEP,\258\ which temporarily
[[Page 25830]]
provides more time for consumers to report losing Medicaid or CHIP
coverage during Medicaid unwinding, but recommended HHS also require
this Unwinding SEP for issuers offering plans in the individual and
group health insurance markets off-Exchange.
---------------------------------------------------------------------------
\258\ See CMS. (2023, January 27). Temporary Special Enrollment
Period (SEP) for Consumers Losing Medicaid or the Children's Health
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid
Continuous Enrollment Condition--Frequently Asked Questions (FAQ).
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
---------------------------------------------------------------------------
Response: In 2018, we clarified through guidance that an
Exceptional Circumstances SEP pursuant to 45 CFR 155.420(d)(9) is
available for individuals seeking coverage on Exchanges on the Federal
platform and who were prevented from enrolling in Exchange coverage
during another SEP or during an Open Enrollment period (OEP) by an
event that Federal Emergency Management Agency (FEMA) declared a
national emergency or major disaster (FEMA SEP).\259\ This guidance
also clarified that we would make a FEMA SEP available for only 60 days
after the date in which a national emergency or major disaster
officially ends.\260\ Given the recent end of the COVID national
emergency on April 10, 2023, the current SEP flexibilities due to the
COVID-19 FEMA national emergency will only be in place until June 9,
2023.
---------------------------------------------------------------------------
\259\ See Pate, R. (2018, August 9). Emergency and Major
Disaster Declarations by the Federal Emergency Management Agency
(FEMA)--Special Enrollment Periods (SEPs), Termination of Coverage,
and Payment Deadline Flexibilities, Effective August 9, 2018.
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/8-9-natural-disaster-SEP.pdf.
\260\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/8-9-natural-disaster-SEP.pdf.
---------------------------------------------------------------------------
We appreciate the recommendation that the Unwinding SEP be
available off-Exchange. However, as specified in 45 CFR
147.104(b)(2)(i)(D), issuers in the individual market off-Exchange are
not required to provide Exceptional Circumstances SEPs under Sec.
155.420(d)(9).\261\ In addition, the Exceptional Circumstances SEP does
not extend to issuers offering group health insurance coverage outside
of the Exchange.\262\ As such, issuers in the individual and group
market off-Exchange are not required to offer an Exceptional
Circumstances SEP to help with coverage transitions due to Medicaid
unwinding. Finally, while the Unwinding SEP does not apply to issuers
in the individual and group health markets off-Exchange, employers may
still work with their plan or issuer to extend the SEP available to
consumers losing Medicaid or CHIP for those who need to enroll in
employer sponsored coverage after the end of the 60-day loss of MEC SEP
available under applicable law.
---------------------------------------------------------------------------
\261\ See CMS. (2023, January 27). Temporary Special Enrollment
Period (SEP) for Consumers Losing Medicaid or the Children's Health
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid
Continuous Enrollment Condition--Frequently Asked Questions (FAQ).
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
\262\ QHP issuers offering a QHP through a Small Business Health
Options Program (SHOP) are required to provide the exceptional
circumstances special enrollment period. 45 CFR 156.286.
---------------------------------------------------------------------------
Comment: A few commenters neither fully supported or opposed the
proposed policy but provided some considerations for HHS, specifically
that the proposal could result in consumers enrolling in a new plan
earlier than they intended to or were aware of. Commenters also
recommended that HHS consider whether it could result in confusion or
misunderstandings among consumers as to when coverage would begin,
which could have financial implications or lead to issues with billing
and premium payments. Another commenter noted that the proposed change
could result in short periods of dual enrollment for consumers, which
may introduce coordination of benefits issues for consumers.
Response: We agree that both consumers and issuers will require
additional guidance to ensure that the policy is implemented as
intended and that all interested parties assisting consumers with
enrollment decisions receive education and guidance, especially
regarding coordination of benefits and potential periods of overlapping
coverage. Because the earlier coverage effective date will only be
available when consumers select a QHP in advance of the month in which
they are losing MEC, consumers who do not want any overlap in coverage
could choose to wait until the month they lose MEC (and up to 60 days
after the loss of MEC) before selecting a plan. We encourage any
Exchanges choosing to implement earlier effective dates to provide
clear explanations to consumers regarding this option. We will continue
to monitor the implementation of this policy, including whether
additional guidance, or any additional policy changes in future
rulemaking, are necessary.
Comment: One commenter fully opposed the proposed policy, stating
that it could further complicate the Medicaid unwinding process,
especially in light of recent guidance published by HHS on January 27,
2023, announcing flexibilities for consumers losing Medicaid or CHIP
due to Medicaid unwinding.\263\ The commenter stated that a more
narrowly tailored approach, such as allowing mid-month enrollments in
Exchange QHPs and proration of APTC and premium amounts, similar to the
SEPs for adoption or birth of a child, is the better solution.
---------------------------------------------------------------------------
\263\ See CMS. (2023, January 27). Temporary Special Enrollment
Period (SEP) for Consumers Losing Medicaid or the Children's Health
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid
Continuous Enrollment Condition--Frequently Asked Questions (FAQ).
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
---------------------------------------------------------------------------
Response: We appreciate and understand the concern that this policy
could further complicate the Medicaid unwinding process given that
there is variability amongst States' unwinding plans and activities.
However, we do believe that the policy still has value given that it
would facilitate timely coverage transitions, which will be critical
throughout the entire Medicaid unwinding period. For example, consumers
who reside in States that allow mid-month terminations of Medicaid or
CHIP risk gaps in coverage during Medicaid unwinding. A rule that
allows for earlier QHP effective dates could mitigate these gaps in
coverage, even more so if consumers do not have access to the
flexibilities we announced on January 27, 2023, because their State
Exchange opted to not provide the Unwinding SEP or something similar.
Regarding the suggestion to allow Exchange QHP coverage to start mid-
month, we also considered and rejected this option for the reasons
described earlier in this final rule.
Comment: A commenter supported a review of the regulations to
ensure that consumers with MEC ending mid-month can be found eligible
for an earlier coverage effective date not just for QHP, but also for
APTC and CSR to help pay for their coverage.
Response: We reiterate that a consumer who is not eligible for or
enrolled in non-Exchange MEC for a full month, and who is enrolled in a
QHP on the first day of such month, may be allowed PTC under 26 CFR
1.36B-3(c)(1). To clarify that such a consumer may be eligible for APTC
and CSRs, we are adding language to the APTC eligibility regulation at
Sec. 155.305(f)(1)(ii)(B) to state that a tax filer must be determined
eligible for APTC if the tax filer (or a member of their tax household)
is not eligible for a full calendar month of minimum essential coverage
(and other criteria are met).
[[Page 25831]]
c. Special Rule for Loss of Medicaid or CHIP Coverage (Sec.
155.420(c))
To mitigate coverage gaps when consumers lose Medicaid or CHIP
coverage and to allow for a more seamless transition into Exchange
coverage, we are finalizing the proposed new special rule under Sec.
155.420(c)(6) to provide more time for consumers who lose Medicaid or
CHIP coverage that is considered MEC as described in Sec.
155.420(d)(1)(i) to report their loss of coverage and enroll in
Exchange coverage. The proposed regulation would align the SEP window
following loss of Medicaid or CHIP with the reconsideration period
available under 42 CFR 435.916(a).
Currently, qualified individuals or their dependents who lose MEC,
such as coverage through an employer or most kinds of Medicaid or CHIP,
qualify for a SEP under Sec. 155.420(d)(1)(i) and may report a loss of
MEC to Exchanges up to 60 days before and up to 60 days after their
loss of MEC. See 45 CFR 155.420(c)(2). When these qualified individuals
or their dependents are not renewed into Medicaid or CHIP based on
modified adjusted gross income following an eligibility
redetermination, 42 CFR 435.916 requires that the State Medicaid agency
provide a 90-day reconsideration window, or a longer period elected by
the State, which allows former beneficiaries to provide the necessary
information to their State Medicaid agency to re-establish their
eligibility for Medicaid or CHIP without having to complete a new
application. During the 90 days (or longer period elected by the State)
following a Medicaid or CHIP non-renewal, it would be reasonable for a
consumer who becomes uninsured to proceed first by attempting to regain
coverage through Medicaid or CHIP. However, because the SEP for loss of
MEC at Sec. 155.420(d)(1)(i) currently lasts only 60 days after the
loss of Medicaid or CHIP coverage, by the time that a consumer exhausts
their attempt to renew coverage through Medicaid or CHIP (which they
must do within 90 days or the longer period elected by a State of the
consumer's loss of Medicaid or CHIP), they may have missed their window
to enroll in Exchange coverage through a SEP based on loss of MEC (60
days after loss of Medicaid or CHIP).
In further support of this proposal, we explained in the proposed
rule (87 FR 78266 through 78267) that we are aware that most consumers
losing Medicaid or CHIP and who are also eligible for Exchange coverage
may not transition to Exchange coverage in a timely manner. A recent
report published by the Medicaid and CHIP Payment and Access Commission
(MACPAC) \264\ found that only about three percent of beneficiaries who
were disenrolled from Medicaid or CHIP in 2018 enrolled in Exchange
coverage within 12 months. The 2018 data also showed that more than 70
percent of adults and children moving from Medicaid to Exchange
coverage had gaps in coverage for an average of about three
months.\265\ While there are likely several reasons that consumers did
not transition directly from Medicaid or CHIP coverage to Exchange
coverage in 2018, the proposed special rule at Sec. 155.420(c)(6) has
the potential to mitigate an administrative hurdle that may pose a
barrier to enrolling in Exchange coverage in a timely manner while
minimizing coverage gaps.
---------------------------------------------------------------------------
\264\ Medicaid and CHIP Payment Access Commission. (2022, July).
Transitions Between Medicaid, CHIP, and Exchange Coverage. https://www.macpac.gov/wp-content/uploads/2022/07/Coverage-transitions-issue-brief.pdf.
\265\ Ibid.
---------------------------------------------------------------------------
Therefore, to ensure that qualifying individuals are able to
seamlessly transition from Medicaid or CHIP coverage to Exchange
coverage as quickly as possible and to mitigate the risk of coverage
gaps, we proposed to create new paragraph (c)(6) stating that,
effective January 1, 2024, at the option of the Exchange, consumers
eligible for a SEP under Sec. 155.420(d)(1)(i) due to loss of Medicaid
or CHIP coverage that is considered MEC would have up to 90 days (or
the longer period elected by a State) after their loss of Medicaid or
CHIP coverage to enroll in an Exchange QHP. This proposal would align
the SEP window following loss of Medicaid or CHIP with the
reconsideration period available under 42 CFR 435.916(a). We also
proposed adding language to paragraph (c)(2) to clarify that a
qualified individual or their dependent(s) who is described in
paragraph (d)(1)(i) continues to have 60 days after the triggering
event to select a QHP unless an Exchange exercises the option proposed
in new paragraph (c)(6). We believed in the proposed rule (87 FR 78267)
that these proposed changes would have a positive impact on consumers
while providing flexibility for Exchanges with different enrollment
trends.
We sought comment on this proposal.
After reviewing the public comments, we are finalizing this
provision as proposed, with two modifications to permit State Exchanges
some additional flexibilities. As finalized, State Exchanges are
permitted to provide a qualified individual or their dependent(s) who
are losing Medicaid or CHIP coverage with more time to select a QHP, up
to the number of days provided for the applicable Medicaid or CHIP
reconsideration period if the State Medicaid Agency allows or provides
a longer Medicaid or CHIP reconsideration period. State Exchanges will
also have the option to implement this special rule as soon as this
final rule takes effect, instead of on January 1, 2024, as proposed. We
summarize and respond to public comments received on the proposed
special rule for consumers losing Medicaid or CHIP coverage below.
Comment: Multiple commenters supported the proposal stating that,
even before the COVID-19 PHE, many Medicaid beneficiaries experienced
churn due to administrative errors, lost paperwork, and address
changes. Commenters noted that despite States' best efforts during
Medicaid unwinding, notices may still not reach consumers in time.
Commenters also supported the proposal because it would promote
continuity of care, which helps consumers achieve healthier outcomes,
helps support the emergency care safety net, and minimizes care
disruptions, especially for those with serious, chronic medical
conditions. Commenters also were supportive of the flexibility for
State Exchanges to determine whether they will adopt the special rule
or not.
Response: We agree that the new special rule will have a
significant impact and will be beneficial for consumers losing Medicaid
or CHIP coverage, especially those with chronic health conditions, and
will help ease transitions into Exchange coverage. We also agree that
State Exchanges should have flexibility to decide whether to offer this
special rule or not.
Comment: A few commenters supported the proposal but made
recommendations for HHS to consider. A few commenters requested that
HHS make this special rule mandatory instead of at the option of
Exchanges. A few commenters requested that HHS not delay implementation
to January 1, 2024, and requested that this special rule go into effect
immediately or that Exchanges be given explicit authority to offer this
special rule before January 1, 2024, if desired. Other commenters asked
that HHS consider extending the window to 120 days or to permit
Exchanges to extend the attestation window in States where the Medicaid
or CHIP reconsideration period is longer than 90 days. Finally, a few
commenters said that HHS should clarify that, under 45 CFR
155.420(d)(9), Exchanges already have flexibility to offer Exceptional
Circumstance SEPs, can
[[Page 25832]]
establish Exceptional Circumstance SEPs at any time and/or length, and
that these lengths can be greater than the 60 or 90-day timeframes as
discussed in preamble.
Response: We continue to believe that all Exchanges should have
flexibility to adopt this special rule or not, based on their
experiences with their eligible and enrolled populations. Therefore, we
are not requiring that all Exchanges offer this special rule but we may
consider this in future rulemaking. We believe that delaying
implementation until January 1, 2024, will give Exchanges time to
prepare any system changes for implementation, and update guidance and
educational materials, which may not be feasible when States are also
engaged in Medicaid unwinding activities. However, we understand that
some Exchanges may be ready to implement this special rule earlier than
January 1, 2024, and therefore, we are modifying our proposal to
provide State Exchanges the flexibility to implement this policy as
soon as this rule is finalized. Finally, we understand and appreciate
States' concerns that the proposed 90-day window for consumers to
report a past loss of Medicaid or CHIP is not enough time in States
whose State Medicaid agency allow or provide for a Medicaid or CHIP
reconsideration window that is 90 days or greater. Given these
concerns, we are modifying our proposal to permit Exchanges to offer an
attestation window (for consumers eligible for a SEP under Sec.
155.420(d)(1)(i) due to loss of Medicaid or CHIP coverage that is
considered MEC) up to the number of days provided for the applicable
Medicaid or CHIP reconsideration period, if the State Medicaid agency
allows or provides for a Medicaid or CHIP reconsideration period
greater than 90 days.
Regarding the comment that Exchanges already have flexibility and
authority under paragraph (d)(9) to set the length of a SEP, we remind
Exchanges that the exceptional circumstances authority is subject to
each Exchange's reasonable interpretation of what is ``exceptional.'' A
misalignment between the Exchange attestation window for consumers
losing Medicaid or CHIP coverage with the Medicaid or CHIP
reconsideration period alone does not alone constitute an exceptional
circumstance. If an Exchange chooses not to adopt this special rule for
consumers losing Medicaid or CHIP coverage, or if an Exchange receives
a request from an applicant to enroll in Exchange coverage more than 90
days after losing Medicaid or CHIP coverage, an Exchange could consider
that applicant's claim that they experienced an exceptional
circumstance that prevented them from enrolling in Exchange coverage in
a timely manner on a case-by-case basis only. We also remind commenters
that while Exchanges have broad authority to establish a SEP due to an
exceptional circumstance, the Exceptional Circumstance SEP may not last
more than 60 days, consistent with 45 CFR 155.420(c)(1). Therefore, we
are finalizing as proposed.
Comment: One commenter supported the proposed special rule but also
recommended that HHS continue to implement other changes to enrollment
rules to reduce burden on consumers looking to enroll in Exchanges to
make it more likely that they enroll. For example, the commenter
suggested offering a SEP to consumers who owe a monthly premium after
application of APTC, so that they can enroll in Exchange coverage
throughout the year, similar to the SEP at Sec. 155.420(d)(16) for
consumers with attested household incomes at or below 150 percent of
the FPL. The commenter also recommended that HHS consider other SEPs
once the 150 percent FPL SEP expires at the end of coverage year 2025.
Finally, one commenter supported automatic coverage transitions for
consumers needing to transition from Medicaid or CHIP into Exchange
coverage.
Response: We appreciate the commenters' concerns regarding
consumers who have low incomes but are ineligible for the SEP at
paragraph (d)(16). While any changes to the existing SEP at paragraph
(d)(16) are out-of-scope for this rule, we will continue to explore
potential ways to help lower income consumers access and enroll in
Exchange coverage. We also appreciate the concerns regarding the need
for automatic coverage transitions and will continue work with internal
and external interested parties to find ways to improve transitions for
consumers.
Comment: Some commenters also expressed concern about the recently
announced Unwinding SEP available for consumers who submit a new
application or update an existing application between March 31, 2023,
and July 31, 2024, and attest to a last date of Medicaid or CHIP
coverage within the same time period.\266\ Commenters were concerned
that the Unwinding SEP could invite adverse selection, as impacted
consumers may delay enrolling into Exchange coverage until they have a
medical need for health insurance, and because the Unwinding SEP is not
subject to SEP verification. Commenters also said that they did not
anticipate the announcement of the Unwinding SEP so that they could
determine how the Unwinding SEP will impact their 2024 pricing.
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\266\ See CMS. (2023, January 27). Temporary Special Enrollment
Period (SEP) for Consumers Losing Medicaid or the Children's Health
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid
Continuous Enrollment Condition--Frequently Asked Questions (FAQ).
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
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Response: The recently announced Unwinding SEP \267\ is out of
scope for this rulemaking, but we acknowledge and appreciate the
concerns raised by commenters related to potential adverse selection
and impact on pricing of premiums.
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\267\ See CMS. (2023, January 27). Temporary Special Enrollment
Period (SEP) for Consumers Losing Medicaid or the Children's Health
Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid
Continuous Enrollment Condition--Frequently Asked Questions (FAQ).
https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
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Comment: A few commenters opposed the proposed special rule. One
commenter contended that it was unnecessary given that the Consolidated
Appropriations Act, 2023 \268\ delinked the Medicaid unwinding from the
end of the COVID-19 PHE. Specifically, the commenter said that
``beginning April 1, 2023, States can begin Medicaid redeterminations''
and because of this, the commenter expects that ``many individuals
impacted by this will have been redirected to coverage on the Exchange
by the end of 2023.'' Another commenter stated that the existing SEP at
Sec. 155.420(d)(1) adequately addresses the situation, and expressed
concern that HHS is introducing too many new SEPs, which can cause too
much variation amongst Exchanges and may create more confusion within
and across markets. The commenter also stated that enrollment data
shows that consumers submit their applications early during their 60-
day SEP window, and that lengthy, overlapping SEPs create more
administrative burden for Exchanges and may cause delays or prevent
consumers from enrolling into coverage.
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\268\ Public Law 117-328.
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Response: While there may not be a need for this special rule
during Medicaid unwinding due to our recent announcement of the
Unwinding SEP, the Unwinding SEP is only temporary and will not address
the misalignment of the loss of MEC SEP eligibility period and Medicaid
and CHIP reconsideration periods outside of the exceptional
circumstances of Medicaid unwinding. We proposed this change due to
[[Page 25833]]
continued concerns from interested parties that consumers transitioning
from Medicaid or CHIP coverage and into other coverage, like Exchange
coverage, continue to experience gaps in coverage, which can be
detrimental to health outcomes. We also appreciate the concern that
different rules for SEPs may be confusing, and therefore, Exchanges
have the option of whether or not to offer this special rule.
d. Plan Display Error Special Enrollment Periods (Sec. 155.420(d))
We are finalizing our proposal to amend Sec. 155.420(d)(12) to
align the policy of the Exchanges for granting SEPs to persons who are
adversely affected by a plan display error with current plan display
error SEP operations. We proposed amending paragraph (d)(12) by
changing the subject of the regulation to focus on the affected
enrollment, not the affected qualified individual, enrollee, or their
dependents.\269\
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\269\ In this section, ``consumer'' may be used as shorthand for
``qualified individual, enrollee, or their dependents.''
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In accordance with Sec. 155.420, SEPs allow a qualified
individual, enrollee, and/or their dependents who experiences certain
qualifying events to enroll in, or change enrollment in, a QHP through
the Exchange outside of the annual OEP. In 2016, we added warnings on
HealthCare.gov about inappropriate use of SEPs, and tightened certain
eligibility rules.\270\ We sought comment on these issues in the
Patient Protection and Affordable Care Act; HHS Notice of Benefit and
Payment Parameters for 2018 proposed rule (81 FR 61456), especially on
data that could help distinguish misuse of SEPs from low take-up of
SEPs among healthier eligible individuals; evidence on the impact of
eligibility verification approaches, including pre-enrollment
verification, on health insurance enrollment, continuity of coverage,
and risk pools (whether in the Exchange or other contexts); and input
on what SEP-related policy or outreach changes could help strengthen
risk pools. We examined attrition rates in our enrollment data and have
found that the attrition rate for any particular cohort is no different
at the end of the year than at points earlier in the year, suggesting
that any such gaming, if it is occurring, does not appear to be
occurring at sufficient scale to produce statistically measurable
effects.
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\270\ February 25, 2016. Fact Sheet: Special Enrollment
Confirmation Process. Available online at https://www.cms.gov/newsroom/fact-sheets/fact-sheet-special-enrollment-confirmation-process.
---------------------------------------------------------------------------
In the Patient Protection and Affordable Care Act; HHS Notice of
Benefit and Payment Parameters for 2018; Amendments to Special
Enrollment Periods and the Consumer Operated and Oriented Plan Program
(81 FR 94058, 94127 through 94129), we codified the plan display error
SEP at Sec. 155.420(d)(12) to reflect that plan display error SEP may
be triggered when a qualified individual or enrollee, or their
dependent, adequately demonstrates to the Exchange that a material
error related to plan benefits, service area, or premium (hereinafter
``plan display error'') influenced the qualified individual's,
enrollee's, or their dependents' decision to purchase a QHP through the
Exchange. This generally allowed consumers who enrolled in a plan for
which HealthCare.gov displayed incorrect plan benefits, service area,
cost-sharing, or premium, and who could demonstrate that such incorrect
information influenced their decision to purchase a QHP through the
Exchange, to select a new plan that better suited their needs.
In the same final rule, we also finalized the policies at Sec.
147.104(b)(2) to make clear that the plan display error SEP only
creates an opportunity to enroll in coverage through the Exchange, and
clarified that the SEP is limited to plan display errors presented to
the consumer by the Exchange at the point at which the consumer enrolls
in a QHP (81 FR 94128 through 94129). By this we meant that the
consumer must have already completed their Exchange application, the
Exchange must have determined that the consumer is eligible for QHP
coverage and any applicable APTC or CSRs, and the consumer must have
viewed the material error while making a final selection to enroll in
the QHP.
Currently, Sec. 155.420(d)(12) requires the qualified individual,
enrollee, or their dependent, to adequately demonstrate to the Exchange
that a material error related to plan benefits, service area, or
premium influenced the qualified individual's or enrollee's, or their
dependent's, decision to purchase a QHP through the Exchange. However,
we have found that consumers may benefit when other interested parties
can demonstrate to the Exchange that a material plan error influenced
the qualified individual's, enrollee's, or their dependents' enrollment
decision to purchase a QHP through the Exchange. In our experience,
plan display errors may not be obvious or detectable to the consumer
and the Exchange until after the enrollment has been impacted by the
error, at which point the issuer or State regulator is in the best
position first to identify the display error. For example, a plan
display error that influenced a consumer's enrollment can be discovered
when a consumer enrolls in a QHP, pays the premium amount that was
submitted by the issuer to be displayed on HealthCare.gov, and the
enrollment is cancelled by the issuer for non-payment of premiums
because the premium was incorrectly displayed on HealthCare.gov. In
this case, the plan display error would not be discovered until the
issuer investigates the reason for cancellation. The issuer is the only
party that can identify and notify the Exchange that the error was
caused by incorrect premium amounts between the issuer's records and
data submitted to HealthCare.gov. We can then work with the issuer to
implement the data correction processes to make the necessary
corrections to the HealthCare.gov and investigate the error to
determine if the error was material because it was likely to have
influenced the consumer's enrollment. In this example, we would likely
determine that the error impacted the consumer's enrollment if the
difference between the displayed premium and the actual premium was
material. Issuers that submit a data change request that adversely
impacts the consumers' enrollment on HealthCare.gov are required to
notify consumers of the plan display error and the remediation.
Since qualified individuals, enrollees, and their dependents are
not always the parties best suited to demonstrate to the Exchange that
a material plan display has influenced their enrollment, we proposed
revising paragraph (d)(12) to remove the burden solely from the
qualified individual, enrollee, and their dependents. We also proposed
adding cost-sharing to the list of plan display errors, alongside plan
benefits, service area, and premiums, as a plan display error with
respect to cost-sharing could equally influence a consumer's enrollment
decision. Specifically, we proposed revising Sec. 155.420(d)(12) to
reflect that a SEP is available when the enrollment in a QHP through
the Exchange was influenced by a material error related to plan
benefits, cost-sharing, service area, or premium. We proposed to
consider a material error to be an error that is likely to have
influenced a qualified individual's, enrollee's, or their dependent's
enrollment in a QHP.
We note that an error related to plan benefits, service area, cost-
sharing or premium does not trigger a SEP when the error is not
material, which may occur if an error is honored as displayed. Errors
related to plan
[[Page 25834]]
benefits, service area, cost-sharing or premium include situations
where coding on HealthCare.gov causes benefits to display incorrectly,
or where we identified incorrect QHP data submission or discrepancy
between an issuer's QHP data and its State-approved form filings.\271\
If the error involves information that displays on HealthCare.gov, we
work with the issuer and applicable State's regulatory authority to
arrive at a solution that has minimal impact on consumers and affirms,
to the extent possible, that they are not negatively affected by the
error. Generally, the most straightforward and consumer-friendly
resolution is for issuers to honor the benefit as it was displayed
incorrectly for affected enrollees, if permitted by the applicable
State regulatory authority. If the issuer chooses to honor the error
and administers the plan as it was incorrectly displayed for the
affected consumers, we will not typically provide the consumers with a
SEP. The proposed revision to the regulation will be consistent with
this approach.
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\271\ See the following: CMS. (2022, July 28). 2022 Federally-
facilitated Exchange (FFE) and Federally-facilitated Small Business
Health Options Program (FF-SHOP) Enrollment Manual. (Section 6.8.1,
p. 82). https://www.cms.gov/files/document/ffeffshop-enrollment-manual-2022.pdf.
---------------------------------------------------------------------------
Our proposal would have minimal operational impact, as interested
parties currently have the infrastructure to demonstrate to the
Exchange that a plan display error influenced a qualified individual's,
enrollee's, or their dependents' decision to purchase a QHP through the
Exchange. We currently engage with partners and interested parties
throughout the plan display error SEP process to ensure that issuers
and States are notified of our decisions as appropriate. States have
access to the status of all applicable plan display error SEPs and can
track the progress of the plan display error SEPs until remediation. In
addition, under Sec. 156.1256, issuers ``must notify their enrollees
of material plan or benefit display errors and the enrollees'
eligibility for an [SEP]. . . within 30 calendar days after being
notified by the [FFE] that the error has been fixed, if directed to do
so by the [FFE].'' Thus, impacted consumers are also currently being
notified and made aware of plan display error SEP if their plan data
had a significant, material error. We expected that this experience is
similar on all Exchanges, and therefore are proposing that this
amendment to the description of the SEP will apply for all Exchanges.
We requested comment on this proposal.
After reviewing the public comments, we are finalizing this
provision as proposed. All comments supported the proposed policy. We
summarize and respond to public comments received on the proposed plan
display error SEP below.
Comment: Multiple commenters supported a SEP for consumers affected
by a material plan display error related to plan benefits, service
area, or premium. Specifically, commenters mentioned their support for
the SEP for consumers whose enrollment in a plan was adversely affected
by the material plan display error. Additionally, multiple commenters
supported the proposal to add ``cost-sharing'' to the list of plan
display error that includes material error related to plan benefits,
service area, and premiums.
Response: We agree that this revised plan display error SEP will
support consumers whose enrollment in a plan was influenced by a
material plan display error related to plan benefits, service area, or
premium. We also agree with adding cost-sharing to the list of errors
that may constitute a plan display, and we are finalizing this as
proposed.
Comment: Several commenters supported our proposal to lift the
burden of proof to additionally allow regulators and other interested
third parties to demonstrate that a plan display error affected a
consumer's plan selection. One comment supported expanding the ways in
which people can prove they have been affected by plan display errors.
Commenters stated this proposed change encourages the efficient
operations of the Exchanges while reducing the burden on consumers to
prove an error occurred. Another commenter supported the proposal as it
allows consumers to benefit from other interested parties recognizing a
plan display error including issuers, State regulators, and others.
Response: We agree that the proposal will remove the burden from
consumers to solely demonstrate to the Exchange that their enrollment
was influenced by a material error. We agree that this change will lift
the burden of proof to allow regulators and other interested parties to
demonstrate plan display errors. As such, we will finalize this
proposal to allow plan display errors to be efficiently identified and
resolved.
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78268), HHS requested information on whether
consumers affected by a significant change in their plan's provider
network should be eligible for a SEP, and whether we should consider an
enrollee who is impacted by a provider contract termination to be
someone who is experiencing an exceptional circumstance, as specified
in Sec. 155.420(d)(9), or should be eligible for a new SEP for
provider contract terminations. We thank commenters for their feedback
and will take this into consideration in future rulemaking.
Comment: One commenter recommended that the plan display error SEP
should also include provider directory inaccuracies.
Response: In the Federally-facilitated Exchange (FFE) and
Federally-facilitated Small Business Health Options Program (FF-SHOP)
Enrollment Manual, we state that plan display errors or changes that
are made to external websites will not be considered triggering events
for plan display error SEPs.\272\ Since provider directories are
displayed and maintained outside the Exchange, we did not propose in
this rulemaking to include provider network inaccuracies as potential
plan display error triggers under Sec. 155.420(d)(12). Nonetheless, we
will consider provider directory inaccuracies for future rulemaking.
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\272\ CMS. (2022, July 28). 2022 Federally-facilitated Exchange
(FFE) and Federally-facilitated Small Business Health Options
Program (FF-SHOP) Enrollment Manual. (Exhibit 12, pp. 33-37, and p.
87). https://www.hhs.gov/guidance/document/2022-enrollment-manual.
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8. Termination of Exchange Enrollment or Coverage (Sec. 155.430)
a. Prohibition of Mid-Plan Year Coverage Termination for Dependent
Children Who Reach the Maximum Age
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78268), we proposed to add Sec.
155.430(b)(3) to explicitly prohibit QHP issuers participating in
Exchanges on the Federal platform from terminating coverage of
dependent children before the end of the coverage year because the
child has reached the maximum age at which issuers are required to make
coverage available under Federal or State law. The ACA added PHS Act
section 2714 (implemented at Sec. 147.120) to require that group
health plans and health insurance issuers offering group or individual
health insurance coverage that offer dependent child coverage make such
coverage available for an adult child until age 26. The ACA also added
section 9815(a)(1) to the Code and section 715(a)(1) to the Employee
Retirement Income Security Act (ERISA) to incorporate the provisions of
part A of title XXVII of the PHS Act (including
[[Page 25835]]
section 2714) and make them applicable under ERISA and the Code to
group health plans and health insurance issuers providing health
insurance coverage in connection with group health plans. This proposed
amendment to Sec. 155.430 would not change the requirements under
Sec. 147.120 nor would it affect parallel provisions in 26 CFR
54.9815-2714 and 2590.715-2714. Some States have established
requirements under which issuers must maintain coverage for dependent
children beyond age 26, and some issuers adopt higher than legally
required age limits as a business decision.
In operationalizing Sec. 155.430 on the Federal eligibility and
enrollment platform, HHS has required QHP issuers that cover dependent
children to provide coverage to dependent children until the end of the
plan year in which they turn 26 (or, if higher, the maximum age under
State law or the plan's business rules), although this is not required
under Sec. 147.120. Nevertheless, interested parties requested that
HHS' policy be codified in regulation for clarity. Doing so by amending
Sec. 155.430 would reduce uncertainty for issuers on the Exchanges on
the Federal platform regarding their obligation under Sec. 155.430 to
maintain coverage for a dependent child who has turned 26 (or, if
higher, the maximum age under State law or the plan's business rules)
until the end of the plan year (unless coverage is otherwise permitted
to be terminated). Likewise, it would provide clarity for enrollees
themselves who may be uncertain about the rules governing their ability
to remain enrolled as a dependent child until the end of the plan year
in which they reach the maximum age (that is, age 26 or, if higher, the
maximum age under State law or the plan's business rules). This policy
would codify the current policy on the Federal platform.
Payment of APTC on the Exchange, in addition to the way the Federal
eligibility and enrollment platform has operationalized Exchange
eligibility determinations, warrants a different policy for issuers of
individual market QHPs on the Exchanges with regard to child dependents
turning age 26 (or, if higher, the maximum age under State law or the
plan's business rules). This is especially true when comparing
individual market Exchange coverage to the employer market. In the
employer market, the employer typically contributes toward the cost of
child dependent coverage, but only until the child dependent attains
the maximum dependent age under the group health plan (at which point
the child dependent's coverage would typically be terminated). Whereas
in the Exchange, APTC is allowed for the coverage of a 26-year-old
child who is a tax dependent for the entire plan year because attaining
age 26 may not, by itself, change tax dependent status. Exchange
eligibility determinations for enrollment through the Exchange and for
APTC are based on the tax household, and the determination is made for
the entire plan year unless it is replaced by a new determination of
eligibility, such as when a change is reported by the enrollee or
identified by the Exchange in accordance with Sec. 155.330. The annual
basis of Exchange eligibility determinations, absent a new
determination, is made clear by the annual eligibility redetermination
requirements in Sec. 155.335. Eligibility standards for enrollment
through the Exchange and for APTC make no mention of an issuer's
business rules regarding dependent relationships, or otherwise
regarding the specific non-tax relationships between applicants.
Additionally, Exchange eligibility criteria do not prohibit allocation
of APTC to dependent children enrollees based on age. Every family
member who is part of the tax household must be listed on the Exchange
application for coverage, and there is no maximum age cap for tax
dependents. Because eligibility determinations are made for the entire
plan year, the Exchange will generally continue to pay the issuer APTC,
including the portion attributable to the dependent child, through the
end of the plan year in which the dependent child turns 26, or, if
higher, through the end of the plan year in which the dependent reaches
the maximum age required under State law or the plan's business rules.
In developing the Federal eligibility and enrollment platform, we
directed QHP issuers on Exchanges that use the Federal platform to
honor the eligibility determination made by the Exchange. This
requirement applies whether or not the enrollees are determined
eligible for APTC. The situation for issuers on these Exchanges thus
differs from those in the off-Exchange insurance market, where
enrollees do not receive APTC, and in the group insurance market, where
contributions by employers may end on the day in which the dependent
child turns 26 (or, if higher, the maximum age under State law or the
plan's business rules).
To clarify, in Exchanges on the Federal platform, during the annual
re-enrollment process, enrollees who, during the plan year, have
reached age 26 (or, if higher, the maximum age under State law or the
plan's business rules) are, if otherwise eligible, re-enrolled into a
separate policy (following the re-enrollment hierarchy at Sec.
155.335(j)) beginning January 1st of the following plan year, with
APTC, if applicable. We proposed to add new paragraph (b)(3) to Sec.
155.430 to expressly prohibit QHP issuers participating in Exchanges on
the Federal platform from terminating coverage until the end of the
plan year for dependent children because the dependent child has
reached age 26 (or the maximum age under State law). This change would
provide clarity to issuers participating in Exchanges on the Federal
platform regarding their obligation to maintain coverage for dependent
children, as well as to enrollees themselves regarding their ability to
maintain coverage. In addition, we proposed to make implementation
optional for State Exchanges.
We requested comments on this proposal.
After reviewing the public comments, we are finalizing this
provision as proposed, with the additional clarification that issuers
who have adopted a higher maximum age than required by State or Federal
law, as described in their business rules, also must maintain coverage
for dependent children until the end of the plan year in which they
reach the maximum age. We summarize and respond to public comments
received on the proposal below.
Comment: Multiple commenters supported the proposal, and none
opposed it. Several commenters stated that this proposal would support
continuity of coverage and avoid interruptions in coverage for
dependent children who turn 26 during the plan year (or the maximum age
under State law). A few commenters noted that this proposal was
particularly important given health concerns faced by young people,
such as reproductive health, and given the tendency of young adults to
have lower rates of health insurance coverage. A few commenters agreed
that the proposal would help provide clarity to issuers regarding their
obligation to maintain coverage for dependent children until the end of
the plan year in which the child turns 26 (or the maximum age under
State law), and would clarify for dependent child enrollees their
ability to remain enrolled until the end of the plan year in which they
turn 26 (or the maximum age under State law). Three commenters, two of
whom represented State Exchanges, indicated that their State has a
similar requirement in place. One commenter noted that this proposal
would align
[[Page 25836]]
with the insurance industry standard of enrollments taking place during
the annual Open Enrollment Period. Lastly, two commenters stated that
the proposal would ensure accumulators were not reset mid-plan year for
enrollees who turn 26.
Response: We agree that these changes will help provide clarity to
consumers and issuers regarding the obligation of issuers on Exchanges
on the Federal platform to maintain coverage for dependent children
until the end of the plan year in which they turn 26 (or, if higher,
reach the maximum allowable age under State law or the plan's business
rules). Although this policy has already been in place on these
Exchanges, we agree that this requirement promotes continuity of
coverage, ensures consumers maintain access to needed health services,
and avoids the reset of accumulators that may occur if their coverage
was terminated in the middle of the plan year.
Comment: One commenter supporting the proposal noted that
implementation would be optional for State Exchanges and requested that
we encourage States to adopt a policy of prohibiting mid-year plan
terminations for dependent children who reach the applicable maximum
age.
Response: This proposal provides State Exchanges with the option to
adopt a similar policy, but we do not believe it is appropriate to
explicitly encourage State Exchanges to do so. We note that this
requirement applies to all issuers on Exchanges on the Federal
platform, and as noted in a previous comment, some State Exchanges have
also indicated they currently have a similar requirement. However, as
noted in the preamble of this proposal, this policy for the Exchanges
on the Federal platform is based on Exchange operations and the fact
that APTC eligibility determinations are made for the entire plan year
based on tax household, unless replaced by a new determination of
eligibility. Because State Exchanges may establish their own
operational practices regarding the maximum age for dependent
enrollees, including ones that differ from those on the Exchanges on
the Federal platform, we believe it is appropriate to allow State
Exchanges to determine whether or not to adopt this proposal.
Comment: One commenter expressing support for the proposal stated
that consumers should be informed that some States have higher maximum
ages for dependent child enrollees, and that Federal law requires that
individuals with developmental disabilities must be covered as
insurance dependents regardless of age.
Response: We agree that it is important for consumers to be aware
of the maximum age for dependent children required under State law and
therefore will explore ways in which we can convey this information.
With respect to plans with business rules that provide a maximum age
higher than what is required under State or Federal law, we note that
HHS publishes Public Use Files for the Federally-facilitated Exchange
which contain information on issuers' business rules, including the
maximum dependent age.\273\ States, including State Departments of
Insurance and State Exchanges, may also have resources available to
inform consumers of the applicable laws regarding maximum age. Finally,
we note that Federal law requires coverage of dependent children until
age 26, though States may have higher maximum dependent ages based on
disability status. The application for Exchanges on the Federal
platform allows consumers to designate an enrollee with a disability,
which allows that enrollee to remain enrolled as a dependent past age
26 if required by applicable State law.
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\273\ CMS. (n.d.). Health Insurance Exchange Public Use Files
(Exchange PUFs). https://www.cms.gov/cciio/resources/data-resources/
marketplace-puf.
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Comment: Two commenters expressing support for the proposal noted
that it was important for enrollees to retain APTC for the full plan
year. One commenter stated that dependents may be eligible for more
generous APTC while on their family's coverage than in coverage alone.
Response: We agree that it is important for Exchange enrollees to
retain the APTC to which they are entitled for the full plan year.
However, we note that even if a dependent enrollee enrolls in a
separate plan prior to the end of the year in which the dependent turns
26, they are still entitled to the portion of APTC paid on their behalf
for the tax household in which they are a tax dependent. Enrolling in a
separate plan does not, in and of itself, reduce the amount of APTC to
which an enrollee is entitled.
Comment: One commenter expressed neither support for nor opposition
to the proposal and stated that enrollees who turn 26 during the plan
year should not be automatically re-enrolled into their own plan at the
end of the plan year.
Response: Although this comment is not within the scope of our
proposal, we believe it is appropriate for such enrollees to be re-
enrolled into their own plan at the end of the year in which they turn
26 (or, if higher, reach the maximum age under State law or the plan's
business rules). This practice avoids disruptions of coverage for
enrollees transitioning off their parents' plans, and is in line with
the general Exchange practice of automatically re-enrolling enrollees
at the end of each plan year.
9. General Eligibility Appeals Requirements (Sec. 155.505)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78269), we proposed revising Sec.
155.505(g) to acknowledge the ability of the CMS Administrator to
review Exchange eligibility appeals decisions prior to judicial review.
Section 155.505 describes the general Exchange eligibility appeals
process, including applicants' and enrollees' right to appeal certain
Exchange eligibility determinations specified in Sec. 155.505(b), and
the obligation of the HHS appeals entity and State Exchange appeals
entities to conduct certain Exchange eligibility appeals as described
in Sec. 155.505(c). In accordance with Sec. 155.505(g), appellants
may seek judicial review of an Exchange eligibility appeal decision
made by the HHS appeals entity and State Exchange appeals entities to
the extent it is available by law. Currently, the regulation specifies
no other administrative opportunities for appellants to appeal Exchange
eligibility appeal decisions made by the HHS appeals entity. We
proposed revising this regulation to acknowledge the ability of the CMS
Administrator to review Exchange eligibility appeals decisions prior to
judicial review.
This change would ensure that accountability for the decisions of
the HHS appeals entity is vested in a principal officer, as well as
bring Sec. 155.505(g) of the appeals process to a more similar posture
as other CMS appeals entities that provide Administrator review.\274\
Revising the regulation would also provide appellants and other parties
with accurate information about the availability of administrative
review by
[[Page 25837]]
the CMS Administrator if they are dissatisfied with their Exchange
eligibility appeal decision.
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\274\ Examples include: 42 CFR part 405, subpart R (Provider
Reimbursement Review Board); 42 CFR part 412, subpart L (Medicare
Geographic Classification Review Board); 42 CFR 430.60 through
430.104 (Medicaid State Plan Materials/Compliance Determinations);
42 CFR 423.890 (Retiree Drug Subsidy (RDS) Appeals); 42 CFR 411.120
through 411.124 (Group Health Plan Non-conformance Appeals); 42 CFR
417.640, 417.492. 417.500, 417.494 (Health Maintenance Organization
Competitive Medical Plan (HMO/CMP) Contract Related Appeals); 42 CFR
423.2345 (Termination of Discount Program Agreement Appeals).
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We sought comment on this proposal.
After reviewing the public comments, we are finalizing this
provision as proposed, with the following technical corrections to
improve understanding of the review process, and with a modified
effective date. The first technical correction is to the proposed
language at Sec. 155.505(g). We are modifying the sentence at Sec.
155.505(g) including its citation to paragraph (b) to clarify that
review is available for Exchange eligibility appeals decisions issued
by an impartial official under Sec. 155.535(c)(4). The second
technical correction is to change the reference found in Sec.
155.505(g)(1)(i)(A) from paragraph (g)(1)(ii)(B) to paragraph
(g)(1)(ii)(B)(1) to add specificity regarding voiding the
Administrator's declination. The third technical correction is to Sec.
155.505(g)(1)(i)(C), which should cross reference the 30-day period
described in paragraphs (g)(1)(i)(B)(1) and (3). The fourth is to Sec.
155.505(g)(1)(ii)(C), which should cross reference the 30-day period
described in paragraphs (g)(1)(ii)(B)(1) and (3). The fifth technical
correction is to Sec. 155.505(g)(1)(iii)(A), which should cross-
reference Exchange eligibility appeal decisions final pursuant to
paragraphs (g)(1)(i)(C) and (g)(1)(ii)(C) in this section.
With respect to the effective date, under the proposed rule, any
finalized changes to Sec. 155.505 would be effective 60 days after the
date of display of the final rule in the Federal Register. While this
rule acknowledges the ability of the CMS Administrator to review
Exchange eligibility appeals decisions prior to judicial review, we
anticipate implementation of the proposed process to apply this
authority will take some time. Therefore, we are finalizing this rule
with the new process becoming available for eligibility appeal
decisions issued on or after January 1, 2024.
We summarize and respond to public comments received on the
proposed changes acknowledging the ability of the CMS Administrator to
review Exchange appeals decisions below.
Comment: Some commenters expressed support for the proposed
changes, acknowledging the ability of the CMS Administrator to review
Exchange eligibility appeals decisions prior to judicial review. One
commenter cautioned that we should work to make sure that the correct
decision is made at the lowest level of review.
Response: We will continue to make every effort to ensure the
correctness of the initial decision.
Comment: Two commenters sought clarity around how the proposed
administrative review process would interact with the State Exchange
second-tier eligibility appeal process, with one commenter expressing
concern that the additional level of review may be duplicative and
burdensome, adding further time before a decision can be implemented.
Response: We acknowledge the concerns around an additional level of
review, but reiterate the existing ability of the CMS Administrator to
review Exchange eligibility appeals decisions prior to judicial review.
The proposed regulation also describes timeframes for the CMS
Administrator to review, and for parties to the appeal to request the
CMS Administrator review, an Exchange eligibility appeal decision,
which is intended to balance the right of CMS Administrator to review a
decision with the appellant's desire for finality of an Exchange
eligibility appeal. We recognize that the Exchange should implement the
correct decision as expeditiously as feasible and set the timeframes in
the regulation to achieve that goal. We also clarify that the CMS
Administrator may review the HHS appeals entity's decision with respect
to a second-tier appeal of a State Exchange appeals entity's decision,
but cannot review a decision of a State Exchange appeals entity.
Comment: A commenter sought clarity around the interaction between
the administrative review process and the timeliness standards
prescribed under Sec. 155.545(b).
Response: The administrative review process will not affect the
requirement under Sec. 155.545(b) that the HHS appeals entity must
issue written notice of the appeal decision to the appellant within 90
days of the date an appeal request is received, as administratively
feasible. Parties have 14 days to request, and the CMS Administrator
has 14 days to determine whether to conduct, an administrative review.
Once either of these actions occurs, the CMS Administrator's review
will occur within 30 days of the date a party requests review or the
CMS Administrator determines to review a case. The total additional
time for administrative review may add up to 44 days before the
eligibility appeal decision becomes final.
10. Improper Payment Pre-Testing and Assessment (IPPTA) for State-Based
Exchanges (Sec. Sec. 155.1500 Through 155.1515)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78270-72), we proposed to establish the
IPPTA, an improper payment measurement program of APTC, that would
include State Exchanges. As proposed, the IPPTA would prepare State
Exchanges for the planned measurement of improper payments of APTC,
test processes and procedures that support our review of determinations
of APTC made by State Exchanges, and provide a mechanism for us and
State Exchanges to share information that will aid in developing an
efficient measurement process. We proposed to codify the IPPTA
requirements in a new subpart P under 45 CFR part 155.
The Payment Integrity Information Act of 2019 (PIIA) \275\ requires
Federal agencies to annually identify, review, measure, and report on
the programs they administer that are considered susceptible to
significant improper payments. We determined that APTC are susceptible
to significant improper payments and are subject to additional
oversight. In accordance with 45 CFR part 155, FFEs, SBE-FPs, and State
Exchanges that operate their own eligibility and enrollment systems
determine the amount of APTC to be paid to qualified applicants. Only
improper payments of APTC made by FFE and SBE-FPs were measured and
reported in the FY22 Annual Financial Report (AFR) as part of the
Exchange Improper Payment Measurement (EIPM) program. We stated in the
2023 Payment Notice proposed rule (87 FR 654, 654-655) that we were in
the planning phase of establishing a State-based Exchange Improper
Payment Measurement (SEIPM) program. We also stated in the 2023 Payment
Notice proposed rule that we had intended to implement the proposed
SEIPM program beginning with the 2023 benefit year. In response to that
proposed rule, we received several comments that indicated concerns
with the proposed requirements, particularly with respect to the SEIPM
program's implementation timeline and proposed data collection
processes. For example, some State Exchanges commented that they needed
more time and information from us to prepare for the implementation of
the SEIPM program. We decided not to finalize the proposed rule due to
commenters' concerns surrounding the proposed implementation timeline
and other burdens that would be imposed by the proposed SEIPM program
(87 FR 27281). In the 2024 Payment Notice proposed rule (87 FR 78206,
78270), we proposed IPPTA to provide State Exchanges with more time to
prepare for the planned measurement of improper
[[Page 25838]]
payments of APTC, to test processes and procedures that support our
review of determinations of APTC made by State Exchanges, and to
provide a mechanism for HHS and State Exchanges to share information
that will aid in developing an efficient measurement process (87 FR
28270).
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\275\ PIIA, 31 U.S.C. 3352 (2020).
---------------------------------------------------------------------------
In 2019, we developed an initiative to provide the State Exchanges
with an opportunity to voluntarily engage with us to prepare for future
measurement of improper payments of APTC. We provided three options to
State Exchanges--program analysis, program design, and piloting--
designed to accommodate the State Exchanges' schedules and availability
to participate in the initiative. Currently, of the 18 State Exchanges,
10 have participated in various levels of voluntary State engagement,
and of those, 2 have participated in the piloting option.
We stated in the proposed rule that IPPTA would replace the
voluntary State engagement. We explained that, if finalized, activities
already completed by State Exchanges as part of the voluntary State
engagement may be used to satisfy elements of IPPTA. We have determined
that participation from all State Exchanges is required to test
processes and procedures to prepare the State Exchanges for the planned
measurement of improper payments of APTC.
We proposed to establish a new subpart P under 45 CFR part 155
(containing Sec. Sec. 155.1500 through 155.1515) to codify the
proposed IPPTA requirements. We explained that the proposed regulations
at subpart P would be applicable beginning in 2024 with each State
Exchange being selected to participate for a period of one calendar
year which would occur either in 2024 or 2025.
After reviewing public comments, we are finalizing our proposals
relating to the establishment of the IPPTA with the following
modifications: (1) the final regulations at subpart P will be
applicable beginning in 2024 with a modification to the definition in
Sec. 155.1505 that extends the pre-testing and assessment period from
one calendar year to 2 calendar years; and (2) with a modification to
Sec. 155.1515(a)(1) that reflects the extension of the pre-testing and
assessment period such that each State Exchange will be selected to
participate in the IPPTA for a pre-testing and assessment period of 2
calendar years, which will begin in either 2024 or 2025. We note that,
in response to comments regarding burden and resources, we are
extending the pre-testing and assessment period from one calendar year
to 2 calendar years without increasing or changing any of the IPPTA
requirements in order to provide State Exchanges with more time to
perform and complete all of the IPPTA requirements. The extended pre-
testing and assessment period will also reduce burden to the State
Exchanges by allowing more time to focus on other Exchange priorities
instead of meeting the IPPTA requirements in one year. Additionally,
the burden per State Exchange in estimated hours per year was reduced
from 530 to 265, and the burden in estimated costs per year was reduced
from $56,986 to $28,493 by allowing State Exchanges to spread their
costs over a two-year period. The estimated annualized cost across all
State Exchanges by extending the pre-testing and assessment period by
one calendar year to 2 calendar years without changing any of the IPPTA
requirements was reduced from $1,025,756 to $512,878, saving State
Exchanges half of their estimated outlays on an annualized basis. We
will also work with each State Exchange during the IPPTA orientation
and planning process to address a State Exchange's time and resource
constraints to allow completion of all review processes and procedures.
We summarize and respond to public comments received on the proposed
IPPTA below.
Comment: Some commenters recommended that prior to the
implementation of IPPTA or an improper payment measurement program, HHS
complete the SEIPM voluntary State engagement piloting to incorporate
lessons learned and best practices into the design of IPPTA and/or a
future improper payment measurement program. One commenter supported
IPPTA but was opposed to the mandatory nature of the initiative.
Response: Throughout the course of the voluntary State engagement,
we sought State Exchange feedback to improve the structure of the
planned program and to improve the tools that will be used in IPPTA in
support of reviewing payments of APTC. We applied the feedback and
lessons learned to gain a better understanding of State Exchange
operations, policies, and procedures. Additionally, we were able to
define necessary data specifications for conducting improper payment
measurement and to determine data transfer and access mechanisms
between HHS and State Exchanges.
We appreciate the voluntary participation of the 10 State Exchanges
and acknowledge the benefits such participation has provided in our
development of the planned measurement program. We have determined that
participation in IPPTA by all the State Exchanges is necessary to help
State Exchanges prepare for the planned measurement of improper
payments. In addition, requiring participation in IPPTA will provide us
with feedback from all 18 State Exchanges on the processes and
procedures that support our review of APTC determinations made by State
Exchanges, and therefore will help us maximize the efficiency of the
measurement process. To achieve that, we have determined that all State
Exchanges will need to complete the processes described for IPPTA with
the goal of testing our IPPTA review methodology for each State
Exchange. In this way, all State Exchanges will have the opportunity to
collaborate with us and receive feedback on their current processes
without our IPPTA review contributing to an estimated improper payment
rate.
Comment: One commenter said they supported allowing State Exchanges
to satisfy IPPTA requirements through activities undertaken during
voluntary State engagements.
Response: Our general position is that activities that were
performed by the 10 State Exchanges that participated in voluntary
State engagement will not be duplicated as part of IPPTA. To achieve
that, we will evaluate the activities performed by State Exchanges
during the voluntary State engagements and determine which of those
satisfy IPPTA requirements. We will also utilize voluntary State
engagement information as a substitute, thereby, saving time and
resources needed for the completion of IPPTA. We will accomplish this
by using the pre-testing and assessment checklist, which will identify
the IPPTA requirements that have already been fulfilled. The pretesting
and assessment plan will include the pre-testing and assessment
checklist that will identify which State Exchange's activities
satisfied the requirements. We will work with State Exchanges during
the orientation and planning process to review the checklist and to
confirm the State Exchange's completed activities. Additional
information about the process for satisfying certain IPPTA requirements
as a result of participation in the voluntary State engagements will be
provided in guidance issued after this rule is finalized. State
Exchanges that did not participate in voluntary State engagement will
not have performed activities that satisfy IPPTA requirements and
therefore must complete all IPPTA processes and procedures.
[[Page 25839]]
Comment: Some commenters stated that IPPTA would duplicate
requirements embodied in existing Federal reporting requirements. For
example, these commenters cited the State-based Marketplace Annual
Reporting Tool (SMART), annual independent external programmatic
audits, State Based Marketplace Inbound (SBMI) reporting, performance
monitoring data reporting, and reconciliation processes including the
annual IRS PTC reconciliation as Federal requirements that may
duplicate IPPTA. A few commenters recommended HHS build on existing
audit requirements (for example, the independent, external programmatic
audit) rather than create a new IPPTA requirement. One commenter
recommended State Exchanges make a testing environment for HHS to run
standard tests rather than create a new data collection process.
Another commenter stated that both the independent external auditors
and the IRS PTC reconciliation process already collect data that could
be used to determine an improper payment rate.
Response: We appreciate the commenters' concerns that IPPTA would
be duplicative of existing audits; however, IPPTA is not an audit
program but instead is designed to test processes and procedures that
support our review of determinations of APTC made by State Exchanges
for the planned measurement of improper payments. Additionally, the
independent external programmatic audits ensure oversight of a host of
exchange activities beyond the scope of improper APTC payments.
Moreover, the data collected as part of the Federal reporting
requirements identified by the commenters do not provide us with
information required by Sec. 155.1510 such as information that
verifies citizenship, social security number, residency, and other data
specified below. This information is needed to review determinations of
APTC, which is a necessary step to prepare for identifying and
measuring improper payments of APTC, as required by PIIA.\276\ For
example, the IRS reconciliation process uses annual enrollment data and
monthly reconciliation data provided by HHS to calculate the PTC and to
verify reconciliation of APTC made to the QHP issuers on enrollees'
individual tax returns. However, these annual enrollment data and
monthly reconciliation data do not contain data to the level of
required specificity (such as dates that electronic eligibility
verifications were made) to address issues related to APTC and its
calculation, particularly verification of citizenship, social security
number, residency, MEC, SEP circumstance, income, family size, and DMIs
related to document authenticity. Moreover, the annual enrollment data
and the monthly reconciliation data are collected after an applicant
has been determined eligible for APTC. We need pre-enrollment data that
were used to verify an applicant's eligibility before the application
is approved. Examining these areas in detail is necessary to identify
underlying issues that may lead to improper payments. In contrast, the
SMART allows State Exchanges to self-attest to their verification
procedures for eligibility and enrollment transactions without
submitting supporting data. Similarly, the annual independent external
programmatic audits require State Exchanges to hire independent,
external auditors to review eligibility and enrollment information
collected by State Exchanges to identify deficiencies or errors in
processes to make eligibility determinations for QHPs and APTC without
submitting supporting data to HHS. Neither the SMART nor the
independent, external programmatic audits measure, estimate, or report
the amounts or rates of improper payments, or the systematic errors
that may contribute to improper payments and do not provide the
underlying data that would allow HHS to do so. Finally, these current
oversight procedures do not allow for standardized comparison or
analysis of improper payments across all State Exchanges, which will be
necessary functions of the planned improper payment measurement
program. For these reasons, we will require State Exchanges to submit
the data and data documentation specified in the final rule to comply
with PIIA requirements. We believe that IPPTA will assist State
Exchanges to prepare for the planned measurement of improper payments,
an activity with requirements that are distinct from existing Federal
requirements. IPPTA will provide the data needed to conduct the pre-
testing and assessment review processes in preparation for the planned
measurement of improper payments. We note that in designing IPPTA, we
have carefully reviewed the commenters' concerns regarding potential
duplication of existing audit processes and analyzed the data fields
used to accomplish existing Federal requirements. We have made every
effort to minimize the burden on the State Exchanges by limiting the
amount of data required (that is, application data associated with no
fewer than 10 tax households).
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\276\ In 2016, we conducted a risk assessment of the APTC
program and determined that the program was susceptible to
significant improper payments. PIIA requires that Federal agencies
produce a statistically valid estimate of improper payments for any
programs deemed susceptible to significant improper payments.
---------------------------------------------------------------------------
Comment: Some commenters stated that IPPTA would create financial,
administrative, and staffing burdens for the State Exchanges. A few
commenters stated that they would incur technology upgrade costs to
provide information in the format requested by IPPTA and one said HHS
should wait until after the voluntary State engagement piloting is
completed to enable State Exchanges to make an accurate assessment of
technology costs. One commenter was opposed to the overall burden of
IPPTA but was supportive of our desire to coordinate and consult with
State Exchanges.
Response: We received several comments regarding the burden and
resources (that is, budget, staff, time, technology upgrades) needed to
prepare for and fulfill IPPTA's requirements. We understand these
concerns and, therefore, are finalizing the establishment of the IPPTA
with a modification to extend the pre-testing and assessment period
from one calendar year to two calendar years without increasing or
changing any of the IPPTA requirements in order to allow State
Exchanges more time to perform and complete all IPPTA requirements. By
doing so, we are extending the timeframes allotted for State Exchanges
to execute the pre-testing and assessment procedures including the
timeframes for the submission and review of data and data
documentation. By extending the pre-testing and assessment period to
two calendar years and not otherwise expanding the IPPTA requirements,
we are providing the State Exchanges with the ability to spread their
staffing, administrative, and other budgetary costs across 24 months of
activity instead of 12 months as well as providing State Exchanges
additional time to identify and address staffing capacity and
technology capabilities.
The planning and orientation phase will involve collaboration
between HHS and the State Exchanges to create the IPPTA plan, which
will include a timeline for completing the required pre-testing and
assessment processes. There is sufficient flexibility in this process
that conceivably, the State Exchange could plan to complete, and
achieve completion of all of the required processes within the span of
one year if the State Exchange was able to dedicate the time and
resources that would be so required.
[[Page 25840]]
We are committed to working with State Exchanges to address burden
and resources during the orientation and planning processes, which
would allow State Exchanges to complete the IPPTA. Finally, we
acknowledge that State Exchanges may incur additional costs depending
on their technology capabilities. We provided the public with our
estimate of the burden and costs to State Exchanges in section IV.,
Information Collection Requirements. We are willing to continue to work
with State Exchanges to help to resolve technology issues during the
orientation and planning processes.
Comment: One commenter stated that the review methodology and
associated data structure used by HHS for the FFE does not uniformly
align with State Exchange practices. The commenter added that HHS is
applying a standardized approach despite the flexibility provided to
State Exchanges under the ACA.
Response: We note that IPPTA is intended to test processes and
procedures that support our review of determinations of APTC made by
State Exchanges. We acknowledge the complexities associated with the
development of a planned measurement program tailored for each State
Exchange and that the methodology used for the improper payment
measurement program for the FFE does not directly translate to
operationalization for State Exchange measurement. Those complexities,
which include the State Exchange's mapping their source data to the
Data Request Form (DRF) and validation and verification of the data by
HHS, require close collaboration between HHS and each of the State
Exchanges as described in Sec. 155.1515(e)(2), and in part, form the
basis for the necessity of the IPPTA program in preparing the State
Exchanges for an improper payment measurement program. Through
collaboration with the State Exchanges during IPPTA, we will make every
attempt to resolve data structure issues that differ between the FFE
data model and the State Exchanges.
Comment: A few commenters suggested that HHS provide State
Exchanges with an exemption from the annual independent, external
programmatic audit requirement under 45 CFR 155.1200(c) if HHS
finalized IPPTA, and they suggested that continuing to require the
audit would be duplicative of activities under IPPTA.
Response: The annual independent, external programmatic audits are
one of the primary oversight tools for identifying and addressing State
Exchange regulatory compliance issues, and the audit reports ensure
oversight of a variety of exchange-related activities beyond the scope
of potential improper payments of APTC. As part of the auditing
process, we require State Exchanges to take corrective actions to
address non-compliance issues that are identified through the annual
audits and monitor the implementation of the corrective actions. We
designed IPPTA to minimize the burden on the State Exchanges by
limiting the amount of data required to only what is necessary to
conduct the pre-testing and assessment review processes that will
prepare State Exchanges for the planned measurement of improper
payments. Modifying the annual independent, external programmatic audit
requirement would eliminate a key oversight mechanism over activities
beyond the scope of the SEIPM program and potentially impact our
ability to adequately oversee program integrity in the State Exchanges.
Comment: One commenter requested more information regarding the
sunsetting of the SEIPM piloting option.
Response: We appreciate the comment regarding the sunsetting of the
voluntary State engagement. As stated in the preamble, IPPTA will
replace the voluntary State engagement. Voluntary State engagement
activities will cease by the end of 2023. We will provide further
guidance after the publication of this final rule.
Comment: Some commenters expressed their position as neutral or did
not express a position in support or opposition of IPPTA. These
commenters expressed concerns regarding burden and duplication of
existing Federal requirements. These commenters also suggested that HHS
complete the voluntary piloting prior to establishing IPPTA.
Response: We appreciate those commenters who expressed various
concerns but remained neutral overall to IPPTA, either expressly
indicating their neutrality or choosing not to take a position in
support or opposition of IPPTA. We have addressed the burden,
duplication of existing Federal requirements, and voluntary State
engagement in the preamble to this final rule.
a. Purpose and Scope (Sec. 155.1500)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78270), we proposed to add a new subpart P
to part 155, which addressed State Exchange and HHS responsibilities.
We explained that we may use Federal contractors as needed to support
the performance of IPPTA.
We proposed to add new Sec. 155.1500 to convey the purpose and
scope of IPPTA. In the proposed rule, at paragraph (a), we stated the
purpose and scope of subpart P as setting forth the requirements of the
IPPTA for State Exchanges. We explained that the proposed IPPTA is an
initiative between HHS and State Exchanges. We stated in the proposed
rule that the IPPTA requirements were intended to prepare State
Exchanges for the planned measurement of improper payments, test
processes and procedures that support our review of determinations of
APTC made by State Exchanges, and provide a mechanism for HHS and State
Exchanges to share information that will aid in developing an efficient
measurement process.
We summarize and respond to public comments received on the purpose
and scope of IPPTA below. After reviewing the public comments, we are
finalizing this provision as proposed.
Comment: One commenter stated that consultation with State
Exchanges is crucial to collecting accurate information and recommended
HHS retain the proposed regulatory language requiring strong
coordination and consultation with State Exchanges.
Response: We appreciate the recommendation to retain the language
of the proposed rule that we work with State Exchanges including
coordinating and consulting during the IPPTA period. We are retaining
the language in the rule pertaining to coordinating with the State
Exchanges during the IPPTA period. As stated in the preamble to the
proposed rule (87 FR 78270), IPPTA is intended to be a collaborative
effort between us and the State Exchanges.
b. Definitions (Sec. 155.1505)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78270-71) we proposed to add new Sec.
155.1505, which would codify the definitions of several terms that are
specific to IPPTA and are key to understanding the processes and
procedures of IPPTA. Specifically, we proposed to define the following
terms as set forth below.
We proposed to define ``Business rules'' to mean the State
Exchange's internal directives defining, guiding, or constraining the
State Exchange's actions when making eligibility determinations and
related APTC calculations. In the proposed rule we explained that, for
example, the internal directives, methodologies, algorithms, or
policies that a State Exchange applies or executes on its own data to
determine whether an applicant meets the eligibility requirements for a
QHP and
[[Page 25841]]
any associated APTC would be considered a business rule.
We proposed to define ``Entity relationship diagram'' to
mean a graphical representation illustrating the organization and
relationship of the data elements that are pertinent to applications
for QHP and associated APTC payments.
We proposed to define ``Pre-testing and assessment'' to
mean the process that uses the procedures specified in Sec. 155.1515
to prepare State Exchanges for the planned measurement of improper
payments of APTC.
We proposed to define ``Pre-testing and assessment
checklist'' to mean the document that contains criteria that HHS will
use to review a State Exchange's completion of the requirements of the
IPPTA.
We proposed to define ``Pre-testing and assessment data
request form'' to mean the document that specifies the structure for
the data elements that HHS will require each State Exchange to submit.
We proposed to define ``Pre-testing and assessment
period'' to mean the timespan during which HHS will engage in the pre-
testing and assessment procedures with a State Exchange. In the
proposed rule, we proposed that the pre-testing and assessment period
would cover one calendar year.
We proposed to define ``Pre-testing and assessment plan''
to mean the template developed by HHS in collaboration with each State
Exchange enumerating the procedures, sequence, and schedule to
accomplish the pre-testing and assessment.
We proposed to define ``Pre-testing and assessment
report'' to mean the summary report provided by HHS to each State
Exchange at the end of the State Exchange's pre-testing and assessment
period that will include, but not be limited to, the State Exchanges'
status regarding completion of each of the pre-testing and assessment
procedures specified in proposed Sec. 155.1515, as well as
observations and recommendations that result from processing and
testing the data submitted by the State Exchanges to HHS. In the
proposed rule, we explained, at Sec. 155.1515(g), that we were
proposing that the pre-testing and assessment report is intended to be
used internally by HHS and each State Exchange as a reference document
for performance improvement. We explained that the pre-testing and
assessment report will not be released to the public by HHS unless
otherwise required by law.
We summarize and respond to public comments received on the
proposed definitions below. We are finalizing the definitions as
proposed, with the following modification: we are changing the proposed
definition of ``Pre-testing and assessment period'' to extend the pre-
testing and assessment period from a one calendar year timespan to a 2-
calendar year timespan, during which we will engage in pre-testing and
assessment procedures with a State Exchange. As discussed earlier in
this preamble, we are making this modification in response to comments
received regarding burden and resources (that is, budget, staff, time,
technology upgrades, etc.). By extending the pre-testing and assessment
period from one calendar year to two calendar years without increasing
or changing any of the IPPTA requirements, we are providing State
Exchanges with more time to perform and complete all IPPTA
requirements.
Comment: One commenter requested that HHS clarify the definition of
``entity relationship diagram.'' The commenter stated they did not
understand how the diagram would be used to describe data elements, and
the commenter also requested more information on how sample data would
be collected.
Response: An entity relationship diagram is used to document the
data structure of a database and the relationships of the various data
elements that are used to align many pieces of data to the individual
records within a data set. For the purposes of IPPTA, the entity
relationship diagram would be used to aid in understanding the mapping
of data from the data structures being used by the State Exchange to
the structure of data being used for the review, which is collected in
the data request form (DRF). In addition, an entity relationship
diagram will provide an understanding of the relationships among State
Exchange-provided data and can explain the data values provided by the
State Exchange in the DRF. The properties associated with each entity
need to be understood by the reviewers to ensure that the mapping of
data and the population of the DRF have been performed correctly.
During IPPTA planning, we will work with the State Exchanges to
determine whether available documentation can satisfy the information
needs for the entity relationship diagram.
c. Data Submission (Sec. 155.1510)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206 at 78271), we proposed to add a new Sec.
155.1510 which would address the data submission requirements to
support the IPPTA. Consistent with this, we proposed to establish a
pre-testing and assessment DRF to collect and compile information from
each State Exchange. As explained below in section IV., Collection of
Information Requirements, the pre-testing and assessment DRF was
submitted to OMB for review and approval. We proposed that each State
Exchange must submit to us a sample of no fewer than 10 tax household
identification numbers (that is, the record of a tax household that
applied for and was determined eligible to enroll in a QHP and was
determined eligible to receive APTC in an amount greater than $0).
We summarize and respond to public comments received on the
proposed pre-testing and assessment DRF below. After reviewing the
public comments, we are finalizing this provision as proposed.
Comment: Several commenters stated that they are willing to share
more data and information with HHS and other Federal partners to ensure
the effective and efficient operation of State Exchanges.
Response: We appreciate the willingness of these commenters to
share more data and information with us and other Federal partners to
ensure that the State Exchanges operate in an efficient and effective
manner.
Comment: A few commenters suggested that HHS not require State
Exchanges to produce information about their systems, business rules,
or software. Two commenters recommended that HHS not require new data
documentation but rather accept a State Exchange's existing data
documentation. One commenter objected to the comprehensive submission
of business rules and proposed using identified errors as the basis for
root cause analysis. One commenter objected generally to the provision
of system documentation including concerns that some documentation may
be proprietary. One commenter objected to the detailed review of
eligibility criteria and examination of associated data. Another
commenter recommended that HHS allow State Exchanges to submit data
documentation such as the data dictionary and entity relationship
diagram in any format.
Response: We are not requiring State Exchanges to create new data
documentation, but rather we are requiring State Exchanges provide us
with existing or available data documentation as described in Sec.
155.1510, such as business rules and policies used to determine an
applicant's eligibility for APTC. This data documentation is necessary
to test
[[Page 25842]]
our processes and procedures that support our review of determinations
of APTC made by State Exchanges. We are seeking to test all the
processes associated with IPPTA. Therefore, the information provided by
State Exchanges regarding their systems and business rules will allow
us to tailor review procedures to each State Exchange. A detailed
review of eligibility criteria is necessary to create a measurement
program that complies with the statutory requirements set forth in
PIIA. Regarding the submission of the data dictionary and entity
relationship diagram in any format, we agree with the commenter. We
will allow State Exchanges to submit their data documentation as
defined in this final rule in the format currently used by the State
Exchange.
We will coordinate with State Exchanges to resolve any issues that
may arise related to the potential proprietary nature of this data
documentation and ensure that any such data documentation provided is
not made publicly available, unless required by law.
At paragraph (a)(1) in the proposal, we proposed that a
State Exchange would be required to submit to HHS by the deadline in
the pre-testing and assessment plan the following documentation for
their data: (i) the State Exchange's data dictionary including
attribute name, data type, allowable values, and description; (ii) an
entity relationship diagram, which shall include the structure of the
data tables and the residing data elements that identify the
relationships between the data tables; and (iii) business rules and
related calculations.
At paragraph (a)(2) in the proposal, we proposed that the
State Exchange must use the pre-testing and assessment DRF, or other
method as specified by HHS, to submit to HHS the application data
associated with no fewer than 10 tax household identification numbers
and the associated policy identification numbers that address scenarios
specified by HHS to allow HHS to test all of the pre-testing and
assessment processes and procedures. We explained that the proposed
scenarios would include various application characteristics such as
household composition, data matching inconsistencies (for example, SSN,
citizenship, lawful presence, annual income) identified for the
applications, SEP application types (for example, relocation,
marriage), periodic data matching (for example, Medicaid/CHIP,
Medicare, death), application status (for example, policy terminated,
policy canceled), and application types (for example, initial
application). We explained that we understand that it is unlikely that
the application data associated with a singular tax household could
address all of the characteristics contained in all of the scenarios
specified. Therefore, we proposed that while the application data for
each tax household does not need to address all the scenarios
specified, the application data submitted for no fewer than 10 tax
households should, when taken together as a whole, address all the
characteristics in all the scenarios specified. We explained that, for
example, the application data for one tax household may address lawful
presence inconsistency adjudication but not special enrollment
eligibility verification. Accordingly, we noted that the application
data for another tax household should address special enrollment
eligibility verification. In the proposal we stated that after
receiving the application data associated with no fewer than 10 tax
households from the State Exchange, we would test the data from each of
the tax households against its review procedures to determine if the
respective policy applications fulfill the scenarios. If the submitted
application data did not collectively fulfill the scenarios, we
proposed that we would coordinate with the State Exchange to select
additional tax households. For the data submitted, we also would
require the State Exchange to provide digital copies such as PDFs of
supporting consumer-submitted documentation (for example, proof of
residency, proof of citizenship).
We also proposed that for each of the tax households, the
State Exchange would align and populate the data in the pre-testing and
assessment DRF with the assistance of HHS. We explained that we would
require that the State Exchange electronically transmit the completed
pre-testing and assessment DRF to HHS within the deadline specified in
the pre-testing and assessment plan. We proposed that once we receive
the transmission from the State Exchange, we then would execute the
pre-testing and assessment processes and procedures on the application
data.
We summarize and respond to public comments received on submission
of application data for no fewer than 10 tax households using the pre-
testing and assessment DRF that will be provided to State Exchanges by
HHS and on the proposed scenarios specified by HHS to allow HHS to test
all of the pre-testing and assessment processes and procedures below.
After reviewing the public comments, we are finalizing Sec.
155.1510(a) as proposed.
Comment: A few commenters support the sample size of no fewer than
10 tax households.
Response: We appreciate support of the no fewer than 10 tax
household sample size.
Comment: One commenter agreed with the use of the pre-testing and
assessment DRF to collect and compile information from each State
Exchange.
Response: We appreciate support for collecting information from the
State Exchanges using the pre-testing and assessment DRF.
At paragraph (b) in the proposal, we proposed that a State
Exchange must submit the data documentation as specified in Sec.
155.1510(a)(1) and the application data associated with no fewer than
10 tax households as specified in Sec. 155.1510(a)(2) within the
timelines in the pre-testing and assessment plan specified in Sec.
155.1515.
We did not receive any comments in response to the proposed
pretesting and assessment data submission timeline. We are finalizing
Sec. 155.1510(b) as proposed.
d. Pre-Testing and Assessment Procedures (Sec. 155.1515)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78271 through 72), we proposed to add a new
Sec. 155.1515 which would address the requirements associated with the
pre-testing and assessment procedures that underlie and support the
IPPTA. The pre-testing and assessment procedures are the activities of
IPPTA that are, in part, designed to test our review processes and
procedures that support our review of determinations of the APTC made
by State Exchanges, to improve the State Exchange's understanding of
IPPTA, to prepare State Exchanges for the planned measurement of
improper payments, and to provide us and the State Exchanges with a
mechanism to share information that will aid in developing an efficient
measurement process.
Comment: One commenter supported the need to prepare State
Exchanges for the planned measurement of improper payments.
Response: We appreciate recognition of the need to prepare State
Exchanges for the planned measurement of improper payments.
At paragraph (a), we proposed the general requirement that
the State Exchange must participate in IPPTA for a period of one
calendar year that will occur in either 2024 or 2025, and that the
State Exchange and HHS would work together to execute IPPTA procedures
in accordance with
[[Page 25843]]
timelines in the pre-testing and assessment plan.
We did not receive any comments in response to the proposed
requirement for State Exchanges to participate in IPPTA for one
calendar year in either 2024 or 2025. In response to comments regarding
burden and resources (that is, budget, staff, time, technology
upgrades), and as previously discussed in the preamble of the rule, we
are finalizing this provision with the following modification: we are
extending the pre-testing and assessment period from one calendar year
to 2 calendar years without increasing or changing any of the IPPTA
requirements in order to provide State Exchanges with more time to
perform and complete all IPPTA requirements. We are requiring State
Exchanges to participate in IPPTA for a pre-testing and assessment
period of 2 calendar years, which would begin in either 2024 or 2025.
At paragraph (b), we proposed the requirements for the
orientation and planning processes.
At paragraph (b)(1), we proposed that we would provide
State Exchanges with an overview of the pre-testing and assessment
procedures as part of the orientation process. We also proposed that,
during the orientation process, we would identify the documentation
that a State Exchange must provide to HHS for pre-testing and
assessment. We explained that, for example, if data use agreements or
information exchange agreements need to be executed, we would inform
State Exchanges about that documentation requirement.
We did not receive any comments in response to the proposed State
Exchange IPPTA orientation process. We are finalizing these provisions
as proposed.
At paragraph (b)(2), we proposed that HHS, in
collaboration with each State Exchange, would develop a pre-testing and
assessment plan as part of the orientation process. We explained that
the pre-testing and assessment plan would be based on a template that
enumerates the procedures, sequence, and schedule to accomplish pre-
testing and assessment. In the proposal, we noted that while we would
need to meet milestones specified in the schedule and applicable
deadlines due to the time span allotted for this proposed program, we
would take into account feedback from the State Exchanges in an effort
to minimize burden. We stated that the pre-testing and assessment plan
would take into consideration relevant activities, if any, that were
completed during voluntary State engagement. We explained that the pre-
testing and assessment plan would include the pre-testing and
assessment checklist.
We summarize and respond to public comments received on the
proposed pre-testing and assessment plan below. After reviewing the
public comments, we are finalizing this provision as proposed.
Comment: One commenter said that more information was needed to
inform State Exchanges of how their activities would satisfy IPPTA
requirements.
Response: We appreciate the cooperation and collaboration of State
Exchanges that have participated in voluntary State engagement. We will
work with State Exchanges during the IPPTA orientation and planning
process to review the pre-testing and assessment checklist and confirm
the State Exchange's completed activities that satisfy certain IPPTA
requirements. One of the major activities in the voluntary State
engagements has been the submission of data by the State Exchange,
which includes the mapping of a State Exchange's source data to the
data elements in our DRF. The DRF has been used by State Exchanges
participating in the pilot option of the voluntary State engagement to
collect and transmit application data for testing. In the scenario that
a State Exchange submitted data on the DRF during the piloting option
of voluntary State engagement, and where review processes were not able
to be completed due to the sunsetting of voluntary State engagement
activities, we will incorporate the previously submitted data to
satisfy IPPTA data submission requirements. Similarly, in the scenario
where data was submitted by a State Exchange, but the data was not
sufficient to execute the review methodology, we will incorporate the
previously submitted data into IPPTA and continue working with the
State Exchange for the purpose of satisfying IPPTA data submission
requirements. Our general position is that a State Exchange that
submitted data while participating in the piloting option of voluntary
State engagement will not be required as part of IPPTA to submit new
data for a more recent benefit year. State Exchanges that did not
submit data as part of the voluntary State engagement are required to
submit data for the benefit year most recent to their designated IPPTA
period agreed upon as part of the orientation and planning process.
At paragraph (b)(3), we proposed that we would issue a
pre-testing and assessment plan specific to a State Exchange at the
conclusion of the pre-testing and assessment planning process. We
explained that the pre-testing and assessment plan would be for HHS and
State Exchange internal use only and would not be made available to the
public by HHS unless otherwise required by law.
We did not receive any comments in response to the proposal that we
would issue a pre-testing and assessment plan specific to a State
Exchange at the conclusion of the pre-testing and assessment planning
process. We also did not receive any comments in response to the
proposal that the pre-testing and assessment plan would be used for
internal use only and would not be made publicly available by HHS
unless required by law. We are finalizing this provision as proposed.
At paragraph (c), we proposed the requirements associated
with notifications and updates.
At paragraph (c)(1), we proposed the requirements
associated with our responsibility to notify State Exchanges, as needed
throughout the pre-testing and assessment period, concerning
information related to the pre-testing and assessment processes and
procedures.
We did not receive any comments in response to the proposed
requirement for HHS to notify State Exchanges of the pre-testing and
assessment data request period. We are finalizing these provisions as
proposed.
At paragraph (c)(2), we proposed the requirements
associated with information State Exchanges must provide to HHS
throughout the pre-testing and assessment period regarding any
operational, policy, business rules (for example, data elements and
table relationships), information technology, or other changes that may
impact the ability of the State Exchange to satisfy the requirements of
IPPTA during the pre-testing and assessment period. We explained, for
example, that we would need to be made aware of changes to the State
Exchange's technical platform or modifications to its policies or
procedures as these changes may impact specific pre-testing and
assessment processes or procedures, the data to be reviewed, and
ultimately a State Exchange's determinations of an applicant's
eligibility for APTC. We proposed that other decisions or changes made
by a State Exchange, which could affect the pre-testing and assessment
including any changes regarding items such as naming conventions or
definitions of specific data elements used in the pre-testing and
assessment, must be submitted to HHS. We proposed this requirement
because any lack of clarity in how State Exchanges make eligibility
determinations and payment
[[Page 25844]]
calculations could impact our ability to assist the State Exchange in
understanding the pre-testing and assessment processes and procedures
and could affect our recommendations in the pre-testing and assessment
report.
We did not receive any comments in response to the proposed
requirements associated with information that State Exchanges must
provide to HHS throughout the pre-testing and assessment period
regarding any operational, policy, business rules, information
technology, or other changes that may impact the ability of the State
Exchange to satisfy the requirements of IPPTA during the pre-testing
and assessment period. We are finalizing this provision as proposed.
At paragraph (d), we proposed the requirements regarding
the submission of required data and data documentation by State
Exchanges, and we stated that, as specified in Sec. 155.1510(a), we
will inform State Exchanges about the form and manner for State
Exchanges to submit required data and data documentation to HHS in
accordance with the pre-testing and assessment plan.
We did not receive any comments to the specific proposed
requirement for HHS to coordinate data documentation tracking and
management with each State Exchange. We responded to related comments
regarding the underlying data submission requirements that appear in
Sec. 155.1510(a)(2). We are finalizing this provision as proposed.
At paragraph (e), we proposed the general requirements
regarding coordination between HHS and the State Exchanges to
facilitate our processing of data and data documentation submitted by
State Exchanges.
At paragraph (e)(1), we proposed the requirements
associated with our responsibility to coordinate with each State
Exchange to track and manage the data and data documentation submitted
by a State Exchange as specified in Sec. 155.1510(a)(1) and (2).
We did not receive any comments in response to the proposed
requirement for HHS to coordinate data documentation tracking and
management with each State Exchange. We are finalizing these provisions
as proposed.
At paragraph (e)(2), we proposed the requirements
associated with our responsibility to coordinate with each State
Exchange to provide assistance in aligning the data specified in Sec.
155.1510(a)(2) from the State Exchange's existing data structure to our
standardized set of data elements.
We summarize and respond to public comments received on the
proposed requirement for HHS to assist each State Exchange with data
alignment to a standardized set of data elements below. After reviewing
the public comments, we are finalizing this provision as proposed.
Comment: One commenter stated that HHS should use its own resources
to map the State Exchange data elements to the pre-testing and
assessment DRF.
Response: We considered an alternative to requiring each State
Exchange to submit their source data using the pre-testing and
assessment DRF. That alternative would have allowed a State Exchange to
provide to us the required source data in an unstructured format. We
would have been required to map the source data to the required data
elements. The mapping process would have required consultative sessions
with each State Exchange and a validation process to ensure accurate
mapping. Some State Exchanges stated during voluntary State engagement
that they preferred mapping their data to the data elements in the DRF
in order to ensure accuracy of mapping. We believe that the
consultative process suggested by the commenter would require more
frequent and resource-intensive meetings, costing each party more than
use of standard data fields in the pre-testing and assessment DRF. The
regulatory alternative was documented in the proposed rule (87 FR
78206, 78313) and no additional comments were received in favor of that
option. For these reasons, we are finalizing this provision as
proposed. We are requiring that HHS coordinate with each State Exchange
to aid in aligning the data specified in Sec. 155.1510(a)(2) from the
State Exchange's existing structure to the standardized set of data
elements required for IPPTA.
At paragraph (e)(3), we proposed the requirement that we
will coordinate with each State Exchange to interpret and validate the
data specified in Sec. 155.1510(a)(2).
We did not receive any comments in response to the proposed
requirement for HHS to coordinate with each State Exchange to interpret
and validate the data specified. We are finalizing this provision as
proposed.
At paragraph (e)(4), we proposed the requirement that we
would use the data and data documentation submitted by the State
Exchange to execute the pre-testing and assessment procedures.
We did not receive any comments in response to the proposed
requirement for HHS to use the data and data documentation submitted by
the State Exchange to execute the pre-testing and assessment
procedures. We are finalizing this provision as proposed.
At paragraph (f), we proposed the requirements that we
would issue the pre-testing and assessment checklist in conjunction
with and as part of the pre-testing and assessment plan. We explained
that the pre-testing and assessment checklist criteria we proposed
would include but would not be limited to:
++ At paragraph (f)(1), the State Exchange's submission of the data
documentation as specified in Sec. 155.1510(a)(1);
We did not receive any comments in response to the proposed
requirement for the pre-testing and assessment checklist criteria to
include the State Exchange's submission of the data documentation as
specified. We are finalizing this provision as proposed.
++ At paragraph (f)(2), the State Exchange's submission of the data
for processing and testing as specified in Sec. 155.1510(a)(2); and
We did not receive any comments in response to the proposed
requirement for the pre-testing and assessment criteria to include the
State Exchange's submission of the data for processing and testing. We
are finalizing this provision as proposed.
++ At paragraph (f)(3), the State Exchange's completion of the pre-
testing and assessment processes and procedures related to the IPPTA
program.
We did not receive any comments in response to the proposed
requirement for the pre-testing and assessment criteria to include the
State Exchange's completion of the pre-testing and assessment processes
and procedures related to the IPPTA program. We are finalizing this
provision as proposed.
At paragraph (g), we proposed that, subsequent to the
completion of a State Exchange's pre-testing and assessment period, we
will prepare and issue a pre-testing and assessment report specific to
that State Exchange. We proposed that the pre-testing and assessment
report would be for HHS and State Exchange internal use only and would
not be made available to the public by HHS unless otherwise required by
law.
We did not receive any comments in response to the proposal that,
subsequent to the completion of a State Exchange's pre-testing and
assessment period, we will prepare and issue a pre-testing and
assessment report specific to that State Exchange. We also did not
receive any comments in response to the proposal that the report would
be for HHS and State Exchange internal use only and would not be made
available
[[Page 25845]]
to the public by HHS unless otherwise required by law. We are
finalizing this provision as proposed.
C. Part 156--Health Insurance Issuer Standards Under the Affordable
Care Act, Including Standards Related to Exchanges
1. FFE and SBE-FP User Fee Rates for the 2024 Benefit Year (Sec.
156.50)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78272 through 78273), for the 2024 benefit
year, we proposed an FFE user fee rate of 2.5 percent of total monthly
premiums and an SBE-FP user fee rate of 2.0 percent of the total
monthly premiums.
Section 1311(d)(5)(A) of the ACA permits an Exchange to charge
assessments or user fees on participating health insurance issuers as a
means of generating funding to support its operations. If a State does
not elect to operate an Exchange or does not have an approved Exchange,
section 1321(c)(1) of the ACA directs HHS to operate an Exchange within
the State. Accordingly, in Sec. 156.50(c), we stated that a
participating issuer offering a plan through an FFE or SBE-FP must
remit a user fee to HHS each month that is equal to the product of the
annual user fee rate specified in the annual HHS notice of benefit and
payment parameters for FFEs and SBE-FPs for the applicable benefit year
and the monthly premium charged by the issuer for each policy where
enrollment is through an FFE or SBE-FP. OMB Circular A-25 established
Federal policy regarding user fees and what the fees can be used
for.\277\ In particular, it specifies that a user fee charge will be
assessed against each identifiable recipient of special benefits
derived from Federal activities beyond those received by the general
public.
---------------------------------------------------------------------------
\277\ See Circular No. A-25 Revised, available at https://obamawhitehouse.archives.gov/omb/circulars_a025/.
---------------------------------------------------------------------------
a. FFE User Fee Rates for the 2024 Benefit Year
In Sec. 156.50(c)(1), to support the functions of FFEs, an issuer
offering a plan through an FFE must remit a user fee to HHS, in the
timeframe and manner established by HHS, equal to the product of the
monthly user fee rate specified in the annual HHS notice of benefit and
payment parameters for the applicable benefit year and the monthly
premium charged by the issuer for each policy where enrollment is
through an FFE. As we stated in the proposed rule, as in benefit years
2014 through 2023, issuers seeking to participate in an FFE in the 2024
benefit year will receive two special benefits not available to the
general public: (1) the certification of their plans as QHPs; and (2)
the ability to sell health insurance coverage through an FFE to
individuals determined eligible for enrollment in a QHP. For the 2024
benefit year, issuers participating in an FFE will receive special
benefits from the following Federal activities:
Provision of consumer assistance tools;
Consumer outreach and education;
Management of a Navigator program;
Regulation of agents and brokers;
Eligibility determinations;
Enrollment processes; and
Certification processes for QHPs (including ongoing
compliance verification, recertification, and decertification).
As we explained in the proposed rule (87 FR 78273), activities
performed by the Federal Government that do not provide issuers
participating in an FFE with a special benefit are not covered by the
FFE user fee.
We stated in the proposed rule (87 FR 78273) that the proposed user
fee rate for all participating FFE issuers of 2.5 percent of total
monthly premiums was based on estimated costs, enrollment (including
anticipated establishment of SBEs in certain States in which FFEs
currently are operating), and premiums for the 2023 PY. We refer
readers to the proposed rule (87 FR 78273) for a full description of
how the proposed 2024 benefit year FFE user fee rate was developed.
b. SBE-FP User Fee Rates for the 2024 Benefit Year
In Sec. 156.50(c)(2), we specify that an issuer offering a plan
through an SBE-FP must remit a user fee to HHS, in the timeframe and
manner established by HHS, equal to the monthly user fee rate specified
in the annual HHS notice of benefit and payment parameters for the
applicable benefit year and the monthly premium charged by the issuer
for each policy where enrollment is through an SBE-FP, unless the SBE-
FP and HHS agree on an alternative mechanism to collect the funds from
the SBE-FP or State instead of direct collection from SBE-FP issuers.
SBE-FPs enter into a Federal platform agreement with HHS to leverage
the systems established for the FFEs to perform certain Exchange
functions, and to enhance efficiency and coordination between State and
Federal programs. We explained in the proposed rule that the benefits
provided to issuers in SBE-FPs by the Federal Government include use of
the Federal Exchange information technology and call center
infrastructure used in connection with eligibility determinations for
enrollment in QHPs and other applicable State health subsidy programs,
as defined at section 1413(e) of the ACA, and QHP enrollment functions
under 45 CFR part 155, subpart E. We stated that the user fee rate for
SBE-FPs is calculated based on the proportion of user fee eligible FFE
costs that are associated with the FFE information technology
infrastructure, the consumer call center infrastructure, and
eligibility and enrollment services, and allocating a share of those
costs to issuers in the relevant SBE-FPs. We refer readers to the
proposed rule (87 FR 78273 through 78274) for a full description of how
the proposed 2024 benefit year SBE-FP user fee rate of 2.0 percent of
total monthly premiums was developed.
We sought comment on the proposed 2024 user fee rates.
After reviewing the public comments and revising our projections
based on newly available data that impacted our enrollment projections,
we are finalizing for the 2024 benefit year a user fee rate for all
issuers offering QHPs through an FFE of 2.2 percent of the monthly
premium charged by the issuer for each policy under plans where
enrollment is through an FFE, and a user fee rate for all issuers
offering QHPs through an SBE-FP of 1.8 percent of the monthly premium
charged by the issuer for each policy under plans offered through an
SBE-FP. We summarize and respond to public comments received on the
proposed 2024 benefit year FFE and SBE-FP user fee rates below.
Comment: Some commenters supported the proposed 2024 user fee rates
by agreeing that a lower user fee rate would exert downward pressure on
premiums. A few commenters supported user fee rate reduction in future
years too. One commenter stated that lower user fee rates could
incentivize additional issuers to participate in the Exchanges,
providing consumers with additional choice. One supporting commenter
wanted HHS to monitor whether a reduced user fee rate continued to
fully serve consumers' needs moving forward. Many commenters
appreciated the increased funding for consumer outreach.
Response: We proposed lowering the 2024 user fee rates in the
proposed rule to 2.5 percent of monthly premiums charged by issuers for
each policy under plans offered through an FFE and 2.0 percent of
monthly premiums charged by issuers for each policy under plans offered
through an SBE-FP based on our enrollment projections at the time.
After publishing the proposed rule, two major
[[Page 25846]]
events have changed our estimated enrollment for benefit year 2024. The
first event was the record 2023 Exchange Open Enrollment, with the
number of plan selections exceeding our enrollment estimates.\278\ The
second event was the Consolidated Appropriations Act, 2023, signed into
law of December 29, 2022, which included provisions that provided
certainty that Medicaid redeterminations would take place beginning in
2023. These two changes, both of which took place between the
publication of the proposed rule and the final rule, prompted us to
reassess the 2024 projected enrollment estimates used in our user fee
calculations. After additional analysis of increased future expected
enrollment, we have determined that further reduction to the 2024 user
fee rates is warranted.
---------------------------------------------------------------------------
\278\ Biden-Harris Administration Announces Record-Breaking 16.3
Million People Signed Up for Health Care Coverage in ACA
Marketplaces During 2022-2023 Open Enrollment Season, available at
https://www.cms.gov/newsroom/press-releases/biden-harris-administration-announces-record-breaking-163-million-people-signed-health-care-coverage.
---------------------------------------------------------------------------
FFE and SBE-FP user fees are collected from participating issuers
as a percentage of total monthly premiums, which is calculated as the
product of monthly enrollment and premiums. The increased future
expected enrollment resulting from the record 2023 Open Enrollment and
the Consolidated Appropriations Act, 2023, increased overall expected
user fee collections under the proposed user fee rates of 2.5 percent
of monthly premiums for FFE issuers and 2.0 percent of monthly premiums
for SBE-FP issuers above levels determined to be necessary to fully
fund Exchange operation. This increased collection estimate allowed for
additional reductions of the user fee rates to 2.2 percent of monthly
premiums for FFE issuers and 1.8 percent of monthly premiums for SBE-FP
issuers without decreasing total estimated collections below levels
necessary to fully fund Exchange operations.
Accordingly, we are finalizing user fee rates of 2.2 percent of
monthly premiums charged by issuers for each policy under plans offered
through an FFE and 1.8 percent of monthly premiums charged by issuers
for each policy under plans offered through an SBE-FP. As discussed in
the proposed rule (87 FR 78273), we believe that the lower 2024 user
fee rates will exert downward pressure on premiums when compared to the
user fee rates from prior years, and ensure adequate funding for
Federal Exchange operations. We also agree that lower user fee rates
may incentivize additional issuers to participate in the Exchanges,
thereby promoting competition and improving consumer choice. HHS will
continue to calculate the FFE and SBE-FP user fee rate annually in a
manner that ensures sufficient funding for operations, ensuring that
consumers' needs are met and consumer outreach is appropriately funded.
Comment: Many commenters expressed concern about the timing of
decreased user fee rates considering the high anticipated volume of
Medicaid redeterminations. These commenters suggested additional
investment in outreach and enrollment and requested that the user fee
rates be kept at their current levels. Several commenters stated that
lower user fee rates could reduce funding for community health workers
and encourage private navigators that are incentivized to direct
consumers to certain private products. A few commenters supported using
the higher pre-2022 user fee rates to improve HealthCare.gov. One
commenter suggested retaining or increasing user fee rates to devote
additional resources to hard to reach populations. One commenter
suggested that reducing user fee rates may undermine the historic
enrollment gains for 2023. One commenter disagreed that reducing user
fee rates will result in downward pressure on premiums, citing other
factors as more impactful drivers of premium increases.
Response: Although we are reducing the user fee rates, we are not
reducing our user-fee budget and are considering the additional cost
for Medicaid redeterminations, including providing consumer outreach
and education related to unwinding, in our estimated budget. With these
estimated costs, we are still able to reduce the user fees and retain
this budget because we anticipate higher Exchange enrollment levels due
to Medicaid redeterminations, and we expect the projected total
premiums where the user fee applies to increase, thereby increasing the
amount of user fee that will be collected. Thus, we are able to reduce
the user fee rate without reducing the budget. We believe that any
additional costs associated with Medicaid redeterminations will be
offset by the higher expected enrollment and, even after accounting for
the impact of the lower user fee rates, we estimate that we will have
sufficient funding available to fully fund user-fee eligible Exchange
activities in 2024, even with increased budget needs.
To further explain, due to high levels of anticipated enrollment
through the end of 2025, and the increased total amount of user fees
that will be collected as a result, we believe that a reduced user fee
rate will not result in reduced funding to Exchange functions that
address consumers' needs, including improvements to the HealthCare.gov
website, outreach and enrollment campaigns, and the Navigator program.
We understand that this funding is particularly impactful in improving
coverage for hard to reach and underserved populations, which is why
our estimated budget continues to estimate fully covering the costs of
these programs, even with increased budgetary spending on these
essential activities.
We also disagree that reducing user fees may undermine the historic
enrollment gains for 2023, as we do not believe that the user fee rates
have direct impact on major enrollment trends. Instead, we believe that
the historic enrollment gains can be attributed to a number of factors
that are non-user fee rate related, such as the enhanced PTC subsidies
in section 9661 of the ARP being extended through the 2025 benefit year
in section 12001 of the IRA.
Finally, while we acknowledge that there are many factors that
drive premiums increases, we maintain that reduced user fee rates will
tend to exert downward pressure on premiums, with issuers passing the
additional savings from reduced user fees on to Exchange enrollees
through lower premiums.
For these reasons, we are finalizing the reduced user fee rates for
the 2024 benefit year of 2.2 percent of monthly premiums charged by
issuers for each policy under plans offered through an FFE and 1.8
percent of monthly premiums charged by issuers for each policy under
plans offered through an SBE-FP. As always, we will reassess the FFE
and SBE-FP user fee rates for the 2025 benefit year and propose those
rates in the proposed 2025 Payment Notice. We also note that we will
continue to look for opportunities to reduce these user fee rates in
the future, while ensuring that we will be able to fully fund all
Exchange activities.
Comment: A few commenters stated that HHS should adopt a PMPM user
fee structure, stating that administrative costs do not track with
premium changes and a PMPM user fee would avoid higher fee amounts
based solely on premium increases.
Response: We did not propose any changes to the user fee structure,
as such the user fee rates will continue to be set as a percent of the
premium. However, we will continue to engage with interested parties
regarding how the FFE and SBE-FP user fee policies
[[Page 25847]]
can best support consumer access to affordable, quality health
insurance coverage through the Exchanges that use the Federal platform.
We also note that, even if administrative costs do not trend with
premium changes, we propose and finalize user fee rates each benefit
year and would have the opportunity to adjust the user fee rates to
avoid higher fee amounts based solely on premium increases. Therefore,
even if administrative costs do not trend with premium changes, we do
not believe that would necessarily justify a PMPM user fee cost
structure.
Comment: One commenter appreciated the increased transparency
around user fees, and encouraged additional transparency in the
methodology used to set the user fee rates, as well as how user fees
support HHS' policy goals for the Exchanges. A few other commenters
recommended greater transparency in how the user fee rates are
determined and requested enumerated costs of providing Federal
eligibility and enrollment platform service and infrastructure to each
State.
Response: We provided additional information in the proposed rule
(87 FR 78272 through 78274), explaining the impact of stable contract
cost estimates, the enhanced PTC subsidies in section 9661 of the ARP
being extended in section 12001 of the IRA through the 2025 benefit
year, anticipated effects of the IRA on enrollment, and States
transitioning from FFEs or SBE-FPs to SBEs, as well as the enrollment
impacts of section 1332 State innovation waivers. Additionally, we note
that FFE and SBE-FP user fee costs are not allocated to or provided to
each State. User fees cover activities performed by the Federal
government that provide issuers offering a plan in an FFE or SBE-FP
with a special benefit. As stated, these services are generally IT,
eligibility, enrollment, and QHP certification services that are more
efficiently conducted in a consolidated manner across the Federal
platform, rather than by States, so that the services, service
delivery, and infrastructure can be the same for all issuers in the
FFEs and SBE-FPs. For example, all FFE and SBE-FP issuers send their
834 enrollment transactions to the Federal platform database, which are
processed consistently regardless of State. Contracts are acquired to
provide services for the Federal platform. The services do not differ
by State, and therefore, we do not calculate costs on a State-by-State
basis. Additionally, because HHS is not permitted to publicly provide
information that is confidential due to trade secrets associated with
contracting, there are limits in our ability to provide detailed
information about our budget.
2. Publication of the 2024 Premium Adjustment Percentage, Maximum
Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on
Cost Sharing, and Required Contribution Percentage in Guidance (Sec.
156.130)
As established in part 2 of the 2022 Payment Notice, we will
publish the premium adjustment percentage, the required contribution
percentage, maximum annual limitations on cost-sharing, and reduced
maximum annual limitation on cost-sharing, in guidance annually
starting with the 2023 benefit year. We did not propose to change the
methodology for these parameters for the 2024 benefit year, and
therefore, we published these parameters in guidance on December 12,
2022.\279\
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\279\ https://www.cms.gov/files/document/2024-papi-parameters-guidance-2022-12-12.pdf.
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3. Standardized Plan Options (Sec. 156.201)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78274 through 78279), we proposed to
exercise our authority under sections 1311(c)(1) and 1321(a)(1)(B) of
the ACA to make several minor updates to our approach for standardized
plan options for PY 2024 and subsequent PYs. Section 1311(c)(1) of the
ACA directs the Secretary to establish criteria for the certification
of health plans as QHPs. Section 1321(a)(1)(B) of the ACA directs the
Secretary to issue regulations that set standards for meeting the
requirements of title I of the ACA with respect to, among other things,
the offering of QHPs through such Exchanges. We refer readers to the
proposed rule (87 FR 78274 through 78275) for discussion of our prior
and current standardized plan option policies.
First, in contrast to the policy finalized in the 2023 Payment
Notice, we proposed, for PY 2024 and subsequent PYs, to no longer
include a standardized plan option for the non-expanded bronze metal
level. Accordingly, we proposed at new Sec. 156.201(b) that for PY
2024 and subsequent PYs, FFE and SBE-FP issuers offering QHPs through
the Exchanges must offer standardized QHP options designed by HHS at
every product network type (as described in the definition of
``product'' at Sec. 144.103), at every metal level except the non-
expanded bronze level, and throughout every service area that they
offer non-standardized QHP options. We proposed to re-designate the
current regulation text at Sec. 156.201 as paragraph (a) and revise it
to apply only to PY 2023. Thus, for PY 2024 and subsequent PYs, we
proposed standardized plan options for the following metal levels: one
bronze plan that meets the requirement to have an AV up to 5 points
above the 60 percent standard, as specified in Sec. 156.140(c) (known
as an expanded bronze plan), one standard silver plan, one version of
each of the three income-based silver CSR plan variations, one gold
plan, and one platinum plan.
As we explained in the proposed rule (87 FR 78276), we proposed to
discontinue standardized plan options for the non-expanded bronze metal
level mainly due to AV constraints. Specifically, we explained that it
is not feasible to design a non-expanded bronze plan that includes any
pre-deductible coverage while maintaining an AV within the permissible
AV de minimis range for the non-expanded bronze metal level.
Furthermore, we explained that few issuers chose to offer non-expanded
bronze standardized plan options in PY 2023, with the majority of
issuers offering bronze plans instead choosing to offer only expanded
bronze standardized plan options. Thus, we explained that we believe
that discontinuing non-expanded bronze standardized plan options would
minimize burden without causing deleterious consequences. We also
clarified that issuers would still be permitted to offer non-
standardized plan options at the non-expanded bronze metal level,
meaning consumers would still have the ability to choose these plan
options, if they so choose. We further clarified that if an issuer
offers a non-standardized plan option at the bronze metal level,
whether expanded or non-expanded, it would need to also offer an
expanded bronze standardized plan option.
Consistent with our approach in the 2023 Payment Notice, we did not
propose standardized plan options for the Indian CSR plan variations as
provided for at Sec. 156.420(b), given that the cost-sharing
parameters for these plan variations are already largely specified. We
also explained that we would continue to require issuers to offer these
plan variations for all standardized plan options offered, and we
proposed to remove the regulation text language stating that
standardized plan options for these plan variations are not required to
clarify that while issuers must, under Sec. 156.420(b), continue to
offer such plan variations based on standardized plan options,
[[Page 25848]]
those plan variations will themselves not be standardized plan options
based on designs specified in this rulemaking.\280\
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\280\ See QHP Certification Standardized Plan Options FAQs,
https://www.qhpcertification.cms.gov/s/Standardized%20Plan%20Options%20FAQs.
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Similar to the approach taken in the 2023 Payment Notice, we
proposed to create standardized plan options that resemble the most
popular QHP offerings that millions are already enrolled in by
selecting the most popular cost-sharing type for each benefit category;
selecting enrollee-weighted median values for each of these benefit
categories based on refreshed PY 2022 cost-sharing and enrollment data;
modifying these plans to be able to accommodate State cost-sharing
laws; and decreasing the AVs for these plan designs to be at the floor
of each AV de minimis range primarily by increasing deductibles.
Furthermore, consistent with the approach taken in the 2023 Payment
Notice, we proposed to create two sets of standardized plan options at
the aforementioned metal levels, with the same sets of designs applying
to the same sets of States as in the 2023 Payment Notice. Specifically,
we proposed that the first set of standardized plan options would
continue to apply to FFE and SBE-FP issuers in all FFE and SBE-FP
States, excluding those in Delaware, Louisiana, and Oregon, and the
second set of standardized plan options would continue to apply to
Exchange issuers specifically in Delaware and Louisiana. See Table 9
and Table 10 for the two sets of standardized plan options we are
finalizing for PY 2024.
In addition, since SBE-FPs use the same platform as the FFEs, we
explained that we would continue to apply these standardized plan
option requirements equally on FFEs and SBE-FPs. We explained that we
continue to believe that differentiating between FFEs and SBE-FPs for
the purposes of these requirements would create a substantial financial
and operational burden that outweighs the benefit of permitting such a
distinction.
Also, consistent with our policy in PY 2023, we stated that we
would continue to apply these requirements to applicable issuers in the
individual market but not in the small group market. We also explained
that we would continue to exempt issuers offering QHPs through FFEs and
SBE-FPs that are already required to offer standardized plan options
under State action taking place on or before January 1, 2020, such as
issuers in the State of Oregon,\281\ from the requirement to offer the
standardized plan options included in this rule.
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\281\ See Or. Admin. R. 836-053-0009.
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In addition, we stated that we would continue to exempt issuers in
SBEs from these requirements for several reasons. First, we explained
that we did not wish to impose duplicative standardized plan option
requirements on issuers in the eight SBEs that already have
standardized plan option requirements. Additionally, we explained that
we continue to believe that SBEs are best positioned to understand both
the nuances of their respective markets and consumer needs within those
markets. Finally, we explained that we continue to believe that States
that have invested the necessary time and resources to become SBEs have
done so to implement innovative policies that differ from those on the
FFEs, and we do not wish to impede these innovative policies so long as
they comply with existing legal requirements.
Furthermore, consistent with the policy finalized in the 2023
Payment Notice, we explained that we would continue to differentially
display standardized plan options, including those standardized plan
options required under State action taking place on or before January
1, 2020, on HealthCare.gov under the authority at Sec. 155.205(b)(1).
We further explained that we would also continue enforcement of the
standardized plan options display requirements for approved web-brokers
and QHP issuers using a direct enrollment pathway to facilitate
enrollment through an FFE or SBE-FP--including both the Classic DE and
EDE Pathways--at Sec. Sec. 155.220(c)(3)(i)(H) and 156.265(b)(3)(iv),
respectively. This means that these entities would continue to be
required to differentially display the 2024 benefit year standardized
plan options in accordance with the requirements under Sec.
155.205(b)(1) in a manner consistent with how standardized plan options
are displayed on HealthCare.gov, unless HHS approves a deviation.
Consistent with our PY 2023 policy, we stated that any requests from
web-brokers and QHP issuers seeking approval for an alternate
differentiation format would continue to be reviewed based on whether
the same or similar level of differentiation and clarity is being
provided under the requested deviation as is provided on
HealthCare.gov.
Consistent with the approach to plan designs in the 2023 Payment
Notice, we explained that we would continue to use the following four
tiers of prescription drug cost sharing in the proposed standardized
plan options: generic drugs, preferred brand drugs, non-preferred brand
drugs, and specialty drugs. We stated that we believe the use of four
tiers of prescription drug cost-sharing in the standardized plan
options would continue to allow for predictable and understandable drug
coverage. We further explained that we believe the use of four tiers of
prescription drug cost-sharing would play an important role in
facilitating the consumer decision-making process by allowing consumers
to more easily compare formularies between plans, and allow for easier
year-to-year comparisons with their current plan.
We also explained that the continued use of four tiers would
minimize issuer burden since, for PY 2023, issuers have already created
standardized plan options with formularies that include only four tiers
of prescription drug cost-sharing. We noted that we would consider
including additional drug tiers for future years, and invited comment
on the appropriate number of drug tiers to use in standardized plan
options in the future. However, we explained that we would continue to
use four tiers of prescription drug cost-sharing in standardized plan
options for PY 2024 and subsequent PYs to maintain continuity with our
approach to standardized plan options in PY 2023.
In addition, we noted concerns that issuers may not be including
specific drugs at appropriate cost-sharing tiers for the standardized
plan options; for example, that some issuers may be including brand
name drugs in the generic drug cost-sharing tier, while others include
generic drugs in the preferred or non-preferred brand drug cost-sharing
tiers. We explained that we believe that consumers understand the
difference between generic and brand name drugs, and that it is
reasonable to assume that consumers expect that only generic drugs are
covered at the cost-sharing amount in the generic drug cost-sharing
tier, and that only brand name drugs are covered at the cost-sharing
amount in the preferred or non-preferred brand drug cost-sharing tiers.
Accordingly, we proposed to revise Sec. 156.201 to add a new
paragraph (c) specifying that issuers of standardized plan options must
(1) place all covered generic drugs in the standardized plan options'
generic drug cost-sharing tier, or the specialty drug tier if there is
an appropriate and non-discriminatory basis in accordance with Sec.
156.125 for doing so, and (2) place all covered brand name drugs in
either the standardized
[[Page 25849]]
plan options' preferred brand or non-preferred brand drug cost-sharing
tiers, or the specialty drug tier if there is an appropriate and non-
discriminatory basis in accordance with Sec. 156.125 for doing so. For
purposes of this proposal, ``non-discriminatory basis'' means there
must be a clinical basis for placing a particular prescription drug in
the specialty drug tier in accordance with Sec. 156.125.
We also specified that within the Prescription Drug Template, for
standardized plan options, issuers should enter zero cost preventive
drugs for tier one, generic drugs for tier two, preferred brand drugs
for tier three, non-preferred drugs for tier four, specialty drugs for
tier five, and medical services drugs for tier six, if applicable.
We proposed the approach described in this section for PY 2024 and
subsequent PYs for several reasons. To begin, we explained that we were
continuing to require FFE and SBE-FP issuers to offer standardized plan
options in large part due to continued plan proliferation, which has
only increased since the standardized plan option requirements were
finalized in the 2023 Payment Notice. We explained that with this
continued plan proliferation, it is increasingly important to continue
to attempt to streamline and simplify the plan selection process for
consumers on the Exchanges. We stated that we believe these
standardized plan options can continue to play a meaningful role in
that simplification by reducing the number of variables that consumers
have to consider when selecting a plan option, thus allowing consumers
to more easily compare available plan options. More specifically, we
explained that with these standardized plan options, consumers would
continue to be able to take other meaningful factors into account, such
as networks, formularies, and premiums, when selecting a plan option.
We stated that we further believe these standardized plan options
include several distinctive features, such as enhanced pre-deductible
coverage for several benefit categories, that would continue to play an
important role in reducing barriers to access, combatting
discriminatory benefit designs, and advancing health equity. We
explained that including enhanced pre-deductible coverage for these
benefit categories would ensure consumers are more easily able to
access these services without first meeting their deductibles.
Furthermore, we explained that including copayments instead of
coinsurance rates for a greater number of benefit categories would
enhance consumer certainty and reduce the risk of unexpected financial
harm sometimes associated with high coinsurance rates.
Additionally, given that insufficient time has passed to assess all
the impacts of the standardized plan option requirements finalized in
the 2023 Payment Notice, we proposed to maintain a high degree of
continuity for many of the standardized plan option policies previously
finalized to reduce the risk of disruption for all involved interested
parties, including issuers, agents, brokers, States, and enrollees. We
explained that we believe that making major departures from the
methodology used to create the standardized plan options as finalized
in the 2023 Payment Notice could result in drastic changes in these
plan designs that could potentially create undue burden for these
interested parties. Furthermore, we explained that if these
standardized plan options vary significantly from year to year, those
enrolled in these plans could experience unexpected financial harm if
the cost-sharing for services they rely upon differs substantially from
the previous year. We stated that, ultimately, we believe that
consistency in standardized plan options is important to allow both
issuers and enrollees to become accustomed to these plan designs.
We sought comment on our proposed approach to standardized plan
options for PY 2024 and subsequent PYs.
BILLING CODE 4120-01-P
[[Page 25850]]
[GRAPHIC] [TIFF OMITTED] TR27AP23.019
[[Page 25851]]
[GRAPHIC] [TIFF OMITTED] TR27AP23.020
BILLING CODE 4120-01-C
After reviewing public comments, we are finalizing our proposed
policies with respect to standardized plan options for PY 2024 and
subsequent PYs, as proposed, except as follows. First, we are not
finalizing the proposed requirement that issuers of standardized plan
options must (1) place all covered generic drugs in the standardized
plan options' generic drug cost-sharing tier, or the specialty drug
tier if there is an appropriate and non-discriminatory basis in
accordance with Sec. 156.125 for doing so, and (2) place all covered
brand name drugs in either the standardized plan options' preferred
brand or non-preferred brand drug cost-sharing tiers, or the specialty
drug tier if there is an appropriate and non-discriminatory basis in
accordance with Sec. 156.125 for doing so.
Additionally, we note that both of the standard silver plan designs
finalized in this rule, as set forth in Tables 9 and 10 above, differ
slightly from the corresponding plan designs in the proposed rule (87
FR 78278 through 78279). Specifically, in this final rule, for both of
these standard silver plans, we are reducing the deductible by $100
from $6,000 to $5,900, which increases the AV for these plans from
70.00 percent to 70.01 percent. We are making this change to rectify an
error in our use of the proposed AV Calculator and Plans and Benefits
Template. Specifically, the proposed AV Calculator produced an AV
output of 69.998 percent for both of these standard silver plans.
However, the proposed AV Calculator rounds to only two decimal
places, which resulted in the AV output for both of these plans being
rounded up to 70.00 percent. With a permissible AV de minimis range for
the standard silver metal level of 70.00 percent to 72.00 percent,
these standard silver plans (with an unrounded AV of 69.998 percent)
would have failed the AV de minimis range validation within the Plans
and Benefits Template, meaning issuers would not have been able to
successfully submit these plans during QHP certification. We designed
these plans to have AVs near the floor of each de minimis range to
ensure competitive premiums for these plans. Slightly modifying the
deductibles for these plans ensures that they will continue to have
competitive premiums and AVs within the permissible AV de minimis
range. All other aspects of these plan designs remain unchanged from
the corresponding plan designs in the
[[Page 25852]]
proposed rule. Given that the same rounding logic is present in the
final AV Calculator and the final Plans and Benefits Template, we note
that this change must also be made in the final versions of each of
these tools.
We summarize and respond to public comments received on the
proposed policies with respect to standardized plan options below.
Comment: Many commenters expressed support for continuing to
require FFE and SBE-FP issuers to offer standardized plan options.
These commenters explained that standardized plan options serve an
important role in simplifying the plan selection process for consumers
purchasing health insurance through the Exchanges. These commenters
also explained that the plan selection process could be further
simplified if the requirement for issuers to offer standardized plan
options were paired with the proposed requirements in Sec. 156.202 in
the proposed rule to reduce the risk of plan choice overload by either
directly limiting the number of non-standardized plan options that
issuers can offer through the Exchanges or by implementing a meaningful
difference standard.
These commenters explained that the continued emphasis on efforts
to further simplify the plan selection process is especially important
given the continued proliferation of available plan choices offered
through the Exchanges, as was described in greater detail in Sec.
156.202 of the preamble of the proposed rule (87 FR 78279 through
78283). Commenters further explained that having an overwhelming number
of plan choices to consider during the plan selection process
significantly exacerbates the risk of plan choice overload, which also
increases the risk of suboptimal plan selection and unexpected
financial harm. Commenters thus explained that continuing to require
issuers to offer these standardized plan options would act as one prong
in a multi-pronged strategy to meaningfully simplify the plan selection
process, thereby reducing the risk of suboptimal plan selection and
unexpected financial harm to consumers.
Commenters who supported continuing to require issuers to offer
standardized plan options also explained that the standardized plan
options included in the proposed rule also contain several distinctive
features, such as enhanced pre-deductible coverage for a wide range of
benefit categories, including primary care visits, urgent care visits,
specialist visits, mental health and substance use disorder outpatient
office visits, speech therapy, occupational therapy, physical therapy,
and generic drugs. Commenters explained that the enhanced pre-
deductible coverage for these benefit categories would continue to
serve an important role in reducing barriers to access for services
critical to health. Commenters supportive of these standardized plan
options also explained that including copayments instead of coinsurance
rates as the form of cost sharing for as many benefit categories as
possible would continue to enhance the predictability of costs for
consumers enrolled in these plans, thus further reducing the risk of
unexpected financial harm.
Conversely, several commenters opposed continuing to require
issuers to offer these standardized plan options. These commenters
explained that QHPs are sufficiently standardized due to requirements
pertaining to EHB, annual limitations on cost sharing, metal tiers, and
the recently narrowed AV de minimis ranges for each metal tier. These
commenters also explained that continuing to require issuers to offer
these standardized plan options would inhibit issuer innovation in plan
design, reducing the degree of consumer choice. Several commenters also
noted that requiring issuers to offer standardized plan options in PY
2023 contributed to the sharp increase in plans offered during this
past Open Enrollment, which further increased the risk of plan choice
overload.
Response: We agree that continuing to require issuers to offer
these standardized plan options will serve an important role in
simplifying the plan selection process, especially when done in
conjunction with reducing the risk of plan choice overload by directly
limiting the number of non-standardized plan options that issuers can
offer as well as with further enhancing and optimizing choice
architecture and the consumer experience on HealthCare.gov. We agree
with commenters that simplifying the plan selection process will reduce
the risk of suboptimal plan selection and unexpected financial harm to
consumers. We also agree that the enhanced pre-deductible coverage and
the inclusion of copayments instead of coinsurance rates for a broad
range of benefit categories in these standardized plan options will
continue to serve as important forms of consumer protection.
We further believe that this additional degree of standardization--
beyond the existing requirements pertaining to EHB, annual limitations
on cost sharing, metal tiers, and the recently narrowed AV de minimis
ranges for each metal tier--for plans offered through the Exchanges is
warranted given the continued proliferation of available plan choices
offered through the Exchanges, a stable trend that has continued
unabated for several years. We believe the overwhelming number of plan
choices necessitates taking measures to further simplify the consumer
experience in order to reduce the risk of suboptimal plan selection.
We acknowledge that requiring issuers to offer these standardized
plan options contributed to the increase in the total number of plans
offered through the Exchanges. However, we note that in the 2023
Payment Notice (87 FR 27318), we encouraged issuers to modify their
existing non-standardized plan offerings--in accordance with uniform
modification requirements at Sec. 147.106(e)--to conform with the
cost-sharing parameters of the standardized plan options finalized in
the 2023 Payment Notice in order to significantly reduce the number of
total new plan offerings on the Exchanges. We reiterate this
encouragement.
Additionally, since these standardized plan options contain several
distinctive benefits, such as enhanced pre-deductible coverage and a
preference for copayments instead of coinsurance rates, and since we
believe these standardized plan options play an important role in
simplifying the plan selection process, we believe limiting the number
of non-standardized plan options that issuers can offer will offset
this increase in the number of total plan offerings.
Finally, we disagree that continuing to require issuers to offer
these standardized plan options will inhibit issuer innovation in plan
design and reduce consumer choice. First, given that issuers will still
be permitted to offer two non-standardized plan options per product
network type, metal level, inclusion of dental or vision benefit
coverage, and service area, we believe that issuers will continue to
have sufficient flexibility to innovate and that consumers will
continue to retain a satisfactory degree of choice.
Additionally, as is explained in greater detail in the section of
the preamble to this rule addressing Sec. 156.202, a 2016 report by
the RAND Corporation reviewing over 100 studies concluded that having
too many health plan choices can lead to poor enrollment decisions due
to the difficulty consumers face in processing complex health insurance
information.\282\ We also referred to a
[[Page 25853]]
study of consumer behavior in Medicare Part D, Medicare Advantage, and
Medigap that demonstrated that a choice of 15 or fewer plans was
associated with higher enrollment rates, while a choice of 30 or more
plans led to a decline in enrollment rates.\283\ As we note in the
section of the preamble to this rule addressing Sec. 156.202, with the
limit we are finalizing on the number of non-standardized plans that
may be offered, we estimate (based on Plan Year 2023 data) that the
weighted average number of non-standardized plan options (which does
not take into consideration standardized plan options) available to
each consumer will be reduced from approximately 89.5 in PY 2023 to
66.3 in PY 2024, while the weighted average total number of plans
(which includes both standardized and non-standardized plan options)
available to each consumer will be reduced from approximately 113.7 in
PY 2023 to 90.5 in PY 2024, which we believe will still provide
consumers a satisfactory degree of choice and will continue to allow
them to select a plan that meets their unique health needs.
---------------------------------------------------------------------------
\282\ Taylor EA, Carman KG, Lopez A, Muchow AN, Roshan P, and
Eibner C. Consumer Decisionmaking in the Health Care Marketplace.
RAND Corporation. 2016.
\283\ Chao Zhou and Yuting Zhang, ``The Vast Majority of
Medicare Part D Beneficiaries Still Don't Choose the Cheapest Plans
That Meet Their Medication Needs.'' Health Affairs, 31, no.10
(2012): 2259-2265.
---------------------------------------------------------------------------
Altogether, we believe the standardized plan option requirements at
Sec. 156.201 in conjunction with the non-standardized plan option
limits at Sec. 156.202 will meaningfully enhance consumer choice by
allowing consumers to more easily and meaningfully compare available
plan choices by reducing the risk of plan choice overload.
Comment: Many commenters supported maintaining a high degree of
continuity in both the broader policy approach as well as in specific
plan designs from the previous plan year. These commenters explained
that maintaining a consistent approach between plan years would
maintain predictability for consumers currently enrolled in these
plans. These commenters further explained that introducing drastic
changes in the plan designs would unnecessarily risk disruption for
issuers, states, and enrollees.
Response: We agree that maintaining the highest degree of
continuity possible in both the broader approach, as well as in the
specific plan designs from the previous plan year is highly desirable,
mainly in order to maintain predictability, to minimize the risk of
disruption for issuers, States and enrollees, and to minimize issuer
burden.
Comment: Many commenters expressed concerns about several aspects
of these plan designs. Specifically, several commenters expressed
concern about the high deductibles for these plans. These commenters
explained that having high deductibles acts as a significant barrier
that makes it more difficult for consumers to obtain the care they
need. Thus, many commenters recommended lowering the deductibles for
these plans in order to decrease barriers to access. Commenters also
emphasized the need to expand pre-deductible coverage to a broader
range of benefit categories, including laboratory services, x-rays and
diagnostic imaging, outpatient facility fees, outpatient surgery
physician fees, and more tiers of prescription drug coverage.
Response: We agree that high deductibles can act as a barrier to
obtaining health care services, and that expanding pre-deductible
coverage to a broader range of benefit categories would help to expand
access to health care services. However, to ensure these plans have
design attributes that reflect the most popular plan offerings, to
maintain reasonable cost sharing amounts, to continue exempting benefit
categories that contain some of the most frequently utilized health
care services from the deductible, and to ensure these plans have
competitive premiums, all the while maintaining an AV within the
permissible AV de minimis range, we are unable to materially lower the
deductibles or exempt additional benefit categories from the
deductibles in these plan designs. We note that we will consider these
modifications in future PYs.
Comment: Several commenters supported excluding plan designs for
standardized plan options at the non-expanded bronze metal level. These
commenters explained that excluding non-expanded bronze plan designs
would reduce issuer and State burden, as there would be fewer plans for
issuers to offer and for States to certify. These commenters also
explained that the non-expanded bronze plan standardized plan options
finalized in the 2023 Payment Notice did not include pre-deductible
coverage for any services, which places consumers at risk of unexpected
financial harm. Additionally, commenters explained that issuers
generally chose to offer standardized plan options at the expanded
bronze metal level instead of the non-expanded bronze metal level in PY
2023 since these plans included pre-deductible coverage for a range of
benefit categories.
Conversely, several commenters opposed excluding plan designs for
standardized plan options at the non-expanded bronze metal level,
explaining that consumers currently enrolled in these low-cost plans
would lose access to their current plan offerings.
Response: We agree that excluding plan designs for standardized
plan options at the non-expanded bronze metal level will reduce issuer
and State burden with minimal consumer harm since these plan designs
contain no pre-deductible coverage. In addition, as noted in the
proposed rule, few issuers chose to offer non-expanded bronze
standardized plan options in PY 2023. We also note that although
consumers currently enrolled in standardized plan options at the non-
expanded bronze metal level would lose access to their current plan
offering, these consumers could continue to have access to non-
standardized plan options at the non-expanded bronze metal level, if
the issuer continues to offer such a plan. We believe non-standardized
plan options at the non-expanded bronze metal level would be
appropriate replacements for consumers' current standardized plan
offerings at that level since there is little material difference
between a standardized plan option at the non-expanded bronze metal
level and a non-standardized plan option at the non-expanded bronze
metal level--primarily due to severe AV constraints.
Comment: Several commenters supported continuing to include only
four tiers of prescription drug cost sharing in the formularies of the
standardized plan options. These commenters generally explained that
doing so would allow consumers to better understand their drug
coverage, thereby reducing the risk of unexpected financial harm. These
commenters also noted that the continuity in this aspect of the plan
designs is highly desirable for consumers, and that this would further
minimize the risk of disruption for these consumers.
Conversely, several commenters supported including more than four
tiers of prescription drug cost sharing in the formularies of the
standardized plan options. These commenters instead recommended
permitting the inclusion of five or six tiers, explaining that this
formulary structure is common practice in the commercial market. These
commenters explained that including additional tiers of cost sharing in
these formularies would promote competition among manufacturers for
favorable formulary placement, thus reducing costs for consumers.
[[Page 25854]]
Response: While we acknowledge that the inclusion of five or six
tiers in formularies is common practice in the commercial market, we
believe the advantages of maintaining four tiers in these standardized
plan option formularies outweigh the advantages of permitting
additional tiers at this time. Specifically, we agree that continuing
to include only four tiers of prescription drug cost sharing in the
formularies of these standardized plan options will continue to allow
for more predictable and understandable drug coverage, thereby reducing
the risk of unexpected financial harm for consumers enrolled in these
plans.
Additionally, we believe that not finalizing the proposed formulary
tiering placement regulations that would have required issuers to place
all covered generic drugs in the generic cost-sharing tier and all
brand drugs in either the preferred or non-preferred brand cost-sharing
tier (or the specialty cost-sharing tier, with an appropriate and non-
discriminatory basis) (as discussed later in this section) for PY 2024
will continue to facilitate competition among manufacturers for
favorable formulary placement, reducing costs for consumers, which we
believe is especially important given the other significant policies
finalized in this rule.
We also note that the four-tier design feature is consistent with
the plan designs for PY 2023. As noted in the proposed rule (87 FR
78277), we believe that the use of four tiers plays an important role
in facilitating the consumer decision making process by allowing
consumers to more easily compare formularies between plans, and allows
for easier year-to-year comparison with their current plan. Thus, in
order to minimize the degree of disruption for enrollees, we will
continue to include only four tiers of prescription drug cost-sharing
(excluding the zero-cost share preventive drugs and the medical
services drugs cost-sharing tiers) in these standardized plan options
for PY 2024.
Comment: Several commenters supported requiring issuers to place
all covered generic drugs in the generic drug cost sharing tier and all
covered brand drugs in either the preferred brand or non-preferred
brand drug cost sharing tiers--or the specialty tier, with an
appropriate and non-discriminatory basis--in the standardized plan
options. These commenters explained that introducing such a requirement
would enhance predictability for consumers and allow them to anticipate
the expected costs for prescription drugs, which would further decrease
the risk of unexpected financial harm. Commenters further explained
that this requirement would act as an important step in ensuring that
patients are not forced to overpay for low-cost generic prescription
drugs.
Several commenters further explained that generic drugs are a major
source of cost savings for patients and systems. These commenters cited
recent analyses that demonstrated that generics comprise roughly 91
percent of prescriptions yet only account for 18.2 percent of
prescription drug spending. These commenters also cited analyses that
demonstrated that generics save hundreds of billions of dollars in
prescription drug spending overall, with demonstrated patient savings
of $373 billion in 2021. These commenters also explained how the number
of generic drugs covered on generic cost sharing tiers has been
steadily decreasing over the years. These commenters explained that as
recently as 2016, 65 percent of generic drugs were covered on generic
tiers, but in 2022, only 43 percent of generic drugs were covered on
generic tiers--a decrease of 22 percent in just six years.
Conversely, several commenters opposed requiring issuers to place
all covered generic drugs in the generic drug cost sharing tier and all
covered brand drugs in either the preferred brand or non-preferred
brand drug cost sharing tiers--or the specialty tier, with an
appropriate and non-discriminatory basis--in these standardized plan
options.
Specifically, commenters explained that there are numerous examples
of high-cost generic prescription drugs that have lower-cost,
clinically similar brand-name prescription alternatives. Similarly,
commenters explained that there are brand-name prescription drugs that
may offer clinical and financial value that supports tiering lower than
the preferred brand tier. Thus, commenters explained that the
traditional viewpoint that generic drugs are the lowest-cost or highest
value option is not always necessarily the case. Commenters further
stated that it is commonplace in all market segments to shift generics
to lower tiers only at the point where they become the most cost-
effective option. Commenters also explained that the purpose of tiered
formularies is to encourage the use of high value drugs--not to
encourage the use of generic drugs, per se, especially since generic
prescription drugs are no longer consistently inexpensive or high-
value.
In addition, several commenters expressed concern that requiring
brand prescription drugs to be placed on a higher cost sharing tier
could result in decreased medication adherence, which would be
especially detrimental for consumers with chronic conditions that
require treatment with brand-name prescription drugs (such as asthma
medications and insulin). Moreover, several commenters noted that this
policy would force the placement of clinically inappropriate and high-
priced prescription drugs on lower tiers, thus undermining the work of
Pharmacy & Therapeutics Committees that considers multiple factors when
deciding the tier on which to place each prescription drug.
Several commenters also expressed concern that this requirement
would incentivize manufacturers to take advantage of mandatory tier
placement by raising the cost of certain drugs. Similarly, several
commenters expressed concern that this requirement would limit PBM
flexibility to effectively manage formularies and enrollee drug
spending, as well as PBM and issuer position in negotiations with
manufacturers.
Moreover, these commenters were concerned that this policy could
lead to more administrative costs and may require issuers to maintain
two sets of formularies for standardized and non-standardized plan
options, and that this may lead to more confusion for consumers.
Ultimately, several commenters noted that this policy may have the
unintended effect of increasing costs for consumers through the cost of
each tier with higher out-of-pocket costs, cost-sharing, and the price
of premiums.
Response: We agree that requiring generic prescription drugs to be
placed in the generic drug cost sharing tier and brand drugs in the
preferred or non-preferred brand drug cost sharing tiers (or the
specialty tier, with an appropriate and non-discriminatory basis) would
enhance predictability for consumers and could potentially result in
patient cost savings. However, comments regarding the changing nature
of the costs of brand name drugs and generics, flexibility in designing
formularies, and decreased medication adherence have led us to
determine that we should further investigate the potential impact of
this proposed requirement. For example, we believe that there may be
merit in examining drug tiering more broadly, and not just as related
to standardized plan options. Furthermore, as noted earlier in this
section, we value maintaining the highest degree of continuity possible
in both the broader approach, as well as in the specific plan designs
from the
[[Page 25855]]
previous plan year and we intend to minimize disruption while still
improving on our policies. As such, we are not finalizing this
requirement for PY 2024, but we intend to conduct further investigation
for future PYs.
Comment: Several commenters had specific recommendations regarding
the manner in which these standardized plan options are displayed as
well as broader aspects of choice architecture and the user experience
on HealthCare.gov.
Specifically, several commenters recommended including a more
granular level of detail to highlight important differences between
plans, such as by displaying both the product ID and network ID of
plans. Additionally, several commenters underscored the need to
streamline the plan selection process by adding more filters and sort
orders to highlight innovative plan designs and plans with supplemental
benefits, to prioritize lower deductible plans, or to prioritize plans
with particular cost sharing types and amounts. Several commenters
recommended including additional screener questions to assess consumer
preferences for cost, providers, prescription drugs, utilization, and
cost-sharing assistance. Several commenters recommended including
display features that would further facilitate consumer education and
understanding, such as through pop-ups on screen and accompanying
explanatory messages clarifying what distinguishes ``Easy Pricing''
plans from non-standardized plan options.
Finally, several commenters explained that enhancing choice
architecture and the user experience on HealthCare.gov would be a more
effective and less disruptive method to simplify the plan selection
process and facilitate consumer decision-making than limiting the
number of non-standardized plan options that issuers can offer through
the Exchanges.
Response: We appreciate the commenters' recommendations and will
take them into consideration. We agree that enhancing choice
architecture and the user experience on HealthCare.gov can serve an
important role in simplifying the plan selection process, but we also
believe that these enhancements must be made in conjunction with other
steps--such as enhancing comparability by requiring issuers to offer
standardized plan options, and by reducing the risk of plan choice
overload by limiting the number of non-standardized plan options that
issuers can offer. Ultimately, we believe that multifaceted problems
such as plan choice overload, suboptimal plan selection, and unexpected
financial harm are best mitigated through multifaceted approaches.
4. Non-Standardized Plan Option Limits (Sec. 156.202)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78279), we proposed to exercise the
authority under sections 1311(c)(1) and 1321(a)(1)(B) of the ACA to add
Sec. 156.202 to limit the number of non-standardized plan options that
issuers of QHPs can offer through Exchanges on the Federal platform
(including State-based Exchanges on the Federal Platform) to two non-
standardized plan options per product network type (as described in the
definition of ``product'' at Sec. 144.103) and metal level (excluding
catastrophic plans), in any service area, for PY 2024 and beyond, as a
condition of QHP certification. Section 1311(c)(1) of the ACA directs
the Secretary to establish criteria for the certification of health
plans as QHPs. Section 1321(a)(1)(B) of the ACA directs the Secretary
to issue regulations that set standards for meeting the requirements of
title I of the ACA for, among other things, the offering of QHPs
through such Exchanges.
In the proposed rule (87 FR 78279), we explained that under this
proposed limit, an issuer would, for example, be limited to offering
through an Exchange two gold HMO and two gold PPO non-standardized plan
options in any service area in PY 2024 or any subsequent PY. As an
additional clarifying example, we explained that if an issuer wanted to
offer two Statewide bronze HMO non-standardized plan options, as well
as two additional bronze HMO non-standardized plan options in one
particular service area that covers less than the entire State, in the
service areas that all four plans would cover, the issuer could choose
to offer through the Exchange either the two bronze HMO non-
standardized plan options offered Statewide or the two bronze HMO non-
standardized plan options offered in that particular service area (or
any combination thereof, so long as the total number of non-
standardized plan options does not exceed the limit of two per issuer,
product network type, and metal level in the service area).
Similar to the approach taken with respect to standardized plan
options in the 2023 Payment Notice and in this final rule, we proposed
to not apply this requirement to issuers in SBEs for several reasons.
First, we explained that we did not wish to impose duplicative
requirements on issuers in the SBEs that already limit the number of
non-standardized plan options. Additionally, we stated that we believe
that SBEs are best positioned to understand both the nuances of their
respective markets and consumer needs within those markets. Finally, we
explained that we believe that States that have invested the necessary
time and resources to become SBEs have done so to implement innovative
policies that differ from those on the FFEs, and that we did not wish
to impede these innovative policies, so long as they comply with
existing legal requirements.
Also, consistent with the approach taken for standardized plan
options in the 2023 Payment Notice and in this this final rule, since
SBE-FPs use the same platform as the FFEs, we proposed to apply this
requirement equally on FFEs and SBE-FPs. We explained that we believe
that proposing a distinction between FFEs and SBE-FPs for purposes of
this requirement would create a substantial financial and operational
burden that we believe outweighs the benefit of permitting such a
distinction.
Finally, also in alignment with the approach taken with respect to
standardized plan options in the 2023 Payment Notice and this final
rule, we proposed that this requirement would not apply to plans
offered through the SHOPs or to SADPs, given that the nature of these
markets differ substantially from the individual medical QHP market, in
terms of issuer participation, plan offerings, plan enrollment, and
services covered. For example, we explained that the degree of plan
proliferation observed in individual market medical QHPs over the last
several plan years is not evident to the same degree for QHPs offered
through the SHOPs or for SADPs offered in the individual market. For
these reasons, we stated that we do not believe the same requirements
should be applied to these other markets.
We also explained that we believe that given the large number of
plan offerings that would continue to exist on the Exchanges, a
sufficiently diverse range of plan offerings would still exist for
consumers to continue to select innovative plans that meet their unique
health needs, even if we did ultimately choose to limit the number of
non-standardized plan options that issuers can offer. Thus, we stated
that even if consumers believe that their health needs may not be best
met with the standardized plan options included in this current
rulemaking, they would still have the option to select from a
sufficient number of other non-standardized plan options.
[[Page 25856]]
We stated in the proposed rule (87 FR 78280) that, under this
proposed limit, we estimated that the weighted average number of non-
standardized plan options (which does not take into consideration
standardized plan options) available to each consumer would be reduced
from approximately 107.8 in PY 2022 to 37.2 in PY 2024, which we stated
we believe would still provide consumers with a sufficient number of
plan offerings.\284\ Furthermore, we estimated that approximately
60,949 of a total 106,037 non-standardized plan option plan-county
combinations offered in PY 2022 (amounting to 57.5 percent of non-
standardized plan option plan-county combinations) would be
discontinued as a result of this limit, a number we stated would still
provide consumers with a sufficient degree of choice during the plan
selection process.\285\
---------------------------------------------------------------------------
\284\ Utilizing weighted as opposed to unweighted averages takes
into consideration the number of enrollees in a particular service
area when calculating the average number of plans available to
enrollees. As a result of weighting by enrollment, service areas
with a higher number of enrollees have a greater impact on the
overall average than service areas with a lower number of enrollees.
Weighting averages allows a more representative metric to be
calculated that more closely resembles the actual experience of
enrollees.
\285\ Plan-county combinations are the count of unique plan ID
and Federal Information Processing Series (FIPS) code combinations.
This measure is used because a single plan may be available in
multiple counties, and specific limits on non-standardized plan
options may have different impacts on one county where there are
four plans of the same product network type and metal level versus
another county where there are only two plans of the same product
network type and service area, for example.
---------------------------------------------------------------------------
Finally, we stated that if this limit were adopted, we estimated
that of the approximately 10.21 million enrollees in the FFEs and SBE-
FPs in PY 2022, approximately 2.72 million (26.6 percent) of these
enrollees would have their current plan offerings affected, and issuers
would therefore be required to select another QHP to crosswalk these
enrollees into for PY 2024.\286\ We also explained that we would
utilize the existing discontinuation notices and process as well as the
current re-enrollment hierarchy at Sec. 155.335(j) to ensure a
seamless transition and continuity of coverage for affected enrollees.
In addition, we explained that we would ensure that the necessary
consumer assistance would be made available to affected enrollees as
part of the expanded funding for Navigator programs.
---------------------------------------------------------------------------
\286\ These calculations assumed that the non-standardized plan
options removed due to the proposed limit would be those with the
fewest enrollees based on PY 2022 data, which includes individual
market medical QHPs for Exchanges using the HealthCare.gov
eligibility and enrollment platform, including SBE-FPs.
---------------------------------------------------------------------------
In the 2023 Payment Notice, we also solicited comment on enhancing
choice architecture and on preventing plan choice overload for
consumers on HealthCare.gov (87 FR 689 through 691 and 87 FR 27345
through 27347). In this comment solicitation, we noted that although we
continue to prioritize competition and choice on the Exchanges, we were
concerned about plan choice overload, which can result when consumers
have too many choices in plan options on an Exchange. We referred to a
2016 report by the RAND Corporation reviewing over 100 studies which
concluded that having too many health plan choices can lead to poor
enrollment decisions due to the difficulty consumers face in processing
complex health insurance information.\287\ We also referred to a study
of consumer behavior in Medicare Part D, Medicare Advantage, and
Medigap that demonstrated that a choice of 15 or fewer plans was
associated with higher enrollment rates, while a choice of 30 or more
plans led to a decline in enrollment rates.\288\
---------------------------------------------------------------------------
\287\ Taylor EA, Carman KG, Lopez A, Muchow AN, Roshan P, and
Eibner C. Consumer Decisionmaking in the Health Care Marketplace.
RAND Corporation. 2016.
\288\ Chao Zhou and Yuting Zhang, ``The Vast Majority of
Medicare Part D Beneficiaries Still Don't Choose the Cheapest Plans
That Meet Their Medication Needs.'' Health Affairs, 31, no.10
(2012): 2259-2265.
---------------------------------------------------------------------------
With this concern in mind, we explained in the 2023 Payment Notice
that we were interested in exploring possible methods of improving
choice architecture and preventing plan choice overload. We expressed
interest in exploring the feasibility and utility of limiting the
number of non-standardized plan options that FFE and SBE-FP issuers can
offer through the Exchanges in future plan years as one option to
reduce the risk of plan choice overload and to further streamline and
optimize the plan selection process for consumers on the Exchanges.
Accordingly, we sought comment on the impact of limiting the number of
non-standardized plan options that issuers can offer through the
Exchanges, on effective methods to achieve this goal, the advantages
and disadvantages of these methods, and if there were alternative
methods not considered.
In response to this comment solicitation, many commenters agreed
that the number of plan options that consumers can choose from on the
Exchanges has increased beyond a point that is productive for
consumers. Many of these commenters further explained that consumers do
not have the time, resources, or health literacy to be able to
meaningfully compare all available plan options. These commenters also
agreed that when consumers are faced with an overwhelming number of
plan options, many of which are similar with only minor differences
between them, the risk of plan choice overload is significantly
exacerbated.
Similarly, in the proposed rule (87 FR 78280 through 78281), we
noted that during the standardized plan option interested party
engagement sessions we conducted after publishing the 2023 Payment
Notice, many participants agreed that the number of plan options was
far too high and supported taking additional action to prevent plan
choice overload. In short, many 2023 Payment Notice commenters and
interested party engagement participants supported limiting the number
of non-standardized plan options that issuers can offer to streamline
the plan selection process for consumers on the Exchanges.
In addition, we explained in the proposed rule (87 FR 78281) that
QHP submission data supports the argument that enacting such a limit
would be beneficial for consumers, noting that there has been a
sizeable increase in the weighted average number of plans available per
enrollee and plans offered per issuer in recent years. We refer readers
to the proposed rule further discussion. With this continued plan
proliferation for both enrollees and issuers, we explained that we
believe that limiting the number of non-standardized plan options that
FFE and SBE-FP issuers of QHPs can offer through the Exchanges
beginning in PY 2024 could greatly enhance the consumer experience on
HealthCare.gov.
We also stated in the proposed rule (87 FR 78281) that to reduce
the risk of plan choice overload, we also considered solely focusing on
enhancing choice architecture on HealthCare.gov, instead of enhancing
choice architecture in conjunction with limiting the number of non-
standardized plan options that issuers can offer, an approach
recommended by several commenters in the 2023 Payment Notice. We
explained that we agree that enhancements to the consumer experience on
HealthCare.gov are critical in ensuring that consumers are able to more
meaningfully compare plan choices and more easily select a health plan
that meets their unique health needs. As such, we stated that we made
several enhancements to HealthCare.gov for the open enrollment period
for PY 2023. We also explained
[[Page 25857]]
that we intend to continue conducting research to inform further
enhancements to the consumer experience on HealthCare.gov for PY 2024
and subsequent PYs.
That said, we explained that we believe that enhancing choice
architecture on HealthCare.gov is necessary but, alone, insufficient to
reduce the risk of plan choice overload for several reasons. First, we
stated that HealthCare.gov is not the only pathway for consumers to
search for, compare, select, and enroll in a QHP, and it is not the
only information resource consumers seek when considering Exchange
coverage. Instead, we noted that consumers shop through a multitude of
channels, sometimes utilizing a mix of customer service channels
including the Marketplace Call Center; online on HealthCare.gov;
through assisters, agents, and brokers; and through certified
enrollment partners (such as Classic DE and EDE web brokers and
issuers). Thus, we explained that we believe consumers enrolling in
QHPs through these alternative pathways would not benefit to the same
degree as those enrolling through HealthCare.gov if we focused on
reducing plan choice overload solely by making enhancements to
HealthCare.gov. Moreover, considering that an increasingly greater
portion of QHP enrollment is occurring through these alternative
enrollment pathways, we explained that we believe a more comprehensive
approach to reducing plan choice overload that would also benefit those
utilizing these alternative enrollment pathways was required.
Furthermore, we explained that while making enhancements to choice
architecture and the plan comparison experience can play a critical
role in streamlining the plan selection process and reducing the risk
of plan choice overload, the number of plans available per enrollee has
increased beyond a number that is beneficial for consumers, and this
high number of plan choices makes it increasingly difficult to
meaningfully manage choice architecture on HealthCare.gov and through
other Exchange customer service channels.
Relatedly, we explained that we believe low-income consumers would
particularly benefit from a policy that limits the number of plans.
This is because silver plans deliver the most value to low-income
consumers, but it is exactly these consumers--who often have the lowest
health insurance literacy--who now face choosing among the highest
number of near-duplicate silver plans, which would continue unless
limits on the number of these plans are set. We also explained that
near-duplicate plans are the most difficult to filter and sort out by
interface improvements, and would therefore be most effectively
addressed by limiting the number of non-standardized plan options.
As such, we explained that we believe having an excessive number of
plans (particularly those at the silver metal level) places an
inequitable burden on those who need insurance the most, those who face
the greatest challenges in selecting the most suitable health plan, and
those who can least withstand the consequences of choosing a plan that
costs too much and delivers too little. For this reason, we explained
that we believe reducing the number of available plans (particularly
silver plans) by limiting the number of non-standardized plan options
that issuers can offer, can play an important role in advancing the
agency's commitments to health equity.
In short, we explained that we believe limiting the number of non-
standardized plan options that issuers can offer in conjunction with
enhancing the plan comparison experience on HealthCare.gov would be the
most effective method to streamline the plan selection process and to
reduce the risk of plan choice overload for consumers on the
HealthCare.gov Exchanges.
In addition, we proposed, as an alternative to the proposal to
limit the number of non-standardized plan options that an FFE or SBE-FP
issuer may offer on the Exchange, to impose a new meaningful difference
standard for PY 2024 and subsequent PYs, which would be more stringent
than the previous standard finalized in the 2015 and 2017 Payment
Notices. Specifically, instead of including all of the criteria from
the original standard from the 2015 Payment Notice (that is, cost
sharing, provider networks, covered benefits, plan type, Health Savings
Account eligibility, or self-only, non-self-only, or child only plan
offerings), we proposed grouping plans by issuer ID, county, metal
level, product network type, and deductible integration type, and then
evaluating whether plans within each group are ``meaningfully
different'' based on differences in deductible amounts.
We explained that with this proposed approach, two plans would need
to have deductibles that differ by more than $1,000 to satisfy the new
proposed meaningful difference standard. We further explained that we
believe adopting this approach for a new meaningful difference standard
would more effectively reduce the risk of plan choice overload and
streamline the plan selection process for consumers on the Exchanges.
With a dollar deductible difference threshold of $1,000, we
estimated that the weighted average number of non-standardized plan
options (which does not take into consideration standardized plan
options) available to each consumer would be reduced from approximately
107.8 in PY 2022 to 53.2 in PY 2024, which we explained we believe
would still provide consumers with a sufficient number of plan
offerings. In addition, we estimated that of a total of 106,037 non-
standardized plan option plan-county combinations offered in PY 2022,
approximately 49,629 (46.8 percent) of these plan-county combinations
would no longer be permitted to be offered, which we stated we believe
would still provide consumers with a sufficient degree of choice during
the plan selection process.\289\ We estimated that if this dollar
deductible difference threshold were adopted, of the approximately
10.21 million enrollees in the FFEs and SBE-FPs in PY 2022,
approximately 2.64 million (25.9 percent) of these enrollees would have
their current plan offerings affected.\290\
---------------------------------------------------------------------------
\289\ Plan-county combinations are the count of unique plan ID
and FIPS code combinations. This measure was used because a single
plan may be available in multiple counties, and specific limits on
non-standardized plan options or specific dollar deductible
difference thresholds may have different impacts on one county where
there are four plans of the same product network type and metal
level versus another county where there are only two plans of the
same product network type and metal level, for example.
\290\ These calculations assumed that the non-standardized plan
options removed due to the proposed limit would be those with the
fewest enrollees based on PY 2022 data, which includes individual
market medical QHPs for Exchanges using the HealthCare.gov
eligibility and enrollment platform, including SBE-FPs.
---------------------------------------------------------------------------
We sought comment on the feasibility and utility of limiting the
number of non-standardized plan options that FFE and SBE-FP issuers can
offer through the Exchanges beginning in PY 2024. We also sought
comment on whether the limit of two non-standardized plan options per
issuer, product network type, and metal level in any service area is
the most appropriate approach, or if a stricter or more relaxed limit
should be adopted instead. In addition, we sought comment on the
advantages and disadvantages of utilizing a phased approach of limiting
the number of non-standardized plan options (for example, if there were
a limit of three non-standardized plan options per issuer, product
network type, metal level, and service area for PY 2024, two for PY
2025, and one for PY 2026). We also sought comment on the effect that
[[Page 25858]]
adopting such a limit would have on particular product network types,
and whether this limit would cause a proliferation of product network
types that are not actually differentiated for consumers.
Furthermore, we sought comment on whether we should consider
additional factors, such as variations of products or networks, when
limiting the number of non-standardized plan options--which would mean
that issuers would be limited to offering two non-standardized plan
options per product network type, metal level, product, and network
variation (for example, by network ID) in any service area (or some
combination thereof). We also sought comment on whether permitting
additional variation only for specific benefits, such as adult dental
and adult vision benefits, instead of permitting any variation in a
product (for example, by product ID) would be more appropriate.
In addition, we sought comment on imposing a new meaningful
difference standard in place of limiting the number of non-standardized
plan options that issuers can offer. We also sought comment on
additional or alternative specific criteria that would be appropriate
to include in the meaningful difference standard to determine whether
plans are ``meaningfully different'' from one another, including
whether the same criteria and difference thresholds from the original
standard from the 2015 Payment Notice or the updated difference
thresholds from the 2017 Payment Notice should be instituted, or some
combination thereof. Finally, we sought comment on the specific
deductible dollar difference thresholds that would be appropriate to
determine whether plans are considered to be ``meaningfully different''
from other plans in the same grouping, and whether a deductible
threshold of $1,000 would be most appropriate and effective, or if a
stricter or more relaxed threshold should be adopted instead.
After reviewing the public comments, we are finalizing Sec.
156.202 with modification. Specifically, for PY 2024, we are limiting
the number of non-standardized plan options that issuers of QHPs can
offer through Exchanges on the Federal platform (including the SBE-FPs)
to four non-standardized plan options per product network type, metal
level (excluding catastrophic plans), and inclusion of dental and/or
vision benefit coverage, in any service area. For PY 2025 and
subsequent plan years, we are limiting the number of non-standardized
plan options that issuers of QHPs can offer through Exchanges on the
Federal platform (including the SBE-FPs) to two non-standardized plan
options per product network type, metal level (excluding catastrophic
plans), and inclusion of dental and/or vision benefit coverage, in any
service area.
We note that for PY 2024 and subsequent PYs, we are permitting
additional flexibility specifically for plans with additional dental
and/or vision benefit coverage. Under this modified requirement for PY
2024, For example, an issuer will be permitted to offer four non-
standardized gold HMOs with no additional dental or vision benefit
coverage, four non-standardized gold HMOs with additional dental
benefit coverage, four non-standardized gold HMOs with additional
vision benefit coverage, and four non-standardized gold HMOs with
additional dental and vision benefit coverage, as well as four non-
standardized gold PPOs with no additional dental or vision benefit
coverage, four non-standardized gold PPOs with additional dental
benefit coverage, four non-standardized gold PPOs with additional
vision benefit coverage, and four non-standardized gold PPOs with
additional dental and vision benefit coverage, in the same service
area.
Under this modified requirement, for PY 2025, for example, an
issuer will be permitted to offer two non-standardized gold HMOs with
no additional dental or vision benefit coverage, two non-standardized
gold HMOs with additional dental benefit coverage, two non-standardized
gold HMOs with additional vision benefit coverage, and two non-
standardized gold HMOs with additional dental and vision benefit
coverage, as well as two non-standardized gold PPOs with no additional
dental or vision benefit coverage, two non-standardized gold PPOs with
additional dental benefit coverage, two non-standardized gold PPOs with
additional vision benefit coverage, and two non-standardized gold PPOs
with additional dental and vision benefit coverage, in the same service
area.
By finalizing the proposed policy with modifications to increase
the limit on the number of non-standardized plan options that issuers
can offer to four instead of two for PY 2024, and to factor the
inclusion of dental and/or vision benefit coverage into this limit, we
estimate (based on PY 2023 enrollment and plan offering data) that the
weighted average number of non-standardized plan options available to
each consumer will be reduced from approximately 89.5 in PY 2023 to
66.3 in PY 2024, while the weighted average total number of plans
(which includes both standardized and non-standardized plan options)
available to each consumer will be reduced from approximately 113.7 in
PY 2023 to 90.5 in PY 2024.
Furthermore, we estimate that approximately 17,532 of the total
101,453 non-standardized plan option plan-county combinations (17.3
percent) will be discontinued as a result of this limit in PY 2024.
Relatedly, we estimate that approximately 0.81 million of the 12.2
million enrollees on the FFEs and SBE-FPs (6.6 percent) will be
affected by these discontinuations in PY 2024. Finally, in terms of the
impact on network availability, for PY 2024, we estimate an average
reduction of only 0.03 network IDs per issuer, product network type,
metal level, and service area, meaning we anticipate network IDs to
remain largely unaffected by this limit for PY 2024.
We note that, for PY 2025, we are unable to provide meaningful
estimates at this time for the weighted average number of non-
standardized plan options available to each consumer; the weighted
average number of total plans available to each consumer; the number of
plan-county discontinuations; the number of affected enrollees; and the
average reduction of network IDs per issuer, product network type,
metal level, and service area under the limit of two non-standardized
plan options per issuer, product network type, metal level, inclusion
of dental and/or vision benefit, and service area.
For these estimates to be meaningful, they will need to be based on
plan offering and enrollment data for PY 2024, which will not be
available until the end of the current QHP certification cycle for PY
2024 and the end of the 2024 OEP, respectively. We anticipate that the
broader landscape of plan offerings as well as the composition of
individual issuers' portfolios of plan offerings will undergo
significant changes as a result of the limit of four non-standardized
plan options in PY 2024, and that any estimates based on data sourced
from a plan year before this limit is enacted would not be meaningfully
predictive of the landscape of plan offerings or individual issuers'
portfolios of plan offerings for a plan year after this limit is
enacted.
Furthermore, these estimates would not be able to take into account
the exceptions process we intend to propose that would allow issuers to
offer non-standardized plan options in excess of the limit of two for
PY 2025 and subsequent plan years, because we intend to propose the
exceptions
[[Page 25859]]
process, as well as the specific criteria and thresholds to be included
in this exceptions process, in the 2025 Payment Notice proposed rule,
and we do not yet know whether or how such a proposal would be
finalized.
We also offer further clarification regarding the specific dental
and/or vision benefit coverage a non-standardized plan option would
need to include in order to qualify for this additional flexibility,
which is also reflected in the finalized regulation text at Sec.
156.202(c). Specifically, we clarify that a non-standardized plan
option must include any or all of the following adult dental benefit
coverage in the ``Benefits'' column in the Plans and Benefits Template:
(1) Routine Dental Services (Adult), (2) Basic Dental Care--Adult, or
(3) Major Dental Care--Adult. We also clarify that a non-standardized
plan option must include any or all of the following pediatric dental
benefit coverage in the ``Benefits'' column in the Plans and Benefits
Template: (1) Dental Check-Up for Children, (2) Basic Dental Care--
Child, or (3) Major Dental Care--Child. Finally, we clarify that a non-
standardized plan option must include the following adult vision
benefit coverage in the ``Benefits'' column in the Plans and Benefits
Template: Routine Eye Exam (Adult).
We are making these modifications primarily to decrease the risk of
disruption for both issuers and enrollees, and to provide increased
flexibility to issuers. Specifically, many commenters supported
adopting a more gradual approach in which the number of non-
standardized plan options that issuers can offer is gradually decreased
over a span of several plan years, instead of directly adopting a limit
of two for PY 2024. Additionally, regarding the modification to factor
the inclusion of dental and/or vision benefits into this limit, Issuers
have frequently offered these specific benefit categories as additional
benefits in otherwise identical plan options, accounting for the vast
majority of product ID-based variation (approximately 84 percent of
such variation) offered by issuers within a given metal level, network
type, and service area in PY 2022.
We are not finalizing a new meaningful difference standard. We
summarize and respond to public comments received on the proposed non-
standardized plan option limits and the alternative meaningful
difference standard below.
Comment: Many commenters agreed that the number of plan choices
available through the Exchanges has increased to a point that is beyond
productive for consumers, and many commenters agreed that additional
action should be taken to reduce the risk of plan choice overload. As
such, many of these commenters supported directly limiting the number
of non-standardized plan options that issuers can offer. These
commenters explained that adopting this specific approach to reduce the
risk of plan choice overload would be most effective in further
simplifying and streamlining the Exchange experience, aligning with
some of the primary goals of the Exchanges--fostering competition among
issuers and facilitating a consumer-friendly experience for individuals
looking to purchase health insurance.
As commenters further explained, limiting the number of non-
standardized plan options is especially important at this time because
many consumers currently face an overwhelming number of health plans to
choose from on the Exchanges, and these consumers must navigate the
complexity of each of these options to be able to select a health plan
that meets their unique health care needs and budgetary realities.
Commenters explained that having an overwhelming number of options
makes it difficult to easily and meaningfully compare all available
options, which increases the risk of plan choice overload and
suboptimal plan selection as well as the risk of unexpected financial
harm, especially for consumers with a lower degree of health care
literacy. Commenters thus explained that limiting the number of non-
standardized plan options would allow consumers to more easily and
meaningfully compare available plan options and select a plan that best
meets their unique health care needs, which would particularly benefit
those with lower degrees of health care literacy and those most at risk
of unexpected financial harm.
Several commenters also pointed to the fact that several SBEs have
successfully limited the number of non-standardized plan options that
issuers can offer as evidence that adopting such a policy would benefit
consumers in States with an FFE or SBE-FP. Several commenters also
explained that codifying this requirement would serve as a helpful
template for consideration by SBEs that do not currently limit the
number of non-standardized plan options but may be interested in doing
so in the future.
Response: We agree that the risk of plan choice overload has
continued to increase over the last several years and that additional
action should be taken to reduce this risk. We also agree that limiting
the number of non-standardized plan options that issuers can offer is
the most effective strategy to mitigate this risk, especially when done
in conjunction with requiring issuers to offer standardized plan
options and enhancing choice architecture on HealthCare.gov.
Specifically, we agree that these limits will allow consumers to
more meaningfully compare available plan options and select a health
plan that best meets their unique health needs. These limits will also
allow consumers to take more factors into consideration when comparing
and selecting a health plan--such as providers, networks, formularies,
and quality ratings. We also agree that these changes would reduce the
risk of suboptimal plan selection, which would greatly benefit
disadvantaged populations who can least afford experiencing unexpected
financial harm.
Comment: Several commenters opposed limiting the number of non-
standardized plan options that issuers can offer. Several of these
commenters explained that limiting the number of these plans would
impose a significant burden on issuers as they develop product
portfolios for PY 2024. These commenters explained that issuers have
already made strategic decisions about plan offerings and
participation, and that finalizing these changes for PY 2024 would
result in significant operational challenges. These commenters also
expressed concern that we are proposing the concurrent implementation
of multiple substantive provisions--such as changes to the re-
enrollment hierarchy and changes to standardized plan option formulary
tiering--that would be extremely disruptive if finalized
simultaneously.
Many commenters also explained that a significant number of
Exchange enrollees would lose access to the plans they are currently
enrolled in and would consequently be relegated to enrollment in plans
they did not choose. Many of these commenters pointed to the estimate
that this provision would force 2.72 million enrollees on the FFE and
SBE-FPs (26.6 percent of total enrollees) to change plans due to plan
discontinuations in PY 2024. Many of these commenters explained that
these plan discontinuations would put consumers at risk of unexpected
financial harm, such as from changing the cost-sharing structure,
formularies, or networks from the plans they are currently enrolled in.
Many commenters also explained that these plan discontinuations
would come at a time when issuers will be preparing
[[Page 25860]]
for and processing a deluge of Medicaid redeterminations with the
unwinding of the Public Health Emergency. Commenters explained that
approximately 10 million current Medicaid enrollees will be eligible
for other forms of coverage, including approximately one million of
these enrollees who are expected to be eligible for Exchange coverage.
Commenters explained that for this reason, the Exchanges need to be
prepared for a massive influx of enrollees over the coming months, and
that major policy changes could cause severe disruption for both
consumers and issuers at a critical time.
Commenters also explained that limiting the number of non-
standardized plan options that issuers can offer would inhibit issuer
innovation and force issuers to drastically reduce the unique plan
designs they have thoughtfully developed to best serve their members'
health care needs, which would in turn force consumers into a ``one-
size fits all'' benefit offering.
Many commenters also explained how limiting the number of non-
standardized plan options that issuers can offer would have unintended
impacts on provider networks. These commenters explained that many
issuers would likely drop plans with broader networks to maintain
competitive plan premiums, which would ultimately move the market in
the direction of plans with restricted provider networks. Commenters
further explained that this change could result in further disruption
and the loss of providers consumers are accustomed to. Commenters also
explained that there are consumers who are well-served by smaller, less
expensive networks, and there are consumers who are willing to pay more
for a larger of pool of providers and facilities--and that both groups
deserve the same access to plan choice.
Several commenters also explained that the proposed limit would
negatively impact HSA-eligible high-deductible health plan (HDHP)
offerings since issuers would likely discontinue these plan offerings
due to low enrollment if non-standardized plan options were limited.
Thus, several commenters recommended that HSA-eligible HDHPs be exempt
from these limits.
Several commenters pointed to other health coverage options, such
as Medicare Advantage, which do not limit the number of plans an issuer
can offer. These commenters explained that, in 2022, Medicare
beneficiaries had a choice of 23 stand-alone Medicare Part D plans and
31 Medicare Advantage plans offering Part D, on average. Similarly,
these commenters explained that in 2023, Medicare beneficiaries had a
choice of 43 Medicare Advantage plans, on average.
Several commenters also explained that although the proposed limits
may be appropriate for geographic areas with high rates of both issuer
participation and plan choice proliferation, these limits would not be
appropriate for geographic areas with lower rates of issuers
participation and a more restricted range of plan offerings. These
commenters explained that several States have service areas with only
one issuer and a limited number of plan offerings, and that these
limits would severely restrict consumer choice in these counties.
Several commenters also explained that limiting the number of non-
standardized plan options that issuers can offer could discourage new
market entrants and disadvantage smaller issuers since larger holding
companies operating multiple issuers would still be able to have each
issuer offer its own non-standardized plan options.
Response: We disagree that issuers will have insufficient time to
operationalize these changes, as we have regularly issued new
requirements for the following plan year in that plan year's Payment
Notice, as we are doing here. Additionally, although we acknowledge
that the termination of numerous non-standardized plan options would
entail burden for issuers (such as by affecting issuers' balance of
enrollment across plans, by affecting the premium rating for each of
those plans, and by requiring issuers to send discontinuation notices
for enrollees whose plans are being discontinued), we believe that the
advantages of enacting these changes outweigh the disadvantages of
doing so.
Specifically, with plan proliferation continuing unabated for
several years, consumers have had to select from among record numbers
of available plan options. Having such high numbers of plan choices to
select from makes it increasingly difficult for consumers, especially
those with lower rates of health care literacy, to easily and
meaningfully compare all available plan options. This subsequently
increases the risk of suboptimal plan selection and unexpected
financial harm for those who can least afford it. Thus, although we
acknowledge the burden imposed on issuers subsequent to the imposition
of these limits in PY 2024, we believe these changes align with the
original intent of the Exchanges--to facilitate a consumer-friendly
experience for individuals looking to purchase health insurance. We
believe this change will continue to benefit consumers on the Exchanges
over numerous years. We further note that we intend to offer the
necessary guidance and technical assistance to facilitate this
transition, such as through the 2024 Letter to Issuers and QHP
certification webinars.
Furthermore, based on PY 2022 QHP submission and enrollment data,
we have determined that each issuer's enrollment is predominately
concentrated among its top several plan offerings per product network
type and metal level, with the smaller remaining portion of enrollment
distributed more evenly among several plans. Specifically, we
determined that, on average, 71 percent of each issuer's enrollment is
concentrated among its top two plan offerings per product network type
and metal level, and 83 percent of each issuer's enrollment is
concentrated among its top three plan offerings per product network
type and metal level--meaning that the remaining portion of each
issuer's enrollment is more evenly distributed among issuer's less
popular offerings. As such, we believe making these changes will simply
concentrate enrollment among each issuer's top current plan offerings.
We also acknowledge that, as a result of limiting the number of
non-standardized plan options, a significant number of consumers will
have the plans they are currently enrolled in discontinued and will as
a result be auto-reenrolled into another non-standardized plan option
or standardized plan option offered by the issuer--similar to how this
scenario would be handled prior to the imposition of these new
requirements under the existing reenrollment hierarchy. We believe
affected enrollees auto-reenrolled into standardized plan options would
benefit from the several important distinctive features, such as
enhanced pre-deductible coverage and copayments instead of coinsurance
rates for a broad range of benefit categories, that serve as important
forms of consumer protection. Furthermore, these standardized plan
options were designed to incorporate design features that reflect the
most popular current QHP offerings that millions of enrollees are
already accustomed to. As such, we believe affected enrollees auto-
reenrolled into standardized plan options will not experience
disruption since these standardized plan options will not differ
substantially from the discontinued plans that the majority of
consumers are currently enrolled in.
[[Page 25861]]
Additionally, many commenters explained that a large number of
current non-standardized plan option offerings differ in only minor
ways from one another, and that consumers are often unaware of these
minor differences. Thus, in the scenario that affected enrollees are
auto-reenrolled into a non-standardized plan option (instead of a
standardized plan option), we believe that the new plans these affected
enrollees will be auto-reenrolled into will not differ significantly
from the plan they are currently enrolled in. Thus, in short, we
believe that the majority of affected enrollees would not experience
significant disruption if they were crosswalked into either equivalent
standardized plan option offerings or other non-standardized plan
offerings. We also note that enrollees dissatisfied with the plan they
are re-enrolled in will have the option to actively select a different
plan offering for PY 2024, if desired.
We also note that phasing in the reduction in the number of non-
standardized plan options that issuers can offer, beginning with four
for PY 2024, will also significantly reduce the number of plan
discontinuations and affected enrollees for PY 2024. Specifically,
based on PY 2022 data, we originally estimated that a limit of two non-
standardized plan options would result in approximately 60,949 of a
total 106,037 non-standardized plan option plan-county combinations
(57.5 percent) being discontinued, and approximately 2.72 million of
the 10.21 million enrollees in the FFEs and SBE-FPs (26.6 percent)
being affected. That said, under the limit of four non-standardized
plan options that we are finalizing in this rule for PY 2024, based on
PY 2023 data, we estimate that approximately 17,532 of the total
101,453 non-standardized plan option plan-county combinations (17.3
percent) will be discontinued as a result of this limit, and
approximately 0.81 million of the 12.2 million enrollees on the FFEs
and SBE-FPs (6.6 percent) will be affected by these discontinuations in
PY 2024.
We anticipate that reducing the limit on non-standardized plan
options from four in PY 2024 to two in PY 2025 and subsequent plan
years will result in additional plan-county discontinuations and
affected enrollees in PY 2025. That said, as described previously, we
are unable to provide meaningful estimates for these plan-county
discontinuations and affected enrollees for PY 2025 at this time due to
PY 2024 plan offering and enrollment data limitations. In addition, as
discussed previously, these estimates would not be able to take into
account the exceptions process we intend to propose that would allow
issuers to offer non-standardized plan options in excess of the limit
of two for PY 2025 and subsequent plan years, because we intend to
propose the exceptions process, as well as the specific criteria and
thresholds to be included in this exceptions process, in the 2025
Payment Notice proposed rule, and we do not yet know whether or how
such a proposal would be finalized.
We also clarify that the same rules and processes regarding binder
payments for scenarios unrelated to non-standardized plan option limits
(for example, scenarios from previous years where a particular plan
offering is discontinued, and affected enrollees are auto-reenrolled
from the discontinued plan into a different plan offered by the same
issuer) apply to non-standardized plan option limit scenarios.
Specifically, we clarify that for such renewals of effectuated
coverage, a binder payment is not required, as the renewal is a
continuation of effectuated coverage, and no new effectuation is
required. The Exchanges on the Federal platform also do not require a
binder payment for passive re-enrollments that continue effectuated
coverage in another plan within the same product (or to a different
plan in a different product offered by the same issuer, if the current
product will no longer be available to the enrollee, consistent with
the hierarchy for reenrollment specified at Sec. 155.335(j)(2)) for
the same subscriber.
This means, when consumers are auto-reenrolled into another non-
standardized plan option or standardized plan option as a result of
limiting the number of non-standardized plan options, no binder payment
is required when subscribers in already effectuated policies are auto-
reenrolled into coverage offered by the same issuer. If, however, the
enrollee were to be moved into a plan from a different issuer, a binder
payment would be required. Alternate enrollments, for QHP enrollees
whose current year coverage is no longer available through the Exchange
and for whom a plan offered by a different issuer is selected, are new
enrollments, not renewals, and thus require a binder payment to
effectuate.
We also acknowledge that a significant number of consumers will be
affected by Medicaid eligibility redeterminations and will likely seek
Exchange coverage as a result in PY 2024. We believe this timing offers
a unique opportunity to help ensure that these consumers are able to
meaningfully compare available plan options, select a health plan that
best meets their health needs, and weigh standardized plan design
features such as enhanced pre-deductible coverage for a greater number
of benefits, enhanced price predictability in the form of copayments
over coinsurance for a range of benefit categories, and copayments for
all tiers of prescription drug coverage--including the non-preferred
brand and specialty tiers, which are several relatively uncommon plan
design features.
We disagree that these limits will inhibit issuer innovation and
unnecessarily constrain consumer choice. In PY 2024, issuers will still
retain the ability to offer at least five plans per product network
type, metal level, and service area--four non-standardized plan options
and at least one standardized plan option--such that issuers will
continue to retain the ability to innovate in plan designs. This figure
does not include the additional flexibility permitted for plans that
include dental and/or vision benefit coverage, nor does it include
catastrophic plans, which will allow issuers to offer additional plans
beyond the five per product network type, metal level, and service
area.
Under our incremental approach to phasing in limits to non-
standardized plan options, in PY 2025 and subsequent plan years,
issuers will retain the ability to offer at least three plans per
product network type, metal level, and service area--two non-
standardized plan options and at least one standardized plan option--
such that issuers will continue to retain the ability to innovate in
plan designs. Similar to PY 2024, this figure does not include the
additional flexibility permitted for plans that include dental and/or
vision benefit coverage, nor does it include catastrophic plans, which
would allow issuers to offer additional plans beyond the three per
product network type, metal level, and service area. As noted, we also
intend to propose an exceptions process in the 2025 Payment Notice
proposed rule that could, if finalized, further expand this range of
possible plan offerings in PY 2025 and subsequent plan years.
Moreover, we reiterate that issuers are not limited in the number
of standardized plan options that they can offer and thus retain the
ability to innovate in their standardized plan options, so long as this
innovation conforms with the required cost-sharing specifications. As
previously discussed, we also believe that limiting the number of non-
standardized plan options reduces the risk of plan choice overload,
which actually enhances the plan selection process by making it easier
to
[[Page 25862]]
more meaningfully compare available options.
Furthermore, we believe that, even with the limit on the number of
non-standardized plan options an issuer may offer, the expected
weighted average number of plan offerings available to each enrollee
will remain sufficiently high to permit a satisfactory degree of
choice. The limit being finalized in this rule is estimated to reduce
the weighted average number of total plan offerings (which includes
both standardized and non-standardized plan options offerings) from
approximately 113.7 in PY 2023 to 90.5 in PY 2024, meaning consumers
will continue to have more than enough plan choices to select from
among. Even under the originally proposed limit of two non-standardized
plan options per issuer, product network, type, metal level, inclusion
of dental and/or vision benefits, and service area (which will be the
limit for PY 2025 and subsequent plan years), we estimate that the
weighted average number of total plan offerings available to each
consumer will be 65.3--which will still permit a sufficient degree of
consumer choice.
Similarly, we believe this flexibility will ensure that enrollees
continue to have access to a sufficiently wide range of networks,
ranging from broader and more encompassing networks with larger pools
of providers and facilities to narrower and less expansive networks
with smaller pools of providers and facilities. Additionally, as
previously described, for PY 2024, we estimate an average reduction of
only 0.03 network IDs per issuer, product network type, metal level,
and service area combination, meaning we anticipate network IDs to
remain largely unaffected by this limit for PY 2024. Furthermore, we
once more reiterate that issuers are not limited in the number of
standardized plan options that they can offer and thus retain the
ability to continue to offer these network variations in their
standardized plan options, if so desired.
While we acknowledge that this limit may affect HSA-eligible HDHP
offerings, we do not believe that an exception to the limit is
warranted for these plan offerings as there has been a steady decrease
in both the proportion of HSA-eligible HDHP offerings and enrollment in
these plan offerings (especially at the silver, gold, and platinum
metal levels) over the past several years. The proportion of total plan
offerings that are HSA-eligible HDHPs has decreased from 7 percent in
PY 2019 to 3 percent in PY 2023. Most of these remaining plans are
offered at the bronze metal level, with HSA-eligible HDHP offerings
constituting 14 percent of plan offerings at the bronze metal level in
PY 2023 (and 2 percent, 1 percent, and 0 percent at the non-CSR silver,
gold, and platinum metal levels in the same year, respectively).
Total enrollment in these plans has decreased from 8 percent in PY
2019 to 5 percent in PY 2022. Similar to the PY 2023 plan offering
data, most of this enrollment is concentrated at the bronze metal
level, with HSA-eligible HDHPs constituting 14% of enrollment at the
bronze metal level in PY 2022 (and 2 percent, 2 percent, and 0 percent
at the non-CSR silver, gold, and platinum metal levels in the same
year, respectively). We believe the fact that there is a steadily
decreasing number of issuers choosing to offer these plans, as well as
a steadily decreasing number of consumers choosing to enroll in these
plans, reflects both issuer and consumer preference evolving away from
these types of plan offerings.
Furthermore, due to severe AV constraints at the bronze metal
level, issuers are significantly constrained in how they are able to
design their plan offerings at this metal level. This is especially
true for the non-expanded bronze metal level, in which it is not
possible to include any pre-deductible coverage while maintaining an AV
inside the permissible AV de minimis range--which is also the main
reason we excluded a standardized plan design for the non-expanded
bronze metal level in each set of the plan designs for PY 2024
finalized in this rule. This means that issuers of plans at the bronze
metal level do not have as much leeway to vary their plan offerings
compared to offering plans at other metal levels that do not have as
severe AV constraints--such as the silver, gold, and platinum metal
levels.
With issuers subject to these severe AV constraints at the bronze
metal level in particular, and with the ability of issuers to vary plan
designs at the bronze metal level significantly limited, we believe the
four-plan limit in PY 2024 and the two-plan limit in PY 2025 and
subsequent plan years (per product network type, metal level, inclusion
of dental and/or vision benefit, and service area) will satisfactorily
accommodate the full scope of plans that issuers wish to offer,
including HSA-eligible HDHPs (at the bronze metal level, where the
majority of these plans are offered). We encourage issuers to offer an
HSA-eligible HDHP at the bronze metal level as one of their plan
designs, if so desired.
We also acknowledge that issuers that offer Medicare Advantage
plans are not limited in the number of plans they can offer. That said,
the average number of plans that Medicare beneficiaries had access to
in PY 2023 is still lower than the estimated weighted average number of
total plan offerings that Exchange consumers would have to choose from
with the limit we are finalizing on non-standardized plan options for
both PY 2024 and PY 2025 and subsequent plan years.
In addition, we acknowledge that different States and counties have
differing rates of issuer participation, and thus, differing rates of
plan choice proliferation. Thus, we acknowledge that the risk of plan
choice overload is more pronounced in certain counties than others.
That said, we believe the limit of four non-standardized plan options
for PY 2024 and the limit of two non-standardized plan options for PY
2025 and subsequent years (with additional flexibility permitted for
plans with additional dental and vision benefits, and subject to a
potential exceptions process for the limit of two non-standardized plan
options beginning in PY 2025--which we intend to propose in the 2025
Payment Notice proposed rule) strikes an appropriate balance in
reducing the risk of plan choice overload and preserving a sufficient
degree of consumer choice, even for consumers in counties with lower
rates of issuer participation.
For example, even in counties that have only two issuers, with each
issuer seeking to offer the maximum number of plans possible under the
limit we are finalizing, consumers in PY 2024 would still theoretically
have the ability to select from at least five plans per issuer, product
network type, and metal level--four of which would be non-standardized,
and at least one of which would be standardized. In this scenario, if
both of these issuers offered both PPO and HMO versions of these plans,
they could each theoretically offer at a minimum, ten expanded bronze
plans, ten silver plans (not including CSR silver plans), ten gold
plans, and ten platinum plans, if desired, meaning the total number of
plan offerings available to consumers in that county will be 20 per
metal level, and 80 altogether. In this scenario, the number of plans
could conceivably be higher if both issuers offered more than one
standardized plan option per product network type and metal level,
higher yet if issuers offer additional plan variations of non-
standardized plan options with dental and/or vision benefit coverage,
and higher yet if issuers choose to also offer catastrophic plans.
Similarly, under a non-standardized plan option limit of two,
consumers in PY 2025 will still theoretically have the
[[Page 25863]]
ability to select from at least three plans per issuer, product network
type, and metal level--two of which will be non-standardized, and at
least one of which will be standardized. In this scenario, if both of
these issuers offered both PPO and HMO versions of these plans, they
could each theoretically offer at a minimum, six expanded bronze plans,
six silver plans (not including CSR silver plans), six gold plans, and
six platinum plans, if desired, meaning the total number of plan
offerings available to consumers in that county would be 12 per metal
level, and 48 altogether. Similar to PY 2024, In this scenario, the
number of plans could conceivably be higher if both issuers offered
more than one standardized plan option per product network type and
metal level, higher yet if issuers offer additional plan variations of
non-standardized plan options with dental or vision benefit coverage,
and higher yet if issuers choose to also offer catastrophic plans.
We also acknowledge that there could potentially be scenarios in
which counties have a single issuer not seeking to offer the maximum
number of plans possible under this limit and instead chooses to offer
no non-standardized plan options (since these plans are not required to
be offered). In this scenario, an issuer could theoretically choose to
only offer plans of one product network type at only the required metal
levels (silver and gold), which would mean that there would only be two
plan offerings in that particular county (for example, standardized
silver HMO and standardized gold HMO). This will be true for both PY
2024 (when the limit is four non-standardized plan options) and for PY
2025 (when the limit is two non-standardized plan options), since the
issuer in this scenario would be offering the bare minimum number of
plans, and will therefore not be affected by the maximum limit on the
number of non-standardized plan options, whether four or two.
Though we discourage such an approach, we believe this scenario
would not differ substantially from the scenario before standardized
plan option requirements were introduced. For example, if that same
issuer, prior to the imposition of the standardized plan option
requirements, chose to offer the minimum number of plans in a
particular service area (specifically, one non-standardized silver HMO
and one non-standardized gold HMO), then in PY 2023 also began to offer
one standardized silver HMO and one standardized gold HMO, then in PY
2024 discontinued the non-standardized silver and gold HMOs, then
consumers would have access to the same number of plans they did in PY
2022, before either standardized plan option requirements and non-
standardized plan option limits were enacted. Similar to the previous
discussion, this would also be true whether the limit on the number of
non-standardized plan options is four in PY 2024 or two in PY 2025.
Furthermore, we disagree that limiting the number of non-
standardized plan options that issuers can offer will discourage new
market entrants and disadvantage smaller issuers since larger holding
companies operating multiple issuers would still be able to have each
issuer offer its own non-standardized plan options. To the contrary, we
believe that limiting non-standardized plan options--in conjunction
with requiring issuers to offer standardized plan options--can serve to
even the playing field between larger and more well-established issuers
and smaller issuers newer to the market, because all issuers will be
required to offer plans with standardized cost sharing for a key set of
EHB, and issuers will no longer be permitted to flood the market with
plans with only minor differences between them.
Comment: Several commenters supported a limit of either two or four
non-standardized plan options per product network type, metal level,
and service area, while others recommended adopting a slightly looser
or stricter limit, including for only particular metal levels. Several
commenters recommended not permitting additional variation only for
specific benefits such as adult dental and adult vision benefits
because doing so would likely cause confusion for consumers as to their
options to obtain such benefits through medical QHPs or stand-alone
dental or vision plans. Several other commenters recommended taking
additional factors into account for any limit, such as particular
networks (instead of product network types) and particular benefit
packages (in the form of product IDs)--such that issuers would be
permitted to offer two non-standardized plan options per product ID,
network ID, metal level, and service area, for example.
Response: We believe that finalizing a limit for PY 2024 of four
non-standardized plan options and a limit for PY 2025 and subsequent
plan years of two non-standardized plan options per product network
type, metal level, inclusion of dental and/or vision benefit coverage,
and service area strikes an appropriate balance between simplifying the
plan selection process and maintaining a sufficient degree of consumer
choice. We believe that adopting this more gradual approach, as opposed
to directly limiting the number of non-standardized plan options to two
in PY 2024, also facilitates this transition and reduces the risk of
disruption for both issuers and enrollees.
We also believe that providing advance notice of the eventual
transition to the limit of two non-standardized plan options in PY 2025
and subsequent plan years will allow issuers additional time to prepare
for the two-plan limit. We further believe that permitting additional
variations specifically for non-standardized plan options with the
inclusion of dental and/or vision benefit coverage--instead of, for
example, permitting additional variation for any single change in the
product package, however small--decreases the likelihood that these
limits will be circumvented. Permitting additional flexibility for any
single change in the product package (such as only including one
additional infrequently utilized benefit) would allow issuers to
continue to offer as many non-standardized plan options as desired
simply by adding a single benefit to these additional plans, which
would run counter to the goal of reducing the risk of plan choice
overload.
We also believe that permitting issuers to offer a total of at
least five plans in PY 2024--four non-standardized and at least one
standardized--per product network type, metal level, and inclusion of
dental and/or vision benefit coverage, in any service area will allow
issuers to offer at least five different networks per product network
type, metal level, and inclusion of dental and/or vision benefit
coverage, in any service area, a number we believe provides a
sufficient degree of flexibility for issuers and choice for consumers.
Similarly, we believe that permitting issuers to offer a total of
at least three plans in PY 2025 and subsequent plan years--two non-
standardized and at least one standardized--per product network type,
metal level, and inclusion of dental and/or vision benefit coverage, in
any service area will allow issuers to offer at least three different
networks per product network type, metal level, and inclusion of dental
and/or vision benefit coverage, in any service area, a number we
believe provides a sufficient degree of flexibility for issuers and
choice for consumers.
Comment: Several commenters recommended either applying limits to
non-standardized plan options or imposing a meaningful difference
standard to issuers in SBEs in addition
[[Page 25864]]
to issuers in the FFEs and SBE-FPs. However, one commenter opposed
applying limits to the number of non-standardized plan options and
imposing a meaningful difference standard to issuers in SBE-FPs,
explaining that SBE-FPs are similarly positioned to SBEs and should
thus also be exempt from these requirements.
Response: Similar to our approach with respect to standardized plan
options in the 2023 Payment Notice, we did not propose to limit the
number of non-standardized plan options that issuers can offer through
SBEs for several reasons, including that several SBEs already impose
such limits. As such, we believe imposing duplicative requirements on
issuers in SBEs that are already limited in the number of non-
standardized plan options they can offer could create contradictory
requirements that misalign with existing State requirements.
We also believe that SBEs are uniquely positioned to best
understand the nature of their respective markets as well as the
consumers in these markets. Furthermore, as we explained in the
proposed rule, as well as in the 2023 Payment Notice, we believe States
that have invested the necessary time and resources to become SBEs have
done so in order to implement innovative policies that differ from
those on the FFEs. We explained that we do not wish to impede these
innovative policies so long as they comply with existing legal
requirements.
However, as we explained in the proposed rule, as well as in the
2023 Payment Notice, because we impose this requirement in the FFEs,
and because the SBE-FPs use the same platform as the FFEs, we believe
it is appropriate to apply these requirements equally on FFEs and SBE-
FPs. We believe that changing the platform to permit distinction on
this policy between FFEs and SBE-FPs would require a very substantial
financial and operational burden to HHS that we believe outweighs the
benefit of permitting such a distinction. Finally, States with SBE-FPs
that do not wish to be subject to these requirements may investigate
the feasibility of transitioning to an SBE.
Comment: Many commenters who were concerned with the proliferation
of seemingly similar plans and the consequent increased risk of plan
choice overload but were opposed to limits on non-standardized plan
options recommended implementing a meaningful difference standard.
These commenters explained that implementing a meaningful difference
standard would strike a more appropriate balance in reducing the risk
of plan choice overload while simultaneously preserving a sufficient
degree of consumer choice. These commenters also explained that
adopting this approach would be a more effective mechanism in ensuring
that plans are not duplicative and are instead meaningfully different
from one another without inhibiting issuer innovation in plan design.
Commenters also had a range of recommendations for a meaningful
difference standard. Several commenters suggested decreasing the
deductible dollar difference threshold from the proposed $1,000 to
$500, explaining that requiring a deductible difference of $1,000 would
be too high to account for consumer preference. Several commenters
recommended adopting a version of the meaningful difference standard
more closely aligned with the previous iteration of the meaningful
difference standard. Several commenters recommended taking more factors
into account when determining whether plans are meaningfully different
from one another, such as differences in covered specific benefits
(such as dental or vision benefits), differences in product packages,
differences in cost-sharing (such as the percentage of pre-deductible
services), differences in provider network (such as if there is a
reasonable difference in the size of the network or a reasonable
percentage of providers who are different between networks),
differences in network ID, differences in product network type, and
HSA-compatibility.
Response: We believe that directly limiting the number of non-
standardized plan options to four for PY 2024 and two for PY 2025 and
subsequent years per issuer, product network type, metal level, and
inclusion of dental and/or vision benefit coverage, in any service
area, is a more effective mechanism at this particular time to reduce
plan choice proliferation and to reduce the risk of plan choice
overload for several reasons.
First, we believe the increased complexity associated with a
meaningful difference standard that effectively reduces duplicative
plan offerings as well as the risk of plan choice overload would be
more difficult for issuers to understand and operationalize. We believe
that direct limits on the number of non-standardized plan options that
issuers can offer is a more straightforward approach. We also believe
that the increased complexity associated with creating and
operationalizing a meaningful difference standard (that takes multiple
factors into account when determining whether plans are meaningfully
different from one another) creates the risk of unintentionally
allowing circumvention, which would decrease the efficacy of this
mechanism.
Furthermore, we do not wish to cause unintended consequences to
plan designs by requiring plans to have deductible differences of
$1,000 or more--which would influence issuers to systematically
increase cost-sharing for particular benefits to meet such meaningful
difference standards or to systematically subject particular benefits
to the deductible, which could potentially increase the risk of
discriminatory benefit designs. That said, we note that we intend to
further investigate the feasibility and appropriateness of employing
this mechanism in a future year.
Comment: Several commenters requested clarification that any
product or plan mapping necessary due to non-standardized plan option
discontinuations would satisfy the exception to guaranteed renewability
for uniform modifications of coverage at renewal due to modification in
Federal requirements under Sec. Sec. 147.106(e)(2) and 148.122(g)(2).
Response: The guaranteed renewability requirements at section 2703
of the PHS Act and Sec. 147.106 (as well as parallel provisions at
Sec. Sec. 146.152 and 148.122) generally require an issuer that offers
health insurance coverage in the individual or group market to renew or
continue in force such coverage at the option of the plan sponsor or
individual, as applicable. These provisions also establish requirements
for issuers that decide to discontinue offering a particular product in
the individual or group market and for issuers that modify coverage at
the time of coverage renewal. These requirements apply at the
``product'' level, and the terms ``product'' and ``plan'' are defined
in Sec. 144.103.
Removing a plan(s) from a product will not result in a product
discontinuation, unless by removing the plan(s), the issuer exceeds the
scope of a uniform modification of coverage at Sec. 147.106(e).\291\
If an individual's product remains available for renewal, including a
product with uniform modifications, the issuer generally must provide
the individual the option to renew coverage under that product
(including any plan within the product) to satisfy the guaranteed
renewability
[[Page 25865]]
requirements. Further, issuers on the Exchange must adhere to the re-
enrollment hierarchy at Sec. 155.335(j) when auto re-enrolling
enrollees in coverage through the Exchange.
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\291\ Center for Consumer Information and Insurance Oversight,
Uniform Modification and Plan/Product Withdrawal FAQ (June 15,
2015), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/uniform-mod-and-plan-wd-FAQ-06-15-2015.pdf.
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The guaranteed renewability regulations provide that, in the
individual and small group markets, modifications made pursuant to
Federal or State requirements are a uniform modification of coverage.
However, as nothing in this final rule requires an issuer to cease
generally offering non-standardized plans (that is, outside the
Exchange), a non-standardized plan discontinuation is not a change made
pursuant to a Federal requirement.
Comment: Several commenters requested clarification that State-
mandated plan designs would be excluded from the proposed limit on the
number of non-standardized plan options.
Response: State-mandated plan designs will not be excluded from the
limit of four non-standardized plan options in PY 2024 or two non-
standardized plan options in PY 2025 and subsequent years per issuer,
product network type, metal level, and inclusion of dental and/or
vision benefit coverage, in any service area. We do not believe that
State-mandated plan designs differ sufficiently from other non-
standardized plan options and did not receive comments with substantive
examples of such plan designs. Furthermore, we believe that if all
issuers in a particular State are required to offer State-mandated plan
designs through the Exchanges in that State, these limits will apply to
these issuers equally. Finally, we believe that the flexibility
permitted in this framework (in which issuers will have the ability to
offer four non-standardized plan options per product network type,
metal level, and inclusion of dental and/or vision benefit coverage, in
any service area for PY 2024, and two for PY 2025) will allow issuers
to comply with both these State-mandated plan designs and the limits
finalized in this rule.
Comment: Several commenters requested that HHS clarify its
definition of ``service area'' in the limit on the number of non-
standardized plan options.
Response: We clarify that the ``service area'' component of the
limit on non-standardized plan options refers to Federal Information
Processing Series (FIPS) code.\292\ A FIPS code is a five-digit code
that is unique to every county in the country. The first two digits are
the State code (for example, Georgia's State code is 13), and the
remaining three digits identify the county. We are defining ``service
area'' with FIPS codes in order to provide a standardized, widely
utilized, comprehensive, and mutually exclusive geographic unit for
assessing consumer choice overload and adherence to non-standardized
plan option limits.
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\292\ https://www.census.gov/library/reference/code-lists/ansi.html#county.
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5. QHP Rate and Benefit Information (Sec. 156.210)
a. Age on Effective Date for SADPs
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78283), we proposed at new Sec.
156.210(d)(1) to require issuers of stand-alone dental plans (SADPs),
as a condition of Exchange certification, to use an enrollee's age at
the time of policy issuance or renewal (referred to as age on effective
date) as the sole method to calculate an enrollee's age for rating and
eligibility purposes, beginning with Exchange certification for PY
2024. We proposed that this requirement apply to Exchange-certified
SADPs, whether sold on- or off-Exchange. We clarify that an SADP, as
noted at section 1302(d)(2)(B)(ii) of the ACA, is a type of QHP, which
is Exchange-certified, and offers the pediatric dental EHB as specified
at section 1302(b)(1)(J) of the ACA.
We explained in the proposed rule (87 FR 78283) that since PY 2014,
the process the FFEs use in QHP certification allows SADP issuers
seeking certification to enter multiple options to explain how age is
determined for rating and eligibility purposes. We explained that
because the Federal eligibility and enrollment platform operationalizes
the rating and eligibility standards when an applicant seeks SADP
coverage through an SBE-FP, issuers in SBE-FPs have also been required
to comply with this part of the process. While market rules at Sec.
147.102(a)(1)(iii) require medical QHP issuers to use the age as of the
date of policy issuance or renewal for purposes of identifying the
appropriate age rating adjustment, SADP issuers have been able to enter
any of the following four options in the Business Rules Template: (1)
Age on effective date; (2) Age on January 1st of the effective date
year; (3) Age on insurance date (age on birthday nearest the effective
date); or (4) Age on January 1st or July 1st.\293\
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\293\ See, for example, Qualified Health Plan Issuer Application
Instructions, Plan Year 2023, Extracted section: Section 3B:
Business Rules. https://www.qhpcertification.cms.gov/s/Business%20Rules.
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We stated in the proposed rule that despite the availability of
these other options for SADPs, age on effective date is the most
commonly used age rating methodology; the vast majority of individual
market SADP issuers have used the age on effective date method since PY
2014. We added that not only is it the most commonly used method, but
it is also the most straightforward methodology for consumers to
understand. For example, under the age on effective date method, if an
enrollee is age 30 at the time of a plan's effective date, the enrollee
is rated at age 30 for the rest of the plan year, and the rate will not
change on the basis of age until the next plan year, even if the
enrollee's age changes mid-plan year.
As further explained in the proposed rule (87 FR 78283), allowing
SADPs to rate by other methods imposes unnecessary complexity, not only
to us as operator of the FFEs and the Federal eligibility and
enrollment platform, but also to enrollment partners and consumers in
the Exchanges on the Federal platform. Thus, we stated that we believe
requiring SADP issuers to use the age on effective date methodology,
and consequently removing the less commonly used and more complex age
calculation methods, would reduce consumer confusion and promote
operational efficiency.
We stated that, by helping to reduce consumer confusion and promote
operational efficiency during the QHP certification process, this
proposed policy would help facilitate more informed enrollment
decisions and enrollment satisfaction. Accordingly, we stated that we
believe it is appropriate to extend this proposed certification
requirement to SADPs seeking certification on the FFEs as well as the
SBE-FPs and SBEs. We sought comment on any anticipated challenges that
this proposal could present for SBEs using their own platform, and
whether and to what extent we should, if this proposal is finalized,
limit or delay this proposed certification requirement for those SBEs.
We received one comment on the anticipated challenges this proposal
could present for SBEs, which we address later in this section.
We sought comment on the proposal to require SADP issuers, as a
condition of Exchange certification, to use age on effective date as
the sole method to calculate an enrollee's age for rating and
eligibility purposes, beginning with Exchange certification for PY
2024. We refer readers to the proposed rule (87 FR 78283) for further
discussion of our proposal. After reviewing the public comments, we are
finalizing this provision at new Sec. 156.210(d)(1) as proposed. We
summarize and respond to public comments received on the
[[Page 25866]]
proposed age on effective date policy below.
Comment: All commenters who commented on this provision supported
the proposal. A few commenters expressed their general support of CMS's
efforts to standardize the age calculation method and to select age on
effective date as the only method for calculating the enrollee's age
for rating and eligibility purposes. A majority of commenters supported
the proposal because it would reduce or eliminate confusion among
consumers and improve consumer understanding of SADPs. One commenter
agreed this policy would eliminate unnecessary complexity for both
consumers and the Navigators and assisters who help them.
Response: We agree with commenters that requiring SADP issuers to
use age on effective date as the sole method to calculate an enrollee's
age for rating and eligibility purposes will help reduce or eliminate
confusion among consumers, improve consumer understanding of SADPs, and
eliminate unnecessary complexity for consumers and those who assist
them. As we mentioned in the proposed rule (87 FR 78283), not only is
age on effective date the most commonly used age rating method, but it
is also the most straightforward methodology for consumers to
understand. Since consumers can more easily understand the premium rate
they are charged when the age on effective date method is used, it
reduces consumer confusion. As we also mentioned, allowing SADPs to
rate by other methods imposes unnecessary complexity, not only to HHS
as operator of the FFEs and the Federal eligibility and enrollment
platform, but also to enrollment partners and consumers in the
Exchanges on the Federal platform. From the consumer standpoint, the
more complicated alternative age calculation methods currently in use
make it more difficult to understand the premium rate they are charged.
Therefore, we believe requiring SADP issuers to use age on effective
date as the sole age rating method, and removing the less commonly used
and more complex age calculation methods, will reduce consumer
confusion and promote operational efficiency.
Comment: Several commenters supported this proposal because it
promotes consistency between issuers, as well as between medical QHPs
and QHPs that are SADPs. One commenter agreed with CMS that standards
for medical QHPs and QHPs that are SADPs should be aligned wherever
possible, including rating methodologies. Similarly, one commenter
supported the proposal because it aligns with consumer expectations and
current industry practices. Another commenter noted that the other age
reporting options are not widely used, and therefore, they agreed it is
appropriate for CMS to no longer offer issuers the ability to choose
the less common age reporting methods. Lastly, one commenter noted that
SBEs that do not currently use the age on effective date method may
need more time for implementation.
Response: We agree with commenters that requiring SADP issuers to
use age on effective date as the sole age calculation method promotes
consistency between issuers and between medical QHPs and QHPs that are
SADPs as well. We also agree that this policy aligns with consumer
expectations and industry practices. As we mentioned in the proposed
rule (87 FR 78283), the vast majority of individual market SADP issuers
have used the age on effective date method since PY 2014. Given that
most SADP issuers are already using this method, and based on the
current availability of such plans in all service areas, we anticipate
that most consumers or other Exchange-certified plans will not
experience notable changes. As we also mentioned, market rules at Sec.
147.102(a)(1)(iii) require medical QHP issuers to use the age as of the
date of policy issuance or renewal for purposes of identifying the
appropriate age rating adjustment, however, SADP issuers were not
subject to the same requirement. Implementing this policy change will
help align the requirements for SADPs with the requirements applicable
to other QHPs. We also acknowledge that the SADP issuers that do need
to implement this change will need time for implementation, but we do
not anticipate this will be a significant operational burden and
believe this is feasible to implement for QHP certification in PY 2024.
b. Guaranteed Rates for SADPs
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78284), we proposed at new Sec.
156.210(d)(2) to require issuers of SADPs, as a condition of Exchange
certification, to submit guaranteed rates beginning with Exchange
certification for PY 2024. We proposed that this requirement apply to
Exchange-certified SADPs, whether they are sold on- or off-Exchange.
In the proposed rule (87 FR 78284), we explained that SADPs are
excepted benefits, as defined by section 2791(c)(2)(A) of the PHS Act
and HHS implementing regulations at Sec. Sec. 146.145(b)(3)(iii)(A)
and 148.220(b)(1), and are not subject to the PHS Act insurance market
reform provisions that generally apply to non-grandfathered health
plans in the individual and group markets inside and outside the
Exchange.\294\ In particular, because issuers of Exchange-certified
SADPs are not required to comply with the premium rating requirements
under section 2701 of the PHS Act applicable to non-grandfathered
individual and small group health insurance coverage, we have permitted
issuers of Exchange-certified SADPs in the FFEs and SBE-FPs to comply
with the rate information submission requirements at Sec. 156.210
under a modified standard.\295\ Specifically, we have historically
granted issuers of SADPs the flexibility to offer guaranteed or
estimated rates. By indicating the rate is a guaranteed rate, the SADP
issuer commits to charging the consumer the approved premium rate,
which has been calculated using consumers' geographic location, age,
and other permissible rating factors. Estimated rates require enrollees
to contact the issuer to determine a final rate.
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\294\ See PHS Act sections 2722(b) and (c) and 2763(b). Examples
of PHS Act insurance market reforms added by the ACA that do not
apply to stand-alone dental plans include but are not limited to
section 2702 guaranteed availability standards, section 2703
guaranteed renewability standards, and section 2718 medical loss
ratio standards.
\295\ See, for example, the 2014 Final Letter to Issuers on
Federally-facilitated and State Partnership Exchanges for more
information on how SADPs in the FFEs and SBE-FPs have flexibility to
comply with the rate information submission requirements at Sec.
156.210.
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This flexibility for SADPs to offer estimated rates was effective
for SADP issuers beginning with PY 2014. We explained in the proposed
rule that it was necessary because the relevant certification template
was originally designed to support medical QHPs, which forced
operational limits that prevented the accurate collection of rating
rules for SADPs. We noted that since PY 2014, we have improved the
certification templates to allow SADPs to set the maximum age for
dependents to 18, and to rate all such dependents. Thus, the FFEs and
SBE-FPs can now accommodate the accurate collection of dental rating
rules without forced operational limits in most reasonable
circumstances.
In the proposed rule (87 FR 78284), we stated that we believe this
proposal would significantly benefit enrollees. Consistent with
Sec. Sec. 156.440(b) and 156.470, APTC may be applied to the pediatric
dental EHB portion of SADP premiums. We explained that if SADP issuers
submit estimated rates and
[[Page 25867]]
subsequently modify their actual rates, the Exchanges, including State
Exchanges (including State Exchanges on the Federal platform) and FFEs,
could incorrectly calculate APTC for the pediatric dental EHB portion
of a consumer's premium, which could potentially cause consumer harm.
We also noted that since low-income individuals may qualify for APTC,
we believe this proposed policy change would help advance health equity
by helping ensure that low-income individuals who qualify for APTC are
charged the correct premium amount when enrolling in SADPs on the
Exchange.
We acknowledged in the proposed rule that requiring guaranteed
rates presents a small risk that SADP issuers that offer estimated
rates could cease offering SADPs on the Exchanges. While we recognized
this risk, we stated that we believe the benefits of this proposal far
exceed the disadvantages. Specifically, as discussed previously, we
stated that we believe this proposed policy change would significantly
reduce the risk of consumer harm by reducing the risk of incorrect APTC
calculation for the pediatric dental EHB portion of premiums.
As we explained in the proposed rule, because we believe this
proposed policy would significantly benefit enrollees by ensuring that
enrollees in SADPs receive the correct APTC calculation for the
pediatric dental EHB portion of premiums, and therefore, are charged
the correct premium rate, we believe it is appropriate to apply this
proposed certification requirement to SADPs seeking certification on
the FFEs, as well as the SBE-FPs and SBEs. We sought comment on any
anticipated challenges that this proposal could present for SBEs using
their own platform, and whether and to what extent we should, if this
proposal is finalized, limit or delay this proposed certification
requirement for those SBEs. We did not receive any comments on the
anticipated challenges this proposal could present for SBEs, or whether
or to what extent we should limit or delay this proposed certification
requirement.
We sought comment on the proposal to require issuers of Exchange-
certified SADPs, whether they are sold on- or off-Exchange, to submit
guaranteed rates as a condition of Exchange certification, beginning
with Exchange certification for PY 2024. We refer readers to the
proposed rule (87 FR 78284) for further discussion of our proposal.
After reviewing the public comments, we are finalizing this provision
at new Sec. 156.210(d)(2) as proposed. We summarize and respond to
public comments received on the proposed policy to require guaranteed
rates below.
Comment: All commenters addressing this provision supported the
policy proposal. A few commenters expressed their general support of
CMS's efforts to require the submission of guaranteed rates for SADPs.
More specifically, a few commenters supported this proposal because it
promotes consumer understanding and helps reduce or eliminate consumer
confusion. One commenter stated that requiring SADPs to submit
guaranteed rates promotes consumer understanding by ensuring that
consumers and those who assist them will better understand their
coverage and the actual premium costs they will incur. Another
commenter noted that this proposal will help people make informed
decisions when shopping for their health coverage. Another commenter
explained that guaranteed rates add transparency and clarity for
consumers.
Response: We agree with the commenters that requiring SADP issuers
to submit guaranteed rates will benefit consumers by promoting consumer
understanding and helping to reduce or eliminate consumer confusion. We
prioritize the development and implementation of consumer-centric
policies, and will continue to direct our efforts towards promoting
consumer understanding and improving consumer transparency.
Comment: A few commenters supported this proposal because it
results in a better consumer experience and helps eliminate complexity.
One commenter noted requiring SADP issuers to submit guaranteed rates
will eliminate the practice of providing estimated rates to consumers,
which typically requires the enrollee to contact the insurance issuer
directly to determine a final rate.
Response: We agree with the commenters that requiring guaranteed
rates will result in an improved consumer experience. We also agree
that eliminating the practice of providing estimated rates, which
requires the enrollee to contact the insurance issuer directly to
determine a final rate, is beneficial because it helps eliminate
complexity and reduces the burden on the consumer. As we noted in the
proposed rule (87 FR 78284), by indicating a guaranteed rate, the SADP
issuer commits to charging the consumer the approved premium rate,
which has been calculated using the consumers' geographic location,
age, and other permissible rating factors. Therefore, a guaranteed rate
provides consumers with more certainty, resulting in a more positive
consumer experience.
Comment: A few commenters supported the guaranteed rates proposal
because it is consistent with current industry practices. In
particular, one commenter stated that since the estimated rate option
is not widely used by SADP issuers, it is appropriate for CMS to no
longer offer this option.
Response: We agree with the commenters that the guaranteed rates
proposal aligns with current industry practices. As we mentioned in the
proposed rule (87 FR 78284), the vast majority of issuers offering on-
Exchange and off-Exchange Exchange-certified SADPs already elect to
submit guaranteed rates. Therefore, the majority of SADP issuers are
unlikely to be impacted by this policy.
Comment: A few commenters supported the guaranteed rates proposal
because it allows for accurate APTC calculation of the pediatric dental
EHB portion of premiums, and protects consumers from both unexpected
costs and unnecessary financial burden. One commenter explained that
because the portion of APTC attributable to pediatric dental coverage
can be applied to SADPs, after-purchase rate information changes could
affect APTC calculation, resulting in unnecessary financial burden and
uncertainty for enrollees selecting SADPs. Another commenter also
emphasized that guaranteed rates protect consumers from unnecessary tax
reconciliation.
Response: We agree with the commenters that requiring guaranteed
rates will promote accurate APTC calculation of the pediatric dental
EHB portion of premiums, and protect consumers from unnecessary
financial burden and uncertainty. As we explained in the proposed rule
(87 FR 78284), if an SADP issuer submits an estimated rate and
subsequently modifies their actual rate, the Exchanges, including SBEs,
SBE-FPs, and FFEs, could incorrectly calculate APTC for the pediatric
dental EHB portion of a consumer's premium,\296\ which could result in
consumer harm. This may also disproportionately impact low-income
individuals who may qualify for APTC, who are already
disproportionately impacted by limited access to affordable health
care. Therefore, we believe this policy will also help advance health
equity by ensuring that low-income individuals who qualify for APTC are
charged the
[[Page 25868]]
correct premium amount when enrolling in SADPs on the Exchange.
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\296\ Consistent with Sec. Sec. 156.440(b) and 156.470, APTC
may be applied to the pediatric dental EHB portion of SADP premiums.
---------------------------------------------------------------------------
Comment: One commenter requested clarity on whether the proposed
policy also applies to small group SADPs. This commenter explained that
as a State, it does not have the authority to review dental rates for
small group issuers on- or off-Exchange, and thus it cannot enforce
this proposed certification requirement for such issuers. The commenter
further explained that if plans cannot be certified without meeting
this requirement, that CMS should certify the off-Exchange-only SADPs.
Response: We clarify that the guaranteed rates policy does not
apply to SADPs that are not Exchange-certified. SADPs that are not
seeking Exchange certification, in either an individual market Exchange
or SHOP, will not need to use guaranteed rates under this policy.
States will therefore not need to enforce this requirement, but State
Exchanges will be required to only certify SADPs that comply with the
requirement.
6. Plan and Plan Variation Marketing Name Requirements for QHPs (Sec.
156.225)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78284 through 78285), we proposed to add a
new paragraph (c) to Sec. 156.225 to require that QHP plan and plan
variation \297\ marketing names include correct information, without
omission of material fact, and do not include content that is
misleading. We stated that, if this policy is finalized, we would
review plan and plan variation marketing names during the annual QHP
certification process in close collaboration with State regulators in
States with Exchanges on the Federal platform.
---------------------------------------------------------------------------
\297\ In practice, CMS and interested parties often use the term
``plan variants'' to refer to ``plan variations.'' Per Sec.
156.400, plan variation means a zero-cost sharing plan variation, a
limited cost sharing plan variation, or a silver plan variation.
Issuers may choose to vary plan marketing name by the plan variant--
for example, use one plan marketing name for a silver plan that
meets the actuarial value (AV) requirements at Sec. 156.140(b)(2),
and a different name for that plan's equivalent that meets the AV
requirements at Sec. 156.420(a)(1), (2), or (3).
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Section 1311(c)(1)(A) of the ACA states that the Secretary shall
establish QHP certification criteria, which must include, at a minimum,
that a QHP meet marketing requirements and not employ marketing
practices or benefit designs that have the effect of discouraging
enrollment by individuals with significant health needs. As we stated
in the proposed rule (87 FR 78285), CMS, States, and QHP issuers work
together to ensure that consumers can make informed decisions when
selecting a health insurance plan based on factors such as QHP benefit
design, cost-sharing requirements, and available financial assistance.
We also stated that in PY 2022, we received complaints from consumers
in multiple States who misunderstood cost-sharing information in their
QHP's marketing name. We also stated that upon further investigation,
CMS and State regulators determined that language in a number of plan
and plan variation marketing names was incorrect or could be reasonably
interpreted by consumers as misleading based on information in
corresponding plan benefit documentation submitted as part of the QHP
certification process.\298\
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\298\ For example, in some cases a plan marketing name described
a limited benefit in a way that could be understood as being
unlimited, such as a ``$5 co-pay'' when the $5 co-pay was only
available for an initial visit. Consumers were concerned upon
learning the full extent of the cost-sharing for which they would be
responsible during the plan year.
---------------------------------------------------------------------------
As we explained in the proposed rule (87 FR 78285), CMS' review of
QHP data for PY 2023 indicates continued use of cost-sharing
information in plan and plan variation marketing names. We explained in
the proposed rule that this proposed policy would address the issues we
observed during PY 2022 and again in PY 2023 by requiring all
information in plan and plan variation marketing names that relates to
plan attributes to align with information that issuers submit for the
plan in the Plans & Benefits Template, and in other materials submitted
as part of the QHP certification process, such as any content that is
part of the Summary of Benefits and Coverage. Also, we stated that plan
benefit or cost sharing information in a plan or plan variation
marketing name should not conflict with plan or plan variation
information displayed on HealthCare.gov during the plan selection
process in terms of dollar amount and, where applicable, terminology.
We refer readers to the proposed rule (87 FR 78284 through 78285) for
further discussion of this proposed requirement, including examples
illustrating the kinds of information in plan and plan variation
marketing names that could mislead consumers through inaccurate
information or omission of material facts.
We sought comment on this proposal and whether there are additional
methods of preventing consumer confusion and market disruption related
to this issue. In particular, we sought comment on the potential to
identify components of plan and plan variation marketing names that
could be uniformly structured and defined across QHPs for consistency
and to ensure that plan and plan variation marketing names complement
and do not contradict other sources of plan detail, such as cost-
sharing and benefit information, displayed during the plan selection
process on HealthCare.gov and other enrollment platforms. For example,
we sought comment on whether, to address this, we should establish a
required format for plan and plan variation marketing names that
specifies elements such as name of issuer, metal level, and limited
cost-sharing information.
After reviewing the public comments, we are finalizing, as
proposed, Sec. 156.225(c) to require that QHP plan and plan variation
marketing names include correct information, without omission of
material fact, and not include content that is misleading. We will
review plan and plan variation marketing names during the annual QHP
certification process in close collaboration with State regulators in
States with Exchanges on the Federal platform. We summarize and respond
to public comments received on the proposed policy below.
Comment: Almost all commenters supported the proposal. A number of
commenters agreed that requiring marketing names to be accurate and not
misleading would help consumers make more informed plan selections, and
choose a QHP that they are ultimately satisfied with. Some commenters
added that, like HHS and States, they also heard concerns and
complaints from consumers applying for Exchange coverage about
inaccurate or misleading marketing names, or marketing names that
included extensive detail that they found confusing. One commenter
noted that while confusion about marketing names has not been an issue
in all States, it would be helpful to have clear Federal policy should
the issue arise. Many commenters expressed strong support for continued
collaboration between HHS and States in plan and plan variation
marketing name oversight. Some commenters requested that HHS not impose
any requirements on marketing names in excess of what States already
require, or that HHS not make requirements that contradict requirements
already in place within a State.
Response: We agree with commenters that requiring plan and plan
variation marketing names to be accurate and not misleading will help
applicants for Exchange coverage make more informed
[[Page 25869]]
decisions, and have greater confidence that they are choosing the plan
that is best for themselves and their families. Moving forward, we will
continue working closely with States to review plan and plan variation
marketing names by providing information and technical assistance and
regularly scheduled calls and coordinating shared review of marketing
names during the annual QHP certification process. We will also take
existing State requirements into account when overseeing marketing
names to prevent contradictory requirements and ensure an efficient
plan and plan variation marketing name review process.
Comment: A few commenters opposed the proposal, stating that they
generally supported its intent, but disagreed that additional
regulation was necessary to achieve its purpose. One commenter stated
that States are in a better position than HHS to regulate marketing
names, and voiced concern that there could be conflicting
recommendations between State and Federal regulators. Another commenter
stated that issuers should continue to have the ability to uniquely
position their plans in a market through plan marketing names, noting
that this practice is often descriptive in nature, and therefore, is
not possible to do through other methods of data submission. As
examples, the commenter cited terms like ``Freedom plans,'' implying
broad access or ``Virtual plans,'' implying enhanced telehealth
benefits. This commenter added that they offered Exchange plans with
the same marketing convention for the past ten years, and expressed
concern about any requirements to change it. Other commenters
supportive of the proposal made similar points. For example, other
commenters cited terms like ``elite'' or ``premium'' as being important
marketing tools to convey advantages of a particular plan. Another
recommended exempting marketing names that have been used for three or
more years from required correction, with the exception of changes to
cost-sharing amounts. The commenter noted that many plans have been
offered for five or more years under the same name, and it would be
confusing for enrollees to see a new marketing name for the same plan.
Response: We agree with commenters that States are well-positioned
to oversee plan and plan variation marketing names. However, based on
other public comments and our experiences over the last several years,
we believe that Federal partnership is helpful and necessary to ensure
that marketing names include only information that is accurate and not
misleading. As noted earlier, we will continue to work closely with
States to prevent contradictory requirements and ensure State input. We
note that certain Federal requirements may exceed those that States
currently have in place, such as prohibiting a plan from including in
its marketing name ``$0 cost-sharing'' without specifying that it only
applies to a limited number of visits, or listing ``$0 deductible'' for
a plan that offers a $0 medical deductible but a greater than $0 drug
deductible. However, we believe such requirements are important to
address the more recent marketing name practices causing problems and
we do not anticipate that any such requirements will contradict
existing State rules.
We also acknowledge that some issuers have consistently offered
plans and plan variations with marketing names that are clear and
include correct information. This policy applies to all plan and plan
variation marketing names. We will not exempt any marketing names that
include errors, such as contradictions with plan benefit information,
from required corrections. However, our goal is not to prevent issuers
from using marketing names that have not proven problematic in the
past. Because inclusion of detailed and sometimes incorrect or
misleading plan benefit information in marketing names is a relatively
recent practice, we do not anticipate issuers needing to make extensive
changes to marketing names already in use for a number of years.
Finally, this policy does not prohibit the use of descriptive
language including the terms the commenter cited, such as ``Freedom
Plans'' and ``Virtual Plans''; because these terms do not directly
correlate with or intend to describe a specific service or benefit, it
is unlikely that they would be considered incorrect. However, we
encourage issuers to consider this language carefully to ensure it is
not misleading. In particular, we encourage issuers to ensure that a
plan or plan variation marketing name does not mislead consumers
regarding the nature and cost-sharing for telehealth services and in
person services, when there are differences between the two.
Comment: Multiple commenters shared concerns about the specific
types of inaccurate or confusing marketing name information, some of
which we identified in the proposed rule (87 FR 78285). One commenter
recommended that issuers not be required to include the term
``deductible'' in marketing names that included a deductible dollar
amount, because issuers had long included these dollar amounts in
marketing names, and adding an additional term could cause confusion.
Some commenters expressed general concerns about lengthy, detailed
marketing names, stating that they cause confusion because they are
difficult for consumers to understand. One of these commenters made
several recommendations to decrease the length of marketing names, such
as prohibiting issuers from including the company name in the marketing
name because it is already displayed in the HealthCare.gov plan compare
section, and imposing a character limit to prevent issuers from
creating long and complicated plan names. Another commenter recommended
limiting marketing names to including only one cost-sharing feature to
avoid overwhelming consumers with too much information. One commenter
raised the concern that some marketing names advertise features
available under all QHPs, such as no restrictions for consumers with
pre-existing conditions or full coverage of preventive care free of
charge, which increases the length of the marketing name without
providing valuable information.
Some commenters also expressed concern about using terms like
``choice'' or ``star'' network to refer to a narrow network, based on
the belief that these terms implied an enhanced benefit when the
reality was that the plan might provide access to fewer providers than
a plan with a broader network that it did not advertise. Commenters
also expressed concern about including information in a marketing name
that leads consumers to believe that one of more benefits will be
covered free of charge, when in fact certain conditions and limitations
apply and enrollees cannot access such benefits without incurring
significant cost sharing. Commenters also observed that marketing names
for CSR variants of silver plans often retain the dollar amount of the
deductible or copay of the non-CSR variant plan. In addition,
commenters noted that some consumers find it difficult to confirm
benefit information with a Summary of Benefits and Coverage (SBC); they
cannot determine which SBC corresponds to a plan they have or are
considering, because plan and plan variation marketing names do not
match the plan name used in the SBC. This commenter recommended that
HHS require plan and plan variation marketing names to match the plan
name in the corresponding SBC at the level of individual CSR
variations.
Response: We appreciate the comments regarding the concerns we
cited in the proposed rule about specific
[[Page 25870]]
types of incorrect or misleading marketing name information, and
appreciate additional issues that commenters raised. We confirm that
under this policy, at minimum, we will generally flag for revision plan
and plan variation marketing names that include the issues listed in
the proposed rule (87 FR 78285) to help ensure consumers are not misled
about plans' cost-sharing and coverage implications. However, while we
suggested in the proposed rule that dollar amounts that do not specify
what they refer to (for example, deductible, maximum out-of-pocket, or
something else) could be misleading, based on comments that cited the
importance of allowing issuers to continue using longstanding plan and
plan variation marketing names, and that encouraged us not to require
issuers to include the term ``deductible'' in marketing names that
include a deductible dollar amount, we will not require issuers to
include cost-sharing terms such as deductible in marketing names that
list numbers or dollar amounts. Specifically, while we believe that
some consumers might benefit from additional detail about what numbers
in a marketing name reference, we are aware that requiring issuers to
label all numbers in a marketing name could be counterproductive by
lengthening an otherwise concise plan marketing name and requiring that
some issuers change marketing names that have long been in use and that
comply with existing State rules. Nevertheless, we strongly encourage
issuers to carefully consider the information that numbers and dollar
amounts are meant to convey. Further, in cases where marketing names
specify the type of cost sharing that a number or dollar amount refers
to, our review will confirm that this information is accurate. For
example, plan and plan variation marketing names that list a deductible
amount must be clear whether that amount refers only to medical, drug,
or another type of benefit, or simply lists a deductible amount that is
inclusive of all these categories to ensure that potential enrollees
understand the full cost-sharing requirement.
Additionally, we share concerns that consumers are not always able
to fully understand a plan's benefits because of inconsistencies
between a plan name used in an SBC and the corresponding plan or plan
variation marketing name displayed on HealthCare.gov. Moving forward,
we will require that these names be consistent and clearly resemble
each other, even if a plan or plan variation marketing name includes
cost-sharing or other benefit detail that the plan name listed in the
SBC does not. This requirement exemplifies the intent of the final
policy that we discussed in the proposed rule: by requiring marketing
names to be correct, not omit material fact, and not include content
that is misleading, we expect that consumers will be able to refer to
marketing names as a source of information that supports them in their
plan selection process by facilitating their ability to learn more
about a potential plan, which includes being able to look up
information in other plan materials, instead of exacerbating confusion
or making it more difficult to understand plan benefit details. We will
also prohibit marketing names from advertising benefits that the ACA
requires all Exchange plans to cover as though they were unique to that
plan to prevent this information from unnecessarily extending marketing
names' length and from implying that certain plans are uniquely
advantageous because they provide benefits that in fact all QHPs are
required to cover. This requirement mirrors requirements in widely
adopted North American Industry Classification (NAIC) model
regulations, and therefore, reflects longstanding rules and
practice.\299\
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\299\ See ADVERTISEMENTS OF ACCIDENT AND SICKNESS INSURANCE
MODEL REGULATION, Section 6.A(14), which prohibits ``An
advertisement that exaggerates the effects of statutorily mandated
benefits or required policy provisions or that implies that the
provisions are unique to the advertised policy.''
---------------------------------------------------------------------------
Additionally, we have also observed cases of incorrect information
in plan variation marketing names for CSR variations that occur because
the marketing name retains cost-sharing information from the non-CSR
variation plan. Our goals moving forward as part of our review of plan
and plan variation marketing names will include making sure that this
does not happen. We strongly encourage issuers to proactively update
cost sharing information in marketing names to accurately reflect
information for CSR plan variations to ensure that their initial QHP
application includes accurate information.
We share concerns about the use of potentially misleading terms to
refer to narrow networks; while we do not currently plan to prohibit
use of general descriptive terms in marketing names, we encourage
issuers to carefully consider whether in certain instances, use of
these terms could cause or exacerbate existing consumer confusion or
mislead consumers regarding a particular plan benefit. We also do not
currently plan to prohibit inclusion of issuer names because this could
prevent continuity in some marketing names that are not otherwise
problematic. We note that current QHP certification instructions
already impose a character limit on plan and plan variation marketing
names of 255 characters.\300\ Moving forward, we will consider whether
decreasing this character limit starting in PY 2024 would help to
reduce consumer confusion and improve plan data accuracy and the
efficiency of the QHP certification process. For example, a character
limit of 150 would have permitted more than 90 percent of plan and plan
variation marketing names in plan year 2022, while providing a cap to
shorten some of the lengthiest marketing names and reduce the risk of
unnecessary and confusing information. Finally, we will consider for
future PYs the additional recommendations to limit confusion related to
plan and plan variation marketing names.
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\300\ See PY2023 QHP Issuer Application Instructions: Plans &
Benefits, Section 4.10: page 2D-17: https://www.qhpcertification.cms.gov/s/Plans%20and%20Benefits.
---------------------------------------------------------------------------
Comment: Some commenters supported the proposal but expressed
concern or confusion about the extent and nature of its requirements.
Multiple commenters expressed concern about language in the proposed
rule noting that information in plan and plan variation marketing names
should correspond to benefit information in other plan documents,
including the Plans & Benefits Template, HealthCare.gov plan selection
information, and other applicable QHP certification materials. Some
commenters, including several that supported the proposal and one that
did not, noted that not all plan information that issuers include in
plan marketing names is included in the Plans & Benefits Template.
Multiple commenters cited examples of information on benefits that they
noted may help to mitigate negative impacts of certain Social
Determinants of Health, such as medical transportation and telehealth
coverage. One commenter requested that the Plans & Benefits Template
not be used as a marketing name generator. Several commenters requested
that HHS release guidance on specific requirements for plan and plan
variation marketing names under this policy, to mitigate issuer
confusion and ensure efficient submission of plan information during
the QHP certification process for the coming PY.
Response: We clarify that this policy does not restrict plan and
plan variation marketing name content to information only from the
Plans & Benefits
[[Page 25871]]
Template, or any other template that issuers submit as part of the QHP
certification process. However, information about benefits or any other
plan attribute included in a marketing name should not be the sole
source of information about that benefit, and it must not conflict with
information that appears in other plan documents. In other words,
issuers must only include benefit or other plan attribute information
in a marketing name that is from other plan documents, such as the
Plans & Benefits Template, the SBC, or the plan policy document. For
example, references to telehealth coverage, a medical transportation
benefit, or to any other plan information in a plan marketing name
should be based on, correspond to, and not imply that they are more
generous than, information about that benefit from plan policy
documents. Further, as previously discussed, information in the plan
marketing name should not imply more generous coverage or lower cost
sharing than what is true in practice for that plan, including by
omitting key benefit details or related restrictions. For example, we
have received complaints about plan and plan variation marketing names
advertising ``free'' or ``$0'' primary care provider visits, when in
fact only virtual or telehealth visits are free of charge. Omission of
that limitation on the type of visits that are free can mislead
consumers and make it less likely that they will choose a plan based on
an accurate understanding of its benefits. Finally, we understand the
need for guidance on permitted plan and plan variation marketing name
characteristics, and strongly support issuer efforts to ensure that
marketing name content is accurate prior to submitting an application
for QHP certification.
Comment: One commenter suggested that because applicants for
Exchange coverage can view plan and benefit information in a
standardized format on the HealthCare.gov website, there is no need for
standardizing plan and plan variation marketing names. Other commenters
stated that because plan and benefit information is available on
HealthCare.gov, there is no need for plan or plan variation marketing
names to include benefit information at all, and CMS should prohibit
doing so. Other commenters recommended that rather than impose overly
restrictive standards on plan and plan variation marketing names, CMS
should work to improve the consumer shopping experience on
HealthCare.gov to maximize consumer understanding of benefits available
through and cost sharing required by different QHP options.
Response: We agree that characteristics of the consumer shopping
experience in HealthCare.gov's Plan Compare section play an important
role in helping consumers to choose a plan that is best for themselves
and their family. We also agree that consumers are generally better
served by comparing plan benefit information on HealthCare.gov Plan
Compare, because Plan Compare displays corresponding information for
different plans in a comparable way (for example, plan deductibles and
other cost sharing information is listed in the same format for each
available plan). We disagree that the consistency that Plan Compare
offers makes it unnecessary to require that plan and plan variation
marketing names be correct and not misleading, because incorrect or
misleading information has the potential to harm consumers regardless
of whether accurate information is also available. In fact, information
from a marketing name that conflicts with or does not match
corresponding information on HealthCare.gov or another Exchange
enrollment platform could create consumer confusion that an Exchange
could mitigate with a standard marketing name format designed to
complement information from HealthCare.gov Plan Compare or another
Exchange's enrollment platform. With regard to the suggestion that
availability of plan and benefit information on HealthCare.gov means
there is no need for issuers to include this information in marketing
names, we will not prohibit that practice at this time, because our
goal for PY 2024 is to ensure that marketing names are accurate and not
misleading while permitting issuers, to the extent possible, to
continue using marketing names that they have in prior years in order
to mitigate issuer burden and avoid consumer confusion. Further, we
know that some State rules related to plan and plan variation marketing
names include some cost sharing information, and we want to establish
rules that complement and do not contradict State policy. Relatedly, as
further discussed below, we do not plan to require a specific plan
marketing name format for PY 2024, but do view it as a useful potential
tool to improve the consumer shopping experience wherever possible,
which we will continue to work to do.
Comment: Many commenters supported developing specific standards
for plan and plan variation marketing names either for PY 2024 or in
future plan years. Some offered suggestions for information that
issuers should be permitted or required to include. Commenters also
supported establishing a defined format that all marketing names would
be required to follow, several citing examples of issuers and States
that had already adopted specific formats with success. For example,
one commenter noted that Washington's Exchange requires issuers to
follow a naming format for standard plans, known as ``Cascade Care''
plans. Specifically, Washington adopted the standard plan naming format
of ``[Issuer Name] + Cascade + [Metal Level]'' when implementing
standard plans for PY 2021, and found it simplified comparisons for
consumers by making it easier for them to use standard plans'
comparable plan designs to evaluate the distinctions. Commenters that
recommended standardizing plan and plan variation marketing names and
that recommended specific types of information generally recommended
all or some combination of issuer name, plan metal level, limited cost-
sharing information, network type, and HSA eligibility if applicable.
Some commenters offered specific suggestions about network information
in marketing names with several recommending requiring issuers to
include network information in marketing names for similar plans with
different networks. Others emphasized that network information in
marketing names should not be misleading, and one stated that
availability and relative cost of out-of-network benefits is important
to some consumers and an indication in the plan name would be a
prominent way to signal plan differences in this area.
However, other commenters opposed the development of specific
standards, based on concerns that this would limit issuers' ability to
convey important plan information about plan characteristics through a
marketing name and uniquely position products in the market based on
this information. Some commenters raised further concerns that a
standard format for plan marketing names that specified permitted types
of information could result in the same marketing name for multiple
plans, which would cause consumer confusion. Other commenters added
that requirements for issuers to offer standardized plan options made
it especially important for issuers to be able to use marketing names
to illustrate what makes a particular QHP unique in a context of many
available options, and that many issuers offer more than one network
within a single product network type and use marketing names to make
this distinction clear to consumers.
[[Page 25872]]
Response: We agree that clear and comparable information is most
helpful for consumers during the plan selection process, and we
appreciate recommendations on how to design plan marketing names to
support consumer decision-making. However, we will not apply a required
format for plan and plan variation marketing names for PY 2024, because
we want to achieve a balance between overseeing plan marketing names to
ensure that they are accurate and not misleading and providing issuers
with flexibility to create plan marketing names with information they
believe will be useful to consumers. Further, we want to continue to
work with interested parties to understand the best methods for
ensuring that a marketing name is accurate and clear, but also accounts
as needed for distinctions between different plans. For example, we
appreciate comments related to helping to ensure that consumers
understand plans' provider network information, and will continue to
investigate how to improve consumers' experiences in this area.
Additionally, we agree with comments that it is important to prevent
different plans from having the same plan variation marketing name, and
will take this concern into account if we develop standardized
requirements for plan and plan variation marketing names.
7. Plans That Do Not Use a Provider Network: Network Adequacy (Sec.
156.230) and Essential Community Providers (Sec. 156.235)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78285), we proposed to revise the network
adequacy and ECP standards at Sec. Sec. 156.230 and 156.235 to state
that all individual market QHPs and SADPs and all SHOP QHPs across all
Exchanges must use a network of providers that complies with the
standards described in those sections, and to remove the exception that
these sections do not apply to plans that do not use a provider
network.
In the Exchange Establishment Rule, we established the minimum
network adequacy criteria that health and dental plans must meet to be
certified as QHPs at Sec. 156.230. In the 2016 Payment Notice, we
modified Sec. 156.230(a), in part, to specify that network adequacy
requirements apply only to QHPs that use a provider network to deliver
services to enrollees and that a provider network includes only
providers that are contracted as in-network. We also revised Sec.
156.235(a) to state that the ECP criteria apply only to QHPs that use a
provider network. In Part 1 of the 2022 Payment Notice (86 FR 6138), we
added paragraph (f) to Sec. 156.230 to state that a plan for which an
issuer seeks QHP certification or any certified QHP that does not use a
provider network (meaning that the plan or QHP does not condition or
differentiate benefits based on whether the issuer has a network
participation agreement with a provider that furnishes covered
services) is not required to comply with the network adequacy standards
at paragraphs (a) through (e) of Sec. 156.230 to qualify for
certification as a QHP. In that rule, we also stated that plans that do
not utilize a provider network must still comply with all applicable
QHP certification requirements to obtain QHP certification, which
ensures that any plan that does not comply with applicable QHP
certification requirements will be denied QHP certification (86 FR
6138).
We stated in the proposed rule (87 FR 78286) that since 2016, only
a single issuer has sought certification on an FFE for a plan that does
not use a network. As we explained in the proposed rule, despite
lengthy negotiations with this issuer, our experience with this plan
convinced us that commenters to Part 1 of the 2022 Payment Notice who
raised concerns about the burden plans without networks place on
enrollees appear to have been correct, and so, for that reason and the
other reasons explained below, we proposed to revisit this policy.
Section 1311(c)(1) of the ACA directs HHS to establish by
regulation certification criteria for QHPs, including criteria that
require QHPs to ensure a sufficient choice of providers (in a manner
consistent with applicable provisions under section 2702(c) of the PHS
Act, which governs insured health plans that include a provider
network), provide information to enrollees and prospective enrollees on
the availability of in-network and out-of-network providers, and
include within health insurance plan provider networks those ECPs that
serve predominantly low income, medically underserved individuals. We
explained in the proposed rule (87 FR 78286) that HHS carries out this
directive in part through establishing network adequacy and ECP
requirements.
We stated in the proposed rule (87 FR 78286) that when we added
paragraph (f) to Sec. 156.230 in Part 1 of the 2022 Payment Notice to
except plans that do not use a provider network from meeting the
network adequacy standards described at Sec. 156.230(a) through (e),
we did not intend to allow a plan to ignore the minimum statutory
criteria for QHP certification. We explained that plans without
provider networks still are required by section 1311(c)(1)(B) of the
ACA to ensure sufficient choice of providers and provide information to
enrollees and prospective enrollees on the availability of providers to
obtain certification, even though they are not currently subject to
Sec. Sec. 156.230 and 156.235. We also noted that whether a plan that
does not use a network provides a sufficient choice of providers is a
more nuanced inquiry than a simple assertion that an enrollee can
receive benefits for any provider. We explained that for a prospective
enrollee, a ``sufficient choice of providers'' likely involves factors
like the burden of accessing those providers, including whether there
are providers nearby that they can see without unreasonable delay that
would accept such a plan's benefit amount as payment in full, or
whether they are able to receive all the care for a specific health
condition from a single provider without incurring additional out-of-
pocket costs. We stated that these are among the factors involved in
determining whether a network plan is in compliance with the network
adequacy and ECP standards at Sec. Sec. 156.230 and 156.235 and noted
that a plan's compliance with these regulatory standards is one way
that HHS can verify that plans meet the statutory criteria that QHPs
ensure a sufficient choice of providers, including ECPs.
We stated in the proposed rule (87 FR 78286) that to ensure more
effectively that all plans provide sufficient choice of providers and
to provide for consistent standards across all QHPs, we believe it
would be appropriate to revise the network adequacy and ECP standards
at Sec. Sec. 156.230 and 156.235 to state that all QHPs, including
SADPs, must use a network of providers that complies with the standards
described in those sections and to remove the exception at Sec.
156.230(f). We explained that consistent standards also would allow for
easier comparison across all QHPs in a more comprehensible manner for
prospective enrollees. The benefits of easier comparison among plans
and other challenges posed by plan choice overload are discussed in
more detail in the preamble sections about standardized plan options
and non-standardized plan option limits.
We have previously stated that ``nothing in [the ACA] requires a
QHP issuer to use a provider network'' (84 FR 6154), and it is true
that the ACA includes no standalone network requirement. However, we
explained in the proposed rule (87 FR 78286) that, after revisiting the
statute, we now
[[Page 25873]]
doubt that a plan without a network can comply with the statutory
requirement at section 1311(c)(1)(C) of the ACA that ``a plan shall, at
a minimum . . . include within health insurance plan networks those
essential community providers, where available, that serve
predominately low-income, medically-underserved individuals.'' We
explained that we have always understood section 1311(c)(1)(C) of the
ACA to require all plans to provide sufficient access to ECPs, where
available, whether or not the plan included a provider network. But we
noted that we have not previously considered whether this specific
statutory text is consistent with a policy exempting plans without a
network from network adequacy regulations. We stated that we now
understand the statute's text to best support a reading that access to
ECPs will be provided ``within health insurance networks.''
Additionally, we noted in the proposed rule (87 FR 78286) that
under section 1311(e)(1)(B) of the ACA and Sec. 155.1000(c)(2), an
Exchange may certify plans only if it determines that making the plans
available through the Exchange is in the interests of qualified
individuals. We further noted that Sec. 155.1000 provides Exchanges
with broad discretion to certify health plans that may otherwise meet
the QHP certification standards specified in 45 CFR part 156. We
explained that when we implemented section 1311(e)(1)(B) of the ACA at
Sec. 155.1000(c)(2) in the Exchange Establishment Rule, we noted that
``an Exchange could adopt an `any qualified plan' certification, engage
in selective certification, or negotiate with plans on a case-by-case
basis'' (77 FR 18405). We also explained in the proposed rule (87 FR
78286), that we believe requiring QHPs to use a provider network would
be in the interests of qualified individuals and would better protect
consumers from potential harms that could arise in cases where QHPs do
not use provider networks.\301\ For example, we stated that the
implementation of a provider network can help mitigate against risks of
substantial out-of-pocket costs, ensure access without out-of-pocket
costs to preventive services that must be covered without cost sharing,
and, in the individual market, facilitate comparison of standardized
plan options. Furthermore, we noted that studies have found that
provider networks allow for insurer-negotiated prices and controlled
(that is, reduced) costs in the form of reduced patient cost sharing,
premiums, and service price, as compared with such services obtained
out of network.302 303
---------------------------------------------------------------------------
\301\ As discussed below, some commenters asserted that the
requirement to use a network of providers to obtain certification
contravenes section 1311(e)(1)(B)(i) of the ACA, which states that
an ``Exchange may not exclude a health plan . . . on the basis that
such plan is a fee-for-service plan,'' and that ``fee-for-service
plans'' are understood to be ``a type of non-network plan.'' While
we respond to this comment in more detail below, we clarify that our
reference here to section 1311(e)(1)(B)(i) of the ACA specifically
pertains to our finding that--at least in an FFE that the agency
operates--using a network of providers is generally in the interests
of qualified individuals. It does not address whether fee-for-
service plans are in the interests of qualified individuals.
\302\ Benson NM, Song Z. Prices And Cost Sharing For
Psychotherapy In Network Versus Out Of Network In The United States.
Health Aff (Millwood). 2020 Jul;39(7):1210-1218. https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.01468.
\303\ Song, Z., Johnson, W., Kennedy, K., Biniek, J. F., &
Wallace, J. Out-of-network spending mostly declined in privately
insured populations with a few notable exceptions from 2008 to 2016.
Health Aff. 2020;39(6), 1032-1041.
---------------------------------------------------------------------------
We stated in the proposed rule (87 FR 78286 through 78287) that the
proposed revision would assure HHS that all plans certified as QHPs
offer sufficient choice of providers in compliance with a consistent
set of criteria for easier comparison across all QHPs and better ensure
substantive consumer protections afforded by the ACA without undue
barriers to access those protections. We explained that this
consistency would be valuable to consumers as it ensures all consumers
will have access to a set of providers with whom their plan has
contracted in accordance with our established network adequacy and ECP
requirements and allows for easier comparison between plans for
prospective enrollees. We stated that this would also allow consumers
to seek care from providers with whom their plan has negotiated a rate,
limiting their potential exposure to out-of-pocket costs under the
plan.
Accordingly, under the authority delegated to HHS to establish
criteria for the certification of health plans as QHPs, we proposed to
remove the exception at Sec. 156.230(f) and to revise Sec. Sec.
156.230 and 156.235 to state that all individual market QHPs and SADPs
and all SHOP plan QHPs across all Exchanges-types must use a network of
providers that complies with the standards described in those sections,
beginning with PY 2024. We explained in the proposed rule (87 FR 78287)
that under this proposal, an Exchange could not certify as a QHP a
health plan that does not use a network of providers. However, we
solicited comment on whether it is possible to design a plan that does
not use a network in a way that would address our concerns about the
plan's ability to offer a sufficient choice of providers without
excessive burden on consumers, or what regulatory standards such a plan
could meet to ensure a sufficient choice of providers without excessive
burden on consumers.
We explained in the proposed rule (87 FR 78287) that this proposed
requirement would also generally apply to SADPs. We stated that since
2014, the FFEs have received, and approved, QHP certification
applications for SADPs that do not use a provider network in every PY.
However, we explained that the number of SADPs that do not use a
provider network has never accounted for a significant number of
Exchange-certified SADPs on the FFEs. We noted that at their most
prevalent in PY 2014, only 50 of the 1,521 Exchange-certified SADPs on
the FFEs were plans that do not use a provider network. We also noted
that in PY 2022, only 8 of the 672 Exchange-certified SADPs on the FFEs
were plans that do not use a provider network.
We further explained in the proposed rule (87 FR 78287) that the
number of SADPs on the FFEs that did not use a provider network appears
to be limited since 2017 to fewer and fewer States; while 9 FFE States
had Exchange-certified SADPs that do not use a provider network in PY
2014, only 2 FFE States still had Exchange-certified SADPs that do not
use a provider network in PY 2022. We noted that since PY 2021, only 85
counties in Alaska and Montana still have Exchange-certified SADPs that
do not use a provider network. We stated that we assumed that the few
SADP issuers that still offer SADPs that do not use a provider network
on the FFEs in Alaska and Montana only do so because of difficulty in
maintaining a sufficient provider network in those States. We further
explained that we believe it is reasonable to assume that consumers
increasingly gravitate towards SADPs that use a network, given this
overall decrease in the availability of SADPs that do not use a
provider network. We invited comment to confirm these understandings,
as well as comment on the prevalence of SADPs that do not use a
provider network offered outside of the FFEs in the non-grandfathered
individual and small group markets.
[[Page 25874]]
[GRAPHIC] [TIFF OMITTED] TR27AP23.021
We explained in the proposed rule (87 FR 78288) that, given the
overall lack of popularity of SADPs that do not use a provider network,
we believe that consumers find that such plans do not offer the same
levels of protections against out-of-pocket costs as network plans.
Thus, we stated that we believe it would be appropriate to revise
Sec. Sec. 156.230 and 156.235 so that all SADPs must use a network of
providers that complies with the standards described in those sections
as a condition of QHP certification, beginning with PY 2024.
However, we explained in the proposed rule (87 FR 78288 through
78289) that we were cognizant that it can be more challenging for SADPs
to establish a network of dental providers based on the availability of
nearby
[[Page 25875]]
dental providers, and we were aware this proposal could result in no
SADPs offered through Exchanges in States like Alaska and Montana,
which have historically offered SADPs without provider networks (see
Table 11). We also expressed our awareness that having no Exchange-
certified SADPs offered through an Exchange in an area would impact all
non-grandfathered individual and small group health plans in such
areas. We noted that without an SADP available on the respective
Exchange, all non-grandfathered individual and small group health plans
in impacted areas would be required to cover the pediatric dental EHB.
We noted that section 1302(b)(4)(F) of the ACA states that if such an
SADP is offered through an Exchange, another health plan offered
through such Exchange shall not fail to be treated as a QHP solely
because the plan does not offer coverage of pediatric dental benefits
offered through the SADP.
As we explained that in the EHB Rule (78 FR 12853), we
operationalized this provision at section 1302(b)(4)(F) of the ACA to
permit QHP issuers to omit coverage of the pediatric dental EHB if an
Exchange-certified SADP exists in the same service area in which they
intend to offer coverage. We further explained in the proposed rule (87
FR 78289) that as a corollary, if no such SADP is offered through an
Exchange in that service area, then all health plans offered through
the Exchange in that service area would be required to provide coverage
of the pediatric dental EHB, as section 2707(a) of the ACA requires all
non-grandfathered plans in the individual and small group markets to
provide coverage of the EHB package described at section 1302(a) of the
ACA. However, we stated in the proposed rule that to our knowledge, at
least one Exchange-certified SADP has been offered in all service areas
nationwide since implementation of this requirement in 2014, and no
Exchange has required a medical QHP to provide coverage of the
pediatric dental EHB in this manner. We solicited comment to confirm
this understanding.
As we stated in the proposed rule (87 FR 78289), to prevent a
situation where this proposal would require health plans in those areas
to cover the pediatric dental EHB, we solicited comment on the extent
to which we should finalize a limited exception to this proposal only
for SADPs that sell plans in areas where it is prohibitively difficult
for the issuer to establish a network of dental providers; we also
clarified that this exception would not be applicable to health plans.
We explained that under such an exception, we could consider an area to
be ``prohibitively difficult'' for the SADP issuer to establish a
network of dental providers on a case-by-case basis, taking into
account a number of non-exhaustive factors, such as the availability of
other SADPs that use a provider network in the service area, and prior
years' network adequacy data to identify counties in which SADP issuers
have struggled to meet standards due to a shortage of dental providers.
We stated that other factors could include an attestation from the
issuer about extreme difficulties in developing a dental provider
network, or data provided in the ECP/network adequacy (NA) template or
justification forms during the QHP application submission process that
reflect such extreme difficulties. We sought comment on whether it
would be appropriate to finalize such an exception in this rule, other
factors that we might consider in evaluating whether an exception is
appropriate, as well as alternative approaches to such an exception.
We sought comment on this proposal, as well as on other topics
included in this section.
After reviewing the public comments, for the reasons set forth in
this final rule and those we explained in the proposed rule, subject to
the exception discussed below, we are finalizing the proposal to revise
the network adequacy and ECP standards at Sec. Sec. 156.230 and
156.235 to require all individual market QHPs, including individual
market SADPs, and all SHOP QHPs, including SHOP SADPs, across all
Exchanges to use a network of providers that complies with the
standards described in those sections. In addition, as proposed, we are
also removing from the regulation text the exception at Sec.
156.230(f) that these sections do not apply to plans that do not use a
provider network. Finally, we are finalizing a limited exception at
Sec. 156.230(a)(4) for certain SADP issuers that sell plans in areas
where it is prohibitively difficult for the issuer to establish a
network of dental providers. Specifically, under this exception, an
area is considered ``prohibitively difficult'' for the SADP issuer to
establish a network of dental providers based on attestations from
State departments of insurance in States with at least 80 percent of
their counties classified as Counties with Extreme Access
Considerations (CEAC) that at least one of the following factors exists
in the area of concern: a significant shortage of dental providers, a
significant number of dental providers unwilling to contract with
Exchange issuers, or significant geographic limitations impacting
consumer access to dental providers.
We summarize and respond to public comments received on this
proposal below.
Comment: A majority of commenters supported the proposal to require
plans to use a network of providers that complies with the standards in
Sec. Sec. 156.230 and 156.235. Commenters agreed that such a
requirement is consistent with statutory requirements at section
1311(c)(1)(B) and (C) of the ACA. Some commenters indicated that the
proposal would allow easier comparison across all QHPs in a more
comprehensible manner for prospective enrollees. Commenters agreed that
the proposal would ensure consumer choice and access to care, as it
would ensure that QHPs do not impose excessive burden on enrollees to
understand whether they would incur additional out-of-pocket costs by
their plan or to identify which providers within a reasonable distance
from their residence accept the plan's benefit amount as payment in
full. Other commenters agreed with the proposal, asserting that health
plans that do not use a network of providers are not in consumers'
interests, as they are more likely to subject consumers to increased
medical costs. Other commenters agreed that this requirement should
apply to SADPs. Some commenters supported the proposal, stating that
plans that do not use a provider network have historically presented a
barrier to consumers' ability to access care and control their health
care costs, unnecessarily expose people to potential medical debt, and
are not in the interests of consumers shopping for QHPs.
Response: Subject to a limited exception described below applicable
to SADPs, we are revising the network adequacy and ECP standards at
Sec. Sec. 156.230 and 156.235 to state that all individual market
QHPs, including individual market SADPs, and all SHOP QHPs, including
SHOP SADPs, across all Exchanges must use a network of providers that
complies with the standards described in those sections, and to remove
the exception at Sec. 156.235(f) that these sections do not apply to
plans that do not use a provider network. We are finalizing this
requirement, agreeing with commenters that subjecting all plans that
apply for certification to the network adequacy and ECP standards at
Sec. Sec. 156.230 and 156.235 allows for proper oversight of the
statutory requirements at section 1311(c)(1)(B) and (C) of the ACA. As
discussed below, while plans that use a network of providers may
present certain access issues for consumers,
[[Page 25876]]
their compliance with Sec. Sec. 156.230 and 156.235 ensures that
consumers have reasonable access to a set of providers that accept the
plan's payment as payment in full, which limits consumers' out-of-
pocket costs. In addition, we are not aware of any administrable
regulatory standard that would ensure that plans that do not use a
network comply with those sections of the ACA. Commenters responding to
this proposal also did not identify a regulatory standard that we
believe that we could administer to ensure compliance with the ACA, as
further discussed below.
Comment: A minority of commenters, including one health insurance
issuer, opposed the proposal and asserted that the exception at Sec.
156.230(f) should be retained. These commenters asserted that the
proposal to require QHPs to utilize a provider network contravenes
section 1311(e)(1)(B)(i) of the ACA, which states that an ``Exchange
may not exclude a health plan . . . on the basis that such plan is a
fee-for-service plan,'' and they state that ``fee-for-service plans''
are understood to be ``a type of non-network plan.'' Commenters also
asserted that HHS impermissibly justifies the requirement that QHPs
must use a network of providers because only plans with networks can
satisfy section 1311(c)(1)(C) of the ACA regarding the ECP requirement
for certification. One commenter stated that HHS should develop
alternative regulatory standards for plans that do not use a network to
demonstrate compliance with section 1311(c)(1)(B) and (C) of the ACA,
recommending that HHS should look to Medicare Advantage program
standards as an example.
Response: We do not agree that the requirement for QHPs to utilize
a provider network conflicts with section 1311(e)(1)(B)(i) of the ACA.
Section 1311(e)(1) and (e)(1)(B)(i) of the ACA states that an Exchange
may certify a health plan as a QHP if such plan meets the requirements
for certification as promulgated by the Secretary under section
1311(c)(1) of the ACA and the Exchange determines that making available
such health plan through such Exchange is in the interests of qualified
individuals and qualified employers in the State in which such Exchange
operates, except that the Exchange may not exclude a health plan, among
other reasons, on the basis that such plan is a fee-for-service (FFS)
plan. In requiring all plans to use a network, we are exercising the
authority granted to the Secretary at section 1311(c)(1)(A) of ACA to
establish requirements for the certification of health plans as QHPs,
though we are also informed by the requirement for certification at
section 1311(e) of the ACA, which states that an Exchange must
determine that making available such health plan through such Exchange
is in the interests of qualified individuals and qualified employers in
the State or States in which such Exchange operates, and which we
determine when evaluating plans for QHP certification on an FFE.
In so doing, we are not excluding FFS plans from obtaining
certification on the basis that such plans are FFS plans and
categorically not in the interests of qualified individuals and
qualified employers. We are establishing that plans that do not use a
network of providers are inherently unable to comply with the statutory
requirement at section 1311(c)(1)(C) of the ACA because that section
requires health plans certified as QHPs to ``include [ECPs] within
health insurance plan networks.'' That health plans must include ECPs
within health insurance plan networks as one of the criteria for
certification is a straightforward reading of the language at section
1311(c)(1)(C) of ACA. This statutory language does not provide an
exception for plans that do not use a network of providers or FFS
plans; it simply states, ``. . . to be certified, a plan shall, at a
minimum--(C) include [ECPs] within health insurance plan networks . .
.'' Our interpretation that this language requires health plans to use
a network of providers to obtain certification is supported by statute.
We believe that section 1311(c)(1)(B)'s requirement that plans must
provide a ``sufficient choice of providers'' on which the commenter
relies in fact provides additional legal support for our regulation. As
discussed below, section 1311(c)(1)(B) of the ACA encompasses the
burden of accessing providers, and our experience with health plans
that do not use a network of providers seeking QHP certification
suggests that such plans impose significant burdens on enrollees
seeking access to providers.
Commenters' suggestion is based on equating FFS plans to plans that
do not use a network of providers. We disagree that FFS plans never use
a network of providers. For example, while commenters rely on the
Office of Personnel Management's subregulatory definition of ``non-
PPO'' FFS plans--which are indeed FFS plans that do not involve a
network--they overlook the definition of ``Fee-for-Service (FFS) with a
Preferred Provider Organization (PPO)'' plan that follows, which
acknowledges that there are FFS plans that use a network.\304\
Similarly, the commenters' citation to our 1997 statement in the
Federal Register suggesting that Medicare private FFS plans often
lacked networks overlooks that even then, section 1852(d) of the Social
Security Act (the Act) allowed private FFS plans to include a network
\305\--and that provision has since been amended to encourage and
sometimes require that Medicare private FFS plans use a network.\306\
Because FFS plans include plans with and without networks of providers,
we disagree that a statutory prohibition on not certifying plans based
on the fact that they are FFS plans impliedly prohibits not certifying
plans on the basis that they lack a provider network.
---------------------------------------------------------------------------
\304\ https://www.opm.gov/healthcare-insurance/healthcare/plan-
information/plan-types/
#:~:text=Fee%2Dfor%2DService%20(FFS)%20Plans%20with%20a%20Preferred,t
o%20file%20claims%20or%20paperwork.
\305\ See Public Law 105-33, section 4001, 111 Stat. 290-91
(1997).
\306\ See Public Law108-173, section 211, 117 Stat. 2180 (2003);
Pub. L. 110-275, section 162, 122 Stat. 2569-70 (2008).
---------------------------------------------------------------------------
Thus, we find that commenters are incorrect that FFS plans never
use a network of providers. However, even if the commenters' assertions
were accurate, section 1311(e)(1)(B)(i) of the ACA would not prevent
finalization of this requirement. First, we principally proposed this
rule under our authority to set requirements under section 1311(c) of
the Act, and we do not believe section 1311(e)(1)(B)(i) of the ACA--
directed at the authority of Exchanges--necessarily limits our general
rulemaking authority under section 1311(c) of the ACA. Nor does section
1311(e)(1)(B)(i) of the ACA override our interpretation of the
requirement at section 1311(c)(1)(C) of the ACA that all plans must use
a network as a requirement for certification. In addition, even if
section 1311(e)(1)(B)(i) of the ACA also limited section 1311(c) of the
ACA, the prohibition at section 1311(e)(1)(B)(i) of the ACA is based on
how the plan pays providers for services rendered, and not on the
absence or presence of a network of providers.
In addition, even if we did not interpret the ACA to require the
use of a network of providers for certification, we are not aware of
any administrable regulatory standard to assess whether a plan that
does not use a network of providers ensures a sufficient choice of
providers, including ECPs, as required by sections 1311(c)(1)(B) and
(C) of the ACA. While it may be true that enrollees in plans that do
not use a network may visit any provider (and thus all ECPs)
[[Page 25877]]
and receive some reimbursement from the plan, the possibility of the
enrollee receiving some reimbursement for any benefit from any provider
is not the same as the plan providing enough reimbursement for those
benefits, such that the enrollee has reasonable access to sufficient
providers that would accept the plan's payment amount as payment in
full. As discussed in the proposed rule (87 FR 78286), for a
prospective enrollee, the analysis of whether a plan ensures a
sufficient choice of providers, and thus provides sufficient protection
against additional out-of-pocket costs, involves factors like the
burden of accessing those providers, including whether there are
providers nearby that they can see without unreasonable delay that will
accept such a plan's benefit amount as payment in full. Thus, we cannot
conclude that such a plan de facto complies with these statutory
requirements simply because it provides some reimbursement to its
enrollees for any benefit.
Further, we are unaware of an administrable regulatory standard
that would allow us to determine whether such a plan's benefit amount
would be accepted as payment in full by any provider, such that an
enrollee's out-of-pocket costs may be limited by receiving services
from that provider. Such a plan cannot impose on providers any
obligation to set a certain price for a specific service, and there is
no requirement imposed by the plan on providers to accept the plan's
payment as payment in full. The plan cannot prevent a provider from
changing the price for a specific service, nor can it require that a
provider communicate the price change to the enrollee or their plan.
Likewise, no Federal requirements prohibit such individual market plans
from changing the amount the plan pays for a given service or require
the plan to communicate the change to the enrollee or their provider,
even mid-plan year. As a result, the enrollee is subject to a plan that
can change its benefit amount, and there is no assurance that any
provider will actually accept the payment amount as payment in full;
these changes could occur frequently and without any notice to the
enrollee. To attempt to ascertain whether there are sufficient
providers (including ECPs) who will accept the plan's benefit amount as
payment in full, one would need to accurately understand what services
are medically necessary, continuously contact every provider in the
State to determine what services they perform and what amount they
charge for every specific service, and continuously contact the plan to
determine the amount they pay for every specific service. Such an
exercise is prohibitively difficult for a consumer to perform, and we
have been unable to devise an administrable regulatory standard to
ensure compliance with the ACA's network adequacy and ECP requirements.
Further, even if it were theoretically possible to devise such a
requirement, we are not aware of any statutory authority to require
providers continuously to report what amount they would accept as
payment in full, either to an Exchange, a plan, or individuals--
significantly inhibiting an Exchange's ability to enforce such a
standard. And, even if we had such statutory authority, there is
insufficient demand that HHS dedicate the significant resources
necessary to devise a regulatory standard for plans that do not use a
network to demonstrate compliance with section 1311(c)(1)(C) of the
ACA. We are aware of a single health plan that does not use a network
of providers in one State that seeks to obtain certification for the
State's Exchange. No other issuer has expressed interest to us in
obtaining certification for such a plan, and the majority of comments
on this rule supported the proposal to require health plans to use a
network to obtain certification.
One commenter suggested that we consider implementing a regulatory
standard that considers Medicare Advantage private FFS plan
requirements. We do not find Medicare Advantage private FFS plans to be
comparable to plans without networks seeking QHP certification under
the ACA. Section 1852(d) of the Act requires Medicare Advantage private
FFS plans to demonstrate to the Secretary that the organization has
sufficient number and range of health care professionals and providers
willing to provide services under the terms of the plan. Further,
Medicare Advantage private FFS plans are defined in section 1859(b)(2)
of the Act as a plan that, among other things, ``does not restrict the
selection of providers among those who are lawfully authorized to
provide the covered services and agree to accept the terms and
conditions of payment established by the plan.'' As a result, in the
Medicare Advantage context, private FFS enrollees are more protected
from unexpected out-of-pocket costs.\307\ This may not hold true in the
Exchange context. The one issuer that has previously sought QHP
certification for a plan that did not use a network of providers would
not have required any provider to agree to any particular terms or
conditions of payment. Unlike Medicare Advantage private FFS plans,
then, we are concerned that Exchange plans without networks leave
uncertainty as to whether any provider accepts a plan's benefit amount
as payment in full and potentially opens up the enrollee to additional
out-of-pocket costs.
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\307\ Because sections 1852(k)(1) and 1866(a)(1)(O) of the Act
require health care providers and hospitals to accept Medicare-
established amounts as payment in full, Medicare Advantage private
FFS plans can rely on the availability of providers that accept
Medicare as one way to demonstrate access to services for their
enrollees. In addition, since 2011, Medicare Advantage (MA) private
FFS plans that are offered in areas where there are at least two
other MA plans that are network-based plans, must use contracts or
agreements with providers as the only way to demonstrate that the
private FFS plan provides adequate access to services. See 42 CFR
422.114.
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Comment: Some commenters asserted that the proposed rule fails to
provide a balanced discussion of the data on provider network strengths
and weaknesses or acknowledge the merits of plans that do not use a
provider network.
Response: In requiring plans to use a network of providers to
obtain QHP certification, we are not representing that plans that use a
network of providers do not present certain access issues. For example,
we recognize that such plans place the burden on enrollees to ensure
that specific providers are in-network, while a plan that does not use
a network of providers does not place a such a burden on its enrollees
to receive some benefit under the plan. We also recognize that some
networks are narrower than some enrollees may prefer, which can result
in enrollees needing to travel further or wait longer to receive care
from an in-network provider, while enrollees in a plan that does not
use a network of providers may not need to travel as far or wait as
long to receive some benefit under their plan. However, unlike plans
that do not use a network of providers, there is an administrable
regulatory standard to ensure that plans that use a network of
providers comply with sections 1311(c)(1)(B) and (C) of the ACA; to
that end, since 2014, we have required that plans that use a network of
providers comply with the network adequacy and ECP standards at
Sec. Sec. 156.230 and 156.235. Plans that comply with these standards
ensure that their enrollees have access to sufficient providers who are
contractually obligated to accept the plan's payment amount as payment
in full. This is a consumer protection that plans that do not use a
network cannot provide to its enrollees, and one that we believe is
consistent with core tenets of the ACA--
[[Page 25878]]
that consumers have access to a plan that provides a reasonable method
to limit their out-of-pocket costs for health care to the annual
limitation on cost sharing.
Comment: One commenter requested that HHS clarify whether the
definition of ``provider'' includes pharmacies in the context of
network adequacy and ECP standards.
Response: While we have not defined the term ``provider'' in the
context of the network adequacy standards, we provide a list of the
individual provider and facility specialty types that are included in
the network adequacy reviews within the `Specialty Types' tab of the
respective plan year ECP/NA template. If an issuer does not see a
specific specialty type listed in the `Specialty Types' tab, it should
refer to the `Taxonomy Codes' tab of the ECP/NA template to select the
correct specialty type to which the taxonomy code crosswalks. If a
specific taxonomy code is not listed in the `Taxonomy Codes' tab, such
as in the case of pharmacies, the provider type has not been included
in the FFE network adequacy reviews. In the context of the ECP
standards, although we have not defined the term ``provider,'' we list
the provider types that are included in the ECP categories at Sec.
156.235(a)(2)(ii)(B), which does not include pharmacies.
Comment: Some commenters, including two State departments of
insurance (Alaska and Montana), were in favor of a limited exception to
this requirement for SADPs that sell plans in areas where it is
prohibitively difficult for the issuer to establish a network of dental
providers. These commenters confirmed our analysis that it may be
currently prohibitively difficult for SADP issuers to establish a
network of dental providers in Alaska and Montana, and that without an
exception to the proposed requirement, consumer access to any SADP
would be in jeopardy. Commenters supported the use of the list of non-
exhaustive factors that we would consider in determining whether it is
prohibitively difficult for SADP issuers to establish a network of
dental providers, such as the availability of other SADPs that use a
provider network in the service area, and prior years' network adequacy
data to identify counties in which SADP issuers have struggled to meet
standards due to a shortage of dental providers. In addition,
commenters specifically mentioned as barriers geographic barriers and
providers' unwillingness to enter into provider contracts. A handful of
commenters suggested that State regulators should decide whether to
allow non-network plans to be certified as QHPs on an Exchange. One
commenter recommended that we implement this ``prohibitively
difficult'' approach for allowing certain SADPs to not use a provider
network with a pre-approved form for SADPs to request the exception and
permit an abbreviated filing for subsequent years if a SADP filed the
full request in a prior year. This commenter also requested
clarification that the ``prohibitively difficult'' exception does not
require an attestation, as well as clarification as to the meaning of
``extreme difficulties'' in developing a dental provider network.
Response: We are finalizing this proposal with a limited exception
for SADPs that sell plans in areas where it is prohibitively difficult
for the issuer to establish a network of dental providers. This limited
exception follows logically from how the requirements in sections
1311(c)(1)(B) and (C) of the ACA that plans ensure a sufficient choice
of providers, including ECPs, apply in the unique SADP context. As
commenters point out, if creating a network of dental providers is
prohibitively difficult for SADPs in certain areas, it is foreseeable
that there may be some areas where SADPs could not be Exchange-
certified (in Alaska and Montana, for example). That risks there being
no SADPs in that area and thus no choice of dental providers through
SADPs at all. Thus, in this limited context, requiring a network would
defeat the purpose of sections 1311(c)(1)(B) and (C) the ACA to ensure
that enrollees have a sufficient choice of providers.
We find additional support for this exception in section
1302(b)(4)(F) of the ACA, which states that if an SADP is offered
through an Exchange, another health plan offered through such Exchange
shall not fail to be treated as a QHP solely because the plan does not
offer coverage for pediatric services, including pediatric dental
benefits. Without an Exchange-certified SADP available on the Exchange
in those areas, all non-grandfathered individual and small group health
insurance plans in impacted areas would be required to cover the
pediatric dental EHB, and would be required to develop a network of
pediatric dental providers in accordance with the policy finalized in
this rule. Imposing this certification requirement on these health
plans would likely cause health plans in the area to fail this
certification requirement, as SADPs would have already established the
difficulty in creating pediatric dental networks in this area. The
ultimate result would be that QHPs may not be available on the
respective Exchange in those areas, as all non-grandfathered individual
and small group health insurance plans in the State would not be
permitted to omit coverage of the pediatric dental EHB.
This limited exception will be codified at Sec. 156.230(a)(4).
Under this exception, we will consider an area to be one where it is
``prohibitively difficult'' for the SADP issuer to establish a network
of dental providers based on attestations from State departments of
insurance in States with at least 80 percent of their counties
classified as CEAC that at least one of the following factors exists in
the area of concern: a significant shortage of dental providers, a
significant number of dental providers unwilling to contract with
Exchange issuers, or significant geographic limitations impacting
consumer access to dental providers. For purposes of its network
adequacy standards, CMS uses a county type designation method that is
based on the population size and density parameters of individual
counties. These parameters are foundationally based on approaches used
by the U.S. Census Bureau in its classification of ``urbanized areas''
and ``urban clusters,'' and by the Office of Management and Budget
(OMB) in its classifications of ``metropolitan'' and ``micropolitan.''
The CEAC county type designation is based on a U.S. Census Bureau
population density estimate of fewer than 10 people per square mile.
This approach was informed by comments submitted in response to our
solicitation for comments regarding if and/or how we should design a
limited exception for SADP issuers. The States of Alaska and Montana
were the only two States that expressed a need for this limited
exception in their public comments, and are the only two States with
FFEs that have had SADPs without a provider network for the past two
years. The State of Alaska noted that out of the 2,200 people in the
country enrolled in SADPs without provider networks in 2021,
approximately 1,000 of those individuals resided in Alaska. The State
of Alaska requested in its public comment that if HHS proceeds with
requiring SADPs to use a provider network that we include a limited
exception for SADPs in areas where it is prohibitively difficult to
establish a network, noting that 90 percent of counties in Alaska with
Exchange-certified SADPs without provider networks have no Exchange-
certified SADPs with provider networks. Furthermore, the State of
Montana stated in its public comment that they have unique challenges
as it pertains to health care delivery and access, including geographic
barriers to care and a limited number of dentists
[[Page 25879]]
practicing in Montana who are willing to contract with issuers. The
State of Montana strongly supported HHS establishing an exception to
the provider network requirement for SADPs in areas where it is
difficult for issuers to establish SADPs with provider networks based
on information supporting such an exception, including data provided in
an issuer's ECP/NA template.
These comments submitted by the States of Alaska and Montana,
combined with data provided in issuers' ECP/NA templates or
justification forms, demonstrate that in States with 80 percent or more
of their counties classified as CEAC (that is, Alaska, Montana, North
Dakota, and Wyoming), it is prohibitively more difficult for issuers to
establishing a network of dental providers compared with issuers in
States with fewer than 80 percent of their counties classified as CEAC,
as evidenced by the limited availability of SADPs that use a provider
network in these States and/or the limited number of contracted
dentists. Given that our network adequacy time and distance standards
allow for an issuer to receive credit for a provider across county/
State lines so long as the provider is within the requisite time and
distance of consumers in the respective county, issuers operating in
States with fewer than 80 percent of their counties classified as CEAC
have performed better overall with respect to meeting network adequacy
standards than issuers in Alaska, Montana, North Dakota, and Wyoming,
demonstrating that States with fewer than 80 percent of their counties
classified as CEAC are not in need of this exception. Therefore,
limiting this SADP exception to States with 80 percent or more of their
counties classified as CEAC aligns with our solicitation for comments
regarding whether we should consider the availability of other SADPs
that use a provider network in the service area and prior years'
network adequacy data submitted in issuers' ECP/NA templates or
justification forms to identify counties in which SADP issuers have
struggled to meet standards due to a shortage of dental providers.
We expect that States, in determining whether an area has been
impacted by at least one of the above factors to the degree of being
considered ``prohibitively difficult'' for SADP issuers to establish a
network of dental providers, will take into account a number of non-
exhaustive factors, such as the availability of other SADPs that use a
provider network in the service area and prior years' network adequacy
data to identify counties in which SADP issuers have struggled to meet
standards due to a shortage of dental providers. Other factors could
include extreme difficulties in developing a dental provider network,
or data provided in the ECP/NA template or justification forms during
the QHP application submission process that reflect such extreme
difficulties, and geographic barriers. Where we have determined that an
area is one where it is ``prohibitively difficult'' for the SADP issuer
to establish a network of dental providers based on attestations from
State departments of insurance, all SADPs that are seeking Exchange
certification and that are offering coverage in that area will be
exempt from the requirement to use a provider network. In areas for
which we have not made such a determination, SADP issuers may still
avail themselves of the written justification process at Sec.
156.230(a)(2)(ii).
We also believe that this limited exception is justified for SADPs
in part because, unlike health plans, dental-only coverage constitutes
an excepted benefit under section 2791(c)(2)(A) of the PHS Act. In
addition, there is limited exposure to unanticipated out-of-pocket
costs for pediatric dental EHB in SADPs that do not use a network of
providers, and there are a relatively small number of pediatric dental
EHBs that are covered by such a plan. Collectively, these factors
significantly limit the potential that those receiving pediatric dental
EHB will experience excessive out-of-pocket costs. Thus, we are not
extending this limited exception to health plans. No commenters
indicated that it is prohibitively difficult for health plans to
establish a network of providers that complies with Sec. Sec. 156.230
and 156.235 (or sections 1311(c)(1)(B) or (C) of the ACA) or that such
a requirement may result in the inability for health plans to be
certified as QHPs in specific areas. As a result, we are codifying the
limited exception for SADPs only at this time.
We will operationalize this limited exception beginning with
certification for PY 2024 and anticipate that States will apply for
this exception and include a justification for requiring an exception.
We envision providing SADP issuers and States ample guidance in advance
of PY 2024, and in any event, envision working closely with State
regulators in these areas. We considered allowing issuers to apply for
an exception, but we believe that State regulators are better
positioned to make recommendations to HHS, as they know the challenges
of their markets. We also believe that the conditions for granting or
not granting an exception would not exist at an issuer level, but
instead at a county or service area level, such that issuer-specific
applications would be inappropriate.
Compliance With Appointment Wait Time Standards
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78289), we noted that in the 2023 Payment
Notice, we finalized the requirement that issuers demonstrate
compliance with appointment wait time standards via attestation,
beginning in PY 2024.
We received numerous comments in response to the finalized policy
from the 2023 Payment Notice raising concerns regarding the
implementation of appointment wait time standards for QHP issuers
beginning in PY 2024. In response to the public comments, we are
amending Sec. 156.230(a)(2)(i)(B) to delay applicability of this
standard until PY 2025. We summarize and respond to public comments
received below.
Comment: Most commenters opposed applying appointment wait time
standards beginning in PY 2024 and requested delayed implementation to
PY 2025. Several commenters highlighted the need for HHS to issue
additional guidance necessary for issuers to comply with appointment
wait time standards, and to allow the industry time to comment on that
guidance. Many commenters noted the lack of specificity around how
appointment wait times would be assessed and how issuers could attest
without a standard metric. Other commenters were concerned that States
do not have the tools to assess compliance or additional resources to
conduct compliance activities. A few commenters were concerned with the
following barriers to implementation: the burden on providers to report
data to issuers; the operational challenges in monitoring contracted
providers; the difficulty in receiving accurate wait time data from
providers; and fluctuations in appointment wait times during the PY.
Other commenters noted workforce staffing, recruiting, and retention
challenges as additional barriers. By contrast, a few commenters
supported implementing the appointment wait time policy on the
finalized schedule so that consumers have access to timely necessary
care. Others supported the standard but requested that the methodology
for assessing compliance include additional methodologies other than
issuer attestation.
Response: As noted above, we agree with the many commenters that
implementation of the appointment wait
[[Page 25880]]
time standards should be delayed by one PY. We are amending the
regulation to delay the applicability of the appointment wait time
standards until PY 2025. We are also aware of other HHS initiatives to
define and implement appointment wait times standards for other program
areas. The additional PY delay will allow HHS to ensure that these wait
time standards are implemented in a holistic, logical way across
programs. Accordingly, QHP issuers in FFEs will have one additional PY
before being required to attest to meeting appointment wait time
standards.
As we noted in the 2023 Payment Notice, specific guidelines for
complying with appointment wait time standards will be released in
later guidance. This will allow us additional time to develop specific
guidelines for how issuers should collect the requisite data from
providers, how the metrics should be interpreted, and for public
comment on the proposed guidance. Issuers that do not yet meet the
appointment wait time standards once implemented in PY 2025, will be
able to use the justification process to update HHS on the progress of
their contracting efforts for the respective plan year.
We encourage issuers that have implemented monitoring and data
collection of provider appointment wait times to continue to do so.
However, under this new timeline, we will not be actively collecting or
requiring submission of any data or attestations for compliance with
the standards for purposes of QHP certification for PY 2024.
Comment: Some commenters noted the proposed rule would require QHPs
on all Exchanges to comply with network adequacy standards but that
appointment wait time criteria would only apply to issuers in FFEs.
Others requested that HHS establish Federal appointment wait time
standards that would be applicable to issuers in all Exchanges,
including State Exchanges.
Response: As we noted in the 2023 Payment Notice (87 FR 27334), we
appreciate these comments and understand that there are diverse
opinions regarding the appropriate regulator for network adequacy
standards in State Exchanges. We will monitor existing network adequacy
standards in State Exchanges relative to the Federal standards and will
consider whether applying Federal standards to issuers in State
Exchanges in future PYs is warranted.
Comment: One commenter requested revisions to the wait time
standards for dental issuers and to reduce the required wait time
standard compliance percentage from 90 percent to 80 percent during the
first 3 years. A few commenters requested that the appointment wait
time standards be applicable to pediatric providers separately.
Response: We appreciate the detailed recommendations around
appointment wait times and we will take these comments under advisement
as we continue to specify the Federal appointment wait time standards.
8. Essential Community Providers (Sec. 156.235)
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78289), we proposed to expand access to
care for low-income and medically underserved consumers by
strengthening ECP standards for QHP certification, as discussed in this
section. First, HHS proposed to establish two additional stand-alone
ECP categories at Sec. 156.235(a)(2)(ii)(B) for PY 2024 and beyond:
Mental Health Facilities and Substance Use Disorder (SUD) Treatment
Centers. In doing so, two provider types currently categorized as
``Other ECP Providers'' (Community Mental Health Centers and SUD
Treatment Centers) would be recategorized within these new proposed
stand-alone ECP categories. We proposed to crosswalk the Community
Mental Health Centers provider type into the newly created stand-alone
Mental Health Facilities category and the SUD Treatment Centers
provider type into the newly created stand-alone SUD Treatment Centers
category. Additionally, we proposed to add Rural Emergency Hospitals
(REHs) as a provider type in the Other ECP Providers ECP category (87
FR 78289). We stated in the proposed rule that this addition would
reflect the fact that on or after January 1, 2023, REHs may begin
participating in the Medicare program. As we noted in July 2022,
``[t]he REH designation provides an opportunity for Critical Access
Hospitals (CAHs) and certain rural hospitals to avert potential closure
and continue to provide essential services for the communities they
serve.'' \308\ We stated in the proposed rule that we believe the
inclusion of REHs on the ECP List may increase access to needed care
for low-income and medically underserved consumers in rural
communities.
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\308\ https://www.cms.gov/newsroom/fact-sheets/rural-emergency-hospitals-proposed-rulemaking.
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ECPs include providers that serve predominantly low-income and
medically underserved individuals, and specifically include providers
described in section 340B(a)(4) of the PHS Act and section
1927(c)(1)(D)(i)(IV) of the Act. Section 156.235 establishes the
requirements for the inclusion of ECPs in QHP provider networks.
Section 156.235(a) requires QHP issuers to include a sufficient number
and geographic distribution of ECPs in their networks, where available.
We explained in the proposed rule (87 FR 78289) that each plan year, we
release a final list of ECPs to assist issuers with identifying
providers that qualify for inclusion in a QHP issuer's plan network
toward satisfaction of the ECP standard under Sec. 156.235. We noted
that the list is not exhaustive and does not include every provider
that participates or is eligible to participate in the 340B Drug
Pricing Program, every provider that is described under section
1927(c)(1)(D)(i)(IV) of the Act, or every provider that may otherwise
qualify under Sec. 156.235. We explained that we endeavor to continue
improving the ECP list for future years and that these efforts include
direct provider outreach to ECPs themselves, as well as reviewing the
provider data with Federal partners.
Section 156.235(b) establishes an Alternate ECP Standard for QHP
issuers that provide a majority of their covered professional services
through physicians employed directly by the issuer or a single
contracted medical group. We noted in the proposed rule (87 FR 78289)
that the above proposal establishing two additional ECP categories and
the proposed threshold requirements discussed later in this section
would affect all QHP issuers, regardless of whether they are subject to
the General ECP Standard under Sec. 156.235(a) or Alternate ECP
Standard under Sec. 156.235(b). However, we stated that SADP issuers
would only be subject to such requirements as applied to provider types
that offer dental services, as reflected in Sec. 156.235(a)(2)(ii)(B).
Currently, QHPs that utilize provider networks are required to
contract with at least 35 percent of available ECPs in each plan's
service area to participate in the plan's provider network. In
addition, under Sec. 156.235(a)(2)(ii)(B), medical QHPs must offer a
contract in good faith to at least one ECP in each of the available ECP
categories in each county in the plan's service area and offer a
contract in good faith to all available Indian health care providers in
the plan's service area. Under Sec. 156.235(a)(2)(ii)(B), the six ECP
categories currently include Federally Qualified Health Centers, Ryan
White Program Providers, Family Planning Providers, Indian Health Care
Providers, Inpatient Hospitals, and Other ECP Providers (currently
defined to include
[[Page 25881]]
Substance Use Disorder Treatment Centers, Community Mental Health
Centers, Rural Health Clinics, Black Lung Clinics, Hemophilia Treatment
Centers, Sexually Transmitted Disease Clinics, and Tuberculosis
Clinics).
We stated in the proposed rule (87 FR 78290) that the establishment
of two new stand-alone ECP categories (Mental Health Facilities and SUD
Treatment Centers) would strengthen the ECP standard in two ways: (1)
by requiring that medical QHP issuers offer a contract in good faith to
at least one SUD Treatment Center and at least one Mental Health
Facility that qualify as ECPs in each county in the plan's service
area, as opposed to being blended with other provider types in the
existing ``Other ECP Provider'' category; and (2) by decreasing the
number of provider types remaining in the ``Other ECP Provider''
category, thereby increasing the likelihood that remaining provider
types included in the ``Other ECP Provider'' category will receive a
contract offer from a medical QHP issuer to satisfy the requirement
that they must offer a contract in good faith to at least one provider
in each ECP category in each county in the plan's service area.
As we explained in the proposed rule (87 FR 78290), given that the
ECP standard is facility-based, the inclusion of SUD Treatment Centers
and Mental Health Facilities on the HHS ECP list would be limited to
those facilities identified by the Substance Abuse and Mental Health
Services Administration (SAMHSA) or CMS as providing such services, in
addition to fulfilling other ECP qualification requirements as
specified at Sec. 156.235(c).
We stated in the proposed rule (87 FR 78290), that if this proposal
is finalized as proposed, the eight available stand-alone ECP
categories would consist of the following: (1) Federally Qualified
Health Centers; (2) Ryan White Program Providers; (3) Family Planning
Providers; (4) Indian Health Care Providers; (5) Inpatient Hospitals,
(6) Mental Health Facilities; (7) SUD Treatment Centers, and (8) Other
ECP Providers, to include Rural Health Clinics, Black Lung Clinics,
Hemophilia Treatment Centers, Sexually Transmitted Disease Clinics, and
Tuberculosis Clinics. The proposed ECP categories and ECP provider
types within those categories in the FFEs for PY 2024 and beyond are
set forth in Table 12 (as discussed below, we are finalizing these as
proposed).
[GRAPHIC] [TIFF OMITTED] TR27AP23.022
In addition, we proposed to revise Sec. 156.235(a)(2)(i) to
require QHPs to contract with at least a minimum percentage of
available ECPs in each plan's service area within certain ECP
categories, as specified by HHS. Specifically, we proposed to require
QHPs to contract with at least 35 percent of available FQHCs that
qualify as ECPs in the plan's service area and at least 35 percent of
available Family Planning Providers that qualify as ECPs in the plan's
service area. Furthermore, we proposed to revise Sec. 156.235(a)(2)(i)
to clarify that these proposed requirements would be in addition to the
existing provision that QHPs must satisfy the overall 35 percent ECP
threshold requirement in the plan's service area. We noted that we
would retain the current overall ECP provider participation standard of
35 percent of available ECPs based on the applicable PY HHS ECP list,
including approved ECP write-ins that would also count toward a QHP
issuer's satisfaction of the 35 percent threshold.
We proposed that only two ECP categories, FQHCs and Family Planning
Providers, be subject to the additional 35 percent threshold in PY 2024
and beyond. We stated in the proposed rule (87 FR 78291) that these two
categories were selected, in part, because they represent the two
largest ECP categories; together, these two categories comprise a
significant majority of all facilities on the ECP List. As we explained
in the
[[Page 25882]]
proposed rule, applying an additional 35 percent threshold to these two
categories could increase consumer access in low-income areas that
could benefit from the additional access to the broad range of health
care services that these particular providers offer. We stated that we
may consider applying a specified threshold to other ECP categories in
future rulemaking, if we find that additional ECP categories contain a
sufficient number and geographic distribution of providers to allow for
application of the threshold without inflicting undue burden on issuers
by effectively forcing them to contract with a few specific providers.
We explained that, based on data from PY 2023, it is likely that a
majority of issuers would be able to meet or exceed the threshold
requirements for FQHCs and Family Planning Providers without needing to
contract with additional providers in these categories. To illustrate,
we stated that if these requirements had been in place for PY 2023, out
of 137 QHP issuers on the FFEs, 76 percent would have been able to meet
or exceed the 35 percent FQHC threshold, while 61 percent would have
been able to meet or exceed the 35 percent Family Planning Provider
threshold without contracting with additional providers. For SADP
issuers, 84 percent would have been able to meet the 35 percent
threshold requirement for FQHCs offering dental services without
contracting with additional providers. We further stated that in PY
2023, for medical QHPs, the mean and median percentages of contracted
ECPs for the FQHC category were 74 and 83 percent, respectively. For
the Family Planning Providers category, the mean and median percentages
of contracted ECPs were 66 and 71 percent, respectively. For SADPs, the
mean and median percentages of contracted ECPs for the FQHC category
were 61 and 64 percent, respectively.
In the proposed rule (87 FR 78291), we acknowledged challenges
associated with a general shortage and uneven distribution of SUD
Treatment Centers and Mental Health Facilities. However, we noted that
the ACA requires that a QHP's network include ECPs where available. As
such, we explained that the proposal to require QHPs to offer a
contract to at least one available SUD Treatment Center and one
available Mental Health Facility in every county in the plan's service
area does not unduly penalize issuers facing a lack of certain types of
ECPs within a service area, meaning that if there are no provider types
that map to a specified ECP category available within the respective
county, the issuer is not penalized. Further, we explained that, as
outlined in prior Letters to Issuers, HHS prepares the applicable PY
HHS ECP list that potential QHPs use to identify eligible ECP
facilities. The HHS ECP list reflects eligible providers (that is, the
denominator) from which an issuer may select for contracting to count
toward satisfying the ECP standard. We noted that, as a result, issuers
are not disadvantaged if their service areas contain fewer ECPs. We
explained that we anticipate that any QHP issuers falling short of the
35 percent threshold for PY 2024 and beyond could satisfy the standard
by using ECP write-ins and justifications. We stated that as in
previous years, if an issuer's application does not satisfy the ECP
standard, the issuer would be required to include as part of its
application for QHP certification a satisfactory justification.
We sought comment on these proposals.
After reviewing the public comments, we are finalizing, as
proposed, for PY 2024 and subsequent PYs, the establishment of two
additional stand-alone ECP categories at Sec. 156.235(a)(2)(ii)(B),
Mental Health Facilities and SUD Treatment Centers, and the addition of
REHs as a provider type in the Other ECP Providers category. In
addition, we are finalizing, as proposed, revisions to Sec.
156.235(a)(2)(i) to require QHPs to contract with at least a minimum
percentage of available ECPs in each plan's service area within certain
ECP categories, as specified by HHS. Specifically, we are finalizing
that QHPs must contract with at least 35 percent of available FQHCs
that qualify as ECPs in the plan's service area and at least 35 percent
of available Family Planning Providers that qualify as ECPs in the
plan's service area for PY 2024 and subsequent PYs. Furthermore, we are
finalizing, as proposed, revisions to Sec. 156.235(a)(2)(i) to clarify
that these threshold requirements will be in addition to the existing
provision that QHPs must satisfy the overall 35 percent ECP threshold
requirement in the plan's service area. As stated earlier, we noted in
the proposed rule (87 FR 78289) that the proposal establishing two
additional ECP categories and the proposed threshold requirements would
affect all QHP issuers, regardless of whether they are subject to the
General ECP Standard under Sec. 156.235(a) or Alternate ECP Standard
under Sec. 156.235(b), but we stated that SADP issuers would only be
subject to such requirements as applied to provider types that offer
dental services, as reflected in Sec. 156.235(a)(2)(ii)(B). However,
we omitted corresponding regulation text amendments in the proposed
rule. We are including regulation text amendments at Sec.
156.235(b)(2)(i) to codify this policy as proposed.
We summarize and respond to public comments received on the
proposed policies, below.
Comment: The majority of commenters supported the proposal to
create the standalone ECP categories for SUD Treatment Centers and
Mental Health Facilities, noting that the new categories will expand
access to mental health services and SUD treatment. One commenter urged
HHS to further define what types of facilities are included in the SUD
Treatment Centers and Mental Health Facilities categories. One
commenter recommended that HHS use the language ``mental health
organizations'' because ``mental health organizations'' is a broader
term and can include peer-run organizations and other community-based
mental health centers. They indicated that these organizations receive
funding and technical assistance from SAMHSA and that they would be
able to service more individuals if they were ECPs. Two commenters
requested that HHS establish an additional ECP category for ``pediatric
mental health facility.''
Response: We are finalizing the creation of standalone ECP
categories for SUD Treatment Centers and Mental Health Facilities as
proposed. As noted by commenters and explained in the proposed rule (87
FR 78290), we believe that establishing these new standalone categories
will expand access to mental health services and SUD treatment.
Regarding the suggestion to use the broader term ``mental health
organizations,'' the commenter noted that this term can include the use
of peer-run organizations. CMS partners with SAMHSA to ensure that a
range of providers providing mental health and SUD care appear on the
HHS ECP list in order to increase access for all consumers who need
these types of care. HHS may consider additional ECP categories or
provider types, including pediatric mental health providers and other
types of mental health organizations, in future rulemaking, if analysis
suggests that there is a sufficient number and distribution of such
providers.
Comment: Two commenters opposed HHS' proposal to establish these
ECP categories. One of these comments urged HHS to delay implementation
of the standalone categories until PY 2025 to allow issuers more time
to prepare and to evaluate the impact of the proposal. One commenter
did not
[[Page 25883]]
specifically state whether they supported or opposed the proposal but
stated that regulation should be left to the States. Two commenters
recognized that issuers may have difficulty meeting the requirements
due to inadequate provider supply. One of these two commenters
recommended delaying the implementation of the two categories until
further analysis can be conducted to determine the best way to contract
with quality SUD treatment and mental health providers.
Response: In response to concerns raised about potential
difficulties meeting the increased standard because of a provider
supply shortage, we note that the standard does not penalize issuers
that lack certain types of ECPs within a service area. First, section
1311(c)(1)(C) of the ACA requires that a QHP's network include those
ECPs, where available, that serve predominantly low income and
medically-underserved populations. As such, as we explained in the
proposed rule (87 FR 78291), the proposal to require QHPs to offer a
contract to at least one available SUD Treatment Center and one
available Mental Health Facility in every county in the plan's service
area does not unduly penalize issuers facing a lack of certain types of
ECPs within a service area. In addition, as outlined in prior Letters
to Issuers, HHS prepares the applicable PY HHS ECP list that potential
QHPs use to identify eligible ECP facilities. The HHS ECP list reflects
eligible providers (that is, the denominator) from which an issuer may
select for contracting to count toward satisfying the ECP
standard.\309\ As a result, issuers are not disadvantaged if their
service areas contain fewer ECPs. Further, as in prior years, there
will be mechanisms in place to assist issuers who encounter difficulty
meeting any element of the ECP standard during certification, including
the ECP Justification Form and the ECP Write-in Worksheet.\310\ We
reflect this in our regulations (Sec. 156.235(a)(3) and (b)(3)) by
permitting issuers that cannot meet the contracting standards to
satisfy the QHP certification standard by submitting a justification.
Therefore, the standard does not penalize issuers that cannot meet the
ECP standard because of a lack of certain types of ECPs within a
service area. Moreover, we anticipate implementing these categories for
PY 2024 will increase consumer access to vitally important mental
health and SUD care, enhancing health equity for low-income and
medically underserved consumers. Thus, we are not delaying
implementation until PY 2025.
---------------------------------------------------------------------------
\309\ HHS also endeavors to continue improving the ECP list for
future plan years, and invites issuers to encourage any mental
health or SUD provider in that issuer's service area to submit an
ECP petition for potential inclusion on the list.
\310\ See https://www.qhpcertification.cms.gov/s/ECP%20and%20Network%20Adequacy and https://www.qhpcertification.cms.gov/s/Essential%20Community%20Providers%20and%20Network%20Adequacy%20FAQs
for more information.
---------------------------------------------------------------------------
Comment: One commenter supported the proposal but expressed patient
access concerns, as many mental health and SUD facilities are religious
in nature, and LGBTQIA+ and racial and ethnic minority groups have
frequently expressed discomfort with religiously affiliated programs.
The commenter urged HHS to ensure that the ECP list also includes
secular mental health and SUD facilities.
Response: We acknowledge the commenter's concern and remain
committed to continuously improving the ECP list such that it includes
a wide range of providers that can provide care for all consumers,
recognizing that diverse patient populations may have varying needs and
preferences for their care, including mental health and SUD care.
Comment: Several commenters supported the proposal to add REHs to
the Other ECP Providers category, citing expanded access to care in
rural areas.
Response: We agree that including REHs in the Other ECP Providers
category may increase access to needed care for low-income and
medically underserved consumers in rural communities, and are
finalizing the addition of REHs to the Other ECP Providers category as
proposed. As we noted in the proposed rule (87 FR 78289), REHs are a
new provider type established to address the growing concern over
closures of rural hospitals, and as such, there may initially be few
REHs on the ECP list. We anticipate that the number of REHs on the ECP
list will grow in future years as some current ECPs, such as critical
access hospitals, may potentially convert to REHs to avoid closure.
Comment: Two commenters opposed the addition of REHs to the Other
ECP Providers category. They recommended that HHS delay the proposal
until PY 2025 to allow more time for issuers to prepare and because
States, hospitals, providers, and other interested parties are in the
process of implementing new REH standards.
Response: We are finalizing our proposal to add REHs to the ``Other
ECP Providers'' category. This will increase the likelihood that
issuers will include REHs in their networks, thereby increasing access
to needed care for low-income and medically underserved consumers in
rural communities. However, we note that issuers will often have the
option to satisfy the ECP requirement by contracting with another
provider type. If no REHs are available in a service area, the issuer
will not be penalized.
Comment: Many commenters supported the proposal to apply the 35
percent threshold to FQHCs and Family Planning Providers, citing
enhanced access to care for low-income, medically underserved
consumers. One commenter stated that its support for the extension of
the 35 percent requirement threshold to FQHCs was contingent on HHS'
ECP justification process remaining the same.
Response: We agree that the application of the 35 percent threshold
to FQHCs and Family Planning Providers will enhance access to care for
low-income, medically underserved consumers, and are finalizing the 35
percent thresholds for FQHCs and Family Planning Providers as proposed.
As we stated in the proposed rule, these thresholds will apply to all
issuers regardless of whether they are subject to the General ECP
standards under Sec. 156.235(a) or the Alternate ECP Standards under
Sec. 156.235(b). We note that SADP issuers will only be subject to
such requirements as applied to provider types that offer dental
services, as reflected in Sec. 156.235(a)(2)(ii)(B). Apart from some
enhancements to the ECP Justification Form to facilitate issuers'
reporting to CMS when provider facilities have closed or are no longer
interested in contracting, or when issuers have encountered other
contracting barriers beyond their control, the justification process
remains broadly the same as in PY 2023.
Comment: Some commenters opposed the proposed categorical threshold
requirements (that is, the proposed threshold requirements that would
apply to specific categories of ECPs), stating that they do not account
for regional variations in provider availability, enrollee needs, and
geographic features. Commenters also stated that categorical thresholds
may lead to inflexibility in contracting with high-quality providers
and increased administrative costs. Two of the opposing commenters
expressed concerns about not being given enough time to negotiate new
contracts with providers. However, one commenter acknowledged that
issuers that fall short of the requirement could submit ECP write-ins
and justification forms.
Response: We recognize commenters' concerns given that issuer
network participation negotiations are a tool that issuers use to
manage costs, which are
[[Page 25884]]
generally reflected in lower premium rates. Reducing issuers' ability
to limit the scope of their networks could reduce the utility of that
cost management tool and potentially cause premiums to increase. In
considering these factors, we elected not to propose to extend the 35
percent threshold to each of the major ECP categories. Rather, we
proposed that only two major ECP categories, FQHCs and Family Planning
Providers, be subject to the additional 35 percent threshold in PY 2024
and beyond. These two categories were selected, in part, because they
represent the two largest ECP categories; together, these two
categories comprise a significant majority of all facilities on the ECP
list. Applying an additional 35 percent threshold to these two
categories could increase consumer access in low-income areas that
could benefit from the additional access to the broad range of health
care services that these particular providers offer. As we explained in
the proposed rule (87 FR 78291), because there is already a robust
number of these two types of facilities on the ECP list, we do not
anticipate that it will be unduly burdensome for issuers to contract
with 35 percent of available providers of these types in the plan's
service area. We acknowledge that extending the 35 percent threshold to
those ECP categories that contain fewer total providers, on the other
hand, could potentially lead to decreased contracting flexibility for
issuers.
If issuers encounter difficulty meeting the 35 percent thresholds
for FQHCs and/or Family Planning Providers due to insufficient time,
provider availability, or flexibility to carry out contracting
activities, we remind issuers that the ECP Justification Form, the ECP
Write-in Worksheet, and the ECP/NA Post-certification Compliance
Monitoring (PCM) program are available as tools to assist issuers with
their good faith efforts toward compliance with the applicable ECP
standard.
Comment: Several commenters noted support for HHS' proposal to
increase the contracting threshold for FQHCs from 30 to 35 percent.
Response: We did not make such a proposal in the proposed rule. We
proposed, and are finalizing, the application of a 35 percent ECP
threshold to both FQHCs and Family Planning Providers (in addition to
the existing overall 35 percent ECP threshold requirement in the plan's
service area). In prior years, the threshold percentage applied overall
across categories and did not apply specifically to any individual ECP
category.
9. Termination of Coverage or Enrollment for Qualified Individuals
(Sec. 156.270)
a. Establishing a Timeliness Standard for Notices of Payment
Delinquency
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78291), we proposed to amend Sec.
156.270(f) by adding a timeliness standard to the requirement for QHP
issuers in Exchanges to send enrollees notice of payment delinquency.
Specifically, we proposed to revise Sec. 156.270(f) to require issuers
to send notice of payment delinquency promptly and without undue delay.
We stated in the proposed rule that HHS has long required issuers
to send notices of non-payment of premium (77 FR 18469), so that
enrollees who become delinquent on premium payments are aware and have
a chance to avoid termination of coverage. In accordance with Sec.
156.270(a), issuers may terminate coverage for the reasons specified in
Sec. 155.430(b), which under paragraph (2)(ii) includes termination of
coverage due to non-payment of premiums. Enrollees who are receiving
APTC and who fail to timely pay their premiums are entitled to a 3-
month grace period, described at Sec. 156.270(d), during which they
may return to good standing by paying all outstanding premium before
the end of the 3 months. We noted in the proposed rule (87 FR 78291)
that enrollees who are not receiving APTC may also be entitled to a
grace period under State law, if applicable.
As we explained in the proposed rule (87 FR 78291), we have an
interest in helping enrollees maintain coverage by establishing basic
standards of communication between the QHP issuer and enrollees
regarding premium payment status, especially at the start of an
enrollment and when an enrollment has entered delinquency for failure
to timely pay premium and is at risk for termination. For example, we
stated that before Exchange coverage is effectuated, the Exchanges on
the Federal platform generally require that the enrollee make a binder
payment (first month's premium) by prescribed due dates.\311\ At Sec.
156.270(f), we have also regulated on communicating to an enrollee when
they have become delinquent on premium payment and when their coverage
has been terminated. But we noted that while the regulation at Sec.
156.270(f) requires that issuers notify enrollees when they become
delinquent on premium payments, we currently set no timeliness
requirements for issuers. We stated that, in conducting oversight of
issuers, we are aware that in some instances, issuers have delayed
notifying enrollees of delinquency, and are concerned that there may be
situations in which enrollees are not timely informed that they have
become delinquent on premium payments, thus limiting the amount of time
they have available to rectify the delinquency and avoid termination of
coverage. We noted that in extreme cases, an enrollee may not become
aware that they have become delinquent until termination of coverage
has already occurred. For example, we noted that if an enrollee (who
was not receiving APTC) failed to pay August's premium but was not
informed by the issuer they had become delinquent until September, they
would have already lost coverage and will not have an opportunity to
restore it. We acknowledged that there may also be uncertainty among
issuers regarding their requirement to send notices of delinquency,
since we have not provided guidance on when this notice must be sent.
---------------------------------------------------------------------------
\311\ See Sec. 155.400(e).
---------------------------------------------------------------------------
As we explained in the proposed rule (87 FR 78292), modifying Sec.
156.270(f) to require issuers operating in Exchanges to send notices of
payment delinquency promptly and without undue delay would ensure that
issuers are promptly sending these notices when enrollees fail to make
premium payments, so that enrollees are aware they are at risk of
losing coverage, including when they are entering a grace period
(either the 3-month grace period for enrollees who are receiving APTC,
or a State grace period if applicable). We noted that it would also
provide clarity to issuers regarding their obligation to send a notice
when an enrollee becomes delinquent on premium payment. Finally, we
stated that updating this regulation would serve HHS' goal of promoting
continuity of coverage by ensuring enrollees are aware they have become
delinquent on premium payment and have a chance to pay their
outstanding premium to avoid losing coverage. We sought comments on
this proposal.
In addition, to further help ensure that notices are sent in a
timely and uniform manner, we stated that we believe it would be
important to specify the number of days within which the issuer must
send notice from the time an enrollee becomes delinquent on payment.
Thus, we also solicited comment on what a reasonable timeframe would be
for sending notices of delinquency to enrollees.
After reviewing the public comments, we are finalizing our proposal
to revise Sec. 156.270(f) to require QHP issuers in
[[Page 25885]]
Exchanges on the Federal platform to send notices of payment
delinquency promptly and without undue delay. We are also finalizing
that such notices must be sent within 10 business days of the date the
issuer should have discovered the delinquency. In addition, we clarify
that this timeliness requirement only applies to QHP issuers operating
in Exchanges on the Federal platform. We summarize and respond below to
public comments received on the proposal to require issuers to send
notice of payment delinquency promptly and without undue delay, and on
the comment solicitation regarding a reasonable timeframe for sending
notices of delinquency to enrollees.
Comment: Most commenters who addressed the proposal to add a
timeliness standard for sending notices supported it, stating that the
proposal would help better ensure continuity of coverage and access to
health care services for enrollees. One commenter stated that the
proposal would help ensure issuers do not arbitrarily terminate
coverage without providing the enrollee a chance to make a payment that
may be needed to maintain their coverage.
Response: We agree with commenters that adding the timeliness
standard will help ensure continuity of coverage and access to health
care services, as well as help ensure issuers do not arbitrarily
terminate coverage without providing the enrollee a chance to make a
payment that may be needed to maintain their coverage. As discussed
further below, we are finalizing the timeliness standard with
modification.
Comment: One commenter opposed the proposal, stating that such
rules are already included and enforced at the State level. In
addition, one commenter who supported the proposal suggested that HHS
could deem issuers compliant with the policy in States that have
existing time frames for sending notices to enrollees with premiums in
arrears.
Response: While we acknowledge some States have their own rules, as
we noted in the proposed rule (87 FR 78291), HHS has observed instances
in which issuers significantly delayed sending delinquency notices,
limiting enrollees' ability to pay past due premium prior to
termination of coverage. It is thus important to establish a minimum
standard for when issuers must send notices of payment delinquency so
that enrollees consistently receive such notices in a timely manner.
Under this approach, in States that do not have requirements or that
have less stringent requirements, issuers of QHPs in Exchanges on the
Federal platform would at least be required to meet this new Federal
standard, though States may establish a timeliness standard that is
more protective. However, we clarify that this timeliness requirement
does not apply to SBEs. Unlike the Exchanges on the Federal platform,
some SBEs collect and aggregate premium on behalf of issuers, or send
delinquency notices to consumers, and thus it is appropriate to avoid
extending this requirement to issuers in SBEs.
Comment: Two commenters supported adding a timeliness standard to
the requirement for QHP issuers to send enrollees notice of payment
delinquency but did not recommend including a specific timeframe for
this requirement. These commenters encouraged CMS to allow issuers to
maintain their best practices for sending delinquency payment notices,
and cautioned that issuers need sufficient time to process enrollee
payments received in the few days before and after a payment due date
to ensure consumers do not unnecessarily receive a notice of payment
delinquency.
Response: We acknowledge that issuers have historically had a
variety of practices for sending delinquency notices, and that they
need sufficient time to process enrollee payments to ensure consumers
do not unnecessarily receive a notice of payment delinquency. However,
we also believe it is important that enrollees are given adequate time
to make payments before any applicable grace period expires. To balance
providing issuers sufficient time to process payments around the
payment due date and ensuring that enrollees timely receive notice of
payment delinquency, we are finalizing a standard that requires issuers
to send delinquency notices within 10 business days of the date the
issuer should have discovered the delinquency.
Comment: One commenter recommended that taglines (including large
print taglines) be added to delinquency notices to address the needs of
consumers with LEP and/or sight issues.
Response: Although this comment is not within the scope of our
proposals on the timeliness standard presented in the proposed rule, we
appreciate that consumers with disabilities may have a need for
reasonable accommodations with regard to the notices they receive.
Issuers are required to provide such accommodations under State and
Federal law. Regulation on meaningful access to qualified health plan
information can be found at Sec. 156.250, and on accessibility
requirements at Sec. 155.205(c). Enrollees who need a particular
accommodation should reach out to their issuer to make the request.
Comment: Twenty commenters suggested time frames for sending
notices of delinquency to enrollees. One commenter recommended the
earliest timeframe that is reasonably possible and most protective of
enrollees. Nine commenters recommended insurers send notice of payment
immediately after the deadline. Two commenters recommended that issuers
send delinquency notices to enrollees within 5 business days following
the due date of the unpaid premium. One commenter recommended one week,
and another commenter recommended 7 calendar days, both following the
due date of the premium. Two commenters recommended 10 business days
after the discovery of the delinquency, with one commenter adding that
this would provide flexibility for situations in which an issuer is not
initially aware that an enrollee has become delinquent on premium
payments. This commenter also noted that there were cases in which
issuers did not receive notice of insufficient funds until 20 days
after payment was due.
One commenter recommended 12 days, with no specification of when
that time period would begin, or whether they meant business or
calendar days. One commenter recommended a minimum of 12 business days
or 15 calendar days, with no specification of when that time period
would begin. One commenter recommended that an issuer send an initial
delinquency notice within two calendar weeks of the initial
delinquency. One recommended that 30 days from the original payment due
date would be a sufficient timeline for sending such notices, but did
not specify whether they meant business or calendar days.
Response: We agree with the two commenters who suggested that 10
business days would be a reasonable timeframe for sending notices of
payment delinquency. However, in order to ensure that issuers are
promptly sending notices, we are finalizing a time frame of 10 business
days from when the issuer ``should have'' discovered the delinquency.
This means that there is an expectation that issuers will promptly send
notices of delinquency once they discover the delinquency. We believe
that requiring notice to be sent within 10 business days of the date an
issuer should have discovered the enrollee's delinquency appropriately
balances the need to ensure enrollees receive timely notice of
delinquency, while providing issuers with adequate time to send the
notices. Adopting a standard of 10 business days also allows time for
[[Page 25886]]
issuers to ensure information regarding enrollee delinquency is
accurate and to communicate with enrollees. In addition, as some
commenters noted, there are situations in which an issuer is not
initially aware that an enrollee has entered delinquency. For example,
one commenter noted that there were cases in which issuers did not
receive notice of insufficient funds until 20 days after payment was
due. Thus, the standard we are finalizing in this rule requires issuers
to send notice to enrollees within 10 business days of the date the
issuer should have discovered the delinquency so that issuers are not
required to send the notices until they should have become aware that
an enrollee is delinquent on payment.
Other timeframes suggested by commenters, such as 30 days after the
payment due date or immediately after the deadline for payment, are
either too long to ensure that enrollees are timely notified of
delinquency and have an opportunity to rectify it, or too short to give
issuers time to process an enrollee's delinquency and send a notice. We
believe that defining ``promptly without undue delay,'' as 10 business
days of the date the issuer should have discovered the delinquency
provides issuers with the flexibility to process premium payments that
arrive late, and enough time for enrollees to make late payments before
the expiration of a grace period.
Comment: One commenter recommended that HHS institute a minimum
requirement that issuers include notice of delinquency on their monthly
invoices as soon as the first missed payment and allow issuers to
continue to send additional notices using additional methods.
Response: Issuers have flexibility to implement additional notices,
and nothing prevents issuers from sending additional notices if they
would like to do so.
10. Final Deadline for Reporting Enrollment and Payment Inaccuracies
Discovered After the Initial 90-Day Reporting Window (Sec.
156.1210(c))
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78292), we proposed to amend Sec.
156.1210(c) to remove, beginning with adjustments to APTC and user fee
payments and collections for 2015 PY coverage, the alternate deadline
at Sec. 156.1210(c)(2) that allows an issuer to describe all data
inaccuracies identified in a payment and collection report by the date
HHS notifies issuers that the HHS audit process for the PY to which
such inaccuracy relates has been completed, for these data inaccuracies
to be eligible for resolution.
In the proposed rule (87 FR 78292), we proposed to revise Sec.
156.1210(c) to provide that to be eligible for resolution under Sec.
156.1210(b), an issuer must describe all inaccuracies identified in a
payment and collections report before the end of the 3-year period
beginning at the end of the PY to which the inaccuracy relates. As we
stated in the proposed rule, under this proposal, beginning with the
2020 PY coverage, HHS would not pay additional APTC payments or
reimburse user fee payments for FFE, SBE-FP, and SBE issuers for data
inaccuracies reported after the 3-year deadline. Additionally, we
proposed that HHS would not accept or take action that results in an
outgoing payment on data inaccuracies or payment errors for the 2015
through 2019 PY coverage that are reported after December 31, 2023,
which means an issuer must describe all inaccuracies identified in a
payment and collections report for PYs 2015 through 2019 before January
1, 2024. We stated that this proposal would allow issuers some
additional time after this rule is finalized to submit any inaccuracies
for the 2015 through 2019 PY coverage, for which submissions would no
longer be permitted upon the effective date of this rule if this
proposal were effective upon finalization.
We did not propose any changes to the general framework outlined in
Sec. 156.1210(c)(3), which currently states that if a payment error is
discovered after the final deadline set forth in Sec. 156.1210(c)(1)
and (2), the issuer must notify HHS, the State Exchange, or SBE-FP (as
applicable) and repay any overpayments to HHS. We proposed to retain
this language as the last sentence of new proposed Sec. 156.1210(c),
except for the reference to the alternative deadline at Sec.
156.1210(c)(2).
For issuers in State Exchanges, we further affirmed that this
proposal would not change the requirement that issuers promptly
identify and report data inaccuracies to the State Exchange.\312\ We
stated that under the proposed revisions, issuers in State Exchanges
would be subject to the same final 3-year deadline to work with the
State Exchange to resolve any enrollment or payment inaccuracies
identified after the initial 90-day reporting window for discovered
underpayments. Similarly, we also proposed that HHS would not make any
payments to issuers in State Exchanges on data inaccuracies or payment
errors for 2015 through 2019 PY coverage that are reported after
December 31, 2023. In addition, we explained that issuers in State
Exchanges would also remain subject to the existing requirement to
report data inaccuracies identified at any time when related to
overpayments.
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\312\ As previously noted, the requirements captured in Sec.
156.1210 apply to all issuers who receive APTC, including issuers in
State Exchanges. Also see part 2 of the 2022 Payment Notice, 86 FR
24258.
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We refer readers to the proposed rule for further discussion of
these proposals (87 FR 78292 through 78293). We sought comment on these
proposals.
After reviewing the public comments, we are finalizing our
proposals without modification. Specifically, we are finalizing as
proposed, removing the alternate deadline at Sec. 156.1210(c)(2)
beginning with the 2015 PY coverage,\313\ so that issuers are required
to describe all inaccuracies identified in a payment and collections
report within 3 years of the end of the applicable PY to which the
inaccuracy relates to be eligible to receive an adjustment to correct
an underpayment.\314\ Additionally, as proposed, we are finalizing at
Sec. 156.1210(c) that, for PYs 2015 through 2019, to be eligible for
resolution under paragraph (b) of this section, an issuer must describe
all inaccuracies identified in a payment and collections report before
January 1, 2024, thus allowing issuers additional time to submit any
inaccuracies for the 2015 through 2019 PY coverage. We summarize and
respond below to public comments received on the proposed provisions.
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\313\ The 2014 PY is excluded because the alternate deadline for
reporting inaccuracies closed upon completion of the 2014 audits.
See CMS. (2019, April 1). CMS Issuer Audits of Advanced Payments of
the Premium Tax Credit. https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/2014-CMS-APTC-Audits.PDF.
\314\ Underpayment in this section refers to both APTC
underpayments to the issuer and user fee overpayments to HHS, for
which an issuer would be entitled to additional payment from HHS.
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Comment: A few commenters supported the proposal to remove the
alternate deadline at Sec. 156.1210(c)(2) to resolve data inaccuracies
and report payment adjustments to HHS. Removal of the alternate
deadline requires issuers to describe all inaccuracies in a payment and
collections report within three years of the end of the applicable PY
to which the inaccuracy relates. One of these commenters was concerned
about permitting waiver of any user fees owed to an SBE-FP if
inaccuracies are discovered after the deadline and indicated that some
State-imposed user fees are determined by State law and HHS does not
have the authority to waive them.
Response: We are finalizing these changes as proposed and clarify
that
[[Page 25887]]
this policy is not intended to waive the collection of user fees owed
to SBE-FPs. Only payments to issuers to address underpayments that are
identified several years after the applicable plan year are constrained
under these changes--not incoming user fee or APTC overpayments owed by
the issuer to either HHS or a State. As explained in the proposed rule
and in part 2 of the 2022 Payment Notice (86 FR 24257), under section
1313(a)(6) of the ACA, ``payments made by, through, or in connection
with an Exchange are subject to the False Claims Act (31 U.S.C. 3729,
et seq.) if those payments include any Federal funds.'' As such, if any
issuer has an obligation to pay back APTC or pay additional user fees,
the issuer could be liable under the False Claims Act for knowingly and
improperly avoiding the obligation to pay. Section 156.1210(c) states
that if a payment error is discovered after the reporting deadline, the
issuer is obligated to notify HHS and the State Exchange (as
applicable) and repay any overpayment.
Comment: One commenter stated that removing the alternate deadline
at Sec. 156.1210(c)(2) puts issuers in a position in which they will
be expected to return overpayment of APTCs but will not be reimbursed
for underpayments when identified through an audit process, asserting
that this is unnecessarily punitive to issuers. That commenter stated
that audits are time-consuming, resource-heavy obligations to ensure
accurate payments are made and paying issuers what they owed is a
reasonable expectation.
Response: We believe the benefits of requiring inaccuracies
identified in a payment and collections report to be described within 3
years of the end of the applicable plan year to which the inaccuracy
relates outweigh any perceived inequities associated with establishing
a deadline for receiving an adjustment to correct discovered
underpayments but not for payment of amounts owed to the Federal
government. First, prompt identification and correction of payment and
enrollment errors protects enrollees from unanticipated tax liability
that could result if the APTC is greater than the amount authorized by
the Exchange. In addition, finalizing these changes ensures that HHS
and Exchange processes for handling payment and enrollment disputes for
discovered underpayments are completed before the existing IRS
limitation on amending a Federal income tax return. Second, prompt
reporting supports the efficient operation of Exchanges by aligning the
Exchange's enrollment and eligibility data, payments provided by and
collected by HHS for Exchange coverage, and the issuer's own records of
payments due. The 3-year window is intended to result in accurate
reporting and timely resolution of data inaccuracies, and will
establish a more consistent, predictable, and less operationally
burdensome process for the identification and resolution of such
inaccuracies for enrollees, issuers, HHS, and State Exchanges. Further,
we believe that requiring issuers to adhere to the 3-year deadline to
submit all disputes and address all errors will incentivize proactive
reporting of inaccuracies that will increase data integrity, and will
discourage a reactive approach of utilizing the audit process to
identify inaccuracies and utilizing the end of the audit process as an
alternative timeframe to receive additional APTC or reimbursement of
user fee payments. For all of these reasons, we therefore generally
disagree that this approach is unnecessarily punitive.
This policy requires that issuers describe all inaccuracies
identified in a payment and collections report within three years of
the end of the applicable PY to which the inaccuracy relates to be
eligible to receive an adjustment to correct an underpayment. We will
continue to take action that results in an outgoing payment on data
inaccuracies or payment errors identified through an audit process when
those errors are identified within the 3 years of the end of the
applicable PY to which the inaccuracy relates. However, under this new
framework, we will not accept or take action that results in an
outgoing payment on data inaccuracies or payment errors for the 2015
through 2019 PY coverage that are not reported before January 1, 2024.
To assist in the transitioning to this new framework, we are
affording issuers additional time to report data inaccuracies or
payment errors for the 2015 through 2019 PY coverage for discovered
underpayments, providing at Sec. 156.1210(c) that all such
inaccuracies must be reported before January 1, 2024. This one-time
window is intended to afford issuers time to address concerns with
their submissions and any discovered underpayments for these PYs before
full implementation of this policy change. We will make outgoing
payments for additional APTC or reimbursement of user fee overpayments
associated with reported errors during this one-time window, which we
believe affords ample opportunity for issuers to report any data
inaccuracies or payment errors related to discovered underpayments for
2015 through 2019 PY coverage.
Finally, we note that it is the False Claims Act (31 U.S.C. 3729,
et seq.) \315\ that obligates issuers to notify HHS and repay improper
``payments made by, through, or in connection with an Exchange . . . if
those payments include any Federal funds,'' and prohibits an issuer
from knowingly and improperly avoiding the obligation to pay. If any
issuer has an obligation to pay back APTC or pay additional user fees,
the issuer could be liable under the False Claims Act for knowingly and
improperly avoiding the obligation to pay. The requirement at Sec.
156.1210(c) that the issuer notify HHS and the State Exchange (as
applicable) and repay any overpayment (regardless of when the payment
error is discovered), aligns with obligations under the False Claims
Act. Further, we reiterate that safeguarding Federal funds is a primary
reason for APTC and user fee audits (78 FR 65087 through 65088),\316\
even if a historic, ancillary benefit under the prior framework had
been providing issuers a mechanism to receive additional outgoing
payments after the 3-year reporting deadline in situations involving
late discovery and identification of underpayments. After consideration
of comments, we are finalizing the amendments to Sec. 156.1210(c) as
proposed.
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\315\ ACA section 1313(a)(6) explicitly subjects payments made
by, through, or in connection with an Exchange to the False Claims
Act, if the payments include any Federal funds.
\316\ The 2014 Payment Notice that included financial oversight,
maintenance of records and reporting requirements, ``safeguard[s]
the use of Federal funds provided as cost-sharing reductions and
advance payments of the premium tax credit and provide[s] value for
taxpayers' dollars.'' See 78 FR 65088; see also CMS. The Center for
Consumer Information & Insurance Oversight: Audit Reports. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/AuditReports (``The goals of [APTC] audits are to: Safeguard
Federal Funds'').
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11. Administrative Appeals (Sec. 156.1220)
As discussed in section III.A.7.d. of this preamble, (HHS-RADV
Discrepancy and Administrative Appeals Process), we are finalizing the
amendments to Sec. 156.1220(a)(4)(ii) to add a reference to new
proposed Sec. 153.630(d)(3) to align with the changes to shorten the
SVA attestation and discrepancy reporting period. As discussed in
section III.A.7.d of this preamble, under new Sec. 153.630(d)(3), we
are retaining the 30-calendar-day window to confirm, or file a
discrepancy, regarding the calculation of the risk score error rate as
a result of HHS-RADV. The cross-reference to Sec. 153.630(d)(2) in
Sec. 156.1220(a)(4)(ii)
[[Page 25888]]
will be maintained and will capture the new proposed 15-calendar-day
window to confirm, or file a discrepancy, for SVA findings (if
applicable).
In addition, in the HHS Notice of Benefit and Payment Parameters
for 2024 proposed rule (87 FR 78206, 78293), we proposed to amend Sec.
156.1220(b)(1) to address situations when the last day of the period to
request an informal hearing does not fall on a business day by
extending the deadline to request an informal hearing to the next
applicable business day. We solicited comment on this proposed
amendment.
After reviewing the public comments, we are finalizing the
amendment to Sec. 156.1220(b)(1), as proposed, to extend the deadline
to request an informal hearing to the next applicable business day in
situations when the last day of the period to request an informal
hearing does not fall on a business day. We summarize and respond below
to the public comment received on the proposed amendment to Sec.
156.1220(b)(1).
Comment: One commenter supported the proposal to clarify that when
the last day to request an informal hearing does not fall on a business
day, the deadline is the next business day.
Response: We are finalizing the amendment to Sec. 156.1220(b)(1),
as proposed, extending the deadline to request an informal hearing to
the next applicable business day when the last day to request an
informal hearing does not fall on a business day. As we noted in the
proposed rule (87 FR 78293), this provision is consistent with our
policy for other risk adjustment deadlines that do not fall on a
business day.\317\
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\317\ See, for example, Sec. 153.730.
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For a discussion of the comments related to the shortening of the
SVA window to confirm, or file a discrepancy for SVA findings to 15
days, see the preamble discussion in section III.A.7.d. of this rule
(HHS-RADV Discrepancy and Administrative Appeals Process).
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide notice in the Federal Register and solicit public comment
before a collection of information requirement is submitted to the
Office of Management and Budget (OMB) for review and approval. In order
to fairly evaluate whether an information collection should be approved
by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995
requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of the agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We solicited public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs). The public comments and our responses appear in
the applicable ICR sections that follow.
A. Wage Estimates
To derive wage estimates, we generally use data from the Bureau of
Labor Statistics to derive average labor costs (including a 100 percent
increase for the cost of fringe benefits and overhead) for estimating
the burden associated with the ICRs.\318\ Table 13 in this final rule
presents the mean hourly wage, the cost of fringe benefits and
overhead, and the adjusted hourly wage.
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\318\ See May 2021 Bureau of Labor Statistics, Occupational
Employment Statistics, National Occupational Employment and Wage
Estimates. Available 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. Nonetheless, there is no practical alternative, and we
believe that doubling the hourly wage to estimate total cost is a
reasonably accurate estimation method.
[GRAPHIC] [TIFF OMITTED] TR27AP23.023
B. ICRs Regarding Repeal of Risk Adjustment State Flexibility To
Request a Reduction in Risk Adjustment State Transfers (Sec.
153.320(d))
We are finalizing the repeal of the ability for prior participant
States to request a reduction in risk adjustment State transfers in all
State market risk pools beginning with the 2025 benefit year. As such,
we are finalizing several amendments to Sec. 153.320(d).
The burden currently associated with this option is the time and
effort for the State regulator to submit its request(s), supporting
evidence, and analysis to HHS. Burden for this option is currently
approved under OMB control number: 0938-1155. In that Paperwork
Reduction Act (PRA) package, we estimate that it will take a business
operations specialist 40 hours (at a rate of $76.20 per hour) to
prepare the request, supporting evidence, and analysis, and 20 hours
for a senior
[[Page 25889]]
operations manager (at a rate of $110.82 per hour) to review the
request, supporting evidence, and analysis and transmit it
electronically to HHS. In that PRA package, we further estimate that
each State seeking a reduction will incur a total burden of 60 hours at
a cost of approximately $5,264.40 per State to comply with this
reporting.
Since this policy will eliminate the ability of the one prior
participating State (Alabama) to request a reduction in risk adjustment
transfers beginning with benefit year 2025, we proposed to rescind this
information collection and the associated burden beginning with the
2025 benefit year in the proposed rule. Therefore, there will be a
reduction in burden on States seeking reductions of 60 hours at a cost
of approximately $5,264.40 per State due to the repeal of this policy.
We sought comment on the information collection requirements
related to this policy and the proposed rescission of this information
collection beginning with the 2025 benefit year. We did not receive any
comments. Therefore, we are finalizing this information collection as
proposed, and HHS will rescind the associated information collection
once the policy is no longer in effect.
C. ICRs Regarding Risk Adjustment Issuer Data Submission Requirements
(Sec. Sec. 153.610, 153.700, and 153.710)
We are finalizing a requirement for issuers to collect and make
available for HHS' extraction from issuers' EDGE servers a new data
element, a QSEHRA indicator. To implement this policy, we are adopting
the same transitional approach and schedule for the QSEHRA indicator as
was finalized for the ICHRA indicator in the 2023 Payment Notice. Under
this approach, for the 2023 and 2024 benefit years, issuers will be
required to populate the QSEHRA indicator using data they already
collect or have accessible regarding their enrollees. Then, beginning
with the 2025 benefit year, issuers that do not have an existing source
to populate this field for particular enrollees will be required to
make a good faith effort to collect and submit the QSEHRA indicator for
these enrollees. We are also finalizing the proposed extraction of this
data element beginning with the 2023 benefit year and are also
finalizing the inclusion of the QSEHRA indicator in the enrollee-level
EDGE limited data sets available to qualified researchers upon request,
once available.
We will begin collection of the QSEHRA indicator with the 2023
benefit year, and we estimate that approximately 650 issuers of risk
adjustment covered plans will be subject to this data collection. We
will collect a QSEHRA indicator from issuers' ESES files and risk
adjustment recalibration enrollment files. We believe the burden
associated with the collection of this data will be similar to that of
the collection of ICHRA indicator finalized in the 2023 Payment Notice.
Much like the ICHRA indicator data, we believe that some issuers
already collect or have access to the relevant information to populate
the QSEHRA indicator. However, we do not believe the information to
populate the QSEHRA indicator is routinely collected by all issuers at
this time; therefore, we anticipate that there may be administrative
burden for some issuers in developing processes for collection,
validation, and submission of this new data element.
In recognition of the burden associated with collecting this new
data element for issuers, we are adopting a transitional approach for
the QSEHRA indicator that mirrors the approach finalized for the ICHRA
indicator in the 2023 Payment Notice and is similar to how we have
handled other new data collection requirements.\319\ For successful
EDGE server data submission, each issuer will need to update their file
creation process to include the new data element, which will require a
one-time administrative cost. After incorporating the most recently
updated wage estimate data, we estimate this one-time administrative
cost at $579.96 per issuer (reflecting 6 hours of work by a management
analyst at an average hourly rate of $96.66 per hour). Based on this,
we estimate the cumulative one-time cost to update issuers' file
creation process to be $376,974 for 650 issuers (3,900 total hours for
all issuers). We also estimate a cost of $96.66 in total annual labor
costs for each issuer, which reflects 1 hour of work by a management
analyst per issuer at an average hourly rate of $96.66 per hour.
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\319\ For example, HHS did not penalize issuers for temporarily
submitting a default value for the in/out-of-network indictor for
the 2018 benefit year to give issuers time to make the necessary
changes to their operations and systems to comply with the new data
collection requirement, but required issuers to provide full and
accurate information for the in/out-of-network indicator beginning
with the 2019 benefit year.
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Based on these estimates, we estimate $62,829 in total annual labor
costs for 650 issuers (650 total hours per year for all issuers). We
believe that this data collection should not pose significant
additional operational burden to issuers given that the operational
burden associated with populating the QSEHRA indicator should be aided
by the requirement finalized in the 2023 Payment Notice mandating the
collection of the ICHRA indicator in the same fashion. The extraction
of the new QSEHRA indicator should also not pose additional burden to
issuers since the creation and storage of the extract--which issuers do
not receive--are mainly handled by HHS. As this policy is being
finalized in this rule, we will revise the information collection
request to account for the burden associated with this policy, and will
provide the applicable comment periods.\320\
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\320\ Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment (OMB control number 0938-1155).
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We are also finalizing the amendment to the applicability date for
the extraction of the plan ID and rating area data elements to extend
the extraction of these two data elements to the 2017, 2018, 2019 and
2020 benefit year data sets. As detailed earlier and in prior
rulemakings, issuers have been required to collect and submit these two
data elements as part of the required risk adjustment data since the
2014 benefit year. Therefore, we estimate that the extraction of these
data elements will not pose additional operational burden to the
majority of issuers, since the creation and storage of the extract--
which issuers do not receive--is mainly handled by HHS. However, some
issuers may not have benefit year 2017, 2018, 2019, or 2020 data
readily available for extraction from their EDGE servers, and
therefore, there may be some burden associated with restoring past
years' data to their respective EDGE servers should this be the case.
Our intention with this policy is to limit the burden on issuers for us
to collect and extract the plan ID and rating area data elements from
these additional prior benefit year data. Therefore, while we broadly
solicited comment on these data collections, we specifically solicited
comments on this burden estimate and ways that we can further limit the
burden on extracting these two data elements from the 2017, 2018, 2019
and 2020 benefit year data sets.
We did not receive any comments in response to the information
collection requirements related to these policies. We are finalizing
these requirements as proposed.
D. ICRs Regarding Risk Adjustment Data Validation Requirements When HHS
Operates Risk Adjustment (HHS-RADV) (Sec. 153.630)
Under Sec. 153.630(g)(2), issuers below a materiality threshold,
as defined by HHS, are exempt from the annual HHS-
[[Page 25890]]
RADV audit requirements in Sec. 153.630(b). While these issuers are
exempt from the annual HHS-RADV audit process, they are subject to
random and targeted sampling such that they undergo HHS-RADV
approximately every 3 years (barring any risk-based triggers based on
experience that would warrant more frequent audits). We are finalizing,
beginning with 2022 benefit year HHS-RADV, a change to the materiality
threshold from $15 million in total annual premiums Statewide in the
benefit year being audited to 30,000 BMM Statewide in the benefit year
being audited.
We estimate that this policy will not significantly impact issuer
burden relative to previous estimates for HHS-RADV and the current
materiality threshold. In particular, the new threshold will not
significantly alter the anticipated number of issuers that will fall
under the materiality threshold and be subject to random and targeted
sampling rather than the annual audit requirements. We estimate that
each year, on average, there are 197 issuers of risk adjustment covered
plans with total annual Statewide premiums below $15 million and 201
issuers of risk adjustment covered plans below 30,000 BMM Statewide.
Assuming one-third of issuers below the materiality threshold will be
subject to HHS-RADV each year, we estimate that the total number of
issuers selected for HHS-RADV that fall under the materiality threshold
will remain fairly constant. We believe that the number of issuers
participating in HHS-RADV for any given benefit year under the
finalized 30,000 BMM Statewide threshold will not be significantly
different than the number of issuers participating under the current
$15 million total annual premium Statewide threshold and reflected in
our current HHS-RADV burden estimates, and therefore, we believe that
there will not be an overall increase or decrease in burden. We will
revise the information collection currently approved under OMB control
number: 0938-1155 to account for the changes to the HHS definition for
the materiality threshold in Sec. 153.630(g)(2).
We did not receive any comments in response to the information
collection requirements related to this policy. We are finalizing these
requirements as proposed.
E. ICRs Regarding Navigator, Non-Navigator Assistance Personnel, and
Certified Application Counselor Program Standards (Sec. Sec. 155.210
and 155.225)
We are finalizing amendments to Sec. Sec. 155.210 and 155.225 to
permit enrollment assistance on initial door-to-door outreach by
Navigators, non-Navigator assistance personnel, or certified
application counselors. This policy will not impose any new information
collection requirements, that is, reporting, recordkeeping or third-
party disclosure requirements. Though we require Navigator grantees to
track enrollment numbers on weekly, monthly, and quarterly progress
reports, burden is already accounted for under OMB control number:
0938-1205, and grantees are not required to specifically track
enrollments completed for door-to-door enrollments.
We did not receive any comments in response to the information
collection requirements related to this policy. We are finalizing these
requirements as proposed.
F. ICRs Regarding Providing Correct Information to the FFEs (Sec.
155.220(j))
We are finalizing amendments to Sec. 155.220(j)(2)(ii) to require
agents, brokers, and web-brokers to document that eligibility
application information has been reviewed by and confirmed to be
accurate by the consumer or their authorized representative prior to
application submission. This policy will require the consumer or their
authorized representative to take an action that produces a record that
they reviewed and confirmed the information on the eligibility
application to be accurate prior to application submission. This
documentation will be required to be maintained by agents, brokers, and
web-brokers for a minimum of 10 years and produced upon request in
response to monitoring, audit, and enforcement activities.
We estimate costs will be associated with this policy, including
those related to documenting, maintaining, and producing the
documentation. This policy will not mandate any method or prescribe a
template for documenting that a consumer or their authorized
representative reviewed and confirmed the accuracy of their eligibility
application information. It will be up to the agents, brokers, and web-
brokers to determine the best way to meet these regulatory
requirements.
Costs related to requiring the agent, broker, or web-broker to
document that eligibility application information has been reviewed by
and confirmed to be accurate by the consumer or their authorized
representative prior to application submission and to maintain that
documentation for a period of 10 years are as follows. We estimate it
will take an additional 5 minutes for an enrolling agent, broker, or
web-broker to obtain documentation from a consumer or their authorized
representative that they have reviewed and confirmed the accuracy of
their application information. Billing at $66.68 per hour using the
Insurance Sales Agent occupation code, each enrollment will have
approximately $5.56 additional cost associated with it based on extra
time commitment. In PY 2022, agents submitted 4,947,909 policies. This
makes the yearly total cost associated with the extra 412,326 hours of
burden approximately $27,493,898 (412,326 total hours x $66.68 per
hour).
Costs associated with maintaining consumer's or their authorized
representative's documentation will depend on the method selected by
the agent, broker, or web-broker to meet the regulatory requirements.
For those agents, brokers, or web-brokers currently meeting the
requirements, no additional costs will be incurred. If an agent,
broker, or web-broker opts to use paper for documentation, they will
bear the costs of paper, ink and filing cabinets to store the
paperwork.
HHS will only require an agent, broker, or web-broker to produce
retained records in limited circumstances related to monitoring, audit,
and enforcement activities. In instances of fraud investigation, we
typically request documentation associated with approximately 10
different applications, generally from the past 2 to 3 years. We
estimate it will take an agent approximately 2 hours to gather consumer
documentation for 10 applications. Each year, we generally investigate
approximately 120 agents, brokers, or web-brokers. Therefore, we
estimate the yearly cost of producing documentation for HHS to be
approximately $16,002 (($66.68 hourly rate x 2 hours) x 120). The
documentation will be able to be mailed electronically, so there will
be no cost associated with printing or mailing the documentation.
Agency-wide audits are not completed often by HHS but may become more
widespread. In those instances, we will request that the agency produce
a certain number of records from the past 10 years. As this policy is
being finalized in this rule, we will request to account for the
associated information collection burden under OMB control number:
0938-NEW--(CMS-10840--Agent/Broker Consent Information Collection).
[[Page 25891]]
After a review of the comments received, we are finalizing this
information collection requirement as proposed. We summarize and
respond to public comments received on the burden estimates associated
with the proposal to require agents, brokers, and web-brokers to
document that eligibility application information has been reviewed by
and confirmed to be accurate by the consumer or their authorized
representative prior to application submission and to maintain that
documentation for a period of 10 years.
Comment: One commenter suggested we did not estimate these costs
properly. This commenter believed we underestimated these burden
estimates by as much as six times. Specifically, the commenter asserted
the time to produce client specific documentation for each client and
unique factors such as individuals with limited English proficiency or
without means to sign electronically and the estimated 30 minutes the
process takes for Medicare applications is indicative the burden may be
underestimated.
Response: After reviewing the regulatory changes and potential
costs associated, we disagree with this commenter's suggestion that we
underestimated these costs. We believe 5 minutes per enrollment
interaction is a reasonable timeframe to meet these requirements. Under
current Sec. 155.220(j)(2)(ii), agents, brokers, and web-brokers must
``Provide the Federally-facilitated Exchanges with correct information
. . .'' As such, these new requirements are simply building on the
existing requirement to provide the FFEs with correct information,
which we believe will alleviate the burdens and costs associated with
these new requirements for agents, brokers, and web-brokers.\321\
Requesting that a consumer respond to a text message, email, verbal
question posed by the assisting agent, broker, or web-broker, etc.,
stating they have reviewed their application information and it is
accurate should not add a significant amount of time to the enrollment
process. As discussed in the proposed rule (87 FR 78252), we did not
propose to specify a method for documenting that eligibility
application information has been reviewed and confirmed to be accurate
by the consumer or their authorized representative. This flexibility
will allow each individual agent, broker, or web-broker to establish
protocols and methods that will meet their needs in the most efficient
manner. We believe this flexibility will allow agents, brokers, and
web-brokers to meet the requirements of Sec. 155.220(j)(2)(ii) within
the estimated 5 minutes per enrollment interaction instead of the 30
minutes associated with Medicare applications.
---------------------------------------------------------------------------
\321\ See Sec. 155.220(j)(2)(ii).
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Additionally, we only plan on requesting this documentation when
investigating potentially fraudulent or noncompliant behavior. As
agents, brokers, and web-brokers establish storage methods that best
suit their needs, the costs associated with obtaining and submitting
such documentation to HHS should be minimal. We believe that a 2-hour
time window for submitting requested documentation is a reasonable
assumption.
Comment: A few commenters suggested the proposed record retention
period of 10 years is too long for agents, brokers, and web-brokers to
maintain the documentation required by Sec. 155.220(j)(2)(ii)(A).
Another commenter stated HHS should have the record retention period
align with the required record retention period of the State where the
consumer is enrolled.
Response: We have considered these comments but continue to believe
10 years is an appropriate length of time to maintain the documentation
required by Sec. 155.220(j)(2)(ii)(A). As discussed in the proposed
rule (87 FR 78253), this aligns with other Exchange maintenance of
records requirements, including Sec. 155.220(c)(3)(i)(E), which states
internet websites of web-brokers used to complete QHP selections must
``[m]aintain audit trails and records in an electronic format for a
minimum of ten years and cooperate with any audit under this section.''
We believe being consistent within the regulation and with other
Exchange maintenance of records requirements is important. Enforcement
actions may encompass non-compliance with different parts of the
regulations making standardized timeframes for retention important for
relevant document collection and review during investigations.
Additionally, we do not agree that aligning with State record retention
requirements is beneficial in this instance given the variability in
retention periods that this approach would introduce. Many agents,
brokers, and web-brokers assist consumers in multiple States and as a
result, we often speak with consumers from multiple States during the
course of a single investigation into potential noncompliance by an
agent, broker, web-broker. If these agents, brokers, and web-brokers
were retaining documents based on State laws, investigations may be
hindered by one State's record retention law being shorter than
another's due to records being legally discarded by the agent, broker,
or web-broker under investigation. Mandating a standard 10-year
retention period for all agents, brokers, and web-brokers assisting
consumers in the FFEs and SBE-FPs will help mitigate these concerns
when reviewing agent, broker, or web-broker responses to monitoring,
audit, and enforcement activities conducted consistent with Sec.
155.220(c)(5), (g), (h), and (k).
Comment: Some commenters stated this documentation should be part
of the application process and maintained by the Federal government,
making the documentation readily accessible and minimizing burden on
agents, brokers, and web-brokers.
Response: We appreciate commenter's suggestions and agree there is
merit to these ideas. However, it is not currently feasible to
implement systematic changes of this nature. There are no plans to
create a system that would allow the Federal government to store
documentation for all enrollees. This type of systematic change would
likely take years to implement, which would mean the protections we
hope to implement with these new requirements would be severely
delayed. Delaying these requirements means a longer time period during
which consumers may be vulnerable to potentially fraudulent behavior by
agents, brokers, and web-brokers. If a consumer receives an incorrect
APTC determination or is unaware they are enrolled in a QHP, that
consumer may owe money to the IRS when they file their Federal income
tax return. Ensuring a consumer's income determination has been
reviewed and is attested to be accurate will help avoid these
situations, which is why we are requiring the consumer or their
authorized representative to take an action to produce a record that is
retained by the assisting agent, broker, or web-broker. We believe the
consumer is in the best position to project their future income. To
determine if a consumer is eligible for financial assistance, such as
APTC, prior to enrollment, an estimate for income must be entered prior
to the eligibility determination process. As many consumers enroll in
health coverage prior to a new calendar year, the income amount they
enter is an estimate based on available data, including income in prior
years, as well as what consumers believe their income will be in the
upcoming plan year. If we remove the consumer action from this process,
which may happen if the system is changed in ways these commenters are
suggesting, it may circumvent the
[[Page 25892]]
purpose of these new requirements (that is, consumers reviewing their
information to ensure accuracy).
G. ICRs Regarding Documenting Receipt of Consumer Consent (Sec.
155.220(j))
We are finalizing amendments to Sec. 155.220(j)(2)(iii) to require
agents, brokers, and web-brokers to document the receipt of consumer
consent prior to facilitating enrollment in coverage through the FFEs
or SBE-FPs or assisting an individual in applying for APTC and CSRs for
QHPs. This policy will require the consumer or their authorized
representative to take an action that produces a record that they
provided consent. Agents, brokers, and web-brokers will be required to
maintain the documentation for a minimum of 10 years and produce it
upon request in response to monitoring, audit, and enforcement
activities.
We estimate costs will be associated with this policy, including
those related to documenting, maintaining, and producing the records of
consumer consent. This policy does not mandate any method or prescribe
a template for documenting receipt of consumer consent. It will be up
to the agents, brokers, and web-brokers to determine the best way to
meet these regulatory requirements.
Costs related to requiring that agents, brokers, and web-brokers
document the receipt of consumer consent and maintain such
documentation for a period of 10 years are as follows. We estimate it
will take about 5 minutes for an enrolling agent, broker or web-broker
to obtain a consumer's, or their authorized representative's, record of
their consent. Using the adjusted hourly wage rate of $66.68 for an
Insurance Sales Agent, each enrollment will have approximately $5.56 in
additional cost associated with it based on the extra time commitment
from these proposed policy changes. In PY 2022, agents submitted
4,947,909 policies. Based on this number of enrollments, the total
annual burden is approximately 412,326 hours with a total annual cost
of approximately $27,493,898.
We will only require an agent, broker, or web-broker to produce
retained records in limited circumstances related to fraud
investigation or agency audits. In instances of fraud investigation, we
typically request consent records of approximately 10 different
applications, generally from the past 2 to 3 years. We estimate it will
take an agent, broker, or web-broker approximately 2 hours to gather
consent documentation for 10 applications.\322\ Each year, we generally
investigate approximately 120 agents, brokers, or web-brokers.
Therefore, we estimate the yearly cost of producing consumer consent
documentation to HHS to be approximately $16,002 (($66.68 hourly rate x
2 hours) x 120). These records are able to be mailed electronically, so
there will be no cost associated with printing or mailing the records.
Agency-wide audits are not completed often by HHS but may become more
widespread. In those instances, we will request that the agency produce
a certain number of records from the past 10 years.
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\322\ We note that we generally expect that producing retained
documentation of consumer consent and documentation that a consumer
has reviewed and confirmed the accuracy of their application
information will occur as part of a single audit in most cases, so
the estimate for this activity in section IV.F is inclusive of the
costs for this activity in this ICR.
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The estimated total annual cost of documenting of consumer consent
is $27,493,898 and the estimated total cost of producing the retained
consent records is $16,002. This cost is captured in the new
information request related to requiring agents, brokers, and web-
brokers to document that eligibility application information has been
reviewed by and confirmed to be accurate by the consumer or their
authorized representative prior to application submission. Therefore,
the total annual cost of the information collection requirements
associated with this policy is $27,493,898. As this policy is being
finalized in this rule, we will request to account for the associated
information collection burden under OMB control number: 0938-NEW (CMS-
10840--Agent/Broker Consent Information Collection).
After a review of the comments received, we are finalizing the
information collection requirements as proposed. We received similar
comments on this proposal as we did on the policy to require agents,
brokers, and web-brokers to document that eligibility application
information has been reviewed by and confirmed to be accurate by the
consumer or their authorized representative prior to application
submission and to maintain that documentation for a period of 10 years.
There were no comments that were unique to the documentation of
consumer consent. Therefore, we request that you please see the prior
information collection section for our responses to these comments.
H. ICRs Regarding Failure To File and Reconcile Process (Sec.
155.305(f))
We are finalizing amendments to Sec. 155.305(f)(4) to provide that
an Exchange must determine an enrollee ineligible for APTC if the
enrollee has FTR status is for two consecutive tax years as opposed to
one tax year (specifically, years for which tax data will be utilized
for verification of household income and family size). This change will
ensure that consumers are complying with the requirement to file their
Federal income tax returns and reconcile past years' APTC, while also
ensuring continuity of coverage in Exchange QHPs. The finalized FTR
rule will impact APTC eligibility determinations for PY 2025 and
beyond.
On Exchanges on the Federal platform, FTR will be conducted in the
same as manner it had previously been conducted with respect to
collection of information, with minimal changes to the language of the
Exchange application questions necessary to obtain relevant
information; as such, we anticipate that the finalized amendment will
not impact the information collection OMB control number: 0938-1191
burden for consumers.
We did not receive any comments in response to the information
collection requirements related to this policy. We are finalizing these
information collection requirements as proposed, with a correction that
there is not an option for Exchanges to remove APTC after a consumer
has been in an FTR status for 1 year.
I. ICRs Regarding Income Inconsistencies (Sec. Sec. 155.315 and
155.320)
We are finalizing amendments to Sec. 155.320 to require Exchanges
to accept attestations, and not set an Income DMI, when the Exchange
requests tax return data from the IRS to verify attested projected
annual household income, but the IRS confirms there is no such tax
return data available.
Based on historical DMI data, we estimate that HHS will conduct
document verification for 1.2 million fewer households per year. Once
households have submitted the required verification documents, we
estimate that it takes approximately 12 minutes for an eligibility
support staff person (occupation No. 43-4061), at an hourly cost of
$46.70, to review and verify submitted verification documents. The
revisions to Sec. 155.320 will result in a decrease in annual burden
for the Federal government of 240,000 hours at a cost of $11,208,000.
In addition to the reduced administrative burden for HHS
[[Page 25893]]
eligibility support staff, the change will reduce the time consumers
spend submitting documentation to verify their income. We estimate that
consumers each spend 1 hour to submit documentation and that the
proposed change will decrease burden on consumers by 1.2 million hours
per year.
We will revise the information collection currently approved under
OMB control number: 0938-1207 to account for this decreased burden.
We did not receive any comments in response to the information
collection requirements related to this policy. We are finalizing these
information collection requirements as proposed.
J. ICRs Regarding the Improper Payment Pre-Testing and Assessment
(IPPTA) for State-Based Exchanges (Sec. Sec. 155.1500 through
155.1515)
As described in the preamble to Sec. 155.1510, IPPTA will replace
the previous voluntary State engagement initiative with mandatory
participation and related requirements. IPPTA is designed to test
processes and procedures that support HHS's review of determinations of
APTC made by State Exchanges and to prepare State Exchanges for the
planned measurement of improper payments.
In the preamble to Sec. 155.1510(a)(1), we state that State
Exchanges will provide to HHS: (1) the State Exchange's data dictionary
including attribute name, data type, allowable values, and description;
(2) an entity relationship diagram; and (3) business rules and related
calculations. This data documentation is currently retained by State
Exchanges in a digital format and can be electronically transmitted to
HHS. We estimate that the burden associated with this data transfer
will be no more than 22 hours.
In the preamble to Sec. 155.1510(a)(2), we state that HHS will
provide State Exchanges with the pre-testing and assessment data
request form. We will review the form and its instructions with each
State Exchange prior to the State Exchange completing and returning the
form and required data to HHS. Both the pre-testing and assessment data
request form and the requested source data are in an electronic format.
The burden associated with completion and return of the pre-testing and
assessment data request form and required data will be the time it will
take each State Exchange to meet with HHS to review the form and its
requirements, analyze and design the database queries based on the data
elements identified in the form, electronically transmit the data to
HHS, and meet with HHS to verify and validate the data.
We expect respondent costs will not substantially vary since the
data being collected is largely in a digitized format and that each
State Exchange will be providing the application data and consumer
submitted documents for approximately 10 tax households. We sought
comment on these assumptions.
We estimate that gathering and transmitting the data documentation
as specified in Sec. 155.1510(a)(1) and completion of the pre-testing
and assessment data request form as specified in Sec. 155.1510(a)(2)
will take 265 hours per respondent at an estimated cost of $28,493.24
per respondent on an annualized basis. To compile our estimates, we
referenced our experience collecting data in our FFE pilot initiative
and in working with State Exchanges in the previous voluntary State
engagement initiative. We identified specific personnel and the number
of hours that will be involved in collecting the data broken down by
specific area (for example, eligibility verification, auto-re-
enrollment, periodic data matching, enrollment reconciliation, plan
management, and manual reviews including document retrieval).
Hourly wage rates vary from $92.92 for a Computer Programmer to
$156.66 for a Computer and Information Systems Manager depending on
occupation code and function. With a mean hourly rate of $111.07 for
the respective occupation codes, the burden across the 18 State
Exchanges equals 4,770 hours for a total cost of up to $512,878 on an
annualized basis. As this policy is being finalized in this rule, we
will request to account for the associated information collection
burden under OMB control number: 0938-1439 (CMS-10829--Improper Payment
Pre-Testing and Assessment (IPPTA)).
We did not receive any comments specific to the collection of
information and are finalizing these requirements as proposed. We did
receive and respond to related general comments of financial burdens in
the earlier preamble section associated with this policy.
K. ICRs Regarding QHP Rate and Benefit Information (Sec. 156.210)
a. Age on Effective Date for SADPs
We are finalizing requiring issuers of Exchange-certified stand-
alone dental plans (SADPs), whether they are sold on- or off-Exchange,
to use the age on effective date methodology as the sole method to
calculate an enrollee's age for rating and eligibility purposes, as a
condition of QHP certification, beginning with Exchange certification
for PY 2024. This rule does not alter any of the information collection
requirements related to age determination for rating and eligibility
purposes during the QHP certification process in a way that will create
any additional costs or burdens for issuers seeking QHP certification.
This information collection is currently approved under OMB control
number: 0938-1187.
We did not receive any comments in response to the information
collection requirements related to this policy. We are finalizing these
requirements as proposed.
b. Guaranteed Rates for SADPs
The policy to require issuers of Exchange-certified SADPs, whether
they are sold on- or off-Exchange, to submit guaranteed rates, as a
condition of Exchange certification beginning with Exchange
certification for PY 2024, will not impose an additional burden on
issuers. Exchange-certified SADP issuers already submit either
guaranteed or estimated rates during QHP certification, and are
therefore familiar with the QHP certification rate submission process.
This information collection is currently approved under OMB control
number: 0938-1187.
We did not receive any comments in response to the information
collection requirements related to this policy. We are finalizing these
requirements as proposed.
L. ICRs Regarding Establishing a Timeliness Standard for Notices of
Payment Delinquency (Sec. 156.270)
The policy to add a timeliness standard to the requirement for QHP
issuers to send enrollees notice of payment delinquency will not impose
an additional information burden on issuers. Per Sec. 156.270(f),
issuers are already required to send notices to enrollees when they
become delinquent on premium payments, and this policy will not require
any additional information collection. We are merely finalizing the
addition of a requirement that issuers in the Exchanges on the Federal
platform send these notices promptly and without undue delay, within 10
business days of the date the issuer should have discovered the
delinquency. This information collection is currently approved under
OMB control number: 0938-1341.
After a review of the comments received, we are finalizing the
information collection requirements as proposed. We summarize and
respond below to public comments received on the information collection
requirements
[[Page 25894]]
related to the proposed addition of the timeliness standard to the
requirement for QHP issuers to send enrollees notice of payment
delinquency.
Comment: One commenter was neutral on the proposal as long as it
did not require another letter to be sent to consumers.
Response: To clarify, this policy adds a timeliness requirement to
the existing required notice of payment delinquency, so issuers will
not be required to send another letter to consumers.
M. Summary of Annual Burden Estimates for Finalized Requirements
[GRAPHIC] [TIFF OMITTED] TR27AP23.024
This final rule includes one policy--repealing the ability of
States to request a reduction in risk adjustment transfers (Sec.
153.320(d))--with information collection requests being rescinded. HHS
will rescind the associated information collection once the policy is
no longer in effect.
The following information collection requests will be submitted for
OMB approval outside of this rulemaking, through separate Federal
Register notices: risk adjustment issuer data submission requirements
(Sec. Sec. 153.610, 153,700, and 153.710); and income inconsistencies
(Sec. 155.320).
The HHS-RADV, Navigator, FTR, application to SADPs, and QHP rate
and benefit information policies do not impact any of the information
collections under the following OMB control numbers: Standards Related
to Reinsurance, Risk Corridors, and Risk Adjustment, OMB control
number: 0938-1155; Cooperative Agreement to Support Navigators in
Federally-facilitated and State Partnership Exchanges, OMB control
number: 0938-1215; Data Collection to Support Eligibility
Determinations for Insurance Affordability Programs and Enrollment
through Health Benefits Exchanges, Medicaid and CHIP Agencies, OMB
control number: 0938-1191; Initial Plan Data Collection to Support QHP
Certification and other Financial Management and Exchange Operations,
OMB control number: 0938-1187; and Establishment of Qualified Health
Plans and American Health Benefit Exchanges, OMB control number: 0938-
1156. After a review of the comments received, we are finalizing the
information collection requirements as proposed. We summarize and
respond to public comments received on information collection
requirements for the proposals related to agent/broker standards in the
ICR sections earlier in this rule (sections IV.F and IV.G).
V. Regulatory Impact Analysis
A. Statement of Need
This rule finalizes improvements to risk adjustment and HHS-RADV
policies to use more recent data to recalibrate the risk adjustment
models and to refine operational HHS-RADV processes, and to update
Navigator standards to permit door-to-door and other unsolicited means
of direct contact. The rule also finalizes requirements that agents,
brokers, and web-brokers provide correct consumer information and
document consumer consent; and requirements that Exchanges on the
Federal platform accept an applicant's or enrollee's attestation of
projected annual household income when IRS data is not available and
determining the applicant or enrollee eligible for APTC or CSRs in
accordance with the applicant's or enrollee's attested projected
household income. In addition, the rule finalizes the implementation of
the IPPTA, reduced 2024 user fee rates of 2.2 percent of premiums for
FFE issuers and 1.8 percent of premiums for SBE-FP issuers, and minor
updates to standardized plan options and limiting the number of non-
standardized plan options issuers can offer. Finally, the rule
finalizes requirements for QHP plan marketing names to include correct
information, without omission of material fact, and to not include
content that is misleading; revisions to the network adequacy and ECP
standards at Sec. Sec. 156.230 and 156.235 to state that all QHP
issuers, including SADPs, subject to limited exceptions, must use a
network of providers that complies with the standards described in
those sections; expanded access to care for low-income and medically
underserved consumers by strengthening ECP standards for QHP
certification; revisions to the Exchange re-enrollment hierarchy; the
addition of a timeliness standard to the requirement for QHP issuers to
send enrollees notice of payment delinquency; and revisions to the
final deadline for issuers to report data inaccuracies identified in
payment
[[Page 25895]]
and collections reports for discovered underpayments of APTC to the
issuer and user fee overpayments to HHS, requiring that issuers
describe all such inaccuracies within three years of the end of the
applicable plan year to which the inaccuracy relates to be eligible to
receive an adjustment.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 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 Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). The April
6, 2023 Executive order on Modernizing Regulatory Review \323\ amends
section 3(f) of Executive Order 12866 to define a ``significant
regulatory action'' as an action that is likely to result in a rule
that may: (1) have an annual effect on the economy of $200 million or
more (adjusted every 3 years by the Administrator of the Office of
Information and Regulatory Affairs (OIRA) for changes in gross domestic
product), or adversely affect in a material way the economy, a sector
of the economy, productivity, competition, jobs, the environment,
public health or safety, or State, local, territorial, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impacts of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise legal or policy issues for which centralized
review would meaningfully further the President's priorities or the
principles set forth in the Executive order, as specifically authorized
in a timely manner by the Administrator of OIRA in each case.
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\323\ Available at https://www.govinfo.gov/content/pkg/FR-2023-04-11/pdf/2023-07760.pdf.
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A regulatory impact analysis (RIA) must be prepared for rules that
are significant under section 3(f)(1) of the Executive order. Based on
our estimates, OMB's Office of Information and Regulatory Affairs has
determined this rulemaking is ``significant'' as measured by the $200
million threshold under section 3(f)(1). Accordingly, we have prepared
an RIA that to the best of our ability presents the costs and benefits
of the rulemaking. Therefore, OMB has reviewed these final regulations,
and the Departments have provided the following assessment of their
impact.
C. Impact Estimates of the Payment Notice Provisions and Accounting
Table
As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in
Table 15 showing the classification of the impact associated with the
provisions of this final rule.
This final rule finalizes standards for programs that will have
numerous effects, including providing consumers with access to
affordable health insurance coverage, reducing the impact of adverse
selection, and stabilizing premiums in the individual and small group
health insurance markets and in an Exchange. We are unable to quantify
all benefits and costs of this final rule. The effects in Table 15
reflect qualitative assessment of impacts and estimated direct monetary
costs and transfers resulting from the provisions of this final rule
for health insurance issuers and consumers.
We are finalizing the risk adjustment user fee of $0.21 PMPM for
the 2024 benefit year to operate the risk adjustment program on behalf
of States,\324\ which we estimate will cost approximately $60 million
in benefit year 2024. This estimated total cost remains stable with the
approximately $60 million estimated for the 2023 benefit year.
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\324\ As noted previously in this final rule, no State has
elected to operate the risk adjustment program for the 2024 benefit
year; therefore, HHS will operate the risk adjustment program for
all 50 States and the District of Columbia.
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Additionally, for 2024, we are finalizing FFE and SBE-FP user fee
rates of 2.2 and 1.8 percent of premiums, respectively. These user fee
rates are lower than the 2023 FFE and SBE-FP user fee rates of 2.75 and
2.25 percent of premiums, respectively.
For the implementation of the IPPTA program, we estimate
recordkeeping costs for data submission to be approximately $1,025,756
beginning in PY 2024.
BILLING CODE 4120-01-P
[[Page 25896]]
[GRAPHIC] [TIFF OMITTED] TR27AP23.025
[[Page 25897]]
[GRAPHIC] [TIFF OMITTED] TR27AP23.026
BILLING CODE 4120-01-C
This RIA expands upon the impact analyses of previous rules and
utilizes the Congressional Budget Office's (CBO) analysis of the ACA's
impact on Federal
[[Page 25898]]
spending, revenue collections, and insurance enrollment. Table 16
summarizes the effects of the risk adjustment program on the Federal
budget from fiscal years 2024 through 2028, with the additional,
societal effects of this final rule discussed in this RIA. We do not
expect the provisions of this final rule to significantly alter CBO's
estimates of the budget impact of the premium stabilization programs
that are described in Table 16.
[GRAPHIC] [TIFF OMITTED] TR27AP23.027
1. Data for Risk Adjustment Model Recalibration for 2024 Benefit Year
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\325\ Reinsurance collections ended in FY 2018 and outlays in
subsequent years reflect remaining payments, refunds, and allowable
activities.
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We proposed to use the 2018, 2019, and 2020 benefit year enrollee-
level EDGE data to recalibrate the 2024 benefit year risk adjustment
models with an exception for the use of the 2020 benefit year to
recalibrate the age-sex coefficients for the adult models.
Specifically, we proposed to use only 2018 and 2019 benefit year
enrollee-level EDGE data to recalibrate the age-sex coefficients in the
adult models to account for the observed anomalous decreases in the
unconstrained coefficients for the 2020 benefit year enrollee-level
EDGE data for older adult enrollees, especially older female adult
enrollees. However, we are finalizing that we will use the 2018, 2019,
and 2020 benefit year enrollee-level EDGE data to recalibrate the 2024
benefit year risk adjustment models, for all coefficients without
exception, including the adult age-sex coefficients. Consistent with
the approach outlined in the 2020 Payment Notice to no longer rely upon
MarketScan[supreg] data for recalibrating the risk adjustment models,
as finalized in this rule, we will continue to recalibrate the risk
adjustment models for the 2024 benefit year using only enrollee-level
EDGE data, and will continue to use blended, or averaged, coefficients
from the 3 years of separately solved models for the 2024 benefit year
model recalibration. This approach seeks to maintain stability in the
markets by capturing some degree of year-to-year cost shifting without
over-relying on any factors unique to one particular year.
Additionally, we anticipate that the recalibration of the HHS risk
adjustment models using 2018, 2019, and 2020 EDGE data for the blending
of all HHS risk adjustment model coefficients will have a minimal
impact on risk scores and transfers for issuers in the individual and
small group (including merged) markets because our analysis found that
the 2020 enrollee-level EDGE data is largely comparable to previous
years' data sets.
We did not receive any comments in response to the burden estimates
associated with the proposed policy or any of the alternatives
presented in the proposed rule. We are finalizing these estimates with
the modification discussed in the above paragraph. We note that
although the age-sex coefficients for the adult risk adjustment models
differ slightly from their proposed values, we anticipate that these
changes will have a minimal impact on risk scores and transfers for
issuers in the individual and small group (including merged) markets.
2. Repeal of Risk Adjustment State Flexibility To Request a Reduction
in Risk Adjustment State Transfers (Sec. 153.320(d))
We are finalizing the elimination of the ability for prior
participant States to request reductions of risk adjustment State
transfers calculated by HHS under the State payment transfer formula
beginning with the 2025 benefit year. We anticipate that this change
will have a minimal impact as only one State, Alabama, is considered a
prior participant State and will no longer be able to request
reductions in risk adjustment transfers beginning with the 2025 benefit
year.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
3. Risk Adjustment Issuer Data Requirements (Sec. Sec. 153.610,
153.700, and 153.710)
We are finalizing the collection and extraction of a new data
element, the QSEHRA indicator, as part of the required risk adjustment
data submissions issuers make accessible to HHS through their
respective EDGE servers. For the 2023 and 2024 benefit years, similar
to the transitional approach finalized for the ICHRA indicator, issuers
will be required to populate the field for the QSEHRA indicator using
only data they already collect or have accessible regarding their
enrollees. Then, beginning with the 2025 benefit year, the transitional
approach will end, and issuers will be required to populate the field
using available sources (for example, information from Exchanges, and
requesting information directly from enrollees) and, in the absence of
an existing source for particular enrollees, to make a good faith
effort to ensure collection and submission of the QSEHRA indicator for
these enrollees. HHS will provide additional guidance on what
constitutes a good faith effort to ensure collection and submission of
the QSEHRA indicator beginning with 2025 benefit year data submissions
in the future. An updated burden estimate associated with this policy
may be found in section IV.C of this final rule, in the ICRs Regarding
Risk Adjustment Issuer Data Submission Requirements (Sec. Sec.
153.610, 153.700, and 153.710) section earlier in this rule.
In addition, we are finalizing the extraction of the plan ID and
rating area data elements from issuers' EDGE servers that issuers
already make
[[Page 25899]]
accessible to HHS as part of the required risk adjustment data for
additional prior benefit years of data. Specifically, we are finalizing
an amendment to the applicability date for the extraction of these two
data elements from issuers' enrollee-level EDGE data as finalized in
the 2023 Payment Notice to also allow extraction of these data elements
from the 2017, 2018, 2019 and 2020 benefit year data.
We did not receive any comments in response to the burden estimates
for these policies. We are finalizing these estimates as proposed.
4. Risk Adjustment User Fee for 2024 Benefit Year (Sec. 153.610(f))
For the 2024 benefit year, HHS will operate risk adjustment in
every State and the District of Columbia. As described in the 2014
Payment Notice (78 FR 15416 through 15417), HHS' operation of risk
adjustment on behalf of States is funded through a risk adjustment user
fee. For the 2024 benefit year, we are using the same methodology to
estimate our administrative expenses to operate the risk adjustment
program as was used in the 2023 Payment Notice. Risk adjustment user
fee costs for the 2024 benefit year are expected to remain stable from
the prior 2023 benefit year estimates. However, we project higher
enrollment than our prior estimates in the individual and small group
(including merged) markets in the 2023 and 2024 benefit years due to
the enactment of the ARP \326\ and section 12001 of the IRA,\327\ which
extended the enhanced PTC subsidies in section 9661 of the ARP through
the 2025 benefit year. We estimate that the total cost for HHS to
operate the risk adjustment program on behalf of all 50 States and the
District of Columbia for the 2024 benefit year will be approximately
$60 million, and therefore, the proposed risk adjustment user fee will
be $0.21 PMPM. Because enrollment projections have increased for the
2023 and 2024 benefit year due to the IRA and the proposed 2024 risk
adjustment user fee is $0.01 PMPM lower than the 2023 user fee, we
expect the risk adjustment user fee for the 2024 benefit year to reduce
the transfer amounts collected or paid by issuers of risk adjustment
covered plans.
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\326\ Public Law 117-2.
\327\ Public Law 117-169.
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We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
5. Risk Adjustment Data Validation Requirements When HHS Operates Risk
Adjustment (HHS-RADV) (Sec. 153.630)
We are finalizing, beginning with 2022 benefit year HHS-RADV,
changes to the HHS definition for the materiality threshold for the
HHS-RADV exemption under Sec. 153.630(g)(2) from $15 million total
annual premiums Statewide to 30,000 BMM Statewide in the benefit year
being audited. The purpose of this policy is to address the estimated
increase in costs to complete the initial validation audit (IVA) over
the years and to ensure the materiality threshold is not eroded as
costs increase. We quantified this increase in IVA cost in the
Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment
PRA package (OMB Control Number 0938-1155), which we updated in
2022.\328\ We believe the number of issuers exempt from HHS-RADV for
any given benefit year under the new 30,000 BMM materiality threshold
will not be significantly different than the number of issuers exempt
under the current $15 million total annual premium Statewide threshold,
and therefore, we believe there will not be an overall reduction in
burden. However, those issuers that are exempted from HHS-RADV will
have less burden and administrative costs than an issuer subject to
these requirements.
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\328\ Available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202207-0938-001.
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We are finalizing, beginning with 2021 benefit year HHS-RADV, the
removal of the policy to only make adjustments to reflect exiting
outlier issuers HHS-RADV results when the issuer is a positive error
rate outlier in the applicable benefit year's HHS-RADV. With this
policy, exiting and non-exiting outlier issuers are treated the same,
and HHS is applying HHS-RADV adjustments to risk scores and risk
adjustment State transfers for both positive and negative error rate
outlier exiting and non-exiting issuers. Based on our experience, we
estimate the number of negative error rate outlier exiting issuers in
any given benefit year will be very small, and therefore, we believe
changing this policy will not significantly increase burden.
We are also finalizing a change to the attestation and discrepancy
reporting window to file a discrepancy report or confirm second
validation audit (SVA) findings from 30 calendar days to within 15
calendar days of the notification by HHS, beginning with the 2022
benefit year HHS-RADV. Shortening this attestation and discrepancy
reporting window will improve our ability to finalize SVA findings
results prior to release of the HHS Risk Adjustment Data Validation
(HHS-RADV) Results Memo and the Summary Report of Risk Adjustment Data
Validation Adjustments to Risk Adjustment Transfers for the applicable
benefit year in a timely fashion. This change will support timely
reporting of information on HHS-RADV adjustments to risk adjustment
State transfers in issuers' MLR reports.
Based on our experience operating HHS-RADV, few issuers have
insufficient pairwise agreement and receive SVA findings, and the 15-
calendar-day attestation and discrepancy reporting window is consistent
with the IVA sample and EDGE discrepancy reporting windows under
Sec. Sec. 153.630(d)(1) and 153.710(d)(1). The shortened window also
does not change the underlying burden for an issuer to attest or file a
discrepancy of its SVA results as those tasks generally remain the
same. Instead, this change only relates to the timeframe to complete
these activities. Although there may be a potential increase in
administrative burden to issuers resulting from the need to reallocate
staffing or resources to attest or file a discrepancy of its SVA within
the compressed 15-day window, the existing overall burden hours and
associated resource expenditures to complete this task remains
unchanged. Further, we believe that this shortened reporting window
will not be overly burdensome to the few impacted issuers, and that any
disadvantages of this shortened reporting window will be outweighed by
the benefits of timely resolution of any discrepancies before the
release of the applicable benefit year HHS RADV Results Memo and the
Summary Report of Risk Adjustment Data Validation Adjustments to Risk
Adjustment Transfers for the applicable benefit year.
After reviewing the public comments, we are finalizing the burden
estimates as proposed. We summarize and respond to public comments
received regarding the impact of the change to the HHS-RADV materiality
threshold definition below.
Comment: One commenter agreed that the proposed materiality
threshold of 30,000 BMM will continue to ease the administrative burden
associated with HHS-RADV audits. Another commenter encouraged HHS to
consider changing the materiality threshold for HHS-RADV participation
to a percentage of Statewide member months to reduce the burden of HHS-
RADV on issuers that do not materially impact risk adjustment
transfers.
[[Page 25900]]
Response: As explained in section III.A.7 of this final rule, we
believe that a materiality threshold of 30,000 BMM appropriately
balances the goals of the HHS-RADV process and the burden of the
process on smaller issuers. As stated above, we do not anticipate that
a materiality threshold of 30,000 BMM will change the current estimated
burden of the annual HHS-RADV requirements on issuers. The burden of
annual HHS-RADV requirements may decrease over time as a materiality
threshold of 30,000 BMM will result in a more consistent pool of
issuers subject to random and targeted sampling than a threshold of $15
million in total annual premiums, which could increase the number of
issuers subject to annual HHS-RADV audits over time as premiums grow.
We did not consider or propose using a percentage of Statewide member
months as the metric for the materiality threshold as that metric does
not have a relationship with the costs to conduct the audit. We
therefore decline to adopt use of such a metric as part of this final
rule.
6. EDGE Discrepancy Materiality Threshold (Sec. 153.710)
We are finalizing an amendment to the materiality threshold for
EDGE discrepancies at Sec. 153.710(e) to align with the materiality
threshold as described in the preamble of part 2 of the 2022 Payment
Notice final rule (86 FR 24194 through 24195) to reflect that the
amount in dispute must equal or exceed $100,000 or 1 percent of the
total estimated transfer amount in the applicable State market risk
pool, whichever is less. HHS generally only takes action on reported
material EDGE discrepancies when an issuer's submission of incorrect
EDGE server premium data has the effect of increasing or decreasing the
magnitude of the risk adjustment transfers to other issuers in the
market (83 FR 16970 through 16971). We do not believe that the updated
materiality threshold definition for EDGE discrepancies will impose
additional administrative burden on issuers beyond the effort already
required to submit data to HHS for the purposes of operating State
market risk pool transfers, as previously estimated in part 2 of the
2022 Payment Notice (86 FR 24273 through 24274).
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
7. Exchange Blueprint Approval Timelines (Sec. 155.106)
As discussed in section III.B.1 of this final rule, the proposed
regulatory amendments will not eliminate the requirement for States
seeking to transition to a different Exchange operational model (FFE to
SBE-FP or State Exchange, or SBE-FP to State Exchange) to submit an
Exchange Blueprint or for HHS to approve, or conditionally approve, a
State's Exchange Blueprint. It will only impact the timeline, by
providing additional time for HHS to provide approval, or conditional
approval.
We do not anticipate any additional burden associated with this
policy as States are currently required to submit an Exchange Blueprint
to HHS for approval, or conditional approval, and HHS is currently
required to approve, or conditionally approve, a State's Exchange
Blueprint.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
8. Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards (Sec. Sec. 155.210 and
155.225)
As discussed in section III.B.2, new rules will permit enrollment
assistance on initial door-to-door outreach. Currently, Assisters are
permitted to go door-to-door to engage in outreach and education
activities, just not enrollment assistance. Therefore, this change will
not impose any new or additional opportunity costs on Assisters, and we
do not anticipate any estimated burden associated with this proposal.
The benefits of this proposal will be eliminating barriers to coverage
access by maximizing pathways to enrollment. We believe it is important
to be able to increase access to coverage for those whose ability to
travel is impeded due to mobility, sensory or other disabilities, who
are immunocompromised, and who are limited by a lack of transportation.
We anticipate that this proposal will be a positive step toward
enabling Assisters to reach a broader consumer base in a timely
manner--helping to reduce uninsured rates and health disparities by
removing underlying barriers to accessing health coverage.
We sought comment on these assumptions, specifically about any
reduction in costs, benefits, or burdens on Assisters and consumers as
related to this policy.
After reviewing the public comments, we are finalizing the burden
estimates as proposed. We summarize and respond to public comments
received regarding the impact of the proposed change to repeal the
provisions that currently prohibit Assisters from going door-to-door or
using other unsolicited means of direct contact to provide enrollment
assistance to consumers below.
Comment: We received many comments expressing appreciation that we
are striving to build-in more flexibility for Assisters to go into the
community and reach the patients who need the most support. These
commenters stated that Assisters being able to travel to an enrollee's
residence enhances the opportunity to get more people enrolled in
health insurance coverage and that this provision will allow Navigators
and other types of Assisters to better meet patients where they are,
hopefully allowing more people to receive health coverage.
Response: We agree that additional flexibility will help reduce
burden not only for Assisters but for consumers experiencing chronic
illness, inflexible schedules, lack of child care, lack of
transportation, and other adverse social determinants of health.
9. Extension of Time To Review Suspension Rebuttal Evidence and
Termination Reconsideration Requests (Sec. Sec. 155.220(g) and
155.220(h))
As discussed in section III.B.3 of this final rule, the regulatory
amendments we are finalizing will provide HHS with up to an additional
15 calendar days to review evidence submitted by agents, brokers, or
web-brokers to rebut allegations that led to the suspension of their
Exchange agreement(s) and up to an additional 30 calendar days to
review evidence submitted by agents, brokers, or web-brokers to request
reconsideration of termination of their Exchange agreement(s).
We do not estimate much burden associated with these amendments, as
there is no requirement for HHS to utilize the additional 15 or 30
calendar days and this will only impact a very small percentage of
enrolling agents, brokers, or web-brokers. Only those agents, brokers,
or web-brokers that are reasonably suspected to have engaged in fraud
or abusive conduct, or those with a specific finding of noncompliance
against them or who have exhibited a pattern of noncompliance or abuse
that may pose imminent consumer harm will be impacted.
As discussed in the preamble, this policy will not impose any new
requirements on agents, brokers, or web-brokers. At present, agents,
brokers, or web-brokers whose Exchange agreement(s) are suspended or
terminated may submit rebuttal evidence or reconsideration requests for
HHS to consider. During this review, the submitting agent, broker, or
web-broker remains unable to enroll consumers on
[[Page 25901]]
the FFEs. This process will not change. While we will be increasing the
amount of potential time the review process will take, which could lead
to slightly longer periods during which agents, brokers, or web-brokers
cannot enroll consumers through the FFEs and SBE-FPs, we will not be
mandating HHS utilize the additional 15 or 30 calendars days for its
reviews. For this reason, we do not expect any impact on agents,
brokers, or web-brokers based on this policy.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
10. Providing Correct Information to the FFEs and Documenting Receipt
of Consumer Consent (Sec. 155.220(j))
As discussed in section III.B.3 of this final rule, the regulatory
amendments we are finalizing will require agents, brokers, and web-
brokers assisting with and facilitating enrollment in coverage through
FFEs and SBE-FPs or assisting an individual with applying for APTC and
CSRs for QHPs to document that eligibility application information has
been reviewed by and confirmed to be accurate by the consumer or their
authorized representative, designated in compliance with Sec. 155.227,
prior to application submission. The policy will require the consumer
or their authorized representative to take an action that produces a
record showing the consumer or their authorized representative reviewed
and confirmed the accuracy of their application information that must
be maintained by the assisting agent, broker, or web-broker and
produced upon request in response to monitoring, audit, and enforcement
activities.
In addition, we are finalizing regulatory amendments that will
require agents, brokers, and web-brokers assisting with and
facilitating enrollment through FFEs and SBE-FPs or assisting an
individual with applying for APTC and CSRs for QHPs to document the
receipt of consent from the consumer or their authorized
representative, designated in compliance with Sec. 155.227, qualified
employers, or qualified employees they are assisting. The policy will
require the consumer or their authorized representative to take an
action that produces a record of consent that must be maintained by the
assisting agent, broker, or web-broker and produced upon request in
response to monitoring, audit, and enforcement activities. As we
anticipate these two documentation processes will likely be occurring
as part of the same consumer interaction,\329\ the two policies are
discussed together below.
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\329\ We note that obtaining documentation of consumer consent
must occur before an application is completed. In contrast,
obtaining documentation that a consumer has reviewed and confirmed
the accuracy of their application information must necessarily take
place during or after the application is completed and prior to
application submission. However, we generally expect that the
documentation that will be required before and after the completion
of the application, will occur as part of a single interaction in
most cases.
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A potential cost to consider is the additional time it will take to
process and submit each consumer's eligibility application. It
currently takes approximately 30 minutes for an assisting agent,
broker, or web-broker to submit a consumer's eligibility application.
These finalized requirements may add approximately five minutes
additional time, per the new requirement, to each application, making
each application submission take 40 minutes under the new finalized
policies. This means that for every six policies submitted under the
new finalized regulatory requirements, there would have been two
additional applications that could have been submitted under the former
regulatory requirements (10 extra minutes per application x 3
applications = 30 minutes, which is the estimated completion time for
applications at present). If we assume agents, brokers, and web-brokers
work traditional 8-hour days, they would have been able to enroll
approximately 4 more consumers per day (1 application per 30 minutes =
16 per day; 1 application per 40 minutes = 12 per day). An
approximation of commission for each submitted policy is $16.67.\330\
Therefore, the finalized regulatory text may result in $66.68 lost per
day per agent, broker, or web-broker ($16.67 x 4 fewer applications
submitted).
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\330\ This was derived using the Insurance Sales Agent mean
hourly wage from the above wage estimate table of $33.34 and
dividing in half.
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However, there will only be a potential loss of income if an agent,
broker, or web-broker were constantly enrolling consumers and running
out of time during the workday. It is unlikely agents, brokers, and
web-brokers are constantly enrolling consumers non-stop throughout an
8-hour workday. During PY 2021, agents submitted 3,630,849 policies.
The top 1 percent of agents \331\ submitted 1,159,608 policies during
PY 2021, which equals approximately 7 submitted policies per day.\332\
As it was determined under the new policies that an agent could submit
approximately 12 applications per day, there is no clear impact
associated with these policies as far as the number of applications
being submitted. However, this could be different during the Open
Enrollment Period (OEP) as there is generally more enrollment activity
during OEP than regular business days. During PY 2022 Open Enrollment,
agents submitted 2,572,341 applications, which translates to 38
applications per agent. The top selling 1 percent of agents submitted
689,146 applications during Open Enrollment, which is approximately 18
applications per day.\333\ Under the finalized regulatory amendments, a
top-selling agent could lose approximately 6 applications per day due
to time constraints. OEP runs from November 1 through January 15, which
is 76 days. Under the assumption an agent is working 5 days per week
for 8 hours per day, an agent may submit 330 fewer applications during
OEP (55 days working x 6 fewer applications per day). Using the above
reference of $16.67 commission gained per submitted policy, a top-
selling agent may lose $5,501.10 in commissions during OEP (330
applications x $16.67). For the 668 agents in the top selling 1
percent, the total potential commission loss may be approximately
$3,674,735 (668 agents x $5,501.10). It is likely these agents are
working more hours than we accounted for, meaning the 330 fewer
applications and $3,674,735 in lost commissions is an estimate such
that the actual loss of commission will be less than we estimated.
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\331\ The current number of agents registered with the Exchange
is 66,893. We looked at data from the 668 top-selling agents.
\332\ This assumed an agent worked 250 days per year (50 weeks
at 5 days per week).
\333\ This assumed an agent worked 5 days per week at 8 hours
per day, which is likely a low estimate.
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We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
11. Failure To File and Reconcile Process (Sec. 155.305)
We are finalizing a requirement that Exchanges determine an
enrollee as ineligible for APTC if their taxpayer did not file a
Federal income tax return and reconcile their APTC for two consecutive
tax years, rather than one tax year as currently outlined at Sec.
155.305(f)(4). We believe this policy will benefit both Exchanges and
consumers by ensuring that consumers are complying with the requirement
to file their Federal income tax returns and reconcile past years'
APTC, while also providing continuity of coverage for consumers who
might otherwise go uninsured after losing ATPC.
[[Page 25902]]
We anticipate that this policy will increase APTC expenditures by
promoting continuous enrollment of consumers with APTC, who, absent
this policy, would likely choose to terminate their coverage altogether
after losing their APTC eligibility due to having an FTR status. Based
on our own analysis, for Open Enrollment 2020, about 116,000 enrollees
with an FTR status were automatically re-enrolled into an Exchange QHP
without APTC; by March 2020, approximately 14,000 (12 percent) of those
enrollees were still enrolled in an Exchange QHP without APTC. Assuming
the same enrollment numbers for Open Enrollment 2025 with the new 2-
year FTR policy, if the 102,000 enrollees who ended their QHP coverage
after losing APTC were given another year of APTC eligibility to
confirm compliance or come into compliance with the requirement to file
and reconcile, we estimate that all 102,000 likely enrollees would have
retained coverage for another coverage year. However, based on our
experience running FTR since 2015, we anticipate that about 20,400 (20
percent) of these enrollees would have likely received a second,
consecutive FTR flag and would be re-enrolled into coverage without
APTC due to their failure to file and reconcile for two consecutive tax
years. Therefore, we estimate that this 2-year FTR policy is likely to
increase APTC expenditures by approximately $373 million per year
beginning in plan year 2025 for those consumers who have not filed and
reconciled for only one tax year (approximately 81,600) and retain
their APTC eligibility (using average APTC amount of approximately $508
per month multiplied by the average retention rate in an Exchange QHP
of 9 months).
We are also aware of five States that have only recently
transitioned to operating their own State Exchange and have not yet
fully implemented the infrastructure to run FTR operations for plan
years through 2023 due to the flexibility the Exchanges were given to
temporarily pause FTR operations between 2021 and 2023 due to the
COVID-19 PHE. We estimate the one-time costs for these five States to
fully implement the functionality and infrastructure to conduct FTR
operations to be approximately $6.6 million and estimate the annual
costs to maintain FTR operations to be approximately $10 million.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
12. Income Inconsistencies (Sec. Sec. 155.315 and 155.320)
We anticipate that the finalized revision to Sec. 155.315 will
impose a minimal regulatory and cost burden on Exchanges using the
Federal platform and State Exchanges in order to grant the 60-day
extension for income DMIs. We estimate that the change to grant a 60-
day extension to applicants with income DMIs will result in a $500,000
one-time cost to Exchanges on the Federal platform and to each of the
State Exchanges using their own platform. Therefore, we estimate that
the total cost for State Exchanges will be $9 million to comply with
the requirement to grant the 60-day extension, and the total cost to
the Federal Government will be $500,000.
We anticipate that the revisions to Sec. 155.320 will impose a
minimal regulatory burden and a one-time cost burden on the Exchanges
using the Federal platform and State Exchanges using their own
platform. We estimate that the change to accept the income attestation
for households for which the Exchange requests tax return data from the
IRS to verify attested projected annual household income but for whom
the IRS confirms there is no such tax return data available will result
in a $500,000 one-time cost to the Federal Government and a one-time
cost of $500,000 to each of the State Exchanges using their own
platform. We also anticipate $175 million in increased APTC costs
annually as a result of this policy, due to applicants remaining
enrolled through the end of the plan year instead of losing eligibility
for APTC for failing to provide sufficient documentation to verify
their projected household income.
However, we do anticipate that the revisions to Sec. 155.320 will
also result in some decreases in ongoing administrative costs for the
Exchanges using the Federal platform and State Exchanges. The change
will eliminate the requirement to generate income DMIs when the
Exchange requests tax return data from the IRS for an applicant or
enrollee and the IRS confirms no such data is available. For Exchanges
on the Federal platform, based on historical DMI data, we anticipate
that this will result in 1.2 million fewer households receiving an
income DMI, which will result in $66 million in annual cost savings to
the Federal Government. Additionally, State Exchanges using their own
platform will also experience annual cost savings of $37 million due to
this change.
We do not anticipate that these changes will impose a cost or
regulatory burden on issuers. However, the changes will have a
financial impact on issuers via the continued enrollment of consumers
who otherwise would have experienced APTC adjustment and thus would
have been likely to disenroll.
After reviewing the public comments, we are finalizing the burden
estimates as proposed. We summarize and respond to public comments
received regarding the impact of the change to accept household income
attestation when IRS is contacted but does not return data and to
provide an automatic 60-day extension for Income DMIs below.
Comment: One commenter noted concerns that these calculations would
result in increased spending for the Federal Government.
Response: We agree that Federal Government spending will increase,
but this will be primarily due to more consumers appropriately
maintaining eligibility for financial assistance that they need to stay
enrolled in coverage, which positively impacts health equity,
continuous coverage, and the risk pool. We note that these consumers
are still subject to the reconciliation process when filing their
taxes, which may result in repayment of APTC and help account for any
potential excess financial assistance beyond what they were eligible
for. Additionally, households are required to provide true answers to
application questions under penalty of perjury.
13. Annual Eligibility Redetermination (Sec. 155.335(j))
In the HHS Notice of Benefit and Payment Parameters for 2024
proposed rule (87 FR 78206, 78259), we proposed changes to allow
Exchanges, beginning in PY 2024, to direct re-enrollment for enrollees
who are eligible for CSRs in accordance with Sec. 155.305(g) from a
bronze QHP to a silver QHP, if certain conditions are met (``bronze to
silver crosswalk policy''), and to require all Exchanges (Exchanges on
the Federal platform and State Exchanges) to incorporate provider
network considerations into the re-enrollment hierarchy. After
reviewing public comments, we are finalizing proposed changes to the
re-enrollment hierarchy with modifications. Specifically, we are
amending the proposed regulations to clarify that Exchanges
implementing the bronze to silver crosswalk policy will compare net
monthly silver plan premiums for the future year with net monthly
bronze plan premiums for the future year, as opposed to net monthly
bronze plan premiums for the current year (where net monthly premium is
the enrollee's responsible amount after
[[Page 25903]]
applying APTC). Additionally, we changed the structure and some content
of the regulation to simplify the regulatory text and to clearly
characterize the rule's provider network continuity protections for
enrollees whose QHP is no longer available, compared to enrollees
eligible for the bronze to silver crosswalk policy under paragraph
(j)(4).\334\
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\334\ Please see the preamble for Sec. 155.335(j) at section
III.B.6. for a full description of and explanation for these
modifications.
---------------------------------------------------------------------------
As discussed in the proposed rule, we anticipate that the inclusion
of additional criteria in the auto re-enrollment process will increase
costs and burden for issuers and Exchanges, although we are unable to
quantify this increase. However, we believe initially limiting the
scope of the bronze to silver crosswalk policy to only CSR-eligible
enrollees who are currently in a bronze QHP and have a lower or
equivalent after APTC cost silver QHP available will allow issuers and
Exchanges to incrementally update their processes, as opposed to
including both premium (after APTC) and out-of-pocket cost (OOPC)
throughout the hierarchy in PY 2024. Additionally, we believe that
allowing the Exchange to direct re-enrollment for CSR-eligible
enrollees from bronze plans to silver plans with lower or equivalent
premium after APTC will facilitate enrollment into silver CSR plans and
help reduce CSR forfeiture. Notwithstanding these burdens, we believe
changes to the re-enrollment process finalized in this rule, in
combination with improved consumer notification, will further
streamline the consumer shopping experience, enhance consumer
understanding of plan options, and help move enrollment into more
affordable, higher generosity plans, especially in cases where market
conditions have substantially increased the cost of an enrollee's
current plan. By amending the current Federal hierarchy for re-
enrollment to incorporate provider networks and facilitate enrollment
into lower cost, higher generosity plans, we believe we will be
promoting consumer access to affordable, quality coverage.
We sought comment on the estimated costs and benefits described in
this section, as well as any additional impacts on consumers, issuers,
and Exchanges as a result of this policy. We summarize and respond in
preamble and below to public comments received regarding the impact of
the changes to the auto re-enrollment policy.
Comment: Some commenters raised concerns that implementing this
policy for the 2024 plan year would be difficult for issuers and cause
confusion for consumers. Some commenters with this concern requested
that HHS delay the policy if it were finalized, and that HHS not change
the auto re-enrollment system until after the implementation of other
proposed policies including the proposals to require plan and plan
variation marketing accuracy and to limit the number of non-
standardized plan options that issuers may offer through the Exchanges.
These commenters expressed concerns that auto re-enrolling consumers
into a different plan than their current QHP would exacerbate potential
confusion related to these other policies. They requested that HHS wait
to implement any changes related to auto re-enrollment until issuers
have finalized their product decisions in accordance with new plan
variation marketing requirements so that plan and plan variation
marketing names are accurate, consistent, and understood by consumers
before consumers are mapped into new plans they are unfamiliar with.
Response: As noted in section III.B.6. of the preamble, Exchanges
on the Federal platform will implement the new policy at Sec.
155.335(j)(4) by incorporating network ID into existing requirements
for issuer submissions through the crosswalk process, which, per
existing rules at Sec. 155.335(j)(2), already requires that if no
plans under the same product as an enrollee's current QHP are available
for renewal, the Exchange will auto re-enroll the enrollee in the
product most similar to their current product with the same
issuer.\335\ We believe that plan network ID will be an effective
method of network comparison for Exchanges on the Federal platform
because QHP Certification Instructions specify that if specific
providers are in-network for some of an issuer's products but not
others, the issuer must establish separate network IDs to enable
mapping the plans to the applicable network IDs. We will also work
closely with State Exchanges to share best practices for implementing
this policy. Further, based on experience from past years, a majority
of enrollees who were crosswalked into a different product with the
same issuer had the same network ID and product type (for example, HMO,
PPO), and so we anticipate that this policy will reinforce and not
disrupt current auto re-enrollment processes.\336\ Finally, we believe
that issuer implementation burden will be mitigated because, as
discussed in the proposed rule, Exchanges, not issuers, will be
responsible for identifying enrollees eligible for the bronze to silver
crosswalk policy under paragraph (j)(4).\337\ Given the benefits that
this policy will provide to consumers who will be enrolled in more
generous coverage for no greater cost, we will not delay its
effectuation. We will work closely with all interested parties to
ensure smooth implementation and mitigate any adverse effects such as
consumer confusion.
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\335\ See Sec. 155.335(j)(2), and see ``Plan Crosswalk'' on the
QHP Certification Information and Guidance website at https://www.qhpcertification.cms.gov/s/Plan%20Crosswalk for more information
on the Crosswalk Template.
\336\ Based on internal CMS analysis, for the 2023 plan year, 86
percent of crosswalks to a different product with the same issuer
had the same network ID and the same network type (that is, HMO,
PPO, EPO).
\337\ See 87 FR 78263.
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Comment: As also discussed in the preamble, many commenters
supported this proposal, agreeing that it would help limit CSR
forfeiture and increase the likelihood that more consumers would be
enrolled in more generous coverage without additional cost. One
commenter expressed support but suggested that the policy could be
limited in its impact for individuals and families with household
incomes above 150 percent FPL because of the difference in bronze and
silver plans' monthly premiums. Commenters also raised concerns that
auto re-enrolling consumers into a different plan for the coming year
could disrupt consumers' provider network, prescription drug
availability, and HSA eligibility that had informed their original
choice of plan selection.
Response: We agree that this policy will help to prevent CSR
forfeiture. Also, we agree with the comment that most enrollees who
Exchanges can crosswalk from a bronze to a silver plan under paragraph
(j)(4) will be those who have access to a silver plan with a $0 monthly
net premium because their household income does not exceed 150 percent
of the FPL. Nevertheless, we believe that the importance of auto re-
enrolling enrollees in a plan within the same product and with the same
provider network that they would have if they were auto re-enrolled
under Sec. 155.335(j)(1) or (2) outweighs concerns that this will
result in fewer bronze enrollees being crosswalked to a silver plan. In
response to concerns that Exchanges will be shifting CSR eligible
consumers auto re-enrolled from a bronze to a silver plan under
paragraph (j)(4) into different benefits and provider networks, we note
that by making this change only for consumers who have a
[[Page 25904]]
plan in their same product with a network ID that matches that of their
future year bronze plan, the policy ensures that consumers will not
experience network changes that they would not otherwise experience had
they been auto re-enrolled into their bronze plan. Also, we will
perform additional research to ensure that we are able to provide
appropriate support and technical assistance to enrollees who may have
chosen a bronze plan HSA, and we encourage State Exchanges, agents and
brokers, and enrollment assisters to do the same.
14. Coverage Effective Dates for Qualified Individuals Losing Other
Minimum Essential Coverage (Sec. 155.420(b))
We are finalizing the amendment to paragraph (b)(2)(iv) to Sec.
155.420 to provide earlier SEP coverage effective dates for qualifying
individuals who attest to a future loss of MEC, such as coverage
offered through an employer, Medicaid, CHIP, or Medicare, and select a
plan between 60 days before such loss of MEC and the last day of the
month preceding the month in which the loss of MEC occurs. Currently,
the earliest start date for Exchange coverage when a qualifying
individual attests to a future loss of MEC is the first day of the
month following the date of loss of MEC, which may result in coverage
gaps when consumers lose forms of MEC (other than Exchange coverage)
mid-month. We believe that this change is necessary to ensure that
qualifying individuals are able to seamlessly transition from other
non-Exchange MEC to Exchange coverage as quickly as possible with
minimal coverage gaps. As discussed earlier in preamble at section
III.B.7.a., ensuring smooth and quick transitions into Exchange
coverage will be especially critical during Medicaid unwinding when a
large number of consumers are expected to lose their Medicaid or CHIP
coverage and transition to Exchange coverage.
Based on our own analysis, for plan years 2019 through 2021,
approximately 214,000 households seeking coverage on Exchanges using
the Federal platform reported a future mid-month loss of MEC date and
ultimately did not enroll in a QHP. In PY 2021, about 45,000 households
attested to a future mid-month loss of coverage MEC date and did not
enroll in QHP coverage. If these consumers had been given the
opportunity for Exchange coverage to begin on the first of the month in
which their prior mid-month loss of MEC coverage end date occurred,
rather than having to wait weeks for their coverage to start, these
consumers could have avoided a gap in coverage and could have received
an additional month of APTC. Therefore, for consumers who report a
future loss of MEC, especially those who reside in States that allow
mid-month terminations for Medicaid or CHIP, we estimate that this
change could increase APTC expenditures by approximately $161 million
dollars per coverage year by allowing Exchange coverage to start the
first of the month in which the mid-month loss of MEC occurs assuming a
similar volume of consumers will choose to enroll in an Exchange QHP
based on PY 2021 data. We estimated this amount by multiplying the
number of consumers in PY 2021 who attested to a future loss of MEC and
chose not to enroll (approximately 45,000) and multiplied this by
average APTC (about $508 per month for PY 2021 and assuming an average
enrollment of 7 months). However, the actual number could be lower,
given that we are unable to estimate what proportion of consumers will
still elect to not enroll in an Exchange QHP. We also anticipate
additional costs for consumers whose monthly premium after APTC (if
applicable) is greater than $0, as they would likely have to pay
premiums for both MEC and Exchange coverage in the month over
overlapping coverage, depending on the type of prior MEC involved.
Conversely, our estimate may also be low because it does not account
for the one additional month of coverage and APTC that consumers may
receive if they would have already chosen to enroll in Exchange
coverage under the existing policy, but may do so earlier under the new
rule. We note that, to mitigate adverse selection and the related
burden on issuers, we did not propose that Exchanges permit consumers
to select a coverage date such as the first of the month following plan
selection. We sought comment on this policy, specifically about any
additional costs, benefits, or burdens on State Exchanges, issuers, and
consumers as related to this policy. We also sought comment from
issuers regarding any additional or remaining risk regarding mid-month
coverage effective dates.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
15. Special Rule for Loss of Medicaid or CHIP Coverage (Sec.
155.420(c))
We are finalizing the addition of paragraph (c)(6) to Sec. 155.420
to provide qualifying individuals losing Medicaid or CHIP that is
considered MEC in accordance with Sec. 155.420(d)(1)(i), and who
qualify for a special enrollment period, with up to 60 days before and
up to 90 days after their loss of coverage to enroll in QHP coverage.
In addition, if a State Medicaid Agency allows or provides for a
Medicaid or CHIP reconsideration period greater than 90 days, then the
Exchange in that State may elect to provide a qualified individual or
their dependent(s) who is described in paragraph (d)(1)(i) of this
section and whose loss of coverage is a loss of Medicaid or CHIP
coverage additional time to select a QHP, up to the number of days
provided for the applicable Medicaid or CHIP reconsideration period. We
believe that this change is necessary to ensure that qualifying
individuals are able to seamlessly transition from Medicaid or CHIP
into Exchange coverage as quickly as possible with minimal coverage
gaps.
Based on our own analysis, in plan year 2019, about 60,000
consumers seeking coverage on Exchanges using the Federal platform
attested to a Medicaid or CHIP loss or denial between 60 to 90 days
prior to submitting or updating a HealthCare.gov application. We
estimate that this change to permit Exchanges to use a special rule to
provide consumers losing Medicaid or CHIP with 90 days after their loss
of Medicaid or CHIP to enroll in QHP coverage will increase APTC
expenditures by approximately $98 million per year. This number may be
slightly higher given the additional flexibilities for State Exchanges,
but we are unable to estimate that because we do not know which State
Exchanges may choose to implement this special rule earlier than
January 1, 2024, or which State Exchanges operate in States whose State
Medicaid Agency allows or provides for a Medicaid or CHIP
reconsideration period greater than 90 days whereby the Exchange in
that State may elect to provide more than 90 days to select a QHP under
Sec. 155.420(c)(6).
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
16. Plan Display Error Special Enrollment Periods (Sec. 155.420(d))
We anticipate that revisions to Sec. 155.420(d)(12) will maintain
current regulatory burden and cost on issuers. As discussed earlier in
preamble at section III.B.7.d., these revisions will make necessary
changes to the text of Sec. 155.420(d)(12) to align the policy for
granting SEPs to persons who are adversely affected by a plan display
error with current plan display error SEP operations. This policy will
have minimal operational impact, as interested parties such as issuers,
States,
[[Page 25905]]
and the Exchanges on the Federal platform currently have the
infrastructure to demonstrate that a material plan display error
influenced a qualified individual's, enrollee's, or their dependents'
enrollment in a QHP through the Exchange. This does not impose
additional regulatory burden or costs because the revisions do not
require the consumers, HHS, or issuers to conduct new or additional
processes.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
17. Termination of Exchange Enrollment or Coverage (Sec. 155.430)
We do not anticipate any burden related to the policy to expressly
prohibit QHP issuers participating in Exchanges on the Federal platform
from terminating coverage of dependent children before the end of the
coverage year because the child has reached the maximum age at which
issuers are required to make coverage available under Federal or State
law, or the issuer's business rules. Because this prohibition has
already been operationalized on the Exchanges on the Federal platform,
we do not anticipate a financial impact to issuers or HHS. There may be
some minor costs for State Exchanges that choose to implement this
policy and have not previously done so, but we do not have adequate
data to estimate these costs.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
18. Improper Payment Pre-Testing and Assessment for State-Based
Exchanges (Sec. 155.1500)
This policy will prepare HHS to implement the Payment Integrity
Information Act of 2019 (PIIA) requirements for State Exchanges. As
described in the preamble in this final rule, the PIIA requires that
agencies measure the improper payments rate for programs susceptible to
significant improper payments. We already undertake annual measurements
for Medicare, Medicaid, FFEs, and SBE-FPs. This final rule will lay the
groundwork to complete the Exchanges' measurement program by including
State Exchanges and to enable HHS to estimate improper payment rates as
mandated by statute.
This policy will test State Exchanges' readiness to provide the
information necessary to measure the rate of improper payments. Even
slight decreases in this rate will accrue large taxpayer savings. As
discussed in section IV.J, the IPPTA incurs approximately $28,500 in
annual costs per State Exchange for a total annual cost of $512,878 for
all 18 State Exchanges. Nevertheless, we believe that the potential
benefits of this regulatory action justify the present costs.
This policy will prepare HHS to implement the statutory requirement
for measurement of improper payments for programs susceptible to
significant improper payments. We have quantified the costs for this
policy. Neither this IPPTA nor any follow-on program should affect
transfers between parties.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
19. FFE and SBE-FP User Fee Rates for the 2024 Benefit Year (Sec.
156.50)
We are finalizing an FFE user fee rate of 2.2 percent of monthly
premiums for the 2024 benefit year, which is a decrease from the 2.75
percent FFE user fee rate finalized in the 2023 Payment Notice (87 FR
27289). We are also finalizing an SBE-FP user fee rate of 1.8 percent
of monthly premium for the 2024 benefit year, which is a decrease from
the 2.25 percent SBE-FP user fee rate finalized in the 2023 Payment
Notice. Based on our estimated costs, enrollment (including anticipated
transitions of States from the FFE and SBE-FP models to either the SBE-
FP or State Exchange model, increased Open Enrollment numbers and
anticipated Medicaid redeterminations), premiums for the 2024 benefit
year, and user fee rates, we are estimating that FFE and SBE-FP user
fee transfers from issuers to the Federal Government will be $404
million lower compared to those estimated for the prior benefit year.
We also anticipate that the lower user fee rates may exert downward
pressure on premiums.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
20. Standardized Plans
a. Standardized Plan Options (Sec. 156.201)
At Sec. 156.201, for PY 2024 and subsequent PYs, we are finalizing
minor updates to our approach to standardized plan options.
Specifically, in contrast to the policy finalized in the 2023 Payment
Notice, we are finalizing, for PY 2024 and subsequent PYs, to no longer
include a standardized plan option for the non-expanded bronze metal
level. Accordingly, we are finalizing at new Sec. 156.201(b) that for
PY 2024 and subsequent PYs, FFE and SBE-FP issuers offering QHPs
through the Exchanges must offer standardized QHP options designed by
HHS at every product network type (as described in the definition of
``product'' at Sec. 144.103), at every metal level except the non-
expanded bronze level, and throughout every service area that they
offer non-standardized QHP options.
As we explained in the proposed rule, we believe that maintaining
the highest degree of continuity possible in the approach to
standardized plan options minimizes the risk of disruption for a range
of interested parties, including issuers, agents, brokers, States, and
enrollees. We also explained that we believe that making major
departures from the approach to standardized plan options in the 2023
Payment Notice could result in drastic changes in these plan designs
that could potentially cause undue burden for these interested parties.
Furthermore, we explained that if these standardized plan options vary
significantly from year to year, those enrolled in these plans could
experience unexpected financial harm if the cost-sharing for services
they rely upon differs substantially from the previous year.
Ultimately, we believe that consistency in standardized plan options is
important to allow both issuers and enrollees to become accustomed to
these plan designs.
Thus, similar to the approach taken in the 2023 Payment Notice, we
are finalizing standardized plan options that continue to resemble the
most popular QHP offerings that millions of consumers are already
enrolled in. Accordingly, these standardized plan options are based on
refreshed PY 2022 cost-sharing and enrollment data to ensure that these
plans continue to reflect the most popular offerings in the Exchanges.
We are maintaining an approach to standardized plan options that is
similar to that taken in the 2023 Payment Notice, such that issuers
will continue to be able to utilize many existing benefit packages,
networks, and formularies, including those paired with standardized
plan options for PY 2023. Furthermore, since we are finalizing
requirements that QHP issuers offer standardized plan options at every
product network type, at every metal level except the non-expanded
bronze metal level, and throughout every service area for which they
also offer non-standardized plan options (but not for different product
network types, metal levels, and service areas where they do not also
offer non-standardized plan options), issuers will not be required to
extend plan offerings
[[Page 25906]]
beyond service areas and metal levels in which they currently offer
plans.
Furthermore, as discussed earlier in the preamble, we will continue
to differentially display standardized plan options on HealthCare.gov
per the existing authority at Sec. 155.205(b)(1). Since we will
continue to assume the burden for differentially displaying
standardized plan options on HealthCare.gov, FFE and SBE-FP issuers
will not be subject to this burden.
In addition, as noted in the preamble, we will continue enforcement
of the standardized plan option display requirements for approved web-
brokers and QHP issuers using a direct enrollment pathway to facilitate
enrollment through an FFE or SBE-FP--including both the Classic DE and
EDE Pathways--at Sec. Sec. 155.220(c)(3)(i)(H) and 156.265(b)(3)(iv),
respectively. We believe that continuing the enforcement of these
differential display requirements will not require significant
modification of these entities' platforms and non-Exchange websites,
especially since the majority of this burden already occurred when the
standardized plan option differential display requirements were first
finalized in the 2018 Payment Notice \338\ or when enforcement of these
requirements resumed beginning with the PY 2023 open enrollment period.
---------------------------------------------------------------------------
\338\ These differential display requirements were first
effective and enforced beginning with PY 2018. See 81 FR 94117
through 94118, 94148.
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Furthermore, since we will continue to allow these entities to
submit requests to deviate from the manner in which standardized plan
options are differentially displayed on HealthCare.gov, the burden for
these entities will continue to be minimized. We intend to continue
providing access to information on standardized plan options to web-
brokers through the Health Insurance Marketplace Public Use Files
(PUFs) and QHP Landscape file to further minimize burden. Specific
burden estimates for these requirements can be found in the
corresponding ICR sections for Sec. Sec. 155.220 and 156.265 of the
2023 Payment Notice (87 FR 698 and 699 and 87 FR 27360 and 27361).
Finally, since we are not finalizing the proposed requirement for
issuers to place all covered generic prescription drugs in the generic
prescription drug cost-sharing tier and all covered brand drugs in the
preferred or non-preferred brand prescription drug cost sharing tiers
(or the specialty prescription drug tier, with an appropriate and non-
discriminatory basis) in these standardized plan options, issuers of
these plans will not be subject to this additional burden.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
b. Non-Standardized Plan Option Limits (Sec. 156.202)
At Sec. 156.202, we are finalizing limiting the number of non-
standardized plan options that issuers of individual market medical
QHPs can offer through the FFEs and SBE-FPs to four in PY 2024 and two
in PY 2025 and subsequent plan years per product network type, metal
level, and inclusion of dental and/or vision benefit coverage, in any
service area.
By finalizing the proposed policy with modifications to increase
the limit on the number of non-standardized plan options that issuers
can offer to four instead of two for PY 2024, and to also factor the
inclusion of dental and/or vision benefit coverage into this limit, we
estimate (based on PY 2023 enrollment and plan offering data) that the
weighted average number of non-standardized plan options available to
each consumer will be reduced from approximately 89.5 in PY 2023 to
66.3 in PY 2024, while the weighted average total number of plans
(which includes both standardized and non-standardized plan options)
available to each consumer will be reduced from approximately 113.7 in
PY 2023 to 90.5 in PY 2024.
We also note that phasing in the reduction in the number of non-
standardized plan options that issuers can offer, beginning with four
for PY 2024, will also significantly reduce the number of plan
discontinuations and affected enrollees for PY 2024. Specifically,
based on PY 2022 data, we originally estimated that a limit of two non-
standardized plan options would result in the discontinuation of
approximately 60,949 of a total 106,037 non-standardized plan option
plan-county combinations (57.5 percent), and would affect approximately
2.72 million of the 10.21 million enrollees in the FFEs and SBE-FPs
(26.6 percent). That said, under the limit of four non-standardized
plan options we are finalizing for PY 2024, based on PY 2023 data, we
estimate that approximately 17,532 of the total 101,453 non-
standardized plan option plan-county combinations (17.3 percent) will
be discontinued as a result of this limit, and approximately 0.81
million of the 12.2 million enrollees on the FFEs and SBE-FPs (6.6
percent) will be affected by these discontinuations in PY 2024.
Finally, in terms of the impact on network availability, we estimate an
average reduction of only 0.03 network IDs per issuer, product network
type, metal level, and service area, meaning we anticipate network IDs
will remain largely unaffected by this limit for PY 2024.
As discussed in the preamble to this rule, we note that we are
unable to provide meaningful estimates at this time for the weighted
average number of non-standardized plan options available to each
consumer; the weighted average number of total plans available to each
consumer; the number of plan-county discontinuations; the number of
affected enrollees; and the average reduction of network IDs per
issuer, product network type, metal level, and service area under the
limit of two non-standardized plan options per issuer, product network
type, metal level, inclusion of dental and/or vision benefit, and
service area for PY 2025 and subsequent plan years.
This is because for these estimates to be meaningful, they would
need to be based on plan offering and enrollment data for PY 2024,
which will not be available until the end of the current QHP
certification cycle for PY 2024 and the end of the 2024 OEP,
respectively. We anticipate that the broader landscape of plan
offerings as well as the composition of individual issuers' portfolios
of plan offerings will undergo significant changes as a result of the
limit of four non-standardized plan options in PY 2024, and that any
estimates based on data sourced from a plan year before this limit is
enacted would not be meaningfully predictive of the landscape of plan
offerings or individual issuers' portfolios of plan offerings for a
plan year after this limit is enacted.
Furthermore, as we discussed in the preamble to this rule, we note
that in the 2025 Payment Notice proposed rule, we intend to propose an
exceptions process, as well as the specific criteria and thresholds
that would be included in this exceptions process, that would, if
finalized, allow issuers to offer non-standardized plan options in
excess of the limit of two for PY 2025 and subsequent plan years.
Regardless, we acknowledge that the termination of these non-
standardized plan options would entail burden in several forms, such as
by affecting issuers' balance of enrollment across plans, by affecting
the premium rating for each of those plans, and by requiring issuers to
send discontinuation notices for enrollees whose plans are being
discontinued. We are unable to quantify this burden, as the costs of
discontinuing plans, reallocating enrollment among existing plans, and
[[Page 25907]]
recalculating the premium rating for each of these plans after these
discontinuations and enrollee reallocations vary considerably due to a
range of factors, including the current number of plan offerings per
issuer, the number of plans that would be discontinued per issuer, the
number of enrollees in those discontinued plans that would have to be
re-enrolled in a different plan, and the composition of these remaining
plan offerings.
That said, we believe that the advantages of enacting these changes
outweigh the disadvantages of doing so. Specifically, with plan
proliferation continuing unabated for several years, consumers have had
to select from among record numbers of available plan options. Having
such high numbers of plan choices to select from makes it increasingly
difficult for consumers, especially those with lower rates of health
care literacy, to easily and meaningfully compare all available plan
options.
This subsequently increases the risk of suboptimal plan selection
and unexpected financial harm for those who can least afford it. Thus,
although we acknowledge the burden imposed on issuers subsequent to the
imposition of a limit of four non-standardized plan options in PY 2024
and two non-standardized plan options in PY 2025 and subsequent plan
years, we believe these changes align with the original intent of the
Exchanges--to facilitate a consumer-friendly experience for individuals
looking to purchase health insurance. We believe this change will
continue to benefit consumers on the Exchanges over numerous years. We
further note that we intend to offer the necessary guidance and
technical assistance to facilitate this transition, such as through the
2024 Letter to Issuers and QHP certification webinars.
Relatedly, although issuers will be required to select another QHP
to which to crosswalk affected enrollees from discontinued non-
standardized plan options, we note that the existing discontinuation
notices and process as well as the current re-enrollment hierarchy and
corresponding crosswalk process outlined at Sec. 155.335(j) will
accommodate crosswalking these affected enrollees, and that no
additional modification to these processes or to this re-enrollment
hierarchy will be required. Finally, we note that no additional action
will be required on behalf of consumers to complete this crosswalking
process.
Finally, we believe burden is further meaningfully reduced given
that we are phasing in the reduction in the number of non-standardized
plan options that issuers can offer, beginning with four in PY 2024,
which significantly reduces the number of necessary discontinuations in
PY 2024 and subsequently reduces the number of affected enrollees that
will need to be crosswalked.
We explained in the proposed rule that we did not have sufficient
data to estimate the costs associated with these changes. As such, we
sought comment from interested parties regarding cost estimates and
data sources.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
21. QHP Rate and Benefit Information (Sec. 156.210)
a. Age on Effective Date for SADPs
We are finalizing standards related to the rate submission process
for Exchange-certified SADPs during QHP certification. Specifically, we
are finalizing modifications to the rate submission process to require
issuers of Exchange-certified SADPs, whether they are sold on- or off-
Exchange, to use age on effective date as the sole method to calculate
an enrollee's age for rating and eligibility purposes beginning with
Exchange certification in PY 2024. Requiring these issuers to use the
age on effective date methodology for calculating an enrollee's age,
and consequently removing the less common and more complex age
calculation methods, will reduce potential consumer confusion and the
burden placed on Exchange interested parties (including issuers, as
well as Classic DE and EDE partners) by promoting operational
efficiency.
This policy change reduces the risk of consumer harm and confusion
since the age on effective date method allows consumers to more easily
understand the rate they are charged. This policy also helps reduce
enrollment blockers, which will improve the efficiency of the
enrollment process and reduce the burden placed on Exchange interested
parties (including issuers, as well as Classic DE and EDE partners).
Therefore, this policy helps facilitate more informed enrollment
decisions and enrollment satisfaction.
We also do not anticipate any negative financial impact as a result
of this policy, given that it will be a small operational change. If
anything, this policy has the potential to reduce financial burden on
issuers and HHS, as removing the other age rating methods will reduce
the added expense and slower development times that must account for
test cases in the rating engine for the less commonly used and more
complex methods.
Additionally, this policy change will not create any additional
information submission burden, as it will apply to information that
Exchange issuers already submit as part of the QHP certification
process.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
b. Guaranteed Rates for SADPs
We are finalizing standards related to the rate submission process
for Exchange-certified SADPs during QHP certification. Specifically, we
are finalizing modifications to the rate submission process to require
issuers of Exchange-certified SADPs, whether they are sold on- or off-
Exchange, to submit guaranteed rates beginning with Exchange
certification in PY 2024.
Requiring guaranteed rates will reduce the risk of consumer harm by
reducing the risk of incorrect APTC calculation for the pediatric
dental EHB portion of premiums. Therefore, we believe that this policy
change will support health equity by helping to ensure that low-income
enrollees who qualify for APTC are charged the correct premium amount.
Beyond reducing the potential for consumer financial harm, this policy
will also reduce the burden placed on consumers because it will allow
them to rely on the information they see on the issuer's website and
not have to contact issuers for final rates after the QHP certification
process.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
22. Plan and Plan Variation Marketing Name Requirements for QHPs (Sec.
156.225)
We are finalizing the addition of a new paragraph (c) to Sec.
156.225 as proposed, to require that QHP plan and plan variation \339\
marketing names include correct information, without omission of
material fact, and do not include content that is misleading. We will
review plan and plan variation marketing names during the annual
[[Page 25908]]
QHP certification process in close collaboration with State regulators
in States with Exchanges on the Federal platform.
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\339\ In practice, CMS and interested parties often use the term
``plan variants'' to refer to ``plan variations.'' Per Sec.
156.400, plan variation means a zero-cost sharing plan variation, a
limited cost sharing plan variation, or a silver plan variation.
Issuers may choose to vary plan marketing name by the plan variant--
for example, use one plan marketing name for a silver plan that
meets the actuarial value (AV) requirements at Sec. 156.140(b)(2),
and a different name for that plan's equivalent that meets the AV
requirements at Sec. 156.420(a)(1), (2), or (3).
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By providing standards that help ensure plan and plan variation
marketing names are clear and accurate, we anticipate this policy will
reduce burden on consumers and on those who help consumers to enroll in
Exchange coverage because it will allow them to rely on information
they see during the plan selection process. In addition, we believe
that the policy will have an overall positive impact on other Exchange
interested parties as well, by ensuring that the consumer education
that plans use to compete in the individual health insurance market is
clear and accurate. We acknowledge that the policy might require
additional effort during the QHP certification process on the part of
Exchange issuers to comply with new plan marketing name standards, but
believe it will ultimately decrease issuer and State effort following
QHP certification, and during and after the annual Open Enrollment
Period, by reducing the number of plan and plan variation marketing
name-related consumer complaints to triage and, in some cases, special
enrollment periods to be provided.
Finally, we also believe that the policy will promote health equity
by reducing the likelihood of QHP benefit misunderstanding and
confusion that leads to less informed enrollment decisions, especially
for consumers with low health literacy, which is disproportionately
experienced among underserved communities and other vulnerable
populations.
We sought comment on the burden that this policy would impose, and
on the burden reduction it could provide. We also sought comment on how
HHS can further alleviate any burden associated with this policy, such
as through technical assistance to Exchange interested parties,
including issuers and enrollment assisters.
We summarize and respond to public comments received regarding the
impact of the policy below.
Comment: Many commenters supported the proposal and agreed that
ensuring plan and plan variation marketing name accuracy would reduce
burden on consumers, assisters, agents and brokers, and other
stakeholders. Some commenters supported the policy but cautioned
against imposing name requirements that were too detailed or
restrictive, or that contradicted existing State requirements. A few
commenters opposed the policy based on concerns that it would restrict
issuers' ability to market unique characteristics of their plans.
Response: We respond to these public comments in the final rule
preamble.
Comment: Several commenters recommended steps for CMS to take to
reduce burden on issuers if this policy were finalized. One commenter
requested that CMS delay the policy to 2025 because issuers would have
already begun plan filings when the final rule is expected to be
issued, and because marketing names are used in multiple materials,
issuers would benefit from additional implementation time and more
specific guidance regarding permitted naming practices to prevent
having to revise consumer-facing materials. This commenter also
suggested that this proposal be implemented prior to the proposed
changes to the auto re-enrollment hierarchy to ensure that marketing
names are first accurate, consistent, and understood by consumers,
before some consumers are auto re-enrolled into a different plan than
their current plan. Another commenter raised concerns about including
additional requirements during the QHP certification process, stating
that new requirements would add significant administrative burden
during a time when issuers are working to implement several new
standards and requirements.
Response: Given that the primary intent of this policy is to ensure
that information in plan and plan variation marketing names is accurate
and does not conflict with information included in other plan
documents, we disagree that it is necessary or appropriate to delay it.
In response to concerns about issuer burden, we expect that this rule,
and the related requirements discussed in preamble, will permit the
continued use of most plan and plan variation marketing names and that
this will help mitigate burden on issuers. Further, the rule and
related review process will likely result in improved stability in this
area because it will allow us to work with issuers and States during
the QHP Certification process to address marketing name errors prior to
Open Enrollment, as opposed to addressing problems with and requiring
changes to plan and plan variation marketing names based on consumer
complaints during and after Open Enrollment. Over the past several
years, the need to make changes to plan and plan variation marketing
names after Open Enrollment to address incorrect or misleading
information in marketing names has resulted in significant time and
effort on the part of HHS and issuers. We expect that the requirement
to make these corrections prior to Open Enrollment will result in a net
reduction in burden, especially in cases where a marketing name error
would otherwise have resulted in offering an SEP to enrollees whose
plan selection may have been impacted by the incorrect or misleading
marketing name information. The availability of accurate and clear
marketing names during Open Enrollment will also reduce burden for
consumers who would otherwise have to reassess their decisions based on
information that was not clear when they enrolled.
For a discussion of why we do not plan to delay implementation of
changes to the re-enrollment hierarchy, see the RIA section for annual
eligibility redeterminations (Sec. 155.335(j)). We also note that as
discussed in the preamble for this section, we will work with States to
review plan and plan variation marketing names in advance of Open
Enrollment, which will result in improved accuracy of marketing names
prior to the auto re-enrollment process for PY 2024. Additionally, as
we discussed in the proposed rule (87 FR 78309), we will proactively
address issuer and State questions through existing outreach and
education vehicles, including webinars, email blasts, and regularly
scheduled meetings on individual health insurance market policy and
operations.
Comment: Multiple commenters agreed that this policy would promote
health equity by reducing the likelihood that consumers might
misunderstand or be confused about QHP benefits based on information in
marketing names. These commenters agreed that these challenges were
especially burdensome for consumers with low health literacy, which is
disproportionately experienced among low-income, underserved, and
vulnerable populations.
Response: We agree with commenters and look forward to continuing
to work with interested parties to advance health equity in the
individual and small group health insurance markets.
23. Network Adequacy (Sec. 156.230)
HHS is finalizing the proposal to revise Sec. Sec. 156.230 and
156.235 to require all QHP issuers, including SADP issuers, to utilize
a contracted network of providers and comply with network adequacy
standards at Sec. 156.230 and ECP standards at Sec. 156.235, subject
to a limited exception for certain SADPs as discussed previously in
this final rule. We acknowledge that SADP issuers that only offer plans
that do not use a provider network and that want to be certified may
initially face increased costs associated with developing contractual
relationships with providers
[[Page 25909]]
or leveraging pre-existing networks associated with their other plans.
However, studies have found that provider networks allow for insurer-
negotiated prices and controlled (that is, reduced) costs in the form
of reduced patient cost-sharing, premiums, and service price, as
compared with such services obtained out of network.340 341
We expect any initial increased issuer costs to differ from the costs
experienced once such provider contractual relationships have been
established or pre-existing networks associated with their other plans
have been leveraged. We requested comment on whether and how to
extrapolate from literature on voluntary network formation for purposes
of assessing impacts of this regulatory provision.
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\340\ Benson NM, Song Z. Prices And Cost Sharing For
Psychotherapy In Network Versus Out Of Network In The United States.
Health Aff (Millwood). 2020 Jul;39(7):1210-1218. https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.01468.
\341\ Song, Z., Johnson, W., Kennedy, K., Biniek, J. F., &
Wallace, J. Out-of-network spending mostly declined in privately
insured populations with a few notable exceptions from 2008 to 2016.
Health Aff. 2020;39(6), 1032-1041. https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.01776.
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For SADPs that do not use a provider network, this policy will
require these issuers to contract with providers in accordance with our
existing network adequacy requirements or withdraw from the Exchange.
The latter may create a burden for enrollees and QHP plans in the
service area if no SADPs remain. However, we expect this burden to only
affect a small number of consumers, given the overall small number of
Exchange-certified SADPs that do not use a provider network on the
FFEs, and we expect that a similarly small number of Exchange-certified
SADPs that do not use a provider network would be affected on State
Exchanges and SBE-FPs. As discussed further in Table 11 in the preamble
for part 156, over the last few years, fewer than 100 counties on the
FFEs have had SADPs without provider networks, and most of these
counties had SADPs with provider network options available. For PY
2022, there were only 8 Exchange-certified SADPs without provider
networks in the FFEs. Similarly, the number of States with these types
of plans has decreased over time. At its highest, in 2014, 9 FFE States
had Exchange-certified SADPs without provider networks. Since PY 2020,
this number has dropped to 4 or fewer FFE States, with only 2 FFE
States having this plan type in PYs 2022 and 2023. Additionally,
Exchange-certified SADPs with provider networks are becoming more
available in counties that previously only had no-network SADP options:
for PYs 2022 and 2023, only 2 FFE States (Alaska and Montana) offer
Exchange-certified SADPs without provider networks. For Montana, all
counties offering this plan type also offer Exchange-certified SADPs
with provider networks. For Alaska in PYs 2022 and 2023, 90 percent of
counties with Exchange-certified SADPs without provider networks have
no Exchange-certified SADPs with provider networks.
We anticipate approximately 2,200 enrollees will be affected by
this proposal. Enrollees in SADPs that choose not to comply with this
requirement will need to select a different plan for coverage, which
may cause hardship if the enrollee cannot access assistance, requires
culturally and linguistically appropriate support, and/or does not have
an understanding of health insurance design and benefits. In the event
service areas are left without SADPs due to the provider network
requirement, health plans will have to amend their benefits to include
the pediatric dental benefit EHB. This change may require costs for
issuers to build the benefit and contract with providers.
As discussed previously in this final rule, these impacts will be
mitigated, as we are finalizing a limited exception to allow SADPs to
not use a provider network in areas where it is prohibitively difficult
for the SADP issuer to establish a network of dental providers that
complies with Sec. Sec. 156.230 and 156.235 (we refer readers to
section III.C.7 of the preamble of this final rule for further
discussion of this exception).
Finally, we do not anticipate any impact as a result of this policy
on health plans that do not use a network, given our understanding that
no such plan is currently certified as a QHP by an Exchange, but we
solicited comment to inform that understanding.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
24. Essential Community Providers (Sec. 156.235)
We are finalizing the proposal to strengthen the ECP standards
under Sec. 156.235(a)(2)(i) and (b)(2)(i) by requiring QHPs to
contract with at least a minimum percentage of available ECPs in each
plan's service area within certain ECP categories, as specified by HHS.
Specifically, we are requiring QHPs to contract with at least 35
percent of available FQHCs that qualify as ECPs in the plan's service
area and at least 35 percent of available Family Planning Providers
that qualify as ECPs in the plan's service area as proposed. We
acknowledge that issuers whose provider networks do not currently
include such a percentage of these provider types that qualify as ECPs
may face increased costs associated with complying with the proposed
policies. However, we do not expect this increase to be prohibitive.
Based on data from PY 2023, it is likely that a majority of issuers
will be able to meet or exceed the threshold requirements for FQHCs and
Family Planning Providers without needing to contract with additional
providers in these categories.
To illustrate, if these requirements had been in place for PY 2023,
out of 137 QHP issuers on the FFEs, 76 percent would have been able to
meet or exceed the 35 percent FQHC threshold, while 61 percent would
have been able to meet or exceed the 35 percent Family Planning
Provider threshold without contracting with additional providers. For
SADP issuers, 84 percent would have been able to meet the 35 percent
threshold requirement for FQHCs offering dental services without
contracting with additional providers. In PY 2023, for medical QHPs,
the mean and median ECP percentages for the FQHC category were 74 and
83 percent, respectively. For the Family Planning Providers category,
the mean and median ECP percentages were 66 and 71 percent,
respectively. For SADPs, the mean and median ECP percentages for the
FQHC category were 61 and 64 percent, respectively.
We are also finalizing the proposal to strengthen the ECP standards
under Sec. 156.235(a)(2)(ii)(B) by establishing two additional stand-
alone ECP categories--SUD Treatment Centers and Mental Health
Facilities. We acknowledge challenges associated with a general
shortage and uneven distribution of SUD Treatment Centers and mental
health providers. However, the ACA requires that a QHP's network
include ECPs where available. As such, the policy to require QHPs to
offer a contract to at least one available SUD Treatment Center and one
available Mental Health Facility in every county in the plan's service
area does not unduly penalize issuers facing a lack of certain types of
ECPs within a service area; meaning that if there are no provider types
that map to a specified ECP category available within the respective
county, the issuer is not penalized. Further, as outlined in prior
Letters to Issuers, HHS prepares the applicable PY HHS ECP list that
potential QHPs use to identify eligible ECP facilities. The HHS ECP
list reflects the total supply of eligible providers
[[Page 25910]]
(that is, the denominator) from which an issuer may select for
contracting to count toward satisfying the ECP standard. As a result,
issuers are not disadvantaged if their service areas contain fewer
ECPs. HHS anticipates that any QHP issuers falling short of the 35
percent threshold for PY 2024 could satisfy the standard by using ECP
write-ins and justifications. As in previous years, if an issuer's
application does not satisfy the ECP standard, the issuer will be
required to include as part of its application for QHP certification a
satisfactory justification.
We did not receive any comments in response to the burden estimates
for these policies. We are finalizing these estimates as proposed.
25. Termination of Coverage or Enrollment for Qualified Individuals
(Sec. 156.270)
We are finalizing an amendment to Sec. 156.270(f) to add a
timeliness standard to the requirement for QHP issuers operating in
Exchanges on the Federal platform to send enrollees notice of payment
delinquency. Specifically, we are revising Sec. 156.270(f) to require
such issuers to send notice of payment delinquency promptly and without
undue delay, within 10 business days of the date the issuer should have
discovered the delinquency. We anticipate that this policy will be
beneficial to enrollees who become delinquent on premium payments by
ensuring they are properly informed of their delinquency in time to
avoid losing coverage. It may be especially beneficial to enrollees who
are low income, who will be especially negatively impacted by
disruptions in coverage. We expect some minimal costs to issuers
associated with updating their internal processes to ensure compliance
with the finalized timeliness standard, but do not have adequate data
to estimate these costs.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
26. Final Deadline for Reporting Enrollment and Payment Inaccuracies
Discovered After the Initial 90-Day Reporting Window (Sec.
156.1210(c))
We are finalizing an amendment to Sec. 156.1210(c) to remove the
alternate deadline at Sec. 156.1210(c)(2), which requires an issuer to
describe all data inaccuracies identified in a payment and collection
report by the date HHS notifies issuers that the HHS audit process with
respect to the PY to which such inaccuracy relates has been completed,
in order for these data inaccuracies to be eligible for resolution. We
are retaining only the deadline at Sec. 156.1210(c)(1), which requires
that issuers describe all inaccuracies identified in a payment and
collections report within 3 years of the end of the applicable PY to
which the inaccuracy relates to be eligible to receive an adjustment to
correct an underpayment of APTC or overpayment of user fees to HHS.
Beginning with the 2020 plan year coverage, HHS will not pay additional
APTC payments or reimburse user fee payments for FFE, SBE-FP, and State
Exchange issuers for data inaccuracies reported after the 3-year
deadline. For PYs 2015 through 2019, to be eligible for resolution
under Sec. 156.1210(b), an issuer must describe all inaccuracies
identified in a payment and collections report before January 1, 2024.
We anticipate that this change will result in a less operationally
burdensome process for the identification and resolution of these data
inaccuracies for issuers, State Exchanges, and HHS, and a slight
reduction in associated burdens, such as resolution of data
inaccuracies for discovered underpayments. However, we anticipate the
impact will be minimal, if any, as issuers have several opportunities
to submit data inaccuracies prior to this 3- year deadline. Therefore,
we anticipate no significant financial impact for this policy.
We did not receive any comments in response to the burden estimates
for this policy. We are finalizing these estimates as proposed.
27. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this final rule, we
should 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 assumed that the total number of unique
commenters on last year's final rule (465) will be the number of
reviewers of this final rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed last year's rule in detail,
and it is also possible that some reviewers chose not to comment on the
proposed rule. For these reasons, we thought that the number of past
commenters will be a fair estimate of the number of reviewers of this
rule. We welcome any comments on the approach in estimating the number
of entities which will review this proposed rule.
We also recognized that different types of entities are in many
cases affected by mutually exclusive sections of this final rule, and
therefore, for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. We sought comments
on this assumption.
Using the wage information ($57.61 per hour) from the Bureau of
Labor Statistics (BLS) for medical and health service managers (Code
11-9111), we estimate that the cost of reviewing this rule is $115.22
per hour, including a 100 percent increase for other indirect
costs.\342\ Assuming an average reading speed of 250 words per minute,
we estimate that it will take approximately 6.67 hours for the staff to
review half of this final rule (no more than 100,000 words). For each
entity that reviews the rule, the estimated cost is $768.13 (6.67 hours
x $115.22). Therefore, we estimate that the total cost of reviewing
this regulation is approximately $357,180 ($768.13 x 465).
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\342\ https://www.bls.gov/oes/current/oes_nat.htm.
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D. Regulatory Alternatives Considered
For the inclusion or exclusion of the 2020 benefit year enrollee-
level EDGE data in the recalibration of 2024 benefit year risk
adjustment models, we considered a variety of alternative options that
were detailed in the proposed rule (87 FR 78216 through 78218). The
first option considered was to maintain current policy, recalibrating
the risk adjustment models using 2018, 2019, and 2020 enrollee-level
EDGE data (without any adjustment). The second option involved using
2018, 2019, and 2020 enrollee-level EDGE data, but assigning a lower
weight to the 2020 data. The third option we considered would utilize 4
years of enrollee-level EDGE data, instead of three, to recalibrate the
risk adjustment models using 2017, 2018, 2019, and 2020 data. The
fourth option, which was the proposed option, would determine
coefficients for the 2024 benefit year based on a blend of separately
solved coefficients from the 2018, 2019, and 2020 benefit years of
enrollee-level EDGE recalibration data except for the coefficients for
the adult age-sex factors, which would instead be based on a blend of
separately solved coefficients from only the 2018 and 2019 benefit year
enrollee-level EDGE recalibration. The fifth option would exclude the
2020 enrollee-level EDGE data and use the 2017, 2018, and 2019
enrollee-level EDGE data in recalibration for the 2024 benefit year or
to use the final 2023 models as the 2024 risk adjustment models. The
sixth and final option we considered would use 2 years of enrollee-
level EDGE data for 2024
[[Page 25911]]
benefit year recalibration--only 2018 and 2019 data.
Our analyses found that the 2019 and 2020 enrollee-level EDGE
recalibration data were largely comparable, however, there were
observed anomalous decreases in the unconstrained age-sex coefficients
for the 2020 enrollee-level EDGE. Specifically, whether a coefficient
increased or decreased between the 2019 and 2020 enrollee-level EDGE
data seemed to be related to the age and sex values for the age-sex
factor, with older female enrollees being observed to have a greater
likelihood of a decrease in their age-sex factor coefficient than other
age and sex groups. However, we have noted that the magnitude of these
coefficient changes is within the range of year-to-year changes that we
have previously observed. Additionally, we agree with commenters to the
proposed rule that removing only the 2020 enrollee-level EDGE data set
age-sex factors from the blending of the coefficients may have
disadvantages in that all coefficients in the model are interrelated
and the removal of a subset of coefficients from blending as described
in the proposed option 4 would not address any related coefficients
that remained in the blending step. Therefore, although option 1 will
not address the identified anomalous trend in the direction of changes
to the age-sex factors, the small magnitude of the changes and the
disadvantages of the proposed option have resulted in our decision to
finalize option 1 in lieu of the proposed option. As such, we will
maintain current policy, recalibrating the risk adjustment models using
2018, 2019, and 2020 enrollee-level EDGE data (without any adjustment).
We continue to believe the other options we considered are less
appropriate than either the proposed option or the option finalized in
this rule. For example, the second option we considered in the proposed
rule represented a compromise between those who wish to include 2020
enrollee-level EDGE data in model recalibration and those who wish to
exclude 2020 data, by capturing the utilization and spending patterns
underlying the 2020 data while dampening its effects in the model.
However, we are concerned this approach will require finding an
appropriate weighting methodology, and we are further concerned that
broadly dampening the effect of the 2020 enrollee-level EDGE data in
the models defeats the purpose of adding the next available benefit
year of data as part of model recalibration, because doing so will
prevent the models from reflecting changes in utilization and cost of
care that are unrelated to the impact of the COVID-19 PHE. We have
similar concerns with option 3 and the inclusion of an additional prior
benefit year (that is, 2017) to recalibrate the 2024 benefit year
models to dampen the impact of the 2020 enrollee-level EDGE data. We do
not believe that such a broad dampening is necessary because the
anomalous coefficient changes identified from the 2020 enrollee-level
EDGE data were largely limited to which adult model age-sex
coefficients increased or decreased, and including an additional prior
benefit year of data will dampen the impact of the 2020 data on other
factors, preventing the models from reflecting changes in utilization
and cost of care that are unrelated to the impact of the COVID-19 PHE.
We are similarly concerned about options 5 and 6, which involve the
complete exclusion of 2020 enrollee-level EDGE data, because both of
these options will result in reliance on data that may not be the most
reflective data set of current utilization and spending trends.
Furthermore, there are questions about whether there is a sufficient
justification to completely exclude 2020 benefit year enrollee-level
EDGE recalibration data in the recalibration of the risk adjustment
models as our analysis showed 2020 enrollee-level EDGE data to be
largely comparable to 2019 benefit year enrollee-level EDGE data. The
sixth option has the same limitations and would also have the
additional drawback of decreasing the stabilizing effect of using
multiple years of data in model recalibration. More specifically,
because this option would reduce the number of years of data used, a
change in a coefficient occurring in just 1 year of the data that is
actually included in recalibration (that is, the 2018 or 2019 benefit
years of enrollee-level EDGE recalibration data) will have a greater
impact on the risk adjustment model coefficients due to the increase in
the reliance of the blended coefficients on the remaining 2 years of
data.
We solicited comment on all of these alternatives for the use of
the 2020 enrollee-level EDGE data in the 2024 benefit year risk
adjustment model recalibration and responded to comments in the above
preamble section entitled ``Data for Risk Adjustment Model
Recalibration for 2024 Benefit Year''.
In developing the updated materiality threshold for HHS-RADV
finalized in this rule, we sought to ensure the materiality threshold
will ease the burden of annual audit requirements for smaller issuers
of risk adjustment covered plans that do not materially impact risk. To
do this, we considered the costs associated with hiring an initial
validation auditor and submitting IVA results and the relative growth
of issuers' total annual premiums Statewide and total BMM. We also
evaluated the benefits of shifting to a threshold based on BMM rather
than annual premiums, and we proposed changing the materiality
threshold from $15 million in total annual premiums Statewide to 30,000
BMM Statewide. As an alternative option, we considered increasing the
threshold to $17 million in total annual premiums Statewide and
maintaining a cutoff based on premium dollars (instead of BMMs).
However, we were concerned that a premium threshold will fail to
capture small issuers overtime as PMPM premiums grow and will require
more regular updates to the materiality threshold to maintain the
current balance. The use of a BMM threshold avoids this issue. We
invited comment on our proposed materiality threshold and on the
potential alternative option to update the threshold to $17 million
annual premiums Statewide for the benefit year being audited, and we
also invited comment on the applicability date for when the new
materiality threshold should begin to apply. Based on comments received
and discussed in the preamble section titled ``Materiality Threshold
for Risk Adjustment Data Validation,'' we are finalizing this provision
as proposed and are using the new materiality threshold beginning with
the 2022 benefit year HHS-RADV.
Regarding our proposal to require Exchanges to determine an
enrollee as ineligible for APTC after having failed to file and
reconcile for two consecutive tax years rather than after one tax year,
we considered multiple alternatives. One alternative we considered was
extending the current pause on FTR operations through plan year 2024,
while HHS continued to examine the current FTR process, and explore
ways in which the FTR process could promote continuity of coverage,
while maintaining its critical program integrity function to ensure
that only enrollees eligible for APTC continue to do so. Another
alternative we considered was repealing the requirement under 45 CFR
155.305(f)(4) that a taxpayer(s) must file a Federal income tax return
and reconcile their APTC for any tax year in which they or their tax
household received APTC in order to continue their eligibility for
APTC. However, we wanted to maintain the program integrity benefits of
the FTR process, and believe there is still value in ensuring that only
people who
[[Page 25912]]
are filing and reconciling remain eligible to receive APTC. Because of
this, we amended our proposal and are finalizing as proposed a
requirement that Exchanges end APTC only after two consecutive years of
FTR status rather than ending APTC after a single year.
We considered two alternatives to accepting attestation to
determine household income for households for which IRS does not return
any data and expanding the amount of time to resolve income DMIs to
meet the goal of increased consumer service and advancing health
equity. We considered establishing a threshold when adjusting APTC
following an income inconsistency period. Under this alternative, HHS
would continue current operations but would not eliminate APTC
eligibility completely if consumers are unable to provide sufficient
documentation. While this alternative would require fewer changes to
implement, the policy we are finalizing will create better outcomes for
more consumers and decrease administrative burden. Additionally, we
considered eliminating income DMIs for all consumers, including those
for whom the Exchanges have IRS data, due to the large burden the
income verification process places on consumers, but we found that the
verification process was required for consumers with IRS data, and that
consumers with IRS data would have their household income adjusted
based on that data as opposed to those without IRS data who would lose
eligibility for financial assistance.
In developing the proposal for re-enrollment hierarchy, we
considered a variety of alternatives, including making no
modifications. We also considered revising the policy, beginning in PY
2024, such that the Exchange could direct re-enrollment for income-
based CSR-eligible enrollees from a bronze QHP to a silver QHP with a
$0 net premium within the same product and QHP issuer, regardless if
the enrollee's current plan is available. Under this alternative we
considered revising the policy to allow the Exchange to ensure the
enrollee's coverage retained a similar provider network throughout the
Federal hierarchy for re-enrollment. While we believed this may
slightly reduce operational complexity, we believed income-based CSR-
eligible enrollees who have a de minimis or non-zero-dollar premium
will still greatly benefit from having their coverage renewed into a
silver CSR QHP with a lower or equivalent net premium and OOPC, by
saving thousands in care costs.
We also considered revising the policy, beginning in PY 2024, such
that the Exchange could: (1) direct re-enrollment, for income-based
CSR-eligible enrollees, from a bronze QHP to a silver QHP with a lower
or equivalent net premium and total OOPC within the same product and
QHP issuer regardless if their current plan is available; (2) if their
current plan is available and the enrollee is not income-based CSR
eligible, re-enroll the enrollee's coverage in the enrollee's same
plan; (3) if their current plan is not available and the enrollee is
not income-based CSR eligible, direct re-enrollment to a plan at the
same metal level that has a lower or equivalent net premium and total
out-of-pocket cost compared to the enrollee's current QHP within the
same product and QHP issuer; and (4) if a plan at the same metal level
as their current QHP is not available and the enrollee is not income-
based CSR eligible, direct re-enrollment to a QHP that is one metal
level higher or lower than the enrollee's current QHP and has a lower
or equivalent net premium and total OOPC compared to the enrollee's
current QHP within the same product and issuer. Under this alternative,
we considered revising the policy to allow the Exchange to ensure the
enrollee's coverage retained a similar provider network throughout the
Federal hierarchy for re-enrollment. While we believed this alternative
would be beneficial for all enrollees, we understand this would pose a
substantial operational burden and complexities for issuers and
Exchanges to shift from the current policy to this revised alternative.
We believe an incremental change will help issuers and Exchanges
diligently and appropriately adjust their re-enrollment operations. We
solicited comment on all aspects of the re-enrollment proposal at Sec.
155.335(j) and responded to comments received in the associated
preamble section. As discussed in that preamble section, we are
finalizing this policy with minor modifications.
We considered taking no action related to the two technical
corrections to the regulatory text at Sec. 155.420(a)(4)(ii)(A) and
(B). However, we believed these changes were necessary to make it
explicitly clear that when a qualified individual or enrollee, or his
or her dependent, experiences the special enrollment period triggering
event, all members of a household may enroll in or change plans
together in response to the event experienced by one member of the
household. These finalized technical corrections should eliminate any
confusion surrounding special enrollment period triggering events and
may help Exchanges and other interested parties more effectively
communicate and message rules that determine eligibility for special
enrollment periods and how plan category limitations may apply for
certain special enrollment periods as outlined under Sec. 155.420(a).
We considered taking no action related to the revisions to Sec.
155.420(b)(2)(iv), to provide Exchanges with more flexibility by
allowing Exchanges the option to provide consumers with earlier
coverage effective dates so that consumers are able to seamlessly
transition from one form of coverage to Exchange coverage as quickly as
possible with no coverage gaps. However, we believe that many consumers
will benefit from this finalized change, especially those consumers
whose States allow for mid-month terminations for Medicaid/CHIP or
those consumers whose COBRA coverage ends mid-month and who report
their coverage loss to the Exchange before it happens. We also
considered allowing consumers the option to request a prospective
coverage start date rather than the day following loss of MEC or COBRA
coverage but we determined that this could introduce adverse selection
as consumers could choose to delay enrolling in Exchange coverage and
paying premiums until coverage was necessary. Finally, we also
considered for consumers attesting to a past loss of MEC and who also
report a mid-month coverage loss that Exchange coverage will be
effective retroactively back to the first day after the prior coverage
loss date. For example, if a consumer lost coverage on July 15,
coverage will be effective retroactively back to July 16. We decided
against this option as it would require a statutory change to allow for
mid-month PTC for consumers losing MEC mid-month, in addition to being
too operationally complex for both Exchanges and issuers to implement.
We considered taking no action related to the addition of new Sec.
155.420(c)(6), to ensure that qualifying individuals losing Medicaid or
CHIP coverage are able to seamlessly transition to Exchange coverage as
quickly as possible with little to no coverage gaps. However, we
believe that many consumers will benefit from this finalized change,
especially during the period of unwinding the Medicaid continuous
enrollment condition, where many consumers will need to seamlessly
transition off Medicaid or CHIP and into Exchange coverage. We also
considered whether this proposed change should be broadened to include
[[Page 25913]]
consumers in other disadvantaged groups such as those impacted by
natural disasters or other exceptional circumstances, consumers losing
Medicaid or CHIP that is not considered MEC, and consumers who are
denied Medicaid or CHIP coverage. We decided not to include other
groups, such as those residing in a Federal Emergency Management Agency
(FEMA) declared disaster area, as current CMS guidance requires that an
SEP be made available for an additional 60 days after the end of a FEMA
declaration.\343\ Additionally, for other exceptional circumstances,
there is flexibility under Sec. 155.420(d)(9) that we may offer
impacted consumers more time to enroll under an SEP depending on the
type of exceptional circumstance, like a national PHE such as COVID-19.
Finally, regarding the population that is denied Medicaid or CHIP
coverage in a new application for enrollment (instead of losing
eligibility for existing Medicaid or CHIP coverage), we also considered
whether to extend the SEP window length from 60 days to 90 days for the
population that is denied Medicaid or CHIP; however, we chose not to
extend the SEP window length for this population as there is no 90 day
reconsideration period that needs alignment for consumers denied
Medicaid or CHIP as there is for consumers who have lost eligibility
for Medicaid or CHIP as described earlier in the preamble.
---------------------------------------------------------------------------
\343\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/8-9-natural-disaster-SEP.pdf.
---------------------------------------------------------------------------
We considered taking no action regarding the modifications to Sec.
155.430(b) to expressly prohibit issuers from terminating coverage for
policy dependent enrollees because they reached the maximum allowable
age mid-plan year. However, we believe it is important to provide
clarity to issuers and consumers regarding this policy so that coverage
is not prematurely disrupted, and we are therefore finalizing this
policy as proposed.
In developing the IPPTA policies contained in this final rule
(Sec. 155.1500), we requested to meet individually with each State
Exchange that participated in the voluntary State engagement initiative
in order to gather State-specific information regarding options for
data collection that will impose the least burden on State Exchanges.
Based on information provided by those State Exchanges that were able
to participate in the meetings, we considered several data collection
options but chose the option that provides State Exchanges with the
greatest amount of control in aligning their source data to the
requested data elements. In addition, the data collection option
requests that the State Exchange provide no fewer than 10 sampled tax
households that we proposed the State Exchange will identify based upon
fulfilling the scenarios described in the preamble. An alternative
option consisted of allowing the State Exchange to provide to HHS all
of the source data in an unstructured format for the respective,
sampled tax households. HHS, using its own resources, would then map
the State Exchange source data to the required data elements that are
necessary for performing the pre-testing and assessment. The mapping
process would require consultative sessions with each State Exchange
and a validation process to ensure the accurate mapping of the data.
While the pre-testing and assessment data request form also entails a
process to validate the data with the State Exchanges, the consultative
process associated with this alternative data collection mechanism
would entail more frequency and a higher level of intensity.
We invited comment on this data collection option and potential
alternative data collection options. We did not receive any comments on
the data collection alternative option. We are finalizing the data
collection option as proposed.
For standardized plan options, we considered a range of options for
the policy approach at Sec. 156.201, such as modifying the methodology
used to create the standardized plan options for PY 2024 and subsequent
PYs. Specifically, we considered including more than four tiers of
prescription drug cost-sharing in the standardized plan option
formularies. We also considered lowering the deductibles in these plan
designs and offsetting this increase in plan generosity by increasing
cost-sharing amounts for several benefit categories. We also considered
simultaneously maintaining the current cost-sharing structures and
decreasing the deductibles for these plan designs, which would have
increased the AVs of these plans to be at the ceiling of each AV de
minimis range. Ultimately, we decided to maintain the AVs of these
plans near the floor of each de minimis range by largely maintaining
the cost-sharing structures and deductible values of the standardized
plan options from PY 2023, as well as by increasing the maximum out-of-
pocket (MOOP) values for these plan designs. We explained in the
proposed rule that we believe this approach will strike the greatest
balance in providing enhanced pre-deductible coverage while ensuring
competitive premiums for these standardized plan options.
We invited comment on this proposed approach. As further discussed
in the associated preamble section, we are finalizing the proposed
standardized plan options policy, but with one modification.
Specifically, we are not finalizing the proposed requirement for
issuers to include all covered generic drugs in the generic
prescription drug cost-sharing tier and all covered brand drugs in
either the preferred brand or non-preferred brand prescription drug
cost-sharing tiers (or the specialty tier, with an appropriate and non-
discriminatory basis) in these standardized plan options, as is further
discussed in the associated preamble section.
For non-standardized plan option limits, we considered a range of
options for the policy approach at Sec. 156.202. Specifically, we
considered limiting the number of non-standardized plan options to
three, two, or one per issuer, product network type, metal level, and
service area combination. We also considered no longer permitting non-
standardized plan options to be offered through the Exchanges.
We also considered redeploying the meaningful difference standard,
which was previously codified at Sec. 156.298, either in place of or
in conjunction with imposing limits on the number of non-standardized
plan options that issuers can offer through the Exchanges. In this
scenario, we considered selecting from among several combinations of
the criteria in the original version of the meaningful difference
standard to determine whether plans are ``meaningfully different'' from
one another.\344\ Specifically, we considered using only a difference
in deductible type (that is, integrated or separate medical and drug
deductible), as well as a $1,000 difference in deductible to determine
whether plans are ``meaningfully different'' from one another.
---------------------------------------------------------------------------
\344\ Under the original meaningful difference standard, a plan
was considered to be ``meaningfully different'' from other plans in
the same product network type, metal level, and service area
combination if the plan had at least one of the following
characteristics: difference in network ID, difference in formulary
ID, difference in MOOP type, difference in deductible, multiple in-
network provider tiers rather than only one, a difference of $500 or
more in MOOP, a difference of $250 or more in deductible, or any
difference in covered benefits.
---------------------------------------------------------------------------
In the proposed rule, we proposed to add Sec. 156.202 to limit the
number of non-standardized plan options that issuers of QHPs can offer
through Exchanges on the Federal platform (including SBE-FPs) to two
non-
[[Page 25914]]
standardized plan options per product network type (as described in the
definition of ``product'' at Sec. 144.103) and metal level (excluding
catastrophic plans), in any service area, for PY 2024 and beyond, as a
condition of QHP certification. We explained that we believed this
would be the most effective mechanism to reduce the risk of plan choice
overload, streamline the plan selection process, and enhance choice
architecture for consumers on the Exchanges.
We invited comment on this proposed approach. As discussed further
in the associated preamble section of this final rule, we are
finalizing this policy with a modification. Specifically, we are
finalizing a phased in approach to limiting the number of non-
standardized plan options such that a QHP issuer in an FFE or SBE-FP in
PY 2024 is limited to offering four non-standardized plan options per
product network type, as the term is described in the definition of
``product'' at Sec. 144.103, metal level (excluding catastrophic
plans), and inclusion of dental and/or vision benefit coverage, in any
service area. For PY 2025 and subsequent plan years, a QHP issuer in an
FFE or SBE-FP is limited to offering two non-standardized plan options
per product network type, as the term is described in the definition of
``product'' at Sec. 144.103, metal level (excluding catastrophic
plans), and inclusion of dental and/or vision benefit coverage, in any
service area.
We believe this policy strikes an appropriate balance in reducing
the risk of plan choice overload and preserving a sufficient degree of
consumer choice. As we explain in the corresponding section of the
preamble to this final rule, we believe that permitting additional
variations specifically for non-standardized plan options with the
inclusion of dental or vision benefit coverage--instead of, for
example, permitting additional variation for any single change in the
product package, however small--decreases the likelihood that these
limits will be circumvented.
For plan and plan variation marketing names, we considered issuing
sub-regulatory guidance in lieu of rulemaking to require that marketing
names include correct information, without omission of material fact,
and not include content that is misleading. However, as explained in
the proposed rule, given the important role that plan and plan
variation marketing names play in facilitating plan competition through
consumer education on Exchanges, we proposed this requirement in
regulation to allow interested parties the opportunity to comment. As
discussed in that preamble section, we are finalizing this policy as
proposed.
We considered leaving the ECP provider participation threshold and
major ECP categories unchanged from PY 2023, but elected to propose
these changes to ECP policy in an effort to increase access to care,
particularly mental health care and SUD treatment, for low-income and
medically underserved consumers. In the proposed rule, we invited
comment on these proposed changes and respond to those comments in the
associated preamble section of this final rule. As discussed in that
preamble section, we are finalizing these changes as proposed.
We considered not proposing to require all QHP issuers, including
SADPs, to utilize a contracted network of providers, but elected to
propose this change to network adequacy policy in an effort to ensure
that consumers have access to insurer-negotiated prices and reduced
costs in the form of reduced cost-sharing, premiums, and service price,
as compared with cost-sharing, premiums, and service prices obtained
from plans with no network of contracted providers. In the proposed
rule, we invited comment on this proposal and respond to those comments
in the associated preamble section of this final rule. As discussed in
that preamble section, we are finalizing this policy but providing a
limited exception to allow SADPs to not use a provider network in areas
where it is prohibitively difficult for the SADP issuer to establish a
network of dental providers that complies with Sec. Sec. 156.230 and
156.235 (we refer readers to section III.C.7 of the preamble of this
final rule for further discussion of this exception).
We considered not proposing an amendment to Sec. 156.270(f) to add
a timeliness standard to the requirement for QHP issuers to send
enrollees notices of payment delinquency. However, as we stated in the
proposed rule, because there is currently no timeliness standard for
delinquency notices, we are concerned that there is a risk that
enrollees may not receive sufficient notice of their delinquency to
avoid termination of coverage. We also considered proposing
requirements on how much advance notice issuers must provide on premium
bills after coverage is effectuated, but declined to propose such a
regulation, determining that our focus on delinquency notice timeliness
will have the desired impact without creating potential conflicts with
the existing pattern of State rules and issuer practices that have long
applied in the individual market. As discussed in the associated
preamble section of this final rule, we are finalizing this timeliness
standard with modifications, such that beginning in PY 2024, QHP
issuers in Exchanges operating on the Federal platform will be required
to send notices of payment delinquency promptly and without undue
delay, within 10 business days of the date the issuer should have
discovered the delinquency.
E. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, we estimate that
small businesses, nonprofit organizations, and small governmental
jurisdictions are small entities as that term is used in the RFA. The
great majority of hospitals and most other health care providers and
suppliers are small entities, either by being nonprofit organizations
or by meeting the SBA definition of a small business (having revenues
of less than $8.0 million to $41.5 million in any 1 year). Individuals
and States are not included in the definition of a small entity.
For purposes of the RFA, we believe that health insurance issuers
and group health plans will be classified under the North American
Industry Classification System (NAICS) code 524114 (Direct Health and
Medical Insurance Carriers). According to SBA size standards, entities
with average annual receipts of $41.5 million or less will be
considered small entities for these NAICS codes. Issuers could possibly
be classified in 621491 (HMO Medical Centers) and, if this is the case,
the SBA size standard will be $35 million or less.\345\ 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.
Based on data from MLR annual report submissions for the 2021 MLR
reporting year, approximately 78 out of 480 issuers of health insurance
coverage nationwide had total premium revenue of $41.5 million or
less.\346\ This estimate may overstate the actual number of small
health insurance issuers that may be affected, since over 76 percent of
these small issuers belong to larger holding groups, and many, if not
all, of these
[[Page 25915]]
small companies are likely to have non-health lines of business that
will result in their revenues exceeding $41.5 million.
---------------------------------------------------------------------------
\345\ https://www.sba.gov/document/support--table-size-standards.
\346\ Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------
In this final rule, we are finalizing standards for the risk
adjustment and HHS-RADV programs, which are intended to stabilize
premiums and reduce incentives for issuers to avoid higher-risk
enrollees. Because we believe that insurance firms offering
comprehensive health insurance policies generally exceed the size
thresholds for ``small entities'' established by the SBA, we did not
believe that an initial regulatory flexibility analysis is required for
such firms and therefore do not believe a final regulatory flexibility
analysis is required. Furthermore, the proposals related to IPPTA at
Sec. Sec. 155.1500-155.1515 will affect only State Exchanges. As State
governments do not constitute small entities under the statutory
definition, and as all State Exchanges have revenues exceeding $5
million, an impact analysis for these provisions is not required under
the RFA.
As its measure of significant economic impact on a substantial
number of small entities, HHS uses a change in revenue of more than 3
to 5 percent. We do not believe that this threshold will be reached by
the requirements in this final rule. Therefore, the Secretary has
certified 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 Act requires us to 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 603 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. While this rule is not
subject to section 1102 of the Act, we have determined that this rule
will not affect small rural hospitals. Therefore, the Secretary has
certified that this final rule will not have a significant impact on
the operations of a substantial number of small rural hospitals.
F. Unfunded Mandates Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2023, that
threshold is approximately $177 million. Although we have not been able
to quantify all costs, we expect that the combined impact on State,
local, or Tribal governments and the private sector does not meet the
UMRA definition of unfunded mandate.
G. 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.
In compliance with the requirement of E.O. 13132 that agencies
examine closely any policies that may have federalism implications or
limit the policy making discretion of the States, we have engaged in
efforts to consult with and work cooperatively with affected States,
including participating in conference calls with and attending
conferences of the NAIC, and consulting with State insurance officials
on an individual basis.
While developing this rule, we attempted to balance the States'
interests in regulating health insurance issuers with the need to
ensure market stability. By doing so, we complied with the requirements
of E.O. 13132.
Because States have flexibility in designing their Exchange and
Exchange-related programs, State decisions will ultimately influence
both administrative expenses and overall premiums. States are not
required to establish an Exchange or risk adjustment program. For
States that elected previously to operate an Exchange, those States had
the opportunity to use funds under Exchange Planning and Establishment
Grants to fund the development of data. Accordingly, some of the
initial cost of creating programs was funded by Exchange Planning and
Establishment Grants. After establishment, Exchanges must be
financially self-sustaining, with revenue sources at the discretion of
the State. Current State Exchanges charge user fees to issuers.
In our view, while this final rule will not impose substantial
direct requirement costs on State and local governments, this
regulation has federalism implications due to potential direct effects
on the distribution of power and responsibilities among the State and
Federal Governments relating to determining standards relating to
health insurance that is offered in the individual and small group
markets. For example, the repeal of the ability for States to request a
reduction in risk adjustment State transfers may have federalism
implications, but they are mitigated because States have the option to
operate their own Exchange and risk adjustment program if they believe
the HHS risk adjustment methodology does not account for State-specific
factors unique to the State's markets.
As previously noted, the policies in this rule related to IPPTA
will impose a minimal unfunded mandate on State Exchanges to supply
data for the improper payment calculation. Accordingly, E.O. 13132 does
not apply to this section of the final rule. In addition, statute
requires HHS to determine the amount and rate of improper payments.
Finally, States have the option to choose an FFE or SBE-FP, each of
which place different Federal burdens on the State. As the IPPTA
section of this final rule should not conflict with State law, HHS does
not anticipate any preemption of State law. We invited State Exchanges
to submit comments on this section of the proposed rule if they believe
it will conflict with State law and did not receive any such comments.
In addition, we believe this final rule does have federalism
implications due to the finalized policy that Exchanges offer earlier
effective dates for consumers attesting to future mid-month coverage
losses. However, the federalism implications are mitigated as Exchanges
will have the flexibility to continue offering the current coverage
effective dates as described at Sec. 155.420(b)(2)(iv) or the new
finalized earlier effective dates for consumers attesting to a future
loss of MEC as described earlier in preamble. In addition, through the
cross-references in Sec. 147.104(b)(5), the new earlier coverage
effective dates for consumers attesting to a future loss of MEC will be
applicable market-wide at the option of the applicable State authority.
Additionally, we believe this final rule does have federalism
implications due to the finalized policy that Exchanges provide
consumers losing Medicaid or CHIP with a 90-day special enrollment
period window to enroll in an Exchange QHP rather than the current 60-
day window. However, the federalism implications are mitigated as
Exchanges will have the flexibility to decide whether to continue
providing 60 days before or 60 days after for consumers losing Medicaid
or CHIP to enroll in a QHP plan as described at Sec. 155.420(c)(1) or
to implement the new special rule providing consumers with 60 days
before or 90 days after their loss of Medicaid or CHIP to enroll in QHP
coverage. State Exchanges will also have
[[Page 25916]]
additional flexibility to implement this special rule earlier than
January 1, 2024, if they so choose, and are permitted to offer a longer
attestation window up to the number of days provided for the applicable
Medicaid or CHIP reconsideration period, if the State Medicaid agency
allows or provides for a Medicaid or CHIP reconsideration period
greater than 90 days.
H. 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
containing a copy of the rule along with other specified information.
The Office of Information and Regulatory Affairs in OMB has determined
that this final rule is a ``major rule'' as that term is defined in 5
U.S.C. 804(2), because it is likely to result in an annual effect on
the economy of $100 million or more.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on April 12, 2023.
List of Subjects
45 CFR Part 153
Administrative practice and procedure, Health care, Health
insurance, Health records, Intergovernmental relations, Organization
and functions (Government agencies), Reporting and recordkeeping
requirements.
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, 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, under the authority at 5
U.S.C. 301, the Department of Health and Human Services amends 45 CFR
subtitle A, subchapter B, as set forth below.
PART 153--STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS, AND
RISK ADJUSTMENT UNDER THE AFFORDABLE CARE ACT
0
1. The authority citation for part 153 continues to read as follows:
Authority: 42 U.S.C. 18031, 18041, and 18061 through 18063.
0
2. Section 153.320 is amended by revising paragraphs (d) introductory
text, (d)(1)(iv), and (d)(4)(i)(B) to read as follows:
Sec. 153.320 Federally certified risk adjustment methodology.
* * * * *
(d) State flexibility to request reductions to transfers. For the
2020 through 2023 benefit years, States can request to reduce risk
adjustment transfers in the State's individual catastrophic, individual
non-catastrophic, small group, or merged market risk pool by up to 50
percent in States where HHS operates the risk adjustment program. For
the 2024 benefit year only, only prior participants, as defined in
paragraph (d)(5) of this section, may request to reduce risk adjustment
transfers in the State's individual catastrophic, individual non-
catastrophic, small group, or merged market risk pool by up to 50
percent in States where HHS operates the risk adjustment program.
(1) * * *
(i) * * *
(iv) For the 2024 benefit year only, a justification for the
requested reduction demonstrating the requested reduction would have de
minimis impact on the necessary premium increase to cover the transfers
for issuers that would receive reduced transfer payments.
* * * * *
(4) * * *
(i) * * *
(B) For the 2024 benefit year only, that the requested reduction
would have de minimis impact on the necessary premium increase to cover
the transfers for issuers that would receive reduced transfer payments.
* * * * *
0
3. Section 153.630 is amended by--
0
a. Revising paragraph (d)(2);
0
b. Redesignating paragraph (d)(3) as paragraph (d)(4); and
0
c. Adding new paragraph (d)(3).
The revision and addition read as follows:
Sec. 153.630 Data validation requirements when HHS operates risk
adjustment.
* * * * *
(d) * * *
(2) Within 15 calendar days of the notification of the findings of
a second validation audit (if applicable) by HHS, in the manner set
forth by HHS, an issuer must confirm the findings of the second
validation audit (if applicable), or file a discrepancy report to
dispute the findings of a second validation audit (if applicable).
(3) Within 30 calendar days of the notification by HHS of the
calculation of a risk score error rate, in the manner set forth by HHS,
an issuer must confirm the calculation of the risk score error rate as
a result of risk adjustment data validation, or file a discrepancy
report to dispute the calculation of a risk score error rate as a
result of risk adjustment data validation.
* * * * *
0
4. Section 153.710 is amended by revising paragraphs (e) and (h)(1)
introductory text to read as follows:
Sec. 153.710 Data requirements.
* * * * *
(e) Materiality threshold. HHS will consider a discrepancy reported
under paragraph (d)(2) of this section to be material if the amount in
dispute is equal to or exceeds $100,000 or 1 percent of the total
estimated transfer amount in the applicable State market risk pool,
whichever is less.
* * * * *
(h) * * *
(1) Notwithstanding any discrepancy report made under paragraph
(d)(2) of this section, any discrepancy filed under Sec. 153.630(d)(2)
or (3), or any request for reconsideration under Sec. 156.1220(a) of
this subchapter with respect to any risk adjustment payment or charge,
including an assessment of risk adjustment user fees and risk
adjustment data validation adjustments; reinsurance payment; cost-
sharing reduction payment or charge; or risk corridors payment or
charge, unless the dispute has been resolved, an issuer must report,
for purposes of the risk
[[Page 25917]]
corridors and medical loss ratio (MLR) programs:
* * * * *
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
5. 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
6. Section 155.106 is amended by revising paragraphs (a)(3) and (c)(3)
to read as follows:
Sec. 155.106 Election to operate an Exchange after 2014.
(a) * * *
(3) Have in effect an approved, or conditionally approved, Exchange
Blueprint and operational readiness assessment prior to the date on
which the Exchange would begin open enrollment as a State Exchange;
* * * * *
(c) * * *
(3) Have in effect an approved, or conditionally approved, Exchange
Blueprint and operational readiness assessment prior to the date on
which the Exchange proposes to begin open enrollment as a State-based
Exchanges on the Federal platform (SBE-FP), in accordance with HHS
rules in this chapter, as a State Exchange utilizing the Federal
platform;
* * * * *
Sec. 155.210 [Amended]
0
7. Section 155.210 is amended by:
0
a. Removing the period at the end of paragraph (c)(6) and adding a
semicolon in its place;
0
b. Adding the word ``or'' following the semicolon at the end of
paragraph (d)(7); and
0
c. Removing and reserving paragraph (d)(8).
0
8. Section 155.220 is amended by--
0
a. Revising paragraphs (g)(5)(i)(B), (h)(3), and (j)(2)(ii)
introductory text;
0
b. Redesignating paragraphs (j)(2)(ii)(A) through (D) as paragraphs
(j)(2)(ii)(B) through (E), respectively;
0
c. Adding new paragraph (j)(2)(ii)(A); and
0
d. Revising paragraph (j)(2)(iii).
The revisions and additions read as follows:
Sec. 155.220 Ability of States to permit agents and brokers and web-
brokers to assist qualified individuals, qualified employers, or
qualified employees enrolling QHPs.
* * * * *
(g) * * *
(5) * * *
(i) * * *
(B) The agent, broker, or web-broker may submit evidence in a form
and manner to be specified by HHS, to rebut the allegation during this
90-day period. If the agent, broker, or web-broker submits such
evidence during the suspension period, HHS will review the evidence and
make a determination whether to lift the suspension within 45 calendar
days of receipt of such evidence. If the rebuttal evidence does not
persuade HHS to lift the suspension, or if the agent, broker, or web-
broker fails to submit rebuttal evidence during the suspension period,
HHS may terminate the agent's, broker's, or web-broker's agreements
required under paragraph (d) of this section and under Sec. 155.260(b)
for cause under paragraph (g)(5)(ii) of this section.
* * * * *
(h) * * *
(3) Notice of reconsideration decision. The HHS reconsideration
entity will provide the agent, broker, or web-broker with a written
notice of the reconsideration decision within 60 calendar days of the
date it receives the request for reconsideration. This decision will
constitute HHS' final determination.
* * * * *
(j) * * *
(2) * * *
(ii) Provide the Federally-facilitated Exchanges with correct
information, and document that eligibility application information has
been reviewed by and confirmed to be accurate by the consumer, or the
consumer's authorized representative designated in compliance with
Sec. 155.227, prior to the submission of information, under section
1411(b) of the Affordable Care Act, including but not limited to:
(A) Documenting that eligibility application information has been
reviewed by and confirmed to be accurate by the consumer or the
consumer's authorized representative must require the consumer or their
authorized representative to take an action that produces a record that
can be maintained by the individual or entity described in paragraph
(j)(1) of this section and produced to confirm the consumer or their
authorized representative has reviewed and confirmed the accuracy of
the eligibility application information. Non-exhaustive examples of
acceptable documentation include obtaining the signature of the
consumer or their authorized representative (electronically or
otherwise), verbal confirmation by the consumer or their authorized
representative that is captured in an audio recording, a written
response (electronic or otherwise) from the consumer or their
authorized representative to a communication sent by the agent, broker,
or web-broker, or other similar means or methods specified by HHS in
guidance.
(1) The documentation required under paragraph (j)(2)(ii)(A) of
this section must include the date the information was reviewed, the
name of the consumer or their authorized representative, an explanation
of the attestations at the end of the eligibility application, and the
name of the assisting agent, broker, or web-broker.
(2) An individual or entity described in paragraph (j)(1) of this
section must maintain the documentation described in paragraph
(j)(2)(ii)(A) of this section for a minimum of ten years, and produce
the documentation upon request in response to monitoring, audit, and
enforcement activities conducted consistent with paragraphs (c)(5),
(g), (h), and (k) of this section.
* * * * *
(iii) Obtain and document the receipt of consent of the consumer or
their authorized representative designated in compliance with Sec.
155.227, employer, or employee prior to assisting with or facilitating
enrollment through a Federally-facilitated Exchange or assisting the
individual in applying for advance payments of the premium tax credit
and cost-sharing reductions for QHPs;
(A) Obtaining and documenting the receipt of consent must require
the consumer, or the consumer's authorized representative designated in
compliance with Sec. 155.227, to take an action that produces a record
that can be maintained and produced by an individual or entity
described in paragraph (j)(1) of this section to confirm the consumer's
or their authorized representative's consent has been provided. Non-
exhaustive examples of acceptable documentation of consent include
obtaining the signature of the consumer or their authorized
representative (electronically or otherwise), verbal confirmation by
the consumer or their authorized representative that is captured in an
audio recording, a response from the consumer or their authorized
representative to an electronic or other communication sent by the
agent, broker, or web-broker, or other similar means or methods
specified by HHS in guidance.
(B) The documentation required under paragraph (j)(2)(iii)(A) of
this section must include a description of
[[Page 25918]]
the scope, purpose, and duration of the consent provided by the
consumer or their authorized representative designated in compliance
with Sec. 155.227, the date consent was given, name of the consumer or
their authorized representative, and the name of the agent, broker,
web-broker, or agency being granted consent, as well as a process
through which the consumer or their authorized representative may
rescind the consent.
(C) An individual or entity described in paragraph (j)(1) of this
section must maintain the documentation described in paragraph
(j)(2)(iii)(A) of this section for a minimum of 10 years, and produce
the documentation upon request in response to monitoring, audit, and
enforcement activities conducted consistent with paragraphs (c)(5),
(g), (h), and (k) of this section.
* * * * *
Sec. 155.225 [Amended]
0
9. Section 155.225 is amended by:
0
a. Adding the word ``or'' following the semicolon in paragraph (g)(4);
and
0
b. Removing and reserving paragraph (g)(5).
0
10. Section 155.305 is amended by revising paragraphs (f)(1)(ii)(B) and
(f)(4) to read as follows.
Sec. 155.305 Eligibility standards.
* * * * *
(f) * * *
(1) * * *
(ii) * * *
(B) Is not eligible for minimum essential coverage for the full
calendar month for which advance payments of the premium tax credit
would be paid, with the exception of coverage in the individual market,
in accordance with 26 CFR 1.36B-2(a)(2) and (c).
* * * * *
(4) Compliance with filing requirement. The Exchange may not
determine a tax filer eligible for advance payments of the premium tax
credit (APTC) if HHS notifies the Exchange as part of the process
described in Sec. 155.320(c)(3) that APTC payments were made on behalf
of either the tax filer or spouse, if the tax filer is a married
couple, for two consecutive years for which tax data would be utilized
for verification of household income and family size in accordance with
Sec. 155.320(c)(1)(i), and the tax filer or the tax filer's spouse did
not comply with the requirement to file an income tax return for that
year and for the previous year as required by 26 U.S.C. 6011, 6012, and
in 26 CFR chapter I, and reconcile APTC for that period.
* * * * *
0
11. Section 155.315 is amended by adding paragraph (f)(7) to read as
follows:
Sec. 155.315 Verification process related to eligibility for
enrollment in a QHP through the Exchange.
* * * * *
(f) * * *
(7) Must extend the period described in paragraph (f)(2)(ii) of
this section by a period of 60 days for an applicant if the applicant
is required to present satisfactory documentary evidence to verify
household income.
* * * * *
0
12. Section 155.320 is amended by adding paragraph (c)(5) to read as
follows:
Sec. 155.320 Verification process related to eligibility for
insurance affordability programs.
* * * * *
(c) * * *
(5) Acceptance of attestation. Notwithstanding any other
requirement described in this paragraph (c) to the contrary, when the
Exchange requests tax return data and family size from the Secretary of
Treasury as described in paragraph (c)(1)(i)(A) of this section but no
such data is returned for an applicant, the Exchange will accept that
applicant's attestation of income and family size without further
verification.
* * * * *
0
13. Section 155.335 is amended by--
0
a. Revising paragraphs (j)(1) introductory text, (j)(1)(i) and (ii),
(j)(1)(iii)(A) and (B), (j)(1)(iv), (j)(2), and (j)(3) introductory
text; and
0
b. Adding paragraph (j)(4).
The revisions and addition read as follows:
Sec. 155.335 Annual eligibility redetermination.
* * * * *
(j) * * *
(1) The product under which the QHP in which the enrollee is
enrolled remains available through the Exchange for renewal, consistent
with Sec. 147.106 of this subchapter, the Exchange will renew the
enrollee in a QHP under that product, unless the enrollee terminates
coverage, including termination of coverage in connection with
voluntarily selecting a different QHP, in accordance with Sec.
155.430, or unless otherwise provided in paragraph (j)(1)(iii)(A) or
(j)(4) of this section, as follows:
(i) The Exchange will re-enroll the enrollee in the same plan as
the enrollee's current QHP, unless the current QHP is not available
through the Exchange;
(ii) If the enrollee's current QHP is not available through the
Exchange, the Exchange will re-enroll the enrollee in a QHP within the
same product at the same metal level as the enrollee's current QHP that
has the most similar network compared to the enrollee's current QHP;
(iii) * * *
(A) The enrollee's current QHP is a silver level plan, the Exchange
will re-enroll the enrollee in a silver level QHP under a different
product offered by the same QHP issuer that is most similar to the
enrollee's current product and that has the most similar network
compared to the enrollee's current QHP. If no such silver level QHP is
available for enrollment through the Exchange, the Exchange will re-
enroll the enrollee in a QHP under the same product that is one metal
level higher or lower than the enrollee's current QHP and that has the
most similar network compared to the enrollee's current QHP; or
(B) The enrollee's current QHP is not a silver level plan, the
Exchange will re-enroll the enrollee in a QHP under the same product
that is one metal level higher or lower than the enrollee's current QHP
and that has the most similar network compared to the enrollee's
current QHP; or
(iv) If the enrollee's current QHP is not available through the
Exchange and the enrollee's product no longer includes a QHP that is at
the same metal level as, or one metal level higher or lower than, the
enrollee's current QHP, the Exchange will re-enroll the enrollee in any
other QHP offered under the product in which the enrollee's current QHP
is offered in which the enrollee is eligible to enroll and that has the
most similar network compared to the enrollee's current QHP.
(2) No plans under the product under which the QHP in which the
enrollee is enrolled are available through the Exchange for renewal,
consistent with Sec. 147.106 of this subchapter, the Exchange will
enroll the enrollee in a QHP under a different product offered by the
same QHP issuer, to the extent permitted by applicable State law,
unless the enrollee terminates coverage, including termination of
coverage in connection with voluntarily selecting a different QHP, in
accordance with Sec. 155.430, as follows, except as provided in
paragraph (j)(4) of this section.
(i) The Exchange will re-enroll the enrollee in a QHP at the same
metal level as the enrollee's current QHP in the product offered by the
same issuer that is the most similar to the enrollee's current product
and that has the most
[[Page 25919]]
similar network compared to the enrollee's current QHP;
(ii) If the issuer does not offer another QHP at the same metal
level as the enrollee's current QHP, the Exchange will re-enroll the
enrollee in a QHP that is one metal level higher or lower than the
enrollee's current QHP and that has the most similar network compared
to the enrollee's current QHP in the product offered by the same issuer
through the Exchange that is the most similar to the enrollee's current
product; or
(iii) If the issuer does not offer another QHP through the Exchange
at the same metal level as, or one metal level higher or lower than the
enrollee's current QHP, the Exchange will re-enroll the enrollee in any
other QHP offered by the same issuer in which the enrollee is eligible
to enroll and that has the most similar network compared to the
enrollee's current QHP in the product that is most similar to the
enrollee's current product.
(3) No QHPs from the same issuer are available through the
Exchange, the Exchange may enroll the enrollee in a QHP issued by a
different issuer, to the extent permitted by applicable State law,
unless the enrollee terminates coverage, including termination of
coverage in connection with voluntarily selecting a different QHP, in
accordance with Sec. 155.430, as follows:
* * * * *
(4) The enrollee is determined upon annual redetermination eligible
for cost-sharing reductions, in accordance with Sec. 155.305(g), is
currently enrolled in a bronze level QHP, and would be re-enrolled in a
bronze level QHP under paragraph (j)(1) or (2) of this section, then to
the extent permitted by applicable State law, unless the enrollee
terminates coverage, including termination of coverage in connection
with voluntarily selecting a different QHP, in accordance with Sec.
155.430, at the option of the Exchange, the Exchange may re-enroll such
enrollee in a silver level QHP within the same product, with the same
provider network, and with a lower or equivalent premium after the
application of advance payments of the premium tax credit as the bronze
level QHP into which the Exchange would otherwise re-enroll the
enrollee under paragraph (j)(1) or (2) of this section.
* * * * *
0
14. Section 155.420 is amended by-
0
a. Revising paragraphs (a)(4)(ii)(A) and (B), (b)(2)(iv), and (c)(2);
0
b. Adding paragraph (c)(6);
0
c. Removing the heading from paragraph (d)(6); and
0
d. Revising paragraph (d)(12).
The revisions and addition read as follows:
Sec. 155.420 Special enrollment periods.
(a) * * *
(4) * * *
(ii) * * *
(A) If an enrollee or their dependents become newly eligible for
cost-sharing reductions in accordance with paragraph (d)(6)(i) or (ii)
of this section and the enrollee or their dependents are not enrolled
in a silver-level QHP, the Exchange must allow the enrollee and their
dependents to change to a silver-level QHP if they elect to change
their QHP enrollment; or
(B) Beginning January 2022, if an enrollee or their dependents
become newly ineligible for cost-sharing reductions in accordance with
paragraph (d)(6)(i) or (ii) of this section and the enrollee or his or
her dependents are enrolled in a silver-level QHP, the Exchange must
allow the enrollee and their dependents to change to a QHP one metal
level higher or lower if they elect to change their QHP enrollment;
* * * * *
(b) * * *
(2) * * *
(iv) If a qualified individual, enrollee, or dependent, as
applicable, loses coverage as described in paragraph (d)(1) or
(d)(6)(iii) of this section, or is enrolled in COBRA continuation
coverage for which an employer is paying all or part of the premiums,
or for which a government entity is providing subsidies, and the
employer contributions or government subsidies completely cease as
described in paragraph (d)(15) of this section, gains access to a new
QHP as described in paragraph (d)(7) of this section, becomes newly
eligible for enrollment in a QHP through the Exchange in accordance
with Sec. 155.305(a)(2) as described in paragraph (d)(3) of this
section, becomes newly eligible for advance payments of the premium tax
credit in conjunction with a permanent move as described in paragraph
(d)(6)(iv) of this section, and if the plan selection is made on or
before the day of the triggering event, the Exchange must ensure that
the coverage effective date is the first day of the month following the
date of the triggering event. If the plan selection is made after the
date of the triggering event, the Exchange must ensure that coverage is
effective in accordance with paragraph (b)(1) of this section or on the
first day of the following month, at the option of the Exchange.
Notwithstanding the requirements of this paragraph (b)(2)(iv) with
respect to losses of coverage as described at paragraphs (d)(1),
(d)(6)(iii), and (d)(15) of this section, at the option of the
Exchange, if the plan selection is made on or before the last day of
the month preceding the triggering event, the Exchange must ensure that
the coverage effective date is the first day of the month in which the
triggering event occurs.
* * * * *
(c) * * *
(2) Advanced availability. A qualified individual or their
dependent who is described in paragraph (d)(1), (d)(6)(iii), or (d)(15)
of this section has 60 days before and, unless the Exchange exercises
the option in paragraph (c)(6) of this section, 60 days after the
triggering event to select a QHP. At the option of the Exchange, a
qualified individual or their dependent who is described in paragraph
(d)(7) of this section; who is described in paragraph (d)(6)(iv) of
this section becomes newly eligible for advance payments of the premium
tax credit as a result of a permanent move to a new State; or who is
described in paragraph (d)(3) of this section and becomes newly
eligible for enrollment in a QHP through the Exchange because they
newly satisfy the requirements under Sec. 155.305(a)(2), has 60 days
before or after the triggering event to select a QHP.
* * * * *
(6) Special rule for individuals losing Medicaid or CHIP. Beginning
January 1, 2024, or earlier, at the option of the Exchange, a qualified
individual or their dependent(s) who is described in paragraph
(d)(1)(i) of this section and whose loss of coverage is a loss of
Medicaid or CHIP coverage shall have 90 days after the triggering event
to select a QHP. If a State Medicaid or CHIP Agency allows or provides
for a Medicaid or CHIP reconsideration period greater than 90 days, the
Exchange in that State may elect to provide a qualified individual or
their dependent(s) who is described in paragraph (d)(1)(i) of this
section and whose loss of coverage is a loss of Medicaid or CHIP
coverage additional time to select a QHP, up to the number of days
provided for the applicable Medicaid or CHIP reconsideration period.
* * * * *
(d) * * *
(12) The enrollment in a QHP through the Exchange was influenced by
a material error related to plan benefits, service area, cost-sharing,
or premium. A material error is one that is likely to have influenced a
qualified individual's,
[[Page 25920]]
enrollee's, or their dependent's enrollment in a QHP.
* * * * *
0
15. Section 155.430 is amended by adding paragraph (b)(3) to read as
follows:
Sec. 155.430 Termination of Exchange enrollment or coverage.
* * * * *
(b) * * *
(3) Prohibition of issuer-initiated terminations due to aging-off.
Exchanges on the Federal platform must, and State Exchanges using their
own platform may, prohibit QHP issuers from terminating dependent
coverage of a child before the end of the plan year in which the child
attains age 26 (or, if higher, the maximum age a QHP issuer is required
to make available dependent coverage of children under applicable State
law or the issuer's business rules), on the basis of the child's age,
unless otherwise permitted.
* * * * *
0
16. Section 155.505 is amended by revising paragraph (g) to read as
follows:
Sec. 155.505 General eligibility appeals requirements.
* * * * *
(g) Review of Exchange eligibility appeal decisions. Review of
appeal decisions issued by an impartial official as described in Sec.
155.535(c)(4) is available as follows:
(1) Administrative review. The Administrator may review an Exchange
eligibility appeal decision as follows:
(i) Request by a party to the appeal. (A) Within 14 calendar days
of the date of the Exchange eligibility appeal decision issued by an
impartial official as described in Sec. 155.535(c)(4), a party to the
appeal may request review of the Exchange eligibility appeal decision
by the CMS Administrator. Such a request may be made even if the CMS
Administrator has already at their initiative declined review as
described in paragraph (g)(1)(ii)(B)(1) of this section. If the CMS
Administrator accepts that party's request for a review after having
declined review, then the CMS Administrator's initial declination to
review the eligibility appeal decision is void.
(B) Within 30 days of the date of the party's request for
administrative review, the CMS Administrator must:
(1) Decline to review the Exchange eligibility appeal decision;
(2) Render a final decision as described in Sec. 155.545(a)(1)
based on their review of the eligibility appeal decision; or
(3) Choose to take no action on the request for review.
(C) The Exchange eligibility appeal decision of the impartial
official as described in Sec. 155.535(c)(4) is final as of the date of
the impartial official's decision if the CMS Administrator declines the
party's request for review or if the CMS Administrator does not take
any action on the party's request for review by the end of the 30-day
period described in paragraphs (g)(1)(i)(B)(1) and (3) of this section.
(ii) Review at the discretion of the CMS Administrator. (A) Within
14 calendar days of the date of the Exchange eligibility appeal
decision issued by an impartial official as described in Sec.
155.535(c)(4), the CMS Administrator may initiate a review of an
eligibility appeal decision at their discretion.
(B) Within 30 days of the date the CMS Administrator initiates a
review, the CMS Administrator may:
(1) Decline to review the Exchange eligibility appeal decision;
(2) Render a final decision as described in Sec. 155.545(a)(1)
based on their review of the eligibility appeal decision; or
(3) Choose to take no action on the Exchange eligibility appeal
decision.
(C) The eligibility Exchange appeal decision of the impartial
official as described in Sec. 155.535(c)(4) is final as of the date of
the Exchange eligibility appeal decision if the CMS Administrator
declines to review the eligibility appeal decision or chooses to take
no action by the end of the 30-day period described in paragraphs
(g)(1)(i)(B)(1) and (3) of this section.
(iii) Effective dates. If a party requests a review of an Exchange
eligibility appeal decision by the CMS Administrator or the CMS
Administrator initiates a review of an Exchange eligibility appeal
decision at their own discretion, the eligibility appeal decision is
effective as follows:
(A) If an Exchange eligibility appeal decision is final pursuant to
paragraphs (g)(1)(i)(C) and (g)(1)(ii)(C) in this section, the Exchange
eligibility appeal decision of the impartial official as described in
Sec. 155.535(c)(4) is effective as of the date of the impartial
official's decision.
(B) If the CMS Administrator renders a final decision after
reviewing an Exchange eligibility appeal decision as described in
paragraphs (g)(1)(i)(B)(2) and (g)(1)(ii)(B)(2) of this section, the
CMS Administrator may choose to change the effective date of the
Exchange eligibility appeal decision as described in Sec.
155.545(a)(5).
(iv) Informal resolution decision. Informal resolution decisions as
described in Sec. 155.535(a)(4) are not subject to administrative
review by the CMS Administrator.
(2) Judicial review. To the extent it is available by law, an
appellant may seek judicial review of a final Exchange eligibility
appeal decision.
(3) Implementation date. The administrative review process is
available for eligibility appeal decisions issued on or after January
1, 2024.
* * * * *
0
17. Add subpart P, consisting of Sec. Sec. 155.1500 through 155.1515,
to read as follows:
Subpart P--Improper Payment Pre-Testing and Assessment (IPPTA) for
State-based Exchanges
Sec.
155.1500 Purpose and scope.
155.1505 Definitions.
155.1510 Data submission.
155.1515 Pre-testing and assessment procedures.
Subpart P--Improper Payment Pre-Testing and Assessment (IPPTA) for
State-based Exchanges
Sec. 155.1500 Purpose and scope.
(a) This subpart sets forth the requirements of the IPPTA. The
IPPTA is an initiative between HHS and the State-based Exchanges. These
requirements are intended to:
(1) Prepare State-based Exchanges for the planned measurement of
improper payments.
(2) Test processes and procedures that support HHS's review of
determinations of advance payments of the premium tax credit (APTC)
made by State-based Exchanges.
(3) Provide a mechanism for HHS and State-based Exchanges to share
information that will aid in developing an efficient measurement
process.
(b) [Reserved]
Sec. 155.1505 Definitions.
As used in this subpart-
Business rules means the State-based Exchange's internal directives
defining, guiding, or constraining the State-based Exchange's actions
when making eligibility determinations and related APTC calculations.
Entity relationship diagram means a graphical representation
illustrating the organization and relationship of the data elements
that are pertinent to applications for QHP and associated APTC
payments.
Pre-testing and assessment means the process that uses the
procedures specified in Sec. 155.1515 to prepare State-based Exchanges
for the planned measurement of improper payments of APTC.
Pre-testing and assessment checklist means the document that
contains
[[Page 25921]]
criteria that HHS will use to review a State-based Exchange's ability
to accomplish the requirements of the IPPTA.
Pre-testing and assessment data request form means the document
that specifies the structure for the data elements that HHS will
require each State-based Exchange to submit.
Pre-testing and assessment period means the two calendar year
timespan during which HHS will engage in pre-testing and assessment
procedures with a State-based Exchange.
Pre-testing and assessment plan means the template developed by HHS
in collaboration with each State-based Exchange enumerating the
procedures, sequence, and schedule to accomplish pre-testing and
assessment.
Pre-testing and assessment report means the summary report provided
by HHS to each State-based Exchange at the end of the State-based
Exchange's pre-testing and assessment period that will include, but not
be limited to, the State-based Exchange's status regarding completion
of each of the pre-testing and assessment procedures specified in Sec.
155.1515, as well as observations and recommendations that result from
processing and reviewing the data submitted by the State-based Exchange
to HHS.
Sec. 155.1510 Data submission.
(a) Requirements. For purposes of the IPPTA, a State-based Exchange
must submit the following information in a form and manner specified by
HHS:
(1) Data documentation. The State-based Exchange must provide to
HHS the following data documentation:
(i) The State-based Exchange's data dictionary including attribute
name, data type, allowable values, and description;
(ii) An entity relationship diagram, which shall include the
structure of the data tables and the residing data elements that
identify the relationships between the data tables; and
(iii) Business rules and related calculations.
(2) Data for processing and testing. The State-based Exchange must
use the pre-testing and assessment data request form, or other method
as specified by HHS, to submit to HHS the application data associated
with no fewer than 10 tax household identification numbers and the
associated policy identification numbers that address scenarios
specified by HHS to allow HHS to test all of the pre-testing and
assessment processes and procedures.
(b) Timing. The State-based Exchange must submit the information
specified in paragraph (a) of this section within the timelines in the
pre-testing and assessment plan specified in Sec. 155.1515.
Sec. 155.1515 Pre-testing and assessment procedures.
(a) General requirement. The State-based Exchanges are required to
participate in the IPPTA for a period of two calendar years. The State-
based Exchange and HHS will execute the pre-testing and assessment
procedures in this section within the timelines in the pre-testing and
assessment plan.
(b) Orientation and planning processes. (1) As a part of the
orientation process, HHS will provide State-based Exchanges with an
overview of the pre-testing and assessment procedures and identify
documentation that a State-based Exchange must provide to HHS for pre-
testing and assessment.
(2) As a part of the planning process, HHS, in collaboration with
each State-based Exchange, will develop a pre-testing and assessment
plan that takes into consideration relevant activities, if any, that
were completed during a prior, voluntary State engagement. The pre-
testing and assessment plan will include the pre-testing and assessment
checklist.
(3) At the conclusion of the pre-testing and assessment planning
process, HHS will issue the pre-testing and assessment plan specific to
that State-based Exchange. The pre-testing and assessment plan will be
for HHS and State-based Exchange internal use only and will not be made
available to the public by HHS unless otherwise required by law.
(c) Notifications and updates--(1) Notifications. As needed
throughout the pre-testing and assessment period, HHS will issue
notifications to State-based Exchanges concerning information related
to the pre-testing and assessment processes and procedures.
(2) Updates regarding changes. Throughout the pre-testing and
assessment period, the State-based Exchange must provide HHS with
information regarding any operational, policy, business rules,
information technology, or other changes that may impact the ability of
the State-based Exchange to satisfy the requirements of the pre-testing
and assessment.
(d) Submission of required data and data documentation. As
specified in Sec. 155.1510, HHS will inform State-based Exchanges
about the form and manner for State-based Exchanges to submit required
data and data documentation to HHS in accordance with the pre-testing
and assessment plan.
(e) Data processing. (1) HHS will coordinate with each State-based
Exchange to track and manage the data and data documentation submitted
by a State-based Exchange as specified in Sec. 155.1510(a)(1) and (2).
(2) HHS will coordinate with each State-based Exchange to provide
assistance in aligning the data specified in Sec. 155.1510(a)(2) from
the State-based Exchange's existing data structure to the standardized
set of data elements.
(3) HHS will coordinate with each State-based Exchange to interpret
and validate the data specified in Sec. 155.1510(a)(2).
(4) HHS will use the data and data documentation submitted by the
State-based Exchange to execute the pre-testing and assessment
procedures.
(f) Pre-testing and assessment checklist. HHS will issue the pre-
testing and assessment checklist as part of the pre-testing and
assessment plan. The pre-testing and assessment checklist criteria will
include but are not limited to:
(1) A State-based Exchange's submission of the data documentation
as specified in Sec. 155.1510(a)(1).
(2) A State-based Exchange's submission of the data for processing
and testing as specified in Sec. 155.1510(a)(2); and
(3) A State-based Exchange's completion of the pre-testing and
assessment processes and procedures related to the IPPTA program.
(g) Pre-testing and assessment report. Subsequent to the completion
of a State-based Exchange's pre-testing and assessment period, HHS will
issue a pre-testing and assessment report specific to that State-based
Exchange. The pre-testing and assessment report will be for HHS and
State-based Exchange internal use only and will not be made available
to the public by HHS unless otherwise required by law.
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
18. The authority citation for part 156 continues to read as follows:
Authority: 42 U.S.C. 18021-18024, 18031-18032, 18041-18042,
18044, 18054, 18061, 18063, 18071, 18082, and 26 U.S.C. 36B.
0
19. Section 156.201 is revised to read as follows:
Sec. 156.201 Standardized plan options.
A qualified health plan (QHP) issuer in a Federally-facilitated
Exchange or a State-based Exchange on the Federal platform, other than
an issuer that is already required to offer standardized plan options
under State action taking
[[Page 25922]]
place on or before January 1, 2020, must:
(a) For the plan year 2023, offer in the individual market at least
one standardized QHP option, defined at Sec. 155.20 of this
subchapter, at every product network type, as the term is described in
the definition of ``product'' at Sec. 144.103 of this subchapter, at
every metal level, and throughout every service area that it also
offers non-standardized QHP options, including, for silver plans, for
the income-based cost-sharing reduction plan variations, as provided
for at Sec. 156.420(a); and
(b) For plan year 2024 and subsequent plan years, offer in the
individual market at least one standardized QHP option, defined at
Sec. 155.20 of this subchapter, at every product network type, as the
term is described in the definition of ``product'' at Sec. 144.103 of
this subchapter, at every metal level except the non-expanded bronze
metal level, and throughout every service area that it also offers non-
standardized QHP options, including, for silver plans, for the income-
based cost-sharing reduction plan variations, as provided for at Sec.
156.420(a).
0
20. Section 156.202 is added to read as follows:
Sec. 156.202 Non-standardized plan option limits.
A QHP issuer in a Federally-facilitated Exchange or a State-based
Exchange on the Federal platform:
(a) For plan year 2024, is limited to offering four non-
standardized plan options per product network type, as the term is
described in the definition of ``product'' at Sec. 144.103 of this
subchapter, metal level (excluding catastrophic plans), and inclusion
of dental and/or vision benefit coverage (as defined in paragraph (c)
of this section), in any service area.
(b) For plan year 2025 and subsequent plan years, is limited to
offering two non-standardized plan options per product network type, as
the term is described in the definition of ``product'' at Sec. 144.103
of this subchapter, metal level (excluding catastrophic plans), and
inclusion of dental and/or vision benefit coverage (as defined in
paragraph (c) of this section), in any service area.
(c) For purposes of paragraphs (a) and (b) of this section, the
inclusion of dental and/or vision benefit coverage is defined as
coverage of any or all of the following:
(1) Adult dental benefit coverage as defined by the following in
the ``Benefits'' column in the Plans and Benefits Template:
(i) Routine Dental Services (Adult);
(ii) Basic Dental Care--Adult; or
(iii) Major Dental Care--Adult.
(2) Pediatric dental benefit coverage as defined by the following
in the ``Benefits'' column in the Plans and Benefits Template:
(i) Dental Check-Up for Children;
(ii) Basic Dental Care--Child; or
(iii) Major Dental Care--Child.
(3) Adult vision benefit coverage as defined by the following in
the ``Benefits'' column in the Plans and Benefits Template: Routine Eye
Exam (Adult).
0
21. Section 156.210 is amended by adding paragraph (d) to read as
follows:
Sec. 156.210 QHP rate and benefit information.
* * * * *
(d) Rate requirements for stand-alone dental plans. For benefit and
plan years beginning on or after January 1, 2024:
(1) Age on effective date. The premium rate charged by an issuer of
stand-alone dental plans may vary with respect to the particular plan
or coverage involved by determining the enrollee's age. Any age
calculation for rating and eligibility purposes must be based on the
age as of the time of policy issuance or renewal.
(2) Guaranteed rates. An issuer of stand-alone dental plans must
set guaranteed rates.
0
22. Section 156.225 is amended by--
0
a. Revising the section heading;
0
b. In paragraph (a), removing ``and'' from the end of the paragraph;
0
c. In paragraph (b), removing the period and adding in its place ``;
and''; and
0
d. Adding paragraph (c).
The revision and addition read as follows:
Sec. 156.225 Marketing and benefit design of QHPs.
* * * * *
(c) Plan marketing names. Offer plans and plan variations with
marketing names that include correct information, without omission of
material fact, and do not include content that is misleading.
0
23. Section 156.230 is amended by--
0
a. Revising paragraphs (a)(1) introductory text and (a)(2)(i)(B);
0
b. Adding paragraph (a)(4);
0
c. Revising paragraph (e) introductory text; and
0
d. Removing and reserving paragraph (f).
The revisions and addition read as follows:
Sec. 156.230 Network adequacy standards.
(a) * * *
(1) Each QHP issuer must use a provider network and ensure that the
provider network consisting of in-network providers, as available to
all enrollees, meets the following standards:
* * * * *
(2) * * *
(i) * * *
(B) For plan years beginning on or after January 1, 2025, meeting
appointment wait time standards established by the Federally-
facilitated Exchange. Such appointment wait time standards will be
developed for consistency with industry standards and published in
guidance.
* * * * *
(4) A limited exception to the requirement described under
paragraph (a)(1) of this section that each QHP issuer use a provider
network is available to stand-alone dental plans issuers that sell
plans in areas where it is prohibitively difficult for the issuer to
establish a network of dental providers; this exception is not
available to medical QHP issuers. Under this exception, an area is
considered ``prohibitively difficult'' for the stand-alone dental plan
issuer to establish a network of dental providers based on attestations
from State departments of insurance in States with at least 80 percent
of counties classified as Counties with Extreme Access Considerations
(CEAC) that at least one of the following factors exists in the area of
concern: a significant shortage of dental providers, a significant
number of dental providers unwilling to contract with Exchange issuers,
or significant geographic limitations impacting consumer access to
dental providers.
* * * * *
(e) Out-of-network cost-sharing. Beginning for the 2018 and later
benefit years, for a network to be deemed adequate, each QHP must:
* * * * *
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24. Section 156.235 is amended by revising paragraphs (a)(1),
(a)(2)(i), (a)(2)(ii)(B), and (b)(2)(i) to read as follows:
Sec. 156.235 Essential community providers.
(a) * * *
(1) A QHP issuer must include in its provider network a sufficient
number and geographic distribution of essential community providers
(ECPs), where available, to ensure reasonable and timely access to a
broad range of such providers for low-income individuals or individuals
residing in Health Professional Shortage Areas within the QHP's service
area, in accordance with the Exchange's network adequacy standards.
(2) * * *
[[Page 25923]]
(i) The QHP issuer's provider network includes as participating
providers at least a minimum percentage, as specified by HHS, of
available ECPs in each plan's service area collectively across all ECP
categories defined under paragraph (a)(2)(ii)(B) of this section, and
at least a minimum percentage of available ECPs in each plan's service
area within certain individual ECP categories, as specified by HHS.
Multiple providers at a single location will count as a single ECP
toward both the available ECPs in the plan's service area and the
issuer's satisfaction of the ECP participation standard. For plans that
use tiered networks, to count toward the issuer's satisfaction of the
ECP standards, providers must be contracted within the network tier
that results in the lowest cost-sharing obligation. For plans with two
network tiers (for example, participating providers and preferred
providers), such as many preferred provider organizations (PPOs), where
cost-sharing is lower for preferred providers, only preferred providers
will be counted towards ECP standards; and
(ii) * * *
(B) At least one ECP in each of the eight (8) ECP categories in
each county in the service area, where an ECP in that category is
available and provides medical or dental services that are covered by
the issuer plan type. The ECP categories are: Federally Qualified
Health Centers, Ryan White Program Providers, Family Planning
Providers, Indian Health Care Providers, Inpatient Hospitals, Mental
Health Facilities, Substance Use Disorder Treatment Centers, and Other
ECP Providers. The Other ECP Providers category includes the following
types of providers: Rural Health Clinics, Black Lung Clinics,
Hemophilia Treatment Centers, Sexually Transmitted Disease Clinics,
Tuberculosis Clinics, and Rural Emergency Hospitals.
* * * * *
(b) * * *
(2) * * *
(i) The number of its providers that are located in Health
Professional Shortage Areas or five-digit zip codes in which 30 percent
or more of the population falls below 200 percent of the Federal
poverty level satisfies a minimum percentage, specified by HHS, of
available ECPs in each plan's service area collectively across all ECP
categories defined under paragraph (a)(2)(ii)(B) of this section, and
at least a minimum percentage of available ECPs in each plan's service
area within certain individual ECP categories, as specified by HHS.
Multiple providers at a single location will count as a single ECP
toward both the available ECPs in the plan's service area and the
issuer's satisfaction of the ECP participation standard. For plans that
use tiered networks, to count toward the issuer's satisfaction of the
ECP standards, providers must be contracted within the network tier
that results in the lowest cost-sharing obligation. For plans with two
network tiers (for example, participating providers and preferred
providers), such as many PPOs, where cost sharing is lower for
preferred providers, only preferred providers would be counted towards
ECP standards; and
* * * * *
0
25. Section 156.270 is amended by revising paragraph (f) to read as
follows:
Sec. 156.270 Termination of coverage or enrollment for qualified
individuals.
* * * * *
(f) Notice of non-payment of premiums. If an enrollee is delinquent
on premium payment, the QHP issuer must provide the enrollee with
notice of such payment delinquency. Issuers offering QHPs in Exchanges
on the Federal platform must provide such notices promptly and without
undue delay, within 10 business days of the date the issuer should have
discovered the delinquency.
* * * * *
0
26. Section 156.1210 is amended by revising paragraph (c) to read as
follows:
Sec. 156.1210 Dispute submission.
* * * * *
(c) Deadline for describing inaccuracies. To be eligible for
resolution under paragraph (b) of this section, an issuer must describe
all inaccuracies identified in a payment and collections report before
the end of the 3-year period beginning at the end of the plan year to
which the inaccuracy relates. For plan years 2015 through 2019, to be
eligible for resolution under paragraph (b) of this section, an issuer
must describe all inaccuracies identified in a payment and collections
report before January 1, 2024. If a payment error is discovered after
the timeframe set forth in this paragraph (c), the issuer must notify
HHS, the State Exchange, or State-based Exchanges on the Federal
platform (SBE-FP) (as applicable) and repay any overpayments to HHS.
* * * * *
0
27. Section 156.1220 is amended by revising paragraphs (a)(4)(ii) and
(b)(1) to read as follows:
Sec. 156.1220 Administrative appeals.
(a) * * *
(4) * * *
(ii) Notwithstanding paragraph (a)(1) of this section, a
reconsideration with respect to a processing error by HHS, HHS's
incorrect application of the relevant methodology, or HHS's
mathematical error may be requested only if, to the extent the issue
could have been previously identified, the issuer notified HHS of the
dispute through the applicable process for reporting a discrepancy set
forth in Sec. Sec. 153.630(d)(2) and (3) and 153.710(d)(2) of this
subchapter and Sec. 156.430(h)(1), it was so identified and remains
unresolved.
* * * * *
(b) * * *
(1) Manner and timing for request. A request for an informal
hearing must be made in writing and filed with HHS within 30 calendar
days of the date of the reconsideration decision under paragraph (a)(5)
of this section. If the last day of this period is not a business day,
the request for an informal hearing must be made in writing and filed
by the next applicable business day.
* * * * *
Dated: April 17, 2023.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-08368 Filed 4-19-23; 4:15 pm]
BILLING CODE 4120-01-P
