[Title 45 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2020 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 45

Public Welfare


________________________

Parts 140 to 199

                         Revised as of October 1, 2020

          Containing a codification of documents of general 
          applicability and future effect

          As of October 1, 2020
                    Published by the Office of the Federal National 
                    Archives and Records Administration as a Special 
                    Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 45:
          SUBTITLE A--Department of Health and Human Services        3
  Finding Aids:
      Table of CFR Titles and Chapters........................     677
      Alphabetical List of Agencies Appearing in the CFR......     697
      List of CFR Sections Affected...........................     707

[[Page iv]]





                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 45 CFR 144.101 
                       refers to title 45, part 
                       144, section 101.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, October 1, 2020), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
the revision date stated on the cover of each volume are not carried. 
Code users may find the text of provisions in effect on any given date 
in the past by using the appropriate List of CFR Sections Affected 
(LSA). For the convenience of the reader, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume. For changes to 
the Code prior to the LSA listings at the end of the volume, consult 
previous annual editions of the LSA. For changes to the Code prior to 
2001, consult the List of CFR Sections Affected compilations, published 
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
editorially to indicate that a portion of the CFR was left vacant and 
not dropped in error.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed as 
an approved incorporation by reference, please contact the agency that 
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contacting the agency, you find the material is not available, please 
notify the Director of the Federal Register, National Archives and 
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or call 202-741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Authorities 
and Rules. A list of CFR titles, chapters, subchapters, and parts and an 
alphabetical list of agencies publishing in the CFR are also included in 
this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.

[[Page vii]]

    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, 8601 Adelphi Road, College Park, MD 
20740-6001 or e-mail [email protected].

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
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law numbers, Federal Register finding aids, and related information. 
Connect to NARA's website at www.archives.gov/federal- register.
    The e-CFR is a regularly updated, unofficial editorial compilation 
of CFR material and Federal Register amendments, produced by the Office 
of the Federal Register and the Government Publishing Office. It is 
available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register
    October 1, 2020







[[Page ix]]



                               THIS TITLE

    Title 45--Public Welfare is composed of five volumes. The parts in 
these volumes are arranged in the following order: Parts 1-139, 140-199, 
200-499, 500-1199, and 1200 to end. Volumes one and two (parts 1-139 and 
parts 140-199) contain all current regulations issued under subtitle A--
Department of Health and Human Services. Volume three (parts 200-499) 
contains all current regulations issued under subtitle B--Regulations 
Relating to Public Welfare, chapter II--Office of Family Assistance 
(Assistance Programs), Administration for Children and Families, 
Department of Health and Human Services, chapter III--Office of Child 
Support Enforcement (Child Support Enforcement Program), Administration 
for Children and Families, Department of Health and Human Services, and 
chapter IV--Office of Refugee Resettlement, Administration for Children 
and Families, Department of Health and Human Services. Volume four 
(parts 500-1199) contains all current regulations issued under chapter 
V--Foreign Claims Settlement Commission of the United States, Department 
of Justice, chapter VI--National Science Foundation, chapter VII--
Commission on Civil Rights, chapter VIII--Office of Personnel 
Management, chapter IX--Denali Commission, chapter X--Office of 
Community Services, Administration for Children and Families, Department 
of Health and Human Services, and chapter XI--National Foundation on the 
Arts and the Humanities. Volume five (part 1200 to end) contains all 
current regulations issued under chapter XII--Corporation for National 
and Community Service, chapter XIII--Administration for Children and 
Families, Department of Health and Human Services, chapter XVI--Legal 
Services Corporation, chapter XVII--National Commission on Libraries and 
Information Science, chapter XVIII--Harry S. Truman Scholarship 
Foundation, chapter XXI--Commission of Fine Arts, chapter XXIII--Arctic 
Research Commission, chapter XXIV--James Madison Memorial Fellowship 
Foundation, and chapter XXV--Corporation for National and Community 
Service. The contents of these volumes represent all of the current 
regulations codified under this title of the CFR as of October 1, 2020.

    For this volume, Ann Worley was Chief Editor. The Code of Federal 
Regulations publication program is under the direction of John Hyrum 
Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                        TITLE 45--PUBLIC WELFARE




                  (This book contains parts 140 to 199)

  --------------------------------------------------------------------
                                                                    Part

SUBTITLE A--Department of Health and Human Services.........         144

[[Page 3]]



           Subtitle A--Department of Health and Human Services




  --------------------------------------------------------------------


  Editorial Note: Nomenclature changes to subtitle A appear at 66 FR 
39452, July 31, 2001.

        SUBCHAPTER B--REQUIREMENTS RELATING TO HEALTH CARE ACCESS
Part                                                                Page
140-143

[Reserved]

144             Requirements relating to health insurance 
                    coverage................................           5
145

[Reserved]

146             Requirements for the group health insurance 
                    market..................................          14
147             Health insurance reform requirements for the 
                    group and individual health insurance 
                    markets.................................         108
148             Requirements for the individual health 
                    insurance market........................         172
149

[Reserved]

150             CMS enforcement in group and individual 
                    insurance markets.......................         191
151

[Reserved]

152             Pre-existing condition insurance plan 
                    program.................................         207
153             Standards related to reinsurance, risk 
                    corridors, and risk adjustment under the 
                    Affordable Care Act.....................         214
154             Health insurance issuer rate increases: 
                    disclosure and review requirements......         243
155             Exchange establishment standards and other 
                    related standards under the Affordable 
                    Care Act................................         249
156             Health insurance issuer standards under the 
                    Affordable Care Act, including standards 
                    related to exchanges....................         380
157             Employer interactions with exchanges and 
                    shop participation......................         456
158             Issuer use of premium revenue: reporting and 
                    rebate requirements.....................         458

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159             Health care reform insurance web portal.....         487
  SUBCHAPTER C--ADMINISTRATIVE DATA STANDARDS AND RELATED REQUIREMENTS
160             General administrative requirements.........         489
162             Administrative requirements.................         514
163

[Reserved]

164             Security and privacy........................         534
165-169

 [Reserved]

               SUBCHAPTER D--HEALTH INFORMATION TECHNOLOGY
170             Health information technology standards, 
                    implementation specifications, and 
                    certification criteria and certification 
                    programs for health information 
                    technology..............................         595
171             Information blocking........................         656
172-179

 [Reserved]

             SUBCHAPTER E--PRICE TRANSPARENCY (EFF. 1-1-21)
180             Hospital price transparency (Eff. 1-1-21)...         667
181-199

 [Reserved]

[[Page 5]]



        SUBCHAPTER B_REQUIREMENTS RELATING TO HEALTH CARE ACCESS



                        PARTS 140	143 [RESERVED]



PART 144_REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE-
-Table of Contents



                      Subpart A_General Provisions

Sec.
144.101 Basis and purpose.
144.102 Scope and applicability.
144.103 Definitions.

    Subpart B_Qualified State Long-Term Care Insurance Partnerships: 
                   Reporting Requirements for Insurers

144.200 Basis.
144.202 Definitions.
144.204 Applicability of regulations.
144.206 Reporting requirements.
144.208 Deadlines for submission of reports.
144.210 Form and manner of reports.
144.212 Confidentiality of information.
144.214 Notifications of noncompliance with reporting requirements.

    Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92.

    Source: 62 FR 16955, Apr. 8, 1997, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  144.101  Basis and purpose.

    (a) Part 146 of this subchapter implements requirements of Title 
XXVII of the Public Health Service Act (PHS Act, 42 U.S.C. 300gg, et 
seq.) that apply to group health plans and group health insurance 
issuers.
    (b) Part 147 of this subchapter implements the provisions of the 
Patient Protection and Affordable Care Act that apply to both group 
health plans and health insurance issuers in the Group and Individual 
Markets.
    (c) Part 148 of this subchapter implements Individual Health 
Insurance Market requirements of the PHS Act. Its purpose is to improve 
access to individual health insurance coverage for certain individuals 
who previously had group coverage, guarantee the renewability of all 
health insurance coverage in the individual market, and provide certain 
protections for mothers and newborns with respect to coverage for 
hospital stays in connection with childbirth, and to provide certain 
protections for patients who elect breast reconstruction in connection 
with a mastectomy.
    (d) Part 150 of this subchapter implements the enforcement 
provisions of sections 2723 and 2761 of the PHS Act with respect to the 
following:
    (1) States that fail to substantially enforce one or more provisions 
of part 146 concerning group health insurance, one or more provisions of 
part 147 concerning group or individual health insurance, or the 
requirements of part 148 of this subchapter concerning individual health 
insurance.
    (2) Insurance issuers in States described in paragraph (d)(1) of 
this section.
    (3) Group health plans that are non-Federal governmental plans.
    (e) Sections 2791 and 2792 of the PHS Act define terms used in the 
regulations in this subchapter and provide the basis for issuing these 
regulations.

[64 FR 45795, Aug. 20, 1999, as amended at 74 FR 51688, Oct. 7, 2009; 75 
FR 27137, May 13, 2010; 78 FR 13435, Feb. 27, 2013]



Sec.  144.102  Scope and applicability.

    (a) For purposes of 45 CFR parts 144 through 148, all health 
insurance coverage is generally divided into two markets--the group 
market and the individual market. The group market is further divided 
into the large group market and the small group market.
    (b) The protections afforded under 45 CFR parts 144 through 148 to 
individuals and employers (and other sponsors of health insurance 
offered in connection with a group health plan) are determined by 
whether the coverage involved is obtained in the small group market, the 
large group market, or the individual market.
    (c) Coverage that is provided to associations, but not related to 
employment, and sold to individuals is not considered group coverage 
under 45

[[Page 6]]

CFR parts 144 through 148. If the coverage is offered to an association 
member other than in connection with a group health plan, the coverage 
is considered individual health insurance coverage for purposes of 45 
CFR parts 144 through 148. The coverage is considered coverage in the 
individual market, regardless of whether it is considered group coverage 
under state law. If the health insurance coverage is offered in 
connection with a group health plan as defined at 45 CFR 144.103, it is 
considered group health insurance coverage for purposes of 45 CFR parts 
144 through 148.
    (d) Provisions relating to CMS enforcement of parts 146, 147, and 
148 are contained in part 150 of this subchapter.

[78 FR 13435, Feb. 27, 2013, as amended at 78 FR 65091, Oct. 30, 2013]



Sec.  144.103  Definitions.

    For purposes of parts 146 (group market), 147 (group and individual 
market), 148 (individual market), and 150 (enforcement) of this 
subchapter, the following definitions apply unless otherwise provided:
    Affiliation period means a period of time that must expire before 
health insurance coverage provided by an HMO becomes effective, and 
during which the HMO is not required to provide benefits.
    Applicable State authority means, with respect to a health insurance 
issuer in a State, the State insurance commissioner or official or 
officials designated by the State to enforce the requirements of 45 CFR 
parts 146 and 148 for the State involved with respect to the issuer.
    Beneficiary has the meaning given the term under section 3(8) of the 
Employee Retirement Income Security Act of 1974 (ERISA), which states, 
``a person designated by a participant, or by the terms of an employee 
benefit plan, who is or may become entitled to a benefit'' under the 
plan.
    Bona fide association means, with respect to health insurance 
coverage offered in a State, an association that meets the following 
conditions:
    (1) Has been actively in existence for at least 5 years.
    (2) Has been formed and maintained in good faith for purposes other 
than obtaining insurance.
    (3) Does not condition membership in the association on any health 
status-related factor relating to an individual (including an employee 
of an employer or a dependent of any employee).
    (4) Makes health insurance coverage offered through the association 
available to all members regardless of any health status-related factor 
relating to the members (or individuals eligible for coverage through a 
member).
    (5) Does not make health insurance coverage offered through the 
association available other than in connection with a member of the 
association.
    (6) Meets any additional requirements that may be imposed under 
State law.
    Church plan means a Church plan within the meaning of section 3(33) 
of ERISA.
    COBRA definitions:
    (1) COBRA means Title X of the Consolidated Omnibus Budget 
Reconciliation Act of 1985, as amended.
    (2) COBRA continuation coverage means coverage, under a group health 
plan, that satisfies an applicable COBRA continuation provision.
    (3) COBRA continuation provision means sections 601-608 of the 
Employee Retirement Income Security Act, section 4980B of the Internal 
Revenue Code of 1986 (other than paragraph (f)(1) of such section 4980B 
insofar as it relates to pediatric vaccines), or Title XXII of the PHS 
Act.
    (4) Continuation coverage means coverage under a COBRA continuation 
provision or a similar State program. Coverage provided by a plan that 
is subject to a COBRA continuation provision or similar State program, 
but that does not satisfy all the requirements of that provision or 
program, will be deemed to be continuation coverage if it allows an 
individual to elect to continue coverage for a period of at least 18 
months. Continuation coverage does not include coverage under a 
conversion policy required to be offered to an individual upon 
exhaustion of continuation coverage, nor does it include continuation 
coverage under the Federal Employees Health Benefits Program.

[[Page 7]]

    (5) Exhaustion of COBRA continuation coverage means that an 
individual's COBRA continuation coverage ceases for any reason other 
than either failure of the individual to pay premiums on a timely basis, 
or for cause (such as making a fraudulent claim or an intentional 
misrepresentation of a material fact in connection with the plan). An 
individual is considered to have exhausted COBRA continuation coverage 
if such coverage ceases--
    (i) Due to the failure of the employer or other responsible entity 
to remit premiums on a timely basis;
    (ii) When the individual no longer resides, lives, or works in the 
service area of an HMO or similar program (whether or not within the 
choice of the individual) and there is no other COBRA continuation 
coverage available to the individual; or
    (iii) When the individual incurs a claim that would meet or exceed a 
lifetime limit on all benefits and there is no other COBRA continuation 
coverage available to the individual.
    (6) Exhaustion of continuation coverage means that an individual's 
continuation coverage ceases for any reason other than either failure of 
the individual to pay premiums on a timely basis, or for cause (such as 
making a fraudulent claim or an intentional misrepresentation of a 
material fact in connection with the plan). An individual is considered 
to have exhausted continuation coverage if--
    (i) Coverage ceases due to the failure of the employer or other 
responsible entity to remit premiums on a timely basis;
    (ii) When the individual no longer resides, lives or works in a 
service area of an HMO or similar program (whether or not within the 
choice of the individual) and there is no other continuation coverage 
available to the individual; or
    (iii) When the individual incurs a claim that would meet or exceed a 
lifetime limit on all benefits and there is no other continuation 
coverage available to the individual.
    Condition means a medical condition.
    Creditable coverage has the meaning given the term in 45 CFR 
146.113(a).
    Dependent means any individual who is or may become eligible for 
coverage under the terms of a group health plan because of a 
relationship to a participant.
    Eligible individual, for purposes of--
    (1) The group market provisions in 45 CFR part 146, subpart E, is 
defined in 45 CFR 146.150(b); and
    (2) The individual market provisions in 45 CFR part 148, is defined 
in 45 CFR 148.103.
    Employee has the meaning given the term under section 3(6) of ERISA, 
which states, ``any individual employed by an employer.''
    Employer has the meaning given the term under section 3(5) of ERISA, 
which states, ``any person acting directly as an employer, or indirectly 
in the interest of an employer, in relation to an employee benefit plan; 
and includes a group or association of employers acting for an employer 
in such capacity.''
    Enroll means to become covered for benefits under a group health 
plan (that is, when coverage becomes effective), without regard to when 
the individual may have completed or filed any forms that are required 
in order to become covered under the plan. For this purpose, an 
individual who has health coverage under a group health plan is enrolled 
in the plan regardless of whether the individual elects coverage, the 
individual is a dependent who becomes covered as a result of an election 
by a participant, or the individual becomes covered without an election.
    Enrollment date means the first day of coverage or, if there is a 
waiting period, the first day of the waiting period. If an individual 
receiving benefits under a group health plan changes benefit packages, 
or if the plan changes group health insurance issuers, the individual's 
enrollment date does not change.
    ERISA stands for the Employee Retirement Income Security Act of 
1974, as amended (29 U.S.C. 1001 et seq.).
    Excepted benefits, consistent for purposes of the--
    (1) Group market provisions in 45 CFR part 146, subpart D, is 
defined in 45 CFR 146.145(b); and
    (2) Individual market provisions in 45 CFR part 148, is defined in 
45 CFR 148.220.

[[Page 8]]

    Federal governmental plan means a governmental plan established or 
maintained for its employees by the Government of the United States or 
by any agency or instrumentality of such Government.
    First day of coverage means, in the case of an individual covered 
for benefits under a group health plan, the first day of coverage under 
the plan and, in the case of an individual covered by health insurance 
coverage in the individual market, the first day of coverage under the 
policy or contract.
    Genetic information has the meaning specified in Sec.  146.122(a) of 
this subchapter.
    Governmental plan means a governmental plan within the meaning of 
section 3(32) of ERISA.
    Group health insurance coverage means health insurance coverage 
offered in connection with a group health plan. Individual health 
insurance coverage reimbursed by the arrangements described in 29 CFR 
2510.3-1(l) is not offered in connection with a group health plan, and 
is not group health insurance coverage, provided all the conditions in 
29 CFR 2510.3-1(l) are satisfied.
    Group health plan or plan means a group health plan within the 
meaning of 45 CFR 146.145(a).
    Group market means the market for health insurance coverage offered 
in connection with a group health plan.
    Health insurance coverage means benefits consisting of medical care 
(provided directly, through insurance or reimbursement, or otherwise) 
under any hospital or medical service policy or certificate, hospital or 
medical service plan contract, or HMO contract offered by a health 
insurance issuer. Health insurance coverage includes group health 
insurance coverage, individual health insurance coverage, and short-
term, limited-duration insurance.
    Health insurance issuer or issuer means an insurance company, 
insurance service, or insurance organization (including an HMO) that is 
required to be licensed to engage in the business of insurance in a 
State and that is subject to State law that regulates insurance (within 
the meaning of section 514(b)(2) of ERISA). This term does not include a 
group health plan.
    Health maintenance organization or HMO means--
    (1) A Federally qualified health maintenance organization (as 
defined in section 1301(a) of the PHS Act);
    (2) An organization recognized under State law as a health 
maintenance organization; or
    (3) A similar organization regulated under State law for solvency in 
the same manner and to the same extent as such a health maintenance 
organization.
    Health status-related factor is any factor identified as a health 
factor in 45 CFR 146.121(a).
    Individual health insurance coverage means health insurance coverage 
offered to individuals in the individual market, but does not include 
short-term, limited-duration insurance. Individual health insurance 
coverage can include dependent coverage.
    Individual market means the market for health insurance coverage 
offered to individuals other than in connection with a group health 
plan, or other than coverage offered pursuant to a contract between the 
health insurance issuer with the Medicaid, Children's Health Insurance 
Program, or Basic Health programs.
    Internal Revenue Code means the Internal Revenue Code of 1986, as 
amended (Title 26, United States Code).
    Issuer means a health insurance issuer.
    Large employer means, in connection with a group health plan with 
respect to a calendar year and a plan year, an employer who employed an 
average of at least 51 employees on business days during the preceding 
calendar year and who employs at least 1 employee on the first day of 
the plan year. A State may elect to define large employer by 
substituting ``101 employees'' for ``51 employees.'' In the case of an 
employer that was not in existence throughout the preceding calendar 
year, the determination of whether the employer is a large employer is 
based on the average number of employees that it is reasonably expected 
the employer will employ on business days in the current calendar year.
    Large group market means the health insurance market under which 
individuals obtain health insurance coverage (directly or through any 
arrangement)

[[Page 9]]

on behalf of themselves (and their dependents) through a group health 
plan maintained by a large employer, unless otherwise provided under 
State law.
    Late enrollee means an individual whose enrollment in a plan is a 
late enrollment.
    Late enrollment means enrollment of an individual under a group 
health plan other than on the earliest date on which coverage can become 
effective for the individual under the terms of the plan; or through 
special enrollment. (For rules relating to special enrollment and 
limited open enrollment, see Sec. Sec.  146.117 and 147.104 of this 
subchapter.) If an individual ceases to be eligible for coverage under a 
plan, and then subsequently becomes eligible for coverage under the 
plan, only the individual's most recent period of eligibility is taken 
into account in determining whether the individual is a late enrollee 
under the plan with respect to the most recent period of coverage. 
Similar rules apply if an individual again becomes eligible for coverage 
following a suspension of coverage that applied generally under the 
plan.
    Medical care means amounts paid for--
    (1) The diagnosis, cure, mitigation, treatment, or prevention of 
disease, or amounts paid for the purpose of affecting any structure or 
function of the body;
    (2) Transportation primarily for and essential to medical care 
referred to in paragraph (1) of this definition; and
    (3) Insurance covering medical care referred to in paragraphs (1) 
and (2) of this definition.
    Medical condition or condition means any condition, whether physical 
or mental, including, but not limited to, any condition resulting from 
illness, injury (whether or not the injury is accidental), pregnancy, or 
congenital malformation. However, genetic information is not a 
condition.
    Network plan means health insurance coverage of a health insurance 
issuer under which the financing and delivery of medical care (including 
items and services paid for as medical care) are provided, in whole or 
in part, through a defined set of providers under contract with the 
issuer.
    Non-Federal governmental plan means a governmental plan that is not 
a Federal governmental plan.
    Participant has the meaning given the term under section 3(7) of 
ERISA, which States, ``any employee or former employee of an employer, 
or any member or former member of an employee organization, who is or 
may become eligible to receive a benefit of any type from an employee 
benefit plan which covers employees of such employer or members of such 
organization, or whose beneficiaries may be eligible to receive any such 
benefit.''
    PHS Act stands for the Public Health Service Act (42 U.S.C. 201 et 
seq.).
    Placement, or being placed, for adoption means the assumption and 
retention of a legal obligation for total or partial support of a child 
by a person with whom the child has been placed in anticipation of the 
child's adoption. The child's placement for adoption with such person 
ends upon the termination of such legal obligation.
    Plan means, with respect to a product, the pairing of the health 
insurance coverage benefits under the product with a particular cost-
sharing structure, provider network, and service area. The product 
comprises all plans offered with those characteristics and the 
combination of the service areas for all plans offered within a product 
constitutes the total service area of the product. With respect to a 
plan that has been modified at the time of coverage renewal consistent 
with Sec.  147.106 of this subchapter--
    (1) The plan will be considered to be the same plan if it:
    (i) Has the same cost-sharing structure as before the modification, 
or any variation in cost sharing is solely related to changes in cost or 
utilization of medical care, or is to maintain the same metal tier level 
described in sections 1302(d) and (e) of the Affordable Care Act;
    (ii) Continues to cover a majority of the same service area; and
    (iii) Continues to cover a majority of the same provider network. 
For this purpose, the plan's provider network on the first day of the 
plan year is compared with the plan's provider network on the first day 
of the preceding plan year (as applicable).

[[Page 10]]

    (2) The plan will not fail to be treated as the same plan to the 
extent the modification(s) are made uniformly and solely pursuant to 
applicable Federal and State requirements if--
    (i) The modification is made within a reasonable time period after 
the imposition or modification of the Federal or State requirement;
    (ii) The modification is directly related to the imposition or 
modification of the Federal or State requirement.
    (3) A State may permit greater changes to the cost-sharing 
structure, or designate a lower threshold for maintenance of the same 
provider network or service area for a plan to still be considered the 
same plan.
    Plan sponsor has the meaning given the term under section 3(16)(B) 
of ERISA, which states, ``(i) the employer in the case of an employee 
benefit plan established or maintained by a single employer, (ii) the 
employee organization in the case of a plan established or maintained by 
an employee organization, or (iii) in the case of a plan established or 
maintained by two or more employers or jointly by one or more employers 
and one or more employee organizations, the association, committee, 
joint board of trustees, or other similar group of representatives of 
the parties who establish or maintain the plan.''
    Plan year means the year that is designated as the plan year in the 
plan document of a group health plan, except that if the plan document 
does not designate a plan year or if there is no plan document, the plan 
year is--
    (1) The deductible or limit year used under the plan;
    (2) If the plan does not impose deductibles or limits on a yearly 
basis, then the plan year is the policy year;
    (3) If the plan does not impose deductibles or limits on a yearly 
basis, and either the plan is not insured or the insurance policy is not 
renewed on an annual basis, then the plan year is the employer's taxable 
year; or
    (4) In any other case, the plan year is the calendar year.
    Policy year means, with respect to--
    (1) A grandfathered health plan offered in the individual health 
insurance market and student health insurance coverage, the 12-month 
period that is designated as the policy year in the policy documents of 
the health insurance coverage. If there is no designation of a policy 
year in the policy document (or no such policy document is available), 
then the policy year is the deductible or limit year used under the 
coverage. If deductibles or other limits are not imposed on a yearly 
basis, the policy year is the calendar year.
    (2) A non-grandfathered health plan offered in the individual health 
insurance market, or in a market in which the State has merged the 
individual and small group risk pools, for coverage issued or renewed 
beginning January 1, 2014, a calendar year for which health insurance 
coverage provides coverage for health benefits.
    Preexisting condition exclusion means a limitation or exclusion of 
benefits (including a denial of coverage) based on the fact that the 
condition was present before the effective date of coverage (or if 
coverage is denied, the date of the denial) under a group health plan or 
group or individual health insurance coverage (or other coverage 
provided to Federally eligible individuals pursuant to 45 CFR part 148), 
whether or not any medical advice, diagnosis, care, or treatment was 
recommended or received before that day. A preexisting condition 
exclusion includes any limitation or exclusion of benefits (including a 
denial of coverage) applicable to an individual as a result of 
information relating to an individual's health status before the 
individual's effective date of coverage (or if coverage is denied, the 
date of the denial) under a group health plan, or group or individual 
health insurance coverage (or other coverage provided to Federally 
eligible individuals pursuant to 45 CFR part 148), such as a condition 
identified as a result of a pre-enrollment questionnaire or physical 
examination given to the individual, or review of medical records 
relating to the pre-enrollment period.
    Product means a discrete package of health insurance coverage 
benefits that are offered using a particular product network type (such 
as health maintenance organization, preferred provider organization, 
exclusive provider organization, point of service, or indemnity) within 
a service area. In the case

[[Page 11]]

of a product that has been modified, transferred, or replaced, the 
resulting new product will be considered to be the same as the modified, 
transferred, or replaced product if the changes to the modified, 
transferred, or replaced product meet the standards of Sec.  146.152(f), 
Sec.  147.106(e), or Sec.  148.122(g) of this subchapter (relating to 
uniform modification of coverage), as applicable.
    Public health plan has the meaning given the term in 45 CFR 
146.113(a)(1)(ix).
    Short-term, limited-duration insurance means health insurance 
coverage provided pursuant to a contract with an issuer that:
    (1) Has an expiration date specified in the contract that is less 
than 12 months after the original effective date of the contract and, 
taking into account renewals or extensions, has a duration of no longer 
than 36 months in total;
    (2) With respect to policies having a coverage start date before 
January 1, 2019, displays prominently in the contract and in any 
application materials provided in connection with enrollment in such 
coverage in at least 14 point type the language in the following Notice 
1, excluding the heading ``Notice 1,'' with any additional information 
required by applicable state law:
Notice 1:
    This coverage is not required to comply with certain federal market 
requirements for health insurance, principally those contained in the 
Affordable Care Act. Be sure to check your policy carefully to make sure 
you are aware of any exclusions or limitations regarding coverage of 
preexisting conditions or health benefits (such as hospitalization, 
emergency services, maternity care, preventive care, prescription drugs, 
and mental health and substance use disorder services). Your policy 
might also have lifetime and/or annual dollar limits on health benefits. 
If this coverage expires or you lose eligibility for this coverage, you 
might have to wait until an open enrollment period to get other health 
insurance coverage. Also, this coverage is not ``minimum essential 
coverage.'' If you don't have minimum essential coverage for any month 
in 2018, you may have to make a payment when you file your tax return 
unless you qualify for an exemption from the requirement that you have 
health coverage for that month.

    (3) With respect to policies having a coverage start date on or 
after January 1, 2019, displays prominently in the contract and in any 
application materials provided in connection with enrollment in such 
coverage in at least 14 point type the language in the following Notice 
2, excluding the heading ``Notice 2,'' with any additional information 
required by applicable state law:
Notice 2:
    This coverage is not required to comply with certain federal market 
requirements for health insurance, principally those contained in the 
Affordable Care Act. Be sure to check your policy carefully to make sure 
you are aware of any exclusions or limitations regarding coverage of 
preexisting conditions or health benefits (such as hospitalization, 
emergency services, maternity care, preventive care, prescription drugs, 
and mental health and substance use disorder services). Your policy 
might also have lifetime and/or annual dollar limits on health benefits. 
If this coverage expires or you lose eligibility for this coverage, you 
might have to wait until an open enrollment period to get other health 
insurance coverage.

    (4) If a court holds the 36-month maximum duration provision set 
forth in paragraph (1) of this definition or its applicability to any 
person or circumstances invalid, the remaining provisions and their 
applicability to other people or circumstances shall continue in effect.
    Significant break in coverage has the meaning given the term in 45 
CFR 146.113(b)(2)(iii).
    Small employer means, in connection with a group health plan with 
respect to a calendar year and a plan year, an employer who employed an 
average of at least 1 but not more than 50 employees on business days 
during the preceding calendar year and who employs at least 1 employee 
on the first day of the plan year. A State may elect to define small 
employer by substituting ``100 employees'' for ``50 employees.'' In the 
case of an employer that was not in existence throughout the preceding 
calendar year, the determination of whether the employer is a small 
employer is based on the average number of employees that it is 
reasonably expected the employer will employ on business days in the 
current calendar year.

[[Page 12]]

    Small group market means the health insurance market under which 
individuals obtain health insurance coverage (directly or through any 
arrangement) on behalf of themselves (and their dependents) through a 
group health plan maintained by a small employer.
    Special enrollment means enrollment in a group health plan or group 
health insurance coverage under the rights described in 45 CFR 146.117.
    State means each of the 50 States, the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana 
Islands; except that for purposes of part 147, the term does not include 
Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern 
Mariana Islands.
    State health benefits risk pool has the meaning given the term in 45 
CFR Sec.  146.113(a)(1)(vii).
    Student health insurance coverage has the meaning given the term in 
Sec.  147.145.
    Travel insurance means insurance coverage for personal risks 
incident to planned travel, which may include, but is not limited to, 
interruption or cancellation of trip or event, loss of baggage or 
personal effects, damages to accommodations or rental vehicles, and 
sickness, accident, disability, or death occurring during travel, 
provided that the health benefits are not offered on a stand-alone basis 
and are incidental to other coverage. For this purpose, the term travel 
insurance does not include major medical plans that provide 
comprehensive medical protection for travelers with trips lasting 6 
months or longer, including, for example, those working overseas as an 
expatriate or military personnel being deployed.
    Waiting period has the meaning given the term in 45 CFR 147.116(b).

[69 FR 78781, Dec. 30, 2004, as amended at 74 FR 51688, Oct. 7, 2009; 75 
FR 27138, May 13, 2010; 75 FR 37235, June 28, 2010; 77 FR 16468, Mar. 
21, 2012; 78 FR 65091, Oct. 30, 2013; 79 FR 10313, Feb. 24, 2014; 79 FR 
13833, Mar. 11, 2014; 79 FR 14151, Mar. 12, 2014; 79 FR 30335, May 27, 
2014; 80 FR 10861, Feb. 27, 2015; 80 FR 72274, Nov. 18, 2015; 81 FR 
12333, Mar. 8, 2016; 81 FR 75326, Oct. 31, 2016; 81 FR 94172, Dec. 22, 
2016; 83 FR 38243, Aug. 3, 2018; 84 FR 29014, June 20, 2019]



    Subpart B_Qualified State Long-Term Care Insurance Partnerships: 
                   Reporting Requirements for Insurers

    Source: 73 FR 76968, Dec. 18, 2008, unless otherwise noted.



Sec.  144.200  Basis.

    This subpart implements--
    (a) Section 1917(b)(1)(C) (iii)(VI) of the Social Security Act, 
(Act) which requires the issuer of a long-term care insurance policy 
issued under a qualified State long-term care insurance partnership to 
provide specified regular reports to the Secretary.
    (b) Section 1917(b)(1)(C)(v) of the Act, which specifies that the 
regulations of the Secretary under section 1917(b)(1)(C)(iii)(VI) of the 
Act shall be promulgated after consultation with the National 
Association of Insurance Commissioners, issuers of long-term care 
insurance policies, States with experience with long-term care insurance 
partnership plans, other States, and representatives of consumers of 
long-term care insurance policies, and shall specify the type and format 
of the data to be reported and the frequency with which such reports are 
to be made. This section of the statute also provides that the Secretary 
provide copies of the reports to the States involved.



Sec.  144.202  Definitions.

    As used in this Subpart--
    Partnership qualified policy refers to a qualified long-term care 
insurance policy issued under a qualified State long-term care insurance 
partnership.
    Qualified long-term care insurance policy means an insurance policy 
that has been determined by a State insurance commissioner to meet the 
requirements of sections 1917(b)(1)(C)(iii)(I) through (IV) and 
1917(b)(5) of the Act. It includes a certificate issued under a group 
insurance contract.
    Qualified State long-term care insurance partnership means an 
approved Medicaid State plan amendment that provides for the disregard 
of any assets or resources in an amount equal to the insurance benefit 
payments that are made to or on behalf of an individual who is a 
beneficiary under a long-term

[[Page 13]]

care insurance policy that has been determined by a State insurance 
commissioner to meet the requirements of section 1917(b)(1)(C)(iii) of 
the Act.



Sec.  144.204  Applicability of regulations.

    The regulations contained in this subpart for reporting data apply 
only to those insurers that have issued qualified long-term care 
insurance policies to individuals under a qualified State long-term care 
insurance partnership. They do not apply to the reporting of data by 
insurers for States with a Medicaid State plan amendment that 
established a long-term care partnership on or before May 14, 1993.



Sec.  144.206  Reporting requirements.

    (a) General requirement. Any insurer that sells a qualified long-
term care insurance policy under a qualified State long-term care 
insurance partnership must submit, in accordance with the requirements 
of this section, data on insured individuals, policyholders, and 
claimants who have active partnership qualified policies or certificates 
for a reporting period.
    (b) Specific requirements. Insurers of qualified long-term care 
insurance policies must submit the following data to the Secretary by 
the deadlines specified in paragraph (c) of this section:
    (1) Registry of active individual and group partnership qualified 
policies or certificates. (i) Insurers must submit data on--
    (A) Any insured individual who held an active partnership qualified 
policy or certificate at any point during a reporting period, even if 
the policy or certificate was subsequently cancelled, lost partnership 
qualified status, or otherwise terminated during the reporting period; 
and
    (B) All active group long-term care partnership qualified insurance 
policies, even if the identity of the individual policy/certificate 
holder is unavailable.
    (ii) The data required under paragraph (b)(1)(i) of this section 
must cover a 6-month reporting period of January through June 30 or July 
1 through December 31 of each year; and
    (iii) The data must include, but are not limited to--
    (A) Current identifying information on the insured individual;
    (B) The name of the insurance company and issuing State;
    (C) The effective date and terms of coverage under the policy.
    (D) The annual premium.
    (E) The coverage period.
    (F) Other information, as specified by the Secretary in ``State 
Long-Term Care Partnership Insurer Reporting Requirements.''
    (2) Claims paid under partnership qualified policies or 
certificates. Insurers must submit data on all partnership qualified 
policies or certificates for which the insurer paid at least one claim 
during the reporting period. This includes data for employer-paid core 
plans and buy-up plans without individual insured data. The data must--
    (i) Cover a quarterly reporting period of 3 months;
    (ii) Include, but are not limited to--
    (A) Current identifying information on the insured individual;
    (B) The type and cash amount of the benefits paid during the 
reporting period and lifetime to date;
    (C) Remaining lifetime benefits;
    (D) Other information, as specified by the Secretary in ``State 
Long-Term Care Partnership Insurer Reporting Requirements.''



Sec.  144.208  Deadlines for submission of reports.

    (a) Transition provision for insurers who have issued or exchanged a 
qualified partnership policy prior to the effective date of these 
regulations.
    The first reports required for these insurers will be the reports 
that pertain to the reporting period that begins no more than 120 days 
after the effective date of the final regulations.
    (b) All reports on the registry of qualified long-term care 
insurance policies issued to individuals or individuals under group 
coverage specified in Sec.  144.206(b)(1)(ii) must be submitted within 
30 days of the end of the 6-month reporting period.
    (c) All reports on the claims paid under qualified long-term care 
insurance policies issued to individual and

[[Page 14]]

individuals under group coverage specified in Sec.  144.206(b)(2)(i) 
must be submitted within 30 days of the end of the 3-month quarterly 
reporting period.



Sec.  144.210  Form and manner of reports.

    All reports specified in Sec.  144.206 must be submitted in the form 
and manner specified by the Secretary.



Sec.  144.212  Confidentiality of information.

    Data collected and reported under the requirements of this subpart 
are subject to the confidentiality of information requirements specified 
in regulations under 42 CFR part 401, subpart B, and 45 CFR part 5, 
subpart F.



Sec.  144.214  Notifications of noncompliance with reporting requirements.

    If an insurer of a qualified long-term care insurance policy does 
not submit the required reports by the due dates specified in this 
subpart, the Secretary notifies the appropriate State insurance 
commissioner within 45 days after the deadline for submission of the 
information and data specified in Sec.  144.208.

                           PART 145 [RESERVED]



PART 146_REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET-
-Table of Contents



                      Subpart A_General Provisions

Sec.
146.101 Basis and scope.

Subpart B_Requirements Relating to Access and Renewability of Coverage, 
       and Limitations on Preexisting Condition Exclusion Periods

146.111 Preexisting condition exclusions.
146.113 Rules relating to creditable coverage.
146.115 Certification and disclosure of previous coverage.
146.117 Special enrollment periods.
146.119 HMO affiliation period as an alternative to a preexisting 
          condition exclusion.
146.120 Interaction with the Family and Medical Leave Act. [Reserved]
146.121 Prohibiting discrimination against participants and 
          beneficiaries based on a health factor.
146.122 Additional requirements prohibiting discrimination based on 
          genetic information.
146.123 Special rule allowing integration of Health Reimbursement 
          Arrangements (HRAs) and other account-based group health plans 
          with individual health insurance coverage and Medicare and 
          prohibiting discrimination in HRAs and other account-based 
          group health plans.
146.125 Applicability dates.

               Subpart C_Requirements Related to Benefits

146.130 Standards relating to benefits for mothers and newborns.
146.136 Parity in mental health and substance use disorder benefits.

                 Subpart D_Preemption and Special Rules

146.143 Preemption; State flexibility; construction.
146.145 Special rules relating to group health plans.

    Subpart E_Provisions Applicable to Only Health Insurance Issuers

146.150 Guaranteed availability of coverage for employers in the small 
          group market.
146.152 Guaranteed renewability of coverage for employers in the group 
          market.
146.160 Disclosure of information.

              Subpart F_Exclusion of Plans and Enforcement

146.180 Treatment of non-Federal governmental plans.

     Authority: 42 U.S.C. 300gg-1 through 300gg-5, 300gg-11 through 
300gg-23, 300gg-91, and 300gg-92.

    Source: 62 FR 16958, Apr. 8, 1997, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  146.101  Basis and scope.

    (a) Statutory basis. This part implements the Group Market 
requirements of the PHS Act. Its purpose is to improve access to group 
health insurance coverage, to guarantee the renewability of all coverage 
in the group market, and to provide certain protections for mothers and 
newborns with respect to coverage for hospital stays in connection with 
childbirth. Sections 2791 and 2792 of the PHS Act define terms used in 
the regulations in this subchapter and provide the basis for issuing 
these regulations, respectively.

[[Page 15]]

    (b) Scope. A group health plan or health insurance issuer offering 
group health insurance coverage may provide greater rights to 
participants and beneficiaries than those set forth in this part.
    (1) Subpart B. Subpart B of this part sets forth minimum 
requirements for group health plans and group health insurance issuers 
offering group health insurance coverage concerning certain consumer 
protections of the Health Insurance Portability and Accountability Act 
(HIPAA), as amended, including special enrollment periods, prohibiting 
discrimination against participants and beneficiaries based on a health 
factor, and additional requirements prohibiting discrimination against 
participants and beneficiaries based on genetic information.
    (2) Subpart C. Subpart C of this part sets forth the requirements 
that apply to plans and issuers with respect to coverage for hospital 
stays in connection with childbirth. It also sets forth the regulations 
governing parity between medical/surgical benefits and mental health 
benefits in group health plans and health insurance coverage offered by 
issuers in connection with a group health plan.
    (3) Subpart D. Subpart D of this part sets forth exceptions to the 
requirements of subpart B for certain plans and certain types of 
benefits.
    (4) Subpart E. Subpart E of this part implements requirements 
relating to group health plans and issuers in the Group Health Insurance 
Market.
    (5) Subpart F. Subpart F of this part addresses the treatment of 
non-Federal governmental plans, and sets forth enforcement procedures.

[62 FR 16958, Apr. 8, 1997, as amended at 63 FR 57559, Oct. 27, 1998; 71 
FR 75046, Dec. 13, 2006; 74 FR 51688, Oct. 7, 2009, as amended at 75 FR 
27138, May 13, 2010; 79 FR 10313, Feb. 24, 2014]



Subpart B_Requirements Relating to Access and Renewability of Coverage, 
       and Limitations on Preexisting Condition Exclusion Periods



Sec.  146.111  Preexisting condition exclusions.

    (a) Preexisting condition exclusion defined--(1) A preexisting 
condition exclusion means a preexisting condition exclusion within the 
meaning of Sec.  144.103 of this subchapter.
    (2) Examples. The rules of this paragraph (a)(1) are illustrated by 
the following examples:

    Example 1. (i) Facts. A group health plan provides benefits solely 
through an insurance policy offered by Issuer S. At the expiration of 
the policy, the plan switches coverage to a policy offered by Issuer T. 
Issuer T's policy excludes benefits for any prosthesis if the body part 
was lost before the effective date of coverage under the policy.
    (ii) Conclusion. In this Example 1, the exclusion of benefits for 
any prosthesis if the body part was lost before the effective date of 
coverage is a preexisting condition exclusion because it operates to 
exclude benefits for a condition based on the fact that the condition 
was present before the effective date of coverage under the policy. The 
exclusion of benefits, therefore, is prohibited.
    Example 2. (i) Facts. A group health plan provides coverage for 
cosmetic surgery in cases of accidental injury, but only if the injury 
occurred while the individual was covered under the plan.
    (ii) Conclusion. In this Example 2, the plan provision excluding 
cosmetic surgery benefits for individuals injured before enrolling in 
the plan is a preexisting condition exclusion because it operates to 
exclude benefits relating to a condition based on the fact that the 
condition was present before the effective date of coverage. The plan 
provision, therefore, is prohibited.
    Example 3. (i) Facts. A group health plan provides coverage for the 
treatment of diabetes, generally not subject to any requirement to 
obtain an approval for a treatment plan. However, if an individual was 
diagnosed with diabetes before the effective date of coverage under the 
plan, diabetes coverage is subject to a requirement to obtain approval 
of a treatment plan in advance.
    (ii) Conclusion. In this Example 3, the requirement to obtain 
advance approval of a treatment plan is a preexisting condition 
exclusion because it limits benefits for a condition based on the fact 
that the condition was present before the effective date of coverage. 
The plan provision, therefore, is prohibited.

[[Page 16]]

    Example 4. (i) Facts. A group health plan provides coverage for 
three infertility treatments. The plan counts against the three-
treatment limit benefits provided under prior health coverage.
    (ii) Conclusion. In this Example 4, counting benefits for a specific 
condition provided under prior health coverage against a treatment limit 
for that condition is a preexisting condition exclusion because it 
operates to limit benefits for a condition based on the fact that the 
condition was present before the effective date of coverage. The plan 
provision, therefore, is prohibited.
    Example 5. (i) Facts. When an individual's coverage begins under a 
group health plan, the individual generally becomes eligible for all 
benefits. However, benefits for pregnancy are not available until the 
individual has been covered under the plan for 12 months.
    (ii) Conclusion. In this Example 5, the requirement to be covered 
under the plan for 12 months to be eligible for pregnancy benefits is a 
subterfuge for a preexisting condition exclusion because it is designed 
to exclude benefits for a condition (pregnancy) that arose before the 
effective date of coverage. The plan provision, therefore, is 
prohibited.
    Example 6. (i) Facts. A group health plan provides coverage for 
medically necessary items and services, generally including treatment of 
heart conditions. However, the plan does not cover those same items and 
services when used for treatment of congenital heart conditions.
    (ii) Conclusion. In this Example 6, the exclusion of coverage for 
treatment of congenital heart conditions is a preexisting condition 
exclusion because it operates to exclude benefits relating to a 
condition based on the fact that the condition was present before the 
effective date of coverage. The plan provision, therefore, is 
prohibited.
    Example 7. (i) Facts. A group health plan generally provides 
coverage for medically necessary items and services. However, the plan 
excludes coverage for the treatment of cleft palate.
    (ii) Conclusion. In this Example 7, the exclusion of coverage for 
treatment of cleft palate is not a preexisting condition exclusion 
because the exclusion applies regardless of when the condition arose 
relative to the effective date of coverage. The plan provision, 
therefore, is not prohibited. (But see 45 CFR 147.150, which may require 
coverage of cleft palate as an essential health benefit for health 
insurance coverage in the individual or small group market, depending on 
the essential health benefits benchmark plan as defined in Sec.  156.20 
of this subchapter).
    Example 8. (i) Facts. A group health plan provides coverage for 
treatment of cleft palate, but only if the individual being treated has 
been continuously covered under the plan from the date of birth.
    (ii) Conclusion. In this Example 8, the exclusion of coverage for 
treatment of cleft palate for individuals who have not been covered 
under the plan from the date of birth operates to exclude benefits in 
relation to a condition based on the fact that the condition was present 
before the effective date of coverage. The plan provision, therefore, is 
prohibited.

    (b) General rules. See Sec.  147.108 of this subchapter for rules 
prohibiting the imposition of a preexisting condition exclusion.

[69 FR 78783, Dec. 30, 2004, as amended at 75 FR 37235, June 28, 2010; 
79 FR 10313, Feb. 24, 2014; 80 FR 72274, Nov. 18, 2015]



Sec.  146.113  Rules relating to creditable coverage.

    (a) General rules--(1) Creditable coverage. For purposes of this 
section, except as provided in paragraph (a)(2) of this section, the 
term creditable coverage means coverage of an individual under any of 
the following:
    (i) A group health plan as defined in Sec.  146.145(a).
    (ii) Health insurance coverage as defined in Sec.  144.103 of this 
chapter (whether or not the entity offering the coverage is subject to 
the requirements of this part and 45 CFR part 148 and without regard to 
whether the coverage is offered in the group market, the individual 
market, or otherwise).
    (iii) Part A or B of Title XVIII of the Social Security Act 
(Medicare).
    (iv) Title XIX of the Social Security Act (Medicaid), other than 
coverage consisting solely of benefits under section 1928 of the Social 
Security Act (the program for distribution of pediatric vaccines).
    (v) Title 10 U.S.C. Chapter 55 (medical and dental care for members 
and certain former members of the uniformed services, and for their 
dependents; for purposes of Title 10 U.S.C. Chapter 55, uniformed 
services means the armed forces and the Commissioned Corps of the 
National Oceanic and Atmospheric Administration and of the Public Health 
Service).
    (vi) A medical care program of the Indian Health Service or of a 
tribal organization.
    (vii) A State health benefits risk pool. For purposes of this 
section, a State health benefits risk pool means--

[[Page 17]]

    (A) An organization qualifying under section 501(c)(26) of the 
Internal Revenue Code;
    (B) A qualified high risk pool described in section 2744(c)(2) of 
the PHS Act; or
    (C) Any other arrangement sponsored by a State, the membership 
composition of which is specified by the State and which is established 
and maintained primarily to provide health coverage for individuals who 
are residents of such State and who, by reason of the existence or 
history of a medical condition--
    (1) Are unable to acquire medical care coverage for such condition 
through insurance or from an HMO, or
    (2) Are able to acquire such coverage only at a rate which is 
substantially in excess of the rate for such coverage through the 
membership organization.
    (viii) A health plan offered under Title 5 U.S.C. Chapter 89 (the 
Federal Employees Health Benefits Program).
    (ix) A public health plan. For purposes of this section, a public 
health plan means any plan established or maintained by a State, the 
U.S. government, a foreign country, or any political subdivision of a 
State, the U.S. government, or a foreign country that provides health 
coverage to individuals who are enrolled in the plan.
    (x) A health benefit plan under section 5(e) of the Peace Corps Act 
(22 U.S.C. 2504(e)).
    (xi) Title XXI of the Social Security Act (State Children's Health 
Insurance Program).
    (2) Excluded coverage. Creditable coverage does not include coverage 
of solely excepted benefits (described in Sec.  146.145).
    (b) Counting creditable coverage rules superseded by prohibition on 
preexisting condition exclusion. See Sec.  147.108 of this subchapter 
for rules prohibiting the imposition of a preexisting condition 
exclusion.

[69 FR 78788, Dec. 30, 2004, as amended at 79 FR 10314, Feb. 24, 2014]



Sec.  146.115  Certification and disclosure of previous coverage.

    (a) In general. The rules for providing certificates of creditable 
coverage and demonstrating creditable coverage have been superseded by 
the prohibition on preexisting condition exclusions. See Sec.  147.108 
of this subchapter for rules prohibiting the imposition of a preexisting 
condition exclusion.
    (b) Applicability. The provisions of this section apply beginning 
December 31, 2014.

[79 FR 10314, Feb. 24, 2014]



Sec.  146.117  Special enrollment periods.

    (a) Special enrollment for certain individuals who lose coverage--
(1) In General. A group health plan, and a health insurance issuer 
offering health insurance coverage in connection with a group health 
plan, is required to permit current employees and dependents (as defined 
in Sec.  144.103 of this chapter) who are described in paragraph (a)(2) 
of this section to enroll for coverage under the terms of the plan if 
the conditions in paragraph (a)(3) of this section are satisfied. The 
special enrollment rights under this paragraph (a) apply without regard 
to the dates on which an individual would otherwise be able to enroll 
under the plan.
    (2) Individuals eligible for special enrollment--(i) When employee 
loses coverage. A current employee and any dependents (including the 
employee's spouse) each are eligible for special enrollment in any 
benefit package under the plan (subject to plan eligibility rules 
conditioning dependent enrollment on enrollment of the employee) if--
    (A) The employee and the dependents are otherwise eligible to enroll 
in the benefit package;
    (B) When coverage under the plan was previously offered, the 
employee had coverage under any group health plan or health insurance 
coverage; and
    (C) The employee satisfies the conditions of paragraph (a)(3)(i), 
(ii), or (iii) of this section and, if applicable, paragraph (a)(3)(iv) 
of this section.
    (ii) When dependent loses coverage--(A) A dependent of a current 
employee (including the employee's spouse) and the employee each are 
eligible for special enrollment in any benefit package under the plan 
(subject to plan eligibility rules conditioning dependent enrollment on 
enrollment of the employee) if--

[[Page 18]]

    (1) The dependent and the employee are otherwise eligible to enroll 
in the benefit package;
    (2) When coverage under the plan was previously offered, the 
dependent had coverage under any group health plan or health insurance 
coverage; and
    (3) The dependent satisfies the conditions of paragraph (a)(3)(i), 
(ii), or (iii) of this section and, if applicable, paragraph (a)(3)(iv) 
of this section.
    (B) However, the plan or issuer is not required to enroll any other 
dependent unless that dependent satisfies the criteria of this paragraph 
(a)(2)(ii), or the employee satisfies the criteria of paragraph 
(a)(2)(i) of this section.
    (iii) Examples. The rules of this paragraph (a)(2) are illustrated 
by the following examples:

    Example 1. (i) Facts. Individual A works for Employer X. A, A's 
spouse, and A's dependent children are eligible but not enrolled for 
coverage under X's group health plan. A's spouse works for Employer Y 
and at the time coverage was offered under X's plan, A was enrolled in 
coverage under Y's plan. Then, A loses eligibility for coverage under 
Y's plan.
    (ii) Conclusion. In this Example 1, because A satisfies the 
conditions for special enrollment under paragraph (a)(2)(i) of this 
section, A, A's spouse, and A's dependent children are eligible for 
special enrollment under X's plan.
    Example 2. (i) Facts. Individual A and A's spouse are eligible but 
not enrolled for coverage under Group Health Plan P maintained by A's 
employer. When A was first presented with an opportunity to enroll A and 
A's spouse, they did not have other coverage. Later, A and A's spouse 
enroll in Group Health Plan Q maintained by the employer of A's spouse. 
During a subsequent open enrollment period in P, A and A's spouse did 
not enroll because of their coverage under Q. They then lose eligibility 
for coverage under Q.
    (ii) Conclusion. In this Example 2, because A and A's spouse were 
covered under Q when they did not enroll in P during open enrollment, 
they satisfy the conditions for special enrollment under paragraphs 
(a)(2)(i) and (ii) of this section. Consequently, A and A's spouse are 
eligible for special enrollment under P.
    Example 3. (i) Facts. Individual B works for Employer X. B and B's 
spouse are eligible but not enrolled for coverage under X's group health 
plan. B's spouse works for Employer Y and at the time coverage was 
offered under X's plan, B's spouse was enrolled in self-only coverage 
under Y's group health plan. Then, B's spouse loses eligibility for 
coverage under Y's plan.
    (ii) Conclusion. In this Example 3, because B's spouse satisfies the 
conditions for special enrollment under paragraph (a)(2)(ii) of this 
section, both B and B's spouse are eligible for special enrollment under 
X's plan.
    Example 4. (i) Facts. Individual A works for Employer X. X maintains 
a group health plan with two benefit packages--an HMO option and an 
indemnity option. Self-only and family coverage are available under both 
options. A enrolls for self-only coverage in the HMO option. A's spouse 
works for Employer Y and was enrolled for self-only coverage under Y's 
plan at the time coverage was offered under X's plan. Then, A's spouse 
loses coverage under Y's plan. A requests special enrollment for A and 
A's spouse under the plan's indemnity option.
    (ii) Conclusion. In this Example 4, because A's spouse satisfies the 
conditions for special enrollment under paragraph (a)(2)(ii) of this 
section, both A and A's spouse can enroll in either benefit package 
under X's plan. Therefore, if A requests enrollment in accordance with 
the requirements of this section, the plan must allow A and A's spouse 
to enroll in the indemnity option.

    (3) Conditions for special enrollment--(i) Loss of eligibility for 
coverage. In the case of an employee or dependent who has coverage that 
is not COBRA continuation coverage, the conditions of this paragraph 
(a)(3)(i) are satisfied at the time the coverage is terminated as a 
result of loss of eligibility (regardless of whether the individual is 
eligible for or elects COBRA continuation coverage). Loss of eligibility 
under this paragraph (a)(3)(i) does not include a loss due to the 
failure of the employee or dependent to pay premiums on a timely basis 
or termination of coverage for cause (such as making a fraudulent claim 
or an intentional misrepresentation of a material fact in connection 
with the plan). Loss of eligibility for coverage under this paragraph 
(a)(3)(i) includes (but is not limited to)--
    (A) Loss of eligibility for coverage as a result of legal 
separation, divorce, cessation of dependent status (such as attaining 
the maximum age to be eligible as a dependent child under the plan), 
death of an employee, termination of employment, reduction in the number 
of hours of employment, and any loss of eligibility for coverage after a 
period that is measured by reference to any of the foregoing;

[[Page 19]]

    (B) In the case of coverage offered through an HMO, or other 
arrangement, in the individual market that does not provide benefits to 
individuals who no longer reside, live, or work in a service area, loss 
of coverage because an individual no longer resides, lives, or works in 
the service area (whether or not within the choice of the individual);
    (C) In the case of coverage offered through an HMO, or other 
arrangement, in the group market that does not provide benefits to 
individuals who no longer reside, live, or work in a service area, loss 
of coverage because an individual no longer resides, lives, or works in 
the service area (whether or not within the choice of the individual), 
and no other benefit package is available to the individual; and
    (D) A situation in which a plan no longer offers any benefits to the 
class of similarly situated individuals (as described in Sec.  
146.121(d)) that includes the individual.
    (ii) Termination of employer contributions. In the case of an 
employee or dependent who has coverage that is not COBRA continuation 
coverage, the conditions of this paragraph (a)(3)(ii) are satisfied at 
the time employer contributions towards the employee's or dependent's 
coverage terminate. Employer contributions include contributions by any 
current or former employer that was contributing to coverage for the 
employee or dependent.
    (iii) Exhaustion of COBRA continuation coverage. In the case of an 
employee or dependent who has coverage that is COBRA continuation 
coverage, the conditions of this paragraph (a)(3)(iii) are satisfied at 
the time the COBRA continuation coverage is exhausted. For purposes of 
this paragraph (a)(3)(iii), an individual who satisfies the conditions 
for special enrollment of paragraph (a)(3)(i) of this section, does not 
enroll, and instead elects and exhausts COBRA continuation coverage 
satisfies the conditions of this paragraph (a)(3)(iii). (Exhaustion of 
COBRA continuation coverage is defined in Sec.  144.103 of this 
chapter.)
    (iv) Written statement. A plan may require an employee declining 
coverage (for the employee or any dependent of the employee) to state in 
writing whether the coverage is being declined due to other health 
coverage only if, at or before the time the employee declines coverage, 
the employee is provided with notice of the requirement to provide the 
statement (and the consequences of the employee's failure to provide the 
statement). If a plan requires such a statement, and an employee does 
not provide it, the plan is not required to provide special enrollment 
to the employee or any dependent of the employee under this paragraph 
(a)(3). A plan must treat an employee as having satisfied the plan 
requirement permitted under this paragraph (a)(3)(iv) if the employee 
provides a written statement that coverage was being declined because 
the employee or dependent had other coverage; a plan cannot require 
anything more for the employee to satisfy the plan's requirement to 
provide a written statement. (For example, the plan cannot require that 
the statement be notarized.)
    (v) The rules of this paragraph (a)(3) are illustrated by the 
following examples:

    Example 1. (i) Facts. Individual D enrolls in a group health plan 
maintained by Employer Y. At the time D enrolls, Y pays 70 percent of 
the cost of employee coverage and D pays the rest. Y announces that 
beginning January 1, Y will no longer make employer contributions 
towards the coverage. Employees may maintain coverage, however, if they 
pay the total cost of the coverage.
    (ii) Conclusion. In this Example 1, employer contributions towards 
D's coverage ceased on January 1 and the conditions of paragraph 
(a)(3)(ii) of this section are satisfied on this date (regardless of 
whether D elects to pay the total cost and continue coverage under Y's 
plan).
    Example 2. (i) Facts. A group health plan provides coverage through 
two options--Option 1 and Option 2. Employees can enroll in either 
option only within 30 days of hire or on January 1 of each year. 
Employee A is eligible for both options and enrolls in Option 1. 
Effective July 1 the plan terminates coverage under Option 1 and the 
plan does not create an immediate open enrollment opportunity into 
Option 2.
    (ii) Conclusion. In this Example 2, A has experienced a loss of 
eligibility for coverage that satisfies paragraph (a)(3)(i) of this 
section, and has satisfied the other conditions for special enrollment 
under paragraph (a)(2)(i) of this section. Therefore, if A satisfies the 
other conditions of this paragraph (a), the plan must permit A to enroll 
in Option 2 as a special enrollee. (A may also be

[[Page 20]]

eligible to enroll in another group health plan, such as a plan 
maintained by the employer of A's spouse, as a special enrollee.) The 
outcome would be the same if Option 1 was terminated by an issuer and 
the plan made no other coverage available to A.
    Example 3. (i) Facts. Individual C is covered under a group health 
plan maintained by Employer X. While covered under X's plan, C was 
eligible for but did not enroll in a plan maintained by Employer Z, the 
employer of C's spouse. C terminates employment with X and loses 
eligibility for coverage under X's plan. C has a special enrollment 
right to enroll in Z's plan, but C instead elects COBRA continuation 
coverage under X's plan. C exhausts COBRA continuation coverage under 
X's plan and requests special enrollment in Z's plan.
    (ii) Conclusion. In this Example 3, C has satisfied the conditions 
for special enrollment under paragraph (a)(3)(iii) of this section, and 
has satisfied the other conditions for special enrollment under 
paragraph (a)(2)(i) of this section. The special enrollment right that C 
had into Z's plan immediately after the loss of eligibility for coverage 
under X's plan was an offer of coverage under Z's plan. When C later 
exhausts COBRA coverage under X's plan, C has a second special 
enrollment right in Z's plan.

    (4) Applying for special enrollment and effective date of coverage--
(i) A plan or issuer must allow an employee a period of at least 30 days 
after an event described in paragraph (a)(3) of this section to request 
enrollment (for the employee or the employee's dependent).
    (ii) Coverage must begin no later than the first day of the first 
calendar month beginning after the date the plan or issuer receives the 
request for special enrollment.
    (b) Special enrollment with respect to certain dependent 
beneficiaries--(1) General. A group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, that makes coverage available with respect to dependents is 
required to permit individuals described in paragraph (b)(2) of this 
section to be enrolled for coverage in a benefit package under the terms 
of the plan. Paragraph (b)(3) of this section describes the required 
special enrollment period and the date by which coverage must begin. The 
special enrollment rights under this paragraph (b) apply without regard 
to the dates on which an individual would otherwise be able to enroll 
under the plan.
    (2) Individuals eligible for special enrollment. An individual is 
described in this paragraph (b)(2) if the individual is otherwise 
eligible for coverage in a benefit package under the plan and if the 
individual is described in paragraph (b)(2)(i), (ii), (iii), (iv), (v), 
or (vi) of this section.
    (i) Current employee only. A current employee is described in this 
paragraph (b)(2)(i) if a person becomes a dependent of the individual 
through marriage, birth, adoption, or placement for adoption.
    (ii) Spouse of a participant only. An individual is described in 
this paragraph (b)(2)(ii) if either--
    (A) The individual becomes the spouse of a participant; or
    (B) The individual is a spouse of a participant and a child becomes 
a dependent of the participant through birth, adoption, or placement for 
adoption.
    (iii) Current employee and spouse. A current employee and an 
individual who is or becomes a spouse of such an employee, are described 
in this paragraph (b)(2)(iii) if either--
    (A) The employee and the spouse become married; or
    (B) The employee and spouse are married and a child becomes a 
dependent of the employee through birth, adoption, or placement for 
adoption.
    (iv) Dependent of a participant only. An individual is described in 
this paragraph (b)(2)(iv) if the individual is a dependent (as defined 
in Sec.  144.103 of this chapter) of a participant and the individual 
has become a dependent of the participant through marriage, birth, 
adoption, or placement for adoption.
    (v) Current employee and a new dependent. A current employee and an 
individual who is a dependent of the employee, are described in this 
paragraph (b)(2)(v) if the individual becomes a dependent of the 
employee through marriage, birth, adoption, or placement for adoption.
    (vi) Current employee, spouse, and a new dependent. A current 
employee, the employee's spouse, and the employee's dependent are 
described in this paragraph (b)(2)(vi) if the dependent becomes a 
dependent of the employee through marriage, birth, adoption, or 
placement for adoption.

[[Page 21]]

    (3) Applying for special enrollment and effective date of coverage--
(i) Request. A plan or issuer must allow an individual a period of at 
least 30 days after the date of the marriage, birth, adoption, or 
placement for adoption (or, if dependent coverage is not generally made 
available at the time of the marriage, birth, adoption, or placement for 
adoption, a period of at least 30 days after the date the plan makes 
dependent coverage generally available) to request enrollment (for the 
individual or the individual's dependent).
    (ii) Reasonable procedures for special enrollment. [Reserved]
    (iii) Date coverage must begin--(A) Marriage. In the case of 
marriage, coverage must begin no later than the first day of the first 
calendar month beginning after the date the plan or issuer receives the 
request for special enrollment.
    (B) Birth, adoption, or placement for adoption. Coverage must begin 
in the case of a dependent's birth on the date of birth and in the case 
of a dependent's adoption or placement for adoption no later than the 
date of such adoption or placement for adoption (or, if dependent 
coverage is not made generally available at the time of the birth, 
adoption, or placement for adoption, the date the plan makes dependent 
coverage available).
    (4) Examples. The rules of this paragraph (b) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer maintains a group health plan that 
offers all employees employee-only coverage, employee-plus-spouse 
coverage, or family coverage. Under the terms of the plan, any employee 
may elect to enroll when first hired (with coverage beginning on the 
date of hire) or during an annual open enrollment period held each 
December (with coverage beginning the following January 1). Employee A 
is hired on September 3. A is married to B, and they have no children. 
On March 15 in the following year a child C is born to A and B. Before 
that date, A and B have not been enrolled in the plan.
    (ii) Conclusion. In this Example 1, the conditions for special 
enrollment of an employee with a spouse and new dependent under 
paragraph (b)(2)(vi) of this section are satisfied. If A satisfies the 
conditions of paragraph (b)(3) of this section for requesting enrollment 
timely, the plan will satisfy this paragraph (b) if it allows A to 
enroll either with employee-only coverage, with employee-plus-spouse 
coverage (for A and B), or with family coverage (for A, B, and C). The 
plan must allow whatever coverage is chosen to begin on March 15, the 
date of C's birth.
    Example 2. (i) Facts. Individual D works for Employer X. X maintains 
a group health plan with two benefit packages--an HMO option and an 
indemnity option. Self-only and family coverage are available under both 
options. D enrolls for self-only coverage in the HMO option. Then, a 
child, E, is placed for adoption with D. Within 30 days of the placement 
of E for adoption, D requests enrollment for D and E under the plan's 
indemnity option.
    (ii) Conclusion. In this Example 2, D and E satisfy the conditions 
for special enrollment under paragraphs (b)(2)(v) and (b)(3) of this 
section. Therefore, the plan must allow D and E to enroll in the 
indemnity coverage, effective as of the date of the placement for 
adoption.

    (c) Notice of special enrollment. At or before the time an employee 
is initially offered the opportunity to enroll in a group health plan, 
the plan must furnish the employee with a notice of special enrollment 
that complies with the requirements of this paragraph (c).
    (1) Description of special enrollment rights. The notice of special 
enrollment must include a description of special enrollment rights. The 
following model language may be used to satisfy this requirement:

    If you are declining enrollment for yourself or your dependents 
(including your spouse) because of other health insurance or group 
health plan coverage, you may be able to enroll yourself and your 
dependents in this plan if you or your dependents lose eligibility for 
that other coverage (or if the employer stops contributing towards your 
or your dependents' other coverage). However, you must request 
enrollment within [insert ``30 days'' or any longer period that applies 
under the plan] after your or your dependents' other coverage ends (or 
after the employer stops contributing toward the other coverage).
    In addition, if you have a new dependent as a result of marriage, 
birth, adoption, or placement for adoption, you may be able to enroll 
yourself and your dependents. However, you must request enrollment 
within [insert ``30 days'' or any longer period that applies under the 
plan] after the marriage, birth, adoption, or placement for adoption.
    To request special enrollment or obtain more information, contact 
[insert the name, title, telephone number, and any additional contact 
information of the appropriate plan representative].


[[Page 22]]


    (2) Additional information that may be required. The notice of 
special enrollment must also include, if applicable, the notice 
described in paragraph (a)(3)(iv) of this section (the notice required 
to be furnished to an individual declining coverage if the plan requires 
the reason for declining coverage to be in writing).
    (d) Treatment of special enrollees--(1) If an individual requests 
enrollment while the individual is entitled to special enrollment under 
either paragraph (a) or (b) of this section, the individual is a special 
enrollee, even if the request for enrollment coincides with a late 
enrollment opportunity under the plan. Therefore, the individual cannot 
be treated as a late enrollee.
    (2) Special enrollees must be offered all the benefit packages 
available to similarly situated individuals who enroll when first 
eligible. For this purpose, any difference in benefits or cost-sharing 
requirements for different individuals constitutes a different benefit 
package. In addition, a special enrollee cannot be required to pay more 
for coverage than a similarly situated individual who enrolls in the 
same coverage when first eligible.
    (3) The rules of this section are illustrated by the following 
example:

    Example. (i) Facts. Employer Y maintains a group health plan that 
has an enrollment period for late enrollees every November 1 through 
November 30 with coverage effective the following January 1. On October 
18, Individual B loses coverage under another group health plan and 
satisfies the requirements of paragraphs (a)(2), (3), and (4) of this 
section. B submits a completed application for coverage on November 2.
    (ii) Conclusion. In this Example, B is a special enrollee. 
Therefore, even though B's request for enrollment coincides with an open 
enrollment period, B's coverage is required to be made effective no 
later than December 1 (rather than the plan's January 1 effective date 
for late enrollees).

[69 FR 78794, Dec. 30, 2004, as amended at 79 FR 10314, Feb. 24, 2014]



Sec.  146.119  HMO affiliation period as an alternative to a 
preexisting condition exclusion.

    The rules for HMO affiliation periods have been superseded by the 
prohibition on preexisting condition exclusions. See Sec.  147.108 of 
this subchapter for rules prohibiting the imposition of a preexisting 
condition exclusion.

[79 FR 10314, Feb. 24, 2014]



Sec.  146.120  Interaction with the Family and Medical Leave Act.

[Reserved]



Sec.  146.121  Prohibiting discrimination against participants and
beneficiaries based on a health factor.

    (a) Health factors. (1) The term health factor means, in relation to 
an individual, any of the following health status-related factors:
    (i) Health status;
    (ii) Medical condition (including both physical and mental 
illnesses), as defined in Sec.  144.103 of this chapter;
    (iii) Claims experience;
    (iv) Receipt of health care;
    (v) Medical history;
    (vi) Genetic information, as defined in Sec.  146.122(a) of this 
subchapter;
    (vii) Evidence of insurability; or
    (viii) Disability.
    (2) Evidence of insurability includes--
    (i) Conditions arising out of acts of domestic violence; and
    (ii) Participation in activities such as motorcycling, snowmobiling, 
all-terrain vehicle riding, horseback riding, skiing, and other similar 
activities.
    (3) The decision whether health coverage is elected for an 
individual (including the time chosen to enroll, such as under special 
enrollment or late enrollment) is not, itself, within the scope of any 
health factor. (However, under Sec.  146.117, a plan or issuer must 
treat special enrollees the same as similarly situated individuals who 
are enrolled when first eligible.)
    (b) Prohibited discrimination in rules for eligibility--(1) In 
general--42V3(4839):
    As used in this part, unless the context indicates otherwise--(i) A 
group health plan, and a health insurance issuer offering health 
insurance coverage in connection with a group health plan, may not 
establish any rule for eligibility (including continued eligibility) of 
any individual to enroll for benefits under the terms of the plan or 
group health insurance coverage that discriminates based on any health 
factor that relates to that individual or a dependent of that 
individual. This rule

[[Page 23]]

is subject to the provisions of paragraph (b)(2) of this section 
(explaining how this rule applies to benefits), paragraph (d) of this 
section (containing rules for establishing groups of similarly situated 
individuals), paragraph (e) of this section (relating to nonconfinement, 
actively-at-work, and other service requirements), paragraph (f) of this 
section (relating to wellness programs), and paragraph (g) of this 
section (permitting favorable treatment of individuals with adverse 
health factors).
    (ii) For purposes of this section, rules for eligibility include, 
but are not limited to, rules relating to--
    (A) Enrollment;
    (B) The effective date of coverage;
    (C) Waiting (or affiliation) periods;
    (D) Late and special enrollment;
    (E) Eligibility for benefit packages (including rules for 
individuals to change their selection among benefit packages);
    (F) Benefits (including rules relating to covered benefits, benefit 
restrictions, and cost-sharing mechanisms such as coinsurance, 
copayments, and deductibles), as described in paragraphs (b)(2) and 
(b)(3) of this section;
    (G) Continued eligibility; and
    (H) Terminating coverage (including disenrollment) of any individual 
under the plan.
    (iii) The rules of this paragraph (b)(1) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan that 
is available to all employees who enroll within the first 30 days of 
their employment. However, employees who do not enroll within the first 
30 days cannot enroll later unless they pass a physical examination.
    (ii) Conclusion. In this Example 1, the requirement to pass a 
physical examination in order to enroll in the plan is a rule for 
eligibility that discriminates based on one or more health factors and 
thus violates this paragraph (b)(1).
    Example 2. (i) Facts. Under an employer's group health plan, 
employees who enroll during the first 30 days of employment (and during 
special enrollment periods) may choose between two benefit packages: an 
indemnity option and an HMO option. However, employees who enroll during 
late enrollment are permitted to enroll only in the HMO option and only 
if they provide evidence of good health.
    (ii) Conclusion. In this Example 2, the requirement to provide 
evidence of good health in order to be eligible for late enrollment in 
the HMO option is a rule for eligibility that discriminates based on one 
or more health factors and thus violates this paragraph (b)(1). However, 
if the plan did not require evidence of good health but limited late 
enrollees to the HMO option, the plan's rules for eligibility would not 
discriminate based on any health factor, and thus would not violate this 
paragraph (b)(1), because the time an individual chooses to enroll is 
not, itself, within the scope of any health factor.
    Example 3. (i) Facts. Under an employer's group health plan, all 
employees generally may enroll within the first 30 days of employment. 
However, individuals who participate in certain recreational activities, 
including motorcycling, are excluded from coverage.
    (ii) Conclusion. In this Example 3, excluding from the plan 
individuals who participate in recreational activities, such as 
motorcycling, is a rule for eligibility that discriminates based on one 
or more health factors and thus violates this paragraph (b)(1).
    Example 4. (i) Facts. A group health plan applies for a group health 
policy offered by an issuer. As part of the application, the issuer 
receives health information about individuals to be covered under the 
plan. Individual A is an employee of the employer maintaining the plan. 
A and A's dependents have a history of high health claims. Based on the 
information about A and A's dependents, the issuer excludes A and A's 
dependents from the group policy it offers to the employer.
    (ii) Conclusion. In this Example 4, the issuer's exclusion of A and 
A's dependents from coverage is a rule for eligibility that 
discriminates based on one or more health factors, and thus violates 
this paragraph (b)(1). (If the employer is a small employer under 45 CFR 
144.103 (generally, an employer with 50 or fewer employees), the issuer 
also may violate 45 CFR 146.150, which requires issuers to offer all the 
policies they sell in the small group market on a guaranteed available 
basis to all small employers and to accept every eligible individual in 
every small employer group.) If the plan provides coverage through this 
policy and does not provide equivalent coverage for A and A's dependents 
through other means, the plan will also violate this paragraph (b)(1).

    (2) Application to benefits--(i) General rule--(A) Under this 
section, a group health plan or group health insurance issuer is not 
required to provide coverage for any particular benefit to any group of 
similarly situated individuals.

[[Page 24]]

    (B) However, benefits provided under a plan must be uniformly 
available to all similarly situated individuals (as described in 
paragraph (d) of this section). Likewise, any restriction on a benefit 
or benefits must apply uniformly to all similarly situated individuals 
and must not be directed at individual participants or beneficiaries 
based on any health factor of the participants or beneficiaries 
(determined based on all the relevant facts and circumstances). Thus, 
for example, a plan may limit or exclude benefits in relation to a 
specific disease or condition, limit or exclude benefits for certain 
types of treatments or drugs, or limit or exclude benefits based on a 
determination of whether the benefits are experimental or not medically 
necessary, but only if the benefit limitation or exclusion applies 
uniformly to all similarly situated individuals and is not directed at 
individual participants or beneficiaries based on any health factor of 
the participants or beneficiaries. In addition, a plan or issuer may 
require the satisfaction of a deductible, copayment, coinsurance, or 
other cost-sharing requirement in order to obtain a benefit if the limit 
or cost-sharing requirement applies uniformly to all similarly situated 
individuals and is not directed at individual participants or 
beneficiaries based on any health factor of the participants or 
beneficiaries. In the case of a cost-sharing requirement, see also 
paragraph (b)(2)(ii) of this section, which permits variances in the 
application of a cost-sharing mechanism made available under a wellness 
program. (Whether any plan provision or practice with respect to 
benefits complies with this paragraph (b)(2)(i) does not affect whether 
the provision or practice is permitted under ERISA, the Affordable Care 
Act (including the requirements related to essential health benefits), 
the Americans with Disabilities Act, or any other law, whether State or 
Federal.)
    (C) For purposes of this paragraph (b)(2)(i), a plan amendment 
applicable to all individuals in one or more groups of similarly 
situated individuals under the plan and made effective no earlier than 
the first day of the first plan year after the amendment is adopted is 
not considered to be directed at any individual participants or 
beneficiaries.
    (D) The rules of this paragraph (b)(2)(i) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan applies a $10,000 annual 
limit on a specific covered benefit that is not an essential health 
benefit to each participant or beneficiary covered under the plan. The 
limit is not directed at individual participants or beneficiaries.
    (ii) Conclusion. In this Example 1, the limit does not violate this 
paragraph (b)(2)(i) because coverage of the specific, non-essential 
health benefit up to $10,000 is available uniformly to each participant 
and beneficiary under the plan and because the limit is applied 
uniformly to all participants and beneficiaries and is not directed at 
individual participants or beneficiaries.
    Example 2. (i) Facts. A group health plan has a $500 deductible on 
all benefits for participants covered under the plan. Participant B 
files a claim for the treatment of AIDS. At the next corporate board 
meeting of the plan sponsor, the claim is discussed. Shortly thereafter, 
the plan is modified to impose a $2,000 deductible on benefits for the 
treatment of AIDS, effective before the beginning of the next plan year.
    (ii) Conclusion. The facts of this Example 2 strongly suggest that 
the plan modification is directed at B based on B's claim. Absent 
outweighing evidence to the contrary, the plan violates this paragraph 
(b)(2)(i).
    Example 3. (i) A group health plan applies for a group health policy 
offered by an issuer. Individual C is covered under the plan and has an 
adverse health condition. As part of the application, the issuer 
receives health information about the individuals to be covered, 
including information about C's adverse health condition. The policy 
form offered by the issuer generally provides benefits for the adverse 
health condition that C has, but in this case the issuer offers the plan 
a policy modified by a rider that excludes benefits for C for that 
condition. The exclusionary rider is made effective the first day of the 
next plan year.
    (ii) Conclusion. In this Example 3, the issuer violates this 
paragraph (b)(2)(i) because benefits for C's condition are available to 
other individuals in the group of similarly situated individuals that 
includes C but are not available to C. Thus, the benefits are not 
uniformly available to all similarly situated individuals. Even though 
the exclusionary rider is made effective the first day of the next plan 
year, because the rider does not apply to all similarly situated 
individuals, the issuer violates this paragraph (b)(2)(i).
    Example 4. (i) Facts. A group health plan has a $2,000 lifetime 
limit for the treatment of temporomandibular joint syndrome

[[Page 25]]

(TMJ). The limit is applied uniformly to all similarly situated 
individuals and is not directed at individual participants or 
beneficiaries.
    (ii) Conclusion. In this Example 4, the limit does not violate this 
paragraph (b)(2)(i) because $2,000 of benefits for the treatment of TMJ 
are available uniformly to all similarly situated individuals and a plan 
may limit benefits covered in relation to a specific disease or 
condition if the limit applies uniformly to all similarly situated 
individuals and is not directed at individual participants or 
beneficiaries. (However, applying a lifetime limit on TMJ may violate 
Sec.  147.126 of this subchapter, if TMJ coverage is an essential health 
benefit, depending on the essential health benefits benchmark plan as 
defined in Sec.  156.20 of this subchapter. This example does not 
address whether the plan provision is permissible under any other 
applicable law, including PHS Act section 2711 or the Americans with 
Disabilities Act.)
    Example 5. (i) Facts. A group health plan applies a $2 million 
lifetime limit on all benefits. However, the $2 million lifetime limit 
is reduced to $10,000 for any participant or beneficiary covered under 
the plan who has a congenital heart defect.
    (ii) Conclusion. In this Example 5, the lower lifetime limit for 
participants and beneficiaries with a congenital heart defect violates 
this paragraph (b)(2)(i) because benefits under the plan are not 
uniformly available to all similarly situated individuals and the plan's 
lifetime limit on benefits does not apply uniformly to all similarly 
situated individuals. Additionally, this plan provision is prohibited 
under Sec.  147.126 of this subchapter because it imposes a lifetime 
limit on essential health benefits.
    Example 6. (i) Facts. A group health plan limits benefits for 
prescription drugs to those listed on a drug formulary. The limit is 
applied uniformly to all similarly situated individuals and is not 
directed at individual participants or beneficiaries.
    (ii) Conclusion. In this Example 6, the exclusion from coverage of 
drugs not listed on the drug formulary does not violate this paragraph 
(b)(2)(i) because benefits for prescription drugs listed on the 
formulary are uniformly available to all similarly situated individuals 
and because the exclusion of drugs not listed on the formulary applies 
uniformly to all similarly situated individuals and is not directed at 
individual participants or beneficiaries.
    Example 7. (i) Facts. Under a group health plan, doctor visits are 
generally subject to a $250 annual deductible and 20 percent coinsurance 
requirement. However, prenatal doctor visits are not subject to any 
deductible or coinsurance requirement. These rules are applied uniformly 
to all similarly situated individuals and are not directed at individual 
participants or beneficiaries.
    (ii) Conclusion. In this Example 7, imposing different deductible 
and coinsurance requirements for prenatal doctor visits and other visits 
does not violate this paragraph (b)(2)(i) because a plan may establish 
different deductibles or coinsurance requirements for different services 
if the deductible or coinsurance requirement is applied uniformly to all 
similarly situated individuals and is not directed at individual 
participants or beneficiaries.

    (ii) Exception for wellness programs. A group health plan or group 
health insurance issuer may vary benefits, including cost-sharing 
mechanisms (such as a deductible, copayment, or coinsurance), based on 
whether an individual has met the standards of a wellness program that 
satisfies the requirements of paragraph (f) of this section.
    (iii) Specific rule relating to source-of-injury exclusions--(A) If 
a group health plan or group health insurance coverage generally 
provides benefits for a type of injury, the plan or issuer may not deny 
benefits otherwise provided for treatment of the injury if the injury 
results from an act of domestic violence or a medical condition 
(including both physical and mental health conditions). This rule 
applies in the case of an injury resulting from a medical condition even 
if the condition is not diagnosed before the injury.
    (B) The rules of this paragraph (b)(2)(iii) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan generally provides 
medical/surgical benefits, including benefits for hospital stays, that 
are medically necessary. However, the plan excludes benefits for self-
inflicted injuries or injuries sustained in connection with attempted 
suicide. Because of depression, Individual D attempts suicide. As a 
result, D sustains injuries and is hospitalized for treatment of the 
injuries. Under the exclusion, the plan denies D benefits for treatment 
of the injuries.
    (ii) Conclusion. In this Example 1, the suicide attempt is the 
result of a medical condition (depression). Accordingly, the denial of 
benefits for the treatments of D's injuries violates the requirements of 
this paragraph (b)(2)(iii) because the plan provision excludes benefits 
for treatment of an injury resulting from a medical condition.
    Example 2. (i) Facts. A group health plan provides benefits for head 
injuries generally. The plan also has a general exclusion for any injury 
sustained while participating in any

[[Page 26]]

of a number of recreational activities, including bungee jumping. 
However, this exclusion does not apply to any injury that results from a 
medical condition (nor from domestic violence). Participant E sustains a 
head injury while bungee jumping. The injury did not result from a 
medical condition (nor from domestic violence). Accordingly, the plan 
denies benefits for E's head injury.
    (ii) Conclusion. In this Example 2, the plan provision that denies 
benefits based on the source of an injury does not restrict benefits 
based on an act of domestic violence or any medical condition. 
Therefore, the provision is permissible under this paragraph (b)(2)(iii) 
and does not violate this section. (However, if the plan did not allow E 
to enroll in the plan (or applied different rules for eligibility to E) 
because E frequently participates in bungee jumping, the plan would 
violate paragraph (b)(1) of this section.)

    (c) Prohibited discrimination in premiums or contributions--(1) In 
general. (i) A group health plan, and a health insurance issuer offering 
health insurance coverage in connection with a group health plan, may 
not require an individual, as a condition of enrollment or continued 
enrollment under the plan or group health insurance coverage, to pay a 
premium or contribution that is greater than the premium or contribution 
for a similarly situated individual (described in paragraph (d) of this 
section) enrolled in the plan or group health insurance coverage based 
on any health factor that relates to the individual or a dependent of 
the individual.
    (ii) Discounts, rebates, payments in kind, and any other premium 
differential mechanisms are taken into account in determining an 
individual's premium or contribution rate. (For rules relating to cost-
sharing mechanisms, see paragraph (b)(2) of this section (addressing 
benefits).)
    (2) Rules relating to premium rates--(i) Group rating based on 
health factors not restricted under this section. Nothing in this 
section restricts the aggregate amount that an employer may be charged 
for coverage under a group health plan. But see Sec.  146.122(b) of this 
part, which prohibits adjustments in group premium or contribution rates 
based on genetic information.
    (ii) List billing based on a health factor prohibited. However, a 
group health insurance issuer, or a group health plan, may not quote or 
charge an employer (or an individual) a different premium for an 
individual in a group of similarly situated individuals based on a 
health factor. (But see paragraph (g) of this section permitting 
favorable treatment of individuals with adverse health factors.)
    (iii) Examples. The rules of this paragraph (c)(2) are illustrated 
by the following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan and 
purchases coverage from a health insurance issuer. In order to determine 
the premium rate for the upcoming plan year, the issuer reviews the 
claims experience of individuals covered under the plan. The issuer 
finds that Individual F had significantly higher claims experience than 
similarly situated individuals in the plan. The issuer quotes the plan a 
higher per-participant rate because of F's claims experience.
    (ii) Conclusion. In this Example 1, the issuer does not violate the 
provisions of this paragraph (c)(2) because the issuer blends the rate 
so that the employer is not quoted a higher rate for F than for a 
similarly situated individual based on F's claims experience. (However, 
if the issuer used genetic information in computing the group rate, it 
would violate Sec.  146.122(b) of this part.)
    Example 2. (i) Facts. Same facts as Example 1, except that the 
issuer quotes the employer a higher premium rate for F, because of F's 
claims experience, than for a similarly situated individual.
    (ii) Conclusion. In this Example 2, the issuer violates this 
paragraph (c)(2). Moreover, even if the plan purchased the policy based 
on the quote but did not require a higher participant contribution for F 
than for a similarly situated individual, the issuer would still violate 
this paragraph (c)(2) (but in such a case the plan would not violate 
this paragraph (c)(2)).

    (3) Exception for wellness programs. Notwithstanding paragraphs 
(c)(1) and (c)(2) of this section, a plan or issuer may vary the amount 
of premium or contribution it requires similarly situated individuals to 
pay based on whether an individual has met the standards of a wellness 
program that satisfies the requirements of paragraph (f) of this 
section.
    (d) Similarly situated individuals. The requirements of this section 
apply only within a group of individuals who are

[[Page 27]]

treated as similarly situated individuals. A plan or issuer may treat 
participants as a group of similarly situated individuals separate from 
beneficiaries. In addition, participants may be treated as two or more 
distinct groups of similarly situated individuals and beneficiaries may 
be treated as two or more distinct groups of similarly situated 
individuals in accordance with the rules of this paragraph (d). 
Moreover, if individuals have a choice of two or more benefit packages, 
individuals choosing one benefit package may be treated as one or more 
groups of similarly situated individuals distinct from individuals 
choosing another benefit package.
    (1) Participants. Subject to paragraph (d)(3) of this section, a 
plan or issuer may treat participants as two or more distinct groups of 
similarly situated individuals if the distinction between or among the 
groups of participants is based on a bona fide employment-based 
classification consistent with the employer's usual business practice. 
Whether an employment-based classification is bona fide is determined on 
the basis of all the relevant facts and circumstances. Relevant facts 
and circumstances include whether the employer uses the classification 
for purposes independent of qualification for health coverage (for 
example, determining eligibility for other employee benefits or 
determining other terms of employment). Subject to paragraph (d)(3) of 
this section, examples of classifications that, based on all the 
relevant facts and circumstances, may be bona fide include full-time 
versus part-time status, different geographic location, membership in a 
collective bargaining unit, date of hire, length of service, current 
employee versus former employee status, and different occupations. 
However, a classification based on any health factor is not a bona fide 
employment-based classification, unless the requirements of paragraph 
(g) of this section are satisfied (permitting favorable treatment of 
individuals with adverse health factors).
    (2) Beneficiaries. (i) Subject to paragraph (d)(3) of this section, 
a plan or issuer may treat beneficiaries as two or more distinct groups 
of similarly situated individuals if the distinction between or among 
the groups of beneficiaries is based on any of the following factors:
    (A) A bona fide employment-based classification of the participant 
through whom the beneficiary is receiving coverage;
    (B) Relationship to the participant (for example, as a spouse or as 
a dependent child);
    (C) Marital status;
    (D) With respect to children of a participant, age or student 
status; or
    (E) Any other factor if the factor is not a health factor.
    (ii) Paragraph (d)(2)(i) of this section does not prevent more 
favorable treatment of individuals with adverse health factors in 
accordance with paragraph (g) of this section.
    (3) Discrimination directed at individuals. Notwithstanding 
paragraphs (d)(1) and (d)(2) of this section, if the creation or 
modification of an employment or coverage classification is directed at 
individual participants or beneficiaries based on any health factor of 
the participants or beneficiaries, the classification is not permitted 
under this paragraph (d), unless it is permitted under paragraph (g) of 
this section (permitting favorable treatment of individuals with adverse 
health factors). Thus, if an employer modified an employment-based 
classification to single out, based on a health factor, individual 
participants and beneficiaries and deny them health coverage, the new 
classification would not be permitted under this section.
    (4) Examples. The rules of this paragraph (d) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan for 
full-time employees only. Under the plan (consistent with the employer's 
usual business practice), employees who normally work at least 30 hours 
per week are considered to be working full-time. Other employees are 
considered to be working part-time. There is no evidence to suggest that 
the classification is directed at individual participants or 
beneficiaries.
    (ii) Conclusion. In this Example 1, treating the full-time and part-
time employees as two separate groups of similarly situated individuals 
is permitted under this paragraph (d) because the classification is bona 
fide and is not directed at individual participants or beneficiaries.

[[Page 28]]

    Example 2. (i) Facts. Under a group health plan, coverage is made 
available to employees, their spouses, and their children. However, 
coverage is made available to a child only if the child is under age 26 
(or under age 29 if the child is continuously enrolled full-time in an 
institution of higher learning (full-time students)). There is no 
evidence to suggest that these classifications are directed at 
individual participants or beneficiaries.
    (ii) Conclusion. In this Example 2, treating spouses and children 
differently by imposing an age limitation on children, but not on 
spouses, is permitted under this paragraph (d). Specifically, the 
distinction between spouses and children is permitted under paragraph 
(d)(2) of this section and is not prohibited under paragraph (d)(3) of 
this section because it is not directed at individual participants or 
beneficiaries. It is also permissible to treat children who are under 
age 26 (or full-time students under age 29) as a group of similarly 
situated individuals separate from those who are age 26 or older (or age 
29 or older if they are not full-time students) because the 
classification is permitted under paragraph (d)(2) of this section and 
is not directed at individual participants or beneficiaries.
    Example 3. (i) Facts. A university sponsors a group health plan that 
provides one health benefit package to faculty and another health 
benefit package to other staff. Faculty and staff are treated 
differently with respect to other employee benefits such as retirement 
benefits and leaves of absence. There is no evidence to suggest that the 
distinction is directed at individual participants or beneficiaries.
    (ii) Conclusion. In this Example 3, the classification is permitted 
under this paragraph (d) because there is a distinction based on a bona 
fide employment-based classification consistent with the employer's 
usual business practice and the distinction is not directed at 
individual participants and beneficiaries.
    Example 4. (i) Facts. An employer sponsors a group health plan that 
is available to all current employees. Former employees may also be 
eligible, but only if they complete a specified number of years of 
service, are enrolled under the plan at the time of termination of 
employment, and are continuously enrolled from that date. There is no 
evidence to suggest that these distinctions are directed at individual 
participants or beneficiaries.
    (ii) Conclusion. In this Example 4, imposing additional eligibility 
requirements on former employees is permitted because a classification 
that distinguishes between current and former employees is a bona fide 
employment-based classification that is permitted under this paragraph 
(d), provided that it is not directed at individual participants or 
beneficiaries. In addition, it is permissible to distinguish between 
former employees who satisfy the service requirement and those who do 
not, provided that the distinction is not directed at individual 
participants or beneficiaries. (However, former employees who do not 
satisfy the eligibility criteria may, nonetheless, be eligible for 
continued coverage pursuant to a COBRA continuation provision or similar 
State law.)
    Example 5. (i) Facts. An employer sponsors a group health plan that 
provides the same benefit package to all seven employees of the 
employer. Six of the seven employees have the same job title and 
responsibilities, but Employee G has a different job title and different 
responsibilities. After G files an expensive claim for benefits under 
the plan, coverage under the plan is modified so that employees with G's 
job title receive a different benefit package that includes a higher 
deductible than in the benefit package made available to the other six 
employees.
    (ii) Conclusion. Under the facts of this Example 5, changing the 
coverage classification for G based on the existing employment 
classification for G is not permitted under this paragraph (d) because 
the creation of the new coverage classification for G is directed at G 
based on one or more health factors.

    (e) Nonconfinement and actively-at-work provisions--(1) 
Nonconfinement provisions--(i) General rule. Under the rules of 
paragraphs (b) and (c) of this section, a plan or issuer may not 
establish a rule for eligibility (as described in paragraph (b)(1)(ii) 
of this section) or set any individual's premium or contribution rate 
based on whether an individual is confined to a hospital or other health 
care institution. In addition, under the rules of paragraphs (b) and (c) 
of this section, a plan or issuer may not establish a rule for 
eligibility or set any individual's premium or contribution rate based 
on an individual's ability to engage in normal life activities, except 
to the extent permitted under paragraphs (e)(2)(ii) and (e)(3) of this 
section (permitting plans and issuers, under certain circumstances, to 
distinguish among employees based on the performance of services).
    (ii) Examples. The rules of this paragraph (e)(1) are illustrated by 
the following examples:

    Example 1. (i) Facts. Under a group health plan, coverage for 
employees and their dependents generally becomes effective on the first 
day of employment. However, coverage for a dependent who is confined to 
a hospital

[[Page 29]]

or other health care institution does not become effective until the 
confinement ends.
    (ii) Conclusion. In this Example 1, the plan violates this paragraph 
(e)(1) because the plan delays the effective date of coverage for 
dependents based on confinement to a hospital or other health care 
institution.
    Example 2. (i) Facts. In previous years, a group health plan has 
provided coverage through a group health insurance policy offered by 
Issuer M. However, for the current year, the plan provides coverage 
through a group health insurance policy offered by Issuer N. Under 
Issuer N's policy, items and services provided in connection with the 
confinement of a dependent to a hospital or other health care 
institution are not covered if the confinement is covered under an 
extension of benefits clause from a previous health insurance issuer.
    (ii) Conclusion. In this Example 2, Issuer N violates this paragraph 
(e)(1) because the group health insurance coverage restricts benefits (a 
rule for eligibility under paragraph (b)(1)) based on whether a 
dependent is confined to a hospital or other health care institution 
that is covered under an extension of benefits clause from a previous 
issuer. State law cannot change the obligation of Issuer N under this 
section. However, under State law Issuer M may also be responsible for 
providing benefits to such a dependent. In a case in which Issuer N has 
an obligation under this section to provide benefits and Issuer M has an 
obligation under State law to provide benefits, any State laws designed 
to prevent more than 100% reimbursement, such as State coordination-of-
benefits laws, continue to apply.

    (2) Actively-at-work and continuous service provisions--(i) General 
rule. (A) Under the rules of paragraphs (b) and (c) of this section and 
subject to the exception for the first day of work described in 
paragraph (e)(2)(ii) of this section, a plan or issuer may not establish 
a rule for eligibility (as described in paragraph (b)(1)(ii) of this 
section) or set any individual's premium or contribution rate based on 
whether an individual is actively at work (including whether an 
individual is continuously employed), unless absence from work due to 
any health factor (such as being absent from work on sick leave) is 
treated, for purposes of the plan or health insurance coverage, as being 
actively at work.
    (B) The rules of this paragraph (e)(2)(i) are illustrated by the 
following examples:

    Example 1. (i) Facts. Under a group health plan, an employee 
generally becomes eligible to enroll 30 days after the first day of 
employment. However, if the employee is not actively at work on the 
first day after the end of the 30-day period, then eligibility for 
enrollment is delayed until the first day the employee is actively at 
work.
    (ii) Conclusion. In this Example 1, the plan violates this paragraph 
(e)(2) (and thus also violates paragraph (b) of this section). However, 
the plan would not violate paragraph (e)(2) or (b) of this section if, 
under the plan, an absence due to any health factor is considered being 
actively at work.
    Example 2. (i) Facts. Under a group health plan, coverage for an 
employee becomes effective after 90 days of continuous service; that is, 
if an employee is absent from work (for any reason) before completing 90 
days of service, the beginning of the 90-day period is measured from the 
day the employee returns to work (without any credit for service before 
the absence).
    (ii) Conclusion. In this Example 2, the plan violates this paragraph 
(e)(2) (and thus also paragraph (b) of this section) because the 90-day 
continuous service requirement is a rule for eligibility based on 
whether an individual is actively at work. However, the plan would not 
violate this paragraph (e)(2) or paragraph (b) of this section if, under 
the plan, an absence due to any health factor is not considered an 
absence for purposes of measuring 90 days of continuous service. (In 
addition, any eligibility provision that is time-based must comply with 
the requirements of PHS Act section 2708 and its implementing 
regulations.)

    (ii) Exception for the first day of work. (A) Notwithstanding the 
general rule in paragraph (e)(2)(i) of this section, a plan or issuer 
may establish a rule for eligibility that requires an individual to 
begin work for the employer sponsoring the plan (or, in the case of a 
multiemployer plan, to begin a job in covered employment) before 
coverage becomes effective, provided that such a rule for eligibility 
applies regardless of the reason for the absence.
    (B) The rules of this paragraph (e)(2)(ii) are illustrated by the 
following examples:

    Example 1. (i) Facts. Under the eligibility provision of a group 
health plan, coverage for new employees becomes effective on the first 
day that the employee reports to work. Individual H is scheduled to 
begin work on August 3. However, H is unable to begin work on that day 
because of illness. H begins working on August 4, and H's coverage is 
effective on August 4.
    (ii) Conclusion. In this Example 1, the plan provision does not 
violate this section. However, if coverage for individuals who do not

[[Page 30]]

report to work on the first day they were scheduled to work for a reason 
unrelated to a health factor (such as vacation or bereavement) becomes 
effective on the first day they were scheduled to work, then the plan 
would violate this section.
    Example 2. (i) Facts. Under a group health plan, coverage for new 
employees becomes effective on the first day of the month following the 
employee's first day of work, regardless of whether the employee is 
actively at work on the first day of the month. Individual J is 
scheduled to begin work on March 24. However, J is unable to begin work 
on March 24 because of illness. J begins working on April 7 and J's 
coverage is effective May 1.
    (ii) Conclusion. In this Example 2, the plan provision does not 
violate this section. However, as in Example 1, if coverage for 
individuals absent from work for reasons unrelated to a health factor 
became effective despite their absence, then the plan would violate this 
section.

    (3) Relationship to plan provisions defining similarly situated 
individuals. (i) Notwithstanding the rules of paragraphs (e)(1) and 
(e)(2) of this section, a plan or issuer may establish rules for 
eligibility or set any individual's premium or contribution rate in 
accordance with the rules relating to similarly situated individuals in 
paragraph (d) of this section. Accordingly, a plan or issuer may 
distinguish in rules for eligibility under the plan between full-time 
and part-time employees, between permanent and temporary or seasonal 
employees, between current and former employees, and between employees 
currently performing services and employees no longer performing 
services for the employer, subject to paragraph (d) of this section. 
However, other Federal or State laws (including the COBRA continuation 
provisions and the Family and Medical Leave Act of 1993) may require an 
employee or the employee's dependents to be offered coverage and set 
limits on the premium or contribution rate even though the employee is 
not performing services.
    (ii) The rules of this paragraph (e)(3) are illustrated by the 
following examples:

    Example 1. (i) Facts. Under a group health plan, employees are 
eligible for coverage if they perform services for the employer for 30 
or more hours per week or if they are on paid leave (such as vacation, 
sick, or bereavement leave). Employees on unpaid leave are treated as a 
separate group of similarly situated individuals in accordance with the 
rules of paragraph (d) of this section.
    (ii) Conclusion. In this Example 1, the plan provisions do not 
violate this section. However, if the plan treated individuals 
performing services for the employer for 30 or more hours per week, 
individuals on vacation leave, and individuals on bereavement leave as a 
group of similarly situated individuals separate from individuals on 
sick leave, the plan would violate this paragraph (e) (and thus also 
would violate paragraph (b) of this section) because groups of similarly 
situated individuals cannot be established based on a health factor 
(including the taking of sick leave) under paragraph (d) of this 
section.
    Example 2. (i) Facts. To be eligible for coverage under a bona fide 
collectively bargained group health plan in the current calendar 
quarter, the plan requires an individual to have worked 250 hours in 
covered employment during the three-month period that ends one month 
before the beginning of the current calendar quarter. The distinction 
between employees working at least 250 hours and those working less than 
250 hours in the earlier three-month period is not directed at 
individual participants or beneficiaries based on any health factor of 
the participants or beneficiaries.
    (ii) Conclusion. In this Example 2, the plan provision does not 
violate this section because, under the rules for similarly situated 
individuals allowing full-time employees to be treated differently than 
part-time employees, employees who work at least 250 hours in a three-
month period can be treated differently than employees who fail to work 
250 hours in that period. The result would be the same if the plan 
permitted individuals to apply excess hours from previous periods to 
satisfy the requirement for the current quarter.
    Example 3. (i) Facts. Under a group health plan, coverage of an 
employee is terminated when the individual's employment is terminated, 
in accordance with the rules of paragraph (d) of this section. Employee 
B has been covered under the plan. B experiences a disabling illness 
that prevents B from working. B takes a leave of absence under the 
Family and Medical Leave Act of 1993. At the end of such leave, B 
terminates employment and consequently loses coverage under the plan. 
(This termination of coverage is without regard to whatever rights the 
employee (or members of the employee's family) may have for COBRA 
continuation coverage.)
    (ii) Conclusion. In this Example 3, the plan provision terminating 
B's coverage upon B's termination of employment does not violate this 
section.
    Example 4. (i) Facts. Under a group health plan, coverage of an 
employee is terminated when the employee ceases to perform services for 
the employer sponsoring the plan, in

[[Page 31]]

accordance with the rules of paragraph (d) of this section. Employee C 
is laid off for three months. When the layoff begins, C's coverage under 
the plan is terminated. (This termination of coverage is without regard 
to whatever rights the employee (or members of the employee's family) 
may have for COBRA continuation coverage.)
    (ii) Conclusion. In this Example 4, the plan provision terminating 
C's coverage upon the cessation of C's performance of services does not 
violate this section.

    (f) Nondiscriminatory wellness programs--in general. A wellness 
program is a program of health promotion or disease prevention. 
Paragraphs (b)(2)(ii) and (c)(3) of this section provide exceptions to 
the general prohibitions against discrimination based on a health factor 
for plan provisions that vary benefits (including cost-sharing 
mechanisms) or the premium or contribution for similarly situated 
individuals in connection with a wellness program that satisfies the 
requirements of this paragraph (f).
    (1) Definitions. The definitions in this paragraph (f)(1) govern in 
applying the provisions of this paragraph (f).
    (i) Reward. Except where expressly provided otherwise, references in 
this section to an individual obtaining a reward include both obtaining 
a reward (such as a discount or rebate of a premium or contribution, a 
waiver of all or part of a cost-sharing mechanism, an additional 
benefit, or any financial or other incentive) and avoiding a penalty 
(such as the absence of a premium surcharge or other financial or 
nonfinancial disincentive). References in this section to a plan 
providing a reward include both providing a reward (such as a discount 
or rebate of a premium or contribution, a waiver of all or part of a 
cost-sharing mechanism, an additional benefit, or any financial or other 
incentive) and imposing a penalty (such as a surcharge or other 
financial or nonfinancial disincentive).
    (ii) Participatory wellness programs. If none of the conditions for 
obtaining a reward under a wellness program is based on an individual 
satisfying a standard that is related to a health factor (or if a 
wellness program does not provide a reward), the wellness program is a 
participatory wellness program. Examples of participatory wellness 
programs are:
    (A) A program that reimburses employees for all or part of the cost 
for membership in a fitness center.
    (B) A diagnostic testing program that provides a reward for 
participation in that program and does not base any part of the reward 
on outcomes.
    (C) A program that encourages preventive care through the waiver of 
the copayment or deductible requirement under a group health plan for 
the costs of, for example, prenatal care or well-baby visits. (Note 
that, with respect to non-grandfathered plans, Sec.  147.130 of this 
subchapter requires benefits for certain preventive health services 
without the imposition of cost sharing.)
    (D) A program that reimburses employees for the costs of 
participating, or that otherwise provides a reward for participating, in 
a smoking cessation program without regard to whether the employee quits 
smoking.
    (E) A program that provides a reward to employees for attending a 
monthly, no-cost health education seminar.
    (F) A program that provides a reward to employees who complete a 
health risk assessment regarding current health status, without any 
further action (educational or otherwise) required by the employee with 
regard to the health issues identified as part of the assessment. (See 
also Sec.  146.122 for rules prohibiting collection of genetic 
information.)
    (iii) Health-contingent wellness programs. A health-contingent 
wellness program is a program that requires an individual to satisfy a 
standard related to a health factor to obtain a reward (or requires an 
individual to undertake more than a similarly situated individual based 
on a health factor in order to obtain the same reward). A health-
contingent wellness program may be an activity-only wellness program or 
an outcome-based wellness program.
    (iv) Activity-only wellness programs. An activity-only wellness 
program is a type of health-contingent wellness program that requires an 
individual to perform or complete an activity related to a health factor 
in order to obtain a reward but does not require the individual to 
attain or maintain a specific health outcome. Examples include walking, 
diet, or exercise programs,

[[Page 32]]

which some individuals may be unable to participate in or complete (or 
have difficulty participating in or completing) due to a health factor, 
such as severe asthma, pregnancy, or a recent surgery. See paragraph 
(f)(3) of this section for requirements applicable to activity-only 
wellness programs.
    (v) Outcome-based wellness programs. An outcome-based wellness 
program is a type of health-contingent wellness program that requires an 
individual to attain or maintain a specific health outcome (such as not 
smoking or attaining certain results on biometric screenings) in order 
to obtain a reward. To comply with the rules of this paragraph (f), an 
outcome-based wellness program typically has two tiers. That is, for 
individuals who do not attain or maintain the specific health outcome, 
compliance with an educational program or an activity may be offered as 
an alternative to achieve the same reward. This alternative pathway, 
however, does not mean that the overall program, which has an outcome-
based component, is not an outcome-based wellness program. That is, if a 
measurement, test, or screening is used as part of an initial standard 
and individuals who meet the standard are granted the reward, the 
program is considered an outcome-based wellness program. For example, if 
a wellness program tests individuals for specified medical conditions or 
risk factors (including biometric screening such as testing for high 
cholesterol, high blood pressure, abnormal body mass index, or high 
glucose level) and provides a reward to individuals identified as within 
a normal or healthy range for these medical conditions or risk factors, 
while requiring individuals who are identified as outside the normal or 
healthy range (or at risk) to take additional steps (such as meeting 
with a health coach, taking a health or fitness course, adhering to a 
health improvement action plan, complying with a walking or exercise 
program, or complying with a health care provider's plan of care) to 
obtain the same reward, the program is an outcome-based wellness 
program. See paragraph (f)(4) of this section for requirements 
applicable to outcome-based wellness programs.
    (2) Requirement for participatory wellness programs. A participatory 
wellness program, as described in paragraph (f)(1)(ii) of this section, 
does not violate the provisions of this section only if participation in 
the program is made available to all similarly situated individuals, 
regardless of health status.
    (3) Requirements for activity-only wellness programs. A health-
contingent wellness program that is an activity-only wellness program, 
as described in paragraph (f)(1)(iv) of this section, does not violate 
the provisions of this section only if all of the following requirements 
are satisfied:
    (i) Frequency of opportunity to qualify. The program must give 
individuals eligible for the program the opportunity to qualify for the 
reward under the program at least once per year.
    (ii) Size of reward. The reward for the activity-only wellness 
program, together with the reward for other health-contingent wellness 
programs with respect to the plan, must not exceed the applicable 
percentage (as defined in paragraph (f)(5) of this section) of the total 
cost of employee-only coverage under the plan. However, if, in addition 
to employees, any class of dependents (such as spouses, or spouses and 
dependent children) may participate in the wellness program, the reward 
must not exceed the applicable percentage of the total cost of the 
coverage in which an employee and any dependents are enrolled. For 
purposes of this paragraph (f)(3)(ii), the cost of coverage is 
determined based on the total amount of employer and employee 
contributions towards the cost of coverage for the benefit package under 
which the employee is (or the employee and any dependents are) receiving 
coverage.
    (iii) Reasonable design. The program must be reasonably designed to 
promote health or prevent disease. A program satisfies this standard if 
it has a reasonable chance of improving the health of, or preventing 
disease in, participating individuals, and it is not overly burdensome, 
is not a subterfuge for discriminating based on a health factor, and is 
not highly suspect in the method chosen to promote health or prevent 
disease. This determination is

[[Page 33]]

based on all the relevant facts and circumstances.
    (iv) Uniform availability and reasonable alternative standards. The 
full reward under the activity-only wellness program must be available 
to all similarly situated individuals.
    (A) Under this paragraph (f)(3)(iv), a reward under an activity-only 
wellness program is not available to all similarly situated individuals 
for a period unless the program meets both of the following 
requirements:
    (1) The program allows a reasonable alternative standard (or waiver 
of the otherwise applicable standard) for obtaining the reward for any 
individual for whom, for that period, it is unreasonably difficult due 
to a medical condition to satisfy the otherwise applicable standard; and
    (2) The program allows a reasonable alternative standard (or waiver 
of the otherwise applicable standard) for obtaining the reward for any 
individual for whom, for that period, it is medically inadvisable to 
attempt to satisfy the otherwise applicable standard.
    (B) While plans and issuers are not required to determine a 
particular reasonable alternative standard in advance of an individual's 
request for one, if an individual is described in either paragraph 
(f)(3)(iv)(A)(1) or (2) of this section, a reasonable alternative 
standard must be furnished by the plan or issuer upon the individual's 
request or the condition for obtaining the reward must be waived.
    (C) All the facts and circumstances are taken into account in 
determining whether a plan or issuer has furnished a reasonable 
alternative standard, including but not limited to the following:
    (1) If the reasonable alternative standard is completion of an 
educational program, the plan or issuer must make the educational 
program available or assist the employee in finding such a program 
(instead of requiring an individual to find such a program unassisted), 
and may not require an individual to pay for the cost of the program.
    (2) The time commitment required must be reasonable (for example, 
requiring attendance nightly at a one-hour class would be unreasonable).
    (3) If the reasonable alternative standard is a diet program, the 
plan or issuer is not required to pay for the cost of food but must pay 
any membership or participation fee.
    (4) If an individual's personal physician states that a plan 
standard (including, if applicable, the recommendations of the plan's 
medical professional) is not medically appropriate for that individual, 
the plan or issuer must provide a reasonable alternative standard that 
accommodates the recommendations of the individual's personal physician 
with regard to medical appropriateness. Plans and issuers may impose 
standard cost sharing under the plan or coverage for medical items and 
services furnished pursuant to the physician's recommendations.
    (D) To the extent that a reasonable alternative standard under an 
activity-only wellness program is, itself, an activity-only wellness 
program, it must comply with the requirements of this paragraph (f)(3) 
in the same manner as if it were an initial program standard. (Thus, for 
example, if a plan or issuer provides a walking program as a reasonable 
alternative standard to a running program, individuals for whom it is 
unreasonably difficult due to a medical condition to complete the 
walking program (or for whom it is medically inadvisable to attempt to 
complete the walking program) must be provided a reasonable alternative 
standard to the walking program.) To the extent that a reasonable 
alternative standard under an activity-only wellness program is, itself, 
an outcome-based wellness program, it must comply with the requirements 
of paragraph (f)(4) of this section, including paragraph (f)(4)(iv)(D).
    (E) If reasonable under the circumstances, a plan or issuer may seek 
verification, such as a statement from an individual's personal 
physician, that a health factor makes it unreasonably difficult for the 
individual to satisfy, or medically inadvisable for the individual to 
attempt to satisfy, the otherwise applicable standard of an activity-
only wellness program. Plans and

[[Page 34]]

issuers may seek verification with respect to requests for a reasonable 
alternative standard for which it is reasonable to determine that 
medical judgment is required to evaluate the validity of the request.
    (v) Notice of availability of reasonable alternative standard. The 
plan or issuer must disclose in all plan materials describing the terms 
of an activity-only wellness program the availability of a reasonable 
alternative standard to qualify for the reward (and, if applicable, the 
possibility of waiver of the otherwise applicable standard), including 
contact information for obtaining a reasonable alternative standard and 
a statement that recommendations of an individual's personal physician 
will be accommodated. If plan materials merely mention that such a 
program is available, without describing its terms, this disclosure is 
not required. Sample language is provided in paragraph (f)(6) of this 
section, as well as in certain examples of this section.
    (vi) Example. The provisions of this paragraph (f)(3) are 
illustrated by the following example:

    Example. (i) Facts. A group health plan provides a reward to 
individuals who participate in a reasonable specified walking program. 
If it is unreasonably difficult due to a medical condition for an 
individual to participate (or if it is medically inadvisable for an 
individual to attempt to participate), the plan will waive the walking 
program requirement and provide the reward. All materials describing the 
terms of the walking program disclose the availability of the waiver.
    (ii) Conclusion. In this Example, the program satisfies the 
requirements of paragraph (f)(3)(iii) of this section because the 
walking program is reasonably designed to promote health and prevent 
disease. The program satisfies the requirements of paragraph (f)(3)(iv) 
of this section because the reward under the program is available to all 
similarly situated individuals. It accommodates individuals for whom it 
is unreasonably difficult to participate in the walking program due to a 
medical condition (or for whom it would be medically inadvisable to 
attempt to participate) by providing them with the reward even if they 
do not participate in the walking program (that is, by waiving the 
condition). The plan also complies with the disclosure requirement of 
paragraph (f)(3)(v) of this section. Thus, the plan satisfies paragraphs 
(f)(3)(iii), (iv), and (v) of this section.

    (4) Requirements for outcome-based wellness programs. A health-
contingent wellness program that is an outcome-based wellness program, 
as described in paragraph (f)(1)(v) of this section, does not violate 
the provisions of this section only if all of the following requirements 
are satisfied:
    (i) Frequency of opportunity to qualify. The program must give 
individuals eligible for the program the opportunity to qualify for the 
reward under the program at least once per year.
    (ii) Size of reward. The reward for the outcome-based wellness 
program, together with the reward for other health-contingent wellness 
programs with respect to the plan, must not exceed the applicable 
percentage (as defined in paragraph (f)(5) of this section) of the total 
cost of employee-only coverage under the plan. However, if, in addition 
to employees, any class of dependents (such as spouses, or spouses and 
dependent children) may participate in the wellness program, the reward 
must not exceed the applicable percentage of the total cost of the 
coverage in which an employee and any dependents are enrolled. For 
purposes of this paragraph (f)(4)(ii), the cost of coverage is 
determined based on the total amount of employer and employee 
contributions towards the cost of coverage for the benefit package under 
which the employee is (or the employee and any dependents are) receiving 
coverage.
    (iii) Reasonable design. The program must be reasonably designed to 
promote health or prevent disease. A program satisfies this standard if 
it has a reasonable chance of improving the health of, or preventing 
disease in, participating individuals, and it is not overly burdensome, 
is not a subterfuge for discriminating based on a health factor, and is 
not highly suspect in the method chosen to promote health or prevent 
disease. This determination is based on all the relevant facts and 
circumstances. To ensure that an outcome-based wellness program is 
reasonably designed to improve health and does not act as a subterfuge 
for underwriting or reducing benefits based on a health factor, a 
reasonable alternative standard to qualify for the reward must be 
provided to any individual who does not meet the initial standard based 
on a measurement, test, or

[[Page 35]]

screening that is related to a health factor, as explained in paragraph 
(f)(4)(iv) of this section.
    (iv) Uniform availability and reasonable alternative standards. The 
full reward under the outcome-based wellness program must be available 
to all similarly situated individuals.
    (A) Under this paragraph (f)(4)(iv), a reward under an outcome-based 
wellness program is not available to all similarly situated individuals 
for a period unless the program allows a reasonable alternative standard 
(or waiver of the otherwise applicable standard) for obtaining the 
reward for any individual who does not meet the initial standard based 
on the measurement, test, or screening, as described in this paragraph 
(f)(4)(iv).
    (B) While plans and issuers are not required to determine a 
particular reasonable alternative standard in advance of an individual's 
request for one, if an individual is described in paragraph 
(f)(4)(iv)(A) of this section, a reasonable alternative standard must be 
furnished by the plan or issuer upon the individual's request or the 
condition for obtaining the reward must be waived.
    (C) All the facts and circumstances are taken into account in 
determining whether a plan or issuer has furnished a reasonable 
alternative standard, including but not limited to the following:
    (1) If the reasonable alternative standard is completion of an 
educational program, the plan or issuer must make the educational 
program available or assist the employee in finding such a program 
(instead of requiring an individual to find such a program unassisted), 
and may not require an individual to pay for the cost of the program.
    (2) The time commitment required must be reasonable (for example, 
requiring attendance nightly at a one-hour class would be unreasonable).
    (3) If the reasonable alternative standard is a diet program, the 
plan or issuer is not required to pay for the cost of food but must pay 
any membership or participation fee.
    (4) If an individual's personal physician states that a plan 
standard (including, if applicable, the recommendations of the plan's 
medical professional) is not medically appropriate for that individual, 
the plan or issuer must provide a reasonable alternative standard that 
accommodates the recommendations of the individual's personal physician 
with regard to medical appropriateness. Plans and issuers may impose 
standard cost sharing under the plan or coverage for medical items and 
services furnished pursuant to the physician's recommendations.
    (D) To the extent that a reasonable alternative standard under an 
outcome-based wellness program is, itself, an activity-only wellness 
program, it must comply with the requirements of paragraph (f)(3) of 
this section in the same manner as if it were an initial program 
standard. To the extent that a reasonable alternative standard under an 
outcome-based wellness program is, itself, another outcome-based 
wellness program, it must comply with the requirements of this paragraph 
(f)(4), subject to the following special rules:
    (1) The reasonable alternative standard cannot be a requirement to 
meet a different level of the same standard without additional time to 
comply that takes into account the individual's circumstances. For 
example, if the initial standard is to achieve a BMI less than 30, the 
reasonable alternative standard cannot be to achieve a BMI less than 31 
on that same date. However, if the initial standard is to achieve a BMI 
less than 30, a reasonable alternative standard for the individual could 
be to reduce the individual's BMI by a small amount or small percentage, 
over a realistic period of time, such as within a year.
    (2) An individual must be given the opportunity to comply with the 
recommendations of the individual's personal physician as a second 
reasonable alternative standard to meeting the reasonable alternative 
standard defined by the plan or issuer, but only if the physician joins 
in the request. The individual can make a request to involve a personal 
physician's recommendations at any time and the personal physician can 
adjust the physician's recommendations at any time, consistent with 
medical appropriateness.

[[Page 36]]

    (E) It is not reasonable to seek verification, such as a statement 
from an individual's personal physician, under an outcome-based wellness 
program that a health factor makes it unreasonably difficult for the 
individual to satisfy, or medically inadvisable for the individual to 
attempt to satisfy, the otherwise applicable standard as a condition of 
providing a reasonable alternative to the initial standard. However, if 
a plan or issuer provides an alternative standard to the otherwise 
applicable measurement, test, or screening that involves an activity 
that is related to a health factor, then the rules of paragraph (f)(3) 
of this section for activity-only wellness programs apply to that 
component of the wellness program and the plan or issuer may, if 
reasonable under the circumstances, seek verification that it is 
unreasonably difficult due to a medical condition for an individual to 
perform or complete the activity (or it is medically inadvisable to 
attempt to perform or complete the activity). (For example, if an 
outcome-based wellness program requires participants to maintain a 
certain healthy weight and provides a diet and exercise program for 
individuals who do not meet the targeted weight, a plan or issuer may 
seek verification, as described in paragraph (f)(3)(iv)(D) of this 
section, if reasonable under the circumstances, that a second reasonable 
alternative standard is needed for certain individuals because, for 
those individuals, it would be unreasonably difficult due to a medical 
condition to comply, or medically inadvisable to attempt to comply, with 
the diet and exercise program, due to a medical condition.)
    (v) Notice of availability of reasonable alternative standard. The 
plan or issuer must disclose in all plan materials describing the terms 
of an outcome-based wellness program, and in any disclosure that an 
individual did not satisfy an initial outcome-based standard, the 
availability of a reasonable alternative standard to qualify for the 
reward (and, if applicable, the possibility of waiver of the otherwise 
applicable standard), including contact information for obtaining a 
reasonable alternative standard and a statement that recommendations of 
an individual's personal physician will be accommodated. If plan 
materials merely mention that such a program is available, without 
describing its terms, this disclosure is not required. Sample language 
is provided in paragraph (f)(6) of this section, as well as in certain 
examples of this section.
    (vi) Examples. The provisions of this paragraph (f)(4) are 
illustrated by the following examples:

    Example 1--Cholesterol screening with reasonable alternative 
standard to work with personal physician. (i) Facts. A group health plan 
offers a reward to participants who achieve a count under 200 on a total 
cholesterol test. If a participant does not achieve the targeted 
cholesterol count, the plan allows the participant to develop an 
alternative cholesterol action plan in conjunction with the 
participant's personal physician that may include recommendations for 
medication and additional screening. The plan allows the physician to 
modify the standards, as medically necessary, over the year. (For 
example, if a participant develops asthma or depression, requires 
surgery and convalescence, or some other medical condition or 
consideration makes completion of the original action plan inadvisable 
or unreasonably difficult, the physician may modify the original action 
plan.) All plan materials describing the terms of the program include 
the following statement: ``Your health plan wants to help you take 
charge of your health. Rewards are available to all employees who 
participate in our Cholesterol Awareness Wellness Program. If your total 
cholesterol count is under 200, you will receive the reward. If not, you 
will still have an opportunity to qualify for the reward. We will work 
with you and your doctor to find a Health Smart program that is right 
for you.'' In addition, when any individual participant receives 
notification that his or her cholesterol count is 200 or higher, the 
notification includes the following statement: ``Your plan offers a 
Health Smart program under which we will work with you and your doctor 
to try to lower your cholesterol. If you complete this program, you will 
qualify for a reward. Please contact us at [contact information] to get 
started.''
    (ii) Conclusion. In this Example 1, the program is an outcome-based 
wellness program because the initial standard requires an individual to 
attain or maintain a specific health outcome (a certain cholesterol 
level) to obtain a reward. The program satisfies the requirements of 
paragraph (f)(4)(iii) of this section because the cholesterol program is 
reasonably designed to promote health and prevent disease. The program 
satisfies the requirements of paragraph (f)(4)(iv) of this section 
because it makes available to all participants who do not meet the 
cholesterol

[[Page 37]]

standard a reasonable alternative standard to qualify for the reward. 
Lastly, the plan also discloses in all materials describing the terms of 
the program and in any disclosure that an individual did not satisfy the 
initial outcome-based standard the availability of a reasonable 
alternative standard (including contact information and the individual's 
ability to involve his or her personal physician), as required by 
paragraph (f)(4)(v) of this section. Thus, the program satisfies the 
requirements of paragraphs (f)(4)(iii), (iv), and (v) of this section.
    Example 2--Cholesterol screening with plan alternative and no 
opportunity for personal physician involvement. (i) Facts. Same facts as 
Example 1, except that the wellness program's physician or nurse 
practitioner (rather than the individual's personal physician) 
determines the alternative cholesterol action plan. The plan does not 
provide an opportunity for a participant's personal physician to modify 
the action plan if it is not medically appropriate for that individual.
    (ii) Conclusion. In this Example 2, the wellness program does not 
satisfy the requirements of paragraph (f)(4)(iii) of this section 
because the program does not accommodate the recommendations of the 
participant's personal physician with regard to medical appropriateness, 
as required under paragraph (f)(4)(iv)(C)(3) of this section. Thus, the 
program is not reasonably designed under paragraph (f)(4)(iii) of this 
section and is not available to all similarly situated individuals under 
paragraph (f)(4)(iv) of this section. The notice also does not provide 
all the content required under paragraph (f)(4)(v) of this section.
    Example 3--Cholesterol screening with plan alternative that can be 
modified by personal physician. (i) Facts. Same facts as Example 2, 
except that if a participant's personal physician disagrees with any 
part of the action plan, the personal physician may modify the action 
plan at any time, and the plan discloses this to participants.
    (ii) Conclusion. In this Example 3, the wellness program satisfies 
the requirements of paragraph (f)(4)(iii) of this section because the 
participant's personal physician may modify the action plan determined 
by the wellness program's physician or nurse practitioner at any time if 
the physician states that the recommendations are not medically 
appropriate, as required under paragraph (f)(4)(iv)(C)(3) of this 
section. Thus, the program is reasonably designed under paragraph 
(f)(4)(iii) of this section and is available to all similarly situated 
individuals under paragraph (f)(4)(iv) of this section. The notice, 
which includes a statement that recommendations of an individual's 
personal physician will be accommodated, also complies with paragraph 
(f)(4)(v) of this section.
    Example 4--BMI screening with walking program alternative. (i) 
Facts. A group health plan will provide a reward to participants who 
have a body mass index (BMI) that is 26 or lower, determined shortly 
before the beginning of the year. Any participant who does not meet the 
target BMI is given the same discount if the participant complies with 
an exercise program that consists of walking 150 minutes a week. Any 
participant for whom it is unreasonably difficult due to a medical 
condition to comply with this walking program (and any participant for 
whom it is medically inadvisable to attempt to comply with the walking 
program) during the year is given the same discount if the participant 
satisfies an alternative standard that is reasonable taking into 
consideration the participant's medical situation, is not unreasonably 
burdensome or impractical to comply with, and is otherwise reasonably 
designed based on all the relevant facts and circumstances. All plan 
materials describing the terms of the wellness program include the 
following statement: ``Fitness is Easy! Start Walking! Your health plan 
cares about your health. If you are considered overweight because you 
have a BMI of over 26, our Start Walking program will help you lose 
weight and feel better. We will help you enroll. (**If your doctor says 
that walking isn't right for you, that's okay too. We will work with you 
(and, if you wish, your own doctor) to develop a wellness program that 
is.)'' Participant E is unable to achieve a BMI that is 26 or lower 
within the plan's timeframe and receives notification that complies with 
paragraph (f)(4)(v) of this section. Nevertheless, it is unreasonably 
difficult due to a medical condition for E to comply with the walking 
program. E proposes a program based on the recommendations of E's 
physician. The plan agrees to make the same discount available to E that 
is available to other participants in the BMI program or the alternative 
walking program, but only if E actually follows the physician's 
recommendations.
    (ii) Conclusion. In this Example 4, the program is an outcome-based 
wellness program because the initial standard requires an individual to 
attain or maintain a specific health outcome (a certain BMI level) to 
obtain a reward. The program satisfies the requirements of paragraph 
(f)(4)(iii) of this section because it is reasonably designed to promote 
health and prevent disease. The program also satisfies the requirements 
of paragraph (f)(4)(iv) of this section because it makes available to 
all individuals who do not satisfy the BMI standard a reasonable 
alternative standard to qualify for the reward (in this case, a walking 
program that is not unreasonably burdensome or impractical for 
individuals to comply with and that is otherwise reasonably designed 
based on all the relevant facts and circumstances). In addition, the 
walking program is, itself, an activity-only standard and the plan 
complies with

[[Page 38]]

the requirements of paragraph (f)(3) of this section (including the 
requirement of paragraph (f)(3)(iv) that, if there are individuals for 
whom it is unreasonably difficult due to a medical condition to comply, 
or for whom it is medically inadvisable to attempt to comply, with the 
walking program, the plan provide a reasonable alternative to those 
individuals). Moreover, the plan satisfies the requirements of paragraph 
(f)(4)(v) of this section because it discloses, in all materials 
describing the terms of the program and in any disclosure that an 
individual did not satisfy the initial outcome-based standard, the 
availability of a reasonable alternative standard (including contact 
information and the individual's option to involve his or her personal 
physician) to qualify for the reward or the possibility of waiver of the 
otherwise applicable standard. Thus, the program satisfies the 
requirements of paragraphs (f)(4)(iii), (iv), and (v) of this section.
    Example 5--BMI screening with alternatives available to either lower 
BMI or meet personal physician's recommendations. (i) Facts. Same facts 
as Example 4 except that, with respect to any participant who does not 
meet the target BMI, instead of a walking program, the participant is 
expected to reduce BMI by one point. At any point during the year upon 
request, any individual can obtain a second reasonable alternative 
standard, which is compliance with the recommendations of the 
participant's personal physician regarding weight, diet, and exercise as 
set forth in a treatment plan that the physician recommends or to which 
the physician agrees. The participant's personal physician is permitted 
to change or adjust the treatment plan at any time and the option of 
following the participant's personal physician's recommendations is 
clearly disclosed.
    (ii) Conclusion. In this Example 5, the reasonable alternative 
standard to qualify for the reward (the alternative BMI standard 
requiring a one-point reduction) does not make the program unreasonable 
under paragraph (f)(4)(iii) or (iv) of this section because the program 
complies with paragraph (f)(4)(iv)(C)(4) of this section by allowing a 
second reasonable alternative standard to qualify for the reward 
(compliance with the recommendations of the participant's personal 
physician, which can be changed or adjusted at any time). Accordingly, 
the program continues to satisfy the applicable requirements of 
paragraph (f) of this section.
    Example 6--Tobacco use surcharge with smoking cessation program 
alternative. (i) Facts. In conjunction with an annual open enrollment 
period, a group health plan provides a premium differential based on 
tobacco use, determined using a health risk assessment. The following 
statement is included in all plan materials describing the tobacco 
premium differential: ``Stop smoking today! We can help! If you are a 
smoker, we offer a smoking cessation program. If you complete the 
program, you can avoid this surcharge.'' The plan accommodates 
participants who smoke by facilitating their enrollment in a smoking 
cessation program that requires participation at a time and place that 
are not unreasonably burdensome or impractical for participants, and 
that is otherwise reasonably designed based on all the relevant facts 
and circumstances, and discloses contact information and the 
individual's option to involve his or her personal physician. The plan 
pays for the cost of participation in the smoking cessation program. Any 
participant can avoid the surcharge for the plan year by participating 
in the program, regardless of whether the participant stops smoking, but 
the plan can require a participant who wants to avoid the surcharge in a 
subsequent year to complete the smoking cessation program again.
    (ii) Conclusion. In this Example 6, the premium differential 
satisfies the requirements of paragraphs (f)(4)(iii), (iv), and (v). The 
program is an outcome-based wellness program because the initial 
standard for obtaining a reward is dependent on the results of a health 
risk assessment (a measurement, test, or screening). The program is 
reasonably designed under paragraph (f)(4)(iii) because the plan 
provides a reasonable alternative standard (as required under paragraph 
(f)(4)(iv) of this section) to qualify for the reward to all tobacco 
users (a smoking cessation program). The plan discloses, in all 
materials describing the terms of the program, the availability of the 
reasonable alternative standard (including contact information and the 
individual's option to involve his or her personal physician). Thus, the 
program satisfies the requirements of paragraphs (f)(4)(iii), (iv), and 
(v) of this section.
    Example 7--Tobacco use surcharge with alternative program requiring 
actual cessation. (i) Facts. Same facts as Example 6, except the plan 
does not provide participant F with the reward in subsequent years 
unless F actually stops smoking after participating in the tobacco 
cessation program.
    (ii) Conclusion. In this Example 7, the program is not reasonably 
designed under paragraph (f)(4)(iii) of this section and does not 
provide a reasonable alternative standard as required under paragraph 
(f)(4)(iv) of this section. The plan cannot cease to provide a 
reasonable alternative standard merely because the participant did not 
stop smoking after participating in a smoking cessation program. The 
plan must continue to offer a reasonable alternative standard whether it 
is the same or different (such as a new recommendation from F's personal 
physician or a new nicotine replacement therapy).
    Example 8--Tobacco use surcharge with smoking cessation program 
alternative that is not reasonable. (i) Facts. Same facts as Example 6,

[[Page 39]]

except the plan does not facilitate participant F's enrollment in a 
smoking cessation program. Instead the plan advises F to find a program, 
pay for it, and provide a certificate of completion to the plan.
    (ii) Conclusion. In this Example 8, the requirement for F to find 
and pay for F's own smoking cessation program means that the alternative 
program is not reasonable. Accordingly, the plan has not offered a 
reasonable alternative standard that complies with paragraphs 
(f)(4)(iii) and (iv) of this section and the program fails to satisfy 
the requirements of paragraph (f) of this section.

    (5) Applicable percentage. (i) For purposes of this paragraph (f), 
the applicable percentage is 30 percent, except that the applicable 
percentage is increased by an additional 20 percentage points (to 50 
percent) to the extent that the additional percentage is in connection 
with a program designed to prevent or reduce tobacco use.
    (ii) The rules of this paragraph (f)(5) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan. The 
annual premium for employee-only coverage is $6,000 (of which the 
employer pays $4,500 per year and the employee pays $1,500 per year). 
The plan offers employees a health-contingent wellness program with 
several components, focused on exercise, blood sugar, weight, 
cholesterol, and blood pressure. The reward for compliance is an annual 
premium rebate of $600.
    (ii) Conclusion. In this Example 1, the reward for the wellness 
program, $600, does not exceed the applicable percentage of 30 percent 
of the total annual cost of employee-only coverage, $1,800. ($6,000 x 
30% = $1,800.)
    Example 2. (i) Facts. Same facts as Example 1, except the wellness 
program is exclusively a tobacco prevention program. Employees who have 
used tobacco in the last 12 months and who are not enrolled in the 
plan's tobacco cessation program are charged a $1,000 premium surcharge 
(in addition to their employee contribution towards the coverage). 
(Those who participate in the plan's tobacco cessation program are not 
assessed the $1,000 surcharge.)
    (ii) Conclusion. In this Example 2, the reward for the wellness 
program (absence of a $1,000 surcharge), does not exceed the applicable 
percentage of 50 percent of the total annual cost of employee-only 
coverage, $3,000. ($6,000 x 50% = $3,000.)
    Example 3. (i) Facts. Same facts as Example 1, except that, in 
addition to the $600 reward for compliance with the health-contingent 
wellness program, the plan also imposes an additional $2,000 tobacco 
premium surcharge on employees who have used tobacco in the last 12 
months and who are not enrolled in the plan's tobacco cessation program. 
(Those who participate in the plan's tobacco cessation program are not 
assessed the $2,000 surcharge.)
    (ii) Conclusion. In this Example 3, the total of all rewards 
(including absence of a surcharge for participating in the tobacco 
program) is $2,600 ($600 + $2,000 = $2,600), which does not exceed the 
applicable percentage of 50 percent of the total annual cost of 
employee-only coverage ($3,000); and, tested separately, the $600 reward 
for the wellness program unrelated to tobacco use does not exceed the 
applicable percentage of 30 percent of the total annual cost of 
employee-only coverage ($1,800).
    Example 4. (i) Facts. An employer sponsors a group health plan. The 
total annual premium for employee-only coverage (including both employer 
and employee contributions towards the coverage) is $5,000. The plan 
provides a $250 reward to employees who complete a health risk 
assessment, without regard to the health issues identified as part of 
the assessment. The plan also offers a Healthy Heart program, which is a 
health-contingent wellness program, with an opportunity to earn a $1,500 
reward.
    (ii) Conclusion. In this Example 4, even though the total reward for 
all wellness programs under the plan is $1,750 ($250 + $1,500 = $1,750, 
which exceeds the applicable percentage of 30 percent of the cost of the 
annual premium for employee-only coverage ($5,000 x 30% = $1,500)), only 
the reward offered for compliance with the health-contingent wellness 
program ($1,500) is taken into account in determining whether the rules 
of this paragraph (f)(5) are met. (The $250 reward is offered in 
connection with a participatory wellness program and therefore is not 
taken into account.) Accordingly, the health-contingent wellness program 
offers a reward that does not exceed the applicable percentage of 30 
percent of the total annual cost of employee-only coverage.

    (6) Sample language. The following language, or substantially 
similar language, can be used to satisfy the notice requirement of 
paragraphs (f)(3)(v) or (f)(4)(v) of this section: ``Your health plan is 
committed to helping you achieve your best health. Rewards for 
participating in a wellness program are available to all employees. If 
you think you might be unable to meet a standard for a reward under this 
wellness program, you might qualify for an opportunity to earn the same 
reward by different means. Contact us at [insert contact information] 
and we will work with you (and, if you wish, with your doctor) to find a 
wellness program with

[[Page 40]]

the same reward that is right for you in light of your health status.''
    (g) More favorable treatment of individuals with adverse health 
factors permitted--(1) In rules for eligibility. (i) Nothing in this 
section prevents a group health plan or group health insurance issuer 
from establishing more favorable rules for eligibility (described in 
paragraph (b)(1) of this section) for individuals with an adverse health 
factor, such as disability, than for individuals without the adverse 
health factor. Moreover, nothing in this section prevents a plan or 
issuer from charging a higher premium or contribution with respect to 
individuals with an adverse health factor if they would not be eligible 
for the coverage were it not for the adverse health factor. (However, 
other laws, including State insurance laws, may set or limit premium 
rates; these laws are not affected by this section.)
    (ii) The rules of this paragraph (g)(1) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan that 
generally is available to employees, spouses of employees, and dependent 
children until age 26. However, dependent children who are disabled are 
eligible for coverage beyond age 26.
    (ii) Conclusion. In this Example 1, the plan provision allowing 
coverage for disabled dependent children beyond age 26 satisfies this 
paragraph (g)(1) (and thus does not violate this section).
    Example 2. (i) Facts. An employer sponsors a group health plan, 
which is generally available to employees (and members of the employee's 
family) until the last day of the month in which the employee ceases to 
perform services for the employer. The plan generally charges employees 
$50 per month for employee-only coverage and $125 per month for family 
coverage. However, an employee who ceases to perform services for the 
employer by reason of disability may remain covered under the plan until 
the last day of the month that is 12 months after the month in which the 
employee ceased to perform services for the employer. During this 
extended period of coverage, the plan charges the employee $100 per 
month for employee-only coverage and $250 per month for family coverage. 
(This extended period of coverage is without regard to whatever rights 
the employee (or members of the employee's family) may have for COBRA 
continuation coverage.)
    (ii) Conclusion. In this Example 2, the plan provision allowing 
extended coverage for disabled employees and their families satisfies 
this paragraph (g)(1) (and thus does not violate this section). In 
addition, the plan is permitted, under this paragraph (g)(1), to charge 
the disabled employees a higher premium during the extended period of 
coverage.
    Example 3. (i) Facts. To comply with the requirements of a COBRA 
continuation provision, a group health plan generally makes COBRA 
continuation coverage available for a maximum period of 18 months in 
connection with a termination of employment but makes the coverage 
available for a maximum period of 29 months to certain disabled 
individuals and certain members of the disabled individual's family. 
Although the plan generally requires payment of 102 percent of the 
applicable premium for the first 18 months of COBRA continuation 
coverage, the plan requires payment of 150 percent of the applicable 
premium for the disabled individual's COBRA continuation coverage during 
the disability extension if the disabled individual would not be 
entitled to COBRA continuation coverage but for the disability.
    (ii) Conclusion. In this Example 3, the plan provision allowing 
extended COBRA continuation coverage for disabled individuals satisfies 
this paragraph (g)(1) (and thus does not violate this section). In 
addition, the plan is permitted, under this paragraph (g)(1), to charge 
the disabled individuals a higher premium for the extended coverage if 
the individuals would not be eligible for COBRA continuation coverage 
were it not for the disability. (Similarly, if the plan provided an 
extended period of coverage for disabled individuals pursuant to State 
law or plan provision rather than pursuant to a COBRA continuation 
coverage provision, the plan could likewise charge the disabled 
individuals a higher premium for the extended coverage.)

    (2) In premiums or contributions. (i) Nothing in this section 
prevents a group health plan or group health insurance issuer from 
charging individuals a premium or contribution that is less than the 
premium (or contribution) for similarly situated individuals if the 
lower charge is based on an adverse health factor, such as disability.
    (ii) The rules of this paragraph (g)(2) are illustrated by the 
following example:

    Example. (i) Facts. Under a group health plan, employees are 
generally required to pay $50 per month for employee-only coverage and 
$125 per month for family coverage under the plan. However, employees 
who are disabled receive coverage (whether employee-only or family 
coverage) under the plan free of charge.

[[Page 41]]

    (ii) Conclusion. In this Example, the plan provision waiving premium 
payment for disabled employees is permitted under this paragraph (g)(2) 
(and thus does not violate this section).

    (h) No effect on other laws. Compliance with this section is not 
determinative of compliance with any other provision of the PHS Act 
(including the COBRA continuation provisions) or any other State or 
Federal law, such as the Americans with Disabilities Act. Therefore, 
although the rules of this section would not prohibit a plan or issuer 
from treating one group of similarly situated individuals differently 
from another (such as providing different benefit packages to current 
and former employees), other Federal or State laws may require that two 
separate groups of similarly situated individuals be treated the same 
for certain purposes (such as making the same benefit package available 
to COBRA qualified beneficiaries as is made available to active 
employees). In addition, although this section generally does not impose 
new disclosure obligations on plans and issuers, this section does not 
affect any other laws, including those that require accurate disclosures 
and prohibit intentional misrepresentation.
    (i) Applicability dates--(1) Generally. This section applies for 
plan years beginning on or after July 1, 2007.
    (2) Special rule for self-funded nonfederal governmental plans 
exempted under 45 CFR 146.180. (i) If coverage has been denied to any 
individual because the sponsor of a self-funded nonfederal governmental 
plan has elected under Sec.  146.180 to exempt the plan from the 
requirements of this section, and the plan sponsor subsequently chooses 
to bring the plan into compliance with the requirements of this section, 
the plan--
    (A) Must notify the individual that the plan will be coming into 
compliance with the requirements of this section, specify the effective 
date of compliance, and inform the individual regarding any enrollment 
restrictions that may apply under the terms of the plan once the plan is 
in compliance with this section (as a matter of administrative 
convenience, the notice may be disseminated to all employees);
    (B) Must give the individual an opportunity to enroll that continues 
for at least 30 days;
    (C) Must permit coverage to be effective as of the first day of plan 
coverage for which an exemption election under Sec.  146.180 of this 
part (with regard to this section) is no longer in effect; and
    (D) May not treat the individual as a late enrollee or a special 
enrollee.
    (ii) For purposes of this paragraph (i)(2), an individual is 
considered to have been denied coverage if the individual failed to 
apply for coverage because, given an exemption election under Sec.  
146.180 of this part, it was reasonable to believe that an application 
for coverage would have been denied based on a health factor.
    (iii) The rules of this paragraph (i)(2) are illustrated by the 
following examples:

    Example 1. (i) Facts. Individual D was hired by a nonfederal 
governmental employer in June 1999. The employer maintains a self-funded 
group health plan with a plan year beginning on October 1. The plan 
sponsor elected under Sec.  146.180 of this part to exempt the plan from 
the requirements of this section for the plan year beginning October 1, 
2005, and renewed the exemption election for the plan year beginning 
October 1, 2006. Under the terms of the plan while the exemption was in 
effect, employees and their dependents were allowed to enroll when the 
employee was first hired without regard to any health factor. If an 
individual declines to enroll when first eligible, the individual could 
enroll effective October 1 of any plan year if the individual could pass 
a physical examination. The evidence-of-good-health requirement for late 
enrollees, absent an exemption election under Sec.  146.180 of this 
part, would have been in violation of this section. D chose not to 
enroll for coverage when first hired. In February of 2006, D was treated 
for skin cancer but did not apply for coverage under the plan for the 
plan year beginning October 1, 2006, because D assumed D could not meet 
the evidence-of-good-health requirement. With the plan year beginning 
October 1, 2007 the plan sponsor chose not to renew its exemption 
election and brought the plan into compliance with this section. The 
plan notifies individual D (and all other employees) that it will be 
coming into compliance with the requirements of this section. The notice 
specifies that the effective date of compliance will be October 1, 2007, 
explains the applicable enrollment restrictions that will apply under 
the plan, states that individuals will have at least 30 days to enroll, 
and explains that coverage for those

[[Page 42]]

who choose to enroll will be effective as of October 1, 2007. Individual 
D timely requests enrollment in the plan, and coverage commences under 
the plan on October 1, 2007.
    (ii) Conclusion. In this Example 1, the plan complies with this 
paragraph (i)(2).
    Example 2. (i) Facts. Individual E was hired by a nonfederal 
governmental employer in February 1999. The employer maintains a self-
funded group health plan with a plan year beginning on September 1. The 
plan sponsor elected under Sec.  146.180 of this part to exempt the plan 
from the requirements of this section and ``Sec.  146.111 (limitations 
on preexisting condition exclusion periods) for the plan year beginning 
September 1, 2002, and renews the exemption election for the plan years 
beginning September 1, 2003, September 1, 2004, September 1, 2005, and 
September 1, 2006. Under the terms of the plan while the exemption was 
in effect, employees and their dependents were allowed to enroll when 
the employee was first hired without regard to any health factor. If an 
individual declined to enroll when first eligible, the individual could 
enroll effective September 1 of any plan year if the individual could 
pass a physical examination. Also under the terms of the plan, all 
enrollees were subject to a 12-month preexisting condition exclusion 
period, regardless of whether they had creditable coverage. E chose not 
to enroll for coverage when first hired. In June of 2006, E is diagnosed 
as having multiple sclerosis (MS). With the plan year beginning 
September 1, 2007, the plan sponsor chooses to bring the plan into 
compliance with this section, but renews its exemption election with 
regard to limitations on preexisting condition exclusion periods. The 
plan notifies E of her opportunity to enroll, without a physical 
examination, effective September 1, 2007. The plan gives E 30 days to 
enroll. E is subject to a 12-month preexisting condition exclusion 
period with respect to any treatment E receives that is related to E's 
MS, without regard to any prior creditable coverage E may have. 
Beginning September 1, 2008, the plan will cover treatment of E's MS.
    (ii) Conclusion. In this Example 2, the plan complies with the 
requirements of this section. (The plan is not required to comply with 
the requirements of Sec.  146.111 because the plan continues to be 
exempted from those requirements in accordance with the plan sponsor's 
election under Sec.  146.180.)

[71 FR 75046, Dec. 13, 2006, as amended at 74 FR 51688, Oct. 7, 2009; 78 
FR 33187, June 3, 2013; 79 FR 10314, Feb. 24, 2014]



Sec.  146.122  Additional requirements prohibiting discrimination
based on genetic information.

    (a) Definitions. Unless otherwise provided, the definitions in this 
paragraph (a) govern in applying the provisions of this section.
    (1) Collect means, with respect to information, to request, require, 
or purchase such information.
    (2) Family member means, with respect to an individual--
    (i) A dependent (as defined in Sec.  144.103 of this part) of the 
individual; or
    (ii) Any other person who is a first-degree, second-degree, third-
degree, or fourth-degree relative of the individual or of a dependent of 
the individual. Relatives by affinity (such as by marriage or adoption) 
are treated the same as relatives by consanguinity (that is, relatives 
who share a common biological ancestor). In determining the degree of 
the relationship, relatives by less than full consanguinity (such as 
half-siblings, who share only one parent) are treated the same as 
relatives by full consanguinity (such as siblings who share both 
parents).
    (A) First-degree relatives include parents, spouses, siblings, and 
children.
    (B) Second-degree relatives include grandparents, grandchildren, 
aunts, uncles, nephews, and nieces.
    (C) Third-degree relatives include great-grandparents, great-
grandchildren, great aunts, great uncles, and first cousins.
    (D) Fourth-degree relatives include great-great grandparents, great-
great grandchildren, and children of first cousins.
    (3) Genetic information means--
    (i) Subject to paragraphs (a)(3)(ii) and (iii) of this section, with 
respect to an individual, information about--
    (A) The individual's genetic tests (as defined in paragraph (a)(5) 
of this section);
    (B) The genetic tests of family members of the individual;
    (C) The manifestation (as defined in paragraph (a)(6) of this 
section) of a disease or disorder in family members of the individual; 
or
    (D) Any request for, or receipt of, genetic services (as defined in 
paragraph (a)(4) of this section), or participation in clinical research 
which includes genetic services, by the individual or any family member 
of the individual.
    (ii) The term genetic information does not include information about 
the sex or age of any individual.

[[Page 43]]

    (iii) The term genetic information includes--
    (A) With respect to a pregnant woman (or a family member of the 
pregnant woman), genetic information of any fetus carried by the 
pregnant woman; and
    (B) With respect to an individual (or a family member of the 
individual) who is utilizing an assisted reproductive technology, 
genetic information of any embryo legally held by the individual or 
family member.
    (4) Genetic services means --
    (i) A genetic test, as defined in paragraph (a)(5) of this section;
    (ii) Genetic counseling (including obtaining, interpreting, or 
assessing genetic information); or
    (iii) Genetic education.
    (5)(i) Genetic test means an analysis of human DNA, RNA, 
chromosomes, proteins, or metabolites, if the analysis detects 
genotypes, mutations, or chromosomal changes. However, a genetic test 
does not include an analysis of proteins or metabolites that is directly 
related to a manifested disease, disorder, or pathological condition. 
Accordingly, a test to determine whether an individual has a BRCA1 or 
BRCA2 variant is a genetic test. Similarly, a test to determine whether 
an individual has a genetic variant associated with hereditary 
nonpolyposis colorectal cancer is a genetic test. However, an HIV test, 
complete blood count, cholesterol test, liver function test, or test for 
the presence of alcohol or drugs is not a genetic test.
    (ii) The rules of this paragraph (a)(5) are illustrated by the 
following example:

    Example. (i) Facts. Individual A is a newborn covered under a group 
health plan. A undergoes a phenylketonuria (PKU) screening, which 
measures the concentration of a metabolite, phenylalanine, in A's blood. 
In PKU, a mutation occurs in the phenylalanine hydroxylase (PAH) gene 
which contains instructions for making the enzyme needed to break down 
the amino acid phenylalanine. Individuals with the mutation, who have a 
deficiency in the enzyme to break down phenylalanine, have high 
concentrations of phenylalanine.
    (ii) Conclusion. In this Example, the PKU screening is a genetic 
test with respect to A because the screening is an analysis of 
metabolites that detects a genetic mutation.

    (6)(i) Manifestation or manifested means, with respect to a disease, 
disorder, or pathological condition, that an individual has been or 
could reasonably be diagnosed with the disease, disorder, or 
pathological condition by a health care professional with appropriate 
training and expertise in the field of medicine involved. For purposes 
of this section, a disease, disorder, or pathological condition is not 
manifested if a diagnosis is based principally on genetic information.
    (ii) The rules of this paragraph (a)(6) are illustrated by the 
following examples:

    Example 1. (i) Facts. Individual A has a family medical history of 
diabetes. A begins to experience excessive sweating, thirst, and 
fatigue. A's physician examines A and orders blood glucose testing 
(which is not a genetic test). Based on the physician's examination, A's 
symptoms, and test results that show elevated levels of blood glucose, 
A's physician diagnoses A as having adult onset diabetes mellitus (Type 
2 diabetes).
    (ii) Conclusion. In this Example 1, A has been diagnosed by a health 
care professional with appropriate training and expertise in the field 
of medicine involved. The diagnosis is not based principally on genetic 
information. Thus, Type 2 diabetes is manifested with respect to A.
    Example 2. (i) Facts. Individual B has several family members with 
colon cancer. One of them underwent genetic testing which detected a 
mutation in the MSH2 gene associated with hereditary nonpolyposis 
colorectal cancer (HNPCC). B's physician, a health care professional 
with appropriate training and expertise in the field of medicine 
involved, recommends that B undergo a targeted genetic test to look for 
the specific mutation found in B 's relative to determine if B has an 
elevated risk for cancer. The genetic test with respect to B showed that 
B also carries the mutation and is at increased risk to develop 
colorectal and other cancers associated with HNPCC. B has a colonoscopy 
which indicates no signs of disease, and B has no symptoms.
    (ii) Conclusion. In this Example 2, because B has no signs or 
symptoms of colorectal cancer, B has not been and could not reasonably 
be diagnosed with HNPCC. Thus, HNPCC is not manifested with respect to 
B.
    Example 3. (i) Facts. Same facts as Example 2, except that B's 
colonoscopy and subsequent tests indicate the presence of HNPCC. Based 
on the colonoscopy and subsequent test results, B's physician makes a 
diagnosis of HNPCC.
    (ii) Conclusion. In this Example 3, HNPCC is manifested with respect 
to B because a

[[Page 44]]

health care professional with appropriate training and expertise in the 
field of medicine involved has made a diagnosis that is not based 
principally on genetic information.
    Example 4. (i) Facts. Individual C has a family member that has been 
diagnosed with Huntington's Disease. A genetic test indicates that C has 
the Huntington's Disease gene variant. At age 42, C begins suffering 
from occasional moodiness and disorientation, symptoms which are 
associated with Huntington's Disease. C is examined by a neurologist (a 
physician with appropriate training and expertise for diagnosing 
Huntington's Disease). The examination includes a clinical neurological 
exam. The results of the examination do not support a diagnosis of 
Huntington's Disease.
    (ii) Conclusion. In this Example 4, C is not and could not 
reasonably be diagnosed with Huntington's Disease by a health care 
professional with appropriate training and expertise. Therefore, 
Huntington's Disease is not manifested with respect to C.
    Example 5. (i) Facts. Same facts as Example 4, except that C 
exhibits additional neurological and behavioral symptoms, and the 
results of the examination support a diagnosis of Huntington's Disease 
with respect to C.
    (ii) Conclusion. In this Example 5, C could reasonably be diagnosed 
with Huntington's Disease by a health care professional with appropriate 
training and expertise. Therefore, Huntington's Disease is manifested 
with respect to C.

    (7) Underwriting purposes has the meaning given in paragraph (d)(1) 
of this section.
    (b) No group-based discrimination based on genetic information--(1) 
In general. For purposes of this section, a group health plan, and a 
health insurance issuer offering health insurance coverage in connection 
with a group health plan, must not adjust premium or contribution 
amounts for the plan, or any group of similarly situated individuals 
under the plan, on the basis of genetic information. For this purpose, 
``similarly situated individuals'' are those described in Sec.  
146.121(d) of this part.
    (2) Rule of construction. Nothing in paragraph (b)(1) of this 
section (or in paragraph (d)(1) or (d)(2) of this section) limits the 
ability of a health insurance issuer offering health insurance coverage 
in connection with a group health plan to increase the premium for a 
group health plan or a group of similarly situated individuals under the 
plan based on the manifestation of a disease or disorder of an 
individual who is enrolled in the plan. In such a case, however, the 
manifestation of a disease or disorder in one individual cannot also be 
used as genetic information about other group members to further 
increase the premium for a group health plan or a group of similarly 
situated individuals under the plan.
    (3) Examples. The rules of this paragraph (b) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan that 
provides coverage through a health insurance issuer. In order to 
determine the premium rate for the upcoming plan year, the issuer 
reviews the claims experience of individuals covered under the plan and 
other health status information of the individuals, including genetic 
information. The issuer finds that three individuals covered under the 
plan had unusually high claims experience. In addition, the issuer finds 
that the genetic information of two other individuals indicates the 
individuals have a higher probability of developing certain illnesses 
although the illnesses are not manifested at this time. The issuer 
quotes the plan a higher per-participant rate because of both the 
genetic information and the higher claims experience.
    (ii) Conclusion. In this Example 1, the issuer violates the 
provisions of this paragraph (b) because the issuer adjusts the premium 
based on genetic information. However, if the adjustment related solely 
to claims experience, the adjustment would not violate the requirements 
of this section (nor would it violate the requirements of paragraph (c) 
of Sec.  146.121 of this part, which prohibits discrimination in 
individual premiums or contributions based on a health factor but 
permits increases in the group rate based on a health factor).
    Example 2. (i) Facts. An employer sponsors a group health plan that 
provides coverage through a health insurance issuer. In order to 
determine the premium rate for the upcoming plan year, the issuer 
reviews the claims experience of individuals covered under the plan and 
other health status information of the individuals, including genetic 
information. The issuer finds that Employee A has made claims for 
treatment of polycystic kidney disease. A also has two dependent 
children covered under the plan. The issuer quotes the plan a higher 
per-participant rate because of both A's claims experience and the 
family medical history of A's children (that is, the fact that A has the 
disease).
    (ii) Conclusion. In this Example 2, the issuer violates the 
provisions of this paragraph (b)

[[Page 45]]

because, by taking the likelihood that A's children may develop 
polycystic kidney disease into account in computing the rate for the 
plan, the issuer adjusts the premium based on genetic information 
relating to a condition that has not been manifested in A's children. 
However, it is permissible for the issuer to increase the premium based 
on A's claims experience.

    (c) Limitation on requesting or requiring genetic testing--(1) 
General rule. Except as otherwise provided in this paragraph (c), a 
group health plan, and a health insurance issuer offering health 
insurance coverage in connection with a group health plan, must not 
request or require an individual or a family member of the individual to 
undergo a genetic test.
    (2) Health care professional may recommend a genetic test. Nothing 
in paragraph (c)(1) of this section limits the authority of a health 
care professional who is providing health care services to an individual 
to request that the individual undergo a genetic test.
    (3) Examples. The rules of paragraphs (c)(1) and (2) of this section 
are illustrated by the following examples:

    Example 1. (i) Facts. Individual A goes to a physician for a routine 
physical examination. The physician reviews A's family medical history 
and A informs the physician that A's mother has been diagnosed with 
Huntington's Disease. The physician advises A that Huntington's Disease 
is hereditary and recommends that A undergo a genetic test.
    (ii) Conclusion. In this Example 1, the physician is a health care 
professional who is providing health care services to A. Therefore, the 
physician's recommendation that A undergo the genetic test does not 
violate this paragraph (c).
    Example 2. (i) Facts. Individual B is covered by a health 
maintenance organization (HMO). B is a child being treated for leukemia. 
B's physician, who is employed by the HMO, is considering a treatment 
plan that includes six-mercaptopurine, a drug for treating leukemia in 
most children. However, the drug could be fatal if taken by a small 
percentage of children with a particular gene variant. B's physician 
recommends that B undergo a genetic test to detect this variant before 
proceeding with this course of treatment.
    (ii) Conclusion. In this Example 2, even though the physician is 
employed by the HMO, the physician is nonetheless a health care 
professional who is providing health care services to B. Therefore, the 
physician's recommendation that B undergo the genetic test does not 
violate this paragraph (c).

    (4) Determination regarding payment--(i) In general. As provided in 
this paragraph (c)(4), nothing in paragraph (c)(1) of this section 
precludes a plan or issuer from obtaining and using the results of a 
genetic test in making a determination regarding payment. For this 
purpose, ``payment'' has the meaning given such term in Sec.  164.501 of 
the privacy regulations issued under the Health Insurance Portability 
and Accountability Act. Thus, if a plan or issuer conditions payment for 
an item or service based on its medical appropriateness and the medical 
appropriateness of the item or service depends on the genetic makeup of 
a patient, then the plan or issuer is permitted to condition payment for 
the item or service on the outcome of a genetic test. The plan or issuer 
may also refuse payment if the patient does not undergo the genetic 
test.
    (ii) Limitation. A plan or issuer is permitted to request only the 
minimum amount of information necessary to make a determination 
regarding payment. The minimum amount of information necessary is 
determined in accordance with the minimum necessary standard in Sec.  
164.502(b) of the privacy regulations issued under the Health Insurance 
Portability and Accountability Act.
    (iii) Examples. See paragraph (e) of this section for examples 
illustrating the rules of this paragraph (c)(4), as well as other 
provisions of this section.
    (5) Research exception. Notwithstanding paragraph (c)(1) of this 
section, a plan or issuer may request, but not require, that a 
participant or beneficiary undergo a genetic test if all of the 
conditions of this paragraph (c)(5) are met:
    (i) Research in accordance with Federal regulations and applicable 
State or local law or regulations. The plan or issuer makes the request 
pursuant to research, as defined in Sec.  46.102(d) of this subtitle, 
that complies with part 46 of this subtitle or equivalent Federal 
regulations, and any applicable State or local law or regulations for 
the protection of human subjects in research.
    (ii) Written request for participation in research. The plan or 
issuer makes the request in writing, and the request clearly indicates 
to each participant or

[[Page 46]]

beneficiary (or, in the case of a minor child, to the legal guardian of 
the beneficiary) that--
    (A) Compliance with the request is voluntary; and
    (B) Noncompliance will have no effect on eligibility for benefits 
(as described in Sec.  146.121(b)(1) of this part) or premium or 
contribution amounts.
    (iii) Prohibition on underwriting. No genetic information collected 
or acquired under this paragraph (c)(5) can be used for underwriting 
purposes (as described in paragraph (d)(1) of this section).
    (iv) Notice to Federal agencies. The plan or issuer completes a copy 
of the ``Notice of Research Exception under the Genetic Information 
Nondiscrimination Act'' authorized by the Secretary and provides the 
notice to the address specified in the instructions thereto.
    (d) Prohibitions on collection of genetic information--(1) For 
underwriting purposes--(i) General rule. A group health plan, and a 
health insurance issuer offering health insurance coverage in connection 
with a group health plan, must not collect (as defined in paragraph 
(a)(1) of this section) genetic information for underwriting purposes. 
See paragraph (e) of this section for examples illustrating the rules of 
this paragraph (d)(1), as well as other provisions of this section.
    (ii) Underwriting purposes defined. Subject to paragraph (d)(1)(iii) 
of this section, underwriting purposes means, with respect to any group 
health plan, or health insurance coverage offered in connection with a 
group health plan--
    (A) Rules for, or determination of, eligibility (including 
enrollment and continued eligibility) for benefits under the plan or 
coverage as described in Sec.  146.121(b)(1)(ii) of this part (including 
changes in deductibles or other cost-sharing mechanisms in return for 
activities such as completing a health risk assessment or participating 
in a wellness program);
    (B) The computation of premium or contribution amounts under the 
plan or coverage (including discounts, rebates, payments in kind, or 
other premium differential mechanisms in return for activities such as 
completing a health risk assessment or participating in a wellness 
program);
    (C) The application of any preexisting condition exclusion under the 
plan or coverage; and
    (D) Other activities related to the creation, renewal, or 
replacement of a contract of health insurance or health benefits.
    (iii) Medical appropriateness. If an individual seeks a benefit 
under a group health plan or health insurance coverage, the plan or 
coverage may limit or exclude the benefit based on whether the benefit 
is medically appropriate, and the determination of whether the benefit 
is medically appropriate is not within the meaning of underwriting 
purposes. Accordingly, if an individual seeks a benefit under the plan 
and the plan or issuer conditions the benefit based on its medical 
appropriateness and the medical appropriateness of the benefit depends 
on genetic information of the individual, then the plan or issuer is 
permitted to condition the benefit on the genetic information. A plan or 
issuer is permitted to request only the minimum amount of genetic 
information necessary to determine medical appropriateness. The plan or 
issuer may deny the benefit if the patient does not provide the genetic 
information required to determine medical appropriateness. If an 
individual is not seeking a benefit, the medical appropriateness 
exception of this paragraph (d)(1)(iii) to the definition of 
underwriting purposes does not apply. See paragraph (e) of this section 
for examples illustrating the medical appropriateness provisions of this 
paragraph (d)(1)(iii), as well as other provisions of this section.
    (2) Prior to or in connection with enrollment--(i) In general. A 
group health plan, and a health insurance issuer offering health 
insurance coverage in connection with a group health plan, must not 
collect genetic information with respect to any individual prior to that 
individual's effective date of coverage under that plan or coverage, nor 
in connection with the rules for eligibility (as defined in Sec.  
146.121(b)(1)(ii) of this part) that apply to that individual.

[[Page 47]]

Whether or not an individual's information is collected prior to that 
individual's effective date of coverage is determined at the time of 
collection.
    (ii) Incidental collection exception--(A) In general. If a group 
health plan, or a health insurance issuer offering health insurance 
coverage in connection with a group health plan, obtains genetic 
information incidental to the collection of other information concerning 
any individual, the collection is not a violation of this paragraph 
(d)(2), as long as the collection is not for underwriting purposes in 
violation of paragraph (d)(1) of this section.
    (B) Limitation. The incidental collection exception of this 
paragraph (d)(2)(ii) does not apply in connection with any collection 
where it is reasonable to anticipate that health information will be 
received, unless the collection explicitly states that genetic 
information should not be provided.
    (3) Examples. The rules of this paragraph (d) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan provides a premium 
reduction to enrollees who complete a health risk assessment. The health 
risk assessment is requested to be completed after enrollment. Whether 
or not it is completed or what responses are given on it has no effect 
on an individual's enrollment status, or on the enrollment status of 
members of the individual's family. The health risk assessment includes 
questions about the individual's family medical history.
    (ii) Conclusion. In this Example 1, the health risk assessment 
includes a request for genetic information (that is, the individual's 
family medical history). Because completing the health risk assessment 
results in a premium reduction, the request for genetic information is 
for underwriting purposes. Consequently, the request violates the 
prohibition on the collection of genetic information in paragraph (d)(1) 
of this section.
    Example 2. (i) Facts. The same facts as Example 1, except there is 
no premium reduction or any other reward for completing the health risk 
assessment.
    (ii) Conclusion. In this Example 2, the request is not for 
underwriting purposes, nor is it prior to or in connection with 
enrollment. Therefore, it does not violate the prohibition on the 
collection of genetic information in this paragraph (d).
    Example 3. (i) Facts. A group health plan requests that enrollees 
complete a health risk assessment prior to enrollment, and includes 
questions about the individual's family medical history. There is no 
reward or penalty for completing the health risk assessment.
    (ii) Conclusion. In this Example 3, because the health risk 
assessment includes a request for genetic information (that is, the 
individual's family medical history), and requests the information prior 
to enrollment, the request violates the prohibition on the collection of 
genetic information in paragraph (d)(2) of this section. Moreover, 
because it is a request for genetic information, it is not an incidental 
collection under paragraph (d)(2)(ii) of this section.
    Example 4. (i) Facts. The facts are the same as in Example 1, except 
there is no premium reduction or any other reward given for completion 
of the health risk assessment. However, certain people completing the 
health risk assessment may become eligible for additional benefits under 
the plan by being enrolled in a disease management program based on 
their answers to questions about family medical history. Other people 
may become eligible for the disease management program based solely on 
their answers to questions about their individual medical history.
    (ii) Conclusion. In this Example 4, the request for information 
about an individual's family medical history could result in the 
individual being eligible for benefits for which the individual would 
not otherwise be eligible. Therefore, the questions about family medical 
history on the health risk assessment are a request for genetic 
information for underwriting purposes and are prohibited under this 
paragraph (d). Although the plan conditions eligibility for the disease 
management program based on determinations of medical appropriateness, 
the exception for determinations of medical appropriateness does not 
apply because the individual is not seeking benefits.
    Example 5. (i) Facts. A group health plan requests enrollees to 
complete two distinct health risk assessments (HRAs) after and unrelated 
to enrollment. The first HRA instructs the individual to answer only for 
the individual and not for the individual's family. The first HRA does 
not ask about any genetic tests the individual has undergone or any 
genetic services the individual has received. The plan offers a reward 
for completing the first HRA. The second HRA asks about family medical 
history and the results of genetic tests the individual has undergone. 
The plan offers no reward for completing the second HRA and the 
instructions make clear that completion of the second HRA is wholly 
voluntary and will not affect the reward given for completion of the 
first HRA.
    (ii) Conclusion. In this Example 5, no genetic information is 
collected in connection with the first HRA, which offers a reward, and 
no benefits or other rewards are conditioned on the request for genetic 
information

[[Page 48]]

in the second HRA. Consequently, the request for genetic information in 
the second HRA is not for underwriting purposes, and the two HRAs do not 
violate the prohibition on the collection of genetic information in this 
paragraph (d).
    Example 6. (i) Facts. A group health plan waives its annual 
deductible for enrollees who complete an HRA. The HRA is requested to be 
completed after enrollment. Whether or not the HRA is completed or what 
responses are given on it has no effect on an individual's enrollment 
status, or on the enrollment status of members of the individual's 
family. The HRA does not include any direct questions about the 
individual's genetic information (including family medical history). 
However, the last question reads, ``Is there anything else relevant to 
your health that you would like us to know or discuss with you?''
    (ii) Conclusion. In this Example 6, the plan's request for medical 
information does not explicitly state that genetic information should 
not be provided. Therefore, any genetic information collected in 
response to the question is not within the incidental collection 
exception and is prohibited under this paragraph (d).
    Example 7. (i) Facts. Same facts as Example 6, except that the last 
question goes on to state, ``In answering this question, you should not 
include any genetic information. That is, please do not include any 
family medical history or any information related to genetic testing, 
genetic services, genetic counseling, or genetic diseases for which you 
believe you may be at risk.''
    (ii) Conclusion. In this Example 7, the plan's request for medical 
information explicitly states that genetic information should not be 
provided. Therefore, any genetic information collected in response to 
the question is within the incidental collection exception. However, the 
plan may not use any genetic information it obtains incidentally for 
underwriting purposes.
    Example 8. (i) Facts. Issuer M acquires Issuer N. M requests N's 
records, stating that N should not provide genetic information and 
should review the records to excise any genetic information. N assembles 
the data requested by M and, although N reviews it to delete genetic 
information, the data from a specific region included some individuals' 
family medical history. Consequently, M receives genetic information 
about some of N's covered individuals.
    (ii) Conclusion. In this Example 8, M's request for health 
information explicitly stated that genetic information should not be 
provided. Therefore, the collection of genetic information was within 
the incidental collection exception. However, M may not use the genetic 
information it obtained incidentally for underwriting purposes.

    (e) Examples regarding determinations of medical appropriateness. 
The application of the rules of paragraphs (c) and (d) of this section 
to plan or issuer determinations of medical appropriateness is 
illustrated by the following examples:

    Example 1. (i) Facts. Individual A group health plan covers genetic 
testing for celiac disease for individuals who have family members with 
this condition. After A's son is diagnosed with celiac disease, A 
undergoes a genetic test and promptly submits a claim for the test to 
A's issuer for reimbursement. The issuer asks A to provide the results 
of the genetic test before the claim is paid.
    (ii) Conclusion. In this Example 1, under the rules of paragraph 
(c)(4) of this section the issuer is permitted to request only the 
minimum amount of information necessary to make a decision regarding 
payment. Because the results of the test are not necessary for the 
issuer to make a decision regarding the payment of A's claim, the 
issuer's request for the results of the genetic test violates paragraph 
(c) of this section.
    Example 2. (i) Facts. Individual B's group health plan covers a 
yearly mammogram for participants and beneficiaries starting at age 40, 
or at age 30 for those with increased risk for breast cancer, including 
individuals with BRCA1 or BRCA2 gene mutations. B is 33 years old and 
has the BRCA2 mutation. B undergoes a mammogram and promptly submits a 
claim to B's plan for reimbursement. Following an established policy, 
the plan asks B for evidence of increased risk of breast cancer, such as 
the results of a genetic test or a family history of breast cancer, 
before the claim for the mammogram is paid. This policy is applied 
uniformly to all similarly situated individuals and is not directed at 
individuals based on any genetic information.
    (ii) Conclusion. In this Example 2, the plan does not violate 
paragraphs (c) or (d) of this section. Under paragraph (c), the plan is 
permitted to request and use the results of a genetic test to make a 
determination regarding payment, provided the plan requests only the 
minimum amount of information necessary. Because the medical 
appropriateness of the mammogram depends on the genetic makeup of the 
patient, the minimum amount of information necessary includes the 
results of the genetic test. Similarly, the plan does not violate 
paragraph (d) of this section because the plan is permitted to request 
genetic information in making a determination regarding the medical 
appropriateness of a claim if the genetic information is necessary to 
make the determination (and if the genetic information is not used for 
underwriting purposes).

[[Page 49]]

    Example 3. (i) Facts. Individual C was previously diagnosed with and 
treated for breast cancer, which is currently in remission. In 
accordance with the recommendation of C's physician, C has been taking a 
regular dose of tamoxifen to help prevent a recurrence. C's group health 
plan adopts a new policy requiring patients taking tamoxifen to undergo 
a genetic test to ensure that tamoxifen is medically appropriate for 
their genetic makeup. In accordance with, at the time, the latest 
scientific research, tamoxifen is not helpful in up to 7 percent of 
breast cancer patients, those with certain variations of the gene for 
making the CYP2D6 enzyme. If a patient has a gene variant 
making tamoxifen not medically appropriate, the plan does not pay for 
the tamoxifen prescription.
    (ii) Conclusion. In this Example 3, the plan does not violate 
paragraph (c) of this section if it conditions future payments for the 
tamoxifen prescription on C's undergoing a genetic test to determine 
what genetic markers C has for making the CYP2D6 enzyme. Nor 
does the plan violate paragraph (c) of this section if the plan refuses 
future payment if the results of the genetic test indicate that 
tamoxifen is not medically appropriate for C.
    Example 4. (i) Facts. A group health plan offers a diabetes disease 
management program to all similarly situated individuals for whom it is 
medically appropriate based on whether the individuals have or are at 
risk for diabetes. The program provides enhanced benefits related only 
to diabetes for individuals who qualify for the program. The plan sends 
out a notice to all participants that describes the diabetes disease 
management program and explains the terms for eligibility. Individuals 
interested in enrolling in the program are advised to contact the plan 
to demonstrate that they have diabetes or that they are at risk for 
diabetes. For individuals who do not currently have diabetes, genetic 
information may be used to demonstrate that an individual is at risk.
    (ii) Conclusion. In this Example 4, the plan may condition benefits 
under the disease management program upon a showing by an individual 
that the individual is at risk for diabetes, even if such showing may 
involve genetic information, provided that the plan requests genetic 
information only when necessary to make a determination regarding 
whether the disease management program is medically appropriate for the 
individual and only requests the minimum amount of information necessary 
to make that determination.
    Example 5. (i) Facts. Same facts as Example 4, except that the plan 
includes a questionnaire that asks about the occurrence of diabetes in 
members of the individual's family as part of the notice describing the 
disease management program.
    (ii) Conclusion. In this Example 5, the plan violates the 
requirements of paragraph (d)(1) of this section because the requests 
for genetic information are not limited to those situations in which it 
is necessary to make a determination regarding whether the disease 
management program is medically appropriate for the individuals.
    Example 6. (i) Facts. Same facts as Example 4, except the disease 
management program provides an enhanced benefit in the form of a lower 
annual deductible to individuals under the program; the lower deductible 
applies with respect to all medical expenses incurred by the individual. 
Thus, whether or not a claim relates to diabetes, the individual is 
provided with a lower deductible based on the individual providing the 
plan with genetic information.
    (ii) Conclusion. In this Example 6, because the enhanced benefits 
include benefits not related to the determination of medical 
appropriateness, making available the enhanced benefits is within the 
meaning of underwriting purposes. Accordingly, the plan may not request 
or require genetic information (including family history information) in 
determining eligibility for enhanced benefits under the program because 
such a request would be for underwriting purposes and would violate 
paragraph (d)(1) of this section.

    (f) Applicability date. This section applies for plan years 
beginning on or after December 7, 2009.

[74 FR 51688, Oct. 7, 2009]



Sec.  146.123  Special rule allowing integration of Health Reimbursement
Arrangements (HRAs) and other account-based group health plans with 
individual health 
          insurance coverage and Medicare and prohibiting discrimination 
          in HRAs and other account-based group health plans.

    (a) Scope. This section applies to health reimbursement arrangements 
(HRAs) and other account-based group health plans, as defined in Sec.  
147.126(d)(6)(i) of this subchapter. For ease of reference, the term 
``HRA'' is used in this section to include other account-based group 
health plans. For related regulations, see 26 CFR 1.36B-2(c)(3)(i) and 
(c)(5), 29 CFR 2510.3-1(l), and 45 CFR 155.420.
    (b) Purpose. This section provides the conditions that an HRA must 
satisfy in order to be integrated with individual health insurance 
coverage for purposes of Public Health Service Act (PHS Act) sections 
2711 and 2713 and Sec.  147.126(d)(4)

[[Page 50]]

of this subchapter (referred to as an individual coverage HRA). This 
section also allows an individual coverage HRA to be integrated with 
Medicare for purposes of PHS Act sections 2711 and 2713 and Sec.  
147.126(d)(4) of this subchapter, subject to the conditions provided in 
this section (see paragraph (e) of this section). Some of the conditions 
set forth in this section specifically relate to compliance with PHS Act 
sections 2711 and 2713 and some relate to the effect of having or being 
offered an individual coverage HRA on eligibility for the premium tax 
credit under section 36B of the Internal Revenue Code (Code). In 
addition, this section provides conditions that an individual coverage 
HRA must satisfy in order to comply with the nondiscrimination 
provisions in PHS Act section 2705 and that are consistent with the 
provisions of the Patient Protection and Affordable Care Act, Public Law 
111-148 (124 Stat. 119 (2010)), and the Health Care and Education 
Reconciliation Act of 2010, Public Law 111-152 (124 Stat. 1029 (2010)), 
each as amended, that are designed to create a competitive individual 
market. These conditions are intended to prevent an HRA plan sponsor 
from intentionally or unintentionally, directly or indirectly, steering 
any participants or dependents with adverse health factors away from its 
traditional group health plan, if any, and toward individual health 
insurance coverage.
    (c) General rule. An HRA will be considered to be integrated with 
individual health insurance coverage for purposes of PHS Act sections 
2711 and 2713 and Sec.  147.126(d)(4) of this subchapter and will not be 
considered to discriminate in violation of PHS Act section 2705 solely 
because it is integrated with individual health insurance coverage, 
provided that the conditions of this paragraph (c) are satisfied. See 
paragraph (e) of this section for how these conditions apply to an 
individual coverage HRA integrated with Medicare. For purposes of this 
section, medical care expenses means medical care expenses as defined in 
Sec.  147.126(d)(6)(ii) of this subchapter and Exchange means Exchange 
as defined in Sec.  155.20 of this subchapter.
    (1) Enrollment in individual health insurance coverage--(i) In 
general. The HRA must require that the participant and any dependent(s) 
are enrolled in individual health insurance coverage that is subject to 
and complies with the requirements in PHS Act sections 2711 (and Sec.  
147.126(a)(2) of this subchapter) and PHS Act section 2713 (and Sec.  
147.130(a)(1) of this subchapter), for each month that the individual(s) 
are covered by the HRA. For purposes of this paragraph (c), all 
individual health insurance coverage, except for individual health 
insurance coverage that consists solely of excepted benefits, is treated 
as being subject to and complying with PHS Act sections 2711 and 2713. 
References to individual health insurance coverage in this paragraph (c) 
do not include individual health insurance coverage that consists solely 
of excepted benefits.
    (ii) Forfeiture. The HRA must provide that if any individual covered 
by the HRA ceases to be covered by individual health insurance coverage, 
the HRA will not reimburse medical care expenses that are incurred by 
that individual after the individual health insurance coverage ceases. 
In addition, if the participant and all dependents covered by the 
participant's HRA cease to be covered by individual health insurance 
coverage, the participant must forfeit the HRA. In either case, the HRA 
must reimburse medical care expenses incurred by the individual prior to 
the cessation of individual health insurance coverage to the extent the 
medical care expenses are otherwise covered by the HRA, but the HRA may 
limit the period to submit medical care expenses for reimbursement to a 
reasonable specified time period. If a participant or dependent loses 
coverage under the HRA for a reason other than cessation of individual 
health insurance coverage, COBRA and other continuation coverage 
requirements may apply.
    (iii) Grace periods and retroactive termination of individual health 
insurance coverage. In the event an individual is initially enrolled in 
individual health insurance coverage and subsequently timely fails to 
pay premiums for the

[[Page 51]]

coverage, with the result that the individual is in a grace period, the 
individual is considered to be enrolled in individual health insurance 
coverage for purposes of this paragraph (c)(1) and the individual 
coverage HRA must reimburse medical care expenses incurred by the 
individual during that time period to the extent the medical care 
expenses are otherwise covered by the HRA. If the individual fails to 
pay the applicable premium(s) by the end of the grace period and the 
coverage is cancelled or terminated, including retroactively, or if the 
individual health insurance coverage is cancelled or terminated 
retroactively for some other reason (for example, a rescission), an 
individual coverage HRA must require that a participant notify the HRA 
that coverage has been cancelled or terminated and the date on which the 
cancellation or termination is effective. After the individual coverage 
HRA has received the notice of cancellation or termination, the HRA may 
not reimburse medical care expenses incurred on and after the date the 
individual health insurance coverage was cancelled or terminated, which 
is considered to be the date of termination of coverage under the HRA.
    (2) No traditional group health plan may be offered to same 
participants. To the extent a plan sponsor offers any class of employees 
(as defined in paragraph (d) of this section) an individual coverage 
HRA, the plan sponsor may not also offer a traditional group health plan 
to the same class of employees, except as provided in paragraph (d)(5) 
of this section. For purposes of this section, a traditional group 
health plan is any group health plan other than either an account-based 
group health plan or a group health plan that consists solely of 
excepted benefits. Therefore, a plan sponsor may not offer a choice 
between an individual coverage HRA or a traditional group health plan to 
any participant or dependent.
    (3) Same terms requirement--(i) In general. If a plan sponsor offers 
an individual coverage HRA to a class of employees described in 
paragraph (d) of this section, the HRA must be offered on the same terms 
to all participants within the class, except as provided in paragraphs 
(c)(3)(ii) through (vi) and (d)(5) of this section.
    (ii) Carryover amounts, salary reduction arrangements, and transfer 
amounts. Amounts that are not used to reimburse medical care expenses 
for any plan year that are made available to participants in later plan 
years are disregarded for purposes of determining whether an HRA is 
offered on the same terms, provided that the method for determining 
whether participants have access to unused amounts in future years, and 
the methodology and formula for determining the amounts of unused funds 
which they may access in future years, is the same for all participants 
in a class of employees. In addition, the ability to pay the portion of 
the premium for individual health insurance coverage that is not covered 
by the HRA, if any, by using a salary reduction arrangement under 
section 125 of the Code is considered to be a term of the HRA for 
purposes of this paragraph (c)(3). Therefore, an HRA is not provided on 
the same terms unless the salary reduction arrangement, if made 
available to any participant in a class of employees, is made available 
on the same terms to all participants (other than former employees, as 
defined in paragraph (c)(3)(iv) of this section) in the class of 
employees. Further, to the extent that a participant in an individual 
coverage HRA was previously covered by another HRA and the current 
individual coverage HRA makes available amounts that were not used to 
reimburse medical care expenses under the prior HRA (transferred 
amounts), the transferred amounts are disregarded for purposes of 
determining whether the HRA is offered on the same terms, provided that 
if the HRA makes available transferred amounts, it does so on the same 
terms for all participants in the class of employees.
    (iii) Permitted variation. An HRA does not fail to be provided on 
the same terms solely because the maximum dollar amount made available 
to participants in a class of employees to reimburse medical care 
expenses for any plan year increases in accordance with paragraph 
(c)(3)(iii)(A) or (B) of this section.

[[Page 52]]

    (A) Variation due to number of dependents. An HRA does not fail to 
be provided on the same terms to participants in a class of employees 
solely because the maximum dollar amount made available to those 
participants to reimburse medical care expenses for any plan year 
increases as the number of the participant's dependents who are covered 
under the HRA increases, so long as the same maximum dollar amount 
attributable to the increase in family size is made available to all 
participants in that class of employees with the same number of 
dependents covered by the HRA.
    (B) Variation due to age. An HRA does not fail to be provided on the 
same terms to participants in a class of employees solely because the 
maximum dollar amount made available under the terms of the HRA to those 
participants to reimburse medical care expenses for any plan year 
increases as the age of the participant increases, so long as the 
requirements in paragraphs (c)(3)(iii)(B)(1) and (2) of this section are 
satisfied. For the purpose of this paragraph (c)(3)(iii)(B), the plan 
sponsor may determine the age of the participant using any reasonable 
method for a plan year, so long as the plan sponsor determines each 
participant's age for the purpose of this paragraph (c)(3)(iii)(B) using 
the same method for all participants in the class of employees for the 
plan year and the method is determined prior to the plan year.
    (1) The same maximum dollar amount attributable to the increase in 
age is made available to all participants who are the same age.
    (2) The maximum dollar amount made available to the oldest 
participant(s) is not more than three times the maximum dollar amount 
made available to the youngest participant(s).
    (iv) Former employees. An HRA does not fail to be treated as 
provided on the same terms if the plan sponsor offers the HRA to some, 
but not all, former employees within a class of employees. However, if a 
plan sponsor offers the HRA to one or more former employees within a 
class of employees, the HRA must be offered to the former employee(s) on 
the same terms as to all other employees within the class, except as 
provided in paragraph (c)(3)(ii) of this section. For purposes of this 
section, a former employee is an employee who is no longer performing 
services for the employer.
    (v) New employees or new dependents. For a participant whose 
coverage under the HRA becomes effective later than the first day of the 
plan year, the HRA does not fail to be treated as being provided on the 
same terms to the participant if the maximum dollar amount made 
available to the participant either is the same as the maximum dollar 
amount made available to participants in the participant's class of 
employees whose coverage became effective as of the first day of the 
plan year, or is pro-rated consistent with the portion of the plan year 
in which the participant is covered by the HRA. Similarly, if the HRA 
provides for variation in the maximum amount made available to 
participants in a class of employees based on the number of a 
participant's dependents covered by the HRA, and the number of a 
participant's dependents covered by the HRA changes during a plan year 
(either increasing or decreasing), the HRA does not fail to be treated 
as being provided on the same terms to the participant if the maximum 
dollar amount made available to the participant either is the same as 
the maximum dollar amount made available to participants in the 
participant's class of employees who had the same number of dependents 
covered by the HRA on the first day of the plan year or is pro-rated for 
the remainder of the plan year after the change in the number of the 
participant's dependents covered by the HRA consistent with the portion 
of the plan year in which that number of dependents are covered by the 
HRA. The method the HRA uses to determine amounts made available for 
participants whose coverage under the HRA is effective later than the 
first day of the plan year or who have changes in the number of 
dependents covered by the HRA during a plan year must be the same for 
all participants in the class of employees and the method must be 
determined prior to the beginning of the plan year.
    (vi) HSA-compatible HRAs. An HRA does not fail to be treated as 
provided

[[Page 53]]

on the same terms if the plan sponsor offers participants in a class of 
employees a choice between an HSA-compatible individual coverage HRA and 
an individual coverage HRA that is not HSA compatible, provided both 
types of HRAs are offered to all participants in the class of employees 
on the same terms. For the purpose of this paragraph (c)(3)(vi), an HSA-
compatible individual coverage HRA is an individual coverage HRA that is 
limited in accordance with applicable guidance under section 223 of the 
Code such that an individual covered by such an HRA is not disqualified 
from being an eligible individual under section 223 of the Code.
    (vii) Examples. The following examples illustrate the provisions of 
this paragraph (c)(3), without taking into account the provisions of 
paragraph (d) of this section. In each example, the HRA is an individual 
coverage HRA that has a calendar year plan year and may reimburse any 
medical care expenses, including premiums for individual health 
insurance coverage (except as provided in paragraph (c)(3)(vii)(E) of 
this section (Example 5)). Further, in each example, assume the HRA is 
offered on the same terms, except as otherwise specified in the example 
and that no participants or dependents are Medicare beneficiaries.
    (A) Example 1: Carryover amounts permitted--(1) Facts. For 2020 and 
again for 2021, Plan Sponsor A offers all employees $7,000 each in an 
HRA, and the HRA provides that amounts that are unused at the end of a 
plan year may be carried over to the next plan year, with no 
restrictions on the use of the carryover amounts compared to the use of 
newly available amounts. At the end of 2020, some employees have used 
all of the funds in their HRAs, while other employees have balances 
remaining that range from $500 to $1,750 that are carried over to 2021 
for those employees.
    (2) Conclusion. The same terms requirement of this paragraph (c)(3) 
is satisfied in this paragraph (c)(3)(vii)(A) (Example 1) for 2020 
because Plan Sponsor A offers all employees the same amount, $7,000, in 
an HRA for that year. The same terms requirement is also satisfied for 
2021 because Plan Sponsor A again offers all employees the same amount 
for that year, and the carryover amounts that some employees have are 
disregarded in applying the same terms requirement because the amount of 
the carryover for each employee (that employee's balance) and each 
employee's access to the carryover amounts is based on the same terms.
    (B) Example 2: Employees hired after the first day of the plan 
year--(1) Facts. For 2020, Plan Sponsor B offers all employees employed 
on January 1, 2020, $7,000 each in an HRA for the plan year. Employees 
hired after January 1, 2020, are eligible to enroll in the HRA with an 
effective date of the first day of the month following their date of 
hire, as long as they have enrolled in individual health insurance 
coverage effective on or before that date, and the amount offered to 
these employees is pro-rated based on the number of months remaining in 
the plan year, including the month which includes their coverage 
effective date.
    (2) Conclusion. The same terms requirement of this paragraph (c)(3) 
is satisfied in this paragraph (c)(3)(vii)(B) (Example 2) for 2020 
because Plan Sponsor B offers all employees employed on the first day of 
the plan year the same amount, $7,000, in an HRA for that plan year and 
all employees hired after January 1, 2020, a pro-rata amount based on 
the portion of the plan year during which they are enrolled in the HRA.
    (C) Example 3: HRA amounts offered vary based on number of 
dependents--(1) Facts. For 2020, Plan Sponsor C offers its employees the 
following amounts in an HRA: $1,500, if the employee is the only 
individual covered by the HRA; $3,500, if the employee and one dependent 
are covered by the HRA; and $5,000, if the employee and more than one 
dependent are covered by the HRA.
    (2) Conclusion. The same terms requirement of this paragraph (c)(3) 
is satisfied in this paragraph (c)(3)(vii)(C) (Example 3) because 
paragraph (c)(3)(iii)(A) of this section allows the maximum dollar 
amount made available in an HRA to increase as the number of the 
participant's dependents covered by the HRA increases and Plan Sponsor C 
makes the same amount available to each employee with the

[[Page 54]]

same number of dependents covered by the HRA.
    (D) Example 4: HRA amounts offered vary based on increases in 
employees' ages--(1) Facts. For 2020, Plan Sponsor D offers its 
employees the following amounts in an HRA: $1,000 each for employees age 
25 to 35; $2,000 each for employees age 36 to 45; $2,500 each for 
employees age 46 to 55; and $4,000 each for employees over age 55.
    (2) Conclusion. The same terms requirement of this paragraph (c)(3) 
is not satisfied in this paragraph (c)(3)(vii)(D) (Example 4) because 
the terms of the HRA provide the oldest participants (those over age 55) 
with more than three times the amount made available to the youngest 
participants (those ages 25 to 35), in violation of paragraph 
(c)(3)(iii)(B)(2) of this section.
    (E) Example 5: Application of same terms requirement to premium only 
HRA--(1) Facts. For 2020, Plan Sponsor E offers its employees an HRA 
that reimburses only premiums for individual health insurance coverage, 
up to $10,000 for the year. Employee A enrolls in individual health 
insurance coverage with a $5,000 premium for the year and is reimbursed 
$5,000 from the HRA. Employee B enrolls in individual health insurance 
coverage with an $8,000 premium for the year and is reimbursed $8,000 
from the HRA.
    (2) [Reserved]
    Conclusion. The same terms requirement of this paragraph (c)(3) is 
satisfied in this paragraph (c)(3)(vii)(E) (Example 5) because Plan 
Sponsor E offers the HRA on the same terms to all employees, 
notwithstanding that some employees receive a greater amount of 
reimbursement than others based on the cost of the individual health 
insurance coverage selected by the employee.
    (4) Opt out. Under the terms of the HRA, a participant who is 
otherwise eligible for coverage must be permitted to opt out of and 
waive future reimbursements on behalf of the participant and all 
dependents eligible for the HRA from the HRA once, and only once, with 
respect to each plan year. The HRA may establish timeframes for 
enrollment in (and opting out of) the HRA but, in general, the 
opportunity to opt out must be provided in advance of the first day of 
the plan year. For participants who become eligible to participate in 
the HRA on a date other than the first day of the plan year (or who 
become eligible fewer than 90 days prior to the plan year or for whom 
the notice under paragraph (c)(6) of this section is required to be 
provided as set forth in paragraph (c)(6)(i)(C) of this section), or for 
a dependent who newly becomes eligible during the plan year, this 
opportunity must be provided during the applicable HRA enrollment 
period(s) established by the HRA for these individuals. Further, under 
the terms of the HRA, upon termination of employment, for a participant 
who is covered by the HRA, either the remaining amounts in the HRA must 
be forfeited or the participant must be permitted to permanently opt out 
of and waive future reimbursements from the HRA on behalf of the 
participant and all dependents covered by the HRA.
    (5) Reasonable procedures for coverage substantiation--(i) 
Substantiation of individual health insurance coverage for the plan 
year. The HRA must implement, and comply with, reasonable procedures to 
substantiate that participants and each dependent covered by the HRA 
are, or will be, enrolled in individual health insurance coverage for 
the plan year (or for the portion of the plan year the individual is 
covered by the HRA, if applicable). The HRA may establish the date by 
which this substantiation must be provided, but, in general, the date 
may be no later than the first day of the plan year. However, for a 
participant who is not eligible to participate in the HRA on the first 
day of the plan year (or who becomes eligible fewer than 90 days prior 
to the plan year or for whom the notice under paragraph (c)(6) of this 
section is required to be provided as set forth in paragraph 
(c)(6)(i)(C) of this section), the HRA may establish the date by which 
this substantiation must be provided, but that date may be no later than 
the date the HRA coverage begins. Similarly, for a participant who adds 
a new dependent during the plan year, the HRA may establish the date by 
which this substantiation must be provided, but the date may be no later 
than the date the HRA coverage for the

[[Page 55]]

new dependent begins; however, to the extent the dependent's coverage 
under the HRA is effective retroactively, the HRA may establish a 
reasonable time by which this substantiation is required, but must 
require it be provided before the HRA will reimburse any medical care 
expense for the newly added dependent. The reasonable procedures an HRA 
may use to implement the substantiation requirement set forth in this 
paragraph (c)(5)(i) may include a requirement that a participant 
substantiate enrollment by providing either:
    (A) A document from a third party (for example, the issuer or an 
Exchange) showing that the participant and any dependents covered by the 
HRA are, or will be, enrolled in individual health insurance coverage 
(for example, an insurance card or an explanation of benefits document 
pertaining to the relevant time period or documentation from the 
Exchange showing that the individual has completed the application and 
plan selection); or
    (B) An attestation by the participant stating that the participant 
and dependent(s) covered by the HRA are, or will be, enrolled in 
individual health insurance coverage, the date coverage began or will 
begin, and the name of the provider of the coverage.
    (ii) Coverage substantiation with each request for reimbursement of 
medical care expenses. Following the initial substantiation of coverage, 
with each new request for reimbursement of an incurred medical care 
expense for the same plan year, the HRA may not reimburse a participant 
for any medical care expenses unless, prior to each reimbursement, the 
participant substantiates that the individual on whose behalf medical 
care expenses are requested to be reimbursed continues to be enrolled in 
individual health insurance coverage for the month during which the 
medical care expenses were incurred. The HRA must implement, and comply 
with, reasonable procedures to satisfy this requirement. This 
substantiation may be in the form of a written attestation by the 
participant, which may be part of the form used to request 
reimbursement, or a document from a third party (for example, a health 
insurance issuer) showing that the participant or the dependent, if 
applicable, are or were enrolled in individual health insurance coverage 
for the applicable month.
    (iii) Reliance on substantiation. For purposes of this paragraph 
(c)(5), an HRA may rely on the participant's documentation or 
attestation unless the HRA, its plan sponsor, or any other entity acting 
in an official capacity on behalf of the HRA has actual knowledge that 
any individual covered by the HRA is not, or will not be, enrolled in 
individual health insurance coverage for the plan year (or applicable 
portion of the plan year) or the month, as applicable.
    (6) Notice requirement--(i) Timing. The HRA must provide a written 
notice to each participant:
    (A) At least 90 calendar days before the beginning of each plan year 
for any participant who is not described in either paragraph 
(c)(6)(i)(B) or (C) of this section;
    (B) No later than the date on which the HRA may first take effect 
for the participant, for any participant who is not eligible to 
participate at the beginning of the plan year (or is not eligible to 
participate at the time the notice is provided at least 90 calendar days 
before the beginning of the plan year pursuant to paragraph (c)(6)(i)(A) 
of this section); or
    (C) No later than the date on which the HRA may first take effect 
for the participant, for any participant who is employed by an employer 
that is first established less than 120 days before the beginning of the 
first plan year of the HRA; this paragraph (c)(6)(i)(C) applies only 
with respect to the first plan year of the HRA.
    (ii) Content. The notice must include all the information described 
in this paragraph (c)(6)(ii) (and may include any additional information 
that does not conflict with that information). To the extent that the 
Departments of the Treasury, Labor and Health and Human Services provide 
model notice language for certain elements of this required notice, HRAs 
are permitted, but not required, to use the model language.
    (A) A description of the terms of the HRA, including the maximum 
dollar amount available for each participant

[[Page 56]]

(including the self-only HRA amount available for the plan year (or the 
maximum dollar amount available for the plan year if the HRA provides 
for reimbursements up to a single dollar amount regardless of whether a 
participant has self-only or other than self-only coverage)), any rules 
regarding the proration of the maximum dollar amount applicable to any 
participant (or dependent, if applicable) who is not eligible to 
participate in the HRA for the entire plan year, whether (and which of) 
the participant's dependents are eligible for the HRA, a statement that 
there are different kinds of HRAs (including a qualified small employer 
health reimbursement arrangement) and the HRA being offered is an 
individual coverage HRA, a statement that the HRA requires the 
participant and any covered dependents to be enrolled in individual 
health insurance coverage (or Medicare Part A and B or Medicare Part C, 
if applicable), a statement that the coverage in which the participant 
and any covered dependents must be enrolled cannot be short-term, 
limited-duration insurance or consist solely of excepted benefits, if 
the HRA is subject to the Employee Retirement Income Security Act 
(ERISA), a statement that individual health insurance coverage in which 
the participant and any covered dependents are enrolled is not subject 
to ERISA, if the conditions under 29 CFR 2510.3-1(l) are satisfied, the 
date as of which coverage under the HRA may first become effective (both 
for participants whose coverage will become effective on the first day 
of the plan year and for participants whose HRA coverage may become 
effective at a later date), the dates on which the HRA plan year begins 
and ends, and the dates on which the amounts newly made available under 
the HRA will be made available.
    (B) A statement of the right of the participant to opt out of and 
waive future reimbursements from the HRA, as set forth under paragraph 
(c)(4) of this section.
    (C) A description of the potential availability of the premium tax 
credit if the participant opts out of and waives future reimbursements 
from the HRA and the HRA is not affordable for one or more months under 
26 CFR 1.36B-2(c)(5), a statement that even if the participant opts out 
of and waives future reimbursements from an HRA, the offer will prohibit 
the participant (and, potentially, the participant's dependents) from 
receiving a premium tax credit for the participant's coverage (or the 
dependent's coverage, if applicable) on an Exchange for any month that 
the HRA is affordable under 26 CFR 1.36B-2(c)(5), a statement describing 
how the participant may find assistance with determining affordability, 
a statement that, if the participant is a former employee, the offer of 
the HRA does not render the participant (or the participant's 
dependents, if applicable) ineligible for the premium tax credit 
regardless of whether it is affordable under 26 CFR 1.36B-2(c)(5), and a 
statement that if the participant or dependent is enrolled in Medicare, 
he or she is ineligible for the premium tax credit without regard to the 
offer or acceptance of the HRA;
    (D) A statement that if the participant accepts the HRA, the 
participant may not claim a premium tax credit for the participant's 
Exchange coverage for any month the HRA may be used to reimburse medical 
care expenses of the participant, and a premium tax credit may not be 
claimed for the Exchange coverage of the participant's dependents for 
any month the HRA may be used to reimburse medical care expenses of the 
dependents.
    (E) A statement that the participant must inform any Exchange to 
which the participant applies for advance payments of the premium tax 
credit of the availability of the HRA; the self-only HRA amount 
available for the HRA plan year (or the maximum dollar amount available 
for the plan year if the HRA provides for reimbursements up to a single 
dollar amount regardless of whether a participant has self-only or other 
than self-only coverage) as set forth in the written notice in 
accordance with paragraph (c)(6)(ii)(A) of this section; whether the HRA 
is also available to the participant's dependents and if so, which ones; 
the date as of which coverage under the HRA may first become effective; 
the date on which the plan year begins and the

[[Page 57]]

date on which it ends; and whether the participant is a current employee 
or former employee.
    (F) A statement that the participant should retain the written 
notice because it may be needed to determine whether the participant is 
allowed a premium tax credit on the participant's individual income tax 
return.
    (G) A statement that the HRA may not reimburse any medical care 
expense unless the substantiation requirement set forth in paragraph 
(c)(5)(ii) of this section is satisfied and a statement that the 
participant must also provide the substantiation required by paragraph 
(c)(5)(i) of this section.
    (H) A statement that if the individual health insurance coverage (or 
coverage under Medicare Part A and B or Medicare Part C) of a 
participant or dependent ceases, the HRA will not reimburse any medical 
care expenses that are incurred by the participant or dependent, as 
applicable, after the coverage ceases, and a statement that the 
participant must inform the HRA if the participant's or dependent's 
individual health insurance coverage (or coverage under Medicare Part A 
and B or Medicare Part C) is cancelled or terminated retroactively and 
the date on which the cancellation or termination is effective.
    (I) The contact information (including a phone number) for an 
individual or a group of individuals who participants may contact in 
order to receive additional information regarding the HRA. The plan 
sponsor may determine which individual or group of individuals is best 
suited to be the specified contact.
    (J) A statement of availability of a special enrollment period to 
enroll in or change individual health insurance coverage, through or 
outside of an Exchange, for the participant and any dependents who newly 
gain access to the HRA and are not already covered by the HRA.
    (d) Classes of employees--(1) In general. This paragraph (d) sets 
forth the rules for determining classes of employees. Paragraph (d)(2) 
of this section sets forth the specific classes of employees; paragraph 
(d)(3) of this section sets forth a minimum class size requirement that 
applies in certain circumstances; paragraph (d)(4) of this section sets 
forth rules regarding the definition of ``full-time employees,'' ``part-
time employees,'' and ``seasonal employees''; paragraph (d)(5) of this 
section sets forth a special rule for new hires; and paragraph (d)(6) of 
this section addresses student premium reduction arrangements. For 
purposes of this section, including determining classes under this 
paragraph (d), the employer is the common law employer and is determined 
without regard to the rules under sections 414(b), (c), (m), and (o) of 
the Code that would treat the common law employer as a single employer 
with certain other entities.
    (2) List of classes. Participants may be treated as belonging to a 
class of employees based on whether they are, or are not, included in 
the classes described in this paragraph (d)(2). If the individual 
coverage HRA is offered to former employees, former employees are 
considered to be in the same class in which they were included 
immediately before separation from service. Before each plan year, a 
plan sponsor must determine for the plan year which classes of employees 
it intends to treat separately and the definition of the relevant 
class(es) it will apply, to the extent these regulations permit a 
choice. After the classes and the definitions of the classes are 
established for a plan year, a plan sponsor may not make changes to the 
classes of employees or the definitions of those relevant classes with 
respect to that plan year.
    (i) Full-time employees, defined at the election of the plan sponsor 
to mean either full-time employees under section 4980H of the Code (and 
26 CFR 54.4980H-1(a)(21)) or employees who are not part-time employees 
(as described in 26 CFR 1.105-11(c)(2)(iii)(C));
    (ii) Part-time employees, defined at the election of the plan 
sponsor to mean either employees who are not full-time employees under 
section 4980H of the Code (and under 26 CFR 54.4980H-1(a)(21) (which 
defines full-time employee)) or employees who are part-time employees as 
described in 26 CFR 1.105-11(c)(2)(iii)(C);
    (iii) Employees who are paid on a salary basis;

[[Page 58]]

    (iv) Non-salaried employees (such as, for example, hourly 
employees);
    (v) Employees whose primary site of employment is in the same rating 
area as defined in Sec.  147.102(b) of this subchapter;
    (vi) Seasonal employees, defined at the election of the plan sponsor 
to mean seasonal employees as described in either 26 CFR 54.4980H-
1(a)(38) or 26 CFR 1.105-11(c)(2)(iii)(C);
    (vii) Employees included in a unit of employees covered by a 
particular collective bargaining agreement (or an appropriate related 
participation agreement) in which the plan sponsor participates (as 
described in 26 CFR 1.105-11(c)(2)(iii)(D));
    (viii) Employees who have not satisfied a waiting period for 
coverage (if the waiting period complies with Sec.  147.116 of this 
subchapter);
    (ix) Non-resident aliens with no U.S.-based income (as described in 
26 CFR 1.105-11(c)(2)(iii)(E));
    (x) Employees who, under all the facts and circumstances, are 
employees of an entity that hired the employees for temporary placement 
at an entity that is not the common law employer of the employees and 
that is not treated as a single employer with the entity that hired the 
employees for temporary placement under section 414(b), (c), (m), or (o) 
of the Code; or
    (xi) A group of participants described as a combination of two or 
more of the classes of employees set forth in paragraphs (d)(2)(i) 
through (x) of this section.
    (3) Minimum class size requirement--(i) In general. If a class of 
employees is subject to the minimum class size requirement as set forth 
in this paragraph (d)(3), the class must consist of at least a minimum 
number of employees (as described in paragraphs (d)(3)(iii) and (iv) of 
this section), otherwise, the plan sponsor may not treat that class as a 
separate class of employees. Paragraph (d)(3)(ii) of this section sets 
forth the circumstances in which the minimum class size requirement 
applies to a class of employees, paragraph (d)(3)(iii) of this section 
sets forth the rules for determining the applicable class size minimum, 
and paragraph (d)(3)(iv) of this section sets forth the rules for a plan 
sponsor to determine if it satisfies the minimum class size requirement 
with respect to a class of employees.
    (ii) Circumstances in which minimum class size requirement applies. 
(A) The minimum class size requirement applies only if a plan sponsor 
offers a traditional group health plan to one or more classes of 
employees and offers an individual coverage HRA to one or more other 
classes of employees.
    (B) The minimum class size requirement does not apply to a class of 
employees offered a traditional group health plan or a class of 
employees offered no coverage.
    (C) The minimum class size requirement applies to a class of 
employees offered an individual coverage HRA if the class is full-time 
employees, part-time employees, salaried employees, non-salaried 
employees, or employees whose primary site of employment is in the same 
rating area (described in paragraph (d)(2)(i), (ii), (iii), (iv), or (v) 
of this section, respectively, and referred to collectively as the 
applicable classes or individually as an applicable class), except that:
    (1) In the case of the class of employees whose primary site of 
employment is in the same rating area (as described in paragraph 
(d)(2)(v) of this section), the minimum class size requirement does not 
apply if the geographic area defining the class is a State or a 
combination of two or more entire States; and
    (2) In the case of the classes of employees that are full-time 
employees and part-time employees (as described in paragraphs (d)(2)(i) 
and (ii) of this section, respectively), the minimum class size 
requirement applies only to those classes (and the classes are only 
applicable classes) if the employees in one such class are offered a 
traditional group health plan while the employees in the other such 
class are offered an individual coverage HRA. In such a case, the 
minimum class size requirement applies only to the class offered an 
individual coverage HRA.
    (D) A class of employees offered an individual coverage HRA is also 
subject to the minimum class size requirement if the class is a class of 
employees created by combining at least one of the

[[Page 59]]

applicable classes (as defined in paragraph (d)(3)(ii)(C) of this 
section) with any other class, except that the minimum class size 
requirement shall not apply to a class that is the result of a 
combination of one of the applicable classes and a class of employees 
who have not satisfied a waiting period (as described in paragraph 
(d)(2)(viii) of this section).
    (iii) Determination of the applicable class size minimum--(A) In 
general. The minimum number of employees that must be in a class of 
employees that is subject to the minimum class size requirement (the 
applicable class size minimum) is determined prior to the beginning of 
the plan year for each plan year of the individual coverage HRA and is:
    (1) 10, for an employer with fewer than 100 employees;
    (2) A number, rounded down to a whole number, equal to 10 percent of 
the total number of employees, for an employer with 100 to 200 
employees; and
    (3) 20, for an employer with more than 200 employees.
    (B) Determining employer size. For purposes of this paragraph 
(d)(3), the number of employees of an employer is determined in advance 
of the plan year of the HRA based on the number of employees that the 
employer reasonably expects to employ on the first day of the plan year.
    (iv) Determining if a class satisfies the applicable class size 
minimum. For purposes of this paragraph (d)(3), whether a class of 
employees satisfies the applicable class size minimum for a plan year of 
the individual coverage HRA is based on the number of employees in the 
class offered the individual coverage HRA as of the first day of the 
plan year. Therefore, this determination is not based on the number of 
employees that actually enroll in the individual coverage HRA, and this 
determination is not affected by changes in the number of employees in 
the class during the plan year.
    (4) Consistency requirement. For any plan year, a plan sponsor may 
define ``full-time employee,'' ``part-time employee,'' and ``seasonal 
employee'' in accordance with the relevant provisions of sections 105(h) 
or 4980H of the Code, as set forth in paragraphs (d)(2)(i), (ii), and 
(vi) of this section, if:
    (i) To the extent applicable under the HRA for the plan year, each 
of the three classes of employees are defined in accordance with section 
105(h) of the Code or each of the three classes of employees are defined 
in accordance with section 4980H of the Code for the plan year; and
    (ii) The HRA plan document sets forth the applicable definitions 
prior to the beginning of the plan year to which the definitions will 
apply.
    (5) Special rule for new hires--(i) In general. Notwithstanding 
paragraphs (c)(2) and (3) of this section, a plan sponsor that offers a 
traditional group health plan to a class of employees may prospectively 
offer the employees in that class of employees who are hired on or after 
a certain future date (the new hire date) an individual coverage HRA 
(with this group of employees referred to as the new hire subclass), 
while continuing to offer employees in that class of employees who are 
hired before the new hire date a traditional group health plan (with the 
rule set forth in this sentence referred to as the special rule for new 
hires). For the new hire subclass, the individual coverage HRA must be 
offered on the same terms to all participants within the subclass, in 
accordance with paragraph (c)(3) of this section. In accordance with 
paragraph (c)(2) of this section, a plan sponsor may not offer a choice 
between an individual coverage HRA or a traditional group health plan to 
any employee in the new hire subclass or to any employee in the class 
who is not a member of the new hire subclass.
    (ii) New hire date. A plan sponsor may set the new hire date for a 
class of employees prospectively as any date on or after January 1, 
2020. A plan sponsor may set different new hire dates prospectively for 
separate classes of employees.
    (iii) Discontinuation of use of special rule for new hires and 
multiple applications of the special rule for new hires. A plan sponsor 
may discontinue use of the special rule for new hires at any time for 
any class of employees. In that case, the new hire subclass is no longer 
treated as a separate subclass of

[[Page 60]]

employees. In the event a plan sponsor applies the special rule for new 
hires to a class of employees and later discontinues use of the rule to 
the class of employees, the plan sponsor may later apply the rule if the 
application of the rule would be permitted under the rules for initial 
application of the special rule for new hires. If a plan sponsor, in 
accordance with the requirements for the special rule for new hires, 
applies the rule to a class of employees subsequent to any prior 
application and discontinuance of the rule to that class, the new hire 
date must be prospective.
    (iv) Application of the minimum class size requirement under the 
special rule for new hires. The minimum class size requirement set forth 
in paragraph (d)(3) of this section does not apply to the new hire 
subclass. However, if a plan sponsor subdivides the new hire subclass 
subsequent to creating the new hire subclass, the minimum class size 
requirement set forth in paragraph (d)(3) of this section applies to any 
class of employees created by subdividing the new hire subclass, if the 
minimum class size requirement otherwise applies.
    (6) Student employees offered student premium reduction 
arrangements. For purposes of this section, if an institution of higher 
education (as defined in the Higher Education Act of 1965) offers a 
student employee a student premium reduction arrangement, the employee 
is not considered to be part of the class of employees to which the 
employee would otherwise belong. For the purpose of this paragraph 
(d)(6) and paragraph (f)(1) of this section, a student premium reduction 
arrangement is defined as any program offered by an institution of 
higher education under which the cost of insured or self-insured student 
health coverage is reduced for certain students through a credit, 
offset, reimbursement, stipend or similar arrangement. A student 
employee offered a student premium reduction arrangement is also not 
counted for purposes of determining the applicable class size minimum 
under paragraph (d)(3)(iii) of this section. If a student employee is 
not offered a student premium reduction arrangement (including if the 
student employee is offered an individual coverage HRA instead), the 
student employee is considered to be part of the class of employees to 
which the employee otherwise belongs and is counted for purposes of 
determining the applicable class size minimum under paragraph 
(d)(3)(iii) of this section.
    (e) Integration of Individual Coverage HRAs with Medicare--(1) 
General rule. An individual coverage HRA will be considered to be 
integrated with Medicare (and deemed to comply with PHS Act sections 
2711 and 2713 and Sec.  147.126(d)(4) of this subchapter), provided that 
the conditions of paragraph (c) of this section are satisfied, subject 
to paragraph (e)(2) of this section. Nothing in this section requires 
that a participant and his or her dependents all have the same type of 
coverage; therefore, an individual coverage HRA may be integrated with 
Medicare for some individuals and with individual health insurance 
coverage for others, including, for example, a participant enrolled in 
Medicare Part A and B or Part C and his or her dependents enrolled in 
individual health insurance coverage.
    (2) Application of conditions in paragraph (c) of this section--(i) 
In general. Except as provided in paragraph (e)(2)(ii) of this section, 
in applying the conditions of paragraph (c) of this section with respect 
to integration with Medicare, a reference to ``individual health 
insurance coverage'' is deemed to refer to coverage under Medicare Part 
A and B or Part C. References in this section to integration of an HRA 
with Medicare refer to integration of an individual coverage HRA with 
Medicare Part A and B or Part C.
    (ii) Exceptions. For purposes of the statement regarding ERISA under 
the notice content element under paragraph (c)(6)(ii)(A) of this section 
and the statement regarding the availability of a special enrollment 
period under the notice content element under paragraph (c)(6)(ii)(J) of 
this section, the term individual health insurance coverage means only 
individual health insurance coverage and does not also mean coverage 
under Medicare Part A and B or Part C.

[[Page 61]]

    (f) Examples--(1) Examples regarding classes and the minimum class 
size requirement. The following examples illustrate the provisions of 
paragraph (c)(3) of this section, taking into account the provisions of 
paragraphs (d)(1) through (4) and (d)(6) of this section. In each 
example, the HRA is an individual coverage HRA that may reimburse any 
medical care expenses, including premiums for individual health 
insurance coverage and it is assumed that no participants or dependents 
are Medicare beneficiaries.
    (i) Example 1: Collectively bargained employees offered traditional 
group health plan; non-collectively bargained employees offered HRA--(A) 
Facts. For 2020, Plan Sponsor A offers its employees covered by a 
collective bargaining agreement a traditional group health plan (as 
required by the collective bargaining agreement) and all other employees 
(non-collectively bargained employees) each an HRA on the same terms.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(i) (Example 1) 
because collectively bargained and non-collectively bargained employees 
may be treated as different classes of employees, one of which may be 
offered a traditional group health plan and the other of which may be 
offered an individual coverage HRA, and Plan Sponsor A offers the HRA on 
the same terms to all participants who are non-collectively bargained 
employees. The minimum class size requirement does not apply to this 
paragraph (f)(1)(i) (Example 1) even though Plan Sponsor A offers one 
class a traditional group health plan and one class the HRA because 
collectively bargained and non-collectively bargained employees are not 
applicable classes that are subject to the minimum class size 
requirement.
    (ii) Example 2: Collectively bargained employees in one unit offered 
traditional group health plan and in another unit offered HRA--(A) 
Facts. For 2020, Plan Sponsor B offers its employees covered by a 
collective bargaining agreement with Local 100 a traditional group 
health plan (as required by the collective bargaining agreement), and 
its employees covered by a collective bargaining agreement with Local 
200 each an HRA on the same terms (as required by the collective 
bargaining agreement).
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(ii) (Example 2) 
because the employees covered by the collective bargaining agreements 
with the two separate bargaining units (Local 100 and Local 200) may be 
treated as two different classes of employees and Plan Sponsor B offers 
an HRA on the same terms to the participants covered by the agreement 
with Local 200. The minimum class size requirement does not apply to 
this paragraph (f)(1)(ii) (Example 2) even though Plan Sponsor B offers 
the Local 100 employees a traditional group health plan and the Local 
200 employees an HRA because collectively bargained employees are not 
applicable classes that are subject to the minimum class size 
requirement.
    (iii) Example 3: Employees in a waiting period offered no coverage; 
other employees offered an HRA--(A) Facts. For 2020, Plan Sponsor C 
offers its employees who have completed a waiting period that complies 
with the requirements for waiting periods in Sec.  147.116 of this 
subchapter each an HRA on the same terms and does not offer coverage to 
its employees who have not completed the waiting period.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(iii) (Example 3) 
because employees who have completed a waiting period and employees who 
have not completed a waiting period may be treated as different classes 
and Plan Sponsor C offers the HRA on the same terms to all participants 
who have completed the waiting period. The minimum class size 
requirement does not apply to this paragraph (f)(1)(iii) (Example 3) 
because Plan Sponsor C does not offer at least one class of employees a 
traditional group health plan and because the class of employees who 
have not completed a waiting period and the class of employees who have 
completed a waiting period are not applicable classes that are subject 
to the minimum class size requirement.

[[Page 62]]

    (iv) Example 4: Employees in a waiting period offered an HRA; other 
employees offered a traditional group health plan--(A) Facts. For 2020, 
Plan Sponsor D offers its employees who have completed a waiting period 
that complies with the requirements for waiting periods in Sec.  147.116 
of this subchapter a traditional group health plan and offers its 
employees who have not completed the waiting period each an HRA on the 
same terms.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(iv) (Example 4) 
because employees who have completed a waiting period and employees who 
have not completed a waiting period may be treated as different classes 
and Plan Sponsor D offers an HRA on the same terms to all participants 
who have not completed the waiting period. The minimum class size 
requirement does not apply to this paragraph (f)(1)(iv) (Example 4) even 
though Plan Sponsor D offers employees who have completed a waiting 
period a traditional group health plan and employees who have not 
completed a waiting period an HRA because the class of employees who 
have not completed a waiting period is not an applicable class that is 
subject to the minimum class size requirement (nor is the class made up 
of employees who have completed the waiting period).
    (v) Example 5: Staffing firm employees temporarily placed with 
customers offered an HRA; other employees offered a traditional group 
health plan--(A) Facts. Plan Sponsor E is a staffing firm that places 
certain of its employees on temporary assignments with customers that 
are not the common law employers of Plan Sponsor E's employees or 
treated as a single employer with Plan Sponsor E under section 414(b), 
(c), (m), or (o) of the Code (unrelated entities); other employees work 
in Plan Sponsor E's office managing the staffing business (non-temporary 
employees). For 2020, Plan Sponsor E offers its employees who are on 
temporary assignments with customers each an HRA on the same terms. All 
other employees are offered a traditional group health plan.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(v) (Example 5) 
because the employees who are hired for temporary placement at an 
unrelated entity and non-temporary employees of Plan Sponsor E may be 
treated as different classes of employees and Plan Sponsor E offers an 
HRA on the same terms to all participants temporarily placed with 
customers. The minimum class size requirement does not apply to this 
paragraph (f)(1)(v) (Example 5) even though Plan Sponsor E offers one 
class a traditional group health plan and one class the HRA because the 
class of employees hired for temporary placement is not an applicable 
class that is subject to the minimum class size requirement (nor is the 
class made up of non-temporary employees).
    (vi) Example 6: Staffing firm employees temporarily placed with 
customers in rating area 1 offered an HRA; other employees offered a 
traditional group health plan--(A) Facts. The facts are the same as in 
paragraph (f)(1)(v) of this section (Example 5), except that Plan 
Sponsor E has work sites in rating area 1 and rating area 2, and it 
offers its 10 employees on temporary assignments with a work site in 
rating area 1 an HRA on the same terms. Plan Sponsor E has 200 other 
employees in rating areas 1 and 2, including its non-temporary employees 
in rating areas 1 and 2 and its employees on temporary assignments with 
a work site in rating area 2, all of whom are offered a traditional 
group health plan.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is not satisfied in this paragraph (f)(1)(vi) (Example 6) 
because, even though the employees who are temporarily placed with 
customers generally may be treated as employees of a different class, 
because Plan Sponsor E is also using a rating area to identify the class 
offered the HRA (which is an applicable class for the minimum class size 
requirement) and is offering one class the HRA and another class the 
traditional group health plan, the minimum class size requirement 
applies to the class offered the HRA, and the class offered the HRA 
fails to satisfy the minimum class size requirement. Because Plan 
Sponsor E employs 210 employees, the applicable

[[Page 63]]

class size minimum is 20, and the HRA is offered to only 10 employees.
    (vii) Example 7: Employees in State 1 offered traditional group 
health plan; employees in State 2 offered HRA--(A) Facts. Plan Sponsor F 
employs 45 employees whose work site is in State 1 and 7 employees whose 
primary site of employment is in State 2. For 2020, Plan Sponsor F 
offers its 45 employees in State 1 a traditional group health plan, and 
each of its 7 employees in State 2 an HRA on the same terms.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(vii) (Example 7) 
because Plan Sponsor F offers the HRA on the same terms to all employees 
with a work site in State 2 and that class is a permissible class under 
paragraph (d) of this section. This is because employees whose work 
sites are in different rating areas may be considered different classes 
and a plan sponsor may create a class of employees by combining classes 
of employees, including by combining employees whose work site is in one 
rating area with employees whose work site is in a different rating 
area, or by combining all employees whose work site is in a state. The 
minimum class size requirement does not apply to this paragraph 
(f)(1)(vii) (Example 7) because the minimum class size requirement does 
not apply if the geographic area defining a class of employees is a 
state or a combination of two or more entire states.
    (viii) Example 8: Full-time seasonal employees offered HRA; all 
other full-time employees offered traditional group health plan; part-
time employees offered no coverage--(A) Facts. Plan Sponsor G employs 6 
full-time seasonal employees, 75 full-time employees who are not 
seasonal employees, and 5 part-time employees. For 2020, Plan Sponsor G 
offers each of its 6 full-time seasonal employees an HRA on the same 
terms, its 75 full-time employees who are not seasonal employees a 
traditional group health plan, and offers no coverage to its 5 part-time 
employees.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(viii) (Example 8) 
because full-time seasonal employees and full-time employees who are not 
seasonal employees may be considered different classes and Plan Sponsor 
G offers the HRA on the same terms to all full-time seasonal employees. 
The minimum class size requirement does not apply to the class offered 
the HRA in this paragraph (f)(1)(viii) (Example 8) because part-time 
employees are not offered coverage and full-time employees are not an 
applicable class subject to the minimum class size requirement if part-
time employees are not offered coverage.
    (ix) Example 9: Full-time employees in rating area 1 offered 
traditional group health plan; full-time employees in rating area 2 
offered HRA; part-time employees offered no coverage--(A) Facts. Plan 
Sponsor H employs 17 full-time employees and 10 part-time employees 
whose work site is in rating area 1 and 552 full-time employees whose 
work site is in rating area 2. For 2020, Plan Sponsor H offers its 17 
full-time employees in rating area 1 a traditional group health plan and 
each of its 552 full-time employees in rating area 2 an HRA on the same 
terms. Plan Sponsor H offers no coverage to its 10 part-time employees 
in rating area 1. Plan Sponsor H reasonably expects to employ 569 
employees on the first day of the HRA plan year.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(ix) (Example 9) 
because employees whose work sites are in different rating areas may be 
considered different classes and Plan Sponsor H offers the HRA on the 
same terms to all full-time employees in rating area 2. The minimum 
class size requirement applies to the class offered the HRA in this 
paragraph (f)(1)(ix) (Example 9) because the minimum class size 
requirement applies to a class based on a geographic area unless the 
geographic area is a state or a combination of two or more entire 
states. However, the minimum class size requirement applies only to the 
class offered the HRA, and Plan Sponsor H offers the HRA to the 552 
full-time employees in rating area 2 on the first day of the plan year, 
satisfying the minimum class size requirement (because the applicable 
class size minimum for Plan Sponsor H is 20).

[[Page 64]]

    (x) Example 10: Employees in rating area 1 offered HRA; employees in 
rating area 2 offered traditional group health plan--(A) Facts. The 
facts are the same as in paragraph (f)(1)(ix) of this section (Example 
9) except that Plan Sponsor H offers its 17 full-time employees in 
rating area 1 the HRA and offers its 552 full-time employees in rating 
area 2 the traditional group health plan.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is not satisfied in this paragraph (f)(1)(x) (Example 10) 
because, even though employees whose work sites are in different rating 
areas generally may be considered different classes and Plan Sponsor H 
offers the HRA on the same terms to all participants in rating area 1, 
the HRA fails to satisfy the minimum class size requirement. 
Specifically, the minimum class size requirement applies to this 
paragraph (f)(1)(x) (Example 10) because the minimum class size 
requirement applies to a class based on a geographic area unless the 
geographic area is a state or a combination of two or more entire 
states. Further, the applicable class size minimum for Plan Sponsor H is 
20 employees, and the HRA is only offered to the 17 full-time employees 
in rating area 1 on the first day of the HRA plan year.
    (xi) Example 11: Employees in State 1 and rating area 1 of State 2 
offered HRA; employees in all other rating areas of State 2 offered 
traditional group health plan--(A) Facts. For 2020, Plan Sponsor I 
offers an HRA on the same terms to a total of 200 employees it employs 
with work sites in State 1 and in rating area 1 of State 2. Plan Sponsor 
I offers a traditional group health plan to its 150 employees with work 
sites in other rating areas in State 2. Plan Sponsor I reasonably 
expects to employ 350 employees on the first day of the HRA plan year.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(xi) (Example 11). 
Plan Sponsor I may treat all of the employees with a work site in State 
1 and rating area 1 of State 2 as a class of employees because employees 
whose work sites are in different rating areas may be considered 
different classes and a plan sponsor may create a class of employees by 
combining classes of employees, including by combining employees whose 
work site is in one rating area with a class of employees whose work 
site is in a different rating area. The minimum class size requirement 
applies to the class of employees offered the HRA (made up of employees 
in State 1 and in rating area 1 of State 2) because the minimum class 
size requirement applies to a class based on a geographic area unless 
the geographic area is a state or a combination of two or more entire 
states. In this case, the class is made up of a state plus a rating area 
which is not the entire state. However, this class satisfies the minimum 
class size requirement because the applicable class size minimum for 
Plan Sponsor I is 20, and Plan Sponsor I offered the HRA to 200 
employees on the first day of the plan year.
    (xii) Example 12: Salaried employees offered a traditional group 
health plan; hourly employees offered an HRA--(A) Facts. Plan Sponsor J 
has 163 salaried employees and 14 hourly employees. For 2020, Plan 
Sponsor J offers its 163 salaried employees a traditional group health 
plan and each of its 14 hourly employees an HRA on the same terms. Plan 
Sponsor J reasonably expects to employ 177 employees on the first day of 
the HRA plan year.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is not satisfied in this paragraph (f)(1)(xii) (Example 12) 
because, even though salaried and hourly employees generally may be 
considered different classes and Plan Sponsor J offers the HRA on the 
same terms to all hourly employees, the HRA fails to satisfy the minimum 
class size requirement. Specifically, the minimum class size requirement 
applies in this paragraph (f)(1)(xii) (Example 12) because employees who 
are paid on a salaried basis and employees who are not paid on a 
salaried basis are applicable classes subject to the minimum class size 
requirement. Because Plan Sponsor J reasonably expects to employ between 
100 and 200 employees on the first day of the plan year, the applicable 
class size minimum is 10 percent, rounded down to a whole number. Ten 
percent of 177 total employees, rounded down

[[Page 65]]

to a whole number is 17, and the HRA is offered to only 14 hourly 
employees.
    (xiii) Example 13: Part-time employees and full-time employees 
offered different HRAs; no traditional group health plan offered--(A) 
Facts. Plan Sponsor K has 50 full-time employees and 7 part-time 
employees. For 2020, Plan Sponsor K offers its 50 full-time employees 
$2,000 each in an HRA otherwise provided on the same terms and each of 
its 7 part-time employees $500 in an HRA otherwise provided on the same 
terms. Plan Sponsor K reasonably expects to employ 57 employees on the 
first day of the HRA plan year.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(xiii) (Example 13) 
because full-time employees and part-time employees may be treated as 
different classes and Plan Sponsor K offers an HRA on the same terms to 
all the participants in each class. The minimum class size requirement 
does not apply to either the full-time class or the part-time class 
because (although in certain circumstances the minimum class size 
requirement applies to a class of full-time employees and a class of 
part-time employees) Plan Sponsor K does not offer any class of 
employees a traditional group health plan, and the minimum class size 
requirement applies only when, among other things, at least one class of 
employees is offered a traditional group health plan while another class 
is offered an HRA.
    (xiv) Example 14: No employees offered an HRA--(A) Facts. The facts 
are the same facts as in paragraph (f)(1)(xiii) of this section (Example 
13), except that Plan Sponsor K offers its full-time employees a 
traditional group health plan and does not offer any group health plan 
(either a traditional group health plan or an HRA) to its part-time 
employees.
    (B) Conclusion. The regulations set forth under this section do not 
apply to Plan Sponsor K because Plan Sponsor K does not offer an 
individual coverage HRA to any employee.
    (xv) Example 15: Full-time employees offered traditional group 
health plan; part-time employees offered HRA--(A) Facts. The facts are 
the same as in paragraph (f)(1)(xiii) of this section (Example 13), 
except that Plan Sponsor K offers its full-time employees a traditional 
group health plan and offers each of its part-time employees $500 in an 
HRA and otherwise on the same terms.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is not satisfied in this paragraph (f)(1)(xv) (Example 15) 
because, even though the full-time employees and the part-time employees 
generally may be treated as different classes, in this paragraph 
(f)(1)(xv) (Example 15), the minimum class size requirement applies to 
the part-time employees, and it is not satisfied. Specifically, the 
minimum class size requirement applies to the part-time employees 
because that requirement applies to an applicable class offered an HRA 
when one class is offered a traditional group health plan while another 
class is offered an HRA, and to the part-time and full-time employee 
classes when one of those classes is offered a traditional group health 
plan while the other is offered an HRA. Because Plan Sponsor K 
reasonably expects to employ fewer than 100 employees on the first day 
of the HRA plan year, the applicable class size minimum for Plan Sponsor 
K is 10 employees, but Plan Sponsor K offered the HRA only to its 7 
part-time employees.
    (xvi) Example 16: Satisfying minimum class size requirement based on 
employees offered HRA--(A) Facts. Plan Sponsor L employs 78 full-time 
employees and 12 part-time employees. For 2020, Plan Sponsor L offers 
its 78 full-time employees a traditional group health plan and each of 
its 12 part-times employees an HRA on the same terms. Only 6 part-time 
employees enroll in the HRA. Plan Sponsor L reasonably expects to employ 
fewer than 100 employees on the first day of the HRA plan year.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(xvi) (Example 16) 
because full-time employees and part-time employees may be treated as 
different classes, Plan Sponsor L offers an HRA on the same terms to all 
the participants in the part-time class, and the minimum class size 
requirement is satisfied. Specifically, whether a class of employees

[[Page 66]]

satisfies the applicable class size minimum is determined as of the 
first day of the plan year based on the number of employees in a class 
that is offered an HRA, not on the number of employees who enroll in the 
HRA. The applicable class size minimum for Plan Sponsor L is 10 
employees, and Plan Sponsor L offered the HRA to its 12 part-time 
employees.
    (xvii) Example 17: Student employees offered student premium 
reduction arrangements and same terms requirement--(A) Facts. Plan 
Sponsor M is an institution of higher education that offers each of its 
part-time employees an HRA on the same terms, except that it offers its 
part-time employees who are student employees a student premium 
reduction arrangement, and the student premium reduction arrangement 
provides different amounts to different part-time student employees.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(1)(xvii) (Example 17) 
because Plan Sponsor M offers the HRA on the same terms to its part-time 
employees who are not students and because the part-time student 
employees offered a student premium reduction arrangement (and their 
varying HRAs) are not taken into account as part-time employees for 
purposes of determining whether a class of employees is offered an HRA 
on the same terms.
    (xiii) Example 18: Student employees offered student premium 
reduction arrangements and minimum class size requirement--(A) Facts. 
Plan Sponsor N is an institution of higher education with 25 hourly 
employees. Plan Sponsor N offers 15 of its hourly employees, who are 
student employees, a student premium reduction arrangement and it wants 
to offer its other 10 hourly employees an HRA for 2022. Plan Sponsor N 
offers its salaried employees a traditional group health plan. Plan 
Sponsor N reasonably expects to have 250 employees on the first day of 
the 2022 HRA plan year, 15 of which will have offers of student premium 
reduction arrangements.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is not satisfied in this paragraph (f)(1)(xviii) (Example 
18). The minimum class size requirement will apply to the class of 
hourly employees to which Plan Sponsor N wants to offer the HRA because 
Plan Sponsor N offers a class of employees a traditional group health 
plan and another class the HRA, and the minimum class size requirement 
generally applies to a class of hourly employees offered an HRA. Plan 
Sponsor N's applicable class size minimum is 20 because Plan Sponsor N 
reasonably expects to employ 235 employees on the first day of the plan 
year (250 employees minus 15 employees receiving a student premium 
reduction arrangement). Plan Sponsor N may not offer the HRA to its 
hourly employees because the 10 employees offered the HRA as of the 
first day of the plan year does not satisfy the applicable class size 
minimum.
    (2) Examples regarding special rule for new hires. The following 
examples illustrate the provisions of paragraph (c)(3) of this section, 
taking into account the provisions of paragraph (d) of this section, in 
particular the special rule for new hires under paragraph (d)(5) of this 
section. In each example, the HRA is an individual coverage HRA that has 
a calendar year plan year and may reimburse any medical care expenses, 
including premiums for individual health insurance coverage. The 
examples also assume that no participants or dependents are Medicare 
beneficiaries.
    (i) Example 1: Application of special rule for new hires to all 
employees--(A) Facts. For 2021, Plan Sponsor A offers all employees a 
traditional group health plan. For 2022, Plan Sponsor A offers all 
employees hired on or after January 1, 2022, an HRA on the same terms 
and continues to offer the traditional group health plan to employees 
hired before that date. On the first day of the 2022 plan year, Plan 
Sponsor A has 2 new hires who are offered the HRA.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(2)(i) (Example 1) 
because, under the special rule for new hires in paragraph (d)(5) of 
this section, the employees newly hired on and after January 1, 2022, 
may be treated as a new hire subclass, Plan Sponsor A offers the HRA on 
the same terms to all participants

[[Page 67]]

in the new hire subclass, and the minimum class size requirement does 
not apply to the new hire subclass.
    (ii) Example 2: Application of special rule for new hires to full-
time employees--(A) Facts. For 2021, Plan Sponsor B offers a traditional 
group health plan to its full-time employees and does not offer any 
coverage to its part-time employees. For 2022, Plan Sponsor B offers 
full-time employees hired on or after January 1, 2022, an HRA on the 
same terms, continues to offer its full-time employees hired before that 
date a traditional group health plan, and continues to offer no coverage 
to its part-time employees. On the first day of the 2022 plan year, Plan 
Sponsor B has 2 new hire, full-time employees who are offered the HRA.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(2)(ii) (Example 2) 
because, under the special rule for new hires in paragraph (d)(5) of 
this section, the full-time employees newly hired on and after January 
1, 2022, may be treated as a new hire subclass and Plan Sponsor B offers 
the HRA on the same terms to all participants in the new hire subclass. 
The minimum class size requirement does not apply to the new hire 
subclass.
    (iii) Example 3: Special rule for new hires impermissibly applied 
retroactively--(A) Facts. For 2025, Plan Sponsor C offers a traditional 
group health plan to its full-time employees. For 2026, Plan Sponsor C 
wants to offer an HRA to its full-time employees hired on and after 
January 1, 2023, while continuing to offer a traditional group health 
plan to its full-time employees hired before January 1, 2023.
    (B) Conclusion. The special rule for new hires under paragraph 
(d)(5) of this section does not apply in this paragraph (f)(2)(iii) 
(Example 3) because the rule must be applied prospectively. That is, 
Plan Sponsor C may not, in 2026, choose to apply the special rule for 
new hires retroactive to 2023. If Plan Sponsor C were to offer an HRA in 
this way, it would fail to satisfy the conditions under paragraphs 
(c)(2) and (3) of this section because the new hire subclass would not 
be treated as a subclass for purposes of applying those rules and, 
therefore, all full-time employees would be treated as one class to 
which either a traditional group health plan or an HRA could be offered, 
but not both.
    (iv) Example 4: Permissible second application of the special rule 
for new hires to the same class of employees--(A) Facts. For 2021, Plan 
Sponsor D offers all of its full-time employees a traditional group 
health plan. For 2022, Plan Sponsor D applies the special rule for new 
hires and offers an HRA on the same terms to all employees hired on and 
after January 1, 2022, and continues to offer a traditional group health 
plan to full-time employees hired before that date. For 2025, Plan 
Sponsor D discontinues use of the special rule for new hires, and again 
offers all full-time employees a traditional group health plan. In 2030, 
Plan Sponsor D decides to apply the special rule for new hires to the 
full-time employee class again, offering an HRA to all full-time 
employees hired on and after January 1, 2030, on the same terms, while 
continuing to offer employees hired before that date a traditional group 
health plan.
    (B) Conclusion. Plan Sponsor D has permissibly applied the special 
rule for new hires and is in compliance with the requirements of 
paragraphs (c)(2) and (3) of this section.
    (v) Example 5: Impermissible second application of the special rule 
for new hires to the same class of employees--(A) Facts. The facts are 
the same as in paragraph (f)(2)(iv) of this section (Example 4), except 
that for 2025, Plan Sponsor D discontinues use of the special rule for 
new hires by offering all full-time employees an HRA on the same terms. 
Further, for 2030, Plan Sponsor D wants to continue to offer an HRA on 
the same terms to all full-time employees hired before January 1, 2030, 
and to offer all full-time employees hired on or after January 1, 2030, 
an HRA in a different amount.
    (B) Conclusion. Plan Sponsor D may not apply the special rule for 
new hires for 2030 to the class of full-time employees being offered an 
HRA because the special rule for new hires may only be applied to a 
class that is being offered a traditional group health plan.
    (vi) Example 6: New full-time employees offered different HRAs in 
different rating areas--(A) Facts. Plan Sponsor E has

[[Page 68]]

work sites in rating area 1, rating area 2, and rating area 3. For 2021, 
Plan Sponsor E offers its full-time employees a traditional group health 
plan. For 2022, Plan Sponsor E offers its full-time employees hired on 
or after January 1, 2022, in rating area 1 an HRA of $3,000, its full-
time employees hired on or after January 1, 2022, in rating area 2 an 
HRA of $5,000, and its full-time employees hired on or after January 1, 
2022, in rating area 3 an HRA of $7,000. Within each class offered an 
HRA, Plan Sponsor E offers the HRA on the same terms. Plan Sponsor E 
offers its full-time employees hired prior to January 1, 2022, in each 
of those classes a traditional group health plan. On the first day of 
the 2022 plan year, there is one new hire, full-time employee in rating 
area 1, three new hire, full-time employees in rating area 2, and 10 new 
hire-full-time employees in rating area 3.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(2)(vi) (Example 6) 
because, under the special rule for new hires in paragraph (d)(5) of 
this section, the full-time employees in each of the three rating areas 
newly hired on and after January 1, 2022, may be treated as three new 
hire subclasses and Plan Sponsor E offers the HRA on the same terms to 
all participants in the new hire subclasses. Further, the minimum class 
size requirement does not apply to the new hire subclasses.
    (vii) Example 7: New full-time employee class subdivided based on 
rating area--(A) Facts. Plan Sponsor F offers its full-time employees 
hired on or after January 1, 2022, an HRA on the same terms and it 
continues to offer its full-time employees hired before that date a 
traditional group health plan. Plan Sponsor F offers no coverage to its 
part-time employees. For the 2025 plan year, Plan Sponsor F wants to 
subdivide the full-time new hire subclass so that those whose work site 
is in rating area 1 will be offered the traditional group health plan 
and those whose work site is in rating area 2 will continue to receive 
the HRA. Plan Sponsor F reasonably expects to employ 219 employees on 
January 1, 2025. As of January 1, 2025, Plan Sponsor F has 15 full-time 
employees whose work site in in rating area 2 and who were hired between 
January 1, 2022, and January 1, 2025.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is not satisfied in this paragraph (f)(2)(vii) (Example 7) 
because the new hire subclass has been subdivided in a manner that is 
subject to the minimum class size requirement, and the class offered the 
HRA fails to satisfy the minimum class size requirement. Specifically, 
once the new hire subclass is subdivided the general rules for applying 
the minimum class size requirement apply to the employees offered the 
HRA in the new hire subclass. In this case, because the subdivision of 
the new hire full-time subclass is based on rating areas; a class based 
on rating areas is an applicable class subject to the minimum class size 
requirement; and the employees in one rating area are to be offered the 
HRA, while the employees in the other rating area are offered the 
traditional group health plan, the minimum class size requirement would 
apply on and after the date of the subdivision. Further, the minimum 
class size requirement would not be satisfied, because the applicable 
class size minimum for Plan Sponsor F would be 20, and only 15 employees 
in rating area 2 would be offered the HRA.
    (viii) Example 8: New full-time employee class subdivided based on 
state--(A) Facts. The facts are the same as in paragraph (f)(2)(vii) of 
this section (Example 7), except that for the 2025 plan year, Plan 
Sponsor F intends to subdivide the new hire, full-time class so that 
those in State 1 will be offered the traditional group health plan and 
those in State 2 will each be offered an HRA on the same terms.
    (B) Conclusion. The same terms requirement of paragraph (c)(3) of 
this section is satisfied in this paragraph (f)(2)(viii) (Example 8) 
because even though the new hire subclass has been subdivided, it has 
been subdivided in a manner that is not subject to the minimum class 
size requirement as the subdivision is based on the entire state.
    (ix) Example 9: New full-time employees and part-time employees 
offered HRA--(A) Facts. In 2021, Plan Sponsor G offers its full-time 
employees a traditional

[[Page 69]]

group health plan and does not offer coverage to its part-time 
employees. For the 2022 plan year, Plan Sponsor G offers its full-time 
employees hired on or after January 1, 2022, and all of its part-time 
employees, including those hired before January 1, 2022, and those hired 
on and after January 1, 2022, an HRA on the same terms, and it continues 
to offer its full-time employees hired before January 1, 2022, a 
traditional group health plan.
    (B) Conclusion. The minimum class size requirement applies to the 
part-time employees offered the HRA in 2022 because the class is being 
offered an HRA; the special rule for new hires does not apply (because 
this class was not previously offered a traditional group health plan) 
and so it is not a new hire subclass exempt from the minimum class size 
requirement; another class of employees (that is, full-time hired before 
January 1, 2022) are being offered a traditional group health plan; and 
the part-time employee class is generally an applicable classes that is 
subject to the minimum class size requirement. However, because the 
full-time, new hire subclass is based on the special rule for new hires, 
the minimum class size requirement does not apply to full-time new hires 
offered an HRA in 2022.
    (g) Applicability date. This section applies to plan years beginning 
on or after January 1, 2020.

[84 FR 29014, June 20, 2019]



Sec.  146.125  Applicability dates.

    Section 144.103, Sec. Sec.  146.111 through 146.119, 146.143, and 
146.145 are applicable for plan years beginning on or after July 1, 
2005. Until the applicability date for this regulation, plans and 
issuers are required to continue to comply with the corresponding 
sections of 45 CFR parts 144 and 146, contained in the 45 CFR, parts 1 
to 199, edition revised as of October 1, 2004. Notwithstanding the 
previous sentence, the definition of ``short-term, limited-duration 
insurance'' in Sec.  144.103 of this subchapter applies October 2, 2018.

[69 FR 78797, Dec. 30, 2004; 70 FR 21147, Apr. 25, 2005, as amended at 
81 FR 75326, Oct. 31, 2016; 83 FR 38243, Aug. 3, 2018]



               Subpart C_Requirements Related to Benefits



Sec.  146.130  Standards relating to benefits for mothers and newborns.

    (a) Hospital length of stay--(1) General rule. Except as provided in 
paragraph (a)(5) of this section, a group health plan, or a health 
insurance issuer offering group health insurance coverage, that provides 
benefits for a hospital length of stay in connection with childbirth for 
a mother or her newborn may not restrict benefits for the stay to less 
than--
    (i) 48 hours following a vaginal delivery; or
    (ii) 96 hours following a delivery by cesarean section.
    (2) When stay begins--(i) Delivery in a hospital. If delivery occurs 
in a hospital, the hospital length of stay for the mother or newborn 
child begins at the time of delivery (or in the case of multiple births, 
at the time of the last delivery).
    (ii) Delivery outside a hospital. If delivery occurs outside a 
hospital, the hospital length of stay begins at the time the mother or 
newborn is admitted as a hospital inpatient in connection with 
childbirth. The determination of whether an admission is in connection 
with childbirth is a medical decision to be made by the attending 
provider.
    (3) Examples. The rules of paragraphs (a)(1) and (2) of this section 
are illustrated by the following examples. In each example, the group 
health plan provides benefits for hospital lengths of stay in connection 
with childbirth and is subject to the requirements of this section, as 
follows:

    Example 1. (i) Facts. A pregnant woman covered under a group health 
plan goes into labor and is admitted to the hospital at 10 p.m. on June 
11. She gives birth by vaginal delivery at 6 a.m. on June 12.
    (ii) Conclusion. In this Example 1, the 48-hour period described in 
paragraph (a)(1)(i) of this section ends at 6 a.m. on June 14.
    Example 2. (i) Facts. A woman covered under a group health plan 
gives birth at home by vaginal delivery. After the delivery, the woman 
begins bleeding excessively in connection with the childbirth and is 
admitted to the hospital for treatment of the excessive bleeding at 7 
p.m. on October 1.

[[Page 70]]

    (ii) Conclusion. In this Example 2, the 48-hour period described in 
paragraph (a)(1)(i) of this section ends at 7 p.m. on October 3.
    Example 3. (i) Facts. A woman covered under a group health plan 
gives birth by vaginal delivery at home. The child later develops 
pneumonia and is admitted to the hospital. The attending provider 
determines that the admission is not in connection with childbirth.
    (ii) Conclusion. In this Example 3, the hospital length-of-stay 
requirements of this section do not apply to the child's admission to 
the hospital because the admission is not in connection with childbirth.

    (4) Authorization not required--(i) In general. A plan or issuer is 
prohibited from requiring that a physician or other health care provider 
obtain authorization from the plan or issuer for prescribing the 
hospital length of stay specified in paragraph (a)(1) of this section. 
(See also paragraphs (b)(2) and (c)(3) of this section for rules and 
examples regarding other authorization and certain notice requirements.)
    (ii) Example. The rule of this paragraph (a)(4) is illustrated by 
the following example:

    Example. (i) Facts. In the case of a delivery by cesarean section, a 
group health plan subject to the requirements of this section 
automatically provides benefits for any hospital length of stay of up to 
72 hours. For any longer stay, the plan requires an attending provider 
to complete a certificate of medical necessity. The plan then makes a 
determination, based on the certificate of medical necessity, whether a 
longer stay is medically necessary.
    (ii) Conclusion. In this Example, the requirement that an attending 
provider complete a certificate of medical necessity to obtain 
authorization for the period between 72 hours and 96 hours following a 
delivery by cesarean section is prohibited by this paragraph (a)(4).

    (5) Exceptions--(i) Discharge of mother. If a decision to discharge 
a mother earlier than the period specified in paragraph (a)(1) of this 
section is made by an attending provider, in consultation with the 
mother, the requirements of paragraph (a)(1) of this section do not 
apply for any period after the discharge.
    (ii) Discharge of newborn. If a decision to discharge a newborn 
child earlier than the period specified in paragraph (a)(1) of this 
section is made by an attending provider, in consultation with the 
mother (or the newborn's authorized representative), the requirements of 
paragraph (a)(1) of this section do not apply for any period after the 
discharge.
    (iii) Attending provider defined. For purposes of this section, 
attending provider means an individual who is licensed under applicable 
state law to provide maternity or pediatric care and who is directly 
responsible for providing maternity or pediatric care to a mother or 
newborn child. Therefore, a plan, hospital, managed care organization, 
or other issuer is not an attending provider.
    (iv) Example. The rules of this paragraph (a)(5) are illustrated by 
the following example:

    Example. (i) Facts. A pregnant woman covered under a group health 
plan subject to the requirements of this section goes into labor and is 
admitted to a hospital. She gives birth by cesarean section. On the 
third day after the delivery, the attending provider for the mother 
consults with the mother, and the attending provider for the newborn 
consults with the mother regarding the newborn. The attending providers 
authorize the early discharge of both the mother and the newborn. Both 
are discharged approximately 72 hours after the delivery. The plan pays 
for the 72-hour hospital stays.
    (ii) Conclusion. In this Example, the requirements of this paragraph 
(a) have been satisfied with respect to the mother and the newborn. If 
either is readmitted, the hospital stay for the readmission is not 
subject to this section.
    (b) Prohibitions--(1) With respect to mothers--(i) In general. A 
group health plan, and a health insurance issuer offering group health 
insurance coverage, may not--
    (A) Deny a mother or her newborn child eligibility or continued 
eligibility to enroll or renew coverage under the terms of the plan 
solely to avoid the requirements of this section; or
    (B) Provide payments (including payments-in-kind) or rebates to a 
mother to encourage her to accept less than the minimum protections 
available under this section.
    (ii) Examples. The rules of this paragraph (b)(1) are illustrated by 
the following examples. In each example, the group health plan is 
subject to the requirements of this section, as follows:


[[Page 71]]


    Example 1. (i) Facts. A group health plan provides benefits for at 
least a 48-hour hospital length of stay following a vaginal delivery. If 
a mother and newborn covered under the plan are discharged within 24 
hours after the delivery, the plan will waive the copayment and 
deductible.
    (ii) Conclusion. In this Example 1, because waiver of the copayment 
and deductible is in the nature of a rebate that the mother would not 
receive if she and her newborn remained in the hospital, it is 
prohibited by this paragraph (b)(1). (In addition, the plan violates 
paragraph (b)(2) of this section because, in effect, no copayment or 
deductible is required for the first portion of the stay and a double 
copayment and a deductible are required for the second portion of the 
stay.)
    Example 2. (i) Facts. A group health plan provides benefits for at 
least a 48-hour hospital length of stay following a vaginal delivery. In 
the event that a mother and her newborn are discharged earlier than 48 
hours and the discharges occur after consultation with the mother in 
accordance with the requirements of paragraph (a)(5) of this section, 
the plan provides for a follow-up visit by a nurse within 48 hours after 
the discharges to provide certain services that the mother and her 
newborn would otherwise receive in the hospital.
    (ii) Conclusion. In this Example 2, because the follow-up visit does 
not provide any services beyond what the mother and her newborn would 
receive in the hospital, coverage for the follow-up visit is not 
prohibited by this paragraph (b)(1).

    (2) With respect to benefit restrictions--(i) In general. Subject to 
paragraph (c)(3) of this section, a group health plan, and a health 
insurance issuer offering group health insurance coverage, may not 
restrict the benefits for any portion of a hospital length of stay 
specified in paragraph (a) of this section in a manner that is less 
favorable than the benefits provided for any preceding portion of the 
stay.
    (ii) Example. The rules of this paragraph (b)(2) are illustrated by 
the following example:

    Example. (i) Facts. A group health plan subject to the requirements 
of this section provides benefits for hospital lengths of stay in 
connection with childbirth. In the case of a delivery by cesarean 
section, the plan automatically pays for the first 48 hours. With 
respect to each succeeding 24-hour period, the participant or 
beneficiary must call the plan to obtain precertification from a 
utilization reviewer, who determines if an additional 24-hour period is 
medically necessary. If this approval is not obtained, the plan will not 
provide benefits for any succeeding 24-hour period.
    (ii) Conclusion. In this Example, the requirement to obtain 
precertification for the two 24-hour periods immediately following the 
initial 48-hour stay is prohibited by this paragraph (b)(2) because 
benefits for the latter part of the stay are restricted in a manner that 
is less favorable than benefits for a preceding portion of the stay. 
(However, this section does not prohibit a plan from requiring 
precertification for any period after the first 96 hours.) In addition, 
the requirement to obtain precertification from the plan based on 
medical necessity for a hospital length of stay within the 96-hour 
period would also violate paragraph (a) of this section.

    (3) With respect to attending providers. A group health plan, and a 
health insurance issuer offering group health insurance coverage, may 
not directly or indirectly--
    (i) Penalize (for example, take disciplinary action against or 
retaliate against), or otherwise reduce or limit the compensation of, an 
attending provider because the provider furnished care to a participant 
or beneficiary in accordance with this section; or
    (ii) Provide monetary or other incentives to an attending provider 
to induce the provider to furnish care to a participant or beneficiary 
in a manner inconsistent with this section, including providing any 
incentive that could induce an attending provider to discharge a mother 
or newborn earlier than 48 hours (or 96 hours) after delivery.
    (c) Construction. With respect to this section, the following rules 
of construction apply:
    (1) Hospital stays not mandatory. This section does not require a 
mother to--
    (i) Give birth in a hospital; or
    (ii) Stay in the hospital for a fixed period of time following the 
birth of her child.
    (2) Hospital stay benefits not mandated. This section does not apply 
to any group health plan, or any group health insurance coverage, that 
does not provide benefits for hospital lengths of stay in connection 
with childbirth for a mother or her newborn child.
    (3) Cost-sharing rules--(i) In general. This section does not 
prevent a group health plan or a health insurance issuer offering group 
health insurance coverage from imposing deductibles,

[[Page 72]]

coinsurance, or other cost-sharing in relation to benefits for hospital 
lengths of stay in connection with childbirth for a mother or a newborn 
under the plan or coverage, except that the coinsurance or other cost-
sharing for any portion of the hospital length of stay specified in 
paragraph (a) of this section may not be greater than that for any 
preceding portion of the stay.
    (ii) Examples. The rules of this paragraph (c)(3) are illustrated by 
the following examples. In each example, the group health plan is 
subject to the requirements of this section, as follows:

    Example 1. (i) Facts. A group health plan provides benefits for at 
least a 48-hour hospital length of stay in connection with vaginal 
deliveries. The plan covers 80 percent of the cost of the stay for the 
first 24-hour period and 50 percent of the cost of the stay for the 
second 24-hour period. Thus, the coinsurance paid by the patient 
increases from 20 percent to 50 percent after 24 hours.
    (ii) Conclusion. In this Example 1, the plan violates the rules of 
this paragraph (c)(3) because coinsurance for the second 24-hour period 
of the 48-hour stay is greater than that for the preceding portion of 
the stay. (In addition, the plan also violates the similar rule in 
paragraph (b)(2) of this section.)
    Example 2. (i) Facts. A group health plan generally covers 70 
percent of the cost of a hospital length of stay in connection with 
childbirth. However, the plan will cover 80 percent of the cost of the 
stay if the participant or beneficiary notifies the plan of the 
pregnancy in advance of admission and uses whatever hospital the plan 
may designate.
    (ii) Conclusion. In this Example 2, the plan does not violate the 
rules of this paragraph (c)(3) because the level of benefits provided 
(70 percent or 80 percent) is consistent throughout the 48-hour (or 96-
hour) hospital length of stay required under paragraph (a) of this 
section. (In addition, the plan does not violate the rules in paragraph 
(a)(4) or (b)(2) of this section.)

    (4) Compensation of attending provider. This section does not 
prevent a group health plan or a health insurance issuer offering group 
health insurance coverage from negotiating with an attending provider 
the level and type of compensation for care furnished in accordance with 
this section (including paragraph (b) of this section).
    (d) Notice requirement. Except as provided in paragraph (d)(4) of 
this section, a group health plan that provides benefits for hospital 
lengths of stay in connection with childbirth must meet the following 
requirements:
    (1) Required statement. The plan document that provides a 
description of plan benefits to participants and beneficiaries, or that 
notifies participants and beneficiaries of plan benefit changes, must 
disclose information that notifies participants and beneficiaries of 
their rights under this section.
    (2) Disclosure notice. To meet the disclosure requirement set forth 
in paragraph (d)(1) of this section, the following disclosure notice 
must be used:

 Statement of Rights Under the Newborns' and Mothers' Health Protection 
                                   Act

    Under federal law, group health plans and health insurance issuers 
offering group health insurance coverage generally may not restrict 
benefits for any hospital length of stay in connection with childbirth 
for the mother or newborn child to less than 48 hours following a 
vaginal delivery, or less than 96 hours following a delivery by cesarean 
section. However, the plan or issuer may pay for a shorter stay if the 
attending provider (e.g., your physician, nurse midwife, or physician 
assistant), after consultation with the mother, discharges the mother or 
newborn earlier.
    Also, under federal law, plans and issuers may not set the level of 
benefits or out-of-pocket costs so that any later portion of the 48-hour 
(or 96-hour) stay is treated in a manner less favorable to the mother or 
newborn than any earlier portion of the stay.
    In addition, a plan or issuer may not, under federal law, require 
that a physician or other health care provider obtain authorization for 
prescribing a length of stay of up to 48 hours (or 96 hours). However, 
to use certain providers or facilities, or to reduce your out-of-pocket 
costs, you may be required to obtain precertification. For information 
on precertification, contact your plan administrator.

    (3) Timing of disclosure. The disclosure notice in paragraph (d)(2) 
of this section shall be furnished to each participant covered under a 
group health plan, and each beneficiary receiving benefits under a group 
health plan, not later than 60 days after the first day of the first 
plan year beginning on or after January 1, 2009. Each time a plan 
distributes one or both of the documents described in paragraph (d)(1) 
to participants and beneficiaries after

[[Page 73]]

providing this initial notice, the disclosure notice in paragraph (d)(2) 
must appear in at least one of those documents.
    (4) Exceptions. The requirements of this paragraph (d) do not apply 
in the following situations.
    (i) Self-insured plans that have already provided notice. If 
benefits for hospital lengths of stay in connection with childbirth are 
not provided through health insurance coverage, and the group health 
plan has already provided an initial notice that complies with 
paragraphs (d)(1) and (d)(2) of this section, the group health plan is 
not automatically required to provide another such notice to 
participants and beneficiaries who have been provided with the initial 
notice. However, following the effective date of these regulations, 
whenever such a plan provides one or both of the documents described in 
paragraph (d)(1) of this section to participants and beneficiaries, the 
disclosure notice in paragraph (d)(2) of this section must appear in at 
least one of those documents.
    (ii) Self-insured plans that have elected exemption from this 
section. If benefits for hospital lengths of stay in connection with 
childbirth are not provided through health insurance coverage, and the 
group health plan has made the election described in Sec. 146.180 to be 
exempted from the requirements of this section, the group health plan is 
not subject to this paragraph (d).
    (iii) Insured plans. If benefits for hospital lengths of stay in 
connection with childbirth are provided through health insurance 
coverage, and the coverage is regulated under a State law described in 
paragraph (e) of this section, the group health plan is not subject to 
this paragraph (d).
    (e) Applicability in certain states--(1) Health insurance coverage. 
The requirements of section 2725 of the PHS Act and this section do not 
apply with respect to health insurance coverage offered in connection 
with a group health plan if there is a state law regulating the coverage 
that meets any of the following criteria:
    (i) The state law requires the coverage to provide for at least a 
48-hour hospital length of stay following a vaginal delivery and at 
least a 96-hour hospital length of stay following a delivery by cesarean 
section.
    (ii) The state law requires the coverage to provide for maternity 
and pediatric care in accordance with guidelines that relate to care 
following childbirth established by the American College of 
Obstetricians and Gynecologists, the American Academy of Pediatrics, or 
any other established professional medical association.
    (iii) The state law requires, in connection with the coverage for 
maternity care, that the hospital length of stay for such care is left 
to the decision of (or is required to be made by) the attending provider 
in consultation with the mother. State laws that require the decision to 
be made by the attending provider with the consent of the mother satisfy 
the criterion of this paragraph (e)(1)(iii).
    (2) Group health plans--(i) Fully-insured plans. For a group health 
plan that provides benefits solely through health insurance coverage, if 
the state law regulating the health insurance coverage meets any of the 
criteria in paragraph (e)(1) of this section, then the requirements of 
section 2725 of the PHS Act and this section do not apply.
    (ii) Self-insured plans. For a group health plan that provides all 
benefits for hospital lengths of stay in connection with childbirth 
other than through health insurance coverage, the requirements of 
section 2725 of the PHS Act and this section apply.
    (iii) Partially-insured plans. For a group health plan that provides 
some benefits through health insurance coverage, if the state law 
regulating the health insurance coverage meets any of the criteria in 
paragraph (e)(1) of this section, then the requirements of section 2725 
of the PHS Act and this section apply only to the extent the plan 
provides benefits for hospital lengths of stay in connection with 
childbirth other than through health insurance coverage.
    (3) Relation to section 2724 (a) of the PHS Act. The preemption 
provisions contained in section 2724 (a)(1) of the PHS Act and Sec. 
146.143(a) do not supersede a state law described in paragraph (e)(1) of 
this section.

[[Page 74]]

    (4) Examples. The rules of this paragraph (e) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan buys group health 
insurance coverage in a state that requires that the coverage provide 
for at least a 48-hour hospital length of stay following a vaginal 
delivery and at least a 96-hour hospital length of stay following a 
delivery by cesarean section.
    (ii) Conclusion. In this Example 1, the coverage is subject to state 
law, and the requirements of section 2725 of the PHS Act and this 
section do not apply.
    Example 2. (i) Facts. A self-insured group health plan covers 
hospital lengths of stay in connection with childbirth in a state that 
requires health insurance coverage to provide for maternity and 
pediatric care in accordance with guidelines that relate to care 
following childbirth established by the American College of 
Obstetricians and Gynecologists and the American Academy of Pediatrics.
    (ii) Conclusion. In this Example 2, even though the state law 
satisfies the criterion of paragraph (e)(1)(ii) of this section, because 
the plan provides benefits for hospital lengths of stay in connection 
with childbirth other than through health insurance coverage, the plan 
is subject to the requirements of section 2725 of the PHS Act and this 
section.

    (f) Applicability date. Section 2725 of the PHS Act applies to group 
health plans, and health insurance issuers offering group health 
insurance coverage, for plan years beginning on or after January 1, 
1998. This section applies to group health plans, and health insurance 
issuers offering group health insurance coverage, for plan years 
beginning on or after January 1, 2009.

[73 FR 62424, Oct. 20, 2008, as amended at 75 FR 27138, May 13, 2010]



Sec.  146.136  Parity in mental health and substance use disorder benefits.

    (a) Meaning of terms. For purposes of this section, except where the 
context clearly indicates otherwise, the following terms have the 
meanings indicated:
    Aggregate lifetime dollar limit means a dollar limitation on the 
total amount of specified benefits that may be paid under a group health 
plan (or health insurance coverage offered in connection with such a 
plan) for any coverage unit.
    Annual dollar limit means a dollar limitation on the total amount of 
specified benefits that may be paid in a 12-month period under a group 
health plan (or health insurance coverage offered in connection with 
such a plan) for any coverage unit.
    Coverage unit means coverage unit as described in paragraph 
(c)(1)(iv) of this section.
    Cumulative financial requirements are financial requirements that 
determine whether or to what extent benefits are provided based on 
accumulated amounts and include deductibles and out-of-pocket maximums. 
(However, cumulative financial requirements do not include aggregate 
lifetime or annual dollar limits because these two terms are excluded 
from the meaning of financial requirements.)
    Cumulative quantitative treatment limitations are treatment 
limitations that determine whether or to what extent benefits are 
provided based on accumulated amounts, such as annual or lifetime day or 
visit limits.
    Financial requirements include deductibles, copayments, coinsurance, 
or out-of-pocket maximums. Financial requirements do not include 
aggregate lifetime or annual dollar limits.
    Medical/surgical benefits means benefits with respect to items or 
services for medical conditions or surgical procedures, as defined under 
the terms of the plan or health insurance coverage and in accordance 
with applicable Federal and State law, but does not include mental 
health or substance use disorder benefits. Any condition defined by the 
plan or coverage as being or as not being a medical/surgical condition 
must be defined to be consistent with generally recognized independent 
standards of current medical practice (for example, the most current 
version of the International Classification of Diseases (ICD) or State 
guidelines).
    Mental health benefits means benefits with respect to items or 
services for mental health conditions, as defined under the terms of the 
plan or health insurance coverage and in accordance with applicable 
Federal and State law. Any condition defined by the plan or coverage as 
being or as not being a mental health condition must be defined to be 
consistent with generally

[[Page 75]]

recognized independent standards of current medical practice (for 
example, the most current version of the Diagnostic and Statistical 
Manual of Mental Disorders (DSM), the most current version of the ICD, 
or State guidelines).
    Substance use disorder benefits means benefits with respect to items 
or services for substance use disorders, as defined under the terms of 
the plan or health insurance coverage and in accordance with applicable 
Federal and State law. Any disorder defined by the plan as being or as 
not being a substance use disorder must be defined to be consistent with 
generally recognized independent standards of current medical practice 
(for example, the most current version of the DSM, the most current 
version of the ICD, or State guidelines).
    Treatment limitations include limits on benefits based on the 
frequency of treatment, number of visits, days of coverage, days in a 
waiting period, or other similar limits on the scope or duration of 
treatment. Treatment limitations include both quantitative treatment 
limitations, which are expressed numerically (such as 50 outpatient 
visits per year), and nonquantitative treatment limitations, which 
otherwise limit the scope or duration of benefits for treatment under a 
plan or coverage. (See paragraph (c)(4)(ii) of this section for an 
illustrative list of nonquantitative treatment limitations.) A permanent 
exclusion of all benefits for a particular condition or disorder, 
however, is not a treatment limitation for purposes of this definition.
    (b) Parity requirements with respect to aggregate lifetime and 
annual dollar limits. This paragraph (b) details the application of the 
parity requirements with respect to aggregate lifetime and annual dollar 
limits. This paragraph (b) does not address the provisions of PHS Act 
section 2711, which prohibit imposing lifetime and annual limits on the 
dollar value of essential health benefits. For more information, see 
Sec.  147.126 of this subchapter.
    (1) General--(i) General parity requirement. A group health plan (or 
health insurance coverage offered by an issuer in connection with a 
group health plan) that provides both medical/surgical benefits and 
mental health or substance use disorder benefits must comply with 
paragraph (b)(2), (b)(3), or (b)(5) of this section.
    (ii) Exception. The rule in paragraph (b)(1)(i) of this section does 
not apply if a plan (or health insurance coverage) satisfies the 
requirements of paragraph (f) or (g) of this section (relating to 
exemptions for small employers and for increased cost).
    (2) Plan with no limit or limits on less than one-third of all 
medical/surgical benefits. If a plan (or health insurance coverage) does 
not include an aggregate lifetime or annual dollar limit on any medical/
surgical benefits or includes an aggregate lifetime or annual dollar 
limit that applies to less than one-third of all medical/surgical 
benefits, it may not impose an aggregate lifetime or annual dollar 
limit, respectively, on mental health or substance use disorder 
benefits.
    (3) Plan with a limit on at least two-thirds of all medical/surgical 
benefits. If a plan (or health insurance coverage) includes an aggregate 
lifetime or annual dollar limit on at least two-thirds of all medical/
surgical benefits, it must either--
    (i) Apply the aggregate lifetime or annual dollar limit both to the 
medical/surgical benefits to which the limit would otherwise apply and 
to mental health or substance use disorder benefits in a manner that 
does not distinguish between the medical/surgical benefits and mental 
health or substance use disorder benefits; or
    (ii) Not include an aggregate lifetime or annual dollar limit on 
mental health or substance use disorder benefits that is less than the 
aggregate lifetime or annual dollar limit, respectively, on medical/
surgical benefits. (For cumulative limits other than aggregate lifetime 
or annual dollar limits, see paragraph (c)(3)(v) of this section 
prohibiting separately accumulating cumulative financial requirements or 
cumulative quantitative treatment limitations.)
    (4) Determining one-third and two-thirds of all medical/surgical 
benefits. For purposes of this paragraph (b), the determination of 
whether the portion of medical/surgical benefits subject to an aggregate 
lifetime or annual dollar

[[Page 76]]

limit represents one-third or two-thirds of all medical/surgical 
benefits is based on the dollar amount of all plan payments for medical/
surgical benefits expected to be paid under the plan for the plan year 
(or for the portion of the plan year after a change in plan benefits 
that affects the applicability of the aggregate lifetime or annual 
dollar limits). Any reasonable method may be used to determine whether 
the dollar amount expected to be paid under the plan will constitute 
one-third or two-thirds of the dollar amount of all plan payments for 
medical/surgical benefits.
    (5) Plan not described in paragraph (b)(2) or (b)(3) of this 
section--(i) In general. A group health plan (or health insurance 
coverage) that is not described in paragraph (b)(2) or (b)(3) of this 
section with respect to aggregate lifetime or annual dollar limits on 
medical/surgical benefits, must either--
    (A) Impose no aggregate lifetime or annual dollar limit, as 
appropriate, on mental health or substance use disorder benefits; or
    (B) Impose an aggregate lifetime or annual dollar limit on mental 
health or substance use disorder benefits that is no less than an 
average limit calculated for medical/surgical benefits in the following 
manner. The average limit is calculated by taking into account the 
weighted average of the aggregate lifetime or annual dollar limits, as 
appropriate, that are applicable to the categories of medical/surgical 
benefits. Limits based on delivery systems, such as inpatient/outpatient 
treatment or normal treatment of common, low-cost conditions (such as 
treatment of normal births), do not constitute categories for purposes 
of this paragraph (b)(5)(i)(B). In addition, for purposes of determining 
weighted averages, any benefits that are not within a category that is 
subject to a separately-designated dollar limit under the plan are taken 
into account as a single separate category by using an estimate of the 
upper limit on the dollar amount that a plan may reasonably be expected 
to incur with respect to such benefits, taking into account any other 
applicable restrictions under the plan.
    (ii) Weighting. For purposes of this paragraph (b)(5), the weighting 
applicable to any category of medical/surgical benefits is determined in 
the manner set forth in paragraph (b)(4) of this section for determining 
one-third or two-thirds of all medical/surgical benefits.
    (c) Parity requirements with respect to financial requirements and 
treatment limitations--(1) Clarification of terms--(i) Classification of 
benefits. When reference is made in this paragraph (c) to a 
classification of benefits, the term ``classification'' means a 
classification as described in paragraph (c)(2)(ii) of this section.
    (ii) Type of financial requirement or treatment limitation. When 
reference is made in this paragraph (c) to a type of financial 
requirement or treatment limitation, the reference to type means its 
nature. Different types of financial requirements include deductibles, 
copayments, coinsurance, and out-of-pocket maximums. Different types of 
quantitative treatment limitations include annual, episode, and lifetime 
day and visit limits. See paragraph (c)(4)(ii) of this section for an 
illustrative list of nonquantitative treatment limitations.
    (iii) Level of a type of financial requirement or treatment 
limitation. When reference is made in this paragraph (c) to a level of a 
type of financial requirement or treatment limitation, level refers to 
the magnitude of the type of financial requirement or treatment 
limitation. For example, different levels of coinsurance include 20 
percent and 30 percent; different levels of a copayment include $15 and 
$20; different levels of a deductible include $250 and $500; and 
different levels of an episode limit include 21 inpatient days per 
episode and 30 inpatient days per episode.
    (iv) Coverage unit. When reference is made in this paragraph (c) to 
a coverage unit, coverage unit refers to the way in which a plan (or 
health insurance coverage) groups individuals for purposes of 
determining benefits, or premiums or contributions. For example, 
different coverage units include self-only, family, and employee-plus-
spouse.
    (2) General parity requirement--(i) General rule. A group health 
plan (or health insurance coverage offered by an issuer in connection 
with a group health plan)

[[Page 77]]

that provides both medical/surgical benefits and mental health or 
substance use disorder benefits may not apply any financial requirement 
or treatment limitation to mental health or substance use disorder 
benefits in any classification that is more restrictive than the 
predominant financial requirement or treatment limitation of that type 
applied to substantially all medical/surgical benefits in the same 
classification. Whether a financial requirement or treatment limitation 
is a predominant financial requirement or treatment limitation that 
applies to substantially all medical/surgical benefits in a 
classification is determined separately for each type of financial 
requirement or treatment limitation. The application of the rules of 
this paragraph (c)(2) to financial requirements and quantitative 
treatment limitations is addressed in paragraph (c)(3) of this section; 
the application of the rules of this paragraph (c)(2) to nonquantitative 
treatment limitations is addressed in paragraph (c)(4) of this section.
    (ii) Classifications of benefits used for applying rules--(A) In 
general. If a plan (or health insurance coverage) provides mental health 
or substance use disorder benefits in any classification of benefits 
described in this paragraph (c)(2)(ii), mental health or substance use 
disorder benefits must be provided in every classification in which 
medical/surgical benefits are provided. In determining the 
classification in which a particular benefit belongs, a plan (or health 
insurance issuer) must apply the same standards to medical/surgical 
benefits and to mental health or substance use disorder benefits. To the 
extent that a plan (or health insurance coverage) provides benefits in a 
classification and imposes any separate financial requirement or 
treatment limitation (or separate level of a financial requirement or 
treatment limitation) for benefits in the classification, the rules of 
this paragraph (c) apply separately with respect to that classification 
for all financial requirements or treatment limitations (illustrated in 
examples in paragraph (c)(2)(ii)(C) of this section). The following 
classifications of benefits are the only classifications used in 
applying the rules of this paragraph (c):
    (1) Inpatient, in-network. Benefits furnished on an inpatient basis 
and within a network of providers established or recognized under a plan 
or health insurance coverage. See special rules for plans with multiple 
network tiers in paragraph (c)(3)(iii) of this section.
    (2) Inpatient, out-of-network. Benefits furnished on an inpatient 
basis and outside any network of providers established or recognized 
under a plan or health insurance coverage. This classification includes 
inpatient benefits under a plan (or health insurance coverage) that has 
no network of providers.
    (3) Outpatient, in-network. Benefits furnished on an outpatient 
basis and within a network of providers established or recognized under 
a plan or health insurance coverage. See special rules for office visits 
and plans with multiple network tiers in paragraph (c)(3)(iii) of this 
section.
    (4) Outpatient, out-of-network. Benefits furnished on an outpatient 
basis and outside any network of providers established or recognized 
under a plan or health insurance coverage. This classification includes 
outpatient benefits under a plan (or health insurance coverage) that has 
no network of providers. See special rules for office visits in 
paragraph (c)(3)(iii) of this section.
    (5) Emergency care. Benefits for emergency care.
    (6) Prescription drugs. Benefits for prescription drugs. See special 
rules for multi-tiered prescription drug benefits in paragraph 
(c)(3)(iii) of this section.
    (B) Application to out-of-network providers. See paragraph 
(c)(2)(ii)(A) of this section, under which a plan (or health insurance 
coverage) that provides mental health or substance use disorder benefits 
in any classification of benefits must provide mental health or 
substance use disorder benefits in every classification in which 
medical/surgical benefits are provided, including out-of-network 
classifications.
    (C) Examples. The rules of this paragraph (c)(2)(ii) are illustrated 
by the following examples. In each example, the group health plan is 
subject to the requirements of this section and provides both medical/
surgical benefits

[[Page 78]]

and mental health and substance use disorder benefits.

    Example 1. (i) Facts. A group health plan offers inpatient and 
outpatient benefits and does not contract with a network of providers. 
The plan imposes a $500 deductible on all benefits. For inpatient 
medical/surgical benefits, the plan imposes a coinsurance requirement. 
For outpatient medical/surgical benefits, the plan imposes copayments. 
The plan imposes no other financial requirements or treatment 
limitations.
    (ii) Conclusion. In this Example 1, because the plan has no network 
of providers, all benefits provided are out-of-network. Because 
inpatient, out-of-network medical/surgical benefits are subject to 
separate financial requirements from outpatient, out-of-network medical/
surgical benefits, the rules of this paragraph (c) apply separately with 
respect to any financial requirements and treatment limitations, 
including the deductible, in each classification.
    Example 2. (i) Facts. A plan imposes a $500 deductible on all 
benefits. The plan has no network of providers. The plan generally 
imposes a 20 percent coinsurance requirement with respect to all 
benefits, without distinguishing among inpatient, outpatient, emergency 
care, or prescription drug benefits. The plan imposes no other financial 
requirements or treatment limitations.
    (ii) Conclusion. In this Example 2, because the plan does not impose 
separate financial requirements (or treatment limitations) based on 
classification, the rules of this paragraph (c) apply with respect to 
the deductible and the coinsurance across all benefits.
    Example 3. (i) Facts. Same facts as Example 2, except the plan 
exempts emergency care benefits from the 20 percent coinsurance 
requirement. The plan imposes no other financial requirements or 
treatment limitations.
    (ii) Conclusion. In this Example 3, because the plan imposes 
separate financial requirements based on classifications, the rules of 
this paragraph (c) apply with respect to the deductible and the 
coinsurance separately for--
    (A) Benefits in the emergency care classification; and
    (B) All other benefits.
    Example 4. (i) Facts. Same facts as Example 2, except the plan also 
imposes a preauthorization requirement for all inpatient treatment in 
order for benefits to be paid. No such requirement applies to outpatient 
treatment.
    (ii) Conclusion. In this Example 4, because the plan has no network 
of providers, all benefits provided are out-of-network. Because the plan 
imposes a separate treatment limitation based on classifications, the 
rules of this paragraph (c) apply with respect to the deductible and 
coinsurance separately for--
    (A) Inpatient, out-of-network benefits; and
    (B) All other benefits.

    (3) Financial requirements and quantitative treatment limitations--
(i) Determining ``substantially all'' and ``predominant''--(A) 
Substantially all. For purposes of this paragraph (c), a type of 
financial requirement or quantitative treatment limitation is considered 
to apply to substantially all medical/surgical benefits in a 
classification of benefits if it applies to at least two-thirds of all 
medical/surgical benefits in that classification. (For this purpose, 
benefits expressed as subject to a zero level of a type of financial 
requirement are treated as benefits not subject to that type of 
financial requirement, and benefits expressed as subject to a 
quantitative treatment limitation that is unlimited are treated as 
benefits not subject to that type of quantitative treatment limitation.) 
If a type of financial requirement or quantitative treatment limitation 
does not apply to at least two-thirds of all medical/surgical benefits 
in a classification, then that type cannot be applied to mental health 
or substance use disorder benefits in that classification.
    (B) Predominant--(1) If a type of financial requirement or 
quantitative treatment limitation applies to at least two-thirds of all 
medical/surgical benefits in a classification as determined under 
paragraph (c)(3)(i)(A) of this section, the level of the financial 
requirement or quantitative treatment limitation that is considered the 
predominant level of that type in a classification of benefits is the 
level that applies to more than one-half of medical/surgical benefits in 
that classification subject to the financial requirement or quantitative 
treatment limitation.
    (2) If, with respect to a type of financial requirement or 
quantitative treatment limitation that applies to at least two-thirds of 
all medical/surgical benefits in a classification, there is no single 
level that applies to more than one-half of medical/surgical benefits in 
the classification subject to the financial requirement or quantitative 
treatment limitation, the plan (or health insurance issuer) may combine 
levels until the combination of levels applies to

[[Page 79]]

more than one-half of medical/surgical benefits subject to the financial 
requirement or quantitative treatment limitation in the classification. 
The least restrictive level within the combination is considered the 
predominant level of that type in the classification. (For this purpose, 
a plan may combine the most restrictive levels first, with each less 
restrictive level added to the combination until the combination applies 
to more than one-half of the benefits subject to the financial 
requirement or treatment limitation.)
    (C) Portion based on plan payments. For purposes of this paragraph 
(c), the determination of the portion of medical/surgical benefits in a 
classification of benefits subject to a financial requirement or 
quantitative treatment limitation (or subject to any level of a 
financial requirement or quantitative treatment limitation) is based on 
the dollar amount of all plan payments for medical/surgical benefits in 
the classification expected to be paid under the plan for the plan year 
(or for the portion of the plan year after a change in plan benefits 
that affects the applicability of the financial requirement or 
quantitative treatment limitation).
    (D) Clarifications for certain threshold requirements. For any 
deductible, the dollar amount of plan payments includes all plan 
payments with respect to claims that would be subject to the deductible 
if it had not been satisfied. For any out-of-pocket maximum, the dollar 
amount of plan payments includes all plan payments associated with out-
of-pocket payments that are taken into account towards the out-of-pocket 
maximum as well as all plan payments associated with out-of-pocket 
payments that would have been made towards the out-of-pocket maximum if 
it had not been satisfied. Similar rules apply for any other thresholds 
at which the rate of plan payment changes. (See also PHS Act section 
2707(b) and Affordable Care Act section 1302(c), which establish 
limitations on annual deductibles for non-grandfathered health plans in 
the small group market and annual limitations on out-of-pocket maximums 
for all non-grandfathered health plans.)
    (E) Determining the dollar amount of plan payments. Subject to 
paragraph (c)(3)(i)(D) of this section, any reasonable method may be 
used to determine the dollar amount expected to be paid under a plan for 
medical/surgical benefits subject to a financial requirement or 
quantitative treatment limitation (or subject to any level of a 
financial requirement or quantitative treatment limitation).
    (ii) Application to different coverage units. If a plan (or health 
insurance coverage) applies different levels of a financial requirement 
or quantitative treatment limitation to different coverage units in a 
classification of medical/surgical benefits, the predominant level that 
applies to substantially all medical/surgical benefits in the 
classification is determined separately for each coverage unit.
    (iii) Special rules--(A) Multi-tiered prescription drug benefits. If 
a plan (or health insurance coverage) applies different levels of 
financial requirements to different tiers of prescription drug benefits 
based on reasonable factors determined in accordance with the rules in 
paragraph (c)(4)(i) of this section (relating to requirements for 
nonquantitative treatment limitations) and without regard to whether a 
drug is generally prescribed with respect to medical/surgical benefits 
or with respect to mental health or substance use disorder benefits, the 
plan (or health insurance coverage) satisfies the parity requirements of 
this paragraph (c) with respect to prescription drug benefits. 
Reasonable factors include cost, efficacy, generic versus brand name, 
and mail order versus pharmacy pick-up.
    (B) Multiple network tiers. If a plan (or health insurance coverage) 
provides benefits through multiple tiers of in-network providers (such 
as an in-network tier of preferred providers with more generous cost-
sharing to participants than a separate in-network tier of participating 
providers), the plan may divide its benefits furnished on an in-network 
basis into sub-classifications that reflect network tiers, if the 
tiering is based on reasonable factors determined in accordance with the 
rules in paragraph (c)(4)(i) of this section (such as quality, 
performance, and market standards) and without regard to whether a 
provider provides services

[[Page 80]]

with respect to medical/surgical benefits or mental health or substance 
use disorder benefits. After the sub-classifications are established, 
the plan or issuer may not impose any financial requirement or treatment 
limitation on mental health or substance use disorder benefits in any 
sub-classification that is more restrictive than the predominant 
financial requirement or treatment limitation that applies to 
substantially all medical/surgical benefits in the sub-classification 
using the methodology set forth in paragraph (c)(3)(i) of this section.
    (C) Sub-classifications permitted for office visits, separate from 
other outpatient services. For purposes of applying the financial 
requirement and treatment limitation rules of this paragraph (c), a plan 
or issuer may divide its benefits furnished on an outpatient basis into 
the two sub-classifications described in this paragraph (c)(3)(iii)(C). 
After the sub-classifications are established, the plan or issuer may 
not impose any financial requirement or quantitative treatment 
limitation on mental health or substance use disorder benefits in any 
sub-classification that is more restrictive than the predominant 
financial requirement or quantitative treatment limitation that applies 
to substantially all medical/surgical benefits in the sub-classification 
using the methodology set forth in paragraph (c)(3)(i) of this section. 
Sub-classifications other than these special rules, such as separate 
sub-classifications for generalists and specialists, are not permitted. 
The two sub-classifications permitted under this paragraph 
(c)(3)(iii)(C) are:
    (1) Office visits (such as physician visits), and
    (2) All other outpatient items and services (such as outpatient 
surgery, facility charges for day treatment centers, laboratory charges, 
or other medical items).
    (iv) Examples. The rules of paragraphs (c)(3)(i), (c)(3)(ii), and 
(c)(3)(iii) of this section are illustrated by the following examples. 
In each example, the group health plan is subject to the requirements of 
this section and provides both medical/surgical benefits and mental 
health and substance use disorder benefits.

    Example 1. (i) Facts. For inpatient, out-of-network medical/surgical 
benefits, a group health plan imposes five levels of coinsurance. Using 
a reasonable method, the plan projects its payments for the upcoming 
year as follows:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Coinsurance rate................  0%        10%            15%           20%           30%            Total.
Projected payments..............  $200x     $100x          $450x         $100x         $150x          $1,000x.
Percent of total plan costs.....  20%       10%            45%           10%           15%
Percent subject to coinsurance    N/A       12.5%          56.25%        12.5%         18.75%
 level.                                     (100x/800x)    (450x/800x)   (100x/800x)   (150x/800x)
----------------------------------------------------------------------------------------------------------------


The plan projects plan costs of $800x to be subject to coinsurance 
($100x + $450x + $100x + $150x = $800x). Thus, 80 percent ($800x/
$1,000x) of the benefits are projected to be subject to coinsurance, and 
56.25 percent of the benefits subject to coinsurance are projected to be 
subject to the 15 percent coinsurance level.
    (ii) Conclusion. In this Example 1, the two-thirds threshold of the 
substantially all standard is met for coinsurance because 80 percent of 
all inpatient, out-of-network medical/surgical benefits are subject to 
coinsurance. Moreover, the 15 percent coinsurance is the predominant 
level because it is applicable to more than one-half of inpatient, out-
of-network medical/surgical benefits subject to the coinsurance 
requirement. The plan may not impose any level of coinsurance with 
respect to inpatient, out-of-network mental health or substance use 
disorder benefits that is more restrictive than the 15 percent level of 
coinsurance.
    Example 2. (i) Facts. For outpatient, in-network medical/surgical 
benefits, a plan imposes five different copayment levels. Using a 
reasonable method, the plan projects payments for the upcoming year as 
follows:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Copayment amount................  $0        $10            $15           $20           $50            Total.
Projected payments..............  $200x     $200x          $200x         $300x         $100x          $1,000x.
Percent of total plan costs.....  20%       20%            20%           30%           10%
Percent subject to copayments...  N/A       25%            25%           37.5%         12.5%
                                            (200x/800x)    (200x/800x)   (300x/800x)   (100x/800x)
----------------------------------------------------------------------------------------------------------------


[[Page 81]]


The plan projects plan costs of $800x to be subject to copayments ($200x 
+ $200x + $300x + $100x = $800x). Thus, 80 percent ($800x/$1,000x) of 
the benefits are projected to be subject to a copayment.
    (ii) Conclusion. In this Example 2, the two-thirds threshold of the 
substantially all standard is met for copayments because 80 percent of 
all outpatient, in-network medical/surgical benefits are subject to a 
copayment. Moreover, there is no single level that applies to more than 
one-half of medical/surgical benefits in the classification subject to a 
copayment (for the $10 copayment, 25%; for the $15 copayment, 25%; for 
the $20 copayment, 37.5%; and for the $50 copayment, 12.5%). The plan 
can combine any levels of copayment, including the highest levels, to 
determine the predominant level that can be applied to mental health or 
substance use disorder benefits. If the plan combines the highest levels 
of copayment, the combined projected payments for the two highest 
copayment levels, the $50 copayment and the $20 copayment, are not more 
than one-half of the outpatient, in-network medical/surgical benefits 
subject to a copayment because they are exactly one-half ($300x + $100x 
= $400x; $400x/$800x = 50%). The combined projected payments for the 
three highest copayment levels--the $50 copayment, the $20 copayment, 
and the $15 copayment--are more than one-half of the outpatient, in-
network medical/surgical benefits subject to the copayments ($100x + 
$300x + $200x = $600x; $600x/$800x = 75%). Thus, the plan may not impose 
any copayment on outpatient, in-network mental health or substance use 
disorder benefits that is more restrictive than the least restrictive 
copayment in the combination, the $15 copayment.
    Example 3. (i) Facts. A plan imposes a $250 deductible on all 
medical/surgical benefits for self-only coverage and a $500 deductible 
on all medical/surgical benefits for family coverage. The plan has no 
network of providers. For all medical/surgical benefits, the plan 
imposes a coinsurance requirement. The plan imposes no other financial 
requirements or treatment limitations.
    (ii) Conclusion. In this Example 3, because the plan has no network 
of providers, all benefits are provided out-of-network. Because self-
only and family coverage are subject to different deductibles, whether 
the deductible applies to substantially all medical/surgical benefits is 
determined separately for self-only medical/surgical benefits and family 
medical/surgical benefits. Because the coinsurance is applied without 
regard to coverage units, the predominant coinsurance that applies to 
substantially all medical/surgical benefits is determined without regard 
to coverage units.
    Example 4. (i) Facts. A plan applies the following financial 
requirements for prescription drug benefits. The requirements are 
applied without regard to whether a drug is generally prescribed with 
respect to medical/surgical benefits or with respect to mental health or 
substance use disorder benefits. Moreover, the process for certifying a 
particular drug as ``generic'', ``preferred brand name'', ``non-
preferred brand name'', or ``specialty'' complies with the rules of 
paragraph (c)(4)(i) of this section (relating to requirements for 
nonquantitative treatment limitations).

----------------------------------------------------------------------------------------------------------------
                                                   Tier 1           Tier 2           Tier 3           Tier 4
----------------------------------------------------------------------------------------------------------------
                                                                                 Non-preferred
                                                                                   brand name
                                                               Preferred brand    drugs (which
              Tier description                 Generic drugs      name drugs    may have Tier 1  Specialty drugs
                                                                                   or Tier 2
                                                                                 alternatives)
----------------------------------------------------------------------------------------------------------------
Percent paid by plan........................             90%              80%              60%              50%
----------------------------------------------------------------------------------------------------------------

    (ii) Conclusion. In this Example 4, the financial requirements that 
apply to prescription drug benefits are applied without regard to 
whether a drug is generally prescribed with respect to medical/surgical 
benefits or with respect to mental health or substance use disorder 
benefits; the process for certifying drugs in different tiers complies 
with paragraph (c)(4) of this section; and the bases for establishing 
different levels or types of financial requirements are reasonable. The 
financial requirements applied to prescription drug benefits do not 
violate the parity requirements of this paragraph (c)(3).
    Example 5. (i) Facts. A plan has two-tiers of network of providers: 
A preferred provider tier and a participating provider tier. Providers 
are placed in either the preferred tier or participating tier based on 
reasonable factors determined in accordance with the rules in paragraph 
(c)(4)(i) of this section, such as accreditation, quality and 
performance measures (including customer feedback), and relative 
reimbursement rates. Furthermore, provider tier placement is determined 
without regard to whether a provider specializes in the treatment of 
mental health conditions or substance use disorders, or medical/surgical 
conditions. The plan divides the in-network classifications into two 
sub-classifications (in-network/preferred and in-network/participating). 
The plan does not impose any

[[Page 82]]

financial requirement or treatment limitation on mental health or 
substance use disorder benefits in either of these sub-classifications 
that is more restrictive than the predominant financial requirement or 
treatment limitation that applies to substantially all medical/surgical 
benefits in each sub-classification.
    (ii) Conclusion. In this Example 5, the division of in-network 
benefits into sub-classifications that reflect the preferred and 
participating provider tiers does not violate the parity requirements of 
this paragraph (c)(3).
    Example 6. (i) Facts. With respect to outpatient, in-network 
benefits, a plan imposes a $25 copayment for office visits and a 20 
percent coinsurance requirement for outpatient surgery. The plan divides 
the outpatient, in-network classification into two sub-classifications 
(in-network office visits and all other outpatient, in-network items and 
services). The plan or issuer does not impose any financial requirement 
or quantitative treatment limitation on mental health or substance use 
disorder benefits in either of these sub-classifications that is more 
restrictive than the predominant financial requirement or quantitative 
treatment limitation that applies to substantially all medical/surgical 
benefits in each sub-classification.
    (ii) Conclusion. In this Example 6, the division of outpatient, in-
network benefits into sub-classifications for office visits and all 
other outpatient, in-network items and services does not violate the 
parity requirements of this paragraph (c)(3).
    Example 7. (i) Facts. Same facts as Example 6, but for purposes of 
determining parity, the plan divides the outpatient, in-network 
classification into outpatient, in-network generalists and outpatient, 
in-network specialists.
    (ii) Conclusion. In this Example 7, the division of outpatient, in-
network benefits into any sub-classifications other than office visits 
and all other outpatient items and services violates the requirements of 
paragraph (c)(3)(iii)(C) of this section.

    (v) No separate cumulative financial requirements or cumulative 
quantitative treatment limitations. (A) A group health plan (or health 
insurance coverage offered in connection with a group health plan) may 
not apply any cumulative financial requirement or cumulative 
quantitative treatment limitation for mental health or substance use 
disorder benefits in a classification that accumulates separately from 
any established for medical/surgical benefits in the same 
classification.
    (B) The rules of this paragraph (c)(3)(v) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan imposes a combined annual 
$500 deductible on all medical/surgical, mental health, and substance 
use disorder benefits.
    (ii) Conclusion. In this Example 1, the combined annual deductible 
complies with the requirements of this paragraph (c)(3)(v).
    Example 2. (i) Facts. A plan imposes an annual $250 deductible on 
all medical/surgical benefits and a separate annual $250 deductible on 
all mental health and substance use disorder benefits.
    (ii) Conclusion. In this Example 2, the separate annual deductible 
on mental health and substance use disorder benefits violates the 
requirements of this paragraph (c)(3)(v).
    Example 3. (i) Facts. A plan imposes an annual $300 deductible on 
all medical/surgical benefits and a separate annual $100 deductible on 
all mental health or substance use disorder benefits.
    (ii) Conclusion. In this Example 3, the separate annual deductible 
on mental health and substance use disorder benefits violates the 
requirements of this paragraph (c)(3)(v).
    Example 4. (i) Facts. A plan generally imposes a combined annual 
$500 deductible on all benefits (both medical/surgical benefits and 
mental health and substance use disorder benefits) except prescription 
drugs. Certain benefits, such as preventive care, are provided without 
regard to the deductible. The imposition of other types of financial 
requirements or treatment limitations varies with each classification. 
Using reasonable methods, the plan projects its payments for medical/
surgical benefits in each classification for the upcoming year as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                                     Benefits                         Percent
                         Classification                             subject to    Total benefits    subject to
                                                                    deductible                      deductible
----------------------------------------------------------------------------------------------------------------
Inpatient, in-network...........................................         $1,800x         $2,000x              90
Inpatient, out-of-network.......................................          1,000x          1,000x             100
Outpatient, in-network..........................................          1,400x          2,000x              70
Outpatient, out-of-network......................................          1,880x          2,000x              94
Emergency care..................................................            300x            500x              60
----------------------------------------------------------------------------------------------------------------

    (ii) Conclusion. In this Example 4, the two-thirds threshold of the 
substantially all standard is met with respect to each classification 
except emergency care because in each of those other classifications at 
least two-thirds of medical/surgical benefits are

[[Page 83]]

subject to the $500 deductible. Moreover, the $500 deductible is the 
predominant level in each of those other classifications because it is 
the only level. However, emergency care mental health and substance use 
disorder benefits cannot be subject to the $500 deductible because it 
does not apply to substantially all emergency care medical/surgical 
benefits.

    (4) Nonquantitative treatment limitations--(i) General rule. A group 
health plan (or health insurance coverage) may not impose a 
nonquantitative treatment limitation with respect to mental health or 
substance use disorder benefits in any classification unless, under the 
terms of the plan (or health insurance coverage) as written and in 
operation, any processes, strategies, evidentiary standards, or other 
factors used in applying the nonquantitative treatment limitation to 
mental health or substance use disorder benefits in the classification 
are comparable to, and are applied no more stringently than, the 
processes, strategies, evidentiary standards, or other factors used in 
applying the limitation with respect to medical/surgical benefits in the 
classification.
    (ii) Illustrative list of nonquantitative treatment limitations. 
Nonquantitative treatment limitations include--
    (A) Medical management standards limiting or excluding benefits 
based on medical necessity or medical appropriateness, or based on 
whether the treatment is experimental or investigative;
    (B) Formulary design for prescription drugs;
    (C) For plans with multiple network tiers (such as preferred 
providers and participating providers), network tier design;
    (D) Standards for provider admission to participate in a network, 
including reimbursement rates;
    (E) Plan methods for determining usual, customary, and reasonable 
charges;
    (F) Refusal to pay for higher-cost therapies until it can be shown 
that a lower-cost therapy is not effective (also known as fail-first 
policies or step therapy protocols);
    (G) Exclusions based on failure to complete a course of treatment; 
and
    (H) Restrictions based on geographic location, facility type, 
provider specialty, and other criteria that limit the scope or duration 
of benefits for services provided under the plan or coverage.
    (iii) Examples. The rules of this paragraph (c)(4) are illustrated 
by the following examples. In each example, the group health plan is 
subject to the requirements of this section and provides both medical/
surgical benefits and mental health and substance use disorder benefits.

    Example 1. (i) Facts. A plan requires prior authorization from the 
plan's utilization reviewer that a treatment is medically necessary for 
all inpatient medical/surgical benefits and for all inpatient mental 
health and substance use disorder benefits. In practice, inpatient 
benefits for medical/surgical conditions are routinely approved for 
seven days, after which a treatment plan must be submitted by the 
patient's attending provider and approved by the plan. On the other 
hand, for inpatient mental health and substance use disorder benefits, 
routine approval is given only for one day, after which a treatment plan 
must be submitted by the patient's attending provider and approved by 
the plan.
    (ii) Conclusion. In this Example 1, the plan violates the rules of 
this paragraph (c)(4) because it is applying a stricter nonquantitative 
treatment limitation in practice to mental health and substance use 
disorder benefits than is applied to medical/surgical benefits.
    Example 2. (i) Facts. A plan applies concurrent review to inpatient 
care where there are high levels of variation in length of stay (as 
measured by a coefficient of variation exceeding 0.8). In practice, the 
application of this standard affects 60 percent of mental health 
conditions and substance use disorders, but only 30 percent of medical/
surgical conditions.
    (ii) Conclusion. In this Example 2, the plan complies with the rules 
of this paragraph (c)(4) because the evidentiary standard used by the 
plan is applied no more stringently for mental health and substance use 
disorder benefits than for medical/surgical benefits, even though it 
results in an overall difference in the application of concurrent review 
for mental health conditions or substance use disorders than for 
medical/surgical conditions.
    Example 3. (i) Facts. A plan requires prior approval that a course 
of treatment is medically necessary for outpatient, in-network medical/
surgical, mental health, and substance use disorder benefits and uses 
comparable criteria in determining whether a course of treatment is 
medically necessary.

[[Page 84]]

For mental health and substance use disorder treatments that do not have 
prior approval, no benefits will be paid; for medical/surgical 
treatments that do not have prior approval, there will only be a 25 
percent reduction in the benefits the plan would otherwise pay.
    (ii) Conclusion. In this Example 3, the plan violates the rules of 
this paragraph (c)(4). Although the same nonquantitative treatment 
limitation--medical necessity--is applied both to mental health and 
substance use disorder benefits and to medical/surgical benefits for 
outpatient, in-network services, it is not applied in a comparable way. 
The penalty for failure to obtain prior approval for mental health and 
substance use disorder benefits is not comparable to the penalty for 
failure to obtain prior approval for medical/surgical benefits.
    Example 4. (i) Facts. A plan generally covers medically appropriate 
treatments. For both medical/surgical benefits and mental health and 
substance use disorder benefits, evidentiary standards used in 
determining whether a treatment is medically appropriate (such as the 
number of visits or days of coverage) are based on recommendations made 
by panels of experts with appropriate training and experience in the 
fields of medicine involved. The evidentiary standards are applied in a 
manner that is based on clinically appropriate standards of care for a 
condition.
    (ii) Conclusion. In this Example 4, the plan complies with the rules 
of this paragraph (c)(4) because the processes for developing the 
evidentiary standards used to determine medical appropriateness and the 
application of these standards to mental health and substance use 
disorder benefits are comparable to and are applied no more stringently 
than for medical/surgical benefits. This is the result even if the 
application of the evidentiary standards does not result in similar 
numbers of visits, days of coverage, or other benefits utilized for 
mental health conditions or substance use disorders as it does for any 
particular medical/surgical condition.
    Example 5. (i) Facts. A plan generally covers medically appropriate 
treatments. In determining whether prescription drugs are medically 
appropriate, the plan automatically excludes coverage for antidepressant 
drugs that are given a black box warning label by the Food and Drug 
Administration (indicating the drug carries a significant risk of 
serious adverse effects). For other drugs with a black box warning 
(including those prescribed for other mental health conditions and 
substance use disorders, as well as for medical/surgical conditions), 
the plan will provide coverage if the prescribing physician obtains 
authorization from the plan that the drug is medically appropriate for 
the individual, based on clinically appropriate standards of care.
    (ii) Conclusion. In this Example 5, the plan violates the rules of 
this paragraph (c)(4). Although the standard for applying a 
nonquantitative treatment limitation is the same for both mental health 
and substance use disorder benefits and medical/surgical benefits--
whether a drug has a black box warning--it is not applied in a 
comparable manner. The plan's unconditional exclusion of antidepressant 
drugs given a black box warning is not comparable to the conditional 
exclusion for other drugs with a black box warning.
    Example 6. (i) Facts. An employer maintains both a major medical 
plan and an employee assistance program (EAP). The EAP provides, among 
other benefits, a limited number of mental health or substance use 
disorder counseling sessions. Participants are eligible for mental 
health or substance use disorder benefits under the major medical plan 
only after exhausting the counseling sessions provided by the EAP. No 
similar exhaustion requirement applies with respect to medical/surgical 
benefits provided under the major medical plan.
    (ii) Conclusion. In this Example 6, limiting eligibility for mental 
health and substance use disorder benefits only after EAP benefits are 
exhausted is a nonquantitative treatment limitation subject to the 
parity requirements of this paragraph (c). Because no comparable 
requirement applies to medical/surgical benefits, the requirement may 
not be applied to mental health or substance use disorder benefits.
    Example 7. (i) Facts. Training and State licensing requirements 
often vary among types of providers. A plan applies a general standard 
that any provider must meet the highest licensing requirement related to 
supervised clinical experience under applicable State law in order to 
participate in the plan's provider network. Therefore, the plan requires 
master's-level mental health therapists to have post-degree, supervised 
clinical experience but does not impose this requirement on master's-
level general medical providers because the scope of their licensure 
under applicable State law does require clinical experience. In 
addition, the plan does not require post-degree, supervised clinical 
experience for psychiatrists or Ph.D. level psychologists since their 
licensing already requires supervised training.
    (ii) Conclusion. In this Example 7, the plan complies with the rules 
of this paragraph (c)(4). The requirement that master's-level mental 
health therapists must have supervised clinical experience to join the 
network is permissible, as long as the plan consistently applies the 
same standard to all providers even though it may have a disparate 
impact on certain mental health providers.
    Example 8. (i) Facts. A plan considers a wide array of factors in 
designing medical management techniques for both mental health

[[Page 85]]

and substance use disorder benefits and medical/surgical benefits, such 
as cost of treatment; high cost growth; variability in cost and quality; 
elasticity of demand; provider discretion in determining diagnosis, or 
type or length of treatment; clinical efficacy of any proposed treatment 
or service; licensing and accreditation of providers; and claim types 
with a high percentage of fraud. Based on application of these factors 
in a comparable fashion, prior authorization is required for some (but 
not all) mental health and substance use disorder benefits, as well as 
for some medical/surgical benefits, but not for others. For example, the 
plan requires prior authorization for: Outpatient surgery; speech, 
occupational, physical, cognitive and behavioral therapy extending for 
more than six months; durable medical equipment; diagnostic imaging; 
skilled nursing visits; home infusion therapy; coordinated home care; 
pain management; high-risk prenatal care; delivery by cesarean section; 
mastectomy; prostate cancer treatment; narcotics prescribed for more 
than seven days; and all inpatient services beyond 30 days. The evidence 
considered in developing its medical management techniques includes 
consideration of a wide array of recognized medical literature and 
professional standards and protocols (including comparative 
effectiveness studies and clinical trials). This evidence and how it was 
used to develop these medical management techniques is also well 
documented by the plan.
    (ii) Conclusion. In this Example 8, the plan complies with the rules 
of this paragraph (c)(4). Under the terms of the plan as written and in 
operation, the processes, strategies, evidentiary standards, and other 
factors considered by the plan in implementing its prior authorization 
requirement with respect to mental health and substance use disorder 
benefits are comparable to, and applied no more stringently than, those 
applied with respect to medical/surgical benefits.
    Example 9. (i) Facts. A plan generally covers medically appropriate 
treatments. The plan automatically excludes coverage for inpatient 
substance use disorder treatment in any setting outside of a hospital 
(such as a freestanding or residential treatment center). For inpatient 
treatment outside of a hospital for other conditions (including 
freestanding or residential treatment centers prescribed for mental 
health conditions, as well as for medical/surgical conditions), the plan 
will provide coverage if the prescribing physician obtains authorization 
from the plan that the inpatient treatment is medically appropriate for 
the individual, based on clinically appropriate standards of care.
    (ii) Conclusion. In this Example 9, the plan violates the rules of 
this paragraph (c)(4). Although the same nonquantitative treatment 
limitation--medical appropriateness--is applied to both mental health 
and substance use disorder benefits and medical/surgical benefits, the 
plan's unconditional exclusion of substance use disorder treatment in 
any setting outside of a hospital is not comparable to the conditional 
exclusion of inpatient treatment outside of a hospital for other 
conditions.
    Example 10. (i) Facts. A plan generally provides coverage for 
medically appropriate medical/surgical benefits as well as mental health 
and substance use disorder benefits. The plan excludes coverage for 
inpatient, out-of-network treatment of chemical dependency when obtained 
outside of the State where the policy is written. There is no similar 
exclusion for medical/surgical benefits within the same classification.
    (ii) Conclusion. In this Example 10, the plan violates the rules of 
this paragraph (c)(4). The plan is imposing a nonquantitative treatment 
limitation that restricts benefits based on geographic location. Because 
there is no comparable exclusion that applies to medical/surgical 
benefits, this exclusion may not be applied to mental health or 
substance use disorder benefits.
    Example 11. (i) Facts. A plan requires prior authorization for all 
outpatient mental health and substance use disorder services after the 
ninth visit and will only approve up to five additional visits per 
authorization. With respect to outpatient medical/surgical benefits, the 
plan allows an initial visit without prior authorization. After the 
initial visit, the plan pre-approves benefits based on the individual 
treatment plan recommended by the attending provider based on that 
individual's specific medical condition. There is no explicit, 
predetermined cap on the amount of additional visits approved per 
authorization.
    (ii) Conclusion. In this Example 11, the plan violates the rules of 
this paragraph (c)(4). Although the same nonquantitative treatment 
limitation--prior authorization to determine medical appropriateness--is 
applied to both mental health and substance use disorder benefits and 
medical/surgical benefits for outpatient services, it is not applied in 
a comparable way. While the plan is more generous with respect to the 
number of visits initially provided without pre-authorization for mental 
health benefits, treating all mental health conditions and substance use 
disorders in the same manner, while providing for individualized 
treatment of medical conditions, is not a comparable application of this 
nonquantitative treatment limitation.

    (5) Exemptions. The rules of this paragraph (c) do not apply if a 
group health plan (or health insurance coverage) satisfies the 
requirements of paragraph (f) or (g) of this section (relating to 
exemptions for small employers and for increased cost).

[[Page 86]]

    (d) Availability of plan information--(1) Criteria for medical 
necessity determinations. The criteria for medical necessity 
determinations made under a group health plan with respect to mental 
health or substance use disorder benefits (or health insurance coverage 
offered in connection with the plan with respect to such benefits) must 
be made available by the plan administrator (or the health insurance 
issuer offering such coverage) to any current or potential participant, 
beneficiary, or contracting provider upon request.
    (2) Reason for any denial. The reason for any denial under a group 
health plan (or health insurance coverage offered in connection with 
such plan) of reimbursement or payment for services with respect to 
mental health or substance use disorder benefits in the case of any 
participant or beneficiary must be made available by the plan 
administrator (or the health insurance issuer offering such coverage) to 
the participant or beneficiary. For this purpose, a non-Federal 
governmental plan (or health insurance coverage offered in connection 
with such plan) that provides the reason for the claim denial in a form 
and manner consistent with the requirements of 29 CFR 2560.503-1 for 
group health plans complies with the requirements of this paragraph 
(d)(2).
    (3) Provisions of other law. Compliance with the disclosure 
requirements in paragraphs (d)(1) and (d)(2) of this section is not 
determinative of compliance with any other provision of applicable 
Federal or State law. In particular, in addition to those disclosure 
requirements, provisions of other applicable law require disclosure of 
information relevant to medical/surgical, mental health, and substance 
use disorder benefits. For example, Sec.  147.136 of this subchapter 
sets forth rules regarding claims and appeals, including the right of 
claimants (or their authorized representative) upon appeal of an adverse 
benefit determination (or a final internal adverse benefit 
determination) to be provided upon request and free of charge, 
reasonable access to and copies of all documents, records, and other 
information relevant to the claimant's claim for benefits. This includes 
documents with information on medical necessity criteria for both 
medical/surgical benefits and mental health and substance use disorder 
benefits, as well as the processes, strategies, evidentiary standards, 
and other factors used to apply a nonquantitative treatment limitation 
with respect to medical/surgical benefits and mental health or substance 
use disorder benefits under the plan.
    (e) Applicability--(1) Group health plans. The requirements of this 
section apply to a group health plan offering medical/surgical benefits 
and mental health or substance use disorder benefits. If, under an 
arrangement or arrangements to provide medical care benefits by an 
employer or employee organization (including for this purpose a joint 
board of trustees of a multiemployer trust affiliated with one or more 
multiemployer plans), any participant (or beneficiary) can 
simultaneously receive coverage for medical/surgical benefits and 
coverage for mental health or substance use disorder benefits, then the 
requirements of this section (including the exemption provisions in 
paragraph (g) of this section) apply separately with respect to each 
combination of medical/surgical benefits and of mental health or 
substance use disorder benefits that any participant (or beneficiary) 
can simultaneously receive from that employer's or employee 
organization's arrangement or arrangements to provide medical care 
benefits, and all such combinations are considered for purposes of this 
section to be a single group health plan.
    (2) Health insurance issuers. The requirements of this section apply 
to a health insurance issuer offering health insurance coverage for 
mental health or substance use disorder benefits in connection with a 
group health plan subject to paragraph (e)(1) of this section.
    (3) Scope. This section does not--
    (i) Require a group health plan (or health insurance issuer offering 
coverage in connection with a group health plan) to provide any mental 
health benefits or substance use disorder benefits, and the provision of 
benefits by a plan (or health insurance coverage) for one or more mental 
health conditions or substance use disorders does not require the plan 
or

[[Page 87]]

health insurance coverage under this section to provide benefits for any 
other mental health condition or substance use disorder;
    (ii) Require a group health plan (or health insurance issuer 
offering coverage in connection with a group health plan) that provides 
coverage for mental health or substance use disorder benefits only to 
the extent required under PHS Act section 2713 to provide additional 
mental health or substance use disorder benefits in any classification 
in accordance with this section; or
    (iii) Affect the terms and conditions relating to the amount, 
duration, or scope of mental health or substance use disorder benefits 
under the plan (or health insurance coverage) except as specifically 
provided in paragraphs (b) and (c) of this section.
    (4) Coordination with EHB requirements. Nothing in paragraph (f) or 
(g) of this section changes the requirements of Sec. Sec.  147.150 and 
156.115 of this subchapter, providing that a health insurance issuer 
offering non-grandfathered health insurance coverage in the individual 
or small group market providing mental health and substance use disorder 
services, including behavioral health treatment services, as part of 
essential health benefits required under Sec. Sec.  156.110(a)(5) and 
156.115(a) of this subchapter, must comply with the provisions of this 
section to satisfy the requirement to provide essential health benefits.
    (f) Small employer exemption--(1) In general. The requirements of 
this section do not apply to a group health plan (or health insurance 
issuer offering coverage in connection with a group health plan) for a 
plan year of a small employer (as defined in section 2791 of the PHS 
Act).
    (2) Rules in determining employer size. For purposes of paragraph 
(f)(1) of this section--
    (i) All persons treated as a single employer under subsections (b), 
(c), (m), and (o) of section 414 of the Internal Revenue Code are 
treated as one employer;
    (ii) If an employer was not in existence throughout the preceding 
calendar year, whether it is a small employer is determined based on the 
average number of employees the employer reasonably expects to employ on 
business days during the current calendar year; and
    (iii) Any reference to an employer for purposes of the small 
employer exemption includes a reference to a predecessor of the 
employer.
    (g) Increased cost exemption--(1) In general. If the application of 
this section to a group health plan (or health insurance coverage 
offered in connection with such plans) results in an increase for the 
plan year involved of the actual total cost of coverage with respect to 
medical/surgical benefits and mental health and substance use disorder 
benefits as determined and certified under paragraph (g)(3) of this 
section by an amount that exceeds the applicable percentage described in 
paragraph (g)(2) of this section of the actual total plan costs, the 
provisions of this section shall not apply to such plan (or coverage) 
during the following plan year, and such exemption shall apply to the 
plan (or coverage) for one plan year. An employer or issuer may elect to 
continue to provide mental health and substance use disorder benefits in 
compliance with this section with respect to the plan or coverage 
involved regardless of any increase in total costs.
    (2) Applicable percentage. With respect to a plan or coverage, the 
applicable percentage described in this paragraph (g) is--
    (i) 2 percent in the case of the first plan year in which this 
section is applied to the plan or coverage; and
    (ii) 1 percent in the case of each subsequent plan year.
    (3) Determinations by actuaries--(i) Determinations as to increases 
in actual costs under a plan or coverage that are attributable to 
implementation of the requirements of this section shall be made and 
certified by a qualified and licensed actuary who is a member in good 
standing of the American Academy of Actuaries. All such determinations 
must be based on the formula specified in paragraph (g)(4) of this 
section and shall be in a written report prepared by the actuary.
    (ii) The written report described in paragraph (g)(3)(i) of this 
section shall be maintained by the group health plan

[[Page 88]]

or health insurance issuer, along with all supporting documentation 
relied upon by the actuary, for a period of six years following the 
notification made under paragraph (g)(6) of this section.
    (4) Formula. The formula to be used to make the determination under 
paragraph (g)(3)(i) of this section is expressed mathematically as 
follows:

[(E1 - E0) / T0] -D  k

    (i) E1 is the actual total cost of coverage with respect 
to mental health and substance use disorder benefits for the base 
period, including claims paid by the plan or issuer with respect to 
mental health and substance use disorder benefits and administrative 
costs (amortized over time) attributable to providing these benefits 
consistent with the requirements of this section.
    (ii) E0 is the actual total cost of coverage with respect 
to mental health and substance use disorder benefits for the length of 
time immediately before the base period (and that is equal in length to 
the base period), including claims paid by the plan or issuer with 
respect to mental health and substance use disorder benefits and 
administrative costs (amortized over time) attributable to providing 
these benefits.
    (iii) T0 is the actual total cost of coverage with 
respect to all benefits during the base period.
    (iv) k is the applicable percentage of increased cost specified in 
paragraph (g)(2) of this section that will be expressed as a fraction 
for purposes of this formula.
    (v) D is the average change in spending that is calculated by 
applying the formula (E1-E0)/T0 to mental health and substance use 
disorder spending in each of the five prior years and then calculating 
the average change in spending.
    (5) Six month determination. If a group health plan or health 
insurance issuer seeks an exemption under this paragraph (g), 
determinations under paragraph (g)(3) of this section shall be made 
after such plan or coverage has complied with this section for at least 
the first 6 months of the plan year involved.
    (6) Notification. A group health plan or health insurance issuer 
that, based on the certification described under paragraph (g)(3) of 
this section, qualifies for an exemption under this paragraph (g), and 
elects to implement the exemption, must notify participants and 
beneficiaries covered under the plan, the Secretary, and the appropriate 
State agencies of such election.
    (i) Participants and beneficiaries--(A) Content of notice. The 
notice to participants and beneficiaries must include the following 
information:
    (1) A statement that the plan or issuer is exempt from the 
requirements of this section and a description of the basis for the 
exemption.
    (2) The name and telephone number of the individual to contact for 
further information.
    (3) The plan or issuer name and plan number (PN).
    (4) The plan administrator's name, address, and telephone number.
    (5) For single-employer plans, the plan sponsor's name, address, and 
telephone number (if different from paragraph (g)(6)(i)(A)(3) of this 
section) and the plan sponsor's employer identification number (EIN).
    (6) The effective date of such exemption.
    (7) A statement regarding the ability of participants and 
beneficiaries to contact the plan administrator or health insurance 
issuer to see how benefits may be affected as a result of the plan's or 
issuer's election of the exemption.
    (8) A statement regarding the availability, upon request and free of 
charge, of a summary of the information on which the exemption is based 
(as required under paragraph (g)(6)(i)(D) of this section).
    (B) Use of summary of material reductions in covered services or 
benefits. A plan or issuer may satisfy the requirements of paragraph 
(g)(6)(i)(A) of this section by providing participants and beneficiaries 
(in accordance with paragraph (g)(6)(i)(C) of this section) with a 
summary of material reductions in covered services or benefits 
consistent with 29 CFR 2520.104b-3(d) that also includes the information 
specified in paragraph (g)(6)(i)(A) of this section. However, in all 
cases, the exemption is not effective until 30 days after notice has 
been sent.

[[Page 89]]

    (C) Delivery. The notice described in this paragraph (g)(6)(i) is 
required to be provided to all participants and beneficiaries. The 
notice may be furnished by any method of delivery that satisfies the 
requirements of section 104(b)(1) of ERISA (29 U.S.C. 1024(b)(1)) and 
its implementing regulations (for example, first-class mail). If the 
notice is provided to the participant and any beneficiaries at the 
participant's last known address, then the requirements of this 
paragraph (g)(6)(i) are satisfied with respect to the participant and 
all beneficiaries residing at that address. If a beneficiary's last 
known address is different from the participant's last known address, a 
separate notice is required to be provided to the beneficiary at the 
beneficiary's last known address.
    (D) Availability of documentation. The plan or issuer must make 
available to participants and beneficiaries (or their representatives), 
on request and at no charge, a summary of the information on which the 
exemption was based. (For purposes of this paragraph (g), an individual 
who is not a participant or beneficiary and who presents a notice 
described in paragraph (g)(6)(i) of this section is considered to be a 
representative. A representative may request the summary of information 
by providing the plan a copy of the notice provided to the participant 
under paragraph (g)(6)(i) of this section with any personally 
identifiable information redacted.) The summary of information must 
include the incurred expenditures, the base period, the dollar amount of 
claims incurred during the base period that would have been denied under 
the terms of the plan or coverage absent amendments required to comply 
with paragraphs (b) and (c) of this section, the administrative costs 
related to those claims, and other administrative costs attributable to 
complying with the requirements of this section. In no event should the 
summary of information include any personally identifiable information.
    (ii) Federal agencies--(A) Content of notice. The notice to the 
Secretary must include the following information:
    (1) A description of the number of covered lives under the plan (or 
coverage) involved at the time of the notification, and as applicable, 
at the time of any prior election of the cost exemption under this 
paragraph (g) by such plan (or coverage);
    (2) For both the plan year upon which a cost exemption is sought and 
the year prior, a description of the actual total costs of coverage with 
respect to medical/surgical benefits and mental health and substance use 
disorder benefits; and
    (3) For both the plan year upon which a cost exemption is sought and 
the year prior, the actual total costs of coverage with respect to 
mental health and substance use disorder benefits under the plan.
    (B) Reporting by health insurance coverage offered in connection 
with a church plan. See 26 CFR 54.9812(g)(6)(ii)(B) for delivery with 
respect to church plans.
    (C) Reporting by health insurance coverage offered in connection 
with a group health plans subject to Part 7 of Subtitle B of Title I of 
ERISA. See 29 CFR 2590.712(g)(6)(ii) for delivery with respect to group 
health plans subject to ERISA.
    (D) Reporting with respect to non-Federal governmental plans and 
health insurance issuers in the individual market. A group health plan 
that is a non-Federal governmental plan, or a health insurance issuer 
offering health insurance coverage in the individual market, claiming 
the exemption of this paragraph (g) for any benefit package must provide 
notice to the Department of Health and Human Services. This requirement 
is satisfied if the plan or issuer sends a copy, to the address 
designated by the Secretary in generally applicable guidance, of the 
notice described in paragraph (g)(6)(ii)(A) of this section identifying 
the benefit package to which the exemption applies.
    (iii) Confidentiality. A notification to the Secretary under this 
paragraph (g)(6) shall be confidential. The Secretary shall make 
available, upon request and not more than on an annual basis, an 
anonymous itemization of each notification that includes--
    (A) A breakdown of States by the size and type of employers 
submitting such notification; and

[[Page 90]]

    (B) A summary of the data received under paragraph (g)(6)(ii) of 
this section.
    (iv) Audits. The Secretary may audit the books and records of a 
group health plan or a health insurance issuer relating to an exemption, 
including any actuarial reports, during the 6 year period following 
notification of such exemption under paragraph (g)(6) of this section. A 
State agency receiving a notification under paragraph (g)(6) of this 
section may also conduct such an audit with respect to an exemption 
covered by such notification.
    (h) Sale of nonparity health insurance coverage. A health insurance 
issuer may not sell a policy, certificate, or contract of insurance that 
fails to comply with paragraph (b) or (c) of this section, except to a 
plan for a year for which the plan is exempt from the requirements of 
this section because the plan meets the requirements of paragraph (f) or 
(g) of this section.
    (i) Applicability dates--(1) In general. Except as provided in 
paragraph (i)(2) of this section, this section applies to group health 
plans and health insurance issuers offering group health insurance 
coverage on the first day of the first plan year beginning on or after 
July 1, 2014. Until the applicability date, plans and issuers are 
required to continue to comply with the corresponding sections of Sec.  
146.136 contained in the 45 CFR, parts 1 to 199, edition revised as of 
October 1, 2013.
    (2) Special effective date for certain collectively-bargained plans. 
For a group health plan maintained pursuant to one or more collective 
bargaining agreements ratified before October 3, 2008, the requirements 
of this section do not apply to the plan (or health insurance coverage 
offered in connection with the plan) for plan years beginning before the 
date on which the last of the collective bargaining agreements 
terminates (determined without regard to any extension agreed to after 
October 3, 2008).

[78 FR 68286, Nov. 13, 2013]



                 Subpart D_Preemption and Special Rules



Sec.  146.143  Preemption; State flexibility; construction.

    (a) Continued applicability of State law with respect to health 
insurance issuers. Subject to paragraph (b) of this section and except 
as provided in paragraph (c) of this section, part A of title XXVII of 
the PHS Act is not to be construed to supersede any provision of State 
law which establishes, implements, or continues in effect any standard 
or requirement solely relating to health insurance issuers in connection 
with group health insurance coverage except to the extent that such 
standard or requirement prevents the application of a requirement of 
this part.
    (b) Continued preemption with respect to group health plans. Nothing 
in part A of title XXVII of the PHS Act affects or modifies the 
provisions of section 514 of ERISA with respect to group health plans.
    (c) Special rules--(1) In general. Subject to paragraph (c)(2) of 
this section, the provisions of part A of title XXVII of the PHS Act 
relating to health insurance coverage offered by a health insurance 
issuer supersede any provision of State law which establishes, 
implements, or continues in effect a standard or requirement applicable 
to imposition of a preexisting condition exclusion specifically governed 
by section 2701 of the PHS Act which differs from the standards or 
requirements specified in section 2701 of the PHS Act.
    (2) Exceptions. Only in relation to health insurance coverage 
offered by a health insurance issuer, the provisions of this part do not 
supersede any provision of State law to the extent that such provision 
requires special enrollment periods in addition to those required under 
section 2702 of the Act.
    (d) Definitions--(1) State law. For purposes of this section the 
term State law includes all laws, decisions, rules, regulations, or 
other State action having the effect of law, of any State. A law of the 
United States applicable only to the District of Columbia is treated as 
a State law rather than a law of the United States.

[[Page 91]]

    (2) State. For purposes of this section the term State includes a 
State (as defined in Sec.  144.103), any political subdivisions of a 
State, or any agency or instrumentality of either.

[69 FR 78797, Dec. 30, 2004; 70 FR 21147, Apr. 25, 2005; 79 FR 10315, 
Feb. 24, 2014]



Sec.  146.145  Special rules relating to group health plans.

    (a) Group health plan--(1) Definition. A group health plan means an 
employee welfare benefit plan to the extent that the plan provides 
medical care (including items and services paid for as medical care) to 
employees (including both current and former employees) or their 
dependents (as defined under the terms of the plan) directly or through 
insurance, reimbursement, or otherwise.
    (2) Determination of number of plans. [Reserved]
    (b) Excepted benefits--(1) In general. The requirements of subparts 
B and C of this part do not apply to any group health plan (or any group 
health insurance coverage) in relation to its provision of the benefits 
described in paragraph (b) (2), (3), (4), or (5) of this section (or any 
combination of these benefits).
    (2) Benefits excepted in all circumstances. The following benefits 
are excepted in all circumstances--
    (i) Coverage only for accident (including accidental death and 
dismemberment);
    (ii) Disability income coverage;
    (iii) Liability insurance, including general liability insurance and 
automobile liability insurance;
    (iv) Coverage issued as a supplement to liability insurance;
    (v) Workers' compensation or similar coverage;
    (vi) Automobile medical payment insurance;
    (vii) Credit-only insurance (for example, mortgage insurance); and
    (viii) Coverage for on-site medical clinics.
    (ix) Travel insurance, within the meaning of Sec.  144.103 of this 
subchapter.
    (3) Limited excepted benefits--(i) In general. Limited-scope dental 
benefits, limited-scope vision benefits, or long-term care benefits are 
excepted if they are provided under a separate policy, certificate, or 
contract of insurance, or are otherwise not an integral part of a group 
health plan as described in paragraph (b)(3)(ii) of this section. In 
addition, benefits provided under a health flexible spending arrangement 
(health FSA) are excepted benefits if they satisfy the requirements of 
paragraph (b)(3)(v) of this section; benefits provided under an employee 
assistance program are excepted benefits if they satisfy the 
requirements of paragraph (b)(3)(vi) of this section; benefits provided 
under limited wraparound coverage are excepted benefits if they satisfy 
the requirements of paragraph (b)(3)(vii) of this section; and benefits 
provided under a health reimbursement arrangement or other account-based 
group health plan, other than a health FSA, are excepted benefits if 
they satisfy the requirements of paragraph (b)(3)(viii) of this section.
    (ii) Not an integral part of a group health plan. For purposes of 
this paragraph (b)(3), benefits are not an integral part of a group 
health plan (whether the benefits are provided through the same plan, a 
separate plan, or as the only plan offered to participants) if either 
paragraph (b)(3)(ii)(A) or (B) are satisfied.
    (A) Participants may decline coverage. For example, a participant 
may decline coverage if the participant can opt out of the coverage upon 
request, whether or not there is a participant contribution required for 
the coverage.
    (B) Claims for the benefits are administered under a contract 
separate from claims administration for any other benefits under the 
plan.
    (iii) Limited scope--(A) Dental benefits. Limited scope dental 
benefits are benefits substantially all of which are for treatment of 
the mouth (including any organ or structure within the mouth).
    (B) Vision benefits. Limited scope vision benefits are benefits 
substantially all of which are for treatment of the eye.
    (iv) Long-term care. Long-term care benefits are benefits that are 
either--
    (A) Subject to State long-term care insurance laws;
    (B) For qualified long-term care services, as defined in section 
7702B(c)(1) of the Internal Revenue Code, or provided

[[Page 92]]

under a qualified long-term care insurance contract, as defined in 
section 7702B(b) of the Internal Revenue Code; or
    (C) Based on cognitive impairment or a loss of functional capacity 
that is expected to be chronic.
    (v) Health flexible spending arrangements. Benefits provided under a 
health flexible spending arrangement (as defined in section 106(c)(2) of 
the Internal Revenue Code) are excepted for a class of participants only 
if they satisfy the following two requirements--
    (A) Other group health plan coverage, not limited to excepted 
benefits, is made available for the year to the class of participants by 
reason of their employment; and
    (B) The arrangement is structured so that the maximum benefit 
payable to any participant in the class for a year cannot exceed two 
times the participant's salary reduction election under the arrangement 
for the year (or, if greater, cannot exceed $500 plus the amount of the 
participant's salary reduction election). For this purpose, any amount 
that an employee can elect to receive as taxable income but elects to 
apply to the health flexible spending arrangement is considered a salary 
reduction election (regardless of whether the amount is characterized as 
salary or as a credit under the arrangement).
    (vi) Employee assistance programs. Benefits provided under employee 
assistance programs are excepted if they satisfy all of the requirements 
of this paragraph (b)(3)(vi).
    (A) The program does not provide significant benefits in the nature 
of medical care. For this purpose, the amount, scope and duration of 
covered services are taken into account.
    (B) The benefits under the employee assistance program are not 
coordinated with benefits under another group health plan, as follows:
    (1) Participants in the other group health plan must not be required 
to use and exhaust benefits under the employee assistance program 
(making the employee assistance program a gatekeeper) before an 
individual is eligible for benefits under the other group health plan; 
and
    (2) Participant eligibility for benefits under the employee 
assistance program must not be dependent on participation in another 
group health plan.
    (C) No employee premiums or contributions are required as a 
condition of participation in the employee assistance program.
    (D) There is no cost sharing under the employee assistance program.
    (vii) Limited wraparound coverage. Limited benefits provided through 
a group health plan that wrap around eligible individual health 
insurance (or Basic Health Plan coverage described in section 1331 of 
the Patient Protection and Affordable Care Act); or that wrap around 
coverage under a Multi-State Plan described in section 1334 of the 
Patient Protection and Affordable Care Act, collectively referred to as 
``limited wraparound coverage,'' are excepted benefits if all of the 
following conditions are satisfied. For this purpose, eligible 
individual health insurance is individual health insurance coverage that 
is not a grandfathered health plan (as described in section 1251 of the 
Patient Protection and Affordable Care Act and Sec.  147.140 of this 
subchapter), not a transitional individual health insurance plan (as 
described in the March 5, 2014 Insurance Standards Bulletin Series--
Extension of Transitional Policy through October 1, 2016), and does not 
consist solely of excepted benefits (as defined in paragraph (b) of this 
section).
    (A) Covers additional benefits. The limited wraparound coverage 
provides meaningful benefits beyond coverage of cost sharing under 
either the eligible individual health insurance, Basic Health Program 
coverage, or Multi-State Plan coverage. The limited wraparound coverage 
must not provide benefits only under a coordination-of-benefits 
provision and must not consist of an account-based reimbursement 
arrangement.
    (B) Limited in amount. The annual cost of coverage per employee (and 
any covered dependents, as defined in Sec.  144.103 of this subchapter) 
under the limited wraparound coverage does not exceed the greater of the 
amount determined under either paragraph (b)(3)(vii)(B)(1) or (2) of 
this section. Making a determination regarding the annual cost of 
coverage per employee

[[Page 93]]

must occur on an aggregate basis relying on sound actuarial principles.
    (1) The maximum permitted annual salary reduction contribution 
toward health flexible spending arrangements, indexed in the manner 
prescribed under section 125(i)(2) of the Internal Revenue Code. For 
this purpose, the cost of coverage under the limited wraparound includes 
both employer and employee contributions towards coverage and is 
determined in the same manner as the applicable premium is calculated 
under a COBRA continuation provision.
    (2) Fifteen percent of the cost of coverage under the primary plan. 
For this purpose, the cost of coverage under the primary plan and under 
the limited wraparound coverage includes both employer and employee 
contributions towards the coverage and each is determined in the same 
manner as the applicable premium is calculated under a COBRA 
continuation provision.
    (C) Nondiscrimination. All of the conditions of this paragraph 
(b)(3)(vii)(C) are satisfied.
    (1) No preexisting condition exclusion. The limited wraparound 
coverage does not impose any preexisting condition exclusion, consistent 
with the requirements of section 2704 of the PHS Act and Sec.  147.108 
of this subchapter.
    (2) No discrimination based on health status. The limited wraparound 
coverage does not discriminate against individuals in eligibility, 
benefits, or premiums based on any health factor of an individual (or 
any dependent of the individual, as defined in Sec.  144.103 of this 
subchapter), consistent with the requirements of section 2705 of the PHS 
Act.
    (3) No discrimination in favor of highly compensated individuals. 
Neither the limited wraparound coverage, nor any other group health plan 
coverage offered by the plan sponsor, fails to comply with section 2716 
of the PHS Act or fails to be excludible from income for any individual 
due to the application of section 105(h) of the Internal Revenue Code 
(as applicable).
    (D) Plan eligibility requirements. Individuals eligible for the 
wraparound coverage are not enrolled in excepted benefit coverage under 
paragraph (b)(3)(v) of this section (relating to health FSAs). In 
addition, the conditions set forth in either paragraph (b)(3)(vii)(D)(1) 
or (2) of this section are met.
    (1) Limited wraparound coverage that wraps around eligible 
individual insurance for persons who are not full-time employees. 
Coverage that wraps around eligible individual health insurance (or that 
wraps around Basic Health Plan coverage) must satisfy all of the 
conditions of this paragraph (b)(3)(vii)(D)(1).
    (i) For each year for which limited wraparound coverage is offered, 
the employer that is the sponsor of the plan offering limited wraparound 
coverage, or the employer participating in a plan offering limited 
wraparound coverage, offers to its full-time employees coverage that is 
substantially similar to coverage that the employer would need to offer 
to its full-time employees in order not to be subject to a potential 
assessable payment under the employer shared responsibility provisions 
of section 4980H(a) of the Internal Revenue Code, if such provisions 
were applicable; provides minimum value (as defined in section 
36B(c)(2)(C)(ii) of the Internal Revenue Code); and is reasonably 
expected to be affordable (applying the safe harbor rules for 
determining affordability set forth in 26 CFR 54.4980H-5(e)(2)). If a 
plan or issuer providing limited wraparound coverage takes reasonable 
steps to ensure that employers disclose to the plan or issuer necessary 
information regarding their coverage offered and affordability 
information, the plan or issuer is permitted to rely on reasonable 
representations by employers regarding this information, unless the plan 
or issuer has specific knowledge to the contrary. In the event that the 
employer that is the sponsor of the plan offering wraparound coverage, 
or the employer participating in a plan offering wraparound coverage, 
has no full-time employees for any plan year limited wraparound coverage 
is offered, the requirement of this paragraph (b)(3)(vii)(D)(1)(i) is 
considered satisfied.
    (ii) Eligibility for the limited wraparound coverage is limited to 
employees who are reasonably determined at the time of enrollment to not 
be full-time employees (and their dependents,

[[Page 94]]

as defined in Sec.  144.103 of this subchapter), or who are retirees 
(and their dependents, as defined in Sec.  144.103 of this subchapter). 
For this purpose, full-time employees are employees who are reasonably 
expected to work at least an average of 30 hours per week.
    (iii) Other group health plan coverage, not limited to excepted 
benefits, is offered to the individuals eligible for the limited 
wraparound coverage. Only individuals eligible for the other group 
health plan coverage are eligible for the limited wraparound coverage.
    (2) Limited coverage that wraps around Multi-State Plan coverage. 
Coverage that wraps around Multi-State Plan coverage must satisfy all of 
the conditions of this paragraph (b)(3)(vii)(D)(2). For this purpose, 
the term ``full-time employee'' means a ``full-time employee'' as 
defined in 26 CFR 54.4980H-1(a)(21) who is not in a limited non-
assessment period for certain employees (as defined in 26 CFR 54.4980H-
1(a)(26)). Moreover, if a plan or issuer providing limited wraparound 
coverage takes reasonable steps to ensure that employers disclose to the 
plan or issuer necessary information regarding their coverage offered 
and contribution levels for 2013 or 2014 (as applicable), and for any 
year in which limited wraparound coverage is offered, the plan or issuer 
is permitted to rely on reasonable representations by employers 
regarding this information, unless the plan or issuer has specific 
knowledge to the contrary. Consistent with the reporting and evaluation 
criteria of paragraph (b)(3)(vii)(E) of this section, the Office of 
Personnel Management may verify that plans and issuers have reasonable 
mechanisms in place to ensure that contributing employers meet these 
standards.
    (i) The limited wraparound coverage is reviewed and approved by the 
Office of Personnel Management, consistent with the reporting and 
evaluation criteria of paragraph (b)(3)(vii)(E) of this section, to 
provide benefits in conjunction with coverage under a Multi-State Plan 
authorized under section 1334 of the Patient Protection and Affordable 
Care Act. The Office of Personnel Management may revoke approval if it 
determines that continued approval is inconsistent with the reporting 
and evaluation criteria of paragraph (b)(3)(vii)(E) of this section.
    (ii) The employer offered coverage in the plan year that began in 
either 2013 or 2014 that is substantially similar to coverage that the 
employer would need to have offered to its full-time employees in order 
to not be subject to an assessable payment under the employer shared 
responsibility provisions of section 4980H(a) of the Internal Revenue 
Code, if such provisions had been applicable. In the event that a plan 
that offered coverage in 2013 or 2014 has no full-time employees for any 
plan year limited wraparound coverage is offered, the requirement of 
this paragraph (b)(3)(vii)(D)(2)(ii) is considered satisfied.
    (iii) In the plan year that began in either 2013 or 2014, the 
employer offered coverage to a substantial portion of full-time 
employees that provided minimum value (as defined in section 
36B(c)(2)(C)(ii) of the Internal Revenue Code) and was affordable 
(applying the safe harbor rules for determining affordability set forth 
in 26 CFR 54.4980H-5(e)(2)). In the event that the plan that offered 
coverage in 2013 or 2014 has no full-time employees for any plan year 
limited wraparound coverage is offered, the requirement of this 
paragraph (b)(3)(vii)(D)(2)(iii) is considered satisfied.
    (iv) For the duration of the pilot program, as described in 
paragraph (b)(3)(vii)(F) of this section, the employer's annual 
aggregate contributions for both primary and limited wraparound coverage 
are substantially the same as the employer's total contributions for 
coverage offered to full-time employees in 2013 or 2014.
    (E) Reporting--(1) Reporting by group health plans and group health 
insurance issuers. A self-insured group health plan, or a health 
insurance issuer, offering or proposing to offer limited wraparound 
coverage in connection with Multi-State Plan coverage pursuant to 
paragraph (b)(3)(vii)(D)(2) of this section reports to the Office of 
Personnel Management (OPM), in a form and manner specified in guidance, 
information OPM reasonably requires to determine whether the plan or 
issuer

[[Page 95]]

qualifies to offer such coverage or complies with the applicable 
requirements of this section.
    (2) Reporting by group health plan sponsors. The plan sponsor of a 
group health plan offering limited wraparound coverage under paragraph 
(b)(3)(vii) of this section, must report to the Department of Health and 
Human Services (HHS), in a form and manner specified in guidance, 
information HHS reasonably requires.
    (F) Pilot program with sunset--The provisions of paragraph 
(b)(3)(vii) of this section apply to limited wraparound coverage that is 
first offered no earlier than January 1, 2016 and no later than December 
31, 2018 and that ends no later than on the later of:
    (1) The date that is three years after the date limited wraparound 
coverage is first offered; or
    (2) The date on which the last collective bargaining agreement 
relating to the plan terminates after the date limited wraparound 
coverage is first offered (determined without regard to any extension 
agreed to after the date limited wraparound coverage is first offered).
    (viii) Health reimbursement arrangements (HRAs) and other account-
based group health plans. Benefits provided under an HRA or other 
account-based group health plan, other than a health FSA, are excepted 
if they satisfy all of the requirements of this paragraph (b)(3)(viii). 
See paragraph (b)(3)(v) of this section for the circumstances in which 
benefits provided under a health FSA are excepted benefits. For purposes 
of this paragraph (b)(3)(viii), the term ``HRA or other account-based 
group health plan'' has the same meaning as ``account-based group health 
plan'' set forth in Sec.  147.126(d)(6)(i) of this subchapter, except 
that the term does not include health FSAs. For ease of reference, an 
HRA or other account-based group health plan that satisfies the 
requirements of this paragraph (b)(3)(viii) is referred to as an 
excepted benefit HRA.
    (A) Otherwise not an integral part of the plan. Other group health 
plan coverage that is not limited to excepted benefits and that is not 
an HRA or other account-based group health plan must be made available 
by the same plan sponsor for the plan year to the participant.
    (B) Benefits are limited in amount--(1) Limit on annual amounts made 
available. The amounts newly made available for each plan year under the 
HRA or other account-based group health plan do not exceed $1,800. In 
the case of any plan year beginning after December 31, 2020, the dollar 
amount in the preceding sentence shall be increased by an amount equal 
to such dollar amount multiplied by the cost-of-living adjustment. The 
cost of living adjustment is the percentage (if any) by which the C-CPI-
U for the preceding calendar year exceeds the C-CPI-U for calendar year 
2019. The term ``C-CPI-U'' means the Chained Consumer Price Index for 
All Urban Consumers as published by the Bureau of Labor Statistics of 
the Department of Labor. The C-CPI-U for any calendar year is the 
average of the C-CPI-U as of the close of the 12-month period ending on 
March 31 of such calendar year. The values of the C-CPI-U used for any 
calendar year shall be the latest values so published as of the date on 
which the Bureau publishes the initial value of the C-CPI-U for the 
month of March for the preceding calendar year. Any such increase that 
is not a multiple of $50 shall be rounded down to the next lowest 
multiple of $50. The Department of the Treasury and the Internal Revenue 
Service will publish the adjusted amount for plan years beginning in any 
calendar year no later than June 1 of the preceding calendar year.
    (2) Carryover amounts. If the terms of the HRA or other account-
based group health plan allow unused amounts to be made available to 
participants and dependents in later plan years, such carryover amounts 
are disregarded for purposes of determining whether benefits are limited 
in amount.
    (3) Multiple HRAs or other account-based group health plans. If the 
plan sponsor provides more than one HRA or other account-based group 
health plan to the participant for the same time period, the amounts 
made available under all such plans are aggregated to determine whether 
the benefits are limited in amount, except that HRAs or other account-
based group health plans that reimburse only excepted

[[Page 96]]

benefits are not included in determining whether the benefits are 
limited in amount.
    (C) Prohibition on reimbursement of certain health insurance 
premiums. The HRA or other account-based group health plan must not 
reimburse premiums for individual health insurance coverage, group 
health plan coverage (other than COBRA continuation coverage or other 
continuation coverage), or Medicare Part A, B, C, or D, except that the 
HRA or other account-based group health plan may reimburse premiums for 
such coverage that consists solely of excepted benefits. See also, 
paragraph (b)(3)(viii)(F) of this section.
    (D) Uniform availability. The HRA or other account-based group 
health plan is made available under the same terms to all similarly 
situated individuals, as defined in Sec.  146.121(d), regardless of any 
health factor (as described in Sec.  146.121(a)).
    (E) Notice requirement. For plan years beginning on or after January 
11, 2021, the HRA or other account-based group health plan must provide 
a notice that describes conditions pertaining to eligibility to receive 
benefits, annual or lifetime caps, or other limits on benefits under the 
plan, and a description or summary of the benefits. This notice must be 
provided no later than 90 days after an employee becomes a participant 
and annually thereafter, in a manner reasonably calculated to ensure 
actual receipt by participants eligible for the HRA or other account-
based group health plan.
    (F) Special rule. The HRA or other account-based group health plan 
must not reimburse premiums for short-term, limited-duration insurance 
(as defined in Sec.  144.103 of this subchapter) if the conditions of 
this paragraph (b)(3)(viii)(F) are satisfied.
    (1) The HRA or other account-based group health plan is offered by a 
small employer (as defined in PHS Act section 2791(e)(4)).
    (2) The other group health plan coverage offered by the employer 
pursuant to paragraph (b)(3)(viii)(A) of this section is either fully-
insured or partially-insured.
    (3) The Secretary makes a finding, in consultation with the 
Secretaries of Labor and the Treasury, that the reimbursement of 
premiums for short-term, limited-duration insurance by excepted benefit 
HRAs has caused significant harm to the small group market in the state 
that is the principal place of business of the small employer.
    (4) The finding by the Secretary is made after submission of a 
written recommendation by the applicable state authority of such state, 
in a form and manner specified by HHS. The written recommendation must 
include evidence that the reimbursement of premiums for short-term, 
limited-duration insurance by excepted benefit HRAs established by 
insured or partially-insured small employers in the state has caused 
significant harm to the state's small group market, including with 
respect to premiums.
    (5) The restriction shall be imposed or discontinued by publication 
by the Secretary of a notice in the Federal Register and shall apply 
only prospectively and with a reasonable time for plan sponsors to 
comply.
    (4) Noncoordinated benefits--(i) Excepted benefits that are not 
coordinated. Coverage for only a specified disease or illness (for 
example, cancer-only policies) or hospital indemnity or other fixed 
indemnity insurance is excepted only if it meets each of the conditions 
specified in paragraph (b)(4)(ii) of this section. To be hospital 
indemnity or other fixed indemnity insurance, the insurance must pay a 
fixed dollar amount per day (or per other period) of hospitalization or 
illness (for example, $100/day) regardless of the amount of expenses 
incurred.
    (ii) Conditions. Benefits are described in paragraph (b)(4)(i) of 
this section only if--
    (A) The benefits are provided under a separate policy, certificate, 
or contract of insurance;
    (B) There is no coordination between the provision of the benefits 
and an exclusion of benefits under any group health plan maintained by 
the same plan sponsor; and
    (C) The benefits are paid with respect to an event without regard to 
whether benefits are provided with respect to the event under any group 
health plan maintained by the same plan sponsor.

[[Page 97]]

    (iii) Example. The rules of this paragraph (b)(4) are illustrated by 
the following example:

    Example. (i) Facts. An employer sponsors a group health plan that 
provides coverage through an insurance policy. The policy provides 
benefits only for hospital stays at a fixed percentage of hospital 
expenses up to a maximum of $100 a day.
    (ii) Conclusion. In this Example, even though the benefits under the 
policy satisfy the conditions in paragraph (b)(4)(ii) of this section, 
because the policy pays a percentage of expenses incurred rather than a 
fixed dollar amount, the benefits under the policy are not excepted 
benefits under this paragraph (b)(4). This is the result even if, in 
practice, the policy pays the maximum of $100 for every day of 
hospitalization.

    (5) Supplemental benefits. (i) The following benefits are excepted 
only if they are provided under a separate policy, certificate, or 
contract of insurance--
    (A) Medicare supplemental health insurance (as defined under section 
1882(g)(1) of the Social Security Act; also known as Medigap or MedSupp 
insurance);
    (B) Coverage supplemental to the coverage provided under Chapter 55, 
Title 10 of the United States Code (also known as TRICARE supplemental 
programs); and
    (C) Similar supplemental coverage provided to coverage under a group 
health plan. To be similar supplemental coverage, the coverage must be 
specifically designed to fill gaps in the primary coverage. The 
preceding sentence is satisfied if the coverage is designed to fill gaps 
in cost sharing in the primary coverage, such as coinsurance or 
deductibles, or the coverage is designed to provide benefits for items 
and services not covered by the primary coverage and that are not 
essential health benefits (as defined under section 1302(b) of the 
Patient Protection and Affordable Care Act) in the State where the 
coverage is issued, or the coverage is designed to both fill such gaps 
in cost sharing under, and cover such benefits not covered by, the 
primary coverage. Similar supplemental coverage does not include 
coverage that becomes secondary or supplemental only under a 
coordination-of-benefits provision.
    (ii) The rules of this paragraph (b)(5) are illustrated by the 
following example:

    Example. (i) Facts. An employer sponsors a group health plan that 
provides coverage for both active employees and retirees. The coverage 
for retirees supplements benefits provided by Medicare, but does not 
meet the requirements for a supplemental policy under section 1882(g)(1) 
of the Social Security Act.
    (ii) Conclusion. In this Example, the coverage provided to retirees 
does not meet the definition of supplemental excepted benefits under 
this paragraph (b)(5) because the coverage is not Medicare supplemental 
insurance as defined under section 1882(g)(1) of the Social Security 
Act, is not a TRICARE supplemental program, and is not supplemental to 
coverage provided under a group health plan.

    (c) Treatment of partnerships. For purposes of this part:
    (1) Treatment as a group health plan. Any plan, fund, or program 
that would not be (but for this paragraph (c)) an employee welfare 
benefit plan and that is established or maintained by a partnership, to 
the extent that the plan, fund, or program provides medical care 
(including items and services paid for as medical care) to present or 
former partners in the partnership or to their dependents (as defined 
under the terms of the plan, fund, or program), directly or through 
insurance, reimbursement, or otherwise, is treated (subject to paragraph 
(c)(2) of this section) as an employee welfare benefit plan that is a 
group health plan.
    (2) Employment relationship. In the case of a group health plan, the 
term employer also includes the partnership in relation to any bona fide 
partner. In addition, the term employee also includes any bona fide 
partner. Whether or not an individual is a bona fide partner is 
determined based on all the relevant facts and circumstances, including 
whether the individual performs services on behalf of the partnership.
    (3) Participants of group health plans. In the case of a group 
health plan, the term participant also includes any individual described 
in paragraph (c)(3)(i) or (ii) of this section if the individual is, or 
may become, eligible to receive a benefit under the plan or the 
individual's beneficiaries may be eligible to receive any such benefit.

[[Page 98]]

    (i) In connection with a group health plan maintained by a 
partnership, the individual is a partner in relation to the partnership.
    (ii) In connection with a group health plan maintained by a self-
employed individual (under which one or more employees are 
participants), the individual is the self-employed individual.
    (d) Determining the average number of employees. [Reserved]

[69 FR 78798, Dec. 30, 2004, as amended at 74 FR 51692, Oct. 7, 2009; 78 
FR 65092, Oct. 30, 2013; 79 FR 59136, Oct. 1, 2014; 80 FR 14007, Mar. 
18, 2015; 81 FR 75326, Oct. 31, 2016; 84 FR 29024, June 20, 2019; 85 FR 
29259, May 14, 2020]



    Subpart E_Provisions Applicable to Only Health Insurance Issuers



Sec.  146.150  Guaranteed availability of coverage for employers in
the small group market.

    (a) Issuance of coverage in the small group market. Subject to 
paragraphs (c) through (f) of this section, each health insurance issuer 
that offers health insurance coverage in the small group market in a 
State must--
    (1) Offer, to any small employer in the State, all products that are 
approved for sale in the small group market and that the issuer is 
actively marketing, and must accept any employer that applies for any of 
those products; and
    (2) Accept for enrollment under the coverage every eligible 
individual (as defined in paragraph (b) of this section) who applies for 
enrollment during the period in which the individual first becomes 
eligible to enroll under the terms of the group health plan, or during a 
special enrollment period, and may not impose any restriction on an 
eligible individual's being a participant or beneficiary, which is 
inconsistent with the nondiscrimination provisions of Sec.  146.121.
    (b) Eligible individual defined. For purposes of this section, the 
term ``eligible individual'' means an individual who is eligible--
    (1) To enroll in group health insurance coverage offered to a group 
health plan maintained by a small employer, in accordance with the terms 
of the group health plan;
    (2) For coverage under the rules of the health insurance issuer 
which are uniformly applicable in the State to small employers in the 
small group market; and
    (3) For coverage in accordance with all applicable State laws 
governing the issuer and the small group market.
    (c) Special rules for network plans. (1) In the case of a health 
insurance issuer that offers health insurance coverage in the small 
group market through a network plan, the issuer may--
    (i) Limit the employers that may apply for the coverage to those 
with eligible individuals who live, work, or reside in the service area 
for the network plan; and
    (ii) Within the service area of the plan, deny coverage to employers 
if the issuer has demonstrated to the applicable State authority (if 
required by the State authority) that--
    (A) It will not have the capacity to deliver services adequately to 
enrollees of any additional groups because of its obligations to 
existing group contract holders and enrollees; and
    (B) It is applying this paragraph (c)(1) uniformly to all employers 
without regard to the claims experience of those employers and their 
employees (and their dependents) or any health status-related factor 
relating to those employees and dependents.
    (2) An issuer that denies health insurance coverage to an employer 
in any service area, in accordance with paragraph (c)(1)(ii) of this 
section, may not offer coverage in the small group market within the 
service area to any employer for a period of 180 days after the date the 
coverage is denied. This paragraph (c)(2) does not limit the issuer's 
ability to renew coverage already in force or relieve the issuer of the 
responsibility to renew that coverage.
    (3) Coverage offered within a service area after the 180-day period 
specified in paragraph (c)(2) of this section is subject to the 
requirements of this section.
    (d) Application of financial capacity limits. (1) A health insurance 
issuer may deny health insurance coverage in the small group market if 
the issuer has demonstrated to the applicable

[[Page 99]]

State authority (if required by the State authority) that it--
    (i) Does not have the financial reserves necessary to underwrite 
additional coverage; and
    (ii) Is applying this paragraph (d)(1) uniformly to all employers in 
the small group market in the State consistent with applicable State law 
and without regard to the claims experience of those employers and their 
employees (and their dependents) or any health status-related factor 
relating to those employees and dependents.
    (2) An issuer that denies group health insurance coverage to any 
small employer in a State under paragraph (d)(1) of this section may not 
offer coverage in connection with group health plans in the small group 
market in the State before the later of the following dates:
    (i) The 181st day after the date the issuer denies coverage.
    (ii) The date the issuer demonstrates to the applicable State 
authority, if required under applicable State law, that the issuer has 
sufficient financial reserves to underwrite additional coverage.
    (3) Paragraph (d)(2) of this section does not limit the issuer's 
ability to renew coverage already in force or relieve the issuer of the 
responsibility to renew that coverage.
    (4) Coverage offered after the 180-day period specified in paragraph 
(d)(2) of this section is subject to the requirements of this section.
    (5) An applicable State authority may provide for the application of 
this paragraph (d) on a service-area-specific basis.
    (e) Exception to requirement for failure to meet certain minimum 
participation or contribution rules. (1) Paragraph (a) of this section 
does not preclude a health insurance issuer from establishing employer 
contribution rules or group participation rules for the offering of 
health insurance coverage in connection with a group health plan in the 
small group market, as allowed under applicable State law.
    (2) For purposes of paragraph (e)(1) of this section--
    (i) The term ``employer contribution rule'' means a requirement 
relating to the minimum level or amount of employer contribution toward 
the premium for enrollment of participants and beneficiaries; and
    (ii) The term ``group participation rule'' means a requirement 
relating to the minimum number of participants or beneficiaries that 
must be enrolled in relation to a specified percentage or number of 
eligible individuals or employees of an employer.
    (f) Exception for coverage offered only to bona fide association 
members. Paragraph (a) of this section does not apply to health 
insurance coverage offered by a health insurance issuer if that coverage 
is made available in the small group market only through one or more 
bona fide associations (as defined in 45 CFR 144.103).

(Approved by the Office of Management and Budget under control number 
0938-0702)

[62 FR 16958, Apr. 8, 1997; 62 FR 31694, June 10, 1997, as amended at 62 
FR 35906, July 2, 1997; 67 FR 48811, July 26, 2002]



Sec.  146.152  Guaranteed renewability of coverage for employers in
the group market.

    (a) General rule. Subject to paragraphs (b) through (f) of this 
section, a health insurance issuer offering health insurance coverage in 
the small or large group market is required to renew or continue in 
force the coverage at the option of the plan sponsor or the individual, 
as applicable.
    (b) Exceptions. An issuer may nonrenew or discontinue group health 
insurance coverage offered in the small or large group market based only 
on one or more of the following:
    (1) Nonpayment of premiums. The plan sponsor has failed to pay 
premiums or contributions in accordance with the terms of the health 
insurance coverage, including any timeliness requirements.
    (2) Fraud. The plan sponsor has performed an act or practice that 
constitutes fraud or made an intentional misrepresentation of material 
fact in connection with the coverage.
    (3) Violation of participation or contribution rules. The plan 
sponsor has failed to comply with a material plan provision relating to 
any employer contribution or group participation rules permitted under 
Sec.  146.150(e) in the case of the small group market or under 
applicable State law in the case of the large group market.

[[Page 100]]

    (4) Termination of product. The issuer is ceasing to offer coverage 
in the market in accordance with paragraph (c) or (d) of this section 
and applicable State law.
    (5) Enrollees' movement outside service area. For network plans, 
there is no longer any enrollee under the group health plan who lives, 
resides, or works in the service area of the issuer (or in the area for 
which the issuer is authorized to do business); and in the case of the 
small group market, the issuer applies the same criteria it would apply 
in denying enrollment in the plan under Sec.  146.150(c); provided the 
issuer provides notice in accordance with the requirements of paragraph 
(c)(1) of this section.
    (6) Association membership ceases. For coverage made available in 
the small or large group market only through one or more bona fide 
associations, if the employer's membership in the association ceases, 
but only if the coverage is terminated uniformly without regard to any 
health status-related factor relating to any covered individual.
    (c) Discontinuing a particular product. In any case in which an 
issuer decides to discontinue offering a particular product offered in 
the small or large group market, that product may be discontinued by the 
issuer in accordance with applicable State law in the particular market 
only if--
    (1) The issuer provides notice in writing, in a form and manner 
specified by the Secretary, to each plan sponsor provided that 
particular product in that market (and to all participants and 
beneficiaries covered under such coverage) of the discontinuation at 
least 90 days before the date the coverage will be discontinued;
    (2) The issuer offers to each plan sponsor provided that particular 
product the option, on a guaranteed issue basis, to purchase all (or, in 
the case of the large group market, any) other health insurance coverage 
currently being offered by the issuer to a group health plan in that 
market; and
    (3) In exercising the option to discontinue that product and in 
offering the option of coverage under paragraph (c)(2) of this section, 
the issuer acts uniformly without regard to the claims experience of 
those sponsors or any health status-related factor relating to any 
participants or beneficiaries covered or new participants or 
beneficiaries who may become eligible for such coverage.
    (d) Discontinuing all coverage. An issuer may elect to discontinue 
offering all health insurance coverage in the small or large group 
market or both markets in a State in accordance with applicable State 
law only if--
    (1) The issuer provides notice in writing to the applicable State 
authority and to each plan sponsor (and all participants and 
beneficiaries covered under the coverage) of the discontinuation at 
least 180 days prior to the date the coverage will be discontinued; and
    (2) All health insurance policies issued or delivered for issuance 
in the State in the market (or markets) are discontinued and not 
renewed.
    (3) For purposes of this paragraph (d), subject to applicable State 
law, an issuer will not be considered to have discontinued offering all 
health insurance coverage in a market in a State if--
    (i) The issuer (in this paragraph referred to as the initial issuer) 
or, if the issuer is a member of a controlled group, any other issuer 
that is a member of such controlled group, offers and makes available in 
the applicable market in the State at least one product that is 
considered in accordance with Sec.  144.103 of this subchapter to be the 
same product as a product the initial issuer had been offering in such 
market in such State; or
    (ii) The issuer--
    (A) Offers and makes available at least one product (in paragraphs 
(d)(3)(ii)(A) through (C) of this section referred to as the new 
product) in the applicable market in the State, even if such product is 
not considered in accordance with Sec.  144.103 of this subchapter to be 
the same product as a product the issuer had been offering in the 
applicable market in the State (in paragraphs (d)(3)(ii)(A) through (C) 
of this section referred to as the discontinued product);
    (B) Subjects such new product or products to the applicable process 
and requirements established under part 154 of this title as if such 
process and requirements applied with respect to

[[Page 101]]

that product or products, to the extent such process and requirements 
are otherwise applicable to coverage of the same type and in the same 
market; and
    (C) Reasonably identifies the discontinued product or products that 
correspond to the new product or products for purposes of the process 
and requirements applied pursuant to paragraph (d)(3)(ii)(B) of this 
section.
    (4) For purposes of this section, the term controlled group means a 
group of two or more persons that is treated as a single employer under 
sections 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code of 
1986, as amended, or a narrower group as may be provided by applicable 
State law.
    (e) Prohibition on market reentry. An issuer who elects to 
discontinue offering all health insurance coverage in a market (or 
markets) in a State as described in paragraph (d) of this section may 
not issue coverage in the market (or markets) and State involved during 
the 5-year period beginning on the date of discontinuation of the last 
coverage not renewed.
    (f) Exception for uniform modification of coverage. (1) Only at the 
time of coverage renewal may issuers modify the health insurance 
coverage for a product offered to a group health plan in the following--
    (i) Large group market; and
    (ii) Small group market if, for coverage available in this market 
(other than only through one or more bona fide associations), the 
modification is consistent with State law and is effective uniformly 
among group health plans with that product.
    (2) For purposes of paragraph (f)(1)(ii) of this section, 
modifications made uniformly and solely pursuant to applicable Federal 
or State requirements are considered a uniform modification of coverage 
if:
    (i) The modification is made within a reasonable time period after 
the imposition or modification of the Federal or State requirement; and
    (ii) The modification is directly related to the imposition or 
modification of the Federal or State requirement.
    (3) For purposes of paragraph (f)(1)(ii) of this section, other 
types of modifications made uniformly are considered a uniform 
modification of coverage if the health insurance coverage for the 
product in the small group market meets all of the following criteria:
    (i) The product is offered by the same health insurance issuer 
(within the meaning of section 2791(b)(2) of the PHS Act), or if the 
issuer is a member of a controlled group (as described in paragraph 
(d)(4) of this section), any other health insurance issuer that is a 
member of such controlled group;
    (ii) The product is offered as the same product network type (for 
example, health maintenance organization, preferred provider 
organization, exclusive provider organization, point of service, or 
indemnity);
    (iii) The product continues to cover at least a majority of the same 
service area;
    (iv) Within the product, each plan has the same cost-sharing 
structure as before the modification, except for any variation in cost 
sharing solely related to changes in cost and utilization of medical 
care, or to maintain the same metal tier level described in sections 
1302(d) and (e) of the Affordable Care Act; and
    (v) The product provides the same covered benefits, except for any 
changes in benefits that cumulatively impact the rate for any plan 
within the product within an allowable variation of 2 percentage points (not including changes pursuant to 
applicable Federal or State requirements).
    (4) A State may only broaden the standards in paragraphs (f)(3)(iii) 
and (iv) of this section.
    (g) Application to coverage offered only through associations. In 
the case of health insurance coverage that is made available by a health 
insurance issuer in the small or large group market to employers only 
through one or more associations, the reference to ``plan sponsor'' is 
deemed, with respect to coverage provided to an employer member of the 
association, to include a reference to such employer.
    (h) Notice of renewal of coverage. If an issuer in the small group 
market is renewing grandfathered coverage as described in paragraph (a) 
of this section, or uniformly modifying grandfathered coverage as 
described in paragraph (f) of this section, the issuer must provide to 
each plan sponsor written notice of

[[Page 102]]

the renewal at least 60 calendar days before the date the coverage will 
be renewed in a form and manner specified by the Secretary.

(Approved by the Office of Management and Budget under control number 
0938-0702)

[62 FR 16958, Apr. 8, 1997; 62 FR 31670, June 10, 1997, as amended at 62 
FR 35906, July 2, 1997; 79 FR 30335, May 27, 2014; 79 FR 53004, Sept. 5, 
2014; 81 FR 94172, Dec. 22, 2016; 84 FR 17561, Apr. 25, 2019]



Sec.  146.160  Disclosure of information.

    (a) General rule. In connection with the offering of any health 
insurance coverage to a small employer, a health insurance issuer is 
required to--
    (1) Make a reasonable disclosure to the employer, as part of its 
solicitation and sales materials, of the availability of information 
described in paragraph (b) of this section; and
    (2) Upon request of the employer, provide that information to the 
employer.
    (b) Information described. Subject to paragraph (d) of this section, 
information that must be provided under paragraph (a)(2) of this section 
is information concerning the following:
    (1) Provisions of coverage relating to the following:
    (i) The issuer's right to change premium rates and the factors that 
may affect changes in premium rates.
    (ii) Renewability of coverage.
    (iii) Any preexisting condition exclusion, including use of the 
alternative method of counting creditable coverage.
    (iv) Any affiliation periods applied by HMOs.
    (v) The geographic areas served by HMOs.
    (2) The benefits and premiums available under all health insurance 
coverage for which the employer is qualified, under applicable State 
law. See Sec.  146.150(b) through (f) for allowable limitations on 
product availability.
    (c) Form of information. The information must be described in 
language that is understandable by the average small employer, with a 
level of detail that is sufficient to reasonably inform small employers 
of their rights and obligations under the health insurance coverage. 
This requirement is satisfied if the issuer provides each of the 
following with respect to each product offered:
    (1) An outline of coverage. For purposes of this section, outline of 
coverage means a description of benefits in summary form.
    (2) The rate or rating schedule that applies to the product (with 
and without the preexisting condition exclusion or affiliation period).
    (3) The minimum employer contribution and group participation rules 
that apply to any particular type of coverage.
    (4) In the case of a network plan, a map or listing of counties 
served.
    (5) Any other information required by the State.
    (d) Exception. An issuer is not required to disclose any information 
that is proprietary and trade secret information under applicable law.

(Approved by the Office of Management and Budget under control number 
0938-0702)

[62 FR 16958, Apr. 8, 1997, as amended at 62 FR 35906, July 2, 1997]



              Subpart F_Exclusion of Plans and Enforcement



Sec.  146.180  Treatment of non-Federal governmental plans.

    (a) Opt-out election for self-funded non-Federal governmental 
plans--(1) Requirements subject to exemption. The PHS Act requirements 
described in this paragraph are the following:
    (i) Limitations on preexisting condition exclusion periods in 
accordance with section 2701 of the PHS Act as codified before enactment 
of the Affordable Care Act.
    (ii) Special enrollment periods for individuals and dependents 
described under section 2704(f) of the PHS Act.
    (iii) Prohibitions against discriminating against individual 
participants and beneficiaries based on health status under section 2705 
of the PHS Act, except that the sponsor of a self-funded non-Federal 
governmental plan cannot elect to exempt its plan from requirements 
under section 2705(a)(6) and 2705(c) through (f) that prohibit 
discrimination with respect to genetic information.

[[Page 103]]

    (iv) Standards relating to benefits for mothers and newborns under 
section 2725 of the PHS Act.
    (v) Parity in mental health and substance use disorder benefits 
under section 2726 of the PHS Act.
    (vi) Required coverage for reconstructive surgery following 
mastectomies under section 2727 of the PHS Act.
    (vii) Coverage of dependent students on a medically necessary leave 
of absence under section 2728 of the PHS Act.
    (2) General rule. For plan years beginning on or after September 23, 
2010, a sponsor of a non-Federal governmental plan may elect to exempt 
its plan, to the extent the plan is not provided through health 
insurance coverage (that is, it is self-funded), from one or more of the 
requirements described in paragraphs (a)(1)(iv) through (vii) of this 
section.
    (3) Special rule for certain collectively bargained plans. In the 
case of a plan that is maintained pursuant to a collective bargaining 
agreement that was ratified before March 23, 2010, and whose sponsor 
made an election to exempt its plan from any of the requirements 
described in paragraphs (a)(1)(i) through (iii) of this section, the 
provisions of paragraph (a)(2) of this section apply for plan years 
beginning after the expiration of the term of the agreement.
    (4) Examples--(i) Example 1. A non-Federal governmental employer has 
elected to exempt its self-funded group health plan from all of the 
requirements described in paragraph (a)(1) of this section. The plan 
year commences September 1 of each year. The plan is not subject to the 
provisions of paragraph (a)(2) of this section until the plan year that 
commences on September 1, 2011. Accordingly, for that plan year and any 
subsequent plan years, the plan sponsor may elect to exempt its plan 
only from the requirements described in paragraphs (a)(1)(iv) through 
(vii) of this section.
    (ii) Example 2. A non-Federal governmental employer has elected to 
exempt its collectively bargained self-funded plan from all of the 
requirements described in paragraph (a)(1) of this section. The 
collective bargaining agreement applies to five plan years, October 1, 
2009 through September 30, 2014. For the plan year that begins on 
October 1, 2014, the plan sponsor is no longer permitted to elect to 
exempt its plan from the requirements described in paragraph (a)(1) of 
this section. Accordingly, for that plan year and any subsequent plan 
years, the plan sponsor may elect to exempt its plan only from the 
requirements described in paragraphs (a)(1)(iv) through (vii) of this 
section.
    (5) Limitations. (i) An election under this section cannot 
circumvent a requirement of the PHS Act to the extent the requirement 
applied to the plan before the effective date of the election.
    (A) Example 1. A plan is subject to requirements of section 2727 of 
the PHS Act, under which a plan that covers medical and surgical 
benefits with respect to a mastectomy must cover reconstructive surgery 
and certain other services following a mastectomy. An enrollee who has 
had a mastectomy receives reconstructive surgery on August 24. Claims 
with respect to the surgery are submitted to and processed by the plan 
in September. The group health plan commences a new plan year each 
September 1. Effective September 1, the plan sponsor elects to exempt 
its plan from section 2727 of the PHS Act. The plan cannot, on the basis 
of its exemption election, decline to pay for the claims incurred on 
August 24.
    (B) [Reserved]
    (ii) If a group health plan is co-sponsored by two or more 
employers, then only plan enrollees of the non-Federal governmental 
employer(s) with a valid election under this section are affected by the 
election.
    (6) Stop-loss or excess risk coverage. For purposes of this 
section--
    (i) Subject to paragraph (a)(6)(ii) of this section, the purchase of 
stop-loss or excess risk coverage by a self-funded non-Federal 
governmental plan does not prevent an election under this section.
    (ii) Regardless of whether coverage offered by an issuer is 
designated as ``stop-loss'' coverage or ``excess risk'' coverage, if it 
is regulated as group health insurance under an applicable

[[Page 104]]

State law, then for purposes of this section, a non-Federal governmental 
plan that purchases the coverage is considered to be fully insured. In 
that event, a plan may not be exempted under this section from the 
requirements described in paragraph (a)(1) of this section.
    (7) Construction. Nothing in this part should be construed as 
imposing collective bargaining obligations on any party to the 
collective bargaining process.
    (b) Form and manner of election--(1) Election requirements. The 
election must meet the following requirements:
    (i) Be made in an electronic format in a form and manner as 
described by the Secretary in guidance.
    (ii) Be made in conformance with all of the plan sponsor's rules, 
including any public hearing requirements.
    (iii) Specify the beginning and ending dates of the period to which 
the election is to apply. This period can be either of the following 
periods:
    (A) A single specified plan year, as defined in Sec.  144.103 of 
this subchapter.
    (B) The ``term of the agreement,'' as specified in paragraph (b)(2) 
of this section, in the case of a plan governed by collective 
bargaining.
    (iv) Specify the name of the plan and the name and address of the 
plan administrator, and include the name and telephone number of a 
person CMS may contact regarding the election.
    (v) State that the plan does not include health insurance coverage, 
or identify which portion of the plan is not funded through health 
insurance coverage.
    (vi) Specify each requirement described in paragraph (a)(1) of this 
section from which the plan sponsor elects to exempt the plan.
    (vii) Certify that the person signing the election document, 
including (if applicable) a third party plan administrator, is legally 
authorized to do so by the plan sponsor.
    (viii) Include, as an attachment, a copy of the notice described in 
paragraph (f) of this section.
    (ix) In the case of a plan sponsor submitting one opt-out election 
for all group health plans subject to the same collective bargaining 
agreement, include a list of plans subject to the agreement.
    (x) In the case of a plan sponsor submitting opt-out elections for 
more than one group health plan that is not subject to a collective 
bargaining agreement, submit a separate election document for each such 
plan.
    (2) ``Term of the agreement'' defined. Except as provided in 
paragraphs (b)(2)(i) and (ii) of this section, for purposes of this 
section ``term of the agreement'' means all group health plan years 
governed by a single collective bargaining agreement.
    (i) In the case of a group health plan for which the last plan year 
governed by a prior collective bargaining agreement expires during the 
bargaining process for a new agreement, the term of the prior agreement 
includes all plan years governed by the agreement plus the period of 
time that precedes the latest of the following dates, as applicable, 
with respect to the new agreement:
    (A) The date of an agreement between the governmental employer and 
union officials.
    (B) The date of ratification of an agreement between the 
governmental employer and the union.
    (C) The date impasse resolution, arbitration or other closure of the 
collective bargaining process is finalized when agreement is not 
reached.
    (ii) In the case of a group health plan governed by a collective 
bargaining agreement for which closure is not reached before the last 
plan year under the immediately preceding agreement expires, the term of 
the new agreement includes all plan years governed by the agreement 
excluding the period that precedes the latest applicable date specified 
in paragraph (b)(2)(i) of this section.
    (3) Construction--(i) Dispute resolution. Nothing in paragraph 
(b)(1)(ii) of this section should be construed to mean that CMS 
arbitrates disputes between plan sponsors, participants, beneficiaries, 
or their representatives regarding whether an election complies with all 
of a plan sponsor's rules.
    (ii) Future elections not preempted. If a plan must comply with one 
or more requirements described in paragraph (a)(1) of this section for a 
given plan

[[Page 105]]

year or period of plan coverage, nothing in this section should be 
construed as preventing a plan sponsor from submitting an election in 
accordance with this section for a subsequent plan year or period of 
plan coverage.
    (c) Filing a timely election--(1) Plan not governed by collective 
bargaining. Subject to paragraph (c)(4) of this section, if a plan is 
not governed by a collective bargaining agreement, a plan sponsor or 
entity acting on behalf of a plan sponsor must file an election with CMS 
before the first day of the plan year.
    (2) Plan governed by a collective bargaining agreement. Subject to 
paragraph (d)(4) of this section, if a plan is governed by a collective 
bargaining agreement that was ratified before March 23, 2010, a plan 
sponsor or entity acting on behalf of a plan sponsor must file an 
election with CMS before the first day of the first plan year governed 
by a collective bargaining agreement, or by the 45th day after the 
latest applicable date specified in paragraph (b)(2)(i) of this section, 
if the 45th day falls on or after the first day of the plan year.
    (3) Special rule for timely filing. If the latest filing date 
specified under paragraphs (c)(1) or (c)(2) of this section falls on a 
Saturday, Sunday, or a State or Federal holiday, CMS accepts filings 
submitted on the next business day.
    (4) Filing extension based on good cause. CMS may extend the 
deadlines specified in paragraphs (c)(1) and (2) of this section for 
good cause if the plan substantially complies with the requirements of 
paragraph (e) of this section.
    (5) Failure to file a timely election. Absent an extension under 
paragraph (c)(4) of this section, a plan sponsor's failure to file a 
timely election under paragraph (c)(1) or (2) of this section makes the 
plan subject to all requirements of this part for the entire plan year 
to which the election would have applied, or, in the case of a plan 
governed by a collective bargaining agreement, for any plan years under 
the agreement for which the election is not timely filed.
    (d) Additional information required--(1) Written notification. If an 
election is timely filed, but CMS determines that the election document 
(or the notice to plan enrollees) does not meet all of the requirements 
of this section, CMS may notify the plan sponsor, or other entity that 
filed the election, that it must submit any additional information that 
CMS has determined is necessary to meet those requirements. The 
additional information must be filed with CMS by the later of the 
following dates:
    (i) The last day of the plan year.
    (ii) The 45th day after the date of CMS's written notification 
requesting additional information.
    (2) Timely response. For submissions via hard copy via U.S. Mail, 
CMS uses the postmark on the envelope in which the additional 
information is submitted to determine that the information is timely 
filed as specified under paragraph (d)(1) of this section. If the latest 
filing date falls on a Saturday, Sunday, or a State or Federal holiday, 
CMS accepts a postmark on the next business day.
    (3) Failure to respond timely. CMS may invalidate an election if the 
plan sponsor, or other entity that filed the election, fails to timely 
submit the additional information as specified under paragraph (d)(1) of 
this section.
    (e) Notice to enrollees--(1) Mandatory notification. (i) A plan that 
makes the election described in this section must notify each affected 
enrollee of the election, and explain the consequences of the election. 
For purposes of paragraph (e) of this section, if the dependent(s) of a 
participant reside(s) with the participant, a plan need only provide 
notice to the participant.
    (ii) The notice must be in writing and, except as provided in 
paragraph (e)(2) of this section with regard to initial notices, must be 
provided to each enrollee at the time of enrollment under the plan, and 
on an annual basis no later than the last day of each plan year (as 
defined in Sec.  144.103 of this subchapter) for which there is an 
election.
    (iii) A plan may meet the notification requirements of paragraph (e) 
of this section by prominently printing the notice in a summary plan 
description, or equivalent description, that it provides to each 
enrollee at the time of enrollment, and annually. Also, when a plan 
provides a notice to an enrollee at the time of enrollment, that notice

[[Page 106]]

may serve as the initial annual notice for that enrollee.
    (2) Initial notices. (i) If a plan is not governed by a collective 
bargaining agreement, with regard to the initial plan year to which an 
election under this section applies, the plan must provide the initial 
annual notice of the election to all enrollees before the first day of 
that plan year, and notice at the time of enrollment to all individuals 
who enroll during that plan year.
    (ii) In the case of a collectively bargained plan, with regard to 
the initial plan year to which an election under this section applies, 
the plan must provide the initial annual notice of the election to all 
enrollees before the first day of the plan year, or within 30 days after 
the latest applicable date specified in paragraph (b)(2)(i) of this 
section if the 30th day falls on or after the first day of the plan 
year. Also, the plan must provide a notice at the time of enrollment to 
individuals who--
    (A) Enroll on or after the first day of the plan year, when closure 
of the collective bargaining process is reached before the plan year 
begins; or
    (B) Enroll on or after the latest applicable date specified in 
paragraph (b)(2)(i) of this section if that date falls on or after the 
first day of the plan year.
    (3) Notice content. The notice must include at least the following 
information:
    (i) The specific requirements described in paragraph (a)(1) of this 
section from which the plan sponsor is electing to exempt the plan, and 
a statement that, in general, Federal law imposes these requirements 
upon group health plans.
    (ii) A statement that Federal law gives the plan sponsor of a self-
funded non-Federal governmental plan the right to exempt the plan in 
whole, or in part, from the listed requirements, and that the plan 
sponsor has elected to do so.
    (iii) A statement identifying which parts of the plan are subject to 
the election.
    (iv) A statement identifying which of the listed requirements, if 
any, apply under the terms of the plan, or as required by State law, 
without regard to an exemption under this section.
    (f) Subsequent elections--(1) Election renewal. A plan sponsor may 
renew an election under this section through subsequent elections. The 
timeliness standards described in paragraph (c) of this section apply to 
election renewals under paragraph (f) of this section.
    (2) Form and manner of renewal. Except for the requirement to 
forward to CMS a copy of the notice to enrollees under paragraph 
(b)(1)(viii) of this section, the plan sponsor must comply with the 
election requirements of paragraph (b)(1) of this section. In lieu of 
providing a copy of the notice under paragraph (b)(1)(viii) of this 
section, the plan sponsor may include a statement that the notice has 
been, or will be, provided to enrollees as specified under paragraph (e) 
of this section.
    (3) Election renewal includes provisions from which plan not 
previously exempted. If an election renewal includes a requirement 
described in paragraph (a)(1) of this section from which the plan 
sponsor did not elect to exempt the plan for the preceding plan year, 
the advance notification requirements of paragraph (e)(2) of this 
section apply with respect to the additional requirement(s) of paragraph 
(a) of this section from which the plan sponsor is electing to exempt 
the plan.
    (4) Special rules regarding renewal of an election under a 
collective bargaining agreement. (i) If protracted negotiations with 
respect to a new agreement result in an extension of the term of the 
prior agreement (as provided under paragraph (b)(2)(i) of this section) 
under which an election under this section was in effect, the plan must 
comply with the enrollee notification requirements of paragraph (e)(1) 
of this section, and, following closure of the collective bargaining 
process, must file an election renewal with CMS as provided under 
paragraph (c)(2) of this section.
    (ii) If a single plan applies to more than one bargaining unit, and 
the plan is governed by collective bargaining agreements of varying 
lengths, paragraph (c)(2) of this section, with respect to an election 
renewal, applies to the plan as governed by the agreement that results 
in the earliest filing date.
    (g) Requirements not subject to exemption--(1) Genetic information. 
Without regard to an election under this section

[[Page 107]]

that exempts a non-Federal governmental plan from any or all of the 
provisions of Sec. Sec.  146.111 and 146.121, the exemption election 
must not be construed to exempt the plan from any provisions of this 
part that pertain to genetic information.
    (2) Enforcement. CMS enforces these requirements as provided under 
paragraph (j) of this section.
    (h) Effect of failure to comply with certification and notification 
requirements--(1) Substantial failure--(i) General rule. Except as 
provided in paragraph (h)(1)(iii) of this section, a substantial failure 
to comply with paragraph (e) or (g)(1) of this section results in the 
invalidation of an election under this section with respect to all plan 
enrollees for the entire plan year. That is, the plan is subject to all 
requirements of this part for the entire plan year to which the election 
otherwise would have applied.
    (ii) Determination of substantial failure. CMS determines whether a 
plan has substantially failed to comply with a requirement of paragraph 
(e) or (g)(1) of this section based on all relevant facts and 
circumstances, including previous record of compliance, gravity of the 
violation and whether a plan corrects the failure, as warranted, within 
30 days of learning of the violation. However, in general, a plan's 
failure to provide a notice of the fact and consequences of an election 
under this section to an individual at the time of enrollment, or on an 
annual basis before a given plan year expires, constitutes a substantial 
failure.
    (iii) Exceptions--(A) Multiple employers. If the plan is sponsored 
by multiple employers, and only certain employers substantially fail to 
comply with the requirements of paragraph (e) or (g)(1) of this section, 
then the election is invalidated with respect to those employers only, 
and not with respect to other employers that complied with those 
requirements, unless the plan chooses to cancel its election entirely.
    (B) Limited failure to provide notice. If a substantial failure to 
notify enrollees of the fact and consequences of an election is limited 
to certain individuals, the election under this section is valid only 
if, for the plan year with respect to which the failure has occurred, 
the plan agrees not to apply the election with respect to the 
individuals who were not notified and so informs those individuals in 
writing.
    (2) Examples--(i) Example 1. A self-funded, non-Federal group health 
plan is co-sponsored by 10 school districts. Nine of the school 
districts have fully complied with the requirements of paragraph (e) of 
this section, including providing notice to new employees at the time of 
their enrollment in the plan, regarding the group health plan's 
exemption under this section from requirements of this part. One school 
district, which hired 10 new teachers during the summer for the upcoming 
school year, neglected to notify three of the new hires about the group 
health plan's exemption election at the time they enrolled in the plan. 
The school district has substantially failed to comply with a 
requirement of paragraph (e) of this section with respect to these 
individuals. The school district learned of the oversight six weeks into 
the school year, and promptly (within 30 days of learning of the 
oversight) provided notice to the three teachers regarding the plan's 
exemption under this section and that the exemption does not apply to 
them, or their dependents, during the plan year of their enrollment 
because of the plan's failure to timely notify them of its exemption. 
The plan complies with the requirements of this part for these 
individuals for the plan year of their enrollment. CMS would not require 
the plan to come into compliance with the requirements of this part for 
other enrollees.
    (ii) Example 2. Two non-Federal governmental employers cosponsor a 
self-funded group health plan. One employer substantially fails to 
comply with the requirements of paragraph (e) of this section. While the 
plan may limit the invalidation of the election to enrollees of the plan 
sponsor that is responsible for the substantial failure, the plan 
sponsors determine that administering the plan in that manner would be 
too burdensome. Accordingly, in this example, the plan sponsors choose 
to cancel the election entirely. Both plan sponsors come into compliance 
with the requirements of this part with respect to all enrollees for the

[[Page 108]]

plan year for which the substantial failure has occurred.
    (i) Election invalidated. If CMS finds cause to invalidate an 
election under this section, the following rules apply:
    (1) CMS notifies the plan sponsor (and the plan administrator if 
other than the plan sponsor and the administrator's address is known to 
CMS) in writing that CMS has made a preliminary determination that an 
election is invalid, and States the basis for that determination.
    (2) CMS's notice informs the plan sponsor that it has 45 days after 
the date of CMS's notice to explain in writing why it believes its 
election is valid. The plan sponsor should provide applicable statutory 
and regulatory citations to support its position.
    (3) CMS verifies that the plan sponsor's response is timely filed as 
provided under paragraph (c)(3) of this section. CMS will not consider a 
response that is not timely filed.
    (4) If CMS's preliminary determination that an election is invalid 
remains unchanged after CMS considers the plan sponsor's timely response 
(or in the event that the plan sponsor fails to respond timely), CMS 
provides written notice to the plan sponsor (and the plan administrator 
if other than the plan sponsor and the administrator's address is known 
to CMS) of CMS's final determination that the election is invalid. Also, 
CMS informs the plan sponsor that, within 45 days of the date of the 
notice of final determination, the plan, subject to paragraph 
(i)(1)(iii) of this section, must comply with all requirements of this 
part for the specified period for which CMS has determined the election 
to be invalid.
    (j) Enforcement. To the extent that an election under this section 
has not been filed or a non-Federal governmental plan otherwise is 
subject to one or more requirements of this part, CMS enforces those 
requirements under part 150 of this subchapter. This may include 
imposing a civil money penalty against the plan or plan sponsor, as 
determined under subpart C of part 150.
    (k) Construction. Nothing in this section should be construed to 
prevent a State from taking the following actions:
    (1) Establishing, and enforcing compliance with, the requirements of 
State law (as defined in Sec.  146.143(d)(1)), including requirements 
that parallel provisions of title XXVII of the PHS Act, that apply to 
non-Federal governmental plans or sponsors.
    (2) Prohibiting a sponsor of a non-Federal governmental plan within 
the State from making an election under this section.

[79 FR 30336, May 27, 2014]



PART 147_HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND 
INDIVIDUAL HEALTH INSURANCE MARKETS--Table of Contents



Sec.
147.100 Basis and scope.
147.102 Fair health insurance premiums.
147.103 State reporting.
147.104 Guaranteed availability of coverage.
147.106 Guaranteed renewability of coverage.
147.108 Prohibition of preexisting condition exclusions.
147.110 Prohibiting discrimination against participants, beneficiaries, 
          and individuals based on a health factor.
147.116 Prohibition on waiting periods that exceed 90 days.
147.120 Eligibility of children until at least age 26.
147.126 No lifetime or annual limits.
147.128 Rules regarding rescissions.
147.130 Coverage of preventive health services.
147.131 Accommodations in connection with coverage of certain preventive 
          health services.
147.132 Religious exemptions in connection with coverage of certain 
          preventive health services.
147.133 Moral exemptions in connection with coverage of certain 
          preventive health services.
147.136 Internal claims and appeals and external review processes.
147.138 Patient protections.
147.140 Preservation of right to maintain existing coverage.
147.145 Student health insurance coverage.
147.150 Coverage of essential health benefits.
147.160 Parity in mental health and substance use disorder benefits.
147.200 Summary of benefits and coverage and uniform glossary.

    Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92, 
as amended.

[[Page 109]]


    Source: 75 FR 27138, May 13, 2010, unless otherwise noted.



Sec.  147.100  Basis and scope.

    Part 147 of this subchapter implements the requirements of the 
Patient Protection and Affordable Care Act that apply to group health 
plans and health insurance issuers in the Group and Individual markets.



Sec.  147.102  Fair health insurance premiums.

    (a) In general. With respect to the premium rate charged by a health 
insurance issuer in accordance with Sec.  156.80 of this subchapter for 
health insurance coverage offered in the individual or small group 
market--
    (1) The rate may vary with respect to the particular plan or 
coverage involved only by determining the following:
    (i) Whether the plan or coverage covers an individual or family.
    (ii) Rating area, as established in accordance with paragraph (b) of 
this section. For purposes of this paragraph (a), rating area is 
determined--
    (A) In the individual market, using the primary policyholder's 
address.
    (B) In the small group market, using the group policyholder's 
principal business address. For purposes of this paragraph 
(a)(1)(ii)(B), principal business address means the principal business 
address registered with the State or, if a principal business address is 
not registered with the State, or is registered solely for purposes of 
service of process and is not a substantial worksite for the 
policyholder's business, the business address within the State where the 
greatest number of employees of such policyholder works. If, for a 
network plan, the group policyholder's principal business address is not 
within the service area of such plan, and the policyholder has employees 
who live, reside, or work within the service area, the principal 
business address for purposes of the network plan is the business 
address within the plan's service area where the greatest number of 
employees work as of the beginning of the plan year. If there is no such 
business address, the rating area for purposes of the network plan is 
the rating area that reflects where the greatest number of employees 
within the plan's service area live or reside as of the beginning of the 
plan year.
    (iii) Age, except that the rate may not vary by more than 3:1 for 
like individuals of different age who are age 21 and older and that the 
variation in rate must be actuarially justified for individuals under 
age 21, consistent with the uniform age rating curve under paragraph (e) 
of this section. For purposes of identifying the appropriate age 
adjustment under this paragraph and the age band under paragraph (d) of 
this section applicable to a specific enrollee, the enrollee's age as of 
the date of policy issuance or renewal must be used.
    (iv) Subject to section 2705 of the Public Health Service Act and 
its implementing regulations (related to prohibiting discrimination 
based on health status and programs of health promotion or disease 
prevention) as applicable, tobacco use, except that such rate may not 
vary by more than 1.5:1 and may only be applied with respect to 
individuals who may legally use tobacco under federal and state law. For 
purposes of this section, tobacco use means use of tobacco on average 
four or more times per week within no longer than the past 6 months. 
This includes all tobacco products, except that tobacco use does not 
include religious or ceremonial use of tobacco. Further, tobacco use 
must be defined in terms of when a tobacco product was last used.
    (2) The rate must not vary with respect to the particular plan or 
coverage involved by any other factor not described in paragraph (a)(1) 
of this section.
    (b) Rating area. (1) A state may establish one or more rating areas 
within that state, as provided in paragraphs (b)(3) and (b)(4) of this 
section, for purposes of applying this section and the requirements of 
title XXVII the Public Health Service Act and title I of the Patient 
Protection and Affordable Care Act.
    (2) If a state does not establish rating areas as provided in 
paragraphs (b)(3) and (b)(4) of this section or provide information on 
such rating areas in accordance with Sec.  147.103, or CMS determines in 
accordance with paragraph

[[Page 110]]

(b)(5) of this section that a state's rating areas under paragraph 
(b)(4) of this section are not adequate, the default will be one rating 
area for each metropolitan statistical area in the state and one rating 
area comprising all non-metropolitan statistical areas in the state, as 
defined by the Office of Management and Budget.
    (3) A state's rating areas must be based on the following geographic 
boundaries: Counties, three-digit zip codes, or metropolitan statistical 
areas and non-metropolitan statistical areas, as defined by the Office 
of Management and Budget, and will be presumed adequate if either of the 
following conditions are satisfied:
    (i) The state established by law, rule, regulation, bulletin, or 
other executive action uniform rating areas for the entire state as of 
January 1, 2013.
    (ii) The state establishes by law, rule, regulation, bulletin, or 
other executive action after January 1, 2013 uniform rating areas for 
the entire state that are no greater in number than the number of 
metropolitan statistical areas in the state plus one.
    (4) Notwithstanding paragraph (b)(3) of this section, a state may 
propose to CMS for approval a number of rating areas that is greater 
than the number described in paragraph (b)(3)(ii) of this section, 
provided such rating areas are based on the geographic boundaries 
specified in paragraph (b)(3) of this section.
    (5) In determining whether the rating areas established by each 
state under paragraph (b)(4) of this section are adequate, CMS will 
consider whether the state's rating areas are actuarially justified, are 
not unfairly discriminatory, reflect significant differences in health 
care unit costs, lead to stability in rates over time, apply uniformly 
to all issuers in a market, and are based on the geographic boundaries 
of counties, three-digit zip codes, or metropolitan statistical areas 
and non-metropolitan statistical areas.
    (c) Application of variations based on age or tobacco use. With 
respect to family coverage under health insurance coverage, the rating 
variations permitted under paragraphs (a)(1)(iii) and (a)(1)(iv) of this 
section must be applied based on the portion of the premium attributable 
to each family member covered under the coverage.
    (1) Per-member rating. The total premium for family coverage must be 
determined by summing the premiums for each individual family member. 
With respect to family members under the age of 21, the premiums for no 
more than the three oldest covered children must be taken into account 
in determining the total family premium.
    (2) Family tiers under community rating. If a state does not permit 
any rating variation for the factors described in paragraphs (a)(1)(iii) 
and (a)(1)(iv) of this section, the state may require that premiums for 
family coverage be determined by using uniform family tiers and the 
corresponding multipliers established by the state. If a state does not 
establish uniform family tiers and the corresponding multipliers, the 
per-member-rating methodology under paragraph (c)(1) of this section 
will apply in that state.
    (3) Application to small group market--(i) In the case of the small 
group market, the total premium charged to a group health plan is 
determined by summing the premiums of covered participants and 
beneficiaries in accordance with paragraph (c)(1) or (2) of this 
section, as applicable.
    (ii) Subject to paragraph (c)(3)(iii) of this section, nothing in 
this section prevents a state from requiring issuers to offer to a group 
health plan, or an issuer from voluntarily offering to a group health 
plan, premiums that are based on average enrollee premium amounts, 
provided that the total group premium established at the time of 
applicable enrollment at the beginning of the plan year is the same 
total amount derived in accordance with paragraph (c)(1) or (2) of this 
section, as applicable.
    (iii) Effective for plan years beginning on or after January 1, 
2015, an issuer that, in connection with a group health plan in the 
small group market, offers premiums that are based on average enrollee 
premium amounts under paragraph (c)(3)(ii) of this section must--
    (A) Ensure an average enrollee premium amount calculated based on 
applicable enrollment of participants and beneficiaries at the beginning 
of the

[[Page 111]]

plan year does not vary during the plan year.
    (B) Unless a state establishes and CMS approves an alternate rating 
methodology, calculate an average enrollee premium amount for covered 
individuals age 21 and older, and calculate an average enrollee premium 
amount for covered individuals under age 21. The premium for a given 
family composition is determined by summing the average enrollee premium 
amount applicable to each family member covered under the plan, taking 
into account no more than three covered children under age 21.
    (C) Pursuant to applicable state law, ensure that the average 
enrollee premium amount calculated for any individual covered under the 
plan does not include any rating variation for tobacco use permitted 
under paragraph (a)(1)(iv) of this section. The rating variation for 
tobacco use permitted under paragraph (a)(1)(iv) of this section is 
determined based on the premium rate that would be applied on a per-
member basis with respect to an individual who uses tobacco and then 
included in the premium charged for that individual.
    (D) To the extent permitted by applicable State law and, in the case 
of coverage offered through a SHOP, as permitted by the SHOP, apply this 
paragraph (c)(3)(iii) uniformly among group health plans enrolling in 
that product, giving those group health plans the option to pay premiums 
based on average enrollee premium amounts.
    (d) Uniform age bands. The following uniform age bands apply for 
rating purposes under paragraph (a)(1)(iii) of this section:
    (1) Child age bands. (i) For plan years or policy years beginning 
before January 1, 2018, a single age band for individuals age 0 through 
20.
    (ii) For plan years or policy years beginning on or after January 1, 
2018:
    (A) A single age band for individuals age 0 through 14.
    (B) One-year age bands for individuals age 15 through 20.
    (2) Adult age bands. One-year age bands for individuals age 21 
through 63.
    (3) Older adult age bands. A single age band for individuals age 64 
and older.
    (e) Uniform age rating curves. Each State may establish a uniform 
age rating curve in the individual or small group market, or both 
markets, for rating purposes under paragraph (a)(1)(iii) of this 
section. If a State does not establish a uniform age rating curve or 
provide information on such age curve in accordance with Sec.  147.103, 
a default uniform age rating curve specified in guidance by the 
Secretary to reflect market patterns in the individual and small group 
markets will apply in that State that takes into account the rating 
variation permitted for age under State law.
    (f) Special rule for large group market. If a state permits health 
insurance issuers that offer coverage in the large group market in the 
state to offer such coverage through an Exchange starting in 2017, the 
provisions of this section applicable to coverage in the small group 
market apply to all coverage offered in the large group market in the 
state.
    (g) Applicability date. The provisions of this section apply for 
plan years (in the individual market, policy years) beginning on or 
after January 1, 2014.
    (h) Grandfathered health plans. This section does not apply to 
grandfathered health plans in accordance with Sec.  147.140.

[78 FR 13436, Feb. 27, 2013, as amended at 78 FR 54133, Aug. 30, 2013; 
79 FR 13834, Mar. 11, 2014; 81 FR 12334, Mar. 8, 2016; 81 FR 94173, Dec. 
22, 2016; 83 FR 17058, Apr. 17, 2018]



Sec.  147.103  State reporting.

    (a) 2014. If a state has adopted or intends to adopt for the 2014 
plan or policy year a standard or requirement described in this 
paragraph, the state must submit to CMS information about such standard 
or requirement in a form and manner specified in guidance by the 
Secretary no later than March 29, 2013. A state standard or requirement 
is described in this paragraph if it includes any of the following:
    (1) A ratio narrower than 3:1 in connection with establishing rates 
for individuals who are age 21 and older, pursuant to Sec.  
147.102(a)(1)(iii).
    (2) A ratio narrower than 1.5:1 in connection with establishing 
rates for individuals who use tobacco legally, pursuant to Sec.  
147.102(a)(1)(iv).

[[Page 112]]

    (3) Geographic rating areas, pursuant to Sec.  147.102(b).
    (4) In states that do not permit rating based on age or tobacco use, 
uniform family tiers and corresponding multipliers, pursuant to Sec.  
147.102(c)(2).
    (5) A requirement that that issuers in the small group market offer 
to a group premiums that are based on average enrollee amounts, pursuant 
to paragraph Sec.  147.102(c)(3).
    (6) A uniform age rating curve, pursuant to Sec.  147.102(e).
    (b) Updates. If a state adopts a standard or requirement described 
in paragraph (a) of this section for any plan or policy year beginning 
after the 2014 plan or policy year (or updates a standard or requirement 
that applies for the 2014 plan or policy year), the state must submit to 
CMS information about such standard in a form and manner specified in 
guidance by the Secretary.
    (c) Applicability date. The provisions of this section apply on 
March 29, 2013.

[78 FR 13437, Feb. 27, 2013]



Sec.  147.104  Guaranteed availability of coverage.

    (a) Guaranteed availability of coverage in the individual and group 
market. Subject to paragraphs (b) through (d) of this section, a health 
insurance issuer that offers health insurance coverage in the 
individual, small group, or large group market in a State must offer to 
any individual or employer in the State all products that are approved 
for sale in the applicable market, and must accept any individual or 
employer that applies for any of those products.
    (b) Enrollment periods. A health insurance issuer may restrict 
enrollment in health insurance coverage to open or special enrollment 
periods.
    (1) Open enrollment periods--(i) Group market. (A) Subject to 
paragraph (b)(1)(i)(B) of this section, a health insurance issuer in the 
group market must allow an employer to purchase health insurance 
coverage for a group health plan at any point during the year.
    (B) In the case of a group health plan in the small group market 
that cannot comply with employer contribution or group participation 
rules for the offering of health insurance coverage, as allowed under 
applicable State law, and in the case of a QHP offered in the SHOP, as 
permitted by Sec.  156.285(e) or Sec.  156.286(e) of this subchapter, a 
health insurance issuer may restrict the availability of coverage to an 
annual enrollment period that begins November 15 and extends through 
December 15 of each calendar year.
    (C) With respect to coverage in the small group market, and in the 
large group market if such coverage is offered through a SHOP in a 
State, for a group enrollment received on the first through the 
fifteenth day of any month, the coverage effective date must be no later 
than the first day of the following month. For a group enrollment 
received on the 16th through last day of any month, the coverage 
effective date must be no later than the first day of the second 
following month. In either such case, a small employer may instead opt 
for a later effective date within a quarter for which small group market 
rates are available.
    (ii) Individual market. A health insurance issuer in the individual 
market must allow an individual to purchase health insurance coverage 
during the initial and annual open enrollment periods described in Sec.  
155.410(b) and (e) of this subchapter. Coverage must become effective 
consistent with the dates described in Sec.  155.410(c) and (f) of this 
subchapter.
    (2) Limited open enrollment periods. (i) A health insurance issuer 
in the individual market must provide a limited open enrollment period 
for the triggering events described in Sec.  155.420(d) of this 
subchapter, excluding, with respect to coverage offered outside of an 
Exchange, the following:
    (A) Section 155.420(d)(3) of this subchapter (concerning Exchange 
eligibility standards);
    (B) Section 155.420(d)(6) of this subchapter (to the extent 
concerning eligibility for advance payments of the premium tax credit or 
change in eligibility for cost-sharing reductions other than 
ineligibility);
    (C) Section 155.420(d)(8) of this subchapter (concerning Indians);
    (D) Section 155.420(d)(9) of this subchapter (concerning exceptional 
circumstances);

[[Page 113]]

    (E) Section 155.420(d)(12) of this subchapter (concerning plan and 
benefit display errors); and
    (F) Section 155.420(d)(13) of this subchapter (concerning 
eligibility for insurance affordability programs or enrollment in the 
Exchange).
    (ii) In applying this paragraph (b)(2), a reference in Sec.  155.420 
(other than in Sec.  155.420(a)(5)) of this subchapter to a ``QHP'' is 
deemed to refer to a plan, a reference to ``the Exchange'' is deemed to 
refer to the applicable State authority, and a reference to a 
``qualified individual'' is deemed to refer to an individual in the 
individual market.
    (iii) Notwithstanding anything to the contrary in Sec.  155.420(d) 
of this subchapter, Sec.  155.420(a)(4) of this subchapter does not 
apply to limited open enrollment periods under paragraph (b)(2) of this 
section.
    (3) Special enrollment periods. A health insurance issuer in the 
group and individual market must establish special enrollment periods 
for qualifying events as defined under section 603 of the Employee 
Retirement Income Security Act of 1974, as amended. These special 
enrollment periods are in addition to any other special enrollment 
periods that are required under federal and state law.
    (4) Length of enrollment periods. (i) In the group market, enrollees 
must be provided 30 calendar days after the date of the qualifying event 
described in paragraph (b)(3) of this section to elect coverage.
    (ii) In the individual market, enrollees must be provided 60 
calendar days after the date of an event described in paragraph (b)(2) 
and (3) of this section to elect coverage, as well as 60 calendar days 
before certain triggering events as provided for in Sec.  155.420(c)(2) 
of this subchapter.
    (5) Effective date of coverage for limited open and special 
enrollment periods. With respect to an election made under paragraph 
(b)(2) or (b)(3) of this section, coverage must become effective 
consistent with the dates described in Sec.  155.420(b) of this 
subchapter.
    (c) Special rules for network plans. (1) In the case of a health 
insurance issuer that offers health insurance coverage in the group and 
individual market through a network plan, the issuer may do the 
following:
    (i) Limit the employers that may apply for the coverage to those 
with eligible individuals in the group market who live, work, or reside 
in the service area for the network plan, and limit the individuals who 
may apply for the coverage in the individual market to those who live or 
reside in the service area for the network plan.
    (ii) Within the service area of the plan, deny coverage to employers 
and individuals if the issuer has demonstrated to the applicable state 
authority (if required by the state authority) the following:
    (A) It will not have the capacity to deliver services adequately to 
enrollees of any additional groups or any additional individuals because 
of its obligations to existing group contract holders and enrollees.
    (B) It is applying paragraph (c)(1) of this section uniformly to all 
employers and individuals without regard to the claims experience of 
those individuals, employers and their employees (and their dependents) 
or any health status-related factor relating to such individuals, 
employees, and dependents.
    (2) An issuer that denies health insurance coverage to an individual 
or an employer in any service area, in accordance with paragraph 
(c)(1)(ii) of this section, may not offer coverage in the individual, 
small group, or large group market, as applicable, for a period of 180 
calendar days after the date the coverage is denied. This paragraph 
(c)(2) does not limit the issuer's ability to renew coverage already in 
force or relieve the issuer of the responsibility to renew that 
coverage.
    (3) Coverage offered within a service area after the 180-day period 
specified in paragraph (c)(2) of this section is subject to the 
requirements of this section.
    (d) Application of financial capacity limits. (1) A health insurance 
issuer may deny health insurance coverage in the group or individual 
market if the issuer has demonstrated to the applicable state authority 
(if required by the state authority) the following:
    (i) It does not have the financial reserves necessary to offer 
additional coverage.

[[Page 114]]

    (ii) It is applying this paragraph (d)(1) uniformly to all employers 
or individual in the large group, small group, or individual market, as 
applicable, in the State consistent with applicable State law and 
without regard to the claims experience of those individuals, employers 
and their employees (and their dependents) or any health status-related 
factor relating to such individuals, employees, and dependents.
    (2) An issuer that denies health insurance coverage to any employer 
or individual in a state under paragraph (d)(1) of this section may not 
offer coverage in the large group, small group, or individual market, as 
applicable, in the State before the later of either of the following 
dates:
    (i) The 181st day after the date the issuer denies coverage.
    (ii) The date the issuer demonstrates to the applicable state 
authority, if required under applicable state law, that the issuer has 
sufficient financial reserves to underwrite additional coverage.
    (3) Paragraph (d)(2) of this section does not limit the issuer's 
ability to renew coverage already in force or relieve the issuer of the 
responsibility to renew that coverage.
    (4) Coverage offered after the 180-day period specified in paragraph 
(d)(2) of this section is subject to the requirements of this section.
    (5) An applicable state authority may provide for the application of 
this paragraph (d) on a service-area-specific basis.
    (e) Marketing. A health insurance issuer and its officials, 
employees, agents and representatives must comply with any applicable 
State laws and regulations regarding marketing by health insurance 
issuers and cannot employ marketing practices or benefit designs that 
will have the effect of discouraging the enrollment of individuals with 
significant health needs in health insurance coverage or discriminate 
based on an individual's race, color, national origin, present or 
predicted disability, age, sex, expected length of life, degree of 
medical dependency, quality of life, or other health conditions.
    (f) Calendar year plans. An issuer that offers coverage in the 
individual market, or in a merged market in a State that has elected to 
merge the individual market and small group market risk pools in 
accordance with section 1312(c)(3) of the Affordable Care Act, must 
ensure that such coverage is offered on a calendar year basis with a 
policy year ending on December 31 of each calendar year.
    (g) Applicability date. The provisions of this section apply for 
plan years (in the individual market, policy years) beginning on or 
after January 1, 2014.
    (h) Grandfathered health plans. This section does not apply to 
grandfathered health plans in accordance with Sec.  147.140.
    (i) Construction. Nothing in this section should be construed to 
require an issuer to offer coverage otherwise prohibited under 
applicable Federal law.

[78 FR 13437, Feb. 27, 2013, as amended at 78 FR 65092, Oct. 30, 2013; 
78 FR 76217, Dec. 17, 2013; 79 FR 30339, May 27, 2014; 79 FR 59138, Oct. 
1, 2014; 80 FR 10862, Feb. 27, 2015; 81 FR 94173, Dec. 22, 2016; 82 FR 
18381, Apr. 18, 2017; 83 FR 17058, Apr. 17, 2018; 85 FR 37247, June 19, 
2020]



Sec.  147.106  Guaranteed renewability of coverage.

    (a) General rule. Subject to paragraphs (b) through (e) of this 
section, a health insurance issuer offering health insurance coverage in 
the individual, small group, or large group market is required to renew 
or continue in force the coverage at the option of the plan sponsor or 
the individual, as applicable.
    (b) Exceptions. An issuer may nonrenew or discontinue health 
insurance coverage offered in the group or individual market based only 
on one or more of the following:
    (1) Nonpayment of premiums. The plan sponsor or individual, as 
applicable, has failed to pay premiums or contributions in accordance 
with the terms of the health insurance coverage, including any 
timeliness requirements.
    (2) Fraud. The plan sponsor or individual, as applicable, has 
performed an act or practice that constitutes fraud or made an 
intentional misrepresentation of material fact in connection with the 
coverage.

[[Page 115]]

    (3) Violation of participation or contribution rules. In the case of 
group health insurance coverage, the plan sponsor has failed to comply 
with a material plan provision relating to employer contribution or 
group participation rules, pursuant to applicable state law. For 
purposes of this paragraph the following apply:
    (i) The term ``employer contribution rule'' means a requirement 
relating to the minimum level or amount of employer contribution toward 
the premium for enrollment of participants and beneficiaries.
    (ii) The term ``group participation rule'' means a requirement 
relating to the minimum number of participants or beneficiaries that 
must be enrolled in relation to a specified percentage or number of 
eligible individuals or employees of an employer.
    (4) Termination of product. The issuer is ceasing to offer coverage 
in the market in accordance with paragraph (c) or (d) of this section 
and applicable State law.
    (5) Enrollees' movement outside service area. For network plans, 
there is no longer any enrollee under the plan who lives, resides, or 
works in the service area of the issuer (or in the area for which the 
issuer is authorized to do business); and in the case of the small group 
market, the issuer applies the same criteria it would apply in denying 
enrollment in the plan under Sec.  147.104(c)(1)(i); provided the issuer 
provides notice in accordance with the requirements of paragraph (c)(1) 
of this section.
    (6) Association membership ceases. For coverage made available in 
the small or large group market only through one or more bona fide 
associations, if the employer's membership in the bona fide association 
ceases, but only if the coverage is terminated uniformly without regard 
to any health status-related factor relating to any covered individual.
    (c) Discontinuing a particular product. In any case in which an 
issuer decides to discontinue offering a particular product offered in 
the group or individual market, that product may be discontinued by the 
issuer in accordance with applicable state law in the applicable market 
only if the following occurs:
    (1) The issuer provides notice in writing, in a form and manner 
specified by the Secretary, to each plan sponsor or individual, as 
applicable, provided that particular product in that market (and to all 
participants and beneficiaries covered under such coverage) of the 
discontinuation at least 90 calendar days before the date the coverage 
will be discontinued.
    (2) The issuer offers to each plan sponsor or individual, as 
applicable, provided that particular product the option, on a guaranteed 
availability basis, to purchase all (or, in the case of the large group 
market, any) other health insurance coverage currently being offered by 
the issuer to a group health plan or individual health insurance 
coverage in that market.
    (3) In exercising the option to discontinue that product and in 
offering the option of coverage under paragraph (c)(2) of this section, 
the issuer acts uniformly without regard to the claims experience of 
those sponsors or individuals, as applicable, or any health status-
related factor relating to any participants or beneficiaries covered or 
new participants or beneficiaries who may become eligible for such 
coverage.
    (d) Discontinuing all coverage. (1) An issuer may elect to 
discontinue offering all health insurance coverage in the individual, 
small group, or large group market, or all markets, in a State in 
accordance with applicable State law only if--
    (i) The issuer provides notice in writing to the applicable state 
authority and to each plan sponsor or individual, as applicable, (and 
all participants and beneficiaries covered under the coverage) of the 
discontinuation at least 180 calendar days prior to the date the 
coverage will be discontinued; and
    (ii) All health insurance policies issued or delivered for issuance 
in the state in the applicable market (or markets) are discontinued and 
not renewed.
    (2) An issuer that elects to discontinue offering all health 
insurance coverage in a market (or markets) in a state as described in 
this paragraph (d)

[[Page 116]]

may not issue coverage in the applicable market (or markets) and state 
involved during the 5-year period beginning on the date of 
discontinuation of the last coverage not renewed.
    (3) For purposes of this paragraph (d), subject to applicable State 
law, an issuer will not be considered to have discontinued offering all 
health insurance coverage in a market in a State if--
    (i) The issuer (in this paragraph referred to as the initial issuer) 
or, if the issuer is a member of a controlled group, any other issuer 
that is a member of such controlled group, offers and makes available in 
the applicable market in the State at least one product that is 
considered in accordance with Sec.  144.103 of this subchapter to be the 
same product as a product the initial issuer had been offering in such 
market in such State; or
    (ii) The issuer--
    (A) Offers and makes available at least one product (in paragraphs 
(d)(3)(ii)(A) through (C) of this section referred to as the new 
product) in the applicable market in the State, even if such product is 
not considered in accordance with Sec.  144.103 of this subchapter to be 
the same product as a product the issuer had been offering in the 
applicable market in the State (in paragraphs (d)(3)(ii)(A) through (C) 
of this section referred to as the discontinued product);
    (B) Subjects such new product or products to the applicable process 
and requirements established under part 154 of this title as if such 
process and requirements applied with respect to that product or 
products, to the extent such process and requirements are otherwise 
applicable to coverage of the same type and in the same market; and
    (C) Reasonably identifies the discontinued product or products that 
correspond to the new product or products for purposes of the process 
and requirements applied pursuant to paragraph (d)(3)(ii)(B) of this 
section.
    (4) For purposes of this section, the term controlled group means a 
group of two or more persons that is treated as a single employer under 
sections 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code of 
1986, as amended, or a narrower group as may be provided by applicable 
State law.
    (e) Exception for uniform modification of coverage. (1) Only at the 
time of coverage renewal may issuers modify the health insurance 
coverage for a product offered to a group health plan or an individual, 
as applicable, in the following:
    (i) Large group market.
    (ii) Small group market if, for coverage available in this market 
(other than only through one or more bona fide associations), the 
modification is consistent with State law and is effective uniformly 
among group health plans with that product.
    (iii) Individual market if the modification is consistent with State 
law and is effective uniformly for all individuals with that product.
    (2) For purposes of paragraphs (e)(1)(ii) and (iii) of this section, 
modifications made uniformly and solely pursuant to applicable Federal 
or State requirements are considered a uniform modification of coverage 
if:
    (i) The modification is made within a reasonable time period after 
the imposition or modification of the Federal or State requirement; and
    (ii) The modification is directly related to the imposition or 
modification of the Federal or State requirement.
    (3) Other types of modifications made uniformly are considered a 
uniform modification of coverage if the health insurance coverage for 
the product in the individual or small group market meets all of the 
following criteria:
    (i) The product is offered by the same health insurance issuer 
(within the meaning of section 2791(b)(2) of the PHS Act), or if the 
issuer is a member of a controlled group (as described in paragraph 
(d)(4) of this section), any other health insurance issuer that is a 
member of such controlled group);
    (ii) The product is offered as the same product network type (for 
example, health maintenance organization, preferred provider 
organization, exclusive provider organization, point of service, or 
indemnity);
    (iii) The product continues to cover at least a majority of the same 
service area;
    (iv) Within the product, each plan has the same cost-sharing 
structure as

[[Page 117]]

before the modification, except for any variation in cost sharing solely 
related to changes in cost and utilization of medical care, or to 
maintain the same metal tier level described in sections 1302(d) and (e) 
of the Affordable Care Act; and
    (v) The product provides the same covered benefits, except for any 
changes in benefits that cumulatively impact the plan-adjusted index 
rate (as described in Sec.  156.80(d)(2) of this subchapter) for any 
plan within the product within an allowable variation of 2 percentage points (not including changes pursuant to 
applicable Federal or State requirements).
    (4) A State may only broaden the standards in paragraphs (e)(3)(iii) 
and (iv) of this section.
    (f) Notice of renewal of coverage. (1) If an issuer in the 
individual market is renewing non-grandfathered coverage as described in 
paragraph (a) of this section, or uniformly modifying non-grandfathered 
coverage as described in paragraph (e) of this section, the issuer must 
provide to each individual written notice of the renewal before the date 
of the first day of the next annual open enrollment period in a form and 
manner specified by the Secretary.
    (2) If an issuer in the small group market is renewing coverage as 
described in paragraph (a) of this section, or uniformly modifying 
coverage as described in paragraph (e) of this section, the issuer must 
provide to each plan sponsor written notice of the renewal at least 60 
calendar days before the date of the coverage will be renewed in a form 
and manner specified by the Secretary.
    (g) Notification of change of ownership. If an issuer of a QHP, a 
plan otherwise subject to risk corridors, a risk adjustment covered 
plan, or a reinsurance-eligible plan experiences a change of ownership, 
as recognized by the State in which the plan is offered, the issuer must 
notify HHS in a manner specified by HHS, by the latest of--
    (1) The date the transaction is entered into; or
    (2) The 30th day prior to the effective date of the transaction.
    (h) Construction. (1) Nothing in this section should be construed to 
require an issuer to renew or continue in force coverage for which 
continued eligibility would otherwise be prohibited under applicable 
Federal law.
    (2) Medicare entitlement or enrollment is not a basis to nonrenew an 
individual's health insurance coverage in the individual market under 
the same policy or contract of insurance.
    (i) Application to coverage offered only through associations. In 
the case of health insurance coverage that is made available by a health 
insurance issuer in the small or large group market to employers only 
through one or more associations, the reference to ``plan sponsor'' is 
deemed, with respect to coverage provided to an employer member of the 
association, to include a reference to the employer.
    (j) Applicability date. The provisions of this section apply for 
plan years (in the individual market, policy years) beginning on or 
after January 1, 2014.
    (k) Grandfathered health plans. This section does not apply to 
grandfathered health plans in accordance with Sec.  147.140.

[78 FR 13437, Feb. 27, 2013, as amended at 78 FR 65092, Oct. 30, 2013; 
79 FR 30339, May 27, 2014; 79 FR 42985, July 24, 2014; 79 FR 53004, 
Sept. 5, 2014; 80 FR 10862, Feb. 27, 2015; 81 FR 94173, Dec. 22, 2016; 
84 FR 17561, Apr. 25, 2019]



Sec.  147.108  Prohibition of preexisting condition exclusions.

    (a) In general. A group health plan, or a health insurance issuer 
offering group or individual health insurance coverage, may not impose 
any preexisting condition exclusion (as defined in Sec.  144.103 of this 
subchapter).
    (b) Examples. The rules of paragraph (a) of this section are 
illustrated by the following examples (for additional examples 
illustrating the definition of a preexisting condition exclusion, see 
Sec.  146.111(a)(2) of this subchapter):

    Example 1. (i) Facts. A group health plan provides benefits solely 
through an insurance policy offered by Issuer P. At the expiration of 
the policy, the plan switches coverage to a policy offered by Issuer N. 
N's policy excludes benefits for oral surgery required as a result of a 
traumatic injury if the injury occurred before the effective date of 
coverage under the policy.
    (ii) Conclusion. In this Example 1, the exclusion of benefits for 
oral surgery required as a result of a traumatic injury if the injury

[[Page 118]]

occurred before the effective date of coverage is a preexisting 
condition exclusion because it operates to exclude benefits for a 
condition based on the fact that the condition was present before the 
effective date of coverage under the policy. Therefore, such an 
exclusion is prohibited.
    Example 2. (i) Facts. Individual C applies for individual health 
insurance coverage with Issuer M. M denies C's application for coverage 
because a pre-enrollment physical revealed that C has type 2 diabetes.
    (ii) Conclusion. See Example 2 in Sec.  146.111(a)(2) of this 
subchapter for a conclusion that M's denial of C's application for 
coverage is a preexisting condition exclusion because a denial of an 
application for coverage based on the fact that a condition was present 
before the date of denial is an exclusion of benefits based on a 
preexisting condition.

    (c) Allowable screenings to determine eligibility for alternative 
coverage in the individual market--(1) In general. (i) A health 
insurance issuer offering individual health insurance coverage may 
screen applicants for eligibility for alternative coverage options 
before offering a child-only policy if--
    (A) The practice is permitted under State law;
    (B) The screening applies to all child-only applicants, regardless 
of health status; and
    (C) The alternative coverage options include options for which 
healthy children would potentially be eligible (e.g., Children's Health 
Insurance Program (CHIP) or group health insurance).
    (ii) An issuer must provide such coverage to an applicant effective 
on the first date that a child-only policy would have been effective had 
the applicant not been screened for an alternative coverage option, as 
provided by State law. A State may impose a reasonable time limit by 
when an issuer would have to enroll a child regardless of pending 
applications for other coverage.
    (2) Restrictions. A health insurance issuer offering individual 
health insurance coverage may screen applicants for eligibility for 
alternative coverage provided that:
    (i) The screening process does not by its operation significantly 
delay enrollment or artificially engineer eligibility of a child for a 
program targeted to individuals with a pre-existing condition;
    (ii) The screening process is not applied to offers of dependent 
coverage for children; or
    (ii) The issuer does not consider whether an applicant is eligible 
for, or is provided medical assistance under, Medicaid in making 
enrollment decisions, as provided under 42 U.S.C. 1396a (25)(G).
    (d) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years (in the individual market, policy years) beginning on or after 
January 1, 2017. Until the applicability date for this regulation, plans 
and issuers are required to continue to comply with the corresponding 
sections of 45 CFR parts 144, 146 and 147, contained in the 45 CFR, 
parts 1 to 199, edition revised as of October 1, 2015.

[80 FR 72274, Nov. 18, 2015]

    Editorial Note: At 80 FR 72284, Nov. 18, 2015, Sec.  147.108 was 
revised to include two paragraphs (c)(2)(ii).



Sec.  147.110  Prohibiting discrimination against participants, 
beneficiaries, and individuals based on a health factor.

    (a) In general. A group health plan and a health insurance issuer 
offering group or individual health insurance coverage must comply with 
all the requirements under 45 CFR 146.121 applicable to a group health 
plan and a health insurance issuer offering group health insurance 
coverage. Accordingly, with respect to an issuer offering health 
insurance coverage in the individual market, the issuer is subject to 
the requirements of Sec.  146.121 to the same extent as an issuer 
offering group health insurance coverage, except the exception contained 
in Sec.  146.121(f) (concerning nondiscriminatory wellness programs) 
does not apply.
    (b) Applicability date. This section is applicable to group health 
plans and health insurance issuers offering group or individual health 
insurance coverage for plan years (in the individual market, policy 
years) beginning on or after January 1, 2014. See Sec.  147.140, which 
provides that the rules of this section do not apply to grandfathered

[[Page 119]]

health plans that are individual health insurance coverage.

[78 FR 33192, June 3, 2013]



Sec.  147.116  Prohibition on waiting periods that exceed 90 days.

    (a) General rule. A group health plan, and a health insurance issuer 
offering group health insurance coverage, must not apply any waiting 
period that exceeds 90 days, in accordance with the rules of this 
section. If, under the terms of a plan, an individual can elect coverage 
that would begin on a date that is not later than the end of the 90-day 
waiting period, this paragraph (a) is considered satisfied. Accordingly, 
in that case, a plan or issuer will not be considered to have violated 
this paragraph (a) solely because individuals take, or are permitted to 
take, additional time (beyond the end of the 90-day waiting period) to 
elect coverage.
    (b) Waiting period defined. For purposes of this part, a waiting 
period is the period that must pass before coverage for an individual 
who is otherwise eligible to enroll under the terms of a group health 
plan can become effective. If an individual enrolls as a late enrollee 
(as defined under Sec.  144.103 of this subchapter) or special enrollee 
(as described in Sec.  146.117 of this subchapter), any period before 
such late or special enrollment is not a waiting period.
    (c) Relation to a plan's eligibility criteria--(1) In general. 
Except as provided in paragraphs (c)(2) and (c)(3) of this section, 
being otherwise eligible to enroll under the terms of a group health 
plan means having met the plan's substantive eligibility conditions 
(such as, for example, being in an eligible job classification, 
achieving job-related licensure requirements specified in the plan's 
terms, or satisfying a reasonable and bona fide employment-based 
orientation period). Moreover, except as provided in paragraphs (c)(2) 
and (c)(3) of this section, nothing in this section requires a plan 
sponsor to offer coverage to any particular individual or class of 
individuals (including, for example, part-time employees). Instead, this 
section prohibits requiring otherwise eligible individuals to wait more 
than 90 days before coverage is effective. See also section 4980H of the 
Code and its implementing regulations for an applicable large employer's 
shared responsibility to provide health coverage to full-time employees.
    (2) Eligibility conditions based solely on the lapse of time. 
Eligibility conditions that are based solely on the lapse of a time 
period are permissible for no more than 90 days.
    (3) Other conditions for eligibility. Other conditions for 
eligibility under the terms of a group health plan are generally 
permissible under PHS Act section 2708, unless the condition is designed 
to avoid compliance with the 90-day waiting period limitation, 
determined in accordance with the rules of this paragraph (c)(3).
    (i) Application to variable-hour employees in cases in which a 
specified number of hours of service per period is a plan eligibility 
condition. If a group health plan conditions eligibility on an employee 
regularly having a specified number of hours of service per period (or 
working full-time), and it cannot be determined that a newly-hired 
employee is reasonably expected to regularly work that number of hours 
per period (or work full-time), the plan may take a reasonable period of 
time, not to exceed 12 months and beginning on any date between the 
employee's start date and the first day of the first calendar month 
following the employee's start date, to determine whether the employee 
meets the plan's eligibility condition. Except in cases in which a 
waiting period that exceeds 90 days is imposed in addition to a 
measurement period, the time period for determining whether such an 
employee meets the plan's eligibility condition will not be considered 
to be designed to avoid compliance with the 90-day waiting period 
limitation if coverage is made effective no later than 13 months from 
the employee's start date plus, if the employee's start date is not the 
first day of a calendar month, the time remaining until the first day of 
the next calendar month.
    (ii) Cumulative service requirements. If a group health plan or 
health insurance issuer conditions eligibility on an employee's having 
completed a number of cumulative hours of service, the eligibility 
condition is not considered to be designed to avoid compliance with the

[[Page 120]]

90-day waiting period limitation if the cumulative hours-of-service 
requirement does not exceed 1,200 hours.
    (iii) Limitation on orientation periods. To ensure that an 
orientation period is not used as a subterfuge for the passage of time, 
or designed to avoid compliance with the 90-day waiting period 
limitation, an orientation period is permitted only if it does not 
exceed one month. For this purpose, one month is determined by adding 
one calendar month and subtracting one calendar day, measured from an 
employee's start date in a position that is otherwise eligible for 
coverage. For example, if an employee's start date in an otherwise 
eligible position is May 3, the last permitted day of the orientation 
period is June 2. Similarly, if an employee's start date in an otherwise 
eligible position is October 1, the last permitted day of the 
orientation period is October 31. If there is not a corresponding date 
in the next calendar month upon adding a calendar month, the last 
permitted day of the orientation period is the last day of the next 
calendar month. For example, if the employee's start date is January 30, 
the last permitted day of the orientation period is February 28 (or 
February 29 in a leap year). Similarly, if the employee's start date is 
August 31, the last permitted day of the orientation period is September 
30.
    (d) Application to rehires. A plan or issuer may treat an employee 
whose employment has terminated and who then is rehired as newly 
eligible upon rehire and, therefore, required to meet the plan's 
eligibility criteria and waiting period anew, if reasonable under the 
circumstances (for example, the termination and rehire cannot be a 
subterfuge to avoid compliance with the 90-day waiting period 
limitation).
    (e) Counting days. Under this section, all calendar days are counted 
beginning on the enrollment date (as defined in Sec.  144.103), 
including weekends and holidays. A plan or issuer that imposes a 90-day 
waiting period may, for administrative convenience, choose to permit 
coverage to become effective earlier than the 91st day if the 91st day 
is a weekend or holiday.
    (f) Examples. The rules of this section are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan provides that full-time 
employees are eligible for coverage under the plan. Employee A begins 
employment as a full-time employee on January 19.
    (ii) Conclusion. In this Example 1, any waiting period for A would 
begin on January 19 and may not exceed 90 days. Coverage under the plan 
must become effective no later than April 19 (assuming February lasts 28 
days).
    Example 2. (i) Facts. A group health plan provides that only 
employees with job title M are eligible for coverage under the plan. 
Employee B begins employment with job title L on January 30.
    (ii) Conclusion. In this Example 2, B is not eligible for coverage 
under the plan, and the period while B is working with job title L and 
therefore not in an eligible class of employees, is not part of a 
waiting period under this section.
    Example 3. (i) Facts. Same facts as in Example 2, except that B 
transfers to a new position with job title M on April 11.
    (ii) Conclusion. In this Example 3, B becomes eligible for coverage 
on April 11, but for the waiting period. Any waiting period for B begins 
on April 11 and may not exceed 90 days; therefore, coverage under the 
plan must become effective no later than July 10.
    Example 4. (i) Facts. A group health plan provides that only 
employees who have completed specified training and achieved specified 
certifications are eligible for coverage under the plan. Employee C is 
hired on May 3 and meets the plan's eligibility criteria on September 
22.
    (ii) Conclusion. In this Example 4, C becomes eligible for coverage 
on September 22, but for the waiting period. Any waiting period for C 
would begin on September 22 and may not exceed 90 days; therefore, 
coverage under the plan must become effective no later than December 21.
    Example 5. (i) Facts. A group health plan provides that employees 
are eligible for coverage after one year of service.
    (ii) Conclusion. In this Example 5, the plan's eligibility condition 
is based solely on the lapse of time and, therefore, is impermissible 
under paragraph (c)(2) of this section because it exceeds 90 days.
    Example 6. (i) Facts. Employer V's group health plan provides for 
coverage to begin on the first day of the first payroll period on or 
after the date an employee is hired and completes the applicable 
enrollment forms. Enrollment forms are distributed on an employee's 
start date and may be completed within 90 days. Employee D is hired and 
starts on October 31, which is the first day of a pay period. D 
completes the enrollment forms and submits them on the 90th day after 
D's start

[[Page 121]]

date, which is January 28. Coverage is made effective 7 days later, 
February 4, which is the first day of the next pay period.
    (ii) Conclusion. In this Example 6, under the terms of V's plan, 
coverage may become effective as early as October 31, depending on when 
D completes the applicable enrollment forms. Under the terms of the 
plan, when coverage becomes effective depends solely on the length of 
time taken by D to complete the enrollment materials. Therefore, under 
the terms of the plan, D may elect coverage that would begin on a date 
that does not exceed the 90-day waiting period limitation, and the plan 
complies with this section.
    Example 7. (i) Facts. Under Employer W's group health plan, only 
employees who are full-time (defined under the plan as regularly 
averaging 30 hours of service per week) are eligible for coverage. 
Employee E begins employment for Employer W on November 26 of Year 1. 
E's hours are reasonably expected to vary, with an opportunity to work 
between 20 and 45 hours per week, depending on shift availability and 
E's availability. Therefore, it cannot be determined at E's start date 
that E is reasonably expected to work full-time. Under the terms of the 
plan, variable-hour employees, such as E, are eligible to enroll in the 
plan if they are determined to be a full-time employee after a 
measurement period of 12 months that begins on the employee's start 
date. Coverage is made effective no later than the first day of the 
first calendar month after the applicable enrollment forms are received. 
E's 12-month measurement period ends November 25 of Year 2. E is 
determined to be a full-time employee and is notified of E's plan 
eligibility. If E then elects coverage, E's first day of coverage will 
be January 1 of Year 3.
    (ii) Conclusion. In this Example 7, the measurement period is 
permissible because it is not considered to be designed to avoid 
compliance with the 90-day waiting period limitation. The plan may use a 
reasonable period of time to determine whether a variable-hour employee 
is a full-time employee, provided that (a) the period of time is no 
longer than 12 months; (b) the period of time begins on a date between 
the employee's start date and the first day of the next calendar month 
(inclusive); (c) coverage is made effective no later than 13 months from 
E's start date plus, if the employee's start date is not the first day 
of a calendar month, the time remaining until the first day of the next 
calendar month; and (d) in addition to the measurement period, no more 
than 90 days elapse prior to the employee's eligibility for coverage.
    Example 8. (i) Facts. Employee F begins working 25 hours per week 
for Employer X on January 6 and is considered a part-time employee for 
purposes of X's group health plan. X sponsors a group health plan that 
provides coverage to part-time employees after they have completed a 
cumulative 1,200 hours of service. F satisfies the plan's cumulative 
hours of service condition on December 15.
    (ii) Conclusion. In this Example 8, the cumulative hours of service 
condition with respect to part-time employees is not considered to be 
designed to avoid compliance with the 90-day waiting period limitation. 
Accordingly, coverage for F under the plan must begin no later than the 
91st day after F completes 1,200 hours. (If the plan's cumulative hours-
of-service requirement was more than 1,200 hours, the requirement would 
be considered to be designed to avoid compliance with the 90-day waiting 
period limitation.)
    Example 9. (i) Facts. A multiemployer plan operating pursuant to an 
arms-length collective bargaining agreement has an eligibility provision 
that allows employees to become eligible for coverage by working a 
specified number of hours of covered employment for multiple 
contributing employers. The plan aggregates hours in a calendar quarter 
and then, if enough hours are earned, coverage begins the first day of 
the next calendar quarter. The plan also permits coverage to extend for 
the next full calendar quarter, regardless of whether an employee's 
employment has terminated.
    (ii) Conclusion. In this Example 9, these eligibility provisions are 
designed to accommodate a unique operating structure, and, therefore, 
are not considered to be designed to avoid compliance with the 90-day 
waiting period limitation, and the plan complies with this section.
    Example 10. (i) Facts. Employee G retires at age 55 after 30 years 
of employment with Employer Y with no expectation of providing further 
services to Employer Y. Three months later, Y recruits G to return to 
work as an employee providing advice and transition assistance for G's 
replacement under a one-year employment contract. Y's plan imposes a 90-
day waiting period from an employee's start date before coverage becomes 
effective.
    (ii) Conclusion. In this Example 10, Y's plan may treat G as newly 
eligible for coverage under the plan upon rehire and therefore may 
impose the 90-day waiting period with respect to G for coverage offered 
in connection with G's rehire.
    Example 11. (i) Facts. Employee H begins working full time for 
Employer Z on October 16. Z sponsors a group health plan, under which 
full time employees are eligible for coverage after they have 
successfully completed a bona fide one-month orientation period. H 
completes the orientation period on November 15.
    (ii) Conclusion. In this Example 11, the orientation period is not 
considered a subterfuge for the passage of time and is not considered to 
be designed to avoid compliance with the 90-day waiting period 
limitation.

[[Page 122]]

Accordingly, plan coverage for H must begin no later than February 14, 
which is the 91st day after H completes the orientation period. (If the 
orientation period was longer than one month, it would be considered to 
be a subterfuge for the passage of time and designed to avoid compliance 
with the 90-day waiting period limitation. Accordingly it would violate 
the rules of this section.)

    (g) Special rule for health insurance issuers. To the extent 
coverage under a group health plan is insured by a health insurance 
issuer, the issuer is permitted to rely on the eligibility information 
reported to it by the employer (or other plan sponsor) and will not be 
considered to violate the requirements of this section with respect to 
its administration of any waiting period, if both of the following 
conditions are satisfied:
    (1) The issuer requires the plan sponsor to make a representation 
regarding the terms of any eligibility conditions or waiting periods 
imposed by the plan sponsor before an individual is eligible to become 
covered under the terms of the plan (and requires the plan sponsor to 
update this representation with any changes), and
    (2) The issuer has no specific knowledge of the imposition of a 
waiting period that would exceed the permitted 90-day period.
    (h) No effect on other laws. Compliance with this section is not 
determinative of compliance with any other provision of State or Federal 
law (including ERISA, the Code, or other provisions of the Patient 
Protection and Affordable Care Act). See e.g., Sec.  146.121 of this 
subchapter and Sec.  147.110, which prohibits discrimination in 
eligibility for coverage based on a health factor and Code section 
4980H, which generally requires applicable large employers to offer 
coverage to full-time employees and their dependents or make an 
assessable payment.
    (i) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2015. See Sec.  147.140 
providing that the prohibition on waiting periods exceeding 90 days 
applies to all group health plans and group health insurance issuers, 
including grandfathered health plans.

[79 FR 10315, Feb. 24, 2014, as amended at 79 FR 35948, June 25, 2014]



Sec.  147.120  Eligibility of children until at least age 26.

    (a) In general--(1) A group health plan, or a health insurance 
issuer offering group or individual health insurance coverage, that 
makes available dependent coverage of children must make such coverage 
available for children until attainment of 26 years of age.
    (2) The rule of this paragraph (a) is illustrated by the following 
example:

    Example. (i) Facts. For the plan year beginning January 1, 2011, a 
group health plan provides health coverage for employees, employees' 
spouses, and employees' children until the child turns 26. On the 
birthday of a child of an employee, July 17, 2011, the child turns 26. 
The last day the plan covers the child is July 16, 2011.
    (ii) Conclusion. In this Example, the plan satisfies the requirement 
of this paragraph (a) with respect to the child.

    (b) Restrictions on plan definition of dependent--(1) In general. 
With respect to a child who has not attained age 26, a plan or issuer 
may not define dependent for purposes of eligibility for dependent 
coverage of children other than in terms of a relationship between a 
child and the participant (in the individual market, the primary 
subscriber). Thus, for example, a plan or issuer may not deny or 
restrict dependent coverage for a child who has not attained age 26 
based on the presence or absence of the child's financial dependency 
(upon the participant or primary subscriber, or any other person); 
residency with the participant (in the individual market, the primary 
subscriber) or with any other person; whether the child lives, works, or 
resides in an HMO's service area or other network service area; marital 
status; student status; employment; eligibility for other coverage; or 
any combination of those factors. (Other requirements of Federal or 
State law, including section 609 of ERISA or section 1908 of the Social 
Security Act, may require coverage of certain children.)
    (2) Construction. A plan or issuer will not fail to satisfy the 
requirements of this section if the plan or issuer limits dependent 
child coverage to children under age 26 who are described in section 
152(f)(1) of the Code. For an individual not described in Code section

[[Page 123]]

152(f)(1), such as a grandchild or niece, a plan may impose additional 
conditions on eligibility for dependent child health coverage, such as a 
condition that the individual be a dependent for income tax purposes.
    (c) Coverage of grandchildren not required. Nothing in this section 
requires a plan or issuer to make coverage available for the child of a 
child receiving dependent coverage.
    (d) Uniformity irrespective of age. The terms of the plan or health 
insurance coverage providing dependent coverage of children cannot vary 
based on age (except for children who are age 26 or older).
    (e) Examples. The rules of paragraph (d) of this section are 
illustrated by the following examples:

    Example 1. (i) Facts. A group health plan offers a choice of self-
only or family health coverage. Dependent coverage is provided under 
family health coverage for children of participants who have not 
attained age 26. The plan imposes an additional premium surcharge for 
children who are older than age 18.
    (ii) Conclusion. In this Example 1, the plan violates the 
requirement of paragraph (d) of this section because the plan varies the 
terms for dependent coverage of children based on age.
    Example 2. (i) Facts. A group health plan offers a choice among the 
following tiers of health coverage: self-only, self-plus-one, self-plus-
two, and self-plus-three-or-more. The cost of coverage increases based 
on the number of covered individuals. The plan provides dependent 
coverage of children who have not attained age 26.
    (ii) Conclusion. In this Example 2, the plan does not violate the 
requirement of paragraph (d) of this section that the terms of dependent 
coverage for children not vary based on age. Although the cost of 
coverage increases for tiers with more covered individuals, the increase 
applies without regard to the age of any child.
    Example 3. (i) Facts. A group health plan offers two benefit 
packages--an HMO option and an indemnity option. Dependent coverage is 
provided for children of participants who have not attained age 26. The 
plan limits children who are older than age 18 to the HMO option.
    (ii) Conclusion. In this Example 3, the plan violates the 
requirement of paragraph (d) of this section because the plan, by 
limiting children who are older than age 18 to the HMO option, varies 
the terms for dependent coverage of children based on age.
    Example 4. (i) Facts. A group health plan sponsored by a large 
employer normally charges a copayment for physician visits that do not 
constitute preventive services. The plan charges this copayment to 
individuals age 19 and over, including employees, spouses, and dependent 
children, but waives it for those under age 19.
    (ii) Conclusion. In this Example 4, the plan does not violate the 
requirement of paragraph (d) of this section that the terms of dependent 
coverage for children not vary based on age. While the requirement of 
paragraph (d) of this section generally prohibits distinctions based 
upon age in dependent coverage of children, it does not prohibit 
distinctions based upon age that apply to all coverage under the plan, 
including coverage for employees and spouses as well as dependent 
children. In this Example 4, the copayments charged to dependent 
children are the same as those charged to employees and spouses. 
Accordingly, the arrangement described in this Example 4 (including 
waiver, for individuals under age 19, of the generally applicable 
copayment) does not violate the requirement of paragraph (d) of this 
section.

    (f) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years (in the individual market, policy years) beginning on or after 
January 1, 2017. Until the applicability date for this regulation, plans 
and issuers are required to continue to comply with the corresponding 
sections of 45 CFR parts 144, 146 and 147, contained in the 45 CFR, 
parts 1 to 199, edition revised as of October 1, 2015.

[80 FR 72275, Nov. 18, 2015]



Sec.  147.126  No lifetime or annual limits.

    (a) Prohibition--(1) Lifetime limits. Except as provided in 
paragraph (b) of this section, a group health plan, or a health 
insurance issuer offering group or individual health insurance coverage, 
may not establish any lifetime limit on the dollar amount of essential 
health benefits for any individual, whether provided in-network or out-
of-network.
    (2) Annual limits--(i) General rule. Except as provided in 
paragraphs (a)(2)(ii) and (b) of this section, a group health plan, or a 
health insurance issuer offering group or individual health insurance 
coverage, may not establish any annual limit on the dollar amount of 
essential health benefits for any individual, whether provided in-
network or out-of-network.

[[Page 124]]

    (ii) Exception for health flexible spending arrangements. A health 
flexible spending arrangement (as defined in section 106(c)(2) of the 
Internal Revenue Code) offered through a cafeteria plan pursuant to 
section 125 of the Internal Revenue Code is not subject to the 
requirement in paragraph (a)(2)(i) of this section.
    (b) Construction--(1) Permissible limits on specific covered 
benefits. The rules of this section do not prevent a group health plan, 
or a health insurance issuer offering group or individual health 
insurance coverage, from placing annual or lifetime dollar limits with 
respect to any individual on specific covered benefits that are not 
essential health benefits to the extent that such limits are otherwise 
permitted under applicable Federal or State law. (The scope of essential 
health benefits is addressed in paragraph (c) of this section).
    (2) Condition-based exclusions. The rules of this section do not 
prevent a group health plan, or a health insurance issuer offering group 
or individual health insurance coverage, from excluding all benefits for 
a condition. However, if any benefits are provided for a condition, then 
the requirements of this section apply. Other requirements of Federal or 
State law may require coverage of certain benefits.
    (c) Definition of essential health benefits. The term ``essential 
health benefits'' means essential health benefits under section 1302(b) 
of the Patient Protection and Affordable Care Act and applicable 
regulations. For the purpose of this section, a group health plan or a 
health insurance issuer that is not required to provide essential health 
benefits under section 1302(b) must define ``essential health benefits'' 
in a manner that is consistent with the following:
    (1) For plan years beginning before January 1, 2020, one of the EHB-
benchmark plans applicable in a State under Sec.  156.110 of this 
subchapter, and including coverage of any additional required benefits 
that are considered essential health benefits consistent with Sec.  
155.170(a)(2) of this subchapter, or one of the three Federal Employees 
Health Benefits Program (FEHBP) plan options as defined by Sec.  
156.100(a)(3) of this subchapter, supplemented as necessary, to satisfy 
the standards in Sec.  156.110 of this subchapter; or
    (2) For plan years beginning on or after January 1, 2020, an EHB-
benchmark plan selected by a State in accordance with the available 
options and requirements for EHB-benchmark plan selection at Sec.  
156.111 of this subchapter, including an EHB-benchmark plan in a State 
that takes no action to change its EHB-benchmark plan and thus retains 
the EHB-benchmark plan applicable in that State for the prior year in 
accordance with Sec.  156.111(d)(1) of this subchapter, and including 
coverage of any additional required benefits that are considered 
essential health benefits consistent with Sec.  155.170(a)(2) of this 
subchapter.
    (d) Health reimbursement arrangements (HRAs) and other account-based 
group health plans--(1) In general. If an HRA or other account-based 
group health plan is integrated with another group health plan or 
individual health insurance coverage and the other group health plan or 
individual health insurance coverage, as applicable, separately is 
subject to and satisfies the requirements in PHS Act section 2711 and 
paragraph (a)(2) of this section, the fact that the benefits under the 
HRA or other account-based group health plan are limited does not cause 
the HRA or other account-based group health plan to fail to satisfy the 
requirements of PHS Act section 2711 and paragraph (a)(2) of this 
section. Similarly, if an HRA or other account-based group health plan 
is integrated with another group health plan or individual health 
insurance coverage and the other group health plan or individual health 
insurance coverage, as applicable, separately is subject to and 
satisfies the requirements in PHS Act section 2713 and Sec.  
147.130(a)(1) of this subchapter, the fact that the benefits under the 
HRA or other account-based group health plan are limited does not cause 
the HRA or other account-based group health plan to fail to satisfy the 
requirements of PHS Act section 2713 and Sec.  147.130(a)(1) of this 
subchapter. For the purpose of this paragraph (d), all individual health 
insurance coverage, except for coverage that consists solely of excepted 
benefits, is treated as being subject to

[[Page 125]]

and complying with PHS Act sections 2711 and 2713.
    (2) Requirements for an HRA or other account-based group health plan 
to be integrated with another group health plan. An HRA or other 
account-based group health plan is integrated with another group health 
plan for purposes of PHS Act section 2711 and paragraph (a)(2) of this 
section if it satisfies the requirements under one of the integration 
methods set forth in paragraph (d)(2)(i) or (ii) of this section. For 
purposes of the integration methods under which an HRA or other account-
based group health plan is integrated with another group health plan, 
integration does not require that the HRA or other account-based group 
health plan and the other group health plan with which it is integrated 
share the same plan sponsor, the same plan document or governing 
instruments, or file a single Form 5500, if applicable. An HRA or other 
account-based group health plan integrated with another group health 
plan for purposes of PHS Act section 2711 and paragraph (a)(2) of this 
section may not be used to purchase individual health insurance coverage 
unless that coverage consists solely of excepted benefits, as defined in 
Sec.  148.220 of this subchapter.
    (i) Method for integration with a group health plan: Minimum value 
not required. An HRA or other account-based group health plan is 
integrated with another group health plan for purposes of this paragraph 
(d) if:
    (A) The plan sponsor offers a group health plan (other than the HRA 
or other account-based group health plan) to the employee that does not 
consist solely of excepted benefits;
    (B) The employee receiving the HRA or other account-based group 
health plan is actually enrolled in a group health plan (other than the 
HRA or other account-based group health plan) that does not consist 
solely of excepted benefits, regardless of whether the plan is offered 
by the same plan sponsor (referred to as non-HRA group coverage);
    (C) The HRA or other account-based group health plan is available 
only to employees who are enrolled in non-HRA group coverage, regardless 
of whether the non-HRA group coverage is offered by the plan sponsor of 
the HRA or other account-based group health plan (for example, the HRA 
may be offered only to employees who do not enroll in an employer's 
group health plan but are enrolled in other non-HRA group coverage, such 
as a group health plan maintained by the employer of the employee's 
spouse);
    (D) The benefits under the HRA or other account-based group health 
plan are limited to reimbursement of one or more of the following--co-
payments, co-insurance, deductibles, and premiums under the non-HRA 
group coverage, as well as medical care expenses that do not constitute 
essential health benefits as defined in paragraph (c) of this section; 
and
    (E) Under the terms of the HRA or other account-based group health 
plan, an employee (or former employee) is permitted to permanently opt 
out of and waive future reimbursements from the HRA or other account-
based group health plan at least annually and, upon termination of 
employment, either the remaining amounts in the HRA or other account-
based group health plan are forfeited or the employee is permitted to 
permanently opt out of and waive future reimbursements from the HRA or 
other account-based group health plan (see paragraph (d)(3) of this 
section for additional rules regarding forfeiture and waiver).
    (ii) Method for integration with another group health plan: Minimum 
value required. An HRA or other account-based group health plan is 
integrated with another group health plan for purposes of this paragraph 
(d) if:
    (A) The plan sponsor offers a group health plan (other than the HRA 
or other account-based group health plan) to the employee that provides 
minimum value pursuant to section 36B(c)(2)(C)(ii) of the Code (and its 
implementing regulations and applicable guidance);
    (B) The employee receiving the HRA or other account-based group 
health plan is actually enrolled in a group health plan (other than the 
HRA or other account-based group health plan) that provides minimum 
value pursuant to section 36B(c)(2)(C)(ii) of the Code (and applicable 
guidance), regardless of whether the plan is offered by the plan sponsor 
of the HRA or other account-

[[Page 126]]

based group health plan (referred to as non-HRA MV group coverage);
    (C) The HRA or other account-based group health plan is available 
only to employees who are actually enrolled in non-HRA MV group 
coverage, regardless of whether the non-HRA MV group coverage is offered 
by the plan sponsor of the HRA or other account-based group health plan 
(for example, the HRA may be offered only to employees who do not enroll 
in an employer's group health plan but are enrolled in other non-HRA MV 
group coverage, such as a group health plan maintained by an employer of 
the employee's spouse); and
    (D) Under the terms of the HRA or other account-based group health 
plan, an employee (or former employee) is permitted to permanently opt 
out of and waive future reimbursements from the HRA or other account-
based group health plan at least annually, and, upon termination of 
employment, either the remaining amounts in the HRA or other account-
based group health plan are forfeited or the employee is permitted to 
permanently opt out of and waive future reimbursements from the HRA or 
other account-based group health plan (see paragraph (d)(3) of this 
section for additional rules regarding forfeiture and waiver).
    (3) Forfeiture. For purposes of integration under paragraphs 
(d)(2)(i)(E) and (d)(2)(ii)(D) of this section, forfeiture or waiver 
occurs even if the forfeited or waived amounts may be reinstated upon a 
fixed date, a participant's death, or the earlier of the two events (the 
reinstatement event). For the purpose of this paragraph (d)(3), coverage 
under an HRA or other account-based group health plan is considered 
forfeited or waived prior to a reinstatement event only if the 
participant's election to forfeit or waive is irrevocable, meaning that, 
beginning on the effective date of the election and through the date of 
the reinstatement event, the participant and the participant's 
beneficiaries have no access to amounts credited to the HRA or other 
account-based group health plan. This means that upon and after 
reinstatement, the reinstated amounts under the HRA or other account-
based group health plan may not be used to reimburse or pay medical care 
expenses incurred during the period after forfeiture and prior to 
reinstatement.
    (4) Requirements for an HRA or other account-based group health plan 
to be integrated with individual health insurance coverage or Medicare 
Part A and B or Medicare Part C. An HRA or other account-based group 
health plan is integrated with individual health insurance coverage or 
Medicare Part A and B or Medicare Part C (and treated as complying with 
PHS Act sections 2711 and 2713) if the HRA or other account-based group 
health plan satisfies the requirements of Sec.  146.123(c) of this 
subchapter (as modified by Sec.  146.123(e), for HRAs or other account-
based group health plans integrated with Medicare Part A and B or 
Medicare Part C).
    (5) Integration with Medicare Part B and D. For employers that are 
not required to offer their non-HRA group health plan coverage to 
employees who are Medicare beneficiaries, an HRA or other account-based 
group health plan that may be used to reimburse premiums under Medicare 
Part B or D may be integrated with Medicare (and deemed to comply with 
PHS Act sections 2711 and 2713) if the following requirements are 
satisfied with respect to employees who would be eligible for the 
employer's non-HRA group health plan but for their eligibility for 
Medicare (and the integration rules under paragraphs (d)(2)(i) and (ii) 
of this section continue to apply to employees who are not eligible for 
Medicare):
    (i) The plan sponsor offers a group health plan (other than the HRA 
or other account-based group health plan and that does not consist 
solely of excepted benefits) to employees who are not eligible for 
Medicare;
    (ii) The employee receiving the HRA or other account-based group 
health plan is actually enrolled in Medicare Part B or D;
    (iii) The HRA or other account-based group health plan is available 
only to employees who are enrolled in Medicare Part B or D; and
    (iv) The HRA or other account-based group health plan complies with 
paragraphs (d)(2)(i)(E) and (d)(2)(ii)(D) of this section.
    (6) Definitions. The following definitions apply for purposes of 
this section.

[[Page 127]]

    (i) Account-based group health plan. An account-based group health 
plan is an employer-provided group health plan that provides 
reimbursements of medical care expenses with the reimbursement subject 
to a maximum fixed dollar amount for a period. An HRA is a type of 
account-based group health plan. An account-based group health plan does 
not include a qualified small employer health reimbursement arrangement, 
as defined in section 9831(d)(2) of the Code.
    (ii) Medical care expenses. Medical care expenses means expenses for 
medical care as defined under section 213(d) of the Code.
    (e) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years beginning on or after January 1, 2020. Until the applicability 
date for this section, plans and issuers are required to continue to 
comply with the corresponding sections of this subchapter B, contained 
in the 45 CFR, subtitle A, parts 1-199, revised as of October 1, 2018.

[80 FR 72276, Nov. 18, 2015, as amended at 81 FR 75326, Oct. 31, 2016; 
84 FR 29025, June 20, 2019]



Sec.  147.128  Rules regarding rescissions.

    (a) Prohibition on rescissions--(1) A group health plan, or a health 
insurance issuer offering group or individual health insurance coverage, 
must not rescind coverage under the plan, or under the policy, 
certificate, or contract of insurance, with respect to an individual 
(including a group to which the individual belongs or family coverage in 
which the individual is included) once the individual is covered under 
the plan or coverage, unless the individual (or a person seeking 
coverage on behalf of the individual) performs an act, practice, or 
omission that constitutes fraud, or makes an intentional 
misrepresentation of material fact, as prohibited by the terms of the 
plan or coverage. A group health plan, or a health insurance issuer 
offering group or individual health insurance coverage, must provide at 
least 30 days advance written notice to each participant (in the 
individual market, primary subscriber) who would be affected before 
coverage may be rescinded under this paragraph (a)(1), regardless of, in 
the case of group coverage, whether the coverage is insured or self-
insured, or whether the rescission applies to an entire group or only to 
an individual within the group. (The rules of this paragraph (a)(1) 
apply regardless of any contestability period that may otherwise apply.)
    (2) For purposes of this section, a rescission is a cancellation or 
discontinuance of coverage that has retroactive effect. For example, a 
cancellation that treats a policy as void from the time of the 
individual's or group's enrollment is a rescission. As another example, 
a cancellation that voids benefits paid up to a year before the 
cancellation is also a rescission for this purpose. A cancellation or 
discontinuance of coverage is not a rescission if --
    (i) The cancellation or discontinuance of coverage has only a 
prospective effect;
    (ii) The cancellation or discontinuance of coverage is effective 
retroactively, to the extent it is attributable to a failure to timely 
pay required premiums or contributions (including COBRA premiums) 
towards the cost of coverage;
    (iii) The cancellation or discontinuance of coverage is initiated by 
the individual (or by the individual's authorized representative) and 
the sponsor, employer, plan, or issuer does not, directly or indirectly, 
take action to influence the individual's decision to cancel or 
discontinue coverage retroactively or otherwise take any adverse action 
or retaliate against, interfere with, coerce, intimidate, or threaten 
the individual; or
    (iv) The cancellation or discontinuance of coverage is initiated by 
the Exchange pursuant to Sec.  155.430 of this subchapter (other than 
under paragraph (b)(2)(iii) of this section).
    (3) The rules of this paragraph (a) are illustrated by the following 
examples:

    Example 1. (i) Facts. Individual A seeks enrollment in an insured 
group health plan. The plan terms permit rescission of coverage with 
respect to an individual if the individual engages in fraud or makes an 
intentional misrepresentation of a material fact. The plan requires A to 
complete a questionnaire regarding A's prior medical history, which 
affects setting the group rate by the health insurance issuer. The 
questionnaire

[[Page 128]]

complies with the other requirements of this part and part 146 of this 
subchapter. The questionnaire includes the following question: ``Is 
there anything else relevant to your health that we should know?'' A 
inadvertently fails to list that A visited a psychologist on two 
occasions, six years previously. A is later diagnosed with breast cancer 
and seeks benefits under the plan. On or around the same time, the 
issuer receives information about A's visits to the psychologist, which 
was not disclosed in the questionnaire.
    (ii) Conclusion. In this Example 1, the plan cannot rescind A's 
coverage because A's failure to disclose the visits to the psychologist 
was inadvertent. Therefore, it was not fraudulent or an intentional 
misrepresentation of material fact.
    Example 2. (i) Facts. An employer sponsors a group health plan that 
provides coverage for employees who work at least 30 hours per week. 
Individual B has coverage under the plan as a full-time employee. The 
employer reassigns B to a part-time position. Under the terms of the 
plan, B is no longer eligible for coverage. The plan mistakenly 
continues to provide health coverage, collecting premiums from B and 
paying claims submitted by B. After a routine audit, the plan discovers 
that B no longer works at least 30 hours per week. The plan rescinds B's 
coverage effective as of the date that B changed from a full-time 
employee to a part-time employee.
    (ii) Conclusion. In this Example 2, the plan cannot rescind B's 
coverage because there was no fraud or an intentional misrepresentation 
of material fact. The plan may cancel coverage for B prospectively, 
subject to other applicable Federal and State laws.

    (b) Compliance with other requirements. Other requirements of 
Federal or State law may apply in connection with a rescission of 
coverage.
    (c) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years (in the individual market, policy years) beginning on or after 
January 1, 2017. Until the applicability date for this regulation, plans 
and issuers are required to continue to comply with the corresponding 
sections of 45 CFR parts 144, 146 and 147, contained in the 45 CFR, 
parts 1 to 199, edition revised as of October 1, 2015.

[80 FR 72277, Nov. 18, 2015]



Sec.  147.130  Coverage of preventive health services.

    (a) Services--(1) In general. Beginning at the time described in 
paragraph (b) of this section and subject to Sec. Sec.  147.131, 
147.132, and 147.133, a group health plan, or a health insurance issuer 
offering group or individual health insurance coverage, must provide 
coverage for and must not impose any cost-sharing requirements (such as 
a copayment, coinsurance, or a deductible) for--
    (i) Evidence-based items or services that have in effect a rating of 
A or B in the current recommendations of the United States Preventive 
Services Task Force with respect to the individual involved (except as 
otherwise provided in paragraph (c) of this section);
    (ii) Immunizations for routine use in children, adolescents, and 
adults that have in effect a recommendation from the Advisory Committee 
on Immunization Practices of the Centers for Disease Control and 
Prevention with respect to the individual involved (for this purpose, a 
recommendation from the Advisory Committee on Immunization Practices of 
the Centers for Disease Control and Prevention is considered in effect 
after it has been adopted by the Director of the Centers for Disease 
Control and Prevention, and a recommendation is considered to be for 
routine use if it is listed on the Immunization Schedules of the Centers 
for Disease Control and Prevention);
    (iii) With respect to infants, children, and adolescents, evidence-
informed preventive care and screenings provided for in comprehensive 
guidelines supported by the Health Resources and Services 
Administration; and
    (iv) With respect to women, such additional preventive care and 
screenings not described in paragraph (a)(1)(i) of this section as 
provided for in comprehensive guidelines supported by the Health 
Resources and Services Administration for purposes of section 2713(a)(4) 
of the Public Health Service Act, subject to Sec. Sec.  147.131, 
147.132, and 147.133.
    (2) Office visits. (i) If an item or service described in paragraph 
(a)(1) of this section is billed separately (or is tracked as individual 
encounter data separately) from an office visit, then a plan or issuer 
may impose cost-sharing requirements with respect to the office visit.

[[Page 129]]

    (ii) If an item or service described in paragraph (a)(1) of this 
section is not billed separately (or is not tracked as individual 
encounter data separately) from an office visit and the primary purpose 
of the office visit is the delivery of such an item or service, then a 
plan or issuer may not impose cost-sharing requirements with respect to 
the office visit.
    (iii) If an item or service described in paragraph (a)(1) of this 
section is not billed separately (or is not tracked as individual 
encounter data separately) from an office visit and the primary purpose 
of the office visit is not the delivery of such an item or service, then 
a plan or issuer may impose cost-sharing requirements with respect to 
the office visit.
    (iv) The rules of this paragraph (a)(2) are illustrated by the 
following examples:

    Example 1. (i) Facts. An individual covered by a group health plan 
visits an in-network health care provider. While visiting the provider, 
the individual is screened for cholesterol abnormalities, which has in 
effect a rating of A or B in the current recommendations of the United 
States Preventive Services Task Force with respect to the individual. 
The provider bills the plan for an office visit and for the laboratory 
work of the cholesterol screening test.
    (ii) Conclusion. In this Example 1, the plan may not impose any 
cost-sharing requirements with respect to the separately-billed 
laboratory work of the cholesterol screening test. Because the office 
visit is billed separately from the cholesterol screening test, the plan 
may impose cost-sharing requirements for the office visit.
    Example 2. (i) Facts. Same facts as Example 1. As the result of the 
screening, the individual is diagnosed with hyperlipidemia and is 
prescribed a course of treatment that is not included in the 
recommendations under paragraph (a)(1) of this section.
    (ii) Conclusion. In this Example 2, because the treatment is not 
included in the recommendations under paragraph (a)(1) of this section, 
the plan is not prohibited from imposing cost-sharing requirements with 
respect to the treatment.
    Example 3. (i) Facts. An individual covered by a group health plan 
visits an in-network health care provider to discuss recurring abdominal 
pain. During the visit, the individual has a blood pressure screening, 
which has in effect a rating of A or B in the current recommendations of 
the United States Preventive Services Task Force with respect to the 
individual. The provider bills the plan for an office visit.
    (ii) Conclusion. In this Example 3, the blood pressure screening is 
provided as part of an office visit for which the primary purpose was 
not to deliver items or services described in paragraph (a)(1) of this 
section. Therefore, the plan may impose a cost-sharing requirement for 
the office visit charge.
    Example 4. (i) Facts. A child covered by a group health plan visits 
an in-network pediatrician to receive an annual physical exam described 
as part of the comprehensive guidelines supported by the Health 
Resources and Services Administration. During the office visit, the 
child receives additional items and services that are not described in 
the comprehensive guidelines supported by the Health Resources and 
Services Administration, nor otherwise described in paragraph (a)(1) of 
this section. The provider bills the plan for an office visit.
    (ii) Conclusion. In this Example 4, the service was not billed as a 
separate charge and was billed as part of an office visit. Moreover, the 
primary purpose for the visit was to deliver items and services 
described as part of the comprehensive guidelines supported by the 
Health Resources and Services Administration. Therefore, the plan may 
not impose a cost-sharing requirement for the office visit charge.

    (3) Out-of-network providers. (i) Subject to paragraph (a)(3)(ii) of 
this section, nothing in this section requires a plan or issuer that has 
a network of providers to provide benefits for items or services 
described in paragraph (a)(1) of this section that are delivered by an 
out-of-network provider. Moreover, nothing in this section precludes a 
plan or issuer that has a network of providers from imposing cost-
sharing requirements for items or services described in paragraph (a)(1) 
of this section that are delivered by an out-of-network provider.
    (ii) If a plan or issuer does not have in its network a provider who 
can provide an item or service described in paragraph (a)(1) of this 
section, the plan or issuer must cover the item or service when 
performed by an out-of-network provider, and may not impose cost sharing 
with respect to the item or service.
    (4) Reasonable medical management. Nothing prevents a plan or issuer 
from using reasonable medical management techniques to determine the 
frequency, method, treatment, or setting for an item or service 
described in paragraph

[[Page 130]]

(a)(1) of this section to the extent not specified in the relevant 
recommendation or guideline. To the extent not specified in a 
recommendation or guideline, a plan or issuer may rely on the relevant 
clinical evidence base and established reasonable medical management 
techniques to determine the frequency, method, treatment, or setting for 
coverage of a recommended preventive health service.
    (5) Services not described. Nothing in this section prohibits a plan 
or issuer from providing coverage for items and services in addition to 
those recommended by the United States Preventive Services Task Force or 
the Advisory Committee on Immunization Practices of the Centers for 
Disease Control and Prevention, or provided for by guidelines supported 
by the Health Resources and Services Administration, or from denying 
coverage for items and services that are not recommended by that task 
force or that advisory committee, or under those guidelines. A plan or 
issuer may impose cost-sharing requirements for a treatment not 
described in paragraph (a)(1) of this section, even if the treatment 
results from an item or service described in paragraph (a)(1) of this 
section.
    (b) Timing--(1) In general. A plan or issuer must provide coverage 
pursuant to paragraph (a)(1) of this section for plan years (in the 
individual market, policy years) that begin on or after September 23, 
2010, or, if later, for plan years (in the individual market, policy 
years) that begin on or after the date that is one year after the date 
the recommendation or guideline is issued.
    (2) Changes in recommendations or guidelines. (i) A plan or issuer 
that is required to provide coverage for any items and services 
specified in any recommendation or guideline described in paragraph 
(a)(1) of this section on the first day of a plan year (in the 
individual market, policy year) must provide coverage through the last 
day of the plan or policy year, even if the recommendation or guideline 
changes or is no longer described in paragraph (a)(1) of this section, 
during the plan or policy year.
    (ii) Notwithstanding paragraph (b)(2)(i) of this section, to the 
extent a recommendation or guideline described in paragraph (a)(1)(i) of 
this section that was in effect on the first day of a plan year (in the 
individual market, policy year) is downgraded to a ``D'' rating, or any 
item or service associated with any recommendation or guideline 
specified in paragraph (a)(1) of this section is subject to a safety 
recall or is otherwise determined to pose a significant safety concern 
by a federal agency authorized to regulate the item or service during a 
plan or policy year, there is no requirement under this section to cover 
these items and services through the last day of the plan or policy 
year.
    (c) Recommendations not current. For purposes of paragraph (a)(1)(i) 
of this section, and for purposes of any other provision of law, 
recommendations of the United States Preventive Services Task Force 
regarding breast cancer screening, mammography, and prevention issued in 
or around November 2009 are not considered to be current.
    (d) Applicability date. The provisions of this section apply for 
plan years (in the individual market, for policy years) beginning on or 
after September 23, 2010. See Sec.  147.140 of this part for determining 
the application of this section to grandfathered health plans (providing 
that these rules regarding coverage of preventive health services do not 
apply to grandfathered health plans).

[75 FR 41759, July 19, 2010, as amended at 76 FR 46626, Aug. 3, 2011; 78 
FR 39896, July 2, 2013; 80 FR 41346, July 14, 2015; 82 FR 47833, 47861, 
Oct. 13, 2017]



Sec.  147.131  Accommodations in connection with coverage of certain
preventive health services.

    (a)-(b) [Reserved]
    (c) Eligible organizations for optional accommodation. An eligible 
organization is an organization that meets the criteria of paragraphs 
(c)(1) through (3) of this section.
    (1) The organization is an objecting entity described in Sec.  
147.132(a)(1)(i) or (ii), or 45 CFR 147.133(a)(1)(i) or (ii).

[[Page 131]]

    (2) Notwithstanding its exempt status under Sec.  147.132(a) or 
Sec.  147.133, the organization voluntarily seeks to be considered an 
eligible organization to invoke the optional accommodation under 
paragraph (d) of this section; and
    (3) The organization self-certifies in the form and manner specified 
by the Secretary or provides notice to the Secretary as described in 
paragraph (d) of this section. To qualify as an eligible organization, 
the organization must make such self-certification or notice available 
for examination upon request by the first day of the first plan year to 
which the accommodation in paragraph (d) of this section applies. The 
self-certification or notice must be executed by a person authorized to 
make the certification or provide the notice on behalf of the 
organization, and must be maintained in a manner consistent with the 
record retention requirements under section 107 of ERISA.
    (4) An eligible organization may revoke its use of the accommodation 
process, and its issuer must provide participants and beneficiaries 
written notice of such revocation, as specified herein.
    (i) Transitional rule. If contraceptive coverage is being offered on 
January 14, 2019, by an issuer through the accommodation process, an 
eligible organization may give 60-days notice pursuant to section 
2715(d)(4) of the PHS Act and Sec.  147.200(b), if applicable, to revoke 
its use of the accommodation process (to allow for the provision of 
notice to plan participants in cases where contraceptive benefits will 
no longer be provided). Alternatively, such eligible organization may 
revoke its use of the accommodation process effective on the first day 
of the first plan year that begins on or after 30 days after the date of 
the revocation.
    (ii) General rule. In plan years that begin after January 14, 2019, 
if contraceptive coverage is being offered by an issuer through the 
accommodation process, an eligible organization's revocation of use of 
the accommodation process will be effective no sooner than the first day 
of the first plan year that begins on or after 30 days after the date of 
the revocation.
    (d) Optional accommodation--insured group health plans--(1) General 
rule. A group health plan established or maintained by an eligible 
organization that provides benefits through one or more group health 
insurance issuers may voluntarily elect an optional accommodation under 
which its health insurance issuer(s) will provide payments for all or a 
subset of contraceptive services for one or more plan years. To invoke 
the optional accommodation process:
    (i) The eligible organization or its plan must contract with one or 
more health insurance issuers.
    (ii) The eligible organization must provide either a copy of the 
self-certification to each issuer providing coverage in connection with 
the plan or a notice to the Secretary of the Department of Health and 
Human Services that it is an eligible organization and of its objection 
as described in Sec.  147.132 or Sec.  147.133 to coverage for all or a 
subset of contraceptive services.
    (A) When a self-certification is provided directly to an issuer, the 
issuer has sole responsibility for providing such coverage in accordance 
with Sec.  147.130(a)(iv).
    (B) When a notice is provided to the Secretary of the Department of 
Health and Human Services, the notice must include the name of the 
eligible organization; a statement that it objects as described in Sec.  
147.132 or Sec.  147.133 to coverage of some or all contraceptive 
services (including an identification of the subset of contraceptive 
services to which coverage the eligible organization objects, if 
applicable) but that it would like to elect the optional accommodation 
process; the plan name and type (that is, whether it is a student health 
insurance plan within the meaning of Sec.  147.145(a) or a church plan 
within the meaning of section 3(33) of ERISA); and the name and contact 
information for any of the plan's health insurance issuers. If there is 
a change in any of the information required to be included in the 
notice, the eligible organization must provide updated information to 
the Secretary of the Department of Health and Human Services for the 
optional accommodation to remain in effect. The Department of Health and 
Human Services will send a separate notification to each of the

[[Page 132]]

plan's health insurance issuers informing the issuer that the Secretary 
of the Deparement of Health and Human Services has received a notice 
under paragraph (d)(1)(ii) of this section and describing the 
obligations of the issuer under this section.
    (2) If an issuer receives a copy of the self-certification from an 
eligible organization or the notification from the Department of Health 
and Human Services as described in paragraph (d)(1)(ii) of this section 
and does not have an objection as described in Sec.  147.132 or Sec.  
147.133 to providing the contraceptive services identified in the self-
certification or the notification from the Department of Health and 
Human Services, then the issuer will provide payments for contraceptive 
services as follows--
    (i) The issuer must expressly exclude contraceptive coverage from 
the group health insurance coverage provided in connection with the 
group health plan and provide separate payments for any contraceptive 
services required to be covered under Sec.  141.130(a)(1)(iv) for plan 
participants and beneficiaries for so long as they remain enrolled in 
the plan.
    (ii) With respect to payments for contraceptive services, the issuer 
may not impose any cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible), premium, fee, or other charge, or any 
portion thereof, directly or indirectly, on the eligible organization, 
the group health plan, or plan participants or beneficiaries. The issuer 
must segregate premium revenue collected from the eligible organization 
from the monies used to provide payments for contraceptive services. The 
issuer must provide payments for contraceptive services in a manner that 
is consistent with the requirements under sections 2706, 2709, 2711, 
2713, 2719, and 2719A of the PHS Act. If the group health plan of the 
eligible organization provides coverage for some but not all of any 
contraceptive services required to be covered under Sec.  
147.130(a)(1)(iv), the issuer is required to provide payments only for 
those contraceptive services for which the group health plan does not 
provide coverage. However, the issuer may provide payments for all 
contraceptive services, at the issuer's option.
    (3) A health insurance issuer may not require any documentation 
other than a copy of the self-certification from the eligible 
organization or the notification from the Department of Health and Human 
Services described in paragraph (d)(1)(ii) of this section.
    (e) Notice of availability of separate payments for contraceptive 
services--insured group health plans and student health insurance 
coverage. For each plan year to which the optional accommodation in 
paragraph (d) of this section is to apply, an issuer required to provide 
payments for contraceptive services pursuant to paragraph (d) of this 
section must provide to plan participants and beneficiaries written 
notice of the availability of separate payments for contraceptive 
services contemporaneous with (to the extent possible), but separate 
from, any application materials distributed in connection with 
enrollment (or re-enrollment) in group health coverage that is effective 
beginning on the first day of each applicable plan year. The notice must 
specify that the eligible organization does not administer or fund 
contraceptive benefits, but that the issuer provides separate payments 
for contraceptive services, and must provide contact information for 
questions and complaints. The following model language, or substantially 
similar language, may be used to satisfy the notice requirement of this 
paragraph (e) ``Your [employer/institution of higher education] has 
certified that your [group health plan/student health insurance 
coverage] qualifies for an accommodation with respect to the Federal 
requirement to cover all Food and Drug Administration-approved 
contraceptive services for women, as prescribed by a health care 
provider, without cost sharing. This means that your [employer/
institution of higher education] will not contract, arrange, pay, or 
refer for contraceptive coverage. Instead, [name of health insurance 
issuer] will provide separate payments for contraceptive services that 
you use, without cost sharing and at no other cost, for so long as you 
are enrolled in your [group health plan/student health insurance 
coverage]. Your [employer/institution

[[Page 133]]

of higher education] will not administer or fund these payments . If you 
have any questions about this notice, contact [contact information for 
health insurance issuer].''
    (f) Reliance. (1) If an issuer relies reasonably and in good faith 
on a representation by the eligible organization as to its eligibility 
for the accommodation in paragraph (d) of this section, and the 
representation is later determined to be incorrect, the issuer is 
considered to comply with any applicable requirement under Sec.  
147.130(a)(1)(iv) to provide contraceptive coverage if the issuer 
complies with the obligations under this section applicable to such 
issuer.
    (2) A group health plan is considered to comply with any applicable 
requirement under Sec.  147.130(a)(1)(iv) to provide contraceptive 
coverage if the plan complies with its obligations under paragraph (d) 
of this section, without regard to whether the issuer complies with the 
obligations under this section applicable to such issuer.
    (g) Definition. For the purposes of this section, reference to 
``contraceptive'' services, benefits, or coverage includes contraceptive 
or sterilization items, procedures, or services, or related patient 
education or counseling, to the extent specified for purposes of Sec.  
147.130(a)(1)(iv).
    (h) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, shall be construed so as to continue to give maximum 
effect to the provision permitted by law, unless such holding shall be 
one of utter invalidity or unenforceability, in which event the 
provision shall be severable from this section and shall not affect the 
remainder thereof or the application of the provision to persons not 
similarly situated or to dissimilar circumstances.

[82 FR 47833, Oct. 13, 2017, as amended at 82 FR 47861, Oct. 13, 2017; 
83 FR 57589, Nov. 15, 2018]



Sec.  147.132  Religious exemptions in connection with coverage of
certain preventive health services.

    (a) Objecting entities. (1) Guidelines issued under Sec.  
147.130(a)(1)(iv) by the Health Resources and Services Administration 
must not provide for or support the requirement of coverage or payments 
for contraceptive services with respect to a group health plan 
established or maintained by an objecting organization, or health 
insurance coverage offered or arranged by an objecting organization, to 
the extent of the objections specified below. Thus the Health Resources 
and Service Administration will exempt from any guidelines' requirements 
that relate to the provision of contraceptive services:
    (i) A group health plan and health insurance coverage provided in 
connection with a group health plan to the extent the non-governmental 
plan sponsor objects as specified in paragraph (a)(2) of this section. 
Such non-governmental plan sponsors include, but are not limited to, the 
following entities--
    (A) A church, an integrated auxiliary of a church, a convention or 
association of churches, or a religious order.
    (B) A nonprofit organization.
    (C) A closely held for-profit entity.
    (D) A for-profit entity that is not closely held.
    (E) Any other non-governmental employer.
    (ii) A group health plan, and health insurance coverage provided in 
connection with a group health plan, where the plan or coverage is 
established or maintained by a church, an integrated auxiliary of a 
church, a convention or association of churches, a religious order, a 
nonprofit organization, or other non-governmental organization or 
association, to the extent the plan sponsor responsible for establishing 
and/or maintaining the plan objects as specified in paragraph (a)(2) of 
this section. The exemption in this paragraph applies to each employer, 
organization, or plan sponsor that adopts the plan;
    (iii) An institution of higher education as defined in 20 U.S.C. 
1002, which is non-governmental, in its arrangement of student health 
insurance coverage, to the extent that institution objects as specified 
in paragraph (a)(2) of this section. In the case of student health 
insurance coverage, this section is applicable in a manner comparable to 
its applicability to group health insurance coverage provided in 
connection with a group health plan established or maintained by a plan 
sponsor

[[Page 134]]

that is an employer, and references to ``plan participants and 
beneficiaries'' will be interpreted as references to student enrollees 
and their covered dependents; and
    (iv) A health insurance issuer offering group or individual 
insurance coverage to the extent the issuer objects as specified in 
paragraph (a)(2) of this section. Where a health insurance issuer 
providing group health insurance coverage is exempt under this 
subparagraph (iv), the group health plan established or maintained by 
the plan sponsor with which the health insurance issuer contracts 
remains subject to any requirement to provide coverage for contraceptive 
services under Guidelines issued under Sec.  147.130(a)(1)(iv) unless it 
is also exempt from that requirement.
    (2) The exemption of this paragraph (a) will apply to the extent 
that an entity described in paragraph (a)(1) of this section objects, 
based on its sincerely held religious beliefs, to its establishing, 
maintaining, providing, offering, or arranging for (as applicable):
    (i) Coverage or payments for some or all contraceptive services; or
    (ii) A plan, issuer, or third party administrator that provides or 
arranges such coverage or payments.
    (b) Objecting individuals. Guidelines issued under Sec.  
147.130(a)(1)(iv) by the Health Resources and Services Administration 
must not provide for or support the requirement of coverage or payments 
for contraceptive services with respect to individuals who object as 
specified in this paragraph (b), and nothing in Sec.  147.130(a)(1)(iv), 
26 CFR 54.9815-2713(a)(1)(iv), or 29 CFR 2590.715-2713(a)(1)(iv) may be 
construed to prevent a willing health insurance issuer offering group or 
individual health insurance coverage, and as applicable, a willing plan 
sponsor of a group health plan, from offering a separate policy, 
certificate or contract of insurance or a separate group health plan or 
benefit package option, to any group health plan sponsor (with respect 
to an individual) or individual, as applicable, who objects to coverage 
or payments for some or all contraceptive services based on sincerely 
held religious beliefs. Under this exemption, if an individual objects 
to some but not all contraceptive services, but the issuer, and as 
applicable, plan sponsor, are willing to provide the plan sponsor or 
individual, as applicable, with a separate policy, certificate or 
contract of insurance or a separate group health plan or benefit package 
option that omits all contraceptives, and the individual agrees, then 
the exemption applies as if the individual objects to all contraceptive 
services.
    (c) Definition. For the purposes of this section, reference to 
``contraceptive'' services, benefits, or coverage includes contraceptive 
or sterilization items, procedures, or services, or related patient 
education or counseling, to the extent specified for purposes of Sec.  
147.130(a)(1)(iv).
    (d) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, shall be construed so as to continue to give maximum 
effect to the provision permitted by law, unless such holding shall be 
one of utter invalidity or unenforceability, in which event the 
provision shall be severable from this section and shall not affect the 
remainder thereof or the application of the provision to persons not 
similarly situated or to dissimilar circumstances.

[82 FR 47835, Oct. 13, 2017, as amended at 83 FR 57590, Nov. 15, 2018]



Sec.  147.133  Moral exemptions in connection with coverage of certain
preventive health services.

    (a) Objecting entities. (1) Guidelines issued under Sec.  
147.130(a)(1)(iv) by the Health Resources and Services Administration 
must not provide for or support the requirement of coverage or payments 
for contraceptive services with respect to a group health plan 
established or maintained by an objecting organization, or health 
insurance coverage offered or arranged by an objecting organization, to 
the extent of the objections specified below. Thus the Health Resources 
and Service Administration will exempt from any guidelines' requirements 
that relate to the provision of contraceptive services:

[[Page 135]]

    (i) A group health plan and health insurance coverage provided in 
connection with a group health plan to the extent one of the following 
non-governmental plan sponsors object as specified in paragraph (a)(2) 
of this section:
    (A) A nonprofit organization; or
    (B) A for-profit entity that has no publicly traded ownership 
interests (for this purpose, a publicly traded ownership interest is any 
class of common equity securities required to be registered under 
section 12 of the Securities Exchange Act of 1934);
    (ii) An institution of higher education as defined in 20 U.S.C. 
1002, which is non-governmental, in its arrangement of student health 
insurance coverage, to the extent that institution objects as specified 
in paragraph (a)(2) of this section. In the case of student health 
insurance coverage, this section is applicable in a manner comparable to 
its applicability to group health insurance coverage provided in 
connection with a group health plan established or maintained by a plan 
sponsor that is an employer, and references to ``plan participants and 
beneficiaries'' will be interpreted as references to student enrollees 
and their covered dependents; and
    (iii) A health insurance issuer offering group or individual 
insurance coverage to the extent the issuer objects as specified in 
paragraph (a)(2) of this section. Where a health insurance issuer 
providing group health insurance coverage is exempt under paragraph 
(a)(1)(iii) of this section, the group health plan established or 
maintained by the plan sponsor with which the health insurance issuer 
contracts remains subject to any requirement to provide coverage for 
contraceptive services under Guidelines issued under Sec.  
147.130(a)(1)(iv) unless it is also exempt from that requirement.
    (2) The exemption of this paragraph (a) will apply to the extent 
that an entity described in paragraph (a)(1) of this section objects, 
based on its sincerely held moral convictions, to its establishing, 
maintaining, providing, offering, or arranging for (as applicable):
    (i) Coverage or payments for some or all contraceptive services; or
    (ii) A plan, issuer, or third party administrator that provides or 
arranges such coverage or payments.
    (b) Objecting individuals. Guidelines issued under Sec.  
147.130(a)(1)(iv) by the Health Resources and Services Administration 
must not provide for or support the requirement of coverage or payments 
for contraceptive services with respect to individuals who object as 
specified in this paragraph (b), and nothing in Sec.  147.130(a)(1)(iv), 
26 CFR 54.9815-2713(a)(1)(iv), or 29 CFR 2590.715-2713(a)(1)(iv) may be 
construed to prevent a willing health insurance issuer offering group or 
individual health insurance coverage, and as applicable, a willing plan 
sponsor of a group health plan, from offering a separate policy, 
certificate or contract of insurance or a separate group health plan or 
benefit package option, to any group health plan sponsor (with respect 
to an individual) or individual, as applicable, who objects to coverage 
or payments for some or all contraceptive services based on sincerely 
held moral convictions. Under this exemption, if an individual objects 
to some but not all contraceptive services, but the issuer, and as 
applicable, plan sponsor, are willing to provide the plan sponsor or 
individual, as applicable, with a separate policy, certificate or 
contract of insurance or a separate group health plan or benefit package 
option that omits all contraceptives, and the individual agrees, then 
the exemption applies as if the individual objects to all contraceptive 
services.
    (c) Definition. For the purposes of this section, reference to 
``contraceptive'' services, benefits, or coverage includes contraceptive 
or sterilization items, procedures, or services, or related patient 
education or counseling, to the extent specified for purposes of Sec.  
147.130(a)(1)(iv).
    (d) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, shall be construed so as to continue to give maximum 
effect to the provision permitted by law, unless such holding shall be 
one of utter invalidity or unenforceability, in which event the 
provision shall be severable from this section and shall not affect the 
remainder thereof

[[Page 136]]

or the application of the provision to persons not similarly situated or 
to dissimilar circumstances.

[82 FR 47861, Oct. 13, 2017, as amended at 83 FR 57630, Nov. 15, 2018]



Sec.  147.136  Internal claims and appeals and external review processes.

    (a) Scope and definitions--(1) Scope. This section sets forth 
requirements with respect to internal claims and appeals and external 
review processes for group health plans and health insurance issuers 
that are not grandfathered health plans under Sec.  147.140. Paragraph 
(b) of this section provides requirements for internal claims and 
appeals processes. Paragraph (c) of this section sets forth rules 
governing the applicability of State external review processes. 
Paragraph (d) of this section sets forth a Federal external review 
process for plans and issuers not subject to an applicable State 
external review process. Paragraph (e) of this section prescribes 
requirements for ensuring that notices required to be provided under 
this section are provided in a culturally and linguistically appropriate 
manner. Paragraph (f) of this section describes the authority of the 
Secretary to deem certain external review processes in existence on 
March 23, 2010 as in compliance with paragraph (c) or (d) of this 
section.
    (2) Definitions. For purposes of this section, the following 
definitions apply--
    (i) Adverse benefit determination. An adverse benefit determination 
means an adverse benefit determination as defined in 29 CFR 2560.503-1, 
as well as any rescission of coverage, as described in Sec.  147.128 
(whether or not, in connection with the rescission, there is an adverse 
effect on any particular benefit at that time).
    (ii) Appeal (or internal appeal). An appeal or internal appeal means 
review by a plan or issuer of an adverse benefit determination, as 
required in paragraph (b) of this section.
    (iii) Claimant. Claimant means an individual who makes a claim under 
this section. For purposes of this section, references to claimant 
include a claimant's authorized representative.
    (iv) External review. External review means a review of an adverse 
benefit determination (including a final internal adverse benefit 
determination) conducted pursuant to an applicable State external review 
process described in paragraph (c) of this section or the Federal 
external review process of paragraph (d) of this section.
    (v) Final internal adverse benefit determination. A final internal 
adverse benefit determination means an adverse benefit determination 
that has been upheld by a plan or issuer at the completion of the 
internal appeals process applicable under paragraph (b) of this section 
(or an adverse benefit determination with respect to which the internal 
appeals process has been exhausted under the deemed exhaustion rules of 
paragraph (b)(2)(ii)(F) of this section).
    (vi) Final external review decision. A final external review 
decision means a determination by an independent review organization at 
the conclusion of an external review.
    (vii) Independent review organization (or IRO). An independent 
review organization (or IRO) means an entity that conducts independent 
external reviews of adverse benefit determinations and final internal 
adverse benefit determinations pursuant to paragraph (c) or (d) of this 
section.
    (viii) NAIC Uniform Model Act. The NAIC Uniform Model Act means the 
Uniform Health Carrier External Review Model Act promulgated by the 
National Association of Insurance Commissioners in place on July 23, 
2010.
    (b) Internal claims and appeals process--(1) In general. A group 
health plan and a health insurance issuer offering group or individual 
health insurance coverage must implement an effective internal claims 
and appeals process, as described in this paragraph (b).
    (2) Requirements for group health plans and group health insurance 
issuers. A group health plan and a health insurance issuer offering 
group health insurance coverage must comply with all the requirements of 
this paragraph (b)(2). In the case of health insurance coverage offered 
in connection with a group health plan, if either the plan or the issuer 
complies with the internal claims and appeals process of this paragraph 
(b)(2), then the obligation to comply with this paragraph (b)(2) is 
satisfied for both the plan and the

[[Page 137]]

issuer with respect to the health insurance coverage.
    (i) Minimum internal claims and appeals standards. A group health 
plan and a health insurance issuer offering group health insurance 
coverage must comply with all the requirements applicable to group 
health plans under 29 CFR 2560.503-1, except to the extent those 
requirements are modified by paragraph (b)(2)(ii) of this section. 
Accordingly, under this paragraph (b), with respect to health insurance 
coverage offered in connection with a group health plan, the group 
health insurance issuer is subject to the requirements in 29 CFR 
2560.503-1 to the same extent as the group health plan.
    (ii) Additional standards. In addition to the requirements in 
paragraph (b)(2)(i) of this section, the internal claims and appeals 
processes of a group health plan and a health insurance issuer offering 
group health insurance coverage must meet the requirements of this 
paragraph (b)(2)(ii).
    (A) Clarification of meaning of adverse benefit determination. For 
purposes of this paragraph (b)(2), an ``adverse benefit determination'' 
includes an adverse benefit determination as defined in paragraph 
(a)(2)(i) of this section. Accordingly, in complying with 29 CFR 
2560.503-1, as well as the other provisions of this paragraph (b)(2), a 
plan or issuer must treat a rescission of coverage (whether or not the 
rescission has an adverse effect on any particular benefit at that time) 
as an adverse benefit determination. (Rescissions of coverage are 
subject to the requirements of Sec.  147.128.)
    (B) Expedited notification of benefit determinations involving 
urgent care. The requirements of 29 CFR 2560.503-1(f)(2)(i) (which 
generally provide, among other things, in the case of urgent care claims 
for notification of the plan's benefit determination (whether adverse or 
not) as soon as possible, taking into account the medical exigencies, 
but not later than 72 hours after the receipt of the claim) continue to 
apply to the plan and issuer. For purposes of this paragraph 
(b)(2)(ii)(B), a claim involving urgent care has the meaning given in 29 
CFR 2560.503-1(m)(1), as determined by the attending provider, and the 
plan or issuer shall defer to such determination of the attending 
provider.
    (C) Full and fair review. A plan and issuer must allow a claimant to 
review the claim file and to present evidence and testimony as part of 
the internal claims and appeals process. Specifically, in addition to 
complying with the requirements of 29 CFR 2560.503-1(h)(2)--
    (1) The plan or issuer must provide the claimant, free of charge, 
with any new or additional evidence considered, relied upon, or 
generated by the plan or issuer (or at the direction of the plan or 
issuer) in connection with the claim; such evidence must be provided as 
soon as possible and sufficiently in advance of the date on which the 
notice of final internal adverse benefit determination is required to be 
provided under 29 CFR 2560.503-1(i) to give the claimant a reasonable 
opportunity to respond prior to that date; and
    (2) Before the plan or issuer can issue a final internal adverse 
benefit determination based on a new or additional rationale, the 
claimant must be provided, free of charge, with the rationale; the 
rationale must be provided as soon as possible and sufficiently in 
advance of the date on which the notice of final internal adverse 
benefit determination is required to be provided under 29 CFR 2560.503-
1(i) to give the claimant a reasonable opportunity to respond prior to 
that date. Notwithstanding the rules of 29 CFR 2560.503-1(i), if the new 
or additional evidence is received so late that it would be impossible 
to provide it to the claimant in time for the claimant to have a 
reasonable opportunity to respond, the period for providing a notice of 
final internal adverse benefit determination is tolled until such time 
as the claimant has a reasonable opportunity to respond. After the 
claimant responds, or has a reasonable opportunity to respond but fails 
to do so, the plan administrator shall notify the claimant of the plan's 
benefit determination as soon as a plan acting in a reasonable and 
prompt fashion can provide the notice, taking into account the medical 
exigencies.
    (D) Avoiding conflicts of interest. In addition to the requirements 
of 29 CFR 2560.503-1(b) and (h) regarding full and fair review, the plan 
and issuer must

[[Page 138]]

ensure that all claims and appeals are adjudicated in a manner designed 
to ensure the independence and impartiality of the persons involved in 
making the decision. Accordingly, decisions regarding hiring, 
compensation, termination, promotion, or other similar matters with 
respect to any individual (such as a claims adjudicator or medical 
expert) must not be made based upon the likelihood that the individual 
will support the denial of benefits.
    (E) Notice. A plan and issuer must provide notice to individuals, in 
a culturally and linguistically appropriate manner (as described in 
paragraph (e) of this section) that complies with the requirements of 29 
CFR 2560.503-1(g) and (j). The plan and issuer must also comply with the 
additional requirements of this paragraph (b)(2)(ii)(E).
    (1) The plan and issuer must ensure that any notice of adverse 
benefit determination or final internal adverse benefit determination 
includes information sufficient to identify the claim involved 
(including the date of service, the health care provider, the claim 
amount (if applicable), and a statement describing the availability, 
upon request, of the diagnosis code and its corresponding meaning, and 
the treatment code and its corresponding meaning).
    (2) The plan and issuer must provide to participants, beneficiaries 
and enrollees, as soon as practicable, upon request, the diagnosis code 
and its corresponding meaning, and the treatment code and its 
corresponding meaning, associated with any adverse benefit determination 
or final internal adverse benefit determination. The plan or issuer must 
not consider a request for such diagnosis and treatment information, in 
itself, to be a request for an internal appeal under this paragraph (b) 
or an external review under paragraphs (c) and (d) of this section.
    (3) The plan and issuer must ensure that the reason or reasons for 
the adverse benefit determination or final internal adverse benefit 
determination includes the denial code and its corresponding meaning, as 
well as a description of the plan's or issuer's standard, if any, that 
was used in denying the claim. In the case of a notice of final internal 
adverse benefit determination, this description must include a 
discussion of the decision.
    (4) The plan and issuer must provide a description of available 
internal appeals and external review processes, including information 
regarding how to initiate an appeal.
    (5) The plan and issuer must disclose the availability of, and 
contact information for, any applicable office of health insurance 
consumer assistance or ombudsman established under PHS Act section 2793 
to assist individuals with the internal claims and appeals and external 
review processes.
    (F) Deemed exhaustion of internal claims and appeals processes. (1) 
In the case of a plan or issuer that fails to strictly adhere to all the 
requirements of this paragraph (b)(2) with respect to a claim, the 
claimant is deemed to have exhausted the internal claims and appeals 
process of this paragraph (b), except as provided in paragraph 
(b)(2)(ii)(F)(2) of this section. Accordingly the claimant may initiate 
an external review under paragraph (c) or (d) of this section, as 
applicable. The claimant is also entitled to pursue any available 
remedies under section 502(a) of ERISA or under State law, as 
applicable, on the basis that the plan or issuer has failed to provide a 
reasonable internal claims and appeals process that would yield a 
decision on the merits of the claim. If a claimant chooses to pursue 
remedies under section 502(a) of ERISA under such circumstances, the 
claim or appeal is deemed denied on review without the exercise of 
discretion by an appropriate fiduciary.
    (2) Notwithstanding paragraph (b)(2)(ii)(F)(1) of this section, the 
internal claims and appeals process of this paragraph (b) will not be 
deemed exhausted based on de minimis violations that do not cause, and 
are not likely to cause, prejudice or harm to the claimant so long as 
the plan or issuer demonstrates that the violation was for good cause or 
due to matters beyond the control of the plan or issuer and that the 
violation occurred in the context of an ongoing, good faith exchange of 
information between the plan and the claimant. This exception is not 
available if the violation is part of a pattern or practice of 
violations by the

[[Page 139]]

plan or issuer. The claimant may request a written explanation of the 
violation from the plan or issuer, and the plan or issuer must provide 
such explanation within 10 days, including a specific description of its 
bases, if any, for asserting that the violation should not cause the 
internal claims and appeals process of this paragraph (b) to be deemed 
exhausted. If an external reviewer or a court rejects the claimant's 
request for immediate review under paragraph (b)(2)(ii)(F)(1) of this 
section on the basis that the plan met the standards for the exception 
under this paragraph (b)(2)(ii)(F)(2), the claimant has the right to 
resubmit and pursue the internal appeal of the claim. In such a case, 
within a reasonable time after the external reviewer or court rejects 
the claim for immediate review (not to exceed 10 days), the plan shall 
provide the claimant with notice of the opportunity to resubmit and 
pursue the internal appeal of the claim. Time periods for re-filing the 
claim shall begin to run upon claimant's receipt of such notice.
    (iii) Requirement to provide continued coverage pending the outcome 
of an appeal. A plan and issuer subject to the requirements of this 
paragraph (b)(2) are required to provide continued coverage pending the 
outcome of an appeal. For this purpose, the plan and issuer must comply 
with the requirements of 29 CFR 2560.503-1(f)(2)(ii), which generally 
provides that benefits for an ongoing course of treatment cannot be 
reduced or terminated without providing advance notice and an 
opportunity for advance review.
    (3) Requirements for individual health insurance issuers. A health 
insurance issuer offering individual health insurance coverage must 
comply with all the requirements of this paragraph (b)(3).
    (i) Minimum internal claims and appeals standards. A health 
insurance issuer offering individual health insurance coverage must 
comply with all the requirements of the ERISA internal claims and 
appeals procedures applicable to group health plans under 29 CFR 
2560.503-1 except for the requirements with respect to multiemployer 
plans, and except to the extent those requirements are modified by 
paragraph (b)(3)(ii) of this section. Accordingly, under this paragraph 
(b), with respect to individual health insurance coverage, the issuer is 
subject to the requirements in 29 CFR 2560.503-1 as if the issuer were a 
group health plan.
    (ii) Additional standards. In addition to the requirements in 
paragraph (b)(3)(i) of this section, the internal claims and appeals 
processes of a health insurance issuer offering individual health 
insurance coverage must meet the requirements of this paragraph 
(b)(3)(ii).
    (A) Clarification of meaning of adverse benefit determination. For 
purposes of this paragraph (b)(3), an adverse benefit determination 
includes an adverse benefit determination as defined in paragraph 
(a)(2)(i) of this section. Accordingly, in complying with 29 CFR 
2560.503-1, as well as other provisions of this paragraph (b)(3), an 
issuer must treat a rescission of coverage (whether or not the 
rescission has an adverse effect on any particular benefit at that time) 
and any decision to deny coverage in an initial eligibility 
determination as an adverse benefit determination. (Rescissions of 
coverage are subject to the requirements of Sec.  147.128.)
    (B) Expedited notification of benefit determinations involving 
urgent care. The requirements of 29 CFR 2560.503-1(f)(2)(i) (which 
generally provide, among other things, in the case of urgent care claims 
for notification of the issuer's benefit determination (whether adverse 
or not) as soon as possible, taking into account the medical exigencies, 
but not later than 72 hours after receipt of the claim) continue to 
apply to the issuer. For purposes of this paragraph (b)(3)(ii)(B), a 
claim involving urgent care has the meaning given in 29 CFR 2560.503-
1(m)(1), as determined by the attending provider, and the issuer shall 
defer to such determination of the attending provider.
    (C) Full and fair review. An issuer must allow a claimant to review 
the claim file and to present evidence and testimony as part of the 
internal claims and appeals process. Specifically, in addition to 
complying with the requirements of 29 CFR 2560.503-1(h)(2)--

[[Page 140]]

    (1) The issuer must provide the claimant, free of charge, with any 
new or additional evidence considered, relied upon, or generated by the 
issuer (or at the direction of the issuer) in connection with the claim; 
such evidence must be provided as soon as possible and sufficiently in 
advance of the date on which the notice of final internal adverse 
benefit determination is required to be provided under 29 CFR 2560.503-
1(i) to give the claimant a reasonable opportunity to respond prior to 
that date; and
    (2) Before the issuer can issue a final internal adverse benefit 
determination based on a new or additional rationale, the claimant must 
be provided, free of charge, with the rationale; the rationale must be 
provided as soon as possible and sufficiently in advance of the date on 
which the notice of final internal adverse benefit determination is 
required to be provided under 29 CFR 2560.503-1(i) to give the claimant 
a reasonable opportunity to respond prior to that date. Notwithstanding 
the rules of 29 CFR 2560.503-1(i), if the new or additional evidence is 
received so late that it would be impossible to provide it to the 
claimant in time for the claimant to have a reasonable opportunity to 
respond, the period for providing a notice of final internal adverse 
benefit determination is tolled until such time as the claimant has a 
reasonable opportunity to respond. After the claimant responds, or has a 
reasonable opportunity to respond but fails to do so, the issuer shall 
notify the claimant of the issuer's determination as soon as an issuer 
acting in a reasonable and prompt fashion can provide the notice, taking 
into account the medical exigencies.
    (D) Avoiding conflicts of interest. In addition to the requirements 
of 29 CFR 2560.503-1(b) and (h) regarding full and fair review, the 
issuer must ensure that all claims and appeals are adjudicated in a 
manner designed to ensure the independence and impartiality of the 
persons involved in making the decision. Accordingly, decisions 
regarding hiring, compensation, termination, promotion, or other similar 
matters with respect to any individual (such as a claims adjudicator or 
medical expert) must not be made based upon the likelihood that the 
individual will support the denial of benefits.
    (E) Notice. An issuer must provide notice to individuals, in a 
culturally and linguistically appropriate manner (as described in 
paragraph (e) of this section) that complies with the requirements of 29 
CFR 2560.503-1(g) and (j). The issuer must also comply with the 
additional requirements of this paragraph (b)(3)(ii)(E).
    (1) The issuer must ensure that any notice of adverse benefit 
determination or final internal adverse benefit determination includes 
information sufficient to identify the claim involved (including the 
date of service, the name of the health care provider, the claim amount 
(if applicable), and a statement describing the availability, upon 
request, of the diagnosis code and its corresponding meaning, and the 
treatment code and its corresponding meaning).
    (2) The issuer must provide to participants and beneficiaries, as 
soon as practicable, upon request, the diagnosis code and its 
corresponding meaning, and the treatment code and its corresponding 
meaning, associated with any adverse benefit determination or final 
internal adverse benefit determination. The issuer must not consider a 
request for such diagnosis and treatment information, in itself, to be a 
request for an internal appeal under this paragraph (b) or an external 
review under paragraphs (c) and (d) of this section.
    (3) The issuer must ensure that the reason or reasons for the 
adverse benefit determination or final internal adverse benefit 
determination includes the denial code and its corresponding meaning, as 
well as a description of the issuer's standard, if any, that was used in 
denying the claim. In the case of a notice of final internal adverse 
benefit determination, this description must include a discussion of the 
decision.
    (4) The issuer must provide a description of available internal 
appeals and external review processes, including information regarding 
how to initiate an appeal.
    (5) The issuer must disclose the availability of, and contact 
information for,

[[Page 141]]

any applicable office of health insurance consumer assistance or 
ombudsman established under PHS Act section 2793 to assist individuals 
with the internal claims and appeals and external review processes.
    (F) Deemed exhaustion of internal claims and appeals processes. (1) 
In the case of an issuer that fails to adhere to all the requirements of 
this paragraph (b)(3) with respect to a claim, the claimant is deemed to 
have exhausted the internal claims and appeals process of this paragraph 
(b), except as provided in paragraph (b)(3)(ii)(F)(2) of this section. 
Accordingly, the claimant may initiate an external review under 
paragraph (c) or (d) of this section, as applicable. The claimant is 
also entitled to pursue any available remedies under State law, as 
applicable, on the basis that the issuer has failed to provide a 
reasonable internal claims and appeals process that would yield a 
decision on the merits of the claim.
    (2) Notwithstanding paragraph (b)(3)(ii)(F)(1) of this section, the 
internal claims and appeals process of this paragraph (b) will not be 
deemed exhausted based on de minimis violations that do not cause, and 
are not likely to cause, prejudice or harm to the claimant so long as 
the issuer demonstrates that the violation was for good cause or due to 
matters beyond the control of the issuer and that the violation occurred 
in the context of an ongoing, good faith exchange of information between 
the issuer and the claimant. This exception is not available if the 
violation is part of a pattern or practice of violations by the issuer. 
The claimant may request a written explanation of the violation from the 
issuer, and the issuer must provide such explanation within 10 days, 
including a specific description of its bases, if any, for asserting 
that the violation should not cause the internal claims and appeals 
process of this paragraph (b) to be deemed exhausted. If an external 
reviewer or a court rejects the claimant's request for immediate review 
under paragraph (b)(3)(ii)(F)(1) of this section on the basis that the 
issuer met the standards for the exception under this paragraph 
(b)(3)(ii)(F)(2), the claimant has the right to resubmit and pursue the 
internal appeal of the claim. In such a case, within a reasonable time 
after the external reviewer or court rejects the claim for immediate 
review (not to exceed 10 days), the issuer shall provide the claimant 
with notice of the opportunity to resubmit and pursue the internal 
appeal of the claim. Time periods for re-filing the claim shall begin to 
run upon claimant's receipt of such notice.
    (G) One level of internal appeal. Notwithstanding the requirements 
in 29 CFR 2560.503-1(c)(3), a health insurance issuer offering 
individual health insurance coverage must provide for only one level of 
internal appeal before issuing a final determination.
    (H) Recordkeeping requirements. A health insurance issuer offering 
individual health insurance coverage must maintain for six years records 
of all claims and notices associated with the internal claims and 
appeals process, including the information detailed in paragraph 
(b)(3)(ii)(E) of this section and any other information specified by the 
Secretary. An issuer must make such records available for examination by 
the claimant or State or Federal oversight agency upon request.
    (iii) Requirement to provide continued coverage pending the outcome 
of an appeal. An issuer subject to the requirements of this paragraph 
(b)(3) is required to provide continued coverage pending the outcome of 
an appeal. For this purpose, the issuer must comply with the 
requirements of 29 CFR 2560.503-1(f)(2)(ii) as if the issuer were a 
group health plan, so that the issuer cannot reduce or terminate an 
ongoing course of treatment without providing advance notice and an 
opportunity for advance review.
    (c) State standards for external review--(1) In general. (i) If a 
State external review process that applies to and is binding on a health 
insurance issuer offering group or individual health insurance coverage 
includes at a minimum the consumer protections in the NAIC Uniform Model 
Act, then the issuer must comply with the applicable State external 
review process and is not required to comply with the Federal external 
review process of paragraph (d) of this section. In such a case, to the 
extent that benefits under a group health plan are provided through

[[Page 142]]

health insurance coverage, the group health plan is not required to 
comply with either this paragraph (c) or the Federal external review 
process of paragraph (d) of this section.
    (ii) To the extent that a group health plan provides benefits other 
than through health insurance coverage (that is, the plan is self-
insured) and is subject to a State external review process that applies 
to and is binding on the plan (for example, is not preempted by ERISA) 
and the State external review process includes at a minimum the consumer 
protections in the NAIC Uniform Model Act, then the plan must comply 
with the applicable State external review process and is not required to 
comply with the Federal external review process of paragraph (d) of this 
section. Where a self-insured plan is not subject to an applicable State 
external review process, but the State has chosen to expand access to 
its process for plans that are not subject to the applicable State laws, 
the plan may choose to comply with either the applicable State external 
review process or the Federal external review process of paragraph (d) 
of this section.
    (iii) If a plan or issuer is not required under paragraph (c)(1)(i) 
or (c)(1)(ii) of this section to comply with the requirements of this 
paragraph (c), then the plan or issuer must comply with the Federal 
external review process of paragraph (d) of this section, except to the 
extent, in the case of a plan, the plan is not required under paragraph 
(c)(1)(i) of this section to comply with paragraph (d) of this section.
    (2) Minimum standards for State external review processes. An 
applicable State external review process must meet all the minimum 
consumer protections in this paragraph (c)(2). The Department of Health 
and Human Services will determine whether State external review 
processes meet these requirements.
    (i) The State process must provide for the external review of 
adverse benefit determinations (including final internal adverse benefit 
determinations) by issuers (or, if applicable, plans) that are based on 
the issuer's (or plan's) requirements for medical necessity, 
appropriateness, health care setting, level of care, or effectiveness of 
a covered benefit.
    (ii) The State process must require issuers (or, if applicable, 
plans) to provide effective written notice to claimants of their rights 
in connection with an external review for an adverse benefit 
determination.
    (iii) To the extent the State process requires exhaustion of an 
internal claims and appeals process, exhaustion must be unnecessary 
where the issuer (or, if applicable, the plan) has waived the 
requirement; the issuer (or the plan) is considered to have exhausted 
the internal claims and appeals process under applicable law (including 
by failing to comply with any of the requirements for the internal 
appeal process, as outlined in paragraph (b)(2) of this section); or the 
claimant has applied for expedited external review at the same time as 
applying for an expedited internal appeal.
    (iv) The State process provides that the issuer (or, if applicable, 
the plan) against which a request for external review is filed must pay 
the cost of the IRO for conducting the external review. Notwithstanding 
this requirement, a State external review process that expressly 
authorizes, as of November 18, 2015, a nominal filing fee may continue 
to permit such fees. For this purpose, to be considered nominal, a 
filing fee must not exceed $25, it must be refunded to the claimant if 
the adverse benefit determination (or final internal adverse benefit 
determination) is reversed through external review, it must be waived if 
payment of the fee would impose an undue financial hardship, and the 
annual limit on filing fees for any claimant within a single plan year 
must not exceed $75.
    (v) The State process may not impose a restriction on the minimum 
dollar amount of a claim for it to be eligible for external review. 
Thus, the process may not impose, for example, a $500 minimum claims 
threshold.
    (vi) The State process must allow at least four months after the 
receipt of a notice of an adverse benefit determination or final 
internal adverse benefit determination for a request for an external 
review to be filed.
    (vii) The State process must provide that IROs will be assigned on a 
random

[[Page 143]]

basis or another method of assignment that assures the independence and 
impartiality of the assignment process (such as rotational assignment) 
by a State or independent entity, and in no event selected by the 
issuer, plan, or the individual.
    (viii) The State process must provide for maintenance of a list of 
approved IROs qualified to conduct the external review based on the 
nature of the health care service that is the subject of the review. The 
State process must provide for approval only of IROs that are accredited 
by a nationally recognized private accrediting organization.
    (ix) The State process must provide that any approved IRO has no 
conflicts of interest that will influence its independence. Thus, the 
IRO may not own or control, or be owned or controlled by a health 
insurance issuer, a group health plan, the sponsor of a group health 
plan, a trade association of plans or issuers, or a trade association of 
health care providers. The State process must further provide that the 
IRO and the clinical reviewer assigned to conduct an external review may 
not have a material professional, familial, or financial conflict of 
interest with the issuer or plan that is the subject of the external 
review; the claimant (and any related parties to the claimant) whose 
treatment is the subject of the external review; any officer, director, 
or management employee of the issuer; the plan administrator, plan 
fiduciaries, or plan employees; the health care provider, the health 
care provider's group, or practice association recommending the 
treatment that is subject to the external review; the facility at which 
the recommended treatment would be provided; or the developer or 
manufacturer of the principal drug, device, procedure, or other therapy 
being recommended.
    (x) The State process allows the claimant at least five business 
days to submit to the IRO in writing additional information that the IRO 
must consider when conducting the external review, and it requires that 
the claimant is notified of the right to do so. The process must also 
require that any additional information submitted by the claimant to the 
IRO must be forwarded to the issuer (or, if applicable, the plan) within 
one business day of receipt by the IRO.
    (xi) The State process must provide that the decision is binding on 
the plan or issuer, as well as the claimant except to the extent the 
other remedies are available under State or Federal law, and except that 
the requirement that the decision be binding shall not preclude the plan 
or issuer from making payment on the claim or otherwise providing 
benefits at any time, including after a final external review decision 
that denies the claim or otherwise fails to require such payment or 
benefits. For this purpose, the plan or issuer must provide benefits 
(including by making payment on the claim) pursuant to the final 
external review decision without delay, regardless of whether the plan 
or issuer intends to seek judicial review of the external review 
decision and unless or until there is a judicial decision otherwise.
    (xii) The State process must require, for standard external review, 
that the IRO provide written notice to the issuer (or, if applicable, 
the plan) and the claimant of its decision to uphold or reverse the 
adverse benefit determination (or final internal adverse benefit 
determination) within no more than 45 days after the receipt of the 
request for external review by the IRO.
    (xiii) The State process must provide for an expedited external 
review if the adverse benefit determination (or final internal adverse 
benefit determination) concerns an admission, availability of care, 
continued stay, or health care service for which the claimant received 
emergency services, but has not been discharged from a facility; or 
involves a medical condition for which the standard external review time 
frame would seriously jeopardize the life or health of the claimant or 
jeopardize the claimant's ability to regain maximum function. As 
expeditiously as possible but within no more than 72 hours after the 
receipt of the request for expedited external review by the IRO, the IRO 
must make its decision to uphold or reverse the adverse benefit 
determination (or final internal adverse benefit determination) and 
notify the claimant and the issuer (or, if applicable, the plan) of the 
determination. If the notice is not in writing, the

[[Page 144]]

IRO must provide written confirmation of the decision within 48 hours 
after the date of the notice of the decision.
    (xiv) The State process must require that issuers (or, if 
applicable, plans) include a description of the external review process 
in or attached to the summary plan description, policy, certificate, 
membership booklet, outline of coverage, or other evidence of coverage 
it provides to participants, beneficiaries, or enrollees, substantially 
similar to what is set forth in section 17 of the NAIC Uniform Model 
Act.
    (xv) The State process must require that IROs maintain written 
records and make them available upon request to the State, substantially 
similar to what is set forth in section 15 of the NAIC Uniform Model 
Act.
    (xvi) The State process follows procedures for external review of 
adverse benefit determinations (or final internal adverse benefit 
determinations) involving experimental or investigational treatment, 
substantially similar to what is set forth in section 10 of the NAIC 
Uniform Model Act.
    (3) Transition period for external review processes--(i) Through 
December 31, 2017, an applicable State external review process 
applicable to a health insurance issuer or group health plan is 
considered to meet the requirements of PHS Act section 2719(b). 
Accordingly, through December 31, 2017, an applicable State external 
review process will be considered binding on the issuer or plan (in lieu 
of the requirements of the Federal external review process). If there is 
no applicable State external review process, the issuer or plan is 
required to comply with the requirements of the Federal external review 
process in paragraph (d) of this section.
    (ii) An applicable State external review process must apply for 
final internal adverse benefit determinations (or, in the case of 
simultaneous internal appeal and external review, adverse benefit 
determinations) provided on or after January 1, 2018. The Federal 
external review process will apply to such internal adverse benefit 
determinations unless the Department of Health and Human Services 
determines that a State law meets all the minimum standards of paragraph 
(c)(2) of this section. Through December 31, 2017, a State external 
review process applicable to a health insurance issuer or group health 
plan may be considered to meet the minimum standards of paragraph (c)(2) 
of this section, if it meets the temporary standards established by the 
Secretary in guidance for a process similar to the NAIC Uniform Model 
Act.
    (d) Federal external review process. A plan or issuer not subject to 
an applicable State external review process under paragraph (c) of this 
section must provide an effective Federal external review process in 
accordance with this paragraph (d) (except to the extent, in the case of 
a plan, the plan is described in paragraph (c)(1)(i) of this section as 
not having to comply with this paragraph (d)). In the case of health 
insurance coverage offered in connection with a group health plan, if 
either the plan or the issuer complies with the Federal external review 
process of this paragraph (d), then the obligation to comply with this 
paragraph (d) is satisfied for both the plan and the issuer with respect 
to the health insurance coverage. A Multi State Plan or MSP, as defined 
by 45 CFR 800.20, must provide an effective Federal external review 
process in accordance with this paragraph (d). In such circumstances, 
the requirement to provide external review under this paragraph (d) is 
satisfied when a Multi State Plan or MSP complies with standards 
established by the Office of Personnel Management.
    (1) Scope--(i) In general. The Federal external review process 
established pursuant to this paragraph (d) applies to the following:
    (A) An adverse benefit determination (including a final internal 
adverse benefit determination) by a plan or issuer that involves medical 
judgment (including, but not limited to, those based on the plan's or 
issuer's requirements for medical necessity, appropriateness, health 
care setting, level of care, or effectiveness of a covered benefit; its 
determination that a treatment is experimental or investigational; its 
determination whether a participant or beneficiary is entitled to a 
reasonable alternative standard for a reward under a wellness program; 
or its determination whether a plan or issuer is complying with the 
nonquantitative treatment

[[Page 145]]

limitation provisions of Code section 9812 and Sec.  54.9812, which 
generally require, among other things, parity in the application of 
medical management techniques), as determined by the external reviewer. 
(A denial, reduction, termination, or a failure to provide payment for a 
benefit based on a determination that a participant or beneficiary fails 
to meet the requirements for eligibility under the terms of a group 
health plan or health insurance coverage is not eligible for the Federal 
external review process under this paragraph (d)); and
    (B) A rescission of coverage (whether or not the rescission has any 
effect on any particular benefit at that time).
    (ii) Examples. The rules of paragraph (d)(1)(i) of this section are 
illustrated by the following examples:

    Example 1. (i) Facts. A group health plan provides coverage for 30 
physical therapy visits generally. After the 30th visit, coverage is 
provided only if the service is preauthorized pursuant to an approved 
treatment plan that takes into account medical necessity using the 
plan's definition of the term. Individual A seeks coverage for a 31st 
physical therapy visit. A's health care provider submits a treatment 
plan for approval, but it is not approved by the plan, so coverage for 
the 31st visit is not preauthorized. With respect to the 31st visit, A 
receives a notice of final internal adverse benefit determination 
stating that the maximum visit limit is exceeded.
    (ii) Conclusion. In this Example 1, the plan's denial of benefits is 
based on medical necessity and involves medical judgment. Accordingly, 
the claim is eligible for external review under paragraph (d)(1)(i) of 
this section. Moreover, the plan's notification of final internal 
adverse benefit determination is inadequate under paragraphs (b)(2)(i) 
and (b)(2)(ii)(E)(3) of this section because it fails to make clear that 
the plan will pay for more than 30 visits if the service is 
preauthorized pursuant to an approved treatment plan that takes into 
account medical necessity using the plan's definition of the term. 
Accordingly, the notice of final internal adverse benefit determination 
should refer to the plan provision governing the 31st visit and should 
describe the plan's standard for medical necessity, as well as how the 
treatment fails to meet the plan's standard.
    Example 2. (i) Facts. A group health plan does not provide coverage 
for services provided out of network, unless the service cannot 
effectively be provided in network. Individual B seeks coverage for a 
specialized medical procedure from an out-of-network provider because B 
believes that the procedure cannot be effectively provided in network. B 
receives a notice of final internal adverse benefit determination 
stating that the claim is denied because the provider is out-of-network.
    (ii) Conclusion. In this Example 2, the plan's denial of benefits is 
based on whether a service can effectively be provided in network and, 
therefore, involves medical judgment. Accordingly, the claim is eligible 
for external review under paragraph (d)(1)(i) of this section. Moreover, 
the plan's notice of final internal adverse benefit determination is 
inadequate under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) of this 
section because the plan does provide benefits for services on an out-
of-network basis if the services cannot effectively be provided in 
network. Accordingly, the notice of final internal adverse benefit 
determination is required to refer to the exception to the out-of-
network exclusion and should describe the plan's standards for 
determining effectiveness of services, as well as how services available 
to the claimant within the plan's network meet the plan's standard for 
effectiveness of services.

    (2) External review process standards. The Federal external review 
process established pursuant to this paragraph (d) is considered similar 
to the process set forth in the NAIC Uniform Model Act and, therefore 
satisfies the requirements of paragraph (d)(2)) if such process provides 
the following.
    (i) Request for external review. A group health plan or health 
insurance issuer must allow a claimant to file a request for an external 
review with the plan or issuer if the request is filed within four 
months after the date of receipt of a notice of an adverse benefit 
determination or final internal adverse benefit determination. If there 
is no corresponding date four months after the date of receipt of such a 
notice, then the request must be filed by the first day of the fifth 
month following the receipt of the notice. For example, if the date of 
receipt of the notice is October 30, because there is no February 30, 
the request must be filed by March 1. If the last filing date would fall 
on a Saturday, Sunday, or Federal holiday, the last filing date is 
extended to the next day that is not a Saturday, Sunday, or Federal 
holiday.
    (ii) Preliminary review--(A) In general. Within five business days 
following the date of receipt of the external review request, the group 
health plan or health insurance issuer must complete

[[Page 146]]

a preliminary review of the request to determine whether:
    (1) The claimant is or was covered under the plan or coverage at the 
time the health care item or service was requested or, in the case of a 
retrospective review, was covered under the plan or coverage at the time 
the health care item or service was provided;
    (2) The adverse benefit determination or the final adverse benefit 
determination does not relate to the claimant's failure to meet the 
requirements for eligibility under the terms of the group health plan or 
health insurance coverage (e.g., worker classification or similar 
determination);
    (3) The claimant has exhausted the plan's or issuer's internal 
appeal process unless the claimant is not required to exhaust the 
internal appeals process under paragraph (b)(1) of this section; and
    (4) The claimant has provided all the information and forms required 
to process an external review.
    (B) Within one business day after completion of the preliminary 
review, the plan or issuer must issue a notification in writing to the 
claimant. If the request is complete but not eligible for external 
review, such notification must include the reasons for its ineligibility 
and current contact information, including the phone number, for the 
Employee Benefits Security Administration. If the request is not 
complete, such notification must describe the information or materials 
needed to make the request complete and the plan or issuer must allow a 
claimant to perfect the request for external review within the four-
month filing period or within the 48 hour period following the receipt 
of the notification, whichever is later.
    (iii) Referral to Independent Review Organization--(A) In general. 
The group health plan or health insurance issuer must assign an IRO that 
is accredited by URAC or by similar nationally-recognized accrediting 
organization to conduct the external review. The IRO referral process 
must provide for the following:
    (1) The plan or issuer must ensure that the IRO process is not 
biased and ensures independence;
    (2) The plan or issuer must contract with at least three (3) IROs 
for assignments under the plan or coverage and rotate claims assignments 
among them (or incorporate other independent, unbiased methods for 
selection of IROs, such as random selection); and
    (3) The IRO may not be eligible for any financial incentives based 
on the likelihood that the IRO will support the denial of benefits.
    (4) The IRO process may not impose any costs, including filing fees, 
on the claimant requesting the external review.
    (B) IRO contracts. A group health plan or health insurance issuer 
must include the following standards in the contract between the plan or 
issuer and the IRO:
    (1) The assigned IRO will utilize legal experts where appropriate to 
make coverage determinations under the plan or coverage.
    (2) The assigned IRO will timely notify a claimant in writing 
whether the request is eligible for external review. This notice will 
include a statement that the claimant may submit in writing to the 
assigned IRO, within ten business days following the date of receipt of 
the notice, additional information. This additional information must be 
considered by the IRO when conducting the external review. The IRO is 
not required to, but may, accept and consider additional information 
submitted after ten business days.
    (3) Within five business days after the date of assignment of the 
IRO, the plan or issuer must provide to the assigned IRO the documents 
and any information considered in making the adverse benefit 
determination or final internal adverse benefit determination. Failure 
by the plan or issuer to timely provide the documents and information 
must not delay the conduct of the external review. If the plan or issuer 
fails to timely provide the documents and information, the assigned IRO 
may terminate the external review and make a decision to reverse the 
adverse benefit determination or final internal adverse benefit 
determination. Within one business day after making the decision, the 
IRO must notify the claimant and the plan.
    (4) Upon receipt of any information submitted by the claimant, the 
assigned IRO must within one business

[[Page 147]]

day forward the information to the plan or issuer. Upon receipt of any 
such information, the plan or issuer may reconsider its adverse benefit 
determination or final internal adverse benefit determination that is 
the subject of the external review. Reconsideration by the plan or 
issuer must not delay the external review. The external review may be 
terminated as a result of the reconsideration only if the plan decides, 
upon completion of its reconsideration, to reverse its adverse benefit 
determination or final internal adverse benefit determination and 
provide coverage or payment. Within one business day after making such a 
decision, the plan must provide written notice of its decision to the 
claimant and the assigned IRO. The assigned IRO must terminate the 
external review upon receipt of the notice from the plan or issuer.
    (5) The IRO will review all of the information and documents timely 
received. In reaching a decision, the assigned IRO will review the claim 
de novo and not be bound by any decisions or conclusions reached during 
the plan's or issuer's internal claims and appeals process applicable 
under paragraph (b). In addition to the documents and information 
provided, the assigned IRO, to the extent the information or documents 
are available and the IRO considers them appropriate, will consider the 
following in reaching a decision:
    (i) The claimant's medical records;
    (ii) The attending health care professional's recommendation;
    (iii) Reports from appropriate health care professionals and other 
documents submitted by the plan or issuer, claimant, or the claimant's 
treating provider;
    (iv) The terms of the claimant's plan or coverage to ensure that the 
IRO's decision is not contrary to the terms of the plan or coverage, 
unless the terms are inconsistent with applicable law;
    (v) Appropriate practice guidelines, which must include applicable 
evidence-based standards and may include any other practice guidelines 
developed by the Federal government, national or professional medical 
societies, boards, and associations;
    (vi) Any applicable clinical review criteria developed and used by 
the plan or issuer, unless the criteria are inconsistent with the terms 
of the plan or coverage or with applicable law; and
    (vii) To the extent the final IRO decision maker is different from 
the IRO's clinical reviewer, the opinion of such clinical reviewer, 
after considering information described in this notice, to the extent 
the information or documents are available and the clinical reviewer or 
reviewers consider such information or documents appropriate.
    (6) The assigned IRO must provide written notice of the final 
external review decision within 45 days after the IRO receives the 
request for the external review. The IRO must deliver the notice of the 
final external review decision to the claimant and the plan or issuer.
    (7) The assigned IRO's written notice of the final external review 
decision must contain the following:
    (i) A general description of the reason for the request for external 
review, including information sufficient to identify the claim 
(including the date or dates of service, the health care provider, the 
claim amount (if applicable), and a statement describing the 
availability, upon request, of the diagnosis code and its corresponding 
meaning, the treatment code and its corresponding meaning, and the 
reason for the plan's or issuer's denial);
    (ii) The date the IRO received the assignment to conduct the 
external review and the date of the IRO decision;
    (iii) References to the evidence or documentation, including the 
specific coverage provisions and evidence-based standards, considered in 
reaching its decision;
    (iv) A discussion of the principal reason or reasons for its 
decision, including the rationale for its decision and any evidence-
based standards that were relied on in making its decision;
    (v) A statement that the IRO's determination is binding except to 
the extent that other remedies may be available under State or Federal 
law to either the group health plan or health insurance issuer or to the 
claimant, or to

[[Page 148]]

the extent the health plan or health insurance issuer voluntarily makes 
payment on the claim or otherwise provides benefits at any time, 
including after a final external review decision that denies the claim 
or otherwise fails to require such payment or benefits;
    (vi) A statement that judicial review may be available to the 
claimant; and
    (vii) Current contact information, including phone number, for any 
applicable office of health insurance consumer assistance or ombudsman 
established under PHS Act section 2793.
    (viii) After a final external review decision, the IRO must maintain 
records of all claims and notices associated with the external review 
process for six years. An IRO must make such records available for 
examination by the claimant, plan, issuer, or State or Federal oversight 
agency upon request, except where such disclosure would violate State or 
Federal privacy laws.
    (iv) Reversal of plan's or issuer's decision. Upon receipt of a 
notice of a final external review decision reversing the adverse benefit 
determination or final adverse benefit determination, the plan or issuer 
immediately must provide coverage or payment (including immediately 
authorizing care or immediately paying benefits) for the claim.
    (3) Expedited external review. A group health plan or health 
insurance issuer must comply with the following standards with respect 
to an expedited external review:
    (i) Request for external review. A group health plan or health 
insurance issuer must allow a claimant to make a request for an 
expedited external review with the plan or issuer at the time the 
claimant receives:
    (A) An adverse benefit determination if the adverse benefit 
determination involves a medical condition of the claimant for which the 
timeframe for completion of an expedited internal appeal under paragraph 
(b) of this section would seriously jeopardize the life or health of the 
claimant or would jeopardize the claimant's ability to regain maximum 
function and the claimant has filed a request for an expedited internal 
appeal; or
    (B) A final internal adverse benefit determination, if the claimant 
has a medical condition where the timeframe for completion of a standard 
external review would seriously jeopardize the life or health of the 
claimant or would jeopardize the claimant's ability to regain maximum 
function, or if the final internal adverse benefit determination 
concerns an admission, availability of care, continued stay, or health 
care item or service for which the claimant received emergency services, 
but has not been discharged from the facility.
    (ii) Preliminary review. Immediately upon receipt of the request for 
expedited external review, the plan or issuer must determine whether the 
request meets the reviewability requirements set forth in paragraph 
(d)(2)(ii) of this section for standard external review. The plan or 
issuer must immediately send a notice that meets the requirements set 
forth in paragraph (d)(2)(ii)(B) for standard review to the claimant of 
its eligibility determination.
    (iii) Referral to independent review organization. (A) Upon a 
determination that a request is eligible for expedited external review 
following the preliminary review, the plan or issuer will assign an IRO 
pursuant to the requirements set forth in paragraph (d)(2)(iii) of this 
section for standard review. The plan or issuer must provide or transmit 
all necessary documents and information considered in making the adverse 
benefit determination or final internal adverse benefit determination to 
the assigned IRO electronically or by telephone or facsimile or any 
other available expeditious method.
    (B) The assigned IRO, to the extent the information or documents are 
available and the IRO considers them appropriate, must consider the 
information or documents described above under the procedures for 
standard review. In reaching a decision, the assigned IRO must review 
the claim de novo and is not bound by any decisions or conclusions 
reached during the plan's or issuer's internal claims and appeals 
process.
    (iv) Notice of final external review decision. The plan's or 
issuer's contract with the assigned IRO must require the IRO to provide 
notice of the final external review decision, in accordance with the 
requirements set forth in paragraph (d)(2)(iii)(B) of this section,

[[Page 149]]

as expeditiously as the claimant's medical condition or circumstances 
require, but in no event more than 72 hours after the IRO receives the 
request for an expedited external review. If the notice is not in 
writing, within 48 hours after the date of providing that notice, the 
assigned IRO must provide written confirmation of the decision to the 
claimant and the plan or issuer.
    (4) Alternative, Federally-administered external review process. 
Insured coverage not subject to an applicable State external review 
process under paragraph (c) of this section and a self-insured 
nonfederal governmental plan may elect to use either the Federal 
external review process, as set forth under paragraph (d) of this 
section or the Federally-administered external review process, as set 
forth by HHS in guidance. In such circumstances, the requirement to 
provide external review under this paragraph (d) is satisfied.
    (e) Form and manner of notice--(1) In general. For purposes of this 
section, a group health plan and a health insurance issuer offering 
group or individual health insurance coverage are considered to provide 
relevant notices in a culturally and linguistically appropriate manner 
if the plan or issuer meets all the requirements of paragraph (e)(2) of 
this section with respect to the applicable non-English languages 
described in paragraph (e)(3) of this section.
    (2) Requirements. (i) The plan or issuer must provide oral language 
services (such as a telephone customer assistance hotline) that includes 
answering questions in any applicable non-English language and providing 
assistance with filing claims and appeals (including external review) in 
any applicable non-English language;
    (ii) The plan or issuer must provide, upon request, a notice in any 
applicable non-English language; and
    (iii) The plan or issuer must include in the English versions of all 
notices, a statement prominently displayed in any applicable non-English 
language clearly indicating how to access the language services provided 
by the plan or issuer.
    (3) Applicable non-English language. With respect to an address in 
any United States county to which a notice is sent, a non-English 
language is an applicable non-English language if ten percent or more of 
the population residing in the county is literate only in the same non-
English language, as determined in guidance published by the Secretary.
    (f) Secretarial authority. The Secretary may determine that the 
external review process of a group health plan or health insurance 
issuer, in operation as of March 23, 2010, is considered in compliance 
with the applicable process established under paragraph (c) or (d) of 
this section if it substantially meets the requirements of paragraph (c) 
or (d) of this section, as applicable.
    (g) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years (in the individual market, policy years) beginning on or after 
January 1, 2017. Until the applicability date for this regulation, plans 
and issuers are required to continue to comply with the corresponding 
sections of 45 CFR parts 144, 146 and 147, contained in the 45 CFR, 
parts 1 to 199, edition revised as of October 1, 2015.

[80 FR 72278, Nov. 18, 2015]



Sec.  147.138  Patient protections.

    (a) Choice of health care professional--(1) Designation of primary 
care provider--(i) In general. If a group health plan, or a health 
insurance issuer offering group or individual health insurance coverage, 
requires or provides for designation by a participant, beneficiary, or 
enrollee of a participating primary care provider, then the plan or 
issuer must permit each participant, beneficiary, or enrollee to 
designate any participating primary care provider who is available to 
accept the participant, beneficiary, or enrollee. In such a case, the 
plan or issuer must comply with the rules of paragraph (a)(4) of this 
section by informing each participant (in the individual market, primary 
subscriber) of the terms of the plan or health insurance coverage 
regarding designation of a primary care provider.
    (ii) Construction. Nothing in paragraph (a)(1)(i) of this section is 
to be construed to prohibit the application of reasonable and 
appropriate geographic

[[Page 150]]

limitations with respect to the selection of primary care providers, in 
accordance with the terms of the plan or coverage, the underlying 
provider contracts, and applicable State law.
    (iii) Example. The rules of this paragraph (a)(1) are illustrated by 
the following example:

    Example. (i) Facts. A group health plan requires individuals covered 
under the plan to designate a primary care provider. The plan permits 
each individual to designate any primary care provider participating in 
the plan's network who is available to accept the individual as the 
individual's primary care provider. If an individual has not designated 
a primary care provider, the plan designates one until one has been 
designated by the individual. The plan provides a notice that satisfies 
the requirements of paragraph (a)(4) of this section regarding the 
ability to designate a primary care provider.
    (ii) Conclusion. In this Example, the plan has satisfied the 
requirements of paragraph (a) of this section.

    (2) Designation of pediatrician as primary care provider--(i) In 
general. If a group health plan, or a health insurance issuer offering 
group or individual health insurance coverage, requires or provides for 
the designation of a participating primary care provider for a child by 
a participant, beneficiary, or enrollee, the plan or issuer must permit 
the participant, beneficiary, or enrollee to designate a physician 
(allopathic or osteopathic) who specializes in pediatrics (including 
pediatric subspecialties, based on the scope of that provider's license 
under applicable State law) as the child's primary care provider if the 
provider participates in the network of the plan or issuer and is 
available to accept the child. In such a case, the plan or issuer must 
comply with the rules of paragraph (a)(4) of this section by informing 
each participant (in the individual market, primary subscriber) of the 
terms of the plan or health insurance coverage regarding designation of 
a pediatrician as the child's primary care provider.
    (ii) Construction. Nothing in paragraph (a)(2)(i) of this section is 
to be construed to waive any exclusions of coverage under the terms and 
conditions of the plan or health insurance coverage with respect to 
coverage of pediatric care.
    (iii) Examples. The rules of this paragraph (a)(2) are illustrated 
by the following examples:

    Example 1. (i) Facts. A group health plan's HMO designates for each 
participant a physician who specializes in internal medicine to serve as 
the primary care provider for the participant and any beneficiaries. 
Participant A requests that Pediatrician B be designated as the primary 
care provider for A's child. B is a participating provider in the HMO's 
network and is available to accept the child.
    (ii) Conclusion. In this Example 1, the HMO must permit A's 
designation of B as the primary care provider for A's child in order to 
comply with the requirements of this paragraph (a)(2).
    Example 2. (i) Facts. Same facts as Example 1, except that A takes 
A's child to B for treatment of the child's severe shellfish allergies. 
B wishes to refer A's child to an allergist for treatment. The HMO, 
however, does not provide coverage for treatment of food allergies, nor 
does it have an allergist participating in its network, and it therefore 
refuses to authorize the referral.
    (ii) Conclusion. In this Example 2, the HMO has not violated the 
requirements of this paragraph (a)(2) because the exclusion of treatment 
for food allergies is in accordance with the terms of A's coverage.

    (3) Patient access to obstetrical and gynecological care--(i) 
General rights--(A) Direct access. A group health plan, or a health 
insurance issuer offering group or individual health insurance coverage, 
described in paragraph (a)(3)(ii) of this section may not require 
authorization or referral by the plan, issuer, or any person (including 
a primary care provider) in the case of a female participant, 
beneficiary, or enrollee who seeks coverage for obstetrical or 
gynecological care provided by a participating health care professional 
who specializes in obstetrics or gynecology. In such a case, the plan or 
issuer must comply with the rules of paragraph (a)(4) of this section by 
informing each participant (in the individual market, primary 
subscriber) that the plan may not require authorization or referral for 
obstetrical or gynecological care by a participating health care 
professional who specializes in obstetrics or gynecology. The plan or 
issuer may require such a professional to agree to otherwise adhere to 
the plan's or issuer's policies and

[[Page 151]]

procedures, including procedures regarding referrals and obtaining prior 
authorization and providing services pursuant to a treatment plan (if 
any) approved by the plan or issuer. For purposes of this paragraph 
(a)(3), a health care professional who specializes in obstetrics or 
gynecology is any individual (including a person other than a physician) 
who is authorized under applicable State law to provide obstetrical or 
gynecological care.
    (B) Obstetrical and gynecological care. A group health plan or 
health insurance issuer described in paragraph (a)(3)(ii) of this 
section must treat the provision of obstetrical and gynecological care, 
and the ordering of related obstetrical and gynecological items and 
services, pursuant to the direct access described under paragraph 
(a)(3)(i)(A) of this section, by a participating health care 
professional who specializes in obstetrics or gynecology as the 
authorization of the primary care provider.
    (ii) Application of paragraph. A group health plan, or a health 
insurance issuer offering group or individual health insurance coverage, 
is described in this paragraph (a)(3) if the plan or issuer--
    (A) Provides coverage for obstetrical or gynecological care; and
    (B) Requires the designation by a participant, beneficiary, or 
enrollee of a participating primary care provider.
    (iii) Construction. Nothing in paragraph (a)(3)(i) of this section 
is to be construed to--
    (A) Waive any exclusions of coverage under the terms and conditions 
of the plan or health insurance coverage with respect to coverage of 
obstetrical or gynecological care; or
    (B) Preclude the group health plan or health insurance issuer 
involved from requiring that the obstetrical or gynecological provider 
notify the primary care health care professional or the plan or issuer 
of treatment decisions.
    (iv) Examples. The rules of this paragraph (a)(3) are illustrated by 
the following examples:

    Example 1. (i) Facts. A group health plan requires each participant 
to designate a physician to serve as the primary care provider for the 
participant and the participant's family. Participant A, a female, 
requests a gynecological exam with Physician B, an in-network physician 
specializing in gynecological care. The group health plan requires prior 
authorization from A's designated primary care provider for the 
gynecological exam.
    (ii) Conclusion. In this Example 1, the group health plan has 
violated the requirements of this paragraph (a)(3) because the plan 
requires prior authorization from A's primary care provider prior to 
obtaining gynecological services.
    Example 2. (i) Facts. Same facts as Example 1 except that A seeks 
gynecological services from C, an out-of-network provider.
    (ii) Conclusion. In this Example 2, the group health plan has not 
violated the requirements of this paragraph (a)(3) by requiring prior 
authorization because C is not a participating health care provider.
    Example 3. (i) Facts. Same facts as Example 1 except that the group 
health plan only requires B to inform A's designated primary care 
physician of treatment decisions.
    (ii) Conclusion. In this Example 3, the group health plan has not 
violated the requirements of this paragraph (a)(3) because A has direct 
access to B without prior authorization. The fact that the group health 
plan requires notification of treatment decisions to the designated 
primary care physician does not violate this paragraph (a)(3).
    Example 4. (i) Facts. A group health plan requires each participant 
to designate a physician to serve as the primary care provider for the 
participant and the participant's family. The group health plan requires 
prior authorization before providing benefits for uterine fibroid 
embolization.
    (ii) Conclusion. In this Example 4, the plan requirement for prior 
authorization before providing benefits for uterine fibroid embolization 
does not violate the requirements of this paragraph (a)(3) because, 
though the prior authorization requirement applies to obstetrical 
services, it does not restrict access to any providers specializing in 
obstetrics or gynecology.

    (4) Notice of right to designate a primary care provider--(i) In 
general. If a group health plan or health insurance issuer requires the 
designation by a participant, beneficiary, or enrollee of a primary care 
provider, the plan or issuer must provide a notice informing each 
participant (in the individual market, primary subscriber) of the terms 
of the plan or health insurance coverage regarding designation of a 
primary care provider and of the rights--
    (A) Under paragraph (a)(1)(i) of this section, that any 
participating primary

[[Page 152]]

care provider who is available to accept the participant, beneficiary, 
or enrollee can be designated;
    (B) Under paragraph (a)(2)(i) of this section, with respect to a 
child, that any participating physician who specializes in pediatrics 
can be designated as the primary care provider; and
    (C) Under paragraph (a)(3)(i) of this section, that the plan may not 
require authorization or referral for obstetrical or gynecological care 
by a participating health care professional who specializes in 
obstetrics or gynecology.
    (ii) Timing. In the case of a group health plan or group health 
insurance coverage, the notice described in paragraph (a)(4)(i) of this 
section must be included whenever the plan or issuer provides a 
participant with a summary plan description or other similar description 
of benefits under the plan or health insurance coverage. In the case of 
individual health insurance coverage, the notice described in paragraph 
(a)(4)(i) of this section must be included whenever the issuer provides 
a primary subscriber with a policy, certificate, or contract of health 
insurance.
    (iii) Model language. The following model language can be used to 
satisfy the notice requirement described in paragraph (a)(4)(i) of this 
section:
    (A) For plans and issuers that require or allow for the designation 
of primary care providers by participants, beneficiaries, or enrollees, 
insert:

    [Name of group health plan or health insurance issuer] generally 
[requires/allows] the designation of a primary care provider. You have 
the right to designate any primary care provider who participates in our 
network and who is available to accept you or your family members. [If 
the plan or health insurance coverage designates a primary care provider 
automatically, insert: Until you make this designation, [name of group 
health plan or health insurance issuer] designates one for you.] For 
information on how to select a primary care provider, and for a list of 
the participating primary care providers, contact the [plan 
administrator or issuer] at [insert contact information].

    (B) For plans and issuers that require or allow for the designation 
of a primary care provider for a child, add:
    For children, you may designate a pediatrician as the primary care 
provider.
    (C) For plans and issuers that provide coverage for obstetric or 
gynecological care and require the designation by a participant, 
beneficiary, or enrollee of a primary care provider, add:

    You do not need prior authorization from [name of group health plan 
or issuer] or from any other person (including a primary care provider) 
in order to obtain access to obstetrical or gynecological care from a 
health care professional in our network who specializes in obstetrics or 
gynecology. The health care professional, however, may be required to 
comply with certain procedures, including obtaining prior authorization 
for certain services, following a pre-approved treatment plan, or 
procedures for making referrals. For a list of participating health care 
professionals who specialize in obstetrics or gynecology, contact the 
[plan administrator or issuer] at [insert contact information].

    (b) Coverage of emergency services--(1) Scope. If a group health 
plan, or a health insurance issuer offering group or individual health 
insurance coverage, provides any benefits with respect to services in an 
emergency department of a hospital, the plan or issuer must cover 
emergency services (as defined in paragraph (b)(4)(ii) of this section) 
consistent with the rules of this paragraph (b).
    (2) General rules. A plan or issuer subject to the requirements of 
this paragraph (b) must provide coverage for emergency services in the 
following manner--
    (i) Without the need for any prior authorization determination, even 
if the emergency services are provided on an out-of-network basis;
    (ii) Without regard to whether the health care provider furnishing 
the emergency services is a participating network provider with respect 
to the services;
    (iii) If the emergency services are provided out of network, without 
imposing any administrative requirement or limitation on coverage that 
is more restrictive than the requirements or limitations that apply to 
emergency services received from in-network providers;
    (iv) If the emergency services are provided out of network, by 
complying with the cost-sharing requirements of paragraph (b)(3) of this 
section; and

[[Page 153]]

    (v) Without regard to any other term or condition of the coverage, 
other than--
    (A) The exclusion of or coordination of benefits;
    (B) An affiliation or waiting period permitted under part 7 of 
ERISA, part A of title XXVII of the PHS Act, or chapter 100 of the 
Internal Revenue Code; or
    (C) Applicable cost sharing.
    (3) Cost-sharing requirements--(i) Copayments and coinsurance. Any 
cost-sharing requirement expressed as a copayment amount or coinsurance 
rate imposed with respect to a participant, beneficiary, or enrollee for 
out-of-network emergency services cannot exceed the cost-sharing 
requirement imposed with respect to a participant, beneficiary, or 
enrollee if the services were provided in-network. However, a 
participant, beneficiary, or enrollee may be required to pay, in 
addition to the in-network cost-sharing, the excess of the amount the 
out-of-network provider charges over the amount the plan or issuer is 
required to pay under this paragraph (b)(3)(i). A group health plan or 
health insurance issuer complies with the requirements of this paragraph 
(b)(3) if it provides benefits with respect to an emergency service in 
an amount at least equal to the greatest of the three amounts specified 
in paragraphs (b)(3)(i)(A),(B), and (C) of this section (which are 
adjusted for in-network cost-sharing requirements).
    (A) The amount negotiated with in-network providers for the 
emergency service furnished, excluding any in-network copayment or 
coinsurance imposed with respect to the participant, beneficiary, or 
enrollee. If there is more than one amount negotiated with in-network 
providers for the emergency service, the amount described under this 
paragraph (b)(3)(i)(A) is the median of these amounts, excluding any in-
network copayment or coinsurance imposed with respect to the 
participant, beneficiary, or enrollee. In determining the median 
described in the preceding sentence, the amount negotiated with each in-
network provider is treated as a separate amount (even if the same 
amount is paid to more than one provider). If there is no per-service 
amount negotiated with in-network providers (such as under a capitation 
or other similar payment arrangement), the amount under this paragraph 
(b)(3)(i)(A) is disregarded.
    (B) The amount for the emergency service calculated using the same 
method the plan generally uses to determine payments for out-of-network 
services (such as the usual, customary, and reasonable amount), 
excluding any in-network copayment or coinsurance imposed with respect 
to the participant, beneficiary, or enrollee. The amount in this 
paragraph (b)(3)(i)(B) is determined without reduction for out-of-
network cost sharing that generally applies under the plan or health 
insurance coverage with respect to out-of-network services. Thus, for 
example, if a plan generally pays 70 percent of the usual, customary, 
and reasonable amount for out-of-network services, the amount in this 
paragraph (b)(3)(i)(B) for an emergency service is the total (that is, 
100 percent) of the usual, customary, and reasonable amount for the 
service, not reduced by the 30 percent coinsurance that would generally 
apply to out-of-network services (but reduced by the in-network 
copayment or coinsurance that the individual would be responsible for if 
the emergency service had been provided in-network).
    (C) The amount that would be paid under Medicare (part A or part B 
of title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.) for 
the emergency service, excluding any in-network copayment or coinsurance 
imposed with respect to the participant, beneficiary, or enrollee.
    (ii) Other cost sharing. Any cost-sharing requirement other than a 
copayment or coinsurance requirement (such as a deductible or out-of-
pocket maximum) may be imposed with respect to emergency services 
provided out of network if the cost-sharing requirement generally 
applies to out-of-network benefits. A deductible may be imposed with 
respect to out-of-network emergency services only as part of a 
deductible that generally applies to out-of-network benefits. If an out-
of-pocket maximum generally applies to out-of-network benefits, that 
out-of-pocket maximum must apply to out-of-network emergency services.

[[Page 154]]

    (iii) Special rules regarding out-of-network minimum payment 
standards--(A) The minimum payment standards set forth under paragraph 
(b)(3) of this section do not apply in cases where State law prohibits a 
participant, beneficiary, or enrollee from being required to pay, in 
addition to the in-network cost sharing, the excess of the amount the 
out-of-network provider charges over the amount the plan or issuer 
provides in benefits, or where a group health plan or health insurance 
issuer is contractually responsible for such amounts. Nonetheless, in 
such cases, a plan or issuer may not impose any copayment or coinsurance 
requirement for out-of-network emergency services that is higher than 
the copayment or coinsurance requirement that would apply if the 
services were provided in network.
    (B) A group health plan and health insurance issuer must provide a 
participant, beneficiary, or enrollee adequate and prominent notice of 
their lack of financial responsibility with respect to the amounts 
described under this paragraph (b)(3)(iii), to prevent inadvertent 
payment by the participant, beneficiary, or enrollee.
    (iv) Examples. The rules of this paragraph (b)(3) are illustrated by 
the following examples. In all of these examples, the group health plan 
covers benefits with respect to emergency services.

    Example 1. (i) Facts. A group health plan imposes a 25% coinsurance 
responsibility on individuals who are furnished emergency services, 
whether provided in network or out of network. If a covered individual 
notifies the plan within two business days after the day an individual 
receives treatment in an emergency department, the plan reduces the 
coinsurance rate to 15%.
    (ii) Conclusion. In this Example 1, the requirement to notify the 
plan in order to receive a reduction in the coinsurance rate does not 
violate the requirement that the plan cover emergency services without 
the need for any prior authorization determination. This is the result 
even if the plan required that it be notified before or at the time of 
receiving services at the emergency department in order to receive a 
reduction in the coinsurance rate.
    Example 2. (i) Facts. A group health plan imposes a $60 copayment on 
emergency services without preauthorization, whether provided in network 
or out of network. If emergency services are preauthorized, the plan 
waives the copayment, even if it later determines the medical condition 
was not an emergency medical condition.
    (ii) Conclusion. In this Example 2, by requiring an individual to 
pay more for emergency services if the individual does not obtain prior 
authorization, the plan violates the requirement that the plan cover 
emergency services without the need for any prior authorization 
determination. (By contrast, if, to have the copayment waived, the plan 
merely required that it be notified rather than a prior authorization, 
then the plan would not violate the requirement that the plan cover 
emergency services without the need for any prior authorization 
determination.)
    Example 3. (i) Facts. A group health plan covers individuals who 
receive emergency services with respect to an emergency medical 
condition from an out-of-network provider. The plan has agreements with 
in-network providers with respect to a certain emergency service. Each 
provider has agreed to provide the service for a certain amount. Among 
all the providers for the service: One has agreed to accept $85, two 
have agreed to accept $100, two have agreed to accept $110, three have 
agreed to accept $120, and one has agreed to accept $150. Under the 
agreement, the plan agrees to pay the providers 80% of the agreed 
amount, with the individual receiving the service responsible for the 
remaining 20%.
    (ii) Conclusion. In this Example 3, the values taken into account in 
determining the median are $85, $100, $100, $110, $110, $120, $120, 
$120, and $150. Therefore, the median amount among those agreed to for 
the emergency service is $110, and the amount under paragraph 
(b)(3)(i)(A) of this section is 80% of $110 ($88).
    Example 4. (i) Facts. Same facts as Example 3. Subsequently, the 
plan adds another provider to its network, who has agreed to accept $150 
for the emergency service.
    (ii) Conclusion. In this Example 4, the median amount among those 
agreed to for the emergency service is $115. (Because there is no one 
middle amount, the median is the average of the two middle amounts, $110 
and $120.) Accordingly, the amount under paragraph (b)(3)(i)(A) of this 
section is 80% of $115 ($92).
    Example 5. (i) Facts. Same facts as Example 4. An individual covered 
by the plan receives the emergency service from an out-of-network 
provider, who charges $125 for the service. With respect to services 
provided by out-of-network providers generally, the plan reimburses 
covered individuals 50% of the reasonable amount charged by the provider 
for medical services. For this purpose, the reasonable amount for any 
service is based on information on charges by all providers collected by 
a third party, on a zip code by zip code basis, with the plan treating 
charges at a specified percentile as reasonable. For the

[[Page 155]]

emergency service received by the individual, the reasonable amount 
calculated using this method is $116. The amount that would be paid 
under Medicare for the emergency service, excluding any copayment or 
coinsurance for the service, is $80.
    (ii) Conclusion. In this Example 5, the plan is responsible for 
paying $92.80, 80% of $116. The median amount among those agreed to for 
the emergency service is $115 and the amount the plan would pay is $92 
(80% of $115); the amount calculated using the same method the plan uses 
to determine payments for out-of-network services--$116--excluding the 
in-network 20% coinsurance, is $92.80; and the Medicare payment is $80. 
Thus, the greatest amount is $92.80. The individual is responsible for 
the remaining $32.20 charged by the out-of-network provider.
    Example 6. (i) Facts. Same facts as Example 5. The group health plan 
generally imposes a $250 deductible for in-network health care. With 
respect to all health care provided by out-of-network providers, the 
plan imposes a $500 deductible. (Covered in-network claims are credited 
against the deductible.) The individual has incurred and submitted $260 
of covered claims prior to receiving the emergency service out of 
network.
    (ii) Conclusion. In this Example 6, the plan is not responsible for 
paying anything with respect to the emergency service furnished by the 
out-of-network provider because the covered individual has not satisfied 
the higher deductible that applies generally to all health care provided 
out of network. However, the amount the individual is required to pay is 
credited against the deductible.

    (4) Definitions. The definitions in this paragraph (b)(4) govern in 
applying the provisions of this paragraph (b).
    (i) Emergency medical condition. The term emergency medical 
condition means a medical condition manifesting itself by acute symptoms 
of sufficient severity (including severe pain) so that a prudent 
layperson, who possesses an average knowledge of health and medicine, 
could reasonably expect the absence of immediate medical attention to 
result in a condition described in clause (i), (ii), or (iii) of section 
1867(e)(1)(A) of the Social Security Act (42 U.S.C. 1395dd(e)(1)(A)). 
(In that provision of the Social Security Act, clause (i) refers to 
placing the health of the individual (or, with respect to a pregnant 
woman, the health of the woman or her unborn child) in serious jeopardy; 
clause (ii) refers to serious impairment to bodily functions; and clause 
(iii) refers to serious dysfunction of any bodily organ or part.)
    (ii) Emergency services. The term emergency services means, with 
respect to an emergency medical condition--
    (A) A medical screening examination (as required under section 1867 
of the Social Security Act, 42 U.S.C. 1395dd) that is within the 
capability of the emergency department of a hospital, including 
ancillary services routinely available to the emergency department to 
evaluate such emergency medical condition, and
    (B) Such further medical examination and treatment, to the extent 
they are within the capabilities of the staff and facilities available 
at the hospital, as are required under section 1867 of the Social 
Security Act (42 U.S.C. 1395dd) to stabilize the patient.
    (iii) Stabilize. The term to stabilize, with respect to an emergency 
medical condition (as defined in paragraph (b)(4)(i) of this section) 
has the meaning given in section 1867(e)(3) of the Social Security Act 
(42 U.S.C. 1395dd(e)(3)).
    (c) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years (in the individual market, policy years) beginning on or after 
January 1, 2017. Until the applicability date for this regulation, plans 
and issuers are required to continue to comply with the corresponding 
sections of 45 CFR parts 144, 146 and 147, contained in the 45 CFR, 
parts 1 to 199, edition revised as of October 1, 2015.

[80 FR 72286, Nov. 18, 2015]



Sec.  147.140  Preservation of right to maintain existing coverage.

    (a) Definition of grandfathered health plan coverage--(1) In 
general--(i) Grandfathered health plan coverage means coverage provided 
by a group health plan, or a group or individual health insurance 
issuer, in which an individual was enrolled on March 23, 2010 (for as 
long as it maintains that status under the rules of this section). A 
group health plan or group health insurance coverage does not cease to 
be grandfathered health plan coverage merely because one or more (or 
even all) individuals enrolled on March 23, 2010 cease to be covered, 
provided that the plan or group health insurance coverage has 
continuously covered someone since

[[Page 156]]

March 23, 2010 (not necessarily the same person, but at all times at 
least one person). In addition, subject to the limitation set forth in 
paragraph (a)(1)(ii) of this section, a group health plan (and any 
health insurance coverage offered in connection with the group health 
plan) does not cease to be a grandfathered health plan merely because 
the plan (or its sponsor) enters into a new policy, certificate, or 
contract of insurance after March 23, 2010 (for example, a plan enters 
into a contract with a new issuer or a new policy is issued with an 
existing issuer). For purposes of this section, a plan or health 
insurance coverage that provides grandfathered health plan coverage is 
referred to as a grandfathered health plan. The rules of this section 
apply separately to each benefit package made available under a group 
health plan or health insurance coverage. Accordingly, if any benefit 
package relinquishes grandfather status, it will not affect the 
grandfather status of the other benefit packages.
    (ii) Changes in group health insurance coverage. Subject to 
paragraphs (f) and (g)(2) of this section, if a group health plan 
(including a group health plan that was self-insured on March 23, 2010) 
or its sponsor enters into a new policy, certificate, or contract of 
insurance after March 23, 2010 that is effective before November 15, 
2010, then the plan ceases to be a grandfathered health plan.
    (2) Disclosure of grandfather status. (i) To maintain status as a 
grandfathered health plan, a plan or health insurance coverage must 
include a statement that the plan or coverage believes it is a 
grandfathered health plan within the meaning of section 1251 of the 
Patient Protection and Affordable Care Act, and must provide contact 
information for questions and complaints, in any summary of benefits 
provided under the plan.
    (ii) The following model language can be used to satisfy this 
disclosure requirement:

    This [group health plan or health insurance issuer] believes this 
[plan or coverage] is a ``grandfathered health plan'' under the Patient 
Protection and Affordable Care Act (the Affordable Care Act). As 
permitted by the Affordable Care Act, a grandfathered health plan can 
preserve certain basic health coverage that was already in effect when 
that law was enacted. Being a grandfathered health plan means that your 
[plan or policy] may not include certain consumer protections of the 
Affordable Care Act that apply to other plans, for example, the 
requirement for the provision of preventive health services without any 
cost sharing. However, grandfathered health plans must comply with 
certain other consumer protections in the Affordable Care Act, for 
example, the elimination of lifetime dollar limits on benefits.
    Questions regarding which protections apply and which protections do 
not apply to a grandfathered health plan and what might cause a plan to 
change from grandfathered health plan status can be directed to the plan 
administrator at [insert contact information]. [For ERISA plans, insert: 
You may also contact the Employee Benefits Security Administration, U.S. 
Department of Labor at 1-866-444-3272 or www.dol.gov/ebsa/healthreform. 
This Web site has a table summarizing which protections do and do not 
apply to grandfathered health plans.] [For individual market policies 
and nonfederal governmental plans, insert: You may also contact the U.S. 
Department of Health and Human Services at www.healthcare.gov.]

    (3)(i) Documentation of plan or policy terms on March 23, 2010. To 
maintain status as a grandfathered health plan, a group health plan, or 
group or individual health insurance coverage, must, for as long as the 
plan or health insurance coverage takes the position that it is a 
grandfathered health plan--
    (A) Maintain records documenting the terms of the plan or health 
insurance coverage in connection with the coverage in effect on March 
23, 2010, and any other documents necessary to verify, explain, or 
clarify its status as a grandfathered health plan; and
    (B) Make such records available for examination upon request.
    (ii) Change in group health insurance coverage. To maintain status 
as a grandfathered health plan, a group health plan that enters into a 
new policy, certificate, or contract of insurance must provide to the 
new health insurance issuer (and the new health insurance issuer must 
require) documentation of plan terms (including benefits, cost sharing, 
employer contributions, and annual dollar limits) under the prior health 
coverage sufficient to determine whether a change causing a cessation of 
grandfathered

[[Page 157]]

health plan status under paragraph (g)(1) of this section has occurred.
    (4) Family members enrolling after March 23, 2010. With respect to 
an individual who is enrolled in a group health plan or health insurance 
coverage on March 23, 2010, grandfathered health plan coverage includes 
coverage of family members of the individual who enroll after March 23, 
2010 in the grandfathered health plan coverage of the individual.
    (b) Allowance for new employees to join current plan--(1) In 
general. Subject to paragraph (b)(2) of this section, a group health 
plan (including health insurance coverage provided in connection with 
the group health plan) that provided coverage on March 23, 2010 and has 
retained its status as a grandfathered health plan (consistent with the 
rules of this section, including paragraph (g) of this section) is 
grandfathered health plan coverage for new employees (whether newly 
hired or newly enrolled) and their families enrolling in the plan after 
March 23, 2010. Further, the addition of a new contributing employer or 
new group of employees of an existing contributing employer to a 
grandfathered multiemployer health plan will not affect the plan's 
grandfather status.
    (2) Anti-abuse rules--(i) Mergers and acquisitions. If the principal 
purpose of a merger, acquisition, or similar business restructuring is 
to cover new individuals under a grandfathered health plan, the plan 
ceases to be a grandfathered health plan.
    (ii) Change in plan eligibility. A group health plan or health 
insurance coverage (including a benefit package under a group health 
plan) ceases to be a grandfathered health plan if--
    (A) Employees are transferred into the plan or health insurance 
coverage (the transferee plan) from a plan or health insurance coverage 
under which the employees were covered on March 23, 2010 (the transferor 
plan);
    (B) Comparing the terms of the transferee plan with those of the 
transferor plan (as in effect on March 23, 2010) and treating the 
transferee plan as if it were an amendment of the transferor plan would 
cause a loss of grandfather status under the provisions of paragraph 
(g)(1) of this section; and
    (C) There was no bona fide employment-based reason to transfer the 
employees into the transferee plan. For this purpose, changing the terms 
or cost of coverage is not a bona fide employment-based reason.
    (iii) Illustrative list of bona fide employment-based reasons. For 
purposes of this paragraph (b)(2)(ii)(C), bona fide employment-based 
reasons include--
    (A) When a benefit package is being eliminated because the issuer is 
exiting the market;
    (B) When a benefit package is being eliminated because the issuer no 
longer offers the product to the employer;
    (C) When low or declining participation by plan participants in the 
benefit package makes it impractical for the plan sponsor to continue to 
offer the benefit package;
    (D) When a benefit package is eliminated from a multiemployer plan 
as agreed upon as part of the collective bargaining process; or
    (E) When a benefit package is eliminated for any reason and multiple 
benefit packages covering a significant portion of other employees 
remain available to the employees being transferred.
    (3) Examples. The rules of this paragraph (b) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan offers two benefit 
packages on March 23, 2010, Options F and G. During a subsequent open 
enrollment period, some of the employees enrolled in Option F on March 
23, 2010 switch to Option G.
    (ii) Conclusion. In this Example 1, the group health coverage 
provided under Option G remains a grandfathered health plan under the 
rules of paragraph (b)(1) of this section because employees previously 
enrolled in Option F are allowed to enroll in Option G as new employees.
    Example 2. (i) Facts. A group health plan offers two benefit 
packages on March 23, 2010, Options H and I. On March 23, 2010, Option H 
provides coverage only for employees in one manufacturing plant. 
Subsequently, the plant is closed, and some employees in the closed 
plant are moved to another plant. The employer eliminates Option H and 
the employees that are moved are transferred to Option I. If instead of 
transferring employees from Option H to Option I, Option H was amended 
to match the terms of Option I,

[[Page 158]]

then Option H would cease to be a grandfathered health plan.
    (ii) Conclusion. In this Example 2, the plan has a bona fide 
employment-based reason to transfer employees from Option H to Option I. 
Therefore, Option I does not cease to be a grandfathered health plan.

    (c) General grandfathering rule. (1) Except as provided in 
paragraphs (d) and (e) of this section, subtitles A and C of title I of 
the Patient Protection and Affordable Care Act (and the amendments made 
by those subtitles, and the incorporation of those amendments into ERISA 
section 715 and Internal Revenue Code section 9815) do not apply to 
grandfathered health plan coverage. Accordingly, the provisions of PHS 
Act sections 2701, 2702, 2703, 2705, 2706, 2707, 2709 (relating to 
coverage for individuals participating in approved clinical trials, as 
added by section 10103 of the Patient Protection and Affordable Care 
Act), 2713, 2715A, 2716, 2717, 2719, and 2719A, as added or amended by 
the Patient Protection and Affordable Care Act, do not apply to 
grandfathered health plans. In addition, the provisions of PHS Act 
section 2704, and PHS Act section 2711 insofar as it relates to annual 
dollar limits, do not apply to grandfathered health plans that are 
individual health insurance coverage.
    (2) To the extent not inconsistent with the rules applicable to a 
grandfathered health plan, a grandfathered health plan must comply with 
the requirements of the PHS Act, ERISA, and the Internal Revenue Code 
applicable prior to the changes enacted by the Patient Protection and 
Affordable Care Act.
    (d) Provisions applicable to all grandfathered health plans. The 
provisions of PHS Act section 2711 insofar as it relates to lifetime 
dollar limits, and the provisions of PHS Act sections 2712, 2714, 2715, 
and 2718, apply to grandfathered health plans for plan years (in the 
individual market, policy years) beginning on or after September 23, 
2010. The provisions of PHS Act section 2708 apply to grandfathered 
health plans for plan years (in the individual market, policy years) 
beginning on or after January 1, 2014.
    (e) Applicability of PHS Act sections 2704, 2711, and 2714 to 
grandfathered group health plans and group health insurance coverage. 
(1) The provisions of PHS Act section 2704 as it applies with respect to 
enrollees who are under 19 years of age, and the provisions of PHS Act 
section 2711 insofar as it relates to annual dollar limits, apply to 
grandfathered health plans that are group health plans (including group 
health insurance coverage) for plan years beginning on or after 
September 23, 2010. The provisions of PHS Act section 2704 apply 
generally to grandfathered health plans that are group health plans 
(including group health insurance coverage) for plan years beginning on 
or after January 1, 2014.
    (2) For plan years beginning before January 1, 2014, the provisions 
of PHS Act section 2714 apply in the case of an adult child with respect 
to a grandfathered health plan that is a group health plan only if the 
adult child is not eligible to enroll in an eligible employer-sponsored 
health plan (as defined in section 5000A(f)(2) of the Internal Revenue 
Code) other than a grandfathered health plan of a parent. For plan years 
beginning on or after January 1, 2014, the provisions of PHS Act section 
2714 apply with respect to a grandfathered health plan that is a group 
health plan without regard to whether an adult child is eligible to 
enroll in any other coverage.
    (f) Effect on collectively bargained plans--In general. In the case 
of health insurance coverage maintained pursuant to one or more 
collective bargaining agreements between employee representatives and 
one or more employers that was ratified before March 23, 2010, the 
coverage is grandfathered health plan coverage at least until the date 
on which the last of the collective bargaining agreements relating to 
the coverage that was in effect on March 23, 2010 terminates. Any 
coverage amendment made pursuant to a collective bargaining agreement 
relating to the coverage that amends the coverage solely to conform to 
any requirement added by subtitles A and C of title I of the Patient 
Protection and Affordable Care Act (and the amendments made by those 
subtitles, and the incorporation of those amendments into ERISA section 
715 and Internal Revenue Code section 9815) is not treated as a 
termination of the collective bargaining

[[Page 159]]

agreement. After the date on which the last of the collective bargaining 
agreements relating to the coverage that was in effect on March 23, 2010 
terminates, the determination of whether health insurance coverage 
maintained pursuant to a collective bargaining agreement is 
grandfathered health plan coverage is made under the rules of this 
section other than this paragraph (f) (comparing the terms of the health 
insurance coverage after the date the last collective bargaining 
agreement terminates with the terms of the health insurance coverage 
that were in effect on March 23, 2010).
    (g) Maintenance of grandfather status--(1) Changes causing cessation 
of grandfather status. Subject to paragraph (g)(2) of this section, the 
rules of this paragraph (g)(1) describe situations in which a group 
health plan or health insurance coverage ceases to be a grandfathered 
health plan. A plan or coverage will cease to be a grandfathered health 
plan when an amendment to plan terms that results in a change described 
in this paragraph (g)(1) becomes effective, regardless of when the 
amendment was adopted. Once grandfather status is lost, it cannot be 
regained.
    (i) Elimination of benefits. The elimination of all or substantially 
all benefits to diagnose or treat a particular condition causes a group 
health plan or health insurance coverage to cease to be a grandfathered 
health plan. For this purpose, the elimination of benefits for any 
necessary element to diagnose or treat a condition is considered the 
elimination of all or substantially all benefits to diagnose or treat a 
particular condition. Whether or not a plan or coverage has eliminated 
substantially all benefits to diagnose or treat a particular condition 
must be determined based on all the facts and circumstances, taking into 
account the items and services provided for a particular condition under 
the plan on March 23, 2010, as compared to the benefits offered at the 
time the plan or coverage makes the benefit change effective.
    (ii) Increase in percentage cost-sharing requirement. Any increase, 
measured from March 23, 2010, in a percentage cost-sharing requirement 
(such as an individual's coinsurance requirement) causes a group health 
plan or health insurance coverage to cease to be a grandfathered health 
plan.
    (iii) Increase in a fixed-amount cost-sharing requirement other than 
a copayment. Any increase in a fixed-amount cost-sharing requirement 
other than a copayment (for example, deductible or out-of-pocket limit), 
determined as of the effective date of the increase, causes a group 
health plan or health insurance coverage to cease to be a grandfathered 
health plan, if the total percentage increase in the cost-sharing 
requirement measured from March 23, 2010 exceeds the maximum percentage 
increase (as defined in paragraph (g)(3)(ii) of this section).
    (iv) Increase in a fixed-amount copayment. Any increase in a fixed-
amount copayment, determined as of the effective date of the increase, 
and determined for each copayment level if a plan has different 
copayment levels for different categories of services, causes a group 
health plan or health insurance coverage to cease to be a grandfathered 
health plan, if the total increase in the copayment measured from March 
23, 2010 exceeds the greater of:
    (A) An amount equal to $5 increased by medical inflation, as defined 
in paragraph (g)(3)(i) of this section (that is, $5 times medical 
inflation, plus $5), or
    (B) The maximum percentage increase (as defined in paragraph 
(g)(3)(ii) of this section), determined by expressing the total increase 
in the copayment as a percentage.
    (v) Decrease in contribution rate by employers and employee 
organizations--(A) Contribution rate based on cost of coverage. A group 
health plan or group health insurance coverage ceases to be a 
grandfathered health plan if the employer or employee organization 
decreases its contribution rate based on cost of coverage (as defined in 
paragraph (g)(3)(iii)(A) of this section) towards the cost of any tier 
of coverage for any class of similarly situated individuals (as 
described in Sec.  146.121(d) of this subchapter) by more than 5 
percentage points below the contribution rate for the coverage period 
that includes March 23, 2010.

[[Page 160]]

    (B) Contribution rate based on a formula. A group health plan or 
group health insurance coverage ceases to be a grandfathered health plan 
if the employer or employee organization decreases its contribution rate 
based on a formula (as defined in paragraph (g)(3)(iii)(B) of this 
section) towards the cost of any tier of coverage for any class of 
similarly situated individuals (as described in Sec.  146.121(d) of this 
subchapter) by more than 5 percent below the contribution rate for the 
coverage period that includes March 23, 2010.
    (C) Special rules regarding decreases in contribution rates. An 
insured group health plan (or a multiemployer plan) that is a 
grandfathered health plan will not cease to be a grandfathered health 
plan based on a change in the employer contribution rate unless the 
issuer (or multiemployer plan) knows, or should know, of the change, 
provided:
    (1) Upon renewal (or, in the case of a multiemployer plan, before 
the start of a new plan year), the issuer (or multiemployer plan) 
requires relevant employers, employee organizations, or plan sponsors, 
as applicable, to make a representation regarding its contribution rate 
for the plan year covered by the renewal, as well as its contribution 
rate on March 23, 2010 (if the issuer, or multiemployer plan, does not 
already have it); and
    (2) The relevant policies, certificates, contracts of insurance, or 
plan documents disclose in a prominent and effective manner that 
employers, employee organizations, or plan sponsors, as applicable, are 
required to notify the issuer (or multiemployer plan) if the 
contribution rate changes at any point during the plan year.
    (D) Application to plans with multi-tiered coverage structures. The 
standards for employer contributions in this paragraph (g)(1)(v) apply 
on a tier-by-tier basis. Therefore, if a group health plan modifies the 
tiers of coverage it had on March 23, 2010 (for example, from self-only 
and family to a multi-tiered structure of self-only, self-plus-one, 
self-plus-two, and self-plus-three-or-more), the employer contribution 
for any new tier would be tested by comparison to the contribution rate 
for the corresponding tier on March 23, 2010. For example, if the 
employer contribution rate for family coverage was 50 percent on March 
23, 2010, the employer contribution rate for any new tier of coverage 
other than self-only (i.e., self-plus-one, self-plus-two, self-plus-
three or more) must be within 5 percentage points of 50 percent (i.e., 
at least 45 percent). If, however, the plan adds one or more new 
coverage tiers without eliminating or modifying any previous tiers and 
those new coverage tiers cover classes of individuals that were not 
covered previously under the plan, the new tiers would not be analyzed 
under the standards for changes in employer contributions. For example, 
if a plan with self-only as the sole coverage tier added a family 
coverage tier, the level of employer contributions toward the family 
coverage would not cause the plan to lose grandfather status.
    (E) Group health plans with fixed-dollar employee contributions or 
no employee contributions. A group health plan that requires either 
fixed-dollar employee contributions or no employee contributions will 
not cease to be a grandfathered health plan solely because the employer 
contribution rate changes so long as there continues to be no employee 
contributions or no increase in the fixed-dollar employee contributions 
towards the cost of coverage.
    (vi) Changes in annual limits--(A) Addition of an annual limit. A 
group health plan, or group or individual health insurance coverage 
that, on March 23, 2010, did not impose an overall annual or lifetime 
limit on the dollar value of all benefits ceases to be a grandfathered 
health plan if the plan or health insurance coverage imposes an overall 
annual limit on the dollar value of benefits. (But see Sec.  147.126, 
which generally prohibits all annual dollar limits on essential health 
benefits for plan years (in the individual market, policy years) 
beginning on or after January 1, 2014).
    (B) Decrease in limit for a plan or coverage with only a lifetime 
limit. Grandfathered individual health insurance coverage, that, on 
March 23, 2010, imposed an overall lifetime limit on the dollar value of 
all benefits but no overall annual limit on the dollar value of all 
benefits ceases to be a grandfathered health plan if the plan or

[[Page 161]]

health insurance coverage adopts an overall annual limit at a dollar 
value that is lower than the dollar value of the lifetime limit on March 
23, 2010. (But see Sec.  147.126, which generally prohibits all annual 
dollar limits on essential health benefits for plan years (in the 
individual market, policy years) beginning on or after January 1, 2014).
    (C) Decrease in limit for a plan or coverage with an annual limit. A 
group health plan, or group or individual health insurance coverage, 
that, on March 23, 2010, imposed an overall annual limit on the dollar 
value of all benefits ceases to be a grandfathered health plan if the 
plan or health insurance coverage decreases the dollar value of the 
annual limit (regardless of whether the plan or health insurance 
coverage also imposed an overall lifetime limit on March 23, 2010 on the 
dollar value of all benefits). (But see Sec.  147.126, which generally 
prohibits all annual dollar limits on essential health benefits for plan 
years (in the individual market, policy years) beginning on or after 
January 1, 2014).
    (2) Transitional rules--(i) Changes made prior to March 23, 2010. If 
a group health plan or health insurance issuer makes the following 
changes to the terms of the plan or health insurance coverage, the 
changes are considered part of the terms of the plan or health insurance 
coverage on March 23, 2010 even though they were not effective at that 
time and such changes do not cause a plan or health insurance coverage 
to cease to be a grandfathered health plan:
    (A) Changes effective after March 23, 2010 pursuant to a legally 
binding contract entered into on or before March 23, 2010;
    (B) Changes effective after March 23, 2010 pursuant to a filing on 
or before March 23, 2010 with a State insurance department; or
    (C) Changes effective after March 23, 2010 pursuant to written 
amendments to a plan that were adopted on or before March 23, 2010.
    (ii) Changes made after March 23, 2010 and adopted prior to issuance 
of regulations. If, after March 23, 2010, a group health plan or health 
insurance issuer makes changes to the terms of the plan or health 
insurance coverage and the changes are adopted prior to June 14, 2010, 
the changes will not cause the plan or health insurance coverage to 
cease to be a grandfathered health plan if the changes are revoked or 
modified effective as of the first day of the first plan year (in the 
individual market, policy year) beginning on or after September 23, 
2010, and the terms of the plan or health insurance coverage on that 
date, as modified, would not cause the plan or coverage to cease to be a 
grandfathered health plan under the rules of this section, including 
paragraph (g)(1) of this section. For this purpose, changes will be 
considered to have been adopted prior to June 14, 2010 if:
    (A) The changes are effective before that date;
    (B) The changes are effective on or after that date pursuant to a 
legally binding contract entered into before that date;
    (C) The changes are effective on or after that date pursuant to a 
filing before that date with a State insurance department; or
    (D) The changes are effective on or after that date pursuant to 
written amendments to a plan that were adopted before that date.
    (3) Definitions--(i) Medical inflation defined. For purposes of this 
paragraph (g), the term medical inflation means the increase since March 
2010 in the overall medical care component of the Consumer Price Index 
for All Urban Consumers (CPI-U) (unadjusted) published by the Department 
of Labor using the 1982-1984 base of 100. For this purpose, the increase 
in the overall medical care component is computed by subtracting 387.142 
(the overall medical care component of the CPI-U (unadjusted) published 
by the Department of Labor for March 2010, using the 1982-1984 base of 
100) from the index amount for any month in the 12 months before the new 
change is to take effect and then dividing that amount by 387.142.
    (ii) Maximum percentage increase defined. For purposes of this 
paragraph (g), the term maximum percentage increase means medical 
inflation (as defined in paragraph (g)(3)(i) of this section), expressed 
as a percentage, plus 15 percentage points.

[[Page 162]]

    (iii) Contribution rate defined. For purposes of paragraph (g)(1)(v) 
of this section:
    (A) Contribution rate based on cost of coverage. The term 
contribution rate based on cost of coverage means the amount of 
contributions made by an employer or employee organization compared to 
the total cost of coverage, expressed as a percentage. The total cost of 
coverage is determined in the same manner as the applicable premium is 
calculated under the COBRA continuation provisions of section 604 of 
ERISA, section 4980B(f)(4) of the Internal Revenue Code, and section 
2204 of the PHS Act. In the case of a self-insured plan, contributions 
by an employer or employee organization are equal to the total cost of 
coverage minus the employee contributions towards the total cost of 
coverage.
    (B) Contribution rate based on a formula. The term contribution rate 
based on a formula means, for plans that, on March 23, 2010, made 
contributions based on a formula (such as hours worked or tons of coal 
mined), the formula.
    (4) Examples. The rules of this paragraph (g) are illustrated by the 
following examples:

    Example 1. (i) Facts. On March 23, 2010, a grandfathered health plan 
has a coinsurance requirement of 20% for inpatient surgery. The plan is 
subsequently amended to increase the coinsurance requirement to 25%.
    (ii) Conclusion. In this Example 1, the increase in the coinsurance 
requirement from 20% to 25% causes the plan to cease to be a 
grandfathered health plan.
    Example 2. (i) Facts. Before March 23, 2010, the terms of a group 
health plan provide benefits for a particular mental health condition, 
the treatment for which is a combination of counseling and prescription 
drugs. Subsequently, the plan eliminates benefits for counseling.
    (ii) Conclusion. In this Example 2, the plan ceases to be a 
grandfathered health plan because counseling is an element that is 
necessary to treat the condition. Thus the plan is considered to have 
eliminated substantially all benefits for the treatment of the 
condition.
    Example 3. (i) Facts. On March 23, 2010, a grandfathered health plan 
has a copayment requirement of $30 per office visit for specialists. The 
plan is subsequently amended to increase the copayment requirement to 
$40. Within the 12-month period before the $40 copayment takes effect, 
the greatest value of the overall medical care component of the CPI-U 
(unadjusted) is 475.
    (ii) Conclusion. In this Example 3, the increase in the copayment 
from $30 to $40, expressed as a percentage, is 33.33% (40-30 = 10; 10 / 
30 = 0.3333; 0.3333 = 33.33%). Medical inflation (as defined in 
paragraph (g)(3)(i) of this section) from March 2010 is 0.2269 (475-
387.142 = 87.858; 87.858 / 387.142 = 0.2269). The maximum percentage 
increase permitted is 37.69% (0.2269 = 22.69%; 22.69% + 15% = 37.69%). 
Because 33.33% does not exceed 37.69%, the change in the copayment 
requirement at that time does not cause the plan to cease to be a 
grandfathered health plan.
    Example 4. (i) Facts. Same facts as Example 3, except the 
grandfathered health plan subsequently increases the $40 copayment 
requirement to $45 for a later plan year. Within the 12-month period 
before the $45 copayment takes effect, the greatest value of the overall 
medical care component of the CPI-U (unadjusted) is 485.
    (ii) Conclusion. In this Example 4, the increase in the copayment 
from $30 (the copayment that was in effect on March 23, 2010) to $45, 
expressed as a percentage, is 50% (45-30 = 15; 15 / 30 = 0.5; 0.5 = 
50%). Medical inflation (as defined in paragraph (g)(3)(i) of this 
section) from March 2010 is 0.2527 (485-387.142 = 97.858; 97.858 / 
387.142 = 0.2527). The increase that would cause a plan to cease to be a 
grandfathered health plan under paragraph (g)(1)(iv) of this section is 
the greater of the maximum percentage increase of 40.27% (0.2527 = 
25.27%; 25.27% + 15% = 40.27%), or $6.26 ($5 x 0.2527 = $1.26; $1.26 + 
$5 = $6.26). Because 50% exceeds 40.27% and $15 exceeds $6.26, the 
change in the copayment requirement at that time causes the plan to 
cease to be a grandfathered health plan.
    Example 5. (i) Facts. On March 23, 2010, a grandfathered health plan 
has a copayment of $10 per office visit for primary care providers. The 
plan is subsequently amended to increase the copayment requirement to 
$15. Within the 12-month period before the $15 copayment takes effect, 
the greatest value of the overall medical care component of the CPI-U 
(unadjusted) is 415.
    (ii) Conclusion. In this Example 5, the increase in the copayment, 
expressed as a percentage, is 50% (15-10 = 5; 5 / 10 = 0.5; 0.5 = 50%). 
Medical inflation (as defined in paragraph (g)(3) of this section) from 
March 2010 is 0.0720 (415.0-387.142 = 27.858; 27.858 / 387.142 = 
0.0720). The increase that would cause a plan to cease to be a 
grandfathered health plan under paragraph (g)(1)(iv) of this section is 
the greater of the maximum percentage increase of 22.20% (0.0720 = 
7.20%; 7.20% + 15% = 22.20), or $5.36 ($5 x 0.0720 = $0.36; $0.36 + $5 = 
$5.36). The $5 increase in copayment in this Example 5 would not cause 
the plan to cease to be a grandfathered health plan pursuant to 
paragraph (g)(1)(iv)this section,

[[Page 163]]

which would permit an increase in the copayment of up to $5.36.
    Example 6. (i) Facts. The same facts as Example 5, except on March 
23, 2010, the grandfathered health plan has no copayment ($0) for office 
visits for primary care providers. The plan is subsequently amended to 
increase the copayment requirement to $5.
    (ii) Conclusion. In this Example 6, medical inflation (as defined in 
paragraph (g)(3)(i) of this section) from March 2010 is 0.0720 (415.0-
387.142 = 27.858; 27.858 / 387.142 = 0.0720). The increase that would 
cause a plan to cease to be a grandfathered health plan under paragraph 
(g)(1)(iv)(A) of this section is $5.36 ($5 x 0.0720 = $0.36; $0.36 + $5 
= $5.36). The $5 increase in copayment in this Example 6 is less than 
the amount calculated pursuant to paragraph (g)(1)(iv)(A) of this 
section of $5.36. Thus, the $5 increase in copayment does not cause the 
plan to cease to be a grandfathered health plan.
    Example 7. (i) Facts. On March 23, 2010, a self-insured group health 
plan provides two tiers of coverage--self-only and family. The employer 
contributes 80% of the total cost of coverage for self-only and 60% of 
the total cost of coverage for family. Subsequently, the employer 
reduces the contribution to 50% for family coverage, but keeps the same 
contribution rate for self-only coverage.
    (ii) Conclusion. In this Example 7, the decrease of 10 percentage 
points for family coverage in the contribution rate based on cost of 
coverage causes the plan to cease to be a grandfathered health plan. The 
fact that the contribution rate for self-only coverage remains the same 
does not change the result.
    Example 8. (i) Facts. On March 23, 2010, a self-insured 
grandfathered health plan has a COBRA premium for the 2010 plan year of 
$5000 for self-only coverage and $12,000 for family coverage. The 
required employee contribution for the coverage is $1000 for self-only 
coverage and $4000 for family coverage. Thus, the contribution rate 
based on cost of coverage for 2010 is 80% ((5000-1000)/5000) for self-
only coverage and 67% ((12,000-4000)/12,000) for family coverage. For a 
subsequent plan year, the COBRA premium is $6000 for self-only coverage 
and $15,000 for family coverage. The employee contributions for that 
plan year are $1200 for self-only coverage and $5000 for family 
coverage. Thus, the contribution rate based on cost of coverage is 80% 
((6000-1200)/6000) for self-only coverage and 67% ((15,000-5000)/15,000) 
for family coverage.
    (ii) Conclusion. In this Example 8, because there is no change in 
the contribution rate based on cost of coverage, the plan retains its 
status as a grandfathered health plan. The result would be the same if 
all or part of the employee contribution was made pre-tax through a 
cafeteria plan under section 125 of the Internal Revenue Code.
    Example 9. (i) Facts. A group health plan not maintained pursuant to 
a collective bargaining agreement offers three benefit packages on March 
23, 2010. Option F is a self-insured option. Options G and H are insured 
options. Beginning July 1, 2013, the plan increases coinsurance under 
Option H from 10% to 15%.
    (ii) Conclusion. In this Example 9, the coverage under Option H is 
not grandfathered health plan coverage as of July 1, 2013, consistent 
with the (rule in paragraph (g)(1)(ii) of this section. Whether the 
coverage under Options F and G is grandfathered health plan coverage is 
determined separately under the rules of this paragraph (g).

[80 FR 72289, Nov. 18, 2015]



Sec.  147.145  Student health insurance coverage.

    (a) Definition. Student health insurance coverage is a type of 
individual health insurance coverage (as defined in Sec.  144.103 of 
this subchapter) that is provided pursuant to a written agreement 
between an institution of higher education (as defined in the Higher 
Education Act of 1965) and a health insurance issuer, and provided to 
students enrolled in that institution of higher education and their 
dependents, that meets the following conditions:
    (1) Does not make health insurance coverage available other than in 
connection with enrollment as a student (or as a dependent of a student) 
in the institution of higher education.
    (2) Does not condition eligibility for the health insurance coverage 
on any health status-related factor (as defined in Sec.  146.121(a) of 
this subchapter) relating to a student (or a dependent of a student).
    (3) Meets any additional requirement that may be imposed under State 
law.
    (b) Exemptions from the Public Health Service Act and the Affordable 
Care Act--(1) Guaranteed availability and guaranteed renewability. (i) 
For purposes of sections 2741(e)(1) and 2742(b)(5) of the Public Health 
Service Act, student health insurance coverage is deemed to be available 
only through a bona fide association.
    (ii) For purposes of section 2702 of the Public Health Service Act, 
a health insurance issuer that offers student health insurance coverage 
is not required to accept individuals who are not students or dependents 
of students in such coverage, and, notwithstanding

[[Page 164]]

the requirements of Sec.  147.104(b), is not required to establish open 
enrollment periods or coverage effective dates that are based on a 
calendar policy year or to offer policies on a calendar year basis.
    (iii) For purposes of section 2703(a) of the Public Health Service 
Act, a health insurance issuer that offers student health insurance 
coverage is not required to renew or continue in force coverage for 
individuals who are no longer students or dependents of students.
    (2) Levels of coverage. The requirement to provide a specific level 
of coverage described in section 1302(d) of the Affordable Care Act does 
not apply to student health insurance coverage for policy years 
beginning on or after July 1, 2016. However, the benefits provided by 
such coverage must provide at least 60 percent actuarial value, as 
calculated in accordance with Sec.  156.135 of this subchapter. The 
issuer must specify in any plan materials summarizing the terms of the 
coverage the actuarial value and level of coverage (or next lowest level 
of coverage) the coverage would otherwise satisfy under Sec.  156.140 of 
this subchapter.
    (3) Single risk pool. Student health insurance coverage is not 
subject to the requirements of section 1312(c) of the Affordable Care 
Act. A health insurance issuer that offers student health insurance 
coverage may establish one or more separate risk pools for an 
institution of higher education, if the distinction between or among 
groups of students (or dependents of students) who form the risk pool is 
based on a bona fide school-related classification and not based on a 
health factor (as described in Sec.  146.121 of this subchapter). 
However, student health insurance rates must reflect the claims 
experience of individuals who comprise the risk pool, and any 
adjustments to rates within a risk pool must be actuarially justified.
    (c) Student administrative health fees--(1) Definition. A student 
administrative health fee is a fee charged by the institution of higher 
education on a periodic basis to students of the institution of higher 
education to offset the cost of providing health care through health 
clinics regardless of whether the students utilize the health clinics or 
enroll in student health insurance coverage.
    (2) Preventive services. Notwithstanding the requirements under 
section 2713 of the Public Health Service Act and its implementing 
regulations, student administrative health fees as defined in paragraph 
(c)(1) of this section are not considered cost-sharing requirements with 
respect to specified recommended preventive services.

[77 FR 16468, Mar. 21, 2012, as amended at 78 FR 13439, Feb. 27, 2013; 
79 FR 13834, Mar. 11, 2014; 81 FR 12334, Mar. 8, 2016]



Sec.  147.150  Coverage of essential health benefits.

    (a) Requirement to cover the essential health benefits package. A 
health insurance issuer offering health insurance coverage in the 
individual or small group market must ensure that such coverage includes 
the essential health benefits package as defined in section 1302(a) of 
the Affordable Care Act effective for plan or policy years beginning on 
or after January 1, 2014.
    (b) Cost-sharing under group health plans. [Reserved]
    (c) Child-only plans. If a health insurance issuer offers health 
insurance coverage in any level of coverage specified under section 
1302(d)(1) of the Affordable Care Act, the issuer must offer coverage in 
that level as a plan in which the only enrollees are individuals who, as 
of the beginning of a plan year, have not attained the age of 21.

[78 FR 12865, Feb. 25, 2013]



Sec.  147.160  Parity in mental health and substance use disorder benefits.

    (a) In general. The provisions of Sec.  146.136 of this subchapter 
apply to health insurance coverage offered by health insurance issuer in 
the individual market in the same manner and to the same extent as such 
provisions apply to health insurance coverage offered by a health 
insurance issuer in connection with a group health plan in the large 
group market.
    (b) Applicability date. The provisions of this section apply for 
policy years beginning on or after the applicability dates set forth in 
Sec.  146.136(i) of this subchapter. This section applies to non-

[[Page 165]]

grandfathered and grandfathered health plans as defined in Sec.  
147.140.

[78 FR 68296, Nov. 13, 2013]



Sec.  147.200  Summary of benefits and coverage and uniform glossary.

    (a) Summary of benefits and coverage--(1) In general. A group health 
plan (and its administrator as defined in section 3(16)(A) of ERISA)), 
and a health insurance issuer offering group or individual health 
insurance coverage, is required to provide a written summary of benefits 
and coverage (SBC) for each benefit package without charge to entities 
and individuals described in this paragraph (a)(1) in accordance with 
the rules of this section.
    (i) SBC provided by a group health insurance issuer to a group 
health plan--(A) Upon application. A health insurance issuer offering 
group health insurance coverage must provide the SBC to a group health 
plan (or its sponsor) upon application for health coverage, as soon as 
practicable following receipt of the application, but in no event later 
than seven business days following receipt of the application. If an SBC 
was provided before application pursuant to paragraph (a)(1)(i)(D) of 
this section (relating to SBCs upon request), this paragraph 
(a)(1)(i)(A) is deemed satisfied, provided there is no change to the 
information required to be in the SBC. However, if there has been a 
change in the information required, a new SBC that includes the changed 
information must be provided upon application pursuant to this paragraph 
(a)(1)(i)(A).
    (B) By first day of coverage (if there are changes). If there is any 
change in the information required to be in the SBC that was provided 
upon application and before the first day of coverage, the issuer must 
update and provide a current SBC to the plan (or its sponsor) no later 
than the first day of coverage.
    (C) Upon renewal, reissuance, or reenrollment. If the issuer renews 
or reissues a policy, certificate, or contract of insurance for a 
succeeding policy year, or automatically re-enrolls the policyholder or 
its participants and beneficiaries in coverage, the issuer must provide 
a new SBC as follows:
    (1) If written application is required (in either paper or 
electronic form) for renewal or reissuance, the SBC must be provided no 
later than the date the written application materials are distributed.
    (2) If renewal, reissuance, or reenrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the new 
plan or policy year; however, with respect to an insured plan, if the 
policy, certificate, or contract of insurance has not been issued or 
renewed before such 30-day period, the SBC must be provided as soon as 
practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (D) Upon request. If a group health plan (or its sponsor) requests 
an SBC or summary information about a health insurance product from a 
health insurance issuer offering group health insurance coverage, an SBC 
must be provided as soon as practicable, but in no event later than 
seven business days following receipt of the request.
    (ii) SBC provided by a group health insurance issuer and a group 
health plan to participants and beneficiaries--(A) In general. A group 
health plan (including its administrator, as defined under section 3(16) 
of ERISA), and a health insurance issuer offering group health insurance 
coverage, must provide an SBC to a participant or beneficiary (as 
defined under sections 3(7) and 3(8) of ERISA), and consistent with the 
rules of paragraph (a)(1)(iii) of this section, with respect to each 
benefit package offered by the plan or issuer for which the participant 
or beneficiary is eligible.
    (B) Upon application. The SBC must be provided as part of any 
written application materials that are distributed by the plan or issuer 
for enrollment. If the plan or issuer does not distribute written 
application materials for enrollment, the SBC must be provided no later 
than the first date on which the participant is eligible to enroll in 
coverage for the participant or any beneficiaries. If an SBC was 
provided before application pursuant to paragraph (a)(1)(ii)(F) of this 
section (relating to SBCs upon request), this paragraph

[[Page 166]]

(a)(1)(ii)(B) is deemed satisfied, provided there is no change to the 
information required to be in the SBC. However, if there has been a 
change in the information that is required to be in the SBC, a new SBC 
that includes the changed information must be provided upon application 
pursuant to this paragraph (a)(1)(ii)(B).
    (C) By first day of coverage (if there are changes). (1) If there is 
any change to the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the plan 
or issuer must update and provide a current SBC to a participant or 
beneficiary no later than the first day of coverage.
    (2) If the plan sponsor is negotiating coverage terms after an 
application has been filed and the information required to be in the SBC 
changes, the plan or issuer is not required to provide an updated SBC 
(unless an updated SBC is requested) until the first day of coverage.
    (D) Special enrollees. The plan or issuer must provide the SBC to 
special enrollees (as described in Sec.  146.117 of this subchapter) no 
later than the date by which a summary plan description is required to 
be provided under the timeframe set forth in ERISA section 104(b)(1)(A) 
and its implementing regulations, which is 90 days from enrollment.
    (E) Upon renewal, reissuance, or reenrollment. If the plan or issuer 
requires participants or beneficiaries to renew in order to maintain 
coverage (for example, for a succeeding plan year), or automatically re-
enrolls participants and beneficiaries in coverage, the plan or issuer 
must provide a new SBC, as follows:
    (1) If written application is required for renewal, reissuance, or 
reenrollment (in either paper or electronic form), the SBC must be 
provided no later than the date on which the written application 
materials are distributed.
    (2) If renewal, reissuance, or reenrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the new 
plan or policy year; however, with respect to an insured plan, if the 
policy, certificate, or contract of insurance has not been issued or 
renewed before such 30-day period, the SBC must be provided as soon as 
practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (F) Upon request. A plan or issuer must provide the SBC to 
participants or beneficiaries upon request for an SBC or summary 
information about the health coverage, as soon as practicable, but in no 
event later than seven business days following receipt of the request.
    (iii) Special rules to prevent unnecessary duplication with respect 
to group health coverage. (A) An entity required to provide an SBC under 
this paragraph (a)(1) with respect to an individual satisfies that 
requirement if another party provides the SBC, but only to the extent 
that the SBC is timely and complete in accordance with the other rules 
of this section. Therefore, for example, in the case of a group health 
plan funded through an insurance policy, the plan satisfies the 
requirement to provide an SBC with respect to an individual if the 
issuer provides a timely and complete SBC to the individual. An entity 
required to provide an SBC under this paragraph (a)(1) with respect to 
an individual that contracts with another party to provide such SBC is 
considered to satisfy the requirement to provide such SBC if:
    (1) The entity monitors performance under the contract;
    (2) If the entity has knowledge that the SBC is not being provided 
in a manner that satisfies the requirements of this section and the 
entity has all information necessary to correct the noncompliance, the 
entity corrects the noncompliance as soon as practicable; and
    (3) If the entity has knowledge the SBC is not being provided in a 
manner that satisfies the requirements of this section and the entity 
does not have all information necessary to correct the noncompliance, 
the entity communicates with participants and beneficiaries who are 
affected by the noncompliance regarding the noncompliance, and begins 
taking significant

[[Page 167]]

steps as soon as practicable to avoid future violations.
    (B) If a single SBC is provided to a participant and any 
beneficiaries at the participant's last known address, then the 
requirement to provide the SBC to the participant and any beneficiaries 
is generally satisfied. However, if a beneficiary's last known address 
is different than the participant's last known address, a separate SBC 
is required to be provided to the beneficiary at the beneficiary's last 
known address.
    (C) With respect to a group health plan that offers multiple benefit 
packages, the plan or issuer is required to provide a new SBC 
automatically to participants and beneficiaries upon renewal or 
reenrollment only with respect to the benefit package in which a 
participant or beneficiary is enrolled (or will be automatically re-
enrolled under the plan); SBCs are not required to be provided 
automatically upon renewal or reenrollment with respect to benefit 
packages in which the participant or beneficiary is not enrolled (or 
will not automatically be enrolled). However, if a participant or 
beneficiary requests an SBC with respect to another benefit package (or 
more than one other benefit package) for which the participant or 
beneficiary is eligible, the SBC (or SBCs, in the case of a request for 
SBCs relating to more than one benefit package) must be provided upon 
request as soon as practicable, but in no event later than seven 
business days following receipt of the request.
    (D) Subject to paragraph (a)(2)(ii) of this section, a plan 
administrator of a group health plan that uses two or more insurance 
products provided by separate health insurance issuers with respect to a 
single group health plan may synthesize the information into a single 
SBC or provide multiple partial SBCs provided that all the SBC include 
the content in paragraph (a)(2)(iii) of this section.
    (iv) SBC provided by a health insurance issuer offering individual 
health insurance coverage--(A) Upon application. A health insurance 
issuer offering individual health insurance coverage must provide an SBC 
to an individual covered under the policy (including every dependent) 
upon receiving an application for any health insurance policy, as soon 
as practicable following receipt of the application, but in no event 
later than seven business days following receipt of the application. If 
an SBC was provided before application pursuant to paragraph 
(a)(1)(iv)(D) of this section (relating to SBCs upon request), this 
paragraph (a)(1)(iv)(A) is deemed satisfied, provided there is no change 
to the information required to be in the SBC. However, if there has been 
a change in the information that is required to be in the SBC, a new SBC 
that includes the changed information must be provided upon application 
pursuant to this paragraph (a)(1)(iv)(A).
    (B) By first day of coverage (if there are changes). If there is any 
change in the information required to be in the SBC that was provided 
upon application and before the first day of coverage, the issuer must 
update and provide a current SBC to the individual no later than the 
first day of coverage.
    (C) Upon renewal, reissuance, or reenrollment. If the issuer renews 
or reissues a policy, certificate, or contract of insurance for a 
succeeding policy year, or automatically re-enrolls an individual (or 
dependent) covered under a policy, certificate, or contract of insurance 
into a policy, certificate, or contract of insurance under a different 
plan or product, the issuer must provide an SBC for the coverage in 
which the individual (including every dependent) will be enrolled, as 
follows:
    (1) If written application is required (in either paper or 
electronic form) for renewal, reissuance, or reenrollment, the SBC must 
be provided no later than the date on which the written application 
materials are distributed.
    (2) If renewal, reissuance, or reenrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the new 
policy year; however, if the policy, certificate, or contract of 
insurance has not been issued or renewed before such 30 day period, the 
SBC must be provided as soon as practicable but in no event later than 
seven business days after issuance of the new policy, certificate, or 
contract of insurance, or the receipt of written confirmation of intent 
to renew, whichever is earlier.

[[Page 168]]

    (D) Upon request. A health insurance issuer offering individual 
health insurance coverage must provide an SBC to any individual or 
dependent upon request for an SBC or summary information about a health 
insurance product as soon as practicable, but in no event later than 
seven business days following receipt of the request.
    (v) Special rule to prevent unnecessary duplication with respect to 
individual health insurance coverage--(A) In general. If a single SBC is 
provided to an individual and any dependents at the individual's last 
known address, then the requirement to provide the SBC to the individual 
and any dependents is generally satisfied. However, if a dependent's 
last known address is different than the individual's last known 
address, a separate SBC is required to be provided to the dependent at 
the dependents' last known address.
    (B) Student health insurance coverage. With respect to student 
health insurance coverage as defined at Sec.  147.145(a), the 
requirement to provide an SBC to an individual will be considered 
satisfied for an entity if another party provides a timely and complete 
SBC to the individual. An entity required to provide an SBC under this 
paragraph (a)(1) with respect to an individual that contracts with 
another party to provide such SBC is considered to satisfy the 
requirement to provide such SBC if:
    (1) The entity monitors performance under the contract;
    (2) If the entity has knowledge that the SBC is not being provided 
in a manner that satisfies the requirements of this section and the 
entity has all information necessary to correct the noncompliance, the 
entity corrects the noncompliance as soon as practicable; and
    (3) If the entity has knowledge the SBC is not being provided in a 
manner that satisfies the requirements of this section and the entity 
does not have all information necessary to correct the noncompliance, 
the entity communicates with covered individuals and dependents who are 
affected by the noncompliance regarding the noncompliance, and begins 
taking significant steps as soon as practicable to avoid future 
violations.
    (2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of 
this section, the SBC must include the following:
    (A) Uniform definitions of standard insurance terms and medical 
terms so that consumers may compare health coverage and understand the 
terms of (or exceptions to) their coverage, in accordance with guidance 
as specified by the Secretary;
    (B) A description of the coverage, including cost sharing, for each 
category of benefits identified by the Secretary in guidance;
    (C) The exceptions, reductions, and limitations of the coverage;
    (D) The cost-sharing provisions of the coverage, including 
deductible, coinsurance, and copayment obligations;
    (E) The renewability and continuation of coverage provisions;
    (F) Coverage examples, in accordance with the rules of paragraph 
(a)(2)(ii) of this section;
    (G) With respect to coverage beginning on or after January 1, 2014, 
a statement about whether the plan or coverage provides minimum 
essential coverage as defined under section 5000A(f) and whether the 
plan's or coverage's share of the total allowed costs of benefits 
provided under the plan or coverage meets applicable requirements;
    (H) A statement that the SBC is only a summary and that the plan 
document, policy, certificate, or contract of insurance should be 
consulted to determine the governing contractual provisions of the 
coverage;
    (I) Contact information for questions;
    (J) For issuers, an Internet web address where a copy of the actual 
individual coverage policy or group certificate of coverage can be 
reviewed and obtained;
    (K) For plans and issuers that maintain one or more networks of 
providers, an Internet address (or similar contact information) for 
obtaining a list of network providers;
    (L) For plans and issuers that use a formulary in providing 
prescription drug coverage, an Internet address (or similar contact 
information) for obtaining information on prescription drug coverage;
    (M) An Internet address for obtaining the uniform glossary, as 
described in

[[Page 169]]

paragraph (c) of this section, as well as a contact phone number to 
obtain a paper copy of the uniform glossary, and a disclosure that paper 
copies are available; and
    (N) For qualified health plans sold through an individual market 
Exchange that exclude or provide for coverage of the services described 
in Sec.  156.280(d)(1) or (2) of this subchapter, a notice of coverage 
or exclusion of such services.
    (ii) Coverage examples. The SBC must include coverage examples 
specified by the Secretary in guidance that illustrate benefits provided 
under the plan or coverage for common benefits scenarios (including 
pregnancy and serious or chronic medical conditions) in accordance with 
this paragraph (a)(2)(ii).
    (A) Number of examples. The Secretary may identify up to six 
coverage examples that may be required in an SBC.
    (B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii), a 
benefits scenario is a hypothetical situation, consisting of a sample 
treatment plan for a specified medical condition during a specific 
period of time, based on recognized clinical practice guidelines as 
defined by the National Guideline Clearinghouse, Agency for Healthcare 
Research and Quality. The Secretary will specify, in guidance, the 
assumptions, including the relevant items and services and reimbursement 
information, for each claim in the benefits scenario.
    (C) Illustration of benefit provided. For purposes of this paragraph 
(a)(2)(ii), to illustrate benefits provided under the plan or coverage 
for a particular benefits scenario, a plan or issuer simulates claims 
processing in accordance with guidance issued by the Secretary to 
generate an estimate of what an individual might expect to pay under the 
plan, policy, or benefit package. The illustration of benefits provided 
will take into account any cost sharing, excluded benefits, and other 
limitations on coverage, as specified by the Secretary in guidance.
    (iii) Coverage provided outside the United States. In lieu of 
summarizing coverage for items and services provided outside the United 
States, a plan or issuer may provide an Internet address (or similar 
contact information) for obtaining information about benefits and 
coverage provided outside the United States. In any case, the plan or 
issuer must provide an SBC in accordance with this section that 
accurately summarizes benefits and coverage available under the plan or 
coverage within the United States.
    (3) Appearance. (i) A group health plan and a health insurance 
issuer must provide an SBC in the form, and in accordance with the 
instructions for completing the SBC, that are specified by the Secretary 
in guidance. The SBC must be presented in a uniform format, use 
terminology understandable by the average plan enrollee (or, in the case 
of individual market coverage, the average individual covered under a 
health insurance policy), not exceed four double-sided pages in length, 
and not include print smaller than 12-point font. A health insurance 
issuer offering individual health insurance coverage must provide the 
SBC as a stand-alone document.
    (ii) A group health plan that utilizes two or more benefit packages 
(such as major medical coverage and a health flexible spending 
arrangement) may synthesize the information into a single SBC, or 
provide multiple SBCs.
    (4) Form. (i) An SBC provided by an issuer offering group health 
insurance coverage to a plan (or its sponsor), may be provided in paper 
form. Alternatively, the SBC may be provided electronically (such as by 
email or an Internet posting) if the following three conditions are 
satisfied--
    (A) The format is readily accessible by the plan (or its sponsor);
    (B) The SBC is provided in paper form free of charge upon request; 
and
    (C) If the electronic form is an Internet posting, the issuer timely 
advises the plan (or its sponsor) in paper form or email that the 
documents are available on the Internet and provides the Internet 
address.
    (ii) An SBC provided by a group health plan or health insurance 
issuer to a participant or beneficiary may be provided in paper form. 
Alternatively, the SBC may be provided electronically (such as by email 
or an Internet posting) if the requirements of this paragraph (a)(4)(ii) 
are met.

[[Page 170]]

    (A) With respect to participants and beneficiaries covered under the 
plan or coverage, the SBC may be provided electronically as described in 
this paragraph (a)(4)(ii)(A). However, in all cases, the plan or issuer 
must provide the SBC in paper form if paper form is requested.
    (1) In accordance with the Department of Labor's disclosure 
regulations at 29 CFR 2520.104b-1;
    (2) In connection with online enrollment or online renewal of 
coverage under the plan; or
    (3) In response to an online request made by a participant or 
beneficiary for the SBC.
    (B) With respect to participants and beneficiaries who are eligible 
but not enrolled for coverage, the SBC may be provided electronically 
if:
    (1) The format is readily accessible;
    (2) The SBC is provided in paper form free of charge upon request; 
and
    (3) In a case in which the electronic form is an Internet posting, 
the plan or issuer timely notifies the individual in paper form (such as 
a postcard) or email that the documents are available on the Internet, 
provides the Internet address, and notifies the individual that the 
documents are available in paper form upon request.
    (iii) An issuer offering individual health insurance coverage must 
provide an SBC in a manner that can reasonably be expected to provide 
actual notice in paper or electronic form.
    (A) An issuer satisfies the requirements of this paragraph 
(a)(4)(iii) if the issuer:
    (1) Hand-delivers a printed copy of the SBC to the individual or 
dependent;
    (2) Mails a printed copy of the SBC to the mailing address provided 
to the issuer by the individual or dependent;
    (3) Provides the SBC by email after obtaining the individual's or 
dependent's agreement to receive the SBC or other electronic disclosures 
by email;
    (4) Posts the SBC on the Internet and advises the individual or 
dependent in paper or electronic form, in a manner compliant with 
paragraphs (a)(4)(iii)(A)(1) through (3) of this section, that the SBC 
is available on the Internet and includes the applicable Internet 
address; or
    (5) Provides the SBC by any other method that can reasonably be 
expected to provide actual notice.
    (B) An SBC may not be provided electronically unless:
    (1) The format is readily accessible;
    (2) The SBC is placed in a location that is prominent and readily 
accessible;
    (3) The SBC is provided in an electronic form which can be 
electronically retained and printed;
    (4) The SBC is consistent with the appearance, content, and language 
requirements of this section;
    (5) The issuer notifies the individual or dependent that the SBC is 
available in paper form without charge upon request and provides it upon 
request.
    (C) Deemed compliance. A health insurance issuer offering individual 
health insurance coverage that provides the content required under 
paragraph (a)(2) of this section, as specified in guidance published by 
the Secretary, to the federal health reform Web portal described in 
Sec.  159.120 of this subchapter will be deemed to satisfy the 
requirements of paragraph (a)(1)(iv)(D) of this section with respect to 
a request for summary information about a health insurance product made 
prior to an application for coverage. However, nothing in this paragraph 
should be construed as otherwise limiting such issuer's obligations 
under this section.
    (iv) An SBC provided by a self-insured non-Federal governmental plan 
may be provided in paper form. Alternatively, the SBC may be provided 
electronically if the plan conforms to either the substance of the 
provisions in paragraph (a)(4)(ii) or (iii) of this section.
    (5) Language. A group health plan or health insurance issuer must 
provide the SBC in a culturally and linguistically appropriate manner. 
For purposes of this paragraph (a)(5), a plan or issuer is considered to 
provide the SBC in a culturally and linguistically appropriate manner if 
the thresholds and standards of Sec.  147.136(e) are met as applied to 
the SBC.
    (b) Notice of modification. If a group health plan, or health 
insurance issuer offering group or individual health insurance coverage, 
makes any material modification (as defined under section

[[Page 171]]

102 of ERISA) in any of the terms of the plan or coverage that would 
affect the content of the SBC, that is not reflected in the most 
recently provided SBC, and that occurs other than in connection with a 
renewal or reissuance of coverage, the plan or issuer must provide 
notice of the modification to enrollees (or, in the case of individual 
market coverage, an individual covered under a health insurance policy) 
not later than 60 days prior to the date on which the modification will 
become effective. The notice of modification must be provided in a form 
that is consistent with the rules of paragraph (a)(4) of this section.
    (c) Uniform glossary--(1) In general. A group health plan, and a 
health insurance issuer offering group health insurance coverage, must 
make available to participants and beneficiaries, and a health insurance 
issuer offering individual health insurance coverage must make available 
to applicants, policyholders, and covered dependents, the uniform 
glossary described in paragraph (c)(2) of this section in accordance 
with the appearance and form and manner requirements of paragraphs 
(c)(3) and (4) of this section.
    (2) Health-coverage-related terms and medical terms. The uniform 
glossary must provide uniform definitions, specified by the Secretary in 
guidance, of the following health-coverage-related terms and medical 
terms:
    (i) Allowed amount, appeal, balance billing, co-insurance, 
complications of pregnancy, co-payment, deductible, durable medical 
equipment, emergency medical condition, emergency medical 
transportation, emergency room care, emergency services, excluded 
services, grievance, habilitation services, health insurance, home 
health care, hospice services, hospitalization, hospital outpatient 
care, in-network co-insurance, in-network co-payment, medically 
necessary, network, non-preferred provider, out-of-network coinsurance, 
out-of-network co-payment, out-of-pocket limit, physician services, 
plan, preauthorization, preferred provider, premium, prescription drug 
coverage, prescription drugs, primary care physician, primary care 
provider, provider, reconstructive surgery, rehabilitation services, 
skilled nursing care, specialist, usual customary and reasonable (UCR), 
and urgent care; and
    (ii) Such other terms as the Secretary determines are important to 
define so that individuals and employers may compare and understand the 
terms of coverage and medical benefits (including any exceptions to 
those benefits), as specified in guidance.
    (3) Appearance. A group health plan, and a health insurance issuer, 
must provide the uniform glossary with the appearance specified by the 
Secretary in guidance to ensure the uniform glossary is presented in a 
uniform format and uses terminology understandable by the average plan 
enrollee (or, in the case of individual market coverage, an average 
individual covered under a health insurance policy).
    (4) Form and manner. A plan or issuer must make the uniform glossary 
described in this paragraph (c) available upon request, in either paper 
or electronic form (as requested), within seven business days after 
receipt of the request.
    (d) Preemption. For purposes of this section, the provisions of 
section 2724 of the PHS Act continue to apply with respect to preemption 
of State law. State laws that conflict with this section (including a 
state law that requires a health insurance issuer to provide an SBC that 
supplies less information than required under paragraph (a) of this 
section) are preempted.
    (e) Failure to provide. A health insurance issuer or a non-federal 
governmental health plan that willfully fails to provide information to 
a covered individual required under this section is subject to a fine of 
not more than $1,000 as adjusted annually under 45 CFR part 102 for each 
such failure. A failure with respect to each covered individual 
constitutes a separate offense for purposes of this paragraph (e). HHS 
will enforce these provisions in a manner consistent with Sec. Sec.  
150.101 through 150.465 of this subchapter.
    (f) Applicability to Medicare Advantage benefits. The requirements 
of this section do not apply to a group health plan benefit package that 
provides Medicare Advantage benefits pursuant to or 42 U.S.C. Chapter 7, 
Subchapter XVIII, Part C.

[[Page 172]]

    (g) Applicability date. (1) This section is applicable to group 
health plans and group health insurance issuers in accordance with this 
paragraph (g). (See Sec.  147.140(d), providing that this section 
applies to grandfathered health plans.)
    (i) For disclosures with respect to participants and beneficiaries 
who enroll or re-enroll through an open enrollment period (including re-
enrollees and late enrollees), this section applies beginning on the 
first day of the first open enrollment period that begins on or after 
September 1, 2015; and
    (ii) For disclosures with respect to participants and beneficiaries 
who enroll in coverage other than through an open enrollment period 
(including individuals who are newly eligible for coverage and special 
enrollees), this section applies beginning on the first day of the first 
plan year that begins on or after September 1, 2015.
    (2) For disclosures with respect to plans, this section is 
applicable to health insurance issuers beginning September 1, 2015.
    (3) For disclosures with respect individuals and covered dependents 
in the individual market, this section is applicable to health insurance 
issuers beginning with respect to SBCs issued for coverage that begins 
on or after January 1, 2016.

[80 FR 34310, June 16, 2015, as amended at 81 FR 61581, Sept. 6, 2016]



PART 148_REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE MARKET-
-Table of Contents



                      Subpart A_General Provisions

Sec.
148.101 Basis and purpose.
148.102 Scope and applicability date.

 Subpart B_Requirements Relating to Access and Renewability of Coverage

148.120 Guaranteed availability of individual health insurance coverage 
          to certain individuals with prior group coverage.
148.122 Guaranteed renewability of individual health insurance coverage.
148.124 Certification and disclosure of coverage.
148.126 Determination of an eligible individual.
148.128 State flexibility in individual market reforms--alternative 
          mechanisms.

               Subpart C_Requirements Related to Benefits

148.170 Standards relating to benefits for mothers and newborns.
148.180 Prohibition of discrimination based on genetic information.

                 Subpart D_Preemption; Excepted Benefits

148.210 Preemption.
148.220 Excepted benefits.

  Subpart E_Grants to States for Operation of Qualified High Risk Pools

148.306 Basis and scope.
148.308 Definitions.
148.310 Eligibility requirements for a grant.
148.312 Amount of grant payment.
148.314 Periods during which eligible States may apply for a grant.
148.316 Grant application instructions.
148.318 Grant application review.
148.320 Grant awards.

    Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-11 300gg-91, and 
300-gg92, as amended.

    Source: 62 FR 16995, Apr. 8, 1997, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  148.101  Basis and purpose.

    This part implements sections 2741 through 2763 and 2791 and 2792 of 
the PHS Act. Its purpose is to guarantee the renewability of all 
coverage in the individual market. It also provides certain protections 
for mothers and newborns with respect to coverage for hospital stays in 
connection with childbirth and protects all individuals and family 
members who have, or seek, individual health insurance coverage from 
discrimination based on genetic information.

[79 FR 30340, May 27, 2014]



Sec.  148.102  Scope and applicability date.

    (a) Scope and applicability. (1) Individual health insurance 
coverage includes all health insurance coverage (as defined in Sec.  
144.103 of this subchapter) that is neither health insurance coverage 
sold in connection with an employment-related group health plan, nor 
short-term, limited-duration

[[Page 173]]

coverage as defined in Sec.  144.103 of this subchapter.
    (2) The requirements that pertain to guaranteed renewability for all 
individuals, to protections for mothers and newborns with respect to 
hospital stays in connection with childbirth, and to protections against 
discrimination based on genetic information apply to all issuers of 
individual health insurance coverage in the State.
    (b) Applicability date. Except as provided in Sec.  148.124 
(certificate of creditable coverage), Sec.  148.170 (standards relating 
to benefits for mothers and newborns), and Sec.  148.180 (prohibition of 
health discrimination based on genetic information), the requirements of 
this part apply to health insurance coverage offered, sold, issued, 
renewed, in effect, or operated in the individual market after June 30, 
1997. Notwithstanding the previous sentence, the definition of ``short-
term, limited-duration insurance'' in Sec.  144.103 of this subchapter 
is applicable October 2, 2018.

[79 FR 30340, May 27, 2014, as amended at 81 FR 75327, Oct. 31, 2016; 83 
FR 38243, Aug. 3, 2018]



 Subpart B_Requirements Relating to Access and Renewability of Coverage



Sec.  148.120  Guaranteed availability of individual health insurance
coverage to certain individuals with prior group coverage.

    The rules for guaranteeing the availability of individual health 
insurance coverage to certain eligible individuals with prior group 
coverage have been superseded by the requirements of Sec.  147.104 of 
this subchapter, which set forth Federal requirements for guaranteed 
availability of coverage in the group and individual markets.

[79 FR 30340, May 27, 2014]



Sec.  148.122  Guaranteed renewability of individual health insurance
coverage.

    (a) Applicability. This section applies to non-grandfathered and 
grandfathered health plans (within the meaning of Sec.  147.140 of this 
subchapter) that are individual health insurance coverage. See also 
Sec.  147.106 of this subchapter for requirements relating to guaranteed 
renewability of coverage with respect to non-grandfathered health plans.
    (b) General rules. (1) Except as provided in paragraphs (c) through 
(g) of this section, an issuer must renew or continue in force the 
coverage at the option of the individual.
    (2) Medicare entitlement or enrollment is not a basis to nonrenew an 
individual's health insurance coverage in the individual market under 
the same policy or contract of insurance.
    (c) Exceptions to renewing coverage. An issuer may nonrenew or 
discontinue health insurance coverage of an individual in the individual 
market based only on one or more of the following:
    (1) Nonpayment of premiums. The individual has failed to pay 
premiums or contributions in accordance with the terms of the health 
insurance coverage, including any timeliness requirements.
    (2) Fraud. The individual has performed an act or practice that 
constitutes fraud or made an intentional misrepresentation of material 
fact under the terms of the coverage.
    (3) Termination of product. The issuer is ceasing to offer coverage 
in the market in accordance with paragraph (d) or (e) of this section 
and applicable State law.
    (4) Movement outside the service area. For network plans, the 
individual no longer resides, lives, or works in the service area of the 
issuer, or area for which the issuer is authorized to do business, but 
only if coverage is terminated uniformly without regard to any health 
status-related factor of covered individuals; provided the issuer 
provides notice in accordance with the requirements of paragraph (d)(1) 
of this section.
    (5) Association membership ceases. For coverage made available in 
the individual market only through one or more bona fide associations, 
the individual's membership in the association ceases, but only if the 
coverage is terminated uniformly without regard to any health status-
related factor of covered individuals.

[[Page 174]]

    (d) Discontinuing a particular type of coverage. An issuer may 
discontinue offering a particular type of health insurance coverage 
offered in the individual market only if it meets the following 
requirements:
    (1) Provides notice in writing, in a form and manner specified by 
the Secretary, to each individual provided coverage of that type of 
health insurance at least 90 calendar days before the date the coverage 
will be discontinued.
    (2) Offers to each covered individual, on a guaranteed issue basis, 
the option to purchase any other individual health insurance coverage 
currently being offered by the issuer for individuals in that market.
    (3) Acts uniformly without regard to any health status-related 
factor of covered individuals or dependents of covered individuals who 
may become eligible for coverage.
    (e) Discontinuing all coverage. An issuer may discontinue offering 
all health insurance coverage in the individual market in a State only 
if it meets the following requirements.
    (1) Provides notice in writing to the applicable State authority and 
to each individual of the discontinuation at least 180 days before the 
date the coverage will expire.
    (2) Discontinues and does not renew all health insurance policies it 
issues or delivers for issuance in the State in the individual market.
    (3) Acts uniformly without regard to any health status-related 
factor of covered individuals or dependents of covered individuals who 
may become eligible for coverage.
    (4) For purposes of this paragraph (e), subject to applicable State 
law, an issuer will not be considered to have discontinued offering all 
health insurance coverage in a market in a State if--
    (i) The issuer (in this paragraph referred to as the initial issuer) 
or, if the issuer is a member of a controlled group, any other issuer 
that is a member of such controlled group, offers and makes available in 
the applicable market in the State at least one product that is 
considered in accordance with Sec.  144.103 of this subchapter to be the 
same product as a product the initial issuer had been offering in such 
market in such State; or
    (ii) The issuer--
    (A) Offers and makes available at least one product (in paragraphs 
(e)(4)(ii)(A) through (C) of this section referred to as the new 
product) in the applicable market in the State, even if such product is 
not considered in accordance with Sec.  144.103 of this subchapter to be 
the same product as a product the issuer had been offering in the 
applicable market in the State (in paragraphs (e)(4)(ii)(A) through (C) 
of this section referred to as the discontinued product);
    (B) Subjects such new product or products to the applicable process 
and requirements established under part 154 of this title as if such 
process and requirements applied with respect to that product or 
products, to the extent such process and requirements are otherwise 
applicable to coverage of the same type and in the same market; and
    (C) Reasonably identifies the discontinued product or products that 
correspond to the new product or products for purposes of the process 
and requirements applied pursuant to paragraph (e)(4)(ii)(B) of this 
section.
    (5) For purposes of this section, the term controlled group means a 
group of two or more persons that is treated as a single employer under 
sections 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code of 
1986, as amended, or a narrower group as may be provided by applicable 
State law.
    (f) Prohibition on market reentry. An issuer who elects to 
discontinue offering all health insurance coverage under paragraph (e) 
of this section may not issue coverage in the market and State involved 
during the 5-year period beginning on the date of discontinuation of the 
last coverage not renewed.
    (g) Exception for uniform modification of coverage. (1) An issuer 
may, only at the time of coverage renewal, modify the health insurance 
coverage for a product offered in the individual market if the 
modification is consistent with State law and is effective uniformly for 
all individuals with that product.

[[Page 175]]

    (2) For purposes of paragraph (g) of this section, modifications 
made uniformly and solely pursuant to applicable Federal or State 
requirements are considered a uniform modification of coverage if:
    (i) The modification is made within a reasonable time period after 
the imposition or modification of the Federal or State requirement; and
    (ii) The modification is directly related to the imposition or 
modification of the Federal or State requirement.
    (3) For purposes of paragraph (g) of this section, other types of 
modifications made uniformly are considered a uniform modification of 
coverage if the health insurance coverage for the product meets all of 
the following criteria:
    (i) The product is offered by the same health insurance issuer 
(within the meaning of section 2791(b)(2) of the PHS Act), or if the 
issuer that is a member of a controlled group (as described in paragraph 
(e)(5) of this section), any other health insurance issuer that is a 
member of such controlled group;
    (ii) The product is offered as the same product network type (for 
example, health maintenance organization, preferred provider 
organization, exclusive provider organization, point of service, or 
indemnity);
    (iii) The product continues to cover at least a majority of the same 
service area;
    (iv) Within the product, each plan has the same cost-sharing 
structure as before the modification, except for any variation in cost 
sharing solely related to changes in cost and utilization of medical 
care, or to maintain the same metal tier level described in sections 
1302(d) and (e) of the Affordable Care Act; and
    (v) The product provides the same covered benefits, except for any 
changes in benefits that cumulatively impact the rate for any plan 
within the product within an allowable variation of 2 percentage points (not including changes pursuant to 
applicable Federal or State requirements).
    (4) A State may only broaden the standards in paragraphs (g)(3)(iii) 
and (iv) of this section.
    (h) Application to coverage offered only through associations. In 
the case of health insurance coverage that is made available by a health 
insurance issuer in the individual market only through one or more 
associations, any reference in this section to an ``individual'' is 
deemed to include a reference to the association of which the individual 
is a member.
    (i) Notice of renewal of coverage. If an issuer is renewing 
grandfathered coverage as described in paragraph (b) of this section, or 
uniformly modifying grandfathered coverage as described in paragraph (g) 
of this section, the issuer must provide to each individual written 
notice of the renewal at least 60 calendar days before the date the 
coverage will be renewed in a form and manner specified by the 
Secretary.

(Approved by the Office of Management and Budget under control number 
0938-0703)

[62 FR 16998, Apr. 8, 1997; 62 FR 31696, June 10, 1997, as amended at 62 
FR 35906, July 2, 1997; 79 FR 30340, May 27, 2014; 79 FR 42986, July 24, 
2014; 79 FR 53004, Sept. 5, 2014; 81 FR 94174, Dec. 22, 2016; 84 FR 
17561, Apr. 25, 2019]



Sec.  148.124  Certification and disclosure of coverage.

    (a) General rule. The rules for providing certificates of creditable 
coverage and demonstrating creditable coverage have been superseded by 
the prohibition on preexisting condition exclusions. See Sec.  147.108 
of this subchapter for rules prohibiting the imposition of a preexisting 
condition exclusion.
    (b) Applicability. The provisions of this section apply beginning 
December 31, 2014.

[79 FR 30341, May 27, 2014]



Sec.  148.126  Determination of an eligible individual.

    The rules for guaranteeing the availability of individual health 
insurance coverage to certain eligible individuals with prior group 
coverage have been superseded by the requirements of Sec.  147.104 of 
this subchapter, which set forth Federal requirements for guaranteed 
availability of coverage in the group and individual markets.

[79 FR 30341, May 27, 2014]

[[Page 176]]



Sec.  148.128  State flexibility in individual market reforms-
-alternative mechanisms.

    The rules for a State to implement an acceptable alternative 
mechanism for purposes of guaranteeing the availability of individual 
health insurance coverage to certain eligible individuals with prior 
group coverage have been superseded by the requirements of Sec.  147.104 
of this subchapter, which set forth Federal requirements for guaranteed 
availability of coverage in the group and individual markets.

[79 FR 30341, May 27, 2014]



               Subpart C_Requirements Related to Benefits



Sec.  148.170  Standards relating to benefits for mothers and newborns.

    (a) Hospital length of stay--(1) General rule. Except as provided in 
paragraph (a)(5) of this section, an issuer offering health insurance 
coverage in the individual market that provides benefits for a hospital 
length of stay in connection with childbirth for a mother or her newborn 
may not restrict benefits for the stay to less than--
    (i) 48 hours following a vaginal delivery; or
    (ii) 96 hours following a delivery by cesarean section.
    (2) When stay begins--(i) Delivery in a hospital. If delivery occurs 
in a hospital, the hospital length of stay for the mother or newborn 
child begins at the time of delivery (or in the case of multiple births, 
at the time of the last delivery).
    (ii) Delivery outside a hospital. If delivery occurs outside a 
hospital, the hospital length of stay begins at the time the mother or 
newborn is admitted as a hospital inpatient in connection with 
childbirth. The determination of whether an admission is in connection 
with childbirth is a medical decision to be made by the attending 
provider.
    (3) Examples. The rules of paragraphs (a)(1) and (2) of this section 
are illustrated by the following examples. In each example, the issuer 
provides benefits for hospital lengths of stay in connection with 
childbirth and is subject to the requirements of this section, as 
follows:

    Example 1. (i) Facts. A pregnant woman covered under a policy issued 
in the individual market goes into labor and is admitted to the hospital 
at 10 p.m. on June 11. She gives birth by vaginal delivery at 6 a.m. on 
June 12.
    (ii) Conclusion. In this Example 1, the 48-hour period described in 
paragraph (a)(1)(i) of this section ends at 6 a.m. on June 14.
    Example 2. (i) Facts. A woman covered under a policy issued in the 
individual market gives birth at home by vaginal delivery. After the 
delivery, the woman begins bleeding excessively in connection with the 
childbirth and is admitted to the hospital for treatment of the 
excessive bleeding at 7 p.m. on October 1.
    (ii) Conclusion. In this Example 2, the 48-hour period described in 
paragraph (a)(1)(i) of this section ends at 7 p.m. on October 3.
    Example 3. (i) Facts. A woman covered under a policy issued in the 
individual market gives birth by vaginal delivery at home. The child 
later develops pneumonia and is admitted to the hospital. The attending 
provider determines that the admission is not in connection with 
childbirth.
    (ii) Conclusion. In this Example 3, the hospital length-of-stay 
requirements of this section do not apply to the child's admission to 
the hospital because the admission is not in connection with childbirth.

    (4) Authorization not required--(i) In general. An issuer is 
prohibited from requiring that a physician or other health care provider 
obtain authorization from the issuer for prescribing the hospital length 
of stay specified in paragraph (a)(1) of this section. (See also 
paragraphs (b)(2) and (c)(3) of this section for rules and examples 
regarding other authorization and certain notice requirements.)
    (ii) Example. The rule of this paragraph (a)(4) is illustrated by 
the following example:

    Example. (i) Facts. In the case of a delivery by cesarean section, 
an issuer subject to the requirements of this section automatically 
provides benefits for any hospital length of stay of up to 72 hours. For 
any longer stay, the issuer requires an attending provider to complete a 
certificate of medical necessity. The issuer then makes a determination, 
based on the certificate of medical necessity, whether a longer stay is 
medically necessary.
    (ii) Conclusion. In this Example, the requirement that an attending 
provider complete a certificate of medical necessity to obtain 
authorization for the period between 72 hours and 96 hours following a 
delivery by cesarean section is prohibited by this paragraph (a)(4).


[[Page 177]]


    (5) Exceptions--(i) Discharge of mother. If a decision to discharge 
a mother earlier than the period specified in paragraph (a)(1) of this 
section is made by an attending provider, in consultation with the 
mother, the requirements of paragraph (a)(1) of this section do not 
apply for any period after the discharge.
    (ii) Discharge of newborn. If a decision to discharge a newborn 
child earlier than the period specified in paragraph (a)(1) of this 
section is made by an attending provider, in consultation with the 
mother (or the newborn's authorized representative), the requirements of 
paragraph (a)(1) of this section do not apply for any period after the 
discharge.
    (iii) Attending provider defined. For purposes of this section, 
attending provider means an individual who is licensed under applicable 
state law to provide maternity or pediatric care and who is directly 
responsible for providing maternity or pediatric care to a mother or 
newborn child. Therefore, an issuer, plan, hospital, or managed care 
organization is not an attending provider.
    (iv) Example. The rules of this paragraph (a)(5) are illustrated by 
the following example:

    Example. (i) Facts. A pregnant woman covered under a policy offered 
by an issuer subject to the requirements of this section goes into labor 
and is admitted to a hospital. She gives birth by cesarean section. On 
the third day after the delivery, the attending provider for the mother 
consults with the mother, and the attending provider for the newborn 
consults with the mother regarding the newborn. The attending providers 
authorize the early discharge of both the mother and the newborn. Both 
are discharged approximately 72 hours after the delivery. The issuer 
pays for the 72-hour hospital stays.
    (ii) Conclusion. In this Example, the requirements of this paragraph 
(a) have been satisfied with respect to the mother and the newborn. If 
either is readmitted, the hospital stay for the readmission is not 
subject to this section.

    (b) Prohibitions--(1) With respect to mothers--(i) In general. An 
issuer subject to the requirements of this section may not--
    (A) Deny a mother or her newborn child eligibility or continued 
eligibility to enroll in or renew coverage solely to avoid the 
requirements of this section; or
    (B) Provide payments (including payments-in-kind) or rebates to a 
mother to encourage her to accept less than the minimum protections 
available under this section.
    (ii) Examples. The rules of this paragraph (b)(1) are illustrated by 
the following examples. In each example, the issuer is subject to the 
requirements of this section, as follows:

    Example 1. (i) Facts. An issuer provides benefits for at least a 48-
hour hospital length of stay following a vaginal delivery. If a mother 
and newborn covered under a policy issued in the individual market are 
discharged within 24 hours after the delivery, the issuer will waive the 
copayment and deductible.
    (ii) Conclusion. In this Example 1, because waiver of the copayment 
and deductible is in the nature of a rebate that the mother would not 
receive if she and her newborn remained in the hospital, it is 
prohibited by this paragraph (b)(1). (In addition, the issuer violates 
paragraph (b)(2) of this section because, in effect, no copayment or 
deductible is required for the first portion of the stay and a double 
copayment and a deductible are required for the second portion of the 
stay.)
    Example 2. (i) Facts. An issuer provides benefits for at least a 48-
hour hospital length of stay following a vaginal delivery. In the event 
that a mother and her newborn are discharged earlier than 48 hours and 
the discharges occur after consultation with the mother in accordance 
with the requirements of paragraph (a)(5) of this section, the issuer 
provides for a follow-up visit by a nurse within 48 hours after the 
discharges to provide certain services that the mother and her newborn 
would otherwise receive in the hospital.
    (ii) Conclusion. In this Example 2, because the follow-up visit does 
not provide any services beyond what the mother and her newborn would 
receive in the hospital, coverage for the follow-up visit is not 
prohibited by this paragraph (b)(1).

    (2) With respect to benefit restrictions--(i) In general. Subject to 
paragraph (c)(3) of this section, an issuer may not restrict the 
benefits for any portion of a hospital length of stay specified in 
paragraph (a) of this section in a manner that is less favorable than 
the benefits provided for any preceding portion of the stay.
    (ii) Example. The rules of this paragraph (b)(2) are illustrated by 
the following example:


[[Page 178]]


    Example. (i) Facts. An issuer subject to the requirements of this 
section provides benefits for hospital lengths of stay in connection 
with childbirth. In the case of a delivery by cesarean section, the 
issuer automatically pays for the first 48 hours. With respect to each 
succeeding 24-hour period, the covered individual must call the issuer 
to obtain precertification from a utilization reviewer, who determines 
if an additional 24-hour period is medically necessary. If this approval 
is not obtained, the issuer will not provide benefits for any succeeding 
24-hour period.
    (ii) Conclusion. In this Example, the requirement to obtain 
precertification for the two 24-hour periods immediately following the 
initial 48-hour stay is prohibited by this paragraph (b)(2) because 
benefits for the latter part of the stay are restricted in a manner that 
is less favorable than benefits for a preceding portion of the stay. 
(However, this section does not prohibit an issuer from requiring 
precertification for any period after the first 96 hours.) In addition, 
the requirement to obtain precertification from the issuer based on 
medical necessity for a hospital length of stay within the 96-hour 
period would also violate paragraph (a) of this section.

    (3) With respect to attending providers. An issuer may not directly 
or indirectly--
    (i) Penalize (for example, take disciplinary action against or 
retaliate against), or otherwise reduce or limit the compensation of, an 
attending provider because the provider furnished care to a covered 
individual in accordance with this section; or
    (ii) Provide monetary or other incentives to an attending provider 
to induce the provider to furnish care to a covered individual in a 
manner inconsistent with this section, including providing any incentive 
that could induce an attending provider to discharge a mother or newborn 
earlier than 48 hours (or 96 hours) after delivery.
    (c) Construction. With respect to this section, the following rules 
of construction apply:
    (1) Hospital stays not mandatory. This section does not require a 
mother to--
    (i) Give birth in a hospital; or
    (ii) Stay in the hospital for a fixed period of time following the 
birth of her child.
    (2) Hospital stay benefits not mandated. This section does not apply 
to any issuer that does not provide benefits for hospital lengths of 
stay in connection with childbirth for a mother or her newborn child.
    (3) Cost-sharing rules--(i) In general. This section does not 
prevent an issuer from imposing deductibles, coinsurance, or other cost-
sharing in relation to benefits for hospital lengths of stay in 
connection with childbirth for a mother or a newborn under the coverage, 
except that the coinsurance or other cost-sharing for any portion of the 
hospital length of stay specified in paragraph (a) of this section may 
not be greater than that for any preceding portion of the stay.
    (ii) Examples. The rules of this paragraph (c)(3) are illustrated by 
the following examples. In each example, the issuer is subject to the 
requirements of this section, as follows:

    Example 1. (i) Facts. An issuer provides benefits for at least a 48-
hour hospital length of stay in connection with vaginal deliveries. The 
issuer covers 80 percent of the cost of the stay for the first 24-hour 
period and 50 percent of the cost of the stay for the second 24-hour 
period. Thus, the coinsurance paid by the patient increases from 20 
percent to 50 percent after 24 hours.
    (ii) Conclusion. In this Example 1, the issuer violates the rules of 
this paragraph (c)(3) because coinsurance for the second 24-hour period 
of the 48-hour stay is greater than that for the preceding portion of 
the stay. (In addition, the issuer also violates the similar rule in 
paragraph (b)(2) of this section.)
    Example 2. (i) Facts. An issuer generally covers 70 percent of the 
cost of a hospital length of stay in connection with childbirth. 
However, the issuer will cover 80 percent of the cost of the stay if the 
covered individual notifies the issuer of the pregnancy in advance of 
admission and uses whatever hospital the issuer may designate.
    (ii) Conclusion. In this Example 2, the issuer does not violate the 
rules of this paragraph (c)(3) because the level of benefits provided 
(70 percent or 80 percent) is consistent throughout the 48-hour (or 96-
hour) hospital length of stay required under paragraph (a) of this 
section. (In addition, the issuer does not violate the rules in 
paragraph (a)(4) or (b)(2) of this section.)

    (4) Compensation of attending provider. This section does not 
prevent an issuer from negotiating with an attending provider the level 
and type of compensation for care furnished in accordance with this 
section (including paragraph (b) of this section).
    (5) Applicability. This section applies to all health insurance 
coverage issued

[[Page 179]]

in the individual market, and is not limited in its application to 
coverage that is provided to eligible individuals as defined in section 
2741(b) of the PHS Act.
    (d) Notice requirement. Except as provided in paragraph (d)(4) of 
this section, an issuer offering health insurance in the individual 
market must meet the following requirements with respect to benefits for 
hospital lengths of stay in connection with childbirth:
    (1) Required statement. The insurance contract must disclose 
information that notifies covered individuals of their rights under this 
section.
    (2) Disclosure notice. To meet the disclosure requirements set forth 
in paragraph (d)(1) of this section, the following disclosure notice 
must be used:

 Statement of Rights Under the Newborns' and Mothers' Health Protection 
                                   Act

    Under federal law, health insurance issuers generally may not 
restrict benefits for any hospital length of stay in connection with 
childbirth for the mother or newborn child to less than 48 hours 
following a vaginal delivery, or less than 96 hours following a delivery 
by cesarean section. However, the issuer may pay for a shorter stay if 
the attending provider (e.g. , your physician, nurse midwife, or 
physician assistant), after consultation with the mother, discharges the 
mother or newborn earlier.
    Also, under federal law, issuers may not set the level of benefits 
or out-of-pocket costs so that any later portion of the 48-hour (or 96-
hour) stay is treated in a manner less favorable to the mother or 
newborn than any earlier portion of the stay.
    In addition, an issuer may not, under federal law, require that a 
physician or other health care provider obtain authorization for 
prescribing a length of stay of up to 48 hours (or 96 hours). However, 
to use certain providers or facilities, or to reduce your out-of-pocket 
costs, you may be required to obtain precertification. For information 
on precertification, contact your issuer.

    (3) Timing of disclosure. The disclosure notice in paragraph (d)(2) 
of this section shall be furnished to the covered individuals in the 
form of a copy of the contract, or a rider (or equivalent amendment to 
the contract) no later than December 19, 2008. To the extent an issuer 
has already provided the disclosure notice in paragraph (d)(2) of this 
section to covered individuals, it need not provide another such notice 
by December 19, 2008.
    (4) Exception. The requirements of this paragraph (d) do not apply 
with respect to coverage regulated under a state law described in 
paragraph (e) of this section.
    (e) Applicability in certain states--(1) Health insurance coverage. 
The requirements of section 2751 of the PHS Act and this section do not 
apply with respect to health insurance coverage in the individual market 
if there is a state law regulating the coverage that meets any of the 
following criteria:
    (i) The state law requires the coverage to provide for at least a 
48-hour hospital length of stay following a vaginal delivery and at 
least a 96-hour hospital length of stay following a delivery by cesarean 
section.
    (ii) The state law requires the coverage to provide for maternity 
and pediatric care in accordance with guidelines that relate to care 
following childbirth established by the American College of 
Obstetricians and Gynecologists, the American Academy of Pediatrics, or 
any other established professional medical association.
    (iii) The state law requires, in connection with the coverage for 
maternity care, that the hospital length of stay for such care is left 
to the decision of (or is required to be made by) the attending provider 
in consultation with the mother. State laws that require the decision to 
be made by the attending provider with the consent of the mother satisfy 
the criterion of this paragraph (e)(1)(iii).
    (2) Relation to section 2762(a) of the PHS Act. The preemption 
provisions contained in section 2762(a) of the PHS Act and Sec.  
148.210(b) do not supersede a state law described in paragraph (e)(1) of 
this section.
    (f) Applicability date. Section 2751 of the PHS Act applies to 
health insurance coverage offered, sold, issued, renewed, in effect, or 
operated in the individual market on or after January 1, 1998. This 
section applies to health insurance coverage offered, sold, issued, 
renewed, in effect, or operated in the individual market on or after 
January 1, 2009.

[73 FR 62427, Oct. 20, 2008]

[[Page 180]]



Sec.  148.180  Prohibition of discrimination based on genetic information.

    (a) Definitions. For purposes of this section, the following 
definitions as set forth in Sec.  146.122 of this subchapter pertain to 
health insurance issuers in the individual market to the extent that 
those definitions are not inconsistent with respect to health insurance 
coverage offered, sold, issued, renewed, in effect or operated in the 
individual market:
    Collect has the meaning set forth at Sec.  146.122(a).
    Family member has the meaning set forth at Sec.  146.122(a).
    Genetic information has the meaning set forth at Sec.  146.122(a).
    Genetic services has the meaning set forth at Sec.  146.122(a).
    Genetic test has the meaning set forth at Sec.  146.122(a).
    Manifestation or manifested has the meaning set forth at Sec.  
146.122(a).
    Preexisting condition exclusion has the meaning set forth at Sec.  
144.103.
    Underwriting purposes has the meaning set forth at Sec.  
148.180(f)(1).
    (b) Prohibition on genetic information as a condition of 
eligibility--(1) In general. An issuer offering health insurance 
coverage in the individual market may not establish rules for the 
eligibility (including continued eligibility) of any individual to 
enroll in individual health insurance coverage based on genetic 
information.
    (2) Rule of construction. Nothing in paragraph (b)(1) of this 
section precludes an issuer from establishing rules for eligibility for 
an individual to enroll in individual health insurance coverage based on 
the manifestation of a disease or disorder in that individual, or in a 
family member of that individual when the family member is covered under 
the policy that covers the individual.
    (3) Examples. The rules of this paragraph (b) are illustrated by the 
following examples:

    Example 1. (i) Facts. A State implements the HIPAA guaranteed 
availability requirement in the individual health insurance market in 
accordance with Sec.  148.120. Individual A and his spouse S are not 
``eligible individuals'' as that term is defined at Sec.  148.103 and, 
therefore, they are not entitled to obtain individual health insurance 
coverage on a guaranteed available basis. They apply for individual 
coverage with Issuer M. As part of the application for coverage, M 
receives health information about A and S. Although A has no known 
medical conditions, S has high blood pressure. M declines to offer 
coverage to S.
    (ii) Conclusion. In this Example 1, M permissibly may decline to 
offer coverage to S because S has a manifested disorder (high blood 
pressure) that makes her ineligible for coverage under the policy's 
rules for eligibility.
    Example 2. (i) Facts. Same facts as Example 1, except that S does 
not have high blood pressure or any other known medical condition. The 
only health information relevant to S that M receives in the application 
indicates that both of S's parents are overweight and have high blood 
pressure. M declines to offer coverage to S.
    (ii) Conclusion. In this Example 2, M cannot decline to offer 
coverage to S because S does not have a manifested disease or disorder. 
The only health information M has that relates to her pertains to a 
manifested disease or disorder of family members, which as family 
medical history constitutes genetic information with respect to S. If M 
denies eligibility to S based on genetic information, the denial will 
violate this paragraph (b).

    (c) Prohibition on genetic information in setting premium rates--(1) 
In general. An issuer offering health insurance coverage in the 
individual market must not adjust premium amounts for an individual on 
the basis of genetic information regarding the individual or a family 
member of the individual.
    (2) Rule of construction. (i) Nothing in paragraph (c)(1) of this 
section precludes an issuer from adjusting premium amounts for an 
individual on the basis of a manifestation of a disease or disorder in 
that individual, or on the basis of a manifestation of a disease or 
disorder in a family member of that individual when the family member is 
covered under the policy that covers the individual.
    (ii) The manifestation of a disease or disorder in one individual 
cannot also be used as genetic information about other individuals 
covered under the policy issued to that individual and to further 
increase premium amounts.
    (3) Examples. The rules of this paragraph (c) are illustrated by the 
following examples:

    Example 1. (i) Facts. Individual B is covered under an individual 
health insurance policy through Issuer N. Every other policy year, 
before renewal, N requires policyholders to

[[Page 181]]

submit updated health information before the policy renewal date for 
purposes of determining an appropriate premium, in excess of any 
increases due to inflation, based on the policyholders' health status. B 
complies with that requirement. During the past year, B's blood glucose 
levels have increased significantly. N increases its premium for 
renewing B's policy to account for N's increased risk associated with 
B's elevated blood glucose levels.
    (ii) Conclusion. In this Example 1, N is permitted to increase the 
premium for B's policy on the basis of a manifested disorder (elevated 
blood glucose) in B.
    Example 2. (i) Facts. Same facts as Example 1, except that B's blood 
glucose levels have not increased and are well within the normal range. 
In providing updated health information to N, B indicates that both his 
mother and sister are being treated for adult onset diabetes mellitus 
(Type 2 diabetes). B provides this information voluntarily and not in 
response to a specific request for family medical history or other 
genetic information. N increases B's premium to account for B's genetic 
predisposition to develop Type 2 diabetes in the future.
    (ii) Conclusion. In this Example 2, N cannot increase B's premium on 
the basis of B's family medical history of Type 2 diabetes, which is 
genetic information with respect to B. Since there is no manifestation 
of the disease in B at this point in time, N cannot increase B's 
premium.

    (d) Prohibition on genetic information as preexisting condition--(1) 
In general. An issuer offering health insurance coverage in the 
individual market may not, on the basis of genetic information, impose 
any preexisting condition exclusion with respect to that coverage.
    (2) Rule of construction. Nothing in paragraph (d)(1) of this 
section precludes an issuer from imposing any preexisting condition 
exclusion for an individual with respect to health insurance coverage on 
the basis of a manifestation of a disease or disorder in that 
individual.
    (3) Examples: The rules of this paragraph (d) are illustrated by the 
following examples:

    Example 1. (i) Facts. Individual C has encountered delays in 
receiving payment from the issuer of his individual health insurance 
policy for covered services. He decides to switch carriers and applies 
for an individual health insurance policy through Issuer O. C is 
generally in good health, but has arthritis for which he has received 
medical treatment. O offers C an individual policy that excludes 
coverage for a 12-month period for any services related to C's 
arthritis.
    (ii) Conclusion. In this Example 1, O is permitted to impose a 
preexisting condition exclusion with respect to C because C has a 
manifested disease (arthritis).
    Example 2. (i) Facts. Individual D applies for individual health 
insurance coverage through Issuer P. D has no known medical conditions. 
However, in response to P's request for medical information about D, P 
receives information from D's physician that indicates that both of D's 
parents have adult onset diabetes mellitus (Type 2 diabetes). P offers D 
an individual policy with a rider that permanently excludes coverage for 
any treatment related to diabetes that D may receive while covered by 
the policy, based on the fact that both of D's parents have the disease.
    (ii) Conclusion. In this Example 2, the rider violates this 
paragraph (d) because the preexisting condition exclusion is based on 
genetic information with respect to D (family medical history of Type 2 
diabetes).

    (e) Limitation on requesting or requiring genetic testing--(1) 
General rule. Except as otherwise provided in this paragraph (e), an 
issuer offering health insurance coverage in the individual market must 
not request or require an individual or a family member of the 
individual to undergo a genetic test.
    (2) Health care professional may recommend a genetic test. Nothing 
in paragraph (e)(1) of this section limits the authority of a health 
care professional who is providing health care services to an individual 
to request that the individual undergo a genetic test.
    (3) Examples. The rules of paragraphs (e)(1) and (e)(2) of this 
section are illustrated by the following examples:

    Example 1. (i) Facts. Individual E goes to a physician for a routine 
physical examination. The physician reviews E's family medical history, 
and E informs the physician that E's mother has been diagnosed with 
Huntington's Disease. The physician advises E that Huntington's Disease 
is hereditary, and recommends that E undergo a genetic test.
    (ii) Conclusion. In this Example 1, the physician is a health care 
professional who is providing health care services to E. Therefore, the 
physician's recommendation that E undergo the genetic test does not 
violate this paragraph (e).
    Example 2. (i) Facts. Individual F is covered by a health 
maintenance organization (HMO). F is a child being treated for leukemia. 
F's physician, who is employed by the HMO, is considering a treatment 
plan that

[[Page 182]]

includes six-mercaptopurine, a drug for treating leukemia in most 
children. However, the drug could be fatal if taken by a small 
percentage of children with a particular gene variant. F's physician 
recommends that F undergo a genetic test to detect this variant before 
proceeding with this course of treatment.
    (ii) Conclusion. In this Example 2, even though the physician is 
employed by the HMO, the physician is nonetheless a health care 
professional who is providing health care services to F. Therefore, the 
physician's recommendation that F undergo the genetic test does not 
violate this paragraph (e).

    (4) Determination regarding payment--(i) In general. As provided in 
this paragraph (e)(4), nothing in paragraph (e)(1) of this section 
precludes an issuer offering health insurance in the individual market 
from obtaining and using the results of a genetic test in making a 
determination regarding payment. For this purpose, ``payment'' has the 
meaning given such term in Sec.  164.501 of this subtitle of the privacy 
regulations issued under the Health Insurance Portability and 
Accountability Act. Thus, if an issuer conditions payment for an item or 
service based on its medical appropriateness and the medical 
appropriateness of the item or service depends on a covered individual's 
genetic makeup, the issuer is permitted to condition payment on the 
outcome of a genetic test, and may refuse payment if the covered 
individual does not undergo the genetic test.
    (ii) Limitation. An issuer in the individual market is permitted to 
request only the minimum amount of information necessary to make a 
determination regarding payment. The minimum amount of information 
necessary is determined in accordance with the minimum necessary 
standard in Sec.  164.502(b) of this subtitle of the privacy regulations 
issued under the Health Insurance Portability and Accountability Act.
    (iii) Examples. See paragraph (g) of this section for examples 
illustrating the rules of this paragraph (e)(4), as well as other 
provisions of this section.
    (5) Research exception. Notwithstanding paragraph (e)(1) of this 
section, an issuer may request, but not require, that an individual or 
family member covered under the same policy undergo a genetic test if 
all of the conditions of this paragraph (e)(5) are met:
    (i) Research in accordance with Federal regulations and applicable 
State or local law or regulations. The issuer makes the request pursuant 
to research, as defined in Sec.  46.102(d) of this subtitle, that 
complies with part 46 of this subtitle or equivalent Federal 
regulations, and any applicable State or local law or regulations for 
the protection of human subjects in research.
    (ii) Written request for participation in research. The issuer makes 
the request in writing, and the request clearly indicates to each 
individual (or, in the case of a minor child, to the child's legal 
guardian) that--
    (A) Compliance with the request is voluntary; and
    (B) Noncompliance will have no effect on eligibility for benefits 
(as described in paragraph (b) of this section) or premium amounts (as 
described in paragraph (c) of this section).
    (iii) Prohibition on underwriting. No genetic information collected 
or acquired under this paragraph (e)(5) can be used for underwriting 
purposes (as described in paragraph (f)(1) of this section).
    (iv) Notice to Federal agencies. The issuer completes a copy of the 
``Notice of Research Exception under the Genetic Information 
Nondiscrimination Act'' authorized by the Secretary and provides the 
notice to the address specified in the instructions thereto.
    (f) Prohibitions on collection of genetic information--(1) For 
underwriting purposes--(i) General rule. An issuer offering health 
insurance coverage in the individual market must not collect (as defined 
in paragraph (a) of this section) genetic information for underwriting 
purposes. See paragraph (g) of this section for examples illustrating 
the rules of this paragraph (f)(1), as well as other provisions of this 
section.
    (ii) Underwriting purposes defined. Subject to paragraph (f)(1)(iii) 
of this section, underwriting purposes means, with respect to any issuer 
offering health insurance coverage in the individual market--
    (A) Rules for, or determination of, eligibility (including 
enrollment and continued eligibility) for benefits under the coverage;

[[Page 183]]

    (B) The computation of premium amounts under the coverage;
    (C) The application of any preexisting condition exclusion under the 
coverage; and
    (D) Other activities related to the creation, renewal, or 
replacement of a contract of health insurance.
    (iii) Medical appropriateness. An issuer in the individual market 
may limit or exclude a benefit based on whether the benefit is medically 
appropriate, and the determination of whether the benefit is medically 
appropriate is not within the meaning of underwriting purposes. 
Accordingly, if an issuer conditions a benefit based on its medical 
appropriateness and the medical appropriateness of the benefit depends 
on a covered individual's genetic information, the issuer is permitted 
to condition the benefit on the genetic information. An issuer is 
permitted to request only the minimum amount of genetic information 
necessary to determine medical appropriateness, and may deny the benefit 
if the covered individual does not provide the genetic information 
required to determine medical appropriateness. See paragraph (g) of this 
section for examples illustrating the applicability of this paragraph 
(f)(1)(iii), as well as other provisions of this section.
    (2) Prior to or in connection with enrollment--(i) In general. An 
issuer offering health insurance coverage in the individual market must 
not collect genetic information with respect to any individual prior to 
that individual's enrollment under the coverage or in connection with 
that individual's enrollment. Whether or not an individual's information 
is collected prior to that individual's enrollment is determined at the 
time of collection.
    (ii) Incidental collection exception--(A) In general. If an issuer 
offering health insurance coverage in the individual market obtains 
genetic information incidental to the collection of other information 
concerning any individual, the collection is not a violation of this 
paragraph (f)(2), as long as the collection is not for underwriting 
purposes in violation of paragraph (f)(1) of this section.
    (B) Limitation. The incidental collection exception of this 
paragraph (f)(2)(ii) does not apply in connection with any collection 
where it is reasonable to anticipate that health information will be 
received, unless the collection explicitly provides that genetic 
information should not be provided.
    (iii) Examples. The rules of this paragraph (f)(2) are illustrated 
by the following examples:

    Example 1. (i) Facts. Individual G applies for a health insurance 
policy through Issuer Q. Q's application materials ask for the 
applicant's medical history, but not for family medical history. The 
application's instructions state that no genetic information, including 
family medical history, should be provided. G answers the questions in 
the application completely and truthfully, but volunteers certain health 
information about diseases his parents had, believing that Q also needs 
this information.
    (ii) Conclusion. In this Example 1, G's family medical history is 
genetic information with respect to G. However, since Q did not request 
this genetic information, and Q's instructions stated that no genetic 
information should be provided, Q's collection is an incidental 
collection under paragraph (f)(2)(ii). However, Q may not use the 
genetic information it obtained incidentally for underwriting purposes.
    Example 2. (i) Facts. Individual H applies for a health insurance 
policy through Issuer R. R's application materials request that an 
applicant provide information on his or her individual medical history, 
including the names and contact information of physicians from whom the 
applicant sought treatment. The application includes a release which 
authorizes the physicians to furnish information to R. R forwards a 
request for health information about H, including the signed release, to 
his primary care physician. Although the request for information does 
not ask for genetic information, including family medical history, it 
does not state that no genetic information should be provided. The 
physician's office administrator includes part of H's family medical 
history in the package to R.
    (ii) Conclusion. In this Example 2, R's request was for health 
information solely about its applicant, H, which is not genetic 
information with respect to H. However, R's materials did not state that 
genetic information should not be provided. Therefore, R's collection of 
H's family medical history (which is genetic information with respect to 
H), violates the rule against collection of genetic information and does 
not qualify for the incidental collection exception under paragraph 
(f)(2)(ii).
    Example 3. (i) Facts. Issuer S acquires Issuer T. S requests T's 
records, stating that S should not provide genetic information and

[[Page 184]]

should review the records to excise any genetic information. T assembles 
the data requested by S and, although T reviews it to delete genetic 
information, the data from a specific region included some individuals' 
family medical history. Consequently, S receives genetic information 
about some of T's covered individuals.
    (ii) Conclusion. In this Example 3, S's request for health 
information explicitly stated that genetic information should not be 
provided. Therefore, its collection of genetic information was within 
the incidental collection exception. However, S may not use the genetic 
information it obtained incidentally for underwriting purposes.

    (g) Examples regarding determinations of medical appropriateness. 
The application of the rules of paragraphs (e) and (f) of this section 
to issuer determinations of medical appropriateness is illustrated by 
the following examples:

    Example 1. (i) Facts. Individual I has an individual health 
insurance policy through Issuer U that covers genetic testing for celiac 
disease for individuals who have family members with this condition. I's 
policy includes dependent coverage. After I's son is diagnosed with 
celiac disease, I undergoes a genetic test and promptly submits a claim 
for the test to U for reimbursement. U asks I to provide the results of 
the genetic test before the claim is paid.
    (ii) Conclusion. In this Example 1, under the rules of paragraph 
(e)(4) of this section, U is permitted to request only the minimum 
amount of information necessary to make a decision regarding payment. 
Because the results of the test are not necessary for U to make a 
decision regarding the payment of I's claim, U's request for the results 
of the genetic test violates paragraph (e) of this section.
    Example 2. (i) Facts. Individual J has an individual health 
insurance policy through Issuer V that covers a yearly mammogram for 
participants starting at age 40, or at age 30 for those with increased 
risk for breast cancer, including individuals with BRCA1 or BRCA2 gene 
mutations. J is 33 years old and has the BRCA2 mutation. J undergoes a 
mammogram and promptly submits a claim to V for reimbursement. V asks J 
for evidence of increased risk of breast cancer, such as the results of 
a genetic test, before the claim for the mammogram is paid.
    (ii) Conclusion. In this Example 2, V does not violate paragraphs 
(e) or (f) of this section. Under paragraph (e), an issuer is permitted 
to request and use the results of a genetic test to make a determination 
regarding payment, provided the issuer requests only the minimum amount 
of information necessary. Because the medical appropriateness of the 
mammogram depends on the covered individual's genetic makeup, the 
minimum amount of information necessary includes the results of the 
genetic test. Similarly, V does not violate paragraph (f) of this 
section because an issuer is permitted to request genetic information in 
making a determination regarding the medical appropriateness of a claim 
if the genetic information is necessary to make the determination (and 
the genetic information is not used for underwriting purposes).
    Example 3. (i) Facts. Individual K was previously diagnosed with and 
treated for breast cancer, which is currently in remission. In 
accordance with the recommendation of K's physician, K has been taking a 
regular dose of tamoxifen to help prevent a recurrence. K has an 
individual health insurance policy through Issuer W which adopts a new 
policy requiring patients taking tamoxifen to undergo a genetic test to 
ensure that tamoxifen is medically appropriate for their genetic makeup. 
In accordance with, at the time, the latest scientific research, 
tamoxifen is not helpful in up to 7 percent of breast cancer patients 
with certain variations of the gene for making the CYP2D6 
enzyme. If a patient has a gene variant making tamoxifen not medically 
appropriate, W does not pay for the tamoxifen prescription.
    (ii) Conclusion. In this Example 3, W does not violate paragraph (e) 
of this section if it conditions future payments for the tamoxifen 
prescription on K's undergoing a genetic test to determine the genetic 
markers K has for making the CYP2D6 enzyme. W also does not 
violate paragraph (e) of this section if it refuses future payment if 
the results of the genetic test indicate that tamoxifen is not medically 
appropriate for K.

    (h) Applicability date. The provisions of this section are effective 
with respect to health insurance coverage offered, sold, issued, 
renewed, in effect, or operated in the individual market on or after 
December 7, 2009.

[74 FR 51693, Oct. 7, 2009]



                 Subpart D_Preemption; Excepted Benefits



Sec.  148.210  Preemption.

    (a) Scope. (1) This section describes the effect of sections 2741 
through 2763 and 2791 of the PHS Act on a State's authority to regulate 
health insurance issuers in the individual market. This section makes 
clear that States remain subject to section 514 of ERISA, which 
generally preempts State law that relates to ERISA-covered plans.

[[Page 185]]

    (2) Sections 2741 through 2763 and 2791 of the PHS Act cannot be 
construed to affect or modify the provisions of section 514 of ERISA.
    (b) Regulation of insurance issuers. The individual market rules of 
this part do not prevent a State law from establishing, implementing, or 
continuing in effect standards or requirements unless the standards or 
requirements prevent the application of a requirement of this part.



Sec.  148.220  Excepted benefits.

    The requirements of this part and part 147 of this subchapter do not 
apply to any individual coverage in relation to its provision of the 
benefits described in paragraphs (a) and (b) of this section (or any 
combination of the benefits).
    (a) Benefits excepted in all circumstances. The following benefits 
are excepted in all circumstances:
    (1) Coverage only for accident (including accidental death and 
dismemberment).
    (2) Disability income insurance.
    (3) Liability insurance, including general liability insurance and 
automobile liability insurance.
    (4) Coverage issued as a supplement to liability insurance.
    (5) Workers' compensation or similar insurance.
    (6) Automobile medical payment insurance.
    (7) Credit-only insurance (for example, mortgage insurance).
    (8) Coverage for on-site medical clinics.
    (9) Travel insurance, within the meaning of Sec.  144.103 of this 
subchapter.
    (b) Other excepted benefits. The requirements of this part do not 
apply to individual health insurance coverage described in paragraphs 
(b)(1) through (b)(6) of this section if the benefits are provided under 
a separate policy, certificate, or contract of insurance. These benefits 
include the following:
    (1) Limited scope dental or vision benefits. These benefits are 
dental or vision benefits that are limited in scope to a narrow range or 
type of benefits that are generally excluded from benefit packages that 
combine hospital, medical, and surgical benefits.
    (2) Long-term care benefits. These benefits are benefits that are 
either--
    (i) Subject to State long-term care insurance laws;
    (ii) For qualified long-term care insurance services, as defined in 
section 7702B(c)(1) of the Code, or provided under a qualified long-term 
care insurance contract, as defined in section 7702B(b) of the Code; or
    (iii) Based on cognitive impairment or a loss of functional capacity 
that is expected to be chronic.
    (3) Coverage only for a specified disease or illness (for example, 
cancer policies) if the policies meet the requirements of Sec.  
146.145(b)(4)(ii)(B) and (C) of this subchapter regarding 
noncoordination of benefits.
    (4) Hospital indemnity or other fixed indemnity insurance only if--
    (i) The benefits are provided only to individuals who attest, in 
their fixed indemnity insurance application, that they have other health 
coverage that is minimum essential coverage within the meaning of 
section 5000A(f) of the Internal Revenue Code, or that they are treated 
as having minimum essential coverage due to their status as a bona fide 
resident of any possession of the United States pursuant to Code section 
5000A(f)(4)(B).
    (ii) There is no coordination between the provision of benefits and 
an exclusion of benefits under any other health coverage.
    (iii) The benefits are paid in a fixed dollar amount per period of 
hospitalization or illness and/or per service (for example, $100/day or 
$50/visit) regardless of the amount of expenses incurred and without 
regard to the amount of benefits provided with respect to the event or 
service under any other health coverage.
    (iv) A notice is displayed prominently in the application materials 
in at least 14 point type that has the following language: ``THIS IS A 
SUPPLEMENT TO HEALTH INSURANCE AND IS NOT A SUBSTITUTE FOR MAJOR MEDICAL 
COVERAGE. LACK OF MAJOR MEDICAL COVERAGE (OR OTHER MINIMUM ESSENTIAL 
COVERAGE) MAY RESULT IN AN ADDITIONAL PAYMENT WITH YOUR TAXES.''

[[Page 186]]

    (v) The requirement of paragraph (b)(4)(iv) of this section applies 
to all hospital or other fixed indemnity insurance policy years 
beginning on or after January 1, 2015, and the requirement of paragraph 
(b)(4)(i) of this section applies to hospital or other fixed indemnity 
insurance policies issued on or after January 1, 2015, and to hospital 
or other fixed indemnity policies issued before that date, upon their 
first renewal occurring on or after October 1, 2016.
    (5) Medicare supplemental health insurance (as defined under section 
1882(g)(1) of the Social Security Act. 42 U.S.C. 1395ss, also known as 
Medigap or MedSupp insurance). The requirements of this part 148 
(including genetic nondiscrimination requirements), do not apply to 
Medicare supplemental health insurance policies. However, Medicare 
supplemental health insurance policies are subject to similar genetic 
nondiscrimination requirements under section 104 of the Genetic 
Information Nondiscrimination Act of 2008 (Pub. L. 110-233), as 
incorporated into the NAIC Model Regulation relating to sections 
1882(s)(2)(e) and (x) of the Act (The NAIC Model Regulation can be 
accessed at http://www.naic.org.).
    (6) Coverage supplemental to the coverage provided under Chapter 55, 
Title 10 of the United States Code (also known as CHAMPUS supplemental 
programs).
    (7) Similar supplemental coverage provided to coverage under a group 
health plan (as described in Sec.  146.145(b)(5)(i)(C) of this 
subchapter).

[62 FR 16995, Apr. 8, 1997; 62 FR 31696, June 10, 1997, as amended at 74 
FR 51696, Oct. 7, 2009; 79 FR 30341, May 27, 2014; 81 FR 75327, Oct. 31, 
2016]



  Subpart E_Grants to States for Operation of Qualified High Risk Pools

    Source: 68 FR 23414, May 2, 2003, unless otherwise noted.



Sec.  148.306  Basis and scope.

    This subpart implements section 2745 of the Public Health Service 
Act (PHS Act). It extends grants to States that have qualified high risk 
pools that meet the specific requirements described in Sec.  148.310. It 
also provides specific instructions on how to apply for the grants and 
outlines the grant review and grant award processes.

[73 FR 22285, Apr. 25, 2008]



Sec.  148.308  Definitions.

    For the purposes of this subpart, the following definitions apply:
    Bonus grants means funds that the Secretary provides from the 
appropriated grant funds to be used to provide supplemental consumer 
benefits to enrollees or potential enrollees in qualified high risk 
pools.
    CMS stands for Centers for Medicare & Medicaid Services.
    Loss means the difference between expenses incurred by a qualified 
high risk pool, including payment of claims and administrative expenses, 
and the premiums collected by the pool.
    Qualified high risk pool as defined in sections 2744(c)(2) and 
2745(g) of the PHS Act means a risk pool that--
    (1) Provides to all eligible individuals health insurance coverage 
(or comparable coverage) that does not impose any preexisting condition 
exclusion with respect to such coverage for all eligible individuals, 
except that it may provide for enrollment of eligible individuals 
through an acceptable alternative mechanism (as defined for purposes of 
section 2744 of the PHS Act) that includes a high risk pool as a 
component; and
    (2) Provides for premium rates and covered benefits for such 
coverage consistent with standards included in the NAIC Model Health 
Plan for Uninsurable Individuals Act that was in effect at the time of 
the enactment of the Health Insurance Portability and Accountability Act 
of 1996 (August 21, 1996) but only if the model has been revised in 
State regulations to meet all of the requirements of this part and title 
27 of the PHS Act.
    Standard risk rate means a rate developed by a State using 
reasonable actuarial techniques and taking into account the premium 
rates charged by other insurers offering health insurance coverage to 
individuals in the same geographical service area to which the rate 
applies. The standard

[[Page 187]]

rate may be adjusted based upon age, sex, and geographical location.
    State means any of the 50 States and the District of Columbia and 
includes the U.S. Territories of Puerto Rico, the Virgin Islands, Guam, 
American Samoa and the Northern Mariana Islands.
    State fiscal year, for purposes of this subpart, means the fiscal 
year used for accounting purposes by either a State or a risk pool 
entity to which a State has delegated the authority to conduct risk pool 
operations.

[68 FR 23414, May 2, 2003, as amended at 69 FR 15700, Mar. 26, 2004; 72 
FR 41236, July 27, 2007; 73 FR 22285, Apr. 25, 2008]



Sec.  148.310  Eligibility requirements for a grant.

    A State must meet all of the following requirements to be eligible 
for a grant:
    (a) The State has a qualified high risk pool as defined in Sec.  
148.308.
    (b) The pool restricts premiums charged under the pool to no more 
than 200 percent of the premium for applicable standard risk rates for 
the State.
    (c) The pool offers a choice of two or more coverage options through 
the pool.
    (d) The pool has in effect a mechanism reasonably designed to ensure 
continued funding of losses incurred by the State after the end of each 
fiscal year for which the State applies for Federal Funding in fiscal 
year (FY) 2005 through FY 2010 in connection with the operation of the 
pool.
    (e) The pool has incurred a loss in a period described in Sec.  
148.314.
    (f) In the case of a qualified high risk pool in a State that 
charges premiums that exceed 150 percent of the premium for applicable 
standard risks, the State will use at least 50 percent of the amount of 
the grant provided to the State to reduce premiums for enrollees.
    (g) In no case will the aggregate amount allotted and made available 
to the U.S. Territories for a fiscal year exceed $1,000,000 in total.
    (h) Bonus grant funding must be used for one or more of the 
following benefits:
    (1) Low income premium subsidies;
    (2) Reduction in premium trends, actual premium or other cost-
sharing requirements;
    (3) An expansion or broadening of the pool of individuals eligible 
for coverage, such as through eliminating waiting lists, increasing 
enrollment caps, or providing flexibility in enrollment rules;
    (4) Less stringent rules or additional waiver authority with respect 
to coverage of pre-existing conditions;
    (5) Increased benefits; and
    (6) The establishment of disease management programs.

[68 FR 23414, May 2, 2003, as amended at 72 FR 41236, July 27, 2007; 73 
FR 22285, Apr. 25, 2008]



Sec.  148.312  Amount of grant payment.

    (a) An eligible State may receive a grant to fund up to 100 percent 
of the losses incurred in the operation of its qualified high risk pool 
during the period for which it is applying or a lesser amount based on 
the limits of the allotment under the formula.
    (b) Funds will be allocated in accordance with this paragraph to 
each State that meets the eligibility requirements of Sec.  148.310 and 
files an application in accordance with Sec.  148.316. The amount will 
be divided among the States that apply and are awarded grants according 
to the allotment rules that generally provide that: 40 percent will be 
equally divided among those States; 30 percent will be divided among 
States and territories based on their number of uninsured residents in 
the State during the specified year as compared to all States that 
apply; and 30 percent will be divided among States and territories based 
on the number of people in State high risk pools during the specified 
year as compared to all States that apply.
    For purposes of this paragraph:
    (1) The number of uninsured individuals is calculated for each 
eligible State by taking a 3-year average of the number of uninsured 
individuals in that State in the Current Population Survey (CPS) of the 
Census Bureau during the period for which it is applying. The 3-year 
average will be calculated using numbers available as of March 1 of each 
year.

[[Page 188]]

    (2) The number of individuals enrolled in health care coverage 
through the qualified high risk pool of the State will be determined by 
attestation by the State in its grant application and verified for 
reasonability by the Secretary through acceptable industry data sources.
    (c) The amount awarded to each eligible State will be the lesser of 
the 50 percent of losses incurred by its qualified risk pool for the 
fiscal year in question or its allotment under the formula.
    (d) One-third of the total appropriation will be available for the 
bonus grants. In no case will a State for a fiscal year receive bonus 
grants that exceed 10 percent of the total allotted funds for bonus 
grants.

[68 FR 23414, May 2, 2003, as amended at 69 FR 15700, Mar. 26, 2004; 72 
FR 41237, July 27, 2007; 73 FR 22285, Apr. 25, 2008]



Sec.  148.314  Periods during which eligible States may apply for a grant.

    (a) General rule. A State that meets the eligibility requirements in 
Sec.  148.310 may apply for a grant to fund losses that were incurred 
during the State's FYs 2005, 2006, 2007, 2008 and 2009 in connection 
with the operation of its qualified high risk pool. Funding for FY 2007 
through FY 2010 under the Extension Act requires subsequent enactment of 
appropriations authority. States will be unable to apply for grants 
unless and until such funding becomes available. Grants funding is on a 
retrospective basis and applies to the States previous fiscal year. If a 
State becomes eligible for a grant in the middle of its fiscal year, a 
State may apply for losses incurred in a partial fiscal year if a 
partial year audit is done. Only losses that are incurred after 
eligibility is established will qualify for a grant.
    (b) Maximum number of grants. An eligible State may only be awarded 
a maximum of five grants, with one grant per fiscal year. A grant for a 
partial fiscal year counts as a full grant.
    (c) Deadline for submitting grant applications. The deadlines for 
submitting grant applications are stated in Sec.  148.316(d).
    (d) Distribution of grant funds. States that meet all of the 
eligibility requirements in Sec.  148.310 and submit timely requests in 
accordance with paragraph (c) of this section will receive an initial 
distribution of grant funds using the following methodology: Grant 
applications for losses will be on a retrospective basis. For example, 
grant applications for 2006 funds are based on the State's FY 2005 
incurred losses. Grant funding was appropriated for Federal FY 2006 and 
is authorized to be appropriated for Federal FYs 2008 through 2010.
    (e) Grant allocations. Grant allocations for each fiscal year will 
be determined by taking all grant applications during the period for 
which States are applying and allocating the funds in accordance with 
Sec.  148.312.
    (1) In no case will a State receive funds greater than 100 percent 
of their losses.
    (2) If any excess funds remain after the initial calculation, these 
excess funds will be proportionately redistributed to the States whose 
allocations have not exceeded 100 percent of their losses.

[73 FR 22285, Apr. 25, 2008]



Sec.  148.316  Grant application instructions.

    Funding for FY 2008, FY 2009, and FY 2010 under the Extension Act 
requires the subsequent enactment of appropriations authority. Funding 
was appropriated for Federal FY 2006. States will be unable to apply for 
FY 2008 through FY 2010 grants unless and until such funding becomes 
available.
    (a) Application for operational losses. Each State must compile an 
application package that documents that it has met the requirements for 
a grant. If a risk pool entity applies on behalf of a State, it must 
provide documentation that it has been delegated appropriate authority 
by the State. At a minimum, the application package must include a 
completed standard form application kit (see paragraph (b) of this 
section) along with the following information:
    (1) History and description of the qualified high risk pool. Provide 
a detailed description of the qualified high risk pool that includes the 
following:
    (i) Brief history, including date of inception.

[[Page 189]]

    (ii) Enrollment criteria (including provisions for the admission of 
eligible individuals as defined in Sec.  148.103) and number of 
enrollees.
    (iii) Description of how coverage is provided administratively in 
the qualified high risk pool (that is, self-insured, through a private 
carrier, etc.).
    (iv) Benefits options and packages offered in the qualified high 
risk pool to both eligible individual (as defined in Sec.  148.103) and 
other applicants.
    (v) Outline of plan benefits and coverage offered in the pool. 
Provide evidence that the level of plan benefits is consistent with 
either Alternative One or Alternative Two in Section 8 of the NAIC Model 
Health Plan for Uninsurable Individuals Act. See appendix for the text 
of Section 8 of the NAIC Model.
    (vi) Premiums charged (in terms of dollars and in percentage of 
standard risk rate) and other cost-sharing mechanisms, such as co-pays 
and deductibles, imposed on enrollees (both eligible individuals (as 
defined in Sec.  148.103) and non-eligible individuals if a distinction 
is made).
    (vii) How the standard risk rate for the State is calculated and 
when it was last calculated.
    (viii) Revenue sources for the qualified high risk pool, including 
current funding mechanisms and, if different, future funding mechanisms. 
Provide current projections of future income.
    (ix) Copies of all governing authorities of the pool, including 
statutes, regulations and plan of operation.
    (2) Accounting of risk pool losses. Provide a detailed accounting of 
claims paid, administrative expenses, and premiums collected for the 
fiscal year for which the grant is being requested. Indicate the timing 
of the fiscal year upon which the accounting is based. Provide the 
methodology of projecting losses and expenses, and include current 
projections of future operating losses (this information is needed to 
judge compliance with the requirements in Sec.  148.310(d)).
    (3) Bonus grants for supplemental consumer benefits. Provide 
detailed information about the following supplemental consumer benefits 
for which the entity is applying:
    (i) A narrative description of one or more of the following of the 
supplemental consumer benefits to be provided to enrollees and/or 
potential enrollees in the high risk pool:
    (A) Low income premium subsidies;
    (B) Reduction in premium trends, actual premium or other cost-
sharing requirements;
    (C) An expansion or broadening of the pool of individuals eligible 
for coverage, such as through eliminating waiting lists, increasing 
enrollment caps, or providing flexibility in enrollment;
    (D) Less stringent rules, or additional waiver authority with 
respect to coverage of pre-existing conditions;
    (E) Increased benefits; and
    (F) The establishment of disease management programs.
    (ii) A description of the population or subset population that will 
be eligible for the supplemental consumer benefits.
    (iii) A projected budget for the use of bonus grant funds using the 
SF 424 A.
    (4) Contact person. Identify the name, position title, address, e-
mail address, and telephone number of the person to contact for further 
information and questions.
    (b) Standard form application kit--(1) Forms. (i) The following 
standard forms must be completed with an original signature and enclosed 
as part of the application package:

SF-424 Application for Federal Assistance.
SF-424A Budget Information.
SF-424B Assurances Non-Construction Programs.
SF-LLL Disclosure of Lobbying Activities Biographical Sketch.

    (ii) These forms can be accessed from the following Web site: http:/
/www.grants.gov.
    (2) Other narrative. All other narrative in the application must be 
submitted on 8\1/2\ x 11 inches white paper.
    (c) Application submission. Submission of application package is 
through http://www.grants.gov. Submissions by facsimile (fax) 
transmissions will not be accepted.
    (d) Application deadlines. (1) The deadline for States to submit an 
application for losses incurred in a State fiscal

[[Page 190]]

year is June 30 of the next Federal fiscal year that begins after the 
end of the State fiscal year. Funding for FY 2008, FY 2009, and FY 2010 
under the Extension Act requires the subsequent enactment of 
appropriations authority. Funding was appropriated for Federal FY 2006. 
States will be unable to apply for FY 2008 through FY 2010 grants unless 
and until such funding becomes available.
    (2) Deadline for States to submit an application for losses incurred 
in their fiscal year 2005. States had to submit an application to CMS no 
later than June 30, 2006.
    (3) Deadline for States to submit an application for losses incurred 
in their fiscal year 2006. States must submit an application to CMS by 
no later than June 30, 2007.
    (4) Deadline for States to submit an application for losses incurred 
in their fiscal year 2007. States must submit an application to CMS by 
no later than June 30, 2008.
    (5) Deadline for States to submit an application for losses incurred 
in their fiscal year 2008. States must submit an application to CMS by 
no later than June 30, 2009.
    (6) Deadline for States to submit an application for losses incurred 
in their fiscal year 2009. States must submit an application to CMS by 
no later than June 30, 2010.
    (e) Where to submit an application. Applications must be submitted 
to http://www.grants.gov. Submissions by facsimile (fax) transmissions 
will not be accepted.

[68 FR 23414, May 2, 2003, as amended at 69 FR 15701, Mar. 26, 2004; 72 
FR 41237, July 27, 2007; 73 FR 22286, Apr. 25, 2008]



Sec.  148.318  Grant application review.

    (a) Executive Order 12372. This grant program is not listed by the 
Secretary under Sec.  100.3 of this title, and therefore the grant 
program is not subject to review by States under part 100 of this title, 
which implements Executive Order 12372, ``Intergovernmental Review of 
Federal Programs'' (see part 100 of this title).
    (b) Review team. A team consisting of staff from CMS and the 
Department of Health and Human Services will review all applications. 
The team will meet as necessary on an ongoing basis as applications are 
received.
    (c) Eligibility criteria. To be eligible for a grant, a State must 
submit sufficient documentation that its high risk pool meets the 
eligibility requirements described in Sec.  148.310. A State must 
include sufficient documentation of the losses incurred in the operation 
of the qualified high risk pool in the period for when it is applying.
    (d) Review criteria. If the review team determines that a State 
meets the eligibility requirements described in Sec.  148.310, the 
review team will use the following additional criteria in reviewing the 
applications:
    (1) Documentation of expenses incurred during operation of the 
qualified high risk pool. The losses and expenses incurred in the 
operation of a State's pool are sufficiently documented.
    (2) Funding mechanism. The State has outlined funding sources, such 
as assessments and State general revenues, which can cover the projected 
costs and are reasonably designed to ensure continued funding of losses 
a State incurs in connection with the operation of the qualified high 
risk pool after each fiscal year for which it is applying for grant 
funds.

[68 FR 23414, May 2, 2003, as amended at 72 FR 41238, July 27, 2007; 73 
FR 22286, Apr. 25, 2008]



Sec.  148.320  Grant awards.

    (a) Notification and award letter. (1) Each State applicant will be 
notified in writing of CMS's decision on its application.
    (2) If the State applicant is awarded a grant, the award letter will 
contain the following terms and conditions:
    (i) All funds awarded to the grantee under this program must be used 
exclusively for the operation of a qualified high risk pool that meets 
the eligibility requirements for this program.
    (ii) The grantee must keep sufficient records of the grant 
expenditures for audit purposes (see part 92 of this title).
    (iii) The grantee will be required to submit quarterly progress and 
financial reports under part 92 of this title and in accordance with 
section 2745(f)

[[Page 191]]

of the Public Health Service Act, requiring the Secretary to make an 
annual report to Congress that includes information on the use of these 
grant funds by States.
    (b) Grantees letter of acceptance. Grantees must submit a letter of 
acceptance to CMS' Acquisition and Grants Group within 30 days of the 
date of the award agreeing to the terms and conditions of the award 
letter.

[68 FR 23414, May 2, 2003, as amended at 72 FR 41238, July 27, 2007; 73 
FR 22286, Apr. 25, 2008]

                           PART 149 [RESERVED]



PART 150_CMS ENFORCEMENT IN GROUP AND INDIVIDUAL INSURANCE MARKETS-
-Table of Contents



                      Subpart A_General Provisions

Sec.
150.101 Basis and scope.
150.103 Definitions.

 Subpart B_CMS Enforcement Processes for Determining Whether States Are 
          Failing To Substantially Enforce PHS Act requirements

150.201 State enforcement.
150.203 Circumstances requiring CMS enforcement.
150.205 Sources of information triggering an investigation of State 
          enforcement.
150.207 Procedure for determining that a State fails to substantially 
          enforce PHS Act requirements.
150.209 Verification of exhaustion of remedies and contact with State 
          officials.
150.211 Notice to the State.
150.213 Form and content of notice.
150.215 Extension for good cause.
150.217 Preliminary determination.
150.219 Final determination.
150.221 Transition to State enforcement.

   Subpart C_CMS Enforcement With Respect to Issuers and Non-Federal 
                Governmental Plans_Civil Money Penalties

150.301 General rule regarding the imposition of civil money penalties.
150.303 Basis for initiating an investigation of a potential violation.
150.305 Determination of entity liable for civil money penalty.
150.307 Notice to responsible entities.
150.309 Request for extension.
150.311 Responses to allegations of noncompliance.
150.313 Market conduct examinations.
150.315 Amount of penalty--General.
150.317 Factors CMS uses to determine the amount of penalty.
150.319 Determining the amount of the penalty--mitigating circumstances.
150.321 Determining the amount of penalty--aggravating circumstances.
150.323 Determining the amount of penalty--other matters as justice may 
          require.
150.325 Settlement authority.
150.341 Limitations on penalties.
150.343 Notice of proposed penalty.
150.345 Appeal of proposed penalty.
150.347 Failure to request a hearing.

                    Subpart D_Administrative Hearings

150.401 Definitions.
150.403 Scope of ALJ's authority.
150.405 Filing of request for hearing.
150.407 Form and content of request for hearing.
150.409 Amendment of notice of assessment or request for hearing.
150.411 Dismissal of request for hearing.
150.413 Settlement.
150.415 Intervention.
150.417 Issues to be heard and decided by ALJ.
150.419 Forms of hearing.
150.421 Appearance of counsel.
150.423 Communications with the ALJ.
150.425 Motions.
150.427 Form and service of submissions.
150.429 Computation of time and extensions of time.
150.431 Acknowledgment of request for hearing.
150.435 Discovery.
150.437 Submission of briefs and proposed hearing exhibits.
150.439 Effect of submission of proposed hearing exhibits.
150.441 Prehearing conferences.
150.443 Standard of proof.
150.445 Evidence.
150.447 The record.
150.449 Cost of transcripts.
150.451 Posthearing briefs.
150.453 ALJ decision.
150.455 Sanctions.
150.457 Review by Administrator.
150.459 Judicial review.
150.461 Failure to pay assessment.
150.463 Final order not subject to review.
150.465 Collection and use of penalty funds.

    Authority: Secs. 2701 through 2763, 2791, and 2792 of the PHS Act 
(42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92).

    Source: 64 FR 45795, Aug. 20, 1999, unless otherwise noted.

[[Page 192]]



                      Subpart A_General Provisions



Sec.  150.101  Basis and scope.

    (a) Basis. CMS's enforcement authority under sections 2723 and 2761 
of the PHS Act and its rulemaking authority under section 2792 of the 
PHS Act provide the basis for issuing regulations under this part 150.
    (b) Scope--(1) Enforcement with respect to group heath plans. The 
provisions of title XXVII of the PHS Act that apply to group health 
plans that are non-Federal governmental plans are enforced by CMS using 
the procedures described in Sec.  150.301 et seq.
    (2) Enforcement with respect to health insurance issuers. The states 
have primary enforcement authority with respect to the requirements of 
title XXVII of the PHS Act that apply to health insurance issuers 
offering coverage in the group or individual health insurance market. If 
CMS determines under subpart B of this part that a state is not 
substantially enforcing title XXVII of the PHS Act, including the 
implementing regulations in parts 146, 147, and 148 of this subchapter, 
CMS enforces them under subpart C of this part.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13439, Feb. 27, 2013]



Sec.  150.103  Definitions.

    The definitions that appear in part 144 of this subchapter apply to 
this part 150, unless stated otherwise. As used in this part:
    Amendment, endorsement, or rider means a document that modifies or 
changes the terms or benefits of an individual policy, group policy, or 
certificate of insurance.
    Application means a signed statement of facts by a potential insured 
that an issuer uses as a basis for its decision whether, and on what 
basis to insure an individual, or to issue a certificate of insurance, 
or that a non-Federal governmental health plan uses as a basis for a 
decision whether to enroll an individual under the plan.
    Certificate of insurance means the document issued to a person or 
entity covered under an insurance policy issued to a group health plan 
or an association or trust that summarizes the benefits and principal 
provisions of the policy.
    Complaint means any expression, written or oral, indicating a 
potential denial of any right or protection contained in HIPAA 
requirements (whether ultimately justified or not) by an individual, a 
personal representative or other entity acting on behalf of an 
individual, or any entity that believes such a right is being or has 
been denied an individual.
    Group health insurance policy or group policy means the legal 
document or contract issued by an issuer to a plan sponsor with respect 
to a group health plan (including a plan that is a non-Federal 
governmental plan) that contains the conditions and terms of the 
insurance that covers the group.
    Individual health insurance policy or individual policy means the 
legal document or contract issued by the issuer to an individual that 
contains the conditions and terms of the insurance. Any association or 
trust arrangement that is not a group health plan as defined in Sec.  
144.103 of this subchapter or does not provide coverage in connection 
with one or more group health plans is individual coverage subject to 
the requirements of parts 147 and 148 of this subchapter. The term 
``individual health insurance policy'' includes a policy that is--
    (1) Issued to an association that makes coverage available to 
individuals other than in connection with one or more group health 
plans; or
    (2) Administered, or placed in a trust, and is not sold in 
connection with a group health plan subject to the provisions of parts 
146 and 147 of this subchapter.
    PHS Act requirements means the requirements of title XXVII of the 
PHS Act and its implementing regulations in parts 146, 147, and 148 of 
this subchapter.
    Plan document means the legal document that provides the terms of 
the plan to individuals covered under a group health plan, such as a 
non-Federal governmental health plan.
    State law means all laws, decisions, rules, regulations, or other 
State action having the effect of law, of any

[[Page 193]]

State as defined in Sec.  144.103 of this subchapter. A law of the 
United States applicable to the District of Columbia is treated as a 
State law rather than a law of the United States.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13439, Feb. 27, 2013]



 Subpart B_CMS Enforcement Processes for Determining Whether States Are 
          Failing To Substantially Enforce PHS Act Requirement



Sec.  150.201  State enforcement.

    Except as provided in subpart C of this part, each State enforces 
PHS Act requirements with respect to health insurance issuers that 
issue, sell, renew, or offer health insurance coverage in the State.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.203  Circumstances requiring CMS enforcement.

    CMS enforces PHS Act requirement to the extent warranted (as 
determined by CMS) in any of the following circumstances:
    (a) Notification by State. A State notifies CMS that it has not 
enacted legislation to enforce or that it is not otherwise enforcing PHS 
Act requirements.
    (b) Determination by CMS. If CMS receives or obtains information 
that a State may not be substantially enforcing PHS Act requirements, it 
may initiate the process described in this subchapter to determine 
whether the State is failing to substantially enforce these 
requirements.
    (c) Special rule for guaranteed availability in the individual 
market. If a State has notified CMS that it is implementing an 
acceptable alternative mechanism in accordance with Sec.  148.128 of 
this subchapter instead of complying with the guaranteed availability 
requirements of Sec.  148.120, CMS's determination focuses on the 
following:
    (1) Whether the State's mechanism meets the requirements for an 
acceptable alternative mechanism.
    (2) Whether the State is implementing the acceptable alternative 
mechanism.
    (d) Consequence of a State not implementing an alternative 
mechanism. If a State is not implementing an acceptable alternative 
mechanism, CMS determines whether the State is substantially enforcing 
the requirements of Sec. Sec.  148.101 through 148.126 and Sec.  148.170 
of this subchapter.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.205  Sources of information triggering an investigation of
State enforcement.

    Information that may trigger an investigation of State enforcement 
includes, but is not limited to, any of the following:
    (a) A complaint received by CMS.
    (b) Information learned during informal contact between CMS and 
State officials.
    (c) A report in the news media.
    (d) Information from the governors and commissioners of insurance of 
the various States regarding the status of their enforcement of PHS Act 
requirements.
    (e) Information obtained during periodic review of State health care 
legislation. CMS may review State health care and insurance legislation 
and regulations to determine whether they are:
    (1) Consistent with PHS Act requirements.
    (2) Not pre-empted as provided in Sec.  146.143 (relating to group 
market provisions) and Sec.  148.120 (relating to individual market 
requirements) on the basis that they prevent the application of a HIPAA 
requirement.
    (f) Any other information that indicates a possible failure to 
substantially enforce.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.207  Procedure for determining that a State fails to 
substantially enforce PHS Act requirements.

    Sections 150.209 through 150.219 describe the procedures CMS follows 
to determine whether a State is substantially enforcing PHS Act 
requirements.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]

[[Page 194]]



Sec.  150.209  Verification of exhaustion of remedies and contact
with State officials.

    If CMS receives a complaint or other information indicating that a 
State is failing to enforce PHS Act requirements, CMS assesses whether 
the affected individual or entity has made reasonable efforts to exhaust 
available State remedies. As part of its assessment, CMS may contact 
State officials regarding the questions raised.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.211  Notice to the State.

    If CMS is satisfied that there is a reasonable question whether 
there has been a failure to substantially enforce PHS Act requirements, 
CMS sends, in writing, the notice described in Sec.  150.213 of this 
part, to the following State officials:
    (a) The governor or chief executive officer of the State.
    (b) The insurance commissioner or chief insurance regulatory 
official.
    (c) If the alleged failure involves HMOs, the official responsible 
for regulating HMOs if different from the official listed in paragraph 
(b) of this section.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.213  Form and content of notice.

    The notice provided to the State is in writing and does the 
following:
    (a) Identifies the PHS Act requirement or requirements that have 
allegedly not been substantially enforced.
    (b) Describes the factual basis for the allegation of a failure or 
failures to enforce HIPAA requirements.
    (c) Explains that the consequence of a State's failure to 
substantially enforce PHS Act requirements is that CMS enforces them.
    (d) Advises the State that it has 30 days from the date of the 
notice to respond, unless the time for response is extended as described 
in Sec.  150.215 of this subpart. The State's response should include 
any information that the State wishes CMS to consider in making the 
preliminary determination described in Sec.  150.217.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.215  Extension for good cause.

    CMS may extend, for good cause, the time the State has for 
responding to the notice described in Sec.  150.213 of this subpart. 
Examples of good cause include an agreement between CMS and the State 
that there should be a public hearing on the State's enforcement, or 
evidence that the State is undertaking expedited enforcement activities.



Sec.  150.217  Preliminary determination.

    If, at the end of the 30-day period (and any extension), the State 
has not established to CMS's satisfaction that it is substantially 
enforcing the PHS Act requirements described in the notice, CMS takes 
the following actions:
    (a) Consults with the appropriate State officials identified in 
Sec.  150.211 (or their designees).
    (b) Notifies the State of CMS's preliminary determination that the 
State has failed to substantially enforce the requirements and that the 
failure is continuing.
    (c) Permits the State a reasonable opportunity to show evidence of 
substantial enforcement.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.219  Final determination.

    If, after providing notice and a reasonable opportunity for the 
State to show that it has corrected any failure to substantially 
enforce, CMS finds that the failure to substantially enforce has not 
been corrected, it will send the State a written notice of its final 
determination. The notice includes the following:
    (a) Identification of the PHS Act requirements that CMS is 
enforcing.
    (b) The effective date of CMS's enforcement.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.221  Transition to State enforcement.

    (a) If CMS determines that a State for which it has assumed 
enforcement

[[Page 195]]

authority has enacted and implemented legislation to enforce PHS Act 
requirements and also determines that it is appropriate to return 
enforcement authority to the State, CMS will enter into discussions with 
State officials to ensure that a transition is effected with respect to 
the following:
    (1) Consumer complaints and inquiries.
    (2) Instructions to issuers.
    (3) Any other pertinent aspect of operations.
    (b) CMS may also negotiate a process to ensure that, to the extent 
practicable, and as permitted by law, its records documenting issuer 
compliance and other relevant areas of CMS's enforcement operations are 
made available for incorporation into the records of the State 
regulatory authority that will assume enforcement responsibility.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



   Subpart C_CMS Enforcement With Respect to Issuers and Non-Federal 
                Governmental Plans_Civil Money Penalties



Sec.  150.301  General rule regarding the imposition of civil
money penalties.

    If any health insurance issuer that is subject to CMS's enforcement 
authority under Sec.  150.101(b)(2), or any non-Federal governmental 
plan (or employer that sponsors a non-Federal governmental plan) that is 
subject to CMS's enforcement authority under Sec.  150.101(b)(1), fails 
to comply with PHS Act requirements, it may be subject to a civil money 
penalty as described in this subpart.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.303  Basis for initiating an investigation of a potential
violation.

    (a) Information. Any information that indicates that any issuer may 
be failing to meet the PHS Act requirements or that any non-Federal 
governmental plan that is a group health plan as defined in section 
2791(a)(1) of the PHS Act and 45 CFR Sec.  144.103 may be failing to 
meet an applicable HIPAA requirement, may warrant an investigation. CMS 
may consider, but is not limited to, the following sources or types of 
information:
    (1) Complaints.
    (2) Reports from State insurance departments, the National 
Association of Insurance Commissioners, and other Federal and State 
agencies.
    (3) Any other information that indicates potential noncompliance 
with PHS Act requirements.
    (b) Who may file a complaint. Any entity or individual, or any 
entity or personal representative acting on that individual's behalf, 
may file a complaint with CMS if he or she believes that a right to 
which the aggrieved person is entitled under PHS Act requirements is 
being, or has been, denied or abridged as a result of any action or 
failure to act on the part of an issuer or other responsible entity as 
defined in Sec.  150.305.
    (c) Where a complaint should be directed. A complaint may be 
directed to any CMS regional office.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.305  Determination of entity liable for civil money penalty.

    If a failure to comply is established under this part, the 
responsible entity, as determined under this section, is liable for any 
civil money penalty imposed.
    (a) Health insurance issuer is responsible entity--(1) Group health 
insurance policy. To the extent a group health insurance policy issued, 
sold, renewed, or offered to a private plan sponsor or a non-Federal 
governmental plan sponsor is subject to applicable PHS Act requirements, 
a health insurance issuer is subject to a civil money penalty, 
irrespective of whether a civil money penalty is imposed under 
paragraphs (b) or (c) of this section, if the policy itself or the 
manner in which the policy is marketed or administered fails to comply 
with an applicable HIPAA requirement.
    (2) Individual health insurance policy. To the extent an individual 
health insurance policy is subject to an applicable HIPAA requirement, a 
health insurance issuer is subject to a civil money penalty if the 
policy itself, or the manner in which the policy is marketed or

[[Page 196]]

administered, violates any applicable HIPAA requirement.
    (b) Non-Federal governmental plan is responsible entity--(1) Basic 
rule. If a non-Federal governmental plan is sponsored by two or more 
employers and fails to comply with an applicable HIPAA requirement, the 
plan is subject to a civil money penalty, irrespective of whether a 
civil money penalty is imposed under paragraph (a) of this section. The 
plan is the responsible entity irrespective of whether the plan is 
administered by a health insurance issuer, an employer sponsoring the 
plan, or a third-party administrator.
    (2) Exception. In the case of a non-Federal governmental plan that 
is not provided through health insurance coverage, this paragraph (b) 
does not apply to the extent that the non-Federal governmental employers 
have elected under Sec.  146.180 to exempt the plan from applicable PHS 
Act requirements.
    (c) Employer is responsible entity--(1) Basic rule. If a non-Federal 
governmental plan is sponsored by a single employer and fails to comply 
with an applicable HIPAA requirement, the employer is subject to a civil 
money penalty, irrespective of whether a civil money penalty is imposed 
under paragraph (a) of this section. The employer is the responsible 
entity irrespective of whether the plan is administered by a health 
insurance issuer, the employer, or a third-party administrator.
    (2) Exception. In the case of a non-Federal governmental plan that 
is not provided through health insurance coverage, this paragraph (c) 
does not apply to the extent the non-Federal governmental employer has 
elected under Sec.  146.180 to exempt the plan from applicable PHS Act 
requirements.
    (d) Actions or inactions of agent. A principal is liable for 
penalties assessed for the actions or inactions of its agent.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.307  Notice to responsible entities.

    If an investigation under Sec.  150.303 indicates a potential 
violation, CMS provides written notice to the responsible entity or 
entities identified under Sec.  150.305. The notice does the following:
    (a) Describes the substance of any complaint or other information.
    (b) Provides 30 days from the date of the notice for the responsible 
entity or entities to respond with additional information, including 
documentation of compliance as described in Sec.  150.311.
    (c) States that a civil money penalty may be assessed.

[64 FR 45795, Aug. 20, 1999, as amended at 70 FR 71023, Nov. 25, 2005]



Sec.  150.309  Request for extension.

    In circumstances in which an entity cannot prepare a response to CMS 
within the 30 days provided in the notice, the entity may make a written 
request for an extension from CMS detailing the reason for the extension 
request and showing good cause. If CMS grants the extension, the 
responsible entity must respond to the notice within the time frame 
specified in CMS's letter granting the extension of time. Failure to 
respond within 30 days, or within the extended time frame, may result in 
CMS's imposition of a civil money penalty based upon the complaint or 
other information alleging or indicating a violation of PHS Act 
requirements.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.311  Responses to allegations of noncompliance.

    In determining whether to impose a civil money penalty, CMS reviews 
and considers documentation provided in any complaint or other 
information, as well as any additional information provided by the 
responsible entity to demonstrate that it has complied with PHS Act 
requirements. The following are examples of documentation that a 
potential responsible entity may submit for CMS's consideration in 
determining whether a civil money penalty should be assessed and the 
amount of any civil money penalty:
    (a) Any individual policy, group policy, certificate of insurance, 
application, rider, amendment, endorsement, certificate of creditable 
coverage, advertising material, or any other documents if those 
documents form the basis of a complaint or allegation of

[[Page 197]]

noncompliance, or the basis for the responsible entity to refute the 
complaint or allegation.
    (b) Any other evidence that refutes an alleged noncompliance.
    (c) Evidence that the entity did not know, and exercising due 
diligence could not have known, of the violation.
    (d) Documentation that the policies, certificates of insurance, or 
non-Federal governmental plan documents have been amended to comply with 
PHS Act requirements either by revision of the contracts or by the 
development of riders, amendments, or endorsements.
    (e) Documentation of the entity's issuance of conforming policies, 
certificates of insurance, plan documents, or amendments to 
policyholders or certificate holders before the issuance of the notice 
to the responsible entity or entities described in Sec.  150.307.
    (f) Evidence documenting the development and implementation of 
internal policies and procedures by an issuer, or non-Federal 
governmental health plan or employer, to ensure compliance with PHS Act 
requirements. Those policies and procedures may include or consist of a 
voluntary compliance program. Any such program should do the following:
    (1) Effectively articulate and demonstrate the fundamental mission 
of compliance and the issuer's, or non-Federal governmental health 
plan's or employer's, commitment to the compliance process.
    (2) Include the name of the individual in the organization 
responsible for compliance.
    (3) Include an effective monitoring system to identify practices 
that do not comply with PHS Act requirements and to provide reasonable 
assurance that fraud, abuse, and systemic errors are detected in a 
timely manner.
    (4) Address procedures to improve internal policies when 
noncompliant practices are identified.
    (g) Evidence documenting the entity's record of previous compliance 
with HIPAA requirements.

[64 FR 45795, Aug. 20, 1999, as amended at 70 FR 71023, Nov. 25, 2005; 
78 FR 13440, Feb. 27, 2013]



Sec.  150.313  Market conduct examinations.

    (a) Definition. A market conduct examination means the examination 
of health insurance operations of an issuer, or the operation of a non-
Federal governmental plan, involving the review of one or more (or a 
combination) of a responsible entity's business or operational affairs, 
or both, to verify compliance with PHS Act requirements.
    (b) General. If, based on the information described in Sec.  
150.303, CMS finds evidence that a specific entity may be in violation 
of a HIPAA requirement, CMS may initiate a market conduct examination to 
determine whether the entity is out of compliance. CMS may conduct the 
examinations either at the site of the issuer or other responsible 
entity or a site CMS selects. When CMS selects a site, it may direct the 
issuer or other responsible entity to forward any documentation CMS 
considers relevant for purposes of the examination to that site.
    (c) Appointment of examiners. When CMS identifies an issue that 
warrants investigation, CMS will appoint one or more examiners to 
perform the examination and instruct them as to the scope of the 
examination.
    (d) Appointment of professionals and specialists. When conducting an 
examination under this part, CMS may retain attorneys, independent 
actuaries, independent market conduct examiners, or other professionals 
and specialists as examiners.
    (e) Report of market conduct examination--(1) CMS review. When CMS 
receives a report, it will review the report, together with the 
examination work papers and any other relevant information, and prepare 
a final report. The final examination report will be provided to the 
issuer or other responsible entity.
    (2) Response from issuer or other responsible entity. With respect 
to each examination issue identified in the report, the issuer or other 
responsible entity may:
    (i) Concur with CMS's position(s) as outlined in the report, 
explaining the plan of correction to be implemented.
    (ii) Dispute CMS's position(s), clearly outlining the basis for its 
dispute and

[[Page 198]]

submitting illustrative examples where appropriate.
    (3) CMS's reply to a response from an issuer or other responsible 
entity. Upon receipt of a response from the issuer or other responsible 
entity, CMS will provide a letter containing its reply to each 
examination issue. CMS's reply will consist of one of the following:
    (i) Concurrence with the issuer's or non-Federal governmental plan's 
position.
    (ii) Approval of the issuer's or non-Federal governmental plan's 
proposed plan of correction.
    (iii) Conditional approval of the issuer's or non-Federal 
governmental plan's proposed plan of correction, which will include any 
modifications CMS requires.
    (iv) Notice to the issuer or non-Federal governmental plan that 
there exists a potential violation of PHS Act requirements.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.315  Amount of penalty--General.

    A civil money penalty for each violation of 42 U.S.C. 300gg et seq. 
may not exceed $100 as adjusted annually under 45 CFR part 102 for each 
day, for each responsible entity, for each individual affected by the 
violation. Penalties imposed under this part are in addition to any 
other penalties prescribed or allowed by law.

[64 FR 45795, Aug. 20, 1999, as amended at 81 FR 61581, Sept. 6, 2016]



Sec.  150.317  Factors CMS uses to determine the amount of penalty.

    In determining the amount of any penalty, CMS takes into account the 
following:
    (a) The entity's previous record of compliance. This may include any 
of the following:
    (1) Any history of prior violations by the responsible entity, 
including whether, at any time before determination of the current 
violation or violations, CMS or any State found the responsible entity 
liable for civil or administrative sanctions in connection with a 
violation of PHS Act requirements.
    (2) Documentation that the responsible entity has submitted its 
policy forms to CMS for compliance review.
    (3) Evidence that the responsible entity has never had a complaint 
for noncompliance with PHS Act requirements filed with a State or CMS.
    (4) Such other factors as justice may require.
    (b) The gravity of the violation. This may include any of the 
following:
    (1) The frequency of the violation, taking into consideration 
whether any violation is an isolated occurrence, represents a pattern, 
or is widespread.
    (2) The level of financial and other impacts on affected 
individuals.
    (3) Other factors as justice may require.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.319  Determining the amount of the penalty--mitigating
circumstances.

    For every violation subject to a civil money penalty, if there are 
substantial or several mitigating circumstances, the aggregate amount of 
the penalty is set at an amount sufficiently below the maximum permitted 
by Sec.  150.315 to reflect that fact. As guidelines for taking into 
account the factors listed in Sec.  150.317, CMS considers the 
following:
    (a) Record of prior compliance. It should be considered a mitigating 
circumstance if the responsible entity has done any of the following:
    (1) Before receipt of the notice issued under Sec.  150.307, 
implemented and followed a compliance plan as described in Sec.  
150.311(f).
    (2) Had no previous complaints against it for noncompliance.
    (b) Gravity of the violation(s). It should be considered a 
mitigating circumstance if the responsible entity has done any of the 
following:
    (1) Made adjustments to its business practices to come into 
compliance with PHS Act requirements so that the following occur:
    (i) All employers, employees, individuals and non-Federal 
governmental entities are identified that are or were issued any policy, 
certificate of insurance or plan document, or any form used in 
connection therewith that failed to comply.

[[Page 199]]

    (ii) All employers, employees, individuals, and non-Federal 
governmental plans are identified that were denied coverage or were 
denied a right provided under PHS Act requirements.
    (iii) Each employer, employee, individual, or non-Federal 
governmental plan adversely affected by the violation has been, for 
example, offered coverage or provided a certificate of creditable 
coverage in a manner that complies with PHS Act requirements that were 
violated so that, to the extent practicable, that employer, employee, 
individual, or non-Federal governmental entity is in the same position 
that he, she, or it would have been in had the violation not occurred.
    (iv) The adjustments are completed in a timely manner.
    (2) Discovered areas of noncompliance without notice from CMS and 
voluntarily reported that noncompliance, provided that the responsible 
entity submits the following:
    (i) Documentation verifying that the rights and protections of all 
individuals adversely affected by the noncompliance have been restored; 
and
    (ii) A plan of correction to prevent future similar violations.
    (3) Demonstrated that the violation is an isolated occurrence.
    (4) Demonstrated that the financial and other impacts on affected 
individuals is negligible or nonexistent.
    (5) Demonstrated that the noncompliance is correctable and that a 
high percentage of the violations were corrected.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.321  Determining the amount of penalty--aggravating 
circumstances.

    For every violation subject to a civil money penalty, if there are 
substantial or several aggravating circumstances, CMS sets the aggregate 
amount of the penalty at an amount sufficiently close to or at the 
maximum permitted by Sec.  150.315 to reflect that fact. CMS considers 
the following circumstances to be aggravating circumstances:
    (a) The frequency of violation indicates a pattern of widespread 
occurrence.
    (b) The violation(s) resulted in significant financial and other 
impacts on the average affected individual.
    (c) The entity does not provide documentation showing that 
substantially all of the violations were corrected.



Sec.  150.323  Determining the amount of penalty--other matters as
justice may require.

    CMS may take into account other circumstances of an aggravating or 
mitigating nature if, in the interests of justice, they require either a 
reduction or an increase of the penalty in order to assure the 
achievement of the purposes of this part, and if those circumstances 
relate to the entity's previous record of compliance or the gravity of 
the violation.



Sec.  150.325  Settlement authority.

    Nothing in Sec. Sec.  150.315 through 150.323 limits the authority 
of CMS to settle any issue or case described in the notice furnished in 
accordance with Sec.  150.307 or to compromise on any penalty provided 
for in Sec. Sec.  150.315 through 150.323.



Sec.  150.341  Limitations on penalties.

    (a) Circumstances under which a civil money penalty is not imposed. 
CMS does not impose any civil money penalty on any failure for the 
period of time during which none of the responsible entities knew, or 
exercising reasonable diligence would have known, of the failure. CMS 
also does not impose a civil money penalty for the period of time after 
any of the responsible entities knew, or exercising reasonable diligence 
would have known of the failure, if the failure was due to reasonable 
cause and not due to willful neglect and the failure was corrected 
within 30 days of the first day that any of the entities against whom 
the penalty would be imposed knew, or exercising reasonable diligence 
would have known, that the failure existed.
    (b) Burden of establishing knowledge. The burden is on the 
responsible entity or entities to establish to CMS's satisfaction that 
no responsible entity knew, or exercising reasonable diligence would 
have known, that the failure existed.

[[Page 200]]



Sec.  150.343  Notice of proposed penalty.

    If CMS proposes to assess a penalty in accordance with this part, it 
delivers to the responsible entity, or sends to that entity by certified 
mail, return receipt requested, written notice of its intent to assess a 
penalty. The notice includes the following:
    (a) A description of the PHS Act requirements that CMS has 
determined that the responsible entity violated.
    (b) A description of any complaint or other information upon which 
CMS based its determination, including the basis for determining the 
number of affected individuals and the number of days for which the 
violations occurred.
    (c) The amount of the proposed penalty as of the date of the notice.
    (d) Any circumstances described in Sec. Sec.  150.317 through 
150.323 that were considered when determining the amount of the proposed 
penalty.
    (e) A specific statement of the responsible entity's right to a 
hearing.
    (f) A statement that failure to request a hearing within 30 days 
permits the assessment of the proposed penalty without right of appeal 
in accordance with Sec.  150.347.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]



Sec.  150.345  Appeal of proposed penalty.

    Any entity against which CMS has assessed a penalty may appeal that 
penalty in accordance with Sec.  150.401 et seq.



Sec.  150.347  Failure to request a hearing.

    If the responsible entity does not request a hearing within 30 days 
of the issuance of the notice described in Sec.  150.343, CMS may assess 
the proposed civil money penalty, a less severe penalty, or a more 
severe penalty. CMS notifies the responsible entity in writing of any 
penalty that has been assessed and of the means by which the responsible 
entity may satisfy the judgment. The responsible entity has no right to 
appeal a penalty with respect to which it has not requested a hearing in 
accordance with Sec.  150.405 unless the responsible entity can show 
good cause, as determined under Sec.  150.405(b), for failing to timely 
exercise its right to a hearing.



                    Subpart D_Administrative Hearings



Sec.  150.401  Definitions.

    In this subpart, unless the context indicates otherwise:
    ALJ means administrative law judge of the Departmental Appeals Board 
of the Department of Health and Human Services.
    Filing date means the date postmarked by the U.S. Postal Service, 
deposited with a carrier for commercial delivery, or hand delivered.
    Hearing includes a hearing on a written record as well as an in-
person or telephone hearing.
    Party means CMS or the respondent.
    Receipt date means five days after the date of a document, unless 
there is a showing that it was in fact received later.
    Respondent means an entity that received a notice of proposed 
assessment of a civil money penalty issued pursuant to Sec.  150.343.



Sec.  150.403  Scope of ALJ's authority.

    (a) The ALJ has the authority, including all of the authority 
conferred by the Administrative Procedure Act, to adopt whatever 
procedures may be necessary or proper to carry out in an efficient and 
effective manner the ALJ's duty to provide a fair and impartial hearing 
on the record and to issue an initial decision concerning the imposition 
of a civil money penalty.
    (b) The ALJ's authority includes the authority to modify, consistent 
with the Administrative Procedure Act (5 U.S.C. 552a), any hearing 
procedures set out in this subpart.
    (c) The ALJ does not have the authority to find invalid or refuse to 
follow Federal statutes or regulations.



Sec.  150.405  Filing of request for hearing.

    (a) A respondent has a right to a hearing before an ALJ if it files 
a request for hearing that complies with Sec.  150.407(a), within 30 
days after the date of issuance of either CMS's notice of proposed 
assessment under Sec.  150.343 or notice that an alternative dispute 
resolution process has terminated. The request for hearing should be 
addressed as instructed in the notice of proposed determination. ``Date 
of issuance'' is

[[Page 201]]

five (5) days after the filing date, unless there is a showing that the 
document was received earlier.
    (b) The ALJ may extend the time for filing a request for hearing 
only if the ALJ finds that the respondent was prevented by events or 
circumstances beyond its control from filing its request within the time 
specified above. Any request for an extension of time must be made 
promptly by written motion.



Sec.  150.407  Form and content of request for hearing.

    (a) The request for hearing must do the following:
    (1) Identify any factual or legal bases for the assessment with 
which the respondent disagrees.
    (2) Describe with reasonable specificity the basis for the 
disagreement, including any affirmative facts or legal arguments on 
which the respondent is relying.
    (b) The request for hearing must identify the relevant notice of 
assessment by date and attach a copy of the notice.



Sec.  150.409  Amendment of notice of assessment or request for hearing.

    The ALJ may permit CMS to amend its notice of assessment, or permit 
the respondent to amend a request for hearing that complies with Sec.  
150.407(a), if the ALJ finds that no undue prejudice to either party 
will result.



Sec.  150.411  Dismissal of request for hearing.

    An ALJ will order a request for hearing dismissed if the ALJ 
determines that:
    (a) The request for hearing was not filed within 30 days as 
specified by Sec.  150.405(a) or any extension of time granted by the 
ALJ pursuant to Sec.  150.405(b).
    (b) The request for hearing fails to meet the requirements of Sec.  
150.407.
    (c) The entity that filed the request for hearing is not a 
respondent under Sec.  150.401.
    (d) The respondent has abandoned its request.
    (e) The respondent withdraws its request for hearing.



Sec.  150.413  Settlement.

    CMS has exclusive authority to settle any issue or any case, without 
the consent of the administrative law judge at any time before or after 
the administrative law judge's decision.



Sec.  150.415  Intervention.

    (a) The ALJ may grant the request of an entity, other than the 
respondent, to intervene if all of the following occur:
    (1) The entity has a significant interest relating to the subject 
matter of the case.
    (2) Disposition of the case will, as a practical matter, likely 
impair or impede the entity's ability to protect that interest.
    (3) The entity's interest is not adequately represented by the 
existing parties.
    (4) The intervention will not unduly delay or prejudice the 
adjudication of the rights of the existing parties.
    (b) A request for intervention must specify the grounds for 
intervention and the manner in which the entity seeks to participate in 
the proceedings. Any participation by an intervenor must be in the 
manner and by any deadline set by the ALJ.
    (c) The Department of Labor or the IRS may intervene without regard 
to paragraphs (a)(1) through (a)(3) of this section.



Sec.  150.417  Issues to be heard and decided by ALJ.

    (a) The ALJ has the authority to hear and decide the following 
issues:
    (1) Whether a basis exists to assess a civil money penalty against 
the respondent.
    (2) Whether the amount of the assessed civil money penalty is 
reasonable.
    (b) In deciding whether the amount of a civil money penalty is 
reasonable, the ALJ--
    (1) Applies the factors that are identified in Sec.  150.317.
    (2) May consider evidence of record relating to any factor that CMS 
did not apply in making its initial determination, so long as that 
factor is identified in this subpart.
    (c) If the ALJ finds that a basis exists to assess a civil money 
penalty,

[[Page 202]]

the ALJ may sustain, reduce, or increase the penalty that CMS assessed.



Sec.  150.419  Forms of hearing.

    (a) All hearings before an ALJ are on the record. The ALJ may 
receive argument or testimony in writing, in person, or by telephone. 
The ALJ may receive testimony by telephone only if the ALJ determines 
that doing so is in the interest of justice and economy and that no 
party will be unduly prejudiced. The ALJ may require submission of a 
witness' direct testimony in writing only if the witness is available 
for cross-examination.
    (b) The ALJ may decide a case based solely on the written record 
where there is no disputed issue of material fact the resolution of 
which requires the receipt of oral testimony.



Sec.  150.421  Appearance of counsel.

    Any attorney who is to appear on behalf of a party must promptly 
file, with the ALJ, a notice of appearance.



Sec.  150.423  Communications with the ALJ.

    No party or person (except employees of the ALJ's office) may 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for both parties to participate. This 
provision does not prohibit a party or person from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec.  150.425  Motions.

    (a) Any request to the ALJ for an order or ruling must be by motion, 
stating the relief sought, the authority relied upon, and the facts 
alleged. All motions must be in writing, with a copy served on the 
opposing party, except in either of the following situations:
    (1) The motion is presented during an oral proceeding before an ALJ 
at which both parties have the opportunity to be present.
    (2) An extension of time is being requested by agreement of the 
parties or with waiver of objections by the opposing party.
    (b) Unless otherwise specified in this subpart, any response or 
opposition to a motion must be filed within 20 days of the party's 
receipt of the motion. The ALJ does not rule on a motion before the time 
for filing a response to the motion has expired except where the 
response is filed at an earlier date, where the opposing party consents 
to the motion being granted, or where the ALJ determines that the motion 
should be denied.



Sec.  150.427  Form and service of submissions.

    (a) Every submission filed with the ALJ must be filed in triplicate, 
including one original of any signed documents, and include:
    (1) A caption on the first page, setting forth the title of the 
case, the docket number (if known), and a description of the submission 
(such as ``Motion for Discovery'').
    (2) The signatory's name, address, and telephone number.
    (3) A signed certificate of service, specifying each address to 
which a copy of the submission is sent, the date on which it is sent, 
and the method of service.
    (b) A party filing a submission with the ALJ must, at the time of 
filing, serve a copy of such submission on the opposing party. An 
intervenor filing a submission with the ALJ must, at the time of filing, 
serve a copy of the submission on all parties. Service must be made by 
mailing or hand delivering a copy of the submission to the opposing 
party. If a party is represented by an attorney, service must be made on 
the attorney.



Sec.  150.429  Computation of time and extensions of time.

    (a) For purposes of this subpart, in computing any period of time, 
the time begins with the day following the act, event, or default and 
includes the last day of the period unless it is a Saturday, Sunday, or 
legal holiday observed by the Federal government, in which event it 
includes the next business day. When the period of time allowed is less 
than seven days, intermediate Saturdays, Sundays, and legal holidays 
observed by the Federal government are excluded from the computation.

[[Page 203]]

    (b) The period of time for filing any responsive pleading or papers 
is determined by the date of receipt (as defined in Sec.  150.401) of 
the submission to which a response is being made.
    (c) The ALJ may grant extensions of the filing deadlines specified 
in these regulations or set by the ALJ for good cause shown (except that 
requests for extensions of time to file a request for hearing may be 
granted only on the grounds specified in section Sec.  150.405(b)).



Sec.  150.431  Acknowledgment of request for hearing.

    After receipt of the request for hearing, the ALJ assigned to the 
case or someone acting on behalf of the ALJ will send a letter to the 
parties that acknowledges receipt of the request for hearing, identifies 
the docket number assigned to the case, provides instructions for filing 
submissions and other general information concerning procedures, and 
sets out the next steps in the case.



Sec.  150.435  Discovery.

    (a) The parties must identify any need for discovery from the 
opposing party as soon as possible, but no later than the time for the 
reply specified in Sec.  150.437(c). Upon request of a party, the ALJ 
may stay proceedings for a reasonable period pending completion of 
discovery if the ALJ determines that a party would not be able to make 
the submissions required by Sec.  150.437 without discovery. The parties 
should attempt to resolve any discovery issues informally before seeking 
an order from the ALJ.
    (b) Discovery devices may include requests for production of 
documents, requests for admission, interrogatories, depositions, and 
stipulations. The ALJ orders interrogatories or depositions only if 
these are the only means to develop the record adequately on an issue 
that the ALJ must resolve to decide the case.
    (c) Each discovery request must be responded to within 30 days of 
receipt, unless that period of time is extended for good cause by the 
ALJ.
    (d) A party to whom a discovery request is directed may object in 
writing for any of the following reasons:
    (1) Compliance with the request is unduly burdensome or expensive.
    (2) Compliance with the request will unduly delay the proceedings.
    (3) The request seeks information that is wholly outside of any 
matter in dispute.
    (4) The request seeks privileged information. Any party asserting a 
claim of privilege must sufficiently describe the information or 
document being withheld to show that the privilege applies. If an 
asserted privilege applies to only part of a document, a party 
withholding the entire document must state why the nonprivileged part is 
not segregable.
    (e) Any motion to compel discovery must be filed within 10 days 
after receipt of objections to the party's discovery request, within 10 
days after the time for response to the discovery request has elapsed if 
no response is received, or within 10 days after receipt of an 
incomplete response to the discovery request. The motion must be 
reasonably specific as to the information or document sought and must 
state its relevance to the issues in the case.



Sec.  150.437  Submission of briefs and proposed hearing exhibits.

    (a) Within 60 days of its receipt of the acknowledgment provided for 
in Sec.  150.431, the respondent must file the following with the ALJ:
    (1) A statement of its arguments concerning CMS's notice of 
assessment (respondent's brief), including citations to the respondent's 
hearing exhibits provided in accordance with paragraph (a)(2) of this 
section. The brief may not address factual or legal bases for the 
assessment that the respondent did not identify as disputed in its 
request for hearing or in an amendment to that request permitted by the 
ALJ.
    (2) All documents (including any affidavits) supporting its 
arguments, tabbed and organized chronologically and accompanied by an 
indexed list identifying each document (respondent's proposed hearing 
exhibits).
    (3) A statement regarding whether there is a need for an in-person 
hearing and, if so, a list of proposed witnesses

[[Page 204]]

and a summary of their expected testimony that refers to any factual 
dispute to which the testimony will relate.
    (4) Any stipulations or admissions.
    (b) Within 30 days of its receipt of the respondent's submission 
required by paragraph (a) of this section, CMS will file the following 
with the ALJ:
    (1) A statement responding to the respondent's brief, including the 
respondent's proposed hearing exhibits, if appropriate. The statement 
may include citations to CMS's proposed hearing exhibits submitted in 
accordance with paragraph (b)(2) of this section.
    (2) Any documents supporting CMS's response not already submitted as 
part of the respondent's proposed hearing exhibits, organized and 
indexed as indicated in paragraph (a)(2) of this section (CMS's proposed 
hearing exhibits).
    (3) A statement regarding whether there is a need for an in-person 
hearing and, if so, a list of proposed witnesses and a summary of their 
expected testimony that refers to any factual dispute to which the 
testimony will relate.
    (4) Any admissions or stipulations.
    (c) Within 15 days of its receipt of CMS's submission required by 
paragraph (b) of this section, the respondent may file with the ALJ a 
reply to CMS's submission.



Sec.  150.439  Effect of submission of proposed hearing exhibits.

    (a) Any proposed hearing exhibit submitted by a party in accordance 
with Sec.  150.437 is deemed part of the record unless the opposing 
party raises an objection to that exhibit and the ALJ rules to exclude 
it from the record. An objection must be raised either in writing prior 
to the prehearing conference provided for in Sec.  150.441 or at the 
prehearing conference. The ALJ may require a party to submit the 
original hearing exhibit on his or her own motion or in response to a 
challenge to the authenticity of a proposed hearing exhibit.
    (b) A party may introduce a proposed hearing exhibit following the 
times for submission specified in Sec.  150.437 only if the party 
establishes to the satisfaction of the ALJ that it could not have 
produced the exhibit earlier and that the opposing party will not be 
prejudiced.



Sec.  150.441  Prehearing conferences.

    An ALJ may schedule one or more prehearing conferences (generally 
conducted by telephone) on the ALJ's own motion or at the request of 
either party for the purpose of any of the following:
    (a) Hearing argument on any outstanding discovery request.
    (b) Establishing a schedule for any supplements to the submissions 
required by Sec.  150.437 because of information obtained through 
discovery.
    (c) Hearing argument on a motion.
    (d) Discussing whether the parties can agree to submission of the 
case on a stipulated record.
    (e) Establishing a schedule for an in-person hearing, including 
setting deadlines for the submission of written direct testimony or for 
the written reports of experts.
    (f) Discussing whether the issues for a hearing can be simplified or 
narrowed.
    (g) Discussing potential settlement of the case.
    (h) Discussing any other procedural or substantive issues.



Sec.  150.443  Standard of proof.

    (a) In all cases before an ALJ--
    (1) CMS has the burden of coming forward with evidence sufficient to 
establish a prima facie case;
    (2) The respondent has the burden of coming forward with evidence in 
response, once CMS has established a prima facie case; and
    (3) CMS has the burden of persuasion regarding facts material to the 
assessment; and
    (4) The respondent has the burden of persuasion regarding facts 
relating to an affirmative defense.
    (b) The preponderance of the evidence standard applies to all cases 
before the ALJ.



Sec.  150.445  Evidence.

    (a) The ALJ will determine the admissibility of evidence.
    (b) Except as provided in this part, the ALJ will not be bound by 
the Federal Rules of Evidence. However, the ALJ may apply the Federal 
Rules of Evidence where appropriate; for example, to exclude unreliable 
evidence.

[[Page 205]]

    (c) The ALJ excludes irrelevant or immaterial evidence.
    (d) Although relevant, evidence may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (e) Although relevant, evidence is excluded if it is privileged 
under Federal law.
    (f) Evidence concerning offers of compromise or settlement made in 
this action will be inadmissible to the extent provided in the Federal 
Rules of Evidence.
    (g) Evidence of acts other than those at issue in the instant case 
is admissible in determining the amount of any civil money penalty if 
those acts are used under Sec. Sec.  150.317 and 150.323 of this part to 
consider the entity's prior record of compliance, or to show motive, 
opportunity, intent, knowledge, preparation, identity, or lack of 
mistake. This evidence is admissible regardless of whether the acts 
occurred during the statute of limitations period applicable to the acts 
that constitute the basis for liability in the case and regardless of 
whether CMS's notice sent in accordance with Sec. Sec.  150.307 and 
150.343 referred to them.
    (h) The ALJ will permit the parties to introduce rebuttal witnesses 
and evidence.
    (i) All documents and other evidence offered or taken for the record 
will be open to examination by all parties, unless the ALJ orders 
otherwise for good cause shown.
    (j) The ALJ may not consider evidence regarding the willingness and 
ability to enter into and successfully complete a corrective action plan 
when that evidence pertains to matters occurring after CMS's notice 
under Sec.  150.307.



Sec.  150.447  The record.

    (a) Any testimony that is taken in-person or by telephone is 
recorded and transcribed. The ALJ may order that other proceedings in a 
case, such as a prehearing conference or oral argument of a motion, be 
recorded and transcribed.
    (b) The transcript of any testimony, exhibits and other evidence 
that is admitted, and all pleadings and other documents that are filed 
in the case constitute the record for purposes of an ALJ decision.
    (c) For good cause, the ALJ may order appropriate redactions made to 
the record.



Sec.  150.449  Cost of transcripts.

    Generally, each party is responsible for 50 percent of the 
transcript cost. Where there is an intervenor, the ALJ determines what 
percentage of the transcript cost is to be paid for by the intervenor.



Sec.  150.451  Posthearing briefs.

    Each party is entitled to file proposed findings and conclusions, 
and supporting reasons, in a posthearing brief. The ALJ will establish 
the schedule by which such briefs must be filed. The ALJ may direct the 
parties to brief specific questions in a case and may impose page limits 
on posthearing briefs. Additionally, the ALJ may allow the parties to 
file posthearing reply briefs.



Sec.  150.453  ALJ decision.

    The ALJ will issue an initial agency decision based only on the 
record and on applicable law; the decision will contain findings of fact 
and conclusions of law. The ALJ's decision is final and appealable after 
30 days unless it is modified or vacated under Sec.  150.457.



Sec.  150.455  Sanctions.

    (a) The ALJ may sanction a party or an attorney for failing to 
comply with an order or other directive or with a requirement of a 
regulation, for abandonment of a case, or for other actions that 
interfere with the speedy, orderly or fair conduct of the hearing. Any 
sanction that is imposed will relate reasonably to the severity and 
nature of the failure or action.
    (b) A sanction may include any of the following actions:
    (1) In the case of failure or refusal to provide or permit 
discovery, drawing negative fact inferences or treating such failure or 
refusal as an admission by deeming the matter, or certain facts, to be 
established.

[[Page 206]]

    (2) Prohibiting a party from introducing certain evidence or 
otherwise advocating a particular claim or defense.
    (3) Striking pleadings, in whole or in part.
    (4) Staying the case.
    (5) Dismissing the case.
    (6) Entering a decision by default.
    (7) Refusing to consider any motion or other document that is not 
filed in a timely manner.
    (8) Taking other appropriate action.



Sec.  150.457  Review by Administrator.

    (a) The Administrator of CMS (which for purposes of this subsection 
may include his or her delegate), at his or her discretion, may review 
in whole or in part any initial agency decision issued under Sec.  
150.453.
    (b) The Administrator may decide to review an initial agency 
decision if it appears from a preliminary review of the decision (or 
from a preliminary review of the record on which the initial agency 
decision was based, if available at the time) that:
    (1) The ALJ made an erroneous interpretation of law or regulation.
    (2) The initial agency decision is not supported by substantial 
evidence.
    (3) The ALJ has incorrectly assumed or denied jurisdiction or 
extended his or her authority to a degree not provided for by statute or 
regulation.
    (4) The ALJ decision requires clarification, amplification, or an 
alternative legal basis for the decision.
    (5) The ALJ decision otherwise requires modification, reversal, or 
remand.
    (c) Within 30 days of the date of the initial agency decision, the 
Administrator will mail a notice advising the respondent of any intent 
to review the decision in whole or in part.
    (d) Within 30 days of receipt of a notice that the Administrator 
intends to review an initial agency decision, the respondent may submit, 
in writing, to the Administrator any arguments in support of, or 
exceptions to, the initial agency decision.
    (e) This submission of the information indicated in paragraph (d) of 
this section must be limited to issues the Administrator has identified 
in his or her notice of intent to review, if the Administrator has given 
notice of an intent to review the initial agency decision only in part. 
A copy of this submission must be sent to the other party.
    (f) After receipt of any submissions made pursuant to paragraph (d) 
of this section and any additional submissions for which the 
Administrator may provide, the Administrator will affirm, reverse, 
modify, or remand the initial agency decision. The Administrator will 
mail a copy of his or her decision to the respondent.
    (g) The Administrator's decision will be based on the record on 
which the initial agency decision was based (as forwarded by the ALJ to 
the Administrator) and any materials submitted pursuant to paragraphs 
(b), (d), and (f) of this section.
    (h) The Administrator's decision may rely on decisions of any courts 
and other applicable law, whether or not cited in the initial agency 
decision.



Sec.  150.459  Judicial review.

    (a) Filing of an action for review. Any responsible entity against 
whom a final order imposing a civil money penalty is entered may obtain 
review in the United States District Court for any district in which the 
entity is located or in the United States District Court for the 
District of Columbia by doing the following:
    (1) Filing a notice of appeal in that court within 30 days from the 
date of a final order.
    (2) Simultaneously sending a copy of the notice of appeal by 
registered mail to CMS.
    (b) Certification of administrative record. CMS promptly certifies 
and files with the court the record upon which the penalty was assessed.
    (c) Standard of review. The findings of CMS and the ALJ may not be 
set aside unless they are found to be unsupported by substantial 
evidence, as provided by 5 U.S.C. 706(2)(E).



Sec.  150.461  Failure to pay assessment.

    If any entity fails to pay an assessment after it becomes a final 
order, or after the court has entered final judgment in favor of CMS, 
CMS refers the matter to the Attorney General, who brings an action 
against the entity in

[[Page 207]]

the appropriate United States district court to recover the amount 
assessed.



Sec.  150.463  Final order not subject to review.

    In an action brought under Sec.  150.461, the validity and 
appropriateness of the final order described in Sec.  150.459 is not 
subject to review.



Sec.  150.465  Collection and use of penalty funds.

    (a) Any funds collected under Sec.  150.461 are paid to CMS.
    (b) The funds are available without appropriation until expended.
    (c) The funds may be used only for the purpose of enforcing the PHS 
Act requirements for which the penalty was assessed.

[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]

                           PART 151 [RESERVED]



PART 152_PRE-EXISTING CONDITION INSURANCE PLAN PROGRAM-
-Table of Contents



                      Subpart A_General Provisions

Sec.
152.1 Statutory basis.
152.2 Definitions.

                  Subpart B_PCIP Program Administration

152.6 Program administration.
152.7 PCIP proposal process.

                  Subpart C_Eligibility and Enrollment

152.14 Eligibility.
152.15 Enrollment and disenrollment process.

                           Subpart D_Benefits

152.19 Covered benefits.
152.20 Prohibitions on pre-existing condition exclusions and waiting 
          periods.
152.21 Premiums and cost-sharing.
152.22 Access to services.

                           Subpart E_Oversight

152.26 Appeals procedures.
152.27 Fraud, waste, and abuse.
152.28 Preventing insurer dumping.

                            Subpart F_Funding

152.32 Use of funds.
152.33 Initial allocation of funds.
152.34 Reallocation of funds.
152.35 Insufficient funds.

          Subpart G_Relationship to Existing Laws and Programs

152.39 Maintenance of effort.
152.40 Relation to State laws.

                    Subpart H_Transition to Exchanges

152.44 End of PCIP program coverage.
152.45 Transition to the exchanges.

    Authority: Sec. 1101 of the Patient Protection and Affordable Care 
Act (Pub. L. 111-148).

    Source: 75 FR 45029, July 30, 2010, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  152.1  Statutory basis.

    (a) Basis. This part establishes provisions needed to implement 
section 1101 of the Patient Protection and Affordable Care Act of 2010 
(Affordable Care Act), which requires the Secretary of the Department of 
Health and Human Services to establish a temporary high risk health 
insurance pool program to provide health insurance coverage for 
individuals described in Sec.  152.14 of this part.
    (b) Scope. This part establishes standards and sets forth the 
requirements, limitations, and procedures for the temporary high risk 
health insurance pool program, hereafter referred to as the ``Pre-
Existing Condition Insurance Plan'' (PCIP) program.



Sec.  152.2  Definitions.

    For purposes of this part the following definitions apply:
    Creditable coverage means coverage of an individual as defined in 
section 2701(c)(1) of the Public Health Service Act as of March 23, 2010 
and 45 CFR 146.113(a)(1).
    Enrollee means an individual receiving coverage from a PCIP 
established under this section.
    Lawfully present means
    (1) A qualified alien as defined in section 431 of the Personal 
Responsibility and Work Opportunity Act (PRWORA) (8 U.S.C. 1641);
    (2) An alien in nonimmigrant status who has not violated the terms 
of the

[[Page 208]]

status under which he or she was admitted or to which he or she has 
changed after admission;
    (3) An alien who has been paroled into the United States pursuant to 
section 212(d)(5) of the Immigration and Nationality Act (INA) (8 U.S.C. 
1182(d)(5)) for less than 1 year, except for an alien paroled for 
prosecution, for deferred inspection or pending removal proceedings;
    (4) An alien who belongs to one of the following classes:
    (i) Aliens currently in temporary resident status pursuant to 
section 210 or 245A of the INA (8 U.S.C. 1160 or 1255a, respectively);
    (ii) Aliens currently under Temporary Protected Status (TPS) 
pursuant to section 244 of the INA (8 U.S.C. 1254a), and pending 
applicants for TPS who have been granted employment authorization;
    (iii) Aliens who have been granted employment authorization under 8 
CFR 274a.12(c)(9), (10), (16), (18), (20), (22), or (24);
    (iv) Family Unity beneficiaries pursuant to section 301 of Public 
Law 101-649 as amended;
    (v) Aliens currently under Deferred Enforced Departure (DED) 
pursuant to a decision made by the President;
    (vi) Aliens currently in deferred action status;
    (vii) Aliens whose visa petitions have been approved and who have a 
pending application for adjustment of status;
    (5) A pending applicant for asylum under section 208(a) of the INA 
(8 U.S.C. 1158) or for withholding of removal under section 241(b)(3) of 
the INA (8 U.S.C. 1231) or under the Convention Against Torture who has 
been granted employment authorization, and such an applicant under the 
age of 14 who has had an application pending for at least 180 days;
    (6) An alien who has been granted withholding of removal under the 
Convention Against Torture; or
    (7) A child who has a pending application for Special Immigrant 
Juvenile status as described in section 101(a)(27)(J) of the INA (8 
U.S.C. 1101(a)(27)(J)).
    (8) Exception. An individual with deferred action under the 
Department of Homeland Security's deferred action for childhood arrivals 
process, as described in the Secretary of Homeland Security's June 15, 
2012, memorandum, shall not be considered to be lawfully present with 
respect to any of the above categories in paragraphs (1) through (7) of 
this definition.
    Out-of-pocket costs means the sum of the annual deductible and the 
other annual out-of-pocket expenses, other than for premiums, required 
to be paid under the program.
    Pre-Existing condition exclusion has the meaning given such term in 
45 CFR 144.103.
    Pre-Existing Condition Insurance Plan (PCIP) means the temporary 
high risk health insurance pool plan (sometimes referred to as a 
``qualified high risk pool'') that provides coverage in a State, or 
combination of States, in accordance with the requirements of section 
1101 of the Affordable Care Act and this part. The term ``PCIP program'' 
is generally used to describe the national program the Secretary is 
charged with carrying out, under which States or non-profit entities 
operate individual PCIPs.
    Resident means an individual who has been legally domiciled in a 
State.
    Service Area refers to the geographic area encompassing an entire 
State or States in which PCIP furnishes benefits.
    State refers each of the 50 States and the District of Columbia.

[75 FR 45029, July 30, 2010, as amended at 77 FR 52616, Aug. 30, 2012]



                  Subpart B_PCIP Program Administration



Sec.  152.6  Program administration.

    (a) General rule. Section 1101(b)(1) of the Affordable Care Act 
requires that HHS carry out the Pre-Existing Condition Insurance Plan 
program directly or through contracts with eligible entities, which are 
States or nonprofit private entities.
    (b) Administration by State. A State (or its designated non-profit 
private entity) may submit a proposal to enter into a contract with HHS 
to establish and administer a PCIP in accordance with section 1101 of 
the Affordable Care Act and this part.

[[Page 209]]

    (1) At the Secretary's discretion, a State may designate a nonprofit 
entity or entities to contract with HHS to administer a PCIP.
    (2) As part of its administrative approach, a State or designated 
entity may subcontract with either a for-profit or nonprofit entity.
    (c) Administration by HHS. If a State or its designated entity 
notifies HHS that it will not establish or continue to administer a 
PCIP, or does not submit an acceptable or timely proposal to do so, HHS 
will contract with a nonprofit private entity or entities to administer 
a PCIP in that State.
    (d) Transition in administration. The Secretary may consider a 
request from a State to transition from administration by HHS to 
administration by a State or from administration by a State to 
administration by HHS. Such transitions shall be approved only if the 
Secretary determines that the transition is in the best interests of the 
PCIP enrollees and potential PCIP enrollees in that state, consistent 
with Sec.  152.7(b) of this part.



Sec.  152.7  PCIP proposal process.

    (a) General. A proposal from a State or nonprofit private entity to 
contract with HHS shall demonstrate that the eligible entity has the 
capacity and technical capability to perform all functions necessary for 
the design and operation of a PCIP, and that its proposed PCIP is in 
full compliance with all of the requirements of this part.
    (b) Special rules for transitions in administration. (1) Transitions 
from HHS administration of a PCIP to State administration must take 
effect on January 1 of a given year.
    (2) A State's proposal to administer a PCIP must meet all the 
requirements of this section.
    (3) Transitions from State administration to HHS administration must 
comply with the termination procedures of the PCIP contract in effect 
with the State or its designated entity.
    (4) The Secretary may establish other requirements needed to ensure 
a seamless transition of coverage for all existing enrollees.



                  Subpart C_Eligibility and Enrollment



Sec.  152.14  Eligibility.

    (a) General rule. An individual is eligible to enroll in a PCIP if 
he or she:
    (1) Is a citizen or national of the United States or lawfully 
present in the United States;
    (2) Subject to paragraph (b) of this section, has not been covered 
under creditable coverage for a continuous 6-month period of time prior 
to the date on which such individual is applying for PCIP;
    (3) Has a pre-existing condition as established under paragraph (c) 
of this section; and
    (4) Is a resident of one of the 50 States or the District of 
Columbia which constitutes or is within the service area of the PCIP. A 
PCIP may not establish any standards with regard to the duration of 
residency in the PCIP service area.
    (b) Satisfaction of 6-month creditable coverage requirement when an 
enrollee leaves the PCIP service area. An individual who becomes 
ineligible for a PCIP on the basis of no longer residing in the PCIP's 
service area as described in paragraph (a)(4) of this section is deemed 
to have satisfied the requirement in paragraph (a)(2) of this section 
for purposes of applying to enroll in a PCIP in the new service area.
    (c) Pre-existing condition requirement. For purposes of establishing 
a process for determining eligibility, and subject to HHS approval, a 
PCIP may elect to apply any one or more of the following criteria in 
determining whether an individual has a pre-existing condition for 
purposes of this section:
    (1) Refusal of coverage. Documented evidence that an insurer has 
refused, or a clear indication that the insurer would refuse, to issue 
coverage to an individual on grounds related to the individual's health.
    (2) Exclusion of coverage. Documented evidence that such individual 
has been offered coverage but only with a rider that excludes coverage 
of benefits associated with an individuals' identified pre-existing 
condition.
    (3) Medical or health condition. Documented evidence of the 
existence or history of certain medical or health

[[Page 210]]

condition, as approved or specified by the Secretary.
    (4) Other. Other criteria, as defined by a PCIP and approved by HHS.



Sec.  152.15  Enrollment and disenrollment process.

    (a) Enrollment process. (1) A PCIP must establish a process for 
verifying eligibility and enrolling an individual that is approved by 
HHS.
    (2) A PCIP must allow an individual to remain enrolled in the PCIP 
unless:
    (i) The individual is disenrolled under paragraph (b) of this 
section;
    (ii) The individual obtains other creditable coverage;
    (iii) The PCIP program terminates, or is terminated; or
    (iv) As specified by the PCIP program and approved by HHS.
    (3) A PCIP must verify that an individual is a United States citizen 
or national or lawfully present in the United States by:
    (i) Verifying the individual's citizenship, nationality, or lawful 
presence with the Commissioner of Security or Secretary of Homeland 
Security as applicable; or
    (ii) By requiring the individual to provide documentation which 
establishes the individual's citizenship, nationality, or lawful 
presence.
    (iii) The PCIP must provide an individual who is applying to enroll 
in the PCIP with a disclosure specifying if the information will be 
shared with the Department of Health and Human Services, Social Security 
Administration, and if necessary, Department of Homeland Security for 
purposes of establishing eligibility.
    (b) Disenrollment process. (1) A PCIP must establish a disenrollment 
process that is approved by HHS.
    (2) A PCIP may disenroll an individual if the monthly premium is not 
paid on a timely basis, following notice and a reasonable grace period, 
not to exceed 61 days from when payment is due, as defined by the PCIP 
and approved by HHS.
    (3) A PCIP must disenroll an individual in any of the following 
circumstances:
    (i) The individual no longer resides in the PCIP service area.
    (ii) The individual obtains other creditable coverage.
    (iii) Death of the individual.
    (iv) Other exceptional circumstances established by HHS.
    (c) Effective dates. A PCIP must establish rules governing the 
effective date of enrollment and disenrollment that are approved by HHS. 
A complete enrollment request submitted by an eligible individual by the 
15th day of a month, where the individual is determined to be eligible 
for enrollment, must take effect by the 1st day of the following month, 
except in exceptional circumstances that are subject to HHS approval.
    (d) Funding limitation. A PCIP may stop taking applications for 
enrollment to comply with funding limitations established by the HHS 
under section 1101(g) of Public Law 111-148 and Sec.  152.35 of this 
part. Accordingly, a PCIP may employ strategies to manage enrollment 
over the course of the program that may include enrollment capacity 
limits, phased-in (delayed) enrollment, and other measures, as defined 
by the PCIP and approved by HHS, including measures specified under 
Sec.  152.35(b).



                           Subpart D_Benefits



Sec.  152.19  Covered benefits.

    (a) Required benefits. Each benefit plan offered by a PCIP shall 
cover at least the following categories and the items and services:
    (1) Hospital inpatient services
    (2) Hospital outpatient services
    (3) Mental health and substance abuse services
    (4) Professional services for the diagnosis or treatment of injury, 
illness, or condition
    (5) Non-custodial skilled nursing services
    (6) Home health services
    (7) Durable medical equipment and supplies
    (8) Diagnostic x-rays and laboratory tests
    (9) Physical therapy services (occupational therapy, physical 
therapy, speech therapy)
    (10) Hospice
    (11) Emergency services, consistent with Sec.  152.22(b), and 
ambulance services
    (12) Prescription drugs

[[Page 211]]

    (13) Preventive care
    (14) Maternity care
    (b) Excluded services. Benefit plans offered by a PCIP shall not 
cover the following services:
    (1) Cosmetic surgery or other treatment for cosmetic purposes except 
to restore bodily function or correct deformity resulting from disease.
    (2) Custodial care except for hospice care associated with the 
palliation of terminal illness.
    (3) In vitro fertilization, artificial insemination or any other 
artificial means used to cause pregnancy.
    (4) Abortion services except when the life of the woman would be 
endangered or when the pregnancy is the result of an act of rape or 
incest.
    (5) Experimental care except as part of an FDA-approved clinical 
trial.



Sec.  152.20  Prohibitions on pre-existing condition exclusions
and waiting periods.

    (a) Pre-existing condition exclusions. A PCIP must provide all 
enrollees with health coverage that does not impose any pre-existing 
condition exclusions (as defined in Sec.  152.2) with respect to such 
coverage.
    (b) Waiting periods. A PCIP may not impose a waiting period with 
respect to the coverage of services after the effective date of 
enrollment.



Sec.  152.21  Premiums and cost-sharing.

    (a) Limitation on enrollee premiums. (1) The premiums charged under 
the PCIP may not exceed 100 percent of the premium for the applicable 
standard risk rate that would apply to the coverage offered in the State 
or States. The PCIP shall determine a standard risk rate by considering 
the premium rates charged for similar benefits and cost-sharing by other 
insurers offering health insurance coverage to individuals in the 
applicable State or States. The standard risk rate shall be established 
using reasonable actuarial techniques, that are approved by the 
Secretary, and that reflect anticipated experience and expenses. A PCIP 
may not use other methods of determining the standard rate, except with 
the approval of the Secretary.
    (2) Premiums charged to enrollees in the PCIP may vary on the basis 
of age by a factor not greater than 4 to 1.
    (b) Limitation on enrollee costs. (1) The PCIP's average share of 
the total allowed costs of the PCIP benefits must be at least 65 percent 
of such costs.
    (2) The out-of-pocket limit of coverage for cost-sharing for covered 
services under the PCIP may not be greater than the applicable amount 
described in section 223(c)(2) of the Internal Revenue code of 1986 for 
the year involved. If the plan uses a network of providers, this limit 
may be applied only for in-network providers, consistent with the terms 
of PCIP benefit package.
    (c) Prohibition on balance billing in the PCIP administered by HHS. 
A facility or provider that accepts payment under Sec.  152.35(c)(2) for 
a covered service furnished to an enrollee may not bill the enrollee for 
an amount greater than the cost-sharing amount for the covered service 
calculated by the PCIP.

[75 FR 45029, July 30, 2010, as amended at 78 FR 30226, May 22, 2013]



Sec.  152.22  Access to services.

    (a) General rule. A PCIP may specify the networks of providers from 
whom enrollees may obtain plan services. The PCIP must demonstrate to 
HHS that it has a sufficient number and range of providers to ensure 
that all covered services are reasonably available and accessible to its 
enrollees.
    (b) Emergency services. In the case of emergency services, such 
services must be covered out of network if:
    (1) The enrollee had a reasonable concern that failure to obtain 
immediate treatment could present a serious risk to his or her life or 
health; and
    (2) The services were required to assess whether a condition 
requiring immediate treatment exists, or to provide such immediate 
treatment where warranted.



                           Subpart E_Oversight



Sec.  152.26  Appeals procedures.

    (a) General. A PCIP shall establish and maintain procedures for 
individuals to appeal eligibility and coverage determinations.

[[Page 212]]

    (b) Minimum requirements. The appeals procedure must, at a minimum, 
provide:
    (1) A potential enrollee with the right to a timely redetermination 
by the PCIP or its designee of a determination regarding PCIP 
eligibility, including a determination of whether the individual is a 
citizen or national of the United States, or is lawfully present in the 
United States.
    (2) An enrollee with the right to a timely redetermination by the 
PCIP or its designee of a determination regarding the coverage of a 
service or the amount paid by the PCIP for a service.
    (3) An enrollee with the right to a timely reconsideration of a 
redetermination made under paragraph (b)(2) of this section by an entity 
independent of the PCIP.



Sec.  152.27  Fraud, waste, and abuse.

    (a) Procedures. The PCIP shall develop, implement, and execute 
operating procedures to prevent, detect, recover (when applicable or 
allowable), and promptly report to HHS incidences of waste, fraud, and 
abuse, and to appropriate law enforcement authorities instances of 
fraud. Such procedures shall include identifying situations in which 
enrollees or potential enrollees (or their family members) are employed, 
and may have, or have had, access to other coverage such as group health 
coverage, but were discouraged from enrolling.
    (b) Cooperation. The PCIP shall cooperate with Federal law 
enforcement and oversight authorities in cases involving waste, fraud 
and abuse, and shall report to appropriate authorities situations in 
which enrollment in other coverage may have been discouraged.



Sec.  152.28  Preventing insurer dumping.

    (a) General rule. If it is determined based on the procedures and 
criteria set forth in paragraph (b) of this section that a health 
insurance issuer or group health plan has discouraged an individual from 
remaining enrolled in coverage offered by such issuer or health plan 
based on the individual's health status, if the individual subsequently 
enrolls in a PCIP under this part, the issuer or health plan will be 
responsible for any medical expenses incurred by the PCIP with respect 
to the individual.
    (b) Procedures and criteria for a determination of dumping. A PCIP 
shall establish procedures to identify and report to HHS instances in 
which health insurance issuers or employer-based group health plans are 
discouraging high-risk individuals from remaining enrolled in their 
current coverage in instances in which such individuals subsequently are 
eligible to enroll in the qualified high risk pool. Such procedures 
shall include methods to identify the following circumstances, either 
through the PCIP enrollment application form or other vehicles:
    (1) Situations where an enrollee or potential enrollee had prior 
coverage obtained through a group health plan or issuer, and the 
individual was provided financial consideration or other rewards for 
disenrolling from their coverage, or disincentives for remaining 
enrolled.
    (2) Situations where enrollees or potential enrollees had prior 
coverage obtained directly from an issuer or a group health plan and 
either of the following occurred:
    (i) The premium for the prior coverage was increased to an amount 
that exceeded the premium required by the PCIP (adjusted based on the 
age factors applied to the prior coverage), and this increase was not 
otherwise explained;
    (ii) The health plan, issuer or employer otherwise provided money or 
other financial consideration to disenroll from coverage, or 
disincentive to remain enrolled in such coverage. Such considerations 
include payment of the PCIP premium for an enrollee or potential 
enrollee.
    (c) Remedies. If the Secretary determines, based on the criteria in 
paragraph (b) of this section, that the rule in paragraph (a) of this 
section applies, an issuer or a group health plan will be billed for the 
medical expenses incurred by the PCIP. The issuer or group health plan 
also will be referred to appropriate Federal and State authorities for 
other enforcement actions that may be warranted based on the behavior at 
issue.
    (d) Other. Nothing in this section may be construed as constituting 
exclusive remedies for violations of this

[[Page 213]]

section or as preventing States from applying or enforcing this section 
or other provisions of law with respect to health insurance issuers.



                            Subpart F_Funding



Sec.  152.32  Use of funds.

    (a) Limitation on use of funding. All funds awarded through the 
contracts established under this program must be used exclusively to pay 
allowable claims and administrative costs incurred in the development 
and operation of the PCIP that are in excess of the amounts of premiums 
collected from individuals enrolled in the program.
    (b) Limitation on administrative expenses. No more than 10 percent 
of available funds shall be used for administrative expenses over the 
life of the contract with the PCIP, absent approval from HHS.



Sec.  152.33  Initial allocation of funds.

    HHS will establish an initial ceiling for the amount of the $5 
billion in Federal funds allocated for PCIPs in each State using a 
methodology consistent with that used to established allocations under 
the Children's Health Insurance Program, as set forth under 42 CFR part 
457, subpart F, Payment to States.



Sec.  152.34  Reallocation of funds.

    If HHS determines, based on actual and projected enrollment and 
claims experience, that the PCIP in a given State will not make use of 
the total estimated funding allocated to that State, HHS may reallocate 
unused funds to other States, as needed.



Sec.  152.35  Insufficient funds.

    (a) Adjustments by a PCIP to eliminate a deficit. In the event that 
a PCIP determines, based on actual and projected enrollment and claims 
data, that its allocated funds are insufficient to cover projected PCIP 
expenses, the PCIP shall report such insufficiency to HHS, and identify 
and implement necessary adjustments to eliminate such deficit, subject 
to HHS approval.
    (b) Adjustment by the Secretary. If the Secretary estimates that 
aggregate amounts available for PCIP expenses will be less than the 
actual amount of expenses, HHS reserves the right to make such 
adjustments as are necessary to eliminate such deficit.
    (c) Payment rates for covered services furnished beginning June 15, 
2013 to enrollees in the PCIP administered by HHS. (1) Covered services 
furnished under the prescription drug, organ/tissue transplant, dialysis 
and durable medical equipment benefits will be paid at the payment rates 
that are in effect on June 15, 2013.
    (2) With respect to all other covered services, the payment rates 
will be--
    (i) 100 percent of Medicare payment rates; or
    (ii) Where Medicare payment rates cannot be implemented by the 
federally-administered PCIP, 50 percent of billed charges or a rate 
using a relative value scale pricing methodology.

[75 FR 45029, July 30, 2010, as amended at 78 FR 30226, May 22, 2013]



          Subpart G_Relationship to Existing Laws and Programs



Sec.  152.39  Maintenance of effort.

    (a) General. A State that enters into a contract with HHS under this 
part must demonstrate, subject to approval by HHS, that it will continue 
to provide funding of any existing high risk pool in the State at a 
level that is not reduced from the amount provided for in the year prior 
to the year in which the contract is entered.
    (b) Failure to maintain efforts. In situations where a State enters 
into a contract with HHS under this part, HHS shall take appropriate 
action, such as terminating the PCIP contract, against any State that 
fails to maintain funding levels for existing State high risk pools as 
required, and approved by HHS, under paragraph (a) of this section.



Sec.  152.40  Relation to State laws.

    The standards established under this section shall supersede any 
State law or regulation, other than State licensing laws or State laws 
relating to plan solvency, with respect to PCIPs which are established 
in accordance with this section.

[[Page 214]]



                    Subpart H_Transition to Exchanges



Sec.  152.44  End of PCIP program coverage.

    Effective January 1, 2014, coverage under the PCIP program (45 CFR 
part 152) will end.



Sec.  152.45  Transition to the exchanges.

    Prior to termination of the PCIP program, HHS will develop 
procedures to transition PCIP enrollees to the Exchanges, established 
under sections 1311 or 1321 of the Affordable Care Act, to ensure that 
there are no lapses in health coverage for those individuals.



PART 153_STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS, AND RISK
ADJUSTMENT UNDER THE AFFORDABLE CARE ACT--Table of Contents



                      Subpart A_General Provisions

Sec.
153.10 Basis and scope.
153.20 Definitions.

        Subpart B_State Notice of Benefit and Payment Parameters

153.100 State notice of benefit and payment parameters.
153.110 Standards for the State notice of benefit and payment 
          parameters.

      Subpart C_State Standards Related to the Reinsurance Program

153.200 [Reserved]
153.210 State establishment of a reinsurance program.
153.220 Collection of reinsurance contribution funds.
153.230 Calculation of reinsurance payments made under the national 
          contribution rate.
153.232 Calculation of reinsurance payments made under a State 
          additional contribution rate.
153.234 Eligibility under health insurance market rules.
153.235 Allocation and distribution of reinsurance contributions.
153.240 Disbursement of reinsurance payments.
153.250 Coordination with high-risk pools.
153.260 General oversight requirements for State-operated reinsurance 
          programs.
153.265 Restrictions on use of reinsurance funds for administrative 
          expenses.
153.270 HHS audits of State-operated reinsurance programs.

    Subpart D_State Standards Related to the Risk Adjustment Program

153.300 [Reserved]
153.310 Risk adjustment administration.
153.320 Federally certified risk adjustment methodology.
153.330 State alternate risk adjustment methodology.
153.340 Data collection under risk adjustment.
153.350 Risk adjustment data validation standards.
153.360 Application of risk adjustment to the small group market.
153.365 General oversight requirements for State-operated risk 
          adjustment programs.

   Subpart E_Health Insurance Issuer and Group Health Plan Standards 
                   Related to the Reinsurance Program

153.400 Reinsurance contribution funds.
153.405 Calculation of reinsurance contributions.
153.410 Requests for reinsurance payment.
153.420 Data collection.

    Subpart F_Health Insurance Issuer Standards Related to the Risk 
                            Corridors Program

153.500 Definitions.
153.510 Risk corridors establishment and payment methodology.
153.520 Attribution and allocation of revenue and expense items.
153.530 Risk corridors data requirements.
153.540 Compliance with risk corridors standards.

    Subpart G_Health Insurance Issuer Standards Related to the Risk 
                           Adjustment Program

153.600 [Reserved]
153.610 Risk adjustment issuer requirements.
153.620 Compliance with risk adjustment standards.
153.630 Data validation requirements when HHS operates risk adjustment.

     Subpart H_Distributed Data Collection for HHS-Operated Programs

153.700 Distributed data environment.
153.710 Data requirements.
153.720 Establishment and usage of masked enrollee identification 
          numbers.
153.730 Deadline for submission of data.

[[Page 215]]

153.740 Failure to comply with HHS-operated risk adjustment and 
          reinsurance data requirements.

    Authority: 42 U.S.C. 18031, 18041, and 18061 through 18063.

    Source: 77 FR 17245, Mar. 23, 2012, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  153.10  Basis and scope.

    (a) Basis. This part is based on the following sections of title I 
of the Affordable Care Act (Pub. L. 111-148, 24 Stat. 119):
    (1) Section 1321. State flexibility in operation and enforcement of 
Exchanges and related requirements.
    (2) Section 1341. Transitional reinsurance program for individual 
market in each State.
    (3) Section 1342. Establishment of risk corridors for plans in 
individual and small group markets.
    (4) Section 1343. Risk adjustment.
    (b) Scope. This part establishes standards for the establishment and 
operation of a transitional reinsurance program, temporary risk 
corridors program, and a permanent risk adjustment program.



Sec.  153.20  Definitions.

    The following definitions apply to this part, unless the context 
indicates otherwise:
    Alternate risk adjustment methodology means a risk adjustment 
methodology proposed by a State for use instead of a Federally certified 
risk adjustment methodology that has not yet been certified by HHS.
    Applicable reinsurance entity means a not-for-profit organization 
that is exempt from taxation under Chapter 1 of the Internal Revenue 
Code of 1986 that carries out reinsurance functions under this part on 
behalf of the State. An entity is not an applicable reinsurance entity 
to the extent it is carrying out reinsurance functions under subpart C 
of this part on behalf of HHS.
    Attachment point means the threshold dollar amount for claims costs 
incurred by a health insurance issuer for an enrolled individual's 
covered benefits in a benefit year, after which threshold the claims 
costs for such benefits are eligible for reinsurance payments.
    Benefit year has the meaning given to the term in Sec.  155.20 of 
this subchapter.
    Calculation of payments and charges means the methodology applied to 
plan average actuarial risk to determine risk adjustment payments and 
charges for a risk adjustment covered plan.
    Calculation of plan average actuarial risk means the specific 
procedures used to determine plan average actuarial risk from individual 
risk scores for a risk adjustment covered plan, including adjustments 
for variable rating and the specification of the risk pool from which 
average actuarial risk is to be calculated.
    Coinsurance rate means the rate at which the applicable reinsurance 
entity will reimburse the health insurance issuer for claims costs 
incurred for an enrolled individual's covered benefits in a benefit year 
after the attachment point and before the reinsurance cap.
    Contributing entity means--
    (1) A health insurance issuer; or
    (2) For the 2014 benefit year, a self-insured group health plan 
(including a group health plan that is partially self-insured and 
partially insured, where the health insurance coverage does not 
constitute major medical coverage), whether or not it uses a third party 
administrator; and for the 2015 and 2016 benefit years, a self-insured 
group health plan (including a group health plan that is partially self-
insured and partially insured, where the health insurance coverage does 
not constitute major medical coverage) that uses a third party 
administrator in connection with claims processing or adjudication 
(including the management of internal appeals) or plan enrollment for 
services other than for pharmacy benefits or excepted benefits within 
the meaning of section 2791(c) of the PHS Act. Notwithstanding the 
foregoing, a self-insured group health plan that uses an unrelated third 
party to obtain provider network and related claim repricing services, 
or uses an unrelated third party for up to 5 percent of claims 
processing or adjudication or plan enrollment, will not be deemed to use 
a third party administrator, based on either the number of transactions 
processed by the third party, or the

[[Page 216]]

value of the claims processing and adjudication and plan enrollment 
services provided by the third party. A self-insured group health plan 
that is a contributing entity is responsible for the reinsurance 
contributions, although it may elect to use a third party administrator 
or administrative services-only contractor for transfer of the 
reinsurance contributions.
    Contribution rate means, with respect to a benefit year, the per 
capita amount each contributing entity must pay for a reinsurance 
program established under this part with respect to each reinsurance 
contribution enrollee who resides in that State.
    Exchange has the meaning given to the term in Sec.  155.20 of this 
subchapter.
    Federally certified risk adjustment methodology means a risk 
adjustment methodology that either has been developed and promulgated by 
HHS, or has been certified by HHS.
    Grandfathered health plan has the meaning given to the term in Sec.  
147.140(a) of this subchapter.
    Group health plan has the meaning given to the term in Sec.  144.103 
of this subchapter.
    Health insurance coverage has the meaning given to the term in Sec.  
144.103 of this subchapter.
    Health insurance issuer or issuer has the meaning given to the term 
in Sec.  144.103 of this subchapter.
    Health plan has the meaning given to the term in section 1301(b)(1) 
of the Affordable Care Act.
    Individual market has the meaning given to the term in Sec.  144.103 
of this subchapter.
    Individual risk score means a relative measure of predicted health 
care costs for a particular enrollee that is the result of a risk 
adjustment model.
    Major medical coverage means, for purposes only of the requirements 
related to reinsurance contributions under section 1341 of the 
Affordable Care Act, a catastrophic plan, an individual or a small group 
market plan subject to the actuarial value requirements under Sec.  
156.140 of this subchapter, or health coverage for a broad range of 
services and treatments provided in various settings that provides 
minimum value as defined in Sec.  156.145 of this subchapter.
    Qualified employer has the meaning given to the term in Sec.  155.20 
of this subchapter.
    Qualified individual has the meaning given to the term in Sec.  
155.20 of this subchapter.
    Reinsurance cap means the threshold dollar amount for claims costs 
incurred by a health insurance issuer for an enrolled individual's 
covered benefits, after which threshold, the claims costs for such 
benefits are no longer eligible for reinsurance payments.
    Reinsurance contribution enrollee means an individual covered by a 
plan for which reinsurance contributions must be made pursuant to Sec.  
153.400.
    Reinsurance-eligible plan means, for the purpose of the reinsurance 
program, any health insurance coverage offered in the individual market, 
except for grandfathered plans and health insurance coverage not 
required to submit reinsurance contributions under Sec.  153.400(a).
    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.
    Risk adjustment data means all data that are used in a risk 
adjustment model, the calculation of plan average actuarial risk, or the 
calculation of payments and charges, or that are used for validation or 
audit of such data.
    Risk adjustment data collection approach means the specific 
procedures by which risk adjustment data is to be stored, collected, 
accessed, transmitted, and validated and the applicable timeframes, data 
formats, and privacy and security standards.
    Risk adjustment methodology means the risk adjustment model, the 
calculation of plan average actuarial risk, the calculation of payments 
and charges, the risk adjustment data collection approach, and the 
schedule for the risk adjustment program.

[[Page 217]]

    Risk adjustment model means an actuarial tool used to predict health 
care costs based on the relative actuarial risk of enrollees in risk 
adjustment covered plans.
    Risk pool means the State-wide population across which risk is 
distributed.
    Small group market has the meaning given to the term in section 
1304(a)(3) of the Affordable Care Act.
    State has the meaning given to the term in Sec.  155.20 of this 
subchapter.

[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 15525, Mar. 11, 2013; 
78 FR 54133, Aug. 30, 2013; 78 FR 65093, Oct. 30, 2013; 79 FR 13834, 
Mar. 11, 2014; 79 FR 36432, June 27, 2014; 81 FR 94174, Dec. 22, 2016; 
84 FR 17561, Apr. 25, 2019]



        Subpart B_State Notice of Benefit and Payment Parameters



Sec.  153.100  State notice of benefit and payment parameters.

    (a) General requirement for reinsurance. A State establishing a 
reinsurance program must issue an annual notice of benefit and payment 
parameters specific to that State if that State elects to:
    (1) Modify the data requirements for health insurance issuers to 
receive reinsurance payments from those specified in the annual HHS 
notice of benefit and payment parameters for the applicable benefit 
year;
    (2) Collect additional reinsurance contributions under Sec.  
153.220(d)(1) or use additional funds for reinsurance payments under 
Sec.  153.220(d)(2); or
    (3) Use more than one applicable reinsurance entity; or
    (b) Risk adjustment requirements. A State operating a risk 
adjustment program must issue an annual notice of benefit and payment 
parameters specific to that State setting forth the risk adjustment 
methodology and data validation standards it will use.
    (c) State notice deadlines. If a State is required to publish an 
annual State notice of benefit and payment parameters for a particular 
benefit year, it must do so by the later of March 1 of the calendar year 
prior to the applicable benefit year, or by the 30th day following the 
publication of the final HHS notice of benefit and payment parameters 
for that benefit year.
    (d) State failure to publish notice. Any State establishing a 
reinsurance program or operating a risk adjustment program that fails to 
publish a State notice of benefit and payment parameters within the 
period specified in paragraph (c) of this section must--
    (1) Adhere to the data requirements for health insurance issuers to 
receive reinsurance payments that are specified in the annual HHS notice 
of benefit and payment parameters for the applicable benefit year;
    (2) Forgo the collection of additional reinsurance contributions 
under Sec.  153.220(d)(1) and the use of additional funds for 
reinsurance payments under Sec.  153.220(d)(2);
    (3) Forgo the use of more than one applicable reinsurance entity;
    (4) Adhere to the risk adjustment methodology and data validation 
standards published in the annual HHS notice of benefit and payment 
parameters for use by HHS when operating risk adjustment on behalf of a 
State.

[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 15525, Mar. 11, 2013; 
80 FR 10862, Feb. 27, 2015]



Sec.  153.110  Standards for the State notice of benefit and payment
parameters.

    (a) Data requirements. If a State that establishes a reinsurance 
program elects to modify the data requirements for health insurance 
issuers to receive reinsurance payments from those specified in the 
annual HHS notice of benefit and payment parameters for the applicable 
benefit year, the State notice of benefit and payment parameters must 
specify those modifications.
    (b) Additional collections. If a State that establishes a 
reinsurance program elects to collect additional funds under Sec.  
153.220(d)(1) or use additional funds for reinsurance payments under 
Sec.  153.220(d)(2), the State must publish in the State notice of 
benefit and payment parameters the following:
    (1) A description of the purpose of the additional collection, 
including whether it will be used to cover reinsurance payments made 
under Sec.  153.232, administrative costs, or both;
    (2) The additional contribution rate at which the funds will be 
collected; and

[[Page 218]]

    (3) If the purpose of the additional collection includes reinsurance 
payments (or if the State is using additional funds for reinsurance 
payments under Sec.  153.220(d)(2)), the State supplemental reinsurance 
payment parameters required under Sec.  153.232.
    (c) Multiple reinsurance entities. If a State plans to use more than 
one applicable reinsurance entity, the State must publish in the State 
notice of benefit and payment parameters, for each applicable 
reinsurance entity--
    (1) The geographic boundaries for that entity;
    (2) An estimate of the number of enrollees in the individual market 
within those boundaries;
    (3) An estimate of the amount of reinsurance payments that will be 
made to issuers with respect to enrollees within those boundaries.
    (d) Risk adjustment content. A State operating a risk adjustment 
program must provide the information set forth in Sec.  153.330(a) and 
the data validation standards set forth pursuant to Sec.  153.350 in the 
State notice of benefit and payment parameters.

[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 15525, Mar. 11, 2013]



      Subpart C_State Standards Related to the Reinsurance Program



Sec.  153.200  [Reserved]



Sec.  153.210  State establishment of a reinsurance program.

    (a) General requirement. Each State is eligible to establish a 
reinsurance program for the years 2014 through 2016.
    (1) If a State establishes a reinsurance program, the State must 
enter into a contract with one or more applicable reinsurance entities 
to carry out the provisions of this subpart.
    (2) If a State contracts with or establishes more than one 
applicable reinsurance entity, the State must ensure that each 
applicable reinsurance entity operates in a distinct geographic area 
with no overlap of jurisdiction with any other applicable reinsurance 
entity.
    (3) A State may permit an applicable reinsurance entity to 
subcontract specific administrative functions required under this 
subpart and subpart E of this part.
    (4) A State must review and approve subcontracting arrangements to 
ensure efficient and appropriate expenditures of administrative funds 
collected under this subpart.
    (5) A State must ensure that the applicable reinsurance entity 
completes all reinsurance-related activities for benefit years 2014 
through 2016 and any activities required to be undertaken in subsequent 
periods.
    (b) Multi-State reinsurance arrangements. Multiple States may 
contract with a single entity to serve as an applicable reinsurance 
entity for each State. In such a case, the reinsurance programs for 
those States must be operated as separate programs.
    (c) Non-electing States. HHS will establish a reinsurance program 
for each State that does not elect to establish its own reinsurance 
program.
    (d) Oversight. Each State that establishes a reinsurance program 
must ensure that the applicable reinsurance entity complies with all 
provisions of this subpart and subpart E of this part throughout the 
duration of its contract.
    (e) Reporting to HHS. Each State that establishes a reinsurance 
program must ensure that each applicable reinsurance entity provides 
information regarding requests for reinsurance payments under the 
national contribution rate made under Sec.  153.410 for all reinsurance-
eligible plans for each quarter during the applicable benefit year in a 
manner and timeframe established by HHS.

[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 15525, Mar. 11, 2013]



Sec.  153.220  Collection of reinsurance contribution funds.

    (a) Collections. If a State establishes a reinsurance program, HHS 
will collect all reinsurance contributions from all contributing 
entities for that State under the national contribution rate.
    (b) Contribution funding. Reinsurance contributions collected must 
fund the following:
    (1) Reinsurance payments that will total, on a national basis, $10 
billion in 2014, $6 billion in 2015, and $4 billion in 2016;

[[Page 219]]

    (2) U.S. Treasury contributions that will total, on a national 
basis, $2 billion in 2014, $2 billion in 2015, and $1 billion in 2016; 
and
    (3) Administrative expenses of the applicable reinsurance entity or 
HHS when performing reinsurance functions under this subpart.
    (c) National contribution rate. HHS will set in the annual HHS 
notice of benefit and payment parameters for the applicable benefit year 
the national contribution rate and the proportion of contributions 
collected under the national contribution rate to be allocated to:
    (1) Reinsurance payments;
    (2) Payments to the U.S. Treasury as described in paragraph (b)(2) 
of this section; and
    (3) Administrative expenses of the applicable reinsurance entity or 
HHS when performing reinsurance functions under this subpart.
    (d) Additional State collections. If a State establishes a 
reinsurance program:
    (1) The State may elect to collect more than the amounts that would 
be collected based on the national contribution rate set forth in the 
annual HHS notice of benefit and payment parameters for the applicable 
benefit year to provide:
    (i) Funding for administrative expenses of the applicable 
reinsurance entity; or
    (ii) Additional funds for reinsurance payments.
    (2) A State may use additional funds which were not collected as 
additional reinsurance contributions under this part for reinsurance 
payments under the State supplemental payment parameters under Sec.  
153.232.

[77 FR 17245, Mar. 23, 2012, as amended at 77 FR 29236, May 17, 2012, 78 
FR 15525, Mar. 11, 2013; 78 FR 66655, Nov. 6, 2013]



Sec.  153.230  Calculation of reinsurance payments made under the 
national contribution rate.

    (a) Eligibility for reinsurance payments under the national 
reinsurance parameters. A health insurance issuer of a reinsurance-
eligible plan becomes eligible for reinsurance payments from 
contributions collected under the national contribution rate when its 
claims costs for an individual enrollee's covered benefits in a benefit 
year exceed the national attachment point.
    (b) National reinsurance payment parameters. The national 
reinsurance payment parameters for each benefit year commencing in 2014 
and ending in 2016 set forth in the annual HHS notice of benefit and 
payment parameters for each applicable benefit year will apply with 
respect to reinsurance payments made from contributions received under 
the national contribution rate.
    (c) National reinsurance payments. Each reinsurance payment made 
from contributions received under the national contribution rate will be 
calculated as the product of the national coinsurance rate multiplied by 
the health insurance issuer's claims costs for an individual enrollee's 
covered benefits that the health insurance issuer incurs in the 
applicable benefit year between the national attachment point and the 
national reinsurance cap.
    (d) Uniform adjustment to national reinsurance payments. If HHS 
determines that all reinsurance payments requested under the national 
payment parameters from all reinsurance-eligible plans in all States for 
a benefit year will not be equal to the amount of all reinsurance 
contributions collected for reinsurance payments under the national 
contribution rate in all States for an applicable benefit year, HHS will 
determine a uniform pro rata adjustment to be applied to all such 
requests for reinsurance payments for all States. Each applicable 
reinsurance entity, or HHS on behalf of a State, must reduce or increase 
the reinsurance payment amounts for the applicable benefit year by any 
adjustment required under this paragraph (d).

[78 FR 15526, Mar. 11, 2013, as amended at 78 FR 66655, Nov. 6, 2013; 79 
FR 13835, Mar. 11, 2014]



Sec.  153.232  Calculation of reinsurance payments made under a State
additional contribution rate.

    (a) State supplemental reinsurance payment parameters. (1) If a 
State establishes a reinsurance program and elects to collect additional 
contributions under Sec.  153.220(d)(1)(ii) or use additional funds for 
reinsurance payments under

[[Page 220]]

Sec.  153.220(d)(2), the State must set supplemental reinsurance payment 
parameters using one or more of the following methods:
    (i) Decreasing the national attachment point;
    (ii) Increasing the national reinsurance cap; or
    (iii) Increasing the national coinsurance rate.
    (2) The State must ensure that additional reinsurance contributions 
and funds projected to be received under Sec.  153.220(d)(1)(ii) and 
Sec.  153.220(d)(2), as applicable, for any applicable benefit year are 
reasonably calculated to cover additional reinsurance payments that are 
projected to be made only under the State supplemental reinsurance 
payment parameters (that will not be paid under the national payment 
parameters) for the given benefit year.
    (3) All applicable reinsurance entities in a State collecting 
additional reinsurance contributions must apply the State supplemental 
reinsurance payment parameters established under paragraph (a)(1) of 
this section when calculating reinsurance payments.
    (b) General requirement for payments under State supplemental 
reinsurance parameters. Contributions collected under Sec.  
153.220(d)(1)(ii) or funds under Sec.  153.220(d)(2), as applicable, 
must be applied towards requests for reinsurance payments made under the 
State supplemental reinsurance payments parameters for each benefit year 
commencing in 2014 and ending in 2016.
    (c) Eligibility for reinsurance payments under State supplemental 
reinsurance parameters. If a State establishes State supplemental 
reinsurance payment parameters under Sec.  153.232(a)(1), a reinsurance-
eligible plan becomes eligible for reinsurance payments from 
contributions under Sec.  153.220(d)(1)(ii) or funds under Sec.  
153.220(d)(2), as applicable, if its incurred claims costs for an 
individual enrollee's covered benefits in the applicable benefit year:
    (1) Exceed the State supplemental attachment point set forth in the 
State notice of benefit and payment parameters for the applicable 
benefit year if a State has established such a supplemental attachment 
point under Sec.  153.232(a)(1)(i);
    (2) Exceed the national reinsurance cap set forth in the annual HHS 
notice of benefit and payment parameters for the applicable benefit year 
if a State has established a State supplemental reinsurance cap under 
Sec.  153.232(a)(1)(ii); or
    (3) Exceed the national attachment point set forth in the annual HHS 
notice of benefit and payment parameters for the applicable benefit year 
if a State has established a supplemental coinsurance rate under Sec.  
153.232(a)(1)(iii).
    (d) Payments under State supplemental reinsurance parameters. Each 
reinsurance payment made from contributions received under Sec.  
153.220(d)(1)(ii) or funds under Sec.  153.220(d)(2), as applicable, 
will be calculated with respect to an issuer's incurred claims costs for 
an individual enrollee's covered benefits in the applicable benefit year 
as the sum of the following:
    (1) If the State has established a State supplemental attachment 
point, to the extent the issuer's incurred claims costs for such 
benefits in the applicable benefit year exceed the State supplemental 
attachment point but do not exceed the national attachment point, the 
product of such claims costs between the State supplemental attachment 
point and the national attachment point multiplied by the national 
coinsurance rate (or, if the State has established a State supplemental 
coinsurance rate, the State supplemental coinsurance rate);
    (2) If the State has established a State supplemental reinsurance 
cap, to the extent the issuer's incurred claims costs for such benefits 
in the applicable benefit year exceed the national reinsurance cap but 
do not exceed the State supplemental reinsurance cap, the product of 
such claims costs between the national reinsurance cap and the State 
supplemental reinsurance cap multiplied by the national coinsurance rate 
(or, if the State has established a State supplemental coinsurance rate, 
the State supplemental coinsurance rate); and
    (3) If the State has established a State supplemental coinsurance 
rate, the product of the issuer's incurred

[[Page 221]]

claims costs for such benefits in the applicable benefit year between 
the national attachment point and the national reinsurance cap 
multiplied by the difference between the State supplemental coinsurance 
rate and the national coinsurance rate.
    (e) Uniform adjustment to payments under State supplemental 
reinsurance payment parameters. If all requested reinsurance payments 
under the State supplemental reinsurance parameters calculated in 
accordance with paragraph (a)(1) of this section from all reinsurance-
eligible plans in a State for a benefit year will exceed all reinsurance 
contributions collected under Sec.  153.220(d)(1)(ii) or funds under 
Sec.  153.220(d)(2) for the applicable benefit year, the State must 
determine a uniform pro rata adjustment to be applied to all such 
requests for reinsurance payments. Each applicable reinsurance entity in 
the State must reduce all such requests for reinsurance payments for the 
applicable benefit year by that adjustment.
    (f) Limitations on payments under State supplemental reinsurance 
parameters. A State must ensure that:
    (1) The payments made to issuers must not exceed the issuer's total 
paid amount for the reinsurance-eligible claim(s); and
    (2) Any remaining additional funds for reinsurance payments 
collected under Sec.  153.220(d)(1)(ii) must be used for reinsurance 
payments under the State supplemental reinsurance payment parameters in 
subsequent benefit years.

[78 FR 15526, Mar. 11, 2013]



Sec.  153.234  Eligibility under health insurance market rules.

    A reinsurance-eligible plan's covered claims costs for an enrollee 
incurred prior to the application of the following provisions do not 
count towards either the national reinsurance payment parameters or the 
State supplemental reinsurance payment parameters: 45 CFR 147.102, 
147.104 (subject to 147.145), 147.106 (subject to 147.145), 156.80, and 
subpart B of part 156.

[78 FR 15527, Mar. 11, 2013]



Sec.  153.235  Allocation and distribution of reinsurance contributions

    (a) Allocation of reinsurance contributions. HHS will allocate and 
disburse to each State operating reinsurance (and will distribute 
directly to issuers if HHS is operating reinsurance on behalf of a 
State), reinsurance contributions collected from contributing entities 
under the national contribution rate for reinsurance payments. The 
disbursed funds would be based on the total requests for reinsurance 
payments made under the national reinsurance payment parameters in all 
States and submitted under Sec.  153.410, net of any adjustment under 
Sec.  153.230(d).
    (b) Excess reinsurance contributions. Any reinsurance contributions 
collected from contributing entities under the national contribution 
rate for reinsurance payments for any benefit year but unused for the 
applicable benefit year will be used for reinsurance payments under the 
national reinsurance payment parameters for subsequent benefit years.

[78 FR 15527, Mar. 11, 2013]



Sec.  153.240  Disbursement of reinsurance payments.

    (a) Data collection. If a State establishes a reinsurance program, 
the State must ensure that the applicable reinsurance entity:
    (1) Collects data required to determine reinsurance payments as 
described in Sec. Sec.  153.230 and 153.232, as applicable, from an 
issuer of reinsurance-eligible plans or is provided access to such data, 
according to the data requirements specified by the State in the State 
notice of benefit and payment parameters described in subpart B of this 
part.
    (2) Makes reinsurance payments to the issuer of a reinsurance-
eligible plan after receiving a valid claim for payment from that health 
insurance issuer in accordance with the requirements of Sec.  153.410.
    (3) Provides a process through which an issuer of a reinsurance-
eligible plan that does not generate individual enrollee claims in the 
normal course of business may use estimated claims costs to make a 
request for payment

[[Page 222]]

(or to submit data to be considered for reinsurance payments) in 
accordance with the requirements of Sec.  153.410. The State must ensure 
that such requests for reinsurance payment (or a subset of such 
requests) are subject to validation.
    (b) Notification of reinsurance payments. For each applicable 
benefit year,
    (1) A State, or HHS on behalf of the State, must notify issuers 
annually of:
    (i) Reinsurance payments under the national payment parameters, and
    (ii) Reinsurance payments under the State supplemental payment 
parameters if applicable, to be made for the applicable benefit year no 
later than June 30 of the year following the applicable benefit year.
    (2) A State must provide to each issuer of a reinsurance-eligible 
plan the calculation of total reinsurance payment requests, on a 
quarterly basis during the applicable benefit year in a timeframe and 
manner specified by HHS, made under:
    (i) The national reinsurance payment parameters, and
    (ii) State supplemental reinsurance payments parameters if 
applicable.
    (c) Maintenance of records. If a State establishes a reinsurance 
program, the State must maintain documents and records relating to the 
reinsurance program, whether paper, electronic, or in other media, for 
each benefit year for at least 10 years, and make them available upon 
request from HHS, the OIG, the Comptroller General, or their designees, 
to any such entity. The documents and records must be sufficient to 
enable the evaluation of the State-operated reinsurance program's 
compliance with Federal standards. The State must also ensure that its 
contractors, subcontractors, and agents similarly maintain and make 
relevant documents and records available upon request from HHS, the OIG, 
the Comptroller General, or their designees, to any such entity.
    (d) Privacy and security. (1) If a State establishes a reinsurance 
program, the State must ensure that the applicable reinsurance entity's 
collection of personally identifiable information is limited to 
information reasonably necessary for use in the calculation of 
reinsurance payments, and that use and disclosure of personally 
identifiable information is limited to those purposes for which the 
personally identifiable information was collected (including for 
purposes of data validation).
    (2) If a State establishes a reinsurance program, the State must 
ensure that the applicable reinsurance entity implements security 
standards that provide administrative, physical, and technical 
safeguards for the personally identifiable information consistent with 
the security standards described at 45 CFR 164.308, 164.310, and 
164.312.

[77 FR 17247, Mar. 23, 2012, as amended at 78 FR 15527, Mar. 11, 2013; 
78 FR 65093, Oct. 30, 2013]



Sec.  153.250  Coordination with high-risk pools.

    (a) General requirement. The State must eliminate or modify any 
State high-risk pool to the extent necessary to carry out the 
reinsurance program established under this subpart.
    (b) Coordination with high-risk pools. The State may coordinate the 
State high-risk pool with the reinsurance program to the extent that the 
State high-risk pool conforms to the provisions of this subpart.



Sec.  153.260  General oversight requirements for State-operated
reinsurance programs.

    (a) Accounting requirements. A State that establishes a reinsurance 
program must ensure that its applicable reinsurance entity keeps an 
accounting for each benefit year of:
    (1) All reinsurance contributions received from HHS for reinsurance 
payments and for administrative expenses;
    (2) All claims for reinsurance payments received from issuers of 
reinsurance-eligible plans;
    (3) All reinsurance payments made to issuers of reinsurance-eligible 
plans; and
    (4) All administrative expenses incurred for the reinsurance 
program.
    (b) State summary report. A State that establishes a reinsurance 
program must submit to HHS and make public a report on its reinsurance 
program operations for each benefit year in the manner and timeframe 
specified by HHS. The report must summarize the accounting for the 
benefit year kept

[[Page 223]]

pursuant to paragraph (a) of this section.
    (c) Independent external audit. A State that establishes a 
reinsurance program must engage an independent qualified auditing entity 
to perform a financial and programmatic audit for each benefit year of 
its State-operated reinsurance program in accordance with generally 
accepted auditing standards (GAAS). The State must:
    (1) Provide to HHS the results of the audit, in the manner and 
timeframe to be specified by HHS;
    (2) Ensure that the audit addresses the prohibitions set forth in 
Sec.  153.265;
    (3) Identify to HHS any material weakness or significant deficiency 
identified in the audit, and address in writing to HHS how the State 
intends to correct any such material weakness or significant deficiency; 
and
    (4) Make public a summary of the results of the audit, including any 
material weakness or significant deficiency and how the State intends to 
correct the material weakness or significant deficiency, in the manner 
and timeframe to be specified by HHS.

[78 FR 65093, Oct. 30, 2013]



Sec.  153.265  Restrictions on use of reinsurance funds for
administrative expenses.

    A State that establishes a reinsurance program must ensure that its 
applicable reinsurance entity does not use any funds for the support of 
reinsurance operations, including any reinsurance contributions provided 
under the national contribution rate for administrative expenses, for 
any of the following purposes:
    (a) Staff retreats;
    (b) Promotional giveaways;
    (c) Excessive executive compensation; or
    (d) Promotion of Federal or State legislative or regulatory 
modifications.

[78 FR 65093, Oct. 30, 2013]



Sec.  153.270  HHS audits of State-operated reinsurance programs.

    (a) Audits. HHS or its designee may conduct a financial and 
programmatic audit of a State-operated reinsurance program to assess 
compliance with the requirements of this subpart or subpart B of this 
part. A State that establishes a reinsurance program must ensure that 
its applicable reinsurance entity and any relevant contractors, 
subcontractors, or agents cooperate with any audit under this section.
    (b) Action on audit findings. If an audit results in a finding of 
material weakness or significant deficiency with respect to compliance 
with any requirement of this subpart or subpart B, the State must ensure 
that the applicable reinsurance entity:
    (1) Within 60 calendar days of the issuance of the final audit 
report, provides a written corrective action plan to HHS for approval;
    (2) Implements that plan; and
    (3) Provides to HHS written documentation of the corrective actions 
once taken.

[79 FR 13835, Mar. 11, 2014]



    Subpart D_State Standards Related to the Risk Adjustment Program



Sec.  153.300  [Reserved]



Sec.  153.310  Risk adjustment administration.

    (a) State eligibility to establish a risk adjustment program. (1) A 
State that elects to operate an Exchange is eligible to establish a risk 
adjustment program.
    (2) Any State that does not elect to operate an Exchange, or that 
HHS has not approved to operate an Exchange, will forgo implementation 
of all State functions in this subpart, and HHS will carry out all of 
the provisions of this subpart on behalf of the State.
    (3) Any State that elects to operate an Exchange but does not elect 
to administer risk adjustment will forgo implementation of all State 
functions in this subpart, and HHS will carry out all of the provisions 
of this subpart on behalf of the State.
    (4) Beginning in 2015, any State that is approved to operate an 
Exchange and elects to operate risk adjustment but has not been approved 
by HHS to operate risk adjustment prior to publication of its State 
notice of benefit and payment parameters for the applicable benefit 
year, will forgo implementation of all State functions in this subpart,

[[Page 224]]

and HHS will carry out all of the provisions of this subpart on behalf 
of the State.
    (b) Entities eligible to carry out risk adjustment activities. If a 
State is operating a risk adjustment program, the State may elect to 
have an entity other than the Exchange perform the State functions of 
this subpart, provided that the entity meets the standards promulgated 
by HHS to be an entity eligible to carry out Exchange functions.
    (c) State responsibility for risk adjustment. (1) A State operating 
a risk adjustment program for a benefit year must administer the 
applicable Federally certified risk adjustment methodology through an 
entity that--
    (i) Is operationally ready to implement the applicable Federally 
certified risk adjustment methodology and process the resulting payments 
and charges; and
    (ii) Has experience relevant to operating the risk adjustment 
program.
    (2) The State must ensure that the risk adjustment entity complies 
with all applicable provisions of subpart D of this part in the 
administration of the applicable Federally certified risk adjustment 
methodology.
    (3) The State must conduct oversight and monitoring of its risk 
adjustment program.
    (4) Maintenance of records. A State operating a risk adjustment 
program must maintain documents and records relating to the risk 
adjustment program, whether paper, electronic, or in other media, for 
each benefit year for at least 10 years, and make them available upon 
request from HHS, the OIG, the Comptroller General, or their designees, 
to any such entity. The documents and records must be sufficient to 
enable the evaluation of the State-operated risk adjustment program's 
compliance with Federal standards. A State operating a risk adjustment 
program must also ensure that its contractors, subcontractors, and 
agents similarly maintain and make relevant documents and records 
available upon request from HHS, the OIG, the Comptroller General, or 
their designees, to any such entity.
    (d) Approval for a State to operate risk adjustment. (1) To be 
approved by HHS to operate risk adjustment under a particular Federally 
certified risk adjustment methodology for a benefit year, a State must 
establish that it and its risk adjustment entity meet the standards set 
forth in paragraph (c) of this section.
    (2) To obtain such approval, the State must submit to HHS, in a form 
and manner specified by HHS, evidence that its risk adjustment entity 
meets these standards.
    (3) In addition to requirements set forth in paragraphs (d)(1) and 
(2) of this section, to obtain re-approval from HHS to operate risk 
adjustment for a third benefit year, the State must, in the first 
benefit year for which it operates risk adjustment, provide to HHS an 
interim report, in a manner specified by HHS, including a detailed 
summary of its risk adjustment activities in the first 10 months of the 
benefit year, no later than December 31 of the applicable benefit year.
    (4) To obtain re-approval from HHS to operate risk adjustment for 
each benefit year after the third benefit year, each State operating a 
risk adjustment program must submit to HHS and make public a detailed 
summary of its risk adjustment program operations for the most recent 
benefit year for which risk adjustment operations have been completed, 
in the manner and timeframe specified by HHS.
    (i) The summary must include the results of a programmatic and 
financial audit for each benefit year of the State-operated risk 
adjustment program conducted by an independent qualified auditing entity 
in accordance with generally accepted auditing standards (GAAS).
    (ii) The summary must identify any material weakness or significant 
deficiency identified in the audit and address how the State intends to 
correct any such material weakness or significant deficiency.
    (e) Timeframes. A State, or HHS on behalf of the State, must 
implement risk adjustment for the 2014 benefit year and every benefit 
year thereafter. For each benefit year, a State, or HHS on behalf of the 
State, must notify issuers of risk adjustment payments due or charges 
owed annually by June

[[Page 225]]

30 of the year following the benefit year.

[77 FR 17247, Mar. 23, 2012, as amended at 78 FR 15527, Mar. 11, 2013; 
78 FR 65093, Oct. 30, 2013]



Sec.  153.320  Federally certified risk adjustment methodology.

    (a) General requirement. Any risk adjustment methodology used by a 
State, or HHS on behalf of the State, must be a Federally certified risk 
adjustment methodology. A risk adjustment methodology may become 
Federally certified by one of the following processes:
    (1) The risk adjustment methodology is developed by HHS and 
published in advance of the benefit year in rulemaking; or
    (2) An alternate risk adjustment methodology is submitted by a State 
in accordance with Sec.  153.330, reviewed and certified by HHS, and 
published in the applicable annual HHS notice of benefit and payment 
parameters.
    (b) Publication of methodology in notices. The publication of a risk 
adjustment methodology by HHS in an annual HHS notice of benefit and 
payment parameters or by a State in an annual State notice of benefit 
and payment parameters described in subpart B of this part must include:
    (1) A complete description of the risk adjustment model, including--
    (i) Draft factors to be employed in the model, including but not 
limited to, demographic factors, diagnostic factors, and utilization 
factors, if any, the dataset(s) to be used to calculate final 
coefficients, and the date by which final coefficients will be released 
in guidance;
    (ii) The qualifying criteria for establishing that an individual is 
eligible for a specific factor;
    (iii) Weights assigned to each factor; and
    (iv) The schedule for the calculation of individual risk scores.
    (2) A complete description of the calculation of plan average 
actuarial risk.
    (3) A complete description of the calculation of payments and 
charges.
    (4) A complete description of the risk adjustment data collection 
approach.
    (5) The schedule for the risk adjustment program.
    (c) Use of methodology for States that do not operate a risk 
adjustment program. HHS will specify in the annual HHS notice of benefit 
and payment parameters for the applicable year the Federally certified 
risk adjustment methodology that will apply in States that do not 
operate a risk adjustment program.
    (d) State flexibility to request reductions to transfers. Beginning 
with the 2020 benefit year, States can request to reduce risk adjustment 
transfers in the State's individual catastrophic, individual non-
catastrophic, small group, or merged markets risk pools by up to 50 
percent in States where HHS operates the risk adjustment program.
    (1) State requests. State requests for a reduction to transfers must 
include:
    (i) Supporting evidence and analysis demonstrating the State-
specific factors that warrant an adjustment to more precisely account 
for the differences in actuarial risk in the State market risk pool;
    (ii) The adjustment percentage of up to 50 percent requested for the 
State individual catastrophic, individual non-catastrophic, small group, 
or merged market risk pool; and
    (iii) A justification for the reduction requested demonstrating the 
State-specific factors that warrant an adjustment to more precisely 
account for relative risk differences in the State individual 
catastrophic, individual non-catastrophic, small group, or merged market 
risk pool, or 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.
    (2) Timeframe to submit reduction requests. States must submit 
requests for a reduction to transfers in the individual catastrophic, 
individual non-catastrophic, small group, or merged market risk pool 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.
    (3) Publication of reduction requests. HHS will publish State 
reduction requests in the applicable benefit year's HHS notice of 
benefit and payment parameters rule and make the supporting evidence 
available to the public for comment, except to the extent the

[[Page 226]]

State requests HHS not publish certain supporting evidence because it 
contains trade secrets or confidential commercial or financial 
information as defined in HHS' Freedom of Information regulations under 
45 CFR 5.31(d). HHS will publish any approved or denied State reduction 
requests in the applicable benefit year's HHS notice of benefit and 
payment parameters final rule.
    (4) HHS approval. (i) Subject to paragraph (d)(4)(ii) of this 
section, HHS will approve State reduction requests if HHS determines, 
based on the review of the information submitted as part of the State's 
request, along with other relevant factors, including the premium impact 
of the transfer reduction for the State market risk pool, and relevant 
public comments:
    (A) That State-specific rules or other relevant factors warrant an 
adjustment to more precisely account for relative risk differences in 
the State's individual catastrophic, individual non-catastrophic, small 
group, or merged market risk pool and support the percentage reduction 
to risk adjustment transfers requested; or
    (B) That State-specific rules or other relevant factors warrant an 
adjustment to more precisely account for relative risk differences in 
the State's individual catastrophic, individual non-catastrophic, small 
group, or merged market risk pool and 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.
    (ii) HHS may approve a reduction amount that is lower than the 
amount requested by the State if the supporting evidence and analysis do 
not fully support the requested reduction amount. HHS will assess other 
relevant factors, including the premium impact of the transfer reduction 
for the applicable State market risk pool.

[77 FR 17247, Mar. 23, 2012, as amended at 78 FR 15528, Mar. 11, 2013; 
81 FR 94174, Dec. 22, 2016; 83 FR 17059, Apr. 17, 2018; 84 FR 17561, 
Apr. 25, 2019]



Sec.  153.330  State alternate risk adjustment methodology.

    (a) State request for alternate methodology certification. (1) A 
State request to HHS for the certification of an alternate risk 
adjustment methodology must include:
    (i) The elements specified in Sec.  153.320(b);
    (ii) The calibration methodology and frequency of calibration; and
    (iii) The statistical performance metrics specified by HHS.
    (2) The request must include the extent to which the methodology:
    (i) Accurately explains the variation in health care costs of a 
given population;
    (ii) Links risk factors to daily clinical practice and is clinically 
meaningful to providers;
    (iii) Encourages favorable behavior among providers and health plans 
and discourages unfavorable behavior;
    (iv) Uses data that is complete, high in quality, and available in a 
timely fashion;
    (v) Is easy for stakeholders to understand and implement;
    (vi) Provides stable risk scores over time and across plans; and
    (vii) Minimizes administrative costs.
    (b) Evaluation criteria for alternate risk adjustment methodology. 
An alternate risk adjustment methodology will be certified by HHS as a 
Federally certified risk adjustment methodology based on the following 
criteria:
    (1) The criteria listed in paragraph (a)(2) of this section;
    (2) Whether the methodology complies with the requirements of this 
subpart D;
    (3) Whether the methodology accounts for risk selection across metal 
levels; and
    (4) Whether each of the elements of the methodology are aligned.
    (c) State renewal of alternate methodology. If a State is operating 
a risk adjustment program, the State may not implement a recalibrated 
risk adjustment model or otherwise alter its risk adjustment methodology 
without first obtaining HHS certification.
    (1) Recalibration of the risk adjustment model must be performed at 
least as frequently as described in paragraph (a)(1)(ii) of this 
section;
    (2) A State request to implement a recalibrated risk adjustment 
model or otherwise alter its risk adjustment methodology must include 
any changes

[[Page 227]]

to the parameters described in paragraph (a)(1) of this section.

[77 FR 17248, Mar. 23, 2012, as amended at 78 FR 15528, Mar. 11, 2013]



Sec.  153.340  Data collection under risk adjustment.

    (a) Data collection requirements. If a State is operating a risk 
adjustment program, the State must collect risk adjustment data.
    (b) Minimum standards. (1) If a State is operating a risk adjustment 
program, the State may vary the amount and type of data collected, but 
the State must collect or calculate individual risk scores generated by 
the risk adjustment model in the applicable Federally certified risk 
adjustment methodology;
    (2) If a State is operating a risk adjustment program, the State 
must require that issuers offering risk adjustment covered plans in the 
State comply with data privacy and security standards set forth in the 
applicable risk adjustment data collection approach; and
    (3) If a State is operating a risk adjustment program, the State 
must ensure that any collection of personally identifiable information 
is limited to information reasonably necessary for use in the applicable 
risk adjustment model, calculation of plan average actuarial risk, or 
calculation of payments and charges. Except for purposes of data 
validation, the State may not collect or store any personally 
identifiable information for use as a unique identifier for an 
enrollee's data, unless such information is masked or encrypted by the 
issuer, with the key to that masking or encryption withheld from the 
State. Use and disclosure of personally identifiable information is 
limited to those purposes for which the personally identifiable 
information was collected (including for purposes of data validation).
    (4) If a State is operating a risk adjustment program, the State 
must implement security standards that provide administrative, physical, 
and technical safeguards for the individually identifiable information 
consistent with the security standards described at 45 CFR 164.308, 
164.310, and 164.312.

[77 FR 17248, Mar. 23, 2012, as amended at 78 FR 15528, Mar. 11, 2013]



Sec.  153.350  Risk adjustment data validation standards.

    (a) General requirement. The State, or HHS on behalf of the State, 
must ensure proper implementation of any risk adjustment software and 
ensure proper validation of a statistically valid sample of risk 
adjustment data from each issuer that offers at least one risk 
adjustment covered plan in that State.
    (b) Adjustment to plan average actuarial risk. The State, or HHS on 
behalf of the State, may adjust the plan average actuarial risk for a 
risk adjustment covered plan based on errors discovered with respect to 
implementation of risk adjustment software or as a result of data 
validation conducted pursuant to paragraph (a) of this section.
    (c) Adjustment to charges and payments. The State, or HHS on behalf 
of the State, may adjust charges and payments to all risk adjustment 
covered plan issuers based on the adjustments calculated in paragraph 
(b) of this section.
    (d) Appeals. The State, or HHS on behalf of the State, must provide 
an administrative process to appeal findings with respect to the 
implementation of risk adjustment software or data validation.



Sec.  153.360  Application of risk adjustment to the small group market.

    Enrollees in a risk adjustment covered plan must be assigned to the 
applicable risk pool in the State in which the employer's policy was 
filed and approved.

[78 FR 15528, Mar. 11, 2013]

[[Page 228]]



Sec.  153.365  General oversight requirements for State-operated risk
adjustment programs.

    If a State is operating a risk adjustment program, it must keep an 
accounting of all receipts and expenditures related to risk adjustment 
payments and charges and the administration of risk adjustment-related 
functions and activities for each benefit year.

[78 FR 65094, Oct. 30, 2013]



   Subpart E_Health Insurance Issuer and Group Health Plan Standards 
                   Related to the Reinsurance Program



Sec.  153.400  Reinsurance contribution funds.

    (a) General requirement. Each contributing entity must make 
reinsurance contributions annually: at the national contribution rate 
for all reinsurance contribution enrollees, in a manner specified by 
HHS; and at the additional State supplemental contribution rate if the 
State has elected to collect additional contributions under Sec.  
153.220(d)(1), in a manner specified by the State.
    (1) In general, reinsurance contributions are required for major 
medical coverage that is considered to be part of a commercial book of 
business, but are not required to be paid more than once with respect to 
the same covered life. In order to effectuate that principle, a 
contributing entity must make reinsurance contributions for lives 
covered by its self-insured group health plans and health insurance 
coverage except to the extent that:
    (i) Such plan or coverage is not major medical coverage, subject to 
paragraph (a)(3) of this section.
    (ii) In the case of health insurance coverage, such coverage is not 
considered to be part of an issuer's commercial book of business;
    (iii) Such plan or coverage is expatriate health coverage, as 
defined by the Secretary, or for the 2015 and 2016 benefit years only, 
is a self-insured group health plan with respect to which enrollment is 
limited to participants who reside outside of their home country for at 
least 6 months of the plan year, and any covered dependents; or
    (iv) In the case of employer-provided health coverage, such coverage 
applies to individuals with respect to which benefits under Title XVIII 
of the Act (Medicare) are primary under the Medicare Secondary Payor 
rules under section 1862(b) of the Act and the regulations issued 
thereunder.
    (v) Such plan or coverage applies to individuals with primary 
residence in a territory that does not operate a reinsurance program.
    (vi) In the case of employer-provided group health coverage:
    (A) Such coverage applies to individuals with individual market 
health insurance coverage for which reinsurance contributions are 
required; or
    (B) Such coverage is supplemental or secondary to group health 
coverage for which reinsurance contributions must be made for the same 
covered lives.
    (2) Accordingly, as specified in paragraph (a)(1) of this section, a 
contributing entity is not required to make contributions on behalf of 
the following:
    (i) A self-insured group health plan or health insurance coverage 
that consists solely of excepted benefits as defined by section 2791(c) 
of the PHS Act;
    (ii) Coverage offered by an issuer under contract to provide 
benefits under any of the following titles of the Act:
    (A) Title XVIII (Medicare);
    (B) Title XIX (Medicaid); or
    (C) Title XXI (Children's Health Insurance Program);
    (iii) A Federal or State high-risk pool, including the Pre-Existing 
Condition Insurance Plan Program;
    (iv) Basic health plan coverage offered by issuers under contract 
with a State as described in section 1331 of the Affordable Care Act;
    (v) A health reimbursement arrangement within the meaning of IRS 
Notice 2002-45 (2002-2 CB 93) or any subsequent applicable guidance, 
that is integrated with a self-insured group health plan or health 
insurance coverage;
    (vi) A health savings account within the meaning of section 223(d) 
of the Code;

[[Page 229]]

    (vii) A health flexible spending arrangement within the meaning of 
section 125 of the Code;
    (viii) An employee assistance plan, disease management program, or 
wellness program that does not provide major medical coverage;
    (ix) A stop-loss policy or an indemnity reinsurance policy;
    (x) TRICARE and other military health benefits for active and 
retired uniformed services personnel and their dependents;
    (xi) A plan or coverage provided by an Indian Tribe to Tribal 
members and their spouses and dependents (and other persons of Indian 
descent closely affiliated with the Tribe), in the capacity of the 
Tribal members as Tribal members (and not in their capacity as current 
or former employees of the Tribe or their dependents);
    (xii) Health programs operated under the authority of the Indian 
Health Service; or
    (xiii) A self-insured group health plan or health insurance coverage 
that consists solely of benefits for prescription drugs.
    (3) Notwithstanding paragraph (a)(1)(i) of this section, a health 
insurance issuer must make reinsurance contributions for lives covered 
by its group health insurance coverage whether or not the insurance 
coverage constitutes major medical coverage, if--
    (i) The group health plan provides health insurance coverage for 
those covered lives through more than one insurance policy that in 
combination constitute major medical coverage;
    (ii) The lives are not covered by self-insured coverage of the group 
health plan (except for self-insured coverage limited to excepted 
benefits); and
    (iii) The health insurance coverage under the policy offered by the 
health insurance issuer constitutes the greatest portion of inpatient 
hospitalization benefits under the group health plan.
    (b) Data requirements. Each contributing entity must submit to HHS 
data required to substantiate the contribution amounts for the 
contributing entity, in the manner and timeframe specified by HHS.
    (c) Determination of a debt. Any amount owed to the Federal 
government by a self-insured group health plan (including a group health 
plan that is partially self-insured and partially insured, where the 
health insurance coverage does not constitute major medical coverage) 
and its affiliates for reinsurance is a determination of a debt.

[78 FR 15528, Mar. 11, 2013, as amended at 78 FR 65094, Oct. 30, 2013; 
79 FR 13835, Mar. 11, 2014; 80 FR 10862, Feb. 27, 2015]



Sec.  153.405  Calculation of reinsurance contributions.

    (a) In general. The reinsurance contribution required from a 
contributing entity for its reinsurance contribution enrollees during a 
benefit year is calculated by multiplying:
    (1) The number of covered lives of reinsurance contribution 
enrollees during the applicable benefit year for all plans and coverage 
described in Sec.  153.400(a)(1) of the contributing entity; by
    (2) The contribution rate for the applicable benefit year.
    (b) Annual enrollment count. No later than November 15 of benefit 
year 2014, 2015, or 2016, as applicable, or, if such date is not a 
business day, the next business day, a contributing entity must submit 
an annual enrollment count of the number of covered lives of reinsurance 
contribution enrollees for the applicable benefit year to HHS. The count 
must be determined as specified in paragraphs (d) through (g) of this 
section, as applicable.
    (c) Notification and payment. (1) Following submission of the annual 
enrollment count described in paragraph (b) of this section, HHS will 
notify the contributing entity of the reinsurance contribution amount 
allocated to reinsurance payments, administrative expenses, and the U.S. 
Treasury to be paid for the applicable benefit year.
    (2) A contributing entity must remit reinsurance contributions to 
HHS no later than January 15, 2015, 2016, or 2017, as applicable, or, if 
such date is not a business day, the next business day, if making a 
combined contribution or the first payment of the bifurcated 
contribution, and no later than November 15, 2015, 2016, or 2017, as 
applicable, or, if such date is not a business day, the next business 
day, if

[[Page 230]]

making the second payment of the bifurcated contribution.
    (d) Procedures for counting covered lives for health insurance 
issuers. A health insurance issuer must use the same method in a benefit 
year for all of its health insurance plans in the State (including both 
the individual and group markets) for which reinsurance contributions 
are required. To determine the number of covered lives of reinsurance 
contribution enrollees under all health insurance plans in a State for a 
benefit year, a health insurance issuer must use one of the following 
methods:
    (1) Adding the total number of lives covered for each day of the 
first nine months of the benefit year and dividing that total by the 
number of days in the first nine months;
    (2) Adding the total number of lives covered on any date (or more 
dates, if an equal number of dates are used for each quarter) during the 
same corresponding month in each of the first three quarters of the 
benefit year, and dividing that total by the number of dates on which a 
count was made. For this purpose, the same months must be used for each 
quarter (for example January, April and July) and the date used for the 
second and third quarter must fall within the same week of the quarter 
as the corresponding date used for the first quarter; or
    (3) Multiplying the average number of policies in effect for the 
first nine months of the benefit year by the ratio of covered lives per 
policy in effect, calculated using the prior National Association of 
Insurance Commissioners (NAIC) Supplemental Health Care Exhibit (or a 
form filed with the issuer's State of domicile for the most recent time 
period).
    (e) Procedures for counting covered lives for self-insured group 
health plans. To determine the number of covered lives of reinsurance 
contribution enrollees under a self-insured group health plan for a 
benefit year, a plan must use one of the following methods:
    (1) One of the methods specified in either paragraph (d)(1) or 
paragraph (d)(2) of this section;
    (2) Adding the total number of lives covered on any date (or more 
dates, if an equal number of dates are used for each quarter) during the 
same corresponding month in each of the first three quarters of the 
benefit year (provided that the date used for the second and third 
quarters must fall within the same week of the quarter as the 
corresponding date used for the first quarter), and dividing that total 
by the number of dates on which a count was made, except that the number 
of lives covered on a date is calculated by adding the number of 
participants with self-only coverage on the date to the product of the 
number of participants with coverage other than self-only coverage on 
the date and a factor of 2.35. For this purpose, the same months must be 
used for each quarter (for example, January, April, and July); or
    (3) Using the number of lives covered for the most current plan year 
calculated based upon the ``Annual Return/Report of Employee Benefit 
Plan'' filed with the Department of Labor (Form 5500) for the last 
applicable time period. For purposes of this paragraph (e)(3), the 
number of lives covered for the plan year for a plan offering only self-
only coverage equals the sum of the total participants covered at the 
beginning and end of the plan year, as reported on the Form 5500, 
divided by 2, and the number of lives covered for the plan year for a 
plan offering self-only coverage and coverage other than self-only 
coverage equals the sum of the total participants covered at the 
beginning and the end of the plan year, as reported on the Form 5500.
    (f) Procedures for counting covered lives for group health plans 
with a self-insured coverage option and an insured coverage option. (1) 
To determine the number of covered lives of reinsurance contribution 
enrollees under a group health plan with a self-insured coverage option 
and an insured coverage option for a benefit year, a plan must use one 
of the methods specified in either paragraph (d)(1) or paragraph (d)(2) 
of this section.
    (2) Notwithstanding paragraph (f)(1), a plan with multiple coverage 
options may use any of the counting methods specified for self-insured 
coverage or insured coverage, as applicable to each option, if it 
determines the number of

[[Page 231]]

covered lives under each option separately as if each coverage option 
provided major medical coverage (not including any coverage option that 
consists solely of excepted benefits as defined by section 2791(c) of 
the PHS Act, that only provides benefits related to prescription drugs, 
or that is a health reimbursement arrangement, health savings account, 
or health flexible spending arrangement).
    (g) Multiple group health plans maintained by the same plan 
sponsor--(1) General rule. If a plan sponsor maintains two or more group 
health plans (including one or more group health plans that provide 
health insurance coverage) that collectively provide major medical 
coverage for the same covered lives simultaneously, then those multiple 
plans must be treated as a single group health plan for purposes of 
calculating any reinsurance contribution amount due under this section. 
However, a plan sponsor may treat the multiple plans as separate group 
health plans for purposes of calculating any reinsurance contribution 
due under this section if it determines the number of covered lives 
under each separate group health plan as if the separate group health 
plan provided major medical coverage.
    (2) Plan sponsor. For purposes of this paragraph (g), the term 
``plan sponsor'' means:
    (i) The employer, in the case of a plan established or maintained by 
a single employer;
    (ii) The employee organization, in the case of a plan established or 
maintained by an employee organization;
    (iii) The joint board of trustees, in the case of a multiemployer 
plan (as defined in section 414(f) of the Code);
    (iv) The committee, in the case of a multiple employer welfare 
arrangement;
    (v) The cooperative or association that establishes or maintains a 
plan established or maintained by a rural electric cooperative or rural 
cooperative association (as such terms are defined in section 3(40)(B) 
of ERISA);
    (vi) The trustee, in the case of a plan established or maintained by 
a voluntary employees' beneficiary association (meaning that the 
association is not merely serving as a funding vehicle for a plan that 
is established or maintained by an employer or other person);
    (vii) In the case of a plan, the sponsor of which is not described 
in paragraph (g)(2)(i) through (g)(2)(vi) of this section, the person 
identified by the terms of the document under which the plan is operated 
as the plan sponsor, or the person designated by the terms of the 
document under which the plan is operated as the plan sponsor, provided 
that designation is made, and that person has consented to the 
designation, by no later than the date by which the count of covered 
lives for that benefit year is required to be provided, after which date 
that designation for that benefit year may not be changed or revoked, 
and provided further that a person may be designated as the plan sponsor 
only if the person is one of the persons maintaining the plan (for 
example, one of the employers that is maintaining the plan with one or 
more other employers or employee organizations); or
    (viii) In the case of a plan, the sponsor of which is not described 
in paragraph (g)(2)(i) through (g)(2)(vi) of this section, and for which 
no identification or designation of a plan sponsor has been made under 
paragraph (g)(2)(i)(vii) of this section, each employer that maintains 
the plan (with respect to employees of that employer), each employee 
organization that maintains the plan (with respect to members of that 
employee organization), and each board of trustees, cooperative or 
association that maintains the plan.
    (3) Exception. A plan sponsor is not required to include as part of 
a single group health plan as determined under paragraph (g)(1) of this 
section any group health plan that consists solely of excepted benefits 
as defined by section 2791(c) of the PHS Act, that only provides 
benefits related to prescription drugs, or that is a health 
reimbursement arrangement, health savings account, or health flexible 
spending arrangement.
    (4) Procedures for counting covered lives for multiple group health 
plans treated as a single group health plan. The rules in this paragraph 
(g)(4) govern the determination of the average number of covered lives 
in a benefit year for any set of multiple self-insured group health 
plans or health insurance plans (or a

[[Page 232]]

combination of one or more self-insured group health plans and one or 
more health insurance plans) that are treated as a single group health 
plan under paragraph (g)(1) of this section.
    (i) Multiple group health plans including an insured plan. If at 
least one of the multiple plans is an insured plan, the average number 
of covered lives of reinsurance contribution enrollees must be 
calculated using one of the methods specified in either paragraph (d)(1) 
or (2) of this section, applied across the multiple plans as a whole. 
The following information must be determined by the plan sponsor:
    (A) The average number of covered lives calculated;
    (B) The counting method used; and
    (C) The names of the multiple plans being treated as a single group 
health plan as determined by the plan sponsor and reported to HHS.
    (ii) Multiple group health plans not including an insured plan. If 
each of the multiple plans is a self-insured group health plan, the 
average number of covered lives of reinsurance contribution enrollees 
must be calculated using one of the methods specified either in 
paragraph (e)(1) or (2) of this section, applied across the multiple 
plans as a whole. The following information must be determined by the 
plan sponsor:
    (A) The average number of covered lives calculated;
    (B) The counting method used; and
    (C) The names of the multiple plans being treated as a single group 
health plan as determined by the plan sponsor.
    (h) Maintenance of records. A contributing entity must maintain 
documents and records, whether paper, electronic, or in other media, 
sufficient to substantiate the enrollment count submitted pursuant to 
this section for a period of at least 10 years, and must make those 
documents and records available upon request from HHS, the OIG, the 
Comptroller General, or their designees, to any such entity, for 
purposes of verification, investigation, audit, or other review of 
reinsurance contribution amounts.
    (i) Audits. HHS or its designee may audit a contributing entity to 
assess its compliance with the requirements of this subpart. A 
contributing entity that uses a third party administrator, 
administrative services-only contractor, or other third party to assist 
with its obligations under this subpart must ensure that the third party 
administrator, administrative services-only contractor, or other third 
party cooperates with any audit under this section.

[78 FR 15528, Mar. 11, 2013, as amended at 78 FR 66655, Nov. 6, 2013; 78 
FR 65094, Oct. 30, 2013; 78 FR 66655, Nov. 6, 2014; 79 FR 13835, Mar. 
11, 2014; 80 FR 10862, Feb. 27, 2015; 81 FR 12334, Mar. 8, 2016]



Sec.  153.410  Requests for reinsurance payment.

    (a) General requirement. An issuer of a reinsurance-eligible plan 
may make a request for payment when that issuer's claims costs for an 
enrollee of that reinsurance-eligible plan has met the criteria for 
reinsurance payment set forth in subpart B of this part and the HHS 
notice of benefit and payment parameters and State notice of benefit and 
payment parameters for the applicable benefit year, if applicable.
    (b) Manner of request. An issuer of a reinsurance-eligible plan must 
make requests for payment in accordance with the requirements of the 
annual HHS notice of benefit and payment parameters for the applicable 
benefit year or the State notice of benefit and payment parameters 
described in subpart B of this part, as applicable.
    (c) Maintenance of records. An issuer of a reinsurance-eligible plan 
must maintain documents and records, whether paper, electronic, or in 
other media, sufficient to substantiate the requests for reinsurance 
payments made pursuant to this section for a period of at least 10 
years, and must make those documents and records available upon request 
from HHS, the OIG, the Comptroller General, or their designees, or, in a 
State where the State is operating reinsurance, the State or its 
designee, to any such entity, for purposes of verification, 
investigation, audit, or other review of reinsurance payment requests.
    (d) Audits. HHS or its designee may audit an issuer of a 
reinsurance-eligible plan to assess its compliance with the requirements 
of this subpart and subpart H of this part. The issuer must

[[Page 233]]

ensure that its relevant contractors, subcontractors, or agents 
cooperate with any audit under this section. If an audit results in a 
finding of material weakness or significant deficiency with respect to 
compliance with any requirement of this subpart or subpart H, the issuer 
must complete all of the following:
    (1) Within 30 calendar days of the issuance of the final audit 
report, provide a written corrective action plan to HHS for approval.
    (2) Implement that plan.
    (3) Provide to HHS written documentation of the corrective actions 
once taken.

[77 FR 17248, Mar. 23, 2012, as amended at 78 FR 15530, Mar. 11, 2013; 
78 FR 65094, Oct. 30, 2013; 79 FR 13835, Mar. 11, 2014]



Sec.  153.420  Data collection.

    (a) Data requirement. To be eligible for reinsurance payments, an 
issuer of a reinsurance-eligible plan must submit or make accessible all 
required reinsurance data in accordance with the reinsurance data 
collection approach established by the State, or by HHS on behalf of the 
State.
    (b) Deadline for submission of data. An issuer of a reinsurance-
eligible plan must submit or make accessible data to be considered for 
reinsurance payments for the applicable benefit year by April 30 of the 
year following the end of the applicable benefit year.

[78 FR 15530, Mar. 11, 2013]



    Subpart F_Health Insurance Issuer Standards Related to the Risk 
                            Corridors Program



Sec.  153.500  Definitions.

    The following definitions apply to this subpart:
    Adjustment percentage means, with respect to a QHP:
    (1) For benefit year 2014--
    (i) For a QHP offered by a health insurance issuer with allowable 
costs of at least 80 percent of after-tax premium in a transitional 
State, the percentage specified by HHS for such QHPs in the transitional 
State; and otherwise
    (ii) Zero percent.
    (2) For benefit year 2015, for a QHP offered by a health insurance 
issuer in any State, 2 percent.
    (3) For benefit year 2016--
    (i) For a QHP offered by a health insurance issuer with allowable 
costs of at least 80 percent of after-tax premium, the percentage 
specified by HHS; and otherwise
    (ii) Zero percent.
    Administrative costs mean, with respect to a QHP, total non-claims 
costs incurred by the QHP issuer for the QHP, including taxes and 
regulatory fees.
    After-tax premiums earned mean, with respect to a QHP, premiums 
earned with respect to the QHP minus taxes and regulatory fees.
    Allowable administrative costs mean, with respect to a QHP, the sum 
of administrative costs of the QHP, other than taxes and regulatory 
fees, plus profits earned by the QHP, which sum is limited to the sum of 
20 percent and the adjustment percentage of after-tax premiums earned 
with respect to the QHP (including any premium tax credit under any 
governmental program), plus taxes and regulatory fees.
    Allowable costs means, with respect to a QHP, an amount equal to the 
pro rata portion of the sum of incurred claims within the meaning of 
Sec.  158.140 of this subchapter (including adjustments for any direct 
and indirect remuneration), expenditures by the QHP issuer for the QHP 
for activities that improve health care quality as set forth in Sec.  
158.150 of this subchapter, expenditures by the QHP issuer for the QHP 
related to health information technology and meaningful use requirements 
as set forth in Sec.  158.151 of this subchapter, and the adjustments 
set forth in Sec.  153.530(b); in each case for all of the QHP issuer's 
non-grandfathered health plans in a market within a State, allocated to 
the QHP based on premiums earned.
    Charge means the flow of funds from QHP issuers to HHS.
    Direct and indirect remuneration means prescription drug rebates 
received by a QHP issuer within the meaning of Sec.  158.140(b)(1)(i) of 
this subchapter.
    Payment means the flow of funds from HHS to QHP issuers.

[[Page 234]]

    Premiums earned mean, with respect to a QHP, all monies paid by or 
for enrollees with respect to that plan as a condition of receiving 
coverage, including any fees or other contributions paid by or for 
enrollees, within the meaning of Sec.  158.130 of this subchapter.
    Profits mean, with respect to a QHP, the greater of:
    (1) The sum of three percent and the adjustment percentage of after-
tax premiums earned; and
    (2) Premiums earned of the QHP minus the sum of allowable costs and 
administrative costs of the QHP.
    Qualified health plan or QHP means, with respect to the risk 
corridors program only --
    (1) A qualified health plan, as defined at Sec.  155.20 of this 
subchapter;
    (2) A health plan offered outside the Exchange by an issuer that is 
the same plan as a qualified health plan, as defined at Sec.  155.20 of 
this subchapter, offered through the Exchange by the issuer. To be the 
same plan as a qualified health plan (as defined at Sec.  155.20 of this 
subchapter) means that the health plan offered outside the Exchange has 
identical benefits, premium, cost-sharing structure, provider network, 
and service area as the qualified health plan (as defined at Sec.  
155.20 of this subchapter); or
    (3) A health plan offered outside the Exchange that is substantially 
the same as a qualified health plan, as defined at Sec.  155.20 of this 
subchapter, offered through the Exchange by the issuer. To be 
substantially the same as a qualified health plan (as defined at Sec.  
155.20 of this subchapter) means that the health plan meets the criteria 
set forth in paragraph (2) of this definition with respect to the 
qualified health plan, except that its benefits, premium, cost-sharing 
structure, and provider network may differ from those of the qualified 
health plan (as defined at Sec.  155.20 of this subchapter) provided 
that such differences are tied directly and exclusively to Federal or 
State requirements or prohibitions on the coverage of benefits that 
apply differently to plans depending on whether they are offered through 
or outside an Exchange.
    Risk corridors means any payment adjustment system based on the 
ratio of allowable costs of a plan to the plan's target amount.
    Target amount means, with respect to a QHP, an amount equal to the 
total premiums earned with respect to a QHP, including any premium tax 
credit under any governmental program, reduced by the allowable 
administrative costs of the plan.
    Taxes and regulatory fees mean, with respect to a QHP, Federal and 
State licensing and regulatory fees paid with respect to the QHP as 
described in Sec.  158.161(a) of this subchapter, and Federal and State 
taxes and assessments paid with respect to the QHP as described in Sec.  
158.162(a)(1) and (b)(1) of this subchapter.
    Transitional State means a State that does not enforce compliance 
with Sec.  147.102, Sec.  147.104, Sec.  147.106, Sec.  147.150, Sec.  
156.80, or subpart B of part 156 of this subchapter for individual 
market and small group health plans that renew for a policy year 
starting between January 1, 2014, and October 1, 2014, in accordance 
with the transitional policy outlined in the CMS letter dated November 
14, 2013.

[77 FR 17248, Mar. 23, 2012, as amended at 78 FR 15530, 15550, Mar. 11, 
2013; 78 FR 54133, Aug. 30, 2013; 79 FR 13835, Mar. 11, 2014; 79 FR 
30341, May 27, 2014; 80 FR 10863, Feb. 27, 2015]



Sec.  153.510  Risk corridors establishment and payment methodology.

    (a) General requirement. A QHP issuer must adhere to the 
requirements set by HHS in this subpart and in the annual HHS notice of 
benefit and payment parameters for the establishment and administration 
of a program of risk corridors for calendar years 2014, 2015, and 2016.
    (b) HHS payments to health insurance issuers. QHP issuers will 
receive payment from HHS in the following amounts, under the following 
circumstances:
    (1) When a QHP's allowable costs for any benefit year are more than 
103 percent but not more than 108 percent of the target amount, HHS will 
pay the QHP issuer an amount equal to 50 percent of the allowable costs 
in excess of 103 percent of the target amount; and
    (2) When a QHP's allowable costs for any benefit year are more than 
108 percent of the target amount, HHS will

[[Page 235]]

pay to the QHP issuer an amount equal to the sum of 2.5 percent of the 
target amount plus 80 percent of allowable costs in excess of 108 
percent of the target amount.
    (c) Health insurance issuers' remittance of charges. QHP issuers 
must remit charges to HHS in the following amounts, under the following 
circumstances:
    (1) If a QHP's allowable costs for any benefit year are less than 97 
percent but not less than 92 percent of the target amount, the QHP 
issuer must remit charges to HHS in an amount equal to 50 percent of the 
difference between 97 percent of the target amount and the allowable 
costs; and
    (2) When a QHP's allowable costs for any benefit year are less than 
92 percent of the target amount, the QHP issuer must remit charges to 
HHS in an amount equal to the sum of 2.5 percent of the target amount 
plus 80 percent of the difference between 92 percent of the target 
amount and the allowable costs.
    (d) Charge submission deadline. A QHP issuer must remit charges to 
HHS within 30 days after notification of such charges.
    (e) A QHP issuer is not subject to the provisions of this subpart 
with respect to a stand-alone dental plan.
    (f) Eligibility under health insurance market rules. The provisions 
of this subpart apply only for plans offered by a QHP issuer in the SHOP 
or the individual or small group market, as determined according to the 
employee counting method applicable under State law, that are subject to 
the following provisions: Sec. Sec.  147.102, 147.104, 147.106, 147.150, 
156.80, and subpart B of part 156 of this subchapter.
    (g) Adjustment to risk corridors payments and charges. If an issuer 
reported a certified estimate of 2014 cost-sharing reductions on its 
2014 MLR and Risk Corridors Annual Reporting Form that is lower than the 
actual value of cost-sharing reductions calculated under Sec.  
156.430(c) of this subchapter for the 2014 benefit year, HHS will make 
an adjustment to the amount of the issuer's 2015 benefit year risk 
corridors payment or charge measured by the full difference between the 
certified estimate of 2014 cost-sharing reductions reported and the 
actual value of cost-sharing reductions provided as calculated under 
Sec.  156.430(c) for the 2014 benefit year.

[77 FR 17248, Mar. 23, 2012, as amended at 78 FR 15530, Mar. 11, 2013; 
78 FR 65094, Oct. 30, 2013; 79 FR 13836, Mar. 11, 2014; 81 FR 12334, 
Mar. 8, 2016]



Sec.  153.520  Attribution and allocation of revenue and expense items.

    (a) Attribution to plans. Each item of expense in the target amount 
with respect to a QHP must be reasonably attributable to the operation 
of the QHP issuer's non-grandfathered health plans in a market within a 
State, with the attribution based on a generally accepted accounting 
method, consistently applied. To the extent that a QHP issuer utilizes a 
specific method for allocating expenses for purposes of Sec.  158.170 of 
this subchapter, the method used for purposes of this paragraph must be 
consistent.
    (b) Allocation across plans. Each item of expense in the target 
amount must reflect an amount equal to the pro rata portion of the 
aggregate amount of such expense across all of the QHP issuer's non-
grandfathered health plans in a market within a State, allocated to the 
QHP based on premiums earned.
    (c) Disclosure of attribution and allocation methods. A QHP issuer 
must submit to HHS a report, in the manner and timeframe specified in 
the annual HHS notice of benefit and payment parameters, with a detailed 
description of the methods and specific bases used to perform the 
attributions and allocations set forth in paragraphs (a) and (b) of this 
section.
    (d) Attribution of reinsurance and risk adjustment to benefit year. 
A QHP issuer must attribute reinsurance payments and risk adjustment 
payments and charges to allowable costs for the benefit year with 
respect to which the reinsurance payments or risk adjustment 
calculations apply.
    (e) Maintenance of records. A QHP issuer must maintain documents and 
records, whether paper, electronic, or in other media, sufficient to 
enable the evaluation of the issuer's compliance with applicable risk 
corridors standards, for each benefit year for at least

[[Page 236]]

10 years, and must make those documents and records available upon 
request from HHS, the OIG, the Comptroller General, or their designees, 
to any such entity, for purposes of verification, investigation, audit 
or other review.

[77 FR 17248, Mar. 23, 2012, as amended at 78 FR 15530, 15550, Mar. 11, 
2013; 78 FR 65094, Oct. 30, 2013]



Sec.  153.530  Risk corridors data requirements.

    (a) Premium data. A QHP issuer must submit to HHS data on the 
premiums earned with respect to each QHP that the issuer offers in a 
manner specified by HHS.
    (b) Allowable costs. A QHP issuer must submit to HHS data on the 
allowable costs incurred with respect to the QHP issuer's non-
grandfathered health plans in a market within a State in a manner 
specified by HHS. For purposes of this subpart, allowable costs must be 
--
    (1) Increased by any risk adjustment charges paid by the issuer for 
the non-grandfathered health plans under the risk adjustment program 
established under subpart D of this part.
    (2) Reduced by --
    (i) Any risk adjustment payments received by the issuer for the non-
grandfathered health plans under the risk adjustment program established 
pursuant to subpart D of this part;
    (ii) Any reinsurance payments received by the issuer for the non-
grandfathered health plans under the transitional reinsurance program 
established under subpart C of this part;
    (iii) A cost-sharing reduction amount equal to the amount of cost-
sharing reductions for the benefit year as calculated under Sec.  
156.430(c) of this subchapter, to the extent not reimbursed to the 
provider furnishing the item or service.
    (iv) For the 2015 and 2016 benefit years, any difference between--
    (A) The sum of unpaid claims reserves and claims incurred but not 
reported, as set forth in Sec. Sec.  158.103 and 158.140(a)(2) and (3) 
of this subchapter, that were reported on the MLR and Risk Corridors 
Annual Reporting Form for the year preceding the benefit year; and
    (B) The actual claims incurred during the year preceding the benefit 
year and paid between March 31 of the benefit year and March 31 of the 
year following the benefit year.
    (c) Allowable administrative costs. A QHP issuer must submit to HHS 
data on the allowable administrative costs incurred with respect to the 
QHP issuer's non-grandfathered health plans in a market within a State 
in a manner specified by HHS.
    (d) Timeframes. For each benefit year, a QHP issuer must submit all 
information required under paragraphs (a) through (c) of this section by 
July 31 of the year following the benefit year.
    (e) Requirement to submit enrollment data for risk corridors 
adjustment. A health insurance issuer in the individual or small group 
market of a transitional State must submit, in a manner and timeframe 
specified by HHS, the following:
    (1) A count of its total enrollment in the individual market and 
small group market; and
    (2) A count of its total enrollment in individual market and small 
group market policies that meet the criteria for transitional policies 
outlined in the CMS letter dated November 14, 2013.

[77 FR 17248, Mar. 23, 2012, as amended at 78 FR 15531, Mar. 11, 2013; 
78 FR 65094, Oct. 30, 2013; 79 FR 13836, Mar. 11, 2014; 79 FR 37662, 
July 2, 2014; 81 FR 12334, Mar. 8, 2016]



Sec.  153.540  Compliance with risk corridors standards.

    HHS or its designee may audit a QHP issuer to assess its compliance 
with the requirements of this subpart. HHS will conduct an audit in 
accordance with the procedures set forth in Sec.  158.402(a) through (e) 
of this subchapter.

[79 FR 13836, Mar. 11, 2014]



    Subpart G_Health Insurance Issuer Standards Related to the Risk 
                           Adjustment Program



Sec.  153.600  [Reserved]



Sec.  153.610  Risk adjustment issuer requirements.

    (a) Data requirements. An issuer that offers risk adjustment covered 
plans

[[Page 237]]

must submit or make accessible all required risk adjustment data for 
those risk adjustment covered plans in accordance with the risk 
adjustment data collection approach established by the State, or by HHS 
on behalf of the State.
    (b) Risk adjustment data storage. An issuer that offers risk 
adjustment covered plans must store all required risk adjustment data in 
accordance with the risk adjustment data collection approach established 
by the State, or by HHS on behalf of the State.
    (c) Issuer contracts. An issuer that offers risk adjustment covered 
plans may include in its contract with a provider, supplier, physician, 
or other practitioner, provisions that require such contractor's 
submission of complete and accurate risk adjustment data in the manner 
and timeframe established by the State, or HHS on behalf of the State. 
These provisions may include financial penalties for failure to submit 
complete, timely, or accurate data.
    (d) Assessment of charges. An issuer that offers risk adjustment 
covered plans that has a net balance of risk adjustment charges payable, 
including adjustments made pursuant to Sec.  153.350(c), will be 
notified by the State, or by HHS on behalf of the State, of those net 
charges, and must remit those risk adjustment charges to the State, or 
to HHS on behalf of the State, as applicable.
    (e) Charge submission deadline. An issuer must remit net charges to 
the State, or HHS on behalf of the State, within 30 days of notification 
of net charges payable by the State, or HHS on behalf of the State.
    (f) Assessment and collection of user fees for HHS risk adjustment 
operations. Where HHS is operating risk adjustment on behalf of a State, 
an issuer of a risk adjustment covered plan (other than a student health 
plan or a plan not subject to 45 CFR 147.102, 147.104, 147.106, 156.80, 
and subpart B of part 156) must, for each benefit year--
    (1) Submit or make accessible to HHS its monthly enrollment for the 
risk adjustment covered plan for the benefit year through the risk 
adjustment data collection approach established at Sec.  153.610(a), in 
a manner and timeframe specified by HHS; and
    (2) Remit to HHS an amount equal to the product of its monthly 
billable enrollment in the risk adjustment covered plan multiplied by 
the per-enrollee-per-month risk adjustment user fee specified in the 
annual HHS notice of benefit and payment parameters for the applicable 
benefit year.

[77 FR 17248, Mar. 23, 2012, as amended at 78 FR 15531, Mar. 11, 2013; 
81 FR 94174, Dec. 22, 2016]



Sec.  153.620  Compliance with risk adjustment standards.

    (a) Issuer support of data validation. An issuer that offers risk 
adjustment covered plans must comply with any data validation requests 
by the State or HHS on behalf of the State.
    (b) Issuer records maintenance requirements. An issuer that offers 
risk adjustment covered plans must also maintain documents and records, 
whether paper, electronic, or in other media, sufficient to enable the 
evaluation of the issuer's compliance with applicable risk adjustment 
standards, for each benefit year for at least 10 years, and must make 
those documents and records available upon request to HHS, the OIG, the 
Comptroller General, or their designees, or in a State where the State 
is operating risk adjustment, the State or its designee to any such 
entity, for purposes of verification, investigation, audit or other 
review.
    (c) Audits. HHS or its designee may audit an issuer of a risk 
adjustment covered plan to assess its compliance with the requirements 
of this subpart and subpart H of this part. The issuer must ensure that 
its relevant contractors, subcontractors, or agents cooperate with any 
audit under this section. If an audit results in a finding of material 
weakness or significant deficiency with respect to compliance with any 
requirement of this subpart or subpart H of this part, the issuer must 
complete all of the following:
    (1) Within 30 calendar days of the issuance of the final audit 
report, provide a written corrective action plan to HHS for approval.
    (2) Implement that plan.

[[Page 238]]

    (3) Provide to HHS written documentation of the corrective actions 
once taken.

[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 65095, Oct. 30, 2013; 
79 FR 13836, Mar. 11, 2014]



Sec.  153.630  Data validation requirements when HHS operates risk
adjustment.

    (a) General requirement. An issuer of a risk adjustment covered plan 
in a State where HHS is operating risk adjustment on behalf of the State 
for the applicable benefit year must have an initial and second 
validation audit performed on its risk adjustment data as described in 
this section.
    (b) Initial validation audit. (1) An issuer of a risk adjustment 
covered plan must engage one or more independent auditors to perform an 
initial validation audit of a sample of its risk adjustment data 
selected by HHS. The issuer must provide HHS with the identity of the 
initial validation auditor, and must attest to the absence of conflicts 
of interest between the initial validation auditor (or the members of 
its audit team, owners, directors, officers, or employees) and the 
issuer (or its owners, directors, officers, or employees), to its 
knowledge, following reasonable investigation, and must attest that it 
has obtained an equivalent representation from the initial validation 
auditor, in a timeframe and manner to be specified by HHS.
    (2) The issuer must ensure that the initial validation auditors are 
reasonably capable of performing an initial data validation audit 
according to the standards established by HHS for such audit, and must 
ensure that the audit is so performed.
    (3) The issuer must ensure that each initial validation auditor is 
reasonably free of conflicts of interest, such that it is able to 
conduct the initial validation audit in an impartial manner and its 
impartiality is not reasonably open to question.
    (4) The issuer must ensure validation of the accuracy of risk 
adjustment data for a sample of enrollees selected by HHS. The issuer 
must ensure that the initial validation audit findings are submitted to 
HHS in a manner and timeframe specified by HHS.
    (5) An initial validation audit must be conducted by medical coders 
certified as such and in good standing by a nationally recognized 
accrediting agency.
    (6) An issuer must provide the initial validation auditor and the 
second validation auditor with all relevant source enrollment 
documentation, all claims and encounter data, and medical record 
documentation from providers of services to each enrollee in the 
applicable sample without unreasonable delay and in a manner that 
reasonably assures confidentiality and security in transmission. 
Notwithstanding any other provision of this section, a qualified 
provider that is licensed to diagnose mental illness by the State and 
that is prohibited from furnishing a complete medical record by 
applicable State privacy laws concerning any enrollee's treatment for 
one or more mental or behavioral health conditions may furnish a signed 
mental or behavioral health assessment that, to the extent permissible 
under applicable Federal and State privacy laws, should contain: The 
enrollee's name; sex; date of birth; current status of all mental or 
behavioral health diagnoses; and dates of service. The mental or 
behavioral health assessment should be signed by the provider and 
submitted with an attestation that the provider is prohibited from 
furnishing a complete medical record by applicable State privacy laws.
    (7) The risk score of each enrollee in the sample must be validated 
by--
    (i) Validating the enrollee's enrollment data and demographic data 
in a manner to be determined by HHS.
    (ii) Validating enrollee health status through review of all 
relevant medical record documentation. Medical record documentation must 
originate from the provider of the services and align with dates of 
service for the medical diagnoses, and reflect permitted providers and 
services. For purposes of this section, ``medical record documentation'' 
means clinical documentation of hospital inpatient or outpatient 
treatment or professional medical treatment from which enrollee health 
status is documented and related to accepted risk adjustment services 
that occurred during a specified period of

[[Page 239]]

time. Medical record documentation must be generated under a face-to-
face or telehealth visit documented and authenticated by a permitted 
provider of services;
    (iii) Beginning in the 2018 benefit year, validating enrollee health 
status through review of all relevant paid pharmacy claims;
    (iv) Validating medical records according to industry standards for 
coding and reporting; and
    (v) Having a senior reviewer confirm any enrollee risk adjustment 
error discovered during the initial validation audit. For purposes of 
this section, a ``senior reviewer'' is a reviewer certified as a medical 
coder by a nationally recognized accrediting agency who possesses at 
least 5 years of experience in medical coding. However, for validation 
of risk adjustment data for the 2014 and 2015 benefit years, a senior 
reviewer may possess 3 or more years of experience.
    (8) The initial validation auditor must measure and report to the 
issuer and HHS, in a manner and timeframe specified by HHS, its inter-
rater reliability rates among its reviewers. The initial validation 
auditor must achieve a consistency measure of at least 95 percent for 
his or her review outcomes, except that for validation of risk 
adjustment data for the 2015 and 2016 benefit years, the initial 
validation auditor may meet an inter-rater reliability standard of 85 
percent for review outcomes.
    (9) HHS may impose civil money penalties in accordance with the 
procedures set forth in Sec.  156.805(b) through (e) of this subchapter 
if an issuer of a risk adjustment covered plan--
    (i) Fails to engage an initial validation auditor;
    (ii) Fails to submit the results of an initial validation audit to 
HHS;
    (iii) Engages in misconduct or substantial non-compliance with the 
risk adjustment data validation standards and requirements applicable to 
issuers of risk adjustment covered plans; or
    (iv) Intentionally or recklessly misrepresents or falsifies 
information that it furnishes to HHS.
    (10) If an issuer of a risk adjustment covered plan fails to engage 
an initial validation auditor or to submit the results of an initial 
validation audit to HHS, HHS will impose a default data validation 
charge.
    (c) Second validation audit. HHS will select a subsample of the risk 
adjustment data validated by the initial validation audit for a second 
validation audit. The issuer must comply with, and must ensure the 
initial validation auditor complies with, standards for such audit 
established by HHS, and must cooperate with, and must ensure that the 
initial validation auditor cooperates with, HHS and the second 
validation auditor in connection with such audit.
    (d) Risk adjustment data validation disputes and appeals. (1) Within 
15 calendar days of notification of the initial validation audit sample 
determined by HHS, in the manner set forth by HHS, an issuer must 
confirm the sample or file a discrepancy report to dispute the initial 
validation audit sample determined by HHS.
    (2) Within 30 calendar days of the notification by HHS of the 
findings of a second validation audit (if applicable) or the calculation 
of a risk score error rate, in the manner set forth by HHS, an issuer 
must confirm the findings of the second validation audit (if applicable) 
or the calculation of the risk score error rate as a result of risk 
adjustment data validation, or file a discrepancy report to dispute the 
findings of a second validation audit (if applicable) or the calculation 
of a risk score error rate as a result of risk adjustment data 
validation.
    (3) An issuer may appeal the findings of a second validation audit 
or the calculation of a risk score error rate as result of risk 
adjustment data validation, under the process set forth in Sec.  
156.1220 of this subchapter.
    (e) Adjustment of payments and charges. HHS may adjust payments and 
charges for issuers that do not comply with audit requirements and 
standards, as specified in paragraphs (b) and (c) of this section.
    (f) Data security and transmission. (1) An issuer must submit the 
risk adjustment data and source documentation for the initial and second 
validation audits specified by HHS to HHS or its designee in the manner 
and timeframe specified by HHS.

[[Page 240]]

    (2) An issuer must ensure that it and its initial validation auditor 
comply with the security standards described at 45 CFR 164.308, 164.310, 
and 164.312 in connection with the initial validation audit, the second 
validation audit, and any appeal.
    (g) Exemptions. An issuer of a risk adjustment covered plan will be 
exempted by HHS from the data validation requirement set forth in 
paragraph (b) of this section for a given benefit year if:
    (1) The issuer has 500 or fewer billable member months of enrollment 
in the individual, small group and merged markets (as applicable) for 
the applicable benefit year, calculated on a Statewide basis;
    (2) The issuer is at or below the materiality threshold as defined 
by HHS and is not selected by HHS to participate in the data validation 
requirements in an applicable benefit year under random and targeted 
sampling conducted approximately every 3 years (barring any risk-based 
triggers based on experience that will warrant more frequent audits); or
    (3) The issuer is in liquidation, or will enter liquidation no later 
than April 30th of the benefit year that is 2 benefit years after the 
benefit year being audited, provided that:
    (i) The issuer provides to HHS, in the manner and timeframe 
specified by HHS, an attestation that the issuer is in liquidation or 
will enter liquidation no later than April 30th of the benefit year that 
is 2 benefit years after the benefit year being audited that is signed 
by an individual with the authority to legally and financially bind the 
issuer; and
    (ii) The issuer is not a positive error rate outlier under the error 
estimation methodology in risk adjustment data validation for the prior 
benefit year of risk adjustment data validation.
    (iii) For purposes of this paragraph (g)(3), liquidation means that 
a State court has issued an order of liquidation for the issuer that 
fixes the rights and liabilities of the issuer and its creditors, 
policyholders, shareholders, members, and all other persons of interest.

[78 FR 15531, Mar. 11, 2013, as amended at 79 FR 13836, Mar. 11, 2014; 
81 FR 94174, Dec. 22, 2016; 83 FR 17059, Apr. 17, 2018; 84 FR 17562, 
Apr. 25, 2019]



     Subpart H_Distributed Data Collection for HHS-Operated Programs

    Source: 78 FR 15531, Mar. 11, 2013, unless otherwise noted.



Sec.  153.700  Distributed data environment.

    (a) Dedicated distributed data environments. For each benefit year 
in which HHS operates the risk adjustment or reinsurance program on 
behalf of a State, an issuer of a risk adjustment covered plan or a 
reinsurance-eligible plan in the State, as applicable, must establish a 
dedicated data environment and provide data access to HHS, in a manner 
and timeframe specified by HHS, for any HHS-operated risk adjustment and 
reinsurance program.
    (b) Timeline. An issuer must establish the dedicated data 
environment (and confirm proper establishment through successfully 
testing the environment to conform with applicable HHS standards for 
such testing) three months prior to the first date of full operation.



Sec.  153.710  Data requirements.

    (a) Enrollment, claims, and encounter data. An issuer of a risk 
adjustment covered plan or a reinsurance-eligible plan in a State in 
which HHS is operating the risk adjustment or reinsurance program, as 
applicable, must provide to HHS, through the dedicated data environment, 
access to enrollee-level plan enrollment data, enrollee claims data, and 
enrollee encounter data as specified by HHS.
    (b) Claims data. All claims data submitted by an issuer of a risk 
adjustment covered plan or a reinsurance-eligible plan in a State in 
which HHS is operating the risk adjustment or reinsurance program, as 
applicable, must have resulted in payment by the issuer (or payment of 
cost sharing by the enrollee).
    (c) Claims data from capitated plans. An issuer of a risk adjustment 
covered plan or a reinsurance-eligible plan in a State in which HHS is 
operating the risk adjustment or reinsurance program, as applicable, 
that does not generate individual enrollee claims in the normal course 
of business must derive

[[Page 241]]

the costs of all applicable provider encounters using its principal 
internal methodology for pricing those encounters. If the issuer does 
not have such a methodology, or has an incomplete methodology, it must 
supplement the methodology in a manner that yields derived claims that 
are reasonable in light of the specific service and insurance market 
that the plan is serving.
    (d) Final dedicated distributed data environment report. Within 15 
calendar days of the date of the final dedicated distributed data 
environment report from HHS, the issuer must, in a format specified by 
HHS, either:
    (1) Confirm to HHS that the information in the final report 
accurately reflects the data to which the issuer has provided access to 
HHS through its dedicated distributed data environment in accordance 
with Sec.  153.700(a) for the benefit year specified in the report; or
    (2) Describe to HHS any discrepancy it identifies in the final 
dedicated distributed data environment report.
    (e) Unresolved discrepancies. If a discrepancy first identified in a 
final dedicated distributed data environment report in accordance with 
paragraph (d)(2) of this section remains unresolved after the issuance 
of the notification of risk adjustment payments and charges or 
reinsurance payments under Sec.  153.310(e) or Sec.  153.240(b)(1)(ii), 
respectively, an issuer of a risk adjustment covered plan or 
reinsurance-eligible plan may make a request for reconsideration 
regarding such discrepancy under the process set forth in Sec.  
156.1220(a) of this subchapter.
    (f) Evaluation of dedicated distributed data. If an issuer of a risk 
adjustment covered plan fails to provide sufficient required data, such 
that HHS cannot apply the applicable methodology to calculate the risk 
adjustment payment transfer amount for the risk adjustment covered plan 
in a timely or appropriate fashion, then HHS will assess a default risk 
adjustment charge under Sec.  153.740(b). If an issuer of a reinsurance 
eligible plan fails to provide data sufficient for HHS to calculate 
reinsurance payments, the issuer will forfeit reinsurance payments for 
claims it fails to submit.
    (1) Data quantity. An issuer of a risk adjustment covered plan or a 
reinsurance-eligible plan must provide, in a format and on a timeline 
specified by HHS, data on its total enrollment and claims counts by 
market, which HHS may use in evaluating whether the issuer provided 
access in the dedicated distributed data environment to a sufficient 
quantity of data to meet reinsurance and risk adjustment data 
requirements.
    (2) Data quality. If, following the deadline for submission of data 
specified in Sec.  153.730, HHS identifies an outlier that would cause 
the data that a risk adjustment covered plan or a reinsurance-eligible 
plan made available through a dedicated distributed data environment to 
fail HHS's data quality thresholds, the issuer may, within 10 calendar 
days of receiving notification of the outlier, submit an explanation of 
the outlier for HHS to consider in determining whether the issuer met 
the reinsurance and risk adjustment data requirements.
    (g) Risk corridors and MLR reporting. Except as provided in 
paragraph (g)(3) of this section:
    (1) Notwithstanding any discrepancy report made under paragraph 
(d)(2) of this section, or any request for reconsideration under Sec.  
156.1220(a) of this subchapter with respect to any risk adjustment 
payment or charge, including an assessment of risk adjustment user fees; 
reinsurance payment; cost-sharing reduction payment or charge; or risk 
corridors payment or charge, unless the dispute has been resolved, an 
issuer must report, for purposes of the risk corridors and MLR programs:
    (i) The risk adjustment payment to be made or charge assessed, 
including an assessment of risk adjustment user fees, by HHS in the 
notification provided under Sec.  153.310(e);
    (ii) The reinsurance payment to be made by HHS in the notification 
provided under Sec.  153.240(b)(1)(ii);
    (iii) A cost-sharing reduction amount equal to the actual amount of 
cost-sharing reductions for the benefit year as calculated under Sec.  
156.430(c) of this subchapter, to the extent not reimbursed to the 
provider furnishing the item or service; and

[[Page 242]]

    (iv) For medical loss ratio reporting only, the risk corridors 
payment to be made or charge assessed by HHS under Sec.  153.510.
    (2) An issuer must report during the current MLR and risk corridors 
reporting year any adjustment made or approved by HHS for any risk 
adjustment payment or charge, including an assessment of risk adjustment 
user fees; any reinsurance payment; any cost-sharing reduction payment 
or charge; or any risk corridors payment or charge before August 15, or 
the next applicable business day, of the current MLR and risk corridors 
reporting year unless instructed otherwise by HHS. An issuer must report 
any adjustment made or approved by HHS for any risk adjustment payment 
or charge, including an assessment of risk adjustment user fees; any 
reinsurance payment; any cost-sharing reduction payment or charge; or 
any risk corridors payment or charge where such adjustment has not been 
accounted for in a prior MLR and Risk Corridor Annual Reporting Form, in 
the MLR and Risk Corridors Annual Reporting Form for the following 
reporting year.
    (3) In cases where HHS reasonably determines that the reporting 
instructions in paragraph (g)(1) or (2) of this section would lead to 
unfair or misleading financial reporting, issuers must correct their 
data submissions in a form and manner to be specified by HHS.

[78 FR 15531, Mar. 11, 2013, as amended at 79 FR 13837, Mar. 11, 2014; 
81 FR 12335, Mar. 8, 2016]



Sec.  153.720  Establishment and usage of masked enrollee 
identification numbers.

    (a) Enrollee identification numbers. An issuer of a risk adjustment 
covered plan or a reinsurance-eligible plan in a State in which HHS is 
operating the risk adjustment or reinsurance program, as applicable, 
must--
    (1) Establish a unique masked enrollee identification number for 
each enrollee; and
    (2) Maintain the same masked enrollee identification number for an 
enrollee across enrollments or plans within the issuer, within the 
State, during a benefit year.
    (b) Prohibition on personally identifiable information. An issuer of 
a risk adjustment covered plan or a reinsurance-eligible plan in a State 
in which HHS is operating the risk adjustment or reinsurance program on 
behalf of the State, as applicable, may not--
    (1) Include enrollee's personally identifiable information in the 
masked enrollee identification number; or
    (2) Use the same masked enrollee identification number for different 
enrollees enrolled with the issuer.



Sec.  153.730  Deadline for submission of data.

    A risk adjustment covered plan or a reinsurance-eligible plan in a 
State in which HHS is operating the risk adjustment or reinsurance 
program, as applicable, must submit data to be considered for risk 
adjustment payments and charges and reinsurance payments for the 
applicable benefit year by April 30 of the year following the applicable 
benefit year.



Sec.  153.740  Failure to comply with HHS-operated risk adjustment
and reinsurance data requirements.

    (a) Enforcement actions. If an issuer of a risk adjustment covered 
plan or reinsurance-eligible plan fails to establish a dedicated 
distributed data environment in a manner and timeframe specified by HHS; 
fails to provide HHS with access to the required data in such 
environment in accordance with Sec.  153.700(a) or otherwise fails to 
comply with the requirements of Sec. Sec.  153.700 through 153.730; 
fails to adhere to the reinsurance data submission requirements set 
forth in Sec.  153.420; or fails to adhere to the risk adjustment data 
submission and data storage requirements set forth in Sec. Sec.  153.610 
through 153.630, HHS may impose civil money penalties in accordance with 
the procedures set forth in Sec.  156.805 of this subchapter. Civil 
monetary penalties will not be imposed for non-compliance with these 
requirements during the 2014 or 2015 calendar years under this paragraph 
if the issuer has made good faith efforts to comply with these 
requirements.
    (b) Default risk adjustment charge. If an issuer of a risk 
adjustment covered

[[Page 243]]

plan fails to establish a dedicated distributed data environment or 
fails to provide HHS with access to the required data in such 
environment in accordance with Sec.  153.610(a), Sec.  153.700, Sec.  
153.710, or Sec.  153.730 such that HHS cannot apply the applicable 
Federally certified risk adjustment methodology to calculate the risk 
adjustment payment transfer amount for the risk adjustment covered plan 
in a timely fashion, HHS will assess a default risk adjustment charge.
    (c) Information sharing. HHS may consult with and share information 
about issuers of risk adjustment covered plans and reinsurance-eligible 
plans with other Federal and State regulatory and enforcement entities 
to the extent the consultation or information is necessary for purposes 
of Federal or State oversight and enforcement activities.

[78 FR 65095, Oct. 30, 2013, as amended at 80 FR 10863, Feb. 27, 2015]



PART 154_HEALTH INSURANCE ISSUER RATE INCREASES: DISCLOSURE AND REVIEW
REQUIREMENTS--Table of Contents



                      Subpart A_General Provisions

Sec.
154.101 Basis and scope.
154.102 Definitions.
154.103 Applicability.

               Subpart B_Disclosure and Review Provisions

154.200 Rate increases subject to review.
154.205 Unreasonable rate increases.
154.210 Review of rate increases subject to review by CMS or by a State.
154.215 Submission of rate filing justification.
154.220 Timing of providing the rate filing justification.
154.225 Determination by CMS or a State of an unreasonable rate 
          increase.
154.230 Submission and posting of Final Justifications for unreasonable 
          rate increases.

                Subpart C_Effective Rate Review Programs

154.301 CMS's determinations of Effective Rate Review Programs.

    Authority: Section 2794 of the Public Health Service Act (42 USC 
300gg-94).

    Source: 76 FR 29985, May 23, 2011, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  154.101  Basis and scope.

    (a) Basis. This part implements section 2794 of the Public Health 
Service (PHS) Act.
    (b) Scope. This part establishes the requirements for health 
insurance issuers offering health insurance coverage in the small group 
or individual markets to report information concerning unreasonable rate 
increases to the Centers for Medicare & Medicaid Services (CMS). This 
part further establishes the process by which it will be determined 
whether the rate increases are unreasonable rate increases as defined in 
this part.



Sec.  154.102  Definitions.

    As used in this part:
    CMS means the Centers for Medicare & Medicaid Services.
    Effective Rate Review Program means a State program that CMS has 
determined meets the requirements set forth in Sec.  154.301(a) and (b) 
for the relevant market segment in the State.
    Federal medical loss ratio standard means the applicable medical 
loss ratio standard for the State and market segment involved, 
determined under subpart B of 45 CFR part 158.
    Health insurance coverage has the meaning given the term in section 
2791(b)(1) of the PHS Act.
    Health insurance issuer has the meaning given the term in section 
2791(b)(2) of the PHS Act.
    Individual market has the meaning given the term in Sec.  144.103 of 
this subchapter.
    Plan has the meaning given the term in Sec.  144.103 of this 
subchapter.
    Product means a package of health insurance coverage benefits with a 
discrete set of rating and pricing methodologies offered in a State. The 
term product includes any product that is discontinued and newly filed 
within a 12-month period when the changes to the product meet the 
standards of Sec.  147.106(e)(2) or (3) of this subchapter (relating to 
uniform modification of coverage).

[[Page 244]]

    Rate increase means, with respect to rates filed--
    (1) For coverage effective prior to January 1, 2017, any increase of 
the rates for a specific product offered in the individual or small 
group market.
    (2) For coverage effective on or after January 1, 2017, any increase 
of the rates for a specific product or plan within a product offered in 
the individual or small group market.
    Rate increase subject to review means a rate increase that meets the 
criteria set forth in Sec.  154.200.
    Secretary means the Secretary of the Department of Health and Human 
Services.
    Small group market has the meaning given the term in Sec.  144.103 
of this subchapter.
    State means each of the 50 States and the District of Columbia.
    Unreasonable rate increase means:
    (1) When CMS is conducting the review required by this part, a rate 
increase that CMS determines under Sec.  154.205 is:
    (i) An excessive rate increase;
    (ii) An unjustified rate increase; or
    (iii) An unfairly discriminatory rate increase.
    (2) When CMS adopts the determination of a State that has an 
Effective Rate Review Program, a rate increase that the State determines 
is excessive, unjustified, unfairly discriminatory, or otherwise 
unreasonable as provided under applicable State law.

[76 FR 29985, May 23, 2011, as amended at 76 FR 54976, Sept. 6, 2011; 79 
FR 30342, May 27, 2014; 80 FR 10863, Feb. 27, 2015; 81 FR 94175, Dec. 
22, 2016]



Sec.  154.103  Applicability.

    (a) In general. The requirements of this part apply to health 
insurance issuers offering health insurance coverage in the individual 
market and small group market.
    (b) Exceptions. The requirements of this part do not apply to--
    (1) Grandfathered health plan coverage as defined in Sec.  147.140 
of this subchapter;
    (2) Excepted benefits as described in section 2791(c) of the PHS 
Act; and
    (3) For coverage effective on or after July 1, 2018, student health 
insurance coverage as defined in Sec.  147.145 of this subchapter.

[76 FR 29985, May 23, 2011, as amended at 83 FR 17060, Apr. 17, 2018]



               Subpart B_Disclosure and Review Provisions



Sec.  154.200  Rate increases subject to review.

    (a) A rate increase filed in a State, or effective in a State that 
does not require a rate increase to be filed, is subject to review if:
    (1) The rate increase is 15 percent or more applicable to a 12-month 
period that begins on January 1, as calculated under paragraph (b) of 
this section; or
    (2) The rate increase meets or exceeds a State-specific threshold 
applicable to a 12-month period that begins on January 1, as calculated 
under paragraph (b) of this section, determined by the Secretary. A 
State-specific threshold shall be based on factors impacting rate 
increases in a State to the extent that the data relating to such State-
specific factors are available by August 1 of the preceding year. States 
interested in proposing a State-specific threshold greater than the 
Federal default stated in paragraph (a)(1) of this section are required 
to submit a proposal for approval of such threshold to the Secretary by 
August 1 of the preceding year, in the form and manner specified by the 
Secretary.
    (b) A rate increase meets or exceeds the applicable threshold set 
forth in paragraph (a) of this section if the average increase, 
including premium rating factors described in Sec.  147.102 of this 
subchapter, for all enrollees weighted by premium volume for any plan 
within the product meets or exceeds the applicable threshold.
    (c) If a rate increase that does not otherwise meet or exceed the 
threshold under paragraph (b) of this section meets or exceeds the 
threshold when combined with a previous increase or increases during the 
12-month period preceding the date on which the rate increase would 
become effective, then the rate increase must be considered to meet or 
exceed the threshold and is subject to review under Sec.  154.210, and 
such review shall include a review of

[[Page 245]]

the aggregate rate increases during the applicable 12-month period.

[83 FR 17060, Apr. 17, 2018]



Sec.  154.205  Unreasonable rate increases.

    (a) When CMS reviews a rate increase subject to review under Sec.  
154.210(a), CMS will determine that the rate increase is an unreasonable 
rate increase if the increase is an excessive rate increase, an 
unjustified rate increase, or an unfairly discriminatory rate increase.
    (b) The rate increase is an excessive rate increase if the increase 
causes the premium charged for the health insurance coverage to be 
unreasonably high in relation to the benefits provided under the 
coverage. In determining whether the rate increase causes the premium 
charged to be unreasonably high in relationship to the benefits 
provided, CMS will consider:
    (1) Whether the rate increase results in a projected medical loss 
ratio below the Federal medical loss ratio standard in the applicable 
market to which the rate increase applies, after accounting for any 
adjustments allowable under Federal law;
    (2) Whether one or more of the assumptions on which the rate 
increase is based is not supported by substantial evidence; and
    (3) Whether the choice of assumptions or combination of assumptions 
on which the rate increase is based is unreasonable.
    (c) The rate increase is an unjustified rate increase if the health 
insurance issuer provides data or documentation to CMS in connection 
with the increase that is incomplete, inadequate or otherwise does not 
provide a basis upon which the reasonableness of an increase may be 
determined.
    (d) The rate increase is an unfairly discriminatory rate increase if 
the increase results in premium differences between insureds within 
similar risk categories that:
    (1) Are not permissible under applicable State law; or
    (2) In the absence of an applicable State law, do not reasonably 
correspond to differences in expected costs.



Sec.  154.210  Review of rate increases subject to review by CMS
or by a State.

    (a) Except as provided in paragraph (b) of this section, CMS will 
review a rate increase subject to review to determine whether it is 
unreasonable, as required by this part.
    (b) CMS will adopt a State's determination of whether a rate 
increase is an unreasonable rate increase, if the State:
    (1) Has an Effective Rate Review Program as described in Sec.  
154.301; and
    (2) The State provides to CMS, on a form and in a manner prescribed 
by the Secretary, its final determination of whether a rate increase is 
unreasonable, which must include a brief explanation of how its analysis 
of the relevant factors set forth in Sec.  154.301(a)(3) caused it to 
arrive at that determination, within five business days following the 
State's final determination.
    (c) CMS will post and maintain on its Web site a list of the States 
with market segments that meet the requirements of paragraph (b) of this 
section.



Sec.  154.215  Submission of rate filing justification.

    (a) A health insurance issuer must submit to CMS and to the 
applicable State (if the State accepts such submissions) the information 
specified below on a form and in a manner prescribed by the Secretary.
    (1) For all single risk pool products, including new and 
discontinuing products, the Unified Rate Review Template, as described 
in paragraph (d) of this section;
    (2) For each single risk pool product that includes a plan that is 
subject to a rate increase, regardless of the size of the increase, the 
unified rate review template and actuarial memorandum, as described in 
paragraph (f) of this section;
    (3) For each single risk pool product that includes a plan with a 
rate increase that is subject to review under Sec.  154.210, all parts 
of the Rate Filing Justification, as described in paragraph (b) of this 
section
    (b) A Rate Filing Justification includes one or more of the 
following:
    (1) Unified rate review template (Part I), as described in paragraph 
(d) of this section.

[[Page 246]]

    (2) Written description justifying the rate increase (Part II), as 
described in paragraph (e) of this section.
    (3) Rating filing documentation (Part III), as described in 
paragraph (f) of this section.
    (c) [Reserved]
    (d) Content of unified rate review template (Part I): The unified 
rate review template must include the following as determined 
appropriate by the Secretary:
    (1) Historical and projected claims experience.
    (2) Trend projections related to utilization, and service or unit 
cost.
    (3) Any claims assumptions related to benefit changes.
    (4) Allocation of the overall rate increase to claims and non-claims 
costs.
    (5) Per enrollee per month allocation of current and projected 
premium.
    (6) Three year history of rate increases for the product associated 
with the rate increase.
    (e) Content of written description justifying the rate increase 
(Part II): The written description of the rate increase must include a 
simple and brief narrative describing the data and assumptions that were 
used to develop the rate increase and including the following:
    (1) Explanation of the most significant factors causing the rate 
increase, including a brief description of the relevant claims and non-
claims expense increases reported in the rate increase summary.
    (2) Brief description of the overall experience of the policy, 
including historical and projected expenses, and loss ratios.
    (f) Content of rate filing documentation (Part III): The rate filing 
documentation must include an actuarial memorandum that contains the 
reasoning and assumptions supporting the data contained in Part I of the 
Rate Filing Justification. Parts I and III must be sufficient to conduct 
an examination satisfying the requirements of Sec.  154.301(a)(3) and 
(4) and determine whether the rate increase is an unreasonable increase. 
Instructions concerning the requirements for the rate filing 
documentation will be provided in guidance issued by CMS.
    (g) If the level of detail provided by the issuer for the 
information under paragraphs (d) and (f) of this section does not 
provide sufficient basis for CMS to determine whether the rate increase 
is an unreasonable rate increase when CMS reviews a rate increase 
subject to review under Sec.  154.210(a), CMS will request the 
additional information necessary to make its determination. The health 
insurance issuer must provide the requested information to CMS within 10 
business days following its receipt of the request.
    (h) Posting of the disclosure on the CMS Web site:
    (1) CMS promptly will make available to the public on its Web site 
the information contained in Part II of each Rate Filing Justification.
    (2) CMS will make available to the public on its website the 
information contained in Parts I and III of each Rate Filing 
Justification that is not a trade secret or confidential commercial or 
financial information as defined in HHS's Freedom of Information Act 
regulations, 45 CFR 5.31(d).
    (3) CMS will include a disclaimer on its Web site with the 
information made available to the public that explains the purpose and 
role of the Rate Filing Justification.
    (4) CMS will include information on its Web site concerning how the 
public can submit comments on the proposed rate increases that CMS 
reviews.

[78 FR 13440, Feb. 27, 2013, as amended at 80 FR 10864, Feb. 27, 2015; 
81 FR 12335, Mar. 8, 2016; 83 FR 17060, Apr. 17, 2018]



Sec.  154.220  Timing of providing the rate filing justification.

    A health insurance issuer must submit applicable sections of the 
Rate Filing Justification for all single risk pool coverage in the 
individual or small group market, as follows:
    (a) For rate increases for coverage effective prior to January 1, 
2016:
    (1) If a State requires that a proposed rate increase be filed with 
the State prior to the implementation of the rate, the health insurance 
issuer must submit to CMS and the applicable State the Rate Filing 
Justification on the date on which the health insurance issuer submits 
the proposed rate increase to the State.

[[Page 247]]

    (2) For all other States, the health insurance issuer must submit to 
CMS and the State the Rate Filing Justification prior to the 
implementation of the rate increase.
    (b) For coverage effective on or after January 1, 2017, by the 
earlier of the following:
    (1) The date by which the State requires submission of a rate 
filing; or
    (2) The date specified in guidance by the Secretary.

[80 FR 10864, Feb. 27, 2015, as amended at 81 FR 12336, Mar. 8, 2016]



Sec.  154.225  Determination by CMS or a State of an unreasonable
rate increase.

    (a) When CMS receives a Rate Filing Justification for a rate 
increase subject to review and CMS reviews the rate increase under Sec.  
154.210(a), CMS will make a timely determination whether the rate 
increase is an unreasonable rate increase.
    (1) CMS will post on its Web site its final determination and a 
brief explanation of its analysis, consistent with the form and manner 
prescribed by the Secretary under Sec.  154.210(b)(2), within five 
business days following its final determination.
    (2) If CMS determines that the rate increase is an unreasonable rate 
increase, CMS will also provide its final determination and brief 
explanation to the health insurance issuer within five business days 
following its final determination.
    (b) If a State conducts a review under Sec.  154.210(b), CMS will 
adopt the State's determination of whether a rate increase is 
unreasonable and post on the CMS Web site the State's final 
determination described in Sec.  154.210(b)(2).
    (c) If a State determines that the rate increase is an unreasonable 
rate increase and the health insurance issuer is legally permitted to 
implement the unreasonable rate increase under applicable State law, CMS 
will provide the State's final determination and brief explanation to 
the health insurance issuer within five business days following CMS's 
receipt thereof.

[76 FR 29985, May 23, 2011, as amended at 78 FR 13441, Feb. 27, 2013]



Sec.  154.230  Submission and posting of Final Justifications for
unreasonable rate increases.

    (a) If a health insurance issuer receives from CMS a final 
determination by CMS or a State that a rate increase is an unreasonable 
rate increase, and the health insurance issuer declines to implement the 
rate increase or chooses to implement a lower increase, the health 
insurance issuer must submit to CMS timely notice that it will not 
implement the rate increase or that it will implement a lower increase 
on a form and in the manner prescribed by the Secretary.
    (b) If a health insurance issuer implements a lower increase as 
described in paragraph (a) of this section and the lower increase does 
not meet or exceed the applicable threshold under Sec.  154.200, such 
lower increase is not subject to this part. If the lower increase meets 
or exceeds the applicable threshold, the health insurance issuer must 
submit a new Rate Filing Justification under this part.
    (c) If a health insurance issuer implements a rate increase 
determined by CMS or a State to be unreasonable, within the later of 10 
business days after the implementation of such increase or the health 
insurance issuer's receipt of CMS's final determination that a rate 
increase is an unreasonable rate increase, the health insurance issuer 
must:
    (1) Submit to CMS a Final Justification in response to CMS's or the 
State's final determination, as applicable. The information in the Final 
Justification must be consistent with the information submitted in the 
Rate Filing Justification supporting the rate increase; and
    (2) Prominently post on its Web site the following information on a 
form and in the manner prescribed by the Secretary:
    (i) The information made available to the public by CMS and 
described in Sec.  154.215(h).
    (ii) CMS's or the State's final determination and brief explanation 
described in Sec. Sec.  154.225(a) and 154.210(b)(2), as applicable; and
    (iii) The health insurance issuer's Final Justification for 
implementing an increase that has been determined

[[Page 248]]

to be unreasonable by CMS or the State, as applicable.
    (3) The health insurance issuer must continue to make this 
information available to the public on its Web site for at least three 
years.
    (d) CMS will post all Final Justifications on the CMS Web site. This 
information will remain available to the public on the CMS Web site for 
three years.

[76 FR 29985, May 23, 2011, as amended at 78 FR 13441, Feb. 27, 2013; 81 
FR 12336, Mar. 8, 2016]



                Subpart C_Effective Rate Review Programs



Sec.  154.301  CMS's determinations of Effective Rate Review Programs.

    (a) Effective Rate Review Program. In evaluating whether a State has 
an Effective Rate Review Program, CMS will apply the following criteria 
for the review of rates for the small group market and the individual 
market, and also, as applicable depending on State law, the review of 
rates for different types of products within those markets:
    (1) The State receives from issuers data and documentation in 
connection with rate increases that are sufficient to conduct the 
examination described in paragraph (a)(3) of this section.
    (2) The State conducts an effective and timely review of the data 
and documentation submitted by a health insurance issuer in support of a 
proposed rate increase.
    (3) The State's rate review process includes an examination of:
    (i) The reasonableness of the assumptions used by the health 
insurance issuer to develop the proposed rate increase and the validity 
of the historical data underlying the assumptions.
    (ii) The health insurance issuer's data related to past projections 
and actual experience.
    (iii) The reasonableness of assumptions used by the health insurance 
issuer to estimate the rate impact of the reinsurance and risk 
adjustment programs under sections 1341 and 1343 of the Affordable Care 
Act.
    (iv) The health insurance issuer's data related to implementation 
and ongoing utilization of a market-wide single risk pool, essential 
health benefits, actuarial values and other market reform rules as 
required by the Affordable Care Act.
    (4) The examination must take into consideration the following 
factors to the extent applicable to the filing under review:
    (i) The impact of medical trend changes by major service categories.
    (ii) The impact of utilization changes by major service categories.
    (iii) The impact of cost-sharing changes by major service 
categories, including actuarial values.
    (iv) The impact of benefit changes, including essential health 
benefits and non-essential health benefits.
    (v) The impact of changes in enrollee risk profile and pricing, 
including rating limitations for age and tobacco use under section 2701 
of the Public Health Service Act.
    (vi) The impact of any overestimate or underestimate of medical 
trend for prior year periods related to the rate increase.
    (vii) The impact of changes in reserve needs;
    (viii) The impact of changes in administrative costs related to 
programs that improve health care quality;
    (ix) The impact of changes in other administrative costs;
    (x) The impact of changes in applicable taxes, licensing or 
regulatory fees.
    (xi) Medical loss ratio.
    (xii) The health insurance issuer's capital and surplus.
    (xiii) The impacts of geographic factors and variations.
    (xiv) The impact of changes within a single risk pool to all 
products or plans within the risk pool.
    (xv) The impact of reinsurance and risk adjustment payments and 
charges under sections 1341 and 1343 of the Affordable Care Act.
    (5) The State's determination of whether a rate increase is 
unreasonable is made under a standard that is set forth in State statute 
or regulation.
    (b) Public disclosure and input. (1) In addition to satisfying the 
provisions in paragraph (a) of this section, a State with an Effective 
Rate Review Program must provide:
    (i) For proposed rate increases subject to review, access from its 
Web site

[[Page 249]]

to at least the information contained in Parts I, II, and III of the 
Rate Filing Justification that CMS makes available on its Web site (or 
provide CMS's Web address for such information), and have a mechanism 
for receiving public comments on those proposed rate increases, no later 
than the date specified in guidance by the Secretary.
    (ii) Beginning with rates filed for coverage effective on or after 
January 1, 2016, for all final rate increases (including those not 
subject to review), access from its Web site to at least the information 
contained in Parts I, II, and III of the Rate Filing Justification (as 
applicable) that CMS makes available on its Web site (or provide CMS's 
Web address for such information), no later than the first day of the 
annual open enrollment period in the individual market for the 
applicable calendar year.
    (2) If a State intends to make the information in paragraph 
(b)(1)(i) of this section available to the public prior to the date 
specified by the Secretary, or if it intends to make the information in 
paragraph (b)(1)(ii) of this section available to the public prior to 
the first day of the annual open enrollment period in the individual 
market for the applicable calendar year, the State must notify CMS in 
writing, no later than five (5) business days prior to the date it 
intends to make the information public, of its intent to do so and the 
date it intends to make the information public.
    (3) A State with an Effective Rate Review Program must ensure the 
information in paragraphs (b)(1)(i) and (ii) of this section is made 
available to the public at a uniform time for all proposed and final 
rate increases, as applicable, in the relevant market segment and 
without regard to whether coverage is offered through or outside an 
Exchange.
    (c) CMS will determine whether a State has an Effective Rate Review 
Program for each market based on information available to CMS that a 
rate review program meets the criteria described in paragraphs (a) and 
(b) of this section.
    (d) CMS reserves the right to evaluate from time to time whether, 
and to what extent, a State's circumstances have changed such that it 
has begun to or has ceased to satisfy the criteria set forth in 
paragraphs (a) and (b) of this section.

[76 FR 29985, May 23, 2011, as amended at 78 FR 13441, Feb. 27, 2013; 80 
FR 10864, Feb. 27, 2015; 83 FR 17060, Apr. 17, 2018]



PART 155_EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED STANDARDS 
UNDER THE AFFORDABLE CARE ACT--Table of Contents



                      Subpart A_General Provisions

Sec.
155.10 Basis and scope.
155.20 Definitions.

 Subpart B_General Standards Related to the Establishment of an Exchange

155.100 Establishment of a State Exchange.
155.105 Approval of a State Exchange.
155.106 Election to operate an Exchange after 2014.
155.110 Entities eligible to carry out Exchange functions.
155.120 Non-interference with Federal law and non-discrimination 
          standards.
155.130 Stakeholder consultation.
155.140 Establishment of a regional Exchange or subsidiary Exchange.
155.150 Transition process for existing State health insurance 
          exchanges.
155.160 Financial support for continued operations.
155.170 Additional required benefits.

               Subpart C_General Functions of an Exchange

155.200 Functions of an Exchange.
155.205 Consumer assistance tools and programs of an Exchange.
155.206 Civil money penalties for violations of applicable Exchange 
          standards by consumer assistance entities in Federally-
          facilitated Exchanges.
155.210 Navigator program standards.
155.215 Standards applicable to Navigators and Non-Navigator Assistance 
          Personnel carrying out consumer assistance functions under 
          Sec. Sec.  155.205(d) and (e) and 155.210 in a Federally-
          facilitated Exchange and to Non-Navigator Assistance Personnel 
          funded through an Exchange Establishment Grant.
155.220 Ability of States to permit agents and brokers and web-brokers 
          to assist qualified individuals, qualified employers, or 
          qualified employees enrolling in QHPs.

[[Page 250]]

155.221 Standards for direct enrollment entities and for third-parties 
          to perform audits of direct enrollment entities.
155.222 Standards for HHS-approved vendors of Federally-facilitated 
          Exchange training for agents and brokers.
155.225 Certified application counselors.
155.227 Authorized representatives.
155.230 General standards for Exchange notices.
155.240 Payment of premiums.
155.260 Privacy and security of personally identifiable information.
155.270 Use of standards and protocols for electronic transactions.
155.280 Oversight and monitoring of privacy and security requirements.
155.285 Bases and process for imposing civil penalties for provision of 
          false or fraudulent information to an Exchange or improper use 
          or disclosure of information.

   Subpart D_Exchange Functions in the Individual Market: Eligibility 
 Determinations for Exchange Participation and Insurance Affordability 
                                Programs

155.300 Definitions and general standards for eligibility 
          determinations.
155.302 Options for conducting eligibility determinations.
155.305 Eligibility standards.
155.310 Eligibility process.
155.315 Verification process related to eligibility for enrollment in a 
          QHP through the Exchange.
155.320 Verification process related to eligibility for insurance 
          affordability programs.
155.330 Eligibility redetermination during the benefit year.
155.335 Annual eligibility redetermination.
155.340 Administration of advance payments of the premium tax credit and 
          cost-sharing reductions.
155.345 Coordination with Medicaid, CHIP, the Basic Health Program, and 
          the Pre-existing Condition Insurance Plan.
155.350 Special eligibility standards and process for Indians.
155.355 Right to appeal.

  Subpart E_Exchange Functions in the Individual Market: Enrollment in 
                         Qualified Health Plans

155.400 Enrollment of qualified individuals into QHPs.
155.405 Single streamlined application.
155.410 Initial and annual open enrollment periods.
155.415 Allowing issuer or direct enrollment entity application 
          assisters to assist with eligibility applications.
155.420 Special enrollment periods.
155.430 Termination of Exchange enrollment or coverage.

      Subpart F_Appeals of Eligibility Determinations for Exchange 
           Participation and Insurance Affordability Programs

155.500 Definitions.
155.505 General eligibility appeals requirements.
155.510 Appeals coordination.
155.515 Notice of appeal procedures.
155.520 Appeal requests.
155.525 Eligibility pending appeal.
155.530 Dismissals.
155.535 Informal resolution and hearing requirements.
155.540 Expedited appeals.
155.545 Appeal decisions.
155.550 Appeal record.
155.555 Employer appeals process.

   Subpart G_Exchange Functions in the Individual Market: Eligibility 
                     Determinations for Exemptions.

155.600 Definitions and general requirements.
155.605 Eligibility standards for exemptions.
155.610 Eligibility process for exemptions.
155.615 Verification process related to eligibility for exemptions.
155.620 Eligibility redeterminations for exemptions during a calendar 
          year.
155.625 Options for conducting eligibility determinations for 
          exemptions.
155.630 Reporting.
155.635 Right to appeal.

  Subpart H_Exchange Functions: Small Business Health Options Program 
                                 (SHOP)

155.700 Standards for the establishment of a SHOP.
155.705 Functions of a SHOP for plan years beginning prior to January 1, 
          2018.
155.706 Functions of a SHOP for plan years beginning on or after January 
          1, 2018.
155.710 Eligibility standards for SHOP.
155.715 Eligibility determination process for SHOP for plan years 
          beginning prior to January 1, 2018.
155.716 Eligibility determination process for SHOP for plan years 
          beginning on or after January 1, 2018.
155.720 Enrollment of employees into QHPs under SHOP for plan years 
          beginning prior to January 1, 2018.
155.721 Record retention and IRS Reporting for plan years beginning on 
          or after January 1, 2018.
155.725 Enrollment periods under SHOP for plan years beginning prior to 
          January 1, 2018.
155.726 Enrollment periods under SHOP for plan years beginning on or 
          after January 1, 2018.

[[Page 251]]

155.730 Application standards for SHOP for plan year beginning prior to 
          January 1, 2018.
155.731 Application standards for SHOP for plan years beginning on or 
          after January 1, 2018.
155.735 Termination of SHOP enrollment or coverage for plan years 
          beginning prior to January 1, 2018.
155.740 SHOP employer and employee eligibility appeals requirements for 
          plan years beginning prior to January 1, 2018.
155.741 SHOP employer and employee eligibility appeals requirements for 
          plan year beginning on or after January 1, 2018.

Subparts I-J [Reserved]

  Subpart K_Exchange Functions: Certification of Qualified Health Plans

155.1000 Certification standards for QHPs.
155.1010 Certification process for QHPs.
155.1020 QHP issuer rate and benefit information.
155.1030 QHP certification standards related to advance payments of the 
          premium tax credit and cost-sharing reductions.
155.1040 Transparency in coverage.
155.1045 Accreditation timeline.
155.1050 Establishment of Exchange network adequacy standards.
155.1055 Service area of a QHP.
155.1065 Stand-alone dental plans.
155.1075 Recertification of QHPs.
155.1080 Decertification of QHPs.
155.1090 Request for reconsideration.

Subpart L [Reserved]

 Subpart M_Oversight and Program Integrity Standards for State Exchanges

155.1200 General program integrity and oversight requirements.
155.1210 Maintenance of records.

                       Subpart N_State Flexibility

155.1300 Basis and purpose.
155.1302 Coordinated waiver process.
155.1304 Definitions.
155.1308 Application procedures.
155.1312 State public notice requirements.
155.1316 Federal public notice and approval process.
155.1320 Monitoring and compliance.
155.1324 State reporting requirements.
155.1328 Periodic evaluation requirements.

           Subpart O_Quality Reporting Standards for Exchanges

155.1400 Quality rating system.
155.1405 Enrollee satisfaction survey system.

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

    Source: 77 FR 11718, Feb. 27, 2012, unless otherwise noted.



                      Subpart A_General Provisions.

    Source: 77 FR 18444, Mar. 27, 2012, unless otherwise noted.



Sec.  155.10  Basis and scope.

    (a) Basis. This part is based on the following sections of title I 
of the Affordable Care Act:
    (1) 1301. Qualified health plan defined
    (2) 1302. Essential health benefits requirements
    (3) 1303. Special rules
    (4) 1304. Related definitions
    (5) 1311. Affordable choices of health benefit plans.
    (6) 1312. Consumer choice
    (7) 1313. Financial integrity.
    (8) 1321. State flexibility in operation and enforcement of 
Exchanges and related requirements.
    (9) 1322. Federal program to assist establishment and operation of 
nonprofit, member-run health insurance issuers.
    (10) 1331. State flexibility to establish Basic Health Programs for 
low-income individuals not eligible for Medicaid.
    (11) 1334. Multi-State plans.
    (12) 1402. Reduced cost-sharing for individuals enrolling in QHPs.
    (13) 1411. Procedures for determining eligibility for Exchange 
participation, advance premium tax credits and reduced cost sharing, and 
individual responsibility exemptions.
    (14) 1412. Advance determination and payment of premium tax credits 
and cost-sharing reductions.
    (15) 1413. Streamlining of procedures for enrollment through an 
exchange and State Medicaid, CHIP, and health subsidy programs.
    (b) Scope. This part establishes minimum standards for the 
establishment of an Exchange, minimum Exchange functions, eligibility 
determinations, enrollment periods, minimum SHOP functions, 
certification of QHPs, and health plan quality improvement.

[[Page 252]]



Sec.  155.20  Definitions.

    The following definitions apply to this part:
    Advance payments of the premium tax credit means payment of the tax 
credit authorized by 26 U.S.C. 36B and its implementing regulations, 
which are provided on an advance basis to an eligible individual 
enrolled in a QHP through an Exchange in accordance with section 1412 of 
the Affordable Care Act.
    Affordable Care Act means the Patient Protection and Affordable Care 
Act of 2010 (Pub. L. 111-148), as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152).
    Agent or broker means a person or entity licensed by the State as an 
agent, broker or insurance producer.
    Annual open enrollment period means the period each year during 
which a qualified individual may enroll or change coverage in a QHP 
through the Exchange.
    Applicant means:
    (1) An individual who is seeking eligibility for him or herself 
through an application submitted to the Exchange, excluding those 
individuals seeking eligibility for an exemption from the individual 
shared responsibility payment pursuant to subpart G of this part, or 
transmitted to the Exchange by an agency administering an insurance 
affordability program for at least one of the following:
    (i) Enrollment in a QHP through the Exchange; or
    (ii) Medicaid, CHIP, and the BHP, if applicable.
    (2) For SHOP:
    (i) An employer seeking eligibility to purchase coverage through the 
SHOP; or
    (ii) An employer, employee, or a former employee seeking eligibility 
for enrollment in a QHP through the SHOP for himself or herself and, if 
the qualified employer offers dependent coverage through the SHOP, 
seeking eligibility to enroll his or her dependents in a QHP through the 
SHOP.
    Application filer means an applicant, an adult who is in the 
applicant's household, as defined in 42 CFR 435.603(f), or family, as 
defined in 26 CFR 1.36B-1(d), an authorized representative of an 
applicant, or if the applicant is a minor or incapacitated, someone 
acting responsibly for an applicant, excluding those individuals seeking 
eligibility for an exemption from the individual shared responsibility 
payment pursuant to subpart G of this part.
    Benefit year means a calendar year for which a health plan provides 
coverage for health benefits.
    Catastrophic plan means a health plan described in section 1302(e) 
of the Affordable Care Act.
    Code means the Internal Revenue Code of 1986.
    Cost sharing means any expenditure required by or on behalf of an 
enrollee with respect to essential health benefits; such term includes 
deductibles, coinsurance, copayments, or similar charges, but excludes 
premiums, balance billing amounts for non-network providers, and 
spending for non-covered services.
    Cost-sharing reductions means reductions in cost sharing for an 
eligible individual enrolled in a silver level plan in the Exchange or 
for an individual who is an Indian enrolled in a QHP in the Exchange.
    Direct enrollment entity means an entity that an Exchange permits to 
assist consumers with direct enrollment in qualified health plans 
offered through the Exchange in a manner considered to be through the 
Exchange as authorized by Sec.  155.220(c)(3), Sec.  155.221, or Sec.  
156.1230 of this subchapter.
    Direct enrollment entity application assister means an employee, 
contractor, or agent of a direct enrollment entity who is not licensed 
as an agent, broker, or producer under State law and who assists 
individuals in the individual market with applying for a determination 
or redetermination of eligibility for coverage through the Exchange or 
for insurance affordability programs.
    Direct enrollment technology provider means a type of web-broker 
business entity that is not a licensed agent, broker, or producer under 
State law and has been engaged or created by, or is owned by an agent or 
broker, to provide technology services to facilitate participation in 
direct enrollment under Sec. Sec.  155.220(c)(3) and 155.221.
    Educated health care consumer has the meaning given the term in 
section 1304(e) of the Affordable Care Act.

[[Page 253]]

    Eligible employer-sponsored plan has the meaning given the term in 
section 5000A(f)(2) of the Code.
    Employee has the meaning given to the term in section 2791 of the 
PHS Act.
    Employer has the meaning given to the term in section 2791 of the 
PHS Act, except that such term includes employers with one or more 
employees. All persons treated as a single employer under subsection 
(b), (c), (m), or (o) of section 414 of the Code are treated as one 
employer.
    Employer contributions means any financial contributions towards an 
employer sponsored health plan, or other eligible employer-sponsored 
benefit made by the employer including those made by salary reduction 
agreement that is excluded from gross income.
    Enrollee means a qualified individual or qualified employee enrolled 
in a QHP. Enrollee also means the dependent of a qualified employee 
enrolled in a QHP through the SHOP, and any other person who is enrolled 
in a QHP through the SHOP, consistent with applicable law and the terms 
of the group health plan. Provided that at least one employee enrolls in 
a QHP through the SHOP, enrollee also means a business owner enrolled in 
a QHP through the SHOP, or the dependent of a business owner enrolled in 
a QHP through the SHOP.
    Exchange means a governmental agency or non-profit entity that meets 
the applicable standards of this part and makes QHPs available to 
qualified individuals and/or qualified employers. Unless otherwise 
identified, this term includes an Exchange serving the individual market 
for qualified individuals and a SHOP serving the small group market for 
qualified employers, regardless of whether the Exchange is established 
and operated by a State (including a regional Exchange or subsidiary 
Exchange) or by HHS.
    Exchange Blueprint means information submitted by a State, an 
Exchange, or a regional Exchange that sets forth how an Exchange 
established by a State or a regional Exchange meets the Exchange 
approval standards established in Sec.  155.105(b) and demonstrates 
operational readiness of an Exchange as described in Sec.  
155.105(c)(2).
    Exchange service area means the area in which the Exchange is 
certified to operate, in accordance with the standards specified in 
subpart B of this part.
    Federal platform agreement means an agreement between a State 
Exchange and HHS under which a State Exchange agrees to rely on the 
Federal platform to carry out select Exchange functions.
    Federally-facilitated Exchange means an Exchange established and 
operated within a State by the Secretary under section 1321(c)(1) of the 
Affordable Care Act.
    Federally-facilitated SHOP means a Small Business Health Options 
Program established and operated within a State by the Secretary under 
section 1321(c)(1) of the Affordable Care Act.
    Full-time employee has the meaning given in section 4980H (c)(4) of 
the Code effective for plan years beginning on or after January 1, 2016, 
except for operations of a Federally-facilitated SHOP for which it is 
effective for plan years beginning on or after January 1, 2014 and in 
connection with open enrollment activities beginning October 1, 2013.
    Grandfathered health plan has the meaning given the term in Sec.  
147.140.
    Group health plan has the meaning given to the term in Sec.  
144.103.
    Health insurance issuer or issuer has the meaning given to the term 
in Sec.  144.103.
    Health insurance coverage has the meaning given to the term in Sec.  
144.103.
    Health plan has the meaning given to the term in section 1301(b)(1) 
of the Affordable Care Act.
    Individual market has the meaning given the term in section 
1304(a)(2) of the Affordable Care Act.
    Initial open enrollment period means the period during which a 
qualified individual may enroll in coverage through the Exchange for 
coverage during the 2014 benefit year.
    Issuer application assister means an employee, contractor, or agent 
of a QHP issuer who is not licensed as an agent, broker, or producer 
under State law and who assists individuals in the individual market 
with applying for a determination or redetermination of

[[Page 254]]

eligibility for coverage through the Exchange or for insurance 
affordability programs.
    Large employer means, in connection with a group health plan with 
respect to a calendar year and a plan year, an employer who employed an 
average of at least 51 employees on business days during the preceding 
calendar year and who employs at least 1 employee on the first day of 
the plan year. In the case of an employer that was not in existence 
throughout the preceding calendar year, the determination of whether the 
employer is a large employer is based on the average number of employees 
that it is reasonably expected the employer will employ on business days 
in the current calendar year. A State may elect to define large employer 
by substituting ``101 employees'' for ``51 employees.'' The number of 
employees must be determined using the method set forth in section 
4980H(c)(2) of the Code.
    Lawfully present has the meaning given the term in Sec.  152.2.
    Minimum essential coverage has the meaning given in section 5000A(f) 
of the Code.
    Navigator means a private or public entity or individual that is 
qualified, and licensed, if appropriate, to engage in the activities and 
meet the standards described in Sec.  155.210.
    Plan year means a consecutive 12 month period during which a health 
plan provides coverage for health benefits. A plan year may be a 
calendar year or otherwise.
    Plain language has the meaning given to the term in section 
1311(e)(3)(B) of the Affordable Care Act.
    Qualified employee means any employee or former employee of a 
qualified employer who has been offered health insurance coverage by 
such qualified employer through the SHOP for himself or herself and, if 
the qualified employer offers dependent coverage through the SHOP, for 
his or her dependents.
    Qualified employer means a small employer that elects to make, at a 
minimum, all full-time employees of such employer eligible for one or 
more QHPs in the small group market offered through a SHOP. Beginning in 
2017, if a State allows large employers to purchase coverage through the 
SHOP, the term ``qualified employer'' shall include a large employer 
that elects to make all full-time employees of such employer eligible 
for one or more QHPs in the large group market offered through the SHOP.
    Qualified health plan or QHP means a health plan that has in effect 
a certification that it meets the standards described in subpart C of 
part 156 issued or recognized by each Exchange through which such plan 
is offered in accordance with the process described in subpart K of part 
155.
    Qualified health plan issuer or QHP issuer means a health insurance 
issuer that offers a QHP in accordance with a certification from an 
Exchange.
    Qualified individual means, with respect to an Exchange, an 
individual who has been determined eligible to enroll through the 
Exchange in a QHP in the individual market.
    SHOP means a Small Business Health Options Program operated by an 
Exchange through which a qualified employer can provide its employees 
and their dependents with access to one or more QHPs.
    Small employer means, in connection with a group health plan with 
respect to a calendar year and a plan year, an employer who employed an 
average of at least one but not more than 50 employees on business days 
during the preceding calendar year and who employs at least one employee 
on the first day of the plan year. In the case of an employer that was 
not in existence throughout the preceding calendar year, the 
determination of whether the employer is a small employer is based on 
the average number of employees that it is reasonably expected the 
employer will employ on business days in the current calendar year. A 
State may elect to define small employer by substituting ``100 
employees'' for ``50 employees.'' The number of employees must be 
determined using the method set forth in section 4980H(c)(2) of the 
Code.
    Small group market has the meaning given to the term in section 
1304(a)(3) of the Affordable Care Act.

[[Page 255]]

    Special enrollment period means a period during which a qualified 
individual or enrollee who experiences certain qualifying events may 
enroll in, or change enrollment in, a QHP through the Exchange outside 
of the initial and annual open enrollment periods.
    Standardized option means a QHP offered for sale through an 
individual market Exchange that either--
    (1) Has a standardized cost-sharing structure specified by HHS in 
rulemaking; or
    (2) Has a standardized cost-sharing structure specified by HHS in 
rulemaking that is modified only to the extent necessary to align with 
high deductible health plan requirements under section 223 of the 
Internal Revenue Code of 1986, as amended, or the applicable annual 
limitation on cost sharing and HHS actuarial value requirements.
    State means each of the 50 States and the District of Columbia.
    Web-broker means an individual agent or broker, group of agents or 
brokers, or business entity registered with an Exchange under Sec.  
155.220(d)(1) that develops and hosts a non-Exchange website that 
interfaces with an Exchange to assist consumers with direct enrollment 
in qualified health plans offered through the Exchange as described in 
Sec. Sec.  155.220(c)(3) and 155.221. The term also includes a direct 
enrollment technology provider.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 15532, Mar. 11, 2013; 
78 FR 39523, July 1, 2013; 78 FR 42313, July 15, 2013; 78 FR 54134, Aug. 
30, 2013; 80 FR 10864, Feb. 27, 2015; 81 FR 12336, Mar. 8, 2016; 81 FR 
94175, Dec. 22, 2016; 84 FR 17562, Apr. 25, 2019]



 Subpart B_General Standards Related to the Establishment of an Exchange



Sec.  155.100  Establishment of a State Exchange.

    (a) General requirements. Each State may elect to establish:
    (1) An Exchange that facilitates the purchase of health insurance 
coverage in QHPs in the individual market and that provides for the 
establishment of a SHOP; or
    (2) An Exchange that provides only for the establishment of a SHOP.
    (b) Timing. For plan years beginning before January 1, 2015, only 
States that provide reasonable assurances to CMS that they will be in a 
position to establish and operate only a SHOP for 2014 may elect to 
establish an Exchange that provides only for the establishment of a 
SHOP, pursuant to the process in Sec.  155.105(c), (d), and/or (e), 
whichever is applicable. For plan years beginning on or after January 1, 
2015, any State may elect to establish an Exchange that provides only 
for the establishment of a SHOP, pursuant to the process in Sec.  
155.106(a).
    (c) Eligible Exchange entities. The Exchange must be a governmental 
agency or non-profit entity established by a State, consistent with 
Sec.  155.110.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 54134, Aug. 30, 2013]



Sec.  155.105  Approval of a State Exchange.

    (a) State Exchange approval requirement. Each State Exchange must be 
approved by HHS by no later than January 1, 2013 to offer QHPs on 
January 1, 2014, and thereafter required in accordance with Sec.  
155.106. HHS may consult with other Federal Government agencies in 
determining whether to approve an Exchange.
    (b) State Exchange approval standards. HHS will approve the 
operation of an Exchange established by a State provided that it meets 
the following standards:
    (1) The Exchange is able to carry out the required functions of an 
Exchange consistent with subparts C, D, E, F, G, H, and K of this part 
unless the State is approved to operate only a SHOP by HHS pursuant to 
Sec.  155.100(a)(2), in which case the Exchange must perform the minimum 
functions described in subpart H and all applicable provisions of other 
subparts referenced therein;
    (2) The Exchange is capable of carrying out the information 
reporting requirements in accordance with section 36B of the Code, 
unless the State is approved to operate only a SHOP by HHS pursuant to 
Sec.  155.100(a)(2); and
    (3) The entire geographic area of the State is in the service area 
of an Exchange, or multiple Exchanges consistent with Sec.  155.140(b).

[[Page 256]]

    (c) State Exchange approval process. In order to have its Exchange 
approved, a State must:
    (1) Elect to establish an Exchange by submitting, in a form and 
manner specified by HHS, an Exchange Blueprint that sets forth how the 
Exchange meets the standards outlined in paragraph (b) of this section; 
and
    (2) Demonstrate operational readiness to execute its Exchange 
Blueprint through a readiness assessment conducted by HHS.
    (d) State Exchange approval. Each Exchange must receive written 
approval or conditional approval of its Exchange Blueprint and its 
performance under the operational readiness assessment consistent with 
paragraph (c) of this section in order to be considered an approved 
Exchange.
    (e) Significant changes to Exchange Blueprint. The State must notify 
HHS in writing before making a significant change to its Exchange 
Blueprint; no significant change to an Exchange Blueprint may be 
effective until it is approved by HHS in writing or 60 days after HHS 
receipt of a completed request. For good cause, HHS may extend the 
review period by an additional 30 days to a total of 90 days. HHS may 
deny a request for a significant change to an Exchange Blueprint within 
the review period.
    (f) HHS operation of an Exchange. (1) If a State does not elect to 
operate an Exchange under Sec.  155.100(a)(1) or an electing State does 
not have an approved or conditionally approved Exchange pursuant to 
Sec.  155.100(a)(1) by January 1, 2013, HHS must (directly or through 
agreement with a not-for-profit entity) establish and operate such 
Exchange within the State. In this case, the requirements in Sec. Sec.  
155.120(c), 155.130 and subparts C, D, E, F, G, H, and K of this part 
will apply.
    (2) If an electing State has an approved or conditionally approved 
Exchange pursuant to Sec.  155.100(a)(2) by January 1, 2013, HHS must 
(directly or through agreement with a not-for-profit entity) establish 
and operate an Exchange that facilitates the purchase of health 
insurance coverage in QHPs in the individual market and operate such 
Exchange within the State. In this case, the requirements in Sec. Sec.  
155.120(c), 155.130 and subparts C, D, E, F, G, and K of this part will 
apply to the Exchange operated by HHS.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42313, July 15, 2013; 
78 FR 54134, Aug. 30, 2013]



Sec.  155.106  Election to operate an Exchange after 2014.

    (a) Election to operate an Exchange. Except as provided in paragraph 
(c) of this section, a State electing to seek approval of its Exchange 
must:
    (1) Comply with the State Exchange approval requirements and process 
set forth in Sec.  155.105;
    (2) Submit an Exchange Blueprint application for HHS approval at 
least 15 months prior to the date on which the Exchange proposes to 
begin open enrollment as a State Exchange;
    (3) Have in effect an approved, or conditionally approved, Exchange 
Blueprint and operational readiness assessment at least 14 months prior 
to the date on which the Exchange proposes to begin open enrollment as a 
State Exchange;
    (4) Develop a plan jointly with HHS to facilitate the transition to 
a State Exchange; and
    (5) If the open enrollment period for the year the State intends to 
begin operating an SBE has not been established, this deadline must be 
calculated based on the date open enrollment began or will begin in the 
year in which the State is submitting the Blueprint application.
    (b) Transition process for State Exchanges that cease operations. If 
a State intends to cease operation of its Exchange, HHS will operate the 
Exchange on behalf of the State. Therefore, a State that intends to 
cease operations of its Exchange must:
    (1) Notify HHS that it will no longer operate an Exchange at least 
12 months prior to ceasing operations; and
    (2) Coordinate with HHS on a transition plan to be developed jointly 
between HHS and the State.
    (c) Process for State Exchanges that seek to utilize the Federal 
platform for select functions. States may seek approval to operate a 
State Exchange utilizing

[[Page 257]]

the Federal platform for only the individual market. A State seeking 
approval to operate a State Exchange utilizing the Federal platform for 
the individual market to support select functions through a Federal 
platform agreement under Sec.  155.200(f) must:
    (1) If the State Exchange does not have a conditionally approved 
Exchange Blueprint application, submit one for HHS approval at least 3 
months prior to the date on which the Exchange proposes to begin open 
enrollment as an SBE-FP;
    (2) If the State Exchange has a conditionally approved Exchange 
Blueprint application, submit any significant changes to that 
application for HHS approval, in accordance with Sec.  155.105(e), at 
least 3 months prior to the date on which the Exchange proposes to begin 
open enrollment as an SBE-FP;
    (3) Have in effect an approved, or conditionally approved, Exchange 
Blueprint and operational readiness assessment at least 2 months prior 
to the date on which the Exchange proposes to begin open enrollment as 
an SBE-FP, in accordance with HHS rules, as a State Exchange utilizing 
the Federal platform;
    (4) Prior to approval, or conditional approval, of the Exchange 
Blueprint, execute a Federal platform agreement for utilizing the 
Federal platform for select functions; and
    (5) Coordinate with HHS on a transition plan to be developed jointly 
between HHS and the State.

[77 FR 18444, Mar. 27, 2012, as amended at 79 FR 13837, Mar. 11, 2014; 
81 FR 12336, Mar. 8, 2016; 83 FR 17060, Apr. 17, 2018]



Sec.  155.110  Entities eligible to carry out Exchange functions.

    (a) Eligible contracting entities. The State may elect to authorize 
an Exchange established by the State to enter into an agreement with an 
eligible entity to carry out one or more responsibilities of the 
Exchange. Eligible entities are:
    (1) An entity:
    (i) Incorporated under, and subject to the laws of, one or more 
States;
    (ii) That has demonstrated experience on a State or regional basis 
in the individual and small group health insurance markets and in 
benefits coverage; and
    (iii) Is not a health insurance issuer or treated as a health 
insurance issuer under subsection (a) or (b) of section 52 of the Code 
of 1986 as a member of the same controlled group of corporations (or 
under common control with) as a health insurance issuer; or
    (2) The State Medicaid agency, or any other State agency that meets 
the qualifications of paragraph (a)(1) of this section.
    (b) Responsibility. To the extent that an Exchange establishes such 
agreements, the Exchange remains responsible for ensuring that all 
Federal requirements related to contracted functions are met.
    (c) Governing board structure. If the Exchange is an independent 
State agency or a non-profit entity established by the State, the State 
must ensure that the Exchange has in place a clearly-defined governing 
board that:
    (1) Is administered under a formal, publicly-adopted operating 
charter or by-laws;
    (2) Holds regular public governing board meetings that are announced 
in advance;
    (3) Represents consumer interests by ensuring that overall governing 
board membership:
    (i) Includes at least one voting member who is a consumer 
representative;
    (ii) Is not made up of a majority of voting representatives with a 
conflict of interest, including representatives of health insurance 
issuers or agents or brokers, or any other individual licensed to sell 
health insurance; and
    (4) Ensures that a majority of the voting members on its governing 
board have relevant experience in health benefits administration, health 
care finance, health plan purchasing, health care delivery system 
administration, public health, or health policy issues related to the 
small group and individual markets and the uninsured.
    (d) Governance principles. (1) The Exchange must have in place and 
make publicly available a set of guiding governance principles that 
include ethics, conflict of interest standards, accountability and 
transparency standards, and disclosure of financial interest.

[[Page 258]]

    (2) The Exchange must implement procedures for disclosure of 
financial interests by members of the Exchange board or governance 
structure.
    (e) SHOP independent governance. (1) A State may elect to create an 
independent governance and administrative structure for the SHOP, 
consistent with this section, if the State ensures that the SHOP 
coordinates and shares relevant information with the Exchange operating 
in the same service area.
    (2) If a State chooses to operate its Exchange and SHOP under a 
single governance or administrative structure, it must ensure that the 
Exchange has adequate resources to assist individuals and small 
employers in the Exchange.
    (f) HHS review. HHS may periodically review the accountability 
structure and governance principles of a State Exchange.



Sec.  155.120  Non-interference with Federal law and 
non-discrimination standards.

    (a) Non-interference with Federal law. An Exchange must not 
establish rules that conflict with or prevent the application of 
regulations promulgated by HHS under subtitle D of title I of the 
Affordable Care Act.
    (b) Non-interference with State law. Nothing in parts 155, 156, or 
157 of this subchapter shall be construed to preempt any State law that 
does not prevent the application of the provisions of title I of the 
Affordable Care Act.
    (c) Non-discrimination. (1) In carrying out the requirements of this 
part, the State and the Exchange must:
    (i) Comply with applicable non-discrimination statutes; and
    (ii) Not discriminate based on race, color, national origin, 
disability, age, or sex.
    (2) Notwithstanding the provisions of paragraph (c)(1)(ii) of this 
section, an organization that receives Federal funds to provide services 
to a defined population under the terms of Federal legal authorities 
that participates in the certified application counselor program under 
Sec.  155.225 may limit its provision of certified application counselor 
services to the same defined population, but must comply with paragraph 
(c)(1)(ii) of this section with respect to the provision of certified 
application counselor services to that defined population. If the 
organization limits its provision of certified application counselor 
services pursuant to this exception, but is approached for certified 
application counselor services by an individual who is not included in 
the defined population that the organization serves, the organization 
must refer the individual to other Exchange-approved resources that can 
provide assistance. If the organization does not limit its provision of 
certified application counselor services pursuant to this exception, the 
organization must comply with paragraph (c)(1)(ii) of this section.

[77 FR 18444, Mar. 27, 2012, as amended at 79 FR 30342, May 27, 2014; 85 
FR 37247, June 19, 2020]



Sec.  155.130  Stakeholder consultation.

    The Exchange must regularly consult on an ongoing basis with the 
following stakeholders:
    (a) Educated health care consumers who are enrollees in QHPs;
    (b) Individuals and entities with experience in facilitating 
enrollment in health coverage;
    (c) Advocates for enrolling hard to reach populations, which include 
individuals with mental health or substance abuse disorders;
    (d) Small businesses and self-employed individuals;
    (e) State Medicaid and CHIP agencies;
    (f) Federally-recognized Tribes, as defined in the Federally 
Recognized Indian Tribe List Act of 1994, 25 U.S.C. 479a, that are 
located within such Exchange's geographic area;
    (g) Public health experts;
    (h) Health care providers;
    (i) Large employers;
    (j) Health insurance issuers; and
    (k) Agents and brokers.



Sec.  155.140  Establishment of a regional Exchange or subsidiary Exchange.

    (a) Regional Exchange. A State may participate in a regional 
Exchange if:
    (1) The Exchange spans two or more States, regardless of whether the 
States are contiguous; and

[[Page 259]]

    (2) The regional Exchange submits a single Exchange Blueprint and is 
approved to operate consistent with Sec.  155.105(c).
    (b) Subsidiary Exchange. A State may establish one or more 
subsidiary Exchanges within the State if:
    (1) Each such Exchange serves a geographically distinct area; and
    (2) The area served by each subsidiary Exchange is at least as large 
as a rating area described in section 2701(a) of the PHS Act.
    (c) Exchange standards. Each regional or subsidiary Exchange must:
    (1) Otherwise meet the requirements of an Exchange consistent with 
this part; and
    (2) Meet the following standards for SHOP:
    (i) Perform the functions of a SHOP for its service area in 
accordance with subpart H of this part; and
    (ii) Encompass the same geographic area for its regional or 
subsidiary SHOP and its regional or subsidiary Exchange except:
    (A) In the case of a regional Exchange established pursuant to Sec.  
155.100(a)(2), the regional SHOP must encompass a geographic area that 
matches the combined geographic areas of the individual market Exchanges 
established to serve the same set of States establishing the regional 
SHOP; and
    (B) In the case of a subsidiary Exchange established pursuant to 
Sec.  155.100(a)(2), the combined geographic area of all subsidiary 
SHOPs established in the State must encompass the geographic area of the 
individual market Exchange established to serve the State.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 54134, Aug. 30, 2013]



Sec.  155.150  Transition process for existing State health
insurance exchanges.

    (a) Presumption. Unless an exchange is determined to be non-
compliant through the process in paragraph (b) of this section, HHS will 
otherwise presume that an existing State exchange meets the standards 
under this part if:
    (1) The exchange was in operation prior to January 1, 2010; and
    (2) The State has insured a percentage of its population not less 
than the percentage of the population projected to be covered nationally 
after the implementation of the Affordable Care Act, according to the 
Congressional Budget Office estimates for projected coverage in 2016 
that were published on March 30, 2011.
    (b) Process for determining non-compliance. Any State described in 
paragraph (a) of this section must work with HHS to identify areas of 
non-compliance with the standards under this part.



Sec.  155.160  Financial support for continued operations.

    (a) Definition. For purposes of this section, participating issuers 
has the meaning provided in Sec.  156.50.
    (b) Funding for ongoing operations. A State must ensure that its 
Exchange has sufficient funding in order to support its ongoing 
operations beginning January 1, 2015, as follows:
    (1) States may generate funding, such as through user fees on 
participating issuers, for Exchange operations; and
    (2) No Federal grants under section 1311 of the Affordable Care Act 
will be awarded for State Exchange establishment after January 1, 2015.



Sec.  155.170  Additional required benefits.

    (a) Additional required benefits. (1) A State may require a QHP to 
offer benefits in addition to the essential health benefits.
    (2) A benefit required by State action taking place on or before 
December 31, 2011 is considered an EHB. A benefit required by State 
action taking place on or after January 1, 2012, other than for purposes 
of compliance with Federal requirements, is considered in addition to 
the essential health benefits.
    (3) The State will identify which State-required benefits are in 
addition to the EHB.
    (b) Payments. The State must make payments to defray the cost of 
additional required benefits specified in paragraph (a) of this section 
to one of the following:
    (1) To an enrollee, as defined in Sec.  155.20 of this subchapter; 
or
    (2) Directly to the QHP issuer on behalf of the individual described 
in paragraph (b)(1) of this section.

[[Page 260]]

    (c) Cost of additional required benefits. (1) Each QHP issuer in the 
State shall quantify cost attributable to each additional required 
benefit specified in paragraph (a) of this section.
    (2) A QHP issuer's calculation shall be:
    (i) Based on an analysis performed in accordance with generally 
accepted actuarial principles and methodologies;
    (ii) Conducted by a member of the American Academy of Actuaries; and
    (iii) Reported to the State.

[78 FR 12865, Feb. 25, 2013, as amended at 81 FR 12337, Mar. 8, 2016]



               Subpart C_General Functions of an Exchange



Sec.  155.200  Functions of an Exchange.

    (a) General requirements. An Exchange must perform the functions 
described in this subpart and in subparts D, E, F, G, H, K, M, and O of 
this part unless the State is approved to operate only a SHOP by HHS 
under Sec.  155.100(a)(2), in which case the Exchange operated by the 
State must perform the functions described in subpart H of this part and 
all applicable provisions of other subparts referenced in that subpart. 
In a State that is approved to operate only a SHOP, the individual 
market Exchange operated by HHS in that State will perform the functions 
described in this subpart and in subparts D, E, F, G, K, M, and O of 
this part.
    (b) Certificates of exemption. The Exchange must issue certificates 
of exemption consistent with sections 1311(d)(4)(H) and 1411 of the 
Affordable Care Act.
    (c) Oversight and financial integrity. The Exchange must perform 
required functions and cooperate with activities related to oversight 
and financial integrity requirements in accordance with section 1313 of 
the Affordable Care Act and as required under this part, including 
overseeing its Exchange programs and non-Exchange entities as defined in 
Sec.  155.260(b)(1).
    (d) Quality activities. The Exchange must evaluate quality 
improvement strategies and oversee implementation of enrollee 
satisfaction surveys, assessment and ratings of health care quality and 
outcomes, information disclosures, and data reporting in accordance with 
sections 1311(c)(1), 1311(c)(3), and 1311(c)(4) of the Affordable Care 
Act.
    (e) Clarification. In carrying out its responsibilities under this 
subpart, an Exchange is not operating on behalf of a QHP.
    (f) Requirements for State Exchanges on the Federal platform. (1) A 
State that receives approval or conditional approval to operate a State 
Exchange on the Federal platform under Sec.  155.106(c) may meet its 
obligations under paragraph (a) of this section by relying on Federal 
services that the Federal government agrees to provide under a Federal 
platform agreement.
    (2) A State Exchange on the Federal platform must establish and 
oversee requirements for its issuers that are no less strict than the 
following requirements that are applied to Federally-facilitated 
Exchange issuers:
    (i) Data submission requirements under Sec.  156.122(d)(2) of this 
subchapter;
    (ii)--(iv) [Reserved]
    (v) Changes of ownership of issuers requirements under Sec.  156.330 
of this subchapter;
    (vi) QHP issuer compliance and compliance of delegated or downstream 
entities requirements under Sec.  156.340(a)(4) of this subchapter; and
    (vii) Casework requirements under Sec.  156.1010 of this subchapter.
    (3) If a State is not substantially enforcing any requirement listed 
under Sec.  155.200(f)(2) with respect to a QHP issuer or plan in a 
State-based Exchange on the Federal platform, HHS may enforce that 
requirement directly against the issuer or plan by means of plan 
suppression under Sec.  156.815 of this subchapter.
    (4) A State Exchange on the Federal platform that utilizes the 
Federal platform for SHOP functions, for plan years beginning on or 
after January 1, 2018, must require its QHP issuers to make any changes 
to rates in accordance with the timeline applicable in a Federally-
facilitated SHOP under Sec.  155.706(b)(6)(i)(A). A State Exchange on 
the Federal platform that utilizes the Federal platform for SHOP 
functions, as set forth in paragraphs (f)(4)(i) through (vii) of this 
section, for plan years beginning prior to January 1, 2018, must--

[[Page 261]]

    (i) If utilizing the Federal platform for SHOP eligibility, 
enrollment, or premium aggregation functions, establish standard 
processes for premium calculation, premium payment, and premium 
collection that are consistent with the requirements applicable in a 
Federally-facilitated SHOP under Sec.  155.705(b)(4);
    (ii) If utilizing the Federal platform for SHOP enrollment or 
premium aggregation functions, require its QHP issuers to make any 
changes to rates in accordance with the timeline applicable in a 
Federally-facilitated SHOP under Sec.  155.705(b)(6)(i)(A);
    (iii) If utilizing the Federal platform for SHOP enrollment 
functions, establish minimum participation rate requirements and 
calculation methodologies that are consistent with those applicable in a 
Federally-facilitated SHOP under Sec.  155.705(b)(10);
    (iv) If utilizing the Federal platform for SHOP enrollment or 
premium aggregation functions, establish employer contribution 
methodologies that are consistent with the methodologies applicable in a 
Federally-facilitated SHOP under Sec.  155.705(b)(11)(ii);
    (v) If utilizing the Federal platform for SHOP enrollment functions, 
establish annual employee open enrollment period requirements that are 
consistent with Sec.  155.725(e)(2);
    (vi) If utilizing the Federal platform for SHOP enrollment 
functions, establish effective dates of coverage for an initial group 
enrollment or a group renewal that are consistent with the effective 
dates of coverage applicable in a Federally-facilitated SHOP under Sec.  
155.725(h)(2); and
    (vii) If utilizing the Federal platform for SHOP eligibility, 
enrollment, or premium aggregation functions, establish policies for the 
termination of SHOP coverage or enrollment that are consistent with the 
requirements applicable in a Federally-facilitated SHOP under Sec.  
155.735.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 39523, July 1, 2013; 78 
FR 54134, Aug. 30, 2013; 81 FR 12337, Mar. 8, 2016; 81 FR 94175, Dec. 
22, 2016; 83 FR 17060, Apr. 17, 2018; 84 FR 71710, Dec. 27, 2019]



Sec.  155.205  Consumer assistance tools and programs of an Exchange.

    (a) Call center. The Exchange must provide for operation of a toll-
free call center that addresses the needs of consumers requesting 
assistance and meets the requirements outlined in paragraphs (c)(1), 
(2)(i), and (3) of this section, unless it is an Exchange described in 
paragraphs (a)(1) or (2) of this section, in which case, the Exchange 
must provide at a minimum a toll-free telephone hotline that includes 
the capability to provide information to consumers about eligibility and 
enrollment processes, and to appropriately direct consumers to the 
applicable Exchange website and other applicable resources.
    (1) An Exchange described in this paragraph is one that enters into 
a Federal platform agreement through which it relies on HHS to operate 
its eligibility and enrollment functions, as applicable.
    (2) An Exchange described in this paragraph is a SHOP that does not 
provide for enrollment in SHOP coverage through an online SHOP 
enrollment platform, but rather provides for enrollment through SHOP 
issuers or agents and brokers registered with the Exchange.
    (b) Internet Web site. The Exchange must maintain an up-to-date 
Internet Web site that meets the requirements outlined in paragraph (c) 
of this section and:
    (1) Provides standardized comparative information on each available 
QHP, which may include differential display of standardized options on 
consumer-facing plan comparison and shopping tools, and at a minimum 
includes:
    (i) Premium and cost-sharing information;
    (ii) The summary of benefits and coverage established under section 
2715 of the PHS Act;
    (iii) Identification of whether the QHP is a bronze, silver, gold, 
or platinum level plan as defined by section 1302(d) of the Affordable 
Care Act, or a catastrophic plan as defined by section 1302(e) of the 
Affordable Care Act;
    (iv) The results of the enrollee satisfaction survey, as described 
in section 1311(c)(4) of the Affordable Care Act;

[[Page 262]]

    (v) Quality ratings assigned in accordance with section 1311(c)(3) 
of the Affordable Care Act;
    (vi) Medical loss ratio information as reported to HHS in accordance 
with 45 CFR part 158;
    (vii) Transparency of coverage measures reported to the Exchange 
during certification in accordance with Sec.  155.1040; and
    (viii) The provider directory made available to the Exchange in 
accordance with Sec.  156.230.
    (2) Publishes the following financial information:
    (i) The average costs of licensing required by the Exchange;
    (ii) Any regulatory fees required by the Exchange;
    (iii) Any payments required by the Exchange in addition to fees 
under paragraphs (b)(2)(i) and (ii) of this section;
    (iv) Administrative costs of such Exchange; and
    (v) Monies lost to waste, fraud, and abuse.
    (3) Provides applicants with information about Navigators as 
described in Sec.  155.210 and other consumer assistance services, 
including the toll-free telephone number of the Exchange call center 
required in paragraph (a) of this section.
    (4) Allows for an eligibility determination to be made in accordance 
with subpart D of this part.
    (5) Allows a qualified individual to select a QHP in accordance with 
subpart E of this part.
    (6) Makes available by electronic means a calculator to facilitate 
the comparison of available QHPs after the application of any advance 
payments of the premium tax credit and any cost-sharing reductions.
    (7) A State-based Exchange on the Federal platform must at a minimum 
maintain an informational Internet Web site that includes the capability 
to direct consumers to Federal platform services to apply for, and 
enroll in, Exchange coverage.
    (c) Accessibility. Information must be provided to applicants and 
enrollees in plain language and in a manner that is accessible and 
timely to--
    (1) Individuals living with disabilities including accessible Web 
sites and the provision of auxiliary aids and services at no cost to the 
individual in accordance with the Americans with Disabilities Act and 
section 504 of the Rehabilitation Act.
    (2) Individuals who are limited English proficient through the 
provision of language services at no cost to the individual, including
    (i) For all entities subject to this standard, oral interpretation.
    (A) For Exchanges and QHP issuers, this standard also includes 
telephonic interpreter services in at least 150 languages.
    (B) For an agent or broker subject to Sec.  155.220(c)(3)(i), 
beginning November 1, 2015, or when such entity been registered with the 
Exchange for at least 1 year, whichever is later, this standard also 
includes telephonic interpreter services in at least 150 languages.
    (ii) Written translations; and
    (iii) For all entities subject to this standard, taglines in non-
English languages indicating the availability of language services.
    (A) For Exchanges and QHP issuers, this standard also includes 
taglines on Web site content and any document that is critical for 
obtaining health insurance coverage or access to health care services 
through a QHP for qualified individuals, applicants, qualified 
employers, qualified employees, or enrollees. A document is deemed to be 
critical for obtaining health insurance coverage or access to health 
care services through a QHP if it is required to be provided by law or 
regulation to a qualified individual, applicant, qualified employer, 
qualified employee, or enrollee. Such taglines must indicate the 
availability of language services in at least the top 15 languages 
spoken by the limited English proficient population of the relevant 
State or States, as determined in guidance published by the Secretary. 
If an Exchange is operated by an entity that operates multiple 
Exchanges, or if an Exchange relies on an entity to conduct its 
eligibility or enrollment functions and that entity conducts such 
functions for multiple Exchanges, the Exchange may aggregate the limited 
English proficient populations across all the States served by the 
entity that operates the Exchange or conducts its eligibility or

[[Page 263]]

enrollment functions to determine the top 15 languages required for 
taglines. A QHP issuer may aggregate the limited English proficient 
populations across all States served by the health insurance issuers 
within the issuer's controlled group (defined for purposes of this 
section as a group of two or more persons that is treated as a single 
employer under sections 52(a), 52(b), 414(m), or 414(o) of the Internal 
Revenue Code of 1986, as amended), whether or not those health insurance 
issuers offer plans through the Exchange in each of those States, to 
determine the top 15 languages required for taglines. Exchanges and QHP 
issuers may satisfy tagline requirements with respect to Web site 
content if they post a Web link prominently on their home page that 
directs individuals to the full text of the taglines indicating how 
individuals may obtain language assistance services, and if they also 
include taglines on any critical stand-alone document linked to or 
embedded in the Web site. Exchanges, and QHP issuers that are also 
subject to Sec.  92.8 of this subtitle, will be deemed in compliance 
with paragraph (c)(2)(iii)(A) of this section if they are in compliance 
with Sec.  92.8 of this subtitle.
    (B) For an agent or broker subject to Sec.  155.220(c)(3)(i), 
beginning when such entity has been registered with the Exchange for at 
least 1 year, this standard also includes taglines on Web site content 
and any document that is critical for obtaining health insurance 
coverage or access to health care services through a QHP for qualified 
individuals, applicants, qualified employers, qualified employees, or 
enrollees. A document is deemed to be critical for obtaining health 
insurance coverage or access to health care services through a QHP if it 
is required to be provided by law or regulation to a qualified 
individual, applicant, qualified employer, qualified employee, or 
enrollee. Such taglines must indicate the availability of language 
services in at least the top 15 languages spoken by the limited English 
proficient population of the relevant State or States, as determined in 
guidance published by the Secretary. An agent or broker subject to Sec.  
155.220(c)(3)(i) that is licensed in and serving multiple States may 
aggregate the limited English populations in the States it serves to 
determine the top 15 languages required for taglines. An agent or broker 
subject to Sec.  155.220(c)(3)(i) may satisfy tagline requirements with 
respect to Web site content if it posts a Web link prominently on its 
home page that directs individuals to the full text of the taglines 
indicating how individuals may obtain language assistance services, and 
if it also includes taglines on any critical stand-alone document linked 
to or embedded in the Web site.
    (iv) For Exchanges, QHP issuers, and an agent or broker subject to 
Sec.  155.220(c)(3)(i), Web site translations.
    (A) For an Exchange, beginning no later than the first day of the 
individual market open enrollment period for the 2017 benefit year, 
content that is intended for qualified individuals, applicants, 
qualified employers, qualified employees, or enrollees on a Web site 
that is maintained by the Exchange must be translated into any non-
English language that is spoken by a limited English proficient 
population that reaches 10 percent or more of the population of the 
relevant State, as determined in guidance published by the Secretary.
    (B) For a QHP issuer, beginning no later than the first day of the 
individual market open enrollment period for the 2017 benefit year, if 
the content of a Web site maintained by the QHP issuer is critical for 
obtaining health insurance coverage or access to health care services 
through a QHP, within the meaning of Sec.  156.250 of this subchapter, 
it must be translated into any non-English language that is spoken by a 
limited English proficient population that reaches 10 percent or more of 
the population of the relevant State, as determined in guidance 
published by the Secretary.
    (C) For an agent or broker subject to Sec.  155.220(c)(3)(i), 
beginning on the first day of the individual market open enrollment 
period for the 2017 benefit year, or when such entity has been 
registered with the Exchange for at least 1 year, whichever is later, 
content that is intended for qualified individuals, applicants, 
qualified employers, qualified employees, or enrollees on a Web site 
that is maintained by the agent or

[[Page 264]]

broker must be translated into any non-English language that is spoken 
by a limited English proficient population that reaches 10 percent or 
more of the population of the relevant State, as determined in guidance 
published by the Secretary.
    (3) Inform individuals of the availability of the services described 
in paragraphs (c)(1) and (2) of this section and how to access such 
services.
    (d) Consumer assistance. (1) The Exchange must have a consumer 
assistance function that meets the standards in paragraph (c) of this 
section, including the Navigator program described in Sec.  155.210. Any 
individual providing such consumer assistance must be trained regarding 
QHP options, insurance affordability programs, eligibility, and benefits 
rules and regulations governing all insurance affordability programs 
operated in the State, as implemented in the State, prior to providing 
such assistance or the outreach and education activities specified in 
paragraph (e) of this section.
    (2) The Exchange must provide referrals to any applicable office of 
health insurance consumer assistance or health insurance ombudsman 
established under section 2793 of the Public Health Service Act, or any 
other appropriate State agency or agencies, for any enrollee with a 
grievance, complaint, or question regarding their health plan, coverage, 
or a determination under such plan or coverage.
    (e) Outreach and education. The Exchange must conduct outreach and 
education activities that meet the standards in paragraph (c) of this 
section to educate consumers about the Exchange and insurance 
affordability programs to encourage participation.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42859, July 17, 2013; 
80 FR 10864, Feb. 27, 2015; 81 FR 12337, Mar. 8, 2016; 81 FR 94175, Dec. 
22, 2016; 84 FR 17563, Apr. 25, 2019]



Sec.  155.206  Civil money penalties for violations of applicable 
Exchange standards by consumer assistance entities in 
Federally-facilitated Exchanges.

    (a) Enforcement actions. If an individual or entity specified in 
paragraph (b) of this section engages in activity specified in paragraph 
(c) of this section, the Department of Health and Human Services (HHS) 
may impose the following sanctions:
    (1) Civil money penalties (CMPs), subject to the provisions of this 
section.
    (2) Corrective action plans. In the notice of assessment of CMPs 
specified in paragraph (l) of this section, HHS may provide an 
individual or entity specified in paragraph (b) of this section the 
opportunity to enter into a corrective action plan to correct the 
violation instead of paying the CMP, based on evaluation of the factors 
set forth in paragraph (h) of this section. In the event that the 
individual or entity does not follow such a corrective action plan, HHS 
could require payment of the CMP.
    (b) Consumer assistance entities. CMPs may be assessed under this 
section against the following consumer assistance entities:
    (1) Individual Navigators and Navigator entities in a Federally-
facilitated Exchange, including grantees, sub-grantees, and all 
personnel carrying out Navigator duties on behalf of a grantee or sub-
grantee;
    (2) Non-Navigator assistance personnel authorized under Sec.  
155.205(d) and (e) and non-Navigator assistance personnel entities in a 
Federally-facilitated Exchange, including but not limited to individuals 
and entities under contract with HHS to facilitate consumer enrollment 
in QHPs in a Federally-facilitated Exchange; and
    (3) Organizations that a Federally-facilitated Exchange has 
designated as certified application counselor organizations and 
individual certified application counselors carrying out certified 
application counselor duties in a Federally-facilitated Exchange.
    (c) Grounds for assessing CMPs. HHS may assess CMPs against a 
consumer assistance entity if, based on the outcome of the investigative 
process outlined in paragraphs (d) through (i) of this section, HHS has 
reasonably determined that the consumer assistance entity has failed to 
comply with the Federal regulatory requirements applicable to the 
consumer assistance entity that have been implemented pursuant to 
section 1321(a)(1) of the Affordable Care Act, including provisions of

[[Page 265]]

any agreements, contracts, and grant terms and conditions between HHS 
and the consumer assistance entity that interpret those Federal 
regulatory requirements or establish procedures for compliance with 
them, unless a CMP has been assessed for the same conduct under 45 CFR 
155.285.
    (d) Basis for initiating an investigation of a potential violation--
(1) Information. Any information received or learned by HHS that 
indicates that a consumer assistance entity may have engaged or may be 
engaging in activity specified in paragraph (c) of this section may 
warrant an investigation. Information that might trigger an 
investigation includes, but is not limited to, the following:
    (i) Complaints from the general public;
    (ii) Reports from State regulatory agencies, and other Federal and 
State agencies; or
    (iii) Any other information that indicates that a consumer 
assistance entity may have engaged or may be engaging in activity 
specified in paragraph (c) of this section.
    (2) Who may file a complaint. Any entity or individual, or the 
legally authorized representative of an entity or individual, may file a 
complaint with HHS alleging that a consumer assistance entity has 
engaged or is engaging in an activity specified in paragraph (c) of this 
section.
    (e) Notice of investigation. When HHS performs an investigation 
under this section, it must provide a written notice to the consumer 
assistance entity of its investigation. This notice must include the 
following:
    (1) Description of the activity that is being investigated.
    (2) Explanation that the consumer assistance entity has 30 days from 
the date of the notice to respond with additional information or 
documentation, including information or documentation to refute an 
alleged violation.
    (3) State that a CMP might be assessed if the allegations are not, 
as determined by HHS, refuted within 30 days from the date of the 
notice.
    (f) Request for extension. In circumstances in which a consumer 
assistance entity cannot prepare a response to HHS within the 30 days 
provided in the notice of investigation described in paragraph (e) of 
this section, the entity may make a written request for an extension 
from HHS detailing the reason for the extension request and showing good 
cause. If HHS grants the extension, the consumer assistance entity must 
respond to the notice within the time frame specified in HHS's letter 
granting the extension of time. Failure to respond within 30 days, or, 
if applicable, within an extended time frame, may result in HHS's 
imposition of a CMP depending upon the outcome of HHS's investigation of 
the alleged violation.
    (g) Responses to allegations of noncompliance. In determining 
whether to impose a CMP, HHS may review and consider documents or 
information received or collected in accordance with paragraph (d)(1) of 
this section, as well as additional documents or information provided by 
the consumer assistance entity in response to receiving a notice of 
investigation in accordance with paragraph (e)(2) of this section. HHS 
may also conduct an independent investigation into the alleged 
violation, which may include site visits and interviews, if applicable, 
and may consider the results of this investigation in its determination.
    (h) Factors in determining noncompliance and amount of CMPs, if any. 
In determining whether there has been noncompliance by the consumer 
assistance entity, and whether CMPs are appropriate:
    (1) HHS must take into account the following:
    (i) The consumer assistance entity's previous or ongoing record of 
compliance, including but not limited to compliance or noncompliance 
with any corrective action plan.
    (ii) The gravity of the violation, which may be determined in part 
by--
    (A) The frequency of the violation, taking into consideration 
whether any violation is an isolated occurrence, represents a pattern, 
or is widespread; and
    (B) Whether the violation caused, or could reasonably be expected to 
cause, financial or other adverse impacts on consumer(s), and the 
magnitude of those impacts;

[[Page 266]]

    (2) HHS may take into account the following:
    (i) The degree of culpability of the consumer assistance entity, 
including but not limited to--
    (A) Whether the violation was beyond the direct control of the 
consumer assistance entity; and
    (B) The extent to which the consumer assistance entity received 
compensation--legal or otherwise--for the services associated with the 
violation;
    (ii) Aggravating or mitigating circumstances;
    (iii) Whether other remedies or penalties have been assessed and/or 
imposed for the same conduct or occurrence; or
    (iv) Other such factors as justice may require.
    (i) Maximum per-day penalty. The maximum amount of penalty imposed 
for each violation is $100 for each day for each consumer assistance 
entity for each individual directly affected by the consumer assistance 
entity's noncompliance; and where the number of individuals cannot be 
determined, HHS may reasonably estimate the number of individuals 
directly affected by the violation.
    (j) Settlement authority. Nothing in Sec.  155.206 limits the 
authority of HHS to settle any issue or case described in the notice 
furnished in accordance with paragraph (e) of this section or to 
compromise on any penalty provided for in this section.
    (k) Limitations on penalties--(1) Circumstances under which a CMP is 
not imposed. HHS will not impose any CMP on:
    (i) Any violation for the period of time during which none of the 
consumer assistance entities knew, or exercising reasonable diligence 
would have known, of the violation; or
    (ii) The period of time after any of the consumer assistance 
entities knew, or exercising reasonable diligence would have known, of 
the failure, if the violation was due to reasonable cause and not due to 
willful neglect and the violation was corrected within 30 days of the 
first day that any of the consumer assistance entities against whom the 
penalty would be imposed knew, or exercising reasonable diligence would 
have known, that the violation existed.
    (2) Burden of establishing knowledge. The burden is on the consumer 
assistance entity or entities to establish to HHS's satisfaction that 
the consumer assistance entity did not know, or exercising reasonable 
diligence would have known, that the violation existed, as well as the 
period of time during which that limitation applies; or that the 
violation was due to reasonable cause and not due to willful neglect and 
was corrected pursuant to the elements in paragraph (k)(1)(ii) of this 
section.
    (3) Time limit for commencing action. No action under this section 
will be entertained unless commenced, in accordance with Sec.  
155.206(l), within six years from the date on which the violation 
occurred.
    (l) Notice of assessment of CMP. If HHS proposes to assess a CMP in 
accordance with this section, HHS will send a written notice of this 
decision to the consumer assistance entity against whom the sanction is 
being imposed, which notice must include the following:
    (1) A description of the basis for the determination;
    (2) The basis for the CMP;
    (3) The amount of the CMP, if applicable;
    (4) The date the CMP, if applicable, is due;
    (5) Whether HHS would permit the consumer assistance entity to enter 
into a corrective action plan in place of paying the CMP, and the terms 
of any such corrective action plan;
    (6) An explanation of the consumer assistance entity's right to a 
hearing under paragraph (m) of this section; and
    (7) Information about the process for filing a request for a 
hearing.
    (m) Appeal of proposed sanction. Any consumer assistance entity 
against which HHS has assessed a sanction may appeal that penalty in 
accordance with the procedures set forth at 45 CFR part 150, subpart D.
    (n) Failure to request a hearing. (1) If the consumer assistance 
entity does not request a hearing within 30 days of the issuance of the 
notice of assessment of CMP described in paragraph (l)

[[Page 267]]

of this section, HHS may require payment of the proposed CMP.
    (2) HHS will notify the consumer assistance entity in writing of any 
CMP that has been assessed and of the means by which the consumer 
assistance entity may pay the CMP.
    (3) The consumer assistance entity has no right to appeal a CMP with 
respect to which it has not requested a hearing in accordance with 
paragraph (m) of this section unless the consumer assistance entity can 
show good cause in accordance with Sec.  150.405(b) of this subchapter 
for failing to timely exercise its right to a hearing.

[79 FR 30342, May 27, 2014]



Sec.  155.210  Navigator program standards.

    (a) General requirements. The Exchange must establish a Navigator 
program consistent with this section through which it awards grants to 
eligible public or private entities or individuals described in 
paragraph (c) of this section.
    (b) Standards. The Exchange must develop and publicly disseminate--
    (1) A set of standards, to be met by all entities and individuals to 
be awarded Navigator grants, designed to prevent, minimize and mitigate 
any conflicts of interest, financial or otherwise, that may exist for an 
entity or individuals to be awarded a Navigator grant and to ensure that 
all entities and individuals carrying out Navigator functions have 
appropriate integrity; and
    (2) A set of training standards, to be met by all entities and 
individuals carrying out Navigator functions under the terms of a 
Navigator grant, to ensure the entities and individuals are qualified to 
engage in Navigator activities, including training standards on the 
following topics:
    (i) The needs of underserved and vulnerable populations;
    (ii) Eligibility and enrollment rules and procedures;
    (iii) The range of QHP options and insurance affordability programs; 
and
    (iv) The privacy and security standards applicable under Sec.  
155.260.
    (c) Entities and individuals eligible to be a Navigator. (1) To 
receive a Navigator grant, an entity or individual must--
    (i) Be capable of carrying out at least those duties described in 
paragraph (e) of this section;
    (ii) Demonstrate to the Exchange that the entity has existing 
relationships, or could readily establish relationships, with employers 
and employees, consumers (including uninsured and underinsured 
consumers), or self-employed individuals likely to be eligible for 
enrollment in a QHP;
    (iii) Meet any licensing, certification or other standards 
prescribed by the State or Exchange, if applicable, so long as such 
standards do not prevent the application of the provisions of title I of 
the Affordable Care Act. Standards that would prevent the application of 
the provisions of title I of the Affordable Care Act include but are not 
limited to the following:
    (A) Except as otherwise provided under Sec.  155.705(d), 
requirements that Navigators refer consumers to other entities not 
required to provide fair, accurate, and impartial information.
    (B) Except as otherwise provided under Sec.  155.705(d), 
requirements that would prevent Navigators from providing services to 
all persons to whom they are required to provide assistance.
    (C) Requirements that would prevent Navigators from providing advice 
regarding substantive benefits or comparative benefits of different 
health plans.
    (D) Requiring that a Navigator hold an agent or broker license or 
imposing any requirement that, in effect, would require all Navigators 
in the Exchange to be licensed agents or brokers.
    (E) Imposing standards that would, as applied or as implemented in a 
State, prevent the application of Federal requirements applicable to 
Navigator entities or individuals or applicable to the Exchange's 
implementation of the Navigator program.
    (iv) Not have a conflict of interest during the term as Navigator; 
and,
    (v) Comply with the privacy and security standards adopted by the 
Exchange as required in accordance with Sec.  155.260.
    (2) The Exchange must include an entity from at least one of the 
following

[[Page 268]]

categories for receipt of a Navigator grant:
    (i) Community and consumer-focused nonprofit groups;
    (ii) Trade, industry, and professional associations;
    (iii) Commercial fishing industry organizations, ranching and 
farming organizations;
    (iv) Chambers of commerce;
    (v) Unions;
    (vi) Resource partners of the Small Business Administration;
    (vii) Licensed agents and brokers; and
    (viii) Other public or private entities or individuals that meet the 
requirements of this section. Other entities may include but are not 
limited to Indian tribes, tribal organizations, urban Indian 
organizations, and State or local human service agencies.
    (d) Prohibition on Navigator conduct. The Exchange must ensure that 
a Navigator must not--
    (1) Be a health insurance issuer or issuer of stop loss insurance;
    (2) Be a subsidiary of a health insurance issuer or issuer of stop 
loss insurance;
    (3) Be an association that includes members of, or lobbies on behalf 
of, the insurance industry;
    (4) Receive any consideration directly or indirectly from any health 
insurance issuer or issuer of stop loss insurance in connection with the 
enrollment of any individuals or employees in a QHP or a non-QHP. 
Notwithstanding the requirements of this paragraph (d)(4), in a 
Federally-facilitated Exchange, no health care provider shall be 
ineligible to operate as a Navigator solely because it receives 
consideration from a health insurance issuer for health care services 
provided;
    (5) Charge any applicant or enrollee, or request or receive any form 
of remuneration from or on behalf of an individual applicant or 
enrollee, for application or other assistance related to Navigator 
duties;
    (6) Provide to an applicant or potential enrollee gifts of any value 
as an inducement for enrollment. The value of gifts provided to 
applicants and potential enrollees for purposes other than as an 
inducement for enrollment must not exceed nominal value, either 
individually or in the aggregate, when provided to that individual 
during a single encounter. For purposes of this paragraph (d)(6), the 
term gifts includes gift items, gift cards, cash cards, cash, and 
promotional items that market or promote the products or services of a 
third party, but does not include the reimbursement of legitimate 
expenses incurred by a consumer in an effort to receive Exchange 
application assistance, such as travel or postage expenses.
    (7) Use Exchange funds to purchase gifts or gift cards, or 
promotional items that market or promote the products or services of a 
third party, that would be provided to any applicant or potential 
enrollee;
    (8) Solicit 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 Navigator 
or Navigator entity and other applicable State and Federal laws are 
otherwise complied with. Outreach and education activities may be 
conducted by going door-to-door or through other unsolicited means of 
direct contact, including calling a consumer; or
    (9) Initiate any telephone call to a consumer using an automatic 
telephone dialing system or an artificial or prerecorded voice, except 
in cases where the individual Navigator or Navigator entity has a 
relationship with the consumer and so long as other applicable State and 
Federal laws are otherwise complied with.
    (e) Duties of a Navigator. An entity that serves as a Navigator must 
carry out at least the following duties:
    (1) Maintain expertise in eligibility, enrollment, and program 
specifications and conduct public education activities to raise 
awareness about the Exchange;
    (2) Provide information and services in a fair, accurate, and 
impartial manner, which includes: providing information that assists 
consumers with submitting the eligibility application; clarifying the 
distinctions among health coverage options, including

[[Page 269]]

QHPs; and helping consumers make informed decisions during the health 
coverage selection process. Such information must acknowledge other 
health programs;
    (3) Facilitate selection of a QHP;
    (4) Provide referrals to any applicable office of health insurance 
consumer assistance or health insurance ombudsman established under 
section 2793 of the PHS Act, or any other appropriate State agency or 
agencies, for any enrollee with a grievance, complaint, or question 
regarding their health plan, coverage, or a determination under such 
plan or coverage;
    (5) Provide information in a manner that is culturally and 
linguistically appropriate to the needs of the population being served 
by the Exchange, including individuals with limited English proficiency, 
and ensure accessibility and usability of Navigator tools and functions 
for individuals with disabilities in accordance with the Americans with 
Disabilities Act and section 504 of the Rehabilitation Act;
    (6) Ensure that applicants--
    (i) Are informed, prior to receiving assistance, of the functions 
and responsibilities of Navigators, including that Navigators are not 
acting as tax advisers or attorneys when providing assistance as 
Navigators and cannot provide tax or legal advice within their capacity 
as Navigators;
    (ii) Provide authorization in a form and manner as determined by the 
Exchange prior to a Navigator's obtaining access to an applicant's 
personally identifiable information, and that the Navigator maintains a 
record of the authorization provided in a form and manner as determined 
by the Exchange. The Exchange must establish a reasonable retention 
period for maintaining these records. In Federally-facilitated 
Exchanges, this period is no less than six years, unless a different and 
longer retention period has already been provided under other applicable 
Federal law; and
    (iii) May revoke at any time the authorization provided the 
Navigator pursuant to paragraph (e)(6)(ii) of this section; and
    (7) In a Federally-facilitated Exchange, no individual or entity 
shall be ineligible to operate as a Navigator solely because its 
principal place of business is outside of the Exchange service area;
    (8) Provide targeted assistance to serve underserved or vulnerable 
populations, as identified by the Exchange, within the Exchange service 
area.
    (i) In a Federally-facilitated Exchange, this paragraph (e)(8) will 
apply beginning with the Navigator grant application process for 
Navigator grants awarded in 2018. The Federally-facilitated Exchange 
will identify populations as vulnerable or underserved that are 
disproportionately without access to coverage or care, or that are at a 
greater risk for poor health outcomes, in the funding opportunity 
announcement for its Navigator grants, and applicants for those grants 
will have an opportunity to propose additional vulnerable or underserved 
populations in their applications for the Federally-facilitated 
Exchange's approval.
    (ii) [Reserved]
    (9) The Exchange may require or authorize Navigators to provide 
information and assistance with any of the following topics. In 
Federally-facilitated Exchanges, Navigators are required to provide 
information and assistance with all of the following topics under 
Navigator grants awarded in 2018, and will be authorized to provide 
information and assistance with all of the following topics under 
Navigator grants awarded in 2019 or any later year.
    (i) Understanding the process of filing Exchange eligibility 
appeals;
    (ii) Understanding and applying for exemptions from the individual 
shared responsibility payment that are granted through the Exchange, 
understanding the availability of exemptions from the requirement to 
maintain minimum essential coverage and from the individual shared 
responsibility payment that are claimed through the tax filing process 
and how to claim them, and understanding the availability of IRS 
resources on this topic;
    (iii) The Exchange-related components of the premium tax credit 
reconciliation process, and understanding the availability of IRS 
resources on this process;

[[Page 270]]

    (iv) Understanding basic concepts and rights related to health 
coverage and how to use it; and
    (v) Referrals to licensed tax advisers, tax preparers, or other 
resources for assistance with tax preparation and tax advice related to 
consumer questions about the Exchange application and enrollment 
process, exemptions from the requirement to maintain minimum essential 
coverage and from the individual shared responsibility payment, and 
premium tax credit reconciliations.
    (f) Funding for Navigator grants. Funding for Navigator grants may 
not be from Federal funds received by the State to establish the 
Exchange.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42859, July 17, 2013; 
79 FR 30344, May 27, 2014; 79 FR 42986, July 24, 2014; 81 FR 12337, Mar. 
8, 2016; 83 FR 17061, Apr. 17, 2018; 84 FR 17563, Apr. 25, 2019]



Sec.  155.215  Standards applicable to Navigators and Non-Navigator
Assistance Personnel carrying out consumer assistance functions under
Sec. Sec.  155.205(d) 
          and (e) and 155.210 in a Federally-facilitated Exchange and to 
          Non-Navigator Assistance Personnel funded through an Exchange 
          Establishment Grant.

    (a) Conflict-of-interest standards. The following conflict-of-
interest standards apply in an Exchange operated by HHS during the 
exercise of its authority under Sec.  155.105(f) and to non-Navigator 
assistance personnel funded through an Exchange Establishment Grant 
under section 1311(a) of the Affordable Care Act:
    (1) Conflict-of-interest standards for Navigators. (i) All Navigator 
entities, including Navigator grant applicants, must submit to the 
Exchange a written attestation that the Navigator, including the 
Navigator's staff:
    (A) Is not a health insurance issuer or issuer of stop loss 
insurance;
    (B) Is not a subsidiary of a health insurance issuer or issuer of 
stop loss insurance;
    (C) Is not an association that includes members of, or lobbies on 
behalf of, the insurance industry; and
    (D) Will not receive any consideration directly or indirectly from 
any health insurance issuer or issuer of stop loss insurance in 
connection with the enrollment of any individuals or employees in a QHP 
or non-QHP.
    (ii) All Navigator entities must submit to the Exchange a written 
plan to remain free of conflicts of interest during the term as a 
Navigator.
    (iii) All Navigator entities, including the Navigator's staff, must 
provide information to consumers about the full range of QHP options and 
insurance affordability programs for which they are eligible.
    (iv) All Navigator entities, including the Navigator's staff, must 
disclose to the Exchange and, in plain language, to each consumer who 
receives application assistance from the Navigator:
    (A) Any lines of insurance business, not covered by the restrictions 
on participation and prohibitions on conduct in Sec.  155.210(d), which 
the Navigator intends to sell while carrying out the consumer assistance 
functions;
    (B) Any existing employment relationships, or any former employment 
relationships within the last 5 years, with any health insurance issuers 
or issuers of stop loss insurance, or subsidiaries of health insurance 
issuers or issuers of stop loss insurance, including any existing 
employment relationships between a spouse or domestic partner and any 
health insurance issuers or issuers of stop loss insurance, or 
subsidiaries of health insurance issuers or issuers of stop loss 
insurance; and
    (C) Any existing or anticipated financial, business, or contractual 
relationships with one or more health insurance issuers or issuers of 
stop loss insurance, or subsidiaries of health insurance issuers or 
issuers of stop loss insurance.
    (2) Conflict-of-interest standards for Non-Navigator assistance 
personnel carrying out consumer assistance functions under Sec.  
155.205(d) and (e). All Non-Navigator entities or individuals authorized 
to carry out consumer assistance functions under Sec.  155.205(d) and 
(e) must--
    (i) Comply with the prohibitions on Navigator conduct set forth at 
Sec.  155.210(d) and the duties of a Navigator set forth at Sec.  
155.210(e)(2).
    (ii) Submit to the Exchange a written attestation that the entity or 
individual--
    (A) Is not a health insurance issuer or issuer of stop loss 
insurance;

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    (B) Is not a subsidiary of a health insurance issuer or issuer of 
stop loss insurance;
    (C) Is not an association that includes members of, or lobbies on 
behalf of, the insurance industry; and
    (D) Will not receive any consideration directly or indirectly from 
any health insurance issuer or issuer of stop loss insurance in 
connection with the enrollment of any individuals or employees in a QHP 
or non-QHP.
    (iii) Submit to the Exchange a written plan to remain free of 
conflicts of interest while carrying out consumer assistance functions 
under Sec.  155.205(d) and (e).
    (iv) Provide information to consumers about the full range of QHP 
options and insurance affordability programs for which they are 
eligible.
    (v) Submit to the Exchange, and, in plain language, to each consumer 
who receives application assistance from the entity or individual:
    (A) Any lines of insurance business, not covered by the restrictions 
on participation and prohibitions on conduct in Sec.  155.210(d), which 
the entity or individual intends to sell while carrying out the consumer 
assistance functions;
    (B) Any existing employment relationships, or any former employment 
relationships within the last five years, with any health insurance 
issuers or issuers of stop loss insurance, or subsidiaries of health 
insurance issuers or issuers of stop loss insurance, including any 
existing employment relationships between a spouse or domestic partner 
and any health insurance issuers or issuers of stop loss insurance, or 
subsidiaries of health insurance issuers or issuers of stop loss 
insurance; and
    (C) Any existing or anticipated financial, business, or contractual 
relationships with one or more health insurance issuers or issuers of 
stop loss insurance, or subsidiaries of health insurance issuers or 
issuers of stop loss insurance.
    (b) Training standards for Navigators and Non-Navigator assistance 
personnel carrying out consumer assistance functions under Sec. Sec.  
155.205(d) and (e) and 155.210. The following training standards apply 
in an Exchange operated by HHS during the exercise of its authority 
under Sec.  155.105(f), and to non-Navigator assistance personnel funded 
through an Exchange Establishment Grant under section 1311(a) of the 
Affordable Care Act.
    (1) Certification and recertification standards. All individuals or 
entities who carry out consumer assistance functions under Sec. Sec.  
155.205(d) and (e) and 155.210, including Navigators, must meet the 
following certification and recertification requirements.
    (i) Obtain certification by the Exchange prior to carrying out any 
consumer assistance functions or outreach and education activities under 
Sec.  155.205(d) and (e) or Sec.  155.210;
    (ii) Register for and complete a HHS-approved training;
    (iii) Following completion of the HHS-approved training described in 
paragraph (b)(1)(ii) of this section, complete and achieve a passing 
score on all approved certification examinations prior to carrying out 
any consumer assistance functions under Sec.  155.205(d) and (e) or 
Sec.  155.210;
    (iv) Obtain continuing education and be certified and/or recertified 
on at least an annual basis; and
    (v) Be prepared to serve both the individual Exchange and SHOP.
    (2) Training module content standards. All individuals who carry out 
the consumer assistance functions under Sec. Sec.  155.205(d) and (e) 
and 155.210 must receive training consistent with standards established 
by the Exchange consistent with Sec.  155.210(b)(2).
    (c) Providing Culturally and Linguistically Appropriate Services 
(CLAS Standards). The following standards will apply in an Exchange 
operated by HHS during the exercise of its authority under Sec.  
155.105(f) and to non-Navigator assistance personnel funded through an 
Exchange Establishment Grant under section 1311(a) of the Affordable 
Care Act. To ensure that information provided as part of any consumer 
assistance functions under Sec.  155.205(d) and (e) or Sec.  155.210 is 
culturally and linguistically appropriate to the needs of the population 
being served, including individuals with limited English proficiency as 
required by Sec. Sec.  155.205(c)(2) and 155.210(e)(5), any entity or 
individual carrying out these functions must:

[[Page 272]]

    (1) Develop and maintain general knowledge about the racial, ethnic, 
and cultural groups in their service area, including each group's 
diverse cultural health beliefs and practices, preferred languages, 
health literacy, and other needs;
    (2) Collect and maintain updated information to help understand the 
composition of the communities in the service area, including the 
primary languages spoken;
    (3) Provide consumers with information and assistance in the 
consumer's preferred language, at no cost to the consumer, including the 
provision of oral interpretation of non-English languages and the 
translation of written documents in non-English languages when necessary 
or when requested by the consumer to ensure effective communication. Use 
of a consumer's family or friends as oral interpreters can satisfy the 
requirement to provide linguistically appropriate services only when 
requested by the consumer as the preferred alternative to an offer of 
other interpretive services;
    (4) Provide oral and written notice to consumers with limited 
English proficiency, in their preferred language, informing them of 
their right to receive language assistance services and how to obtain 
them;
    (5) Receive ongoing education and training in culturally and 
linguistically appropriate service delivery; and
    (6) Implement strategies to recruit, support, and promote a staff 
that is representative of the demographic characteristics, including 
primary languages spoken, of the communities in their service area.
    (d) Standards ensuring access by persons with disabilities. The 
following standards related to ensuring access by people with 
disabilities will apply in an Exchange operated by HHS during the 
exercise of its authority under Sec.  155.105(f), and to non-Navigator 
assistance personnel funded through an Exchange Establishment Grant 
under section 1311(a) of the Affordable Care Act. Any entity or 
individual carrying out any consumer assistance functions under Sec.  
155.205(d) and (e) or Sec.  155.210, and in accordance with Sec.  
155.205(c), must--
    (1) Ensure that any consumer education materials, Web sites, or 
other tools utilized for consumer assistance purposes, are accessible to 
people with disabilities, including those with sensory impairments, such 
as visual or hearing impairments, and those with mental illness, 
addiction, and physical, intellectual, and developmental disabilities;
    (2) Provide auxiliary aids and services for individuals with 
disabilities, at no cost, when necessary or when requested by the 
consumer to ensure effective communication. Use of a consumer's family 
or friends as interpreters can satisfy the requirement to provide 
auxiliary aids and services only when requested by the consumer as the 
preferred alternative to an offer of other auxiliary aids and services;
    (3) Provide assistance to consumers in a location and in a manner 
that is physically and otherwise accessible to individuals with 
disabilities;
    (4) Ensure that authorized representatives are permitted to assist 
an individual with a disability to make informed decisions;
    (5) Acquire sufficient knowledge to refer people with disabilities 
to local, state, and federal long-term services and supports programs 
when appropriate; and
    (6) Be able to work with all individuals regardless of age, 
disability, or culture, and seek advice or experts when needed.
    (e) Monitoring. Any Exchange operated by HHS during the exercise of 
its authority under Sec.  155.105(f) will monitor compliance with the 
standards in this section and the requirements of Sec. Sec.  155.205(d) 
and (e) and 155.210.
    (f) State or Exchange standards. All non-Navigator entities or 
individuals carrying out consumer assistance functions under Sec.  
155.205(d) and (e) in an Exchange operated by HHS during the exercise of 
its authority under Sec.  155.105(f) and all non-Navigator assistance 
personnel funded through an Exchange Establishment Grant under section 
1311(a) of the Affordable Care Act must meet any licensing, 
certification, or other standards prescribed by the State or Exchange, 
if applicable, so long as such standards do not prevent the application 
of the provisions of title I of

[[Page 273]]

the Affordable Care Act. Standards that would prevent the application of 
the provisions of title I of the Affordable Care Act include but are not 
limited to the following:
    (1) Requirements that non-Navigator entities or individuals refer 
consumers to other entities not required to provide fair, accurate, and 
impartial information.
    (2) Requirements that would prevent non-Navigator entities or 
individuals from providing services to all persons to whom they are 
required to provide assistance.
    (3) Requirements that would prevent non-Navigator entities or 
individuals from providing advice regarding substantive benefits or 
comparative benefits of different health plans.
    (4) Imposing standards that would, as applied or as implemented in a 
State, prevent the application of Federal requirements applicable to 
non-Navigator entities or individuals or applicable to the Exchange's 
implementation of the non-Navigator assistance personnel program.
    (g) Consumer authorization. All non-Navigator entities or 
individuals carrying out consumer assistance functions under Sec.  
155.205(d) and (e) in an Exchange operated by HHS during the exercise of 
its authority under Sec.  155.105(f) and all non-Navigator assistance 
personnel funded through an Exchange Establishment Grant under section 
1311(a) of the Affordable Care Act must establish procedures to ensure 
that applicants--
    (1) Are informed, prior to receiving assistance, of the functions 
and responsibilities of non-Navigator assistance personnel, including 
that non-Navigator assistance personnel are not acting as tax advisers 
or attorneys when providing assistance as non-Navigator assistance 
personnel and cannot provide tax or legal advice within their capacity 
as non-Navigator assistance personnel;
    (2) Provide authorization in a form and manner as determined by the 
Exchange prior to a non-Navigator assistance personnel's obtaining 
access to an applicant's personally identifiable information, and that 
the non-Navigator assistance personnel maintains a record of the 
authorization provided in a form and manner as determined by the 
Exchange. The Exchange must establish a reasonable retention period for 
maintaining these records. In Federally-facilitated Exchanges, this 
period is no less than six years, unless a different and longer 
retention period has already been provided under other applicable 
Federal law; and
    (3) May revoke at any time the authorization provided the non-
Navigator assistance personnel pursuant to paragraph (g)(2) of this 
section.
    (h) Physical presence. In a Federally-facilitated Exchange, no 
individual or entity shall be ineligible to operate as a non-Navigator 
entity or as non-Navigator assistance personnel solely because its 
principal place of business is outside of the Exchange service area.
    (i) Prohibition on compensation per enrollment. Beginning November 
15, 2014, Navigators and Non-Navigator assistance personnel carrying out 
consumer assistance functions under Sec. Sec.  155.205(d) and (e) and 
155.210, if operating in an Exchange operated by HHS during the exercise 
of its authority under Sec.  155.105(f), are prohibited from providing 
compensation to individual Navigators or non-Navigator assistance 
personnel on a per-application, per-individual-assisted, or per-
enrollment basis.

[78 FR 42859, July 17, 2013, as amended at 79 FR 30344, May 27, 2014; 81 
FR 12338, Mar. 8, 2016; 83 FR 17061, Apr. 17, 2018; 84 FR 17563, Apr. 
25, 2019]



Sec.  155.220  Ability of States to permit agents and brokers and 
web-brokers to assist qualified individuals, qualified employers,
or qualified employees enrolling in QHPs.

    (a) General rule. A State may permit agents, brokers, and web-
brokers to--
    (1) Enroll individuals, employers or employees in any QHP in the 
individual or small group market as soon as the QHP is offered through 
an Exchange in the State;
    (2) Subject to paragraphs (c), (d), and (e) of this section, enroll 
qualified individuals in a QHP in a manner that constitutes enrollment 
through the Exchange; and
    (3) Subject to paragraphs (d) and (e) of this section, assist 
individuals in applying for advance payments of the

[[Page 274]]

premium tax credit and cost-sharing reductions for QHPs.
    (b)(1) Web site disclosure. The Exchange or SHOP may elect to 
provide information regarding licensed agents and brokers on its Web 
site for the convenience of consumers seeking insurance through that 
Exchange and may elect to limit the information to information regarding 
licensed agents and brokers who have completed any required Exchange or 
SHOP registration and training process.
    (2) A Federally-facilitated Exchange or SHOP will limit the 
information provided on its Web site regarding licensed agents and 
brokers to information regarding licensed agents and brokers who have 
completed registration and training.
    (c) Enrollment through the Exchange. A qualified individual may be 
enrolled in a QHP through the Exchange with the assistance of an agent, 
broker, or web-broker if--
    (1) The agent, broker, or web-broker ensures the applicant's 
completion of an eligibility verification and enrollment application 
through the Exchange internet website as described in Sec.  155.405, or 
ensures that the eligibility application information is submitted for an 
eligibility determination through the Exchange-approved web service 
subject to meeting the requirements in paragraphs (c)(3)(ii) and 
(c)(4)(i)(F) of this section;
    (2) The Exchange transmits enrollment information to the QHP issuer 
as provided in Sec.  155.400(a) to allow the issuer to effectuate 
enrollment of qualified individuals in the QHP.
    (3)(i) When an internet website of a web-broker is used to complete 
the QHP selection, at a minimum the internet website must:
    (A) Disclose and display all QHP information provided by the 
Exchange or directly by QHP issuers consistent with the requirements of 
Sec.  155.205(b)(1) and (c), and to the extent that not all information 
required under Sec.  155.205(b)(1) is displayed on the web-broker's 
internet website for a QHP, prominently display a standardized 
disclaimer provided by HHS stating that information required under Sec.  
155.205(b)(1) for the QHP is available on the Exchange website, and 
provide a Web link to the Exchange website;
    (B) Provide consumers the ability to view all QHPs offered through 
the Exchange;
    (C) Not provide financial incentives, such as rebates or giveaways;
    (D) Display all QHP data provided by the Exchange;
    (E) Maintain audit trails and records in an electronic format for a 
minimum of ten years and cooperate with any audit under this section;
    (F) Provide consumers with the ability to withdraw from the process 
and use the Exchange Web site described in Sec.  155.205(b) instead at 
any time;
    (G) For the Federally-facilitated Exchange, prominently display a 
standardized disclaimer provided by HHS, and provide a Web link to the 
Exchange Web site; and
    (H) Differentially display all standardized options prominently and 
in accordance with the requirements under Sec.  155.205(b)(1) in a 
manner consistent with that adopted by HHS for display on the Federally-
facilitated Exchange Web site and with standards defined by HHS, unless 
HHS approves a deviation;
    (I) Prominently display information provided by HHS pertaining to a 
consumer's eligibility for advance payments of the premium tax credit or 
cost-sharing reductions;
    (J) Allow the consumer to select an amount for advance payments of 
the premium tax credit, if applicable, and make related attestations in 
accordance with Sec.  155.310(d)(2);
    (K) Comply with the applicable requirements in Sec.  155.221; and
    (L) Not display QHP recommendations based on compensation the agent, 
broker, or web-broker receives from QHP issuers.
    (ii) When an internet website of a web-broker is used to complete 
the Exchange eligibility application, at a minimum the internet website 
must:
    (A) Comply with the requirements in paragraph (c)(3)(i) of this 
section;
    (B) Use exactly the same eligibility application language as appears 
in the FFE Single Streamlined Application required in Sec.  155.405, 
unless HHS approves a deviation;
    (C) Ensure that all necessary information for the consumer's 
applicable

[[Page 275]]

eligibility circumstances are submitted through the Exchange-approved 
web service; and
    (D) Ensure that the process used for consumers to complete the 
eligibility application complies with all applicable Exchange standards, 
including Sec. Sec.  155.230 and 155.260(b).
    (4) When an agent or broker, through a contract or other 
arrangement, uses the internet website of a web-broker to help an 
applicant or enrollee complete a QHP selection or complete the Exchange 
eligibility application in the Federally-facilitated Exchange:
    (i) The web-broker who makes the website available must:
    (A) Provide HHS with a list of agents and brokers who enter into 
such a contract or other arrangement to use the web-broker's website, in 
a form and manner to be specified by HHS;
    (B) Verify that any agent or broker accessing or using the Web site 
pursuant to the arrangement is licensed in the State in which the 
consumer is selecting the QHP; and has completed training and 
registration and has signed all required agreements with the Federally-
facilitated Exchange pursuant to paragraph (d) of this section and Sec.  
155.260(b);
    (C) Ensure that its name and any identifier required by HHS 
prominently appears on the Internet Web site and on written materials 
containing QHP information that can be printed from the Web site, even 
if the agent or broker that is accessing the Internet Web site is able 
to customize the appearance of the Web site;
    (D) Terminate the agent or broker's access to its Web site if HHS 
determines that the agent or broker is in violation of the provisions of 
this section and/or HHS terminates any required agreement with the agent 
or broker;
    (E) Report to HHS and applicable State departments of insurance any 
potential material breach of the standards in paragraphs (c) and (d) of 
this section, or the agreement entered into under Sec.  155.260(b), by 
the agent or broker accessing the internet website, should it become 
aware of any such potential breach. A web-broker that provides access to 
its website to complete the QHP selection or the Exchange eligibility 
application or ability to transact information with HHS to another web-
broker website is responsible for ensuring compliance with applicable 
requirements in paragraph (c)(3) of this section for any web pages of 
the other web-broker's website that assist consumers, applicants, 
qualified individuals, and enrollees in applying for APTC and CSRs for 
QHPs, or in completing enrollment in QHPs, offered in the Exchanges.
    (F) When an internet website of a web-broker is used to complete the 
Exchange eligibility application, obtain HHS approval verifying that all 
requirements in this section are met.
    (ii) HHS retains the right to temporarily suspend the ability of a 
web-broker making its website available to transact information with 
HHS, if HHS discovers a security and privacy incident or breach, for the 
period in which HHS begins to conduct an investigation and until the 
incident or breach is remedied to HHS' satisfaction.
    (5) HHS or its designee may periodically monitor and audit an agent, 
broker, or web-broker under this subpart to assess its compliance with 
the applicable requirements of this section.
    (d) Agreement. An agent, broker, or web-broker that enrolls 
qualified individuals in a QHP in a manner that constitutes enrollment 
through the Exchange or assists individuals in applying for advance 
payments of the premium tax credit and cost-sharing reductions for QHPs 
must comply with the terms of an agreement between the agent, broker, or 
web-broker and the Exchange under which the agent, broker, or web-broker 
at least:
    (1) Registers with the Exchange in advance of assisting qualified 
individuals enrolling in QHPs through the Exchange;
    (2) Receives training in the range of QHP options and insurance 
affordability programs, except that a licensed agent or broker entity 
that registers with the Federally-facilitated Exchange in its capacity 
as a business organized under the laws of a State, and not as an 
individual person, and direct enrollment technology providers are exempt 
from this requirement; and

[[Page 276]]

    (3) Complies with the Exchange's privacy and security standards 
adopted consistent with Sec.  155.260.
    (e) Compliance with State law. An agent, broker, or web-broker that 
enrolls qualified individuals in a QHP in a manner that constitutes 
enrollment through the Exchange or assists individuals in applying for 
advance payments of the premium tax credit and cost-sharing reductions 
for QHPs must comply with applicable State law related to agents, 
brokers, or web-brokers including applicable State law related to 
confidentiality and conflicts of interest.
    (f) Termination notice to HHS. (1) An agent, broker, or web-broker 
may terminate its agreement with HHS by sending to HHS a written notice 
at least 30 days in advance of the date of intended termination.
    (2) The notice must include the intended date of termination, but if 
it does not specify a date of termination, or the date provided is not 
acceptable to HHS, HHS may set a different termination date that will be 
no less than 30 days from the date on the agent's, broker's, or web-
broker's notice of termination.
    (3) Prior to the date of termination, an agent, broker, or web-
broker should--
    (i) Notify applicants, qualified individuals, or enrollees that the 
agent, broker, or web-broker is assisting, of the agent's, broker's, or 
web-broker's intended date of termination;
    (ii) Continue to assist such individuals with Exchange-related 
eligibility and enrollment services up until the date of termination; 
and
    (iii) Provide such individuals with information about alternatives 
available for obtaining additional assistance, including but not limited 
to the Federally-facilitated Exchange Web site.
    (4) When the agreement between the agent, broker, or web-broker and 
the Exchange under paragraph (d) of this section is terminated under 
paragraph (f) of this section, the agent, broker, or web-broker will no 
longer be registered with the Federally-facilitated Exchanges, or be 
permitted to assist with or facilitate enrollment of qualified 
individuals, qualified employers or qualified employees in coverage in a 
manner that constitutes enrollment through a Federally-facilitated 
Exchange, or be permitted to assist individuals in applying for advance 
payments of the premium tax credit and cost-sharing reductions for QHPs. 
The agent's, broker's, or web-broker's agreement with the Exchange under 
Sec.  155.260(b) will also be terminated through the termination without 
cause process set forth in that agreement. The agent, broker, or web-
broker must continue to protect any personally identifiable information 
accessed during the term of either of these agreements with the 
Federally-facilitated Exchanges.
    (g) Standards for termination for cause from the Federally-
facilitated Exchange. (1) If, in HHS' determination, a specific finding 
of noncompliance or pattern of noncompliance is sufficiently severe, HHS 
may terminate an agent's, broker's, or web-broker's agreement with the 
Federally-facilitated Exchange for cause.
    (2) An agent, broker, or web-broker may be determined noncompliant 
if HHS finds that the agent, broker, or web-broker violated--
    (i) Any standard specified under this section;
    (ii) Any term or condition of the agreement with the Federally-
facilitated Exchanges required under paragraph (d) of this section, or 
any term or condition of the agreement with the Federally-facilitated 
Exchange required under Sec.  155.260(b);
    (iii) Any State law applicable to agents, brokers, or web-brokers, 
as required under paragraph (e) of this section, including but not 
limited to State laws related to confidentiality and conflicts of 
interest; or
    (iv) Any Federal law applicable to agents, brokers, or web-brokers.
    (3)(i) Except as provided in paragraph (g)(3)(ii) of this section, 
HHS will notify the agent, broker, or web-broker of the specific finding 
of noncompliance or pattern of noncompliance made under paragraph (g)(1) 
of this section, and after 30 days from the date of the notice, may 
terminate the agreement for cause if the matter is not resolved to the 
satisfaction of HHS.
    (ii) HHS may immediately terminate the agreement for cause upon 
notice to

[[Page 277]]

the agent or broker without any further opportunity to resolve the 
matter if an agent or broker fails to maintain the appropriate license 
under State law as an agent, broker, or insurance producer in every 
State in which the agent or broker actively assists consumers with 
applying for advance payments of the premium tax credit or cost-sharing 
reductions or with enrolling in QHPs through the Federally-facilitated 
Exchanges.
    (4) After the applicable period in paragraph (g)(3) of this section 
has elapsed and the agreement under paragraph (d) of this section is 
terminated, the agent, broker, or web-broker will no longer be 
registered with the Federally-facilitated Exchanges, or be permitted to 
assist with or facilitate enrollment of a qualified individual, 
qualified employer, or qualified employee in coverage in a manner that 
constitutes enrollment through a Federally-facilitated Exchange, or be 
permitted to assist individuals in applying for advance payments of the 
premium tax credit and cost-sharing reductions for QHPs. The agent's, 
broker's, or web-broker's agreement with the Exchange under Sec.  
155.260(b)(2) will also be terminated through the process set forth in 
that agreement. The agent, broker, or web-broker must continue to 
protect any personally identifiable information accessed during the term 
of either of these agreements with the Federally-facilitated Exchanges.
    (5) Fraud or abusive conduct--
    (i)(A) If HHS reasonably suspects that an agent, broker, or web-
broker may have may have engaged in fraud, or in abusive conduct that 
may cause imminent or ongoing consumer harm using personally 
identifiable information of an Exchange enrollee or applicant or in 
connection with an Exchange enrollment or application, HHS may 
temporarily suspend the agent's, broker's, or web-broker's agreements 
required under paragraph (d) of this section and under Sec.  155.260(b) 
for up to 90 calendar days. Suspension will be effective on the date of 
the notice that HHS sends to the agent, broker, or web-broker advising 
of the suspension of the agreements.
    (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 30 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.
    (ii) If there is a finding or determination by a Federal or State 
entity that an agent, broker, or web-broker engaged in fraud, or abusive 
conduct that may result in imminent or ongoing consumer harm, using 
personally identifiable information of Exchange enrollees or applicants 
or in connection with an Exchange enrollment or application, HHS will 
terminate the agent's, broker's, or web-broker's agreements required 
under paragraph (d) of this section and under Sec.  155.260(b) for 
cause. The termination will be effective starting on the date of the 
notice that HHS sends to the agent, broker, or web-broker advising of 
the termination of the agreements.
    (iii) During the suspension period under paragraph (g)(5)(i) of this 
section and following termination of the agreements under paragraph 
(g)(5)(i)(B) or (g)(5)(ii) of this section, the agent, broker, or web-
broker will not be registered with the Federally-facilitated Exchanges, 
or be permitted to assist with or facilitate enrollment of qualified 
individuals, qualified employers, or qualified employees in coverage in 
a manner that constitutes enrollment through a Federally-facilitated 
Exchange, or be permitted to assist individuals in applying for advance 
payments of the premium tax credit and cost-sharing reductions for QHPs. 
The agent, broker, or web-broker must continue to protect any personally 
identifiable information accessed during the term of either of these 
agreements with the Federally-facilitated Exchanges.

[[Page 278]]

    (6) The State department of insurance or equivalent State agent or 
broker licensing authority will be notified by HHS in cases of 
suspensions or terminations effectuated under this paragraph (g).
    (h) Request for reconsideration of termination for cause from the 
Federally-facilitated Exchange--(1) Request for reconsideration. An 
agent, broker, or web-broker whose agreement with the Federally-
facilitated Exchange has been terminated may request reconsideration of 
such action in the manner and form established by HHS.
    (2) Timeframe for request. The agent, broker, or web-broker must 
submit a request for reconsideration to the HHS reconsideration entity 
within 30 calendar days of the date of the written notice from HHS.
    (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 30 calendar days of the 
date it receives the request for reconsideration. This decision will 
constitute HHS' final determination.
    (i) Use of agents' and brokers' and web-brokers' internet websites 
for SHOP. For plan years beginning on or after January 1, 2015, in 
States that permit this activity under State law, a SHOP may permit 
agents, brokers, and web-brokers to use an internet website to assist 
qualified employers and facilitate enrollment of enrollees in a QHP 
through the Exchange, under paragraph (c)(3) of this section.
    (j) Federally-facilitated Exchange standards of conduct. (1) An 
agent, broker, or web-broker that assists with or facilitates enrollment 
of qualified individuals, qualified employers, or qualified employees, 
in coverage in a manner that constitutes enrollment through a Federally-
facilitated Exchange, or assists individuals in applying for advance 
payments of the premium tax credit and cost-sharing reductions for QHPs 
sold through a Federally-facilitated Exchange, must--
    (i) Have executed the required agreement under paragraph Sec.  
155.260(b);
    (ii) Be registered with the Federally-facilitated Exchanges under 
paragraph (d)(1) of this section; and
    (iii) Comply with the standards of conduct in paragraph (j)(2) of 
this section.
    (2) Standards of conduct. An individual or entity described in 
paragraph (j)(1) of this section must--
    (i) Provide consumers with correct information, without omission of 
material fact, regarding the Federally-facilitated Exchanges, QHPs 
offered through the Federally-facilitated Exchanges, and insurance 
affordability programs, and refrain from marketing or conduct that is 
misleading (including by having a direct enrollment website that HHS 
determines could mislead a consumer into believing they are visiting 
HealthCare.gov), coercive, or discriminates based on race, color, 
national origin, disability, age, or sex;
    (ii) Provide the Federally-facilitated Exchanges with correct 
information under section 1411(b) of the Affordable Care Act;
    (iii) Obtain the consent of the individual, employer, or employee 
prior to assisting with or facilitating enrollment through a Federally-
facilitated Exchange, or assisting the individual in applying for 
advance payments of the premium tax credit and cost-sharing reductions 
for QHPs;
    (iv) Protect consumer personally identifiable information according 
to Sec.  155.260(b)(3) and the agreement described in Sec.  
155.260(b)(2); and
    (v) Comply with all applicable Federal and State laws and 
regulations.
    (3) If an agent, 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.
    (k) Penalties other than termination of the agreement with the 
Federally-facilitated Exchanges. (1) If HHS determines that an agent, 
broker, or web-broker has failed to comply with the requirements of this 
section, in addition to any other available remedies, that agent, 
broker, or web-broker--

[[Page 279]]

    (i) May be denied the right to enter into agreements with the 
Federally-facilitated Exchanges in future years; and
    (ii) May be subject to civil money penalties as described in Sec.  
155.285.
    (2) HHS will notify the agent, broker, or web-broker of the proposed 
imposition of penalties under paragraph (k)(1)(i) of this section as 
part of the termination notice issued under paragraph (g) of this 
section and, after 30 calendar days from the date of the notice, may 
impose the penalty if the agent, broker, or web-broker has not requested 
a reconsideration under paragraph (h) of this section. The proposed 
imposition of penalties under paragraph (k)(1)(ii) of this section will 
follow the process outlined under Sec.  155.285.
    (3) HHS may immediately suspend the agent's or broker's ability to 
transact information with the Exchange if HHS discovers circumstances 
that pose unacceptable risk to Exchange operations or Exchange 
information technology systems until the incident or breach is remedied 
or sufficiently mitigated to HHS' satisfaction.
    (l) Application to State Exchanges using a Federal platform. An 
agent, broker, or web-broker who enrolls qualified individuals, 
qualified employers, or qualified employees in coverage in a manner that 
constitutes enrollment through a State Exchange using the Federal 
platform, or assists individual market consumers with submission of 
applications for advance payments of the premium tax credit and cost-
sharing reductions through a State Exchange using the Federal platform 
must comply with all applicable Federally-facilitated Exchange standards 
in this section.
    (m) Web-broker agreement suspension, termination, and denial and 
information collection. (1) A web-broker's agreement executed under 
paragraph (d) of this section, may be suspended or terminated under 
paragraph (g) of this section, and a web-broker may be denied the right 
to enter into agreements with the Federally-facilitated Exchanges under 
paragraph (k)(1)(i) of this section, based on the actions of its 
officers, employees, contractors, or agents, whether or not the officer, 
employee, contractor, or agent is registered with the Exchange as an 
agent or broker.
    (2) A web-broker's agreement executed under paragraph (d) of this 
section may be suspended or terminated under paragraph (g) of this 
section, and a web-broker may be denied the right to enter into 
agreements with the Federally-facilitated Exchanges under paragraph 
(k)(1)(i) of this section, if it is under the common ownership or 
control or is an affiliated business of another web-broker that had its 
agreement suspended or terminated under paragraph (g) of this section.
    (3) The Exchange may collect information from a web-broker during 
its registration with the Exchange under paragraph (d)(1) of this 
section, or at another time on an annual basis, in a form and manner to 
be specified by HHS, sufficient to establish the identities of the 
individuals who comprise its corporate ownership and leadership and to 
ascertain any corporate or business relationships it has with other 
entities that may seek to register with the Federally-facilitated 
Exchange as web-brokers.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 15533, Mar. 11, 2013; 
78 FR 54134, Aug. 30, 2013; 79 FR 13837, Mar. 11, 2014; 81 FR 12338, 
Mar. 8, 2016; 81 FR 94176, Dec. 22, 2016; 84 FR 17563, Apr. 25, 2019; 85 
FR 37248, June 19, 2020]

    Editorial Note: At 78 FR 54134, Aug. 30, 2013, Sec.  155.220 was 
amended by revising (d)(3); however, the amendment could not be 
incorporated because there was no regulatory text provided in the 
amendment for (d)(3).



Sec.  155.221  Standards for direct enrollment entities and for
third-parties to perform audits of direct enrollment entities.

    (a) Direct enrollment entities. The Federally-facilitated Exchanges 
will permit the following entities to assist consumers with direct 
enrollment in QHPs offered through the Exchange in a manner that is 
considered to be through the Exchange, to the extent permitted by 
applicable State law:
    (1) QHP issuers that meet the applicable requirements in this 
section and Sec.  156.1230 of this subchapter; and
    (2) Web-brokers that meet the applicable requirements in this 
section and Sec.  155.220.

[[Page 280]]

    (b) Direct enrollment entity requirements. For the Federally-
facilitated Exchanges, a direct enrollment entity must:
    (1) Display and market QHPs and non-QHPs on separate website pages 
on its non-Exchange website;
    (2) Prominently display a standardized disclaimer in the form and 
manner provided by HHS;
    (3) Limit marketing of non-QHPs during the Exchange eligibility 
application and QHP plan selection process in a manner that minimizes 
the likelihood that consumers will be confused as to what products are 
available through the Exchange and what products are not;
    (4) Demonstrate operational readiness and compliance with applicable 
requirements prior to the direct enrollment entity's internet website 
being used to complete an Exchange eligibility application or a QHP 
selection; and
    (5) Comply with applicable Federal and State requirements.
    (c) Direct enrollment entity application assister requirements. For 
the Federally-facilitated Exchanges, to the extent permitted under state 
law, a direct enrollment entity may permit its direct enrollment entity 
application assisters, as defined at Sec.  155.20, to assist individuals 
in the individual market with applying for a determination or 
redetermination of eligibility for coverage through the Exchange and for 
insurance affordability programs, provided that such direct enrollment 
entity ensures that each of its direct enrollment entity application 
assisters meets the requirements in Sec.  155.415(b).
    (d) Federally-facilitated Exchange direct enrollment entity 
suspension. HHS may immediately suspend the direct enrollment entity's 
ability to transact information with the Exchange if HHS discovers 
circumstances that pose unacceptable risk to the accuracy of the 
Exchange's eligibility determinations, Exchange operations, or Exchange 
information technology systems until the incident or breach is remedied 
or sufficiently mitigated to HHS' satisfaction.
    (e) Third parties to perform audits of direct enrollment entities. A 
direct enrollment entity must engage an independent, third-party entity 
to conduct an initial and annual review to demonstrate the direct 
enrollment entity's operational readiness and compliance with applicable 
direct enrollment entity requirements in accordance with paragraph 
(b)(4) of this section prior to the direct enrollment entity's internet 
website being used to complete an Exchange eligibility application or a 
QHP selection. The third-party entity will be a downstream or delegated 
entity of the direct enrollment entity that participates or wishes to 
participate in direct enrollment.
    (f) Third-party auditor standards. A direct enrollment entity must 
satisfy the requirement to demonstrate operational readiness under 
paragraph (e) of this section by engaging a third-party entity that 
executes a written agreement with the direct enrollment entity under 
which the third-party entity agrees to comply with each of the following 
standards:
    (1) Has experience conducting audits or similar services, including 
experience with relevant privacy and security standards;
    (2) Adheres to HHS specifications for content, format, privacy, and 
security in the conduct of an operational readiness review, which 
includes ensuring that direct enrollment entities are in compliance with 
the applicable privacy and security standards and other applicable 
requirements;
    (3) Collects, stores, and shares with HHS all data related to the 
third-party entity's audit of direct enrollment entities in a manner, 
format, and frequency specified by HHS until 10 years from the date of 
creation, and complies with the privacy and security standards HHS 
adopts for direct enrollment entities as required in accordance with 
Sec.  155.260;
    (4) Discloses to HHS any financial relationships between the entity 
and individuals who own or are employed by a direct enrollment entity 
for which it is conducting an operational readiness review;
    (5) Complies with all applicable Federal and State requirements;
    (6) Ensures, on an annual basis, that appropriate staff successfully 
complete operational readiness review training

[[Page 281]]

as established by HHS prior to conducting audits under paragraph (e) of 
this section;
    (7) Permits access by the Secretary and the Office of the Inspector 
General or their designees in connection with their right to evaluate 
through audit, inspection, or other means, to the third-party entity's 
books, contracts, computers, or other electronic systems, relating to 
the third-party entity's audits of a direct enrollment entity's 
obligations in accordance with standards under paragraph (e) of this 
section until 10 years from the date of creation of a specific audit; 
and
    (8) Complies with other minimum business criteria as specified in 
guidance by HHS.
    (g) Multiple auditors. A direct enrollment entity may engage 
multiple third-party entities to conduct the audit under paragraph (e) 
of this section.
    (h) Application to State Exchanges using a Federal platform. A 
direct enrollment entity that enrolls qualified individuals in coverage 
in a manner that constitutes enrollment through a State Exchange using 
the Federal platform, or assists individual market consumers with 
submission of applications for advance payments of the premium tax 
credit and cost-sharing reductions through a State Exchange using a 
Federal platform must comply with all applicable Federally-facilitated 
Exchange standards in this section.

[83 FR 17061, Apr. 17, 2018, as amended at 84 FR 17566, Apr. 25, 2019]



Sec.  155.222  Standards for HHS-approved vendors of Federally-
acilitated Exchange training for agents and brokers.

    (a) Application for approval. (1) A vendor must be approved by HHS, 
in a form and manner to be determined by HHS, to have its training 
program recognized for agents and brokers assisting with or facilitating 
enrollment in individual market or SHOP coverage through the Federally-
facilitated Exchanges consistent with Sec.  155.220.
    (2) As part of the training program, the vendor must require agents 
and brokers to provide identifying information and successfully complete 
the required curriculum.
    (3) HHS will approve vendors on an annual basis for a given plan 
year, and each vendor must submit an application for each year that 
approval is sought.
    (b) Standards. To be approved by HHS and maintain its status as an 
approved vendor for plan year 2016 and future plan years, a vendor must 
meet each of the following standards:
    (1) Submit a complete and accurate application by the deadline 
established by HHS, which includes demonstration of prior experience 
with successfully conducting online training, as well as providing 
technical support to a large customer base.
    (2) Adhere to HHS specifications for content, format, and delivery 
of training, which includes offering continuing education units (CEUs) 
for at least five States in which a Federally-facilitated Exchange or 
State-Based Exchange using a Federal platform is operating.
    (3) Collect, store, and share with HHS training completion data from 
agent and broker users of the vendor's training in a manner, format, and 
frequency specified by HHS, and protect all data from agent and broker 
users of the vendor's training in accordance with applicable privacy and 
security requirements.
    (4) Execute an agreement with HHS, in a form and manner to be 
determined by HHS, which requires the vendor to comply with applicable 
HHS guidelines for implementing the training and interfacing with HHS 
data systems, and the use of all data collected.
    (5) Permit any individual who holds a valid State license or 
equivalent State authority to sell health insurance products to access 
the vendor's training.
    (6) Provide technical support to agent and broker users of the 
vendor's training as specified by HHS.
    (c) Approved list. A list of approved vendors will be published on 
an HHS Web site.
    (d) Monitoring. HHS may periodically monitor and audit vendors 
approved under this subpart, and their records related to the training 
functions described in this section, to ensure ongoing compliance with 
the standards in paragraph (b) of this section. If HHS

[[Page 282]]

determines that an HHS-approved vendor is not in compliance with the 
standards required in paragraph (b) of this section, the vendor may be 
removed from the approved list described in paragraph (c) of this 
section and may be required by HHS to cease performing the training 
functions described under this subpart.
    (e) Appeals. A vendor that is not approved by HHS after submitting 
the application described in paragraph (a) of this section, or an 
approved vendor whose agreement is revoked under paragraph (d) of this 
section, may appeal HHS's decision by notifying HHS in writing within 15 
days from receipt of the notification of not being approved and 
submitting additional documentation demonstrating how the vendor meets 
the standards in paragraph (b) of this section and (if applicable) the 
terms of its agreement with HHS. HHS will review the submitted 
documentation and make a final approval determination within 30 days 
from receipt of the additional documentation.

[80 FR 10865, Feb. 27, 2015, as amended at 81 FR 12340, Mar. 8, 2016]



Sec.  155.225  Certified application counselors.

    (a) General rule. The Exchange must have a certified application 
counselor program that complies with the requirements of this section.
    (b) Exchange designation of organizations. (1) The Exchange may 
designate an organization, including an organization designated as a 
Medicaid certified application counselor organization by a state 
Medicaid or CHIP agency, to certify its staff members or volunteers to 
act as certified application counselors who perform the duties and meet 
the standards and requirements for certified application counselors in 
this section if the organization--
    (i) Enters into an agreement with the Exchange to comply with the 
standards and requirements of this section including the standards 
specified in paragraphs (d)(3) through (d)(5) of this section; and
    (ii) Maintains a registration process and method to track the 
performance of certified application counselors.
    (iii) Provides data and information to the Exchange regarding the 
number and performance of its certified application counselors and 
regarding the consumer assistance provided by its certified application 
counselors, upon request, in the form and manner specified by the 
Exchange. Beginning for the third quarter of calendar year 2017, in a 
Federally-facilitated Exchange, organizations designated by the Exchange 
must submit quarterly reports that include, at a minimum, data regarding 
the number of individuals who have been certified by the organization; 
the total number of consumers who received application and enrollment 
assistance from the organization; and of that number, the number of 
consumers who received assistance in applying for and selecting a QHP, 
enrolling in a QHP, or applying for Medicaid or CHIP.
    (2) An Exchange may comply with paragraph (a) of this section either 
by--
    (i) Designating organizations to certify application counselors in 
compliance with paragraph (b)(1) of this section;
    (ii) Directly certifying individual staff members or volunteers of 
Exchange designated organizations to provide the duties specified in 
paragraph (c) of this section if the staff member or volunteer enters 
into an agreement with the Exchange to comply with the standards and 
requirements for certified application counselors in this section; or
    (iii) A combination of paragraphs (b)(2)(i) and (b)(2)(ii) of this 
section.
    (3) In a Federally-facilitated Exchange, no individual or entity 
shall be ineligible to operate as a certified application counselor or 
organization designated by the Exchange under paragraph (b) of this 
section solely because its principal place of business is outside of the 
Exchange service area.
    (c) Duties. Certified application counselors are certified to--
    (1) Provide information to individuals and employees about the full 
range of QHP options and insurance affordability programs for which they 
are eligible, which includes: providing fair, impartial, and accurate 
information that assists consumers with submitting the eligibility 
application; clarifying the distinctions among health coverage options, 
including

[[Page 283]]

QHPs; and helping consumers make informed decisions during the health 
coverage selection process;
    (2) Assist individuals and employees to apply for coverage in a QHP 
through the Exchange and for insurance affordability programs; and
    (3) Help to facilitate enrollment of eligible individuals in QHPs 
and insurance affordability programs.
    (d) Standards of certification. An organization designated by the 
Exchange to provide certified application counselor services, or an 
Exchange that chooses to certify individual staff members or volunteers 
directly under paragraph (b)(2)(ii) of this section, may certify a staff 
member or volunteer to perform the duties specified in paragraph (c) of 
this section only if the staff member or volunteer--
    (1) Completes Exchange approved training regarding QHP options, 
insurance affordability programs, eligibility, and benefits rules and 
regulations governing all insurance affordability programs operated in 
the state, as implemented in the state, and completes and achieves a 
passing score on all Exchange approved certification examinations, prior 
to functioning as a certified application counselor;
    (2) Discloses to the organization, or to the Exchange if directly 
certified by an Exchange, and potential applicants any relationships the 
certified application counselor or sponsoring agency has with QHPs or 
insurance affordability programs, or other potential conflicts of 
interest;
    (3) Complies with the Exchange's privacy and security standards 
adopted consistent with Sec.  155.260, and applicable authentication and 
data security standards;
    (4) Agrees to act in the best interest of the applicants assisted;
    (5) Either directly or through an appropriate referral to a 
Navigator or non-Navigator assistance personnel authorized under Sec.  
155.205(d) and (e) or Sec.  155.210, or to the Exchange call center 
authorized under Sec.  155.205(a), provides information in a manner that 
is accessible to individuals with disabilities, as defined by the 
Americans with Disabilities Act, as amended, 42 U.S.C. 12101 et seq. and 
section 504 of the Rehabilitation Act, as amended, 29 U.S.C. 794;
    (6) Enters into an agreement with the organization regarding 
compliance with the standards specified in paragraphs (d), (f), and (g) 
of this section;
    (7) Is recertified on at least an annual basis after successfully 
completing recertification training as required by the Exchange; and
    (8) Meets any licensing, certification, or other standards 
prescribed by the State or Exchange, if applicable, so long as such 
standards do not prevent the application of the provisions of title I of 
the Affordable Care Act. Standards that would prevent the application of 
the provisions of title I of the Affordable Care Act include but are not 
limited to the following:
    (i) Requirements that certified application counselors refer 
consumers to other entities not required to provide fair, accurate, and 
impartial information.
    (ii) Requirements that would prevent certified application 
counselors from providing services to all persons to whom they are 
required to provide assistance.
    (iii) Requirements that would prevent certified application 
counselors from providing advice regarding substantive benefits or 
comparative benefits of different health plans.
    (iv) Imposing standards that would, as applied or as implemented in 
a State, prevent the application of Federal requirements applicable to 
certified application counselors, to an organization designated by the 
Exchange under paragraph (b) of this section, or to the Exchange's 
implementation of the certified application counselor program.
    (e) Withdrawal of designation and certification. (1) The Exchange 
must establish procedures to withdraw designation from a particular 
organization it has designated under paragraph (b) of this section, when 
it finds noncompliance with the terms and conditions of the 
organization's agreement required by paragraph (b) of this section.
    (2) If an Exchange directly certifies organizations' individual 
certified application counselors, it must establish procedures to 
withdraw certification from individual certified application

[[Page 284]]

counselors when it finds noncompliance with the requirements of this 
section.
    (3) An organization designated by the Exchange under paragraph (b) 
of this section must establish procedures to withdraw certification from 
individual certified application counselors when it finds noncompliance 
with the requirements of this section.
    (f) Availability of information; authorization. An organization 
designated by the Exchange under paragraph (b) of this section, or, if 
applicable, an Exchange that certifies staff members or volunteers of 
organizations directly must establish procedures to ensure that 
applicants--
    (1) Are informed, prior to receiving assistance, of the functions 
and responsibilities of certified application counselors, including that 
certified application counselors are not acting as tax advisers or 
attorneys when providing assistance as certified application counselors 
and cannot provide tax or legal advice within their capacity as 
certified application counselors;
    (2) Provide authorization in a form and manner as determined by the 
Exchange prior to a certified application counselor obtaining access to 
an applicant's personally identifiable information, and that the 
organization or certified application counselor maintains a record of 
the authorization in a form and manner as determined by the Exchange. 
The Exchange must establish a reasonable retention period for 
maintaining these records. In Federally-facilitated Exchanges, this 
period is no less than six years, unless a different and longer 
retention period has already been provided under other applicable 
Federal law; and
    (3) May revoke at any time the authorization provided the certified 
application counselor, pursuant to paragraph (f)(2) of this section.
    (g) Fees, consideration, solicitation, and marketing. Organizations 
designated by the Exchange under paragraph (b) of this section and 
certified application counselors must not--
    (1) Impose any charge on applicants or enrollees for application or 
other assistance related to the Exchange;
    (2) Receive any consideration directly or indirectly from any health 
insurance issuer or issuer of stop-loss insurance in connection with the 
enrollment of any individuals in a QHP or a non-QHP. In a Federally-
facilitated Exchange, no health care provider shall be ineligible to 
operate as a certified application counselor or organization designated 
by the Exchange under paragraph (b) of this section solely because it 
receives consideration from a health insurance issuer for health care 
services provided;
    (3) Beginning November 15, 2014, if operating in a Federally-
facilitated Exchange, provide compensation to individual certified 
application counselors on a per-application, per-individual-assisted, or 
per-enrollment basis;
    (4) Provide to an applicant or potential enrollee gifts of any value 
as an inducement for enrollment. The value of gifts provided to 
applicants and potential enrollees for purposes other than as an 
inducement for enrollment must not exceed nominal value, either 
individually or in the aggregate, when provided to that individual 
during a single encounter. For purposes of this paragraph (g)(4), the 
term gifts includes gift items, gift cards, cash cards, cash, and 
promotional items that market or promote the products or services of a 
third party, but does not include the reimbursement of legitimate 
expenses incurred by a consumer in an effort to receive Exchange 
application assistance, such as travel or postage expenses;
    (5) Solicit 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 certified 
application counselor or designated organization and other applicable 
State and Federal laws are otherwise complied with. Outreach and 
education activities may be conducted by going door-to-door or through 
other unsolicited means of direct contact, including calling a consumer; 
or
    (6) Initiate any telephone call to a consumer using an automatic 
telephone dialing system or an artificial or prerecorded voice, except 
in cases

[[Page 285]]

where the individual certified application counselor or designated 
organization has a relationship with the consumer and so long as other 
applicable State and Federal laws are otherwise complied with.

[78 FR 42861, July 17, 2013, as amended at 79 FR 30345, May 27, 2014; 79 
FR 42986, July 24, 2014; 81 FR 12341, Mar. 8, 2016]



Sec.  155.227  Authorized representatives.

    (a) General rule. (1) The Exchange must permit an applicant or 
enrollee in the individual or small group market, subject to applicable 
privacy and security requirements, to designate an individual person or 
organization to act on his or her behalf in applying for an eligibility 
determination or redetermination, under subpart D, G, or H of this part, 
and in carrying out other ongoing communications with the Exchange.
    (2) Designation of an authorized representative must be in a written 
document signed by the applicant or enrollee, or through another legally 
binding format subject to applicable authentication and data security 
standards. If submitted, legal documentation of authority to act on 
behalf of an applicant or enrollee under State law, such as a court 
order establishing legal guardianship or a power of attorney, shall 
serve in the place of the applicant's or enrollee's signature.
    (3) The Exchange must ensure that the authorized representative 
agrees to maintain, or be legally bound to maintain, the confidentiality 
of any information regarding the applicant or enrollee provided by the 
Exchange.
    (4) The Exchange must ensure that the authorized representative is 
responsible for fulfilling all responsibilities encompassed within the 
scope of the authorized representation, as described in this section, to 
the same extent as the applicant or enrollee he or she represents.
    (5) The Exchange must provide information both to the applicant or 
enrollee, and to the authorized representative, regarding the powers and 
duties of authorized representatives.
    (b) Timing of designation. The Exchange must permit an applicant or 
enrollee to designate an authorized representative:
    (1) At the time of application; and
    (2) At other times and through methods as described in Sec.  
155.405(c)(2).
    (c) Duties. (1) The Exchange must permit an applicant or enrollee to 
authorize his or her representative to:
    (i) Sign an application on the applicant or enrollee's behalf;
    (ii) Submit an update or respond to a redetermination for the 
applicant or enrollee in accordance with Sec.  155.330 or Sec.  155.335;
    (iii) Receive copies of the applicant's or enrollee's notices and 
other communications from the Exchange; and
    (iv) Act on behalf of the applicant or enrollee in all other matters 
with the Exchange.
    (2) The Exchange may permit an applicant or enrollee to authorize a 
representative to perform fewer than all of the activities described in 
paragraph (c)(1) of this section, provided that the Exchange tracks the 
specific permissions for each authorized representative.
    (d) Duration. The Exchange must consider the designation of an 
authorized representative valid until:
    (1) The applicant or enrollee notifies the Exchange that the 
representative is no longer authorized to act on his or her behalf using 
one of the methods available for the submission of an application, as 
described in Sec.  155.405(c). The Exchange must notify the authorized 
representative of such change; or
    (2) The authorized representative informs the Exchange and the 
applicant or enrollee that he or she no longer is acting in such 
capacity. An authorized representative must notify the Exchange and the 
applicant or enrollee on whose behalf he or she is acting when the 
authorized representative no longer has legal authority to act on behalf 
of the applicant or enrollee.
    (e) Compliance with State and Federal law. The Exchange must require 
an authorized representative to comply with applicable state and federal 
laws concerning conflicts of interest and confidentiality of 
information.
    (f) Signature. For purposes of this section, designation of an 
authorized representative must be through a written document signed by 
the applicant or enrollee, or through another legally binding format, as 
described in Sec.  155.227(a)(2), and must be accepted

[[Page 286]]

through all of the modalities described in Sec.  155.405(c).

[78 FR 42313, July 15, 2013]



Sec.  155.230  General standards for Exchange notices.

    (a) General requirement. Any notice required to be sent by the 
Exchange to individuals or employers must be written and include:
    (1) An explanation of the action reflected in the notice, including 
the effective date of the action.
    (2) Any factual findings relevant to the action.
    (3) Citations to, or identification of, the relevant regulations 
supporting the action.
    (4) Contact information for available customer service resources.
    (5) An explanation of appeal rights, if applicable.
    (b) Accessibility and readability requirements. All applications, 
forms, and notices, including the single, streamlined application 
described in Sec.  155.405 and notice of annual redetermination 
described in Sec.  155.335(c), must conform to the standards outlined in 
Sec.  155.205(c).
    (c) Re-evaluation of appropriateness and usability. The Exchange 
must re-evaluate the appropriateness and usability of applications, 
forms, and notices.
    (d) Electronic notices. (1) The individual market Exchange must 
provide required notices either through standard mail, or if an 
individual or employer elects, electronically, provided that the 
requirements for electronic notices in 42 CFR 435.918 are met, except 
that the individual market Exchange is not required to implement the 
process specified in 42 CFR 435.918(b)(1) for eligibility determinations 
for enrollment in a QHP through the Exchange and insurance affordability 
programs that are effective before January 1, 2015.
    (2) Unless otherwise required by Federal or State law, the SHOP must 
provide required notices electronically or, if an employer or employee 
elects, through standard mail. If notices are provided electronically, 
the SHOP must comply with the requirements for electronic notices in 42 
CFR 435.918(b)(2) through (5) for the employer or employee.
    (3) In the event that an individual market Exchange or SHOP is 
unable to send select required notices electronically due to technical 
limitations, it may instead send these notices through standard mail, 
even if an election has been made to receive such notices 
electronically.

[77 FR 11718, Feb. 27, 2012, as amended at 78 FR 42314, July 15, 2013; 
81 FR 94177, Dec. 22, 2016]



Sec.  155.240  Payment of premiums.

    (a) Payment by individuals. The Exchange must allow a qualified 
individual to pay any applicable premium owed by such individual 
directly to the QHP issuer.
    (b) Payment by tribes, tribal organizations, and urban Indian 
organizations. The Exchange may permit Indian tribes, tribal 
organizations and urban Indian organizations to pay aggregated QHP 
premiums on behalf of qualified individuals, including aggregated 
payment, subject to terms and conditions determined by the Exchange.
    (c) Payment facilitation. The Exchange may establish a process to 
facilitate through electronic means the collection and payment of 
premiums to QHP issuers.
    (d) Required standards. In conducting an electronic transaction with 
a QHP issuer that involves the payment of premiums or an electronic 
funds transfer, the Exchange must comply with the privacy and security 
standards adopted in accordance with Sec.  155.260 and use the standards 
and operating rules referenced in Sec.  155.270.
    (e) Premium calculation. The Exchange may establish one or more 
standard processes for premium calculation.
    (1) For a Federally-facilitated Exchange, the premium for coverage 
lasting less than one month must equal the product of--
    (i) The premium for one month of coverage divided by the number of 
days in the month; and
    (ii) The number of days for which coverage is being provided in the 
month described in paragraph (e)(1)(i) of this section.
    (2) [Reserved]

[77 FR 18444, Mar. 27, 2012, as amended at 79 FR 30346, May 27, 2014]

[[Page 287]]



Sec.  155.260  Privacy and security of personally identifiable information.

    (a) Creation, collection, use and disclosure. (1) Where the Exchange 
creates or collects personally identifiable information for the purposes 
of determining eligibility for enrollment in a qualified health plan; 
determining eligibility for other insurance affordability programs, as 
defined in Sec.  155.300; or determining eligibility for exemptions from 
the individual shared responsibility provisions in section 5000A of the 
Code, the Exchange may only use or disclose such personally identifiable 
information to the extent such information is necessary:
    (i) For the Exchange to carry out the functions described in Sec.  
155.200;
    (ii) For the Exchange to carry out other functions not described in 
paragraph (a)(1)(i) of this section, which the Secretary determines to 
be in compliance with section 1411(g)(2)(A) of the Affordable Care Act 
and for which an individual provides consent for his or her information 
to be used or disclosed; or
    (iii) For the Exchange to carry out other functions not described in 
paragraphs (a)(1)(i) and (ii) of this section, for which an individual 
provides consent for his or her information to be used or disclosed, and 
which the Secretary determines are in compliance with section 
1411(g)(2)(A) of the Affordable Care Act under the following substantive 
and procedural requirements:
    (A) Substantive requirements. The Secretary may approve other uses 
and disclosures of personally identifiable information created or 
collected as described in paragraph (a)(1) of this section that are not 
described in paragraphs (a)(1)(i) or (ii) of this section, provided that 
HHS determines that the information will be used only for the purposes 
of and to the extent necessary in ensuring the efficient operation of 
the Exchange consistent with section 1411(g)(2)(A) of the Affordable 
Care Act, and that the uses and disclosures are also permissible under 
relevant law and policy.
    (B) Procedural requirements for approval of a use or disclosure of 
personally identifiable information. To seek approval for a use or 
disclosure of personally identifiable information created or collected 
as described in paragraph (a)(1) of this section that is not described 
in paragraphs (a)(1)(i) or (ii) of this section, the Exchange must 
submit the following information to HHS:
    (1) Identity of the Exchange and appropriate contact persons;
    (2) Detailed description of the proposed use or disclosure, which 
must include, but not necessarily be limited to, a listing or 
description of the specific information to be used or disclosed and an 
identification of the persons or entities that may access or receive the 
information;
    (3) Description of how the use or disclosure will ensure the 
efficient operation of the Exchange consistent with section 
1411(g)(2)(A) of the Affordable Care Act; and
    (4) Description of how the information to be used or disclosed will 
be protected in compliance with privacy and security standards that meet 
the requirements of this section or other relevant law, as applicable.
    (2) The Exchange may not create, collect, use, or disclose 
personally identifiable information unless the creation, collection, 
use, or disclosure is consistent with this section.
    (3) The Exchange must establish and implement privacy and security 
standards that are consistent with the following principles:
    (i) Individual access. Individuals should be provided with a simple 
and timely means to access and obtain their personally identifiable 
information in a readable form and format;
    (ii) Correction. Individuals should be provided with a timely means 
to dispute the accuracy or integrity of their personally identifiable 
information and to have erroneous information corrected or to have a 
dispute documented if their requests are denied;
    (iii) Openness and transparency. There should be openness and 
transparency about policies, procedures, and technologies that directly 
affect individuals and/or their personally identifiable information;
    (iv) Individual choice. Individuals should be provided a reasonable 
opportunity and capability to make informed decisions about the 
collection, use, and disclosure of their personally identifiable 
information;

[[Page 288]]

    (v) Collection, use, and disclosure limitations. Personally 
identifiable information should be created, collected, used, and/or 
disclosed only to the extent necessary to accomplish a specified 
purpose(s) and never to discriminate inappropriately;
    (vi) Data quality and integrity. Persons and entities should take 
reasonable steps to ensure that personally identifiable information is 
complete, accurate, and up-to-date to the extent necessary for the 
person's or entity's intended purposes and has not been altered or 
destroyed in an unauthorized manner;
    (vii) Safeguards. Personally identifiable information should be 
protected with reasonable operational, administrative, technical, and 
physical safeguards to ensure its confidentiality, integrity, and 
availability and to prevent unauthorized or inappropriate access, use, 
or disclosure; and,
    (viii) Accountability. These principles should be implemented, and 
adherence assured, through appropriate monitoring and other means and 
methods should be in place to report and mitigate non-adherence and 
breaches.
    (4) For the purposes of implementing the principle described in 
paragraph (a)(3)(vii) of this section, the Exchange must establish and 
implement operational, technical, administrative and physical safeguards 
that are consistent with any applicable laws (including this section) to 
ensure--
    (i) The confidentiality, integrity, and availability of personally 
identifiable information created, collected, used, and/or disclosed by 
the Exchange;
    (ii) Personally identifiable information is only used by or 
disclosed to those authorized to receive or view it;
    (iii) Return information, as such term is defined by section 
6103(b)(2) of the Code, is kept confidential under section 6103 of the 
Code;
    (iv) Personally identifiable information is protected against any 
reasonably anticipated threats or hazards to the confidentiality, 
integrity, and availability of such information;
    (v) Personally identifiable information is protected against any 
reasonably anticipated uses or disclosures of such information that are 
not permitted or required by law; and
    (vi) Personally identifiable information is securely destroyed or 
disposed of in an appropriate and reasonable manner and in accordance 
with retention schedules;
    (5) The Exchange must monitor, periodically assess, and update the 
security controls and related system risks to ensure the continued 
effectiveness of those controls.
    (6) The Exchange must develop and utilize secure electronic 
interfaces when sharing personally identifiable information 
electronically.
    (b) Application to non-Exchange entities--(1) Non-Exchange entities. 
A non-Exchange entity is any individual or entity that:
    (i) Gains access to personally identifiable information submitted to 
an Exchange; or
    (ii) Collects, uses, or discloses personally identifiable 
information gathered directly from applicants, qualified individuals, or 
enrollees while that individual or entity is performing functions agreed 
to with the Exchange.
    (2) Prior to any person or entity becoming a non-Exchange entity, 
Exchanges must execute with the person or entity a contract or agreement 
that includes:
    (i) A description of the functions to be performed by the non-
Exchange entity;
    (ii) A provision(s) binding the non-Exchange entity to comply with 
the privacy and security standards and obligations adopted in accordance 
with paragraph (b)(3) of this section, and specifically listing or 
incorporating those privacy and security standards and obligations;
    (iii) A provision requiring the non-Exchange entity to monitor, 
periodically assess, and update its security controls and related system 
risks to ensure the continued effectiveness of those controls in 
accordance with paragraph (a)(5) of this section;
    (iv) A provision requiring the non-Exchange entity to inform the 
Exchange of any change in its administrative, technical, or operational 
environments defined as material within the contract; and
    (v) A provision that requires the non-Exchange entity to bind any 
downstream entities to the same privacy

[[Page 289]]

and security standards and obligations to which the non-Exchange entity 
has agreed in its contract or agreement with the Exchange.
    (3) When collection, use or disclosure is not otherwise required by 
law, the privacy and security standards to which an Exchange binds non-
Exchange entities must:
    (i) Be consistent with the principles and requirements listed in 
paragraphs (a)(1) through (6) of this section, including being at least 
as protective as the standards the Exchange has established and 
implemented for itself in compliance with paragraph (a)(3) of this 
section;
    (ii) Comply with the requirements of paragraphs (c), (d), (f), and 
(g) of this section; and
    (iii) Take into specific consideration:
    (A) The environment in which the non-Exchange entity is operating;
    (B) Whether the standards are relevant and applicable to the non-
Exchange entity's duties and activities in connection with the Exchange; 
and
    (C) Any existing legal requirements to which the non-Exchange entity 
is bound in relation to its administrative, technical, and operational 
controls and practices, including but not limited to, its existing data 
handling and information technology processes and protocols.
    (c) Workforce compliance. The Exchange must ensure its workforce 
complies with the policies and procedures developed and implemented by 
the Exchange to comply with this section.
    (d) Written policies and procedures. Policies and procedures 
regarding the creation collection, use, and disclosure of personally 
identifiable information must, at minimum:
    (1) Be in writing, and available to the Secretary of HHS upon 
request; and
    (2) Identify applicable law governing collection, use, and 
disclosure of personally identifiable information.
    (e) Data sharing. Data matching and sharing arrangements that 
facilitate the sharing of personally identifiable information between 
the Exchange and agencies administering Medicaid, CHIP or the BHP for 
the exchange of eligibility information must:
    (1) Meet any applicable requirements described in this section;
    (2) Meet any applicable requirements described in section 1413(c)(1) 
and (c)(2) of the Affordable Care Act;
    (3) Be equal to or more stringent than the requirements for Medicaid 
programs under section 1942 of the Act; and
    (4) For those matching agreements that meet the definition of 
``matching program'' under 5 U.S.C. 552a(a)(8), comply with 5 U.S.C. 
552a(o).
    (f) Compliance with the Code. Return information, as defined in 
section 6103(b)(2) of the Code, must be kept confidential and disclosed, 
used, and maintained only in accordance with section 6103 of the Code.
    (g) Improper use and disclosure of information. Any person who 
knowingly and willfully uses or discloses information in violation of 
section 1411(g) of the Affordable Care Act will be subject to a CMP of 
not more than $25,000 as adjusted annually under 45 CFR part 102 per 
person or entity, per use or disclosure, consistent with the bases and 
process for imposing civil penalties specified at Sec.  155.285, in 
addition to other penalties that may be prescribed by law.

[77 FR 18444, Mar. 27, 2012, as amended at 77 FR 31515, May 29, 2012; 79 
FR 13837, Mar. 11, 2014; 79 FR 30346, May 27, 2014; 81 FR 12341, Mar. 8, 
2016; 81 FR 61581, Sept. 6, 2016]



Sec.  155.270  Use of standards and protocols for electronic transactions.

    (a) HIPAA administrative simplification. To the extent that the 
Exchange performs electronic transactions with a covered entity, the 
Exchange must use standards, implementation specifications, operating 
rules, and code sets that are adopted by the Secretary in 45 CFR parts 
160 and 162 or that are otherwise approved by HHS.
    (b) HIT enrollment standards and protocols. The Exchange must 
incorporate interoperable and secure standards and protocols developed 
by the Secretary in accordance with section 3021 of the PHS Act. Such 
standards and protocols must be incorporated within Exchange information 
technology systems.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 54135, Aug. 30, 2013]

[[Page 290]]



Sec.  155.280  Oversight and monitoring of privacy and security
requirements.

    (a) General. HHS will oversee and monitor the Federally-facilitated 
Exchanges, State-based Exchanges on the Federal platform, and non-
Exchange entities required to comply with the privacy and security 
standards established and implemented by a Federally-facilitated 
Exchange pursuant to Sec.  155.260 for compliance with those standards. 
HHS will oversee and monitor State Exchanges for compliance with the 
standards State Exchanges establish and implement pursuant to Sec.  
155.260. State Exchanges will oversee and monitor non-Exchange entities 
required to comply with the privacy and security standards established 
and implemented by a State Exchange in accordance to Sec.  155.260.
    (b) Audits and investigations. HHS may conduct oversight activities 
that include but are not limited to the following: audits, 
investigations, inspections, and any reasonable activities necessary for 
appropriate oversight of compliance with the Exchange privacy and 
security standards. HHS may also pursue civil, criminal or 
administrative proceedings or actions as determined necessary.

[78 FR 54135, Aug. 30, 2013, as amended at 81 FR 12341, Mar. 8, 2016]



Sec.  155.285  Bases and process for imposing civil penalties for
provision of false or fraudulent information to an Exchange or improper
use or disclosure of information.

    (a) Grounds for imposing civil money penalties. (1) HHS may impose 
civil money penalties on any person, as defined in paragraph (a)(2) of 
this section, if, based on credible evidence, HHS reasonably determines 
that a person has engaged in one or more of the following actions:
    (i) Failure to provide correct information under section 1411(b) of 
the Affordable Care Act where such failure is attributable to negligence 
or disregard of any rules or regulations of the Secretary with 
negligence and disregard defined as they are in section 6662 of the 
Internal Revenue Code of 1986:
    (A) ``Negligence'' includes any failure to make a reasonable attempt 
to provide accurate, complete, and comprehensive information; and
    (B) ``Disregard'' includes any careless, reckless, or intentional 
disregard for any rules or regulations of the Secretary.
    (ii) Knowing and willful provision of false or fraudulent 
information required under section 1411(b) of the Affordable Care Act, 
where knowing and willful means the intentional provision of information 
that the person knows to be false or fraudulent; or
    (iii) Knowing and willful use or disclosure of information in 
violation of section 1411(g) of the Affordable Care Act, where knowing 
and willful means the intentional use or disclosure of information in 
violation of section 1411(g). Such violations would include, but not be 
limited to, the following:
    (A) Any use or disclosure performed which violates relevant privacy 
and security standards established by the Exchange pursuant to Sec.  
155.260;
    (B) Any other use or disclosure which has not been determined by the 
Secretary to be in compliance with section 1411(g)(2)(A) of the 
Affordable Care Act pursuant to Sec.  155.260(a); and
    (C) Any other use or disclosure which is not necessary to carry out 
a function described in a contract with a non-Exchange entity executed 
pursuant to Sec.  155.260(b)(2).
    (2) For purposes of this section, the term ``person'' is defined to 
include, but is not limited to, all individuals; corporations; 
Exchanges; Medicaid and CHIP agencies; other entities gaining access to 
personally identifiable information submitted to an Exchange to carry 
out additional functions which the Secretary has determined ensure the 
efficient operation of the Exchange pursuant to Sec.  155.260(a)(1); and 
non-Exchange entities as defined in Sec.  155.260(b) which includes 
agents, brokers, Web-brokers, QHP issuers, Navigators, non-Navigator 
assistance personnel, certified application counselors, in-person 
assistors, and other third party contractors.
    (b) Factors in determining the amount of civil money penalties 
imposed. In determining the amount of civil money penalties, HHS may 
take into account factors which include, but are not limited to, the 
following:

[[Page 291]]

    (1) The nature and circumstances of the conduct including, but not 
limited to:
    (i) The number of violations;
    (ii) The severity of the violations;
    (iii) The person's history with the Exchange including any prior 
violations that would indicate whether the violation is an isolated 
occurrence or represents a pattern of behavior;
    (iv) The length of time of the violation;
    (v) The number of individuals affected or potentially affected;
    (vi) The extent to which the person received compensation or other 
consideration associated with the violation;
    (vii) Any documentation provided in any complaint or other 
information, as well as any additional information provided by the 
individual to refute performing the violation; and
    (viii) Whether other remedies or penalties have been imposed for the 
same conduct or occurrence.
    (2) The nature of the harm resulting from, or reasonably expected to 
result from, the violation, including but not limited to:
    (i) Whether the violation resulted in actual or potential financial 
harm;
    (ii) Whether there was actual or potential harm to an individual's 
reputation;
    (iii) Whether the violation hindered or could have hindered an 
individual's ability to obtain health insurance coverage;
    (iv) [Reserved]
    (v) The actual or potential impact of the provision of false or 
fraudulent information or of the improper use or disclosure of the 
information; and
    (vi) Whether any person received a more favorable eligibility 
determination for enrollment in a QHP or insurance affordability 
program, such as greater advance payment of the premium tax credits or 
cost-sharing reductions than he or she would be eligible for if the 
correct information had been provided.
    (3) No penalty will be imposed under paragraph (a)(1)(i) of this 
section if HHS determines that there was a reasonable cause for the 
failure to provide correct information required under section 1411(b) of 
the Affordable Care Act and that the person acted in good faith.
    (c) Maximum penalty. The amount of a civil money penalty will be 
determined by HHS in accordance with paragraph (b) of this section.
    (1) The following provisions provide maximum penalties for a single 
``plan year,'' where ``plan year'' has the same meaning as at Sec.  
155.20:
    (i) Any person who fails to provide correct information as specified 
in paragraph (a)(1)(i) of this section may be subject to a maximum civil 
money penalty of $25,000 as adjusted annually under 45 CFR part 102 for 
each application, as defined at paragraph (c)(1)(iii) of this section, 
pursuant to which a person fails to provide correct information.
    (ii) Any person who knowingly and willfully provides false 
information as specified in paragraph (a)(1)(ii) of this section may be 
subject to a maximum civil money penalty of $250,000 as adjusted 
annually under 45 CFR part 102 for each application, as defined at 
paragraph (c)(1)(iii) of this section, on which a person knowingly and 
willfully provides false information.
    (iii) For the purposes of this subsection, ``application'' is 
defined as a submission of information, whether through an online 
portal, over the telephone through a call center, or through a paper 
submission process, in which the information is provided in relation to 
an eligibility determination; an eligibility redetermination based on a 
change in an individual's circumstances; or an annual eligibility 
redetermination for any of the following:
    (A) Enrollment in a qualified health plan;
    (B) Premium tax credits or cost sharing reductions; or
    (C) An exemption from the individual shared responsibility payment.
    (2) Any person who knowingly or willfully uses or discloses 
information as specified in paragraph (a)(1)(iii) of this section may be 
subject to the following civil money penalty:
    (i) A civil money penalty for each use or disclosure described in 
paragraph (a)(1)(iii) of this section of not more than $25,000 as 
adjusted annually under 45 CFR part 102 per use or disclosure.
    (ii) For purposes of paragraph (c) of this section, a use or 
disclosure includes one separate use or disclosure of

[[Page 292]]

a single individual's personally identifiable information where the 
person against whom a civil money penalty may be imposed has made the 
use or disclosure.
    (3) These penalties may be imposed in addition to any other 
penalties that may be prescribed by law.
    (d) Notice of intent to issue civil money penalty. If HHS intends to 
impose a civil money penalty in accordance with this part, HHS will send 
a written notice of such intent to the person against whom it intends to 
impose a civil money penalty.
    (1) This written notice will be either hand delivered, sent by 
certified mail, return receipt requested, or sent by overnight delivery 
service with signature upon delivery required. The written notice must 
include the following elements:
    (i) A description of the findings of fact regarding the violations 
with respect to which the civil money penalty is proposed;
    (ii) The basis and reasons why the findings of fact subject the 
person to a penalty;
    (iii) Any circumstances described in paragraph (b) of this section 
that were considered in determining the amount of the proposed penalty;
    (iv) The amount of the proposed penalty;
    (v) An explanation of the person's right to a hearing under any 
applicable administrative hearing process;
    (vi) A statement that failure to request a hearing within 60 
calendar days after the date of issuance printed on the notice permits 
the assessment of the proposed penalty; and
    (vii) Information explaining how to file a request for a hearing and 
the address to which the hearing request must be sent.
    (2) The person may request a hearing before an ALJ on the proposed 
penalty by filing a request in accordance with the procedure to file an 
appeal specified in paragraph (f) of this section.
    (e) Failure to request a hearing. If the person does not request a 
hearing within 60 calendar days of the date of issuance printed on the 
notice described in paragraph (d) of this section, HHS may impose the 
proposed civil money penalty.
    (1) HHS will notify the person in writing of any penalty that has 
been imposed, the means by which the person may satisfy the penalty, and 
the date on which the penalty is due.
    (2) A person has no right to appeal a penalty with respect to which 
the person has not timely requested a hearing in accordance with 
paragraph (d) of this section.
    (f) Appeal of proposed penalty. Subject to paragraph (e)(2) of this 
section, any person against whom HHS proposed to impose a civil money 
penalty may appeal that penalty in accordance with the rules and 
procedures outlined at 45 CFR part 150, subpart D, excluding Sec. Sec.  
150.461, 150.463, and 150.465.
    (g) Enforcement authority--(1) HHS. HHS may impose civil money 
penalties up to the maximum amounts specified in paragraph (d) of this 
section for any of the violations described in paragraph (a) of this 
section.
    (2) OIG. In accordance with the rules and procedures of 42 CFR part 
1003, and in place of imposition of penalties by CMS, the OIG may impose 
civil money penalties for violations described in paragraph (a)(1)(ii) 
of this section.
    (h) Settlement authority. Nothing in this section limits the 
authority of HHS to settle any issue or case described in the notice 
furnished in accordance with Sec.  155.285(d) or to compromise on any 
penalty provided for in this section.
    (i) Limitations. No action under this section will be entertained 
unless commenced, in accordance with Sec.  155.285(d), within 6 years 
from the date on which the violation occurred.

[79 FR 30346, May 27, 2014, as amended at 81 FR 61581, Sept. 6, 2016]



   Subpart D_Exchange Functions in the Individual Market: Eligibility 
 Determinations for Exchange Participation and Insurance Affordability 
                                Programs



Sec.  155.300  Definitions and general standards for eligibility
determinations.

    (a) Definitions. In addition to those definitions in Sec.  155.20, 
for purposes of

[[Page 293]]

this subpart, the following terms have the following meaning:
    Applicable Children's Health Insurance Program (CHIP) MAGI-based 
income standard means the applicable income standard as defined at 42 
CFR 457.310(b)(1), as applied under the State plan adopted in accordance 
with title XXI of the Act, or waiver of such plan and as certified by 
the State CHIP Agency in accordance with 42 CFR 457.348(d), for 
determining eligibility for child health assistance and enrollment in a 
separate child health program.
    Applicable Medicaid modified adjusted gross income (MAGI)-based 
income standard has the same meaning as ``applicable modified adjusted 
gross income standard,'' as defined at 42 CFR 435.911(b), as applied 
under the State plan adopted in accordance with title XIX of the Act, or 
waiver of such plan, and as certified by the State Medicaid agency in 
accordance with 42 CFR 435.1200(b)(2) for determining eligibility for 
Medicaid.
    Federal poverty level or FPL means the most recently published 
Federal poverty level, updated periodically in the Federal Register by 
the Secretary of Health and Human Services under the authority of 42 
U.S.C. 9902(2), as of the first day of the annual open enrollment period 
for coverage in a QHP through the Exchange, as specified in Sec.  
155.410.
    Indian means any individual as defined in section 4(d) of the Indian 
Self-Determination and Education Assistance Act (Pub. L. 93-638).
    Insurance affordability program has the same meaning as ``insurance 
affordability program,'' as specified in 42 CFR 435.4.
    MAGI-based income has the same meaning as it does in 42 CFR 
435.603(e).
    Minimum value when used to describe coverage in an eligible 
employer-sponsored plan, means that the employer-sponsored plan meets 
the standards for coverage of the total allowed costs of benefits set 
forth in Sec.  156.145.
    Modified Adjusted Gross Income (MAGI) has the same meaning as it 
does in 26 CFR 1.36B-1(e)(2).
    Non-citizen means an individual who is not a citizen or national of 
the United States, in accordance with section 101(a)(3) of the 
Immigration and Nationality Act.
    Qualifying coverage in an eligible employer-sponsored plan means 
coverage in an eligible employer-sponsored plan that meets the 
affordability and minimum value standards specified in 26 CFR 1.36B-
2(c)(3).
    State CHIP Agency means the agency that administers a separate child 
health program established by the State under title XXI of the Act in 
accordance with implementing regulations at 42 CFR 457.
    State Medicaid Agency means the agency established or designated by 
the State under title XIX of the Act that administers the Medicaid 
program in accordance with implementing regulations at 42 CFR parts 430 
through 456.
    Tax dependent has the same meaning as the term dependent under 
section 152 of the Code.
    Tax filer means an individual, or a married couple, who indicates 
that he, she or they expects--
    (1) To file an income tax return for the benefit year, in accordance 
with 26 U.S.C. 6011, 6012, and implementing regulations;
    (2) If married (within the meaning of 26 CFR 1.7703-1), to file a 
joint tax return for the benefit year;
    (3) That no other taxpayer will be able to claim him, her or them as 
a tax dependent for the benefit year; and
    (4) That he, she, or they expects to claim a personal exemption 
deduction under section 151 of the Code on his or her tax return for one 
or more applicants, who may or may not include himself or herself and 
his or her spouse.
    (b) Medicaid and CHIP. In general, references to Medicaid and CHIP 
regulations in this subpart refer to those regulations as implemented in 
accordance with rules and procedures which are the same as those applied 
by the State Medicaid or State CHIP agency or approved by such agency in 
the agreement described in Sec.  155.345(a).
    (c) Attestation. (1) Except as specified in paragraph (c)(2) of this 
section, for the purposes of this subpart, an attestation may be made by 
the application filer.

[[Page 294]]

    (2) The attestations specified in Sec. Sec.  155.310(d)(2)(ii) and 
155.315(f)(4)(ii) must be provided by the tax filer.
    (d) Reasonably compatible. For purposes of this subpart, the 
Exchange must consider information obtained through electronic data 
sources, other information provided by the applicant, or other 
information in the records of the Exchange to be reasonably compatible 
with an applicant's attestation if the difference or discrepancy does 
not impact the eligibility of the applicant, including the amount of 
advance payments of the premium tax credit or category of cost-sharing 
reductions.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42314, July 15, 2013]



Sec.  155.302  Options for conducting eligibility determinations.

    (a) Options for conducting eligibility determinations. The Exchange 
may satisfy the requirements of this subpart--
    (1) Directly, through contracting arrangements in accordance with 
Sec.  155.110(a), or as a State-based Exchange on the Federal platform 
through a Federal platform agreement under which HHS carries out 
eligibility determinations and other requirements contained within this 
subpart; or
    (2) Through a combination of the approach described in paragraph 
(a)(1) of this section and one or both of the options described in 
paragraph (b) or (c) of this section, subject to the standards in 
paragraph (d) of this section.
    (b) Medicaid and CHIP. Notwithstanding the requirements of this 
subpart, the Exchange may conduct an assessment of eligibility for 
Medicaid and CHIP, rather than an eligibility determination for Medicaid 
and CHIP, provided that--
    (1) The Exchange makes such an assessment based on the applicable 
Medicaid and CHIP MAGI-based income standards and citizenship and 
immigration status, using verification rules and procedures consistent 
with 42 CFR parts 435 and 457, without regard to how such standards are 
implemented by the State Medicaid and CHIP agencies.
    (2) Notices and other activities required in connection with an 
eligibility determination for Medicaid or CHIP are performed by the 
Exchange consistent with the standards identified in this subpart or the 
State Medicaid or CHIP agency consistent with applicable law.
    (3) Applicants found potentially eligible for Medicaid or CHIP. When 
the Exchange assesses an applicant as potentially eligible for Medicaid 
or CHIP consistent with the standards in paragraph (b)(1) of this 
section, the Exchange transmits all information provided as a part of 
the application, update, or renewal that initiated the assessment, and 
any information obtained or verified by the Exchange to the State 
Medicaid agency or CHIP agency via secure electronic interface, promptly 
and without undue delay.
    (4) Applicants not found potentially eligible for Medicaid and CHIP. 
(i) If the Exchange conducts an assessment in accordance with paragraph 
(b) of this section and finds that an applicant is not potentially 
eligible for Medicaid or CHIP based on the applicable Medicaid and CHIP 
MAGI-based income standards, the Exchange must consider the applicant as 
ineligible for Medicaid and CHIP for purposes of determining eligibility 
for advance payments of the premium tax credit and cost-sharing 
reductions and must notify such applicant, and provide him or her with 
the opportunity to--
    (A) Withdraw his or her application for Medicaid and CHIP, unless 
the Exchange has assessed the applicant as potentially eligible for 
Medicaid based on factors not otherwise considered in this subpart, in 
accordance with Sec.  155.345(b), and provided that the application will 
not be considered withdrawn if he or she appeals his or her eligibility 
determination for advance payments of the premium tax credit or cost-
sharing reductions and the appeals entity described in Sec.  155.500(a) 
finds that the individual is potentially eligible for Medicaid or CHIP; 
or
    (B) Request a full determination of eligibility for Medicaid and 
CHIP by the applicable State Medicaid and CHIP agencies.
    (ii) To the extent that an applicant described in paragraph 
(b)(4)(i) of this section requests a full determination of eligibility 
for Medicaid and CHIP, the Exchange must--

[[Page 295]]

    (A) Transmit all information provided as a part of the application, 
update, or renewal that initiated the assessment, and any information 
obtained or verified by the Exchange to the State Medicaid agency and 
CHIP agency via secure electronic interface, promptly and without undue 
delay; and
    (B) Consider such an applicant as ineligible for Medicaid and CHIP 
for purposes of determining eligibility for advance payments of the 
premium tax credit and cost-sharing reductions until the State Medicaid 
or CHIP agency notifies the Exchange that the applicant is eligible for 
Medicaid or CHIP.
    (5) The Exchange and the Exchange appeals entity adheres to the 
eligibility determination or appeals decision for Medicaid or CHIP made 
by the State Medicaid or CHIP agency, or the appeals entity for such 
agency.
    (6) The Exchange and the State Medicaid and CHIP agencies enter into 
an agreement specifying their respective responsibilities in connection 
with eligibility determinations for Medicaid and CHIP, and provide a 
copy of such agreement to HHS upon request.
    (c) Advance payments of the premium tax credit and cost-sharing 
reductions. Notwithstanding the requirements of this subpart, the 
Exchange may implement a determination of eligibility for advance 
payments of the premium tax credit and cost-sharing reductions made by 
HHS, provided that--
    (1) Verifications, notices, and other activities required in 
connection with an eligibility determination for advance payments of the 
premium tax credit and cost-sharing reductions are performed by the 
Exchange in accordance with the standards identified in this subpart or 
by HHS in accordance with the agreement described in paragraph (c)(4) of 
this section;
    (2) The Exchange transmits all information provided as a part of the 
application, update, or renewal that initiated the eligibility 
determination, and any information obtained or verified by the Exchange, 
to HHS via secure electronic interface, promptly and without undue 
delay;
    (3) The Exchange adheres to the eligibility determination for 
advance payments of the premium tax credit and cost-sharing reductions 
made by HHS; and
    (4) The Exchange and HHS enter into an agreement specifying their 
respective responsibilities in connection with eligibility 
determinations for advance payments of the premium tax credit and cost-
sharing reductions.
    (d) Standards. To the extent that assessments of eligibility for 
Medicaid and CHIP based on MAGI or eligibility determinations for 
advance payments of the premium tax credit and cost-sharing reductions 
are made in accordance with paragraphs (b) or (c) of this section, the 
Exchange must ensure that--
    (1) Eligibility processes for all insurance affordability programs 
are streamlined and coordinated across HHS, the Exchange, the State 
Medicaid agency, and the State CHIP agency, as applicable;
    (2) Such arrangement does not increase administrative costs and 
burdens on applicants, enrollees, beneficiaries, or application filers, 
or increase delay; and
    (3) Applicable requirements under 45 CFR 155.260, 155.270, and 
155.315(i), and section 6103 of the Code for the confidentiality, 
disclosure, maintenance, and use of information are met.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42314, July 15, 2013; 
81 FR 12341, Mar. 8, 2016]



Sec.  155.305  Eligibility standards.

    (a) Eligibility for enrollment in a QHP through the Exchange. The 
Exchange must determine an applicant eligible for enrollment in a QHP 
through the Exchange if he or she meets the following requirements:
    (1) Citizenship, status as a national, or lawful presence. Is a 
citizen or national of the United States, or is a non-citizen who is 
lawfully present in the United States, and is reasonably expected to be 
a citizen, national, or a non-citizen who is lawfully present for the 
entire period for which enrollment is sought;
    (2) Incarceration. Is not incarcerated, other than incarceration 
pending the disposition of charges; and
    (3) Residency. Meets the applicable residency standard identified in 
this paragraph (a)(3).

[[Page 296]]

    (i) For an individual who is age 21 and over, is not living in an 
institution as defined in 42 CFR 435.403(b), is capable of indicating 
intent, and is not receiving an optional State supplementary payment as 
addressed in 42 CFR 435.403(f), the service area of the Exchange of the 
individual is the service areas of the Exchange in which he or she is 
living and--
    (A) Intends to reside, including without a fixed address; or
    (B) Has entered with a job commitment or is seeking employment 
(whether or not currently employed).
    (ii) For an individual who is under the age of 21, is not living in 
an institution as defined in 42 CFR 435.403(b), is not eligible for 
Medicaid based on receipt of assistance under title IV-E of the Social 
Security Act as addressed in 42 CFR 435.403(g), is not emancipated, is 
not receiving an optional State supplementary payment as addressed in 42 
CFR 435.403(f), the Exchange service area of the individual--
    (A) Is the service area of the Exchange in which he or she resides, 
including without a fixed address; or
    (B) Is the service area of the Exchange of a parent or caretaker, 
established in accordance with paragraph (a)(3)(i) of this section, with 
whom the individual resides.
    (iii) Other special circumstances. In the case of an individual who 
is not described in paragraphs (a)(3)(i) or (ii) of this section, the 
Exchange must apply the residency requirements described in 42 CFR 
435.403 with respect to the service area of the Exchange.
    (iv) Special rule for tax households with members in multiple 
Exchange service areas. (A) Except as specified in paragraph 
(a)(3)(iv)(B) of this section if all of the members of a tax household 
are not within the same Exchange service area, in accordance with the 
applicable standards in paragraphs (a)(3)(i), (ii), and (iii) of this 
section, any member of the tax household may enroll in a QHP through any 
of the Exchanges for which one of the tax filers meets the residency 
standard.
    (B) If both spouses in a tax household enroll in a QHP through the 
same Exchange, a tax dependent may only enroll in a QHP through that 
Exchange, or through the Exchange that services the area in which the 
dependent meets a residency standard described in paragraphs (a)(3)(i), 
(ii), or (iii) of this section.
    (v) Temporary absence. The Exchange may not deny or terminate an 
individual's eligibility for enrollment in a QHP through the Exchange if 
the individual meets the standards in paragraph (a)(3) of this section 
but for a temporary absence from the service area of the Exchange and 
intends to return when the purpose of the absence has been accomplished.
    (b) Eligibility for QHP enrollment periods. The Exchange must 
determine an applicant eligible for an enrollment period if he or she 
meets the criteria for an enrollment period, as specified in Sec. Sec.  
155.410 and 155.420.
    (c) Eligibility for Medicaid. The Exchange must determine an 
applicant eligible for Medicaid if he or she meets the non-financial 
eligibility criteria for Medicaid for populations whose eligibility is 
based on MAGI-based income, as certified by the Medicaid agency in 
accordance with 42 CFR 435.1200(b)(2), has a household income, as 
defined in 42 CFR 435.603(d), that is at or below the applicable 
Medicaid MAGI-based income standard as defined in 42 CFR 435.911(b)(1) 
and--
    (1) Is a pregnant woman, as defined in the Medicaid State Plan in 
accordance with 42 CFR 435.4;
    (2) Is under age 19;
    (3) Is a parent or caretaker relative of a dependent child, as 
defined in the Medicaid State plan in accordance with 42 CFR 435.4; or
    (4) Is not described in paragraph (c)(1), (2), or (3) of this 
section, is under age 65 and is not entitled to or enrolled for benefits 
under part A of title XVIII of the Social Security Act, or enrolled for 
benefits under part B of title XVIII of the Social Security Act.
    (d) Eligibility for CHIP. The Exchange must determine an applicant 
eligible for CHIP if he or she meets the requirements of 42 CFR 457.310 
through 457.320 and has a household income, as defined in 42 CFR 
435.603(d), at or below the applicable CHIP MAGI-based income standard.
    (e) Eligibility for BHP. If a BHP is operating in the service area 
of the Exchange, the Exchange must determine

[[Page 297]]

an applicant eligible for the BHP if he or she meets the requirements 
specified in section 1331(e) of the Affordable Care Act and regulations 
implementing that section.
    (f) Eligibility for advance payments of the premium tax credit--(1) 
In general. The Exchange must determine a tax filer eligible for advance 
payments of the premium tax credit if the Exchange determines that--
    (i) He or she is expected to have a household income, as defined in 
26 CFR 1.36B-1(e), of greater than or equal to 100 percent but not more 
than 400 percent of the FPL for the benefit year for which coverage is 
requested; and
    (ii) One or more applicants for whom the tax filer expects to claim 
a personal exemption deduction on his or her tax return for the benefit 
year, including the tax filer and his or her spouse--
    (A) Meets the requirements for eligibility for enrollment in a QHP 
through the Exchange, as specified in paragraph (a) of this section; and
    (B) Is not eligible for minimum essential coverage, with the 
exception of coverage in the individual market, in accordance with 
section 26 CFR 1.36B-2(a)(2) and (c).
    (2) Special rule for non-citizens who are lawfully present and who 
are ineligible for Medicaid by reason of immigration status. The 
Exchange must determine a tax filer eligible for advance payments of the 
premium tax credit if the Exchange determines that--
    (i) He or she meets the requirements specified in paragraph (f)(1) 
of this section, except for paragraph (f)(1)(i);
    (ii) He or she is expected to have a household income, as defined in 
26 CFR 1.36B-1(e) of less than 100 percent of the FPL for the benefit 
year for which coverage is requested; and
    (iii) One or more applicants for whom the tax filer expects to claim 
a personal exemption deduction on his or her tax return for the benefit 
year, including the tax filer and his or her spouse, is a non-citizen 
who is lawfully present and ineligible for Medicaid by reason of 
immigration status, in accordance with 26 CFR 1.36B-2(b)(5).
    (3) Enrollment required. The Exchange may provide advance payments 
of the premium tax credit on behalf of a tax filer only if one or more 
applicants for whom the tax filer attests that he or she expects to 
claim a personal exemption deduction for the benefit year, including the 
tax filer and his or her spouse, is enrolled in a QHP that is not a 
catastrophic plan, through the Exchange.
    (4) Compliance with filing requirement. The Exchange may not 
determine a tax filer eligible for APTC if HHS notifies the Exchange as 
part of the process described in Sec.  155.320(c)(3) that APTC were made 
on behalf of the tax filer or either spouse if the tax filer is a 
married couple for a year 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 his or her spouse did not 
comply with the requirement to file an income tax return for that year 
as required by 26 U.S.C. 6011, 6012, and implementing regulations and 
reconcile the advance payments of the premium tax credit for that 
period.
    (5) Calculation of advance payments of the premium tax credit. The 
Exchange must calculate advance payments of the premium tax credit in 
accordance with 26 CFR 1.36B-3.
    (6) Collection of Social Security numbers. The Exchange must require 
an application filer to provide the Social Security number of a tax 
filer who is not an applicant only if an applicant attests that the tax 
filer has a Social Security number and filed a tax return for the year 
for which tax data would be utilized for verification of household 
income and family size.
    (g) Eligibility for cost-sharing reductions--(1) Eligibility 
criteria. (i) The Exchange must determine an applicant eligible for 
cost-sharing reductions if he or she--
    (A) Meets the requirements for eligibility for enrollment in a QHP 
through the Exchange, as specified in paragraph (a) of this section;
    (B) Meets the requirements for advance payments of the premium tax 
credit, as specified in paragraph (f) of this section; and
    (C) Is expected to have a household income that does not exceed 250 
percent of the FPL, for the benefit year for which coverage is 
requested.

[[Page 298]]

    (ii) The Exchange may only provide cost-sharing reductions to an 
enrollee who is not an Indian if he or she is enrolled through the 
Exchange in a silver-level QHP, as defined by section 1302(d)(1)(B) of 
the Affordable Care Act.
    (2) Eligibility categories. The Exchange must use the following 
eligibility categories for cost-sharing reductions when making 
eligibility determinations under this section--
    (i) An individual who is expected to have a household income greater 
than or equal to 100 percent of the FPL and less than or equal to 150 
percent of the FPL for the benefit year for which coverage is requested, 
or for an individual who is eligible for advance payments of the premium 
tax credit under paragraph (f)(2) of this section, a household income 
less than 100 percent of the FPL for the benefit year for which coverage 
is requested;
    (ii) An individual is expected to have a household income greater 
than 150 percent of the FPL and less than or equal to 200 percent of the 
FPL for the benefit year for which coverage is requested; and
    (iii) An individual who is expected to have a household income 
greater than 200 percent of the FPL and less than or equal to 250 
percent of the FPL for the benefit year for which coverage is requested.
    (3) Special rule for family policies. To the extent that an 
enrollment in a QHP in the individual market offered through an Exchange 
under a single policy covers two or more individuals who, if they were 
to enroll in separate individual policies would be eligible for 
different cost sharing, the Exchange must deem the individuals under 
such policy to be collectively eligible only for the category of 
eligibility last listed below for which all the individuals covered by 
the policy would be eligible:
    (i) Individuals not eligible for changes to cost sharing;
    (ii) Individuals described in Sec.  155.350(b) (the special cost-
sharing rule for Indians regardless of income);
    (iii) Individuals described in paragraph (g)(2)(iii) of this 
section;
    (iv) Individuals described in paragraph (g)(2)(ii) of this section;
    (v) Individuals described in paragraph (g)(2)(i) of this section; 
and
    (vi) Individuals described in Sec.  155.350(a) (the cost-sharing 
rule for Indians with household incomes under 300 percent of the FPL).
    (4) For the purposes of paragraph (g) of this section, ``household 
income'' means household income as defined in section 36B(d)(2) of the 
Code.
    (h) Eligibility for enrollment through the Exchange in a QHP that is 
a catastrophic plan. The Exchange must determine an applicant eligible 
for enrollment in a QHP through the Exchange in a QHP that is a 
catastrophic plan as defined by section 1302(e) of the Affordable Care 
Act, if he or she has met the requirements for eligibility for 
enrollment in a QHP through the Exchange, in accordance with Sec.  
155.305(a), and either--
    (1) Has not attained the age of 30 before the beginning of the plan 
year; or
    (2) Has a certification in effect for any plan year that he or she 
is exempt from the requirement to maintain minimum essential coverage 
under section 5000A of the Code by reason of--
    (i) Section 5000A(e)(1) of the Code (relating to individuals without 
affordable coverage); or
    (ii) Section 5000A(e)(5) of the Code (relating to individuals with 
hardships).

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 15533, Mar. 11, 2013; 
78 FR 42315, July 15, 2013; 83 FR 17061, Apr. 17, 2018]



Sec.  155.310  Eligibility process.

    (a) Application--(1) Accepting applications. The Exchange must 
accept applications from individuals in the form and manner specified in 
Sec.  155.405.
    (2) Information collection from non-applicants. The Exchange may not 
request information regarding citizenship, status as a national, or 
immigration status for an individual who is not seeking coverage for 
himself or herself on any application or supplemental form.
    (3) Collection of Social Security numbers. (i) The Exchange must 
require an applicant who has a Social Security number to provide such 
number to the Exchange.
    (ii) The Exchange may not require an individual who is not seeking 
coverage for himself or herself to provide a Social Security number, 
except as specified in Sec.  155.305(f)(6).

[[Page 299]]

    (b) Applicant choice for Exchange to determine eligibility for 
insurance affordability programs. The Exchange must permit an applicant 
to request only an eligibility determination for enrollment in a QHP 
through the Exchange; however, the Exchange may not permit an applicant 
to request an eligibility determination for less than all insurance 
affordability programs.
    (c) Timing. The Exchange must accept an application and make an 
eligibility determination for an applicant seeking an eligibility 
determination at any point in time during the year.
    (d) Determination of eligibility. (1) The Exchange must determine an 
applicant's eligibility, in accordance with the standards specified in 
Sec.  155.305.
    (2) Special rules relating to advance payments of the premium tax 
credit. (i) The Exchange must permit an enrollee to accept less than the 
full amount of advance payments of the premium tax credit for which he 
or she is determined eligible.
    (ii) The Exchange may authorize advance payments of the premium tax 
credit on behalf of a tax filer only if the Exchange first obtains 
necessary attestations from the tax filer regarding advance payments of 
the premium tax credit, including, but not limited to attestations 
that--
    (A) He or she will file an income tax return for the benefit year, 
in accordance with 26 U.S.C. 6011, 6012, and implementing regulations;
    (B) If married (within the meaning of 26 CFR 1.7703-1), he or she 
will file a joint tax return for the benefit year;
    (C) No other taxpayer will be able to claim him or her as a tax 
dependent for the benefit year; and
    (D) He or she will claim a personal exemption deduction on his or 
her tax return for the applicants identified as members of his or her 
family, including the tax filer and his or her spouse, in accordance 
with Sec.  155.320(c)(3)(i).
    (3) Special rule relating to Medicaid and CHIP. To the extent that 
the Exchange determines an applicant eligible for Medicaid or CHIP, the 
Exchange must notify the State Medicaid or CHIP agency and transmit all 
information from the records of the Exchange to the State Medicaid or 
CHIP agency, promptly and without undue delay, that is necessary for 
such agency to provide the applicant with coverage.
    (e) Timeliness standards. (1) The Exchange must determine 
eligibility promptly and without undue delay.
    (2) The Exchange must assess the timeliness of eligibility 
determinations based on the period from the date of application or 
transfer from an agency administering an insurance affordability program 
to the date the Exchange notifies the applicant of its decision or the 
date the Exchange transfers the application to another agency 
administering an insurance affordability program, when applicable.
    (f) Effective dates for eligibility. Upon making an eligibility 
determination, the Exchange must implement the eligibility determination 
under this section for enrollment in a QHP through the Exchange, advance 
payments of the premium tax credit, and cost-sharing reductions as 
follows--
    (1) For an initial eligibility determination, in accordance with the 
dates specified in Sec. Sec.  155.410(c) and (f) and 155.420(b), as 
applicable,
    (2) For a redetermination, in accordance with the dates specified in 
Sec. Sec.  155.330(f) and 155.335(i), as applicable.
    (g) Notification of eligibility determination. The Exchange must 
provide timely written notice to an applicant of any eligibility 
determination made in accordance with this subpart.
    (h) Notice of an employee's receipt of advance payments of the 
premium tax credit and cost-sharing reductions to an employer. The 
Exchange must notify an employer that an employee has been determined 
eligible for advance payments of the premium tax credit and cost-sharing 
reductions and has enrolled in a qualified health plan through the 
Exchange within a reasonable timeframe following a determination that 
the employee is eligible for advance payments of the premium tax credit 
and cost-sharing reductions in accordance with Sec.  155.305(g) or Sec.  
155.350(a) and enrollment by the employee in a qualified health plan 
through the Exchange. Such notice must:
    (1) Identify the employee;
    (2) Indicate that the employee has been determined eligible advance 
payments of the premium tax credit and

[[Page 300]]

cost-sharing reductions and has enrolled in a qualified health plan 
through the Exchange;
    (3) Indicate that, if the employer has 50 or more full-time 
employees, the employer may be liable for the payment assessed under 
section 4980H of the Code; and
    (4) Notify the employer of the right to appeal the determination.
    (i) Certification program for employers. As part of its 
determination of whether an employer has a liability under section 4980H 
of the Code, the Internal Revenue Service will adopt methods to certify 
to an employer that one or more employees has enrolled for one or more 
months during a year in a QHP for which a premium tax credit or cost-
sharing reduction is allowed or paid.
    (j) Duration of eligibility determinations without enrollment. To 
the extent that an applicant who is determined eligible for enrollment 
in a QHP through the Exchange does not select a QHP within his or her 
enrollment period, or is not eligible for an enrollment period, in 
accordance with subpart E, and seeks a new enrollment period prior to 
the date on which his or her eligibility is redetermined in accordance 
with Sec.  155.335, the Exchange must require the applicant to attest as 
to whether information affecting his or her eligibility has changed 
since his or her most recent eligibility determination before 
determining his or her eligibility for a special enrollment period, and 
must process any changes reported in accordance with the procedures 
specified in Sec.  155.330.
    (k) Incomplete application. If an application filer submits an 
application that does not include sufficient information for the 
Exchange to conduct an eligibility determination for enrollment in a QHP 
through the Exchange or for insurance affordability programs, if 
applicable, the Exchange must--
    (1) Provide notice to the applicant indicating that information 
necessary to complete an eligibility determination is missing, 
specifying the missing information, and providing instructions on how to 
provide the missing information; and
    (2) Provide the applicant with a period of no less than 10 days and 
no more than 90 days from the date on which the notice described in 
paragraph (k)(1) of this section is sent to the applicant to provide the 
information needed to complete the application to the Exchange.
    (3) During the period described in paragraph (k)(2) of this section, 
the Exchange must not proceed with an applicant's eligibility 
determination or provide advance payments of the premium tax credit or 
cost-sharing reductions, unless an application filer has provided 
sufficient information to determine his or her eligibility for 
enrollment in a QHP through the Exchange, in which case the Exchange 
must make such a determination for enrollment in a QHP.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42314, July 15, 2013; 
78 FR 54136, Aug. 30, 2013; 81 FR 12341, Mar. 8, 2016]



Sec.  155.315  Verification process related to eligibility for
enrollment in a QHP through the Exchange.

    (a) General requirement. Unless a request for modification is 
granted in accordance with paragraph (h) of this section, the Exchange 
must verify or obtain information as provided in this section in order 
to determine that an applicant is eligible for enrollment in a QHP 
through the Exchange.
    (b) Validation of Social Security number. (1) For any individual who 
provides his or her Social Security number to the Exchange, the Exchange 
must transmit the Social Security number and other identifying 
information to HHS, which will submit it to the Social Security 
Administration.
    (2) To the extent that the Exchange is unable to validate an 
individual's Social Security number through the Social Security 
Administration, or the Social Security Administration indicates that the 
individual is deceased, the Exchange must follow the procedures 
specified in paragraph (f) of this section, except that the Exchange 
must provide the individual with a period of 90 days from the date on 
which the notice described in paragraph (f)(2)(i) of this section is 
received for the applicant to provide satisfactory documentary evidence 
or resolve the inconsistency with the Social Security Administration. 
The date on which the notice is received means 5 days after the date

[[Page 301]]

on the notice, unless the individual demonstrates that he or she did not 
receive the notice within the 5 day period.
    (c) Verification of citizenship, status as a national, or lawful 
presence--(1) Verification with records from the Social Security 
Administration. For an applicant who attests to citizenship and has a 
Social Security number, the Exchange must transmit the applicant's 
Social Security number and other identifying information to HHS, which 
will submit it to the Social Security Administration.
    (2) Verification with the records of the Department of Homeland 
Security. For an applicant who has documentation that can be verified 
through the Department of Homeland Security and who attests to lawful 
presence, or who attests to citizenship and for whom the Exchange cannot 
substantiate a claim of citizenship through the Social Security 
Administration, the Exchange must transmit information from the 
applicant's documentation and other identifying information to HHS, 
which will submit necessary information to the Department of Homeland 
Security for verification.
    (3) Inconsistencies and inability to verify information. For an 
applicant who attests to citizenship, status as a national, or lawful 
presence, and for whom the Exchange cannot verify such attestation 
through the Social Security Administration or the Department of Homeland 
Security, the Exchange must follow the procedures specified in paragraph 
(f) of this section, except that the Exchange must provide the applicant 
with a period of 90 days from the date on which the notice described in 
paragraph (f)(2)(i) of this section is received for the applicant to 
provide satisfactory documentary evidence or resolve the inconsistency 
with the Social Security Administration or the Department of Homeland 
Security, as applicable. The date on which the notice is received means 
5 days after the date on the notice, unless the applicant demonstrates 
that he or she did not receive the notice within the 5 day period.
    (d) Verification of residency. The Exchange must verify an 
applicant's attestation that he or she meets the standards of Sec.  
155.305(a)(3) as follows--
    (1) Except as provided in paragraphs (d)(3) and (4) of this section, 
accept his or her attestation without further verification; or
    (2) Examine electronic data sources that are available to the 
Exchange and which have been approved by HHS for this purpose, based on 
evidence showing that such data sources are sufficiently current and 
accurate, and minimize administrative costs and burdens.
    (3) If information provided by an applicant regarding residency is 
not reasonably compatible with other information provided by the 
individual or in the records of the Exchange the Exchange must examine 
information in data sources that are available to the Exchange and which 
have been approved by HHS for this purpose, based on evidence showing 
that such data sources are sufficiently current and accurate.
    (4) If the information in such data sources is not reasonably 
compatible with the information provided by the applicant, the Exchange 
must follow the procedures specified in paragraph (f) of this section. 
Evidence of immigration status may not be used to determine that an 
applicant is not a resident of the Exchange service area.
    (e) Verification of incarceration status. The Exchange must verify 
an applicant's attestation that he or she meets the requirements of 
Sec.  155.305(a)(2) by--
    (1) Relying on any electronic data sources that are available to the 
Exchange and which have been approved by HHS for this purpose, based on 
evidence showing that such data sources are sufficiently current, 
accurate, and offer less administrative complexity than paper 
verification; or
    (2) Except as provided in paragraph (e)(3) of this section, if an 
approved data source is unavailable, accepting his or her attestation 
without further verification.
    (3) To the extent that an applicant's attestation is not reasonably 
compatible with information from approved data sources described in 
paragraph (e)(1) of this section or other information provided by the 
applicant or in the records of the Exchange, the Exchange

[[Page 302]]

must follow the procedures specified in Sec.  155.315(f).
    (f) Inconsistencies. Except as otherwise specified in this subpart, 
for an applicant for whom the Exchange cannot verify information 
required to determine eligibility for enrollment in a QHP through the 
Exchange, advance payments of the premium tax credit, and cost-sharing 
reductions, including when electronic data is required in accordance 
with this subpart but data for individuals relevant to the eligibility 
determination are not included in such data sources or when electronic 
data from IRS, DHS, or SSA is required but it is not reasonably expected 
that data sources will be available within 1 day of the initial request 
to the data source, the Exchange:
    (1) Must make a reasonable effort to identify and address the causes 
of such inconsistency, including through typographical or other clerical 
errors, by contacting the application filer to confirm the accuracy of 
the information submitted by the application filer;
    (2) If unable to resolve the inconsistency through the process 
described in paragraph (f)(1) of this section, must--
    (i) Provide notice to the applicant regarding the inconsistency; and
    (ii) Provide the applicant with a period of 90 days from the date on 
which the notice described in paragraph (f)(2)(i) of this section is 
sent to the applicant to either present satisfactory documentary 
evidence via the channels available for the submission of an 
application, as described in Sec.  155.405(c), except for by telephone 
through a call center, or otherwise resolve the inconsistency.
    (3) May extend the period described in paragraph (f)(2)(ii) of this 
section for an applicant if the applicant demonstrates that a good faith 
effort has been made to obtain the required documentation during the 
period.
    (4) During the periods described in paragraphs (f)(1) and (f)(2)(ii) 
of this section, must:
    (i) Proceed with all other elements of eligibility determination 
using the applicant's attestation, and provide eligibility for 
enrollment in a QHP to the extent that an applicant is otherwise 
qualified; and
    (ii) Ensure that advance payments of the premium tax credit and 
cost-sharing reductions are provided on behalf of an applicant within 
this period who is otherwise qualified for such payments and reductions, 
as described in Sec.  155.305, if the tax filer attests to the Exchange 
that he or she understands that any advance payments of the premium tax 
credit paid on his or her behalf are subject to reconciliation.
    (5) If, after the period described in paragraph (f)(2)(ii) of this 
section, the Exchange remains unable to verify the attestation, the 
Exchange must determine the applicant's eligibility based on the 
information available from the data sources specified in this subpart, 
unless such applicant qualifies for the exception provided under 
paragraph (g) of this section, and notify the applicant of such 
determination in accordance with the notice requirements specified in 
Sec.  155.310(g), including notice that the Exchange is unable to verify 
the attestation.
    (6) When electronic data to support the verifications specified in 
Sec.  155.315(d) or Sec.  155.320(b) is required but it is not 
reasonably expected that data sources will be available within 1 day of 
the initial request to the data source, the Exchange must accept the 
applicant's attestation regarding the factor of eligibility for which 
the unavailable data source is relevant.
    (g) Exception for special circumstances. For an applicant who does 
not have documentation with which to resolve the inconsistency through 
the process described in paragraph (f)(2) of this section because such 
documentation does not exist or is not reasonably available and for whom 
the Exchange is unable to otherwise resolve the inconsistency, with the 
exception of an inconsistency related to citizenship or immigration 
status, the Exchange must provide an exception, on a case-by-case basis, 
to accept an applicant's attestation as to the information which cannot 
otherwise be verified along with an explanation of circumstances as to 
why the applicant does not have documentation.
    (h) Flexibility in information collection and verification. HHS may 
approve an Exchange Blueprint in accordance with Sec.  155.105(d) or a 
significant change to

[[Page 303]]

the Exchange Blueprint in accordance with Sec.  155.105(e) to modify the 
methods to be used for collection of information and verification of 
information as set forth in this subpart, as well as the specific 
information required to be collected, provided that HHS finds that such 
modification would reduce the administrative costs and burdens on 
individuals while maintaining accuracy and minimizing delay, that it 
would not undermine coordination with Medicaid and CHIP, and that 
applicable requirements under Sec. Sec.  155.260, 155.270, paragraph (i) 
of this section, and section 6103 of the Code with respect to the 
confidentiality, disclosure, maintenance, or use of such information 
will be met.
    (i) Applicant information. The Exchange must not require an 
applicant to provide information beyond the minimum necessary to support 
the eligibility and enrollment processes of the Exchange, Medicaid, 
CHIP, and the BHP, if a BHP is operating in the service area of the 
Exchange, described in this subpart.
    (j) Verification related to eligibility for enrollment through the 
Exchange in a QHP that is a catastrophic plan. The Exchange must verify 
an applicant's attestation that he or she meets the requirements of 
Sec.  155.305(h) by--
    (1) Verifying the applicant's attestation of age as follows--
    (i) Except as provided in paragraph (j)(1)(iii) of this section, 
accepting his or her attestation without further verification; or
    (ii) Examining electronic data sources that are available to the 
Exchange and which have been approved by HHS for this purpose, based on 
evidence showing that such data sources are sufficiently current and 
accurate, and minimize administrative costs and burdens.
    (iii) If information regarding age is not reasonably compatible with 
other information provided by the individual or in the records of the 
Exchange, the Exchange must examine information in data sources that are 
available to the Exchange and which have been approved by HHS for this 
purpose based on evidence showing that such data sources are 
sufficiently current and accurate.
    (2) Verifying that an applicant has a certification of exemption in 
effect as described in Sec.  155.305(h)(2).
    (3) To the extent that the Exchange is unable to verify the 
information required to determine eligibility for enrollment through the 
Exchange in a QHP that is a catastrophic plan as described in paragraphs 
(j)(1) and (2) of this section, the Exchange must follow the procedures 
specified in Sec.  155.315(f), except for Sec.  155.315(f)(4).

[77 FR 18444, Mar. 27, 2012, as amended at 77 FR 31515, May 29, 2012; 78 
FR 42316, July 15, 2013]



Sec.  155.320  Verification process related to eligibility for
insurance affordability programs.

    (a) General requirements. (1) The Exchange must verify information 
in accordance with this section only for an applicant or tax filer who 
requested an eligibility determination for insurance affordability 
programs in accordance with Sec.  155.310(b).
    (2) Unless a request for modification is granted in accordance with 
Sec.  155.315(h), the Exchange must verify or obtain information in 
accordance with this section before making an eligibility determination 
for insurance affordability programs, and must use such information in 
such determination.
    (b) Verification of eligibility for minimum essential coverage other 
than through an eligible employer-sponsored plan. (1)(i) The Exchange 
must verify whether an applicant is eligible for minimum essential 
coverage other than through an eligible employer-sponsored plan, 
Medicaid, CHIP, or the BHP, using information obtained by transmitting 
identifying information specified by HHS to HHS for verification 
purposes.
    (ii) The Exchange must verify whether an applicant has already been 
determined eligible for coverage through Medicaid, CHIP, or the BHP, if 
a BHP is operating in the service area of the Exchange, within the State 
or States in which the Exchange operates using information obtained from 
the agencies administering such programs.
    (2) Consistent with Sec.  164.512(k)(6)(i) of this subchapter, the 
disclosure to HHS of information regarding eligibility for

[[Page 304]]

and enrollment in a health plan, which may be considered protected 
health information, as that term is defined in Sec.  160.103 of this 
subchapter, is expressly authorized, for the purposes of verification of 
applicant eligibility for minimum essential coverage as part of the 
eligibility determination process for advance payments of the premium 
tax credit or cost-sharing reductions.
    (c) Verification of household income and family/household size--(1) 
Data--(i) Data regarding annual household income. (A) For all 
individuals whose income is counted in calculating a tax filer's 
household income, as defined in 26 CFR 1.36B-1(e), or an applicant's 
household income, calculated in accordance with 42 CFR 435.603(d), and 
for whom the Exchange has a Social Security number, the Exchange must 
request tax return data regarding MAGI and family size from the 
Secretary of the Treasury and data regarding Social security benefits 
described in 26 CFR 1.36B-1(e)(2)(iii) from the Commissioner of Social 
Security by transmitting identifying information specified by HHS to 
HHS.
    (B) If the identifying information for one or more individuals does 
not match a tax record on file with the Secretary of the Treasury that 
may be disclosed in accordance with section 6103(l)(21) of the Code and 
its accompanying regulations, the Exchange must proceed in accordance 
with Sec.  155.315(f)(1).
    (ii) Data regarding MAGI-based income. For all individuals whose 
income is counted in calculating a tax filer's household income, as 
defined in 26 CFR 1.36B-1(e), or an applicant's household income, 
calculated in accordance with 42 CFR 435.603(d), the Exchange must 
request data regarding MAGI-based income in accordance with 42 CFR 
435.948(a).
    (2) Verification process for Medicaid and CHIP--(i) Household size. 
(A) The Exchange must verify household size in accordance with 42 CFR 
435.945(a) or through other reasonable verification procedures 
consistent with the requirements in 42 CFR 435.952.
    (B) The Exchange must verify the information in paragraph 
(c)(2)(i)(A) of this section by accepting an applicant's attestation 
without further verification, unless the Exchange finds that an 
applicant's attestation to the individuals that comprise his or her 
household for Medicaid and CHIP is not reasonably compatible with other 
information provided by the application filer for the applicant or in 
the records of the Exchange, in which case the Exchange must utilize 
data obtained through electronic data sources to verify the attestation. 
If such data sources are unavailable or information in such data sources 
is not reasonably compatible with the applicant's attestation, the 
Exchange must request additional documentation to support the 
attestation within the procedures specified in 42 CFR 435.952.
    (ii) Verification process for MAGI-based household income. The 
Exchange must verify MAGI-based income, within the meaning of 42 CFR 
435.603(d), for the household described in paragraph (c)(2)(i) in 
accordance with the procedures specified in Medicaid regulations 42 CFR 
435.945, 42 CFR 435.948, and 42 CFR 435.952 and CHIP regulations at 42 
CFR 457.380.
    (3) Verification process for advance payments of the premium tax 
credit and cost-sharing reductions--(i) Family size. (A) The Exchange 
must require an applicant to attest to the individuals that comprise a 
tax filer's family for advance payments of the premium tax credit and 
cost-sharing reductions.
    (B) To the extent that the applicant attests that the information 
described in paragraph (c)(1)(i) of this section represents an accurate 
projection of a tax filer's family size for the benefit year for which 
coverage is requested, the Exchange must determine the tax filer's 
eligibility for advance payments of the premium tax credit and cost-
sharing reductions based on the family size data in paragraph (c)(1)(i) 
of this section.
    (C) To the extent that the data described in paragraph (c)(1)(i) of 
this section is unavailable, or an applicant attests that a change in 
circumstances has occurred or is reasonably expected to occur, and so it 
does not represent an accurate projection of a tax filer's family size 
for the benefit year for which coverage is requested, the Exchange must 
verify the tax filer's family size for advance payments of the premium 
tax credit and cost-sharing reductions by accepting an applicant's

[[Page 305]]

attestation without further verification, except as specified in 
paragraph (c)(3)(i)(D) of this section.
    (D) If the Exchange finds that an applicant's attestation of a tax 
filer's family size is not reasonably compatible with other information 
provided by the application filer for the family or in the records of 
the Exchange, with the exception of the data described in paragraph 
(c)(1)(i) of this section, the Exchange must utilize data obtained 
through other electronic data sources to verify the attestation. If such 
data sources are unavailable or information in such data sources is not 
reasonably compatible with the applicant's attestation, the Exchange 
must request additional documentation to support the attestation within 
the procedures specified in Sec.  155.315(f).
    (E) The Exchange must verify that neither advance payments of the 
premium tax credit nor cost-sharing reductions are being provided on 
behalf of an individual using information obtained by transmitting 
identifying information specified by HHS to HHS.
    (ii) Basic verification process for annual household income. (A) The 
Exchange must compute annual household income for the family described 
in paragraph (c)(3)(i)(A) of this section based on the data described in 
paragraph (c)(1)(i) of this section;
    (B) The Exchange must require the applicant to attest regarding a 
tax filer's projected annual household income;
    (C) To the extent that the applicant's attestation indicates that 
the information described in paragraph (c)(3)(ii)(A) of this section 
represents an accurate projection of the tax filer's household income 
for the benefit year for which coverage is requested, the Exchange must 
determine the tax filer's eligibility for advance payments of the 
premium tax credit and cost-sharing reductions based on the household 
income data in paragraph (c)(3)(ii)(A) of this section.
    (D) To the extent that the data described in paragraph (c)(1)(i) of 
this section is unavailable, or an applicant attests that a change in 
circumstances has occurred or is reasonably expected to occur, and so it 
does not represent an accurate projection of the tax filer's household 
income for the benefit year for which coverage is requested, the 
Exchange must require the applicant to attest to the tax filer's 
projected household income for the benefit year for which coverage is 
requested.
    (iii) Verification process for changes in household income. (A) 
Except as specified in paragraph (c)(3)(iii)(B), (C), and (D) of this 
section, if an applicant's attestation, in accordance with paragraph 
(c)(3)(ii)(B) of this section, indicates that a tax filer's annual 
household income has increased or is reasonably expected to increase 
from the data described in paragraph (c)(3)(ii)(A) of this section for 
the benefit year for which the applicant(s) in the tax filer's family 
are requesting coverage and the Exchange has not verified the 
applicant's MAGI-based income through the process specified in paragraph 
(c)(2)(ii) of this section to be within the applicable Medicaid or CHIP 
MAGI-based income standard, the Exchange must accept the applicant's 
attestation regarding a tax filer's annual household income without 
further verification.
    (B) If data available to the Exchange in accordance with paragraph 
(c)(1)(ii) of this section indicate that a tax filer's projected annual 
household income is in excess of his or her attestation by a significant 
amount, the Exchange must proceed in accordance with Sec.  155.315(f)(1) 
through (4).
    (C) If other information provided by the application filer indicates 
that a tax filer's projected annual household income is in excess of his 
or her attestation by a significant amount, the Exchange must utilize 
data available to the Exchange in accordance with paragraph (c)(1)(ii) 
of this section to verify the attestation. If such data is unavailable 
or are not reasonably compatible with the applicant's attestation, the 
Exchange must proceed in accordance with Sec.  155.315(f)(1) through 
(4).
    (D) If an applicant's attestation to projected annual household 
income, as described in paragraph (c)(3)(ii)(B) of this section, is 
greater than or equal to 100 percent but not more than 400 percent of 
the FPL for the benefit year for which coverage is requested and is more 
than a reasonable threshold above the annual household income

[[Page 306]]

computed in accordance with paragraph (c)(3)(ii)(A) of this section, the 
data described in paragraph (c)(3)(ii)(A) of this section indicates that 
projected annual household income is under 100 percent FPL, and the 
Exchange has not verified the applicant's MAGI-based income through the 
process specified in paragraph (c)(2)(ii) of this section to be within 
the applicable Medicaid or CHIP MAGI-based income standard, the Exchange 
must proceed in accordance with Sec.  155.315(f)(1) through (4). 
However, this paragraph (c)(3)(iii)(D) does not apply if the applicant 
is a non-citizen who is lawfully present and ineligible for Medicaid by 
reason of immigration status. For the purposes of this paragraph, a 
reasonable threshold is established by the Exchange in guidance and 
approved by HHS, but must not be less than 10 percent, and can also 
include a threshold dollar amount.
    (E) If, at the conclusion of the period specified in Sec.  
155.315(f)(2)(ii), the Exchange remains unable to verify the applicant's 
attestation, the Exchange must determine the applicant's eligibility 
based on the information described in paragraph (c)(3)(ii)(A) of this 
section, notify the applicant of such determination in accordance with 
the notice requirements specified in Sec.  155.310(g), and implement 
such determination in accordance with the effective dates specified in 
Sec.  155.330(f).
    (F) If, at the conclusion of the period specified in Sec.  
155.315(f)(2)(ii), the Exchange remains unable to verify the applicant's 
attestation and the information described in paragraph (c)(3)(ii)(A) of 
this section is unavailable, the Exchange must determine the tax filer 
ineligible for advance payments of the premium tax credit and cost-
sharing reductions, notify the applicant of such determination in 
accordance with the notice requirements specified in Sec.  155.310(g), 
and discontinue any advance payments of the premium tax credit and cost-
sharing reductions in accordance with the effective dates specified in 
Sec.  155.330(f).
    (iv) Eligibility for alternate verification process for decreases in 
annual household income and situations in which tax return data is 
unavailable. The Exchange must determine a tax filer's annual household 
income for advance payments of the premium tax credit and cost-sharing 
reductions based on the alternate verification procedures described in 
paragraph (c)(3)(v) of this section, if an applicant attests to 
projected annual household income in accordance with paragraph 
(c)(3)(ii)(B) of this section, the tax filer does not meet the criteria 
specified in paragraph (c)(3)(iii) of this section, the applicants in 
the tax filer's family have not established MAGI-based income through 
the process specified in paragraph (c)(2)(ii) of this section that is 
within the applicable Medicaid or CHIP MAGI-based income standard, and 
one of the following conditions is met--
    (A) The Secretary of the Treasury does not have tax return data that 
may be disclosed under section 6103(l)(21) of the Code for the tax filer 
that is at least as recent as the calendar year two years prior to the 
calendar year for which advance payments of the premium tax credit or 
cost-sharing reductions would be effective;
    (B) The applicant attests that the tax filer's applicable family 
size has changed or is reasonably expected to change for the benefit 
year for which the applicants in his or her family are requesting 
coverage, or the members of the tax filer's family have changed or are 
reasonably expected to change for the benefit year for which the 
applicants in his or her family are requesting coverage;
    (C) The applicant attests that a change in circumstances has 
occurred or is reasonably expected to occur, and so the tax filer's 
annual household income has decreased or is reasonably expected to 
decrease from the data described in paragraph (c)(1)(i) of this section 
for the benefit year for which the applicants in his or her family are 
requesting coverage;
    (D) The applicant attests that the tax filer's filing status has 
changed or is reasonably expected to change for the benefit year for 
which the applicants in his or her family are requesting coverage; or
    (E) An applicant in the tax filer's family has filed an application 
for unemployment benefits.
    (v) Alternate verification process. If a tax filer qualifies for an 
alternate

[[Page 307]]

verification process based on the requirements specified in paragraph 
(c)(3)(iv) of this section and the applicant's attestation to projected 
annual household income, as described in paragraph (c)(3)(ii)(B) of this 
section, is no more than ten percent below the annual household income 
computed in accordance with paragraph (c)(3)(ii)(A) of this section, the 
Exchange must accept the applicant's attestation without further 
verification.
    (vi) Alternate verification process for decreases in annual 
household income estimates and for situations in which tax return data 
is unavailable. If a tax filer qualifies for an alternate verification 
process based on the requirements specified in paragraph (c)(3)(iv) of 
this section and the applicant's attestation to projected annual 
household income, as described in paragraph (c)(3)(ii)(B) of this 
section, is more than a reasonable threshold below the annual household 
income computed in accordance with paragraph (c)(3)(ii)(A) of this 
section, or if data described in paragraph (c)(1)(i) of this section is 
unavailable, the Exchange must attempt to verify the applicant's 
attestation of the tax filer's projected annual household income by 
following the procedures specified in paragraph (c)(3)(vi)(A) through 
(G) of this section. For the purposes of this paragraph (c)(3)(vi), a 
reasonable threshold is established by the Exchange in guidance and 
approved by HHS, but must not be less than 10 percent, and can also 
include a threshold dollar amount. The Exchange's threshold is subject 
to approval by HHS.
    (A) Data. The Exchange must annualize data from the MAGI-based 
income sources specified in paragraph (c)(1)(ii) of this section, and 
obtain any data available from other electronic data sources that have 
been approved by HHS, based on evidence showing that such data sources 
are sufficiently accurate and offer less administrative complexity than 
paper verification.
    (B) Eligibility. To the extent that the applicant's attestation 
indicates that the information described in paragraph (c)(3)(vi)(A) of 
this section represents an accurate projection of the tax filer's 
household income for the benefit year for which coverage is requested, 
the Exchange must determine the tax filer's eligibility for advance 
payments of the premium tax credit and cost-sharing reductions based on 
the household income data in paragraph (c)(3)(vi)(A) of this section.
    (C) Increases in annual household income. If an applicant's 
attestation, in accordance with paragraph (c)(3)(ii)(B) of this section, 
indicates that a tax filer's annual household income has increased or is 
reasonably expected to increase from the data described in paragraph 
(c)(3)(vi)(A) of this section to the benefit year for which the 
applicant(s) in the tax filer's family are requesting coverage and the 
Exchange has not verified the applicant's MAGI-based income through the 
process specified in paragraph (c)(2)(ii) of this section to be within 
the applicable Medicaid or CHIP MAGI-based income standard, the Exchange 
must accept the applicant's attestation for the tax filer's family 
without further verification, unless:
    (1) The Exchange finds that an applicant's attestation of a tax 
filer's annual household income is not reasonably compatible with other 
information provided by the application filer, or
    (2) The data described in paragraph (c)(3)(vi)(A) of this section 
indicates that projected annual household income is under 100 percent 
FPL and the applicant's attestation to projected household income, as 
described in paragraph (c)(3)(ii)(B) of this section, is greater than or 
equal to 100 percent but not more than 400 percent of the FPL for the 
benefit year for which coverage is requested and is more than a 
reasonable threshold above the annual household income as computed using 
data sources described in paragraph (c)(3)(vi)(A) of this section, in 
which case the Exchange must follow the procedures specified in Sec.  
155.315(f)(1) through (4). The reasonable threshold used under this 
paragraph must be equal to the reasonable threshold established in 
accordance with paragraph (c)(3)(iii)(D) of this section.
    (D) Decreases in annual household income and situations in which 
electronic data is unavailable. If electronic data are unavailable or an 
applicant's attestation to projected annual household income, as 
described in paragraph (c)(3)(ii)(B) of this section, is more

[[Page 308]]

than a reasonable threshold below the annual household income as 
computed using data sources described in paragraphs (c)(3)(vi)(A) of 
this section, the Exchange must follow the procedures specified in Sec.  
155.315(f)(1) through (4). The reasonable threshold used under this 
paragraph must be equal to the reasonable threshold established in 
accordance with paragraph (c)(3)(vi) of this section.
    (E) If, following the 90-day period described in paragraph 
(c)(3)(vi)(D) of this section, an applicant has not responded to a 
request for additional information from the Exchange and the data 
sources specified in paragraph (c)(1) of this section indicate that an 
applicant in the tax filer's family is eligible for Medicaid or CHIP, 
the Exchange must not provide the applicant with eligibility for advance 
payments of the premium tax credit, cost-sharing reductions, Medicaid, 
CHIP or the BHP, if a BHP is operating in the service area of the 
Exchange.
    (F) If, at the conclusion of the period specified in Sec.  
155.315(f)(2)(ii), the Exchange remains unable to verify the applicant's 
attestation, the Exchange must determine the applicant's eligibility 
based on the information described in paragraph (c)(3)(ii)(A) of this 
section, notify the applicant of such determination in accordance with 
the notice requirements specified in Sec.  155.310(g), and implement 
such determination in accordance with the effective dates specified in 
Sec.  155.330(f).
    (G) If, at the conclusion of the period specified in Sec.  
155.315(f)(2)(ii), the Exchange remains unable to verify the applicant's 
attestation for the tax filer and the information described in paragraph 
(c)(3)(ii)(A) of this section is unavailable, the Exchange must 
determine the tax filer ineligible for advance payments of the premium 
tax credit and cost-sharing reductions, notify the applicant of such 
determination in accordance with the notice requirement specified in 
Sec.  155.310(g), and discontinue any advance payments of the premium 
tax credit and cost-sharing reductions in accordance with the effective 
dates specified in Sec.  155.330(f).
    (vii) For the purposes of paragraph (c)(3) of this section, 
``household income'' means household income as specified in 26 CFR 
1.36B-1(e).
    (viii) For the purposes of paragraph (c)(3) of this section, 
``family size'' means family size as specified in 26 CFR 1.36B-1(d).
    (viii) For purposes of paragraph (c)(3) of this section, ``family 
size'' means family size as specified in section 36B(d)(1) of the Code.
    (4) The Exchange must provide education and assistance to an 
applicant regarding the process specified in this paragraph.
    (d) Verification related to enrollment in an eligible employer-
sponsored plan and eligibility for qualifying coverage in an eligible 
employer-sponsored plan--(1) General requirement. The Exchange must 
verify whether an applicant reasonably expects to be enrolled in an 
eligible employer-sponsored plan or is eligible for qualifying coverage 
in an eligible employer-sponsored plan for the benefit year for which 
coverage is requested.
    (2) Data. The Exchange must--
    (i) Obtain data about enrollment in and eligibility for an eligible 
employer-sponsored plan from any electronic data sources that are 
available to the Exchange and which have been approved by HHS, based on 
evidence showing that such data sources are sufficiently current, 
accurate, and minimize administrative burden.
    (ii) Obtain any available data regarding enrollment in employer-
sponsored coverage or eligibility for qualifying coverage in an eligible 
employer-sponsored plan based on federal employment by transmitting 
identifying information specified by HHS to HHS for HHS to provide the 
necessary verification using data obtained by HHS.
    (iii) Obtain any available data from the SHOP that corresponds to 
the State in which the Exchange is operating.
    (3) Verification procedures. (i) If an applicant's attestation is 
not reasonably compatible with the information obtained by the Exchange 
as specified in paragraphs (d)(2)(i) through (iii) of this section, 
other information provided by the application filer, or other 
information in the records of the Exchange,

[[Page 309]]

the Exchange must follow the procedures specified in Sec.  155.315(f).
    (ii) Except as specified in paragraph (d)(3)(i) or (d)(4)(i) of this 
section, the Exchange must accept an applicant's attestation regarding 
the verification specified in paragraph (d) of this section without 
further verification.
    (4) Alternate procedures. For any benefit year for which it does not 
reasonably expect to obtain sufficient verification data as described in 
paragraphs (d)(2)(i) through (iii) of this section, the Exchange must 
follow the procedures specified in paragraph (d)(4)(i) of this section 
or, for benefit years 2016 through 2019, the Exchange may follow the 
procedures specified in paragraph (d)(4)(ii) of this section. For 
purposes of this paragraph (d)(4), the Exchange reasonably expects to 
obtain sufficient verification data for any benefit year when, for the 
benefit year, the Exchange is able to obtain data about enrollment in 
and eligibility for qualifying coverage in an eligible employer-
sponsored plan from at least one electronic data source that is 
available to the Exchange and that has been approved by HHS, based on 
evidence showing that the data source is sufficiently current, accurate, 
and minimizes administrative burden, as described under paragraph 
(d)(2)(i) of this section.
    (i) Select a statistically significant random sample of applicants 
for whom the Exchange does not have any of the information specified in 
paragraphs (d)(2)(i) through (iii) of this section and--
    (A) Provide notice to the applicant indicating that the Exchange 
will be contacting any employer identified on the application for the 
applicant and the members of his or her household, as defined in 26 CFR 
1.36B-1(d), to verify whether the applicant is enrolled in an eligible 
employer-sponsored plan or is eligible for qualifying coverage in an 
eligible employer-sponsored plan for the benefit year for which coverage 
is requested;
    (B) Proceed with all other elements of the eligibility determination 
using the applicant's attestation, and provide eligibility for 
enrollment in a QHP to the extent that an applicant is otherwise 
qualified;
    (C) Ensure that advance payments of the premium tax credit and cost-
sharing reductions are provided on behalf of an applicant who is 
otherwise qualified for such payments and reductions, as described in 
Sec.  155.305, if the tax filer attests to the Exchange that he or she 
understands that any advance payments of the premium tax credit paid on 
his or her behalf are subject to reconciliation;
    (D) Make reasonable attempts to contact any employer identified on 
the application for the applicant and the members of his or her 
household, as defined in 26 CFR 1.36B-1(d), to verify whether the 
applicant is enrolled in an eligible employer-sponsored plan or is 
eligible for qualifying coverage in an eligible employer-sponsored plan 
for the benefit year for which coverage is requested;
    (E) If the Exchange receives any information from an employer 
relevant to the applicant's enrollment in an eligible employer-sponsored 
plan or eligibility for qualifying coverage in an eligible employer-
sponsored plan, the Exchange must determine the applicant's eligibility 
based on such information and in accordance with the effective dates 
specified in Sec.  155.330(f), and if such information changes his or 
her eligibility determination, notify the applicant and his or her 
employer or employers of such determination in accordance with the 
notice requirements specified in Sec.  155.310(g) and (h);
    (F) If, after a period of 90 days from the date on which the notice 
described in paragraph (d)(4)(i)(A) of this section is sent to the 
applicant, the Exchange is unable to obtain the necessary information 
from an employer, the Exchange must determine the applicant's 
eligibility based on his or her attestation regarding coverage provided 
by that employer.
    (G) To carry out the process described in paragraph (d)(4)(i) of 
this section, the Exchange must only disclose an individual's 
information to an employer to the extent necessary for the employer to 
identify the employee.
    (ii) Establish an alternative process approved by HHS.
    (e) Additional verification related to immigration status for 
Medicaid and CHIP.

[[Page 310]]

(1) For purposes of determining eligibility for Medicaid, the Exchange 
must verify whether an applicant who does not attest to being a citizen 
or a national has satisfactory immigration status to be eligible for 
Medicaid, as required by 42 CFR 435.406 and, if applicable under the 
State Medicaid plan, section 1903(v)(4) of the Act.
    (2) For purposes of determining eligibility for CHIP, the Exchange 
must verify whether an applicant who does not attest to being a citizen 
or a national has satisfactory immigration status to be eligible for 
CHIP, in accordance with 42 CFR 457.320(b) and if applicable under the 
State Child Health Plan, section 2107(e)(1)(J) of the Act.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42316, July 15, 2013; 
78 FR 54136, Aug. 30, 2013; 79 FR 30347, May 27, 2014; 81 FR 12341, Mar. 
8, 2016; 83 FR 17061, Apr. 17, 2018]



Sec.  155.330  Eligibility redetermination during a benefit year.

    (a) General requirement. The Exchange must redetermine the 
eligibility of an enrollee in a QHP through the Exchange during the 
benefit year if it receives and verifies new information reported by an 
enrollee or identifies updated information through the data matching 
described in paragraph (d) of this section.
    (b) Requirement for individuals to report changes. (1) Except as 
specified in paragraphs (b)(2) and (3) of this section, the Exchange 
must require an enrollee to report any change with respect to the 
eligibility standards specified in Sec.  155.305 within 30 days of such 
change.
    (2) The Exchange must not require an enrollee who did not request an 
eligibility determination for insurance affordability programs to report 
changes that affect eligibility for insurance affordability programs.
    (3) The Exchange may establish a reasonable threshold for changes in 
income, such that an enrollee who experiences a change in income that is 
below the threshold is not required to report such change.
    (4) The Exchange must allow an enrollee, or an application filer on 
behalf of the enrollee, to report changes via the channels available for 
the submission of an application, as described in Sec.  155.405(c)(2), 
except that the Exchange is permitted but not required to allow an 
enrollee, or an application filer, on behalf of the enrollee, to report 
changes via mail.
    (c) Verification of reported changes. The Exchange must--
    (1) Verify any information reported by an enrollee in accordance 
with the processes specified in Sec. Sec.  155.315 and 155.320 prior to 
using such information in an eligibility redetermination; and
    (2) Provide periodic electronic notifications regarding the 
requirements for reporting changes and an enrollee's opportunity to 
report any changes as described in paragraph (b)(3) of this section, to 
an enrollee who has elected to receive electronic notifications, unless 
he or she has declined to receive notifications under this paragraph 
(c)(2).
    (d) Periodic examination of data sources--(1) General requirement. 
Subject to paragraph (d)(3) of this section, the Exchange must 
periodically examine available data sources described in Sec. Sec.  
155.315(b)(1) and 155.320(b) to identify the following changes:
    (i) Death; and
    (ii) For an enrollee on whose behalf advance payments of the premium 
tax credit or cost-sharing reductions are being provided, eligibility 
determinations for or enrollment in Medicare, Medicaid, CHIP, or the 
Basic Health Program, if a Basic Health Program is operating in the 
service area of the Exchange.
    (2) Flexibility. The Exchange may make additional efforts to 
identify and act on changes that may affect an enrollee's eligibility 
for enrollment in a QHP through the Exchange or for insurance 
affordability programs, provided that such efforts--
    (i) Would reduce the administrative costs and burdens on individuals 
while maintaining accuracy and minimizing delay, that it would not 
undermine coordination with Medicaid and CHIP, and that applicable 
requirements under Sec. Sec.  155.260, 155.270, 155.315(i), and section 
6103 of the Code with respect to the confidentiality, disclosure, 
maintenance, or use of such information will be met; and
    (ii) Comply with the standards specified in paragraph (e)(2) of this 
section.

[[Page 311]]

    (3) Definition of periodically. Beginning with the 2021 calendar 
year, the Exchange must perform the periodic examination of data sources 
described in paragraph (d)(1)(ii) of this section at least twice in a 
calendar year. State Exchanges that have implemented a fully integrated 
eligibility system with their respective State Medicaid programs, that 
have a single eligibility rules engine that uses MAGI to determine 
eligibility for advance payments of the premium tax credit, cost-sharing 
reductions, Medicaid, CHIP, and the BHP, if a BHP is operating in the 
service area of the Exchange, will be deemed in compliance with the 
Medicaid/CHIP PDM requirements and, if applicable, BHP PDM requirements, 
in paragraphs (d)(1)(ii) and (d)(3) of this section.
    (e) Redetermination and notification of eligibility--(1) Enrollee-
reported data. If the Exchange verifies updated information reported by 
an enrollee, the Exchange must--
    (i) Redetermine the enrollee's eligibility in accordance with the 
standards specified in Sec.  155.305;
    (ii) Notify the enrollee regarding the determination in accordance 
with the requirements specified in Sec.  155.310(g); and
    (iii) Notify the enrollee's employer, as applicable, in accordance 
with the requirements specified in Sec.  155.310(h).
    (2) Data matching. (i) Except as provided in paragraph (e)(2)(iii) 
of this section, if the Exchange identifies updated information 
regarding death, in accordance with paragraph (d)(1)(i) of this section, 
or regarding any factor of eligibility not regarding income, family 
size, or family composition, or tax filing status, the Exchange must--
    (A) Notify the enrollee regarding the updated information, as well 
as the enrollee's projected eligibility determination after considering 
such information.
    (B) Allow an enrollee 30 days from the date of the notice to notify 
the Exchange that such information is inaccurate.
    (C) If the enrollee responds contesting the updated information, 
proceed in accordance with Sec.  155.315(f) of this part.
    (D) If the enrollee does not respond contesting the updated 
information within the 30-day period specified in paragraph (e)(2)(i)(B) 
of this section, proceed in accordance with paragraphs (e)(1)(i) and 
(ii) of this section, provided the enrollee has not directed the 
Exchange to terminate his or her coverage under such circumstances, in 
which case the Exchange will terminate the enrollee's coverage in 
accordance with Sec.  155.430(b)(1)(ii), and provided the enrollee has 
not been determined to be deceased, in which case the Exchange will 
terminate the enrollee's coverage in accordance with Sec.  
155.430(d)(7).
    (ii) If the Exchange identifies updated information regarding 
income, family size, or family composition, with the exception of 
information regarding death, the Exchange must--
    (A) Follow procedures described in paragraph (e)(2)(i)(A) and (B) of 
this section; and
    (B) If the enrollee responds confirming the updated information, 
proceed in accordance with paragraphs (e)(1)(i) and (ii) of this 
section.
    (C) If the enrollee does not respond within the 30-day period 
specified in paragraph (e)(2)(i)(B) of this section, maintain the 
enrollee's existing eligibility determination without considering the 
updated information.
    (D) If the enrollee provides more up-to-date information, proceed in 
accordance with paragraph (c)(1) of this section.
    (iii) If the Exchange identifies updated information that the tax 
filer for the enrollee's household or the tax filer's spouse did not 
comply with the requirements described in Sec.  155.305(f)(4), the 
Exchange when redetermining and providing notification of eligibility 
for advance payments of the premium tax credit must:
    (A) Follow the procedures specified in paragraph (e)(2)(i) of this 
section;
    (B) Follow the procedures in guidance published by the Secretary; or
    (C) Follow alternative procedures approved by the Secretary based on 
a showing by the Exchange that the alternative procedures facilitate 
continued enrollment in coverage with financial assistance for which the 
enrollee remains eligible, provide appropriate

[[Page 312]]

information about the process to the enrollee (including regarding any 
action by the enrollee necessary to obtain the most accurate 
redetermination of eligibility), and provide adequate program integrity 
protections and safeguards for Federal tax information under section 
6103 of the Internal Revenue Code with respect to the confidentiality, 
disclosure, maintenance, or use of such information.
    (f) Effective dates. (1) Except as specified in paragraphs (f)(2) 
through (f)(5) of this section, the Exchange must implement changes--
    (i) Resulting from a redetermination under this section on the first 
day of the month following the date of the notice described in paragraph 
(e)(1)(ii) of this section; or
    (ii) Resulting from an appeal decision, on the date specified in the 
appeal decision; or
    (iii) Affecting enrollment or premiums only, on the first day of the 
month following the date on which the Exchange is notified of the 
change;
    (2) Except as specified in paragraphs (f)(3) through (5) of this 
section, the Exchange may determine a reasonable point in a month after 
which a change described in paragraph (f)(1) of this section will not be 
effective until the first day of the month after the month specified in 
paragraph (f)(1) of this section. Such reasonable point in a month must 
be no earlier than the 15th of the month.
    (3) Except as specified in paragraphs (f)(4) and (5) of this 
section, the Exchange must implement a change described in paragraph 
(f)(1) of this section that results in a decreased amount of advance 
payments of the premium tax credit, or a change in the level of cost-
sharing reductions, and for which the date of the notices described in 
paragraphs (f)(1)(i) and (ii) of this section, or the date on which the 
Exchange is notified in accordance with paragraph (f)(1)(iii) of this 
section is after the 15th of the month, on the first day of the month 
after the month specified in paragraph (f)(1) of this section.
    (4) The Exchange must implement a change associated with the events 
described in Sec.  155.420(b)(2)(i) and (ii) on the coverage effective 
dates described in Sec.  155.420(b)(2)(i) and (ii), respectively.
    (5) Notwithstanding paragraphs (f)(1) through (f)(4) of this 
section, the Exchange may provide the effective date of a change 
associated with the events described in Sec.  155.420(d)(4), (d)(5), and 
(d)(9) based on the specific circumstances of each situation.
    (g) Recalculation of advance payments of the premium tax credit and 
cost-sharing reductions. (1) When an eligibility redetermination in 
accordance with this section results in a change in the amount of 
advance payments of the premium tax credit for the benefit year, the 
Exchange must:
    (i) Recalculate the amount of advance payments of the premium tax 
credit in such a manner as to account for any advance payments already 
made on behalf of the tax filer for the benefit year for which 
information is available to the Exchange, such that the recalculated 
advance payment amount is projected to result in total advance payments 
for the benefit year that correspond to the tax filer's total projected 
premium tax credit for the benefit year, calculated in accordance with 
26 CFR 1.36B-3 (or, if less than zero, be set at zero); or
    (ii) Recalculate advance payments of the premium tax credit using an 
alternate method that has been approved by the Secretary.
    (2) When an eligibility redetermination in accordance with this 
section results in a change in cost-sharing reductions, the Exchange 
must determine an individual eligible for the category of cost-sharing 
reductions that corresponds to his or her expected annual household 
income for the benefit year (subject to the special rule for family 
policies set forth in Sec.  155.305(g)(3)).

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 15533, Mar. 11, 2013; 
78 FR 42318, July 15, 2013; 79 FR 30347, May 27, 2014; 79 FR 53005, 
Sept. 5, 2014; 81 FR 94177, Dec. 22, 2016; 84 FR 71710, Dec. 27, 2019; 
85 FR 29259, May 14, 2020]



Sec.  155.335  Annual eligibility redetermination.

    (a) General requirement. (1) Except as specified in paragraphs (l) 
and (m) of this section, the Exchange must redetermine the eligibility 
of a qualified individual on an annual basis.
    (2) The Exchange must conduct annual redeterminations required under

[[Page 313]]

paragraph (a)(1) of this section using one of the following:
    (i) The procedures described in paragraphs (b) through (m) of this 
section;
    (ii) Alternative procedures specified by the Secretary for the 
applicable benefit year; or
    (iii) Alternative procedures approved by the Secretary based on a 
showing by the Exchange that the alternative procedures would facilitate 
continued enrollment in coverage for which the enrollee remains 
eligible, provide clear information about the process to the qualified 
individual or enrollee (including regarding any action by the qualified 
individual or enrollee necessary to obtain the most accurate 
redetermination of eligibility), and provide adequate program integrity 
protections.
    (b) Updated income and family size information. In the case of a 
qualified individual who requested an eligibility determination for 
insurance affordability programs in accordance with Sec.  155.310(b) of 
this part, the Exchange must request updated tax return information, if 
the qualified individual has authorized the request of such tax return 
information, data regarding Social Security benefits, and data regarding 
MAGI-based income as described in Sec.  155.320(c)(1) of this part for 
use in the qualified individual's eligibility redetermination.
    (c) Notice to qualified individual. The Exchange must provide a 
qualified individual with an annual redetermination notice including the 
following:
    (1)-(2) [Reserved]
    (3) The qualified individual's projected eligibility determination 
for the following year, after considering any updated information 
described in paragraph (b) of this section, including, if applicable, 
the amount of any advance payments of the premium tax credit and the 
level of any cost-sharing reductions or eligibility for Medicaid, CHIP 
or BHP.
    (d) Timing. (1) For redeterminations under this section for coverage 
effective January 1, 2015, the Exchange must satisfy the notice 
provisions of paragraph (c) of this section and Sec.  155.410(d) through 
a single, coordinated notice.
    (2) For redeterminations under this section for coverage effective 
on or after January 1, 2017, the Exchange may send the notice specified 
in paragraph (c) of this section separately from the notice of annual 
open enrollment specified in Sec.  155.410(d), provided that--
    (i) The Exchange sends the notice specified in paragraph (c) of this 
section no earlier than the date of the notice of annual open enrollment 
specified in Sec.  155.410(d); and
    (ii) The timing of the notice specified in paragraph (c) of this 
section allows a reasonable amount of time for the enrollee to review 
the notice, provide a timely response, and for the Exchange to implement 
any changes in coverage elected during the annual open enrollment 
period.
    (e) Changes reported by qualified individuals. Except as specified 
in paragraph (e)(1) of this section, the Exchange must require a 
qualified individual to report any change with respect to the 
eligibility standards specified in Sec.  155.305 within 30 days of such 
change.
    (1) The Exchange must not require a qualified individual who did not 
request an eligibility determination for insurance affordability 
programs to report changes that affect eligibility for insurance 
affordability programs.
    (2) The Exchange must allow a qualified individual, or an 
application filer, on behalf of the qualified individual, to report 
changes via the channels available for the submission of an application, 
as described in Sec.  155.405(c)(2), except that the Exchange is 
permitted but not required to allow a qualified individual, or an 
application filer, on behalf of the qualified individual, to report 
changes via mail.
    (f) Verification of reported changes. The Exchange must verify any 
information reported by a qualified individual under paragraph (e) of 
this section using the processes specified in Sec. Sec.  155.315 and 
155.320, including the relevant provisions in those sections regarding 
inconsistencies, prior to using such information to determine 
eligibility.
    (g) Response to redetermination notice. (1) The Exchange must 
require a qualified individual, or an application filer, on behalf of 
the qualified individual, to

[[Page 314]]

sign and return the notice described in paragraph (c) of this section.
    (2) To the extent that a qualified individual does not sign and 
return the notice described in paragraph (c) of this section within the 
30-day period specified in paragraph (e) of this section, the Exchange 
must proceed in accordance with the procedures specified in paragraph 
(h)(1) of this section.
    (h) Redetermination and notification of eligibility. (1) After the 
30-day period specified in paragraph (e) of this section has elapsed, 
the Exchange must--
    (i) Redetermine the qualified individual's eligibility in accordance 
with the standards specified in Sec.  155.305 using the information 
provided to the qualified individual in the notice specified in 
paragraph (c) of this section, as supplemented with any information 
reported by the qualified individual and verified by the Exchange in 
accordance with paragraphs (e) and (f) of this section.
    (ii) Notify the qualified individual in accordance with the 
requirements specified in Sec.  155.310(g).
    (iii) If applicable, notify the qualified individual employer, in 
accordance with the requirements specified in Sec.  155.310(h).
    (2) If a qualified individual reports a change for the information 
provided in the notice specified in paragraph (c) of this section that 
the Exchange has not verified as of the end of the 30-day period 
specified in paragraph (e) of this section, the Exchange must 
redetermine the qualified individual's eligibility after completing 
verification, as specified in paragraph (f) of this section.
    (i) Effective date of annual redetermination. The Exchange must 
ensure that a redetermination under this section is effective on the 
first day of the coverage year following the year in which the Exchange 
provided the notice in paragraph (c) of this section, or in accordance 
with the rules specified in Sec.  155.330(f) regarding effective dates, 
whichever is later.
    (j) Re-enrollment. If an enrollee remains eligible for enrollment in 
a QHP through the Exchange upon annual redetermination and--
    (1) The product under which the QHP in which he or she is enrolled 
remains available through the Exchange for renewal, consistent with 
Sec.  147.106 of this subchapter, such enrollee will have his or her 
enrollment through the Exchange in a QHP under that product renewed, 
unless he or she terminates coverage, including termination of coverage 
in connection with voluntarily selecting a different QHP, in accordance 
with Sec.  155.430. The Exchange will ensure that re-enrollment in 
coverage under this paragraph (j)(1) occurs under the same product 
(except as provided in paragraph (j)(1)(iii)(A) of this section) in 
which the enrollee was enrolled, as follows:
    (i) The enrollee's coverage will be renewed in the same plan as the 
enrollee's current QHP, unless the current QHP is not available through 
the Exchange.
    (ii) If the enrollee's current QHP is not available through the 
Exchange, the enrollee's coverage will be renewed in a QHP at the same 
metal level as the enrollee's current QHP within the same product.
    (iii) If the enrollee's current QHP is not available through the 
Exchange and the enrollee's product no longer includes a QHP at the same 
metal level as the enrollee's current QHP and--
    (A) The enrollee's current QHP is a silver level plan, the enrollee 
will be re-enrolled in a silver level QHP under a different product 
offered by the same QHP issuer that is most similar to the enrollee's 
current product. If no such silver level QHP is available for enrollment 
through the Exchange, the enrollee's coverage will be renewed in a QHP 
that is one metal level higher or lower than the enrollee's current QHP 
under the same product;
    (B) The enrollee's current QHP is not a silver level plan, the 
enrollee's coverage will be renewed in a QHP that is one metal level 
higher or lower than the enrollee's current QHP under the same product; 
or
    (iv) If the enrollee's current QHP is not available through the 
Exchange and the enrollee's product no longer includes a QHP that is at 
the same metal level as, or one metal level higher or lower than the 
enrollee's current QHP, the enrollee's coverage will be renewed in any 
other QHP offered under the product in which the enrollee's current

[[Page 315]]

QHP is offered in which the enrollee is eligible to enroll.
    (2) No plans under the product under which the QHP in which he or 
she is enrolled are available through the Exchange for renewal, 
consistent with Sec.  147.106 of this subchapter, such enrollee may be 
enrolled in a QHP under a different product offered by the same QHP 
issuer, to the extent permitted by applicable State law, unless he or 
she terminates coverage, including termination of coverage in connection 
with voluntarily selecting a different QHP, in accordance with Sec.  
155.430. The Exchange will ensure that re-enrollment in coverage under 
this paragraph (j)(2) occurs as follows:
    (i) The enrollee will be re-enrolled in a QHP at the same metal 
level as the enrollee's current QHP in the product offered by the same 
issuer that is the most similar to the enrollee's current product;
    (ii) If the issuer does not offer another QHP at the same metal 
level as the enrollee's current QHP, the enrollee will be re-enrolled in 
a QHP that is one metal level higher or lower than the enrollee's 
current QHP in the product offered by the same issuer through the 
Exchange that is the most similar to the enrollee's current product; or
    (iii) If the issuer does not offer another QHP through the Exchange 
at the same metal level as, or one metal level higher or lower than the 
enrollee's current QHP, the enrollee will be re-enrolled in any other 
QHP offered by the same issuer in which the enrollee is eligible to 
enroll.
    (3) No QHPs from the same issuer are available through the Exchange, 
the enrollee may be enrolled through the Exchange in a QHP issued by a 
different issuer, to the extent permitted by applicable State law, 
unless he or she terminates coverage, including termination of coverage 
in connection with voluntarily selecting a different QHP, in accordance 
with Sec.  155.430. The Exchange will ensure that re-enrollment in 
coverage under this paragraph (j)(3) occurs as follows:
    (i) As directed by the applicable State regulatory authority; or
    (ii) If the applicable State regulatory authority declines to 
provide direction, in a similar QHP from a different issuer, as 
determined by the Exchange.
    (k) Authorization of the release of tax data to support annual 
redetermination. (1) The Exchange must have authorization from a 
qualified individual to obtain updated tax return information described 
in paragraph (b) of this section for purposes of conducting an annual 
redetermination.
    (2) The Exchange is authorized to obtain the updated tax return 
information described in paragraph (b) of this section for a period of 
no more than five years based on a single authorization, provided that--
    (i) An individual may decline to authorize the Exchange to obtain 
updated tax return information; or
    (ii) An individual may authorize the Exchange to obtain updated tax 
return information for fewer than five years; and
    (iii) The Exchange must allow an individual to discontinue, change, 
or renew his or her authorization at any time.
    (l) Limitation on redetermination. To the extent that a qualified 
individual has requested an eligibility determination for insurance 
affordability programs in accordance with Sec.  155.310(b) and the 
Exchange does not have an active authorization to obtain tax data as a 
part of the annual redetermination process, the Exchange must 
redetermine the qualified individual's eligibility only for enrollment 
in a QHP and notify the enrollee in accordance with the timing described 
in paragraph (d) of this section. The Exchange may not proceed with a 
redetermination for insurance affordability programs until such 
authorization has been obtained or the qualified individual continues 
his or her request for an eligibility determination for insurance 
affordability programs in accordance with Sec.  155.310(b).
    (m) Special rule. The Exchange must not redetermine a qualified 
individual's eligibility in accordance with this section if the 
qualified individual's eligibility was redetermined under this section 
during the prior year, and the qualified individual was not enrolled in 
a QHP through the Exchange at the time of such redetermination, and has

[[Page 316]]

not enrolled in a QHP through the Exchange since such redetermination.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42319, July 15, 2013; 
79 FR 53005, Sept. 5, 2014; 81 FR 12342, Mar. 8, 2016]



Sec.  155.340  Administration of advance payments of the premium tax
credit and cost-sharing reductions.

    (a) Requirement to provide information to enable advance payments of 
the premium tax credit and cost-sharing reductions. In the event that 
the Exchange determines that a tax filer is eligible for advance 
payments of the premium tax credit, an applicant is eligible for cost-
sharing reductions, or that such eligibility for such programs has 
changed, the Exchange must, simultaneously--
    (1) Transmit eligibility and enrollment information to HHS necessary 
to enable HHS to begin, end, or change advance payments of the premium 
tax credit or cost-sharing reductions; and
    (2) Notify and transmit information necessary to enable the issuer 
of the QHP to implement, discontinue the implementation, or modify the 
level of advance payments of the premium tax credit or cost-sharing 
reductions, as applicable, including:
    (i) The dollar amount of the advance payment; and
    (ii) The cost-sharing reductions eligibility category.
    (b) Requirement to provide information related to employer 
responsibility. (1) In the event that the Exchange determines that an 
individual is eligible for advance payments of the premium tax credit or 
cost-sharing reductions based in part on a finding that an individual's 
employer does not provide minimum essential coverage, or provides 
minimum essential coverage that is unaffordable, within the standard of 
26 CFR 1.36B-2(c)(3)(v), or provide minimum essential coverage that does 
not meet the minimum value standard of Sec.  156.145, the Exchange must 
transmit the individual's name and taxpayer identification number to 
HHS.
    (2) If an enrollee for whom advance payments of the premium tax 
credit are made or who is receiving cost-sharing reductions notifies the 
Exchange that he or she has changed employers, the Exchange must 
transmit the enrollee's name and taxpayer identification number to HHS.
    (3) In the event that an individual for whom advance payments of the 
premium tax credit are made or who is receiving cost-sharing reductions 
terminates coverage from a QHP through the Exchange during a benefit 
year, the Exchange must--
    (i) Transmit the individual's name and taxpayer identification 
number, and the effective date of coverage termination, to HHS, which 
will transmit it to the Secretary of the Treasury; and,
    (ii) Transmit the individual's name and the effective date of the 
termination of coverage to his or her employer.
    (c) Requirement to provide information related to reconciliation of 
advance payments of the premium tax credit. The Exchange must comply 
with the requirements of 26 CFR 1.36B-5 regarding reporting to the IRS 
and to taxpayers.
    (d) Timeliness standard. The Exchange must transmit all information 
required in accordance with paragraphs (a) and (b) of this section 
promptly and without undue delay.
    (e) Allocation of advance payments of the premium tax credit among 
policies. If one or more advance payments of the premium tax credit are 
to be made on behalf of a tax filer (or two tax filers covered by the 
same plan(s)), and individuals in the tax filers' tax households are 
enrolled in more than one QHP or stand-alone dental plan, then the 
advance payment must be allocated as follows:
    (1) That portion of the advance payment of the premium tax credit 
that is less than or equal to the aggregate adjusted monthly premiums, 
as defined in 26 CFR 1.36B-3(e), for the QHP policies properly allocated 
to EHB must be allocated among the QHP policies in a reasonable and 
consistent manner specified by the Exchange; and
    (2) Any remaining advance payment of the premium tax credit must be 
allocated among the stand-alone dental policies in a reasonable and 
consistent manner specified by the Exchange.

[[Page 317]]

    (f) Allocation of advance payments of the premium tax credit among 
policies offered through a Federally-facilitated Exchange. If one or 
more advance payments of the premium tax credit are to be made on behalf 
of a tax filer (or two tax filers covered by the same plan(s)), and 
individuals in the tax filers' tax households are enrolled in more than 
one QHP or stand-alone dental plan offered through a Federally-
facilitated Exchange, then that portion of the advance payment of the 
premium tax credit that is less than or equal to the aggregate adjusted 
monthly premiums, as defined in 26 CFR 1.36B-3(e), properly allocated to 
EHB for the QHP policies, will be allocated among the QHP policies, as 
described in Sec.  155.340(f)(1); and any remaining advance payment of 
the premium tax credit will be allocated among the stand-alone dental 
policies based on the methodology described in Sec.  155.340(f)(2).
    (1) That portion of the advance payment(s) of the premium tax credit 
to be allocated among QHP policies will be allocated based on the number 
of enrollees covered under the QHP, weighted by the age of the 
enrollees, using the default uniform age rating curve established by the 
Secretary of HHS under 45 CFR 147.102(e), with the portion allocated to 
any single QHP policy not to exceed the portion of the QHP's adjusted 
monthly premium properly allocated to EHB. If the portion of the advance 
payment(s) of the premium tax credit allocated to a QHP under this 
subparagraph exceeds the portion of the same QHP's adjusted monthly 
premium properly allocated to EHB, the remainder will be allocated 
evenly among all other QHPs in which individuals in the tax filers' tax 
households are enrolled.
    (2) That portion of the advance payment(s) of the premium tax credit 
to be allocated among stand-alone dental policies will be allocated 
based on the number of enrollees covered under the stand-alone dental 
policy, weighted by the age of the enrollees, using the default uniform 
age rating curve established by the Secretary of HHS under 45 CFR 
147.102(e), with the portion allocated to any single stand-alone dental 
policy not to exceed the portion of the stand-alone dental policy 
premium properly allocated to EHB. If the portion of the advance 
payment(s) of the premium tax credit allocated to a stand-alone dental 
policy under this subparagraph exceeds the portion of the same policy's 
premium properly allocated to EHB, the remainder will be allocated 
evenly among all other stand-alone dental policies in which individuals 
in the tax filers' tax households are enrolled.
    (g) Reduction of enrollee's portion of premium to account for 
advance payments of the premium tax credit. If an Exchange is 
facilitating the collection and payment of premiums to QHP issuers and 
stand-alone dental plans on behalf of enrollees under Sec.  155.240, and 
if a QHP issuer or stand-alone dental plan has been notified that it 
will receive an advance payment of the premium tax credit on behalf of 
an enrollee for whom the Exchange is facilitating such functions, the 
Exchange must--
    (1) Reduce the portion of the premium for the policy collected from 
the individual for the applicable month(s) by the amount of the advance 
payment of the premium tax credit; and
    (2) Include with each billing statement, as applicable, to or for 
the individual the amount of the advance payment of the premium tax 
credit for the applicable month(s) and the remaining premium owed for 
the policy.
    (h) Failure to reduce enrollee's premiums to account for advance 
payments of the premium tax credit. If the Exchange discovers that it 
did not reduce an enrollee's premium by the amount of the advance 
payment of the premium tax credit, then the Exchange must notify the 
enrollee of the improper reduction within 45 calendar days of discovery 
of the improper reduction and refund the enrollee any excess premium 
paid by or for the enrollee as follows:
    (1) Unless a refund is requested by or for the enrollee, the 
Exchange must, within 45 calendar days of discovery of the error, apply 
the excess premium paid by or for the enrollee to the enrollee's portion 
of the premium (or refund the amount directly). If any excess premium 
remains, the Exchange must then apply the excess premium to the 
enrollee's portion of the premium

[[Page 318]]

for each subsequent month for the remainder of the period of enrollment 
or benefit year until the excess premium is fully refunded (or refund 
the remaining amount directly). If any excess premium remains at the end 
of the period of enrollment or benefit year, the Exchange must refund 
any excess premium within 45 calendar days of the end of the period of 
enrollment or benefit year, whichever comes first.
    (2) If a refund is requested by or for the enrollee, the refund must 
be provided within 45 calendar days of the date of the request.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 15533, Mar. 11, 2013; 
78 FR 42320, July 15, 2013; 78 FR 65095, Oct. 30, 2013]



Sec.  155.345  Coordination with Medicaid, CHIP, the Basic Health 
Program, and the Pre-existing Condition Insurance Plan.

    (a) Agreements. The Exchange must enter into agreements with 
agencies administering Medicaid, CHIP, and the BHP, if a BHP is 
operating in the service area of the Exchange, as are necessary to 
fulfill the requirements of this subpart and provide copies of any such 
agreements to HHS upon request. Such agreements must include a clear 
delineation of the responsibilities of each agency to--
    (1) Minimize burden on individuals;
    (2) Ensure prompt determinations of eligibility and enrollment in 
the appropriate program without undue delay, based on the date the 
application is submitted to or redetermination is initiated by the 
Exchange or the agency administering Medicaid, CHIP, or the BHP;
    (3) [Reserved]
    (4) Ensure compliance with paragraphs (c), (d), (e), and (g) of this 
section.
    (b) Responsibilities related to individuals potentially eligible for 
Medicaid based on other information or through other coverage groups. 
For an applicant who is not eligible for Medicaid based on the standards 
specified in Sec.  155.305(c), the Exchange must assess the information 
provided by the applicant on his or her application to determine whether 
he or she is potentially eligible for Medicaid based on factors not 
otherwise considered in this subpart.
    (c) Individuals requesting additional screening. The Exchange must 
notify an applicant of the opportunity to request a full determination 
of eligibility for Medicaid based on eligibility criteria that are not 
described in Sec.  155.305(c), and provide such an opportunity. The 
Exchange must also make such notification to an enrollee and provide an 
enrollee such opportunity in any determination made in accordance with 
Sec.  155.330 or Sec.  155.335.
    (d) Notification of applicant and State Medicaid agency. If an 
Exchange identifies an applicant as potentially eligible for Medicaid 
under paragraph (b) of this section or an applicant requests a full 
determination for Medicaid under paragraph (c) of this section, the 
Exchange must--
    (1) Transmit all information provided on the application and any 
information obtained or verified by, the Exchange to the State Medicaid 
agency, promptly and without undue delay; and
    (2) Notify the applicant of such transmittal.
    (e) Treatment of referrals to Medicaid on eligibility for advance 
payments of the premium tax credit and cost-sharing reductions. The 
Exchange must consider an applicant who is described in paragraph (d) of 
this section and has not been determined eligible for Medicaid based on 
the standards specified in Sec.  155.305(c) as ineligible for Medicaid 
for purposes of eligibility for advance payments of the premium tax 
credit or cost-sharing reductions until the State Medicaid agency 
notifies the Exchange that the applicant is eligible for Medicaid.
    (f) Special rule. If the Exchange verifies that a tax filer's 
household income, as defined in 26 CFR 1.36B-1(e), is less than 100 
percent of the FPL for the benefit year for which coverage is requested, 
determines that the tax filer is not eligible for advance payments of 
the premium tax credit based on Sec.  155.305(f)(2), and one or more 
applicants in the tax filer's household has been determined ineligible 
for Medicaid and CHIP based on income, the Exchange must--
    (1) Provide the applicant with any information regarding income used 
in the

[[Page 319]]

Medicaid and CHIP eligibility determination; and
    (2) Follow the procedures specified in Sec.  155.320(c)(3).
    (g) Determination of eligibility for individuals submitting 
applications directly to an agency administering Medicaid, CHIP, or the 
BHP. The Exchange, in consultation with the agency or agencies 
administering Medicaid, CHIP, and the BHP if a BHP is operating in the 
service area of the Exchange, must establish procedures to ensure that 
an eligibility determination for enrollment in a QHP, advance payments 
of the premium tax credit, and cost-sharing reductions is performed when 
an application is submitted directly to an agency administering 
Medicaid, CHIP, or the BHP if a BHP is operating in the service area of 
the Exchange. Under such procedures, the Exchange must--
    (1) Accept, via secure electronic interface, all information 
provided on the application and any information obtained or verified by, 
the agency administering Medicaid, CHIP, or the BHP, if a BHP is 
operating in the service area of the Exchange, for the individual, and 
not require submission of another application;
    (2) Notify such agency of the receipt of the information described 
in paragraph (g)(1) of this section and final eligibility determination 
for enrollment in a QHP, advance payments of the premium tax credit, and 
cost-sharing reductions.
    (3) Not duplicate any eligibility and verification findings already 
made by the transmitting agency, to the extent such findings are made in 
accordance with this part.
    (4) Not request information or documentation from the individual 
already provided to another agency administering an insurance 
affordability program and included in the transmission of information 
provided on the application or other information transmitted from the 
other agency.
    (5) Determine the individual's eligibility for enrollment in a QHP, 
advance payments of the premium tax credit, and cost-sharing reductions, 
promptly and without undue delay, and in accordance with this subpart.
    (6) Follow a streamlined process for eligibility determinations 
regardless of the agency that initially received an application.
    (h) Adherence to state decision regarding Medicaid and CHIP. The 
Exchange and the Exchange appeals entity must adhere to the eligibility 
determination or appeals decision for Medicaid or CHIP made by the State 
Medicaid or CHIP agency, or the appeals entity for such agency.
    (i) Standards for sharing information between the Exchange and the 
agencies administering Medicaid, CHIP, and the BHP. (1) The Exchange 
must utilize a secure electronic interface to exchange data with the 
agencies administering Medicaid, CHIP, and the BHP, if a BHP is 
operating in the service area of the Exchange, including to verify 
whether an applicant for insurance affordability programs has been 
determined eligible for Medicaid, CHIP, or the BHP, as specified in 
Sec.  155.320(b)(1)(ii), and for other functions required under this 
subpart.
    (2) Model agreements. The Exchange may utilize any model agreements 
as established by HHS for the purpose of sharing data as described in 
this section.
    (j) Transition from the Pre-existing Condition Insurance Plan 
(PCIP). The Exchange must follow procedures established in accordance 
with 45 CFR 152.45 to transition PCIP enrollees to the Exchange to 
ensure that there are no lapses in health coverage.

[77 FR 18444, Mar. 27, 2012, as amended at 77 FR 31515, May 29, 2012; 78 
FR 42320, July 15, 2013; 78 FR 54136, Aug. 30, 2013]



Sec.  155.350  Special eligibility standards and process for Indians.

    (a) Eligibility for cost-sharing reductions. (1) The Exchange must 
determine an applicant who is an Indian eligible for cost-sharing 
reductions if he or she--
    (i) Meets the requirements specified in Sec.  155.305(a) and Sec.  
155.305(f);
    (ii) Is expected to have a household income, as defined in 26 CFR 
1.36B-1(e) that does not exceed 300 percent of the FPL for the benefit 
year for which coverage is requested.
    (2) The Exchange may only provide cost-sharing reductions to an 
individual who is an Indian if he or she is

[[Page 320]]

enrolled in a QHP through the Exchange.
    (b) Special cost-sharing rule for Indians regardless of income. The 
Exchange must determine an applicant eligible for the special cost-
sharing rule described in section 1402(d)(2) of the Affordable Care Act 
if he or she is an Indian, without requiring the applicant to request an 
eligibility determination for insurance affordability programs in 
accordance with Sec.  155.310(b) in order to qualify for this rule.
    (c) Verification related to Indian status. To the extent that an 
applicant attests that he or she is an Indian, the Exchange must verify 
such attestation by--
    (1) Utilizing any relevant documentation verified in accordance with 
Sec.  155.315(f);
    (2) Relying on any electronic data sources that are available to the 
Exchange and which have been approved by HHS for this purpose, based on 
evidence showing that such data sources are sufficiently accurate and 
offer less administrative complexity than paper verification; or
    (3) To the extent that approved data sources are unavailable, an 
individual is not represented in available data sources, or data sources 
are not reasonably compatible with an applicant's attestation, the 
Exchange must follow the procedures specified in Sec.  155.315(f) and 
verify documentation provided by the applicant in accordance with the 
standards for acceptable documentation provided in section 
1903(x)(3)(B)(v) of the Social Security Act.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42321, July 15, 2013]



Sec.  155.355  Right to appeal.

    Individual appeals. The Exchange must include the notice of the 
right to appeal and instructions regarding how to file an appeal in any 
eligibility determination notice issued to the applicant in accordance 
with Sec.  155.310(g), Sec.  155.330(e)(1)(ii), or Sec.  
155.335(h)(1)(ii).



  Subpart E_Exchange Functions in the Individual Market: Enrollment in 
                         Qualified Health Plans



Sec.  155.400  Enrollment of qualified individuals into QHPs.

    (a) General requirements. The Exchange must accept a QHP selection 
from an applicant who is determined eligible for enrollment in a QHP in 
accordance with subpart D, and must--
    (1) Notify the issuer of the applicant's selected QHP; and
    (2) Transmit information necessary to enable the QHP issuer to 
enroll the applicant.
    (b) Timing of data exchange. The Exchange must:
    (1) Send eligibility and enrollment information to QHP issuers and 
HHS promptly and without undue delay; and
    (2) Establish a process by which a QHP issuer acknowledges the 
receipt of such information.
    (3) Send updated eligibility and enrollment information to HHS 
promptly and without undue delay, in a manner and timeframe as specified 
by HHS.
    (c) Records. The Exchange must maintain records of all enrollments 
in QHP issuers through the Exchange.
    (d) Reconcile files. The Exchange must reconcile enrollment 
information with QHP issuers and HHS no less than on a monthly basis.
    (e) Premium payment. Exchanges may, and the Federally-facilitated 
Exchanges and State-Based Exchanges on the Federal Platform will, 
require payment of a binder payment to effectuate an enrollment or to 
add coverage retroactively to an already effectuated enrollment. 
Exchanges may, and the Federally-facilitated Exchanges and State-Based 
Exchanges on the Federal Platform will, establish a standard policy for 
setting premium payment deadlines:
    (1) In a Federally-facilitated Exchange or State-Based Exchange on 
the Federal Platform:
    (i) For prospective coverage to be effectuated under regular 
coverage effective dates, as provided for in Sec.  155.410(f), the 
binder payment must consist of the first month's premium, and the 
deadline for making the binder payment must be no earlier than the 
coverage

[[Page 321]]

effective date, and no later than 30 calendar days from the coverage 
effective date.
    (ii) For prospective coverage to be effectuated under special 
effective dates, as provided for in Sec.  155.420(b)(2) and (3), the 
binder payment must consist of the first month's premium, and the 
deadline for making the binder payment must be no earlier than the 
coverage effective date and no later than 30 calendar days from the date 
the issuer receives the enrollment transaction or the coverage effective 
date, whichever is later.
    (iii) For coverage to be effectuated under retroactive effective 
dates, as provided for in Sec.  155.420(b)(2), including when 
retroactive effective dates are due to a delay until after special 
enrollment period verification, the binder payment must consist of the 
premium due for all months of retroactive coverage through the first 
prospective month of coverage, and the deadline for making the binder 
payment must be no earlier than 30 calendar days from the date the 
issuer receives the enrollment transaction. If only the premium for 1 
month of coverage is paid, only prospective coverage should be 
effectuated, in accordance with Sec.  155.420(b)(3).
    (2) Premium payment deadline extension. Exchanges may, and the 
Federally-facilitated Exchanges and State-Based Exchanges on the Federal 
Platform will, allow issuers experiencing billing or enrollment problems 
due to high volume or technical errors to implement a reasonable 
extension of the binder payment deadlines in paragraph (e)(1) of this 
section.
    (f) Processing enrollment transactions. The Exchange may provide 
requirements to QHP issuers regarding the instructions for processing 
electronic enrollment-related transactions.
    (g) Premium payment threshold. Exchanges may, and the Federally-
facilitated Exchanges and State-Based Exchanges on the Federal Platform 
will, allow issuers to implement, a premium payment threshold policy 
under which issuers can consider enrollees to have paid all amounts due 
if the enrollees pay an amount sufficient to maintain a percentage of 
total premium paid out of the total premium owed equal to or greater 
than a level prescribed by the issuer, provided that the level is 
reasonable and that the level and the policy are applied in a uniform 
manner to all enrollees. If an applicant or enrollee satisfies the 
premium payment threshold policy, the issuer may:
    (1) Effectuate an enrollment based on payment of the binder payment 
under paragraph (e) of this section.
    (2) Avoid triggering a grace period for non-payment of premium, as 
described by Sec.  156.270(d) of this subchapter or a grace period 
governed by State rules.
    (3) Avoid terminating the enrollment for non-payment of premium as, 
described by Sec. Sec.  156.270(g) of this subchapter and 
155.430(b)(2)(ii)(A) and (B).
    (h) Requirements. A State Exchange may rely on HHS to carry out the 
requirements of this section and other requirements contained within 
this subpart through a Federal platform agreement.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42321, July 15, 2013; 
79 FR 30348, May 27, 2014; 80 FR 10866, Feb. 27, 2015; 81 FR 12343, Mar. 
8, 2016; 81 FR 94177, Dec. 22, 2016; 82 FR 18381, Apr. 18, 2017; 85 FR 
29260, May 14, 2020]



Sec.  155.405  Single streamlined application.

    (a) The application. The Exchange must use a single streamlined 
application to determine eligibility and to collect information 
necessary for:
    (1) Enrollment in a QHP;
    (2) Advance payments of the premium tax credit;
    (3) Cost-sharing reductions; and
    (4) Medicaid, CHIP, or the BHP, where applicable.
    (b) Alternative application. If the Exchange seeks to use an 
alternative application, such application, as approved by HHS, must 
request the minimum information necessary for the purposes identified in 
paragraph (a) of this section.
    (c) Filing the single streamlined application. The Exchange must--
    (1) Accept the single streamlined application from an application 
filer;
    (2) Provide the tools to file an application--
    (i) Via an Internet Web site;
    (ii) By telephone through a call center;
    (iii) By mail; and

[[Page 322]]

    (iv) In person, with reasonable accommodations for those with 
disabilities, as defined by the Americans with Disabilities Act.



Sec.  155.410  Initial and annual open enrollment periods.

    (a) General requirements. (1) The Exchange must provide an initial 
open enrollment period and annual open enrollment periods consistent 
with this section, during which qualified individuals may enroll in a 
QHP and enrollees may change QHPs.
    (2) The Exchange may only permit a qualified individual to enroll in 
a QHP or an enrollee to change QHPs during the initial open enrollment 
period specified in paragraph (b) of this section, the annual open 
enrollment period specified in paragraph (e) of this section, or a 
special enrollment period described in Sec.  155.420 of this subpart for 
which the qualified individual has been determined eligible.
    (b) Initial open enrollment period. The initial open enrollment 
period begins October 1, 2013 and extends through March 31, 2014.
    (c) Effective coverage dates for initial open enrollment period--(1) 
Regular effective dates. For a QHP selection received by the Exchange 
from a qualified individual--
    (i) On or before December 23, 2013, the Exchange must ensure a 
coverage effective date of January 1, 2014.
    (ii) Between the first and fifteenth day of any subsequent month 
during the initial open enrollment period, the Exchange must ensure a 
coverage effective date of the first day of the following month.
    (iii) Between the sixteenth and last day of the month for any month 
between January 2014 and March 31, 2014 or between the twenty-fourth and 
the thirty-first of the month of December 2013, the Exchange must ensure 
a coverage effective date of the first day of the second following 
month.
    (iv) Notwithstanding the requirement of paragraph (c)(1)(i) of this 
section, an Exchange or SHOP operated by a State may require a January 
1, 2014 effective date for plan selection dates later than December 23, 
2013; a SHOP may also establish plan selection dates as early as 
December 15, 2013 for enrollment in SHOP QHPs for a January 1, 2014 
coverage effective date.
    (v) Notwithstanding the regular effective dates set forth in this 
section, an Exchange may allow issuers to provide for a coverage 
effective date of January 1, 2014 for plan selections received after 
December 23, 2013 and on or before January 31, 2014, if a QHP issuer is 
willing to accept such enrollments.
    (2) Option for earlier effective dates. Subject to the Exchange 
demonstrating to HHS that all of its participating QHP issuers agree to 
effectuate coverage in a timeframe shorter than discussed in paragraphs 
(c)(1)(ii) and (iii) of this section, the Exchange may do one or both of 
the following for all applicable individuals:
    (i) For a QHP selection received by the Exchange from a qualified 
individual in accordance with the dates specified in paragraph 
(c)(1)(ii) or (iii) of this section, the Exchange may provide a coverage 
effective date for a qualified individual earlier than specified in such 
paragraphs, provided that either--
    (A) The qualified individual has not been determined eligible for 
advance payments of the premium tax credit or cost-sharing reductions; 
or
    (B) The qualified individual pays the entire premium for the first 
partial month of coverage as well as all cost sharing, thereby waiving 
the benefit of advance payments of the premium tax credit and cost-
sharing reduction payments until the first of the next month.
    (ii) For a QHP selection received by the Exchange from a qualified 
individual on a date set by the Exchange after the fifteenth of the 
month for any month between December 2013 and March 31, 2014, the 
Exchange may provide a coverage effective date of the first of the 
following month.
    (d) Notice of annual open enrollment period. Starting in 2014, the 
Exchange must provide a written annual open enrollment notification to 
each enrollee no earlier than the first day of the month before the open 
enrollment period begins and no later than the first day of the open 
enrollment period.

[[Page 323]]

    (e) Annual open enrollment period. (1) For the benefit year 
beginning on January 1, 2015, the annual open enrollment period begins 
on November 15, 2014, and extends through February 15, 2015.
    (2) For the benefit years beginning on January 1, 2016 and January 
1, 2017, the annual open enrollment period begins on November 1 of the 
calendar year preceding the benefit year, and extends through January 31 
of the benefit year.
    (3) For the benefit years beginning on or after January 1, 2018, the 
annual open enrollment period begins on November 1 and extends through 
December 15 of the calendar year preceding the benefit year.
    (f) Effective date. (1) For the benefit year beginning on January 1, 
2015, the Exchange must ensure coverage is effective--
    (i) January 1, 2015, for QHP selections received by the Exchange on 
or before December 15, 2014.
    (ii) February 1, 2015, for QHP selections received by the Exchange 
from December 16, 2014 through January 15, 2015.
    (iii) March 1, 2015, for QHP selections received by the Exchange 
from January 16, 2015 through February 15, 2015.
    (2) For benefit years beginning on or after January 1, 2016, the 
Exchange must ensure that coverage is effective--
    (i) January 1, for QHP selections received by the Exchange on or 
before December 15 of the calendar year preceding the benefit year.
    (ii) February 1, for QHP selections received by the Exchange from 
December 16 of the calendar year preceding the benefit year through 
January 15 of the benefit year.
    (iii) March 1, for QHP selections received by the Exchange from 
January 16 through January 31 of the benefit year.
    (g) Automatic enrollment. The Exchange may automatically enroll 
qualified individuals, at such time and in such manner as HHS may 
specify, and subject to the Exchange demonstrating to HHS that it has 
good cause to perform such automatic enrollments.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 76218, Dec. 17, 2013; 
79 FR 13838, Mar. 11, 2014; 79 FR 30348, May 27, 2014; 80 FR 10866, Feb. 
27, 2015; 81 FR 12343, Mar. 8, 2016; 82 FR 18381, Apr. 18, 2017]



Sec.  155.415  Allowing issuer or direct enrollment entity application
assisters to assist with eligibility applications.

    (a) Exchange option. An Exchange, to the extent permitted by State 
law, may permit issuer application assisters and direct enrollment 
entity application assisters, as defined at Sec.  155.20, to assist 
individuals in the individual market with applying for a determination 
or redetermination of eligibility for coverage through the Exchange and 
insurance affordability programs, provided that such issuer application 
assisters or direct enrollment entity application assisters meet the 
requirements set forth in paragraph (b) of this section.
    (b) Application assister requirements. If permitted by an Exchange 
under paragraph (a) of this section, and to the extent permitted by 
State law, an issuer may permit its issuer application assisters and a 
direct enrollment entity may permit its direct enrollment entity 
application assisters to assist individuals in the individual market 
with applying for a determination or redetermination of eligibility for 
coverage through the Exchange and for insurance affordability programs, 
provided that such issuer or direct enrollment entity ensures that each 
of its issuer application assisters or direct enrollment entity 
application assisters at least--
    (1) Receives training on QHP options and insurance affordability 
programs, eligibility, and benefits rules and regulations, and for 
application assisters providing assistance in the Federally-facilitated 
Exchanges or a State Exchange using the Federal platform, the assisters 
must fulfill this requirement by completing registration and training in 
a form and manner to be specified by HHS;
    (2) Complies with the Exchange's privacy and security standards 
adopted consistent with Sec.  155.260; and

[[Page 324]]

    (3) Complies with applicable State law related to the sale, 
solicitation, and negotiation of health insurance products, including 
any State licensure laws applicable to the functions to be performed by 
the issuer application assister or direct enrollment entity application 
assister, as well as State law related to confidentiality and conflicts 
of interest.

[84 FR 17567, Apr. 25, 2019]



Sec.  155.420  Special enrollment periods.

    (a) General requirements--(1) General parameters. The Exchange must 
provide special enrollment periods consistent with this section, during 
which qualified individuals may enroll in QHPs and enrollees may change 
QHPs.
    (2) Definition of dependent. For the purpose of this section, 
``dependent'', has the same meaning as it does in 26 CFR 54.9801-2, 
referring to any individual who is or who may become eligible for 
coverage under the terms of a QHP because of a relationship to a 
qualified individual or enrollee.
    (3) Use of special enrollment periods. Except in the circumstances 
specified in paragraph (a)(4) of this section, the Exchange must allow a 
qualified individual or enrollee, and when specified in paragraph (d) of 
this section, his or her dependent to enroll in a QHP if one of the 
triggering events specified in paragraph (d) of this section occur.
    (4) Use of special enrollment periods by enrollees. (i) If an 
enrollee has gained a dependent in accordance with paragraph (d)(2)(i) 
of this section, the Exchange must allow the enrollee to add the 
dependent to his or her current QHP, or, if the current QHP's business 
rules do not allow the dependent to enroll, the Exchange must allow the 
enrollee and his or her dependents to change to another QHP within the 
same level of coverage (or one metal level higher or lower, if no such 
QHP is available), as outlined in Sec.  156.140(b) of this subchapter, 
or, at the option of the enrollee or dependent, enroll the dependent in 
any separate QHP.
    (ii)(A) If an enrollee and his or her dependents become newly 
eligible for cost-sharing reductions in accordance with paragraph 
(d)(6)(i) or (ii) of this section and are not enrolled in a silver-level 
QHP, the Exchange must allow the enrollee and his or her dependents to 
change to a silver-level QHP if they elect to change their QHP 
enrollment; or
    (B) Beginning January 2022, if an enrollee and his or her dependents 
become newly ineligible for cost-sharing reductions in accordance with 
paragraph (d)(6)(i) or (ii) of this section and are enrolled in a 
silver-level QHP, the Exchange must allow the enrollee and his or her 
dependents to change to a QHP one metal level higher or lower, if they 
elect to change their QHP enrollment.
    (iii) For the other triggering events specified in paragraph (d) of 
this section, except for paragraphs (d)(2)(i), (d)(4), and (d)(6)(i) and 
(ii) of this section for becoming newly eligible or ineligible for CSRs 
and paragraphs (d)(8), (9), (10), (12), and (14) of this section:
    (A) If an enrollee qualifies for a special enrollment period, the 
Exchange must allow the enrollee and his or her dependents, if 
applicable, to change to another QHP within the same level of coverage 
(or one metal level higher or lower, if no such QHP is available), as 
outlined in Sec.  156.140(b) of this subchapter;
    (B) If a dependent qualifies for a special enrollment period, and an 
enrollee who does not also qualify for a special enrollment period is 
adding the dependent to his or her QHP, the Exchange must allow the 
enrollee to add the dependent to his or her current QHP; or, if the 
QHP's business rules do not allow the dependent to enroll, the Exchange 
must allow the enrollee and his or her dependents to change to another 
QHP within the same level of coverage (or one metal level higher or 
lower, if no such QHP is available), as outlined in Sec.  156.140(b) of 
this subchapter, or enroll the new qualified individual in a separate 
QHP; or
    (C) If a qualified individual who is not an enrollee qualifies for a 
special enrollment period and has one or more dependents who are 
enrollees who do not also qualify for a special enrollment period, the 
Exchange must allow the newly enrolling qualified individual to add 
himself or herself to a dependent's current QHP; or, if the QHP's

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business rules do not allow the qualified individual to enroll in the 
dependent's current QHP, to enroll with his or her dependent(s) in 
another QHP within the same level of coverage (or one metal level higher 
or lower, if no such QHP is available), as outlined in Sec.  156.140(b) 
of this subchapter, or enroll himself or herself in a separate QHP.
    (5) Prior coverage requirement. Qualified individuals who are 
required to demonstrate coverage in the 60 days prior to a qualifying 
event can either demonstrate that they had minimum essential coverage as 
described in 26 CFR 1.5000A-1(b) or demonstrate that they had coverage 
as described in paragraphs (d)(1)(iii) or (iv) of this section for 1 or 
more days during the 60 days preceding the date of the qualifying event; 
lived in a foreign country or in a United States territory for 1 or more 
days during the 60 days preceding the date of the qualifying event; are 
an Indian as defined by section 4 of the Indian Health Care Improvement 
Act; or lived for 1 or more days during the 60 days preceding the 
qualifying event or during their most recent preceding enrollment 
period, as specified in Sec. Sec.  155.410 and 155.420, in a service 
area where no qualified health plan was available through the Exchange.
    (b) Effective dates--(1) Regular effective dates. Except as 
specified in paragraphs (b)(2) and (3) of this section, for a QHP 
selection received by the Exchange from a qualified individual--
    (i) Between the first and the fifteenth day of any month, the 
Exchange must ensure a coverage effective date of the first day of the 
following month; and
    (ii) Between the sixteenth and the last day of any month, the 
Exchange must ensure a coverage effective date of the first day of the 
second following month.
    (2) Special effective dates. (i) In the case of birth, adoption, 
placement for adoption, placement in foster care, or child support or 
other court order as described in paragraph (d)(2)(i) of this section, 
the Exchange must ensure that coverage is effective for a qualified 
individual or enrollee on the date of birth, adoption, placement for 
adoption, placement in foster care, or effective date of court order; or 
it may permit the qualified individual or enrollee to elect a coverage 
effective date of the first of the month following plan selection; or in 
accordance with paragraph (b)(1) of this section. If the Exchange 
permits the qualified individual or enrollee to elect a coverage 
effective date of either the first of the month following the date of 
plan selection or in accordance with paragraph (b)(1) of this section, 
the Exchange must ensure coverage is effective on the date duly selected 
by the qualified individual or enrollee.
    (ii) In the case of marriage as described in paragraph (d)(2) of 
this section the Exchange must ensure that coverage is effective for a 
qualified individual or enrollee on the first day of the month following 
plan selection.
    (iii) In the case of a qualified individual or enrollee eligible for 
a special enrollment period as described in paragraph (d)(4), (5), (9), 
(11), (12), or (13) of this section, the Exchange must ensure that 
coverage is effective on an appropriate date based on the circumstances 
of the special enrollment period.
    (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, 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, or 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.
    (v) If an enrollee or his or her dependent dies as described in 
paragraph (d)(2)(ii) of this section, the Exchange must ensure that 
coverage is effective on the first day of the month following the plan 
selection, or it may permit

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the enrollee or his or her dependent to elect a coverage effective date 
in accordance with paragraph (b)(1) of this section. If the Exchange 
permits the enrollee or his or her dependent to elect a coverage 
effective date in accordance with paragraph (b)(1) of this section, the 
Exchange must ensure coverage is effective on the date duly selected by 
the enrollee or his or her dependent.
    (vi) If a qualified individual, enrollee, or dependent newly gains 
access to an individual coverage HRA or is newly provided a QSEHRA, each 
as described in paragraph (d)(14) of this section, and if the plan 
selection is made before the day of the triggering event, the Exchange 
must ensure that coverage is effective on the first day of the month 
following the date of the triggering event or, if the triggering event 
is on the first day of a month, on the date of the triggering event. If 
the plan selection is made on or after the day of the triggering event, 
the Exchange must ensure that coverage is effective on the first day of 
the month following plan selection.
    (3) Option for earlier effective dates. (i) For a QHP selection 
received by the Exchange under a special enrollment period for which 
regular effective dates specified in paragraph (b)(1) of this section 
would apply, the Exchange may provide a coverage effective date that is 
earlier than specified in such paragraph, and, beginning January 2022, a 
Federally-facilitated Exchange or a State Exchange on the Federal 
platform will ensure that coverage is effective on the first day of the 
month following plan selection.
    (ii) For a QHP selection received by the Exchange under a special 
enrollment period for which special effective dates specified in 
paragraph (b)(2)(ii) of this section would apply, the Exchange may 
provide a coverage effective date that is earlier than specified in such 
paragraph.
    (4) Advance payments of the premium tax credit and cost-sharing 
reductions. Notwithstanding the standards of this section, the Exchange 
must ensure that advance payments of the premium tax credit and cost-
sharing reductions adhere to the effective dates specified in Sec.  
155.330(f).
    (c) Availability and length of special enrollment periods--(1) 
General rule. Unless specifically stated otherwise herein, a qualified 
individual or enrollee has 60 days from the date of a triggering event 
to select a QHP.
    (2) Advanced availability. A qualified individual or his or her 
dependent who is described in paragraph (d)(1) or (d)(6)(iii) of this 
section has 60 days before or after the triggering event to select a 
QHP. At the option of the Exchange, a qualified individual or his or her 
dependent who is described in paragraph (d)(7) of this section; who is 
described in paragraph (d)(6)(iv) of this section and 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 he or she newly satisfies the requirements 
under Sec.  155.305(a)(2), has 60 days before or after the triggering 
event to select a QHP.
    (3) Advanced availability for individuals with an individual 
coverage HRA or QSEHRA. A qualified individual, enrollee, or his or her 
dependent who is described in paragraph (d)(14) of this section has 60 
days before the triggering event to select a QHP, unless the HRA or 
QSEHRA was not required to provide the notice setting forth its terms to 
such individual or enrollee at least 90 days before the beginning of the 
plan year, as specified in 45 CFR 146.123(c)(6), 26 CFR 54.9802-4(c)(6), 
and 29 CFR 2590.702-2(c)(6) or section 9831(d)(4) of the Internal 
Revenue Code, as applicable, in which case the qualified individual, 
enrollee, or his or her dependent has 60 days before or after the 
triggering event to select a QHP.
    (4) Special rule. In the case of a qualified individual or enrollee 
who is eligible for a special enrollment period as described in 
paragraphs (d)(4), (5), or (9) of this section, the Exchange may define 
the length of the special enrollment period as appropriate based on the 
circumstances of the special enrollment period, but in no event may the 
length of the special enrollment period exceed 60 days.
    (d) Triggering events. Subject to paragraphs (a)(3) through (5) of 
this section,

[[Page 327]]

as applicable, the Exchange must allow a qualified individual or 
enrollee, and, when specified below, his or her dependent, to enroll in 
or change from one QHP to another if one of the triggering events occur:
    (1) The qualified individual or his or her dependent either:
    (i) Loses minimum essential coverage. The date of the loss of 
coverage is the last day the consumer would have coverage under his or 
her previous plan or coverage;
    (ii) Is enrolled in any non-calendar year group health plan, 
individual health insurance coverage, or qualified small employer health 
reimbursement arrangement (as defined in section 9831(d)(2) of the 
Internal Revenue Code); even if the qualified individual or his or her 
dependent has the option to renew or re-enroll in such coverage. The 
date of the loss of coverage is the last day of the plan year;
    (iii) Loses pregnancy-related coverage described under section 
1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Act (42 U.S.C. 
1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX)) or loses access to health 
care services through coverage provided to a pregnant woman's unborn 
child, based on the definition of a child in 42 CFR 457.10. The date of 
the loss of coverage is the last day the qualified individual would have 
pregnancy-related coverage or access to health care services through the 
unborn child coverage; or
    (iv) Loses medically needy coverage as described under section 
1902(a)(10)(C) of the Social Security Act only once per calendar year. 
The date of the loss of coverage is the last day the consumer would have 
medically needy coverage.
    (2)(i) The qualified individual gains a dependent or becomes a 
dependent through marriage, birth, adoption, placement for adoption, or 
placement in foster care, or through a child support order or other 
court order.
    (A) In the case of marriage, at least one spouse must demonstrate 
having minimum essential coverage as described in 26 CFR 1.5000A-1(b) 
for 1 or more days during the 60 days preceding the date of marriage.
    (B) [Reserved]
    (ii) At the option of the Exchange, the enrollee loses a dependent 
or is no longer considered a dependent through divorce or legal 
separation as defined by State law in the State in which the divorce or 
legal separation occurs, or if the enrollee, or his or her dependent, 
dies.
    (3) The qualified individual, or his or her dependent, becomes newly 
eligible for enrollment in a QHP through the Exchange because he or she 
newly satisfies the requirements under Sec.  155.305(a)(1) or (2);
    (4) The qualified individual's or his or her dependent's, enrollment 
or non-enrollment in a QHP is unintentional, inadvertent, or erroneous 
and is the result of the error, misrepresentation, misconduct, or 
inaction of an officer, employee, or agent of the Exchange or HHS, its 
instrumentalities, or a non-Exchange entity providing enrollment 
assistance or conducting enrollment activities. For purposes of this 
provision, misconduct includes the failure to comply with applicable 
standards under this part, part 156 of this subchapter, or other 
applicable Federal or State laws as determined by the Exchange.
    (5) The enrollee or, his or her dependent adequately demonstrates to 
the Exchange that the QHP in which he or she is enrolled substantially 
violated a material provision of its contract in relation to the 
enrollee;
    (6) Newly eligible or ineligible for advance payments of the premium 
tax credit, or change in eligibility for cost-sharing reductions. (i) 
The enrollee is determined newly eligible or newly ineligible for 
advance payments of the premium tax credit or has a change in 
eligibility for cost-sharing reductions;
    (ii) The enrollee's dependent enrolled in the same QHP is determined 
newly eligible or newly ineligible for advance payments of the premium 
tax credit or has a change in eligibility for cost-sharing reductions;
    (iii) A qualified individual or his or her dependent who is enrolled 
in an eligible employer-sponsored plan is determined newly eligible for 
advance payments of the premium tax credit based in part on a finding 
that such individual is ineligible for qualifying coverage in an 
eligible-employer sponsored

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plan in accordance with 26 CFR 1.36B-2(c)(3), including as a result of 
his or her employer discontinuing or changing available coverage within 
the next 60 days, provided that such individual is allowed to terminate 
existing coverage;
    (iv) A qualified individual who was previously ineligible for 
advance payments of the premium tax credit solely because of a household 
income below 100 percent of the FPL and who, during the same timeframe, 
was ineligible for Medicaid because he or she was living in a non-
Medicaid expansion State, who either experiences a change in household 
income or moves to a different State resulting in the qualified 
individual becoming newly eligible for advance payments of the premium 
tax credit; or
    (v) At the option of the Exchange, the qualified individual, or his 
or her dependent--
    (A) Experiences a decrease in household income;
    (B) Is newly determined eligible by the Exchange for advance 
payments of the premium tax credit; and
    (C) Had minimum essential coverage as described in 26 CFR 1.5000A-
1(b) for one or more days during the 60 days preceding the date of the 
financial change.
    (7) The qualified individual or enrollee, or his or her dependent, 
gains access to new QHPs as a result of a permanent move and--
    (i) Had minimum essential coverage as described in 26 CFR 1.5000A-
1(b) for one or more days during the 60 days preceding the date of the 
permanent move.
    (ii) [Reserved]
    (8) The qualified individual--
    (i) Who gains or maintains status as an Indian, as defined by 
section 4 of the Indian Health Care Improvement Act, may enroll in a QHP 
or change from one QHP to another one time per month; or
    (ii) Who is or becomes a dependent of an Indian, as defined by 
section 4 of the Indian Health Care Improvement Act and is enrolled or 
is enrolling in a QHP through an Exchange on the same application as the 
Indian, may change from one QHP to another one time per month, at the 
same time as the Indian;
    (9) The qualified individual or enrollee, or his or her dependent, 
demonstrates to the Exchange, in accordance with guidelines issued by 
HHS, that the individual meets other exceptional circumstances as the 
Exchange may provide;
    (10) A qualified individual or enrollee--
    (i) Is a victim of domestic abuse or spousal abandonment as defined 
by 26 CFR 1.36B-2 or a dependent or unmarried victim within a household, 
is enrolled in minimum essential coverage, and sought to enroll in 
coverage separate from the perpetrator of the abuse or abandonment; or
    (ii) Is a dependent of a victim of domestic abuse or spousal 
abandonment, on the same application as the victim, may enroll in 
coverage at the same time as the victim;
    (11) A qualified individual or dependent--
    (i) Applies for coverage on the Exchange during the annual open 
enrollment period or due to a qualifying event, is assessed by the 
Exchange as potentially eligible for Medicaid or the Children's Health 
Insurance Program (CHIP), and is determined ineligible for Medicaid or 
CHIP by the State Medicaid or CHIP agency either after open enrollment 
has ended or more than 60 days after the qualifying event; or
    (ii) Applies for coverage at the State Medicaid or CHIP agency 
during the annual open enrollment period, and is determined ineligible 
for Medicaid or CHIP after open enrollment has ended;
    (12) The qualified individual or enrollee, or his or her dependent, 
adequately demonstrates to the Exchange that a material error related to 
plan benefits, service area, or premium influenced the qualified 
individual's or enrollee's decision to purchase a QHP through the 
Exchange;
    (13) At the option of the Exchange, the qualified individual 
provides satisfactory documentary evidence to verify his or her 
eligibility for an insurance affordability program or enrollment in a 
QHP through the Exchange following termination of Exchange enrollment 
due to a failure to verify such status within the time period specified 
in Sec.  155.315 or is under 100 percent of the

[[Page 329]]

Federal poverty level and did not enroll in coverage while waiting for 
HHS to verify his or her citizenship, status as a national, or lawful 
presence; or
    (14) The qualified individual, enrollee, or dependent newly gains 
access to an individual coverage HRA (as defined in 45 CFR 146.123(b)) 
or is newly provided a qualified small employer health reimbursement 
arrangement (QSEHRA) (as defined in section 9831(d)(2) of the Internal 
Revenue Code). The triggering event is the first day on which coverage 
for the qualified individual, enrollee, or dependent under the 
individual coverage HRA can take effect, or the first day on which 
coverage under the QSEHRA takes effect. An individual, enrollee, or 
dependent will qualify for this special enrollment period regardless of 
whether they were previously offered or enrolled in an individual 
coverage HRA or previously provided a QSEHRA, so long as the individual, 
enrollee, or dependent is not enrolled in the individual coverage HRA or 
covered by the QSEHRA on the day immediately prior to the triggering 
event.
    (e) Loss of coverage. Loss of coverage described in paragraph (d)(1) 
of this section includes those circumstances described in 26 CFR 
54.9801-6(a)(3)(i) through (iii) and in paragraphs (d)(1)(ii) through 
(iv) of this section. Loss of coverage does not include voluntary 
termination of coverage or other loss due to--
    (1) Failure to pay premiums on a timely basis, including COBRA 
premiums prior to expiration of COBRA coverage, or
    (2) Situations allowing for a rescission as specified in 45 CFR 
147.128.

[77 FR 18444, Mar. 27, 2012, as amended at 78 FR 42321, July 15, 2013; 
78 FR 65095, Oct. 30, 2013; 79 FR 30348, May 27, 2014; 80 FR 10866, Feb. 
27, 2015; 80 FR 38653, July 7, 2015; 81 FR 29155, May 11, 2016; 81 FR 
94178, Dec. 22, 2016; 82 FR 18381, Apr. 18, 2017; 83 FR 17062, Apr. 17, 
2018; 84 FR 17567, Apr. 25, 2019; 84 FR 29027, June 20, 2019; 85 FR 
29260, May 14, 2020]



Sec.  155.430  Termination of Exchange enrollment or coverage.

    (a) General requirements. The Exchange must determine the form and 
manner in which enrollment in a QHP through the Exchange may be 
terminated.
    (b) Termination events--(1) Enrollee-initiated terminations. (i) The 
Exchange must permit an enrollee to terminate his or her coverage or 
enrollment in a QHP through the Exchange, including as a result of the 
enrollee obtaining other minimum essential coverage. To the extent the 
enrollee has the right to terminate the coverage under applicable State 
laws, including ``free look'' cancellation laws, the enrollee may do so, 
in accordance with such laws.
    (ii) The Exchange must provide an opportunity at the time of plan 
selection for an enrollee to choose to remain enrolled in a QHP if he or 
she becomes eligible for other minimum essential coverage and the 
enrollee does not request termination in accordance with paragraph 
(b)(1)(i) of this section. If an enrollee does not choose to remain 
enrolled in a QHP in such situation, the Exchange must initiate 
termination of his or her enrollment in the QHP upon completion of the 
process specified in Sec.  155.330(e)(2).
    (iii) The Exchange must establish a process to permit individuals, 
including enrollees' authorized representatives, to report the death of 
an enrollee for purposes of initiating termination of the enrollee's 
Exchange enrollment. The Exchange may require the reporting party to 
submit documentation of the death. Any applicable premium refund, or 
premium due, must be processed by the deceased enrollee's QHP in 
accordance with State law.
    (iv) The Exchange must permit an enrollee to retroactively terminate 
or cancel his or her coverage or enrollment in a QHP in the following 
circumstances:
    (A) The enrollee demonstrates to the Exchange that he or she 
attempted to terminate his or her coverage or enrollment in a QHP and 
experienced a technical error that did not allow the enrollee to 
terminate his or her coverage or enrollment through the Exchange, and 
requests retroactive termination within 60 days after he or she 
discovered the technical error.
    (B) The enrollee demonstrates to the Exchange that his or her 
enrollment in a QHP through the Exchange was unintentional, inadvertent, 
or erroneous and was the result of the error or misconduct of an 
officer, employee, or

[[Page 330]]

agent of the Exchange or HHS, its instrumentalities, or a non-Exchange 
entity providing enrollment assistance or conducting enrollment 
activities. Such enrollee must request cancellation within 60 days of 
discovering the unintentional, inadvertent, or erroneous enrollment. For 
purposes of this paragraph (b)(1)(iv)(B), misconduct includes the 
failure to comply with applicable standards under this part, part 156 of 
this subchapter, or other applicable Federal or State requirements as 
determined by the Exchange.
    (C) The enrollee demonstrates to the Exchange that he or she was 
enrolled in a QHP without his or her knowledge or consent by any third 
party, including third parties who have no connection with the Exchange, 
and requests cancellation within 60 days of discovering of the 
enrollment.
    (2) Exchange-initiated terminations. The Exchange may initiate 
termination of an enrollee's enrollment in a QHP through the Exchange, 
and must permit a QHP issuer to terminate such coverage or enrollment, 
in the following circumstances:
    (i) The enrollee is no longer eligible for coverage in a QHP through 
the Exchange;
    (ii) Non-payment of premiums for coverage of the enrollee, and
    (A) The exhaustion of the 3-month grace period, as described in 
Sec.  156.270(d) and (g) of this subchapter, required for enrollees, who 
when first failing to timely pay premiums, are receiving advance 
payments of the premium tax credit.
    (B) Any other grace period not described in paragraph (b)(2)(ii)(A) 
of this section has been exhausted;
    (iii) The enrollee's coverage is rescinded in accordance with Sec.  
147.128 of this subchapter, after a QHP issuer demonstrates, to the 
reasonable satisfaction of the Exchange, if required by the Exchange, 
that the rescission is appropriate;
    (iv) The QHP terminates or is decertified as described in Sec.  
155.1080; or
    (v) The enrollee changes from one QHP to another during an annual 
open enrollment period or special enrollment period in accordance with 
Sec.  155.410 or Sec.  155.420.
    (vi) The enrollee was enrolled in a QHP without his or her knowledge 
or consent by a third party, including by a third party with no 
connection with the Exchange.
    (vii) Any other reason for termination of coverage described in 
Sec.  147.106 of this subchapter.
    (c) Termination of coverage or enrollment tracking and approval. The 
Exchange must--
    (1) Establish mandatory procedures for QHP issuers to maintain 
records of termination of enrollment in a QHP through the Exchange;
    (2) Send termination information to the QHP issuer and HHS, promptly 
and without undue delay in accordance with Sec.  155.400(b).
    (3) Require QHP issuers to make reasonable accommodations for all 
individuals with disabilities (as defined by the Americans with 
Disabilities Act) before terminating enrollment of such individuals 
through the Exchange; and
    (4) Retain records in order to facilitate audit functions.
    (d) Effective dates for termination of coverage or enrollment. (1) 
For purposes of this section--
    (i) Reasonable notice is defined as at least fourteen days before 
the requested effective date of termination; and
    (ii) Changes in eligibility for advance payments of the premium tax 
credit and cost sharing reductions, including terminations, must adhere 
to the effective dates specified in Sec.  155.330(f).
    (2) In the case of a termination in accordance with paragraph (b)(1) 
of this section, the last day of enrollment through the Exchange is--
    (i) The termination date specified by the enrollee, if the enrollee 
provides reasonable notice;
    (ii) If the enrollee does not provide reasonable notice, fourteen 
days after the termination is requested by the enrollee; or
    (iii) At the option of the Exchange, on the date on which the 
termination is requested by the enrollee, or on another prospective date 
selected by the enrollee; or
    (iv) If an Exchange does not require an earlier termination date in 
accordance with paragraph (d)(2)(iii) of this section, at the option of 
the QHP

[[Page 331]]

issuer, on a date on or after the termination is requested by the 
enrollee that is less than 14 days after the termination is requested by 
the enrollee, if the enrollee requests an earlier termination date; or
    (v) At the option of the Exchange, for an individual who is newly 
determined eligible for Medicaid, CHIP, or the Basic Health Program, if 
a Basic Health Program is operating in the service area of the Exchange, 
the day before the enrollee's date of eligibility for Medicaid, CHIP, or 
the Basic Health Program.
    (vi) The retroactive termination date requested by the enrollee, if 
specified by applicable State laws.
    (3) In the case of a termination in accordance with paragraph 
(b)(2)(i) of this section, the last day of enrollment in a QHP through 
the Exchange is the last day of eligibility, as described in Sec.  
155.330(f), unless the individual requests an earlier termination 
effective date per paragraph (b)(1) of this section.
    (4) In the case of a termination in accordance with paragraph 
(b)(2)(ii)(A) of this section, the last day of enrollment in a QHP 
through the Exchange will be the last day of the first month of the 3-
month grace period.
    (5) In the case of a termination in accordance with paragraph 
(b)(2)(ii)(B) of this section, the last day of enrollment in a QHP 
through the Exchange should be consistent with existing State laws 
regarding grace periods.
    (6) In the case of a termination in accordance with paragraph 
(b)(2)(v) of this section, the last day of coverage in an enrollee's 
prior QHP is the day before the effective date of coverage in his or her 
new QHP, including any retroactive enrollments effectuated under Sec.  
155.420(b)(2)(iii).
    (7) In the case of a termination due to death, the last day of 
enrollment in a QHP through the Exchange is the date of death.
    (8) In cases of retroactive termination dates, the Exchange will 
ensure that appropriate actions are taken to make necessary adjustments 
to advance payments of the premium tax credit, cost-sharing reductions, 
premiums, claims, and user fees.
    (9) In case of a retroactive termination in accordance with 
paragraph (b)(1)(iv)(A) of this section, the termination date will be no 
sooner than the date that would have applied under paragraph (d)(2) of 
this section, based on the date that the enrollee can demonstrate he or 
she contacted the Exchange to terminate his or her coverage or 
enrollment through the Exchange, had the technical error not occurred.
    (10) In case of a retroactive cancellation or termination in 
accordance with paragraph (b)(1)(iv)(B) or (C) of this section, the 
cancellation date or termination date will be the original coverage 
effective date or a later date, as determined appropriate by the 
Exchange, based on the circumstances of the cancellation or termination.
    (11) In the case of cancellation in accordance with paragraph 
(b)(2)(vi) of this section, the Exchange may cancel the enrollee's 
enrollment upon its determination that the enrollment was performed 
without the enrollee's knowledge or consent and following reasonable 
notice to the enrollee (where possible). The termination date will be 
the original coverage effective date.
    (12) In the case of retroactive cancellations or terminations in 
accordance with paragraphs (b)(1)(iv)(A), (B) and (C) of this section, 
such terminations or cancellations for the preceding coverage year must 
be initiated within a timeframe established by the Exchange based on a 
balance of operational needs and consumer protection. This timeframe 
will not apply to cases adjudicated through the appeals process.
    (e) Termination, cancellation, and reinstatement. The Exchange may 
establish operational instructions as to the form, manner, and method 
for addressing each of the following:
    (1) Termination. A termination is an action taken after a coverage 
effective date that ends an enrollee's enrollment through the Exchange 
for a date after the original coverage effective date, resulting in a 
period during which the individual was enrolled in coverage through the 
Exchange.
    (2) Cancellation. A cancellation is specific type of termination 
action that

[[Page 332]]

ends a qualified individual's enrollment through the Exchange on the 
date such enrollment became effective resulting in enrollment through 
the Exchange never having been effective.
    (3) Reinstatement. A reinstatement is a correction of an erroneous 
termination or cancellation action and results in restoration of an 
enrollment with no break in coverage.

[77 FR 18444, Mar. 27, 2012, as amended at 77 FR 31515, May 29, 2012; 78 
FR 42322, July 15, 2013; 79 FR 30348, May 27, 2014; 80 FR 10867, Feb. 
27, 2015; 81 FR 12343, Mar. 8, 2016; 81 FR 94179, Dec. 22, 2016; 83 FR 
17063, Apr. 17, 2018; 85 FR 29260, May 14, 2020]



      Subpart F_Appeals of Eligibility Determinations for Exchange 
           Participation and Insurance Affordability Programs

    Source: 78 FR 54136, Aug. 30, 2013, unless otherwise noted.



Sec.  155.500  Definitions.

    In addition to those definitions in Sec. Sec.  155.20 and 155.300, 
for purposes of this subpart and Sec.  155.740 of subpart H, the 
following terms have the following meanings:
    Appeal record means the appeal decision, all papers and requests 
filed in the proceeding, and, if a hearing was held, the transcript or 
recording of hearing testimony or an official report containing the 
substance of what happened at the hearing, and any exhibits introduced 
at the hearing.
    Appeal request means a clear expression, either orally or in 
writing, by an applicant, enrollee, employer, or small business employer 
or employee to have any eligibility determination or redetermination 
contained in a notice issued in accordance with Sec.  155.310(g), Sec.  
155.330(e)(1)(ii), Sec.  155.335(h)(1)(ii), Sec.  155.610(i), Sec.  
155.715(e) or (f), or Sec.  155.716(e) reviewed by an appeals entity.
    Appeals entity means a body designated to hear appeals of 
eligibility determinations or redeterminations contained in notices 
issued in accordance with Sec.  155.310(g), Sec.  155.330(e)(1)(ii), 
Sec.  155.335(h)(1)(ii), Sec.  155.610(i), Sec.  155.715(e) and (f), or 
Sec.  155.716(e).
    Appellant means the applicant or enrollee, the employer, or the 
small business employer or employee who is requesting an appeal.
    De novo review means a review of an appeal without deference to 
prior decisions in the case.
    Evidentiary hearing means a hearing conducted where evidence may be 
presented.
    Vacate means to set aside a previous action.

[78 FR 54136, Aug. 30, 2013, as amended at 83 FR 17063, Apr. 17, 2018]



Sec.  155.505  General eligibility appeals requirements.

    (a) General requirements. Unless otherwise specified, the provisions 
of this subpart apply to Exchange eligibility appeals processes, 
regardless of whether the appeals process is provided by a State 
Exchange appeals entity or by the HHS appeals entity.
    (b) Right to appeal. An applicant or enrollee must have the right to 
appeal--
    (1) An eligibility determination made in accordance with subpart D, 
including--
    (i) An initial determination of eligibility, including the amount of 
advance payments of the premium tax credit and level of cost-sharing 
reductions, made in accordance with the standards specified in Sec.  
155.305(a) through (h); and
    (ii) A redetermination of eligibility, including the amount of 
advance payments of the premium tax credit and level of cost-sharing 
reductions, made in accordance with Sec. Sec.  155.330 and 155.335;
    (iii) A determination of eligibility for an enrollment period, made 
in accordance with Sec.  155.305(b);
    (2) An eligibility determination for an exemption made in accordance 
Sec.  155.605;
    (3) A failure by the Exchange to provide timely notice of an 
eligibility determination in accordance with Sec.  155.310(g), Sec.  
155.330(e)(1)(ii), Sec.  155.335(h)(1)(ii), or Sec.  155.610(i); and
    (4) A denial of a request to vacate dismissal made by a State 
Exchange appeals entity in accordance with Sec.  155.530(d)(2), made 
under paragraph (c)(2)(i) of this section; and
    (5) An appeal decision issued by a State Exchange appeals entity in 
accordance with Sec.  155.545(b), consistent with Sec.  155.520(c).

[[Page 333]]

    (c) Options for Exchange appeals. Exchange eligibility appeals may 
be conducted by--
    (1) A State Exchange appeals entity, or an eligible entity described 
in paragraph (d) of this section that is designated by the Exchange, if 
the Exchange establishes an appeals process in accordance with the 
requirements of this subpart; or
    (2) The HHS appeals entity--
    (i) Upon exhaustion of the State Exchange appeals process;
    (ii) If the Exchange has not established an appeals process in 
accordance with the requirements of this subpart; or
    (iii) If the Exchange has delegated appeals of exemption 
determinations made by HHS pursuant to Sec.  155.625(b) to the HHS 
appeals entity, and the appeal is limited to a determination of 
eligibility for an exemption.
    (d) Eligible entities. An appeals process established under this 
subpart must comply with Sec.  155.110(a).
    (e) Representatives. An appellant may represent himself or herself, 
or be represented by an authorized representative under Sec.  155.227, 
or by legal counsel, a relative, a friend, or another spokesperson, 
during the appeal.
    (f) Accessibility requirements. Appeals processes established under 
this subpart must comply with the accessibility requirements in Sec.  
155.205(c).
    (g) Judicial review. An appellant may seek judicial review to the 
extent it is available by law.
    (h) Electronic requirements. If the Exchange appeals entity cannot 
fulfill the electronic requirements of subparts C, D, F, and H of this 
part related to acceptance of telephone- or Internet-based appeal 
requests, the provision of appeals notices electronically, or the secure 
electronic transfer of eligibility and appeal records between appeals 
entities and Exchanges or Medicaid or CHIP agencies, the Exchange 
appeals entity may fulfill those requirements that it cannot fulfill 
electronically using a secure and expedient paper-based process.

[78 FR 54136, Aug. 30, 2013, as amended at 79 FR 30349, May 27, 2014; 81 
FR 12344, Mar. 8, 2016; 81 FR 94179, Dec. 22, 2016]



Sec.  155.510  Appeals coordination.

    (a) Agreements. The appeals entity or the Exchange must enter into 
agreements with the agencies administering insurance affordability 
programs regarding the appeals processes for such programs as are 
necessary to fulfill the requirements of this subpart. Such agreements 
must include a clear delineation of the responsibilities of each entity 
to support the eligibility appeals process, and must--
    (1) Minimize burden on appellants, including not asking the 
appellant to provide duplicative information or documentation that he or 
she already provided to an agency administering an insurance 
affordability program or eligibility appeals process, unless the appeals 
entity, Exchange, or agency does not have access to the information or 
documentation and cannot reasonably obtain it, and such information is 
necessary to properly adjudicate an appeal;
    (2) Ensure prompt issuance of appeal decisions consistent with 
timeliness standards established under this subpart; and
    (3) Comply with the requirements set forth in--
    (i) 42 CFR 431.10(d), if the state Medicaid agency delegates 
authority to hear fair hearings under 42 CFR 431.10(c)(ii) to the 
Exchange appeals entity; or
    (ii) 42 CFR 457.348(b), if the state CHIP agency delegates authority 
to review appeals under Sec.  457.1120 to the Exchange appeals entity.
    (b) Coordination for Medicaid and CHIP appeals. (1) Where the 
Medicaid or CHIP agency has delegated appeals authority to the Exchange 
appeals entity consistent with 42 CFR 431.10(c)(1)(ii) or 457.1120, and 
the Exchange appeals entity has accepted such delegation--
    (i) The Exchange appeals entity will conduct the appeal in 
accordance with--
    (A) Medicaid and CHIP MAGI-based income standards and standards for 
citizenship and immigration status, in accordance with the eligibility 
and verification rules and procedures, consistent with 42 CFR parts 435 
and 457.
    (B) Notice standards identified in this subpart, subpart D, and by 
the

[[Page 334]]

State Medicaid or CHIP agency, consistent with applicable law.
    (ii) Consistent with 42 CFR 431.10(c)(1)(ii), an appellant who has 
been determined ineligible for Medicaid must be informed of the option 
to opt into pursuing his or her appeal of the adverse Medicaid 
eligibility determination with the Medicaid agency, and if the appellant 
elects to do so, the appeals entity transmits the eligibility 
determination and all information provided via secure electronic 
interface, promptly and without undue delay, to the Medicaid agency.
    (2) Where the Medicaid or CHIP agency has not delegated appeals 
authority to the appeals entity and the appellant seeks review of a 
denial of Medicaid or CHIP eligibility, the appeals entity must transmit 
the eligibility determination and all relevant information provided as 
part of the initial application or appeal, if applicable, via secure 
electronic interface, promptly and without undue delay, to the Medicaid 
or CHIP agency, as applicable.
    (3) The Exchange must consider an appellant determined or assessed 
by the appeals entity as not potentially eligible for Medicaid or CHIP 
as ineligible for Medicaid and CHIP based on the applicable Medicaid and 
CHIP MAGI-based income standards for purposes of determining eligibility 
for advance payments of the premium tax credit and cost-sharing 
reductions.
    (c) Data exchange. The appeals entity must--
    (1) Ensure that all data exchanges that are part of the appeals 
process, comply with the data exchange requirements in Sec. Sec.  
155.260, 155.270, and 155.345(i); and
    (2) Comply with all data sharing requests made by HHS.

[78 FR 54136, Aug. 30, 2013, as amended at 81 FR 12344, Mar. 8, 2016]



Sec.  155.515  Notice of appeal procedures.

    (a) Requirement to provide notice of appeal procedures. The Exchange 
must provide notice of appeal procedures at the time that the--
    (1) Applicant submits an application; and
    (2) Notice of eligibility determination is sent under Sec. Sec.  
155.310(g), 155.330(e)(1)(ii), 155.335(h)(1)(ii), and 155.610(i).
    (b) General content on right to appeal and appeal procedures. 
Notices described in paragraph (a) of this section must contain--
    (1) An explanation of the applicant or enrollee's appeal rights 
under this subpart;
    (2) A description of the procedures by which the applicant or 
enrollee may request an appeal;
    (3) Information on the applicant or enrollee's right to represent 
himself or herself, or to be represented by legal counsel or another 
representative;
    (4) An explanation of the circumstances under which the appellant's 
eligibility may be maintained or reinstated pending an appeal decision, 
as described in Sec.  155.525; and
    (5) An explanation that an appeal decision for one household member 
may result in a change in eligibility for other household members and 
that such a change will be handled as a redetermination of eligibility 
for all household members in accordance with the standards specified in 
Sec.  155.305.



Sec.  155.520  Appeal requests.

    (a) General standards for appeal requests. The Exchange and the 
appeals entity--
    (1) Must accept appeal requests submitted--
    (i) By telephone;
    (ii) By mail;
    (iii) In person, if the Exchange or the appeals entity, as 
applicable, is capable of receiving in-person appeal requests; and
    (iv) Via the Internet.
    (2) Must assist the applicant or enrollee in making the appeal 
request, if requested;
    (3) Must not limit or interfere with the applicant or enrollee's 
right to make an appeal request; and
    (4) Must consider an appeal request to be valid for the purpose of 
this subpart, if it is submitted in accordance with the requirements of 
paragraphs (b) and (c) of this section and Sec.  155.505(b).
    (b) Appeal request. The Exchange and the appeals entity must allow 
an applicant or enrollee to request an appeal within--

[[Page 335]]

    (1) 90 days of the date of the notice of eligibility determination; 
or
    (2) A timeframe consistent with the state Medicaid agency's 
requirement for submitting fair hearing requests, provided that 
timeframe is no less than 30 days, measured from the date of the notice 
of eligibility determination.
    (c) Appeal of a State Exchange appeals entity decision to HHS. If 
the appellant disagrees with the appeal decision of a State Exchange 
appeals entity, he or she may make an appeal request to the HHS appeals 
entity within 30 days of the date of the State Exchange appeals entity's 
notice of appeal decision or notice of denial of a request to vacate a 
dismissal.
    (d) Acknowledgement of appeal request. (1) Upon receipt of a valid 
appeal request pursuant to paragraph (b), (c), or (d)(3)(i) of this 
section, the appeals entity must--
    (i) Send timely acknowledgment to the appellant of the receipt of 
his or her valid appeal request, including--
    (A) Information regarding the appellant's eligibility pending appeal 
pursuant to Sec.  155.525; and
    (B) An explanation that any advance payments of the premium tax 
credit paid on behalf of the tax filer pending appeal are subject to 
reconciliation under 26 CFR 1.36B-4.
    (ii) Send timely notice via secure electronic interface of the 
appeal request and, if applicable, instructions to provide eligibility 
pending appeal pursuant to Sec.  155.525, to the Exchange and to the 
agencies administering Medicaid or CHIP, where applicable.
    (iii) If the appeal request is made pursuant to paragraph (c) of 
this section, send timely notice via secure electronic interface of the 
appeal request to the State Exchange appeals entity.
    (iv) Promptly confirm receipt of the records transferred pursuant to 
paragraph (d)(3) or (4) of this section to the Exchange or the State 
Exchange appeals entity, as applicable.
    (2) Upon receipt of an appeal request that is not valid because it 
fails to meet the requirements of this section or Sec.  155.505(b), the 
appeals entity must--
    (i) Promptly and without undue delay, send written notice to the 
applicant or enrollee informing the appellant:
    (A) That the appeal request has not been accepted;
    (B) About the nature of the defect in the appeal request; and
    (C) That the applicant or enrollee may cure the defect and resubmit 
the appeal request by the date determined under paragraph (b) or (c) of 
this section, as applicable, or within a reasonable timeframe 
established by the appeals entity.
    (D) That, in the event the appeal request is not valid due to 
failure to submit by the date determined under paragraph (b) or (c) of 
this section, as applicable, the appeal request may be considered valid 
if the applicant or enrollee sufficiently demonstrates within a 
reasonable timeframe determined by the appeals entity that failure to 
timely submit was due to exceptional circumstances and should not 
preclude the appeal.
    (ii) Treat as valid an amended appeal request that meets the 
requirements of this section and Sec.  155.505(b).
    (3) Upon receipt of a valid appeal request pursuant to paragraph (b) 
of this section, or upon receipt of the notice under paragraph 
(d)(1)(ii) of this section, the Exchange must transmit via secure 
electronic interface to the appeals entity--
    (i) The appeal request, if the appeal request was initially made to 
the Exchange; and
    (ii) The appellant's eligibility record.
    (4) Upon receipt of the notice pursuant to paragraph (d)(1)(iii) of 
this section, the State Exchange appeals entity must transmit via secure 
electronic interface the appellant's appeal record, including the 
appellant's eligibility record as received from the Exchange, to the HHS 
appeals entity.

[78 FR 54136, Aug. 30, 2013, as amended at 81 FR 12344, Mar. 8, 2016]



Sec.  155.525  Eligibility pending appeal.

    (a) General standards. After receipt of a valid appeal request or 
notice under Sec.  155.520(d)(1)(ii) that concerns an appeal of a 
redetermination under Sec.  155.330(e) or Sec.  155.335(h), the Exchange 
or the Medicaid or CHIP agency, as applicable, must continue to consider 
the appellant eligible while the appeal is

[[Page 336]]

pending in accordance with standards set forth in paragraph (b) of this 
section or as determined by the Medicaid or CHIP agency consistent with 
42 CFR parts 435 and 457, as applicable.
    (b) Implementation. If the tax filer or appellant, as applicable, 
accepts eligibility pending an appeal, the Exchange must continue the 
appellant's eligibility for enrollment in a QHP, advance payments of the 
premium tax credit, and cost-sharing reductions, as applicable, in 
accordance with the level of eligibility immediately before the 
redetermination being appealed.



Sec.  155.530  Dismissals.

    (a) Dismissal of appeal. The appeals entity must dismiss an appeal 
if the appellant--
    (1) Withdraws the appeal request in writing or by telephone, if the 
appeals entity is capable of accepting telephonic withdrawals.
    (i) Accepting telephonic withdrawals means the appeals entity--
    (A) Records in full the appellant's statement and telephonic 
signature made under penalty of perjury; and
    (B) Provides a written confirmation to the appellant documenting the 
telephonic interaction.
    (ii) [Reserved]
    (2) Fails to appear at a scheduled hearing without good cause;
    (3) Fails to submit a valid appeal request as specified in Sec.  
155.520(a)(4); or
    (4) Dies while the appeal is pending, except if the executor, 
administrator, or other duly authorized representative of the estate 
requests to continue the appeal.
    (b) Notice of dismissal to the appellant. If an appeal is dismissed 
under paragraph (a) of this section, the appeals entity must provide 
timely written notice to the appellant, including--
    (1) The reason for dismissal;
    (2) An explanation of the dismissal's effect on the appellant's 
eligibility; and
    (3) An explanation of how the appellant may show good cause why the 
dismissal should be vacated in accordance with paragraph (d) of this 
section.
    (c) Notice of the dismissal to the Exchange, Medicaid, and CHIP. If 
an appeal is dismissed under paragraph (a) of this section, the appeals 
entity must provide timely notice to the Exchange, and to the agency 
administering Medicaid or CHIP, as applicable, including instruction 
regarding--
    (1) The eligibility determination to implement; and
    (2) Discontinuing eligibility provided under Sec.  155.525, if 
applicable.
    (d) Vacating a dismissal. The appeals entity must--
    (1) Vacate a dismissal and proceed with the appeal if the appellant 
makes a written request within 30 days of the date of the notice of 
dismissal showing good cause why the dismissal should be vacated; and
    (2) Provide timely written notice of the denial of a request to 
vacate a dismissal to the appellant, if the request is denied.

[78 FR 54136, Aug. 30, 2013, as amended at 79 FR 30349, May 27, 2014; 81 
FR 12344, Mar. 8, 2016]



Sec.  155.535  Informal resolution and hearing requirements.

    (a) Informal resolution. The HHS appeals process will provide an 
opportunity for informal resolution and a hearing in accordance with the 
requirements of this section. A State Exchange appeals entity may also 
provide an informal resolution process prior to a hearing. Any 
information resolution process must meet the following requirements:
    (1) The process complies with the scope of review specified in 
paragraph (e) of this section;
    (2) The appellant's right to a hearing is preserved in any case in 
which the appellant remains dissatisfied with the outcome of the 
informal resolution process;
    (3) If the appeal advances to hearing, the appellant is not asked to 
provide duplicative information or documentation that he or she 
previously provided during the application or informal resolution 
process; and
    (4) If the appeal does not advance to hearing, the informal 
resolution decision is final and binding.
    (b) Notice of hearing. When a hearing is scheduled, the appeals 
entity must send written notice to the appellant and the appellant's 
authorized representative, if any, of the date, time, and location or 
format of the hearing

[[Page 337]]

no later than 15 days prior to the hearing date unless--
    (1) The appellant requests an earlier hearing date; or
    (2) A hearing date sooner than 15 days is necessary to process an 
expedited appeal, as described in Sec.  155.540(a), and the appeals 
entity has contacted the appellant to schedule a hearing on a mutually 
agreed upon date, time, and location or format.
    (c) Conducting the hearing. All hearings under this subpart must be 
conducted--
    (1) At a reasonable date, time, and location or format;
    (2) After notice of the hearing, pursuant to paragraph (b) of this 
section;
    (3) As an evidentiary hearing, consistent with paragraph (e) of this 
section; and
    (4) By one or more impartial officials who have not been directly 
involved in the eligibility determination or any prior Exchange appeal 
decisions in the same matter.
    (d) Procedural rights of an appellant. The appeals entity must 
provide the appellant with the opportunity to--
    (1) Review his or her appeal record, including all documents and 
records to be used by the appeals entity at the hearing, at a reasonable 
time before the date of the hearing as well as during the hearing;
    (2) Bring witnesses to testify;
    (3) Establish all relevant facts and circumstances;
    (4) Present an argument without undue interference; and
    (5) Question or refute any testimony or evidence, including the 
opportunity to confront and cross-examine adverse witnesses.
    (e) Information and evidence to be considered. The appeals entity 
must consider the information used to determine the appellant's 
eligibility as well as any additional relevant evidence presented during 
the course of the appeals process, including at the hearing.
    (f) Standard of review. The appeals entity will review the appeal de 
novo and will consider all relevant facts and evidence adduced during 
the appeals process.

[78 FR 54136, Aug. 30, 2013, as amended at 81 FR 12344, Mar. 8, 2016]



Sec.  155.540  Expedited appeals.

    (a) Expedited appeals. The appeals entity must establish and 
maintain an expedited appeals process for an appellant to request an 
expedited process where there is an immediate need for health services 
because a standard appeal could jeopardize the appellant's life, health, 
or ability to attain, maintain, or regain maximum function.
    (b) Denial of a request for expedited appeal. If the appeals entity 
denies a request for an expedited appeal, it must--
    (1) Handle the appeal request under the standard process and issue 
the appeal decision in accordance with Sec.  155.545(b)(1); and
    (2) Inform the appellant, promptly and without undue delay, through 
electronic or oral notification, if possible, of the denial and, if 
notification is oral, follow up with the appellant by written notice, 
within the timeframe established by the Secretary. Written notice of the 
denial must include--
    (i) The reason for the denial;
    (ii) An explanation that the appeal request will be transferred to 
the standard process; and
    (iii) An explanation of the appellant's rights under the standard 
process.



Sec.  155.545  Appeal decisions.

    (a) Appeal decisions. Appeal decisions must--
    (1) Be based exclusively on the information and evidence specified 
in Sec.  155.535(e) and the eligibility requirements under subpart D or 
G of this part, as applicable, and if the Medicaid or CHIP agencies 
delegate authority to conduct the Medicaid fair hearing or CHIP review 
to the appeals entity in accordance with 42 CFR 431.10(c)(1)(ii) or 
457.1120, the eligibility requirements under 42 CFR parts 435 and 457, 
as applicable;
    (2) State the decision, including a plain language description of 
the effect of the decision on the appellant's eligibility;
    (3) Summarize the facts relevant to the appeal;
    (4) Identify the legal basis, including the regulations that support 
the decision;
    (5) State the effective date of the decision; and

[[Page 338]]

    (6) If the appeals entity is a State Exchange appeals entity--
    (i) Provide an explanation of the appellant's right to pursue the 
appeal before the HHS appeals entity, including the applicable 
timeframe, if the appellant remains dissatisfied with the eligibility 
determination; and
    (ii) Indicate that the decision of the State Exchange appeals entity 
is final, unless the appellant pursues the appeal before the HHS appeals 
entity.
    (b) Notice of appeal decision. The appeals entity--
    (1) Must issue written notice of the appeal decision to the 
appellant within 90 days of the date an appeal request under Sec.  
155.520(b) or (c) is received, as administratively feasible.
    (2) In the case of an appeal request submitted under Sec.  155.540 
that the appeals entity determines meets the criteria for an expedited 
appeal, must issue the notice as expeditiously as reasonably possible, 
consistent with the timeframe established by the Secretary.
    (3) Must provide notice of the appeal decision and instructions to 
cease pended eligibility to the appellant, if applicable, via secure 
electronic interface, to the Exchange or the Medicaid or CHIP agency, as 
applicable.
    (c) Implementation of appeal decisions. The Exchange, upon receiving 
the notice described in paragraph (b), must promptly--
    (1) Implement the appeal decision effective--
    (i) Prospectively, on the first day of the month following the date 
of the notice of appeal decision, or consistent with Sec.  
155.330(f)(2), (3), (4), or (5), if applicable; or
    (ii) Retroactively, to the coverage effective date the appellant did 
receive or would have received if the appellant had enrolled in coverage 
under the incorrect eligibility determination that is the subject of the 
appeal, at the option of the appellant.
    (2) Redetermine the eligibility of household members who have not 
appealed their own eligibility determinations but whose eligibility may 
be affected by the appeal decision, in accordance with the standards 
specified in Sec.  155.305.

[78 FR 54136, Aug. 30, 2013, as amended at 81 FR 12345, Mar. 8, 2016]



Sec.  155.550  Appeal record.

    (a) Appellant access to the appeal record. Subject to the 
requirements of all applicable Federal and State laws regarding privacy, 
confidentiality, disclosure, and personally identifiable information, 
the appeals entity must make the appeal record accessible to the 
appellant at a convenient place and time.
    (b) Public access to the appeal decision. The appeals entity must 
provide public access to all appeal decisions, subject to all applicable 
Federal and State laws regarding privacy, confidentiality, disclosure, 
and personally identifiable information.



Sec.  155.555  Employer appeals process.

    (a) General requirements. The provisions of this section apply to 
employer appeals processes through which an employer may, in response to 
a notice under Sec.  155.310(h), appeal a determination that the 
employer does not provide minimum essential coverage through an 
employer-sponsored plan or that the employer does provide that coverage 
but it is not affordable coverage with respect to an employee.
    (b) Exchange employer appeals process. An Exchange may establish an 
employer appeals process in accordance with the requirements of this 
section and Sec. Sec.  155.505(f) through (h) and 155.510(a)(1) and (2) 
and (c). Where an Exchange has not established an employer appeals 
process, HHS will provide an employer appeals process that meets the 
requirements of this section and Sec. Sec.  155.505(f) through (h) and 
155.510(a)(1) and (2) and (c).
    (c) Appeal request. The Exchange and appeals entity, as applicable, 
must--
    (1) Allow an employer to request an appeal within 90 days from the 
date the notice described under Sec.  155.310(h) is sent;
    (2) Allow an employer to submit relevant evidence to support the 
appeal;
    (3) Allow an employer to submit an appeal request to--

[[Page 339]]

    (i) The Exchange or the Exchange appeals entity, if the Exchange 
establishes an employer appeals process; or
    (ii) The HHS appeals entity, if the Exchange has not established an 
employer appeals process;
    (4) Comply with the requirements of Sec.  155.520(a)(1) through (3); 
and
    (5) Consider an appeal request valid if it is submitted in 
accordance with paragraph (c)(1) of this section and with the purpose of 
appealing the determination identified in the notice specified in Sec.  
155.310(h).
    (d) Notice of appeal request. (1) Upon receipt of a valid appeal 
request, the appeals entity must--
    (i) Send timely acknowledgement of the receipt of the appeal request 
to the employer, including an explanation of the appeals process;
    (ii) Send timely notice to the employee of the receipt of the appeal 
request, including--
    (A) An explanation of the appeals process;
    (B) Instructions for submitting additional evidence for 
consideration by the appeals entity; and
    (C) An explanation of the potential effect of the employer's appeal 
on the employee's eligibility.
    (iii) Promptly notify the Exchange of the appeal, if the employer 
did not initially make the appeal request to the Exchange.
    (2) Upon receipt of an invalid appeal request, the appeals entity 
must promptly and without undue delay send written notice to the 
employer that the appeal request is not valid because it fails to meet 
the requirements of this section. The written notice must inform the 
employer--
    (i) That the appeal request has not been accepted;
    (ii) About the nature of the defect in the appeal request; and
    (iii) That the employer may cure the defect and resubmit the appeal 
request by the date determined under paragraph (c) of this section, or 
within a reasonable timeframe established by the appeals entity.
    (iv) Treat as valid an amended appeal request that meets the 
requirements of this section, including standards for timeliness.
    (e) Transmittal and receipt of records. (1) Upon receipt of a valid 
appeal request under this section, or upon receipt of the notice under 
paragraph (d)(1)(iii) of this section, the Exchange must promptly 
transmit via secure electronic interface to the appeals entity--
    (i) The appeal request, if the appeal request was initially made to 
the Exchange; and
    (ii) The employee's eligibility record.
    (2) The appeals entity must promptly confirm receipt of records 
transmitted pursuant to paragraph (e)(1) of this section to the entity 
that transmitted the records.
    (f) Dismissal of appeal. The appeals entity--
    (1) Must dismiss an appeal under the circumstances specified in 
Sec.  155.530(a)(1) or if the request fails to comply with the standards 
in paragraph (c)(4) of this section.
    (2) Must provide timely notice of the dismissal to the employer, 
employee, and Exchange including the reason for dismissal; and
    (3) May vacate a dismissal if the employer makes a written request 
within 30 days of the date of the notice of dismissal showing good cause 
as to why the dismissal should be vacated.
    (g) Procedural rights of the employer. The appeals entity must 
provide the employer the opportunity to--
    (1) Provide relevant evidence for review of the determination of an 
employee's eligibility for advance payments of the premium tax credit or 
cost-sharing reductions;
    (2) Review--
    (i) The information described in Sec.  155.310(h)(1);
    (ii) Information regarding whether the employee's income is above or 
below the threshold by which the affordability of employer-sponsored 
minimum essential coverage is measured, as set forth by standards 
described in 26 CFR 1.36B; and
    (iii) Other data used to make the determination described in Sec.  
155.305(f) or (g), to the extent allowable by law, except the 
information described in paragraph (h) of this section.
    (h) Confidentiality of employee information. Neither the Exchange 
nor the appeals entity may make available to an

[[Page 340]]

employer any tax return information of an employee as prohibited by 
section 6103 of the Code.
    (i) Adjudication of employer appeals. Employer appeals must--
    (1) Be reviewed by one or more impartial officials who have not been 
directly involved in the employee eligibility determination implicated 
in the appeal;
    (2) Consider the information used to determine the employee's 
eligibility as well as any additional relevant evidence provided by the 
employer or the employee during the course of the appeal; and
    (3) Be reviewed de novo.
    (j) Appeal decisions. Employer appeal decisions must--
    (1) Be based exclusively on the information and evidence described 
in paragraph (i)(2) of this section and the eligibility standards in 45 
CFR part 155, subpart D;
    (2) State the decision, including a plain language description of 
the effect of the decision on the employee's eligibility; and
    (3) Comply with the requirements set forth in Sec.  155.545(a)(3) 
through (5).
    (k) Notice of appeal decision. The appeals entity must provide 
written notice of the appeal decision within 90 days of the date the 
appeal request is received, as administratively feasible, to--
    (1) The employer. Such notice must include--
    (i) The appeal decision; and
    (ii) An explanation that the appeal decision does not foreclose any 
appeal rights the employer may have under subtitle F of the Code.
    (2) The employee. Such notice must include--
    (i) The appeal decision; and
    (ii) An explanation that the employee and his or her household 
members, if applicable, may appeal a redetermination of eligibility that 
occurs as a result of the appeal decision.
    (3) The Exchange.
    (l) Implementation of the appeal decision. After receipt of the 
notice under paragraph (k)(3) of this section, if the appeal decision 
affects the employee's eligibility, the Exchange must promptly:
    (1) Redetermine the employee's eligibility and the eligibility of 
the employee's household members, if applicable, in accordance with the 
standards specified in Sec.  155.305; or
    (2) Notify the employee of the requirement to report changes in 
eligibility as described in Sec.  155.330(b)(1).
    (m) Appeal record. Subject to the requirements of Sec.  155.550 and 
paragraph (h) of this section, the appeal record must be accessible to 
the employer and to the employee in a convenient format and at a 
convenient time.

[78 FR 54136, Aug. 30, 2013, as amended at 79 FR 30349, May 27, 2014; 81 
FR 12345, Mar. 8, 2016; 81 FR 94179, Dec. 22, 2016]



   Subpart G_Exchange Functions in the Individual Market: Eligibility 
                      Determinations for Exemptions

    Source: 78 FR 39523, July 1, 2013, unless otherwise noted.



Sec.  155.600  Definitions and general requirements.

    (a) Definitions. For purposes of this subpart, the following terms 
have the following meaning:
    Applicant means an individual who is seeking an exemption for him or 
herself through an application submitted to the Exchange.
    Application filer means an applicant, an individual who is liable 
for the shared responsibility payment in accordance with section 5000A 
of the Code for an applicant, an authorized representative, or if the 
applicant is a minor or incapacitated, someone acting responsibly for an 
applicant.
    Exemption means an exemption from the shared responsibility payment.
    Health care sharing ministry has the same meaning as it does in 
section 5000A(d)(2)(B)(ii) of the Code.
    Indian tribe has the same meaning as it does in section 45A(c)(6) of 
the Code.
    Required contribution has the same meaning as it does in section 
5000A(e)(1)(B) of the Code.
    Required contribution percentage means the product of eight percent 
and the rate of premium growth over the rate of income growth for the 
calendar

[[Page 341]]

year, rounded to the nearest one-hundredth of one percent.
    Shared responsibility payment means the payment imposed with respect 
to a non-exempt individual who does not maintain minimum essential 
coverage in accordance with section 5000A(b) of the Code.
    Tax filer has the same meaning as it does in Sec.  155.300(a).
    (b) Attestation. For the purposes of this subpart, any attestation 
that an applicant is to provide under this subpart may be made by the 
application filer on behalf of the applicant.
    (c) Reasonably compatible. For purposes of this subpart, the 
Exchange must consider information through electronic data sources, 
other information provided by the applicant, or other information in the 
records of the Exchange to be reasonably compatible with an applicant's 
attestation if the difference or discrepancy does not impact the 
eligibility of the applicant for the exemption or exemptions for which 
he or she applied.
    (d) Accessibility. Information, including notices, forms, and 
applications, must be provided to applicants in accordance with the 
standards specified in Sec.  155.205(c).
    (e) Notices. Any notice required to be sent by the Exchange to an 
individual in accordance with this subpart must be provided in 
accordance with the standards specified in Sec.  155.230.

[78 FR 39523, July 1, 2013, as amended at 79 FR 30349, May 27, 2014]



Sec.  155.605  Eligibility standards for exemptions.

    (a) Eligibility for an exemption through the Exchange. Except as 
specified in paragraph (g) of this section, the Exchange must determine 
an applicant eligible for and issue a certificate of exemption for any 
month if the Exchange determines that he or she meets the requirements 
for one or more of the categories of exemptions described in this 
section for at least one day of the month.
    (b) Duration of single exemption. Except as specified in paragraphs 
(c)(2) and (d) of this section, the Exchange may provide a certificate 
of exemption only for the calendar year in which an applicant submitted 
an application for such exemption.
    (c) Religious conscience. (1) The Exchange must determine an 
applicant eligible for an exemption for any month if the applicant is a 
member of a recognized religious sect or division described in section 
1402(g)(1) of the Code, and an adherent of established tenets or 
teachings of such sect or division, for such month in accordance with 
section 5000A(d)(2)(A) of the Code.
    (2) Duration of exemption for religious conscience. (i) The Exchange 
must grant the certificate of exemption specified in this paragraph to 
an applicant who meets the standards provided in paragraph (c)(1) of 
this section for a month on a continuing basis, until the month after 
the month of the individual's 21st birthday, or until such time that an 
individual reports that he or she no longer meets the standards provided 
in paragraph (c)(1) of this section.
    (ii) If the Exchange granted a certificate of exemption in this 
category to an applicant prior to his or her reaching the age of 21, the 
Exchange must send the applicant a notice upon reaching the age of 21 
informing the applicant that he or she must submit a new exemption 
application to maintain the certificate of exemption.
    (3) The Exchange must make an exemption in this category available 
prospectively or retrospectively.
    (d) Hardship--(1) General. The Exchange must grant a hardship 
exemption to an applicant eligible for an exemption for at least the 
month before, the month or months during which, and the month after a 
specific event or circumstance, if the Exchange determines that:
    (i) He or she experienced financial or domestic circumstances, 
including an unexpected natural or human-caused event, such that he or 
she had a significant, unexpected increase in essential expenses that 
prevented him or her from obtaining coverage under a qualified health 
plan;
    (ii) The expense of purchasing a qualified health plan would have 
caused him or her to experience serious deprivation of food, shelter, 
clothing or other necessities; or

[[Page 342]]

    (iii) He or she has experienced other circumstances that prevented 
him or her from obtaining coverage under a qualified health plan.
    (2) Lack of affordable coverage based on projected income. The 
Exchange must determine an applicant eligible for an exemption for a 
month or months during which he or she, or another individual the 
applicant attests will be included in the applicant's family, as defined 
in 26 CFR 1.36B-1(d), is unable to afford coverage in accordance with 
the standards specified in section 5000A(e)(1) of the Code, provided 
that--
    (i) Eligibility for this exemption is based on projected annual 
household income;
    (ii) An eligible employer-sponsored plan is only considered under 
paragraphs (d)(4)(iii) and (iv) of this section if it meets the minimum 
value standard described in Sec.  156.145 of this subchapter.
    (iii) For an individual who is eligible to purchase coverage under 
an eligible employer-sponsored plan, the Exchange determines the 
required contribution for coverage such that--
    (A) An individual who uses tobacco is treated as not earning any 
premium incentive related to participation in a wellness program 
designed to prevent or reduce tobacco use that is offered by an eligible 
employer-sponsored plan;
    (B) Wellness incentives offered by an eligible employer-sponsored 
plan that do not relate to tobacco use are treated as not earned;
    (C) In the case of an employee who is eligible to purchase coverage 
under an eligible employer-sponsored plan sponsored by the employee's 
employer, the required contribution is the portion of the annual premium 
that the employee would pay (whether through salary reduction or 
otherwise) for the lowest cost self-only coverage.
    (D) In the case of an individual who is eligible to purchase 
coverage under an eligible employer-sponsored plan as a member of the 
employee's family, as defined in 26 CFR 1.36B-1(d), the required 
contribution is the portion of the annual premium that the employee 
would pay (whether through salary reduction or otherwise) for the lowest 
cost family coverage that would cover the employee and all other 
individuals who are included in the employee's family who have not 
otherwise been granted an exemption through the Exchange.
    (iv) For an individual who is ineligible to purchase coverage under 
an eligible employer-sponsored plan, the Exchange determines the 
required contribution for coverage in accordance with section 
5000A(e)(1)(B)(ii) of the Code, inclusive of all members of the family, 
as defined in 26 CFR 1.36B-1(d), who have not otherwise been granted an 
exemption through the Exchange and who are not treated as eligible to 
purchase coverage under an eligible employer-sponsored plan, in 
accordance with paragraph (d)(4)(ii) of this section. If there is not a 
bronze level plan offered through the Exchange in the individual's 
county, the Exchange must use the annual premium for the lowest cost 
Exchange metal level plan, excluding catastrophic coverage, available in 
the individual market through the Exchange in the State in the county in 
which the individual resides to determine whether coverage exceeds the 
affordability threshold specified in section 5000A(e)(1) of the Code; 
and
    (v) The applicant applies for this exemption prior to the last date 
on which he or she could enroll in a QHP through the Exchange for the 
month or months of a calendar year for which the exemption is requested.
    (vi) The Exchange must make an exemption in this category available 
prospectively, and provide it for all remaining months in a coverage 
year, notwithstanding any change in an individual's circumstances.
    (3) Ineligible for Medicaid based on a State's decision not to 
expand. The Exchange must determine an applicant eligible for an 
exemption for a calendar year if he or she would be determined 
ineligible for Medicaid for one or more months during the benefit year 
solely as a result of a State not implementing section 2001(a) of the 
Affordable Care Act.
    (e) Eligibility for an exemption through the IRS. Hardship 
exemptions in this paragraph (e) can be claimed on a Federal income tax 
return without obtaining an exemption certificate number. The IRS may 
allow an individual to

[[Page 343]]

claim the hardship exemptions described in this paragraph (e) without 
requiring an exemption certificate number from the Exchange.
    (1) Filing threshold. The IRS may allow an applicant to claim an 
exemption specified in HHS Guidance published September 18, 2014, 
entitled, ``Shared Responsibility Guidance--Filing Threshold Hardship 
Exemption,'' and in IRS Notice 2014-76, section B (see https://
www.cms.gov/cciio/).
    (2) Self-only coverage in an eligible employer-sponsored plan. The 
IRS may allow an applicant to claim an exemption specified in HHS 
Guidance published November 21, 2014, entitled, ``Guidance on Hardship 
Exemptions for Persons Meeting Certain Criteria,'' and in IRS Notice 
2014-76, section A (see https://www.cms.gov/cciio/).
    (3) Eligible for services through an Indian health care provider. 
The IRS may allow an applicant to claim the exemption specified in HHS 
Guidance published September 18, 2014, entitled, ``Shared Responsibility 
Guidance--Exemption for Individuals Eligible for Services through an 
Indian Health Care Provider,'' and in IRS Notice 2014-76, section E (see 
https://www.cms.gov/cciio/).
    (4) Ineligible for Medicaid based on a State's decision not to 
expand. The IRS may allow an applicant to claim the exemption specified 
in HHS Guidance published November 21, 2014, entitled, ``Guidance on 
Hardship Exemptions for Persons Meeting Certain Criteria,'' and in IRS 
Notice 2014-76, section F (see https://www.cms.gov/cciio/).
    (5) General hardship. The IRS may allow an applicant to claim the 
exemption specified in HHS Guidance published September 12, 2018, 
entitled, ``Guidance on Claiming a Hardship Exemption through the 
Internal Revenue Service (IRS)'' (see https://www.cms.gov/CCIIO /
Resources/Regulations-and- Guidance/Downloads/Authority- to-Grant-HS-
Exemptions-2018- Final-91218.pdf) and in IRS Notice 2019-05 (see https:/
/www.irs.gov/pub /irs-drop/n-19-05.pdf), for the 2018 tax year.

[78 FR 39523, July 1, 2013, as amended at 79 FR 30349, May 27, 2014; 80 
FR 10868, Feb. 27, 2015; 81 FR 12345, Mar. 8, 2016; 83 FR 17063, Apr. 
17, 2018; 84 FR 17567, Apr. 25, 2019]



Sec.  155.610  Eligibility process for exemptions.

    (a) Application. Except as specified in paragraphs (b) and (c) of 
this section, the Exchange must use an application established by HHS to 
collect information necessary for determining eligibility for and 
granting certificates of exemption as described in Sec.  155.605.
    (b) Alternative application. If the Exchange seeks to use an 
alternative application, such application, as approved by HHS, must 
request the minimum information necessary for the purposes identified in 
paragraph (a) of this section.
    (c) Exemptions through the eligibility process for coverage. If an 
individual submits the application described in Sec.  155.405 and then 
requests an exemption, the Exchange must use information collected for 
purposes of the eligibility determination for enrollment in a QHP and 
for insurance affordability programs in making the exemption eligibility 
determination, and must not request duplicate information or conduct 
repeat verifications to the extent that the Exchange finds that such 
information is still applicable, where the standards for such 
verifications adhere to the standards specified in this subpart.
    (d) Filing the exemption application. The Exchange must--
    (1) Accept the application from an application filer; and
    (2) Provide the tools to file an application.
    (3) For applications submitted before October 15, 2014, the Exchange 
must, at a minimum, accept the application by mail.
    (e) Collection of Social Security Numbers. (1) The Exchange must 
require an applicant who has a Social Security number to provide such 
number to the Exchange.
    (2) The Exchange may not require an individual who is not seeking an 
exemption for himself or herself to provide a Social Security number, 
except as specified in paragraph (e)(3) of this section.
    (3) The Exchange must require an application filer to provide the 
Social Security number of a tax filer who is not

[[Page 344]]

an applicant only if an applicant attests that the tax filer has a 
Social Security number and filed a tax return for the year for which tax 
data would be utilized for verification of household income and family 
size for an exemption under Sec.  155.605(g)(2) that requires such 
verification.
    (f) Determination of eligibility; granting of certificates. The 
Exchange must determine an applicant's eligibility for an exemption in 
accordance with the standards specified in Sec.  155.605, and grant a 
certificate of exemption to any applicant determined eligible.
    (g) Timeliness standards. (1) The Exchange must determine 
eligibility for exemption promptly and without undue delay.
    (2) The Exchange must assess the timeliness of eligibility 
determinations made under this subpart based on the period from the date 
of application to the date the Exchange notifies the applicant of its 
decision.
    (h) Exemptions for previous tax years. (1) Except for the exemptions 
described in Sec.  155.605(c) and (d), after December 31 of a given 
calendar year, the Exchange may decline to accept an application for an 
exemption that is available retrospectively for months for such calendar 
year, and must provide information to individuals regarding how to claim 
an exemption through the tax filing process.
    (2) The Exchange will only accept an application for an exemption 
described in Sec.  155.605(d)(1) during one of the 3 calendar years 
after the month or months during which the applicant attests that the 
hardship occurred.
    (i) Notification of eligibility determination for exemptions. The 
Exchange must provide timely written notice to an applicant of any 
eligibility determination made in accordance with this subpart. In the 
case of a determination that an applicant is eligible for an exemption, 
this notification must include the exemption certificate number for the 
purposes of tax administration.
    (j) Retention of records for tax compliance. (1) An Exchange must 
notify an individual to retain the records that demonstrate receipt of 
the certificate of exemption and qualification for the underlying 
exemption.
    (2) In the case of any factor of eligibility that is verified 
through use of the special circumstances exception described in Sec.  
155.615(h), the records that demonstrate qualification for the 
underlying exemption are the information submitted to the Exchange 
regarding the circumstances that warranted the use of the exception, as 
well as records of the Exchange decision to allow such exception.
    (k) Incomplete application. (1) If an applicant submits an 
application that does not include sufficient information for the 
Exchange to conduct a determination for eligibility of an exemption the 
Exchange must--
    (i) Provide notice to the applicant indicating that information 
necessary to complete an eligibility determination is missing, 
specifying the missing information, and providing instructions on how to 
provide the missing information; and
    (ii) Provide the applicant with a period of no less than 30 and no 
more than 90 days, in the reasonable discretion of the Exchange, from 
the date on which the notice described in paragraph (k)(1) of this 
section is sent to the applicant to provide the information needed to 
complete the application to the Exchange; and
    (iii) Not proceed with the applicant's eligibility determination 
during the period described in paragraph (k)(2) of this section.
    (2) If the Exchange does not receive the requested information 
within the time allotted in paragraph (k)(1)(ii) of this section, the 
Exchange must notify the applicant in writing that the Exchange cannot 
process the application and provide appeal rights to the applicant.

[78 FR 39523, July 1, 2013, as amended at 81 FR 12346, Mar. 8, 2016; 83 
FR 17064, Apr. 17, 2018]



Sec.  155.615  Verification process related to eligibility for exemptions.

    (a) General rule. Unless a request for modification is granted under 
paragraph (i) of this section, the Exchange must verify or obtain 
information as provided in this section in order to determine that an 
applicant is eligible for an exemption.

[[Page 345]]

    (b) Verification related to exemption for religious conscience. For 
any applicant who requests an exemption based on religious conscience, 
the Exchange must verify that he or she meets the standards specified in 
Sec.  155.605(c) by--
    (1) Except as specified in paragraph (b)(2) of this section, 
accepting a form that reflects that he or she is exempt from Social 
Security and Medicare taxes under section 1402(g)(1) of the Code;
    (2) Except as specified in paragraphs (b)(3) and (4) of this 
section, accepting his or her attestation of membership in a religious 
sect or division, and verifying that the religious sect or division to 
which the applicant attests membership is recognized by the Social 
Security Administration as an approved religious sect or division under 
section 1402(g)(1) of the Code.
    (3) If information provided by an applicant regarding his or her 
membership in a religious sect or division is not reasonably compatible 
with other information provided by the individual or in the records of 
the Exchange, the Exchange must follow the procedures specified in 
paragraph (g) of this section.
    (4) If an applicant attests to membership in a religious sect or 
division that is not recognized by the Social Security Administration as 
an approved religious sect or division under section 1402(g)(1) of the 
Code, the Exchange must provide the applicant with information regarding 
how his or her religious sect or division can pursue recognition under 
section 1402(g)(1) of the Code, and determine the applicant ineligible 
for this exemption until such time as the Exchange obtains information 
indicating that the religious sect or division has been approved.
    (c) Verification related to exemption for hardship--(1) In general. 
For any applicant who requests an exemption based on hardship, except 
for the hardship exemptions described in Sec.  155.605(d)(1)(i) and 
(iv), the Exchange must verify whether he or she has experienced the 
hardship to which he or she is attesting.
    (2) Lack of affordable coverage based on projected income. (i) For 
any applicant who requests an exemption based on the hardship described 
in Sec.  155.605(g)(2), the Exchange must verify the unavailability of 
affordable coverage through the procedures used to determine eligibility 
for advance payments of the premium tax credit, as specified in subpart 
D of this part, including the procedures described in Sec.  
155.315(c)(1), and the procedures used to verify eligibility for 
qualifying coverage in an eligible employer-sponsored plan, as specified 
in Sec.  155.320(d), except as specified in Sec.  155.615(f)(2)(ii).
    (ii) The Exchange must accept an application filer's attestation for 
an applicant regarding eligibility for minimum essential coverage other 
than through an eligible employer-sponsored plan, instead of following 
the procedures specified in Sec.  155.320(b).
    (3) [Reserved]
    (4) To the extent that the Exchange is unable to verify any of the 
information needed to determine an applicant's eligibility for an 
exemption based on hardship, the Exchange must follow the procedures 
specified in paragraph (g) of this section.
    (d) Inability to verify necessary information. Except as otherwise 
specified in this subpart, for an applicant for whom the Exchange cannot 
verify information required to determine eligibility for an exemption, 
including but not limited to when electronic data is required in 
accordance with this subpart but data for individuals relevant to the 
eligibility determination for an exemption are not included in such data 
sources or when electronic data is required but it is not reasonably 
expected that data sources will be available within the time period as 
specified in Sec.  155.315(f), the Exchange--
    (1) Must make a reasonable effort to identify and address the causes 
of such inconsistency, including typographical or other clerical errors, 
by contacting the application filer to confirm the accuracy of the 
information submitted by the application filer;
    (2) If unable to resolve the inconsistency through the process 
described in paragraph (g)(1) of this section, must--
    (i) Provide notice to the applicant regarding the inconsistency; and
    (ii) Provide the applicant with a period of 90 days from the date on 
which the notice described in paragraph

[[Page 346]]

(g)(2)(i) of this section is sent to the applicant to either present 
satisfactory documentary evidence via the channels available for the 
submission of an application, as described in Sec.  155.610(d), except 
for by telephone, or otherwise to resolve the inconsistency.
    (3) May extend the period described in paragraph (g)(2)(ii) of this 
section for an applicant if the applicant demonstrates that a good faith 
effort has been made to obtain the required documentation during the 
period.
    (4) During the period described in paragraph (g)(1) and (g)(2)(ii) 
of this section, must not grant a certificate of exemption based on the 
information subject to this paragraph.
    (5) If, after the period described in paragraph (g)(2)(ii) of this 
section, the Exchange remains unable to verify the attestation, the 
Exchange must determine the applicant's eligibility for an exemption 
based on any information available from the data sources used in 
accordance with this subpart, if applicable, unless such applicant 
qualifies for the exception provided under paragraph (h) of this 
section, and notify the applicant of such determination in accordance 
with the notice requirements specified in Sec.  155.610(i), including 
notice that the Exchange is unable to verify the attestation.
    (e) Exception for special circumstances. For an applicant who does 
not have documentation with which to resolve the inconsistency through 
the process described in paragraph (g)(2) of this section because such 
documentation does not exist or is not reasonably available and for whom 
the Exchange is unable to otherwise resolve the inconsistency, the 
Exchange must provide an exception, on a case-by-case basis, to accept 
an applicant's attestation as to the information which cannot otherwise 
be verified along with an explanation of circumstances as to why the 
applicant does not have documentation.
    (f) Flexibility in information collection and verification. HHS may 
approve an Exchange Blueprint in accordance with Sec.  155.105(d) or a 
significant change to the Exchange Blueprint in accordance with Sec.  
155.105(e) to modify the methods to be used for collection of 
information and verification as set forth in this subpart, as well as 
the specific information required to be collected, provided that HHS 
finds that such modification would reduce the administrative costs and 
burdens on individuals while maintaining accuracy and minimizing delay, 
and that applicable requirements under Sec. Sec.  155.260, 155.270, and 
paragraph (j) of this section, and section 6103 of the Code with respect 
to the confidentiality, disclosure, maintenance, or use of such 
information will be met.
    (g) Applicant information. The Exchange may not require an applicant 
to provide information beyond the minimum necessary to support the 
eligibility process for exemptions as described in this subpart.
    (h) Validation of Social Security number. (1) For any individual who 
provides his or her Social Security number to the Exchange, the Exchange 
must transmit the Social Security number and other identifying 
information to HHS, which will submit it to the Social Security 
Administration.
    (2) To the extent that the Exchange is unable to validate an 
individual's Social Security number through the Social Security 
Administration, or the Social Security Administration indicates that the 
individual is deceased, the Exchange must follow the procedures 
specified in paragraph (g) of this section, except that the Exchange 
must provide the individual with a period of 90 days from the date on 
which the notice described in paragraph (g)(2)(i) of this section is 
received for the applicant to provide satisfactory documentary evidence 
or resolve the inconsistency with the Social Security Administration. 
The date on which the notice is received means 5 days after the date on 
the notice, unless the individual demonstrates that he or she did not 
receive the notice within the 5 day period.

[78 FR 39523, July 1, 2013, as amended at 78 FR 42322, July 15, 2013; 81 
FR 12346, Mar. 8, 2016]



Sec.  155.620  Eligibility redeterminations for exemptions during
a calendar year.

    (a) General requirement. The Exchange must redetermine the 
eligibility of an individual with an exemption granted

[[Page 347]]

by the Exchange if it receives and verifies new information reported by 
such an individual, except for the exemption described in Sec.  
155.605(g)(2).
    (b) Requirement for individuals to report changes. (1) Except as 
specified in paragraph (b)(2) of this section, the Exchange must require 
an individual who has a certificate of exemption from the Exchange to 
report any change with respect to the eligibility standards for the 
exemption as specified in Sec.  155.605, except for the exemption 
described in Sec.  155.605(g)(2), within 30 days of such change.
    (2) The Exchange must allow an individual with a certificate of 
exemption to report changes via the channels available for the 
submission of an application, as described in Sec.  155.610(d).
    (c) Verification of reported changes. The Exchange must--
    (1) Verify any information reported by an individual with a 
certificate of exemption in accordance with the processes specified in 
Sec.  155.615 prior to using such information in an eligibility 
redetermination.
    (2) Notify an individual in accordance with Sec.  155.610(i) after 
redetermining his or her eligibility based on a reported change.
    (3) Provide periodic electronic notifications regarding the 
requirements for reporting changes and an individual's opportunity to 
report any changes, to an individual who has a certificate of exemption 
for which changes must be reported in accordance with Sec.  155.620(b) 
and who has elected to receive electronic notifications, unless he or 
she has declined to receive such notifications.
    (d) Effective date of changes. The Exchange must implement a change 
resulting from a redetermination under this section for the month or 
months after the month in which the redetermination occurs, such that a 
certificate that was provided for the month in which the redetermination 
occurs, and for prior months remains effective.



Sec.  155.625  Options for conducting eligibility determinations for
exemptions.

    (a) Options for conducting eligibility determinations. The Exchange 
may satisfy the requirements of this subpart--
    (1) Directly or through contracting arrangements in accordance with 
Sec.  155.110(a); or
    (2) By use of the HHS service under paragraph (b) of this section.
    (b) Use of HHS service. Notwithstanding the requirements of this 
subpart, the Exchange may adopt an exemption eligibility determination 
made by HHS.
    (c) Administration of hardship exemption based on affordability. 
States may choose to administer the hardship exemption under Sec.  
155.605(d)(2) only and delegate to HHS all other exemption 
determinations generally administered by HHS.

[79 FR 30349, May 27, 2014, as amended at 81 FR 12346, Mar. 8, 2016]



Sec.  155.630  Reporting.

    Requirement to provide information related to tax administration. If 
the Exchange grants an individual a certificate of exemption in 
accordance with Sec.  155.610(i), the Exchange must transmit to the IRS 
at such time and in such manner as the IRS may specify--
    (a) The individual's name, Social Security number, and exemption 
certificate number;
    (b) Any other information required in guidance published by the 
Secretary of the Treasury in accordance with 26 CFR 601.601(d)(2).



Sec.  155.635  Right to appeal.

    (a) For an application submitted before October 15, 2014, the 
Exchange must include the notice of the right to appeal and instructions 
regarding how to file an appeal in any notification issued in accordance 
with Sec.  155.610(i).
    (b) For an application submitted on or after October 15, 2014, the 
Exchange must include the notice of the right to appeal and instructions 
regarding how to file an appeal in any notification issued in accordance 
with Sec. Sec.  155.610(i) and 155.625(b)(2)(i).



  Subpart H_Exchange Functions: Small Business Health Options Program 
                                 (SHOP)

    Source: 77 FR 18464, Mar. 27, 2012, unless otherwise noted.

[[Page 348]]



Sec.  155.700  Standards for the establishment of a SHOP.

    (a) General requirement. (1) For plan years beginning before January 
1, 2018, an Exchange must provide for the establishment of a SHOP that 
meets the requirements of this subpart and is designed to assist 
qualified employers and facilitate the enrollment of qualified employees 
into qualified health plans.
    (2) For plan years beginning on or after January 1, 2018, an 
Exchange must provide for the establishment of a SHOP that meets the 
requirements of this subpart and is designed to assist qualified 
employers in facilitating the enrollment of their employees in qualified 
health plans.
    (b) Definition. For the purposes of this subpart:
    Group participation rate means the minimum percentage of all 
eligible individuals or employees of an employer that must be enrolled.
    SHOP application filer means an applicant, an authorized 
representative, an agent or broker of the employer, or an employer 
filing for its employees where not prohibited by other law.

[77 FR 18464, Mar. 27, 2012, as amended at 78 FR 54141, Aug. 30, 2013; 
80 FR 10868, Feb. 27, 2015; 83 FR 17064, Apr. 17, 2018]



Sec.  155.705  Functions of a SHOP for plan years beginning prior
to January 1, 2018.

    (a) Exchange functions that apply to SHOP. The SHOP must carry out 
all the required functions of an Exchange described in this subpart and 
in subparts C, E, K, and M of this part, except:
    (1) Requirements related to individual eligibility determinations in 
subpart D of this part;
    (2) Requirements related to enrollment of qualified individuals 
described in subpart E of this part;
    (3) The requirement to issue certificates of exemption in accordance 
with Sec.  155.200(b); and
    (4) Requirements related to the payment of premiums by individuals, 
Indian tribes, tribal organizations and urban Indian organizations under 
Sec.  155.240.
    (b) Unique functions of a SHOP. The SHOP must also provide the 
following unique functions:
    (1) Enrollment and eligibility functions. The SHOP must adhere to 
the requirements outlined in subpart H.
    (2) Employer choice requirements. With regard to QHPs offered 
through the SHOP for plan years beginning on or after January 1, 2015, 
the SHOP must allow a qualified employer to select a level of coverage 
as described in section 1302(d)(1) of the Affordable Care Act, in which 
all QHPs within that level are made available to the qualified employees 
of the employer, unless the SHOP makes an election pursuant to paragraph 
(b)(3)(vi) of this section.
    (3) SHOP options with respect to employer choice requirements. (i) 
For plan years beginning before January 1, 2015, a SHOP may allow a 
qualified employer to make one or more QHPs available to qualified 
employees:
    (A) By the method described in paragraph (b)(2) of this section, or
    (B) By a method other than the method described in paragraph (b)(2) 
of this section.
    (ii) Unless the SHOP makes an election pursuant to paragraph 
(b)(3)(vi) of this section, for plan years beginning on or after January 
1, 2015, a SHOP:
    (A) Must allow an employer to make available to qualified employees 
all QHPs at the level of coverage selected by the employer as described 
in paragraph (b)(2) of this section, and
    (B) May allow an employer to make one or more QHPs available to 
qualified employees by a method other than the method described in 
paragraph (b)(2) of this section.
    (iii) For plan years beginning before January 1, 2015, a Federally-
facilitated SHOP will provide a qualified employer the choice to make 
available to qualified employees a single QHP.
    (iv) Unless the Secretary makes an election pursuant to paragraph 
(b)(3)(vi) of this section, for plan years beginning on or after January 
1, 2015, a Federally-facilitated SHOP will provide a qualified employer 
a choice of two methods to make QHPs available to qualified employees:
    (A) The employer may choose a level of coverage as described in 
paragraph (b)(2) of this section, or

[[Page 349]]

    (B) The employer may choose a single QHP.
    (v) For plan years beginning on or after January 1, 2015, a 
Federally-facilitated SHOP will provide a qualified employer a choice of 
two methods to make stand-alone dental plans available to qualified 
employees and their dependents:
    (A) The employer may choose to make available a single stand-alone 
dental plan.
    (B) The employer may choose to make available all stand-alone dental 
plans offered through a Federally-facilitated SHOP at a level of 
coverage as described in Sec.  156.150(b)(2) of this subchapter.
    (vi) For plan years beginning in 2015 only, the SHOP may elect to 
provide employers only with the option set forth at paragraph 
(b)(3)(ii)(B) of this section, or in the case of a Federally-facilitated 
SHOP, only with the option set forth at paragraph (b)(3)(iv)(B) of this 
section, only if the State Insurance Commissioner submits a written 
recommendation to the SHOP adequately explaining that it is the State 
Insurance Commissioner's expert judgment, based on a documented 
assessment of the full landscape of the small group market in his or her 
State, that not implementing employee choice would be in the best 
interests of small employers and their employees and dependents, given 
the likelihood that implementing employee choice would cause issuers to 
price products and plans higher in 2015 due to the issuers' beliefs 
about adverse selection. A State Insurance Commissioner's recommendation 
must be based on concrete evidence, including but not limited to 
discussions with those issuers expected to participate in the SHOP in 
2015.
    (vii) For plan years beginning in 2015 only, a State Insurance 
Commissioner should submit the recommendation specified in paragraph 
(b)(3)(vi) of this section, and the SHOP should make a decision based on 
that recommendation sufficiently in advance of the end of the QHP 
certification application window such that issuers can make informed 
decisions about whether to participate in the SHOP. In a Federally-
facilitated-SHOP, State Insurance Commissioners must submit to HHS the 
recommendation specified in paragraph (b)(3)(vi) of this section on or 
before June 2, 2014, and HHS will make a decision based on any 
recommendations submitted by that deadline before the close of the QHP 
certification application window.
    (viii) For plan years beginning on or after January 1, 2017, a 
Federally-facilitated SHOP will provide a qualified employer a choice of 
at least the two methods to make QHPs available to qualified employees 
and their dependents described in paragraphs (b)(3)(viii)(A) and (B) of 
this section, and may also provide a qualified employer with a choice of 
a third method to make QHPs available to qualified employees and their 
dependents as described in paragraph (b)(3)(viii)(C) of this section.
    (A) The employer may choose a level of coverage as described in 
paragraph (b)(2) of this section;
    (B) The employer may choose a single QHP; or
    (C) The employer may offer its qualified employees a choice of all 
QHPs offered through a Federally-facilitated SHOP by a single issuer 
across all available levels of coverage, as described in section 
1302(d)(1) of the Affordable Care Act and implemented in Sec.  
156.140(b) of this subchapter. A State with a Federally-facilitated SHOP 
may recommend that the Federally-facilitated SHOP not make this 
additional option available in that State, by submitting a letter to HHS 
in advance of the annual QHP certification application deadline, by a 
date to be established by HHS. The State's letter must describe and 
justify the State's recommendation, based on the anticipated impact this 
additional option would have on the small group market and consumers.
    (ix) For plan years beginning on or after January 1, 2017, a 
Federally-facilitated SHOP will provide a qualified employer a choice of 
at least the two methods to make stand-alone dental plans available to 
qualified employees and their dependents described in paragraphs 
(b)(3)(ix)(A) and (B) of this section, and may also provide a qualified 
employer with a choice of a third method to make stand-alone dental

[[Page 350]]

plans available to qualified employees and their dependents as described 
in paragraph (b)(3)(ix)(C) of this section.
    (A) The employer may choose to make available a single stand-alone 
dental plan;
    (B) The employer may choose to make available all stand-alone dental 
plans offered through a Federally-facilitated SHOP at a level of 
coverage as described in Sec.  156.150(b)(2) of this subchapter; or
    (C) The employer may offer its qualified employees a choice of all 
stand-alone dental plans offered through a Federally-facilitated SHOP by 
a single issuer across all available levels of coverage, as described in 
Sec.  156.150(b)(2) of this subchapter. A State with a Federally-
facilitated SHOP may recommend that the Federally-facilitated SHOP not 
make this additional option available in that State, by submitting a 
letter to HHS in advance of the annual QHP certification application 
deadline, by a date to be established by HHS. The State's letter must 
describe and justify the State's recommendation, based on the 
anticipated impact this additional option would have on the small group 
market and consumers.
    (x) States operating a State-based Exchange utilizing the Federal 
platform for SHOP enrollment functions will have the same employer 
choice models available as States with a Federally-facilitated SHOP, 
except that a State with a State-based Exchange utilizing the Federal 
platform for SHOP enrollment functions may decide against offering the 
employer choice models specified in paragraphs (b)(3)(viii)(C) and 
(b)(3)(ix)(C) of this section in that State, provided that the State 
notifies HHS of that decision in advance of the annual QHP certification 
application deadline, by a date to be established by HHS.
    (4)(i) Premium aggregation. Consistent with the effective dates set 
forth in paragraph (b)(4)(ii) of this section, the SHOP must perform the 
following functions related to premium payment administration:
    (A) Provide each qualified employer with a bill on a monthly basis 
that identifies the employer contribution, the employee contribution, 
and the total amount that is due to the QHP issuers from the qualified 
employer;
    (B) Collect from each employer the total amount due and make 
payments to QHP issuers in the SHOP for all enrollees except as provided 
for in paragraph (b)(4)(ii)(A) of this section; and
    (C) Maintain books, records, documents, and other evidence of 
accounting procedures and practices of the premium aggregation program 
for each benefit year for at least 10 years.
    (ii) The SHOP may establish one or more standard processes for 
premium calculation, premium payment, and premium collection.
    (A) The SHOP may, upon an election by a qualified employer, enter 
into an agreement with a qualified employer to facilitate the 
administration of continuation coverage by collecting premiums for 
continuation coverage enrolled in through the SHOP directly from a 
person enrolled in continuation coverage through the SHOP consistent 
with applicable law and the terms of the group health plan, and 
remitting premium payments for this coverage to QHP issuers. A 
Federally-facilitated SHOP may elect to limit this service to the 
collection of premiums related to continuation coverage required under 
29 U.S.C. 1161, et seq.
    (B) Qualified employers in a Federally-facilitated SHOP must make 
premium payments according to a timeline and process established by HHS:
    (1) In a Federally-facilitated SHOP, payment for the group's first 
month of coverage must be received by the premium aggregation services 
vendor on or before the 20th day of the month prior to the month that 
coverage begins.
    (2) In a Federally-facilitated SHOP, when coverage is effectuated 
retroactively, payment for the first month's coverage and all months of 
the retroactive coverage must be received and processed no later than 30 
days after the event that triggers the eligibility for retroactive 
coverage. If payment is received on or before the 20th day of a month, 
coverage will be effectuated upon the first day of the following month 
retroactive to the effective date of coverage. If payment is received 
after the 20th day of a month, coverage

[[Page 351]]

will be effectuated upon the first day of the second following month 
retroactive to the effective date of coverage, provided that the payment 
includes the premium for the intervening month.
    (C) For a Federally-facilitated SHOP, the premium for coverage 
lasting less than 1 month must equal the product of:
    (1) The premium for 1 month of coverage divided by the number of 
days in the month; and
    (2) The number of days for which coverage is being provided in the 
month described in paragraph (b)(4)(ii)(C)(1) of this section.
    (iii) Effective dates. (A) A State-based SHOP may elect to perform 
these functions for plan years beginning before January 1, 2015, but 
need not do so.
    (B) A Federally-facilitated SHOP will perform these functions only 
in plan years beginning on or after January 1, 2015.
    (5) QHP Certification. With respect to certification of QHPs in the 
small group market, the SHOP must ensure each QHP meets the requirements 
specified in Sec.  156.285 of this subchapter.
    (6) Rates and rate changes. The SHOP must--
    (i) Require all QHP issuers to make any change to rates at a uniform 
time that is no more frequently than quarterly.
    (A) In a Federally-facilitated SHOP, rates may be updated quarterly 
with effective dates of January 1, April 1, July 1, or October 1 of each 
calendar year, beginning with rates effective no sooner than July 1, 
2014. The updated rates must be submitted to HHS at least 60 days in 
advance of the effective date of the rates.
    (B) [Reserved]
    (ii) Prohibit all QHP issuers from varying rates for a qualified 
employer during the employer's plan year.
    (7) QHP availability in merged markets. If a State merges the 
individual market and the small group market risk pools in accordance 
with section 1312(c)(3) of the Affordable Care Act, the SHOP may permit 
a qualified employee to enroll in any QHP meeting level of coverage 
requirements described in section 1302(d) of the Affordable Care Act.
    (8) QHP availability in unmerged markets. If a State does not merge 
the individual and small group market risk pools, the SHOP must permit 
each qualified employee to enroll only in QHPs in the small group 
market.
    (9) SHOP expansion to large group market. If a State elects to 
expand the SHOP to the large group market, a SHOP must allow issuers of 
health insurance coverage in the large group market in the State to 
offer QHPs in such market through a SHOP beginning in 2017 provided that 
a large employer meets the qualified employer requirements other than 
that it be a small employer.
    (10) Participation rules. Subject to Sec.  147.104 of this 
subchapter, the SHOP may authorize a uniform group participation rate 
for the offering of health insurance coverage in the SHOP, which must be 
a single, uniform rate that applies to all groups and issuers in the 
SHOP. If the SHOP authorizes a minimum participation rate, such rate 
must be based on the rate of employee participation in the SHOP, not on 
the rate of employee participation in any particular QHP or QHPs of any 
particular issuer.
    (i) For plan years beginning before January 1, 2016, subject to 
Sec.  147.104 of this subchapter, a Federally-facilitated SHOP must use 
a minimum participation rate of 70 percent, calculated as the number of 
qualified employees accepting coverage under the employer's group health 
plan, divided by the number of qualified employees offered coverage, 
excluding from the calculation any employee who, at the time the 
employer submits the SHOP application, is enrolled in coverage through 
another employer's group health plan or through a governmental plan such 
as Medicare, Medicaid, or TRICARE. For purposes of this calculation, 
qualified employees who are former employees will not be counted.
    (ii) For plan years beginning on or after January 1, 2016, subject 
to Sec.  147.104 of this subchapter, a Federally-facilitated SHOP must 
use a minimum participation rate of 70 percent, calculated as the number 
of full-time employees accepting coverage offered by a qualified 
employer plus the number of full-time employees who, at the time the

[[Page 352]]

employer submits the SHOP group enrollment, are enrolled in coverage 
through another group health plan, governmental coverage (such as 
Medicare, Medicaid, or TRICARE), coverage sold through the individual 
market, or in other minimum essential coverage, divided by the number of 
full-time employees offered coverage.
    (iii) Notwithstanding paragraphs (b)(10)(i) and (ii) of this 
section, a Federally-facilitated SHOP may utilize a different minimum 
participation rate in a State if there is evidence that a State law sets 
a minimum participation rate or that a higher or lower minimum 
participation rate is customarily used by the majority of QHP issuers in 
that State for products in the State's small group market outside the 
SHOP.
    (11) Premium calculator. In the SHOP, the premium calculator 
described in Sec.  155.205(b)(6) must facilitate the comparison of 
available QHPs after the application of any applicable employer 
contribution in lieu of any advance payment of the premium tax credit 
and any cost sharing reductions.
    (i) To determine the employer and employee contributions, a SHOP may 
establish one or more standard methods that employers may use to define 
their contributions toward employee and dependent coverage.
    (ii) A Federally-facilitated SHOP must use the following method for 
employer contributions:
    (A) When the employer offers a single plan to qualified employees, 
the employer must use a fixed contribution methodology under which the 
employer contributes a fixed percentage of the plan's premium for each 
qualified employee and, if applicable, for each dependent of a qualified 
employee. The employer's contribution is calculated based on an 
enrollee's premium before any applicable tobacco surcharge, based on the 
total premium owed for the enrollee, is applied.
    (B) When the employer offers a choice of plans to qualified 
employees, the employer may use a fixed contribution methodology or a 
reference plan contribution methodology. Under the fixed contribution 
methodology, the employer contributes a fixed percentage of the premiums 
for each qualified employee and, if applicable, for each dependent of a 
qualified employee, across all plans in which any qualified employee, 
and, if applicable, any dependent of a qualified employee, is enrolled. 
Under the reference plan contribution methodology, the employer will 
select a plan from among the plans offered by the employer as described 
in paragraphs (b)(2) and (3) of this section to serve as a reference 
plan on which contributions will be based, and then will define a 
percentage contribution toward premiums under the reference plan; the 
resulting contribution amounts under the reference plan will be applied 
toward any plan in which a qualified employee or, if applicable, any 
dependent of a qualified employee, is enrolled, up to the lesser of the 
contribution amount or the total amount of any premium for the selected 
plan before application of a tobacco surcharge, if applicable. The 
employer's contribution is calculated based on an enrollee's premium 
before any applicable tobacco surcharge, based on the total premium owed 
for the enrollee, is applied.
    (C) The employer will define a percentage contribution toward 
premiums for employee-only coverage and, if dependent coverage is 
offered, a percentage contribution toward premiums for dependent 
coverage. To the extent permitted by other applicable law, for plan 
years beginning on or after January 1, 2015, a Federally-facilitated 
SHOP may permit an employer to define a different percentage 
contribution for full-time employees from the percentage contribution it 
defines for non-full-time employees, and it may permit an employer to 
define a different percentage contribution for dependent coverage for 
full-time employees from the percentage contribution it defines for 
dependent coverage for non-full-time employees.
    (D) A Federally-facilitated SHOP may permit employers to base 
contributions on a calculated composite premium for employees, for adult 
dependents, and for dependents below age 21.
    (c) Coordination with individual market Exchange for eligibility 
determinations. A SHOP must provide data related to eligibility and 
enrollment of a qualified

[[Page 353]]

employee to the individual market Exchange that corresponds to the 
service area of the SHOP, unless the SHOP is operated pursuant to Sec.  
155.100(a)(2).
    (d) Duties of Navigators in the SHOP. In States that have elected to 
operate only a SHOP pursuant to Sec.  155.100(a)(2), at State option and 
if State law permits the Navigator duties described in Sec.  
155.210(e)(3) and (4) may be fulfilled through referrals to agents and 
brokers.
    (e) Applicability date. The provisions of this section apply for 
plan years beginning prior to January 1, 2018. Section 155.706 is 
applicable for plan years beginning on or after January 1, 2018.

[77 FR 18464, Mar. 27, 2012, as amended at 78 FR 15533, Mar. 11, 2013; 
78 FR 33239, June 4, 2013; 78 FR 54141, Aug. 30, 2013; 78 FR 79620, Dec. 
31, 2013; 79 FR 13838, Mar. 11, 2014; 79 FR 30349, May 27, 2014; 79 FR 
59138, Oct. 1, 2014; 80 FR 10868, Feb. 27, 2015; 81 FR 12346, Mar. 8, 
2016; 83 FR 17064, Apr. 17, 2018]



Sec.  155.706  Functions of a SHOP for plan years beginning on or
after January 1, 2018.

    (a) Exchange functions that apply to SHOP. The SHOP must carry out 
all the required functions of an Exchange described in this subpart and 
in subparts C, E, K, and M of this part, except:
    (1) Requirements related to individual eligibility determinations in 
subpart D of this part;
    (2) Requirements related to enrollment of qualified individuals 
described in subpart E of this part;
    (3) The requirement to issue certificates of exemption in accordance 
with Sec.  155.200(b); and
    (4) Requirements related to the payment of premiums by individuals, 
Indian tribes, tribal organizations and urban Indian organizations under 
Sec.  155.240.
    (b) Unique functions of a SHOP. The SHOP must also provide the 
following unique functions:
    (1) Enrollment and eligibility functions. The SHOP must adhere to 
the requirements outlined in subpart H.
    (2) Employer choice requirements. The SHOP must allow a qualified 
employer to select a level of coverage as described in section 
1302(d)(1) of the Affordable Care Act, in which all QHPs within that 
level are made available to the qualified employees of the employer.
    (3) SHOP options with respect to employer choice requirements. (i) A 
SHOP:
    (A) Must allow an employer to make available to qualified employees 
all QHPs at the level of coverage selected by the employer as described 
in paragraph (b)(2) of this section, and
    (B) May allow an employer to make one or more QHPs available to 
qualified employees by a method other than the method described in 
paragraph (b)(2) of this section.
    (ii) A Federally-facilitated SHOP will provide a qualified employer 
a choice of two methods to make QHPs available to qualified employees:
    (A) The employer may choose a level of coverage as described in 
paragraph (b)(2) of this section, or
    (B) The employer may choose a single QHP.
    (iii) A SHOP may, and a Federally-facilitated SHOP will provide a 
qualified employer a choice of two methods to make stand-alone dental 
plans available to qualified employees:
    (A) The employer may choose to make available a single stand-alone 
dental plan.
    (B) The employer may choose to make available all stand-alone dental 
plans offered through a SHOP.
    (iv) A SHOP may also provide a qualified employer with a choice of a 
third method to make QHPs available to qualified employees by offering 
its qualified employees a choice of all QHPs offered through the SHOP by 
a single issuer across all available levels of coverage, as described in 
section 1302(d)(1) of the Affordable Care Act and implemented in Sec.  
156.140(b) of this subchapter. A State with a Federally-facilitated SHOP 
may recommend that the Federally-facilitated SHOP not make this 
additional option available in that State, by submitting a letter to HHS 
in advance of the annual QHP certification application deadline, by a 
date to be established by HHS. The State's letter must describe and 
justify the State's recommendation, based on the anticipated impact this 
additional option would have on the small group market and consumers.
    (v) A SHOP may also provide a qualified employer with a choice of a 
third

[[Page 354]]

method to make stand-alone dental plans available to qualified employees 
by offering its qualified employees a choice of all stand-alone dental 
plans offered through the SHOP by a single issuer. A State with a 
Federally-facilitated SHOP may recommend that the Federally-facilitated 
SHOP not make this additional option available in that State, by 
submitting a letter to HHS in advance of the annual QHP certification 
application deadline, by a date to be established by HHS. The State's 
letter must describe and justify the State's recommendation, based on 
the anticipated impact this additional option would have on the small 
group market and consumers.
    (vi) States operating a State Exchange utilizing the Federal 
platform for SHOP enrollment functions will have the same employer 
choice models available as States with a Federally-facilitated SHOP, 
except that a State with a State Exchange utilizing the Federal platform 
for SHOP enrollment functions may decide against offering the employer 
choice models specified in paragraphs (b)(3)(iv) and (v) of this section 
in that State, provided that the State notifies HHS of that decision in 
advance of the annual QHP certification application deadline, by a date 
to be established by HHS.
    (4) Continuation of Coverage. The SHOP may, upon an election by a 
qualified employer, enter into an agreement with a qualified employer to 
facilitate the administration of continuation coverage by collecting 
premiums for continuation coverage enrolled in through the SHOP directly 
from a person enrolled in continuation coverage through the SHOP 
consistent with applicable law and the terms of the group health plan, 
and remitting premium payments for this coverage to QHP issuers.
    (5) QHP Certification. With respect to certification of QHPs in the 
small group market, the SHOP must ensure each QHP meets the requirements 
specified in Sec.  156.285 of this subchapter.
    (6) Rates and rate changes. The SHOP must--
    (i) Require all QHP issuers to make any change to rates at a uniform 
time that is no more frequently than quarterly.
    (A) In a Federally-facilitated SHOP, rates may be updated quarterly 
with effective dates of January 1, April 1, July 1, or October 1 of each 
calendar year. The updated rates must be submitted to HHS at least 60 
days in advance of the effective date of the rates.
    (B) [Reserved]
    (ii) Prohibit all QHP issuers from varying rates for a qualified 
employer during the employer's plan year.
    (7) QHP availability in merged markets. If a State merges the 
individual market and the small group market risk pools in accordance 
with section 1312(c)(3) of the Affordable Care Act, the SHOP may permit 
employer groups to enroll in any QHP meeting level of coverage 
requirements described in section 1302(d) of the Affordable Care Act.
    (8) QHP availability in unmerged markets. If a State does not merge 
the individual and small group market risk pools, the SHOP must permit 
employer groups to enroll only in QHPs in the small group market.
    (9) SHOP expansion to large group market. If a State elects to 
expand the SHOP to the large group market, a SHOP must allow issuers of 
health insurance coverage in the large group market in the State to 
offer QHPs in such market through a SHOP beginning in 2017 provided that 
a large employer meets the qualified employer requirements other than 
that it be a small employer.
    (10) Participation rules. Subject to Sec.  147.104 of this 
subchapter, the SHOP may authorize a uniform group participation rate 
for the offering of health insurance coverage in the SHOP, which must be 
a single, uniform rate that applies to all groups and issuers in the 
SHOP. If the SHOP authorizes a minimum participation rate, such rate 
must be based on the rate of employee participation in the SHOP, not on 
the rate of employee participation in any particular QHP or QHPs of any 
particular issuer.
    (i) Subject to Sec.  147.104 of this subchapter, a Federally-
facilitated SHOP must use a minimum participation rate of 70 percent, 
calculated as the number of full-time employees accepting coverage 
offered by a qualified employer plus the number of full-time employees

[[Page 355]]

who, at the time the employer submits the SHOP group enrollment, are 
enrolled in coverage through another group health plan, governmental 
coverage (such as Medicare, Medicaid, or TRICARE), coverage sold through 
the individual market, or in other minimum essential coverage, divided 
by the number of full-time employees offered coverage.
    (ii) Notwithstanding paragraphs (b)(10)(i) of this section, a 
Federally-facilitated SHOP may utilize a different minimum participation 
rate in a State if there is evidence that a State law sets a minimum 
participation rate or that a higher or lower minimum participation rate 
is customarily used by the majority of QHP issuers in that State for 
products in the State's small group market outside the SHOP.
    (11) Premium calculator. In the SHOP, the premium calculator 
described in Sec.  155.205(b)(6) must facilitate the comparison of 
available QHPs.
    (c) Coordination with individual market Exchange for eligibility 
determinations. A SHOP that collects employee eligibility or enrollment 
data must provide data related to eligibility and enrollment of a 
qualified employee to the individual market Exchange that corresponds to 
the service area of the SHOP, unless the SHOP is operated pursuant to 
Sec.  155.100(a)(2).
    (d) Duties of Navigators in the SHOP. In States that have elected to 
operate only a SHOP pursuant to Sec.  155.100(a)(2), at State option and 
if State law permits the Navigator duties described in Sec.  
155.210(e)(3) and (4) may be fulfilled through referrals to agents and 
brokers.
    (e) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2018.

[83 FR 17064, Apr. 17, 2018]



Sec.  155.710  Eligibility standards for SHOP.

    (a) General requirement. The SHOP must permit qualified employers to 
purchase coverage for qualified employees through the SHOP.
    (b) Employer eligibility requirements. An employer is a qualified 
employer eligible to purchase coverage through a SHOP if such employer--
    (1) Is a small employer;
    (2) Elects to offer, at a minimum, all full-time employees coverage 
in a QHP through a SHOP; and
    (3) Either--
    (i) Has its principal business address in the Exchange service area 
and offers coverage to all its full-time employees through that SHOP; or
    (ii) Offers coverage to each eligible employee through the SHOP 
serving that employee's primary worksite.
    (c) Participating in multiple SHOPs. If an employer meets the 
criteria in paragraph (b) of this section and makes the election 
described in (b)(3)(ii) of this section, a SHOP shall allow the employer 
to offer coverage to those employees whose primary worksite is in the 
SHOP's service area.
    (d) Continuing eligibility. The SHOP must treat a qualified employer 
which ceases to be a small employer solely by reason of an increase in 
the number of employees of such employer as a qualified employer until 
the qualified employer otherwise fails to meet the eligibility criteria 
of this section or elects to no longer purchase coverage for qualified 
employees through the SHOP.
    (e) Employee eligibility requirements. An employee is a qualified 
employee eligible to enroll in coverage through a SHOP if such employee 
receives an offer of coverage from a qualified employer. A qualified 
employee is eligible to enroll his or her dependents in coverage through 
a SHOP if the offer from the qualified employer includes an offer of 
dependent coverage.

[77 FR 18464, Mar. 27, 2012, as amended at 80 FR 10869, Feb. 27, 2015]



Sec.  155.715  Eligibility determination process for SHOP for plan
years beginning prior to January 1, 2018.

    (a) General requirement. Before permitting the purchase of coverage 
in a QHP, the SHOP must determine that the employer or individual who 
requests coverage is eligible in accordance with the requirements of 
Sec.  155.710.
    (b) Applications. The SHOP must accept a SHOP single employer 
application form from employers and the SHOP single employee application 
form from employees wishing to elect

[[Page 356]]

coverage through the SHOP, in accordance with the relevant standards of 
Sec.  155.730.
    (c) Verification of eligibility. For the purpose of verifying 
employer and employee eligibility, the SHOP--
    (1) Must verify that an individual applicant is identified by the 
employer as an employee to whom the qualified employer has offered 
coverage and must otherwise accept the information attested to within 
the application unless the information is inconsistent with the 
employer-provided information;
    (2) May establish, in addition to or in lieu of reliance on the 
application, additional methods to verify the information provided by 
the applicant on the applicable application;
    (3) Must collect only the minimum information necessary for 
verification of eligibility in accordance with the eligibility standards 
described in Sec.  155.710; and
    (4) May not perform individual market Exchange eligibility 
determinations or verifications described in subpart D of this part.
    (d) Eligibility adjustment period. (1) When the information 
submitted on the SHOP single employer application is inconsistent with 
information collected from third-party data sources through the 
verification process described in Sec.  155.715(c)(2), the SHOP must--
    (i) Make a reasonable effort to identify and address the causes of 
such inconsistency, including through typographical or other clerical 
errors;
    (ii) Notify the employer of the inconsistency;
    (iii) Provide the employer with a period of 30 days from the date on 
which the notice described in paragraph (d)(1)(ii) of this section is 
sent to the employer to either present satisfactory documentary evidence 
to support the employer's application, or resolve the inconsistency; and
    (iv) If, after the 30-day period described in paragraph (d)(1)(iii) 
of this section, the SHOP has not received satisfactory documentary 
evidence, the SHOP must--
    (A) Notify the employer of its denial of eligibility in accordance 
with paragraph (e) of this section and of the employer's right to appeal 
such determination; and
    (B) If the employer was enrolled pending the confirmation or 
verification of eligibility information, discontinue the employer's 
participation in the SHOP at the end of the month following the month in 
which the notice is sent.
    (2) When the information submitted on the SHOP single employee 
application is inconsistent with information collected from third-party 
data sources through the verification process described in Sec.  
155.715(c)(2), the SHOP must-
    (i) Make a reasonable effort to identify and address the causes of 
such inconsistency, including through typographical or other clerical 
errors;
    (ii) Notify the individual of the inability to substantiate his or 
her employee status;
    (iii) Provide the employee with a period of 30 days from the date on 
which the notice described in paragraph (d)(2)(ii) of this section is 
sent to the employee to either present satisfactory documentary evidence 
to support the employee's application, or resolve the inconsistency; and
    (iv) If, after the 30-day period described in paragraph (d)(2)(iii) 
of this section, the SHOP has not received satisfactory documentary 
evidence, the SHOP must notify the employee of its denial of eligibility 
in accordance with paragraph (f) of this section.
    (e) Notification of employer eligibility. The SHOP must provide an 
employer requesting eligibility to purchase coverage with a notice of 
approval or denial of eligibility and the employer's right to appeal 
such eligibility determination.
    (f) Notification of employee eligibility. The SHOP must notify an 
employee seeking to enroll in a QHP offered through the SHOP of the 
determination by the SHOP whether the individual is eligible in 
accordance with Sec.  155.710 and the employee's right to appeal such 
determination.
    (g) Notification of employer withdrawal from SHOP. If a qualified 
employer ceases to purchase coverage through the SHOP, the SHOP must 
ensure that--

[[Page 357]]

    (1) Each QHP terminates the enrollment through the SHOP of the 
employer's enrollees enrolled in a QHP through the SHOP; and
    (2) Each of the employer's qualified employees enrolled in a QHP 
through the SHOP is notified of the termination of coverage prior to 
such termination. Such notification must also provide information about 
other potential sources of coverage, including access to individual 
market coverage through the Exchange.
    (h) Applicability date. The provisions of this section apply for 
plan years beginning prior to January 1, 2018. Section 155.716 is 
applicable for plan years beginning on or after January 1, 2018.

[77 FR 18464, Mar. 27, 2012, as amended at 79 FR 13839, Mar. 11, 2014; 
81 FR 12347, Mar. 8, 2016; 83 FR 17065, Apr. 17, 2018]



Sec.  155.716  Eligibility determination process for SHOP for plan 
years beginning on or after January 1, 2018.

    (a) General requirement. The SHOP must determine whether an employer 
requesting a determination of eligibility to participate in a SHOP is 
eligible in accordance with the requirements of Sec.  155.710.
    (b) Applications. The SHOP must accept a SHOP single employer 
application form from employers, in accordance with the relevant 
standards of Sec.  155.730.
    (c) Verification of eligibility. For the purpose of verifying 
employer eligibility, the SHOP--
    (1) May establish, in addition to or in lieu of reliance on the 
application, additional methods to verify the information provided by 
the applicant on the applicable application;
    (2) Must collect only the minimum information necessary for 
verification of eligibility in accordance with the eligibility standards 
described in Sec.  155.710; and
    (3) May not perform individual market Exchange eligibility 
determinations or verifications described in subpart D of this part.
    (d) Eligibility adjustment period. When the information submitted on 
the SHOP single employer application is inconsistent with information 
collected from third-party data sources through the verification process 
described in paragraph (c)(1) of this section or otherwise received by 
the SHOP, the SHOP must--
    (1) Make a reasonable effort to identify and address the causes of 
such inconsistency, including through typographical or other clerical 
errors;
    (2) Notify the employer of the inconsistency;
    (3) Provide the employer with a period of 30 days from the date on 
which the notice described in paragraph (d)(2) of this section is sent 
to the employer to either present satisfactory documentary evidence to 
support the employer's application, or resolve the inconsistency; and
    (4) If, after the 30-day period described in paragraph (d)(2) of 
this section, the SHOP has not received satisfactory documentary 
evidence, the SHOP must--
    (i) Notify the employer of its denial or termination of eligibility 
in accordance with paragraph (e) of this section and of the employer's 
right to appeal such determination; and
    (ii) If the employer was enrolled pending the confirmation or 
verification of eligibility information, discontinue the employer's 
participation in the SHOP at the end of the month following the month in 
which the notice is sent.
    (e) Notification of employer eligibility. The SHOP must provide an 
employer requesting eligibility to purchase coverage through the SHOP 
with a notice of approval or denial or termination of eligibility and 
the employer's right to appeal such eligibility determination.
    (f) Validity of Eligibility Determination. An employer's 
determination of eligibility to participate in SHOP remains valid until 
the employer makes a change that could end its eligibility under Sec.  
155.710(b) or withdraws from participation in the SHOP.
    (g) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2018.

[83 FR 17065, Apr. 17, 2018]

[[Page 358]]



Sec.  155.720  Enrollment of employees into QHPs under SHOP for
plan years beginning prior to January 1, 2018.

    (a) General requirements. The SHOP must process the SHOP single 
employee applications of qualified employees to the applicable QHP 
issuers and facilitate the enrollment of qualified employees in QHPs. 
All references to QHPs in this section refer to QHPs offered through the 
SHOP.
    (b) Enrollment timeline and process. The SHOP must establish a 
uniform enrollment timeline and process for all QHP issuers and 
qualified employers to follow, which includes the following activities 
that must occur before the effective date of coverage for qualified 
employees:
    (1) Determination of employer eligibility for purchase of coverage 
in the SHOP as described in Sec.  155.715;
    (2) Qualified employer selection of QHPs offered through the SHOP to 
qualified employees, consistent with Sec.  155.705(b)(2) and (3);
    (3) Provision of a specific timeframe during which the qualified 
employer can select the level of coverage or QHP offering, as 
appropriate;
    (4) Provision of a specific timeframe for qualified employees to 
provide relevant information to complete the application process;
    (5) Determination and verification of employee eligibility for 
enrollment through the SHOP; and
    (6) Processing enrollment of qualified employees into selected QHPs.
    (c) Transfer of enrollment information. In order to enroll qualified 
employees of a qualified employer participating in the SHOP, the SHOP 
must--
    (1) Transmit enrollment information on behalf of qualified employees 
to QHP issuers in accordance with the timeline and process described in 
paragraph (b) of this section; and
    (2) Follow requirements set forth in Sec.  155.400(c) of this part.
    (d) Payment. The SHOP must--
    (1) Follow requirements set forth in Sec.  155.705(b)(4) of this 
part; and
    (2) Terminate participation of qualified employers that do not 
comply with the process established in Sec.  155.705(b)(4).
    (e) Notification of effective date. (1) For plan years beginning 
before January 1, 2017, the SHOP must ensure that a QHP issuer notifies 
a qualified employee enrolled in a QHP through the SHOP of the effective 
date of his or her coverage.
    (2) For plan years beginning on or after January 1, 2017, the SHOP 
must ensure that a QHP issuer notifies an enrollee enrolled in a QHP 
through the SHOP of the effective date of his or her coverage.
    (3) When a primary subscriber and his or her dependents live at the 
same address, a separate notice of the effective date of coverage need 
not be sent to each dependent at that address, provided that the notice 
sent to each primary subscriber at that address contains all required 
information about the coverage effective date for the primary subscriber 
and his or her dependents at that address.
    (f) Records. The SHOP must receive and maintain for at least 10 
years records of enrollment in QHPs, including identification of--
    (1) Qualified employers participating in the SHOP; and
    (2) Qualified employees enrolled in QHPs.
    (g) Reconcile files. The SHOP must reconcile enrollment information 
and employer participation information with QHPs on no less than a 
monthly basis.
    (h) Employee termination of coverage from a QHP. If any employee 
terminates coverage from a QHP, the SHOP must notify the employee's 
employer.
    (i) Reporting requirement for tax administration purposes. The SHOP 
must report to the IRS employer participation, employer contribution, 
and employee enrollment information in a time and format to be 
determined by HHS.
    (j) Applicability date. The provisions of this section apply for 
plan years beginning prior to January 1, 2018. Section 155.721 is 
applicable for plan years beginning on or after January 1, 2018.

[77 FR 18464, Mar. 27, 2012, as amended at 80 FR 10869, Feb. 27, 2015; 
83 FR 17066, Apr. 17, 2018]



Sec.  155.721  Record retention and IRS Reporting for plan years
beginning on or after January 1, 2018.

    (a) Records. The SHOP must receive and maintain for at least 10 
years

[[Page 359]]

records of qualified employers participating in the SHOP.
    (b) Reporting requirement for tax administration purposes. The SHOP 
must, at the request of the IRS, report information to the IRS about 
employer eligibility to participate in SHOP coverage.
    (c) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2018.

[83 FR 17066, Apr. 17, 2018]



Sec.  155.725  Enrollment periods under SHOP for plan years beginning
prior to January 1, 2018.

    (a) General requirements. The SHOP must ensure that enrollment 
transactions are sent to QHP issuers and that such issuers adhere to 
coverage effective dates in accordance with this section.
    (b) Rolling enrollment in the SHOP. The SHOP must permit a qualified 
employer to purchase coverage for its small group at any point during 
the year. The employer's plan year must consist of the 12-month period 
beginning with the qualified employer's effective date of coverage, 
unless the plan is issued in a State that has elected to merge its 
individual and small group risk pools under section 1312(c)(3) of the 
Affordable Care Act, in which case the plan year will end on December 31 
of the calendar year in which coverage first became effective.
    (c) Annual employer election period. The SHOP must provide qualified 
employers with a standard election period prior to the completion of the 
employer's plan year and before the annual employee open enrollment 
period, in which the qualified employer may change its participation in 
the SHOP for the next plan year, including--
    (1) The method by which the qualified employer makes QHPs available 
to qualified employees pursuant to Sec.  155.705(b)(2) and (3);
    (2) The employer contribution towards the premium cost of coverage;
    (3) The level of coverage offered to qualified employees as 
described in Sec.  155.705(b)(2) and (3); and
    (4) The QHP or QHPs offered to qualified employees in accordance 
with Sec.  155.705.
    (d) Annual employer election period notice. The SHOP must provide 
notification to a qualified employer of the annual election period in 
advance of such period.
    (e) Annual employee open enrollment period. (1) The SHOP must 
establish a standardized annual open enrollment period for qualified 
employees prior to the completion of the applicable qualified employer's 
plan year and after that employer's annual election period.
    (2) Qualified employers in a Federally-facilitated SHOP must provide 
qualified employees with an annual open enrollment period of at least 
one week.
    (f) Annual employee open enrollment period notice. The SHOP must 
provide notification to a qualified employee of the annual open 
enrollment period in advance of such period.
    (g) Newly qualified employees. (1) In a State Exchange that does not 
use the Federal platform for SHOP functions, the following rules apply 
with respect to enrollment and coverage effective dates for newly 
qualified employees.
    (i) The SHOP must provide an employee who becomes a qualified 
employee outside of the initial or annual open enrollment period an 
enrollment period beginning on the first day of becoming a qualified 
employee. A newly qualified employee must have at least 30 days from the 
beginning of his or her enrollment period to select a QHP. The 
enrollment period must end no sooner than 15 days prior to the date that 
any applicable employee waiting period longer than 45 days would end if 
the employee made a plan selection on the first day of becoming 
eligible.
    (ii) The effective date of coverage for a QHP selection received by 
the SHOP from a newly qualified employee must always be the first day of 
a month, and must generally be determined in accordance with paragraph 
(h) of this section, unless the employee is subject to a waiting period 
consistent with Sec.  147.116 of this subchapter, in which case the 
effective date may be on the first day of a later month, but in no case 
may the effective date fail to comply with Sec.  147.116 of this 
subchapter.
    (iii) Waiting periods in the SHOP are calculated beginning on the 
date the employee becomes a qualified employee

[[Page 360]]

who is otherwise eligible for coverage, regardless of when a qualified 
employer notifies the SHOP about a newly qualified employee.
    (2) In a Federally-facilitated SHOP or in a State Exchange that uses 
the Federal platform for SHOP functions, the following rules apply with 
respect to enrollment and coverage effective dates for newly qualified 
employees.
    (i) The SHOP must provide an employee who becomes a qualified 
employee outside of the initial or annual open enrollment period with a 
30-day enrollment period beginning on the date the qualified employer 
notifies the SHOP about the newly qualified employee. Qualified 
employers must notify the SHOP about a newly qualified employee on or 
before the thirtieth day after the day that the employee becomes a newly 
qualified employee.
    (ii) The effective date of coverage for a QHP selection received by 
the SHOP from a newly qualified employee is the first day of the month 
following plan selection, unless the employee is subject to a waiting 
period consistent with Sec.  147.116 of this subchapter and paragraph 
(g)(2)(iii) of this section, in which case the effective date will be on 
the first day of the month following the end of the waiting period, but 
in no case may the effective date fail to comply with Sec.  147.116 of 
this subchapter. If a newly qualified employee's waiting period ends on 
the first day of a month and the employee has already made a plan 
selection by that date, coverage must take effect on that date. If a 
newly qualified employee makes a plan selection on the first day of a 
month and any applicable waiting period has ended by that date, coverage 
must be effective on the first day of the following month. If a 
qualified employer with variable hour employees makes regularly having a 
specified number of hours of service per period, or working full-time, a 
condition of employee eligibility for coverage offered through the SHOP, 
any measurement period that the qualified employer elects to use under 
Sec.  147.116(c)(3)(i) to determine whether an employee meets the 
applicable eligibility conditions with respect to coverage offered 
through the SHOP must not exceed 10 months, beginning on any date 
between the employee's start date and the first day of the first 
calendar month following the employee's start date.
    (iii) Waiting periods in the SHOP are calculated beginning on the 
date the employee becomes a qualified employee who is otherwise eligible 
for coverage, regardless of when a qualified employer notifies the SHOP 
about a newly qualified employee, and must not exceed 60 days in length. 
Waiting periods must be 0, 15, 30, 45 or 60 days in length.
    (h) Initial and annual open enrollment effective dates. (1) The SHOP 
must establish effective dates of coverage for qualified employees 
enrolling in coverage for the first time, and for qualified employees 
enrolling during the annual open enrollment period described in 
paragraph (e) of this section.
    (2) For a group enrollment received by the Federally-facilitated 
SHOP from a qualified employer at the time of an initial group 
enrollment or renewal:
    (i) Between the first and fifteenth day of any month, the Federally-
facilitated SHOP must ensure a coverage effective date of the first day 
of the following month unless the employer opts for a later effective 
date within a quarter for which small group market rates are available.
    (ii) Between the 16th and last day of any month, the Federally-
facilitated SHOP must ensure a coverage effective date of the first day 
of the second following month unless the employer opts for a later 
effective date within a quarter for which small group market rates are 
available.
    (i) Renewal of coverage. (1) If a qualified employee enrolled in a 
QHP through the SHOP remains eligible for enrollment through the SHOP in 
coverage offered by the same qualified employer, the SHOP may provide 
for a process under which the employee will remain in the QHP selected 
the previous year, unless--
    (i) The qualified employee terminates coverage from such QHP in 
accordance with standards identified in Sec.  155.430;
    (ii) The qualified employee enrolls in another QHP if such option 
exists; or
    (iii) The QHP is no longer available to the qualified employee.

[[Page 361]]

    (2) The SHOP may treat a qualified employer offering coverage 
through the SHOP as offering the same coverage under Sec.  155.705(b)(3) 
at the same level of contribution under Sec.  155.705(b)(11) unless:
    (i) The qualified employer is no longer eligible to offer such 
coverage through the SHOP;
    (ii) The qualified employer elects to offer different coverage or a 
different contribution through the SHOP;
    (iii) The qualified employer withdraws from the SHOP; or
    (iv) In the case of a qualified employer offering a single QHP, the 
single QHP is no longer available through the SHOP.
    (j)(1) Special enrollment periods. The SHOP must provide special 
enrollment periods consistent with this section, during which certain 
qualified employees or a dependent of a qualified employee may enroll in 
QHPs and enrollees may change QHPs.
    (2) The SHOP must provide a special enrollment period for a 
qualified employee or dependent of a qualified employee who:
    (i) Experiences an event described in Sec.  155.420(d)(1) (other 
than paragraph (d)(1)(ii)), or experiences an event described in Sec.  
155.420(d)(2), (4), (5), (7), (8), (9), (10), (11), or (12);
    (ii) Loses eligibility for coverage under a Medicaid plan under 
title XIX of the Social Security Act or a State child health plan under 
title XXI of the Social Security Act; or
    (iii) Becomes eligible for assistance, with respect to coverage 
under a SHOP, under such Medicaid plan or a State child health plan 
(including any waiver or demonstration project conducted under or in 
relation to such a plan).
    (3) A qualified employee or dependent of a qualified employee who 
experiences a qualifying event described in paragraph (j)(2) of this 
section has:
    (i) Thirty (30) days from the date of a triggering event described 
in paragraph (j)(2)(i) of this section to select a QHP through the SHOP; 
and
    (ii) Sixty (60) days from the date of a triggering event described 
in paragraph (j)(2)(ii) or (iii) of this section to select a QHP through 
the SHOP;
    (4) A dependent of a qualified employee is not eligible for a 
special election period if the employer does not extend the offer of 
coverage to dependents.
    (5) The effective dates of coverage for special enrollment periods 
are determined using the provisions of Sec.  155.420(b).
    (6) Loss of minimum essential coverage is determined using the 
provisions of Sec.  155.420(e).
    (7) Notwithstanding anything to the contrary in Sec.  155.420(d), 
Sec.  155.420(a)(4) and (d)(2)(i)(A) do not apply to special enrollment 
periods in the SHOP.
    (k) Limitation. Qualified employees will not be able to enroll 
unless the employer group meets any applicable minimum participation 
rate implemented under Sec.  155.705(b)(10).
    (l) Applicability date. The provisions of this section apply for 
plan years beginning prior to January 1, 2018. Section 155.726 is 
applicable for plan years beginning on or after January 1, 2018.

[77 FR 18464, Mar. 27, 2012, as amended at 78 FR 33239, June 4, 2013; 78 
FR 65095, Oct. 30, 2013; 79 FR 30350, May 27, 2014; 79 FR 42986, July 
24, 2014; 80 FR 10869, Feb. 27, 2015; 81 FR 12347, Mar. 8, 2016; 81 FR 
94179, Dec. 22, 2016; 82 FR 18382, Apr. 18, 2017; 83 FR 17066, Apr. 17, 
2018]



Sec.  155.726  Enrollment periods under SHOP for plan years beginning
on or after January 1, 2018.

    (a) General requirements. The SHOP must ensure that issuers offering 
QHPs through the SHOP adhere to applicable enrollment periods, including 
special enrollment periods.
    (b) Rolling enrollment in the SHOP. The SHOP must permit a qualified 
employer to purchase coverage for its small group at any point during 
the year. The employer's plan year must consist of the 12-month period 
beginning with the qualified employer's effective date of coverage, 
unless the plan is issued in a State that has elected to merge its 
individual and small group risk pools under section 1312(c)(3) of the 
Affordable Care Act, in which case the plan year will end on December 31 
of the calendar year in which coverage first became effective.
    (c) Special enrollment periods. (1) The SHOP must ensure that 
issuers offering

[[Page 362]]

QHPs through the SHOP provide special enrollment periods consistent with 
the section, during which certain qualified employees or dependents of 
qualified employees may enroll in QHPs and enrollees may change QHPs.
    (2) The SHOP must ensure that issuers offering QHPs through a SHOP 
provide a special enrollment period for a qualified employee or a 
dependent of a qualified employee who;
    (i) Experiences an event described in Sec.  155.420(d)(1) (other 
than paragraph (d)(1)(ii)), or experiences an event described in Sec.  
155.420(d)(2), (4), (5), (7), (8), (9), (10), (11), or (12);
    (ii) Loses eligibility for coverage under a Medicaid plan under 
title XIX of the Social Security Act or a State child health plan under 
title XXI of the Social Security Act; or
    (iii) Becomes eligible for assistance, with respect to coverage 
under a SHOP, under such Medicaid plan or a State child health plan 
(including any waiver or demonstration project conducted under or in 
relation to such a plan).
    (3) A qualified employee or dependent of a qualified employee who 
experiences a qualifying event described in paragraph (j)(2) of this 
section has:
    (i) Thirty (30) days from the date of a triggering event described 
in paragraph (c)(2)(i) of this section to select a QHP through the SHOP; 
and
    (ii) Sixty (60) days from the date of a triggering event described 
in paragraph (c)(2)(ii) or (iii) of this section to select a QHP through 
the SHOP;
    (4) A dependent of a qualified employee is not eligible for a 
special enrollment period if the employer does not extend the offer of 
coverage to dependents.
    (5) The effective dates of coverage for special enrollment periods 
are determined using the provisions of Sec.  155.420(b).
    (6) Loss of minimum essential coverage is determined using the 
provisions of Sec.  155.420(e).
    (d) Limitation. Qualified employees will not be able to enroll 
unless the employer group meets any applicable minimum participation 
rate implemented under Sec.  155.706(b)(10).
    (e) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2018.

[83 FR 17066, Apr. 17, 2018]



Sec.  155.730  Application standards for SHOP for plan year beginning
prior to January 1, 2018.

    (a) General requirements. Application forms used by the SHOP must 
meet the requirements set forth in this section.
    (b) Single employer application. The SHOP must use a single 
application to determine employer eligibility and to collect information 
necessary for purchasing coverage. Such application must collect the 
following--
    (1) Employer name and address of employer's locations;
    (2) Number of employees;
    (3) Employer Identification Number (EIN); and
    (4) A list of qualified employees and their taxpayer identification 
numbers.
    (c) Single employee application. The SHOP must use a single 
application for eligibility determination, QHP selection and enrollment 
for qualified employees and their dependents.
    (d) Model application. The SHOP may use the model single employer 
application and the model single employee application provided by HHS.
    (e) Alternative employer and employee application. The SHOP may use 
an alternative application if such application is approved by HHS and 
collects the following:
    (1) In the case of the employer application, the information in 
described in paragraph (b); and
    (2) In the case of the employee application, the information 
necessary to establish eligibility of the employee as a qualified 
employee and to complete the enrollment of the qualified employee and 
any dependents to be enrolled.
    (f) Filing. The SHOP must:
    (1) Accept applications from SHOP application filers; and
    (2) Provide the tools to file an application via an Internet Web 
site.
    (g) Additional safeguards. (1) The SHOP may not provide to the 
employer any information collected on the employee application with 
respect to spouses or dependents other than the

[[Page 363]]

name, address, and birth date of the spouse or dependent.
    (2) The SHOP is not permitted to collect information on the single 
employer or single employee application unless that information is 
necessary to determine SHOP eligibility or effectuate enrollment through 
the SHOP.
    (h) Applicability date. The provisions of this section apply for 
plan years beginning prior to January 1, 2018. Section 155.731 is 
applicable for plan years beginning on or after January 1, 2018.

[77 FR 18464, Mar. 27, 2012, as amended at 78 FR 54141, Aug. 30, 2013; 
79 FR 13839, Mar. 11, 2014; 83 FR 17066, Apr. 17, 2018]



Sec.  155.731  Application standards for SHOP for plan years 
beginning on or after January 1, 2018.

    (a) General requirements. Application forms used by the SHOP must 
meet the requirements set forth in this section.
    (b) Single employer application. The SHOP must use a single 
application to determine employer eligibility. Such application must 
collect the following--
    (1) Employer name and address of employer's locations;
    (2) Information sufficient to confirm the employer is a small 
employer;
    (3) Employer Identification Number (EIN); and
    (4) Information sufficient to confirm that the employer is offering, 
at a minimum, all full-time employees coverage in a QHP through a SHOP.
    (c) Model application. The SHOP may use the model single employer 
application provided by HHS.
    (d) Alternative employer application. The SHOP may use an 
alternative application if such application is approved by HHS and 
collects the information described in paragraph (b).
    (e) Filing. The SHOP must:
    (1) Accept applications from SHOP application filers; and
    (2) Provide the tools to file an employer eligibility application 
via an internet website.
    (f) Additional safeguards. (1) The SHOP may not provide to the 
employer any information collected on an employee application with 
respect to spouses or dependents other than the name, address, and birth 
date of the spouse or dependent.
    (2) The SHOP is not permitted to collect information on the single 
employer or on an employee application unless that information is 
necessary to determine SHOP eligibility or effectuate enrollment through 
the SHOP.
    (g) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2018.

[83 FR 17066, Apr. 17, 2018]



Sec.  155.735  Termination of SHOP enrollment or coverage for plan
years beginning prior to January 1, 2018.

    (a) General requirements. The SHOP must determine the timing, form, 
and manner in which coverage or enrollment in a QHP through the SHOP may 
be terminated.
    (b) Termination of employer group health coverage or enrollment at 
the request of the employer. (1) The SHOP must establish policies for 
advance notice of termination required from the employer and effective 
dates of termination.
    (2) In the Federally-facilitated SHOP, an employer may terminate 
coverage or enrollment for all enrollees covered by the employer group 
health plan effective on the last day of any month, provided that the 
employer has given notice to the Federally-facilitated SHOP on or before 
the 15th day of any month. If notice is given after the 15th of the 
month, the Federally-facilitated SHOP may terminate the coverage or 
enrollment on the last day of the following month.
    (c) Termination of employer group health coverage for non-payment of 
premiums. (1) The SHOP must establish policies for termination for non-
payment of premiums, including but not limited to policies regarding due 
dates for payment of premiums to the SHOP, grace periods, employer and 
employee notices, and reinstatement provisions.
    (2) In an FF-SHOP, for premium payments other than payments for the 
first month of coverage--
    (i) For a given month of coverage, premium payment is due by the 
first day of the coverage month.
    (ii) If premium payment is not received 31 days from the first of 
the coverage month, the Federally-facilitated

[[Page 364]]

SHOP may terminate the qualified employer for lack of payment. The 
termination would take effect on the last day of the month for which the 
Federally-facilitated SHOP received full payment.
    (iii) If a qualified employer is terminated due to lack of premium 
payment, but within 30 days following its termination the qualified 
employer requests reinstatement, pays all premiums owed including any 
prior premiums owed for coverage during the grace period, and pays the 
premium for the next month's coverage, the Federally-facilitated SHOP 
must reinstate the qualified employer in its previous coverage. A 
qualified employer may be reinstated in the Federally-facilitated SHOP 
only once per calendar year.
    (iv) Enrollees enrolled in continuation coverage required under 29 
U.S.C. 1161, et seq. through the Federally-facilitated SHOP may not be 
terminated if timely payment is made to the Federally-facilitated SHOP 
in an amount that is not less than $50 less than the amount the plan 
requires to be paid for a period of coverage unless the Federally-
facilitated SHOP notifies the enrollee of the amount of the deficiency 
and the enrollee does not pay the deficiency within 30 days of such 
notice, pursuant to the notice requirements in Sec.  155.230.
    (3) Payment for COBRA Continuation Coverage. Nothing in this section 
modifies existing obligations related to the administration of coverage 
required under 29 U.S.C. 1161, et seq., as described in 26 CFR part 54.
    (d) Termination of employee or dependent coverage or enrollment. (1) 
The SHOP must establish consistent policies regarding the process for 
and effective dates of termination of employee or dependent coverage or 
enrollment in the following circumstances:
    (i) The employee or dependent is no longer eligible for coverage 
under the employer's group health plan;
    (ii) The employee requests that the SHOP terminate the coverage of 
the employee or a dependent of the employee under the employer's group 
health plan;
    (iii) The QHP in which the enrollee is enrolled terminates, is 
decertified as described in Sec.  155.1080, or its certification as a 
QHP is not renewed;
    (iv) The enrollee changes from one QHP to another during the 
employer's annual open enrollment period or during a special enrollment 
period in accordance with Sec.  155.725(j); or
    (v) The enrollee's coverage is rescinded in accordance with Sec.  
147.128 of this subtitle.
    (2) In the FF-SHOP, termination is effective:
    (i) In the case of a termination in accordance with paragraphs 
(d)(1)(i), (ii), (iii), and (v) of this section, termination is 
effective on the last day of the month in which the Federally-
facilitated SHOP receives notice of the event described in paragraph 
(d)(1)(i), (ii), (iii), or (v) of this section.
    (ii) In the case of a termination in accordance with paragraph 
(d)(1)(iv) of this section, the last day of coverage in an enrollee's 
prior QHP is the day before the effective date of coverage in his or her 
new QHP, including for any retroactive enrollments effectuated under 
Sec.  155.725(j)(5).
    (iii) The FF-SHOP will send qualified employees a notice notifying 
them in advance of a child dependent's loss of eligibility for dependent 
child coverage under their plan because of age. The notice will be sent 
90 days in advance of the date when the dependent enrollee would lose 
eligibility for dependent child coverage. The enrollee will also receive 
a separate termination notice when coverage is terminated, under Sec.  
155.735(g).
    (e) Termination of enrollment or coverage tracking and approval. The 
SHOP must comply with the standards described in Sec.  155.430(c).
    (f) Applicability date. The provisions of this section apply to 
coverage--
    (1) Beginning on or after January 1, 2015; and
    (2) In any SHOP providing qualified employers with the option 
described in Sec.  155.705(b)(2) or the option described in Sec.  
155.705(b)(4) before January 1, 2015, beginning with the date that 
option is offered.
    (g) Notice of termination. Beginning January 1, 2016:
    (1) Except as provided in paragraph (g)(3) of this section, if any 
enrollee's coverage or enrollment through the

[[Page 365]]

SHOP is terminated due to non-payment of premiums or due to a loss of 
the enrollee's eligibility to participate in the SHOP, including where 
an enrollee loses his or her eligibility because a qualified employer 
has lost its eligibility, the SHOP must notify the enrollee of the 
termination. Such notice must include the termination effective date and 
reason for termination, and must be sent within 3 business days if an 
electronic notice is sent, and within 5 business days if a mailed hard 
copy notice is sent.
    (2) Except as provided in paragraph (g)(3) of this section, if an 
employer group's coverage or enrollment through the SHOP is terminated 
due to non-payment of premiums or, where applicable, due to a loss of 
the qualified employer's eligibility to offer coverage through the SHOP, 
the SHOP must notify the employer of the termination. Such notice must 
include the termination effective date and reason for termination, and 
must be sent within 3 business days if an electronic notice is sent, and 
within 5 business days if a mailed hard copy notice is sent.
    (3) Where State law requires a QHP issuer to send the notices 
described in paragraphs (g)(1) and (2) of this section, a SHOP is not 
required to send such notices.
    (4) When a primary subscriber and his or her dependents live at the 
same address, a separate termination notice need not be sent to each 
dependent at that address, provided that the notice sent to each primary 
subscriber at that address contains all required information about the 
termination for the primary subscriber and his or her dependents at that 
address.
    (h) Applicability date. The provisions of this section apply for 
plan years beginning before January 1, 2018.

[78 FR 54141, Aug. 30, 2013, as amended at 80 FR 10870, Feb. 27, 2015; 
81 FR 12348, Mar. 8, 2016; 83 FR 17067, Apr. 17, 2018]



Sec.  155.740  SHOP employer and employee eligibility appeals 
requirements for plan years beginning prior to January 1, 2018.

    (a) Definitions. The definitions in Sec. Sec.  155.20, 155.300, and 
155.500 apply to this section.
    (b) General requirements. (1) A State, establishing an Exchange that 
provides for the establishment of a SHOP pursuant to Sec.  155.100 must 
provide an eligibility appeals process for the SHOP. Where a State has 
not established an Exchange that provides for the establishment of a 
SHOP pursuant to Sec.  155.100, HHS will provide an eligibility appeals 
process for the SHOP that meets the requirements of this section and the 
requirements in paragraph (b)(2) of this section.
    (2) The appeals entity must conduct appeals in accordance with the 
requirements established in this section and Sec. Sec.  155.505(e) 
through (h) and 155.510(a)(1) and (2) and (c).
    (c) Employer right to appeal. An employer may appeal--
    (1) A notice of denial of eligibility under Sec.  155.715(e); or
    (2) A failure by the SHOP to provide a timely eligibility 
determination or a timely notice of an eligibility determination in 
accordance with Sec.  155.715(e).
    (d) Employee right to appeal. An employee may appeal--
    (1) A notice of denial of eligibility under Sec.  155.715(f); or
    (2) A failure by the SHOP to provide a timely eligibility 
determination or a timely notice of an eligibility determination in 
accordance with Sec.  155.715(f).
    (e) Appeals notice requirement. Notices of the right to appeal a 
denial of eligibility under Sec.  155.715(e) or (f) must be written and 
include--
    (1) The reason for the denial of eligibility, including a citation 
to the applicable regulations; and
    (2) The procedure by which the employer or employee may request an 
appeal of the denial of eligibility.
    (f) Appeal request. The SHOP and appeals entity must--
    (1) Allow an employer or employee to request an appeal within 90 
days from the date of the notice of denial of eligibility to--
    (i) The SHOP or the appeals entity; or
    (ii) HHS, if no State Exchange that provides for establishment of a 
SHOP has been established;
    (2) Accept appeal requests submitted through any of the methods 
described in Sec.  155.520(a)(1);

[[Page 366]]

    (3) Comply with the requirements of Sec.  155.520(a)(2) and (3); and
    (4) Consider an appeal request valid if it is submitted in 
accordance with paragraph (f)(1) of this section.
    (g) Notice of appeal request. (1) Upon receipt of a valid appeal 
request, the appeals entity must--
    (i) Send timely acknowledgement to the employer, or employer and 
employee if an employee is appealing, of the receipt of the appeal 
request, including--
    (A) An explanation of the appeals process; and
    (B) Instructions for submitting additional evidence for 
consideration by the appeals entity.
    (ii) Promptly notify the SHOP of the appeal, if the appeal request 
was not initially made to the SHOP.
    (2) Upon receipt of an appeal request that is not valid because it 
fails to meet the requirements of this section, the appeals entity 
must--
    (i) Promptly and without undue delay, send written notice to the 
employer or employee that is appealing that--
    (A) The appeal request has not been accepted,
    (B) The nature of the defect in the appeal request; and
    (C) An explanation that the employer or employee may cure the defect 
and resubmit the appeal request if it meets the timeliness requirements 
of paragraph (f) of this section, or within a reasonable timeframe 
established by the appeals entity.
    (ii) Treat as valid an amended appeal request that meets the 
requirements of this section.
    (h) Transmittal and receipt of records. (1) Upon receipt of a valid 
appeal request under this section, or upon receipt of the notice under 
paragraph (g)(2) of this section, the SHOP must promptly transmit, via 
secure electronic interface, to the appeals entity--
    (i) The appeal request, if the appeal request was initially made to 
the SHOP; and
    (ii) The eligibility record of the employer or employee that is 
appealing.
    (2) The appeals entity must promptly confirm receipt of records 
transmitted pursuant to paragraph (h)(1) of this section to the SHOP 
that transmitted the records.
    (i) Dismissal of appeal. The appeals entity--
    (1) Must dismiss an appeal if the employer or employee that is 
appealing--
    (i) Withdraws the request in accordance with the standards set forth 
in Sec.  155.530(a)(1); or
    (ii) Fails to submit an appeal request meeting the standards 
specified in paragraph (f) of this section.
    (2) Must provide timely notice to the employer or employee that is 
appealing of the dismissal of the appeal request, including the reason 
for dismissal, and must notify the SHOP of the dismissal.
    (3) May vacate a dismissal if the employer or employee makes a 
written request within 30 days of the date of the notice of dismissal 
showing good cause why the dismissal should be vacated.
    (j) Procedural rights of the employer or employee. The appeals 
entity must provide the employer, or the employer and employee if an 
employee is appealing, the opportunity to submit relevant evidence for 
review of the eligibility determination.
    (k) Adjudication of SHOP appeals. SHOP appeals must--
    (1) Comply with the standards set forth in Sec.  155.555(i)(1) and 
(3); and
    (2) Consider the information used to determine the employer or 
employee's eligibility as well as any additional relevant evidence 
submitted during the course of the appeal by the employer or employee.
    (l) Appeal decisions. Appeal decisions must--
    (1) Be based solely on--
    (i) The evidence referenced in paragraph (k)(2) of this section;
    (ii) The eligibility requirements for the SHOP under Sec.  
155.710(b) or (e), as applicable.
    (2) Comply with the standards set forth in Sec.  155.545(a)(2) 
through (5); and
    (3) Be effective as follows:
    (i) If an employer is found eligible under the decision, then at the 
employer's option, the effective date of coverage or enrollment through 
the SHOP under the decision can either be made retroactive to the 
effective date of coverage or enrollment through the SHOP that the 
employer would have had if

[[Page 367]]

the employer had been correctly determined eligible, or prospective to 
the first day of the month following the date of the notice of the 
appeal decision.
    (ii) For employee appeal decisions only, if an employee is found 
eligible under the decision, then at the employee's option, the 
effective date of coverage or enrollment through the SHOP under the 
decision can either be made effective retroactive to the effective date 
of coverage or enrollment through the SHOP that the employee would have 
had if the employee had been correctly determined eligible, or 
prospective to the first day of the month following the date of the 
notice of the appeal decision.
    (iii) If the employer or employee is found ineligible under the 
decision, then the appeal decision is effective as of the date of the 
notice of the appeal decision.
    (m) Notice of appeal decision. The appeals entity must issue written 
notice of the appeal decision to the employer, or to the employer and 
employee if an employee is appealing, and to the SHOP within 90 days of 
the date the appeal request is received.
    (n) Implementation of SHOP appeal decisions. The SHOP must promptly 
implement the appeal decision upon receiving the notice under paragraph 
(m) of this section.
    (o) Appeal record. Subject to the requirements of Sec.  155.550, the 
appeal record must be accessible to the employer, or employer and 
employee if an employee is appealing, in a convenient format and at a 
convenient time.
    (p) Applicability date. The provisions of this section apply for 
plan years beginning prior to January 1, 2018. Section 155.741 is 
applicable for plan years beginning on or after January 1, 2018.

[78 FR 54141, Aug. 30, 2013, as amended at 79 FR 30350, May 27, 2014; 81 
FR 12348, Mar. 8, 2016; 81 FR 94180, Dec. 22, 2016; 83 FR 17067, Apr. 
17, 2018]



Sec.  155.741  SHOP employer and employee eligibility appeals 
requirements for plan year beginning on or after January 1, 2018.

    (a) Definitions. The definitions in Sec. Sec.  155.20, 155.300, and 
155.500 apply to this section.
    (b) General requirements. (1) A State, establishing an Exchange that 
provides for the establishment of a SHOP pursuant to Sec.  155.100 must 
provide an eligibility appeals process for the SHOP. Where a State has 
not established an Exchange that provides for the establishment of a 
SHOP pursuant to Sec.  155.100, HHS will provide an eligibility appeals 
process for the SHOP that meets the requirements of this section and the 
requirements in paragraph (b)(2) of this section.
    (2) The appeals entity must conduct appeals in accordance with the 
requirements established in this section and Sec. Sec.  155.505(e) 
through (h) and 155.510(a)(1) and (2) and (c).
    (c) Employer right to appeal. An employer may appeal--
    (1) A notice of denial or termination of eligibility under Sec.  
155.716(e); or
    (2) A failure by the SHOP to provide a timely eligibility 
determination or a timely notice of an eligibility determination in 
accordance with Sec.  155.716(e).
    (d) Appeals notice requirement. Notices of the right to appeal a 
denial of eligibility under Sec.  155.716(e) must be written and 
include--
    (1) The reason for the denial or termination of eligibility, 
including a citation to the applicable regulations; and
    (2) The procedure by which the employer may request an appeal of the 
denial or termination of eligibility.
    (e) Appeal request. The SHOP and appeals entity must--
    (1) Allow an employer to request an appeal within 90 days from the 
date of the notice of denial or termination of eligibility to--
    (i) The SHOP or the appeals entity; or
    (ii) HHS, if no State Exchange that provides for establishment of a 
SHOP has been established;
    (2) Accept appeal requests submitted through any of the methods 
described in Sec.  155.520(a)(1);
    (3) Comply with the requirements of Sec.  155.520(a)(2) and (3); and
    (4) Consider an appeal request valid if it is submitted in 
accordance with paragraph (e)(1) of this section.

[[Page 368]]

    (f) Notice of appeal request. (1) Upon receipt of a valid appeal 
request, the appeals entity must--
    (i) Send timely acknowledgement to the employer of the receipt of 
the appeal request, including--
    (A) An explanation of the appeals process; and
    (B) Instructions for submitting additional evidence for 
consideration by the appeals entity.
    (ii) Promptly notify the SHOP of the appeal, if the appeal request 
was not initially made to the SHOP.
    (2) Upon receipt of an appeal request that is not valid because it 
fails to meet the requirements of this section, the appeals entity 
must--
    (i) Promptly and without undue delay, send written notice to the 
employer that is appealing that--
    (A) The appeal request has not been accepted,
    (B) The nature of the defect in the appeal request; and
    (C) An explanation that the employer may cure the defect and 
resubmit the appeal request if it meets the timeliness requirements of 
paragraph (e) of this section, or within a reasonable timeframe 
established by the appeals entity.
    (ii) Treat as valid an amended appeal request that meets the 
requirements of this section.
    (g) Transmittal and receipt of records. (1) Upon receipt of a valid 
appeal request under this section, or upon receipt of the notice under 
paragraph (f)(2) of this section, the SHOP must promptly transmit, via 
secure electronic interface, to the appeals entity--
    (i) The appeal request, if the appeal request was initially made to 
the SHOP; and
    (ii) The eligibility record of the employer that is appealing.
    (2) The appeals entity must promptly confirm receipt of records 
transmitted pursuant to paragraph (g)(1) of this section to the SHOP 
that transmitted the records.
    (h) Dismissal of appeal. The appeals entity--
    (1) Must dismiss an appeal if the employer that is appealing--
    (i) Withdraws the request in accordance with the standards set forth 
in Sec.  155.530(a)(1); or
    (ii) Fails to submit an appeal request meeting the standards 
specified in paragraph (e) of this section.
    (2) Must provide timely notice to the employer that is appealing of 
the dismissal of the appeal request, including the reason for dismissal, 
and must notify the SHOP of the dismissal.
    (3) May vacate a dismissal if the employer makes a written request 
within 30 days of the date of the notice of dismissal showing good cause 
why the dismissal should be vacated.
    (i) Procedural rights of the employer. The appeals entity must 
provide the employer the opportunity to submit relevant evidence for 
review of the eligibility determination.
    (j) Adjudication of SHOP appeals. SHOP appeals must--
    (1) Comply with the standards set forth in Sec.  155.555(i)(1) and 
(3); and
    (2) Consider the information used to determine the employer's 
eligibility as well as any additional relevant evidence submitted during 
the course of the appeal by the employer or employee.
    (k) Appeal decisions. Appeal decisions must--
    (1) Be based solely on--
    (i) The evidence referenced in paragraph (j)(2) of this section;
    (ii) The eligibility requirements for the SHOP under Sec.  
155.710(b), as applicable.
    (2) Comply with the standards set forth in Sec.  155.545(a)(2) 
through (5)
    (3) Be effective as follows:
    (i) If an employer is found eligible under the decision, then at the 
employer's option, the effective date of coverage or enrollment through 
the SHOP under the decision can either be made retroactive to the 
effective date of coverage or enrollment through the SHOP that the 
employer would have had if the employer had been correctly determined 
eligible, or prospective to the first day of the month following the 
date of the notice of the appeal decision.
    (ii) If the employer is found ineligible under the decision, then 
the appeal decision is effective as of the date of the notice of the 
appeal decision.

[[Page 369]]

    (l) Notice of appeal decision. The appeals entity must issue written 
notice of the appeal decision to the employer and to the SHOP within 90 
days of the date the appeal request is received.
    (m) Implementation of SHOP appeal decisions. The SHOP must promptly 
implement the appeal decision upon receiving the notice under paragraph 
(l) of this section.
    (n) Appeal record. Subject to the requirements of Sec.  155.550, the 
appeal record must be accessible to the employer in a convenient format 
and at a convenient time.
    (o) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2018.

[83 FR 17067, Apr. 17, 2018]

Subparts I-J [Reserved]



  Subpart K_Exchange Functions: Certification of Qualified Health Plans

    Source: 77 FR 18467, Mar. 27, 2012, unless otherwise noted.



Sec.  155.1000  Certification standards for QHPs.

    (a) Definition. The following definition applies in this subpart:
    Multi-State plan means a health plan that is offered in accordance 
with section 1334 of the Affordable Care Act.
    (b) General requirement. The Exchange must offer only health plans 
which have in effect a certification issued or are recognized as plans 
deemed certified for participation in an Exchange as a QHP, unless 
specifically provided for otherwise.
    (c) General certification criteria. The Exchange may certify a 
health plan as a QHP in the Exchange if--
    (1) The health insurance issuer provides evidence during the 
certification process in Sec.  155.1010 that it complies with the 
minimum certification requirements outlined in subpart C of part 156, as 
applicable; and
    (2) The Exchange determines that making the health plan available is 
in the interest of the qualified individuals and qualified employers, 
except that the Exchange must not exclude a health plan--
    (i) On the basis that such plan is a fee-for-service plan;
    (ii) Through the imposition of premium price controls; or
    (iii) On the basis that the health plan provides treatments 
necessary to prevent patients' deaths in circumstances the Exchange 
determines are inappropriate or too costly.
    (d) Special rule for SHOP. Except when a QHP is decertified by the 
Exchange pursuant to Sec.  155.1080, in a SHOP that certifies QHPs on a 
calendar-year basis, the certification shall remain in effect for the 
duration of any plan year beginning in the calendar year for which the 
QHP was certified, even if the plan year ends after the calendar year 
for which the QHP was certified.

[77 FR 18467, Mar. 27, 2012, as amended at 80 FR 10870, Feb. 27, 2015]



Sec.  155.1010  Certification process for QHPs.

    (a) Certification procedures. The Exchange must establish procedures 
for the certification of QHPs consistent with Sec.  155.1000(c).
    (1) Completion date. The Exchange must complete the certification of 
the QHPs that will be offered during the open enrollment period prior to 
the beginning of such period, as outlined in Sec.  155.410.
    (2) Ongoing compliance. The Exchange must monitor the QHP issuers 
for demonstration of ongoing compliance with the certification 
requirements in Sec.  155.1000(c).
    (b) Exchange recognition of plans deemed certified for participation 
in an Exchange. Notwithstanding paragraph (a) of this section, an 
Exchange must recognize as certified QHPs:
    (1) A multi-State plan certified by and under contract with the U.S. 
Office of Personnel Management.
    (2) A CO-OP QHP as described in subpart F of part 156 and deemed as 
certified under Sec.  156.520(e).



Sec.  155.1020  QHP issuer rate and benefit information.

    (a) Receipt and posting of rate increase justification. The Exchange 
must ensure that a QHP issuer submits a justification for a rate 
increase for a QHP prior to the implementation of such an increase, 
except for multi-State plans,

[[Page 370]]

for which the U.S. Office of Personnel Management will provide a process 
for the submission of rate increase justifications. The Exchange must 
ensure that the QHP issuer has prominently posted the justification on 
its Web site as required under Sec.  156.210. To ensure consumer 
transparency, the Exchange must also provide access to the justification 
on its Internet Web site described in Sec.  155.205(b).
    (b) Rate increase consideration. (1) The Exchange must consider rate 
increases in accordance with section 1311(e)(2) of the Affordable Care 
Act, which includes consideration of the following:
    (i) A justification for a rate increase prior to the implementation 
of the increase;
    (ii) Recommendations provided to the Exchange by the State in 
accordance with section 2794(b)(1)(B) of the PHS Act; and
    (iii) Any excess of rate growth outside the Exchange as compared to 
the rate of such growth inside the Exchange.
    (2) This paragraph does not apply to multi-State plans for which the 
U.S. Office of Personnel Management will provide a process for rate 
increase consideration.
    (c) Benefit and rate information. The Exchange must receive the 
information described in this paragraph, at least annually, from QHP 
issuers for each QHP in a form and manner to be specified by HHS. 
Information about multi-State plans may be provided in a form and manner 
determined by the U.S. Office of Personnel Management. The information 
identified in this paragraph is:
    (1) Rates;
    (2) Covered benefits; and
    (3) Cost-sharing requirements.

[77 FR 18467, Mar. 27, 2012, as amended at 77 FR 31515, May 29, 2012]



Sec.  155.1030  QHP certification standards related to advance payments
of the premium tax credit and cost-sharing reductions.

    (a) Review of plan variations for cost-sharing reductions. (1) An 
Exchange must ensure that each issuer that offers, or intends to offer a 
health plan at any level of coverage in the individual market on the 
Exchange submits the required plan variations for the health plan as 
described in Sec.  156.420 of this subchapter. The Exchange must certify 
that the plan variations meet the requirements of Sec.  156.420.
    (2) The Exchange must provide to HHS the actuarial values of each 
QHP and silver plan variation, calculated under Sec.  156.135 of this 
subchapter, in the manner and timeframe established by HHS.
    (b) Information for administering advance payments of the premium 
tax credit and advance payments of cost-sharing reductions. (1) The 
Exchange must collect and review annually the rate allocation and the 
actuarial memorandum that an issuer submits to the Exchange under Sec.  
156.470 of this subchapter, to ensure that the allocation meets the 
standards set forth in Sec.  156.470(c) and (d) of this subchapter.
    (2) The Exchange must submit, in the manner and timeframe 
established by HHS, to HHS the approved allocations and actuarial 
memorandum underlying the approved allocations for each health plan at 
any level of coverage or stand-alone dental plan offered, or intended to 
be offered in the individual market on the Exchange.
    (3) The Exchange must use the methodology specified in the annual 
HHS notice of benefit and payment parameters to calculate advance 
payment amounts for cost-sharing reductions, and must transmit the 
advance payment amounts to HHS, in accordance with Sec.  156.340(a) of 
this subchapter.
    (4) HHS may use the information provided to HHS by the Exchange 
under this section for oversight of advance payments of cost-sharing 
reductions and premium tax credits.
    (c) Multi-State plans. The U.S. Office of Personnel Management will 
ensure compliance with the standards referenced in this section for 
multi-State plans, as defined in Sec.  155.1000(a).

[78 FR 15534, Mar. 11, 2013, as amended at 79 FR 13839, Mar. 11, 2014]



Sec.  155.1040  Transparency in coverage.

    (a) General requirement. The Exchange must collect information 
relating to coverage transparency as described in Sec.  156.220 of this 
subtitle from QHP issuers, and from multi-State plans in

[[Page 371]]

a time and manner determined by the U.S. Office of Personnel Management.
    (b) Use of plain language. The Exchange must determine whether the 
information required to be submitted and made available under paragraph 
(a) of this section is provided in plain language.
    (c) Transparency of cost-sharing information. The Exchange must 
monitor whether a QHP issuer has made cost-sharing information available 
in a timely manner upon the request of an individual as required by 
Sec.  156.220(d) of this subtitle.



Sec.  155.1045  Accreditation timeline.

    (a) Timeline. The Exchange must establish a uniform period following 
certification of a QHP within which a QHP issuer that is not already 
accredited must become accredited as required by Sec.  156.275 of this 
subchapter, except for multi-state plans. The U.S. Office of Personnel 
Management will establish the accreditation period for multi-state 
plans.
    (b) Federally-facilitated Exchange. The accreditation timeline used 
in federally-facilitated Exchanges follows:
    (1) During certification for an issuer's initial year of QHP 
certification (for example, in 2013 for the 2014 coverage year), a QHP 
issuer without existing commercial, Medicaid, or Exchange health plan 
accreditation granted by a recognized accrediting entity for the same 
State in which the issuer is applying to offer coverage must have 
scheduled or plan to schedule a review of QHP policies and procedures of 
the applying QHP issuer with a recognized accrediting entity.
    (2) Prior to a QHP issuer's second year and third year of QHP 
certification (for example, in 2014 for the 2015 coverage year and 2015 
for the 2016 coverage year), a QHP issuer must be accredited by a 
recognized accrediting entity on the policies and procedures that are 
applicable to their Exchange products, or a QHP issuer must have 
commercial or Medicaid health plan accreditation granted by a recognized 
accrediting entity for the same State in which the issuer is offering 
Exchange coverage and the administrative policies and procedures 
underlying that accreditation must be the same or similar to the 
administrative policies and procedures used in connection with the QHP.
    (3) Prior to the QHP issuer's fourth year of QHP certification and 
in every subsequent year of certification (for example, in 2016 for the 
2017 coverage year and forward), a QHP issuer must be accredited in 
accordance with Sec.  156.275 of this subchapter.

[78 FR 12865, Feb. 25, 2013]



Sec.  155.1050  Establishment of Exchange network adequacy standards.

    (a) An Exchange must ensure that the provider network of each QHP 
meets the standards specified in Sec.  156.230 of this subtitle, except 
for multi-State plans.
    (b) The U.S. Office of Personnel Management will ensure compliance 
with the standards specified in Sec.  156.230 of this subtitle for 
multi-State plans.
    (c) A QHP issuer in an Exchange may not be prohibited from 
contracting with any essential community provider designated under Sec.  
156.235(c) of this subtitle.



Sec.  155.1055  Service area of a QHP.

    The Exchange must have a process to establish or evaluate the 
service areas of QHPs to ensure such service areas meet the following 
minimum criteria:
    (a) The service area of a QHP covers a minimum geographical area 
that is at least the entire geographic area of a county, or a group of 
counties defined by the Exchange, unless the Exchange determines that 
serving a smaller geographic area is necessary, nondiscriminatory, and 
in the best interest of the qualified individuals and employers.
    (b) The service area of a QHP has been established without regard to 
racial, ethnic, language, health status-related factors specified under 
section 2705(a) of the PHS Act, or other factors that exclude specific 
high utilizing, high cost or medically-underserved populations.



Sec.  155.1065  Stand-alone dental plans.

    (a) General requirements. The Exchange must allow the offering of a 
limited scope dental benefits plan through the Exchange, if--

[[Page 372]]

    (1) The plan meets the requirements of section 9832(c)(2)(A) of the 
Code and 2791(c)(2)(A) of the PHS Act; and
    (2) The plan covers at least the pediatric dental essential health 
benefit as defined in section 1302(b)(1)(J) of the Affordable Care Act, 
provided that, with respect to this benefit, the plan satisfies the 
requirements of section 2711 of the PHS Act; and
    (3) The plan and issuer of such plan meets QHP certification 
standards, including Sec.  155.1020(c), except for any certification 
requirement that cannot be met because the plan covers only the benefits 
described in paragraph (a)(2) of this section.
    (b) Offering options. The Exchange may allow the dental plan to be 
offered--
    (1) As a stand-alone dental plan; or
    (2) In conjunction with a QHP.
    (c) Sufficient capacity. An Exchange must consider the collective 
capacity of stand-alone dental plans during certification to ensure 
sufficient access to pediatric dental coverage.
    (d) QHP Certification standards. If a plan described in paragraph 
(a) of this section is offered through an Exchange, another health plan 
offered through such Exchange must not fail to be treated as a QHP 
solely because the plan does not offer coverage of benefits offered 
through the stand-alone plan that are otherwise required under section 
1302(b)(1)(J) of the Affordable Care Act.



Sec.  155.1075  Recertification of QHPs.

    (a) Recertification process. Except with respect to multi-State 
plans and CO-OP QHPs, an Exchange must establish a process for 
recertification of QHPs that, at a minimum, includes a review of the 
general certification criteria as outlined in Sec.  155.1000(c). Upon 
determining the recertification status of a QHP, the Exchange must 
notify the QHP issuer.
    (b) Timing. The Exchange must complete the QHP recertification 
process no later than 2 weeks prior to the beginning of the open 
enrollment date at Sec.  155.410(e)(2) of the applicable calendar year.

[77 FR 18467, Mar. 27, 2012, as amended at 80 FR 10870, Feb. 27, 2015]



Sec.  155.1080  Decertification of QHPs.

    (a) Definition. The following definition applies to this section:
    Decertification means the termination by the Exchange of the 
certification status and offering of a QHP.
    (b) Decertification process. Except with respect to multi-State 
plans and CO-OP QHPs, the Exchange must establish a process for the 
decertification of QHPs, which, at a minimum, meets the requirements in 
this section.
    (c) Decertification by the Exchange. The Exchange may at any time 
decertify a health plan if the Exchange determines that the QHP issuer 
is no longer in compliance with the general certification criteria as 
outlined in Sec.  155.1000(c).
    (d) Appeal of decertification. The Exchange must establish a process 
for the appeal of a decertification of a QHP.
    (e) Notice of decertification. Upon decertification of a QHP, the 
Exchange must provide notice of decertification to all affected parties, 
including:
    (1) The QHP issuer;
    (2) Exchange enrollees in the QHP who must receive information about 
a special enrollment period, as described in Sec.  155.420;
    (3) HHS; and
    (4) The State department of insurance.

[77 FR 18467, Mar. 27, 2012, as amended at 77 FR 31515, May 29, 2012]



Sec.  155.1090  Request for reconsideration.

    (a) Request for reconsideration of denial of certification specific 
to a Federally-facilitated Exchange--(1) Request for reconsideration. 
The Federally-facilitated Exchanges will permit an issuer that has 
submitted a complete application to a Federally-facilitated Exchange for 
certification of a health plan as a QHP and is denied certification to 
request reconsideration of such action.
    (2) Form and manner of request. An issuer submitting a request for 
reconsideration under paragraph (a)(1) of this section must submit a 
written request for reconsideration to HHS, in the form and manner 
specified by HHS, within 7 calendar days of the date of the written 
notice of denial of certification. The issuer must include any

[[Page 373]]

and all documentation the issuer wishes to provide in support of its 
request with its request for reconsideration.
    (3) HHS reconsideration decision. HHS will provide the issuer with a 
written notice of the reconsideration decision. The decision will 
constitute HHS's final determination.
    (b) [Reserved]

[81 FR 94180, Dec. 22, 2016]

Subpart L [Reserved]



 Subpart M_Oversight and Program Integrity Standards for State Exchanges

    Source: 78 FR 65095, Oct. 30, 2013, unless otherwise noted.



Sec.  155.1200  General program integrity and oversight requirements.

    (a) General requirement. A State Exchange must:
    (1) Keep an accurate accounting of Exchange receipts and 
expenditures in accordance with generally accepted accounting principles 
(GAAP).
    (2) Monitor and report to HHS on Exchange related activities.
    (3) Collect and report to HHS performance monitoring data.
    (b) Reporting. The State Exchange must, at least annually, provide 
to HHS, in a manner specified by HHS and by applicable deadlines 
specified by HHS, the following data and information:
    (1) A financial statement presented in accordance with GAAP,
    (2) Information showing compliance with Exchange requirements under 
this part 155 through submission of annual reports,
    (3) Performance monitoring data, and
    (4) If the Exchange is collecting premiums under Sec.  155.240, a 
report on instances in which it did not reduce an enrollee's premium by 
the amount of the advance payment of the premium tax credit in 
accordance with Sec.  155.340(g)(1) and (2).
    (c) External audits. The State Exchange must engage an independent 
qualified auditing entity which follows generally accepted government 
auditing standards (GAGAS) to perform an annual independent external 
financial and programmatic audit and must make such information 
available to HHS for review. The State Exchange must:
    (1) Provide to HHS the results of the annual external audit; and
    (2) Inform HHS of any material weakness or significant deficiency 
identified in the audit and must develop and inform HHS of a corrective 
action plan for such material weakness or significant deficiency;
    (3) Make public a summary of the results of the external audit.
    (d) External audit standard. The State Exchange must ensure that 
independent audits of State Exchange financial statements and program 
activities in paragraph (c) of this section address:
    (1) Compliance with paragraph (a)(1) of this section;
    (2) Compliance with subparts D and E of this part 155, or other 
requirements under this part 155 as specified by HHS;
    (3) Processes and procedures designed to prevent improper 
eligibility determinations and enrollment transactions, as applicable;
    (4) Compliance with eligibility and enrollment standards through 
sampling, testing, or other equivalent auditing procedures that 
demonstrate the accuracy of eligibility determinations and enrollment 
transactions; and
    (5) Identification of errors that have resulted in incorrect 
eligibility determinations, as applicable.

[78 FR 65095, Oct. 30, 2013, as amended at 84 FR 71710, Dec. 27, 2019]



Sec.  155.1210  Maintenance of records.

    (a) General. The State Exchange must maintain and must ensure its 
contractors, subcontractors, and agents maintain for 10 years, documents 
and records (whether paper, electronic, or other media) and other 
evidence of accounting procedures and practices, which are sufficient to 
do the following:
    (1) Accommodate periodic auditing of the State Exchange's financial 
records; and
    (2) Enable HHS or its designee(s) to inspect facilities, or 
otherwise evaluate the State- Exchange's compliance with Federal 
standards.

[[Page 374]]

    (b) Records. The State Exchange and its contractors, subcontractors, 
and agents must ensure that the records specified in paragraph (a) of 
this section include, at a minimum, the following:
    (1) Information concerning management and operation of the State 
Exchange's financial and other record keeping systems;
    (2) Financial statements, including cash flow statements, and 
accounts receivable and matters pertaining to the costs of operations;
    (3) Any financial reports filed with other Federal programs or State 
authorities;
    (4) Data and records relating to the State Exchange's eligibility 
verifications and determinations, enrollment transactions, appeals, and 
plan variation certifications; and
    (5) Qualified health plan contracting (including benefit review) 
data and consumer outreach and Navigator grant oversight information.
    (c) Availability. A State Exchange must make all records and must 
ensure its contractors, subcontractors, and agents must make all records 
in paragraph (a) of this section available to HHS, the OIG, the 
Comptroller General, or their designees, upon request.



                       Subpart N_State Flexibility



Sec.  155.1300  Basis and purpose.

    (a) Statutory basis. This subpart implements provisions of section 
1332 of the Affordable Care Act, relating to Waivers for State 
Innovation, which the Secretary may authorize for plan years beginning 
on or after January 1, 2017. Section 1332 of the Affordable Care Act 
requires the Secretary to issue regulations that provide for all of the 
following:
    (1) A process for public notice and comment at the State level, 
including public hearings, sufficient to ensure a meaningful level of 
public input.
    (2) A process for the submission of an application that ensures the 
disclosure of all of the following:
    (i) The provisions of law that the State involved seeks to waive.
    (ii) The specific plans of the State to ensure that the waiver will 
meet all requirements specified in section 1332.
    (3) A process for the provision of public notice and comment after a 
waiver application is received by the Secretary, that is sufficient to 
ensure a meaningful level of public input and that does not impose 
requirements that are in addition to, or duplicative of, requirements 
imposed under the Administrative Procedures Act, or requirements that 
are unreasonable or unnecessarily burdensome with respect to State 
compliance.
    (4) A process for the submission of reports to the Secretary by a 
State relating to the implementation of a waiver.
    (5) A process for the periodic evaluation by the Secretary of 
programs under waivers.
    (b) Purpose. This subpart sets forth certain procedural requirements 
for Waivers for State Innovation under section 1332 of the Affordable 
Care Act.



Sec.  155.1302  Coordinated waiver process.

    (a) Coordination with applications for waivers under other Federal 
laws. A State may submit a single application to the Secretary for a 
waiver under section 1332 of the Affordable Care Act and a waiver under 
one or more of the existing waiver processes applicable under titles 
XVIII, XIX, and XXI of the Act, or under any other Federal law relating 
to the provision of health care items or services, provided that such 
application is consistent with the procedures described in this part, 
the procedures for demonstrations under section 1115 of the Act, if 
applicable, and the procedures under any other applicable Federal law 
under which the State seeks a waiver.
    (b) Coordinated process for section 1332 waivers. A State seeking a 
section 1332 waiver must submit a waiver application to the Secretary. 
Any application submitted to the Secretary that requests to waive 
sections 36B, 4980H, or 5000A of the Code, in accordance with section 
1332(a)(2)(D) of the Affordable Care Act, shall upon receipt be 
transmitted by the Secretary to the Secretary of the Treasury to be 
reviewed in accordance with 31 CFR part 33.



Sec.  155.1304  Definitions.

    For the purposes of this subpart:
    Complete application means an application that has been submitted 
and for

[[Page 375]]

which the Secretary and the Secretary of the Treasury, as applicable, 
have made a preliminary determination that it includes all required 
information and satisfies all requirements that are described in Sec.  
155.1308(f).
    Public notice means a notice issued by a government agency or 
legislative body that contains sufficient detail to notify the public at 
large of a proposed action consistent with Sec.  155.1312.
    Section 1332 waiver means a Waiver for State Innovation under 
section 1332 of the Affordable Care Act.



Sec.  155.1308  Application procedures.

    (a) Acceptable formats for applications. Applications for initial 
approval of a section 1332 waiver shall be submitted in electronic 
format to the Secretary.
    (b) Application timing. Applications for initial approval of a 
section 1332 waiver must be submitted sufficiently in advance of the 
requested effective date to allow for an appropriate implementation 
timeline.
    (c) Preliminary review. Each application for a section 1332 waiver 
will be subject to a preliminary review by the Secretary and the 
Secretary of the Treasury, as applicable, who will make a preliminary 
determination that the application is complete. A submitted application 
will not be deemed received until the Secretary and the Secretary of the 
Treasury, as applicable, have made the preliminary determination that 
the application is complete.
    (1) The Secretary and the Secretary of the Treasury, as applicable, 
will complete the preliminary review of the application within 45 days 
after it is submitted.
    (2) If the Secretary and the Secretary of the Treasury, as 
applicable, determine that the application is not complete, the 
Secretary will send the State a written notice of the elements missing 
from the application.
    (3) The preliminary determination that an application is complete 
does not preclude a finding during the 180-day Federal decision-making 
period that a necessary element of the application is missing or 
insufficient.
    (d) Notification of preliminary determination. Upon making the 
preliminary determination that an application is complete, as defined in 
this part, the Secretary will send the State a written notice informing 
the State that the Secretary and the Secretary of the Treasury, as 
applicable, have made such a preliminary determination. That date will 
also mark the beginning of the Federal public notice process and the 
180-day Federal decision-making period.
    (e) Public notice of completed application. Upon receipt of a 
complete application for an initial section 1332 waiver, the Secretary 
will--
    (1) Make available to the public the application, and all related 
State submissions, including all supplemental information received from 
the State following the receipt of a complete application for a section 
1332 waiver.
    (2) Indicate the status of the application.
    (f) Criteria for a complete application. An application for initial 
approval of a section 1332 waiver will not be considered complete unless 
the application meets all of the following conditions:
    (1) Complies with paragraphs (a) through (f) of this section.
    (2) Provides written evidence of the State's compliance with the 
public notice requirements set forth in Sec.  155.1312, including a 
description of the key issues raised during the State public notice and 
comment period.
    (3) Provides all of the following:
    (i) A comprehensive description of the State legislation and program 
to implement a plan meeting the requirements for a waiver under section 
1332;
    (ii) A copy of the enacted State legislation that provides the State 
with authority to implement the proposed waiver, as required under 
section 1332(a)(1)(C) of the Affordable Care Act;
    (iii) A list of the provisions of law that the State seeks to waive 
including a description of the reason for the specific requests; and
    (iv) The analyses, actuarial certifications, data, assumptions, 
analysis, targets and other information set forth in paragraph (f)(4) of 
this section sufficient to provide the Secretary and the Secretary of 
the Treasury, as applicable, with the necessary data to determine that 
the State's proposed waiver:
    (A) As required under section 1332(b)(1)(A) of the Affordable Care 
Act

[[Page 376]]

(the comprehensive coverage requirement), will provide coverage that is 
at least as comprehensive as the coverage defined in section 1302(b) of 
the Affordable Care Act and offered through Exchanges established under 
the Affordable Care Act as certified by the Office of the Actuary of the 
Centers for Medicare & Medicaid Services based on sufficient data from 
the State and from comparable States about their experience with 
programs created by the Affordable Care Act and the provisions of the 
Affordable Care Act that the State seeks to waive;
    (B) As required under section 1332(b)(1)(B) of the Affordable Care 
Act (the affordability requirement), will provide coverage and cost 
sharing protections against excessive out-of-pocket spending that are at 
least as affordable as the provisions of Title I of the Affordable Care 
Act would provide;
    (C) As required under section 1332(b)(1)(C) of the Affordable Care 
Act (the scope of coverage requirement), will provide coverage to at 
least a comparable number of its residents as the provisions of Title I 
of the Affordable Care Act would provide; and
    (D) As prohibited under section 1332(b)(1)(D) of the Affordable Care 
Act (the Federal deficit requirement), will not increase the Federal 
deficit.
    (4) Contains the following supporting information:
    (i) Actuarial analyses and actuarial certifications. Actuarial 
analyses and actuarial certifications to support the State's estimates 
that the proposed waiver will comply with the comprehensive coverage 
requirement, the affordability requirement, and the scope of coverage 
requirement;
    (ii) Economic analyses. Economic analyses to support the State's 
estimates that the proposed waiver will comply with the comprehensive 
coverage requirement, the affordability requirement, the scope of 
coverage requirement and the Federal deficit requirement, including:
    (A) A detailed 10-year budget plan that is deficit neutral to the 
Federal government, as prescribed by section 1332(a)(1)(B)(ii) of the 
Affordable Care Act, and includes all costs under the waiver, including 
administrative costs and other costs to the Federal government, if 
applicable; and
    (B) A detailed analysis regarding the estimated impact of the waiver 
on health insurance coverage in the State.
    (iii) Data and assumptions. The data and assumptions used to 
demonstrate that the State's proposed waiver is in compliance with the 
comprehensive coverage requirement, the affordability requirement, the 
scope of coverage requirement and the Federal deficit requirement, 
including:
    (A) Information on the age, income, health expenses and current 
health insurance status of the relevant State population; the number of 
employers by number of employees and whether the employer offers 
insurance; cross-tabulations of these variables; and an explanation of 
data sources and quality; and
    (B) An explanation of the key assumptions used to develop the 
estimates of the effect of the waiver on coverage and the Federal 
budget, such as individual and employer participation rates, behavioral 
changes, premium and price effects, and other relevant factors.
    (iv) Implementation timeline. A detailed draft timeline for the 
State's implementation of the proposed waiver.
    (v) Additional information. Additional information supporting the 
State's proposed waiver, including:
    (A) An explanation as to whether the waiver increases or decreases 
the administrative burden on individuals, insurers, and employers, and 
if so, how and why;
    (B) An explanation of how the waiver will affect the implementation 
of the provisions of the Affordable Care Act which the State is not 
requesting to waive in the State and at the Federal level;
    (C) An explanation of how the waiver will affect residents who need 
to obtain health care services out-of-State, as well as the States in 
which such residents may seek such services;
    (D) If applicable, an explanation as to how the State will provide 
the Federal government with all information necessary to administer the 
waiver at the Federal level; and

[[Page 377]]

    (E) An explanation of how the State's proposal will address 
potential individual, employer, insurer, or provider compliance, waste, 
fraud and abuse within the State or in other States.
    (vi) Reporting targets. Quarterly, annual, and cumulative targets 
for the comprehensive coverage requirement, the affordability 
requirement, the scope of coverage requirement and the Federal deficit 
requirement.
    (vii) Other information. Other information consistent with guidance 
provided by the Secretary and the Secretary of the Treasury, as 
applicable.
    (g) Additional supporting information. (1) During the Federal review 
process, the Secretary may request additional supporting information 
from the State as needed to address public comments or to address issues 
that arise in reviewing the application.
    (2) Requests for additional information, and responses to such 
requests, will be made available to the public in the same manner as 
information described in Sec.  155.1316(b).



Sec.  155.1312  State public notice requirements.

    (a) General. (1) Prior to submitting an application for a new 
section 1332 waiver to the Secretary for review and consideration, a 
State must provide a public notice and comment period sufficient to 
ensure a meaningful level of public input for the application for a 
section 1332 waiver.
    (2) Such public notice and comment period shall include, for a State 
with one or more Federally-recognized Indian tribes within its borders, 
a separate process for meaningful consultation with such tribes.
    (b) Public notice and comment period. The State shall make available 
at the beginning of the public notice and comment period, through its 
Web site or other effective means of communication, and shall update as 
appropriate, a public notice that includes all of the following:
    (1) A comprehensive description of the application for a section 
1332 waiver to be submitted to the Secretary including information and 
assurances related to all statutory requirements and other information 
consistent with guidance provided by the Secretary and the Secretary of 
the Treasury, as applicable.
    (2) Information relating to where copies of the application for a 
section 1332 waiver are available for public review and comment.
    (3) Information relating to how and where written comments may be 
submitted and reviewed by the public, and the timeframe during which 
comments will be accepted.
    (4) The location, date, and time of public hearings that will be 
convened by the State to seek public input on the application for a 
section 1332 waiver.
    (c) Public hearings. (1) After issuing the public notice and prior 
to submitting an application for a new section 1332 waiver, a State must 
conduct public hearings regarding the State's application.
    (2) Such public hearings shall provide an interested party the 
opportunity to learn about and comment on the contents of the 
application for a section 1332 waiver.
    (d) Submission of initial application. After the State public notice 
and comment period has concluded, the State may submit an application to 
the Secretary for an initial waiver in accordance with the requirements 
set forth in Sec.  155.1308.



Sec.  155.1316  Federal public notice and approval process.

    (a) General. The Federal public notice and approval process begins 
on the first business day after the Secretary and the Secretary of the 
Treasury, as applicable, determine that all elements for a complete 
application were documented and submitted to the Secretary.
    (b) Public notice and comment period. (1) Following a determination 
that a State's application for a section 1332 waiver is complete, the 
Secretary and the Secretary of the Treasury, as applicable, will provide 
for a public notice and comment period that is sufficient to ensure a 
meaningful level of public input and that does not impose requirements 
that are in addition to, or duplicative of, requirements imposed under 
the Administrative Procedures Act, or requirements that are unreasonable 
or

[[Page 378]]

unnecessarily burdensome with respect to State compliance.
    (2) At the beginning of the Federal notice and comment period, the 
Secretary will make available through its Web site and otherwise, and 
shall update as appropriate, public notice that includes all of the 
following:
    (i) The complete application for a section 1332 waiver, updates for 
the status of the State's application, and any supplemental materials 
received from the State prior to and during the Federal public notice 
and comment period.
    (ii) Information relating to where copies of the application for a 
section 1332 waiver are available for public review and comment.
    (iii) Information relating to how and where written comments may be 
submitted and reviewed by the public, and the timeframe during which 
comments will be accepted.
    (iv) Any public comments received during the Federal public notice 
and comment period.
    (c) Approval of a section 1332 waiver application. The final 
decision of the Secretary and the Secretary of the Treasury, as 
applicable, on a State application for a section 1332 waiver will be 
issued by the Secretary no later than 180 days after the determination 
by the Secretary and the Secretary of the Treasury, as applicable, that 
a complete application was received in accordance with Sec.  155.1308.



Sec.  155.1320  Monitoring and compliance.

    (a) General. (1) Following the issuance of a final decision to 
approve a section 1332 waiver by the Secretary and the Secretary of the 
Treasury, as applicable, a State must comply with all applicable Federal 
laws, regulations, interpretive policy statements and interpretive 
guidance unless expressly waived. A State must, within the timeframes 
specified in law, regulation, policy or guidance, come into compliance 
with any changes in Federal law, regulation, or policy affecting section 
1332 waivers, unless the provision being changed is expressly waived.
    (2) A State must comply with the terms and conditions of the 
agreement between the Secretary, the Secretary of the Treasury, as 
applicable, and the State to implement a section 1332 waiver.
    (b) Implementation reviews. (1) The terms and conditions of an 
approved section 1332 waiver will provide that the State will perform 
periodic reviews of the implementation of the section 1332 waiver.
    (2) The Secretary and the Secretary of the Treasury, as applicable, 
will review documented complaints that a State is failing to comply with 
requirements specified in the terms and conditions of any approved 
section 1332 waiver.
    (3) The Secretary and the Secretary of the Treasury, as applicable, 
will promptly share with a State any complaint that the Secretary and 
the Secretary of the Treasury has received and will also provide 
notification of any applicable monitoring and compliance issues.
    (c) Post award. Within at least 6 months after the implementation 
date of a section 1332 waiver and annually thereafter, a State must hold 
a public forum to solicit comments on the progress of a section 1332 
waiver. The State must hold the public forum at which members of the 
public have an opportunity to provide comments and must provide a 
summary of the forum to the Secretary as part of the quarterly report 
specified in Sec.  155.1324(a) that is associated with the quarter in 
which the forum was held, as well as in the annual report specified in 
Sec.  155.1324(b) that is associated with the year in which the forum 
was held.
    (1) The State must publish the date, time, and location of the 
public forum in a prominent location on the State's public web site, at 
least 30 days prior to the date of the planned public forum.
    (2) [Reserved]
    (d) Terminations and suspensions. The Secretary and the Secretary of 
the Treasury, as applicable, reserve the right to suspend or terminate a 
section 1332 waiver in whole or in part, at any time before the date of 
expiration, whenever the Secretary or the Secretary of the Treasury, as 
applicable, determines that a State has materially failed to comply with 
the terms of a section 1332 waiver.

[[Page 379]]

    (e) Closeout costs. If all or part of a section 1332 waiver is 
terminated or suspended, or if a portion of a section 1332 waiver is 
withdrawn, Federal funding is limited to normal closeout costs 
associated with an orderly termination, suspension, or withdrawal, 
including service costs during any approved transition period, and 
administrative costs of disenrolling participants.
    (f) Federal evaluators. (1) A State must fully cooperate with the 
Secretary, the Secretary of the Treasury, as applicable, or an 
independent evaluator selected by the Secretary or the Secretary of the 
Treasury, as applicable, to undertake an independent evaluation of any 
component of a section 1332 waiver.
    (2) As part of this required cooperation, a State must submit all 
requested data and information to the Secretary, the Secretary of the 
Treasury, as applicable, or the independent evaluator.



Sec.  155.1324  State reporting requirements.

    (a) Quarterly reports. A State must submit quarterly reports to the 
Secretary in accordance with the terms and conditions of the State's 
section 1332 waiver. These quarterly reports must include, but are not 
limited to, reports of any ongoing operational challenges and plans for 
and results of associated corrective actions.
    (b) Annual reports. A State must submit an annual report to the 
Secretary documenting all of the following:
    (1) The progress of the section 1332 waiver.
    (2) Data on compliance with section 1332(b)(1)(A) through (D) of the 
Affordable Care Act.
    (3) A summary of the annual post-award public forum, held in 
accordance with Sec.  155.1320(c), including all public comments 
received at such forum regarding the progress of the section 1332 waiver 
and action taken in response to such concerns or comments.
    (4) Other information consistent with the State's approved terms and 
conditions.
    (c) Submitting and publishing annual reports. A State must submit a 
draft annual report to the Secretary no later than 90 days after the end 
of each waiver year, or as specified in the waiver's terms and 
conditions.
    (1) Within 60 days of receipt of comments from the Secretary, a 
State must submit to the Secretary the final annual report for the 
waiver year.
    (2) The draft and final annual reports are to be published on a 
State's public web site within 30 days of submission to and approval by 
the Secretary, respectively.



Sec.  155.1328  Periodic evaluation requirements.

    (a) The Secretary and the Secretary of the Treasury, as applicable, 
shall periodically evaluate the implementation of a program under a 
section 1332 waiver consistent with guidance published by the Secretary 
and the Secretary of the Treasury, as applicable, and any terms and 
conditions governing the section 1332 waiver.
    (b) Each periodic evaluation must include a review of the annual 
report or reports submitted by the State in accordance with Sec.  
155.1324 that relate to the period of time covered by the evaluation.



           Subpart O_Quality Reporting Standards for Exchanges

    Source: 79 FR 30350, May 27, 2014, unless otherwise noted.



Sec.  155.1400  Quality rating system.

    The Exchange must prominently display quality rating information for 
each QHP on its website, in accordance with Sec.  155.205(b)(1)(v), in a 
form and manner specified by HHS.

[85 FR 29261, May 14, 2020]



Sec.  155.1405  Enrollee satisfaction survey system.

    The Exchange must prominently display results from the Enrollee 
Satisfaction Survey for each QHP on its website, in accordance with 
Sec.  155.205(b)(1)(iv), in a form and manner specified by HHS.

[85 FR 29261, May 14, 2020]

[[Page 380]]



PART 156_HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES--Table of Contents



                      Subpart A_General Provisions

Sec.
156.10 Basis and scope.
156.20 Definitions.
156.50 Financial support.
156.80 Single risk pool.

               Subpart B_Essential Health Benefits Package

156.100 State selection of benchmark plan for plan years beginning prior 
          to January 1, 2020.
156.105 Determination of EHB for multi-state plans.
156.110 EHB-benchmark plan standards.
156.111 State selection of EHB-benchmark plan for plan years beginning 
          on or after January 1, 2020, and annual reporting of state-
          required benefits.
156.115 Provision of EHB.
156.120 Collection of data to define essential health benefits.
156.122 Prescription drug benefits.
156.125 Prohibition on discrimination.
156.130 Cost-sharing requirements.
156.135 AV calculation for determining level of coverage.
156.140 Levels of coverage.
156.145 Determination of minimum value.
156.150 Application to stand-alone dental plans inside the Exchange.
156.155 Enrollment in catastrophic plans.

     Subpart C_Qualified Health Plan Minimum Certification Standards

156.200 QHP issuer participation standards.
156.210 QHP rate and benefit information.
156.215 Advance payments of the premium tax credit and cost-sharing 
          reduction standards.
156.220 Transparency in coverage.
156.221 Access to and exchange of health data and plan information.
156.225 Marketing and Benefit Design of QHPs.
156.230 Network adequacy standards.
156.235 Essential community providers.
156.245 Treatment of direct primary care medical homes.
156.250 Meaningful access to qualified health plan information.
156.255 Rating variations.
156.260 Enrollment periods for qualified individuals.
156.265 Enrollment process for qualified individuals.
156.270 Termination of coverage or enrollment for qualified individuals.
156.272 Issuer participation for the full plan year.
156.275 Accreditation of QHP issuers.
156.280 Separate billing and segregation of funds for abortion services.
156.285 Additional standards specific to SHOP for plan years beginning 
          prior to January 1, 2018.
156.286 Additional standards specific to SHOP for plan years beginning 
          on or after January 1, 2018.
156.290 Non-certification and decertification of QHPs.
156.295 Prescription drug distribution and cost reporting.

   Subpart D_Standards for Qualified Health Plan Issuers on Federally-
 Facilitated Exchanges and State-Based Exchanges on the Federal Platform

156.330 Changes of ownership of issuers of Qualified Health Plans in 
          Federally-facilitated Exchanges.
156.340 Standards for downstream and delegated entities.
156.350 Eligibility and enrollment standards for Qualified Health Plan 
          issuers on State-based Exchanges on the Federal platform.

   Subpart E_Health Insurance Issuer Responsibilities With Respect to 
 Advance Payments of the Premium Tax Credit and Cost-Sharing Reductions

156.400 Definitions.
156.410 Cost-sharing reductions for enrollees.
156.420 Plan variations.
156.425 Changes in eligibility for cost-sharing reductions.
156.430 Payment for cost-sharing reductions.
156.440 Plans eligible for advance payments of the premium tax credit 
          and cost-sharing reductions.
156.460 Reduction of enrollee's share of premium to account for advance 
          payments of the premium tax credit.
156.470 Allocation of rates for advance payments of the premium tax 
          credit.
156.480 Oversight of the administration of the cost-sharing reductions 
          and advance payments of the premium tax credit programs.

          Subpart F_Consumer Operated and Oriented Plan Program

156.500 Basis and scope.
156.505 Definitions.
156.510 Eligibility.
156.515 CO-OP Standards.
156.520 Loan terms.

[[Page 381]]

                  Subpart G_Minimum Essential Coverage

156.600 The definition of minimum essential coverage.
156.602 Other coverage that qualifies as minimum essential coverage.
156.604 Requirements for recognition as minimum essential coverage for 
          types of coverage not otherwise designated minimum essential 
          coverage in the statute or this subpart.
156.606 HHS audit authority.

  Subpart H_Oversight and Financial Integrity Standards for Issuers of 
        Qualified Health Plans in Federally-Facilitated Exchanges

156.705 Maintenance of records for Federally-facilitated Exchange.
156.715 Compliance reviews of QHP issuers in Federally-facilitated 
          Exchanges.

    Subpart I_Enforcement Remedies in Federally-Facilitated Exchanges

156.800 Available remedies; Scope.
156.805 Bases and process for imposing civil money penalties in 
          Federally-facilitated Exchanges.
156.806 Notice of non-compliance.
156.810 Bases and process for decertification of a QHP offered by an 
          issuer through a Federally-facilitated Exchange.
156.815 Plan suppression.

  Subpart J_Administrative Review of QHP Issuer Sanctions in Federally-
                          Facilitated Exchanges

156.901 Definitions.
156.903 Scope of Administrative Law Judge's (ALJ) authority.
156.905 Filing of request for hearing.
156.907 Form and content of request for hearing.
156.909 Amendment of notice of assessment or decertification request for 
          hearing.
156.911 Dismissal of request for hearing.
156.913 Settlement.
156.915 Intervention.
156.917 Issues to be heard and decided by ALJ.
156.919 Forms of hearing.
156.921 Appearance of counsel.
156.923 Communications with the ALJ.
156.925 Motions.
156.927 Form and service of submissions.
156.929 Computation of time and extensions of time.
156.931 Acknowledgment of request for hearing.
156.935 Discovery.
156.937 Submission of briefs and proposed hearing exhibits.
156.939 Effect of submission of proposed hearing exhibits.
156.941 Prehearing conferences.
156.943 Standard of proof.
156.945 Evidence.
156.947 The record.
156.951 Posthearing briefs.
156.953 ALJ decision.
156.955 Sanctions.
156.957 Review by Administrator.
156.959 Judicial review.
156.961 Failure to pay assessment.
156.963 Final order not subject to review.

Subpart K_Cases Forwarded to Qualified Health Plans and Qualified Health 
             Plan Issuers in Federally-facilitated Exchanges

156.1010 Standards.

                       Subpart L_Quality Standards

156.1105 Establishment of standards for HHS-approved enrollee 
          satisfaction survey vendors for use by QHP issuers in 
          Exchanges.
156.1110 Establishment of patient safety standards for QHP issuers.
156.1120 Quality rating system.
156.1125 Enrollee satisfaction survey system.
156.1130 Quality improvement strategy.

         Subpart M_Qualified Health Plan Issuer Responsibilities

156.1210 Dispute submission.
156.1215 Payment and collections processes.
156.1220 Administrative appeals.
156.1230 Direct enrollment with the QHP issuer in a manner considered to 
          be through the Exchange.
156.1240 Enrollment process for qualified individuals.
156.1250 Acceptance of certain third party payments.
156.1255 Renewal and re-enrollment notices.
156.1256 Other notices.

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

    Source: 76 FR 77411, Dec. 13, 2011, unless otherwise noted.



                      Subpart A_General Provisions

    Source: 77 FR 18468, Mar. 27, 2012, unless otherwise noted.



Sec.  156.10  Basis and scope.

    (a) Basis. (1) This part is based on the following sections of title 
I of the Affordable Care Act:
    (i) 1301. QHP defined.

[[Page 382]]

    (ii) 1302. Essential health benefits requirements.
    (iii) 1303. Special rules.
    (iv) 1304. Related definitions.
    (v) 1311. Affordable choices of health benefit plans.
    (vi) 1312. Consumer choice.
    (vii) 1313. Financial integrity.
    (viii) 1321. State flexibility in operation and enforcement of 
Exchanges and related requirements.
    (ix) 1322. Federal program to assist establishment and operation of 
nonprofit, member-run health insurance issuers.
    (x) 1331. State flexibility to establish Basic Health Programs for 
low-income individuals not eligible for Medicaid.
    (xi) 1334. Multi-State plans.
    (xii) 1402. Reduced cost-sharing for individuals enrolling in QHPs.
    (xiii) 1411. Procedures for determining eligibility for Exchange 
participation, advance premium tax credits and reduced cost sharing, and 
individual responsibility exemptions.
    (xiv) 1412. Advance determination and payment of premium tax credits 
and cost-sharing reductions.
    (xv) 1413. Streamlining of procedures for enrollment through an 
Exchange and State, Medicaid, CHIP, and health subsidy programs.
    (2) This part is based on section 1150A, Pharmacy Benefit Managers 
Transparency Requirements, of title I of the Act:
    (b) Scope. This part establishes standards for QHPs under Exchanges, 
and addresses other health insurance issuer requirements.



Sec.  156.20  Definitions.

    The following definitions apply to this part, unless the context 
indicates otherwise:
    Actuarial value (AV) means the percentage paid by a health plan of 
the percentage of the total allowed costs of benefits.
    Applicant has the meaning given to the term in Sec.  155.20 of this 
subchapter.
    Base-benchmark plan means the plan that is selected by a State from 
the options described in Sec.  156.100(a) of this subchapter, or a 
default benchmark plan, as described in Sec.  156.100(c) of this 
subchapter, prior to any adjustments made pursuant to the benchmark 
standards described in Sec.  156.110 of this subchapter.
    Benefit design standards means coverage that provides for all of the 
following:
    (1) The essential health benefits as described in section 1302(b) of 
the Affordable Care Act;
    (2) Cost-sharing limits as described in section 1302(c) of the 
Affordable Care Act; and
    (3) A bronze, silver, gold, or platinum level of coverage as 
described in section 1302(d) of the Affordable Care Act, or is a 
catastrophic plan as described in section 1302(e) of the Affordable Care 
Act.
    Benefit year has the meaning given to the term in Sec.  155.20 of 
this subtitle.
    Cost-sharing has the meaning given to the term in Sec.  155.20 of 
this subtitle.
    Cost-sharing reductions has the meaning given to the term in Sec.  
155.20 of this subtitle.
    Delegated entity means any party, including an agent or broker, that 
enters into an agreement with a QHP issuer to provide administrative 
services or health care services to qualified individuals, qualified 
employers, or qualified employees and their dependents.
    Downstream entity means any party, including an agent or broker, 
that enters into an agreement with a delegated entity or with another 
downstream entity for purposes of providing administrative or health 
care services related to the agreement between the delegated entity and 
the QHP issuer. The term ``downstream entity'' is intended to reach the 
entity that directly provides administrative services or health care 
services to qualified individuals, qualified employers, or qualified 
employees and their dependents.
    EHB-benchmark plan means the standardized set of essential health 
benefits that must be met by a QHP, as defined in Sec.  155.20 of this 
section, or other issuer as required by Sec.  147.150 of this 
subchapter.
    Enrollee satisfaction survey vendor means an organization that has 
relevant survey administration experience (for example, CAHPS[supreg] 
surveys), organizational survey capacity, and quality control procedures 
for survey administration.

[[Page 383]]

    Essential health benefits package or EHB package means the scope of 
covered benefits and associated limits of a health plan offered by an 
issuer that provides at least the ten statutory categories of benefits, 
as described in Sec.  156.110(a) of this subchapter; provides the 
benefits in the manner described in Sec.  156.115 of this subchapter; 
limits cost sharing for such coverage as described in Sec.  156.130; and 
subject to offering catastrophic plans as described in section 1302(e) 
of the Affordable Care Act, provides distinct levels of coverage as 
described in Sec.  156.140 of this subchapter.
    Federally-facilitated SHOP has the meaning given to the term in 
Sec.  155.20 of this subchapter.
    Group health plan has the meaning given to the term in Sec.  144.103 
of this subtitle.
    Health insurance coverage has the meaning given to the term in Sec.  
144.103 of this subtitle.
    Health insurance issuer or issuer has the meaning given to the term 
in Sec.  144.103 of this subtitle.
    Issuer group means all entities treated under subsection (a) or (b) 
of section 52 of the Internal Revenue Code of 1986 as a member of the 
same controlled group of corporations as (or under common control with) 
a health insurance issuer, or issuers affiliated by the common use of a 
nationally licensed service mark.
    Level of coverage means one of four standardized actuarial values as 
defined by section 1302(d)(1) of the Affordable Care Act of plan 
coverage.
    Percentage of the total allowed costs of benefits means the 
anticipated covered medical spending for EHB coverage (as defined in 
Sec.  156.110(a) of this subchapter) paid by a health plan for a 
standard population, computed in accordance with the plan's cost-
sharing, divided by the total anticipated allowed charges for EHB 
coverage provided to a standard population, and expressed as a 
percentage.
    Plan has the meaning given the term in Sec.  144.103 of this 
subchapter.
    Plan year has the meaning given to the term in Sec.  155.20 of this 
subchapter.
    Qualified employer has the meaning given to the term in Sec.  155.20 
of this subchapter.
    Qualified health plan has the meaning given to the term in Sec.  
155.20 of this subchapter.
    Qualified health plan issuer has the meaning given to the term in 
Sec.  155.20 of this subchapter.
    Qualified individual has the meaning given to the term in Sec.  
155.20 of this subchapter.
    Registered user of the enrollee satisfaction survey data warehouse 
means enrollee satisfaction survey vendors, QHP issuers, and Exchanges 
authorized to access CMS's secure data warehouse to submit survey data 
and to preview survey results prior to public reporting.

[77 FR 18468, Mar. 27, 2012, as amended at 77 FR 31515, May 29, 2012; 78 
FR 12865, Feb. 25, 2013; 78 FR 15535, Mar. 11, 2013; 78 FR 54142, Aug. 
30, 2013; 78 FR 65096, Oct. 30, 2013; 80 FR 10871, Feb. 27, 2015; 84 FR 
17567, Apr. 25, 2019; 85 FR 29261, May 14, 2020]



Sec.  156.50  Financial support.

    (a) Definitions. The following definitions apply for the purposes of 
this section:
    Participating issuer means any issuer offering a plan that 
participates in the specific function that is funded by user fees. This 
term may include: health insurance issuers, QHP issuers, issuers of 
multi-State plans (as defined in Sec.  155.1000(a) of this subchapter), 
issuers of stand-alone dental plans (as described in Sec.  155.1065 of 
this subtitle), or other issuers identified by an Exchange.
    (b) Requirement for State-based Exchange user fees. A participating 
issuer must remit user fee payments, or any other payments, charges, or 
fees, if assessed by a State-based Exchange under Sec.  155.160 of this 
subchapter.
    (c) Requirement for Federally-facilitated Exchange user fee. (1) To 
support the functions of Federally-facilitated Exchanges, a 
participating issuer offering a plan through a Federally-facilitated 
Exchange must remit a user fee to HHS each month, in the timeframe and 
manner established by HHS, equal to the product of the monthly user fee 
rate specified in the annual HHS notice of benefit and payment 
parameters for Federally-facilitated Exchanges for the applicable 
benefit year and the monthly premium charged by the issuer for

[[Page 384]]

each policy under the plan where enrollment is through a Federally-
facilitated Exchange.
    (2) To support the functions of State-based Exchanges on the Federal 
platform, unless the State-based Exchange and HHS agree on an 
alternative mechanism to collect the funds, a participating issuer 
offering a plan through a State-based Exchange that elects to utilize 
the Federal Exchange platform for certain Exchange functions described 
in Sec.  155.200 of this subchapter, as specified in a Federal platform 
agreement, must remit a user fee to HHS, in the timeframe and manner 
established by HHS, equal to the product of the sum of the monthly user 
fee rate specified in the annual HHS notice of benefit and payment 
parameters for State-based Exchanges that use the Federal platform for 
the applicable benefit year plus, if a written request is made by a 
State, any additional user fee rate that HHS will collect on behalf of 
the State-based Exchange, multiplied by the monthly premium charged by 
the issuer for each policy under the plan where enrollment is through 
the State-based Exchange on the Federal platform.
    (d) Adjustment of Federally-facilitated Exchange user fee. (1) A 
participating issuer offering a plan through a Federally-facilitated 
Exchange may qualify for an adjustment in the Federally-facilitated 
Exchange user fee specified in paragraph (c) of this section to the 
extent that the participating issuer--
    (i) Made payments for contraceptive services on behalf of a third 
party administrator pursuant to 26 CFR 54.9815-2713A(b)(2)(ii) or 29 CFR 
2590.715-2713A(b)(2)(ii); or
    (ii) Seeks an adjustment in the Federally-facilitated Exchange user 
fee with respect to a third party administrator that, following receipt 
of a copy of the self-certification referenced in 26 CFR 54.9815-
2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4), made or arranged for 
payments for contraceptive services pursuant to 26 CFR 54.9815-
2713A(b)(2)(i) or (ii) or 29 CFR 2590.715-2713A(b)(2)(i) or (ii).
    (2) For a participating issuer described in paragraph (d)(1) of this 
section to receive the Federally-facilitated Exchange user fee 
adjustment--
    (i) The participating issuer must submit to HHS, in the manner and 
timeframe specified by HHS, in the year following the calendar year in 
which the contraceptive services for which payments were made pursuant 
to 26 CFR 54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) were 
provided --
    (A) Identifying information for the participating issuer and each 
third party administrator that received a copy of the self-certification 
referenced in 26 CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) 
with respect to which the participating issuer seeks an adjustment in 
the Federally-facilitated Exchange user fee, whether or not the 
participating issuer was the entity that made the payments for 
contraceptive services;
    (B) Identifying information for each self-insured group health plan 
with respect to which a copy of the self-certification referenced in 26 
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by a 
third party administrator and with respect to which the participating 
issuer seeks an adjustment in the Federally-facilitated Exchange user 
fee; and
    (C) For each such self-insured group health plan, the total dollar 
amount of the payments that were made pursuant to 26 CFR 54.9815-
2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) for contraceptive services 
that were provided during the applicable calendar year. If such payments 
were made by the participating issuer directly as described in paragraph 
(d)(1)(i) of this section, the total dollar amount should reflect the 
amount of the payments made by the participating issuer; if the third 
party administrator made or arranged for such payments, as described in 
paragraph (d)(1)(ii) of this section, the total dollar amount should 
reflect the amount reported to the participating issuer by the third 
party administrator.
    (ii) Each third party administrator that intends for a participating 
issuer to seek an adjustment in the Federally-facilitated Exchange user 
fee with respect to the third party administrator for payments for 
contraceptive services must submit to HHS a notification of such intent, 
in a manner

[[Page 385]]

specified by HHS, by the later of January 1, 2014, or the 60th calendar 
day following the date on which the third party administrator receives 
the applicable copy of the self-certification referenced in 26 CFR 
54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4).
    (iii) Each third party administrator identified in paragraph 
(d)(2)(i)(A) of this section must submit to HHS, in the manner and 
timeframe specified by HHS, in the year following the calendar year in 
which the contraceptive services for which payments were made pursuant 
to 26 CFR 54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) were 
provided--
    (A) Identifying information for the third party administrator and 
the participating issuer;
    (B) Identifying information for each self-insured group health plan 
with respect to which a copy of the self-certification referenced in 26 
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by 
the third party administrator and with respect to which the 
participating issuer seeks an adjustment in the Federally-facilitated 
Exchange user fee;
    (C) The total number of participants and beneficiaries in each such 
self-insured group health plan during the applicable calendar year;
    (D) For each such self-insured group health plan with respect to 
which the third party administrator made payments pursuant to 26 CFR 
54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) for contraceptive 
services, the total dollar amount of such payments that were provided 
during the applicable calendar year. If such payments were made by the 
participating issuer directly as described in paragraph (d)(1)(i) of 
this section, the total dollar amount should reflect the amount reported 
to the third party administrator by the participating issuer; if the 
third party administrator made or arranged for such payments, as 
described in paragraph (d)(1)(ii) of this section, the total dollar 
amount should reflect the amount of the payments made by or on behalf of 
the third party administrator; and
    (E) An attestation that the payments for contraceptive services were 
made in compliance with 26 CFR 54.9815-2713A(b)(2) or 29 CFR 2590.715-
2713A(b)(2).
    (3) If the requirements set forth in paragraph (d)(2) of this 
section are met, the participating issuer will be provided a reduction 
in its obligation to pay the Federally-facilitated Exchange user fee 
specified in paragraph (c) of this section equal in value to the sum of 
the following:
    (i) The total dollar amount of the payments for contraceptive 
services submitted by the applicable third-party administrators, as 
described in paragraph (d)(2)(iii)(D) of this section; and
    (ii) An allowance for administrative costs and margin. The allowance 
will be no less than 10 percent of the total dollar amount of the 
payments for contraceptive services specified in paragraph (d)(3)(i) of 
this section. HHS will specify the allowance for a particular calendar 
year in the annual HHS notice of benefit and payment parameters.
    (4) If the amount of the adjustment under paragraph (d)(3) of this 
section is greater than the amount of the participating issuer's 
obligation to pay the Federally-facilitated Exchange user fee in a 
particular month, the participating issuer will be provided a credit in 
succeeding months in the amount of the excess.
    (5) Within 60 days of receipt of any adjustment in the Federally-
facilitated Exchange user fee under this section, a participating issuer 
must pay each third party administrator with respect to which it 
received any portion of such adjustment an amount no less than the 
portion of the adjustment attributable to the total dollar amount of the 
payments for contraceptive services submitted by the third party 
administrator, as described in paragraph (d)(2)(iii)(D) of this section. 
No such payment is required with respect to the allowance for 
administrative costs and margin described in paragraph (d)(3)(ii) of 
this section. This paragraph does not apply if the participating issuer 
made the payments for contraceptive services on behalf of the third 
party administrator, as described in paragraph (d)(1)(i) of this 
section, or is in the same issuer group as the third party 
administrator.

[[Page 386]]

    (6) A participating issuer receiving an adjustment in the Federally-
facilitated Exchange user fee under this section for a particular 
calendar year must maintain for 10 years following that year, and make 
available upon request to HHS, the Office of the Inspector General, the 
Comptroller General, and their designees, documentation demonstrating 
that it timely paid each third party administrator with respect to which 
it received any such adjustment any amount required to be paid to the 
third party administrator under paragraph (d)(5) of this section.
    (7) A third party administrator with respect to which an adjustment 
in the Federally-facilitated Exchange user fee is received under this 
section for a particular calendar year must maintain for 10 years 
following that year, and make available upon request to HHS, the Office 
of the Inspector General, the Comptroller General, and their designees, 
all of the following documentation:
    (i) A copy of the self-certification referenced in 26 CFR 54.9815-
2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) for each self-insured plan 
with respect to which an adjustment is received.
    (ii) Documentation demonstrating that the payments for contraceptive 
services were made in compliance with 26 CFR 54.9815-2713A(b)(2) or 29 
CFR 2590.715-2713A(b)(2).
    (iii) Documentation supporting the total dollar amount of the 
payments for contraceptive services submitted by the third party 
administrator, as described in paragraph (d)(2)(iii)(D) of this section.

[77 FR 18468, Mar. 27, 2012, as amended at 78 FR 15535, Mar. 11, 2013; 
78 FR 39897, July 2, 2013; 81 FR 12348, Mar. 8, 2016; 83 FR 62498, Dec. 
4, 2018]



Sec.  156.80  Single risk pool.

    (a) Individual market. A health insurance issuer must consider the 
claims experience of all enrollees in all health plans (other than 
grandfathered health plans) subject to section 2701 of the Public Health 
Service Act and offered by such issuer in the individual market in a 
state, including those enrollees who do not enroll in such plans through 
the Exchange, to be members of a single risk pool.
    (b) Small group market. A health insurance issuer must consider the 
claims experience of all enrollees in all health plans (other than 
grandfathered health plans) subject to section 2701 of the Public Health 
Service Act and offered by such issuer in the small group market in a 
state, including those enrollees who do not enroll in such plans through 
the Exchange, to be members of a single risk pool.
    (c) Merger of the individual and small group markets. A state may 
require the individual and small group insurance markets within a state 
to be merged into a single risk pool if the state determines 
appropriate. A state that requires such merger must submit to CMS 
information on its election in accordance with the procedures described 
in Sec.  147.103 of this subchapter.
    (d) Index rate--(1) In general. A health insurance issuer must 
establish an index rate that is effective January 1 of each calendar 
year for a State market described in paragraphs (a) through (c) of this 
section.
    (i) The index rate must be based on the total combined claims costs 
for providing essential health benefits within the single risk pool of 
that State market.
    (ii) The index rate must be adjusted on a market-wide basis for the 
State based on the total expected market-wide payments and charges under 
the risk adjustment program and Exchange user fees (expected to be 
remitted under Sec.  156.50(b) or (c) and (d) as applicable, plus the 
dollar amount under Sec.  156.50(d)(3)(i) and (ii) expected to be 
credited against user fees payable for that State market).
    (iii) The premium rate for all of the health insurance issuer's 
plans in the relevant State market must use the applicable market-wide 
adjusted index rate, subject only to the plan-level adjustments 
permitted in paragraph (d)(2) of this section.
    (2) Permitted plan-level adjustments to the index rate. For plan 
years or policy years beginning on or after January 1, 2014, a health 
insurance issuer may vary premium rates for a particular plan from its 
market-wide index rate for a relevant state market based only on the 
following actuarially justified plan-specific factors:

[[Page 387]]

    (i) The actuarial value and cost-sharing design of the plan.
    (ii) The plan's provider network, delivery system characteristics, 
and utilization management practices.
    (iii) The benefits provided under the plan that are in addition to 
the essential health benefits. These additional benefits must be pooled 
with similar benefits within the single risk pool and the claims 
experience from those benefits must be utilized to determine rate 
variations for plans that offer those benefits in addition to essential 
health benefits.
    (iv) Administrative costs, excluding Exchange user fees.
    (v) With respect to catastrophic plans, the expected impact of the 
specific eligibility categories for those plans.
    (3) Calibration. The issuer must calibrate the plan-adjusted index 
rate for its plans within the single risk pool to correspond to an age 
rating factor of 1.0, a geographic rating factor of 1.0, and a tobacco 
use rating factor of 1.0, in a manner specified by the Secretary in 
guidance, to ensure that any rating variation under Sec.  147.102 of 
this subchapter may be accurately applied with respect to a particular 
plan or coverage. The calibration must be applied uniformly to all plans 
within the single risk pool of the State market and cannot vary by plan.
    (4) Frequency of index rate and plan-level adjustments. (i) A health 
insurance issuer may not establish an index rate and make the market-
wide adjustments pursuant to paragraph (d)(1) of this section, make the 
plan-level adjustments pursuant to paragraph (d)(2) of this section, or 
calibrate the plan-adjusted index rate for its plans pursuant to 
paragraph (d)(3) of this section more or less frequently than annually, 
except as provided in paragraph (d)(4)(ii) of this section.
    (ii) A health insurance issuer in the small group market (not 
including a merged market) may establish index rates and make the 
marketwide adjustments under paragraph (d)(1) of this section, make the 
plan-level adjustments under paragraph (d)(2) of this section, and 
calibrate the plan-adjusted index rate for its plans pursuant to 
paragraph (d)(3) of this section, no more frequently than quarterly. Any 
changes to rates must have effective dates of January 1, April 1, July 
1, or October 1. Such rates may only apply to coverage issued or renewed 
on or after the rate effective date and will apply for the entire plan 
year of the group health plan.
    (e) Grandfathered health plans in the individual and small group 
market. A state law requiring grandfathered health plans described in 
Sec.  147.140 of this subchapter to be included in a single risk pool 
described in paragraphs (a) through (c) of this section does not apply.
    (f) Applicability date. The provisions of this section apply for 
plan years (as that term is defined in Sec.  144.103 of this subchapter) 
in the group market, and for policy years (as that term is defined in 
Sec.  144.103 of this subchapter) in the individual market, beginning on 
or after January 1, 2014.

[78 FR 13441, Feb. 27, 2013, as amended at 78 FR 39898, July 2, 2013; 78 
FR 65096, Oct. 30, 2013; 81 FR 12349, Mar. 8, 2016; 81 FR 94180, Dec. 
22, 2016]



               Subpart B_Essential Health Benefits Package

    Source: 78 FR 12866, Feb. 25, 2013, unless otherwise noted.



Sec.  156.100  State selection of benchmark plan for plan years
beginning prior to January 1, 2020.

    For plan years beginning before January 1, 2020, each State may 
identify a base-benchmark plan according to the selection criteria 
described below:
    (a) State selection of base-benchmark plan. The options from which a 
base-benchmark plan may be selected by the State are the following:
    (1) Small group market health plan. The largest health plan by 
enrollment in any of the three largest small group insurance products by 
enrollment, as defined in Sec.  159.110 of this subpart, in the State's 
small group market as defined in Sec.  155.20 of this subchapter.
    (2) State employee health benefit plan. Any of the largest three 
employee health benefit plan options by enrollment offered and generally 
available to State employees in the State involved.

[[Page 388]]

    (3) FEHBP plan. Any of the largest three national Federal Employees 
Health Benefits Program (FEHBP) plan options by aggregate enrollment 
that is offered to all health-benefits-eligible federal employees under 
5 USC 8903.
    (4) HMO. The coverage plan with the largest insured commercial non-
Medicaid enrollment offered by a health maintenance organization 
operating in the State.
    (b) EHB-benchmark selection standards. In order to become an EHB-
benchmark plan as defined in Sec.  156.20 of this subchapter, a state-
selected base-benchmark plan must meet the requirements for coverage of 
benefits and limits described in Sec.  156.110 of this subpart; and
    (c) Default base-benchmark plan. If a State does not make a 
selection using the process described in this section, the default base-
benchmark plan will be the largest plan by enrollment in the largest 
product by enrollment in the State's small group market.
    (d) Applicability date: For plan years beginning on or after January 
1, 2020, Sec.  156.111 applies in place of this section.

[78 FR 12866, Feb. 25, 2013, as amended at 80 FR 10871, Feb. 27, 2015; 
83 FR 17068, Apr. 17, 2018]



Sec.  156.105  Determination of EHB for multi-state plans.

    A multi-state plan must meet benchmark standards set by the U.S. 
Office of Personnel Management.



Sec.  156.110  EHB-benchmark plan standards.

    An EHB-benchmark plan must meet the following standards:
    (a) EHB coverage. Provide coverage of at least the following 
categories of benefits:
    (1) Ambulatory patient services.
    (2) Emergency services.
    (3) Hospitalization.
    (4) Maternity and newborn care.
    (5) Mental health and substance use disorder services, including 
behavioral health treatment.
    (6) Prescription drugs.
    (7) Rehabilitative and habilitative services and devices.
    (8) Laboratory services.
    (9) Preventive and wellness services and chronic disease management.
    (10) Pediatric services, including oral and vision care.
    (b) Coverage in each benefit category. A base-benchmark plan not 
providing any coverage in one or more of the categories described in 
paragraph (a) of this section, must be supplemented as follows:
    (1) General supplementation methodology. A base-benchmark plan that 
does not include items or services within one or more of the categories 
described in paragraph (a) of this section must be supplemented by the 
addition of the entire category of such benefits offered under any other 
benchmark plan option described in Sec.  156.100(a) of this subpart 
unless otherwise described in this subsection.
    (2) Supplementing pediatric oral services. A base-benchmark plan 
lacking the category of pediatric oral services must be supplemented by 
the addition of the entire category of pediatric oral benefits from one 
of the following:
    (i) The FEDVIP dental plan with the largest national enrollment that 
is described in and offered to federal employees under 5 U.S.C. 8952; or
    (ii) The benefits available under that State's separate CHIP plan, 
if a separate CHIP plan exists, to the eligibility group with the 
highest enrollment.
    (3) Supplementing pediatric vision services. A base-benchmark plan 
lacking the category of pediatric vision services must be supplemented 
by the addition of the entire category of pediatric vision benefits from 
one of the following:
    (i) The FEDVIP vision plan with the largest national enrollment that 
is offered to federal employees under 5 USC 8982; or
    (ii) The benefits available under the State's separate CHIP plan, if 
a separate CHIP plan exists, to the eligibility group with the highest 
enrollment.
    (c) Supplementing the default base-benchmark plan. A default base-
benchmark plan as defined in Sec.  156.100(c) of this subpart that lacks 
any categories of essential health benefits will be supplemented by HHS 
in the following order, to the extent that any of the plans offer 
benefits in the missing EHB category:

[[Page 389]]

    (1) The largest plan by enrollment in the second largest product by 
enrollment in the State's small group market, as defined in Sec.  155.20 
of this subchapter (except for pediatric oral and vision benefits);
    (2) The largest plan by enrollment in the third largest product by 
enrollment in the State's small group market, as defined in Sec.  155.20 
of this subchapter (except for pediatric oral and vision benefits);
    (3) The largest national FEHBP plan by enrollment across States that 
is offered to federal employees under 5 USC 8903 (except for pediatric 
oral and vision benefits);
    (4) The plan described in paragraph (b)(2)(i) of this section for 
pediatric oral care benefits; and
    (5) The plan described in paragraph (b)(3)(i) of this section for 
pediatric vision care benefits.
    (d) Non-discrimination. Not include discriminatory benefit designs 
that contravene the non-discrimination standards defined in Sec.  
156.125 of this subpart.
    (e) Balance. Ensure an appropriate balance among the EHB categories 
to ensure that benefits are not unduly weighted toward any category.
    (f) Determining habilitative services. If the base-benchmark plan 
does not include coverage for habilitative services, the State may 
determine which services are included in that category.

[78 FR 12866, Feb. 25, 2013, as amended at 80 FR 10871, Feb. 27, 2015]



Sec.  156.111  State selection of EHB-benchmark plan for plan years
beginning on or after January 1, 2020, and annual reporting of
state-required benefits.

    (a) Subject to paragraphs (b), (c), (d) and (e) of this section, for 
plan years beginning on or after January 1, 2020, a State may change its 
EHB-benchmark plan by:
    (1) Selecting the EHB-benchmark plan that another State used for the 
2017 plan year under Sec. Sec.  156.100 and 156.110;
    (2) Replacing one or more categories of EHBs established at Sec.  
156.110(a) in the State's EHB-benchmark plan used for the 2017 plan year 
with the same category or categories of EHB from the EHB-benchmark plan 
that another State used for the 2017 plan year under Sec. Sec.  156.100 
and 156.110; or
    (3) Otherwise selecting a set of benefits that would become the 
State's EHB-benchmark plan.
    (b) A State's EHB-benchmark plan must:
    (1) EHB coverage. Provide coverage of items and services for at 
least the categories of benefits at Sec.  156.110(a), including an 
appropriate balance of coverage for these categories of benefits.
    (2) Scope of benefits. (i) Provide a scope of benefits equal to, or 
greater than, to the extent any supplementation is required to provide 
coverage within each EHB category at Sec.  156.110(a), the scope of 
benefits provided under a typical employer plan, defined as either:
    (A) One of the selecting State's 10 base-benchmark plan options 
established at Sec.  156.100, and available for the selecting State's 
selection for the 2017 plan year; or
    (B) The largest health insurance plan by enrollment within one of 
the five largest large group health insurance products by enrollment in 
the State, as product and plan are defined at Sec.  144.103 of this 
subchapter, provided that:
    (1) The product has at least 10 percent of the total enrollment of 
the five largest large group health insurance products in the State;
    (2) The plan provides minimum value, as defined under Sec.  156.145;
    (3) The benefits are not excepted benefits, as established under 
Sec.  146.145(b), and Sec.  148.220 of this subchapter; and
    (4) The benefits in the plan are from a plan year beginning after 
December 31, 2013.
    (ii) Not exceed the generosity of the most generous among a set of 
comparison plans, including:
    (A) The State's EHB-benchmark plan used for the 2017 plan year, and
    (B) Any of the State's base-benchmark plan options for the 2017 plan 
year described in Sec.  156.100(a)(1), supplemented as necessary under 
Sec.  156.110.
    (iii) Not have benefits unduly weighted towards any of the 
categories of benefits at Sec.  156.110(a);
    (iv) Provide benefits for diverse segments of the population, 
including

[[Page 390]]

women, children, persons with disabilities, and other groups; and
    (v) Not include discriminatory benefit designs that contravene the 
non-discrimination standards defined in Sec.  156.125.
    (c) The State must provide reasonable public notice and an 
opportunity for public comment on the State's selection of an EHB-
benchmark plan that includes posting a notice on its opportunity for 
public comment with associated information on a relevant State website.
    (d) A State must notify HHS of the selection of a new EHB-benchmark 
plan by a date to be determined by HHS for each applicable plan year 
and, in accordance with paragraph (f) of this section, of any State-
required benefits that are in addition to EHB identified under Sec.  
155.170(a)(3) of this subchapter.
    (1) If the State does not make a selection by the annual selection 
date, or its benchmark plan selection does not meet the requirements of 
this section and section 1302 of the PPACA, the State's EHB-benchmark 
plan for the applicable plan year will be that State's EHB-benchmark 
plan applicable for the prior year.
    (2) If the State does not notify HHS of its State-required benefits 
that are in addition to EHB identified under Sec.  155.170(a)(3) of this 
subchapter in accordance with paragraph (f) of this section, HHS will 
identify which benefits are in addition to EHB for the applicable plan 
year in the State, consistent with Sec.  155.170(a)(2) of this 
subchapter.
    (e) A State changing its EHB-benchmark plan under this section must 
submit documents in a format and manner specified by HHS by a date 
determined by HHS. These must include:
    (1) A document confirming that the State's EHB-benchmark plan 
definition complies with the requirements under paragraphs (a), (b) and 
(c) of this section, including information on which selection option 
under paragraph (a) of this section the State is using, and whether the 
State is using another State's EHB-benchmark plan;
    (2) An actuarial certification and an associated actuarial report 
from an actuary, who is a member of the American Academy of Actuaries, 
in accordance with generally accepted actuarial principles and 
methodologies, that affirms:
    (i) That the State's EHB-benchmark plan provides a scope of benefits 
that is equal to, or greater than, to the extent any supplementation is 
required to provide coverage within each EHB category at Sec.  
156.110(a), the scope of benefits provided under a typical employer 
plan, as defined at (b)(2)(i) of this section; and
    (ii) That the State's EHB-benchmark plan does not exceed the 
generosity of the most generous among the plans listed in paragraphs 
(b)(2)(ii)(A) and (B) of this section.
    (3) The State's EHB-benchmark plan document that reflects the 
benefits and limitations, including medical management requirements, a 
schedule of benefits and, if the State is selecting its EHB-benchmark 
plan using the option in paragraph (a)(3) of this section, a formulary 
drug list in a format and manner specified by HHS; and
    (4) Other documentation specified by HHS, which is necessary to 
operationalize the State's EHB-benchmark plan.
    (f) A State must submit to HHS in a form and manner and by a date 
specified by HHS, a document that:
    (1) Is accurate as of the day that is at least 60 days prior to the 
annual reporting submission deadline set by HHS and that lists all State 
benefit requirements applicable to QHPs in the individual and/or small 
group market under state mandates imposed on or before December 31, 
2011, and that were not withdrawn or otherwise no longer effective 
before December 31, 2011, and any State benefit requirements that were 
imposed any time after December 31, 2011;
    (2) Specifies which of those State-required benefits listed in 
accordance with paragraph (f)(1) of this section the State has 
identified as in addition to EHB and subject to defrayal in accordance 
with Sec.  155.170 of this subchapter;
    (3) Specifies which of those State-required benefits listed in 
accordance with paragraph (f)(1) of this section the State has 
identified as not in addition to EHB and not subject to defrayal in 
accordance with Sec.  155.170 of this subchapter, and describes the 
basis for the state's determination;

[[Page 391]]

    (4) Provides other information about those State-required benefits 
listed in accordance with paragraph (f)(1) of this section that is 
necessary for HHS oversight, as specified by HHS;
    (5) Is signed by a state official with authority to make the 
submission on behalf of the state certifying the accuracy of the 
submission; and
    (6) Is updated annually, in a form and manner and by a date 
specified by HHS, to include any new State benefit requirements, and to 
indicate whether benefit requirements previously reported to HHS under 
this paragraph (f) have been amended, repealed, or otherwise affected by 
state regulatory or legislative action.

[83 FR 17068, Apr. 17, 2018, as amended at 85 FR 29261, May 14, 2020]



Sec.  156.115  Provision of EHB.

    (a) Provision of EHB means that a health plan provides benefits 
that--
    (1) Are substantially equal to the EHB-benchmark plan including:
    (i) Covered benefits;
    (ii) Limitations on coverage including coverage of benefit amount, 
duration, and scope; and
    (iii) Prescription drug benefits that meet the requirements of Sec.  
156.122 of this subpart;
    (2) With the exception of the EHB category of coverage for pediatric 
services, do not exclude an enrollee from coverage in an EHB category.
    (3) With respect to the mental health and substance use disorder 
services, including behavioral health treatment services, required under 
Sec.  156.110(a)(5) of this subpart, comply with the requirements of 
Sec.  146.136 of this subchapter.
    (4) Include preventive health services described in Sec.  147.130 of 
this subchapter.
    (5) With respect to habilitative services and devices--
    (i) Cover health care services and devices that help a person keep, 
learn, or improve skills and functioning for daily living (habilitative 
services). Examples include therapy for a child who is not walking or 
talking at the expected age. These services may include physical and 
occupational therapy, speech-language pathology and other services for 
people with disabilities in a variety of inpatient and/or outpatient 
settings;
    (ii) Do not impose limits on coverage of habilitative services and 
devices that are less favorable than any such limits imposed on coverage 
of rehabilitative services and devices; and
    (iii) For plan years beginning on or after January 1, 2017, do not 
impose combined limits on habilitative and rehabilitative services and 
devices.
    (6) For plan years beginning on or after January 1, 2016, for 
pediatric services that are required under Sec.  156.110(a)(10), provide 
coverage for enrollees until at least the end of the month in which the 
enrollee turns 19 years of age.
    (b) An issuer of a plan offering EHB may substitute benefits for 
those provided in the EHB-benchmark plan under the following 
conditions--
    (1) The issuer substitutes a benefit that:
    (i) Is actuarially equivalent to the benefit that is being replaced 
as determined in paragraph (b)(4) of this section; and
    (ii) Is not a prescription drug benefit.
    (2) An issuer may substitute a benefit under this paragraph:
    (i) Within the same EHB category, unless prohibited by applicable 
State requirements; and
    (ii) For plan years beginning on or after January 1, 2020, between 
EHB categories, if the State in which the plan will be offered has 
notified HHS that substitution between EHB categories is permitted in 
the State.
    (3) The plan that includes substituted benefits must:
    (i) Continue to comply with the requirements of paragraph (a) of 
this section, including by providing benefits that are substantially 
equal to the EHB-benchmark plan;
    (ii) Provide an appropriate balance among the EHB categories such 
that benefits are not unduly weighted toward any category; and
    (iii) Provide benefits for diverse segments of the population.
    (4) The issuer submits to the State evidence of actuarial 
equivalence that is:
    (i) Certified by a member of the American Academy of Actuaries;
    (ii) Based on an analysis performed in accordance with generally 
accepted actuarial principles and methodologies;

[[Page 392]]

    (iii) Based on a standardized plan population; and
    (iv) Determined without taking cost-sharing into account.
    (c) A health plan does not fail to provide EHB solely because it 
does not offer the services described in Sec.  156.280(d) of this 
subchapter.
    (d) An issuer of a plan offering EHB may not include routine non-
pediatric dental services, routine non-pediatric eye exam services, 
long-term/custodial nursing home care benefits, or non-medically 
necessary orthodontia as EHB.

[78 FR 12866, Feb. 25, 2013, as amended at 80 FR 10871, Feb. 27, 2015; 
81 FR 12349, Mar. 8, 2016; 83 FR 17069, Apr. 17, 2018]



Sec.  156.120  Collection of data to define essential health benefits.

    (a) Definitions. The following definitions apply to this section, 
unless the context indicates otherwise:
    Health benefits means benefits for medical care, as defined at Sec.  
144.103 of this subchapter, which may be delivered through the purchase 
of insurance or otherwise.
    Health plan has the meaning given to the term ``Portal Plan'' in 
Sec.  159.110 of this subchapter.
    State has the meaning given to that term in Sec.  155.20 of this 
subchapter.
    Treatment limitations include limits on benefits based on the 
frequency of treatment, number of visits, days of coverage, or other 
similar limits on the scope or duration of treatment. Treatment 
limitations include only quantitative treatment limitations. A permanent 
exclusion of all benefits for a particular condition or disorder is not 
a treatment limitation.
    (b) Reporting requirement. A State that selects a base-benchmark 
plan or an issuer that offers a default base-benchmark plan in 
accordance with Sec.  156.100 must submit to HHS the following 
information in a form and manner, and by a date, determined by HHS:
    (1) Administrative data necessary to identify the health plan;
    (2) Data and descriptive information for each plan on the following 
items:
    (i) All health benefits in the plan;
    (ii) Treatment limitations;
    (iii) Drug coverage; and
    (iv) Exclusions.

[80 FR 10871, Feb. 27, 2015]



Sec.  156.122  Prescription drug benefits.

    (a) A health plan does not provide essential health benefits unless 
it:
    (1) Subject to the exception in paragraph (b) of this section, 
covers at least the greater of:
    (i) One drug in every United States Pharmacopeia (USP) category and 
class; or
    (ii) The same number of prescription drugs in each category and 
class as the EHB-benchmark plan;
    (2) Submits its formulary drug list to the Exchange, the State or 
OPM; and
    (3) For plans years beginning on or after January 1, 2017, uses a 
pharmacy and therapeutics (P&T) committee that meets the following 
standards.
    (i) Membership standards. The P&T committee must:
    (A) Have members that represent a sufficient number of clinical 
specialties to adequately meet the needs of enrollees.
    (B) Consist of a majority of individuals who are practicing 
physicians, practicing pharmacists and other practicing health care 
professionals who are licensed to prescribe drugs.
    (C) Prohibit any member with a conflict of interest with respect to 
the issuer or a pharmaceutical manufacturer from voting on any matters 
for which the conflict exists.
    (D) Require at least 20 percent of its membership to have no 
conflict of interest with respect to the issuer and any pharmaceutical 
manufacturer.
    (ii) Meeting standards. The P&T committee must:
    (A) Meet at least quarterly.
    (B) Maintain written documentation of the rationale for all 
decisions regarding formulary drug list development or revision.
    (iii) Formulary drug list establishment and management. The P&T 
committee must:
    (A) Develop and document procedures to ensure appropriate drug 
review and inclusion.
    (B) Base clinical decisions on the strength of scientific evidence 
and standards of practice, including assessing peer-reviewed medical 
literature, pharmacoeconomic studies, outcomes

[[Page 393]]

research data, and other such information as it determines appropriate.
    (C) Consider the therapeutic advantages of drugs in terms of safety 
and efficacy when selecting formulary drugs.
    (D) Review policies that guide exceptions and other utilization 
management processes, including drug utilization review, quantity 
limits, and therapeutic interchange.
    (E) Evaluate and analyze treatment protocols and procedures related 
to the plan's formulary at least annually.
    (F) Review and approve all clinical prior authorization criteria, 
step therapy protocols, and quantity limit restrictions applied to each 
covered drug.
    (G) Review new FDA-approved drugs and new uses for existing drugs.
    (H) Ensure the issuer's formulary drug list:
    (1) Covers a range of drugs across a broad distribution of 
therapeutic categories and classes and recommended drug treatment 
regimens that treat all disease states, and does not discourage 
enrollment by any group of enrollees; and
    (2) Provides appropriate access to drugs that are included in 
broadly accepted treatment guidelines and that are indicative of general 
best practices at the time.
    (b) A health plan does not fail to provide EHB prescription drug 
benefits solely because it does not offer drugs approved by the Food and 
Drug Administration as a service described in Sec.  156.280(d) of this 
subchapter.
    (c) A health plan providing essential health benefits must have the 
following processes in place that allow an enrollee, the enrollee's 
designee, or the enrollee's prescribing physician (or other prescriber, 
as appropriate) to request and gain access to clinically appropriate 
drugs not otherwise covered by the health plan (a request for 
exception). In the event that an exception request is granted, the plan 
must treat the excepted drug(s) as an essential health benefit, 
including by counting any cost-sharing towards the plan's annual 
limitation on cost-sharing under Sec.  156.130 and when calculating the 
plan's actuarial value under Sec.  156.135.
    (1) Standard exception request. For plans years beginning on or 
after January 1, 2016:
    (i) A health plan must have a process for an enrollee, the 
enrollee's designee, or the enrollee's prescribing physician (or other 
prescriber) to request a standard review of a decision that a drug is 
not covered by the plan.
    (ii) A health plan must make its determination on a standard 
exception and notify the enrollee or the enrollee's designee and the 
prescribing physician (or other prescriber, as appropriate) of its 
coverage determination no later than 72 hours following receipt of the 
request.
    (iii) A health plan that grants a standard exception request must 
provide coverage of the non-formulary drug for the duration of the 
prescription, including refills.
    (2) Expedited exception request. (i) A health plan must have a 
process for an enrollee, the enrollee's designee, or the enrollee's 
prescribing physician (or other prescriber) to request an expedited 
review based on exigent circumstances.
    (ii) Exigent circumstances exist when an enrollee is suffering from 
a health condition that may seriously jeopardize the enrollee's life, 
health, or ability to regain maximum function or when an enrollee is 
undergoing a current course of treatment using a non-formulary drug.
    (iii) A health plan must make its coverage determination on an 
expedited review request based on exigent circumstances and notify the 
enrollee or the enrollee's designee and the prescribing physician (or 
other prescriber, as appropriate) of its coverage determination no later 
than 24 hours following receipt of the request.
    (iv) A health plan that grants an exception based on exigent 
circumstances must provide coverage of the non-formulary drug for the 
duration of the exigency.
    (3) External exception request review. For plans years beginning on 
or after January 1, 2016:
    (i) If the health plan denies a request for a standard exception 
under paragraph (c)(1) of this section or for an expedited exception 
under paragraph (c)(2) of this section, the health plan must have a 
process for the enrollee, the enrollee's designee, or the enrollee's 
prescribing physician (or other

[[Page 394]]

prescriber) to request that the original exception request and 
subsequent denial of such request be reviewed by an independent review 
organization.
    (ii) A health plan must make its determination on the external 
exception request and notify the enrollee or the enrollee's designee and 
the prescribing physician (or other prescriber, as appropriate) of its 
coverage determination no later than 72 hours following its receipt of 
the request, if the original request was a standard exception request 
under paragraph (c)(1) of this section, and no later than 24 hours 
following its receipt of the request, if the original request was an 
expedited exception request under paragraph (c)(2) of this section.
    (iii) If a health plan grants an external exception review of a 
standard exception request, the health plan must provide coverage of the 
non-formulary drug for the duration of the prescription. If a health 
plan grants an external exception review of an expedited exception 
request, the health plan must provide coverage of the non-formulary drug 
for the duration of the exigency.
    (4) Application of coverage appeals laws. (i) A State may determine 
that a health plan in the State satisfies the requirements of this 
paragraph (c) if the health plan has a process to allow an enrollee to 
request and gain access to clinically appropriate drugs not otherwise 
covered by the health plan that is compliant with the State's applicable 
coverage appeals laws and regulations that are at least as stringent as 
the requirements of this paragraph (c) and include:
    (A) An internal review;
    (B) An external review;
    (C) The ability to expedite the reviews; and
    (D) Timeframes that are the same or shorter than the timeframes 
under paragraphs (c)(1)(ii), (c)(2)(iii), and (c)(3)(ii) of this 
section.
    (ii) [Reserved]
    (d)(1) For plan years beginning on or after January 1, 2016, a 
health plan must publish an up-to-date, accurate, and complete list of 
all covered drugs on its formulary drug list, including any tiering 
structure that it has adopted and any restrictions on the manner in 
which a drug can be obtained, in a manner that is easily accessible to 
plan enrollees, prospective enrollees, the State, the Exchange, HHS, the 
U.S. Office of Personnel Management, and the general public. A formulary 
drug list is easily accessible when:
    (i) It can be viewed on the plan's public Web site through a clearly 
identifiable link or tab without requiring an individual to create or 
access an account or enter a policy number; and
    (ii) If an issuer offers more than one plan, when an individual can 
easily discern which formulary drug list applies to which plan.
    (2) A QHP in the Federally-facilitated Exchange must make available 
the information described in paragraph (d)(1) of this section on its Web 
site in an HHS-specified format and also submit this information to HHS, 
in a format and at times determined by HHS.
    (e) For plan years beginning on or after January 1, 2017, a health 
plan providing essential health benefits must have the following access 
procedures:
    (1) A health plan must allow enrollees to access prescription drug 
benefits at in-network retail pharmacies, unless:
    (i) The drug is subject to restricted distribution by the U.S. Food 
and Drug Administration; or
    (ii) The drug requires special handling, provider coordination, or 
patient education that cannot be provided by a retail pharmacy.
    (2) A health plan may charge enrollees a different cost-sharing 
amount for obtaining a covered drug at a retail pharmacy, but all cost 
sharing will count towards the plan's annual limitation on cost sharing 
under Sec.  156.130 and must be accounted for in the plan's actuarial 
value calculated under Sec.  156.135.

[78 FR 12866, Feb. 25, 2013, as amended at 79 FR 30350, May 27, 2014; 80 
FR 10871, Feb. 27, 2015; 81 FR 12349, Mar. 8, 2016; 81 FR 53032, Aug. 
11, 2016]



Sec.  156.125  Prohibition on discrimination.

    (a) An issuer does not provide EHB if its benefit design, or the 
implementation of its benefit design, discriminates based on an 
individual's age, expected

[[Page 395]]

length of life, present or predicted disability, degree of medical 
dependency, quality of life, or other health conditions.
    (b) An issuer providing EHB must comply with the requirements of 
Sec.  156.200(e) of this subchapter; and
    (c) Nothing in this section shall be construed to prevent an issuer 
from appropriately utilizing reasonable medical management techniques.



Sec.  156.130  Cost-sharing requirements.

    (a) Annual limitation on cost sharing. (1) For a plan year beginning 
in the calendar year 2014, cost sharing may not exceed the following:
    (i) For self-only coverage--the annual dollar limit as described in 
section 223(c)(2)(A)(ii)(I) of the Internal Revenue Code of 1986 as 
amended, for self-only coverage that that is in effect for 2014; or
    (ii) For other than self-only coverage--the annual dollar limit in 
section 223(c)(2)(A)(ii)(II) of the Internal Revenue Code of 1986 as 
amended, for non-self-only coverage that is in effect for 2014.
    (2) For a plan year beginning in a calendar year after 2014, cost 
sharing may not exceed the following:
    (i) For self-only coverage--the dollar limit for calendar year 2014 
increased by an amount equal to the product of that amount and the 
premium adjustment percentage, as defined in paragraph (e) of this 
section.
    (ii) For other than self-only coverage--twice the dollar limit for 
self-only coverage described in paragraph (a)(2)(i) of this section.
    (b) [Reserved]
    (c) Special rule for network plans. In the case of a plan using a 
network of providers, cost sharing paid by, or on behalf of, an enrollee 
for benefits provided outside of such network is not required to count 
toward the annual limitation on cost sharing (as defined in paragraph 
(a) of this section).
    (d) Increase annual dollar limits in multiples of 50. For a plan 
year beginning in a calendar year after 2014, any increase in the annual 
dollar limits described in paragraph (a) of this section that does not 
result in a multiple of 50 dollars will be rounded down, to the next 
lowest multiple of 50 dollars.
    (e) Premium adjustment percentage. The premium adjustment percentage 
is the percentage (if any) by which the average per capita premium for 
health insurance coverage for the preceding calendar year exceeds such 
average per capita premium for health insurance for 2013. HHS will 
publish the annual premium adjustment percentage in the annual HHS 
notice of benefits and payment parameters.
    (f) Coordination with preventive limits. Nothing in this subpart is 
in derogation of the requirements of Sec.  147.130 of this subchapter.
    (g) Coverage of emergency department services. Emergency department 
services must be provided as follows:
    (1) Without imposing any requirement under the plan for prior 
authorization of services or any limitation on coverage where the 
provider of services is out of network that is more restrictive than the 
requirements or limitations that apply to emergency department services 
received in network; and
    (2) If such services are provided out-of-network, cost-sharing must 
be limited as provided in Sec.  147.138(b)(3) of this subchapter.
    (h) Use of direct support offered by drug manufacturers. 
Notwithstanding any other provision of this section, and to the extent 
consistent with State law, amounts paid toward reducing the cost sharing 
incurred by an enrollee using any form of direct support offered by drug 
manufacturers for specific prescription drugs may be, but are not 
required to be, counted toward the annual limitation on cost sharing, as 
defined in paragraph (a) of this section.

[78 FR 12866, Feb. 25, 2013, as amended at 79 FR 30350, May 27, 2014; 80 
FR 10872, Feb. 27, 2015; 84 FR 17567, Apr. 25, 2019; 85 FR 29261, May 
14, 2020]



Sec.  156.135  AV calculation for determining level of coverage.

    (a) Calculation of AV. Subject to paragraphs (b) and (d) of this 
section, to calculate the AV of a health plan, the issuer must use the 
AV Calculator developed and made available by HHS for the given benefit 
year.
    (b) Exception to the use of the AV Calculator. If a health plan's 
design is not compatible with the AV Calculator, the issuer must meet 
the following:

[[Page 396]]

    (1) Submit the actuarial certification from an actuary, who is a 
member of the American Academy of Actuaries, on the chosen methodology 
identified in paragraphs (b)(2) and (b)(3) of this section:
    (2) Calculate the plan's AV by:
    (i) Estimating a fit of its plan design into the parameters of the 
AV Calculator; and
    (ii) Having an actuary, who is a member of the American Academy of 
Actuaries, certify that the plan design was fit appropriately in 
accordance with generally accepted actuarial principles and 
methodologies; or
    (3) Use the AV Calculator to determine the AV for the plan 
provisions that fit within the calculator parameters and have an 
actuary, who is a member of the American Academy of Actuaries calculate 
and certify, in accordance with generally accepted actuarial principles 
and methodologies, appropriate adjustments to the AV identified by the 
calculator, for plan design features that deviate substantially from the 
parameters of the AV Calculator.
    (4) The calculation methods described in paragraphs (b)(2) and (3) 
of this section may include only in-network cost-sharing, including 
multi-tier networks.
    (c) Employer contributions to health savings accounts and amounts 
made available under certain health reimbursement arrangements. For 
plans other than those in the individual market that at the time of 
purchase are offered in conjunction with an HSA or with integrated HRAs 
that may be used only for cost-sharing, annual employer contributions to 
HSAs and amounts newly made available under such HRAs for the current 
year are:
    (1) Counted towards the total anticipated medical spending of the 
standard population that is paid by the health plan; and
    (2) Adjusted to reflect the expected spending for health care costs 
in a benefit year so that:
    (i) Any current year HSA contributions are accounted for; and
    (ii) The amounts newly made available under such integrated HRAs for 
the current year are accounted for.
    (d) Use of state-specific standard population for the calculation of 
AV. Beginning in 2015, if submitted by the State and approved by HHS, a 
state-specific data set will be used as the standard population to 
calculate AV in accordance with paragraph (a) of this section. The data 
set may be approved by HHS if it is submitted in accordance with 
paragraph (e) of this section and:
    (1) Supports the calculation of AVs for the full range of health 
plans available in the market;
    (2) Is derived from a non-elderly population and estimates those 
likely to be covered by private health plans on or after January 1, 
2014;
    (3) Is large enough that: (i) The demographic and spending patterns 
are stable over time; and (ii) Includes a substantial majority of the 
State's insured population, subject to the requirement in paragraph 
(d)(2) of this section;
    (4) Is a statistically reliable and stable basis for area-specific 
calculations; and (5) Contains claims data on health care services 
typically offered in the then-current market.
    (e) Submission of state-specific data. AV will be calculated using 
the default standard population described in paragraph (f) of this 
section, unless a data set in a format specified by HHS that can support 
the use of the AV Calculator as described in paragraph (a) of this 
section is submitted by a State and approved by HHS consistent with 
paragraph (d) of this section by a date specified by HHS.
    (f) Default standard population. The default standard population for 
AV calculation will be developed and summary statistics, such as in 
continuance tables, will be provided by HHS in a format that supports 
the calculation of AV as described in paragraph (a) of this section.
    (g) Updates to the AV Calculator. HHS will update the AV Calculator 
annually for material changes that may include costs, plan designs, the 
standard population, developments in the function and operation of the 
AV Calculator and other actuarially relevant factors.

[78 FR 12866, Feb. 25, 2013, as amended at 79 FR 13839, Mar. 11, 2014; 
81 FR 12349, Mar. 8, 2016]

[[Page 397]]



Sec.  156.140  Levels of coverage.

    (a) General requirement for levels of coverage. AV, calculated as 
described in Sec.  156.135 of this subpart, and within a de minimis 
variation as defined in paragraph (c) of this section, determines 
whether a health plan offers a bronze, silver, gold, or platinum level 
of coverage.
    (b) The levels of coverage are:
    (1) A bronze health plan is a health plan that has an AV of 60 
percent.
    (2) A silver health plan is a health plan that has an AV of 70 
percent.
    (3) A gold health plan is a health plan that has an AV of 80 
percent.
    (4) A platinum health plan is a health plan that has as an AV of 90 
percent.
    (c) De minimis variation. For plan years beginning on or after 
January 1, 2018, the allowable variation in the AV of a health plan that 
does not result in a material difference in the true dollar value of the 
health plan is -4 percentage points and +2 percentage points, except if 
a health plan under paragraph (b)(1) of this section (a bronze health 
plan) either covers and pays for at least one major service, other than 
preventive services, before the deductible or meets the requirements to 
be a high deductible health plan within the meaning of 26 U.S.C. 
223(c)(2), in which case the allowable variation in AV for such plan is 
-4 percentage points and +5 percentage points.

[78 FR 12866, Feb. 25, 2013, as amended at 81 FR 94180, Dec. 22, 2016; 
82 FR 18382, Apr. 18, 2017]



Sec.  156.145  Determination of minimum value.

    (a) Acceptable methods for determining MV. An employer-sponsored 
plan provides minimum value (MV) only if the percentage of the total 
allowed costs of benefits provided under the plan is greater than or 
equal to 60 percent, and the benefits under the plan include substantial 
coverage of inpatient hospital services and physician services. An 
employer-sponsored plan may use one of the following methods to 
determine whether the percentage of the total allowed costs of benefits 
provided under the plan is not less than 60 percent.
    (1) The MV Calculator to be made available by HHS and the Internal 
Revenue Service. The result derived from the calculator may be modified 
under the rules in paragraph (b) of this section.
    (2) Any safe harbor established by HHS and the Internal Revenue 
Service.
    (3) A group health plan may seek certification by an actuary to 
determine MV if the plan contains non-standard features that are not 
suitable for either of the methods described in paragraphs (a)(1) or (2) 
of this section. The determination of MV must be made by a member of the 
American Academy of Actuaries, based on an analysis performed in 
accordance with generally accepted actuarial principles and 
methodologies.
    (4) Any plan in the small group market that meets any of the levels 
of coverage, as described in Sec.  156.140 of this subpart, satisfies 
minimum value.
    (b) Benefits that may be counted towards the determination of MV. 
(1) In the event that a group health plan uses the MV Calculator and 
offers an EHB outside of the parameters of the MV Calculator, the plan 
may seek an actuary, who is a member of the American Academy of 
Actuaries, to determine the value of that benefit and adjust the result 
derived from the MV Calculator to reflect that value.
    (2) For the purposes of applying the options described in paragraph 
(a) of this section in determining MV, a group health plan will be 
permitted to take into account all benefits provided by the plan that 
are included in any one of the EHB-benchmarks.
    (c) Standard population. The standard population for MV 
determinations described in paragraph (a) of this section is the 
standard population developed by HHS for such use and described through 
summary statistics issued by HHS. The standard population for MV must 
reflect the population covered by self-insured group health plans.
    (d) Employer contributions to health savings accounts and amounts 
made available under certain health reimbursement arrangements. For 
employer-sponsored self-insured group health plans and insured group 
health plans that at the time of purchase are offered in conjunction 
with an HSA or with integrated HRAs that may be used only for cost-
sharing, annual employer contributions to HSAs and amounts newly

[[Page 398]]

made available under such HRAs for the current year are:
    (1) Counted towards the total anticipated medical spending of the 
standard population that is paid by the health plan; and
    (2) Adjusted to reflect the expected spending for health care costs 
in a benefit year so that:
    (i) Any current year HSA contributions are accounted for; and
    (ii) The amounts newly made available under such integrated HRAs for 
the current year are accounted for.

[78 FR 12866, Feb. 25, 2013, as amended at 80 FR 10872, Feb. 27, 2015]



Sec.  156.150  Application to stand-alone dental plans inside the Exchange.

    (a) Annual limitation on cost-sharing. For a stand-alone dental plan 
covering the pediatric dental EHB under Sec.  155.1065 of this 
subchapter in any Exchange, cost sharing may not exceed $350 for one 
covered child and $700 for two or more covered children.
    (1) For plan years beginning after 2017, for one covered child--the 
dollar limit applicable to a stand-alone dental plan for one covered 
child specified in this paragraph (a) increased by the percent increase 
of the consumer price index for dental services for the year 2 years 
prior to the applicable plan year over the consumer price index for 
dental services for 2016.
    (2) For plan years after 2017, for two or more covered children--
twice the dollar limit for one child described in paragraph (a)(1) of 
this section.
    (b) Calculation of AV. A stand-alone dental plan:
    (1) May not use the AV calculator in Sec.  156.135; and
    (2) Must have the plan's actuarial value of coverage for pediatric 
dental essential health benefits certified by a member of the American 
Academy of Actuaries using generally accepted actuarial principles and 
reported to the Exchange.
    (c) Consumer price index for dental services defined. The consumer 
price index for dental services is a sub-component of the U.S. 
Department of Labor's Bureau of Labor Statistics Consumer Price Index 
specific to dental services.
    (d) Increments of cost sharing increases. Any increase in the annual 
dollar limits described in paragraph (a)(1) of this section that does 
not result in a multiple of 25 dollars will be rounded down, to the next 
lowest multiple of 25 dollars.

[78 FR 12866, Feb. 25, 2013, as amended at 79 FR 13840, Mar. 11, 2014; 
81 FR 12349, Mar. 8, 2016; 83 FR 17069, Apr. 17, 2018]



Sec.  156.155  Enrollment in catastrophic plans.

    (a) General rule. A health plan is a catastrophic plan if it meets 
the following conditions:
    (1) Meets all applicable requirements for health insurance coverage 
in the individual market (including but not limited to those 
requirements described in parts 147 and 148 of this subchapter), and is 
offered only in the individual market.
    (2) Does not provide a bronze, silver, gold, or platinum level of 
coverage described in section 1302(d) of the Affordable Care Act.
    (3) Provides coverage of the essential health benefits under section 
1302(b) of the Affordable Care Act, except that the plan provides no 
benefits for any plan year (except as provided in paragraphs (a)(4) and 
(b) of this section) until the annual limitation on cost sharing in 
section 1302(c)(1) of the act is reached.
    (4) Provides coverage for at least three primary care visits per 
year before reaching the deductible.
    (5) Covers only individuals who meet either of the following 
conditions:
    (i) Have not attained the age of 30 prior to the first day of the 
plan or policy year.
    (ii) Have received a certificate of exemption for the reasons 
identified in section 1302(e)(2)(B)(i) or (ii) of the Affordable Care 
Act.
    (b) Coverage of preventive health services. A catastrophic plan may 
not impose any cost-sharing requirements (such as a copayment, 
coinsurance, or deductible) for preventive services, in accordance with 
section 2713 of the Public Health Service Act.

[[Page 399]]

    (c) Application for family coverage. For other than self-only 
coverage, each individual enrolled must meet the requirements of 
paragraph (a)(5) of this section.

[78 FR 13442, Feb. 27, 2013, as amended at 78 FR 65096, Oct. 30, 2013]



     Subpart C_Qualified Health Plan Minimum Certification Standards

    Source: 77 FR 18469, Mar. 27, 2012, unless otherwise noted.



Sec.  156.200  QHP issuer participation standards.

    (a) General requirement. In order to participate in an Exchange, a 
health insurance issuer must have in effect a certification issued or 
recognized by the Exchange to demonstrate that each health plan it 
offers in the Exchange is a QHP.
    (b) QHP issuer requirement. A QHP issuer must--
    (1) Comply with the requirements of this subpart with respect to 
each of its QHPs on an ongoing basis;
    (2) Comply with Exchange processes, procedures, and requirements set 
forth in accordance with subpart K of part 155 of this subchapter and, 
in the small group market, Sec. Sec.  155.705 and 155.706 of this 
subchapter;
    (3) Ensure that each QHP complies with benefit design standards, as 
defined in Sec.  156.20;
    (4) Be licensed and in good standing to offer health insurance 
coverage in each State in which the issuer offers health insurance 
coverage;
    (5) Implement and report on a quality improvement strategy or 
strategies described in section 1311(c)(1)(E) of the Affordable Care Act 
consistent with the standards of section 1311(g) of the Affordable Care 
Act, disclose and report information on health care quality and outcomes 
described in sections 1311(c)(1)(H), (c)(1)(I), and (c)(3) of the 
Affordable Care Act, and implement appropriate enrollee satisfaction 
surveys consistent with section 1311(c)(4) of the Affordable Care Act
    (6) Pay any applicable user fees assessed under Sec.  156.50; and
    (7) Comply with the standards under 45 CFR part 153.
    (c) Offering requirements. A QHP issuer must offer through the 
Exchange:
    (1) At least one QHP in the silver coverage level and at least one 
QHP in the gold coverage level as described in Sec.  156.140 throughout 
each service area in which it offers coverage through the Exchange; and,
    (2) A child-only plan at the same level of coverage, as described in 
section 1302(d)(1) of the Affordable Care Act, as any QHP offered 
through the Exchange to individuals who, as of the beginning of the plan 
year, have not attained the age of 21.
    (d) State requirements. A QHP issuer certified by an Exchange must 
adhere to the requirements of this subpart and any provisions imposed by 
the Exchange, or a State in connection with its Exchange, that are 
conditions of participation or certification with respect to each of its 
QHPs.
    (e) Non-discrimination. A QHP issuer must not, with respect to its 
QHP, discriminate on the basis of race, color, national origin, 
disability, age, or sex.
    (f) Broker compensation in a Federally-facilitated Exchange. A QHP 
issuer must pay the same broker compensation for QHPs offered through a 
Federally-facilitated Exchange that the QHP issuer pays for similar 
health plans offered in the State outside a Federally-facilitated 
Exchange.
    (g) Certification standard specific to a Federally-facilitated 
Exchange for plan years beginning before January 1, 2018. A Federally-
facilitated Exchange may certify a QHP in the individual market of a 
Federally-facilitated Exchange only if the QHP issuer meets one of the 
conditions below:
    (1) The QHP issuer also offers through a Federally-facilitated SHOP 
serving that State at least one small group market QHP at the silver 
level of coverage and one at the gold level of coverage as described in 
section 1302(d) of the Affordable Care Act;
    (2) The QHP issuer does not offer small group market products in 
that State, but another issuer in the same issuer group offers through a 
Federally-facilitated SHOP serving that State at least one small group 
market QHP at the silver level of coverage and one at the gold level of 
coverage; or

[[Page 400]]

    (3) Neither the issuer nor any other issuer in the same issuer group 
has a share of the small group market, as determined by HHS, greater 
than 20 percent, based on the earned premiums submitted by all issuers 
in the State's small group market, under Sec.  158.110 of this 
subchapter, on the reporting date immediately preceding the due date of 
the application for QHP certification.
    (h) Operational requirements. As a condition of certification of a 
QHP, an issuer must attest that it will comply with all QHP operational 
requirements described in subparts D, E, H, K, L, and M of this part.

[77 FR 18469, Mar. 27, 2012, as amended at 78 FR 15535, Mar. 11, 2013; 
79 FR 30351, May 27, 2014; 80 FR 10873, Feb. 27, 2015; 81 FR 94181, Dec. 
22, 2016; 83 FR 17069, Apr. 17, 2018; 85 FR 37248, June 19, 2020]



Sec.  156.210  QHP rate and benefit information.

    (a) General rate requirement. A QHP issuer must set rates for an 
entire benefit year, or for the SHOP, plan year.
    (b) Rate and benefit submission. A QHP issuer must submit rate and 
benefit information to the Exchange.
    (c) Rate justification. A QHP issuer must submit to the Exchange a 
justification for a rate increase prior to the implementation of the 
increase. A QHP issuer must prominently post the justification on its 
Web site.



Sec.  156.215  Advance payments of the premium tax credit and 
cost-sharing reduction standards.

    (a) Standards relative to advance payments of the premium tax credit 
and cost-sharing reductions. In order for a health plan to be certified 
as a QHP initially and to maintain certification to be offered in the 
individual market on the Exchange, the issuer must meet the requirements 
related to the administration of cost-sharing reductions and advance 
payments of the premium tax credit set forth in subpart E of this part.
    (b) [Reserved]

[78 FR 15535, Mar. 11, 2013]



Sec.  156.220  Transparency in coverage.

    (a) Required information. A QHP issuer must provide the following 
information in accordance with the standards in paragraph (b) of this 
section:
    (1) Claims payment policies and practices;
    (2) Periodic financial disclosures;
    (3) Data on enrollment;
    (4) Data on disenrollment;
    (5) Data on the number of claims that are denied;
    (6) Data on rating practices;
    (7) Information on cost-sharing and payments with respect to any 
out-of-network coverage; and
    (8) Information on enrollee rights under title I of the Affordable 
Care Act.
    (b) Reporting requirement. A QHP issuer must submit, in an accurate 
and timely manner, to be determined by HHS, the information described in 
paragraph (a) of this section to the Exchange, HHS and the State 
insurance commissioner, and make the information described in paragraph 
(a) of this section available to the public.
    (c) Use of plain language. A QHP issuer must make sure that the 
information submitted under paragraph (b) is provided in plain language 
as defined under Sec.  155.20 of this subtitle.
    (d) Enrollee cost sharing transparency. A QHP issuer must make 
available the amount of enrollee cost sharing under the individual's 
plan or coverage with respect to the furnishing of a specific item or 
service by a participating provider in a timely manner upon the request 
of the individual. At a minimum, such information must be made available 
to such individual through an Internet Web site and such other means for 
individuals without access to the Internet.



Sec.  156.221  Access to and exchange of health data and plan
information.

    (a) Application Programming Interface to support enrollees. Subject 
to paragraph (h) of this section, a QHP issuer on a Federally-
Facilitated Exchange must implement and maintain a standards-based 
Application Programming Interface (API) that permits third-party 
applications to retrieve, with the approval and at the direction of a 
current individual enrollee or the enrollee's personal representative, 
data specified in paragraph (b) of this section

[[Page 401]]

through the use of common technologies and without special effort from 
the enrollee.
    (b) Accessible content. (1) A QHP issuer on a Federally-facilitate 
Exchange must make the following information accessible to its current 
enrollees or the enrollee's personal representative through the API 
described in paragraph (a) of this section:
    (i) Data concerning adjudicated claims, including claims data for 
payment decisions that may be appealed, were appealed, or are in the 
process of appeal, and provider remittances and enrollee cost-sharing 
pertaining to such claims, no later than one (1) business day after a 
claim is processed;
    (ii) Encounter data from capitated providers, no later than one (1) 
business day after data concerning the encounter is received by the QHP 
issuer; and
    (iii) Clinical data, including laboratory results, if the QHP issuer 
maintains any such data, no later than one (1) business day after data 
is received by the issuer.
    (2) [Reserved]
    (c) Technical requirements. A QHP issuer on a Federally-facilitated 
Exchange implementing an API under paragraph (a) of this section:
    (1) Must implement, maintain, and use API technology conformant with 
45 CFR 170.215;
    (2) Must conduct routine testing and monitoring, and update as 
appropriate, to ensure the API functions properly, including assessments 
to verify the API is fully and successfully implementing privacy and 
security features such as, but not limited to, those required to comply 
with HIPAA privacy and security requirements in parts 160 and 164, 42 
CFR parts 2 and 3, and other applicable law protecting privacy and 
security of individually identifiable data;
    (3) Must comply with the content and vocabulary standard 
requirements in paragraphs (c)(3)(i) and (ii) of this section, as 
applicable, to the data type or data element, unless alternate standards 
are required by other applicable law:
    (i) Content and vocabulary standards at 45 CFR 170.213 where such 
are applicable to the data type or element, as appropriate; and
    (ii) Content and vocabulary standards at part 162 of this subchapter 
and 42 CFR 423.160 where required by law, or where such standards are 
applicable to the data type or element, as appropriate.
    (4) May use an updated version of any standard or all standards 
required under paragraphs (c)(1) or (3) of this section, where:
    (i) Use of the updated version of the standard is required by other 
applicable law, or
    (ii) Use of the updated version of the standard is not prohibited 
under other applicable law, provided that:
    (A) For content and vocabulary standards other than those at 45 CFR 
170.213, the Secretary has not prohibited use of the updated version of 
a standard for purposes of this section or part 170 of this subchapter;
    (B) For standards at 45 CFR 170.213 and 45 CFR 170.215, the National 
Coordinator has approved the updated version for use in the ONC Health 
IT Certification Program; and
    (C) Use of the updated version of a standard does not disrupt an end 
user's ability to access the data described in paragraph (b) of this 
section through the API described in paragraph (a) of this section.
    (d) Documentation requirements for APIs. For each API implemented in 
accordance with paragraph (a) of this section, a QHP issuer on a 
Federally-Facilitated Exchange must make publicly accessible, by posting 
directly on its website and/or via publicly accessible hyperlink(s), 
complete accompanying documentation that contains, at a minimum the 
information listed in this paragraph. For the purposes of this section, 
``publicly accessible'' means that any person using commonly available 
technology to browse the internet could access the information without 
any preconditions or additional steps, such as a fee for access to the 
documentation; a requirement to receive a copy of the material via 
email; a requirement to register or create an account to receive the 
documentation; or

[[Page 402]]

a requirement to read promotional material or agree to receive future 
communications from the organization making the documentation available;
    (1) API syntax, function names, required and optional parameters 
supported and their data types, return variables and their types/
structures, exceptions and exception handling methods and their returns;
    (2) The software components and configurations an application must 
use in order to successfully interact with the API and process its 
response(s); and
    (3) All applicable technical requirements and attributes necessary 
for an application to be registered with any authorization server(s) 
deployed in conjunction with the API.
    (e) Denial or discontinuation of access to the API. A QHP issuer on 
a Federally-Facilitated Exchange may deny or discontinue any third party 
application's connection to the API required under paragraph (a) of this 
section if the QHP issuer:
    (1) Reasonably determines, consistent with its security risk 
analysis under 45 CFR part 164 subpart C, that allowing an application 
to connect or remain connected to the API would present an unacceptable 
level of risk to the security of personally identifiable information, 
including protected health information, on the QHP issuer's systems; and
    (2) Makes this determination using objective, verifiable criteria 
that are applied fairly and consistently across all applications and 
developers through which enrollees seek to access their electronic 
health information as defined at Sec.  171.102 of this subchapter, 
including but not limited to criteria that may rely on automated 
monitoring and risk mitigation tools.
    (f) Coordination among payers. (1) A QHP issuer on a Federally-
facilitated Exchange must maintain a process for the electronic exchange 
of, at a minimum, the data classes and elements included in the content 
standard adopted at 45 CFR 170.213. Such information received by a QHP 
issuer on a Federally-facilitated Exchange must be incorporated into the 
QHP issuer's records about the current enrollee. With the approval and 
at the direction of a current or former enrollee or the enrollee's 
personal representative, a QHP issuer on a Federally-facilitated 
Exchange must:
    (i) Receive all such data for a current enrollee from any other 
payer that has provided coverage to the enrollee within the preceding 5 
years;
    (ii) At any time the enrollee is currently enrolled in the plan and 
up to 5 years after disenrollment, send all such data to any other payer 
that currently covers the enrollee or a payer the enrollee or the 
enrollee's personal representative specifically requests receive the 
data; and
    (iii) Send data received from another payer under this paragraph (f) 
in the electronic form and format it was received.
    (2) [Reserved]
    (g) Enrollee resources regarding privacy and security. A QHP issuer 
on a Federally-facilitated Exchange must provide in an easily accessible 
location on its public website and through other appropriate mechanisms 
through which it ordinarily communicates with current and former 
enrollees seeking to access their health information held by the QHP 
issuer, educational resources in non-technical, simple and easy-to-
understand language explaining at a minimum:
    (1) General information on steps the individual may consider taking 
to help protect the privacy and security of their health information, 
including factors to consider in selecting an application including 
secondary uses of data, and the importance of understanding the security 
and privacy practices of any application to which they will entrust 
their health information; and
    (2) An overview of which types of organizations or individuals are 
and are not likely to be HIPAA covered entities, the oversight 
responsibilities of the Office for Civil Rights (OCR) and the Federal 
Trade Commission (FTC), and how to submit a complaint to:
    (i) The HHS Office for Civil Rights (OCR); and
    (ii) The Federal Trade Commission (FTC).
    (h) Exception. (1) If a plan applying for QHP certification to be 
offered through a Federally-facilitated Exchange believes it cannot 
satisfy the

[[Page 403]]

requirements in paragraphs (a) through (g) of this section, the issuer 
must include as part of its QHP application a narrative justification 
describing the reasons why the plan cannot reasonably satisfy the 
requirements for the applicable plan year, the impact of non-compliance 
upon enrollees, the current or proposed means of providing health 
information to enrollees, and solutions and a timeline to achieve 
compliance with the requirements of this section.
    (2) The Federally-facilitated Exchange may grant an exception to the 
requirements in paragraphs (a) through (g) of this section if the 
Exchange determines that making such health plan available through such 
Exchange is in the interests of qualified individuals in the State or 
States in which such Exchange operates.
    (i) Applicability. A QHP issuer on an individual market Federally-
facilitated Exchange, not including QHP issuers offering only stand-
alone dental plans, must comply with the requirements in paragraphs (a) 
through (e) and (g) of this section beginning with plan years beginning 
on or after January 1, 2021, and with the requirements in paragraph (f) 
of this section beginning with plan years beginning on or after January 
1, 2022 with regard to data:
    (1) With a date of service on or after January 1, 2016; and
    (2) That are maintained by the QHP issuer for enrollees in QHPs.

[85 FR 25638, May 1, 2020]



Sec.  156.225  Marketing and Benefit Design of QHPs.

    A QHP issuer and its officials, employees, agents and 
representatives must--
    (a) State law applies. Comply with any applicable State laws and 
regulations regarding marketing by health insurance issuers; and
    (b) Non-discrimination. Not employ marketing practices or benefit 
designs that will have the effect of discouraging the enrollment of 
individuals with significant health needs in QHPs.



Sec.  156.230  Network adequacy standards.

    (a) General requirement. Each QHP issuer that uses a provider 
network must ensure that the provider network consisting of in-network 
providers, as available to all enrollees, meets the following 
standards--
    (1) Includes essential community providers in accordance with Sec.  
156.235;
    (2) Maintains a network that is sufficient in number and types of 
providers, including providers that specialize in mental health and 
substance abuse services, to assure that all services will be accessible 
without unreasonable delay; and,
    (3) Is consistent with the network adequacy provisions of section 
2702(c) of the PHS Act.
    (b) Access to provider directory. (1) A QHP issuer must make its 
provider directory for a QHP available to the Exchange for publication 
online in accordance with guidance from HHS and to potential enrollees 
in hard copy upon request. In the provider directory, a QHP issuer must 
identify providers that are not accepting new patients.
    (2) For plan years beginning on or after January 1, 2016, a QHP 
issuer must publish an up-to-date, accurate, and complete provider 
directory, including information on which providers are accepting new 
patients, the provider's location, contact information, specialty, 
medical group, and any institutional affiliations, in a manner that is 
easily accessible to plan enrollees, prospective enrollees, the State, 
the Exchange, HHS and OPM. A provider directory is easily accessible 
when--
    (i) The general public is able to view all of the current providers 
for a plan in the provider directory on the issuer's public Web site 
through a clearly identifiable link or tab and without creating or 
accessing an account or entering a policy number; and
    (ii) If a health plan issuer maintains multiple provider networks, 
the general public is able to easily discern which providers participate 
in which plans and which provider networks.
    (c) Increasing consumer transparency. A QHP issuer in a Federally-
facilitated Exchange must make available the information described in 
paragraph (b) of this section on its Web site in an HHS specified format 
and also submit this information to HHS, in a format and manner and at 
times determined by HHS.

[[Page 404]]

    (d) Provider transitions. A QHP issuer in a Federally-facilitated 
Exchange must--
    (1) Make a good faith effort to provide written notice of 
discontinuation of a provider 30 days prior to the effective date of the 
change or otherwise as soon as practicable, to enrollees who are 
patients seen on a regular basis by the provider or who receive primary 
care from the provider whose contract is being discontinued, 
irrespective of whether the contract is being discontinued due to a 
termination for cause or without cause, or due to a non-renewal;
    (2) In cases where a provider is terminated without cause, allow an 
enrollee in an active course of treatment to continue treatment until 
the treatment is complete or for 90 days, whichever is shorter, at in-
network cost-sharing rates.
    (i) For the purposes of paragraph (d)(2) of this section, active 
course of treatment means:
    (A) An ongoing course of treatment for a life-threatening condition, 
defined as a disease or condition for which likelihood of death is 
probable unless the course of the disease or condition is interrupted;
    (B) An ongoing course of treatment for a serious acute condition, 
defined as a disease or condition requiring complex ongoing care which 
the covered person is currently receiving, such as chemotherapy, 
radiation therapy, or post-operative visits;
    (C) The second or third trimester of pregnancy, through the 
postpartum period; or
    (D) An ongoing course of treatment for a health condition for which 
a treating physician or health care provider attests that discontinuing 
care by that physician or health care provider would worsen the 
condition or interfere with anticipated outcomes.
    (ii) Any QHP issuer decision made for a request for continuity of 
care under paragraph (d)(2) of this section must be subject to the 
health benefit plan's internal and external grievance and appeal 
processes in accordance with applicable State or Federal law or 
regulations.
    (e) Out-of-network cost sharing. Beginning for the 2018 and later 
benefit years, for a network to be deemed adequate, each QHP that uses a 
provider network must:
    (1) Notwithstanding Sec.  156.130(c), count the cost sharing paid by 
an enrollee for an essential health benefit provided by an out-of-
network ancillary provider in an in-network setting towards the 
enrollee's annual limitation on cost sharing; or
    (2) Provide a written notice to the enrollee by the longer of when 
the issuer would typically respond to a prior authorization request 
timely submitted, or 48 hours before the provision of the benefit, that 
additional costs may be incurred for an essential health benefit 
provided by an out-of- network ancillary provider in an in-network 
setting, including balance billing charges, unless such costs are 
prohibited under State law, and that any additional charges may not 
count toward the in-network annual limitation on cost sharing.

[77 FR 18469, Mar. 27, 2012, as amended at 80 FR 10873, Feb. 27, 2015; 
81 FR 12349, Mar. 8, 2016]



Sec.  156.235  Essential community providers.

    (a) General ECP standard. (1) A QHP issuer that uses a provider 
network 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) A plan applying for QHP certification to be offered through a 
Federally-facilitated Exchange has a sufficient number and geographic 
distribution of ECPs if it demonstrates in its QHP application that--
    (i) The network includes as participating practitioners at least a 
minimum percentage, as specified by HHS, of available essential 
community providers in each plan's service area. Multiple providers at a 
single location will count as a single essential community provider 
toward both the available essential community providers in the

[[Page 405]]

plan's service area and the issuer's satisfaction of the essential 
community provider participation standard; and
    (ii) The issuer of the plan offers contracts to--
    (A) All available Indian health care providers in the service area, 
applying the special terms and conditions required by Federal law and 
regulations as referenced in the recommended model QHP addendum for 
Indian health care providers developed by HHS; and
    (B) At least one ECP in each of the ECP categories (Federally 
Qualified Health Centers, Ryan White Providers, Family Planning 
Providers, Indian Health Care Providers, Hospitals and other ECP 
providers) 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.
    (3) If a plan applying for QHP certification to be offered through a 
Federally-facilitated Exchange does not satisfy the ECP standard 
described in paragraph (a)(2) of this section, the issuer must include 
as part of its QHP application a narrative justification describing how 
the plan's provider network provides an adequate level of service for 
low-income enrollees or individuals residing in Health Professional 
Shortage Areas within the plan's service area and how the plan's 
provider network will be strengthened toward satisfaction of the ECP 
standard prior to the start of the benefit year.
    (4) Nothing in paragraphs (a)(1) through (3) of this section 
requires any QHP to provide coverage for any specific medical procedure.
    (5) A plan that provides a majority of covered professional services 
through physicians employed by the issuer or through a single contracted 
medical group may instead comply with the alternate standard described 
in paragraph (b) of this section.
    (b) Alternate ECP standard. (1) A plan described in paragraph (a)(5) 
of this section must have a sufficient number and geographic 
distribution of employed providers and hospital facilities, or providers 
of its contracted medical group and hospital facilities, to ensure 
reasonable and timely access for low-income individuals or individuals 
residing in Health Professional Shortage Areas within the plan's service 
area, in accordance with the Exchange's network adequacy standards.
    (2) A plan described in paragraph (a)(5) of this section applying 
for QHP certification to be offered through a Federally-facilitated 
Exchange has a sufficient number and geographic distribution of employed 
or contracted providers if it demonstrates in its QHP application that--
    (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 
essential community providers in the plan's service area. Multiple 
providers at a single location will count as a single essential 
community provider toward both the available essential community 
providers in the plan's service area and the issuer's satisfaction of 
the essential community provider participation standard; and
    (ii) The issuer's integrated delivery system provides all of the 
categories of services provided by entities in each of the ECP 
categories in each county in the plan's service area as outlined in the 
general ECP standard, or otherwise offers a contract to at least one ECP 
outside of the issuer's integrated delivery system per ECP category in 
each county in the plan's service area that can provide those services 
to low-income, medically underserved individuals.
    (3) If a plan does not satisfy the alternate ECP standard described 
in paragraph (b)(2) of this section, the issuer must include as part of 
its QHP application a narrative justification describing how the plan's 
provider networks provide an adequate level of service for low-income 
enrollees or individuals residing in Health Professional Shortage Areas 
within the plan's service area and how the plan's provider network will 
be strengthened toward satisfaction of the ECP standard prior to the 
start of the benefit year.
    (c) Definition. An essential community provider is a provider that 
serves predominantly low-income, medically underserved individuals, 
including a health care provider defined in section

[[Page 406]]

340B(a)(4) of the PHS Act; or described in section 1927(c)(1)(D)(i)(IV) 
of the Act as set forth by section 221 of Pub. L. 111-8; or a State-
owned family planning service site, or governmental family planning 
service site, or not-for-profit family planning service site that does 
not receive Federal funding under special programs, including under 
Title X of the PHS Act, or an Indian health care provider, unless any of 
the above providers has lost its status under either of these sections, 
340(B) of the PHS Act or 1927 of the Act as a result of violating 
Federal law.
    (d) Payment rates. Nothing in paragraph (a) of this section may be 
construed to require a QHP issuer to contract with an ECP if such 
provider refuses to accept the same rates and contract provisions 
included in contracts accepted by similarly situated providers.
    (e) Payment of Federally qualified health centers. If an item or 
service covered by a QHP is provided by a Federally-qualified health 
center (as defined in section 1905(l)(2)(B) of the Act) to an enrollee 
of a QHP, the QHP issuer must pay the Federally qualified health center 
for the item or service an amount that is not less than the amount of 
payment that would have been paid to the center under section 1902(bb) 
of the Act for such item or service. Nothing in this paragraph (e) 
precludes a QHP issuer and Federally-qualified health center from 
agreeing upon payment rates other than those that would have been paid 
to the center under section 1902(bb) of the Act, as long as that rate is 
at least equal to the generally applicable payment rate of the issuer 
described in paragraph (d) of this section.

[80 FR 10873, Feb. 27, 2015, as amended at 81 FR 12350, Mar. 8, 2016; 81 
FR 94181, Dec. 22, 2016]



Sec.  156.245  Treatment of direct primary care medical homes.

    A QHP issuer may provide coverage through a direct primary care 
medical home that meets criteria established by HHS, so long as the QHP 
meets all requirements that are otherwise applicable and the services 
covered by the direct primary care medical home are coordinated with the 
QHP issuer.



Sec.  156.250  Meaningful access to qualified health plan information.

    A QHP issuer must provide all information that is critical for 
obtaining health insurance coverage or access to health care services 
through the QHP, including applications, forms, and notices, to 
qualified individuals, applicants, qualified employers, qualified 
employees, and enrollees in accordance with the standards described in 
Sec.  155.205(c) of this subchapter. Information is deemed to be 
critical for obtaining health insurance coverage or access to health 
care services if the issuer is required by law or regulation to provide 
the document to a qualified individual, applicant, qualified employer, 
qualified employee, or enrollee.

[80 FR 10874, Feb. 27, 2015]



Sec.  156.255  Rating variations.

    (a) Rating areas. A QHP issuer, including an issuer of a multi-State 
plan, may vary premiums by the geographic rating area established under 
section 2701(a)(2) of the PHS Act.
    (b) Same premium rates. A QHP issuer must charge the same premium 
rate without regard to whether the plan is offered through an Exchange, 
or whether the plan is offered directly from the issuer or through an 
agent.



Sec.  156.260  Enrollment periods for qualified individuals.

    (a) Individual market requirement. A QHP issuer must:
    (1) Enroll a qualified individual during the initial and annual open 
enrollment periods described in Sec.  155.410(b) and (e) of this 
subchapter, and abide by the effective dates of coverage established by 
the Exchange in accordance with Sec.  155.410(c) and (f) of this 
subchapter; and
    (2) Make available, at a minimum, special enrollment periods 
described in Sec.  155.420(d) of this subchapter, for QHPs and abide by 
the effective dates of coverage established by the Exchange in 
accordance with Sec.  155.420(b) of this subchapter.
    (b) Notification of effective date. A QHP issuer must notify a 
qualified individual of his or her effective date of coverage.

[[Page 407]]



Sec.  156.265  Enrollment process for qualified individuals.

    (a) General requirement. A QHP issuer must process enrollment in 
accordance with this section.
    (b) Enrollment through the Exchange for the individual market. (1) A 
QHP issuer must enroll a qualified individual only if the Exchange--
    (i) Notifies the QHP issuer that the individual is a qualified 
individual; and
    (ii) Transmits information to the QHP issuer as provided in Sec.  
155.400(a) of this subchapter.
    (2) If an applicant initiates enrollment directly with the QHP 
issuer for enrollment through the Exchange, the QHP issuer must either--
    (i) Direct the individual to file an application with the Exchange 
in accordance with Sec.  155.310, or
    (ii) Ensure the applicant's completion of an eligibility 
verification and enrollment application through the Exchange Internet 
Web site as described in Sec.  155.405, or ensure that the eligibility 
application information is submitted for an eligibility determination 
through the Exchange-approved Web service subject to meeting the 
requirements in paragraph (b)(3) through (5) of this section;
    (3) When an Internet Web site of an issuer is used to complete the 
Exchange eligibility application outlined in this section, at a minimum, 
the Internet Web site must:
    (i) Use exactly the same eligibility application language as appears 
in the FFE Single Streamlined Application required in Sec.  155.405 of 
this subchapter, unless HHS approves a deviation;
    (ii) Ensure that all necessary information for the consumer's 
applicable eligibility circumstances are submitted through the Exchange-
approved Web service;
    (iii) Ensure that the process used for consumers to complete the 
eligibility application complies with all applicable Exchange standards, 
including Sec. Sec.  155.230 and 155.260(b) of this subchapter; and
    (iv) Differentially display all standardized options in accordance 
with the requirements under Sec.  155.205(b)(1) in a manner consistent 
with that adopted by HHS for display on the Federally-facilitated 
Exchange Web site, unless HHS approves a deviation.
    (4) An issuer must obtain HHS approval that the requirements of this 
section have been met prior to completing an applicant's eligibility 
application through the issuer's Internet Web site.
    (5) HHS or its designee may periodically monitor and audit an agent, 
broker, or issuer to assess its compliance with the applicable 
requirements of this section.
    (c) Acceptance of enrollment information. A QHP issuer must accept 
enrollment information consistent with the privacy and security 
requirements established by the Exchange in accordance with Sec.  
155.260 and in an electronic format that is consistent with Sec.  
155.270.
    (d) Premium payment. A QHP issuer must follow the premium payment 
process established by the Exchange in accordance with Sec.  155.240 of 
this subchapter and the payment rules established in Sec.  155.400(e) of 
this subchapter.
    (e) Enrollment information package. A QHP issuer must provide new 
enrollees an enrollment information package that is compliant with 
accessibility and readability standards established in Sec.  155.230(b).
    (f) Enrollment reconciliation. A QHP issuer must reconcile 
enrollment files with the Exchange in a format specified by the Exchange 
(or, for QHP issuers in State Exchanges on the Federal Platform, the 
Federal Platform) and resolve assigned updates no less than once a month 
in accordance with Sec.  155.400(d) of this subchapter, using the most 
recent enrollment information that is available and that has been 
verified to the best of the issuer's knowledge or belief.
    (g) Timely updates to enrollment records. A QHP issuer offering 
plans through an Exchange must, in a format specified by the Exchange 
(or, for QHP issuers in State Exchanges on the Federal Platform, the 
Federal Platform), either:
    (1) Verify to the Exchange (or, for QHP issuers in State Exchanges 
on the Federal Platform, the Federal Platform) that the information in 
the enrollment reconciliation file received from the Exchange (or, for 
QHP issuers in State Exchanges on the Federal

[[Page 408]]

Platform, the Federal Platform) accurately reflects its enrollment data 
for the applicable benefit year in its next enrollment reconciliation 
file submission to the Exchange (or, for QHP issuers in State Exchanges 
on the Federal Platform, the Federal Platform), and update its internal 
enrollment records accordingly; or
    (2) Describe to the Exchange (or for QHP issuers in State Exchanges 
on the Federal Platform, the Federal Platform) within one reconciliation 
cycle any discrepancy it identifies in the enrollment reconciliation 
files it received from the Exchange (or for QHP issuers in State 
Exchanges on the Federal Platform, the Federal Platform).

[77 FR 18469, Mar. 27, 2012, as amended at 78 FR 76218, Dec. 17, 2013; 
79 FR 30351, May 27, 2014; 80 FR 10874, Feb. 27, 2015; 81 FR 12350, Mar. 
8, 2016; 81 FR 94181, Dec. 22, 2016; 85 FR 29261, May 14, 2020]



Sec.  156.270  Termination of coverage or enrollment for qualified
individuals.

    (a) General requirement. A QHP issuer may only terminate enrollment 
in a QHP through the Exchange as permitted by the Exchange in accordance 
with Sec.  155.430(b) of this subchapter. (See also Sec.  147.106 of 
this subchapter for termination of coverage.)
    (b) Termination of coverage or enrollment notice requirement. If a 
QHP issuer terminates an enrollee's coverage or enrollment in a QHP 
through the Exchange in accordance with Sec.  155.430(b) of this 
subchapter, the QHP issuer must, promptly and without undue delay:
    (1) Provide the enrollee with a notice of termination that includes 
the termination effective date and reason for termination.
    (2) [Reserved]
    (c) Termination of coverage or enrollment due to non-payment of 
premium. A QHP issuer must establish a standard policy for the 
termination of enrollment of enrollees through the Exchange due to non-
payment of premium as permitted by the Exchange in Sec.  
155.430(b)(2)(ii) of this subchapter. This policy for the termination of 
enrollment:
    (1) Must include the grace period for enrollees receiving advance 
payments of the premium tax credits as described in paragraph (d) of 
this section; and
    (2) Must be applied uniformly to enrollees in similar circumstances.
    (d) Grace period for recipients of advance payments of the premium 
tax credit. A QHP issuer must provide a grace period of 3 consecutive 
months for an enrollee, who when failing to timely pay premiums, is 
receiving advance payments of the premium tax credit. During the grace 
period, the QHP issuer must:
    (1) Pay all appropriate claims for services rendered to the enrollee 
during the first month of the grace period and may pend claims for 
services rendered to the enrollee in the second and third months of the 
grace period;
    (2) Notify HHS of such non-payment; and,
    (3) Notify providers of the possibility for denied claims when an 
enrollee is in the second and third months of the grace period.
    (e) Advance payments of the premium tax credit. For the 3-month 
grace period described in paragraph (d) of this section, a QHP issuer 
must:
    (1) Continue to collect advance payments of the premium tax credit 
on behalf of the enrollee from the Department of the Treasury.
    (2) Return advance payments of the premium tax credit paid on the 
behalf of such enrollee for the second and third months of the grace 
period if the enrollee exhausts the grace period as described in 
paragraph (g) of this section.
    (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.
    (g) Exhaustion of grace period. If an enrollee receiving advance 
payments of the premium tax credit exhausts the 3-month grace period in 
paragraph (d) of this section without paying all outstanding premiums, 
subject to a premium payment threshold implemented under Sec.  
155.400(g) of this subchapter, if applicable, the QHP issuer must 
terminate the enrollee's enrollment through the Exchange on the 
effective date described in Sec.  155.430(d)(4) of this subchapter, 
provided that the QHP issuer

[[Page 409]]

meets the notice requirement specified in paragraph (b) of this section.
    (h) Records of termination of coverage. QHP issuers must maintain 
records in accordance with Exchange standards established in accordance 
with Sec.  155.430(c) of this subchapter.
    (i) Effective date of termination of coverage or enrollment. QHP 
issuers must abide by the termination of coverage or enrollment 
effective dates described in Sec.  155.430(d) of this subchapter.
    (j) Operational instructions. QHP issuers must follow the 
transaction rules established by the Exchange in accordance with Sec.  
155.430(e) of this subchapter.

[77 FR 18469, Mar. 27, 2012, as amended at 78 FR 42322, July 15, 2013; 
78 FR 54143, Aug. 30, 2013; 79 FR 30351, May 27, 2014; 80 FR 10874, Feb. 
27, 2015; 81 FR 12350, Mar. 8, 2016; 81 FR 53032, Aug. 11, 2016; 85 FR 
29261, May 14, 2020]



Sec.  156.272  Issuer participation for the full plan year.

    (a) An issuer offering a QHP through an individual market Exchange 
must make the QHP available for enrollment through the Exchange for the 
full plan year for which the plan was certified, including to eligible 
enrollees during limited open enrollment periods, unless a basis for 
suppression under Sec.  156.815 applies.
    (b) Unless a basis for suppression under Sec.  156.815 applies, an 
issuer offering a QHP through a SHOP must make the QHP available for 
enrollment through the SHOP for the full plan year for which the QHP was 
certified.
    (c) An issuer offering a QHP through a Federally-facilitated 
Exchange or a Federally-facilitated SHOP that does not comply with 
paragraph (a) or (b) of this section may, at the discretion of HHS, be 
precluded from offering QHPs in a Federally-facilitated Exchange or 
Federally-facilitated SHOP for up to the two succeeding plan years.

[81 FR 94181, Dec. 22, 2016]



Sec.  156.275  Accreditation of QHP issuers.

    (a) General requirement. A QHP issuer must:
    (1) Be accredited on the basis of local performance of its QHPs in 
the following categories by an accrediting entity recognized by HHS:
    (i) Clinical quality measures, such as the Healthcare Effectiveness 
Data and Information Set;
    (ii) Patient experience ratings on a standardized CAHPS survey;
    (iii) Consumer access;
    (iv) Utilization management;
    (v) Quality assurance;
    (vi) Provider credentialing;
    (vii) Complaints and appeals;
    (viii) Network adequacy and access; and
    (ix) Patient information programs, and
    (2) Authorize the accrediting entity that accredits the QHP issuer 
to release to the Exchange and HHS a copy of its most recent 
accreditation survey, together with any survey-related information that 
HHS may require, such as corrective action plans and summaries of 
findings.
    (b) Timeframe for accreditation. A QHP issuer must be accredited 
within the timeframe established by the Exchange in accordance with 
Sec.  155.1045 of this subchapter. The QHP issuer must maintain 
accreditation so long as the QHP issuer offers QHPs.
    (c) Accreditation--(1) Recognition of accrediting entity by HHS--(i) 
Application. An accrediting entity may apply to HHS for recognition. An 
application must include the documentation described in paragraph (c)(4) 
of this section and demonstrate, in a concise and organized fashion how 
the accrediting entity meets the requirements of paragraphs (c)(2) and 
(3) of this section.
    (ii) Proposed notice. Within 60 days of receiving a complete 
application as described in paragraph (c)(1)(i) of this section, HHS 
will publish a notice in the Federal Register identifying the 
accrediting entity making the request, summarizing HHS's analysis of 
whether the accrediting entity meets the criteria described in 
paragraphs (c)(2) and (3) of this section, and providing no less than a 
30-day public comment period about whether HHS should recognize the 
accrediting entity.
    (iii) Final notice. After the close of the comment period described 
in paragraph (c)(1)(ii) of this section, HHS will notify the public in 
the Federal Register of the names of the accrediting entities recognized 
and those not recognized as accrediting entities by the

[[Page 410]]

Secretary of HHS to provide accreditation of QHPs.
    (iv) Other recognition. Upon completion of conditions listed in 
paragraphs (c)(2), (3), and (4) of this section, HHS recognized, and 
provided notice to the public in the Federal Register, the National 
Committee for Quality Assurance (NCQA) and URAC as accrediting entities 
by the Secretary of HHS to provide accreditation of QHPs meeting the 
requirement of this section.
    (2)(i) Scope of accreditation. Subject to paragraphs (c)(2)(ii), 
(iii), and (iv) of this section, recognized accrediting entities must 
provide accreditation within the categories identified in paragraphs 
(a)(1) of this section.
    (ii) Clinical quality measures. Recognized accrediting entities must 
include a clinical quality measure set in their accreditation standards 
for health plans that:
    (A) Spans a breadth of conditions and domains, including, but not 
limited to, preventive care, mental health and substance abuse 
disorders, chronic care, and acute care.
    (B) Includes measures that are applicable to adults and measures 
that are applicable to children.
    (C) Aligns with the priorities of the National Strategy for Quality 
Improvement in Health Care issued by the Secretary of HHS and submitted 
to Congress on March 12, 2011;
    (D) Only includes measures that are either developed or adopted by a 
voluntary consensus standards setting body (such as those described in 
the National Technology and Transfer Advancement of Act of 1995 (NTTAA) 
and Office of Management and Budget (OMB) Circular A-119 (1998)) or, 
where appropriate endorsed measures are unavailable, are in common use 
for health plan quality measurement and meet health plan industry 
standards; and
    (E) Is evidence-based.
    (iii) Level of accreditation. Recognized accrediting entities must 
provide accreditation at the Exchange product type level unless the 
product type level of accreditation is not methodologically sound. In 
such cases, the recognized accrediting entity must demonstrate that the 
Exchange product type level accreditation is not methodologically sound 
as a condition of the Exchange granting an exception to authorize 
accreditation at an aggregated level.
    (iv) Network adequacy. The network adequacy standards for 
accreditation used by the recognized accrediting entities must, at a 
minimum, be consistent with the general requirements for network 
adequacy for QHP issuers codified in Sec.  156.230(a)(2) and (a)(3).
    (3) Methodological and scoring criteria for accreditation. 
Recognized accrediting entities must use transparent and rigorous 
methodological and scoring criteria.
    (4) Documentation. An accrediting entity applying to be recognized 
under the process described in (c)(1) of this section must provide the 
following documentation:
    (i) To be recognized, an accrediting entity must provide current 
accreditation standards and requirements, processes and measure 
specifications for performance measures to demonstrate that it meets the 
conditions described in paragraphs (c)(2) and (3) of this section to 
HHS.
    (ii) Recognized accrediting entities must provide to HHS any 
proposed changes or updates to the accreditation standards and 
requirements, processes, and measure specifications for performance 
measures with 60 days notice prior to public notification.
    (5) Data sharing requirements between the recognized accrediting 
entities and Exchanges. When authorized by an accredited QHP issuer 
pursuant to paragraph (a)(2) of this section, recognized accrediting 
entities must provide the following QHP issuer's accreditation survey 
data elements to the Exchange, other than personally identifiable 
information (as described in OMB Memorandum M-07-16), in which the 
issuer plans to operate one or more QHPs during the annual certification 
period or as changes occur to these data throughout the coverage year--
the name, address, Health Insurance Oversight System (HIOS) issuer 
identifier, and unique accreditation identifier(s) of the QHP issuer and 
its accredited product line(s) and type(s) which have been released; and 
for each accredited product type:

[[Page 411]]

    (i) HIOS product identifier (if applicable);
    (ii) Accreditation status, survey type, or level (if applicable);
    (iii) Accreditation score;
    (iv) Expiration date of accreditation; and
    (v) Clinical quality measure results and adult and child CAHPS 
measure survey results (and corresponding expiration dates of these 
data) at the level specified by the Exchange.

[77 FR 18469, Mar. 27, 2012, as amended at 77 FR 42671, July 20, 2012; 
78 FR 12869, Feb. 25, 2013]



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

    (a) State opt-out of abortion coverage. A QHP issuer must comply 
with a State law that prohibits abortion coverage in QHPs.
    (b) Termination of opt out. A QHP issuer may provide coverage of 
abortion services through the Exchange in a State described in paragraph 
(a) of this section if the State repeals such law.
    (c) Voluntary choice of coverage of abortion services. 
Notwithstanding any other provision of title I of the Affordable Care 
Act (or any other amendment made under that title):
    (1) Nothing in title I of the Affordable Care Act (or any amendments 
by that title) shall be construed to require a QHP issuer to provide 
coverage of services described in paragraph (d) of this section as part 
of its essential health benefits, as described in section 1302(b) of the 
Affordable Care Act, for any plan year.
    (2) Subject to paragraphs (a) and (b) of this section, the QHP 
issuer must determine whether or not the QHP provides coverage of 
services described in paragraph (d) of this section as part of such 
benefits for the plan year.
    (d) Abortion services--(1) Abortions for which public funding is 
prohibited. The services described in this paragraph are abortion 
services for which the expenditure of Federal funds appropriated for HHS 
is not permitted, based on the law in effect 6 months before the 
beginning of the plan year involved.
    (2) Abortions for which public funding is allowed. The services 
described in this paragraph are abortion services for which the 
expenditure of Federal funds appropriated for HHS is permitted, based on 
the law in effect 6 months before the beginning of the plan year 
involved.
    (e) Prohibition on the use of Federal funds. (1) If a QHP provides 
coverage of services described in paragraph (d)(1) of this section, the 
QHP issuer must not use any amount attributable to any of the following 
for the purposes of paying for such services:
    (i) The credit under section 36B of the Code and the amount (if any) 
of the advance payment of the credit under section 1412 of the 
Affordable Care Act;
    (ii) Any cost-sharing reduction under section 1402 of the Affordable 
Care Act and the amount (if any) of the advance payments of the 
reduction under section 1412 of the Affordable Care Act.
    (2) Establishment of allocation accounts. In the case of a QHP to 
which paragraph (e)(1) of this section applies, the QHP issuer must:
    (i) Collect from each enrollee in the QHP (without regard to the 
enrollee's age, sex, or family status) a separate payment for each of 
the following:
    (A) An amount equal to the portion of the premium to be paid 
directly by the enrollee for coverage under the QHP of services other 
than services described in (d)(1) of this section (after reductions for 
credits and cost-sharing reductions described in paragraph (e)(1) of 
this section); and
    (B) An amount equal to the actuarial value of the coverage of 
services described in paragraph (d)(1) of this section.
    (ii) Beginning on or before the first billing cycle following August 
26, 2020, to satisfy the obligation in paragraph (e)(2)(i) of this 
section--
    (A) Send to each policy holder of a QHP monthly bills for each of 
the amounts specified in paragraphs (e)(2)(i)(A) and (B) of this 
section, either by sending separate paper bills which may be in the same 
envelope or mailing, or by sending separate bills electronically, which 
must be in separate emails or electronic communications; and
    (B) Instruct the policy holder to pay each of the amounts specified 
in paragraphs (e)(2)(i)(A) and (B) of this section through separate 
transactions.

[[Page 412]]

Notwithstanding this instruction, if the policy holder fails to pay each 
of these amounts in a separate transaction as instructed by the issuer, 
the issuer may not refuse the payment and initiate a grace period or 
terminate the policy holder's QHP coverage on this basis.
    (iii) Deposit all such separate payments into separate allocation 
accounts as provided in paragraph (e)(3) of this section. In the case of 
an enrollee whose premium for coverage under the QHP is paid through 
employee payroll deposit, the separate payments required under paragraph 
(e)(2)(i) of this section shall each be paid by a separate deposit.
    (3) Segregation of funds. (i) The QHP issuer to which paragraph 
(e)(1) of this section applies must establish allocation accounts 
described in paragraph (e)(3)(ii) of this section for enrollees 
receiving the amounts described in paragraph (e)(1) of this section.
    (ii) Allocation accounts. The QHP issuer to which paragraph (e)(1) 
of this section applies must deposit:
    (A) All payments described in paragraph (e)(2)(i)(A) of this section 
into a separate account that consists solely of such payments and that 
is used exclusively to pay for services other than the services 
described in paragraph (d)(1) of this section;
    (B) All payments described in paragraph (e)(2)(i)(B) of this section 
into a separate account that consists solely of such payments and that 
is used exclusively to pay for services described in paragraph (d)(1) of 
this section.
    (4) Actuarial value. The QHP issuer must estimate the basic per 
enrollee, per month cost, determined on an average actuarial basis, for 
including coverage under the QHP of services described in paragraph 
(d)(1) of this section. In making such an estimate, the QHP issuer:
    (i) May take into account the impact on overall costs of the 
inclusion of such coverage, but may not take into account any cost 
reduction estimated to result from such services, including prenatal 
care, delivery, or postnatal care;
    (ii) Must estimate such costs as if such coverage were included for 
the entire population covered; and
    (iii) May not estimate such a cost at less than one dollar per 
enrollee, per month.
    (5) Ensuring compliance with segregation requirements. (i) Subject 
to paragraph (e)(5)(iv) of this section, the QHP issuer must comply with 
the efforts or direction of the State health insurance commissioner to 
ensure compliance with this section through the segregation of QHP funds 
in accordance with applicable provisions of generally accepted 
accounting requirements, circulars on funds management of the Office of 
Management and Budget and guidance on accounting of the Government 
Accountability Office.
    (ii) Each QHP issuer that participates in an Exchange and offers 
coverage for services described in paragraph (d)(1) of this section 
should, as a condition of participating in an Exchange, submit a plan 
that details its process and methodology for meeting the requirements of 
section 1303(b)(2)(C), (D), and (E) (hereinafter, ``segregation plan'') 
to the State health insurance commissioner. The segregation plan should 
describe the QHP issuer's financial accounting systems, including 
appropriate accounting documentation and internal controls, that would 
ensure the segregation of funds required by section 1303(b)(2)(C), (D), 
and (E), and should include:
    (A) The financial accounting systems, including accounting 
documentation and internal controls, that would ensure the appropriate 
segregation of payments received for coverage of services described in 
paragraph (d)(1) of this section from those received for coverage of all 
other services;
    (B) The financial accounting systems, including accounting 
documentation and internal controls, that would ensure that all 
expenditures for services described in paragraph (d)(1) of this section 
are reimbursed from the appropriate account; and
    (C) An explanation of how the QHP issuer's systems, accounting 
documentation, and controls meet the requirements for segregation 
accounts under the law.
    (iii) Each QHP issuer participating in the Exchange must provide to 
the State insurance commissioner an annual assurance statement attesting

[[Page 413]]

that the plan has complied with section 1303 of the Affordable Care Act 
and applicable regulations.
    (iv) Nothing in this clause shall prohibit the right of an 
individual or QHP issuer to appeal such action in courts of competent 
jurisdiction.
    (f) Rules relating to notice--(1) Notice. A QHP that provides for 
coverage of services in paragraph (d)(1) of this section, must provide a 
notice to enrollees, only as part of the summary of benefits and 
coverage explanation, at the time of enrollment, of such coverage.
    (2) Rules relating to payments. The notice described in paragraph 
(f)(1) of this section, any advertising used by the QHP issuer with 
respect to the QHP, any information provided by the Exchange, and any 
other information specified by HHS must provide information only with 
respect to the total amount of the combined payments for services 
described in paragraph (d)(1) of this section and other services covered 
by the QHP.
    (g) No discrimination on basis of provision of abortion. No QHP 
offered through an Exchange may discriminate against any individual 
health care provider or health care facility because of its 
unwillingness to provide, pay for, provide coverage of, or refer for 
abortions.
    (h) Application of State and Federal laws regarding abortions--(1) 
No preemption of State laws regarding abortion. Nothing in the 
Affordable Care Act shall be construed to preempt or otherwise have any 
effect on State laws regarding the prohibition of (or requirement of) 
coverage, funding, or procedural requirements on abortions, including 
parental notification or consent for the performance of an abortion on a 
minor.
    (2) No effect on Federal laws regarding abortion. Nothing in the 
Affordable Care Act shall be construed to have any effect on Federal 
laws regarding:
    (i) Conscience protection;
    (ii) Willingness or refusal to provide abortion; and
    (iii) Discrimination on the basis of the willingness or refusal to 
provide, pay for, cover, or refer for abortion or to provide or 
participate in training to provide abortion.
    (3) No effect on Federal civil rights law. Nothing in section 
1303(c) of the Affordable Care Act shall alter the rights and 
obligations of employees and employers under Title VII of the Civil 
Rights Act of 1964.
    (i) Application of emergency services laws. Nothing in the 
Affordable Care Act shall be construed to relieve any health care 
provider from providing emergency services as required by State or 
Federal law, including section 1867 of the Act (popularly known as 
``EMTALA'').

[77 FR 18469, Mar. 27, 2012, as amended at 84 FR 71710, Dec. 27, 2019; 
85 FR 2888, Jan. 17, 2020; 85 FR 27629, May 8, 2020]



Sec.  156.285  Additional standards specific to SHOP for plan years
beginning prior to January 1, 2018.

    (a) SHOP rating and premium payment requirements. QHP issuers 
offering a QHP through a SHOP must:
    (1) Accept payment from the SHOP on behalf of a qualified employer 
or an enrollee in accordance with Sec.  155.705(b)(4) of this 
subchapter;
    (2) Adhere to the SHOP timeline for rate setting as established in 
Sec.  155.705(b)(6) of this subchapter; and
    (3) Charge the same contract rate for a plan year.
    (4)(i) Adhere to the premium rating standards described in Sec.  
147.102 of this subchapter regardless of whether the QHP being sold 
through the SHOP is sold in the small group market or the large group 
market; and
    (ii) Effective in plan years beginning on or after January 1, 2015, 
a QHP issuer in a Federally-facilitated SHOP may not offer to an 
employer premiums that are based on average enrollee premium amounts 
under Sec.  147.102(c)(3) of this subchapter, if the employer elects to 
offer coverage to its employees under Sec.  155.705(b)(3)(iv)(A) of this 
subchapter. This paragraph (a)(4)(ii) also applies to stand-alone dental 
plans in a Federally-facilitated SHOP, if the employer elects to offer 
coverage to its employees under Sec.  155.705(b)(3)(v)(B) of this 
subchapter.
    (b) Enrollment periods for the SHOP. QHP issuers offering a QHP 
through the SHOP must:
    (1) Enroll a qualified employee in accordance with the qualified 
employer's

[[Page 414]]

initial and annual employee open enrollment periods described in Sec.  
155.725 of this subchapter;
    (2) Provide special enrollment periods as described in Sec.  
155.725(j);
    (3) Provide an enrollment period for an employee who becomes a 
qualified employee outside of the initial or annual open enrollment 
period as described in Sec.  155.725(g) of this subchapter; and
    (4) Adhere to effective dates of coverage established in accordance 
with Sec.  155.725 of this subchapter.
    (c) Enrollment process for the SHOP. A QHP issuer offering a QHP 
through the SHOP must:
    (1) Adhere to the enrollment timeline and process for the SHOP as 
described in Sec.  155.720(b) of this subchapter;
    (2) Receive enrollment information in an electronic format, in 
accordance with the requirements in Sec. Sec.  155.260 and 155.270 of 
this subchapter, from the SHOP as described in Sec.  155.720(c);
    (3) Notify new enrollees of their effective date of coverage 
consistent with Sec.  155.720(e) of this subchapter.
    (4) Provide new enrollees with the enrollment information package as 
described in Sec.  156.265(e);
    (5) Send enrollment reconciliation files on at least a monthly 
basis, and, in a Federally-facilitated SHOP, according to a process, 
timeline, and file format established by the Federally-facilitated SHOP;
    (6) Acknowledge receipt of enrollment information in accordance with 
SHOP standards; and
    (7) Enroll all qualified employees consistent with the plan year of 
the applicable qualified employer.
    (8) A QHP issuer must enroll a qualified employee only if the SHOP--
    (i) Notifies the QHP issuer that the employee is a qualified 
employee;
    (ii) Transmits information to the QHP issuer as provided in Sec.  
155.400(a) of this subchapter; and
    (iii) Effective for QHPs offered through a Federally-facilitated 
SHOP in plan years beginning on or after January 1, 2015, does not send 
a cancellation notice to the QHP issuer prior to the effective date of 
coverage.
    (d) Termination of coverage or enrollment in the SHOP. QHP issuers 
offering a QHP through the SHOP must:
    (1) Comply with the following requirements with respect to 
termination of enrollees in the SHOP:
    (i)(A) Effective in plan years beginning on or after January 1, 
2015, requirements regarding termination of coverage or enrollment 
established in Sec.  155.735 of this subchapter, if applicable to the 
coverage or enrollment being terminated; otherwise
    (B) General requirements regarding termination of coverage or 
enrollment established in Sec.  156.270(a).
    (ii) If a QHP issuer terminates an enrollee's coverage or enrollment 
through the SHOP in accordance with Sec.  155.735(d)(1)(iii) or (v) of 
this subchapter, the QHP issuer must notify the qualified employer and 
the enrollee of the termination. Such notice must include the 
termination effective date and reason for termination, and must be sent 
within 3 business days if an electronic notice is sent, and within 5 
business days if a mailed hard copy notice is sent. When a primary 
subscriber and his or her dependents live at the same address, a 
separate termination notice need not be sent to each dependent at that 
address, provided that the notice sent to each primary subscriber at 
that address contains all required information about the termination for 
the primary subscriber and his or her dependents at that address.
    (iii)(A) Effective in plan years beginning on or after January 1, 
2015, requirements regarding termination of coverage or enrollment 
effective dates as set forth in Sec.  155.735 of this subchapter, if 
applicable to the coverage or enrollment being terminated; otherwise
    (B) Requirements regarding termination of coverage or enrollment 
effective dates as set forth in Sec.  156.270(i).
    (2) [Reserved]
    (e) Participation rules. QHP issuers offering a QHP through the SHOP 
may impose group participation rules for the offering of health 
insurance coverage in connection with a QHP only if and to the extent 
authorized by the SHOP in accordance with Sec.  155.705 of this 
subchapter.
    (f) Applicability date. The provisions of this section apply for 
plan years beginning prior to January 1, 2018. Additional standards 
specific to SHOP for

[[Page 415]]

plan years beginning on or after January 1, 2018 are in Sec.  156.286.

[77 FR 18469, Mar. 27, 2012, as amended at 78 FR 15535, Mar. 11, 2013; 
78 FR 33240, June 4, 2013; 78 FR 54143, Aug. 30, 2013; 79 FR 13840, Mar. 
11, 2014; 80 FR 10874, Feb. 27, 2015; 80 FR 10875, Feb. 27, 2015; 81 FR 
12350, Mar. 8, 2016; 83 FR 17069, Apr. 17, 2018]



Sec.  156.286  Additional standards specific to SHOP for plan years
beginning on or after January 1, 2018.

    (a) SHOP rating and premium payment requirements. QHP issuers 
offering a QHP through a SHOP must:
    (1) Accept payment from a qualified employer or an enrollee, or a 
SHOP on behalf of a qualified employer or enrollee, in accordance with 
applicable SHOP requirements.
    (2) Adhere to the SHOP timeline for rate setting as established in 
Sec.  155.706(b)(6) of this subchapter;
    (3) Charge the same contract rate for a plan year; and
    (4) Adhere to the premium rating standards described in Sec.  
147.102 of this subchapter regardless of whether the QHP being sold 
through the SHOP is sold in the small group market or the large group 
market.
    (b) Enrollment periods and processes for the SHOP. QHP issuers 
offering a QHP through the SHOP must adhere to enrollment periods and 
processes established by the SHOP, consistent with Sec.  155.726 of this 
subchapter, and establish a uniform enrollment timeline and process for 
enrolling qualified employers and employer group members.
    (c) Enrollment process for the SHOP. A QHP issuer offering a QHP 
through the SHOP must:
    (1) Provide new enrollees with the enrollment information package as 
described in Sec.  156.265(e); and
    (2) Enroll all qualified employees consistent with the plan year of 
the applicable qualified employer.
    (d) Participation rules. QHP issuers offering a QHP through the SHOP 
may impose group participation rules for the offering of health 
insurance coverage in connection with a QHP only if and to the extent 
authorized by the SHOP in accordance with Sec.  155.706 of this 
subchapter.
    (e) Employer choice. QHP issuers offering a QHP through the SHOP 
must accept enrollments from groups in accordance with the employer 
choice policies applicable to the SHOP under Sec.  155.706(b)(3) of this 
subchapter.
    (f) Identification of SHOP enrollments. QHP issuers offering a QHP 
through the SHOP must use a uniform enrollment form, maintain processes 
sufficient to identify whether a group market enrollment is an 
enrollment through the SHOP, and maintain records of SHOP enrollments 
for a period of 10 years following the enrollment.
    (g) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2018.

[83 FR 17069, Apr. 17, 2018]



Sec.  156.290  Non-certification and decertification of QHPs.

    (a) Non-certification for a subsequent, consecutive certification 
cycle. If a QHP issuer elects not to seek certification for a 
subsequent, consecutive certification cycle with the Exchange, the QHP 
issuer, at a minimum, must--
    (1) Notify the Exchange of its decision prior to the beginning of 
the recertification process and adhere to the procedures adopted by the 
Exchange in accordance with Sec.  155.1075 of this subchapter;
    (2) Fulfill its obligation to cover benefits for each enrollee 
through the end of the plan or benefit year through the Exchange;
    (3) Fulfill data reporting obligations from the last plan or benefit 
year of the certification;
    (4) Provide notice to enrollees as described in paragraph (b) of 
this section; and
    (5) Terminate the coverage or enrollment through the Exchange of 
enrollees in the QHP in accordance with Sec.  156.270, as applicable.
    (b) Notice of QHP non-availability. When, for a subsequent, 
consecutive certification cycle, a QHP issuer elects not to seek 
certification with the Exchange, or the Exchange denies certification of 
a QHP, the QHP issuer must provide written notice to each enrollee in 
the form and manner specified by the Secretary under Sec.  147.106 of 
this subchapter.
    (c) Decertification. If a QHP is decertified by the Exchange, the 
QHP issuer

[[Page 416]]

must terminate the enrollment of enrollees through the Exchange only 
after:
    (1) The Exchange has made notification as described in Sec.  
155.1080 of this subchapter; and
    (2) Enrollees have an opportunity to enroll in other coverage.

[77 FR 18469, Mar. 27, 2012, as amended at 80 FR 10875, Feb. 27, 2015; 
81 FR 94181, Dec. 22, 2016]



Sec.  156.295  Prescription drug distribution and cost reporting.

    (a) General requirement. In a form, manner, and at such times 
specified by HHS, a QHP issuer must provide to HHS the following 
information:
    (1) The percentage of all prescriptions that were provided under the 
QHP through retail pharmacies compared to mail order pharmacies, and the 
percentage of prescriptions for which a generic drug was available and 
dispensed compared to all drugs dispensed, broken down by pharmacy type, 
which includes an independent pharmacy, supermarket pharmacy, or mass 
merchandiser pharmacy that is licensed as a pharmacy by the State and 
that dispenses medication to the general public, that is paid by the QHP 
issuer or the QHP issuer's contracted PBM;
    (2) The aggregate amount, and the type of rebates, discounts or 
price concessions (excluding bona fide service fees) that the QHP issuer 
or its contracted PBM negotiates that are attributable to patient 
utilization under the QHP, and the aggregate amount of the rebates, 
discounts, or price concessions that are passed through to the QHP 
issuer, and the total number of prescriptions that were dispensed.
    (i) Bona fide service fees means fees paid by a manufacturer to an 
entity that represent fair market value for a bona fide, itemized 
service actually performed on behalf of the manufacturer that the 
manufacturer would otherwise perform (or contract for) in the absence of 
the service arrangement, and that are not passed on in whole or in part 
to a client or customer of an entity, whether or not the entity takes 
title to the drug.
    (ii) [Reserved]
    (3) The aggregate amount of the difference between the amount the 
QHP issuer pays its contracted PBM and the amounts that the PBM pays 
retail pharmacies, and mail order pharmacies, and the total number of 
prescriptions that were dispensed.
    (b) Confidentiality. Information disclosed by a QHP issuer or a PBM 
under this section is confidential and shall not be disclosed by HHS or 
by a QHP receiving the information, except that HHS may disclose the 
information in a form which does not disclose the identity of a specific 
PBM, QHP, or prices charged for drugs, for the following purposes:
    (1) As HHS determines to be necessary to carry out section 1150A or 
part D of title XVIII of the Act;
    (2) To permit the Comptroller General to review the information 
provided;
    (3) To permit the Director of the Congressional Budget Office to 
review the information provided; or
    (4) To States to carry out section 1311 of the Affordable Care Act.
    (c) Penalties. A QHP issuer that fails to report the information 
described in paragraph (a) of this section to HHS on a timely basis or 
knowingly provides false information will be subject to the provisions 
of subsection (b)(3)(C) of section 1927 of the Act.



   Subpart D_Standards for Qualified Health Plan Issuers on Federally-
 Facilitated Exchanges and State-Based Exchanges on the Federal Platform

    Source: 78 FR 54143, Aug. 30, 2013, unless otherwise noted.



Sec.  156.330  Changes of ownership of issuers of Qualified Health
Plans in Federally-facilitated Exchanges.

    When a QHP issuer that offers one or more QHPs in a Federally-
facilitated Exchange undergoes a change of ownership as recognized by 
the State in which the issuer offers the QHP, the QHP issuer must notify 
HHS of the change in a manner to be specified by HHS, and provide the 
legal name and Taxpayer Identification Number (TIN)

[[Page 417]]

of the new owner and the effective date of the change at least 30 days 
prior to the effective date of the change of ownership. The new owner 
must agree to adhere to all applicable statutes and regulations.

[78 FR 65096, Oct. 30, 2013]



Sec.  156.340  Standards for downstream and delegated entities.

    (a) General requirement. Effective October 1, 2013, notwithstanding 
any relationship(s) that a QHP issuer may have with delegated and 
downstream entities, a QHP issuer maintains responsibility for its 
compliance and the compliance of any of its delegated or downstream 
entities, as applicable, with all applicable standards, including--
    (1) Standards of subpart C of part 156 with respect to each of its 
QHPs on an ongoing basis;
    (2) Exchange processes, procedures, and standards in accordance with 
subparts H and K of part 155 and, in the small group market, Sec. Sec.  
155.705 and 155.706 of this subchapter;
    (3) Standards of Sec.  155.220 of this subchapter with respect to 
assisting with enrollment in QHPs; and
    (4) Standards of Sec. Sec.  156.705 and 156.715 for maintenance of 
records and compliance reviews for QHP issuers operating in a Federally-
facilitated Exchange or FF-SHOP.
    (b) Delegation agreement specifications. If any of the QHP issuer's 
activities or obligations, in accordance with paragraph (a) of this 
section, are delegated to other parties, the QHP issuer's agreement with 
any delegated or downstream entity must--
    (1) Specify the delegated activities and reporting responsibilities;
    (2) Provide for revocation of the delegated activities and reporting 
standards or specify other remedies in instances where HHS or the QHP 
issuer determines that such parties have not performed satisfactorily;
    (3) Specify that the delegated or downstream entity must comply with 
all applicable laws and regulations relating to the standards specified 
under paragraph (a) of this section;
    (4) Specify that the delegated or downstream entity must permit 
access by the Secretary and the OIG or their designees in connection 
with their right to evaluate through audit, inspection, or other means, 
to the delegated or downstream entity's books, contracts, computers, or 
other electronic systems, including medical records and documentation, 
relating to the QHP issuer's obligations in accordance with Federal 
standards under paragraph (a) of this section until 10 years from the 
final date of the agreement period; and
    (5) Contain specifications described in paragraph (b) of this 
section by no later than January 1, 2015, for existing agreements; and 
no later than the effective date of the agreement for agreements that 
are newly entered into as of October 1, 2013.

[78 FR 54143, Aug. 30, 2013, as amended at 83 FR 17069, Apr. 17, 2018]



Sec.  156.350  Eligibility and enrollment standards for Qualified 
Health Plan issuers on State-based Exchanges on the Federal platform.

    (a) In order to participate in a State-based Exchange on the Federal 
platform, a QHP issuer must comply with HHS regulations, and guidance 
pertaining to issuer eligibility and enrollment functions as if the 
issuer were an issuer of a QHP on a Federally-facilitated Exchange. 
These requirements include--
    (1) Section 156.285(a)(4)(ii) regarding the premiums for plans 
offered on the SHOP, for plan years beginning prior to January 1, 2018;
    (2) Section 156.285(c)(5) and (c)(8)(iii) regarding the enrollment 
process for SHOP, for plan years beginning prior to January 1, 2018; and
    (3) Section 156.715 regarding compliance reviews of QHP issuers, to 
the extent relating directly to applicable eligibility and enrollment 
functions.
    (4) Section 156.265(d) of this subchapter regarding binder payments 
and premium payment deadlines.
    (b) HHS will permit issuers of QHPs in each State-based Exchange on 
the Federal platform to directly enroll applicants in a manner that is 
considered to be through the Exchange, as if the issuers were issuers of 
QHPs on Federally-facilitated Exchanges under Sec.  156.1230(a), to the 
extent permitted by applicable State law.

[[Page 418]]

    (c) If the State-based Exchange on the Federal platform does not 
substantially enforce a requirement in paragraph (a) of this section 
against the issuer or plan, then HHS may do so, in accordance with the 
enforcement remedies in subpart I of this part, subject to the 
administrative review process in subpart J of this part.

[81 FR 12351, Mar. 8, 2016, as amended at 81 FR 94181, Dec. 22, 2016; 83 
FR 17069, Apr. 17, 2018]



   Subpart E_Health Insurance Issuer Responsibilities With Respect to 
 Advance Payments of the Premium Tax Credit and Cost-Sharing Reductions

    Source: 78 FR 15535, Mar. 11, 2013, unless otherwise noted.



Sec.  156.400  Definitions.

    The following definitions apply to this subpart:
    Advance payments of the premium tax credit has the meaning given to 
the term in Sec.  155.20 of this subchapter.
    Affordable Care Act has the meaning given to the term in Sec.  
155.20 of this subchapter.
    Annual limitation on cost sharing means the annual dollar limit on 
cost sharing required to be paid by an enrollee that is established by a 
particular qualified health plan.
    De minimis variation means the allowable variation in the AV of a 
health plan that does not result in a material difference in the true 
dollar value of the health plan as established in Sec.  156.140(c).
    De minimis variation for a silver plan variation means a single 
percentage point.
    Federal poverty level or FPL has the meaning given to the term in 
Sec.  155.300(a) of this subchapter.
    Indian has the meaning given to the term in Sec.  155.300(a) of this 
subchapter.
    Limited cost sharing plan variation means, with respect to a QHP at 
any level of coverage, the variation of such QHP described in Sec.  
156.420(b)(2).
    Maximum annual limitation on cost sharing means the highest annual 
dollar amount that qualified health plans (other than QHPs with cost-
sharing reductions) may require in cost sharing for a particular year, 
as established for that year under Sec.  156.130.
    Most generous or more generous means, as between a QHP (including a 
standard silver plan) or plan variation and one or more other plan 
variations of the same QHP, the standard plan or plan variation designed 
for the category of individuals last listed in Sec.  155.305(g)(3) of 
this subchapter. Least generous or less generous has the opposite 
meaning.
    Plan variation means a zero cost sharing plan variation, a limited 
cost sharing plan variation, or a silver plan variation.
    Reduced maximum annual limitation on cost sharing means the dollar 
value of the maximum annual limitation on cost sharing for a silver plan 
variation that remains after applying the reduction, if any, in the 
maximum annual limitation on cost sharing required by section 1402 of 
the Affordable Care Act as announced in the annual HHS notice of benefit 
and payment parameters.
    Silver plan variation means, with respect to a standard silver plan, 
any of the variations of that standard silver plan described in Sec.  
156.420(a).
    Stand-alone dental plan means a plan offered through an Exchange 
under Sec.  155.1065 of this subchapter.
    Standard plan means a QHP offered at one of the four levels of 
coverage, defined at Sec.  156.140, with an annual limitation on cost 
sharing that conforms to the requirements of Sec.  156.130(a). A 
standard plan at the bronze, silver, gold, or platinum level of coverage 
is referred to as a standard bronze plan, a standard silver plan, a 
standard gold plan, and a standard platinum plan, respectively.
    Zero cost sharing plan variation means, with respect to a QHP at any 
level of coverage, the variation of such QHP described in Sec.  
156.420(b)(1).

[78 FR 15535, Mar. 11, 2013, as amended at 78 FR 65097, Oct. 30, 2013]



Sec.  156.410  Cost-sharing reductions for enrollees.

    (a) General requirement. A QHP issuer must ensure that an individual 
eligible for cost-sharing reductions, as demonstrated by assignment to a 
particular plan variation, pays only the

[[Page 419]]

cost sharing required of an eligible individual for the applicable 
covered service under the plan variation. The cost-sharing reduction for 
which an individual is eligible must be applied when the cost sharing is 
collected.
    (b) Assignment to applicable plan variation. If an individual is 
determined to be eligible to enroll in a QHP in the individual market 
offered through an Exchange and elects to do so, the QHP issuer must 
assign the individual under enrollment and eligibility information 
submitted by the Exchange as follows--
    (1) If the individual is determined eligible by the Exchange for 
cost-sharing reductions under Sec.  155.305(g)(2)(i), (ii), or (iii) of 
this subchapter (subject to the special rule for family policies set 
forth in Sec.  155.305(g)(3) of this subchapter) and chooses to enroll 
in a silver health plan, the QHP issuer must assign the individual to 
the silver plan variation of the selected silver health plan described 
in Sec.  156.420(a)(1), (2), or (3), respectively.
    (2) If the individual is determined eligible by the Exchange for 
cost-sharing reductions for Indians with lower household income under 
Sec.  155.350(a) of this subchapter (subject to the special rule for 
family policies set forth in Sec.  155.305(g)(3) of this subchapter), 
and chooses to enroll in a QHP, the QHP issuer must assign the 
individual to the zero cost sharing plan variation of the selected QHP 
with all cost sharing eliminated described in Sec.  156.420(b)(1).
    (3) If the individual is determined by the Exchange to be eligible 
for cost-sharing reductions for Indians regardless of household income 
under Sec.  155.350(b) of this subchapter (subject to the special rule 
for family policies set forth in Sec.  155.305(g)(3) of this 
subchapter), and chooses to enroll in a QHP, the QHP issuer must assign 
the individual to the limited cost sharing plan variation of the 
selected QHP with the prohibition on cost sharing for benefits received 
from the Indian Health Service and certain other providers described in 
Sec.  156.420(b)(2).
    (4) If the individual is determined by the Exchange not to be 
eligible for cost-sharing reductions (including eligibility under the 
special rule for family policies set forth in Sec.  155.305(g)(3) of 
this subchapter), and chooses to enroll in a QHP, the QHP issuer must 
assign the individual to the selected QHP with no cost-sharing 
reductions.
    (c) Improper cost-sharing reductions. (1) If a QHP issuer fails to 
ensure that an individual assigned to a plan variation receives the 
cost-sharing reductions required under the applicable plan variation, 
taking into account Sec.  156.425(b) concerning continuity of 
deductibles and out-of-pocket amounts (if applicable), then the QHP 
issuer must notify the enrollee of the improper application of any cost-
sharing reduction within 45 calendar days of discovery of such improper 
application, and refund any resulting excess cost sharing paid by or for 
the enrollee as follows:
    (i) If the excess cost sharing was paid by the provider, the QHP 
issuer must refund the excess cost sharing to the provider within 45 
calendar days of discovery of the improper application.
    (ii) If the excess cost sharing was not paid by the provider and is 
not requested by the enrollee as a refund, the QHP issuer must, within 
45 calendar days of discovery of the error, apply the excess cost 
sharing paid by or for the enrollee to the enrollee's portion of the 
premium (or refund the amount directly). If any excess premium remains, 
the QHP issuer must apply the excess premium to the enrollee's portion 
of the premium for each subsequent month for the remainder of the period 
of enrollment or benefit year until the excess is fully applied (or 
refund any remaining amount directly). If any excess premium remains at 
the end of the period of enrollment or benefit year, the QHP issuer must 
refund the enrollee any remaining excess cost sharing paid by or for the 
enrollee within 45 calendar days of the end of the period of enrollment 
or benefit year, whichever comes first.
    (iii) If the excess cost sharing was not paid by the provider, and 
if a refund is requested by the enrollee, the refund must be provided to 
the enrollee within 45 calendar days of the date of the request.
    (2) If a QHP issuer provides an individual assigned to a plan 
variation greater cost-sharing reductions than required under the 
applicable plan variation, taking into account Sec.  156.425(b) 
concerning continuity of deductibles

[[Page 420]]

and out-of-pocket amounts (if applicable), then the QHP issuer will not 
be eligible for reimbursement of any excess cost-sharing reductions 
provided to the enrollee, and may not seek reimbursement from the 
enrollee or the applicable provider for any of the excess cost-sharing 
reductions.
    (d) Improper assignment. If a QHP issuer does not assign an 
individual to the applicable plan variation (or standard plan without 
cost-sharing reductions) in accordance with Sec. Sec.  156.410(b) and 
156.425(a) based on the eligibility and enrollment information or 
notification provided by the Exchange, then the QHP issuer must reassign 
the enrollee to the applicable plan variation (or standard plan without 
cost-sharing reductions) and notify the enrollee of the improper 
assignment such that:
    (1) If the QHP issuer discovers the improper assignment between the 
first and fifteenth day of the month, the QHP issuer must reassign the 
enrollee to the correct plan variation (or standard plan without cost-
sharing reductions) by the first day of the following month.
    (2) If the QHP issuer discovers the improper assignment between the 
sixteen and the last day of the month, the QHP issuer must reassign the 
individual to the correct plan variation (or standard plan without cost-
sharing reductions) by the first day of the second following month.
    (3) If, pursuant to a reassignment under this paragraph (d), a QHP 
issuer reassigns an enrollee from a more generous plan variation to a 
less generous plan variation of a QHP (or a standard plan without cost-
sharing reductions), the QHP issuer will not be eligible for 
reimbursement for any of the excess cost-sharing reductions provided to 
the enrollee following the effective date of eligibility required by the 
Exchange, and may not seek reimbursement from the enrollee or the 
applicable provider for any of the excess cost-sharing reductions.
    (4) If, pursuant to a reassignment under this paragraph (d), a QHP 
issuer reassigns an enrollee from a less generous plan variation (or a 
standard plan without cost-sharing reductions) to a more generous plan 
variation of a QHP, the QHP issuer must recalculate the enrollee's 
liability for cost sharing paid between the effective date of 
eligibility required by the Exchange and the date on which the issuer 
effectuated the change, and must refund any excess cost sharing paid by 
or for the enrollee during such period as follows:
    (i) If the excess cost sharing was paid by the provider, the QHP 
issuer must refund the excess cost sharing to the provider within 45 
calendar days of discovery of the improper assignment.
    (ii) If the excess cost sharing was not paid by the provider and is 
not requested by the enrollee as a refund, the QHP issuer must, within 
45 calendar days of discovery of the improper assignment, apply the 
excess cost sharing paid by or for the enrollee to the enrollee's 
portion of the premium (or refund the amount directly). If any excess 
premium remains, the QHP issuer must apply the excess premium to the 
enrollee's portion of the premium for each subsequent month for the 
remainder of the period of enrollment or benefit year until the excess 
is fully applied (or refund the remaining amount directly). If any 
excess premium remains at the end of the period of enrollment or benefit 
year, the QHP issuer must refund the enrollee any remaining excess cost 
sharing paid by or for the enrollee within 45 calendar days of the end 
of the period of enrollment or benefit year, whichever comes first.
    (iii) If the excess cost sharing was not paid by the provider, then, 
if the enrollee requests a refund, the refund must be provided to the 
enrollee within 45 calendar days of the date of the request.

[78 FR 15535, Mar. 11, 2013, as amended at 78 FR 65097, Oct. 30, 2013; 
80 FR 10875, Feb. 27, 2015]



Sec.  156.420  Plan variations.

    (a) Submission of silver plan variations. For each of its silver 
health plans that an issuer offers, or intends to offer in the 
individual market on an Exchange, the issuer must submit annually to the 
Exchange for certification prior to each benefit year the standard 
silver plan and three variations of the standard silver plan, as 
follows--
    (1) For individuals eligible for cost-sharing reductions under

[[Page 421]]

Sec.  155.305(g)(2)(i) of this subchapter, a variation of the standard 
silver plan with:
    (i) An annual limitation on cost sharing no greater than the reduced 
maximum annual limitation on cost sharing specified in the annual HHS 
notice of benefit and payment parameters for such individuals, and
    (ii) Other cost-sharing reductions such that the AV of the silver 
plan variation is 94 percent plus or minus the de minimis variation for 
a silver plan variation;
    (2) For individuals eligible for cost-sharing reductions under Sec.  
155.305(g)(2)(ii) of this subchapter, a variation of the standard silver 
plan with:
    (i) An annual limitation on cost sharing no greater than the reduced 
maximum annual limitation on cost sharing specified in the annual HHS 
notice of benefit and payment parameters for such individuals, and
    (ii) Other cost-sharing reductions such that the AV of the silver 
plan variation is 87 percent plus or minus the de minimis variation for 
a silver plan variation; and
    (3) For individuals eligible for cost-sharing reductions under Sec.  
155.305(g)(2)(iii) of this subchapter, a variation of the standard 
silver plan with:
    (i) An annual limitation on cost sharing no greater than the reduced 
maximum annual limitation on cost sharing specified in the annual HHS 
notice of benefit and payment parameters for such individuals, and
    (ii) Other cost-sharing reductions such that the AV of the silver 
plan variation is 73 percent plus or minus the de minimis variation for 
a silver plan variation (subject to Sec.  156.420(h)).
    (b) Submission of zero and limited cost sharing plan variations. For 
each of its health plans at any level of coverage that an issuer offers, 
or intends to offer in the individual market on an Exchange, the issuer 
must submit to the Exchange for certification the health plan and two 
variations of the health plan, as follows--
    (1) For individuals eligible for cost-sharing reductions under Sec.  
155.350(a) of this subchapter, a variation of the health plan with all 
cost sharing eliminated; and
    (2) For individuals eligible for cost-sharing reductions under Sec.  
155.350(b) of this subchapter, a variation of the health plan with no 
cost sharing on any item or service that is an EHB furnished directly by 
the Indian Health Service, an Indian Tribe, Tribal Organization, or 
Urban Indian Organization (each as defined in 25 U.S.C. 1603), or 
through referral under contract health services.
    (c) Benefit and network equivalence in silver plan variations. A 
standard silver plan and each silver plan variation thereof must cover 
the same benefits and providers. Each silver plan variation is subject 
to all requirements applicable to the standard silver plan (except for 
the requirement that the plan have an AV as set forth in Sec.  
156.140(b)(2)).
    (d) Benefit and network equivalence in zero and limited cost sharing 
plan variations. A QHP and each zero cost sharing plan variation or 
limited cost sharing plan variation thereof must cover the same benefits 
and providers. The out-of-pocket spending required of enrollees in the 
zero cost sharing plan variation of a QHP for a benefit that is not an 
essential health benefit from a provider (including a provider outside 
the plan's network) may not exceed the corresponding out-of-pocket 
spending required in the limited cost sharing plan variation of the QHP 
and the corresponding out-of-pocket spending required in the silver plan 
variation of the QHP for individuals eligible for cost-sharing 
reductions under Sec.  155.305(g)(2)(i) of this subchapter, in the case 
of a silver QHP. The out-of-pocket spending required of enrollees in the 
limited cost sharing plan variation of the QHP for a benefit that is not 
an essential health benefit from a provider (including a provider 
outside the plan's network) may not exceed the corresponding out-of-
pocket spending required in the QHP with no cost-sharing reductions. A 
limited cost sharing plan variation must have the same cost sharing for 
essential health benefits not described in paragraph (b)(2) of this 
section as the QHP with no cost-sharing reductions. Each zero cost 
sharing plan variation or limited cost sharing

[[Page 422]]

plan variation is subject to all requirements applicable to the QHP 
(except for the requirement that the plan have an AV as set forth in 
Sec.  156.140(b)).
    (e) Decreasing cost sharing and out-of-pocket spending in higher AV 
silver plan variations. The cost sharing or out-of-pocket spending 
required of enrollees under any silver plan variation of a standard 
silver plan for a benefit from a provider (including a provider outside 
the plan's network) may not exceed the corresponding cost sharing or 
out-of-pocket spending required in the standard silver plan or any other 
silver plan variation thereof with a lower AV.
    (f) Minimum AV differential between 70 percent and 73 percent silver 
plan variations. Notwithstanding any permitted de minimis variation in 
AV for a health plan or permitted de minimis variation for a silver plan 
variation, the AVs of a standard silver plan and the silver plan 
variation thereof described in paragraph (a)(3) of this section must 
differ by at least 2 percentage points.
    (g) Multi-state plans. The U.S. Office of Personnel Management will 
determine the time and manner for multi-State plans, as defined in Sec.  
155.1000(a) of this subchapter, to submit silver plan variations, zero 
cost sharing plan variations, and limited cost sharing plan variations.
    (h) Notice. No later than November 1, 2015, for each plan variation 
that an issuer offers in accordance with the rules of this section, an 
issuer must provide a summary of benefits and coverage that accurately 
represents each plan variation consistent with the requirements set 
forth in Sec.  147.200 of this subchapter.

[78 FR 15535, Mar. 11, 2013, as amended at 79 FR 13840, Mar. 11, 2014; 
80 FR 10875, Feb. 27, 2015]



Sec.  156.425  Changes in eligibility for cost-sharing reductions.

    (a) Effective date of change in assignment. If the Exchange notifies 
a QHP issuer of a change in an enrollee's eligibility for cost-sharing 
reductions (including a change in the individual's eligibility under the 
special rule for family policies set forth in Sec.  155.305(g)(3) of 
this subchapter due to a change in eligibility of another individual on 
the same policy), then the QHP issuer must change the individual's 
assignment such that the individual is assigned to the applicable 
standard plan or plan variation of the QHP as required under Sec.  
156.410(b) as of the effective date of eligibility required by the 
Exchange.
    (b) Continuity of deductible and out-of-pocket amounts. In the case 
of a change in assignment to a different plan variation (or standard 
plan without cost-sharing reductions) of the same QHP in the course of a 
benefit year under this section, the QHP issuer must ensure that any 
cost sharing paid by the applicable individual under previous plan 
variations (or standard plan without cost-sharing reductions) for that 
benefit year is taken into account in the new plan variation (or 
standard plan without cost-sharing reductions) for purposes of 
calculating cost sharing based on aggregate spending by the individual, 
such as for deductibles or for the annual limitations on cost sharing.
    (c) Notice upon assignment. Beginning on January 1, 2016, if an 
individual's assignment to a standard plan or plan variation of the QHP 
changes in accordance with paragraph (a) of this section, the issuer 
must provide to that individual a summary of benefits and coverage that 
accurately reflects the new plan variation (or standard plan variation 
without cost-sharing reductions) in a manner consistent with Sec.  
147.200 of this subchapter as soon as practicable following receipt of 
notice from the Exchange, but not later than 7 business days following 
receipt of notice.

[78 FR 15535, Mar. 11, 2013, as amended at 80 FR 10875, Feb. 27, 2015]



Sec.  156.430  Payment for cost-sharing reductions.

    (a) [Reserved]
    (b) Advance payments for cost-sharing reductions. (1) A QHP issuer 
will receive periodic advance payments based on the advance payment 
amounts calculated in accordance with Sec.  155.1030(b)(3) of this 
subchapter.
    (2) HHS may adjust the advance payment amount for a particular QHP 
during the benefit year if the QHP issuer

[[Page 423]]

provides evidence, certified by a member of the American Academy of 
Actuaries in accordance with generally accepted actuarial principles and 
methodologies, that the advance payments for a particular QHP are likely 
to be substantially different than the cost-sharing reduction amounts 
that the QHP provides that will be reimbursed by HHS.
    (c) Submission of actual amounts--(1) General. For each plan 
variation that a QHP issuer offers on the Exchange, it must submit to 
HHS, in the manner and timeframe established by HHS, for each policy, 
the total allowed costs for essential health benefits charged for the 
policy for the benefit year, broken down by all of the following:
    (i) The amount the issuer paid.
    (ii) The amount the enrollee(s) paid.
    (iii) The amount the enrollee(s) would have paid under the standard 
plan without cost-sharing reductions.
    (2) Standard methodology. A QHP issuer must calculate the value of 
the amount the enrollee(s) would have paid under the standard plan 
without cost-sharing reductions by applying the actual cost-sharing 
requirements for the standard plan to the allowed costs for essential 
health benefits under the enrollee's policy for the benefit year.
    (i) For reconciliation of cost-sharing reduction amounts advanced 
for the 2014 and 2015 benefit years, an issuer of a QHP using the 
standard or simplified methodology may calculate claims amounts 
attributable to EHB, including cost sharing amounts attributable to EHB, 
by reducing total claims amounts by the plan-specific percentage 
estimate of non-essential health benefit claims submitted on the Uniform 
Rate Review Template for the corresponding benefit year, if the 
following conditions are met:
    (A) The non-essential health benefits percentage estimate is less 
than 2 percent; and
    (B) Out-of-pocket expenses for non-EHB benefits are included in the 
calculation of amounts subject to a deductible or annual limitation on 
cost sharing, but copayments and coinsurance rates on non-EHB benefits 
are not reduced under the plan variation.
    (ii) [Reserved]
    (3) Selection of methodology. For benefit years 2014 through 2016, 
notwithstanding paragraph (c)(2) of this section, a QHP issuer may 
choose to calculate the amounts that would have been paid under the 
standard plan without cost-sharing reductions using the simplified 
methodology described in paragraph (c)(4) of this section.
    (i) The QHP issuer must notify HHS prior to the start of each 
benefit year, in the manner and timeframe established by HHS, whether or 
not it selects the simplified methodology for the benefit year.
    (ii) If the QHP issuer selects the simplified methodology, it must 
apply the simplified methodology to all plan variations it offers on the 
Exchange for a benefit year.
    (iii) The QHP issuer may not select the simplified methodology for a 
benefit year if the QHP issuer did not select the simplified methodology 
for the prior benefit year.
    (iv) Notwithstanding paragraphs (c)(3)(ii) and (iii) of this 
section, if a QHP issuer merges with or acquires another issuer of a QHP 
on the Exchange, or acquires a QHP offered on the Exchange from another 
QHP issuer, and if one, but not all, of the merging, acquiring, or 
acquired parties had selected the simplified methodology for the benefit 
year, then for the benefit year in which the merger or acquisition took 
place, the QHP issuer must calculate the amounts that would have been 
paid using the methodology (whether the standard methodology described 
in paragraph (c)(2) of this section or the simplified methodology 
described in paragraph (c)(4) of this section) selected with respect to 
the plan variation prior to the start of the benefit year (even if the 
selection was not made by that QHP issuer). For the next benefit year 
(if such benefit year is 2015 or 2016), the QHP issuer may select the 
simplified methodology (subject to paragraph (c)(3)(ii) of this section 
but, for that benefit year, not paragraph (c)(3)(iii) of this section) 
or the standard methodology.
    (4) Simplified methodology. Subject to paragraph (c)(4)(v) of this 
section, a QHP issuer that selects the simplified methodology described 
in this paragraph (c)(4) must calculate the amount

[[Page 424]]

that the enrollees would have paid under the standard plan without cost-
sharing reductions for each policy that was assigned to a plan variation 
for any portion of the benefit year by applying each set of the standard 
plan's effective cost-sharing parameters (as calculated under paragraphs 
(c)(3)(ii) and (iii) of this section) to the corresponding subgroup of 
total allowed costs for EHB for the policy (as described in paragraph 
(c)(4)(i) of this section).
    (i) For plan variation policies with total allowed costs for EHB for 
the benefit year that are:
    (A) Less than or equal to the effective deductible, the amount that 
the enrollees would have paid under the standard plan is equal to the 
total allowed costs for EHB under the policy for the benefit year 
multiplied by the effective pre-deductible coinsurance rate.
    (B) Greater than the effective deductible but less than the 
effective claims ceiling, the amount that the enrollees would have paid 
under the standard plan is equal to the sum of (x) the average 
deductible, plus (y) the effective non-deductible cost sharing, plus (z) 
the difference, if positive, between the total allowed costs under the 
policy for the benefit year for EHB that are subject to a deductible and 
the average deductible, multiplied by the effective post-deductible 
coinsurance rate.
    (C) Greater than or equal to the effective claims ceiling, the 
amount that the enrollees would have paid under the standard plan is 
equal to the annual limitation on cost sharing for the standard plan (as 
defined at 45 CFR 156.400), or, at the QHP issuer's election on a 
policy-by-policy basis, the amount calculated pursuant to the standard 
methodology described in paragraph (c)(2) of this section,
    (ii) The QHP issuer must calculate one or more sets of effective 
cost-sharing parameters, as described in paragraph (c)(4)(iii) of this 
section, based on policies assigned to the standard plan without cost-
sharing reductions for the entire benefit year and must separately apply 
each set of effective cost-sharing parameters to the corresponding 
subgroup of total allowed costs for EHB for each plan variation policy, 
as described in paragraph (c)(4)(i) of this section, as follows:
    (A) If the standard plan has separate cost-sharing parameters for 
self-only coverage and other than self-only coverage, but does not have 
separate cost-sharing parameters for pharmaceutical and medical 
services, the QHP issuer must calculate and apply separate sets of 
effective cost-sharing parameters based on the costs of enrollees in the 
standard plan with self-only coverage, and based on the costs of 
enrollees in the standard plan with other than self-only coverage.
    (B) If the standard plan has separate cost-sharing parameters for 
pharmaceutical and medical services, but does not have separate cost-
sharing parameters for self-only coverage and other than self-only 
coverage, the QHP issuer must calculate and apply separate sets of 
effective cost-sharing parameters based on the medical costs of the 
enrollees in the standard plan, and based on the pharmaceutical costs of 
the enrollees in the standard plan.
    (C) If the standard plan has separate cost-sharing parameters for 
self-only coverage and other than self-only coverage, and also has 
separate cost-sharing parameters for pharmaceutical and medical 
services, the QHP issuer must calculate and apply separate sets of 
effective cost-sharing parameters based on the medical costs of 
enrollees in the standard plan with self-only coverage, based on the 
pharmaceutical costs of enrollees in the standard plan with self-only 
coverage, based on the medical costs of enrollees in the standard plan 
with other than self-only coverage, and based on the pharmaceutical 
costs of enrollees in the standard plan with other than self-only 
coverage.
    (iii) The effective cost-sharing parameters for the standard plan 
without cost-sharing reductions must be calculated based on policies 
assigned to the standard plan for the entire benefit year for each of 
the required subgroups under paragraph (c)(4)(ii) of this section as 
follows:
    (A) If the standard plan has only one deductible (for the applicable 
subgroup), the average deductible of the standard plan is that 
deductible amount. If the standard plan has more than one deductible 
(for the applicable

[[Page 425]]

subgroup), the average deductible is the weighted average of the 
deductibles, weighted by allowed costs for EHB under the standard plan 
for the benefit year that are subject to each separate deductible. 
Services that are not subject to any deductible (including services 
subject to copayments or coinsurance but not any deductible) are not to 
be incorporated into the calculation of the average deductible.
    (B) The effective non-deductible cost sharing for the applicable 
subgroup is the average portion of total allowed costs for EHB that are 
not subject to any deductible for the standard plan for the benefit year 
incurred for standard plan enrollees and payable by the enrollees as 
cost sharing. The effective non-deductible cost sharing must be 
calculated based only on standard plan policies with total allowed costs 
for EHB for the benefit year that are above the effective deductible but 
for which associated cost sharing for EHB is less than the annual 
limitation on cost sharing.
    (C) The effective deductible for the applicable subgroup is equal to 
the sum of the average deductible and the average total allowed costs 
for EHB that are not subject to any deductible for the standard plan for 
the benefit year. The average total allowed costs for EHB that are not 
subject to any deductible for the standard plan for the benefit year 
must be calculated based only on standard plan policies with total 
allowed costs for EHB for the benefit year that are above the average 
deductible but for which associated cost sharing for EHB is less than 
the annual limitation on cost sharing.
    (D) The effective pre-deductible coinsurance rate for the applicable 
subgroup is the proportion of the total allowed costs for EHB under the 
standard plan for the benefit year incurred for standard plan enrollees 
and payable as cost sharing. The effective pre-deductible coinsurance 
rate must be calculated based only on standard plan policies with total 
allowed costs for EHB for the benefit year that are less than or equal 
to the effective deductible.
    (E) The effective post-deductible coinsurance rate for the 
applicable subgroup is the quotient of (x) the portion of average 
allowed costs for EHB subject to a deductible incurred for enrollees for 
the benefit year, and payable by the enrollees as cost sharing other 
than through a deductible, over the difference of (y) the average 
allowed costs for EHB subject to a deductible incurred for enrollees for 
the benefit year, and (z) the average deductible. The effective post-
deductible coinsurance rate must be calculated based only on standard 
plan policies with total allowed costs for EHB for the benefit year that 
are above the effective deductible but for which associated cost sharing 
for EHB is less than the annual limitation on cost sharing.
    (F) The effective claims ceiling for the applicable subgroup is 
calculated as the effective deductible plus the quotient of (x) the 
difference between the annual limitation on cost sharing and the sum of 
the average deductible and the effective non-deductible cost sharing, 
divided by (y) the effective post-deductible coinsurance rate.
    (iv) If a QHP issuer uses the simplified methodology described in 
this paragraph (c)(4), and the QHP issuer's standard plan does not meet 
any of the criteria in paragraphs (c)(4)(v)(A) through (D) of this 
section, the QHP issuer must also submit to HHS, in the manner and 
timeframe established by HHS, the following information for each 
standard plan offered by the QHP issuer in the individual market through 
the Exchange for each of the required subgroups described in paragraph 
(c)(4)(ii) of this section:
    (A) The average deductible for each applicable subgroup;
    (B) The effective deductible for each applicable subgroup;
    (C) The effective non-deductible cost sharing amount for each 
applicable subgroup;
    (D) The effective pre-deductible coinsurance rate for each 
applicable subgroup;
    (E) The effective post-deductible coinsurance rate for each 
applicable subgroup;
    (F) The effective claims ceiling for each applicable subgroup; and
    (G) A memorandum developed by a member of the American Academy of 
Actuaries in accordance with generally accepted actuarial principles and

[[Page 426]]

methodologies that describes how the QHP issuer calculated the effective 
cost-sharing parameters for each applicable subgroup for the standard 
plan.
    (v) Notwithstanding paragraphs (c)(4)(i) through (iii) of this 
section, if a QHP issuer's standard plan meets the criteria in any of 
the following subparagraphs, and the QHP issuer has selected the 
simplified methodology described in this paragraph (c)(4), then the QHP 
issuer must calculate the amount that the enrollees in the plan 
variation would have paid under the standard plan without cost-sharing 
reductions as the lesser of the annual limitation on cost sharing for 
the standard plan or the amount equal to the product of, (x) one minus 
the standard plan's actuarial value, as calculated under 45 CFR 156.135, 
and (y) the total allowed costs for EHB for the benefit year under each 
policy that was assigned to a plan variation for any portion of the 
benefit year.
    (A) The standard plan has separate cost-sharing parameters for self-
only coverage and other than self-only coverage, does not have separate 
cost-sharing parameters for pharmaceutical and medical services, and has 
an enrollment during the benefit year of fewer than 12,000 member months 
for coverage with total allowed costs for EHB for the benefit year that 
are greater than the effective deductible, but for which associated cost 
sharing for EHB is less than the annual limitation on cost sharing, in 
either of the following categories -
    (1) Self-only coverage; or
    (2) Other than self-only coverage.
    (B) The standard plan has separate cost-sharing parameters for 
pharmaceutical and medical services, does not have separate cost-sharing 
parameters for self-only coverage and other than self-only coverage, and 
has an enrollment during the benefit year of fewer than 12,000 member 
months for coverage with total allowed costs for EHB for the benefit 
year that are greater than the effective deductible, but for which 
associated cost sharing for EHB is less than the annual limitation on 
cost sharing, in either of the following categories:
    (1) Coverage of medical services; or
    (2) Coverage of pharmaceutical services.
    (C) The standard plan has separate cost-sharing parameters for self-
only coverage and other than self-only coverage and for pharmaceutical 
and medical services, and has an enrollment during the benefit year of 
fewer than 12,000 member months for coverage with total allowed costs 
for EHB for the benefit year that are greater than the effective 
deductible, but for which associated cost sharing for EHB is less than 
the annual limitation on cost sharing, in any of the following 
categories:
    (1) Self-only coverage of medical services;
    (2) Self-only coverage of pharmaceutical services;
    (3) Other than self-only coverage of medical services; or
    (4) Other than self-only coverage of pharmaceutical services.
    (D) The standard plan does not have separate cost-sharing parameters 
for pharmaceutical and medical services, or for self-only coverage and 
other than self-only coverage, and has an enrollment during the benefit 
year of fewer than 12,000 member months with total allowed costs for EHB 
for the benefit year that are greater than the effective deductible, but 
for which associated cost sharing for EHB is less than the annual 
limitation on cost sharing.
    (vi) Notwithstanding paragraphs (c)(4)(i)(A) and (B) of this 
section, and paragraphs (c)(4)(iii)(A) through (E) of this section, if 
more than eighty percent of the total allowed costs for EHB for the 
benefit year under a standard plan for a subgroup that requires a 
separate set of effective cost-sharing parameters pursuant to paragraph 
(c)(4)(ii) are not subject to a deductible, then:
    (A) The average deductible, the effective non-deductible cost 
sharing, and the effective deductible for the subgroup equal zero;
    (B) The effective pre-deductible coinsurance rate for the subgroup 
is equal to the effective post-deductible coinsurance rate for the 
subgroup, which is determined based on all standard plan policies for 
the applicable subgroup for which associated cost sharing for EHB

[[Page 427]]

is less than the annual limitation on cost sharing, and calculated for 
the applicable subgroup as the proportion of the total allowed costs for 
EHB under the standard plan for the benefit year incurred for standard 
plan enrollees and payable as cost sharing (including cost sharing 
payable through a deductible); and
    (C) The amount that enrollees in the applicable subgroup in plan 
variation policies with total allowed costs for EHB for the benefit year 
that are less than the effective claims ceiling would have paid under 
the standard plan must be calculated using the formula in paragraph 
(c)(4)(i)(A).
    (5) Reimbursement of providers. In the case of a benefit for which 
the QHP issuer compensates an applicable provider in whole or in part on 
a fee-for-service basis, allowed costs associated with the benefit may 
be included in the calculation of the amount that an enrollee(s) would 
have paid under the standard plan without cost-sharing reductions only 
to the extent the amount was either payable by the enrollee(s) as cost 
sharing under the plan variation or was reimbursed to the provider by 
the QHP issuer.
    (d) Reconciliation of amounts. HHS will perform periodic 
reconciliations of any advance payments of cost-sharing reductions 
provided to a QHP issuer under paragraph (b) of this section against--
    (1) The actual amount of cost-sharing reductions provided to 
enrollees and reimbursed to providers by the QHP issuer for benefits for 
which the QHP issuer compensates the applicable providers in whole or in 
part on a fee-for-service basis; and
    (2) The actual amount of cost-sharing reductions provided to 
enrollees for benefits for which the QHP issuer compensates the 
applicable providers in any other manner.
    (e) Payment of discrepancies. If the actual amounts of cost-sharing 
reductions described in paragraphs (d)(1) and (2) of this section are--
    (1) More than the amount of advance payments provided and the QHP 
issuer has timely provided the actual amounts of cost-sharing reductions 
as required under paragraph (c) of this section, HHS will reimburse the 
QHP issuer for the difference; and
    (2) Less than the amount of advance payments provided, the QHP 
issuer must repay the difference to HHS in the manner and timeframe 
specified by HHS.
    (f) Cost-sharing reductions during special periods. (1) 
Notwithstanding the cost-sharing reduction reconciliation process 
described in paragraphs (c) through (e) of this section, a QHP issuer 
will not be eligible for reimbursement of any cost-sharing reductions 
provided following a termination of coverage effective date with respect 
to a grace period as described in Sec.  155.430(b)(2)(ii)(A) or (B) of 
this subchapter. However, the QHP issuer will be eligible for 
reimbursement of cost-sharing reductions provided prior to the 
termination of coverage effective date. Advance payments of cost-sharing 
reductions will be paid to a QHP issuer prior to a determination of 
termination (including during any grace period, but the QHP issuer will 
be required to repay any advance payments made with respect to any month 
after any termination of coverage effective date during a grace period).
    (2) Notwithstanding the cost-sharing reduction reconciliation 
process described in paragraphs (c) through (e) of this section, if the 
termination of coverage effective date is prior to the determination of 
termination other than in the circumstances described in paragraph 
(f)(1) of this section, and if the termination (or the late 
determination thereof) is the fault of the QHP issuer, as reasonably 
determined by the Exchange, the QHP issuer will not be eligible for 
advance payments and reimbursement for cost-sharing reductions provided 
during the period following the termination of coverage effective date 
and prior to the determination of the termination.
    (3) Subject to the requirements of the cost-sharing reduction 
reconciliation process described in paragraphs (c) through (e) of this 
section, if the termination of coverage effective date is prior to the 
determination of termination other than in the circumstances described 
in paragraph (f)(1) of this section, and if the reason for the 
termination (or late determination thereof)

[[Page 428]]

is not the fault of the QHP issuer, as reasonably determined by the 
Exchange, the QHP issuer will be eligible for advance payments and 
reimbursement for cost-sharing reductions provided during such period.
    (4) Subject to the requirements of the cost-sharing reduction 
reconciliation process described in paragraphs (c) through (e) of this 
section, a QHP issuer will be eligible for advance payments and 
reimbursement for cost-sharing reductions provided during any period of 
coverage pending resolution of inconsistencies in information required 
to determine eligibility for enrollment under Sec.  155.315(f) of this 
subchapter.
    (g) Prohibition on reduction in payments to Indian health providers. 
If an Indian is enrolled in a QHP in the individual market through an 
Exchange and is furnished an item or service directly by the Indian 
Health Service, an Indian Tribe, Tribal Organization, or Urban Indian 
Organization, or through referral under contract health services, the 
QHP issuer may not reduce the payment to any such entity for such item 
or service by the amount of any cost sharing that would be due from the 
Indian but for the prohibitions on cost sharing set forth in Sec.  
156.410(b)(2) and (3).
    (h) Reconciliation of the cost-sharing reduction portion of advance 
payments discrepancies and appeals. (1) If an issuer reports a 
discrepancy and seeks to dispute the notification of the amount of 
reconciliation of the cost-sharing reduction portion of advance 
payments, it must report the discrepancy to HHS within 30 calendar days 
of notification of the amount of reconciliation of the cost-sharing 
reduction portion of advance payments as described in paragraph (e) of 
this section, in the manner set forth by HHS.
    (2) An issuer may appeal the amount of reconciliation of the cost-
sharing reduction portion of advance payments, under the process set 
forth in Sec.  156.1220.

[78 FR 15535, 15555, Mar. 11, 2013, as amended at 78 FR 65097, Oct. 30, 
2013; 79 FR 13840, Mar. 11, 2014; 80 FR 10875, Feb. 27, 2015; 81 FR 
94181, Dec. 22, 2016]



Sec.  156.440  Plans eligible for advance payments of the premium
tax credit and cost-sharing reductions.

    Except as noted in paragraph (a) through (c) of this section, the 
provisions of this subpart apply to qualified health plans offered in 
the individual market on the Exchange.
    (a) Catastrophic plans. The provisions of this subpart do not apply 
to catastrophic plans described in Sec.  156.155.
    (b) Stand-alone dental plans. The provisions of this subpart, to the 
extent relating to cost-sharing reductions, do not apply to stand-alone 
dental plans. The provisions of this subpart, to the extent relating to 
advance payments of the premium tax credit, apply to stand-alone dental 
plans.
    (c) Child-only plans. The provisions of this subpart apply to child-
only QHPs, described in Sec.  156.200(c)(2).



Sec.  156.460  Reduction of enrollee's share of premium to account
for advance payments of the premium tax credit.

    (a) Reduction of enrollee's share of premium to account for advance 
payments of the premium tax credit. A QHP issuer that receives notice 
from the Exchange that an individual enrolled in the issuer's QHP is 
eligible for an advance payment of the premium tax credit must--
    (1) Reduce the portion of the premium charged to or for the 
individual for the applicable month(s) by the amount of the advance 
payment of the premium tax credit;
    (2) Notify the Exchange of the reduction in the portion of the 
premium charged to the individual in accordance with Sec.  156.265(g); 
and
    (3) Include with each billing statement, as applicable, to or for 
the individual the amount of the advance payment of the premium tax 
credit for the applicable month(s), and the remaining premium owed.
    (b) Delays in payment. A QHP issuer may not refuse to commence 
coverage under a policy or terminate coverage on account of any delay in 
payment of an advance payment of the premium tax credit on behalf of an 
enrollee if the QHP issuer has been notified by the

[[Page 429]]

Exchange under Sec.  155.340(a) of this subchapter that the QHP issuer 
will receive such advance payment.
    (c) Refunds to enrollees for improper reduction of enrollee's share 
of premium to account for advance payments of the premium tax credit. If 
a QHP issuer discovers that it did not reduce the portion of the premium 
charged to or for an enrollee for the applicable month(s) by the amount 
of the advance payment of the premium tax credit in accordance with 
paragraph (a)(1) of this section, the QHP issuer must notify the 
enrollee of the improper reduction within 45 calendar days of the QHP 
issuer's discovery of the improper reduction and refund any excess 
premium paid by or for the enrollee, as follows:
    (1) Unless a refund is requested by or for the enrollee, the QHP 
issuer must, within 45 calendar days of discovery of the error, apply 
the excess premium paid by or for the enrollee to the enrollee's portion 
of the premium (or refund the amount directly). If any excess premium 
remains, the QHP issuer must apply the excess premium to the enrollee's 
portion of the premium for each subsequent month for the remainder of 
the period of enrollment or benefit year until the excess is fully 
applied (or refund the remaining amount directly). If any excess premium 
remains at the end of the period of enrollment or benefit year, the QHP 
issuer must refund any excess premium within 45 calendar days of the end 
of the period of enrollment or benefit year, whichever comes first.
    (2) If a refund is requested by or for the enrollee, the refund must 
be provided within 45 calendar days of the date of the request.

[78 FR 15535, Mar. 11, 2013, as amended at 78 FR 65100, Oct. 30, 2013]



Sec.  156.470  Allocation of rates for advance payments of the
premium tax credit.

    (a) Allocation to additional health benefits for QHPs. An issuer 
must provide to the Exchange annually for approval, in the manner and 
timeframe established by HHS, for each health plan at any level of 
coverage offered, or intended to be offered, in the individual market on 
an Exchange, an allocation of the rate for the plan to:
    (1) EHB, other than services described in Sec.  156.280(d)(1); and
    (2) Any other services or benefits offered by the health plan not 
described in paragraph (a)(1) of this section.
    (b) Allocation to additional health benefits for stand-alone dental 
plans. An issuer must provide to the Exchange annually for approval, in 
the manner and timeframe established by HHS, for each stand-alone dental 
plan offered, or intended to be offered, in the individual market on the 
Exchange, a dollar allocation of the expected premium for the plan, to:
    (1) The pediatric dental essential health benefit, and
    (2) Any benefits offered by the stand-alone dental plan that are not 
the pediatric dental essential health benefit.
    (c) Allocation standards for QHPs. The issuer must ensure that the 
allocation described in paragraph (a) of this section--
    (1) Is performed by a member of the American Academy of Actuaries in 
accordance with generally accepted actuarial principles and 
methodologies;
    (2) Reasonably reflects the allocation of the expected allowed 
claims costs attributable to EHB (excluding those services described in 
Sec.  156.280(d)(1));
    (3) Is consistent with the allocation applicable to State-required 
benefits to be submitted by the issuer under Sec.  155.170(c) of this 
subchapter, and the allocation requirements described in Sec.  
156.280(e)(4) for certain services; and
    (4) Is calculated under the fair health insurance premium standards 
described at 45 CFR 147.102, the single risk pool standards described at 
45 CFR 156.80, and the same premium rate standards described at 45 CFR 
156.255.
    (d) Allocation standards for stand-alone dental plans. The issuer 
must ensure that the dollar allocation described in paragraph (b) of 
this section is performed by a member of the American Academy of 
Actuaries in accordance with generally accepted actuarial principles and 
methodologies.
    (e) Disclosure of attribution and allocation methods. An issuer of a 
health plan at any level of coverage or a stand-alone dental plan 
offered, or intended to be offered, in the individual market on the 
Exchange must submit to the

[[Page 430]]

Exchange annually for approval, an actuarial memorandum, in the manner 
and timeframe specified by HHS, with a detailed description of the 
methods and specific bases used to perform the allocations set forth in 
paragraphs (a) and (b), and demonstrating that the allocations meet the 
standards set forth in paragraphs (c) and (d) of this section, 
respectively.
    (f) Multi-State plans. Issuers of multi-State plans, as defined in 
Sec.  155.1000(a) of this subchapter, must submit the allocations and 
actuarial memorandum described in this section to the U.S. Office of 
Personnel Management, in the time and manner established by the U.S. 
Office of Personnel Management.

[78 FR 15535, Mar. 11, 2013, as amended at 79 FR 13840, Mar. 11, 2014]



Sec.  156.480  Oversight of the administration of the cost-sharing
reductions and advance payments of the premium tax credit programs.

    (a) Maintenance of records. An issuer that offers a QHP in the 
individual market through a State Exchange must adhere to, and ensure 
that any relevant delegated entities and downstream entities adhere to, 
the standards set forth in Sec.  156.705 concerning maintenance of 
documents and records, whether paper, electronic, or in other media, by 
issuers offering QHPs in a Federally-facilitated Exchange, in connection 
with cost-sharing reductions and advance payments of the premium tax 
credit.
    (b) Annual reporting requirements. For each benefit year, an issuer 
that offers a QHP in the individual market through an Exchange must 
report to HHS, in the manner and timeframe required by HHS, summary 
statistics specified by HHS with respect to administration of cost-
sharing reduction and advance payments of the premium tax credit 
programs, including any failure to adhere to the standards set forth 
under Sec. Sec.  156.410(a) through (d), 156.425(a) through (b), and 
156.460(a) through (c) of this part.
    (c) Audits. HHS or its designee may audit an issuer that offers a 
QHP in the individual market through an Exchange to assess compliance 
with the requirements of this subpart.

[78 FR 65100, Oct. 30, 2013]



          Subpart F_Consumer Operated and Oriented Plan Program



Sec.  156.500  Basis and scope.

    This subpart implements section 1322 of the Affordable Care Act by 
establishing the Consumer Operated and Oriented Plan (CO-OP) program to 
foster the creation of new consumer-governed, private, nonprofit health 
insurance issuers, known as ``CO-OPs.'' Under this program, loans are 
awarded to encourage the development of CO-OPs. Applicants that meet the 
eligibility standards of the CO-OP program may apply to receive loans to 
help fund start-up costs and meet the solvency requirements of States in 
which the applicant seeks to be licensed to issue CO-OP qualified health 
plans. This subpart sets forth the eligibility and governance 
requirements for the CO-OP program, CO-OP standards, and the terms for 
loans awarded under the CO-OP program.



Sec.  156.505  Definitions.

    The following definitions apply to this subpart:
    Applicant means an entity eligible to apply for a loan described in 
Sec.  156.520 of this subpart.
    Consumer operated and oriented plan (CO-OP) means a loan recipient 
that satisfies the standards in section 1322(c) of the Affordable Care 
Act and Sec.  156.515 of this subpart within the timeframes specified in 
this subpart.
    CO-OP qualified health plan means a health plan that has in effect a 
certification that it meets the standards described in subpart C of this 
part, except that the plan can be deemed certified by CMS or an entity 
designated by CMS as described in Sec.  156.520(e).
    Exchange has the meaning given to the term in Sec.  155.20 of this 
subchapter.
    Formation board means the initial board of directors of the 
applicant or loan recipient before it has begun accepting enrollment and 
had an election by the members of the organization to the board of 
directors.
    Individual market has the meaning given to the term in Sec.  155.20 
of this subchapter.
    Issuer has the meaning given to the term in Sec.  155.20 of this 
subchapter.

[[Page 431]]

    Member means an individual covered under health insurance policies 
issued by a loan recipient.
    Nonprofit member organization or nonprofit member corporation means 
a nonprofit, not-for-profit, public benefit, or similar membership 
entity organized as appropriate under State law.
    Operational board means the board of directors elected by the 
members of the loan recipient after it has begun accepting enrollment.
    Predecessor, with respect to a new entity, means any entity that 
participates in a merger, consolidation, purchase or acquisition of 
property or stock, corporate separation, or other similar business 
transaction that results in the formation of the new entity.
    Pre-existing issuer means a health insurance issuer licensed by a 
State regulator that marketed individual or group health insurance 
benefit plans (other than Medicare or Medicaid Managed Care plans) on 
July 16, 2009.
    Qualified nonprofit health insurance issuer means an entity that 
satisfies or can reasonably be expected to satisfy the standards in 
section 1322(c) of the Affordable Care Act and Sec.  156.515 of this 
subpart within the time frames specified in this subpart, until such 
time as CMS determines the entity does not satisfy or cannot reasonably 
be expected to satisfy these standards.
    Related entity means an entity that shares common ownership, 
control, or governance structure (including management team or Board 
members) with a pre-existing issuer, and satisfies at least one of the 
following conditions:
    (1) Retains responsibilities for the services to be provided by the 
issuer.
    (2) Furnishes services to the issuer's enrollees under an oral or 
written agreement.
    (3) Performs some of the issuer's management functions under 
contract or delegation.
    Representative means an officer, director, or trustee of an 
organization, or group of organizations; or a senior executive or high-
level representative of the Federal government, or a State or local 
government or a sub-unit thereof.
    SHOP has the meaning given to the term in Sec.  155.20 of this 
subchapter.
    Small group market has the meaning given to the term in Sec.  155.20 
of this subchapter.
    Solvency Loan means a loan provided by CMS to a loan recipient in 
order to meet State solvency and reserve requirements.
    Sponsor means an organization or individual that is involved in the 
development, creation, or organization of the CO-OP or provides 40 
percent or more in total funding to a CO-OP (excluding any loans 
received from the CO-OP Program).
    Start-up Loan means a loan provided by CMS to a loan recipient for 
costs associated with establishing a CO-OP.
    State has the meaning given to the term in Sec.  155.20 of this 
subchapter.

[76 FR 77411, Dec. 13, 2011, as amended at 77 FR 18474, Mar. 27, 2012; 
81 FR 29155, May 11, 2016; 81 FR 94181, Dec. 22, 2016]



Sec.  156.510  Eligibility.

    (a) General. In addition to the eligibility standards set forth in 
the CO-OP program Funding Opportunity Announcement (FOA), to be eligible 
to apply for and receive a loan under the CO-OP program, an organization 
must intend to become a CO-OP and be a nonprofit member organization.
    (b) Exclusions from eligibility. (1) Subject to paragraph (b)(2) of 
this section, an organization is not eligible to apply for a loan if:
    (i) The organization or a sponsor of the organization is a pre-
existing issuer, a holding company (an organization that exists 
primarily to hold stock in other companies) that controls a pre-existing 
issuer, a trade association comprised of pre-existing issuers and whose 
purpose is to represent the interests of the health insurance industry, 
a foundation established by a pre-existing issuer, a related entity, or 
a predecessor of either a pre-existing issuer or related entity;
    (ii) The organization receives 25 percent or more of its total 
funding (excluding any loans received from the CO-OP Program) from pre-
existing issuers, holding companies (organizations that exists primarily 
to hold stock in other companies) that control pre-existing issuers, 
trade associations comprised of pre-existing issuers and

[[Page 432]]

whose purpose is to represent the interests of the health insurance 
industry, foundations established by a pre-existing issuer, a related 
entity, or a predecessor of either a pre-existing issuer or related 
entity; or
    (iii) A State or local government, any political subdivision 
thereof, or any instrumentality of such government or political 
subdivision is a sponsor of the organization. The organization receives 
40 percent or more of its total funding (excluding any loans received 
from the CO-OP Program) from a State or local government, any political 
subdivision thereof, or any instrumentality of such a government or 
political subdivision.
    (2) The exclusions in paragraphs (b)(1)(i) and (b)(1)(ii) of this 
section do not exclude from eligibility an applicant that:
    (i) Has as a sponsor a nonprofit, not-for-profit, public benefit, or 
similarly organized entity that is also a sponsor for a pre-existing 
issuer but is not an issuer, a foundation established by a pre-existing 
issuer, a holding company that controls a pre-existing issuer, or a 
trade association comprised of pre-existing issuers and whose purpose is 
to represent the interests of the health insurance industry, provided 
that the pre-existing issuer sponsored by the nonprofit organization 
does not share any of its board or the same chief executive with the 
applicant; or
    (ii) Has purchased assets from a preexisting issuer provided that it 
is an arm's-length transaction where each party acts independently and 
has no other relationship with the other party.
    (3) The exclusion of any instrumentality of a State or local 
government in paragraph (b)(1)(iii) of this section does not exclude 
from eligibility or sponsorship an organization that:
    (i) Is not a government organization under State law;
    (ii) Has no employee of a State or local government serving in his 
or her official capacity as a senior executive (for example, President, 
Chief Executive Officer, or Chief Financial Officer) for the 
organization; and
    (iii) Has a board of directors on which fewer than half of its 
directors are employees of a State or local government serving in their 
official capacities.

[76 FR 77411, Dec. 13, 2011, as amended at 77 FR 18474, Mar. 27, 2012]



Sec.  156.515  CO-OP standards.

    (a) General. A CO-OP must satisfy the standards in this section in 
addition to all other statutory, regulatory, or other requirements.
    (b) Governance requirements. A CO-OP must meet the following 
governance requirements:
    (1) Member control. A CO-OP must implement policies and procedures 
to foster and ensure member control of the organization. Accordingly, a 
CO-OP must meet the following requirements:
    (i) The CO-OP must be governed by an operational board with a 
majority of directors elected by a majority vote of a quorum of the CO-
OP's members that are age 18 or older;
    (ii) All members age 18 or older must be eligible to vote for each 
of the directors on the organization's operational board subject to a 
vote of the members under paragraph (b)(1)(i) of this section;
    (iii) Each member age 18 or older must have one vote in each 
election for each director subject to a vote of the members under 
paragraph (b)(1)(i) of this section in that election;
    (iv) The first elected directors of the organization's operational 
board must be elected no later than one year after the effective date on 
which the organization provides coverage to its first member; the entire 
operational board must be elected or in place, and in full compliance 
with paragraph (b)(1)(i) of this section, no later than two years after 
the same date;
    (v) Elections of the directors on the organization's operational 
board subject to a vote of the members under paragraph (b)(1)(i) of this 
section must be contested so that the total number of candidates for 
contested seats on the operational board exceeds the number of contested 
seats for such directors, except in cases where a seat is vacated mid- 
term due to death, resignation, or removal.
    (2) Standards for board of directors. The operational board for a 
CO-OP must meet the following standards:

[[Page 433]]

    (i) Each director must meet ethical, conflict-of-interest, and 
disclosure standards;
    (ii) Each director has one vote;
    (iii) Positions on the board of directors may be designated for 
individuals with specialized expertise, experience, or affiliation (for 
example, providers, employers, and unions); and
    (iv) [Reserved]
    (v) Limitation on government and issuer participation. No 
representative of any Federal, State or local government (or of any 
political subdivision or instrumentality thereof) and no representative 
of any organization described in Sec.  156.510(b)(1)(i) (in the case of 
a representative of a State or local government or organization 
described in Sec.  156.510(b)(1)(i), with respect to a State in which 
the CO-OP issues policies), may serve on the CO-OP's formation board or 
as a director on the organization's operational board.
    (3) Ethics and conflict of interest protections. The CO-OP must have 
governing documents that incorporate ethics, conflict of interest, and 
disclosure standards. The standards must protect against insurance 
industry involvement and interference. In addition, the standards must 
ensure that each director acts in the sole interest of the CO-OP, its 
members, and its local geographic community as appropriate, avoids self 
dealing, and acts prudently and consistently with the terms of the CO-
OP's governance documents and applicable State and Federal law. At a 
minimum, these standards must include:
    (i) A mechanism to identify potential ethical or other conflicts of 
interest;
    (ii) A duty on the CO-OP's executive officers and directors to 
disclose all potential conflicts of interest;
    (iii) A process to determine the extent to which a conflict exists;
    (iv) A process to address any conflict of interest; and
    (v) A process to be followed in the event a director or executive 
officer of the CO-OP violates these standards.
    (4) Consumer focus. The CO-OP must operate with a strong consumer 
focus, including timeliness, responsiveness, and accountability to 
members.
    (c) Standards for health plan issuance. A CO-OP must meet several 
standards for the issuance of health plans in the individual and small 
group market.
    (1) At least two-thirds of the policies or contracts for health 
insurance coverage issued by a CO-OP in each State in which it is 
licensed must be CO-OP qualified health plans offered in the individual 
and small group markets.
    (2) Loan recipients must offer a CO-OP qualified health plan at the 
silver and gold benefit levels, defined in section 1302(d) of the 
Affordable Care Act, in every individual market Exchange that serves the 
geographic regions in which the organization is licensed and intends to 
provide health care coverage. If offering at least one plan in the small 
group market, loan recipients must offer a CO-OP qualified health plan 
at both the silver and gold benefit levels, defined in section 1302(d) 
of the Affordable Care Act, in each SHOP that serves the geographic 
regions in which the organization offers coverage in the small group 
market.
    (3) Within the earlier of thirty-six months following the initial 
drawdown of the Start-up Loan or one year following the initial drawdown 
of the Solvency Loan, loan recipients must be licensed in a State and 
offer at least one CO-OP qualified health plan at the silver and gold 
benefit levels, defined in section 1302(d) of the Affordable Care Act, 
in the individual market Exchanges and if the loan recipient offers 
coverage in the small group market, at the silver and gold benefit 
levels, defined in section 1302(d) of the Affordable Care Act, in the 
SHOPs. Loan recipients may only begin offering plans and accepting 
enrollment in the Exchanges for new CO-OP qualified health plans during 
the open enrollment period for each applicable Exchange.
    (d) Requirement to become a CO-OP. Loan recipients must meet the 
standards of Sec.  156.515 no later than five years following initial 
drawdown of the Start-up Loan or three years following the initial 
drawdown of a Solvency Loan.

[76 FR 77411, Dec. 13, 2011, as amended at 81 FR 29155, May 11, 2016; 81 
FR 94182, Dec. 22, 2016]

[[Page 434]]



Sec.  156.520  Loan terms.

    (a) Overview of Loans. Applicants may apply for the following loans 
under this section: Start-up Loans and Solvency Loans.
    (1) Use of loans. All loans awarded under this subpart must be used 
in a manner that is consistent with the FOA, the loan agreement, and all 
other statutory, regulatory, or other requirements.
    (2) Solvency loans. Solvency Loans awarded under this section will 
be structured in a manner that ensures that the loan amount is 
recognized by State insurance regulators as contributing to the State-
determined reserve requirements or other solvency requirements (rather 
than debt) consistent with the insurance regulations for the States in 
which the loan recipient will offer a CO-OP qualified health plan.
    (b) Repayment period. The loan recipient must make loan payments 
consistent with the approved repayment schedule in the loan agreement 
until the loan is paid in full consistent with State reserve 
requirements, solvency regulations, and requisite surplus note 
arrangements. Subject to their ability to meet State reserve 
requirements, solvency regulations, or requisite surplus note 
arrangements, the loan recipient must repay its loans and, if 
applicable, penalties within the repayment periods in paragraphs (b)(1), 
(b)(2), or (b)(3) of this section.
    (1) The contractual repayment period for Start-up Loans and any 
applicable penalty pursuant to paragraph (c)(3) of this section is 5 
years following each drawdown of loan funds consistent with the terms of 
the loan agreement.
    (2) The contractual repayment period for Solvency Loans and any 
applicable penalty pursuant to paragraph (c)(3) of this section is 15 
years following each drawdown of loan funds consistent with the terms of 
the loan agreement.
    (3) Changes to the loan terms, including the repayment periods, may 
be executed if CMS determines that the loan recipient is unable to repay 
the loans as a result of State reserve requirements, solvency 
regulations, or requisite surplus note arrangements or without 
compromising coverage stability, member control, quality of care, or 
market stability. In the case of a loan modification or workout, the 
repayment period for loans awarded under this subpart is the repayment 
period established in the loan modification or workout. The revised 
terms must meet all other regulatory, statutory, and other requirements.
    (c) Interest rates. Loan recipients will be charged interest for the 
loans awarded under this subpart. Interest will be accrued starting from 
the date of drawdown on the loan amounts that have been drawn down and 
not yet repaid by the loan recipient. The interest rate will be 
determined based on the date of award.
    (1) Start-up Loans. Consistent with the terms of the loan agreement, 
the interest rate for Start-up Loans is equal to the greater of the 
average interest rate on marketable Treasury securities of similar 
maturity minus one percentage point or zero percent. If the loan 
recipient's loan agreement is terminated by CMS, the loan recipient will 
be charged the interest and penalty described in paragraph (c)(3) of 
this section.
    (2) Solvency Loans. Consistent with the terms of the loan agreement, 
the interest rate for Solvency Loans is equal to the greater of the 
average interest rate on marketable Treasury securities of similar 
maturity minus two percentage points or zero percent. If a loan 
recipient's loan agreement is terminated by CMS, the loan recipient will 
be charged the interest and penalty described in paragraph (c)(3) of 
this section.
    (3) Penalty payment. If CMS terminates a loan recipient's loan 
agreement because the loan recipient is not in compliance with program 
rules or the terms of its loan agreement, or CMS has reason to believe 
that the organization engages in, or has engaged in, criminal or 
fraudulent activities or activities that cause material harm to the 
organization's members or the government, the loan recipient must repay 
110 percent of the aggregate amount of loans received under this 
subpart. In addition, the loan recipient must pay interest on the 
aggregate amount of loans received for the period the loans were 
outstanding equal to the average

[[Page 435]]

interest rate on marketable Treasury securities of similar maturity.
    (d) Failure to pay. Loan recipients that fail to make loan payments 
consistent with the repayment schedule or loan modification or workout 
approved by CMS will be subject to any and all remedies available to CMS 
under law to collect the debt.
    (e) Deeming of CO-OP qualified health plans. Health plans offered by 
a loan recipient may be deemed certified as a CO-OP qualified health 
plan to participate in the Exchanges for two years and may be 
recertified every two years for up to ten years following the life of 
any loan awarded to the loan recipient under this subpart, consistent 
with section 1301(a)(2) of the Affordable Care Act.
    (1) To be deemed as certified to participate in the Exchanges, the 
plan must comply with the standards for CO-OP qualified health plans set 
forth pursuant to section 1311(c) of the Affordable Care Act, all State-
specific standards established by an Exchange for qualified health plans 
operating in that Exchange, except for those State-specific standards 
that operate to exclude loan recipients due to being new issuers or 
based on other characteristics that are inherent in the design of a CO-
OP, and the standards of the CO-OP program as set forth in this subpart.
    (2) A loan recipient seeking to have a plan deemed as certified to 
participate in the Exchanges must provide evidence to CMS or an entity 
designated by CMS that the plan complies with the standards for CO-OP 
qualified health plans set forth pursuant to section 1311(c) of the 
Affordable Care Act, all State-specific standards established by an 
Exchange for qualified health plans operating in that Exchange, except 
for those State-specific standards that operate to exclude loan 
recipients due to being new issuers or based on other characteristics 
that are inherent in the design of a CO-OP, and the standards of the CO-
OP program as set forth in this subpart.
    (3) If a plan offered by a loan recipient is deemed to be certified 
to participate in the Exchanges or loses its deemed status and is no 
longer certified to participate in the Exchanges, CMS or an entity 
designated by CMS will provide notice to the Exchanges in which the loan 
recipient offers CO-OP qualified health plans.
    (f) Conversions. The loan recipient shall not convert or sell to a 
for-profit or non-consumer operated entity at any time after receiving a 
loan under this subpart. The loan recipient shall not undertake any 
transaction that would result in the CO-OP implementing a governance 
structure that does not meet the standards in this subpart.

[76 FR 77411, Dec. 13, 2011, as amended at 77 FR 18474, Mar. 27, 2012]



                  Subpart G_Minimum Essential Coverage

    Source: 78 FR 39529, July 1, 2013, unless otherwise noted.



Sec.  156.600  The definition of minimum essential coverage.

    The term minimum essential coverage has the same meaning as provided 
in section 5000A(f) of the Code and its implementing regulations for 
purposes of this subpart.



Sec.  156.602  Other coverage that qualifies as minimum essential coverage.

    The following types of coverage are designated by the Secretary as 
minimum essential coverage for purposes of section 5000A(f)(1)(E) of the 
Code:
    (a) Self-funded student health coverage. Coverage offered to 
students by an institution of higher education (as defined in the Higher 
Education Act of 1965), where the institution assumes the risk for 
payment of claims, are designated as minimum essential coverage for plan 
or policy years beginning on or before December 31, 2014. For coverage 
beginning after December 31, 2014, sponsors of self-funded student 
health coverage may apply to be recognized as minimum essential coverage 
pursuant to the process provided under 45 CFR 156.604.
    (b) Refugee Medical Assistance supported by the Administration for 
Children and Families. Coverage under Refugee Medical Assistance, 
authorized under section 412(e)(7)(A) of The Immigration and Nationality 
Act, provides up to

[[Page 436]]

eight months of coverage to certain noncitizens who are considered 
Refugees, as defined in section 101(a)(42) of the Act.
    (c) Medicare advantage plans. Coverage under the Medicare program 
pursuant to Part C of title XVIII of the Social Security Act, which 
provides Medicare Parts A and B benefits through a private insurer.
    (d) State high risk pool coverage. A qualified high risk pool as 
defined by section 2744(c)(2) of the Public Health Service Act 
established on or before November 26, 2014 in any State.
    (e) Other coverage. Other coverage that qualifies pursuant to Sec.  
156.604.

[78 FR 39529, July 1, 2013, as amended at 80 FR 10875, Feb. 27, 2015]



Sec.  156.604  Requirements for recognition as minimum essential
coverage for types of coverage not otherwise designated minimum
essential coverage in the statute or this subpart.

    (a) The Secretary may recognize ``other coverage'' as minimum 
essential coverage provided HHS determines that the coverage meets the 
following substantive and procedural requirements:
    (1) Coverage requirements. A plan must meet substantially all the 
requirements of title I of the Affordable Care Act pertaining to non-
grandfathered, individual health insurance coverage.
    (2) Procedural requirements for recognition as minimum essential 
coverage. To be considered for recognition as minimum essential 
coverage, the sponsor of the coverage, government agency, health 
insurance issuer, or plan administrator must submit the following 
information to HHS:
    (i) Identity of the plan sponsor and appropriate contact persons;
    (ii) Basic information about the plan, including:
    (A) Name of the organization sponsoring the plan;
    (B) Name and title of the individual who is authorized to make, and 
makes, this certification on behalf of the organization;
    (C) Address of the individual named above;
    (D) Phone number of the individual named above;
    (E) Number of enrollees;
    (F) Eligibility criteria;
    (G) Cost sharing requirements, including deductible and out-of-
pocket maximum limit;
    (H) Essential health benefits covered; and
    (I) A certification by the appropriate individual, named pursuant to 
paragraph (a)(3)(ii)(b), that the organization substantially complies 
with the requirements of title I of the Affordable Care Act that apply 
to non-grandfathered plans in the individual market and any plan 
documentation or other information that demonstrate that the coverage 
substantially comply with these requirements.
    (b) CMS will publish a list of types of coverage that the Secretary 
has recognized as minimum essential coverage pursuant to this provision.
    (c) If at any time the Secretary determines that a type of coverage 
previously recognized as minimum essential coverage no longer meets the 
coverage requirements of paragraph (a)(1) of this section, the Secretary 
may revoke the recognition of such coverage.
    (d) Notice. Once recognized as minimum essential coverage, the 
sponsor of the coverage, government agency, health insurance issuer, or 
plan administrator must provide notice to all enrollees of its minimum 
essential coverage status and must comply with the information reporting 
requirements of section 6055 of the Internal Revenue Code and 
implementing regulations.

[78 FR 39529, July 1, 2013, as amended at 79 FR 30351, May 27, 2014]



Sec.  156.606  HHS audit authority.

    The Secretary may audit a plan or program recognized as minimum 
essential coverage under Sec.  156.604 at any time to ensure compliance 
with the requirements of Sec.  156.604(a).



  Subpart H_Oversight and Financial Integrity Standards for Issuers of 
        Qualified Health Plans in Federally-Facilitated Exchanges

    Source: 78 FR 65100, Oct. 30, 2013, unless otherwise noted.

[[Page 437]]



Sec.  156.705  Maintenance of records for Federally-facilitated
Exchanges.

    (a) General standard. Issuers offering QHPs in a Federally-
facilitated Exchange must maintain all documents and records (whether 
paper, electronic, or other media) and other evidence of accounting 
procedures and practices, necessary for HHS to do the following:
    (1) Periodically audit financial records related to QHP issuers' 
participation in a Federally-facilitated Exchange, and evaluate the 
ability of QHP issuers to bear the risk of potential financial losses; 
and
    (2) Conduct compliance reviews or otherwise monitor QHP issuers' 
compliance with all Exchange standards applicable to issuers offering 
QHPs in a federally-facilitated Exchange as listed in this part.
    (b) Records. The records described in paragraph (a) of this section 
include the sources listed in Sec.  155.1210(b)(2), (3), and (5) of this 
subchapter.
    (c) Record retention timeframe. Issuers offering QHPs in a 
Federally-facilitated Exchange must maintain all records referenced in 
paragraph (a) of this section for 10 years.
    (d) Record availability. Issuers offering QHPs in a Federally-
facilitated Exchange must make all records in paragraph (a) of this 
section available to HHS, the OIG, the Comptroller General, or their 
designees, upon request.



Sec.  156.715  Compliance reviews of QHP issuers in Federally-
facilitated Exchanges.

    (a) General standard. Issuers offering QHPs in a Federally-
facilitated Exchange may be subject to compliance reviews to ensure 
ongoing compliance with Exchange standards applicable to issuers 
offering QHPs in a Federally-facilitated Exchange.
    (b) Records. In preparation for or in the course of the compliance 
review, a QHP issuer must make available for HHS to review the records 
of the QHP issuer that pertain to its activities within a Federally-
facilitated Exchange. Such records may include, but are not limited to 
the following:
    (1) The QHP issuer's books and contracts, including the QHP issuer's 
policy manuals and other QHP plan benefit information provided to the 
QHP issuer's enrollees;
    (2) The QHP issuer's policies and procedures, protocols, standard 
operating procedures, or other similar manuals related to the QHP 
issuer's activities in a Federally-facilitated Exchange;
    (3) Any other information reasonably necessary for HHS to--
    (i) Evaluate the QHP issuer's compliance with QHP certification 
standards and other Exchange standards applicable to issuers offering 
QHPs in a Federally-facilitated Exchange;
    (ii) Evaluate the QHP's performance, including its adherence to an 
effective compliance plan, within a Federally-facilitated Exchange;
    (iii) Verify that the QHP issuer has performed the duties attested 
to as part of the QHP certification process; and
    (iv) Assess the likelihood of fraud or abuse.
    (c) Interest of Qualified Individuals and Qualified Employers. HHS's 
findings from the compliance reviews under this section may be in 
conjunction with other findings related to the QHP issuers' compliance 
with certification standards, used to confirm that permitting the 
issuer's QHPs to be available through a Federally-facilitated Exchange 
is in the interest of the qualified individuals and qualified employers 
as provided under Sec.  155.1000(c)(2) of this subchapter.
    (d) Onsite and desk reviews. The QHP issuer will make available, for 
the purposes listed in paragraph (c) of this section, its premises, 
physical facilities and equipment (including computer and other 
electronic systems), for HHS to conduct a compliance review as provided 
under this section.
    (1) A compliance review under this section will be carried out as an 
onsite or desk review based on the specific circumstances.
    (2) Unless otherwise specified, nothing in this section is intended 
to preempt Federal laws and regulations related to information privacy 
and security.
    (e) Compliance review timeframe. A QHP issuer may be subject to a 
compliance review up to 10 years from the last day of that plan benefit 
year, or 10 years from the last day that the QHP

[[Page 438]]

certification is effective if the QHP is no longer available through a 
Federally-facilitated Exchange; provided, however, that if the 10 year 
review period falls during an ongoing compliance review, the review 
period would be extended until the compliance review is completed.
    (f) Failure to comply. A QHP issuer that fails to comply with a 
compliance review under this section may be subject to enforcement 
remedies under subpart I of this part.

[78 FR 65100, Oct. 30, 2013, as amended at 81 FR 94182, Dec. 22, 2016]



    Subpart I_Enforcement Remedies in Federally-Facilitated Exchanges

    Source: 78 FR 54143, Aug. 30, 2013, unless otherwise noted.



Sec.  156.800  Available remedies; Scope.

    (a) Kinds of sanctions. HHS may impose the following types of 
sanctions on QHP issuers in a Federally-facilitated Exchange that are 
not in compliance with Exchange standards applicable to issuers offering 
QHPs in the Federally-facilitated Exchange:
    (1) Civil money penalties as specified in Sec.  156.805; and
    (2) Decertification of a QHP offered by the non-compliant QHP issuer 
in a Federally-facilitated Exchange as described in Sec.  156.810.
    (b) Scope. Sanctions under subpart I are applicable only for non-
compliance with QHP issuer participation standards and other standards 
applicable to issuers offering QHPs in a Federally-facilitated Exchange.
    (c) Compliance standard. For calendar years 2014 and 2015, sanctions 
under this subpart will not be imposed if the QHP issuer has made good 
faith efforts to comply with applicable requirements.
    (d) Information sharing. HHS may consult and share information about 
QHP issuers with other Federal and State regulatory and enforcement 
entities to the extent that the consultation and information is 
necessary for purposes of State or Federal oversight and enforcement 
activities.

[78 FR 54143, Aug. 30, 2013, as amended at 79 FR 30351, May 27, 2014; 80 
FR 10875, Feb. 27, 2015]



Sec.  156.805  Bases and process for imposing civil money penalties
in Federally-facilitated Exchanges.

    (a) Grounds for imposing civil money penalties. Civil money 
penalties may be imposed on an issuer in a Federally-facilitated 
Exchange by HHS if, based on credible evidence, HHS has reasonably 
determined that the issuer has engaged in one or more of the following 
actions:
    (1) Misconduct in the Federally-facilitated Exchange or substantial 
non-compliance with the Exchange standards and requirements applicable 
to issuers offering QHPs in the Federally-facilitated Exchange, 
including but not limited to issuer standards and requirements under 
parts 153 and 156 of this subchapter;
    (2) Limiting the QHP's enrollees' access to medically necessary 
items and services that are required to be covered as a condition of the 
QHP issuer's ongoing participation in the Federally-facilitated 
Exchange, if the limitation has adversely affected or has a substantial 
likelihood of adversely affecting one or more enrollees in the QHP 
offered by the QHP issuer;
    (3) Imposing on enrollees premiums in excess of the monthly 
beneficiary premiums permitted by Federal standards applicable to QHP 
issuers participating in the Federally-facilitated Exchange;
    (4) Engaging in any practice that would reasonably be expected to 
have the effect of denying or discouraging enrollment into a QHP offered 
by the issuer (except as permitted by this part) by qualified 
individuals whose medical condition or history indicates the potential 
for a future need for significant medical services or items;
    (5) Intentionally or recklessly misrepresenting or falsifying 
information that it furnishes--
    (i) To HHS; or
    (ii) To an individual or entity upon which HHS relies to make its 
certifications or evaluations of the QHP issuer's ongoing compliance 
with Exchange standards applicable to issuers

[[Page 439]]

offering QHPs in the Federally-facilitated Exchange;
    (6) Failure to remit user fees assessed under Sec.  156.50(c); or
    (7) Failure to comply with the cost-sharing reductions and advance 
payments of the premium tax credit standards of subpart E of this part.
    (b) Factors in determining the amount of civil money penalties 
assessed. In determining the amount of civil money penalties, HHS may 
take into account the following:
    (1) The QHP issuer's previous or ongoing record of compliance;
    (2) The level of the violation, as determined in part by--
    (i) The frequency of the violation, taking into consideration 
whether any violation is an isolated occurrence, represents a pattern, 
or is widespread; and
    (ii) The magnitude of financial and other impacts on enrollees and 
qualified individuals; and
    (3) Aggravating or mitigating circumstances, or other such factors 
as justice may require, including complaints about the issuer with 
regard to the issuer's compliance with the medical loss ratio standards 
required by the Affordable Care Act and as codified by applicable 
regulations.
    (c) Maximum penalty. The maximum amount of penalty imposed for each 
violation is $100 as adjusted annually under 45 CFR part 102 for each 
day for each QHP issuer for each individual adversely affected by the 
QHP issuer's non-compliance; and where the number of individuals cannot 
be determined, HHS may estimate the number of individuals adversely 
affected by the violation.
    (d) Request for hearing. (1) An issuer may appeal the assessment of 
a civil money penalty under this section by filing a request for hearing 
under an applicable administrative hearing process.
    (2) If an issuer files a request for hearing under this paragraph 
(d), the assessment of a civil money penalty will not occur prior to the 
issuance of the final administrative decision in the appeal.
    (e) Failure to request a hearing. (1) If the QHP issuer does not 
request a hearing within 30 days of the issuance of the notice described 
in paragraph (d)(1) of this section, HHS may assess the proposed civil 
money penalty.
    (2) HHS will notify the issuer in writing of any penalty that has 
been assessed under this subpart and of the means by which the QHP 
issuer or another responsible entity may satisfy the CMP assessment.
    (3) The QHP issuer has no right to appeal a penalty with respect to 
which it has not requested a hearing in accordance with the requirements 
of the applicable administrative hearing process unless the QHP issuer 
can show good cause, as determined under Sec.  156.905(b), for failing 
to timely exercise its right to a hearing.

[78 FR 54143, Aug. 30, 2013, as amended at 79 FR 15245, Mar. 19, 2014; 
79 FR 30351, May 27, 2014; 81 FR 12351, Mar. 8, 2016; 81 FR 61581, Sept. 
6, 2016]



Sec.  156.806  Notice of non-compliance.

    If HHS learns of a potential violation described in Sec.  156.805 or 
if a State informs HHS of a potential violation, prior to imposing any 
CMPs, HHS must provide a written notice to the issuer, to include the 
following:
    (a) Describe the potential violation.
    (b) Provide 30 days from the date of the notice for the QHP issuer 
to respond and to provide additional information to refute an alleged 
violation.
    (c) State that a civil money penalty may be assessed if the 
allegations are not, as determined by HHS, refuted.

[79 FR 30351, May 27, 2014]



Sec.  156.810  Bases and process for decertification of a QHP offered
by an issuer through a Federally-facilitated Exchange.

    (a) Bases for decertification. A QHP may be decertified on one or 
more of the following grounds:
    (1) The QHP issuer substantially fails to comply with the Federal 
laws and regulations applicable to QHP issuers participating in the 
Federally-facilitated Exchange;
    (2) The QHP issuer substantially fails to comply with the standards 
related to the risk adjustment, reinsurance, or risk corridors programs 
under 45 CFR part 153, including providing HHS with valid risk 
adjustment, reinsurance or risk corridors data;

[[Page 440]]

    (3) The QHP issuer substantially fails to comply with the 
transparency and marketing standards in Sec. Sec.  156.220 and 156.225;
    (4) The QHP issuer substantially fails to comply with the standards 
regarding advance payments of the premium tax credit and cost-sharing in 
subpart E of this part;
    (5) The QHP issuer is operating in the Federally-facilitated 
Exchange in a manner that hinders the efficient and effective 
administration of the Exchange;
    (6) The QHP no longer meets the applicable standards set forth under 
subpart C of this part.
    (7) Based on credible evidence, the QHP issuer has committed or 
participated in fraudulent or abusive activities, including submission 
of false or fraudulent data;
    (8) The QHP issuer substantially fails to meet the requirements 
under Sec.  156.230 related to network adequacy standards or, Sec.  
156.235 related to inclusion of essential community providers;
    (9) The QHP issuer substantially fails to comply with the law and 
regulations related to internal claims and appeals and external review 
processes;
    (10) The State recommends to HHS that the QHP should no longer be 
available in a Federally-facilitated Exchange;
    (11) The QHP issuer substantially fails to comply with the privacy 
or security standards set forth in Sec.  156.260;
    (12) The QHP issuer substantially fails to meet the requirements 
related to the cases forwarded to QHP issuers under subpart K of this 
part;
    (13) The QHP issuer substantially fails to meet the requirements 
related to the offering of a QHP under subpart M of this part;
    (14) The QHP issuer offering the QHP is the subject of a pending, 
ongoing, or final State regulatory or enforcement action or 
determination that relates to the issuer offering QHPs in the Federally-
facilitated Exchanges; or
    (15) HHS reasonably believes that the QHP issuer lacks the financial 
viability to provide coverage under its QHPs until the end of the plan 
year.
    (b) State sanctions and determinations--(1) State sanctions. HHS may 
consider regulatory or enforcement actions taken by a State against a 
QHP issuer as a factor in determining whether to decertify a QHP offered 
by that issuer.
    (2) State determinations. HHS may decertify a QHP offered by an 
issuer in a Federally-facilitated Exchange based on a determination or 
action by a State as it relates to the issuer offering QHPs in a 
Federally-facilitated Exchange, including when a State places an issuer 
or its parent organization into receivership or when the State 
recommends to HHS that the QHP no longer be available in a Federally-
facilitated Exchange.
    (c) Standard decertification process. For decertification actions on 
grounds other than those described in paragraphs (a)(7), (8), or (9) of 
this section, HHS will provide written notices to the QHP issuer, 
enrollees in that QHP, and the State department of insurance in the 
State in which the QHP is being decertified. The written notice must 
include the following:
    (1) The effective date of the decertification, which will be a date 
specified by HHS that is no earlier than 30 days after the date of 
issuance of the notice;
    (2) The reason for the decertification, including the regulation or 
regulations that are the basis for the decertification;
    (3) For the written notice to the QHP issuer, information about the 
effect of the decertification on the ability of the issuer to offer the 
QHP in the Federally-facilitated Exchange and must include information 
about the procedure for appealing the decertification by making a 
hearing request; and
    (4) The written notice to the QHP enrollees must include information 
about the effect of the decertification on enrollment in the QHP and 
about the availability of a special enrollment period, as described in 
Sec.  155.420 of this subchapter.
    (d) Expedited decertification process. For decertification actions 
on grounds described in paragraphs (a)(6), (7), (8), or (9) of this 
section, HHS will provide written notice to the QHP issuer, enrollees, 
and the State department of insurance in the State in which the QHP is 
being decertified. The written notice must include the following:

[[Page 441]]

    (1) The effective date of the decertification, which will be a date 
specified by HHS; and
    (2) The information required by paragraphs (c)(2) through (4) of 
this section.
    (e) Request for hearing. An issuer may appeal the decertification of 
a QHP offered by that issuer under paragraph (c) or (d) of this section 
by filing a request for hearing under an applicable administrative 
hearing process.
    (1) If an issuer files a request for hearing under this paragraph 
(e):
    (i) If the decertification is under paragraph (b)(1) of this 
section, the decertification will not take effect prior to the issuance 
of the final administrative decision in the appeal, notwithstanding the 
effective date specified in paragraph (b)(1) of this section.
    (ii) If the decertification is under paragraph (b)(2) of this 
section, the decertification will be effective on the date specified in 
the notice of decertification, but the certification of the QHP may be 
reinstated immediately upon issuance of a final administrative decision 
that the QHP should not be decertified.
    (2) [Reserved]

[78 FR 54143, Aug. 30, 2013, as amended at 79 FR 30351, May 27, 2014; 81 
FR 12351, Mar. 8, 2016]



Sec.  156.815  Plan suppression.

    (a) Suppression means temporarily making a QHP certified to be 
offered through the Federally-facilitated Exchange unavailable for 
enrollment through the Federally-facilitated Exchange.
    (b) Grounds for suppression. A QHP may be suppressed as described in 
paragraph (a) of this section on one or more of the following grounds:
    (1) The QHP issuer notifies HHS of its intent to withdraw the QHP 
from a Federally-facilitated Exchange when one of the exceptions to 
guaranteed renewability of coverage related to discontinuing a 
particular product or discontinuing all coverage under Sec.  147.106(c) 
or (d) of this subchapter applies;
    (2) Data submitted for the QHP is incomplete or inaccurate;
    (3) The QHP is in the process of being decertified as described in 
Sec.  156.810(c) or (d), or the QHP issuer is appealing a completed 
decertification as described in subpart J of this part;
    (4) The QHP issuer offering the QHP is the subject of a pending, 
ongoing, or final State regulatory or enforcement action or 
determination that could affect the issuer's ability to enroll consumers 
or otherwise relates to the issuer offering QHPs in the Federally-
facilitated Exchanges; or
    (5) One of the exceptions to guaranteed availability of coverage 
related to special rules for network plans or financial capacity limits 
under Sec.  147.104(c) or (d) of this subchapter applies.
    (c) A multi-State plan as defined in Sec.  155.1000(a) of this 
subchapter may be suppressed as described in paragraph (a) of this 
section if OPM notifies the Exchange that:
    (1) OPM has found a compliance violation within the multi-State 
plan, or
    (2) One of the grounds for suppression in paragraph (b) of this 
section exists for the multi-State plan.

[80 FR 10875, Feb. 27, 2015]



  Subpart J_Administrative Review of QHP Issuer Sanctions in Federally-
                          Facilitated Exchanges

    Source: 78 FR 65101, Oct. 30, 2013, unless otherwise noted.



Sec.  156.901  Definitions.

    In this subpart, unless the context indicates otherwise:
    ALJ means administrative law judge of the Departmental Appeals Board 
of HHS.
    Filing date means the date postmarked by the U.S. Postal Service, 
deposited with a carrier for commercial delivery, or hand delivered.
    Hearing includes a hearing on a written record as well as an in-
person or telephone hearing.
    Party means HHS or the respondent.
    Receipt date means five days after the date of a document, unless 
there is a showing that it was in fact received later.
    Respondent means an entity that received a notice of proposed 
assessment

[[Page 442]]

of a civil money penalty issued pursuant to Sec.  156.805 or a notice of 
decertification pursuant to Sec.  156.810(c) or (d).



Sec.  156.903  Scope of Administrative Law Judge's (ALJ) authority.

    (a) The ALJ has the authority, including all of the authority 
conferred by the Administrative Procedure Act (5 U.S.C. 554a), to adopt 
whatever procedures may be necessary or proper to carry out in an 
efficient and effective manner the ALJ's duty to provide a fair and 
impartial hearing on the record and to issue an initial decision 
concerning the imposition of a civil money penalty or the 
decertification of a QHP offered in a Federally-facilitated Exchange.
    (b) The ALJ's authority includes the authority to modify, consistent 
with the Administrative Procedures Act (5 U.S.C. 552a), any hearing 
procedures set out in this subpart.
    (c) The ALJ does not have the authority to find invalid or refuse to 
follow Federal statutes or regulations.



Sec.  156.905  Filing of request for hearing.

    (a) A respondent has a right to a hearing before an ALJ if it files 
a request for hearing that complies with Sec.  156.907(a), within 30 
days after the date of issuance of either HHS' notice of proposed 
assessment under Sec.  156.805, notice of decertification of a QHP under 
Sec.  156.810(c) or Sec.  156.810(d). The request for hearing should be 
addressed as instructed in the notice of proposed determination. ``date 
of issuance'' is five (5) days after the filing date, unless there is a 
showing that the document was received earlier.
    (b) The ALJ may extend the time for filing a request for hearing 
only if the ALJ finds that the respondent was prevented by events or 
circumstances beyond its control from filing its request within the time 
specified above. Any request for an extension of time must be made 
promptly by written motion.



Sec.  156.907  Form and content of request for hearing.

    (a) The request for hearing must do the following:
    (1) Identify any factual or legal bases for the assessment or 
decertifications with which the respondent disagrees.
    (2) Describe with reasonable specificity the basis for the 
disagreement, including any affirmative facts or legal arguments on 
which the respondent is relying.
    (b) Identify the relevant notice of assessment or decertification by 
date and attach a copy of the notice.



Sec.  156.909  Amendment of notice of assessment or decertification
request for hearing.

    The ALJ may permit CMS to amend its notice of assessment or 
decertification, or permit the respondent to amend a request for hearing 
that complies with Sec.  156.907(a), if the ALJ finds that no undue 
prejudice to either party will result.



Sec.  156.911  Dismissal of request for hearing.

    An ALJ will order a request for hearing dismissed if the ALJ 
determines that:
    (a) The request for hearing was not filed within 30 days as 
specified by Sec.  156.905(a) or any extension of time granted by the 
ALJ pursuant to Sec.  156.905(b).
    (b) The request for hearing fails to meet the requirements of Sec.  
156.907.
    (c) The entity that filed the request for hearing is not a 
respondent under Sec.  156.901.
    (d) The respondent has abandoned its request.
    (e) The respondent withdraws its request for hearing.



Sec.  156.913  Settlement.

    HHS has exclusive authority to settle any issue or any case, without 
the consent of the ALJ at any time before or after the ALJ's decision.



Sec.  156.915  Intervention.

    (a) The ALJ may grant the request of an entity, other than the 
respondent, to intervene if all of the following occur:
    (1) The entity has a significant interest relating to the subject 
matter of the case.
    (2) Disposition of the case will, as a practical matter, likely 
impair or impede the entity's ability to protect that interest.

[[Page 443]]

    (3) The entity's interest is not adequately represented by the 
existing parties.
    (4) The intervention will not unduly delay or prejudice the 
adjudication of the rights of the existing parties.
    (b) A request for intervention must specify the grounds for 
intervention and the manner in which the entity seeks to participate in 
the proceedings. Any participation by an intervenor must be in the 
manner and by any deadline set by the ALJ.
    (c) The Department of Labor (DOL) or the Internal Revenue Service 
(IRS) may intervene without regard to paragraphs (a)(1) through (3) of 
this section.



Sec.  156.917  Issues to be heard and decided by ALJ.

    (a) The ALJ has the authority to hear and decide the following 
issues:
    (1) Whether a basis exists to assess a civil money penalty against 
the respondent.
    (2) Whether the amount of the assessed civil money penalty is 
reasonable.
    (3) Whether a basis exists to decertify a QHP offered by the 
respondent in a Federally-facilitated Exchange.
    (b) In deciding whether the amount of a civil money penalty is 
reasonable, the ALJ--
    (1) Will apply the factors that are identified in Sec.  156.805 for 
civil money penalties.
    (2) May consider evidence of record relating to any factor that HHS 
did not apply in making its initial determination, so long as that 
factor is identified in this subpart.
    (c) If the ALJ finds that a basis exists to assess a civil money 
penalty, the ALJ may sustain, reduce, or increase the penalty that HHS 
assessed.



Sec.  156.919  Forms of hearing.

    (a) All hearings before an ALJ are on the record. The ALJ may 
receive argument or testimony in writing, in person, or by telephone. 
The ALJ may receive testimony by telephone only if the ALJ determines 
that doing so is in the interest of justice and economy and that no 
party will be unduly prejudiced. The ALJ may require submission of a 
witness' direct testimony in writing only if the witness is available 
for cross-examination.
    (b) The ALJ may decide a case based solely on the written record 
where there is no disputed issue of material fact the resolution of 
which requires the receipt of oral testimony.



Sec.  156.921  Appearance of counsel.

    Any attorney who is to appear on behalf of a party must promptly 
file, with the ALJ, a notice of appearance.



Sec.  156.923  Communications with the ALJ.

    No party or person (except employees of the ALJ's office) may 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for both parties to participate. This 
provision does not prohibit a party or person from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec.  156.925  Motions.

    (a) Any request to the ALJ for an order or ruling must be by motion, 
stating the relief sought, the authority relied upon, and the facts 
alleged. All motions must be in writing, with a copy served on the 
opposing party, except in either of the following situations:
    (1) The motion is presented during an oral proceeding before an ALJ 
at which both parties have the opportunity to be present.
    (2) An extension of time is being requested by agreement of the 
parties or with waiver of objections by the opposing party.
    (b) Unless otherwise specified in this subpart, any response or 
opposition to a motion must be filed within 20 days of the party's 
receipt of the motion. The ALJ does not rule on a motion before the time 
for filing a response to the motion has expired except where the 
response is filed at an earlier date, where the opposing party consents 
to the motion being granted, or where the ALJ determines that the motion 
should be denied.

[[Page 444]]



Sec.  156.927  Form and service of submissions.

    (a) Every submission filed with the ALJ must be filed in triplicate, 
including one original of any signed documents, and include:
    (1) A caption on the first page, setting forth the title of the 
case, the docket number (if known), and a description of the submission 
(such as ``Motion for Discovery'').
    (2) The signatory's name, address, and telephone number.
    (3) A signed certificate of service, specifying each address to 
which a copy of the submission is sent, the date on which it is sent, 
and the method of service.
    (b) A party filing a submission with the ALJ must, at the time of 
filing, serve a copy of such submission on the opposing party. An 
intervenor filing a submission with the ALJ must, at the time of filing, 
serve a copy of the submission on all parties. Service must be made by 
mailing or hand delivering a copy of the submission to the opposing 
party. If a party is represented by an attorney, service must be made on 
the attorney.



Sec.  156.929  Computation of time and extensions of time.

    (a) For purposes of this subpart, in computing any period of time, 
the time begins with the day following the act, event, or default and 
includes the last day of the period unless it is a Saturday, Sunday, or 
legal holiday observed by the Federal government, in which event it 
includes the next business day. When the period of time allowed is less 
than seven days, intermediate Saturdays, Sundays, and legal holidays 
observed by the Federal government are excluded from the computation.
    (b) The period of time for filing any responsive pleading or papers 
is determined by the date of receipt (as defined in Sec.  156.901) of 
the submission to which a response is being made.
    (c) The ALJ may grant extensions of the filing deadlines specified 
in these regulations or set by the ALJ for good cause shown (except that 
requests for extensions of time to file a request for hearing may be 
granted only on the grounds specified in Sec.  156.905(b)).



Sec.  156.931  Acknowledgment of request for hearing.

    After receipt of the request for hearing, the ALJ assigned to the 
case or someone acting on behalf of the ALJ will send a letter to the 
parties that acknowledges receipt of the request for hearing, identifies 
the docket number assigned to the case, provides instructions for filing 
submissions and other general information concerning procedures, and 
sets out the next steps in the case.



Sec.  156.935  Discovery.

    (a) The parties must identify any need for discovery from the 
opposing party as soon as possible, but no later than the time for the 
reply specified in Sec.  156.937(c). Upon request of a party, the ALJ 
may stay proceedings for a reasonable period pending completion of 
discovery if the ALJ determines that a party would not be able to make 
the submissions required by Sec.  156.937 without discovery. The parties 
should attempt to resolve any discovery issues informally before seeking 
an order from the ALJ.
    (b) Discovery devices may include requests for production of 
documents, requests for admission, interrogatories, depositions, and 
stipulations. The ALJ orders interrogatories or depositions only if 
these are the only means to develop the record adequately on an issue 
that the ALJ must resolve to decide the case.
    (c) Each discovery request must be responded to within 30 days of 
receipt, unless that period of time is extended for good cause by the 
ALJ.
    (d) A party to whom a discovery request is directed may object in 
writing for any of the following reasons:
    (1) Compliance with the request is unduly burdensome or expensive.
    (2) Compliance with the request will unduly delay the proceedings.
    (3) The request seeks information that is wholly outside of any 
matter in dispute.
    (4) The request seeks privileged information. Any party asserting a 
claim of privilege must sufficiently describe the information or 
document being withheld to show that the privilege applies. If an 
asserted privilege applies to only

[[Page 445]]

part of a document, a party withholding the entire document must state 
why the nonprivileged part is not segregable.
    (5) The disclosure of information responsive to the discovery 
request is prohibited by law.
    (e) Any motion to compel discovery must be filed within 10 days 
after receipt of objections to the party's discovery request, within 10 
days after the time for response to the discovery request has elapsed if 
no response is received, or within 10 days after receipt of an 
incomplete response to the discovery request. The motion must be 
reasonably specific as to the information or document sought and must 
state its relevance to the issues in the case.



Sec.  156.937  Submission of briefs and proposed hearing exhibits.

    (a) Within 60 days of its receipt of the acknowledgment provided for 
in Sec.  156.931, the respondent must file the following with the ALJ:
    (1) A statement of its arguments concerning CMS's notice of 
assessment or decertification (respondent's brief), including citations 
to the respondent's hearing exhibits provided in accordance with 
paragraph (a)(2) of this section. The brief may not address factual or 
legal bases for the assessment or decertification that the respondent 
did not identify as disputed in its request for hearing or in an 
amendment to that request permitted by the ALJ.
    (2) All documents (including any affidavits) supporting its 
arguments, tabbed and organized chronologically and accompanied by an 
indexed list identifying each document.
    (3) A statement regarding whether there is a need for an in-person 
hearing and, if so, a list of proposed witnesses and a summary of their 
expected testimony that refers to any factual dispute to which the 
testimony will relate.
    (4) Any stipulations or admissions.
    (b) Within 30 days of its receipt of the respondent's submission 
required by paragraph (a) of this section, CMS will file the following 
with the ALJ:
    (1) A statement responding to the respondent's brief, including the 
respondent's proposed hearing exhibits, if appropriate. The statement 
may include citations to CMS's proposed hearing exhibits submitted in 
accordance with paragraph (b)(2) of this section.
    (2) Any documents supporting CMS's response not already submitted as 
part of the respondent's proposed hearing exhibits, organized and 
indexed as indicated in paragraph (a)(2) of this section (CMS's proposed 
hearing exhibits).
    (3) A statement regarding whether there is a need for an in-person 
hearing and, if so, a list of proposed witnesses and a summary of their 
expected testimony that refers to any factual dispute to which the 
testimony will relate.
    (4) Any admissions or stipulations.
    (c) Within 15 days of its receipt of CMS's submission required by 
paragraph (b) of this section, the respondent may file with the ALJ a 
reply to CMS's submission.



Sec.  156.939  Effect of submission of proposed hearing exhibits.

    (a) Any proposed hearing exhibit submitted by a party in accordance 
with Sec.  156.937 is deemed part of the record unless the opposing 
party raises an objection to that exhibit and the ALJ rules to exclude 
it from the record. An objection must be raised either in writing prior 
to the prehearing conference provided for in Sec.  156.941 or at the 
prehearing conference. The ALJ may require a party to submit the 
original hearing exhibit on his or her own motion or in response to a 
challenge to the authenticity of a proposed hearing exhibit.
    (b) A party may introduce a proposed hearing exhibit following the 
times for submission specified in Sec.  156.937 only if the party 
establishes to the satisfaction of the ALJ that it could not have 
produced the exhibit earlier and that the opposing party will not be 
prejudiced.



Sec.  156.941  Prehearing conferences.

    An ALJ may schedule one or more prehearing conferences (generally 
conducted by telephone) on the ALJ's own motion or at the request of 
either party for the purpose of any of the following:
    (a) Hearing argument on any outstanding discovery request.

[[Page 446]]

    (b) Establishing a schedule for any supplements to the submissions 
required by Sec.  156.937 because of information obtained through 
discovery.
    (c) Hearing argument on a motion.
    (d) Discussing whether the parties can agree to submission of the 
case on a stipulated record.
    (e) Establishing a schedule for an in-person hearing, including 
setting deadlines for the submission of written direct testimony or for 
the written reports of experts.
    (f) Discussing whether the issues for a hearing can be simplified or 
narrowed.
    (g) Discussing potential settlement of the case.
    (h) Discussing any other procedural or substantive issues.



Sec.  156.943  Standard of proof.

    (a) In all cases before an ALJ--
    (1) CMS has the burden of coming forward with evidence sufficient to 
establish a prima facie case;
    (2) The respondent has the burden of coming forward with evidence in 
response, once CMS has established a prima facie case; and
    (3) CMS has the burden of persuasion regarding facts material to the 
assessment or decertification; and
    (4) The respondent has the burden of persuasion regarding facts 
relating to an affirmative defense.
    (b) The preponderance of the evidence standard applies to all cases 
before the ALJ.



Sec.  156.945  Evidence.

    (a) The ALJ will determine the admissibility of evidence.
    (b) Except as provided in this part, the ALJ will not be bound by 
the Federal Rules of Evidence. However, the ALJ may apply the Federal 
Rules of Evidence where appropriate; for example, to exclude unreliable 
evidence.
    (c) The ALJ excludes irrelevant or immaterial evidence.
    (d) Although relevant, evidence may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (e) Although relevant, evidence is excluded if it is privileged 
under Federal law.
    (f) Evidence concerning offers of compromise or settlement made in 
this action will be inadmissible to the extent provided in the Federal 
Rules of Evidence.
    (g) Evidence of acts other than those at issue in the instant case 
is admissible in determining the amount of any civil money penalty if 
those acts are used under Sec.  156.805 of this part to consider the 
entity's prior record of compliance, or to show motive, opportunity, 
intent, knowledge, preparation, identity, or lack of mistake. This 
evidence is admissible regardless of whether the acts occurred during 
the statute of limitations period applicable to the acts that constitute 
the basis for liability in the case and regardless of whether HHS' 
notice sent in accordance with Sec.  156.805 referred to them.
    (h) The ALJ will permit the parties to introduce rebuttal witnesses 
and evidence.
    (i) All documents and other evidence offered or taken for the record 
will be open to examination by all parties, unless the ALJ orders 
otherwise for good cause shown.
    (j) The ALJ may not consider evidence regarding the willingness and 
ability to enter into and successfully complete a corrective action plan 
when that evidence pertains to matters occurring after HHS' notice under 
Sec.  156.805(d) or Sec.  156.810(c) or Sec.  156.810(d).



Sec.  156.947  The record.

    (a) Any testimony that is taken in-person or by telephone is 
recorded and transcribed. The ALJ may order that other proceedings in a 
case, such as a prehearing conference or oral argument of a motion, be 
recorded and transcribed.
    (b) The transcript of any testimony, exhibits and other evidence 
that is admitted, and all pleadings and other documents that are filed 
in the case constitute the record for purposes of an ALJ decision.
    (c) For good cause, the ALJ may order appropriate redactions made to 
the record.

[[Page 447]]



Sec.  156.951  Posthearing briefs.

    Each party is entitled to file proposed findings and conclusions, 
and supporting reasons, in a posthearing brief. The ALJ will establish 
the schedule by which such briefs must be filed. The ALJ may direct the 
parties to brief specific questions in a case and may impose page limits 
on posthearing briefs. Additionally, the ALJ may allow the parties to 
file posthearing reply briefs.



Sec.  156.953  ALJ decision.

    The ALJ will issue an initial agency decision based only on the 
record and on applicable law; the decision will contain findings of fact 
and conclusions of law. The ALJ's decision is final and appealable after 
30 days unless it is modified or vacated under Sec.  156.957.



Sec.  156.955  Sanctions.

    (a) The ALJ may sanction a party or an attorney for failing to 
comply with an order or other directive or with a requirement of a 
regulation, for abandonment of a case, or for other actions that 
interfere with the speedy, orderly or fair conduct of the hearing. Any 
sanction that is imposed will relate reasonably to the severity and 
nature of the failure or action.
    (b) A sanction may include any of the following actions:
    (1) In the case of failure or refusal to provide or permit 
discovery, drawing negative fact inferences or treating such failure or 
refusal as an admission by deeming the matter, or certain facts, to be 
established.
    (2) Prohibiting a party from introducing certain evidence or 
otherwise advocating a particular claim or defense.
    (3) Striking pleadings, in whole or in part.
    (4) Staying the case.
    (5) Dismissing the case.
    (6) Entering a decision by default.
    (7) Refusing to consider any motion or other document that is not 
filed in a timely manner.
    (8) Taking other appropriate action.



Sec.  156.957  Review by Administrator.

    (a) The Administrator of CMS (which for purposes of this section may 
include his or her delegate), at his or her discretion, may review in 
whole or in part any initial agency decision issued under Sec.  156.953.
    (b) The Administrator may decide to review an initial agency 
decision if it appears from a preliminary review of the decision (or 
from a preliminary review of the record on which the initial agency 
decision was based, if available at the time) that:
    (1) The ALJ made an erroneous interpretation of law or regulation.
    (2) The initial agency decision is not supported by substantial 
evidence.
    (3) The ALJ has incorrectly assumed or denied jurisdiction or 
extended his or her authority to a degree not provided for by statute or 
regulation.
    (4) The ALJ decision requires clarification, amplification, or an 
alternative legal basis for the decision.
    (5) The ALJ decision otherwise requires modification, reversal, or 
remand.
    (c) Within 30 days of the date of the initial agency decision, the 
Administrator will mail a notice advising the respondent of any intent 
to review the decision in whole or in part.
    (d) Within 30 days of receipt of a notice that the Administrator 
intends to review an initial agency decision, the respondent may submit, 
in writing, to the Administrator any arguments in support of, or 
exceptions to, the initial agency decision.
    (e) This submission of the information indicated in paragraph (d) of 
this section must be limited to issues the Administrator has identified 
in his or her notice of intent to review, if the Administrator has given 
notice of an intent to review the initial agency decision only in part. 
A copy of this submission must be sent to the other party.
    (f) After receipt of any submissions made pursuant to paragraph (d) 
of this section and any additional submissions for which the 
Administrator may provide, the Administrator will affirm, reverse, 
modify, or remand the initial agency decision. The Administrator will 
mail a copy of his or her decision to the respondent.
    (g) The Administrator's decision will be based on the record on 
which the initial agency decision was based (as

[[Page 448]]

forwarded by the ALJ to the Administrator) and any materials submitted 
pursuant to paragraphs (b), (d), and (f) of this section.
    (h) The Administrator's decision may rely on decisions of any courts 
and other applicable law, whether or not cited in the initial agency 
decision.



Sec.  156.959  Judicial review.

    (a) Filing of an action for review. Any responsible entity against 
whom a final order imposing a civil money penalty or decertification of 
a QHP is entered may obtain review in the United States District Court 
for any district in which the entity is located or in the United States 
District Court for the District of Columbia by doing the following:
    (1) Filing a notice of appeal in that court within 30 days from the 
date of a final order.
    (2) Simultaneously sending a copy of the notice of appeal by 
registered mail to HHS.
    (b) Certification of administrative record. HHS promptly certifies 
and files with the court the record upon which the penalty was assessed.
    (c) Standard of review. The findings of HHS and the ALJ may not be 
set aside unless they are found to be unsupported by substantial 
evidence, as provided by 5 U.S.C. 706(2)(E).



Sec.  156.961  Failure to pay assessment.

    If any entity fails to pay an assessment after it becomes a final 
order, or after the court has entered final judgment in favor of CMS, 
CMS refers the matter to the Attorney General, who brings an action 
against the entity in the appropriate United States district court to 
recover the amount assessed.



Sec.  156.963  Final order not subject to review.

    In an action brought under Sec.  156.961, the validity and 
appropriateness of the final order imposing a civil money penalty is not 
subject to review.



Subpart K_Cases Forwarded to Qualified Health Plans and Qualified Health 
             Plan Issuers in Federally-facilitated Exchanges

    Source: 78 FR 54143, Aug. 30, 2013, unless otherwise noted.



Sec.  156.1010  Standards.

    (a) A case is a communication brought by a complainant that 
expresses dissatisfaction with a specific person or entity subject to 
State or Federal laws regulating insurance, concerning the person or 
entity's activities related to the offering of insurance, other than a 
communication with respect to an adverse benefit determination as 
defined in Sec.  147.136(a)(2)(i) of this subchapter. Issues related to 
adverse benefit determinations are not addressed in this section and are 
subject to the provisions in Sec.  147.136 of this subchapter governing 
internal claims appeals and external review. Issues related to 
eligibility determination processes and appeals are not addressed in 
this section and are subject to the provisions in subpart F of part 155.
    (b) QHP issuers operating in a Federally-facilitated Exchange must 
investigate and resolve, as appropriate, cases from the complainant 
forwarded to the issuer by HHS. Cases received by a QHP issuer operating 
in a Federally-facilitated Exchange directly from a complainant or the 
complainant's authorized representative will be handled by the issuer 
through its internal customer service process.
    (c) Cases may be forwarded to a QHP issuer operating in a Federally-
facilitated Exchange through a casework tracking system developed by HHS 
or other means as determined by HHS.
    (d) Cases received by a QHP issuer operating in a Federally-
facilitated Exchange from HHS must be resolved within 15 calendar days 
of receipt of the case. Urgent cases as defined in paragraph (e) of this 
section that do not otherwise fall within the scope of Sec.  147.136 of 
this subchapter must be resolved no later than 72 hours after receipt of 
the case. Where applicable State laws and regulations establish 
timeframes for case resolution that are

[[Page 449]]

stricter than the standards contained in this paragraph, QHP issuers 
operating in a Federally-facilitated Exchange must comply with such 
stricter laws and regulations.
    (e) For cases received from HHS by a QHP issuer operating in a 
Federally-facilitated Exchange, an urgent case is one in which there is 
an immediate need for health services because the non-urgent standard 
could seriously jeopardize the enrollee's or potential enrollee's life, 
or health or ability to attain, maintain, or regain maximum function; or 
one in which the process for non-urgent cases would jeopardize the 
enrollee's or potential enrollee's ability enroll in a QHP through the 
Federally-facilitated Exchange.
    (f) For cases received from HHS, QHP issuers operating in a 
Federally-facilitated Exchange are required to notify complainants 
regarding the disposition of the as soon as possible upon resolution of 
the case, but in no event later than three (3) business days after the 
case is resolved.
    (1) For the purposes of meeting the requirement in this paragraph 
(f), notification may be by verbal or written means as determined most 
appropriate by the QHP issuer.
    (2) In instances when the initial notification of a case's 
disposition is not written, written notification must be provided to the 
consumer in a timely manner.
    (g) For cases received from HHS, QHP issuers operating in a 
Federally-facilitated Exchange must use the casework tracking system 
developed by HHS, or other means as determined by HHS, to document the 
following:
    (1) The date of resolution of a case received from HHS;
    (2) A resolution summary of the case no later than seven (7) 
business days after resolution of the case. The record must include a 
clear and concise narrative explaining how the case was resolved 
including information about how and when the complainant was notified of 
the resolution; and
    (3) For a case in which a State agency, including but not limited to 
a State department of insurance, conducts an investigation related to 
that case, any compliance issues identified by the State agency 
implicating the QHP or QHP issuer.
    (h) Cases received by a QHP issuer operating in a Federally-
facilitated Exchange from a State in which the issuer offers QHPs must 
be investigated and resolved according to applicable State laws and 
regulations. With respect to cases directly handled by the State, HHS or 
any other appropriate regulatory authority, QHP issuers operating in a 
Federally-facilitated Exchange must cooperate fully with the efforts of 
the State, HHS, or other regulatory authority to resolve the case.



                       Subpart L_Quality Standards

    Source: 78 FR 65105, Oct. 30, 2013, unless otherwise noted.



Sec.  156.1105  Establishment of standards for HHS-approved enrollee
satisfaction survey vendors for use by QHP issuers in Exchanges.

    (a) Application for approval. An enrollee satisfaction survey vendor 
must be approved by HHS, in a form and manner to be determined by HHS, 
to administer, on behalf of a QHP issuer, enrollee satisfaction surveys 
to QHP enrollees. HHS will approve enrollee satisfaction survey vendors 
on an annual basis, and each enrollee satisfaction survey vendor must 
submit an application for each year that approval is sought.
    (b) Standards. To be approved by HHS, an enrollee satisfaction 
survey vendor must meet each of the following standards:
    (1) Sign and submit an application form for approval in accordance 
with paragraph (a) of this section;
    (2) Ensure, on an annual basis, that appropriate staff participate 
in enrollee satisfaction survey vendor training and successfully 
complete a post-training certification exercise as established by HHS;
    (3) Ensure the accuracy of their data collection, calculation and 
submission processes and attest to HHS the veracity of the data and 
these processes;
    (4) Sign and execute a standard HHS data use agreement, in a form 
and manner to be determined by HHS, that

[[Page 450]]

establishes protocols related to the disclosure, use, and reuse of HHS 
data;
    (5) Adhere to the enrollee satisfaction survey protocols and 
technical specifications in a manner and form required by HHS;
    (6) Develop and submit to HHS a quality assurance plan and any 
supporting documentation as determined to be relevant by HHS. The plan 
must describe in adequate detail the implementation of and compliance 
with all required protocols and technical specifications described in 
paragraph (b)(5) of this section;
    (7) Adhere to privacy and security standards established and 
implemented under Sec.  155.260 of this subchapter by the Exchange with 
which they are associated;
    (8) Comply with all applicable State and Federal laws;
    (9) Become a registered user of the enrollee satisfaction survey 
data warehouse to submit files to HHS on behalf of its authorized QHP 
contracts;
    (10) Participate in and cooperate with HHS oversight for quality-
related activities, including, but not limited to: review of the 
enrollee satisfaction survey vendor's quality assurance plan and other 
supporting documentation; analysis of the vendor's submitted data and 
sampling procedures; and site visits and conference calls; and,
    (11) Comply with minimum business criteria as established by HHS.
    (c) Approved list. A list of approved enrollee satisfaction survey 
vendors will be published on an HHS Web site.
    (d) Monitoring. HHS will periodically monitor HHS-approved enrollee 
satisfaction survey vendors to ensure ongoing compliance with the 
standards in paragraph (b) of this section. If HHS determines that an 
HHS-approved enrollee satisfaction survey vendor is non-compliant with 
the standards required in paragraph (b) of this section, the survey 
vendor may be removed from the approved list described in paragraph (c) 
of this section and/or the submitted survey results may be ineligible to 
be included for ESS results.
    (e) Appeals. An enrollee satisfaction survey vendor that is not 
approved by HHS after submitting the application described in paragraph 
(a) of this section may appeal HHS's decision by notifying HHS in 
writing within 15 days from receipt of the notification of not being 
approved and submitting additional documentation demonstrating how the 
vendor meets the standards in paragraph (b) of this section. HHS will 
review the submitted documentation and make a final approval 
determination within 30 days from receipt of the additional 
documentation.

[78 FR 65105, Oct. 30, 2013, as amended at 79 FR 30351, May 27, 2014]



Sec.  156.1110  Establishment of patient safety standards for
QHP issuers.

    (a) Patient safety standards. A QHP issuer that contracts with a 
hospital with greater than 50 beds must verify that the hospital, as 
defined in section 1861(e) of the Act:
    (1) For plan years beginning before January 1, 2017, is Medicare-
certified or has been issued a Medicaid-only CMS Certification Number 
(CCN) and is subject to the Medicare Hospital Conditions of 
Participation requirements for--
    (i) A quality assessment and performance improvement program as 
specified in 42 CFR 482.21; and
    (ii) Discharge planning as specified in 42 CFR 482.43.
    (2) For plan years beginning on or after January 1, 2017--
    (i)(A) Utilizes a patient safety evaluation system as defined in 42 
CFR 3.20; and
    (B) Implements a mechanism for comprehensive person-centered 
hospital discharge to improve care coordination and health care quality 
for each patient; or
    (ii) Implements an evidence-based initiative, to improve health care 
quality through the collection, management and analysis of patient 
safety events that reduces all cause preventable harm, prevents hospital 
readmission, or improves care coordination.
    (3) A QHP issuer must ensure that each of its QHPs meets the patient 
safety standards in accordance with this section.
    (b) Documentation. A QHP issuer must collect:
    (1) For plan years beginning before January 1, 2017, the CCN from 
each of its contracted hospitals with greater than 50 beds, to 
demonstrate that those

[[Page 451]]

hospitals meet patient safety standards required in paragraph (a)(1) of 
this section; and
    (2) For plan years beginning on or after January 1, 2017, 
information, from each of its contracted hospitals with greater than 50 
beds, to demonstrate that those hospitals meet patient safety standards 
required in paragraph (a)(2) of this section.
    (c) Reporting. (1) A QHP issuer must make available to the Exchange 
the documentation referenced in paragraph (b) of this section, upon 
request by the Exchange, in a time and manner specified by the Exchange.
    (2) Issuers of multi-State plans, as defined in Sec.  155.1000(a) of 
this subchapter, must provide the documentation described in paragraph 
(b) of this section to the U.S. Office of Personnel Management, in the 
time and manner specified by the U.S. Office of Personnel Management.

[79 FR 13841, Mar. 11, 2014, as amended at 81 FR 12351, Mar. 8, 2016]



Sec.  156.1120  Quality rating system.

    (a) Data submission requirement. (1) A QHP issuer must submit data 
to HHS and Exchanges to support the calculation of quality ratings for 
each QHP that has been offered in an Exchange for at least one year.
    (2) In order to ensure the integrity of the data required to 
calculate the QRS, a QHP issuer must submit data that has been validated 
in a form and manner specified by HHS.
    (3) A QHP issuer must include in its data submission information 
only for those QHP enrollees at the level specified by HHS.
    (b) Timeline. A QHP issuer must annually submit data necessary to 
calculate the QHP's quality ratings to HHS and Exchanges, on a timeline 
and in a standardized form and manner specified by HHS.
    (c) Marketing requirement. A QHP issuer may reference the quality 
ratings for its QHPs in its marketing materials, in a manner specified 
by HHS.
    (d) Multi-State plans. Issuers of multi-State plans, as defined in 
Sec.  155.1000(a) of this subchapter, must provide the data described in 
paragraph (a) of this section to the U.S. Office of Personnel 
Management, in the time and manner specified by the U.S. Office of 
Personnel Management.

[79 FR 30352, May 27, 2014]



Sec.  156.1125  Enrollee satisfaction survey system.

    (a) General requirement. A QHP issuer must contract with an HHS-
approved enrollee satisfaction survey (ESS) vendor, as identified by 
Sec.  156.1105, in order to administer the Enrollee Satisfaction Survey 
of the QHP's enrollees. A QHP issuer must authorize its contracted ESS 
vendor to report survey results to HHS and the Exchange on the issuer's 
behalf.
    (b) Data requirement. (1) A QHP issuer must collect data for each 
QHP, with more than 500 enrollees in the previous year that has been 
offered in an Exchange for at least one year and following a survey 
sampling methodology provided by HHS.
    (2) In order to ensure the integrity of the data required to conduct 
the survey, a QHP issuer must submit data that has been validated in a 
form and manner specified by HHS, and submit this data to its contracted 
ESS vendor.
    (3) A QHP issuer must include in its data submission information 
only for those QHP enrollees at the level specified by HHS.
    (c) Marketing requirement. A QHP issuer may reference the survey 
results for its QHPs in its marketing materials, in a manner specified 
by HHS.
    (d) Timeline. A QHP issuer must annually submit data necessary to 
conduct the survey to its contracted ESS vendor on a timeline and in a 
standardized form and manner specified by HHS.
    (e) Multi-State plans. Issuers of multi-State plans, as defined in 
Sec.  155.1000(a) of this subchapter, must provide the data described in 
paragraph (b) of this section to the U.S. Office of Personnel 
Management, in the time and manner specified by the U.S. Office of 
Personnel Management.

[79 FR 30352, May 27, 2014]



Sec.  156.1130  Quality improvement strategy.

    (a) General requirement. A QHP issuer participating in an Exchange 
for 2 or

[[Page 452]]

more consecutive years must implement and report on a quality 
improvement strategy including a payment structure that provides 
increased reimbursement or other market-based incentives in accordance 
with the health care topic areas in section 1311(g)(1) of the Affordable 
Care Act, for each QHP offered in an Exchange, consistent with the 
guidelines developed by HHS under section 1311(g) of the Affordable Care 
Act.
    (b) Data requirement. A QHP issuer must submit data that has been 
validated in a manner and timeframe specified by the Exchange to support 
the evaluation of quality improvement strategies in accordance with 
Sec.  155.200(d) of this subchapter.
    (c) Timeline. A QHP issuer must submit data annually to evaluate 
compliance with the standards for a quality improvement strategy in 
accordance with paragraph (a) of this section, in a manner and timeframe 
specified by the Exchange.
    (d) Multi-State plans. Issuers of multi-State plans, as defined in 
Sec.  155.1000(a) of this subchapter, must provide the data described in 
paragraph (b) of this section to the U.S. Office of Personnel 
Management, in the manner and timeframe specified by the U.S. Office of 
Personnel Management.

[80 FR 10876, Feb. 27, 2015]



         Subpart M_Qualified Health Plan Issuer Responsibilities

    Source: 78 FR 54143, Aug. 30, 2013, unless otherwise noted.



Sec.  156.1210  Dispute submission.

    (a) Responses to reports. Within 90 calendar days of the date of a 
payment and collections report from HHS, the issuer must, in a form and 
manner specified by HHS describe to HHS any inaccuracies it identifies 
in the report.
    (b) Confirmation of HHS payment and collections reports. At the end 
of each payment year, the issuer must, in a form and manner specified by 
HHS, confirm to HHS that the amounts identified in the most recent 
payment and collections report for the coverage year accurately reflect 
applicable payments owed by the issuer to the Federal Government and the 
payments owed to the issuer by the Federal Government, or that the 
issuer has disputed any identified inaccuracies.

[85 FR 29262, May 14, 2020]



Sec.  156.1215  Payment and collections processes.

    (a) Netting of payments and charges for 2014. In 2014, as part of 
its monthly payment and collections process, HHS will net payments owed 
to QHP issuers and their affiliates under the same taxpayer 
identification number against amounts due to the Federal government from 
the QHP issuers and their affiliates under the same taxpayer 
identification number for advance payments of the premium tax credit, 
advance payments of cost-sharing reductions, and payment of Federally-
facilitated Exchange user fees.
    (b) Netting of payments and charges for later years. As part of its 
payment and collections process, HHS may net payments owed to issuers 
and their affiliates operating under the same tax identification number 
against amounts due to the Federal or State governments from the issuers 
and their affiliates under the same taxpayer identification number for 
advance payments of the premium tax credit, advance payments of and 
reconciliation of cost-sharing reductions, payment of Federally-
facilitated Exchange user fees, payment of any fees for State-based 
Exchanges utilizing the Federal platform, and risk adjustment, 
reinsurance, and risk corridors payments and charges.
    (c) Determination of debt. Any amount owed to the Federal government 
by an issuer and its affiliates for advance payments of the premium tax 
credit, advance payments of and reconciliation of cost-sharing 
reductions, Federally-facilitated Exchange user fees, including any fees 
for State-based Exchanges utilizing the Federal platform, risk 
adjustment, reinsurance, and risk corridors, after HHS nets amounts owed 
by the Federal government under these programs, is a determination of a 
debt.

[79 FR 13841, Mar. 11, 2014, as amended at 81 FR 12351, Mar. 8, 2016]

[[Page 453]]



Sec.  156.1220  Administrative appeals.

    (a) Requests for reconsideration--(1) Matters for reconsideration. 
An issuer may file a request for reconsideration under this section to 
contest a processing error by HHS, HHS's incorrect application of the 
relevant methodology, or HHS's mathematical error only with respect to 
the following:
    (i) The amount of advance payment of the premium tax credit, advance 
payment of cost-sharing reductions or Federally-facilitated Exchange 
user fees charge for a benefit year;
    (ii) The amount of a risk adjustment payment or charge for a benefit 
year, including an assessment of risk adjustment user fees;
    (iii) The amount of a reinsurance payment for a benefit year;
    (iv) The amount of a risk adjustment default charge for a benefit 
year;
    (v) The amount of a reconciliation payment or charge for cost-
sharing reductions for a benefit year;
    (vi) The amount of a risk corridors payment or charge for a benefit 
year;
    (vii) The findings of a second validation audit as a result of risk 
adjustment data validation with respect to risk adjustment data for the 
2016 benefit year and beyond; or
    (viii) The calculation of a risk score error rate as a result of 
risk adjustment data validation with respect to risk adjustment data for 
the 2016 benefit year and beyond.
    (2) Materiality threshold. Notwithstanding paragraph (a)(1) of this 
section, an issuer may file a request for reconsideration under this 
section only if the amount in dispute under paragraph (a)(1)(i) through 
(viii) of this section, as applicable, is equal to or exceeds 1 percent 
of the applicable payment or charge listed in such paragraphs (a)(1)(i) 
through (viii) of this section payable to or due from the issuer for the 
benefit year, or $10,000, whichever is less.
    (3) Time for filing a request for reconsideration. The request for 
reconsideration must be filed in accordance with the following 
timeframes:
    (i) For advance payments of the premium tax credit, advance payments 
of cost-sharing reductions, Federally-facilitated Exchange user fee 
charges, or State-based Exchanges utilizing the Federal platform fees, 
within 60 calendar days after the date of the final reconsideration 
notification specifying the aggregate amount of advance payments of the 
premium tax credit, advance payments of cost-sharing reductions, 
Federally-facilitated Exchange user fees, and State-based Exchanges 
utilizing the Federal platform fees for the applicable benefit year;
    (ii) For a risk adjustment payment or charge, including an 
assessment of risk adjustment user fees, the findings of a second 
validation audit, or the calculation of a risk score error rate as a 
result of risk adjustment data validation, within 30 calendar days of 
the date of the notification under Sec.  153.310(e) of this subchapter;
    (iii) For a reinsurance payment, within 30 calendar days of the date 
of the notification under Sec.  153.240(b)(1)(ii) of this subchapter;
    (iv) For a default risk adjustment charge, within 30 calendar days 
of the date of the notification of the default risk adjustment charge;
    (v) For reconciliation of the cost-sharing reduction portion of 
advance payments, within 60 calendar days of the date of the cost-
sharing reduction reconciliation discrepancy resolution decision; and
    (vi) For a risk corridors payment or charge, within 30 calendar days 
of the date of the notification under Sec.  153.510(d) of this 
subchapter.
    (4) Content of request. (i) The request for reconsideration must 
specify the findings or issues specified in paragraph (a)(1) of this 
section that the issuer challenges, and the reasons for the challenge.
    (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), 153.710(d)(2), and 156.430(h)(1) of this 
subchapter, it was so identified and remains unresolved.
    (iii) Notwithstanding paragraph (a)(1) of this section, a 
reconsideration with

[[Page 454]]

respect to advance payments of the premium tax credit, advance payments 
of cost-sharing reductions, and Federally-facilitated Exchange user fees 
may be requested only if, to extent the issue could have been previously 
identified by the issuer to HHS under Sec.  156.1210, it was so 
identified and remains unresolved. An issuer may request reconsideration 
if it previously identified an issue under Sec.  156.1210 after the 15-
calendar-day deadline, but late discovery of the issue was not due to 
misconduct on the part of the issuer.
    (iv) The issuer may include in the request for reconsideration 
additional documentary evidence that HHS should consider. Such documents 
may not include data that was to have been filed by the applicable data 
submission deadline, but may include evidence of timely submission.
    (5) Scope of review for reconsideration. In conducting the 
reconsideration, HHS will review the appropriate payment and charge 
determinations, the evidence and findings upon which the determination 
was based, and any additional documentary evidence submitted by the 
issuer. HHS may also review any other evidence it believes to be 
relevant in deciding the reconsideration, which will be provided to the 
issuer with a reasonable opportunity to review and rebut the evidence. 
The issuer must prove its case by a preponderance of the evidence with 
respect to issues of fact.
    (6) Reconsideration decision. HHS will inform the issuer of the 
reconsideration decision in writing. A reconsideration decision is final 
and binding for decisions regarding the advance payments of the premium 
tax credit, advance payment of cost-sharing reductions, or Federally-
facilitated Exchange user fees. A reconsideration decision with respect 
to other matters is subject to the outcome of a request for informal 
hearing filed in accordance with paragraph (b) of this section.
    (b) Informal hearing. An issuer may request an informal hearing 
before a CMS hearing officer to appeal HHS's reconsideration decision.
    (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.
    (2) Content of request. The request for informal hearing must 
include a copy of the reconsideration decision and must specify the 
findings or issues in the decision that the issuer challenges, and its 
reasons for the challenge. HHS may submit for review by the CMS hearing 
officer a statement of its reasons for the reconsideration decision.
    (3) Informal hearing procedures. (i) The issuer will receive a 
written notice of the time and place of the informal hearing at least 15 
calendar days before the scheduled date.
    (ii) The CMS hearing officer will neither receive testimony nor 
accept any new evidence that was not presented with the reconsideration 
request and HHS statement under paragraph (b) of this section. The CMS 
hearing officer will review only the documentary evidence provided by 
the issuer and HHS, and the record that was before HHS when HHS made its 
reconsideration determination. The issuer may be represented by counsel 
in the informal hearing, and must prove its case by clear and convincing 
evidence with respect to issues of fact.
    (4) Decision of the CMS hearing officer. The CMS hearing officer 
will send the informal hearing decision and the reasons for the decision 
to the issuer. The decision of the CMS hearing officer is final and 
binding, but is subject to the results of any Administrator's review 
initiated in accordance with paragraph (c) of this section.
    (c) Review by the Administrator of CMS. (1) Either the issuer or CMS 
may request review by the Administrator of CMS of the CMS hearing 
officer's decision. A request for review of the CMS hearing officer's 
decision must be submitted to the Administrator of CMS within 15 
calendar days of the date of the CMS hearing officer's decision, and 
must specify the findings or issues that the issuer or CMS challenges. 
The issuer or CMS may submit for review by the Administrator of CMS a 
statement supporting the decision of the CMS hearing officer.
    (2) After receiving a request for review, the Administrator of CMS 
has the discretion to elect to review the

[[Page 455]]

CMS hearing officer's decision or to decline to review the CMS hearing 
officer's decision. If the Administrator of CMS elects to review the CMS 
hearing officer's decision, the Administrator of CMS will also review 
the statements of the issuer and CMS, and any other information included 
in the record of the CMS hearing officer's decision, and will determine 
whether to uphold, reverse, or modify the CMS hearing officer's 
decision. The issuer or CMS must prove its case by clear and convincing 
evidence for issues of fact. The Administrator of CMS will send the 
decision and the reasons for the decision to the issuer.
    (3) The Administrator of CMS's determination is final and binding.

[79 FR 13841, Mar. 11, 2014, as amended at 80 FR 10876, Feb. 27, 2015; 
81 FR 12352, Mar. 8, 2016; 81 FR 94182, Dec. 22, 2016]



Sec.  156.1230  Direct enrollment with the QHP issuer in a manner
considered to be through the Exchange.

    (a) A QHP issuer that is directly contacted by a potential applicant 
may, at the Exchange's option, enroll such applicant in a QHP in a 
manner that is considered through the Exchange. In order for the 
enrollment to be made directly with the issuer in a manner that is 
considered to be through the Exchange, the QHP issuer needs to comply 
with at least the following requirements:
    (1) QHP issuer general requirements. (i) The QHP issuer follows the 
enrollment process for qualified individuals consistent with Sec.  
156.265.
    (ii) The QHP issuer's Web site provides applicants the ability to 
view QHPs offered by the issuer with the data elements listed in Sec.  
155.205(b)(1)(i) through (viii) of this subchapter.
    (iii) The QHP issuer's Web site clearly distinguishes between QHPs 
for which the consumer is eligible and other non-QHPs that the issuer 
may offer, and indicate that advance payments of the premium tax credit 
and cost sharing reductions apply only to QHPs offered through the 
Exchange.
    (iv) The QHP issuer informs all applicants of the availability of 
other QHP products offered through the Exchange through an HHS-approved 
universal disclaimer and displays the Web link to and describes how to 
access the Exchange Web site.
    (v) The QHP issuer's Web site allows applicants to select and attest 
to an advance payment of the premium tax credit amount, if applicable, 
in accordance with Sec.  155.310(d)(2) of this subchapter.
    (2) [Reserved]
    (b) Direct enrollment in a Federally-facilitated Exchange. The 
individual market Federally-facilitated Exchanges will permit issuers of 
QHPs in each Federally-facilitated Exchange to directly enroll 
applicants in a manner that is considered to be through the Exchange, 
pursuant to paragraph (a) of this section, to the extent permitted by 
applicable State law.
    (1) The QHP issuer must comply with applicable requirements in Sec.  
155.221 of this subchapter.
    (2) The QHP issuer must provide consumers with correct information, 
without omission of material fact, regarding the Federally-facilitated 
Exchanges, QHPs offered through the Federally-facilitated Exchanges, and 
insurance affordability programs, and refrain from marketing or conduct 
that is misleading (including by having a direct enrollment website that 
HHS determines could mislead a consumer into believing they are visiting 
HealthCare.gov), coercive, or discriminates based on race, color, 
national origin, disability, age, or sex.

[78 FR 54143, Aug. 30, 2013, as amended at 81 FR 94182, Dec. 22, 2016; 
83 FR 17070, Apr. 17, 2018; 84 FR 17568, Apr. 25, 2019; 85 FR 37248, 
June 19, 2020]



Sec.  156.1240  Enrollment process for qualified individuals.

    (a) Premium payment. A QHP issuer must--
    (1) Follow the premium payment process established by the Exchange 
in accordance with Sec.  155.240.
    (2) At a minimum, for all payments in the individual market, accept 
paper checks, cashier's checks, money orders, EFT, and all general-
purpose pre-paid debit cards as methods of payment and present all 
payment method options equally for a consumer to select their preferred 
payment method.
    (b) [Reserved]

[[Page 456]]



Sec.  156.1250  Acceptance of certain third party payments.

    Issuers offering individual market QHPs, including stand-alone 
dental plans, and their downstream entities, must accept premium and 
cost-sharing payments for the QHPs from the following third-party 
entities from plan enrollees (in the case of a downstream entity, to the 
extent the entity routinely collects premiums or cost sharing):
    (a) A Ryan White HIV/AIDS Program under title XXVI of the Public 
Health Service Act;
    (b) An Indian tribe, tribal organization, or urban Indian 
organization; and
    (c) A local, State, or Federal government program, including a 
grantee directed by a government program to make payments on its behalf.

[81 FR 12352, Mar. 8, 2016]



Sec.  156.1255  Renewal and re-enrollment notices.

    A health insurance issuer that is renewing an enrollment group's 
coverage in an individual market QHP offered through the Exchange 
(including a renewal with modifications) in accordance with Sec.  
147.106 of this subchapter, or that is nonrenewing coverage offered 
through the Exchange and automatically enrolling an enrollee in a QHP 
under a different product offered by the same QHP issuer through the 
Exchange in accordance with Sec.  155.335 of this subchapter, must 
include the following information in the applicable notice described in 
Sec.  147.106(b)(5), (c)(1), or (f)(1) of this subchapter:
    (a) Premium and advance payment of the premium tax credit 
information sufficient to notify the enrollment group of its expected 
monthly premium payment under the renewed coverage, in a form and manner 
specified by the Exchange, provided that if the Exchange does not 
provide this information to enrollees and does not require issuers to 
provide this information to enrollees, consistent with this section, 
such information must be provided in a form and manner specified by HHS;
    (b) An explanation of the requirement to report changes to the 
Exchange, as specified in Sec.  155.335(e) of this subchapter, the 
timeframe and channels through which changes can be reported, and the 
implications of not reporting changes;
    (c) For an enrollment group that includes an enrollee on whose 
behalf advance payments of the premium tax credit are being provided, an 
explanation of the reconciliation process for advance payments of the 
premium tax credit established in accordance with 26 CFR 1.36B-4; and
    (d) For an enrollment group that includes an enrollee being provided 
cost-sharing reductions, but for whom no QHP under the product remains 
available for renewal at the silver level, an explanation that in 
accordance with Sec.  155.305(g)(1)(ii) of this subchapter, cost-sharing 
reductions are only available to an individual who is not an Indian if 
he or she is enrolled in a silver-level QHP.

[79 FR 53006, Sept. 5, 2014]



Sec.  156.1256  Other notices.

    As directed by a Federally-facilitated Exchange, a health insurance 
issuer that is offering QHP coverage through a Federally-facilitated 
Exchange or a State-based Exchange on the Federal platform must notify 
its enrollees of material plan or benefit display errors and the 
enrollees' eligibility for a special enrollment period, included in 
Sec.  155.420(d)(12) of this subchapter, within 30 calendar days after 
being notified by a Federally-facilitated Exchange that the error has 
been fixed, if directed to do so by a Federally-facilitated Exchange.

[81 FR 94183, Dec. 22, 2016]



PART 157_EMPLOYER INTERACTIONS WITH EXCHANGES AND SHOP PARTICIPATION-
-Table of Contents



                      Subpart A_General Provisions

Sec.
157.10 Basis and scope.
157.20 Definitions.

Subpart B [Reserved]

               Subpart C_Standards for Qualified Employers

157.200 Eligibility of qualified employers to participate in a SHOP.

[[Page 457]]

157.205 Qualified employer participation process in a SHOP for plan 
          years beginning prior to January 1, 2018.
157.206 Qualified employer participation process in a SHOP for plan 
          years beginning on or after January 1, 2018.

    Authority: Title I of the Affordable Care Act, Sections 1311, 1312, 
1321, 1411, 1412, Pub. L. 111-148, 124 Stat. 199.

    Source: 77 FR 18474, Mar. 27, 2012, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  157.10  Basis and scope.

    (a) Basis. This part is based on the following sections of title I 
of the Affordable Care:
    (1) 1311. Affordable choices of health benefits plans.
    (2) 1312. Consumer Choice.
    (3) 1321. State flexibility in operation and enforcement of 
Exchanges and related requirements.
    (4) 1411. Procedures for determining eligibility for Exchange 
participation, advance payments of the premium tax credit and cost-
sharing reductions, and individual responsibility exemptions.
    (5) 1412. Advance determination and payment of the premium tax 
credit and cost-sharing reductions.
    (b) Scope. This part establishes the requirements for employers in 
connection with the operation of Exchanges.



Sec.  157.20  Definitions.

    The following definitions apply to this part, unless otherwise 
indicated:
    Federally-facilitated SHOP has the meaning given to the term in 
Sec.  155.20 of this subchapter.
    Full-time employee has the meaning given to the term in Sec.  155.20 
of this subchapter.
    Large employer has the meaning given to the term in Sec.  155.20 of 
this subchapter.
    Qualified employee has the meaning given to the term in Sec.  155.20 
of this subchapter.
    Qualified employer has the meaning given to the term in Sec.  155.20 
of this subchapter.
    Small employer has the meaning given to the term in Sec.  155.20 of 
this subchapter.

[77 FR 18474, Mar. 27, 2012, as amended at 78 FR 15539, Mar. 11, 2013]

Subpart B [Reserved]



               Subpart C_Standards for Qualified Employers



Sec.  157.200  Eligibility of qualified employers to participate in 
a SHOP.

    (a) General requirement. Only a qualified employer may participate 
in the SHOP in accordance with Sec.  155.710 of this subchapter.
    (b) Continuing participation for growing small employers. A 
qualified employer may continue to participate in the SHOP if it ceases 
to be a small employer in accordance with Sec.  155.710 of this 
subchapter.
    (c) Participation in multiple SHOPs. A qualified employer may 
participate in multiple SHOPs in accordance with Sec.  155.710 of this 
subchapter.



Sec.  157.205  Qualified employer participation process in a SHOP for
plan years beginning prior to January 1, 2018.

    (a) General requirements. When joining the SHOP, a qualified 
employer must comply with the requirements, processes, and timelines set 
forth by this part and must remain in compliance for the duration of the 
employer's participation in the SHOP.
    (b) Selecting QHPs. During an election period, a qualified employer 
may make coverage in a QHP available through the SHOP in accordance with 
the processes developed by the SHOP in accordance with Sec.  155.705 of 
this subchapter.
    (c) Information dissemination to employees. A qualified employer 
participating in the SHOP must disseminate information to its qualified 
employees about the process to enroll in a QHP through the SHOP.
    (d) Payment. A qualified employer must submit any contribution 
towards the premiums of any qualified employee according to the 
standards and processes described in Sec.  155.705 of this subchapter.
    (e) Employees hired outside of the initial or annual open enrollment 
period. Qualified employers must provide employees hired outside of the 
initial or annual open enrollment period with:
    (1) An enrollment period to seek coverage in a QHP in accordance 
with Sec.  155.725(g) of this subchapter; and

[[Page 458]]

    (2) Information about the enrollment process in accordance with 
Sec.  155.725 of this subchapter.
    (f) New employees and changes in employee eligibility. Qualified 
employers participating in the SHOP must provide the SHOP with 
information about dependents or employees whose eligibility status for 
coverage purchased through the employer in the SHOP has changed, 
including:
    (1) Newly eligible dependents and newly qualified employees. In a 
Federally-facilitated SHOP or in a State Exchange that uses the Federal 
platform for SHOP functions, a qualified employer must provide 
information about a newly qualified employee on or before the thirtieth 
day after the day that the employee becomes a newly qualified employee; 
and
    (2) Loss of qualified employee status.
    (g) Annual employer election period. Qualified employers must adhere 
to the annual employer election period to change their program 
participation for the next plan year described in Sec.  155.725(c) of 
this subchapter.
    (h) Applicability date. The provisions of this section apply for 
plan years beginning prior to January 1, 2018. Section 157.206 is 
applicable for plan years beginning on or after January 1, 2018.

[77 FR 18474, Mar. 27, 2012, as amended at 81 FR 94183, Dec. 22, 2016; 
83 FR 17070, Apr. 17, 2018]



Sec.  157.206  Qualified employer participation process in a SHOP
for plan years beginning on or after January 1, 2018.

    (a) General requirements. When joining the SHOP, a qualified 
employer must comply with the requirements, processes, and timelines set 
forth by this part and must remain in compliance for the duration of the 
employer's participation in the SHOP.
    (b) Selecting QHPs. During an election period, a qualified employer 
may make coverage in a QHP available through the SHOP in accordance with 
the processes developed by the SHOP in accordance with Sec.  155.706 of 
this subchapter.
    (c) Information dissemination to employees. A qualified employer 
participating in the SHOP must disseminate information to its qualified 
employees about the process to enroll in a QHP through the SHOP.
    (d) Employees hired outside of the initial or annual open enrollment 
period. Qualified employers must provide employees hired outside of the 
initial or annual open enrollment period with information about the 
enrollment process.
    (e) Participation in the SHOP and termination of coverage or 
enrollment through the SHOP. (1) Changes affecting participation. 
Employers must submit a new single employer application to the SHOP or 
withdraw from participating in the SHOP if the employer makes a change 
that could end its eligibility under Sec.  155.710 of this subchapter.
    (2) If an employer receives a determination of ineligibility to 
participate in the SHOP or the SHOP terminates its eligibility to 
participate in the SHOP, unless the SHOP notifies the issuer or issuers 
of the determination of ineligibility or termination of eligibility, the 
employer must notify the issuer or issuers of QHPs in which their group 
members are enrolled in coverage of its ineligibility or termination of 
eligibility within 5 business days of the end of any applicable appeal 
process under Sec.  155.741 of this subchapter, which could include when 
the time to file an appeal lapses without an appeal being filed, when 
the appeal is rejected or dismissed, or when the appeal process 
concludes with an adjudication by the appeals entity, as applicable.
    (3) Employers must promptly notify the issuer or issuers of QHPs in 
which their group members are enrolled in coverage if it wishes to 
terminate coverage or enrollment through the SHOP, unless the SHOP 
notifies the issuer or issuers.
    (f) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2018.

[83 FR 17070, Apr. 17, 2018]



PART 158_ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE 
REQUIREMENTS--Table of Contents



Sec.
158.101 Basis and scope.
158.102 Applicability.
158.103 Definitions.

[[Page 459]]

                   Subpart A_Disclosure and Reporting

158.110 Reporting requirements related to premiums and expenditures.
158.120 Aggregate reporting.
158.121 Newer experience.
158.130 Premium revenue.
158.140 Reimbursement for clinical services provided to enrollees.
158.150 Activities that improve health care quality.
158.151 Expenditures related to Health Information Technology and 
          meaningful use requirements.
158.160 Other non-claims costs.
158.161 Reporting of Federal and State licensing and regulatory fees.
158.162 Reporting of Federal and State taxes.
158.170 Allocation of expenses.

             Subpart B_Calculating and Providing the Rebate

158.210 Minimum medical loss ratio.
158.211 Requirement in States with a higher medical loss ratio.
158.220 Aggregation of data in calculating an issuer's medical loss 
          ratio.
158.221 Formula for calculating an issuer's medical loss ratio.
158.230 Credibility adjustment.
158.231 Life-years used to determine credible experience.
158.232 Calculating the credibility adjustment.
158.240 Rebating premium if the applicable medical loss ratio standard 
          is not met.
158.241 Form of rebate.
158.242 Recipients of rebates.
158.243 De minimis rebates.
158.244 Unclaimed rebates.
158.250 Notice of rebates.
158.251 Notice of MLR information.
158.260 Reporting of rebates.
158.270 Effect of rebate payments on solvency.

   Subpart C_Potential Adjustment to the MLR for a State's Individual 
                                 Market

158.301 Standard for adjustment to the medical loss ratio.
158.310 Who may request adjustment to the medical loss ratio.
158.311 Duration of adjustment to the medical loss ratio.
158.320 Information supporting a request for adjustment to the medical 
          loss ratio.
158.321 Information regarding the State's individual health insurance 
          market.
158.322 Proposal for adjusted medical loss ratio.
158.323 State contact information.
158.330 Criteria for assessing request for adjustment to the medical 
          loss ratio.
158.340 Process for submitting request for adjustment to the medical 
          loss ratio.
158.341 Treatment as a public document.
158.342 Invitation for public comments.
158.343 Optional State hearing.
158.344 Secretary's discretion to hold a hearing.
158.345 Determination on a State's request for adjustment to the medical 
          loss ratio.
158.346 Request for reconsideration.
158.350 Subsequent requests for adjustment to the medical loss ratio.

                        Subpart D_HHS Enforcement

158.401 HHS enforcement.
158.402 Audits.
158.403 Circumstances in which a State is conducting audits of issuers.

              Subpart E_Additional Requirements on Issuers

158.501 Access to facilities and records.
158.502 Maintenance of records.

                    Subpart F_Federal Civil Penalties

158.601 General rule regarding the imposition of civil penalties.
158.602 Basis for imposing civil penalties.
158.603 Notice to responsible entities.
158.604 Request for extension.
158.605 Responses to allegations of noncompliance.
158.606 Amount of penalty--general.
158.607 Factors HHS uses to determine the amount of penalty.
158.608 Determining the amount of the penalty--mitigating circumstances.
158.609 Determining the amount of the penalty--aggravating 
          circumstances.
158.610 Determining the amount of the penalty--other matters as justice 
          may require.
158.611 Settlement authority.
158.612 Limitations on penalties.
158.613 Notice of proposed penalty.
158.614 Appeal of proposed penalty.
158.615 Failure to request a hearing.

    Authority: 42 U.S.C. 300gg-18.

    Source: 75 FR 74921, Dec. 1, 2010, unless otherwise noted.



Sec.  158.101  Basis and scope.

    (a) Basis. This part implements section 2718 of the Public Health 
Service Act (PHS Act).
    (b) Scope. Subpart A of this part establishes the requirements for 
health insurance issuers (``issuers'') offering group or individual 
health insurance coverage to report information concerning premium 
revenues and the use of such premium revenues for clinical

[[Page 460]]

services provided to enrollees, activities that improve health care 
quality, and all other non-claims costs. Subpart B describes how this 
information will be used to determine, with respect to each medical loss 
ratio (MLR) reporting year, whether the ratio of the amount of adjusted 
premium revenue expended by the issuer on permitted costs to the total 
amount of adjusted premium revenue (MLR) meets or exceeds the 
percentages established by section 2718(b)(1) of the PHS Act. Subpart B 
also addresses requirements for calculating any rebate amounts that may 
be due in the event an issuer does not meet the applicable MLR standard. 
Subpart C implements the provision of section 2718(b)(1)(A)(ii) of the 
PHS Act allowing the Secretary to adjust the MLR standard for the 
individual market in a State if requiring issuers to meet that standard 
may destabilize the individual market. Subparts D through F provide for 
enforcement of this part, including requirements for issuers to maintain 
records and civil monetary penalties that may be assessed against 
issuers who violate the requirements of this part.

[75 FR 74921, Dec. 1, 2010, as amended at 75 FR 82278, Dec. 30, 2010]



Sec.  158.102  Applicability.

    General requirements. The requirements of this part apply to issuers 
offering group or individual health insurance coverage, including a 
grandfathered health plan as defined in Sec.  147.140 of this subpart.



Sec.  158.103  Definitions.

    For the purposes of this part, the following definitions apply 
unless specified otherwise.
    Blended rate means a single rate charged for health insurance 
coverage provided to a single employer through two or more of an 
issuer's affiliated companies for employees in one or more States.
    Contract reserves means reserves that are established by an issuer 
which, due to the gross premium pricing structure at issue, account for 
the value of the future benefits that at any time exceeds the value of 
any appropriate future valuation of net premiums at that time. Contract 
reserves must not include premium deficiency reserves. Contract reserves 
must not include reserves for expected MLR rebates.
    Direct paid claims means claim payments before ceded reinsurance and 
excluding assumed reinsurance except as otherwise provided in this part.
    Enrollee means an individual who is enrolled, within the meaning of 
Sec.  144.103 of this title, in group health insurance coverage, or an 
individual who is covered by individual insurance coverage, at any time 
during an MLR reporting year.
    Experience rating refund means the return of a portion of premiums 
pursuant to a retrospectively rated funding arrangement when the sum of 
incurred losses, retention and margin are less than earned premium.
    Group conversion charges means the portion of earned premium 
allocated to providing the privilege for a certificate holder terminated 
from a group health plan to purchase individual health insurance without 
providing evidence of insurability.
    Health Plan means health insurance coverage offered through either 
individual coverage or a group health plan.
    Individual market has the meaning given the term in section 
2791(e)(1) of the PHS Act and section 1304(a)(2) of the Affordable Care 
Act.
    Large Employer has the meaning given the term in Sec.  144.103 of 
this subchapter.
    Large group market has the meaning given the term in section 
2791(e)(3) of the PHS Act and section 1304(a)(3) of the Affordable Care 
Act.
    MLR reporting year means a calendar year during which group or 
individual health insurance coverage is provided by an issuer.
    Policyholder means any entity that has entered into a contract with 
an issuer to receive health insurance coverage as defined in section 
2791(b) of the PHS Act.
    Situs of the contract means the jurisdiction in which the contract 
is issued or delivered as stated in the contract.
    Small Employer has the meaning given the term in Sec.  144.103 of 
this subchapter.
    Small group market has the meaning in section 2791(e)(5) of the PHS 
Act and section 1304(a)(3) of the Affordable Care Act.

[[Page 461]]

    Student administrative health fee has the meaning given the term in 
Sec.  147.145 of this subchapter.
    Student health insurance coverage has the meaning given the term in 
Sec.  147.145 of this subchapter.
    Student market means the market for student health insurance 
coverage.
    Subscriber refers to both the group market and the individual 
market. In the group market, subscriber means the individual, generally 
the employee, whose eligibility is the basis for the enrollment in the 
group health plan and who is responsible for the payment of premiums. In 
the individual market, subscriber means the individual who purchases an 
individual policy and who is responsible for the payment of premiums.
    Unearned premium means that portion of the premium paid in the MLR 
reporting year that is intended to provide coverage during a period 
which extends beyond the MLR reporting year.
    Unpaid Claim Reserves means reserves and liabilities established to 
account for claims that were incurred during the MLR reporting year but 
had not been paid within 3 months of the end of the MLR reporting year.

[75 FR 74921, Dec. 1, 2010, as amended at 77 FR 16469, Mar. 21, 2012; 77 
FR 28790, May 16, 2012; 81 FR 12352, Mar. 8, 2016]



                   Subpart A_Disclosure and Reporting



Sec.  158.110  Reporting requirements related to premiums and 
expenditures.

    (a) General requirements. For each MLR reporting year, an issuer 
must submit to the Secretary a report which complies with the 
requirements of this part, concerning premium revenue and expenses 
related to the group and individual health insurance coverage that it 
issued. Reporting requirements of this part that apply to expenses 
incurred directly by the issuer also apply to expenses for functions 
outsourced to or services provided by other entities retained by the 
issuer.
    (b) Timing and form of report. The report for each of the 2011, 
2012, and 2013 MLR reporting years must be submitted to the Secretary by 
June 1 of the year following the end of an MLR reporting year, on a form 
and in the manner prescribed by the Secretary. Beginning with the 2014 
MLR reporting year, the report for each MLR reporting year must be 
submitted to the Secretary by July 31 of the year following the end of 
an MLR reporting year, on a form and in the manner prescribed by the 
Secretary.
    (c) Transfer of Business. Issuers that purchase a line or block of 
business from another issuer during an MLR reporting year are 
responsible for submitting the information and reports required by this 
part for the assumed business, including for that part of the MLR 
reporting year that was prior to the purchase.

[75 FR 74921, Dec. 1, 2010, as amended at 76 FR 76592, Dec. 7, 2011; 78 
FR 15539, Mar. 11, 2013; 85 FR 29262, May 14, 2020]



Sec.  158.120  Aggregate reporting.

    (a) General requirements. For purposes of submitting the report 
required in Sec.  158.110 of this subpart, the issuer must submit a 
report for each State in which it is licensed to issue health insurance 
coverage that includes the experience of all policies issued in the 
State during the MLR reporting year covered by the report. The report 
must aggregate data for each entity licensed within a State, aggregated 
separately for the large group market, the small group market and the 
individual market. Experience with respect to each policy must be 
included on the report submitted with respect to the State where the 
contract was issued, except as specified in Sec.  158.120(d) of this 
subpart.
    (b) Group Health Insurance Coverage in Multiple States. Group 
coverage issued by a single issuer that covers employees in multiple 
States must be attributed to the applicable State based on the situs of 
the contract. Group coverage issued by multiple affiliated issuers that 
covers employees in multiple States must be attributed by each issuer to 
each State based on the situs of the contract.
    (c) Group Health Insurance Coverage With Dual Contracts. Where a 
group health plan involves health insurance coverage obtained from two 
affiliated issuers, one providing in-network coverage only and the 
second providing out-of-network coverage only, solely

[[Page 462]]

for the purpose of providing a group health plan that offers both in-
network and out-of-network benefits, experience may be treated as if it 
were all related to the contract provided by the in-network issuer. 
However, if the issuer chooses this method of aggregation, it must apply 
it for a minimum of 3 MLR reporting years.
    (d) Exceptions. (1) For individual market business sold through an 
association or trust, the experience of the issuer must be included in 
the State report for the issue State of the certificate of coverage.
    (2) For employer business issued through a group trust or multiple 
employer welfare association (MEWA), the experience of the issuer must 
be included in the State report for the State where the employer (if 
sold through a trust) or the MEWA (if the MEWA is the policyholder) has 
its principal place of business.
    (3) An issuer with policies that have a total annual limit of 
$250,000 or less must report the experience from such policies 
separately from other policies.
    (4) An issuer with group policies that provide coverage to 
employees, substantially all of whom are: Working outside their country 
of citizenship; working outside of their country of citizenship and 
outside the employer's country of domicile; or non-U.S. citizens working 
in their home country, must aggregate and report the experience from 
these policies on a national basis, separately for the large group 
market and small group market, and separately from other policies.
    (5) An issuer in the student market must aggregate and report the 
experience from these policies on a national basis, separately from 
other policies.

[75 FR 74921, Dec. 1, 2010, as amended at 75 FR 82278, Dec. 30, 2010; 76 
FR 76592, Dec. 7, 2011; 77 FR 16469, Mar. 21, 2012; 77 FR 28790, May 16, 
2012]



Sec.  158.121  Newer experience.

    If, for any aggregation as defined in Sec.  158.120, 50 percent or 
more of the total earned premium for an MLR reporting year is 
attributable to policies newly issued in that MLR reporting year, then 
the experience of these policies may be excluded from the report 
required under Sec.  158.110 for that same MLR reporting year. If an 
issuer chooses to defer reporting of newer business as provided in this 
section, then the excluded experience must be added to the experience 
reported in the following MLR reporting year.

[81 FR 94183, Dec. 22, 2016]



Sec.  158.130  Premium revenue.

    (a) General requirements. An issuer must report to the Secretary 
earned premium for each MLR reporting year. Earned premium means all 
monies paid by a policyholder or subscriber as a condition of receiving 
coverage from the issuer, including any fees or other contributions 
associated with the health plan.
    (1) Earned premium is to be reported on a direct basis except as 
provided in paragraph (b) of this section.
    (2) All earned premium for policies issued by one issuer and later 
assumed by another issuer must be reported by the assuming issuer for 
the entire MLR reporting year during which the policies were assumed and 
no earned premium for that MLR reporting year must be reported by the 
ceding issuer.
    (3) Reinsured earned premium for a block of business that was 
subject to indemnity reinsurance and administrative agreements effective 
prior to March 23, 2010, for which the assuming entity is responsible 
for 100 percent of the ceding entity's financial risk and takes on all 
of the administration of the block, must be reported by the assuming 
issuer and must not be reported by the ceding issuer.
    (b) Adjustments. Earned premium must include adjustments to:
    (1) Account for assessments paid to or subsidies received from 
Federal and State high risk pools.
    (2) Account for portions of premiums associated with group 
conversion charges.
    (3) Account for any experience rating refunds incurred, excluding 
any rebate paid based upon an issuer's MLR.
    (4) Account for unearned premium.
    (5) Account for the net payments or receipts related to the risk 
adjustment, risk corridors (using an adjustment percentage, as described 
in Sec.  153.500 of this subchapter, equal to zero percent), and 
reinsurance programs under sections 1341, 1342, and 1343 of the Patient

[[Page 463]]

Protection and Affordable Care Act, 42 U.S.C. 18061, 18062, 18063.

[75 FR 74921, Dec. 1, 2010, as amended at 77 FR 28790, May 16, 2012; 78 
FR 15539, Mar. 11, 2013; 79 FR 13842, Mar. 11, 2014]



Sec.  158.140  Reimbursement for clinical services provided to enrollees.

    (a) General requirements. The report required in Sec.  158.110 must 
include direct claims paid to or received by providers, including under 
capitation contracts with physicians, whose services are covered by the 
policy for clinical services or supplies covered by the policy. In 
addition, the report must include claim reserves associated with claims 
incurred during the MLR reporting year, the change in contract reserves, 
reserves for contingent benefits and the medical claim portion of 
lawsuits, and any incurred experience rating refunds. Reimbursement for 
clinical services, as defined in this section, is referred to as 
``incurred claims.'' All components of and adjustments to incurred 
claims, with the exception of contract reserves, must be calculated 
based on claims incurred only during the MLR reporting year and paid 
through March 31st of the following year. Contract reserves must be 
calculated as of December 31st of the applicable year.
    (1) If there are any group conversion charges for a health plan, the 
conversion charges must be subtracted from the incurred claims for the 
aggregation that includes the conversion policies and this same amount 
must be added to the incurred claims for the aggregation that provides 
coverage that is intended to be replaced by the conversion policies. If 
an issuer transfers portions of earned premium associated with group 
conversion privileges between group and individual lines of business in 
its Annual Statement accounting, these amounts must be added to or 
subtracted from incurred claims.
    (2) Incurred claims must include the current year's unpaid claims 
reserves, including claims reported in the process of adjustment, 
percentage withholds from payments made to contracted providers, claims 
that are recoverable for anticipated coordination of benefits (COB), and 
claim recoveries received as a result of subrogation.
    (3) Incurred claims must include claims incurred but not reported 
based on past experience, and modified to reflect current conditions 
such as changes in exposure, claim frequency or severity.
    (4) Incurred claims must include changes in other claims-related 
reserves.
    (5) Incurred claims must include incurred experience rating refunds 
and exclude rebates paid as required by Sec.  158.240 based upon prior 
MLR reporting year experience.
    (b) Adjustments to incurred claims. (1) Adjustments that must be 
deducted from incurred claims:
    (i)(A) For MLR reporting years before 2022, prescription drug 
rebates received by the issuer;
    (B) Beginning with the 2022 MLR reporting year, prescription drug 
rebates and other price concessions received and retained by the issuer, 
and prescription drug rebates and other price concessions that are 
received and retained by an entity providing pharmacy benefit management 
services to the issuer and are associated with administering the 
issuer's prescription drug benefits.
    (ii) Overpayment recoveries received from providers.
    (iii) Cost-sharing reduction payments received by the issuer to the 
extent not reimbursed to the provider furnishing the item or service.
    (2) Adjustments that must be included in incurred claims:
    (i) Market stabilization payments or receipts by issuers that are 
directly tied to claims incurred and other claims based or census based 
assessments.
    (ii) State subsidies based on a stop-loss payment methodology.
    (iii) The amount of incentive and bonus payments made to providers.
    (iv) The amount of claims payments recovered through fraud reduction 
efforts not to exceed the amount of fraud reduction expenses.
    (3) Adjustments that must not be included in incurred claims:
    (i) Amounts paid to third party vendors for secondary network 
savings.
    (ii) Amounts paid to third party vendors for network development, 
administrative fees, claims processing, and

[[Page 464]]

utilization management. For example, if an issuer contracts with a 
behavioral health, chiropractic network, or high technology radiology 
vendor, or a pharmacy benefit manager, and the vendor reimburses the 
provider at one amount but bills the issuer a higher amount to cover its 
network development, utilization management costs, and profits, then the 
amount that exceeds the reimbursement to the provider must not be 
included in incurred claims.
    (iii) Amounts paid, including amounts paid to a provider, for 
professional or administrative services that do not represent 
compensation or reimbursement for covered services provided to an 
enrollee. For example, medical record copying costs, attorneys' fees, 
subrogation vendor fees, compensation to paraprofessionals, janitors, 
quality assurance analysts, administrative supervisors, secretaries to 
medical personnel and medical record clerks must not be included in 
incurred claims.
    (iv) Amounts paid to a provider for services that do not represent 
reimbursement for covered services provided to an enrollee and are 
directly covered by a student administrative health fee.
    (4) Adjustments that must be either included in or deducted from 
incurred claims:
    (i) Payment to and from unsubsidized State programs designed to 
address distribution of health risks across issuers via charges to low 
risk issuers that are distributed to high risk issuers must be included 
in or deducted from incurred claims, as applicable.
    (ii) Receipts related to the transitional reinsurance program and 
net payments or receipts related to the risk adjustment and risk 
corridors programs (calculated using an adjustment percentage, as 
described in Sec.  153.500 of this subchapter, equal to zero percent) 
under sections 1341, 1342, and 1343 of the Patient Protection and 
Affordable Care Act, 42 U.S.C. 18061, 18062, 18063.
    (5) Other adjustments to incurred claims:
    (i) Affiliated issuers that offer group coverage at a blended rate 
may choose whether to make an adjustment to each affiliate's incurred 
claims and activities to improve health care quality, to reflect the 
experience of the issuer with respect to the employer as a whole, 
according to an objective formula that must be defined by the issuer 
prior to January 1 of the MLR reporting year, so as to result in each 
affiliate having the same ratio of incurred claims to earned premium for 
that employer group for the MLR reporting year as the ratio of incurred 
claims to earned premium calculated for the employer group in the 
aggregate.
    (ii) [Reserved]

[75 FR 74921, Dec. 1, 2010, as amended at 75 FR 82278, Dec. 30, 2010; 77 
FR 16469, Mar. 21, 2012; 77 FR 28790, May 16, 2012; 78 FR 15539, Mar. 
11, 2013; 79 FR 13842, Mar. 11, 2014; 80 FR 10876, Feb. 27, 2015; 85 FR 
29262, May 14, 2020]



Sec.  158.150  Activities that improve health care quality.

    (a) General requirements. The report required in Sec.  158.110 of 
this subpart must include expenditures for activities that improve 
health care quality, as described in this section.
    (b) Activity requirements. Activities conducted by an issuer to 
improve quality must meet the following requirements:
    (1) The activity must be designed to:
    (i) Improve health quality.
    (ii) Increase the likelihood of desired health outcomes in ways that 
are capable of being objectively measured and of producing verifiable 
results and achievements.
    (iii) Be directed toward individual enrollees or incurred for the 
benefit of specified segments of enrollees or provide health 
improvements to the population beyond those enrolled in coverage as long 
as no additional costs are incurred due to the non-enrollees.
    (iv) Be grounded in evidence-based medicine, widely accepted best 
clinical practice, or criteria issued by recognized professional medical 
associations, accreditation bodies, government agencies or other 
nationally recognized health care quality organizations.
    (2) The activity must be primarily designed to:
    (i) Improve health outcomes including increasing the likelihood of 
desired outcomes compared to a baseline and

[[Page 465]]

reduce health disparities among specified populations.
    (A) Examples include the direct interaction of the issuer (including 
those services delegated by contract for which the issuer retains 
ultimate responsibility under the insurance policy), providers and the 
enrollee or the enrollee's representative (for example, face-to-face, 
telephonic, web-based interactions or other means of communication) to 
improve health outcomes, including activities such as:
    (1) Effective case management, care coordination, chronic disease 
management, and medication and care compliance initiatives including 
through the use of the medical homes model as defined in section 3502 of 
the Affordable Care Act.
    (2) Identifying and addressing ethnic, cultural or racial 
disparities in effectiveness of identified best clinical practices and 
evidence based medicine.
    (3) Quality reporting and documentation of care in non-electronic 
format.
    (4) Health information technology to support these activities.
    (5) Accreditation fees directly related to quality of care 
activities.
    (6) Commencing with the 2012 reporting year and extending through 
the first reporting year in which the Secretary requires ICD-10 as the 
standard medical data code set, implementing ICD-10 code sets that are 
designed to improve quality and are adopted pursuant to the Health 
Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. 1320d-2, 
as amended, limited to 0.3 percent of an issuer's earned premium as 
defined in Sec.  158.130.
    (B) [Reserved]
    (ii) Prevent hospital readmissions through a comprehensive program 
for hospital discharge. Examples include:
    (A) Comprehensive discharge planning (for example, arranging and 
managing transitions from one setting to another, such as hospital 
discharge to home or to a rehabilitation center) in order to help assure 
appropriate care that will, in all likelihood, avoid readmission to the 
hospital;
    (B) Patient-centered education and counseling.
    (C) Personalized post-discharge reinforcement and counseling by an 
appropriate health care professional.
    (D) Any quality reporting and related documentation in non-
electronic form for activities to prevent hospital readmission.
    (E) Health information technology to support these activities.
    (iii) Improve patient safety, reduce medical errors, and lower 
infection and mortality rates.
    (A) Examples of activities primarily designed to improve patient 
safety, reduce medical errors, and lower infection and mortality rates 
include:
    (1) The appropriate identification and use of best clinical 
practices to avoid harm.
    (2) Activities to identify and encourage evidence-based medicine in 
addressing independently identified and documented clinical errors or 
safety concerns.
    (3) Activities to lower the risk of facility-acquired infections.
    (4) Prospective prescription drug Utilization Review aimed at 
identifying potential adverse drug interactions.
    (5) Any quality reporting and related documentation in non-
electronic form for activities that improve patient safety and reduce 
medical errors.
    (6) Health information technology to support these activities.
    (B) [Reserved]
    (iv) Implement, promote, and increase wellness and health 
activities:
    (A) Examples of activities primarily designed to implement, promote, 
and increase wellness and health activities, include--
    (1) Wellness assessments;
    (2) Wellness/lifestyle coaching programs designed to achieve 
specific and measurable improvements;
    (3) Coaching programs designed to educate individuals on clinically 
effective methods for dealing with a specific chronic disease or 
condition;
    (4) Public health education campaigns that are performed in 
conjunction with State or local health departments;
    (5)(i) For MLR reporting years before 2021, actual rewards, 
incentives, bonuses, and reductions in copayments (excluding 
administration of such programs) that are not already reflected in 
premiums or claims should be allowed as a quality improvement activity 
for the group market to the extent

[[Page 466]]

permitted by section 2705 of the PHS Act;
    (ii) Beginning with the 2021 MLR reporting year, actual rewards, 
incentives, bonuses, reductions in copayments (excluding administration 
of such programs) that are not already reflected in premiums or claims, 
to the extent permitted by section 2705 of the PHS Act;
    (6) Any quality reporting and related documentation in non-
electronic form for wellness and health promotion activities;
    (7) Coaching or education programs and health promotion activities 
designed to change member behavior and conditions (for example, smoking 
or obesity); and
    (8) Health information technology to support these activities.
    (B) [Reserved]
    (v) Enhance the use of health care data to improve quality, 
transparency, and outcomes and support meaningful use of health 
information technology consistent with Sec.  158.151 of this subpart.
    (c) Exclusions. Expenditures and activities that must not be 
included in quality improving activities are:
    (1) Those that are designed primarily to control or contain costs;
    (2) The pro rata share of expenses that are for lines of business or 
products other than those being reported, including but not limited to, 
those that are for or benefit self-funded plans;
    (3) Those which otherwise meet the definitions for quality 
improvement activities but which were paid for with grant money or other 
funding separate from premium revenue;
    (4) Those activities that can be billed or allocated by a provider 
for care delivery and which are, therefore, reimbursed as clinical 
services;
    (5) Establishing or maintaining a claims adjudication system, 
including costs directly related to upgrades in health information 
technology that are designed primarily or solely to improve claims 
payment capabilities or to meet regulatory requirements for processing 
claims, including maintenance of ICD-10 code sets adopted pursuant to 
the Health Insurance Portability and Accountability Act (HIPAA), 42 
U.S.C. 1320d-2, as amended.
    (6) That portion of the activities of health care professional 
hotlines that does not meet the definition of activities that improve 
health quality;
    (7) All retrospective and concurrent utilization review;
    (8) Fraud prevention activities;
    (9) The cost of developing and executing provider contracts and fees 
associated with establishing or managing a provider network, including 
fees paid to a vendor for the same reason;
    (10) Provider credentialing;
    (11) Marketing expenses;
    (12) Costs associated with calculating and administering individual 
enrollee or employee incentives;
    (13) That portion of prospective utilization that does not meet the 
definition of activities that improve health quality; and
    (14) Any function or activity not expressly included in paragraph 
(a) or (b) of this section, unless otherwise approved by and within the 
discretion of the Secretary, upon adequate showing by the issuer that 
the activity's costs support the definitions and purposes in this part 
or otherwise support monitoring, measuring or reporting health care 
quality improvement.

[75 FR 74921, Dec. 1, 2010, as amended at 76 FR 76592, Dec. 7, 2011; 77 
FR 28790, May 16, 2012; 79 FR 30352, May 27, 2014; 85 FR 29262, May 14, 
2020]



Sec.  158.151  Expenditures related to Health Information Technology
and meaningful use requirements.

    (a) General requirements. An issuer may include as activities that 
improve health care quality such Health Information Technology (HIT) 
expenses as are required to accomplish the activities allowed in Sec.  
158.150 of this subpart and that are designed for use by health plans, 
health care providers, or enrollees for the electronic creation, 
maintenance, access, or exchange of health information, as well as those 
consistent with Medicare and/or Medicaid meaningful use requirements, 
and which may in whole or in part improve quality of care, or provide 
the technological infrastructure to enhance current quality improvement 
or make new quality improvement initiatives possible by doing one or 
more of the following:

[[Page 467]]

    (1) Making incentive payments to health care providers for the 
adoption of certified electronic health record technologies and their 
``meaningful use'' as defined by HHS to the extent such payments are not 
included in reimbursement for clinical services as defined in Sec.  
158.140 of this subpart;
    (2) Implementing systems to track and verify the adoption and 
meaningful use of certified electronic health records technologies by 
health care providers, including those not eligible for Medicare and 
Medicaid incentive payments;
    (3) Providing technical assistance to support adoption and 
meaningful use of certified electronic health records technologies;
    (4) Monitoring, measuring, or reporting clinical effectiveness 
including reporting and analysis of costs related to maintaining 
accreditation by nationally recognized accrediting organizations such as 
NCQA or URAC, or costs for public reporting of quality of care, 
including costs specifically required to make accurate determinations of 
defined measures (for example, CAHPS surveys or chart review of HEDIS 
measures and costs for public reporting mandated or encouraged by law.
    (5) Tracking whether a specific class of medical interventions or a 
bundle of related services leads to better patient outcomes.
    (6) Advancing the ability of enrollees, providers, issuers or other 
systems to communicate patient centered clinical or medical information 
rapidly, accurately and efficiently to determine patient status, avoid 
harmful drug interactions or direct appropriate care, which may include 
electronic Health Records accessible by enrollees and appropriate 
providers to monitor and document an individual patient's medical 
history and to support care management.
    (7) Reformatting, transmitting or reporting data to national or 
international government-based health organizations for the purposes of 
identifying or treating specific conditions or controlling the spread of 
disease.
    (8) Provision of electronic health records, patient portals, and 
tools to facilitate patient self-management.
    (b) [Reserved]



Sec.  158.160  Other non-claims costs.

    (a) General requirements. The report required in Sec.  158.110 of 
this subpart must include non-claims costs described in paragraph (b) of 
this section and must provide an explanation of how premium revenue is 
used, other than to provide reimbursement for clinical services covered 
by the benefit plan, expenditures for activities that improve health 
care quality, and Federal and State taxes and licensing or regulatory 
fees as specified in this part.
    (b) Non-claims costs other than taxes and regulatory fees. (1) The 
report required in Sec.  158.110 of this subpart must include any 
expenses for administrative services that do not constitute adjustments 
to premium revenue as provided in Sec.  158.130 of this subpart, 
reimbursement for clinical services to enrollees as defined in Sec.  
158.140 of this subpart, or expenditures on quality improvement 
activities as defined in Sec. Sec.  158.150 and 158.151 of this subpart.
    (2) Expenses for administrative services include the following:
    (i) Cost-containment expenses not included as an expenditure related 
to an activity at Sec.  158.150 of this subpart.
    (ii) Loss adjustment expenses not classified as a cost containment 
expense.
    (iii) Direct sales salaries, workforce salaries and benefits.
    (iv) Agents and brokers fees and commissions.
    (v) General and administrative expenses.
    (vi) Community benefit expenditures.
    (vii) Beginning with the 2022 MLR reporting year, prescription drug 
rebates and other price concessions that are received and retained by an 
entity providing pharmacy benefit management services to the issuer and 
are associated with administering the issuer's prescription drug 
benefits.

[75 FR 74921, Dec. 1, 2010, as amended at 85 FR 29262, May 14, 2020]



Sec.  158.161  Reporting of Federal and State licensing and regulatory 
fees.

    (a) Licensing and regulatory fees included. The report required in 
Sec.  158.110 must include statutory assessments to defray operating 
expenses of any State

[[Page 468]]

or Federal department, transitional reinsurance contributions assessed 
under section 1341 of the Patient Protection and Affordable Care Act, 42 
U.S.C. 18061, and examination fees in lieu of premium taxes as specified 
by State law.
    (b) Licensing and regulatory fees excluded. The report required in 
Sec.  158.110 must include fines and penalties of regulatory 
authorities, and fees for examinations by any State or Federal 
departments other than as specified in Sec.  158.161(a) as other non-
claims costs, but not as an adjustment to premium revenue.''

[75 FR 82279, Dec. 30, 2010, as amended at 78 FR 15539, Mar. 11, 2013]



Sec.  158.162  Reporting of Federal and State taxes.

    (a) Federal taxes. The report required in Sec.  158.110 of this 
subpart must separately report:
    (1) Federal taxes excluded from premium under subpart B which 
include all Federal taxes and assessments allocated to health insurance 
coverage reported under section 2718 of the PHS Act.
    (2) Federal taxes not excluded from premium under subpart B of this 
part which include Federal income taxes on investment income and capital 
gains, as well as Federal employment taxes, as other non-claims costs.
    (b) State taxes and assessments. The report required in Sec.  
158.110 of this subpart must separately report:
    (1) State taxes and assessments excluded from premium under subpart 
B which include:
    (i) Any industry-wide (or subset) assessments (other than surcharges 
on specific claims) paid to the State directly, or premium subsidies 
that are designed to cover the costs of providing indigent care or other 
access to health care throughout the State.
    (ii) Guaranty fund assessments.
    (iii) Assessments of State industrial boards or other boards for 
operating expenses or for benefits to sick employed persons in 
connection with disability benefit laws or similar taxes levied by 
States.
    (iv) Advertising required by law, regulation or ruling, except 
advertising associated with investments.
    (v) State income, excise, and business taxes other than premium 
taxes.
    (vi) State premium taxes plus State taxes based on policy reserves, 
if in lieu of premium taxes.
    (vii) Payments made by a Federal income tax exempt issuer for 
community benefit expenditures as defined in paragraph (c) of this 
section, limited to the highest of either:
    (A) Three percent of earned premium; or
    (B) The highest premium tax rate in the State for which the report 
is being submitted, multiplied by the issuer's earned premium in the 
applicable State market.
    (viii) In lieu of reporting amounts described in paragraph 
(b)(1)(vi) of this section, an issuer that is not exempt from Federal 
income tax may choose to report payment for community benefit 
expenditures as described in paragraph (c) of this section, limited to 
the highest premium tax rate in the State for which the report is being 
submitted multiplied by the issuer's earned premium in the applicable 
State market.
    (2) State taxes and assessments not excluded from premium under 
subpart B which include:
    (i) State sales taxes if the issuer does not exercise options of 
including such taxes with the cost of goods and services purchased.
    (ii) Any portion of commissions or allowances on reinsurance assumed 
that represent specific reimbursement of premium taxes.
    (iii) Any portion of commissions or allowances on reinsurance ceded 
that represents specific reimbursement of premium taxes.
    (iv) State employment and similar taxes and assessments.
    (c) Community benefit expenditures. Community benefit expenditures 
means expenditures for activities or programs that seek to achieve the 
objectives of improving access to health services, enhancing public 
health and relief of government burden. This includes any of the 
following activities that:
    (1) Are available broadly to the public and serve low-income 
consumers;
    (2) Reduce geographic, financial, or cultural barriers to accessing 
health services, and if ceased to exist would

[[Page 469]]

result in access problems (for example, longer wait times or increased 
travel distances);
    (3) Address Federal, State or local public health priorities such as 
advancing health care knowledge through education or research that 
benefits the public;
    (4) Leverage or enhance public health department activities such as 
childhood immunization efforts; and
    (5) Otherwise would become the responsibility of government or 
another tax-exempt organization.

[75 FR 74921, Dec. 1, 2010. Redesignated and amended at 75 FR 82279, 
Dec. 30, 2010; 76 FR 76593, Dec. 7, 2011; 78 FR 15540, Mar. 11, 2013; 80 
FR 10876, Feb. 27, 2015]



Sec.  158.170  Allocation of expenses.

    (a) General requirements. Each expense must be reported under only 
one type of expense, unless a portion of the expense fits under the 
definition of or criteria for one type of expense and the remainder fits 
into a different type of expense, in which case the expense must be pro-
rated between types of expenses. Expenditures that benefit lines of 
business or products other than those being reported, including but not 
limited to those that are for or benefit self-funded plans, must be 
reported on a pro rata share.
    (b) Description of the methods used to allocate expenses. The report 
required in Sec.  158.110 must include a detailed description of the 
methods used to allocate expenses, including incurred claims, quality 
improvement expenses (unless the report utilizes the percentage of 
premium option described in Sec.  158.221(b)(8), in which case the 
allocation method description should state so), Federal and State taxes 
and licensing or regulatory fees, and other non-claims costs, to each 
health insurance market in each State. A detailed description of each 
expense element must be provided, including how each specific expense 
meets the criteria for the type of expense in which it is categorized, 
as well as the method by which it was aggregated.
    (1) Allocation to each category should be based on a generally 
accepted accounting method that is expected to yield the most accurate 
results. Specific identification of an expense with an activity that is 
represented by one of the categories above will generally be the most 
accurate method. If a specific identification is not feasible, the 
issuer should provide an explanation of why it believes the more 
accurate result will be gained from allocation of expenses based upon 
pertinent factors or ratios such as studies of employee activities, 
salary ratios or similar analyses.
    (2) Many entities operate within a group where personnel and 
facilities are shared. Shared expenses, including expenses under the 
terms of a management contract, must be apportioned pro rata to the 
entities incurring the expense.
    (3) Any basis adopted to apportion expenses must be that which is 
expected to yield the most accurate results and may result from special 
studies of employee activities, salary ratios, premium ratios or similar 
analyses. Expenses that relate solely to the operations of a reporting 
entity, such as personnel costs associated with the adjusting and paying 
of claims, must be borne solely by the reporting entity and are not to 
be apportioned to other entities within a group.
    (c) Disclosure of allocation methods. The issuer must identify in 
the report required in Sec.  158.110 of this subpart the specific basis 
used to allocate expenses reported under this part to States and, within 
States, to lines of business including the individual market, small 
group market, large group market, supplemental health insurance 
coverage, health insurance coverage offered to beneficiaries of public 
programs (such as Medicare and Medicaid), and group health plans as 
defined in Sec.  145.103 of this chapter and administered by the issuer.
    (d) Maintenance of records. The issuer must maintain and make 
available to the Secretary upon request the data used to allocate 
expenses reported under this part together with all supporting 
information required to determine that the methods identified and 
reported as required under paragraph (b) of this section were accurately 
implemented in preparing the report required in Sec.  158.110 of this 
subpart.

[75 FR 74921, Dec. 1, 2010, as amended at 83 FR 17070, Apr. 17, 2018]

[[Page 470]]



             Subpart B_Calculating and Providing the Rebate



Sec.  158.210  Minimum medical loss ratio.

    Subject to the provisions of Sec.  158.211 of this subpart:
    (a) Large group market. For all policies issued in the large group 
market in a State during the MLR reporting year, an issuer must provide 
a rebate to enrollees if the issuer has an MLR of less than 85 percent, 
as determined in accordance with this part.
    (b) Small group market. For all policies issued in the small group 
market in a State during the MLR reporting year, an issuer must provide 
a rebate to enrollees if the issuer has an MLR of less than 80 percent, 
as determined in accordance with this part.
    (c) Individual market. For all policies issued in the individual 
market in a State during the MLR reporting year, an issuer must provide 
a rebate to enrollees if the issuer has an MLR of less than 80 percent, 
as determined in accordance with this part.
    (d) Adjustment by the Secretary. If the Secretary has adjusted the 
percentage that issuers in the individual market in a specific State 
must meet, then the adjusted percentage determined by the Secretary in 
accordance with Sec.  158.301 of this part et seq. must be substituted 
for 80 percent in paragraph (c) of this section.



Sec.  158.211  Requirement in States with a higher medical loss ratio.

    (a) State option to set higher minimum loss ratio. For coverage 
offered in a State whose law provides that issuers in the State must 
meet a higher MLR than that set forth in Sec.  158.210, the State's 
higher percentage must be substituted for the percentage stated in Sec.  
158.210. If a State requires the small group market and individual 
market to be merged and also sets a higher MLR standard for the merged 
market, the State's higher percentage must be substituted for the 
percentage stated in Sec.  158.210 for both the small group and 
individual markets.
    (b) Considerations in setting a higher minimum loss ratio. In 
adopting a higher minimum loss ratio than that set forth in Sec.  
158.210, a State must seek to ensure adequate participation by health 
insurance issuers, competition in the health insurance market in the 
State, and value for consumers so that premiums are used for clinical 
services and quality improvements.

[75 FR 74921, Dec. 1, 2010, as amended at 79 FR 30352, May 27, 2014]



Sec.  158.220  Aggregation of data in calculating an issuer's 
medical loss ratio.

    (a) Aggregation by State and by market. In general, an issuer's MLR 
must be calculated separately for the large group market, small group 
market and individual market within each State. However, if a State 
requires the small group market and individual market to be merged, then 
the data reported separately under subpart A of this part for the small 
group and individual market in that State must be merged for purposes of 
calculating an issuer's MLR and any rebates owing.
    (b) Years of data to include in calculating MLR. Subject to 
paragraphs (c) and (d) of this section, an issuer's MLR for an MLR 
reporting year is calculated according to the formula in Sec.  158.221 
of this subpart and aggregating the data reported under this part for 
the following 3-year period:
    (1) The data for the MLR reporting year whose MLR is being 
calculated; and
    (2) The data for the two prior MLR reporting years.
    (c) Requirements for MLR reporting years 2011 and 2012. (1) For the 
2011 MLR reporting year, an issuer's MLR is calculated using the data 
reported under this part for the 2011 MLR reporting year only.
    (2) For the 2012 MLR reporting year--
    (i) If an issuer's experience for the 2012 MLR reporting year is 
fully credible, as defined in Sec.  158.230 of this subpart, an issuer's 
MLR is calculated using the data reported under this part for the 2012 
MLR reporting year.
    (ii) If an issuer's experience for the 2012 MLR reporting year is 
partially credible or non-credible, as defined in Sec.  158.230 of this 
subpart, an issuer's MLR is calculated using the data reported under 
this part for the 2011 MLR reporting year and the 2012 MLR reporting 
year.
    (d) Requirements for MLR reporting years 2013 and 2014 for the 
student market

[[Page 471]]

only. (1) For the 2013 MLR reporting year, an issuer's MLR is calculated 
using the data reported under this part for the 2013 MLR reporting year 
only.
    (2) For the 2014 MLR reporting year--
    (i) If an issuer's experience for the 2014 MLR reporting year is 
fully credible, as defined in Sec.  158.230 of this subpart, an issuer's 
MLR is calculated using the data reported under this part for the 2014 
MLR reporting year.
    (ii) If an issuer's experience for the 2014 MLR reporting year is 
partially credible or non-credible, as defined in Sec.  158.230 of this 
subpart, an issuer's MLR is calculated using the data reported under 
this part for the 2013 MLR reporting year and the 2014 MLR reporting 
year.

[75 FR 74921, Dec. 1, 2010, as amended at 77 FR 16469, Mar. 21, 2012; 79 
FR 30352, May 27, 2014]



Sec.  158.221  Formula for calculating an issuer's medical loss ratio.

    (a) Medical loss ratio. (1) An issuer's MLR is the ratio of the 
numerator, as defined in paragraph (b) of this section, to the 
denominator, as defined in paragraph (c) of this section, subject to the 
applicable credibility adjustment, if any, as provided in Sec.  158.232 
of this subpart.
    (2) An issuer's MLR shall be rounded to three decimal places. For 
example, if an MLR is 0.7988, it shall be rounded to 0.799 or 79.9 
percent. If an MLR is 0.8253 or 82.53 percent, it shall be rounded to 
0.825 or 82.5 percent.
    (b) Numerator. The numerator of an issuer's MLR for an MLR reporting 
year must be the issuer's incurred claims, as defined in Sec.  158.140 
of this part, plus the issuer's expenditures for activities that improve 
health care quality, as defined in Sec.  158.150 and Sec.  158.151 of 
this part, that are reported for the years specified in Sec.  158.220 of 
this subpart.
    (1) The numerator of the MLR for the 2012 MLR reporting year may 
include any rebate paid under Sec.  158.240 of this subpart for the 2011 
MLR reporting year if the 2012 MLR reporting year experience is not 
fully credible as defined in Sec.  158.230 of this subpart.
    (2) The numerator of the MLR for the 2013 MLR reporting year may 
include any rebate paid under Sec.  158.240 for the 2011 MLR reporting 
year or the 2012 MLR reporting year.
    (3) The numerator of the MLR for policies that are reported 
separately under Sec.  158.120(d)(3) of this part must be the amount 
specified in paragraph (b) of this section, except that for the 2012 MLR 
reporting year, the total of the incurred claims and expenditures for 
activities that improve health care quality are then multiplied by a 
factor of 1.75, for the 2013 MLR reporting year, the total of the 
incurred claims and expenditures for activities that improve health care 
quality are then multiplied by a factor of 1.50, and for the 2014 MLR 
reporting year, the total of the incurred claims and expenditures for 
activities that improve health care quality are then multiplied by a 
factor of 1.25.
    (4) The numerator of the MLR for policies that are reported 
separately under Sec.  158.120(d)(4) of this part must be the amount 
specified in paragraph (b) of this section, except that the total of the 
incurred claims and expenditures for activities that improve health care 
quality are then multiplied by a factor of 2.00.
    (5) The numerator of the MLR for policies that are reported 
separately under Sec.  158.120(d)(5) of this part must be the amount 
specified in paragraph (b) of this section, except that for the 2013 MLR 
reporting year the total of the incurred claims and expenditures for 
activities that improve health care quality is then multiplied by a 
factor of 1.15.
    (6) The numerator of the MLR in the individual and small group 
markets in States that adopted the transitional policy outlined in the 
CMS letter dated November 14, 2013 must be the amount specified in 
paragraph (b) of this section, except that issuers that provided 
transitional coverage may multiply the total incurred claims and 
expenditures for activities that improve health care quality incurred in 
2014 in the respective State and market by a factor of 1.0001.
    (7) The numerator of the MLR in the individual and small group 
markets for issuers participating in the State and Federal Exchanges 
(sometimes referred to as ``Marketplaces'') must be the amount specified 
in paragraph (b) of

[[Page 472]]

this section, except that the total incurred claims and expenditures for 
activities that improve health care quality incurred in 2014 in the 
respective State and market may be multiplied by a factor of 1.0004.
    (8) Beginning with the 2017 MLR reporting year, an issuer has the 
option of reporting an amount equal to 0.8 percent of earned premium in 
the relevant State and market in lieu of reporting the issuer's actual 
expenditures for activities that improve health care quality, as defined 
in Sec. Sec.  158.150 and 158.151. If an issuer chooses this method of 
reporting, it must apply it for a minimum of 3 consecutive MLR reporting 
years and for all of its individual, small group, and large group 
markets; and all affiliated issuers must choose the same reporting 
method.
    (c) Denominator. The denominator of an issuer's MLR must equal the 
issuer's premium revenue, as defined in Sec.  158.130, excluding the 
issuer's Federal and State taxes and licensing and regulatory fees, 
described in Sec. Sec.  158.161(a) and 158.162(a)(1) and (b)(1), and 
after accounting for payments or receipts related to risk adjustment, 
risk corridors, and reinsurance, described in Sec.  158.130(b)(5).

[75 FR 74921, Dec. 1, 2010, as amended at 76 FR 76593, Dec. 7, 2011; 77 
FR 16469, Mar. 21, 2012; 78 FR 15540, Mar. 11, 2013; 79 FR 30352, May 
27, 2014; 83 FR 17070, Apr. 17, 2018]



Sec.  158.230  Credibility adjustment.

    (a) General rule. An issuer may add to the MLR calculated under 
Sec.  158.221(a) of this subpart the credibility adjustment specified by 
Sec.  158.232 of this section, if such MLR is based on partially 
credible experience as defined in paragraph (c)(2) of this section. An 
issuer may not apply the credibility adjustment if the issuer's 
experience is fully credible, as defined in paragraph (c)(1) of this 
section, or non-credible, as defined in paragraph (c)(3) of this 
section.
    (b) Life-years. The credibility of an issuer's experience is based 
upon the number of life-years covered by the issuer. Life-years means 
the total number of months of coverage for enrollees whose premiums and 
claims experience is included in the report to the Secretary required by 
Sec.  158.110 of this part, divided by 12.
    (c) Credible experience. (1) An MLR calculated under Sec.  
158.221(a) through (c) of this subpart is fully credible if it is based 
on the experience of 75,000 or more life-years.
    (2) An MLR calculated under Sec.  158.221(a) through (c) of this 
subpart is partially credible if it is based on the experience of at 
least 1,000 life-years and fewer than 75,000 life-years.
    (3) An MLR calculated under Sec.  158.221(a) through (c) of this 
subpart is non-credible if it is based on the experience of less than 
1,000 life-years.
    (d) If an issuer's MLR is non-credible, it is presumed to meet or 
exceed the minimum percentage required by Sec.  158.210 or Sec.  158.211 
of this subpart.



Sec.  158.231  Life-years used to determine credible experience.

    (a) The life-years used to determine the credibility of an issuer's 
experience are the life-years for the MLR reporting year plus the life-
years for the two prior MLR reporting years. If a State requires the 
small group market and individual market to be merged, then life-years 
used to determine credibility must be the life-years from the small 
group market and the individual market for the MLR reporting year plus 
the life-years from the small group market and the individual market for 
the two prior MLR reporting years.
    (b) For the 2011 MLR reporting year, the life-years used to 
determine credibility are the life-years for the 2011 MLR reporting year 
only.
    (c) For the 2012 MLR reporting year-
    (1) If an issuer's experience for the 2012 MLR reporting year is 
fully credible, the life-years used to determine credibility are the 
life-years for the 2012 MLR reporting year only;
    (2) If an issuer's experience for the 2012 MLR reporting year only 
is partially credible or non-credible, the life-years used to determine 
credibility are the life-years for the 2011 MLR reporting year plus the 
life-years for the 2012 MLR reporting year.
    (d) For the 2013 MLR reporting year for the student market only, the 
life-years used to determine credibility are the life-years for the 2013 
MLR reporting year only.
    (e) For the 2014 MLR reporting year for the student market only--

[[Page 473]]

    (1) If an issuer's experience for the 2014 MLR reporting year is 
fully credible, the life-years used to determine credibility are the 
life-years for the 2014 MLR reporting year only;
    (2) If an issuer's experience for the 2014 MLR reporting year only 
is partially credible or non-credible, the life-years used to determine 
credibility are the life-years for the 2013 MLR reporting year plus the 
life-years for the 2014 MLR reporting year.

[75 FR 74921, Dec. 1, 2010, as amended at 75 FR 82279, Dec. 30, 2010; 77 
FR 16469, Mar. 21, 2012; 79 FR 30353, May 27, 2014]



Sec.  158.232  Calculating the credibility adjustment.

    (a) Formula. An issuer's credibility adjustment, if any, is the 
product of the base credibility factor, as determined under paragraph 
(b) of this section, multiplied by the deductible factor, as determined 
under paragraph (c) of this section.
    (b) Base credibility factor. (1) The base credibility factor for 
fully credible experience or for non-credible experience is zero.
    (2) The base credibility factor for partially credible experience is 
determined based on the number of life-years included in the 
aggregation, as determined under Sec.  158.231 of this subpart, and the 
factors shown in Table 1. When the number of life-years used to 
determine credibility exactly matches a life-year category listed in 
Table 1, the value associated with that number of life-years is the base 
credibility factor. The base credibility factor for a number of life-
years between the values shown in Table 1 is determined by linear 
interpolation.

           Table 1 to Sec.   158.232: Base Credibility Factors
------------------------------------------------------------------------
              Life-years                     Base credibility factor
------------------------------------------------------------------------
<1,000................................  No Credibility.
1,000.................................  8.3%.
2,500.................................  5.2%.
5,000.................................  3.7%.
10,000................................  2.6%.
25,000................................  1.6%.
50,000................................  1.2%.
=75,000....................  0.0% (Full Credibility).
------------------------------------------------------------------------

    (c) Deductible factor. (1) The deductible factor is based on the 
average per person deductible of policies whose experience is included 
in the aggregation, as determined under Sec.  158.231 of this subpart. 
When the weighted average deductible, as determined in accordance with 
this section, exactly matches a deductible category listed in Table 2, 
the value associated with that deductible is the deductible factor. The 
deductible factor for an average weighted deductible between the values 
shown in Table 2 is determined by linear interpolation.
    (i) The per person deductible for a policy that covers a subscriber 
and the subscriber's dependents shall be the lesser of: the deductible 
applicable to each of the individual family members; or the overall 
family deductible for the subscriber and subscriber's family divided by 
two (regardless of the total number of individuals covered through the 
subscriber).
    (ii) The average deductible for an aggregation is calculated 
weighted by the life-years of experience for each deductible level of 
policies included in the aggregation.
    (2) An issuer may choose to use a deductible factor of 1.0 in lieu 
of calculating a deductible factor based on the average of policies 
included in the aggregation.

              Table 2 to Sec.   158.232: Deductible Factor
------------------------------------------------------------------------
                                                            Deductible
                 Health plan deductible                       factor
------------------------------------------------------------------------
<$2,500.................................................           1.000
$2,500..................................................           1.164
$5,000..................................................           1.402
=$10,000.....................................           1.736
------------------------------------------------------------------------

    (d) No credibility adjustment. Beginning with the 2013 MLR reporting 
year, the credibility adjustment for an MLR based on partially credible 
experience is zero if both of the following conditions are met:
    (1) Each year in the aggregation included experience of at least 
1,000 life-years; and
    (2) The issuer's preliminary MLR, as defined under paragraph (f) of 
this section, for each year in the aggregation was below the applicable 
MLR standard, as established under Sec. Sec.  158.210 and 158.211.
    (e) No credibility adjustment. Beginning with the 2015 MLR reporting 
year

[[Page 474]]

for the student market only, the credibility adjustment for an MLR based 
on partially credible experience is zero if both of the following 
conditions are met:
    (1) Each year in the aggregation included experience of at least 
1,000 life-years; and
    (2) The issuer's preliminary MLR, as defined under paragraph (f) of 
this section, for each year in the aggregation was below the applicable 
MLR standard, as established under Sec. Sec.  158.210 and 158.211.
    (f) Preliminary MLR. Preliminary MLR means the ratio of the 
numerator, as defined in Sec.  158.221(b) and calculated as of March 
31st of the year following the year for which the MLR report required in 
Sec.  158.110 is being submitted, to the denominator, as defined in 
Sec.  158.221(c), calculated using only a single year of experience, and 
without applying any credibility adjustment.

[75 FR 74921, Dec. 1, 2010, as amended at 75 FR 82279, Dec. 30, 2010; 77 
FR 16469, Mar. 21, 2012; 77 FR 28790, May 16, 2012; 78 FR 15540, Mar. 
11, 2013; 78 FR 66655, Nov. 6, 2013; 81 FR 94183, Dec. 22, 2016]



Sec.  158.240  Rebating premium if the applicable medical loss ratio
standard is not met.

    (a) General requirement. For each MLR reporting year, an issuer must 
provide a rebate to each enrollee if the issuer's MLR does not meet or 
exceed the minimum percentage required by Sec. Sec.  158.210 and 158.211 
of this subpart.
    (b) Definition of enrollee for purposes of rebate. For the sole 
purpose of determining whom is entitled to receive a rebate pursuant to 
this part, the term ``enrollee'' means the subscriber, policyholder, 
and/or government entity that paid the premium for health care coverage 
received by an individual during the respective MLR reporting year.
    (c) Amount of rebate to each enrollee. (1) For each MLR reporting 
year, an issuer must rebate to the enrollee, subject to paragraph (d) of 
this section, the total amount of premium revenue, as defined in Sec.  
158.130, received by the issuer from the enrollee, after subtracting 
Federal and State taxes and licensing and regulatory fees as provided in 
Sec. Sec.  158.161(a) and 158.162(a)(1) and (b)(1), and after accounting 
for payments or receipts for risk adjustment, risk corridors, and 
reinsurance as provided in Sec.  158.130(b)(5), multiplied by the 
difference between the MLR required by Sec.  158.210 or Sec.  158.211, 
and the issuer's MLR as calculated under Sec.  158.221.
    (2) For example, an issuer must rebate a pro rata portion of premium 
revenue if it does not meet an 80 percent MLR for the individual market 
in a State that has not set a higher MLR. If an issuer has a 75 percent 
MLR for the coverage it offers in the individual market in a State that 
has not set a higher MLR, the issuer must rebate 5 percent of the 
premium paid by or on behalf of the enrollee for the MLR reporting year 
after subtracting a pro rata portion of taxes and fees and accounting 
for payments or receipts related to the reinsurance, risk adjustment and 
risk corridors programs (calculated using an adjustment percentage, as 
described in Sec.  153.500 of this subchapter, equal to zero percent). 
If the issuer's total earned premium for the MLR reporting year in the 
individual market in the State is $200,000, the issuer received 
transitional reinsurance payments of $2,500, and made net payments 
related to risk adjustment and risk corridors of $20,000 (calculated 
using an adjustment percentage, as described in Sec.  153.500 of this 
subchapter, equal to zero percent), the issuer's gross earned premium in 
the individual market in the State would be $200,000 plus $2,500 minus 
$20,000, for a total of $182,500. If the issuer's Federal and State 
taxes and licensing and regulatory fees, including reinsurance 
contributions, that may be excluded from premium revenue as described in 
Sec. Sec.  158.161(a), 158.162(a)(1) and 158.162(b)(1), allocated to the 
individual market in the State are $15,000, and the net payments related 
to risk adjustment and risk corridors, reduced by reinsurance receipts, 
that must be accounted for in premium revenue as described in Sec. Sec.  
158.130(b)(5), 158.221, and 158.240, are $17,500 ($20,000 reduced by 
$2,500), then the issuer would subtract $15,000 and add $17,500 to gross 
premium revenue of $182,500, for a base of $185,000 in premium. The 
issuer would owe rebates of 5 percent of $185,000, or $9,250 in the 
individual market in the State.

[[Page 475]]

In this example, if an enrollee of the issuer in the individual market 
in the State paid $2,000 in premiums for the MLR reporting year, or 1/
100 of the issuer's total premium in that State market, then the 
enrollee would be entitled to 1/100 of the total rebates owed by the 
issuer, or $92.50.
    (d) Limitation on total rebate payable for each year in the 
aggregation. For any State and market, an issuer may elect to limit the 
amount of rebate payable for the MLR reporting year to the issuer's 
total outstanding rebate liability with respect to all years included in 
the aggregation. If an issuer elects this option, the outstanding rebate 
liability with respect to a specific year in the aggregation must be 
calculated by multiplying the denominator with respect to that year, as 
defined in Sec.  158.221(c), by the difference between the MLR required 
by Sec.  158.210 or Sec.  158.211 for the MLR reporting year, and the 
sum of the issuer's preliminary MLR for that year, as defined under 
Sec.  158.232(f), and the credibility adjustment applicable to the 
current MLR reporting year. The outstanding rebate liability with 
respect to a specific year must be reduced by any rebate payments 
applied against it in prior MLR reporting years. A rebate paid for an 
MLR reporting year must be applied first to reduce the outstanding 
rebate liability with respect to the earliest year in the aggregation.
    (e) Timing of rebate. For each of the 2011, 2012, and 2013 MLR 
reporting years, an issuer must provide any rebate owing to an enrollee 
no later than August 1 following the end of the MLR reporting year. 
Beginning with the 2014 MLR reporting year, an issuer must provide any 
rebate owing to an enrollee no later than September 30 following the end 
of the MLR reporting year.
    (f) Late payment interest. An issuer that fails to pay any rebate 
owing to an enrollee or subscriber in accordance with paragraph (e) of 
this section or to take other required action within the time periods 
set forth in this part must, in addition to providing the required 
rebate to the enrollee, pay the enrollee interest at the current Federal 
Reserve Board lending rate or ten percent annually, whichever is higher, 
on the total amount of the rebate, accruing from the date payment was 
due under paragraph (e) of this section.

[75 FR 74921, Dec. 1, 2010, as amended at 78 FR 15540, Mar. 11, 2013; 79 
FR 13842, Mar. 11, 2014; 81 FR 94183, Dec. 22, 2016]



Sec.  158.241  Form of rebate.

    (a) Current enrollees. (1) An issuer may choose to provide any 
rebates owing to current enrollees in the form of a premium credit, 
lump-sum check, or, if an enrollee paid the premium using a credit card 
or direct debit, by lump-sum reimbursement to the account used to pay 
the premium.
    (2) For each of the 2011, 2012, and 2013 MLR reporting years, any 
rebate provided in the form of a premium credit must be provided by 
applying the full amount due to the first month's premium that is due on 
or after August 1 following the MLR reporting year. If the amount of the 
rebate exceeds the premium due for August, then any overage shall be 
applied to succeeding premium payments until the full amount of the 
rebate has been credited. Beginning with the 2014 MLR reporting year, 
any rebate provided in the form of a premium credit must be provided by 
applying the full amount due to the first month's premium that is due on 
or after September 30 following the MLR reporting year. If the amount of 
the rebate exceeds the premium due for October, then any overage shall 
be applied to succeeding premium payments until the full amount of the 
rebate has been credited.
    (b) Former enrollees in the individual market. Rebates owing to 
former enrollees in the individual market must be paid in the form of 
lump-sum check or lump-sum reimbursement using the same method that was 
used for payment, such as credit card or direct debit.

[75 FR 74921, Dec. 1, 2010, as amended at 76 FR 76593, Dec. 7, 2011; 78 
FR 15540, Mar. 11, 2013]



Sec.  158.242  Recipients of rebates.

    (a) Individual market. An issuer must meet its obligation to provide 
any rebate due to an enrollee in the individual market by providing it 
to the enrollee. For individual policies that cover more than one 
person, one lump-

[[Page 476]]

sum rebate may be provided to the subscriber on behalf of all enrollees 
covered by the policy.
    (b) Large group and small group markets. Except as provided in 
paragraphs (b)(3) and (4) of this section, an issuer must meet its 
obligation to provide any rebate to persons covered under a group health 
plan by providing it to the policyholder.
    (1) In the case of a policyholder that is a non-Federal governmental 
group health plan, the policyholder must use the amount of the rebate 
that is proportionate to the total amount of premium paid by all 
subscribers under the policy, for the benefit of subscribers in one of 
the following ways, at the option of the policyholder:
    (i) For all subscribers covered under any option offered under the 
policyholder's group health plan at the time the rebate is received by 
the policyholder, to reduce the subscribers' portion of premium for the 
subsequent policy year;
    (ii) For subscribers covered, at the time the rebate is received by 
the policyholder, under the group health plan option for which the 
issuer is providing a rebate, to reduce the subscribers' portion of 
premium for the subsequent policy year;
    (iii) A cash refund to subscribers of the group health plan option 
for which the issuer is providing a rebate, who were enrolled in the 
group health plan option either during the MLR reporting year that 
resulted in the issuer providing the rebate or at the time the rebate is 
received by the policyholder;
    (iv) The reduction in future premium or the cash refund provided 
under paragraphs (b)(1)(i), (ii), or (iii) of this section may, at the 
option of the policyholder, be: Divided evenly among such subscribers; 
divided based on each subscriber's actual contributions to premium; or 
apportioned in a manner that reasonably reflects each subscriber's 
contributions to premium; and
    (v) All rebate distributions made under paragraphs (b)(1)(i), (ii), 
or (iii) of this section must be made within 3 months of the 
policyholder's receipt of the rebate. Rebate distributions made after 3 
months must include late payment interest at the current Federal Reserve 
Board lending rate or 10 percent annually, whichever is higher, on the 
total amount of the rebate, accruing from the date payment was due under 
this section.
    (2) In the case of a policyholder that is a non-Federal governmental 
group health plan, the portion of a rebate based upon former 
subscribers' contributions to premium must be aggregated and used for 
the benefit of current subscribers in the group health plan in any 
manner permitted by paragraph (b)(1) of this section.
    (3) If the policyholder is a group health plan that is not a 
governmental plan and not subject to the Employee Retirement Income 
Security Act of 1974, as amended (29 U.S.C. 1001 et seq.) (ERISA), 
rebates may only be paid to the policyholder if the issuer receives a 
written assurance from the policyholder that the rebates will be used as 
provided in paragraphs (b)(1) and (2) of this section; otherwise, the 
issuer must distribute the rebate directly to the subscribers of the 
group health plan covered by the policy during the MLR reporting year on 
which the rebate is based by dividing the entire rebate, including the 
amount proportionate to the amount of premium paid by the policyholder, 
in equal amounts to all subscribers entitled to a rebate without regard 
to how much each subscriber actually paid toward premiums.
    (4) If the group health plan has been terminated at the time of 
rebate payment and the issuer cannot, despite reasonable efforts, locate 
the policyholder whose plan participants or employees were enrolled in 
the group health plan, the issuer must distribute the rebate directly to 
the subscribers of the terminated group health plan by dividing the 
entire rebate, including the amount proportionate to the amount of 
premium paid by the policyholder, in equal amounts to all subscribers 
entitled to a rebate without regard to how much each subscriber actually 
paid toward premiums.

[75 FR 74921, Dec. 1, 2010, as amended at 76 FR 76593, 76599, Dec. 7, 
2011; 80 FR 10876, Feb. 27, 2015]



Sec.  158.243  De minimis rebates.

    (a) Minimum threshold. An issuer is not required to provide a rebate 
to an enrollee based upon the premium that

[[Page 477]]

enrollee paid, under the following circumstances:
    (1) For a group policy for which the issuer distributes the rebate 
to the policyholder, if the total rebate owed to the policyholder and 
the subscribers combined is less than $20 for a given MLR reporting 
year; or for a group policy for which the issuer distributes the rebate 
directly to the subscribers, as provided in Sec.  158.242(a)(3) and (4) 
of this subpart, if the total rebate owed to each subscriber is less 
than $5.
    (2) In the individual market, if the total rebated owed to the 
subscriber is less than $5.
    (b) Distribution. (1) An issuer must aggregate and distribute any 
rebates not provided because they did not meet the minimum threshold set 
forth in paragraph (a) of this section by aggregating the unpaid rebates 
by individual market, small group market and large group market in a 
State and use them to increase the rebates provided to enrollees who 
receive rebates based upon the same MLR reporting year as the aggregated 
unpaid rebates. An issuer must distribute such aggregated rebates by 
providing additional premium credit or payment divided evenly among 
enrollees who are being provided a rebate.
    (2) For example, an issuer in the individual market has aggregated 
unpaid rebates totaling $2,000, and the issuer has 10,000 enrollees who 
are entitled to be provided a rebate above the minimum threshold for the 
applicable MLR reporting year. The $2,000 must be redistributed to the 
10,000 and added on to their existing rebate amounts. The $2,000 is 
divided evenly among the 10,000 enrollees, so the issuer increases each 
enrollee's rebate by $0.20.

[75 FR 74921, Dec. 1, 2010, as amended at 76 FR 76593, Dec. 7, 2011]



Sec.  158.244  Unclaimed rebates.

    An issuer must make a good faith effort to locate and deliver to an 
enrollee any rebate required under this part. If, after making a good 
faith effort, an issuer is unable to locate a former enrollee, the 
issuer must comply with any applicable State law.



Sec.  158.250  Notice of rebates.

    (a) Notice of rebates to policyholders and subscribers of group 
health plans. For each MLR reporting year, at the time any rebate of 
premium is provided to a policyholder of a group health plan in 
accordance with this part, an issuer must provide each policyholder who 
receives a rebate and subscribers whose policyholder receives a rebate, 
or each subscriber who receives a rebate directly from an issuer, the 
following information in a form prescribed by the Secretary:
    (1) A general description of the concept of an MLR;
    (2) The purpose of setting an MLR standard;
    (3) The applicable MLR standard;
    (4) The issuer's MLR, adjusted in accordance with the provisions of 
this subpart;
    (5) The issuer's aggregate premium revenue as reported in accordance 
with Sec.  158.130 of this part, minus any Federal and State taxes and 
licensing and regulatory fees that may be excluded from premium revenue 
as described in Sec.  158.162(a)(1) and (b)(1) of this part;
    (6) The rebate percentage and the amount owed to enrollees, as 
defined in section 158.240(b), based upon the difference between the 
issuer's MLR and the applicable MLR standard; and
    (7) The fact that, as provided by this subpart, the total aggregated 
rebate for the group health plan is being provided to the policyholder:
    (i) If the policy provides benefits for a plan subject to ERISA, a 
statement that the policyholder may have additional obligations under 
ERISA's fiduciary responsibility provisions with respect to the handling 
of rebates and contact information for questions regarding the rebate;
    (ii) If the policyholder is a non-Federal governmental plan, the 
proportion of the rebate attributable to subscribers' contribution to 
premium must be used for the benefit of subscribers, using one of the 
methods set forth in Sec.  158.242(b)(1) of this subpart; and
    (iii) If the policyholder is a group health plan that is not a 
governmental plan and is not subject to ERISA,
    (A) The policyholder has provided written assurance that the 
proportion

[[Page 478]]

of the rebate attributable to subscribers' contribution to premium will 
be used for the benefit of current subscribers, using one of the methods 
set forth in Sec.  158.242(b)(1) of this subpart, or
    (B) If the policyholder did not provide such written assurance, the 
issuer must distribute the rebate evenly among the policyholder's 
subscribers covered by the policy during the MLR reporting year on which 
the rebate is based.
    (b) Notice of rebates to subscribers in the individual market. For 
each MLR reporting year, at the time any rebate of premium is provided 
to a subscriber in the individual market in accordance with this part, 
an issuer must provide each subscriber that is receiving the rebate the 
following information in a form prescribed by the Secretary:
    (1) A general description of the concept of an MLR;
    (2) The purpose of setting an MLR standard;
    (3) The applicable MLR standard;
    (4) The issuer's MLR, adjusted in accordance with the provisions of 
this subpart;
    (5) The issuer's aggregate premium revenue as reported in accordance 
with Sec.  158.130 of this part, minus any Federal and State taxes and 
licensing and regulatory fees that may be excluded from premium revenue 
as described in Sec.  158.162(a)(1) and (b)(1) of this part; and
    (6) The rebate percentage and amount owed to enrollees based upon 
the difference between the issuer's MLR and the applicable MLR standard.

[76 FR 76593, Dec. 7, 2011]



Sec.  158.251  Notice of MLR information.

    (a) Notice of MLR information when the MLR standard is met or 
exceeded--(1) General requirement. Except as provided in paragraph (b) 
of this section, for the 2011 MLR reporting year, an issuer whose MLR 
meets or exceeds the applicable MLR standard required by Sec.  158.210 
or Sec.  158.211 must provide each policyholder and subscriber of a 
group health plan, and each subscriber in the individual market, a 
notice in accordance with the requirements of this section.
    (2) Timing. An issuer must provide the notice required in this 
paragraph (a) with the first plan document that the issuer provides to 
enrollees on or after July 1, 2012.
    (3) Form and appearance. The notice must be prominently displayed in 
clear, conspicuous 14-point bold type on the front of the plan document 
or as a separate notice. The notice may be provided electronically, if 
the requirements for electronic disclosure under section 2715 of the 
Public Health Service Act are met.
    (4) Language. The following language must be used to satisfy the 
notice requirement of this paragraph (a):
    Medical Loss Ratio Information--The Affordable Care Act requires 
health insurers in the individual and small group markets to spend at 
least 80 percent of the premiums they receive on health care services 
and activities to improve health care quality (in the large group 
market, this amount is 85 percent). This is referred to as the Medical 
Loss Ratio (MLR) rule or the 80/20 rule. If a health insurer does not 
spend at least 80 percent of the premiums it receives on health care 
services and activities to improve health care quality, the insurer must 
rebate the difference.
    A health insurer's Medical Loss Ratio is determined separately for 
each State's individual, small group and large group markets in which 
the health insurer offers health insurance. In some States, health 
insurers must meet a higher or lower Medical Loss Ratio. No later than 
August 1, 2012, health insurers must send any rebates due for 2011 and 
information to employers and individuals regarding any rebates due for 
2011.
    You are receiving this notice because your health insurer had a 
Medical Loss Ratio for 2011 that met or exceeded the required Medical 
Loss Ratio. For more information on Medical Loss Ratio and your health 
insurer's Medical Loss Ratio, visit www.HealthCare.gov.''
    (b) Exceptions. The requirements of paragraph (a) of this section do 
not apply to an issuer that reports its experience separately under 
Sec.  158.120(d)(3) or (d)(4), or to an issuer whose experience is non-
credible as defined in Sec.  158.230(c)(3) and determined in accordance 
with Sec.  158.231.

[77 FR 28797, May 16, 2012]

[[Page 479]]



Sec.  158.260  Reporting of rebates.

    (a) General requirement. For each MLR reporting year, an issuer must 
submit to the Secretary a report concerning the rebates provided to and 
on behalf of enrollees pursuant to this subpart.
    (b) Aggregation of information in the report. The information in the 
report must be aggregated in the same manner as required by Sec.  
158.120.
    (c) Information to report. The report required by this section must 
include the total:
    (1) Number of subscribers in the individual, small group and large 
group markets to whom the issuer paid a rebate directly, and number of 
small group and large group policyholders receiving a rebate on behalf 
of enrollees;
    (2) Amount of rebates provided as premium credit;
    (3) Amount of rebates provided as lump sum payment regardless of 
whether in cash, reimbursement to an enrollee's credit card, or direct 
payment to an enrollee's bank account;
    (4) Amount of rebates that were de minimis as provided in Sec.  
158.243 of this subpart and the number of enrollees who did not receive 
a rebate because it was de minimis; and
    (5) Amount of unclaimed rebates, a description of the methods used 
to locate the applicable enrollees, and a description of how the 
unclaimed rebates were disbursed.
    (d) Timing and form of report. The data required by paragraphs 
(c)(1) through (4) of this section must be submitted with the report 
under Sec.  158.110, on a form and in the manner prescribed by the 
Secretary. The data required by paragraph (c)(5) of this section must be 
submitted with the report under Sec.  158.110 for the subsequent MLR 
reporting year.

[75 FR 74921, Dec. 1, 2010, as amended at 76 FR 76594, Dec. 7, 2011]



Sec.  158.270  Effect of rebate payments on solvency.

    (a) If a State's insurance commissioner, superintendent, or other 
responsible official determines that the payment of rebates by a 
domestic issuer in that State will cause the issuer's risk based capital 
(RBC) level to fall below the Company Action Level RBC, as defined in 
the NAIC's Risk Based Capital (RBC) for Insurers Model Act, the 
commissioner, superintendent, or other responsible official must notify 
the Secretary. In such a circumstance, the commissioner, superintendent, 
or other responsible official may request that the Secretary defer all 
or a portion of the rebate payments owed by the issuer.
    (b) In the event an insurance commissioner, superintendent, or other 
responsible official makes the request set forth in paragraph (a) of 
this section, the following should be provided to the Secretary along 
with the notification:
    (1) The domestic issuer's RBC reports for the current calendar year 
and the 2 preceding calendar years; and
    (2) A calculation of the amount of rebates that would be owed by the 
domestic issuer pursuant to this part.
    (c) Upon receipt of the notification under paragraph (a), the 
Secretary will examine the information provided by the insurance 
commissioner, superintendent, or other responsible official along with 
any other information the Secretary may request from the issuer, and 
determine whether the payment of rebates by the issuer will cause its 
RBC level to fall below the Company Action Level RBC.
    (d) When the Secretary determines that the payment of rebates by an 
issuer will cause its RBC level to fall below the Company Action Level 
RBC, the Secretary may permit a deferral of all or a portion of the 
rebates owed, but only for a period determined by the Secretary in 
consultation with the State. The Secretary will require that the issuer 
must pay these rebates with interest in a future year in which payment 
of the rebates would not cause the issuer's RBC level to fall below the 
Company Action Level RBC.



   Subpart C_Potential Adjustment to the MLR for a State's Individual 
                                 Market



Sec.  158.301  Standard for adjustment to the medical loss ratio.

    The Secretary may adjust the MLR standard that must be met by 
issuers offering coverage in the individual market in a State, as 
defined in section

[[Page 480]]

2791 of the PHS Act, for a given MLR reporting year if, in the 
Secretary's discretion, the Secretary determines that there is a 
reasonable likelihood that an adjustment to the 80 percent MLR standard 
of section 2718(b)(1)(A)(ii) of the Public Health Service Act will help 
stabilize the individual market in that State.

[83 FR 17070, Apr. 17, 2018]



Sec.  158.310  Who may request adjustment to the medical loss ratio.

    A request for an adjustment to the MLR standard for a State must be 
submitted by the State's insurance commissioner, superintendent, or 
comparable official of that State in order to be considered by the 
Secretary.



Sec.  158.311  Duration of adjustment to the medical loss ratio.

    A State may request that an adjustment to the MLR standard be for up 
to three MLR reporting years.



Sec.  158.320  Information supporting a request for adjustment to 
the medical loss ratio.

    A State must submit in electronic format the information required by 
Sec. Sec.  158.321 through 158.323 of this subpart in order for the 
request for adjustment to the MLR standard for the State to be 
considered by the Secretary. A State may submit to the Secretary any 
additional information it determines would support its request. In the 
event that certain data are unavailable or that the collection of 
certain data is unduly burdensome, a State may provide written notice to 
the Secretary and the Secretary may, at her discretion, request 
alternative supporting data or move forward with her determination.



Sec.  158.321  Information regarding the State's individual health
insurance market.

    (a) Subject to Sec.  158.320, the State must provide, for each 
issuer who actively offers coverage in the individual market in the 
State, the following information, in accordance with paragraph (b) of 
this section, for the preceding calendar year and, at the State's 
option, for the current year:
    (1) Total earned premium and incurred claims;
    (2) Total number of enrollees (life-years and covered lives);
    (3) Total agents' and brokers' commission expenses;
    (4) Net underwriting gain;
    (5) Risk-based capital level; and
    (6) Whether the issuer has provided notice to the State's insurance 
commissioner, superintendent, or comparable State authority that the 
issuer will cease or begin offering individual market coverage on the 
Exchange, certain geographic areas, or the entire individual market in 
the State.
    (b) The information required in paragraphs (a)(1) through (4) and 
(6) of this section must be provided separately for the issuer's 
individual market plans grouped by the following categories, as 
applicable: On-Exchange, off-Exchange, grandfathered health plans as 
defined in Sec.  147.140 of this subchapter, coverage that meets the 
criteria for transitional policies outlined in applicable guidance, and 
non-grandfathered single risk pool coverage. The information required in 
paragraph (a)(5) of this section must be provided at the issuer level.
    (c) The State must also provide information regarding whether any 
issuer other than those described in paragraph (a) of this section has 
provided notice to the State's insurance commissioner, superintendent, 
or comparable State authority that the issuer will cease or begin 
offering individual market coverage on the Exchange, certain geographic 
areas, or the entire individual market in the State.

[83 FR 17070, Apr. 17, 2018]



Sec.  158.322  Proposal for adjusted medical loss ratio.

    A State must provide its own proposal as to the adjustment it seeks 
to the MLR standard. This proposal must include an explanation of how an 
adjustment to the MLR standard for the State's individual market will 
help stabilize the State's individual market.

[83 FR 17071, Apr. 17, 2018]



Sec.  158.323  State contact information.

    A State must provide the name, telephone number, e-mail address, and

[[Page 481]]

mailing address of the person the Secretary may contact regarding the 
request for an adjustment to the MLR standard.



Sec.  158.330  Criteria for assessing request for adjustment to the
medical loss ratio.

    The Secretary may consider the following criteria in assessing 
whether an adjustment to the 80 percent MLR standard, as calculated in 
accordance with this subpart, would be reasonably likely to help 
stabilize the individual market in a State that has requested such 
adjustment:
    (a) The number and financial performance (based on data provided by 
a State under Sec.  158.321) of issuers actively offering individual 
health insurance coverage on- and off-Exchange, grandfathered health 
plans as defined in Sec.  147.140 of this subchapter, coverage that 
meets the criteria for transitional policies outlined in applicable 
guidance, and non-grandfathered single risk pool coverage; the number of 
issuers reasonably likely to cease or begin offering individual market 
coverage in the State; and the likelihood that an adjustment to the 80 
percent MLR standard could help increase competition in the individual 
market in the State, including in underserved areas.
    (b) Whether an adjustment to the 80 percent MLR standard for the 
individual market may improve consumers' access to agents and brokers.
    (c) The capacity of any new issuers or issuers remaining in the 
individual market to write additional business in the event one or more 
issuers were to cease offering individual market coverage on the 
Exchange, in certain geographic areas, or in the entire individual 
market in the State.
    (d) The impact on premiums charged, and on benefits and cost sharing 
provided, to consumers by issuers remaining in or entering the 
individual market in the event one or more issuers were to cease or 
begin offering individual market coverage on the Exchange, in certain 
geographic areas, or in the entire individual market in the State.
    (e) Any other relevant information submitted by the State's 
insurance commissioner, superintendent, or comparable official in the 
State's request.

[83 FR 17071, Apr. 17, 2018]



Sec.  158.340  Process for submitting request for adjustment to the 
medical loss ratio.

    (a) Electronic submission. A State must submit electronically, to an 
address and in a format prescribed by the Secretary, all of the 
information required by this subpart in order for its request for an 
adjustment to the MLR standard for its individual market to be 
considered by the Secretary.
    (b) Submission by mail. A State may also submit by overnight 
delivery service or by U.S mail, return receipt requested, to an address 
and in a format prescribed by the Secretary, its request for an 
adjustment to the MLR standard for its individual market.



Sec.  158.341  Treatment as a public document.

    A State's request for an adjustment to the MLR standard, and all 
information submitted as part of its request, will be treated as a 
public document. Instructions for how to access documents related to a 
State's request for an adjustment to the MLR standard will be made 
available on the Secretary's website.

[83 FR 17071, Apr. 17, 2018]



Sec.  158.342  Invitation for public comments.

    The Secretary will invite public comment regarding a State's request 
for an adjustment to the MLR standard. All public comments must be 
submitted in writing within 10 days of the posting of the request, and 
must be submitted in the manner prescribed by the Secretary. The 
Secretary will consider timely public comments in assessing a State's 
request for an adjustment to the MLR standard.



Sec.  158.343  Optional State hearing.

    Any State that submits a request for adjustment to the MLR standard 
may, at its option, hold a public hearing and create an evidentiary 
record with respect to its application. If a State does so, the 
Secretary will take the evidentiary record of the hearing into

[[Page 482]]

consideration in making her determination.



Sec.  158.344  Secretary's discretion to hold a hearing.

    The Secretary may, at her discretion, conduct a public hearing with 
respect to a State's request for an adjustment to the MLR standard. All 
testimony and materials received in connection with any public hearing 
will be made part of the public record, and shall be considered by the 
Secretary in assessing a State's request for an adjustment to the MLR 
standard.



Sec.  158.345  Determination on a State's request for adjustment to
the medical loss ratio.

    (a) General time frame. The Secretary will make a determination as 
to whether to grant a State's request for an adjustment to the MLR 
standard within 30 days after determining that the information required 
by this subpart has been received.
    (b) Extension at the discretion of the Secretary. The Secretary may, 
in her discretion, extend the 30 day time period in paragraph (a) of 
this section for as long a time as necessary not to exceed 30 days.



Sec.  158.346  Request for reconsideration.

    (a) Requesting reconsideration. A State whose request for adjustment 
to the MLR standard has been denied by the Secretary may request 
reconsideration of that determination. A request for reconsideration 
must be submitted in writing to the Secretary within 10 days of her 
decision to deny the State's request for an adjustment, and may include 
any additional information in support of its request.
    (b) Reconsideration determination. The Secretary will issue her 
determination on a State's request for reconsideration within 20 days of 
receiving the reconsideration request.



Sec.  158.350  Subsequent requests for adjustment to the medical
loss ratio.

    A State that has made a previous request for an adjustment to the 
MLR standard must, in addition to the other information required by this 
subpart, submit information as to what steps the State has taken since 
its prior requests, if any, to improve the stability of the State's 
individual market.

[83 FR 17071, Apr. 17, 2018]



                        Subpart D_HHS Enforcement



Sec.  158.401  HHS enforcement.

    HHS enforces the reporting and rebate requirements described in 
subparts A and B, including but not limited to:
    (a) The requirement that such reports be submitted timely.
    (b) The requirement that the data reported complies with the 
definitions and criteria set forth in this part.
    (c) The requirement that rebates be paid timely and accurately.



Sec.  158.402  Audits.

    (a) Notice of Audit. HHS will provide 30 days advance notice of its 
intent to conduct an audit of an issuer.
    (b) Conferences. All audits will include an entrance conference at 
which the scope of the audit will be presented and an exit conference at 
which the initial audit findings will be discussed.
    (c) Preliminary Audit Findings. HHS will share its preliminary audit 
findings with the issuer, which will then have 30 days to respond to 
such findings. HHS may extend, for good cause, the time for an issuer to 
submit such a response.
    (d) Final Audit Findings. If the issuer does not dispute the 
preliminary findings, the audit findings will become final. 
Alternatively, if the issuer responds to the preliminary findings, HHS 
will review and consider such response and finalize the audit findings.
    (e) Corrective actions. HHS will send a copy of the final audit 
findings to the issuer as well as any corrective actions that issuer 
must undertake as a result of the audit findings.
    (f) Order to pay rebates. If HHS determines as the result of an 
audit that an issuer has failed to pay rebates it is obligated to pay 
pursuant to this part, it may order the issuer to pay those rebates, 
together with interest from the date the rebates were due, in accordance 
with Sec.  158.240(d) of this part.

[[Page 483]]



Sec.  158.403  Circumstances in which a State is conducting audits
of issuers.

    (a) If a State conducts an audit of an issuer's MLR reporting and 
rebate obligations, HHS may, in the exercise of its discretion, accept 
the findings of that audit if HHS determines the following:
    (1) The laws of the State permit public release of the findings of 
audits of issuers;
    (2) The State's audit reports on the validity of the data regarding 
expenses and premiums that the issuer reported to the Secretary, 
including the appropriateness of the allocations of expenses used in 
such reporting and whether the activities associated with the issuer's 
reported expenditures for quality improving activities meet the 
definition of such activities;
    (3) The State's audit reports on the accuracy of rebate calculations 
and the timeliness and accuracy of rebate payments;
    (4) The State submits final audit reports to HHS within 30 days of 
finalization; and
    (5) The State submits preliminary or draft audit reports to HHS 
within 6 months of the completion of audit field work unless they have 
already been finalized and reported under paragraph (a)(4) of this 
section.
    (b) If HHS accepts an audit conducted by a State, and if the issuer 
makes additional rebate payments as a result of the audit, then HHS 
shall accept those payments as satisfying the issuer's obligation to pay 
rebates pursuant to this part.



              Subpart E_Additional Requirements on Issuers



Sec.  158.501  Access to facilities and records.

    (a) Each issuer subject to the reporting requirement of this part 
must allow access and entry to its premises, facilities and records, 
including computer and other electronic systems, to HHS, the Comptroller 
General, or their designees to evaluate, through inspection, audit, or 
other means, compliance with the requirements for reporting and 
calculation of data submitted to HHS, and the timeliness and accuracy of 
rebate payments made under this part.
    (b) Each issuer must also allow access and entry to the facilities 
and records, including computer and other electronic systems, of its 
parent organization, subsidiaries, related entities, contractors, 
subcontractors, agents, or a transferee that pertain to any aspect of 
the data reported to HHS or to rebate payments calculated and made under 
this part. To the extent that the issuer does not control access to the 
facilities and records of its parent organization, related entities, or 
third parties, it will be the responsibility of the issuer to 
contractually obligate any such parent organization, related entities, 
or third parties to grant said access.
    (c) The Comptroller General, HHS, or their designees may inspect, 
evaluate, and audit through 6 years from the date of the filing of a 
report required by this part or through 3 years after the completion of 
the audit and for such longer period set forth below provided that any 
of the following occur:
    (1) HHS determines there is a special need to retain a particular 
record or group of records for a longer period and notifies the issuer 
at least 30 days before the disposition date.
    (2) There has been a dispute, or allegation of fraud or similar 
fault by the issuer, in which case the retention may be extended to 6 
years from the date of any resulting final resolution of the dispute, 
fraud, or similar fault.
    (3) HHS determines that there is a reasonable possibility of fraud 
or similar fault, in which case HHS may inspect, evaluate, and audit the 
issuer at any time.



Sec.  158.502  Maintenance of records.

    (a) Basic rule. Each issuer subject to the requirements of this part 
must maintain all documents and other evidence necessary to enable HHS 
to verify that the data required to be submitted in accordance with this 
part comply with the definitions and criteria set forth in this part, 
and that the MLR is calculated and any rebates owing are calculated and 
provided in accordance with this part. This includes but is not limited 
to all administrative and financial books and

[[Page 484]]

records used in compiling data reported and rebates provided under this 
part and in determining what data to report and rebates to provide under 
this part, electronically stored information, and evidence of accounting 
procedures and practices. This also includes all administrative and 
financial books and records used by others in assisting an issuer with 
its obligations under this part.
    (b) Length of time information must be maintained. All of the 
documents and other evidence required by this part must be maintained 
for the current year and six prior years, unless a longer time is 
required under Sec.  158.501 of this subpart.



                    Subpart F_Federal Civil Penalties



Sec.  158.601  General rule regarding the imposition of civil penalties.

    If any issuer fails to comply with the requirements of this part, 
civil penalties, as described in this subpart, may be imposed.



Sec.  158.602  Basis for imposing civil penalties.

    Civil penalties. For the violations listed in this paragraph, HHS 
may impose civil penalties in the amounts specified in Sec.  158.606 of 
this subpart on any issuer who fails to do the following:
    (a) Submit to HHS a report concerning the data required under this 
part by the deadline established by HHS.
    (b) Submit to HHS a substantially complete or accurate report 
concerning the data required under this part.
    (c) Timely and accurately pay rebates owing pursuant to this part.
    (d) Respond to HHS inquiries as part of an investigation of issuer 
non-compliance.
    (e) Maintain records as required under this part for the periodic 
auditing of books and records used in compiling data reported to HHS and 
in calculating and paying rebates pursuant to this part.
    (f) Allow access and entry to premises, facilities and records that 
pertain to any aspect of the data reported to HHS or to rebates 
calculated and paid pursuant to this part.
    (g) Comply with corrective actions resulting from audit findings.
    (h) Accurately and truthfully represent data, reports or other 
information that it furnishes to a State or HHS.



Sec.  158.603  Notice to responsible entities.

    If HHS learns of a potential violation described in Sec.  158.602 of 
this subpart or if a State informs HHS of a potential violation prior to 
imposing any civil monetary penalty HHS must provide written notice to 
the issuer, to include the following:
    (a) Describe the potential violation.
    (b) Provide 30 days from the date of the notice for the responsible 
entity to respond and to provide additional information to refute an 
alleged violation.
    (c) State that a civil monetary penalty may be assessed if the 
allegations are not, as determined by HHS, refuted.



Sec.  158.604  Request for extension.

    In circumstances in which an entity cannot prepare a response to HHS 
within the 30 days provided in the notice, the entity may make a written 
request for an extension from HHS detailing the reason for the extension 
request and showing good cause. If HHS grants the extension, the 
responsible entity must respond to the notice within the time frame 
specified in HHS's letter granting the extension of time. Failure to 
respond within 30 days, or within the extended time frame, may result in 
HHS's imposition of a civil monetary penalty based upon its 
determination of a potential violation described in Sec.  158.602 of 
this subpart.



Sec.  158.605  Responses to allegations of noncompliance.

    In determining whether to impose a civil monetary penalty, HHS may 
review and consider documentation provided in any complaint or other 
information, as well as any additional information provided by the 
responsible entity to demonstrate that it has complied with Affordable 
Care Act requirements. The following are examples of documentation that 
a potential responsible entity may submit for HHS's consideration in 
determining whether a

[[Page 485]]

civil monetary penalty should be assessed and the amount of any civil 
monetary penalty:
    (a) Any evidence that refutes an alleged noncompliance.
    (b) Evidence that the entity did not know, and exercising due 
diligence could not have known, of the violation.
    (c) Evidence documenting the development and implementation of 
internal policies and procedures by an issuer to ensure compliance with 
the Affordable Care Act requirements regarding MLR. Those policies and 
procedures may include or consist of a voluntary compliance program. Any 
such program should do the following:
    (1) Effectively articulate and demonstrate the fundamental mission 
of compliance and the issuer's commitment to the compliance process.
    (2) Include the name of the individual in the organization 
responsible for compliance.
    (3) Include an effective monitoring system to identify practices 
that do not comply with Affordable Care Act requirements regarding MLRs 
and to provide reasonable assurance that fraud, abuse, and systemic 
errors are detected in a timely manner.
    (4) Address procedures to improve internal policies when 
noncompliant practices are identified.
    (d) Evidence documenting the entity's record of previous compliance 
with Affordable Care Act requirements regarding MLRs.



Sec.  158.606  Amount of penalty--general.

    A civil monetary penalty for each violation of Sec.  158.602 of this 
subpart may not exceed $100 as adjusted annually under 45 CFR part 102 
for each day, for each responsible entity, for each individual affected 
by the violation. Penalties imposed under this part are in addition to 
any other penalties prescribed or allowed by law.

[75 FR 74921, Dec. 1, 2010, as amended at 81 FR 61581, Sept. 6, 2016]



Sec.  158.607  Factors HHS uses to determine the amount of penalty.

    In determining the amount of any penalty, HHS may take into account 
the following:
    (a) The entity's previous record of compliance. This may include any 
of the following:
    (1) Any history of prior violations by the responsible entity, 
including whether, at any time before determination of the current 
violation(s), HHS or any State found the responsible entity liable for 
civil or administrative sanctions in connection with a violation of 
Affordable Care Act requirements regarding minimum loss ratios.
    (2) Evidence that the responsible entity has never had a complaint 
for noncompliance with Affordable Care Act requirements regarding MLRs 
filed with a State or HHS.
    (3) Such other factors as justice may require.
    (b) The gravity of the violation. This may include any of the 
following:
    (1) The frequency of the violation, taking into consideration 
whether any violation is an isolated occurrence, represents a pattern, 
or is widespread.
    (2) The level of financial and other impacts on affected 
individuals.
    (3) Other factors as justice may require.



Sec.  158.608  Determining the amount of the penalty--mitigating
circumstances.

    For every violation subject to a civil monetary penalty, if there 
are substantial or several mitigating circumstances, the aggregate 
amount of the penalty is set at an amount sufficiently below the maximum 
permitted by Sec.  158.606 of this subpart to reflect that fact. As 
guidelines for taking into account the factors listed in Sec.  158.607 
of this subpart, HHS considers the following:
    (a) Record of prior compliance. It should be considered a mitigating 
circumstance if the responsible entity has done any of the following:
    (1) Before receipt of the notice issued under Sec.  158.603 of this 
subpart, implemented and followed a compliance plan as described in 
Sec.  158.605(c) of this subpart.
    (2) Had no previous complaints against it for noncompliance.
    (b) Gravity of the violation(s). It should be considered a 
mitigating circumstance if the responsible entity has done any of the 
following:

[[Page 486]]

    (1) Made adjustments to its business practices to come into 
compliance with the requirements of this part so that the following 
occur:
    (i) Each enrollee adversely affected by the violation has been paid 
any amount of rebate owed so that, to the extent practicable, that 
enrollee is in the same position that he, she, or it would have been in 
had the violation not occurred.
    (ii) The rebate payments are completed in a timely manner.
    (2) Discovered areas of noncompliance without notice from HHS and 
voluntarily reported that noncompliance, provided that the responsible 
entity submits the following:
    (i) Documentation verifying that the rights and protections of all 
individuals adversely affected by the noncompliance have been restored; 
and
    (ii) A plan of correction to prevent future similar violations.
    (3) Demonstrated that the violation is an isolated occurrence.
    (4) Demonstrated that the financial and other impacts on affected 
individuals is negligible or nonexistent.
    (5) Demonstrated that the noncompliance is correctable and that a 
high percentage of the violations were corrected.



Sec.  158.609  Determining the amount of penalty--aggravating
circumstances.

    For every violation subject to a civil monetary penalty, if there 
are substantial or several aggravating circumstances, HHS may set the 
aggregate amount of the penalty at an amount sufficiently close to or at 
the maximum permitted by Sec.  158.606 of this subpart to reflect that 
fact. HHS considers the following circumstances to be aggravating 
circumstances:
    (a) The frequency of violation indicates a pattern of widespread 
occurrence.
    (b) The violation(s) resulted in significant financial and other 
impacts on the average affected individual.
    (c) The entity does not provide documentation showing that 
substantially all of the violations were corrected.



Sec.  158.610  Determining the amount of penalty--other matters as 
justice may require.

    HHS may take into account other circumstances of an aggravating or 
mitigating nature if, in the interests of justice, they require either a 
reduction or an increase of the penalty in order to assure the 
achievement of the purposes of this part, and if those circumstances 
relate to the entity's previous record of compliance or the gravity of 
the violation.



Sec.  158.611  Settlement authority.

    Nothing in Sec.  158.606 through Sec.  158.610 of this subpart 
limits the authority of HHS to settle any issue or case described in the 
notice furnished in accordance with Sec.  158.603 of this subpart or to 
compromise on any penalty provided for in Sec. Sec.  158.606 through 
158.610 of this subpart.



Sec.  158.612  Limitations on penalties.

    (a) Circumstances under which a civil monetary penalty is not 
imposed. HHS does not impose any civil monetary penalty on any failure 
for the period of time during which none of the responsible entities 
knew, or exercising reasonable diligence would have known, of the 
failure. HHS also may not impose a civil monetary penalty for the period 
of time after any of the responsible entities knew, or exercising 
reasonable diligence would have known of the failure, if the failure was 
due to reasonable cause and not due to willful neglect and the failure 
was corrected within 30 days of the first day that any of the entities 
against whom the penalty would be imposed knew, or exercising reasonable 
diligence would have known, that the failure existed.
    (b) Burden of establishing knowledge. The burden is on the 
responsible entity or entities to establish to HHS's satisfaction that 
no responsible entity knew, or exercising reasonable diligence would 
have known, that the failure existed.



Sec.  158.613  Notice of proposed penalty.

    (a) Contents of notice. If HHS proposes to assess a penalty in 
accordance with this part, it must provide the issuer written notice of 
its intent to assess a penalty, which includes the following:

[[Page 487]]

    (1) A description of the requirements under this part that HHS has 
determined the issuer violated.
    (2) A description of the information upon which HHS based its 
determination, including the basis for determining the number of 
affected individuals and the number of days or weeks for which the 
violations occurred.
    (3) The amount of the proposed penalty as of the date of the notice.
    (4) Any considerations described in Sec.  158.607 through Sec.  
158.610 of this subpart that were taken into account in determining the 
amount of the proposed penalty.
    (5) A specific statement of the issuer's right to a hearing.
    (6) A statement that failure to request a hearing within 30 days 
after the date of the notice permits the assessment of the proposed 
penalty without right of appeal in accordance with Sec.  158.615 of this 
subpart.
    (b) Delivery of notice. This notice must be either hand delivered, 
sent by certified mail, return receipt requested, or sent by overnight 
delivery service with signature upon delivery required.



Sec.  158.614  Appeal of proposed penalty.

    Any issuer against which HHS has assessed a penalty under this part 
may appeal that penalty in accordance with Sec.  150.400 et seq.



Sec.  158.615  Failure to request a hearing.

    If the issuer does not request a hearing within 30 days of the 
issuance of the notice described in Sec.  158.613 of this subpart, HHS 
may assess the proposed civil monetary penalty indicated in such notice 
and may impose additional penalties as described in Sec.  158.606 of 
this subpart. HHS must notify the issuer in writing of any penalty that 
has been assessed and of the means by which the issuer may satisfy the 
penalty. The issuer has no right to appeal a penalty with respect to 
which it has not requested a hearing in accordance with Sec.  150.405 of 
this subchapter, unless the responsible entity can show good cause, as 
determined at Sec.  150.405(b) of this subchapter, for failing to timely 
exercise its right to a hearing.



PART 159_HEALTH CARE REFORM INSURANCE WEB PORTAL--Table of Contents



Sec.
159.100 Basis and Scope.
159.110 Definitions.
159.120 Data Submission for the individual and small group markets.

    Authority: Section 1103 of the Patient Protection and Affordable 
Care Act (Pub. L. 111-148).

    Source: 75 FR 24482, May 5, 2010, unless otherwise noted.



Sec.  159.100  Basis and scope.

    This part establishes provisions governing a Web portal that will 
provide information on health insurance coverage options in each of the 
50 States and the District of Columbia. It sets forth data submission 
requirements for health insurance issuers. It covers the individual 
market and the small group market.



Sec.  159.110  Definitions.

    For purposes of part 159, the following definitions apply unless 
otherwise provided:
    Health Insurance Coverage: We adopt the Public Health Service Act 
(PHSA) definition of ``health insurance coverage'' found at section 
2791(b)(1) of the Public Health Service Act (PHSA).
    Health Insurance Issuer: We adopt the PHSA definition of ``health 
insurance issuer'' found at section 2791(b)(2) of the PHSA.
    Health Insurance Product: Means a package of benefits that an issuer 
offers that is reported to State regulators in an insurance filing.
    Individual Health Insurance Coverage: We adopt the PHSA definition 
of ``individual health insurance coverage'' found at section 2791(b)(5) 
of the PHSA.
    Individual Market: We adopt the Affordable Care Act definition of 
``individual market'' found at section 1304(a)(2) of the Affordable Care 
Act and 2791(e)(1)(A) of the PHSA.
    Portal Plan: Means the discrete pairing of a package of benefits and 
a particular cost sharing option (not including premium rates or premium 
quotes).

[[Page 488]]

    Section 1101 High Risk Pools: We define section 1101 high risk pools 
as any entity described in regulations implementing section 1101 of the 
Affordable Care Act.
    Small Employer: We adopt the Affordable Care Act definition of 
``small employer'' found at section 1304(b)(2) and (3).
    Small Group Coverage: Means health insurance coverage offered to 
employees of small employers in the small group market.
    Small Group Market: We adopt the Affordable Care Act definition of 
``small group market'' found at section 1304(a)(3).
    State Health Benefits High Risk Pools: Means nonprofit organizations 
created by State law to offer comprehensive health insurance to 
individuals who otherwise would be unable to secure such coverage 
because of their health status.



Sec.  159.120  Data submission for the individual and small
group markets.

    (a) Health insurance issuers (hereinafter referred to as issuers) 
must, in accordance with guidance issued by the Secretary, submit 
corporate and contact information; administrative information; 
enrollment data by health insurance product; product names and types; 
whether enrollment is currently open for each health insurance product; 
geographic availability information; customer service phone numbers; and 
Web site links to the issuer Web site, brochure documents, and provider 
networks; and financial ratings on or before May 21, 2010, and annually 
thereafter.
    (b) Issuers must, as determined by the Secretary, submit pricing and 
benefit information for their portal plans on or before September 3, 
2010, and annually thereafter.
    (c) Issuers must submit updated pricing and benefit data for their 
portal plans whenever they change premiums, cost-sharing, types of 
services covered, coverage limitations, or exclusions for one or more of 
their individual or small group portal plans.
    (d) Issuers must submit pricing and benefit data for portal plans 
associated with products that are newly open or newly reopened for 
enrollment within 30 days of opening for enrollment.
    (e) Issuers must annually verify the data submitted under paragraphs 
(a) through (d) of this section, and make corrections to any errors that 
are found.
    (f) Issuers must submit administrative data on products and portal 
plans, and these performance ratings, percent of individual market and 
small group market policies that are rescinded; the percent of 
individual market policies sold at the manual rate; the percent of 
claims that are denied under individual market and small group market 
policies; and the number and disposition of appeals on denials to 
insure, pay claims and provide required preauthorizations, for future 
releases of the Web portal in accordance with guidance issued by the 
Secretary.
    (g) The issuer's CEO or CFO must electronically certify to the 
completeness and accuracy of all data submitted for the October 1, 2010, 
release of the Web portal and for any future updates to these 
requirements.

[[Page 489]]



   SUBCHAPTER C_ADMINISTRATIVE DATA STANDARDS AND RELATED REQUIREMENTS





PART 160_GENERAL ADMINISTRATIVE REQUIREMENTS--Table of Contents



                      Subpart A_General Provisions

Sec.
160.101 Statutory basis and purpose.
160.102 Applicability.
160.103 Definitions.
160.104 Modifications.
160.105 Compliance dates for implementation of new or modified standards 
          and implementation specifications.

                    Subpart B_Preemption of State Law

160.201 Statutory basis.
160.202 Definitions.
160.203 General rule and exceptions.
160.204 Process for requesting exception determinations.
160.205 Duration of effectiveness of exception determinations.

                 Subpart C_Compliance and Investigations

160.300 Applicability.
160.302 [Reserved]
160.304 Principles for achieving compliance.
160.306 Complaints to the Secretary.
160.308 Compliance reviews.
160.310 Responsibilities of covered entities.
160.312 Secretarial action regarding complaints and compliance reviews.
160.314 Investigational subpoenas and inquiries.
160.316 Refraining from intimidation or retaliation.

              Subpart D_Imposition of Civil Money Penalties

160.400 Applicability.
160.401 Definitions.
160.402 Basis for a civil money penalty.
160.404 Amount of a civil money penalty.
160.406 Violations of an identical requirement or prohibition.
160.408 Factors considered in determining the amount of a civil money 
          penalty.
160.410 Affirmative defenses.
160.412 Waiver.
160.414 Limitations.
160.416 Authority to settle.
160.418 Penalty not exclusive.
160.420 Notice of proposed determination.
160.422 Failure to request a hearing.
160.424 Collection of penalty.
160.426 Notification of the public and other agencies.

                    Subpart E_Procedures for Hearings

160.500 Applicability.
160.502 Definitions.
160.504 Hearing before an ALJ.
160.506 Rights of the parties.
160.508 Authority of the ALJ.
160.510 Ex parte contacts.
160.512 Prehearing conferences.
160.514 Authority to settle.
160.516 Discovery.
160.518 Exchange of witness lists, witness statements, and exhibits.
160.520 Subpoenas for attendance at hearing.
160.522 Fees.
160.524 Form, filing, and service of papers.
160.526 Computation of time.
160.528 Motions.
160.530 Sanctions.
160.532 Collateral estoppel.
160.534 The hearing.
160.536 Statistical sampling.
160.538 Witnesses.
160.540 Evidence.
160.542 The record.
160.544 Post hearing briefs.
160.546 ALJ's decision.
160.548 Appeal of the ALJ's decision.
160.550 Stay of the Secretary's decision.
160.552 Harmless error.

    Authority: 42 U.S.C. 1302(a); 42 U.S.C. 1320d-1320d-9; sec. 264, 
Pub. L. 104-191, 110 Stat. 2033-2034 (42 U.S.C. 1320d-2 (note)); 5 
U.S.C. 552; secs. 13400-13424, Pub. L. 111-5, 123 Stat. 258-279; and 
sec. 1104 of Pub. L. 111-148, 124 Stat. 146-154.

    Source: 65 FR 82798, Dec. 28, 2000, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  160.101  Statutory basis and purpose.

    The requirements of this subchapter implement sections 1171-1180 of 
the Social Security Act (the Act), sections 262 and 264 of Public Law 
104-191, section 105 of Public Law 110-233, sections 13400-13424 of 
Public Law 111-5, and section 1104 of Public Law 111-148.

[78 FR 5687, Jan. 25, 2013]



Sec.  160.102  Applicability.

    (a) Except as otherwise provided, the standards, requirements, and 
implementation specifications adopted under

[[Page 490]]

this subchapter apply to the following entities:
    (1) A health plan.
    (2) A health care clearinghouse.
    (3) A health care provider who transmits any health information in 
electronic form in connection with a transaction covered by this 
subchapter.
    (b) Where provided, the standards, requirements, and implementation 
specifications adopted under this subchapter apply to a business 
associate.
    (c) To the extent required under the Social Security Act, 42 U.S.C. 
1320a-7c(a)(5), nothing in this subchapter shall be construed to 
diminish the authority of any Inspector General, including such 
authority as provided in the Inspector General Act of 1978, as amended 
(5 U.S.C. App.).

[65 FR 82798, Dec. 28, 2000, as amended at 67 FR 53266, Aug. 14, 2002; 
78 FR 5687, Jan. 25, 2013]



Sec.  160.103  Definitions.

    Except as otherwise provided, the following definitions apply to 
this subchapter:
    Act means the Social Security Act.
    Administrative simplification provision means any requirement or 
prohibition established by:
    (1) 42 U.S.C. 1320d-1320d-4, 1320d-7, 1320d-8, and 1320d-9;
    (2) Section 264 of Pub. L. 104-191;
    (3) Sections 13400-13424 of Public Law 111-5; or
    (4) This subchapter.
    ALJ means Administrative Law Judge.
    ANSI stands for the American National Standards Institute.
    Business associate: (1) Except as provided in paragraph (4) of this 
definition, business associate means, with respect to a covered entity, 
a person who:
    (i) On behalf of such covered entity or of an organized health care 
arrangement (as defined in this section) in which the covered entity 
participates, but other than in the capacity of a member of the 
workforce of such covered entity or arrangement, creates, receives, 
maintains, or transmits protected health information for a function or 
activity regulated by this subchapter, including claims processing or 
administration, data analysis, processing or administration, utilization 
review, quality assurance, patient safety activities listed at 42 CFR 
3.20, billing, benefit management, practice management, and repricing; 
or
    (ii) Provides, other than in the capacity of a member of the 
workforce of such covered entity, legal, actuarial, accounting, 
consulting, data aggregation (as defined in Sec.  164.501 of this 
subchapter), management, administrative, accreditation, or financial 
services to or for such covered entity, or to or for an organized health 
care arrangement in which the covered entity participates, where the 
provision of the service involves the disclosure of protected health 
information from such covered entity or arrangement, or from another 
business associate of such covered entity or arrangement, to the person.
    (2) A covered entity may be a business associate of another covered 
entity.
    (3) Business associate includes:
    (i) A Health Information Organization, E-prescribing Gateway, or 
other person that provides data transmission services with respect to 
protected health information to a covered entity and that requires 
access on a routine basis to such protected health information.
    (ii) A person that offers a personal health record to one or more 
individuals on behalf of a covered entity.
    (iii) A subcontractor that creates, receives, maintains, or 
transmits protected health information on behalf of the business 
associate.
    (4) Business associate does not include:
    (i) A health care provider, with respect to disclosures by a covered 
entity to the health care provider concerning the treatment of the 
individual.
    (ii) A plan sponsor, with respect to disclosures by a group health 
plan (or by a health insurance issuer or HMO with respect to a group 
health plan) to the plan sponsor, to the extent that the requirements of 
Sec.  164.504(f) of this subchapter apply and are met.
    (iii) A government agency, with respect to determining eligibility 
for, or enrollment in, a government health plan that provides public 
benefits and is administered by another government agency, or collecting 
protected health information for such purposes, to the

[[Page 491]]

extent such activities are authorized by law.
    (iv) A covered entity participating in an organized health care 
arrangement that performs a function or activity as described by 
paragraph (1)(i) of this definition for or on behalf of such organized 
health care arrangement, or that provides a service as described in 
paragraph (1)(ii) of this definition to or for such organized health 
care arrangement by virtue of such activities or services.
    Civil money penalty or penalty means the amount determined under 
Sec.  160.404 of this part and includes the plural of these terms.
    CMS stands for Centers for Medicare & Medicaid Services within the 
Department of Health and Human Services.
    Compliance date means the date by which a covered entity or business 
associate must comply with a standard, implementation specification, 
requirement, or modification adopted under this subchapter.
    Covered entity means:
    (1) A health plan.
    (2) A health care clearinghouse.
    (3) A health care provider who transmits any health information in 
electronic form in connection with a transaction covered by this 
subchapter.
    Disclosure means the release, transfer, provision of access to, or 
divulging in any manner of information outside the entity holding the 
information.
    EIN stands for the employer identification number assigned by the 
Internal Revenue Service, U.S. Department of the Treasury. The EIN is 
the taxpayer identifying number of an individual or other entity 
(whether or not an employer) assigned under one of the following:
    (1) 26 U.S.C. 6011(b), which is the portion of the Internal Revenue 
Code dealing with identifying the taxpayer in tax returns and 
statements, or corresponding provisions of prior law.
    (2) 26 U.S.C. 6109, which is the portion of the Internal Revenue 
Code dealing with identifying numbers in tax returns, statements, and 
other required documents.
    Electronic media means:
    (1) Electronic storage material on which data is or may be recorded 
electronically, including, for example, devices in computers (hard 
drives) and any removable/transportable digital memory medium, such as 
magnetic tape or disk, optical disk, or digital memory card;
    (2) Transmission media used to exchange information already in 
electronic storage media. Transmission media include, for example, the 
Internet, extranet or intranet, leased lines, dial-up lines, private 
networks, and the physical movement of removable/transportable 
electronic storage media. Certain transmissions, including of paper, via 
facsimile, and of voice, via telephone, are not considered to be 
transmissions via electronic media if the information being exchanged 
did not exist in electronic form immediately before the transmission.
    Electronic protected health information means information that comes 
within paragraphs (1)(i) or (1)(ii) of the definition of protected 
health information as specified in this section.
    Employer is defined as it is in 26 U.S.C. 3401(d).
    Family member means, with respect to an individual:
    (1) A dependent (as such term is defined in 45 CFR 144.103), of the 
individual; or
    (2) Any other person who is a first-degree, second-degree, third-
degree, or fourth-degree relative of the individual or of a dependent of 
the individual. Relatives by affinity (such as by marriage or adoption) 
are treated the same as relatives by consanguinity (that is, relatives 
who share a common biological ancestor). In determining the degree of 
the relationship, relatives by less than full consanguinity (such as 
half-siblings, who share only one parent) are treated the same as 
relatives by full consanguinity (such as siblings who share both 
parents).
    (i) First-degree relatives include parents, spouses, siblings, and 
children.
    (ii) Second-degree relatives include grandparents, grandchildren, 
aunts, uncles, nephews, and nieces.
    (iii) Third-degree relatives include great-grandparents, great-
grandchildren, great aunts, great uncles, and first cousins.
    (iv) Fourth-degree relatives include great-great grandparents, 
great-great

[[Page 492]]

grandchildren, and children of first cousins.
    Genetic information means:
    (1) Subject to paragraphs (2) and (3) of this definition, with 
respect to an individual, information about:
    (i) The individual's genetic tests;
    (ii) The genetic tests of family members of the individual;
    (iii) The manifestation of a disease or disorder in family members 
of such individual; or
    (iv) Any request for, or receipt of, genetic services, or 
participation in clinical research which includes genetic services, by 
the individual or any family member of the individual.
    (2) Any reference in this subchapter to genetic information 
concerning an individual or family member of an individual shall include 
the genetic information of:
    (i) A fetus carried by the individual or family member who is a 
pregnant woman; and
    (ii) Any embryo legally held by an individual or family member 
utilizing an assisted reproductive technology.
    (3) Genetic information excludes information about the sex or age of 
any individual.
    Genetic services means:
    (1) A genetic test;
    (2) Genetic counseling (including obtaining, interpreting, or 
assessing genetic information); or
    (3) Genetic education.
    Genetic test means an analysis of human DNA, RNA, chromosomes, 
proteins, or metabolites, if the analysis detects genotypes, mutations, 
or chromosomal changes. Genetic test does not include an analysis of 
proteins or metabolites that is directly related to a manifested 
disease, disorder, or pathological condition.
    Group health plan (also see definition of health plan in this 
section) means an employee welfare benefit plan (as defined in section 
3(1) of the Employee Retirement Income and Security Act of 1974 (ERISA), 
29 U.S.C. 1002(1)), including insured and self-insured plans, to the 
extent that the plan provides medical care (as defined in section 
2791(a)(2) of the Public Health Service Act (PHS Act), 42 U.S.C. 300gg-
91(a)(2)), including items and services paid for as medical care, to 
employees or their dependents directly or through insurance, 
reimbursement, or otherwise, that:
    (1) Has 50 or more participants (as defined in section 3(7) of 
ERISA, 29 U.S.C. 1002(7)); or
    (2) Is administered by an entity other than the employer that 
established and maintains the plan.
    HHS stands for the Department of Health and Human Services.
    Health care means care, services, or supplies related to the health 
of an individual. Health care includes, but is not limited to, the 
following:
    (1) Preventive, diagnostic, therapeutic, rehabilitative, 
maintenance, or palliative care, and counseling, service, assessment, or 
procedure with respect to the physical or mental condition, or 
functional status, of an individual or that affects the structure or 
function of the body; and
    (2) Sale or dispensing of a drug, device, equipment, or other item 
in accordance with a prescription.
    Health care clearinghouse means a public or private entity, 
including a billing service, repricing company, community health 
management information system or community health information system, 
and ``value-added'' networks and switches, that does either of the 
following functions:
    (1) Processes or facilitates the processing of health information 
received from another entity in a nonstandard format or containing 
nonstandard data content into standard data elements or a standard 
transaction.
    (2) Receives a standard transaction from another entity and 
processes or facilitates the processing of health information into 
nonstandard format or nonstandard data content for the receiving entity.
    Health care provider means a provider of services (as defined in 
section 1861(u) of the Act, 42 U.S.C. 1395x(u)), a provider of medical 
or health services (as defined in section 1861(s) of the Act, 42 U.S.C. 
1395x(s)), and any other person or organization who furnishes, bills, or 
is paid for health care in the normal course of business.
    Health information means any information, including genetic 
information, whether oral or recorded in any form or medium, that:

[[Page 493]]

    (1) Is created or received by a health care provider, health plan, 
public health authority, employer, life insurer, school or university, 
or health care clearinghouse; and
    (2) Relates to the past, present, or future physical or mental 
health or condition of an individual; the provision of health care to an 
individual; or the past, present, or future payment for the provision of 
health care to an individual.
    Health insurance issuer (as defined in section 2791(b)(2) of the PHS 
Act, 42 U.S.C. 300gg-91(b)(2) and used in the definition of health plan 
in this section) means an insurance company, insurance service, or 
insurance organization (including an HMO) that is licensed to engage in 
the business of insurance in a State and is subject to State law that 
regulates insurance. Such term does not include a group health plan.
    Health maintenance organization (HMO) (as defined in section 
2791(b)(3) of the PHS Act, 42 U.S.C. 300gg-91(b)(3) and used in the 
definition of health plan in this section) means a federally qualified 
HMO, an organization recognized as an HMO under State law, or a similar 
organization regulated for solvency under State law in the same manner 
and to the same extent as such an HMO.
    Health plan means an individual or group plan that provides, or pays 
the cost of, medical care (as defined in section 2791(a)(2) of the PHS 
Act, 42 U.S.C. 300gg-91(a)(2)).
    (1) Health plan includes the following, singly or in combination:
    (i) A group health plan, as defined in this section.
    (ii) A health insurance issuer, as defined in this section.
    (iii) An HMO, as defined in this section.
    (iv) Part A or Part B of the Medicare program under title XVIII of 
the Act.
    (v) The Medicaid program under title XIX of the Act, 42 U.S.C. 1396, 
et seq.
    (vi) The Voluntary Prescription Drug Benefit Program under Part D of 
title XVIII of the Act, 42 U.S.C. 1395w-101 through 1395w-152.
    (vii) An issuer of a Medicare supplemental policy (as defined in 
section 1882(g)(1) of the Act, 42 U.S.C. 1395ss(g)(1)).
    (viii) An issuer of a long-term care policy, excluding a nursing 
home fixed indemnity policy.
    (ix) An employee welfare benefit plan or any other arrangement that 
is established or maintained for the purpose of offering or providing 
health benefits to the employees of two or more employers.
    (x) The health care program for uniformed services under title 10 of 
the United States Code.
    (xi) The veterans health care program under 38 U.S.C. chapter 17.
    (xii) The Indian Health Service program under the Indian Health Care 
Improvement Act, 25 U.S.C. 1601, et seq.
    (xiii) The Federal Employees Health Benefits Program under 5 U.S.C. 
8902, et seq.
    (xiv) An approved State child health plan under title XXI of the 
Act, providing benefits for child health assistance that meet the 
requirements of section 2103 of the Act, 42 U.S.C. 1397, et seq.
    (xv) The Medicare Advantage program under Part C of title XVIII of 
the Act, 42 U.S.C. 1395w-21 through 1395w-28.
    (xvi) A high risk pool that is a mechanism established under State 
law to provide health insurance coverage or comparable coverage to 
eligible individuals.
    (xvii) Any other individual or group plan, or combination of 
individual or group plans, that provides or pays for the cost of medical 
care (as defined in section 2791(a)(2) of the PHS Act, 42 U.S.C. 300gg-
91(a)(2)).
    (2) Health plan excludes:
    (i) Any policy, plan, or program to the extent that it provides, or 
pays for the cost of, excepted benefits that are listed in section 
2791(c)(1) of the PHS Act, 42 U.S.C. 300gg-91(c)(1); and
    (ii) A government-funded program (other than one listed in paragraph 
(1)(i)-(xvi) of this definition):
    (A) Whose principal purpose is other than providing, or paying the 
cost of, health care; or
    (B) Whose principal activity is:
    (1) The direct provision of health care to persons; or
    (2) The making of grants to fund the direct provision of health care 
to persons.

[[Page 494]]

    Implementation specification means specific requirements or 
instructions for implementing a standard.
    Individual means the person who is the subject of protected health 
information.
    Individually identifiable health information is information that is 
a subset of health information, including demographic information 
collected from an individual, and:
    (1) Is created or received by a health care provider, health plan, 
employer, or health care clearinghouse; and
    (2) Relates to the past, present, or future physical or mental 
health or condition of an individual; the provision of health care to an 
individual; or the past, present, or future payment for the provision of 
health care to an individual; and
    (i) That identifies the individual; or
    (ii) With respect to which there is a reasonable basis to believe 
the information can be used to identify the individual.
    Manifestation or manifested means, with respect to a disease, 
disorder, or pathological condition, that an individual has been or 
could reasonably be diagnosed with the disease, disorder, or 
pathological condition by a health care professional with appropriate 
training and expertise in the field of medicine involved. For purposes 
of this subchapter, a disease, disorder, or pathological condition is 
not manifested if the diagnosis is based principally on genetic 
information.
    Modify or modification refers to a change adopted by the Secretary, 
through regulation, to a standard or an implementation specification.
    Organized health care arrangement means:
    (1) A clinically integrated care setting in which individuals 
typically receive health care from more than one health care provider;
    (2) An organized system of health care in which more than one 
covered entity participates and in which the participating covered 
entities:
    (i) Hold themselves out to the public as participating in a joint 
arrangement; and
    (ii) Participate in joint activities that include at least one of 
the following:
    (A) Utilization review, in which health care decisions by 
participating covered entities are reviewed by other participating 
covered entities or by a third party on their behalf;
    (B) Quality assessment and improvement activities, in which 
treatment provided by participating covered entities is assessed by 
other participating covered entities or by a third party on their 
behalf; or
    (C) Payment activities, if the financial risk for delivering health 
care is shared, in part or in whole, by participating covered entities 
through the joint arrangement and if protected health information 
created or received by a covered entity is reviewed by other 
participating covered entities or by a third party on their behalf for 
the purpose of administering the sharing of financial risk.
    (3) A group health plan and a health insurance issuer or HMO with 
respect to such group health plan, but only with respect to protected 
health information created or received by such health insurance issuer 
or HMO that relates to individuals who are or who have been participants 
or beneficiaries in such group health plan;
    (4) A group health plan and one or more other group health plans 
each of which are maintained by the same plan sponsor; or
    (5) The group health plans described in paragraph (4) of this 
definition and health insurance issuers or HMOs with respect to such 
group health plans, but only with respect to protected health 
information created or received by such health insurance issuers or HMOs 
that relates to individuals who are or have been participants or 
beneficiaries in any of such group health plans.
    Person means a natural person, trust or estate, partnership, 
corporation, professional association or corporation, or other entity, 
public or private.
    Protected health information means individually identifiable health 
information:
    (1) Except as provided in paragraph (2) of this definition, that is:
    (i) Transmitted by electronic media;
    (ii) Maintained in electronic media; or
    (iii) Transmitted or maintained in any other form or medium.

[[Page 495]]

    (2) Protected health information excludes individually identifiable 
health information:
    (i) In education records covered by the Family Educational Rights 
and Privacy Act, as amended, 20 U.S.C. 1232g;
    (ii) In records described at 20 U.S.C. 1232g(a)(4)(B)(iv);
    (iii) In employment records held by a covered entity in its role as 
employer; and
    (iv) Regarding a person who has been deceased for more than 50 
years.
    Respondent means a covered entity or business associate upon which 
the Secretary has imposed, or proposes to impose, a civil money penalty.
    Small health plan means a health plan with annual receipts of $5 
million or less.
    Standard means a rule, condition, or requirement:
    (1) Describing the following information for products, systems, 
services, or practices:
    (i) Classification of components;
    (ii) Specification of materials, performance, or operations; or
    (iii) Delineation of procedures; or
    (2) With respect to the privacy of protected health information.
    Standard setting organization (SSO) means an organization accredited 
by the American National Standards Institute that develops and maintains 
standards for information transactions or data elements, or any other 
standard that is necessary for, or will facilitate the implementation 
of, this part.
    State refers to one of the following:
    (1) For a health plan established or regulated by Federal law, State 
has the meaning set forth in the applicable section of the United States 
Code for such health plan.
    (2) For all other purposes, State means any of the several States, 
the District of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands, Guam, American Samoa, and the Commonwealth of the Northern 
Mariana Islands.
    Subcontractor means a person to whom a business associate delegates 
a function, activity, or service, other than in the capacity of a member 
of the workforce of such business associate.
    Trading partner agreement means an agreement related to the exchange 
of information in electronic transactions, whether the agreement is 
distinct or part of a larger agreement, between each party to the 
agreement. (For example, a trading partner agreement may specify, among 
other things, the duties and responsibilities of each party to the 
agreement in conducting a standard transaction.)
    Transaction means the transmission of information between two 
parties to carry out financial or administrative activities related to 
health care. It includes the following types of information 
transmissions:
    (1) Health care claims or equivalent encounter information.
    (2) Health care payment and remittance advice.
    (3) Coordination of benefits.
    (4) Health care claim status.
    (5) Enrollment and disenrollment in a health plan.
    (6) Eligibility for a health plan.
    (7) Health plan premium payments.
    (8) Referral certification and authorization.
    (9) First report of injury.
    (10) Health claims attachments.
    (11) Health care electronic funds transfers (EFT) and remittance 
advice.
    (12) Other transactions that the Secretary may prescribe by 
regulation.
    Use means, with respect to individually identifiable health 
information, the sharing, employment, application, utilization, 
examination, or analysis of such information within an entity that 
maintains such information.
    Violation or violate means, as the context may require, failure to 
comply with an administrative simplification provision.
    Workforce means employees, volunteers, trainees, and other persons 
whose conduct, in the performance of work for a covered entity or 
business associate, is under the direct control of such covered entity 
or business associate, whether or not they are paid by the covered 
entity or business associate.

[65 FR 82798, Dec. 28, 2000, as amended at 67 FR 38019, May 31, 2002; 67 
FR 53266, Aug. 14, 2002; 68 FR 8374, Feb. 20, 2003; 71 FR 8424, Feb. 16, 
2006; 76 FR 40495, July 8, 2011; 77 FR 1589, Jan. 10, 2012; 78 FR 5687, 
Jan. 25, 2013]

[[Page 496]]



Sec.  160.104  Modifications.

    (a) Except as provided in paragraph (b) of this section, the 
Secretary may adopt a modification to a standard or implementation 
specification adopted under this subchapter no more frequently than once 
every 12 months.
    (b) The Secretary may adopt a modification at any time during the 
first year after the standard or implementation specification is 
initially adopted, if the Secretary determines that the modification is 
necessary to permit compliance with the standard or implementation 
specification.
    (c) The Secretary will establish the compliance date for any 
standard or implementation specification modified under this section.
    (1) The compliance date for a modification is no earlier than 180 
days after the effective date of the final rule in which the Secretary 
adopts the modification.
    (2) The Secretary may consider the extent of the modification and 
the time needed to comply with the modification in determining the 
compliance date for the modification.
    (3) The Secretary may extend the compliance date for small health 
plans, as the Secretary determines is appropriate.

[65 FR 82798, Dec. 28, 2000, as amended at 67 FR 38019, May 31, 2002]



Sec.  160.105  Compliance dates for implementation of new or modified
standards and implementation specifications.

    Except as otherwise provided, with respect to rules that adopt new 
standards and implementation specifications or modifications to 
standards and implementation specifications in this subchapter in 
accordance with Sec.  160.104 that become effective after January 25, 
2013, covered entities and business associates must comply with the 
applicable new standards and implementation specifications, or 
modifications to standards and implementation specifications, no later 
than 180 days from the effective date of any such standards or 
implementation specifications.

[78 FR 5689, Jan. 25, 2013]



                    Subpart B_Preemption of State Law



Sec.  160.201  Statutory basis.

    The provisions of this subpart implement section 1178 of the Act, 
section 262 of Public Law 104-191, section 264(c) of Public Law 104-191, 
and section 13421(a) of Public Law 111-5.

[78 FR 5689, Jan. 25, 2013]



Sec.  160.202  Definitions.

    For purposes of this subpart, the following terms have the following 
meanings:
    Contrary, when used to compare a provision of State law to a 
standard, requirement, or implementation specification adopted under 
this subchapter, means:
    (1) A covered entity or business associate would find it impossible 
to comply with both the State and Federal requirements; or
    (2) The provision of State law stands as an obstacle to the 
accomplishment and execution of the full purposes and objectives of part 
C of title XI of the Act, section 264 of Public Law 104-191, or sections 
13400-13424 of Public Law 111-5, as applicable.
    More stringent means, in the context of a comparison of a provision 
of State law and a standard, requirement, or implementation 
specification adopted under subpart E of part 164 of this subchapter, a 
State law that meets one or more of the following criteria:
    (1) With respect to a use or disclosure, the law prohibits or 
restricts a use or disclosure in circumstances under which such use or 
disclosure otherwise would be permitted under this subchapter, except if 
the disclosure is:
    (i) Required by the Secretary in connection with determining whether 
a covered entity or business associate is in compliance with this 
subchapter; or
    (ii) To the individual who is the subject of the individually 
identifiable health information.
    (2) With respect to the rights of an individual, who is the subject 
of the individually identifiable health information, regarding access to 
or amendment of individually identifiable health information, permits 
greater rights of access or amendment, as applicable.

[[Page 497]]

    (3) With respect to information to be provided to an individual who 
is the subject of the individually identifiable health information about 
a use, a disclosure, rights, and remedies, provides the greater amount 
of information.
    (4) With respect to the form, substance, or the need for express 
legal permission from an individual, who is the subject of the 
individually identifiable health information, for use or disclosure of 
individually identifiable health information, provides requirements that 
narrow the scope or duration, increase the privacy protections afforded 
(such as by expanding the criteria for), or reduce the coercive effect 
of the circumstances surrounding the express legal permission, as 
applicable.
    (5) With respect to recordkeeping or requirements relating to 
accounting of disclosures, provides for the retention or reporting of 
more detailed information or for a longer duration.
    (6) With respect to any other matter, provides greater privacy 
protection for the individual who is the subject of the individually 
identifiable health information.
    Relates to the privacy of individually identifiable health 
information means, with respect to a State law, that the State law has 
the specific purpose of protecting the privacy of health information or 
affects the privacy of health information in a direct, clear, and 
substantial way.
    State law means a constitution, statute, regulation, rule, common 
law, or other State action having the force and effect of law.

[65 FR 82798, Dec. 28, 2000, as amended at 67 FR 53266, Aug. 14, 2002; 
74 FR 42767, Aug. 24, 2009; 78 FR 5689, Jan. 25, 2013]



Sec.  160.203  General rule and exceptions.

    A standard, requirement, or implementation specification adopted 
under this subchapter that is contrary to a provision of State law 
preempts the provision of State law. This general rule applies, except 
if one or more of the following conditions is met:
    (a) A determination is made by the Secretary under Sec.  160.204 
that the provision of State law:
    (1) Is necessary:
    (i) To prevent fraud and abuse related to the provision of or 
payment for health care;
    (ii) To ensure appropriate State regulation of insurance and health 
plans to the extent expressly authorized by statute or regulation;
    (iii) For State reporting on health care delivery or costs; or
    (iv) For purposes of serving a compelling need related to public 
health, safety, or welfare, and, if a standard, requirement, or 
implementation specification under part 164 of this subchapter is at 
issue, if the Secretary determines that the intrusion into privacy is 
warranted when balanced against the need to be served; or
    (2) Has as its principal purpose the regulation of the manufacture, 
registration, distribution, dispensing, or other control of any 
controlled substances (as defined in 21 U.S.C. 802), or that is deemed a 
controlled substance by State law.
    (b) The provision of State law relates to the privacy of 
individually identifiable health information and is more stringent than 
a standard, requirement, or implementation specification adopted under 
subpart E of part 164 of this subchapter.
    (c) The provision of State law, including State procedures 
established under such law, as applicable, provides for the reporting of 
disease or injury, child abuse, birth, or death, or for the conduct of 
public health surveillance, investigation, or intervention.
    (d) The provision of State law requires a health plan to report, or 
to provide access to, information for the purpose of management audits, 
financial audits, program monitoring and evaluation, or the licensure or 
certification of facilities or individuals.

[65 FR 82798, Dec. 28, 2000, as amended at 67 FR 53266, Aug. 14, 2002]



Sec.  160.204  Process for requesting exception determinations.

    (a) A request to except a provision of State law from preemption 
under Sec.  160.203(a) may be submitted to the Secretary. A request by a 
State must be submitted through its chief elected official, or his or 
her designee. The request must be in writing and include the following 
information:

[[Page 498]]

    (1) The State law for which the exception is requested;
    (2) The particular standard, requirement, or implementation 
specification for which the exception is requested;
    (3) The part of the standard or other provision that will not be 
implemented based on the exception or the additional data to be 
collected based on the exception, as appropriate;
    (4) How health care providers, health plans, and other entities 
would be affected by the exception;
    (5) The reasons why the State law should not be preempted by the 
federal standard, requirement, or implementation specification, 
including how the State law meets one or more of the criteria at Sec.  
160.203(a); and
    (6) Any other information the Secretary may request in order to make 
the determination.
    (b) Requests for exception under this section must be submitted to 
the Secretary at an address that will be published in the Federal 
Register. Until the Secretary's determination is made, the standard, 
requirement, or implementation specification under this subchapter 
remains in effect.
    (c) The Secretary's determination under this section will be made on 
the basis of the extent to which the information provided and other 
factors demonstrate that one or more of the criteria at Sec.  160.203(a) 
has been met.



Sec.  160.205  Duration of effectiveness of exception determinations.

    An exception granted under this subpart remains in effect until:
    (a) Either the State law or the federal standard, requirement, or 
implementation specification that provided the basis for the exception 
is materially changed such that the ground for the exception no longer 
exists; or
    (b) The Secretary revokes the exception, based on a determination 
that the ground supporting the need for the exception no longer exists.



                 Subpart C_Compliance and Investigations

    Source: 71 FR 8424, Feb. 16, 2006, unless otherwise noted.



Sec.  160.300  Applicability.

    This subpart applies to actions by the Secretary, covered entities, 
business associates, and others with respect to ascertaining the 
compliance by covered entities and business associates with, and the 
enforcement of, the applicable provisions of this part 160 and parts 162 
and 164 of this subchapter.

[78 FR 5690, Jan. 25, 2013]



Sec.  160.302  [Reserved]



Sec.  160.304  Principles for achieving compliance.

    (a) Cooperation. The Secretary will, to the extent practicable and 
consistent with the provisions of this subpart, seek the cooperation of 
covered entities and business associates in obtaining compliance with 
the applicable administrative simplification provisions.
    (b) Assistance. The Secretary may provide technical assistance to 
covered entities and business associates to help them comply voluntarily 
with the applicable administrative simplification provisions.

[78 FR 5690, Jan. 25, 2013]



Sec.  160.306  Complaints to the Secretary.

    (a) Right to file a complaint. A person who believes a covered 
entity or business associate is not complying with the administrative 
simplification provisions may file a complaint with the Secretary.
    (b) Requirements for filing complaints. Complaints under this 
section must meet the following requirements:
    (1) A complaint must be filed in writing, either on paper or 
electronically.
    (2) A complaint must name the person that is the subject of the 
complaint and describe the acts or omissions believed to be in violation 
of the applicable administrative simplification provision(s).
    (3) A complaint must be filed within 180 days of when the 
complainant knew or should have known that the act or omission 
complained of occurred, unless this time limit is waived by the 
Secretary for good cause shown.

[[Page 499]]

    (4) The Secretary may prescribe additional procedures for the filing 
of complaints, as well as the place and manner of filing, by notice in 
the Federal Register.
    (c) Investigation. (1) The Secretary will investigate any complaint 
filed under this section when a preliminary review of the facts 
indicates a possible violation due to willful neglect.
    (2) The Secretary may investigate any other complaint filed under 
this section.
    (3) An investigation under this section may include a review of the 
pertinent policies, procedures, or practices of the covered entity or 
business associate and of the circumstances regarding any alleged 
violation.
    (4) At the time of the initial written communication with the 
covered entity or business associate about the complaint, the Secretary 
will describe the acts and/or omissions that are the basis of the 
complaint.

[71 FR 8424, Feb. 16, 2006, as amended at 78 FR 5690, Jan. 25, 2013]



Sec.  160.308  Compliance reviews.

    (a) The Secretary will conduct a compliance review to determine 
whether a covered entity or business associate is complying with the 
applicable administrative simplification provisions when a preliminary 
review of the facts indicates a possible violation due to willful 
neglect.
    (b) The Secretary may conduct a compliance review to determine 
whether a covered entity or business associate is complying with the 
applicable administrative simplification provisions in any other 
circumstance.

[78 FR 5690, Jan. 25, 2013]



Sec.  160.310  Responsibilities of covered entities and business
associates.

    (a) Provide records and compliance reports. A covered entity or 
business associate must keep such records and submit such compliance 
reports, in such time and manner and containing such information, as the 
Secretary may determine to be necessary to enable the Secretary to 
ascertain whether the covered entity or business associate has complied 
or is complying with the applicable administrative simplification 
provisions.
    (b) Cooperate with complaint investigations and compliance reviews. 
A covered entity or business associate must cooperate with the 
Secretary, if the Secretary undertakes an investigation or compliance 
review of the policies, procedures, or practices of the covered entity 
or business associate to determine whether it is complying with the 
applicable administrative simplification provisions.
    (c) Permit access to information. (1) A covered entity or business 
associate must permit access by the Secretary during normal business 
hours to its facilities, books, records, accounts, and other sources of 
information, including protected health information, that are pertinent 
to ascertaining compliance with the applicable administrative 
simplification provisions. If the Secretary determines that exigent 
circumstances exist, such as when documents may be hidden or destroyed, 
a covered entity or business associate must permit access by the 
Secretary at any time and without notice.
    (2) If any information required of a covered entity or business 
associate under this section is in the exclusive possession of any other 
agency, institution, or person and the other agency, institution, or 
person fails or refuses to furnish the information, the covered entity 
or business associate must so certify and set forth what efforts it has 
made to obtain the information.
    (3) Protected health information obtained by the Secretary in 
connection with an investigation or compliance review under this subpart 
will not be disclosed by the Secretary, except if necessary for 
ascertaining or enforcing compliance with the applicable administrative 
simplification provisions, if otherwise required by law, or if permitted 
under 5 U.S.C. 552a(b)(7).

[78 FR 5690, Jan. 25, 2013]



Sec.  160.312  Secretarial action regarding complaints and compliance
reviews.

    (a) Resolution when noncompliance is indicated. (1) If an 
investigation of a complaint pursuant to Sec.  160.306 or a compliance 
review pursuant to Sec.  160.308

[[Page 500]]

indicates noncompliance, the Secretary may attempt to reach a resolution 
of the matter satisfactory to the Secretary by informal means. Informal 
means may include demonstrated compliance or a completed corrective 
action plan or other agreement.
    (2) If the matter is resolved by informal means, the Secretary will 
so inform the covered entity or business associate and, if the matter 
arose from a complaint, the complainant, in writing.
    (3) If the matter is not resolved by informal means, the Secretary 
will--
    (i) So inform the covered entity or business associate and provide 
the covered entity or business associate an opportunity to submit 
written evidence of any mitigating factors or affirmative defenses for 
consideration under Sec. Sec.  160.408 and 160.410 of this part. The 
covered entity or business associate must submit any such evidence to 
the Secretary within 30 days (computed in the same manner as prescribed 
under Sec.  160.526 of this part) of receipt of such notification; and
    (ii) If, following action pursuant to paragraph (a)(3)(i) of this 
section, the Secretary finds that a civil money penalty should be 
imposed, inform the covered entity or business associate of such finding 
in a notice of proposed determination in accordance with Sec.  160.420 
of this part.
    (b) Resolution when no violation is found. If, after an 
investigation pursuant to Sec.  160.306 or a compliance review pursuant 
to Sec.  160.308, the Secretary determines that further action is not 
warranted, the Secretary will so inform the covered entity or business 
associate and, if the matter arose from a complaint, the complainant, in 
writing.

[78 FR 5690, Jan. 25, 2013]



Sec.  160.314  Investigational subpoenas and inquiries.

    (a) The Secretary may issue subpoenas in accordance with 42 U.S.C. 
405(d) and (e), 1320a-7a(j), and 1320d-5 to require the attendance and 
testimony of witnesses and the production of any other evidence during 
an investigation or compliance review pursuant to this part. For 
purposes of this paragraph, a person other than a natural person is 
termed an ``entity.''
    (1) A subpoena issued under this paragraph must--
    (i) State the name of the person (including the entity, if 
applicable) to whom the subpoena is addressed;
    (ii) State the statutory authority for the subpoena;
    (iii) Indicate the date, time, and place that the testimony will 
take place;
    (iv) Include a reasonably specific description of any documents or 
items required to be produced; and
    (v) If the subpoena is addressed to an entity, describe with 
reasonable particularity the subject matter on which testimony is 
required. In that event, the entity must designate one or more natural 
persons who will testify on its behalf, and must state as to each such 
person that person's name and address and the matters on which he or she 
will testify. The designated person must testify as to matters known or 
reasonably available to the entity.
    (2) A subpoena under this section must be served by--
    (i) Delivering a copy to the natural person named in the subpoena or 
to the entity named in the subpoena at its last principal place of 
business; or
    (ii) Registered or certified mail addressed to the natural person at 
his or her last known dwelling place or to the entity at its last known 
principal place of business.
    (3) A verified return by the natural person serving the subpoena 
setting forth the manner of service or, in the case of service by 
registered or certified mail, the signed return post office receipt, 
constitutes proof of service.
    (4) Witnesses are entitled to the same fees and mileage as witnesses 
in the district courts of the United States (28 U.S.C. 1821 and 1825). 
Fees need not be paid at the time the subpoena is served.
    (5) A subpoena under this section is enforceable through the 
district court of the United States for the district where the 
subpoenaed natural person resides or is found or where the entity 
transacts business.

[[Page 501]]

    (b) Investigational inquiries are non-public investigational 
proceedings conducted by the Secretary.
    (1) Testimony at investigational inquiries will be taken under oath 
or affirmation.
    (2) Attendance of non-witnesses is discretionary with the Secretary, 
except that a witness is entitled to be accompanied, represented, and 
advised by an attorney.
    (3) Representatives of the Secretary are entitled to attend and ask 
questions.
    (4) A witness will have the opportunity to clarify his or her 
answers on the record following questioning by the Secretary.
    (5) Any claim of privilege must be asserted by the witness on the 
record.
    (6) Objections must be asserted on the record. Errors of any kind 
that might be corrected if promptly presented will be deemed to be 
waived unless reasonable objection is made at the investigational 
inquiry. Except where the objection is on the grounds of privilege, the 
question will be answered on the record, subject to objection.
    (7) If a witness refuses to answer any question not privileged or to 
produce requested documents or items, or engages in conduct likely to 
delay or obstruct the investigational inquiry, the Secretary may seek 
enforcement of the subpoena under paragraph (a)(5) of this section.
    (8) The proceedings will be recorded and transcribed. The witness is 
entitled to a copy of the transcript, upon payment of prescribed costs, 
except that, for good cause, the witness may be limited to inspection of 
the official transcript of his or her testimony.
    (9)(i) The transcript will be submitted to the witness for 
signature.
    (A) Where the witness will be provided a copy of the transcript, the 
transcript will be submitted to the witness for signature. The witness 
may submit to the Secretary written proposed corrections to the 
transcript, with such corrections attached to the transcript. If the 
witness does not return a signed copy of the transcript or proposed 
corrections within 30 days (computed in the same manner as prescribed 
under Sec.  160.526 of this part) of its being submitted to him or her 
for signature, the witness will be deemed to have agreed that the 
transcript is true and accurate.
    (B) Where, as provided in paragraph (b)(8) of this section, the 
witness is limited to inspecting the transcript, the witness will have 
the opportunity at the time of inspection to propose corrections to the 
transcript, with corrections attached to the transcript. The witness 
will also have the opportunity to sign the transcript. If the witness 
does not sign the transcript or offer corrections within 30 days 
(computed in the same manner as prescribed under Sec.  160.526 of this 
part) of receipt of notice of the opportunity to inspect the transcript, 
the witness will be deemed to have agreed that the transcript is true 
and accurate.
    (ii) The Secretary's proposed corrections to the record of 
transcript will be attached to the transcript.
    (c) Consistent with Sec.  160.310(c)(3), testimony and other 
evidence obtained in an investigational inquiry may be used by HHS in 
any of its activities and may be used or offered into evidence in any 
administrative or judicial proceeding.



Sec.  160.316  Refraining from intimidation or retaliation.

    A covered entity or business associate may not threaten, intimidate, 
coerce, harass, discriminate against, or take any other retaliatory 
action against any individual or other person for--
    (a) Filing of a complaint under Sec.  160.306;
    (b) Testifying, assisting, or participating in an investigation, 
compliance review, proceeding, or hearing under this part; or
    (c) Opposing any act or practice made unlawful by this subchapter, 
provided the individual or person has a good faith belief that the 
practice opposed is unlawful, and the manner of opposition is reasonable 
and does not involve a disclosure of protected health information in 
violation of subpart E of part 164 of this subchapter.

[71 FR 8424, Feb. 16, 2006, as amended at 78 FR 5691, Jan. 25, 2013]

[[Page 502]]



              Subpart D_Imposition of Civil Money Penalties

    Source: 71 FR 8426, Feb. 16, 2006, unless otherwise noted.



Sec.  160.400  Applicability.

    This subpart applies to the imposition of a civil money penalty by 
the Secretary under 42 U.S.C. 1320d-5.



Sec.  160.401  Definitions.

    As used in this subpart, the following terms have the following 
meanings:
    Reasonable cause means an act or omission in which a covered entity 
or business associate knew, or by exercising reasonable diligence would 
have known, that the act or omission violated an administrative 
simplification provision, but in which the covered entity or business 
associate did not act with willful neglect.
    Reasonable diligence means the business care and prudence expected 
from a person seeking to satisfy a legal requirement under similar 
circumstances.
    Willful neglect means conscious, intentional failure or reckless 
indifference to the obligation to comply with the administrative 
simplification provision violated.

[74 FR 56130, Oct. 30, 2009, as amended at 78 FR 5691, Jan. 25, 2013]



Sec.  160.402  Basis for a civil money penalty.

    (a) General rule. Subject to Sec.  160.410, the Secretary will 
impose a civil money penalty upon a covered entity or business associate 
if the Secretary determines that the covered entity or business 
associate has violated an administrative simplification provision.
    (b) Violation by more than one covered entity or business associate. 
(1) Except as provided in paragraph (b)(2) of this section, if the 
Secretary determines that more than one covered entity or business 
associate was responsible for a violation, the Secretary will impose a 
civil money penalty against each such covered entity or business 
associate.
    (2) A covered entity that is a member of an affiliated covered 
entity, in accordance with Sec.  164.105(b) of this subchapter, is 
jointly and severally liable for a civil money penalty for a violation 
of part 164 of this subchapter based on an act or omission of the 
affiliated covered entity, unless it is established that another member 
of the affiliated covered entity was responsible for the violation.
    (c) Violation attributed to a covered entity or business associate. 
(1) A covered entity is liable, in accordance with the Federal common 
law of agency, for a civil money penalty for a violation based on the 
act or omission of any agent of the covered entity, including a 
workforce member or business associate, acting within the scope of the 
agency.
    (2) A business associate is liable, in accordance with the Federal 
common law of agency, for a civil money penalty for a violation based on 
the act or omission of any agent of the business associate, including a 
workforce member or subcontractor, acting within the scope of the 
agency.

[78 FR 5691, Jan. 25, 2013]



Sec.  160.404  Amount of a civil money penalty.

    (a) The amount of a civil money penalty will be determined in 
accordance with paragraph (b) of this section, and Sec. Sec.  160.406, 
160.408, and 160.412. These amounts were adjusted in accordance with the 
Federal Civil Monetary Penalty Inflation Adjustment Act of 1990, (Pub. 
L. 101-140), as amended by the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015, (section 701 of Pub. L. 114-
74), and appear at 45 CFR part 102. These amounts will be updated 
annually and published at 45 CFR part 102.
    (b) The amount of a civil money penalty that may be imposed is 
subject to the following limitations:
    (1) For violations occurring prior to February 18, 2009, the 
Secretary may not impose a civil money penalty--
    (i) In the amount of more than $100 for each violation; or
    (ii) In excess of $25,000 for identical violations during a calendar 
year (January 1 through the following December 31);
    (2) For violations occurring on or after February 18, 2009, the 
Secretary may not impose a civil money penalty--

[[Page 503]]

    (i) For a violation in which it is established that the covered 
entity or business associate did not know and, by exercising reasonable 
diligence, would not have known that the covered entity or business 
associate violated such provision,
    (A) In the amount of less than $100 or more than $50,000 for each 
violation; or
    (B) In excess of $1,500,000 for identical violations during a 
calendar year (January 1 through the following December 31);
    (ii) For a violation in which it is established that the violation 
was due to reasonable cause and not to willful neglect,
    (A) In the amount of less than $1,000 or more than $50,000 for each 
violation; or
    (B) In excess of $1,500,000 for identical violations during a 
calendar year (January 1 through the following December 31);
    (iii) For a violation in which it is established that the violation 
was due to willful neglect and was corrected during the 30-day period 
beginning on the first date the covered entity or business associate 
liable for the penalty knew, or, by exercising reasonable diligence, 
would have known that the violation occurred,
    (A) In the amount of less than $10,000 or more than $50,000 for each 
violation; or
    (B) In excess of $1,500,000 for identical violations during a 
calendar year (January 1 through the following December 31);
    (iv) For a violation in which it is established that the violation 
was due to willful neglect and was not corrected during the 30-day 
period beginning on the first date the covered entity or business 
associate liable for the penalty knew, or, by exercising reasonable 
diligence, would have known that the violation occurred,
    (A) In the amount of less than $50,000 for each violation; or
    (B) In excess of $1,500,000 for identical violations during a 
calendar year (January 1 through the following December 31).
    (3) If a requirement or prohibition in one administrative 
simplification provision is repeated in a more general form in another 
administrative simplification provision in the same subpart, a civil 
money penalty may be imposed for a violation of only one of these 
administrative simplification provisions.

[71 FR 8426, Feb. 16, 2006, as amended at 74 FR 56130, Oct. 30, 2009; 78 
FR 5691, Jan. 25, 2013; 81 FR 61581, Sept. 6, 2016]



Sec.  160.406  Violations of an identical requirement or prohibition.

    The Secretary will determine the number of violations of an 
administrative simplification provision based on the nature of the 
covered entity's or business associate's obligation to act or not act 
under the provision that is violated, such as its obligation to act in a 
certain manner, or within a certain time, or to act or not act with 
respect to certain persons. In the case of continuing violation of a 
provision, a separate violation occurs each day the covered entity or 
business associate is in violation of the provision.

[78 FR 5691, Jan. 25, 2013]



Sec.  160.408  Factors considered in determining the amount of a civil
money penalty.

    In determining the amount of any civil money penalty, the Secretary 
will consider the following factors, which may be mitigating or 
aggravating as appropriate:
    (a) The nature and extent of the violation, consideration of which 
may include but is not limited to:
    (1) The number of individuals affected; and
    (2) The time period during which the violation occurred;
    (b) The nature and extent of the harm resulting from the violation, 
consideration of which may include but is not limited to:
    (1) Whether the violation caused physical harm;
    (2) Whether the violation resulted in financial harm;
    (3) Whether the violation resulted in harm to an individual's 
reputation; and
    (4) Whether the violation hindered an individual's ability to obtain 
health care;
    (c) The history of prior compliance with the administrative 
simplification provisions, including violations, by the covered entity 
or business associate,

[[Page 504]]

consideration of which may include but is not limited to:
    (1) Whether the current violation is the same or similar to previous 
indications of noncompliance;
    (2) Whether and to what extent the covered entity or business 
associate has attempted to correct previous indications of 
noncompliance;
    (3) How the covered entity or business associate has responded to 
technical assistance from the Secretary provided in the context of a 
compliance effort; and
    (4) How the covered entity or business associate has responded to 
prior complaints;
    (d) The financial condition of the covered entity or business 
associate, consideration of which may include but is not limited to:
    (1) Whether the covered entity or business associate had financial 
difficulties that affected its ability to comply;
    (2) Whether the imposition of a civil money penalty would jeopardize 
the ability of the covered entity or business associate to continue to 
provide, or to pay for, health care; and
    (3) The size of the covered entity or business associate; and
    (e) Such other matters as justice may require.

[78 FR 5691, Jan. 25, 2013]



Sec.  160.410  Affirmative defenses.

    (a) The Secretary may not:
    (1) Prior to February 18, 2011, impose a civil money penalty on a 
covered entity or business associate for an act that violates an 
administrative simplification provision if the covered entity or 
business associate establishes that the violation is punishable under 42 
U.S.C. 1320d-6.
    (2) On or after February 18, 2011, impose a civil money penalty on a 
covered entity or business associate for an act that violates an 
administrative simplification provision if the covered entity or 
business associate establishes that a penalty has been imposed under 42 
U.S.C. 1320d-6 with respect to such act.
    (b) For violations occurring prior to February 18, 2009, the 
Secretary may not impose a civil money penalty on a covered entity for a 
violation if the covered entity establishes that an affirmative defense 
exists with respect to the violation, including the following:
    (1) The covered entity establishes, to the satisfaction of the 
Secretary, that it did not have knowledge of the violation, determined 
in accordance with the Federal common law of agency, and by exercising 
reasonable diligence, would not have known that the violation occurred; 
or
    (2) The violation is--
    (i) Due to circumstances that would make it unreasonable for the 
covered entity, despite the exercise of ordinary business care and 
prudence, to comply with the administrative simplification provision 
violated and is not due to willful neglect; and
    (ii) Corrected during either:
    (A) The 30-day period beginning on the first date the covered entity 
liable for the penalty knew, or by exercising reasonable diligence would 
have known, that the violation occurred; or
    (B) Such additional period as the Secretary determines to be 
appropriate based on the nature and extent of the failure to comply.
    (c) For violations occurring on or after February 18, 2009, the 
Secretary may not impose a civil money penalty on a covered entity or 
business associate for a violation if the covered entity or business 
associate establishes to the satisfaction of the Secretary that the 
violation is--
    (1) Not due to willful neglect; and
    (2) Corrected during either:
    (i) The 30-day period beginning on the first date the covered entity 
or business associate liable for the penalty knew, or, by exercising 
reasonable diligence, would have known that the violation occurred; or
    (ii) Such additional period as the Secretary determines to be 
appropriate based on the nature and extent of the failure to comply.

[78 FR 5692, Jan. 25, 2013]



Sec.  160.412  Waiver.

    For violations described in Sec.  160.410(b)(2) or (c) that are not 
corrected within the period specified under such paragraphs, the 
Secretary may waive the civil money penalty, in whole or in part, to the 
extent that the

[[Page 505]]

payment of the penalty would be excessive relative to the violation.

[8 FR 5692, Jan. 25, 2013]



Sec.  160.414  Limitations.

    No action under this subpart may be entertained unless commenced by 
the Secretary, in accordance with Sec.  160.420, within 6 years from the 
date of the occurrence of the violation.



Sec.  160.416  Authority to settle.

    Nothing in this subpart limits the authority of the Secretary to 
settle any issue or case or to compromise any penalty.



Sec.  160.418  Penalty not exclusive.

    Except as otherwise provided by 42 U.S.C. 1320d-5(b)(1) and 42 
U.S.C. 299b-22(f)(3), a penalty imposed under this part is in addition 
to any other penalty prescribed by law.

[78 FR 5692, Jan. 25, 2013]



Sec.  160.420  Notice of proposed determination.

    (a) If a penalty is proposed in accordance with this part, the 
Secretary must deliver, or send by certified mail with return receipt 
requested, to the respondent, written notice of the Secretary's intent 
to impose a penalty. This notice of proposed determination must 
include--
    (1) Reference to the statutory basis for the penalty;
    (2) A description of the findings of fact regarding the violations 
with respect to which the penalty is proposed (except that, in any case 
where the Secretary is relying upon a statistical sampling study in 
accordance with Sec.  160.536 of this part, the notice must provide a 
copy of the study relied upon by the Secretary);
    (3) The reason(s) why the violation(s) subject(s) the respondent to 
a penalty;
    (4) The amount of the proposed penalty and a reference to the 
subparagraph of Sec.  160.404 upon which it is based.
    (5) Any circumstances described in Sec.  160.408 that were 
considered in determining the amount of the proposed penalty; and
    (6) Instructions for responding to the notice, including a statement 
of the respondent's right to a hearing, a statement that failure to 
request a hearing within 90 days permits the imposition of the proposed 
penalty without the right to a hearing under Sec.  160.504 or a right of 
appeal under Sec.  160.548 of this part, and the address to which the 
hearing request must be sent.
    (b) The respondent may request a hearing before an ALJ on the 
proposed penalty by filing a request in accordance with Sec.  160.504 of 
this part.

[71 FR 8426, Feb. 16, 2006, as amended at 74 FR 56131, Oct. 30, 2009]



Sec.  160.422  Failure to request a hearing.

    If the respondent does not request a hearing within the time 
prescribed by Sec.  160.504 of this part and the matter is not settled 
pursuant to Sec.  160.416, the Secretary will impose the proposed 
penalty or any lesser penalty permitted by 42 U.S.C. 1320d-5. The 
Secretary will notify the respondent by certified mail, return receipt 
requested, of any penalty that has been imposed and of the means by 
which the respondent may satisfy the penalty, and the penalty is final 
on receipt of the notice. The respondent has no right to appeal a 
penalty under Sec.  160.548 of this part with respect to which the 
respondent has not timely requested a hearing.



Sec.  160.424  Collection of penalty.

    (a) Once a determination of the Secretary to impose a penalty has 
become final, the penalty will be collected by the Secretary, subject to 
the first sentence of 42 U.S.C. 1320a-7a(f).
    (b) The penalty may be recovered in a civil action brought in the 
United States district court for the district where the respondent 
resides, is found, or is located.
    (c) The amount of a penalty, when finally determined, or the amount 
agreed upon in compromise, may be deducted from any sum then or later 
owing by the United States, or by a State agency, to the respondent.
    (d) Matters that were raised or that could have been raised in a 
hearing before an ALJ, or in an appeal under 42 U.S.C. 1320a-7a(e), may 
not be raised as a defense in a civil action by the United States to 
collect a penalty under this part.

[[Page 506]]



Sec.  160.426  Notification of the public and other agencies.

    Whenever a proposed penalty becomes final, the Secretary will 
notify, in such manner as the Secretary deems appropriate, the public 
and the following organizations and entities thereof and the reason it 
was imposed: the appropriate State or local medical or professional 
organization, the appropriate State agency or agencies administering or 
supervising the administration of State health care programs (as defined 
in 42 U.S.C. 1320a-7(h)), the appropriate utilization and quality 
control peer review organization, and the appropriate State or local 
licensing agency or organization (including the agency specified in 42 
U.S.C. 1395aa(a), 1396a(a)(33)).



                    Subpart E_Procedures for Hearings

    Source: 71 FR 8428, Feb. 16, 2006, unless otherwise noted.



Sec.  160.500  Applicability.

    This subpart applies to hearings conducted relating to the 
imposition of a civil money penalty by the Secretary under 42 U.S.C. 
1320d-5.



Sec.  160.502  Definitions.

    As used in this subpart, the following term has the following 
meaning:
    Board means the members of the HHS Departmental Appeals Board, in 
the Office of the Secretary, who issue decisions in panels of three.



Sec.  160.504  Hearing before an ALJ.

    (a) A respondent may request a hearing before an ALJ. The parties to 
the hearing proceeding consist of--
    (1) The respondent; and
    (2) The officer(s) or employee(s) of HHS to whom the enforcement 
authority involved has been delegated.
    (b) The request for a hearing must be made in writing signed by the 
respondent or by the respondent's attorney and sent by certified mail, 
return receipt requested, to the address specified in the notice of 
proposed determination. The request for a hearing must be mailed within 
90 days after notice of the proposed determination is received by the 
respondent. For purposes of this section, the respondent's date of 
receipt of the notice of proposed determination is presumed to be 5 days 
after the date of the notice unless the respondent makes a reasonable 
showing to the contrary to the ALJ.
    (c) The request for a hearing must clearly and directly admit, deny, 
or explain each of the findings of fact contained in the notice of 
proposed determination with regard to which the respondent has any 
knowledge. If the respondent has no knowledge of a particular finding of 
fact and so states, the finding shall be deemed denied. The request for 
a hearing must also state the circumstances or arguments that the 
respondent alleges constitute the grounds for any defense and the 
factual and legal basis for opposing the penalty, except that a 
respondent may raise an affirmative defense under Sec.  160.410(b)(1) at 
any time.
    (d) The ALJ must dismiss a hearing request where--
    (1) On motion of the Secretary, the ALJ determines that the 
respondent's hearing request is not timely filed as required by 
paragraphs (b) or does not meet the requirements of paragraph (c) of 
this section;
    (2) The respondent withdraws the request for a hearing;
    (3) The respondent abandons the request for a hearing; or
    (4) The respondent's hearing request fails to raise any issue that 
may properly be addressed in a hearing.



Sec.  160.506  Rights of the parties.

    (a) Except as otherwise limited by this subpart, each party may--
    (1) Be accompanied, represented, and advised by an attorney;
    (2) Participate in any conference held by the ALJ;
    (3) Conduct discovery of documents as permitted by this subpart;
    (4) Agree to stipulations of fact or law that will be made part of 
the record;
    (5) Present evidence relevant to the issues at the hearing;
    (6) Present and cross-examine witnesses;
    (7) Present oral arguments at the hearing as permitted by the ALJ; 
and

[[Page 507]]

    (8) Submit written briefs and proposed findings of fact and 
conclusions of law after the hearing.
    (b) A party may appear in person or by a representative. Natural 
persons who appear as an attorney or other representative must conform 
to the standards of conduct and ethics required of practitioners before 
the courts of the United States.
    (c) Fees for any services performed on behalf of a party by an 
attorney are not subject to the provisions of 42 U.S.C. 406, which 
authorizes the Secretary to specify or limit their fees.



Sec.  160.508  Authority of the ALJ.

    (a) The ALJ must conduct a fair and impartial hearing, avoid delay, 
maintain order, and ensure that a record of the proceeding is made.
    (b) The ALJ may--
    (1) Set and change the date, time and place of the hearing upon 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (4) Administer oaths and affirmations;
    (5) Issue subpoenas requiring the attendance of witnesses at 
hearings and the production of documents at or in relation to hearings;
    (6) Rule on motions and other procedural matters;
    (7) Regulate the scope and timing of documentary discovery as 
permitted by this subpart;
    (8) Regulate the course of the hearing and the conduct of 
representatives, parties, and witnesses;
    (9) Examine witnesses;
    (10) Receive, rule on, exclude, or limit evidence;
    (11) Upon motion of a party, take official notice of facts;
    (12) Conduct any conference, argument or hearing in person or, upon 
agreement of the parties, by telephone; and
    (13) Upon motion of a party, decide cases, in whole or in part, by 
summary judgment where there is no disputed issue of material fact. A 
summary judgment decision constitutes a hearing on the record for the 
purposes of this subpart.
    (c) The ALJ--
    (1) May not find invalid or refuse to follow Federal statutes, 
regulations, or Secretarial delegations of authority and must give 
deference to published guidance to the extent not inconsistent with 
statute or regulation;
    (2) May not enter an order in the nature of a directed verdict;
    (3) May not compel settlement negotiations;
    (4) May not enjoin any act of the Secretary; or
    (5) May not review the exercise of discretion by the Secretary with 
respect to whether to grant an extension under Sec.  
160.410(b)(2)(ii)(B) or (c)(2)(ii) of this part or to provide technical 
assistance under 42 U.S.C. 1320d-5(b)(2)(B).

[71 FR 8428, Feb. 16, 2006, as amended at 78 FR 34266, June 7, 2013]



Sec.  160.510  Ex parte contacts.

    No party or person (except employees of the ALJ's office) may 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for both parties to participate. This 
provision does not prohibit a party or person from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec.  160.512  Prehearing conferences.

    (a) The ALJ must schedule at least one prehearing conference, and 
may schedule additional prehearing conferences as appropriate, upon 
reasonable notice, which may not be less than 14 business days, to the 
parties.
    (b) The ALJ may use prehearing conferences to discuss the 
following--
    (1) Simplification of the issues;
    (2) The necessity or desirability of amendments to the pleadings, 
including the need for a more definite statement;
    (3) Stipulations and admissions of fact or as to the contents and 
authenticity of documents;
    (4) Whether the parties can agree to submission of the case on a 
stipulated record;
    (5) Whether a party chooses to waive appearance at an oral hearing 
and to

[[Page 508]]

submit only documentary evidence (subject to the objection of the other 
party) and written argument;
    (6) Limitation of the number of witnesses;
    (7) Scheduling dates for the exchange of witness lists and of 
proposed exhibits;
    (8) Discovery of documents as permitted by this subpart;
    (9) The time and place for the hearing;
    (10) The potential for the settlement of the case by the parties; 
and
    (11) Other matters as may tend to encourage the fair, just and 
expeditious disposition of the proceedings, including the protection of 
privacy of individually identifiable health information that may be 
submitted into evidence or otherwise used in the proceeding, if 
appropriate.
    (c) The ALJ must issue an order containing the matters agreed upon 
by the parties or ordered by the ALJ at a prehearing conference.



Sec.  160.514  Authority to settle.

    The Secretary has exclusive authority to settle any issue or case 
without the consent of the ALJ.



Sec.  160.516  Discovery.

    (a) A party may make a request to another party for production of 
documents for inspection and copying that are relevant and material to 
the issues before the ALJ.
    (b) For the purpose of this section, the term ``documents'' includes 
information, reports, answers, records, accounts, papers and other data 
and documentary evidence. Nothing contained in this section may be 
interpreted to require the creation of a document, except that requested 
data stored in an electronic data storage system must be produced in a 
form accessible to the requesting party.
    (c) Requests for documents, requests for admissions, written 
interrogatories, depositions and any forms of discovery, other than 
those permitted under paragraph (a) of this section, are not authorized.
    (d) This section may not be construed to require the disclosure of 
interview reports or statements obtained by any party, or on behalf of 
any party, of persons who will not be called as witnesses by that party, 
or analyses and summaries prepared in conjunction with the investigation 
or litigation of the case, or any otherwise privileged documents.
    (e)(1) When a request for production of documents has been received, 
within 30 days the party receiving that request must either fully 
respond to the request, or state that the request is being objected to 
and the reasons for that objection. If objection is made to part of an 
item or category, the part must be specified. Upon receiving any 
objections, the party seeking production may then, within 30 days or any 
other time frame set by the ALJ, file a motion for an order compelling 
discovery. The party receiving a request for production may also file a 
motion for protective order any time before the date the production is 
due.
    (2) The ALJ may grant a motion for protective order or deny a motion 
for an order compelling discovery if the ALJ finds that the discovery 
sought--
    (i) Is irrelevant;
    (ii) Is unduly costly or burdensome;
    (iii) Will unduly delay the proceeding; or
    (iv) Seeks privileged information.
    (3) The ALJ may extend any of the time frames set forth in paragraph 
(e)(1) of this section.
    (4) The burden of showing that discovery should be allowed is on the 
party seeking discovery.



Sec.  160.518  Exchange of witness lists, witness statements, and exhibits.

    (a) The parties must exchange witness lists, copies of prior written 
statements of proposed witnesses, and copies of proposed hearing 
exhibits, including copies of any written statements that the party 
intends to offer in lieu of live testimony in accordance with Sec.  
160.538, not more than 60, and not less than 15, days before the 
scheduled hearing, except that if a respondent intends to introduce the 
evidence of a statistical expert, the respondent must provide the 
Secretarial party with a copy of the statistical expert's report not 
less than 30 days before the scheduled hearing.
    (b)(1) If, at any time, a party objects to the proposed admission of 
evidence

[[Page 509]]

not exchanged in accordance with paragraph (a) of this section, the ALJ 
must determine whether the failure to comply with paragraph (a) of this 
section should result in the exclusion of that evidence.
    (2) Unless the ALJ finds that extraordinary circumstances justified 
the failure timely to exchange the information listed under paragraph 
(a) of this section, the ALJ must exclude from the party's case-in-
chief--
    (i) The testimony of any witness whose name does not appear on the 
witness list; and
    (ii) Any exhibit not provided to the opposing party as specified in 
paragraph (a) of this section.
    (3) If the ALJ finds that extraordinary circumstances existed, the 
ALJ must then determine whether the admission of that evidence would 
cause substantial prejudice to the objecting party.
    (i) If the ALJ finds that there is no substantial prejudice, the 
evidence may be admitted.
    (ii) If the ALJ finds that there is substantial prejudice, the ALJ 
may exclude the evidence, or, if he or she does not exclude the 
evidence, must postpone the hearing for such time as is necessary for 
the objecting party to prepare and respond to the evidence, unless the 
objecting party waives postponement.
    (c) Unless the other party objects within a reasonable period of 
time before the hearing, documents exchanged in accordance with 
paragraph (a) of this section will be deemed to be authentic for the 
purpose of admissibility at the hearing.



Sec.  160.520  Subpoenas for attendance at hearing.

    (a) A party wishing to procure the appearance and testimony of any 
person at the hearing may make a motion requesting the ALJ to issue a 
subpoena if the appearance and testimony are reasonably necessary for 
the presentation of a party's case.
    (b) A subpoena requiring the attendance of a person in accordance 
with paragraph (a) of this section may also require the person (whether 
or not the person is a party) to produce relevant and material evidence 
at or before the hearing.
    (c) When a subpoena is served by a respondent on a particular 
employee or official or particular office of HHS, the Secretary may 
comply by designating any knowledgeable HHS representative to appear and 
testify.
    (d) A party seeking a subpoena must file a written motion not less 
than 30 days before the date fixed for the hearing, unless otherwise 
allowed by the ALJ for good cause shown. That motion must--
    (1) Specify any evidence to be produced;
    (2) Designate the witnesses; and
    (3) Describe the address and location with sufficient particularity 
to permit those witnesses to be found.
    (e) The subpoena must specify the time and place at which the 
witness is to appear and any evidence the witness is to produce.
    (f) Within 15 days after the written motion requesting issuance of a 
subpoena is served, any party may file an opposition or other response.
    (g) If the motion requesting issuance of a subpoena is granted, the 
party seeking the subpoena must serve it by delivery to the person 
named, or by certified mail addressed to that person at the person's 
last dwelling place or principal place of business.
    (h) The person to whom the subpoena is directed may file with the 
ALJ a motion to quash the subpoena within 10 days after service.
    (i) The exclusive remedy for contumacy by, or refusal to obey a 
subpoena duly served upon, any person is specified in 42 U.S.C. 405(e).



Sec.  160.522  Fees.

    The party requesting a subpoena must pay the cost of the fees and 
mileage of any witness subpoenaed in the amounts that would be payable 
to a witness in a proceeding in United States District Court. A check 
for witness fees and mileage must accompany the subpoena when served, 
except that, when a subpoena is issued on behalf of the Secretary, a 
check for witness fees and mileage need not accompany the subpoena.

[[Page 510]]



Sec.  160.524  Form, filing, and service of papers.

    (a) Forms. (1) Unless the ALJ directs the parties to do otherwise, 
documents filed with the ALJ must include an original and two copies.
    (2) Every pleading and paper filed in the proceeding must contain a 
caption setting forth the title of the action, the case number, and a 
designation of the paper, such as motion to quash subpoena.
    (3) Every pleading and paper must be signed by and must contain the 
address and telephone number of the party or the person on whose behalf 
the paper was filed, or his or her representative.
    (4) Papers are considered filed when they are mailed.
    (b) Service. A party filing a document with the ALJ or the Board 
must, at the time of filing, serve a copy of the document on the other 
party. Service upon any party of any document must be made by delivering 
a copy, or placing a copy of the document in the United States mail, 
postage prepaid and addressed, or with a private delivery service, to 
the party's last known address. When a party is represented by an 
attorney, service must be made upon the attorney in lieu of the party.
    (c) Proof of service. A certificate of the natural person serving 
the document by personal delivery or by mail, setting forth the manner 
of service, constitutes proof of service.



Sec.  160.526  Computation of time.

    (a) In computing any period of time under this subpart or in an 
order issued thereunder, the time begins with the day following the act, 
event or default, and includes the last day of the period unless it is a 
Saturday, Sunday, or legal holiday observed by the Federal Government, 
in which event it includes the next business day.
    (b) When the period of time allowed is less than 7 days, 
intermediate Saturdays, Sundays, and legal holidays observed by the 
Federal Government must be excluded from the computation.
    (c) Where a document has been served or issued by placing it in the 
mail, an additional 5 days must be added to the time permitted for any 
response. This paragraph does not apply to requests for hearing under 
Sec.  160.504.



Sec.  160.528  Motions.

    (a) An application to the ALJ for an order or ruling must be by 
motion. Motions must state the relief sought, the authority relied upon 
and the facts alleged, and must be filed with the ALJ and served on all 
other parties.
    (b) Except for motions made during a prehearing conference or at the 
hearing, all motions must be in writing. The ALJ may require that oral 
motions be reduced to writing.
    (c) Within 10 days after a written motion is served, or such other 
time as may be fixed by the ALJ, any party may file a response to the 
motion.
    (d) The ALJ may not grant a written motion before the time for 
filing responses has expired, except upon consent of the parties or 
following a hearing on the motion, but may overrule or deny the motion 
without awaiting a response.
    (e) The ALJ must make a reasonable effort to dispose of all 
outstanding motions before the beginning of the hearing.



Sec.  160.530  Sanctions.

    The ALJ may sanction a person, including any party or attorney, for 
failing to comply with an order or procedure, for failing to defend an 
action or for other misconduct that interferes with the speedy, orderly 
or fair conduct of the hearing. The sanctions must reasonably relate to 
the severity and nature of the failure or misconduct. The sanctions may 
include--
    (a) In the case of refusal to provide or permit discovery under the 
terms of this part, drawing negative factual inferences or treating the 
refusal as an admission by deeming the matter, or certain facts, to be 
established;
    (b) Prohibiting a party from introducing certain evidence or 
otherwise supporting a particular claim or defense;
    (c) Striking pleadings, in whole or in part;
    (d) Staying the proceedings;
    (e) Dismissal of the action;
    (f) Entering a decision by default;
    (g) Ordering the party or attorney to pay the attorney's fees and 
other costs

[[Page 511]]

caused by the failure or misconduct; and
    (h) Refusing to consider any motion or other action that is not 
filed in a timely manner.



Sec.  160.532  Collateral estoppel.

    When a final determination that the respondent violated an 
administrative simplification provision has been rendered in any 
proceeding in which the respondent was a party and had an opportunity to 
be heard, the respondent is bound by that determination in any 
proceeding under this part.



Sec.  160.534  The hearing.

    (a) The ALJ must conduct a hearing on the record in order to 
determine whether the respondent should be found liable under this part.
    (b) (1) The respondent has the burden of going forward and the 
burden of persuasion with respect to any:
    (i) Affirmative defense pursuant to Sec.  160.410 of this part;
    (ii) Challenge to the amount of a proposed penalty pursuant to 
Sec. Sec.  160.404-160.408 of this part, including any factors raised as 
mitigating factors; or
    (iii) Claim that a proposed penalty should be reduced or waived 
pursuant to Sec.  160.412 of this part; and
    (iv) Compliance with subpart D of part 164, as provided under Sec.  
164.414(b).
    (2) The Secretary has the burden of going forward and the burden of 
persuasion with respect to all other issues, including issues of 
liability other than with respect to subpart D of part 164, and the 
existence of any factors considered aggravating factors in determining 
the amount of the proposed penalty.
    (3) The burden of persuasion will be judged by a preponderance of 
the evidence.
    (c) The hearing must be open to the public unless otherwise ordered 
by the ALJ for good cause shown.
    (d)(1) Subject to the 15-day rule under Sec.  160.518(a) and the 
admissibility of evidence under Sec.  160.540, either party may 
introduce, during its case in chief, items or information that arose or 
became known after the date of the issuance of the notice of proposed 
determination or the request for hearing, as applicable. Such items and 
information may not be admitted into evidence, if introduced--
    (i) By the Secretary, unless they are material and relevant to the 
acts or omissions with respect to which the penalty is proposed in the 
notice of proposed determination pursuant to Sec.  160.420 of this part, 
including circumstances that may increase penalties; or
    (ii) By the respondent, unless they are material and relevant to an 
admission, denial or explanation of a finding of fact in the notice of 
proposed determination under Sec.  160.420 of this part, or to a 
specific circumstance or argument expressly stated in the request for 
hearing under Sec.  160.504, including circumstances that may reduce 
penalties.
    (2) After both parties have presented their cases, evidence may be 
admitted in rebuttal even if not previously exchanged in accordance with 
Sec.  160.518.

[71 FR 8428, Feb. 16, 2006, as amended at 74 FR 42767, Aug. 24, 2009; 78 
FR 5692, Jan. 25, 2013]



Sec.  160.536  Statistical sampling.

    (a) In meeting the burden of proof set forth in Sec.  160.534, the 
Secretary may introduce the results of a statistical sampling study as 
evidence of the number of violations under Sec.  160.406 of this part, 
or the factors considered in determining the amount of the civil money 
penalty under Sec.  160.408 of this part. Such statistical sampling 
study, if based upon an appropriate sampling and computed by valid 
statistical methods, constitutes prima facie evidence of the number of 
violations and the existence of factors material to the proposed civil 
money penalty as described in Sec. Sec.  160.406 and 160.408.
    (b) Once the Secretary has made a prima facie case, as described in 
paragraph (a) of this section, the burden of going forward shifts to the 
respondent to produce evidence reasonably calculated to rebut the 
findings of the statistical sampling study. The Secretary will then be 
given the opportunity to rebut this evidence.



Sec.  160.538  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing must be given orally by witnesses under oath or 
affirmation.

[[Page 512]]

    (b) At the discretion of the ALJ, testimony of witnesses other than 
the testimony of expert witnesses may be admitted in the form of a 
written statement. The ALJ may, at his or her discretion, admit prior 
sworn testimony of experts that has been subject to adverse examination, 
such as a deposition or trial testimony. Any such written statement must 
be provided to the other party, along with the last known address of the 
witness, in a manner that allows sufficient time for the other party to 
subpoena the witness for cross-examination at the hearing. Prior written 
statements of witnesses proposed to testify at the hearing must be 
exchanged as provided in Sec.  160.518.
    (c) The ALJ must exercise reasonable control over the mode and order 
of interrogating witnesses and presenting evidence so as to:
    (1) Make the interrogation and presentation effective for the 
ascertainment of the truth;
    (2) Avoid repetition or needless consumption of time; and
    (3) Protect witnesses from harassment or undue embarrassment.
    (d) The ALJ must permit the parties to conduct cross-examination of 
witnesses as may be required for a full and true disclosure of the 
facts.
    (e) The ALJ may order witnesses excluded so that they cannot hear 
the testimony of other witnesses, except that the ALJ may not order to 
be excluded--
    (1) A party who is a natural person;
    (2) In the case of a party that is not a natural person, the officer 
or employee of the party appearing for the entity pro se or designated 
as the party's representative; or
    (3) A natural person whose presence is shown by a party to be 
essential to the presentation of its case, including a person engaged in 
assisting the attorney for the Secretary.



Sec.  160.540  Evidence.

    (a) The ALJ must determine the admissibility of evidence.
    (b) Except as provided in this subpart, the ALJ is not bound by the 
Federal Rules of Evidence. However, the ALJ may apply the Federal Rules 
of Evidence where appropriate, for example, to exclude unreliable 
evidence.
    (c) The ALJ must exclude irrelevant or immaterial evidence.
    (d) Although relevant, evidence may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (e) Although relevant, evidence must be excluded if it is privileged 
under Federal law.
    (f) Evidence concerning offers of compromise or settlement are 
inadmissible to the extent provided in Rule 408 of the Federal Rules of 
Evidence.
    (g) Evidence of crimes, wrongs, or acts other than those at issue in 
the instant case is admissible in order to show motive, opportunity, 
intent, knowledge, preparation, identity, lack of mistake, or existence 
of a scheme. This evidence is admissible regardless of whether the 
crimes, wrongs, or acts occurred during the statute of limitations 
period applicable to the acts or omissions that constitute the basis for 
liability in the case and regardless of whether they were referenced in 
the Secretary's notice of proposed determination under Sec.  160.420 of 
this part.
    (h) The ALJ must permit the parties to introduce rebuttal witnesses 
and evidence.
    (i) All documents and other evidence offered or taken for the record 
must be open to examination by both parties, unless otherwise ordered by 
the ALJ for good cause shown.



Sec.  160.542  The record.

    (a) The hearing must be recorded and transcribed. Transcripts may be 
obtained following the hearing from the ALJ. A party that requests a 
transcript of hearing proceedings must pay the cost of preparing the 
transcript unless, for good cause shown by the party, the payment is 
waived by the ALJ or the Board, as appropriate.
    (b) The transcript of the testimony, exhibits, and other evidence 
admitted at the hearing, and all papers and requests filed in the 
proceeding constitute the record for decision by the ALJ and the 
Secretary.
    (c) The record may be inspected and copied (upon payment of a 
reasonable

[[Page 513]]

fee) by any person, unless otherwise ordered by the ALJ for good cause 
shown.
    (d) For good cause, the ALJ may order appropriate redactions made to 
the record.



Sec.  160.544  Post hearing briefs.

    The ALJ may require the parties to file post-hearing briefs. In any 
event, any party may file a post-hearing brief. The ALJ must fix the 
time for filing the briefs. The time for filing may not exceed 60 days 
from the date the parties receive the transcript of the hearing or, if 
applicable, the stipulated record. The briefs may be accompanied by 
proposed findings of fact and conclusions of law. The ALJ may permit the 
parties to file reply briefs.



Sec.  160.546  ALJ's decision.

    (a) The ALJ must issue a decision, based only on the record, which 
must contain findings of fact and conclusions of law.
    (b) The ALJ may affirm, increase, or reduce the penalties imposed by 
the Secretary.
    (c) The ALJ must issue the decision to both parties within 60 days 
after the time for submission of post-hearing briefs and reply briefs, 
if permitted, has expired. If the ALJ fails to meet the deadline 
contained in this paragraph, he or she must notify the parties of the 
reason for the delay and set a new deadline.
    (d) Unless the decision of the ALJ is timely appealed as provided 
for in Sec.  160.548, the decision of the ALJ will be final and binding 
on the parties 60 days from the date of service of the ALJ's decision.



Sec.  160.548  Appeal of the ALJ's decision.

    (a) Any party may appeal the decision of the ALJ to the Board by 
filing a notice of appeal with the Board within 30 days of the date of 
service of the ALJ decision. The Board may extend the initial 30 day 
period for a period of time not to exceed 30 days if a party files with 
the Board a request for an extension within the initial 30 day period 
and shows good cause.
    (b) If a party files a timely notice of appeal with the Board, the 
ALJ must forward the record of the proceeding to the Board.
    (c) A notice of appeal must be accompanied by a written brief 
specifying exceptions to the initial decision and reasons supporting the 
exceptions. Any party may file a brief in opposition to the exceptions, 
which may raise any relevant issue not addressed in the exceptions, 
within 30 days of receiving the notice of appeal and the accompanying 
brief. The Board may permit the parties to file reply briefs.
    (d) There is no right to appear personally before the Board or to 
appeal to the Board any interlocutory ruling by the ALJ.
    (e) Except for an affirmative defense under Sec.  160.410(a)(1) or 
(2) of this part, the Board may not consider any issue not raised in the 
parties' briefs, nor any issue in the briefs that could have been raised 
before the ALJ but was not.
    (f) If any party demonstrates to the satisfaction of the Board that 
additional evidence not presented at such hearing is relevant and 
material and that there were reasonable grounds for the failure to 
adduce such evidence at the hearing, the Board may remand the matter to 
the ALJ for consideration of such additional evidence.
    (g) The Board may decline to review the case, or may affirm, 
increase, reduce, reverse or remand any penalty determined by the ALJ.
    (h) The standard of review on a disputed issue of fact is whether 
the initial decision of the ALJ is supported by substantial evidence on 
the whole record. The standard of review on a disputed issue of law is 
whether the decision is erroneous.
    (i) Within 60 days after the time for submission of briefs and reply 
briefs, if permitted, has expired, the Board must serve on each party to 
the appeal a copy of the Board's decision and a statement describing the 
right of any respondent who is penalized to seek judicial review.
    (j)(1) The Board's decision under paragraph (i) of this section, 
including a decision to decline review of the initial decision, becomes 
the final decision of the Secretary 60 days after the date of service of 
the Board's decision, except with respect to a decision to remand to the 
ALJ or if reconsideration is requested under this paragraph.

[[Page 514]]

    (2) The Board will reconsider its decision only if it determines 
that the decision contains a clear error of fact or error of law. New 
evidence will not be a basis for reconsideration unless the party 
demonstrates that the evidence is newly discovered and was not 
previously available.
    (3) A party may file a motion for reconsideration with the Board 
before the date the decision becomes final under paragraph (j)(1) of 
this section. A motion for reconsideration must be accompanied by a 
written brief specifying any alleged error of fact or law and, if the 
party is relying on additional evidence, explaining why the evidence was 
not previously available. Any party may file a brief in opposition 
within 15 days of receiving the motion for reconsideration and the 
accompanying brief unless this time limit is extended by the Board for 
good cause shown. Reply briefs are not permitted.
    (4) The Board must rule on the motion for reconsideration not later 
than 30 days from the date the opposition brief is due. If the Board 
denies the motion, the decision issued under paragraph (i) of this 
section becomes the final decision of the Secretary on the date of 
service of the ruling. If the Board grants the motion, the Board will 
issue a reconsidered decision, after such procedures as the Board 
determines necessary to address the effect of any error. The Board's 
decision on reconsideration becomes the final decision of the Secretary 
on the date of service of the decision, except with respect to a 
decision to remand to the ALJ.
    (5) If service of a ruling or decision issued under this section is 
by mail, the date of service will be deemed to be 5 days from the date 
of mailing.
    (k)(1) A respondent's petition for judicial review must be filed 
within 60 days of the date on which the decision of the Board becomes 
the final decision of the Secretary under paragraph (j) of this section.
    (2) In compliance with 28 U.S.C. 2112(a), a copy of any petition for 
judicial review filed in any U.S. Court of Appeals challenging the final 
decision of the Secretary must be sent by certified mail, return receipt 
requested, to the General Counsel of HHS. The petition copy must be a 
copy showing that it has been time-stamped by the clerk of the court 
when the original was filed with the court.
    (3) If the General Counsel of HHS received two or more petitions 
within 10 days after the final decision of the Secretary, the General 
Counsel will notify the U.S. Judicial Panel on Multidistrict Litigation 
of any petitions that were received within the 10 day period.

[71 FR 8428, Feb. 16, 2006, as amended at 78 FR 34266, June 7, 2013]



Sec.  160.550  Stay of the Secretary's decision.

    (a) Pending judicial review, the respondent may file a request for 
stay of the effective date of any penalty with the ALJ. The request must 
be accompanied by a copy of the notice of appeal filed with the Federal 
court. The filing of the request automatically stays the effective date 
of the penalty until such time as the ALJ rules upon the request.
    (b) The ALJ may not grant a respondent's request for stay of any 
penalty unless the respondent posts a bond or provides other adequate 
security.
    (c) The ALJ must rule upon a respondent's request for stay within 10 
days of receipt.



Sec.  160.552  Harmless error.

    No error in either the admission or the exclusion of evidence, and 
no error or defect in any ruling or order or in any act done or omitted 
by the ALJ or by any of the parties is ground for vacating, modifying or 
otherwise disturbing an otherwise appropriate ruling or order or act, 
unless refusal to take such action appears to the ALJ or the Board 
inconsistent with substantial justice. The ALJ and the Board at every 
stage of the proceeding must disregard any error or defect in the 
proceeding that does not affect the substantial rights of the parties.



PART 162_ADMINISTRATIVE REQUIREMENTS--Table of Contents



                      Subpart A_General Provisions

Sec.
162.100 Applicability.
162.103 Definitions.

[[Page 515]]

Subparts B-C [Reserved]

  Subpart D_Standard Unique Health Identifier for Health Care Providers

162.402 [Reserved]
162.404 Compliance dates of the implementation of the standard unique 
          health identifier for health care providers.
162.406 Standard unique health identifier for health care providers.
162.408 National Provider System.
162.410 Implementation specifications: Health care providers.
162.412 Implementation specifications: Health plans.
162.414 Implementation specifications: Health care clearinghouses.

Subpart E [Reserved]

              Subpart F_Standard Unique Employer Identifier

162.600 Compliance dates of the implementation of the standard unique 
          employer identifier.
162.605 Standard unique employer identifier.
162.610 Implementation specifications for covered entities.

Subparts G-H [Reserved]

              Subpart I_General Provisions for Transactions

162.900 [Reserved]
162.910 Maintenance of standards and adoption of modifications and new 
          standards.
162.915 Trading partner agreements.
162.920 Availability of implementation specifications and operating 
          rules.
162.923 Requirements for covered entities.
162.925 Additional requirements for health plans.
162.930 Additional rules for health care clearinghouses.
162.940 Exceptions from standards to permit testing of proposed 
          modifications.

                           Subpart J_Code Sets

162.1000 General requirements.
162.1002 Medical data code sets.
162.1011 Valid code sets.

    Subpart K_Health Care Claims or Equivalent Encounter Information

162.1101 Health care claims or equivalent encounter information 
          transaction.
162.1102 Standards for health care claims or equivalent encounter 
          information transaction.

                 Subpart L_Eligibility for a Health Plan

162.1201 Eligibility for a health plan transaction.
162.1202 Standards for eligibility for a health plan transaction.
162.1203 Operating rules for eligibility for a health plan transaction.

           Subpart M_Referral Certification and Authorization

162.1301 Referral certification and authorization transaction.
162.1302 Standard for referral certification and authorization 
          transaction.

                   Subpart N_Health Care Claim Status

162.1401 Health care claim status transaction.
162.1402 Standards for health care claim status transaction.
162.1403 Operating rules for health care claim status transaction.

         Subpart O_Enrollment and Disenrollment in a Health Plan

162.1501 Enrollment and disenrollment in a health plan transaction.
162.1502 Standards for enrollment and disenrollment in a health plan 
          transaction.

 Subpart P_Health Care Electronic Funds Transfers (EFT) and Remittance 
                                 Advice

162.1601 Health care electronic funds transfers (EFT) and remittance 
          advice transaction.
162.1602 Standards for health care electronic funds transfers (EFT) and 
          remittance advice transaction.
162.1603 Operating rules for health care electronic funds transfers 
          (EFT) and remittance advice transaction.

                 Subpart Q_Health Plan Premium Payments

162.1701 Health plan premium payments transaction.
162.1702 Standards for health plan premium payments transaction.

                   Subpart R_Coordination of Benefits

162.1801 Coordination of benefits transaction.
162.1802 Standards for coordination of benefits information transaction.

                 Subpart S_Medicaid Pharmacy Subrogation

162.1901 Medicaid pharmacy subrogation transaction.

[[Page 516]]

162.1902 Standard for Medicaid pharmacy subrogation transaction.

    Authority: 42 U.S.C. 1320d--1320d-9 and secs. 1104 and 10109 of Pub. 
L. 111-148, 124 Stat. 146-154 and 915-917.

    Source: 65 FR 50367, Aug. 17, 2000, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  162.100  Applicability.

    Covered entities (as defined in Sec.  160.103 of this subchapter) 
must comply with the applicable requirements of this part.



Sec.  162.103  Definitions.

    For purposes of this part, the following definitions apply:
    Code set means any set of codes used to encode data elements, such 
as tables of terms, medical concepts, medical diagnostic codes, or 
medical procedure codes. A code set includes the codes and the 
descriptors of the codes.
    Code set maintaining organization means an organization that creates 
and maintains the code sets adopted by the Secretary for use in the 
transactions for which standards are adopted in this part.
    Covered health care provider means a health care provider that meets 
the definition at paragraph (3) of the definition of ``covered entity'' 
at Sec.  160.103.
    Data condition means the rule that describes the circumstances under 
which a covered entity must use a particular data element or segment.
    Data content means all the data elements and code sets inherent to a 
transaction, and not related to the format of the transaction. Data 
elements that are related to the format are not data content.
    Data element means the smallest named unit of information in a 
transaction.
    Data set means a semantically meaningful unit of information 
exchanged between two parties to a transaction.
    Descriptor means the text defining a code.
    Designated standard maintenance organization (DSMO) means an 
organization designated by the Secretary under Sec.  162.910(a).
    Direct data entry means the direct entry of data (for example, using 
dumb terminals or web browsers) that is immediately transmitted into a 
health plan's computer.
    Format refers to those data elements that provide or control the 
enveloping or hierarchical structure, or assist in identifying data 
content of, a transaction.
    HCPCS stands for the Health [Care Financing Administration] Common 
Procedure Coding System.
    Maintain or maintenance refers to activities necessary to support 
the use of a standard adopted by the Secretary, including technical 
corrections to an implementation specification, and enhancements or 
expansion of a code set. This term excludes the activities related to 
the adoption of a new standard or implementation specification, or 
modification to an adopted standard or implementation specification.
    Maximum defined data set means all of the required data elements for 
a particular standard based on a specific implementation specification.
    Operating rules means the necessary business rules and guidelines 
for the electronic exchange of information that are not defined by a 
standard or its implementation specifications as adopted for purposes of 
this part.
    Segment means a group of related data elements in a transaction.
    Stage 1 payment initiation means a health plan's order, instruction 
or authorization to its financial institution to make a health care 
claims payment using an electronic funds transfer (EFT) through the ACH 
Network.
    Standard transaction means a transaction that complies with an 
applicable standard and associated operating rules adopted under this 
part.

[65 FR 50367, Aug. 17, 2000, as amended at 68 FR 8374, Feb. 20, 2003; 74 
FR 3324, Jan. 16, 2009; 76 FR 40495, July 8, 2011; 77 FR 1589, Jan. 10, 
2012; 77 FR 54719, Sept. 5, 2012; 84 FR 57629, Oct. 28, 2019]

Subparts B-C [Reserved]



  Subpart D_Standard Unique Health Identifier for Health Care
  Providers

    Source: 69 FR 3468, Jan. 23, 2004, unless otherwise noted.

[[Page 517]]



Sec.  162.402  [Reserved]



Sec.  162.404  Compliance dates of the implementation of the standard
unique health identifier for health care providers.

    (a) Health care providers. A covered health care provider must 
comply with the implementation specifications in Sec.  162.410 no later 
than May 23, 2007.
    (b) Health plans. A health plan must comply with the implementation 
specifications in Sec.  162.412 no later than one of the following 
dates:
    (1) A health plan that is not a small health plan--May 23, 2007.
    (2) A small health plan--May 23, 2008.
    (c) Health care clearinghouses. A health care clearinghouse must 
comply with the implementation specifications in Sec.  162.414 no later 
than May 23, 2007.

[69 FR 3468, Jan. 23, 2004, as amended at 77 FR 54719, Sept. 5, 2012]



Sec.  162.406  Standard unique health identifier for health care providers.

    (a) Standard. The standard unique health identifier for health care 
providers is the National Provider Identifier (NPI). The NPI is a 10-
position numeric identifier, with a check digit in the 10th position, 
and no intelligence about the health care provider in the number.
    (b) Required and permitted uses for the NPI. (1) The NPI must be 
used as stated in Sec. Sec.  162.410, 162.412, and 162.414.
    (2) The NPI may be used for any other lawful purpose.



Sec.  162.408  National Provider System.

    National Provider System. The National Provider System (NPS) shall 
do the following:
    (a) Assign a single, unique NPI to a health care provider, provided 
that--
    (1) The NPS may assign an NPI to a subpart of a health care provider 
in accordance with paragraph (g); and
    (2) The Secretary has sufficient information to permit the 
assignment to be made.
    (b) Collect and maintain information about each health care provider 
that has been assigned an NPI and perform tasks necessary to update that 
information.
    (c) If appropriate, deactivate an NPI upon receipt of appropriate 
information concerning the dissolution of the health care provider that 
is an organization, the death of the health care provider who is an 
individual, or other circumstances justifying deactivation.
    (d) If appropriate, reactivate a deactivated NPI upon receipt of 
appropriate information.
    (e) Not assign a deactivated NPI to any other health care provider.
    (f) Disseminate NPS information upon approved requests.
    (g) Assign an NPI to a subpart of a health care provider on request 
if the identifying data for the subpart are unique.



Sec.  162.410  Implementation specifications: Health care providers.

    (a) A covered entity that is a covered health care provider must:
    (1) Obtain, by application if necessary, an NPI from the National 
Provider System (NPS) for itself or for any subpart of the covered 
entity that would be a covered health care provider if it were a 
separate legal entity. A covered entity may obtain an NPI for any other 
subpart that qualifies for the assignment of an NPI.
    (2) Use the NPI it obtained from the NPS to identify itself on all 
standard transactions that it conducts where its health care provider 
identifier is required.
    (3) Disclose its NPI, when requested, to any entity that needs the 
NPI to identify that covered health care provider in a standard 
transaction.
    (4) Communicate to the NPS any changes in its required data elements 
in the NPS within 30 days of the change.
    (5) If it uses one or more business associates to conduct standard 
transactions on its behalf, require its business associate(s) to use its 
NPI and other NPIs appropriately as required by the transactions that 
the business associate(s) conducts on its behalf.
    (6) If it has been assigned NPIs for one or more subparts, comply 
with the requirements of paragraphs (a)(2) through (a)(5) of this 
section with respect to each of those NPIs.
    (b) An organization covered health care provider that has as a 
member, employs, or contracts with, an individual health care provider 
who is not

[[Page 518]]

a covered entity and is a prescriber, must require such health care 
provider to--
    (1) Obtain an NPI from the National Plan and Provider Enumeration 
System (NPPES); and
    (2) To the extent the prescriber writes a prescription while acting 
within the scope of the prescriber's relationship with the organization, 
disclose the NPI upon request to any entity that needs it to identify 
the prescriber in a standard transaction.
    (c) A health care provider that is not a covered entity may obtain, 
by application if necessary, an NPI from the NPS.

[69 FR 3468, Jan. 23, 2004, as amended at 77 FR 54719, Sept. 5, 2012]



Sec.  162.412  Implementation specifications: Health plans.

    (a) A health plan must use the NPI of any health care provider (or 
subpart(s), if applicable) that has been assigned an NPI to identify 
that health care provider on all standard transactions where that health 
care provider's identifier is required.
    (b) A health plan may not require a health care provider that has 
been assigned an NPI to obtain an additional NPI.



Sec.  162.414  Implementation specifications: Health care clearinghouses.

    A health care clearinghouse must use the NPI of any health care 
provider (or subpart(s), if applicable) that has been assigned an NPI to 
identify that health care provider on all standard transactions where 
that health care provider's identifier is required.

Subpart E [Reserved]



              Subpart F_Standard Unique Employer Identifier

    Source: 67 FR 38020, May 31, 2002, unless otherwise noted.



Sec.  162.600  Compliance dates of the implementation of the standard
unique employer identifier.

    (a) Health care providers. Health care providers must comply with 
the requirements of this subpart no later than July 30, 2004.
    (b) Health plans. A health plan must comply with the requirements of 
this subpart no later than one of the following dates:
    (1) Health plans other than small health plans--July 30, 2004.
    (2) Small health plans--August 1, 2005.
    (c) Health care clearinghouses. Health care clearinghouses must 
comply with the requirements of this subpart no later than July 30, 
2004.



Sec.  162.605  Standard unique employer identifier.

    The Secretary adopts the EIN as the standard unique employer 
identifier provided for by 42 U.S.C. 1320d-2(b).



Sec.  162.610  Implementation specifications for covered entities.

    (a) The standard unique employer identifier of an employer of a 
particular employee is the EIN that appears on that employee's IRS Form 
W-2, Wage and Tax Statement, from the employer.
    (b) A covered entity must use the standard unique employer 
identifier (EIN) of the appropriate employer in standard transactions 
that require an employer identifier to identify a person or entity as an 
employer, including where situationally required.
    (c) Required and permitted uses for the Employer Identifier.
    (1) The Employer Identifier must be used as stated in Sec.  
162.610(b).
    (2) The Employer Identifier may be used for any other lawful 
purpose.

[67 FR 38020, May 31, 2002, as amended at 69 FR 3469, Jan. 23, 2004]

Subparts G-H [Reserved]



              Subpart I_General Provisions for Transactions



Sec.  162.900  [Reserved]



Sec.  162.910  Maintenance of standards and adoption of modifications
and new standards.

    (a) Designation of DSMOs. (1) The Secretary may designate as a DSMO 
an organization that agrees to conduct, to the satisfaction of the 
Secretary, the following functions:

[[Page 519]]

    (i) Maintain standards adopted under this subchapter.
    (ii) Receive and process requests for adopting a new standard or 
modifying an adopted standard.
    (2) The Secretary designates a DSMO by notice in the Federal 
Register.
    (b) Maintenance of standards. Maintenance of a standard by the 
appropriate DSMO constitutes maintenance of the standard for purposes of 
this part, if done in accordance with the processes the Secretary may 
require.
    (c) Process for modification of existing standards and adoption of 
new standards. The Secretary considers a recommendation for a proposed 
modification to an existing standard, or a proposed new standard, only 
if the recommendation is developed through a process that provides for 
the following:
    (1) Open public access.
    (2) Coordination with other DSMOs.
    (3) An appeals process for each of the following, if dissatisfied 
with the decision on the request:
    (i) The requestor of the proposed modification.
    (ii) A DSMO that participated in the review and analysis of the 
request for the proposed modification, or the proposed new standard.
    (4) Expedited process to address content needs identified within the 
industry, if appropriate.
    (5) Submission of the recommendation to the National Committee on 
Vital and Health Statistics (NCVHS).



Sec.  162.915  Trading partner agreements.

    A covered entity must not enter into a trading partner agreement 
that would do any of the following:
    (a) Change the definition, data condition, or use of a data element 
or segment in a standard or operating rule, except where necessary to 
implement State or Federal law, or to protect against fraud and abuse.
    (b) Add any data elements or segments to the maximum defined data 
set.
    (c) Use any code or data elements that are either marked ``not 
used'' in the standard's implementation specification or are not in the 
standard's implementation specification(s).
    (d) Change the meaning or intent of the standard's implementation 
specification(s).

[65 FR 50367, Aug. 17, 2000, as amended at 76 FR 40495, July 8, 2011]



Sec.  162.920  Availability of implementation specifications and
operating rules.

    Certain material is incorporated by reference into this subpart with 
the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, the Department of Health and Human Services 
must publish notice of change in the Federal Register and the material 
must be available to the public. All approved material is available for 
inspection at the National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call (202) 
714-6030, or go to: http://www.archives.gov/federal_ register/code_of_ 
federal_regulations/ibr _locations.html. The materials are also 
available for inspection by the public at the Centers for Medicare & 
Medicaid Services (CMS), 7500 Security Boulevard, Baltimore, Maryland 
21244. For more information on the availability on the materials at CMS, 
call (410) 786-6597. The materials are also available from the sources 
listed below.
    (a) ASC X12N specifications and the ASC X12 Standards for Electronic 
Data Interchange Technical Report Type 3. The implementation 
specifications for the ASC X12N and the ASC X12 Standards for Electronic 
Data Interchange Technical Report Type 3 (and accompanying Errata or 
Type 1 Errata) may be obtained from the ASC X12, 7600 Leesburg Pike, 
Suite 430, Falls Church, VA 22043; Telephone (703) 970-4480; and FAX 
(703) 970-4488. They are also available through the internet at http://
www.X12.org. A fee is charged for all implementation specifications, 
including Technical Reports Type 3. Charging for such publications is 
consistent with the policies of other publishers of standards. The 
transaction implementation specifications are as follows:
    (1) The ASC X12N 837--Health Care Claim: Dental, Version 4010, May 
2000, Washington Publishing Company,

[[Page 520]]

004010X097 and Addenda to Health Care Claim: Dental, Version 4010, 
October 2002, Washington Publishing Company, 004010X097A1, as referenced 
in Sec.  162.1102 and Sec.  162.1802.
    (2) The ASC X12N 837--Health Care Claim: Professional, Volumes 1 and 
2, Version 4010, May 2000, Washington Publishing Company, 004010X098 and 
Addenda to Health Care Claim: Professional, Volumes 1 and 2, Version 
4010, October 2002, Washington Publishing Company, 004010X098A1, as 
referenced in Sec.  162.1102 and Sec.  162.1802.
    (3) The ASC X12N 837--Health Care Claim: Institutional, Volumes 1 
and 2, Version 4010, May 2000, Washington Publishing Company, 004010X096 
and Addenda to Health Care Claim: Institutional, Volumes 1 and 2, 
Version 4010, October 2002, Washington Publishing Company, 004010X096A1 
as referenced in Sec.  162.1102 and Sec.  162.1802.
    (4) The ASC X12N 835--Health Care Claim Payment/Advice, Version 
4010, May 2000, Washington Publishing Company, 004010X091, and Addenda 
to Health Care Claim Payment/Advice, Version 4010, October 2002, 
Washington Publishing Company, 004010X091A1 as referenced in Sec.  
162.1602.
    (5) ASC X12N 834--Benefit Enrollment and Maintenance, Version 4010, 
May 2000, Washington Publishing Company, 004010X095 and Addenda to 
Benefit Enrollment and Maintenance, Version 4010, October 2002, 
Washington Publishing Company, 004010X095A1, as referenced in Sec.  
162.1502.
    (6) The ASC X12N 820--Payroll Deducted and Other Group Premium 
Payment for Insurance Products, Version 4010, May 2000, Washington 
Publishing Company, 004010X061, and Addenda to Payroll Deducted and 
Other Group Premium Payment for Insurance Products, Version 4010, 
October 2002, Washington Publishing Company, 004010X061A1, as referenced 
in Sec.  162.1702.
    (7) The ASC X12N 278--Health Care Services Review--Request for 
Review and Response, Version 4010, May 2000, Washington Publishing 
Company, 004010X094 and Addenda to Health Care Services Review--Request 
for Review and Response, Version 4010, October 2002, Washington 
Publishing Company, 004010X094A1, as referenced in Sec.  162.1302.
    (8) The ASC X12N-276/277 Health Care Claim Status Request and 
Response, Version 4010, May 2000, Washington Publishing Company, 
004010X093 and Addenda to Health Care Claim Status Request and Response, 
Version 4010, October 2002, Washington Publishing Company, 004010X093A1, 
as referenced in Sec.  162.1402.
    (9) The ASC X12N 270/271--Health Care Eligibility Benefit Inquiry 
and Response, Version 4010, May 2000, Washington Publishing Company, 
004010X092 and Addenda to Health Care Eligibility Benefit Inquiry and 
Response, Version 4010, October 2002, Washington Publishing Company, 
004010X092A1, as referenced in Sec.  162.1202.
    (10) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim: Dental (837), May 2006, ASC X12N/
005010X224, and Type 1 Errata to Health Care Claim Dental (837), ASC X12 
Standards for Electronic Data Interchange Technical Report Type 3, 
October 2007, ASC X12N/005010X224A1, as referenced in Sec.  162.1102 and 
Sec.  162.1802.
    (11) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim: Professional (837), May 2006, ASC X12, 
005010X222, as referenced in Sec.  162.1102 and Sec.  162.1802.
    (12) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim: Institutional (837), May 2006, ASC 
X12/N005010X223, and Type 1 Errata to Health Care Claim: Institutional 
(837), ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3, October 2007, ASC X12N/005010X223A1, as referenced in 
Sec.  162.1102 and Sec.  162.1802.
    (13) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim Payment/Advice (835), April 2006, ASC 
X12N/005010X221, as referenced in Sec.  162.1602.
    (14) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Benefit Enrollment and Maintenance (834), August 2006, 
ASC X12N/005010X220, as referenced in Sec.  162.1502.
    (15) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Payroll Deducted and

[[Page 521]]

Other Group Premium Payment for Insurance Products (820), February 2007, 
ASC X12N/005010X218, as referenced in Sec.  162.1702.
    (16) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Services Review--Request for Review and 
Response (278), May 2006, ASC X12N/005010X217, and Errata to Health Care 
Services Review--Request for Review and Response (278), ASC X12 
Standards for Electronic Data Interchange Technical Report Type 3, April 
2008, ASC X12N/005010X217E1, as referenced in Sec.  162.1302.
    (17) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim Status Request and Response (276/277), 
August 2006, ASC X12N/005010X212, and Errata to Health Care Claim Status 
Request and Response (276/277), ASC X12 Standards for Electronic Data 
Interchange Technical Report Type 3, April 2008, ASC X12N/005010X212E1, 
as referenced in Sec.  162.1402.
    (18) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Eligibility Benefit Inquiry and Response 
(270/271), April 2008, ASC X12N/005010X279, as referenced in Sec.  
162.1202.
    (b) Retail pharmacy specifications and Medicaid subrogation 
implementation guides. The implementation specifications for the retail 
pharmacy standards and the implementation specifications for the batch 
standard for the Medicaid pharmacy subrogation transaction may be 
obtained from the National Council for Prescription Drug Programs, 9240 
East Raintree Drive, Scottsdale, AZ 85260. Telephone (480) 477-1000; FAX 
(480) 767-1042. They are also available through the Internet at http://
www.ncpdp.org. A fee is charged for all NCPDP Implementation Guides. 
Charging for such publications is consistent with the policies of other 
publishers of standards. The transaction implementation specifications 
are as follows:
    (1) The Telecommunication Standard Implementation Guide Version 5, 
Release 1 (Version 5.1), September 1999, National Council for 
Prescription Drug Programs, as referenced in Sec.  162.1102, Sec.  
162.1202, Sec.  162.1302, Sec.  162.1602, and Sec.  162.1802.
    (2) The Batch Standard Batch Implementation Guide, Version 1, 
Release 1 (Version 1.1), January 2000, supporting Telecommunication 
Standard Implementation Guide, Version 5, Release 1 (Version 5.1) for 
the NCPDP Data Record in the Detail Data Record, National Council for 
Prescription Drug Programs, as referenced in Sec.  162.1102, Sec.  
162.1202, Sec.  162.1302, and Sec.  162.1802.
    (3) The National Council for Prescription Drug Programs (NCPDP) 
equivalent NCPDP Batch Standard Batch Implementation Guide, Version 1, 
Release 0, February 1, 1996, as referenced in Sec.  162.1102, Sec.  
162.1202, Sec.  162.1602, and Sec.  162.1802.
    (4) The Telecommunication Standard Implementation Guide, Version D, 
Release 0 (Version D.0), August 2007, National Council for Prescription 
Drug Programs, as referenced in Sec.  162.1102, Sec.  162.1202, Sec.  
162.1302, and Sec.  162.1802.
    (5) The Batch Standard Implementation Guide, Version 1, Release 2 
(Version 1.2), January 2006, National Council for Prescription Drug 
Programs, as referenced in Sec.  162.1102, Sec.  162.1202, Sec.  
162.1302, and Sec.  162.1802.
    (6) The Batch Standard Medicaid Subrogation Implementation Guide, 
Version 3, Release 0 (Version 3.0), July 2007, National Council for 
Prescription Drug Programs, as referenced in Sec.  162.1902.
    (c) Council for Affordable Quality Healthcare's (CAQH) Committee on 
Operating Rules for Information Exchange (CORE), 601 Pennsylvania 
Avenue, NW. South Building, Suite 500 Washington, DC 20004; Telephone 
(202) 861-1492; Fax (202) 861- 1454; E-mail [email protected]; and Internet 
at http://www.caqh.org/benefits.php.
    (1) CAQH, Committee on Operating Rules for Information Exchange, 
CORE Phase I Policies and Operating Rules, Approved April 2006, v5010 
Update March 2011.
    (i) Phase I CORE 152: Eligibility and Benefit Real Time Companion 
Guide Rule, version 1.1.0, March 2011, as referenced in Sec.  162.1203.
    (ii) Phase I CORE 153: Eligibility and Benefits Connectivity Rule, 
version 1.1.0, March 2011, as referenced in Sec.  162.1203.
    (iii) Phase I CORE 154: Eligibility and Benefits 270/271 Data 
Content Rule,

[[Page 522]]

version 1.1.0, March 2011, as referenced in Sec.  162.1203.
    (iv) Phase I CORE 155: Eligibility and Benefits Batch Response Time 
Rule, version 1.1.0, March 2011, as referenced in Sec.  162.1203.
    (v) Phase I CORE 156: Eligibility and Benefits Real Time Response 
Time Rule, version 1.1.0, March 2011, as referenced in Sec.  162.1203.
    (vi) Phase I CORE 157: Eligibility and Benefits System Availability 
Rule, version 1.1.0, March 2011, as referenced in Sec.  162.1203.
    (2) ACME Health Plan, HIPAA Transaction Standard Companion Guide, 
Refers to the Implementation Guides Based on ASC X12 version 005010, 
CORE v5010 Master Companion Guide Template, 005010, 1.2, (CORE v 5010 
Master Companion Guide Template, 005010, 1.2), March 2011, as referenced 
in Sec. Sec.  162.1203, 162.1403, and 162.1603.
    (3) CAQH, Committee on Operating Rules for Information Exchange, 
CORE Phase II Policies and Operating Rules, Approved July 2008, v5010 
Update March 2011.
    (i) Phase II CORE 250: Claim Status Rule, version 2.1.0, March 2011, 
as referenced in Sec.  162.1403.
    (ii) Phase II CORE 258: Eligibility and Benefits 270/271 Normalizing 
Patient Last Name Rule, version 2.1.0, March 2011, as referenced in 
Sec.  162.1203.
    (iii) Phase II CORE 259: Eligibility and Benefits 270/271 AAA Error 
Code Reporting Rule, version 2.1.0, March 2011, as referenced in Sec.  
162.1203.
    (iv) Phase II CORE 260: Eligibility & Benefits Data Content (270/
271) Rule, version 2.1.0, March 2011, as referenced in Sec.  162.1203.
    (v) Phase II CORE 270: Connectivity Rule, version 2.2.0, March 2011, 
as referenced in Sec.  162.1203 and Sec.  162.1403.
    (4) Council for Affordable Quality Healthcare (CAQH) Phase III 
Committee on Operating Rules for Information Exchange (CORE) EFT & ERA 
Operating Rule Set, Approved June 2012, as specified in this paragraph 
and referenced in Sec.  162.1603.
    (i) Phase III CORE 380 EFT Enrollment Data Rule, version 3.0.0, June 
2012.
    (ii) Phase III CORE 382 ERA Enrollment Data Rule, version 3.0.0, 
June 2012.
    (iii) Phase III 360 CORE Uniform Use of CARCs and RARCs (835) Rule, 
version 3.0.0, June 2012.
    (iv) CORE-required Code Combinations for CORE-defined Business 
Scenarios for the Phase III CORE 360 Uniform Use of Claim Adjustment 
Reason Codes and Remittance Advice Remark Codes (835) Rule, version 
3.0.0, June 2012.
    (v) Phase III CORE 370 EFT & ERA Reassociation (CCD+/835) Rule, 
version 3.0.0, June 2012.
    (vi) Phase III CORE 350 Health Care Claim Payment/Advice (835) 
Infrastructure Rule, version 3.0.0, June 2012, except Requirement 4.2 
titled ``Health Care Claim Payment/Advice Batch Acknowledgement 
Requirements''.
    (d) The National Automated Clearing House Association (NACHA), The 
Electronic Payments Association, 1350 Sunrise Valle Drive, Suite 100, 
Herndon, Virginia 20171 (Phone) (703) 561-1100; (Fax) (703) 713-1641; 
Email: [email protected]; and Internet at http://www.nacha.org. The 
implementation specifications are as follows:
    (1) 2011 NACHA Operating Rules & Guidelines, A Complete Guide to the 
Rules Governing the ACH Network, NACHA Operating Rules, Appendix One: 
ACH File Exchange Specifications (Operating Rule 59) as referenced in 
Sec.  162.1602.
    (2) 2011 NACHA Operating Rules & Guidelines, A Complete Guide to the 
Rules Governing the ACH Network, NACHA Operating Rules Appendix Three: 
ACH Record Format Specifications (Operating Rule 78), Part 3.1, Subpart 
3.1.8 Sequence of Records for CCD Entries as referenced in Sec.  
162.1602.

[68 FR 8396, Feb. 20, 2003, as amended at 69 FR 18803, Apr. 9, 2004; 74 
FR 3324, Jan. 16, 2009; 76 FR 40495, July 8, 2011; 77 FR 1590, Jan. 10, 
2012; 77 FR 48043, Aug. 10, 2012]



Sec.  162.923  Requirements for covered entities.

    (a) General rule. Except as otherwise provided in this part, if a 
covered entity conducts, with another covered entity that is required to 
comply with a transaction standard adopted under this part (or within 
the same covered entity), using electronic media, a transaction for 
which the Secretary has adopted a standard under this part,

[[Page 523]]

the covered entity must conduct the transaction as a standard 
transaction.
    (b) Exception for direct data entry transactions. A health care 
provider electing to use direct data entry offered by a health plan to 
conduct a transaction for which a standard has been adopted under this 
part must use the applicable data content and data condition 
requirements of the standard when conducting the transaction. The health 
care provider is not required to use the format requirements of the 
standard.
    (c) Use of a business associate. A covered entity may use a business 
associate, including a health care clearinghouse, to conduct a 
transaction covered by this part. If a covered entity chooses to use a 
business associate to conduct all or part of a transaction on behalf of 
the covered entity, the covered entity must require the business 
associate to do the following:
    (1) Comply with all applicable requirements of this part.
    (2) Require any agent or subcontractor to comply with all applicable 
requirements of this part.

[65 FR 50367, Aug. 17, 2000, as amended at 74 FR 3325, Jan. 16, 2009]



Sec.  162.925  Additional requirements for health plans.

    (a) General rules. (1) If an entity requests a health plan to 
conduct a transaction as a standard transaction, the health plan must do 
so.
    (2) A health plan may not delay or reject a transaction, or attempt 
to adversely affect the other entity or the transaction, because the 
transaction is a standard transaction.
    (3) A health plan may not reject a standard transaction on the basis 
that it contains data elements not needed or used by the health plan 
(for example, coordination of benefits information).
    (4) A health plan may not offer an incentive for a health care 
provider to conduct a transaction covered by this part as a transaction 
described under the exception provided for in Sec.  162.923(b).
    (5) A health plan that operates as a health care clearinghouse, or 
requires an entity to use a health care clearinghouse to receive, 
process, or transmit a standard transaction may not charge fees or costs 
in excess of the fees or costs for normal telecommunications that the 
entity incurs when it directly transmits, or receives, a standard 
transaction to, or from, a health plan.
    (6) During the period from March 17, 2009 through December 31, 2011, 
a health plan may not delay or reject a standard transaction, or attempt 
to adversely affect the other entity or the transaction, on the basis 
that it does not comply with another adopted standard for the same 
period.
    (b) Coordination of benefits. If a health plan receives a standard 
transaction and coordinates benefits with another health plan (or 
another payer), it must store the coordination of benefits data it needs 
to forward the standard transaction to the other health plan (or other 
payer).
    (c) Code sets. A health plan must meet each of the following 
requirements:
    (1) Accept and promptly process any standard transaction that 
contains codes that are valid, as provided in subpart J of this part.
    (2) Keep code sets for the current billing period and appeals 
periods still open to processing under the terms of the health plan's 
coverage.

[65 FR 50367, Aug. 17, 2000, as amended at 74 FR 3325, Jan. 16, 2009]



Sec.  162.930  Additional rules for health care clearinghouses.

    When acting as a business associate for another covered entity, a 
health care clearinghouse may perform the following functions:
    (a) Receive a standard transaction on behalf of the covered entity 
and translate it into a nonstandard transaction (for example, 
nonstandard format and/or nonstandard data content) for transmission to 
the covered entity.
    (b) Receive a nonstandard transaction (for example, nonstandard 
format and/or nonstandard data content) from the covered entity and 
translate it into a standard transaction for transmission on behalf of 
the covered entity.

[[Page 524]]



Sec.  162.940  Exceptions from standards to permit testing of 
proposed modifications.

    (a) Requests for an exception. An organization may request an 
exception from the use of a standard from the Secretary to test a 
proposed modification to that standard. For each proposed modification, 
the organization must meet the following requirements:
    (1) Comparison to a current standard. Provide a detailed 
explanation, no more than 10 pages in length, of how the proposed 
modification would be a significant improvement to the current standard 
in terms of the following principles:
    (i) Improve the efficiency and effectiveness of the health care 
system by leading to cost reductions for, or improvements in benefits 
from, electronic health care transactions.
    (ii) Meet the needs of the health data standards user community, 
particularly health care providers, health plans, and health care 
clearinghouses.
    (iii) Be uniform and consistent with the other standards adopted 
under this part and, as appropriate, with other private and public 
sector health data standards.
    (iv) Have low additional development and implementation costs 
relative to the benefits of using the standard.
    (v) Be supported by an ANSI-accredited SSO or other private or 
public organization that would maintain the standard over time.
    (vi) Have timely development, testing, implementation, and updating 
procedures to achieve administrative simplification benefits faster.
    (vii) Be technologically independent of the computer platforms and 
transmission protocols used in electronic health transactions, unless 
they are explicitly part of the standard.
    (viii) Be precise, unambiguous, and as simple as possible.
    (ix) Result in minimum data collection and paperwork burdens on 
users.
    (x) Incorporate flexibility to adapt more easily to changes in the 
health care infrastructure (such as new services, organizations, and 
provider types) and information technology.
    (2) Specifications for the proposed modification. Provide 
specifications for the proposed modification, including any additional 
system requirements.
    (3) Testing of the proposed modification. Provide an explanation, no 
more than 5 pages in length, of how the organization intends to test the 
standard, including the number and types of health plans and health care 
providers expected to be involved in the test, geographical areas, and 
beginning and ending dates of the test.
    (4) Trading partner concurrences. Provide written concurrences from 
trading partners who would agree to participate in the test.
    (b) Basis for granting an exception. The Secretary may grant an 
initial exception, for a period not to exceed 3 years, based on, but not 
limited to, the following criteria:
    (1) An assessment of whether the proposed modification demonstrates 
a significant improvement to the current standard.
    (2) The extent and length of time of the exception.
    (3) Consultations with DSMOs.
    (c) Secretary's decision on exception. The Secretary makes a 
decision and notifies the organization requesting the exception whether 
the request is granted or denied.
    (1) Exception granted. If the Secretary grants an exception, the 
notification includes the following information:
    (i) The length of time for which the exception applies.
    (ii) The trading partners and geographical areas the Secretary 
approves for testing.
    (iii) Any other conditions for approving the exception.
    (2) Exception denied. If the Secretary does not grant an exception, 
the notification explains the reasons the Secretary considers the 
proposed modification would not be a significant improvement to the 
current standard and any other rationale for the denial.
    (d) Organization's report on test results. Within 90 days after the 
test is completed, an organization that receives an exception must 
submit a report on the results of the test, including a cost-benefit 
analysis, to a location specified by the Secretary by notice in the 
Federal Register.

[[Page 525]]

    (e) Extension allowed. If the report submitted in accordance with 
paragraph (d) of this section recommends a modification to the standard, 
the Secretary, on request, may grant an extension to the period granted 
for the exception.



                           Subpart J_Code Sets



Sec.  162.1000  General requirements.

    When conducting a transaction covered by this part, a covered entity 
must meet the following requirements:
    (a) Medical data code sets. Use the applicable medical data code 
sets described in Sec.  162.1002 as specified in the implementation 
specification adopted under this part that are valid at the time the 
health care is furnished.
    (b) Nonmedical data code sets. Use the nonmedical data code sets as 
described in the implementation specifications adopted under this part 
that are valid at the time the transaction is initiated.



Sec.  162.1002  Medical data code sets.

    The Secretary adopts the following maintaining organization's code 
sets as the standard medical data code sets:
    (a) For the period from October 16, 2002 through October 15, 2003:
    (1) International Classification of Diseases, 9th Edition, Clinical 
Modification, (ICD-9-CM), Volumes 1 and 2 (including The Official ICD-9-
CM Guidelines for Coding and Reporting), as maintained and distributed 
by HHS, for the following conditions:
    (i) Diseases.
    (ii) Injuries.
    (iii) Impairments.
    (iv) Other health problems and their manifestations.
    (v) Causes of injury, disease, impairment, or other health problems.
    (2) International Classification of Diseases, 9th Edition, Clinical 
Modification, Volume 3 Procedures (including The Official ICD-9-CM 
Guidelines for Coding and Reporting), as maintained and distributed by 
HHS, for the following procedures or other actions taken for diseases, 
injuries, and impairments on hospital inpatients reported by hospitals:
    (i) Prevention.
    (ii) Diagnosis.
    (iii) Treatment.
    (iv) Management.
    (3) National Drug Codes (NDC), as maintained and distributed by HHS, 
in collaboration with drug manufacturers, for the following:
    (i) Drugs
    (ii) Biologics.
    (4) Code on Dental Procedures and Nomenclature, as maintained and 
distributed by the American Dental Association, for dental services.
    (5) The combination of Health Care Financing Administration Common 
Procedure Coding System (HCPCS), as maintained and distributed by HHS, 
and Current Procedural Terminology, Fourth Edition (CPT-4), as 
maintained and distributed by the American Medical Association, for 
physician services and other health care services. These services 
include, but are not limited to, the following:
    (i) Physician services.
    (ii) Physical and occupational therapy services.
    (iii) Radiologic procedures.
    (iv) Clinical laboratory tests.
    (v) Other medical diagnostic procedures.
    (vi) Hearing and vision services.
    (vii) Transportation services including ambulance.
    (6) The Health Care Financing Administration Common Procedure Coding 
System (HCPCS), as maintained and distributed by HHS, for all other 
substances, equipment, supplies, or other items used in health care 
services. These items include, but are not limited to, the following:
    (i) Medical supplies.
    (ii) Orthotic and prosthetic devices.
    (iii) Durable medical equipment.
    (b) For the period on and after October 16, 2003 through September 
30, 2015:
    (1) The code sets specified in paragraphs (a)(1), (a)(2),(a)(4), and 
(a)(5) of this section.
    (2) National Drug Codes (NDC), as maintained and distributed by HHS, 
for reporting the following by retail pharmacies:
    (i) Drugs.
    (ii) Biologics.
    (3) The Healthcare Common Procedure Coding System (HCPCS), as 
maintained and distributed by HHS, for all other substances, equipment, 
supplies, or

[[Page 526]]

other items used in health care services, with the exception of drugs 
and biologics. These items include, but are not limited to, the 
following:
    (i) Medical supplies.
    (ii) Orthotic and prosthetic devices.
    (iii) Durable medical equipment.
    (c) For the period on and after October 1, 2015:
    (1) The code sets specified in paragraphs (a)(4), (a)(5), (b)(2), 
and (b)(3) of this section.
    (2) International Classification of Diseases, 10th Revision, 
Clinical Modification (ICD-10-CM) (including The Official ICD-10-CM 
Guidelines for Coding and Reporting), as maintained and distributed by 
HHS, for the following conditions:
    (i) Diseases.
    (ii) Injuries.
    (iii) Impairments.
    (iv) Other health problems and their manifestations.
    (v) Causes of injury, disease, impairment, or other health problems.
    (3) International Classification of Diseases, 10th Revision, 
Procedure Coding System (ICD-10-PCS) (including The Official ICD-10-PCS 
Guidelines for Coding and Reporting), as maintained and distributed by 
HHS, for the following procedures or other actions taken for diseases, 
injuries, and impairments on hospital inpatients reported by hospitals:
    (i) Prevention.
    (ii) Diagnosis.
    (iii) Treatment.
    (iv) Management.

[65 FR 50367, Aug. 17, 2000, as amended at 68 FR 8397, Feb. 20, 2003; 74 
FR 3362, Jan. 16, 2009; 77 FR 54720, Sept. 5, 2012; 79 FR 45134, Aug. 4, 
2014]



Sec.  162.1011  Valid code sets.

    Each code set is valid within the dates specified by the 
organization responsible for maintaining that code set.



    Subpart K_Health Care Claims or Equivalent Encounter Information



Sec.  162.1101  Health care claims or equivalent encounter information
transaction.

    The health care claims or equivalent encounter information 
transaction is the transmission of either of the following:
    (a) A request to obtain payment, and the necessary accompanying 
information from a health care provider to a health plan, for health 
care.
    (b) If there is no direct claim, because the reimbursement contract 
is based on a mechanism other than charges or reimbursement rates for 
specific services, the transaction is the transmission of encounter 
information for the purpose of reporting health care.



Sec.  162.1102  Standards for health care claims or equivalent
encounter information transaction.

    The Secretary adopts the following standards for the health care 
claims or equivalent encounter information transaction:
    (a) For the period from October 16, 2003 through March 16, 2009:
    (1) Retail pharmacy drugs claims. The National Council for 
Prescription Drug Programs (NCPDP) Telecommunication Standards 
Implementation Guide, Version 5, Release 1, September 1999, and 
equivalent NCPDP Batch Standards Batch Implementation Guide, Version 1, 
Release 1, (Version 1.1), January 2000, supporting Telecomunication 
Version 5.1 for the NCPDP Data Record in the Detail Data Record. 
(Incorporated by reference in Sec.  162.920).
    (2) Dental, health care claims. The ASC X12N 837--Health Care Claim: 
Dental, Version 4010, May 2000, Washington Publishing Company, 
004010X097. and Addenda to Health Care Claim: Dental, Version 4010, 
October 2002, Washington Publishing Company, 004010X097A1. (Incorporated 
by reference in Sec.  162.920).
    (3) Professional health care claims. The ASC X12N 837--Health Care 
Claims: Professional, Volumes 1 and 2, Version 4010, may 2000, 
Washington Publishing Company, 004010X098 and Addenda to Health Care 
Claims: Professional, Volumes 1 and 2, Version 4010, October 2002, 
Washington Publishing Company, 004010x098A1. (Incorporated by reference 
in Sec.  162.920).
    (4) Institutional health care claims. The ASC X12N 837--Health Care 
Claim: Institutional, Volumes 1 and 2, Version 4010, May 2000, 
Washington Publishing

[[Page 527]]

Company, 004010X096 and Addenda to Health Care Claim: Institutional, 
Volumes 1 and 2, Version 4010, October 2002, Washington Publishing 
Company, 004010X096A1. (Incorporated by reference in Sec.  162.920).
    (b) For the period from March 17, 2009 through December 31, 2011, 
both:
    (1)(i) The standards identified in paragraph (a) of this section; 
and
    (ii) For retail pharmacy supplies and professional services claims, 
the following: The ASC X12N 837--Health Care Claim: Professional, 
Volumes 1 and 2, Version 4010, May 2000, Washington Publishing Company, 
004010X096, October 2002 (Incorporated by reference in Sec.  162.920); 
and
    (2)(i) Retail pharmacy drug claims. The Telecommunication Standard 
Implementation Guide, Version D, Release 0 (Version D.0), August 2007 
and equivalent Batch Standard Implementation Guide, Version 1, Release 2 
(Version 1.2), National Council for Prescription Drug Programs. 
(Incorporated by reference in Sec.  162.920.)
    (ii) Dental health care claims. The ASC X12 Standards for Electronic 
Data Interchange Technical Report Type 3-- Health Care Claim: Dental 
(837), May 2006, ASC X12N/005010X224, and Type 1 Errata to Health Care 
Claim: Dental (837) ASC X12 Standards for Electronic Date Interchange 
Technical Report Type 3, October 2007, ASC X12N/005010X224A1. 
(Incorporated by reference in Sec.  162.920.)
    (iii) Professional health care claims. The ASC X12 Standards for 
Electronic Data Interchange Technical Report Type 3--Health Care Claim: 
Professional (837), May 2006, ASC X12N/005010X222. (Incorporated by 
reference in Sec.  162.920.)
    (iv) Institutional health care claims. The ASC X12 Standards for 
Electronic Data Interchange Technical Report Type 3--Health Care Claim: 
Institutional (837), May 2006, ASC X12N/005010X223, and Type 1 Errata to 
Health Care Claim: Institutional (837) ASC X12 Standards for Electronic 
Data Interchange Technical Report Type 3, October 2007, ASC X12N/
005010X223A1. (Incorporated by reference in Sec.  162.920.)
    (v) Retail pharmacy supplies and professional services claims. (A) 
The Telecommunication Standard, Implementation Guide Version 5, Release 
1, September 1999. (Incorporated by reference in Sec.  162.920.)
    (B) The Telecommunication Standard Implementation Guide, Version D, 
Release 0 (Version D.0), August 2007, and equivalent Batch Standard 
Implementation Guide, Version 1, Release 2 (Version 1.2), National 
Council for Prescription Drug Programs (Incorporated by reference in 
Sec.  162.920); and
    (C) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim: Professional (837), May 2006, ASC 
X12N/005010X222. (Incorporated by reference in Sec.  162.920.)
    (c) For the period on and after the January 1, 2012, the standards 
identified in paragraph (b)(2) of this section, except the standard 
identified in paragraph (b)(2)(v)(A) of this section.
    (d) For the period on and after September 21, 2020, the Quantity 
Prescribed (460-ET) field, as set forth in the Telecommunication 
Standard Implementation Guide, Version D, Release 0 (Version D.0), 
August 2007 and equivalent Batch Standard Implementation Guide, Version 
1, Release 2 (Version 1.2), National Council for Prescription Drug 
Programs, must be treated as required where the transmission meets both 
of the following:
    (1) Is for a Schedule II drug, as defined in 21 CFR 1308.12.
    (2) Uses the standard identified in paragraph (b)(2)(i) of this 
section.

[68 FR 8397, Feb. 20, 2003; 68 FR 11445, Mar. 10, 2003, as amended at 74 
FR 3325, Jan. 16, 2009; 85 FR 4242, Jan. 24, 2020]



                 Subpart L_Eligibility for a Health Plan



Sec.  162.1201  Eligibility for a health plan transaction.

    The eligibility for a health plan transaction is the transmission of 
either of the following:
    (a) An inquiry from a health care provider to a health plan, or from 
one health plan to another health plan, to obtain any of the following 
information about a benefit plan for an enrollee:
    (1) Eligibility to receive health care under the health plan.

[[Page 528]]

    (2) Coverage of health care under the health plan.
    (3) Benefits associated with the benefit plan.
    (b) A response from a health plan to a health care provider's (or 
another health plan's) inquiry described in paragraph (a) of this 
section.



Sec.  162.1202  Standards for eligibility for a health plan transaction.

    The Secretary adopts the following standards for the eligibility for 
a health plan transaction:
    (a) For the period from October 16, 2003 through March 16, 2009:
    (1) Retail pharmacy drugs. The National Council for Prescription 
Drug Programs Telecommunication Standard Implementation Guide, Version 
5, Release 1 (Version 5.1), September 1999, and equivalent NCPDP Batch 
Standard Batch Implementation Guide, Version 1, Release 1 (Version 1.1), 
January 2000 supporting Telecommunications Standard Implementation 
Guide, Version 5, Release 1 (Version 5.1) for the NCPDP Data Record in 
the Detail Data Record. (Incorporated by reference in Sec.  162.920).
    (2) Dental, professional, and institutional health care eligibility 
benefit inquiry and response. The ASC X12N 270/271--Health Care 
Eligibility Benefit Inquiry and Response, Version 4010, May 2000, 
Washington Publishing Company, 004010X092 and Addenda to Health Care 
Eligibility Benefit Inquiry and Response, Version 4010, October 2002, 
Washington Publishing Company, 004010X092A1. (Incorporated by reference 
in Sec.  162.920).
    (b) For the period from March 17, 2009 through December 31, 2011 
both:
    (1) The standards identified in paragraph (a) of this section; and
    (2)(i) Retail pharmacy drugs. The Telecommunication Standard 
Implementation Guide Version D, Release 0 (Version D.0), August 2007, 
and equivalent Batch Standard Implementation Guide, Version 1, Release 2 
(Version 1.2), National Council for Prescription Drug Programs. 
(Incorporated by reference in Sec.  162.920.)
    (ii) Dental, professional, and institutional health care eligibility 
benefit inquiry and response. The ASC X12 Standards for Electronic Data 
Interchange Technical Report Type 3--Health Care Eligibility Benefit 
Inquiry and Response (270/271), April 2008, ASC X12N/005010X279. 
(Incorporated by reference in Sec.  162.920.)
    (c) For the period on and after January 1, 2012, the standards 
identified in paragraph (b)(2) of this section.

[68 FR 8398, Feb. 20, 2003; 68 FR 11445, Mar. 10, 2003, as amended at 74 
FR 3326, Jan. 16, 2009]



Sec.  162.1203  Operating rules for eligibility for a health plan
transaction.

    On and after January 1, 2013, the Secretary adopts the following:
    (a) Except as specified in paragraph (b) of this section, the 
following CAQH CORE Phase I and Phase II operating rules (updated for 
Version 5010) for the eligibility for a health plan transaction:
    (1) Phase I CORE 152: Eligibility and Benefit Real Time Companion 
Guide Rule, version 1.1.0, March 2011, and CORE v5010 Master Companion 
Guide Template. (Incorporated by reference in Sec.  162.920).
    (2) Phase I CORE 153: Eligibility and Benefits Connectivity Rule, 
version 1.1.0, March 2011. (Incorporated by reference in Sec.  162.920).
    (3) Phase I CORE 154: Eligibility and Benefits 270/271 Data Content 
Rule, version 1.1.0, March 2011. (Incorporated by reference in Sec.  
162.920).
    (4) Phase I CORE 155: Eligibility and Benefits Batch Response Time 
Rule, version 1.1.0, March 2011. (Incorporated by reference in Sec.  
162.920).
    (5) Phase I CORE 156: Eligibility and Benefits Real Time Response 
Rule, version 1.1.0, March 2011. (Incorporated by reference in Sec.  
162.920).
    (6) Phase I CORE 157: Eligibility and Benefits System Availability 
Rule, version 1.1.0, March 2011. (Incorporated by reference in Sec.  
162.920).
    (7) Phase II CORE 258: Eligibility and Benefits 270/271 Normalizing 
Patient Last Name Rule, version 2.1.0, March 2011. (Incorporated by 
reference in Sec.  162.920).
    (8) Phase II CORE 259: Eligibility and Benefits 270/271 AAA Error 
Code Reporting Rule, version 2.1.0. (Incorporated by reference in Sec.  
162.920).
    (9) Phase II CORE 260: Eligibility & Benefits Data Content (270/271) 
Rule, version 2.1.0, March 2011. (Incorporated by reference in Sec.  
162.920).

[[Page 529]]

    (10) Phase II CORE 270: Connectivity Rule, version 2.2.0, March 
2011. (Incorporated by reference in Sec.  162.920).
    (b) Excluding where the CAQH CORE rules reference and pertain to 
acknowledgements and CORE certification.

[76 FR 40496, July 8, 2011]



           Subpart M_Referral Certification and Authorization



Sec.  162.1301  Referral certification and authorization transaction.

    The referral certification and authorization transaction is any of 
the following transmissions:
    (a) A request from a health care provider to a health plan for the 
review of health care to obtain an authorization for the health care.
    (b) A request from a health care provider to a health plan to obtain 
authorization for referring an individual to another health care 
provider.
    (c) A response from a health plan to a health care provider to a 
request described in paragraph (a) or paragraph (b) of this section.

[74 FR 3326, Jan. 16, 2009]



Sec.  162.1302  Standards for referral certification and authorization
transaction.

    The Secretary adopts the following standards for the referral 
certification and authorization transaction:
    (a) For the period from October 16, 2003 through March 16, 2009:
    (1) Retail pharmacy drug referral certification and authorization. 
The NCPDP Telecommunication Standard Implementation Guide, Version 5, 
Release 1 (Version 5.1), September 1999, and equivalent NCPDP Batch 
Standard Batch Implementation Guide, Version 1, Release 1 (Version 1.1), 
January 2000, supporting Telecommunications Standard Implementation 
Guide, Version 5, Release 1 (Version 5.1) for the NCPDP Data Record in 
the Detail Data Record. (Incorporated by reference in Sec.  162.920).
    (2) Dental, professional, and institutional referral certification 
and authorization. The ASC X12N 278--Health Care Services Review--
Request for Review and Response, Version 4010, May 2000, Washington 
Publishing Company, 004010X094 and Addenda to Health Care Services 
Review--Request for Review and Response, Version 4010, October 2002, 
Washington Publishing Company, 004010X094A1. (Incorporated by reference 
in Sec.  162.920).
    (b) For the period from March 17, 2009 through December 31, 2011 
both--
    (1) The standards identified in paragraph (a) of this section; and
    (2)(i) Retail pharmacy drugs. The Telecommunication Standard 
Implementation Guide Version D, Release 0 (Version D.0), August 2007, 
and equivalent Batch Standard Implementation Guide, Version 1, Release 2 
(Version 1.2), National Council for Prescription Drug Programs. 
(Incorporated by reference in Sec.  162.920.)
    (ii) Dental, professional, and institutional request for review and 
response. The ASC X12 Standards for Electronic Data Interchange 
Technical Report Type 3--Health Care Services Review--Request for Review 
and Response (278), May 2006, ASC X12N/005010X217, and Errata to Health 
Care Services Review---Request for Review and Response (278), ASC X12 
Standards for Electronic Data Interchange Technical Report Type 3, April 
2008, ASC X12N/005010X217E1. (Incorporated by reference in Sec.  
162.920.)
    (c) For the period on and after January 1, 2012, the standards 
identified in paragraph (b)(2) of this section.
    (d) For the period on and after September 21, 2020, the Quantity 
Prescribed (460-ET) field, as set forth in the Telecommunication 
Standard Implementation Guide, Version D, Release 0 (Version D.0), 
August 2007 and equivalent Batch Standard Implementation Guide, Version 
1, Release 2 (Version 1.2), National Council for Prescription Drug 
Programs, must be treated as required where the transmission meets both 
of the following:
    (1) Is for a Schedule II drug, as defined in 21 CFR 1308.12.
    (2) Uses the standard identified in paragraph (b)(2)(i) of this 
section.

[68 FR 8398, Feb. 20, 2003, as amended at 74 FR 3326, Jan. 16, 2009; 85 
FR 4242, Jan. 24, 2020]

[[Page 530]]



                   Subpart N_Health Care Claim Status



Sec.  162.1401  Health care claim status transaction.

    The health care claim status transaction is the transmission of 
either of the following:
    (a) An inquiry from a health care provider to a health plan to 
determine the status of a health care claim.
    (b) A response from a health plan to a health care provider about 
the status of a health care claim.

[74 FR 3326, Jan. 16, 2009]



Sec.  162.1402  Standards for health care claim status transaction.

    The Secretary adopts the following standards for the health care 
claim status transaction:
    (a) For the period from October 16, 2003 through March 16, 2009: The 
ASC X12N-276/277 Health Care Claim Status Request and Response, Version 
4010, May 2000, Washington Publishing Company, 004010X093 and Addenda to 
Health Care Claim Status Request and Response, Version 4010, October 
2002, Washington Publishing Company, 004010X093A1. (Incorporated by 
reference in Sec.  162.920.)
    (b) For the period from March 17, 2009 through December 31, 2011, 
both:
    (1) The standard identified in paragraph (a) of this section; and
    (2) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim Status Request and Response (276/277), 
August 2006, ASC X12N/005010X212, and Errata to Health Care Claim Status 
Request and Response (276/277), ASC X12 Standards for Electronic Data 
Interchange Technical Report Type 3, April 2008, ASC X12N/005010X212E1. 
(Incorporated by reference in Sec.  162.920.)
    (c) For the period on and after January 1, 2012, the standard 
identified in paragraph (b)(2) of this section.

[74 FR 3326, Jan. 16, 2009]



Sec.  162.1403  Operating rules for health care claim status transaction.

    On and after January 1, 2013, the Secretary adopts the following:
    (a) Except as specified in paragraph (b) of this section, the 
following CAQH CORE Phase II operating rules (updated for Version 5010) 
for the health care claim status transaction:
    (1) Phase II CORE 250: Claim Status Rule, version 2.1.0, March 2011, 
and CORE v5010 Master Companion Guide, 00510, 1.2, March 2011. 
(Incorporated by reference in Sec.  162.920).
    (2) Phase II CORE 270: Connectivity Rule, version 2.2.0, March 2011. 
(Incorporated by reference in Sec.  162.920).
    (b) Excluding where the CAQH CORE rules reference and pertain to 
acknowledgements and CORE certification.

[76 FR 40496, July 8, 2011]



         Subpart O_Enrollment and Disenrollment in a Health Plan



Sec.  162.1501  Enrollment and disenrollment in a health plan transaction.

    The enrollment and disenrollment in a health plan transaction is the 
transmission of subscriber enrollment information from the sponsor of 
the insurance coverage, benefits, or policy, to a health plan to 
establish or terminate insurance coverage.

[74 FR 3327, Jan. 16, 2009]



Sec.  162.1502  Standards for enrollment and disenrollment in a health
plan transaction.

    The Secretary adopts the following standards for enrollment and 
disenrollment in a health plan transaction.
    (a) For the period from October 16, 2003 through March 16, 2009: ASC 
X12N 834--Benefit Enrollment and Maintenance, Version 4010, May 2000, 
Washington Publishing Company, 004010X095 and Addenda to Benefit 
Enrollment and Maintenance, Version 4010, October 2002, Washington 
Publishing Company, 004010X095A1. (Incorporated by reference in Sec.  
162.920.)
    (b) For the period from March 17, 2009 through December 31, 2011, 
both:
    (1) The standard identified in paragraph (a) of this section; and
    (2) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Benefit Enrollment and Maintenance (834), August 2006, 
ASC X12N/005010X220 (Incorporated by reference in Sec.  162.920)

[[Page 531]]

    (c) For the period on and after January 1, 2012, the standard 
identified in paragraph (b)(2) of this section.

[74 FR 3327, Jan. 16, 2009]



 Subpart P_Health Care Electronic Funds Transfers (EFT) and Remittance 
                                 Advice



Sec.  162.1601  Health care electronic funds transfers (EFT) and 
remittance advice transaction.

    The health care electronic funds transfers (EFT) and remittance 
advice transaction is the transmission of either of the following for 
health care:
    (a) The transmission of any of the following from a health plan to a 
health care provider:
    (1) Payment.
    (2) Information about the transfer of funds.
    (3) Payment processing information.
    (b) The transmission of either of the following from a health plan 
to a health care provider:
    (1) Explanation of benefits.
    (2) Remittance advice.

[65 FR 50367, Aug. 17, 2000, as amended at 77 FR 1590, Jan. 10, 2012; 77 
FR 48043, Aug. 10, 2012]



Sec.  162.1602  Standards for health care electronic funds transfers
(EFT) and remittance advice transaction.

    The Secretary adopts the following standards:
    (a) For the period from October 16, 2003 through March 16, 2009: 
Health care claims and remittance advice. The ASC X12N 835--Health Care 
Claim Payment/Advice, Version 4010, May 2000, Washington Publishing 
Company, 004010X091, and Addenda to Health Care Claim Payment/Advice, 
Version 4010, October 2002, Washington Publishing Company, 004010X091A1. 
(Incorporated by reference in Sec.  162.920.)
    (b) For the period from March 17, 2009 through December 31, 2011, 
both of the following standards:
    (1) The standard identified in paragraph (a) of this section.
    (2) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim Payment/Advice (835), April 2006, ASC 
X12N/005010X221. (Incorporated by reference in Sec.  162.920.)
    (c) For the period from January 1, 2012 through December 31, 2013, 
the standard identified in paragraph (b)(2) of this section.
    (d) For the period on and after January 1, 2014, the following 
standards:
    (1) Except when transmissions as described in Sec.  162.1601(a) and 
(b) are contained within the same transmission, for Stage 1 Payment 
Initiation transmissions described in Sec.  162.1601(a), all of the 
following standards:
    (i) The National Automated Clearing House Association (NACHA) 
Corporate Credit or Deposit Entry with Addenda Record (CCD+) 
implementation specifications as contained in the 2011 NACHA Operating 
Rules & Guidelines, A Complete Guide to the Rules Governing the ACH 
Network as follows (incorporated by reference in Sec.  162.920)--
    (A) NACHA Operating Rules, Appendix One: ACH File Exchange 
Specifications; and
    (B) NACHA Operating Rules, Appendix Three: ACH Record Format 
Specifications, Subpart 3.1.8 Sequence of Records for CCD Entries.
    (ii) For the CCD Addenda Record (``7''), field 3, of the standard 
identified in 1602(d)(1)(i), the Accredited Standards Committee (ASC) 
X12 Standards for Electronic Data Interchange Technical Report Type 3, 
``Health Care Claim Payment/Advice (835), April 2006: Section 2.4: 835 
Segment Detail: ``TRN Reassociation Trace Number,'' Washington 
Publishing Company, 005010X221 (Incorporated by reference in Sec.  
162.920).
    (2) For transmissions described in Sec.  162.1601(b), including when 
transmissions as described in Sec.  162.1601(a) and (b) are contained 
within the same transmission, the ASC X12 Standards for Electronic Data 
Interchange Technical Report Type 3, ``Health Care Claim Payment/Advice 
(835), April 2006, ASC X12N/005010X221. (Incorporated by reference in 
Sec.  162.920).

[77 FR 1590, Jan. 10, 2012]



Sec.  162.1603  Operating rules for health care electronic funds
transfers (EFT) and remittance advice transaction.

    On and after January 1, 2014, the Secretary adopts the following for 
the

[[Page 532]]

health care electronic funds transfers (EFT) and remittance advice 
transaction:
    (a) The Phase III CORE EFT & ERA Operating Rule Set, Approved June 
2012 (Incorporated by reference in Sec.  162.920) which includes the 
following rules:
    (1) Phase III CORE 380 EFT Enrollment Data Rule, version 3.0.0, June 
2012.
    (2) Phase III CORE 382 ERA Enrollment Data Rule, version 3.0.0, June 
2012.
    (3) Phase III 360 CORE Uniform Use of CARCs and RARCs (835) Rule, 
version 3.0.0, June 2012.
    (4) CORE-required Code Combinations for CORE-defined Business 
Scenarios for the Phase III CORE 360 Uniform Use of Claim Adjustment 
Reason Codes and Remittance Advice Remark Codes (835) Rule, version 
3.0.0, June 2012.
    (5) Phase III CORE 370 EFT & ERA Reassociation (CCD+/835) Rule, 
version 3.0.0, June 2012.
    (6) Phase III CORE 350 Health Care Claim Payment/Advice (835) 
Infrastructure Rule, version 3.0.0, June 2012, except Requirement 4.2 
titled ``Health Care Claim Payment/Advice Batch Acknowledgement 
Requirements''.
    (b) ACME Health Plan, CORE v5010 Master Companion Guide Template, 
005010, 1.2, March 2011 (incorporated by reference in Sec.  162.920), as 
required by the Phase III CORE 350 Health Care Claim Payment/Advice 
(835) Infrastructure Rule, version 3.0.0, June 2012.

[77 FR 48043, Aug. 10, 2012]



                 Subpart Q_Health Plan Premium Payments



Sec.  162.1701  Health plan premium payments transaction.

    The health plan premium payment transaction is the transmission of 
any of the following from the entity that is arranging for the provision 
of health care or is providing health care coverage payments for an 
individual to a health plan:
    (a) Payment.
    (b) Information about the transfer of funds.
    (c) Detailed remittance information about individuals for whom 
premiums are being paid.
    (d) Payment processing information to transmit health care premium 
payments including any of the following:
    (1) Payroll deductions.
    (2) Other group premium payments.
    (3) Associated group premium payment information.



Sec.  162.1702  Standards for health plan premium payments transaction.

    The Secretary adopts the following standards for the health plan 
premium payments transaction:
    (a) For the period from October 16, 2003 through March 16, 2009: The 
ASC X12N 820--Payroll Deducted and Other Group Premium Payment for 
Insurance Products, Version 4010, May 2000, Washington Publishing 
Company, 004010X061, and Addenda to Payroll Deducted and Other Group 
Premium Payment for Insurance Products, Version 4010, October 2002, 
Washington Publishing Company, 004010X061A1. (Incorporated by reference 
in Sec.  162.920.)
    (b) For the period from March 17, 2009 through December 31, 2011, 
both:
    (1) The standard identified in paragraph (a) of this section, and
    (2) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Payroll Deducted and Other Group Premium Payment for 
Insurance Products (820), February 2007, ASC X12N/005010X218. 
(Incorporated by reference in Sec.  162.920.)
    (c) For the period on and after January 1, 2012, the standard 
identified in paragraph (b)(2) of this section.

[74 FR 3327, Jan. 16, 2009]



                   Subpart R_Coordination of Benefits



Sec.  162.1801  Coordination of benefits transaction.

    The coordination of benefits transaction is the transmission from 
any entity to a health plan for the purpose of determining the relative 
payment responsibilities of the health plan, of either of the following 
for health care:
    (a) Claims.
    (b) Payment information.

[[Page 533]]



Sec.  162.1802  Standards for coordination of benefits information
transaction.

    The Secretary adopts the following standards for the coordination of 
benefits information transaction.
    (a) For the period from October 16, 2003 through March 16, 2009:
    (1) Retail pharmacy drug claims. The National Council for 
Prescription Drug Programs Telecommunication Standard Implementation 
Guide, Version 5, Release 1 (Version 5.1), September 1999, and 
equivalent NCPDP Batch Standard Batch Implementation Guide, Version 1, 
Release 1 (Version 1.1), January 2000, supporting Telecommunications 
Standard Implementation Guide, Version 5, Release 1 (Version 5.1) for 
the NCPDP Data Record in the Detail Data Record. (Incorporated by 
reference in Sec.  162.920).
    (2) Dental health care claims. The ASC X12N 837--Health Care Claim: 
Dental, Version 4010, May 2000, Washington Publishing Company, 
004010X097 and Addenda to Health Care Claim: Dental, Version 4010, 
October 2002, Washington Publishing Company, 004010X097A1. (Incorporated 
by reference in Sec.  162.920).
    (3) Professional health care claims. The ASC X12N 837--Health Care 
Claim: Professional, Volumes 1 and 2, Version 4010, May 2000, Washington 
Publishing Company, 004010X098 and Addenda to Health Care Claim: 
Professional, Volumes 1 and 2, Version 4010, October 2002, Washington 
Publishing Company, 004010X098A1. (Incorporated by reference in Sec.  
162.920).
    (4) Institutional health care claims. The ASC X12N 837--Health Care 
Claim: Institutional, Volumes 1 and 2, Version 4010, May 2000, 
Washington Publishing Company, 004010X096 and Addenda to Health Care 
Claim: Institutional, Volumes 1 and 2, Version 4010, October 2002, 
Washington Publishing Company, 004010X096A1. (Incorporated by reference 
in Sec.  162.920).
    (b) For the period from March 17, 2009 through December 31, 2011, 
both:
    (1) The standards identified in paragraph (a) of this section; and
    (2)(i) Retail pharmacy drug claims. The Telecommunication Standard 
Implementation Guide, Version D, Release 0 (Version D.0), August 2007, 
and equivalent Batch Standard Implementation Guide, Version 1, Release 2 
(Version 1.2), National Council for Prescription Drug Programs. 
(Incorporated by reference in Sec.  162.920.)
    (ii) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim: Dental (837), May 2006, ASC X12N/
005010X224, and Type 1 Errata to Health Care Claim: Dental (837), ASC 
X12 Standards for Electronic Date Interchange Technical Report Type 3, 
October 2007, ASC X12N/005010X224A1. (Incorporated by reference in Sec.  
162.920.)
    (iii) The ASC X12 Standards for Electronic Data Interchange 
Technical Report Type 3--Health Care Claim: Professional (837), May 
2006, ASC X12N/005010X222. (Incorporated by reference in Sec.  162.920.)
    (iv) The ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3--Health Care Claim: Institutional (837), May 2006, ASC 
X12N/005010X223, and Type 1 Errata to Health Care Claim: Institutional 
(837), ASC X12 Standards for Electronic Data Interchange Technical 
Report Type 3, October 2007, ASC X12N/005010X223A1. (Incorporated by 
reference in Sec.  162.920.)
    (c) For the period on and after January 1, 2012, the standards 
identified in paragraph (b)(2) of this section.
    (d) For the period on and after September 21, 2020, the Quantity 
Prescribed (460-ET) field, as set forth in the Telecommunication 
Standard Implementation Guide, Version D, Release 0 (Version D.0), 
August 2007 and equivalent Batch Standard Implementation Guide, Version 
1, Release 2 (Version 1.2), National Council for Prescription Drug 
Programs, must be treated as required where the transmission meets both 
of the following:
    (1) Is for a Schedule II drug, as defined in 21 CFR 1308.12.
    (2) Uses the standard identified in paragraph (b)(2)(i) of this 
section.

[68 FR 8399, Feb. 20, 2003, as amended at 74 FR 3327, Jan. 16, 2009; 85 
FR 4242, Jan. 24, 2020]



                 Subpart S_Medicaid Pharmacy Subrogation

    Source: 74 FR 3328, Jan. 16, 2009, unless otherwise noted.

[[Page 534]]



Sec.  162.1901  Medicaid pharmacy subrogation transaction.

    The Medicaid pharmacy subrogation transaction is the transmission of 
a claim from a Medicaid agency to a payer for the purpose of seeking 
reimbursement from the responsible health plan for a pharmacy claim the 
State has paid on behalf of a Medicaid recipient.



Sec.  162.1902  Standard for Medicaid pharmacy subrogation transaction.

    The Secretary adopts the Batch Standard Medicaid Subrogation 
Implementation Guide, Version 3, Release 0 (Version 3.0), July 2007, 
National Council for Prescription Drug Programs, as referenced in Sec.  
162.1902 (Incorporated by reference at Sec.  162.920):
    (a) For the period on and after January 1, 2012, for covered 
entities that are not small health plans;
    (b) For the period on and after January 1, 2013 for small health 
plans.

                           PART 163 [RESERVED]



PART 164_SECURITY AND PRIVACY--Table of Contents



                      Subpart A_General Provisions

Sec.
164.102 Statutory basis.
164.103 Definitions.
164.104 Applicability.
164.105 Organizational requirements.
164.106 Relationship to other parts.

Subpart B [Reserved]

Subpart C_Security Standards for the Protection of Electronic Protected 
                           Health Information

164.302 Applicability.
164.304 Definitions.
164.306 Security standards: General rules.
164.308 Administrative safeguards.
164.310 Physical safeguards.
164.312 Technical safeguards.
164.314 Organizational requirements.
164.316 Policies and procedures and documentation requirements.
164.318 Compliance dates for the initial implementation of the security 
          standards.

Appendix A to Subpart C of Part 164--Security Standards: Matrix

  Subpart D_Notification in the Case of Breach of Unsecured Protected 
                           Health Information

164.400 Applicability.
164.402 Definitions.
164.404 Notification to individuals.
164.406 Notification to the media.
164.408 Notification to the Secretary.
164.410 Notification by a business associate.
164.412 Law enforcement delay.
164.414 Administrative requirements and burden of proof.

    Subpart E_Privacy of Individually Identifiable Health Information

164.500 Applicability.
164.501 Definitions.
164.502 Uses and disclosures of protected health information: General 
          rules.
164.504 Uses and disclosures: Organizational requirements.
164.506 Uses and disclosures to carry out treatment, payment, or health 
          care operations.
164.508 Uses and disclosures for which an authorization is required.
164.510 Uses and disclosures requiring an opportunity for the individual 
          to agree or to object.
164.512 Uses and disclosures for which an authorization or opportunity 
          to agree or object is not required.
164.514 Other requirements relating to uses and disclosures of protected 
          health information.
164.520 Notice of privacy practices for protected health information.
164.522 Rights to request privacy protection for protected health 
          information.
164.524 Access of individuals to protected health information.
164.526 Amendment of protected health information.
164.528 Accounting of disclosures of protected health information.
164.530 Administrative requirements.
164.532 Transition provisions.
164.534 Compliance dates for initial implementation of the privacy 
          standards.

    Authority: 42 U.S.C. 1302(a); 42 U.S.C. 1320d-1320d-9; sec. 264, 
Pub. L. 104-191, 110 Stat. 2033-2034 (42 U.S.C. 1320d-2(note)); and 
secs. 13400-13424, Pub. L. 111-5, 123 Stat. 258-279.

    Source: 65 FR 82802, Dec. 28, 2000, unless otherwise noted.

[[Page 535]]



                      Subpart A_General Provisions



Sec.  164.102  Statutory basis.

    The provisions of this part are adopted pursuant to the Secretary's 
authority to prescribe standards, requirements, and implementation 
specifications under part C of title XI of the Act, section 264 of 
Public Law 104-191, and sections 13400-13424 of Public Law 111-5.

[78 FR 5692, Jan. 25, 2013]



Sec.  164.103  Definitions.

    As used in this part, the following terms have the following 
meanings:
    Common control exists if an entity has the power, directly or 
indirectly, significantly to influence or direct the actions or policies 
of another entity.
    Common ownership exists if an entity or entities possess an 
ownership or equity interest of 5 percent or more in another entity.
    Covered functions means those functions of a covered entity the 
performance of which makes the entity a health plan, health care 
provider, or health care clearinghouse.
    Health care component means a component or combination of components 
of a hybrid entity designated by the hybrid entity in accordance with 
Sec.  164.105(a)(2)(iii)(D).
    Hybrid entity means a single legal entity:
    (1) That is a covered entity;
    (2) Whose business activities include both covered and non-covered 
functions; and
    (3) That designates health care components in accordance with 
paragraph Sec.  164.105(a)(2)(iii)(D).
    Law enforcement official means an officer or employee of any agency 
or authority of the United States, a State, a territory, a political 
subdivision of a State or territory, or an Indian tribe, who is 
empowered by law to:
    (1) Investigate or conduct an official inquiry into a potential 
violation of law; or
    (2) Prosecute or otherwise conduct a criminal, civil, or 
administrative proceeding arising from an alleged violation of law.
    Plan sponsor is defined as defined at section 3(16)(B) of ERISA, 29 
U.S.C. 1002(16)(B).
    Required by law means a mandate contained in law that compels an 
entity to make a use or disclosure of protected health information and 
that is enforceable in a court of law. Required by law includes, but is 
not limited to, court orders and court-ordered warrants; subpoenas or 
summons issued by a court, grand jury, a governmental or tribal 
inspector general, or an administrative body authorized to require the 
production of information; a civil or an authorized investigative 
demand; Medicare conditions of participation with respect to health care 
providers participating in the program; and statutes or regulations that 
require the production of information, including statutes or regulations 
that require such information if payment is sought under a government 
program providing public benefits.

[68 FR 8374, Feb. 20, 2003, as amended at 74 FR 42767, Aug. 24, 2009; 78 
FR 34266, June 7, 2013]



Sec.  164.104  Applicability.

    (a) Except as otherwise provided, the standards, requirements, and 
implementation specifications adopted under this part apply to the 
following entities:
    (1) A health plan.
    (2) A health care clearinghouse.
    (3) A health care provider who transmits any health information in 
electronic form in connection with a transaction covered by this 
subchapter.
    (b) Where provided, the standards, requirements, and implementation 
specifications adopted under this part apply to a business associate.

[68 FR 8375, Feb. 20, 2003, as amended at 78 FR 5692, Jan. 25, 2013]



Sec.  164.105  Organizational requirements.

    (a)(1) Standard: Health care component. If a covered entity is a 
hybrid entity, the requirements of this part, other than the 
requirements of this section, Sec. Sec.  164.314, and 164.504, apply 
only to the health care component(s) of the entity, as specified in this 
section.
    (2) Implementation specifications:

[[Page 536]]

    (i) Application of other provisions. In applying a provision of this 
part, other than the requirements of this section, Sec. Sec.  164.314, 
and 164.504, to a hybrid entity:
    (A) A reference in such provision to a ``covered entity'' refers to 
a health care component of the covered entity;
    (B) A reference in such provision to a ``health plan,'' ``covered 
health care provider,'' or ``health care clearinghouse,'' refers to a 
health care component of the covered entity if such health care 
component performs the functions of a health plan, health care provider, 
or health care clearinghouse, as applicable;
    (C) A reference in such provision to ``protected health 
information'' refers to protected health information that is created or 
received by or on behalf of the health care component of the covered 
entity; and
    (D) A reference in such provision to ``electronic protected health 
information'' refers to electronic protected health information that is 
created, received, maintained, or transmitted by or on behalf of the 
health care component of the covered entity.
    (ii) Safeguard requirements. The covered entity that is a hybrid 
entity must ensure that a health care component of the entity complies 
with the applicable requirements of this part. In particular, and 
without limiting this requirement, such covered entity must ensure that:
    (A) Its health care component does not disclose protected health 
information to another component of the covered entity in circumstances 
in which subpart E of this part would prohibit such disclosure if the 
health care component and the other component were separate and distinct 
legal entities;
    (B) Its health care component protects electronic protected health 
information with respect to another component of the covered entity to 
the same extent that it would be required under subpart C of this part 
to protect such information if the health care component and the other 
component were separate and distinct legal entities;
    (C) If a person performs duties for both the health care component 
in the capacity of a member of the workforce of such component and for 
another component of the entity in the same capacity with respect to 
that component, such workforce member must not use or disclose protected 
health information created or received in the course of or incident to 
the member's work for the health care component in a way prohibited by 
subpart E of this part.
    (iii) Responsibilities of the covered entity. A covered entity that 
is a hybrid entity has the following responsibilities:
    (A) For purposes of subpart C of part 160 of this subchapter, 
pertaining to compliance and enforcement, the covered entity has the 
responsibility of complying with this part.
    (B) The covered entity is responsible for complying with Sec. Sec.  
164.316(a) and 164.530(i), pertaining to the implementation of policies 
and procedures to ensure compliance with applicable requirements of this 
part, including the safeguard requirements in paragraph (a)(2)(ii) of 
this section.
    (C) The covered entity is responsible for complying with Sec. Sec.  
164.314 and 164.504 regarding business associate arrangements and other 
organizational requirements.
    (D) The covered entity is responsible for designating the components 
that are part of one or more health care components of the covered 
entity and documenting the designation in accordance with paragraph (c) 
of this section, provided that, if the covered entity designates one or 
more health care components, it must include any component that would 
meet the definition of a covered entity or business associate if it were 
a separate legal entity. Health care component(s) also may include a 
component only to the extent that it performs covered functions.
    (b)(1) Standard: Affiliated covered entities. Legally separate 
covered entities that are affiliated may designate themselves as a 
single covered entity for purposes of this part.
    (2) Implementation specifications--(i) Requirements for designation 
of an affiliated covered entity. (A) Legally separate covered entities 
may designate themselves (including any health care component of such 
covered entity) as a single affiliated covered entity, for purposes of 
this part, if all of the covered

[[Page 537]]

entities designated are under common ownership or control.
    (B) The designation of an affiliated covered entity must be 
documented and the documentation maintained as required by paragraph (c) 
of this section.
    (ii) Safeguard requirements. An affiliated covered entity must 
ensure that it complies with the applicable requirements of this part, 
including, if the affiliated covered entity combines the functions of a 
health plan, health care provider, or health care clearinghouse, 
Sec. Sec.  164.308(a)(4)(ii)(A) and 164.504(g), as applicable.
    (c)(1) Standard: Documentation. A covered entity must maintain a 
written or electronic record of a designation as required by paragraphs 
(a) or (b) of this section.
    (2) Implementation specification: Retention period. A covered entity 
must retain the documentation as required by paragraph (c)(1) of this 
section for 6 years from the date of its creation or the date when it 
last was in effect, whichever is later.

[68 FR 8375, Feb. 20, 2003, as amended at 78 FR 5692, Jan. 25, 2013]



Sec.  164.106  Relationship to other parts.

    In complying with the requirements of this part, covered entities 
and, where provided, business associates, are required to comply with 
the applicable provisions of parts 160 and 162 of this subchapter.

[78 FR 5693, Jan. 25, 2013]

Subpart B [Reserved]



Subpart C_Security Standards for the Protection of Electronic Protected 
                           Health Information

    Authority: 42 U.S.C. 1320d-2 and 1320d-4; sec. 13401, Pub. L. 111-5, 
123 Stat. 260.

    Source: 68 FR 8376, Feb. 20, 2003, unless otherwise noted.



Sec.  164.302  Applicability.

    A covered entity or business associate must comply with the 
applicable standards, implementation specifications, and requirements of 
this subpart with respect to electronic protected health information of 
a covered entity.

[78 FR 5693, Jan. 25, 2013]



Sec.  164.304  Definitions.

    As used in this subpart, the following terms have the following 
meanings:
    Access means the ability or the means necessary to read, write, 
modify, or communicate data/information or otherwise use any system 
resource. (This definition applies to ``access'' as used in this 
subpart, not as used in subparts D or E of this part.)
    Administrative safeguards are administrative actions, and policies 
and procedures, to manage the selection, development, implementation, 
and maintenance of security measures to protect electronic protected 
health information and to manage the conduct of the covered entity's or 
business associate's workforce in relation to the protection of that 
information.
    Authentication means the corroboration that a person is the one 
claimed.
    Availability means the property that data or information is 
accessible and useable upon demand by an authorized person.
    Confidentiality means the property that data or information is not 
made available or disclosed to unauthorized persons or processes.
    Encryption means the use of an algorithmic process to transform data 
into a form in which there is a low probability of assigning meaning 
without use of a confidential process or key.
    Facility means the physical premises and the interior and exterior 
of a building(s).
    Information system means an interconnected set of information 
resources under the same direct management control that shares common 
functionality. A system normally includes hardware, software, 
information, data, applications, communications, and people.
    Integrity means the property that data or information have not been 
altered or destroyed in an unauthorized manner.
    Malicious software means software, for example, a virus, designed to 
damage or disrupt a system.

[[Page 538]]

    Password means confidential authentication information composed of a 
string of characters.
    Physical safeguards are physical measures, policies, and procedures 
to protect a covered entity's or business associate's electronic 
information systems and related buildings and equipment, from natural 
and environmental hazards, and unauthorized intrusion.
    Security or Security measures encompass all of the administrative, 
physical, and technical safeguards in an information system.
    Security incident means the attempted or successful unauthorized 
access, use, disclosure, modification, or destruction of information or 
interference with system operations in an information system.
    Technical safeguards means the technology and the policy and 
procedures for its use that protect electronic protected health 
information and control access to it.
    User means a person or entity with authorized access.
    Workstation means an electronic computing device, for example, a 
laptop or desktop computer, or any other device that performs similar 
functions, and electronic media stored in its immediate environment.

[68 FR 8376, Feb. 20, 2003, as amended at 74 FR 42767, Aug. 24, 2009; 78 
FR 5693, Jan. 25, 2013]



Sec.  164.306  Security standards: General rules.

    (a) General requirements. Covered entities and business associates 
must do the following:
    (1) Ensure the confidentiality, integrity, and availability of all 
electronic protected health information the covered entity or business 
associate creates, receives, maintains, or transmits.
    (2) Protect against any reasonably anticipated threats or hazards to 
the security or integrity of such information.
    (3) Protect against any reasonably anticipated uses or disclosures 
of such information that are not permitted or required under subpart E 
of this part.
    (4) Ensure compliance with this subpart by its workforce.
    (b) Flexibility of approach. (1) Covered entities and business 
associates may use any security measures that allow the covered entity 
or business associate to reasonably and appropriately implement the 
standards and implementation specifications as specified in this 
subpart.
    (2) In deciding which security measures to use, a covered entity or 
business associate must take into account the following factors:
    (i) The size, complexity, and capabilities of the covered entity or 
business associate.
    (ii) The covered entity's or the business associate's technical 
infrastructure, hardware, and software security capabilities.
    (iii) The costs of security measures.
    (iv) The probability and criticality of potential risks to 
electronic protected health information.
    (c) Standards. A covered entity or business associate must comply 
with the applicable standards as provided in this section and in 
Sec. Sec.  164.308, 164.310, 164.312, 164.314 and 164.316 with respect 
to all electronic protected health information.
    (d) Implementation specifications. In this subpart:
    (1) Implementation specifications are required or addressable. If an 
implementation specification is required, the word ``Required'' appears 
in parentheses after the title of the implementation specification. If 
an implementation specification is addressable, the word ``Addressable'' 
appears in parentheses after the title of the implementation 
specification.
    (2) When a standard adopted in Sec.  164.308, Sec.  164.310, Sec.  
164.312, Sec.  164.314, or Sec.  164.316 includes required 
implementation specifications, a covered entity or business associate 
must implement the implementation specifications.
    (3) When a standard adopted in Sec.  164.308, Sec.  164.310, Sec.  
164.312, Sec.  164.314, or Sec.  164.316 includes addressable 
implementation specifications, a covered entity or business associate 
must--
    (i) Assess whether each implementation specification is a reasonable 
and appropriate safeguard in its environment, when analyzed with 
reference to the likely contribution to protecting electronic protected 
health information; and

[[Page 539]]

    (ii) As applicable to the covered entity or business associate--
    (A) Implement the implementation specification if reasonable and 
appropriate; or
    (B) If implementing the implementation specification is not 
reasonable and appropriate--
    $(1) Document why it would not be reasonable and appropriate to 
implement the implementation specification; and
    $(2) Implement an equivalent alternative measure if reasonable and 
appropriate.
    (e) Maintenance. A covered entity or business associate must review 
and modify the security measures implemented under this subpart as 
needed to continue provision of reasonable and appropriate protection of 
electronic protected health information, and update documentation of 
such security measures in accordance with Sec.  164.316(b)(2)(iii).

[68 FR 8376, Feb. 20, 2003; 68 FR 17153, Apr. 8, 2003; 78 FR 5693, Jan. 
25, 2013]



Sec.  164.308  Administrative safeguards.

    (a) A covered entity or business associate must, in accordance with 
Sec.  164.306:
    (1)(i) Standard: Security management process. Implement policies and 
procedures to prevent, detect, contain, and correct security violations.
    (ii) Implementation specifications:
    (A) Risk analysis (Required). Conduct an accurate and thorough 
assessment of the potential risks and vulnerabilities to the 
confidentiality, integrity, and availability of electronic protected 
health information held by the covered entity or business associate.
    (B) Risk management (Required). Implement security measures 
sufficient to reduce risks and vulnerabilities to a reasonable and 
appropriate level to comply with Sec.  164.306(a).
    (C) Sanction policy (Required). Apply appropriate sanctions against 
workforce members who fail to comply with the security policies and 
procedures of the covered entity or business associate.
    (D) Information system activity review (Required). Implement 
procedures to regularly review records of information system activity, 
such as audit logs, access reports, and security incident tracking 
reports.
    (2) Standard: Assigned security responsibility. Identify the 
security official who is responsible for the development and 
implementation of the policies and procedures required by this subpart 
for the covered entity or business associate.
    (3)(i) Standard: Workforce security. Implement policies and 
procedures to ensure that all members of its workforce have appropriate 
access to electronic protected health information, as provided under 
paragraph (a)(4) of this section, and to prevent those workforce members 
who do not have access under paragraph (a)(4) of this section from 
obtaining access to electronic protected health information.
    (ii) Implementation specifications:
    (A) Authorization and/or supervision (Addressable). Implement 
procedures for the authorization and/or supervision of workforce members 
who work with electronic protected health information or in locations 
where it might be accessed.
    (B) Workforce clearance procedure (Addressable). Implement 
procedures to determine that the access of a workforce member to 
electronic protected health information is appropriate.
    (C) Termination procedures (Addressable). Implement procedures for 
terminating access to electronic protected health information when the 
employment of, or other arrangement with, a workforce member ends or as 
required by determinations made as specified in paragraph (a)(3)(ii)(B) 
of this section.
    (4)(i) Standard: Information access management. Implement policies 
and procedures for authorizing access to electronic protected health 
information that are consistent with the applicable requirements of 
subpart E of this part.
    (ii) Implementation specifications:
    (A) Isolating health care clearinghouse functions (Required). If a 
health care clearinghouse is part of a larger organization, the 
clearinghouse must implement policies and procedures that protect the 
electronic protected health information of the clearinghouse from 
unauthorized access by the larger organization.

[[Page 540]]

    (B) Access authorization (Addressable). Implement policies and 
procedures for granting access to electronic protected health 
information, for example, through access to a workstation, transaction, 
program, process, or other mechanism.
    (C) Access establishment and modification (Addressable). Implement 
policies and procedures that, based upon the covered entity's or the 
business associate's access authorization policies, establish, document, 
review, and modify a user's right of access to a workstation, 
transaction, program, or process.
    (5)(i) Standard: Security awareness and training. Implement a 
security awareness and training program for all members of its workforce 
(including management).
    (ii) Implementation specifications. Implement:
    (A) Security reminders (Addressable). Periodic security updates.
    (B) Protection from malicious software (Addressable). Procedures for 
guarding against, detecting, and reporting malicious software.
    (C) Log-in monitoring (Addressable). Procedures for monitoring log-
in attempts and reporting discrepancies.
    (D) Password management (Addressable). Procedures for creating, 
changing, and safeguarding passwords.
    (6)(i) Standard: Security incident procedures. Implement policies 
and procedures to address security incidents.
    (ii) Implementation specification: Response and reporting 
(Required). Identify and respond to suspected or known security 
incidents; mitigate, to the extent practicable, harmful effects of 
security incidents that are known to the covered entity or business 
associate; and document security incidents and their outcomes.
    (7)(i) Standard: Contingency plan. Establish (and implement as 
needed) policies and procedures for responding to an emergency or other 
occurrence (for example, fire, vandalism, system failure, and natural 
disaster) that damages systems that contain electronic protected health 
information.
    (ii) Implementation specifications:
    (A) Data backup plan (Required). Establish and implement procedures 
to create and maintain retrievable exact copies of electronic protected 
health information.
    (B) Disaster recovery plan (Required). Establish (and implement as 
needed) procedures to restore any loss of data.
    (C) Emergency mode operation plan (Required). Establish (and 
implement as needed) procedures to enable continuation of critical 
business processes for protection of the security of electronic 
protected health information while operating in emergency mode.
    (D) Testing and revision procedures (Addressable). Implement 
procedures for periodic testing and revision of contingency plans.
    (E) Applications and data criticality analysis (Addressable). Assess 
the relative criticality of specific applications and data in support of 
other contingency plan components.
    (8) Standard: Evaluation. Perform a periodic technical and 
nontechnical evaluation, based initially upon the standards implemented 
under this rule and, subsequently, in response to environmental or 
operational changes affecting the security of electronic protected 
health information, that establishes the extent to which a covered 
entity's or business associate's security policies and procedures meet 
the requirements of this subpart.
    (b)(1) Business associate contracts and other arrangements. A 
covered entity may permit a business associate to create, receive, 
maintain, or transmit electronic protected health information on the 
covered entity's behalf only if the covered entity obtains satisfactory 
assurances, in accordance with Sec.  164.314(a), that the business 
associate will appropriately safeguard the information. A covered entity 
is not required to obtain such satisfactory assurances from a business 
associate that is a subcontractor.
    (2) A business associate may permit a business associate that is a 
subcontractor to create, receive, maintain, or transmit electronic 
protected health information on its behalf only if the business 
associate obtains satisfactory assurances, in accordance with Sec.  
164.314(a), that the subcontractor will appropriately safeguard the 
information.

[[Page 541]]

    (3) Implementation specifications: Written contract or other 
arrangement (Required). Document the satisfactory assurances required by 
paragraph (b)(1) or (b)(2) of this section through a written contract or 
other arrangement with the business associate that meets the applicable 
requirements of Sec.  164.314(a).

[68 FR 8376, Feb. 20, 2003, as amended at 78 FR 5694, Jan. 25, 2013]



Sec.  164.310  Physical safeguards.

    A covered entity or business associate must, in accordance with 
Sec.  164.306:
    (a)(1) Standard: Facility access controls. Implement policies and 
procedures to limit physical access to its electronic information 
systems and the facility or facilities in which they are housed, while 
ensuring that properly authorized access is allowed.
    (2) Implementation specifications:
    (i) Contingency operations (Addressable). Establish (and implement 
as needed) procedures that allow facility access in support of 
restoration of lost data under the disaster recovery plan and emergency 
mode operations plan in the event of an emergency.
    (ii) Facility security plan (Addressable). Implement policies and 
procedures to safeguard the facility and the equipment therein from 
unauthorized physical access, tampering, and theft.
    (iii) Access control and validation procedures (Addressable). 
Implement procedures to control and validate a person's access to 
facilities based on their role or function, including visitor control, 
and control of access to software programs for testing and revision.
    (iv) Maintenance records (Addressable). Implement policies and 
procedures to document repairs and modifications to the physical 
components of a facility which are related to security (for example, 
hardware, walls, doors, and locks).
    (b) Standard: Workstation use. Implement policies and procedures 
that specify the proper functions to be performed, the manner in which 
those functions are to be performed, and the physical attributes of the 
surroundings of a specific workstation or class of workstation that can 
access electronic protected health information.
    (c) Standard: Workstation security. Implement physical safeguards 
for all workstations that access electronic protected health 
information, to restrict access to authorized users.
    (d)(1) Standard: Device and media controls. Implement policies and 
procedures that govern the receipt and removal of hardware and 
electronic media that contain electronic protected health information 
into and out of a facility, and the movement of these items within the 
facility.
    (2) Implementation specifications:
    (i) Disposal (Required). Implement policies and procedures to 
address the final disposition of electronic protected health 
information, and/or the hardware or electronic media on which it is 
stored.
    (ii) Media re-use (Required). Implement procedures for removal of 
electronic protected health information from electronic media before the 
media are made available for re-use.
    (iii) Accountability (Addressable). Maintain a record of the 
movements of hardware and electronic media and any person responsible 
therefore.
    (iv) Data backup and storage (Addressable). Create a retrievable, 
exact copy of electronic protected health information, when needed, 
before movement of equipment.

[68 FR 8376, Feb. 20, 2003, as amended at 78 FR 5694, Jan. 25, 2013]



Sec.  164.312  Technical safeguards.

    A covered entity or business associate must, in accordance with 
Sec.  164.306:
    (a)(1) Standard: Access control. Implement technical policies and 
procedures for electronic information systems that maintain electronic 
protected health information to allow access only to those persons or 
software programs that have been granted access rights as specified in 
Sec.  164.308(a)(4).
    (2) Implementation specifications:
    (i) Unique user identification (Required). Assign a unique name and/
or number for identifying and tracking user identity.
    (ii) Emergency access procedure (Required). Establish (and implement 
as needed) procedures for obtaining necessary electronic protected 
health information during an emergency.

[[Page 542]]

    (iii) Automatic logoff (Addressable). Implement electronic 
procedures that terminate an electronic session after a predetermined 
time of inactivity.
    (iv) Encryption and decryption (Addressable). Implement a mechanism 
to encrypt and decrypt electronic protected health information.
    (b) Standard: Audit controls. Implement hardware, software, and/or 
procedural mechanisms that record and examine activity in information 
systems that contain or use electronic protected health information.
    (c)(1) Standard: Integrity. Implement policies and procedures to 
protect electronic protected health information from improper alteration 
or destruction.
    (2) Implementation specification: Mechanism to authenticate 
electronic protected health information (Addressable). Implement 
electronic mechanisms to corroborate that electronic protected health 
information has not been altered or destroyed in an unauthorized manner.
    (d) Standard: Person or entity authentication. Implement procedures 
to verify that a person or entity seeking access to electronic protected 
health information is the one claimed.
    (e)(1) Standard: Transmission security. Implement technical security 
measures to guard against unauthorized access to electronic protected 
health information that is being transmitted over an electronic 
communications network.
    (2) Implementation specifications:
    (i) Integrity controls (Addressable). Implement security measures to 
ensure that electronically transmitted electronic protected health 
information is not improperly modified without detection until disposed 
of.
    (ii) Encryption (Addressable). Implement a mechanism to encrypt 
electronic protected health information whenever deemed appropriate.

[68 FR 8376, Feb. 20, 2003, as amended at 78 FR 5694, Jan. 25, 2013]



Sec.  164.314  Organizational requirements.

    (a)(1) Standard: Business associate contracts or other arrangements. 
The contract or other arrangement required by Sec.  164.308(b)(3) must 
meet the requirements of paragraph (a)(2)(i), (a)(2)(ii), or (a)(2)(iii) 
of this section, as applicable.
    (2) Implementation specifications (Required)--(i) Business associate 
contracts. The contract must provide that the business associate will--
    (A) Comply with the applicable requirements of this subpart;
    (B) In accordance with Sec.  164.308(b)(2), ensure that any 
subcontractors that create, receive, maintain, or transmit electronic 
protected health information on behalf of the business associate agree 
to comply with the applicable requirements of this subpart by entering 
into a contract or other arrangement that complies with this section; 
and
    (C) Report to the covered entity any security incident of which it 
becomes aware, including breaches of unsecured protected health 
information as required by Sec.  164.410.
    (ii) Other arrangements. The covered entity is in compliance with 
paragraph (a)(1) of this section if it has another arrangement in place 
that meets the requirements of Sec.  164.504(e)(3).
    (iii) Business associate contracts with subcontractors. The 
requirements of paragraphs (a)(2)(i) and (a)(2)(ii) of this section 
apply to the contract or other arrangement between a business associate 
and a subcontractor required by Sec.  164.308(b)(4) in the same manner 
as such requirements apply to contracts or other arrangements between a 
covered entity and business associate.
    (b)(1) Standard: Requirements for group health plans. Except when 
the only electronic protected health information disclosed to a plan 
sponsor is disclosed pursuant to Sec.  164.504(f)(1)(ii) or (iii), or as 
authorized under Sec.  164.508, a group health plan must ensure that its 
plan documents provide that the plan sponsor will reasonably and 
appropriately safeguard electronic protected health information created, 
received, maintained, or transmitted to or by the plan sponsor on behalf 
of the group health plan.
    (2) Implementation specifications (Required). The plan documents of 
the group health plan must be amended to incorporate provisions to 
require the plan sponsor to--
    (i) Implement administrative, physical, and technical safeguards 
that reasonably and appropriately protect the

[[Page 543]]

confidentiality, integrity, and availability of the electronic protected 
health information that it creates, receives, maintains, or transmits on 
behalf of the group health plan;
    (ii) Ensure that the adequate separation required by Sec.  
164.504(f)(2)(iii) is supported by reasonable and appropriate security 
measures;
    (iii) Ensure that any agent to whom it provides this information 
agrees to implement reasonable and appropriate security measures to 
protect the information; and
    (iv) Report to the group health plan any security incident of which 
it becomes aware.

[68 FR 8376, Feb. 20, 2003, as amended at 78 FR 5694, Jan. 25, 2013; 78 
FR 34266, June 7, 2013]



Sec.  164.316  Policies and procedures and documentation requirements.

    A covered entity or business associate must, in accordance with 
Sec.  164.306:
    (a) Standard: Policies and procedures. Implement reasonable and 
appropriate policies and procedures to comply with the standards, 
implementation specifications, or other requirements of this subpart, 
taking into account those factors specified in Sec.  164.306(b)(2)(i), 
(ii), (iii), and (iv). This standard is not to be construed to permit or 
excuse an action that violates any other standard, implementation 
specification, or other requirements of this subpart. A covered entity 
or business associate may change its policies and procedures at any 
time, provided that the changes are documented and are implemented in 
accordance with this subpart.
    (b)(1) Standard: Documentation. (i) Maintain the policies and 
procedures implemented to comply with this subpart in written (which may 
be electronic) form; and
    (ii) If an action, activity or assessment is required by this 
subpart to be documented, maintain a written (which may be electronic) 
record of the action, activity, or assessment.
    (2) Implementation specifications:
    (i) Time limit (Required). Retain the documentation required by 
paragraph (b)(1) of this section for 6 years from the date of its 
creation or the date when it last was in effect, whichever is later.
    (ii) Availability (Required). Make documentation available to those 
persons responsible for implementing the procedures to which the 
documentation pertains.
    (iii) Updates (Required). Review documentation periodically, and 
update as needed, in response to environmental or operational changes 
affecting the security of the electronic protected health information.

[68 FR 8376, Feb. 20, 2003, as amended at 78 FR 5695, Jan. 25, 2013]



Sec.  164.318  Compliance dates for the initial implementation of
the security standards.

    (a) Health plan. (1) A health plan that is not a small health plan 
must comply with the applicable requirements of this subpart no later 
than April 20, 2005.
    (2) A small health plan must comply with the applicable requirements 
of this subpart no later than April 20, 2006.
    (b) Health care clearinghouse. A health care clearinghouse must 
comply with the applicable requirements of this subpart no later than 
April 20, 2005.
    (c) Health care provider. A covered health care provider must comply 
with the applicable requirements of this subpart no later than April 20, 
2005.



  Sec. Appendix A to Subpart C of Part 164--Security Standards: Matrix

----------------------------------------------------------------------------------------------------------------
                                                                                   Implementation Specifications
                 Standards                                 Sections                    (R) = Required, (A) =
                                                                                            Addressable
----------------------------------------------------------------------------------------------------------------
                                            Administrative Safeguards
----------------------------------------------------------------------------------------------------------------
Security Management Process................  164.308(a)(1)                        Risk Analysis (R)
                                             ...................................  Risk Management (R)
                                             ...................................  Sanction Policy (R)
                                             ...................................  Information System Activity
                                                                                   Review (R)
Assigned Security Responsibility...........  164.308(a)(2)                        (R)
Workforce Security.........................  164.308(a)(3)                        Authorization and/or
                                                                                   Supervision (A)

[[Page 544]]

 
                                             ...................................  Workforce Clearance Procedure
                                             ...................................  Termination Procedures (A)
Information Access Management..............  164.308(a)(4)                        Isolating Health care
                                                                                   Clearinghouse Function (R)
                                             ...................................  Access Authorization (A)
                                             ...................................  Access Establishment and
                                                                                   Modification (A)
Security Awareness and Training............  164.308(a)(5)                        Security Reminders (A)
                                             ...................................  Protection from Malicious
                                                                                   Software (A)
                                             ...................................  Log-in Monitoring (A)
                                             ...................................  Password Management (A)
Security Incident Procedures...............  164.308(a)(6)                        Response and Reporting (R)
Contingency Plan...........................  164.308(a)(7)                        Data Backup Plan (R)
                                             ...................................  Disaster Recovery Plan (R)
                                             ...................................  Emergency Mode Operation Plan
                                                                                   (R)
                                             ...................................  Testing and Revision Procedure
                                                                                   (A)
                                             ...................................  Applications and Data
                                                                                   Criticality Analysis (A)
Evaluation.................................  164.308(a)(8)                        (R)
Business Associate Contracts and Other       164.308(b)(1)                        Written Contract or Other
 Arrangement.                                                                      Arrangement (R)
----------------------------------------------------------------------------------------------------------------
                                               Physical Safeguards
----------------------------------------------------------------------------------------------------------------
Facility Access Controls...................  164.310(a)(1)                        Contingency Operations (A)
                                             ...................................  Facility Security Plan (A)
                                             ...................................  Access Control and Validation
                                                                                   Procedures (A)
                                             ...................................  Maintenance Records (A)
Workstation Use............................  164.310(b)                           (R)
Workstation Security.......................  164.310(c)                           (R)
Device and Media Controls..................  164.310(d)(1)                        Disposal (R)
                                             ...................................  Media Re-use (R)
                                             ...................................  Accountability (A)
                                             ...................................  Data Backup and Storage (A)
----------------------------------------------------------------------------------------------------------------
                                    Technical Safeguards (see Sec.   164.312)
----------------------------------------------------------------------------------------------------------------
Access Control.............................  164.312(a)(1)                        Unique User Identification (R)
                                             ...................................  Emergency Access Procedure (R)
                                             ...................................  Automatic Logoff (A)
                                             ...................................  Encryption and Decryption (A)
Audit Controls.............................  164.312(b)                           (R)
Integrity..................................  164.312(c)(1)                        Mechanism to Authenticate
                                                                                   Electronic Protected Health
                                                                                   Information (A)
Person or Entity Authentication............  164.312(d)                           (R)
Transmission Security......................  164.312(e)(1)                        Integrity Controls (A)
                                             ...................................  Encryption (A)
----------------------------------------------------------------------------------------------------------------



  Subpart D_Notification in the Case of Breach of Unsecured Protected 
                           Health Information

    Source: 74 FR 42767, Aug. 24, 2009, unless otherwise noted.



Sec.  164.400  Applicability.

    The requirements of this subpart shall apply with respect to 
breaches of protected health information occurring on or after September 
23, 2009.



Sec.  164.402  Definitions.

    As used in this subpart, the following terms have the following 
meanings:
    Breach means the acquisition, access, use, or disclosure of 
protected health information in a manner not permitted under subpart E 
of this part which compromises the security or privacy of the protected 
health information.
    (1) Breach excludes:
    (i) Any unintentional acquisition, access, or use of protected 
health information by a workforce member or person acting under the 
authority of a covered entity or a business associate, if such 
acquisition, access, or use was made in good faith and within the scope 
of authority and does not result in further use or disclosure in a 
manner not permitted under subpart E of this part.
    (ii) Any inadvertent disclosure by a person who is authorized to 
access protected health information at a covered entity or business 
associate to another person authorized to access protected

[[Page 545]]

health information at the same covered entity or business associate, or 
organized health care arrangement in which the covered entity 
participates, and the information received as a result of such 
disclosure is not further used or disclosed in a manner not permitted 
under subpart E of this part.
    (iii) A disclosure of protected health information where a covered 
entity or business associate has a good faith belief that an 
unauthorized person to whom the disclosure was made would not reasonably 
have been able to retain such information.
    (2) Except as provided in paragraph (1) of this definition, an 
acquisition, access, use, or disclosure of protected health information 
in a manner not permitted under subpart E is presumed to be a breach 
unless the covered entity or business associate, as applicable, 
demonstrates that there is a low probability that the protected health 
information has been compromised based on a risk assessment of at least 
the following factors:
    (i) The nature and extent of the protected health information 
involved, including the types of identifiers and the likelihood of re-
identification;
    (ii) The unauthorized person who used the protected health 
information or to whom the disclosure was made;
    (iii) Whether the protected health information was actually acquired 
or viewed; and
    (iv) The extent to which the risk to the protected health 
information has been mitigated.
    Unsecured protected health information means protected health 
information that is not rendered unusable, unreadable, or indecipherable 
to unauthorized persons through the use of a technology or methodology 
specified by the Secretary in the guidance issued under section 
13402(h)(2) of Public Law 111-5.

[78 FR 5695, Jan. 25, 2013]



Sec.  164.404  Notification to individuals.

    (a) Standard--(1) General rule. A covered entity shall, following 
the discovery of a breach of unsecured protected health information, 
notify each individual whose unsecured protected health information has 
been, or is reasonably believed by the covered entity to have been, 
accessed, acquired, used, or disclosed as a result of such breach.
    (2) Breaches treated as discovered. For purposes of paragraph (a)(1) 
of this section, Sec. Sec.  164.406(a), and 164.408(a), a breach shall 
be treated as discovered by a covered entity as of the first day on 
which such breach is known to the covered entity, or, by exercising 
reasonable diligence would have been known to the covered entity. A 
covered entity shall be deemed to have knowledge of a breach if such 
breach is known, or by exercising reasonable diligence would have been 
known, to any person, other than the person committing the breach, who 
is a workforce member or agent of the covered entity (determined in 
accordance with the federal common law of agency).
    (b) Implementation specification: Timeliness of notification. Except 
as provided in Sec.  164.412, a covered entity shall provide the 
notification required by paragraph (a) of this section without 
unreasonable delay and in no case later than 60 calendar days after 
discovery of a breach.
    (c) Implementation specifications: Content of notification--(1) 
Elements. The notification required by paragraph (a) of this section 
shall include, to the extent possible:
    (A) A brief description of what happened, including the date of the 
breach and the date of the discovery of the breach, if known;
    (B) A description of the types of unsecured protected health 
information that were involved in the breach (such as whether full name, 
social security number, date of birth, home address, account number, 
diagnosis, disability code, or other types of information were 
involved);
    (C) Any steps individuals should take to protect themselves from 
potential harm resulting from the breach;
    (D) A brief description of what the covered entity involved is doing 
to investigate the breach, to mitigate harm to individuals, and to 
protect against any further breaches; and
    (E) Contact procedures for individuals to ask questions or learn 
additional information, which shall include a toll-free telephone 
number, an e-mail address, Web site, or postal address.

[[Page 546]]

    (2) Plain language requirement. The notification required by 
paragraph (a) of this section shall be written in plain language.
    (d) Implementation specifications: Methods of individual 
notification. The notification required by paragraph (a) of this section 
shall be provided in the following form:
    (1) Written notice. (i) Written notification by first-class mail to 
the individual at the last known address of the individual or, if the 
individual agrees to electronic notice and such agreement has not been 
withdrawn, by electronic mail. The notification may be provided in one 
or more mailings as information is available.
    (ii) If the covered entity knows the individual is deceased and has 
the address of the next of kin or personal representative of the 
individual (as specified under Sec.  164.502(g)(4) of subpart E), 
written notification by first-class mail to either the next of kin or 
personal representative of the individual. The notification may be 
provided in one or more mailings as information is available.
    (2) Substitute notice. In the case in which there is insufficient or 
out-of-date contact information that precludes written notification to 
the individual under paragraph (d)(1)(i) of this section, a substitute 
form of notice reasonably calculated to reach the individual shall be 
provided. Substitute notice need not be provided in the case in which 
there is insufficient or out-of-date contact information that precludes 
written notification to the next of kin or personal representative of 
the individual under paragraph (d)(1)(ii).
    (i) In the case in which there is insufficient or out-of-date 
contact information for fewer than 10 individuals, then such substitute 
notice may be provided by an alternative form of written notice, 
telephone, or other means.
    (ii) In the case in which there is insufficient or out-of-date 
contact information for 10 or more individuals, then such substitute 
notice shall:
    (A) Be in the form of either a conspicuous posting for a period of 
90 days on the home page of the Web site of the covered entity involved, 
or conspicuous notice in major print or broadcast media in geographic 
areas where the individuals affected by the breach likely reside; and
    (B) Include a toll-free phone number that remains active for at 
least 90 days where an individual can learn whether the individual's 
unsecured protected health information may be included in the breach.
    (3) Additional notice in urgent situations. In any case deemed by 
the covered entity to require urgency because of possible imminent 
misuse of unsecured protected health information, the covered entity may 
provide information to individuals by telephone or other means, as 
appropriate, in addition to notice provided under paragraph (d)(1) of 
this section.



Sec.  164.406  Notification to the media.

    (a) Standard. For a breach of unsecured protected health information 
involving more than 500 residents of a State or jurisdiction, a covered 
entity shall, following the discovery of the breach as provided in Sec.  
164.404(a)(2), notify prominent media outlets serving the State or 
jurisdiction.
    (b) Implementation specification: Timeliness of notification. Except 
as provided in Sec.  164.412, a covered entity shall provide the 
notification required by paragraph (a) of this section without 
unreasonable delay and in no case later than 60 calendar days after 
discovery of a breach.
    (c) Implementation specifications: Content of notification. The 
notification required by paragraph (a) of this section shall meet the 
requirements of Sec.  164.404(c).

[74 FR 42767, Aug. 24, 2009, as amended at 78 FR 5695, Jan. 25, 2013]



Sec.  164.408  Notification to the Secretary.

    (a) Standard. A covered entity shall, following the discovery of a 
breach of unsecured protected health information as provided in Sec.  
164.404(a)(2), notify the Secretary.
    (b) Implementation specifications: Breaches involving 500 or more 
individuals. For breaches of unsecured protected health information 
involving 500 or more individuals, a covered entity shall, except as 
provided in Sec.  164.412, provide the notification required by 
paragraph (a) of this section contemporaneously with the notice required

[[Page 547]]

by Sec.  164.404(a) and in the manner specified on the HHS Web site.
    (c) Implementation specifications: Breaches involving less than 500 
individuals. For breaches of unsecured protected health information 
involving less than 500 individuals, a covered entity shall maintain a 
log or other documentation of such breaches and, not later than 60 days 
after the end of each calendar year, provide the notification required 
by paragraph (a) of this section for breaches discovered during the 
preceding calendar year, in the manner specified on the HHS web site.

[74 FR 42767, Aug. 24, 2009, as amended at 78 FR 5695, Jan. 25, 2013]



Sec.  164.410  Notification by a business associate.

    (a) Standard--(1) General rule. A business associate shall, 
following the discovery of a breach of unsecured protected health 
information, notify the covered entity of such breach.
    (2) Breaches treated as discovered. For purposes of paragraph (a)(1) 
of this section, a breach shall be treated as discovered by a business 
associate as of the first day on which such breach is known to the 
business associate or, by exercising reasonable diligence, would have 
been known to the business associate. A business associate shall be 
deemed to have knowledge of a breach if the breach is known, or by 
exercising reasonable diligence would have been known, to any person, 
other than the person committing the breach, who is an employee, 
officer, or other agent of the business associate (determined in 
accordance with the Federal common law of agency).
    (b) Implementation specifications: Timeliness of notification. 
Except as provided in Sec.  164.412, a business associate shall provide 
the notification required by paragraph (a) of this section without 
unreasonable delay and in no case later than 60 calendar days after 
discovery of a breach.
    (c) Implementation specifications: Content of notification. (1) The 
notification required by paragraph (a) of this section shall include, to 
the extent possible, the identification of each individual whose 
unsecured protected health information has been, or is reasonably 
believed by the business associate to have been, accessed, acquired, 
used, or disclosed during the breach.
    (2) A business associate shall provide the covered entity with any 
other available information that the covered entity is required to 
include in notification to the individual under Sec.  164.404(c) at the 
time of the notification required by paragraph (a) of this section or 
promptly thereafter as information becomes available.

[74 FR 42767, Aug. 24, 2009, as amended at 78 FR 5695, Jan. 25, 2013]



Sec.  164.412  Law enforcement delay.

    If a law enforcement official states to a covered entity or business 
associate that a notification, notice, or posting required under this 
subpart would impede a criminal investigation or cause damage to 
national security, a covered entity or business associate shall:
    (a) If the statement is in writing and specifies the time for which 
a delay is required, delay such notification, notice, or posting for the 
time period specified by the official; or
    (b) If the statement is made orally, document the statement, 
including the identity of the official making the statement, and delay 
the notification, notice, or posting temporarily and no longer than 30 
days from the date of the oral statement, unless a written statement as 
described in paragraph (a) of this section is submitted during that 
time.



Sec.  164.414  Administrative requirements and burden of proof.

    (a) Administrative requirements. A covered entity is required to 
comply with the administrative requirements of Sec.  164.530(b), (d), 
(e), (g), (h), (i), and (j) with respect to the requirements of this 
subpart.
    (b) Burden of proof. In the event of a use or disclosure in 
violation of subpart E, the covered entity or business associate, as 
applicable, shall have the burden of demonstrating that all 
notifications were made as required by this subpart or that the use or 
disclosure did not constitute a breach, as defined at Sec.  164.402.

[[Page 548]]



    Subpart E_Privacy of Individually Identifiable Health Information

    Authority: 42 U.S.C. 1320d-2, 1320d-4, and 1320d-9; sec. 264 of Pub. 
L. 104-191, 110 Stat. 2033-2034 (42 U.S.C. 1320d-2 (note)); and secs. 
13400-13424, Pub. L. 111-5, 123 Stat. 258-279.



Sec.  164.500  Applicability.

    (a) Except as otherwise provided herein, the standards, 
requirements, and implementation specifications of this subpart apply to 
covered entities with respect to protected health information.
    (b) Health care clearinghouses must comply with the standards, 
requirements, and implementation specifications as follows:
    (1) When a health care clearinghouse creates or receives protected 
health information as a business associate of another covered entity, 
the clearinghouse must comply with:
    (i) Section 164.500 relating to applicability;
    (ii) Section 164.501 relating to definitions;
    (iii) Section 164.502 relating to uses and disclosures of protected 
health information, except that a clearinghouse is prohibited from using 
or disclosing protected health information other than as permitted in 
the business associate contract under which it created or received the 
protected health information;
    (iv) Section 164.504 relating to the organizational requirements for 
covered entities;
    (v) Section 164.512 relating to uses and disclosures for which 
individual authorization or an opportunity to agree or object is not 
required, except that a clearinghouse is prohibited from using or 
disclosing protected health information other than as permitted in the 
business associate contract under which it created or received the 
protected health information;
    (vi) Section 164.532 relating to transition requirements; and
    (vii) Section 164.534 relating to compliance dates for initial 
implementation of the privacy standards.
    (2) When a health care clearinghouse creates or receives protected 
health information other than as a business associate of a covered 
entity, the clearinghouse must comply with all of the standards, 
requirements, and implementation specifications of this subpart.
    (c) Where provided, the standards, requirements, and implementation 
specifications adopted under this subpart apply to a business associate 
with respect to the protected health information of a covered entity.
    (d) The standards, requirements, and implementation specifications 
of this subpart do not apply to the Department of Defense or to any 
other federal agency, or non-governmental organization acting on its 
behalf, when providing health care to overseas foreign national 
beneficiaries.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53266, Aug. 14, 2002; 
68 FR 8381, Feb. 20, 2003; 78 FR 5695, Jan. 25, 2013]



Sec.  164.501  Definitions.

    As used in this subpart, the following terms have the following 
meanings:
    Correctional institution means any penal or correctional facility, 
jail, reformatory, detention center, work farm, halfway house, or 
residential community program center operated by, or under contract to, 
the United States, a State, a territory, a political subdivision of a 
State or territory, or an Indian tribe, for the confinement or 
rehabilitation of persons charged with or convicted of a criminal 
offense or other persons held in lawful custody. Other persons held in 
lawful custody includes juvenile offenders adjudicated delinquent, 
aliens detained awaiting deportation, persons committed to mental 
institutions through the criminal justice system, witnesses, or others 
awaiting charges or trial.
    Data aggregation means, with respect to protected health information 
created or received by a business associate in its capacity as the 
business associate of a covered entity, the combining of such protected 
health information by the business associate with the protected health 
information received by the business associate in its capacity as a 
business associate of another covered entity, to permit data analyses 
that relate to the health care operations of the respective covered 
entities.
    Designated record set means:

[[Page 549]]

    (1) A group of records maintained by or for a covered entity that 
is:
    (i) The medical records and billing records about individuals 
maintained by or for a covered health care provider;
    (ii) The enrollment, payment, claims adjudication, and case or 
medical management record systems maintained by or for a health plan; or
    (iii) Used, in whole or in part, by or for the covered entity to 
make decisions about individuals.
    (2) For purposes of this paragraph, the term record means any item, 
collection, or grouping of information that includes protected health 
information and is maintained, collected, used, or disseminated by or 
for a covered entity.
    Direct treatment relationship means a treatment relationship between 
an individual and a health care provider that is not an indirect 
treatment relationship.
    Health care operations means any of the following activities of the 
covered entity to the extent that the activities are related to covered 
functions:
    (1) Conducting quality assessment and improvement activities, 
including outcomes evaluation and development of clinical guidelines, 
provided that the obtaining of generalizable knowledge is not the 
primary purpose of any studies resulting from such activities; patient 
safety activities (as defined in 42 CFR 3.20); population-based 
activities relating to improving health or reducing health care costs, 
protocol development, case management and care coordination, contacting 
of health care providers and patients with information about treatment 
alternatives; and related functions that do not include treatment;
    (2) Reviewing the competence or qualifications of health care 
professionals, evaluating practitioner and provider performance, health 
plan performance, conducting training programs in which students, 
trainees, or practitioners in areas of health care learn under 
supervision to practice or improve their skills as health care 
providers, training of non-health care professionals, accreditation, 
certification, licensing, or credentialing activities;
    (3) Except as prohibited under Sec.  164.502(a)(5)(i), underwriting, 
enrollment, premium rating, and other activities related to the 
creation, renewal, or replacement of a contract of health insurance or 
health benefits, and ceding, securing, or placing a contract for 
reinsurance of risk relating to claims for health care (including stop-
loss insurance and excess of loss insurance), provided that the 
requirements of Sec.  164.514(g) are met, if applicable;
    (4) Conducting or arranging for medical review, legal services, and 
auditing functions, including fraud and abuse detection and compliance 
programs;
    (5) Business planning and development, such as conducting cost-
management and planning-related analyses related to managing and 
operating the entity, including formulary development and 
administration, development or improvement of methods of payment or 
coverage policies; and
    (6) Business management and general administrative activities of the 
entity, including, but not limited to:
    (i) Management activities relating to implementation of and 
compliance with the requirements of this subchapter;
    (ii) Customer service, including the provision of data analyses for 
policy holders, plan sponsors, or other customers, provided that 
protected health information is not disclosed to such policy holder, 
plan sponsor, or customer.
    (iii) Resolution of internal grievances;
    (iv) The sale, transfer, merger, or consolidation of all or part of 
the covered entity with another covered entity, or an entity that 
following such activity will become a covered entity and due diligence 
related to such activity; and
    (v) Consistent with the applicable requirements of Sec.  164.514, 
creating de-identified health information or a limited data set, and 
fundraising for the benefit of the covered entity.
    Health oversight agency means an agency or authority of the United 
States, a State, a territory, a political subdivision of a State or 
territory, or an Indian tribe, or a person or entity acting under a 
grant of authority from or contract with such public agency,

[[Page 550]]

including the employees or agents of such public agency or its 
contractors or persons or entities to whom it has granted authority, 
that is authorized by law to oversee the health care system (whether 
public or private) or government programs in which health information is 
necessary to determine eligibility or compliance, or to enforce civil 
rights laws for which health information is relevant.
    Indirect treatment relationship means a relationship between an 
individual and a health care provider in which:
    (1) The health care provider delivers health care to the individual 
based on the orders of another health care provider; and
    (2) The health care provider typically provides services or 
products, or reports the diagnosis or results associated with the health 
care, directly to another health care provider, who provides the 
services or products or reports to the individual.
    Inmate means a person incarcerated in or otherwise confined to a 
correctional institution.
    Marketing:
    (1) Except as provided in paragraph (2) of this definition, 
marketing means to make a communication about a product or service that 
encourages recipients of the communication to purchase or use the 
product or service.
    (2) Marketing does not include a communication made:
    (i) To provide refill reminders or otherwise communicate about a 
drug or biologic that is currently being prescribed for the individual, 
only if any financial remuneration received by the covered entity in 
exchange for making the communication is reasonably related to the 
covered entity's cost of making the communication.
    (ii) For the following treatment and health care operations 
purposes, except where the covered entity receives financial 
remuneration in exchange for making the communication:
    (A) For treatment of an individual by a health care provider, 
including case management or care coordination for the individual, or to 
direct or recommend alternative treatments, therapies, health care 
providers, or settings of care to the individual;
    (B) To describe a health-related product or service (or payment for 
such product or service) that is provided by, or included in a plan of 
benefits of, the covered entity making the communication, including 
communications about: the entities participating in a health care 
provider network or health plan network; replacement of, or enhancements 
to, a health plan; and health-related products or services available 
only to a health plan enrollee that add value to, but are not part of, a 
plan of benefits; or
    (C) For case management or care coordination, contacting of 
individuals with information about treatment alternatives, and related 
functions to the extent these activities do not fall within the 
definition of treatment.
    (3) Financial remuneration means direct or indirect payment from or 
on behalf of a third party whose product or service is being described. 
Direct or indirect payment does not include any payment for treatment of 
an individual.
    Payment means:
    (1) The activities undertaken by:
    (i) Except as prohibited under Sec.  164.502(a)(5)(i), a health plan 
to obtain premiums or to determine or fulfill its responsibility for 
coverage and provision of benefits under the health plan; or
    (ii) A health care provider or health plan to obtain or provide 
reimbursement for the provision of health care; and
    (2) The activities in paragraph (1) of this definition relate to the 
individual to whom health care is provided and include, but are not 
limited to:
    (i) Determinations of eligibility or coverage (including 
coordination of benefits or the determination of cost sharing amounts), 
and adjudication or subrogation of health benefit claims;
    (ii) Risk adjusting amounts due based on enrollee health status and 
demographic characteristics;
    (iii) Billing, claims management, collection activities, obtaining 
payment under a contract for reinsurance (including stop-loss insurance 
and excess of loss insurance), and related health care data processing;

[[Page 551]]

    (iv) Review of health care services with respect to medical 
necessity, coverage under a health plan, appropriateness of care, or 
justification of charges;
    (v) Utilization review activities, including precertification and 
preauthorization of services, concurrent and retrospective review of 
services; and
    (vi) Disclosure to consumer reporting agencies of any of the 
following protected health information relating to collection of 
premiums or reimbursement:
    (A) Name and address;
    (B) Date of birth;
    (C) Social security number;
    (D) Payment history;
    (E) Account number; and
    (F) Name and address of the health care provider and/or health plan.
    Psychotherapy notes means notes recorded (in any medium) by a health 
care provider who is a mental health professional documenting or 
analyzing the contents of conversation during a private counseling 
session or a group, joint, or family counseling session and that are 
separated from the rest of the individual's medical record. 
Psychotherapy notes excludes medication prescription and monitoring, 
counseling session start and stop times, the modalities and frequencies 
of treatment furnished, results of clinical tests, and any summary of 
the following items: Diagnosis, functional status, the treatment plan, 
symptoms, prognosis, and progress to date.
    Public health authority means an agency or authority of the United 
States, a State, a territory, a political subdivision of a State or 
territory, or an Indian tribe, or a person or entity acting under a 
grant of authority from or contract with such public agency, including 
the employees or agents of such public agency or its contractors or 
persons or entities to whom it has granted authority, that is 
responsible for public health matters as part of its official mandate.
    Research means a systematic investigation, including research 
development, testing, and evaluation, designed to develop or contribute 
to generalizable knowledge.
    Treatment means the provision, coordination, or management of health 
care and related services by one or more health care providers, 
including the coordination or management of health care by a health care 
provider with a third party; consultation between health care providers 
relating to a patient; or the referral of a patient for health care from 
one health care provider to another.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53266, Aug. 14, 2002; 
68 FR 8381, Feb. 20, 2003; 74 FR 42769, Aug. 24, 2009; 78 FR 5695, Jan. 
25, 2013]



Sec.  164.502  Uses and disclosures of protected health information: General rules.

    (a) Standard. A covered entity or business associate may not use or 
disclose protected health information, except as permitted or required 
by this subpart or by subpart C of part 160 of this subchapter.
    (1) Covered entities: Permitted uses and disclosures. A covered 
entity is permitted to use or disclose protected health information as 
follows:
    (i) To the individual;
    (ii) For treatment, payment, or health care operations, as permitted 
by and in compliance with Sec.  164.506;
    (iii) Incident to a use or disclosure otherwise permitted or 
required by this subpart, provided that the covered entity has complied 
with the applicable requirements of Sec. Sec.  164.502(b), 164.514(d), 
and 164.530(c) with respect to such otherwise permitted or required use 
or disclosure;
    (iv) Except for uses and disclosures prohibited under Sec.  
164.502(a)(5)(i), pursuant to and in compliance with a valid 
authorization under Sec.  164.508;
    (v) Pursuant to an agreement under, or as otherwise permitted by, 
Sec.  164.510; and
    (vi) As permitted by and in compliance with this section, Sec.  
164.512, Sec.  164.514(e), (f), or (g).
    (2) Covered entities: Required disclosures. A covered entity is 
required to disclose protected health information:
    (i) To an individual, when requested under, and required by Sec.  
164.524 or Sec.  164.528; and
    (ii) When required by the Secretary under subpart C of part 160 of 
this subchapter to investigate or determine the

[[Page 552]]

covered entity's compliance with this subchapter.
    (3) Business associates: Permitted uses and disclosures. A business 
associate may use or disclose protected health information only as 
permitted or required by its business associate contract or other 
arrangement pursuant to Sec.  164.504(e) or as required by law. The 
business associate may not use or disclose protected health information 
in a manner that would violate the requirements of this subpart, if done 
by the covered entity, except for the purposes specified under Sec.  
164.504(e)(2)(i)(A) or (B) if such uses or disclosures are permitted by 
its contract or other arrangement.
    (4) Business associates: Required uses and disclosures. A business 
associate is required to disclose protected health information:
    (i) When required by the Secretary under subpart C of part 160 of 
this subchapter to investigate or determine the business associate's 
compliance with this subchapter.
    (ii) To the covered entity, individual, or individual's designee, as 
necessary to satisfy a covered entity's obligations under Sec.  
164.524(c)(2)(ii) and (3)(ii) with respect to an individual's request 
for an electronic copy of protected health information.
    (5) Prohibited uses and disclosures.
    (i) Use and disclosure of genetic information for underwriting 
purposes: Notwithstanding any other provision of this subpart, a health 
plan, excluding an issuer of a long-term care policy falling within 
paragraph (1)(viii) of the definition of health plan, shall not use or 
disclose protected health information that is genetic information for 
underwriting purposes. For purposes of paragraph (a)(5)(i) of this 
section, underwriting purposes means, with respect to a health plan:
    (A) Except as provided in paragraph (a)(5)(i)(B) of this section:
    (1) Rules for, or determination of, eligibility (including 
enrollment and continued eligibility) for, or determination of, benefits 
under the plan, coverage, or policy (including changes in deductibles or 
other cost-sharing mechanisms in return for activities such as 
completing a health risk assessment or participating in a wellness 
program);
    (2) The computation of premium or contribution amounts under the 
plan, coverage, or policy (including discounts, rebates, payments in 
kind, or other premium differential mechanisms in return for activities 
such as completing a health risk assessment or participating in a 
wellness program);
    (3) The application of any pre-existing condition exclusion under 
the plan, coverage, or policy; and
    (4) Other activities related to the creation, renewal, or 
replacement of a contract of health insurance or health benefits.
    (B) Underwriting purposes does not include determinations of medical 
appropriateness where an individual seeks a benefit under the plan, 
coverage, or policy.
    (ii) Sale of protected health information:
    (A) Except pursuant to and in compliance with Sec.  164.508(a)(4), a 
covered entity or business associate may not sell protected health 
information.
    (B) For purposes of this paragraph, sale of protected health 
information means:
    (1) Except as provided in paragraph (a)(5)(ii)(B)(2) of this 
section, a disclosure of protected health information by a covered 
entity or business associate, if applicable, where the covered entity or 
business associate directly or indirectly receives remuneration from or 
on behalf of the recipient of the protected health information in 
exchange for the protected health information.
    (2) Sale of protected health information does not include a 
disclosure of protected health information:
    (i) For public health purposes pursuant to Sec.  164.512(b) or Sec.  
164.514(e);
    (ii) For research purposes pursuant to Sec.  164.512(i) or Sec.  
164.514(e), where the only remuneration received by the covered entity 
or business associate is a reasonable cost-based fee to cover the cost 
to prepare and transmit the protected health information for such 
purposes;
    (iii) For treatment and payment purposes pursuant to Sec.  
164.506(a);
    (iv) For the sale, transfer, merger, or consolidation of all or part 
of the covered entity and for related due diligence as described in 
paragraph (6)(iv)

[[Page 553]]

of the definition of health care operations and pursuant to Sec.  
164.506(a);
    (v) To or by a business associate for activities that the business 
associate undertakes on behalf of a covered entity, or on behalf of a 
business associate in the case of a subcontractor, pursuant to 
Sec. Sec.  164.502(e) and 164.504(e), and the only remuneration provided 
is by the covered entity to the business associate, or by the business 
associate to the subcontractor, if applicable, for the performance of 
such activities;
    (vi) To an individual, when requested under Sec.  164.524 or Sec.  
164.528;
    (vii) Required by law as permitted under Sec.  164.512(a); and
    (viii) For any other purpose permitted by and in accordance with the 
applicable requirements of this subpart, where the only remuneration 
received by the covered entity or business associate is a reasonable, 
cost-based fee to cover the cost to prepare and transmit the protected 
health information for such purpose or a fee otherwise expressly 
permitted by other law.
    (b) Standard: Minimum necessary-- Minimum necessary applies. When 
using or disclosing protected health information or when requesting 
protected health information from another covered entity or business 
associate, a covered entity or business associate must make reasonable 
efforts to limit protected health information to the minimum necessary 
to accomplish the intended purpose of the use, disclosure, or request.
    (2) Minimum necessary does not apply. This requirement does not 
apply to:
    (i) Disclosures to or requests by a health care provider for 
treatment;
    (ii) Uses or disclosures made to the individual, as permitted under 
paragraph (a)(1)(i) of this section or as required by paragraph 
(a)(2)(i) of this section;
    (iii) Uses or disclosures made pursuant to an authorization under 
Sec.  164.508;
    (iv) Disclosures made to the Secretary in accordance with subpart C 
of part 160 of this subchapter;
    (v) Uses or disclosures that are required by law, as described by 
Sec.  164.512(a); and
    (vi) Uses or disclosures that are required for compliance with 
applicable requirements of this subchapter.
    (c) Standard: Uses and disclosures of protected health information 
subject to an agreed upon restriction. A covered entity that has agreed 
to a restriction pursuant to Sec.  164.522(a)(1) may not use or disclose 
the protected health information covered by the restriction in violation 
of such restriction, except as otherwise provided in Sec.  164.522(a).
    (d) Standard: Uses and disclosures of de-identified protected health 
information--(1) Uses and disclosures to create de-identified 
information. A covered entity may use protected health information to 
create information that is not individually identifiable health 
information or disclose protected health information only to a business 
associate for such purpose, whether or not the de-identified information 
is to be used by the covered entity.
    (2) Uses and disclosures of de-identified information. Health 
information that meets the standard and implementation specifications 
for de-identification under Sec.  164.514(a) and (b) is considered not 
to be individually identifiable health information, i.e., de-identified. 
The requirements of this subpart do not apply to information that has 
been de-identified in accordance with the applicable requirements of 
Sec.  164.514, provided that:
    (i) Disclosure of a code or other means of record identification 
designed to enable coded or otherwise de-identified information to be 
re-identified constitutes disclosure of protected health information; 
and
    (ii) If de-identified information is re-identified, a covered entity 
may use or disclose such re-identified information only as permitted or 
required by this subpart.
    (e)(1) Standard: Disclosures to business associates. (i) A covered 
entity may disclose protected health information to a business associate 
and may allow a business associate to create, receive, maintain, or 
transmit protected health information on its behalf, if the covered 
entity obtains satisfactory assurance that the business associate will 
appropriately safeguard the information. A covered entity is not 
required to obtain such satisfactory assurances

[[Page 554]]

from a business associate that is a subcontractor.
    (ii) A business associate may disclose protected health information 
to a business associate that is a subcontractor and may allow the 
subcontractor to create, receive, maintain, or transmit protected health 
information on its behalf, if the business associate obtains 
satisfactory assurances, in accordance with Sec.  164.504(e)(1)(i), that 
the subcontractor will appropriately safeguard the information.
    (2) Implementation specification: Documentation. The satisfactory 
assurances required by paragraph (e)(1) of this section must be 
documented through a written contract or other written agreement or 
arrangement with the business associate that meets the applicable 
requirements of Sec.  164.504(e).
    (f) Standard: Deceased individuals. A covered entity must comply 
with the requirements of this subpart with respect to the protected 
health information of a deceased individual for a period of 50 years 
following the death of the individual.
    (g)(1) Standard: Personal representatives. As specified in this 
paragraph, a covered entity must, except as provided in paragraphs 
(g)(3) and (g)(5) of this section, treat a personal representative as 
the individual for purposes of this subchapter.
    (2) Implementation specification: Adults and emancipated minors. If 
under applicable law a person has authority to act on behalf of an 
individual who is an adult or an emancipated minor in making decisions 
related to health care, a covered entity must treat such person as a 
personal representative under this subchapter, with respect to protected 
health information relevant to such personal representation.
    (3)(i) Implementation specification: Unemancipated minors. If under 
applicable law a parent, guardian, or other person acting in loco 
parentis has authority to act on behalf of an individual who is an 
unemancipated minor in making decisions related to health care, a 
covered entity must treat such person as a personal representative under 
this subchapter, with respect to protected health information relevant 
to such personal representation, except that such person may not be a 
personal representative of an unemancipated minor, and the minor has the 
authority to act as an individual, with respect to protected health 
information pertaining to a health care service, if:
    (A) The minor consents to such health care service; no other consent 
to such health care service is required by law, regardless of whether 
the consent of another person has also been obtained; and the minor has 
not requested that such person be treated as the personal 
representative;
    (B) The minor may lawfully obtain such health care service without 
the consent of a parent, guardian, or other person acting in loco 
parentis, and the minor, a court, or another person authorized by law 
consents to such health care service; or
    (C) A parent, guardian, or other person acting in loco parentis 
assents to an agreement of confidentiality between a covered health care 
provider and the minor with respect to such health care service.
    (ii) Notwithstanding the provisions of paragraph (g)(3)(i) of this 
section:
    (A) If, and to the extent, permitted or required by an applicable 
provision of State or other law, including applicable case law, a 
covered entity may disclose, or provide access in accordance with Sec.  
164.524 to, protected health information about an unemancipated minor to 
a parent, guardian, or other person acting in loco parentis;
    (B) If, and to the extent, prohibited by an applicable provision of 
State or other law, including applicable case law, a covered entity may 
not disclose, or provide access in accordance with Sec.  164.524 to, 
protected health information about an unemancipated minor to a parent, 
guardian, or other person acting in loco parentis; and
    (C) Where the parent, guardian, or other person acting in loco 
parentis, is not the personal representative under paragraphs 
(g)(3)(i)(A), (B), or (C) of this section and where there is no 
applicable access provision under State or other law, including case 
law, a covered entity may provide or deny access under Sec.  164.524 to 
a parent, guardian, or other person acting in loco parentis, if such 
action is consistent with State or other applicable law, provided that

[[Page 555]]

such decision must be made by a licensed health care professional, in 
the exercise of professional judgment.
    (4) Implementation specification: Deceased individuals. If under 
applicable law an executor, administrator, or other person has authority 
to act on behalf of a deceased individual or of the individual's estate, 
a covered entity must treat such person as a personal representative 
under this subchapter, with respect to protected health information 
relevant to such personal representation.
    (5) Implementation specification: Abuse, neglect, endangerment 
situations. Notwithstanding a State law or any requirement of this 
paragraph to the contrary, a covered entity may elect not to treat a 
person as the personal representative of an individual if:
    (i) The covered entity has a reasonable belief that:
    (A) The individual has been or may be subjected to domestic 
violence, abuse, or neglect by such person; or
    (B) Treating such person as the personal representative could 
endanger the individual; and
    (ii) The covered entity, in the exercise of professional judgment, 
decides that it is not in the best interest of the individual to treat 
the person as the individual's personal representative.
    (h) Standard: Confidential communications. A covered health care 
provider or health plan must comply with the applicable requirements of 
Sec.  164.522(b) in communicating protected health information.
    (i) Standard: Uses and disclosures consistent with notice. A covered 
entity that is required by Sec.  164.520 to have a notice may not use or 
disclose protected health information in a manner inconsistent with such 
notice. A covered entity that is required by Sec.  164.520(b)(1)(iii) to 
include a specific statement in its notice if it intends to engage in an 
activity listed in Sec.  164.520(b)(1)(iii)(A)-(C), may not use or 
disclose protected health information for such activities, unless the 
required statement is included in the notice.
    (j) Standard: Disclosures by whistleblowers and workforce member 
crime victims--(1) Disclosures by whistleblowers. A covered entity is 
not considered to have violated the requirements of this subpart if a 
member of its workforce or a business associate discloses protected 
health information, provided that:
    (i) The workforce member or business associate believes in good 
faith that the covered entity has engaged in conduct that is unlawful or 
otherwise violates professional or clinical standards, or that the care, 
services, or conditions provided by the covered entity potentially 
endangers one or more patients, workers, or the public; and
    (ii) The disclosure is to:
    (A) A health oversight agency or public health authority authorized 
by law to investigate or otherwise oversee the relevant conduct or 
conditions of the covered entity or to an appropriate health care 
accreditation organization for the purpose of reporting the allegation 
of failure to meet professional standards or misconduct by the covered 
entity; or
    (B) An attorney retained by or on behalf of the workforce member or 
business associate for the purpose of determining the legal options of 
the workforce member or business associate with regard to the conduct 
described in paragraph (j)(1)(i) of this section.
    (2) Disclosures by workforce members who are victims of a crime. A 
covered entity is not considered to have violated the requirements of 
this subpart if a member of its workforce who is the victim of a 
criminal act discloses protected health information to a law enforcement 
official, provided that:
    (i) The protected health information disclosed is about the 
suspected perpetrator of the criminal act; and
    (ii) The protected health information disclosed is limited to the 
information listed in Sec.  164.512(f)(2)(i).

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53267, Aug. 14, 2002; 
78 FR 5696, Jan. 25, 2013]



Sec.  164.504  Uses and disclosures: Organizational requirements.

    (a) Definitions. As used in this section:
    Plan administration functions means administration functions 
performed by the plan sponsor of a group health plan on behalf of the 
group health plan and excludes functions performed by the plan sponsor 
in connection with any

[[Page 556]]

other benefit or benefit plan of the plan sponsor.
    Summary health information means information, that may be 
individually identifiable health information, and:
    (1) That summarizes the claims history, claims expenses, or type of 
claims experienced by individuals for whom a plan sponsor has provided 
health benefits under a group health plan; and
    (2) From which the information described at Sec.  164.514(b)(2)(i) 
has been deleted, except that the geographic information described in 
Sec.  164.514(b)(2)(i)(B) need only be aggregated to the level of a five 
digit zip code.
    (b)-(d) [Reserved]
    (e)(1) Standard: Business associate contracts. (i) The contract or 
other arrangement required by Sec.  164.502(e)(2) must meet the 
requirements of paragraph (e)(2), (e)(3), or (e)(5) of this section, as 
applicable.
    (ii) A covered entity is not in compliance with the standards in 
Sec.  164.502(e) and this paragraph, if the covered entity knew of a 
pattern of activity or practice of the business associate that 
constituted a material breach or violation of the business associate's 
obligation under the contract or other arrangement, unless the covered 
entity took reasonable steps to cure the breach or end the violation, as 
applicable, and, if such steps were unsuccessful, terminated the 
contract or arrangement, if feasible.
    (iii) A business associate is not in compliance with the standards 
in Sec.  164.502(e) and this paragraph, if the business associate knew 
of a pattern of activity or practice of a subcontractor that constituted 
a material breach or violation of the subcontractor's obligation under 
the contract or other arrangement, unless the business associate took 
reasonable steps to cure the breach or end the violation, as applicable, 
and, if such steps were unsuccessful, terminated the contract or 
arrangement, if feasible.
    (2) Implementation specifications: Business associate contracts. A 
contract between the covered entity and a business associate must:
    (i) Establish the permitted and required uses and disclosures of 
protected health information by the business associate. The contract may 
not authorize the business associate to use or further disclose the 
information in a manner that would violate the requirements of this 
subpart, if done by the covered entity, except that:
    (A) The contract may permit the business associate to use and 
disclose protected health information for the proper management and 
administration of the business associate, as provided in paragraph 
(e)(4) of this section; and
    (B) The contract may permit the business associate to provide data 
aggregation services relating to the health care operations of the 
covered entity.
    (ii) Provide that the business associate will:
    (A) Not use or further disclose the information other than as 
permitted or required by the contract or as required by law;
    (B) Use appropriate safeguards and comply, where applicable, with 
subpart C of this part with respect to electronic protected health 
information, to prevent use or disclosure of the information other than 
as provided for by its contract;
    (C) Report to the covered entity any use or disclosure of the 
information not provided for by its contract of which it becomes aware, 
including breaches of unsecured protected health information as required 
by Sec.  164.410;
    (D) In accordance with Sec.  164.502(e)(1)(ii), ensure that any 
subcontractors that create, receive, maintain, or transmit protected 
health information on behalf of the business associate agree to the same 
restrictions and conditions that apply to the business associate with 
respect to such information;
    (E) Make available protected health information in accordance with 
Sec.  164.524;
    (F) Make available protected health information for amendment and 
incorporate any amendments to protected health information in accordance 
with Sec.  164.526;
    (G) Make available the information required to provide an accounting 
of disclosures in accordance with Sec.  164.528;
    (H) To the extent the business associate is to carry out a covered 
entity's obligation under this subpart, comply

[[Page 557]]

with the requirements of this subpart that apply to the covered entity 
in the performance of such obligation.
    (I) Make its internal practices, books, and records relating to the 
use and disclosure of protected health information received from, or 
created or received by the business associate on behalf of, the covered 
entity available to the Secretary for purposes of determining the 
covered entity's compliance with this subpart; and
    (J) At termination of the contract, if feasible, return or destroy 
all protected health information received from, or created or received 
by the business associate on behalf of, the covered entity that the 
business associate still maintains in any form and retain no copies of 
such information or, if such return or destruction is not feasible, 
extend the protections of the contract to the information and limit 
further uses and disclosures to those purposes that make the return or 
destruction of the information infeasible.
    (iii) Authorize termination of the contract by the covered entity, 
if the covered entity determines that the business associate has 
violated a material term of the contract.
    (3) Implementation specifications: Other arrangements. (i) If a 
covered entity and its business associate are both governmental 
entities:
    (A) The covered entity may comply with this paragraph and Sec.  
164.314(a)(1), if applicable, by entering into a memorandum of 
understanding with the business associate that contains terms that 
accomplish the objectives of paragraph (e)(2) of this section and Sec.  
164.314(a)(2), if applicable.
    (B) The covered entity may comply with this paragraph and Sec.  
164.314(a)(1), if applicable, if other law (including regulations 
adopted by the covered entity or its business associate) contains 
requirements applicable to the business associate that accomplish the 
objectives of paragraph (e)(2) of this section and Sec.  164.314(a)(2), 
if applicable.
    (ii) If a business associate is required by law to perform a 
function or activity on behalf of a covered entity or to provide a 
service described in the definition of business associate in Sec.  
160.103 of this subchapter to a covered entity, such covered entity may 
disclose protected health information to the business associate to the 
extent necessary to comply with the legal mandate without meeting the 
requirements of this paragraph and Sec.  164.314(a)(1), if applicable, 
provided that the covered entity attempts in good faith to obtain 
satisfactory assurances as required by paragraph (e)(2) of this section 
and Sec.  164.314(a)(1), if applicable, and, if such attempt fails, 
documents the attempt and the reasons that such assurances cannot be 
obtained.
    (iii) The covered entity may omit from its other arrangements the 
termination authorization required by paragraph (e)(2)(iii) of this 
section, if such authorization is inconsistent with the statutory 
obligations of the covered entity or its business associate.
    (iv) A covered entity may comply with this paragraph and Sec.  
164.314(a)(1) if the covered entity discloses only a limited data set to 
a business associate for the business associate to carry out a health 
care operations function and the covered entity has a data use agreement 
with the business associate that complies with Sec. Sec.  164.514(e)(4) 
and 164.314(a)(1), if applicable.
    (4) Implementation specifications: Other requirements for contracts 
and other arrangements. (i) The contract or other arrangement between 
the covered entity and the business associate may permit the business 
associate to use the protected health information received by the 
business associate in its capacity as a business associate to the 
covered entity, if necessary:
    (A) For the proper management and administration of the business 
associate; or
    (B) To carry out the legal responsibilities of the business 
associate.
    (ii) The contract or other arrangement between the covered entity 
and the business associate may permit the business associate to disclose 
the protected health information received by the business associate in 
its capacity as a business associate for the purposes described in 
paragraph (e)(4)(i) of this section, if:
    (A) The disclosure is required by law; or
    (B)(1) The business associate obtains reasonable assurances from the 
person to whom the information is disclosed

[[Page 558]]

that it will be held confidentially and used or further disclosed only 
as required by law or for the purposes for which it was disclosed to the 
person; and
    (2) The person notifies the business associate of any instances of 
which it is aware in which the confidentiality of the information has 
been breached.
    (5) Implementation specifications: Business associate contracts with 
subcontractors. The requirements of Sec.  164.504(e)(2) through (e)(4) 
apply to the contract or other arrangement required by Sec.  
164.502(e)(1)(ii) between a business associate and a business associate 
that is a subcontractor in the same manner as such requirements apply to 
contracts or other arrangements between a covered entity and business 
associate.
    (f)(1) Standard: Requirements for group health plans. (i) Except as 
provided under paragraph (f)(1)(ii) or (iii) of this section or as 
otherwise authorized under Sec.  164.508, a group health plan, in order 
to disclose protected health information to the plan sponsor or to 
provide for or permit the disclosure of protected health information to 
the plan sponsor by a health insurance issuer or HMO with respect to the 
group health plan, must ensure that the plan documents restrict uses and 
disclosures of such information by the plan sponsor consistent with the 
requirements of this subpart.
    (ii) Except as prohibited by Sec.  164.502(a)(5)(i), the group 
health plan, or a health insurance issuer or HMO with respect to the 
group health plan, may disclose summary health information to the plan 
sponsor, if the plan sponsor requests the summary health information for 
purposes of:
    (A) Obtaining premium bids from health plans for providing health 
insurance coverage under the group health plan; or
    (B) Modifying, amending, or terminating the group health plan.
    (iii) The group health plan, or a health insurance issuer or HMO 
with respect to the group health plan, may disclose to the plan sponsor 
information on whether the individual is participating in the group 
health plan, or is enrolled in or has disenrolled from a health 
insurance issuer or HMO offered by the plan.
    (2) Implementation specifications: Requirements for plan documents. 
The plan documents of the group health plan must be amended to 
incorporate provisions to:
    (i) Establish the permitted and required uses and disclosures of 
such information by the plan sponsor, provided that such permitted and 
required uses and disclosures may not be inconsistent with this subpart.
    (ii) Provide that the group health plan will disclose protected 
health information to the plan sponsor only upon receipt of a 
certification by the plan sponsor that the plan documents have been 
amended to incorporate the following provisions and that the plan 
sponsor agrees to:
    (A) Not use or further disclose the information other than as 
permitted or required by the plan documents or as required by law;
    (B) Ensure that any agents to whom it provides protected health 
information received from the group health plan agree to the same 
restrictions and conditions that apply to the plan sponsor with respect 
to such information;
    (C) Not use or disclose the information for employment-related 
actions and decisions or in connection with any other benefit or 
employee benefit plan of the plan sponsor;
    (D) Report to the group health plan any use or disclosure of the 
information that is inconsistent with the uses or disclosures provided 
for of which it becomes aware;
    (E) Make available protected health information in accordance with 
Sec.  164.524;
    (F) Make available protected health information for amendment and 
incorporate any amendments to protected health information in accordance 
with Sec.  164.526;
    (G) Make available the information required to provide an accounting 
of disclosures in accordance with Sec.  164.528;
    (H) Make its internal practices, books, and records relating to the 
use and disclosure of protected health information received from the 
group health plan available to the Secretary for purposes of determining 
compliance by the group health plan with this subpart;

[[Page 559]]

    (I) If feasible, return or destroy all protected health information 
received from the group health plan that the sponsor still maintains in 
any form and retain no copies of such information when no longer needed 
for the purpose for which disclosure was made, except that, if such 
return or destruction is not feasible, limit further uses and 
disclosures to those purposes that make the return or destruction of the 
information infeasible; and
    (J) Ensure that the adequate separation required in paragraph 
(f)(2)(iii) of this section is established.
    (iii) Provide for adequate separation between the group health plan 
and the plan sponsor. The plan documents must:
    (A) Describe those employees or classes of employees or other 
persons under the control of the plan sponsor to be given access to the 
protected health information to be disclosed, provided that any employee 
or person who receives protected health information relating to payment 
under, health care operations of, or other matters pertaining to the 
group health plan in the ordinary course of business must be included in 
such description;
    (B) Restrict the access to and use by such employees and other 
persons described in paragraph (f)(2)(iii)(A) of this section to the 
plan administration functions that the plan sponsor performs for the 
group health plan; and
    (C) Provide an effective mechanism for resolving any issues of 
noncompliance by persons described in paragraph (f)(2)(iii)(A) of this 
section with the plan document provisions required by this paragraph.
    (3) Implementation specifications: Uses and disclosures. A group 
health plan may:
    (i) Disclose protected health information to a plan sponsor to carry 
out plan administration functions that the plan sponsor performs only 
consistent with the provisions of paragraph (f)(2) of this section;
    (ii) Not permit a health insurance issuer or HMO with respect to the 
group health plan to disclose protected health information to the plan 
sponsor except as permitted by this paragraph;
    (iii) Not disclose and may not permit a health insurance issuer or 
HMO to disclose protected health information to a plan sponsor as 
otherwise permitted by this paragraph unless a statement required by 
Sec.  164.520(b)(1)(iii)(C) is included in the appropriate notice; and 
(iv) Not disclose protected health information to the plan sponsor for 
the purpose of employment-related actions or decisions or in connection 
with any other benefit or employee benefit plan of the plan sponsor.
    (g) Standard: Requirements for a covered entity with multiple 
covered functions. (1) A covered entity that performs multiple covered 
functions that would make the entity any combination of a health plan, a 
covered health care provider, and a health care clearinghouse, must 
comply with the standards, requirements, and implementation 
specifications of this subpart, as applicable to the health plan, health 
care provider, or health care clearinghouse covered functions performed.
    (2) A covered entity that performs multiple covered functions may 
use or disclose the protected health information of individuals who 
receive the covered entity's health plan or health care provider 
services, but not both, only for purposes related to the appropriate 
function being performed.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53267, Aug. 14, 2002; 
68 FR 8381, Feb. 20, 2003; 78 FR 5697, Jan. 25, 2013]



Sec.  164.506  Uses and disclosures to carry out treatment, payment,
or health care operations.

    (a) Standard: Permitted uses and disclosures. Except with respect to 
uses or disclosures that require an authorization under Sec.  
164.508(a)(2) through (4) or that are prohibited under Sec.  
164.502(a)(5)(i), a covered entity may use or disclose protected health 
information for treatment, payment, or health care operations as set 
forth in paragraph (c) of this section, provided that such use or 
disclosure is consistent with other applicable requirements of this 
subpart.
    (b) Standard: Consent for uses and disclosures permitted. (1) A 
covered entity may obtain consent of the individual to use or disclose 
protected health information to carry out treatment, payment, or health 
care operations.

[[Page 560]]

    (2) Consent, under paragraph (b) of this section, shall not be 
effective to permit a use or disclosure of protected health information 
when an authorization, under Sec.  164.508, is required or when another 
condition must be met for such use or disclosure to be permissible under 
this subpart.
    (c) Implementation specifications: Treatment, payment, or health 
care operations. (1) A covered entity may use or disclose protected 
health information for its own treatment, payment, or health care 
operations.
    (2) A covered entity may disclose protected health information for 
treatment activities of a health care provider.
    (3) A covered entity may disclose protected health information to 
another covered entity or a health care provider for the payment 
activities of the entity that receives the information.
    (4) A covered entity may disclose protected health information to 
another covered entity for health care operations activities of the 
entity that receives the information, if each entity either has or had a 
relationship with the individual who is the subject of the protected 
health information being requested, the protected health information 
pertains to such relationship, and the disclosure is:
    (i) For a purpose listed in paragraph (1) or (2) of the definition 
of health care operations; or
    (ii) For the purpose of health care fraud and abuse detection or 
compliance.
    (5) A covered entity that participates in an organized health care 
arrangement may disclose protected health information about an 
individual to other participants in the organized health care 
arrangement for any health care operations activities of the organized 
health care arrangement.

[67 FR 53268, Aug. 14, 2002, as amended at 78 FR 5698, Jan. 25, 2013]



Sec.  164.508  Uses and disclosures for which an authorization is
required.

    (a) Standard: Authorizations for uses and disclosures--(1) 
Authorization required: General rule. Except as otherwise permitted or 
required by this subchapter, a covered entity may not use or disclose 
protected health information without an authorization that is valid 
under this section. When a covered entity obtains or receives a valid 
authorization for its use or disclosure of protected health information, 
such use or disclosure must be consistent with such authorization.
    (2) Authorization required: Psychotherapy notes. Notwithstanding any 
provision of this subpart, other than the transition provisions in Sec.  
164.532, a covered entity must obtain an authorization for any use or 
disclosure of psychotherapy notes, except:
    (i) To carry out the following treatment, payment, or health care 
operations:
    (A) Use by the originator of the psychotherapy notes for treatment;
    (B) Use or disclosure by the covered entity for its own training 
programs in which students, trainees, or practitioners in mental health 
learn under supervision to practice or improve their skills in group, 
joint, family, or individual counseling; or
    (C) Use or disclosure by the covered entity to defend itself in a 
legal action or other proceeding brought by the individual; and
    (ii) A use or disclosure that is required by Sec.  164.502(a)(2)(ii) 
or permitted by Sec.  164.512(a); Sec.  164.512(d) with respect to the 
oversight of the originator of the psychotherapy notes; Sec.  
164.512(g)(1); or Sec.  164.512(j)(1)(i).
    (3) Authorization required: Marketing. (i) Notwithstanding any 
provision of this subpart, other than the transition provisions in Sec.  
164.532, a covered entity must obtain an authorization for any use or 
disclosure of protected health information for marketing, except if the 
communication is in the form of:
    (A) A face-to-face communication made by a covered entity to an 
individual; or
    (B) A promotional gift of nominal value provided by the covered 
entity.
    (ii) If the marketing involves financial remuneration, as defined in 
paragraph (3) of the definition of marketing at Sec.  164.501, to the 
covered entity from a third party, the authorization must state that 
such remuneration is involved.
    (4) Authorization required: Sale of protected health information. 
(i) Notwithstanding any provision of this subpart,

[[Page 561]]

other than the transition provisions in Sec.  164.532, a covered entity 
must obtain an authorization for any disclosure of protected health 
information which is a sale of protected health information, as defined 
in Sec.  164.501 of this subpart. (ii) Such authorization must state 
that the disclosure will result in remuneration to the covered entity.
    (b) Implementation specifications: General requirements--(1) Valid 
authorizations. (i) A valid authorization is a document that meets the 
requirements in paragraphs (a)(3)(ii), (a)(4)(ii), (c)(1), and (c)(2) of 
this section, as applicable.
    (ii) A valid authorization may contain elements or information in 
addition to the elements required by this section, provided that such 
additional elements or information are not inconsistent with the 
elements required by this section.
    (2) Defective authorizations. An authorization is not valid, if the 
document submitted has any of the following defects:
    (i) The expiration date has passed or the expiration event is known 
by the covered entity to have occurred;
    (ii) The authorization has not been filled out completely, with 
respect to an element described by paragraph (c) of this section, if 
applicable;
    (iii) The authorization is known by the covered entity to have been 
revoked;
    (iv) The authorization violates paragraph (b)(3) or (4) of this 
section, if applicable;
    (v) Any material information in the authorization is known by the 
covered entity to be false.
    (3) Compound authorizations. An authorization for use or disclosure 
of protected health information may not be combined with any other 
document to create a compound authorization, except as follows:
    (i) An authorization for the use or disclosure of protected health 
information for a research study may be combined with any other type of 
written permission for the same or another research study. This 
exception includes combining an authorization for the use or disclosure 
of protected health information for a research study with another 
authorization for the same research study, with an authorization for the 
creation or maintenance of a research database or repository, or with a 
consent to participate in research. Where a covered health care provider 
has conditioned the provision of research-related treatment on the 
provision of one of the authorizations, as permitted under paragraph 
(b)(4)(i) of this section, any compound authorization created under this 
paragraph must clearly differentiate between the conditioned and 
unconditioned components and provide the individual with an opportunity 
to opt in to the research activities described in the unconditioned 
authorization.
    (ii) An authorization for a use or disclosure of psychotherapy notes 
may only be combined with another authorization for a use or disclosure 
of psychotherapy notes.
    (iii) An authorization under this section, other than an 
authorization for a use or disclosure of psychotherapy notes, may be 
combined with any other such authorization under this section, except 
when a covered entity has conditioned the provision of treatment, 
payment, enrollment in the health plan, or eligibility for benefits 
under paragraph (b)(4) of this section on the provision of one of the 
authorizations. The prohibition in this paragraph on combining 
authorizations where one authorization conditions the provision of 
treatment, payment, enrollment in a health plan, or eligibility for 
benefits under paragraph (b)(4) of this section does not apply to a 
compound authorization created in accordance with paragraph (b)(3)(i) of 
this section.
    (4) Prohibition on conditioning of authorizations. A covered entity 
may not condition the provision to an individual of treatment, payment, 
enrollment in the health plan, or eligibility for benefits on the 
provision of an authorization, except:
    (i) A covered health care provider may condition the provision of 
research-related treatment on provision of an authorization for the use 
or disclosure of protected health information for such research under 
this section;
    (ii) A health plan may condition enrollment in the health plan or 
eligibility for benefits on provision of an authorization requested by 
the health

[[Page 562]]

plan prior to an individual's enrollment in the health plan, if:
    (A) The authorization sought is for the health plan's eligibility or 
enrollment determinations relating to the individual or for its 
underwriting or risk rating determinations; and
    (B) The authorization is not for a use or disclosure of 
psychotherapy notes under paragraph (a)(2) of this section; and
    (iii) A covered entity may condition the provision of health care 
that is solely for the purpose of creating protected health information 
for disclosure to a third party on provision of an authorization for the 
disclosure of the protected health information to such third party.
    (5) Revocation of authorizations. An individual may revoke an 
authorization provided under this section at any time, provided that the 
revocation is in writing, except to the extent that:
    (i) The covered entity has taken action in reliance thereon; or
    (ii) If the authorization was obtained as a condition of obtaining 
insurance coverage, other law provides the insurer with the right to 
contest a claim under the policy or the policy itself.
    (6) Documentation. A covered entity must document and retain any 
signed authorization under this section as required by Sec.  164.530(j).
    (c) Implementation specifications: Core elements and requirements--
(1) Core elements. A valid authorization under this section must contain 
at least the following elements:
    (i) A description of the information to be used or disclosed that 
identifies the information in a specific and meaningful fashion.
    (ii) The name or other specific identification of the person(s), or 
class of persons, authorized to make the requested use or disclosure.
    (iii) The name or other specific identification of the person(s), or 
class of persons, to whom the covered entity may make the requested use 
or disclosure.
    (iv) A description of each purpose of the requested use or 
disclosure. The statement ``at the request of the individual'' is a 
sufficient description of the purpose when an individual initiates the 
authorization and does not, or elects not to, provide a statement of the 
purpose.
    (v) An expiration date or an expiration event that relates to the 
individual or the purpose of the use or disclosure. The statement ``end 
of the research study,'' ``none,'' or similar language is sufficient if 
the authorization is for a use or disclosure of protected health 
information for research, including for the creation and maintenance of 
a research database or research repository.
    (vi) Signature of the individual and date. If the authorization is 
signed by a personal representative of the individual, a description of 
such representative's authority to act for the individual must also be 
provided.
    (2) Required statements. In addition to the core elements, the 
authorization must contain statements adequate to place the individual 
on notice of all of the following:
    (i) The individual's right to revoke the authorization in writing, 
and either:
    (A) The exceptions to the right to revoke and a description of how 
the individual may revoke the authorization; or
    (B) To the extent that the information in paragraph (c)(2)(i)(A) of 
this section is included in the notice required by Sec.  164.520, a 
reference to the covered entity's notice.
    (ii) The ability or inability to condition treatment, payment, 
enrollment or eligibility for benefits on the authorization, by stating 
either:
    (A) The covered entity may not condition treatment, payment, 
enrollment or eligibility for benefits on whether the individual signs 
the authorization when the prohibition on conditioning of authorizations 
in paragraph (b)(4) of this section applies; or
    (B) The consequences to the individual of a refusal to sign the 
authorization when, in accordance with paragraph (b)(4) of this section, 
the covered entity can condition treatment, enrollment in the health 
plan, or eligibility for benefits on failure to obtain such 
authorization.
    (iii) The potential for information disclosed pursuant to the 
authorization

[[Page 563]]

to be subject to redisclosure by the recipient and no longer be 
protected by this subpart.
    (3) Plain language requirement. The authorization must be written in 
plain language.
    (4) Copy to the individual. If a covered entity seeks an 
authorization from an individual for a use or disclosure of protected 
health information, the covered entity must provide the individual with 
a copy of the signed authorization.

[67 FR 53268, Aug. 14, 2002, as amended at 78 FR 5699, Jan. 25, 2013]



Sec.  164.510  Uses and disclosures requiring an opportunity for the
individual to agree or to object.

    A covered entity may use or disclose protected health information, 
provided that the individual is informed in advance of the use or 
disclosure and has the opportunity to agree to or prohibit or restrict 
the use or disclosure, in accordance with the applicable requirements of 
this section. The covered entity may orally inform the individual of and 
obtain the individual's oral agreement or objection to a use or 
disclosure permitted by this section.
    (a) Standard: Use and disclosure for facility directories--(1) 
Permitted uses and disclosure. Except when an objection is expressed in 
accordance with paragraphs (a)(2) or (3) of this section, a covered 
health care provider may:
    (i) Use the following protected health information to maintain a 
directory of individuals in its facility:
    (A) The individual's name;
    (B) The individual's location in the covered health care provider's 
facility;
    (C) The individual's condition described in general terms that does 
not communicate specific medical information about the individual; and
    (D) The individual's religious affiliation; and
    (ii) Use or disclose for directory purposes such information:
    (A) To members of the clergy; or
    (B) Except for religious affiliation, to other persons who ask for 
the individual by name.
    (2) Opportunity to object. A covered health care provider must 
inform an individual of the protected health information that it may 
include in a directory and the persons to whom it may disclose such 
information (including disclosures to clergy of information regarding 
religious affiliation) and provide the individual with the opportunity 
to restrict or prohibit some or all of the uses or disclosures permitted 
by paragraph (a)(1) of this section.
    (3) Emergency circumstances. (i) If the opportunity to object to 
uses or disclosures required by paragraph (a)(2) of this section cannot 
practicably be provided because of the individual's incapacity or an 
emergency treatment circumstance, a covered health care provider may use 
or disclose some or all of the protected health information permitted by 
paragraph (a)(1) of this section for the facility's directory, if such 
disclosure is:
    (A) Consistent with a prior expressed preference of the individual, 
if any, that is known to the covered health care provider; and
    (B) In the individual's best interest as determined by the covered 
health care provider, in the exercise of professional judgment.
    (ii) The covered health care provider must inform the individual and 
provide an opportunity to object to uses or disclosures for directory 
purposes as required by paragraph (a)(2) of this section when it becomes 
practicable to do so.
    (b) Standard: Uses and disclosures for involvement in the 
individual's care and notification purposes--(1) Permitted uses and 
disclosures. (i) A covered entity may, in accordance with paragraphs 
(b)(2), (b)(3), or (b)(5) of this section, disclose to a family member, 
other relative, or a close personal friend of the individual, or any 
other person identified by the individual, the protected health 
information directly relevant to such person's involvement with the 
individual's health care or payment related to the individual's health 
care.
    (ii) A covered entity may use or disclose protected health 
information to notify, or assist in the notification of (including 
identifying or locating), a family member, a personal representative of 
the individual, or another person responsible for the care of the 
individual of the individual's location, general condition, or death. 
Any such use

[[Page 564]]

or disclosure of protected health information for such notification 
purposes must be in accordance with paragraphs (b)(2), (b)(3), (b)(4), 
or (b)(5) of this section, as applicable.
    (2) Uses and disclosures with the individual present. If the 
individual is present for, or otherwise available prior to, a use or 
disclosure permitted by paragraph (b)(1) of this section and has the 
capacity to make health care decisions, the covered entity may use or 
disclose the protected health information if it:
    (i) Obtains the individual's agreement;
    (ii) Provides the individual with the opportunity to object to the 
disclosure, and the individual does not express an objection; or
    (iii) Reasonably infers from the circumstances, based on the 
exercise of professional judgment, that the individual does not object 
to the disclosure.
    (3) Limited uses and disclosures when the individual is not present. 
If the individual is not present, or the opportunity to agree or object 
to the use or disclosure cannot practicably be provided because of the 
individual's incapacity or an emergency circumstance, the covered entity 
may, in the exercise of professional judgment, determine whether the 
disclosure is in the best interests of the individual and, if so, 
disclose only the protected health information that is directly relevant 
to the person's involvement with the individual's care or payment 
related to the individual's health care or needed for notification 
purposes. A covered entity may use professional judgment and its 
experience with common practice to make reasonable inferences of the 
individual's best interest in allowing a person to act on behalf of the 
individual to pick up filled prescriptions, medical supplies, X-rays, or 
other similar forms of protected health information.
    (4) Uses and disclosures for disaster relief purposes. A covered 
entity may use or disclose protected health information to a public or 
private entity authorized by law or by its charter to assist in disaster 
relief efforts, for the purpose of coordinating with such entities the 
uses or disclosures permitted by paragraph (b)(1)(ii) of this section. 
The requirements in paragraphs (b)(2), (b)(3), or (b)(5) of this section 
apply to such uses and disclosures to the extent that the covered 
entity, in the exercise of professional judgment, determines that the 
requirements do not interfere with the ability to respond to the 
emergency circumstances.
    (5) Uses and disclosures when the individual is deceased. If the 
individual is deceased, a covered entity may disclose to a family 
member, or other persons identified in paragraph (b)(1) of this section 
who were involved in the individual's care or payment for health care 
prior to the individual's death, protected health information of the 
individual that is relevant to such person's involvement, unless doing 
so is inconsistent with any prior expressed preference of the individual 
that is known to the covered entity.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53270, Aug. 14, 2002; 
78 FR 5699, Jan. 25, 2013]



Sec.  164.512  Uses and disclosures for which an authorization or
opportunity to agree or object is not required.

    A covered entity may use or disclose protected health information 
without the written authorization of the individual, as described in 
Sec.  164.508, or the opportunity for the individual to agree or object 
as described in Sec.  164.510, in the situations covered by this 
section, subject to the applicable requirements of this section. When 
the covered entity is required by this section to inform the individual 
of, or when the individual may agree to, a use or disclosure permitted 
by this section, the covered entity's information and the individual's 
agreement may be given orally.
    (a) Standard: Uses and disclosures required by law. (1) A covered 
entity may use or disclose protected health information to the extent 
that such use or disclosure is required by law and the use or disclosure 
complies with and is limited to the relevant requirements of such law.
    (2) A covered entity must meet the requirements described in 
paragraph (c), (e), or (f) of this section for uses or disclosures 
required by law.
    (b) Standard: Uses and disclosures for public health activities--(1) 
Permitted

[[Page 565]]

uses and disclosures. A covered entity may use or disclose protected 
health information for the public health activities and purposes 
described in this paragraph to:
    (i) A public health authority that is authorized by law to collect 
or receive such information for the purpose of preventing or controlling 
disease, injury, or disability, including, but not limited to, the 
reporting of disease, injury, vital events such as birth or death, and 
the conduct of public health surveillance, public health investigations, 
and public health interventions; or, at the direction of a public health 
authority, to an official of a foreign government agency that is acting 
in collaboration with a public health authority;
    (ii) A public health authority or other appropriate government 
authority authorized by law to receive reports of child abuse or 
neglect;
    (iii) A person subject to the jurisdiction of the Food and Drug 
Administration (FDA) with respect to an FDA-regulated product or 
activity for which that person has responsibility, for the purpose of 
activities related to the quality, safety or effectiveness of such FDA-
regulated product or activity. Such purposes include:
    (A) To collect or report adverse events (or similar activities with 
respect to food or dietary supplements), product defects or problems 
(including problems with the use or labeling of a product), or 
biological product deviations;
    (B) To track FDA-regulated products;
    (C) To enable product recalls, repairs, or replacement, or lookback 
(including locating and notifying individuals who have received products 
that have been recalled, withdrawn, or are the subject of lookback); or
    (D) To conduct post marketing surveillance;
    (iv) A person who may have been exposed to a communicable disease or 
may otherwise be at risk of contracting or spreading a disease or 
condition, if the covered entity or public health authority is 
authorized by law to notify such person as necessary in the conduct of a 
public health intervention or investigation; or
    (v) An employer, about an individual who is a member of the 
workforce of the employer, if:
    (A) The covered entity is a covered health care provider who 
provides health care to the individual at the request of the employer:
    (1) To conduct an evaluation relating to medical surveillance of the 
workplace; or
    (2) To evaluate whether the individual has a work-related illness or 
injury;
    (B) The protected health information that is disclosed consists of 
findings concerning a work-related illness or injury or a workplace-
related medical surveillance;
    (C) The employer needs such findings in order to comply with its 
obligations, under 29 CFR parts 1904 through 1928, 30 CFR parts 50 
through 90, or under state law having a similar purpose, to record such 
illness or injury or to carry out responsibilities for workplace medical 
surveillance; and
    (D) The covered health care provider provides written notice to the 
individual that protected health information relating to the medical 
surveillance of the workplace and work-related illnesses and injuries is 
disclosed to the employer:
    (1) By giving a copy of the notice to the individual at the time the 
health care is provided; or
    (2) If the health care is provided on the work site of the employer, 
by posting the notice in a prominent place at the location where the 
health care is provided.
    (vi) A school, about an individual who is a student or prospective 
student of the school, if:
    (A) The protected health information that is disclosed is limited to 
proof of immunization;
    (B) The school is required by State or other law to have such proof 
of immunization prior to admitting the individual; and
    (C) The covered entity obtains and documents the agreement to the 
disclosure from either:
    (1) A parent, guardian, or other person acting in loco parentis of 
the individual, if the individual is an unemancipated minor; or

[[Page 566]]

    (2) The individual, if the individual is an adult or emancipated 
minor.
    (2) Permitted uses. If the covered entity also is a public health 
authority, the covered entity is permitted to use protected health 
information in all cases in which it is permitted to disclose such 
information for public health activities under paragraph (b)(1) of this 
section.
    (c) Standard: Disclosures about victims of abuse, neglect or 
domestic violence--(1) Permitted disclosures. Except for reports of 
child abuse or neglect permitted by paragraph (b)(1)(ii) of this 
section, a covered entity may disclose protected health information 
about an individual whom the covered entity reasonably believes to be a 
victim of abuse, neglect, or domestic violence to a government 
authority, including a social service or protective services agency, 
authorized by law to receive reports of such abuse, neglect, or domestic 
violence:
    (i) To the extent the disclosure is required by law and the 
disclosure complies with and is limited to the relevant requirements of 
such law;
    (ii) If the individual agrees to the disclosure; or
    (iii) To the extent the disclosure is expressly authorized by 
statute or regulation and:
    (A) The covered entity, in the exercise of professional judgment, 
believes the disclosure is necessary to prevent serious harm to the 
individual or other potential victims; or
    (B) If the individual is unable to agree because of incapacity, a 
law enforcement or other public official authorized to receive the 
report represents that the protected health information for which 
disclosure is sought is not intended to be used against the individual 
and that an immediate enforcement activity that depends upon the 
disclosure would be materially and adversely affected by waiting until 
the individual is able to agree to the disclosure.
    (2) Informing the individual. A covered entity that makes a 
disclosure permitted by paragraph (c)(1) of this section must promptly 
inform the individual that such a report has been or will be made, 
except if:
    (i) The covered entity, in the exercise of professional judgment, 
believes informing the individual would place the individual at risk of 
serious harm; or
    (ii) The covered entity would be informing a personal 
representative, and the covered entity reasonably believes the personal 
representative is responsible for the abuse, neglect, or other injury, 
and that informing such person would not be in the best interests of the 
individual as determined by the covered entity, in the exercise of 
professional judgment.
    (d) Standard: Uses and disclosures for health oversight activities--
(1) Permitted disclosures. A covered entity may disclose protected 
health information to a health oversight agency for oversight activities 
authorized by law, including audits; civil, administrative, or criminal 
investigations; inspections; licensure or disciplinary actions; civil, 
administrative, or criminal proceedings or actions; or other activities 
necessary for appropriate oversight of:
    (i) The health care system;
    (ii) Government benefit programs for which health information is 
relevant to beneficiary eligibility;
    (iii) Entities subject to government regulatory programs for which 
health information is necessary for determining compliance with program 
standards; or
    (iv) Entities subject to civil rights laws for which health 
information is necessary for determining compliance.
    (2) Exception to health oversight activities. For the purpose of the 
disclosures permitted by paragraph (d)(1) of this section, a health 
oversight activity does not include an investigation or other activity 
in which the individual is the subject of the investigation or activity 
and such investigation or other activity does not arise out of and is 
not directly related to:
    (i) The receipt of health care;
    (ii) A claim for public benefits related to health; or
    (iii) Qualification for, or receipt of, public benefits or services 
when a patient's health is integral to the claim for public benefits or 
services.
    (3) Joint activities or investigations. Nothwithstanding paragraph 
(d)(2) of this section, if a health oversight activity or investigation 
is conducted in

[[Page 567]]

conjunction with an oversight activity or investigation relating to a 
claim for public benefits not related to health, the joint activity or 
investigation is considered a health oversight activity for purposes of 
paragraph (d) of this section.
    (4) Permitted uses. If a covered entity also is a health oversight 
agency, the covered entity may use protected health information for 
health oversight activities as permitted by paragraph (d) of this 
section.
    (e) Standard: Disclosures for judicial and administrative 
proceedings--(1) Permitted disclosures. A covered entity may disclose 
protected health information in the course of any judicial or 
administrative proceeding:
    (i) In response to an order of a court or administrative tribunal, 
provided that the covered entity discloses only the protected health 
information expressly authorized by such order; or
    (ii) In response to a subpoena, discovery request, or other lawful 
process, that is not accompanied by an order of a court or 
administrative tribunal, if:
    (A) The covered entity receives satisfactory assurance, as described 
in paragraph (e)(1)(iii) of this section, from the party seeking the 
information that reasonable efforts have been made by such party to 
ensure that the individual who is the subject of the protected health 
information that has been requested has been given notice of the 
request; or
    (B) The covered entity receives satisfactory assurance, as described 
in paragraph (e)(1)(iv) of this section, from the party seeking the 
information that reasonable efforts have been made by such party to 
secure a qualified protective order that meets the requirements of 
paragraph (e)(1)(v) of this section.
    (iii) For the purposes of paragraph (e)(1)(ii)(A) of this section, a 
covered entity receives satisfactory assurances from a party seeking 
protected health information if the covered entity receives from such 
party a written statement and accompanying documentation demonstrating 
that:
    (A) The party requesting such information has made a good faith 
attempt to provide written notice to the individual (or, if the 
individual's location is unknown, to mail a notice to the individual's 
last known address);
    (B) The notice included sufficient information about the litigation 
or proceeding in which the protected health information is requested to 
permit the individual to raise an objection to the court or 
administrative tribunal; and
    (C) The time for the individual to raise objections to the court or 
administrative tribunal has elapsed, and:
    (1) No objections were filed; or
    (2) All objections filed by the individual have been resolved by the 
court or the administrative tribunal and the disclosures being sought 
are consistent with such resolution.
    (iv) For the purposes of paragraph (e)(1)(ii)(B) of this section, a 
covered entity receives satisfactory assurances from a party seeking 
protected health information, if the covered entity receives from such 
party a written statement and accompanying documentation demonstrating 
that:
    (A) The parties to the dispute giving rise to the request for 
information have agreed to a qualified protective order and have 
presented it to the court or administrative tribunal with jurisdiction 
over the dispute; or
    (B) The party seeking the protected health information has requested 
a qualified protective order from such court or administrative tribunal.
    (v) For purposes of paragraph (e)(1) of this section, a qualified 
protective order means, with respect to protected health information 
requested under paragraph (e)(1)(ii) of this section, an order of a 
court or of an administrative tribunal or a stipulation by the parties 
to the litigation or administrative proceeding that:
    (A) Prohibits the parties from using or disclosing the protected 
health information for any purpose other than the litigation or 
proceeding for which such information was requested; and
    (B) Requires the return to the covered entity or destruction of the 
protected health information (including all copies made) at the end of 
the litigation or proceeding.
    (vi) Notwithstanding paragraph (e)(1)(ii) of this section, a covered 
entity may disclose protected health information in response to lawful 
process described in paragraph (e)(1)(ii) of this

[[Page 568]]

section without receiving satisfactory assurance under paragraph 
(e)(1)(ii)(A) or (B) of this section, if the covered entity makes 
reasonable efforts to provide notice to the individual sufficient to 
meet the requirements of paragraph (e)(1)(iii) of this section or to 
seek a qualified protective order sufficient to meet the requirements of 
paragraph (e)(1)(v) of this section.
    (2) Other uses and disclosures under this section. The provisions of 
this paragraph do not supersede other provisions of this section that 
otherwise permit or restrict uses or disclosures of protected health 
information.
    (f) Standard: Disclosures for law enforcement purposes. A covered 
entity may disclose protected health information for a law enforcement 
purpose to a law enforcement official if the conditions in paragraphs 
(f)(1) through (f)(6) of this section are met, as applicable.
    (1) Permitted disclosures: Pursuant to process and as otherwise 
required by law. A covered entity may disclose protected health 
information:
    (i) As required by law including laws that require the reporting of 
certain types of wounds or other physical injuries, except for laws 
subject to paragraph (b)(1)(ii) or (c)(1)(i) of this section; or
    (ii) In compliance with and as limited by the relevant requirements 
of:
    (A) A court order or court-ordered warrant, or a subpoena or summons 
issued by a judicial officer;
    (B) A grand jury subpoena; or
    (C) An administrative request, including an administrative subpoena 
or summons, a civil or an authorized investigative demand, or similar 
process authorized under law, provided that:
    (1) The information sought is relevant and material to a legitimate 
law enforcement inquiry;
    (2) The request is specific and limited in scope to the extent 
reasonably practicable in light of the purpose for which the information 
is sought; and
    (3) De-identified information could not reasonably be used.
    (2) Permitted disclosures: Limited information for identification 
and location purposes. Except for disclosures required by law as 
permitted by paragraph (f)(1) of this section, a covered entity may 
disclose protected health information in response to a law enforcement 
official's request for such information for the purpose of identifying 
or locating a suspect, fugitive, material witness, or missing person, 
provided that:
    (i) The covered entity may disclose only the following information:
    (A) Name and address;
    (B) Date and place of birth;
    (C) Social security number;
    (D) ABO blood type and rh factor;
    (E) Type of injury;
    (F) Date and time of treatment;
    (G) Date and time of death, if applicable; and
    (H) A description of distinguishing physical characteristics, 
including height, weight, gender, race, hair and eye color, presence or 
absence of facial hair (beard or moustache), scars, and tattoos.
    (ii) Except as permitted by paragraph (f)(2)(i) of this section, the 
covered entity may not disclose for the purposes of identification or 
location under paragraph (f)(2) of this section any protected health 
information related to the individual's DNA or DNA analysis, dental 
records, or typing, samples or analysis of body fluids or tissue.
    (3) Permitted disclosure: Victims of a crime. Except for disclosures 
required by law as permitted by paragraph (f)(1) of this section, a 
covered entity may disclose protected health information in response to 
a law enforcement official's request for such information about an 
individual who is or is suspected to be a victim of a crime, other than 
disclosures that are subject to paragraph (b) or (c) of this section, 
if:
    (i) The individual agrees to the disclosure; or
    (ii) The covered entity is unable to obtain the individual's 
agreement because of incapacity or other emergency circumstance, 
provided that:
    (A) The law enforcement official represents that such information is 
needed to determine whether a violation of law by a person other than 
the victim has occurred, and such information is not intended to be used 
against the victim;
    (B) The law enforcement official represents that immediate law 
enforcement activity that depends upon the

[[Page 569]]

disclosure would be materially and adversely affected by waiting until 
the individual is able to agree to the disclosure; and
    (C) The disclosure is in the best interests of the individual as 
determined by the covered entity, in the exercise of professional 
judgment.
    (4) Permitted disclosure: Decedents. A covered entity may disclose 
protected health information about an individual who has died to a law 
enforcement official for the purpose of alerting law enforcement of the 
death of the individual if the covered entity has a suspicion that such 
death may have resulted from criminal conduct.
    (5) Permitted disclosure: Crime on premises. A covered entity may 
disclose to a law enforcement official protected health information that 
the covered entity believes in good faith constitutes evidence of 
criminal conduct that occurred on the premises of the covered entity.
    (6) Permitted disclosure: Reporting crime in emergencies. (i) A 
covered health care provider providing emergency health care in response 
to a medical emergency, other than such emergency on the premises of the 
covered health care provider, may disclose protected health information 
to a law enforcement official if such disclosure appears necessary to 
alert law enforcement to:
    (A) The commission and nature of a crime;
    (B) The location of such crime or of the victim(s) of such crime; 
and
    (C) The identity, description, and location of the perpetrator of 
such crime.
    (ii) If a covered health care provider believes that the medical 
emergency described in paragraph (f)(6)(i) of this section is the result 
of abuse, neglect, or domestic violence of the individual in need of 
emergency health care, paragraph (f)(6)(i) of this section does not 
apply and any disclosure to a law enforcement official for law 
enforcement purposes is subject to paragraph (c) of this section.
    (g) Standard: Uses and disclosures about decedents--(1) Coroners and 
medical examiners. A covered entity may disclose protected health 
information to a coroner or medical examiner for the purpose of 
identifying a deceased person, determining a cause of death, or other 
duties as authorized by law. A covered entity that also performs the 
duties of a coroner or medical examiner may use protected health 
information for the purposes described in this paragraph.
    (2) Funeral directors. A covered entity may disclose protected 
health information to funeral directors, consistent with applicable law, 
as necessary to carry out their duties with respect to the decedent. If 
necessary for funeral directors to carry out their duties, the covered 
entity may disclose the protected health information prior to, and in 
reasonable anticipation of, the individual's death.
    (h) Standard: Uses and disclosures for cadaveric organ, eye or 
tissue donation purposes. A covered entity may use or disclose protected 
health information to organ procurement organizations or other entities 
engaged in the procurement, banking, or transplantation of cadaveric 
organs, eyes, or tissue for the purpose of facilitating organ, eye or 
tissue donation and transplantation.
    (i) Standard: Uses and disclosures for research purposes--(1) 
Permitted uses and disclosures. A covered entity may use or disclose 
protected health information for research, regardless of the source of 
funding of the research, provided that:
    (i) Board approval of a waiver of authorization. The covered entity 
obtains documentation that an alteration to or waiver, in whole or in 
part, of the individual authorization required by Sec.  164.508 for use 
or disclosure of protected health information has been approved by 
either:
    (A) An Institutional Review Board (IRB), established in accordance 
with 7 CFR lc.107, 10 CFR 745.107, 14 CFR 1230.107, 15 CFR 27.107, 16 
CFR 1028.107, 21 CFR 56.107, 22 CFR 225.107, 24 CFR 60.107, 28 CFR 
46.107, 32 CFR 219.107, 34 CFR 97.107, 38 CFR 16.107, 40 CFR 26.107, 45 
CFR 46.107, 45 CFR 690.107, or 49 CFR 11.107; or
    (B) A privacy board that:
    (1) Has members with varying backgrounds and appropriate 
professional competency as necessary to review the effect of the 
research protocol on the individual's privacy rights and related 
interests;

[[Page 570]]

    (2) Includes at least one member who is not affiliated with the 
covered entity, not affiliated with any entity conducting or sponsoring 
the research, and not related to any person who is affiliated with any 
of such entities; and
    (3) Does not have any member participating in a review of any 
project in which the member has a conflict of interest.
    (ii) Reviews preparatory to research. The covered entity obtains 
from the researcher representations that:
    (A) Use or disclosure is sought solely to review protected health 
information as necessary to prepare a research protocol or for similar 
purposes preparatory to research;
    (B) No protected health information is to be removed from the 
covered entity by the researcher in the course of the review; and
    (C) The protected health information for which use or access is 
sought is necessary for the research purposes.
    (iii) Research on decedent's information. The covered entity obtains 
from the researcher:
    (A) Representation that the use or disclosure sought is solely for 
research on the protected health information of decedents;
    (B) Documentation, at the request of the covered entity, of the 
death of such individuals; and
    (C) Representation that the protected health information for which 
use or disclosure is sought is necessary for the research purposes.
    (2) Documentation of waiver approval. For a use or disclosure to be 
permitted based on documentation of approval of an alteration or waiver, 
under paragraph (i)(1)(i) of this section, the documentation must 
include all of the following:
    (i) Identification and date of action. A statement identifying the 
IRB or privacy board and the date on which the alteration or waiver of 
authorization was approved;
    (ii) Waiver criteria. A statement that the IRB or privacy board has 
determined that the alteration or waiver, in whole or in part, of 
authorization satisfies the following criteria:
    (A) The use or disclosure of protected health information involves 
no more than a minimal risk to the privacy of individuals, based on, at 
least, the presence of the following elements;
    (1) An adequate plan to protect the identifiers from improper use 
and disclosure;
    (2) An adequate plan to destroy the identifiers at the earliest 
opportunity consistent with conduct of the research, unless there is a 
health or research justification for retaining the identifiers or such 
retention is otherwise required by law; and
    (3) Adequate written assurances that the protected health 
information will not be reused or disclosed to any other person or 
entity, except as required by law, for authorized oversight of the 
research study, or for other research for which the use or disclosure of 
protected health information would be permitted by this subpart;
    (B) The research could not practicably be conducted without the 
waiver or alteration; and
    (C) The research could not practicably be conducted without access 
to and use of the protected health information.
    (iii) Protected health information needed. A brief description of 
the protected health information for which use or access has been 
determined to be necessary by the institutional review board or privacy 
board, pursuant to paragraph (i)(2)(ii)(C) of this section;
    (iv) Review and approval procedures. A statement that the alteration 
or waiver of authorization has been reviewed and approved under either 
normal or expedited review procedures, as follows:
    (A) An IRB must follow the requirements of the Common Rule, 
including the normal review procedures (7 CFR 1c.108(b), 10 CFR 
745.108(b), 14 CFR 1230.108(b), 15 CFR 27.108(b), 16 CFR 1028.108(b), 21 
CFR 56.108(b), 22 CFR 225.108(b), 24 CFR 60.108(b), 28 CFR 46.108(b), 32 
CFR 219.108(b), 34 CFR 97.108(b), 38 CFR 16.108(b), 40 CFR 26.108(b), 45 
CFR 46.108(b), 45 CFR 690.108(b), or 49 CFR 11.108(b)) or the expedited 
review procedures (7 CFR 1c.110, 10 CFR 745.110, 14 CFR 1230.110, 15 CFR 
27.110, 16 CFR 1028.110, 21 CFR 56.110, 22 CFR 225.110, 24 CFR 60.110, 
28 CFR 46.110, 32 CFR 219.110, 34 CFR 97.110, 38 CFR 16.110, 40 CFR 
26.110, 45

[[Page 571]]

CFR 46.110, 45 CFR 690.110, or 49 CFR 11.110);
    (B) A privacy board must review the proposed research at convened 
meetings at which a majority of the privacy board members are present, 
including at least one member who satisfies the criterion stated in 
paragraph (i)(1)(i)(B)(2) of this section, and the alteration or waiver 
of authorization must be approved by the majority of the privacy board 
members present at the meeting, unless the privacy board elects to use 
an expedited review procedure in accordance with paragraph (i)(2)(iv)(C) 
of this section;
    (C) A privacy board may use an expedited review procedure if the 
research involves no more than minimal risk to the privacy of the 
individuals who are the subject of the protected health information for 
which use or disclosure is being sought. If the privacy board elects to 
use an expedited review procedure, the review and approval of the 
alteration or waiver of authorization may be carried out by the chair of 
the privacy board, or by one or more members of the privacy board as 
designated by the chair; and
    (v) Required signature. The documentation of the alteration or 
waiver of authorization must be signed by the chair or other member, as 
designated by the chair, of the IRB or the privacy board, as applicable.
    (j) Standard: Uses and disclosures to avert a serious threat to 
health or safety--(1) Permitted disclosures. A covered entity may, 
consistent with applicable law and standards of ethical conduct, use or 
disclose protected health information, if the covered entity, in good 
faith, believes the use or disclosure:
    (i)(A) Is necessary to prevent or lessen a serious and imminent 
threat to the health or safety of a person or the public; and
    (B) Is to a person or persons reasonably able to prevent or lessen 
the threat, including the target of the threat; or
    (ii) Is necessary for law enforcement authorities to identify or 
apprehend an individual:
    (A) Because of a statement by an individual admitting participation 
in a violent crime that the covered entity reasonably believes may have 
caused serious physical harm to the victim; or
    (B) Where it appears from all the circumstances that the individual 
has escaped from a correctional institution or from lawful custody, as 
those terms are defined in Sec.  164.501.
    (2) Use or disclosure not permitted. A use or disclosure pursuant to 
paragraph (j)(1)(ii)(A) of this section may not be made if the 
information described in paragraph (j)(1)(ii)(A) of this section is 
learned by the covered entity:
    (i) In the course of treatment to affect the propensity to commit 
the criminal conduct that is the basis for the disclosure under 
paragraph (j)(1)(ii)(A) of this section, or counseling or therapy; or
    (ii) Through a request by the individual to initiate or to be 
referred for the treatment, counseling, or therapy described in 
paragraph (j)(2)(i) of this section.
    (3) Limit on information that may be disclosed. A disclosure made 
pursuant to paragraph (j)(1)(ii)(A) of this section shall contain only 
the statement described in paragraph (j)(1)(ii)(A) of this section and 
the protected health information described in paragraph (f)(2)(i) of 
this section.
    (4) Presumption of good faith belief. A covered entity that uses or 
discloses protected health information pursuant to paragraph (j)(1) of 
this section is presumed to have acted in good faith with regard to a 
belief described in paragraph (j)(1)(i) or (ii) of this section, if the 
belief is based upon the covered entity's actual knowledge or in 
reliance on a credible representation by a person with apparent 
knowledge or authority.
    (k) Standard: Uses and disclosures for specialized government 
functions--(1) Military and veterans activities--(i) Armed Forces 
personnel. A covered entity may use and disclose the protected health 
information of individuals who are Armed Forces personnel for activities 
deemed necessary by appropriate military command authorities to assure 
the proper execution of the military mission, if the appropriate 
military authority has published by notice in the Federal Register the 
following information:

[[Page 572]]

    (A) Appropriate military command authorities; and
    (B) The purposes for which the protected health information may be 
used or disclosed.
    (ii) Separation or discharge from military service. A covered entity 
that is a component of the Departments of Defense or Homeland Security 
may disclose to the Department of Veterans Affairs (DVA) the protected 
health information of an individual who is a member of the Armed Forces 
upon the separation or discharge of the individual from military service 
for the purpose of a determination by DVA of the individual's 
eligibility for or entitlement to benefits under laws administered by 
the Secretary of Veterans Affairs.
    (iii) Veterans. A covered entity that is a component of the 
Department of Veterans Affairs may use and disclose protected health 
information to components of the Department that determine eligibility 
for or entitlement to, or that provide, benefits under the laws 
administered by the Secretary of Veterans Affairs.
    (iv) Foreign military personnel. A covered entity may use and 
disclose the protected health information of individuals who are foreign 
military personnel to their appropriate foreign military authority for 
the same purposes for which uses and disclosures are permitted for Armed 
Forces personnel under the notice published in the Federal Register 
pursuant to paragraph (k)(1)(i) of this section.
    (2) National security and intelligence activities. A covered entity 
may disclose protected health information to authorized federal 
officials for the conduct of lawful intelligence, counter-intelligence, 
and other national security activities authorized by the National 
Security Act (50 U.S.C. 401, et seq.) and implementing authority (e.g., 
Executive Order 12333).
    (3) Protective services for the President and others. A covered 
entity may disclose protected health information to authorized Federal 
officials for the provision of protective services to the President or 
other persons authorized by 18 U.S.C. 3056 or to foreign heads of state 
or other persons authorized by 22 U.S.C. 2709(a)(3), or for the conduct 
of investigations authorized by 18 U.S.C. 871 and 879.
    (4) Medical suitability determinations. A covered entity that is a 
component of the Department of State may use protected health 
information to make medical suitability determinations and may disclose 
whether or not the individual was determined to be medically suitable to 
the officials in the Department of State who need access to such 
information for the following purposes:
    (i) For the purpose of a required security clearance conducted 
pursuant to Executive Orders 10450 and 12968;
    (ii) As necessary to determine worldwide availability or 
availability for mandatory service abroad under sections 101(a)(4) and 
504 of the Foreign Service Act; or
    (iii) For a family to accompany a Foreign Service member abroad, 
consistent with section 101(b)(5) and 904 of the Foreign Service Act.
    (5) Correctional institutions and other law enforcement custodial 
situations--(i) Permitted disclosures. A covered entity may disclose to 
a correctional institution or a law enforcement official having lawful 
custody of an inmate or other individual protected health information 
about such inmate or individual, if the correctional institution or such 
law enforcement official represents that such protected health 
information is necessary for:
    (A) The provision of health care to such individuals;
    (B) The health and safety of such individual or other inmates;
    (C) The health and safety of the officers or employees of or others 
at the correctional institution;
    (D) The health and safety of such individuals and officers or other 
persons responsible for the transporting of inmates or their transfer 
from one institution, facility, or setting to another;
    (E) Law enforcement on the premises of the correctional institution; 
or
    (F) The administration and maintenance of the safety, security, and 
good order of the correctional institution.
    (ii) Permitted uses. A covered entity that is a correctional 
institution may use protected health information of individuals who are 
inmates for any purpose for which such protected health information may 
be disclosed.

[[Page 573]]

    (iii) No application after release. For the purposes of this 
provision, an individual is no longer an inmate when released on parole, 
probation, supervised release, or otherwise is no longer in lawful 
custody.
    (6) Covered entities that are government programs providing public 
benefits. (i) A health plan that is a government program providing 
public benefits may disclose protected health information relating to 
eligibility for or enrollment in the health plan to another agency 
administering a government program providing public benefits if the 
sharing of eligibility or enrollment information among such government 
agencies or the maintenance of such information in a single or combined 
data system accessible to all such government agencies is required or 
expressly authorized by statute or regulation.
    (ii) A covered entity that is a government agency administering a 
government program providing public benefits may disclose protected 
health information relating to the program to another covered entity 
that is a government agency administering a government program providing 
public benefits if the programs serve the same or similar populations 
and the disclosure of protected health information is necessary to 
coordinate the covered functions of such programs or to improve 
administration and management relating to the covered functions of such 
programs.
    (7) National Instant Criminal Background Check System. A covered 
entity may use or disclose protected health information for purposes of 
reporting to the National Instant Criminal Background Check System the 
identity of an individual who is prohibited from possessing a firearm 
under 18 U.S.C. 922(g)(4), provided the covered entity:
    (i) Is a State agency or other entity that is, or contains an entity 
that is:
    (A) An entity designated by the State to report, or which collects 
information for purposes of reporting, on behalf of the State, to the 
National Instant Criminal Background Check System; or
    (B) A court, board, commission, or other lawful authority that makes 
the commitment or adjudication that causes an individual to become 
subject to 18 U.S.C. 922(g)(4); and
    (ii) Discloses the information only to:
    (A) The National Instant Criminal Background Check System; or
    (B) An entity designated by the State to report, or which collects 
information for purposes of reporting, on behalf of the State, to the 
National Instant Criminal Background Check System; and
    (iii)(A) Discloses only the limited demographic and certain other 
information needed for purposes of reporting to the National Instant 
Criminal Background Check System; and
    (B) Does not disclose diagnostic or clinical information for such 
purposes.
    (l) Standard: Disclosures for workers' compensation. A covered 
entity may disclose protected health information as authorized by and to 
the extent necessary to comply with laws relating to workers' 
compensation or other similar programs, established by law, that provide 
benefits for work-related injuries or illness without regard to fault.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53270, Aug. 14, 2002; 
78 FR 5699, Jan. 25, 2013; 78 FR 34266, June 7, 2013; 81 FR 395, Jan. 6, 
2016]



Sec.  164.514  Other requirements relating to uses and disclosures
of protected health information.

    (a) Standard: De-identification of protected health information. 
Health information that does not identify an individual and with respect 
to which there is no reasonable basis to believe that the information 
can be used to identify an individual is not individually identifiable 
health information.
    (b) Implementation specifications: Requirements for de-
identification of protected health information. A covered entity may 
determine that health information is not individually identifiable 
health information only if:
    (1) A person with appropriate knowledge of and experience with 
generally accepted statistical and scientific principles and methods for 
rendering information not individually identifiable:
    (i) Applying such principles and methods, determines that the risk 
is very small that the information could be used, alone or in 
combination with

[[Page 574]]

other reasonably available information, by an anticipated recipient to 
identify an individual who is a subject of the information; and
    (ii) Documents the methods and results of the analysis that justify 
such determination; or
    (2)(i) The following identifiers of the individual or of relatives, 
employers, or household members of the individual, are removed:
    (A) Names;
    (B) All geographic subdivisions smaller than a State, including 
street address, city, county, precinct, zip code, and their equivalent 
geocodes, except for the initial three digits of a zip code if, 
according to the current publicly available data from the Bureau of the 
Census:
    (1) The geographic unit formed by combining all zip codes with the 
same three initial digits contains more than 20,000 people; and
    (2) The initial three digits of a zip code for all such geographic 
units containing 20,000 or fewer people is changed to 000.
    (C) All elements of dates (except year) for dates directly related 
to an individual, including birth date, admission date, discharge date, 
date of death; and all ages over 89 and all elements of dates (including 
year) indicative of such age, except that such ages and elements may be 
aggregated into a single category of age 90 or older;
    (D) Telephone numbers;
    (E) Fax numbers;
    (F) Electronic mail addresses;
    (G) Social security numbers;
    (H) Medical record numbers;
    (I) Health plan beneficiary numbers;
    (J) Account numbers;
    (K) Certificate/license numbers;
    (L) Vehicle identifiers and serial numbers, including license plate 
numbers;
    (M) Device identifiers and serial numbers;
    (N) Web Universal Resource Locators (URLs);
    (O) Internet Protocol (IP) address numbers;
    (P) Biometric identifiers, including finger and voice prints;
    (Q) Full face photographic images and any comparable images; and
    (R) Any other unique identifying number, characteristic, or code, 
except as permitted by paragraph (c) of this section; and
    (ii) The covered entity does not have actual knowledge that the 
information could be used alone or in combination with other information 
to identify an individual who is a subject of the information.
    (c) Implementation specifications: Re-identification. A covered 
entity may assign a code or other means of record identification to 
allow information de-identified under this section to be re-identified 
by the covered entity, provided that:
    (1) Derivation. The code or other means of record identification is 
not derived from or related to information about the individual and is 
not otherwise capable of being translated so as to identify the 
individual; and
    (2) Security. The covered entity does not use or disclose the code 
or other means of record identification for any other purpose, and does 
not disclose the mechanism for re-identification.
    (d)(1) Standard: minimum necessary requirements. In order to comply 
with Sec.  164.502(b) and this section, a covered entity must meet the 
requirements of paragraphs (d)(2) through (d)(5) of this section with 
respect to a request for, or the use and disclosure of, protected health 
information.
    (2) Implementation specifications: Minimum necessary uses of 
protected health information. (i) A covered entity must identify:
    (A) Those persons or classes of persons, as appropriate, in its 
workforce who need access to protected health information to carry out 
their duties; and
    (B) For each such person or class of persons, the category or 
categories of protected health information to which access is needed and 
any conditions appropriate to such access.
    (ii) A covered entity must make reasonable efforts to limit the 
access of such persons or classes identified in paragraph (d)(2)(i)(A) 
of this section to protected health information consistent with 
paragraph (d)(2)(i)(B) of this section.
    (3) Implementation specification: Minimum necessary disclosures of 
protected

[[Page 575]]

health information. (i) For any type of disclosure that it makes on a 
routine and recurring basis, a covered entity must implement policies 
and procedures (which may be standard protocols) that limit the 
protected health information disclosed to the amount reasonably 
necessary to achieve the purpose of the disclosure.
    (ii) For all other disclosures, a covered entity must:
    (A) Develop criteria designed to limit the protected health 
information disclosed to the information reasonably necessary to 
accomplish the purpose for which disclosure is sought; and
    (B) Review requests for disclosure on an individual basis in 
accordance with such criteria.
    (iii) A covered entity may rely, if such reliance is reasonable 
under the circumstances, on a requested disclosure as the minimum 
necessary for the stated purpose when:
    (A) Making disclosures to public officials that are permitted under 
Sec.  164.512, if the public official represents that the information 
requested is the minimum necessary for the stated purpose(s);
    (B) The information is requested by another covered entity;
    (C) The information is requested by a professional who is a member 
of its workforce or is a business associate of the covered entity for 
the purpose of providing professional services to the covered entity, if 
the professional represents that the information requested is the 
minimum necessary for the stated purpose(s); or
    (D) Documentation or representations that comply with the applicable 
requirements of Sec.  164.512(i) have been provided by a person 
requesting the information for research purposes.
    (4) Implementation specifications: Minimum necessary requests for 
protected health information. (i) A covered entity must limit any 
request for protected health information to that which is reasonably 
necessary to accomplish the purpose for which the request is made, when 
requesting such information from other covered entities.
    (ii) For a request that is made on a routine and recurring basis, a 
covered entity must implement policies and procedures (which may be 
standard protocols) that limit the protected health information 
requested to the amount reasonably necessary to accomplish the purpose 
for which the request is made.
    (iii) For all other requests, a covered entity must:
    (A) Develop criteria designed to limit the request for protected 
health information to the information reasonably necessary to accomplish 
the purpose for which the request is made; and
    (B) Review requests for disclosure on an individual basis in 
accordance with such criteria.
    (5) Implementation specification: Other content requirement. For all 
uses, disclosures, or requests to which the requirements in paragraph 
(d) of this section apply, a covered entity may not use, disclose or 
request an entire medical record, except when the entire medical record 
is specifically justified as the amount that is reasonably necessary to 
accomplish the purpose of the use, disclosure, or request.
    (e)(1) Standard: Limited data set. A covered entity may use or 
disclose a limited data set that meets the requirements of paragraphs 
(e)(2) and (e)(3) of this section, if the covered entity enters into a 
data use agreement with the limited data set recipient, in accordance 
with paragraph (e)(4) of this section.
    (2) Implementation specification: Limited data set: A limited data 
set is protected health information that excludes the following direct 
identifiers of the individual or of relatives, employers, or household 
members of the individual:
    (i) Names;
    (ii) Postal address information, other than town or city, State, and 
zip code;
    (iii) Telephone numbers;
    (iv) Fax numbers;
    (v) Electronic mail addresses;
    (vi) Social security numbers;
    (vii) Medical record numbers;
    (viii) Health plan beneficiary numbers;
    (ix) Account numbers;
    (x) Certificate/license numbers;
    (xi) Vehicle identifiers and serial numbers, including license plate 
numbers;
    (xii) Device identifiers and serial numbers;

[[Page 576]]

    (xiii) Web Universal Resource Locators (URLs);
    (xiv) Internet Protocol (IP) address numbers;
    (xv) Biometric identifiers, including finger and voice prints; and
    (xvi) Full face photographic images and any comparable images.
    (3) Implementation specification: Permitted purposes for uses and 
disclosures. (i) A covered entity may use or disclose a limited data set 
under paragraph (e)(1) of this section only for the purposes of 
research, public health, or health care operations.
    (ii) A covered entity may use protected health information to create 
a limited data set that meets the requirements of paragraph (e)(2) of 
this section, or disclose protected health information only to a 
business associate for such purpose, whether or not the limited data set 
is to be used by the covered entity.
    (4) Implementation specifications: Data use agreement--(i) Agreement 
required. A covered entity may use or disclose a limited data set under 
paragraph (e)(1) of this section only if the covered entity obtains 
satisfactory assurance, in the form of a data use agreement that meets 
the requirements of this section, that the limited data set recipient 
will only use or disclose the protected health information for limited 
purposes.
    (ii) Contents. A data use agreement between the covered entity and 
the limited data set recipient must:
    (A) Establish the permitted uses and disclosures of such information 
by the limited data set recipient, consistent with paragraph (e)(3) of 
this section. The data use agreement may not authorize the limited data 
set recipient to use or further disclose the information in a manner 
that would violate the requirements of this subpart, if done by the 
covered entity;
    (B) Establish who is permitted to use or receive the limited data 
set; and
    (C) Provide that the limited data set recipient will:
    (1) Not use or further disclose the information other than as 
permitted by the data use agreement or as otherwise required by law;
    (2) Use appropriate safeguards to prevent use or disclosure of the 
information other than as provided for by the data use agreement;
    (3) Report to the covered entity any use or disclosure of the 
information not provided for by its data use agreement of which it 
becomes aware;
    (4) Ensure that any agents to whom it provides the limited data set 
agree to the same restrictions and conditions that apply to the limited 
data set recipient with respect to such information; and
    (5) Not identify the information or contact the individuals.
    (iii) Compliance. (A) A covered entity is not in compliance with the 
standards in paragraph (e) of this section if the covered entity knew of 
a pattern of activity or practice of the limited data set recipient that 
constituted a material breach or violation of the data use agreement, 
unless the covered entity took reasonable steps to cure the breach or 
end the violation, as applicable, and, if such steps were unsuccessful:
    (1) Discontinued disclosure of protected health information to the 
recipient; and
    (2) Reported the problem to the Secretary.
    (B) A covered entity that is a limited data set recipient and 
violates a data use agreement will be in noncompliance with the 
standards, implementation specifications, and requirements of paragraph 
(e) of this section.
    (f) Fundraising communications--(1) Standard: Uses and disclosures 
for fundraising. Subject to the conditions of paragraph (f)(2) of this 
section, a covered entity may use, or disclose to a business associate 
or to an institutionally related foundation, the following protected 
health information for the purpose of raising funds for its own benefit, 
without an authorization meeting the requirements of Sec.  164.508:
    (i) Demographic information relating to an individual, including 
name, address, other contact information, age, gender, and date of 
birth;
    (ii) Dates of health care provided to an individual;
    (iii) Department of service information;
    (iv) Treating physician;
    (v) Outcome information; and
    (vi) Health insurance status.

[[Page 577]]

    (2) Implementation specifications: Fundraising requirements. (i) A 
covered entity may not use or disclose protected health information for 
fundraising purposes as otherwise permitted by paragraph (f)(1) of this 
section unless a statement required by Sec.  164.520(b)(1)(iii)(A) is 
included in the covered entity's notice of privacy practices.
    (ii) With each fundraising communication made to an individual under 
this paragraph, a covered entity must provide the individual with a 
clear and conspicuous opportunity to elect not to receive any further 
fundraising communications. The method for an individual to elect not to 
receive further fundraising communications may not cause the individual 
to incur an undue burden or more than a nominal cost.
    (iii) A covered entity may not condition treatment or payment on the 
individual's choice with respect to the receipt of fundraising 
communications.
    (iv) A covered entity may not make fundraising communications to an 
individual under this paragraph where the individual has elected not to 
receive such communications under paragraph (f)(2)(ii) of this section.
    (v) A covered entity may provide an individual who has elected not 
to receive further fundraising communications with a method to opt back 
in to receive such communications.
    (g) Standard: Uses and disclosures for underwriting and related 
purposes. If a health plan receives protected health information for the 
purpose of underwriting, premium rating, or other activities relating to 
the creation, renewal, or replacement of a contract of health insurance 
or health benefits, and if such health insurance or health benefits are 
not placed with the health plan, such health plan may only use or 
disclose such protected health information for such purpose or as may be 
required by law, subject to the prohibition at Sec.  164.502(a)(5)(i) 
with respect to genetic information included in the protected health 
information.
    (h)(1) Standard: Verification requirements. Prior to any disclosure 
permitted by this subpart, a covered entity must:
    (i) Except with respect to disclosures under Sec.  164.510, verify 
the identity of a person requesting protected health information and the 
authority of any such person to have access to protected health 
information under this subpart, if the identity or any such authority of 
such person is not known to the covered entity; and
    (ii) Obtain any documentation, statements, or representations, 
whether oral or written, from the person requesting the protected health 
information when such documentation, statement, or representation is a 
condition of the disclosure under this subpart.
    (2) Implementation specifications: Verification--(i) Conditions on 
disclosures. If a disclosure is conditioned by this subpart on 
particular documentation, statements, or representations from the person 
requesting the protected health information, a covered entity may rely, 
if such reliance is reasonable under the circumstances, on 
documentation, statements, or representations that, on their face, meet 
the applicable requirements.
    (A) The conditions in Sec.  164.512(f)(1)(ii)(C) may be satisfied by 
the administrative subpoena or similar process or by a separate written 
statement that, on its face, demonstrates that the applicable 
requirements have been met.
    (B) The documentation required by Sec.  164.512(i)(2) may be 
satisfied by one or more written statements, provided that each is 
appropriately dated and signed in accordance with Sec.  164.512(i)(2)(i) 
and (v).
    (ii) Identity of public officials. A covered entity may rely, if 
such reliance is reasonable under the circumstances, on any of the 
following to verify identity when the disclosure of protected health 
information is to a public official or a person acting on behalf of the 
public official:
    (A) If the request is made in person, presentation of an agency 
identification badge, other official credentials, or other proof of 
government status;
    (B) If the request is in writing, the request is on the appropriate 
government letterhead; or
    (C) If the disclosure is to a person acting on behalf of a public 
official, a written statement on appropriate government letterhead that 
the person is

[[Page 578]]

acting under the government's authority or other evidence or 
documentation of agency, such as a contract for services, memorandum of 
understanding, or purchase order, that establishes that the person is 
acting on behalf of the public official.
    (iii) Authority of public officials. A covered entity may rely, if 
such reliance is reasonable under the circumstances, on any of the 
following to verify authority when the disclosure of protected health 
information is to a public official or a person acting on behalf of the 
public official:
    (A) A written statement of the legal authority under which the 
information is requested, or, if a written statement would be 
impracticable, an oral statement of such legal authority;
    (B) If a request is made pursuant to legal process, warrant, 
subpoena, order, or other legal process issued by a grand jury or a 
judicial or administrative tribunal is presumed to constitute legal 
authority.
    (iv) Exercise of professional judgment. The verification 
requirements of this paragraph are met if the covered entity relies on 
the exercise of professional judgment in making a use or disclosure in 
accordance with Sec.  164.510 or acts on a good faith belief in making a 
disclosure in accordance with Sec.  164.512(j).

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53270, Aug. 14, 2002; 
78 FR 5700, Jan. 25, 2013; 78 FR 34266, June 7, 2013]



Sec.  164.520  Notice of privacy practices for protected health
information.

    (a) Standard: Notice of privacy practices--(1) Right to notice. 
Except as provided by paragraph (a)(2) or (3) of this section, an 
individual has a right to adequate notice of the uses and disclosures of 
protected health information that may be made by the covered entity, and 
of the individual's rights and the covered entity's legal duties with 
respect to protected health information.
    (2) Exception for group health plans. (i) An individual enrolled in 
a group health plan has a right to notice:
    (A) From the group health plan, if, and to the extent that, such an 
individual does not receive health benefits under the group health plan 
through an insurance contract with a health insurance issuer or HMO; or
    (B) From the health insurance issuer or HMO with respect to the 
group health plan through which such individuals receive their health 
benefits under the group health plan.
    (ii) A group health plan that provides health benefits solely 
through an insurance contract with a health insurance issuer or HMO, and 
that creates or receives protected health information in addition to 
summary health information as defined in Sec.  164.504(a) or information 
on whether the individual is participating in the group health plan, or 
is enrolled in or has disenrolled from a health insurance issuer or HMO 
offered by the plan, must:
    (A) Maintain a notice under this section; and
    (B) Provide such notice upon request to any person. The provisions 
of paragraph (c)(1) of this section do not apply to such group health 
plan.
    (iii) A group health plan that provides health benefits solely 
through an insurance contract with a health insurance issuer or HMO, and 
does not create or receive protected health information other than 
summary health information as defined in Sec.  164.504(a) or information 
on whether an individual is participating in the group health plan, or 
is enrolled in or has disenrolled from a health insurance issuer or HMO 
offered by the plan, is not required to maintain or provide a notice 
under this section.
    (3) Exception for inmates. An inmate does not have a right to notice 
under this section, and the requirements of this section do not apply to 
a correctional institution that is a covered entity.
    (b) Implementation specifications: Content of notice--(1) Required 
elements. The covered entity must provide a notice that is written in 
plain language and that contains the elements required by this 
paragraph.
    (i) Header. The notice must contain the following statement as a 
header or otherwise prominently displayed:

``THIS NOTICE DESCRIBES HOW MEDICAL INFORMATION ABOUT YOU MAY BE USED 
AND DISCLOSED AND HOW YOU CAN GET

[[Page 579]]

ACCESS TO THIS INFORMATION. PLEASE REVIEW IT CAREFULLY.''

    (ii) Uses and disclosures. The notice must contain:
    (A) A description, including at least one example, of the types of 
uses and disclosures that the covered entity is permitted by this 
subpart to make for each of the following purposes: treatment, payment, 
and health care operations.
    (B) A description of each of the other purposes for which the 
covered entity is permitted or required by this subpart to use or 
disclose protected health information without the individual's written 
authorization.
    (C) If a use or disclosure for any purpose described in paragraphs 
(b)(1)(ii)(A) or (B) of this section is prohibited or materially limited 
by other applicable law, the description of such use or disclosure must 
reflect the more stringent law as defined in Sec.  160.202 of this 
subchapter.
    (D) For each purpose described in paragraph (b)(1)(ii)(A) or (B) of 
this section, the description must include sufficient detail to place 
the individual on notice of the uses and disclosures that are permitted 
or required by this subpart and other applicable law.
    (E) A description of the types of uses and disclosures that require 
an authorization under Sec.  164.508(a)(2)-(a)(4), a statement that 
other uses and disclosures not described in the notice will be made only 
with the individual's written authorization, and a statement that the 
individual may revoke an authorization as provided by Sec.  
164.508(b)(5).
    (iii) Separate statements for certain uses or disclosures. If the 
covered entity intends to engage in any of the following activities, the 
description required by paragraph (b)(1)(ii)(A) of this section must 
include a separate statement informing the individual of such 
activities, as applicable:
    (A) In accordance with Sec.  164.514(f)(1), the covered entity may 
contact the individual to raise funds for the covered entity and the 
individual has a right to opt out of receiving such communications; (B) 
In accordance with Sec.  164.504(f), the group health plan, or a health 
insurance issuer or HMO with respect to a group health plan, may 
disclose protected health information to the sponsor of the plan; or
    (C) If a covered entity that is a health plan, excluding an issuer 
of a long-term care policy falling within paragraph (1)(viii) of the 
definition of health plan, intends to use or disclose protected health 
information for underwriting purposes, a statement that the covered 
entity is prohibited from using or disclosing protected health 
information that is genetic information of an individual for such 
purposes.
    (iv) Individual rights. The notice must contain a statement of the 
individual's rights with respect to protected health information and a 
brief description of how the individual may exercise these rights, as 
follows:
    (A) The right to request restrictions on certain uses and 
disclosures of protected health information as provided by Sec.  
164.522(a), including a statement that the covered entity is not 
required to agree to a requested restriction, except in case of a 
disclosure restricted under Sec.  164.522(a)(1)
    (B) The right to receive confidential communications of protected 
health information as provided by Sec.  164.522(b), as applicable;
    (C) The right to inspect and copy protected health information as 
provided by Sec.  164.524;
    (D) The right to amend protected health information as provided by 
Sec.  164.526;
    (E) The right to receive an accounting of disclosures of protected 
health information as provided by Sec.  164.528; and
    (F) The right of an individual, including an individual who has 
agreed to receive the notice electronically in accordance with paragraph 
(c)(3) of this section, to obtain a paper copy of the notice from the 
covered entity upon request.
    (v) Covered entity's duties. The notice must contain:
    (A) A statement that the covered entity is required by law to 
maintain the privacy of protected health information, to provide 
individuals with notice of its legal duties and privacy practices with 
respect to protected health information, and to notify affected 
individuals following a breach of unsecured protected health 
information;

[[Page 580]]

    (B) A statement that the covered entity is required to abide by the 
terms of the notice currently in effect; and
    (C) For the covered entity to apply a change in a privacy practice 
that is described in the notice to protected health information that the 
covered entity created or received prior to issuing a revised notice, in 
accordance with Sec.  164.530(i)(2)(ii), a statement that it reserves 
the right to change the terms of its notice and to make the new notice 
provisions effective for all protected health information that it 
maintains. The statement must also describe how it will provide 
individuals with a revised notice.
    (vi) Complaints. The notice must contain a statement that 
individuals may complain to the covered entity and to the Secretary if 
they believe their privacy rights have been violated, a brief 
description of how the individual may file a complaint with the covered 
entity, and a statement that the individual will not be retaliated 
against for filing a complaint.
    (vii) Contact. The notice must contain the name, or title, and 
telephone number of a person or office to contact for further 
information as required by Sec.  164.530(a)(1)(ii).
    (viii) Effective date. The notice must contain the date on which the 
notice is first in effect, which may not be earlier than the date on 
which the notice is printed or otherwise published.
    (2) Optional elements. (i) In addition to the information required 
by paragraph (b)(1) of this section, if a covered entity elects to limit 
the uses or disclosures that it is permitted to make under this subpart, 
the covered entity may describe its more limited uses or disclosures in 
its notice, provided that the covered entity may not include in its 
notice a limitation affecting its right to make a use or disclosure that 
is required by law or permitted by Sec.  164.512(j)(1)(i).
    (ii) For the covered entity to apply a change in its more limited 
uses and disclosures to protected health information created or received 
prior to issuing a revised notice, in accordance with Sec.  
164.530(i)(2)(ii), the notice must include the statements required by 
paragraph (b)(1)(v)(C) of this section.
    (3) Revisions to the notice. The covered entity must promptly revise 
and distribute its notice whenever there is a material change to the 
uses or disclosures, the individual's rights, the covered entity's legal 
duties, or other privacy practices stated in the notice. Except when 
required by law, a material change to any term of the notice may not be 
implemented prior to the effective date of the notice in which such 
material change is reflected.
    (c) Implementation specifications: Provision of notice. A covered 
entity must make the notice required by this section available on 
request to any person and to individuals as specified in paragraphs 
(c)(1) through (c)(3) of this section, as applicable.
    (1) Specific requirements for health plans. (i) A health plan must 
provide the notice:
    (A) No later than the compliance date for the health plan, to 
individuals then covered by the plan;
    (B) Thereafter, at the time of enrollment, to individuals who are 
new enrollees.
    (ii) No less frequently than once every three years, the health plan 
must notify individuals then covered by the plan of the availability of 
the notice and how to obtain the notice.
    (iii) The health plan satisfies the requirements of paragraph (c)(1) 
of this section if notice is provided to the named insured of a policy 
under which coverage is provided to the named insured and one or more 
dependents.
    (iv) If a health plan has more than one notice, it satisfies the 
requirements of paragraph (c)(1) of this section by providing the notice 
that is relevant to the individual or other person requesting the 
notice.
    (v) If there is a material change to the notice:
    (A) A health plan that posts its notice on its web site in 
accordance with paragraph (c)(3)(i) of this section must prominently 
post the change or its revised notice on its web site by the effective 
date of the material change to the notice, and provide the revised 
notice, or information about the material change and how to obtain the 
revised notice, in its next annual mailing to individuals then covered 
by the plan.

[[Page 581]]

    (B) A health plan that does not post its notice on a web site 
pursuant to paragraph (c)(3)(i) of this section must provide the revised 
notice, or information about the material change and how to obtain the 
revised notice, to individuals then covered by the plan within 60 days 
of the material revision to the notice.
    (2) Specific requirements for certain covered health care providers. 
A covered health care provider that has a direct treatment relationship 
with an individual must:
    (i) Provide the notice:
    (A) No later than the date of the first service delivery, including 
service delivered electronically, to such individual after the 
compliance date for the covered health care provider; or
    (B) In an emergency treatment situation, as soon as reasonably 
practicable after the emergency treatment situation.
    (ii) Except in an emergency treatment situation, make a good faith 
effort to obtain a written acknowledgment of receipt of the notice 
provided in accordance with paragraph (c)(2)(i) of this section, and if 
not obtained, document its good faith efforts to obtain such 
acknowledgment and the reason why the acknowledgment was not obtained;
    (iii) If the covered health care provider maintains a physical 
service delivery site:
    (A) Have the notice available at the service delivery site for 
individuals to request to take with them; and
    (B) Post the notice in a clear and prominent location where it is 
reasonable to expect individuals seeking service from the covered health 
care provider to be able to read the notice; and
    (iv) Whenever the notice is revised, make the notice available upon 
request on or after the effective date of the revision and promptly 
comply with the requirements of paragraph (c)(2)(iii) of this section, 
if applicable.
    (3) Specific requirements for electronic notice. (i) A covered 
entity that maintains a web site that provides information about the 
covered entity's customer services or benefits must prominently post its 
notice on the web site and make the notice available electronically 
through the web site.
    (ii) A covered entity may provide the notice required by this 
section to an individual by e-mail, if the individual agrees to 
electronic notice and such agreement has not been withdrawn. If the 
covered entity knows that the e-mail transmission has failed, a paper 
copy of the notice must be provided to the individual. Provision of 
electronic notice by the covered entity will satisfy the provision 
requirements of paragraph (c) of this section when timely made in 
accordance with paragraph (c)(1) or (2) of this section.
    (iii) For purposes of paragraph (c)(2)(i) of this section, if the 
first service delivery to an individual is delivered electronically, the 
covered health care provider must provide electronic notice 
automatically and contemporaneously in response to the individual's 
first request for service. The requirements in paragraph (c)(2)(ii) of 
this section apply to electronic notice.
    (iv) The individual who is the recipient of electronic notice 
retains the right to obtain a paper copy of the notice from a covered 
entity upon request.
    (d) Implementation specifications: Joint notice by separate covered 
entities. Covered entities that participate in organized health care 
arrangements may comply with this section by a joint notice, provided 
that:
    (1) The covered entities participating in the organized health care 
arrangement agree to abide by the terms of the notice with respect to 
protected health information created or received by the covered entity 
as part of its participation in the organized health care arrangement;
    (2) The joint notice meets the implementation specifications in 
paragraph (b) of this section, except that the statements required by 
this section may be altered to reflect the fact that the notice covers 
more than one covered entity; and
    (i) Describes with reasonable specificity the covered entities, or 
class of entities, to which the joint notice applies;
    (ii) Describes with reasonable specificity the service delivery 
sites, or classes of service delivery sites, to which the joint notice 
applies; and

[[Page 582]]

    (iii) If applicable, states that the covered entities participating 
in the organized health care arrangement will share protected health 
information with each other, as necessary to carry out treatment, 
payment, or health care operations relating to the organized health care 
arrangement.
    (3) The covered entities included in the joint notice must provide 
the notice to individuals in accordance with the applicable 
implementation specifications of paragraph (c) of this section. 
Provision of the joint notice to an individual by any one of the covered 
entities included in the joint notice will satisfy the provision 
requirement of paragraph (c) of this section with respect to all others 
covered by the joint notice.
    (e) Implementation specifications: Documentation. A covered entity 
must document compliance with the notice requirements, as required by 
Sec.  164.530(j), by retaining copies of the notices issued by the 
covered entity and, if applicable, any written acknowledgments of 
receipt of the notice or documentation of good faith efforts to obtain 
such written acknowledgment, in accordance with paragraph (c)(2)(ii) of 
this section.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53271, Aug. 14, 2002; 
78 FR 5701, Jan. 25, 2013]



Sec.  164.522  Rights to request privacy protection for protected
health information.

    (a)(1) Standard: Right of an individual to request restriction of 
uses and disclosures. (i) A covered entity must permit an individual to 
request that the covered entity restrict:
    (A) Uses or disclosures of protected health information about the 
individual to carry out treatment, payment, or health care operations; 
and
    (B) Disclosures permitted under Sec.  164.510(b).
    (ii) Except as provided in paragraph (a)(1)(vi) of this section, a 
covered entity is not required to agree to a restriction.
    (iii) A covered entity that agrees to a restriction under paragraph 
(a)(1)(i) of this section may not use or disclose protected health 
information in violation of such restriction, except that, if the 
individual who requested the restriction is in need of emergency 
treatment and the restricted protected health information is needed to 
provide the emergency treatment, the covered entity may use the 
restricted protected health information, or may disclose such 
information to a health care provider, to provide such treatment to the 
individual.
    (iv) If restricted protected health information is disclosed to a 
health care provider for emergency treatment under paragraph (a)(1)(iii) 
of this section, the covered entity must request that such health care 
provider not further use or disclose the information.
    (v) A restriction agreed to by a covered entity under paragraph (a) 
of this section, is not effective under this subpart to prevent uses or 
disclosures permitted or required under Sec.  164.502(a)(2)(ii), Sec.  
164.510(a) or Sec.  164.512.
    (vi) A covered entity must agree to the request of an individual to 
restrict disclosure of protected health information about the individual 
to a health plan if:
    (A) The disclosure is for the purpose of carrying out payment or 
health care operations and is not otherwise required by law; and
    (B) The protected health information pertains solely to a health 
care item or service for which the individual, or person other than the 
health plan on behalf of the individual, has paid the covered entity in 
full.
    (2) Implementation specifications: Terminating a restriction. A 
covered entity may terminate a restriction, if:
    (i) The individual agrees to or requests the termination in writing;
    (ii) The individual orally agrees to the termination and the oral 
agreement is documented; or
    (iii) The covered entity informs the individual that it is 
terminating its agreement to a restriction, except that such termination 
is:
    (A) Not effective for protected health information restricted under 
paragraph (a)(1)(vi) of this section; and
    (B) Only effective with respect to protected health information 
created or received after it has so informed the individual.

[[Page 583]]

    (3) Implementation specification: Documentation. A covered entity 
must document a restriction in accordance with Sec.  160.530(j) of this 
subchapter.
    (b)(1) Standard: Confidential communications requirements. (i) A 
covered health care provider must permit individuals to request and must 
accommodate reasonable requests by individuals to receive communications 
of protected health information from the covered health care provider by 
alternative means or at alternative locations.
    (ii) A health plan must permit individuals to request and must 
accommodate reasonable requests by individuals to receive communications 
of protected health information from the health plan by alternative 
means or at alternative locations, if the individual clearly states that 
the disclosure of all or part of that information could endanger the 
individual.
    (2) Implementation specifications: Conditions on providing 
confidential communications. (i) A covered entity may require the 
individual to make a request for a confidential communication described 
in paragraph (b)(1) of this section in writing.
    (ii) A covered entity may condition the provision of a reasonable 
accommodation on:
    (A) When appropriate, information as to how payment, if any, will be 
handled; and
    (B) Specification of an alternative address or other method of 
contact.
    (iii) A covered health care provider may not require an explanation 
from the individual as to the basis for the request as a condition of 
providing communications on a confidential basis.
    (iv) A health plan may require that a request contain a statement 
that disclosure of all or part of the information to which the request 
pertains could endanger the individual.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53271, Aug. 14, 2002; 
78 FR 5701, Jan. 25, 2013]



Sec.  164.524  Access of individuals to protected health information.

    (a) Standard: Access to protected health information--(1) Right of 
access. Except as otherwise provided in paragraph (a)(2) or (a)(3) of 
this section, an individual has a right of access to inspect and obtain 
a copy of protected health information about the individual in a 
designated record set, for as long as the protected health information 
is maintained in the designated record set, except for:
    (i) Psychotherapy notes; and
    (ii) Information compiled in reasonable anticipation of, or for use 
in, a civil, criminal, or administrative action or proceeding.
    (2) Unreviewable grounds for denial. A covered entity may deny an 
individual access without providing the individual an opportunity for 
review, in the following circumstances.
    (i) The protected health information is excepted from the right of 
access by paragraph (a)(1) of this section.
    (ii) A covered entity that is a correctional institution or a 
covered health care provider acting under the direction of the 
correctional institution may deny, in whole or in part, an inmate's 
request to obtain a copy of protected health information, if obtaining 
such copy would jeopardize the health, safety, security, custody, or 
rehabilitation of the individual or of other inmates, or the safety of 
any officer, employee, or other person at the correctional institution 
or responsible for the transporting of the inmate.
    (iii) An individual's access to protected health information created 
or obtained by a covered health care provider in the course of research 
that includes treatment may be temporarily suspended for as long as the 
research is in progress, provided that the individual has agreed to the 
denial of access when consenting to participate in the research that 
includes treatment, and the covered health care provider has informed 
the individual that the right of access will be reinstated upon 
completion of the research.
    (iv) An individual's access to protected health information that is 
contained in records that are subject to the Privacy Act, 5 U.S.C. 552a, 
may be denied, if the denial of access under the Privacy Act would meet 
the requirements of that law.
    (v) An individual's access may be denied if the protected health 
information was obtained from someone other

[[Page 584]]

than a health care provider under a promise of confidentiality and the 
access requested would be reasonably likely to reveal the source of the 
information.
    (3) Reviewable grounds for denial. A covered entity may deny an 
individual access, provided that the individual is given a right to have 
such denials reviewed, as required by paragraph (a)(4) of this section, 
in the following circumstances:
    (i) A licensed health care professional has determined, in the 
exercise of professional judgment, that the access requested is 
reasonably likely to endanger the life or physical safety of the 
individual or another person;
    (ii) The protected health information makes reference to another 
person (unless such other person is a health care provider) and a 
licensed health care professional has determined, in the exercise of 
professional judgment, that the access requested is reasonably likely to 
cause substantial harm to such other person; or
    (iii) The request for access is made by the individual's personal 
representative and a licensed health care professional has determined, 
in the exercise of professional judgment, that the provision of access 
to such personal representative is reasonably likely to cause 
substantial harm to the individual or another person.
    (4) Review of a denial of access. If access is denied on a ground 
permitted under paragraph (a)(3) of this section, the individual has the 
right to have the denial reviewed by a licensed health care professional 
who is designated by the covered entity to act as a reviewing official 
and who did not participate in the original decision to deny. The 
covered entity must provide or deny access in accordance with the 
determination of the reviewing official under paragraph (d)(4) of this 
section.
    (b) Implementation specifications: Requests for access and timely 
action--(1) Individual's request for access. The covered entity must 
permit an individual to request access to inspect or to obtain a copy of 
the protected health information about the individual that is maintained 
in a designated record set. The covered entity may require individuals 
to make requests for access in writing, provided that it informs 
individuals of such a requirement.
    (2) Timely action by the covered entity. (i) Except as provided in 
paragraph (b)(2)(ii) of this section, the covered entity must act on a 
request for access no later than 30 days after receipt of the request as 
follows.
    (A) If the covered entity grants the request, in whole or in part, 
it must inform the individual of the acceptance of the request and 
provide the access requested, in accordance with paragraph (c) of this 
section.
    (B) If the covered entity denies the request, in whole or in part, 
it must provide the individual with a written denial, in accordance with 
paragraph (d) of this section.
    (ii) If the covered entity is unable to take an action required by 
paragraph (b)(2)(i)(A) or (B) of this section within the time required 
by paragraph (b)(2)(i) of this section, as applicable, the covered 
entity may extend the time for such actions by no more than 30 days, 
provided that:
    (A) The covered entity, within the time limit set by paragraph 
(b)(2)(i) of this section, as applicable, provides the individual with a 
written statement of the reasons for the delay and the date by which the 
covered entity will complete its action on the request; and
    (B) The covered entity may have only one such extension of time for 
action on a request for access.
    (c) Implementation specifications: Provision of access. If the 
covered entity provides an individual with access, in whole or in part, 
to protected health information, the covered entity must comply with the 
following requirements.
    (1) Providing the access requested. The covered entity must provide 
the access requested by individuals, including inspection or obtaining a 
copy, or both, of the protected health information about them in 
designated record sets. If the same protected health information that is 
the subject of a request for access is maintained in more than one 
designated record set or at more than one location, the covered entity 
need only produce the protected health information once in response to a 
request for access.

[[Page 585]]

    (2) Form of access requested. (i) The covered entity must provide 
the individual with access to the protected health information in the 
form and format requested by the individual, if it is readily producible 
in such form and format; or, if not, in a readable hard copy form or 
such other form and format as agreed to by the covered entity and the 
individual.
    (ii) Notwithstanding paragraph (c)(2)(i) of this section, if the 
protected health information that is the subject of a request for access 
is maintained in one or more designated record sets electronically and 
if the individual requests an electronic copy of such information, the 
covered entity must provide the individual with access to the protected 
health information in the electronic form and format requested by the 
individual, if it is readily producible in such form and format; or, if 
not, in a readable electronic form and format as agreed to by the 
covered entity and the individual.
    (iii) The covered entity may provide the individual with a summary 
of the protected health information requested, in lieu of providing 
access to the protected health information or may provide an explanation 
of the protected health information to which access has been provided, 
if:
    (A) The individual agrees in advance to such a summary or 
explanation; and
    (B) The individual agrees in advance to the fees imposed, if any, by 
the covered entity for such summary or explanation.
    (3) Time and manner of access. (i) The covered entity must provide 
the access as requested by the individual in a timely manner as required 
by paragraph (b)(2) of this section, including arranging with the 
individual for a convenient time and place to inspect or obtain a copy 
of the protected health information, or mailing the copy of the 
protected health information at the individual's request. The covered 
entity may discuss the scope, format, and other aspects of the request 
for access with the individual as necessary to facilitate the timely 
provision of access.
    (ii) If an individual's request for access directs the covered 
entity to transmit the copy of protected health information directly to 
another person designated by the individual, the covered entity must 
provide the copy to the person designated by the individual. The 
individual's request must be in writing, signed by the individual, and 
clearly identify the designated person and where to send the copy of 
protected health information.
    (4) Fees. If the individual requests a copy of the protected health 
information or agrees to a summary or explanation of such information, 
the covered entity may impose a reasonable, cost-based fee, provided 
that the fee includes only the cost of:
    (i) Labor for copying the protected health information requested by 
the individual, whether in paper or electronic form;
    (ii) Supplies for creating the paper copy or electronic media if the 
individual requests that the electronic copy be provided on portable 
media;
    (iii) Postage, when the individual has requested the copy, or the 
summary or explanation, be mailed; and
    (iv) Preparing an explanation or summary of the protected health 
information, if agreed to by the individual as required by paragraph 
(c)(2)(iii) of this section.
    (d) Implementation specifications: Denial of access. If the covered 
entity denies access, in whole or in part, to protected health 
information, the covered entity must comply with the following 
requirements.
    (1) Making other information accessible. The covered entity must, to 
the extent possible, give the individual access to any other protected 
health information requested, after excluding the protected health 
information as to which the covered entity has a ground to deny access.
    (2) Denial. The covered entity must provide a timely, written denial 
to the individual, in accordance with paragraph (b)(2) of this section. 
The denial must be in plain language and contain:
    (i) The basis for the denial;
    (ii) If applicable, a statement of the individual's review rights 
under paragraph (a)(4) of this section, including a description of how 
the individual may exercise such review rights; and

[[Page 586]]

    (iii) A description of how the individual may complain to the 
covered entity pursuant to the complaint procedures in Sec.  164.530(d) 
or to the Secretary pursuant to the procedures in Sec.  160.306. The 
description must include the name, or title, and telephone number of the 
contact person or office designated in Sec.  164.530(a)(1)(ii).
    (3) Other responsibility. If the covered entity does not maintain 
the protected health information that is the subject of the individual's 
request for access, and the covered entity knows where the requested 
information is maintained, the covered entity must inform the individual 
where to direct the request for access.
    (4) Review of denial requested. If the individual has requested a 
review of a denial under paragraph (a)(4) of this section, the covered 
entity must designate a licensed health care professional, who was not 
directly involved in the denial to review the decision to deny access. 
The covered entity must promptly refer a request for review to such 
designated reviewing official. The designated reviewing official must 
determine, within a reasonable period of time, whether or not to deny 
the access requested based on the standards in paragraph (a)(3) of this 
section. The covered entity must promptly provide written notice to the 
individual of the determination of the designated reviewing official and 
take other action as required by this section to carry out the 
designated reviewing official's determination.
    (e) Implementation specification: Documentation. A covered entity 
must document the following and retain the documentation as required by 
Sec.  164.530(j):
    (1) The designated record sets that are subject to access by 
individuals; and
    (2) The titles of the persons or offices responsible for receiving 
and processing requests for access by individuals.

[65 FR 82802, Dec. 28, 2000, as amended at 78 FR 5701, Jan. 25, 2013; 78 
FR 34266, June 7, 2013; 79 FR 7316, Feb. 6, 2014]



Sec.  164.526  Amendment of protected health information.

    (a) Standard: Right to amend. (1) Right to amend. An individual has 
the right to have a covered entity amend protected health information or 
a record about the individual in a designated record set for as long as 
the protected health information is maintained in the designated record 
set.
    (2) Denial of amendment. A covered entity may deny an individual's 
request for amendment, if it determines that the protected health 
information or record that is the subject of the request:
    (i) Was not created by the covered entity, unless the individual 
provides a reasonable basis to believe that the originator of protected 
health information is no longer available to act on the requested 
amendment;
    (ii) Is not part of the designated record set;
    (iii) Would not be available for inspection under Sec.  164.524; or
    (iv) Is accurate and complete.
    (b) Implementation specifications: Requests for amendment and timely 
action--(1) Individual's request for amendment. The covered entity must 
permit an individual to request that the covered entity amend the 
protected health information maintained in the designated record set. 
The covered entity may require individuals to make requests for 
amendment in writing and to provide a reason to support a requested 
amendment, provided that it informs individuals in advance of such 
requirements.
    (2) Timely action by the covered entity. (i) The covered entity must 
act on the individual's request for an amendment no later than 60 days 
after receipt of such a request, as follows.
    (A) If the covered entity grants the requested amendment, in whole 
or in part, it must take the actions required by paragraphs (c)(1) and 
(2) of this section.
    (B) If the covered entity denies the requested amendment, in whole 
or in part, it must provide the individual with a written denial, in 
accordance with paragraph (d)(1) of this section.
    (ii) If the covered entity is unable to act on the amendment within 
the time required by paragraph (b)(2)(i) of this section, the covered 
entity may extend the time for such action by no more than 30 days, 
provided that:
    (A) The covered entity, within the time limit set by paragraph 
(b)(2)(i) of

[[Page 587]]

this section, provides the individual with a written statement of the 
reasons for the delay and the date by which the covered entity will 
complete its action on the request; and
    (B) The covered entity may have only one such extension of time for 
action on a request for an amendment.
    (c) Implementation specifications: Accepting the amendment. If the 
covered entity accepts the requested amendment, in whole or in part, the 
covered entity must comply with the following requirements.
    (1) Making the amendment. The covered entity must make the 
appropriate amendment to the protected health information or record that 
is the subject of the request for amendment by, at a minimum, 
identifying the records in the designated record set that are affected 
by the amendment and appending or otherwise providing a link to the 
location of the amendment.
    (2) Informing the individual. In accordance with paragraph (b) of 
this section, the covered entity must timely inform the individual that 
the amendment is accepted and obtain the individual's identification of 
and agreement to have the covered entity notify the relevant persons 
with which the amendment needs to be shared in accordance with paragraph 
(c)(3) of this section.
    (3) Informing others. The covered entity must make reasonable 
efforts to inform and provide the amendment within a reasonable time to:
    (i) Persons identified by the individual as having received 
protected health information about the individual and needing the 
amendment; and
    (ii) Persons, including business associates, that the covered entity 
knows have the protected health information that is the subject of the 
amendment and that may have relied, or could foreseeably rely, on such 
information to the detriment of the individual.
    (d) Implementation specifications: Denying the amendment. If the 
covered entity denies the requested amendment, in whole or in part, the 
covered entity must comply with the following requirements.
    (1) Denial. The covered entity must provide the individual with a 
timely, written denial, in accordance with paragraph (b)(2) of this 
section. The denial must use plain language and contain:
    (i) The basis for the denial, in accordance with paragraph (a)(2) of 
this section;
    (ii) The individual's right to submit a written statement 
disagreeing with the denial and how the individual may file such a 
statement;
    (iii) A statement that, if the individual does not submit a 
statement of disagreement, the individual may request that the covered 
entity provide the individual's request for amendment and the denial 
with any future disclosures of the protected health information that is 
the subject of the amendment; and
    (iv) A description of how the individual may complain to the covered 
entity pursuant to the complaint procedures established in Sec.  
164.530(d) or to the Secretary pursuant to the procedures established in 
Sec.  160.306. The description must include the name, or title, and 
telephone number of the contact person or office designated in Sec.  
164.530(a)(1)(ii).
    (2) Statement of disagreement. The covered entity must permit the 
individual to submit to the covered entity a written statement 
disagreeing with the denial of all or part of a requested amendment and 
the basis of such disagreement. The covered entity may reasonably limit 
the length of a statement of disagreement.
    (3) Rebuttal statement. The covered entity may prepare a written 
rebuttal to the individual's statement of disagreement. Whenever such a 
rebuttal is prepared, the covered entity must provide a copy to the 
individual who submitted the statement of disagreement.
    (4) Recordkeeping. The covered entity must, as appropriate, identify 
the record or protected health information in the designated record set 
that is the subject of the disputed amendment and append or otherwise 
link the individual's request for an amendment, the covered entity's 
denial of the request, the individual's statement of disagreement, if 
any, and the covered entity's rebuttal, if any, to the designated record 
set.

[[Page 588]]

    (5) Future disclosures. (i) If a statement of disagreement has been 
submitted by the individual, the covered entity must include the 
material appended in accordance with paragraph (d)(4) of this section, 
or, at the election of the covered entity, an accurate summary of any 
such information, with any subsequent disclosure of the protected health 
information to which the disagreement relates.
    (ii) If the individual has not submitted a written statement of 
disagreement, the covered entity must include the individual's request 
for amendment and its denial, or an accurate summary of such 
information, with any subsequent disclosure of the protected health 
information only if the individual has requested such action in 
accordance with paragraph (d)(1)(iii) of this section.
    (iii) When a subsequent disclosure described in paragraph (d)(5)(i) 
or (ii) of this section is made using a standard transaction under part 
162 of this subchapter that does not permit the additional material to 
be included with the disclosure, the covered entity may separately 
transmit the material required by paragraph (d)(5)(i) or (ii) of this 
section, as applicable, to the recipient of the standard transaction.
    (e) Implementation specification: Actions on notices of amendment. A 
covered entity that is informed by another covered entity of an 
amendment to an individual's protected health information, in accordance 
with paragraph (c)(3) of this section, must amend the protected health 
information in designated record sets as provided by paragraph (c)(1) of 
this section.
    (f) Implementation specification: Documentation. A covered entity 
must document the titles of the persons or offices responsible for 
receiving and processing requests for amendments by individuals and 
retain the documentation as required by Sec.  164.530(j).



Sec.  164.528  Accounting of disclosures of protected health information.

    (a) Standard: Right to an accounting of disclosures of protected 
health information. (1) An individual has a right to receive an 
accounting of disclosures of protected health information made by a 
covered entity in the six years prior to the date on which the 
accounting is requested, except for disclosures:
    (i) To carry out treatment, payment and health care operations as 
provided in Sec.  164.506;
    (ii) To individuals of protected health information about them as 
provided in Sec.  164.502;
    (iii) Incident to a use or disclosure otherwise permitted or 
required by this subpart, as provided in Sec.  164.502;
    (iv) Pursuant to an authorization as provided in Sec.  164.508;
    (v) For the facility's directory or to persons involved in the 
individual's care or other notification purposes as provided in Sec.  
164.510;
    (vi) For national security or intelligence purposes as provided in 
Sec.  164.512(k)(2);
    (vii) To correctional institutions or law enforcement officials as 
provided in Sec.  164.512(k)(5);
    (viii) As part of a limited data set in accordance with Sec.  
164.514(e); or
    (ix) That occurred prior to the compliance date for the covered 
entity.
    (2)(i) The covered entity must temporarily suspend an individual's 
right to receive an accounting of disclosures to a health oversight 
agency or law enforcement official, as provided in Sec.  164.512(d) or 
(f), respectively, for the time specified by such agency or official, if 
such agency or official provides the covered entity with a written 
statement that such an accounting to the individual would be reasonably 
likely to impede the agency's activities and specifying the time for 
which such a suspension is required.
    (ii) If the agency or official statement in paragraph (a)(2)(i) of 
this section is made orally, the covered entity must:
    (A) Document the statement, including the identity of the agency or 
official making the statement;
    (B) Temporarily suspend the individual's right to an accounting of 
disclosures subject to the statement; and
    (C) Limit the temporary suspension to no longer than 30 days from 
the date of the oral statement, unless a written statement pursuant to 
paragraph (a)(2)(i) of this section is submitted during that time.
    (3) An individual may request an accounting of disclosures for a 
period of

[[Page 589]]

time less than six years from the date of the request.
    (b) Implementation specifications: Content of the accounting. The 
covered entity must provide the individual with a written accounting 
that meets the following requirements.
    (1) Except as otherwise provided by paragraph (a) of this section, 
the accounting must include disclosures of protected health information 
that occurred during the six years (or such shorter time period at the 
request of the individual as provided in paragraph (a)(3) of this 
section) prior to the date of the request for an accounting, including 
disclosures to or by business associates of the covered entity.
    (2) Except as otherwise provided by paragraphs (b)(3) or (b)(4) of 
this section, the accounting must include for each disclosure:
    (i) The date of the disclosure;
    (ii) The name of the entity or person who received the protected 
health information and, if known, the address of such entity or person;
    (iii) A brief description of the protected health information 
disclosed; and
    (iv) A brief statement of the purpose of the disclosure that 
reasonably informs the individual of the basis for the disclosure or, in 
lieu of such statement, a copy of a written request for a disclosure 
under Sec.  164.502(a)(2)(ii) or Sec.  164.512, if any.
    (3) If, during the period covered by the accounting, the covered 
entity has made multiple disclosures of protected health information to 
the same person or entity for a single purpose under Sec.  
164.502(a)(2)(ii) or Sec.  164.512, the accounting may, with respect to 
such multiple disclosures, provide:
    (i) The information required by paragraph (b)(2) of this section for 
the first disclosure during the accounting period;
    (ii) The frequency, periodicity, or number of the disclosures made 
during the accounting period; and
    (iii) The date of the last such disclosure during the accounting 
period.
    (4)(i) If, during the period covered by the accounting, the covered 
entity has made disclosures of protected health information for a 
particular research purpose in accordance with Sec.  164.512(i) for 50 
or more individuals, the accounting may, with respect to such 
disclosures for which the protected health information about the 
individual may have been included, provide:
    (A) The name of the protocol or other research activity;
    (B) A description, in plain language, of the research protocol or 
other research activity, including the purpose of the research and the 
criteria for selecting particular records;
    (C) A brief description of the type of protected health information 
that was disclosed;
    (D) The date or period of time during which such disclosures 
occurred, or may have occurred, including the date of the last such 
disclosure during the accounting period;
    (E) The name, address, and telephone number of the entity that 
sponsored the research and of the researcher to whom the information was 
disclosed; and
    (F) A statement that the protected health information of the 
individual may or may not have been disclosed for a particular protocol 
or other research activity.
    (ii) If the covered entity provides an accounting for research 
disclosures, in accordance with paragraph (b)(4) of this section, and if 
it is reasonably likely that the protected health information of the 
individual was disclosed for such research protocol or activity, the 
covered entity shall, at the request of the individual, assist in 
contacting the entity that sponsored the research and the researcher.
    (c) Implementation specifications: Provision of the accounting. (1) 
The covered entity must act on the individual's request for an 
accounting, no later than 60 days after receipt of such a request, as 
follows.
    (i) The covered entity must provide the individual with the 
accounting requested; or
    (ii) If the covered entity is unable to provide the accounting 
within the time required by paragraph (c)(1) of this section, the 
covered entity may extend the time to provide the accounting by no more 
than 30 days, provided that:
    (A) The covered entity, within the time limit set by paragraph 
(c)(1) of this section, provides the individual

[[Page 590]]

with a written statement of the reasons for the delay and the date by 
which the covered entity will provide the accounting; and
    (B) The covered entity may have only one such extension of time for 
action on a request for an accounting.
    (2) The covered entity must provide the first accounting to an 
individual in any 12 month period without charge. The covered entity may 
impose a reasonable, cost-based fee for each subsequent request for an 
accounting by the same individual within the 12 month period, provided 
that the covered entity informs the individual in advance of the fee and 
provides the individual with an opportunity to withdraw or modify the 
request for a subsequent accounting in order to avoid or reduce the fee.
    (d) Implementation specification: Documentation. A covered entity 
must document the following and retain the documentation as required by 
Sec.  164.530(j):
    (1) The information required to be included in an accounting under 
paragraph (b) of this section for disclosures of protected health 
information that are subject to an accounting under paragraph (a) of 
this section;
    (2) The written accounting that is provided to the individual under 
this section; and
    (3) The titles of the persons or offices responsible for receiving 
and processing requests for an accounting by individuals.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53271, Aug. 14, 2002]



Sec.  164.530  Administrative requirements.

    (a)(1) Standard: Personnel designations. (i) A covered entity must 
designate a privacy official who is responsible for the development and 
implementation of the policies and procedures of the entity.
    (ii) A covered entity must designate a contact person or office who 
is responsible for receiving complaints under this section and who is 
able to provide further information about matters covered by the notice 
required by Sec.  164.520.
    (2) Implementation specification: Personnel designations. A covered 
entity must document the personnel designations in paragraph (a)(1) of 
this section as required by paragraph (j) of this section.
    (b)(1) Standard: Training. A covered entity must train all members 
of its workforce on the policies and procedures with respect to 
protected health information required by this subpart and subpart D of 
this part, as necessary and appropriate for the members of the workforce 
to carry out their functions within the covered entity.
    (2) Implementation specifications: Training. (i) A covered entity 
must provide training that meets the requirements of paragraph (b)(1) of 
this section, as follows:
    (A) To each member of the covered entity's workforce by no later 
than the compliance date for the covered entity;
    (B) Thereafter, to each new member of the workforce within a 
reasonable period of time after the person joins the covered entity's 
workforce; and
    (C) To each member of the covered entity's workforce whose functions 
are affected by a material change in the policies or procedures required 
by this subpart or subpart D of this part, within a reasonable period of 
time after the material change becomes effective in accordance with 
paragraph (i) of this section.
    (ii) A covered entity must document that the training as described 
in paragraph (b)(2)(i) of this section has been provided, as required by 
paragraph (j) of this section.
    (c)(1) Standard: Safeguards. A covered entity must have in place 
appropriate administrative, technical, and physical safeguards to 
protect the privacy of protected health information.
    (2)(i) Implementation specification: Safeguards. A covered entity 
must reasonably safeguard protected health information from any 
intentional or unintentional use or disclosure that is in violation of 
the standards, implementation specifications or other requirements of 
this subpart.
    (ii) A covered entity must reasonably safeguard protected health 
information to limit incidental uses or disclosures made pursuant to an 
otherwise permitted or required use or disclosure.
    (d)(1) Standard: Complaints to the covered entity. A covered entity 
must provide a process for individuals to make

[[Page 591]]

complaints concerning the covered entity's policies and procedures 
required by this subpart and subpart D of this part or its compliance 
with such policies and procedures or the requirements of this subpart or 
subpart D of this part.
    (2) Implementation specification: Documentation of complaints. As 
required by paragraph (j) of this section, a covered entity must 
document all complaints received, and their disposition, if any.
    (e)(1) Standard: Sanctions. A covered entity must have and apply 
appropriate sanctions against members of its workforce who fail to 
comply with the privacy policies and procedures of the covered entity or 
the requirements of this subpart or subpart D of this part. This 
standard does not apply to a member of the covered entity's workforce 
with respect to actions that are covered by and that meet the conditions 
of Sec.  164.502(j) or paragraph (g)(2) of this section.
    (2) Implementation specification: Documentation. As required by 
paragraph (j) of this section, a covered entity must document the 
sanctions that are applied, if any.
    (f) Standard: Mitigation. A covered entity must mitigate, to the 
extent practicable, any harmful effect that is known to the covered 
entity of a use or disclosure of protected health information in 
violation of its policies and procedures or the requirements of this 
subpart by the covered entity or its business associate.
    (g) Standard: Refraining from intimidating or retaliatory acts. A 
covered entity--
    (1) May not intimidate, threaten, coerce, discriminate against, or 
take other retaliatory action against any individual for the exercise by 
the individual of any right established, or for participation in any 
process provided for, by this subpart or subpart D of this part, 
including the filing of a complaint under this section; and
    (2) Must refrain from intimidation and retaliation as provided in 
Sec.  160.316 of this subchapter.
    (h) Standard: Waiver of rights. A covered entity may not require 
individuals to waive their rights under Sec.  160.306 of this 
subchapter, this subpart, or subpart D of this part, as a condition of 
the provision of treatment, payment, enrollment in a health plan, or 
eligibility for benefits.
    (i)(1) Standard: Policies and procedures. A covered entity must 
implement policies and procedures with respect to protected health 
information that are designed to comply with the standards, 
implementation specifications, or other requirements of this subpart and 
subpart D of this part. The policies and procedures must be reasonably 
designed, taking into account the size and the type of activities that 
relate to protected health information undertaken by a covered entity, 
to ensure such compliance. This standard is not to be construed to 
permit or excuse an action that violates any other standard, 
implementation specification, or other requirement of this subpart.
    (2) Standard: Changes to policies and procedures. (i) A covered 
entity must change its policies and procedures as necessary and 
appropriate to comply with changes in the law, including the standards, 
requirements, and implementation specifications of this subpart or 
subpart D of this part.
    (ii) When a covered entity changes a privacy practice that is stated 
in the notice described in Sec.  164.520, and makes corresponding 
changes to its policies and procedures, it may make the changes 
effective for protected health information that it created or received 
prior to the effective date of the notice revision, if the covered 
entity has, in accordance with Sec.  164.520(b)(1)(v)(C), included in 
the notice a statement reserving its right to make such a change in its 
privacy practices; or
    (iii) A covered entity may make any other changes to policies and 
procedures at any time, provided that the changes are documented and 
implemented in accordance with paragraph (i)(5) of this section.
    (3) Implementation specification: Changes in law. Whenever there is 
a change in law that necessitates a change to the covered entity's 
policies or procedures, the covered entity must promptly document and 
implement the revised policy or procedure. If the change in law 
materially affects the content of the notice required by Sec.  164.520, 
the covered entity must

[[Page 592]]

promptly make the appropriate revisions to the notice in accordance with 
Sec.  164.520(b)(3). Nothing in this paragraph may be used by a covered 
entity to excuse a failure to comply with the law.
    (4) Implementation specifications: Changes to privacy practices 
stated in the notice. (i) To implement a change as provided by paragraph 
(i)(2)(ii) of this section, a covered entity must:
    (A) Ensure that the policy or procedure, as revised to reflect a 
change in the covered entity's privacy practice as stated in its notice, 
complies with the standards, requirements, and implementation 
specifications of this subpart;
    (B) Document the policy or procedure, as revised, as required by 
paragraph (j) of this section; and
    (C) Revise the notice as required by Sec.  164.520(b)(3) to state 
the changed practice and make the revised notice available as required 
by Sec.  164.520(c). The covered entity may not implement a change to a 
policy or procedure prior to the effective date of the revised notice.
    (ii) If a covered entity has not reserved its right under Sec.  
164.520(b)(1)(v)(C) to change a privacy practice that is stated in the 
notice, the covered entity is bound by the privacy practices as stated 
in the notice with respect to protected health information created or 
received while such notice is in effect. A covered entity may change a 
privacy practice that is stated in the notice, and the related policies 
and procedures, without having reserved the right to do so, provided 
that:
    (A) Such change meets the implementation specifications in 
paragraphs (i)(4)(i)(A)-(C) of this section; and
    (B) Such change is effective only with respect to protected health 
information created or received after the effective date of the notice.
    (5) Implementation specification: Changes to other policies or 
procedures. A covered entity may change, at any time, a policy or 
procedure that does not materially affect the content of the notice 
required by Sec.  164.520, provided that:
    (i) The policy or procedure, as revised, complies with the 
standards, requirements, and implementation specifications of this 
subpart; and
    (ii) Prior to the effective date of the change, the policy or 
procedure, as revised, is documented as required by paragraph (j) of 
this section.
    (j)(1) Standard: Documentation. A covered entity must:
    (i) Maintain the policies and procedures provided for in paragraph 
(i) of this section in written or electronic form;
    (ii) If a communication is required by this subpart to be in 
writing, maintain such writing, or an electronic copy, as documentation; 
and
    (iii) If an action, activity, or designation is required by this 
subpart to be documented, maintain a written or electronic record of 
such action, activity, or designation.
    (iv) Maintain documentation sufficient to meet its burden of proof 
under Sec.  164.414(b).
    (2) Implementation specification: Retention period. A covered entity 
must retain the documentation required by paragraph (j)(1) of this 
section for six years from the date of its creation or the date when it 
last was in effect, whichever is later.
    (k) Standard: Group health plans. (1) A group health plan is not 
subject to the standards or implementation specifications in paragraphs 
(a) through (f) and (i) of this section, to the extent that:
    (i) The group health plan provides health benefits solely through an 
insurance contract with a health insurance issuer or an HMO; and
    (ii) The group health plan does not create or receive protected 
health information, except for:
    (A) Summary health information as defined in Sec.  164.504(a); or
    (B) Information on whether the individual is participating in the 
group health plan, or is enrolled in or has disenrolled from a health 
insurance issuer or HMO offered by the plan.
    (2) A group health plan described in paragraph (k)(1) of this 
section is subject to the standard and implementation specification in 
paragraph (j) of this section only with respect to plan

[[Page 593]]

documents amended in accordance with Sec.  164.504(f).

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53272, Aug. 14, 2002; 
71 FR 8433, Feb. 16, 2006; 74 FR 42769, Aug. 24, 2009]



Sec.  164.532  Transition provisions.

    (a) Standard: Effect of prior authorizations. Notwithstanding 
Sec. Sec.  164.508 and 164.512(i), a covered entity may use or disclose 
protected health information, consistent with paragraphs (b) and (c) of 
this section, pursuant to an authorization or other express legal 
permission obtained from an individual permitting the use or disclosure 
of protected health information, informed consent of the individual to 
participate in research, a waiver of informed consent by an IRB, or a 
waiver of authorization in accordance with Sec.  164.512(i)(1)(i).
    (b) Implementation specification: Effect of prior authorization for 
purposes other than research. Notwithstanding any provisions in Sec.  
164.508, a covered entity may use or disclose protected health 
information that it created or received prior to the applicable 
compliance date of this subpart pursuant to an authorization or other 
express legal permission obtained from an individual prior to the 
applicable compliance date of this subpart, provided that the 
authorization or other express legal permission specifically permits 
such use or disclosure and there is no agreed-to restriction in 
accordance with Sec.  164.522(a).
    (c) Implementation specification: Effect of prior permission for 
research. Notwithstanding any provisions in Sec. Sec.  164.508 and 
164.512(i), a covered entity may, to the extent allowed by one of the 
following permissions, use or disclose, for research, protected health 
information that it created or received either before or after the 
applicable compliance date of this subpart, provided that there is no 
agreed-to restriction in accordance with Sec.  164.522(a), and the 
covered entity has obtained, prior to the applicable compliance date, 
either:
    (1) An authorization or other express legal permission from an 
individual to use or disclose protected health information for the 
research;
    (2) The informed consent of the individual to participate in the 
research;
    (3) A waiver, by an IRB, of informed consent for the research, in 
accordance with 7 CFR 1c.116(d), 10 CFR 745.116(d), 14 CFR 1230.116(d), 
15 CFR 27.116(d), 16 CFR 1028.116(d), 21 CFR 50.24, 22 CFR 225.116(d), 
24 CFR 60.116(d), 28 CFR 46.116(d), 32 CFR 219.116(d), 34 CFR 97.116(d), 
38 CFR 16.116(d), 40 CFR 26.116(d), 45 CFR 46.116(d), 45 CFR 690.116(d), 
or 49 CFR 11.116(d), provided that a covered entity must obtain 
authorization in accordance with Sec.  164.508 if, after the compliance 
date, informed consent is sought from an individual participating in the 
research; or
    (4) A waiver of authorization in accordance with Sec.  
164.512(i)(1)(i).
    (d) Standard: Effect of prior contracts or other arrangements with 
business associates. Notwithstanding any other provisions of this part, 
a covered entity, or business associate with respect to a subcontractor, 
may disclose protected health information to a business associate and 
may allow a business associate to create, receive, maintain, or transmit 
protected health information on its behalf pursuant to a written 
contract or other written arrangement with such business associate that 
does not comply with Sec. Sec.  164.308(b), 164.314(a), 164.502(e), and 
164.504(e), only in accordance with paragraph (e) of this section.
    (e) Implementation specification: Deemed compliance--(1) 
Qualification. Notwithstanding other sections of this part, a covered 
entity, or business associate with respect to a subcontractor, is deemed 
to be in compliance with the documentation and contract requirements of 
Sec. Sec.  164.308(b), 164.314(a), 164.502(e), and 164.504(e), with 
respect to a particular business associate relationship, for the time 
period set forth in paragraph (e)(2) of this section, if:
    (i) Prior to January 25, 2013, such covered entity, or business 
associate with respect to a subcontractor, has entered into and is 
operating pursuant to a written contract or other written arrangement 
with the business associate that complies with the applicable provisions 
of Sec.  164.314(a) or Sec.  164.504(e) that were in effect on such 
date; and
    (ii) The contract or other arrangement is not renewed or modified 
from March 26, 2013, until September 23, 2013.
    (2) Limited deemed compliance period. A prior contract or other 
arrangement

[[Page 594]]

that meets the qualification requirements in paragraph (e) of this 
section shall be deemed compliant until the earlier of:
    (i) The date such contract or other arrangement is renewed or 
modified on or after September 23, 2013; or
    (ii) September 22, 2014.
    (3) Covered entity responsibilities. Nothing in this section shall 
alter the requirements of a covered entity to comply with part 160, 
subpart C of this subchapter and Sec. Sec.  164.524, 164.526, 164.528, 
and 164.530(f) with respect to protected health information held by a 
business associate.
    (f) Effect of prior data use agreements. If, prior to January 25, 
2013, a covered entity has entered into and is operating pursuant to a 
data use agreement with a recipient of a limited data set that complies 
with Sec.  164.514(e), notwithstanding Sec.  164.502(a)(5)(ii), the 
covered entity may continue to disclose a limited data set pursuant to 
such agreement in exchange for remuneration from or on behalf of the 
recipient of the protected health information until the earlier of:
    (1) The date such agreement is renewed or modified on or after 
September 23, 2013; or
    (2) September 22, 2014.

[65 FR 82802, Dec. 28, 2000, as amended at 67 FR 53272, Aug. 14, 2002; 
78 FR 5702, Jan. 25, 2013; 78 FR 34266, June 7, 2013]



Sec.  164.534  Compliance dates for initial implementation of the
privacy standards.

    (a) Health care providers. A covered health care provider must 
comply with the applicable requirements of this subpart no later than 
April 14, 2003.
    (b) Health plans. A health plan must comply with the applicable 
requirements of this subpart no later than the following as applicable:
    (1) Health plans other than small health plans. April 14, 2003.
    (2) Small health plans. April 14, 2004.
    (c) Health clearinghouses. A health care clearinghouse must comply 
with the applicable requirements of this subpart no later than April 14, 
2003.

[66 FR 12434, Feb. 26, 2001]

                        PARTS 165	169 [RESERVED]



[[Page 595]]



               SUBCHAPTER D_HEALTH INFORMATION TECHNOLOGY





 PART 170_HEALTH INFORMATION TECHNOLOGY STANDARDS, IMPLEMENTATION
 SPECIFICATIONS, AND CERTIFICATION CRITERIA AND CERTIFICATION 
 PROGRAMS FOR HEALTH INFORMATION TECHNOLOGY--Table of Contents



                      Subpart A_General Provisions

Sec.
170.100 Statutory basis and purpose.
170.101 Applicability.
170.102 Definitions.

    Subpart B_Standards and Implementation Specifications for Health 
                         Information Technology

170.200 Applicability.
170.202 Transport standards and other protocols.
170.204 Functional standards.
170.205 Content exchange standards and implementation specifications for 
          exchanging electronic health information.
170.207 Vocabulary standards for representing electronic health 
          information.
170.210 Standards for health information technology to protect 
          electronic health information created, maintained, and 
          exchanged.
170.213 United States Core Data for Interoperability.
170.215 Application Programming Interface Standards.
170.299 Incorporation by reference.

   Subpart C_Certification Criteria for Health Information Technology

170.300 Applicability.
170.302-170.306 [Reserved]
170.314 [Reserved]
170.315 2015 Edition health IT certification criteria.

 Subpart D_Conditions and Maintenance of Certification Requirements for 
                          Health IT Developers

170.400 Basis and scope.
170.401 Information blocking.
170.402 Assurances.
170.403 Communications.
170.404 Application programming interfaces.
170.405 Real world testing.
170.406 Attestations.

              Subpart E_ONC Health IT Certification Program

170.500 Basis and scope.
170.501 Applicability.
170.502 Definitions.
170.503-170.504 [Reserved]
170.505 Correspondence.
170.510 Authorization scope for ONC-ACB status.
170.511 Authorization scope for ONC-ATL status.
170.520 Application.
170.523 Principles of proper conduct for ONC-ACBs.
170.524 Principles of proper conduct for ONC-ATLs.
170.525 Application submission.
170.530 Review of application.
170.535 ONC-ACB and ONC-ATL application reconsideration.
170.540 ONC-ACB and ONC-ATL status.
170.545 [Reserved]
170.550 Health IT Module certification.
170.553 [Reserved]
170.555 Certification to newer versions of certain standards.
170.556 In-the-field surveillance and maintenance of certification for 
          Health IT.
170.557 Authorized testing and certification methods.
170.560 Good standing as an ONC-ACB or ONC-ATL.
170.565 Revocation of ONC-ACB or ONC-ATL status.
170.570 Effect of revocation on the certifications issued to Complete 
          EHRs and EHR Module(s).
170.575 [Reserved]
170.580 ONC review of certified health IT.
170.581 Certification ban.
170.599 Incorporation by reference.

    Authority: 42 U.S.C. 300jj-11; 42 U.S.C 300jj-14; 5 U.S.C. 552.

    Source: 75 FR 2042, Jan. 13, 2010, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  170.100  Statutory basis and purpose.

    The provisions of this subchapter implement sections 3001(c)(5) and 
3004 of the Public Health Service Act.

[75 FR 36203, June 24, 2010]



Sec.  170.101  Applicability.

    The standards, implementation specifications, and certification 
criteria adopted in this part apply to Health IT

[[Page 596]]

Modules and the testing and certification of such Health IT Modules.

[85 FR 25939, May 1, 2020]



Sec.  170.102  Definitions.

    For the purposes of this part:
    2015 Edition Base EHR means an electronic record of health-related 
information on an individual that:
    (1) Includes patient demographic and clinical health information, 
such as medical history and problem lists;
    (2) Has the capacity:
    (i) To provide clinical decision support;
    (ii) To support physician order entry;
    (iii) To capture and query information relevant to health care 
quality;
    (iv) To exchange electronic health information with, and integrate 
such information from other sources; and
    (3) Has been certified to the certification criteria adopted by the 
Secretary in--
    (i) Section 170.315(a)(1), (2), or (3); (a)(5), (a)(9), (a)(14), 
(b)(1), (c)(1), (g)(7) and (9), and (h)(1) or (2);
    (ii) Section 170.315(g)(8) or (10) until May 2, 2022; and
    (iii) Section 170.315(g)(10) on and after May 2, 2022.
    2015 Edition health IT certification criteria means the 
certification criteria in Sec.  170.315.
    Certification criteria means criteria:
    (1) To establish that health information technology meets applicable 
standards and implementation specifications adopted by the Secretary; or
    (2) That are used to test and certify that health information 
technology includes required capabilities.
    Common Clinical Data Set means the following data expressed, where 
indicated, according to the specified standard(s):
    (1) Patient name.
    (2) Sex: The standard specified in Sec.  170.207(n)(1).
    (3) Date of birth.
    (4) Race:
    (i) The standard specified in Sec.  170.207(f)(2); and
    (ii) The standard specified in Sec.  170.207(f)(1) for each race 
identified in accordance Sec.  170.207(f)(2).
    (5) Ethnicity:
    (i) The standard specified in Sec.  170.207(f)(2); and
    (ii) The standard specified in Sec.  170.207(f)(1) for each 
ethnicity identified in accordance Sec.  170.207(f)(2).
    (6) Preferred language: The standard specified in Sec.  
170.207(g)(2).
    (7) Smoking status.
    (8) Problems: At a minimum, the standard specified in Sec.  
170.207(a)(4).
    (9) Medications: At a minimum, the standard specified in Sec.  
170.207(d)(3).
    (10) Medication allergies: At a minimum, the standard specified in 
Sec.  170.207(d)(3).
    (11) Laboratory test(s): At a minimum, the standard specified in 
Sec.  170.207(c)(3).
    (12) Laboratory value(s)/result(s).
    (13) Vital signs:
    (i) The patient's diastolic blood pressure, systolic blood pressure, 
body height, body weight, heart rate, respiratory rate, body 
temperature, pulse oximetry, and inhaled oxygen concentration must be 
exchanged in numerical values only; and
    (ii) In accordance with the standard specified in Sec.  
170.207(c)(3) and with the associated applicable unit of measure for the 
vital sign measurement in the standard specified in Sec.  170.207(m)(1).
    (iii) Optional: The patient's BMI percentile per age and sex for 
youth 2-20 years of age, weight for age per length and sex for children 
less than 3 years of age, and head occipital-frontal circumference for 
children less than 3 years of age must be recorded in numerical values 
only in accordance with the standard specified in Sec.  170.207(c)(3) 
and with the associated applicable unit of measure for the vital sign 
measurement in the standard specified in Sec.  170.207(m)(1). For BMI 
percentile per age and sex for youth 2-20 years of age and weight for 
age per length and sex for children less than 3 years of age, the 
reference range/scale or growth curve should be included as appropriate.
    (14) Procedures:
    (i) At a minimum, the version of the standard specified in Sec.  
170.207(a)(4) or Sec.  170.207(b)(2); or
    (ii) For technology primarily developed to record dental procedures, 
the standard specified in Sec.  170.207(b)(3).
    (iii) Optional: The standard specified in Sec.  170.207(b)(4).
    (15) Care team member(s).

[[Page 597]]

    (16) Immunizations: In accordance with, at a minimum, the standards 
specified in Sec.  170.207(e)(3) and (4).
    (17) Unique device identifier(s) for a patient's implantable 
device(s): In accordance with the ``Product Instance'' in the 
``Procedure Activity Procedure Section'' of the standard specified in 
Sec.  170.205(a)(4).
    (18) Assessment and plan of treatment:
    (i) In accordance with the ``Assessment and Plan Section (V2)'' of 
the standard specified in Sec.  170.205(a)(4); or
    (ii) In accordance with the ``Assessment Section (V2)'' and ``Plan 
of Treatment Section (V2)'' of the standard specified in Sec.  
170.205(a)(4).
    (19) Goals: In accordance with the ``Goals Section'' of the standard 
specified in Sec.  170.205(a)(4).
    (20) Health concerns: In accordance with the ``Health Concerns 
Section'' of the standard specified in Sec.  170.205(a)(4).
    Day or Days means a calendar day or calendar days.
    Device identifier is defined as it is in 21 CFR 801.3.
    Disclosure is defined as it is in 45 CFR 160.103.
    Electronic health information (EHI) is defined as it is in Sec.  
171.102.
    Fee is defined as it is in Sec.  171.102 of this subchapter.
    Global Unique Device Identification Database (GUDID) is defined as 
it is in 21 CFR 801.3.
    Health information technology means hardware, software, integrated 
technologies or related licenses, IP, upgrades, or packaged solutions 
sold as services that are designed for or support the use by health care 
entities or patients for the electronic creation, maintenance, access, 
or exchange of health information.
    Health IT Module means any service, component, or combination 
thereof that can meet the requirements of at least one certification 
criterion adopted by the Secretary.
    Human readable format means a format that enables a human to read 
and easily comprehend the information presented to him or her regardless 
of the method of presentation.
    Implantable device is defined as it is in 21 CFR 801.3.
    Implementation specification means specific requirements or 
instructions for implementing a standard.
    Interoperability is, with respect to health information technology, 
such health information technology that--
    (1) Enables the secure exchange of electronic health information 
with, and use of electronic health information from, other health 
information technology without special effort on the part of the user;
    (2) Allows for complete access, exchange, and use of all 
electronically accessible health information for authorized use under 
applicable State or Federal law; and
    (3) Does not constitute information blocking as defined in Sec.  
171.103 of this subchapter.
    Interoperability element is defined as it is in Sec.  171.102 of 
this subchapter.
    Production identifier is defined as it is in 21 CFR 801.3.
    Qualified EHR means an electronic record of health-related 
information on an individual that:
    (1) Includes patient demographic and clinical health information, 
such as medical history and problem lists; and
    (2) Has the capacity:
    (i) To provide clinical decision support;
    (ii) To support physician order entry;
    (iii) To capture and query information relevant to health care 
quality; and
    (iv) To exchange electronic health information with, and integrate 
such information from other sources.
    Standard means a technical, functional, or performance-based rule, 
condition, requirement, or specification that stipulates instructions, 
fields, codes, data, materials, characteristics, or actions.
    Unique device identifier is defined as it is in 21 CFR 801.3.

[75 FR 2042, Jan. 13, 2010, as amended at 75 FR 36203, June 24, 2010; 75 
FR 44649, July 28, 2010; 77 FR 54283, Sept. 4, 2012; 78 FR 65887, Nov. 
4, 2013; 79 FR 52933, Sept. 4, 2014; 79 FR 54477, 54478, Sept. 11, 2014; 
80 FR 62741, Oct. 16, 2015; 80 FR 76871, Dec. 11, 2015; 85 FR 25939, May 
1, 2020]

[[Page 598]]



    Subpart B_Standards and Implementation Specifications for Health 
                         Information Technology

    Source: 75 FR 44649, July 28, 2010, unless otherwise noted.



Sec.  170.200  Applicability.

    The standards and implementation specifications adopted in this part 
apply with respect to Health IT Modules.

[75 FR 44649, July 28, 2010, as amended at 80 FR 62743, Oct. 16, 2015; 
85 FR 25940, May 1, 2020]



Sec.  170.202  Transport standards and other protocols.

    The Secretary adopts the following transport standards:
    (a) Direct Project. (1) [Reserved]
    (2) Standard. ONC Applicability Statement for Secure Health 
Transport, Version 1.2 (incorporated by reference in Sec.  170.299).
    (b) Standard. ONC XDR and XDM for Direct Messaging Specification 
(incorporated by reference in Sec.  170.299).
    (c) Standard. ONC Transport and Security Specification (incorporated 
by reference in Sec.  170.299).
    (d) Standard. ONC Implementation Guide for Direct Edge Protocols 
(incorporated by reference in Sec.  170.299).
    (e) Delivery notification--(1) Standard. ONC Implementation Guide 
for Delivery Notification in Direct (incorporated by reference in Sec.  
170.299).
    (2) [Reserved]

[77 FR 54284, Sept. 4, 2012, as amended at 79 FR 54478, Sept. 11, 2014; 
80 FR 62743, Oct. 16, 2015; 85 FR 25940, May 1, 2020]



Sec.  170.204  Functional standards.

    The Secretary adopts the following functional standards:
    (a) Accessibility--(1) Standard. Web Content Accessibility 
Guidelines (WCAG) 2.0, Level A Conformance (incorporated by reference in 
Sec.  170.299).
    (2) Standard. Web Content Accessibility Guidelines (WCAG) 2.0, Level 
AA Conformance (incorporated by reference in Sec.  170.299).
    (b) Reference source. Standard. HL7 Version 3 Standard: Context-
Aware Retrieval Application (Infobutton) (incorporated by reference in 
Sec.  170.299).
    (1)-(2) [Reserved]
    (3) Standard. HL7 Version 3 Standard: Context Aware Knowledge 
Retrieval Application. (``Infobutton''), Knowledge Request, Release 2 
(incorporated by reference in Sec.  170.299). Implementation 
specifications. HL7 Implementation Guide: Service-Oriented Architecture 
Implementations of the Context-aware Knowledge Retrieval (Infobutton) 
Domain, Release 1 (incorporated by reference in Sec.  170.299).
    (4) Standard. HL7 Version 3 Standard: Context Aware Knowledge 
Retrieval Application (``Infobutton''), Knowledge Request, Release 2 
(incorporated by reference in Sec.  170.299). Implementation 
specifications. HL7 Version 3 Implementation Guide: Context-Aware 
Knowledge Retrieval (Infobutton), Release 4 (incorporated by reference 
in Sec.  170.299).

[77 FR 54284, Sept. 4, 2012, as amended at 80 FR 62743, Oct. 16, 2015; 
85 FR 25940, May 1, 2020]



Sec.  170.205  Content exchange standards and implementation 
specifications for exchanging electronic health information.

    The Secretary adopts the following content exchange standards and 
associated implementation specifications:
    (a) Patient summary record. (1) [Reserved]
    (2) [Reserved]
    (3) Standard. HL7 Implementation Guide for CDA[supreg] Release 2: 
IHE Health Story Consolidation, (incorporated by reference in Sec.  
170.299). The use of the ``unstructured document'' document-level 
template is prohibited.
    (4) Standard. HL7 Implementation Guide for CDA[supreg] Release 2: 
Consolidated CDA Templates for Clinical Notes (US Realm), Draft Standard 
for Trial Use, Volume 1--Introductory Material, Release 2.1 and HL7 
Implementation Guide for CDA[supreg] Release 2: Consolidated CDA 
Templates for Clinical Notes (US Realm), Draft Standard for Trial Use, 
Volume 2--Templates and Supporting Material, Release 2.1 (incorporated 
by reference in Sec.  170.299).
    (5) Standard. HL7 CDA[supreg] R2 Implementation Guide: C-CDA 
Templates for Clinical Notes R2.1 Companion Guide,

[[Page 599]]

Release 2 (incorporated by reference in Sec.  170.299).
    (b) Electronic prescribing--(1) Standard. National Council for 
Prescription Drug Programs (NCPDP): SCRIPT Standard Implementation 
Guide; Version 2017071 (incorporated by reference in Sec.  170.299).
    (2) Standard. NCPDP SCRIPT Standard, Implementation Guide, Version 
10.6 (incorporated by reference in Sec.  170.299).
    (c) [Reserved]
    (d) Electronic submission to public health agencies for surveillance 
or reporting. (1) [Reserved]
    (2) Standard. HL7 2.5.1 (incorporated by reference in Sec.  
170.299).
    (3) [Reserved]
    (4) Standard. HL7 2.5.1 (incorporated by reference in Sec.  
170.299). Implementation specifications. PHIN Messaging Guide for 
Syndromic Surveillance: Emergency Department, Urgent Care, Inpatient and 
Ambulatory Care Settings, Release 2.0, April 21, 2015 (incorporated by 
reference in Sec.  170.299) and Erratum to the CDC PHIN 2.0 
Implementation Guide, August 2015; Erratum to the CDC PHIN 2.0 Messaging 
Guide, April 2015 Release for Syndromic Surveillance: Emergency 
Department, Urgent Care, Inpatient and Ambulatory Care Settings 
(incorporated by reference in Sec.  170.299).
    (e) Electronic submission to immunization registries. (1) [Reserved]
    (2)-(3) [Reserved]
    (4) Standard. HL7 2.5.1 (incorporated by reference in Sec.  
170.299). Implementation specifications. HL7 2.5.1 Implementation Guide 
for Immunization Messaging, Release 1.5 (incorporated by reference in 
Sec.  170.299) and HL7 Version 2.5.1 Implementation Guide for 
Immunization Messaging (Release 1.5)--Addendum, July 2015 (incorporated 
by reference in Sec.  170.299).
    (f) [Reserved]
    (g) Electronic transmission of lab results to public health 
agencies. Standard. HL7 2.5.1 (incorporated by reference in Sec.  
170.299). Implementation specifications. HL7 Version 2.5.1 
Implementation Guide: Electronic Laboratory Reporting to Public Health, 
Release 1 (US Realm) (incorporated by reference in Sec.  170.299) with 
Errata and Clarifications, (incorporated by reference in Sec.  170.299) 
and ELR 2.5.1 Clarification Document for EHR Technology Certification, 
(incorporated by reference in Sec.  170.299).
    (h) Clinical quality measure data import, export and reporting. (1) 
[Reserved]
    (2) Standard. HL7 CDA[supreg] R2 Implementation Guide: Quality 
Reporting Document Architecture--Category I (QRDA I); Release 1, DSTU 
Release 3 (US Realm), Volume 1--Introductory Material and HL7 
CDA[supreg] R2 Implementation Guide: Quality Reporting Document 
Architecture--Category I (QRDA I); Release 1, DSTU Release 3 (US Realm), 
Volume 2--Templates and Supporting Material (incorporated by reference 
in Sec.  170.299).
    (3) Standard. CMS Implementation Guide for Quality Reporting 
Document Architecture: Category I; Hospital Quality Reporting; 
Implementation Guide for 2019 (incorporated by reference in Sec.  
170.299).
    (i) Cancer information. (1) [Reserved]
    (2) Standard. HL7 Clinical Document Architecture (CDA), Release 2.0, 
Normative Edition (incorporated by reference in Sec.  170.299). 
Implementation specifications. HL7 CDA(copyright) Release 2 
Implementation Guide: Reporting to Public Health Cancer Registries from 
Ambulatory Healthcare Providers, Release 1; DSTU Release 1.1, Volume 1--
Introductory Material and HL7 CDA(copyright) Release 2 
Implementation Guide: Reporting to Public Health Cancer Registries from 
Ambulatory Healthcare Providers, Release 1; DSTU Release 1.1 (US Realm), 
Volume 2--Templates and Supporting Material (incorporated by reference 
in Sec.  170.299).
    (j) [Reserved]
    (k) Clinical quality measure aggregate reporting--(1) Standard. 
Quality Reporting Document Architecture Category III, Implementation 
Guide for CDA Release 2 (incorporated by reference in Sec.  170.299).
    (2) Standard. Errata to the HL7 Implementation Guide for CDA[supreg] 
Release 2: Quality Reporting Document Architecture--Category III, DSTU 
Release 1 (US Realm), September 2014 (incorporated by reference in Sec.  
170.299).
    (3) Standard. CMS Implementation Guide for Quality Reporting 
Document Architecture: Category III; Eligible Clinicians and Eligible 
Professionals Programs; Implementation Guide for

[[Page 600]]

2019 (incorporated by reference in Sec.  170.299).
    (l)-(n) [Reserved]
    (o) Data segmentation for privacy--(1) Standard. HL7 Implementation 
Guide: Data Segmentation for Privacy (DS4P), Release 1 (incorporated by 
reference in Sec.  170.299).
    (2) [Reserved]
    (p) XDM package processing--(1) Standard. IHE IT Infrastructure 
Technical Framework Volume 2b (ITI TF-2b) (incorporated by reference in 
Sec.  170.299).
    (2) [Reserved]
    (q) [Reserved]
    (r) Public health--antimicrobial use and resistance information--(1) 
Standard. The following sections of HL7 Implementation Guide for 
CDA[supreg] Release 2--Level 3: Healthcare Associated Infection Reports, 
Release 1, U.S. Realm (incorporated by reference in Sec.  170.299). 
Technology is only required to conform to the following sections of the 
implementation guide:
    (i) HAI Antimicrobial Use and Resistance (AUR) Antimicrobial 
Resistance Option (ARO) Report (Numerator) specific document template in 
Section 2.1.2.1 (pages 69-72);
    (ii) Antimicrobial Resistance Option (ARO) Summary Report 
(Denominator) specific document template in Section 2.1.1.1 (pages 54-
56); and
    (iii) Antimicrobial Use (AUP) Summary Report (Numerator and 
Denominator) specific document template in Section 2.1.1.2 (pages 56-
58).
    (2) [Reserved]
    (s) Public health--health care survey information--(1) Standard. HL7 
Implementation Guide for CDA[supreg] Release 2: National Health Care 
Surveys (NHCS), Release 1--US Realm, HL7 Draft Standard for Trial Use, 
Volume 1--Introductory Material and HL7 Implementation Guide for 
CDA[supreg] Release 2: National Health Care Surveys (NHCS), Release 1--
US Realm, HL7 Draft Standard for Trial Use, Volume 2--Templates and 
Supporting Material (incorporated by reference in Sec.  170.299).
    (2) [Reserved]

[75 FR 44649, July 28, 2010, as amended at 75 FR 62690, Oct. 13, 2010; 
77 FR 54284, Sept. 4, 2012; 79 FR 54478, Sept. 11, 2014; 80 FR 62743, 
Oct. 16, 2015; 85 FR 25940, May 1, 2020]



Sec.  170.207  Vocabulary standards for representing electronic 
health information.

    The Secretary adopts the following code sets, terminology, and 
nomenclature as the vocabulary standards for the purpose of representing 
electronic health information:
    (a) Problems. (1) [Reserved]
    (2) [Reserved]
    (3) Standard. IHTSDO SNOMED CT[supreg] International Release July 
2012 (incorporated by reference in Sec.  170.299) and US Extension to 
SNOMED CT[supreg] March 2012 Release (incorporated by reference in Sec.  
170.299).
    (4) Standard. IHTSDO SNOMED CT[supreg], U.S. Edition, September 2015 
Release (incorporated by reference in Sec.  170.299).
    (b) Procedures. (1) [Reserved]
    (2) Standard. The code set specified at 45 CFR 162.1002(a)(5).
    (3) Standard. The code set specified at 45 CFR 162.1002(a)(4).
    (4) Standard. The code set specified at 45 CFR 162.1002(c)(3) for 
the indicated procedures or other actions taken.
    (c) Laboratory tests. (1) [Reserved]
    (2) Standard. Logical Observation Identifiers Names and Codes 
(LOINC[supreg]) Database version 2.40, a universal code system for 
identifying laboratory and clinical observations produced by the 
Regenstrief Institute, Inc. (incorporated by reference in Sec.  
170.299).
    (3) Standard. Logical Observation Identifiers Names and Codes 
(LOINC[supreg]) Database version 2.52, a universal code system for 
identifying laboratory and clinical observations produced by the 
Regenstrief Institute, Inc. (incorporated by reference in Sec.  
170.299).
    (d) Medications.
    (1)-(2) [Reserved]
    (3) Standard. RxNorm, a standardized nomenclature for clinical drugs 
produced by the United States National Library of Medicine, September 8, 
2015 Release (incorporated by reference in Sec.  170.299).
    (e) Immunizations.
    (1)-(2) [Reserved]
    (3) Standard. HL7 Standard Code Set CVX--Vaccines Administered, 
updates through August 17, 2015 (incorporated by reference in Sec.  
170.299).
    (4) Standard. National Drug Code Directory (NDC)--Vaccine NDC 
Linker,

[[Page 601]]

updates through August 17, 2015 (incorporated by reference in Sec.  
170.299).
    (f) Race and Ethnicity--(1) Standard. The Office of Management and 
Budget Standards for Maintaining, Collecting, and Presenting Federal 
Data on Race and Ethnicity, Statistical Policy Directive No. 15, as 
revised, October 30, 1997 (incorporated by reference in Sec.  170.299).
    (2) Standard. CDC Race and Ethnicity Code Set Version 1.0 (March 
2000) (incorporated by reference in Sec.  170.299).
    (g) Preferred language. (1) [Reserved]
    (2) Standard. Request for Comments (RFC) 5646 (incorporated by 
reference in Sec.  170.299).
    (h) [Reserved]
    (i) Encounter diagnoses. Standard. The code set specified at 45 CFR 
162.1002(c)(2) for the indicated conditions.
    (j)-(l) [Reserved]
    (m) Numerical references--(1) Standard. The Unified Code of Units of 
Measure, Revision 1.9 (incorporated by reference in Sec.  170.299).
    (2) [Reserved]
    (n) Sex--(1) Standard. Birth sex must be coded in accordance with 
HL7 Version 3 Standard, Value Sets for AdministrativeGender and 
NullFlavor (incorporated by reference in Sec.  170.299), attributed as 
follows:
    (i) Male. M
    (ii) Female. F
    (iii) Unknown. nullFlavor UNK
    (2) [Reserved]
    (o) Sexual orientation and gender identity--(1) Standard. Sexual 
orientation must be coded in accordance with, at a minimum, the version 
of SNOMED CT [supreg] codes specified in paragraph (a)(4) of this 
section for paragraphs (o)(1)(i) through (iii) of this section and HL7 
Version 3 Standard, Value Sets for AdministrativeGender and NullFlavor 
(incorporated by reference in Sec.  170.299), for paragraphs (o)(1)(iv) 
through (vi) of this section, attributed as follows:
    (i) Lesbian, gay or homosexual. 38628009
    (ii) Straight or heterosexual. 20430005
    (iii) Bisexual. 42035005
    (iv) Something else, please describe. nullFlavor OTH
    (v) Don't know. nullFlavor UNK
    (vi) Choose not to disclose. nullFlavor ASKU
    (2) Standard. Gender identity must be coded in accordance with, at a 
minimum, the version of SNOMED CT [supreg] codes specified in paragraph 
(a)(4) of this section for paragraphs (o)(2)(i) through (v) of this 
section and HL7 Version 3 Standard, Value Sets for AdministrativeGender 
and NullFlavor (incorporated by reference in Sec.  170.299), for 
paragraphs (o)(2)(vi) and (vii) of this section, attributed as follows:
    (i) Male. 446151000124109
    (ii) Female. 446141000124107
    (iii) Female-to-Male (FTM)/Transgender Male/Trans Man. 407377005
    (iv) Male-to-Female (MTF)/Transgender Female/Trans Woman. 407376001
    (v) Genderqueer, neither exclusively male nor female. 
446131000124102
    (vi) Additional gender category or other, please specify. nullFlavor 
OTH
    (vii) Choose not to disclose. nullFlavor ASKU
    (p) Social, psychological, and behavioral data--(1) Financial 
resource strain. Financial resource strain must be coded in accordance 
with, at a minimum, the version of LOINC [supreg] codes specified in 
paragraph (c)(3) of this section and attributed with the LOINC [supreg] 
code 76513-1 and LOINC [supreg] answer list ID LL3266-5.
    (2) Education. Education must be coded in accordance with, at a 
minimum, the version of LOINC[supreg] codes specified in paragraph 
(c)(3) of this section and attributed with LOINC[supreg] code 63504-5 
and LOINC[supreg] answer list ID LL1069-5.
    (3) Stress. Stress must be coded in accordance with, at a minimum, 
the version of LOINC[supreg] codes specified in paragraph (c)(3) of this 
section and attributed with the LOINC[supreg] code 76542-0 and 
LOINC[supreg] answer list LL3267-3.
    (4) Depression. Depression must be coded in accordance with, at a 
minimum, the version of LOINC[supreg] codes specified in paragraph 
(c)(3) of this section and attributed with LOINC[supreg] codes 55757-9, 
44250-9 (with LOINC[supreg] answer list ID LL358-3), 44255-8 (with 
LOINC[supreg] answer list ID LL358-3), and 55758-7 (with the answer 
coded with the associated applicable unit of measure in the standard 
specified in Sec.  170.207(m)(1)).
    (5) Physical activity. Physical activity must be coded in accordance 
with, at a minimum, the version of LOINC[supreg] codes

[[Page 602]]

specified in paragraph (c)(3) of this section and attributed with 
LOINC[supreg] codes 68515-6 and 68516-4. The answers must be coded with 
the associated applicable unit of measure in the standard specified in 
Sec.  170.207(m)(1).
    (6) Alcohol use. Alcohol use must be coded in accordance with, at a 
minimum, the version of LOINC[supreg] codes specified in paragraph 
(c)(3) of this section and attributed with LOINC[supreg] codes 72109-2, 
68518-0 (with LOINC[supreg] answer list ID LL2179-1), 68519-8 (with 
LOINC[supreg] answer list ID LL2180-9), 68520-6 (with LOINC[supreg] 
answer list ID LL2181-7), and 75626-2.
    (7) Social connection and isolation. Social connection and isolation 
must be coded in accordance with, at a minimum, the version of 
LOINC[supreg] codes specified in paragraph (c)(3) of this section and 
attributed with the LOINC[supreg] codes 76506-5, 63503-7 (with LOINC 
answer list ID LL1068-7), 76508-1 (with the associated applicable unit 
of measure in the standard specified in Sec.  170.207(m)(1)), 76509-9 
(with the associated applicable unit of measure in the standard 
specified in Sec.  170.207(m)(1)), 76510-7 (with the associated 
applicable unit of measure in the standard specified in Sec.  
170.207(m)(1)), 76511-5 (with LOINC answer list ID LL963-0), and 76512-3 
(with the associated applicable unit of measure in the standard 
specified in Sec.  170.207(m)(1)).
    (8) Exposure to violence (intimate partner violence). Exposure to 
violence: Intimate partner violence must be coded in accordance with, at 
a minimum, the version of LOINC[supreg] codes specified in paragraph 
(c)(3) of this section and attributed with the LOINC[supreg] code 76499-
3, 76500-8 (with LOINC[supreg] answer list ID LL963-0), 76501-6 (with 
LOINC[supreg] answer list ID LL963-0), 76502-4 (with LOINC[supreg] 
answer list ID LL963-0), 76503-2 (with LOINC[supreg] answer list ID 
LL963-0), and 76504-0 (with the associated applicable unit of measure in 
the standard specified in Sec.  170.207(m)(1)).
    (q) Patient matching--(1) Phone number standard. ITU-T E.123, Series 
E: Overall Network Operation, Telephone Service, Service Operation and 
Human Factors, International operation--General provisions concerning 
users: Notation for national and international telephone numbers, email 
addresses and web addresses (incorporated by reference in Sec.  
170.299); and ITU-T E.164, Series E: Overall Network Operation, 
Telephone Service, Service Operation and Human Factors, International 
operation--Numbering plan of the international telephone service: The 
international public telecommunication numbering plan (incorporated by 
reference in Sec.  170.299).
    (2) [Reserved]
    (r) Provider type--(1) Standard. Crosswalk: Medicare Provider/
Supplier to Healthcare Provider Taxonomy, April 2, 2015 (incorporated by 
reference in Sec.  170.299).
    (2) [Reserved]
    (s) Patient insurance--(1) Standard. Public Health Data Standards 
Consortium Source of Payment Typology Code Set Version 5.0 (October 
2011) (incorporated by reference in Sec.  170.299).
    (2) [Reserved]

[75 FR 44649, July 28, 2010, as amended at 77 FR 54284, Sept. 4, 2012; 
79 FR 54478, Sept. 11, 2014; 80 FR 62744, Oct. 16, 2015; 80 FR 76871, 
Dec. 11, 2015; 85 FR 25940, May 1, 2020]



Sec.  170.210  Standards for health information technology to protect
electronic health information created, maintained, and exchanged.

    The Secretary adopts the following standards to protect electronic 
health information created, maintained, and exchanged:
    (a) Encryption and decryption of electronic health information. (1) 
[Reserved]
    (2) General. Any encryption algorithm identified by the National 
Institute of Standards and Technology (NIST) as an approved security 
function in Annex A of the Federal Information Processing Standards 
(FIPS) Publication 140-2, October 8, 2014 (incorporated by reference in 
Sec.  170.299).
    (b) [Reserved]
    (c) Hashing of electronic health information. (1) [Reserved]
    (2) Standard. A hashing algorithm with a security strength equal to 
or greater than SHA-2 as specified by NIST in FIPS Publication 180-4 
(August 2015) (incorporated by reference in Sec.  170.299).
    (d) Record treatment, payment, and health care operations 
disclosures. The date, time, patient identification, user 
identification, and a description of the

[[Page 603]]

disclosure must be recorded for disclosures for treatment, payment, and 
health care operations, as these terms are defined at 45 CFR 164.501.
    (e) Record actions related to electronic health information, audit 
log status, and encryption of end-user devices. (1)(i) The audit log 
must record the information specified in sections 7.1.1 through 7.1.3 
and 7.1.6 through 7.1.9 of the standard specified in Sec.  170.210(h) 
and changes to user privileges when health IT is in use.
    (ii) The date and time must be recorded in accordance with the 
standard specified at Sec.  170.210(g).
    (2)(i) The audit log must record the information specified in 
sections 7.2 and 7.4 of the standard specified at Sec.  170.210(h) when 
the audit log status is changed.
    (ii) The date and time each action occurs in accordance with the 
standard specified at Sec.  170.210(g).
    (3) The audit log must record the information specified in sections 
7.2 and 7.4 of the standard specified at Sec.  170.210(h) when the 
encryption status of electronic health information locally stored by 
health IT on end-user devices is changed. The date and time each action 
occurs in accordance with the standard specified at Sec.  170.210(g).
    (f) Encryption and hashing of electronic health information. Any 
encryption and hashing algorithm identified by the National Institute of 
Standards and Technology (NIST) as an approved security function in 
Annex A of the FIPS Publication 140-2 (incorporated by reference in 
Sec.  170.299).
    (g) Synchronized clocks. The date and time recorded utilize a system 
clock that has been synchronized following (RFC 1305) Network Time 
Protocol, (incorporated by reference in Sec.  170.299) or (RFC 5905) 
Network Time Protocol Version 4, (incorporated by reference in Sec.  
170.299).
    (h) Audit log content. ASTM E2147-18, (incorporated by reference in 
Sec.  170.299).

[75 FR 44649, July 28, 2010, as amended at 77 FR 54285, Sept. 4, 2012; 
79 FR 54478, Sept. 11, 2014; 80 FR 62745, Oct. 16, 2015; 85 FR 25940, 
May 1, 2020]



Sec.  170.213  United States Core Data for Interoperability.

    Standard. United States Core Data for Interoperability (USCDI), 
Version 1 (v1) (incorporated by reference in Sec.  170.299).

[85 FR 25941, May 1, 2020]



Sec.  170.215  Application Programming Interface Standards.

    The Secretary adopts the following application programming interface 
(API) standards and associated implementation specifications:
    (a)(1) Standard. HL7[supreg] Fast Healthcare Interoperability 
Resources (FHIR [supreg]) Release 4.0.1 (incorporated by reference in 
Sec.  170.299).
    (2) Implementation specification. HL7 FHIR US Core Implementation 
Guide STU 3.1.0. (incorporated by reference in Sec.  170.299).
    (3) Implementation specification. HL7 SMART Application Launch 
Framework Implementation Guide Release 1.0.0, including mandatory 
support for the ``SMART Core Capabilities'' (incorporated by reference 
in Sec.  170.299).
    (4) Implementation specification. FHIR Bulk Data Access (Flat FHIR) 
(v1.0.0: STU 1), including mandatory support for the ``group-export'' 
``OperationDefinition'' (incorporated by reference in Sec.  170.299).
    (b) Standard. OpenID Connect Core 1.0, incorporating errata set 1 
(incorporated by reference in Sec.  170.299).

[85 FR 25941, May 1, 2020]



Sec.  170.299  Incorporation by reference.

    (a) Certain material is incorporated by reference into this subpart 
with the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, the Department of Health and Human Services 
must publish a document in the Federal Register and the material must be 
available to the public. All approved material is available for 
inspection at U.S. Department of Health and Human Services, Office of 
the National Coordinator for Health Information Technology, 330 C Street 
SW., Washington, DC 20201, call ahead to arrange for inspection at 202-
690-7151, and is available from the sources

[[Page 604]]

listed below. It is also available for inspection at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030 or go to http:/
/www.archives.gov/federal_ register/code_of_ federal_regulations /
ibr_locations.html.
    (b) American National Standards Institute, Health Information 
Technology Standards Panel (HITSP) Secretariat, 25 West 43rd Street--
Fourth Floor, New York, NY 10036, http://www.hitsp.org.
    (1) HITSP Summary Documents Using HL7 Continuity of Care Document 
(CCD) Component, HITSP/C32, July 8, 2009, Version 2.5, IBR approved for 
Sec.  170.205.
    (2) [Reserved]
    (c) ASTM International, 100 Barr Harbor Drive, PO Box C700, West 
Conshohocken, PA, 19428-2959 USA; Telephone (610) 832-9585 or http://
www.astm.org/.
    (1) ASTM E2147-18 Standard Specification for Audit and Disclosure 
Logs for Use in Health Information Systems, approved May 1, 2018, IBR 
approved for Sec.  170.210(h).
    (2)-(3) [Reserved]
    (d) Centers for Disease Control and Prevention, 2500 Century 
Parkway, Mailstop E-78, Atlanta, GA 30333, USA (800-232-4636); http://
www.cdc.gov/ehrmeaningfuluse/.
    (1) HL7 Standard Code Set CVX--Vaccines Administered, July 30, 2009, 
IBR approved for Sec.  170.207.
    (2) [Reserved]
    (3) Implementation Guide for Immunization Data Transactions using 
Version 2.3.1 of the Health Level Seven (HL7)Standard Protocol 
Implementation Guide Version 2.2, June 2006, IBR approved for Sec.  
170.205.
    (4) HL7 2.5.1 Implementation Guide for Immunization Messaging 
Release 1.0, May 1, 2010, IBR approved for Sec.  170.205.
    (5) PHIN Messaging Guide for Syndromic Surveillance: Emergency 
Department and Urgent Care Data, ADT Messages A01, A03, A04, and A08, 
HL7 Version 2.5.1 (Version 2.3.1 Compatible), Release 1.1, August 2012, 
IBR approved for Sec.  170.205.
    (6) Conformance Clarification for EHR Certification of Electronic 
Syndromic Surveillance, ADT MESSAGES A01, A03, A04, and A08, HL7 Version 
2.5.1, Addendum to PHIN Messaging Guide for Syndromic Surveillance: 
Emergency Department and Urgent Care Data (Release 1.1), August 2012, 
IBR approved for Sec.  170.205.
    (7)-(8) [Reserved]
    (9) ELR 2.5.1 Clarification Document for EHR Technology 
Certification, July 16, 2012, IBR approved for Sec.  170.205.
    (10) PHIN Messaging Guide for Syndromic Surveillance: Emergency 
Department, Urgent Care, Inpatient and Ambulatory Care Settings, Release 
2.0, April 21, 2015, IBR approved for Sec.  170.205(d).
    (11) Erratum to the CDC PHIN 2.0 Implementation Guide, August 2015; 
Erratum to the CDC PHIN 2.0 Messaging Guide, April 2015 Release for 
Syndromic Surveillance: Emergency Department, Urgent Care, Inpatient and 
Ambulatory Care Settings, IBR approved for Sec.  170.205(d).
    (12) HL7 2.5.1 Implementation Guide for Immunization Messaging, 
Release 1.5, October 1, 2014, IBR approved for Sec.  170.205(e).
    (13) HL7 Version 2.5.1 Implementation Guide for Immunization 
Messaging (Release 1.5)--Addendum, July 2015, IBR approved for Sec.  
170.205(e).
    (14) HL7 Standard Code Set CVX--Vaccines Administered, updates 
through August 17, 2015, IBR approved for Sec.  170.207(e).
    (15) National Drug Code Directory (NDC)--Vaccine NDC Linker, updates 
through August 17, 2015, IBR approved for Sec.  170.207(e).
    (16) CDC Race and Ethnicity Code Set Version 1.0 (March 2000), IBR 
approved for Sec.  170.207(f).
    (e) Centers for Medicare & Medicaid Services, Office of Clinical 
Standards and Quality, 7500 Security Boulevard, Baltimore, Maryland 
21244; Telephone (410) 786-3000
    (1) CMS PQRI 2009 Registry XML Specifications, IBR approved for 
Sec.  170.205.
    (2) 2009 Physician Quality Reporting Initiative Measure 
Specifications Manual for Claims and Registry, Version 3.0, December 8, 
2008 IBR approved for Sec.  170.205.

[[Page 605]]

    (3) Crosswalk: Medicare Provider/Supplier to Healthcare Provider 
Taxonomy, April 2, 2015, IBR approved for Sec.  170.207(r).
    (4) CMS Implementation Guide for Quality Reporting Document 
Architecture Category I Hospital Quality Reporting Implementation Guide 
for 2019; published May 4, 2018, IBR approved for Sec.  170.205(h).
    (5) CMS Implementation Guide for Quality Reporting Document 
Architecture Category III Eligible Clinicians and Eligible Professionals 
Programs Implementation Guide for 2019; published October 8, 2018, IBR 
approved for Sec.  170.205(k).
    (f) Health Level Seven, 3300 Washtenaw Avenue, Suite 227, Ann Arbor, 
MI 48104; Telephone (734) 677-7777 or http://www.hl7.org/
    (1) Health Level Seven Standard Version 2.3.1 (HL7 2.3.1), An 
Application Protocol for Electronic Data Exchange in Healthcare 
Environments, April 14, 1999, IBR approved for Sec.  170.205.
    (2) Health Level Seven Messaging Standard Version 2.5.1 (HL7 2.5.1), 
An Application Protocol for Electronic Data Exchange in Healthcare 
Environments, February 21, 2007, IBR approved for Sec.  170.205.
    (3) [Reserved]
    (4) HL7 Version 2.5.1 Implementation Guide: Electronic Laboratory 
Reporting to Public Health, Release 1 (US Realm) HL7 Version 2.5.1: 
ORU[supcaret]R01, HL7 Informative Document, February, 2010, IBR approved 
for Sec.  170.205.
    (5) HL7 Version 3 Standard: Context-Aware Retrieval Application 
(Infobutton); Release 1, July 2010, IBR approved for Sec.  170.204.
    (6)-(7) [Reserved]
    (8) HL7 Implementation Guide for CDA[supreg] Release 2: IHE Health 
Story Consolidation, DSTU Release 1.1 (US Realm) Draft Standard for 
Trial Use July 2012, IBR approved for Sec.  170.205.
    (9) HL7 Clinical Document Architecture, Release 2.0, Normative 
Edition, May 2005, IBR approved for Sec.  170.205.
    (10)-(11) [Reserved]
    (12) HL7 Implementation Guide for CDA[supreg] Release 2: Quality 
Reporting Document Architecture, DTSU Release 2 (Universal Realm), Draft 
Standard for Trial Use, July 2012, IBR approved for Sec.  170.205.
    (13) HL7 v2.5.1 IG: Electronic Laboratory Reporting to Public Health 
(US Realm), Release 1 Errata and Clarifications, September, 29, 2011, 
IBR approved for Sec.  170.205.
    (14) HL7 Implementation Guide for CDA[supreg] Release 2: Quality 
Reporting Document Architecture--Category III, DSTU Release 1 (US Realm) 
Draft Standard for Trial Use, November 2012, IBR approved for Sec.  
170.205.
    (15) HL7 Version 3 Standard: Context Aware Retrieval Application 
(``Infobutton''), Knowledge Request, Release 2, 2014 Release, IBR 
approved for Sec.  170.204(b).
    (16) HL7 Implementation Guide: Service-Oriented Architecture 
Implementations of the Context-aware Knowledge Retrieval (Infobutton) 
Domain, Release 1, August 9, 2013, IBR approved for Sec.  170.204(b).
    (17) HL7 Version 3 Implementation Guide: Context-Aware Knowledge 
Retrieval (Infobutton), Release 4, June 13, 2014, IBR approved for Sec.  
170.204(b).
    (18) HL7 Implementation Guide for CDA[supreg] Release 2: 
Consolidated CDA Templates for Clinical Notes (US Realm), Draft Standard 
for Trial Use, Volume 1--Introductory Material, Release 2.1, August 
2015, IBR approved for Sec.  170.205(a).
    (19) HL7 Implementation Guide for CDA[supreg] Release 2: 
Consolidated CDA Templates for Clinical Notes (US Realm), Draft Standard 
for Trial Use, Volume 2--Templates and Supporting Material, Release 2.1, 
August 2015, IBR approved for Sec.  170.205(a).
    (20) HL7 CDA[supreg] R2 Implementation Guide: Quality Reporting 
Document Architecture--Category I (QRDA I); Release 1, DSTU Release 3 
(US Realm), Volume 1--Introductory Material, June 2015, IBR approved for 
Sec.  170.205(h).
    (21) HL7 CDA[supreg] R2 Implementation Guide: Quality Reporting 
Document Architecture--Category I (QRDA I); Release 1, DSTU Release 3 
(US Realm), Volume 2--Templates and Supporting Material, June 2015, IBR 
approved for Sec.  170.205(h).
    (22) HL7 CDA(copyright) Release 2 Implementation Guide: 
Reporting to Public Health Cancer Registries from Ambulatory Healthcare 
Providers, Release 1; DSTU

[[Page 606]]

Release 1.1 (US Realm), Volume 1--Introductory Material, April 2015, IBR 
approved for Sec.  170.205(i).
    (23) HL7 CDA(copyright) Release 2 Implementation Guide: 
Reporting to Public Health Cancer Registries from Ambulatory Healthcare 
Providers, Release 1; DSTU Release 1.1 (US Realm), Volume 2--Templates 
and Supporting Material, April 2015, IBR approved for Sec.  170.205(i).
    (24) Errata to the HL7 Implementation Guide for CDA[supreg] Release 
2: Quality Reporting Document Architecture--Category III, DSTU Release 1 
(US Realm), September 2014, IBR approved for Sec.  170.205(k).
    (25) HL7 Version 3 Implementation Guide: Data Segmentation for 
Privacy (DS4P), Release 1, Part 1: CDA R2 and Privacy Metadata Reusable 
Content Profile, May 16, 2014, IBR approved for Sec.  170.205(o).
    (26) HL7 Implementation Guide for CDA[supreg] Release 2--Level 3: 
Healthcare Associated Infection Reports, Release 1 (U.S. Realm), August 
9, 2013, IBR approved for Sec.  170.205(r).
    (27) HL7 Implementation Guide for CDA[supreg] Release 2: National 
Health Care Surveys (NHCS), Release 1--US Realm, HL7 Draft Standard for 
Trial Use, Volume 1--Introductory Material, December 2014, IBR approved 
for Sec.  170.205(s).
    (28) HL7 Implementation Guide for CDA[supreg] Release 2: National 
Health Care Surveys (NHCS), Release 1--US Realm, HL7 Draft Standard for 
Trial Use, Volume 2--Templates and Supporting Material, December 2014, 
IBR approved for Sec.  170.205(s).
    (29) HL7 Version 3 (V3) Standard, Value Sets for 
AdministrativeGender and NullFlavor, published August 1, 2013, IBR 
approved for Sec.  170.207(n) and (o).
    (30) HL7[supreg] CDA[supreg] R2 Implementation Guide: C-CDA 
Templates for Clinical Notes R2.1 Companion Guide, Release 2-US Realm, 
October 2019, IBR approved for Sec.  170.205(a).
    (31) HL7 FHIR[supreg] Bulk Data Access (Flat FHIR[supreg]) (v1.0.0: 
STU 1), August 22, 2019, IBR approved for Sec.  170.215(a).
    (32) HL7 FHIR SMART Application Launch Framework Implementation 
Guide Release 1.0.0, November 13, 2018, IBR approved for Sec.  
170.215(a).
    (33) HL7 Fast Healthcare Interoperability Resources Specification 
(FHIR[supreg]) Release 4, Version 4.0.1: R4, October 30, 2019, including 
Technical Correction 1, November 1, 2019, IBR approved for Sec.  
170.215(a).
    (34) HL7 FHIR[supreg] US Core Implementation Guide STU3 Release 
3.1.0, November 06, 2019, IBR approved for Sec.  170.215(a).
    (g) Integrating the Healthcare Enterprise (IHE), 820 Jorie 
Boulevard, Oak Brook, IL, Telephone (630) 481-1004, http://www.ihe.net/.
    (1) IHE IT Infrastructure Technical Framework Volume 2b (ITI TF-2b), 
Transactions Part B--Sections 3.29--2.43, Revision 7.0, August 10, 2010, 
IBR approved for Sec.  170.205(p).
    (2) [Reserved]
    (h) Internet Engineering Task Force (IETF) Secretariat, c/o 
Association Management Solutions, LLC (AMS), 48377 Fremont Blvd., Suite 
117, Fremont, CA, 94538, Telephone (510) 492-4080, http://www.ietf.org /
rfc.html.
    (1) [Reserved]
    (2) Network Time Protocol Version 4: Protocol and Algorithms 
Specification, June 2010, IBR approved for Sec.  170.210.
    (3) Request for Comment (RFC) 5646, ``Tags for Identifying 
Languages, September 2009,'' copyright 2009, IBR approved for Sec.  
170.207(g).
    (i) International Telecommunication Union (ITU), Place des Nations, 
1211 Geneva 20 Switzerland, Telephone (41) 22 730 511, http://
www.itu.int/en /pages/default.aspx.
    (1) ITU-T E.123, Series E: Overall Network Operation, Telephone 
Service, Service Operation and Human Factors, International operation--
General provisions concerning users: Notation for national and 
international telephone numbers, e-mail addresses and web addresses, 
February 2001, IBR approved for Sec.  170.207(q).
    (2) ITU-T E.164, Series E: Overall Network Operation, Telephone 
Service, Service Operation and Human Factors, International operation--
Numbering plan of the international telephone service, The international 
public telecommunication numbering plan, November 2010, IBR approved for 
Sec.  170.207(q).
    (j) Library of Congress, Network Development and MARC Standards 
Office, Washington, DC 20540-4402, Tel: (202)

[[Page 607]]

707-6237 or http://www.loc.gov /standards/iso639-2/.
    (1)-(2) [Reserved]
    (k) National Council for Prescription Drug Programs, Incorporated, 
9240 E. Raintree Drive, Scottsdale, AZ 85260-7518; Telephone (480) 477-
1000; and Facsimile (480) 767-1042 or http://www.ncpdp.org.
    (1) National Council for Prescription Drug Programs Prescriber/
Pharmacist Interface SCRIPT Standard, Implementation Guide, Version 8, 
Release 1, October 2005, IBR approved for Sec.  170.205.
    (2) SCRIPT Standard, Implementation Guide, Version 10.6, October, 
2008, (Approval date for ANSI: November 12, 2008), IBR approved for 
Sec.  170.205.
    (3) SCRIPT Standard, Implementation Guide, Version 2017071 (Approval 
Date for ANSI: July 28, 2017), IBR approved for Sec.  170.205(b).
    (l) National Institute of Standards and Technology, Information 
Technology Laboratory, National Institute of Standards and Technology, 
100 Bureau Drive, Gaithersburg, MD 20899-8930, http://csrc.nist.gov/
groups /STM/cmvp/standards.html.
    (1) Annex A: Approved Security Functions for FIPS PUB 140-2, 
Security Requirements for Cryptographic Modules, Draft, January 27, 
2010, IBR approved for Sec.  170.210.
    (2) Annex A: Approved Security Functions for FIPS PUB 140-2, 
Security Requirements for Cryptographic Modules, Draft, May 30, 2012, 
IBR approved for Sec.  170.210.
    (3) [Reserved]
    (4) FIPS PUB 180-4, Secure Hash Standard (August 2015), IBR approved 
for Sec.  170.210(c).
    (m) Office of the National Coordinator for Health Information 
Technology (ONC), 330 C Street SW., Washington, DC 20201, http://
healthit.hhs.gov.
    (1) Applicability Statement for Secure Health Transport, Version 
1.1, July 10, 2012, IBR approved for Sec.  170.202; available at http://
healthit.hhs.gov /portal/server.pt/community/healthit_ hhs_gov__direct_ 
project/3338.
    (2) XDR and XDM for Direct Messaging Specification, Version 1, March 
9, 2011, IBR approved for Sec.  170.202; available at http://
healthit.hhs.gov /portal/server.pt/community/healthit_ hhs_gov__direct_ 
project/3338.
    (3) Transport and Security Specification, Version 1.0, June 19, 
2012, IBR approved for Sec.  170.202.
    (4) ONC Implementation Guide for Direct Edge Protocols, Version 1.1, 
June 25, 2014, IBR approved for Sec.  170.202; available at http://
www.healthit.gov/sites /default/files/implementation 
guidefordirectedgeprotocol sv1_1.pdf.
    (5) United States Core Data for Interoperability (USCDI), Version 1, 
February 2020, IBR approved for Sec.  170.213; available at https://
www.healthit.gov/USCDI.
    (n) OpenID Foundation, 2400 Camino Ramon, Suite 375, San Ramon, CA 
94583, Telephone +1 925-275-6639, http://openid.net/.
    (1) OpenID Connect Core 1.0 Incorporating errata set 1, November 8, 
2014, IBR approved for Sec.  170.215(b).
    (2) [Reserved]
    (o) Public Health Data Standards Consortium, 111 South Calvert 
Street, Suite 2700, Baltimore, MD 21202, http://www.phdsc.org/.
    (1) Public Health Data Standards Consortium Source of Payment 
Typology Code Set Version 5.0 (October 2011), IBR approved for Sec.  
170.207(s).
    (2) [Reserved]
    (p) Regenstrief Institute, Inc., LOINC[supreg] c/o Regenstrief 
Center for Biomedical Informatics, Inc., 410 West 10th Street, Suite 
2000, Indianapolis, IN 46202-3012, http://loinc.org/.
    (1) Logical Observation Identifiers Names and Codes (LOINC[supreg]) 
version 2.27, June 15, 2009, IBR approved for Sec.  170.207.
    (2) Logical Observation Identifiers Names and Codes (LOINC[supreg]) 
Database version 2.40, Released June 2012, IBR approved for Sec.  
170.207.
    (3) Logical Observation Identifiers Names and Codes (LOINC[supreg]) 
Database version 2.52, Released June 2015, IBR approved for Sec.  
170.207(c).
    (4) The Unified Code of Units for Measure, Revision 1.9, October 23, 
2013, IBR approved for Sec.  170.207.
    (q) The Direct Project, c/o the Office of the National Coordinator 
for Health Information Technology (ONC), 330 C Street SW., Washington, 
DC 20201, http://healthit.hhs.gov.
    (1) Applicability Statement for Secure Health Transport, Version 
1.2, August 2015, IBR approved for Sec.  170.202(a).

[[Page 608]]

    (2) Implementation Guide for Delivery Notification in Direct, 
Version 1.0, June 29, 2012, IBR approved for Sec.  170.202(e).
    (r) U.S. National Library of Medicine, 8600 Rockville Pike, 
Bethesda, MD 20894; Telephone (301) 594-5983 or http://www.nlm.nih.gov/.
    (1) International Health Terminology Standards Development 
Organization Systematized Nomenclature of Medicine Clinical Terms 
(SNOMED CT[supreg]), International Release, July 2009, IBR approved for 
Sec.  170.207.
    (2) International Health Terminology Standards Development 
Organisation (IHTSDO) Systematized Nomenclature of Medicine Clinical 
Terms (SNOMED CT[supreg]) International Release July 31, 2012, IBR 
approved for Sec.  170.207.
    (3) US Extension to SNOMED CT[supreg] March 2012 Release, IBR 
approved for Sec.  170.207.
    (4)-(5) [Reserved]
    (6) International Health Terminology Standards Development 
Organization (IHTSDO) Systematized Nomenclature of Medicine Clinical 
Terms (SNOMED CT[supreg]) U.S. Edition, September 2015 Release, IBR 
approved for Sec.  170.207(a).
    (7) RxNorm, September 8, 2015 Full Release Update, IBR approved for 
Sec.  170.207(d).
    (s) World Wide Web Consortium (W3C)/MIT, 32 Vassar Street, Room 32-
G515, Cambridge, MA 02139 USA, http://www.w3.org/standards/
    (1) Web Content Accessibility Guidelines (WCAG) 2.0, December 11, 
2008, IBR approved for Sec.  170.204.
    (2) [Reserved]

[75 FR 44649, July 28, 2010, as amended at 75 FR 62690, Oct. 13, 2010; 
77 FR 54285, Sept. 4, 2012; 77 FR 72991, Dec. 7, 2012; 79 FR 54478, 
Sept. 11, 2014; 80 FR 62745, Oct. 16, 2015; 81 FR 72463, Oct. 19, 2016; 
85 FR 25941, May 1, 2020]



   Subpart C_Certification Criteria for Health Information Technology

    Source: 75 FR 44651, July 28, 2010, unless otherwise noted.



Sec.  170.300  Applicability.

    (a) The certification criteria adopted in this subpart apply to the 
testing and certification of EHR Modules.
    (b) When a certification criterion refers to two or more standards 
as alternatives, use of at least one of the alternative standards will 
be considered compliant.
    (c) EHR Modules are not required to be compliant with certification 
criteria or capabilities specified within a certification criterion that 
are designated as optional.
    (d) In Sec. Sec.  170.314 and 170.315, all certification criteria 
and all capabilities specified within a certification criterion have 
general applicability (i.e., apply to any health care setting) unless 
designated as ``inpatient setting only'' or ``ambulatory setting only.''
    (1) Inpatient setting only means that the criterion or capability 
within the criterion is only required for certification of health IT 
designed for use in an inpatient setting.
    (2) Ambulatory setting only means that the criterion or capability 
within the criterion is only required for certification of health IT 
designed for use in an ambulatory setting.

[75 FR 44649, July 28, 2010, as amended at 77 FR 54286, Sept. 4, 2012; 
80 FR 62747, Oct. 16, 2015; 85 FR 25941, May 1, 2020]



Sec. Sec.  170.302-170.306  [Reserved]



Sec.  170.314  [Reserved]



Sec.  170.315  2015 Edition health IT certification criteria.

    The Secretary adopts the following certification criteria for health 
IT. Health IT must be able to electronically perform the following 
capabilities in accordance with all applicable standards and 
implementation specifications adopted in this part:
    (a) Clinical--(1) Computerized provider order entry--medications. 
(i) Enable a user to record, change, and access medication orders.
    (ii) Optional. Include a ``reason for order'' field.
    (2) Computerized provider order entry--laboratory. (i) Enable a user 
to record, change, and access laboratory orders.
    (ii) Optional. Include a ``reason for order'' field.
    (3) Computerized provider order entry--diagnostic imaging. (i) 
Enable a user to record, change, and access diagnostic imaging orders.
    (ii) Optional. Include a ``reason for order'' field.

[[Page 609]]

    (4) Drug-drug, drug-allergy interaction checks for CPOE--(i) 
Interventions. Before a medication order is completed and acted upon 
during computerized provider order entry (CPOE), interventions must 
automatically indicate to a user drug-drug and drug-allergy 
contraindications based on a patient's medication list and medication 
allergy list.
    (ii) Adjustments. (A) Enable the severity level of interventions 
provided for drug-drug interaction checks to be adjusted.
    (B) Limit the ability to adjust severity levels in at least one of 
these two ways:
    (1) To a specific set of identified users.
    (2) As a system administrative function.
    (5)Demographics. (i) Enable a user to record, change, and access 
patient demographic data including race, ethnicity, preferred language, 
sex, sexual orientation, gender identity, and date of birth.
    (A) Race and ethnicity. (1) Enable each one of a patient's races to 
be recorded in accordance with, at a minimum, the standard specified in 
Sec.  170.207(f)(2) and whether a patient declines to specify race.
    (2) Enable each one of a patient's ethnicities to be recorded in 
accordance with, at a minimum, the standard specified in Sec.  
170.207(f)(2) and whether a patient declines to specify ethnicity.
    (3) Aggregate each one of the patient's races and ethnicities 
recorded in accordance with paragraphs (a)(5)(i)(A)(1) and (2) of this 
section to the categories in the standard specified in Sec.  
170.207(f)(1).
    (B) Preferred language. Enable preferred language to be recorded in 
accordance with the standard specified in Sec.  170.207(g)(2) and 
whether a patient declines to specify a preferred language.
    (C) Sex. Enable sex to be recorded in accordance with the standard 
specified in Sec.  170.207(n)(1).
    (D) Sexual orientation. Enable sexual orientation to be recorded in 
accordance with the standard specified in Sec.  170.207(o)(1) and 
whether a patient declines to specify sexual orientation.
    (E) Gender identity. Enable gender identity to be recorded in 
accordance with the standard specified in Sec.  170.207(o)(2) and 
whether a patient declines to specify gender identity.
    (ii) Inpatient setting only. Enable a user to record, change, and 
access the preliminary cause of death and date of death in the event of 
mortality.
    (6)-(8) [Reserved]
    (9) Clinical decision support (CDS)--(i) CDS intervention 
interaction. Interventions provided to a user must occur when a user is 
interacting with technology.
    (ii) CDS configuration. (A) Enable interventions and reference 
resources specified in paragraphs (a)(9)(iii) and (iv) of this section 
to be configured by a limited set of identified users (e.g., system 
administrator) based on a user's role.
    (B) Enable interventions:
    (1) Based on the following data:
    (i) Problem list;
    (ii) Medication list;
    (iii) Allergy and intolerance list;
    (iv) At least one demographic specified in paragraph (a)(5)(i) of 
this section;
    (v) Laboratory tests; and
    (vi) Vital signs.
    (2) When a patient's medications, allergies and intolerance, and 
problems are incorporated from a transition of care/referral summary 
received and pursuant to paragraph (b)(2)(iii)(D) of this section.
    (iii) Evidence-based decision support interventions. Enable a 
limited set of identified users to select (i.e., activate) electronic 
CDS interventions (in addition to drug-drug and drug-allergy 
contraindication checking) based on each one and at least one 
combination of the data referenced in paragraphs (a)(9)(ii)(B)(1)(i) 
through (vi) of this section.
    (iv) Linked referential CDS. (A) Identify for a user diagnostic and 
therapeutic reference information in accordance at least one of the 
following standards and implementation specifications:
    (1) The standard and implementation specifications specified in 
Sec.  170.204(b)(3).
    (2) The standard and implementation specifications specified in 
Sec.  170.204(b)(4).
    (B) For paragraph (a)(9)(iv)(A) of this section, technology must be 
able to

[[Page 610]]

identify for a user diagnostic or therapeutic reference information 
based on each one and at least one combination of the data referenced in 
paragraphs (a)(9)(ii)(B)(1)(i), (ii), and (iv) of this section.
    (v) Source attributes. Enable a user to review the attributes as 
indicated for all CDS resources:
    (A) For evidence-based decision support interventions under 
paragraph (a)(9)(iii) of this section:
    (1) Bibliographic citation of the intervention (clinical research/
guideline);
    (2) Developer of the intervention (translation from clinical 
research/guideline);
    (3) Funding source of the intervention development technical 
implementation; and
    (4) Release and, if applicable, revision date(s) of the intervention 
or reference source.
    (B) For linked referential CDS in paragraph (a)(9)(iv) of this 
section and drug-drug, drug-allergy interaction checks in paragraph 
(a)(4) of this section, the developer of the intervention, and where 
clinically indicated, the bibliographic citation of the intervention 
(clinical research/guideline).
    (10) Drug-formulary and preferred drug list checks. The requirements 
specified in one of the following paragraphs (that is, paragraphs 
(a)(10)(i) and (a)(10)(ii) of this section) must be met to satisfy this 
certification criterion:
    (i) Drug formulary checks. Automatically check whether a drug 
formulary exists for a given patient and medication.
    (ii) Preferred drug list checks. Automatically check whether a 
preferred drug list exists for a given patient and medication.
    (11) [Reserved]
    (12) Family health history. Enable a user to record, change, and 
access a patient's family health history in accordance with the familial 
concepts or expressions included in, at a minimum, the version of the 
standard in Sec.  170.207(a)(4).
    (13) Patient-specific education resources. (i) Identify patient-
specific education resources based on data included in the patient's 
problem list and medication list in accordance with at least one of the 
following standards and implementation specifications:
    (A) The standard and implementation specifications specified in 
Sec.  170.204(b)(3).
    (B) The standard and implementation specifications specified in 
Sec.  170.204(b)(4).
    (ii) Optional. Request that patient-specific education resources be 
identified in accordance with the standard in Sec.  170.207(g)(2).
    (14) Implantable device list. (i) Record Unique Device Identifiers 
associated with a patient's Implantable Devices.
    (ii) Parse the following identifiers from a Unique Device 
Identifier:
    (A) Device Identifier; and
    (B) The following identifiers that compose the Production 
Identifier:
    (1) The lot or batch within which a device was manufactured;
    (2) The serial number of a specific device;
    (3) The expiration date of a specific device;
    (4) The date a specific device was manufactured; and
    (5) For an HCT/P regulated as a device, the distinct identification 
code required by 21 CFR 1271.290(c).
    (iii) Obtain and associate with each Unique Device Identifier:
    (A) A description of the implantable device referenced by at least 
one of the following:
    (1) The ``GMDN PT Name'' attribute associated with the Device 
Identifier in the Global Unique Device Identification Database.
    (2) The ``SNOMED CT[supreg] Description'' mapped to the attribute 
referenced in in paragraph (a)(14)(iii)(A)(1) of this section.
    (B) The following Global Unique Device Identification Database 
attributes:
    (1) ``Brand Name'';
    (2) ``Version or Model'';
    (3) ``Company Name'';
    (4) ``What MRI safety information does the labeling contain?''; and
    (5) ``Device required to be labeled as containing natural rubber 
latex or dry natural rubber (21 CFR 801.437).''
    (iv) Display to a user an implantable device list consisting of:
    (A) The active Unique Device Identifiers recorded for the patient;
    (B) For each active Unique Device Identifier recorded for a patient, 
the

[[Page 611]]

description of the implantable device specified by paragraph 
(a)(14)(iii)(A) of this section; and
    (C) A method to access all Unique Device Identifiers recorded for a 
patient.
    (v) For each Unique Device Identifier recorded for a patient, enable 
a user to access:
    (A) The Unique Device Identifier;
    (B) The description of the implantable device specified by paragraph 
(a)(14)(iii)(A) of this section;
    (C) The identifiers associated with the Unique Device Identifier, as 
specified by paragraph (a)(14)(ii) of this section; and
    (D) The attributes associated with the Unique Device Identifier, as 
specified by paragraph (a)(14)(iii)(B) of this section.
    (vi) Enable a user to change the status of a Unique Device 
Identifier recorded for a patient.
    (15) Social, psychological, and behavioral data. Enable a user to 
record, change, and access the following patient social, psychological, 
and behavioral data:
    (i) Financial resource strain. Enable financial resource strain to 
be recorded in accordance with the standard specified in Sec.  
170.207(p)(1) and whether a patient declines to specify financial 
resource strain.
    (ii) Education. Enable education to be recorded in accordance with 
the standard specified in Sec.  170.207(p)(2) and whether a patient 
declines to specify education.
    (iii) Stress. Enable stress to be recorded in accordance with the 
standard specified in Sec.  170.207(p)(3) and whether a patient declines 
to specify stress.
    (iv) Depression. Enable depression to be recorded in accordance with 
the standard specified in Sec.  170.207(p)(4) and whether a patient 
declines to specify depression.
    (v) Physical activity. Enable physical activity to be recorded in 
accordance with the standard specified in Sec.  170.207(p)(5) and 
whether a patient declines to specify physical activity.
    (vi) Alcohol use. Enable alcohol use to be recorded in accordance 
with the standard specified in Sec.  170.207(p)(6) and whether a patient 
declines to specify alcohol use.
    (vii) Social connection and isolation. Enable social connection and 
isolation to be recorded in accordance the standard specified in Sec.  
170.207(p)(7) and whether a patient declines to specify social 
connection and isolation.
    (viii) Exposure to violence (intimate partner violence). Enable 
exposure to violence (intimate partner violence) to be recorded in 
accordance with the standard specified in Sec.  170.207(p)(8) and 
whether a patient declines to specify exposure to violence (intimate 
partner violence).
    (b) Care coordination--(1) Transitions of care--(i) Send and receive 
via edge protocol--(A) Send transition of care/referral summaries 
through a method that conforms to the standard specified in Sec.  
170.202(d) and that leads to such summaries being processed by a service 
that has implemented the standard specified in Sec.  170.202(a)(2); and
    (B) Receive transition of care/referral summaries through a method 
that conforms to the standard specified in Sec.  170.202(d) from a 
service that has implemented the standard specified in Sec.  
170.202(a)(2).
    (C) XDM processing. Receive and make available the contents of a XDM 
package formatted in accordance with the standard adopted in Sec.  
170.205(p)(1) when the technology is also being certified using an SMTP-
based edge protocol.
    (ii) Validate and display--(A) Validate C-CDA conformance--system 
performance. Demonstrate the ability to detect valid and invalid 
transition of care/referral summaries received and formatted in 
accordance with the standards specified in Sec.  170.205(a)(3), (4), and 
(5) for the Continuity of Care Document, Referral Note, and (inpatient 
setting only) Discharge Summary document templates. This includes the 
ability to:
    (1) Parse each of the document types.
    (2) Detect errors in corresponding ``document-templates,'' 
``section-templates,'' and ``entry-templates,'' including invalid 
vocabulary standards and codes not specified in the standards adopted in 
Sec.  170.205(a)(3), (4), and (5).
    (3) Identify valid document-templates and process the data elements 
required in the corresponding section-templates and entry-templates from

[[Page 612]]

the standards adopted in Sec.  170.205(a)(3), (4), and (5).
    (4) Correctly interpret empty sections and null combinations.
    (5) Record errors encountered and allow a user through at least one 
of the following ways to:
    (i) Be notified of the errors produced.
    (ii) Review the errors produced.
    (B) Display. Display in human readable format the data included in 
transition of care/referral summaries received and formatted according 
to the standards specified in Sec.  170.205(a)(3), (4), and (5).
    (C) Display section views. Allow for the individual display of each 
section (and the accompanying document header information) that is 
included in a transition of care/referral summary received and formatted 
in accordance with the standards adopted in Sec.  170.205(a)(3), (4), 
and (5) in a manner that enables the user to:
    (1) Directly display only the data within a particular section;
    (2) Set a preference for the display order of specific sections; and
    (3) Set the initial quantity of sections to be displayed.
    (iii) Create. Enable a user to create a transition of care/referral 
summary formatted in accordance with the standard specified in Sec.  
170.205(a)(3), (4), and (5) using the Continuity of Care Document, 
Referral Note, and (inpatient setting only) Discharge Summary document 
templates that includes, at a minimum:
    (A)(1) The data classes expressed in the standard in Sec.  170.213 
and in accordance with Sec.  170.205(a)(4), (5), and paragraphs 
(b)(1)(iii)(A)(3)(i) through (iii) of this section, or
    (2) The Common Clinical Data Set in accordance with Sec.  
170.205(a)(4) and paragraph (b)(1)(iii)(A)(3)(i) through (iv) of this 
section for the period until May 2, 2022, and
    (3) The following data classes:
    (i) Assessment and plan of treatment. In accordance with the 
``Assessment and Plan Section (V2)'' of the standard specified in Sec.  
170.205(a)(4); or in accordance with the ``Assessment Section (V2)'' and 
``Plan of Treatment Section (V2)'' of the standard specified in Sec.  
170.205(a)(4).
    (ii) Goals. In accordance with the ``Goals Section'' of the standard 
specified in Sec.  170.205(a)(4).
    (iii) Health concerns. In accordance with the ``Health Concerns 
Section'' of the standard specified in Sec.  170.205(a)(4).
    (iv) Unique device identifier(s) for a patient's implantable 
device(s). In accordance with the ``Product Instance'' in the 
``Procedure Activity Procedure Section'' of the standard specified in 
Sec.  170.205(a)(4).
    (B) Encounter diagnoses. Formatted according to at least one of the 
following standards:
    (1) The standard specified in Sec.  170.207(i).
    (2) At a minimum, the version of the standard specified in Sec.  
170.207(a)(4).
    (C) Cognitive status.
    (D) Functional status.
    (E) Ambulatory setting only. The reason for referral; and referring 
or transitioning provider's name and office contact information.
    (F) Inpatient setting only. Discharge instructions.
    (G) Patient matching data. First name, last name, previous name, 
middle name (including middle initial), suffix, date of birth, address, 
phone number, and sex. The following constraints apply:
    (1) Date of birth constraint--(i) The year, month and day of birth 
must be present for a date of birth. The technology must include a null 
value when the date of birth is unknown.
    (ii) Optional. When the hour, minute, and second are associated with 
a date of birth the technology must demonstrate that the correct time 
zone offset is included.
    (2) Phone number constraint. Represent phone number (home, business, 
cell) in accordance with the standards adopted in Sec.  170.207(q)(1). 
All phone numbers must be included when multiple phone numbers are 
present.
    (3) Sex constraint. Represent sex in accordance with the standard 
adopted in Sec.  170.207(n)(1).
    (2) Clinical information reconciliation and incorporation--(i) 
General requirements. Paragraphs (b)(2)(ii) and (iii) of this section 
must be completed based on the receipt of a transition of care/referral 
summary formatted in accordance with the standards adopted in

[[Page 613]]

Sec.  170.205(a)(3) through (5) using the Continuity of Care Document, 
Referral Note, and (inpatient setting only) Discharge Summary document 
templates on and after May 2, 2022.
    (ii) Correct patient. Upon receipt of a transition of care/referral 
summary formatted according to the standards adopted Sec.  170.205(a)(3) 
through (5), technology must be able to demonstrate that the transition 
of care/referral summary received can be properly matched to the correct 
patient.
    (iii) Reconciliation. Enable a user to reconcile the data that 
represent a patient's active medication list, allergies and intolerance 
list, and problem list as follows. For each list type:
    (A) Simultaneously display (i.e., in a single view) the data from at 
least two sources in a manner that allows a user to view the data and 
their attributes, which must include, at a minimum, the source and last 
modification date.
    (B) Enable a user to create a single reconciled list of each of the 
following: Medications; Allergies and Intolerances; and problems.
    (C) Enable a user to review and validate the accuracy of a final set 
of data.
    (D) Upon a user's confirmation, automatically update the list, and 
incorporate the following data expressed according to the specified 
standard(s) on and after May 2, 2022:
    (1) Medications. At a minimum, the version of the standard specified 
in Sec.  170.213;
    (2) Allergies and intolerance. At a minimum, the version of the 
standard specified in Sec.  170.213; and
    (3) Problems. At a minimum, the version of the standard specified in 
Sec.  170.213.
    (iv) System verification. Based on the data reconciled and 
incorporated, the technology must be able to create a file formatted 
according to the standard specified in Sec.  170.205(a)(4) using the 
Continuity of Care Document template and the standard specified in Sec.  
170.205(a)(5) on and after May 2, 2022.
    (3) Electronic prescribing. (i) For technology certified prior to 
June 30, 2020, subject to the real world testing provisions at Sec.  
170.405(b)(5),
    (A) Enable a user to perform the following prescription-related 
electronic transactions in accordance with, at a minimum, the version of 
the standard specified in Sec.  170.207(d)(3) as follows:
    (1) Create new prescriptions (NEWRX).
    (2) Change prescriptions (RXCHG, CHGRES).
    (3) Cancel prescriptions (CANRX, CANRES).
    (4) Refill prescriptions (REFREQ, REFRES).
    (5) Receive fill status notifications (RXFILL).
    (6) Request and receive medication history information (RXHREQ, 
RXHRES).
    (B) For each transaction listed in paragraph (b)(3)(i)(A) of this 
section, the technology must be able to receive and transmit the reason 
for the prescription using the diagnosis elements in the DRU Segment.
    (C) Optional: For each transaction listed in paragraph (b)(3)(i)(A) 
of this section, the technology must be able to receive and transmit the 
reason for prescription using the indication elements in the SIG 
Segment.
    (D) Limit a user's ability to prescribe all oral liquid medications 
in only metric standard units of mL (i.e., not cc).
    (E) Always insert leading zeroes before the decimal point for 
amounts less than one and must not allow trailing zeroes after a decimal 
point when a user prescribes medications.
    (ii) For technology certified subsequent to June 30, 2020:
    (A) Enable a user to perform the following prescription-related 
electronic transactions in accordance with the standard specified in 
Sec.  170.205(b)(1) and, at a minimum, the version of the standard 
specified in Sec.  170.207(d)(3) as follows:
    (1) Create new prescriptions (NewRx).
    (2) Request and respond to change prescriptions (RxChangeRequest, 
RxChangeResponse).
    (3) Request and respond to cancel prescriptions (CancelRx, 
CancelRxResponse).
    (4) Request and respond to renew prescriptions (RxRenewalRequest, 
RxRenewalResponse).
    (5) Receive fill status notifications (RxFill).
    (6) Request and receive medication history (RxHistoryRequest, 
RxHistoryResponse).

[[Page 614]]

    (7) Relay acceptance of a transaction back to the sender (Status).
    (8) Respond that there was a problem with the transaction (Error).
    (9) Respond that a transaction requesting a return receipt has been 
received (Verify).
    (B) Optionally, enable a user to perform the following prescription-
related electronic transactions in accordance with the standard 
specified in Sec.  170.205(b)(1) and, at a minimum, the version of the 
standard specified in Sec.  170.207(d)(3) as follows:
    (1) Create and respond to new prescriptions (NewRxRequest, 
NewRxResponseDenied).
    (2) Receive fill status notifications (RxFillIndicator).
    (3) Ask the Mailbox if there are any transactions (GetMessage).
    (4) Request to send an additional supply of medication (Resupply).
    (5) Communicate drug administration events (DrugAdministration).
    (6) Request and respond to transfer one or more prescriptions 
between pharmacies (RxTransferRequest, RxTransferResponse, 
RxTransferConfirm).
    (7) Recertify the continued administration of a medication order 
(Recertification).
    (8) Complete Risk Evaluation and Mitigation Strategy (REMS) 
transactions (REMSInitiationRequest, REMSInitiationResponse, 
REMSRequest, and REMSResponse).
    (9) Electronic prior authorization transactions 
(PAInitiationRequest, PAInitiationResponse, PARequest, PAResponse, 
PAAppealRequest, PAAppealResponse, PACancelRequest, and 
PACancelResponse).
    (C) For the following prescription-related transactions, the 
technology must be able to receive and transmit the reason for 
prescription using the diagnosis elements:  
 or :
    (1) Required transactions:
    (i) Create new prescriptions (NewRx).
    (ii) Request and respond to change prescriptions (RxChangeRequest, 
RxChangeResponse).
    (iii) Cancel prescriptions (CancelRx).
    (iv) Request and respond to renew prescriptions (RxRenewalRequest, 
RxRenewalResponse).
    (v) Receive fill status notifications (RxFill).
    (vi) Receive medication history (RxHistoryResponse).
    (2) Optional transactions:
    (i) Request to send an additional supply of medication (Resupply)
    (ii) Request and respond to transfer one or more prescriptions 
between pharmacies (RxTransferRequest, RxTransferResponse)
    (iii) Complete Risk Evaluation and Mitigation Strategy (REMS) 
transactions (REMSInitiationRequest, REMSInitiationResponse, 
REMSRequest, and REMSResponse).
    (iv) Electronic prior authorization (ePA) transactions 
(PAInitiationRequest, PAInitiationResponse, PARequest, PAResponse, 
PAAppealRequest, PAAppealResponse and PACancelRequest, 
PACancelResponse).
    (D) Optional: For each transaction listed in paragraph (b)(3)(ii)(C) 
of this section, the technology must be able to receive and transmit 
reason for prescription using the  element 
in the SIG segment.
    (E) Limit a user's ability to prescribe all oral liquid medications 
in only metric standard units of mL (i.e., not cc).
    (F) Always insert leading zeroes before the decimal point for 
amounts less than one and must not allow trailing zeroes after a decimal 
point when a user prescribes medications.
    (4)-(5) [Reserved]
    (6) Data export--(i) General requirements for export summary 
configuration. (A) Enable a user to set the configuration options 
specified in paragraphs (b)(6)(iii) and (iv) of this section when 
creating an export summary as well as a set of export summaries for 
patients whose information is stored in the technology. A user must be 
able to execute these capabilities at any time the user chooses and 
without subsequent developer assistance to operate.
    (B) Limit the ability of users who can create export summaries in at 
least one of these two ways:
    (1) To a specific set of identified users.
    (2) As a system administrative function.

[[Page 615]]

    (ii) Creation. Enable a user to create export summaries formatted in 
accordance with the standard specified in Sec.  170.205(a)(4) using the 
Continuity of Care Document document template that includes, at a 
minimum:
    (A) The Common Clinical Data Set.
    (B) Encounter diagnoses. Formatted according to at least one of the 
following standards:
    (1) The standard specified in Sec.  170.207(i).
    (2) At a minimum, the version of the standard specified in Sec.  
170.207(a)(4).
    (C) Cognitive status.
    (D) Functional status.
    (E) Ambulatory setting only. The reason for referral; and referring 
or transitioning provider's name and office contact information.
    (F) Inpatient setting only. Discharge instructions.
    (iii) Timeframe configuration. (A) Enable a user to set the date and 
time period within which data would be used to create the export 
summaries. This must include the ability to enter in a start and end 
date and time range.
    (B) Consistent with the date and time period specified in paragraph 
(b)(6)(iii)(A) of this section, enable a user to do each of the 
following:
    (1) Create export summaries in real-time;
    (2) Create export summaries based on a relative date and time (e.g., 
the first of every month at 1:00 a.m.); and
    (3) Create export summaries based on a specific date and time (e.g., 
on 10/24/2015 at 1:00 a.m.).
    (iv) Location configuration. Enable a user to set the storage 
location to which the export summary or export summaries are intended to 
be saved.
    (7) Security tags--summary of care--send. Enable a user to create a 
summary record formatted in accordance with the standard adopted in 
Sec.  170.205(a)(4) that is tagged as restricted and subject to 
restrictions on re-disclosure according to the standard adopted in Sec.  
170.205(o)(1) at the:
    (i) Document, section, and entry (data element) level; or
    (ii) Document level for the period until May 2, 2022.
    (8) Security tags--summary of care--receive. (i) Enable a user to 
receive a summary record that is formatted in accordance with the 
standard adopted in Sec.  170.205(a)(4) that is tagged as restricted and 
subject to restrictions on re-disclosure according to the standard 
adopted in Sec.  170.205(o)(1) at the:
    (A) Document, section, and entry (data element) level; or
    (B) Document level for the period until May 2, 2022; and
    (ii) Preserve privacy markings to ensure fidelity to the tagging 
based on consent and with respect to sharing and re-disclosure 
restrictions.
    (9) Care plan. Enable a user to record, change, access, create, and 
receive care plan information in accordance with:
    (i) The Care Plan document template, including the Health Status 
Evaluations and Outcomes Section and Interventions Section (V2), in the 
standard specified in Sec.  170.205(a)(4); and
    (ii) The standard in Sec.  170.205(a)(5)) on and after May 2, 2022.
    (10) Electronic Health Information export--(i) Single patient 
electronic health information export. (A) Enable a user to timely create 
an export file(s) with all of a single patient's electronic health 
information that can be stored at the time of certification by the 
product, of which the Health IT Module is a part.
    (B) A user must be able to execute this capability at any time the 
user chooses and without subsequent developer assistance to operate.
    (C) Limit the ability of users who can create export file(s) in at 
least one of these two ways:
    (1) To a specific set of identified users
    (2) As a system administrative function.
    (D) The export file(s) created must be electronic and in a 
computable format.
    (E) The publicly accessible hyperlink of the export's format must be 
included with the exported file(s).
    (ii) Patient population electronic health information export. Create 
an export of all the electronic health information that can be stored at 
the time of certification by the product, of which the Health IT Module 
is a part.
    (A) The export created must be electronic and in a computable 
format.
    (B) The publicly accessible hyperlink of the export's format must be 
included with the exported file(s).

[[Page 616]]

    (iii) Documentation. The export format(s) used to support paragraphs 
(b)(10)(i) and (ii) of this section must be kept up-to-date.
    (c) Clinical quality measures--(1) Clinical quality measures--record 
and export--(i) Record. For each and every CQM for which the technology 
is presented for certification, the technology must be able to record 
all of the data that would be necessary to calculate each CQM. Data 
required for CQM exclusions or exceptions must be codified entries, 
which may include specific terms as defined by each CQM, or may include 
codified expressions of ``patient reason,'' ``system reason,'' or 
``medical reason.''
    (ii) Export. A user must be able to export a data file at any time 
the user chooses and without subsequent developer assistance to operate:
    (A) Formatted in accordance with the standard specified in Sec.  
170.205(h)(2);
    (B) Ranging from one to multiple patients; and
    (C) That includes all of the data captured for each and every CQM to 
which technology was certified under paragraph (c)(1)(i) of this 
section.
    (2) Clinical quality measures--import and calculate--(i) Import. 
Enable a user to import a data file in accordance with the standard 
specified in Sec.  170.205(h)(2) for one or multiple patients and use 
such data to perform the capability specified in paragraph (c)(2)(ii) of 
this section. A user must be able to execute this capability at any time 
the user chooses and without subsequent developer assistance to operate.
    (ii) Calculate each and every clinical quality measure for which it 
is presented for certification.
    (3) Clinical quality measures--report. Enable a user to 
electronically create a data file for transmission of clinical quality 
measurement data in accordance with the applicable implementation 
specifications specified by the CMS implementation guides for Quality 
Reporting Document Architecture (QRDA), category I, for inpatient 
measures in Sec.  170.205(h)(3) and CMS implementation guide for QRDA, 
category III for ambulatory measures in Sec.  170.205 (k)(3).
    (4) Clinical quality measures--filter. (i) Record the data listed in 
paragraph (c)(4)(iii) of this section in accordance with the identified 
standards, where specified.
    (ii) Filter CQM results at the patient and aggregate levels by each 
one and any combination of the data listed in paragraph (c)(4)(iii) of 
this section and be able to:
    (A) Create a data file of the filtered data in accordance with the 
standards adopted in Sec.  170.205(h)(2) and Sec.  170.205(k)(1) and 
(2); and
    (B) Display the filtered data results in human readable format.
    (iii) Data.
    (A) Taxpayer Identification Number.
    (B) National Provider Identifier.
    (C) Provider type in accordance with, at a minimum, the standard 
specified in Sec.  170.207(r)(1).
    (D) Practice site address.
    (E) Patient insurance in accordance with the standard specified in 
Sec.  170.207(s)(1).
    (F) Patient age.
    (G) Patient sex in accordance with the version of the standard 
specified in Sec.  170.207(n)(1).
    (H) Patient race and ethnicity in accordance with, at a minimum, the 
version of the standard specified in Sec.  170.207(f)(2).
    (I) Patient problem list data in accordance with, at a minimum, the 
version of the standard specified in Sec.  170.207(a)(4).
    (d) Privacy and security--(1) Authentication, access control, and 
authorization. (i) Verify against a unique identifier(s) (e.g., username 
or number) that a user seeking access to electronic health information 
is the one claimed; and
    (ii) Establish the type of access to electronic health information a 
user is permitted based on the unique identifier(s) provided in 
paragraph (d)(1)(i) of this section, and the actions the user is 
permitted to perform with the technology.
    (2) Auditable events and tamper-resistance--(i) Record actions. 
Technology must be able to:
    (A) Record actions related to electronic health information in 
accordance with the standard specified in Sec.  170.210(e)(1);

[[Page 617]]

    (B) Record the audit log status (enabled or disabled) in accordance 
with the standard specified in Sec.  170.210(e)(2) unless it cannot be 
disabled by any user; and
    (C) Record the encryption status (enabled or disabled) of electronic 
health information locally stored on end-user devices by technology in 
accordance with the standard specified in Sec.  170.210(e)(3) unless the 
technology prevents electronic health information from being locally 
stored on end-user devices (see paragraph (d)(7) of this section).
    (ii) Default setting. Technology must be set by default to perform 
the capabilities specified in paragraph (d)(2)(i)(A) of this section 
and, where applicable, paragraphs (d)(2)(i)(B) and (d)(2)(i)(C) of this 
section.
    (iii) When disabling the audit log is permitted. For each capability 
specified in paragraphs (d)(2)(i)(A) through (C) of this section that 
technology permits to be disabled, the ability to do so must be 
restricted to a limited set of users.
    (iv) Audit log protection. Actions and statuses recorded in 
accordance with paragraph (d)(2)(i) of this section must not be capable 
of being changed, overwritten, or deleted by the technology.
    (v) Detection. Technology must be able to detect whether the audit 
log has been altered.
    (3) Audit report(s). Enable a user to create an audit report for a 
specific time period and to sort entries in the audit log according to 
each of the data specified in the standards in Sec.  170.210(e).
    (4) Amendments. Enable a user to select the record affected by a 
patient's request for amendment and perform the capabilities specified 
in paragraph (d)(4)(i) or (ii) of this section.
    (i) Accepted amendment. For an accepted amendment, append the 
amendment to the affected record or include a link that indicates the 
amendment's location.
    (ii) Denied amendment. For a denied amendment, at a minimum, append 
the request and denial of the request in at least one of the following 
ways:
    (A) To the affected record.
    (B) Include a link that indicates this information's location.
    (5) Automatic access time-out. (i) Automatically stop user access to 
health information after a predetermined period of inactivity.
    (ii) Require user authentication in order to resume or regain the 
access that was stopped.
    (6) Emergency access. Permit an identified set of users to access 
electronic health information during an emergency.
    (7) End-user device encryption. The requirements specified in one of 
the following paragraphs (that is, paragraphs (d)(7)(i) and (d)(7)(ii) 
of this section) must be met to satisfy this certification criterion.
    (i) Technology that is designed to locally store electronic health 
information on end-user devices must encrypt the electronic health 
information stored on such devices after use of the technology on those 
devices stops.
    (A) Electronic health information that is stored must be encrypted 
in accordance with the standard specified in Sec.  170.210(a)(2).
    (B) Default setting. Technology must be set by default to perform 
this capability and, unless this configuration cannot be disabled by any 
user, the ability to change the configuration must be restricted to a 
limited set of identified users.
    (ii) Technology is designed to prevent electronic health information 
from being locally stored on end-user devices after use of the 
technology on those devices stops.
    (8) Integrity. (i) Create a message digest in accordance with the 
standard specified in Sec.  170.210(c)(2).
    (ii) Verify in accordance with the standard specified in Sec.  
170.210(c)(2) upon receipt of electronically exchanged health 
information that such information has not been altered.
    (9) Trusted connection. Establish a trusted connection using one of 
the following methods:
    (i) Message-level. Encrypt and integrity protect message contents in 
accordance with the standards specified in Sec.  170.210(a)(2) and 
(c)(2).
    (ii) Transport-level. Use a trusted connection in accordance with 
the standards specified in Sec.  170.210(a)(2) and (c)(2).

[[Page 618]]

    (10) Auditing actions on health information. (i) By default, be set 
to record actions related to electronic health information in accordance 
with the standard specified in Sec.  170.210(e)(1).
    (ii) If technology permits auditing to be disabled, the ability to 
do so must be restricted to a limited set of users.
    (iii) Actions recorded related to electronic health information must 
not be capable of being changed, overwritten, or deleted by the 
technology.
    (iv) Technology must be able to detect whether the audit log has 
been altered.
    (11) Accounting of disclosures. Record disclosures made for 
treatment, payment, and health care operations in accordance with the 
standard specified in Sec.  170.210(d).
    (12) Encrypt authentication credentials. Health IT developers must 
make one of the following attestations and may provide the specified 
accompanying information, where applicable:
    (i) Yes--the Health IT Module encrypts stored authentication 
credentials in accordance with standards adopted in Sec.  170.210(a)(2).
    (ii) No--the Health IT Module does not encrypt stored authentication 
credentials. When attesting ``no,'' the health IT developer may explain 
why the Health IT Module does not support encrypting stored 
authentication credentials.
    (13) Multi-factor authentication. Health IT developers must make one 
of the following attestations and, as applicable, provide the specified 
accompanying information:
    (i) Yes--the Health IT Module supports the authentication, through 
multiple elements, of the user's identity with the use of industry-
recognized standards. When attesting ``yes,'' the health IT developer 
must describe the use cases supported.
    (ii) No--the Health IT Module does not support authentication, 
through multiple elements, of the user's identity with the use of 
industry-recognized standards. When attesting ``no,'' the health IT 
developer may explain why the Health IT Module does not support 
authentication, through multiple elements, of the user's identify with 
the use of industry-recognized standards.
    (e) Patient engagement--(1) View, download, and transmit to 3rd 
party. (i) Patients (and their authorized representatives) must be able 
to use internet-based technology to view, download, and transmit their 
health information to a 3rd party in the manner specified below. Such 
access must be consistent and in accordance with the standard adopted in 
Sec.  170.204(a)(1) and may alternatively be demonstrated in accordance 
with the standard specified in Sec.  170.204(a)(2).
    (A) View. Patients (and their authorized representatives) must be 
able to use health IT to view, at a minimum, the following data:
    (1) The data classes expressed in the standards in Sec.  170.213 
(which should be in their English (i.e., non-coded) representation if 
they associate with a vocabulary/code set), and in accordance with Sec.  
170.205(a)(4) and (a)(5), and paragraphs (e)(1)(i)(A)(3)(i) through 
(iii) of this section, or
    (2) The Common Clinical Data Set in accordance with Sec.  
170.205(a)(4) and paragraphs (e)(1)(i)(A)(3)(i) through (iv) of this 
section for the period until May 2, 2022.
    (3) The following data classes:
    (i) Assessment and plan of treatment. In accordance with the 
``Assessment and Plan Section (V2)'' of the standard specified in Sec.  
170.205(a)(4); or in accordance with the ``Assessment Section (V2)'' and 
``Plan of Treatment Section (V2)'' of the standard specified in Sec.  
170.205(a)(4).
    (ii) Goals. In accordance with the ``Goals Section'' of the standard 
specified in Sec.  170.205(a)(4).
    (iii) Health concerns. In accordance with the ``Health Concerns 
Section'' of the standard specified in Sec.  170.205(a)(4).
    (iv) Unique device identifier(s) for a patient's implantable 
device(s). In accordance with the ``Product Instance'' in the 
``Procedure Activity Procedure Section'' of the standards specified in 
Sec.  170.205(a)(4).
    (4) Ambulatory setting only. Provider's name and office contact 
information.
    (5) Inpatient setting only. Admission and discharge dates and 
locations; discharge instructions; and reason(s) for hospitalization.

[[Page 619]]

    (6) Laboratory test report(s). Laboratory test report(s), including:
    (i) The information for a test report as specified all the data 
specified in 42 CFR 493.1291(c)(1) through (7);
    (ii) The information related to reference intervals or normal values 
as specified in 42 CFR 493.1291(d); and
    (iii) The information for corrected reports as specified in 42 CFR 
493.1291(k)(2).
    (7) Diagnostic image report(s).
    (B) Download. (1) Patients (and their authorized representatives) 
must be able to use technology to download an ambulatory summary or 
inpatient summary (as applicable to the health IT setting for which 
certification is requested) in the following formats:
    (i) Human readable format; and
    (ii) The format specified in accordance to the standard specified in 
Sec.  170.205(a)(4) and (5) following the CCD document template.
    (2) When downloaded according to the standard specified in Sec.  
170.205(a)(4) and (5) following the CCD document template, the 
ambulatory summary or inpatient summary must include, at a minimum, the 
following data (which, for the human readable version, should be in 
their English representation if they associate with a vocabulary/code 
set):
    (i) Ambulatory setting only. All of the data specified in paragraph 
(e)(1)(i)(A)(1), (2), (4), and (5) of this section.
    (ii) Inpatient setting only. All of the data specified in paragraphs 
(e)(1)(i)(A)(1), and (3) through (5) of this section.
    (3) Inpatient setting only. Patients (and their authorized 
representatives) must be able to download transition of care/referral 
summaries that were created as a result of a transition of care 
(pursuant to the capability expressed in the certification criterion 
specified in paragraph (b)(1) of this section).
    (C) Transmit to third party. Patients (and their authorized 
representatives) must be able to:
    (1) Transmit the ambulatory summary or inpatient summary (as 
applicable to the health IT setting for which certification is 
requested) created in paragraph (e)(1)(i)(B)(2) of this section in 
accordance with both of the following ways:
    (i) Email transmission to any email address; and
    (ii) An encrypted method of electronic transmission.
    (2) Inpatient setting only. Transmit transition of care/referral 
summaries (as a result of a transition of care/referral as referenced by 
(e)(1)(i)(B)(3)) of this section selected by the patient (or their 
authorized representative) in both of the ways referenced 
(e)(1)(i)(C)(1)(i) and (ii) of this section).
    (D) Timeframe selection. With respect to the data available to view, 
download, and transmit as referenced paragraphs (e)(1)(i)(A), (B), and 
(C) of this section, patients (and their authorized representatives) 
must be able to:
    (1) Select data associated with a specific date (to be viewed, 
downloaded, or transmitted); and
    (2) Select data within an identified date range (to be viewed, 
downloaded, or transmitted).
    (ii) Activity history log. (A) When any of the capabilities included 
in paragraphs (e)(1)(i)(A) through (C) of this section are used, the 
following information must be recorded and made accessible to the 
patient (or his/her authorized representative):
    (1) The action(s) (i.e., view, download, transmission) that 
occurred;
    (2) The date and time each action occurred in accordance with the 
standard specified in Sec.  170.210(g);
    (3) The user who took the action; and
    (4) Where applicable, the addressee to whom an ambulatory summary or 
inpatient summary was transmitted.
    (B) [Reserved]
    (2) Secure messaging. Enable a user to send messages to, and receive 
messages from, a patient in a secure manner.
    (3) Patient health information capture. Enable a user to:
    (i) Identify, record, and access information directly and 
electronically shared by a patient (or authorized representative).
    (ii) Reference and link to patient health information documents.
    (f) Public health--(1) Transmission to immunization registries. (i) 
Create immunization information for electronic transmission in 
accordance with:

[[Page 620]]

    (A) The standard and applicable implementation specifications 
specified in Sec.  170.205(e)(4).
    (B) At a minimum, the version of the standard specified in Sec.  
170.207(e)(3) for historical vaccines.
    (C) At a minimum, the version of the standard specified in Sec.  
170.207(e)(4) for administered vaccines.
    (ii) Enable a user to request, access, and display a patient's 
evaluated immunization history and the immunization forecast from an 
immunization registry in accordance with the standard at Sec.  
170.205(e)(4).
    (2) Transmission to public health agencies--syndromic surveillance. 
Create syndrome-based public health surveillance information for 
electronic transmission in accordance with the standard (and applicable 
implementation specifications) specified in Sec.  170.205(d)(4).
    (3) Transmission to public health agencies--reportable laboratory 
tests and values/results. Create reportable laboratory tests and values/
results for electronic transmission in accordance with:
    (i) The standard (and applicable implementation specifications) 
specified in Sec.  170.205(g).
    (ii) At a minimum, the versions of the standards specified in Sec.  
170.207(a)(3) and (c)(2).
    (4) Transmission to cancer registries. Create cancer case 
information for electronic transmission in accordance with:
    (i) The standard (and applicable implementation specifications) 
specified in Sec.  170.205(i)(2).
    (ii) At a minimum, the versions of the standards specified in Sec.  
170.207(a)(4) and (c)(3).
    (5) Transmission to public health agencies--electronic case 
reporting. (i) Consume and maintain a table of trigger codes to 
determine which encounters may be reportable.
    (ii) Match a patient visit or encounter to the trigger code based on 
the parameters of the trigger code table.
    (iii) Case report creation. Create a case report for electronic 
transmission:
    (A) Based on a matched trigger from paragraph (f)(5)(ii).
    (B) That includes, at a minimum:
    (1) The data classes expressed in the standards in Sec.  170.213, 
and in accordance with Sec.  170.205(a)(4) and (5), or
    (2) The Common Clinical Data Set in accordance with Sec.  
170.205(a)(4) for the period until May 2, 2022.
    (3) Encounter diagnoses. Formatted according to at least one of the 
following standards:
    (i) The standard specified in Sec.  170.207(i).
    (ii) At a minimum, the version of the standard specified in Sec.  
170.207(a)(4).
    (4) The provider's name, office contact information, and reason for 
visit.
    (5) An identifier representing the row and version of the trigger 
table that triggered the case report.
    (6) Transmission to public health agencies--antimicrobial use and 
resistance reporting. Create antimicrobial use and resistance reporting 
information for electronic transmission in accordance with the standard 
specified in Sec.  170.205(r)(1).
    (7) Transmission to public health agencies--health care surveys. 
Create health care survey information for electronic transmission in 
accordance with the standard specified in Sec.  170.205(s)(1).
    (g) Design and performance--(1) Automated numerator recording. For 
each Promoting Interoperability Programs percentage-based measure, 
technology must be able to create a report or file that enables a user 
to review the patients or actions that would make the patient or action 
eligible to be included in the measure's numerator. The information in 
the report or file created must be of sufficient detail such that it 
enables a user to match those patients or actions to meet the measure's 
denominator limitations when necessary to generate an accurate 
percentage.
    (2) Automated measure calculation. For each Promoting 
Interoperability Programs percentage-based measure that is supported by 
a capability included in a technology, record the numerator and 
denominator and create a report including the numerator, denominator, 
and resulting percentage associated with each applicable measure.
    (3) Safety-enhanced design. (i) User-centered design processes must 
be applied to each capability technology includes that is specified in 
the following

[[Page 621]]

certification criteria: Paragraphs (a)(1) through (5), (9), and (14), 
and (b)(2) and (3).
    (ii) Number of test participants. A minimum of 10 test participants 
must be used for the testing of each capability identified in paragraph 
(g)(3)(i) of this section.
    (iii) One of the following must be submitted on the user-centered 
design processed used:
    (A) Name, description and citation (URL and/or publication citation) 
for an industry or federal government standard.
    (B) Name the process(es), provide an outline of the process(es), a 
short description of the process(es), and an explanation of the 
reason(s) why use of any of the existing user-centered design standards 
was impractical.
    (iv) The following information/sections from NISTIR 7742 must be 
submitted for each capability to which user-centered design processes 
were applied:
    (A) Name and product version; date and location of the test; test 
environment; description of the intended users; and total number of 
participants;
    (B) Description of participants, including: Sex; age; education; 
occupation/role; professional experience; computer experience; and 
product experience;
    (C) Description of the user tasks that were tested and association 
of each task to corresponding certification criteria;
    (D) The specific metrics captured during the testing of each user 
task performed in (g)(3)(iv)(C) of this section, which must include: 
Task success (%); task failures (%); task standard deviations (%); task 
performance time; and user satisfaction rating (based on a scale with 1 
as very difficult and 5 as very easy) or an alternative acceptable user 
satisfaction measure;
    (E) Test results for each task using the metrics identified above in 
paragraph (g)(3)(iv)(D) of this section; and
    (F) Results and data analysis narrative, including: Major test 
finding; effectiveness; efficiency; satisfaction; and areas for 
improvement.
    (v) Submit test scenarios used in summative usability testing.
    (4) Quality management system. (i) For each capability that a 
technology includes and for which that capability's certification is 
sought, the use of a Quality Management System (QMS) in the development, 
testing, implementation, and maintenance of that capability must be 
identified that satisfies one of the following ways:
    (A) The QMS used is established by the Federal government or a 
standards developing organization.
    (B) The QMS used is mapped to one or more QMS established by the 
Federal government or standards developing organization(s).
    (ii) When a single QMS was used for applicable capabilities, it 
would only need to be identified once.
    (iii) When different QMS were applied to specific capabilities, each 
QMS applied would need to be identified.
    (5) Accessibility-centered design. For each capability that a Health 
IT Module includes and for which that capability's certification is 
sought, the use of a health IT accessibility-centered design standard or 
law in the development, testing, implementation and maintenance of that 
capability must be identified.
    (i) When a single accessibility-centered design standard or law was 
used for applicable capabilities, it would only need to be identified 
once.
    (ii) When different accessibility-centered design standards and laws 
were applied to specific capabilities, each accessibility-centered 
design standard or law applied would need to be identified. This would 
include the application of an accessibility-centered design standard or 
law to some capabilities and none to others.
    (iii) When no accessibility-centered design standard or law was 
applied to all applicable capabilities such a response is acceptable to 
satisfy this certification criterion.
    (6) Consolidated CDA creation performance. The following technical 
and performance outcomes must be demonstrated related to Consolidated 
CDA creation. The capabilities required under paragraphs (g)(6)(i) 
through (v) of this section can be demonstrated in tandem and do not 
need to be individually addressed in isolation or sequentially.

[[Page 622]]

    (i) This certification criterion's scope includes:
    (A) The data classes expressed in the standard in Sec.  170.213, and 
in accordance with Sec.  170.205(a)(4) and (5) and paragraphs 
(g)(6)(i)(C)(1) through (3) of this section; or
    (B) The Common Clinical Data Set in accordance with Sec.  
170.205(a)(4) and paragraphs (g)(6)(i)(C)(1) through (4) of this section 
for the period until May 2, 2022.
    (C) The following data classes:
    (1) Assessment and plan of treatment. In accordance with the 
``Assessment and Plan Section (V2)'' of the standard specified in Sec.  
170.205(a)(4); or in accordance with the ``Assessment Section (V2)'' and 
``Plan of Treatment Section (V2)'' of the standard specified in Sec.  
170.205(a)(4).
    (2) Goals. In accordance with the ``Goals Section'' of the standard 
specified in Sec.  170.205(a)(4).
    (3) Health concerns. In accordance with the ``Health Concerns 
Section'' of the standard specified in Sec.  170.205(a)(4).
    (4) Unique device identifier(s) for a patient's implantable 
device(s). In accordance with the ``Product Instance'' in the 
``Procedure Activity Procedure Section'' of the standard specified in 
Sec.  170.205(a)(4).
    (ii) Reference C-CDA match. (A) For health IT certified to 
(g)(6)(i)(A) of this section, create a data file formatted in accordance 
with the standard adopted in Sec.  170.205(a)(4) and (5) that matches a 
gold-standard, reference data file.
    (B) For health IT certified to (g)(6)(i)(B) of this section, create 
a data file formatted in accordance with the standard adopted in Sec.  
170.205(a)(4) that matches a gold-standard, reference data file.
    (iii) Document-template conformance. (A) For health IT certified to 
(g)(6)(i)(A) of this section, create a data file formatted in accordance 
with the standard adopted in Sec.  170.205(a)(4) and (5) that 
demonstrates a valid implementation of each document template applicable 
to the certification criterion or criteria within the scope of the 
certificate sought.
    (B) For health IT certified to (g)(6)(i)(B) of this section, create 
a data file formatted in accordance with the standard adopted in Sec.  
170.205(a)(4) that demonstrates a valid implementation of each document 
template applicable to the certification criterion or criteria within 
the scope of the certificate sought.
    (iv) Vocabulary conformance. (A) For health IT certified to 
(g)(6)(i)(A) of this section, create a data file formatted in accordance 
with the standard adopted in Sec.  170.205(a)(4) and (5) that 
demonstrates the required vocabulary standards (and value sets) are 
properly implemented.
    (B) For health IT certified to (g)(6)(i)(B) of this section, create 
a data file formatted in accordance with the standard adopted in Sec.  
170.205(a)(4) that demonstrates the required vocabulary standards (and 
value sets) are properly implemented.
    (v) Completeness verification. Create a data file for each of the 
applicable document templates referenced in paragraph (g)(6)(iii) of 
this section without the omission of any of the data included in either 
paragraph (g)(6)(i)(A) or (B) of this section, as applicable.
    (7) Application access--patient selection. The following technical 
outcome and conditions must be met through the demonstration of an 
application programming interface (API).
    (i) Functional requirement. The technology must be able to receive a 
request with sufficient information to uniquely identify a patient and 
return an ID or other token that can be used by an application to 
subsequently execute requests for that patient's data.
    (ii) Documentation--(A) The API must include accompanying 
documentation that contains, at a minimum:
    (1) API syntax, function names, required and optional parameters and 
their data types, return variables and their types/structures, 
exceptions and exception handling methods and their returns.
    (2) The software components and configurations that would be 
necessary for an application to implement in order to be able to 
successfully interact with the API and process its response(s).
    (B) The documentation used to meet paragraph (g)(7)(ii)(A) of this 
section must be available via a publicly accessible hyperlink.
    (8) Application access--data category request. The following 
technical outcome and conditions must be met

[[Page 623]]

through the demonstration of an application programming interface.
    (i) Functional requirements. (A) Respond to requests for patient 
data (based on an ID or other token) for each of the individual data 
categories specified in the Common Clinical Data Set and return the full 
set of data for that data category (according to the specified 
standards, where applicable) in a computable format.
    (B) Respond to requests for patient data associated with a specific 
date as well as requests for patient data within a specified date range.
    (ii) Documentation--(A) The API must include accompanying 
documentation that contains, at a minimum:
    (1) API syntax, function names, required and optional parameters and 
their data types, return variables and their types/structures, 
exceptions and exception handling methods and their returns.
    (2) The software components and configurations that would be 
necessary for an application to implement in order to be able to 
successfully interact with the API and process its response(s).
    (B) The documentation used to meet paragraph (g)(8)(ii)(A) of this 
section must be available via a publicly accessible hyperlink.
    (9) Application access--all data request. The following technical 
outcome and conditions must be met through the demonstration of an 
application programming interface.
    (i) Functional requirements. (A)(1) Respond to requests for patient 
data (based on an ID or other token) for all of the data classes 
expressed in the standards in Sec.  170.213 at one time and return such 
data (according to the specified standards, where applicable) in a 
summary record formatted in accordance with Sec.  170.205(a)(4) and (5) 
following the CCD document template, and as specified in paragraphs 
(g)(9)(i)(A)(3)(i) through (iii) of this section, or
    (2) The Common Clinical Data Set in accordance with paragraphs 
(g)(9)(i)(A)(3)(i) through (iv) of this section for the period until May 
2, 2022, and
    (3) The following data classes:
    (i) Assessment and plan of treatment. In accordance with the 
``Assessment and Plan Section (V2)'' of the standards specified in Sec.  
170.205(a)(4); or in accordance with the ``Assessment Section (V2)'' and 
``Plan of Treatment Section (V2)'' of the standards specified in Sec.  
170.205(a)(4).
    (ii) Goals. In accordance with the ``Goals Section'' of the 
standards specified in Sec.  170.205(a)(4).
    (iii) Health concerns. In accordance with the ``Health Concerns 
Section'' of the standards specified in Sec.  170.205(a)(4).
    (iv) Unique device identifier(s) for a patient's implantable 
device(s). In accordance with the ``Product Instance'' in the 
``Procedure Activity Procedure Section'' of the standards specified in 
Sec.  170.205(a)(4).
    (B) Respond to requests for patient data associated with a specific 
date as well as requests for patient data within a specified date range.
    (ii) Documentation--(A) The API must include accompanying 
documentation that contains, at a minimum:
    (1) API syntax, function names, required and optional parameters and 
their data types, return variables and their types/structures, 
exceptions and exception handling methods and their returns.
    (2) The software components and configurations that would be 
necessary for an application to implement in order to be able to 
successfully interact with the API and process its response(s).
    (B) The documentation used to meet paragraph (g)(9)(ii)(A) of this 
section must be available via a publicly accessible hyperlink.
    (10) Standardized API for patient and population services. The 
following technical outcomes and conditions must be met through the 
demonstration of application programming interface technology.
    (i) Data response. (A) Respond to requests for a single patient's 
data according to the standard adopted in Sec.  170.215(a)(1) and 
implementation specification adopted in Sec.  170.215(a)(2), including 
the mandatory capabilities described in ``US Core Server 
CapabilityStatement,'' for each of the data included in the standard 
adopted in Sec.  170.213. All data elements indicated as ``mandatory'' 
and ``must support'' by the standards and implementation specifications 
must be supported.

[[Page 624]]

    (B) Respond to requests for multiple patients' data as a group 
according to the standard adopted in Sec.  170.215(a)(1), and 
implementation specifications adopted in Sec.  170.215(a)(2) and (4), 
for each of the data included in the standard adopted in Sec.  170.213. 
All data elements indicated as ``mandatory'' and ``must support'' by the 
standards and implementation specifications must be supported.
    (ii) Supported search operations. (A) Respond to search requests for 
a single patient's data consistent with the search criteria included in 
the implementation specification adopted in Sec.  170.215(a)(2), 
specifically the mandatory capabilities described in ``US Core Server 
CapabilityStatement.''
    (B) Respond to search requests for multiple patients' data 
consistent with the search criteria included in the implementation 
specification adopted in Sec.  170.215(a)(4).
    (iii) Application registration. Enable an application to register 
with the Health IT Module's ``authorization server.''
    (iv) Secure connection. (A) Establish a secure and trusted 
connection with an application that requests data for patient and user 
scopes in accordance with the implementation specifications adopted in 
Sec.  170.215(a)(2) and (3).
    (B) Establish a secure and trusted connection with an application 
that requests data for system scopes in accordance with the 
implementation specification adopted in Sec.  170.215(a)(4).
    (v) Authentication and authorization--(A) Authentication and 
authorization for patient and user scopes--(1) First time connections--
(i) Authentication and authorization must occur during the process of 
granting access to patient data in accordance with the implementation 
specification adopted in Sec.  170.215(a)(3) and standard adopted in 
Sec.  170.215(b).
    (ii) An application capable of storing a client secret must be 
issued a refresh token valid for a period of no less than three months.
    (2) Subsequent connections. (i) Access must be granted to patient 
data in accordance with the implementation specification adopted in 
Sec.  170.215(a)(3) without requiring re-authorization and re-
authentication when a valid refresh token is supplied by the 
application.
    (ii) An application capable of storing a client secret must be 
issued a new refresh token valid for a new period of no less than three 
months.
    (B) Authentication and authorization for system scopes. 
Authentication and authorization must occur during the process of 
granting an application access to patient data in accordance with the 
``SMART Backend Services: Authorization Guide'' section of the 
implementation specification adopted in Sec.  170.215(a)(4) and the 
application must be issued a valid access token.
    (vi) Patient authorization revocation. A Health IT Module's 
authorization server must be able to revoke an authorized application's 
access at a patient's direction.
    (vii) Token introspection. A Health IT Module's authorization server 
must be able to receive and validate tokens it has issued.
    (viii) Documentation. (A) The API(s) must include complete 
accompanying documentation that contains, at a minimum:
    (1) API syntax, function names, required and optional parameters 
supported and their data types, return variables and their types/
structures, exceptions and exception handling methods and their returns.
    (2) The software components and configurations that would be 
necessary for an application to implement in order to be able to 
successfully interact with the API and process its response(s).
    (3) All applicable technical requirements and attributes necessary 
for an application to be registered with a Health IT Module's 
authorization server.
    (B) The documentation used to meet paragraph (g)(10)(viii)(A) of 
this section must be available via a publicly accessible hyperlink 
without any preconditions or additional steps.
    (h) Transport methods and other protocols--(1) Direct Project--(i) 
Applicability Statement for Secure Health Transport. Able to send and 
receive health information in accordance with the standard specified in 
Sec.  170.202(a)(2), including formatted only as a ``wrapped'' message.

[[Page 625]]

    (ii) Delivery Notification in Direct. Able to send and receive 
health information in accordance with the standard specified in Sec.  
170.202(e)(1).
    (2) Direct Project, Edge Protocol, and XDR/XDM--(i) Able to send and 
receive health information in accordance with:
    (A) The standard specified in Sec.  170.202(a)(2), including 
formatted only as a ``wrapped'' message;
    (B) The standard specified in Sec.  170.202(b), including support 
for both limited and full XDS metadata profiles; and
    (C) Both edge protocol methods specified by the standard in Sec.  
170.202(d).
    (ii) Delivery Notification in Direct. Able to send and receive 
health information in accordance with the standard specified in Sec.  
170.202(e)(1).

[80 FR 62747, Oct. 16, 2015, as amended at 80 FR 76871, Dec. 11, 2015; 
85 FR 25941, May 1, 2020; 85 FR 47099, Aug. 4, 2020]



 Subpart D_Conditions and Maintenance of Certification Requirements for 
                          Health IT Developers

    Source: 85 FR 25945, May 1, 2020, unless otherwise noted.



Sec.  170.400  Basis and scope.

    This subpart implements section 3001(c)(5)(D) of the Public Health 
Service Act by setting forth certain Conditions and Maintenance of 
Certification requirements for health IT developers participating in the 
ONC Health IT Certification Program.



Sec.  170.401  Information blocking.

    (a) Condition of Certification requirement. A health IT developer 
must not take any action that constitutes information blocking as 
defined in 42 U.S.C. 300jj-52 and Sec.  171.103 on or after November 2, 
2020.
    (b) [Reserved]



Sec.  170.402  Assurances.

    (a) Condition of Certification requirement. (1) A health IT 
developer must provide assurances satisfactory to the Secretary that the 
health IT developer will not take any action that constitutes 
information blocking as defined in 42 U.S.C. 300jj-52 and Sec.  171.103 
on and after November 2, 2020, unless for legitimate purposes as 
specified by the Secretary; or any other action that may inhibit the 
appropriate exchange, access, and use of electronic health information.
    (2) A health IT developer must ensure that its health IT certified 
under the ONC Health IT Certification Program conforms to the full scope 
of the certification criteria.
    (3) A health IT developer must not take any action that could 
interfere with a user's ability to access or use certified capabilities 
for any purpose within the full scope of the technology's certification.
    (4) A health IT developer of a certified Health IT Module that is 
part of a heath IT product which electronically stores EHI must certify 
to the certification criterion in Sec.  170.315(b)(10).
    (b) Maintenance of Certification requirements. (1) A health IT 
developer must retain all records and information necessary to 
demonstrate initial and ongoing compliance with the requirements of the 
ONC Health IT Certification Program for:
    (i) A period of 10 years beginning from the date a developer's 
Health IT Module(s) is first certified under the Program; or
    (ii) If for a shorter period of time, a period of 3 years from the 
effective date that removes all of the certification criteria to which 
the developer's health IT is certified from the Code of Federal 
Regulations.
    (2)(i) Within 36 months of May 1, 2020, a health IT developer that 
must comply with the requirements of paragraph (a)(4) of this section 
must provide all of its customers of certified health IT with the health 
IT certified to the certification criterion in Sec.  170.315(b)(10).
    (ii) On and after 36 months from May 1, 2020, a health IT developer 
that must comply with the requirements of paragraph (a)(4) of this 
section must provide all of its customers of certified health IT with 
the health IT certified to the certification criterion in Sec.  
170.315(b)(10).



Sec.  170.403  Communications.

    (a) Condition of Certification requirements. (1) A health IT 
developer may

[[Page 626]]

not prohibit or restrict any communication regarding--
    (i) The usability of its health IT;
    (ii) The interoperability of its health IT;
    (iii) The security of its health IT;
    (iv) Relevant information regarding users' experiences when using 
its health IT;
    (v) The business practices of developers of health IT related to 
exchanging electronic health information; and
    (vi) The manner in which a user of the health IT has used such 
technology.
    (2) A health IT developer must not engage in any practice that 
prohibits or restricts a communication regarding the subject matters 
enumerated in paragraph (a)(1) of this section, unless the practice is 
specifically permitted by this paragraph and complies with all 
applicable requirements of this paragraph.
    (i) Unqualified protection for certain communications. A health IT 
developer must not prohibit or restrict any person or entity from 
communicating any information whatsoever (including proprietary 
information, confidential information, and intellectual property) when 
the communication is about one or more of the subject matters enumerated 
in paragraph (a)(1) of this section and is made for any of the following 
purposes:
    (A) Making a disclosure required by law;
    (B) Communicating information about adverse events, hazards, and 
other unsafe conditions to government agencies, health care 
accreditation organizations, and patient safety organizations;
    (C) Communicating information about cybersecurity threats and 
incidents to government agencies;
    (D) Communicating information about information blocking and other 
unlawful practices to government agencies; or
    (E) Communicating information about a health IT developer's failure 
to comply with a Condition of Certification requirement, or with any 
other requirement of this part, to ONC or an ONC-ACB.
    (ii) Permitted prohibitions and restrictions. For communications 
about one or more of the subject matters enumerated in paragraph (a)(1) 
of this section that is not entitled to unqualified protection under 
paragraph (a)(2)(i) of this section, a health IT developer may prohibit 
or restrict communications only as expressly permitted by paragraphs 
(a)(2)(ii)(A) through (E) of this section.
    (A) Developer employees and contractors. (1) A health IT developer 
may prohibit or restrict the communications of the developer's employees 
or contractors.
    (2) A self-developer must not prohibit or restrict communications of 
users of their health IT who are also employees or contractors.
    (B) Non-user-facing aspects of health IT. A health IT developer may 
prohibit or restrict communications that disclose information about non-
user-facing aspects of the developer's health IT.
    (C) Intellectual property. A health IT developer may prohibit or 
restrict communications that involve the use or disclosure of 
intellectual property existing in the developer's health IT (including 
third-party intellectual property), provided that any prohibition or 
restriction imposed by a developer must be no broader than necessary to 
protect the developer's legitimate intellectual property interests and 
consistent with all other requirements of paragraph (a)(2)(ii) of this 
section. A restriction or prohibition is deemed broader than necessary 
and inconsistent with the requirements of paragraph (a)(2)(ii) of this 
section if it would restrict or preclude a public display of a portion 
of a work subject to copyright protection (without regard to whether the 
copyright is registered) that would reasonably constitute a ``fair use'' 
of that work.
    (D) Screenshots and video. A health IT developer may require persons 
who communicate screenshots or video to--
    (1) Not alter the screenshots or video, except to annotate the 
screenshots or video or resize the screenshots or video;
    (2) Limit the sharing of screenshots to the relevant number of 
screenshots needed to communicate about the health IT regarding one or 
more of the six subject areas in paragraph (a)(1) of this section; and

[[Page 627]]

    (3) Limit the sharing of video to:
    (i) The relevant amount of video needed to communicate about the 
health IT regarding one or more of the six subject areas in paragraph 
(a)(1) of this section; and
    (ii) Only videos that address temporal matters that cannot be 
communicated through screenshots or other forms of communication.
    (E) Pre-market testing and development. A health IT developer may 
prohibit or restrict communications that disclose information or 
knowledge solely acquired in the course of participating in pre-market 
product development and testing activities carried out for the benefit 
of the developer or for the joint benefit of the developer and 
communicator. A developer must not, once the subject health IT is 
released or marketed for purposes other than product development and 
testing, and subject to the permitted prohibitions and restrictions 
described in paragraph (a)(2)(ii) of this section, prohibit or restrict 
communications about matters enumerated in paragraph (a)(1) of this 
section.
    (b) Maintenance of Certification requirements--(1) Notice. Health IT 
developers must issue a written notice to all customers and those with 
which it has contracts or agreements containing provisions that 
contravene paragraph (a) of this section annually, beginning in calendar 
year 2020, until paragraph (b)(2)(ii) of this section is fulfilled, 
stating that any communication or contract provision that contravenes 
paragraph (a) of this section will not be enforced by the health IT 
developer.
    (2) Contracts and agreements. (i) A health IT developer must not 
establish, renew, or enforce any contract or agreement that contravenes 
paragraph (a) of this section.
    (ii) If a health IT developer has a contract or agreement in 
existence as of June 30, 2020, that contravenes paragraph (a) of this 
section, then the developer must amend the contract or agreement to 
remove or void the contractual provision that contravenes paragraph (a) 
of this section whenever the contract is next modified for other reasons 
or renewed.
    (c) Communication, defined. ``Communication'' as used in this 
section means any communication, irrespective of the form or medium. The 
term includes visual communications, such as screenshots and video.

[85 FR 25945, May 1, 2020, as amended at 85 FR 43711, July 20, 2020]



Sec.  170.404  Application programming interfaces.

    The following Condition and Maintenance of Certification 
requirements apply to developers of Health IT Modules certified to any 
of the certification criteria adopted in Sec.  170.315(g)(7) through 
(10).
    (a) Condition of certification requirements--(1) General. A 
Certified API Developer must publish APIs and allow electronic health 
information from such technology to be accessed, exchanged, and used 
without special effort through the use of APIs or successor technology 
or standards, as provided for under applicable law, including providing 
access to all data elements of a patient's electronic health record to 
the extent permissible under applicable privacy laws.
    (2) Transparency conditions--(i) Complete business and technical 
documentation. A Certified API Developer must publish complete business 
and technical documentation, including the documentation described in 
paragraph (a)(2)(ii) of this section, via a publicly accessible 
hyperlink that allows any person to directly access the information 
without any preconditions or additional steps.
    (ii) Terms and conditions--(A) Material information. A Certified API 
Developer must publish all terms and conditions for its certified API 
technology, including any fees, restrictions, limitations, obligations, 
registration process requirements, or other similar requirements that 
would be:
    (1) Needed to develop software applications to interact with the 
certified API technology;
    (2) Needed to distribute, deploy, and enable the use of software 
applications in production environments that use the certified API 
technology;
    (3) Needed to use software applications, including to access, 
exchange, and use electronic health information by means of the 
certified API technology;

[[Page 628]]

    (4) Needed to use any electronic health information obtained by 
means of the certified API technology;
    (5) Used to verify the authenticity of API Users; and
    (6) Used to register software applications.
    (B) API fees. Any and all fees charged by a Certified API Developer 
for the use of its certified API technology must be described in 
detailed, plain language. The description of the fees must include all 
material information, including but not limited to:
    (1) The persons or classes of persons to whom the fee applies;
    (2) The circumstances in which the fee applies; and
    (3) The amount of the fee, which for variable fees must include the 
specific variable(s) and methodology(ies) that will be used to calculate 
the fee.
    (3) Fees conditions--(i) General conditions--(A) All fees. All fees 
related to certified API technology not otherwise permitted by this 
section are prohibited from being imposed by a Certified API Developer. 
The permitted fees in paragraphs (a)(3)(ii) and (iv) of this section may 
include fees that result in a reasonable profit margin in accordance 
with Sec.  171.302.
    (B) Permitted fees requirements. For all permitted fees, a Certified 
API Developer must:
    (1) Ensure that such fees are based on objective and verifiable 
criteria that are uniformly applied to all similarly situated API 
Information Sources and API Users;
    (2) Ensure that such fees imposed on API Information Sources are 
reasonably related to the Certified API Developer's costs to supply 
certified API technology to, and if applicable, support certified API 
technology for, API Information Sources;
    (3) Ensure that such fees to supply and, if applicable, support 
certified API technology are reasonably allocated among all similarly 
situated API Information Sources; and
    (4) Ensure that such fees are not based on whether API Information 
Sources or API Users are competitors, potential competitors, or will be 
using the certified API technology in a way that facilitates competition 
with the Certified API Developer.
    (C) Prohibited fees. A Certified API Developer is prohibited from 
charging fees for the following:
    (1) Costs associated with intangible assets other than actual 
development or acquisition costs of such assets;
    (2) Opportunity costs unrelated to the access, exchange, or use of 
electronic health information; and
    (3) The permitted fees in this section cannot include any costs that 
led to the creation of intellectual property if the actor charged a 
royalty for that intellectual property pursuant to Sec.  171.303 and 
that royalty included the development costs for the creation of the 
intellectual property.
    (D) Record-keeping requirements. A Certified API Developer must keep 
for inspection detailed records of any fees charged with respect to the 
certified API technology, the methodology(ies) used to calculate such 
fees, and the specific costs to which such fees are attributed.
    (ii) Permitted fee--development, deployment, and upgrades. A 
Certified API Developer is permitted to charge fees to an API 
Information Source to recover the costs reasonably incurred by the 
Certified API Developer to develop, deploy, and upgrade certified API 
technology.
    (iii) Permitted fee--recovering API usage costs. A Certified API 
Developer is permitted to charge fees to an API Information Source 
related to the use of certified API technology. The fees must be limited 
to the recovery of incremental costs reasonably incurred by the 
Certified API Developer when it hosts certified API technology on behalf 
of the API Information Source.
    (iv) Permitted fee--value-added services. A Certified API Developer 
is permitted to charge fees to an API User for value-added services 
related to certified API technology, so long as such services are not 
necessary to efficiently and effectively develop and deploy production-
ready software that interacts with certified API technology.
    (4) Openness and pro-competitive conditions; general condition. A 
Certified API Developer must grant an API Information Source the 
independent ability to permit an API User to interact with

[[Page 629]]

the certified API technology deployed by the API Information Source.
    (i) Non-discrimination. (A) A Certified API Developer must provide 
certified API technology to an API Information Source on terms that are 
no less favorable than it provides to itself and its own customers, 
suppliers, partners, and other persons with whom it has a business 
relationship.
    (B) The terms on which a Certified API Developer provides certified 
API technology must be based on objective and verifiable criteria that 
are uniformly applied to all substantially similar or similarly situated 
classes of persons and requests.
    (C) A Certified API Developer must not offer different terms or 
services based on:
    (1) Whether a competitive relationship exists or would be created;
    (2) The revenue or other value that another party may receive from 
using the API technology.
    (ii) Rights to access and use certified API technology--(A) Rights 
that must be granted. A Certified API Developer must have and, upon 
request, must grant to API Information Sources and API Users all rights 
that may be reasonably necessary to:
    (1) Access and use the Certified API Developer's certified API 
technology in a production environment;
    (2) Develop products and services that are designed to interact with 
the Certified API Developer's certified API technology; and
    (3) Market, offer, and distribute products and services associated 
with the Certified API Developer's certified API technology.
    (B) Prohibited conduct. A Certified API Developer is prohibited from 
conditioning the receipt of the rights described in paragraph 
(a)(4)(ii)(A) of this section on:
    (1) Receiving a fee, including but not limited to a license fee, 
royalty, or revenue-sharing arrangement;
    (2) Agreeing to not compete with the Certified API Developer in any 
product, service, or market;
    (3) Agreeing to deal exclusively with the Certified API Developer in 
any product, service, or market;
    (4) Obtaining additional licenses, products, or services that are 
not related to or can be unbundled from the certified API technology;
    (5) Licensing, granting, assigning, or transferring any intellectual 
property to the Certified API Developer;
    (6) Meeting any Certified API Developer-specific testing or 
certification requirements; and.
    (7) Providing the Certified API Developer or its technology with 
reciprocal access to application data.
    (iii) Service and support obligations. A Certified API Developer 
must provide all support and other services reasonably necessary to 
enable the effective development, deployment, and use of certified API 
technology by API Information Sources and API Users in production 
environments.
    (A) Changes and updates to certified API technology. A Certified API 
Developer must make reasonable efforts to maintain the compatibility of 
its certified API technology and to otherwise avoid disrupting the use 
of certified API technology in production environments.
    (B) Changes to terms and conditions. Except as exigent circumstances 
require, prior to making changes to its certified API technology or to 
the terms and conditions thereof, a Certified API Developer must provide 
notice and a reasonable opportunity for API Information Sources and API 
Users to update their applications to preserve compatibility with 
certified API technology and to comply with applicable terms and 
conditions.
    (b) Maintenance of certification requirements--(1) Authenticity 
verification and registration for production use. The following apply to 
a Certified API Developer with a Health IT Module certified to the 
certification criterion adopted in Sec.  170.315(g)(10):
    (i) Authenticity verification. A Certified API Developer is 
permitted to institute a process to verify the authenticity of API Users 
so long as such process is objective and the same for all API Users and 
completed within ten business days of receipt of an API User's request 
to register their software application for use with the Certified API 
Developer's Health IT Module certified to Sec.  170.315(g)(10).
    (ii) Registration for production use. A Certified API Developer must 
register

[[Page 630]]

and enable all applications for production use within five business days 
of completing its verification of an API User's authenticity, pursuant 
to paragraph (b)(1)(i) of this section.
    (2) Service base URL publication. A Certified API Developer must 
publish the service base URLs for all Health IT Modules certified to 
Sec.  170.315(g)(10) that can be used by patients to access their 
electronic health information. The Certified API Developer must publicly 
publish the service base URLs:
    (i) For all of its customers regardless of whether the Health IT 
Modules certified to Sec.  170.315(g)(10) are centrally managed by the 
Certified API Developer or locally deployed by an API Information 
Source; and
    (ii) In a machine-readable format at no charge.
    (3) Rollout of (g)(10)-certified APIs. A Certified API Developer 
with certified API technology previously certified to the certification 
criterion in Sec.  170.315(g)(8) must provide all API Information 
Sources with such certified API technology deployed with certified API 
technology certified to the certification criterion in Sec.  
170.315(g)(10) by no later than May 2, 2022.
    (4) Compliance for existing certified API technology. By no later 
than November 2, 2020, a Certified API Developer with Health IT 
Module(s) certified to the certification criteria in Sec.  
170.315(g)(7), (8), or (9) must comply with paragraph (a) of this 
section, including revisions to their existing business and technical 
API documentation and make such documentation available via a publicly 
accessible hyperlink that allows any person to directly access the 
information without any preconditions or additional steps.
    (c) Definitions. The following definitions apply to this section:
    API Information Source means an organization that deploys certified 
API technology created by a ``Certified API Developer;''
    API User means a person or entity that creates or uses software 
applications that interact with the ``certified API technology'' 
developed by a ``Certified API Developer'' and deployed by an ``API 
Information Source;''
    Certified API Developer means a health IT developer that creates the 
``certified API technology'' that is certified to any of the 
certification criteria adopted in Sec.  170.315(g)(7) through (10); and
    Certified API technology means the capabilities of Health IT Modules 
that are certified to any of the API-focused certification criteria 
adopted in Sec.  170.315(g)(7) through (10).



Sec.  170.405  Real world testing.

    (a) Condition of Certification requirement. A health IT developer 
with Health IT Module(s) certified to any one or more 2015 Edition 
certification criteria in Sec.  170.315(b), (c)(1) through (3), (e)(1), 
(f), (g)(7) through (10), and (h) must successfully test the real world 
use of those Health IT Module(s) for interoperability (as defined in 42 
U.S.C.300jj(9) and Sec.  170.102) in the type of setting in which such 
Health IT Module(s) would be/is marketed.
    (b) Maintenance of Certification requirements--(1) Real world 
testing plan submission. A health IT developer with Health IT Module(s) 
certified to any one or more of the criteria referenced in paragraph (a) 
of this section must submit to its ONC-ACB an annual real world testing 
plan addressing each of those certified Health IT Modules by a date 
determined by the ONC-ACB that enables the ONC-ACB to publish a publicly 
available hyperlink to the plan on CHPL no later than December 15 of 
each calendar year.
    (i) The plan must be approved by a health IT developer authorized 
representative capable of binding the health IT developer for execution 
of the plan and include the representative's contact information.
    (ii) The plan must include all health IT certified to any one or 
more of the criteria referenced in paragraph (a) of this section as of 
August 31 of the year in which the plan is submitted, and address the 
real world testing to be conducted in the calendar year immediately 
following plan submission.
    (iii) The plan must address the following for each of the 
certification criteria identified in paragraph (a) of this section that 
are included in each Health IT Module's scope of certification:

[[Page 631]]

    (A) The testing method(s)/methodology(ies) that will be used to 
demonstrate real world interoperability and conformance to the full 
scope of the certification criterion's requirements, including scenario- 
and use case-focused testing;
    (B) The care setting(s) that will be tested for real world 
interoperability and an explanation for the health IT developer's choice 
of care setting(s) to test;
    (C) For any standards and implementation specifications referenced 
by the criterion that the developer has chosen to certify to National 
Coordinator-approved newer versions pursuant to paragraph (b)(8) or (9) 
of this section, a description of how the developer will test and 
demonstrate conformance to all requirements of the criterion using all 
versions of the adopted standards to which each Health IT Module was 
certified as of August 31 of the year in which the real world testing 
plan is due.
    (D) A schedule of key real world testing milestones;
    (E) A description of the expected outcomes of real world testing;
    (F) At least one measurement/metric associated with the real world 
testing; and
    (G) A justification for the health IT developer's real world testing 
approach.
    (2) Real world testing results reporting. (i) If in the course of 
conducting real world testing the developer discovers one or more non-
conformities with the full scope of any certification criterion under 
the Program, the developer must report that non-conformity to the ONC-
ACB within 30 days.
    (ii) For real world testing activities conducted during the 
immediately preceding calendar year, a health IT developer must submit 
to its ONC-ACB an annual real world testing results report addressing 
each of its certified Health IT Modules that include certification 
criteria referenced in paragraph (a) of this section by a date 
determined by the ONC-ACB that enables the ONC-ACB to publish a publicly 
available hyperlink to the results report on CHPL no later than March 15 
of each calendar year. The real world testing results must report the 
following for each of the certification criteria identified in paragraph 
(a) of this section that are included in the Health IT Module's scope of 
certification:
    (A) The method(s) that was used to demonstrate real world 
interoperability;
    (B) The care setting(s) that was tested for real world 
interoperability;
    (C) The voluntary updates to standards and implementation 
specifications that the National Coordinator has approved through the 
Standards Version Advancement Process;
    (D) A list of the key milestones met during real world testing;
    (E) The outcomes of real world testing including a description of 
any challenges encountered during real world testing; and
    (F) At least one measurement/metric associated with the real world 
testing.
    (3) USCDI Updates for C-CDA. A health IT developer with health IT 
certified to Sec.  170.315(b)(1), (b)(2), (e)(1), (g)(6), (f)(5), and/or 
(g)(9) on May 1, 2020, must:
    (i) Update their certified health IT to be compliant with the 
revised versions of these criteria adopted in this final rule; and
    (ii) Provide its customers of the previously certified health IT 
with certified health IT that meets paragraph (b)(3)(i) of this section 
by May 2, 2022.
    (4) C-CDA Companion Guide Updates. A health IT developer with health 
IT certified to Sec.  170.315(b)(1), (b)(2), (b)(9), (e)(1), (g)(6), 
and/or (g)(9) prior to May 1, 2020, must:
    (i) Update their certified health IT to be compliant with the 
revised versions of the Program criteria in the 2015 Edition; and
    (ii) Provide its customers of the previously certified health IT 
with certified health IT that meets paragraph (b)(4)(i) of this section 
by May 2, 2022.
    (5) Electronic prescribing. A health IT developer with health IT 
certified to Sec.  170.315(b)(3) prior to June 30, 2020, must:
    (i) Update their certified health IT to be compliant with the 
revised versions of this criteria adopted in Sec.  170.315(b)(3)(ii); 
and

[[Page 632]]

    (ii) Provide its customers of the previously certified health IT 
with certified health IT that meets paragraph (b)(5)(i) of this section 
by May 2, 2022
    (6) Security tags. A health IT developer with health IT certified to 
Sec.  170.315(b)(7) and/or Sec.  170.315(b)(8) prior to May 1, 2020, 
must:
    (i) Update their certified health IT to be compliant with the 
revised versions of the criteria adopted in Sec.  170.315(b)(7) and/or 
the revised versions of the criteria adopted in Sec.  170.315(b)(8); and
    (ii) Provide its customers of the previously certified health IT 
with certified health IT that meets paragraph (b)(6)(i) of this section 
by May 2, 2022.
    (7) ASTM updates. A health IT developer with health IT certified to 
Sec.  170.315(d)(2), (3), and/or (d)(10) prior to May 1, 2020, must:
    (i) Update their certified health IT to be compliant with Sec.  
170.210(e)(1) and the standard specified in Sec.  170.210(h); and
    (ii) Provide its customers of the previously certified health IT 
with certified health IT that meets paragraph (b)(7)(i) of this section 
by May 2, 2022.
    (8) Standards Version Advancement Process--voluntary updates of 
certified health IT to newer versions of standards and implementation 
specifications. A health IT developer subject to this paragraph (b) is 
permitted to update Health IT Module(s) certified to any one or more of 
the certification criteria referenced in paragraph (a) of this section 
to a newer version of any adopted standard or implementation 
specification included in the criterion, provided that newer version is 
approved by the National Coordinator for use in certifications issued 
under the ONC Health IT Certification Program. A developer that pursues 
such updates to its certified Health IT Module(s) must:
    (i) Provide advance notice to all affected customers and its ONC-
ACB--
    (A) Expressing its intent to update the certified Health IT 
Module(s) to the National Coordinator-approved advanced version of the 
standard implementation specification;
    (B) The developer's expectations for how the update(s) will affect 
real world interoperability for the Health IT Module(s);
    (C) Whether the developer intends to continue to support the 
certificate(s) for the existing certified Health IT Module(s) version(s) 
for some period of time and how long or if the existing certified Health 
IT Module(s) version(s) will be deprecated; and
    (ii) Successfully demonstrate conformance with approved more recent 
versions of the standard(s) or implementation specification(s) included 
in each certification criterion under which the developer chooses to 
update its certified Health IT Module(s).
    (iii) Maintain the updated certified Health IT Module(s) in full 
conformance with all applicable Program requirements.
    (9) Standards Version Advancement Process--voluntary certification 
to newer versions of standards and implementation specifications. A 
Health IT developer is permitted to seek certification for its Health IT 
Module(s) to any one or more of the certification criteria referenced in 
paragraph (a) of this section using a newer version of any adopted 
standard(s) or implementation specification(s) included in the criterion 
without first obtaining certification to the version of that adopted 
standard or implementation specification that is incorporated by 
reference in Sec.  170.299, provided that the newer version is approved 
by the National Coordinator for use in certifications issued under the 
ONC Health IT Certification Program. Developers may, for each standard 
and implementation specification included in each criterion, choose on 
an itemized basis whether to seek certification to the version 
incorporated by reference in Sec.  170.299, or to one or more newer 
version(s) approved by the National Coordinator for use in Health IT 
Module certifications issued pursuant to section 3001(c)(5) of the 
Public Health Service Act, or to both.

[85 FR 25945, May 1, 2020, as amended at 85 FR 43711, July 20, 2020]



Sec.  170.406  Attestations.

    (a) Condition of Certification requirement. A health IT developer, 
or its authorized representative that is capable of binding the health 
IT developer, must provide the Secretary an attestation of compliance 
with the following

[[Page 633]]

Conditions and Maintenance of Certification requirements:
    (1) Section 170.401;
    (2) Section 170.402, but only for Sec.  170.402(a)(4) and (b)(2) if 
the health IT developer certified a Health IT Module(s) that is part of 
a health IT product which can store electronic health information;
    (3) Section 170.403;
    (4) Section 170.404 if the health IT developer has a Health IT 
Module(s) certified to any of the certification criteria adopted in 
Sec.  170.315(g)(7) through (10); and such health IT developer must also 
ensure that health IT allows for health information to be exchanged, 
accessed, and used, in the manner described in Sec.  170.404; and
    (5) Section 170.405 if a health IT developer has a Health IT 
Module(s) certified to any one or more 2015 Edition certification 
criteria in Sec.  170.315(b), (c)(1) through (3), (e)(1), (f), (g)(7) 
through (10), and (h).
    (b) Maintenance of Certification requirement. (1) A health IT 
developer, or its authorized representative that is capable of binding 
the health IT developer, must provide the attestation specified in 
paragraph (a) of this section semiannually for any Health IT Modules 
that have or have had an active certification at any time under the ONC 
Health IT Certification Program during the prior six months.
    (2) [Reserved]



              Subpart E_ONC Health IT Certification Program

    Source: 76 FR 1325, Dec. 7, 2011, unless otherwise noted.

    Editorial Note: Nomenclature changes to subpart E of part 170 appear 
at 80 FR 62755, Oct. 16, 2015.



Sec.  170.500  Basis and scope.

    This subpart implements section 3001(c)(5) of the Public Health 
Service Act and sets forth the rules and procedures related to the ONC 
Health IT Certification Program for health information technology 
(health IT) administered by the National Coordinator for Health 
Information Technology.

[76 FR 1325, Dec. 7, 2011, as amended at 77 FR 54291, Sept. 4, 2012]



Sec.  170.501  Applicability.

    (a) This subpart establishes the processes that applicants for ONC-
ACB status must follow to be granted ONC-ACB status by the National 
Coordinator; the processes the National Coordinator will follow when 
assessing applicants and granting ONC-ACB status; the requirements that 
ONC-ACBs must follow to maintain ONC-ACB status; and the requirements of 
ONC-ACBs for certifying Health IT Module(s), and other types of health 
IT in accordance with the applicable certification criteria adopted by 
the Secretary in subpart C of this part.
    (b) This subpart establishes the processes that applicants for ONC-
ATL status must follow to be granted ONC-ATL status by the National 
Coordinator; the processes the National Coordinator will follow when 
assessing applicants and granting ONC-ATL status; the requirements that 
ONC-ATLs must follow to maintain ONC-ATL status; and the requirements of 
ONC-ATLs for testing Health IT Modules in accordance with the applicable 
certification criteria adopted by the Secretary in subpart C of this 
part.
    (c) [Reserved]
    (d) This subpart establishes the processes the National Coordinator 
will follow when exercising direct review of certified health IT and 
related requirements for ONC-ACBs, ONC-ATLs, and developers of health IT 
certified under the ONC Health IT Certification Program.

[81 FR 72464, Oct. 19, 2016, as amended at 85 FR 25950, May 1, 2020]



Sec.  170.502  Definitions.

    For the purposes of this subpart:
    Applicant means a single organization or a consortium of 
organizations that seeks to become an ONC-ACB or ONC-ATL by submitting 
an application to the National Coordinator for such status.
    Deployment site means the physical location where a Health IT 
Module(s) or other type of health IT resides or is being or has been 
implemented.
    Development site means the physical location where a Health IT 
Module(s) or other type of health IT was developed.

[[Page 634]]

    Gap certification means the certification of a previously certified 
Health IT Module(s) to:
    (1) All applicable new and/or revised certification criteria adopted 
by the Secretary at subpart C of this part based on test results issued 
by a NVLAP-accredited testing laboratory under the ONC Health IT 
Certification Program or an ONC-ATL; and
    (2) All other applicable certification criteria adopted by the 
Secretary at subpart C of this part based on the test results used to 
previously certify the Complete EHR or Health IT Module(s) under the ONC 
Health IT Certification Program.
    ONC-Authorized Certification Body or ONC-ACB means an organization 
or a consortium of organizations that has applied to and been authorized 
by the National Coordinator pursuant to this subpart to perform the 
certification of Health IT Module(s), and/or other types of health IT 
under the ONC Health IT Certification Program.
    ONC-Authorized Testing Lab or ONC-ATL means an organization or a 
consortium of organizations that has applied to and been authorized by 
the National Coordinator pursuant to this subpart to perform the testing 
of Health IT Modules to certification criteria adopted by the Secretary 
at subpart C of this part.
    Providing or provide an updated certification means the action taken 
by an ONC-ACB to ensure that the developer of a previously certified 
Health IT Module(s) shall update the information required by Sec.  
170.523(k)(1)(i), after the ONC-ACB has verified that the certification 
criterion or criteria to which the Health IT Module(s) was previously 
certified have not been revised and that no new certification criteria 
are applicable to the Health IT Module(s).
    Remote certification means the use of methods, including the use of 
web-based tools or secured electronic transmissions, that do not require 
an ONC-ACB to be physically present at the development or deployment 
site to conduct certification.

[76 FR 1325, Dec. 7, 2011, as amended at 77 FR 54291, Sept. 4, 2012; 81 
FR 72464, Oct. 19, 2016; 85 FR 25950, May 1, 2020]



Sec. Sec.  170.503-170.504  [Reserved]



Sec.  170.505  Correspondence.

    (a) Correspondence and communication with ONC or the National 
Coordinator shall be conducted by email, unless otherwise necessary or 
specified.
    (1) Consideration for providing notice beyond email, such as by 
regular, express, or certified mail, will be based on, but not limited 
to, whether: The party requests use of correspondence beyond email; the 
party has responded via email to our communications; we have sufficient 
information from the party to ensure appropriate delivery of any other 
method of notice; and the matter involves an alleged violation within 
ONC's purview under Sec.  170.580 that indicates a serious violation 
under the ONC Health IT Certification Program with potential 
consequences of suspension, certification termination, or a 
certification ban.
    (2) The official date of receipt of any email between ONC or the 
National Coordinator and an applicant for ONC-ACB status, an applicant 
for ONC-ATL status, an ONC-ACB, an ONC-ATL, health IT developer, or a 
party to any proceeding under this subpart is the date on which the 
email was sent.
    (b) In circumstances where it is necessary for an applicant for ONC-
ACB status, an applicant for ONC-ATL status, an ONC-ACB, an ONC-ATL, 
health IT developer, or a party to any proceeding under this subpart to 
correspond or communicate with ONC or the National Coordinator by 
regular, express, or certified mail, the official date of receipt for 
all parties will be the date of the delivery confirmation to the address 
on record.

[85 FR 25950, May 1, 2020]



Sec.  170.510  Authorization scope for ONC-ACB status.

    Applicants for ONC-ACB status may seek authorization from the 
National Coordinator to perform the following types of certification:
    (a) Health IT Module certification; and/or
    (b) Certification of other types of health IT for which the 
Secretary has

[[Page 635]]

adopted certification criteria under subpart C of this part.

[76 FR 1325, Dec. 7, 2011, as amended at 81 FR 72464, Oct. 19, 2016; 85 
FR 25950, May 1, 2020]



Sec.  170.511  Authorization scope for ONC-ATL status.

    Applicants may seek authorization from the National Coordinator to 
perform the testing of Complete EHRs or Health IT Modules to a portion 
of a certification criterion, one certification criterion, or many or 
all certification criteria adopted by the Secretary under subpart C of 
this part.

[81 FR 72464, Oct. 19, 2016]



Sec.  170.520  Application.

    (a) ONC-ACB application. Applicants must include the following 
information in an application for ONC-ACB status and submit it to the 
National Coordinator for the application to be considered complete.
    (1) The type of authorization sought pursuant to Sec.  170.510. For 
authorization to perform Health IT Module certification, applicants must 
indicate the specific type(s) of Health IT Module(s) they seek 
authorization to certify. If qualified, applicants will only be granted 
authorization to certify the type(s) of Health IT Module(s) for which 
they seek authorization.
    (2) General identifying, information including:
    (i) Name, address, city, state, zip code, and Web site of applicant; 
and
    (ii) Designation of an authorized representative, including name, 
title, phone number, and email address of the person who will serve as 
the applicant's point of contact.
    (3) Documentation that confirms that the applicant has been 
accredited to ISO/IEC 17065 (for availability, see Sec.  170.599), with 
an appropriate scope, by any accreditation body that is a signatory to 
the Multilateral Recognition Arrangement (MLA) with the International 
Accreditation Forum (IAF).
    (4) An agreement, properly executed by the applicant's authorized 
representative, that it will adhere to the Principles of Proper Conduct 
for ONC-ACBs.
    (b) ONC-ATL application. Applicants must include the following 
information in an application for ONC-ATL status and submit it to the 
National Coordinator for the application to be considered complete.
    (1) The authorization scope sought pursuant to Sec.  170.511.
    (2) General identifying, information including:
    (i) Name, address, city, state, zip code, and Web site of applicant; 
and
    (ii) Designation of an authorized representative, including name, 
title, phone number, and email address of the person who will serve as 
the applicant's point of contact.
    (3) Documentation that confirms that the applicant has been 
accredited by NVLAP to the ONC Health IT Certification Program, 
including to ISO/IEC 17025 (incorporated by reference, see Sec.  
170.599).
    (4) An agreement, properly executed by the applicant's authorized 
representative, that it will adhere to the Principles of Proper Conduct 
for ONC-ATLs.

[81 FR 72464, Oct. 19, 2016, as amended at 85 FR 25950, May 1, 2020]



Sec.  170.523  Principles of proper conduct for ONC-ACBs.

    An ONC-ACB shall:
    (a) Accreditation. Maintain its accreditation in good standing to 
ISO/IEC 17065 (incorporated by reference in Sec.  170.599).
    (b) Mandatory training. Attend all mandatory ONC training and 
program update sessions;
    (c) Training program. Maintain a training program that includes 
documented procedures and training requirements to ensure its personnel 
are competent to certify health IT;
    (d) Reporting. Report to ONC within 15 days any changes that 
materially affect its:
    (1) Legal, commercial, organizational, or ownership status;
    (2) Organization and management including key certification 
personnel;
    (3) Policies or procedures;
    (4) Location;
    (5) Personnel, facilities, working environment or other resources;
    (6) ONC authorized representative (point of contact); or

[[Page 636]]

    (7) Other such matters that may otherwise materially affect its 
ability to certify health IT.
    (e) Onsite observation. Allow ONC, or its authorized agent(s), to 
periodically observe on site (unannounced or scheduled), during normal 
business hours, any certifications performed to demonstrate compliance 
with the requirements of the ONC Health IT Certification Program;
    (f) Certified product listing. Provide ONC, no less frequently than 
weekly, a current list of Health IT Modules, and/or EHR Modules that 
have been certified that includes, at a minimum:
    (1) For the 2015 Edition health IT certification criteria and 
subsequent editions of health IT certification criteria:
    (i) The Health IT Module developer name; product name; product 
version; developer Web site, physical address, email, phone number, and 
contact name;
    (ii) The ONC-ACB Web site, physical address, email, phone number, 
and contact name, contact function/title;
    (iii) The ATL Web site, physical address, email, phone number, and 
contact name, contact function/title;
    (iv) Location and means by which the testing was conducted (e.g., 
remotely with health IT developer at its headquarters location);
    (v) The date(s) the Health IT Module was tested;
    (vi) The date the Health IT Module was certified;
    (vii) The unique certification number or other specific product 
identification;
    (viii) The certification criterion or criteria to which the Health 
IT Module has been certified, including the test procedure and test data 
versions used, test tool version used, and whether any test data was 
altered (i.e., a yes/no) and for what purpose;
    (ix) The way in which each privacy and security criterion was 
addressed for the purposes of certification;
    (x) The standard or mapping used to meet the quality management 
system certification criterion;
    (xi) The standard(s) or lack thereof used to meet the accessibility-
centered design certification criterion;
    (xii) Where applicable, the hyperlink to access an application 
programming interface (API)'s documentation and terms of use;
    (xiii) Where applicable, which certification criteria were gap 
certified;
    (xiv) Where applicable, if a certification issued was a result of an 
inherited certified status request;
    (xv) Where applicable, the clinical quality measures to which the 
Health IT Module has been certified;
    (xvi) Where applicable, any additional software a Health IT Module 
relied upon to demonstrate its compliance with a certification criterion 
or criteria adopted by the Secretary;
    (xvii) Where applicable, the standard(s) used to meet a 
certification criterion where more than one is permitted;
    (xviii) Where applicable, any optional capabilities within a 
certification criterion to which the Health IT Module was tested and 
certified;
    (xix) Where applicable, and for each applicable certification 
criterion, all of the information required to be submitted by Health IT 
Module developers to meet the safety-enhanced design certification 
criterion. Each user-centered design element required to be reported 
must be at a granular level (e.g., task success/failure));
    (xx) A hyperlink to the disclosures required by Sec.  170.523(k)(1) 
for the Health IT Module;
    (xxi) The attestation required by Sec.  170.523(k)(2);
    (xxii) When applicable, for each instance in which a Health IT 
Module failed to conform to its certification and for which corrective 
action was instituted under Sec.  170.556 (provided no provider or 
practice site is identified):
    (A) The specific certification requirements to which the technology 
failed to conform, as determined by the ONC-ACB;
    (B) A summary of the deficiency or deficiencies identified by the 
ONC-ACB as the basis for its determination of non-conformity;
    (C) When available, the health IT developer's explanation of the 
deficiency or deficiencies;
    (D) The dates surveillance was initiated and completed;
    (E) The results of randomized surveillance, including pass rate for 
each criterion in instances where the Health IT

[[Page 637]]

Module is evaluated at more than one location;
    (F) The number of sites that were used in randomized surveillance;
    (G) The date of the ONC-ACB's determination of non-conformity;
    (H) The date on which the ONC-ACB approved a corrective action plan;
    (I) The date corrective action began (effective date of approved 
corrective action plan);
    (J) The date by which corrective action must be completed (as 
specified by the approved corrective action plan);
    (K) The date corrective action was completed; and
    (L) A description of the resolution of the non-conformity or non-
conformities.
    (2) [Reserved]
    (g) Records retention. (1) Retain all records related to the 
certification of Complete EHRs and Health IT Modules to an edition of 
certification criteria beginning with the codification of an edition of 
certification criteria in the Code of Federal Regulations through a 
minimum of 3 years from the effective date that removes the applicable 
edition from the Code of Federal Regulations; and
    (2) Make the records available to HHS upon request during the 
retention period described in paragraph (g)(1) of this section;
    (h) Certification decision. Only certify Health IT Modules that have 
been:
    (1) Tested, using test tools and test procedures approved by the 
National Coordinator, by an:
    (i) ONC-ATL;
    (ii) ONC-ATL, National Voluntary Laboratory Accreditation Program-
accredited testing laboratory under the ONC Health IT Certification 
Program, and/or an ONC-ATCB for the purposes of performing gap 
certification; or
    (2) Evaluated by it for compliance with a conformance method 
approved by the National Coordinator.
    (i) Surveillance. Conduct surveillance of certified health IT in 
accordance with its accreditation, Sec.  170.556, and the following 
requirements:
    (1) Submit an annual surveillance plan to the National Coordinator.
    (2) Report, at a minimum, on a quarterly basis to the National 
Coordinator the results of its surveillance, including surveillance 
results that identify:
    (i) The names of health IT developers;
    (ii) Names of products and versions;
    (iii) Certification criteria and ONC Health IT Certification Program 
requirements surveilled;
    (iv) The type of surveillance (i.e., reactive or randomized);
    (v) The dates surveillance was initiated and completed; and
    (vi) As applicable, the number of sites that were used in randomized 
surveillance.
    (3) Annually submit a summative report of surveillance results to 
the National Coordinator.
    (j) Refunds. Promptly refund any and all fees received for:
    (1) Requests for certification that are withdrawn while its 
operations are suspended by the National Coordinator;
    (2) Certifications that will not be completed as a result of its 
conduct; and
    (3) Previous certifications that it performed if its conduct 
necessitates the recertification of Complete EHRs and/or Health IT 
Module(s);
    (k) Disclosures. Ensure adherence to the following requirements when 
issuing any certification and during surveillance of Health IT Modules 
the ONC-ACB has certified.
    (1) Mandatory disclosures. A Health IT developer must conspicuously 
include the following on its Web site and in all marketing materials, 
communications statements, and other assertions related to the Health IT 
Module's certification:
    (i) The disclaimer ``This [Complete EHR or Health IT Module] is 
[specify Edition of EHR certification criteria] compliant and has been 
certified by an ONC-ACB in accordance with the applicable certification 
criteria adopted by the Secretary of Health and Human Services. This 
certification does not represent an endorsement by the U.S. Department 
of Health and Human Services.''
    (ii) For a Health IT Module certified to the 2015 Edition health IT 
certification criteria, the information specified by paragraphs 
(f)(1)(i), (vi) through (viii), (xv), and (xvi) of this section as

[[Page 638]]

applicable for the specific Health IT Module.
    (iii) In plain language, a detailed description of all known 
material information concerning additional types of costs or fees that a 
user may be required to pay to implement or use the Health IT Module's 
capabilities, whether to meet provisions of HHS programs requiring the 
use of certified health IT or to achieve any other use within the scope 
of the health IT's certification. The additional types of costs or fees 
required to be disclosed include but are not limited to costs or fees 
(whether fixed, recurring, transaction-based, or otherwise) imposed by a 
health IT developer (or any third party from whom the developer 
purchases, licenses, or obtains any technology, products, or services in 
connection with its certified health IT) to purchase, license, 
implement, maintain, upgrade, use, or otherwise enable and support the 
use of capabilities to which health IT is certified; or in connection 
with any data generated in the course of using any capability to which 
health IT is certified.
    (iv) The types of information required to be disclosed under 
paragraph (k)(iii) of this section include but are not limited to:
    (A) Additional types of costs or fees (whether fixed, recurring, 
transaction-based, or otherwise) imposed by a health IT developer (or 
any third-party from whom the developer purchases, licenses, or obtains 
any technology, products, or services in connection with its certified 
health IT) to purchase, license, implement, maintain, upgrade, use, or 
otherwise enable and support the use of capabilities to which health IT 
is certified; or in connection with any data generated in the course of 
using any capability to which health IT is certified.
    (B)-(C) [Reserved]
    (v) Health IT self-developers are excluded from the requirements of 
paragraph (k)(1)(iii) of this section.
    (2)-(3) [Reserved]
    (4) A certification issued to a Health IT Module based solely on the 
applicable certification criteria adopted by the ONC Health IT 
Certification Program must be separate and distinct from any other 
certification(s) based on other criteria or requirements.
    (l) Certification and Design Mark. Display the ONC Certified health 
IT Certification and Design Mark on all certifications issued under the 
ONC Health IT Certification Program in a manner that complies with the 
Criteria and Terms of Use for the ONC Certified health IT Certification 
and Design Mark, and ensure that use of the mark by health IT developers 
whose products are certified under the ONC Health IT Certification 
Program is compliant with the Criteria and Terms of Use for the ONC 
Certified health IT Certification and Design Mark.
    (m) Adaptations and updates. On a quarterly basis each calendar 
year, obtain a record of:
    (1) All adaptations of certified Health IT Modules;
    (2) All updates made to certified Health IT Modules affecting the 
capabilities in certification criteria to which the ``safety-enhanced 
design'' criteria apply;
    (3) All uses cases for Sec.  170.315(d)(13);
    (4) All updates made to certified Health IT Modules in compliance 
with Sec.  170.405(b)(3); and
    (5) All updates to certified Health IT Modules and all 
certifications of Health IT Modules issued including voluntary use of 
newer standards versions per Sec.  170.405(b)(8) or (9). Record of these 
updates may be obtained by aggregation of ONC-ACB documentation of 
certification activity.
    (n) Complaints reporting. Submit a list of complaints received to 
the National Coordinator on a quarterly basis each calendar year that 
includes the number of complaints received, the nature/substance of each 
complaint, and the type of complainant for each complaint.
    (o) Scope reduction. Be prohibited from reducing the scope of a 
Health IT Module's certification when it is under surveillance or under 
a corrective action plan.
    (p) Real world testing. (1) Review and confirm that applicable 
health IT developers submit real world testing plans in accordance with 
Sec.  170.405(b)(1).
    (2) Review and confirm that applicable health IT developers submit 
real world testing results in accordance with Sec.  170.405(b)(2).

[[Page 639]]

    (3) Submit real world testing plans by December 15 of each calendar 
year and results by March 15 of each calendar year to ONC for public 
availability.
    (q) Attestations. Review and submit health IT developer Conditions 
and Maintenance of Certification requirements attestations made in 
accordance with Sec.  170.406 to ONC for public availability.
    (r) Test results from ONC-ATLs. Accept test results from any ONC-ATL 
that is:
    (1) In good standing under the ONC Health IT Certification Program, 
and
    (2) Compliant with its ISO/IEC 17025 accreditation requirements as 
required by 170.524(a).
    (s) Information for direct review. Report to ONC, no later than a 
week after becoming aware of, any information that could inform whether 
ONC should exercise direct review under Sec.  170.580(a).
    (t) Health IT Module voluntary standards and implementation 
specifications updates notices. Ensure health IT developers opting to 
take advantage of the flexibility for voluntary updates of standards and 
implementation specifications in certified Health IT Modules per Sec.  
170.405(b)(8) provide timely advance written notice to the ONC-ACB and 
all affected customers.
    (1) Maintain a record of the date of issuance and the content of 
developers' Sec.  170.405(b)(8) notices; and
    (2) Timely post content or make publicly accessible via the CHPL 
each Sec.  170.405(b)(8) notice received, publicly on the CHPL 
attributed to the certified Health IT Module(s) to which it applies.

[76 FR 1325, Dec. 7, 2011, as amended at 76 FR 72642, Nov. 25, 2011; 77 
FR 54291, Sept. 4, 2012; 79 FR 54479, Sept. 11, 2014; 80 FR 62755, Oct. 
16, 2015; 80 FR 76872, Dec. 11, 2015; 81 FR 72465, Oct. 19, 2016; 85 FR 
25950, May 1, 2020]



Sec.  170.524  Principles of proper conduct for ONC-ATLs.

    An ONC-ATL shall:
    (a) Accreditation. Maintain its NVLAP accreditation for the ONC 
Health IT Certification Program, including accreditation to ISO/IEC 
17025 (incorporated by reference, see Sec.  170.599);
    (b) Mandatory training. Attend all mandatory ONC training and 
program update sessions;
    (c) Training program. Maintain a training program that includes 
documented procedures and training requirements to ensure its personnel 
are competent to test health IT;
    (d) Reporting. Report to ONC within 15 days any changes that 
materially affect its:
    (1) Legal, commercial, organizational, or ownership status;
    (2) Organization and management including key testing personnel;
    (3) Policies or procedures;
    (4) Location;
    (5) Personnel, facilities, working environment or other resources;
    (6) ONC authorized representative (point of contact); or
    (7) Other such matters that may otherwise materially affect its 
ability to test health IT.
    (e) Onsite observation. Allow ONC, or its authorized agent(s), to 
periodically observe on site (unannounced or scheduled), during normal 
business hours, any testing performed pursuant to the ONC Health IT 
Certification Program;
    (f) Records retention. (1) Retain all records related to the testing 
of Complete EHRs and/or Health IT Modules to an edition of certification 
criteria beginning with the codification of an edition of certification 
criteria in the Code of Federal Regulations through a minimum of three 
years from the effective date that removes the applicable edition from 
the Code of Federal Regulations; and
    (2) Make the records available to HHS upon request during the 
retention period described in paragraph (f)(1) of this section;
    (g) Approved testing methods. Only test health IT using test tools 
and test procedures approved by the National Coordinator; and
    (h) Refunds. Promptly refund any and all fees received for:
    (1) Requests for testing that are withdrawn while its operations are 
suspended by the National Coordinator;
    (2) Testing that will not be completed as a result of its conduct; 
and

[[Page 640]]

    (3) Previous testing that it performed if its conduct necessitates 
the retesting of Health IT Modules.

[81 FR 72465, Oct. 19, 2016, as amended at 85 FR 25951, May 1, 2020]



Sec.  170.525  Application submission.

    (a) An applicant for ONC-ACB or ONC-ATL status must submit its 
application either electronically via email (or Web site submission if 
available), or by regular or express mail.
    (b) An application for ONC-ACB or ONC-ATL status may be submitted to 
the National Coordinator at any time.

[81 FR 72465, Oct. 19, 2016]



Sec.  170.530  Review of application.

    (a) Method of review and review timeframe. (1) Applications will be 
reviewed in the order they are received.
    (2) The National Coordinator is permitted up to 30 days from receipt 
to review an application that is submitted for the first time.
    (b) Application deficiencies. (1) If the National Coordinator 
identifies an area in an application that requires the applicant to 
clarify a statement or correct an error or omission, the National 
Coordinator may contact the applicant to make such clarification or 
correction without issuing a deficiency notice. If the National 
Coordinator has not received the requested information after five days, 
the National Coordinator may issue a deficiency notice to the applicant.
    (2) If the National Coordinator determines that deficiencies in the 
application exist, the National Coordinator will issue a deficiency 
notice to the applicant and return the application. The deficiency 
notice will identify the areas of the application that require 
additional information or correction.
    (c) Revised application. (1) An applicant is permitted to submit a 
revised application in response to a deficiency notice. An applicant may 
request from the National Coordinator an extension for good cause of the 
15-day period provided in paragraph (c)(2) of this section to submit a 
revised application.
    (2) In order for an applicant to continue to be considered for ONC-
ACB or ONC-ATL status, the applicant's revised application must address 
the specified deficiencies and be received by the National Coordinator 
within 15 days of the applicant's receipt of the deficiency notice, 
unless the National Coordinator grants an applicant's request for an 
extension of the 15-day period based on a finding of good cause. If a 
good cause extension is granted, then the revised application must be 
received by the end of the extension period.
    (3) The National Coordinator is permitted up to 15 days to review a 
revised application once it has been received and may request 
clarification of statements and the correction of errors or omissions in 
a revised application during this time period.
    (4) If the National Coordinator determines that a revised 
application still contains deficiencies, the applicant will be issued a 
denial notice indicating that the applicant cannot reapply for ONC-ACB 
or ONC-ATL status for a period of six months from the date of the denial 
notice. An applicant may request reconsideration of this decision in 
accordance with Sec.  170.535.
    (d) Satisfactory application. (1) An application will be deemed 
satisfactory if it meets all the application requirements, as determined 
by the National Coordinator.
    (2) The National Coordinator will notify the applicant's authorized 
representative of its satisfactory application and its successful 
achievement of ONC-ACB or ONC-ATL status.
    (3) Once notified by the National Coordinator of its successful 
achievement of ONC-ACB or ONC-ATL status, the applicant may represent 
itself as an ONC-ACB or ONC-ATL (as applicable) and begin certifying or 
testing (as applicable) health information technology consistent with 
its authorization.

[76 FR 1325, Dec. 7, 2011, as amended at 81 FR 72465, Oct. 19, 2016]



Sec.  170.535  ONC-ACB and ONC-ATL application reconsideration.

    (a) Basis for reconsideration request. An applicant may request that 
the National Coordinator reconsider a denial notice only if the 
applicant can demonstrate that clear, factual errors were made in the 
review of its application and that the errors' correction could

[[Page 641]]

lead to the applicant obtaining ONC-ACB or ONC-ATL status.
    (b) Submission requirement. An applicant is required to submit, 
within 15 days of receipt of a denial notice, a written statement to the 
National Coordinator contesting the decision to deny its application and 
explaining with sufficient documentation what factual error(s) it 
believes can account for the denial. If the National Coordinator does 
not receive the applicant's reconsideration request within the specified 
timeframe, its reconsideration request may be rejected.
    (c) Reconsideration request review. If the National Coordinator 
receives a timely reconsideration request, the National Coordinator is 
permitted up to 15 days from the date of receipt to review the 
information submitted by the applicant and issue a decision.
    (d) Decision. (1) If the National Coordinator determines that clear, 
factual errors were made during the review of the application and that 
correction of the errors would remove all identified deficiencies, the 
applicant's authorized representative will be notified of the National 
Coordinator's determination and the applicant's successful achievement 
of ONC-ACB or ONC-ATL status.
    (2) If, after reviewing an applicant's reconsideration request, the 
National Coordinator determines that the applicant did not identify 
factual errors or that the correction of the factual errors would not 
remove all identified deficiencies in the application, the National 
Coordinator may reject the applicant's reconsideration request.
    (3) Final decision. A reconsideration decision issued by the 
National Coordinator is final and not subject to further review.

[76 FR 1325, Dec. 7, 2011, as amended at 81 FR 72466, Oct. 19, 2016]



Sec.  170.540  ONC-ACB and ONC-ATL status.

    (a) Acknowledgement and publication. The National Coordinator will 
acknowledge and make publicly available the names of ONC-ACBs and ONC-
ATLs, including the date each was authorized and the type(s) of 
certification or scope of testing, respectively, each has been 
authorized to perform.
    (b) Representation. Each ONC-ACB or ONC-ATL must prominently and 
unambiguously identify the scope of its authorization on its Web site 
and in all marketing and communications statements (written and oral) 
pertaining to its activities under the ONC Health IT Certification 
Program.
    (c) Renewal. An ONC-ACB or ONC-ATL is required to renew its status 
every three years. An ONC-ACB or ONC-ATL is required to submit a renewal 
request, containing any updates to the information requested in Sec.  
170.520, to the National Coordinator 60 days prior to the expiration of 
its status.
    (d) Expiration. An ONC-ACB's or ONC-ATL's status will expire three 
years from the date it was granted by the National Coordinator unless it 
is renewed in accordance with paragraph (c) of this section.

[81 FR 72466, Oct. 19, 2016]



Sec.  170.545  [Reserved]



Sec.  170.550  Health IT Module certification.

    (a) Certification scope. When certifying Health IT Module(s), an 
ONC-ACB must certify in accordance with the applicable certification 
criteria adopted by the Secretary at subpart C of this part.
    (b) Health IT product scope options. An ONC-ACB must provide the 
option for an Health IT Module(s) to be certified solely to the 
applicable certification criteria adopted by the Secretary at subpart C 
of this part.
    (c) Gap certification. An ONC-ACB may provide the option for and 
perform gap certification of previously certified Health IT Module(s).
    (d) Upgrades and enhancements. An ONC-ACB may provide an updated 
certification to a previously certified Health IT Module(s).
    (e) Standards updates. ONC-ACBs must provide an option for 
certification of Health IT Modules consistent with Sec.  171.405(b)(7) 
or (8) to any one or more of the criteria referenced in Sec.  170.405(a) 
based on newer versions of standards included in the criteria which have 
been approved by the National Coordinator for use in certification.

[[Page 642]]

    (f) [Reserved]
    (g) Health IT module dependent criteria. When certifying a Health IT 
Module to the 2015 Edition health IT certification criteria, an ONC-ACB 
must certify the Health IT Module in accordance with the certification 
criteria at:
    (1) Section 170.315(g)(3) if the Health IT Module is presented for 
certification to one or more listed certification criteria in Sec.  
170.315(g)(3);
    (2) Section 170.315(g)(4);
    (3) Section 170.315(g)(5); and
    (4) Section 170.315(g)(6) if the Health IT Module is presented for 
certification with C-CDA creation capabilities within its scope. If the 
scope of certification sought includes multiple certification criteria 
that require C-CDA creation, Sec.  170.315(g)(6) need only be tested in 
association with one of those certification criteria and would not be 
expected or required to be tested for each. If the scope of 
certification sought includes multiple certification criteria that 
require C-CDA creation, Sec.  170.315(g)(6) need only be tested in 
association with one of those certification criteria and would not be 
expected or required to be tested for each so long as all applicable C-
CDA document templates have been evaluated as part of Sec.  
170.315(g)(6) for the scope of the certification sought.
    (5) Section 170.315(b)(10) when a health IT developer presents a 
Health IT Module for certification that can store electronic health 
information at the time of certification by the product, of which the 
Health IT Module is a part.
    (h) Privacy and security certification framework--(1) General rule. 
When certifying a Health IT Module to the 2015 Edition health IT 
certification criteria, an ONC-ACB can only issue a certification to a 
Health IT Module if the privacy and security certification criteria in 
paragraphs (h)(3)(i) through (ix) of this section have also been met 
(and are included within the scope of the certification).
    (2) Testing. In order to be issued a certification, a Health IT 
Module would only need to be tested once to each applicable privacy and 
security criterion in paragraphs (h)(3)(i) through (ix) of this section 
so long as the health IT developer attests that such privacy and 
security capabilities apply to the full scope of capabilities included 
in the requested certification, except for the following:
    (i) A Health IT Module presented for certification to Sec.  
170.315(e)(1) must be separately tested to Sec.  170.315(d)(9); and
    (ii) A Health IT Module presented for certification to Sec.  
170.315(e)(2) must be separately tested to Sec.  170.315(d)(9).
    (3) Applicability. (i) Section 170.315(a)(1) through (3), (5), (12), 
(14), and (15) are also certified to the certification criteria 
specified in Sec.  170.315(d)(1) through (7), (d)(12), and (13).
    (ii) Section 170.315(a)(4), (9), (10), and (13) are also certified 
to the certification criteria specified in Sec.  170.315(d)(1) through 
(3), and (d)(5) through (7), (d)(12), and (13).
    (iii) Section 170.315(b)(1) through (3) and (6) through (9) are also 
certified to the certification criteria specified in Sec.  170.315(d)(1) 
through (3) and (d)(5) through (8), (12), and (13);
    (iv) Section 170.315(c) is also certified to the certification 
criteria specified in Sec.  170.315(d)(1), (d)(2)(i)(A), (B), (d)(2)(ii) 
through (v), (d)(3), (5), (12), and (13);
    (v) Section 170.315(e)(1) is also certified to the certification 
criteria specified in Sec.  170.315(d)(1) through (3), (5), (7), (9), 
(12), and (13);
    (vi) Section 170.315(e)(2) and (3) is also certified to the 
certification criteria specified in Sec.  170.315(d)(1), (d)(2)(i)(A) 
and (B), (d)(2)(ii) through (v), (d)(3), (5), (9), (12), and (13);
    (vii) Section 170.315(f) is also certified to the certification 
criteria specified in Sec.  170.315(d)(1) through (3), (7), (12), and 
(13);
    (viii) Section 170.315(g)(7) through (10) is also certified to the 
certification criteria specified in Sec.  170.315(d)(1), (9), (12), and 
(13); and (d)(2)(i)(A) and (B), (d)(2)(ii) through (v), or (d)(10);
    (ix) Section 170.315(h) is also certified to the certification 
criteria specified in Sec.  170.315(d)(1), (d)(2)(i)(A) and (B), 
(d)(2)(ii) through (v), (d)(3), (12), and (13); and
    (i) [Reserved]
    (j) Direct Project transport method. An ONC-ACB can only issue a 
certification to a Health IT Module for Sec.  170.315(h)(1) if the 
Health IT Module's certification also includes Sec.  170.315(b)(1).

[[Page 643]]

    (k) Inherited certified status. An ONC-ACB must accept requests for 
a newer version of a previously certified Health IT Module(s) to inherit 
the certified status of the previously certified Health IT Module(s) 
without requiring the newer version to be recertified.
    (1) Before granting certified status to a newer version of a 
previously certified Health IT Module(s), an ONC-ACB must review an 
attestation submitted by the developer(s) of the Health IT Module(s) to 
determine whether any change in the newer version has adversely affected 
the Health IT Module(s)' capabilities for which certification criteria 
have been adopted.
    (2) An ONC-ACB may grant certified status to a newer version of a 
previously certified Health IT Module(s) if it determines that the 
capabilities for which certification criteria have been adopted have not 
been adversely affected.
    (l) Conditions of certification attestations. Ensure that the health 
IT developer of the Health IT Module has met its responsibilities under 
subpart D of this part.
    (m) Time-limited certification and certification status for certain 
2015 Edition certification criteria. An ONC-ACB may only issue a 
certification to a Health IT Module and permit continued certified 
status for:
    (1) Section 170.315(a)(10) and (13) and Sec.  170.315(e)(2) until 
January 1, 2022.
    (2) Section 170.315(b)(6) until May 1, 2023.
    (3) Section 170.315(g)(8) until May 2, 2022.

[76 FR 1325, Dec. 7, 2011, as amended at 77 FR 54291, Sept. 4, 2012; 79 
FR 54480, Sept. 11, 2014; 80 FR 62757, Oct. 16, 2015; 85 FR 25952, May 
1, 2020]



Sec.  170.553  [Reserved]



Sec.  170.555  Certification to newer versions of certain standards.

    (a) ONC-ACBs may certify Health IT Module(s) to a newer version of 
certain identified minimum standards specified at subpart B of this 
part, unless the Secretary prohibits the use of a newer version for 
certification.
    (b) Applicability of a newer version of a minimum standard. (1) ONC-
ACBs are not required to certify Health IT Module(s) according to newer 
versions of standards adopted and named in subpart B of this part, 
unless:
    (i) The National Coordinator approves a newer version for use in 
certification and a health IT developer voluntarily elects to seek 
certification of its health IT in accordance with Sec.  170.405(b)(9) or 
update its certified health IT to the newer version in accordance with 
Sec.  170.405(b)(8); or
    (ii) The new version is incorporated by reference in Sec.  170.299.
    (2) A certified Complete EHR or certified Health IT Module may be 
upgraded to comply with newer versions of standards identified as 
minimum standards in subpart B of this part without adversely affecting 
its certification status, unless the Secretary prohibits the use of a 
newer version for certification.

[77 FR 54291, Sept. 4, 2012, as amended at 85 FR 25952, May 1, 2020]



Sec.  170.556  In-the-field surveillance and maintenance of 
certification for Health IT.

    (a) In-the-field surveillance. Consistent with its accreditation 
under 170.523(a) to ISO/IEC 17065 and the requirements of this subpart, 
an ONC-ACB must initiate surveillance ``in the field'' as necessary to 
assess whether a certified Health IT Module continues to conform to the 
requirements in subparts A, B, C and E of this part once the certified 
Health IT Module has been implemented and is in use in a production 
environment.
    (1) Production environment. An ONC-ACB's assessment of a certified 
capability in the field must be based on the use of the capability in a 
production environment, which means a live environment in which the 
capability has been implemented and is in use.
    (2) Production data. An ONC-ACB's assessment of a certified 
capability in the field must be based on the use of the capability with 
production data unless the use of test data is specifically approved by 
the National Coordinator.
    (b) Reactive surveillance. An ONC-ACB must initiate surveillance 
(including, as necessary, in-the-field surveillance required by 
paragraph (a) of this section) whenever it becomes aware of

[[Page 644]]

facts or circumstances that would cause a reasonable person to question 
a certified Health IT Module's continued conformity to the requirements 
of its certification.
    (1) Review of required disclosures. When an ONC-ACB performs 
reactive surveillance under this paragraph, it must verify that the 
requirements of Sec.  170.523(k)(1) have been followed as applicable to 
the issued certification.
    (2) [Reserved]
    (c) Randomized surveillance. During each calendar year surveillance 
period, an ONC-ACB may conduct in-the-field surveillance for certain 
randomly selected Health IT Modules to which it has issued a 
certification.
    (1) Scope. When an ONC-ACB selects a certified Health IT Module for 
randomized surveillance under this paragraph, its evaluation of the 
certified Health IT Module must include all certification criteria 
prioritized by the National Coordinator that are part of the scope of 
the certification issued to the Health IT Module.
    (2) [Reserved]
    (3) Selection method. An ONC-ACB must randomly select (subject to 
appropriate weighting and sampling considerations) and certified Health 
IT Modules for surveillance under this paragraph.
    (4) Number and types of locations for in-the-field surveillance. For 
each certified Health IT Module selected for randomized surveillance 
under this paragraph, an ONC-ACB must:
    (i) Evaluate the certified Health IT Module's capabilities at one or 
more locations where the certified Health IT Module is implemented and 
in use in the field.
    (ii) Ensure that the locations are selected at random (subject to 
appropriate weighting and sampling considerations) from among all 
locations where the certified Health IT Module is implemented and in use 
in the field.
    (d) Corrective action plan and procedures. (1) When an ONC-ACB 
determines, through surveillance under this section or otherwise, that a 
Health IT Module does not conform to the requirements of its 
certification, the ONC-ACB must notify the developer of its findings and 
require the developer to submit a proposed corrective action plan for 
the applicable certification criterion, certification criteria, or 
certification requirement.
    (2) The ONC-ACB shall provide direction to the developer as to the 
required elements of the corrective action plan.
    (3) The ONC-ACB shall verify the required elements of the corrective 
action plan, consistent with its accreditation and any elements 
specified by the National Coordinator. At a minimum, any corrective 
action plan submitted by a developer to an ONC-ACB must include:
    (i) A description of the identified non-conformities or 
deficiencies;
    (ii) An assessment of how widespread or isolated the identified non-
conformities or deficiencies may be across all of the developer's 
customers and users of the certified Health IT Module;
    (iii) How the developer will address the identified non-conformities 
or deficiencies, both at the locations under which surveillance occurred 
and for all other potentially affected customers and users;
    (iv) How the developer will ensure that all affected and potentially 
affected customers and users are alerted to the identified non-
conformities or deficiencies, including a detailed description of how 
the developer will assess the scope and impact of the problem, including 
identifying all potentially affected customers; how the developer will 
promptly ensure that all potentially affected customers are notified of 
the problem and plan for resolution; how and when the developer will 
resolve issues for individual affected customers; and how the developer 
will ensure that all issues are in fact resolved.
    (v) The timeframe under which corrective action will be completed.
    (vi) An attestation by the developer that it has completed all 
elements of the approved corrective action plan.
    (4) When the ONC-ACB receives a proposed corrective action plan (or 
a revised proposed corrective action plan), the ONC-ACB shall either 
approve the corrective action plan or, if the plan does not adequately 
address the elements described by paragraph

[[Page 645]]

(d)(3) of this section and other elements required by the ONC-ACB, 
instruct the developer to submit a revised proposed corrective action 
plan.
    (5) Suspension. Consistent with its accreditation to ISO/IEC 17065 
and procedures for suspending a certification, an ONC-ACB shall initiate 
suspension procedures for a Health IT Module:
    (i) 30 days after notifying the developer of a non-conformity 
pursuant to paragraph (d)(1) of this section, if the developer has not 
submitted a proposed corrective action plan;
    (ii) 90 days after notifying the developer of a non-conformity 
pursuant to paragraph (d)(1) of this section, if the ONC-ACB cannot 
approve a corrective action plan because the developer has not submitted 
a revised proposed corrective action plan in accordance with paragraph 
(d)(4) of this section; and
    (iii) Immediately, if the developer has not completed the corrective 
actions specified by an approved corrective action plan within the time 
specified therein.
    (6) Withdrawal. If a or certified Health IT Module's certification 
has been suspended, an ONC-ACB is permitted to initiate certification 
withdrawal procedures for the Health IT Module (consistent with its 
accreditation to ISO/IEC 17065 and procedures for withdrawing a 
certification) when the health IT developer has not completed the 
actions necessary to reinstate the suspended certification.
    (e) Reporting of surveillance results requirements--(1) Rolling 
submission of in-the-field surveillance results. The results of in-the-
field surveillance under this section must be submitted to the National 
Coordinator, at a minimum, on a quarterly basis in accordance with Sec.  
170.523(i)(2).
    (2) Confidentiality of locations evaluated. The contents of an ONC-
ACB's surveillance results submitted to the National Coordinator must 
not include any information that would identify any user or location 
that participated in or was subject to surveillance.
    (3) Reporting of corrective action plans. When a corrective action 
plan is initiated for a Health IT Module, an ONC-ACB must report the 
Health IT Module and associated product and corrective action 
information to the National Coordinator in accordance with Sec.  
170.523(f)(1)(xxii) or (f)(2)(xi), as applicable.
    (f) Relationship to other surveillance requirements. Nothing in this 
section shall be construed to limit or constrain an ONC-ACB's duty or 
ability to perform surveillance, including in-the-field surveillance, or 
to suspend or terminate the certification, of any certified Health IT 
Module as required or permitted by this subpart and the ONC-ACB's 
accreditation to ISO/IEC 17065.

[80 FR 62758, Oct. 16, 2015, as amended at 80 FR 76872, Dec. 11, 2015; 
81 FR 72466, Oct. 19, 2016; 85 FR 25952, May 1, 2020]



Sec.  170.557  Authorized testing and certification methods.

    (a) ONC-ATL applicability. An ONC-ATL must provide remote testing 
for both development and deployment sites.
    (b) ONC-ACB applicability. An ONC-ACB must provide remote 
certification for both development and deployment sites.

[81 FR 72466, Oct. 19, 2016]



Sec.  170.560  Good standing as an ONC-ACB or ONC-ATL.

    (a) ONC-ACB good standing. An ONC-ACB must maintain good standing 
by:
    (1) Adhering to the Principles of Proper Conduct for ONC-ACBs;
    (2) Refraining from engaging in other types of inappropriate 
behavior, including an ONC-ACB misrepresenting the scope of its 
authorization, as well as an ONC-ACB certifying Health IT Module(s) for 
which it does not have authorization; and
    (3) Following all other applicable federal and state laws.
    (b) ONC-ATL good standing. An ONC-ATL must maintain good standing 
by:
    (1) Adhering to the Principles of Proper Conduct for ONC-ATLs;
    (2) Refraining from engaging in other types of inappropriate 
behavior, including an ONC-ATL misrepresenting the scope of its 
authorization, as well as an ONC-ATL testing health IT for which it does 
not have authorization; and

[[Page 646]]

    (3) Following all other applicable federal and state laws.

[81 FR 72466, Oct. 19, 2016; 85 FR 25953, May 1, 2020]



Sec.  170.565  Revocation of ONC-ACB or ONC-ATL status.

    (a) Type-1 violations. The National Coordinator may revoke an ONC-
ATL or ONC-ACB's status for committing a Type-1 violation. Type-1 
violations include violations of law or ONC Health IT Certification 
Program policies that threaten or significantly undermine the integrity 
of the ONC Health IT Certification Program. These violations include, 
but are not limited to: False, fraudulent, or abusive activities that 
affect the ONC Health IT Certification Program, a program administered 
by HHS or any program administered by the federal government.
    (b) Type-2 violations. The National Coordinator may revoke an ONC-
ATL or ONC-ACB's status for failing to timely or adequately correct a 
Type-2 violation. Type-2 violations constitute noncompliance with Sec.  
170.560.
    (1) Noncompliance notification. If the National Coordinator obtains 
reliable evidence that an ONC-ATL or ONC-ACB may no longer be in 
compliance with Sec.  170.560, the National Coordinator will issue a 
noncompliance notification with reasons for the notification to the ONC-
ATL or ONC-ACB requesting that the ONC-ATL or ONC-ACB respond to the 
alleged violation and correct the violation, if applicable.
    (2) Opportunity to become compliant. After receipt of a 
noncompliance notification, an ONC-ATL or ONC-ACB is permitted up to 30 
days to submit a written response and accompanying documentation that 
demonstrates that no violation occurred or that the alleged violation 
has been corrected.
    (i) If the ONC-ATL or ONC-ACB submits a response, the National 
Coordinator is permitted up to 30 days from the time the response is 
received to evaluate the response and reach a decision. The National 
Coordinator may, if necessary, request additional information from the 
ONC-ATL or ONC-ACB during this time period.
    (ii) If the National Coordinator determines that no violation 
occurred or that the violation has been sufficiently corrected, the 
National Coordinator will issue a memo to the ONC-ATL or ONC-ACB 
confirming this determination.
    (iii) If the National Coordinator determines that the ONC-ATL or 
ONC-ACB failed to demonstrate that no violation occurred or to correct 
the area(s) of non-compliance identified under paragraph (b)(1) of this 
section within 30 days of receipt of the noncompliance notification, 
then the National Coordinator may propose to revoke the ONC-ATL or ONC-
ACB's status.
    (c) Proposed revocation. (1) The National Coordinator may propose to 
revoke an ONC-ATL or ONC-ACB's status if the National Coordinator has 
reliable evidence that the ONC-ATL or ONC-ACB has committed a Type-1 
violation; or
    (2) The National Coordinator may propose to revoke an ONC-ATL or 
ONC-ACB's status if, after the ONC-ATL or ONC-ACB has been notified of a 
Type-2 violation, the ONC-ATL or ONC-ACB fails to:
    (i) Rebut the finding of a violation with sufficient evidence 
showing that the violation did not occur or that the violation has been 
corrected; or
    (ii) Submit to the National Coordinator a written response to the 
noncompliance notification within the specified timeframe under 
paragraph (b)(2) of this section.
    (d) Suspension of an ONC-ATL or ONC-ACB's operations. (1) The 
National Coordinator may suspend the operations of an ONC-ATL or ONC-ACB 
under the ONC Health IT Certification Program based on reliable evidence 
indicating that:
    (i) Applicable to both ONC-ACBs and ONC-ATLs. The ONC-ATL or ONC-ACB 
committed a Type-1 or Type-2 violation;
    (ii) Applicable to ONC-ACBs. The continued certification of Health 
IT Modules by the ONC-ACB could have an adverse impact on the health or 
safety of patients.
    (iii) Applicable to ONC-ATLs. The continued testing of Health IT 
Modules by the ONC-ATL could have an adverse impact on the health or 
safety of patients.

[[Page 647]]

    (2) If the National Coordinator determines that the conditions of 
paragraph (d)(1) of this section have been met, an ONC-ATL or ONC-ACB 
will be issued a notice of proposed suspension.
    (3) Upon receipt of a notice of proposed suspension, an ONC-ATL or 
ONC-ACB will be permitted up to 3 days to submit a written response to 
the National Coordinator explaining why its operations should not be 
suspended.
    (4) The National Coordinator is permitted up to 5 days from receipt 
of an ONC-ATL or ONC-ACB's written response to a notice of proposed 
suspension to review the response and make a determination.
    (5) The National Coordinator may make one of the following 
determinations in response to the ONC-ATL or ONC-ACB's written response 
or if the ONC-ATL or ONC-ACB fails to submit a written response within 
the timeframe specified in paragraph (d)(3) of this section:
    (i) Rescind the proposed suspension; or
    (ii) Suspend the ONC-ATL or ONC-ACB's operations until it has 
adequately corrected a Type-2 violation; or
    (iii) Propose revocation in accordance with paragraph (c) of this 
section and suspend the ONC-ATL or ONC-ACB's operations for the duration 
of the revocation process.
    (6) A suspension will become effective upon an ONC-ATL or ONC-ACB's 
receipt of a notice of suspension.
    (e) Opportunity to respond to a proposed revocation notice. (1) An 
ONC-ATL or ONC-ACB may respond to a proposed revocation notice, but must 
do so within 10 days of receiving the proposed revocation notice and 
include appropriate documentation explaining in writing why its status 
should not be revoked.
    (2) Upon receipt of an ONC-ATL or ONC-ACB's response to a proposed 
revocation notice, the National Coordinator is permitted up to 30 days 
to review the information submitted by the ONC-ACB or ONC-ATL and reach 
a decision.
    (f) Good standing determination. If the National Coordinator 
determines that an ONC-ATL or ONC-ACB's status should not be revoked, 
the National Coordinator will notify the ONC-ATL or ONC-ACB's authorized 
representative in writing of this determination.
    (g) Revocation. (1) The National Coordinator may revoke an ONC-ATL 
or ONC-ACB's status if:
    (i) A determination is made that revocation is appropriate after 
considering the information provided by the ONC-ATL or ONC-ACB in 
response to the proposed revocation notice; or
    (ii) The ONC-ATL or ONC-ACB does not respond to a proposed 
revocation notice within the specified timeframe in paragraph (e)(1) of 
this section.
    (2) A decision to revoke an ONC-ATL or ONC-ACB's status is final and 
not subject to further review unless the National Coordinator chooses to 
reconsider the revocation.
    (h) Extent and duration of revocation--(1) Effectuation. The 
revocation of an ONC-ATL or ONC-ACB is effective as soon as the ONC-ATL 
or ONC-ACB receives the revocation notice.
    (2) ONC-ACB provisions. (i) A certification body that has had its 
ONC-ACB status revoked is prohibited from accepting new requests for 
certification and must cease its current certification operations under 
the ONC Health IT Certification Program.
    (ii) A certification body that has had its ONC-ACB status revoked 
for a Type-1 violation is not permitted to reapply for ONC-ACB status 
under the ONC Health IT Certification Program for a period of 1 year.
    (iii) The failure of a certification body that has had its ONC-ACB 
status revoked to promptly refund any and all fees for certifications of 
Health IT Module(s) not completed will be considered a violation of the 
Principles of Proper Conduct for ONC-ACBs and will be taken into account 
by the National Coordinator if the certification body reapplies for ONC-
ACB status under the ONC Health IT Certification Program.
    (3) ONC-ATL provisions. (i) A testing lab that has had its ONC-ATL 
status revoked is prohibited from accepting new requests for testing and 
must cease its current testing operations under the ONC Health IT 
Certification Program.

[[Page 648]]

    (ii) A testing lab that has had its ONC-ATL status revoked for a 
Type-1 violation is not permitted to reapply for ONC-ATL status under 
the ONC Health IT Certification Program for a period of 1 year.
    (iii) The failure of a testing lab that has had its ONC-ATL status 
revoked to promptly refund any and all fees for testing of health IT not 
completed will be considered a violation of the Principles of Proper 
Conduct for ONC-ATLs and will be taken into account by the National 
Coordinator if the testing lab reapplies for ONC-ATL status under the 
ONC Health IT Certification Program.

[81 FR 72466, Oct. 19, 2016, as amended at 85 FR 25953, May 1, 2020]



Sec.  170.570  Effect of revocation on the certifications issued to
Complete EHRs and EHR Module(s).

    (a) The certified status of Health IT Module(s) certified by an ONC-
ACB or tested by an ONC-ATL that had its status revoked will remain 
intact unless a Type-1 violation was committed by the ONC-ACB and/or 
ONC-ATL that calls into question the legitimacy of the certifications 
issued.
    (b) If the National Coordinator determines that a Type-1 violation 
was committed by an ONC-ACB and/or ONC-ATL that called into question the 
legitimacy of certifications issued to health IT, then the National 
Coordinator would:
    (1) Review the facts surrounding the revocation of the ONC-ACB's or 
ONC-ATL's status; and
    (2) Publish a notice on ONC's Web site if the National Coordinator 
believes that the Health IT Module(s) certifications were based on 
unreliable testing and/or certification.
    (c) If the National Coordinator determines that Health IT Module(s) 
certifications were based on unreliable testing and/or certification, 
the certification status of affected Health IT Module(s) would only 
remain intact for 120 days after the National Coordinator publishes the 
notice.
    (1) The certification status of affected Health IT Module(s) can 
only be maintained after the 120-day timeframe by being re-tested by an 
ONC-ATL in good standing, as necessary, and re-certified by an ONC-ACB 
in good standing.
    (2) The National Coordinator may extend the time that the 
certification status of affected Health IT Module(s) remains intact as 
necessary for the proper retesting and recertification of the affected 
health IT.

[81 FR 72467, Oct. 19, 2016, as amended at 85 FR 25953, May 1, 2020]



Sec.  170.575  [Reserved]



Sec.  170.580  ONC review of certified health IT.

    (a) Direct review--(1) Purpose. ONC may directly review certified 
health IT or a health IT developer's actions or practices to determine 
whether either conform to the requirements of the ONC Health IT 
Certification Program.
    (2) Circumstances that may trigger review--(i) Certified health IT 
causing or contributing to unsafe conditions. ONC may initiate direct 
review under this section if it has a reasonable belief that certified 
health IT may not conform to the requirements of the Program because the 
certified health IT may be causing or contributing to conditions that 
present a serious risk to public health or safety, taking into 
consideration--
    (A) The potential nature, severity, and extent of the suspected 
conditions;
    (B) The need for an immediate or coordinated governmental response; 
and
    (C) If applicable, information that calls into question the validity 
of the health IT's certification or maintenance thereof under the 
Program.
    (ii) Impediments to ONC-ACB oversight of certified health IT. ONC 
may initiate direct review under this section if it has a reasonable 
belief that certified health IT may not conform to requirements of the 
Program and the suspected non-conformity presents issues that--
    (A) May require access to confidential or other information that is 
not available to an ONC-ACB;
    (B) May require concurrent or overlapping review by two or more ONC-
ACBs; or
    (C) May exceed an ONC-ACB's resources or expertise.

[[Page 649]]

    (iii) Noncompliance with a Condition and Maintenance of 
Certification requirement. ONC may initiate direct review under this 
section if it has a reasonable belief that a health IT developer has not 
complied with a Condition or Maintenance of Certification requirement 
under subpart D of this part.
    (3) Relationship to ONC-ACBs and ONC-ATLs. (i) ONC's review of 
certified health IT or a health IT developer's actions or practices is 
independent of, and may be in addition to, any surveillance of certified 
health IT conducted by an ONC-ACB.
    (iii) ONC's determination on matters under its review is controlling 
and supersedes any determination by an ONC-ACB on the same matters.
    (iv) An ONC-ACB and ONC-ATL shall provide ONC with any available 
information that ONC deems relevant to its review of certified health IT 
or a health IT developer's actions or practices.
    (v) ONC may end all or any part of its review of certified health IT 
or a health IT developer's actions or practices under this section at 
any time and refer the applicable part of the review to the relevant 
ONC-ACB(s) if ONC determines that doing so would serve the effective 
administration or oversight of the ONC Health IT Certification Program.
    (4) Coordination with the Office of Inspector General. (i) ONC may 
coordinate its review of a claim of information blocking with the Office 
of Inspector General or defer to the Office of Inspector General to lead 
a review of a claim of information blocking.
    (ii) ONC may rely on Office of Inspector General findings to form 
the basis of a direct review action.
    (b) Notice--(1) Notice of potential non-conformity--(i) 
Circumstances that may trigger notice of potential non-conformity. At 
any time during its review of certified health IT or a health IT 
developer's actions or practices under paragraph (a) of this section, 
ONC may send a notice of potential non-conformity if it has a reasonable 
belief that certified health IT or a health IT developer's actions or 
practices may not conform to the requirements of the ONC Health IT 
Certification Program.
    (ii) Health IT developer response. (A) The health IT developer must 
respond to the notice of potential non-conformity by:
    (1) Cooperating with ONC and/or a third party acting on behalf of 
ONC;
    (2) Providing ONC and/or a third party acting on behalf of ONC 
access, including in accordance with paragraph (b)(3) of this section, 
to the certified health IT under review;
    (3) Providing ONC with a written explanation and all supporting 
documentation addressing the potential non-conformity within 30 days, or 
within the adjusted timeframe set in accordance with paragraph 
(b)(1)(ii)(B) of this section.
    (B) ONC may adjust the 30-day timeframe specified in paragraph 
(b)(1)(ii)(A)(3) of this section to be shorter or longer based on 
factors including, but not limited to:
    (1) The type of certified health IT and certification in question;
    (2) The type of potential non-conformity to be corrected;
    (3) The time required to correct the potential non-conformity; and
    (4) Issues of public health or safety.
    (iii) ONC determination. After receiving the health IT developer's 
written explanation and supporting documentation as required by 
paragraph (b)(1)(ii)(A)(3) of this section, ONC shall do one of the 
following:
    (A) Issue a written determination ending its review.
    (B) Request additional information and continue its review in 
accordance with a new timeframe ONC establishes under (b)(1)(ii)(A)(3) 
and (b)(1)(ii)(B) of this section.
    (C) Substantiate a non-conformity and issue a notice of non-
conformity.
    (D) Issue a notice of proposed termination if the health IT is under 
review in accordance with paragraph (a)(2)(i) or (ii) of this section.
    (2) Notice of non-conformity--(i) Circumstances that may trigger 
notice of non-conformity. At any time during its review of certified 
health IT or a health IT developer's actions or practices under 
paragraph (a) of this section, ONC may send a notice of non-conformity 
to the health IT developer if it determines that certified health IT or 
a health IT developer's actions or

[[Page 650]]

practices does not conform to the requirements of the ONC Health IT 
Certification Program.
    (ii) Health IT developer response. (A) The health IT developer must 
respond to the notice of non-conformity by:
    (1) Cooperating with ONC and/or a third party acting on behalf of 
ONC;
    (2) Providing ONC and/or a third party acting on behalf of ONC 
access, including in accordance with paragraph (b)(3) of this section, 
to the certified health IT under review;
    (3) Providing ONC with a written explanation and all supporting 
documentation addressing the non-conformity within 30 days, or within 
the adjusted timeframe set in accordance with paragraph (b)(1)(ii)(B) of 
this section; and
    (4) Providing a proposed corrective action plan consistent with 
paragraph (c) of this section.
    (B) ONC may adjust the 30-day timeframe specified in paragraph 
(b)(2)(ii)(A)(3) of this section to be shorter or longer based on 
factors including, but not limited to:
    (1) The type of certified health IT and certification in question;
    (2) The type of non-conformity to be corrected;
    (3) The time required to correct the non-conformity; and
    (4) Issues of public health or safety.
    (iii) ONC determination. After receiving the health IT developer's 
response provided in accordance with paragraph (b)(2)(ii) of this 
section, ONC shall either issue a written determination ending its 
review or continue with its review under the provisions of this section.
    (3) Records access. In response to a notice of potential non-
conformity or notice of non-conformity, a health IT developer shall make 
available to ONC and for sharing within HHS, with other federal 
departments, agencies, and offices, and with appropriate entities 
including, but not limited to, third-parties acting on behalf of ONC:
    (i) All records related to the development, testing, certification, 
implementation, maintenance and use of its certified health IT;
    (ii) Any complaint records related to the certified health IT;
    (iii) All records related to the Condition(s) and Maintenance of 
Certification requirements, including marketing and distribution 
records, communications, and contracts; and
    (iv) Any other relevant information.
    (c) Corrective action plan and procedures--(1) Applicability. If ONC 
determines that certified health IT or a health IT developer's action or 
practice does not conform to requirements of the ONC Health IT 
Certification Program, ONC shall notify the health IT developer of its 
determination and require the health IT developer to submit a proposed 
corrective action plan.
    (2) ONC shall provide direction to the health IT developer as to the 
required elements of the corrective action plan, which shall include 
such required elements as ONC determines necessary to comprehensively 
and expeditiously resolve the identified non-conformity(ies). The 
corrective action plan shall, in all cases, at a minimum include the 
following required elements:
    (i) An assessment and description of the nature, severity, and 
extent of the non-conformity;
    (ii) Identification of all potentially affected customers;
    (iii) A detailed description of how the health IT developer will 
promptly ensure that all potentially affected customers are notified of 
the non-conformity and plan for resolution;
    (iv) A detailed description of how and when the health IT developer 
will resolve the identified non-conformity and all issues, both at the 
locations where the non-conformity was identified and for all affected 
customers;
    (v) A detailed description of how the health IT developer will 
ensure that the identified non-conformity and all issues are resolved;
    (vi) A detailed description of the supporting documentation that 
will be provided to demonstrate that the identified non-conformity and 
all issues are resolved; and
    (vii) The timeframe under which all elements of the corrective 
action plan will be completed.
    (viii) An explanation of, and agreement to execute, the steps that 
will be prevent the non-conformity from re-occurring.

[[Page 651]]

    (3) When ONC receives a proposed corrective action plan (or a 
revised proposed corrective action plan), it shall either approve the 
proposed corrective action plan or, if the plan does not adequately 
address all required elements, instruct the health IT developer to 
submit a revised proposed corrective action plan within a specified 
period of time.
    (4) The health IT developer is responsible for ensuring that a 
proposed corrective action plan submitted in accordance with paragraph 
(b)(2)(ii)(A)(4) of this section or a revised corrective action plan 
submitted in accordance with paragraph (c)(3) of this section adequately 
addresses all required elements as determined by ONC no later than 90 
days after the health IT developer's receipt of a notice of non-
conformity.
    (5) Health IT developers may request extensions for the submittal 
and/or completion of corrective action plans. In order to make these 
requests, health IT developers must submit a written statement to ONC 
that explains and justifies the extension request. ONC will evaluate 
each request individually and will make decisions on a case-by-case 
basis.
    (6) Upon fulfilling all of its obligations under the corrective 
action plan, the health IT developer must submit an attestation to ONC, 
which serve as a binding official statement by the health IT developer 
that it has fulfilled all of its obligations under the corrective action 
plan.
    (7) ONC may reinstitute a corrective action plan if it later 
determines that a health IT developer has not fulfilled all of its 
obligations under the corrective action plan as attested in accordance 
with paragraph (c)(6) of this section.
    (d) Suspension. (1) ONC may suspend the certification of a Health IT 
Module at any time if ONC has a reasonable belief that the certified 
health IT may present a serious risk to public health or safety.
    (2) When ONC decides to suspend a certification, ONC will notify the 
health IT developer of its determination through a notice of suspension.
    (i) The notice of suspension will include, but may not be limited 
to:
    (A) An explanation for the suspension;
    (B) Information supporting the determination;
    (C) The consequences of suspension for the health IT developer and 
the Health IT Module under the ONC Health IT Certification Program; and
    (D) Instructions for appealing the suspension.
    (ii) A suspension of a certification will become effective upon the 
date specified in the notice of suspension.
    (3) The health IT developer must notify all potentially affected 
customers of the identified non-conformity(ies) and suspension of 
certification in a timely manner.
    (4) When a certification is suspended, the health IT developer must 
cease and desist from any marketing, licensing, and sale of the 
suspended Health IT Module as ``certified'' under the ONC Health IT 
Certification Program from that point forward until such time ONC 
cancels the suspension in accordance with paragraph (d)(6) of this 
section.
    (5) The certification of any health IT produced by a health IT 
developer that has the certification of one of its Health IT Modules 
suspended under the Program is prohibited, unless ONC cancels a 
suspension in accordance with paragraph (d)(6) of this section.
    (6) ONC may cancel a suspension at any time if ONC no longer has a 
reasonable belief that the certified health IT presents a serious risk 
to public health or safety.
    (e) Proposed termination--(1) Applicability. Excluding situations of 
noncompliance with a Condition or Maintenance of Certification 
requirement under subpart D of this part, ONC may propose to terminate a 
certification issued to a Health IT Module if:
    (i) The health IT developer fails to timely respond to any 
communication from ONC, including, but not limited to:
    (A) Fact-finding;
    (B) A notice of potential non-conformity within the timeframe 
established in accordance with paragraph (b)(1)(ii)(A)(3) of this 
section;
    (C) A notice of non-conformity within the timeframe established in 
accordance with paragraph (b)(2)(ii)(A)(3) of this section; or

[[Page 652]]

    (D) A notice of suspension.
    (ii) The information or access provided by the health IT developer 
in response to any ONC communication, including, but not limited to: 
Fact-finding, a notice of potential non-conformity, or a notice of non-
conformity is insufficient or incomplete;
    (iii) The health IT developer fails to cooperate with ONC and/or a 
third party acting on behalf of ONC;
    (iv) The health IT developer fails to timely submit in writing a 
proposed corrective action plan;
    (v) The health IT developer fails to timely submit a corrective 
action plan that adequately addresses the elements required by ONC as 
described in paragraph (c) of this section;
    (vi) The health IT developer does not fulfill its obligations under 
the corrective action plan developed in accordance with paragraph (c) of 
this section; or
    (vii) ONC concludes that a certified health IT's non-conformity(ies) 
cannot be cured.
    (2) When ONC decides to propose to terminate a certification, ONC 
will notify the health IT developer of the proposed termination through 
a notice of proposed termination.
    (i) The notice of proposed termination will include, but may not be 
limited to:
    (A) An explanation for the proposed termination;
    (B) Information supporting the proposed termination; and
    (C) Instructions for responding to the proposed termination.
    (3) The health IT developer may respond to a notice of proposed 
termination, but must do so within 10 days of receiving the notice of 
proposed termination and must include appropriate documentation 
explaining in writing why its certification should not be terminated.
    (4) Upon receipt of the health IT developer's written response to a 
notice of proposed termination, ONC has up to 30 days to review the 
information submitted by the health IT developer and make a 
determination. ONC may extend this timeframe if the complexity of the 
case requires additional time for ONC review. ONC will, as applicable:
    (i) Notify the health IT developer in writing that it has ceased all 
or part of its review of the health IT developer's certified health IT.
    (ii) Notify the health IT developer in writing of its intent to 
continue all or part of its review of the certified health IT under the 
provisions of this section.
    (iii) Proceed to terminate the certification of the health IT under 
review consistent with paragraph (f) of this section.
    (f) Termination--(1) Applicability. The National Coordinator may 
terminate a certification if:
    (i) A determination is made that termination is appropriate after 
considering the information provided by the health IT developer in 
response to the proposed termination notice;
    (ii) The health IT developer does not respond in writing to a 
proposed termination notice within the timeframe specified in paragraph 
(e)(3) of this section; or
    (iii) A determination is made that the health IT developer is 
noncompliant with a Condition or Maintenance of Certification 
requirement under subpart D of this part or for the following 
circumstances when ONC exercises direct review under paragraph 
(a)(2)(iii) of this section:
    (A) The health IT developer fails to timely respond to any 
communication from ONC, including, but not limited to:
    (1) Fact-finding;
    (2) A notice of potential non-conformity within the timeframe 
established in accordance with paragraph (b)(1)(ii)(A)(3) of this 
section; or
    (3) A notice of non-conformity within the timeframe established in 
accordance with paragraph (b)(2)(ii)(A)(3) of this section.
    (B) The information or access provided by the health IT developer in 
response to any ONC communication, including, but not limited to: Fact-
finding, a notice of potential non-conformity, or a notice of non-
conformity is insufficient or incomplete;
    (C) The health IT developer fails to cooperate with ONC and/or a 
third party acting on behalf of ONC;

[[Page 653]]

    (D) The health IT developer fails to timely submit in writing a 
proposed corrective action plan;
    (E) The health IT developer fails to timely submit a corrective 
action plan that adequately addresses the elements required by ONC as 
described in paragraph (c) of this section;
    (F) The health IT developer does not fulfill its obligations under 
the corrective action plan developed in accordance with paragraph (c) of 
this section; or
    (G) ONC concludes that the non-conformity(ies) cannot be cured.
    (2) When ONC decides to terminate a certification, ONC will notify 
the health IT developer of its determination through a notice of 
termination.
    (i) The notice of termination will include, but may not be limited 
to:
    (A) An explanation for the termination;
    (B) Information supporting the determination;
    (C) The consequences of termination for the health IT developer and 
the Health IT Module under the ONC Health IT Certification Program; and
    (D) Instructions for appealing the termination.
    (ii) A termination of a certification will become effective after 
the following applicable occurrence:
    (A) The expiration of the 10-day period for filing a statement of 
intent to appeal in paragraph (g)(3)(i) of this section if the health IT 
developer does not file a statement of intent to appeal.
    (B) The expiration of the 30-day period for filing an appeal in 
paragraph (g)(3)(ii) of this section if the health IT developer files a 
statement of intent to appeal, but does not file a timely appeal.
    (C) A final determination to terminate the certification per 
paragraph (g)(7) of this section if a health IT developer files an 
appeal.
    (3) The health IT developer must notify all potentially affected 
customers of the identified non-conformity(ies) and termination of 
certification in a timely manner.
    (4) ONC may rescind a termination determination before the 
termination becomes effective if ONC determines that termination is no 
longer appropriate.
    (g) Appeal--(1) Basis for appeal. A health IT developer may appeal 
an ONC determination to suspend or terminate a certification issued to a 
Health IT Module and/or an ONC determination to issue a certification 
ban under Sec.  170.581(a)(2) if the health IT developer asserts:
    (i) ONC incorrectly applied ONC Health IT Certification Program 
requirements for a:
    (A) Suspension;
    (B) Termination; or
    (C) Certification ban under Sec.  170.581(a)(2).
    (ii) ONC's determination was not sufficiently supported by the 
information provided by ONC with its determination.
    (2) Method and place for filing an appeal. A statement of intent to 
appeal followed by a request for appeal must be submitted to ONC in 
writing by an authorized representative of the health IT developer 
subject to the determination being appealed. The statement of intent to 
appeal and request for appeal must be filed in accordance with the 
requirements specified in the notice of:
    (i) Termination;
    (ii) Suspension; or
    (iii) Certification ban under Sec.  170.581(a)(2).
    (3) Time for filing a request for appeal. (i) A statement of intent 
to appeal must be filed within 10 days of a health IT developer's 
receipt of the notice of:
    (A) Suspension;
    (B) Termination; or
    (C) Certification ban under Sec.  170.581(a)(2).
    (ii) An appeal, including all supporting documentation, must be 
filed within 30 days of the filing of the intent to appeal.
    (4) Effect of appeal. (i) A request for appeal stays the termination 
of a certification issued to a Health IT Module, but the Health IT 
Module is prohibited from being marketed, licensed, or sold as 
``certified'' during the stay.
    (ii) A request for appeal does not stay the suspension of a Health 
IT Module.
    (iii) A request for appeal stays a certification ban issued under 
Sec.  170.581(a)(2).
    (5) Appointment of a hearing officer. The National Coordinator will 
assign

[[Page 654]]

the case to a hearing officer to adjudicate the appeal on his or her 
behalf.
    (i) The hearing officer may not review an appeal in which he or she 
participated in the initial suspension, termination, or certification 
ban determination or has a conflict of interest in the pending matter.
    (ii) The hearing officer must be trained in a nationally recognized 
ethics code that articulates nationally recognized standards of conduct 
for hearing officers/officials.
    (6) Adjudication. (i) The hearing officer may make a determination 
based on:
    (A) The written record, which includes the:
    (1) ONC determination and supporting information;
    (2) Information provided by the health IT developer with the appeal 
filed in accordance with paragraphs (g)(1) through (3) of this section; 
and
    (3) Information ONC provides in accordance with paragraph (g)(6)(v) 
of this section; or
    (B) All the information provided in accordance with paragraph 
(g)(6)(i)(A) and any additional information from a hearing conducted in-
person, via telephone, or otherwise.
    (ii) The hearing officer will have the discretion to conduct a 
hearing if he/she:
    (A) Requires clarification by either party regarding the written 
record under paragraph (g)(6)(i)(A) of this section;
    (B) Requires either party to answer questions regarding the written 
record under paragraph (g)(6)(i)(A) of this section; or
    (C) Otherwise determines a hearing is necessary.
    (iii) The hearing officer will neither receive witness testimony nor 
accept any new information beyond what was provided in accordance with 
paragraph (g)(6)(i) of this section.
    (iv) The default process will be a determination in accordance with 
paragraph (g)(6)(i)(A) of this section.
    (v) ONC will have an opportunity to provide the hearing officer with 
a written statement and supporting documentation on its behalf that 
clarifies, as necessary, its determination to suspend or terminate the 
certification or issue a certification ban.
    (7) Determination by the hearing officer. (i) The hearing officer 
will issue a written determination to the health IT developer within 30 
days of receipt of the appeal or within a timeframe agreed to by the 
health IT developer and ONC and approved by the hearing officer, unless 
ONC cancels the suspension or rescinds the termination determination.
    (ii) The National Coordinator's determination on appeal, as issued 
by the hearing officer, is final and not subject to further review.

[81 FR 72468, Oct. 19, 2016, as amended at 85 FR 25953, May 1, 2020]



Sec.  170.581  Certification ban.

    (a) Circumstances that may trigger a certification ban. The 
certification of any of a health IT developer's health IT is prohibited 
when:
    (1) The certification of one or more of the health IT developer's 
Health IT Modules is:
    (i) Terminated by ONC under the ONC Health IT Certification Program;
    (ii) Withdrawn from the ONC Health IT Certification Program by an 
ONC-ACB because the health IT developer requested it to be withdrawn 
(for reasons other than to comply with Program requirements) when the 
health IT developer's health IT was the subject of a potential non-
conformity or non-conformity as determined by ONC;
    (iii) Withdrawn by an ONC-ACB because of a non-conformity with any 
of the certification criteria adopted by the Secretary under subpart C 
of this part;
    (iv) Withdrawn by an ONC-ACB because the health IT developer 
requested it to be withdrawn (for reasons other than to comply with 
Program requirements) when the health IT developer's health IT was the 
subject of surveillance for a certification criterion or criteria 
adopted by the Secretary under subpart C of this part, including notice 
of pending surveillance; or
    (2) ONC determines a certification ban is appropriate per its review 
under Sec.  170.580(a)(2)(iii).
    (b) Notice of certification ban. When ONC decides to issue a 
certification ban to a health IT developer, ONC will

[[Page 655]]

notify the health IT developer of the certification ban through a notice 
of certification ban. The notice of certification ban will include, but 
may not be limited to:
    (1) An explanation of the certification ban;
    (2) Information supporting the certification ban;
    (3) Instructions for appealing the certification ban if banned in 
accordance with paragraph (a)(2) of this section; and
    (4) Instructions for requesting reinstatement into the ONC Health IT 
Certification Program, which would lift the certification ban.
    (c) Effective date of certification ban. (1) A certification ban 
will be effective immediately if banned under paragraph (a)(1) of this 
section.
    (2) For certification bans issued under paragraph (a)(2) of this 
section, the ban will be effective immediately after the following 
applicable occurrence:
    (i) The expiration of the 10-day period for filing a statement of 
intent to appeal in Sec.  170.580(g)(3)(i) if the health IT developer 
does not file a statement of intent to appeal.
    (ii) The expiration of the 30-day period for filing an appeal in 
Sec.  170.580(g)(3)(ii) if the health IT developer files a statement of 
intent to appeal, but does not file a timely appeal.
    (iii) A final determination to issue a certification ban per Sec.  
170.580(g)(7) if a health IT developer files an appeal timely.
    (d) Reinstatement. The certification of a health IT developer's 
health IT subject to the prohibition in paragraph (a) of this section 
may commence once the following conditions are met.
    (1) A health IT developer must request ONC's permission in writing 
to participate in the ONC Health IT Certification Program.
    (2) The request must demonstrate that the customers affected by the 
certificate termination, certificate withdrawal, or noncompliance with a 
Condition or Maintenance of Certification requirement have been provided 
appropriate remediation.
    (3) For noncompliance with a Condition or Maintenance of 
Certification requirement, the noncompliance must be resolved.
    (4) ONC is satisfied with the health IT developer's demonstration 
under paragraph (d)(2) of this section that all affected customers have 
been provided with appropriate remediation and grants reinstatement into 
the ONC Health IT Certification Program.

[85 FR 25954, May 1, 2020]



Sec.  170.599  Incorporation by reference.

    (a) Certain material is incorporated by reference into this subpart 
with the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, the Department of Health and Human Services 
must publish a document in the Federal Register and the material must be 
available to the public. All approved material is available for 
inspection at U.S. Department of Health and Human Services, Office of 
the National Coordinator for Health Information Technology, 330 C Street 
SW., Washington, DC 20201, call ahead to arrange for inspection at 202-
690-7151, and is available from the source listed below. It is also 
available for inspection at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030 or go to http://www.archives.gov/
federal_ register/code_of_ federal_regulations /ibr_locations.html.
    (b) International Organization for Standardization, Case postale 56, 
CH[middot]1211, Geneve 20, Switzerland, telephone +41-22-749-01-11, 
http://www.iso.org.
    (1) ISO/IEC GUIDE 65:1996--General Requirements for Bodies Operating 
Product Certification Systems (First Edition), 1996, ``ISO/IEC Guide 
65,'' IBR approved for Sec.  170.503.
    (2) ISO/IEC 17011:2004 Conformity Assessment--General Requirements 
for Accreditation Bodies Accrediting Conformity Assessment Bodies 
(Corrected Version), February 15, 2005, ``ISO/IEC 17011,'' IBR approved 
for Sec.  170.503.
    (3) ISO/IEC 17025:2005(E)--General requirements for the competence 
of testing and calibration laboratories (Second Edition), 2005-05-15, 
``ISO/IEC

[[Page 656]]

17025,'' IBR approved for Sec. Sec.  170.520(b) and 170.524(a).
    (4) ISO/IEC 17025:2017(E)--General requirements for the competence 
of testing and calibration laboratories (Third Edition), 2017-11, ``ISO/
IEC 17025,'' IBR approved for Sec. Sec.  170.520(b), and 170.524(a).
    (5) ISO/IEC 17065:2012(E)--Conformity assessment--Requirements for 
bodies certifying products, processes and services (First Edition), 
2012, ``ISO/IEC 17065,'' IBR approved for Sec. Sec.  170.503 and 
170.523(a).

[81 FR 72471, Oct. 19, 2016, as amended at 85 FR 25955, May 1, 2020]



PART 171_INFORMATION BLOCKING--Table of Contents



                      Subpart A_General Provisions

Sec.
171.100 Statutory basis and purpose.
171.101 Applicability.
171.102 Definitions.
171.103 Information blocking.

  Subpart B_Exceptions That Involve Not Fulfilling Requests to Access, 
             Exchange, or Use Electronic Health Information

171.200 Availability and effect of exceptions.
171.201 Preventing harm exception--When will an actor's practice that is 
          likely to interfere with the access, exchange, or use of 
          electronic health information in order to prevent harm not be 
          considered information blocking?
171.202 Privacy exception--When will an actor's practice of not 
          fulfilling a request to access, exchange, or use electronic 
          health information in order to protect an individual's privacy 
          not be considered information blocking?
171.203 Security exception--When will an actor's practice that is likely 
          to interfere with the access, exchange, or use of electronic 
          health information in order to protect the security of 
          electronic health information not be considered information 
          blocking?
171.204 Infeasibility exception--When will an actor's practice of not 
          fulfilling a request to access, exchange, or use electronic 
          health information due to the infeasibility of the request not 
          be considered information blocking?
171.205 Health IT performance exception--When will an actor's practice 
          that is implemented to maintain or improve health IT 
          performance and that is likely to interfere with the access, 
          exchange, or use of electronic health information not be 
          considered information blocking?

Subpart C_Exceptions That Involve Procedures for Fulfilling Requests to 
         Access, Exchange, or Use Electronic Health Information

171.300 Availability and effect of exceptions.
171.301 Content and manner exception--When will an actor's practice of 
          limiting the content of its response to or the manner in which 
          it fulfills a request to access, exchange, or use electronic 
          health information not be considered information blocking?
171.302 Fees exception--When will an actor's practice of charging fees 
          for accessing, exchanging, or using electronic health 
          information not be considered information blocking?
171.303 Licensing exception--When will an actor's practice to license 
          interoperability elements in order for electronic health 
          information to be accessed, exchanged, or used not be 
          considered information blocking?

    Authority: 42 U.S.C. 300jj-52; 5 U.S.C. 552.

    Source: 85 FR 25955, May 1, 2020, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  171.100  Statutory basis and purpose.

    (a) Basis. This part implements section 3022 of the Public Health 
Service Act, 42 U.S.C. 300jj-52.
    (b) Purpose. The purpose of this part is to establish exceptions for 
reasonable and necessary activities that do not constitute information 
blocking as defined by section 3022(a)(1) of the Public Health Service 
Act, 42 U.S.C. 300jj-52.



Sec.  171.101  Applicability.

    (a) This part applies to health care providers, health IT developers 
of certified health IT, health information exchanges, and health 
information networks, as those terms are defined in Sec.  171.102.
    (b) Health care providers, health IT developers of certified health 
IT, health information exchanges, and health information networks must 
comply with this part on and after November 2, 2020.



Sec.  171.102  Definitions.

    For purposes of this part:

[[Page 657]]

    Access means the ability or means necessary to make electronic 
health information available for exchange or use.
    Actor means a health care provider, health IT developer of certified 
health IT, health information network or health information exchange.
    API Information Source is defined as it is in Sec.  170.404(c).
    API User is defined as it is in Sec.  170.404(c).
    Certified API Developer is defined as it is in Sec.  170.404(c).
    Certified API technology is defined as it is in Sec.  170.404(c).
    Electronic health information (EHI) means electronic protected 
health information as defined in 45 CFR 160.103 to the extent that it 
would be included in a designated record set as defined in 45 CFR 
164.501, regardless of whether the group of records are used or 
maintained by or for a covered entity as defined in 45 CFR 160.103, but 
EHI shall not include:
    (1) Psychotherapy notes as defined in 45 CFR 164.501; or
    (2) Information compiled in reasonable anticipation of, or for use 
in, a civil, criminal, or administrative action or proceeding.
    Exchange means the ability for electronic health information to be 
transmitted between and among different technologies, systems, 
platforms, or networks.
    Fee means any present or future obligation to pay money or provide 
any other thing of value.
    Health care provider has the same meaning as ``health care 
provider'' in 42 U.S.C. 300jj.
    Health information network or health information exchange means an 
individual or entity that determines, controls, or has the discretion to 
administer any requirement, policy, or agreement that permits, enables, 
or requires the use of any technology or services for access, exchange, 
or use of electronic health information:
    (1) Among more than two unaffiliated individuals or entities (other 
than the individual or entity to which this definition might apply) that 
are enabled to exchange with each other; and
    (2) That is for a treatment, payment, or health care operations 
purpose, as such terms are defined in 45 CFR 164.501 regardless of 
whether such individuals or entities are subject to the requirements of 
45 CFR parts 160 and 164.
    Health IT developer of certified health IT means an individual or 
entity, other than a health care provider that self-develops health IT 
for its own use, that develops or offers health information technology 
(as that term is defined in 42 U.S.C. 300jj(5)) and which has, at the 
time it engages in a practice that is the subject of an information 
blocking claim, one or more Health IT Modules certified under a program 
for the voluntary certification of health information technology that is 
kept or recognized by the National Coordinator pursuant to 42 U.S.C. 
300jj-11(c)(5) (ONC Health IT Certification Program).
    Information blocking is defined as it is in Sec.  171.103.
    Interfere with or interference means to prevent, materially 
discourage, or otherwise inhibit.
    Interoperability element means hardware, software, integrated 
technologies or related licenses, technical information, privileges, 
rights, intellectual property, upgrades, or services that:
    (1) May be necessary to access, exchange, or use electronic health 
information; and
    (2) Is/Are controlled by the actor, which includes the ability to 
confer all rights and authorizations necessary to use the element to 
enable the access, exchange, or use of electronic health information.
    Permissible purpose means a purpose for which a person is 
authorized, permitted, or required to access, exchange, or use 
electronic health information under applicable law.
    Person is defined as it is in 45 CFR 160.103.
    Practice means an act or omission by an actor.
    Use means the ability for electronic health information, once 
accessed or exchanged, to be understood and acted upon.



Sec.  171.103  Information blocking.

    (a) Information blocking means a practice that--

[[Page 658]]

    (1) Except as required by law or covered by an exception set forth 
in subpart B or subpart C of this part, is likely to interfere with 
access, exchange, or use of electronic health information; and
    (2) If conducted by a health information technology developer, 
health information network or health information exchange, such 
developer, network or exchange knows, or should know, that such practice 
is likely to interfere with, prevent, or materially discourage access, 
exchange, or use of electronic health information; or
    (3) If conducted by a health care provider, such provider knows that 
such practice is unreasonable and is likely to interfere with, prevent, 
or materially discourage access, exchange, or use of electronic health 
information.
    (b) Until May 2, 2022, electronic health information for purposes of 
paragraph (a) of this section is limited to the electronic health 
information identified by the data elements represented in the USCDI 
standard adopted in Sec.  170.213.



  Subpart B_Exceptions That Involve Not Fulfilling Requests to Access, 
             Exchange, or Use Electronic Health Information



Sec.  171.200  Availability and effect of exceptions.

    A practice shall not be treated as information blocking if the actor 
satisfies an exception to the information blocking provision as set 
forth in this subpart B by meeting all applicable requirements and 
conditions of the exception at all relevant times.



Sec.  171.201  Preventing harm exception--when will an actor's 
practice that is likely to interfere with the access, exchange, or 
use of electronic health information in order to prevent harm not
be considered information blocking?

    An actor's practice that is likely to interfere with the access, 
exchange, or use of electronic health information in order to prevent 
harm will not be considered information blocking when the practice meets 
the conditions in paragraphs (a) and (b) of this section, satisfies at 
least one condition from each of paragraphs (c), (d), and (f) of this 
section, and also meets the condition in paragraph (e) of this section 
when applicable.
    (a) Reasonable belief. The actor engaging in the practice must hold 
a reasonable belief that the practice will substantially reduce a risk 
of harm to a patient or another natural person that would otherwise 
arise from the access, exchange, or use of electronic health information 
affected by the practice. For purposes of this section, ``patient'' 
means a natural person who is the subject of the electronic health 
information affected by the practice.
    (b) Practice breadth. The practice must be no broader than necessary 
to substantially reduce the risk of harm that the practice is 
implemented to reduce.
    (c) Type of risk. The risk of harm must:
    (1) Be determined on an individualized basis in the exercise of 
professional judgment by a licensed health care professional who has a 
current or prior clinician-patient relationship with the patient whose 
electronic health information is affected by the determination; or
    (2) Arise from data that is known or reasonably suspected to be 
misidentified or mismatched, corrupt due to technical failure, or 
erroneous for another reason.
    (d) Type of harm. The type of harm must be one that could serve as 
grounds for a covered entity (as defined in Sec.  160.103 of this title) 
to deny access (as the term ``access'' is used in part 164 of this 
title) to an individual's protected health information under:
    (1) Section 164.524(a)(3)(iii) of this title where the practice is 
likely to, or in fact does, interfere with access, exchange, or use (as 
these terms are defined in Sec.  171.102) of the patient's electronic 
health information by their legal representative (including but not 
limited to personal representatives recognized pursuant to 45 CFR 
164.502) and the practice is implemented pursuant to an individualized 
determination of risk of harm consistent with paragraph (c)(1) of this 
section;
    (2) Section 164.524(a)(3)(ii) of this title where the practice is 
likely to, or

[[Page 659]]

in fact does, interfere with the patient's or their legal 
representative's access to, use or exchange (as these terms are defined 
in Sec.  171.102) of information that references another natural person 
and the practice is implemented pursuant to an individualized 
determination of risk of harm consistent with paragraph (c)(1) of this 
section;
    (3) Section 164.524(a)(3)(i) of this title where the practice is 
likely to, or in fact does, interfere with the patient's access, 
exchange, or use (as these terms are defined in Sec.  171.102) of their 
own electronic health information, regardless of whether the risk of 
harm that the practice is implemented to substantially reduce is 
consistent with paragraph (c)(1) or (2) of this section; or
    (4) Section 164.524(a)(3)(i) of this title where the practice is 
likely to, or in fact does, interfere with a legally permissible access, 
exchange, or use (as these terms are defined in Sec.  171.102) of 
electronic health information not described in paragraph (d)(1), (2), or 
(3) of this section, and regardless of whether the risk of harm the 
practice is implemented to substantially reduce is consistent with 
paragraph (c)(1) or (2) of this section.
    (e) Patient right to request review of individualized determination 
of risk of harm. Where the risk of harm is consistent with paragraph 
(c)(1) of this section, the actor must implement the practice in a 
manner consistent with any rights the individual patient whose 
electronic health information is affected may have under Sec.  
164.524(a)(4) of this title, or any Federal, State, or tribal law, to 
have the determination reviewed and potentially reversed.
    (f) Practice implemented based on an organizational policy or a 
determination specific to the facts and circumstances. The practice must 
be consistent with an organizational policy that meets paragraph (f)(1) 
of this section or, in the absence of an organizational policy 
applicable to the practice or to its use in particular circumstances, 
the practice must be based on a determination that meets paragraph 
(f)(2) of this section.
    (1) An organizational policy must:
    (i) Be in writing;
    (ii) Be based on relevant clinical, technical, and other appropriate 
expertise;
    (iii) Be implemented in a consistent and non-discriminatory manner; 
and
    (iv) Conform each practice to the conditions in paragraphs (a) and 
(b) of this section, as well as the conditions in paragraphs (c) through 
(e) of this section that are applicable to the practice and its use.
    (2) A determination must:
    (i) Be based on facts and circumstances known or reasonably believed 
by the actor at the time the determination was made and while the 
practice remains in use; and
    (ii) Be based on expertise relevant to implementing the practice 
consistent with the conditions in paragraphs (a) and (b) of this 
section, as well as the conditions in paragraphs (c) through (e) of this 
section that are applicable to the practice and its use in particular 
circumstances.



Sec.  171.202  Privacy exception--When will an actor's practice of not
fulfilling a request to access, exchange, or use electronic health
information in order to protect an individual's privacy not be 
considered information blocking?

    An actor's practice of not fulfilling a request to access, exchange, 
or use electronic health information in order to protect an individual's 
privacy will not be considered information blocking when the practice 
meets all of the requirements of at least one of the sub-exceptions in 
paragraphs (b) through (e) of this section.
    (a) Definitions in this section. (1) The term HIPAA Privacy Rule as 
used in this section means 45 CFR parts 160 and 164.
    (2) The term individual as used in this section means one or more of 
the following--
    (i) An individual as defined by 45 CFR 160.103.
    (ii) Any other natural person who is the subject of the electronic 
health information being accessed, exchanged, or used.
    (iii) A person who legally acts on behalf of a person described in 
paragraph (a)(1) or (2) of this section in making decisions related to 
health care as a

[[Page 660]]

personal representative, in accordance with 45 CFR 164.502(g).
    (iv) A person who is a legal representative of and can make health 
care decisions on behalf of any person described in paragraph (a)(1) or 
(2) of this section.
    (v) An executor, administrator, or other person having authority to 
act on behalf of a deceased person described in paragraph (a)(1) or (2) 
of this section or the individual's estate under State or other law.
    (b) Sub-exception--precondition not satisfied. To qualify for the 
exception on the basis that State or Federal law requires one or more 
preconditions for providing access, exchange, or use of electronic 
health information that have not been satisfied, the following 
requirements must be met--
    (1) The actor's practice is tailored to the applicable precondition 
not satisfied, is implemented in a consistent and non-discriminatory 
manner, and either:
    (i) Conforms to the actor's organizational policies and procedures 
that:
    (A) Are in writing;
    (B) Specify the criteria to be used by the actor to determine when 
the precondition would be satisfied and, as applicable, the steps that 
the actor will take to satisfy the precondition; and
    (C) Are implemented by the actor, including by providing training on 
the policies and procedures; or
    (ii) Are documented by the actor, on a case-by-case basis, 
identifying the criteria used by the actor to determine when the 
precondition would be satisfied, any criteria that were not met, and the 
reason why the criteria were not met.
    (2) If the precondition relies on the provision of a consent or 
authorization from an individual and the actor has received a version of 
such a consent or authorization that does not satisfy all elements of 
the precondition required under applicable law, the actor must:
    (i) Use reasonable efforts within its control to provide the 
individual with a consent or authorization form that satisfies all 
required elements of the precondition or provide other reasonable 
assistance to the individual to satisfy all required elements of the 
precondition; and
    (ii) Not improperly encourage or induce the individual to withhold 
the consent or authorization.
    (3) For purposes of determining whether the actor's privacy policies 
and procedures and actions satisfy the requirements of paragraphs 
(b)(1)(i) and (b)(2) above when the actor's operations are subject to 
multiple laws which have inconsistent preconditions, they shall be 
deemed to satisfy the requirements of the paragraphs if the actor has 
adopted uniform privacy policies and procedures to address the more 
restrictive preconditions.
    (c) Sub-exception--health IT developer of certified health IT not 
covered by HIPAA. If the actor is a health IT developer of certified 
health IT that is not required to comply with the HIPAA Privacy Rule, 
when engaging in a practice that promotes the privacy interests of an 
individual, the actor's organizational privacy policies must have been 
disclosed to the individuals and entities that use the actor's product 
or service before they agreed to use them, and must implement the 
practice according to a process described in the organizational privacy 
policies. The actor's organizational privacy policies must:
    (1) Comply with State and Federal laws, as applicable;
    (2) Be tailored to the specific privacy risk or interest being 
addressed; and
    (3) Be implemented in a consistent and non-discriminatory manner.
    (d) Sub-exception--denial of an individual's request for their 
electronic health information consistent with 45 CFR 164.524(a)(1) and 
(2). If an individual requests electronic health information under the 
right of access provision under 45 CFR 164.524(a)(1) from an actor that 
must comply with 45 CFR 164.524(a)(1), the actor's practice must be 
consistent with 45 CFR 164.524(a)(2).
    (e) Sub-exception--respecting an individual's request not to share 
information. Unless otherwise required by law, an actor may elect not to 
provide access, exchange, or use of an individual's electronic health 
information if the following requirements are met--

[[Page 661]]

    (1) The individual requests that the actor not provide such access, 
exchange, or use of electronic health information without any improper 
encouragement or inducement of the request by the actor;
    (2) The actor documents the request within a reasonable time period;
    (3) The actor's practice is implemented in a consistent and non-
discriminatory manner; and
    (4) An actor may terminate an individual's request for a restriction 
to not provide such access, exchange, or use of the individual's 
electronic health information only if:
    (i) The individual agrees to the termination in writing or requests 
the termination in writing;
    (ii) The individual orally agrees to the termination and the oral 
agreement is documented by the actor; or
    (iii) The actor informs the individual that it is terminating its 
agreement to not provide such access, exchange, or use of the 
individual's electronic health information except that such termination 
is:
    (A) Not effective to the extent prohibited by applicable Federal or 
State law; and
    (B) Only applicable to electronic health information created or 
received after the actor has so informed the individual of the 
termination.



Sec.  171.203  Security exception--When will an actor's practice that
is likely to interfere with the access, exchange, or use of electronic
health information in order to protect the security of electronic
health nformation not be considered information blocking?

    An actor's practice that is likely to interfere with the access, 
exchange, or use of electronic health information in order to protect 
the security of electronic health information will not be considered 
information blocking when the practice meets the conditions in 
paragraphs (a), (b), and (c) of this section, and in addition meets 
either the condition in paragraph (d) of this section or the condition 
in paragraph (e) of this section.
    (a) The practice must be directly related to safeguarding the 
confidentiality, integrity, and availability of electronic health 
information.
    (b) The practice must be tailored to the specific security risk 
being addressed.
    (c) The practice must be implemented in a consistent and non-
discriminatory manner.
    (d) If the practice implements an organizational security policy, 
the policy must--
    (1) Be in writing;
    (2) Have been prepared on the basis of, and be directly responsive 
to, security risks identified and assessed by or on behalf of the actor;
    (3) Align with one or more applicable consensus-based standards or 
best practice guidance; and
    (4) Provide objective timeframes and other parameters for 
identifying, responding to, and addressing security incidents.
    (e) If the practice does not implement an organizational security 
policy, the actor must have made a determination in each case, based on 
the particularized facts and circumstances, that:
    (1) The practice is necessary to mitigate the security risk to 
electronic health information; and
    (2) There are no reasonable and appropriate alternatives to the 
practice that address the security risk that are less likely to 
interfere with, prevent, or materially discourage access, exchange or 
use of electronic health information.



Sec.  171.204  Infeasibility exception--When will an actor's practice
of not fulfilling a request to access, exchange, or use electronic
health information due to the infeasibility of the request not be
considered information blocking?

    An actor's practice of not fulfilling a request to access, exchange, 
or use electronic health information due to the infeasibility of the 
request will not be considered information blocking when the practice 
meets one of the conditions in paragraph (a) of this section and meets 
the requirements in paragraph (b) of this section.
    (a) Conditions--(1) Uncontrollable events. The actor cannot fulfill 
the request for access, exchange, or use of electronic health 
information due to a natural or human-made disaster, public

[[Page 662]]

health emergency, public safety incident, war, terrorist attack, civil 
insurrection, strike or other labor unrest, telecommunication or 
internet service interruption, or act of military, civil or regulatory 
authority.
    (2) Segmentation. The actor cannot fulfill the request for access, 
exchange, or use of electronic health information because the actor 
cannot unambiguously segment the requested electronic health information 
from electronic health information that:
    (i) Cannot be made available due to an individual's preference or 
because the electronic health information cannot be made available by 
law; or
    (ii) May be withheld in accordance with Sec.  171.201.
    (3) Infeasible under the circumstances. (i) The actor demonstrates, 
prior to responding to the request pursuant to paragraph (b) of this 
section, through a contemporaneous written record or other documentation 
its consistent and non-discriminatory consideration of the following 
factors that led to its determination that complying with the request 
would be infeasible under the circumstances:
    (A) The type of electronic health information and the purposes for 
which it may be needed;
    (B) The cost to the actor of complying with the request in the 
manner requested;
    (C) The financial and technical resources available to the actor;
    (D) Whether the actor's practice is non-discriminatory and the actor 
provides the same access, exchange, or use of electronic health 
information to its companies or to its customers, suppliers, partners, 
and other persons with whom it has a business relationship;
    (E) Whether the actor owns or has control over a predominant 
technology, platform, health information exchange, or health information 
network through which electronic health information is accessed or 
exchanged; and
    (F) Why the actor was unable to provide access, exchange, or use of 
electronic health information consistent with the exception in Sec.  
171.301.
    (ii) In determining whether the circumstances were infeasible under 
paragraph (a)(3)(i) of this section, it shall not be considered whether 
the manner requested would have:
    (A) Facilitated competition with the actor.
    (B) Prevented the actor from charging a fee or resulted in a reduced 
fee.
    (b) Responding to requests. If an actor does not fulfill a request 
for access, exchange, or use of electronic health information for any of 
the reasons provided in paragraph (a) of this section, the actor must, 
within ten business days of receipt of the request, provide to the 
requestor in writing the reason(s) why the request is infeasible.



Sec.  171.205  Health IT performance exception--When will an actor's 
practice that is implemented to maintain or improve health IT 
performance and that is likely to interfere with the access, exchange,
or use of electronic health information not be considered information 
blocking?

    An actor's practice that is implemented to maintain or improve 
health IT performance and that is likely to interfere with the access, 
exchange, or use of electronic health information will not be considered 
information blocking when the practice meets a condition in paragraph 
(a), (b), (c), or (d) of this section, as applicable to the particular 
practice and the reason for its implementation.
    (a) Maintenance and improvements to health IT. When an actor 
implements a practice that makes health IT under that actor's control 
temporarily unavailable, or temporarily degrades the performance of 
health IT, in order to perform maintenance or improvements to the health 
IT, the actor's practice must be--
    (1) Implemented for a period of time no longer than necessary to 
complete the maintenance or improvements for which the health IT was 
made unavailable or the health IT's performance degraded;
    (2) Implemented in a consistent and non-discriminatory manner; and
    (3) If the unavailability or degradation is initiated by a health IT 
developer of certified health IT, health information exchange, or health 
information network:
    (i) Planned. Consistent with existing service level agreements 
between the

[[Page 663]]

individual or entity to whom the health IT developer of certified health 
IT, health information exchange, or health information network supplied 
the health IT; or
    (ii) Unplanned. Consistent with existing service level agreements 
between the individual or entity; or agreed to by the individual or 
entity to whom the health IT developer of certified health IT, health 
information exchange, or health information network supplied the health 
IT.
    (b) Assured level of performance. An actor may take action against a 
third-party application that is negatively impacting the health IT's 
performance, provided that the practice is--
    (1) For a period of time no longer than necessary to resolve any 
negative impacts;
    (2) Implemented in a consistent and non-discriminatory manner; and
    (3) Consistent with existing service level agreements, where 
applicable.
    (c) Practices that prevent harm. If the unavailability of health IT 
for maintenance or improvements is initiated by an actor in response to 
a risk of harm to a patient or another person, the actor does not need 
to satisfy the requirements of this section, but must comply with all 
requirements of Sec.  171.201 at all relevant times to qualify for an 
exception.
    (d) Security-related practices. If the unavailability of health IT 
for maintenance or improvements is initiated by an actor in response to 
a security risk to electronic health information, the actor does not 
need to satisfy the requirements of this section, but must comply with 
all requirements of Sec.  171.203 at all relevant times to qualify for 
an exception.



Subpart C_Exceptions That Involve Procedures for Fulfilling Requests to 
         Access, Exchange, or Use Electronic Health Information



Sec.  171.300  Availability and effect of exceptions.

    A practice shall not be treated as information blocking if the actor 
satisfies an exception to the information blocking provision as set 
forth in this subpart C by meeting all applicable requirements and 
conditions of the exception at all relevant times.



Sec.  171.301  Content and manner exception--When will an actor's 
practice of limiting the content of its response to or the manner
in which it fulfills a request to access, exchange, or use electronic
health information not be considered information blocking?

    An actor's practice of limiting the content of its response to or 
the manner in which it fulfills a request to access, exchange, or use 
electronic health information will not be considered information 
blocking when the practice meets all of the following conditions.
    (a) Content condition--electronic health information. An actor must 
respond to a request to access, exchange, or use electronic health 
information with--
    (1) USCDI. For up to May 2, 2022, at a minimum, the electronic 
health information identified by the data elements represented in the 
USCDI standard adopted in Sec.  170.213.
    (2) All electronic health information. On and after May 2, 2022, 
electronic health information as defined in Sec.  171.102.
    (b) Manner condition--(1) Manner requested. (i) An actor must 
fulfill a request described in paragraph (a) of this section in any 
manner requested, unless the actor is technically unable to fulfill the 
request or cannot reach agreeable terms with the requestor to fulfill 
the request.
    (ii) If an actor fulfills a request described in paragraph (a) of 
this section in any manner requested:
    (A) Any fees charged by the actor in relation to fulfilling the 
response are not required to satisfy the exception in Sec.  171.302; and
    (B) Any license of interoperability elements granted by the actor in 
relation to fulfilling the request is not required to satisfy the 
exception in Sec.  171.303.
    (2) Alternative manner. If an actor does not fulfill a request 
described in paragraph (a) of this section in any manner requested 
because it is technically unable to fulfill the request or cannot reach 
agreeable terms with the requestor to fulfill the request, the actor 
must fulfill the request in an alternative manner, as follows:

[[Page 664]]

    (i) The actor must fulfill the request without unnecessary delay in 
the following order of priority, starting with paragraph (b)(2)(i)(A) of 
this section and only proceeding to the next consecutive paragraph if 
the actor is technically unable to fulfill the request in the manner 
identified in a paragraph.
    (A) Using technology certified to standard(s) adopted in part 170 
that is specified by the requestor.
    (B) Using content and transport standards specified by the requestor 
and published by:
    (1) The Federal Government; or
    (2) A standards developing organization accredited by the American 
National Standards Institute.
    (C) Using an alternative machine-readable format, including the 
means to interpret the electronic health information, agreed upon with 
the requestor.
    (ii) Any fees charged by the actor in relation to fulfilling the 
request are required to satisfy the exception in Sec.  171.302.
    (iii) Any license of interoperability elements granted by the actor 
in relation to fulfilling the request is required to satisfy the 
exception in Sec.  171.303.



Sec.  171.302  Fees exception--When will an actor's practice of
charging fees for accessing, exchanging, or using electronic health
information not be considered information blocking?

    An actor's practice of charging fees, including fees that result in 
a reasonable profit margin, for accessing, exchanging, or using 
electronic health information will not be considered information 
blocking when the practice meets the conditions in paragraph (a) of this 
section, does not include any of the excluded fees in paragraph (b) of 
this section, and, as applicable, meets the condition in paragraph (c) 
of this section.
    (a) Basis for fees condition. (1) The fees an actor charges must 
be--
    (i) Based on objective and verifiable criteria that are uniformly 
applied for all similarly situated classes of persons or entities and 
requests;
    (ii) Reasonably related to the actor's costs of providing the type 
of access, exchange, or use of electronic health information to, or at 
the request of, the person or entity to whom the fee is charged;
    (iii) Reasonably allocated among all similarly situated persons or 
entities to whom the technology or service is supplied, or for whom the 
technology is supported; and
    (iv) Based on costs not otherwise recovered for the same instance of 
service to a provider and third party.
    (2) The fees an actor charges must not be based on--
    (i) Whether the requestor or other person is a competitor, potential 
competitor, or will be using the electronic health information in a way 
that facilitates competition with the actor;
    (ii) Sales, profit, revenue, or other value that the requestor or 
other persons derive or may derive from the access, exchange, or use of 
the electronic health information;
    (iii) Costs the actor incurred due to the health IT being designed 
or implemented in a non-standard way, unless the requestor agreed to the 
fee associated with the non-standard design or implementation to access, 
exchange, or use the electronic health information;
    (iv) Costs associated with intangible assets other than the actual 
development or acquisition costs of such assets;
    (v) Opportunity costs unrelated to the access, exchange, or use of 
electronic health information; or
    (vi) Any costs that led to the creation of intellectual property, if 
the actor charged a royalty for that intellectual property pursuant to 
Sec.  171.303 and that royalty included the development costs for the 
creation of the intellectual property.
    (b) Excluded fees condition. This exception does not apply to--
    (1) A fee prohibited by 45 CFR 164.524(c)(4);
    (2) A fee based in any part on the electronic access of an 
individual's EHI by the individual, their personal representative, or 
another person or entity designated by the individual;
    (3) A fee to perform an export of electronic health information via 
the capability of health IT certified to Sec.  170.315(b)(10) of this 
subchapter for the purposes of switching health IT or to provide 
patients their electronic health information; and

[[Page 665]]

    (4) A fee to export or convert data from an EHR technology that was 
not agreed to in writing at the time the technology was acquired.
    (c) Compliance with the Conditions of Certification condition. 
Notwithstanding any other provision of this exception, if the actor is a 
health IT developer subject to the Conditions of Certification in Sec.  
170.402(a)(4), Sec.  170.404, or both of this subchapter, the actor must 
comply with all requirements of such conditions for all practices and at 
all relevant times.
    (d) Definition of Electronic access. The following definition 
applies to this section:
    Electronic access means an internet-based method that makes 
electronic health information available at the time the electronic 
health information is requested and where no manual effort is required 
to fulfill the request.



Sec.  171.303  Licensing exception--When will an actor's practice to 
license interoperability elements in order for electronic health 
information to be accessed, exchanged, or used not be considered
information blocking?

    An actor's practice to license interoperability elements for 
electronic health information to be accessed, exchanged, or used will 
not be considered information blocking when the practice meets all of 
the following conditions.
    (a) Negotiating a license conditions. Upon receiving a request to 
license an interoperability element for the access, exchange, or use of 
electronic health information, the actor must--
    (1) Begin license negotiations with the requestor within 10 business 
days from receipt of the request; and
    (2) Negotiate a license with the requestor, subject to the licensing 
conditions in paragraph (b) of this section, within 30 business days 
from receipt of the request.
    (b) Licensing conditions. The license provided for the 
interoperability element(s) needed to access, exchange, or use 
electronic health information must meet the following conditions:
    (1) Scope of rights. The license must provide all rights necessary 
to:
    (i) Enable the access, exchange, or use of electronic health 
information; and
    (ii) Achieve the intended access, exchange, or use of electronic 
health information via the interoperability element(s).
    (2) Reasonable royalty. If the actor charges a royalty for the use 
of the interoperability elements described in paragraph (a) of this 
section, the royalty must be reasonable and comply with the following 
requirements:
    (i) The royalty must be non-discriminatory, consistent with 
paragraph (c)(3) of this section.
    (ii) The royalty must be based solely on the independent value of 
the actor's technology to the licensee's products, not on any strategic 
value stemming from the actor's control over essential means of 
accessing, exchanging, or using electronic health information.
    (iii) If the actor has licensed the interoperability element through 
a standards developing organization in accordance with such 
organization's policies regarding the licensing of standards-essential 
technologies on terms consistent with those in this exception, the actor 
may charge a royalty that is consistent with such policies.
    (iv) An actor may not charge a royalty for intellectual property if 
the actor recovered any development costs pursuant to Sec.  171.302 that 
led to the creation of the intellectual property.
    (3) Non-discriminatory terms. The terms (including royalty terms) on 
which the actor licenses and otherwise provides the interoperability 
elements must be non-discriminatory and comply with the following 
requirements:
    (i) The terms must be based on objective and verifiable criteria 
that are uniformly applied for all similarly situated classes of persons 
and requests.
    (ii) The terms must not be based in any part on--
    (A) Whether the requestor or other person is a competitor, potential 
competitor, or will be using electronic health information obtained via 
the interoperability elements in a way that facilitates competition with 
the actor; or

[[Page 666]]

    (B) The revenue or other value the requestor may derive from access, 
exchange, or use of electronic health information obtained via the 
interoperability elements.
    (4) Collateral terms. The actor must not require the licensee or its 
agents or contractors to do, or to agree to do, any of the following--
    (i) Not compete with the actor in any product, service, or market.
    (ii) Deal exclusively with the actor in any product, service, or 
market.
    (iii) Obtain additional licenses, products, or services that are not 
related to or can be unbundled from the requested interoperability 
elements.
    (iv) License, grant, assign, or transfer to the actor any 
intellectual property of the licensee.
    (v) Pay a fee of any kind whatsoever, except as described in 
paragraph (b)(2) of this section, unless the practice meets the 
requirements of the exception in Sec.  171.302.
    (5) Non-disclosure agreement. The actor may require a reasonable 
non-disclosure agreement that is no broader than necessary to prevent 
unauthorized disclosure of the actor's trade secrets, provided--
    (i) The agreement states with particularity all information the 
actor claims as trade secrets; and
    (ii) Such information meets the definition of a trade secret under 
applicable law.
    (c) Additional conditions relating to the provision of 
interoperability elements. The actor must not engage in any practice 
that has any of the following purposes or effects.
    (1) Impeding the efficient use of the interoperability elements to 
access, exchange, or use electronic health information for any 
permissible purpose.
    (2) Impeding the efficient development, distribution, deployment, or 
use of an interoperable product or service for which there is actual or 
potential demand.
    (3) Degrading the performance or interoperability of the licensee's 
products or services, unless necessary to improve the actor's technology 
and after affording the licensee a reasonable opportunity to update its 
technology to maintain interoperability.

                        PARTS 172	179 [RESERVED]

[[Page 667]]



              Subchapter E_Price Transparency (Eff. 1-1-21)



    Effective Date Note: At 84 FR 65602, Nov. 27, 2019, subtitle A was 
amended by adding subchapter E, consisting of parts 180 to 199, 
effective Jan. 1, 2021.



PART 180_HOSPITAL PRICE TRANSPARENCY (Eff. 1-1-21)--Table of Contents



                      Subpart A_General Provisions

Sec.
180.10 Basis and scope.
180.20 Definitions.
180.30 Applicability.

                Subpart B_Public Disclosure Requirements

180.40 General requirements.
180.50 Requirements for making public hospital standard charges for all 
          items and services.
180.60 Requirements for displaying shoppable services in a consumer-
          friendly manner.

          Subpart C_Monitoring and Penalties for Noncompliance

180.70 Monitoring and enforcement.
180.80 Corrective action plans.
180.90 Civil monetary penalties.

              Subpart D_Appeals of Civil Monetary Penalties

180.100 Appeal of penalty.
180.110 Failure to request a hearing.

    Authority: 42 U.S.C. 300gg-18, 42 U.S.C. 1302.

    Effective Date Note: At 84 FR 65602, Nov. 27, 2019, subtitle A was 
amended by adding subchapter E, consisting of parts 180 to 199, 
effective Jan. 1, 2021.



                      Subpart A_General Provisions



Sec.  180.10  Basis and scope.

    This part implements section 2718(e) of the Public Health Service 
(PHS) Act, which requires each hospital operating within the United 
States, for each year, to establish, update, and make public a list of 
the hospital's standard charges for items and services provided by the 
hospital, including for diagnosis-related groups (DRGs) established 
under section 1886(d)(4) of the Social Security Act. This part also 
implements section 2718(b)(3) of the PHS Act, to the extent that section 
authorizes CMS to promulgate regulations for enforcing section 2718(e). 
This part also implements section 1102(a) of the Social Security Act, 
which authorizes the Secretary to make and publish rules and 
regulations, not inconsistent with that Act, as may be necessary to the 
efficient administration of the functions for which the Secretary is 
charged under that Act.



Sec.  180.20  Definitions.

    The following definitions apply to this part, unless specified 
otherwise:
    Ancillary service means an item or service a hospital customarily 
provides as part of or in conjunction with a shoppable primary service.
    Chargemaster (Charge Description Master or CDM) means the list of 
all individual items and services maintained by a hospital for which the 
hospital has established a charge.
    De-identified maximum negotiated charge means the highest charge 
that a hospital has negotiated with all third party payers for an item 
or service.
    De-identified minimum negotiated charge means the lowest charge that 
a hospital has negotiated with all third party payers for an item or 
service.
    Discounted cash price means the charge that applies to an individual 
who pays cash (or cash equivalent) for a hospital item or service.
    Gross charge means the charge for an individual item or service that 
is reflected on a hospital's chargemaster, absent any discounts.
    Hospital means an institution in any State in which State or 
applicable local law provides for the licensing of hospitals, that is 
licensed as a hospital pursuant to such law or is approved, by the 
agency of such State or locality responsible for licensing hospitals, as 
meeting the standards established for such licensing. For purposes of 
this definition, a State includes each of the several States, the 
District of Columbia, Puerto Rico, the Virgin Islands, Guam, American 
Samoa, and the Northern Mariana Islands.
    Items and services means all items and services, including 
individual items

[[Page 668]]

and services and service packages, that could be provided by a hospital 
to a patient in connection with an inpatient admission or an outpatient 
department visit for which the hospital has established a standard 
charge. Examples include, but are not limited to, the following:
    (1) Supplies and procedures.
    (2) Room and board.
    (3) Use of the facility and other items (generally described as 
facility fees).
    (4) Services of employed physicians and non-physician practitioners 
(generally reflected as professional charges).
    (5) Any other items or services for which a hospital has established 
a standard charge.
    Machine-readable format means a digital representation of data or 
information in a file that can be imported or read into a computer 
system for further processing. Examples of machine-readable formats 
include, but are not limited to, .XML, .JSON and .CSV formats.
    Payer-specific negotiated charge means the charge that a hospital 
has negotiated with a third party payer for an item or service.
    Service package means an aggregation of individual items and 
services into a single service with a single charge.
    Shoppable service means a service that can be scheduled by a 
healthcare consumer in advance.
    Standard charge means the regular rate established by the hospital 
for an item or service provided to a specific group of paying patients. 
This includes all of the following as defined under this section:
    (1) Gross charge.
    (2) Payer-specific negotiated charge.
    (3) De-identified minimum negotiated charge.
    (4) De-identified maximum negotiated charge.
    (5) Discounted cash price.
    Third party payer means an entity that is, by statute, contract, or 
agreement, legally responsible for payment of a claim for a healthcare 
item or service.



Sec.  180.30  Applicability.

    (a) General applicability. Except as provided in paragraph (b) of 
this section, the requirements of this part apply to hospitals as 
defined at Sec.  180.20.
    (b) Exception. Federally owned or operated hospitals are deemed by 
CMS to be in compliance with the requirements of this part including but 
not limited to:
    (1) Federally owned hospital facilities, including facilities 
operated by the U.S. Department of Veterans Affairs and Military 
Treatment Facilities operated by the U.S. Department of Defense.
    (2) Hospitals operated by an Indian Health Program as defined in 
section 4(12) of the Indian Health Care Improvement Act.
    (c) Online availability. Unless otherwise stated, hospital charge 
information must be made public electronically via the internet.



                Subpart B_Public Disclosure Requirements



Sec.  180.40  General requirements.

    A hospital must make public the following:
    (a) A machine-readable file containing a list of all standard 
charges for all items and services as provided in Sec.  180.50.
    (b) A consumer-friendly list of standard charges for a limited set 
of shoppable services as provided in Sec.  180.60.



Sec.  180.50  Requirements for making public hospital standard charges
for all items and services.

    (a) General rules. (1) A hospital must establish, update, and make 
public a list of all standard charges for all items and services online 
in the form and manner specified in this section.
    (2) Each hospital location operating under a single hospital license 
(or approval) that has a different set of standard charges than the 
other location(s) operating under the same hospital license (or 
approval) must separately make public the standard charges applicable to 
that location.
    (b) Required data elements. A hospital must include all of the 
following corresponding data elements in its list of standard charges, 
as applicable:
    (1) Description of each item or service provided by the hospital.

[[Page 669]]

    (2) Gross charge that applies to each individual item or service 
when provided in, as applicable, the hospital inpatient setting and 
outpatient department setting.
    (3) Payer-specific negotiated charge that applies to each item or 
service when provided in, as applicable, the hospital inpatient setting 
and outpatient department setting. Each payer-specific negotiated charge 
must be clearly associated with the name of the third party payer and 
plan.
    (4) De-identified minimum negotiated charge that applies to each 
item or service when provided in, as applicable, the hospital inpatient 
setting and outpatient department setting.
    (5) De-identified maximum negotiated charge that applies to each 
item or service when provided in, as applicable, the hospital inpatient 
setting and outpatient department setting.
    (6) Discounted cash price that applies to each item or service when 
provided in, as applicable, the hospital inpatient setting and 
outpatient department setting.
    (7) Any code used by the hospital for purposes of accounting or 
billing for the item or service, including, but not limited to, the 
Current Procedural Terminology (CPT) code, the Healthcare Common 
Procedure Coding System (HCPCS) code, the Diagnosis Related Group (DRG), 
the National Drug Code (NDC), or other common payer identifier.
    (c) Format. The information described in paragraph (b) of this 
section must be published in a single digital file that is in a machine-
readable format.
    (d) Location and accessibility. (1) A hospital must select a 
publicly available website for purposes of making public the standard 
charge information required under paragraph (b) of this section.
    (2) The standard charge information must be displayed in a prominent 
manner and clearly identified with the hospital location with which the 
standard charge information is associated.
    (3) The hospital must ensure that the standard charge information is 
easily accessible, without barriers, including but not limited to 
ensuring the information is accessible:
    (i) Free of charge;
    (ii) Without having to establish a user account or password; and
    (iii) Without having to submit personal identifying information 
(PII).
    (4) The digital file and standard charge information contained in 
that file must be digitally searchable.
    (5) The file must use the following naming convention specified by 
CMS, specifically: __standardcharges.[json[verbar]xml[verbar]csv].
    (e) Frequency of updates. The hospital must update the standard 
charge information described in paragraph (b) of this section at least 
once annually. The hospital must clearly indicate the date that the 
standard charge data was most recently updated, either within the file 
itself or otherwise clearly associated with the file.



Sec.  180.60  Requirements for displaying shoppable services in a
consumer-friendly manner.

    (a) General rules. (1) A hospital must make public the standard 
charges identified in paragraphs (b)(3) through (6) of this section, for 
as many of the 70 CMS-specified shoppable services that are provided by 
the hospital, and as many additional hospital-selected shoppable 
services as is necessary for a combined total of at least 300 shoppable 
services.
    (i) In selecting a shoppable service for purposes of this section, a 
hospital must consider the rate at which it provides and bills for that 
shoppable service.
    (ii) If a hospital does not provide 300 shoppable services, the 
hospital must make public the information specified in paragraph (b) of 
this section for as many shoppable services as it provides.
    (2) A hospital is deemed by CMS to meet the requirements of this 
section if the hospital maintains an internet-based price estimator tool 
which meets the following requirements.
    (i) Provides estimates for as many of the 70 CMS-specified shoppable 
services that are provided by the hospital, and as many additional 
hospital-selected shoppable services as is necessary for a combined 
total of at least 300 shoppable services.
    (ii) Allows healthcare consumers to, at the time they use the tool, 
obtain an

[[Page 670]]

estimate of the amount they will be obligated to pay the hospital for 
the shoppable service.
    (iii) Is prominently displayed on the hospital's website and 
accessible to the public without charge and without having to register 
or establish a user account or password.
    (b) Required data elements. A hospital must include, as applicable, 
all of the following corresponding data elements when displaying its 
standard charges (identified in paragraphs (b)(3) through (6) of this 
section) for its list of shoppable services selected under paragraph 
(a)(1) of this section:
    (1) A plain-language description of each shoppable service.
    (2) An indicator when one or more of the CMS-specified shoppable 
services are not offered by the hospital.
    (3) The payer-specific negotiated charge that applies to each 
shoppable service (and to each ancillary service, as applicable). Each 
list of payer-specific negotiated charges must be clearly associated 
with the name of the third party payer and plan.
    (4) The discounted cash price that applies to each shoppable service 
(and corresponding ancillary services, as applicable). If the hospital 
does not offer a discounted cash price for one or more shoppable 
services (or corresponding ancillary services), the hospital must list 
its undiscounted gross charge for the shoppable service (and 
corresponding ancillary services, as applicable).
    (5) The de-identified minimum negotiated charge that applies to each 
shoppable service (and to each corresponding ancillary service, as 
applicable).
    (6) The de-identified maximum negotiated charge that applies to each 
shoppable service (and to each corresponding ancillary service, as 
applicable).
    (7) The location at which the shoppable service is provided, 
including whether the standard charges identified in paragraphs (b)(3) 
through (6) of this section for the shoppable service apply at that 
location to the provision of that shoppable service in the inpatient 
setting, the outpatient department setting, or both.
    (8) Any primary code used by the hospital for purposes of accounting 
or billing for the shoppable service, including, as applicable, the 
Current Procedural Terminology (CPT) code, the Healthcare Common 
Procedure Coding System (HCPCS) code, the Diagnosis Related Group (DRG), 
or other common service billing code.
    (c) Format. A hospital has discretion to choose a format for making 
public the information described in paragraph (b) of this section 
online.
    (d) Location and accessibility of online data. (1) A hospital must 
select an appropriate publicly available internet location for purposes 
of making public the information described in paragraph (b) of this 
section.
    (2) The information must be displayed in a prominent manner that 
identifies the hospital location with which the information is 
associated.
    (3) The shoppable services information must be easily accessible, 
without barriers, including but not limited to ensuring the information 
is:
    (i) Free of charge.
    (ii) Accessible without having to register or establish a user 
account or password.
    (iii) Accessible without having to submit personal identifying 
information (PII).
    (iv) Searchable by service description, billing code, and payer.
    (e) Frequency. The hospital must update the standard charge 
information described in paragraph (b) of this section at least once 
annually. The hospital must clearly indicate the date that the 
information was most recently updated.



          Subpart C_Monitoring and Penalties for Noncompliance



Sec.  180.70  Monitoring and enforcement.

    (a) Monitoring. (1) CMS evaluates whether a hospital has complied 
with the requirements under Sec. Sec.  180.40, 180.50, and 180.60.
    (2) CMS may use methods to monitor and assess hospital compliance 
with the requirements under this part, including, but not limited to, 
the following, as appropriate:

[[Page 671]]

    (i) CMS' evaluation of complaints made by individuals or entities to 
CMS.
    (ii) CMS review of individuals' or entities' analysis of 
noncompliance.
    (iii) CMS audit of hospitals' websites.
    (b) Actions to address hospital noncompliance. If CMS concludes that 
the hospital is noncompliant with one or more of the requirements of 
Sec.  180.40, Sec.  180.50, or Sec.  180.60, CMS may take any of the 
following actions, which generally, but not necessarily, will occur in 
the following order:
    (1) Provide a written warning notice to the hospital of the specific 
violation(s).
    (2) Request a corrective action plan from the hospital if its 
noncompliance constitutes a material violation of one or more 
requirements, according to Sec.  180.80.
    (3) Impose a civil monetary penalty on the hospital and publicize 
the penalty on a CMS website according to Sec.  180.90 if the hospital 
fails to respond to CMS' request to submit a corrective action plan or 
comply with the requirements of a corrective action plan.



Sec.  180.80  Corrective action plans.

    (a) Material violations requiring a corrective action plan. CMS 
determines if a hospital's noncompliance with the requirements of this 
part constitutes material violation(s) requiring a corrective action 
plan. A material violation may include, but is not limited to, the 
following:
    (1) A hospital's failure to make public its standard charges 
required by Sec.  180.40.
    (2) A hospital's failure to make public its standard charges in the 
form and manner required under Sec. Sec.  180.50 and 180.60.
    (b) Notice of violation. CMS may request that a hospital submit a 
corrective action plan, specified in a notice of violation issued by CMS 
to a hospital.
    (c) Compliance with corrective action plan requests and corrective 
actions. (1) A hospital required to submit a corrective action plan must 
do so, in the form and manner, and by the deadline, specified in the 
notice of violation issued by CMS to the hospital and must comply with 
the requirements of the corrective action plan.
    (2) A hospital's corrective action plan must specify elements 
including, but not limited to:
    (i) The corrective actions or processes the hospital will take to 
address the deficiency or deficiencies identified by CMS.
    (ii) The timeframe by which the hospital will complete the 
corrective action.
    (3) A corrective action plan is subject to CMS review and approval.
    (4) After CMS' review and approval of a hospital's corrective action 
plan, CMS may monitor and evaluate the hospital's compliance with the 
corrective actions.
    (d) Noncompliance with corrective action plan requests and 
requirements. (1) A hospital's failure to respond to CMS' request to 
submit a corrective action plan includes failure to submit a corrective 
action plan in the form, manner, or by the deadline, specified in a 
notice of violation issued by CMS to the hospital.
    (2) A hospital's failure to comply with the requirements of a 
corrective action plan includes failure to correct violation(s) within 
the specified timeframes.



Sec.  180.90  Civil monetary penalties.

    (a) Basis for imposing civil monetary penalties. CMS may impose a 
civil monetary penalty on a hospital identified as noncompliant 
according to Sec.  180.70, and that fails to respond to CMS' request to 
submit a corrective action plan or comply with the requirements of a 
corrective action plan as described in Sec.  180.80(d).
    (b) Notice of imposition of a civil monetary penalty. (1) If CMS 
imposes a penalty in accordance with this part, CMS provides a written 
notice of imposition of a civil monetary penalty to the hospital via 
certified mail or another form of traceable carrier.
    (2) This notice to the hospital may include, but is not limited to, 
the following:
    (i) The basis for the hospital's noncompliance, including, but not 
limited to, the following:
    (A) CMS' determination as to which requirement(s) the hospital has 
violated.

[[Page 672]]

    (B) The hospital's failure to respond to CMS' request to submit a 
corrective action plan or comply with the requirements of a corrective 
action plan, as described in Sec.  180.80(d).
    (ii) CMS' determination as to the effective date for the 
violation(s). This date is the latest date of the following:
    (A) The first day the hospital is required to meet the requirements 
of this part.
    (B) If a hospital previously met the requirements of this part but 
did not update the information annually as required, the date 12 months 
after the date of the last annual update specified in information posted 
by the hospital.
    (C) A date determined by CMS, such as one resulting from monitoring 
activities specified in Sec.  180.70, or development of a corrective 
action plan as specified in Sec.  180.80.
    (iii) The amount of the penalty as of the date of the notice.
    (iv) A statement that a civil monetary penalty may continue to be 
imposed for continuing violation(s).
    (v) Payment instructions.
    (vi) Intent to publicize the hospital's noncompliance and CMS' 
determination to impose a civil monetary penalty on the hospital for 
noncompliance with the requirements of this part by posting the notice 
of imposition of a civil monetary penalty on a CMS website.
    (vii) A statement of the hospital's right to a hearing according to 
subpart D of this part.
    (viii) A statement that the hospital's failure to request a hearing 
within 30 calendar days of the issuance of the notice permits the 
imposition of the penalty, and any subsequent penalties pursuant to 
continuing violations, without right of appeal in accordance with Sec.  
180.110.
    (3) If the civil monetary penalty is upheld, in part, by a final and 
binding decision according to subpart D of this part, CMS will issue a 
modified notice of imposition of a civil monetary penalty, to conform to 
the adjudicated finding.
    (c) Amount of the civil monetary penalty. (1) CMS may impose a civil 
monetary penalty upon a hospital for a violation of each requirement of 
this part.
    (2) The maximum daily dollar amount for a civil monetary penalty to 
which a hospital may be subject is $300. Even if the hospital is in 
violation of multiple discrete requirements of this part, the maximum 
total sum that a single hospital may be assessed per day is $300.
    (3) The amount of the civil monetary penalty will be adjusted 
annually using the multiplier determined by OMB for annually adjusting 
civil monetary penalty amounts under part 102 of this title.
    (d) Timing of payment of civil monetary penalty. (1) A hospital must 
pay the civil monetary penalty in full within 60 calendar days after the 
date of the notice of imposition of a civil monetary penalty from CMS 
under paragraph (b) of this section.
    (2) In the event a hospital requests a hearing, pursuant to subpart 
D of this part, the hospital must pay the amount in full within 60 
calendar days after the date of a final and binding decision, according 
to subpart D of this part, to uphold, in whole or in part, the civil 
monetary penalty.
    (3) If the 60th calendar day described in paragraphs (d)(1) and (2) 
of this section is a weekend or a Federal holiday, then the timeframe is 
extended until the end of the next business day.
    (e) Posting of notice. (1) CMS will post the notice of imposition of 
a civil monetary penalty described in paragraphs (b) and (f) of this 
section on a CMS website.
    (2) In the event that a hospital elects to request a hearing, 
pursuant to subpart D of this part:
    (i) CMS will indicate in its posting, under paragraph (e)(1) of this 
section, that the civil monetary penalty is under review.
    (ii) If the civil monetary penalty is upheld, in whole, by a final 
and binding decision according to subpart D of this part, CMS will 
maintain the posting of the notice of imposition of a civil monetary 
penalty on a CMS website.
    (iii) If the civil monetary penalty is upheld, in part, by a final 
and binding decision according to subpart D of this part, CMS will issue 
a modified notice of imposition of a civil monetary penalty according to 
paragraph (b)(3) of

[[Page 673]]

this section, to conform to the adjudicated finding. CMS will make this 
modified notice public on a CMS website.
    (iv) If the civil monetary penalty is overturned in full by a final 
and binding decision according to subpart D of this part, CMS will 
remove the notice of imposition of a civil monetary penalty from a CMS 
website.
    (f) Continuing violations. CMS may issue subsequent notice(s) of 
imposition of a civil monetary penalty, according to paragraph (b) of 
this section, that result from the same instance(s) of noncompliance.



              Subpart D_Appeals of Civil Monetary Penalties



Sec.  180.100  Appeal of penalty.

    (a) A hospital upon which CMS has imposed a penalty under this part 
may appeal that penalty in accordance with subpart D of part 150 of this 
title, except as specified in paragraph (b) of this section.
    (b) For purposes of applying subpart D of part 150 of this title to 
appeals of civil monetary penalties under this part:
    (1) Civil money penalty means a civil monetary penalty according to 
Sec.  180.90.
    (2) Respondent means a hospital that received a notice of imposition 
of a civil monetary penalty according to Sec.  180.90(b).
    (3) References to a notice of assessment or proposed assessment, or 
notice of proposed determination of civil monetary penalties, are 
considered to be references to the notice of imposition of a civil 
monetary penalty specified in Sec.  180.90(b).
    (4) Under Sec.  150.417(b) of this title, in deciding whether the 
amount of a civil money penalty is reasonable, the ALJ may only consider 
evidence of record relating to the following:
    (i) The hospital's posting(s) of its standard charges, if available.
    (ii) Material the hospital timely previously submitted to CMS 
(including with respect to corrective actions and corrective action 
plans).
    (iii) Material CMS used to monitor and assess the hospital's 
compliance according to Sec.  180.70(a)(2).
    (5) The ALJ's consideration of evidence of acts other than those at 
issue in the instant case under Sec.  150.445(g) of this title does not 
apply.



Sec.  180.110  Failure to request a hearing.

    (a) If a hospital does not request a hearing within 30 calendar days 
of the issuance of the notice of imposition of a civil monetary penalty 
described in Sec.  180.90(b), CMS may impose the civil monetary penalty 
indicated in such notice and may impose additional penalties pursuant to 
continuing violations according to Sec.  180.90(f) without right of 
appeal in accordance with this part.
    (1) If the 30th calendar day described in this paragraph (a) is a 
weekend or a Federal holiday, then the timeframe is extended until the 
end of the next business day.
    (2) [Reserved]
    (b) The hospital has no right to appeal a penalty with respect to 
which it has not requested a hearing in accordance with Sec.  150.405 of 
this title, unless the hospital can show good cause, as determined at 
Sec.  150.405(b) of this title, for failing to timely exercise its right 
to a hearing.

                        PARTS 181	199 [RESERVED]

[[Page 675]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 677]]



                    Table of CFR Titles and Chapters




                     (Revised as of October 1, 2020)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--599)
        VI  National Capital Planning Commission (Parts 600--699)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300--
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
         X  Department of the Treasury (Parts 1000--1099)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Department of Housing and Urban Development (Parts 
                2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)

[[Page 678]]

     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600--3699)

[[Page 679]]

    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  U.S. International Development Finance Corporation 
                (Parts 4300--4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
     XXXVI  Department of Homeland Security (Parts 4600--4699)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)

[[Page 680]]

     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
    XCVIII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Parts 10000--10049)
        CI  National Mediation Board (Part 10101)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Agricultural Marketing Service (Federal Grain 
                Inspection Service, Fair Trade Practices Program), 
                Department of Agriculture (Parts 800--899)

[[Page 681]]

        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  [Reserved]
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  [Reserved]
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and Agriculture (Parts 
                3400--3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

[[Page 682]]

         L  Rural Business-Cooperative Service, Rural Housing 
                Service, and Rural Utilities Service, Department 
                of Agriculture (Parts 5001--5099)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Agricultural Marketing Service (Federal Grain 
                Inspection Service, Fair Trade Practices Program), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  (Parts 500--599) [Reserved]
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  (Parts 900--999)[Reserved]

[[Page 683]]

         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)

[[Page 684]]

      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  National Technical Information Service, Department of 
                Commerce (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399) [Reserved]

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599) [Reserved]

[[Page 685]]

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

[[Page 686]]

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799) [Reserved]
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 687]]

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--899)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900--999)
        VI  Office of the Assistant Secretary, Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--799)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)

[[Page 688]]

        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)

[[Page 689]]

      VIII  Office of Investment Security, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Department of Defense, Defense Logistics Agency (Parts 
                1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army, Department 
                of Defense (Parts 200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)

[[Page 690]]

       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Career, Technical, and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  (Parts 1100--1199) [Reserved]
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  National Institute of Standards and Technology, 
                Department of Commerce (Parts 400--599)

[[Page 691]]

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
   62--100  [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
  103--104  [Reserved]
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]

[[Page 692]]

            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
   II--III  [Reserved]
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--699)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1099)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)

[[Page 693]]

       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
        IX  Denali Commission (Parts 900--999)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Administration for Children and Families, Department 
                of Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission of Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Parts 2300--2399)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

[[Page 694]]

        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)
         V  The First Responder Network Authority (Parts 500--599)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199) [Reserved]
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399) 
                [Reserved]

[[Page 695]]

        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)

[[Page 696]]

        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

[[Page 697]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of October 1, 2020)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     5, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, VIII, IX, X, XI; 9, 
                                                  II
Agricultural Research Service                     7, V
Agriculture, Department of                        2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  Agricultural Marketing Service                  7, I, VIII, IX, X, XI; 9, 
                                                  II
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  National Institute of Food and Agriculture      7, XXXIV
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force, Department of                          32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
   Compliance Board
[[Page 698]]

Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI; 38, II
Army, Department of                               32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Career, Technical, and Adult Education, Office    34, IV
     of
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazard Investigation Board    40, VI
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X, XIII
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce, Department of                           2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II; 37, IV
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Technical Information Service          15, XI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Secretary of Commerce, Office of                15, Subtitle A
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense, Department of                            2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III; 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I

[[Page 699]]

  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy, Department of                             32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Denali Commission                                 45, IX
Disability, National Council on                   5, C; 34, XII
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Career, Technical, and Adult Education, Office  34, IV
       of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Policy, National Commission for        1, IV
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 5, XXIII; 10, II, 
                                                  III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99
  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, II
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV

[[Page 700]]

Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    5, LXXX; 12, XII
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission of                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F

[[Page 701]]

  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X, XIII
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 5, XXXVI; 6, I; 8, 
                                                  I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Housing and Urban Development, Department of      2, XXIV; 5, LXV; 24, 
                                                  Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Independent Counsel, Offices of                   28, VI
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII

[[Page 702]]

Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior, Department of                           2, XIV
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Safety and Enforcement Bureau, Bureau of        30, II
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Development Finance Corporation,    5, XXXIII; 22, VII
     U.S.
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
Investment Security, Office of                    31, VIII
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice, Department of                            2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor, Department of                              2, XXIX; 5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment Standards Administration             20, VI
  Employment and Training Administration          20, V
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50

[[Page 703]]

  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I, VII
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Libraries and Information Science, National       45, XVII
     Commission on
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Military Compensation and Retirement              5, XCIX
     Modernization Commission
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV, VI
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           2, XXXVI; 21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Geospatial-Intelligence Agency           32, I
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II; 37, IV
National Intelligence, Office of Director of      5, IV; 32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          5, CI; 29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
   and Technology Policy
[[Page 704]]

National Technical Information Service            15, XI
National Telecommunications and Information       15, XXIII; 47, III, IV, V
     Administration
National Transportation Safety Board              49, VIII
Natural Resource Revenue, Office of               30, XII
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy, Department of                               32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, IV, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory Commission                      5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Privacy and Civil Liberties Oversight Board       6, X
Procurement and Property Management, Office of    7, XXXII
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Contracts, Department of Labor             41, 50
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Utilities Service                           7, XVII, XVIII, XLII
Safety and Environmental Enforcement, Bureau of   30, II
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI

[[Page 705]]

Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State, Department of                              2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Tennessee Valley Authority                        5, LXIX; 18, XIII
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury, Department of the                       2, X; 5, XXI; 12, XV; 17, 
                                                  IV; 31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs, Department of                   2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 707]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2015 are enumerated in the following list. Entries indicate the 
nature of the changes effected. Page numbers refer to Federal Register 
pages. The user should consult the entries for chapters, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.govinfo.gov. For changes to this volume of the 
CFR prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 
1964-1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. 
The ``List of CFR Sections Affected 1986-2000'' is available at 
www.govinfo.gov.

                                  2015

45 CFR
                                                                   80 FR
                                                                    Page
Subtitle A
144.101 Regulation at 75 FR 27137 confirmed........................72274
144.103 Amended....................................................10861
    Regulations at 75 FR 27138 and 37235 confirmed; amended........72274
146.101 Regulation at 75 FR 27138 confirmed........................72274
146.111 Regulation at 75 FR 37235 confirmed; (a)(1) revised........72274
146.115 Regulation at 75 FR 27138 confirmed........................72274
146.130 Regulation at 75 FR 27138 confirmed........................72274
146.145 (b)(3)(vii) added..........................................14007
147 Regulation at 75 FR 27138 confirmed............................72274
147.104 (b)(1)(i)(C), (2) and (4) revised; (f), (g) and (h) 
        redesignated as (g), (h) and (i); new (f) added............10862
147.106 (g) through (j) redesignated as (h) through (k); new (g) 
        added......................................................10862
147.108 Regulation at 75 FR 37235 confirmed; revised...............72274
147.120 Regulation at 75 FR 34566 confirmed........................72274
    Revised........................................................72275
147.126 Regulation at 75 FR 37236 confirmed........................72274
    Revised........................................................72276
147.128 Regulation at 75 FR 37238 confirmed........................72274
    Revised........................................................72277
147.130 Regulation at 75 FR 41759 confirmed; (a)(3), (4) and 
        (b)(2) revised.............................................41346
147.131 Regulation at 75 FR 51101 confirmed; (b) and (f) revised 
                                                                   41346
147.136 Revised....................................................72278
147.138 Regulation at 75 FR 37238 confirmed........................72274
    Revised........................................................72286
147.140 Regulations at 75 FR 34566 and 70121 confirmed.............72274
    Revised........................................................72289
147.200 Revised....................................................34310
153.100 (c) revised................................................10862
153.210 (a)(2)(i), (ii) and (iii) removed; CFR correction..........33198
153.400 (a)(1)(iii) revised; (c) added.............................10862
153.405 (c)(2) removed; (c)(3) redesignated as new (c)(2); (b), 
        (c)(1), new (2), (d) introductory text, (g)(4)(i) 
        introductory text and (ii) introductory text revised.......10862
153.500 Amended....................................................10863
153.740 (a) revised; (c) added.....................................10863
154.102 Amended....................................................10863

[[Page 708]]

154.200 (a) and (c) revised........................................10863
154.215 (a) revised................................................10864
154.220 Revised....................................................10864
154.301 (b) revised................................................10864
155 Policy statement...............................................78131
155.20 Amended.....................................................10864
155.205 (c)(2)(i) and (iii) revised; (c)(2)(iv) added..............10864
155.215 (h) revised................................................10865
155.220 (i) revised................................................10865
155.222 Added......................................................10865
155.400 (e) revised................................................10866
155.410 (e) and (f) revised........................................10866
155.420 (b)(2)(i), (iv), (c)(2), (3), (d)(1)(ii), (2) and (4) 
        revised; (b)(2)(v), (vi) and (d)(6)(iv) revised; (d)(10) 
        removed....................................................10866
    (d)(2)(ii) correctly revised...................................38653
155.430 Heading, (a), (b)(1), (2) introductory text, (c), (d) 
        heading, (2) introductory text, (iv), (3) through (7), 
        (e)(1) and (2) revised; (b)(2)(vi), (d)(2)(v) and (8) 
        added......................................................10867
155.605 (g)(3) and (6)(i) revised; (g)(6)(iii) added...............10868
155.700 (b) amended................................................10868
155.705 (b)(4)(i)(B), (7) and (10) revised; (b)(4)(ii)(A) and (B) 
        redesignated as (b)(4)(ii)(B) and (C); new (b)(4)(ii)(A) 
        added......................................................10868
155.710 (e) revised................................................10869
155.720 (b)(5) and (6) amended; (b)(7) removed; (e) revised........10869
155.725 (a), (b), (g), (h), (i) and (j)(5) revised; (k) added......10869
155.735 Heading, (a), (b), (c)(2)(ii), (iii), (d) heading, (1) 
        introductory text, (iii) and (e) heading revised; 
        (c)(2)(iv), (3) and (g) added..............................10870
155.1000 (d) added.................................................10870
155.1075 (b) revised...............................................10870
156.20 Amended.....................................................10871
156.100 (c) revised................................................10871
156.110 (c)(4) and (5) revised; (c)(6) removed.....................10871
156.115 (a)(5)(i) and (ii) revised; (a)(5)(iii) and (6) added......10871
156.120 Added......................................................10871
156.122 (a)(1), (2) and (c) revised; (a)(3), (d) and (e) added.....10871
156.130 (c) revised................................................10872
156.145 (a) introductory text revised..............................10872
156.200 (b)(7) revised.............................................10873
156.230 (a) introductory text and (b) revised; (c) added...........10873
156.235 Revised; eff. 1-1-16.......................................10873
156.250 Revised....................................................10874
156.265 (d) revised................................................10874
156.270 Heading, (a), (b), (c) introductory text, (g) and (i) 
        revised....................................................10874
156.285 (b)(1), (4), (d) introductory text, (1) introductory text, 
        (i) and (iii) revised; (c)(3) through (7) redesignated as 
        (c)(4) through (8); new (c)(3) added.......................10874
    (d)(1)(ii) revised; eff. 1-1-16................................10875
    (d)(2) correctly reinstated; CFR correction....................24223
156.290 (a)(1), (2), (5) and (c) introductory text revised.........10875
156.410 Second (d)(4)(ii) removed; (d)(4)(iii) added...............10875
156.420 (h) added..................................................10875
156.425 (c) added..................................................10875
156.430 (c)(2)(i) added............................................10875
156.602 (d) revised................................................10875
156.800 (c) revised................................................10875
156.815 Added......................................................10875
156.1130 Added.....................................................10876
156.1220 (c) revised...............................................10876
158.140 (b)(1)(iii) added..........................................10876
158.162 (a)(2) revised; (b)(2)(iv) added; eff. 1-1-16..............10876
158.242 (b)(1)(iii) revised; (b)(1)(iv) amended; (b)(1)(v) added 
                                                                   10876
170 Policy statement...............................................32477
170.102 Amended....................................................62741
    Correctly amended..............................................76871
170.200 Amended....................................................62743
170.202 Heading and (a) revised; (e) added.........................62743
170.204 (a) and (b)(2) revised; (b)(3) and (4) added...............62743
170.205 (a)(4), (d)(4), (e)(4), (o), (p), (r) and (s) added; (h), 
        (i) and (k) revised........................................62743
170.207 (a)(4), (c)(3), (d)(3), (e)(3), (4) and (m) through (s) 
        added; (f) and (g) revised.................................62744
    (o)(1)(ii) corrected...........................................76871
170.210 (a)(2) added; (c), (e)(1)(i) and (h) revised; (e)(3) 
        amended....................................................62745

[[Page 709]]

170.299 (g) through (n) redesignated as (h), (j) through (m), (o), 
        (q) and (r); (d)(10) through (16), (e)(3), (f)(15) through 
        (29), new (g), new (h)(3), new (i), new (l)(3), (4), new 
        (n), new (o)(3), (4), new (p), new (q) (6) and (7) added; 
        (c)(1), new (h) introductory text, new (m) introductory 
        text and new (o) introductory text revised.................62745
170.300 (d) revised................................................62747
170.314 (a)(3)(i)(A), (B), (8)(iii)(B)(2), (b)(1)(i)(A), (B), 
        (2)(i) introductory text, (ii)(A), (B), (7) introductory 
        text, (8)(i)(A), (B), (iii) introductory text, (c)(1)(ii), 
        (2)(i), (3)(i), (d)(8)(i), (ii), (e)(1)(i)(A) introductory 
        text, (1), (C)(1)(i), (ii), (2)(i), (ii), (2)(iii)(A), 
        (f)(6)(i), (h)(1) and (2) amended..........................62747
170.315 Added......................................................62747
    (a)(14)(ii)(A), (iv)(A), (B), (v)(C), (b)(6)(i)(A), (ii) 
introductory text, (c)(4)(iii)(E), (G), (e)(1)(ii)(A) introductory 
text, (B), (g)(6)(ii), (h)(1)(ii) and (2)(ii) corrected............76871
170.500--170.599 (Subpart E) Nomenclature changes..................62755
170.503 (e)(4) revised.............................................62755
170.523 (f), (g), (i) and (k) revised; (m) and (n) added...........62755
    (k)(1)(ii)(A) and (B) corrected................................76872
170.550 (g) redesignated as (k); new (g), (h) and (j) added........62757
170.553 Removed....................................................62758
170.556 Added......................................................62758
    (c)(5) and (d)(6) corrected....................................76872

                                  2016

45 CFR
                                                                   81 FR
                                                                    Page
Subtitle A
144.103 Amended......................................12333, 75326, 94172
146.125 Amended....................................................75326
146.145 (b)(2)(ix) added; (b)(5)(i)(C) revised.....................75326
146.152 (d)(3) and (4) added; (f)(3)(i) revised....................94172
147.102 (a)(1)(ii) revised.........................................12334
    (d)(1) and (e) revised.........................................94173
147.104 (b)(2) revised.............................................94173
147.106 (d)(3) and (4) added; (e)(3)(i) and (h)(2) revised.........94173
147.126 (c) revised................................................75326
147.145 (b)(2) and (3) revised; (d) and (e) removed................12334
147.200 (e) amended................................................61581
148.102 (b) amended................................................75327
148.122 (b)(2) and (g)(3)(i) revised; (e)(4) and (5) added.........94174
148.220 (a)(9) added; (b)(7) revised...............................75327
150.315 Amended....................................................61581
153.20 Amended.....................................................94174
153.320 (a)(1) and (b)(1)(i) revised...............................94174
153.405 (i) revised................................................12334
153.510 (g) added..................................................12334
153.530 (b)(2)(ii) and (iii) revised; (b)(2)(iv) added.............12334
153.610 (f)(2) revised.............................................94174
153.630 (b)(7)(iii) and (iv) redesignated as (b)(7)(iv) and (v); 
        new (b)(7)(iii) added; (d) revised.........................94174
153.710 (d) removed; (e) and (f) redesignated as new (d) and (e); 
        new (e), (g)(1) introductory text, (iii), (iv) and (2) 
        revised; new (f), (g) introductory text and (3) added......12335
154.102 Amended....................................................94175
154.200 (c)(2) revised.............................................12335
154.215 (a) and (b) introductory text revised; (c) removed.........12335
154.220 Introductory text, (b) introductory text and (1) revised 
                                                                   12336
154.230 (c)(2)(i) revised..........................................12336
155.20 Amended..............................................12336, 94175
155.106 (a) introductory text, (2), (3) and (b) introductory text 
        revised; (a)(4), (5) and (c) added.........................12336
155.170 (a)(2), (3) and (c)(2)(iii) revised........................12337
155.200 (a) revised; (f) added.....................................12337
    (f)(4) added...................................................94175
155.205 (a), (b)(1) introductory text and (d)(1) revised; (b)(7) 
        added......................................................12337
    (c)(2)(iii)(A) and (B) revised.................................94175
155.210 (b)(2)(iii), (iv), (d)(6), (e)(6)(i) revised; (e)(7) 
        amended; (b)(2)(v) through (ix), (e)(8) and (9) added......12337
155.215 (b)(1)(i) and (g)(1) revised...............................12338

[[Page 710]]

155.220 (c)(1), (3), (f)(4), (g)(2)(ii), (3) and (4) revised; 
        (c)(4)(i)(F), (5), (g)(5), (6), (j), (k) and (l) added.....12338
    (c)(3)(i)(E), (4)(i)(E) and (j)(2)(i) revised; (c)(3)(i)(F) 
and (G) amended; (c)(3)(i)(H) through (L) added....................94176
155.221 Added......................................................94176
155.222 Heading, (a)(1), (2), (b)(1) through (5) and (d) revised; 
        (b)(6) added...............................................12340
155.225 (b)(1)(iii) added; (f)(1) and (g)(4) revised...............12341
155.230 (d)(2) revised; (d)(3) added...............................94177
155.260 (a)(1) introductory text revised...........................12341
    (g) amended....................................................61581
155.280 (a) revised................................................12341
155.285 (c)(1)(i), (ii) and (2)(i) amended.........................61581
155.302 (a)(1) revised.............................................12341
155.305 (f)(4) revised.............................................94177
155.310 (h) introductory text and (2) revised......................12341
155.320 (c)(3)(vi) introductory text and (d)(3) revised; (d)(4) 
        added......................................................12341
155.330 (d)(1)(ii), (e)(2)(i) introductory text and (g)(1) 
        revised; (e)(2)(iii) added.................................94177
155.335 (j) revised................................................12342
155.400 (e) revised; (g) and (h) added.............................12343
    (e) introductory text, (1) introductory text and (g) 
introductory text revised; (e)(2) added............................94177
155.410 (e)(2) and (f)(2) revised; (e)(3) added....................12343
155.420 (b)(2)(iv), (c)(2), (d)(2)(ii), (3), (6)(iv) and (7) 
        revised; interim...........................................29155
    Regulation at 81 FR 29155 confirmed............................94172
    (b)(2)(iii), (iv), (c)(2), (d)(1)(i), (iii), (2)(ii), (3), 
(6)(iv), (7), (8) and (9) revised; (b)(5) and (d)(10) through (13) 
added..............................................................94178
155.430 (b)(2)(vi) redesignated as (b)(2)(vii); (b)(1)(iv), new 
        (2)(vi) and (d)(9) through (12) added; (b)(2)(ii)(A) 
        revised....................................................12343
    (b)(2)(iii) revised............................................94179
155.505 (b)(1)(iii) and (5) added; (b)(4) revised..................12344
    (h) added......................................................94179
155.510 (a)(1) revised.............................................12344
155.520 (d)(2)(i)(D) added.........................................12344
155.530 (a)(4) revised.............................................12344
155.535 (a) introductory text and (b) revised......................12344
155.545 (b)(1), (c)(1)(i) and (ii) revised.........................12345
155.555 (e)(1) introductory text and (l) revised...................12345
    (b) revised....................................................94179
155.605 (b) amended; (d), (e) and (f) removed; (g) redesignated as 
        new (d); new (d) revised; (e) added........................12345
155.610 (h)(1) revised; (k) added..................................12346
155.615 (c), (d) and (e) removed; (f) through (k) redesignated as 
        new (c) through (h); new (c) heading and (1) revised; new 
        (c)(3) removed.............................................12346
155.625 (a)(2) and (b) revised; (c) added..........................12346
155.705 (b)(3)(viii), (ix), (x), (4)(ii)(B)(1) and (2) added; 
        (b)(4)(ii)(B) amended; (b)(4)(ii)(C)(2) and (11)(ii)(A) 
        through (D) revised; (b)(11)(ii)(E) removed................12346
155.715 (g)(1) revised.............................................12347
155.725 (c), (e), (h)(2), (i)(1) introductory text and (j)(2)(i) 
        revised....................................................12347
    (g)(1), (2) and (j)(2)(i) revised..............................94179
155.735 (c)(2) introductory text and (d)(2) revised................12348
155.740 (c)(2), (d)(2) and (l)(3) revised..........................12348
    (b)(2) revised.................................................94180
155.1090 Added.....................................................94180
156.50 (c) revised.................................................12348
156.80 (d)(3)(ii) revised..........................................12349
    (d)(3) redesignated as (d)(4); new (d)(3) added; (d)(1) and 
new (d)(4) revised.................................................94180
156.115 (a)(5) introductory text revised...........................12349
156.122 (c)(4) added...............................................12349
    (c)(4)(i)(D) correctly amended.................................53032
156.135 (g) revised................................................12349
156.140 (c) revised................................................94180
156.150 (a)(1), (2), (c) and (d) added.............................12349

[[Page 711]]

156.200 (c)(1) and (g) introductory text revised...................94181
156.230 (d) and (e) added..........................................12349
156.235 (a)(2)(i) and (b)(2)(i) revised.....................12350, 94181
156.265 (b)(2)(ii) revised; (b)(3), (4) and (5) added..............12350
    (b)(3)(ii) and (iii) amended; (b)(3)(iv) added.................94181
156.270 (d) introductory text and (g) revised......................12350
    (d) correctly amended..........................................53032
156.272 Added......................................................94181
156.285 (c)(5) revised; (d)(2) removed.............................12350
156.290 Heading, (a) introductory text and (b) revised.............94181
156.298 (b)(5) removed; (b)(6) redesignated as new (b)(5); (b)(4) 
        and new (5) revised........................................12350
156.330--156.340 (Subpart D) Heading revised.......................12351
156.350 Added......................................................12351
    (a)(2) revised; (a)(4) added...................................94181
156.430 (h) added..................................................94181
156.505 Amended; interim...........................................29155
    Regulation at 81 FR 29155 confirmed............................94172
    Amended........................................................94181
156.515 (b)(1)(i) through (v), (2)(i), (ii), (iii) and (v) 
        revised; (b)(1)(vi) and (2)(iv) removed; interim...........29155
    Regulation at 81 FR 29155 confirmed............................94172
    (b)(1)(i) through (v), (2)(i), (ii), (iii) and (v) revised.....94182
156.715 (f) added..................................................94182
156.805 (d) revised................................................12351
    (c) amended....................................................61581
156.810 (a)(12), (13) and (e) revised; (a)(14) and (15) added......12351
156.1110 (a) and (b) revised; (d) removed..........................12351
156.1215 (b) and (c) revised.......................................12351
156.1220 (a)(3) and (4)(ii) revised................................12352
    (a)(1)(v) and (vi) amended; (a)(1)(vii) and (viii) added; 
(a)(2), (3)(ii), (v) and (4)(ii) revised...........................94182
156.1230 (b)(1), (2) and (3) added.................................94182
156.1250 Revised...................................................12352
156.1256 Added.....................................................12352
    Revised........................................................94183
157.205 (e)(1) and (f)(1) revised..................................94183
158.103 Amended....................................................12352
158.121 Revised....................................................94183
158.232 (d)(1), (2), (e)(1) and (2) revised; (f) added.............94183
158.240 (c)(1) revised; (d) and (e) redesignated as (e) and (f); 
        new (d) added; new (f) amended.............................94183
158.606 Amended....................................................61581
160.404 (a) revised................................................61581
164.512 (k)(7) added.................................................395
170.102 Amended; CFR correction....................................47714
170.299 (a) revised................................................72463
170.501 Revised....................................................72464
170.502 Amended....................................................72464
170.505 Revised....................................................72464
170.510 Heading and introductory text revised......................72464
170.511 Added......................................................72464
170.520 Revised....................................................72464
170.523 (h) and (i) revised; (o) added.............................72465
170.524 Added......................................................72465
170.525 Revised....................................................72465
170.530 (c)(2), (4), (d)(2) and (3) revised........................72465
170.535 Heading, (a) and (d)(1) revised............................72466
170.540 Revised....................................................72466
170.556 (d)(6) and (e)(1) revised..................................72466
170.557 Revised....................................................72466
170.560 Revised....................................................72466
170.565 Revised....................................................72466
170.570 Revised....................................................72467
170.580 Added......................................................72468
170.581 Added......................................................72471
170.599 Revised....................................................72471

                                  2017

45 CFR
                                                                   82 FR
                                                                    Page
Subtitle A
147.104 (b)(2)(iii) added..........................................18381
147.130 (a)(1) introductory text and (iv) revised; interim.........47833
    (a)(1) introductory text and (iv) amended; interim.............47861
147.131 Revised; interim...........................................47833
    (c)(1), (2), (d)(1)(ii) introductory text, (B), and (d)(2) 
amended; interim...................................................47861
147.132 Added; interim.............................................47835
147.133 Added; interim.............................................47861
155.400 (e)(1)(iv) added...........................................18381
155.410 (e)(2) and (3) revised.....................................18381

[[Page 712]]

155.420 (a)(1) heading and (2) heading, (3), (4), (5), 
        (d)(2)(i)(A) and (B) added; (b)(1) introductory text, (5), 
        (d) introductory text and (7) revised......................18381
155.725 (j)(7) added...............................................18382
156.140 (c) revised................................................18382

                                  2018

45 CFR
                                                                   83 FR
                                                                    Page
Subtitle A
144 Notification...................................................19431
144.103 Amended; eff. 10-2-18......................................38243
146 Notification...................................................19431
146 Authority citation revised.....................................38243
146.125 Amended; eff. 10-2-18......................................38243
147 Notification...................................................19431
147 Technical correction...........................................21925
147 Authority citation revised.....................................57589
147.102 (c)(3)(iii)(D) revised.....................................17058
147.104 (b)(1)(i)(B), (C), (ii), (2)(i) introductory text, and 
        (ii) revised; (b)(1)(iii) removed..........................17058
147.130 Regulation at 82 FR 47861 confirmed........................57630
147.131 (c)(4) revised; (f) and (g) redesignated as (g) and (h); 
        new (f) added..............................................57589
147.131 Regulation at 82 FR 47861 confirmed........................57630
147.132 (a)(1)(ii) and (iii) redesignated as (a)(1)(iii) and (iv); 
        new (a)(1)(ii) added; (a)(1) introductory text, new (iii), 
        new (iv), (2), and (b) revised.............................57590
147.133 (a)(1) introductory text, (ii), (2), and (b) revised.......57630
147.133 Regulation at 82 FR 47861 confirmed........................57630
148.102 Heading revised; (b) amended; eff. 10-2-18.................38243
153 Technical correction...........................................21925
153 Policy statement........................................36456, 63419
153.320 (d) added..................................................17059
153.630 (b)(6), (8), and (9) revised...............................17059
154 Technical correction...........................................21925
154.103 (b) revised................................................17060
154.200 Revised....................................................17060
154.215 (h)(2) revised.............................................17060
154.301 (b)(2) revised.............................................17060
155 Technical correction...........................................21925
155 Policy statement...............................................53575
155.106 (c) introductory text revised..............................17060
155.200 (f)(2)(ii), (iii), and (iv) removed; (f)(4) introductory 
        text revised...............................................17060
155.210 (c)(2) introductory text and (e)(7) revised................17061
155.215 (h) revised................................................17061
155.221 Revised....................................................17061
155.305 (f)(4) revised.............................................17061
155.320 (c)(3)(iii) introductory text, (A), (vi)(C), (D), (F), 
        (G), and (d)(4) introductory text revised; (c)(3)(iii)(D), 
        (E), and (F) added.........................................17061
155.420 (a)(4)(iii), (5), (b)(2)(i), (d)(1)(iii), and (10)(i) 
        revised; (b)(2)(v) removed; (b)(2)(vi) redesignated as new 
        (b)(2)(v)..................................................17062
155.430 (d)(2)(iii), (iv), and (v) redesignated as (d)(2)(iv), 
        (v), and (vi); (d)(2)(ii), new (iv), and new (v) revised; 
        new (d)(2)(iii) added......................................17063
155.500 Amended....................................................17063
155.605 (d)(2)(iv) revised.........................................17063
155.610 (h)(2) revised.............................................17064
155.700 (a) revised................................................17064
155.705 Heading revised; (e) added.................................17064
155.706 Added......................................................17064
155.715 Heading revised; (h) added.................................17065
155.716 Added......................................................17065
155.720 Heading revised; (j) added.................................17066
155.721 Added......................................................17066
155.725 Heading revised; (l) added.................................17066
155.726 Added......................................................17066
155.730 Heading revised; (h) added.................................17066
155.731 Added......................................................17066
155.735 Heading revised; (h) added.................................17067
155.740 Heading revised; (p) added.................................17067
155.741 Added......................................................17067
156 Technical correction...........................................21925
156 Authority citation revised.....................................62498
156.50 (d)(3) and (4) revised......................................62498
156.100 Heading and introductory text revised; (d) added...........17068
156.111 Added......................................................17068
156.115 (b) revised................................................17069
156.150 (b) revised................................................17069
156.200 (b)(2) revised.............................................17069

[[Page 713]]

156.285 Heading revised; (f) added.................................17069
156.286 Added......................................................17069
156.298 Removed....................................................17069
156.340 (a)(2) revised.............................................17069
156.350 (a)(1) and (2) revised.....................................17069
156.1230 (b)(2) revised............................................17070
157 Technical correction...........................................21925
157.205 Heading revised; (h) added.................................17070
157.206 Added......................................................17070
158 Technical correction...........................................21925
158.170 (b) introductory text revised..............................17070
158.221 (b)(8) added...............................................17070
158.301 Revised....................................................17070
158.321 Revised....................................................17070
158.322 Revised....................................................17071
158.330 Revised....................................................17071
158.341 Revised....................................................17071
158.350 Revised....................................................17071
........................................................................
........................................................................
........................................................................
........................................................................

                                  2019

45 CFR
                                                                   84 FR
                                                                    Page
Subtitle A
144 Authority citation revised.....................................29014
144.103 Amended....................................................29014
146.123 Added......................................................29014
146.145 (b)(3)(i) revised; (b)(3)(viii) added......................29024
146.152 (a) revised................................................17561
147 Authority citation revised.....................................29025
147.106 (a) revised................................................17561
147.126 (c), (d), and (e) revised..................................29025
148 Authority citation revised.....................................17561
148.122 (b)(1) revised.............................................17561
153 Authority citation revised.....................................17561
153.20 Amended.....................................................17561
153.320 (d) revised................................................17561
153.630 (b)(10) and (d)(2) revised; (g) added......................17562
155 Authority citation revised..............................17562, 29027
155.20 Amended.....................................................17562
155.200 (c) revised................................................71710
155.205 (a) revised................................................17563
155.210 (b)(2) introductory text, (iii), (iv), and (e)(9) 
        introductory text revised; (b)(2)(v) through (ix) removed 
                                                                   17563
155.215 (b)(2) revised.............................................17563
155.220 Heading, (a) introductory text, (c) introductory text, 
        (1), (3)(i) introductory text, (A), (K), (L), (ii) 
        introductory text, (4) introductory text, (i) introductory 
        text, (A), (E), (F), (ii), (5), (d) introductory text, 
        (2), (e), (f)(1), (2), (3) introductory text, (i), (4), 
        (g)(1), (2) introductory text, (iii), (iv), (3), (4), 
        (5)(i), (ii), (iii), (h)(1), (2), (3), (i), (j)(1) 
        introductory text, (3), (k)(1) introductory text, (2), and 
        (l) revised; (k)(3) and (m) added..........................17563
155.221 (a), (b), and (c) redesignated as (e), (f), and (g); 
        heading, new (e), new (f) introductory text, new (2), new 
        (3), new (4), new (6), new (7), and new (g) revised; new 
        (a), new (b), new (c), (d), and (h) added..................17566
155.330 (d)(1) introductory text revised; (d)(3) added.............71710
155.415 Revised....................................................17567
155.420 (a)(5) and (b)(2)(iv) revised; (d)(6)(ii), (iii), and (iv) 
        amended; (d)(6)(v) added...................................17567
155.420 (a)(4)(iii) introductory text revised; (c)(3) redesignated 
        as (c)(4); (b)(2)(vi), new (c)(3), and (d)(14) added; 
        (d)(12) and (13) amended...................................29027
155.605 (e)(5) added...............................................17567
155.1200 (d)(4) redesignated as (d)(5); new (d)(4) added; (b) 
        introductory text, (1), (2), (c) introductory text, 
        (d)(2), (3), and (5) revised...............................71710
156 Authority citation revised..............................17567, 71710
156.20 Amended.....................................................17567
156.130 (h) added..................................................17567
156.280 (e)(2)(ii) redesignated as (e)(2)(iii); new (e)(2)(ii) 
        added; heading and new (e)(2)(iii) revised.................71710
156.1230 (a)(2) and (b)(2) removed; (b)(1) revised; (b)(3) 
        redesignated as new (b)(2).................................17568
160 Notification...................................................18151
162 Authority citation revised.....................................57629
162.103 Amended....................................................57629
162.502 Removed....................................................57629
162.503 Removed....................................................57629
162.504 Removed....................................................57629

[[Page 714]]

162.505 Removed....................................................57629
162.506 Removed....................................................57629
162.507 Removed....................................................57629
162.508 Removed....................................................57629
162.509 Removed....................................................57629
162.510 Removed....................................................57629
162.511 Removed....................................................57629
162.512 Removed....................................................57629
162.513 Removed....................................................57629
162.514 Removed....................................................57629
180.10--180.110 (Subchapter E) Added; eff. 1-1-21..................65602

                                  2020

  (Regulations published from January 1, 2020, through October 1, 2020)

45 CFR
                                                                   85 FR
                                                                    Page
Subtitle A
146.145 (b)(3)(viii)(E) added......................................29259
147.104 (e) revised................................................37247
149 Removed........................................................29259
155.120 (c)(1)(ii) revised.........................................37247
155.220 (j)(2)(i) revised..........................................37248
155.330 (e)(2)(i)(D) revised.......................................29259
155.400 (e)(1)(i), (ii), and (iii) revised; (e)(1)(iv) removed.....29260
155.420 (a)(4)(ii), (iii), (b)(1) introductory text, (3), and 
        (d)(1)(ii) revised; (b)(5) removed.........................29260
155.430 (b)(1)(ii) and (d)(9) revised..............................29260
155.1400 Revised...................................................29261
155.1405 Revised...................................................29261
156 Authority citation revised.....................................29261
156.20 Amended.....................................................29261
156.111 Heading and (d) introductory text revised; (d)(2) and (f) 
        added......................................................29261
156.130 (h) revised................................................29261
156.200 (e) revised................................................37248
156.221 Added......................................................25638
156.265 (f) and (g) revised........................................29261
156.270 (b) introductory text revised..............................29261
156.280 Correction: amended.........................................2887
156.280 (e)(2)(ii) introductory text revised; interim..............27629
156.1210 Revised...................................................29262
156.1230 (b)(2) revised............................................37248
158 Authority citation revised.....................................29262
158.110 (a) revised................................................29262
158.140 (b)(1)(i) revised..........................................29262
158.150 (b)(2)(iv)(A)(5) revised...................................29262
158.160 (b)(2)(vii) added..........................................29262
160 Notification.....................................19392, 22024, 29637
162.1102 (d) added; incorporation by reference......................4242
162.1302 (d) added; incorporation by reference......................4242
162.1802 (d) added; incorporation by reference......................4242
164 Notification.....................................19392, 22024, 29637
170.101 Revised....................................................25939
170.102 Amended....................................................25939
170.200 Amended....................................................25940
170.202 (a)(1) removed.............................................25940
170.204 (b)(1), (2), and (c) removed...............................25940
170.205 (a)(1), (2), (d)(3), (e)(3), (h)(1), (i)(1), and (j) 
        removed; (a)(5), (b)(1), (h)(3), and (k)(3) added..........25940
170.207 (d)(2), (e)(2), (g)(1), (h), and (j) removed...............25940
170.210 (a)(1) and (c)(1) removed; (e)(1)(i) and (h) amended.......25940
170.213 Added......................................................25941
170.215 Added......................................................25941
170.299 (c)(1) revised; (n) through (r) redesignated as (o) 
        through (s); (c)(2), (3), (d)(2), (7), (8), (f)(3), (6), 
        (7), (10), (11), (h)(1), (j)(1), (l)(3), new (r)(4), and 
        new (5) removed; (e)(4), (5), (f)(30) through (34), 
        (k)(3), (m)(5), and new (n) added..........................25941
170.300 (a) and (c) amended........................................25941
170.314 Removed....................................................25941
170.315 (a)(6), (7), (8), (11), (b)(4), (5), (e)(1)(ii)(B), 
        (g)(7)(ii)(A)(3), (8)(ii)(A)(3), and (9)(ii)(A)(3) 
        removed; (a)(9)(ii)(B)(1)(iii), (2), (b)(1)(ii)(A) 
        introductory text, (2), (3), (B), (C) introductory text, 
        (iii) introductory text, (e)(1)(i)(B)(1)(ii), and (2) 
        introductory text amended; (b)(1)(iii)(A), (2), (3), (7), 
        (8), (9), (c)(3), (e)(1)(i)(A)(1) through (5), 
        (f)(5)(iii)(B)(1) through (4), (g)(1), (2), (3)(i), (6), 
        and (9)(i)(A) revised; (b)(10), (d)(12), (13), 
        (e)(1)(i)(A)(6), (7), (f)(5)(iii)(B)(5), and (g)(10) added
                                                                   25941
170.315 Correction: amended........................................47099
170.400--170.406 (Subpart D) Added.................................25945
170.403 Correction: amended........................................43711
170.405 Correction: amended........................................43711

[[Page 715]]

170.501 (a) and (b) amended; (c) removed...........................25950
170.502 Amended....................................................25950
170.503 Removed....................................................25950
170.504 Removed....................................................25950
170.505 Revised....................................................25950
170.510 (a) removed; (b) and (c) redesignated as new (a) and (b) 
                                                                   25950
170.520 (a)(3) revised.............................................25950
170.523 (a), (g), and (h), (k)(1)(ii), (iii), (4), (m) revised; 
        (b) heading, (c) heading, (d) introductory text heading, 
        (e) heading, (f) introductory text heading, (i) 
        introductory text heading, (j) introductory text heading, 
        (l) heading, and (p) through (t) added; (f)(2), 
        (k)(1)(iv)(B), (C), (2), and (3) removed; (k) introductory 
        text and (o) amended.......................................25950
170.524 (a) heading, (b) heading, (c) heading, (d) introductory 
        text heading, (e) heading, (g) heading, and (h) 
        introductory text heading added; (f) revised; (h)(3) 
        amended....................................................25951
170.545 Removed....................................................25952
170.550 (a) heading, (b) heading, (d) heading, (e), (g) 
        introductory text heading, (5), (l), and (m) added; (f) 
        removed; (h) revised.......................................25952
170.555 (a) amended; (b)(1) revised................................25952
170.556 (c)(3) and section amended; (a) introductory text and (c) 
        introductory text revised; (c)(2), (5), and (6) removed....25952
170.560 (a)(2) amended.............................................25953
170.565 (d)(1)(ii), (iii), and (h)(2)(iii) amended.................25953
170.570 (a), (b)(2), (c) introductory text, (1), and (2) amended 
                                                                   25953
170.575 Removed....................................................25953
170.580 (a)(1), (2)(i) heading, (ii) heading, (3)(i), (iv), (v), 
        (b)(1)(i), (iii)(D), (2)(i), (3)(i), (ii), (c)(1), (e)(1) 
        introductory text, (f)(1), (g)(1) introductory text, (i), 
        (2), (3)(i), (4), (5)(i), (6)(v) revised; (a)(2)(iii), 
        (4), (b)(3)(iii), and (iv) added; (d)(1), (2)(i)(C), (4), 
        (5), and (f)(2)(i)(C) amended..............................25953
170.581 Revised....................................................25954
170.599 (b)(4) redesignated as (b)(5); new (b)(4) added; new 
        (b)(5) revised.............................................25955
171 Added..........................................................25955


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