Federal Register, Volume 78 Issue 37 (Monday, February 25, 2013)

[Federal Register Volume 78, Number 37 (Monday, February 25, 2013)]
[Rules and Regulations]
[Pages 12834-12872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04084]

[[Page 12833]]

Vol. 78

Monday,

No. 37

February 25, 2013

Part II

Department of Health and Human Services

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45 CFR Parts 147, 155, and 156

Patient Protection and Affordable Care Act; Standards Related to
Essential Health Benefits, Actuarial Value, and Accreditation; Final
Rule

Federal Register / Vol. 78 , No. 37 / Monday, February 25, 2013 /
Rules and Regulations

[[Page 12834]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147, 155, and 156

[CMS-9980-F]
RIN 0938-AR03

Patient Protection and Affordable Care Act; Standards Related to
Essential Health Benefits, Actuarial Value, and Accreditation

AGENCY: Department of Health and Human Services.

ACTION: Final rule.

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SUMMARY: This final rule sets forth standards for health insurance
issuers consistent with title I of the Patient Protection and
Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act of 2010, referred to collectively as the Affordable
Care Act. Specifically, this final rule outlines Exchange and issuer
standards related to coverage of essential health benefits and
actuarial value. This rule also finalizes a timeline for qualified
health plans to be accredited in Federally-facilitated Exchanges and
amends regulations providing an application process for the recognition
of additional accrediting entities for purposes of certification of
qualified health plans.

DATES: Effective April 26, 2013.

FOR FURTHER INFORMATION CONTACT:
Leigha Basini at (301) 492-4307, for general information.
Adam Block at (410) 786-1698, for matters related to essential health
benefits, actuarial value, and minimum value.
Tara Oakman at (301) 492-4253, for matters related to accreditation.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
A. Legislative Overview
B. Stakeholder Consultation and Input
II. Provisions of the Regulation and Analysis of and Responses to
Public Comments
A. Part 147--Health Insurance Reform Requirements for the Group
and Individual Health Insurance Markets
1. Subpart B--Requirements Relating to Health Care Access
a. Coverage of EHB (Sec. 147.150)
B. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act State-Required Benefits
C. Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges
1. Subpart A--General Provisions
2. Subpart B--EHB Package
a. State Selection of Benchmark (Sec. 156.100)
b. Determination of EHB for Multi-State Plans (Sec. 156.105)
c. EHB-Benchmark Plan Standards (Sec. 156.110)
d. Provision of EHB (Sec. 156.115)
e. Prescription Drug Benefits (Sec. 156.122)
f. Prohibition on Discrimination (Sec. 156.125)
g. Cost-Sharing Requirements (Sec. 156.130)
h. AV Calculation for Determining Level of Coverage (Sec.
156.135)
i. Levels of Coverage (Sec. 156.140)
j. Determination of Minimum Value (Sec. 156.145)
k. Application to Stand-Alone Dental Plans Inside the Exchange
(Sec. 156.150)
3. Subpart C--Accreditation
III. Collection of Information Requirements
IV. Regulatory Impact Analysis
V. Regulatory Flexibility Act
VI. Unfunded Mandates
VII. Federalism
VIII. Appendix A--List of EHB Benchmarks
IX. Appendix B--Largest FEDVIP Dental and Vision Plan Options, as of
March 31, 2012

Acronym List:

Because of the many organizations and terms to which we refer by
acronym in this final rule, we are listing these acronyms and their
corresponding terms in alphabetical order below:

AV Actuarial Value
CHIP Children's Health Insurance Program
CMS Centers for Medicare & Medicaid Services
DOL U.S. Department of Labor
EHB Essential Health Benefits
ERISA Employee Retirement Income Security Act (29 U.S.C. section
1001, et seq.)
FDA U.S. Food and Drug Administration
FEDVIP Federal Employees Dental and Vision Insurance Program
FEHBP Federal Employees Health Benefits Program
FSA Flexible Spending Arrangement
HEDIS Healthcare Effectiveness Data and Information Set
HHS U.S. Department of Health and Human Services
HIOS Health Insurance Oversight System
HMO Health Maintenance Organization
HRA Health Reimbursement Arrangement
HSA Health Savings Account
IOM Institute of Medicine
ICR Information Collection Requirements
IRS Internal Revenue Service
MV Minimum Value
NAIC National Association of Insurance Commissioners
OMB Office of Management and Budget
OPM U.S. Office of Personnel Management
PHSAct Public Health Service Act
PRA Paperwork Reduction Act
QHP Qualified Health Plan
SHOP Small Business Health Options Program
SSA Social Security Administration
The Act Social Security Act
The Code Internal Revenue Code of 1986
USP United States Pharmacopeia

Executive Summary: Beginning in 2014, all non-grandfathered health
insurance coverage in the individual and small group markets, Medicaid
benchmark and benchmark-equivalent plans, and Basic Health Programs (if
applicable) will cover essential health benefits (EHB), which include
items and services in 10 statutory benefit categories, such as
hospitalization, prescription drugs, and maternity and newborn care,
and are equal in scope to a typical employer health plan. In addition
to offering EHB, non-grandfathered health insurance plans will meet
specific actuarial values (AVs): 60 percent for a bronze plan, 70
percent for a silver plan, 80 percent for a gold plan, and 90 percent
for a platinum plan. These AVs, called ``metal levels,'' will assist
consumers in comparing and selecting health plans by allowing a
potential enrollee to compare the relative payment generosity of
available plans. Taken together, EHB and AV will significantly increase
consumers' ability to compare and make an informed choice about health
plans.
The Department of Health and Human Services (HHS) has provided
information on EHB and AV standards in several phases. On December 16,
2011, HHS released a bulletin \1\ (the EHB Bulletin) following a report
from the U.S. Department of Labor (DOL) \2\ describing the scope of
benefits typically covered under employer-sponsored coverage and an
HHS-commissioned study from the Institute of Medicine (IOM) \3\
recommending the criteria and methods for determining and updating the
EHB. The EHB Bulletin outlined an intended regulatory approach for
defining EHB, including a benchmark-based framework. Shortly
thereafter, on January 25, 2012, HHS released an illustrative list of
the largest three small group market products by state, which was
updated on July 2, 2012.\4\ HHS further clarified the approach
described in the EHB Bulletin through a series of Frequently Asked
Questions (FAQs),\5\ released on

[[Page 12835]]

February 17, 2012. On July 20, 2012, HHS published a final rule \6\
authorizing the collection of data to be used under the intended
process for states to select from among several benchmark options to
define EHB.
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\1\ ``Essential Health Benefits Bulletin.'' December 16, 2011.
Available at: http://cciio.cms.gov/resources/files/Files2/12162011/essential_health_benefits_bulletin.pdf.
\2\ ``Selected Medical Benefits: A report from the Department of
Labor to the Department of Health and Human Services.'' April 15,
2011. Available at: http://www.bls.gov/ncs/ebs/sp/selmedbensreport.pdf.
\3\ Institute of Medicine, ``Essential Health Benefits:
Balancing Coverage and Cost.'' October 6, 2011. Available at: http://www.iom.edu/Reports/2011/Essential-Health-Benefits-Balancing-Coverage-and-Cost.aspx.
\4\ ``Essential Health Benefits: List of the Largest Three Small
Group Products by State.'' July 3, 2012. Available at: http://cciio.cms.gov/resources/files/largest-smgroup-products-7-2-2012.pdf.PDF.
\5\ ``Frequently Asked Questions on Essential Health Benefits
Bulletin.'' February 17, 2012. Available at: http://cciio.cms.gov/resources/files/Files2/02172012/ehb-faq-508.pdf.
\6\ Patient Protection and Affordable Care Act; Data Collection
to Support Standards Related to Essential Health Benefits;
Recognition of Entities for the Accreditation of Qualified Health
Plans, Final Rule, 77 FR 42658-42672 (July 20, 2012) (to be codified
at 45 CFR part 156).
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HHS also published a bulletin \7\ outlining an intended regulatory
approach to calculations of AV and implementation of cost-sharing
reductions on February 24, 2012 (the AV/CSR Bulletin). Specifically,
HHS outlined an intended regulatory approach for the calculation of AV,
de minimis variation standards, and silver plan variations for
individuals eligible for cost-sharing reductions among other topics. As
described in section IB of this preamble, ``Stakeholder Consultation
and Input,'' HHS reviewed and considered comments on both the EHB and
AV/CSR bulletins in developing the notice of proposed rulemaking and
this final rule.
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\7\ ``Actuarial Value and Cost-Sharing Reductions Bulletin.''
February 24, 2012. Available at: http://cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf.
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In addition, this rule finalizes an amendment to 45 CFR 156.275, as
published on July 20, 2012 (77 FR 42658), which established the first
phase of an intended two-phase approach to recognizing accrediting
entities. As directed under law, recognized entities will implement the
standards established under the Affordable Care Act for qualified
health plans (QHPs) to be accredited on the basis of local performance
on a timeline established by the Exchange. The amendment to phase one
included here does not alter recognition of the National Committee for
Quality Assurance (NCQA) and URAC as published in the Federal Register
notice on November 23, 2012 (77 FR 70163). The amendment provides an
opportunity for additional accrediting entities meeting the conditions
in listed Sec. 156.275 to be recognized by the Secretary, until phase
two is in effect. This opportunity includes an application and review
process. This final rule also sets forth a timeline for the
accreditation standard for the purposes of QHP certification in
Federally-facilitated Exchanges.

I. Background

A. Legislative Overview

Section 1302 of the Affordable Care Act provides for the
establishment of an EHB package that includes coverage of EHB (as
defined by the Secretary of the Department of Health and Human Services
(the Secretary)), cost-sharing limits, and AV requirements. The law
directs that EHB be equal in scope to the benefits covered by a typical
employer plan and cover at least the following 10 general EHB
categories: Ambulatory patient services; emergency services;
hospitalization; maternity and newborn care; mental health and
substance use disorder services, including behavioral health treatment;
prescription drugs; rehabilitative and habilitative services and
devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services, including oral \8\
and vision care. Sections 1302(b)(4)(A) through (D) of the Affordable
Care Act establish that the Secretary must define EHB in a manner that
(1) reflects appropriate balance among the 10 statutory EHB categories;
(2) is not designed in such a way as to discriminate based on age,
disability, or expected length of life; (3) takes into account the
health care needs of diverse segments of the population; and (4) does
not allow denials of EHB based on age, life expectancy, or disability.
Sections 1302(b)(4)(E) and (F) of the Affordable Care Act further
direct the Secretary to consider the provision of emergency services
and dental benefits when determining whether a particular health plan
covers EHB. Finally, sections 1302(b)(4)(G) and (H) of the Affordable
Care Act specify that the Secretary periodically review the EHB, report
the findings of such review to the Congress and to the public, and
update the EHB as needed to address any gaps in access to care or
advances in the relevant evidence base. Section 1311(d)(3)(B) of the
Affordable Care Act establishes that states may require a QHP to cover
additional benefits beyond those in the EHB, provided that the state
defrays the costs of such required benefits.
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\8\ We note that the Affordable Care Act uses the terms
``dental'' and ``oral'' interchangeably when referring to the
pediatric dental care category of EHB (see, e.g., section
1302(B)(1)(J), referring to pediatric oral care, and section
1311(d)(2)(B)(ii), referring to stand-alone dental benefits).
Similarly, we intend for purposes of the EHB rule that these terms
be used without distinction.
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As first described in Public Health Service (PHS) Act section
2711,\9\ to determine which benefits are EHB for purposes of complying
with PHS Act section 2711 and its implementing regulations, the
Departments of Labor, Treasury, and HHS will consider a self-insured
group health plan, a large group market health plan, or a grandfathered
group health plan to have used a permissible definition of EHB under
section 1302(b) of the Affordable Care Act if the definition is one
that is authorized by the Secretary of HHS (including any available
benchmark option, supplemented as needed to ensure coverage of all ten
statutory categories). Furthermore, the Departments intend to work with
those plans that make a good faith effort to apply an authorized
definition of EHB to ensure there are no annual or lifetime dollar
limits on EHB.
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\9\ See 75 FR 37188, 37191 (June 28, 2010). The regulations
define ``essential health benefits'' by cross-reference to section
1302(b) of the Affordable Care Act and applicable regulations, which
had not been issued at the time of publication of the regulations
implementing PHS Act section 2711.
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Section 1301(a)(1)(B) of the Affordable Care Act directs all
issuers of QHPs to cover the EHB package described in section 1302(a)
of the Affordable Care Act, including coverage of the services
described in section 1302(b), adhering to the cost-sharing limits
described in section 1302(c), and subject to 1302(e), meeting the AV
levels established in section 1302(d). Section 2707(a) of the PHS Act
extends the coverage of the EHB package to issuers of non-grandfathered
individual and small group policies beginning with plan years starting
on or after January 1, 2014, irrespective of whether such issuers offer
coverage through an Exchange. In addition, section 2707(b) of the PHS
Act directs non-grandfathered group health plans to ensure that cost-
sharing under the plan does not exceed the limitations described in
sections 1302(c)(1) and (2) of the Affordable Care Act.
Section 1302(d)(2) of the Affordable Care Act describes the levels
of coverage that section 1302(a)(3) includes in the EHB package: 60
percent for a bronze plan, 70 percent for a silver plan, 80 percent for
a gold plan, and 90 percent for a platinum plan. Section 1302(d)(3)
directs the Secretary to develop guidelines that allow for de minimis
variation in AV calculations.
Section 1311(c)(1)(D)(i) of the Affordable Care Act directs a
health plan to ``be accredited with respect to local performance on
clinical quality measures * * * by any entity recognized by the
Secretary for the accreditation of health insurance issuers or plans
(so long as any such entity has transparent and rigorous methodological
and scoring criteria).'' Section 1311(c)(1)(D)(ii) requires that QHPs

[[Page 12836]]

``receive such accreditation within a period established by an Exchange
* * * ''. In a final rule published on July 20, 2012 (77 FR 42658),
because NCQA and URAC already met the statutory requirements, they were
recognized as accrediting entities on an interim basis, subject to the
submission of documentation required in 45 CFR 156.275(c)(4). This
recognition is now effective as indicated in the Federal Register
notice (77 FR 70163) published on November 23, 2012, titled
``Recognition of Entities for the Accreditation of Qualified Health
Plans.''
In this final rule, HHS establishes a process by which accrediting
entities that are not already recognized can submit an application to
be recognized and a proposed notice and final notice process for
recognizing any new accrediting entities. This final rule also sets
forth a timeline for the accreditation requirement in a Federally-
facilitated Exchange.

B. Stakeholder Consultation and Input

HHS consulted with interested stakeholders on several policies
related to EHB, AV, and Exchange functions. HHS held a number of
listening sessions with consumers, providers, employers, health plans,
and state representatives to gather public input, and released several
documents for public review and comment. In addition, HHS consulted
with stakeholders through regular meetings with the National
Association of Insurance Commissioners (NAIC), regular contact with
states through the process of awarding and monitoring grants for the
establishment of Exchanges, Medicaid consultations, and meetings with
tribal leaders and representatives, health insurance issuers, trade
groups, consumer advocates, employers, and other interested parties.
HHS received approximately 11,000 comments in response to the EHB
Bulletin. Commenters represented a wide variety of stakeholders,
including health insurance issuers, consumers, health providers,
states, employers, employees, and Members of Congress. In the proposed
rule, we noted that these comments were considered as the policies were
developed and were also discussed throughout the preamble of the
proposed rule. HHS has consulted with and will continue to consult with
federally recognized tribes on the provisions of this rule that impact
tribes.

II. Provisions of the Regulation and Analysis of and Responses to
Public Comments

The proposed rule, titled ``Patient Protection and Affordable Care
Act; Standards Related to Essential Health Benefits, Actuarial Value,
and Accreditation'' (77 FR 70644), was published in the Federal
Register on November 26, 2012. In that rule, we proposed to codify
regulations in 45 CFR parts 147, 155, and 156. For Part 147, we
proposed standards for health insurance issuers in the small group and
individual markets related to health insurance reforms. For Part 155,
we proposed standards for states seeking to require benefits in
addition to those in EHB and outlined the proposed standards for
Exchanges related to the QHP accreditation timeline. Additionally, for
Part 156, we proposed standards relating to EHB and AV, as well as
relating to accreditation of QHP issuers. These standards apply only in
the individual and small group markets, and not to Medicaid benchmark
or benchmark-equivalent plans. In a proposed rule, released on January
14, 2013, titled ``Medicaid, Children's Health Insurance Programs, and
Exchanges: Essential Health Benefits in Alternative Benefits Plans,
Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and
Exchange Eligibility Appeals and Other Provisions Related to
Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and
Medicaid Premiums and Cost Sharing,'' \10\ CMS proposed EHB
applicability to Medicaid.
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\10\ Medicaid, Children's Health Insurance Programs, and
Exchanges: Essential Health Benefits in Alternative Benefits Plans,
Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid
and Exchange Eligibility Appeals and Other Provisions Related to
Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and
Medicaid Premiums and Cost Sharing, 78 FR 4594 (proposed January 22,
2013) (to be codified at 42 CFR parts 430, 431, 433, 435, 440, 447,
and 457 and 45 CFR part 155).
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We received approximately 5,798 public comments including roughly
600 total unique letters on the essential health benefit proposals,
including comments from states, health plans, industry experts, health
care providers, Members of Congress, consumer groups, and members of
the public. Many non-unique comments concerned coverage of lactation
services, medical foods, acupuncture services, maternity coverage for
dependents, and cost sharing for mental health services. Many
commenters expressed concern about the comprehensiveness of the
proposed benchmark standard, the balance between affordability and
state flexibility, and the length of the public comment period. In this
final rule, we provide a summary of each proposed provision, a summary
of the public comments received and our responses to them, and the
policies we are finalizing.
The comments and our responses to general comments are set forth
below.
Comment: Several commenters were concerned that the 30-day comment
period was not an adequate amount of time to provide sufficient
feedback on the proposed regulation. Specifically, many commenters
requested a 60-day comment period, but provided no substantive comment.
Response: CMS provided a 30-day comment period, which is consistent
with the Administrative Procedure Act and the policy established by the
Assistant Secretary for Administration (ASA) and the Office of
Management and Budget (OMB). We note that CMS previously allowed for an
extended comment period on the EHB Bulletin, which outlined the
intended policy in the proposed rule. CMS believes that interested
stakeholders had adequate opportunity to provide comment on the
policies established in this final rule.

A. Part 147--Health Insurance Reform Requirements for the Group and
Individual Health Insurance Markets

1. Subpart B--Requirements Relating to Health Care Access
a. Coverage of EHB (Sec. 147.150)
Section 2707(a) of the PHS Act, as added by the Affordable Care
Act, directs health insurance issuers that offer non-grandfathered
health insurance coverage in the individual or small group market to
ensure that such coverage includes the EHB package, which is defined
under section 1302(a) of the Affordable Care Act to include the
coverage of EHB, application of cost-sharing limitations, and AV
requirements (plans must be a bronze, silver, gold, or platinum plan,
or a catastrophic plan).
Section 1255 of the Affordable Care Act provides that this EHB
package standard applies starting the first plan year for the small
group market or policy year for the individual market beginning on or
after January 1, 2014. In 45 CFR 147.150(a), we implement the
requirement in section 2707(a) of the PHS Act that a health insurance
issuer that offers health insurance coverage in the individual or small
group market--inside or outside of the Exchange-- ensures that such
coverage offers the EHB package.
Section 2707(b) of the PHS Act provides that a group health plan
shall ensure that any cost-sharing

[[Page 12837]]

requirements under the plan does not exceed the limitations provided
for under section 1302(c)(1), annual limitation on cost-sharing, and
(c)(2), annual limitation on deductibles, of the Affordable Care Act.
Section 715(a)(1) of the Employee Retirement Income Security Act
(ERISA) and section 9815(a)(1) of the Internal Revenue Code (the Code)
incorporate section 2707(b) of the PHS Act into ERISA and the Code. In
the preamble to the proposed rule, HHS, DOL, and the Department of the
Treasury state that they read section 2707(b) to apply the deductible
limit described in section 1302(c)(2) of the Affordable Care Act only
to plans and issuers in the small group market and not to self-insured
group health plans, large group health plans, or health insurance
issuers offering health insurance coverage in the large group market.
However, no rules to implement that interpretation were proposed at
that time and we noted that section 147.150(b) would be reserved. The
three Departments intend to engage in future rulemaking to implement
section 2707(b) but, in light of comments received on the
interpretation of section 2707(b), are explaining in more detail here
our intended approach to this provision and the application of the
section 1302(c)(1) and (2) cost-sharing limits to group health plans.
Section 2707(b) provides that ``[a] group health plan shall ensure that
any annual cost sharing imposed under the plan does not exceed the
limitations provided for under paragraphs (1) and (2) of section
1302(c).'' We recognize the potential ambiguity in this reference to
the limitations provided under section 1302(c)(1) and (2) of the
Affordable Care Act. As noted below in response to comments, we read
section 2707(b) as requiring all group health plans to comply with the
annual limitation on out-of-pocket maximums described in section
1302(c)(1),\11\ annual limitation on cost-sharing. At the same time,
consistent with the approach described in the preamble to the proposed
rule, we continue to believe that only plans and issuers in the small
group market are subject to the deductible limits described in section
1302(c)(2).
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\11\ Note that PHS Act section 2707 is not applicable to
grandfathered health plans. See 26 CFR 54.9815-1251T, 29 CFR
2590.715-1251, 45 CFR 147.140.
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We believe there are two alternative reads of the statute that give
strong textual support for this interpretation of the relationship
between of section 2707(b) and section 1302(c)(2) and lead to
effectively the same result. The first interpretation would implement
section 2707(b)'s direction that group health plans comply with section
1302(c)(1) and (2) by substituting the term ``group health plan'' from
section 2707(b) where the term ``health plan'' appears in section
1302(c)(1) and (2). The annual limitation on cost-sharing in section
1302(c)(1) applies to all ``health plan[s],'' and so under this
interpretation that limitation would apply to all ``group health
plan[s].'' In contrast, the annual limitation on deductibles in section
1302(c)(2) applies only to ``health plan[s] offered in the small group
market,'' and so under this interpretation that limitation would apply
only to insured small group market health plans.
Under the second interpretation we see as consistent with the
statutory text, section 2707(b) could be read to require all group
health plans to comply with both the annual limitation on cost-sharing
in section 1302(c)(1) and the annual limitation on deductibles in
section 1302(c)(2). Section 1302(c)(2)(C), however, provides that the
cap on deductibles shall be applied in such a manner so as not to
affect the actuarial value of the plan. If the limitation on
deductibles were interpreted to apply to large and self-insured group
health plans, the Departments would engage in rulemaking to implement
this provision broadly, so as to provide relief to large and self-
insured group health plans in cases where complying with the limit on
deductibles would affect the actuarial value of those plans. We
anticipate that we would develop the applicable parameters in separate
rulemaking that would take into consideration the differences in
applying the concept of actuarial value to large and self-insured group
health plans that do not have to meet the level of coverage
requirements that are part of the EHB package.
In addition, section 2707(c) of the PHS Act provides that an issuer
offering any level of coverage specified under section 1302(d) of the
Affordable Care Act offer coverage in that level as a plan in which the
only enrollees are individuals who have not yet attained the age of 21.
We codify this standard in 45 CFR 147.150(c).
Comments received regarding Sec. 147.150(a) and (c) are addressed
in other sections of this preamble that are more relevant to the
substance of the comments. We also received comments addressing the
suggested interpretation of section 2707(b) and how the limitations on
cost-sharing should apply to all group health plans.
Comment: Some commenters requested that self-insured plans be
exempt from the cost sharing limits described in Sec. 156.130(a).
Several of these comments indicated operational concerns with applying
a single annual limitation on cost sharing to EHB that are administered
by separate contractors; in particular, commenters noted the practice
of using a pharmacy benefit manager to administer prescription benefits
separately from other medical benefits. Other commenters agreed with
the legal read that cost sharing limits described in Sec. 156.130(a)
apply to all group health plans.
Response: We note that DOL also received correspondence on this
issue seeking clarification of how the three Departments would
interpret section 2707(b) of the PHS Act and the corresponding
provisions in ERISA and the Code. As discussed in more detail above,
the three Departments interpret these provisions to mean that large
group market and self-insured group health plans must comply with the
annual limitation on out-of-pocket maximums described in section
1302(c)(1).
Nevertheless, the Departments are concerned about the operational
and timing issues raised by commenters, and find that some transitional
relief is appropriate. Accordingly, the three Departments are issuing
concurrent sub-regulatory guidance identifying an enforcement safe
harbor for large and self-insured group health plans to address those
operational concerns.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
147.150 of the proposed rule with two technical edits to paragraph (c)
to conform to the underlying statutory authority, including adding to
paragraph (c) the following language ``as a plan in which the only
enrollees are,'' to clarify that the child-only coverage offered by an
issuer under this section must be a plan with only child enrollees.

B. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act State-Required Benefits

Section 1311(d)(3)(B) of the Affordable Care Act explicitly permits
a state, at its option, to require QHPs to offer benefits in addition
to EHB, but requires the state to make payments, either to the
individual enrollee or to the issuer on behalf of the enrollee, to
defray the cost of these additional benefits. We proposed that state-
required benefits enacted on or before December 31, 2011 (even if not
effective

[[Page 12838]]

until a later date) may be considered EHB, which would obviate the
requirement for the state to defray costs for these state-required
benefits. We also proposed that these state-required benefits that are
not included in the benchmark would apply to QHP markets in the same
way they apply in the current market. This policy regarding state-
required benefits is intended to apply for at least plan years 2014 and
2015. This two year transitional period accommodates current market
offerings and limits market disruption in the first years of the
Exchanges.
Under the Affordable Care Act, state payment for state-required
benefits only applies to QHPs. Since the Exchange is responsible for
certifying QHPs, we proposed that the Exchange identify which
additional state-required benefits, if any, are in excess of the EHB.
We additionally proposed that the calculations of the cost of
additional benefits be made by a member of the American Academy of
Actuaries, in accordance with generally accepted actuarial principles
and methodologies. We also proposed the calculation be done
prospectively to allow for the offset of an enrollee's share of premium
and for purposes of calculating the premium tax credit and reduced cost
sharing.\12\
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\12\ Section 36B(b)(3)(D) of the Code specifies that the portion
of the premium allocable to required additional benefits shall not
be taken into account in determining a premium tax credit. Likewise,
section 1402(c) of the Affordable Care Act specifies that cost-
sharing reductions do not apply to required additional benefits.
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The comments and our responses to Sec. 155.170 are set forth
below.
Comment: Some commenters were concerned that including all state-
required benefits enacted before December 31, 2011 in EHB would
increase costs for covered individuals. However, most who commented on
inclusion of state-required benefits favored this policy.
Response: Research by the HHS Office of the Assistant Secretary for
Planning and Evaluation found that the majority of required benefits
have a negligible impact on premiums.\13\
---------------------------------------------------------------------------

\13\ ``Essential Health Benefits: Comparing Benefits in Small
Group Products and State and Federal Employee Plans.'' ASPE Research
Brief, December 2011. Available at: http://aspe.hhs.gov/health/reports/2011/marketcomparison/rb.pdf.
---------------------------------------------------------------------------

Comment: Some commenters suggested that states should make monthly
payments to only the issuer on behalf of the enrollee, and that
payments to the enrollee directly should not be permitted.
Response: Section 1311(d)(3)(B) of the Affordable Care Act directs
the state to make payments either to the individual enrollee or to the
issuer, and regulatory language reflects that statutory requirement. We
are retaining our proposed approach as final and will permit states to
either make payments to individuals or issuers, as applicable.
Comment: Some commenters suggested that we should require the state
to defray any cost associated with other types of state requirements,
such as rules regarding reimbursement to certain providers, anti-
discrimination laws, and rules specific to benefit delivery method.
Response: As we explained in the preamble of the proposed rule, we
interpret ``state-required benefits'' to include the care, treatment
and services that an issuer must provide to its enrollees. Other state
laws that do not relate to specific benefits, including those relating
to providers and benefit delivery method, are not addressed in Sec.
155.170.
Comment: In the proposed rule we requested comment on whether the
state should make payments based on the statewide average cost of
additional state-required benefits that are outside the scope of EHB or
make payments based on each QHP issuer's actual cost. Several
commenters noted that each QHP issuer's cost may vary due to
differences in market share and enrollee pool, and those commenters
favored payments based on actual cost. Other commenters recommended
that payments should be based on the average benefit cost for the
relevant geographic area.
Response: We believe that states may wish to take different
approaches, basing payments on either statewide average or each
issuer's actual cost. Therefore, we are not establishing a standard in
this final rule but permit both options for calculating state payments,
at the election of the state.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
155.170 of the proposed rule without modification.
Accreditation Timeline (Sec. 155.1045)
In Sec. 155.1045, we proposed to redesignate the existing
paragraph as paragraph (a) and to add a new paragraph (b) to set forth
the timeline for accreditation as a QHP certification requirement in
the Federally-facilitated Exchanges (including State Partnership
Exchanges). This provision is consistent with Sec. 156.275(a), in
which we required that all QHP issuers must be accredited with respect
to local performance of their QHPs on the timeline established by the
Exchange.
The comments and our responses to Sec. 155.1045 are set forth
below.
Comment: Several commenters supported the proposal to phase-in
accreditation standards for QHP issuers participating in a Federally-
facilitated Exchange. Other commenters did not support this approach
and requested that QHP issuer accreditation, as defined in 45 CFR
156.275, be required for QHP issuers beginning in 2013.
Response: HHS is finalizing the accreditation timeline for QHP
issuers in the Federally-facilitated Exchanges as proposed. We proposed
a phased approach in order to accommodate issuers without existing
accreditation and new issuers. We believe that accepting existing
accreditation from an issuer's commercial, Medicaid, or Exchange
products and phasing in accreditation requirements for issuers without
existing accreditation will expand QHP choices available to consumers
while ensuring that all QHP issuers commit to delivering high quality
care. Creating a phased approach for these requirements also provides
issuers and recognized accrediting entities with sufficient time to
schedule and conduct accreditation reviews, which can take as long as
18 months.
Comment: Several commenters requested clarification of the
requirements specified in proposed Sec. 155.1045(b)(2) and (3) and the
meaning of being accredited in accordance with Sec. 156.275.
Response: As stated above, HHS proposed a phased approach to
accreditation for the Federally-facilitated Exchanges. In paragraph
(b)(2), we proposed that a QHP issuer must be accredited on their
policies and procedures that are applicable to their Exchange products,
or a QHP issuer must have commercial or Medicaid health plan
accreditation granted by a recognized accrediting entity for the same
state in which the issuer is offering Exchange coverage and the
administrative policies and procedures underlying that accreditation
must be the same or similar to the administrative policies and
procedures used in connection with the QHP. In paragraph (b)(3), we
direct issuers of QHPs to be accredited in accordance with all of the
standards specified in Sec. 156.275, including performance measurement
reporting required at (a)(1)(i) and (ii) of Sec. 156.275 and the
reporting of clinical performance measures and patient experience
ratings on a standardized Consumer Assessment of Health Providers and
Systems[supreg] (CAHPS) survey. We are adopting this phased

[[Page 12839]]

approach to accreditation to align with the earliest possible time that
issuers are able to report performance data on their QHP population as
part of the accreditation process. We acknowledged in earlier guidance
\14\ that performance data on an issuer's QHP population will not be
available until a full-year of data are available (for example, in 2015
based on the 2014 coverage year).
---------------------------------------------------------------------------

\14\ General Guidance on Federally-facilitated Exchanges, May
16, 2012. Available at http://cciio.cms.gov/resources/files/ffe-guidance-05-16-2012.pdf.
---------------------------------------------------------------------------

Comment: One commenter questioned if accreditation at the Exchange
product type level would be methodologically sound in 2016 and
requested a delay of several years in the requirement at Sec.
155.1045(b)(3) which requires QHP issuers to be accredited in
accordance with 45 CFR 156.275 as early as 2016 certification for the
2017 coverage year.
Response: We are requiring performance measurement reporting at the
Exchange product type level as part of accreditation required in 2016
to align with the earliest possible time that issuers are able to
report performance data on their QHP population. As finalized in 45 CFR
156.275(c)(2)(iii),\15\ there is an exception to the Exchange product
type level accreditation requirement if the recognized accrediting
entity demonstrates that the Exchange product type accreditation is not
methodologically sound for a particular issuer.
---------------------------------------------------------------------------

\15\ Patient Protection and Affordable Care Act; Data Collection
To Support Standards Related to Essential Health Benefits;
Recognition of Entities for the Accreditation of Qualified Health
Plans,'' 77 FR 42658 (July 20, 2012).
---------------------------------------------------------------------------

Comment: One commenter suggested that State-based Exchanges should
be encouraged to follow the accreditation timeline set forth for a
Federally-facilitated Exchange.
Response: As specified in 45 CFR 155.1045(a), Exchanges must
establish a uniform period within which a QHP issuer must become
accredited. State-based Exchanges are able to align with the proposed
Federally-facilitated Exchange timeline if they choose. This provision
was finalized in the Exchange Establishment Final Rule.\16\
---------------------------------------------------------------------------

\16\ ``Establishment of Establishment of Exchanges and Qualified
Health Plans; Exchange Standards for Employers; Final Rule and
Interim Final Rule'' (77 FR 18310 (March 27, 2012)). Available at
http://www.gpo.gov/fdsys/pkg/FR-2012-03-27/pdf/2012-6125.pdf.
---------------------------------------------------------------------------

Comment: Some commenters urged HHS to take additional steps to
monitor and oversee QHP quality, aside from accreditation.
Response: Issuers participating in Exchanges need to meet the range
of standards for certification which are included in 45 CFR part 156.
As part of plan management functions, Exchanges will be responsible for
managing certain types of consumer complaints about QHP issuers,
examining potential QHP issuer non-compliance with applicable laws, and
ensuring ongoing compliance with the QHP certification standards. We
believe these requirements, including processes for issuer
recertification and decertification will ensure adequate oversight of
issuers participating in a Federally-facilitated Exchange.
Additionally, we anticipate future rulemaking on QHP issuer quality
reporting requirements, including a QHP-specific quality rating as
required by section 1311(c)(3) of the Affordable Care Act.
Comment: Several commenters asked for clarification regarding how
HHS will determine if an issuer has existing commercial, Medicaid, or
Exchange accreditation. Several commenters noted that Medicaid managed
care plans may not be licensed as ``issuers.'' Other commenters
questioned if HHS would accept accreditation from a company's Preferred
Provider Organization product if it is accredited on a different legal
entity than the company's Health Maintenance Organization (HMO)
product.
Response: The Exchange Establishment Final Rule, at 45 CFR 155.20,
defines ``health insurance issuer or issuer'' by cross-referencing the
definition of health insurance issuer as defined in 45 CFR 144.103: A
health insurance issuer means ``an insurance company, insurance
service, or insurance organization (including an HMO) that is required
to be licensed to engage in the business of insurance in a state and
that is subject to state law that regulates insurance (within the
meaning of section 514(b)(2) of ERISA).'' This term does not include a
group health plan. We consider issuers, as defined above, to have
existing accreditation if they are accredited with respect to the
product type at issue under the same legal entity as the one that is
offering such a product in the Exchange. We plan to issue future
guidance as to the process by which issuers may demonstrate how they
meet the accreditation standard.
Comment: One commenter asked that HHS clarify that a federally-
facilitated Exchange will accept any existing health plan accreditation
on issuers' commercial or Medicaid lines of business, in the same state
as the Exchange in which the issuer is seeking to offer coverage, at
the overall QHP issuer level.
Response: As we stated in a previously issued rule,\17\
accreditation at the Exchange product type level balances capturing the
QHP experience and enabling the reporting of valid and reliable
performance measures. An issuer may offer multiple QHPs under the same
product type, in the same Exchange; if the product type for that
Exchange is accredited, each of the corresponding QHPs would be
considered to be accredited.
---------------------------------------------------------------------------

\17\ Patient Protection and Affordable Care Act; Data Collection
to Support Standards Related to Essential Health Benefits;
Recognition of Entities for the Accreditation of Qualified Health
Plans, Final Rule, 77 FR 42658, -42665-42666 (July 20, 2012) (to be
codified at 45 CFR 156.275(c)(2)(iii)).
---------------------------------------------------------------------------

Comment: Some commenters questioned whether an issuer would meet
the standard in Sec. 155.1045(b) if the recognized accrediting entity
that had awarded the accreditation modified its accreditation
standards. One commenter specifically asked whether a QHP issuer would
meet the similarity standard described in Sec. 155.1045(b)(2) if the
recognized accrediting entity loses its recognition.
Response: We view these comments as pertaining to the meaning of
being accredited as required in Sec. 156.275. We would consider
issuers whose recognized accrediting entity modified its requirements
or lost its recognition as being accredited, provided that the
accrediting entity was recognized by HHS and accredited as meeting the
standards identified in Sec. 156.275 when the accreditation was
awarded. These issuers would meet the requirements in Sec. 156.275
and, therefore, the timeliness and similarity standards described in
Sec. 155.1045(b). Further, we do not anticipate that phase one
recognized accrediting entities are likely to lose their recognition
because Sec. 156.275(c)(4)(ii) requires that recognized accrediting
entities provide to HHS any proposed changes or updates to the
accreditation standards and requirements, processes, and measure
specifications for performance measures with 60 days' notice prior to
public notification.\18\ Therefore, HHS would have ample time to
analyze the entity's changes and assess if the changes should result in
the loss of recognition.
---------------------------------------------------------------------------

\18\ 45 CFR 156.275(c)(2) was finalized in the final rule,
Patient Protection and Affordable Care Act; Data Collection To
Support Standards Related to Essential Health Benefits; Recognition
of Entities for the Accreditation of Qualified Health Plans, 77 FR
42658 (July 20, 2012).
---------------------------------------------------------------------------

Comment: Several commenters requested that HHS exempt certain types
of plans or issuers from the accreditation requirements, such as CO-OPs
and Medicaid managed care plans,

[[Page 12840]]

or provide a different accreditation timeline for these issuers.
Response: Under 45 CFR 155.1045(a) Exchanges are responsible for
establishing a timeline for which all QHP issuers must be accredited.
The timeline for accreditation must be applied consistently across QHP
issuers. The phased process was developed in part to accommodate new
issuers, including CO-OP, and Medicaid plans without existing
accreditation.
Comment: A commenter asked for clarification on the applicability
of the accreditation requirements to stand-alone dental plans.
Response: The preamble to the Exchange Establishment Final Rule
specifies that to the extent that accreditation standards specific to
stand-alone dental plans do not exist, then such plans would not be
required to meet the accreditation requirement or the accreditation
timeline required by 45 CFR 155.1045.
Comment: Several commenters made recommendations as to when in the
QHP certification year a QHP issuer must be accredited in order to be
considered to have met the standards proposed in 45 CFR 155.1045(b)(1),
(2), and (3). One commenter recommended requiring issuers to crosswalk
their existing accredited policies or procedures to their QHP products.
Response: HHS will be issuing forthcoming guidance on how the
accreditation requirements will be operationalized as part of the QHP
certification process in the Federally-facilitated Exchanges.
Comment: Several commenters submitted comments in regard to the
U.S. Office of Personnel Management's (OPM) Establishment of the Multi-
State Plan Program for the Affordable Insurance Exchanges Notice of
Proposed Rulemaking, 77 FR 72582 \19\ (December 5, 2012) on
accreditation of multi-state plans (MSPs).
---------------------------------------------------------------------------

\19\ ``Establishment of the Multi-State Plan Program for the
Affordable Insurance Exchanges'' (77 FR 72582 (December 5, 2012)).
Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-12-05/pdf/2012-29118.pdf.
---------------------------------------------------------------------------

Response: HHS has determined that these comments are outside the
scope of this rule. As noted in Sec. 155.1045(a), the timeline for
accreditation for multi-state plans will be set by OPM.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing Sec. 155.1045 of the proposed
rule without modification.

C. Part 156--Health Insurance Issuer Standards Under the Affordable
Care Act, Including Standards Related to Exchanges

1. Subpart A--General Provisions
In Sec. 156.20, we proposed to add the following definitions as
follows:
Actuarial Value and Percentage of the Total Allowed Costs of Benefits
We proposed to define ``actuarial value (AV)'' as the percentage
paid by a health plan of the total allowed costs of benefits. We
proposed to define the ``percentage of the total allowed costs of
benefits'' as the anticipated covered medical spending for EHB coverage
(as defined in Sec. 156.110 (a)) paid by a health plan for a standard
population, computed in accordance with the health plan's cost sharing,
divided by the total anticipated allowed charges for EHB coverage
provided to the standard population, and expressed as a percentage.
Because section 1302(d)(2) of the Affordable Care Act refers to AV
relative to coverage of the EHB for a standard population, we proposed
these definitions together in order to provide that AV is the
percentage that represents the total allowed costs of benefits paid by
the health plan, based on the provision of EHB as defined for that plan
according to Sec. 156.115.
Benchmark Plans
Under the benchmark selection and standards proposed in Sec. Sec.
156.100 and 156.110, we believe it is important to differentiate
between the plan selected by a state (or through the default process in
Sec. 156.100(c)), which we proposed to call the ``base-benchmark
plan,'' and the benchmark standard that EHB plans will need to meet,
which we proposed to call the ``EHB-benchmark plan.''
We proposed that ``base-benchmark plan'' means that the plan that
is selected by a state from the options described in Sec. 156.100(a),
or a default benchmark plan, as described in Sec. 156.100(c), prior to
any adjustments made to meet the benchmark standards described in Sec.
156.110.
We proposed that ``EHB-benchmark plan'' means that the standardized
set of EHB that must be met by a QHP or other issuer as required by
Sec. 147.150.
We proposed that ``Essential health benefits package or EHB
package'' means the scope of covered benefits and associated limits of
a health plan offered by an issuer, as set forth in section 1302(a) of
the Affordable Care Act. The EHB package provides at least the ten
statutory categories of benefits, as described in 45 CFR 156.110(a);
provides benefits in the manner described in Sec. 156.115; limits
cost-sharing for such coverage as described in Sec. 156.130; and
subject to offering catastrophic plans as described in section 1302(e)
of the Affordable Care Act, provides distinct levels of coverage as
described in 45 CFR 156.140.
The comments and our responses to the proposed changes to Sec.
156.20 are set forth below.
Comment: Several commenters urged HHS to provide uniform,
standardized definitions for certain terms used throughout the
regulation relating to cost sharing.
Response: Terms used throughout the regulation are standard terms
of art that are understood in the industry, therefore we will not
provide additional definitions.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.20 of the proposed rule, without substantive modifications. We note
that we have made technical corrections to clarify that ``EHB package''
and ``essential health benefits package'' are the same.
2. Subpart B--EHB Package
a. State Selection of Benchmark (Sec. 156.100)
In Sec. 156.100, we proposed to set forth the criteria for the
selection process if a state chooses to select a benchmark plan. The
EHB-benchmark plan would apply to non-grandfathered health insurance
coverage offered in the individual or small group markets. The EHB-
benchmark plan would serve as a reference plan, reflecting both the
scope of services and limits offered by a typical employer plan in that
state. This approach and benchmark selection would apply for at least
the 2014 and 2015 benefit years.
Consistent with the approach outlined in the EHB Bulletin, in Sec.
156.100(a) we proposed that the state may select its base-benchmark
plan from among the following four types of health plans: (1) The
largest plan by enrollment in any of the three largest small group
insurance products in the state's small group market as defined in
Sec. 155.20; (2) any of the largest three state employee health
benefit plans by enrollment; (3) any of the largest three national
Federal Employees Health Benefits Program (FEHBP) plan options by
enrollment that are open to Federal employees; or (4) the largest
insured commercial non-Medicaid HMO operating in the state. Data from
the first quarter two years

[[Page 12841]]

prior to the coverage year would be used to determine plan enrollment.
HHS also made available benefit data for the single largest Federal
Employees Dental and Vision Insurance Program (FEDVIP) dental and
vision plans respectively, based on enrollment.
Section 156.100(a)(1) would reflect a typical plan in the state's
small group market and provides state flexibility as recommended by the
IOM in its report.\20\ The remaining proposed benchmark plan options,
in Sec. 156.100(a)(2) through (a)(4), would reflect the benchmark
approach used in Medicaid, as defined in 42 CFR 440.330, and in the
Children's Health Insurance Plan (CHIP), as defined in 42 CFR 457.410
and 457.420.
---------------------------------------------------------------------------

\20\ Institute of Medicine, ``Essential Health Benefits:
Balancing Coverage and Cost'' (2011). Available at: http://www.iom.edu/Reports/2011/Essential-Health-Benefits-Balancing-Coverage-and-Cost.aspx.
---------------------------------------------------------------------------

Because the PHS Act defines ``state'' to include the U.S.
territories (Puerto Rico, Guam, the U.S. Virgin Islands, American
Samoa, and the Northern Mariana Islands), the PHS Act requirements
related to EHB, as established by section 1302 of the Affordable Care
Act, apply to the territories.
At Sec. 156.100(b), we proposed the standard for approval of a
state-selected EHB-benchmark plan.
We proposed that the state's benchmark plan selection in 2012 would
be applicable for at least the 2014 and 2015 benefit years and stated
that we intend to revisit this policy for subsequent years. This two
year transitional period accommodates current market offerings and
limits market disruption in the first years of the Exchanges.
In Sec. 156.100(c), we proposed that if a state did not make a
benchmark plan selection, the default base-benchmark plan would be the
largest plan by enrollment in the largest product by enrollment in the
state's small group market. Each state's benchmark is specified in
Appendix A with a detailed set of benefits available at
www.cciio.cms.gov.
The comments and our responses to Sec. 156.100 are set forth
below.
Comment: Some commenters preferred a different benchmark plan than
the selection proposed in Appendix A of the proposed rule. Commenters
suggested that the proposed benchmark was inconsistent with the typical
employer plan in the state, and/or the scope of benefits was not
sufficiently comprehensive. Several commenters recommended that HHS
have a single, uniform federal EHB package because they are concerned
that the proposed benchmark options have a large degree of variation in
covered benefits which may lead to inconsistent EHB packages from state
to state. We also received several comments indicating that the ``top
three small group products in each state'' approach to the benchmark
selection was not the best option for the default benchmark plan, and
that FEHBP would have been a better alternative. Several commenters
believed that offering plan benefit packages created for adults or
families may not be considered sufficient to meet the requirement to
provide child-only coverage and that we should provide child-specific
benchmark plans such as states' CHIP plans as a more appropriate child-
only plan option.
Response: The benchmark approach for defining EHB sought to balance
the statutory ten benefit categories and affordability while providing
states--the primary regulators of health insurance markets--with
flexibility. The benchmark plan options for each state reflect the
scope of benefits and services typically offered in the employer market
in that state. This approach meets the statutory requirement that EHB
reflect a typical employer plan as well as the recommendation provided
by the IOM on the approach to defining EHB. Prior to the release of the
proposed rule and during the comment period prior to the release of the
final rule, HHS held multiple discussions with states regarding
specific details of their EHB-benchmark recommendations and these
selections are reflected in the finalized selections available in
Appendix A. Furthermore, we believe that our general EHB requirements,
along with regulatory prohibitions on benefit discrimination, ensure
that plans include an appropriate range of benefits for adults and
children. We will monitor these and other benefit packages to ensure
regulatory compliance and assess the need for future program changes.
Comment: We received numerous comments that the largest plan in the
largest product in the state was not among the options provided by HHS.
HHS did not propose the largest plan in the largest product due to
technical concerns with the methodology used in determining enrollment
data for the list of largest plans in the largest products.
Response: The three largest products in each state's small group
market were identified using enrollment data collected by
HealthCare.gov. The largest plan for each of the three largest products
in the small group market in each state was identified using enrollment
data from the plans in each state. We recognize that there are several
different methodologies for counting enrollment that we could have
chosen, and we selected the one that is most uniform across states and
best represents for all states the largest plan in the largest product
in the small group market. Prior to the release of the largest three
products list, HHS confirmed the methodology with each state.
Comment: We received comments recommending which one of the four
types of health plan benchmark options would be the most appropriate
default base-benchmark plan for territories. A few commenters
recommended that the territories follow the same standard as states for
the default base-benchmark plan; however, there was also concern that
the territories' markets are too small and unique, compared to those in
the states, to use the largest small group market plan. Some commenters
recommended using one consistent set of benefits, such as FEHBP, to
ensure a comprehensive EHB package. Other commenters discussed that the
small group market in Puerto Rico is more similar to the small group
markets in the 50 states than to those in the other territories given
the much larger size of its population and suggested that Puerto Rico
should have the largest small group plan in the market as the default
benchmark.
Response: In light of comments received, HHS has selected the
largest FEHBP plan as the default base-benchmark plan for all U.S.
territories, except for Puerto Rico. Benchmarks for Puerto Rico and the
other territories are listed in Appendix A along with the state
benchmark plans.
Comment: Several commenters expressed concern over providing
enforcement authority to states and recommended a more prescriptive
approach to monitoring and enforcement of this regulation. Some
requested that the federal government exercise strong oversight of
state efforts in monitoring and enforcing this area. Commenters also
urged HHS to use 2014 and 2015 as transitional years, during which we
would collect data on the plans then use those data to help update EHB
annually, starting in 2016. Recommended criteria for review included
but were not limited to plan comprehensiveness, affordability, and
continuity of coverage. Moreover, commenters recommended that, starting
in 2016, HHS adopt a comprehensive, Federal EHB standard.
Response: Enforcement of the requirement to cover EHB is governed
by section 2723 of the PHS Act, which looks first to states for
enforcement, then to the Secretary where a state has failed to
substantially enforce.

[[Page 12842]]

Therefore, we expect states to enforce the requirement that plans must
offer EHB. We are currently reviewing all options for updating EHB in
2016 and anticipate releasing additional guidance in the future on
enforcement of EHB requirements and updating EHB.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.100 of the proposed rule, with the following modification: while
continuing to be recognized as states, as defined under the PHS Act,
the U.S. territories including Guam, American Samoa, the U.S. Virgin
Islands and the Northern Mariana Islands, with exception of Puerto
Rico, will use the largest FEHBP plan as the default base-benchmark
plan. Like the other 50 states and the District of Columbia, Puerto
Rico will use the largest plan by enrollment in the largest product by
enrollment in its small group market as its default base-benchmark
plan. This is reflected in Appendix A.
b. Determination of EHB for Multi-State Plans (Sec. 156.105)
In Sec. 156.105, we proposed how the EHB determination would be
made for Multi-State Plans offered under contract with OPM pursuant to
section 1334 of the Affordable Care Act. We proposed that Multi-State
Plans must meet benchmark standards set by OPM.\21\
---------------------------------------------------------------------------

\21\ OPM has proposed standards for the Multi-State Plan Program
in ``Establishment of the Multi-State Plan Program for the
Affordable Insurance Exchanges'' 77 FR 72582 (December 5, 2012).
Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-12-05/pdf/2012-29118.pdf.
---------------------------------------------------------------------------

The comments and our responses to Sec. 156.105 are set forth
below.
Comment: We received several comments requesting more information
on the EHB requirement with respect to Multi-State Plans.
Response: OPM will be releasing regulations and guidance on the
application of EHB to Multi-State Plans. Therefore, we are not
addressing these comments in this rule.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.105 of the proposed rule without modifications.
c. EHB-Benchmark Plan Standards (Sec. 156.110)
To clarify the relationship between the 10 statutory EHB categories
and the EHB-benchmark plan, in paragraph (a) we proposed that the EHB-
benchmark plan provide coverage of at least the following categories of
benefits described in section 1302(b)(1) of the Affordable Care Act:
(1) Ambulatory patient services; (2) emergency services; (3)
hospitalization; (4) maternity and newborn care; (5) mental health and
substance use disorder services, including behavioral health treatment;
(6) prescription drugs; (7) rehabilitative and habilitative services
and devices; (8) laboratory services; (9) preventive and wellness
services and chronic disease management; and (10) pediatric services,
including oral and vision care.
We proposed to interpret ``pediatric services'' to mean services
for individuals under the age of 19 years. We noted that states have
the flexibility to extend pediatric coverage beyond the 19-year age
baseline.
For those base-benchmark plan options that would not cover one or
more of the 10 statutorily required EHB categories, in paragraph (b),
we proposed standards for supplementing. In paragraph (b)(1), we
proposed requiring that if a base-benchmark plan option does not cover
any items and services within an EHB category, the base-benchmark plan
would be supplemented by adding that particular category in its
entirety from another base-benchmark plan option. The resulting plan,
which would then cover all 10 statutory EHB categories, must also meet
standards for non-discrimination and balance defined in paragraphs (d)
and (e) of this section. After meeting all of these standards, it would
be considered the EHB-benchmark plan.
Proposed paragraphs (b)(2) and (3) discuss two categories of
benefits that may not currently be included in some major medical
benefit plans but that were included in the EHB as defined in proposed
Sec. 156.110(a) and section 1302(b)(1) of the Affordable Care Act. Our
review of research on employer-sponsored plan benefits, including small
employer products, found that pediatric oral and vision services were
not covered under the benefit packages of a number of potential
benchmarks, but, rather, were often covered under stand-alone policies.
We proposed targeted policy options for each of these benefit
categories.
In proposed paragraph (b)(2), we proposed to provide states with
two options for supplementing base-benchmark plans that do not include
benefits for pediatric oral care coverage. The first option, described
in paragraph (b)(2)(i), was to supplement with pediatric coverage
included in the FEDVIP dental plan with the largest enrollment. The
second option, described in paragraph (b)(2)(ii), was to supplement
with the benefits available under that state's separate CHIP program,
if one exists, to the eligibility group with the highest enrollment.
Similarly, in proposed paragraph (b)(3), we proposed to provide two
options for states to supplement a base-benchmark plan that does not
include pediatric vision services. The first option, described in
(b)(3)(i), is to supplement with the pediatric vision coverage included
in the FEDVIP vision plan with the largest national enrollment offered
to federal employees under 5 U.S.C. 8982. The second option, described
in (b)(3)(ii), is to supplement pediatric vision coverage with the
state's separate CHIP plan, if applicable.
In proposed paragraph (c), we proposed the process by which HHS
will supplement a default base-benchmark plan, where necessary.
Specifically, HHS would supplement the category of benefits in the
default base-benchmark plan with the first of the following options
that offers benefits in that particular EHB category: (1) The largest
plan by enrollment in the second largest product by enrollment in the
state's small group market as defined in Sec. 155.20; (2) the largest
plan by enrollment in the third largest product by enrollment in the
state's small group market as defined in Sec. 155.20; (3) the largest
national FEHBP plan by enrollment across states that is described in
and offered to Federal employees under 5 U.S.C. 8903; (4) the plan
described in paragraph (b)(2)(i) to cover pediatric oral care benefits;
(5) the plan described in (b)(3)(i) to cover pediatric vision care
benefits; and (6) habilitative services as described in Sec.
156.110(f) or Sec. 156.115(a)(4).
In proposed paragraph (d), we state that the EHB-benchmark plan
must not include discriminatory benefit designs. As set forth in
proposed Sec. 156.125, issuers would be prohibited from using benefit
designs that discriminate on the basis of an individual's age, expected
length of life, present or predicted disability, degree of medical
dependency, quality of life or other health condition. Issuers would
also have to comply with non-discrimination standards applicable to
QHPs under the Exchange rules. These standards would apply both to
benefit designs that limit enrollment, and those that prohibit access
to care for enrollees.
In proposed paragraph (e), we proposed to implement section
1302(b)(4)(A) of the Affordable Care Act by proposing to require that
the EHB-benchmark plan ensure an appropriate

[[Page 12843]]

balance among the categories of EHB so that benefits would not be
unduly weighted toward any category.
In conducting research on employer-sponsored plan benefits and
state-required benefits, HHS found that many health insurance plans do
not identify habilitative services as a distinct group of services.\22\
Accordingly, our proposed regulation proposed to include a transitional
policy for coverage of habilitative services that would provide states
with the opportunity to define these benefits if they were not included
in the base-benchmark plan. Specifically, in paragraph (f), we proposed
that, if the base-benchmark plan did not include coverage of
habilitative services, the state would be permitted to determine the
services included in the habilitative services category. If states did
not define the habilitative services category, plans would be required
to provide these benefits as defined in Sec. 156.115(a)(4). HHS
intends to carefully monitor coverage of habilitative services across
the individual and small group markets, and to use this data to inform
future changes to this transitional policy.
---------------------------------------------------------------------------

\22\ ASPE Research Brief, ``Essential Health Benefits: Comparing
Benefits in Small Group Products and State and Federal Employee
Plans.'' December 16, 2011. Available at: http://aspe.hhs.gov/health/reports/2011/MarketComparison/rb.shtml.
---------------------------------------------------------------------------

The comments and our responses to Sec. 156.110 are set forth
below.
Comment: Numerous commenters urged that the 10 EHB categories and
individual services or benefits within those categories be defined in
more detail. Medicaid was suggested as an appropriate model for
defining the habilitation benefit, as well as pediatric dental and
vision benefits.
Response: The statute directed the Secretary to define EHB to
include at least the 10 identified categories, while ensuring that the
scope of EHB is equal to the scope of benefits provided under a typical
employer plan. However, typical employer plans differ by state. The
Secretary balanced these directives, and minimized market disruption,
by directing plans to offer the 10 statutory EHB categories while
allowing the state to select the specific details of their EHB coverage
by reference to one of a range of popularly selected plans offered in
the state or as part of the FEHBP. Accordingly, the states continue to
maintain their traditional role in defining the scope of insurance
benefits and may exercise that authority by selecting a plan that
reflects the benefit priorities of that state. With regard to
habilitative and pediatric dental and vision benefits, we appreciate
the commenters' recommendation to use Medicaid plans as appropriate
models. In order to maintain the states' role in defining required
benefits in their markets, we will finalize the regulations to provide
for state flexibility in determining how to define habilitation
services and to offer other options for supplementing based-benchmark
plans that do not include coverage for pediatric dental and vision
services. We will continue to monitor this area to assess the need for
future regulatory action.
Comment: We received a number of comments recommending that the age
limit for the ``pediatric services'' category be raised from 19, as
proposed, to 21, to better align with existing Medicaid and CHIP
standards for pediatric benefits and help ensure continuity of coverage
for those children who will transition between Exchange and public
coverage. Commenters further asserted that the higher age limit would
improve care for children with chronic or complex conditions such as
cystic fibrosis by allowing continued treatment beyond the age of 19 by
such children's pediatric provider, who has more expertise in these
areas than adult-focused practitioners.
Response: The age of 19 as the upper limit for the definition of
pediatric services is consistent with the upper age limit in the
Affordable Care Act's prohibition on preexisting conditions for
children as well as the age limit for eligibility to enroll in CHIP. In
addition, federal Medicaid law requires that states cover children up
to age 19 with family incomes up to 100 percent of the federal poverty
limit as a mandatory eligibility category. States are permitted to
increase this maximum age in defining pediatric services.
Comment: A number of commenters expressed concern with individual
state selections for supplementing coverage categories lacking in a
chosen benchmark plan, suggested that the regulation allow additional
supplementation options, or suggested that states should be required to
supplement inadequate coverage of individual service types within a
benefit category.
Response: As stated previously, the Secretary structured the EHB
regulations to maintain state flexibility in defining benefits within
the categorical parameters set out by Congress. Benchmark options
derive from the most popular products in each state's small group
market, among others. Allowing states to supplement from this range of
options allows each state to develop an EHB-benchmark plan that
reflects its state benefit priorities.
Comment: Several commenters suggested that we require balance not
only across the benefit category but also within each category or
across the continuum of care.
Response: The balance provision in Sec. 156.110(e) is consistent
with the section 1302(b)(4)(A) of the Affordable Care Act, which it
implements. Requiring balance within each category or across the
continuum of care could result in plans that are not similar in scope
to a typical employer health plan as required by statute.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.110 of the proposed rule with two technical edits. We have added
the words ``pediatric oral'' to Sec. 156.110(b)(2) to clarify that
supplementation of the pediatric dental services category in the base-
benchmark plan would be with the pediatric oral benefits from a
benchmark option. We have likewise added the words ``pediatric vision''
to Sec. 156.110(b)(3) in place of the word ``such'' to clarify that
supplementation of the pediatric vision services category in the base-
benchmark plan would be with the pediatric vision benefits from
allowable source plan and have added the words ``by enrollment'' to
clarify that the largest product in a state's small group market is
determined by enrollment.
d. Provision of EHB (Sec. 156.115)
In paragraph (a)(1), we proposed that plans may have limitations on
coverage that differ from the limitations in the EHB-benchmark plan,
but covered benefits and limitations on coverage must remain
substantially equal to the benefits in the EHB-benchmark plan.
In paragraph (a)(2), we proposed that in order to satisfy the
requirement to offer EHB, mental health and substance use disorder
services, including behavioral health treatment services required under
Sec. 156.110(a)(5), must be provided in a manner that complies with
the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).
In paragraph (a)(3), we further proposed that a plan does not
provide EHB unless it meets the standards in 45 CFR 147.130.
In paragraph (a)(4), we proposed that if the EHB-benchmark plan
does not include coverage for habilitative services and the state does
not determine habilitative benefits, a health

[[Page 12844]]

insurance issuer must either: (1) Provide parity by covering
habilitative services benefits that are similar in scope, amount, and
duration to benefits covered for rehabilitative services; or (2) decide
which habilitative services to cover and report on that coverage to
HHS.
We proposed the concept of benefit substitution consistent with
what HHS outlined in the EHB Bulletin. As outlined in paragraph
(b)(1)(i), we proposed that issuers may substitute benefits, or sets of
benefits, that are actuarially equivalent to the benefits being
replaced. We further proposed in paragraph (b)(1)(ii) that substitution
could only occur within benefit categories, not between different
benefit categories. In paragraph (b)(1)(iii), we clarify that our
proposed benefit substitution policy does not apply to prescription
drug benefits. In paragraph (b)(2), we outlined what must be submitted
to demonstrate that any substituted benefit, or group thereof, is
actuarially equivalent to the original benefit or benefits contained in
the EHB-benchmark for that state. Lastly, in paragraph (b)(3), we
proposed that actuarial equivalence of benefits be determined based on
the value of the service without regard to cost-sharing, as cost
sharing will be considered in the actuarial value calculation described
in Sec. 156.135. We noted that the resulting plan benefits would be
subject to requirements of non-discrimination described in Sec.
156.125. In addition, we note that under this approach, states would
have the option to enforce a stricter standard on benefit substitution
or prohibit it completely.
In paragraph (c), we proposed to clarify that a plan does not fail
to provide EHB solely because it does not offer the services described
in Sec. 156.280(d). Here we would apply the statutory provision in
section 1303(b)(1)(B)(i) of the Affordable Care Act that allows a QHP
to meet the standards for EHB even if it does not offer the services
described in 45 CFR Sec. 156.280(d), to health insurance issuers that
offer non-grandfathered coverage in the individual or small group
market. This provision applies to all services in section 1303(b)(1)(A)
of the Affordable Care Act, including pharmacological services.
In paragraph (d), we proposed that an issuer of a plan offering EHB
may not include routine non-pediatric dental services, routine non-
pediatric eye exam services, cosmetic orthodontia and long-term/
custodial nursing home care benefits as EHB.
The comments and our responses to Sec. 156.115 are set forth
below.
Comment: Some commenters asked us to eliminate or provide
additional guidance regarding the substantially equal standard.
Response: Based on the rationale we outlined in the proposed rule,
we are maintaining the substantially equal standard as written to allow
for flexibility of plan design.
Comment: Several commenters requested confirmation that EHB must
comply with federal mental health and substance use disorder parity
requirements in both the individual and the small group markets.
Commenters also asked if states would have to defray the cost of adding
benefits in order to comply with parity.
Response: Section 2707 of the PHS Act requires health insurance
issuers in the individual and small group health insurance markets to
cover the EHB package required under section 1302 of the Affordable
Care Act. The Affordable Care Act grants the Secretary broad authority
to define EHB. We proposed in Sec. 156.115(a)(2) that plans are
required to comply with the parity standards set forth in Sec. 146.136
of this chapter, implementing the requirements under MHPAEA in order to
satisfy the requirement to provide EHB. Section 1311(j) of the
Affordable Care Act specifies that section 2726 of the PHS Act shall
apply to qualified health plans in the same manner and to the same
extent as such section applies to health insurance issuers and group
health plans. For these reasons, we confirm that plans must comply with
the parity standards applicable to mental health and substance use
disorder benefits set forth in 45 CFR 146.136 in both the individual
and the small group markets in order to satisfy the requirement to
cover EHB. Additionally, because compliance with EHB would require
compliance with the parity standards, states would not have to defray
any costs associated with bringing plans into compliance because any
benefits added to ensure parity would be considered part of the EHB
package.
Comment: Commenters requested a federal definition of habilitative
services. Many recommended that HHS adopt the NAIC definition of
habilitation or use the Medicaid statute's definition of habilitation
as a reference point, to highlight the importance of maintenance of
function. Commenters also asked that HHS eliminate giving issuers the
choice of determining their habilitative benefits.
Response: As explained in the EHB Bulletin, habilitative benefits
are not well defined in the current commercial market. If habilitative
services are not covered by the EHB-benchmark plan, then states have
the first opportunity to determine which habilitative benefits must be
covered by their benchmark plan. States may choose to use the NAIC or
Medicaid definition. If states have not chosen to define habilitative
benefits, the issuers' choice remains. This is a transitional policy,
and HHS intends to monitor available data regarding coverage of
habilitative services.
Comment: Many commenters urged HHS to eliminate the option to
substitute benefits, noting concerns that substitution may result in
discrimination. Commenters also requested that HHS codify the implied
option for states to limit or completely prohibit substitution.
Response: We have retained the discretion we proposed to provide
for substitution within categories to provide greater choice to
consumers, and promote plan innovation through coverage and design
options. We also retained the requirement that any substitution must be
actuarially equivalent. As the party responsible for enforcement of
EHB, it is up to each state to set criteria for substitution in its
state, consistent with paragraph (b) of this Section.
Comment: In the preamble to the proposed rule, we clarified that a
plan may not exclude enrollees from coverage in any category except
pediatric services. Many commenters recommended that CMS codify this
proposal in regulation text.
Response: In response to the comments received, we have modified
Sec. 156.115(a)(2) to prohibit an EHB plan from excluding an enrollee
from coverage in an EHB category except pediatric services.
Comment: Several commenters urged HHS to remove the provision at
Sec. 156.115(c) so that section 1303(b)(1)(A) of the Affordable Care
Act would not extend to plans that are not QHPs. Other commenters noted
that services under section 1303 of the Affordable Care Act are covered
by their state benchmark plan and requested confirmation that other EHB
plans will not have to offer such services.
Response: We are finalizing the regulation to include the provision
to ensure parity between the Exchange and non-Exchange markets. We note
that nothing in the proposed provision impedes an issuer's ability to
offer 1303 services. It also does not limit a state's authority to
prohibit or require these services under state law.
Comment: While some commenters objected to the exclusion of routine
non-pediatric dental services, routine non-pediatric eye exam services,
and long term/custodial nursing home care

[[Page 12845]]

benefits, from EHB, the majority of commenters agreed with the
exclusion of these services because they are not typically included in
medical plans offered by a typical employer.
Response: The Affordable Care Act requires EHB to be based on
benefits typically offered by a typical employer plan. In contrast with
the benefits covered by a typical employer health plan, these
particular benefits often qualify as excepted benefits.\23\ However,
plan offerings are not restricted to EHB, so plans may offer additional
benefits.
---------------------------------------------------------------------------

\23\ For more information on excepted benefits, see 26 CFR
54.9831-1, 29 CFR 2590.732, 45 CFR 146.145, and 45 CFR 148.220.
---------------------------------------------------------------------------

Comment: We received comments requesting that HHS change the
reference to ``cosmetic orthodontia'' and define the excluded service
as ``non-medically necessary orthodontia'' to reflect the standard that
issuers typically use and to be consistent with the EHB Bulletin.
Response: Based on comments, we have changed the language in Sec.
156.115(d) to refer to non-medically necessary orthodontia and deleted
the reference to cosmetic orthodontia.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 156.115 of the
proposed rule, with the following modifications: In paragraph (a) we
added subparagraph (2) to clarify that an EHB plan cannot exclude an
enrollee from any EHB category except pediatric services. In paragraph
(b), we have added regulation text explicitly reflecting our adoption
in this final rule of our proposal that states be permitted to limit or
prohibit benefit substitutions that would otherwise be permissible
under our regulations, and we recodified subparagraph (3) as (2)(iv).
We changed the language in Sec. 156.115(d) to use the term ``non-
medically necessary'' instead of ``cosmetic'' orthodontia.
e. Prescription Drug Benefits (Sec. 156.122)
This subsection appeared as Sec. 156.120 in the proposed rule,
however, for technical reasons this subsection will be renumbered as
Sec. 156.122 in the final rule.
In paragraph (a)(1), we proposed that in order to comply with the
requirement to cover EHB, a plan would cover at least the greater of:
(1) One drug in every USP category and class; or (2) the same number of
drugs in each category and class as the EHB-benchmark plan. In
paragraph (a)(2) we proposed that a QHP would have to report its drug
list to the Exchange, an EHB plan operating outside of the Exchange
must report its drug list to the state, and a multi-state plan must
report its drug list to OPM. In paragraph (b) we proposed to clarify
that a health plan does not fail to provide EHB prescription drug
benefits solely because it does not offer drugs that are Sec.
156.280(d) services.
We proposed using the most recent version of the United States
Pharmacopeia's (USP) Model Guidelines as a common organizational tool
for plans to report drug coverage. We stated that we would work with
issuers, states and the NAIC to facilitate use of the USP
classification system and we would provide a tool for states and
issuers to count clinically distinct drugs and categorize them into the
USP system.\24\
---------------------------------------------------------------------------

\24\ The requirement to use USP classification applies only to
submission of formulary for review/certification. Plans may continue
to use any classification system they choose in marketing and other
plan materials.
---------------------------------------------------------------------------

We also proposed that drugs would be counted toward these
requirements if they are chemically distinct.\25\ For example, offering
two dosage forms or strengths of the same drug would not be offering
drugs that are chemically distinct. Similarly, a brand name drug and
its generic equivalent are not chemically distinct.
---------------------------------------------------------------------------

\25\ The concept of chemically distinct is also described in the
Medicare Part D Manual, Chapter 6, Section 30.2.1. More information
is available at: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/downloads//Chapter6.pdf.
---------------------------------------------------------------------------

In paragraph (c), we proposed that a plan offering EHB have
procedures in place to ensure that enrollees have access to clinically
appropriate drugs that are prescribed by a provider but are not
included on the plan's drug list, which is generally consistent with
private plan practice today.
The comments and our responses to Sec. 156.122 are set forth
below.
Comment: Several commenters noted that the proposed rule requires
plans to meet a target number of drugs within a specific class without
regard to which drugs are covered. Those commenters expressed concern
regarding absence of a system to review the adequacy and quality of
each plan drug list.
Response: Section 156.125, regarding discrimination, applies to all
EHB including prescription drug benefits. Under the prohibition on
discrimination regulation we are finalizing at Sec. 156.125 of this
part, an issuer's benefit design, or the implementation of its benefit
design, may not discriminate based on an individual's age, expected
length of life, present or predicted disability, degree of medical
dependency, quality of life, or other health conditions. Issuers may
continue to use reasonable medical management techniques that are
evidence-based in accordance with Sec. 156.125. The states and the
Exchanges will be responsible for monitoring drug lists for such
compliance as part of their enforcement and certification
responsibilities.
Comment: Some commenters noted that the proposed rule does not
discuss how plans must address new drugs that come onto the market
during the course of a plan year.
Response: While plans must offer at least the greater of one drug
for each USP category and class or the number of drugs in the EHB-
benchmark plan, plans are permitted to go beyond the number of drugs
offered by the benchmark without exceeding EHB.
Comment: Some commenters recommended that HHS should not require
coverage of at least one drug in each USP category and class, because
such coverage is not similar to a typical employer plan and that
certain categories and classes have limited drug options. Some
commenters raised concerns about cost and that covering a drug in each
USP category and class is arbitrary. Instead, they suggested HHS delete
the requirement to match a specific number of drugs per benchmark plan
category and class, and allow plans to determine the specific drugs
covered.
Response: In response, we internally analyzed and carefully
reviewed prescription drug coverage in the EHB-benchmark plans listed
in Appendix A, and found that the majority of the benchmark plans
already meet the EHB standard or would only have to cover one or two
additional drugs to meet the standard. Therefore, we believe that,
given current coverage under benchmark plans, the policy of requiring
at least one drug per category and class reflects drug coverage in a
typical employer plan and will have a negligible effect on premiums. We
also note that this section does not require that drugs be covered on a
particular tier. Additionally, we are finalizing Sec. 156.122(a)(1) as
proposed as a transition policy for the first two plan or policy years
beginning in 2014 and will study and take into consideration the
effects this policy, if any, have on changing typical drug coverage in
the market.
Comment: Many commenters expressed concern over the use of USP as
the class and category classification system.
Response: For consistency and to minimize administrative burden and
barriers to market entry for health plans, specifically for issuers
offering products in multiple states, we believe it is important to use
only one classification system. While there was concern among

[[Page 12846]]

commenters on the use of USP as the system, there was no universal
system identified as a potential alternative. We chose the current
version USP Model Guidelines (version 5) because it is publicly
available and many pharmacy benefit managers are familiar with it. We
believe the USP model best fits the needs for the years 2014 and 2015
during the transitional EHB policy and we have developed a crosswalk
tool to count the number of drugs available in each USP category and
class. We intend to work with issuers, states and the NAIC to
facilitate state use of the USP Model Guidelines Version 5.0 as a
classification system and as a comparison tool.
Comment: Several commenters requested additional detail regarding
the requirement that that a plan ``must have procedures in place that
allow an enrollee to request clinically appropriate drugs not covered
by the health plan.''
Response: Additional guidance regarding our expectations for the
required exceptions process is forthcoming in sub-regulatory guidance.
We note the importance of this option for those whose medical needs
require a very narrow range of pharmaceuticals, and emphasize that our
research has shown that a large number of plans already offer this
option in the market today. It is expected that plans that currently
have such a process in place will not be expected to modify their
existing process.
Comment: Many commenters suggested that HHS should clarify in Sec.
156.120(c) (as explained above, now renumbered as Sec. 156.122(c)) of
the final regulation that plans must have procedures in place that
ensure enrollees have access to clinically appropriate drugs, not just
allow the enrollee to request such a drug. While the preamble of the
proposed rule includes a statement of this standard, the proposed rule
does not.
Response: We have added language from the proposed rule preamble to
Sec. 156.122(c) directing plans to have procedures to allow an
enrollees to gain access to clinically appropriate drugs.
Comment: Commenters urged HHS to provide guidance as to which drugs
are covered by Sec. 156.280(d) so that the final rule is clear as to
which drugs are actually exempted.
Response: We have revised the language to specify that we are
referring to drugs approved by the U.S. Food and Drug Administration
(FDA) as a Sec. 156.280(d) service.
Summary of Regulatory Changes
We are finalizing the provisions in Sec. 156.120 of the proposed
rule (renumbered as Sec. 156.122 in the final rule), with the
following modifications: We have added language to Sec. 156.122(c)
based on the proposed rule's preamble text directing plans to have
procedures to allow an enrollees to gain access to clinically
appropriate drugs. We have revised the language in subparagraph (b) to
specify that we are referring to drugs approved by the U.S. Food and
Drug Administration (FDA) as a Sec. 156.280(d) service.
f. Prohibition on Discrimination (Sec. 156.125)
Section 1302(b)(4) of the Affordable Care Act directs the Secretary
to address certain standards in defining EHB, including elements
related to balance, discrimination, the needs of diverse sections of
the population, and denial of benefits. The proposed regulations would
provide an approach to addressing discrimination that would allow
states to monitor and identify discriminatory benefit designs, or the
implementation thereof.
To address potentially discriminatory practices, we proposed in
paragraph (a) that an issuer does not provide EHB if its benefit
design, or the implementation of its benefit design, discriminates
based on an individual's age, expected length of life, or present or
predicted disability, degree of medical dependency, quality of life, or
other health conditions. In paragraph (b), we proposed that Sec. Sec.
156.200 and156.225 also apply to all issuers required to provide
coverage of EHB, prohibiting discrimination based on factors including
but not limited to race, gender, disability, and age as well as
marketing practices or benefit designs that will have the effect of
discouraging the enrollment of individuals with significant health
needs.
These provisions would provide a framework and legal standard from
which to develop analytic tools to test for discriminatory plan
benefits. Such analyses could include evaluations to identify
significant deviation from typical plan offerings including such as
limitations for benefits with specific characteristics.
The comments and our responses to Sec. 156.125 are set forth
below.
Comment: Several commenters indicated their belief that section
1302(b)(4) of the Affordable Care Act does not prohibit discrimination
in benefit implementation in the standards for providing EHBs.
Response: Section 1302(b)(4) of the Affordable Care Act specifies
that EHB not include ``coverage decisions, determine reimbursement
rates, establish incentive programs, or design benefits in ways that
discriminate against individuals because of their age, disability, or
expected length of life.'' We believe that this range of prohibited
discrimination implicitly encompasses not just the categories of
benefits included in the benefit design but also the implementation of
that design.
Comment: A number of commenters recommended that we expand this
section to prohibit discrimination based on sex, gender identity,
sexual orientation, having a particular medical condition, and other
factors.
Response: The regulation as written prohibits benefit
discrimination on the grounds articulated by Congress in section
1302(b)(4) of the Affordable Care Act, as well as those in 45 CFR
156.200(e), which include race, color, national origin, disability,
age, sex, gender identity and sexual orientation.
Comment: Many commenters requested that we add more detail to the
regulation regarding standards of nondiscrimination, the framework for
monitoring and enforcement, as well as clarification of the roles of
the states and the federal government. Several commenters expressed
concern that enrollees with certain health conditions might by
discriminated against by an issuer's failure to include appropriate
specialists in their network.
Response: Enforcement of the PHS Act provisions codified in this
rule is governed by section 2723 of the PHS Act, which first looks to
states and then to the Secretary where a state has does not
substantially enforce. The approach to nondiscrimination will reserve
flexibility for both HHS and the states to respond to new developments
in benefit structure and implementation and to be responsive to varying
circumstances across the states. We agree with the commenters that
network adequacy is an important part of plan coverage. Compliance with
network adequacy requirements is outside of the scope of this
regulation.
Comment: Several commenters expressed concern over state benchmarks
that they believed contained discriminatory benefit designs and worried
that issuers in those states would be required to copy those designs.
Response: To the extent that a state benchmark plan includes a
discriminatory benefit design, non-discrimination regulations at Sec.
156.110(d) and Sec. 156.125 require issuers to meet the benchmark
requirements in a nondiscriminatory matter.

[[Page 12847]]

Comment: Many commenters expressed concern that Sec. 156.125 would
prevent issuers from employing traditional medical management
techniques, with some requesting that we revise regulatory text to
indicate that evidence-based techniques would not be considered
discriminatory. Others expressed ongoing concern that medical
management techniques were often used as nuanced mechanisms for
discrimination.
Response: As we stated in the preamble to the proposed rule, and
consistent with section 1563(d) of the Affordable Care Act, these EHB
regulations do not prohibit issuers from applying reasonable medical
management techniques. An issuer could use prior authorization, but
could not implement prior authorization in a manner that discriminates
on the basis of membership in a particular group based on factors such
as age, disability, or expected length of life that are not based on
nationally recognized, clinically appropriate standards of medical
practice evidence or not medically indicated and evidence-based. For
example, a reasonable medical management technique would be to require
preauthorization for coverage of the zoster (shingles) vaccine in
persons under 60 years of age, consistent with the recommendation of
the Advisory Committee on Immunization Practices. We are adding a new
paragraph (c) in Sec. 156.125, to clarify that nothing in this section
shall be construed to prevent an issuer from using reasonable medical
management techniques.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.125 of the proposed rule with two modifications. Based on comments
addressed below in response to proposed section Sec. 156.130, we have
deleted the reference to Sec. 156.225 from paragraph (b) of this
section, and, as described in response to the comment above, we have
added a new paragraph (c), clarifying that nothing in this section
shall be construed to prevent an issuer from appropriately utilizing
reasonable medical management techniques.
g. Cost-Sharing Requirements (Sec. 156.130)
The Affordable Care Act provides several standards on cost sharing
for certain health plans. Standards in Sec. 156.130 are applicable to
QHPs pursuant to section 1301(a)(1)(B), as implemented by 45 CFR
156.200(b)(3) and 45 CFR 156.20, which require QHPs to offer the
essential health benefits package described at section 1302(a) of the
Affordable Care Act. Similarly, these standards would be applicable to
non-grandfathered health insurance coverage offered by health insurance
issuers in the individual and small group markets pursuant to section
2707(a) of the PHS Act as implemented by Sec. 147.150(a) of these
regulations.
In Sec. 156.130(a), we proposed to codify the Affordable Care
Act's limitation on cost sharing for 2014 and in subsequent years.
Section 156.130(a)(1) would tie the annual limitation on cost sharing
for plan years beginning in 2014, to the enrollee out-of-pocket limit
for high-deductible health plans (HDHP), as calculated pursuant to
section 223(c)(2)(A)(ii) of Internal Revenue Code of 1986 (the Code)
based on section 1302(c)(1)(A) of the Affordable Care Act. Proposed
paragraph (a)(1)(i) would address the limitation for self-only coverage
and proposed paragraph (a)(1)(ii) would address the limitation for
coverage other than self-only coverage; the practical effect for
coverage other than self-only coverage would be that the annual
limitation would be double the limitation applicable to self-only
coverage. For illustrative purposes only, for the year 2013 these
amounts will be $6,250 for self-only and $12,500 for non-self only
coverage.\26\ Amounts for 2014 are expected to be released by the IRS
in the spring of 2013. In proposed Sec. 156.130(a)(2)(i), the annual
limitation on cost sharing would increase by the premium adjustment
percentage, which would be set by HHS as described in Sec. 156.130(e),
in years after 2014 for self-only coverage. In proposed Sec.
156.130(a)(2)(ii), the annual limitation on cost sharing in years after
2014 for non-self only coverage is double the annual limitation on cost
sharing for self-only coverage for that year.
---------------------------------------------------------------------------

\26\ http://www.irs.gov/pub/irs-drop/rp-12-26.pdf.
---------------------------------------------------------------------------

Sections 1302(c)(2)(A)(i) and 1302(c)(2)(A)(ii) of the Affordable
Care Act define and proposed Sec. 156.130(b) codified the annual
limitation on deductibles for health plans offered in the small group
market as part of the EHB package. This limitation on deductibles is
imposed on QHPs by section 1301(a)(1)(B) of the Affordable Care Act and
45 CFR 156.200(b)(3). The limitation is also imposed on non-
grandfathered health plans in the individual and small group markets by
section 2707(a) of the PHS Act, which we proposed to implement in
proposed 45 CFR 147.150(a). In proposed Sec. 156.130(b)(1)(i), we
proposed that the annual limitation on deductibles for the year 2014 be
$2,000 for self-only coverage and in proposed Sec. 156.160(b)(1)(ii),
$4,000 for non self-only coverage. In proposed Sec. 156.130(b)(2), we
proposed that in years beyond 2014, the annual deductible limits for
self-only plans would increase by the premium adjustment percentage
described in paragraph (e) under the authority of section 1302(c)(2)(B)
of the Affordable Care Act.
Section 1302(c)(2)(C) of the Affordable Care Act directs that the
limit on deductibles described in section 1302(c)(2)(A) for a health
plan offered in the small group market be applied so as to not affect
the actuarial value of any health plan. We proposed to interpret and
implement this provision through our proposal at Sec. 156.130(b)(3) by
authorizing a health insurance issuer to make adjustments to its
deductible to maintain the specified actuarial value for the applicable
level of coverage required under proposed Sec. 156.140. In proposed
Sec. 156.130(b)(3), we proposed that a plan may exceed the annual
deductible limit if it cannot reasonably reach a given level of
coverage (metal tier) without doing so.
Section 1302(c)(2)(A) of the Affordable Care Act permits but does
not require, contributions to flexible spending arrangements (FSAs) to
be taken into account when determining the deductible maximum. We
proposed to standardize the maximum deductible for all health plans in
the small group market at $2,000 for self-only coverage and $4,000 for
non-self-only coverage, as described in proposed Sec. 156.130(b)(1)
and potentially adjusted in proposed Sec. 156.130(b)(3), and not
increase the deductible levels by the amount available under the FSA.
In proposed Sec. 156.130(c), we proposed a special rule for
network plans. Under our proposal, cost sharing requirements for
benefits from a provider outside of a plan's network would not count
towards the annual limitation on cost sharing, or the annual limitation
on deductibles. We considered an out-of-network provider to be a
provider with whom the issuer does not have a contractual arrangement
with respect to the applicable plan.
In proposed Sec. 156.130(d), we proposed to codify sections
1302(c)(1)(B) and 1302(c)(2)(B) of the Affordable Care Act by requiring
that the annual limitation on cost sharing and the annual limitation on
deductibles for a plan year beginning after calendar year 2014 only
increase by multiples of $50 and must be

[[Page 12848]]

rounded to the next lowest multiple of $50.
In proposed Sec. 156.130(e), we proposed to codify section
1302(c)(4) of the Affordable Care Act, which specifies that the premium
adjustment percentage is calculated as the percentage (if any) by which
the average per capita premium for health insurance coverage for the
preceding calendar year exceeds such average per capita premium for
health insurance for 2013.
In proposed Sec. 156.130(f), we proposed to codify section
1302(c)(2)(D) of the Affordable Care Act, which states that the annual
deductibles do not apply to preventive care described in Sec. 147.130.
Proposed Sec. 156.130(g) proposed to prohibit discriminatory cost
sharing.
Proposed Sec. 156.130(h) proposed to implement the requirements in
section 1302(b)(4)(E) of the Affordable Care Act that, as part of
coverage of EHB, a QHP must (1) provide coverage for emergency
department services provided out-of-network without imposing any
requirement under the plan for prior authorization of services or any
limitation on coverage for the provision of services that is more
restrictive than the requirements or limitations that apply to
emergency department services received from network providers, and (2)
apply the same cost sharing in the form of a copayment or coinsurance
for emergency department services for an out-of-network provider--as
would apply to an in-network provider.
The comments and our responses to Sec. 156.130 are set forth
below.
Comment: HHS received several comments suggesting a standard
definition of the reasonableness exemption in proposed Sec.
156.130(b)(3) for plans in the small group market that can only meet
the deductible requirements as well as certain actuarial value
requirements such as for a bronze plan for a very narrow range of plan
designs.
Response: We intend to provide sub-regulatory guidance outlining
options related to plan designs where exceeding the deductible limits
described in Sec. 156.130(b) is permissible. We reiterate that Sec.
156.130(b) as finalized here applies only for purposes of defining a
cost-sharing limitation application to issuers and QHPs that must offer
the EHB package.
Comment: Several commenters expressed concerns about the protection
of a health plan's ability to control costs through the use of
reasonable medical management, as well as cost and administrative
burdens placed on QHP issuers.
Response: We do not believe that the requirements pertaining to
cost-sharing would preclude issuers from engaging in reasonable medical
management. However, in response to comments about the protection of a
health plan's ability to control costs through the use of utilization
management and administrative burden, we are not finalizing the policy
as paragraph (g) of Sec. 156.130 and we are relabeling the remainder
of Sec. 156.130 accordingly.
Comment: HHS received several comments requesting deductible
increases for plans in the small group market based on employer FSA
contributions. Other commenters preferred our approach, which prohibits
these increases, because of the operational complications of
determining the FSA contribution in time for plan selection.
Response: The Affordable Care Act provides the option but not the
requirement to increase deductibles in the small group market based on
FSA contributions. The operational implications of determining which
employers are contributing to employee FSAs and matching only those
employees to plan options with corresponding increases in deductibles
when FSA contributions and plan selection generally occurs
simultaneously is operationally infeasible. We are now finalizing our
policy due to the operational complications of determining the FSA
contribution in time for plan selection, although we will revisit this
policy in later years. We believe this will have no impact on
enrollment in small group plans for those eligible.
Comment: HHS received several comments discussing the merits of
applying the cost-sharing limits to in-network services only rather
than applying the annual cost sharing limits defined in Sec.
156.130(a) to all costs including both in-network and out-of-network
fees.
Response: Our research has shown that generally, health spending
occurs in-network.\27\ The IOM in its recommendation \28\ focused on
the long term balance between affordability and comprehensiveness of
coverage, therefore, we have decided to apply cost-sharing limits to
in-network visits only to promote health plan affordability. We note
that nothing in this proposal explicitly prohibits an issuer from
voluntarily establishing a maximum out-of-pocket limit applicable to
out-of-network services, or a state from requiring that issuers do so.
---------------------------------------------------------------------------

\27\ 26 U.S.C. 223(c)(2)(D)
\28\ Institute of Medicine, ``Essential Health Benefits:
Balancing Coverage and Cost'' (2011). Available at: http://www.iom.edu/Reports/2011/Essential-Health-Benefits-Balancing-Coverage-and-Cost.aspx.
---------------------------------------------------------------------------

Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.130 of the proposed rule with one modification. We are not
finalizing the text proposed as paragraph (g) and are relabeling the
provision proposed paragraph (h) as paragraph (g) in this final rule.
h. AV Calculation for Determining Level of Coverage (Sec. 156.135)
The Affordable Care Act directs issuers offering non-grandfathered
health insurance coverage in the individual and small group markets,
including QHPs, to ensure that plans meet a level of coverage specified
in section 1302(a)(3) of the Affordable Care Act and defined in Sec.
156.140(b). Each level of coverage corresponds to an AV calculated
based on the cost-sharing features of the plan. Pursuant to these
statutory provisions, in paragraph (a), we proposed that an issuer
would use the AV Calculator developed by HHS to determine the health
plan's level of coverage as proposed in Sec. 156.140(b), subject to
the exception in paragraph (b). As part of this proposal, we solicited
comment on both the AV Calculator and a methodology document that
includes the logic behind the calculator and a description of the
development of the standard population, represented in the calculator
as tables of aggregated data called continuance tables.
Consistent with section 1302(d)(2)(A) of the Affordable Care Act
that AV be calculated based on the provision of the EHB to a standard
population, we proposed that the AV Calculator use one or more sets of
national claims data reflecting plans of various levels of generosity
as the underlying standard population. In paragraph (b), we proposed
options for an issuer whose plan designs do not permit the calculator
to provide an accurate summary of plan generosity. Although HHS
anticipates that the vast majority of plans will be able to use the
calculator in 2014 and beyond, no uniform calculator can accommodate
the entire potential universe of plan designs. Therefore, we proposed
to provide exceptions for plan designs not compatible with the
calculator. Specifically, we proposed in paragraph (b)(1) that plans
not using the AV calculator would need to submit documentation in the
form of actuarial certification that they have complied with one of the
methods described

[[Page 12849]]

below. We intend for this submission to be made to the appropriate
entity (the state, HHS, the Exchange, or OPM) reviewing the health plan
for compliance with AV and level of coverage standards.
In paragraph (b)(2), we proposed two options to accommodate plans
with benefit designs that cannot be accommodated by the AV Calculator.
In paragraph (b)(2)(i), we proposed that a health plan issuer be
permitted to decide how to adjust the plan benefit design (for
calculation purposes only) to fit the parameters of the calculator and
then, pursuant to paragraph (b)(2)(ii), have a member of the American
Academy of Actuaries certify that the methodology was fit to the
parameters of the AV Calculator in accordance with generally accepted
actuarial principles and methodologies. In paragraph (b)(3), we
proposed a second option, that the plan may use the calculator for the
plan design provisions that correspond to the parameters of the
calculator and then have a member of the American Academy of Actuaries
calculate appropriate adjustments to the AV as determined by the AV
Calculator for plan design features that deviate substantially, in
accordance with generally accepted actuarial principles and
methodologies. We proposed in paragraph (b)(4) that, to align with the
AV Calculator and the rules proposed here for how AV is determined,
plans using one of these methods would exclude out-of-network costs
when using additional calculation methods.
In paragraph (c), we proposed a standard for the treatment of small
group market HDHPs offered with a health savings account (HSA) or a
health plan in the small group market integrated with a health
reimbursement arrangement (HRA), so that HDHP and HSAs/HRAs are
integrated. Recognizing that simply calculating the AV of the HDHP
based on the insurance plan alone could understate the value of
coverage if the value of the employer contribution to such accounts are
not included, and that employer-provided HSAs and HRAs are generally
the equivalent of first dollar coverage for any cost-sharing
requirements encountered by the enrollee, in paragraph (c)(1), we
proposed that the annual employer contributions to HSAs and amounts
newly made available under HRAs for the current year count within the
plan design.
Section 1302(d)(2)(B) of the Affordable Care Act directs the
Secretary to issue regulations under which employer contributions to an
HSA (within the meaning of section 223 of the Code) may be taken into
account in determining the level of coverage for a plan of the employer
and HHS proposed allowing for similar treatment of HRAs.
In paragraphs (c)(2)(i) and (ii), we proposed that the AV
Calculator would include any current year HSA contributions or amounts
newly made available under integrated HRAs for the current year as an
input into the calculator that can be used to determine the AV of an
employer-sponsored health benefit plan.
In paragraph (d) we proposed that in years 2015 and after, a state-
specific data set may be used as the standard population (that is, in
place of the HHS-issued continuance tables) for AV calculations if
approved by HHS. Issuers in such a state would still use the AV
Calculator logic, but the underlying data used for generating the AV
would be specific to the state. In paragraphs (d)(1) through (5), we
proposed and solicited comment on criteria, based on a July 2011
American Academy of Actuaries issue brief, for acceptable state claims
data and their use.
In paragraph (e), we proposed that the default standard population
provided by HHS, which is described in paragraph (f) and represented in
the continuance tables incorporated into the regulatory proposal by
reference, would be used unless the state submits its own standard
population consistent with paragraphs (d) and (e). In paragraph (e), we
proposed that the state data set be submitted in a format that can
support the AV Calculator described in paragraph (a).
In paragraph (f), we proposed that HHS will develop the standard
population to be used to calculate AV in accordance with section
1302(d)(2)(A) of the Affordable Care Act, which requires that AV be
calculated using a standard population.
The comments and our responses to Sec. 156.135 are set forth
below.
Comment: Some commenters suggested a different version of the AV
Calculator including a microsimulation model based calculator, a
calculator with greater inputs, or no calculator at all with plans
utilizing their own data to calculate an AV. Other commenters supported
HHS's decision to develop an AV Calculator based on continuance tables.
Response: We elected to use a continuance table model as a
methodology for determining actuarial value because in general this
type of model is common, popular, and well understood by the actuarial
community. We have no evidence that a microsimulation model would be
more precise or would be more successful at parsing plan designs that
receive high actuarial values with this continuance table model, but
would receive low actuarial values in a microsimulation model. The
level of detail of the calculator inputs was thoroughly researched and
tested and we concluded that adding detail did not have a material
impact on actuarial value.
Comment: HHS received numerous comments in support of the
development of an AV Calculator based on a single national standard
population. Other commenters suggested the use of standardized plan
data instead of a single data set to develop the standard population.
Response: HHS is finalizing its proposed approach to develop an AV
Calculator based on a single national standardized dataset. We
considered allowing issuers to use standardized plan data to determine
AV levels, but in response to comments received to both the AV Bulletin
and the proposed regulation, ultimately developed the AV Calculator
using a single standardized dataset to best facilitate consumer
comparisons so that plans with the same cost-sharing structure would
have the same AVs. As described in Sec. 156.135(d), we are also
allowing for the use of state-specific standard population data
beginning in 2015.
Comment: HHS received several comments urging HHS to allow states
to submit their own claims data for use in the AV Calculator starting
in 2014 or to account for regional variations in the AV Calculator.
Other commenters recommended that HHS wait to allow the use of state
data until 2017 or until an update to the AV Calculator is made.
Response: Starting in 2015, states will have the opportunity to
submit state-specific claims data for the AV Calculator. In 2014,
states and other stakeholders can assess the AV Calculator and
determine whether geographic variation or state-specific claims data
would be useful modifications starting in 2015.
Comment: Some commenters suggested that the AV Calculator should
consider both in and out-of-network utilization. Other commenters
supported the inclusion of only in-network utilization for the AV
Calculator.
Response: HHS developed the AV Calculator and with regard to
exceptions to use of the AV Calculator in Sec. 156.135(b)(4), is
finalizing the proposal to consider only in-network utilization based
on empirical data indicating that only a small percentage of total
costs come from out-of-network

[[Page 12850]]

utilization.\29\ This approach was supported by the American Academy of
Actuaries in its comments on the AV Bulletin.
---------------------------------------------------------------------------

\29\ AHIP, Center for Policy and Research, ``An Updated Survey
of Health Insurance Claims Receipt and Processing Times, 2011'',
2013. http://www.ahip.org/SurveyHealthCare-January2013.
---------------------------------------------------------------------------

Comment: Many commenters noted a variety of potential technical
issues in the proposed AV Calculator. Other commenters asked HHS to
provide additional detail on the development of the standard population
and logic and assumptions used to convert the claims data into an AV
Calculator, including that HHS provide additional detail on the
specific services included in each benefit input in the calculator to
facilitate calculation using one of the exceptions, as well as the
services included in the unclassified category.
Response: As part of the proposed regulation, HHS released both the
AV Calculator tool and a methodology document detailing the development
of the standard population and AV Calculator. In developing the final
version of the AV Calculator tool, HHS considered all of the technical
comments received and made revisions as appropriate. In addition, the
revised and final version of the methodology document considers all
comments received and provides additional explanation wherever
possible. In developing the publicly available methodology document, we
described step by step the data and logic that the calculator uses to
determine plan AVs and held ourselves to the common practice level of
detail present in describing risk adjustment models for CMS as well as
academic publications. The final AV Calculator and methodology document
are incorporated by reference into this final rule and available at
http://cciio.cms.gov/resources/regulations/index.html#pm.
Comment: Several commenters asked for additional guidance and
clarification on when one of the exceptions in Sec. 156.135(b) may be
used to calculate AV.
Response: We intend to interpret this standard as dependent on
whether the AV Calculator takes into account or accommodates all
material aspects of a plan's cost-sharing structure. For example, we
expect that the calculator will not be able to accommodate plan designs
with multiple coinsurance rates as different levels of out-of-pocket
spending are met or a multi-tier network with substantial amounts of
utilization expected in tiers other than the lowest-priced tier. We
have also made minor edits to the regulation to clarify that, for a
plan that cannot be accommodated by the calculator, an issuer has the
option of using either exception method and that both methods require
submission of an actuarial certification.
Comment: The majority of commenters noted that the AV Calculator
does not address health plans with family cost-sharing features such as
deductibles that accrue across members of the same family. Some
commenters recommended adjustments or additional guidance for the final
AV Calculator to account for these plans.
Response: The AV Calculator standard population was developed using
claims data that did not include family cost-sharing information.
Therefore, health plans with cost-sharing features that accrue across
family members for non-self-only coverage may be treated as unique plan
designs, if the family plan design has a material effect on the plan's
AV. To address commenters' concerns regarding AV calculation for plans
with family cost-sharing features, as a safe harbor, the AV of a plan
with a deductible and/or out-of-pocket maximum that accumulates at the
family level will be considered the same AV as calculated using the AV
Calculator for the corresponding individual plan, so long as the
deductible and/or out-of-pocket maximum do not exceed that allowed by a
family multiplier set by CMS in future guidance. We note that the out-
of-pocket maximum would still be constrained by the maximum permitted
by Sec. 156.130(a)(1)(ii).
Comment: Several commenters encouraged HHS to add functionality or
additional benefit inputs to the AV Calculator--for example, that the
calculator account for more or different benefits as separate cost-
sharing inputs and that the calculator take into account service
limits.
Response: The AV Calculator was developed to accommodate the vast
majority of plan designs and to include as separate cost-sharing inputs
those benefits that have a significant impact on a plan's AV. The AV
Calculator balances the need to accommodate a wide range of plan
designs, with the need to provide a tool that is accessible to the user
and contains a manageable number of inputs.
Comment: Several commenters requested that the full amount of HSA
and integrated HRA employer contributions be accounted for in the AV
Calculator. Some of these commenters also requested that HHS allow
employee contributions to count towards a plan's AV.
Response: We clarify here that the AV Calculator implements Sec.
156.135 by treating HSA and amounts newly made available under an
integrated HRA that may be used only for cost sharing the same way it
treats any other plan benefits. For example, a $1,000 HSA employer
contribution is treated in the AV Calculator as if a plan with $1,000
deductible is reduced to $0. The $1,000 HSA contribution does not get
counted as $1,000 in the numerator of the AV Calculator because the
equation is based on total population expected spending by the total
population, rather than by particular individuals. Instead the $1,000
contribution is counted as the average dollar value it would cost to
reduce a $1,000 deductible to $0. We note that while the AV Calculator
cannot accommodate situations in which the HSA or amounts first made
available under integrated HRAs that may be used only for cost sharing,
exceeds the deductible, the value of the account can still be
accommodated by using the alternative methods for AV calculation
allowed under Sec. 156.135(b).
Comment: Some commenters expressed concerns that a health plan
issuer would not have access to information on employer contributions
to HSAs and HRAs. Other commenters asked HHS to clarify how the
provision on HSAs and HRAs would be operationalized.
Response: As finalized in Sec. 156.135(c), employer contributions
to an HSA or newly made available through integrated HRAs that may be
used only for cost sharing, are taken into account when calculating the
AV of a health plan only when the plan is offered with an HSA
integrated HRAs that may only be used for cost sharing at the time of
purchase. Because it is the issuer that uses the AV Calculator to
determine a plan's AV, the HSA employer contribution, or the amount
newly made available by the employer under an integrated HRA that may
only be used for cost sharing, may be considered part of the AV
calculation when the contribution is available and known to the issuer
at the time the plan is purchased.
Comment: HHS received numerous comments regarding when and how to
update the AV Calculator in future years. In some cases commenters
expressed concern that annual updates to the AV Calculator or
underlying data would require issuers to make annual updates to plan
benefit designs in order to comply with AV standards.
Response: In response to these comments, we are now clarifying that
HHS does not anticipate making annual changes to the AV Calculator
logic or

[[Page 12851]]

underlying standard population. We will consider all comments received
and give sufficient notice with regard to updating as we develop a
strategy for updating the AV Calculator.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.135 of the proposed rule, with two modifications. First we make
minor modifications to paragraph (b) to clarify that the issuer must
submit an actuarial certification from an actuary as to the methodology
used to determine AV when the plan design is not compatible with the AV
Calculator. In paragraph (c) we clarify that, in order to count towards
the AV calculation, employer contributions to HSAs and amounts made
newly available under integrated HRAs that may only be used for cost
sharing must be known to the issuer when the plan is purchased. Whether
other types of integrated HRAs might count towards AV is being given
further consideration. In this case, guidance on the treatment of HRAs
will be issued and this regulation will be amended as necessary.
i. Levels of Coverage (Sec. 156.140)
This section describes standards for meeting the Affordable Care
Act provisions directing that issuers offering QHPs or non-
grandfathered health plans in the individual and small group markets
offer plans that meet distinct levels of coverage.
In paragraph (a), we proposed the general requirement that the AV
of a plan must be calculated according to Sec. 156.135, within de
minimis variation, in order to determine a plan's level of coverage. In
paragraph (b), we proposed to codify section 1302(d)(1) of the
Affordable Care Act, which requires that a bronze plan has an AV of 60
percent; a silver plan, 70 percent; a gold plan, 80 percent; and a
platinum plan, 90 percent.
In paragraph (c), we proposed a de minimis variation of +/- 2
percentage points for all non-grandfathered plans. For example, a
silver plan could have an AV between 68 and 72 percent.
The comments and our responses to Sec. 156.140 are set forth
below.
Comment: Several commenters encouraged HHS to adopt a wider range
of de minimis variation to allow for greater variation in plan design
and so that more plans are able to maintain their current benefit
designs in 2014 or to allow states to define their own de minimis
variation. Other commenters requested a narrower range than +/- 2
percentage points.
Response: The proposed de minimis variation of +/- 2 percentage
points gives issuers the flexibility to set cost-sharing rates that are
simple and competitive while ensuring consumers can easily compare
plans of similar generosity. This approach strikes a balance between
ensuring comparability of plans within each metal level and allowing
plans the flexibility to use convenient cost-sharing metrics. The de
minimis range also mitigates the need for annual plan redesign,
allowing plans to retain the same plan design year to year and remain
at the same metal level.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.140 of the proposed rule without modification.
j. Determination of Minimum Value (Sec. 156.145)
Section 1302(d)(2)(C) of the Affordable Care Act sets forth the
rules for calculating the percentage of the total allowed costs of
benefits provided under a group health plan or health insurance
coverage under the PHS Act and the Code by providing that the rule
adopted by the Secretary under section 1302(d)(2) include the rules for
calculating the percentage of the total allowed costs of benefits
provided under a group health plan or health insurance coverage.
Section 36B(c)(2)(C)(ii) of the Code provides that an employer-
sponsored plan provides minimum value (MV) if this percentage is no
less than 60 percent. For the purpose of determining that a given plan
provides MV, we proposed in paragraph (a) that the percentage of the
total allowed cost of benefits will be determined using one of the main
methodologies as described in Treasury Notice 2012-31, released on May
14, 2012 (``MV Notice'').\30\ In paragraph (c), we proposed that MV for
employer-sponsored self-insured group health plans and insured large
group health plans will be determined using a standard population that
is based on self-insured group health plans. We also proposed in the
preamble that employer contributions to an HSA and amounts newly made
available under an HRA will be taken into account in determining MV in
accordance with the principles applied in taking such amounts into
account in determining AV.
---------------------------------------------------------------------------

\30\ Internal Revenue Service, ``Minimum value of an employer-
sponsored health plan'' (2012). Available at: http://www.irs.gov/pub/irs-drop/n-12-31.pdf.
---------------------------------------------------------------------------

In applying this approach to determining MV, in paragraph (a)(1),
we proposed that employer-sponsored self-insured and insured group
plans will be able to use the MV Calculator, which would be made
available by HHS and the Internal Revenue Service. We described in
preamble to the proposed rule how the MV Calculator is similar in
design to the AV Calculator discussed above in connection with Sec.
156.135. Furthermore, section 1302(d)(2)(C) of the Affordable Care Act
provides that the percentage of the total allowed costs of benefits
provided under a group health plan or health insurance coverage for the
purposes of determining whether the plan or insurance provide minimum
value will be determined using the rules contained in regulation for
determining actuarial value.
As an alternative to using the MV Calculator, we proposed in
paragraph (a)(2) that an employer-sponsored plan would be able to use
an array of design-based safe-harbors published by HHS and the Internal
Revenue Service in the form of checklists to determine whether the plan
provides MV.
Third, if an employer-sponsored plan contains non-standard features
that are not suitable for the use of the calculator and do not fit the
safe harbor checklists, we proposed in paragraph (a)(3) to permit MV to
be determined through certification by an actuary without the use of
the MV Calculator. The actuary would make this determination based on
the plan's benefits and coverage data and the standard population,
utilization, and pricing tables available for purposes of the valuation
of employer-sponsored plans. As proposed, this final option would be
available only when one of the other methodologies is not applicable to
the employer-sponsored plan. We proposed that the determination of MV
must be made by a member of the American Academy of Actuaries, based on
an analysis performed in accordance with generally accepted actuarial
principles and methodologies. We intend to issue applicable guidance
concerning the actuarial analysis.
In the event that a plan uses the MV Calculator and offers an EHB
outside of the parameters of the MV Calculator, we proposed in
paragraph (b)(1) that an actuary who is a member of the American
Academy of Actuaries will be permitted to determine the value of that
benefit and add it to the result derived from the MV Calculator in
accordance with the generally accepted actuarial principles and
methodologies. For clarity, alignment, and administrative ease, we
proposed in paragraph (b)(2),

[[Page 12852]]

for purposes of determining that a group health plan provides MV, that
such plans will be permitted to take into account all benefits provided
by the plan that are included in any one of the EHB-benchmarks.
The comments and our responses to Sec. 156.145 are set forth
below.
Comment: We received several comments asking why the AV Calculator
cannot be used to determine minimum value.
Response: The AV Calculator was designed to reflect a standard
population as directed by section 1302(d)(2)(A) of the Affordable Care
Act. Because it represents the individual and small group markets, the
AV Calculator was designed to include data that is reflective of these
anticipated populations. Similarly, the MV Calculator is intended to
test whether an employer-sponsored group health plan--which is not in
the individual or small group insurance markets--provides minimum value
and therefore determine if an employee is eligible for a premium tax
credit. Thus, we have developed an MV Calculator with similar
functionality to the AV Calculator but based on claims data that better
reflects typical employer-sponsored plans. In our sampling, the vast
majority of plan designs that are in excess of 60 percent AV are also
in excess of 60 percent MV. We are finalizing the rule with added
language establishing any plan in the small group market that meets any
of the levels of coverage, as described in Sec. 156.140 of this
subpart, satisfies minimum value.
Comment: We received numerous comments asking when the MV
Calculator and safe-harbor checklists will be available for public use.
Response: The MV Calculator with accompanying continuance tables
and the MV methodology are now available at http://cciio.cms.gov/resources/regulations/index.html#pm and we look forward to comments on
both.
Comment: Several commenters questioned why certain benefits outside
EHB would be included in the calculation of MV under paragraph (b).
Response: While employer-sponsored group health plans are not
required to offer EHB unless they are health plans offered in the small
group market subject to PHS Act section 2707(a), employer-sponsored
group health plans that seek to offer minimum value must offer 60
percent of the total allowed cost of benefits. Under section 1302(d)(2)
of the Affordable Care Act, this measurement, like AV, is based on the
provision of EHB to a standard population. To calculate minimum value,
employer-sponsored plans may account for any benefits covered by the
employer that are also covered in any one of the EHB-benchmark plan
options in any state.
Comment: Commenters recommended using the same de minimis variation
of the AV Calculator, +/- 2 percentage points, when using the MV
Calculator.
Response: We acknowledge the flexibility in plan design when
allowing for a de minimis variation of +/- 2 percentage points in the
AV Calculator and the similar functionality of the MV Calculator to the
AV Calculator; however, whereas the statute allows for a de minimis
range with actuarial value there is no similar provision in section 36B
of the Code with regard to MV.
Summary of Regulatory Changes
In general, we are finalizing the provisions of Sec. 156.145 as
proposed. To address concerns whether insurance offered in the small
group market at a bronze level of coverage provides MV, we have added
regulation text at Sec. 156.145(a)(4), to clarify that if a plan in
the small group market meets any of the levels of coverage described in
Sec. 156.140(b), it meets MV. We have also added Sec. 156.145(d) to
reflect the proposed preamble language that employer contributions to
an HSA and amounts newly made available under integrated HRAs,
specifically HRAs that may be used only for cost sharing, will be taken
into account in determining MV. To provide greater clarity, we have
modified Sec. 156.145(a) to read that an employer-sponsored plan
provides MV if the percentage of the total allowed costs of benefits
provided under the plan is no less than 60 percent. An employer-
sponsored plan may use one of the methodologies outlined in Sec.
156.145 to determine whether the percentage of the total allowed costs
of benefits provided under the plan is not less than 60 percent.
Whether other types of integrated HRAs might count towards MV is being
given further consideration. In this case, guidance on the treatment of
HRAs will be issued and this regulation will be amended as necessary.
k. Application to Stand-alone Dental Plans inside the Exchange (Sec.
156.150)
In paragraph (a), we proposed that stand-alone dental plans would
have a separate annual limitation on cost sharing from QHPs covering
the remaining EHBs. While the annual limitation on cost-sharing for a
QHP embedding pediatric dental coverage would have to be consistent
with Sec. 156.130, the annual limitation on cost sharing for a stand-
alone dental plan would be considered in accordance with this section.
We proposed that the plan must demonstrate the annual limitation on
cost sharing for the stand-alone dental plan is reasonable for coverage
of the pediatric dental EHB. The annual limitation on cost sharing
would be applicable to in-network services only, consistent with Sec.
156.130(c).
In paragraph (b), we proposed actuarial value standards for stand-
alone dental plans. The calculator developed by HHS under proposed
Sec. 156.135 would be inappropriate for stand-alone dental plans
because the standard population that underlies the HHS-developed
calculator could not be reasonably adapted to reflect a pediatric-only
population that utilizes dental services. Accordingly, in paragraph
(b)(1), we proposed that stand-alone dental plans may not use the HHS-
developed AV calculator. Instead, given the unique and narrow focus of
the stand-alone dental plan market, we proposed in paragraph (b)(2)
that any stand-alone dental plan certified to meet an 75 percent AV,
with a de minimis range of +/- 2 percentage points, be considered a
``low'' plan and anything with an AV of 85 percent, with a de minimis
range of +/- 2 percentage points, be considered a ``high'' plan. In
order to meet this standard we proposed in paragraph (b)(3) that the
issuer of a stand-alone plan demonstrate that the plan meets the
``high'' or ``low'' level of coverage as certified by a member of the
American Academy of Actuaries using generally accepted actuarial
principles.
The comments and our responses to Sec. 156.150 are set forth
below.
Comment: Several commenters supported our proposal to allow stand-
alone dental plan to have a separate out-of-pocket maximum, subject to
a standard of ``reasonableness'' and either requested additional
guidance on the ``reasonable'' standard or provided suggestions for how
best to further define what a ``reasonable'' out-of-pocket maximum
would be for a stand-alone dental plan. Other commenters urged HHS to
include stand-alone dental plans in the overall out-of-pocket maximum
and to find some method to develop a method to track and coordinate the
out-of-pocket maximum between issuers.
Response: We agree with comments noting that coordination between
medical and dental issuers would be administratively complex and
accordingly could result in higher premiums for consumers. We therefore
allow for a separate out-of-pocket maximum for stand-alone dental
issuers. We clarify that it will be up to the Exchange to decide what
constitutes a reasonable out-of-pocket maximum for

[[Page 12853]]

stand-alone dental plans and anticipate issuing further interpretive
guidance for the federally-facilitated Exchanges in sub-regulatory
guidance.
Comment: Several commenters supported the proposed ``high'' and
``low'' approach for the AV calculation of stand-alone dental plans,
but urged HHS to decrease the ``low'' option from 75 percent to 70
percent as a more affordable option for consumers and to increase
variation between ``high'' and ``low'' plans. Other commenters
expressed concerns about the impact of a ``high'' and ``low'' approach
on consumers from an affordability standpoint. Lastly, some commenters
requested that stand-alone dental plans be held to the same standard as
health plans.
Response: A ``high'' and ``low'' approach for the AV calculation of
stand-alone dental plans simplifies the comparison between stand-alone
dental plans with varying cost-sharing levels, while minimizing market
disruption for dental plans. The AV levels for the ``high'' and ``low''
options are high compared to metal levels set in the statute to
minimize market disruption. This permits stand-alone dental plans to
maintain current benefit designs without adding deductibles or other
cost-sharing features that are currently not part of those plans. We
agree with commenters that 70 percent as a low level will allow for
greater plan variation and are finalizing the regulation with a high/
low AV requirement of 70 percent and 85 percent respectively.
Comment: The statute and regulations provide that if an Exchange
offers a stand-alone dental plan offering a pediatric dental EHB
benefit, medical plans are not required to offer a pediatric dental
plan benefit on that Exchange. Several commenters encouraged HHS to
extend the ability of a medical insurance plan to not offer the
pediatric dental EHB into the non-Exchange market, in cases where a
stand-alone dental plan that meet the standards to cover the pediatric
dental EHB is offered.
Response: The Affordable Care Act does not provide for the
exclusion of a pediatric dental EHB outside of the Exchange as it does
in section 1302(b)(4)(F) of the Affordable Care Act for QHPs.
Therefore, individuals enrolling in health insurance coverage not
offered on an Exchange must be offered the full ten EHB categories,
including the pediatric dental benefit. However, in cases in which an
individual has purchased stand-alone pediatric dental coverage offered
by an Exchange-certified stand-alone dental plan off the Exchange, that
individual would already be covered by the same pediatric dental
benefit that is a part of EHB. When an issuer is reasonably assured
that an individual has obtained such coverage through an Exchange-
certified stand-alone dental plan offered outside an Exchange, the
issuer would not be found non-compliant with EHB requirements if the
issuer offers that individual a policy that, when combined with the
Exchange-certified stand-alone dental plan, ensures full coverage of
EHB. We note that the stand-alone dental plan would have to be an
Exchange-certified stand-alone dental plan to ensure that it covered
the pediatric dental EHB, as required for Exchange certification under
section 1311(d)(2)(B)(ii) of the Affordable Care Act. However, the
Exchange-certified stand-alone dental plan would not need to be
purchased through an Exchange. This alternate method of compliance is
at the option of the medical plan issuer, and would only apply with
respect to individuals for whom the medical plan issuer is reasonably
assured have obtained pediatric dental coverage through an Exchange-
certified stand-alone dental plan. In addition, this option is only
available for the pediatric dental EHB, and not for any other EHB,
because of the unique treatment of stand-alone dental plans inside the
Exchanges. With respect to other individuals seeking to enroll in the
same plan, the issuer would be required to offer the same coverage
generally (there would be no exception to guaranteed availability that
would apply), but would have to make pediatric dental benefits
available to such individuals.
Comment: HHS received comments asking whether childless adults and
families with children need to purchase a stand-alone dental plan if
the QHP they enroll in through an Exchange has omitted the pediatric
dental EHB as allowed under section 1302(b)(4)(F) of the Affordable
Care Act.
Response: Section 1302 of the Affordable Care Act outlines the
requirements for health plans to cover the ten categories of the
essential health benefits. The only exception permitted under 1302 of
the Affordable Care Act is for QHPs to exclude coverage of the
pediatric dental EHB if there is a stand-alone dental plan offered in
the Exchange. Section 1311 of the Affordable Care Act requires all
Exchange stand-alone dental plans to cover the pediatric dental EHB. In
this way, sections 1302 and 1311 of the Affordable Care Act require
that the full set of essential health benefits be offered to people
purchasing coverage through the Exchange. However, nothing in this rule
requires the purchase of the full set of EHB if the purchase is made
through an Exchange. Thus, in an Exchange, someone (with a child or
without) can purchase a QHP that does not cover the pediatric dental
EHB without purchasing a stand-alone dental plan. As noted above,
outside of an Exchange, an individual or family must be offered
coverage of all ten categories of EHB, either through one policy, or
through a combination of a medical policy and an Exchange-certified
stand-alone dental plan, as described above.
Comment: Several commenters asked how the policies in Sec. 156.150
would affect a health insurance plan with an embedded pediatric dental
EHB.
Response: In response to these questions, we are now clarifying
that the policies in Sec. 156.150 apply only to the pediatric dental
EHB when offered by a stand-alone dental plan through an Exchange. When
the pediatric dental benefit is embedded in a health insurance plan
subject to standards set forth in Sec. Sec. 156.130 and 156.140, we do
not distinguish it from other benefits with respect to AV and cost-
sharing requirements.
Comment: Several commenters asked whether stand-alone dental plans
in the Exchange can offer family coverage in addition to the pediatric
dental EHB benefit.
Response: Pursuant to section 1311(d)(2)(B)(ii) of the Affordable
Care Act, a stand-alone dental plan must offer the pediatric dental EHB
but may offer additional benefits, which could include non-pediatric
coverage. We note that only the pediatric dental benefit, and not any
non-pediatric coverage, would be subject to EHB standards, including
complying with the requirement to offer benefits that are substantially
equal to the benchmark and meeting AV and out-of-pocket limit
requirements for stand-alone dental plans.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.150 of the proposed rule, with the following modifications: We
clarify in paragraph (a) that the Exchange determines what constitutes
a reasonable out-of-pocket maximum for a stand-alone dental plan. Also,
in paragraph (b)(2)(i) we are changing the target AV for a ``low''
stand-alone dental plan from 75 percent to 70 percent. In addition, we
clarify here that plans outside of the Exchange may offer EHB that
exclude pediatric dental benefits if they are ``reasonably

[[Page 12854]]

assured'' that such coverage is sold only to individuals who purchase
Exchange certified stand-alone dental plans.
3. Subpart C--Accreditation
Accreditation of QHP Issuers (Sec. 156.275)
Recognition of Accrediting Entity by HHS (Sec. 156.275(c)(1) and
(c)(4))
In Sec. 156.275, we proposed to amend Sec. 156.275(c)(1) to
provide an application and review process for the current (``phase
one'') recognition process of accrediting entities. This would allow
additional accrediting entities the opportunity to apply and
demonstrate how they meet the conditions for recognition articulated in
1311(c)(1)(D) of the Affordable Care Act. We also proposed to amend
Sec. 156.275(c)(4)(i) to delete the timeframe of submitting the
documentation within 60 days of publication of this final rule and
require accrediting entities to provide the documentation described in
Sec. 156.275(c)(4)(i) with their application for review.
The comments and our responses to Sec. 156.275 are set forth
below.
Comment: Commenters generally supported the HHS proposal to
establish an application and review process for the recognition of
additional accrediting entities as part of the phase one recognition
process. Several commenters requested that, to be recognized,
accrediting entities be held to the same standards as were used to
recognize NCQA and URAC.^{31 32} Other commenters noted
specific accrediting entities that should be recognized and asked that
issuers seeking QHP certification be able to select the recognized
accrediting entity from which to seek accreditation. Commenters also
asked HHS to clarify that Exchanges must accept accreditation from any
of the recognized accrediting entities.
---------------------------------------------------------------------------

\31\ Patient Protection and Affordable Care Act; Data Collection
to Support Standards Related to Essential Health Benefits;
Recognition of Entities for the Accreditation of Qualified Health
Plans, Final Rule, 77 FR 42658-42672 (July 20, 2012) (to be codified
at 45 CFR part 156).
\32\ Recognition of Entities for the Accreditation of Qualified
Health Plans, 77 FR 70163 (November 23, 2012).
---------------------------------------------------------------------------

Response: In our notice titled, ``Recognition of Entities for the
Accreditation of Qualified Health Plans'', published on November 23,
2012 (77 FR 70163), we announced NCQA and URAC as recognized
accrediting entities by the Secretary of HHS to provide accreditation
of QHPs meeting the requirements of 45 CFR 156.275 as they have
effectively met the conditions listed in Sec. 156.275(c)(2), (c)(3),
and (c)(4). Nothing in this final rule changes that recognition. HHS
will finalize our regulation text as proposed with slight technical
corrections to paragraph (c)(1)(iv) to correct the verb tenses. By
finalizing Sec. 156.275(c)(1) and (4) largely as proposed, HHS will
implement an application and review process by which additional
accrediting entities can be recognized. This process also allows for
accrediting entities that apply and are not recognized to reapply,
provided that its standards are modified to meet the requirements. We
concur with commenters that this process to provide other entities an
opportunity to apply would provide expanded choices regarding QHP
accreditation for Exchanges, states and issuers. As we stated in the
proposed rule, this assessment will be the same as that underlying the
recognition of NCQA and URAC. We also confirm that, for the purposes of
QHP certification, issuers have the flexibility to seek accreditation
from any of the HHS-recognized accrediting entities and that Exchanges
must accept accreditation from any of the recognized accrediting
entities for the purposes of QHP certification.
Comment: Commenters asked for clarification about when the phase
two recognition process would replace phase one.
Response: As stated in the Recognition of Entities for the
Accreditation of Qualified Health Plans Final Rule (July 20, 2012 77 FR
42663), the phase one recognition process is effective until it is
replaced by the phase two process. HHS has not yet set a timeline for
the development and implementation of phase two.
Comment: Several commenters requested that HHS modify the criteria
established to evaluate accrediting entities, specified in 45 CFR
156.275, including setting minimum standards for accrediting entities,
adding specific clinical measures for accrediting entities to collect
as part of accreditation, and adding specific topic areas to the
accreditation standards, such as evaluating an issuer's implementation
of mental health parity. Other commenters gave suggestions on items for
inclusion in the phase two recognition process, including
antidiscrimination, network adequacy and essential community provider
standards; clinical measures applicable to specific populations, such
as children, and specific measurement tools; implementing performance-
based accreditation; permitting QHP issuers to have their programs or
services accredited; and a process for HHS to update standards over
time.
Response: HHS has established criteria for accreditation in 45 CFR
156.275 that correspond to requirements included in section
1311(c)(1)(D) of the Affordable Care Act. We consider these
requirements as minimum standards for recognized accrediting entities
to review as part of the accreditation of QHPs. These requirements were
finalized in 45 CFR 156.275. We will consider the above comments as we
develop the phase two recognition process which may establish
additional criteria for recognized accrediting entities or for the
accreditation to be provided for QHPs.
Comment: Commenters supported the proposal for HHS to review
applications from accrediting entities as they are received by HHS.
Other commenters asked that HHS modify the proposed process by
shortening the timeline to review applications from accrediting
entities. Commenters also asked that the documentation required in
Sec. 156.275(c)(4) be released to the public.
Response: HHS has established a process to accept accrediting
entity applications on a rolling basis in order to allow for any
accrediting entity wishing to apply to do so as soon as it meets the
requirements established in Sec. 156.275(c). The process also allows
for accrediting entities who apply and are not recognized to reapply.
HHS maintains that a thorough review of an applicant's documentation
supporting the application specified in (c)(1)(i) and the publication
of a notice in the Federal Register may take up to 60 days from the
date of receipt. Further, HHS maintains that a minimum 30-day comment
period is necessary to ensure that the public has adequate time to
consider the accrediting entities being considered for recognition. HHS
further maintains that no time period will be established for when the
final notice is published in the Federal Register, as HHS must
carefully review and consider comments submitted during the comment
period before making a determination on whether or not an accrediting
entity will be recognized. Lastly, as we proposed in (c)(1)(ii), HHS
will publish a notice in the Federal Register that will include a
summary of HHS's analysis of whether the accrediting entity meets the
criteria described in (c)(2) and (3). Other documentation submitted
during the application process may be proprietary and will not be made
public.
Comment: Several commenters offered suggestions for HHS to consider
when implementing future quality reporting requirements for QHP issuers
and Exchanges. These suggestions included: Specific quality measures
for issuers to report; methods to minimize burden for reporting quality
data; elements and attributes to consider in developing the QHP-
specific quality

[[Page 12855]]

rating; and consulting with external stakeholders as the quality
requirements are developed. Other commenters made recommendations for
educating consumers about quality information as well as the types of
information that should be displayed to consumers. Finally, we received
comments encouraging standardized quality reporting requirements across
Exchanges and expressing support for State flexibility in establishing
quality requirements.
Response: While HHS appreciates the submission of these comments,
they are outside the scope of this rule. We will solicit input on
quality reporting requirements as part of future rulemaking.
Summary of Regulatory Changes
For the reasons described in the proposed rule and considering the
comments received, we are finalizing the provisions proposed in Sec.
156.275(c)(1) and (4) of the proposed rule without substantive
modification. We are revising the text at Sec. 156.275(c)(1)(iv) for
technical corrections to reflect that the required notice has been
published since the proposed rule.

III. Collection of Information

Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before an information collection request is submitted to the
Office of Management and Budget (OMB) for review and approval. In order
to fairly evaluate whether an information collection should be approved
by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995
requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Below is a summary of the information collection requirements
outlined in this regulation. Throughout this section, we assume that
each data collection will occur on an annual basis unless otherwise
noted. We used the Bureau of Labor Statistics (BLS) Web site to
identify salary data, unless otherwise indicated. Fringe benefit
estimates were taken from the BLS March 2011 Employer Costs for
Employee Compensation report. These compensation estimates were
selected to align with the burden estimates for the data collections
described in the final rule that published on March 27, 2012 (77 FR
18310). For purposes of presenting an estimate of paperwork burden, we
reflect the operation of an Exchange in fifty states, the U.S.
territories, and the District of Columbia. Similarly, we estimate the
burden for issuers participating in all 50 states, the territories and
the District of Columbia. Therefore, these estimates should be
considered an upper bound of burden estimates. These estimates may be
adjusted in future information collection requests. We solicited public
comment on each of these issues for the following sections of this
document that contain information collection requirements (ICRs).

A. ICRs Regarding Additional Required Benefits (Sec. 155.170(c))

In Sec. 155.170(c), we direct QHP issuers to quantify and report
to the Exchange the cost attributable to required benefits in addition
to EHB. This is a third-party disclosure requirement. Issuers will use
a uniform rate template in a revision to the Rate Increase Disclosure
and Review Reporting Requirements information collection request to
report this information. The burden associated with meeting this data
collection is included in the Rate Review information collection
request. A Federal Register notice (77 FR 40061),\33\ in which we
sought comments on this PRA package, was published on July 6, 2012.
---------------------------------------------------------------------------

\33\ ``Agency Information Collection Activities: Proposed
Collection; Comment Request; Webinars''. (77 FR 40061) Available at
http://www.gpo.gov/fdsys/pkg/FR-2012-07-06/pdf/2012-16508.pdf.
---------------------------------------------------------------------------

As noted in the Rate Review information collection request, we
estimate that a total of 2,010 issuers in the individual market and
1,050 issuers in the small group market will offer products and that
each issuer will have an average of 2.5 submissions per year. We
anticipate that it will take an actuary a total of 11 hours to complete
the uniform rate template, at $225 per hour for an actuary. The total
annual cost is estimated to be $18,933,750. Of this total amount, only
a fraction can be attributable to the portion of the uniform rate
template that pertains to benefits in addition to EHB for QHP issuers.
We estimate that of the total 11 hours it will take an actuary to
complete the uniform rate template, it will take an actuary 1 hour to
complete the portion pertaining to benefits in addition to EHB.
Therefore, we estimate the cost attributable to the collection of
information regarding benefits in addition to EHB to be $1,721,250.

B. ICRs Regarding State Selection of Base-Benchmark (Sec. 156.100) and
EHB-Benchmark Plan Standards (Sec. 156.110)

In Sec. 156.100, we proposed that a state may select a base-
benchmark plan to serve as a reference plan to define EHB in that
state. We also proposed that if a state does not select a benchmark
plan, its base-benchmark would be the largest plan by enrollment in the
largest product in the state's small group market. In Sec. 156.110, we
proposed that a state-selected or default benchmark plan must offer
coverage in each EHB category, as required by the Affordable Care Act.
We proposed that if a base-benchmark plan does not offer coverage in a
category, it must be supplemented to include those missing benefit
categories.
We do not believe that this is a change to the information
collection associated with state selection and submission of a
benchmark plan and associated benefits and the data collection to
establish default benchmark plans, including any required
supplementing, which is already captured in the collection approved
under OMB Control Number 0938-1174.

C. ICRs Regarding AV Calculation for Determining Level of Coverage
(Sec. 156.135)

In Sec. 156.135(b), we proposed to create an exception to using
the AV calculator for issuers with health plans that are not designed
in a way that is compatible with the AV calculator. To take advantage
of this exception, issuers must submit an actuarial certification on
their alternative method to the state, HHS, the Exchange, or OPM. This
is a third-party disclosure requirement when the issuers submit to the
state or the Exchange, and this is a reporting requirement when the
issuers submit to HHS, OPM, or a Federally-facilitated Exchange. We
account for this collection in the Initial Plan Data Collection to
Support Qualified Health Plan Certification and Other Financial
Management and Exchange Operations information collection request. A
Federal Register notice (77 FR 40061) regarding this PRA package was
published on July 6, 2012. As required by the PRA, we will publish
another notice in the Federal Register when the aforementioned
information collection request is submitted to OMB for review and
approval.
In the QHP Certification PRA package, we estimate that 1,200
issuers will each offer 15 potential QHPs, for a total of

[[Page 12856]]

18,000 potential QHPs, and that the per-issuer burden will be 175
hours. We estimate the cost per issuer in the first year of operations
to be $13,475, which represents an aggregation of several staff,
including actuarial staff. This information collection request includes
data collections for QHP certification, risk adjustment, and
reinsurance. We believe that only 5 percent of issuers will be unable
to use the AV calculator, thus use the process proposed in Sec.
156.135(b) and assume that it will take each issuer 8 of the total 175
hours to provide the requested information. We further assume that the
8 hours of work would be performed by an actuary, at $225 per hour.
Therefore, we estimate the total cost attributable to Sec. 156.135(b)
to be $1,800 per QHP and $1,620,000, per year.
In Sec. 156.135(d), we proposed that beginning in 2015, a state
may submit a state-specific standard population, to be used for AV
calculations, so long as the criteria described in Sec. 156.135(d)(1)
through (6) are met. A state that applies must submit to HHS summary
evidence that the requirements described in the proposed rule are met
and the dataset is in a format that will support the use of the AV
calculator. We expect that for each state choosing this option, the
data submission will require 15 hours from a database administrator at
$47.70 an hour, 4 hours of actuarial work at $225 an hour, and 1 hour
of management review at $75.15 an hour. Therefore, the total cost
associated with the reporting requirement for each state choosing this
option will be $1,691. We assume that states opting to develop a state-
specific standard population will provide new data every three to five
years.

D. ICRs Regarding Stand-Alone Dental Plans Inside the Exchange (Sec.
156.150(a))

In Sec. 156.150(a), we proposed that stand-alone dental plans
covering the pediatric dental EHB under Sec. 155.1065 must demonstrate
to the Exchange that they have a reasonable annual limitation on cost
sharing. This is a third-party disclosure requirement.
We account for this collection in the QHP Certification information
collection request discussed earlier in this section, where we estimate
that 40 issuers will each offer a stand-alone dental plan, and that the
burden for certification will be 6 hours per issuer, at a total hourly
billing rate of $77, for a total cost of $462 per issuer. We estimate
that of those 6 hours, 1 will be attributable to demonstrating that the
annual limitation on cost sharing is reasonable, at a cost of $77 per
plan. Therefore, across 40 plans, we estimate the total annual cost to
be $3,080.

E. ICRs Regarding Accreditation (Sec. 156.275)

As part of the proposed rule, titled ``Patient Protection and
Affordable Care Act; Standards Related to Essential Health Benefits,
Actuarial Value, and Accreditation'' (77 FR 70644), published in the
Federal Register on November 26, 2012, we also issued a 60-day Federal
Register notice seeking comments on these ICRs. The 60-day comment
period closed on January 26, 2013. We will submit a revised information
collection request to OMB, under OMB Control Number 0938-1176, to
account for the adjustment in the number of respondents and the
corresponding adjustment to the burden. At that time, as required by
the PRA, we will publish another notice in the Federal Register when
the aforementioned information collection request is submitted to OMB
for review and approval.
The comments and our responses are set forth below.
Comment: One commenter noted that the data collection proposed
under the information collection request entitled ``Recognized
Accrediting Entities Data Collection'' \34\ requires the submission of
significant amounts of sensitive, proprietary, or confidential data and
may be overly burdensome to issuers.
---------------------------------------------------------------------------

\34\ Available at: http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10449.html.
---------------------------------------------------------------------------

Response: HHS disagrees that the data submission requirements for
recognized accrediting entities and accrediting entities seeking
recognition from HHS for the purpose of Sec. 156.275(a) will be overly
burdensome to issuers. We describe minimal data submission requirements
for issuers. Issuer burden for the accreditation requirement is
accounted for in the QHP Application information collection
request.\35\ All other data requirements described in the information
collection request regarding accreditation will be met by recognized
accrediting entities and entities applying to be recognized by HHS.
---------------------------------------------------------------------------

\35\ Patient Protection and Affordable Care Act; Data Collection
to Support Standards Related to Essential Health Benefits;
Recognition of Entities for the Accreditation of Qualified Health
Plans, Final Rule, 77 FR 42658-42672 (July 20, 2012) (to be codified
at 45 CFR part 156).
---------------------------------------------------------------------------

Comment: One commenter offered specific feedback on the content
areas that were proposed for data collection, including what
accreditation survey data is collected, how accreditation data from
different accrediting entities may vary, and requesting that only
specific CAHPS survey questions be required for submission by QHP
issuers.
Response: The purpose of the ICRs regarding accreditation is to
solicit feedback from stakeholders on the estimated burden associated
with the proposed data collection on recognized accrediting entities.
Comments in regard to specific content areas of the data collection are
therefore outside of the scope. We finalized the accreditation
documentation submission requirements in a final rule published on July
20, 2012.\36\
---------------------------------------------------------------------------

\36\ Patient Protection and Affordable Care Act; Data Collection
to Support Standards Related to Essential Health Benefits;
Recognition of Entities for the Accreditation of Qualified Health
Plans (CMS-9965-F), 77 FR 42,658 (July 20, 2012).
---------------------------------------------------------------------------

IV. Regulatory Impact Analysis

HHS has examined the impacts of this proposed regulation under
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993) and Executive Order 13563 on Improving Regulation and Regulatory
Review (February 2, 2011).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 is supplemental to and reaffirms the principles,
structures, and definitions governing regulatory review as established
in Executive Order 12866--emphasizing the importance of quantifying
both costs and benefits, of reducing costs, of harmonizing rules, and
of promoting flexibility.
A regulatory impact analysis (RIA) must be prepared for rules with
economically significant effects ($100 million or more in any 1 year),
and a ``significant'' regulatory action is subject to review by the
Office of Management and Budget (OMB). Section 3(f) of Executive Order
12866 defines a ``significant regulatory action.'' In accordance with
the provisions of Executive Order 12866, this regulation was reviewed
by the Office of Management and Budget as an economically significant
regulatory action.
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. HHS will submit a

[[Page 12857]]

report containing this rule and other required information to the U.S.
Senate, the U.S. House of Representatives, and the Comptroller General
of the United States prior to publication of the rule in the Federal
Register. A major rule cannot take effect until 60 days after it is
published in the Federal Register. This action is a ``major rule'' as
defined by 5 U.S.C. 804(2). This rule will be effective April 26, 2013,
sixty days after date of publication in the Federal Register.

A. Summary

This final rule will implement the requirements related to EHB and
AV levels of coverage, and establish the timeline according to which
QHP issuers participating in Federally-facilitated Exchanges must be
accredited. We note that the Exchange regulation (45 CFR 156.200)
established that QHPs will cover essential health benefits, as defined
by the Secretary, and that QHPs be accredited on the basis of local
performance. The cost to health plans of obtaining QHP certification
and participating in Exchanges is already accounted for in the
regulatory impact analysis that accompanies that regulation.\37\
Therefore, this analysis describes the incremental costs, benefits, and
transfers associated with provisions in this proposed rule, for example
that health plans cover the essential health benefits as specifically
defined herein, and that health plans use the HHS-developed AV
calculator.
---------------------------------------------------------------------------

\37\ ``Patient Protection and Affordable Care Act; Establishment
of Exchanges and Qualified Health Plans, Exchange Standards for
Employers (CMS-9989-FWP) and Standards Related to Reinsurance, Risk
Corridors and Risk Adjustment (CMS-9975-F): Regulatory Impact
Analysis.'' Centers for Medicare & Medicaid Services. Available at:
http://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
---------------------------------------------------------------------------

This final rule also contains details relating to the establishment
of a timeline by which QHPs seeking certification by Federally-
facilitated Exchanges must be accredited. We do not believe that this
results in incremental benefits, costs, or transfers.
HHS has finalized this regulation to implement the protections
intended by the Congress in an economically efficient manner. In
accordance with OMB Circular A-4, HHS has quantified the benefits,
costs and transfers where possible, and has also provided a qualitative
discussion of some of the benefits, costs and transfers that may stem
from this proposed regulation.

B. Overview of Key Provisions in the Proposed Rule

The Affordable Care Act directs the Secretary to define EHB such
that EHB includes at least and reflects an appropriate balance among 10
benefit categories, and is equal in scope to benefits offered by a
typical employer plan. Non-grandfathered plans in the individual and
small group markets both inside and outside of the Exchanges, including
multi-state plans, Medicaid benchmark and benchmark-equivalent, and
Basic Health Programs, if applicable, must cover EHB beginning in 2014.
This final rule establishes how the Secretary will define EHB based on
a state-specific benchmark plan and lays out standards for the EHB-
benchmark plan and for issuers that cover EHB.
In addition, the Affordable Care Act directs issuers offering non-
grandfathered health plans in the individual and small group markets to
ensure that any offered plan meets specific AVs. The final rule
outlines a process for computing plan AV using an HHS-developed AV
calculator, as well as standards and flexibility for issuers in meeting
the metal tiers.

C. Need for Regulatory Action

This rule finalizes standards related to EHB and AV consistent with
the Affordable Care Act. HHS believes that the provisions that are
included in this final rule are necessary to fulfill the Secretary's
obligations under sections 1302 and 1311 of the Affordable Care Act.
Establishing specific approaches for defining EHB and calculating AV
will bring needed clarity for states, issuers, and other stakeholders.
Absent the provisions outlined in this proposed rule, states, issuers,
and consumers would face significant uncertainty about how coverage of
EHB should be defined and evaluated. Similarly, failing to specify a
method for calculating AV could result in significant inconsistency
across states and issuers, and significant confusion for consumers.
Finally, establishing a clear timeline for potential QHPs to become
accredited is essential to successful issuer participation in
Federally-facilitated Exchanges.

D. Summary of Impacts and Accounting Table

In accordance with OMB Circular A-4, Table IV.1 below depicts an
accounting statement summarizing HHS's assessment of the benefits,
costs, and transfers associated with this regulatory action.
HHS anticipates that the provisions of this final rule will assure
consumers that they will have health insurance coverage for EHB, and
significantly increase consumers' ability to compare health plans, make
an informed selection by promoting consistency across covered benefits
and levels of coverage, and more efficiently purchase coverage. This
final rule ensures that consumers can shop on the basis of issues that
are important to them such as price, network physicians, and benefits
offered, and be confident that the plan they choose does not include
unexpected coverage gaps, like hidden benefit exclusions. It also
allows for flexibility for plans to promote innovation in benefit
design.
Insurance contracts are extremely complicated documents; therefore,
many consumers may not understand the content of the contracts they
purchase.\38\ This complexity has two undesirable results. First,
consumers may unknowingly purchase a product that does not meet their
basic needs--the product may not cover benefits to restore or maintain
good health, or may result in more financial exposure than the consumer
anticipated. Second, complexity may deter consumers from market
transactions, whereas a small number of meaningful choices may increase
consumers' willingness to purchase coverage.\39\
---------------------------------------------------------------------------

\38\ Consumers Union. (2012). ``What's Behind the Door:
Consumers' Difficulties Selecting Health Plans.'' Available at:
http://www.consumersunion.org/pub/pdf/Consumer%20Difficulties%20Selecting%20Health%20Plans%20Jan%202012.pdf
.
\39\ Iyengar, Sheena S.; Lepper, Mark R. Journal of Personality
and Social Psychology, Vol 79(6), Dec 2000, 995-1006.
---------------------------------------------------------------------------

The specific approach to defining EHB in this final rule realizes
the benefits of simplicity and transparency by allowing each state to
choose a benchmark from a set of plans that are typical of the benefits
offered by employers in that state. The final rule allows that EHB in
each state reflect the choices made by employers and employees in that
state today, and minimizes disruption in existing coverage in the small
group market. In addition, the provisions addressing specific benefit
categories, such as habilitative services and pediatric dental and
vision services, will improve access to care for consumers who require
these benefits.
The approach to defining AV in this final rule uses standard
assumptions about utilization and prices, and, for most products,
directs issuers to use an AV calculator created by the Department to
compute AV. This approach will ensure that two plans with the same
cost-sharing parameters

[[Page 12858]]

(that is, deductibles, copayments, and coinsurance features) will have
the same AVs. This approach is intended to lower consumer information
costs and drive competition in the market by enabling consumers to
easily compare the relative generosity of plans, knowing that the AV of
each plan has been calculated in the same manner.
In accordance with Executive Order 12866, HHS believes that the
benefits of this regulatory action justify the costs.

Table IV.1--Accounting Table
----------------------------------------------------------------------------------------------------------------
Units
Category Estimates ---------------------------------------------------
Year dollar Discount rate Period covered
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/ Not Estimated 2011 7% 2013-2016
year).
Not Estimated 2011 3% 2013-2016
----------------------------------------------------------------------------------------------------------------
Qualitative....................... (1) Improved coverage in benefit categories less typically available.
Expanded access to coverage of benefits, particularly in the individual
market, including maternity and prescription drug coverage.
(2) Alignment with current consumer and employer choices. Flexibility for
states; limited market disruption; allowance for health plan innovation
(e.g., substitution within benefit categories; de minimis variation for
AV).
(3) Efficiency due to greater transparency. Increased transparency and
consumer ability to compare coverage.
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/ $3.4* 2011 7% 2013-2016
year).
$3.1* 2011 3% 2013-2016
----------------------------------------------------------------------------------------------------------------
Qualitative....................... (1) Administrative costs. Insurers will incur administrative costs
associated with altering benefit packages to ensure compliance with the
definition of EHB established in this proposed rule. Issuers may also incur
minor administrative costs related to computing AV.
----------------------------------------------------------------------------------------------------------------
(2) Costs due to higher service utilization. As consumers gain additional
coverage for benefits that previously did not meet the standards outlined
in this proposed rule (for example, pediatric dental or vision coverage),
utilization, and thus costs, may increase. A portion of this increased
utilization and costs may be economically inefficient.
----------------------------------------------------------------------------------------------------------------
Transfers
----------------------------------------------------------------------------------------------------------------
Federal Annualized Monetized Not Estimated 2011 7% 2013-2016
($millions/year).
Not Estimated 2011 3% 2013-2016
----------------------------------------------------------------------------------------------------------------
*Note: Administrative costs include costs associated with Information Collection Requirements as described in
section III of this final rule. These costs are annualized over the analysis period of 2013-2016.

E. Methods and Limitations of Analysis

There are many provisions of the Affordable Care Act that are
integral to the goal of expanding access to affordable insurance
coverage, including the provisions of this proposed rule relating to
EHB and AV. Because it is often difficult to isolate the effects
associated with each particular provision of the Affordable Care Act,
we discuss the evidence relating to the provisions of this proposed
rule, as well as related provisions of the Affordable Care Act, in this
regulatory impact analysis. We present quantitative evidence where it
is possible and supplement with qualitative discussion.

F. Estimated Number of Affected Entities

As discussed elsewhere in the preamble, standards relating to EHB
and AV will apply to all health insurance issuers offering non-
grandfathered coverage in the individual and small group markets--both
inside and outside of the Exchanges. The following sections summarize
HHS's estimates of the number of entities that will be affected by this
proposed regulation.
a. Issuers
For purposes of the regulatory impact analysis, we have estimated
the total number of health insurance issuers that will be affected by
this proposed

[[Page 12859]]

regulation at the company level because this is the level at which
issuers currently submit their annual financial reports to the National
Association of Insurance Commissioners (NAIC). Table IV.2 shows the
estimated distribution of issuers offering comprehensive major medical
coverage in the individual and small group markets based on data
submitted on the National Association of Insurance Commissioners' 2011
Supplemental Health Care Exhibit (SHCE).\40\ Additionally, because many
issuers are licensed in more than one state, we have also included data
by ``licensed entity'' (company/state combination) for each market.
---------------------------------------------------------------------------

\40\ The most complete source of data on the number of entities
offering fully insured, private comprehensive major medical coverage
in the individual and group markets is the National Association of
Insurance Commissioners (NAIC) Annual Financial Statements and
Policy Experience Exhibits database. These data contain information
that issuers submit to the NAIC through State insurance regulators
on four different financial exhibits (the Health, Life, Property &
Casualty, and Fraternal ``Blanks''). The 2011 SHCE captures data on
individual, small group and large group comprehensive major medical
coverage at the State level in a consistent manner across all
Blanks, providing more extensive information about this market than
was previously available. We note that issuers electing not to offer
non-grandfathered individual or small group market policies would
not be affected by the proposed rule.

Table IV.2--Estimated Number of Issuers and Licensed Entities Affected by the EHB and AV Requirements by Market,
2011
----------------------------------------------------------------------------------------------------------------
Issuers \1\ offering Licensed entities \2\ offering
comprehensive major medical comprehensive major medical
Description coverage coverage
---------------------------------------------------------------
Number % of Total Number % of Total
----------------------------------------------------------------------------------------------------------------
Total Issuers Offering Comprehensive Major 446 100.0 2,107 100.0
Medical Coverage \3\...........................
By Market: \4\
Individual Market........................... 355 79.6 1,663 78.9
Small Group Market \5\...................... 366 82.1 1,039 49.3
Large Group Market.......................... 375 84.1 922 43.8
Individual and/or Small Group Markets \6\... 427 95.7 1,993 94.6
Individual Market Only...................... 82 18.4 904 42.9
Small Group Market Only..................... 39 8.7 117 5.6
Individual & Small Group Markets Only....... 29 6.5 164 7.8
All Three Markets........................... 279 62.6 545 25.9
----------------------------------------------------------------------------------------------------------------
Notes: \1\ Issuers represents companies (for example, NAIC company codes).
\2\ Licensed Entities represents company/state combinations.
\3\ Total issuers excludes data for companies that are regulated by the California Department of Managed Health
Care.
\4\ To be counted as offering coverage in a particular comprehensive major medical market, the issuer must have
reported non-zero premiums and claims and had at least $1,000 in total premiums per life year for at least one
state.
\5\ Small group is defined based on the current definition in the PHS Act.
\6\ Subcategories do not add to the total because other categories are not shown separately such as those
entities in the large group and small group markets, but not in the individual market.
Source: ASPE analysis of 2011 NAIC Supplemental Health Care Exhibit data.

b. Individuals
Persons enrolled in non-grandfathered individual or small group
market coverage inside or outside of the Exchanges beginning in 2014
will be affected by the provisions of this final rule.\41\
---------------------------------------------------------------------------

\41\ The provisions in this proposed regulation could also
potentially affect some enrollees with non-grandfathered large group
market coverage in States that choose to give larger employers the
option of purchasing coverage through the Exchange starting in 2017.
However, the Congressional Budget Office (CBO) and Joint Committee
on Taxation (JCT) ``expect that few large firms would take
[advantage of] that option if offered because their administrative
costs would generally be lower than those of nongroup policies that
would be available in the exchanges.'' (For more information, see
Congressional Budget Office, ``Letter to the Honorable Evan Bayh: An
Analysis of Health Insurance Premiums under the Patient Protection
and Affordable Care Act,'' Washington, DC, 2009.)
---------------------------------------------------------------------------

In July 2012, CBO estimated that there will be approximately 24
million enrollees in Exchange coverage by 2016.\42\ Participation rates
among potential enrollees are expected to be lower in the first few
years of Exchange availability as employers and individuals adjust to
the features of the Exchanges.\43\ Additionally, the EHB and AV
provisions of this final rule will also affect enrollees in non-
grandfathered individual and small group coverage outside of the
Exchanges.
---------------------------------------------------------------------------

\42\ ``CBO's February 2013 Estimate of the Effects of the
Affordable Care Act on Health Insurance Coverage,'' Congressional
Budget Office, February 2013. Available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900_ACAInsuranceCoverageEffects.pdf.
\43\ Congressional Budget Office, ``Letter to the Honorable Evan
Bayh: An Analysis of Health Insurance Premiums under the Patient
Protection and Affordable Care Act,'' Washington, DC 20009.
---------------------------------------------------------------------------

G. Anticipated Benefits

The Affordable Care Act ensures non-grandfathered health plans
offered in the individual and small group markets offer a basic package
of items and services. The benefits of health insurance coverage are
well documented and discussed at length in previous RIAs,\44\ including
improvement in clinical outcomes and financial security.\45\ \46\ This
final rule applies a definition to EHB and finalizes other standards
that are required of health plans, as directed under the statute.
---------------------------------------------------------------------------

\44\ Available at: http://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
\45\ Institute of Medicine (2001). Coverage Matters: Insurance
and Health Care. National Academies Press: Washington, DC. Burstin
HR, Swartz K, O'Neil AC, Orav EJ, Brennan TA. 1999. The effect of
change of health insurance on access to care. Inquiry; 35: 389-97.
Finkelstein A et al. 2011. The Oregon health insurance experiment:
Evidence from the first year. NBER Working Paper No. 17190.
\46\ Institute of Medicine (2002). Care without coverage: too
little, too late. National Academies Press. Ayanian J, et al.
``Unmet Health Needs of Uninsured Adults in the United States.''
JAMA. 284(16). 2000:2061-9. 27; Roetzheim R, et al. ``Effects of
Health Insurance and Race on Colorectal Cancer Treatments and
Outcomes.'' American Journal of Public Health 90(11). 2000: 1746-54;
Wilper, et al. ``Health Insurance and Mortality in US Adults.''
American Journal of Public Health. 99(12). 2009: 2289-2295.
---------------------------------------------------------------------------

In the market today, it is difficult for consumers to make well-
informed choices when selecting from among competing health plans. The
benefits offered are complicated and can vary widely across plans,
making it difficult for consumers to understand which benefits are
covered.\47\ Further, wide variation in deductibles, coinsurance,

[[Page 12860]]

and other cost sharing features make it difficult for consumers to
understand the relative levels of financial protection they will
receive under competing plans.\48\ \49\
---------------------------------------------------------------------------

\47\ Garnick, D.W. et al. (1993). ``How well do Americans
understand their health coverage?'' Health Affairs, 12(3); 204-212.
\48\ Consumers Union. (2012). ``What's Behind the Door:
Consumers' Difficulties Selecting Health Plans.'' Available at:
http://www.consumersunion.org/pub/pdf/Consumer%20Difficulties%20Selecting%20Health%20Plans%20Jan%202012.pdf
.
\49\ Isaacs, S.L. (2006). Consumer's information needs: results
of a national survey. Health Affairs, 15(4): 31-41.
---------------------------------------------------------------------------

Under the provisions in this final rule, the EHB-benchmark plan
will reflect both the scope of services and any limits offered by a
``typical employer plan'' in that state. This approach, applying for at
least the 2014 and 2015 benefit years, will allow states to build on
coverage that is already widely available, minimize market disruption,
and provide consumers with familiar products. This should heighten
consumer understanding of plan options and may facilitate consumers'
abilities to make choices that better suit their needs. In addition, by
ensuring that all plans cover a core set of benefits and services that
will be compared against other plans that offer the same financial
protection to the consumer, this final rule is expected to improve the
quality and value of the coverage that is available for EHB.
Information on AV is expected to be used by consumers to compare
non-grandfathered individual and small group market plans, and provides
a method for consumers to understand relative plan value. Proposing
standard pricing and utilization assumptions for AV calculations for
QHPs and non-grandfathered health plans in the individual and small
group markets will promote transparency and simplicity in the consumer
shopping experience, as well as offer issuers the flexibility to set
cost-sharing rates that are simple and competitive. Without this
approach, plans with the same cost-sharing provisions could have
different AVs making it difficult for consumers to compare and choose
among health plans. It also fosters plan competition based on price,
quality, and service--rather than variations in benefit design.

H. Anticipated Costs and Transfers

In addition to the administrative costs described in the
Information Collection Requirements section of this proposed rule, HHS
anticipates that the provisions of this final rule could result in
increased costs related to increased utilization of health care
services by people receiving coverage for previously uncovered or
unaffordable benefits.
States have primary enforcement authority over health insurance
issuers and this proposed rule extends this primary enforcement
authority for compliance with EHB and AV requirements defined in this
rule. In addition, states must defray the cost of any state-required
benefits in excess of the EHB that apply to QHPs and multi-state plans
offered through Exchanges. As stated earlier, we expect that this will
rarely occur, if at all, in 2014 and 2015, the period coverage by the
benchmark policy.
The anticipated effects on enrollees in the individual market are
expected to be larger than the effects on enrollees in the small group
market. Coverage in the small group market is much more likely to
include EHB already and, in fact, is included in the choice of
benchmark plans.\50\ Second, almost all products in the group market
have AV above 60 percent,\51\ while there are likely to be changes to
products in the individual market due to the provisions of this
proposed rule.
---------------------------------------------------------------------------

\50\ A study conducted by the Assistant Secretary for Planning
and Evaluation (ASPE) found that commonly purchased products in the
small group market, state employee plans, and federal employee plans
do not differ significantly in the range of services they cover.
Because one of these plans will be chosen as the reference plan for
EHB, most small group plans will provide benefits that are similar
to EHB. (ASPE Issue Brief (2011). ``EHB: Comparing Benefits in Small
Group Products and State and Federal Employee Plans,'' U.S.
Department of Health & Human Services.) In contrast, another ASPE
study found that many current subscribers in the individual market
lack coverage for some EHB benefits and services, such as maternity
care and prescription drugs. (ASPE Research Brief (2011). ``EHB:
Individual Market Coverage'' U.S. Department of Health & Human
Services.)
\51\ ASPE Research Brief (2011). ``AV and Employer Sponsored
Insurance,'' available at: http://aspe.hhs.gov/health/reports/2011/AV-ESI/rb.pdf. Similar results were found in a recent study by Gabel
and colleagues. Jon R. Gabel, Ryan Lore, Roland D. McDevitt, Jeremy
D. Pickreign, Heidi Whitmore, Michael Slover and Ethan Levy-
Forsythe, ``More Than Half Of Individual Health Plans Offer Coverage
That Falls Short Of What Can Be Sold Through Exchanges As Of 2014,''
Health Affairs, (2012), available at: http://content.healthaffairs.org/content/early/2012/05/22/hlthaff.2011.1082.full.pdf+html.
---------------------------------------------------------------------------

Impact on Issuers
Commonly purchased products in the small group market, state
employee plans, and the FEHBP Blue Cross Blue Shield (BCBS) Standard
and Basic Options and Government Employees Health Association (GEHA)
plans do not differ significantly in the range of services they
cover.\52\ Because one of these plans will be chosen as the reference
plan for EHB, most small group plans will provide benefits that are
similar to EHB, and changes in benefits offered to comply with EHB
provisions will be relatively minor.
---------------------------------------------------------------------------

\52\ ASPE Issue Brief (2011). ``EHB: Comparing Benefits in Small
Group Products and State and Federal Employee Plans,'' U.S.
Department of Health & Human Services (2011).
---------------------------------------------------------------------------

Notwithstanding this general conclusion, there are four types of
benefits where changes are expected in the small group market: Mental
health and substance use disorder, habilitative services, pediatric
dental care, and pediatric vision services. In addition, individual
health plans are less likely than small group health plans to cover all
of the 10 statutory EHB categories. Below we discuss two categories of
benefits and services that are less likely to be covered in the market
today: mental health and substance use disorder services, and
habilitative services.
Coverage of additional benefits results in a transfer from out-of-
pocket payments to premium payments. Increased access to insurance
coverage for previously excluded benefits will make medical care for
those benefit categories more affordable for consumers by covering a
portion of the costs of those services. While out-of-pocket costs would
decline, consumers could purchase benefits and services inefficiently--
that is, purchase more than the efficient amount of the previously
excluded benefits and services. However, studies of the Medicare
program suggest that the costs of this inefficiency are likely more
than offset by the benefits of risk reduction.\53\ The introduction of
the Medicare program resulted largely in changes from uninsured to
insured--research suggests that only 25 percent of seniors had private
hospital insurance before the introduction of the program.\54\ In
contrast, this final rule will likely result in incremental gains in
access, rather than changes in status from uninsured to insured.
Accordingly, CMS expects that the tradeoff between the costs of
inefficiency and the benefits of risk reduction will be as or more
favorable as the results observed in studies of the Medicare program.
As discussed previously, many other provisions of the Affordable Care
Act, including healthier risk pools, greater administrative
efficiencies, premium tax credits, and the transitional reinsurance
program will lower premiums in the individual market and Exchanges.
---------------------------------------------------------------------------

\53\ Finkelstein A, McKnight R: ``What Did Medicare Do (And Was
It Worth It)?'' Journal of Public Economics 2008, 92:1644-1669; and
Finkelstein, A, ``The Aggregate Effects of Health Insurance:
Evidence from the Introduction of Medicare,'' National Bureau of
Economic Research. Working Paper No. 11619, Sept, 2005.
\54\ Finkelstein, A, ``The Aggregate Effects of Health
Insurance: Evidence from the Introduction of Medicare,'' National
Bureau of Economic Research. Working Paper No. 11619, Sept, 2005.

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

[[Page 12861]]

The statute requires that all plans covering EHB offer mental
health and substance use disorder service benefits, including
behavioral health treatment and services. The preamble of this rule
provides that coverage of EHB must provide parity in treatment
limitations between medical and surgical benefits and the mental health
and substance use disorder benefits required to be covered as EHB in
both the individual and small group markets. Many states \55\ \56\ have
already added some form of mental health parity in some or all insured
markets.\57\ About 95 percent of those with coverage through the three
largest small group products in each state had substance use disorder
and mental health benefits.\58\ Additionally, a study of implementation
of parity in the FEHBP plans \59\ as well as research into state-passed
mental health parity laws \60\ have shown little or no increase in
utilization of mental health services, but found that parity reduced
out-of-pocket spending among those who used mental health and substance
abuse services.
---------------------------------------------------------------------------

\55\ Kaiser State Health Facts. State mandated benefits in small
group private health insurance: Mandated coverage in mental health,
as of January 2010. Available at: http://www.statehealthfacts.org/comparereport.jsp?rep=2&cat=7.
\56\ Health Insurance Mandates in the States 2010, Council for
Affordable Health Insurance, available at: http://www.cahi.org/cahi_contents/resources/pdf/MandatesintheStates2010ExecSummary.pdf.
\57\ Health Insurance Mandates in the States 2010, Council for
Affordable Health Insurance, available at: http://www.cahi.org/cahi_contents/resources/pdf/MandatesintheStates2010ExecSummary.pdf.
\58\ ASPE Issue Brief, ``EHB: Comparing Benefits in Small Group
Products and State and Federal Employee Plans, U.S. Department of
Health & Human Services (2011).
\59\ Goldman HH, et al. 2006. Behavioral health insurance parity
for federal employees. New Engl J Med;354 1378-86.
\60\ Barry CL, Busch SH. 2007. Effects of state parity laws on
the family financial burden of children with mental health care
needs. Health Serv Res; 42: 1061-84. Ma CA, McGuire TG. 1998. Cost
and incentives in a behavioral health carve-out. Health Affairs;17:
56-67.
---------------------------------------------------------------------------

As indicated in the preamble, many health insurance plans do not
identify habilitative services as a distinct group of services.\61\ By
implementing a transitional policy for coverage of habilitative
services, this rule allows issuers time for review and development of
policy in this area, and to gain experience to define these benefits.
To the extent that states exercise the option to define habilitative
services, small group market issuers may incur administrative and
contracting costs associated with bringing their products into
compliance with a state's definition. However, because it is not yet
clear which states will exercise this option or how any such states
will define habilitative services, HHS cannot estimate these costs at
this time.
---------------------------------------------------------------------------

\61\ ASPE Research Brief (2011). ``EHB: Comparing Benefits in
Small Group Products and State and Federal Employee Plans.''
Available at: http://aspe.hhs.gov/health/reports/2011/MarketComparison/rb.shtml.
---------------------------------------------------------------------------

With respect to AV and MV, research indicates that the overwhelming
majority of employer-sponsored health plans meets and exceeds an AV of
60 percent.\62\ Combining both small group and large group, an
estimated 1.6 percent to 2.0 percent of people covered by employer-
sponsored insurance are enrolled in plans with an AV of less than 60
percent.
---------------------------------------------------------------------------

\62\ ASPE Research Brief (2011). ``AV and Employer Sponsored
Insurance,'' available at: http://aspe.hhs.gov/health/reports/2011/AV-ESI/rb.pdf. Similar results were found in a recent study by Gabel
and colleagues. Jon R. Gabel, Ryan Lore, Roland D. McDevitt, Jeremy
D. Pickreign, Heidi Whitmore, Michael Slover and Ethan Levy-
Forsythe, ``More Than Half Of Individual Health Plans Offer Coverage
That Falls Short Of What Can Be Sold Through Exchanges As Of 2014,''
Health Affairs, (2012), available at: http://content.healthaffairs.org/content/early/2012/05/22/hlthaff.2011.1082.full.pdf+html.
---------------------------------------------------------------------------

To keep premium costs low, the Affordable Care Act allows certain
individuals (adults under age 30 and people who otherwise have
unaffordable coverage) to purchase catastrophic coverage, which still
guarantees first dollar coverage of preventive services and primary
care check-ups but has higher deductibles and lower AVs.
Costs to States
State governments are generally responsible for health insurance
enforcement in the individual and small group markets, with the federal
government assuming that role in connection with federal law
requirements if a state does not do so. While HHS expects that states
may need additional resources to enforce the requirements that non-
grandfathered plans in the individual and small group market provide
EHB, and that these plans offer coverage with an AV equal to one of the
four metal levels, these costs will be relatively minor.
If a state requires issuers to cover benefits in excess of EHB, the
Affordable Care Act directs the state to defray the costs of these
benefits in QHPs. States may include as part of their benchmark plan
state benefit requirements that were enacted before December 31, 2011,
avoiding costs associated with these provisions.
Costs to Health Insurance Issuers
Issuers will incur administrative costs to modify existing
offerings to meet EHB and AV standards as defined in this final rule.
For example, issuers that do not currently meet the standards for
prescription drug coverage will incur contracting and one-time
administrative costs to bring their pharmacy benefits into compliance.
Issuers may also incur minor administrative costs related to AV
standards and computing AV. However, because EHB will be based on a
benchmark plan that is typical of what is offered in the market in each
state currently, the modifications in benefits are expected to be
relatively minor for most issuers. Further, issuers have extensive
experience in offering products with various levels of cost sharing,
and HHS expects that following the process for computing AV outlined in
this proposed rule will not demand many additional resources.

I. Regulatory Alternatives

In addition to the regulatory approach outlined in the Essential
Health Bulletin issued on December 16, 2011, HHS considered several
alternatives when developing policy around defining EHBs and
calculating AV.
Definition of EHBs
At the request of some commenters, HHS considered one national
definition of EHB that would have applicable issuers offer a uniform
list of benefits. However, this approach would not allow for state
flexibility and issuer innovation in benefit design, would require a
burdensome overhaul for issuers, and would disrupt the market.
HHS also considered codifying the 10 statutorily required
categories without additional definition and allowing issuers to adjust
their benefit packages accordingly. However, this approach would have
allowed extremely wide variation across plans in the benefits offered,
would not have assured consumers that they would have coverage for
basic benefits, and would not have improved the ability of consumers to
make comparisons among plans.
HHS believes the benchmark approach best strikes the balance
between comprehensiveness, affordability, and state flexibility.
Additionally, HHS believes that the benchmark approach, supplemented
when necessary, best addresses the statutory requirements that EHBs
reflect a typical employer plan and encompass at least the 10 statutory
EHB categories of items and services outlined in the statute.

[[Page 12862]]

Calculation of AV
In the calculation of AV, the statute specifies the use of a
standard population. As described in the AV/CSR Bulletin, HHS
considered allowing issuers to use their own utilization and pricing
data in connection with an HHS-defined standard population (that is,
HHS-set demographics for the standard population) to calculate a
standard population. However, this would not have allowed for consumer
transparency and would not have increased competition. The approach in
this final rule instead reduces issuer burden while allowing consumers
to compare more easily among plans.
The comments and our responses to the RIA are set forth below.
Comment: A few commenters stated that the RIA included in the
proposed rule was insufficiently quantitative; failed to address
specific potential impacts of the regulation, such as access to
previously uncovered benefits and premium costs associated with induced
utilization; and did not adequately describe other regulatory
alternatives considered by HHS.
Response: HHS published the Establishment of Exchanges Final Rule
on March 27, 2012. In the regulatory impact analysis associated with
that final rule, HHS codified standards related to coverage of EHB,
compliance with AV levels, and accreditation of QHPs. The costs,
benefits, and other impacts associated with those standards are
described in the RIA associated with CMS-9989-F. This final rule builds
upon CMS-9989-F by establishing a specific definition of EHB and AV,
and detailing a timeline for issuers to obtain accreditation.
Accordingly, the RIA associated with this final rule assesses only the
costs and benefits of applying that specific definition and timeline
(that is, adopting a benchmark-based approach to defining EHB and a
calculator-based approach to computing AV). HHS provided quantitative
estimates of the costs and benefits associated with the specific
provisions of this regulation where possible, and supplemented those
estimates with qualitative discussion. HHS and OMB reviewed the RIA to
confirm that it addressed all critical components required by Executive
Orders 12866 and 13563, including a description of regulatory
alternatives that HHS considered.

VI. Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA)
requires agencies to analyze options for regulatory relief of small
businesses if a proposed rule has a significant impact on a substantial
number of small entities. The Act generally defines a ``small entity''
as (1) a proprietary firm meeting the size standards of the Small
Business Administration (SBA), (2) a not-for-profit organization that
is not dominant in its field, or (3) a small government jurisdiction
with a population of less than 50,000. (States and individuals are not
included in the definition of ``small entity.'') HHS uses as its
measure of significant economic impact on a substantial number of small
entities a change in revenues of more than 3 to 5 percent.
This final rule is necessary to implement standards related to the
EHB, AV, cost-sharing limitations, and quality, as authorized by the
Affordable Care Act. For purposes of the Regulatory Flexibility
Analysis, we expect the following types of entities to be affected by
this final rule: (1) Issuers; (2) employers; and (3) providers.
We believe that health insurers would be classified under the North
American Industry Classification System (NAICS) Code 524114 (Direct
Health and Medical Insurance Carriers). According to SBA size
standards, entities with average annual receipts of $7 million or less
would be considered small entities for this NAICS code. Health issuers
could possibly also be classified in NAICS Code 621491 (HMO Medical
Centers) and, if this is the case, the SBA size standard would be $10
million or less.
As discussed in the Web Portal interim final rule (75 FR 24481),
HHS examined the health insurance industry in depth in the Regulatory
Impact Analysis we prepared for the proposed rule on establishment of
the Medicare Advantage program (69 FR 46866, August 3, 2004). In that
analysis we determined that there were few, if any, insurance firms
underwriting comprehensive health insurance policies (in contrast, for
example, to travel insurance policies or dental discount policies) that
fell below the size thresholds for ``small'' business established by
the SBA (currently $7 million in annual receipts for health insurers,
based on North American Industry Classification System Code
524114).\63\
---------------------------------------------------------------------------

\63\ `Table of Size Standards Matched to North American Industry
Classification System Codes,'' effective November 5, 2010, U.S.
Small Business Administration, available at http://www.sba.gov.
---------------------------------------------------------------------------

In the proposed rule, we noted that HHS used 2011 National
Association of Insurance Commissioners (NAIC) Supplemental Health Care
Exhibit data to develop an updated estimate of the number of small
entities that offer comprehensive major medical coverage in the
individual and small group markets. HHS used total Accident and Health
(A&H) earned premiums as a proxy for annual receipts. Table IV.3 shows
that HHS estimates that there were 35 small entities with less than $7
million in accident and health earned premiums offering individual or
small group comprehensive major medical (CMM) coverage; however, this
estimate may overstate the actual number of small health insurance
issuers offering such coverage, since it does not include receipts from
these companies' other lines of business.
HHS estimates that 83 percent of these small issuers are
subsidiaries of larger carriers, and 71 percent also offer large group
or other types of A&H coverage. On average, HHS estimates that
individual and small group CMM coverage accounts for approximately 45
percent of total A&H earned premiums for these small issuers. HHS
estimates that 75 percent of these small issuers only offer individual
and small group CMM coverage in a single state. Additionally, HHS
estimates that approximately a third (11) of these small issuers only
offer individual market CMM coverage.

[[Page 12863]]

Table IV.3--Description of Issuers Offering Individual or Small Group Comprehensive Major Medical (CMM) Coverage by Size, 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent of
Total issuers Average number issuers only Individual & Percent of Number of
offering Percent of of States in offering small group issuers also issuers only
Total earned premiums for accident and individual or issuers that which individual or CMM premiums offering large offering
health coverage small group are part of individual or small group as a percent group CMM or individual
market CMM larger small group CMM coverage of total A&H other A&H market CMM
coverage carriers CMM coverage in a single premiums coverage coverage
is offered State
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less Than $7 Million.................... 35 82.9 2.3 74.3 45.0 71.4 11
$7 million to $99 million............... 93 68.8 4.5 62.4 37.2 66.7 6
$100 million to $999 million............ 184 87.0 5.2 65.8 27.0 84.8 11
$1 billion or more...................... 115 87.8 4.8 69.6 24.0 93.9 1
---------------------------------------------------------------------------------------------------------------
Total............................... 427 82.9 4.7 66.7 24.5 82.2 29
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: (1) Issuers represents companies (for example, NAIC company codes). (2) Licensed Entities represents company/state combinations. (3) Total
issuers excludes data for companies that are regulated by the California Department of Managed Health Care. (4) To be counted as offering coverage in
a particular comprehensive major medical market, the issuer must have reported positive premiums, non-zero claims and had at least $1,000 in total
premiums per life year for at least one state. (5) Small group is defined based on the current definition in the PHS Act.
Sources: ASPE analysis of 2011 NAIC Supplemental Health Care Exhibit data.

This rule finalizes standards related to EHB, AV, and accreditation
of QHPs (specifically, by establishing a timeline for accreditation for
QHPs seeking certification in Federally-facilitated Exchanges and
recognition of accrediting entities). These standards may impose some
additional costs on issuers offering coverage that is affected by these
provisions. For example, as discussed earlier, issuers are likely to
experience some administrative costs associated with reconfiguring
existing non-grandfathered plans to meet EHB and AV metal level
standards as defined in this final rule. However, these costs will vary
depending on a number of factors, including the extent to which an
issuer offers coverage in multiple states or is a subsidiary of a
larger carrier, and the variation between these standards and current
practice. Further, some of the changes that standardize coverage may
reduce administrative costs.
As discussed in the regulatory impact analysis for the
Establishment of Exchanges Final Rule, the cost of participating in an
Exchange is an investment for QHP issuers, with benefits expected to
accrue to QHP issuers because of access to new markets where consumers
may receive tax credits to purchase insurance.
This final rule also establishes standards that will affect
employers participating in the small group market, including those that
choose to participate in a SHOP. As discussed in the Summary of
Regulatory Impact Analysis for the Establishment of Exchanges Final
Rule, the SHOP is limited by statute to employers with at least one but
not more than 100 employees. For this reason, we expect that many
affected employers would meet the SBA standard for small entities.
However, the standards outlined in this proposed rule apply to issuers
of small group market health insurance coverage, and not to any small
employers that elect to purchase such coverage on behalf of their
employees (that is, the final rule impacts what coverage is available
to be purchased). We anticipate that the essential health benefits,
coupled with the ability to compare plans based on metal level, will
lead to greater transparency and reduce transaction costs for small
employers.
HHS anticipates that the provisions in this proposed rule will have
a positive effect on providers--particularly those offering services in
areas where many individual market enrollees previously did not have
coverage for these services, and those who serve a substantial share of
the low-income population. HHS anticipates that small providers will
also experience positive effects relating to the provisions of this
proposed rule.
Therefore, the Secretary certifies that this final rule will not
have a significant impact on a substantial number of small entities. We
welcomed comments on the analysis described in this section and on
HHS's conclusion.

VII. Unfunded Mandates

Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995
requires that agencies assess anticipated costs and benefits before
issuing any final rule that includes a federal mandate that could
result in expenditure in any one year by state, local or tribal
governments, in the aggregate, or by the private sector, of $100
million in 1995 dollars, updated annually for inflation. In early 2013,
that threshold level is approximately $139 million.
UMRA does not address the total cost of a final rule. Rather, it
focuses on certain categories of cost, mainly those ``Federal mandate''
costs resulting from: (1) Imposing enforceable duties on state, local,
or tribal governments, or on the private sector; or (2) increasing the
stringency of conditions in, or decreasing the funding of, state,
local, or tribal governments under entitlement programs.
Because states are not required to set up an Exchange, and because
grants are available for funding of the establishment of an Exchange by
a state, we anticipate that this final rule would not impose costs
above that threshold on state, local, or Tribal governments. In
addition, because states largely already collect information on plan
rates and benefits to license them, we believe that the burden on
states is limited. However, because these costs have not been
estimated, HHS sought comments on any additional burdens.
Under the final rule, issuers will provide coverage of certain
benefits. While some issuers may not currently offer benefit packages
that meet the standards outlined in the final rule, we anticipate that
the administrative costs associated with compliance will fall below the
threshold. We anticipate that such administrative costs will be
concentrated in the initial year, with costs significantly tapering off
during subsequent years.
The benchmark-based approach to defining EHB ensures that EHB will
reflect the scope of services offered by a ``typical employer plan.''
Accordingly, we anticipate that many small group market plans meet or
are close to meeting the coverage requirements for EHB and will not
need to incur significant administrative costs to bring

[[Page 12864]]

currently available plans into compliance. Individual market plans are
somewhat less likely to cover all statutorily required benefits and
services as described in this final rule; however, many such plans are
offered by issuers with diverse portfolios that may include small and
large group products or other individual market products that do
include the required services. Accordingly, we do not anticipate that
the provisions related to the EHB package outlined in the final rule
impose costs greater than $139 million on the private sector.
Consistent with policy embodied in UMRA, this final rule has been
designed to be a low-burden alternative for state, local and tribal
governments, and the private sector while achieving the objectives of
the Affordable Care Act.

VIII. Federalism

Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule that imposes
substantial direct requirement costs on state and local governments,
preempts state law, or otherwise has federalism implications.
States regulate health insurance coverage. States would continue to
apply state laws regarding health insurance coverage. However, if any
state law or requirement prevents the application of a federal
standard, then that particular state law or requirement would be
preempted. State requirements that are more stringent than the federal
requirements would not be preempted by this proposed rule unless such
requirements prevent the application of federal law. Accordingly,
states have significant latitude to impose requirements with respect to
health insurance coverage that are more consumer-protective than the
Federal law.
In the view of HHS, this final rule does not impose substantial
direct costs on state and local governments. However, we believe that
this final rule has federalism implications due to direct effects on
the distribution of power and responsibilities among the state and
Federal governments relating to determining standards for health
insurance coverage that is offered in the individual and small group
markets. Each state would adhere to the federal standards outlined in
this final rule for purposes of determining whether non-grandfathered
individual and small group market health insurance coverage includes
the EHB package, or have HHS enforce these policies.
HHS expects that the federalism implications, if any, are
substantially mitigated for a number of reasons. First, the final rule
affords discretion to states to select an EHB-benchmark plan. States
also can choose to be responsible for evaluating the selected benchmark
and making adjustments as needed, and for determining whether non-
grandfathered individual and small group market health insurance
coverage meets the standards outlined in this final rule. While this
final rule establishes new federal standards for certain health
insurance coverage, states will retain their traditional regulatory
roles. Further, if a state elects not to substantially enforce the
standards outlined in the final rule, the federal government will
assume responsibility for these standards.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have federalism
implications or limit the policymaking discretion of the states, HHS
has made efforts to consult with and work cooperatively with states as
evidenced by continued communication through weekly calls and listening
sessions.
HHS initiated weekly calls with key stakeholders from states in
April 2010 as a way for HHS and states to have a regular means of
communication about the Affordable Care Act. The audience for the call
is ``State Government Implementers of the Affordable Care Act'' which
often includes Governors' office staff, state Medicaid Directors'
staff, Insurance Commissioners' staff, state high risk pool staff,
Exchange grantees, health reform coordinators, and other state staff.
National intergovernmental organizations are also invited to
participate. Regular participants also include representatives from the
following intergovernmental organizations:

National Governors Association
National Conference of State Legislatures
National Association of Medicaid Directors
National Association of Insurance Commissioners
American Public Human Services Association
The Council of State Governments
National Academy for State Health Policy
National Association of Counties

These calls, in addition to listening sessions specifically related
to EHB, have helped HHS understand states' major questions about
implementation of the Affordable Care Act. Ongoing communication with
states allowed HHS to develop policy that addressed two central issues:
Flexibility and state-required benefits. The benchmark approach allows
states to select a benchmark option that offer benefit packages that
reflect the needs of their populations and maintain state-required
benefits that were enacted before December 31, 2011. This approach
minimizes state burden while increasing access to quality health care.

List of Subjects

45 CFR Part 147

Health care, Health insurance, Reporting and recordkeeping
requirements, State regulation of health insurance.

45 CFR Part 155

Administrative practice and procedure, Advertising, Brokers,
Conflict of interest, Consumer protection, Grant programs--health,
Grants administration, Health care, Health insurance, Health
maintenance organization (HMO), Health records, Hospitals, Indians,
Individuals with disabilities, Loan programs--health, Organization and
functions (Government agencies), Medicaid, Public assistance programs,
Reporting and recordkeeping requirements, Safety, State and local
governments, Technical assistance, Women, and Youth.

45 CFR Part 156

Administrative practice and procedure, Advertising, Advisory
Committees, Brokers, Conflict of interest, Consumer protection, Grant
programs--health, Grants administration, Health care, Health insurance,
Health maintenance organization (HMO), Health records, Hospitals,
Indians, Individuals with disabilities, Loan programs--health,
Organization and functions (Government agencies), Medicaid, Public
assistance programs, Reporting and recordkeeping requirements, Safety,
State and local governments, Sunshine Act, Technical assistance, Women,
and Youth.

Department of Health and Human Services

For the reasons set forth in the preamble, the Department of Health
and Human Services amends 45 CFR parts 147, 155, and 156 as set forth
below:

Subchapter B--Requirements Relating to Health Care Access

PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS

0
1. The authority citation for part 147 continues to read as follows:

[[Page 12865]]

Authority: Secs 2701 through 2763, 2791, and 2792 of the Public
Health Service Act (42 USC 300gg through 300gg-63, 300gg-91, and
300gg-92), as amended.

0
2. Section 147.150 is added to read as follows:

Sec. 147.150 Coverage of essential health benefits.

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

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

0
3. The authority citation for part 155 is revised to read as follows:

Authority: Title I of the Affordable Care Act, sections 1301,
1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1334, 1402,
1411, 1412, 1413, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-
18024, 18031-18033, 18041-18042, 18051, 18054, 18071, and 18081-
18083.

0
4. Section 155.170 is added to subpart B to read as follows:

Sec. 155.170 Additional required benefits.

(a) Additional required benefits. (1) A State may require a QHP to
offer benefits in addition to the essential health benefits.
(2) A State-required benefit enacted on or before December 31, 2011
is not considered in addition to the essential health benefits.
(3) The Exchange shall identify which state-required benefits are
in excess of EHB.
(b) Payments. The State must make payments to defray the cost of
additional required benefits specified in paragraph (a) of this section
to one of the following:
(1) To an enrollee, as defined in Sec. 155.20 of this subchapter;
or
(2) Directly to the QHP issuer on behalf of the individual
described in paragraph (b)(1) of this section.
(c) Cost of additional required benefits. (1) Each QHP issuer in
the State shall quantify cost attributable to each additional required
benefit specified in paragraph (a) of this section.
(2) A QHP issuer's calculation shall be:
(i) Based on an analysis performed in accordance with generally
accepted actuarial principles and methodologies;
(ii) Conducted by a member of the American Academy of Actuaries;
and
(iii) Reported to the Exchange.

0
5. Revise Sec. 155.1045 to read as follows:

Sec. 155.1045 Accreditation timeline.

(a) Timeline. The Exchange must establish a uniform period
following certification of a QHP within which a QHP issuer that is not
already accredited must become accredited as required by Sec. 156.275
of this subchapter, except for multi-state plans. The U.S. Office of
Personnel Management will establish the accreditation period for multi-
state plans.
(b) Federally-facilitated Exchange. The accreditation timeline used
in federally-facilitated Exchanges follows:
(1) During certification for an issuer's initial year of QHP
certification (for example, in 2013 for the 2014 coverage year), a QHP
issuer without existing commercial, Medicaid, or Exchange health plan
accreditation granted by a recognized accrediting entity for the same
State in which the issuer is applying to offer coverage must have
scheduled or plan to schedule a review of QHP policies and procedures
of the applying QHP issuer with a recognized accrediting entity.
(2) Prior to a QHP issuer's second year and third year of QHP
certification (for example, in 2014 for the 2015 coverage year and 2015
for the 2016 coverage year), a QHP issuer must be accredited by a
recognized accrediting entity on the policies and procedures that are
applicable to their Exchange products, or a QHP issuer must have
commercial or Medicaid health plan accreditation granted by a
recognized accrediting entity for the same State in which the issuer is
offering Exchange coverage and the administrative policies and
procedures underlying that accreditation must be the same or similar to
the administrative policies and procedures used in connection with the
QHP.
(3) Prior to the QHP issuer's fourth year of QHP certification and
in every subsequent year of certification (for example, in 2016 for the
2017 coverage year and forward), a QHP issuer must be accredited in
accordance with Sec. 156.275 of this subchapter.

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

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

Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, and 1401-1402,
Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-18032,
18041-18042, 18044, 18054, 18061, 18063, 18071, and 26 U.S.C. 36B).

0
7. Section 156.20 is amended by adding new definitions for ``Actuarial
value (AV),'' ``Base-benchmark plan,'' ``EHB-benchmark plan,''
``Essential health benefits package or EHB package,'' and ``Percentage
of the total allowed costs of benefits'' in alphabetical order to read
as follows:

Sec. 156.20 Definitions.

Actuarial value (AV) means the percentage paid by a health plan of
the percentage of the total allowed costs of benefits.
* * * * *
Base-benchmark plan means the plan that is selected by a State from
the options described in Sec. 156.100(a) of this subchapter, or a
default benchmark plan, as described in Sec. 156.100(c) of this
subchapter, prior to any adjustments made pursuant to the benchmark
standards described in Sec. 156.110 of this subchapter.
* * * * *
EHB-benchmark plan means the standardized set of essential health
benefits that must be met by a QHP, as defined in Sec. 155.20 of this
section, or other issuer as required by Sec. 147.150 of this
subchapter.
Essential health benefits package or EHB package means the scope of
covered benefits and associated limits of a health plan offered by an
issuer that provides at least the ten statutory categories of benefits,
as described in Sec. 156.110(a) of this subchapter; provides the
benefits in the manner described in Sec. 156.115 of this subchapter;
limits cost sharing for such coverage as described in Sec. 156.130;
and subject to offering catastrophic plans as described in section
1302(e) of the Affordable Care Act, provides distinct levels of
coverage as described in Sec. 156.140 of this subchapter.
* * * * *
Percentage of the total allowed costs of benefits means the
anticipated

[[Page 12866]]

covered medical spending for EHB coverage (as defined in Sec.
156.110(a) of this subchapter) paid by a health plan for a standard
population, computed in accordance with the plan's cost-sharing,
divided by the total anticipated allowed charges for EHB coverage
provided to a standard population, and expressed as a percentage.
* * * * *

0
8. Subpart B is revised to read as follows:
Subpart B--Essential Health Benefits Package
Sec.
156.100 State selection of benchmark.
156.105 Determination of EHB for multi-state plans.
156.110 EHB-benchmark plan standards.
156.115 Provision of EHB.
156.122 Prescription drug benefits.
156.125 Prohibition on discrimination.
156.130 Cost-sharing requirements.
156.135 AV calculation for determining level of coverage.
156.140 Levels of coverage.
156.145 Determination of minimum value.
156.150 Application to stand-alone dental plans inside the Exchange.

Subpart B--Essential Health Benefits Package

Sec. 156.100 State selection of benchmark.

Each State may identify a single EHB-benchmark plan according to
the selection criteria described below:
(a) State selection of base-benchmark plan. The options from which
a base-benchmark plan may be selected by the State are the following:
(1) Small group market health plan. The largest health plan by
enrollment in any of the three largest small group insurance products
by enrollment, as defined in Sec. 159.110 of this subpart, in the
State's small group market as defined in Sec. 155.20 of this
subchapter.
(2) State employee health benefit plan. Any of the largest three
employee health benefit plan options by enrollment offered and
generally available to State employees in the State involved.
(3) FEHBP plan. Any of the largest three national Federal Employees
Health Benefits Program (FEHBP) plan options by aggregate enrollment
that is offered to all health-benefits-eligible federal employees under
5 USC 8903.
(4) HMO. The coverage plan with the largest insured commercial non-
Medicaid enrollment offered by a health maintenance organization
operating in the State.
(b) EHB-benchmark selection standards. In order to become an EHB-
benchmark plan as defined in Sec. 156.20 of this subchapter, a state-
selected base-benchmark plan must meet the requirements for coverage of
benefits and limits described in Sec. 156.110 of this subpart; and
(c) Default base-benchmark plan. If a State does not make a
selection using the process defined in Sec. 156.100 of this section,
the default base-benchmark plan will be the largest plan by enrollment
in the largest product by enrollment in the State's small group market.
If Guam, the U.S. Virgin Islands, American Samoa, or the Northern
Marianna Islands do not make a benchmark selection, the default base-
benchmark plan will be the largest FEHBP plan by enrollment.

Sec. 156.105 Determination of EHB for multi-state plans.

A multi-state plan must meet benchmark standards set by the U.S.
Office of Personnel Management.

Sec. 156.110 EHB-benchmark plan standards.

An EHB-benchmark plan must meet the following standards:
(a) EHB coverage. Provide coverage of at least the following
categories of benefits:
(1) Ambulatory patient services.
(2) Emergency services.
(3) Hospitalization.
(4) Maternity and newborn care.
(5) Mental health and substance use disorder services, including
behavioral health treatment.
(6) Prescription drugs.
(7) Rehabilitative and habilitative services and devices.
(8) Laboratory services.
(9) Preventive and wellness services and chronic disease
management.
(10) Pediatric services, including oral and vision care.
(b) Coverage in each benefit category. A base-benchmark plan not
providing any coverage in one or more of the categories described in
paragraph (a) of this section, must be supplemented as follows:
(1) General supplementation methodology. A base-benchmark plan that
does not include items or services within one or more of the categories
described in paragraph (a) of this section must be supplemented by the
addition of the entire category of such benefits offered under any
other benchmark plan option described in Sec. 156.100(a) of this
subpart unless otherwise described in this subsection.
(2) Supplementing pediatric oral services. A base-benchmark plan
lacking the category of pediatric oral services must be supplemented by
the addition of the entire category of pediatric oral benefits from one
of the following:
(i) The FEDVIP dental plan with the largest national enrollment
that is described in and offered to federal employees under 5 U.S.C.
8952; or
(ii) The benefits available under that State's separate CHIP plan,
if a separate CHIP plan exists, to the eligibility group with the
highest enrollment.
(3) Supplementing pediatric vision services. A base-benchmark plan
lacking the category of pediatric vision services must be supplemented
by the addition of the entire category of pediatric vision benefits
from one of the following:
(i) The FEDVIP vision plan with the largest national enrollment
that is offered to federal employees under 5 USC 8982; or
(ii) The benefits available under the State's separate CHIP plan,
if a separate CHIP plan exists, to the eligibility group with the
highest enrollment.
(c) Supplementing the default base-benchmark plan. A default base-
benchmark plan as defined in Sec. 156.100(c) of this subpart that
lacks any categories of essential health benefits will be supplemented
by HHS in the following order, to the extent that any of the plans
offer benefits in the missing EHB category:
(1) The largest plan by enrollment in the second largest product by
enrollment in the State's small group market, as defined in Sec.
155.20 of this subchapter (except for pediatric oral and vision
benefits);
(2) The largest plan by enrollment in the third largest product by
enrollment in the State's small group market, as defined in Sec.
155.20 of this subchapter (except for pediatric oral and vision
benefits);
(3) The largest national FEHBP plan by enrollment across States
that is offered to federal employees under 5 USC 8903 (except for
pediatric oral and vision benefits);
(4) The plan described in paragraph (b)(2)(i) of this section with
respect to pediatric oral care benefits;
(5) The plan described in paragraph (b)(3)(i) of this section with
respect to pediatric vision care benefits; and
(6) A habilitative benefit determined by the plan as described in
Sec. 156.115(a)(5) of this subpart or by the State as described in
paragraph (f) of this section.
(d) Non-discrimination. Not include discriminatory benefit designs
that contravene the non-discrimination standards defined in Sec.
156.125 of this subpart.
(e) Balance. Ensure an appropriate balance among the EHB categories
to ensure that benefits are not unduly weighted toward any category.
(f) Determining habilitative services. If the base-benchmark plan
does not include coverage for habilitative

[[Page 12867]]

services, the State may determine which services are included in that
category.

Sec. 156.115 Provision of EHB.

(a) Provision of EHB means that a health plan provides benefits
that--
(1) Are substantially equal to the EHB-benchmark plan including:
(i) Covered benefits;
(ii) Limitations on coverage including coverage of benefit amount,
duration, and scope; and
(iii) Prescription drug benefits that meet the requirements of
Sec. 156.122 of this subpart;
(2) With the exception of the EHB category of coverage for
pediatric services, do not exclude an enrollee from coverage in an EHB
category.
(3) With respect to the mental health and substance use disorder
services, including behavioral health treatment services, required
under Sec. 156.110(a)(5) of this subpart, comply with the requirements
of Sec. 146.136 of this subchapter.
(4) Include preventive health services described in Sec. 147.130
of this subchapter.
(5) If the EHB-benchmark plan does not include coverage for
habilitative services, as described in Sec. 156.110(f) of this
subpart, include habilitative services in a manner that meets one of
the following--
(i) Provides parity by covering habilitative services benefits that
are similar in scope, amount, and duration to benefits covered for
rehabilitative services; or
(ii) Is determined by the issuer and reported to HHS.
(b) Unless prohibited by applicable State requirements, an issuer
of a plan offering EHB may substitute benefits if the issuer meets the
following conditions--
(1) Substitutes a benefit that:
(i) Is actuarially equivalent to the benefit that is being replaced
as determined in paragraph (b)(2) of this section;
(ii) Is made only within the same essential health benefit
category; and
(iii) Is not a prescription drug benefit.
(2) Submits evidence of actuarial equivalence that is:
(i) Certified by a member of the American Academy of Actuaries;
(ii) Based on an analysis performed in accordance with generally
accepted actuarial principles and methodologies;
(iii) Based on a standardized plan population; and
(iv) Determined regardless of cost-sharing.
(c) A health plan does not fail to provide EHB solely because it
does not offer the services described in Sec. 156.280(d) of this
subchapter.
(d) An issuer of a plan offering EHB may not include routine non-
pediatric dental services, routine non-pediatric eye exam services,
long-term/custodial nursing home care benefits, or non-medically
necessary orthodontia as EHB.

Sec. 156.122 Prescription drug benefits.

(a) A health plan does not provide essential health benefits unless
it:
(1) Subject to the exception in paragraph (b) of this section,
covers at least the greater of:
(i) One drug in every United States Pharmacopeia (USP) category and
class; or
(ii) The same number of prescription drugs in each category and
class as the EHB-benchmark plan; and
(2) Submits its drug list to the Exchange, the State, or OPM.
(b) A health plan does not fail to provide EHB prescription drug
benefits solely because it does not offer drugs approved by the Food
and Drug Administration as a service described in Sec. 156.280(d) of
this subchapter.
(c) A health plan providing essential health benefits must have
procedures in place that allow an enrollee to request and gain access
to clinically appropriate drugs not covered by the health plan.

Sec. 156.125 Prohibition on discrimination.

(a) An issuer does not provide EHB if its benefit design, or the
implementation of its benefit design, discriminates based on an
individual's age, expected length of life, present or predicted
disability, degree of medical dependency, quality of life, or other
health conditions.
(b) An issuer providing EHB must comply with the requirements of
Sec. 156.200(e) of this subchapter; and
(c) Nothing in this section shall be construed to prevent an issuer
from appropriately utilizing reasonable medical management techniques.

Sec. 156.130 Cost-sharing requirements.

(a) Annual limitation on cost sharing. (1) For a plan year
beginning in the calendar year 2014, cost sharing may not exceed the
following:
(i) For self-only coverage--the annual dollar limit as described in
section 223(c)(2)(A)(ii)(I) of the Internal Revenue Code of 1986 as
amended, for self-only coverage that that is in effect for 2014; or
(ii) For other than self-only coverage--the annual dollar limit in
section 223(c)(2)(A)(ii)(II) of the Internal Revenue Code of 1986 as
amended, for non-self-only coverage that is in effect for 2014.
(2) For a plan year beginning in a calendar year after 2014, cost
sharing may not exceed the following:
(i) For self-only coverage--the dollar limit for calendar year 2014
increased by an amount equal to the product of that amount and the
premium adjustment percentage, as defined in paragraph (e) of this
section.
(ii) For other than self-only coverage--twice the dollar limit for
self-only coverage described in paragraph (a)(2)(i) of this section.
(b) Annual limitation on deductibles for plans in the small group
market. (1) For a plan year beginning in calendar year 2014, the annual
deductible for a health plan in the small group market may not exceed
the following:
(i) For self-only coverage--$2,000; or
(ii) For coverage other than self-only--$4,000.
(2) For a plan year beginning in a calendar year after 2014, the
annual deductible for a health plan in the small group market may not
exceed the following:
(i) For self-only coverage--the annual limitation on deductibles
for calendar year 2014 increased by an amount equal to the product of
that amount and the premium adjustment percentage as defined in
paragraph (e) of this section; and
(ii) For other than self-only coverage--twice the annual deductible
limit for self-only coverage described in paragraph (b)(2)(i) of this
section.
(3) A health plan's annual deductible may exceed the annual
deductible limit if that plan may not reasonably reach the actuarial
value of a given level of coverage as defined in Sec. 156.140 of this
subpart without exceeding the annual deductible limit.
(c) Special rule for network plans. In the case of a plan using a
network of providers, cost-sharing paid by, or on behalf of, an
enrollee for benefits provided outside of such network shall not count
towards the annual limitation on cost-sharing (as defined in paragraph
(a) of this section), or the annual limitation on deductibles (as
defined in paragraph (b) of this section).
(d) Increase annual dollar limits in multiples of 50. For a plan
year beginning in a calendar year after 2014, any increase in the
annual dollar limits described in paragraphs (a) and (b) of this
section that do not result in a multiple of 50 dollars must be rounded
to the next lowest multiple of 50 dollars.
(e) Premium adjustment percentage. The premium adjustment
percentage is the percentage (if any) by which the average per capita
premium for health insurance coverage for the preceding calendar year
exceeds such average per capita premium for health insurance for 2013.
HHS will publish the annual premium adjustment percentage in the

[[Page 12868]]

annual HHS notice of benefits and payment parameters.
(f) Coordination with preventive limits. Nothing in this subpart is
in derogation of the requirements of Sec. 147.130 of this subchapter.
(g) Coverage of emergency department services. Emergency department
services must be provided as follows:
(1) Without imposing any requirement under the plan for prior
authorization of services or any limitation on coverage where the
provider of services is out of network that is more restrictive than
the requirements or limitations that apply to emergency department
services received in network; and
(2) If such services are provided out-of-network, cost-sharing must
be limited as provided in Sec. 147.138(b)(3) of this subchapter.

Sec. 156.135 AV calculation for determining level of coverage.

(a) Calculation of AV. Subject to paragraph (b) of this section, to
calculate the AV of a health plan, the issuer must use the AV
Calculator developed and made available by HHS.
(b) Exception to the use of the AV Calculator. If a health plan's
design is not compatible with the AV Calculator, the issuer must meet
the following:
(1) Submit the actuarial certification from an actuary, who is a
member of the American Academy of Actuaries, on the chosen methodology
identified in paragraphs (b)(2) and (b)(3) of this section:
(2) Calculate the plan's AV by:
(i) Estimating a fit of its plan design into the parameters of the
AV Calculator; and
(ii) Having an actuary, who is a member of the American Academy of
Actuaries, certify that the plan design was fit appropriately in
accordance with generally accepted actuarial principles and
methodologies; or
(3) Use the AV Calculator to determine the AV for the plan
provisions that fit within the calculator parameters and have an
actuary, who is a member of the American Academy of Actuaries calculate
and certify, in accordance with generally accepted actuarial principles
and methodologies, appropriate adjustments to the AV identified by the
calculator, for plan design features that deviate substantially from
the parameters of the AV Calculator.
(4) The calculation methods described in paragraphs (b)(2) and (3)
of this section may include only in-network cost-sharing, including
multi-tier networks.
(c) Employer contributions to health savings accounts and amounts
made available under certain health reimbursement arrangements. For
plans other than those in the individual market that at the time of
purchase are offered in conjunction with an HSA or with integrated HRAs
that may be used only for cost-sharing, annual employer contributions
to HSAs and amounts newly made available under such HRAs for the
current year are:
(1) Counted towards the total anticipated medical spending of the
standard population that is paid by the health plan; and
(2) Adjusted to reflect the expected spending for health care costs
in a benefit year so that:
(i) Any current year HSA contributions are accounted for; and
(ii) The amounts newly made available under such integrated HRAs
for the current year are accounted for.
(d) Use of state-specific standard population for the calculation
of AV. Beginning in 2015, if submitted by the State and approved by
HHS, a state-specific data set will be used as the standard population
to calculate AV in accordance with paragraph (a) of this section. The
data set may be approved by HHS if it is submitted in accordance with
paragraph (e) of this section and:
(1) Supports the calculation of AVs for the full range of health
plans available in the market;
(2) Is derived from a non-elderly population and estimates those
likely to be covered by private health plans on or after January 1,
2014;
(3) Is large enough that: (i) The demographic and spending patterns
are stable over time; and (ii) Includes a substantial majority of the
State's insured population, subject to the requirement in paragraph
(d)(2) of this section;
(4) Is a statistically reliable and stable basis for area-specific
calculations; and (5) Contains claims data on health care services
typically offered in the then-current market.
(e) Submission of state-specific data. AV will be calculated using
the default standard population described in paragraph (f) of this
section, unless a data set in a format specified by HHS that can
support the use of the AV Calculator as described in paragraph (a) of
this section is submitted by a State and approved by HHS consistent
with paragraph (d) of this section by a date specified by HHS.
(f) Default standard population. The default standard population
for AV calculation will be developed and summary statistics, such as in
continuance tables, will be provided by HHS in a format that supports
the calculation of AV as described in paragraph (a) of this section.

Sec. 156.140 Levels of coverage.

(a) General requirement for levels of coverage. AV, calculated as
described in Sec. 156.135 of this subpart, and within a de minimis
variation as defined in paragraph (c) of this section, determines
whether a health plan offers a bronze, silver, gold, or platinum level
of coverage.
(b) The levels of coverage are:
(1) A bronze health plan is a health plan that has an AV of 60
percent.
(2) A silver health plan is a health plan that has an AV of 70
percent.
(3) A gold health plan is a health plan that has an AV of 80
percent.
(4) A platinum health plan is a health plan that has as an AV of 90
percent.
(c) De minimis variation. The allowable variation in the AV of a
health plan that does not result in a material difference in the true
dollar value of the health plan is +/-2 percentage points.

Sec. 156.145 Determination of minimum value.

(a) Acceptable methods for determining MV. An employer-sponsored
plan provides minimum value (MV) if the percentage of the total allowed
costs of benefits provided under the plan is no less than 60 percent.
An employer-sponsored plan may use one of the following methods to
determine whether the percentage of the total allowed costs of benefits
provided under the plan is not less than 60 percent.
(1) The MV Calculator to be made available by HHS and the Internal
Revenue Service. The result derived from the calculator may be modified
under the rules in paragraph (b) of this section.
(2) Any safe harbor established by HHS and the Internal Revenue
Service.
(3) A group health plan may seek certification by an actuary to
determine MV if the plan contains non-standard features that are not
suitable for either of the methods described in paragraphs (a)(1) or
(2) of this section. The determination of MV must be made by a member
of the American Academy of Actuaries, based on an analysis performed in
accordance with generally accepted actuarial principles and
methodologies.
(4) Any plan in the small group market that meets any of the levels
of coverage, as described in Sec. 156.140 of this subpart, satisfies
minimum value.
(b) Benefits that may be counted towards the determination of MV.
(1) In the event that a group health plan uses the MV Calculator and
offers an EHB

[[Page 12869]]

outside of the parameters of the MV Calculator, the plan may seek an
actuary, who is a member of the American Academy of Actuaries, to
determine the value of that benefit and adjust the result derived from
the MV Calculator to reflect that value.
(2) For the purposes of applying the options described in paragraph
(a) of this section in determining MV, a group health plan will be
permitted to take into account all benefits provided by the plan that
are included in any one of the EHB-benchmarks.
(c) Standard population. The standard population for MV
determinations described in paragraph (a) of this section is the
standard population developed by HHS for such use and described through
summary statistics issued by HHS. The standard population for MV must
reflect the population covered by self-insured group health plans.
(d) Employer contributions to health savings accounts and amounts
made available under certain health reimbursement arrangements. For
employer-sponsored self-insured group health plans and insured group
health plans that at the time of purchase are offered in conjunction
with an HSA or with integrated HRAs that may be used only for cost-
sharing, annual employer contributions to HSAs and amounts newly made
available under such HRAs for the current year are:
(1) Counted towards the total anticipated medical spending of the
standard population that is paid by the health plan; and
(2) Adjusted to reflect the expected spending for health care costs
in a benefit year so that:
(i) Any current year HSA contributions are accounted for; and
(ii) The amounts newly made available under such integrated HRAs
for the current year are accounted for.

Sec. 156.150 Application to stand-alone dental plans inside the
Exchange.

(a) Annual limitation on cost-sharing. A stand-alone dental plan
covering the pediatric dental EHB under Sec. 155.1065 of this
subchapter must demonstrate that it has a reasonable annual limitation
on cost-sharing as determined by the Exchange. Such annual limit is
calculated without regard to EHBs provided by the QHP and without
regard to out-of-network services.
(b) Calculation of AV. A stand-alone dental plan:
(1) May not use the AV calculator in Sec. 156.135 of this subpart;
(2) Must demonstrate that the stand-alone dental plan offers the
pediatric dental essential health benefit at either:
(i) A low level of coverage with an AV of 70 percent; or
(ii) A high level of coverage with an AV of 85 percent; and
(iii) Within a de minimis variation of +/-2 percentage points of
the level of coverage in paragraphs (b)(2)(i) or (ii) of this section.
(3) The level of coverage as defined in paragraph (b)(2) of this
section must be certified by a member of the American Academy of
Actuaries using generally accepted actuarial principles.

0
9. Section 156.275 is amended by revising paragraphs (c)(1), (c)(4)
introductory text, and (c)(4)(i) to read as follows:

Sec. 156.275 Accreditation of QHP issuers.

* * * * *
(c) * * *
(1) Recognition of accrediting entity by HHS--(i) Application. An
accrediting entity may apply to HHS for recognition. An application
must include the documentation described in paragraph (c)(4) of this
section and demonstrate, in a concise and organized fashion how the
accrediting entity meets the requirements of paragraphs (c)(2) and (3)
of this section.
(ii) Proposed notice. Within 60 days of receiving a complete
application as described in paragraph (c)(1)(i) of this section, HHS
will publish a notice in the Federal Register identifying the
accrediting entity making the request, summarizing HHS's analysis of
whether the accrediting entity meets the criteria described in
paragraphs (c)(2) and (3) of this section, and providing no less than a
30-day public comment period about whether HHS should recognize the
accrediting entity.
(iii) Final notice. After the close of the comment period described
in paragraph (c)(1)(ii) of this section, HHS will notify the public in
the Federal Register of the names of the accrediting entities
recognized and those not recognized as accrediting entities by the
Secretary of HHS to provide accreditation of QHPs.
(iv) Other recognition. Upon completion of conditions listed in
paragraphs (c)(2), (3), and (4) of this section, HHS recognized, and
provided notice to the public in the Federal Register, the National
Committee for Quality Assurance (NCQA) and URAC as accrediting entities
by the Secretary of HHS to provide accreditation of QHPs meeting the
requirement of this section.
* * * * *
(4) Documentation. An accrediting entity applying to be recognized
under the process described in (c)(1) of this section must provide the
following documentation:
(i) To be recognized, an accrediting entity must provide current
accreditation standards and requirements, processes and measure
specifications for performance measures to demonstrate that it meets
the conditions described in paragraphs (c)(2) and (3) of this section
to HHS.
* * * * *

Dated: February 12, 2013.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.

Approved: February 14, 2013.
Kathleen Sebelius,
Secretary.

Note: The following appendices will not appear in the Code of
Federal Regulations.

Appendix A: List of Essential Health Benefits Benchmarks

The purpose of this appendix is to list the EHB-benchmark plans
for the 50 States, the U.S. territories (Puerto Rico, Guam, the U.S.
Virgin Islands, American Samoa, and the Northern Mariana Islands)
and the District of Columbia. As described in Sec. 156.100 of this
regulation, each State may select a benchmark plan to serve as the
standard for plans required to offer EHB in the State.\64\ HHS has
also stated that the default base-benchmark plan for States, Puerto
Rico and the District of Columbia that do not exercise the option to
select a benchmark health plan would be the largest plan by
enrollment in the largest product by enrollment in the State's small
group market. The default base-benchmark plan for the territories
other than Puerto Rico is the largest FEHBP plan by enrollment. As
described in Sec. 156.110, an EHB-benchmark plan must offer
coverage in each of the 10 statutory benefit categories. In the
summary table that follows, we list the EHB-benchmark plans.
Additional information on the specific benefits, limits, and
prescription drug categories and classes covered by the EHB-
benchmark plans, and state-required benefits, is provided on the
Center for Consumer Information and Insurance Oversight (CCIIO) Web
site (http://cciio.cms.gov/resources/data/ehb.html).
---------------------------------------------------------------------------

\64\ Non-grandfathered plans in the individual and small group
markets both inside and outside of the Exchanges along with certain
other types of plans must cover EHBs beginning in 2014. Self-insured
group health plans, health insurance coverage offered in the large
group market, and grandfathered health plans are not required to
cover the essential health benefits.

[[Page 12870]]

--------------------------------------------------------------------------------------------------------------------------------------------------------
Supplemented Supplementary plan Habilitative
State Plan type Issuer and plan name categories type services
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama............................ Largest small group Blue Cross Blue Shield Pediatric oral....... FEDVIP................. Yes.
product. of Alabama PPO 320 Pediatric vision..... FEDVIP.................
Plan.
Alaska............................. Largest small group Premera Blue Cross Mental health and Largest FEHBP.......... Yes.
product. Blue Shield of Alaska substance use
Heritage Select Envoy disorder services,
PPO. including behavioral
health treatment.
Pediatric oral....... O='xl'>FEDVIP.........
Pediatric vision..... FEDVIP.................
American Samoa..................... Largest National FEHBP Blue Cross Blue Shield Pediatric vision..... FEDVIP................. Yes.
Standard Option PPO.
Arizona............................ Largest State employee Arizona Benefit Pediatric oral....... FEDVIP................. No.
plan. Options EPO Plan, Pediatric vision..... FEDVIP.................
administered by
United HealthCare.
Arkansas........................... Plan from third HMO Partners, Inc. Mental health and 2nd Largest FEHBP...... No.
largest small group Open Access POS, substance use
product. 13262 AR001. disorder services,
including behavioral
health treatment.
Pediatric oral....... CHIP.
Pediatric vision..... CHIP...................
California......................... Plan from largest Kaiser Foundation Pediatric oral....... CHIP................... Yes.
small group product. Health Plan, Inc. Pediatric vision..... FEDVIP.................
Small Group HMO 30 ID
40513CA035.
Colorado........................... Plan from largest Kaiser Foundation Pediatric oral....... CHIP................... No.
small group product. Health Plan of
Colorado Ded HMO
1200D.
Connecticut........................ Largest State non- ConnectiCare HMO...... Pediatric oral....... CHIP................... No.
Medicaid HMO. Pediatric vision..... FEDVIP.................
Delaware........................... Plan from second Highmark Blue Cross Pediatric oral....... CHIP................... No.
largest small group Blue Shield Delaware Pediatric vision..... FEDVIP.................
product. Simply Blue EPO 100
500.
District of Columbia............... Plan from largest Group Hospitalization Pediatric oral....... FEDVIP................. Yes.
small group product. and Medical Services, Pediatric vision..... FEDVIP.................
Inc. BluePreferred
PPO.
Florida............................ Plan from largest Blue Cross Blue Shield Pediatric oral....... FEDVIP................. No.
small group product. of Florida, Inc. Pediatric vision..... FEDVIP.................
BlueOptions PPO.
Georgia............................ Plan from largest Blue Cross Blue Shield Pediatric oral....... FEDVIP................. Yes.
small group product. of Georgia HMO Urgent Pediatric vision..... FEDVIP.................
Care 60 Copay.
Guam............................... Largest National FEHBP Blue Cross Blue Shield Pediatric vision..... FEDVIP................. Yes.
Standard Option PPO.
Hawaii............................. Plan from largest Hawaii Medical Service Pediatric oral....... CHIP................... No.
small group product. Association Preferred Pediatric vision..... FEDVIP.................
Provider Plan 2010.
Idaho.............................. Plan from largest Blue Cross of Idaho Pediatric oral....... FEDVIP................. Yes.
small group product. Health Service, Inc. Pediatric vision..... FEDVIP.................
Preferred Blue PPO.
Illinois........................... Plan from largest Blue Cross and Blue Pediatric oral....... CHIP................... Yes.
small group product. Shield of Illinois Pediatric vision..... FEDVIP.................
BlueAdvantage PPO.
Indiana............................ Plan from largest Anthem Blue Cross and Pediatric oral....... FEDVIP................. Yes.
small group product. Blue Shield of Pediatric vision..... FEDVIP.................
Indiana Blue 5 Blue
Access PPO Medical
Option 6 Rx Option G.
Iowa............................... Plan from largest Wellmark Inc. Alliance Pediatric oral....... FEDVIP................. Yes.
small group product. Select Copayment Plus Pediatric vision..... FEDVIP.................
PPO.
Kansas............................. Plan from largest Blue Cross and Blue Pediatric oral....... CHIP................... No.
small group product. Shield of Kansas Pediatric vision..... CHIP...................
Comprehensive Major
Medical Blue Choice
PPO GF 500 deductible
with Blue Rx card.
Kentucky........................... Plan from largest Anthem Health Plans of Pediatric oral....... CHIP................... Yes.
small group product. Kentucky, Inc. PPO. Pediatric vision..... CHIP...................
Louisiana.......................... Plan from largest Blue Cross and Blue Pediatric oral....... FEDVIP................. Yes.
small group product. Shield of Louisiana Pediatric vision..... FEDVIP.................
GroupCare PPO.

[[Page 12871]]

Maine.............................. Plan from largest Anthem Health Plans of Pediatric oral....... FEDVIP................. Yes.
small group product. Maine Blue Choice 20
PPO with RX 10 30 50
50.
Maryland........................... Plan from largest BlueChoice 20 with RX Pediatric oral....... CHIP................... Yes.
small group product. 10 30 50 50. Pediatric vision..... FEDVIP.................
Massachusetts...................... Plan from largest Blue Cross Blue Shield Pediatric oral....... CHIP................... Yes.
small group product. of Massachusetts,
Inc. HMO Blue 2000
Deductible.
Michigan........................... Largest State non- Priority Health Pediatric oral....... CHIP................... No.
Medicaid HMO. PriorityHMO 100 Pediatric vision..... FEDVIP.................
Percent Hospital
Services Plan.
Minnesota.......................... Plan from largest HealthPartners 500 25 Pediatric oral....... FEDVIP................. Yes.
small group product. Open Access PPO. Pediatric vision..... FEDVIP.................
Mississippi........................ Plan from largest Blue Cross and Blue Pediatric oral....... CHIP................... Yes.
small group product. Shield of Mississippi Pediatric vision..... CHIP...................
Network Blue PPO.
Missouri........................... Plan from largest Healthy Alliance Life Pediatric oral....... FEDVIP................. Yes.
small group product. Insurance Co. (Anthem Pediatric vision..... FEDVIP.................
BCBS) Blue 5 Blue
Access PPO Medical
Option 4 Rx Option D.
Montana............................ Plan from largest Blue Cross and Blue Pediatric oral....... FEDVIP................. Yes.
small group product. Shield of Montana Pediatric vision..... FEDVIP.................
Blue Dimensions PPO.
Nebraska........................... Plan from largest Blue Cross and Blue Pediatric oral....... FEDVIP................. Yes.
small group product. Shield of Nebraska Pediatric vision..... FEDVIP.................
BluePride PPO.
Nevada............................. Plan from largest HPN POS Group 1 c XV Pediatric oral....... CHIP................... Yes.
small group product. 500 HCR. Pediatric vision..... FEDVIP.................
New Hampshire...................... Plan from second Matthew Thornton Pediatric oral....... FEDVIP................. Yes.
largest small group Health Plan (Anthem Pediatric vision..... FEDVIP.................
product. BCBS) HMO.
New Jersey......................... Plan from largest Horizon HMO Access HSA Pediatric oral....... CHIP................... Yes.
small group product. Compatible. Pediatric vision..... FEDVIP.................
New Mexico......................... Plan from largest Lovelace Insurance Pediatric oral....... CHIP................... Yes.
small group product. Company Classic PPO. Pediatric vision..... CHIP...................
New York........................... Plan from largest Oxford Health Pediatric oral....... CHIP................... No.
small group product. Insurance, Inc. Pediatric vision..... CHIP...................
Oxford EPO.
North Carolina..................... Plan from largest Blue Cross and Blue Pediatric oral....... FEDVIP................. No.
small group product. Shield of North Pediatric vision..... FEDVIP.................
Carolina Blue Options
PPO.
North Dakota....................... Largest State non- Sanford Health Plan Pediatric oral....... CHIP................... No.
Medicaid HMO. HMO. Pediatric vision..... CHIP...................
Northern Mariana Islands........... Largest National FEHBP Blue Cross Blue Shield Pediatric vision..... FEDVIP................. Yes.
Standard Option PPO.
Ohio............................... Plan from largest Community Insurance Pediatric oral....... FEDVIP................. No.
small group product. Company (Anthem BCBS) Pediatric vision..... FEDVIP.................
Blue 6 Blue Access
PPO Medical Option D4
Rx Option G.
Oklahoma........................... Plan from largest Blue Cross and Blue Pediatric oral....... CHIP................... Yes.
small group product. Shield of Oklahoma Pediatric vision..... FEDVIP.................
BlueOptions PPO RYB05.
Oregon............................. Plan from third PacificSource Health Pediatric oral....... CHIP................... No.
largest small group Plans PPO Preferred Pediatric vision..... FEDVIP.................
product. CoDeduct Value 3000
35 70.
Pennsylvania....................... Plan from largest Aetna Health, Inc. PA Pediatric oral....... FEDVIP................. No.
small group product. POS Cost Sharing 34
1500 Ded.
Puerto Rico........................ Plan from largest Triple-S Salud, Inc. Pediatric vision..... FEDVIP................. No.
small group product. [Oacute]ptimo Plus
(Plan de Salud PG-OP
2008).
Rhode Island....................... Plan from largest Blue Cross and Blue Pediatric oral....... FEDVIP................. No.
small group product. Shield of Rhode Pediatric vision..... FEDVIP.................
Island Vantage Blue
PPO.
South Carolina..................... Plan from largest Blue Cross Blue Shield Pediatric oral....... FEDVIP................. No.
small group product. of South Carolina Pediatric vision..... FEDVIP.................
Business Blue
Complete PPO.
South Dakota....................... Plan from largest Wellmark of South Pediatric oral....... FEDVIP................. Yes.
small group product. Dakota Blue Select Pediatric vision..... FEDVIP.................
PPO.
Tennessee.......................... Plan from largest Blue Cross Blue Shield Pediatric oral....... FEDVIP................. Yes.
small group product. of Tennessee PPO. Pediatric vision..... FEDVIP.................

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Texas.............................. Plan from largest Blue Cross Blue Shield Pediatric oral....... FEDVIP................. Yes.
small group product. of Texas BestChoice Pediatric vision..... FEDVIP.................
PPO RS26.
Utah............................... Plan from third Public Employee's None................. None................... Yes.
largest State Health Program Utah
employee plan. Basic Plus.
Vermont............................ Plan from largest The Vermont Health Pediatric oral....... CHIP................... No.
small group product. Plan, LLC, CDHP-HMO. Pediatric vision..... FEDVIP.................
Virginia........................... Plan from largest Anthem Health Plans of Pediatric oral....... FEDVIP................. Yes.
small group product. VA PPO KeyCare 30 Pediatric vision..... FEDVIP.................
with KC30 Rx plan 10
30 50 OR 20.
Virgin Islands..................... Largest National FEHBP Blue Cross Blue Shield Pediatric vision..... FEDVIP................. Yes.
Standard Option PPO.
Washington......................... Plan from largest Regence BlueShield non- Pediatric oral....... CHIP................... Yes.
small group product. grandfathered small Pediatric vision..... FEDVIP.................
group product.
West Virginia...................... Plan from largest Highmark Blue Cross Pediatric oral....... CHIP................... No.
small group product. Blue Shield West Pediatric vision..... FEDVIP.................
Virginia Super Blue
PPO Plus 2000 1000
Ded.
Wisconsin.......................... Plan from largest UnitedHealthcare Pediatric oral....... FEDVIP................. No.
small group product. Insurance Company Pediatric vision..... FEDVIP.................
Choice Plus Definity
HSA Plan A92NS.
Wyoming............................ Plan from largest Blue Cross Blue Shield Pediatric oral....... FEDVIP................. No.
small group product. of Wyoming Blue Pediatric vision..... FEDVIP.................
Choice Business 1000
80 20.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Appendix B: Largest FEDVIP Dental and Vision Plan Options, as of March
31, 2012

Section 156.110(b)(2)-(3) directs States to supplement base-
benchmark plans that lack pediatric oral or vision services with
benefits drawn from either the Federal Employees Dental and Vision
Program (FEDVIP) or a State's separate CHIP program. Specifically,
States may select benefits from either: (1) The FEDVIP dental or
vision plans with the largest national enrollments, or (2) the
State's separate CHIP program's dental or vision benefits, where
they exist, which offer benefits to the eligibility group with the
highest enrollment. To assist States with this process, we collected
information about the benefits provided in the FEDVIP dental and
vision plans with the highest national enrollments, as issued by
MetLife and FED Blue, respectively. Below, we provide a chart with a
summary of the benefits offered by these plans.

Largest FEDVIP Dental and Vision Plan Options, as of March 31, 2012 *
------------------------------------------------------------------------
Additional
Issuer name Plan name information
------------------------------------------------------------------------
MetLife (dental).............. MetLife Federal 2012 Plan Benefit
Dental Plan-- Brochure:
High. http://www.opm.gov/insure/health/planinfo/2012/brochures/MetLife.pdf
BCBS Association (vision)..... FEP BlueVision-- 2012 Plan Benefit
High. Brochure:
http://www.opm.gov/insure/health/planinfo/2012/brochures/FEPBlueVi.pdf
------------------------------------------------------------------------
Source: U.S. Office of Personnel Management.
*Please note that this information will be updated with the latest data
when released.

[FR Doc. 2013-04084 Filed 2-20-13; 11:15 am]
BILLING CODE 4120-01-P