[Federal Register Volume 76, Number 49 (Monday, March 14, 2011)]
[Proposed Rules]
[Pages 13553-13567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-5583]


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DEPARTMENT OF THE TREASURY

31 CFR Part 33

RIN 1505-AC30

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 155

[CMS-9987-P]
RIN 0938-AQ75


Application, Review, and Reporting Process for Waivers for State 
Innovation

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS; Department 
of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This proposed rule sets forth a procedural framework for 
submission and review of initial applications for a Waiver for State 
Innovation described in section 1332 of the Patient Protection and the 
Affordable Care Act including processes to ensure opportunities for 
public input in the development of such applications by States and in 
the Federal review of the applications.

DATES: Comments are due on or before May 13, 2011.

ADDRESSES: Written comments may be submitted to any of the addresses 
specified below. Any comment that is submitted to one Department will 
be shared with the other Department. Please do not submit duplicates.
    Department of the Treasury. Interested members of the public are 
invited to submit comments on this proposed rule. Comments may be 
submitted to Treasury by either of the following methods: Submit 
electronic comments through the Federal government e-rulemaking portal, 
http://www.regulations.gov, or send comments in hard copy to: Office of 
Benefits Tax Counsel, Attention: Waivers for State Innovation, Room 
3050, Department of the Treasury, 1500 Pennsylvania Avenue, NW., 
Washington, DC 20220.
    In general, Treasury will post all comments to http://www.regulations.gov without change, including any business or personal 
information provided such as names, addresses, e-mail addresses, or 
telephone numbers. Treasury will also make such comments available for 
public inspection and copying in Treasury's Library, Room 1428, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220, on official business 
days between the hours of 10 a.m. and 5 p.m. Eastern Time. Members of 
the public can make an appointment to inspect comments by telephoning 
(202) 622-0990. All comments received, including attachments and other 
supporting materials, are part of the public record and subject to 
public disclosure. You should only submit information that you wish to 
make available publicly.
    Centers for Medicare & Medicaid Services. In commenting, please 
refer to file code CMS-9987-P. Because of staff and resource 
limitations, we cannot accept comments by facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY:
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-9987-P, P.O. Box 8016, Baltimore, MD 
21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY:
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-9987-P, Mail Stop C4-26-05, 7500 
Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue, SW., Washington, DC 20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will be also available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,

[[Page 13554]]

Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

FOR FURTHER INFORMATION CONTACT:
    Department of the Treasury: Carrie Simons, (202) 622-0044.
    Centers for Medicare & Medicaid Services: Ben Walker, (301) 492-
4430.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1332 of the Patient Protection and Affordable Care Act (the 
Affordable Care Act) (Pub. L. 111-148, enacted on March 23, 2010) 
creates a new Waiver for State Innovation and authorizes the Secretary 
of Health and Human Services (HHS) and the Secretary of the Treasury 
(the Secretaries) to waive all or any of the following requirements 
falling under their respective jurisdictions for health insurance 
coverage within a State for plan years beginning on or after January 1, 
2017:
     Part I of subtitle D of Title I of the Affordable Care Act 
(relating to the establishment of qualified health plans);
     Part II of subtitle D of Title I of the Affordable Care 
Act (relating to consumer choices and insurance competition through 
health benefit exchanges);
     Section 1402 of the Affordable Care Act (relating to 
reduced cost sharing for individuals enrolling in qualified health 
plans); and
     Sections 36B (relating to refundable credits for coverage 
under a qualified health plan), 4980H (relating to shared 
responsibility for employers regarding health coverage), and 5000A 
(relating to the requirement to maintain minimum essential coverage) of 
the Internal Revenue Code.
    Section 1332 of the Affordable Care Act provides that references in 
that section to ``Secretary'' refer to the Secretary of Health and 
Human Services for waivers relating to Parts I and II of subtitle D of 
Title I of the Affordable Care Act and section 1402 of the Affordable 
Care Act, and refer to the Secretary of the Treasury for waivers 
relating to sections 36B, 4980H, and 5000A of the Internal Revenue 
Code.
    Section 1332(a)(4)(B) of the Affordable Care Act requires the 
Secretaries to issue regulations that provide the following:
     A process for public notice and comment at the State 
level, including public hearings, that is sufficient to ensure a 
meaningful level of public input (section 1332(a)(4)(B)(i) of the 
Affordable Care Act);
     A process for the submission of an application that 
ensures the disclosure of (A) the provisions of law that the State 
involved seeks to waive, and (B) the specific plans of the State to 
ensure that the waiver will be in compliance with specified statutory 
requirements relating to the comprehensiveness of coverage, 
affordability of coverage, scope of coverage, and the effect on Federal 
deficit (as described below) (section 1332(a)(4)(B)(ii) of the 
Affordable Care Act);
     A process for providing public notice and comment after 
the application is received by the applicable Secretary or Secretaries, 
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 Procedure 
Act (APA), or requirements that are unreasonable or unnecessarily 
burdensome with respect to State compliance (section 1332(a)(4)(B)(iii) 
of the Affordable Care Act);
     A process for the submission to the applicable Secretary 
or Secretaries of periodic reports by the State concerning the 
implementation of the program under a waiver (section 1332(a)(4)(B)(iv) 
of the Affordable Care Act); and
     A process for the periodic evaluation by the applicable 
Secretary or Secretaries of the program under a waiver (section 
1332(a)(4)(B)(v) of the Affordable Care Act).
    Although section 1332 of the Affordable Care Act does not authorize 
waivers for related programs like Medicaid (title XIX of the Social 
Security Act) or the Children's Health Insurance Program (title XXI of 
the Social Security Act), those programs have existing waiver 
authorities. Section 1332(a)(5) of the Affordable Care Act requires the 
Secretaries to develop a process for coordinating and consolidating the 
State waiver processes applicable under the provisions of section 1332 
of the Affordable Care Act with the existing waiver processes 
applicable under titles XVIII (Medicare), XIX (Medicaid), and XXI 
(Children's Health Insurance Program, or CHIP) of the Social Security 
Act, and any waiver processes under other Federal laws relating to the 
provision of health care items or services. Section 1332(a)(5) of the 
Affordable Care Act further requires the process developed by the 
Secretaries to permit a State to submit a single application for a 
waiver under any or all of those provisions.
    This proposed rule would implement the procedural requirements of 
section 1332 of the Affordable Care Act. The proposed rule is intended 
to provide for a waiver application process that can be coordinated and 
consolidated with the processes for the submission of applications for 
waivers under titles XVIII, XIX, and XXI of the Social Security Act.

II. Overview of the Proposed Regulations: Section 1332 of the 
Affordable Care Act, Waiver for State Innovation (31 CFR Part 33 and 45 
CFR Part 155)

A. Introduction

    To implement the provisions of section 1332 of the Affordable Care 
Act, the Department of the Treasury proposes to add new part 33 to 31 
CFR subtitle A and the Centers for Medicare & Medicaid Services, on 
behalf of the Department of Health and Human Services, proposes to add 
new part 155 to 45 CFR Subtitle A. These new parts would address 
procedures for State development and submission of an application for a 
Waiver for State Innovation under section 1332 of the Affordable Care 
Act (referred to in the proposed regulations as a section 1332 waiver), 
a process for providing public notice and opportunity for comment at 
the State and Federal levels, a process for the review of applications 
by the Secretaries, and processes for the monitoring and evaluation of 
approved section 1332 waivers by the States and the Secretaries, 
including the periodic submission of reports by the States to the 
Secretaries.

B. Coordinated Waiver Process (31 CFR 33.102 and 45 CFR 155.1302)

    These proposed regulations at 31 CFR 33.102 and 45 CFR 155.1302 
permit, but do not require, States to submit a single application for a 
section 1332 waiver and a waiver under one or more of the existing 
waiver processes applicable under titles XVIII, XIX, and XXI of the 
Social Security Act, or under any other Federal law relating to the 
provision of health care items or services, provided that the 
application is consistent with the procedures described in these 
proposed regulations, the procedures for section 1115 demonstrations, 
if applicable, and the procedures under any other applicable Federal 
law under which the State seeks a waiver.\1\
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    \1\ Although section 1332 of the Affordable Care Act does not 
authorize waivers for related programs like Medicaid (title XIX of 
the Social Security Act) or the Children's Health Insurance Program 
(title XXI of the Social Security Act), those programs have existing 
waiver authorities.
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    The proposed regulations require a State seeking a section 1332 
waiver to submit a waiver application to the Secretary of HHS. Upon 
receipt, the Secretary of HHS will transmit any

[[Page 13555]]

application that includes a request for a waiver of provisions under 
the jurisdiction of the Secretary of the Treasury (sections 36B, 4980H 
and 5000A of the Internal Revenue Code) to be reviewed in accordance 
with the provisions of these proposed regulations. The Secretaries will 
coordinate the review of any application that includes a request for a 
waiver of provisions falling under the jurisdiction of each of the 
Departments of Health and Human Services and the Treasury (the 
Departments).

C. Application Procedures (31 CFR 33.108 and 45 CFR 155.1308)

    These proposed regulations establish procedures for the submission 
of applications for an initial section 1332 waiver.
    Under 31 CFR 33.108(a) and 45 CFR 155.1308(a) of the proposed 
regulations, the Secretaries will subject each application for an 
initial section 1332 waiver to a preliminary review. The Secretaries 
will complete the preliminary review within 45 days after the 
application is submitted.
    During this preliminary review period, the Secretaries will make a 
preliminary determination as to whether a State's application complies 
with the requirements set forth in 31 CFR 33.108(a)(2) and 45 CFR 
155.1308(a)(2). If the Secretaries determine that an application is 
incomplete, the Secretary of HHS will send the State a written notice 
of the elements missing from the application. These proposed 
regulations provide that a 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, rendering the application 
incomplete.
    These proposed regulations provide that a submitted application 
will not be considered received until the Secretaries have made this 
preliminary determination that the application is complete. This timing 
protocol is necessary to ensure that the Federal public notice and 
comment period and the 180-day Federal decision-making period are based 
on applications that the Secretaries preliminarily determine to be 
complete, and that all relevant information is available for review 
during those periods.
    The proposed regulations provide that, upon a preliminary 
determination by the Secretaries that an application they have received 
is complete, as defined under these proposed regulations, the Secretary 
of HHS will send the State a written notice informing the State that 
the Secretaries have made such a preliminary determination, and the 
date upon which they have made that preliminary determination. That 
date will also mark the beginning of the Federal public notice and 
comment period and the 180-day Federal decision-making period.
    Under the proposed regulations, an application for initial approval 
of a section 1332 waiver will not be considered complete unless the 
application: (1) Complies with the application procedures of 31 CFR 
33.108(a)(2)(iv) and 45 CFR 155.1308(a)(2)(iv); (2) provides written 
evidence of the State's compliance with the public notice requirements 
set forth in 31 CFR 33.112 and 45 CFR 155.1312; and (3) provides all of 
the following:
     A comprehensive description of the State legislation and 
program to implement a plan meeting the requirements for a waiver under 
section 1332, as required under section 1332(a)(1)(B)(i) of the 
Affordable Care Act;
     A copy of the enacted State legislation authorizing such 
waiver request, as required under section 1332(a)(1)(C) of the 
Affordable Care Act;
     A list of the provisions of law that the State seeks to 
waive including a brief description of the reason for the specific 
requests; and
     The analyses, actuarial certifications, data, assumptions, 
targets and other information sufficient to provide the Secretaries 
with the necessary data to determine that the State's proposed waiver:
    + Will, as required under section 1332(b)(1)(A) of the Affordable 
Care Act (the comprehensive coverage requirement), 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 Title I of the Affordable Care Act as certified by 
the Office of the Actuary of the Centers for Medicare and 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 would be 
waived;
    + Will, as required under section 1332(b)(1)(B) of the Affordable 
Care Act (the affordability requirement), 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;
    + Will, as required under section 1332(b)(1)(B)(C) of the 
Affordable Care Act (the scope of coverage requirement), 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
    + Will not, as prohibited under section 1332(b)(1)(D) of the 
Affordable Care Act (the Federal deficit requirement), increase the 
Federal deficit.
    Section 1332(a)(3) of the Affordable Care Act requires that the 
Secretaries provide for an alternative means by which the aggregate 
amount of tax credits or cost-sharing reductions that would have been 
paid had the State not received a waiver, be paid to the State for 
purposes of implementing the waiver. This amount will be determined 
annually by the Secretaries, on a per capita basis, taking into 
consideration the experience of other States for participation in an 
Exchange and tax credits and cost-sharing reductions provided in such 
other States.
    To provide information necessary for the Secretaries to determine 
(1) that the State's proposed waiver meets the comprehensive coverage 
requirement, the affordability requirement, the scope of coverage 
requirement and the Federal deficit requirement and (2) the annual 
amount, if any, of foregone tax credits and cost-sharing reductions 
that will be paid to the State for purposes of implementing the waiver 
pursuant to section 1332(a)(3) of the Affordable Care Act, the proposed 
regulation requires that a State's application contain:
    (1) 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.
    (2) 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 detailed 10-year budget plan that is deficit neutral to 
the Federal government, as prescribed in 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
     A detailed analysis regarding the estimated impact of the 
waiver on health insurance coverage in the State.
    (3) The data and assumptions used to demonstrate that the State's 
proposal is in compliance with the comprehensive coverage requirement, 
the affordability requirement, the scope of coverage

[[Page 13556]]

requirement and the Federal deficit requirement, including:
     Information on the age, income, health expenses and 
current health insurance status of the relevant State population; the 
number of employers, categorized by number of employees and by whether 
the employer offers health insurance; cross-tabulations of these 
variables; and an explanation of data sources and quality; and
     An explanation of the key assumptions and methodology used 
to develop the estimates of the effect of the waiver on health 
insurance coverage in the State and on the Federal budget, such as 
individual and employer participation rates, behavioral changes, 
premium and price effects, and other relevant factors.
    (4) Additional information supporting the State's proposed waiver, 
including:
     An explanation as to whether the waiver increases or 
decreases the administrative burden on individuals, insurers, and 
employers, and if so, how and why;
     An explanation of whether and 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;
     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;
     If applicable, an explanation of how the State will 
provide the Federal government with all information necessary to 
administer the waiver at the Federal level; and
     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.
    (5) For purposes of post-award monitoring, suggested quarterly, 
annual, and cumulative targets for the comprehensive coverage 
requirement, the affordability requirement, the scope of coverage 
requirement and the Federal deficit requirement of section 1332(b) of 
the Affordable Care Act.
    (6) Other information consistent with guidance provided by the 
Secretaries.
    Under the proposed regulations, there is no minimum time specified 
between the submission of an application and start date of the waiver. 
However, we solicit comments on whether a State should be required to 
submit an application at least 12 months in advance of the requested 
effective date, in order to allow for the effective implementation of 
approved waivers at the State level.
    The requirement in the proposed regulation that a State provide 
certain analysis, certifications, data, assumptions, targets and other 
information as part of a section 1332 waiver application is designed to 
ensure that a State's development of a waiver proposal addresses major 
relevant issues for the State and provides the Secretaries with 
sufficient information to fully assess the projected impact of section 
1332 waiver proposals for the statutory requirements and to accurately 
determine the amount to be paid to the State for purposes of 
implementing the waiver under section 1332(a)(3) of the Affordable Care 
Act. The Secretaries also solicit comments regarding these proposed 
requirements, as well as what other types of analysis, certifications, 
data, assumptions, targets and information States would consider useful 
in supporting an application for a section 1332 waiver and whether 
these regulations should specifically require such additional analyses, 
certifications, data, assumptions, targets and information to be 
included as part of a section 1332 waiver application.
    Lastly, during the Federal review process, the proposed regulation 
provides that the Secretaries may request additional supporting 
information from the State as needed to address public comments or to 
address issues that arise in reviewing the application.

D. State Public Notice Requirements (31 CFR 33.112 and 45 CFR 155.1312)

    Consistent with the provisions of section 1332 of the Affordable 
Care Act, to facilitate public involvement in the review and approval 
of section 1332 waiver applications, 31 CFR 33.112(a)(1) and 45 CFR 
155.1312(a)(1) of the proposed regulations require a State to provide a 
public notice and comment period sufficient to ensure a meaningful 
level of public input for a section 1332 waiver application prior to 
the submission of that application to the Secretary of HHS for review 
and consideration. In addition, the proposed regulations require a 
State with one or more Federally-recognized Indian tribes within its 
borders to consult with those Indian tribes in accordance with 
Executive Order 13175.
    Because meaningful input requires notice of the nature of the 
section 1332 waiver application, as part of the State notice and 
comment period, the proposed regulations require a State to provide the 
public with the following prior to the submission of an application:
     A comprehensive description of the section 1332 waiver 
application to be submitted to the Secretary of HHS, including 
information and assurances related to all statutory requirements and 
other information consistent with guidance provided by the Secretaries;
     Where copies of the section 1332 waiver application are 
available for public review and comment;
     How and where written comments may be submitted and 
reviewed by the public, and the timeframe during which public comments 
may be submitted; and
     The location, date and time of public hearings that will 
be convened by the State to seek public input on the section 1332 
waiver application.
    31 CFR 33.112(a)(2) and 45 CFR 155.1312(a)(2) of the proposed 
regulations require States to conduct public hearings that provide 
interested parties with the opportunity to learn about and comment on 
the contents of the section 1332 waiver application.
    The State public notice and comment process must comply with 
applicable civil rights rules for accessibility, which require, for 
example--
     The provision of auxiliary aids and services such as 
interpreters for persons with disabilities where necessary for 
effective communication;
     The use of accessible meeting places for the hosting of 
public forums provided for in the Rule;
     Reasonable steps to provide meaningful access for limited 
English proficient (LEP) persons, such as the inclusion of ``tag 
lines'' on State web sites containing phone numbers for LEP persons to 
call to reach ``language line'' interpreters for assistance; and
     Other civil rights requirements applicable to the States 
under the Americans with Disabilities Act, section 504 of the 
Rehabilitation Act of 1973 and Title VI of the Civil Rights Act of 
1964, among others.

E. Federal Public Notice and Approval Process (31 CFR 33.116 and 45 CFR 
155.1316)

    Consistent with section 1332 of the Affordable Care Act and the 
Secretaries' desire to implement a State waiver application process 
that promotes transparency, facilitates public involvement and input, 
and encourages sound decision-making at all levels of government, 31 
CFR 33.116 and 45 CFR 155.1316 of the proposed regulations provide for 
a Federal public notice and comment period following a preliminary 
determination by the Secretaries that a State's application for a 
section 1332 waiver is complete. As required by section 1332 of the 
Affordable Care Act, the Federal notice and comment period is designed 
to ensure a meaningful level of public

[[Page 13557]]

input, while avoiding the imposition of requirements that are in 
addition to, or duplicative of, those imposed under the APA or that are 
unreasonable or unnecessarily burdensome for State compliance.
    To facilitate public participation in the section 1332 waiver 
application process, the proposed regulations require the Secretary of 
HHS to provide the public with notice of a section 1332 waiver 
application that has been preliminarily determined to be complete, 
including any supplemental materials received from a State during the 
Federal public notice and comment period, as well as regular updates 
for the status of a State's section 1332 waiver application. In 
addition, the Secretary of HHS will provide the public with information 
relating to (A) where copies of the section 1332 waiver application are 
available for public review and comment; (B) how and where written 
comments may be submitted and reviewed by the public, and the timeframe 
during which comments may be submitted; and (C) any public comments 
received during the Federal public notice and comment period.
    Following the conclusion of the Federal notice and comment period, 
but in no event later than 180 days following the preliminary 
determination by the Secretaries that a State's application for a 
section 1332 waiver is complete, the final decision of the Secretaries 
on a State's section 1332 waiver application will be issued by the 
Secretary of HHS.

F. Monitoring and Compliance (31 CFR 33.120 and 45 CFR 155.1320)

    As section 1332 waivers are likely to a have a significant impact 
on individuals, States and the Federal government, the proposed 
regulations establish processes and methodologies to ensure that the 
Secretaries receive adequate and appropriate information regarding the 
effectiveness of section 1332 waivers (consistent with section 
1332(a)(4)(B)(iv) of the Affordable Care Act).
    Under 31 CFR 33.120(a) and 45 CFR 155.1320(a) of the proposed 
regulations, a State is required to comply with all applicable Federal 
laws, regulations, policy statements and Departmental guidance unless a 
law or regulation has specifically been waived. Further, the proposed 
regulations require a State to come into compliance with any changes in 
Federal law, regulation, or policy affecting section 1332 waivers 
within the timeframes specified in law, regulation, interpretive 
policy, or guidance, unless the provision being changed is expressly 
waived, and to comply with the terms and conditions of the agreement 
entered into between the Secretaries and the State to implement a 
section 1332 waiver, or the section 1332 waiver will be suspended or 
terminated in whole or in part by the Secretaries.
    Under 31 CFR 33.120(b) and 45 CFR 155.1320(b) of the proposed 
regulations, as part of the terms and conditions of any section 1332 
waiver, a State must conduct periodic reviews related to the 
implementation of the waiver. The Secretaries will review, and when 
appropriate investigate, documented complaints that a State is failing 
to materially comply with requirements specified in the terms and 
conditions of the section 1332 waiver. In addition, the Secretaries 
will share with the State any complaint that has been received, and 
notify the State of any applicable monitoring and compliance issues.
    Under 31 CFR 33.120(c) and 45 CFR 155.1320(c) of the proposed 
regulations, to ensure continued public input after the initial 6 
months of the waiver's implementation, and annually thereafter, States 
are required to hold a public forum at which members of the public have 
an opportunity to provide comments on the progress of the section 1332 
waiver. The proposed regulation further requires States to include a 
summary of this forum to the Secretary of HHS as part of the quarterly 
and annual reporting requirements under 31 CFR 33.124 and 45 CFR 
155.1324.
    Under 31 CFR 33.120(c)(1) and 45 CFR 155.1320(c)(1) of the proposed 
regulations, States are required to 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.
    Under 31 CFR 33.120(d) and 45 CFR 155.1320(d) of the proposed 
regulations, the Secretaries reserve the right to suspend or terminate 
a section 1332 waiver, in whole or in part, any time before the date of 
expiration, if the Secretaries determine that the State has materially 
failed to comply with the terms and conditions of the section 1332 
waiver. In the event that all or a portion section 1332 waiver is 
terminated or suspended by the Secretaries, or if all or a portion of 
the section 1332 waiver is withdrawn, Federal funding is limited to 
normal closeout costs associated with an orderly termination of the 
section 1332 waiver, as described in 31 CFR 33.120(e) and 45 CFR 
155.1320(e).
    Under 31 CFR 33.120(f) and 45 CFR 155.1320(f) of the proposed 
regulations, in the event that the Secretaries undertake an independent 
evaluation of any component of the section 1332 waiver, the State must 
cooperate fully with the Secretaries or the independent evaluator 
selected by the Secretaries. This cooperation includes, but is not 
limited to, the submission of all necessary data and information to the 
Secretaries or the independent evaluator.

G. State Reporting Requirements (31 CFR 33.124 and 45 CFR 155.1324)

    Section 1332 of the Affordable Care Act requires that the 
Secretaries provide for a procedure for the periodic submission of 
reports by a State concerning the implementation of the program under a 
section 1332 waiver.
    In order for the Secretaries to effectively monitor the 
implementation of a waiver, the proposed regulations require a State to 
submit a quarterly progress report in accordance with the terms and 
conditions of the State's section 1332 waiver. States are also required 
to submit an annual report, as described in 31 CFR 33.124(b) and 45 CFR 
155.1324(b), documenting the following:
     The progress of the section 1332 waiver;
     Data on compliance with section 1332(b)(1)(A) through (D) 
of the Affordable Care Act;
     A summary of the annual post-award public forum, including 
all public comments received regarding the progress of the section 1332 
waiver and action taken in response to such concerns or comments; and
     Other information consistent with the State's approved 
terms and conditions.
    Under 31 CFR 33.124(c) and 45 CFR 155.1324(c) of the proposed 
regulations, States are required to submit a draft annual report to the 
Secretary of Health and Human Services no later than 90 days after the 
end of each waiver year. Within 60 days of receipt of comments from the 
Secretary of Health and Human Services, a State is required to submit a 
final annual report for the waiver year to the Secretary of Health and 
Human Services. Finally, a State is required to publish the draft and 
final annual reports on the State's public Web site.
    The Secretaries intend to issue future guidance under section 1332 
regarding periodic reports.

H. Periodic Evaluation Requirements (31 CFR 33.128 and 45 CFR 155.1328)

    Section 1332 of the Affordable Care Act requires that the 
Secretaries provide for a procedure for the periodic evaluation of 
section 1332 waivers by the Secretary or Secretaries with jurisdiction 
over the provisions for which the waiver was granted. These

[[Page 13558]]

proposed regulations require that each periodic evaluation shall 
include a review of all annual reports submitted by the State in 
accordance with 45 CFR 155.1324 and 31 CFR 33.124 that relate to the 
period of time covered by the evaluation.
    As part of this proposed regulation, the Secretaries are soliciting 
public comments regarding specific components of the periodic 
evaluation of a section 1332 waiver. Potential components of a periodic 
evaluation could include, but not be limited to, the impact of the 
waiver on the following:
     Choice of health plans for individuals and employers;
     Stability of coverage for individuals and employers;
     Small businesses, individuals with pre-existing 
conditions, and the low-income population;
     The overall health care system in the State; and
     Other States and the Federal government.
    The Secretaries intend to issue future guidance under section 1332 
regarding periodic evaluations.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, the Departments are 
required to provide notice in the Federal Register and solicit public 
comment before a collection of information requirement is approved by 
the Office of Management and Budget (OMB). 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 the 
Departments solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of the Departments.
     The accuracy of the Departments' 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.
    The Departments have no way to accurately quantify the burden until 
the provisions that section 1332 authorizes the Secretaries to waive 
pursuant to an application by a State take effect in 2014. The 
Departments are soliciting public comments on the annual number of 
waiver applications that the Departments may receive, and will 
reevaluate this issue in future guidance. With that said, the 
Departments have developed estimates of the burden associated with 
information collection requirements in this proposed regulation.
    The Departments are soliciting public comment on each of these 
issues for the following sections of this document that contain 
information collection requirements (ICRs):

A. ICRs Regarding Application Procedures (31 CFR 33.108 and 45 CFR 
155.1308)

    31 CFR 33.108 and 45 CFR 155.1308 of the proposed regulations 
establish the application process for section 1332 waivers. A State's 
application for approval of a section 1332 waiver must be submitted to 
CMS as both printed and electronic documents. Paragraph (a)(2)(iv) of 
31 CFR 33.108 and 45 CFR 155.1308 specify that applications for a 
section 1332 waiver will not be considered complete if they do not 
contain written evidence of compliance with the State public notice and 
comment process described in 31 CFR 33.112 and 45 CFR 155.1312, as well 
as the information specified in paragraph (a)(2)(iv)(C) and (D) of 31 
CFR 33.108 and 45 CFR 155.1308.
    The burden associated with the requirements in 31 CFR 33.108 and 45 
CFR 155.1308 is the time and effort necessary for a State to develop 
and submit a complete application for a section 1332 waiver. The 
Departments estimate that it will take 200 hours for a State to develop 
and submit a complete section 1332 waiver application, at a total cost 
of $4,134.

B. ICRs Regarding State Public Notice Requirements (31 CFR 33.112 and 
45 CFR 155.1312)

    Paragraph (a)(1) of 31 CFR 33.112 and 45 CFR 155.1312 of the 
proposed regulations require a State to provide a public notice and 
comment period regarding applications for section 1332 waivers. 31 CFR 
33.112 and 45 CFR 155.1312 specify that prior to submitting an 
application to HHS and Treasury for a section 1332 waiver, the State 
must provide a public notice and comment period sufficient to ensure a 
meaningful level of public input. The public notice must address the 
information requirements listed in paragraphs (b)(1) through (4) of 31 
CFR 33.112 and 45 CFR 155.1312.
    The burden estimate associated with this requirement is the time 
and effort necessary to develop and publish a public notice that 
complies with the aforementioned information requirements. The 
Departments estimate that each State submitting an application for a 
section 1332 waiver will require 40 hours to comply with the 
requirements in this section, at a total cost of $827 per State.
    Paragraph (c) of 31 CFR 33.112 and 45 CFR 155.1312 specify that 
after issuing the public notice and prior to submitting an application 
for a section 1332 waiver, a State must conduct public hearings 
regarding the State's waiver application. The minimum burden associated 
with this requirement is the time and effort necessary for a State to 
conduct public hearings prior to submitting an application for a 
section 1332 waiver. While this requirement is subject to the PRA, the 
Departments believe the associated burden is exempt under 5 CFR 
1320.3(h)(4). Facts or opinions submitted in response to general 
solicitations of comments from the public, published in the Federal 
Register or other publications, regardless of the form or format 
thereof, provided that no person is required to supply specific 
information pertaining to the commenter, other than that necessary for 
self-identification, as a condition of the agency's full consideration 
of the comment are not subject to the PRA.
    Paragraph (a)(2) of 31 CFR 33.112 and 45 CFR 155.1312 require 
States with one or more federally-recognized Indian tribes to consult 
with such tribes before submitting a section 1332 waiver application. 
Paragraph (a)(2)(iv)(B) of 31 CFR 33.108 and 45 CFR 155.1308 explain 
that documentation of the State's public notice, which incorporates 
this consultation, must be included in the waiver application.
    The burden associated with these requirements is both the time and 
effort necessary for a State to conduct its tribal consultations and 
the time and effort necessary to notify CMS of the State's compliance 
with paragraph (a)(2)(iv)(B) of 31 CFR 33.108 and 45 CFR 155.1308. The 
Departments estimate that each State submitting an application for a 
section 1332 waiver will require 40 hours to both conduct its tribal 
consultations and to submit the aforementioned evidence to CMS, at a 
total cost of $827.

C. ICRs Regarding Monitoring and Compliance (31 CFR 33.120 and 45 CFR 
155.1320)

    31 CFR 33.120 and 45 CFR 155.1320 of the proposed regulations 
require States to periodically perform reviews of the implementation of 
the section 1332 waiver. The Departments estimate that it will take a 
State 40 hours annually to periodically review the waiver's 
implementation, at a total cost of $827.
    Paragraph (c) of 31 CFR 33.120 and 45 CFR 155.1320 of the proposed

[[Page 13559]]

regulations further specifies that at least 6 months after the 
implementation date of the waiver and annually thereafter, the State 
must hold a public forum to solicit comments on the progress of a 
section 1332 waiver. As proposed in paragraph (c)(1) of 31 CFR 33.120 
and 45 CFR 155.1320, 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.
    The burden associated with these provisions includes the time and 
effort necessary to conduct the public meeting and the time and effort 
necessary for a State to 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. While 
these requirements are subject to the PRA, the Departments believe the 
associated burden is exempt from the PRA. As discussed previously in 
this collection, facts or opinions submitted in response to general 
solicitations of comments from the public, published in the Federal 
Register or other publications, regardless of the form or format 
thereof, provided that no person is required to supply specific 
information pertaining to the commenter, other than that necessary for 
self-identification, as a condition of the agency's full consideration 
of the comment are not subject to the PRA. Therefore, the burden 
associated with the annual public hearing requirement is exempt. 
Similarly, the Departments believe the time and effort necessary for a 
State to publish the date, time, and location of the public forum in a 
prominent location on the State's public Web site is a burden that 
would be incurred in the course of usual and customary State business 
practices and is therefore exempt from the PRA under 5 CFR 
1320.3(b)(3).

D. ICRs Regarding State Reporting Requirements (31 CFR 33.124 and 45 
CFR 155.1324)

    Paragraph (a) of 31 CFR 33.124 and 45 CFR 155.1324 of the proposed 
regulations requires States to submit quarterly reports to CMS in 
accordance with the terms and conditions of a State's approved section 
1332 waiver. The burden associated with this reporting requirement is 
the time and effort necessary to submit quarterly reports to CMS. The 
Departments estimate that it will take 10 hours per quarter for each 
State to comply with this reporting requirement, for a total of 40 
hours per year, at a total annual cost of $827.
    Paragraph (b) of 31 CFR 33.124 and 45 CFR 155.1324 of the proposed 
regulations requires States to submit annual reports to CMS documenting 
the information listed in paragraph (b)(1) through (4) of 31 CFR 33.124 
and 45 CFR 155.1324. As part of the submission process, paragraph (c) 
of 31 CFR 33.124 and 45 CFR 155.1324 requires States to submit draft 
annual reports to CMS no later than 90 days after the end of each 
waiver year, or as specified in the State's terms and conditions. The 
burden associated with this reporting requirement is the time and 
effort necessary to submit draft annual reports to CMS. The Departments 
estimate that it will take 24 hours for each State to comply with this 
reporting requirement, at a total cost of $496.
    Paragraph (c)(1) of 31 CFR 33.124 and 45 CFR 155.1324 of the 
proposed regulations specifies that within 60 days of receipt of 
comments from CMS, the State must submit to CMS the final annual report 
for the waiver year. While this requirement is subject to the PRA, the 
Departments believe the associated burden is exempt under 5 CFR 
1320.3(h)(9). Facts or opinions obtained or solicited through non-
standardized follow-up questions designed to clarify responses to 
approved collections of information are not subject to the PRA.
    Paragraph (c)(2) of 31 CFR 33.124 and 45 CFR 155.1324 of the 
proposed regulations specify that the draft and final annual reports 
must be published on the State's public Web site. The burden associated 
with this is the time and effort required for a State to post the 
aforementioned information on the State's public Web site. The 
Departments estimate that it will take 2 hours for each State to comply 
with this requirement, at a total cost of $42.

E. ICRs Regarding Periodic Evaluation Requirements (31 CFR 33.128 and 
45 CFR 155.1328)

    31 CFR 33.128 and 45 CFR 155.1328 of the proposed regulations 
specify that the Secretary of Health and Human Services and the 
Secretary of the Treasury shall periodically evaluate the 
implementation of section 1332 waivers. One potential option for 
satisfying this requirement is for a State to design and conduct an 
evaluation, with Federal approval of the evaluation design and interim 
and final reports. The burden associated with this approach is the time 
and effort necessary to design and execute an evaluation for a section 
1332 waiver. The Departments estimate that it will take a State 80 
hours to develop an evaluation design, 80 hours to develop and submit 
an interim evaluation report, and 36 hours to publish CMS-approved 
evaluations on a State's public Web site. The Departments estimate that 
it will take a State 196 hours over the course of a 5-year waiver term 
to complete these activities at a total cost of $4,051.

                                              Table 1--Estimated Annual Recordkeeping and Reporting Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Hourly       Total
                                                                                 Burden per     Total       labor    labor cost     Total
       Regulation section(s)         OMB  control  No.  Respondents   Responses   response     annual      cost of       of        capital/   Total cost
                                                                                   (hours)     burden     reporting   reporting  maintenance      ($)
                                                                                               (hours)       ($)         ($)      costs  ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
31 CFR 33.108 and 45 CFR 155.1308.  0938-New..........           X            1         200         n/a       20.67         n/a            0         n/a
Paragraph (a)(1) of 31 CFR 33.112   0938-New..........           X            1          40         n/a       20.67         n/a            0         n/a
 and 45 CFR 155.1312.
Paragraph (a)(2) of 31 CFR 33.112   0938-New..........           X            1          40         n/a       20.67         n/a            0         n/a
 and 45 CFR 155.1312.
Paragraph (b)(1) of 31 CFR 33.120   0938-New..........           X            1          40         n/a       20.67         n/a            0         n/a
 and 45 CFR 155.1320.
Paragraph (a) of 31 CFR 33.124 and  0938-New..........           X            4          10         n/a       20.67         n/a            0         n/a
 45 CFR 155.1324.
Paragraph (b) of 31 CFR 33.124 and  0938-New..........           X            1          24         n/a       20.67         n/a            0         n/a
 45 CFR 155.1324.
Paragraph (c)(2) of 31 CFR 33.124   0938-New..........           X            1           2         n/a       20.67         n/a            0         n/a
 and 45 CFR 155.1324.
31 CFR 33.128 and 45 CFR 155.1328.  0938-New..........           X            1         196         n/a       20.67         n/a            0         n/a
                                   ---------------------------------------------------------------------------------------------------------------------
    Total.........................  ..................           X           10  ..........         n/a  ..........         n/a            0         n/a
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 13560]]

    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer 
[CMS-9987-P]; Fax: (202) 395-6974; or E-mail: [email protected].
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a control 
number assigned by OMB.

IV. Response to Comments

    Because of the large number of public comments the Departments 
normally receive on Federal Register documents, the Departments are not 
able to acknowledge or respond to them individually. The Departments 
will consider all comments the Departments receive by the date and time 
specified in the DATES section of this preamble, and, when the 
Departments proceed with a subsequent document, the Departments will 
respond to the comments in the preamble to that document.

V. Regulatory Impact Statement

    The Departments have examined the impacts of this proposed rule as 
required by Executive Order 13563 on Improving Regulation and 
Regulatory Review (January 18, 2011), Executive Order 12866 on 
Regulatory Planning and Review (September 30, 1993), the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601 et seq.), section 202 of the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 
13132 on Federalism (August 4, 1999), and the Congressional Review Act 
(5 U.S.C. 804(2)).
    Executive Order 12866 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). This rule has been 
designated a ``significant regulatory action'' although not 
economically significant, under section 3(f) of Executive Order 12866. 
Accordingly, the rule has been reviewed by the Office of Management and 
Budget.
    The RFA requires agencies to analyze options for regulatory relief 
for small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other health care 
providers and suppliers are small entities, either by being nonprofit 
organizations or by meeting the SBA definition of a small business and 
having revenues of less than $7 million to $34.5 million in any 1 year. 
(For details, see the Small Business Administration's final rule that 
set forth size standards for health care industries, at 65 FR 69432, 
November 17, 2000.) Individuals and States are not included in the 
definition of a small entity. The Departments are not preparing an 
analysis for the RFA because the Departments have determined, and the 
Secretaries certify, that this proposed rule will not have a 
significant impact on a substantial number of small entities.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
(Pub. L. 104-4) also requires that agencies assess anticipated costs 
and benefits before issuing any rule whose mandates require spending in 
any 1 year of $100 million in 1995 dollars, updated annually for 
inflation. In 2011, that threshold is approximately $136 million. 
Because this rule does not mandate State participation in section 1332 
waivers, there is no obligation for the State to make any change to 
their existing programs. As a result, there is no mandate for the 
State. Therefore, the Departments estimate this rule will not mandate 
expenditures in the threshold amount of $136 million in any 1 year.
    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. Since this regulation would not impose costs on State or 
local governments, the requirements of Executive Order 13132 are not 
applicable. In accordance with the provisions of Executive Order 12866, 
this regulation was reviewed by the Office of Management and Budget.

List of Subjects

31 CFR Part 33

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

45 CFR Part 155

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

Department of the Treasury

31 CFR Subtitle A

    For the reasons set forth in the preamble, the Department of the 
Treasury proposes to amend 31 CFR subtitle A to add new part 33 to read 
as follows:

PART 33--WAIVERS FOR STATE INNOVATION

Sec.
33.100 Basis and purpose.
33.102 Coordinated waiver process.
33.104 Definitions.
33.108 Application procedures.
33.112 State public notice requirements.
33.116 Federal public notice and approval process.
33.120 Monitoring and compliance.
33.124 State reporting requirements.
33.128 Periodic evaluation requirements.

    Authority:  Sec. 1332, Pub. L. 111-148, 124 Stat. 119


Sec.  33.100  Basis and purpose.

    (a) Statutory basis. This part implements provisions of section 
1332 of the Patient Protection and Affordable Care Act (Affordable Care 
Act), Public Law 111-148, 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 of the Affordable Care 
Act.
    (3) A process for the provision of public notice and comment after 
a waiver application is received by the Secretary of Health and Human 
Services, 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

[[Page 13561]]

relating to the implementation of a waiver.
    (5) A process for the periodic evaluation by the Secretary of 
programs under waivers.
    (b) Purpose. This part sets forth certain procedural requirements 
for Waivers for State Innovation under section 1332 of the Affordable 
Care Act.


Sec.  33.102  Coordinated waiver process.

    (a) Coordination with applications for waivers under other Federal 
laws. A State may submit a single application to the Secretary of 
Health and Human Services 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 
Social Security 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 section 1115 demonstrations, 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 
of Health and Human Services. Any application submitted to the 
Secretary of Health and Human Services that requests to waive sections 
36B, 4980H, and 5000A of the Internal Revenue Code, in accordance with 
section 1332(a)(2)(D) of the Affordable Care Act, shall upon receipt be 
transmitted by the Secretary of Health and Human Services to the 
Secretary to be reviewed in accordance with 31 CFR part 33.


Sec.  33.104  Definitions.

    For the purposes of this part:
    Complete application means an application that has been submitted 
and for which the Secretary and the Secretary of Health and Human 
Services have made a preliminary determination that it includes all 
required information and satisfies all requirements that are described 
in Sec.  33.108(a)(2)(iv).
    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.  33.112.
    Section 1332 waiver means a Waiver for State Innovation under 
section 1332 of the Affordable Care Act.


Sec.  33.108  Application procedures.

    (a) Initial waiver applications--(1) Acceptable formats for 
applications. (i) Applications for initial approval of a section 1332 
waiver shall be submitted in both printed and electronic formats to the 
Secretary of Health and Human Services.
    (ii) [Reserved]
    (2) Guidelines for applications. (i) Each application for a section 
1332 waiver will be subject to a preliminary review by the Secretary 
and the Secretary of Health and Human Services, 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 Health and Human Services have made the preliminary 
determination that the application is complete.
    (A) The Secretary and the Secretary of Health and Human Services 
will complete the preliminary review of the application within 45 days 
after it is submitted.
    (B) If the Secretary and the Secretary of Health and Human Services 
determine that the application is not complete, the Secretary of Health 
and Human Services will send the State a written notice of the elements 
missing from the application.
    (C) 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.
    (ii) Upon making the preliminary determination that an application 
is complete, as defined in this part, the Secretary of Health and Human 
Services will send the State a written notice informing the State that 
the Secretary and the Secretary of Health and Human Services 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.
    (iii) Upon receipt of a complete application for an initial section 
1332 waiver, the Secretary of Health and Human Services will--
    (A) 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.
    (B) Indicate the status of the application.
    (iv) An application for initial approval of a section 1332 waiver 
will not be considered complete unless the application meets all of the 
following conditions:
    (A) Complies with paragraph (a) of this section.
    (B) Provides written evidence of the State's compliance with the 
public notice requirements set forth in Sec.  33.112.
    (C) Provides all of the following:
    (1) A comprehensive description of the State legislation and 
program to implement a plan meeting the requirements for a waiver under 
section 1332;
    (2) A copy of the enacted State legislation authorizing such waiver 
request, as required under section 1332(a)(1)(C) of the Affordable Care 
Act;
    (3) A list of the provisions of law that the State seeks to waive, 
including a brief description of the reason for the specific requests; 
and
    (4) The analyses, actuarial certifications, data, assumptions, 
analysis, targets and other information set forth in paragraph 
(a)(2)(iv)(D) of this section sufficient to provide the Secretary and 
the Secretary of Health and Human Services with the necessary data to 
determine that the State's proposed waiver:
    (i) Will, as required under section 1332(b)(1)(A) of the Affordable 
Care Act (the comprehensive coverage requirement), 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 and 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;
    (ii) Will, as required under section 1332(b)(1)(B) of the 
Affordable Care Act (the affordability requirement), 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;
    (iii) Will, as required under section 1332(b)(1)(C) of the 
Affordable Care Act (the scope of coverage requirement), 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
    (iv) Will not, as prohibited under section 1332(b)(1)(D) of the 
Affordable Care Act (the Federal deficit requirement), increase the 
Federal deficit.
    (D) Contains the following supporting information:
    (1) Actuarial analyses and actuarial certifications. Actuarial 
analyses and actuarial certifications to support the State's estimates 
that the proposed waiver will comply with the

[[Page 13562]]

comprehensive coverage requirement, the affordability requirement, and 
the scope of coverage requirement.
    (2) 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:
    (i) 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
    (ii) A detailed analysis regarding the estimated impact of the 
waiver on health insurance coverage in the State.
    (3) 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:
    (i) 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
    (ii) 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.
    (4) Additional information. Additional information supporting the 
State's proposed waiver, including:
    (i) An explanation as to whether the waiver increases or decreases 
the administrative burden on individuals, insurers, and employers, and 
if so, how and why;
    (ii) 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;
    (iii) 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;
    (iv) 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
    (v) 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.
    (5) 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.
    (6) Other information. Other information consistent with guidance 
provided by the Secretary and the Secretary of Health and Human 
Services.
    (b) 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.  33.116(b).


Sec.  33.112  State public notice requirements.

    (a) General. (1) Prior to submitting an application for a new 
section 1332 waiver to the Secretary of Health and Human Services 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 of Health and Human 
Services including information and assurances related to all statutory 
requirements and other information consistent with guidance provided by 
the Secretary and the Secretary of Health and Human Services.
    (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 of Health and Human Services for an 
initial waiver in accordance with the requirements set forth in Sec.  
33.108.


Sec.  33.116  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 
Health and Human Services determine that all elements for a complete 
application were documented and submitted to the Secretary of Health 
and Human Services.
    (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 Health and Human Services 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 unnecessarily burdensome with respect to State 
compliance.
    (2) At the beginning of the Federal notice and comment period, the 
Secretary of Health and Human Services 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.

[[Page 13563]]

    (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 Health and Human 
Services on a State application for a section 1332 waiver will be 
issued by the Secretary of Health and Human Services no later than 180 
days after the determination by the Secretary and the Secretary of 
Health and Human Services that a complete application was received in 
accordance with Sec.  33.108.


Sec.  33.120  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 
Health and Human Services, 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 Health and Human 
Services, 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 Health and Human Services 
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 Health and Human Services 
will promptly share with a State any complaint that the Secretary and 
the Secretary of Health and Human Services has received and will also 
provide notification of any applicable monitoring and compliance 
issues.
    (c) Post award. Within 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 of Health and Human Services as part of the quarterly 
report specified in Sec.  33.124(a) that is associated with the quarter 
in which the forum was held, as well as in the annual report specified 
in Sec.  33.124(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 Health and Human Services 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 Secretaries determine that a State has 
materially failed to comply with the terms of a section 1332 waiver.
    (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 Health and Human Services, or an 
independent evaluator selected by the Secretary or the Secretary of 
Health and Human Services 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 
Health and Human Services, or the independent evaluator.


Sec.  33.124  State reporting requirements.

    (a) Quarterly reports. A State must submit quarterly reports to the 
Secretary of Health and Human Services 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 of Health and Human Services 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.  33.120(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 the State's approved terms and 
conditions.
    (c) Submitting and publishing annual reports. A State must submit a 
draft annual report to the Secretary of Health and Human Services 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 of 
Health and Human Services, a State must submit to the Secretary of 
Health and Human Services a 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 and approval to 
the Secretary of Health and Human Services, respectively.


Sec.  33.128  Periodic evaluation requirements.

    (a) General. (1) The Secretary and the Secretary of Health and 
Human Services shall periodically evaluate the implementation of a 
program under a section 1332 waiver consistent with guidance published 
by the Secretary and the Secretary of Health and Human Services and any 
terms and conditions governing the section 1332 waiver.
    (2) Each periodic evaluation must include a review of the annual 
report or reports submitted by the State in accordance with Sec.  
33.124 that relate to the period of time covered by the evaluation.

Department of Health and Human Services

45 CFR Subtitle A

    For the reasons set forth in the preamble, the Department of Health 
and Human Services proposes to amend 45 CFR subtitle A, subchapter B to 
add new Part 155 to read as follows:

[[Page 13564]]

PART 155--WAIVERS FOR STATE INNOVATION

Subparts A Through M [Reserved]
Subpart N--State Flexibility
Sec.
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.

    Authority: Sec. 1332, Pub. L. 111-148, 124 Stat. 119.

Subparts A Through M [Reserved]

Subpart N--State Flexibility


Sec.  155.1300  Basis and purpose.

    (a) Statutory basis. This subpart implements provisions of section 
1332 of the Patient Protection and Affordable Care Act (Affordable Care 
Act), Public Law 111-148, 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 Social Security 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 section 1115 demonstrations, 
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, and 5000A of the Internal Revenue 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 which the Secretary and the Secretary of the Treasury have made 
a preliminary determination that it includes all required information 
and satisfies all requirements that are described in Sec.  
155.1308(a)(2)(iv).
    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) Initial waiver applications--(1) Acceptable formats for 
applications. (i) Applications for initial approval of a section 1332 
waiver shall be submitted in both printed and electronic formats to the 
Secretary.
    (ii) [Reserved]
    (2) Guidelines for applications. (i) Each application for a section 
1332 waiver will be subject to a preliminary review by the Secretary 
and the Secretary of the Treasury 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 
have made the preliminary determination that the application is 
complete.
    (A) The Secretary and the Secretary of the Treasury will complete 
the preliminary review of the application within 45 days after it is 
submitted.
    (B) If the Secretary and the Secretary of the Treasury determine 
that the application is not complete, the Secretary will send the State 
a written notice of the elements missing from the application.
    (C) 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.
    (ii) 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 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.
    (iii) Upon receipt of a complete application for an initial section 
1332 waiver, the Secretary will--
    (A) 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.
    (B) Indicate the status of the application.
    (iv) An application for initial approval of a section 1332 waiver 
will not be considered complete unless the application meets all of the 
following conditions:
    (A) Complies with paragraph (a) of this section.
    (B) Provides written evidence of the State's compliance with the 
public notice requirements set forth in Sec.  155.1312.
    (C) Provides all of the following:
    (1) A comprehensive description of the State legislation and 
program to implement a plan meeting the requirements for a waiver under 
section 1332;
    (2) A copy of the enacted State legislation authorizing such waiver 
request, as required under section 1332(a)(1)(C) of the Affordable Care 
Act;
    (3) A list of the provisions of law that the State seeks to waive 
including a brief description of the reason for the specific requests; 
and
    (4) The analyses, actuarial certifications, data, assumptions, 
analysis, targets and other information

[[Page 13565]]

set forth in paragraph (a)(2)(iv)(D) of this section sufficient to 
provide the Secretary and the Secretary of the Treasury with the 
necessary data to determine that the State's proposed waiver:
    (i) Will, as required under section 1332(b)(1)(A) of the Affordable 
Care Act (the comprehensive coverage requirement), 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 and 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;
    (ii) Will, as required under section 1332(b)(1)(B) of the 
Affordable Care Act (the affordability requirement), 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;
    (iii) Will, as required under section 1332(b)(1)(C) of the 
Affordable Care Act (the scope of coverage requirement), 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
    (iv) Will not, as prohibited under section 1332(b)(1)(D) of the 
Affordable Care Act (the Federal deficit requirement), increase the 
Federal deficit.
    (D) Contains the following supporting information:
    (1) 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;
    (2) 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:
    (i) 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
    (ii) A detailed analysis regarding the estimated impact of the 
waiver on health insurance coverage in the State.
    (3) 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:
    (i) 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
    (ii) 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.
    (4) Additional information. Additional information supporting the 
State's proposed waiver, including:
    (i) An explanation as to whether the waiver increases or decreases 
the administrative burden on individuals, insurers, and employers, and 
if so, how and why;
    (ii) 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;
    (iii) 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;
    (iv) 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
    (v) 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.
    (5) 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.
    (6) Other information. Other information consistent with guidance 
provided by the Secretary and the Secretary of the Treasury.
    (b) 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.
    (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.

[[Page 13566]]

    (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 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 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 
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 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 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, 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, 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 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 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 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 Secretaries determine that a State has 
materially failed to comply with the terms of a section 1332 waiver.
    (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, or an independent evaluator 
selected by the Secretary or the Secretary of the Treasury 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, 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 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

[[Page 13567]]

and approval to the Secretary, respectively.


Sec.  155.1328  Periodic evaluation requirements.

    (a) General. (1) The Secretary and the Secretary of the Treasury 
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 and any terms and conditions 
governing the section 1332 waiver.
    (2) 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.

    Authority:  Sec. 1332 of the Patient Protection and Affordable 
Care Act (Pub. L. 111-148).

    Approved: February 22, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: March 4, 2011.
Kathleen Sebelius,
Secretary of Health and Human Services.
    Approved: March 7, 2011.
Michael F. Mundaca,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2011-5583 Filed 3-10-11; 11:15 am]
BILLING CODE 4510-29-P, 4120-01-P