[Federal Register Volume 69, Number 141 (Friday, July 23, 2004)]
[Rules and Regulations]
[Pages 43926-43928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16792]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

45 CFR Part 146

[CMS-2033-F]
RIN 0938-AK00


Requirements for the Group Health Insurance Market; Non-Federal 
Governmental Plans Exempt From HIPAA Title I Requirements

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

ACTION: Final rule.

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SUMMARY: This rule finalizes existing exemption election requirements 
that

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apply to self-funded non-Federal governmental plans. In it, we clarify 
the conditions under which plan sponsors may exempt these plans from 
most of the requirements of title XXVII of the PHS Act, and provide 
guidance on the procedures, limitations, and documentation associated 
with exemption elections. Finally, we revise the requirements to 
reinforce beneficiary protections for exemption elections.

DATES: The regulations amending 45 CFR 146.180 became effective on 
September 24, 2002.

FOR FURTHER INFORMATION CONTACT: David Holstein (410) 786-1565.

SUPPLEMENTARY INFORMATION:

I. Background

    Title I of the Health Insurance Portability and Accountability Act 
of 1996 (HIPAA) added a new title XXVII to the Public Health Service 
(PHS) Act to establish various reforms to the group and individual 
health insurance markets. The group market reforms are contained under 
Part A of title XXVII, which includes, among other things, guaranteed 
availability of coverage to small group market employers and 
renewability of coverage in the small and large group markets; 
limitations on pre-existing condition exclusion periods; special 
enrollment periods under certain circumstances; and prohibition of 
discrimination against individual participants and beneficiaries based 
on health status.
    Part A of title XXVII was amended by the Newborns' and Mothers' 
Health Protection Act of 1996 (NMHPA), the Mental Health Parity Act of 
1996 (MHPA), and the Women's Health and Cancer Rights Act of 1998 
(WHCRA), which added new sections 2704, 2705 and 2706 (subpart 2 of 
Part A of title XXVII), respectively. NMHPA provides protections for 
mothers and newborn children for hospital stays following childbirth. 
MHPA, which applies to group health plans sponsored by employers with 
more than 50 employees, provides for parity between annual and lifetime 
dollar limits applicable to mental health benefits, and annual and 
lifetime dollar limits applicable to medical and surgical benefits. 
Originally, the MHPA sunset date was September 30, 2001, but subsequent 
legislation (Pub. L. 107-116 and Pub. L. 107-313) respectively extended 
the sunset date to December 31, 2002, and December 31, 2003. WHCRA 
requires group health plans that provide medical and surgical benefits 
for mastectomies to cover, among other things, reconstructive surgery 
and prostheses following a mastectomy.
    Section 2721(b)(2) of the PHS Act, as added by HIPAA and 
implemented at 45 CFR 146.180, permits non-Federal governmental 
employers to elect to exempt self-funded portions of their group health 
plans (that is, benefits not provided through health insurance 
coverage) from most of the requirements of title XXVII of the PHS Act. 
(This practice is sometimes referred to as ``opting out of HIPAA.'') 
However, health plans cannot be exempted from certification and 
disclosure of creditable coverage requirements under section 2701(e) of 
the PHS Act.

II. Summary of Provisions of the Interim Final Rule With Comment Period

    On July 26, 2002, we published in the Federal Register (67 FR 
48802) an interim final rule with comment period, ``Technical Change to 
Requirements for the Group Health Insurance Market; Non-Federal 
Governmental Plans Exempt From HIPAA Title I Requirements'' that 
amended existing exemption election requirements at Sec.  146.180 that 
apply to self-funded non-Federal governmental plans. In the interim 
final rule with comment period, we clarified the conditions under which 
plan sponsors may exempt these plans from most of the requirements of 
title XXVII of the PHS Act, provided guidance on the procedures, 
limitations, and documentation associated with exemption elections, 
revised the exemption election requirements to reinforce beneficiary 
protections, and made a technical correction to Sec.  146.150 
``Guaranteed availability of coverage for employees in the small group 
market.''
    We refer the reader to the July 26, 2002, interim final rule with 
comment period for greater detail.

III. Analysis of and Responses to Public Comments

    We received no public comments on the July 26, 2002, interim final 
rule.

IV. Provisions of the Final Regulations

    The provisions of this final rule are identical to the provisions 
of the July 26, 2002, interim final rule with comment period.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act (PRA) of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We received no comments.
    The reporting and disclosure requirements referenced under Sec.  
146.180(b), (g), and (h) are currently approved under OMB number 0938-
0702 (HIPAA Group Market Information Collection Requirements).
    Under paragraph (e) of Sec.  146.180, CMS may require that 
additional information be submitted after receiving an election to opt 
out. The burden of this requirement is the time it takes to gather and 
submit the additional information. This type of information collection 
is exempt from the requirements of the PRA under section 1320.4 as it 
is a collection of information during the conduct of an administrative 
action.
    As required by section 3504(h) of the PRA, we have submitted a copy 
of this document to OMB for its review of these information collection 
requirements.
    If you comment on these information collection and recordkeeping 
requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Regulations Development and 
Issuances Group, Attn: Julie Brown, Room C5-14-03, 7500 Security 
Boulevard, Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Brenda Aguilar, CMS Desk Officer.

VI. Regulatory Impact Statement

    We have examined the impacts of this final rule as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-
354), the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and 
Executive Order 13132.

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    Executive Order 12866 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) directs agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
This final rule is not economically significant and is not a major 
rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. This final rule will have 
no significant impact on small businesses.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. This final rule does not impose unfunded 
mandates on State, local, or tribal governments.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has federalism 
implications. We have determined that this final rule does not 
significantly affect the rights, roles, and responsibilities of State 
or local governments.
    The July 26, 2002, interim final rule with comment period was 
reviewed by the Office of Management and Budget (OMB) in accordance 
with provisions of Executive Order 12866.

List of Subjects in 45 CFR Part 146

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET

0
Accordingly, the interim final rule with comment period amending 45 CFR 
part 146, which was published on July 26, 2002, in the Federal Register 
at 67 FR 48802-48814 is adopted as a final rule without change.

(Catalog of Federal Domestic Assistance Program No. 93.773), 
(Catalog of Federal Domestic Assistance Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program)

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: July 28, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: March 1, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-16792 Filed 7-22-04; 8:45 am]
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